Fair Trading Amendment Bill (No 3)

In speaking to the title clause of this bill, I would like first to cover the fact that the National Party wants to raise with the Minister a number of concerns about this bill. In particular, there are four areas of concern that we will be debating during the Committee stage. My colleagues and I will be seeking several calls on each. We are concerned about increasing the level of fines in an ad hoc and non-comparative way. It is clear that the Government has been doubling the fines involved in this legislation, with no reference to any of the increases or lack thereof of similar fines in other commercial legislation.

We are concerned about the criminal limitation period—that it may inadvertently lead to greater contingencies for business. We do not support exempting the Commerce Commission from the consequences of over-zealous actions by its officers in applying for interim injunctions, and we are concerned about the increased compliance costs from demanding certain information and documents from those people that the Commerce Commission or the appropriate authority is investigating. We want to say to the Minister that there is no regulatory impact, or compliance cost statement attached to the bill, and that is a breach of the Government’s own guidelines.

We have moved a number of amendments to the title of the bill. We do not think the title is a fair reflection of what is contained in the bill. Our amendments include incorporating the fact that some action will be taken on pyramid selling through some subtle word changes that will widen the ambit of the bill. However, we do think that it fails to recognise some quite considerable additional changes that are being proposed in the bill.

This Parliament needs to realise that this is not just an inconsequential Fair Trading Amendment Bill; this bill proposes to change the limitation period from 3 years after a breach or otherwise may have happened, to 3 years from when it was discovered, or ought to have been discovered. We think that that has some risks. For example, if someone advertised a product in an inadvertent way, or in a way that had since been corrected, then an aggrieved consumer could raise a number of issues through the judicial process that could lead to significant costs for business, but also, because business will not know when its limitation period has expired, it will be required to carry considerable contingent liabilities resulting from any warranties or any advertising that may have occurred. We think that this has not been thought through by the committee. We think that the title of the bill should be amended to reflect more correctly the fact that a number of enforcement and procedural provisions are incorporated in the bill. For example, the bill will require companies to provide documents and information—

The CHAIRPERSON (Ann Hartley): I remind the member to keep to the title debate.

Madam Chair, I am sure you were listening to my speech, because what I actually said was that the title of this bill does not fairly reflect. It is very easy for people to jump in and say to speak to the bill, but if people were listening to the debate, they would know that I have been speaking to it. The point I was making before I was interrupted was that this bill requires companies to provide information and documents that do not exist. That is why the title should be amended to include the fact that enforcement and procedural provisions that are quite draconian in nature are included in the bill. I draw the Committee’s attention to the amendment to clause 1 in the name of Lindsay Tisch that covers that very point.

The concern is that if the commission requires a company to provide documents or information that do not exist, then that is a considerable expense to business. There is no ability for those businesses to recover the cost of generating documents and information that do not exist. In other procedures in the bill the Commerce Commission will be excused from having to reimburse or carry the cost for some of their decisions. That is why we are proposing amendments to the title of the bill.

I would like to pick up from where my colleague left off. The title of the bill “Fair Trading Amendment Bill (No 3)” is fairly innocuous. It is important that the title of a bill—and I think it is recognised these days—should accurately reflect as far as is possible the content of a bill. For example, with income tax amendment bills we do not just have Income Tax Amendment Bill (No 1), Income Tax Amendment Bill (No 2), (No 3), and (No 4). Let us go broader than income tax—if it is a taxation amendment bill we are referring to, we try to build into the title what is covered in the bill. For example, we might have a “Taxation (Annual Rates, GST Provision, something else, and something else) Amendment Bill”. The beauty of that kind of title is that it gives the public a reasonable guide as to what is contained in an amendment bill.

The problem with this bill is that the title gives no guidance as to a couple of very significant items in it. The Opposition is not opposed to this bill—in fact, we are totally supportive of the part of the bill that clamps down on pyramid schemes. It would be quite useful if the title indicated that it is this bill amending the Fair Trading Act that actually does deal with pyramid schemes. It would help people using our statutes, were the name to incorporate things like that. That is the first issue in respect of the title.

The second issue, and my colleague the Hon Tony Ryall has mentioned this, is that clause 8(3) contains a very significant issue relating to what is commonly called the statute of limitations, or the period of limitation. A very major change has been made in shifting from a period where action can be taken 3 years after an event, to 3 years after an event was discovered. That is a huge difference, because an event may not be discovered for a period of 5, 6, 7, 8, or 10 years. So that is a huge difference. When we do get to debate Part 2, there will be some issues that I hope the Minister in the chair can really cover in respect of that.

Again, I come back to the title. An issue as significant as changing the period of limitation during which action can be taken is a significant change. If it were just being altered from 3 years to 4 years after an event occurred, that is not a huge change. Maybe one would not need to argue that the title should cover that, but this issue is big. This could change the period of liability from 3 years to 13 years. To have a change as big as that contained in a bill with such a bland title is not satisfactory. That is why I would argue that the title of the bill should really give greater guidance as to the key changes that are contained in the bill.

There are two of them—the pyramid-selling schemes, and the changes to the limitation period, after which action cannot be taken. It is not good enough for the Government to get titles right in some areas of legislative activity, like in taxation. It is getting titles better in that area, but in this area, I do not think enough thought has been given to the title. The title of the bill, the “Fair Trading Amendment Bill (No 3)”, could mean absolutely anything, yet the bill has some very, very significant things in it.

Another area that is obviously very significant for business is the doubling of penalties. Again, the title gives no guide that this bill doubles the penalties for certain breaches of the law. Again, it would be useful if the title were to indicate that that is another major element contained in the bill. So there are a number of key issues. If the bill goes through the way it is, the Commerce Commission may not be accountable for certain actions it takes. Again, that is a hugely significant issue that we will be asking a number of questions about when we get on to the particular clause—is it clause 10—that covers that. Again, in Part 2, I shall be asking about a number of issues around that. The title is really pretty unsatisfactory.

As my colleagues have mentioned, we will be supporting this bill. However, some provisions need to be looked at more closely, and during the Committee stage we will ask the Minister to answer these questions. First, the bill stands in the name of the Hon Judith Tizard and is titled the “Fair Trading Amendment Bill (No 3). We always believe that the title of a bill should fairly reflect what the bill states. Nothing in this title articulates the very important changes that the bill purports to make. As I said, we will be supporting those changes. My colleague the Hon Tony Ryall has mentioned that this bill allows that there will be documents that do not actually exist, and sets out the power that the Commerce Commission will have. Nowhere in the title do we see anything that relates to that. If we go back to the first and second readings, there was much debate about pyramid-selling schemes, and they are covered in clause 5. One of the amendments that the Hon Tony Ryall has tabled, which is a very good amendment to the title, would delete all the words after “the” and insert “Fair Trading (Pyramid Selling Schemes and Additional Powers) Amendment Bill”. This is significant. There is a change here, although it is only a minor change. If we were to go back to the principal Act—and we will be talking about that later on when we get to clause 5 in Part 2, at some length—if the title were to reflect what is actually in the bill, then there is an opportunity to be able to look at that amendment.

The Hon Tony Ryall has another amendment to the title, to delete all the words after “the” and insert “Fair Trading (Miscellaneous Provisions) Amendment Bill”. That probably more reflects that there are some miscellaneous changes that we believe are important. I have gone one step further in my amendment to the title—that we delete all the words after “the” and insert “Fair Trading (Enforcement and Procedural Provisions) Amendment Bill”. Of course this does allow for enforcement proceedings, and in clause 8(2) there is the liability that every person who contravenes section 24 commits an offence and is liable on summary conviction to a fine not exceeding $200,000. So there is a provision that I have put in my amendment that talks about the enforcement side of this bill.

Dr the Hon Lockwood Smith made a very important point about clause 8(3), which provides that proceedings under section 40 “may be commenced at any time within 3 years after the matter giving rise to the contravention was discovered or ought reasonably to have been discovered.” That is opened-ended, and that is one of the real concerns we have about this bill. Although we are supporting it, we really have a concern about that subclause and we will be looking at that one far more closely when we are debating Part 2, and clause 8(3) in particular.

There are a number of other provisions, but I come back to the point I made about making sure that the title, which we are supporting, fairly reflects what the bill is about. I have mentioned the amendment I have put forward, and the two amendments that the Hon Tony Ryall has put forward.

I move, That the question be now put.

I am not at all surprised that the Hon John Tamihere tried to close this debate down. He knows all about scams, if anyone does. When this bill came in, it was described as being about fair trading. It was described as a bill to amend the Fair Trading Act, and it was described in extremely flowery language. I would like to read here from the Government Minister Rick Barker, who described the issues involved, but first perhaps I will have a look at what Mr John Tamihere, who is here in the House, said: “The true issue in the Fair Trading Act is the clause defining misleading or deceptive conduct, which states: ‘No person shall, in trade, engage in conduct that is misleading or deceptive’ ”—

The CHAIRPERSON (Ann Hartley): I am sorry, but I need to bring the member back to the title. The bill has been to the select committee. It is a narrow debate.

I am discussing the title. I believe that this is a misleading title. There was a claim that it was about fair trading. There was a claim that it was about pyramid selling. There is an amendment before the Committee that suggests that the title refer, in particular, to pyramid selling. I am concerned that that amendment might be adopted, and I want to argue that in fact the bill’s title should remain as it is, because it is innocuous. It does not tell us anything, and it does match, in effect, what the bill does. This bill was introduced as part of a Labour Party scheme to throw mud. This was part of an attempt to legitimise, to use the time of the House to legitimise, an attempt to go behind the Standing Orders and throw mud.

The person doing it, Mr John Tamihere, made a great point of integrity. He spoke on 2 May 2002 about the integrity, credibility, and ethics to stand up and publicise scams. This bill was promoted. It involved officials, it took the time of the Ministry of Economic Development people, it took the time of Securities Commission people, and they came along to speak to a bill called the Fair Trading Amendment Bill (No 3), when, in fact, the whole discussion they had to endure was about a non-existent pyramid-selling scheme. The National Party’s amendment to change the title so that it refers specifically to pyramid selling would play into its hands. Because the bill actually has next to nothing to do with pyramid selling. Even the clause that refers to pyramid selling does not deal with pyramid selling.

The true effort that went into this bill was disclosed in the report of the select committee in the very last two sentences, when we see that hearing evidence took 30 minutes, and consideration took 55 minutes. So hearing evidence took 30 minutes, and consideration took 55 minutes. This is a committee that, according to Rick Barker, was “going to make many investigations of the issues it raises, and the issues concerning fair trading. I want to see a very rigorous investigation of those issues, and I am absolutely confident that the Labour members on the committee will dig deep on that investigation. They will drill all over the place, and many things will be flushed out, for the benefit of the whole community.”

I do ask the National Party to consider, when it votes on the title, and on its own amendments, not to be taken in by the references that were made to pyramid selling. There was absolutely no intention ever to look into pyramid selling. There was, in fact, no looking into pyramid selling. One of the National Party amendments urges the change to refer to pyramid selling. I suggest that there is a far better amendment in the name of the National Party that one could easily vote for—that is, that the title simply read “Fair Trading (Miscellaneous Provisions) Amendment Bill”. Certainly, ACT will support the National Party’s motion in that regard, but should not support the earlier one, because this bill, I will go so far as to say, is a fraudulent waste of Parliament’s time.

I move, That the question be now put.

I am delighted to take part in the title debate of the Fair Trading Amendment Bill (No 3) which is, as members know, a bill that refers primarily to pyramid schemes. I am not surprised the Labour Government has introduced this bill, because it knows lots about pyramids—people being at the top, and everybody else flows down. It knows a lot about those schemes. I am not surprised that the Labour Government has introduced this legislation.

💬 Hon Rick Barker: “John Pharaoh Key”.

Let us face it: I certainly like riding around on camels and humps, deserts, and things like that. I do not mind hot weather.

I have never actually been to Egypt though, I might add. I have been to a number of other countries, but I have never single-handedly seen the pyramids, and I would like to go.

It is not too late to change the title of this bill. Labour members could get the caucus in there, have a little chinwag about it, and come out and say that this title is not the right one. The title “Fair Trading Amendment Bill (No 3)” is far too vague. Do members of the New Zealand public up and down the country know what the Fair Trading Amendment Bill (No 3) is? Do they even know what the No. 1 bill or the No. 2 bill is? No, they do not. Government members looking at me at the moment are terribly confused about the title. They are saying to me: “Thank goodness that National member is on his feet with some sound suggestions.”

The Minister for Small Business could well put this on his website while he is out there slashing costs for small businesses—despite the fact that the other 19 members of Cabinet are increasing compliance costs. It is like Team New Zealand bailing water out of the boat—it did not matter. There he is trying to chuck off a few compliance costs. He has the bucket and he is pouring the water out, but it did not do Team New Zealand any good—it nearly sank—and it will not do any good for small-business costs in New Zealand.

💬 Hon Judith Tizard: What about the title?

But we are not here to talk about the costs that are drowning New Zealand’s small businesses. We are not here to talk about the failure of the website that the Minister for Small Business has. He is embarrassed by it, but we are not here to talk about that. We are here to talk about the title, which is the “Fair Trading Amendment Bill (No 3)”, and why the bill is so shamefully titled. What a disgrace this title is! I am on my feet, and at no charge, I will come up with a far better title. I would not be surprised if during the dinner break—or even before—all 120 members of this House come down here and argue vigorously in support of my new title.

So what is my new title going to be? It is like the Oscars, is it not? They rip open the envelope and read out the title—but they do not want to say it upfront and straight away, because no one is there for the punchline. One has to get suspense going, and say: “What is the title?”

💬 Pansy Wong: What is the title?

That is a very good question. It is the “Stop Pyramid Selling in New Zealand Bill”. There is no point in being ambiguous or beating about the bush. The Minister for Small Business does not beat about the bush on his website. He says: “These are ways to cut compliance costs in New Zealand”, even if his colleagues are adding compliance costs. It does not matter—he is not ambiguous in what he is says, and we should not be ambiguous with this legislation.

The Fair Trading Amendment Bill (No 3), which in large part covers the closing down of pyramid schemes in New Zealand, should be up in lights, so that when people are considering ripping off harmless and law-abiding New Zealanders with despicable pyramid-selling schemes, they should be able to flick through the website. Using their Yahoo search engine, with “l” for legislation and “p” for pyramid, they would come straight up with my wonderful title, the “No Pyramid Selling Schemes Bill”, or the “Anti-Pyramid Selling Schemes Bill”, or the “Stop Pyramid Selling in New Zealand Bill”. I think that last one was the one I thought of, but I have so many good ideas that I should not be restricted to one.

If people read the title “Stop Pyramid Selling in New Zealand Bill”, they would see that, yes, it is illegal in New Zealand. They would see that the Labour Government had finally done something of use and stopped pyramid-selling schemes. With a great deal of relief, people would say: “I will not go out there and rip off poor New Zealanders.” They would understand that, but will they ever find out with a title like the “Fair Trading Amendment Bill (No 3)”? No, of course not. They will go to the No. 1 bill, and that will put them to sleep. When they wake up, they will have a look at No. 2, and that will be a huge yawn. Then they will finally come to the No. 3 bill—the Fair Trading Amendment Bill (No 3).

I move, That the question be now put.