The importance of a strong consumer law in the digital age, Speech to the 2014 National Consumer Congress, Sydney

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Thanks for that warm welcome. It’s a great pleasure to be here at the 2014 National Consumer Congress. I’d like to thank the ACCC for once again hosting this important gathering.

This year’s theme is right on the money. Consumption is increasingly moving online, and we need to make sure consumer protections are keeping up with the rapid pace of change.

Just to give you a sense of that change, reaching an audience of 50 million people took radio 38 years. It took television 13 years. The internet took four years to reach 50 million people, and Facebook took two. It now has over 1 billion users worldwide.

It’s hard to believe but Facebook, YouTube, and Twitter are all less than ten years old. Most of the other internet phenomena that have transformed our world are less than twenty years old.

These changes have happened very quickly, and we haven’t really absorbed their implications. Indeed some technology gurus would say that the internet itself is still in its infancy – we haven’t really begun to grasp what it could do.

All of this has an impact on the way we live our lives and interact with the rest of the world. And it has particular implications for our roles as consumers in a new and sparkling digital age.

The latest report from the World Internet Project has found that Australia’s online shopping grew by 46 per cent between 2011 and 2013, far outpacing the growth in bricks and mortar retailing. 1

Last year Australians spent over $14 billion on online retail, or 6.5 per cent of spending in bricks and mortar outlets, according to the NAB Online Retail Sales Index.

Industry estimates indicate that this trend will continue to grow. According to Frost and Sullivan for example, online retail sales will grow by around 13 per cent each year for the next five years.

More than one in every four Australians is shopping online each week. And even where they don’t make the purchase online, five out of six have used the web to do research about a potential purchase.

We’re a world leader in the take-up of online shopping: Australians are the most frequent online shoppers.

The data also show that four in every five Australian consumers prefer to buy from Australian sellers when they shop online, rather than from international retailers.

Statistics like this tell us that there are big opportunities and benefits for small businesses that sell online. Small businesses should be actively looking to exploit the opportunities of online retailing.

This changing environment presents huge benefits for consumers. It also presents great opportunities for Australian businesses, including small businesses that can use online retailing to reach a wider customer base at lower costs.

But the changing environment also presents challenges for policy-makers and regulators.

That’s why we’re here today.

So this [morning] I want to bring you the Government’s perspective on the implications of the shift to greater online trading for our consumer policy framework.

I also want to share my views on how I think the consumer policy framework should be developed, given the Government’s deregulation agenda.

Also, from my perspective as Small Business Minister, I want to touch on the unique opportunities the online world holds for small businesses as well as consumers, and the relevance of a strong consumer law to creating a better trading environment.

In Australia’s consumer policy framework, as many of you will be aware, the main source of consumer protection is the Australian Consumer Law, or ACL, which is nested within the Competition and Consumer Act.

The ACL is a very important piece of legislation. Broadly, its aim, and the aim of the Government’s approach to consumer protection, is to provide a number of fundamental protections for consumers, to support them to engage confidently in the marketplace.

For example, the ACL includes core consumer protection provisions prohibiting misleading or deceptive conduct, unconscionable conduct and unfair contract terms.

These protections make it unlawful for food manufacturers and suppliers to label their products in ways that could mislead or deceive consumers; for example, suggesting that they meet particular credence claims, like being organic or free range. It also makes unlawful those outright scams that are using the internet to rip people off.

In many ways, the ACL codifies good business practice. It is in businesses’ best interest to develop sustainable relationships with their customers, based on trust and confidence. Businesses can only sell when consumers are willing to buy.

And, in fact, the vast majority of consumers don’t experience any problems, and where they do, they can successfully negotiate these with their supplier.

However, for consumers who may experience problems, the ACL provides a number of important protections and redress options.

It’s important not to understate the importance of the ACL to consumers and businesses in this respect.

For example, as the Productivity Commission noted in its Review of Australia’s Consumer Policy Framework, informed consumers can drive competition by seeking the goods and services that offer the best value. This can lower costs, improve product quality and lead to greater innovation and higher productivity.

I would like to turn now to the relevance of our consumer policy framework in the digital world.

An important feature of the ACL is that it is technology neutral: it applies in the bricks and mortar context and for consumers online.

This means that the ACL applies in the same way for all retailers – that is, there is a level playing field that encourages competition between businesses.

The ACL is also a truly national law. All consumers in Australia have the same rights and all businesses have the same obligations, irrespective of where they transact.

As businesses trade more and more across state and territory lines and across countries, particularly online, it is important that we make it as easy as possible for consumers and businesses to understand their rights and obligations under the law.

This means consumers can shop confidently, and businesses can have the clarity and consistency they need to keep compliance costs low.

In light of that, I would like to acknowledge the important work of Australian consumer agencies in supporting the law. The ACL is supported by the work of agencies at all levels of Australian government, including the ACCC. These agencies work hard to help explain how the law works and make sure businesses keep the law.

When Rod Sims recently announced the ACCC’s priorities for 2014, he highlighted that consumers’ concerns with drip pricing and comparator websites are a priority for the ACCC.

Rod noted that drip pricing can cause both competition and consumer detriment, as the incremental disclosure of fees and charges over an online booking process can mislead consumers about the ultimate price.

More can also be done with comparator websites to improve their transparency and reliability, and the ACCC has indicated that it will work with the industry to achieve this.

These are important examples of how the ACCC is continuing to support the law and improve the functioning of the market.

And the ACCC has also been active in helping consumers and businesses to better understand their rights and obligations to safeguard their own interests. Just over a year ago, the ACCC released its Shopper App.

This app helps consumers to think critically about their purchasing decisions and better understand their options under the law. I hope you have all had an opportunity to use the app — it’s available for both iPhones and Android mobile phones — and I’m sure the ACCC would welcome your assistance to further promote it.

I would also like to take this opportunity to acknowledge the work of the Commonwealth Consumer Affairs Advisory Council, ably chaired by Mr Colin Neave AM. This body is an expert council who report to me on a range of consumer issues and I really appreciate their advice and wealth of experience.

The Council helps me understand the real issues that challenge consumers, especially consumers experiencing social disadvantage; and they help me understand how new technologies can present challenges as well as opportunities. I look forward to continuing to work with the Council.

In this respect, I would emphasise the role of competition in promoting a strong, productivity economy and improving outcomes for consumers. Competition is key to putting downward pressure on prices and driving innovation, which drives greater choice, quality and value for consumers.

And, on the whole, online retailing has played an important part in increasing competition and reducing costs across the economy over the last decade. By putting pressure on firms to innovate and keep prices low, competition has helped drive efficiency improvements within businesses. And it has also increased the range of products on offer, which benefits consumers.

It is timely to take a much closer look at the competition landscape and the government’s role, not just in the online space but right across the economy.

As the Prime Minister and I announced late last year, the Government is committed to undertaking a comprehensive ‘root and branch’ review of competition laws and policy.

It’s been more than 20 years since the last comprehensive review in this area, and, as I said at the beginning, the past 20 years have seen immense change in the way businesses and consumers operate.

Consumers and small businesses in particular operate in an ever-changing and increasingly global marketplace.

The review will be an independent examination of how the competition framework is working, whether it’s keeping up with emerging trends, and looking beyond the competition framework to identify impediments to competition with the goal of improving the living standards of all Australians.

The interests of consumers will undoubtedly be central to the review of Australia’s competition framework. Consumers are the ultimate beneficiaries of robust, competitive markets.

Indeed, the object of our Competition and Consumer Act 2010 is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.

Ultimately, I believe that an enhanced competition framework will benefit consumers and the economy as a whole by delivering more competitive, vibrant markets.

We’ll release more details about the review in due course.

The digital world is evolving. This means that businesses, policy‑makers and regulators need to be flexible and responsive to new issues as they emerge to support consumers in this time of ubiquitous and continuous change.

The Government has already shown that we are aware of the opportunities and challenges in this space, and we will continue to be responsive to the emerging issues of the online world.

I look forward to engaging with your organisations in future to further improve the consumer policy framework, and to support consumers and businesses to be aware and fully exercise their rights and obligations under the ACL.

In particular, the ACL will undergo an implementation review from 2016. I would expect that your organisations will contribute to that review process with a view to ironing out any issues, and making sure that the ACL continues to be robust and effective.

Thank you for your time today, and for your work in helping Australian consumers and businesses get a better deal.