Hon HEATHER ROY (Minister of Consumer Affairs) Link to this
I move, That the Motor Vehicle Sales Amendment Bill be now read a first time. It is my intention that this bill be referred to the Commerce Committee. Section 163 of the Motor Vehicle Sales Act requires the Ministry of Consumer Affairs to conduct a review of the Act after 2 years of its operation. This bill is the result of a proactive assessment of the Act, which looked at whether the operation of the legislation is meeting the intended policy goals. The bill makes a number of amendments to improve the legislation’s workability and operation.
As an ACT Party Minister in the National-led Government, I am very supportive of such proactive assessments of the relevance and effectiveness of legislation. Legislation should achieve its stated intention without imposing unnecessary and unforeseen side effects. The principal Act came into force in December 2003. It introduced a new registration regime for motor vehicle traders. This regime served to make traders more accountable, but it also offered people more flexibility to participate in the industry. New information disclosure requirements for used motor vehicles were introduced, and the Motor Vehicle Disputes Tribunal was established to offer consumers a forum for the hearing of complaints against traders.
The policy that underpins the principal Act has several core elements: a requirement for motor vehicle traders to be registered, requirements for information disclosure concerning used motor vehicles, and a provision for consumer redress through the Motor Vehicle Disputes Tribunal. The review of the Act by the Ministry of Consumer Affairs considered how those elements were operating. The review identified areas where the Act’s operation would benefit from amendment. The review report, which was tabled in the House in March 2008, was followed by further consultation on the review’s recommendations, and that has led to the amendments set out in this bill.
The bill makes amendments to the renewal of annual registration by motor vehicle traders. At present, an individual who is applying to become a director of a motor vehicle trading company must supply a statutory declaration with his or her initial application. That person is then required to provide an annual statutory declaration as part of the registration renewal process. The requirement is onerous, costly, and serves no purpose if the person’s details have not changed. The bill amends the renewal procedure to allow a company secretary to confirm to the registrar that the information held on the registry about the company is correct. In particular, companies with directors who are based overseas will benefit from reduced compliance costs, as a result of a small legislative change.
Acceptance or refusal of a renewal application by the registrar will remain essentially the same as it is currently. However, at present people can be appointed as directors between annual registrations, without any check on their suitability. Accordingly, it is proposed that the Act be amended to require that notification of a new director or of the appointment of an individual who is involved in the company’s management be accompanied by a statutory declaration as to the person’s suitability for registration. Again, this is just a small legislative change, but it is one that brings added protections to consumers that unsuitable persons are not legally able to become motor vehicle traders.
There is a further loophole in the current legislation that allows unregistered traders, or those whose registration has lapsed at the time of their conviction for certain offences or at the time of their going into bankruptcy, to not be automatically banned from trading as a motor vehicle dealer in the future. Such traders can currently continue to sell motor vehicles until the registrar can take a case to court to ban them. That process can take some months and incurs costs to the Government. This bill closes that loophole, and proposes that such a person can be automatically banned without being registered under the Act, if he or she met specific criteria, such as convictions for crimes of dishonesty, or going into a second bankruptcy within 10 years of the first.
The Act currently requires private sellers to display a consumer information notice, or window card, containing information on the trader, cost, vehicle registration, warrant of fitness, and other important details, when selling through a car market. In all other circumstances, private sellers do not have to display a consumer information notice. These notices are prescribed by regulation under the Fair Trading Act 1986, must be completed and displayed by traders when selling used motor vehicles, and must list the consumer’s rights when purchasing from a trader. The current requirement for private sellers at car markets to display a consumer information notice is confusing for private sellers and for consumers, who are often under the impression that they have more rights than they actually do. The requirement also creates compliance costs for car market traders, who spend much time ensuring that private sellers complete the forms, and it diverts much of the Commerce Commission’s enforcement time.
Under this bill, traders who use car markets will still need to display the notices, and car market operators will have a specific obligation to ensure that this happens. The bill also removes the requirement to display a consumer information notice for transactions between traders, or between traders and wreckers. This is an unnecessary compliance cost on such traders, as it provides no value to either party.
The bill provides for costs to be awarded against a trader who does not attend a Motor Vehicle Disputes Tribunal hearing without good cause. Although the existing legislation already provides for the awarding of costs against a complainant for non-attendance, this provision does not extend to non-attendance by a trader, even though many hearings are held near the trader’s premises. That creates a perverse incentive for traders to be absent from the hearing, as they know that costs cannot be awarded against them, and it causes inconvenience and cost to consumers. This amendment should lead to consumers having more timely access to redress.
Changes are also made, in order to improve transparency, through amendments to the tribunal’s reporting requirements set out in the Act. The changes will allow all decisions of the tribunal to be made public. Through publication of the tribunal’s decisions, both motor vehicle traders and consumers will benefit by learning about what they can expect under the law. Consumer advocacy groups will also be better informed and better able to pass their knowledge on to their clients. The Ministry of Consumer Affairs and enforcement agencies will be better positioned to assess the effectiveness of the tribunal and to monitor for any systemic issues within the industry.
Lastly, I bring it to the attention of the House that the bill increases the financial limit for the operation of the tribunal from $50,000 to $100,000. This change in the limit reflects consultation with the tribunal, industry, and consumer organisations. It also recognises that motor vehicles, both new and used, may cost in excess of $50,000. This change future-proofs the financial limit, and it provides protection to consumers who purchase high-end vehicles. Regardless of consumers’ financial means, they can still have difficulty in gaining redress from a motor vehicle trader. The change in the limit allows consumers to have their issues heard in the appropriate forum.
The changes I have outlined will strengthen the operation of the Motor Vehicle Sales Act. They are designed both to reduce unnecessary compliance costs to the industry and to improve consumer protections and give consumers better access to dispute resolution through the Motor Vehicle Disputes Tribunal in relation to vehicle purchases. I commend this bill to the House.
CHRIS HIPKINS (Labour—Rimutaka) Link to this
The Labour Party will be supporting the first reading of the Motor Vehicle Sales Amendment Bill. It is somewhat ironic and it may be symbolic that we are discussing this particular bill—which, in essence, reduces the compliance costs for used-car dealers—today rather than focusing on, in the words of the Government, the issues that matter. At a time when 1,100 people are losing their jobs on a weekly basis—
Hon Clayton CosgroveA total of 1,100 people are losing their jobs on a weekly basis, yet the most important legislation this Government wants to bring before the House is a bill that reduces the compliance costs for used-car dealers.
Government members think that reducing the compliance cost for used-car dealers is more important than creating jobs. They think that reducing the compliance cost for used-car dealers is more important than making sure that people can pay their mortgages. They think that it is more important than closing the wage gap with Australia. Was that not one of their key manifesto commitments at the last election? They were going to close the wage gap with Australia, yet nothing has come before this House that will do anything to close the wage gap with Australia.
This is a lazy, do-nothing Government that is interested just in passing legislation, most of which was developed by the previous Labour Government, rather than coming up with anything original. It is not focused on the issues that matter, and that is why we are debating the Motor Vehicle Sales Amendment Bill, rather than legislation to get the economy moving, and to create some jobs in the economy.
It is symbolic that we are discussing used-car dealers. I ask members whether there are similarities between the approach of a used-car dealer and the approach of a lot of National members. They will tell voters anything that they want to hear so that they can make the deal, even if they have absolutely no intention of sticking to their promises. They are a lot like some of the dodgy used-car dealers that the legislation passed in December 2003 was designed to target.
That is dead right. The used-car dealers are more important to the National Government than people in New Zealand who are losing their jobs.
What does this bill do? The bill amends an Act that is designed to protect consumers in relation to motor vehicle sales. Although the bill is important, and I reiterate that the bill is important, it is certainly not addressing the most important issue facing New Zealanders at the moment.
New Zealanders are concerned about their jobs. In fact, people in the motor vehicle industry are also concerned about their jobs. A survey in January carried out by the Motor Trade Association showed that over 200 people have lost their jobs in the motor vehicle industry. A press release from the Independent Motor Vehicle Dealers Association highlighted that a fifth of New Zealand’s 2,000-plus used-car dealers have closed down in the past 6 months, as the recession bites. As fewer and fewer people are employed in this industry, the National Government thinks it is more and more important to deal with this industry’s concerns rather than deal with the thousands and thousands of New Zealanders who, on a weekly and monthly basis, are losing their jobs. The National Government thinks this is the most important legislation to bring before the House. Industry groups say the closures and cut-backs at surviving dealerships have wiped out at least 10,000 of the 50,000 jobs in the used-car business. That is another example of jobs being lost under this National Government, yet it has no real plan to do anything about it. It has absolutely no solutions.
Recent statistics have also shown that the trend in motor vehicle retailing continues downwards. Once again, we are focusing not on an issue that matters, but on something that the National Government wants to put through the House just to make it look like it is doing something.
It spuriously looks like it is doing something, rather than actually putting any legislation or any proposals before the House to create jobs. New Zealanders are looking to this Government to show some leadership, and there is none. The Government is showing absolutely no leadership.
One thing that this bill does is to remove the requirement that when people sell their car privately, but use a sales lot to sell it, they put a bill of sale in the window explaining what it is that someone is buying.
Hon Steve ChadwickThat is right; it is deemed to be a compliance cost. People will not have to do that any more.
But if National was selling the car, we know that the bill of sale in the window would not mean anything anyway. National members would just write down whatever they thought they had to write down in order to get someone to buy it, regardless of whether they were intending to deliver what they had been promising.
It is a lot like the tax cuts. The No. 1 promise on the bill of sale from National at the last election was the tax cuts. It passed them straight away, then, within 6 months, it took them away again. The bill of sale from National was completely worthless. It is ironic that we are removing the requirement to put a bill of sale in a used car when someone is selling it privately on a lot, but we know that if National was selling the car, the bill of sale would not mean a damn thing anyway. Frankly, National members, like a lot of used-car dealers, say whatever they like. The silver tongues over in the National Government—
—it is David Garrett who has the silver tongue—would say whatever they need to say in order to get people to buy whatever it is they want to sell, regardless of whether they intend to deliver on their promises.
This bill is symbolic of National, because it thinks that reducing compliance costs for used-car dealers is more important than coming up with any kind of plan to create jobs for New Zealanders at a time when 1,100 people are losing their jobs on a weekly basis. In fact, it could be 1,101 if Sam Lotu-Iiga would give up one of his jobs.