SECOND-HAND VEHICLE DEALERS (COOLING-OFF RIGHTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 4 June 2009. Page 2601.)

The Hon. J.M.A. LENSINK (11:14): I rise to indicate support for the second reading and to make some comments about the content of this bill and, in doing so, I advise the chamber that the Liberal Party is yet to adopt a formal position. We will do so on 14 July, which is our next day for consideration of parliamentary business. This bill introduces a cooling off period of two business days—which, in definition, actually includes Saturday—from the signing of a contract for a used vehicle.

Features of the proposal include that a non-refundable deposit may be sought by the dealer for 2 per cent of the value of the vehicle up to a maximum of $100. A waiver form will be set out by regulation to allow the purchaser to skip the cooling off period and take immediate possession of the vehicle; however, the dealer must not offer an inducement in order to obtain a waiver. I am advised that inducement would include such things as reducing the purchase price. While the cooling off period is in place for a transaction to purchase, the dealer may offer first option to a third party purchaser in the event of it falling through but cannot proceed to a formal sale until the expiration of that current cooling off period.

Cooling off is available only for vehicles purchased from dealers by private individuals. It does not apply to vehicles purchased at auction. Legal title remains with the dealer until the expiration of the cooling off period. Similarly, any trade-in vehicle remains the property of the purchaser until the expiration of the cooling off period. The bill contains some other functions, including:

the widening of the definition of 'dealer' to include the buying as well as selling of used vehicles;

an assumption that if a person or their close associate sells, or offers to sell, four or more vehicles in a 12 month period they are a dealer;

making it an offence for employees of dealerships to sell second-hand vehicles if they have prior convictions for dishonest conduct or have been disqualified as a second-hand dealer (this is to prevent the setting up of third parties);

the transferral of responsibility for determining claims to the Second-Hand Motor Vehicles Compensation Fund from the Magistrates Court to the Commissioner for Consumer Affairs;

expanding the use of that fund to include education programs for consumers, investigating compliance, cost of disciplinary and prosecuting offences, and conciliation of disputes; and

increases in the expiation fees and maximum penalties of offences already in the act.

My office has investigated what occurs in other states and we note that Queensland, New South Wales, the Australian Capital Territory and Victoria all have similar laws relating to cooling off periods for used vehicles. All allow a non-refundable amount if the contract is rescinded within the cooling off period, and all allow the purchaser to waive this right. Western Australia, Tasmania and the Northern Territory do not regulate cooling off periods.

It is interesting to note the differences in other jurisdictions in relation to the number of days of the cooling off period and the deposit amount. As I stated, all offer a waiver, and I am told by the Motor Trades Association that in Victoria some 97 per cent of these transactions go through using the waiver. If that was replicated in South Australia the cooling off period would not necessarily be used very often. In New South Wales the cooling off period is one day and the deposit is significantly higher than in South Australia ($250 or 2 per cent, whichever is the lesser); Victoria has a cooling off period of three days; the Australian Capital Territory one day; and Queensland three days. In Victoria and the Australian Capital Territory the deposit amount is $100 or 1 per cent, whichever is the greater; in Queensland it is an amount up to $100.

I know the Motor Trades Association has made representations that it believes that South Australia's proposed amount is too low and does not provide a significant enough disincentive for people to sign up for contracts for sale for a range of vehicles, which would be to the detriment of other consumers. That is a matter we will consider in terms of whether we will seek amendments to the amount of the deposit. The Motor Trades Association is also quite concerned about the form of the waiver. There was some suggestion that it would need to be witnessed by a justice of the peace but, considering that a large number of vehicles are sold on weekends, especially Sundays, that could be particularly problematic.

It is also concerned about the transfer of jurisdiction of the compensation fund to OCBA. I have a copy of OCBA's most recently available report for 2007-08: about $300,000 is contributed to the fund each year, and its capital is about $4 million. In 2007-08 some $128,000 was paid out in claims, and in 2006-07 it was $39,000. So, there is not a huge drawing on that resource. The administration costs for 2007-08 were $32,000 and for 2006-07, $16,000. It is not a huge cost to the Office of Consumer and Business Affairs but I suspect that, if the responsibility for settling claims was transferred to OCBA, the administration costs would increase significantly. There is also some reason for scepticism: this may be a means of the office cost-shifting the fund so that it can be used for purposes other than compensation. The fund is a very important stop gap for consumers who may have suffered hardship due to some issue with their purchase, and that capital should be preserved strictly for that purpose.

The Motor Trades Association is also concerned that the definition of 'auction sale' be very specific to ensure that both consumers and other people involved in those auctions understand that it is at the fall of the hammer. I understand that this would have the effect that a cooling off period would be applied to any sales that take place before or after that auction. I have also received some information that the association is opposed to a proposal that inspections be mandated. With those remarks, and given that this has not formally been to our party room meeting, I seek leave to conclude my remarks later.

Leave granted; debate adjourned.