Second-hand Vehicle Dealers (Miscellaneous) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 8 February 2024.)

Mr TEAGUE (Heysen) (16:46): I rise to indicate the opposition's support for the bill and that I am the lead speaker for the opposition. I note the contribution of members to the second reading already, including, chiefly, the minister. I will not state or rehearse all of those aspects of the changes that are contained within the bill. I do make particular mention of the Motor Trade Association's feedback, engagement and support for the bill and the changes that it contains. It is good to have the engagement of the Motor Trade Association.

Before proceeding too much further, I should note that being on my feet now has brought a necessary conclusion to the remarks of the member for Giles, who I thought was well underway on the last occasion and I had looked forward to hearing more from him. No doubt other members will have their own particular experience of the travails of acquiring second-hand vehicles along the way in a whole range of circumstances that people do, whether in remote and regional areas, as the member for Giles was describing, or in the metropolitan area of Adelaide, and for the whole range of different uses that people have for their vehicles.

There is no doubt that there is a very important, if not core, function that second-hand vehicle dealers perform and provide for what, perhaps until recent times, might have often been described as the second most significant individual purchase of an item outside of the family home that families would need to contemplate.

An individual vehicle purchase is a significant one. It is well therefore that we maintain a regulated environment that ensures the consumer experience, when considering and making that important purchase, facilitates as far as practicable an environment of free contracting between willing individuals that is as safe and secure and reliable as the legislation can assist it to be.

There are a number of discrete reforms that are the subject of the bill. I just highlight in particular the focus that has come on, even in recent times, of the security of the electronic form of data retention that motor vehicles have had for some time now and the prevalence of tampering with odometers. As is well known, the odometer's recording of the distance that a vehicle has travelled, along with the vehicle's age, is probably regarded as the key or among the key indicators of the value of a vehicle. So tampering with an odometer to provide an indication on the odometer that the vehicle has travelled less distance than it has is going to be one of those means by which you manipulate the perceived value of the vehicle, so much is clear.

What I confess is that, until considering this bill and the feedback from the Motor Trades Association, it had not been apparent to me just how concerning and prevalent the practice of interference with odometers has become, particularly electronic odometers. Indeed, just as we are aware of computer hacking and the like, the interference with an electronic odometer is something that is now presenting a real threat.

So it is welcome that the bill is very significantly increasing the penalty that would apply per offence, particularly so for third and subsequent offences. Where you have a course of conduct as often the marker of a concerted criminal effort, then for the third and subsequent offences involving such interference of the odometer there will be introduction of the possibility of a term of imprisonment being imposed, with a maximum of two years' imprisonment being in prospect. So that is welcome.

I hope that it is a real-life reflection of current risks and a meaningful response. We will need to look carefully to see that it is having an impact and it would be good to hear in the not too distant future about an improvement in that area.

No doubt there is the possibility for odometer interference to occur with the old school analog odometers. Indeed, while I presume it has become harder for the physical substitution of an odometer, particularly an electronic one, the possibility even for physical substitution might be something that occurs from time to time. I gather that this is something that is akin to computer hacking, hence it being very much in the frame. For those who engage in that sort of activity in a sustained way, involving multiple examples, there are very serious penalties indeed.

The bill engages in areas that are otherwise the subject of the balance between complete freedom of contract on the one hand and mandatory consumer protection provisions to contract on the other. It is welcome, just like is the case in insurance contracts, that it will be possible for certain aspects, certain defects of a second-hand car—and bear in mind that by definition we are not dealing with the pristine article. A second-hand car has a history by definition. It is important that we know what we are dealing with, that is, by virtue of an accurate odometer, that we know how far it has travelled and that there is some information about its history.

However, in terms of the transaction, there is the possibility reflecting the freedom to contract that where a particular feature or defect is pre-existing, then there should be full disclosure—make it clear. Provided the defect is not undermining roadworthiness, then exclude that defect from the otherwise obligation to repair, the subject of a warranty. It is a sensible addition to the landscape that takes us a bit further down the line than the underlying expiry of any obligation to repair when a vehicle is over 15 years old or has done more than 200,000 kilometres.

That itself being a particularly blunt instrument, I can think of any number of examples of vehicles well in excess of 15 years old and having covered more than 200,000 kilometres well and truly deserving of recognition and warranty, but that is another point. If we are dealing with the baseline obligation to repair, then disclosure of a defect—as I say, much like in the insurance environment—is one that ought to make the transaction a more value-based transaction for both sides and, like so many things, full disclosure is often the sunlight that can add to the quality of the transaction rather than take away from it.

I understand and am advised by the government that that is an amendment that brings South Australia in line with other jurisdictions and aligns with the Australian Consumer Law guarantees as well.

On the other side of the line, the current capacity to waive the right to have a defective vehicle repaired is to be removed. Again, it is a change that reflects the balancing act that is the subject of consumer protection legislation across the board. While on the one hand one can anticipate full disclosure of a defect is something that is within the remit of the seller to identify and choose to disclose, there is some real merit to be found in protecting the consumer to the point where it is not part of the transaction to consider whether the price might be somehow reduced in return for a waiver where something that is undisclosed, of a really quite substantial nature, might therefore go unprotected.

There is some merit in that balancing act in terms of changes. There are changes to the provisions in relation to cooling-off rights—those have been addressed. The changes to previous-owner details arrangements are also I think a sensible response to feedback from the Motor Trade Association and other dealers and auctioneers.

It is a matter of longstanding practice and perhaps even a subconscious expectation of those who have looked at buying a second-hand car to see that sheet of paper hanging in the window that sets out all sorts of information that really includes a whole range of private information that, in many cases, serves no direct purpose in terms of informing a buyer as to what they need to know, and the capacity to find out necessary history information is preserved.

Perhaps at the core, I suppose, or the threshold of the scope of the bill and the amendments that it is making are the very substantial increases to penalties for unlicensed dealings. We have seen that they have been both significantly increased for single offending and, as in the circumstances of odometer tampering, significantly increased also for third and subsequent offences, a conduct that, again, highlights that, where there is a sustained practice, there is a particularly serious potential penalty to be now applied in those circumstances.

The odometer tampering and conduct in relation to those erroneous readings is amplified by new provisions that will provide for a new offence in relation to false or misleading statements about odometer readings and the new provisions for provision of compensation where odometer tampering has occurred. It reminds me that it was not until the eighties—perhaps not until the mid-eighties—that odometers routinely had six or more digits so that every 100,000 ks it used to just roll over and reset itself, so you had to remind yourself. So it was perfectly possible in an innocent way—I have fallen foul of this myself (on the receiving end)—for someone to forget and say, 'Hang on, was it 300,000 or 400,000 or 500,000 ks that this vehicle has travelled?'

Mr Pederick: Only 90.

Mr TEAGUE: Or it might be only 90. It might be only 90, but it might be 190 or 290 because they reset themselves. Maybe that tells a story of how long vehicles used to last. It was regarded that that was a good enough standard. Maybe, as well, there was a sense that if you were dealing with a history greater than 100,000 kilometres, then you would have some sort of record or recollection of just how many hundreds had been done.

It is possible, even in innocent circumstances, for a vehicle—even with a working odometer, in those circumstances—to be sold and represented as having done some considerable distance less than it has actually done. But no longer and, as I say, I would emphasise that the practice that has been observed by the motor trades is very much a modern phenomenon and it is well that there be a response—a modern phenomenon to what has been an issue for identifying the history of vehicles from the earliest days. To top it off in this regard, the commissioner, as if he does not already have enough to do, will have a power to go and rectify an odometer where that interference has been identified. That will also have the effect of preventing a vehicle that is, for the time being, getting around with an inaccurate odometer from remaining in circulation in such a misleading state.

The changes also make provision in relation to electric and hybrid vehicles. The minister has addressed those changes in the course of the debate. There is to be an expansion to the Second-hand Vehicles Compensation Fund. There is provision for additional information in contracts of sale and, for good measure, there is a sign of the times in the removal of the option for fax communication for purchasers who are providing written notice. We are seeing that now coming through in this bit of legislation as well.

The changes will be in part now providing a new landscape of responsibility for Consumer and Business Services and, in particular, the commissioner, extending to those specific oversight powers with respect to odometers and interference with them, and by addressing penalties in a way that is really very substantial. As I have said, I would hope and anticipate that Consumer and Business Services will be in a position to provide some information before too long to assist the community to see the benefits of the application of those increased penalties, particularly when it comes to interference with odometers. With those words I reiterate the opposition's support for the bill and I commend it to the house and commend its speedy passage.

Mr BROWN (Florey) (17:09): I am pleased to have the opportunity to speak on this bill which proposes to amend the Second-hand Vehicle Dealers Act 1995 to make a number of changes that we intend to be beneficial to both South Australian consumers and the dealers who are engaged in the sale of second-hand vehicles. The intention is that its provisions will help to streamline purchases to reduce red tape for second-hand vehicle dealerships and, importantly, to strengthen protections for consumers in our state.

It is true to say that motor vehicles are for the majority of South Australians a major purchase. Whether new or second-hand, cars are not cheap to buy. For many people, it represents a significant financial endeavour to support the costs involved in acquiring a motor vehicle, but there are, of course, very many of us who do make the choice to purchase and use motor vehicles. More than a million drivers are licensed in our state and many among them will purchase multiple vehicles over their driving lives to suit their changing needs, as well as because cars do, of course, experience wear over time and may require replacement.

People may take the route of buying a second-hand vehicle for a variety of reasons. Quite reasonably, many buyers prefer to purchase a second-hand vehicle from a licensed dealer in preference over a private sale. This is in part due to the assurance offered by consumer protections that are in place for those who purchase second-hand vehicles from licensed dealers. Vehicles purchased from licensed dealers are covered by applicable warranties and there is perhaps a greater sense of legitimacy, a sense of certainty for consumers that we are getting what is being advertised to us in the true condition in which it is being advertised, as part of our transaction with a registered second-hand vehicle dealer.

Unfortunately, we know that not typically but on some occasions, this sense of legitimacy that we perceive can be a deliberate deception created by an unscrupulous operator. Recent years have seen increased incidents of the practice of lowering a car's odometer reading by licensed dealers. We also see this occurring amongst unlicensed dealers. These are people who may be trying to represent themselves to the public and to prospective car buyers as ordinary private sellers but are actually selling far more vehicles in a single year than what is outlined within the parameters of legality, as well as what would be consistent with public expectation of what constitutes a private seller.

Many of these bogus private sellers, who should rightly be considered unlicensed dealers and will be so declared under the provisions of this bill, are selling from their home and advertising on online facilities such as Facebook Marketplace. The Second-hand Vehicle Dealers Act 1995 is a legislation that oversees the licensing of motor vehicle dealers to ensure robust consumer protections within what should ideally be an honest and reputable industry. Despite being subject to modest amendment at certain times over the period of its operation, the act itself and the Second-hand Vehicle Dealers Regulations had not been, until this government's efforts, comprehensively reviewed since 2009, but since that time some material changes have taken place.

For example, there have been changes in technologies that have had bearing on standards for vehicles, the nature of the business environment in the area of car sales, as well as consumer expectations therein. Additionally, the Australian Consumer Law has been introduced, so a bit of consideration of the act's ongoing suitability was warranted. This bill proposes to improve and to modernise elements of the Second-hand Vehicle Dealers Act relating to the duty to repair vehicles, cooling-off periods, disclosure of information about previous vehicle owners, electric and hybrid vehicles, contracts of sale and also the important matter of penalties for noncompliance by dealers.

I note that these changes have been developed in part through consultation with industry groups including the Motor Trades Association and the Royal Automobile Association of South Australia. One of the reforms put forward in the bill that aims to offer benefit to dealers and operators, as well as to increase clarity for consumers who are prospective buyers, is the provision to allow second-hand vehicle dealers to disclose, rather than to repair, defects which will not be subject to the duty to repair provided that the vehicle remains roadworthy.

Under current provisions in the act, dealers have a duty to repair a defect that arises during or after the sale of a vehicle. There are a number of exemptions to this requirement, including for vehicles that are over 15 years old or those that have odometer readings exceeding 200,000 kilometres before the sale. It is proposed that this duty will not apply where a dealer provides a clear written notice to the consumer identifying a defect and the consumer acknowledges their receipt of that information.

This reflects existing arrangements that are now in place across a majority of jurisdictions around our nation and is consistent with the duty to repair that exists under Australian Consumer Law. The Second-hand Vehicle Dealers Regulations will also be amended to include a prescribed form that must be used by registered dealers to provide notice to a buyer about a vehicle's defect.

To create additional protection for consumers, the bill will also remove current provisions that allow a purchaser to waive their general right to have a vehicle repaired by the dealer under duty-to-repair obligations. This approach is in line with Australian Consumer Law requirements, which set out that purchased goods must be of an acceptable quality and must be fit for purpose.

To accommodate the advent of some of the new technologies that feature in more modern vehicles, the bill will expand the duty to repair to cover the main propulsion battery for hybrid and electric vehicles within the statutory warranty period that is specified in the act. The intention is that this change will support interest in purchasing second-hand electric and hybrid vehicles amongst South Australians and ensure that access to repair rights can be consistently extended to South Australians who own second-hand vehicles.

A transitional provision has been included in covering hybrid and electric vehicle batteries in vehicles purchased either prior to or following the commencement of the act. This provision will begin when clause 9 of the amendment bill comes into operation and will provide for electric and hybrid vehicles that are still under the statutory warranty period to receive the newly established protections. The bill also makes changes to reduce red tape for both consumers and dealers in instances where a consumer chooses to exercise their right to waive the cooling-off period after purchasing a vehicle.

Under current provisions, consumers are afforded two clear business days to consider the purchase of a second-hand vehicle from a dealer. Unless they have chosen to waive this right, a consumer may cancel the sales contract by written notification before the end of the cooling-off period.

Currently, in order to waive the right to a two day cooling-off period a separate form must be signed by the purchaser, as well as a person independent of the sale. This requirement imposes an extra burden on consumers to obtain a witness who will sign the form, a burden the removal of which this government considers reasonable. Amendments to the act will now specify that a consumer does not require an independent witness to sign the form that waives the cooling-off period. In these circumstances, the cooling-off period will now expire when the form is signed by the consumer.

We consider that both consumers and dealers will further benefit from changes to disclosure requirements in relation to previous owners of a vehicle. Currently, when a particular vehicle is being offered for sale, it must include a public notice specifying the name and address of the last owner. While this requirement does provide a measure of transparency for purchasers, it is the view of the government that it raises privacy and safety concerns for previous owners, as well as imposing an administrative burden on dealers. The bill now before us proposes to remove the requirement to display the name and address of a previous owner on a notice and replaces it with a statement that the details of the last owner of the vehicle may be requested from the dealer.

The bill makes similar amendments to disclosure requirements where a vehicle offered for sale has previously been used as a taxi or as a hire car. Under current provisions, notices must display the name and address of the person to whom the vehicle was previously leased. However, it is the view of the government that this information may be misleading for consumers as vehicle dealers may not receive accurate information from previous owners about the history of a vehicle. Accordingly, this bill removes the requirement to disclose personal details and replaces it with a statement that these details may be obtained by request. Both changes to disclosure requirements I have just specified will apply as well in instances where vehicles are sold at auction.

The important component to this bill is the proposed increase in penalties. It is our intent that increasing the maximum penalties for unlicensed dealing and tampering with vehicle odometers will provide a substantially more compelling deterrent against these unacceptable practices. This initiative is important in part because it has been observed that some recent prosecutions undertaken for odometer tampering have resulted in fines substantially less than the maximum amount.

Further, under existing provisions, the applicable fines often represent only a small portion of the profit that can be made from tampering with an odometer. It seems reasonable, therefore, to say that more effective and more meaningful measures of deterrence are a necessary step in the right direction. This bill proposes that penalties for odometer tampering will increase from $10,000 to $150,000 or, for very serious offences, imprisonment for two years. Notably, this will make South Australia the jurisdiction with the most significant penalties in Australia applicable to these offences.

Further changes provide for purchasers to apply to the court for compensation from a private seller where the private seller has been convicted of odometer tampering. Previously, it was only dealers from whom purchasers could seek compensation for any disadvantage they had suffered following the purchase of a vehicle with a tampered odometer. For unlicensed dealing offences, the penalty for a first or second offence will see a meaningful increase from $100,000 to $150,000. The penalty for third and subsequent offences will see an even more substantial increase, from $100,000 or 12 months' imprisonment to $250,000 or two years' imprisonment. The maximum penalty that can be levied on body corporates that engage in unlicensed dealing will increase from $250,000 to $500,000.

It is the view of the Malinauskas Labor government that meaningfully increasing these penalties will be significantly more effective in deterring those who might seek to use deceitful practices to profit from second-hand vehicle purchasers. Increased penalties will better protect both the South Australian community and the licensed dealers who do the right thing from the adverse impacts of these activities.

Further, the bill proposes to create a new offence for false and misleading statements in relation to odometers. The Commissioner for Consumer Affairs will be able to direct a person to rectify an odometer that has been tampered with and also to stop a person from selling or disposing of a vehicle with a tampered odometer. These decisions will be reviewable with the South Australian Civil and Administrative Tribunal. Failure to comply with a direction will be subject to a maximum fine of $20,000.

Another provision of the bill is that where costs are not recoverable by other means, such as compensation following a prosecution, the commissioner will have the option of paying to rectify an odometer. The bill will also allow dealers to add additional information to a contract of sale. The act currently specifies the information that must be included in a contract, including details of the contract parties, details of the vehicle, an agreed purchase price and cooling-off period provisions. To meet these requirements, dealers are currently required to use specific forms prescribed by the Second-hand Vehicle Dealers Regulations.

Provided that information in the prescribed form is retained, dealers will be able to include new information as they see fit, such as the names of salespersons, vehicle stock numbers and other identifiers that are used in sales management systems in the contract of sale form. It is intended that these changes will streamline the processes associated with vehicle sales while retaining important information for consumers about their rights and obligations that exist under contracts of sale.

Very importantly, in relation to communication via facsimile, the bill proposes to remove the option of fax communication for purchasers providing written notice to a dealer of their intention to rescind a sale contract during the cooling-off period. Also to be removed is the option of fax communication for service of documents under the act. These amendments reflect changes to communication practices in the industry and, indeed, across our community and its industries more broadly, where communication by fax is these days increasingly infrequently observed.

Another element of the bill is a series of minor changes to the Second-hand Vehicles Compensation Fund. Currently, dealers provide financial contributions to this fund, which is currently principally used to compensate consumers where there is no reasonable way of recovering money that they are owed by a dealer. This bill proposes to broaden the use of the fund to include programs relating to education, research or reforms that benefit dealers, salespeople or members of the public.

Subject to the passage of this bill through the parliament, there will be amendments to the regulations to support the changes that are proposed. Such amendments will include stylistic and formatting changes to forms relating to the sale of vehicles and motorcycles, in line with requests from industry. There will also be an appropriate period of transition to ensure that existing forms can be phased out and new forms may be introduced and adopted with minimal cost to dealers.

This piece of legislation aims to bring changes that will benefit both vehicle buyers and the great majority of operators of licensed dealerships, who already do the right thing. I am pleased to commend this bill to the house.

Mr PEDERICK (Hammond) (17:24): I rise to speak to the Second-hand Vehicle Dealers (Miscellaneous) Amendment Bill 2023. This bill seeks to get some honesty in the second-hand vehicle department. Obviously, there is a lot of honesty in selling second-hand vehicles but sometimes there is not. This bill was introduced on 15 November last year by the Minister for Consumer and Business Affairs, and obviously it will amend the Second-hand Vehicle Dealers Act 1995.

In regard to some of the clauses of the bill, clause 4 of the bill would increase the existing penalties for carrying out business as a second-hand vehicle dealer without a licence. The penalty for a first or second offence would increase to $150,000 up from $100,000. For a third or subsequent offence, it would increase to $250,000 from $100,000 or two years' imprisonment, up from 12 months. For an offence committed by a body corporate, the penalty would increase to $500,000, and that is up from $250,000. In the first instance we see, probably as a deterrent more than anything, the significant rises in the penalties for breaches of this legislation, if it does go through the house, and I am sure it will.

Clause 12 would increase the existing penalties for interfering with an odometer. This penalty would increase to $150,000, which is a significant increase from $10,000 per offence. For third and subsequent offences, it would introduce the option of a maximum of two years' imprisonment. This is one of the clauses that is getting quite a bit of debate on this legislation. There are a lot of stories, a lot of folklore, around selling second-hand cars. We always hear the story that 'it was only driven by a little old lady to church on Sundays or down to the shop on Saturdays,' and things like that. Sometimes, it is pretty difficult looking at a second-hand vehicle to see what has been flashed up on it unless you know what you are looking for. Even then, you might miss something that has been puttied up in terms of the bodywork and some things are more obvious—

Mr Whetstone interjecting:

Mr PEDERICK: —I am getting a lot of help from my colleagues here—than others. It is just the way of how vehicles can be presented. I remember the second car I owned which was a 1971 HQ and, yes, it looked straight enough. I did not pay a lot for it. That car was very reliable for three years: a 173 three on the tree. If you do not know what that is you might have to google it. That was after I had a disaster with a four-cylinder 1975 Torana with a four-cylinder Opel motor. That only lasted 12 months, and I went backwards in the years to buy this HQ. It was a magnificent car; a good shearer's car. You could get six people in it.

Soon enough, next thing there was a hole in the left-hand passenger door that you could get a cricket ball through that had rusted out. That car was a terrible colour: powder-puff blue with a white roof. I played with it a bit. I jacked it up and put spotlights on—all the carry-on. Pump-up shocks on the back was the go back in the day. But, no, the old Holdens went forever. I think in three years I just put a water pump in. I did not worry about fixing the door; it was not worth it.

It is one of those things: cars can be made to look a lot better than they actually are. As I said, you can detail them in many different ways. Obviously, people in the trade are more likely to know how to do that and, quite legitimately, they get detailed for a genuine second-hand sale to look as smart as they can to get the best possible price, because that is their business. But some people go one step above and, as I said, you hear a lot of folklore around odometers being spun back. It is not right, because it is fraud and it disguises the actual real age and condition of that vehicle.

I have not had many cars since the HQ. I bought a brand new Sigma in 1983, courtesy of some mining money. That went alright, but the motor was not good enough for hard runs across the Nullarbor—and I will leave that there. In January 1990 I managed to get my new V8 ute, which was one of the first ones back after the Holden WBs were phased out, I think in about 1984. The VG Holdens were the equivalent of the VN in the car range. I think there were only 5,690 of that model ever built as a ute variant. They actually had a higher roof put in them so that you could wear your Akubra, like the Commodores and Statesmans in the same range.

I still have that red ute to this day. It has done a few kilometres and it has had quite a journey. It sat in a shed for a long time. It was suggested that as I had not registered it for a while that perhaps I would sell it, so I just went down to the rego place and registered it again. I did not need it; we obviously had work cars in this role. I got it out occasionally for a bit of fun, and then down the track I decided to invest in it and I bought it back, but that is alright; she will go for a long time now. The one thing I have not touched is the motor. These old five-litre 304 motors in these Holdens are built of good steel. That ute has done about 450,000 kilometres, so it has gone a long way. It has a basically rebuilt gearbox, diff, all of the suspension works. There are no bananas in the diff, which is another old trick.

The interesting thing is the odometer only shows 260,000 kilometres but it has actually done 190,000 kilometres more, or very close to that mark. I have always remembered that number from when I had to get the dash repaired because I did not have a temperature gauge in the original dash that was in it. My auto-electrician said, 'Look, I'll just get another dash out of something else and swap it over, the whole thing: speedo, rev counter, fuel gauge, temperature gauge.' That is what happened. People say, 'How well has your ute done?' A mechanic might say it has done 260,000 kilometres and it is not in bad nick. I would say, 'Well, it's in really good nick because it has done 190,000 kilometres more than that.'

I suppose what I am saying, and I think it is caught up in the act, is if this ute was sold to a dealer or traded or something and someone wanted to onsell it, there would have to be that disclosure. I am not sure whether someone would have to wind the odometer up. I am assuming, and the minister might be able to help me in her contribution later or in committee time, you would have to find a way to actually wind it to the appropriate kilometres that it has done. I will give credit to that old motor. I seek leave to continue my remarks.

Leave granted; debate adjourned.