Consumer Protection (Definitions ofGoods and Services) Bill

The National Party in Opposition has moved a number of amendments on the commencement date of this bill, and I would like to explain each of those amendments, which are in the name of the honourable John Carter.

One of the points that we intend to make during the process of this bill is that there is quite considerable concern in local government about the inclusion of water and waste-water provisions in it. Those concerns stem from a number of situations. Possibly the most important of them is that councils feel that they have not had sufficient time to prepare their operations for the passing of this bill. As officials advised the Commerce Committee, many councils supply water that is not of a saleable quality. The document I have here gives the exact phrase: “water has to be supplied of an acceptable quality”. We believe it is appropriate to give councils an opportunity to come to terms with the full ramifications of this legislation, and we have an amendment that proposes that. While the Government can get its way with the rest of the extension of goods and services, we would pull out water and waste water, and allow those to be brought into the bill at a later date by way of Order in Council. That would provide that Government and local government—in the sort of love-in partnership that they like to talk about—could equate this bill with the reality of the challenges that face councils that supply water. It would allow them sufficient time to do so before that “acceptable quality” issue really raises concerns for them.

We also have another couple of amendments that would move the start-date of this bill beyond the next election, because I am quite confident that the next National-led Government, which will be returned to office in 2005, will—

💬 David Benson-Pope: Even the Herald says you haven’t got a chance.

I do not take my directions from the New Zealand Labour Party Herald, thank you very much, or from the Television New Zealand Labour Party. But I know that when the National-led Government is back in power in 2005, we will have to remove those definitions that include water and waste water, because we think they are wrong. We have put forward these amendments for a number of reasons. We want to defer the start-date, so that the next Government can remove the ridiculous parts of this bill in time to avoid a huge consequence for consumers. We have put forward another amendment that would exclude water and waste water from the requirements of the Consumer Guarantees Act, the Commerce Act, and the Fair Trading Act.

While it is not particularly relevant to this debate on the commencement, there is a considerable concern amongst members on this side of the Chamber about the proposition that amendments are being made to these bills for the avoidance of doubt. Frankly, there is doubt, and the only way that the Government can claim that those matters are already covered by the bill is through the opinion of officials. That is not good enough, and we will be talking about that later on.

When we look at the costs to local government, we need to remember that we have an official document here that says that local government will have to spend $400 million over the next 5 years on water and waste-water services. That is an incredible cost per ratepayer. We are seeking information to try to equate that for each district in New Zealand, so that members opposite can be aware of what that cost will mean. Because of the confusion about what the cost will be for the Christchurch, Dunedin, and Palmerston North city councils, and other authorities, to bring their water up to an acceptable standard as required by the Consumer Guarantees Act, the Fair Trading Act, and the Commerce Act, we should defer the start of those provisions in this bill.

I urge the Committee to support the amendment in the name of Mr John Carter, because it just makes sense. There is considerable confusion. Even the Minister cannot take a call to explain what will happen with water, and that is why this action should be taken.

I want to take an opportunity to speak to this part because, as my friend and colleague the Hon Tony Ryall said, there are three amendments in my name. The first is to ask for the bill not to come into force until 1 January 2006. I ask the Minister to give this amendment serious consideration, because there are some issues of major concern in the bill, and those who are likely to be affected do need time to get a better understanding of it. It seems reasonable that the Minister could give some time for those people to get an understanding of, and therefore a feel for, where this bill will go and what impact it will have. So I say that the date the bill should come into force is 1 January 2006, and that means that when the Government changes at the next election we will be able to repeal this bill so that it will not have any impact, at all. That seems to make a whole lot of sense to me.

In the event that I just cannot persuade the Minister to accept that date, I have a fallback date of 1 July 2004. One should always have a back-up. The reason for that is that I know that the Minister in the chair, Judith Tizard, is a reasonable person. She considers very sensible—

💬 Hon Mark Burton: Can you write that one down?

Now I did not say that—it was not me who said that! This Minister considers serious amendments, and I am absolutely certain she will very likely allow this one to be accepted. Changing the date by 12 months, to 1 July 2004, will not make a significant difference. It is a genuine amendment to allow people at least 12 months to get their heads around what this measure means and what impact it will have.

As the Hon Tony Ryall has already told the Committee, there is the issue around the matter of water and waste water, and the very genuine concern that has been put forward by Local Government New Zealand. I wonder whether the Minister could take a call. In the last few minutes of my speech she may get some advice from the officials as to what communication they had with Local Government New Zealand on this matter. Did the officials fully understand the impact this would have on ratepayers across the country? I am not certain that that has been understood.

💬 Hon Tony Ryall: It could be $30 million in Dunedin alone.

Good grief, my colleague the Hon Tony Ryall is now telling me it could be as much as $30 million in Dunedin! Bless my soul—$30 million! I wonder what the member for Dunedin South, David Benson-Pope, thinks of imposing $30 million on the Dunedin City Council as a consequence of this bill. That is just the Dunedin City Council—just one city. I wonder whether the Minister in the chair has told that member that this bill could have an impact as great as $30 million on Dunedin City.

💬 Hon Tony Ryall: And $7 million in Southland district.

Well, let us just focus on Dunedin City. If it is going to be $30 million in one city alone, over a 3-year period—

💬 Hon Tony Ryall: Until 2005.

So it is basically 2 years. That is $15 million extra a year that the ratepayers will have to meet. This is to upgrade the water supply, one assumes, to meet the standards set in this legislation. We have to ask ourselves what is wrong with the water. How many people in Dunedin are dying every day because they drink Dunedin water? I know it does strange things to one or two people who live down there, if we have a look at the member, but the point is that if this bill imposes that sort of cost on the people of Dunedin, they have a right to know.

If this bill is passed tonight, at least it is not unreasonable to allow my amendment. At least the people of Dunedin can then be advised of it, plan for it, and put it into their accounts, because this bill will have a significant impact on each of them individually as ratepayers. Maybe the Minister will take a call and explain to me why it is not going to happen like that. I would be pleased to hear. We would probably think it was OK if there were a rational reason for it. If I have it wrong, I would like the Minister to take a call and tell me I am wrong.

I thank members for their intense interest in this bill. It is interesting that the Commerce Committee received 22 submissions on it. I understand that 10 requested to be heard. These matters—particularly the one raised by John Carter—were dealt with at some length in the select committee. I think most New Zealanders have got to the point where we are all a bit impatient about local authorities and private water suppliers who are not meeting reasonable standards. I think many have been dragging their heels for many years. I personally remember Consumer magazine many years ago pointing out that local authorities around New Zealand had very variable standards. New Zealanders are entitled to see the intent of the Consumer Guarantees Act that was passed in 1993. That Act was intended to cover all goods and services ordinarily supplied in trade to domestic consumers in New Zealand. A number of areas have been disputed through the courts.

The effect of this bill is to clarify those definitions of goods and services that are covered by the Consumer Guarantees Act, the Fair Trading Act, the Commerce Act, and, in one or two cases, the Sale of Goods Act. I think it is very important that water and waste water are included. I understand that one of the very good reports the select committee heard was from the Ministry of Health. That report informed the committee that the ministry was preparing a Health (Drinking Water) Amendment Bill for introduction to the House. The ministry saw the bill that is before us today as compatible with that bill. That bill would provide a 5-year phase-in period for suppliers to comply with the requirements to introduce public health risk management plans and to take all practicable steps to comply with the drinking water standards. I do not think that is an unreasonable requirement. I think that New Zealanders are sick of the fact that a few local authorities have failed to take good steps. All reasonable people understand that acts of God, accidents, or incidents will happen that will affect the quality of drinking water. The courts have, indeed, found that the demands of one or two for a particular standard of drinking water for a particular purpose will not be enforceable. It is an obligation on those people to do their own water treatment.

So I am very happy with the work of the select committee. It was thorough and it looked at all the issues in the bill before us, the Consumer Protection (Definitions of Goods and Services) Bill. It is a good bill that amends four Acts to make them work alongside each other. It clarifies issues that a variety of court cases have raised. Some of them excluded some goods and services and others included some of them. This will be an excellent consumer protection measure. It is a well-named bill and it is a well-examined bill. It should be passed promptly.

I concur with my colleagues: we do need to delay the commencement date of this bill. There are some serious questions that need to be answered here.

One of the glaring omissions in this bill is a compliance cost report—there is not one. Absolutely no assessment has been done of what this will mean to the average ratepayer, let alone the consumer. When there is a substantial submission from a body like Local Government New Zealand, we do need to take some heed of that. That body is majorly concerned about the impact, and this bill should be delayed until all the questions asked by Local Government New Zealand have been answered. It has asked a huge number of questions and it has not had an answer. How could it possibly get an answer when the Government cannot even include a compliance cost report in its presentation of a bill? I thought that was mandatory; maybe I am wrong.

This is not necessarily about standards, but the question of water standards has failed to be defined. A local authority has a range of different standards going from (a) to (e). In a rural area it is possible to accept a rural water supply that does not actually meet a potable water standard. The local body does not have to meet a particular standard. However, if the community accepts a rural water supply for animal consumption and one consumer says, “I’m sorry, that is not acceptable”, then that one consumer gets the opportunity to hold the rest of that community to ransom. Not only that, but section 11 of the Consumer Guarantees Act states that if a consumer deems the cost of that water to be unreasonable, he or she can refuse to pay. Where will that leave a local authority, when it has a responsibility to the community as a whole? Its contract is with the community as a whole. The question has not been answered about which Act will prevail in that situation—the Rating Powers Act or the Consumer Guarantees Act. That question has not been answered by the Minister in the chair, Judith Tizard, and I think it would be good for her to answer some of the questions that have been raised by Local Government New Zealand. It is majorly concerned, and that is not the only question it has raised.

It has also looked at the costs that will be incurred as a result of this bill. I have here a paper provided by my learned colleague the Hon Tony Ryall, which states: “The cost of upgrading all of the water supplies in the country has been estimated at about $750 million.” We have gone from the $400 million identified in the Local Government submission—recognising that it was $30 million for the Dunedin water supply alone—and now we are looking at an estimated cost of $750 million. Upgrading a small water supply can cost upwards of $2 million if the supply is to meet the upper range of the standards, and depending on how a local authority is structured, that can be a huge burden on a small community, with the ones that suffer being those that are on a fixed rate.

Those are the very reasons that it should have been explored and a compliance cost report carried out. If a report was done, it should have assessed all those impacts and worked in conjunction with local government. That is one of the key reasons that the commencement date should be set way out into the future. A compliance cost report needs to be done. The Government should be working in tandem with Local Government New Zealand in assessing what this will mean to ratepayers, which Act will prevail—the Rating Powers Act or the Consumer Guarantees Act—and why the water and waste-water provision is not incorporated into the Local Government Act of 2002, which has recently been passed. In my view, it has been a failure on the part of the Government to adequately consult Local Government New Zealand on all those aspects and to answer its questions.

National initially supported this bill to go to the select committee—

💬 Hon Judith Tizard: National sneers and derides at local government.

We hold local government in high regard, and one of the reasons—

💬 Hon Judith Tizard: Ha!

Yes, we do. Absolutely. [Interruption]

I raise a point of order, Mr Chairperson. Will it be your practice to allow Ministers in the chair to use the microphone to make derogatory comments about members on their feet, and to question their intention and their integrity in the Committee?

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member. I had my hand on the microphone button.

I raise a point of order, Mr Chairperson. What about getting your hand off the button and on the pulse, because the Minister was extremely insulting to the National Party, and we would like a withdrawal and an apology.

The CHAIRPERSON (H V Ross Robertson): As far as I am concerned, there was an exchange between the two members, and it was robust debate. I did not take any offence at it.

I raise a point of order, Mr Chairperson. With all due respect to the Chair, it is the National Party that has taken offence. If members take offence, members’ words must be accepted, and I believe it is incumbent upon you as the Chairperson of the Committee to require the Minister to stand, withdraw, and apologise. Otherwise, where does decorum go?

The CHAIRPERSON (H V Ross Robertson): If the member has taken personal offence, I ask the member to withdraw.

I withdraw.

I raise a point of order, Mr Chairperson. I do take offence, because I hold local government in great regard and—

The CHAIRPERSON (H V Ross Robertson): I say to the member that under Speakers’ Rulings offence must be taken at once, not later.

I rise on behalf of the ACT party to consider the commencement date of the Consumer Protection (Definitions of Goods and Services) Bill. This is the bill that does what the drafters of the Consumer Guarantees Act deliberately decided not to do back in 1993: it overextends what might have been a good idea for a standard form of contract for consumer services, whereby consumers would have been able to shop around, into areas where, in effect, the service has to be universal. The introduction of this bill should be deferred because it will have so many unintended effects.

Although the Minister in the chair, the Hon Judith Tizard, may not be knitting today, I am quite sure that she cannot have paid much attention to this bill. She cannot have considered that there will be a host of unintended consequences when the bill commences, like that faced by the “People’s Republic of Christchurch” in its recycling scheme under the Consumer Guarantees Act. The Christchurch worthies set up a recycling scheme, which was running in very good order until someone found that, with the whiteware and other products that were being recycled with volunteer labour—and, indeed, the volunteers were eventually being paid for their labour—they fell foul of the so-called consumer protection laws. They could not satisfy the after-sales service requirement, they could not give a warranty as to merchantable quality, and even though people were perfectly prepared to take the risk of low quality in return for low price, they were not allowed, under that so-called consumer protection law, to contract out of the obligations that simply could not be satisfied by a recycling scheme.

I urge the Minister to take the National Party amendments seriously. She may consider that they are just intended to harass, or to reduce or defer the inevitable, but the inevitable might mean, for example, that the Minister could get a chance for local authorities to look at whether their ratepayers really do want to have a one-size-fits-all warranty slapped across the supply of water. Local authorities should have an opportunity to deal with what this bill requires—to go out to the consumers, and to give them a full description of the risks they face, so that the reasonable consumer will not be fronting up and claiming a guarantee, or an obligation on the part of the local authority, the electricity supplier, or the gas supplier, that is far more expensive to everyone than they would ever have dreamt of.

If this bill’s commencement were to be deferred it would allow the principal Act, the Consumer Guarantees Act, to operate in the way that has been contemplated, which would mean that the suppliers could go out and use some of the exceptions in the Act. For example, they could make a statement about the goods on any packaging or labelling, or a representation about the goods that would notify the consumer of any defects that may have been specifically drawn to their attention by the manufacturer. Is the Minister comfortable that local authorities and the other suppliers of those services have had an opportunity to consider those exceptions, given that this bill was introduced back in 2001, that it sat waiting as a slogan all that time, that it had a pathetic consideration by a very weak select committee, to which the smartest and brightest members were too busy to turn up, and that there is no urgency—

💬 Hon Harry Duynhoven: Who are the smartest and brightest?

Obviously, the Hon Richard Prebble. He was too busy to turn up.

The select committee has not properly grappled with the issues that were raised in submissions. If this bill were to be deferred long enough for the people who will become subject to it—and for those who, in turn, will get the cost of an overreach in the guarantee—to go through and make sure that all their standard-form contracts, labelling, warnings, and defect descriptions were in order, there would be advantage to everyone.

I move, That the question be now put.

Although I would like to say that this bill should never commence, that it should have no commencement date, I accept that the Government is hell-bent on driving it through this Committee. I want to know why Tim Barnett, Ruth Dyson, Lianne Dalziel, and Clayton Cosgrove are going to vote for such a patently anti-Christchurch bill.

💬 Hon Judith Tizard: Oh!

The Minister shrugs her Auckland shoulders in a sort of mock profanity, but the truth is that, coming from Auckland, she has no idea what exists south of Wellington. She is a unique Aucklander because she gets down to Wellington on a regular basis, although it is not as regular as some might expect. As the previous speaker pointed out, we have a bill here that will absolutely destroy the recycling programme in Christchurch. Countries all over the world have problems with the disposal of whiteware. A programme was put together in Christchurch that will enable those who are less well off to have a fridge that might last an extra 6, 8, 12, or maybe even 24 months, but, no, that programme has been scuttled, sent off to the landfill, because of a bill like this.

As I said before, there is also the issue of water. This bill will cost the Christchurch City Council—and, at the end of the day, that is every ratepayer in Christchurch—$5.241 million to comply. What does the council have to do to comply? It has to supply to the community water that meets or surpasses New Zealand drinking-water standards. On the face of it, everyone would say that is a good idea, a wonderful idea, but in order to meet New Zealand drinking-water standards, the Christchurch City Council would need to tip into the water supply large quantities of chemicals designed to take out all sorts of nasties that do not exist in Christchurch water. That is why I will not support this commencement date. A group of Auckland MPs have decided that they want to lower Christchurch drinking-water standards to the same level as their own.

💬 Stephen Franks: They wouldn’t even drink tap water.

There we are! My colleague Stephen Franks has announced that Aucklanders do not drink tap water.

💬 Hon Judith Tizard: They do; all the time. I do.

That may explain a lot. The Minister says she drinks Auckland tap water—there is a perfect out. I do not want to get into slagging off various other communities, but I do want to make the point that Christchurch has the best drinking water of any city or any province in the country. Marc Alexander, the United Future member, nods to that, but he will vote for this bill, which requires the Christchurch City Council, at an expense of some $5.241 million, to tip additional chemicals into our water. Why should anybody who comes from the city of Christchurch be expected to support this commencement date? I do not think there is any reason whatsoever to do that.

I am happy about the waste-water provisions in this bill, and I am happy about a number of the other consumer protections that exist in this bill. But it is the stupidity of including something like water; the stupidity of excluding State generators as manufacturers of electricity from any scrutiny; and the idiocy of taking out of the bill the telecommunications broadband around the country that also make it totally unacceptable to support the bill’s introduction on the date proposed. I would like the Minister to stand up and tell us whether the officials did any sort of analysis of water quality throughout the country. Were those New Zealand standards—which, incidentally, give Christchurch water a rating of B—well considered, at any time, by the officials?

I am very pleased to take a call on this bill. Although I was not here to take a call on the title, I will say that there could not be a title that was more in opposition to what this bill proposes to do. However, we are now debating the commencement date, and as my colleague said previously, National does not support the commencement date, and there are a number of reasons for that.

We supported the bill in its first and second reading, and we did so because we thought that the underlying intention of the bill was right. But now we have it here for its Committee stage, and presently for its third reading, and we have come to the conclusion that if the bill were to pass there would be too many unfavourable repercussions. The bill has a reasonable intention, but National thinks that the unintended consequences will be substantial, and we do not support the commencement date for that reason.

I make reference to the amendment that has been proposed by my colleague John Carter. There are three parts to it. The first puts the commencement date out to 1 January 2006, and the reason is that, first of all—[Interruption] Well, of course, we will be the Government by then, and we will repeal it. Underlying this debate is the concern that this bill does not protect the consumer, at all. Indeed, it will lead to increased compliance costs for the electricity and gas suppliers. Let us be honest—they are not going to absorb those costs. They will pass them on to the consumer, and that is why I said at the beginning of my speech that the title of this bill is so wrongly stated. There is no protection, at all, for the consumer.

My colleague John Carter has proposed that we change the commencement date to 1 January 2006.

💬 Hon Tony Ryall: That makes sense.

Of course it does. My colleague John Carter would not have proposed it if it did not make sense. It makes absolute sense. We have a situation where Dunedin is budgeting $30 million to upgrade its water to meet the quality required by this bill, and that is a huge amount of money.

💬 David Benson-Pope: It has been doing it for years.

It is a huge amount of money—and why should Dunedin be forced to do that when we could come up with a better result if we thought about what we are doing here a lot more carefully?

💬 David Benson-Pope: Dunedin wouldn’t have to do that if it hadn’t been made to sell its dam by the National Government.

Mr Chairman, is that member going to take a call, or is he just trying to close this debate down?

The CHAIRPERSON (H V Ross Robertson): He may do.

He may do, but my experience is that he never does, so I would appreciate it if he would let me have the rest of my say in peace. In any event, as I say, that is what Dunedin is budgeting for. Goodness knows what all the other local authorities will have to budget for this, but suffice it to say that if Dunedin is budgeting $30 million, then the major metropolitan areas will have to budget that same amount, if not more, and I do not think that is at all fair, when, ultimately, the cost of that will be passed on to the consumer. There was an issue about the Rotorua eastern suburbs—

💬 Hon Tony Ryall: It gets an “E” for water quality.

It gets an “E” for water quality. How much will that cost Rotorua? Perhaps the member for Rotorua will be able to take a call and enlighten us on that, because that is a real concern. Smaller places like Rotorua cannot afford those sorts of costs. Rotorua might look like a wealthy place, but it is not. There is a lot of unemployment there, and this Government has not done anything much about that since it has come in. I come back to my original point, which is that National thinks that the commencement date should be delayed. If the Parliament is not in agreement with a delay to 1 January 2006, then it should be delayed until 1 July 2004.

I move, That the question be now put.