Bills

Second-hand Vehicle Dealers (Roadworthiness Certificates) Amendment Bill

Introduction and First Reading

The Hon. F. PANGALLO (17:31): Obtained leave and introduced a bill for an act to amend the Second-Hand Vehicle Dealers Act 1995 and to make related amendments to the Motor Vehicles Act 1959. Read a first time.

Second Reading

The Hon. F. PANGALLO (17:32): I move:

That this bill be now read a second time.

I am pleased to rise today to introduce the Second-Hand Vehicle Dealers (Roadworthiness Certificates) Amendment Bill—important legislation that protects consumers and promotes road safety. This legislation has been a long time coming and I will explain why in a moment. I thank the Motor Trade Association and its many members for their support for this bill.

However, I am extremely disappointed by the RAA's dismissive and negative attitude, which I had expected considering their own selfish self-interests. They are an organisation whose core business is vehicle maintenance. However, they also want to safeguard their lucrative motor vehicle inspection business, where customers and their members can pay upwards of $500 for a comprehensive inspection. But, not everybody buying a second-hand car privately can afford to pay that. Disingenuously, the RAA, in what is a veiled dig at the Motor Trade Association, had the audacity to claim that the car industry wants to stop private sales.

Last year more than 318,000 used cars were sold privately. Just 82,000, or 26 per cent, went through licensed car dealerships which, of course, carry statutory warranties. That means around 240,000 vehicles last year, or about 5,000 a week, were sold on online platforms like Facebook's Marketplace and Gumtree. There are no warranties or protections when buying cars privately; it is buyer beware. But as we know, there are now many cowboy backyarders out there keen to make a quick buck at the expense of unwitting buyers.

The RAA's views would not have the support of the public. I am willing to wager that the vast majority would support what I am doing. This legislation would provide a level of protection from being sold lemons by backyard private sellers for the RAA's 800,000 members as well as the general public, not to mention provide business to those thousands of current repairers who have to pay for the privilege of being an RAA-approved repairer. Even RAA's workshops could benefit from this much-needed initiative.

I would have expected at least one good word from it from the RAA's Mark Borlace, who I have a great deal of time for. It is not my intention to bash the RAA. They are a good organisation, but they are also conflicted and I think they have got it wrong here. But it was all negative from what I heard on radio.

Mr Borlace was worried it might mislead people to think they were getting a good car. No, Mark, it would give the buyer an idea of any existing problems that could cause the vehicle to be defected by police or detect a problem the buyer would not pick up. He claims the car industry was trying to stop private sales, and that based on the number of annual sales the public would have to spend around $23 million a year on inspections. He asked, 'What would this cure?' Firstly, how much does the RAA receive in revenue from its own inspections annually, and secondly, this is not about curing anything. It is about ensuring a vehicle sold is roadworthy and safe to drive.

Mark wants to know what the size of the problem is. Well, I can tell Mark just from my own experience over the many years that it is a big problem that is only going to get bigger. Compulsory roadworthy checks have been working just fine in other states for years. Why should we be one of the only states out of kilter? Because the RAA does not like them?

Consumer Affairs cannot prevent or save people from buying lemons in private deals. They tell buyers it is their own problem, a civil manner. They only get involved when a seller breaks the law by selling more than four vehicles from their backyards in a year, but the cagey cowboys have even worked a way around this, flipping more vehicles using the name of a family member or relative.

The high value of used cars has made private sales a lucrative sideline for backyarders. They source used vehicles cheaply from clearance auctions and from interstate sellers offloading cars because of the stricter regulations on roadworthiness that apply there. They could be insurance write-offs, crash-damaged, vehicles with high odometer readings, or which may have been involved in accidents and then repaired. Many will come without books that give a history of ownership, odometer readings and, importantly, maintenance.

Today SUVs, utes and panel vans outsell conventional passenger vehicles. These models, along with light commercial vehicles like transit vans, are in great demand by tradies. They can also be very expensive to repair if something goes wrong or if you buy a second-hand lemon. You might think you are getting a good deal paying $30,000 for a late-model popular used Ford Ranger privately; however, these types of modern light commercial vehicles are also far more sophisticated, with all types of gadgetry and electronic components. Blow an engine and you will be up for more than $20,000 to recondition it, whereas once it could have been between $3,000 to $4,000. There could be other defects that are not visible to an untrained eye. Modern generation passenger vehicles of around 10, 15 or 20 years of age are also very expensive to repair.

With cost-of-living pressures weighing heavily on family budgets today, car maintenance, servicing and repairs would not be a priority. Clive Polley, the national chairman of the Commercial Vehicles Association and a 60-year veteran of the commercial vehicle industry, tells me that over the years he has seen many instances where light commercial vehicles bought from interstate were unroadworthy, and he felt sorry for their new owners left with hefty repair bills they had no idea about.

In South Australia, there are compulsory inspections required for vehicles over 4.5 tonnes yet, surprisingly, there is no such requirement for those under 4.5 tonnes, which includes utes, panel vans and transit vans. I would have liked to have heard Mark Borlace say that any type of consumer protection in buying used cars privately could only be beneficial. After all, this remains the largest unregulated consumer activity in this state, which is booming on social media platforms like Facebook Marketplace and Gumtree.

Motoring and maintenance is the RAA's core business, although these days they dabble in insurance, travel and providing energy solutions for their members. You would think consumer protections would still be a strong consideration in their multibusiness model. As people in this place may know, consumer protection is something that I have been hot on for decades, long before I entered this place.

In my previous career we exposed so many used car shysters that I have lost count. They took advantage of vulnerable, trusting people—young kids, single mums, battling pensioners, even professional types. I will even confess that I got burned not once but twice. A basic roadworthy check like I am proposing would have found a major problem I could not immediately identify: a cracked head gasket, which cost me more than $1,000 to repair, because the previous owner laughed and said it was my problem the moment I drove off and it started overheating.

I can tell you some horror stories we revealed on Today Tonight and as you would have seen on our rival program on the Nine Network, A Current Affair. People with problems came to us because they had lost faith in the government's lax consumer laws and toothless tigers like business and consumer affairs, which simply cannot keep up with the complaints they get. If it is a private sale, they get told, 'Bad luck, it's buyer beware. Take civil action.' Who can afford that?

There were cars that blew up on the road after purchase, cars that caught fire, write-offs and dangerous and unsafe cut and shut jobs being flogged at high prices without the problems or incidents being disclosed. There were stolen cars or vehicles that were still under finance but it was not disclosed, costing unwitting buyers tens of thousands of dollars when the car was repossessed by the finance company.

One of South Australia's most notorious backyarders I came across had whizzed back the odometer of a used care by almost one million kilometres, or a couple of round trips to the moon. People have died because they bought unsafe and dangerous vehicles privately, which were not covered by any statutory requirement.

The unscrupulous operators will continue to prey on the vulnerable and the ignorant. Buying a car is an emotional experience too, if you are attracted to it, but it can lead to heartbreak and great expense, particularly for young people and those on low incomes who do not want to buy trouble.

Here are three recent examples of what a roadworthy inspection can do. Last weekend, the MTA and my office invited people to have their vehicles inspected by experienced technicians at their impressive Royal Park workshops and training centre. Among them, was a stylish-looking 2009 Audi Q5 bought for $8,000 in a private sale from a backyarder by 19-year-old Josef Gentile, a luxury marque with 145,000-plus kilometres on the clock at what he thought was a bargain price. Temptation got the better of young Joseph who did not tell his dad about the purchase until he arrived home with his set of wheels.

They noticed it was blowing white smoke while idling and then the alarm bells started to ring. They took it back to the seller, a migrant visa holder, who scoffed at them, refusing to refund the money. Left with no legal option, they reluctantly took the car in for repairs which have cost them so far over $1,000. But there was more bad news to come from the hour-long inspection at the MTA. The vehicle was found to have other serious faults and there was evidence that the vehicle's odometer had been wound back. The teenager's dad told me he wished this proposed legislation had been in place before his son bought the car as it would have saved him thousands of dollars that he could be up for now, and lots of heartache. A roadworthy check will be able to pick up odometer tampering.

Another vehicle brought in for inspection, a Ford Territory, was found to have worn parts that could have resulted in more serious damage, costing its owner thousands if not rectified. The owner was thankful for bringing it in. Then there was my son Connor's 2014 Ford Focus. The roadworthy check found that a wrong-sized tyre had been fitted to the front, which was dangerous and could have caused serious handling problems and lead to an accident. He fixed it the next day—the new tyre cost more than he would have had to pay for a roadworthy certificate inspection.

Yet, there is the RAA dismissing roadworthy checks and saying they are worried they might mislead buyers into thinking they had a good car when it was not. These inspections include checking the vehicle identification number (VIN) to ensure the car is not stolen or rebirthed, the engine, gearbox, differential, brakes, steering, suspension, tyres, body, rust, damage, windscreen chips and cracks, lights, exhaust, seatbelt and airbags. A small price to pay for peace of mind.

The Treasurer, Stephen Mulligan, should also take an interest in what this legislation can do for the government's revenue streams. For years, the government has missed out on hundreds of millions of dollars in stamp duty revenue because buyers and private sellers of second-hand vehicles deliberately and willingly colluded to underestimate the true sale value of their vehicles when registering new ownership. This legislation can put a stop to that dishonesty.

While Queensland, New South Wales and Victoria have strong roadworthy certificate laws in place to protect the consumers and improve road safety, in South Australia there is currently no requirement for roadworthy inspections upon sale or renewal of registration. They are only required upon a lapse of registration, when a vehicle has been significantly modified, or upon a transfer of a vehicle from interstate.

I can point out an anomaly I discovered myself. I bought what I believed was a 1997 Mercedes coupe. When I went to change the ownership of that vehicle and the registration, I was surprised to see that on Service SA's records the vehicle was registered as a 2006 model. When I made inquiries about that it turned out that the vehicle had been imported from the UK in 2006 and therefore, under strange South Australian registration laws, was actually registered as a 2006 model when in fact it was nearly 10 years older than that. As a consequence of that I had to go to Regency Park and go through this arduous process with inspectors there to prove the age of the vehicle and when it was manufactured and give them other evidence before I could then have it appropriately dated as a 1997 vehicle.

Incredibly that is still in place today. As we know, there are a lot of vehicles that are imported from overseas, right-hand drive vehicles particularly from places like Japan and South-East Asia, where motorists still drive them on the road. That is something that Minister Koutsantonis and his department need to rectify pretty quickly.

Let me repeat that when selling a vehicle here in South Australia there are no requirements that the car be checked for roadworthiness. That means the vast majority of those 318,000 vehicles privately sold last year have had no inspection since their last service, and who knows when that was?

Compare that to New South Wales, which has the most rigorous roadworthy regime in place. To register a car in that state a blue slip is required if the car is under five years old along with a safety inspection and an integrity check. That includes the vehicle identification number (VIN) and engine numbers. If a vehicle is over five years old or transferring from interstate, an e-safety check, pink slip and a name for a roadworthy is also required. Further, all New South Wales vehicles must also have an annual safety check at registration renewal. It is no surprise that New South Wales has the youngest and highest standard of vehicles on Australian roads.

South Australia? Well, unsurprisingly ours is still the oldest. In other states, like Queensland, they maintain similar requirements for selling cars, requiring a roadworthy certificate to reregister, transfer or register an interstate vehicle. In Victoria and the ACT vehicles are unable to be transferred unless there is a roadworthy certificate. Western Australia, Tasmania and the Northern Territory have similar regimes to us.

The Motor Trade Association SA/NT CEO, Darrell Jacobs, described the current situation for private purchasers as:

South Australians are the least protected and most vulnerable second-hand vehicle consumers in Australia.

You need to go into this transaction with your eyes wide open, and understand the moment you exchange the keys for the cash there are no comebacks on that vehicle.

This bill is not about limiting private sales. It is about providing a vastly improved level of protection for South Australian consumers buying a second-hand vehicle in South Australia and improving the road safety standards of the vehicles on our roads.

Of course, a diligent buyer can buy from a reputable dealer, do their own register check to see if the car is under finance or has previously been written off and have a pre-purchase inspection done at a cost of between $300 and $500, but the fact is most buyers do not, and unscrupulous sellers have exploited this unregulated private sector where lemons are sold.

Licensed dealers are required to comply with the Second-hand Vehicle Dealers Act. They have to disclose if the car has been written off, if it has had any known faults and provide statutory warranties and consumer protections such as cooling off and refund rights. No such protections exist in regard to private sales. The RAA, who conduct excellent pre-purchase inspections at a purchaser's cost of about $300-plus, have warned of similar problems on their website. Let me quote them:

If you're considering buying a pre-loved BMW, you might want to get it checked over by an expert first.

That's the advice from RAA's vehicle inspection service, after it found only 16% of BMWs brought in for an RAA vehicle inspection last year were given the green light.

In 70% of cases, caution was advised in the form of a yellow light result—a rating that means potential buyers should proceed with caution, as there are some problems that may need attention.

However, it was the Land Rover that recorded highest number of serious roadworthy faults last year, with an average 2.3 serious faults per inspection.

RAA motoring expert Mark Borlace said it was worth noting the faults weren't necessarily a result of defects with the car makes themselves, but rather how the vehicles had been looked after by previous owners.

Across all vehicle makes and models, there was an average of 10 faults at every inspection, including 178 cases that were serious enough to warrant a red-light rating.

'That's 178 times when someone was considering buying a vehicle that would have been a terrible investment,' Mr Borlace said.

'That's why it's so important to get any car checked by a professional—it may cost you a small amount now but it could save you a lot of money in the long run.'

Yet there they are, criticising. I am trying to do exactly the same thing that they have just highlighted on their website. Such advice makes the comments by Mr Borlace about wanting to see more supporting data even more bewildering.

The top five serious roadworthy faults identified by the RAA are headlights, park and driving lights; stop, tail and numberplate lights; brakes, hoses or pipes condition; door glass, windscreen and tinting; and window wipers and fluid. The roadworthy certificates this bill provides for will identify all these and more, including the provenance of the vehicle. Typically, a roadworthy certificate inspection will take up to an hour and will cover tyres, including the spare, and body rust and damage, interior trims, roof, engine, gearbox, differential, brakes, steering, suspension, windscreen chips and cracks, lights, exhaust, seatbelt compliance and that the airbags are operational, the display lights work and no error or warning lights are flashing on the display.

Let me just make a point about airbags. You may recall in recent years there was a significant recall of airbags that had been fitted by a Japanese manufacturer. That was a worldwide recall involving millions of vehicles. Again, it is unknown how many car owners took advantage of that recall. These dangerous cars, cars with dangerous airbags that could explode and cause death to the persons in the vehicle, could still be out on our roads.

A roadworthy certificate does not purport to be the full $300-plus 'total care' road safety inspection that buyers will still be able to obtain pre-purchase, but it is a minimum level of protection that South Australians should be afforded that is simply that the car they are buying is at least safe to be on the road.

In South Australia, it is currently 'buyer beware', and too often this has meant 'buyer be burnt', figuratively and literally, like for 19-year-old Hajar Yassini. She had purchased her first car from what appeared to be a second-hand car dealership, a pre-owned Mazda3, in October 2023 for $5,000. It burst into flames less than 15 minutes down the road. Ms Yassini had no protections or comeback against the seller, a con man who claimed the car was being sold in a private capacity. The so-called dealership disappeared overnight, with no recourse despite the department of consumer and business affairs investigating it.

Experiences like Ms Yassini's are all too common. Last weekend's free MTA-led road safety check day supported by PC Automotive, All In Vehicle Inspections, Taff's Auto Repairs and Adelaide Automatics provided many more examples with a common theme. I mentioned earlier the case of 19-year-old Josef Gentile, whose situation only got worse when he attended the MTA inspection check. But it did not stop there.

Josef did some research and discovered that the seller had other vehicles for sale, was not a licensed dealer and had sold over five vehicles on Facebook Marketplace in the previous year. When 7News tracked down the vendor and asked him all about his sales, he took no fault and said that his wife had sold some and he had sold others. This distribution of sales to family members is a common, but illegal, tactic to avoid the second-hand dealers licence act Josef's dream car has turned into a costly nightmare.

Since announcing my intention to introduce the bill, I have been overwhelmed with support, including from the MTA. Seventy per cent of respondents to talk radio supported it. While the cost of these certificates will be a matter determined by the government, those around the country start as low as $49.

Sitting suspended from 18:02 to 19:46.

The Hon. F. PANGALLO: Before the break, I was outlining how announcing my intention to introduce the bill had received overwhelming support from the Motor Trade Association and also in media reaction; certainly, 70 per cent of respondents to talk radio had expressed their support for it. I went on to describe how the cost of these certificates will be a matter probably determined by the government, with prices probably starting as low as around $49. At this cost, and even double or triple that, a roadworthiness certificate is going to provide greater peace of mind for private sales than we have now.

The bill itself is tailored to South Australia. It is not a replica of legislation in New South Wales, Queensland or Victoria, but I did consult with these jurisdictions and South Australian industry with regard to best practice and what would be workable here. The elements of this bill are:

1. It comes into operation nine months after assent. Government and mechanical businesses will be able to use these nine months to develop the regulations and structure their business processes to meet the requirements of the bill. South Australia's MTA members and private mechanics have advised they are well equipped and qualified to meet this need. The RAA already has an inspection service that could be easily adapted to provide roadworthiness certificates.

2. Individuals selling a second-hand vehicle must provide to the purchaser a roadworthiness certificate that has been issued within three months of the date of sale of the vehicle. The vehicle will not be able to be transferred or re-registered without the roadworthiness certificate.

3. The onus and cost of providing the roadworthiness certificate are on the seller. The cost is a small and reasonable one that can be built into the price of the car. It can be shown and provided to all prospective purchasers. Bear in mind that is important because they may have a number of inquiries about the sale of the vehicle, so the seller already has a certificate as opposed to an individual potential buyer who may decide he will go and get an RAA inspection that may cost him $300 or more. Once the potential buyer has that inspection, he or she can decide whether they want to buy that vehicle or not, but that report remains with the person who paid for that report. It is not transferable to anybody else who comes along, and that is the importance here, where the seller is the one responsible for that certificate and it is shown to all the potential buyers.

4. The bill does not apply to licensed dealers, auctioneers—although I may have something to say about that shortly—a person selling to a dealer or an auctioneer, or the sale of an historic registered vehicle. This bill is not a free kick to licensed second-hand vehicle dealers; they are already obligated to comply with the comprehensive requirements of the Second-hand Vehicle Dealers Act and various other consumer protections and warranties in South Australia.

5. The regulations will set out a scheme of issuing certificates of roadworthiness. Just to clarify, the bill does not require annual roadworthiness certificates.

South Australian consumers currently have no protections when buying a second-hand vehicle from a private seller. This is going to change that. As I have pointed out, we constantly hear horror stories of unroadworthy vehicles being sold to unsuspecting buyers with no recourse whatsoever for expensive repairs or mechanical work to ensure their car can be registered and driven. The bill does not impact on the decision of a purchaser to buy privately. The bill is simply there to improve the standard of private sales and, by its nature, improve the safety of vehicles on South Australian roads.

I commend the Motor Trade Association for its ongoing campaigning to protect consumers, putting a stop to the dishonest and unregulated rip-off merchants flourishing right under the nose of the government and ensuring that older vehicles on our roads are safe to drive.

I would also like to congratulate the MTA's outgoing president, Frank Agostino AM, who last night received the MTA's first lifetime achievement award, presented by Premier Peter Malinauskas. The MTA has been going for something like 98 years, and this is the first occasion they have honoured one of their own. It could not have gone to a more deserving recipient. There were messages of thanks from a cross-section of the community who have engaged with him over the years, including former Premier Mike Rann and leading figures in politics, industry and sport, including a former member of the House of Assembly, Dan van Holst Pellekaan.

I have known Frank for many years. He is a distinguished South Australian of great integrity and a general of industry and business who has made enormous contributions to this state, both through his wideranging professional interests and his selfless and generous community service through so many organisations over the decades. He has been a leading figure in the motor industry at all levels, earning the respect and admiration of all those who have come to know and work with him. He really is a giant, despite his stature.

I am pleased to say that last night I was able to finally put to rest a long-running argument about which of us little Franks is the shortest, and I have to say, 'Congratulations, Frank Agostino. You win!' With that, I commend this bill to the chamber.

Debate adjourned on motion of Hon. I.K. Hunter.