Establishment and Development of the Ministry of Consumer Affairs

Background Paper to Creating Confident Consumers

May 2003

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The Role and Functions of the New Ministry

• An Enforcement Role for the Ministry
• A Complaints Service

In approving the Ministry's establishment, Cabinet agreed its mission was "to develop consistent and co-ordinated consumer policy; to provide consumer support measures that meet the needs of all groups in the community and to promote these widely; and, in so doing, to create an informed marketplace" (Office of the Minister of Consumer Affairs, 1986 Appendix 1).

The Ministry's functions were to:

• advise the government on matters affecting consumers
• promote and participate in the review of consumer-related legislation, policies and programmes
• promote awareness among consumers and the business sector of their rights and obligations in the marketplace so that exchange activities are undertaken without loss or disadvantage to either party
• support and co-ordinate non-governmental involvement in consumer issues
• undertake such tasks as the Minister may from time to time direct.

The Ministry was not intended to have a wide economic reporting role. Instead, it was to develop checklists to assist with assessing the impacts of economic and social policies on consumers. A Cabinet directive required Departments to consult with the Ministry on legislative and administrative matters affecting consumers (Office of the Minister of Consumer Affairs, 1986). This directive is still in effect and the current Ministry routinely provides comments on policy proposals with a consumer dimension.

An Enforcement Role for the Ministry

A theme that came through in public submissions on the 1985 report was that the Ministry should have enforcement powers, especially in relation to the Fair Trading Act 1986.

Before the CAU released its report, Cabinet had decided that the Commerce Commission would enforce the Fair Trading Act. However, the report noted that there were "... strong practical grounds for separating policy and enforcement functions. Indeed these are widely accepted in a number of overseas jurisdictions..." (Consumer Affairs Unit, 1985 p41). Boston et al. (1991, p258) argue that the government's chief rationale for separating the provision of policy advice from the provision of services at the time was to reduce "... the potential for the policy advisors to be captured by those delivering the services which the government has purchased".

Cabinet decided that the Ministry's main functions would be in relation to policy work on fair trading and other consumer-related legislation, including product safety standards.

A Complaints Service

Another theme that came through in public submissions was disappointment that the Ministry would not provide a complaints service, even though such a service was then operated by the Consumers Institute and funded by the government. Submissions indicated that this service was not widely promoted (Synergy Applied Research, 1985).

Cabinet decided that a core function for the Ministry would be consumer education, but that this would not extend to the operation of a consumer complaint service. Cabinet envisaged the Ministry developing a system for recording details of consumer complaints in order to highlight systemic problems (Shields, 1986).

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