Quite a lot of what the Road Transport Forum (RTF) does for the industry is behind the scenes around the corridors of power in Wellington.
A lot of informal discussions and meetings are had before we get to changes in rules, regulations, and law that benefit our industry.
The passing of the Fair Trading Amendment Bill’s third reading in Parliament this week – which effectively makes it law – was in part, thanks to a lot of hard work by the RTF. That work was started by Ken Shirley during his time as CEO. It is also worth noting that the development of the industry’s initial case was supported by our lawyers, Gibson Sheat, and that their fees were funded by the E.J. Brennan Trust.
The Bill targets the use of pressure tactics, deception, one-sided contract terms and practices that exploit the vulnerabilities of a consumer or small business.
It adds to the existing protections put in place under the Fair Trading Act 1986 by:
- Prohibiting unconscionable conduct in trade
- Extending unfair contract term protections to include small trade contracts worth $250,000 a year or less
- Legally empowering consumers and businesses to demand uninvited sellers, such as door-to-door salespeople, to leave their property, including through the use of “do not knock” stickers.
Businesses that are found to act unconscionably – using practices that go beyond what can be deemed commercially necessary - will face fines of up to $600,000.
Good things take time and it was a few years back that the RTF became aware of some poor commercial practices that were impacting our industry, including unfair contract terms for small trade contracts.
Transporters working for big players in the primary sector were forced to accept 60 to 90-day payment terms. If they didn’t, they would lose the business and that threatened their livelihoods.
Terms such as these have a major impact on many small New Zealand businesses, including those that make up a chunk of road freight transport.
Typically, small businesses are not flush with cash and it is therefore critical that they are paid for their services within a reasonable timeframe.
Late payers, especially big corporates, use unilateral deferred payments as a means of exploiting small suppliers and transporters as a cheap source of finance.
We lobbied for extending the provisions of the Fair Trading Act as a simple solution for dealing with this.
We gave feedback on discussion documents and appeared before Parliament’s Economic Development, Science and Innovation Select Committee as the changes to the Fair Trading Act were proposed and refined.
We argued for a contract threshold of $500,000 because in our industry, despite being small businesses themselves, many operators take on large contracts. We felt that too many contracts whose parties deserve protection from unfair contract terms would be worth more than $250,000. Unfortunately, we didn’t win that one.
But we did win the war. This was an issue raised by the RTF and a lot of work has gone into a solution that will help some of our operators. We would like to thank the various Ministers who have listened to us and worked on this amended legislation including Hon Kris Faafoi, Hon Stuart Nash, and Hon Dr David Clark.
Road freight transport is critical to New Zealand’s economy and all players need to be able to operate in a fair business environment so they can deliver the goods safely.