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The unfair terms that we are seeking to address aren't ones that are necessary to conduct business. In some cases they are put into contracts simply because the dominant party knows it can get away with it. It is not reasonable to expect small businesses to be able to pick through routine contracts with a fine-tooth co... |
At the same time, the $250,000 limit on the protections recognises that when businesses enter into large strategic contracts, they do have an obligation to do their own due diligence, seek legal advice, and make their own decisions about whether the risks being placed on their businesses are acceptable or not. I'm alre... |
Thirdly, the bill provides that if an uninvited seller is on or approaching residential premises for the purpose of selling something, the seller must leave or not enter if directed by a consumer. A direction can be written or verbal and can be specific or general, such as a "do not knock" sticker on a letterbox, so if... |
Under this proposal, ignoring a direction to leave or not enter will be subject to penalties of up to $10,000 for individuals and $30,000 for businesses. This will be enforced by the Commerce Commission. I expect that the Commerce Commission will, generally, only take action in respect of systemic commercial offending ... |
To conclude, this bill draws a line in the sand in respect of commercial conduct. It makes clear this Government's expectation that business in New Zealand will be conducted honestly and fairly. At the same time, the protections are designed to ensure that businesses can continue to compete effectively, negotiate firml... |
BRETT HUDSON (National): Thank you, Madam Speaker. Well, the Government is at least showing some consistency at last. The consistency is that for every problem that exists or they perceive, the only answer is more Government, and, within that, the only answer for more Government is more regulation-making power so the M... |
Certainly we don't have an issue with protecting consumers, in particular, and we acknowledge there are some issues of power imbalances that are extraordinarily serious for some small business owners, but we have a very big issue with the failure to seek to define what unconscionable terms will mean and what those term... |
We would say that it would be equally important, if this bill does pass, that the Ministry of Business, Innovation and Employment should publish some guidelines for traders, for businesses, to ensure that they can steer clear of it. No one wants to be at the wrong end of a court proceeding. You certainly don't want to ... |
On the particular business to business, small business unfair contract terms, a couple of issues there. The first one is—and we do acknowledge that there are some small businesses in incredibly invidious positions where their large business customer simply has so much power that they may feel they have no alternative b... |
I'll get to the door-to-door stuff last. We're also a bit concerned about the proposed penalties, particularly if I return to the area around unconscionable conduct. Particularly for individuals, it's really quite high, at $200,000. I think you could probably argue the proposed penalty for a business at $600,000 may be... |
The very last part I'll talk just briefly on, because, actually, I think, you know—the point about helping consumers to be able to ward off predatory sellers is not a bad thing, but, again, it's about appropriateness to the situation. So the Minister said that in his view, the Commerce Commission would only act against... |
Hon Stuart Nash: That's not true. |
BRETT HUDSON: Yes, they would, because they'd be knocking on doors seeking to sell something, and so by the law, they're captured. It's important, when we deal with this—it's what the law says, not how people want to administer it. It is how it is written that is important. |
But, you know, we're not going to support this legislation. We think it's a bit rushed and not well defined as it should be, but we will work constructively in the Economic Development, Science and Innovation Committee. We will seek to actually improve it as best we can, and if it transpires that what comes out of sele... |
Actually, it's the Government's job around this policy to get it right before it introduces the bill into the House, not simply going, "Well, here's the thing we think's worth doing; you panel beat it out at select committee.", which, unfortunately, I have to say, we're seeing more and more of, and particularly more of... |
Dr DEBORAH RUSSELL (Labour—New Lynn): Must be a cold night in hell, because tonight is the night that the National Party has opposed a bill that supports small business. That is an astonishing position for that party to take. This is a bill that small business asked for. This is the bill that was extensively canvassed ... |
On this side of the House, because we understand the stresses and strains of small business, because we understand what can happen from a power imbalance, because we understand why it matters when one party is so much bigger and stronger than the other party, we support this bill. Why? Because it seeks to give grounds ... |
The previous speaker, Brett Hudson, was concerned that we had not defined what unconscionable conduct is in this bill, that we had not given an explicit definition, but he also complained that we hadn't allowed case law to provide a definition over time. Now, I cannot reconcile those two statements. In fact, this bill ... |
This is, I guess, because in some cases, what might amount to unconscionable conduct might change over time. Phishing, indeed, did not exist 20 years ago, but it might amount to unconscionable conduct. Some of the sales techniques that we see that have come about through the advent of the internet might not have been u... |
So let's have a look at some of the criteria that are sitting there in the bill. It is to do with the relative bargaining power of the people engaging in the conduct—that's paragraph (a) of the proposed new section 8. It is to do with the extent to which a trader and an affected person acted in good faith. It is to do ... |
It is exactly those criteria that we might seek to elucidate, to refine, to make better in the select committee process, but not the basic premise of this bill, the basic premise that says that we must act to protect small business from unconscionable conduct. May I suggest that it is utterly absurd not to support this... |
Jonathan Young: Madam Speaker. Madam Speaker—Jonathan Young. |
DEPUTY SPEAKER: Oh, I call Jonathan Young. I got the "Young" bit; I was just struggling with the Audrey or the Jonathan. |
JONATHAN YOUNG (National—New Plymouth): That's right. I'm not Jonathan Hunt or Jonathan Coleman, as I often get introduced as. Well, thank you very much for the opportunity to speak on this bill, and I am so pleased it's coming to the Economic Development, Science and Innovation Committee. It is about time that Governm... |
I'm pleased that this bill is coming to that committee because through the rigours of submissions, then we will get to the nub of what is the definition of unconscionable conduct. In fact, I believe I was chair of the Commerce Committee back in 2015 when we looked at this. We looked at the Australian legislation around... |
I do think that a very broad definition of unconscionable conduct is "a serious misconduct that goes far beyond what is commercially necessary or appropriate". It's too wide. It's too broad. It's very subjective. If somebody walks into a shop and comes under what they would consider to be intense pressure from a salesp... |
When it comes to small business, large businesses, and things like that, there's going to be a lot in this. We have traversed this space, I believe, twice in the last five years around supermarkets. We have looked at it a couple of times. The Commerce Commission has delved into this quite considerably to see whether th... |
One thing that I can say to the Government parties: for goodness' sake, please do not try to homogenise how everything works. There are all sorts of different approaches, techniques, models of business, personalities of salespeople—all of this is part of what makes people succeed in their profession, if they're a sales... |
So, look, thanks very much for sending it to the Economic Development, Science and Innovation Committee. We will look forward to doing good, solid work on this bill. We believe in fair trade. We believe that Kiwis need to have a fair go—obviously, we believe in that—but we want to make sure the balance is correct and t... |
CLAYTON MITCHELL (NZ First): Thank you, Madam Speaker. Welcome back to everybody after a great festive break. I just want to commend the previous speaker, the honourable Jonathan Young, for his comments in relation to the thorough process that we'll be running this bill through, through our Economic Development, Scienc... |
I'd also like to congratulate the Hon Kris Faafoi for bringing this bill forward, because, as much as I've heard a couple of comments this evening to say that there's maybe not as big a problem as people think, I believe there is a big problem there, as Dr Deborah Russell has pointed out. Having been a small and medium... |
We've got laws around consumerism to protect businesses, to protect our consumers, but this is just a further tightening, ratcheting up, to ensure that we protect and bring back a balance to businesses, both small and medium sized, and create an equilibrium between those two sized entities, as well as creating an equil... |
The word "unconscionable", as we heard from Brett Hudson, is one that seems to be raising some angst in their caucus. I am also very surprised that the party that stands by small and medium sized business, and businesses in general, is not supporting this bill through the House, because it is set up and designed specif... |
If we go back to the last Parliament, when we talked about health and safety and we had "persons conducting a business undertaking" (PCBUs) introduced as a terminology and "legal culpability", they didn't have a problem with bringing in terms such as those that needed to be tested in law. But I'll tell you what that di... |
There are, I guess, times in our lives when we see things happening that we don't like the look of. In fact, I can tell you, if you want to put context to "unconscionable", where I know a farmer who was growing a crop who signed a contract with a large supplier who then invested into their farm to get plant and equipme... |
MELISSA LEE (National): Thank you very much, Madam Speaker. Before I actually get on to the purpose of the bill and, you know, some of the other explanations, I just want to take on what Clayton Mitchell has just spoken about. His definition—I just want to do this because I might forget. He just explained that his idea... |
This bill would amend the Fair Trading Act to prohibit unconscionable conduct in trade—misconduct that goes beyond commercially necessary or appropriate conduct, the bill's explanatory note says—and extend the Act's protections against unfair contract terms so that they also apply to small trade contracts of less than ... |
We all know that when people are in business, there are costs to be met. When regulations are introduced in this House, often the cost goes to the business and they have to wear that. In reality, businesses often can't wear that because it costs them money. It will be passed on to the consumers, and, ultimately, the de... |
We are very proud of the improvements that the former National-led Government made to the Fair Trading Act in 2013. They actually benefit the consumers and we're very proud of it. |
Earlier, Dr Deborah Russell explained that the select committee's role is to refine the definition of "unconscionable conduct" and that she was going to do this at select committee. The very basis of this bill, she says, must be to protect the small businesses from unconscionable conduct. What this speech that Deborah ... |
Hon EUGENIE SAGE (Minister of Conservation): Thank you, Madam Speaker. The Green Party is very pleased to support the Fair Trading Amendment Bill. I am puzzled by that last speech and that the party which purports to be the party of business is speaking so strongly against this bill. I am puzzled by the speech that Mel... |
The bill, as other speakers have noted, applies to contracts which have a value of less than $250,000. It is aiming to support small and medium businesses, which are the heart of our economy in New Zealand. So it beggars belief that National is opposing the bill. I can already see the misleading Facebook ad that they w... |
There's been a lot of debate on the Opposition side about the absence of a definition of "unconscionable" in the bill. For those who weren't listening to Deborah Russell, she clearly went through that. If members go to the bill, look at clause 6, and look at the provisions that the bill puts in the new section 8 insert... |
The National Party has also failed to take account of the work that has been done in Australia, where there has been some thought to what constitutes "unconscionable": it is serious misconduct by reference to the norms of society. |
This bill is about fairness. It is about ensuring that smaller businesses—recognising that they often have a limited power to negotiate in relation to larger companies. It is evening the scales. They don't often have the resources to engage in litigation, they don't have the bargaining power, and what this bill is doin... |
This Government is about fairness. National can claim that it's the party of business, but it's not interested in fair business. It's interested in laissez-faire capitalism and leaving people just to survive as they can. |
STUART SMITH (National—Kaikōura): Thank you, Madam Speaker. Well, I'm on the Economic Development, Science and Innovation Committee, so I'm looking forward to having this bill there, albeit that we'll be voting against it. But Jonathan Young is a fine chair of that committee and I'm sure we will do our utmost to try an... |
At last, I understand why Kris Faafoi is not standing in the Mana electorate and is going to go on the list. He fears the "do not knock" signs popping up on all the doors around in his electorate, and he doesn't want to be caught by being fined for not leaving the premises. It is a rather silly provision, really. Ultim... |
We would be better to help financial literacy through our education system rather than teaching our students to go out and get on the streets and protest about climate change. They'd be far better off being taught about financial literacy. The changing of the terms of a contract, which was mentioned by the New Zealand ... |
ASSISTANT SPEAKER (Hon Ruth Dyson): This is a split call. I call Jamie Strange. |
JAMIE STRANGE (Labour): Madam Speaker, thank you for the opportunity to take just a brief call on the Fair Trading Amendment Bill. I agree with the previous member around financial literacy. I guess it loosely relates to this bill, but I think it is something that we do have to have a good look at in our education syst... |
We've heard a lot of arguments for and against this bill. What this bill comes down to is around fairness, around removing the potential for bullying. There was something that the Minister said, that those companies who engage in fair and reasonable contracts have nothing to fear from this bill; it actually doesn't rel... |
Look, I'd just like to touch specifically around the mobile traders. We've heard a little bit about this, around the "do not knock" stickers and that people working for a company who disregard the "do not knock" sticker will potentially be liable for a fine of up to $10,000 and their company up to $30,000. Now, that is... |
Consumer New Zealand have welcomed this proposal. This is something that they've been lobbying for for quite a while, because they've seen the vulnerabilities that people often feel when they open the door to someone and they're asked to leave and that person does not leave. There's often quite a strong power imbalance... |
So this is an excellent bill, an excellent piece of legislation. I'd like to congratulate the Minister, Kris Faafoi, and I commend this to the House. Thank you. |
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