Real Estate Agents Bill

As we move to Part 3, “Licensing”, we come to the very nuts and bolts of this legislation. This is the part where we are talking about how one becomes licensed, how a licence is suspended, how a licence is cancelled, how a licence is renewed, etc. We come to the very essence of this legislation as it impacts on the real players within the industry, and I am talking about the real estate agents themselves.

I want the Committee to note that we now have a fresh Minister in the chair, the Hon Shane Jones, and to note also that some valuable questions raised in the previous discussion remain unanswered, because Mr Cosgrove, who was then the Minister in the chair, decided not to answer the legitimate questions put by members of the National Party. In referring to clause 16, I notice that when we are talking about the nuts and bolts of the licensing, as in Part 3, this is a significant function of the authority. Therefore, I say it is important that we are absolutely assured today by the Minister in the chair that consideration has been given to who the members of the authority are. It is my understanding that following the conclusion of the Committee stage of the debate we will move to the third reading, later on today. If that is the case, then this legislation will have the Royal assent in the early part of next week—say, on Monday or Tuesday, depending on how busy our very distinguished Governor-General is. On that basis, the Minister has to have revealed on the day after that who the members of the authority are, because those members will then have responsibility for administering the licensing regime of Part 3, which affects every person participating as a real estate agent within this industry and affects people who want to enter the industry.

I think that the least the Minister in the chair, the Hon Shane Jones, could do is to rise to his feet and assure the members of this Committee that due consideration has been given to the appointment of members to the authority. Furthermore, he should assure members—and maybe this has happened with my colleague Simon Power, with regard to the normal conventions that have applied in this House for a long, long period of time; decades in fact—that there has been a reasonable consensus between and consultation with other political parties as to the membership of this authority. If, as we are discussing in Part 3, we are to end up with a licensing regime administered by an authority that has not been appointed in a fair and open manner, then this legislation will not be enduring. For example, it might be an authority that could be stacked with Labour Party lackeys. I note that it is now 32 years since we last had reforming legislation involving the real estate industry, and I do not want to see this legislation coming back because it was rammed through without a fair and consensual discussion in Parliament on the membership of that authority.

I hope that Shane Jones will be more cooperative than the bullying, arrogant Minister whom we had earlier, the Hon Clayton Cosgrove, but I think that this Committee has every right to know whether those appointments have been considered, whether they have been approved by a Cabinet process, and, if so, I ask why the Minister cannot simply tell us who they are today. Unless that authority has the confidence of this Parliament and, more important, has the confidence of the industry, this legislation and the licensing regime we are now debating in Part 3 will not be enduring, and I think it would be a shame for this House if that is the process the Minister Shane Jones is prepared to endorse in Parliament this afternoon.

I will deal with several aspects of Part 3, “Licensing”. I endorse the comments Mr David Carter has made, because a key person in this licensing regime will be the registrar, and in the part that we have just dealt with, clause 31A provides that the authority is to appoint the registrar. So it is extremely important that the body that appoints the registrar is made up of competent people and that it is not a pay-off for simply leaving Parliament.

But I come to Mr Dunne’s proposed amendments, because I submit that they are very good indeed. He says that he would make three changes to clause 34, and they are designed to ensure that the authority will have broad and full criteria on which to make the decision on the granting and retaining of licences. Again, this is intended to ensure that the consumer is properly protected. Clause 34(1) deals with the entitlement to a licence as an agent or a branch manager, and an individual must satisfy the registrar that he or she meets the criteria set out in that subclause.

One of those criteria is that the person is to be a fit and proper person to hold a licence. Mr Dunne is suggesting in the first of his proposed amendments that before the words “is a fit”, we should insert the phrase “in the interests of the public”. I fail to see how there could be any objection to that proposal. It emphasises the fact that it must be consumer protection legislation. Ultimately, it is in the interests of the public, and to spell that out very carefully causes no harm whatsoever.

The second proposal relates to clause 34(1)(e), which deals with the experience that the proposed agent or branch manager must have had before appointment. Mr Dunne’s suggestion is that instead of having 2 years’ experience within the 10 years preceding the application, this person must have had, during the preceding 5 years, at least 3 years’ practical experience working full-time or working primarily, and predominantly, in real estate agency work. Again I suggest that as this is supposedly consumer protection legislation the Dunne formula is to be preferred.

The third, and final, change is to clause 34(2), which provides that an individual may be licensed as a sales person if the individual satisfies the registrar of various matters. The critical one for current purposes is clause 34(2)(c), and again it is the fit and proper person test, and Mr Dunne has suggested, again, the insertion of the phrase: “in the interests of the public”. I suggest to the Committee that these changes are sensible. They make the clause that much better, and I certainly support them.

The other point I wish to address concerns clause 50. This is another backdown by the Minister. There was extensive debate in the Justice and Electoral Committee about the desirability of this clause, and whether the chief executive of the Ministry of Justice should report to the Minister as to whether clause 49, which deals with the employment status of a salesperson, should continue to be appropriate. There was considerable debate. The Labour members were adamant that clause 50 should be retained, but it is very interesting to observe that the Minister’s Supplementary Order Paper 243 proposes to omit this clause—another win for the National Party, which had argued the clause was inappropriate and did not sit happily in consumer protection legislation, and if it was to be retained it should be in employment legislation, and the person doing the review should be the chief executive of the Department of Labour. So having adopted a stubborn approach to clause 50, and having had his minions argue the case strongly for the retention of clause 50 in the select committee, the Minister has cut them off at the knee caps because clause 50 is to go.

I rise to speak to Part 3 of the Real Estate Agents Bill, and following on from my colleague Mr Finlayson, I do urge the Committee to consider the proposals submitted by Mr Dunne with those very sensible and consumer protection-related amendments. I do urge the Chamber with some scepticism, because when one has the Government of the day voting against a provision that says the authority must consult with the industry training organisation for the real estate industry, one has to wonder whether they are trying to create and legislate good law or whether it is still just that political posturing. This is a so-called listening Government, but it does not listen to common sense. These amendments suggested by Mr Dunne, as he rightly said, are hardly subversive, they are hardly radical, and they actually do improve the consumer protection of this bill.

Like my colleague Mr Finlayson, I want to touch on a few clauses in Part 3. The first one is the entitlement to the licence, which is in clause 34. It states that “An individual may be licensed as an agent or a branch manager if … the individual (a) has attained the age of 18 years; and (b) is not prohibited from holding a licence … ; and (c) is a fit and proper person to hold a licence; and (d) has the prescribed qualifications; and (e) has obtained 2 years’ experience in real estate agency work within the 10 years preceding the application to be licensed … ” .

I am aware that the Minister has an amendment in Supplementary Order Paper 243 that will increase that experience to 3 years in the 10 years preceding the application. Mr Dunne’s amendment will tighten that and add more protection for the consumer by specifying the experience as 3 years’ experience in real estate agency work within the 5 years preceding the application. That is much better for the consumer, and if this Government really were a listening Government, then it would certainly vote in favour of the amendment proposed by Mr Dunne.

It was raised during the select committee process whether 18 years of age was actually old enough for a person to be buying and selling on behalf of another person his or her most valuable asset—a home. Often it is the most important significant purchase that any family in New Zealand makes, and I wonder whether a person who is 18 years of age is sufficiently old or sufficiently experienced to do that. I think that when we talk about ages, there are so many different age limits littered throughout our legislation, but when one has the very same Minister who on the one hand says that a person of 18 years of age is not old enough to buy a beer—because he voted against that in the sale of liquor legislation—but that an 18-year-old is old enough to buy and sell someone’s most prized possession, a house, then one has to wonder about the consistency of that Minister’s judgment.

The other clause I really want to mention in relation to Part 3 is clause 48. Clause 48(1) states: “A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.” It then specifies: “In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—(a) that the work is performed competently; and (b) that the work complies with the requirements of this Act.”

On first reading, that might seem quite sensible, but if one goes back to the original Real Estate Agents Act, section 54(2) contains the phrase “effective control”. The wording of that is: “Every branch office of a real estate agent … shall be under the effective control of a person approved by the Board,”. So we have changed the terminology from “effective control” to “properly supervised and managed”. The difficulty with changing phraseology and terminology in legislation is that one has to build up a whole new supply of cases to actually explain and verify what that means. Considerable case law already exists as to what “effective control” is. We have now changed that to “properly supervised and managed”, and my concern is that this will lead to uncertainty, and now a new load of case law, which will try to interpret Parliament’s intentions. It will also try to distinguish the difference between “effective control” and “properly supervised and managed”, and will try to work out what the intention of Parliament was in relation to this new definition.

We have to ask ourselves whether this actually adds anything to the consumer protection nature or element of this legislation that could not have been satisfied by using the tried and true terminology of “effective control”. I would like the Minister to take a call on that, because I think that is very important, and that we have a duty as legislators not to be reckless when we are making law, and to me it is certainly not contentious, but it is going towards better law-making. I would like the Minister to give us his views of that change in terminology.

The other clause that I will briefly mention is clause 50, which has been deleted by the Minister’s Supplementary Order Paper 243. National will certainly be voting in favour of that one. It concerns the 5-yearly review of the employment status of salespersons. Having that 5-yearly review hanging over the heads of salespersons was just too untenable and uncertain and really did not add much to the debate. There is no reason whatsoever why salespeople cannot make the choice to be employed on an employment basis or on an independent contract basis—a contract of service as opposed to a contract for service—and, accordingly, that review has now been deleted from the bill by virtue of the Minister’s Supplementary Order Paper, and we certainly approve of that.

Another concern, however, in relation to the employment status of salespersons, is whether changing the terminology to “properly supervised and managed” as opposed to “effective control” implies changes to the employment status of salespersons so that they may in fact be deemed to be employed rather than self-employed. I am concerned that there might be a plethora of cases that would try to interpret the difference in that terminology, and that will lead to uncertainty within the real estate industry as to whether these salespeople are employed or are indeed self-employed. I think it is important that the Minister does address this issue, because I think that is the responsible thing for him to do. It is one of the important clauses in Part 3 that we have highlighted, and I really would appreciate the Minister taking a call. No calls for the Minister to answer any questions have so far been taken seriously, whether in relation to the definition of “transaction”, the definition of “residential property”, or the definition of “real estate agency work”. Now I am asking the Minister to take a call to explain the definition of “properly supervised and managed”. I would appreciate the Minister’s advice, or his getting advice from officials, as to the ramifications of that change of definition.

I am addressing Part 3, and I would like to pick up on a theme I was discussing in relation to Part 2. Part 3, “Licensing”, deals with how to become licensed, and again we see that it is done by the registrar, as appointed by the authority. I see a very strong similarity here to the potential relationship that existed between the Plumbers, Gasfitters, and Drainlayers Board and the industry training organisation. When we look at the terms and reasons in respect of a person becoming licensed, we find that it goes beyond a lot of what has been normal and into areas where the authority has the ability to cancel licences, as one would justifiably understand it could. But when we actually look at it we see clause 53 states that the registrar must cancel a person’s licence and remove that person’s name from the register, for various reasons, and paragraph (c) states: “if the person has failed to maintain the prescribed qualifications;”.

That in itself may not mean a heck of a lot, but when we look at the relationship that can exist between an authority and an industry training organisation, we find that there can be quite a conflict of relationships, as was the case, as I said earlier, between the Plumbers, Gasfitters, and Drainlayers Board and the plumbers and gasfitters industry training organisation. That was borne out in Hazel Armstrong’s report, which stated that there were strong personalities, and in that case they were between the registrar and the chief executive officer of the industry training organisation; it just did not work.

The question I raise is whether a shelf life is now being put on to the real estate agent qualification. It is understood that after 3 to 5 years real estate agents will need to resit to keep those qualifications, whereas in the past there was an understanding that once people gained those qualifications, they did what was reasonable around the variations of the industry at the time and, as long as they were not bankrupt or were not facing criminal charges, they were able to keep their licences. The basis on which that qualification kept rolling on was to do with recognising prior learning and current competencies.

When I look at Part 3, I see that there will need to be continual conversation between the authority, especially the registrar, and the industry training organisation with regard to the construction of those qualifications. It could get quite personal and it could get very bitter, especially if the relationship breaks down, and in the end the Minister would have to step in, as Dr Cullen did with the Plumbers, Gasfitters, and Drainlayers Board, and sack them. That in itself creates its own reverberations around the industry, and it does not do anything to instil confidence. We can see that there is a lot of good within the proposed framework.

Again, I come back to the other point. Are there conversations with Australia and developments along Australian lines so that we are developing similar standards, so that these standards are compatible with New Zealand, and so that we do not allow a standards issue to develop within the qualifications and start a division that could set the licensing authority up against the industry training organisation? That is the one point I think we really need to be very mindful of.

The second point, of course, concerns the definition of a salesperson and how he or she must be supervised. That in itself, I think, opens a can of worms around litigation and confusion, as will the aspect of the independent contractor versus “services of” and “services for”. The Minister has wisely taken the step to take away clause 50, and we certainly see that as being a positive move.

The real estate industry is already reeling from the description of it given by Minister Clayton Cosgrove. He described real estate agents as land sharks and cowboys. The real estate industry knows that it does not have the confidence of the Minister, because he has told it so. The real estate industry has a view of the Minister because of that position and the grandstanding of that Minister on real estate agents and their profession. Now the Minister brings to the House a bill called the Real Estate Agents Bill, which we oppose. The bill intends to provide good consumer protection, but it contains some glaring omissions. I raised one omission during the debate on Part 2, and that was the exclusion of property managers from the regime, which, of course, creates inequalities. Minister Cosgrove’s response to that was, I suppose, typical of him. He indicated that he would conduct a review. When? We do not know. How? We do not know. Who will be conducting that review? We do not know.

That brings me to another part of Part 3. Part 3 is to do with licensing and how to become licensed. There are a number of clauses dealing with how to become licensed, the provisions relating to licences, the effect of licences, the status of licensees, and the renewal, cancellation, suspension, and surrender of licences, and so on. The person who considers the granting of licences to become a real estate agent is, of course, the registrar. The person who appoints the registrar, who grants licences, is somebody who has been appointed by the Minister. Given the recent occurrences, against all the conventions of this Parliament, in the appointment to boards—

The CHAIRPERSON (Hon Marian Hobbs): I just wonder whether I can stop this. I have been upstairs and I have been in this Chamber, and that issue really was addressed in Part 1. We are here talking about licensing. You are trying—as did the first speaker on this part—to link it back to two steps back. I think that is really pushing the definition of what is talked about in Part 3. Thank you.

I think it is important to the real estate agent who is coming under the regime of becoming licensed that he or she has confidence in the person or body that is granting that licence. That is why I raised that issue in the context of the debate on Part 3. We are talking about people’s livelihoods here. We are talking in the debate on Part 3 of this bill, which concerns licensing, about people’s professions. There are real estate agents in New Zealand who take the profession of real estate agent for a number of years of their working lives. There are real estate agents who are in the job in the long term for maybe 20 years. They enjoy the role, and they are good at the profession.

I want to have a look at clauses 43, 44, and 45 in Part 3. Clause 43, “Duty to produce evidence of issue of licence”, states: “A licensee must, if asked by any person, produce for inspection by that person either—(a) the evidence of the issue of a licence sent to that person under section 41; or (b) a copy of that evidence.”

Does that mean if I am employed by Barfoot and Thompson and I am walking down the road, somebody can ask to see my licence? Is that what it means? I wonder whether the Minister could turn his mind to maybe answering that question. It seems to me that it is a bit like the regime they had in South Africa, where one could be walking down the road and somebody would ask in a South African accent—which I will not even try to do—to see one’s pass, to see one’s licence to be there. That is what this clause means. That is exactly what it means.

💬 Charles Chauvel: Good point!

Mr Chauvel says that it is a good point, then shakes his head. It is no wonder these guys are on their way out.

The CHAIRPERSON (Hon Marian Hobbs): We are debating Part 3.

I am just responding to an interjection from the other side of the Chamber. I was on track. [Interruption]

The CHAIRPERSON (Hon Marian Hobbs): We were going along very quietly. On we go.

Thank you, Madam Chair, for bringing the Government members back to order. Fancy having to produce one’s licence! We have licences for driving cars, which the police have the power to look at any time, day or night, when one is in a car, or whatever. But fancy anybody, from Joe Public upwards, downwards, and sideways, having the ability to stop a person and ask where his or her real estate licence is. That is what clause 43 does. That is exactly what clause 43 does.

The term of the licence continues in force for a period of 12 months. Well, what happens if somebody is late in getting relicensed? I have looked through Part 3, and it has no reference to somebody who is late in getting relicensed. The bill talks about the cancellation of a licence, the renewal of a licence, and the expiry of a licence, but nowhere does it tell us what happens when somebody unfortunately misses the renewal date. We have all been guilty, now and then, of missing the date on which we have to get some paperwork in. I wonder whether the Minister can turn his head to that issue.

The interesting clause in Part 3 is clause 45, “Licence may not be transferred”. How stupid is that? Of course it cannot be transferred. Can we transfer our own driver’s licence? No. Can we transfer any other sort of licence? I tell members that it is actually easier to get a gun licence than it is to get a real estate agent’s licence. There will not be a real estate agent left in this country, if the Government has its way. But here is the doozy: clause 51, “Renewal of licence”. I commented briefly yesterday about the same issue. Subclause (1) states: “An application for renewal of a licence must, before the date on which the licence expires,—(a) be made to the Registrar in the prescribed form; and”—here is the little doozy—“(b) be accompanied by the prescribed fee (if any).” Why is it that for the last 9 years this Government has been intent on putting the word “fee” behind everything it does?

I move, That the question be now put.