Consumer Protection (Definitions ofGoods and Services) Bill

The National Party in Opposition is opposed to the extension of the Consumer Guarantees Act to water, gas, and electricity. I shall refresh members’ minds about what guarantees will be provided in respect of water, for example. There will be a guarantee as to title, a guarantee of acceptable quality, a guarantee that reasonable skill and care are employed, a guarantee of fitness for purpose, a guarantee that the goods comply with their description, a guarantee that the goods “comply with sample”, a guarantee as to price, and—wait for it—a guarantee as to repairs and spare parts! Those are some of the guarantees that, under this part, will apply to water.

One of the provisions in the bill that is of concern is paragraph (b)(vii) of section 2(1), in clause 6(1). That paragraph states that, to avoid doubt, water and computer software are going to be considered goods. So there is, obviously, some precedent that says that water comes under the Consumer Guarantees Act. I looked for the precedent, and I discovered a document dated 30 September 2002 that explains why the Government says that water already comes under the Consumer Guarantees Act, and that its inclusion in the bill is only to avoid doubt. It is because of the case of Hamilton v Papakura District Council in 2000, where the plaintiff’s claim that water was not of merchantable quality failed under the Act.

Although there has not been a court decision as to whether water is a good under the Consumer Guarantees Act, officials consider that it is very likely that water is currently a good under the Act. Officials have decided that water is covered by the original Act. Some official called Mr Bowie, the Ministry of Consumer Affairs’ Chief Advisor Policy Projects, has decided that. That is an august position to decide that water is covered by the original Consumer Guarantees Act! It is completely wrong that, based on an opinion from some public servant, a bill has come to this House that states, to avoid doubt, that water is covered by the Consumer Guarantees Act.

Because the Government takes the advice of Mr Robert D Bowie, the ministry’s chief adviser on policy projects, as seminal, I ask the Minister to look at another memo written by that public servant on 8 October 2002. The Government is prepared to take his advice in one memo, but not his advice in the next memo. In the next memo this commentator on the law said: “The only remedy available to a consumer under the Consumer Guarantees Act that water is not of an acceptable quality is to sue for damages for the breach of the Act. However, the practical effect” —according to Mr Bowie—“of a successful claim by a consumer under the Act may be, if the fault is one that has a general application, that a council feels compelled to upgrade its water in order to avoid future claims by other consumers.” So the Government’s official adviser, on whose advice it is prepared to base legislative drafting propositions, is telling it that people will be able to sue the councils.

And what happens if a council that is supplying water is told that its water is of unmerchantable quality, and that it is liable to be fined? What does the council do? Well, the advice goes further: “Yes, a council could decide not to supply.” Rotorua’s eastern suburbs’ water supply is rated D, and is not up to merchantable or acceptable quality. What will happen? The Government is saying that, no, the councils are not going to spend a fortune upgrading water supplies. The officials say that they do not need to do that, that they can just turn the water off. Well, that is not going to happen.

That is why we are making the point that to have the Consumer Guarantees Act apply to water is wrong. As I said, in that Act there is a guarantee about spare parts, and there is a guarantee about durability. We are saying that applying those guarantees to water is ridiculous, unnecessary, and costly. I have asked the Parliamentary Library to find out how much is being spent to upgrade water quality.

I am sorry; I should have allowed my colleague Tony Ryall to continue. I want to make a contribution on Part 2 because I am concerned about some parts of it. The Hon Tony Ryall has made a number of points, and has given me a number of papers about the issue of water supply; I am sure he will want to come back and comment about those parts, but I want to talk about the issue of telecommunications signals.

💬 Darren Hughes: They are included.

No, they are excluded. That is the fascinating part. I ask the Minister of Consumer Affairs why they are excluded. I find it quite remarkable. The bill includes computer software as a good, and the definition of “services” in section 2(1), in clause 6, includes telecommunications. It talks about “a contract for, or in relation to, the supply of electricity, gas, and telecommunications,”. But telecommunications signals are not included as a good. I find that fascinating. Perhaps the Minister will take a call to give an explanation as to why the signals are not included. I cannot understand that.

💬 Darren Hughes: It’s in the select committee report.

It is mentioned in the commentary? Well, it fascinates me.

💬 Stephen Franks: They cannot guarantee the quality of the porn sites. They dropped signals because they can’t guarantee they can live up to it.

That is the problem, is it not? I thought this bill was about consumer protection and about guarantees. If the Government is saying that we have to legislate to guarantee supplies, then why does it pick out the easy bits and not the tough bits? I assume that the need for the consumer to be protected is the principle behind the bill. I do not necessarily agree with that; I think that far too often now in this Parliament, in this country, we pass unnecessary legislation.

Let me digress for a minute. Here we are talking about water supplies. I would like someone to stand up and tell me how many people over the last year, 2 years, or 10 years have died because of contaminated water. I do not know of any; I have not heard of any, but there may have been one. We are going to have up to $750 million of ratepayers’ money spent on protecting people against something that they do not need to be protected against because it has not happened! Well, that is part of what is happening in this country. We are so hell-bent on passing legislation to protect everybody from anything that we will end up putting people in cotton wool.

I go back to the issue of telecommunications signals. Because it is too hard, because the Government cannot guarantee the quality of them, it is leaving them out of the bill. What sort of consistency is that? If that is what is actually happening, if that is the reason behind excluding them, what in the world are we talking about? If we are saying that electricity companies have to guarantee a consistent supply, and that water companies have to guarantee not just a supply of water but a supply of water of a certain quality and standard, why are we not saying that telecommunications suppliers have to supply signals? In this world today we survive on telecommunications signals. We are saying that if a telecommunications signal affects an aeroplane that is trying to land, and it fails to land, that is all right; it does not matter if 300 people on board are killed, because the Government is not able to protect them. But for everything else it is easy to provide guarantees. There might be some cost to it; it might cost $750 million of ratepayers’ money. But that is all right; that is OK. We can do that, but we will not try to do the hard stuff.

Well, I say to the Government that that is not good enough, if it is going to legislate. I say to it seriously that it should not legislate, because we in this country are so legislated for now that it is crazy. When we become the Government after the next election the whole lot of this garbage will go. If I have my way, the Human Rights Commission, the Privacy Act, and the whole damn lot will go in the bucket. However, I do not think we will go as far as that.

💬 Hon Judith Tizard: Excuse me, have you forgotten who brought in the Privacy Act?

Yes, I would chuck the whole bloody lot out! Most of the country would not even notice, quite honestly—but that is just me.

I seriously say to the Minister that if she is going to legislate, then she should do it properly. She should not sit there and not even take a call, and leave out the tough stuff. I want to know, when I am in the middle of doing something on my computer, and I am connected into telecommunications, that the signal will be OK.

I would like to speak on Part 2 of this bill, which is the consumer guarantees part of it. I have listened to a number of speakers here tonight, and water quality is one of the issues that has been raised on numerous occasions. I have to sympathise with Gerry Brownlee when he spoke of Christchurch water being far superior to any other in the country, and he was concerned that Christchurch might end up with water quality like that of Auckland, because Auckland might be the one that dictates the quality.

💬 Hon Judith Tizard: That’s not in the bill.

Well, there is nothing in this bill that actually says that Auckland has to be the benchmark. Christchurch water might be the benchmark, and I would certainly be happy to have Auckland’s water quality brought up to the same quality as Christchurch water. Because after all, we are having to put up with the water coming directly from the Waikato River, which has gone via Kinleith, and of course, Hamilton, and whatever Hamilton throws into it. I know they appreciate our desire to have good-quality water.

Apart from a comment from Gerry Brownlee about being in favour of waste water, I heard a number of National MPs talking against the inclusion of waste water in this bill. I am rather concerned about that, and disappointed that they have overlooked a very important issue about waste water, in particular in Kawakawa Bay in the Clevedon electorate, where I do a lot of work. They were promised by the Mayor of Manukau City that they would have a waste-water reticulation in place by the end of this year. They have subsequently been told that that will not now happen for another 3 years. The people out there are desperate. During the winter their septic tanks overflow, and during the summer they are not allowed to swim at the beaches, because the waste water flows into the water at their beaches.

If this bill will give them some respite, then I am very much in favour of it. Those people are desperate to have their waste-water system put into place by Manukau City, and they need it done now. If this bill will help to do that, then New Zealand First will support it because the people in Kawakawa Bay desperately need that service. We should put this bill into place and make sure it provides that service for the people of Kawakawa Bay, in the Clevedon electorate.

It is important to them, and it is important to other areas. Beachlands desperately tried, for years and years, to get its waste-water service and it was continually put off. It has it now, but Kawakawa Bay is now suffering the same fate as Beachlands did. It has been put off continually. The people out there are desperate. They cannot swim at their beaches, because the beaches are contaminated. If they go swimming they will be in trouble. They will become sick.

💬 Hon Tony Ryall: They’re not going to be able to go to the beach, with this Government.

Of course they are not going to be able to go to the beaches. They will be taxed on it. I come back to the bill. This bill will help the people of Kawakawa Bay and the Clevedon electorate, so New Zealand First will support it.

I am certainly pleased to see the inclusion of water within the definition of goods and services, which it clearly is, and other Opposition speakers have made that point. I listened to the speech from the member who has resumed his seat, who talked about the Clevedon area. When we look at Watercare Services in Auckland, that really goes to the hub of this dispute. On the one hand we have the socialist model, that water is under the control of each individual authority, and on the other hand we have seen the spectacular success of Watercare Services, which is supplying the bulk water as well as picking up the trade waste.

Members may not be aware that Watercare Services harvests the water from the Hunua dams and others in the Waitakeres. It also brings water from the Waikato, treats it, stores it, and reticulates it for under 50c a cubic metre. What do the councils of Auckland do? Manukau City Council retails it for about $1.10; Metro Water, Auckland City, does it for about $1.25; and out west, the hub of the Labour Party, where Bob Harvey is the mayor—he was the former president of the Labour Party—he retails it at $1.53. The water that Bob Harvey gets wholesale, at less than 50c a cubic metre, he retails out west at $1.53.

It is meant to be the green city, but it has the highest per capita usage of the five Auckland authorities. Is that not extraordinary? It is little wonder that Bob Harvey does not want anything to do with Watercare Services. In Manukau, Watercare Services, very sensibly, is going to take over the whole kit and caboodle. It is part of the hydro cycle. The rain falls, we catch it, store it, supply the treated water, turn on the tap, and then the water goes to waste. We then have to treat that waste and discharge it back to water. It is sensible that it comes under the one jurisdiction. Of course water comes within goods and services. It is absolute folly to suggest that somehow water is special. Just like any other goods or services, it should be subject to the forces of supply and demand, and pricing. Too often, people refuse to apply proper pricing to water.

💬 John Key: You are opposing the bill.

Not at all.

💬 John Key: Yes you are.

No, I am confining this speech to the water issue and the nonsense that we have had in Auckland City. Many of the local authorities are trying to obstruct Watercare Services. I believe that it is doing a very good job, by applying pricing mechanisms to water, and it will continue to do so. Bob Harvey and some of his Labour Party supporters are doing all they can to unhinge Watercare Services and disrupt that sensible supply. We certainly support that aspect of the bill, but it is a very narrow aspect; I appreciate that. When we come to some of the other aspects, that is when we will really start to worry. There are real concerns, when we start looking at some of the other aspects. I joined this debate on the water issue, and that was the key contribution I wanted to make as it relates particularly to the Auckland region.

What I find extraordinary about Part 2 is the classic Labour Party “do as we say, not as we do” provisions. What we are proposing to do in this part is to put obligations on a whole number of providers of services to provide guarantees, when they are not prepared to guarantee anything. Remember the old Labour Party credit card? Why do we not have the Consumer Guarantees Act stretched into the Labour Party credit card? It would be a dodgy deal. The member Ken Shirley has a copy of the credit card.

My comment to the Minister, given that she wants to extend these provisions, is let us extend them to Labour Party promises. For instance, there was the promise of no new taxes. How would that go? Have the cockies been told that, with their flatulence tax? Have the road users been told that, with the 5c increase in petrol tax? Have the 16-year-old sherry drinkers been told that? This Government is “do as we say, not as we do”. I take objection to that sort of approach to government.

Then there is the logical inconsistency. Why is it that this bill does not include telecommunications, but includes water, electricity, and gas? I would love to know from one of the Labour members how that differentiation is made. It seems to me that a logical approach would be to say that where Parliament has designed specific legislation—as we debated for nights in the local government legislation over water, or the specific electricity law, or the specific gas law—then that would do the job. But this legislation was designed for specific goods. As my colleague Tony Ryall says, how are we going to provide repairs and get spare parts for electricity? I do not claim to be an electrical engineer, but I am not sure how we can get a spare part for an amp. It is rather tricky. When I get my kilowatt-hour and it does not arrive, can I have the spare part please? What about water? Can I have a spare part for a litre of water?

I say to the Minister that that is what she is putting into the law. That is the sort of nonsense—[Interruption] Well, it does. An official document, provided by consumers’ officials, states that if we put water, electricity, and gas under the Consumer Guarantees Act we have to be able to provide repairs and spare parts. We have to be able to provide a sample. I have to say that it will be a bit interesting—

💬 John Carter: A sample of electricity.

A sample of electricity, and we will put it in a bottle for the member! I know there have been some extraordinary developments in electrical engineering and modern physics, but I do not think we have yet worked out how to bottle electricity. I know that this Minister is capable of some extraordinary things, and I look forward to this technical innovation that allows us to bottle electricity!

Then we have to have this guarantee for title. I refer to the member for Rotorua. I do not know whether members know her latest nickname. It is “Snowflake”. She melts the moment she puts the heat on. She will giggle on, but I would like her to explain how one might be able to guarantee certificate of title for some gas. Perhaps that is part of this new flatulence tax that the Government is delivering for the people of New Zealand! I know that it is coming up to 10 o’clock and we have urgency for some days, but the Minister needs to answer how one can have a guarantee of title for water, for gas, and for a number of amps.

💬 Darren Hughes: Why didn’t the National members on the select committee ask those questions?

Well, I hope the bright spark from Kapiti might tell me how we might be able to provide a guaranteed sample of electricity.

💬 Darren Hughes: Mr Brownlee never raised those questions on the select committee.

I have to ask the member; I have a simple question for him: how do we provide a certificate of title for a kilowatt-hour, or repairs and spare parts for a kilowatt-hour, or, for that matter, water? The provision is a nonsense, and the Government has not thought this through.

I move, That the question be now put.

It is my pleasure to stand on behalf of the National Party and oppose Part 2. As members well know, this bill is looking to amend three specific Acts: the Commerce Act, the Consumer Guarantees Act, and the Fair Trading Act. In particular I want to make reference to the Consumer Guarantees Act to clarify the position that will be confusing a great many consumers in New Zealand. It is simply that this bill attempts to define a service or a good, but it uses in the definition of a good an objective test based on a reasonable person. That is what the law states. One cannot contract out of it under the Consumer Guarantees Act. It says that it is an objective test based on a reasonable consumer.

That means that if electricity is defined as a good, then a reasonable consumer is meant to understand that it will have certain imperfections and certain specific peculiarities in the way it will act. That is what the law says. So it says, for instance, that electricity is subject to momentary fluctuations and prone to interference by environmental factors, and actions of third parties. In other words, that is the kind of understanding that a consumer is meant to have.

Well, how practical or likely is it that consumers, who will be looking to the Consumer Guarantees Act that will be amended by this legislation tonight, will understand, uniformly, an objective test? Let me put this example to the Committee tonight. There I am with my pinny on, in front of the stove, cooking up a lovely supper for 141 of the neighbours I have invited around from the Helensville electorate for a quick dinner. I have my 15 ovens burning away, and for dinner I have decided to cook a lovely meal. I am going to start with a mulligatawny soup. I will move nicely into roast legs of lamb—beautifully done with just a little pink inside. I will have potatoes, pumpkins—because those are always very good for us—a few peas, some gravy, and bits and pieces. I am going to make a lovely dessert. I will have pavlova, a New Zealand favourite. I know that the Australians have tried to claim it and that there will be Australians listening in on their satellite dishes to this speech, but I want to tell them here and now that nobody in New Zealand believes that pavlova is an Australian dish. It is a New Zealand dish and we are proud to have it.

💬 Hon Rick Barker: That’s not what we’re here to talk about.

That is not what we are here to talk about; we are here to talk about the objective test of whether electricity should be a good. So, here I am, with 141 people for dinner from the Helensville electorate, and I am serving them a beautiful three-course meal. We sit down, and the power goes off. The lights are out, but there are plenty of people at home because they are all National Party supporters. There are 141 of them. They do not know each other very well; they do not have neon signs. All of a sudden I come out and say: “Look, a bit of bad news—“

💬 David Benson-Pope: What do you know about Epsom?

I know lots about Epsom. It is a wonderful place. There is—

💬 David Benson-Pope: You live there.

I do live there from time to time and it is a wonderful part of the country—absolutely wonderful. But like all good things, I like to share myself around. There is absolutely no point otherwise. I am known in places in Wellington, Helensville, and Epsom, and wherever I go I am given a sort of coming-home greeting. People are proud to have me when I am there. But that is not what I am here to talk about; I am here to talk about this dinner for 141 people—and the power has gone off.

Here is the rub: am I a reasonable consumer with an objective test? In other words, if I cannot get an electricity supply would I be reasonable to say that it is OK to understand that the electricity may not be there? Well, with 141 people for dinner, and a beautiful 3-course meal when I am having pavlova for dessert with kiwifruit on top—

💬 Hon Tony Ryall: The answer is to buy your own power company.

The answer is to buy one’s own generator. It is cheaper than a power company. My point is that on that particular occasion electricity supply would not meet an objective and reasonable test—and that is where this legislation will horribly fail. It is just not possible to have an objective test measured across the country, because people will have different circumstances at different times. People will be looking to this fine Parliament for legislation that they will be able to rely on, and they will simply not be able to rely on it, because they will not understand that particular issue.

I move, That the question be now put.

We are now at the heart of the stupidity in this bill that has resulted in ACT committing to vote against it. When the services that this bill puts under the Consumer Guarantees Act are compared with that Act’s provisions, we see just what happens when ideology, or a political manifesto, gets in the way of logic. When we put water, electricity, or gas supply into the Consumer Guarantees Act—a pretty suspect piece of law to start with—we end up with the rich being subsidised by the poor. Essentially, this means that the people who use more of those services, who use lots of them, can insist on a higher standard of service. They will exercise remedies the others will not have the time to exercise, and will get the benefits of inventive new ways of persecuting the supplier that the poor will not think of—and they will do all of that for no particular reason.

Let us take water as an example. Paekakariki, just to the north of Wellington, has something in its water that corrodes tap washers. This may seem trifling to members on the other side. They may think it is funny that tap washers and joints get corroded quite quickly by the Paekakariki water supply, but, quite clearly, a reasonable person coming into Paekakariki from outside would not assume a tap washer was likely to disappear within 3 years. That is in fact what happens. If the taps are used frequently, the time taken for the washers to corrode is less. The effect of this requirement is that the local authority, or the supplier of the water, is probably going to have to guarantee that it will meet the cost of those tap washers. Who does that take money from? It takes it from the people. People make a claim and they get paid for their tap washer, or the supplier upgrades the water supply to make sure it does not corrode tap washers and everyone has to pay extra. The people who pay the price of that in their water supply will be paying much more to those who have lots of taps than to those who have only a few taps. They will probably end up paying for tap washers they would never dream of using. Those who can afford to put a water softener on or to take a precaution with their tap washers will be paid for by those who cannot afford to take such precautions.

We can see the same thing with electricity. The person who can afford to take a precaution against losing the contents of their deep freeze because there is an outage or a power unreliability will be paid for by those who do not even have deep freezes. It will be paid for in the price of electricity to those who cannot afford to take any sort of precaution. Householders who decide that an interrupted supply or a power spike in their computer is really irritating, and who decide to go and harass the local power supplier because of what the spike did to their computer, are going to be subsidised by people who do not even have a computer. The cost will be borne by the people who are busy using candles and hot water bottles so that they do not use up power the local authority has asked them to save. The sort of madness we had with the major industrial suppliers deciding to go uncovered on spot prices will presumably come under the Commerce Act, or under one of the other parts of this bill, so I will not, in this part, go into the subsidisation of big business that is occurring. But I will say that the prospect of business for lawyers, or the prospect of the business the disputes tribunal will have, is just rife in this bill.

Let us look at some of the guarantees. Let us take water. There is a guarantee that the water is durable—durable for what purpose? There is a guarantee that it is safe, if it is used in a manner that a reasonable consumer would expect to use to obtain the goods. What about when one’s swimming pool is too deep for the kids? Does the local authority have to worry about that? The local authority can, of course, draw attention to the defects, so we will see another set of these ludicrous warnings with which New Zealand is now infested, saying that if we use too much of something, it might make us feel bloated.

I move, That the question be now put.