Labor reveals plan for tougher consumer cop to stop the ‘shonks and sharks’

FROM exploding Thermomixes to petrol price gouging, Aussies are increasingly getting stung by dodgy behaviour. This plan could fix that.

FROM exploding Thermomixes to petrol price gouging and dodgy painkiller claims, the past 12 months have seen a rapid rise in poor corporate behaviour leaving Aussie consumers out of pocket or worse.

Labor’s Shadow Assistant Treasurer Andrew Leigh has slammed the government’s lax attitude to consumer protection and is calling for a tougher response to unconscionable conduct, unfair contracts, unsafe products, misleading conduct and scams.

In a new submission to the Productivity Commission’s inquiry into Consumer Law Enforcement and Administration, Dr Leigh has outlined proposals to toughen Australia’s legal protections in a way that would prevent future “Thermomix” type scandals, as well as raise significant revenue.

Earlier this month, News Corp revealed Australia’s consumer watchdog was investigating the food processor company over injuries to owners — some 83 incidents resulting in at least 18 people needing medical treatment — and its attempts to silence them.

Separately, at least 10 people injured while using the machines have approached Melbourne-based law firm Slater & Gordon indicating an interest in pursuing group legal action against the company.

“[The Thermomix scandal] illustrates that our penalties for ripping off consumers are extremely light,” Dr Leigh said. “They’re weaker than they should be and that creates the right incentive to do the wrong thing.”

He points to the recent case brought by the Australian Competition and Consumer Commission against drug maker Reckitt Benckiser over its “Specific Pain” Nurofen range as an example of inadequate penalties.

In that case, Reckitt Benckiser was slapped with a $1.7 million fine after the Federal Court found it guilty of making false and misleading claims in its marketing. The ACCC is appealing the penalty, which consumer group Choice slammed as “laughable”.

The largest penalty ever handed down under Australian Consumer Law was the $10 million Coles was forced to pay over its treatment of suppliers. ACCC chairman Rod Sims has warned such small fines relative to the profits of large companies “might be viewed as simply a cost of doing business”.

Currently, the maximum penalty a corporation faces for breaching the Australian Consumer Law is $1.1 million, while the maximum penalty for breaches of the Competition and Consumer Act is around $10 million.

Labor’s proposal would bring penalties under the ACL up to $10 million, in line with competition law, while using revenues from increased penalties to double the ACCC’s litigation budget to $49 million.

Currently, the consumer watchdog escalates around 60 consumer and fair trading cases per quarter from approximately 10,000 complaints. Over the past five years, the ACCC has received $1.50 in penalties for every $1 spent on litigation.

Labor also wants the ACCC to be given a market studies function, similar to what was recommended by the Harper Review, to explore public interest issues such as “increased market concentration, the impacts on inequality in certain markets and to ensure markets are functioning in the best interests of consumers”.

“This function would be of significant practicality in addressing markets with ongoing concerns, including safety, that require a market-wide review before instigating legal action, under the ACL for example,” the report says.

Dr Leigh accused the government of being “asleep at the wheel” on consumer protection issues, with no Minister for Competition or for Consumer Affairs on the government benches.

Currently, Treasurer Scott Morrison is the key minister for the ACCC in charge of competition policy matters. Small Business Minister Michael McCormack, who also had responsibility for the bungled Census, is responsible for consumer and product safety issues.

“They’ve been slow to respond to the Harper Review, and in any choice between standing up for consumers or backing the shonks and sharks, they’re on the side of the shonks and sharks every time,” Dr Leigh said.

The Productivity Commission is due to hand down its final report in March 2017.

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