Electronic Transactions (Contract Formation) Amendment Bill

Now we come to clause 3 of the Electronic Transactions (Contract Formation) Amendment Bill, which relates to the principal Act. It says: “This Act amends the Electronic Transactions Act 2002 (the principal Act).” If we look at the details of the Electronic Transactions Act 2002, which was brought through this House by the Hon Paul Swain—and I would like to pay tribute to him. I used to play with him in the parliamentary rugby side back in the 1990s. He was the left-winger; I was the right-winger. He was not quite as fast, but he was a good man, the salt of the earth, and the sort of politician who represents the Labour Party, in my mind—a good man.

In essence, if I look at the third reading speech that he delivered when that bill was passed in October 2002—just to give you an idea of the idea behind the Electronic Transactions Act 2002, which this bill of mine seeks to amend—he said: “The bill will also allow many interactions with Government that are presently required to be in paper form, to be done in an electronic form. Because the bill is based on the international standard of the model law on electronic commerce, prepared by the United Nations Commission on International Trade Law, it will make it easier for business to trade electronically. The bill follows closely the Australian Electronic Transactions Act, and this minimises transaction costs for exporters in our largest export market.” So Paul Swain was very pleased, and that bill was actually passed unanimously.

But, interestingly enough, supporting the bill and speaking during that debate was the Hon Richard Prebble, who now is devoted to plotting my downfall in the seat of Epsom, but back then he was the leader of the ACT Party. He made some interesting comments on that bill. He noticed that the Electronic Transactions Act 2002 was rushed through this House under urgency by the Labour Government. I just wanted to remind people of that. The concern was—

💬 Hon Clayton Cosgrove: Relevance.

Well, the concern was—

💬 Hon Clayton Cosgrove: Relevance.

I will come to the relevance and it will all become clear, because the concern was at the time—and I will quote another voice from the past, Pansy Wong, whom you will all recall. Pansy Wong spoke during the debate in 2002 and said: “The Minister also mentioned that the bill will remove uncertainty. I doubt that it will achieve that effect, because, first, I pointed out that clause 6 states that when a person interprets the Act, reference may be made to the model law on electronic commerce adopted by the United Nations Commission on International Trade Law [but that] introduces a lot of uncertainty. Imagine when a dispute arises as to whether an electronic signature is acceptable, whether the electronic document has been received, at a time when the sender or the receiver is in dispute. I can just imagine the lawyers reaching into the model law on electronic commerce adopted by the United Nations Commission.” The circumstance of that was that she was being ironic at that point. I did not quite capture the mood of that as I was expressing it, but what she was trying to say was imagine—imagine—the lawyers reaching into the model law.

She went on to say: “However, more than that, they can reach a whole raft of documented material that relates to the development of international law.” So Pansy Wong at this time was concerned that the Electronic Transactions Act, which was passed under urgency by the Labour Government in 2002, was being rushed through and that there were elements of it that were going to cause trouble further down the line. One of the areas that she particularly drew attention to—and, funnily enough, she was quoting her colleague Tony Ryall, who I see is at the back of the Chamber today. She said that he “pointed out that because of the language used in clause 11, an electronically transmitted message may be deemed to have been received by a person on the receiving end. The legislation states that, as long as the sender ensures that the message left his or her system, and goes to the address given by the receiver, it is automatically assumed that the information would have been received.” So the point I am trying to make is that Pansy Wong was predicting—quoting Tony Ryall—in 2002 that the Electronic Transactions Act of 2002, which was rushed through in urgency, would not deal effectively with some of these issues about the specifics and the details of the manner of the moment of instantaneous receipt.

So 12 years later I have had to come along and tidy up the mess that was left by a hurried piece of legislation in 2002. I do not want to blow my trumpet too far, but I would say that, 12 years on, we have dealt with that issue, which was left untidy and ineffectively dealt with by that previous Government. I just also want to refer to a mention that was made by a fellow called Paul Adams, an honourable member he was, from United Future back in 2002. I do not think that—

💬 Hon Clayton Cosgrove: Relevance.

Well, the relevance is that this is the legislation that I am amending. I am trying to get an understanding of what the House was trying to achieve through the original legislation, and then, from there, to understand what needs to change. But I thought the Committee might be interested in this contribution from Paul Adams. He said: “New Zealand as a nation is ripe to receive positive change. The discerning have picked up on the fact that many, many New Zealanders are tired of the old systems that simply are no longer relevant to the hour in which we live. For example, today I wear a pink shirt and have coloured my greying hair. Just 20 years ago, if I walked into the House and looked like I do today, I would not have received positive comments. So I believe that that in itself shows that I am, indeed, open to positive change, as are the three ladies in my life—my wife and two daughters who heartily approve of the change that they now see.” I do not like to be unkind but I think that may explain why United Future did not—

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. I just draw your attention to the issue of relevance. I cannot for the life of me see how the colour of the shirt of a former member who was in here, what, 10 years ago or his attire has anything to do with electronic transactions. I know that the speaker in the chair is desperate to sort of waylay this as long as he can, but there are limits. I do not think that a debate about a dress code, even though Mr Ryall has broken the mould and is in the Chamber, is in any way relevant to this bill.

💬 Tim Macindoe: Apart from that gratuitous comment at the end, in reference to the Minister of Health, which had no relevance, I want to point out that the member who is objecting on this occasion is the one who has probably spent most of the last half-hour doing his level best to try to distract not only the fine member who is sponsoring the bill but also many other members. As members are trying to gather their thoughts around what is, at times, a fairly technical matter, it is important that they are able to retain their train of thought. The problem is that members such as Mr Cosgrove are doing their level best to distract the member. So I would just point out that I think he really needs to look at himself if he has a problem with where the member is going.

The CHAIRPERSON (H V Ross Robertson): Thank you. Can I just urge all honourable members to play the ball and not the member. Remember that and we will preserve an excellent field for the full play of ideas. I just ask the member to try to speak to the bill. I know that he is trying very hard and I am listening intensely to what he is saying. It is important that we debate the issues in front of us. I understand where he is coming from.

Thank you, Mr Chair. I would not like to regard myself as simply a trier; I thought I was achieving the ability of talking about this bill. What I was trying to get across to the Committee was the whole purpose of this bill, which I have had the good fortune to see drawn in the ballot and also the good fortune to have the support on from all members in the House for the last reading stage. I do not think too many members can claim to have unanimous support for a bill that they have brought into the House only 2 years into a parliamentary career.

💬 Hon Todd McClay: Kanwaljit Singh Bakshi did with his Military Manoeuvres Act Repeal Bill.

Thank you for pointing that out. The point I was trying to make was that this bill seeks to amend the Electronic Transactions Act 2002. Going back to the original debate, it is worth reminding us that people were predicting—and I can quote Richard Prebble saying in 2002: “When we draft legislation as loosely as this, I think we are being reckless and irresponsible.” So, really, the point I am making is that this bill amends the Electronic Transactions Act 2002 because it was flawed and it did not give that level of detail and clarity in this area around the acceptance of contract formation of electronic transactions. That is why I have brought this piece of legislation to the House for its consideration, in the hope that we will provide that clarity upon which the smooth regulation of commerce in this country depends. That is why I wanted to make that point. Thank you.

At this point in time, we go through the Committee stage of the Electronic Transactions (Contract Formation) Amendment Bill and arrive at clause 3, which is dealing with the principal Act, the Electronic Transactions Act 2002, which this bill amends. Through the good fortune of the athletic attributes of my colleague the Hon Todd McClay, who—

💬 Hon Todd McClay: Climbed up the ladder.

—climbed up the ladder outside the Chamber here, we managed to secure a copy of the Electronic Transactions Act 2002.

💬 Hon Todd McClay: I had a touch of vertigo.

He had a touch of vertigo. It was good to learn that it was the Hon Paul Swain who shepherded that particular bill through the House—a fine member of this House from the Government of the day. He would be in the Opposition now. I had the good fortune to deal with Mr Swain in a number of areas. In fact, when I was Minister of Internal Affairs he led the fire review that we took through at that point in time.

But the reason for clause 3 is to give us a clear sense of what we are changing, because clause 3 talks about the principal Act. That is why I have got that Act here before us now. I know that my own colleagues will be interested to have a look at this, because there are a range of clauses in here that I am sure you will be able to talk to and actually ask some questions of the member in the chair, Paul Goldsmith. We want him to stand and answer some of these questions.

What is really important to start off with—and I am sure that Mr Cosgrove will be really interested—is the purpose of the principal Act, because that kind of defines where we are at and what we are actually changing. So if you will bear with me, I just wanted to read through the purpose of the principal Act in Part 1: “The purpose of this Act is to facilitate the use of electronic technology”—Mr Swain was really ahead of his day back then in 2002—“by—(a) reducing uncertainty regarding—(i) the legal effect of information that is in electronic form or that is communicated by electronic means;”. So we are really getting to the heart of the bill here. It continues: “(ii) the time and place of dispatch and receipt of electronic communications; and (b) providing that certain paper-based legal requirements may be met by using electronic technology that is functionally equivalent to those legal requirements.”

That is at the heart of how back then in 2002 departments like the Department of Internal Affairs were starting to lead the drive of this change in information and communications technology in a drive towards a digital economy and where it had its genesis. That is why today members such as the member in the chair, Mr Goldsmith, have taken it upon themselves to advance the legislation. There is nothing surer than that technology is changing faster than we know. I mean, all of us—look at our kids. In fact, it was interesting, because my son the other day came up to me—he is 17 years old—and it was the first time in a while he had to send a letter. He said: “Dad, what side of the envelope does the stamp go on?”.

💬 Tim Macindoe: Really? Good lord.

Yes. It is quite incredible to understand how much the electronic age is changing us.

The bill before us seeks to amend that principal Act, that 2002 Act, in the purpose clause. In particular, the really relevant section in this 2002 Act is section 13, and you will note that later in the debate on the bill tonight—I think when we get to clause 5, if I am not wrong—we amend section 13. So in thinking about that, that amendment becomes new section 13A. What I want to remind members of tonight is the principal Act and what is actually section 13 now.

💬 Hon Clayton Cosgrove: Wow!

I know, Mr Cosgrove, that you would be interested, would you not? Section 13 of the Act is “Place of receipt”, and that part of the legislation says that “An electronic communication is taken to be received at—(a) the addressee’s place of business; or (b) if the addressee—”

I would actually like to pick up where my colleague the Hon Chris Tremain has just left off because I think he has touched on some quite relevant issues. I am a late starter in this particular debate on the Electronic Transactions (Contract Formation) Amendment Bill, and so I apologise to the fine member who is sponsoring the bill, Paul Goldsmith, that I was unable to hear everything that he told the Committee earlier on in the evening.

Nevertheless, this particular clause, clause 3, is amending the Electronic Transactions Act. I was very interested that the honourable member Chris Tremain had a copy of the Act there. That Act was passed only 12 years ago, and I daresay that there could be members of the public listening to this debate who would wonder why it would be necessary to move an amendment to something of that nature in a relatively short space of time. In fact, I am intrigued, as I look around the Chamber, that with the exception of the Minister of Health in the back area where the Green members are now, there is not a single member on this side of the Chamber this evening who was actually a member of Parliament at that time. I do think that if we are going to make a decision of this magnitude in amending the principal Act, we do need to be able to hear from the member as thoroughly as we can what the reasons are for his feeling that this particular principal Act needs to be amended.

The member told us also, and this really concerned me, that the principal Act in 2002 was passed under urgency. I know that there are many members on this side of the Chamber who have been accused over the last few years—sometimes quite unfairly—of such grandiose things as an abuse of process or a breach of parliamentary procedure, or whatever, whenever the suggestion is that a matter should be passed under urgency. Of course, there have been some significant things. Budgets are frequently passed under urgency. We passed the Auckland governance legislation under urgency, and a number of other things have happened. Usually Oppositions howl and scream whenever that happens, and yet here we are, learning that the previous Labour-led Government passed that particular Act under urgency back in 2002.

I therefore ask the member sponsoring the bill if he could please, when he next takes a call, give us a little bit of the history of the issue, or maybe there will be a member of the Labour Opposition—I see Mr Cosgrove has been here since 1842. He might be able to tell us why the member Paul Swain saw the need—

💬 Hon Clayton Cosgrove: I’m younger than you, you prat.

The CHAIRPERSON (H V Ross Robertson): Order!

I think that was a particularly unparliamentary expression from Mr Cosgrove.

💬 Hon Clayton Cosgrove: What—“prat”?

That is not the expression that he used, and he well knows it. But, anyway, I will turn the other cheek and we will carry on. The point is that I would appreciate him taking a call to tell us why the previous Labour-led Government felt it was necessary to pass that principal Act under urgency. What were the reasons for that? An Electronic Transactions Act certainly does not obviously lend itself to that sort of treatment. As I say, we have had to listen to many lectures in our time in Government as to why urgency is not an appropriate way of acting. I would also like to know what the actual vote was at the time that that happened. If it was passed under urgency—

💬 Hon Clayton Cosgrove: Look at the Hansard.

Well, I have not had a chance to look at the Hansard because I have only just become aware of the fact. That is why I am saying to the Hon Clayton Cosgrove: take a call and fill us in as to why you and your colleagues at that time felt it was necessary to move this particular Act under urgency. Tell us what the vote was. I would be interested to know how the House divided. Of the parties that were here at that time, which parties supported the measure, which were opposed to it, and what were their reasons for it? But, more important, what was the actual purpose of the principal Act? We do need to know that if we are going to be able to make a considered decision about amending it. This is not a trivial point.

As the Hon Chris Tremain noted just a few minutes ago, technology is evolving rapidly. It is actually quite frightening at times just how quickly technological change is taking over. Quite often you get to my age and you think: where is a teenager when you need one in order to understand the latest technological gadget. I have to admit that I had that experience just a few days ago. Every year it seems that there is a new gadget on the market. We are being expected to become more and more proficient with gadgets that are being used quite often now for electronic transactions. It is important not only that we know how to use them but that we can ensure the security of those transactions when we are using all this technology.

Mr Chairperson, you and I are both old enough to still have cheque books, and I bet you still have one. I certainly have a cheque book. I have to admit that at times I feel a bit of a dinosaur when I use it. In fact, when I look at it, it tends nowadays to be mainly used for charitable donations. I certainly do not pay accounts with cheques any more. I do most of those things online. But I am sure that we have all had the odd occasion of being a little bit fearful about how that is going. In fact, as an electorate MP, more than once I have had constituents who have been concerned about the security of those transactions. I do ask the member in charge of the bill, as we focus on clause 3, this particular clause, in which the sole purpose is to amend the principal Act, whether he could give us that history, please, as to why it is necessary to do this. What was it about the original Act that he now considers to be flawed, and what is it about what he is proposing to do now that will enhance the security?

I also make the point that the Government has set a very ambitious target under the Better Public Services target, which is a cornerstone of our administration, of ensuring that a substantial number of transactions that used to take some time and involved a lot of bureaucracy and a lot of waiting, and quite often a lot of expense, are now available online. We are talking about the sorts of things such as applying for a passport or maybe obtaining a visa to go to another country. We all, I am sure, welcome anything that reduces costs and improves the efficiency and the speed with which things can be done, but it is, of course, absolutely vital that we can be assured of the security of these matters. We want to ensure that there can be no danger of theft of identity, misappropriation of funds, or misuse of the particular technology, which could lead to danger.

We need only think about the fact that if somebody was dishonest enough, they could maybe look down from the gallery and see a member on this side or on the other side of the Chamber putting a pin number into a smartphone or something. That is something that could easily happen and does often happen as members use their iPads and their iPhones in this Chamber frequently. It is possible sometimes for members of the public to look over from the gallery. If they were sufficiently savvy to be able to pick up the pin number of a member and then to get hold of that appliance, then they have got the ability, with that contraption, to get into the member’s account to do all manner of evil. That is a very real possibility, so we need to know from the member in charge of the bill whether that sort of eventuality was contemplated by the member at the time that this bill was originally being pushed through in 2002. Is clause 3, by which the principal Act is going to be amended, a way in which those sorts of concerns can be alleviated?

These are not insignificant questions, because with the rapid evolution of technology it is likely that we will become even more dependent on these technological gadgets in years to come. Electronic transactions will probably become the entire way in which transactions are conducted in the future, and we need to be absolutely sure that the legislation the member is putting forward in this Chamber tonight will be sufficient as we move forward into that era. I do ask the member in charge of the bill whether he could address himself to that as well, and perhaps alert us to whether there are any matters in the bill, as he is putting it forward, that would cover future eventualities. I believe that this is a significant issue. I realise there has been some levity in some of the contributions, and that is good. On a members’ day it is always nice to feel that there is a degree of jocularity in the Chamber and that members can enjoy a little bit of banter. Nevertheless, this is a significant matter.

I am a little bit envious because this particular member has achieved something in half the time that I have been in the House that I have not been able to do, and that is to get a bill drawn out of the ballot and to be able to have the honour of pushing it through. I congratulate him on that, and I do look forward to his answers to the questions that I have put forward. I believe that they are significant and we need to get them on to the record. I look forward to hearing his next contribution. I know that my good friend the Hon Todd McClay has one or two other questions that he wants the member to consider as well, so I hope that the member in charge of the bill will be able to deal with both of them in his next contribution.

Just before I call the next member I want to caution members about name-calling, which occurred during the debate. Let us remember that all members are honourable, and all will get a fair and equitable opportunity to address the people’s business within the Standing Orders that govern our proceedings. By and large, name-calling comes through frustration, and that is understood, but it is out of order as a personal reflection—I refer members to Standing Order 117 and Speakers’ rulings 28/1—because it can lead to disorder.

I move, That the question be now put.

I move that the question not be put, because I want to intervene in this part of the debate on the Electronic Transactions (Contract Formation) Amendment Bill to talk about the principal Act, the Electronic Transactions Act. I was not going to but when the Hon Chris Tremain spoke I was moved to, as I am the person who climbed to the top of the ladder to get the paper copy of the Act to be able to come here and sit in the Chamber and read it. I am going to ask my colleague Kanwaljit Singh Bakshi to bring it over to me, if he would, because I very much believe it is quite important. He can take his time. I reckon that I have got 10 minutes in me for this part of the debate.

The thing about this is that there will be members in this Chamber in the Opposition who were in Government at the time when this piece of legislation, the principal Act, went through who did not bother to read it back then. They would have taken part in the debate, they would have been in the House, they would have voted in favour of the principal Act, and they did not read it. Today the hard-working member of Parliament Paul Goldsmith has brought in an amendment to the principal Act, and I give you a guarantee, Mr Chairman, that there are members in this Chamber who were there in 2002—who were in Government at the time and who are now in Opposition—who did not read the Act back then. Now we have an important piece of legislation to amend the principal Act to fix some of the challenges and problems that Mr Goldsmith found in it, and I am sure they still have not read the Act.

I too would say that when I came here and had an opportunity to look at this draft piece of legislation, I had not read it. That is why I went out the back and I climbed the ladder to the very top, got this New Zealand Statutes 2002, Volume 2, at page 1,217, and found the principal Act and started to read it. And do you know I think that any members from the Opposition who would take part in this debate, who want to rush through this and are trying to get the Committee to vote on the different clauses before we are ready to, who have not read this legislation, the principal Act, are doing themselves and the Committee a great disservice, because it is a very weighty piece of history of what this New Zealand Parliament has done.

When one looks at the bill Mr Goldsmith has brought before us, it is not the largest piece of legislation we have had to debate on a members’ day. But when one looks at what he is trying to achieve and you take the different clauses in this and you come back to the principal Act, it is clear that he has put great detail and thought into his legislation. It is clear that he, at the same time, has looked and found inadequacies in the legislation that was passed by a Labour Government in 2002, and that he genuinely comes here to fix them. He wants to make the lives of New Zealanders who are uncertain about their electronic transactions and the formation of contracts better by diminishing and taking away that uncertainty.

I can say to my colleague that I was going to stop at the next bell anyway, but what I can say to you, Mr Chair, is that that uncertainty that New Zealanders will be experiencing is unnecessary. Had the original movers of this legislation—some members opposite who are now in Opposition who were members of the Government in 2002, who voted on this legislation, who would have made speeches in this House, and who might not have read the legislation—read the legislation, they could have moved Supplementary Order Papers. They could have improved it, they could have spent the time that was needed in the Committee stage, taken that extra bit of time in urgency to make the changes so that we would not have to be here today, so that the House could be doing other business that may or may not be more important. But Mr Goldsmith has had a close look at the principal Act and Mr Goldsmith has found problems that are affecting New Zealanders, and some members opposite did not take the time to get the legislation right, and that is why we need to be here right now.

Can I say to Paul Goldsmith, I want to congratulate him on reading this lengthy piece of legislation. It actually is good legislation. It is detailed, it is quite technical, but the Labour Government did not get it right. I want to give members opposite the benefit of the doubt, because members’ days are—what did the last speaker say about “jocularity” or something like that; we studied in different places—and it could well be that some of the challenges and some of the difficulties that Mr Goldsmith is fixing here with this legislation this year in our Parliament may not have been as obvious or as apparent in 2002. The world has changed. Many, many more people are involved—

Clause 3 agreed to.

Clause 4 Section 4 amended (Overview)