Effective Market And Consumer Choice

Hon Heather Roy's opening address to the Cosmetic, Toiletry and Fragrance Association of New Zealand's Annual Industry Conference; Sky City, Auckland; Friday, March 13 2009.

Thank you, Valerie, for the introduction, and to all members of the association for the invitation to open your annual conference.

This is not the first contact I have had with your industry - as a teenager, I worked in chemist shops during my school holidays.

Working in the cosmetics section was always my favourite - the glamour of the perfumes and make-up, lipsticks and beauty products was much more appealing than dusting the shelves holding painkillers and foot powders. I'm not sure that the advice I gave customers on these products was anywhere near expert - but I can say it was enthusiastic.

Things have certainly moved on - in those days I never imagined I would be standing in front of a group like yours talking about a very different aspect of the industry.

Professional associations and forums like this conference are essential to the operation of effective markets. While the sharing of knowledge and contemplation of trends are obvious benefits of industry group membership I believe that, sometimes, the less apparent benefits are the more important ones. It would be a gloomy day for television audiences, for instance, if they had to watch politicians being interviewed in a make-up-free world.

Any effective market is based on a solid, simple framework. It is balanced in terms of buyer and seller information opportunities; there is sufficient ongoing supply of raw materials, an appropriate workforce and financial liquidity for all parties. While a market does not guarantee the same outcome for all, it does provide the same opportunity.

When you come together - as you have today - you cannot help but notice how many others there are like you; that they are honest and intelligent people and that, in other parts of your lives, you and your families are all consumers of someone else's products or services.

This subtly reinforces your personal responsibility to make good choices about ethical testing, resource sustainability, consumer information, product safety, pricing and a host of other factors that are much better dealt with by self-regulation than by Government. No law-maker can know your industry as you know it, and the unintended consequences of attempting to legislate across an infinite range of scenarios has unfortunately often reduced - rather than enhanced - the pursuit of an effective market.

That's why I am pleased to be here today: because it is through getting out and meeting people like you that I can get the information that I, as Minister of Consumer Affairs, need to make decisions about the best framework on which to grow the New Zealand we all seek.

An annual industry turnover of $800 million makes you, by any measure, a substantial component of our economy. I am pleased to see this industry providing real choice to all New Zealanders and would, no doubt, find other women who find it equally gratifying that our sons have not bought into the view of many older males that 'blokes don't put on girly stuff like moisturiser and sunscreen - no matter how long they have to stay out in the sun'.

Your association's wide range of member services - from monitoring government legislation to the provision of a referral centre for international and domestic trade enquiries - has a strong consumer focus. I wish to compliment you particularly on your support for the industry charity 'Look Good Feel Better', which helps boost the self-esteem of cancer patients undergoing chemotherapy and radiation treatment.

There is no doubt that we face challenging economic times. It is superficial to discuss the products that you offer in terms of being amongst the first to fall off the shopping list. One person's elective purchase is another's essential.

It is, however, inevitable that we will see a general contraction in retail spending in the next year or two. It stands to reason that input cost of manufacture should also decrease. There are many other issues - including regulatory compliance costs, counterfeiting, eco-friendly lobbies and harmonisation with trading partners - to deal with. These will have an influence on the future of your industry long after the dust of recession has settled, and are all issues that I have a strong interest in tackling.

When industry self-regulation is working well there is no need for intrusive government regulation or legislation. It's encouraging to see an industry such as yours committed to maintaining and enforcing a wide range of relevant codes of practice. It is clear you have put time and effort into developing these codes.

Industry members are also much better placed to assess developments, opportunities and risks in their field. Self regulation allows for the speed and flexibility to adjust quickly when environmental circumstances change.

Industry knowledge of international standards is an important part of self-regulation. These standards provide information, establish measurements, and set quality and safety levels. Not only do the latter provide consumers with certainty about the safety of ingredients and manufacturing processes, it also provides a sound basis for an industry that is heavily dependent on reputation.

Consumer education and easy access to relevant information is important. This is especially true when it comes to product safety. As new products and technologies come on to the market, consumers are not always aware of safety issues that may surround these innovations.

Of particular concern to your industry and your consumers, of course, is the need to ensure that not only are product ingredients generally safe but also consumers have ingredient information that enables them to make informed personal choices about products.

New technologies are enabling exciting innovations in the cosmetics, toiletry and fragrance industry and consumers are keen to reap the benefits. However, new technology carries some uncertainties and risks. As my Ministry has a regulatory responsibility for product safety, I need to be assured that industry is actively managing these risks.

I understand that one of the exciting new developments with great relevance to your field is the exploration of nano-technologies. Of course, with any advance that has not been around long enough to prove itself, there are always some concerns - including whether nano-particles can be absorbed into the body and what effect that may have.

Mention of the future brings me to the issue of sustainability. I hear the word used a great deal but I wonder if many people fully understand what it means. The term runs the risk of being just another buzzword that loses its effect by misuse and over-use.

The concept of sustainability is becoming increasingly important to consumers who want to make choices that they believe are environmentally friendly. For some consumers, it is merely a bonus to find a product they like that is also "eco-friendly"; for others, full certification is a must. There are many who are vague about exactly what they think a "sustainable" product is or should be.

Looking to the future, consumers' desire for sustainable and environmentally friendly products and services represents a great opportunity for your industry but it will also, undoubtedly cause you a few challenges along the way.

My intent for the Consumer Affairs portfolio is that it will work to create an environment where consumers get what they expect when purchasing goods or services. While businesses have an obligation to provide goods and services that are 'fit for purpose', the common law principle of caveat emptor - 'let the buyer beware' - remains with the consumer. There must be straightforward systems of redress for either party in the event of a problem.

I am committed to simplifying, rather than increasing, the complexity of consumer law in New Zealand. My test for any existing or proposed legislation is a simple one: does the benefit to the economy as a whole outweigh the total economic cost of the regulations?

To put that into effect, I have directed Ministry staff to commence research on a simplification programme I have called 'One Law - One Door'. The 'one law' refers to a goal of a single, principle-based piece of consumer-supplier legislation to replace the raft of laws dealing with a variety of transaction types and which - in most cases - have been overtaken by marketplace and technological changes.

The 'one door' refers to simplifying the way in which parties seek redress for problematic transactions. Work on this is in its early stages but industry, consumer groups and businesses will have an opportunity to input into this review.

In many ways the challenges of politics and your industry are similar. I see a few bemused looks and hope that Revlon co-founder Charles Revson won't mind me adapting his famous line: "In our factory we make cosmetics. In the store we sell hope".

The same logic is true for politicians: "In our Party think-tanks we make policies. In election campaigns we sell hope".

What about the rest of the three-year Parliamentary cycle? While there are many challenges afoot for us all, I ask you to take away from this conference - not just hope but - the genuine belief that I intend to see a fair marketplace clear of the burden of high compliance costs and in which good traders can operate freely without unnecessary intervention by Government.

Like you, I'm prepared to stand by my product and to be judged in the political marketplace alongside my competitors.

Again, thank you for today's invitation and enjoy the rest of your conference.