Motor Vehicle Sales Bill

I am still struggling to recover, given that the only part of the bill that one can agree with is the title. I learn something every day that I am here in Parliament. [Interruption] Are the members sure about that?

💬 Peter Brown: Absolutely! The title is the only good part about it.

OK. Part 2, relating to motor vehicle trading, contains a number of prohibitive clauses initially, clauses 11 through to 13, which I will deal with briefly. I will then talk about car fairs, which are caught up in clause 14(2), and then the old bona fide purchaser and clear title issue in clause 15(1). That is the sort of stuff that haunts third-year law students, dealing with security interests as to whether dealers are registered or not. Clause 15(1)(b) is a very interesting clause, which we will look at in the next 4 minutes and 30 seconds.

Clauses 11, 12, and 13 deal with persons banned from participating in the business of motor vehicle trading. I put this issue to my ACT colleagues. Clause 11 states: “A person must not participate in the business of motor vehicle trading if that person is a banned person.”—or what? What is the fine for doing that? What happens if a person is a banned person and he or she does participate in the business of motor vehicle trading?

This legislation is appallingly drafted. We have four-wheel drive vehicles going around corners too quickly and turning into motorbikes. We have odometers being tampered with, and we know that the actual distance, in relation to a motor vehicle’s odometer, means the distance that would otherwise have been recorded had the odometer not been tampered with. That will go down well in court! Clause 13 is my favourite, though. It is headed “Tampering with odometers prohibited”, and it states: “A person must not tamper with a motor vehicle’s odometer.”—or what? There is no clause in the bill that states what will happen. There is no clause stating what penalty will be incurred for that. There is no clause stating what that person will face. That clause states that a person must not tamper with a motor vehicle’s odometer—or what? [Interruption] That is very good, Minister! People should not do that—or what? What sort of clause is that? How can anybody take that provision, or those preceding it, seriously? We are told that we are not allowed to do that. That is fine; we are quite happy with that. But what happens if we do so? We are not sure of that; one just has to take that chance at the time that one does it. That is really poor, slack drafting.

I will move on now, because I know my colleague David Carter intends to dwell on clauses 11 through to 13 in his 5-minute contribution. However, I do want to raise the question that I raised in my contribution on the title about the difference between the sale of a motor vehicle and its trade. Clause 14(2) captures the car fair—the good old car fair on the side of the road where one used to be able to bowl up, park one’s car on the road, slap a notice on the front, and say one was keen to sell it to anyone for $1,500—to any buyer or the best bidder in the room. Now that particular activity is caught under clause 14(2), where a motor vehicle trader who is a car market operator—not a car consultant, but a car market operator—must ensure that a consumer selling a vehicle through that trader attaches the notice to the vehicle. When we look at the provisions of the notice, we see it is regulation gone mad. That is a situation where a person wakes up on a Saturday and says he or she needs a quick $1,000, so he or she will go down to the car fair, sell a car and be on his or her way. That person will not be able to do that, because under clause 15(1) a person has to attach a notice pursuant to section 58 of the Personal Property Securities Act in a prominent place.

💬 Sandra Goudie: I have many in my kitchen drawer.

That is right. The buyer or lessee of a motor vehicle only takes the vehicle free of a security interest in the event that subparagraphs (a) through to (c)(i) of that section are passed. We know how difficult legal transactions are when a security interest attaches to a motor vehicle.

I do not intend to take a long call on this issue.

💬 Clayton Cosgrove: Good.

I am glad that I please some members over there on the Government benches. I want to touch on clause 13, “Tampering with odometers prohibited”.

💬 Simon Power: Or what?

That is exactly the issue. Right now, if an importer brings a car into this country from Japan or somewhere else and the odometer is tampered with, he or she loses that car and it is sold by the Customs Department. The department has to put a notice on the motorcar stating that the odometer has been tampered with, and the first buyer—and I think Deborah Coddington has touched on this already—knows full well what has happened. There is some doubt as to whether that extends to the second or any subsequent buyers.

If a car is brought into this country and a person tampers with the odometer, I want to know what happens if that person puts in the details of the vehicle that are required under clause 14 that he or she has tampered with the odometer, which is the thing that measures the distance. I think there is a clause in there from Mr Clayton Cosgrove—[Interruption] Clearly, the member over there on the Government benches has not read the bill, which is a bit of a worry. [Interruption] Mr Power is exactly right. He has summed that up far better than I could have. Nothing seems to happen to anybody who does tamper with an odometer. I cannot find any reference to that.

💬 Simon Power: I looked.

Mr Power, who is a lawyer, has looked and he cannot find anything. Nothing seems to happen to those people. If those people put in the notice that they have to display that the odometer has been tampered with, will that be good enough? If it is good enough, why is that not good enough for an importer who brings in a car from Japan and has it taken from him and sold by the Customs Department?

💬 Simon Power: Good question.

It is a good question, and the Minister should answer it. Why is it not good enough for a person to tamper with the odometer and to put that on the notice that must be displayed? Why is that not good enough?

This bill is flawed. We have said so. The only thing that the Government has got right about the bill is the title. That is the only correct thing in this bill. The sentiments behind the bill are admirable, but the bill itself is flawed, and that surprises me. Our colleagues in the National Party have recognised that this bill is not up to standard—

💬 Simon Power: Constructive criticism.

And I am really surprised that the National Party is voting for it.

💬 Simon Power: We were surprised that you voted for the title.

I will answer that question. We felt a little benevolent. We realised a lot of work had gone into this bill, and we did not want the Government to feel totally downhearted at producing legislation like this bill and Supplementary Order Paper 30. We thought that we had to find something positive about the bill, and the title was all that we could find.

I come back to the odometer issue, which is quite a serious question. Nothing seems to happen to a person who tampers with an odometer. Mr Duynhoven would like something to happen, and I would like something to happen. But I ask Mr Duynhoven to tell us where in the bill it states that something will happen. All that it will do is to make the car look as though it has been used less than it actually has. If the person puts a statement on the notice in the window that the odometer has been tampered with, he or she is complying with the regulation and is selling a car that looks newer than it actually is. But the extent of that tampering we do not know, and that person does not seem to be breaking the law.

Steve Chadwick, who is on the Commerce Committee, is taking a keen interest in this issue. Would she please explain whether such a person is outside the law under this legislation, and if he or she is, would she tell us which clauses put that person outside the law?

💬 Clayton Cosgrove: Read the bill.

Clayton Cosgrove is making a lot of noise back there. Maybe he will take a call and tell us exactly where that is in the bill.

💬 Clayton Cosgrove: Read the bill.

I have read the bill inside out, and Supplementary Order Paper 30. If Mr Cosgrove knows the answer to that question, he should stand up and explain that to this House. I do not think he does know; I am certain he does not know.

This is a serious question. Could we have people tampering with odometers to make cars look, to all intents and purposes, as though they have had less use than they actually have, putting that on the notice that is displayed, and making those cars more attractive to a buyer, without disclosing how much the odometers have been wound back? I invite the Minister, or indeed anybody else, to say whether that is ethical. I invite the Minister or anybody else to say that is against the law.

I want to start by moving through to Subpart 3, clause 21 etc., and taking an opportunity to wade through this legislation, which is becoming more and more alarming by the minute. We note the Minister of Transport, Paul Swain, is not allowed to speak on this bill, at all. He is the member who asked the House earlier whether this legislation was better than what exists now, so that shows how much knowledge he has about it.

I want to move to the issue of the qualifications of motor vehicle traders and the registration process. I say that this provision appears to be a vast improvement on the current situation. It appears to me that with this bill we are about to remove the very old-fashioned, regimented way by which people had to go before a board and prove they were of suitable character, etc.

💬 Peter Brown: Why not explain the point I raised?

No, no, that is not my job. The member should call on Paul Swain to answer his question.

💬 Peter Brown: You are defending the legislation.

No, I am saying that after pages and pages of it, I have actually found one little bit that I quite like.

💬 Brent Catchpole: It is the title!

No, it is not the title; the member has that wrong. But anyway, the member can have another go at speaking later.

The point that I think is a lot tidier is that the registration process will now be effectively automatic, with a number of exemptions for people who are disqualified from registering—the issues about whether one is under the age of 18, which seems fair enough, and about whether one is a person who has been banned or is an undischarged bankrupt, etc. I just say that amongst this dreadfully drafted—

💬 Simon Power: Banned from rugby service!

That is a good point—[Interruption] I think we had better get Paul Swain back. In all this dreadfully drafted bill, which we are appropriately debating on 1 April—April Fool’s Day—I think I have actually found something that has some merit. So I congratulate the Government on at least getting a small part of the bill possibly right.

But I want to get back to the point that has been raised by other members about tampering with odometers. There is an issue whereby clause 13 states that tampering with odometers is prohibited. That clause states: “A person must not tamper with”—[Interruption] Mark Burton gave an interjection of about four words, but by the time he had finished he had forgotten what he said. Now I know it is late at night for the Minister, but one would really expect him to recall—

💬 Hon Mark Burton: I did not want to embarrass the member.

He did not want to embarrass me. I assure Mark Burton that when I interject three words I can remember them. But I ask some honourable member from the Government to explain clause 13—

💬 Simon Power: Harry is getting ready!

Oh, great! The real Minister of Transport will take a call! That would be great. I want to know what happens to a person if he or she tampers with a motor vehicle’s odometer. I remember Harry Duynhoven putting in hours and hours of debate in this House about the issue of people tampering with odometers. That was a big issue, a couple of years ago. In fact, Mr Harry Duynhoven made his name on that issue.

💬 Simon Power: “Harry Odometer Duynhoven”.

That sounds quite good; it has a nice ring about it. Everybody expected that Harry Duynhoven would be the real Minister, and after the remark earlier by Paul Swain maybe Harry Duynhoven should be the real Minister. So Harry Duynhoven can take a call and explain to us what happens to a person who is caught tampering with an odometer. What is the penalty for that? [Interruption] Helen Duncan can tell us what the penalty is. No, she puts her glasses on now, hides her head in a book, and wishes that she had not interjected.

💬 Brent Catchpole: She is knitting.

Oh, is it knitting?

💬 Helen Duncan: It is the National Party that is responsible for the legislation.

I do not think that is the case, at all. This bill has the Hon Judith Tizard’s name on it. She is a member of the caucus that that member belongs to, not a member of our caucus. The member should not blame me.

💬 Helen Duncan: We know you are taking the numbers for the leadership.

No, I am trying to get some honourable member from the Government to explain to us what happens when one finds someone tampering with an odometer. It is a simple question. Not even Parekura Horomia knows the answer to that. Nobody on the Government side of the Chamber can answer that question.

I hope not too many of my friends in the motor industry are listening to this tonight, because many of them were concerned at my level of intelligence when I said that I was going to become an MP. They said to me: “Paul, they’ll run rings around you.” Well, hearing the debate tonight I think many of them would be sadly disappointed. I did like Wayne Mapp’s description of car salesmen; I had never heard it before—honest, hard working entrepreneurs. The National Party has got something right; they are.

But if my car salesmen described a car—and members should listen to this carefully—with the same accuracy as my parliamentary colleagues are describing this bill, they would have to lose their jobs. Under the Fair Trading Act and the consumer protection bill, their descriptions would be so inaccurate that they would probably lose their jobs. There is one word that we need to see come back in every industry in this country, and I think the motor industry largely runs on this word, and it is “integrity”. One cannot legislate for every situation that one has in business. I am surprised when I see some of my parliamentary colleagues who talk about less legislation bringing in more legislation. I scratch my head, and, as just a poor car salesman, I wonder where they are coming from.

Let us have a look at clause 13, “Tampering with odometers prohibited”. That is fine, but if one is without integrity, one can change the speedometer in a car without tampering with it. There is plenty of wreckers’ yards in New Zealand or overseas. Without integrity one cannot write legislation that will cover every situation.

I would also like to touch on—[Interruption] That is not tampering; it is changing. One thing about this legislation is that the motor industry does welcome it, but my concern about it is that we are lowering the bar. In other words, up until now motor vehicle dealers have had to invest a large amount of money in their motor vehicle businesses. They need a site, which they have either had to purchase or had to lease, to operate from. All of that is changing. Many of the calculations that have been done have been done on the existing regime of the car industry, which, to be honest—but people do not like me using that saying. The figures show that, for example, there has been very little call on the fidelity fund. Unfortunately, with the lowering of the bar under this bill, I think that we will have greater challenges unless the industry is policed correctly and really dealt with. It will be very easy now to enter the motor industry.

Many people have also talked about motor vehicles being a high-ticket item. But in reality today that is not the case. One can buy a very good motor vehicle for, say, $3,000, $5,000, or $7,000, which will serve one well. One can buy a spa pool for $15,000, $25,000, or $30,000, or one can buy a television set. So members should not say that the motor industry has big-ticket items; yes, it can have big-ticket items, but it can also have very good items.

I also see in clause 15 problems for the finance industry. I have concerns about the security interest having to be covered in what we call the current motor vehicle dealers window card. If a finance company has a security interest in a vehicle, and if that vehicle is sold by a less-than-desirable motor vehicle trader who has entered this industry, and who has disclosed in the window card that the vehicle has finance on it, then, yes, the member of the public who purchases the vehicle will have clear title to it, but the finance company will lose its right to the security on that vehicle. Its only right of redress to get its funds back will be through the trader. Under this legislation, the standard required of the trader is far less than what we currently have. I can see that that may possibly cause a problem down the line.

Nevertheless, I welcome the 2-year review of this bill. I think that is absolutely necessary.

💬 Simon Power: Why?

If National members are quiet, I will tell them why.

This bill has a large number of issues in it, and it is hard to know where to start in a 5-minute speech. [Interruption] For the benefit of the Hon David Carter, I will start with clause 89, which is about the offence of tampering with odometers. I suggest that the member read it; it is in large print, so he should be able to find it. It has reference to clause 106, which is about penalties.

I have had some misgivings about this legislation, and that would be no secret to anyone in this Committee. I am pleased that, in the process, the bill has been improved somewhat. I share some of the concerns of my United Future colleague Paul Adams, who spoke about the entry level. But it has been deemed that those over the age of 18, who have no criminal convictions, should be able to enter into the motor vehicle dealer business. That is outlined in the bill in such a way as to say: “We have faith that the registrar will be able to ensure that those persons who are suitable remain in the industry, and that those who are not suitable exit from it by being banned.”

I am very pleased that this bill is removing the statutory authority given to the Motor Vehicle Dealers Institute. It takes away the institute’s respectability, which, in my view—and I am not talking about the motor vehicle dealers themselves, but about the organisation—has been used fraudulently for a long time. That may seem a very strong comment, but in the interests of the consumers who have bought clocked cars over the last decade and a bit, I have to say that very few motor vehicle dealers have been imprisoned, or, indeed, taken to the cleaners by the Motor Vehicle Dealers Institute. I imagine that it will now rapidly go out of existence. I see the Motor Trade Association, and perhaps even what used to be known as the Imported Motor Vehicle Dealers Association, and is now the Independent Motor Vehicle Dealers Association, taking over those roles.

I have a little question about the definition of “motor cycle”, in clause 6, not including a moped. The definition of “motor vehicle” states, in paragraph (b)(iii), that “a motor cycle, the total cylinder capacity of which does not exceed 60 cubic centimetres:” is not included as a motor vehicle. There are lots of motorcycles that go fairly quickly, even though they are classified as mopeds. I am surprised by that definition. However, there might be a good reason for it, which someone might enlighten us about later.

I am pleased with clause 14, which is about the particulars that must be displayed. I have never, ever seen a vehicle with “This vehicle is clocked.” displayed on it, despite Mr Delamere assuring us, when he was a Minister, that that would happen. If members compare—and I have done this; I have been there—the deregistration data in Japan, including the mileage, by just walking down the lines at any auction, and looking at the registration data and the original mileage recorded at the time of the first inspection of the vehicle on its coming to New Zealand, they will find that there seems to be a huge disparity. One has only to look at the price of diesel in Japan to start asking: “Why would people buy a diesel vehicle in Japan, where petrol and diesel are more or less the same price, unless they were doing very high mileage?”, and to wonder at the failure rate of Japanese diesel vehicles in New Zealand, to conclude that clocking is still with us, and is an issue. I am pleased that it is addressed in clauses 89 and 106 of the bill.

I have some concern about one aspect, which I hope will be rigorously policed, and that is the idea of travelling, door-to-door salespeople. How can people believe that pressure will not be exerted in that situation? For example, if an elderly person has an older car that breaks down, and that will cost a lot to repair, a motor vehicle dealer who knows the person may notice that the car has broken down, and may shoot around with a flash Japanese used-car import, and say: “This is a marvellous little car. We will give you a good trade-in on your old car.” The dealer would see the person alone in his or her own home, where the person could be convinced by offers of finance, and by lines like: “We can do the deal right here in your lounge.” Motor vehicle salespeople are excellent at psychology: they know how to close deals. We will see that happen. I hope that is an aspect of the bill that the registrar will rigorously follow up.

I am pleased with clause 22(ea), which is the new bit that has been added, and is about one of the concerns I raise. I have to say, though, that anyone who investigates that will be very disappointed with the very low number of disqualified dealers.

The whole point about this legislation is that it is not necessary. It is specialist industry legislation, and there is nothing new in that. There are always certain industry sectors that lobby for specialist legislation. [Interruption] That is the whole point. When we ran this country like a Polish shipyard, only the wealthy could afford to buy cars, but those days have long gone, and now cars are accessible to a lot more people. Families do not have just one car; they can buy two or three cars. My car is worth about $500, and that is fine. It has done 220,000 kilometres, but it gets me from A to B. I am going to keep driving it to see how long it lasts. It is a Subaru, and it is a wonderful little car.

The point I am making is that when cars were out of the reach of most people, and they had to go on to a list to get a new one, and they had to give the dealer a bottle of whiskey to have themselves put further up the list, the family car was often the second-most-expensive possession that people owned after their houses. That was why we needed legislation to protect people in the industry. There was a huge amount of money at stake. These days we need regulation that is a lot lighter, but that is not what we have with this bill. The neo-socialists always fall for this. They see a problem, and they think they can solve it by passing more law. We end up with legislation that is cumbersome and fraught with difficulty.

I noticed that Harry Duynhoven said he welcomed the end of the fidelity fund—

💬 Hon Member: No, he certainly did not. The member spoke of the end of the Motor Vehicle Dealers Association.

I do not welcome the end of that, but I welcome the end of its compulsory membership. If an organisation is good, then people will join it voluntarily—just like unions. If unions are good, people will join them voluntarily. It is the same with students’ associations. We can get rid of the compulsory membership of the Motor Vehicle Dealers Association, but we cannot apply that to students’ associations! Never mind, there is hope; we are the party of influence, and we will keep working. We will influence both sides of the Committee, but it is very difficult when there is a concrete-bound mentality.

I return to Part 2 of this legislation. It deals with exemptions from registration. First of all, the Crown is exempt from registration, so it will not have to be policed or pay levies when the Customs Service seizes cars that it suspects have had their odometers tampered with, and sells them. The Customs Service is exempt from registration. That involves something like a thousand cars a year.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Thursday)