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Second Reading Fair Trading Amendment Ticket Scalping and Gift Cards Bill

18 October 2017

Mr MATT KEAN ( Hornsby—Minister for Innovation and Better Regulation) (12:32): In reply: I thank the Temporary Speaker, the member for Terrigal, for his support of the bill and his passion for putting New South Wales consumers first. I thank all members for contributing to debate on the Fair Trading Amendment (Gift Cards and Ticket Scalping) Bill 2017. I thank members representing the electorates of Terrigal, Drummoyne, Granville, Manly, The Entrance, Seven Hills, Lake Macquarie, Coogee, Newtown, Epping, Balmain, Gosford, Bankstown and Sydney. I single out the member for Swansea, my shadow counterpart. She is genuinely committed to putting consumers first. I have had a constructive working relationship with the member for the entire time that I have been the Minister. I thank her for her exceptional efforts and continued focus on working with me to put consumers first.

I will comment on the issues raised during the debate, first in relation to ticket scalping and then in relation to gift cards. As members have heard, the Fair Trading Amendment (Gift Cards and Ticket Scalping) Bill 2017 will put consumers first and introduce measures to improve transparency in the primary and secondary ticket markets. It will prevent price gouging by dishonest scalpers and ban the use of bots to buy tickets in breach of a website's terms and conditions. Ordinary sports and live entertainment fans are finding it harder and harder to access tickets to see their favourite sports teams play or performance artists in concert. Often the only way to access tickets is to be charged massively marked up prices by scalpers in the resale market.

The Fair Trading Amendment (Gift Cards and Ticket Scalping) Bill 2017 will prohibit profiteering from the resale of sporting and entertainment venue event tickets. It will prohibit anyone reselling a ticket to a New South Wales event for more than the original sale price, or face value, plus a transaction cost capped at a maximum of 10 per cent of the original sale price. It means that tickets to these events cannot be resold for more than 10 per cent above their original price. Such a measure will allow ordinary consumers to resell their tickets should they no longer be able to attend an event after purchasing tickets, but it will stop ticket scalpers from profiteering at the expense of ordinary and genuine fans.

In an Australian first, the New South Wales Government will crack down on ticket bots, which is security manipulation software that allows scalpers to buy tickets in unauthorised high quantities. We will stop the bots. The new laws will make it illegal to use a bot to cheat the system and purchase more tickets than the ticketing site allows. We need to stop this market distortion and give access to tickets back to genuine fans. Fans should also know how many tickets are available to the public for sale. For this reason, the bill confers on the Minister a new power to require event organisers to make a public disclosure of the number of tickets that are available for public sale. The power is intended to be used only for major events, where it is in the public interest to disclose the number of tickets that are available.

By improving the information available to consumers in both the resale and official ticket markets, the Fair Trading Amendment (Ticket Scalping and Gift Cards) Bill 2017 will protect consumers and provide greater transparency. Because the anti-scalping measures in this bill are being inserted into the Fair Trading Act, the enforcement options under the Australian Consumer Law become available to both the regulator, NSW Fair Trading, and the industry participant, should they want to bring legal action to stop scalping operations. The bill provides that breaches of the ticket scalping measures are local contraventions of the Australian Consumer Law. This means that if a prosecution is brought against scalpers for a breach of these provisions, the remedies under the Australian Consumer Law include injunctions, orders for compensation, adverse publicity orders, and the like.

The bill also provides for substantial maximum penalties for breaches of the new anti-scalping laws. A $22,000 maximum fine for an individual, and a $110,000 maximum fine for a corporation, are strong deterrents to the rip-off merchants and resale sites that have been conning consumers for too long. NSW Fair Trading is active in the marketplace every day protecting consumers, monitoring compliance, educating traders, and taking enforcement action against flagrant violations of the State's consumer laws. I will not stand for it. I am sick and tired of consumers being ripped off. These laws will go a long way towards protecting genuine fans trying to purchase tickets to sporting events or music concerts.

I now turn to the issues raised by the Opposition. The shadow Minister contends that the bill neither outlaws nor legalises the onselling of tickets. I commend the interest of the member for Swansea in consumer protection. She has worked closely with me to develop these consumer-friendly laws. But with regard to her comment that the bill neither outlaws nor legalises the onselling of tickets, she is mistaken. New section 58J does exactly that. It offers consumers protection in the secondary market by legitimising the resale of tickets within the 10 per cent mark-up cap. If a genuine consumer—not a scalper—resells a ticket within the 110 per cent limit, then the person who buys that ticket should not be refused entry to the event simply because they hold a resold ticket. New section 58J makes void any term or condition of a ticket that authorises its cancellation within the fair and reasonable 110 per cent limit.

At a price above that, we are trying to provide a disincentive for the ticket scalpers and rogue agents who want to gouge genuine fans. We want to smash the Viagogo and Ticketmaster Resale business model, which thrives as a result of massively inflated prices and price gouging that has been going on in the market for a long time.

I also respond to the contention by the member for Swansea that the bill does nothing to combat fraud in the secondary market. First and foremost, several features of the bill severely reduce the incentive for scalpers to engage in the fraudulent resale of tickets. Profiteering is prohibited through the 10 per cent resale mark-up cap. The prohibition on bot activity in the unauthorised purchase of tickets will also severely restrict the scalpers' ability to engage in fraud. Secondly, fraud is already illegal, and NSW Fair Trading and other law enforcement authorities can take action. I, as the Minister, as well as NSW Fair Trading regularly warn consumers about the hazards of the secondary market and ways to avoid fraud.

I note that a number of members mentioned the problems they were having buying tickets to see Pink, and I will address that very important issue in my reply. One member referred to the website selling Pink tickets going into meltdown and preventing fans from buying tickets. The primary reason the website is slow or goes into meltdown is the use of ticket bots. This bill is designed to smash the bots. We expect to see a massive increase in the speed with which fans can access tickets by destroying the bots that are currently slowing down ticket purchasing websites. Ticket bots can frequently jam websites so that ordinary consumers cannot buy tickets and scalpers can move in and harvest large numbers of tickets. This bill will address that issue.

With regard to transparency in the secondary ticket market, fans should also know what they are buying and when they are transacting in the secondary market. For this reason, the bill increases the information that must be included when a ticket is being resold. For example, details of the ticket, such as the bay, seat and row number and the original sale price are now required to be included. The member for Swansea has also asserted that the information requirements imposed by the bill on the secondary market will provide a greater incentive for fraud. The Government disagrees and firmly sees that these transparency measures are putting consumers first. The bill provides for an offence for the publication of a prohibited advertisement that carries the same substantial maximum penalties as the other offences in the bill.

The Government did not support the amendment moved in the other place to insert a three-year review clause in the bill. NSW Fair Trading keeps all consumer protection laws under constant review and, if there are any indications that these laws are not working as intended, the Government will not wait for three years to review them. I note that the intentions of the member for Swansea are good and noble, but we need to regularly monitor these laws and their effectiveness. I do not want to put an arbitrary time frame in place, whether it be three years or five—five years is the normal statutory review period. We need to make sure that our laws are moving and evolving as quickly as the technology is evolving. I give an undertaking to the member for Swansea that we will work collaboratively to keep a watching brief on how effective these laws are at combating ticket scalping and price gouging. If we need to make further adjustments, then I am very keen to work with the member to do so. Our priority here is putting consumers first and making sure fans get a fair chance to access tickets at a fair and reasonable price.

Websites based outside New South Wales or overseas that market and sell to consumers in New South Wales are subject to the laws of New South Wales and to the requirements of this bill. That includes Viagogo and Ticketmaster Resale. The Fair Trading Act has extraterritorial operation and it is noted that the Australian Competition and Consumer Commission is currently prosecuting Swiss-based company Viagogo for breaches of the Australian Consumer Law. NSW Fair Trading has arrangements with regulators in other jurisdictions and has had experience in taking enforcement action against businesses operating outside New South Wales. If companies like Viagogo want to continue to try to rip off consumers in New South Wales, then we will do what is necessary to protect them. I give that undertaking here today.

Opposition members remarked that the prohibition on the use of ticket bots should keep up with developments in technology. I agree absolutely. The bill is drafted with that in mind and will be able to cover new technologies. First, the prohibition in the bill is broadly drafted and prohibits the use of software to enable or assist a person to buy tickets in contravention of the website's terms and conditions. Secondly, the bill has a regulation-making power that enables the security features of a website to be prescribed. This will enable new technological developments to be prescribed. Obviously, the technology is moving fairly quickly. We need to continue to ensure that our laws are able to keep pace with the changes in technology. We want to crack down on dodgy ticket scalpers; we want to bust their business model and give fans a genuine chance of getting tickets at a fair and reasonable price.

Opposition members referred to the need for nationally consistent legislation addressing ticket scalping—and I could not agree more. Ticket scalping has been discussed by the Legislative and Governance Forum on Consumer Affairs [CAF], which comprises the consumer affairs Ministers from all Australian jurisdictions. The Commonwealth Treasury will undertake a regulatory assessment of ticket onselling and present CAF Ministers with an options paper in 2018. New South Wales supports nationally consistent ticket-scalping laws. However, given New South Wales is attracting increasing numbers of high-profile events and international acts, it is important that the New South Wales Government acts now. Consumers and some industry stakeholders have been calling for government intervention to stop the rort, and with this bill the New South Wales Government convincingly answers that call. I make no apology that New South Wales leads the country when it comes to these tough anti-scalping laws, and we call on the Commonwealth and other States and Territories to put their consumers first and to match New South Wales when it comes to protecting consumers who try to buy tickets online.

I now turn my attention to the bill's provisions regarding gift cards, the announcement of which has been very well received. As members have heard, the Fair Trading Amendment (Ticket Scalping and Gift Cards) Bill 2017 will put consumers first and sets out provisions for gift cards to have a minimum expiry period of three years and no post-purchase administrative fees. Consumers have been suffering significant financial loss for some time due to gift cards expiring with value left on them. This is not good enough. Every year hardworking New South Wales consumers lose $60 million because of early expiry dates on gift cards, and this bill seeks to address that. We believe people deserve to get what they paid for. We believe when you hand over your hard-earned cash, you have every right to get goods or a service in return for it. That is why the Government is moving to introduce minimum three-year expiry dates on gift cards.

I note the amendment proposed by The Greens, and I will address it later. But I will say that in this bill we have tried to strike a balance between the rights of consumers and the needs of businesses to have certainty in terms of the liabilities they carry on their books. We have engaged extensively with businesses, with retailers and with consumers. Our bill attempts to strike the right balance between the rights of consumers in New South Wales and the needs of businesses to continue to operate, employ people and pay taxes. A mandatory minimum period of three years will allow consumers to maximise the full value of a gift card by allowing them sufficient time to redeem a card. Gift cards sold for a period shorter than the minimum expiry period will be void, and there are penalties for those who do not comply with these provisions. This allows the currently diverse practices of businesses to be streamlined, minimising further confusion by consumers.

The provisions will enable New South Wales consumers to redeem the full value of a gift card with the certainty of the value remaining the same, as any post-purchase administrative fee is prohibited during the three-year expiry period. The business of charging post-purchase fees and thus reducing the value of gift cards—meaning consumers do not get what they paid for—is a complete racket. Our bill will put an end to that practice. Consumers deserve to get what they pay for. When they hand over their hard-earned money, they deserve to get a good or service in return—and no amount of whinging from the Shopping Centre Council or big business in this State is going to convince me otherwise.

The reforms exclude certain gift cards, including gift cards issued in exchange for returning goods or services, prepaid internet or phone cards, cards issued by financial institutions such as debit, credit or travel cards, and cards offered as part of a customer loyalty program. While we are on the topic of gift cards, this legislation has been extremely well received by consumers across New South Wales. Indeed, consumers around the country are excited that New South Wales is leading the way when it comes to protecting their rights when buying gift cards.

Again, I call on other States and Territories to follow the example of New South Wales and introduce a minimum expiry date of three years on gift cards. We believe this is best practice and we call on other States and Territories to put their consumers first and to give them a fair chance to receive the goods and services they have paid for.

Introducing this bill in Parliament has not occurred without challenges. We have had huge opposition from big business and retailers in this State with a vested interest. They have sent their lobbyists to convince me not to put consumers first so that the gift card racket can continue. Every year, big businesses pocket $60 million from New South Wales consumers and give nothing in return. Today the Sydney Morning Herald reported my comments about a lobby group—the Australian Retailers Association—headed by Mr Russell Zimmerman. This body went to extreme lengths to stop consumers coming first in this State. It fought to allow big businesses to continue to pocket money without providing anything in return.

The Australian Retailers Association lobbied 12 Government Ministers and went behind my back to the Premier. It threatened my office with war, which is a disgrace. It did a disservice to members of the Australian Retailers Association. Let me be clear: I will not be pushed around by Mr Russell Zimmerman or any other lobbyist or big business in any way, shape or form. I will always stand up for New South Wales consumers and the little guy in the face of big businesses with a vested interest. As the fair trading Minister in New South Wales, I will not be bullied by big businesses about gift cards or any other consumer protection issue.

This reform sets out important consumer protections and it is disappointing that people like Mr Russell Zimmerman and the Australian Retailers Association have campaigned so strongly against the reforms. Russell Zimmerman must be transparent about the businesses that he represents. This industry group lobbied government so it should adhere to the same standards that apply to any other lobbyist. This organisation purports to represent small businesses but when I asked Mr Zimmerman to disclose the businesses that pay his meal ticket, he refused to do so. It is disappointing. I have heard rumours that the organisation is funded by big businesses such as David Jones, Myer, Kmart, and JB Hi-Fi that benefit from the sale of gift cards. Mr Zimmerman should have been transparent about the fact that the beneficiaries of the gift card racket pay his meal ticket.

I want people like Mr Zimmerman to be more transparent when lobbying me as the Minister. I want to know who is paying their meal ticket, on whose behalf they are lobbying me, and what their interests are. I have to disclose my meetings, and organisations such as the Australian Retailers Association should disclose theirs. We want to protect consumers in New South Wales; we want to outlaw practices that rip off the little guy. Lobbyists like Kristin Pryce do their clients a disservice by lecturing Ministers on what is or is not good public policy. I will be the judge of that. I want businesses across this State to know that they do not need a lobbyist to access my office. My door is open to anyone who has ideas about how to protect the little people and those who put consumers first in New South Wales.

The Opposition moved an amendment in the other place to have the gift card provision commence on 1 December. The Government is committed to reforms that put consumers first. We would like them to be implemented as soon as possible. However, we believe we must get the implementation right. We need to strike a balance between consumer needs and business operational rights regarding gift cards. The Government will work with retailers to make the changes happen as soon as it can. It was a herculean effort to introduce the bill in this place, and I thank the outstanding members in my department who have worked tirelessly. I acknowledge the work of Gabbie Mangos, Lachlan Malloch, Diana Holly—who is here today with Lachlan—Pauline Lynn, Maggie Phang, Marcel Savary, John Tansey, Graham Monday, Caterina Mazza, Vi Ngo and Rena Maher. They do outstanding work and I am proud to work with them every day of the week. I thank them for putting consumers first.

No doubt this bill would not have come to fruition without my outstanding ministerial team. I have some of the brightest, most passionate and dedicated staff members that anyone could find. I acknowledge Julia Steward, Aaron Wakeley, Brooke Eggleton, Richard Hodge, Christine Chalker, Alex Roberts, and my brilliant chief of staff Ben Coles. I commend the bill to the House.