Third Readings

I move, That the Commerce Amendment Bill, the Consumer Guarantees Amendment Bill, the Fair Trading Amendment Bill, and the Sale of Goods Amendment Bill be now read a third time.

The overriding purpose of this legislation is to create level playing fields. Firstly, it corrects some anomalies that saw certain utility suppliers having no statutory obligation to deliver value for money and good service to consumers. This legislation ensures that the Consumer Guarantees Act applies to all products and services that are ordinarily supplied in trade for domestic consumer use, now and into the future. Secondly, it ensures that the consumer in the supply chain who is best placed to manage the risk of product failure is liable to the end consumers for defects. Until now, it has been possible for some traders to contract strategically, in order to avoid liability to consumers. Thirdly, it ensures that the definitions of the Commerce Act, the Fair Trading Act, and the Consumer Guarantees Act are consistent with each other. That aligns New Zealand legislation, and the definitions, across all trade practices legislation, as happens in the jurisdictions of our main trading partners.

The legislation has been in train for a long time. The Consumer Protection (Definitions of Goods and Services) Bill, from which these bills have arisen, was introduced in August 2001. It was scrutinised by two Commerce Committees, the first chaired by Kevin Campbell, the Alliance list MP, and the second chaired by Mark Peck. I welcome the legislation as an important enhancement that will make consumer law more comprehensive and give incentives to industry to manage and meet consumers’ legitimate expectations reasonably and sensibly. It is very robust legislation that has had a lot of work done on it.

A number of questions were asked in the course of the select committee’s deliberations, and I want to put to rest some of the fears that Opposition members raised. For example, they were very worried about the cost of local authorities bringing their water supplies up to a reasonable standard. I tell them that the Ministry of Health officials who are working on the proposed Health (Drinking Water Standards) Bill estimate that the total cost for all local authorities across New Zealand to provide infrastructure to meet that bill would, perhaps, be about $400 million, but that would be over time and they would have a 5-year lead-in period to bring services up to standard.

I do not think anyone in this House accepts that local authorities are entitled to under-invest on infrastructure, particularly infrastructure that is vital to our health, like water. This is a sensible amendment, and I urge those local authorities that have not done that—because, of course, most of them have—to get on with bringing their water quality up and to make sure that the service delivery is reliable.

The other thing we had a great deal of debate on from Opposition members was the ownership that one has over software, CDs, or other things where intellectual property is involved. The interest that the consumer receives in software is no different from the interest received in any other intellectual property item, for example, music CDs, videos, and all those sorts of things. Consumers can use that, and they can on-sell it within the licence that they have bought, but they cannot reproduce it or sell multiple copies.

This is good legislation. It brings all those Acts that we are looking at up to modern times, but it also, as Mr Franks pointed out, retains the inherent good sense and clear language of the Sale of Goods Act. A couple of the amendments that went in use very ancient language. Just as New Zealand is moving to include far more Māori into both law and practice, this language comes from the English common law, which often used Norman French because those were the terms that had been tested in the courts and in common law. I think MPs will be mildly amused—and I know that Mr Worth would be—that we are replacing the word “things” with “choses”, as in the French “chose”. So I think this is good legislation that looks at what has been good legislation over the years and brings it up to date. This is an excellent amendment. The Consumer Protection (Definitions of Goods and Services) Bill, as broken out into its four parts, will be a great addition for the protection of consumers in New Zealand.

It would be fair to say from reading the commentary on the legislation that it is apparent it simply was not given the level of consideration by the select committee that it should have been given. There are quite considerable issues in this legislation that make a mockery of it, and I will be touching on those during this report back to the House.

It is disappointing that even though we had about 2½ hours’ debate on this legislation last night, the Minister in the chair, Judith Tizard, took only one call to respond to any of the Opposition parties’ concerns. Frankly, I do not think that is the way a Minister who is supposed to be on top of her portfolio and able to address the issues and concerns raised in Parliament should behave.

This legislation seeks to include electricity, gas, and water in various consumer legislation: the Commerce Amendment Bill, the Consumer Guarantees Amendment Bill, the Sale of Goods Amendment Bill, and the Fair Trading Amendment Bill. The National Party will be opposing the progression of this legislation because it will cost consumers dearly. It will require providers to invest significant new amounts of money into upgrading the provision and quality of the services that they provide for customers, even though many of the customers may not want to pay extra money to get a level of quality they do not desire.

For example, let us look at electricity. As the select committee was advised but seemed to do absolutely nothing about, retail companies now have an extended liability under the Consumer Guarantees Amendment Bill. Previously their liability was limited to ensuring there was no negligence or limits to availability. Now, electricity needs to be of an acceptable quality. So what does that actually mean? Electricity cannot be delivered perfectly. We cannot have a perfect level of electricity, with continuous supply and no interruptions, and with consistent voltage, frequency, and waveform. It is simply not possible to offer that level of assurance in electricity. If it were possible to do that, it would be extremely expensive.

The consequence of this legislation will be to push up the price of electricity, on top of the power tax that this Government is implementing, which is one of the new 15 taxes and levies that it has introduced in the last 4 years. The Government said it would have only one increase, but in fact it has had 15 increases in levies and taxes, completely contrary to what it promised—and the electricity tax is another. Electricity manufacturers, who previously had a duty of care, will now also have to guarantee electricity of an acceptable quality. That will require a significant investment by them, and again will cost taxpayers dearly.

Then we come to the extraordinary circumstance of the Government’s decision to include water as a good under the Consumer Guarantees Amendment Bill. The Ministry of Consumer Affairs advised the select committee about the guarantees consumers will now have in the supply of water. I would like to recite those guarantees to the House, and members can decide whether the Government has been foolish—as the Opposition says—in providing some of them. There is going to be a guarantee of acceptable quality, reasonable care, and skill employed; a guarantee that water complies with its description; a guarantee that goods, such as water, comply with the sample; and a guarantee as to price. But here is one of the ridiculous things: there is going to be a guarantee as to title. There will have to be a certificate of title for water and electricity. But here is the weirdest thing. Why would a member move an amendment to the Consumer Guarantees Amendment Bill to say that, when it comes to water and electricity, there is now a guarantee of repairs and spare parts? The Government is guaranteeing that people who purchase water will now have a guarantee of repairs and spare parts.

💬 John Key: It’s ridiculous

It is ridiculous, but that is what this legislation does. The suppliers of water must now be cognisant of the fact that they must give a guarantee to repairs and spare parts. That is absolutely ridiculous.

What is the consequence of making that decision, whereby local authorities and other water suppliers will now have to have water that is of an acceptable quality? We got out the Ministry of Health documents, which state that it has gone through and tested the water supplies in a myriad of regions throughout New Zealand. It is clear that it is going to be expensive. My colleague Georgina te Heuheu tabled a report that shows that to get water supplies in New Zealand to an acceptable quality, which will be required once the Governor-General signs this legislation, will cost up to $750 million.

We tabled the report. The Minister stood in the House and said: “I’ve looked at the report and I can’t see the figure.” That is because she had not turned over the page. The figure was on the second page, but she said: “I can’t see the figure.”

💬 Stephen Franks: Too long; no pictures.

That is right; no cartoons. We say it will cost up to $750 million. Why were local authorities not allowed to have time to get their water supplies to an acceptable standard? Local Government New Zealand reported to the select committee that local government will have to spend $400 million, over the next 5 years, to get the quality of water up to acceptable standards. We also know that the Dunedin City Council is budgeting $30 million, over the next 2 years, to get its water standards up to an acceptable level. This is important because the legislation states that water must be of an acceptable quality. The fact is that much of the water supplied to New Zealanders is not of an acceptable quality. If councils are to provide a guarantee, under the consumer guarantees legislation, then it will be very, very difficult indeed. We have moved a number of amendments that would have provided for a much more realistic way of dealing with that.

It is very easy for the Government to say that this is nonsense but we also have reports, given to the select committee by the Government’s advisers, that people will be able to take action against councils on the quality of water. Government departments say that if they are faced with this liability, which they do not want to incur, they can stop supplying water to their customers. The councils can turn off the taps. That is ridiculous.

We also raised an issue that this Minister glossed over, and I can understand why—the issue of computer software. This legislation provides for the apparent avoidance of doubt. Computer software will now be defined as a good, under the Sale of Goods Act of 1908. That Act requires some actual validity to the title that is being passed on in order to complete a sale. What the Opposition said—with the support of the New Zealand Law Society—is that no one has title to various pieces of computer software. What people actually buy is a licence to buy the software. The Government is proposing that titles can actually be bought from Bill Gates. Bill Gates is not going to transfer the title of Windows, but he will give people a licence to use that program. So we cannot have legislation that says people are buying computer software, when in fact they are not. They will be buying a licence to use the computer software. Whereas other legislation refers to the licence to use computer software, the Government is proposing, in its amendments to the Sale of Goods Act, that people can purchase computer software, when in most cases they cannot.

The National Party has moved amendments, and says that this legislation will be back before the House within the next 2 years because the silly decision on computer software will cost consumers dearly. The ridiculous decision to include electricity, gas, and water in the legislation will also have to be revisited by the House, simply because of the expense to consumers.

On behalf of United Future I am glad to rise and support the third readings of the bills. United Future is always pleased and happy to support sensible legislation. Unlike the previous speaker, I am very glad that if a power company inadvertently sends a huge spike down the lines to my computer and blows it all up, it will have a responsibility for it. That in itself can be a very expensive exercise for businesses.

The purpose of this legislation is to ensure that the Consumer Guarantees Act applies to all goods and services that are ordinarily required for personal, domestic, or household use or consumption. The legislation, as we have heard, covers the Commerce Act, the Fair Trading Act, and the Sale of Goods Act, and specifically amends the definitions of goods and services in those Acts to ensure that computer software, electricity, gas, telecommunications, water, and services related to their supply, are included within the scope of the legislation.

The Commerce Committee made a number of technical changes to the original legislation. Notably, those changes included the removal of telecommunication signals from the proposed new definition of goods in the Consumer Guarantees Act, Fair Trading Act, and the Commerce Act. The reason for the removal of “telecommunications signals” is that the definition in the legislation was deemed by several submitters to be wide enough to cover the actual content of telecommunications. This caused controversy and unease within the industry. For example, Internet service providers were concerned that they would be liable for emails that did not get through for reasons beyond their control, such as a problem on an overseas network. The committee agreed that it was never intended that suppliers of telecommunications signals should be liable for the content of those signals, and therefore recommended removing them from the definition of goods, but left them in the definition of services.

One widely publicised aspect of the legislation is that it will give consumers the right to claim compensation from electricity companies when spikes or power surges damage computers or other equipment. Electricity suppliers will become liable for direct losses and reasonably foreseeable consequential losses to domestic consumers caused by problems for which the suppliers are responsible.

The legislation was originally designed to clear up an anomaly caused by a 1998 court ruling in a case between the Electricity Supply Association and the Consumers Institute, which held that electricity network services were neither goods nor services. The legislation also closes a legal loophole that has meant that companies or individuals selling computer software packages who misrepresent their products have not necessarily been obligated to offer refunds or replacements to unhappy customers. United Future is very happy to support the legislation.

I rise on behalf of New Zealand First to support this legislation, because we feel it tidies up a lot of loose ends within the area of consumer protection. I would like to touch on a few points. Telecommunications being excluded as a good is an issue that we looked at very strongly and for a long time during the debate at the select committee. It was considered that perhaps telecommunications should be included as a good, but we considered the prospect of having undesirable issues coming down the line. I refer to things that Internet service providers are not responsible for, coming from overseas, and we really felt that it was impossible to continue leaving telecommunications in there as a good. It is included as a service but not as a good, as we could not expect Internet service providers to be responsible for unexpected events coming into their networks and being passed on. They would certainly try to prevent those from happening, but there are ways of getting them through without detection. So it was decided to remove that.

Computer software is another issue that we looked at, and I think that we made a mistake, unfortunately, by leaving it in the legislation as a good. It is not an actual physical item that one can sell on. One buys only the licence to computer software. Computer software does not really fall under the original Act of 1908, because it is only the licence that people buy, and people do not have a right under that licence to then on-sell that good. The end user cannot on-sell the licence to another person. So we have made a mistake in the legislation by leaving computer software in as a good.

Electricity is another item that we looked at in depth, and I think that if we had incorporated the generators into the legislation, it would have strengthened the whole electricity industry, but the electricity industry is very complex, and it is an industry that perhaps will have to be revisited when the inquiry into electricity is carried out.

We have heard a lot about water quality, and local councils being responsible if water quality drops below an acceptable standard. I suggest that all New Zealanders would like to drink fresh, clear water of acceptable quality. But many councils have allowed their water quality to drop. In some cases, that is due to poor maintenance, and in other cases it is due to the particular water supply that the area receives, and sometimes councils cannot—particularly one that Stephen Franks mentioned last night; he was referring to water in Rotorua, I think it was.

💬 Stephen Franks: Paekakariki.

Sorry; Paekakariki, Rotorua also, I think, and certainly Taupo have the same problem in that the water cuts out the washers in the taps, mainly due to the pumice content. That is something that is very difficult to extract from water, particularly at source. So water quality really has to be considered, and councils need to be responsible for the maintenance of their pipe work; and if it is the pipe work that is the problem, then I think the councils should be responsible.

I was particularly disappointed in the number of Supplementary Order Papers that the National Party put on the Table. National was trying to have water and waste water removed from this legislation. The reason I am disappointed is that the people out in Kawakawa Bay in the Clevedon electorate are desperate to have a waste-water reticulation system put in. Their septic tanks continually overflow out on to the beach, and people are unable to swim at that beach. There is a fish farm nearby, and the quality of the water has dropped there, and they are no longer able to operate that fish farm.

The people of Kawakawa Bay were promised last year, by the Mayor of Manukau City, that they would have a waste-water system in place by the end of this year. That has subsequently been withdrawn, and they are now not expecting to have that waste water for another 3 years. It has been postponed, and that is unacceptable. The people of Kawakawa Bay desperately need their waste-water system. They are in the same position as Beachlands was about 5 or 6 years ago—they fought for years to try to have their waste-water system put in place. It was finally done by the Manukau City Council during the 1990s, and they are now satisfied with it. But Kawakawa Bay people are fighting and desperate to have their waste-water system put in place. So if this bill supports the needs of the people of Kawakawa Bay in the Clevedon electorate, then I will most definitely support it, and New Zealand First supports it, as well.

This is good legislation, and I am pleased to support it.

This is more legislation from the Labour Government that loads extra and unnecessary costs on to hard-working New Zealanders. It is legislation born out of the electricity crisis that Auckland alone experienced a few years back in the late 1990s when there was a meltdown in the cables that took electricity into the city area. Even if this legislation had been in place at the time, it would never have stopped that. It would never have done anything to encourage the sort of investment that was needed to prevent that happening—investment, I might say, that has now taken place.

The National Party was concerned that electricity was being classed as a good, and particularly perplexed at the concept of electricity being something that could be considered to have a spare part, could be improved, or delivered as the good itself with some greater level of quality. Everyone knows that it is service delivery around electricity that is most important. One cannot improve the quality of electricity; it is either electricity or it is not. As my colleague Dr Nick Smith pointed out last night, what are consumers to do—bottle up some of the electricity that they have been supplied and take it down to the local power company and complain about its quality? That is not possible. There are some very silly aspects in this legislation that should not see it proceed.

We have also expressed at some length our concerns about water being included in this legislation. My reasons for that are very simple. I come from the city of Christchurch, where we have about the best natural drinking water of anywhere in New Zealand. We have deep aquifers that bubble the water up through the shingle; and it comes out of the tap completely untreated with any chemicals at all, most of the time.

However, if one were to ask the city council what grade its water is considered to be when it is measured against the so-called New Zealand standard for water quality, it is not an A grade, it is a B grade. It gets that B grade because it does not have certain chemical additives that the standard requires to reach A grade. We could now have a situation where consumers are unhappy with that, ignorant of the fact that they have the very best water in the world. We go to our city council and say to them that it must improve the quality of that water by adding those chemicals. We would end up like many other parts of New Zealand, turning on the tap to be greeted with the smell of chlorine or any other purifiers that are added to the water. That is very sad.

Is it a real prospect? I think that it is. I look at the Christchurch City Council annual plan and the submissions to that plan, and I note that when it comes to indicators of satisfaction with water supply, in the year 2002 it received only an 82 percent rating. Therefore, 12 percent of the population out there were unhappy with things. If they had been able to specify that they were unhappy with the pressure, unhappy with the colour of the water because of the quality of the pipes, then I would understand that, and so would the city council. That is why, according to the council’s plan, in the next 12 months the council intends to spend some $5.5 million to improve pipe work, other facilities, pumps, and improving security around the source of the water supplies, as well. The council did not need this legislation to be encouraged to do that.

The other issue that really does perplex us is telecommunications being left out of the legislation. This is a Government that has Ministers running up and down the country making speeches and being photographed where there is anything to do with the new technology that is being touted as the great saviour for the New Zealand economy in the future. Would members not think that with such a desire to promote the so-called knowledge wave, there might be some understanding that telecommunications, broadband capacity, and so on, is very much part of how that progresses?

I would have thought it not unreasonable that everyone in New Zealand at some point should expect to have access to broadband communication. I would have thought that it was quite reasonable for rural communities to expect that over time they would have broadband in their communities to such an extent that they would be able to connect very, very speedily with the rest of the world. These days, farming is very much part of the technological advances that we see. In fact, the Government is so confident that it can get technological advance out of farming that we are now to levy cows, sheep, goats, pigs, and any other thing that moves on four legs, for the so-called flatulence tax.

💬 John Key: What about chickens?

There we go: the two-legged anomaly! Apparently, that money will go into research to try to reduce those emissions. I am not sure how one goes about that, but for a country that grows grass very well it is a little bit concerning that the Government is doing research into how we might give animals other types of feed to prevent that particular exhaust problem.

So on the one hand the Government says: “Yes, we understand the capacity that technology has to advance the nation.”, then on the other hand says: “We’re not going to see the engine of that technology, the broadband telecommunications network, subject to consumer protection, subject to consumer guarantee, and subject to consumer expectation of access and quality delivery.”

A number of my colleagues have raised the issue of computer software. I have noted that the legislation very specifically talks about computer software being a good—in other words, people go down to the computer adviser, buy a disc, it has a programme on it, and according to this legislation, that is the good. It is not. All people get is a licence. I do not think there is any indication in the legislation that those who sell licences to any product have an obligation to the people who purchase that licence. That was never explained by the Minister in the Committee stage. That explicit question was asked of her, and we did not get an answer. That leaves us in a position of concluding that this legislation does very little for New Zealand consumers other than to guarantee that their costs for electricity, water, and, potentially, computer software will go up very considerably.

Finally, we note the irony of computer software being considered a good, but the means by which one uses it, one’s telecommunications network, broadband facilitates, and suchlike, are not considered a good. So the National Party finds itself quite unable to support this legislation.

I am pleased to rise to take a short call on this legislation—eminently sensible legislation, I must say—and I compliment the Minister and her officials on progressing it to this point. Just in brief response to some of the comments that have been raised by the Opposition, I am somewhat astonished by the crocodile tears I see from the National Party in particular about this wonderful new relationship it has just rediscovered with local government. I was a member of the Dunedin City Council when the then National Government tried to sell the nation’s roads. I was a member of the Dunedin City Council when that council was forced to privatise its electricity generation facility. For people from the National Party to stand up in this House, shed crocodile tears, and trumpet their new-found relationship with local government, leads me to say: “Well, yeah, right!”, because I know what members of local government throughout this country think of that party and its discredited policies.

In terms of the extraordinary comments made by the Opposition last night about the difference between the intellectual property involved in computer software, and the good itself, I say to Opposition members that they should pick up a book and think about the fact that it is a good, and there is intellectual property involved in the creation of the author concerned. It is no different. There is no great new precedent here, and it is only the actual dearth of intellectual capacity in that party that causes it to go down such a tortuous and pathetic route.

Sometimes one joins a debate feeling that one is demeaning oneself by being in it. The Committee stage debate on this legislation, and the third reading debate, are such debates. I just hope that no lawyers or economists ever have reason to look back at the idiotic comments that have been made about what the legislation does. Laws that interfere with contracts simply assign and reassign risk. Risk is currently carried in the way that the parties agree. Admittedly with most utilities, individual consumers will not have a lot of choice about what they agree to, but collectively they have a great deal of choice. Collectively, in many cases, they own the supplier. In the case of electricity, 80 percent of the generation capacity, and still most of the lines in this country in distance, are owned by the Government, local authorities, local trusts, or entities that must respond to their local communities.

This legislation simply says that decisions on the standard of service will not be made by the representatives by democratic vote or by democratic representation or by the customers, be they big or small. They will be made by judges and lawyers. The legislation states that acceptability now becomes a matter not of competent adults agreeing, but of what lawyers, in hindsight, say it ought to have been. That is simply a change; a reallocation of risk. It is a risk that is very easily displaced by the supplier on to the customer.

It is a risk that has to be displaced on to the customer in the long run. When I listen to United Future and New Zealand First talk about that, they seem to believe that a Father Christmas comes out of the air when a bill is passed, that somehow makes all those desirable things like clean water and drinkable sewage come out of a law book. The Karekare case Mr Catchpole used as an example is a classic instance of a community burying itself in consultation, and not wanting to find the money. It has nothing whatsoever to do with whether the law says that waste should be a matter of consumer guarantee. So it is sad to hear this debate and to hear all the discussion, without recognising that what this Parliament is now doing is reallocating some risk, allocating cost, and allocating it probably from the people who can best afford to carry and bear it, to those who cannot.

Take, for example, the computer spike that Mr Adams from United Future mentioned. He is saying that he does not like a power spike affecting his computer. He can easily use a spike protector to cover it, or he can back up his disk. He wants his cost covered by everyone in his community, and in particular, those who do not even have a computer. So we get the gold plating of a system, because the law now says that acceptability must be what any reasonable consumer wants. Well, the reasonable consumer might think; “I am going to have a computer and I would quite like not to have spikes.” So irrespective of the economic logic of it, we now have the prospect of a judge saying in hindsight that suppliers should have spent the amount of money required to upgrade a system to avoid cost that Mr Adams could have easily avoided himself with a plug and a simple piece of equipment.

That is what the legislation does. It is the same as rent control. This is that kind of consumer deception bill that says to people: “Vote for us. We’ll vote you rich. We’ll vote you happy. We’ll vote you benefits that you wouldn’t want to pay for if you were given the choice. We’ll vote you what you haven’t been choosing when you do have the choice.” That is exactly what we are getting. It is choices we are making.

The cervical-smear campaign goes uncompleted, cancer patients are sent to Australia, and heart patients are dying because this Government has run down salaries for medical specialists and demoralised the hospitals. The same Government is telling local authorities in this legislation that they may have to spend as much as $400 million on a water-quality upgrade that people have not bothered to vote for.

It is in their hands. In this country, water supply is still in the hands of local authorities. If they wanted better water, there has been nothing to stop them voting for it, and nothing to stop local authorities spending the money to obtain that. But now it will not be their decision. Now it will be the decision of lawyers and judges who do not have to bear the cost. That is what this Government is doing. It is taking choice away from adults.

What does it do in regard to the acceptable quality for electricity? According to the select committee, acceptability is a difficult issue: “We understand the intended effects of the inclusion of electricity as goods in the principal Act are that electricity generators will potentially be responsible as manufacturers of electricity, but they will not be responsible for failures that result from the acts of third parties, or events beyond human control, provided the manufacturer manages the risk of the occurrence adequately.”

Is that not an absolute picnic for a bunch of lawyers? Was it “adequate” for a Government-owned generator to decide that it would not generate over Christmas, because it wanted to wait for its Indonesian coal supply to arrive? Was it “adequate” that that company should decide? I believe that it was doing what it ought to have been in terms of company law and the duty of the directors, but when the lawyers get into this, what will they think in hindsight the next time that one of those inadequacies, those unacceptabilities, does materialise—this Government has been rescued by the rain, but when it does happen, will it be adequate? [Interruption]. Mr Peck is ashamed of himself. He sat on the committee and came up with an absolutely fatuous report that did not deal with any of the issues, so now he is saying that this country is temperate and we do not have to worry about the acceptability; we do not have to worry about water supply—it will rain. Well, it did rain.

Whether something is beyond human control, and whether a risk has been managed adequately, is now something that is no longer for political decision. The legislation makes it a decision by the courts. There is absolutely no doubt that the courts are not an appropriate place to make priority decisions. The courts should not be forced to decide, as in fact they will be by this, between people dying of heart operations and people complaining about their water. I do not know whether anyone in Paekakariki has suffered any health effect from its water supply. Yet this legislation now says that probably millions will have to be spent upgrading a water supply that people would not vote for, when at the same time those same people may be at greater risk of dying on Centennial Parade because of the roading. Those are political prioritisations. They are political decisions. This turns them into the decisions of lawyers and courts. It is bad law, but worse has been the debate we have had about it, and the comfort that people seem to feel in making speeches on a piece of law without even touching any of the provisions that it imposes on New Zealanders who, until now, in this area, have been able to make the kind of deal that ordinary competent adults should be free to make.

One of the good things about doing some university work recently is that I have been able to read a little bit about political science and I know exactly where that member comes from. He comes from a right-wing, public-choice school of thought that tends to suggest that if people find themselves with some particular problems with consumer goods and things like that, it is their own fault. That is what he thinks. He would have people drink sewage if he could. He would have them without electricity, and he would have them being responsible for all of their daily living and functions, with no understanding of market failure or the role of the State.

The ACT party will have quite a bit of explaining to do, once this debate is over, as to why it does not support consumer protection or fair trading. I think it has a lot to do with Pipitea Street. The party is embarrassed about that. It is embarrassed about its pyramid seller, who is no longer in the House. It is also embarrassed about Rodney Hide. It is time ACT grew up and learnt there is more to the State than a Government sitting back and hoping that citizens will behave decently and contribute to society. I say to the previous speaker that we reject his philosophy absolutely. We believe in a decent society, and that is what we are about providing for our citizens.

I rise on behalf of the National Party to oppose the legislation. Before I start on the issues, let me say to Mr Peck that that was a wonderful speech of sorts, but his attacking Mr Franks in such a manner was incorrect and totally inaccurate. He is not backed up by the New Zealand Law Society, either. Mr Peck can call Mr Franks lots of names if he likes, but I suggest he read the ruling from the Law Society, which sets out quite clearly that the view he just gave the House was incorrect.

This legislation, as Mr Franks said, was introduced with good intentions. It is laudable in many aspects, but in my opinion it has the look about it of law of unintended consequences. It is likely to create more issues and more claims than before. Mr Catchpole said it would tidy up a lot of loose ends. I highly doubt that statement will prove to be correct over time. The legislation, as everyone is probably aware by now, seeks to amend four critical pieces of New Zealand’s consumer legislation. They are the Commerce Act, the Consumer Guarantees Act, the Fair Trading Act, and the Sale of Goods Act. It attempts to define electricity, water, gas, and computer software as goods and services.

The very question we need to ask ourselves is whether this legislation is the right way of addressing those goods and services, and whether, in fact, they are goods and services. The Law Society tells us very clearly they are not. It says that although the society supports the idea and supports the objective, the concern simply is that extending the definitions of goods, services, and suppliers in specific Acts is not the most effective way of achieving that. One of the very reasons the Law Society drew that conclusion is that it went to the Consumer Guarantees Act and looked at the specific provisions that would now apply to the likes of electricity, water, and gas if they were defined as a good.

I refer members to what the ongoing liability is when something such as electricity is defined as a good. It will carry with it a guarantee as to title. I know that the House and the country are going through a lot of debate at the moment about title of specific aspects of New Zealand, and I recognise that. But electricity is not a commodity, not a good that is likely normally to carry a title. Nor can it necessarily have a guarantee as to its fitness for a purpose. We saw the problem with applying that definition to water. There are lots of ways that water can be defined. For instance, most New Zealanders would understand what defining potable water and drinking water as a good means, but there are various grades of water that may be acceptable to one consumer but not acceptable to another. Water that is used for mass irrigation may be acceptable at one level but not another. Water used to fill a swimming pool may be acceptable at one level but not another. Similar are the guarantee that goods comply with a sample of the goods, or the guarantee as to repairs and spare parts. It is simply not practical to apply those definitions under the Consumer Guarantees Act to water and electricity, as this law attempts to do.

One of the reasons I said earlier that I believe this law will be a law of unintended consequences that brings about the rulings required by judges, the Law Society, and the courts of New Zealand is simply that the Consumer Guarantees Act requires that an objective test of a reasonable consumer is defined. That is a very broad and woolly statement, if I may say so. For instance, it is understood that a reasonable consumer would not expect a gold-plated supply of electricity. One of the issues that came up for discussion last night in the Committee stage was the practicality of this. Is one consumer the same as another consumer when it comes to the continuity of supply of electricity, for instance, at a dinner party?

💬 Hon Judith Tizard: You would bring that up.

I did bring that up. I thought it was a good point, and I thought I would raise it again. I slept on it, and I still think it is a good point.

Another instance would be continuity of supply of electricity for fridge-freezers. The response from the Government, in putting up this legislation and attempting to have it passed, is that this legislation is the way to deal with that problem. I say it is not the most simple and effective way. There is a far more logical way to deal with that problem—that is, by relying on third-party insurance.

Mr Franks pointed out what will happen, and he is quite correct. There is no free lunch. Every single consumer in New Zealand will have to pick up the tab, in the same way that consumers will pick up the tab for the Government’s recently announced back-up electricity generation. That is not free. It is going to cost $200 million, and all consumers in New Zealand will have to pay for it, irrespective of whether they want it. There are lots of other mechanisms that could be applied in this consumer legislation, but we are using a sledgehammer to crack a peanut.

I turn to the issue of computer software for just a moment, and its definition as a good. Mr Benson-Pope stood up and said it was silly to disagree with its definition as a good, despite the Law Society having said it did not believe it was a good ruling. Mr Benson-Pope said the equivalent was a book—that one could pick up a book. Well, there is no reason to define computer software as a good, because what are we defining? Is it the CD-ROM that one buys and puts in one’s machine, or the actual equipment and the licence to run that particular service? I say the same could apply to a DVD or a CD. What are we defining as a good?

I turn for a moment to the likely costs of this legislation. There has been quite a lot of discussion in this House about the potential cost to local government, and that cost will certainly be passed down to consumers. Amounts in the order of $400 million to $750 million have been bandied around. When news of this legislation hit the media it met with very realistic assessments. The Nelson Mail stated: “Water study carries costs”. The Southland Times stated: “Upgrade will cost”. The Christchurch Press stated that the council was preparing for a huge water upgrade that will cost consumers.

There are many ways to address issues that face this country. I recognise that the intention of this legislation was to look at defining electricity and other commodities as a service, so that people could not contract out, and the full vertical supply chain could be addressed. I recognise that consumers do have demands in terms of the supply of water and electricity. This legislation is not the best way of addressing those issues. There are other ways of doing it that would add more clarity, more simplicity, and, I believe, less cost.