Northern Territory Second Reading Speeches

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HOTEL KEEPERS AMENDMENT BILL 2002

Madam Speaker, I move that the bills be now read a second time.

The main purpose of these bills is to implement reforms identified as a consequence of the various National Competition Policy reviews of acts now administered by the Department of Justice. These acts include the Consumer Affairs and Fair Trading Act, Prices Regulation Act, Hotel Keepers Act and Auctioneers Act. Other Justice acts will be subject to legislation to be introduced later this year.

It is well known, and it has been previously stated in this parliament in respect of many other bills, that in April 1995, the Commonwealth, states and territories signed three inter-governmental agreements that comprised the National Competition Policy reform package. Compliance with the agreed National Competition Policy reforms is a prerequisite for a series of competition payments to the Territory from the Commonwealth. These payments have been estimated at over $7m per annum from 2001-02. One of the National Competition Policy agreements, namely the Competition Principles Agreement, obliges the Territory, along with the states, to examine all legislation that may contain provisions that are anti-competitive. Within the context of the Competition Principals Agreement, a very broad approach is taken as to what provisions are anti-competitive. The provision may be anti-competitive if it does any of the following. It governs the entry or exit of firms or individuals, into or out of markets; control prices or production levels; restricts the quality, level or location of goods and services available; restricts advertising and promotional opportunities; restricts price or type of input used in the production process; is likely to confer significant costs on business; or, provides advantages to some firms over others by, for example, shielding some activities from pressures of competition.

Critically, it can be seen that the provision is anti-competitive if it has the effect of imposing costs on business. This examination requires that the objectives of the legislation be identified and confirmed as to their current application. It then requires that each restriction on competition be assessed to determine if it is in the net public interest. Thus, it is plain that the Competition Policy does not require the removal of all provisions that may be anti-competitive. Rather, it requires that all state and territory governments reach a judgement as to whether an ant-competitive provision can be justified as being in the public interest after regard is had to the cost and the benefits of the restriction.

In summary, the guiding principle underpinning each review is that legislation should not restrict competition unless it can be demonstrated that the benefits to the community as a whole outweigh the cost of the restriction, and that the objectives of the legislation can only be achieved by restricting competition.

The Consumer Affairs and Fair Trading Act was identified as possibly containing anti-competitive provisions. This act has been reviewed by consultants, namely the Centre for International Economics. The consultants were overseen by a steering committee established by the former department of Industries and Business, and comprising representatives from the former Northern Territory Attorney General’s department, the former department of Mines and Energy, Northern Territory Treasury, and the Chief Minister’s department. CIE produced an issues paper in 2000, and conducted wide-ranging consultation with persons and organisations that might be interested in the operation of the act.

CIE produced its report to the former government in October 2000. Some parts of the act are subject to separate national reviews. These parts include those dealing with the Credit Code, part 9, and Travel Agents, part 11. CIE reported on all of the matters required for the purposes of the NCP review. I will now summarise both the findings and the government’s response to those findings.

The most significant issue to be resolved in an NCP review is that of what is the objective of legislative intervention in the market. CIE found that the act contains a diverse range of objectives in relating to consumer protection. In summary, these objectives are as follows: public health and safety regarding dangerous goods; the promotion of energy conservation and the reduction of demand for energy by providing consumers with information about energy uses of certain kinds of goods; the protection of consumers from certain high pressure sales tactics; to promote fair trading by members of various occupations; to reduce opportunities for criminal activities in certain consumer transactions - an example, trade-in of stolen vehicles and other stolen property; and the protection of the consumers in respect of their dealings with various occupations - for example, motor vehicle dealers, credit providers, tow truck operators, pawnbrokers, second-hand dealers and fair credit reporters. The protections include protection from default by the business and reduced costs arising from imbalances of information between consumer and business. The government accepts these findings in respect of the objectives.

The next most significant matter is that of identifying the restrictions in the legislation. CIE found that the main restrictions in the Consumer Affairs and Fair Trading Act are restrictions on entry to various occupations through licensing and registration, and restrictions on the mode of operations of agents. It also identified various other restrictions that add to the cost of business from the point of view of both business and customers. In respect of these restrictions, CIE recommended that firstly, the restrictions as contained in Part 4 of the act dealing with the sale of dangerous goods be retained without amendment. Secondly, that the restrictions concerning the mandatory energy labelling of certain kinds of goods, as contained in Division 4 of Part 4 of the act, be retained without amendment. Thirdly, that the restrictions on door-to-door trading as contained in Part 7 be retained without amendment. Fourthly, that there be a retention of the power of the Commissioner of Consumer Affairs under Part 12 to request that credit providers execute deeds of assurance following improper, negligent or unfair conduct by the credit provider. Fifthly, that the power under Part 13 to make codes of practice be retained and, more specially, that the tow truck code of practice be retained. And sixthly, that there be a retention of the provisions in Part 14 governing the licensing and regulation of pawnbrokers and second-hand dealers.

The government has accepted all of these recommendations. However, I mentioned that the two truck code has been recently extended for another two years. At the end of this period of extension, the Trade Practices Act 1974 will operate to preclude any further extension under the Northern Territory Regulations. The tow truck industry needs to consider seeking an appropriate authorisation from the Australian Competition and Consumer Commission. I also advise that the Department of Justice, in conjunction with the police and industry, is examining Part 14 concerning a possible requirement that pawnbrokers and second-hand dealers hold and provide information to the police in electronic form.

CIE also made some recommendations for amendments to the Consumer Affairs and Fair Trading Act or to the various regulations under the act. These recommendations concern Part 8, Fair Reporting, Part 9, Trading Stamps, and Part 10, Motor Vehicle Dealers. The fair reporting provisions of the Consumer Affairs and Fair Trading Act impose various restrictions on what might contain in such reports and on what information must be disclosed to consumers concerning information in the reports. CIE found that most of these requirements duplicated other requirements under the Commonwealth law, and that insufficient benefits had been demonstrated. However, CIE also noted new national issues relating to residential tenancy data bases. CIE recommended that any repeal of Part 8 be deferred pending resolution of these new issues. The government accepts this recommendation for deferral. The substantial policy issue will be considered in due course.

CIE concluded that the trading stamp provisions of the Consumer Affairs and Fair Trading Act are, in respect of trading stamp schemes other than those relating to tobacco products, inoperative because no relevant regulations have been made. CIE recommended that either regulations be made or the provisions be repealed. The CIE recommendation was such as to require no immediate action. However, the government is considering the implications of this finding in terms of the adequacy of consumer protection in relation to the various frequent flyer award schemes that currently exist. Consequently, the bill provides for the repeal and reenactment of Part 9. The new Part 9 makes it clear that a trading stamp scheme relating to matters other than tobacco products will not be lawful unless it is either a prohibited scheme or unless it breaches a provision in the regulation; and that the minister based on advice from the Commissioner of Consumer Affairs may declare that a particular is a prohibited scheme.

Finally, CIE recommended that the provisions of the Consumer Affairs and Fair Trading Act and regulations concerning motor vehicle dealers be amended so that the provisions in the regulations concerning the submitting of annual financial returns be removed; the government has accepted this recommendation. The financial test applied to applicants for a new licencee be formalised; the government has accepted this recommendation. The recommendation involves the administrative action and possible amendment of the motor vehicle dealer’s regulations. The removal from the act of the power for the Commissioner of Consumer Affairs to require applicants to provide a bank guarantee; the government has accepted this recommendation, clause 35 provides for an appropriate amendment to section 136. The removal of the requirement that dealers only employ as managers, persons approved by the Commissioner of Consumer Affairs; this final finding is at odds with the outcomes of many other NCP reviews of occupational legislation. They have generally supported the need for some positive or negative licencing concerning the person who is in charge of the business. However, it must also be noted that there are strong views to the effect that the provision should be repealed on the basis that the onus regarding supervision of employees should squarely rest with the dealers rather than with the managers.

Managers are in one way or another regulated in New South Wales, Victoria, Queensland, South Australia and Western Australia. They are not regulated in Tasmanian where there is no licencing scheme. Nor are they regulated in the Australian Capital Territory. However it also appears to be the case that the Northern Territory scheme is the least objective. The Motor Traders Association has been calling for a general review of the motor vehicle dealers provisions. The Department of Justice has prepared and released an issues paper; it seems appropriate to defer consideration of the proposer considering dealers managers at this stage but to make clear that the issue will be reconsidered in a more general review than is currently occurring.

Deferral of resolution of this issue is not to be taken as an indication that the NCP recommendation will be rejected in the long run. The National Competition Council’s response to the previous government’s decision about motor vehicle dealers was to the effect that the Northern Territory’s public interest justification for dealer management approval meets the CPA tests.

The bill also provides for certain other reforms and revisions of the Consumer Affairs and Fair Trading Act. These include a review of the penalties in the act and the conversion of them so that they are stated in terms of penalty units rather than in monetary amounts. The review has resulted in substantial increases in the maximum penalties that might be imposed. A review of the provisions of the act dealing with the powers of the courts to issue injunctions and to take enforcement actions under sections 89, 90, 95, 96 and 189. The Chief Magistrate raised the possibility that the local court should also have these powers. The government can see no reason why this should not be the case. Accordingly, the bill makes appropriate amendments to these sections.

A review of the provisions regarding the making of applications. Currently the act provides that the Commissioner of Consumer Affairs must publish applications for licences under the motor vehicle dealers, travel agents, second hand dealers and pawn brokers provisions. Under other Consumer Affairs legislation such as the Agents Licencing Act, such responsibilities lie with the applicant for the licence. This seems to be more appropriate policy position. Accordingly, sections 132, 190 and 251 are to be amended so that the responsibility for advertising shifts from the Commissioner to the applicant.

And lastly, the removal from section 125 of an exemption from motor vehicle licencing provisions gives to persons who sell vehicles on an instalment basis. This provision seems unnecessarily broad.

Moving now to the Prices Regulation Act. The Prices Regulation Act was enacted in 1949 and provides for the setting and enforcement of maximum prices for declared goods and services. Under the act, the minister may appoint a controller of prices who has the power to declare and set maximum prices for controlled goods and services. The controller of prices has a range of powers to ensure that the maximum prices are enforced. These include the power to require the production of balance sheets and other financial records, the powers of entry to premises and inspection of records and the power to summon witnesses and require disclosure of information.

Other provisions of the act are aimed at preventing suppliers from circumventing controls. For example, suppliers are not permitted to bundle declared goods or services with undeclared goods or services and charge a total price that embodies a price higher than the current market value for the undeclared product; package smaller quantity of goods in containers than were ordinarily packed in such containers when the control was introduced; or reduce the quality of the declared goods compared to the quality at the time of introduction of the controls.

As had been the case with similar legislation in other jurisdictions, the Prices Regulation Act has a long history dating back to the period immediately following World War II.. At that time the objectives of the act were likely to have focussed on curbing rising inflation and addressing problems arising from shortages of goods. Since 1993 when the last general price control, which controlled the price of milk, was lifted, the act has basically been held in reserve to be used in times following states of emergency and other adverse events. In fact, the last time the provisions of the act were utilised was in the Katherine region, following the 1998 Australia Day floods when the price of items such as foodstuffs and building products were controlled.

As I said earlier, the Prices Regulation Act underwent a national competition policy review in the year 2000. As with the review of the Consumer Affairs and Fair Trading Act, this review was conducted by CIE and supervised by the departmental steering committee. The CIE review recommended that the powers to regulate prices under the act be retained, but made a number of recommendations for amendments to the act and these have been accepted by government.

These amendments are included in the Prices Regulation Amendment Bill 2002. The review recommended that the exercise of powers to regulate prices under the Prices Regulation Act be restricted to controlling incidents of price exploitation following natural disasters or similar events that severely impact on the operation of markets. Further, that if there is a demonstrated need for more permanent regulation of monopoly or oligopoly firms, separate case-specific legislation should be introduced to impose these controls. At present there is no limit on the length of time for which a price control order can be in effect. The review recommended that the act be amended to include a provision that limits the length of time a price control may be in effect. The bill introduces changes which will limit the length of time which a price control order can be in effect to 12 months. As recommended in the CIE review, there is nothing to prevent a further order being introduced following the expiration of the previous order.

The review also recommended that the objectives for regulation be specified as part of the act. As recommended in the review, the bill at clause 6(2) introduces a purposes clause into the act. In keeping with this purposes clause, and to better describe the functions of the act, the bill will change the name of the act to the Prices Exploitation Prevention Act.

The bill implements a further recommendation of the review by restricting the record keeping requirements under section 57 to suppliers of goods and services that are actually subject to price controls under the act.

In addition, the bill makes a number of statute law revision amendments such as removing outdated references to the old Commonwealth regulations, modernising some expressions, updating penalties and expressing those penalties in terms of penalty units.

The bill also provides that the Commissioner of Consumer Affairs is to be the Controller of Prices.

Moving now to the Hotel Keepers Act: this act was identified as containing some anti-competitive provisions. This act has been reviewed by a review team established by the former Department of Industries and Business, comprising representatives from the Northern Territory departments of Justice, Treasury and Chief Minister. The review was completed by the Department of Justice. The review was conducted under the national competition policy guidelines as a stakeholder focussed review.

The review team identified the following objectives as being relevant to the Hotel Keepers Act:

· to limit the harshness of the common law which imposed unlimited strict liability on inn keepers and hotel keepers for loss or damages to a guest’s property;

· to make certain an hotel keeper’s liability so that disputes are resolved in an ordinary manner; and

· to clarify hotel keepers’ liability in clear terms so that it is readily understandable to those it most concerns.

The review team found that the act met the overall objectives. Further, it found that the act does not contain anti-competitive provisions that cannot be justified in the public good. The review team made several recommendations regarding the Hotel Keepers Act. The main recommendations were as follows: That provision is made in the act to allow regulations to be made which can describe other modes of accommodation that the act will cover. That provision is made in the act to allow regulations to be made to prescribe the monetary limit of liability of hotel keepers, and that the procedure for exercising the statutory lien under the act is considered as part of the review of the Disposal of Uncollected Goods Act being conducted by the Department of Justice. The government has accepted these recommendations. The main rational for these recommendations is to ensure that there are mechanisms that give flexibility and which also allow regulations to be made to provide for a level playing field for all accommodation providers.

There is currently no proposal to extend the coverage of the Hotel Keepers Act to other modes of accommodation currently not covered by the act. There is, however, a national working party called the Australian Standing Committee on Tourism, which is considering uniform legislation in this area. The Northern Territory is participating in this forum. Some of the issues being considered in this forum include: the amount of hotel keepers’ liability and possibly establishing a common level in all states and territories; and, whether the state and territory legislation should be extended to cover other forms of accommodation currently not covered. If there is a proposal to extend the operation of the act to cover other forms of accommodation currently not covered, the Department of Justice will consult closely with peak industry bodies and other stakeholders before undertaking any action to implement the proposal. The Hotel Keepers Amendment Bill 2002 will allow the Northern Territory to easily implement the outcomes, if any, from this forum.

The Hotel Keepers Amendment Bill also provides for other reforms. In particular, the bill provides for changes in the terminology in the act and these should raise greater awareness of the legislation.

The Auctioneers Act was identified as containing some anti-competitive provisions. This act has been reviewed by a review team established by the former Department of Industries and Business, comprising representatives from the Northern Territory departments of Justice, Treasury and Chief Minister. The review was completed by the Department of Justice. The review was conducted under the National Competition Policy guidelines as a public review. As a result, industry and other stakeholders were provided with copies of a discussion paper and advertisements were placed in newspapers inviting submissions to the review.

The review team identified the following objectives as being relevant for the Auctioneers Act. To ensure that consumers and businesses have, in respect of auctions, appropriate choices, are provided with safe products and services, that they have a right to be heard in respect of auctioneering services, products and regulation, and that they have a right to receive appropriate advice in respect of these matters.

The review team identified a number of provisions in the Auctioneers Act that are anti-competitive. In the main, these are provisions that establish a licensing system for auctioneers and auctioneer’s clerks. Other provisions include those that restrict the times in which auctions can be held. Importantly, it found that the licensing system only partly achieves some of the objectives of the act. It also found that the licensing scheme does not, in a cost effective way, assist in achieving the objectives of the act. The review team could not find evidence of significant market failure in the auctioneers’ industry, in that there has only ever been one licence refused in the last ten years, no licence was cancelled in the last ten years, and no formal complaints made against licencees in the last ten years. In addition, almost half the number of licensed auctioneers also hold real estate agents licenses under the Agents Licensing Act and are therefore subject to two regulatory schemes which cover their auctioneering activities.

Of the few informal complaints that have been received against licensed auctioneers, the majority are related to the practice of ‘dummy bidding’ at auctions which is not dealt with under the Auctioneers Act. Dummy bidding is a major issue in many interstate jurisdictions where this practice has been found to occur and cause detriment to consumers and, consequently to the reputation of the auctioneers industry. This government believes that this is an issue that needs to be seriously looked at in the Northern Territory.

The review team did not find a deregulated auctioneers market to be an appropriate alternative. It recommended a negative licensing scheme as a better alternative. It also recommended that this could be implemented by mandatory code of practice for auctioneers under Part 13 of the Consumer Affairs and Fair Trading Act. The government accepts this recommendation.

Under a negative licensing scheme, auctioneers would be able to operate without being licensed, but could be prohibited from conducting auctions if they failed to comply with standards prescribed in the code of practice. The types of standards that will be put into this code of practice will largely depend on consultation that will be undertaken by the Commissioner of Consumer Affairs with industry and stakeholders. However, some of the issues that will be looked at include: trust accounting requirements for auctioneers; dummy bidding practices; appropriate standards of conduct; verifying ownership of property to be sold at auction; prohibiting particular types of false or misleading practices; training requirements; clarifying when the auction period is complete; and co-regulation. The Auctioneers Repeal Act will not be commenced until the code of practice is developed.

This government is committed to a strong and competitive auctioneer’s industry. The repeal of the act and the establishment of a negative licensing scheme for auctioneers should have the effect of improving the current situation. There will be proper standards developed in consultation with industry and stakeholders and the Office of Consumer Affairs and Fair Trading will be closely monitoring compliance with the code of practice.

The Auctioneers Repeal (Consequential Amendments) Bill 2002 also provides for certain other reforms and revisions. These include: re-enacting section 14 of the Auctioneers Act, which relates to appropriate record keeping by auctioneers, into the Consumer Affairs and Fair Trading Act; re-enacting section 15 of the Auctioneers Act, which relates to bidding by a seller, into the Consumer Affairs and Fair Trading Act; and various statute law revision amendments to other legislation to correct references that will become out of date and inaccurate once the Auctioneers Act is repealed.

Madam Acting Deputy Speaker, I commend the bill to honourable members.

 

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