Good morning. I'd first like to thank the members of SOCAP for this opportunity to speak to you this morning.
SOCAP does great work bringing people together to discuss consumer issues. The recent summit on information technology and customer service in Melbourne is a case in point.
It also produces the excellent Consumer Directions magazine and gives members access to practical information. This range of activities is to be admired and applauded. Indeed, quality information is fundamental to the concept of consumer sovereignty, about which I will talk today.
Today's marketplace changes daily. Increased competition and the growth of information technology have expanded the marketplace to the point of being almost boundless. Every day, the choice of products and services available to consumers grows.
Government philosophy relating to consumers used to be one of protection alone.
Make no mistake, protection is the cornerstone of our philosophy. But it needs to be more. In this day of rapid change, the Government's approach is going beyond a narrow protectionist perspective to effectively safeguard Australian consumers.
We must empower today's consumer and equip them with the means to keep pace with the changing marketplace.
Rather than put up fences around potentially difficult terrain, we must provide consumers with tools to negotiate that terrain - the maps and compasses for today's marketplace.
This empowerment is part of the wider concept of consumer sovereignty, a philosophy that goes to the heart of our Government's approach to regulatory reform.
The Government firmly believes that consumers, properly equipped, are the best judges of their own economic well being. All they need are the right tools.
Part of my job is to help provide those tools.
As you know, my Ministerial responsibilities extend from Financial Services and Regulation to competition policy and consumer affairs.
In many ways consumer empowerment is the common thread that goes throughout my entire portfolio. It involves helping investors make more informed choices; reforming industries so you get better service, products and lower prices; even helping parents buy safer toys for their kids.
There are four key elements to consumer sovereignty.
First and foremost, consumers must feel sure the Government has in place a legal system that will protect them. Protection is crucial.
Second, consumers must enjoy a wide range of choice of products and services. Thirdly, they must have sufficient information to choose between those products in an informed way.
And finally, in cases when their standards are not met, they need effective redress to quickly remedy transactions that are unfair.
Let's look, at protection first. In Australia, we have consumer protection legislation the envy of the world. This is the cornerstone of our entire consumer affairs thinking and has been so since the introduction of the Trade Practices Act in the early 1970s.
Indeed you could argue that consumer protection has been part of Australia's landscape since self-government and was part of the peace and welfare of our first settlers, the convicts, that came to Australia in the early 1800s.
Therefore, the importance of consumer protection legislation is self-evident.
Second, lets now look at choice.
The most effective way of ensuring choice is to encourage competition. Government has a big role to play here.
By its very nature, competition increases the level of choice available to consumers. In the financial services industry, for example, increased competition has resulted in an explosion in the choices available to consumers in home loans and personal finance.
In the last year alone, the number of credit options available to consumers has increased by a further 31 per cent.
More importantly, competition makes business more responsive to consumer demands.
In an ideal marketplace, that means consumers can then determine the allocation of resources within the economy, simply by exercising their choice and preferring particular goods and/or suppliers over others.
Italian clothing company Bennetton, for example, has moved to a system where it manufactures each day what was sold yesterday, based on daily electronic sales reports.
This direct response to consumer demand ensures the highest selling items are produced in sufficient numbers and the less popular items are not overproduced. It delivers efficiency to the marketplace.
This sort of responsiveness to consumer demand has become much easier with the Internet. Toyota Australia, for example, recently became the first leading carmaker in the world to offer new cars on the Internet.
Suddenly, the consumer is no longer bound by geography. They have unlimited choice not only in the products they buy and who they buy them from but also where they buy them.
Today's consumers are totally mobile, able to shop in virtual shopping malls and virtual car yards on the other side of the world.
Another benefit of competition is that it applies pressure on businesses to keep prices low.
Indeed, Competition policy has delivered substantial price cuts in a number of areas. Residential electricity prices have fallen by 7 per cent since 1993 and long distance phone calls are up to 75 per cent cheaper than they were two years ago, principally as a result of the Government's commitment to competition policy.
So in an increasing choice is an important step to achieving consumer sovereignty.
But choice means nothing if consumers don't have access to sufficient information to make an informed decision about the products and services available.
Information is the third element of consumer sovereignty.
This is particularly important in light of the increasing proliferation of products and suppliers in the market place.
The more information consumers can access, the more informed their decision is and the greater their empowerment.
Quite simply, consumer sovereignty cannot exist without adequate information channels. Information to a consumer is as vital as a compass to a navigator.
Again, greater access to information technology is an important development, enabling consumers to gain more control within the market.
But it is not simply quantity of information that is needed, so much as quality.
Many complaints to industry dispute resolution schemes can be traced back to inadequate disclosure about various products.
Indeed, the recently released annual report of the Financial Services Complaints Resolution Scheme found the lack of proper risk disclosure was the crucial factor in customer dissatisfaction with investment advice.
So, the third element of consumer sovereignty depends on the provision of information that is relevant to consumers, transparent and easy to understand.
Consumers need to know exactly what they are purchasing and the implications of their choices.
Our Government is taking steps to improve this information flow. Our corporate law reforms, for example, propose a single disclosure regime for financial products, so consumers can more easily compare the many products available to them and make an informed choice.
Of course, no matter how good the choice and information available to consumers, there will be occasions when their expectations are not met by the product they choose.
And when things do go wrong, consumers must have ready access to redress mechanisms relating to their purchase.
This is the fourth element of consumer sovereignty - redress.
In some cases it will be appropriate for the Australian Competition and Consumer Commission to use the enforcement powers of the Trade Practices Act
In other cases consumers will be able to utilise redress mechanisms offered by the original supplier, as well as industry bodies such as the Telecommunications Industry Ombudsman and Government organisations such as the small claims tribunals.
Research suggests more needs to be done to increase consumer awareness of the many schemes available in this area.
A recent consumer survey commissioned by the Consumer Affairs Division of Treasury, for example, found that well over half of the consumers wanting to make a complaint were not aware of the dispute resolution schemes available to them.
This was despite extensive publicity conducted by many of these schemes.
These are the four elements to consumer sovereignty - protection, choice, information and redress.
The principle of consumer sovereignty provides the philosophical keystone for my approach to policy development and reform across the different areas of my responsibilities.
My top priorities are to safeguard Australian consumers and to facilitate consumer markets that function well. That means balancing the interests of consumers and business in the context of an increasingly global marketplace.
In that respect, the role of government is to create the right economic environment to enable business to flourish. We have achieved that with a range of policy reforms that have delivered strong economic growth and low inflation.
We also believe businesses should be given the right incentives to regulate their own fair trading behaviour.
If we are about empowering consumers, then we must also be about empowering business. The most efficient markets, after all, are those that operate free of unnecessary impediments.
For that reason, industry self-regulation is the Government's preferred approach and my first priority in consumer affairs is to further promote effective self-regulation for all industries. These forums should provide consumers with effective, timely and cheap redress for their grievances.
Self-regulation will only work if consumers have autonomy and can participate as equally informed partners. Unfortunately, that does not always occur. At such times, direct Government intervention may be necessary.
In cases where there is a risk of serious market failure or an unacceptable level of risk to the health and safety of consumers, Government and the ACCC, have an obligation to step in and eliminate unsafe products and disreputable practices and services.
This philosophy has been translated into practical priorities for policy development for this Government as outlined in our election commitments.
In cases of severe market failure we will look to underpin codes of conduct with the Trade Practices Act. We are in the process of developing guidelines setting out the circumstances in which such a code of conduct might be prescribed and the process to be followed.
Another key Government priority is to build a world-class consumer environment for electronic commerce in Australia. It is my desire for Australia to be a place where both businesses and consumers readily engage in e-commerce.
In order to achieve this we must promote consumer confidence in this area. Since the Internet doesn't recognise national boundaries achieving this objective is a complex task.
Australia is working with the OECD to draft guidelines that will set out basic principles on consumer protection and e-commerce.
And the Government, ASIC and the ACCC are developing relationships to exchange information on international e-commerce issues and to explore joint enforcement programs.
On consumer affairs generally, I am working toward more consistent national laws. A Working Group of Commonwealth, State and Territory representatives has been set up to advise Fair Trading and Consumer Affairs Ministers on changes to harmonise consumer protection laws to recognise the artificiality of State boundaries in the desire to safeguard consumers.
The aim is to eliminate legislative inconsistencies between the States that impose costs business and create unfair situations for businesses and consumers alike.
We are also providing education materials to specific groups who do not have access to consumer information, particularly older consumers, people in regional areas and consumers on low incomes.
On top of these materials, the Government has allocated $1 million for a Consumer Information Program that focuses on several initiatives, including the development of a one-stop shop' consumer website.
This site will be a major source of consumer protection information in Australia, providing practical information on a range of issues such as Internet shopping and links to other relevant online resources.
In the important area of consumer product safety, we are undertaking a major review of product safety standards to ensure that they are up to date and meet community needs.
I have also commissioned a eview of the Commonwealth's role in product safety and have asked Treasury for options to streamline and improve product safety arrangements.
Ladies and gentlemen, consumer sovereignty is an exciting concept. It comes with responsibility - responsibility to truly investigate consumer options and make an informed choice.
But it also brings rich rewards.
It empowers consumers to participate in today's marketplace with consumers to participate with authority and meaning. It gives them the potential to call the shots.
And the four elements of consumer sovereignty protection, choice, information, and redress all serve to empower Australian consumers in a growing global marketplace.
That is, after all, what it means to be sovereign.