Page 2887 - Week 11 - Thursday, 22 October 1992
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commercial benefit in doing something in the way that it is currently done here and done across the border. It makes for ease of understanding by business. The Victorian legislation is different and more complicated. The Western Australian legislation is a variant of the Trade Practices Act and the Victorian legislation.
The kinds of trading schemes collectively known as pyramid selling are difficult to define, and that is one of the reasons we acknowledge that the definition here is not a model. It is perhaps not the best and clearest definition in any piece of legislation, but it is the one which has worked for many years in this jurisdiction and in New South Wales. Pyramid selling schemes are difficult to pull together. They are inherently unfair because they rely on the availability of an ever expanding universe of participants to ensure that consumers receive the return they are promised on their investment of time and money; that is, you have to keep getting more suckers in at the bottom in order to ensure that people towards the top get their loot. Generally, the attraction of these schemes is that participants primarily offer investment opportunities, memberships, with or without the supply of goods or services. Chain letters are an example of schemes which do not involve goods or services.
The proposed deletion of subclauses (5) and (6) would cause problems. These subclauses are necessary because they define the term "trading scheme" for the purpose of the whole clause. Subclause (5) says that a trading scheme is one in which goods or services, or both, are to be provided by a promoter or promoters and the goods and services in question are to be supplied to or for others under arrangements effected by participants other than the promoters.
Subclause (6) gives subclause (5) a wide operation. In particular, paragraph (a) states that participants include employees or agents. Paragraph (b) states that any arrangements made in connection with carrying on a business are covered, even if they are not evidenced in writing. Paragraph (c) states that references to the supply of goods or services by a person include any arrangements for the provision of goods or services to which that person is a party. Many kinds of network selling - for example, Amway - would be a trading scheme of this kind. However, this kind of network selling is not prohibited under clause 27. This is unless it requires a participant or potential participant to make a payment to or for the benefit of the promoter on the basis that he or she will, in return, receive payment or other benefits for the introduction of other participants. These requirements are set out in subclauses 27(1) and (2).
Madam Speaker, we are dealing here with a provision that has been in place in the Trade Practices Act in identical terms, is in place in New South Wales and other States in identical terms, has proved effective and is designed to combat a very pernicious form of consumer duping - the pyramid selling rorts. The definition is wide in order to ensure that the fish do not slip through the net. It has worked, and I would urge members not to change it.
MR STEVENSON (11.34): Subclauses (5) and (6), if anyone reads them, are practically unintelligible. The statement by the Minister that this definition has proven effective could well be debated. Proven effective for whom? I do not think it could be stated that something as wide as this has proven effective in not only protecting consumers but also protecting businesses. Subclauses (5) and (6) are general provisions; they do not specify. The Minister acknowledges that they are fairly wide. They do not specify instances. They talk about a wide range of methods of trading in a business. As they come within this pyramid selling
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