Motor Vehicle Sales Bill

I would like to carry on from the very fine presentations made by my colleagues last night. They were making such a wonderful contribution to this bill that most of the Labour Party members came down to the Chamber to take some notice of them.

Part 3 is about the registration of motor vehicle traders, and covers the procedures involved. It is interesting to note that a large amount of motor vehicle trading probably takes place on the streets. If we look at the Trade and Exchange we see that an inordinate amount of vehicle trading results from advertisements placed in that paper, and I imagine that a large proportion of those sellers would not be registered. The number of vehicles that a private individual may trade without having to register as a trader has now been increased to six. It was three vehicles.

💬 Hon Harry Duynhoven: It’s been six for a long time.

I thought it was three. I stand corrected, and I thank the Minister for that. It would be marvellous if he took a call.

💬 Hon Harry Duynhoven: Is the member yielding?

No, absolutely not—I could not possibly do that. But we would certainly welcome and appreciate some comments from the Minister. Within his comments, he might like to cover what the cost will be of the levy that is to be imposed on registered motor vehicle dealers. There is a prescribed application fee, but a levy is to be imposed as well. It would be interesting to know what the ballparkfigure for that levy will be and also what the definite intention for using it will be. No evidence has been given that motor vehicle dealers have been spoken to about the levy. The levy has come as somewhat of a surprise to them, and my colleagues have canvassed that issue substantially.

There is an application fee, and now there is to be a levy. Those are some of the substantial costs that are to be imposed on motor vehicle dealers who register. I am sure that the Minister is aware that there is an absence of a compliance cost report. He may care to take a call on that and tell us why no compliance cost report was done in respect of the levy, particularly when the traders are paying a registration fee. Those matters are of considerable concern to National, and we already have a major concern about the increased compliance costs for businesses under the Labour regime. We would like the Minister to take a call and perhaps give us a precis of the compliance cost report as he may have it in his head, given that we did not get it in any form of paperwork in association with this bill.

In looking at the registration of motor vehicle traders, one of the calls from United Future was for the need for greater enforcement. Judith Tizard, in her presentation on the bill when it was read a first time in the House—between knitting, dropping stitches, and whatnot; and we still do not know whether that garment was ever finished—

💬 Brent Catchpole: She was still working on it last night.

I actually saw it being continued last night by another member of the Committee, Dianne Yates. I have now been sidetracked by knitting, so members can see what an influence knitting in the Chamber has been and how it has detracted somewhat seriously from the processes of the House. I am talking about Subpart 1 in Part 3.

💬 Hon Dr Michael Cullen: What’s this about?

We are debating Part 3, “Registration of motor vehicle traders”. We are talking about compliance costs and the enforcement that goes with that—the enforcement to ensure that people dealing in more than six cars a year become registered traders. Those provisions are being put in place to ensure that people register as traders if they sell more than six cars a year. The Hon Judith Tizard, the great knitter of the Chamber, said that enforcement was a very important aspect of this process.

On behalf of New Zealand First I rise to speak to Part 3. Before I get into that I would like to thank the Hon Harry Duynhoven, the Associate Minister of Transport, for getting up last night to give us some explanations on this bill. It was sadly lacking from the Minister who had been in the chair at the time. We are very grateful to Harry Duynhoven for clearing up some of those issues that we had last night. This bill is very complex, and it is one that New Zealand First was not on the select committee to look into. Therefore, we were very grateful to the Hon Harry Duynhoven for clearing up some of those points.

The difficulty we have in this part is that there are no means of compliance checks, and therefore when there is a registered or deregistered member, then there is no way that he or she intends to go back to be registered. There are no teeth or incentives in this bill for somebody to become registered, and, therefore, why would he or she bother? People can sell out of the backyard or under the guise of somebody else’s registration or licence under what is termed a harbouring association. Once people are in that situation they can sell as many cars as they like. They will not report how many cars they have sold. To put in the bill that they have to be registered if they sell more than six cars is a waste of time. They will not disclose what they are doing out of the backyard or under the table. There is no incentive for them to become registered. It certainly does not protect consumers, because they will just walk away from the licence they are working from and leave it. There is no comeback to the original licence holder. Why should anybody become registered under this situation?

New Zealand First has a real concern that this bill lacks teeth. The purpose of the bill is quite good and reasonable, but it lacks teeth, it is disorganised, it does not have the coordination, and, thankfully, the Hon Harry Duynhoven got up here last night and explained some of the situation. One jumps from one end of the bill to other. It is a pity that the real Minister, the Hon Paul Swain, who is supposed to be handling this bill, was not able to stand up to do that for us. He sat in the chair and said absolutely nothing.

💬 Peter Brown: He asked us what we thought it achieved.

That is right. He asked us whether we thought it achieved what he wanted it to do. I do not think he really knew what he wanted to do with this bill, so he had to ask us. Why did he not ask the Hon Harry Duynhoven? He was there, and he has the knowledge. Why did the Minister not ask him? He would have told him that this bill has some major problems. The Hon Harry Duynhoven cleared that up last night and made it quite clear to us that those problems exist.

There is one issue that I would like to go back to: I would like the Hon Harry Duynhoven to explain to us, when we have a situation where people can go to Japan and get the details of the odometer readings, why that paperwork does not follow the vehicle back all the way into New Zealand. This bill does not insist that it do so. If it did, then a lot of the problems with odometer readings and winding them back would be solved. But, no, that paperwork does not follow the vehicle, and it does not give us the checks that we require. I ask Mr Duynhoven to explain this to the Committee.

In some ways this part is probably the whole crunch of why the industry is so pleased that this bill is going through. For many years, dealers have been operating on an uneven playing field where traders have been operating and selling cars from their backyards, through auction houses and car fairs. I agree that the policing of it has been non-existent. Comments have been made that no longer, because our society’s foundations have been breaking down, can we rely on the goodness of people to operate within the laws we make. We expect the police to have to operate and to keep all laws. That is an absolute impossibility. A substantial amount—I would estimate probably about one-third of the vehicles that are bought and sold in this country on a day-by-day basis—would be bought and sold by unlicensed traders. It will interesting to see whether those who deal in that realm register or, indeed, are capable of being registered.

Personally, I think the criterion for the registration of a vehicle trader under this bill is a good criterion. It is a fair criterion. It is in enough detail for anybody who has a brain to read it to understand how it works. It will be interesting to see how many of the unlicensed traders become registered.

Last night my colleagues in National asked why this legislation needs a review within 2 years. This is one of the reasons it will need a review within 2 years. Currently, to be a licensed motor vehicle dealer requires a substantial investment of capital. Therefore, dealers are very aware that if their licence is taken from them, then they will not have the ability to trade, whereas under the new regime it will cost very little to get a licence. Therefore, an unscrupulous trader, when he or she does get prosecuted and loses his or her licence to trade, will not have lost anywhere near as much. But, likewise, United Future also believes that enterprise is well capable of looking after itself.

I believe that what we will find over this 2-year period is that the good dealers will again group together. They will make sure that there are the criteria of a code of ethics for the people who are within their group as they buy and sell motor vehicles. In 2 years’ time we will find again that there is a massive gap between the genuine motor vehicle dealer and those who have just taken a licence because it has been cheap to get. We will find going through the disputes tribunal a massive difference in the quality.

I also notice in the legislation that there is the ability to charge different levies to different types of dealers. That is very wise, because those who are continually in the tribunal will be able to be levied at a higher rate, and those who are not, at a lesser rate. That is great. United Future is pleased to support this legislation. I really hope that all those who are dealing illegally in motor vehicles take this good opportunity that has been given to them to register, to clean up their act, to operate within the laws of the nation, and to keep up the great reputation that the motor vehicle dealer industry has.

It is interesting that this bill is described as something that will protect consumers. I see that the National and ACT members of the select committee, which I was not a part of, made the comment that the registrar should have the power to require audits of motor vehicle traders, especially when he or she believes that a motor vehicle trader may be insolvent. It could stop an insolvent trader carrying on business, losing more and more for his or her creditors. When that was rejected, it was one of the things that could have protected consumers. Government members rejected that recommendation. That would have been a way in which they could have been protected. Currently, this legislation has virtually no teeth.

I turn to clause 29. It is here that we are first introducing the reference in the Supplementary Order Paper to section 130A, which relates to somebody applying for registration as a motor vehicle trader or he or she has to pay this levy. Nothing in section 130A says that if one trader is taken to the disputes tribunal more often than another trader, the levy will go up or down commensurately with how good or bad a trader he or she is. It prescribes different levies for different classes of motor vehicle traders, not for different levels of integrity of motor vehicle traders.

I come back to my point that it is absolutely despicable that this Government—and it should be ashamed of itself—is passing yet more taxes for businesses out there. Why does it keep singling out the poor old motorists, and whacking them every time? We have had petrol tax go up, and road-user charges go up. We have had accident compensation levies go up, and licensing costs go up. The member from United Future talked about a level playing field. What is “level playing field” about socking it to the poor old motorist or the car dealer? It is easy to sock car dealers because everybody holds them in contempt anyway—or that is what this elitist, spa-pool, neo-socialist Government thinks.

The other point about this Supplementary Order Paper is the fact that it is being sneaked through. It never went to a select committee; motor vehicle dealers were never given a chance to have their input. They are writing back to me, and I got another letter this morning that said: “Thank you for your advice regarding Ms Tizard’s clever little stab in our sides. Nothing the Labour Government does, surprises me any more. Their electorate seems to be lower-income people and beneficiaries, so the only way to keep themselves in office is to tax their perceived rich taxpayers to keep the poorer voters happy. As a motor vehicle importer and retailer, I feel we have had enough. The cost of compliance in order to bring a vehicle into the country has risen dramatically over the last 4 years. I wish you well fighting this tax. Your yells will no doubt fall on deaf ears, because the ones that vote these wankers into power have an insatiable appetite for taxpayer money, and they have got to get it from somewhere.” It is a matter of tax and spend, and I come back to the latest OECD report—

The CHAIRPERSON (Ann Hartley): The member used an unparliamentary term. Would she please withdraw.

Yes, I withdraw and apologise. But, to help me, can you tell me what that was?

The CHAIRPERSON (Ann Hartley): The member is well aware of what was said. Please continue.

I come back to what taxing and spending does. The latest OECD survey shows that the average tax bill for the average worker with a spouse and two children in New Zealand, makes that worker the second-worst-off in the world—in just one place above the Czech Republic. That is shameful, and this new tax on motor vehicle dealers will put us, probably, below the Czech Republic. The average working couple now is $1,400 worse off a year, in real terms. I say to this Government that that is shameful, and I say to United Future that if it would support my Supplementary Order Paper, which deletes this reference to section 130A from this bill, then we would be left with legislation that vehicle dealers do want, and that would clean up the system a bit for them. I think it is far too regulatory and singles them out for issues like: why have a disputes tribunal anyway for motor vehicle dealers when they can go through the ordinary courts?

The question was put that the amendments set out on Supplementary Order Paper 30 in the name of the Hon Judith Tizard to Part 3 be agreed to.

It gives me some pleasure to be speaking on Part 4. In particular, late last night at about 20 to 12, I was raising questions relating to the issue of tampering with odometers. I raised the question in the Committee: if one was a banned person or a person who tampered with odometers—so what? What would happen under Part 2 to that person if those offences occurred? Part 4 contains some of those provisions that relate to enforcement. It is worth making the point that I personally do not think that this way of drafting legislation is satisfactory, at all, whereby there is an offending provision in one part of the bill, and an enforcement provision further on. There is not even the actual penalty on conviction in the same part as the section that dealt with creating the offence. So, in fact, there are three sections that relate to the prohibition on tampering with odometers.

Then one must go to clause 89 for the creation of the offence of tampering with the odometer, but to find out what happens to an offender if it is an offence—before anybody who infringes those sections knows what the penalty is—one must go to clause 106. So first of all we are told, in clause 13, that a person must not tamper with a vehicle’s odometer, then we are told, at clause 89, that it is an offence to tamper with an odometer—well, what is the difference between being told one must not tamper with an odometer in clause 13, and being told in clause 89 that it is an offence to tamper with an odometer—but we do not even know what the penalty for tampering with an odometer is until we get to clause 106.

I say that that type of drafting is sloppy, at best. There should be one clause that states that it is an offence to tamper with an odometer, and here is what happens if one offends that provision—one would be jailed or fined. It should all be in one tidy clause. Looking through this document during the course of last night and early this morning, I have to say that it is pretty sloppy stuff, in my view.

Again, I raise the point that has been raised by other members during the course of this debate: if this legislation is so necessary, so tight, and so well drafted, why does it have a 2-year review clause in it? Why does it have a sunset clause? It is sloppy lawmaking. There are three different clauses all relating to the one offence, and we have a review at the end of 2 years. I say that it is just not good enough for this Parliament to be producing legislation that is set out and configured in such a difficult way to follow. This Parliament should be about providing clear and concise laws for the people of New Zealand, with the old “plain English” approach to legal interpretation. In this bill we have some sloppy work, with three different clauses relating to one issue of interference with odometers, and, if we are not worried about that, then we will just review the whole thing after 2 years! The Government should be thinking seriously about the processes being followed when that type of drafting is becoming the norm.

Turning to a specific point in Part 4, I read that now the District Court is to consider whether a person is fit and proper to participate in a business of motor vehicle sales, and I note at clause 65(2) that every application to a District Court must be by way of an originating application. That actually means one has to pay court filing fees, and have supporting affidavits and originating applications. That will become a costly business. I would be interested in hearing from the Minister about whether the costs incurred by an originating application in a District Court differ from the current costs to gain a motor vehicle dealer’s licence, if so, by how much, and what her estimate is for whether that is necessarily a good or bad thing.

One further point has come to my attention, on which I want to wind up my short contribution to Part 4: what happens to those cases currently before the fidelity fund? That is a very interesting question, and I think it is worth asking the Minister—

💬 Peter Brown: There is a transitional—

I am sure there is a transitional clause.

I would like to outline a set of circumstances that I believe do, from time to time, occur in this country with regard to imported, second-hand cars. I would appreciate the Minister taking a call to explain whether I am correct in the first instance, and, if I am correct, what this bill will do about the matter.

As I understand it some importers go to Japan and buy an allocation of cars in a block, and the Japanese dealer says: “If you take this amount of cars, we’ll give you these cars for free.” They are the lower-level cars that, in normal circumstances, the dealer would have to dispose of, at some cost. So he would be keen enough to give them away, if the New Zealand importer is prepared to buy a certain lot of what I call “acceptable” cars. These lower-level cars are known, I believe, as “sewer” cars, because they are about to be dispensed with. They come into this country, and I am of the understanding, over past years, that quite frequently they have their odometers “clocked” or wound back, and are sold to unsuspecting members of the public.

We have to remember that the New Zealand dealer does not have any equity in these cars; he is selling a car, in the circumstances I have illustrated, that he has not bought but has been given, and he has “clocked” or wound back the odometer. I want to know how the rules in Part 4 will be imposed in respect of that band of motor vehicle dealers who are not toeing the line. New Zealand First was not on the Commerce Committee, and I have read this bill to try to find the answer. Now, I would appreciate the Minister taking a call and answering that question. I believe that practice has occurred, and I have no reason to believe that it is not occurring right now.

The honourable member from United Future earlier spoke of all motor vehicle dealers being people of integrity, but I notice this morning he has moved somewhat from that view. He said this bill will open the door to anybody to enter the trade. That possibility is a major concern to New Zealand First. If that happens, and this bill opens the door to anybody, then somebody will pay the price, financially or possibly with an unsafe car. I do not want to extend my statement any further than is necessary, but I would appreciate the Minister addressing that question. If she does not know the answer, I respectfully suggest she speak to her colleague the Hon Harry Duynhoven, because he can verify that what I am saying has occurred. He has immense knowledge of the motor vehicle industry. Indeed, when he spoke last night he was the first Government member, with due respect to Paul Adams, who threw some sensible light on what this bill is all about. He has made New Zealand First rethink this bill, to some limited degree. We say that it is flawed, and we say that the issue I have just illustrated indicates there is a major flaw, because it will not address this issue. If the Minister cannot see her way clear to talk to the Hon Harry Duynhoven, perhaps she would talk to the officials sitting behind her and then give us a genuine answer to that concern.

The speedometer issue comes up regularly in our conversations on this bill, but can I assure the Committee that “clocking” is a used-car problem, not an imported-car problem. Throughout history, people have realised that the lower the mileage is, the higher the price of the vehicle. The fact that a car has been registered “new” in New Zealand does not necessarily mean that that car has an accurate speedometer. I remember in the early days trading Falcons and finding holes behind the ashtray, because people would turn off the electronic speedo when they were going on a trip. So let us get the facts right: the altering of mileage is a used-car problem, not necessarily an imported-car problem.

This enforcement clause has been of great concern to United Future, and I have appreciated the efforts of Judith Tizard and the officials as we have worked to close that major loophole in the used-car industry. However, because that issue crosses a couple of bills, we have not been able to do that in the time allowed, so I look forward in this 2-year period to working to close that gap. We talk about levies being a cost to dealers, but unlicensed trading is also a huge cost to dealers. United Future has been concerned—just as the industry has been concerned—about the huge hole between when a car is cleared by the Customs Service as it comes across the wharf, to when it enters the Land Transport Safety Authority registration system. Under existing regulations, there is no requirement that one has to be a licensed motor vehicle dealer to import cars from overseas. The only criterion is that those cars must be sold to a licensed motor vehicle dealer. They cannot be sold direct to the public, unless the seller is licensed. Of course, that regulation is blatantly ignored. The people who import cars into the country have their money invested in those cars; they cannot sell them to a dealer for one reason or another, and they blatantly sell them through car fairs, auctions, or whatever. United Future would like to see the regulations amended so that only licensed motor vehicle dealers can import cars into the country and hold them until they comply with an MR2A—in other words, until they are identified from the Customs Service to the Land Transport Safety Authority.

We would not be opposed to people bringing in cars for their own private use—that is obvious in the market we are in—but we would insist that if a vehicle were imported by a private person, that person would have to register the vehicle in the name of the person who imported it, at the time that the vehicle went through the compliance process. If that regulation were brought in, it would close a huge loophole that is costing the Government millions of dollars in money not collected through GST from those unlicensed traders. It would create a nice link between the Customs Service and the Land Transport Safety Authority, and it would tidy up a lot of the concerns that people have been dealing with.

My second point deals with the sale price of cars, and the cost that those levies will impose. Surprisingly enough, in a free-trade environment such as we have, car dealers do not set the price they sell their used cars at. The public sets the price. If we try to get too much for a car, it will not sell. In a competitive industry such as we are in, we learn very quickly what price the public will pay for a certain make and model. Our overheads or costs have absolutely nothing to do with the sale price of the motor vehicle. As regulations come in, which the industry does welcome, a segment of traders will stand out above the others. I welcome that, because the public are not silly. They will soon realise where they can buy a car in safety, or where they can buy a car that might be cheaper but has a huge risk attached to it. That is the same for anything we buy and sell.

I look forward to this bill being passed. As I have said, United Future is supportive of it.

I am going to say something positive about Part 4—the enforcement part of the bill.

💬 Hon Member: That is a change.

No, I have not changed; I am often positive about things. I am positive about this list of banned persons. It is a good idea to have a list of banned persons to be kept by the registrar. This part of the bill has been very well-thought-out and carefully drafted. The list will be electronic, it will comply with the Privacy Act, and it will not breach the New Zealand Bill of Rights Act. Hopefully, this part of the legislation will set a precedent in respect of people who prey on vulnerable members of the public. The public will be able to access the list on the register, see the history of those people, see whether they are legitimate car dealers, and armed with that information, make up their own minds about what they want to do.

So I congratulate the Minister on having this provision in the bill, but I would ask her to take a call and explain what happens—because the Crown can be exempted from some of the clauses in this bill—when a dealer is banned from trading in vehicles and the Customs Service has seized imported cars. Contrary to Paul Adams’ statement that “clocking” is not an imported-car problem, it is an imported-car problem. If it is not, why is the Customs Service still seizing up to 1,000 cars a year because it suspects that the odometers have been tampered with? Those are cars coming across the wharf. When I last went to school, that meant they were imported. Now the Customs Service sells those cars and takes the money, and the importer does not get anything back. What happens to that importer? I presume the importer is listed on that list of dodgy dealers. The cars are seized because they are suspected of being unsafe, so we would expect that they would then be broken up and sold for parts, or that the importer would be ordered to cover the cost of sending them back to the country from which they came. But that is not actually what happens—they do get passed on to the unsuspecting public. The first time they are passed on, it will be with a history of possibly having a “clocked” odometer, but that is as far as it goes. The Crown passes on liability to the first dealer, who takes those cars after the Crown has seized them. It exempts itself from any liability that might arise when some unsuspecting person buys a car as the second or third purchaser and finds it has done a lot more mileage than he or she suspected.

I would like to query something else. Two-thirds of car sales in this country do not go through dealers. Under this bill, an individual is entitled to sell up to six cars a year before having to be registered. Does that mean that a family of six could sell 30 cars a year without being registered as a dealer?

💬 Paul Adams: Not if they make a profit.

How do we prove that? They are not registered, so we will not know what they are doing. How do we know whether they are making a profit? Those are two things that I call on the Minister to answer.

As I said, I congratulate her on the banned persons list. I think it is a good idea. Hopefully, it is a precedent for other lists that might come before this House, of people who should not be trusted in respect of the vulnerable public—especially those who are under age. I ask her to answer those two questions about what happens when the Customs Service passes on the cars to the public, and how we tell whether unlicensed traders who can sell up to six cars a year are making a profit?

The question was put that the following amendment and the amendments set out on Supplementary Order Paper 30 in the name of Hon Judith Tizard to Part 4 be agreed to:

to omit from subclause 4(b) of clause 65 the words “period of”.