Motor Vehicle Sales Bill

I move, That the Motor Vehicle Sales Bill be now read a third time. This bill introduces a new regime for motor vehicle trading and replaces the Motor Vehicle Dealers Act of 1975. Many things have changed since 1975. This bill has been widely welcomed, and extremely widely consulted on with motor vehicle dealers and people interested in the trade. This legislation protects and promotes the interests of consumers. It creates a new registration regime for persons involved in the business of motor vehicle trading, and allows for the removal of unsuitable participants from the trade. It revamps the Motor Vehicle Disputes Tribunal, provides for car information through a revised window card, and provides for much stronger enforcement, which will be undertaken by the enforcement team at the Ministry of Economic Development.

The Commerce Committee has scrutinised this bill and recommended a number of changes to improve the workings of the bill. Most notable have been the changes to improve the operation of the Motor Vehicle Disputes Tribunal, and the strengthening of the banning provisions. I have introduced a Supplementary Order Paper that has made technical changes to the bill, including making provision for a levy to pay for the Motor Vehicle Disputes Tribunal in part. Those changes include new clauses 18A and 18B, which create a duty on motor vehicle traders who sell a vehicle on behalf of someone to account for the proceeds of the sale. The Supplementary Order Paper also clarifies the regulation-making powers, enabling a levy to provide additional funding for the Motor Vehicle Disputes Tribunal. The tribunal benefits traders as well as consumers, and it is unquestionable that all parties should contribute to its running. I am also very grateful for the full support for that levy that I have had from the Motor Vehicle Dealers Institute and the Motor Trade Association following the extensive consultation on this matter, starting with the discussion paper in 2001.

I thank all of those who have contributed to this legislation—the people in the organisations who made submissions, the members of the select committee, and in particular the former chair, David Cunliffe, who carefully considered the bill and recommended changes to fine tune it. I acknowledge my predecessor Laila Harré, who introduced this legislation, and all members of the House, particularly Paul Adams from United Future New Zealand who has contributed in an extremely positive and energetic way on behalf of the interests of car dealers, but I acknowledge him much more for his concern for consumers, for whom a car is often a very major purchase. I commend this bill to the House.

We are deep into the second day of urgency, and about to pass the Motor Vehicle Sales Bill that is urgently needed by the industry. That industry has been waiting 4 years for this bill, but here we are today, finally and urgently passing it.

💬 John Carter: After 4 years

After 4 years, the Minister, Harry Duynhoven, has finally got around to getting the bill to the House. I suppose I should start by congratulating him on such a fine display of the work ethic.

This bill is also interesting, because it is a step to the right for the Labour Government. Essentially, the bill removes some compliance and a lot of regulation, gets rid of a whole lot of red tape, and simplifies the way in which motor vehicle dealers are able to operate. That is good, and that is why we are supporting it. But as is always the case with the Labour Government, it is one step to the right and then a quick shuffle back to the left. At the last minute, after 4 years of consideration—4 long years of wondering whether this bill would be passed, and then finally deciding to do it urgently—we find that a Supplementary Order Paper has been dropped on the table.

💬 John Carter: What is wrong with that?

Members might ask what is wrong with that. In fact, we have just discovered that on page 5 of the Supplementary Order Paper, under new clause 130A, the Labour Government is introducing a sales tax. This is the Labour Government that said “No new taxes.”—unless one earns a lot of money. The Minister of Transport is sneaking in a sales tax in the guise of a levy. New clause 130A states: “Regulations may impose levy”. When we are trying to simplify the process for motor vehicle salespeople, and when the House is trying to recognise the way in which cars are bought and sold in this country nowadays, one would have to ask why there is to be a sales tax on vehicles that commercial traders sell. That is quite alarming for us, and it would have been nice if we could have had an answer from the Minister during the Committee stage about why that is necessary.

It appears that the Minister is still thinking about how big that sales tax will be. The legislation provides that the Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations prescribing different levies for different classes of motor vehicle traders. So we will have a truck sales tax, a tractor sales tax, a four-wheel drive sales tax, a people-carriers sales tax—all those seven-seater vehicles that mums throughout the country buy, in order to take the kids from schools to all those events around the countryside that they need to get to. I would like the Minister to tell us how much consultation he had with Paul Adams from United Future. I understand that that particular gentleman knows a little bit about selling motorcars, as well as driving them.

Hundreds of emails have come in in the last couple of hours complaining about that levy. It is not at all fair that after 4 years of consultation with the industry, suddenly there is an urgent decision to pass the bill to get a bit more tax from honest traders in this country. It is quite ridiculous. We are told that the Minister did not consult the industry, and that the industry did not know the levy was coming. It was simply a backhanded way of stealthily applying a little more tax burden on the community.

As we have said, there are one or two good things in the bill. It deals with the activities of people who line cars up and down the sides of various motorways on the weekends, and parade them as a car fair. In essence, that is an entrepreneurial activity, and this country does not need to impinge in any way on the activities of those who act in an entrepreneurial spirit. I want to know whether the Minister will now go to the Minister of Finance to seek an appropriation so that he can have car-fair police out there every weekend applying the new levy to New Zealanders who decide to sell their cars privately. If the levy applies only to licensed motor vehicle dealers—or whatever they will be described as, as a result of the passing of this legislation—then surely that is another business-unfriendly attack by this Government on honest traders.

There is, of course, a controversial element in the bill, and that is the removal of the fidelity guarantee fund. The fund did cost a lot of money, and was added into the cost of every car. The Minister might be able to say that the levy will not alter the cost of buying a motor car on the lot, but that is only because the levy will be offset by what the car dealer used to have to pay into the fidelity guarantee fund. The difference now is that it is the Minister who collects the money, and the poor old consumer is left without the protection the fidelity guarantee fund once gave. There are some good reasons for that. Car prices have fallen considerably in the last few years. The value of the vehicle fleet these days, although greatly expanded, is on average a little less than it used to be. Of course, the vehicles being sold these days are so much more reliable. I remember that the first car I bought was 20 years old, and compared to other cars on the road, it looked well out of date. These days, a person could not buy a 20-year-old car, because they are simply not on the roads. More likely, he or she would be buying a 10-year-old car, and that car would still look reasonably stylish and up to the minute.

We cannot underestimate the effect that this stealth tax will have on the industry. We cannot underestimate the cost it will put upon those people who are buying cars. We should be sounding that caution, because although we are supporting this bill, we have concerns about that. We are pleased to see that there will be a registrar of operators that will cover a much wider group, including auctioneers, fairs, and Internet car sales. The question that goes unanswered is whether those sorts of individual traders will be stuck with the new sales tax that the Government has introduced today.

On behalf of the industry, we welcome this new legislation. It is interesting hearing some of my colleagues speaking, and I hope that I do not develop the art of taking something that is really so simple and making it so incredibly complex. If one sits in this place for long enough, I guess it is an art that one develops very quickly, and some members seem to be absolutely expert at it. That is very strange to me, because in the motor industry we try to keep things simple.

Once this legislation is passed, I can see that cars sold on the side of the road will possibly be a problem for councils. The bill removes the criterion of having to have a site from which to sell one’s vehicles. To an extent, we welcome that, because, as we have heard, the Internet is a good avenue for selling all products, not just cars. If a large number of new traders do not have premises, or anywhere to display their cars—because to sell something, one does have to display it—it will have to be seen whether they feed them through car fairs or go through auction houses. However, I am concerned that the councils will be dealing with a large problem of cars on the side of the road and in public places with “For Sale” notices on them.

The industry welcomes this legislation. As I have said previously, our concern is that the standard and entry level for being a licensed motor vehicle dealer has been lowered substantially. It is now very easy to become a dealer—as long as that dealer does not have a police record, or any bad marks against him or her by already being in the industry. The industry has had to put up with policing its own regulations. As with any law, this law will only be as effective as the policing of it. My concern—and that of most other dealers—is that it be policed correctly, otherwise we will find ourselves competing against far more traders who are perhaps a little unscrupulous in conforming to the standards that the industry is setting for itself. Who will police that?

We talk about a levy on dealers to pay for this tribunal, but look at the levy that the dealers themselves have had to pay under the current regime to police unlicensed dealing. It has cost the industry absolutely thousands and thousands of dollars. The industry has worked very hard, and I commend those who have been policing that unlicensed dealing, but let us hope that it does not happen under this legislation, because self-policing an industry is something that we do not want to do. If we have to pay a small levy for a tribunal and everything gets sorted out correctly—that is, everybody who is a licensed trader operates under the rules or is dealt with accordingly—then this legislation will work, and work well.

I know that we will see two standards of dealers in the days that lie ahead. We will definitely see dealers networking together and working with integrity, a good code of ethics, and looking after their customers. But sadly, I think that we will see a lower level of dealer operating. Those dealers might be cheaper, but it is the same old story—one always gets what one pays for.

United Future is pleased that we have been able to get this legislation through under urgency. I know that it will be well received by current motor vehicle dealers, and that they will thank us for it.

I have to express real concern about much of that member’s speech. The Minister complimented him on his advocacy of the motor vehicle dealers industry, and he referred to two standards of dealers. He recognised that the threshold will become lower, and that more unscrupulous dealers will come into the market, but the purpose of this bill is to promote and protect the interests of consumers in relation to motor vehicle sales. What has United Future done for them? Nothing.

New Zealand First supports the intent of this bill, but we could support little more than the title. At one point, we supported only the title, until the Hon Harry Duynhoven at least gave reasonable explanations of some of the content of the bill, and tied together some of the thought processes that went into it. The bill is not well set out. One part refers to odometer tampering, but the penalties associated with that are somewhere else. Unless one scrutinises the whole bill, one misses them quite easily, because there are no cross-references. That is not the way to pass legislation. Only one speech from a Government member carried any merit and weight at all, and that was from the Hon Harry Duynhoven. The Minister made one short call towards the end and added more confusion than clarification to the whole debate. Very few people spoke in defence of the bill. Even the National Party, which is supporting the bill, spent most of its time ripping it apart.

This bill misses the mark by a long way. The legislation will open the door for the public to be ripped off by whoever wants to call himself a motor vehicle dealer. In many cases, it will be a case of buyer be very, very aware. I put a scenario to the Minister, and she refused to answer it. I think that Mr Duynhoven will take a call shortly, and perhaps he will answer it. I understand that some importers go to Japan to buy an allocation—a block—of first-rate cars, and they are given second-grade cars, which are known, I understand, as “sewer cars”. They are virtually given away. Far too frequently the odometers of those “sewer cars” are wound back, and they are sold to the unsuspecting public in this country. Because Harry Duynhoven is an expert in vehicles and vehicle sales matters, I would appreciate him telling me whether I am correct in my assertions, whether this bill will address that issue, and how.

As I said, we wanted to support the intent of this bill, but we believe that it has missed the mark considerably. The question that comes to our minds is: does the public need protection from motor vehicle dealers from time to time, if at all? The answer to that question is generally yes, because a car is the second-largest expense that most people incur.

💬 David Benson-Pope: The member should be supporting the bill.

The member says I should be supporting the bill, but this bill does not protect consumers. You have heard Paul Adams—

💬 Mr SPEAKER: I have not heard it.

Oh, you missed a good speech.

💬 Mr SPEAKER: Yes, I know, but it is a Standing Order.

Mr Adams has been a very good advocate for motor vehicle traders, but he has said nothing in favour of consumers. If we believe that the public needs protection, does this bill deliver that protection? No, it does not. It will allow unscrupulous people to enter the industry, and somebody will suffer either financially, or by buying a car that is less than safe. They might even pay for it with their lives. When the Government reviews this legislation in 2 years’ time, I hope Mr Paul Adams takes a close look at what has happened in that 2 years, because he has been a firm advocate for the motor vehicle industry.

I believe that this bill will, to some extent, result in fewer safe cars coming on to our roads. Will greater numbers of the public pay more than is fair and reasonable for a car as a result of this legislation? I believe they will. Is that compatible with the purpose of this bill? The answer must be no. New Zealand First was not represented on the Commerce Committee, but we approached this bill with an open mind. We believe it to be flawed, and therefore we will not be supporting it.

I want to comment on a few things that have been said during the course of this bill’s passage, and the first thing I will comment on is Deborah Coddington, who accused me, of all people, of hating cars. Perhaps she does not know me very well yet. Cars have been my life-long interest, and I guess my wife is occasionally annoyed at the number of them that we have at home.

💬 Gerry Brownlee: That happens!

Yes, it is called an addiction. My interest has always been with the buyers—the consumers. There is clearly not an even playing field between buyer and seller. I really became interested in this issue when New Plymouth Women’s Refuge was ripped off, defrauded, and cheated by Saevue Autos in New Plymouth, a company that operated in a way that led everyone to believe it was extremely trustworthy, and very sadly it was not.

The Motor Vehicle Disputes Tribunal, which, for the benefit of Mr Key who spoke about it earlier, but clearly has never been to a dispute, and admitted such, recognised that that vehicle had been “clocked”, and that that was a considerable cost to the women’s refuge. The issue is whether people could have faith in the Motor Vehicle Dealers Institute, and the conflict that the institute found itself in, when those importing cars and wanting to make a quick buck by clocking them began to get more and more control of the Motor Vehicle Dealers Institute. The vast number of dealers in this country were appalled at what happened over the running of the Motor Vehicle Dealers Institute in recent years. Honest dealers tried very hard not to be members of that compulsory organisation and not pay the levies.

Mr Prebble commented on the levies and this new $127 levy to fund the disputes tribunal. He ranted about the new levy. I tell him that currently the licence fee, just to belong to the compulsory Motor Vehicle Dealers Institute, is $140. On top of that, there are various occasional amounts that have to be paid to the motor vehicle dealers levy fund. The last amount paid in February this year was $506, but it has been $675, an occasional $500, and so on.

I have probably been personally responsible for some of the reasons that that money had to be forked out, because of the court cases I have taken against crooks in the motor vehicle industry. I think I am the only member of Parliament ever to have taken a constituent through that process.

💬 Gerry Brownlee: What about the sales tax?

It would be very helpful if Mr Brownlee were to keep his mouth shut, and listen for a while.

💬 Mr SPEAKER: Some comment can be made, but that is out of order. The member will withdraw that comment and carry on with the debate.

I withdraw the comment. I tell Mr Brownlee that it might help him if he were to be quiet and to listen. The original motor vehicle dealers legislation set a dual responsibility for the Motor Vehicle Dealers Institute. The original 1975 Act was to make better provision for the licensing and disciplining of motor vehicle dealers and their staff, and to reform the law relating to contracts for the sale of motor vehicles by dealers—and here is the key point—in order to promote and protect the interests of consumers. The Motor Vehicle Dealers Institute was charged with the statutory duty of operating in the interests of consumers, and of disciplining dealers, but, at the same time, it was shanghaied and derailed into protecting the interests of motor vehicle dealers even when they were committing fraud.

One of the reasons that the levy from the fidelity fund has been so high in recent years is that, on some occasions, the Motor Vehicle Dealers Institute has applied to the licensing board to have a dealer struck off on the basis of evidence provided. In cases where the struck-off dealer has been smart enough to have all of his or her assets in trusts and everything else, the money cannot be clawed back, and the dealer has been able to avoid paying. It is then that the fidelity fund becomes responsible, and the lawyers in the Motor Vehicle Dealers Institute then object to the same evidence they used to take the licence in the court to try to avoid a payment being made from the fidelity fund. If members look at the expenses of the fidelity fund in recent years, I am sure they will find that most of the fund has been spent on legal fees.

The original Act had a very powerful section, which was section 42(3). Notwithstanding any other law, that section enabled a crooked dealer to be pursued. I am very pleased that this bill gives the registrar the right to strike off crooked dealers, and provides that there will be a review in 2 years to see whether this bill is working well. I am looking forward to that review. I am pleased to have played a part in this. I know I have not been terribly popular with my colleagues, but I can tell from the number of good, honest dealers who have come up to me, and said, “Harry, good on you for keeping on this, because these “clocked” cars are killing us.”, that they really appreciate the work that has been done to try to make this legislation work.

Finally, for the benefit of those who do not believe that “clocked” cars are still a problem, I suggest that they look at a Japanese website to see what the average mileage there is, and then compare that with the average mileage on cars at their local car yard. I think people will be amazed by the difference between those figures. We still seem to have a problem with the reduction of mileage in vehicles crossing the sea, particularly with regard to diesel vehicles. There are many good dealers, and I want to see them protected.

Debate interrupted.