Hon DAVID CUNLIFFE (Minister for Information Technology) : I move, That the Unsolicited Electronic Messages Bill be now read a first time. I will move in due course that this bill be considered by the Commerce Committee.

In just a few years, unsolicited commercial email, generally known as spam, has gone from being a minor nuisance to becoming a significant social and economic issue. It is also a drain on the business and personal productivity of New Zealanders. Spam impedes the effective use of email and other communication technologies for personal and business communications. It threatens the growth and acceptance of legitimate e-commerce. Spam technology is also increasingly being used as the delivery mechanism for computer viruses, phishing, and identity theft.

Spam is a multifaceted problem that requires coordinated action from Government, industry, marketers, and consumers working together on several fronts, such as self-regulatory measures. Industry codes are useful steps forward; for example, that of the New Zealand Direct Marketing Association, which has in place a set of standards for email marketing and a spam code of practice that is currently being developed by InternetNZ, in conjunction with the Telecommunications Carriers Forum. Education and awareness campaigns need to be run for business and Internet users. Controlling spam requires technical measures, such as the use of filtering by Internet service providers and users, international cooperation and coordination, and, of course, legislative and regulatory measures.

New Zealand already has many of those measures in place. However, reliance upon on the existing legislative framework, codes of practice, industry and user education, and technical measures alone has shortcomings. The degree of public concern and the growing cost to our economy have made it clear that it is now time for specific anti-spam legislation. Without that legislation, and without a specific anti-spam enforcement agency, New Zealand runs the risk of being seen as a safe haven for spammers, and it will lack a firm basis upon which to enter into multilateral agreements with other countries to address the problem of spam originating from overseas.

Enactment of this bill is part of a multi-pronged approach to address the problem of spam and will provide the following benefits: it will prohibit spam and enable legal action to be taken against spammers based in New Zealand, it will regulate the sending of commercial electronic messages, it will prevent New Zealand from being seen as a safe haven for spammers, and it will provide a basis for New Zealand to participate in international regulatory arrangements to curb the growth of spam. The bill also sets out an enforcement regime based on civil penalties and the ability to take preventive action.

The design of anti-spam legislation requires the resolution of issues such as what messages are covered, who should be covered, and what amounts to consent to receive messages. The resolution of these issues requires the balancing of a number of factors, such as the seriousness of the problem, compliance costs for business, and the right to freedom of expression. The legislation will apply to electronic messages including email, text messages, and instant messages but not to facsimile messages and voice calls. It will apply to commercial messages—that is, those that are primarily for the purpose of marketing or promoting goods or services, land or an interest in land, or a business or investment opportunity, or for the purposes of assisting or enabling a person by deception to dishonestly obtain a financial advantage or a gain from another person. It includes promotional messages—that is, those that market or promote an organisation’s aims and ideals other than where a recipient has not opted out. The legislation will apply to messages with a New Zealand link, messages sent within or from New Zealand, messages authorised by a person or organisation from New Zealand, and messages sent to people in New Zealand from overseas.

The legislation will require specified commercial and promotional electronic messages to have accurate sender identification and a functional “unsubscribe” facility—that is, a working and clearly visible means of opting out of future such messages. These measures empower Internet service providers, businesses, and users to better control the email they have to deal with. The bill will prohibit the supply and use of address-harvesting software, and address-harvested lists for spam purposes.

The legislation will be enforced through a regime that provides for a range of civil pecuniary penalties and remedies. The enforcement regime will be based on a tiered structure, with emphasis on Internet service providers and telecommunications carriers taking action in response to customer complaints in the first instance. If complaints cannot be satisfactorily resolved in this way, then the user’s Internet service provider can forward the matter to the enforcement agency. The enforcement agency will then consider whether an investigation or further action is appropriate. The Government enforcement agency will have a range of penalties available to it. That will enable it to adopt a flexible approach to enforcement.

Under this legislation, Internet service providers and users affected by contraventions of the legislation will also have the right to take direct legal action, as well as to join any action taken by the enforcement agency. The agency will have responsibility for carrying out any investigations regarding complaints referred to it by Internet service providers, carriers, or users on matters that it considers should be investigated; issuing warning and infringement notices; taking legal action where appropriate; and cooperating with overseas enforcement agencies.

In conclusion, the Unsolicited Electronic Messages Bill gives effect to the Government’s decision to enact anti-spam legislation as part of a multi-pronged strategy to reduce and control spam.

CHRISTOPHER FINLAYSON (National) : The National Party supports the first reading of this bill, which, as the general policy statement says, implements the Government’s decisions on the regulation of electronic messages, known as spam. It is modelled on the Australian Spam Act 2003, although, interestingly, there does not appear to be a definition of spam. The preferred terminology is “unsolicited commercial electronic message”.

I will shortly outline my understanding of the problems with spam, but first a brief note about the source of the term. Webopedia says that the generally accepted version is that the word comes from the Monty Python song with the lyrics: “Spam, spam, lovely spam, wonderful spam.” Like the song, spam is an endless repetition of worthless text—somewhat like the inane contributions in this House by the member for Otaki. Another school of thought maintains that it comes from the computer group lab at the University of Southern California, which gave it the name because it has many of the same characteristics as spam, the tinned meat: nobody wants it or ever asks for it; no one ever eats it—indeed, it is the first item to be pushed to the side when eating the entrée—and sometimes it is actually tasty, like 1 percent of junk mail that is rarely useful to some people.

Whatever the origins of the term, there is no doubt, as the Minister said, that spam is a curse to the modern world. It causes great disruption to individuals, businesses, and the Government. It can be sent to millions of recipients at a time worldwide. Indeed, I recall a tsunami of spam email that arrived in from Germany one afternoon earlier this year—there must have been about a thousand emails in my in-box in the space of a couple of hours. That volume of spam can threaten the effectiveness and efficiency of electronic communication and legitimate online businesses—although I note that the bill will not prevent that kind of extraterritorial spamming. There are many categories of spam, as we know, and as adverted to by the member for Whangarei, the most common categories are the Nigerian financial scams. There is also pornography—

Phil Heatley: At least you can make money out of them!

CHRISTOPHER FINLAYSON: Pornography? Keep quiet. There are also promotions for dubious health products. Perhaps most disturbingly, there is also an emergence of spam that carries a virus. I am no computer whiz and therefore have little understanding of the technical means by which spam can be sent, although I understand that it costs virtually nothing to spend spam, and that it is very easy to send large volumes—as the Germans would tell us. That has led to hundreds of millions of spam messages being sent around the world on a daily basis. Indeed, it has been said that the cost to Australian business is substantial—around $900 per employee per year, and I have no doubt it is much the same here. It can cause a loss of productivity, damage to reputation, and a loss to customers of business opportunity, so, obviously, something needs to be done. Hence the need for legislation prohibiting the sending of unsolicited electronic messages of a marketing nature. That is why the National Party supports the aims of the bill, although, along with much legislation these days, it does seem to be very prescriptive, and in my view some parts are unnecessary. Perhaps the select committee could take a close look at those parts.

Part 1 contains the preliminary provisions, including extended definitions of electronic messages and commercial electronic messages. Those provisions are modelled on section 6 of the Australian Act. I think that non-inclusive definitions are preferable, given the rate of technological change in the modern world, and the same comment may apply to other definitions in the definitional section. I hope the select committee will look at that. Clause 8 is a very important clause. It deals with the application of the legislation. The bill, once enacted, will extend to a person who engages in prohibited conduct outside New Zealand if that conduct contravenes the provisions of the bill and if the offender is either an individual who is resident in New Zealand or an organisation that carries on business or activities in New Zealand. But the legislation can have no extraterritorial effect on foreign spammers.

Part 2 is the very heart of the legislation. The Minister has outlined the key provisions of clause 9, which provides that a person must not send, or cause to be sent, an unsolicited commercial electronic message that has a New Zealand link, and the onus of showing that the recipient consented to receiving such a message will rest on the person who sent it. Clause 10 prohibits a person from sending, or causing to be sent, a promotional electronic message that has a New Zealand link to any person who has opted out of receiving such messages. Clause 11 requires that every commercial electronic message and promotional electronic message that is either sent or has a New Zealand link must identify clearly and accurately the person who authorised the sending of the message, and must include accurate information about how the recipient can readily contact the person who authorised the message. Clause 13 sets out the defences that can be relied on by a person who either sends an electronic message or causes such a message to be sent. As with other affirmative defences, the onus of proof is on the person who seeks to raise the defence.

I will not deal with subparts 2 and 3, which, I think, the Minister has dealt with. Subpart 4 will doubtless be of interest to service providers, and I expect that the select committee will receive submissions on that subpart. The service provider does not send an electronic message, cause one to be sent, or contravene third-party breaches simply because it provides a telecommunications service that enables such messages to be sent. Clause 21 is a very important clause. It sets out who is deemed to have authorised the sending of such a message and who is deemed to have sent such a message. It could be that those clauses will require close and careful analysis at the select committee deliberation.

I want to focus on Part 3, which contains the enforcement provisions. The bill effectively creates a new statutory cause of action that is a bit like the Fair Trading Act’s causes of action. A civil liability event will be a breach of the key prohibitions in Part 3, to which I have just referred, and clause 23 sets out what the response to the civil liability event will be. I have no particular concerns with subparts 2 and 3 of Part 3, which deal with the obligations of the service provider and the powers of the enforcement department.

I do, however, have a few comments to make about subpart 4, which deals with the powers of the High Court. I wonder whether it is really necessary to specify that the court may grant performance, restraining, and interim injunctions. That seems to me to be a prescriptive way of stating the obvious—namely, that the High Court can grant prohibitory, mandatory, and interim injunctions, which is something the court has done from time immemorial. Why do we not simply rely on the existing law? I also wonder whether it is wise to attempt to define, for the purposes of this legislation, the circumstances where such injunctive relief may be granted. In the case of interim injunctive relief, courts are well used to applying what is often referred to as the American Cyanamid test of a serious issue to be tried in balance of convenience, while also considering the issue of overall justice. That test is a broad flexible test that would cover the kinds of situations contemplated by this legislation, so the select committee may want to consider whether those clauses are necessary. I think it best not to have suigeneris provisions of that kind unless they are strictly necessary, but rather to rely on the general law.

Clause 41 deals with undertakings as to damages, and in fact that clause alters the general law. With every application for an interim injunction under the High Court rules, for example, the applicant must give an undertaking as to damages. In a case involving the Commerce Commission in 1987, the commission argued that it should not be required to give an undertaking, but the court held otherwise, saying the fact that the commission was performing a public duty did not, in the absence of legislation, obviate the requirement to give an undertaking. As far as I am aware, this legislation is the first time an enforcement agency seeking injunctive relief will be exempted from giving an undertaking, and I think that issue needs to be closely looked at by the select committee. The other relief clauses generally appear to be unexceptional, providing as they do for pecuniary penalties, compensation, and damages, and sometimes for all three.

As with the Commerce Act and the Fair Trading Act, one does not rely on the general provisions of the Limitation Act 1950, but there are specific limitation provisions—namely, a 2-year period within which proceedings in the High Court need to be commenced. That would appear to be a sensible period for that kind of infringing behaviour. So I support the bill in its first reading. I hope that the select committee will look at the issues I have raised, and at others that will doubtless be raised through other submissions.

BARBARA STEWART (NZ First) : On behalf of New Zealand First, I rise to support the Unsolicited Electronic Messages Bill going to the select committee. The bill is long overdue. We need to see some action on spam, as it is definitely a problem. We hope that the select committee and the submitters take the widest possible view as to how to stop those communications.

Rodney Hide: Winston Peters lost Tauranga twice. Apologise!

BARBARA STEWART: I thank Mr Hide; we do appreciate his apology.

Even here in Parliament spam is a real problem, and I would have thought that if those messages could be stopped, then the parliamentary information technology team would have definitely stopped them. I note that the bill takes an opt-in approach, which I hope Internet service providers can use when they take action in response to customer complaints. Here in Parliament we seem to be regular recipients of spam, particularly for certain medicinal products that we would never buy over the Internet—although I note that the previous speaker said that those products would be useful for 1 percent of people. What do we receive? We receive spam for products like Viagra and other related products, human growth hormones, Russian caviar, enhancement patches, computer software, investment alerts, the best imitation Rolex watches, and travel deals—just to mention a few. And they keep coming in every day. They are articles and products that very few people, I would imagine, would want to buy over the Internet.

We receive spam letters from people who claim that we have been left, or even that we have won, $1 million—as long as we are willing to invest some money ourselves in order to collect it. The same messages seem to come from many different people. They are unsolicited, totally unwanted, and they must block up the parliamentary server. Those messages appear to be totally impossible to block from our own PCs. If they were, I am sure that someone in the information technology department would have already done that for us. I know that I have looked carefully at Microsoft Outlook to try to find out how to do it. Those messages really are a pain, and spam is a very big problem. Some process does need to be put in place to manage all those unwanted and unnecessary emails.

It is very surprising that here in Parliament, an environment that is very security-conscious, we find that spam cannot be managed in any way. We can receive hundreds of emails—up to 200 over a weekend, according to one of my colleagues who has counted them—and I can assure senders that those emails are a real pain when people use remote access on their cellphones. Basically, here in Parliament we are drowning in spam, and there is never, ever an unsubscribe option. I was very pleased to see in clause 12 that every commercial electronic message and promotional electronic message that is sent, and that has a New Zealand link, needs to have an unsubscribe facility. It is interesting, too, to see in clause 13 that the onus of proving a defence lies with the person who is actually relying upon that defence.

This is an important issue and one that New Zealand First would like to see resolved. We have no doubt that the select committee will look further into the issue of spam and how to monitor it. We do not know whether the spam messages that we all receive so regularly originate here in New Zealand or elsewhere—over in Germany, according to one of my colleagues. That will prove a real challenge for Internet service providers to monitor. It is an unfortunate fact that this legislation can apply only to messages generated within New Zealand, and we hope that it can apply to all emails sent to an email address here in New Zealand. Otherwise, it will be very easy for the smart operators to arrange for messages to be sent from an overseas Internet service provider and be above the law.

So we are looking forward to this bill going to the select committee, where the committee can scrutinise it very carefully—and I am sure that Mr Henare will be among those members looking at it carefully—and we look forward to the bill returning to the House.

RODNEY HIDE (Leader—ACT) : It is good to hear from New Zealand First, because that party put out a bit of spam during the election campaign in order to have Winston Peters elected in Tauranga.

Simon Power: That worked.

RODNEY HIDE: No, it did not work, actually. Despite the spam that Mr Peters put out in Tauranga, he took a pummelling and lost his seat. Being a bad loser, he went off to court, said that he would win, and told the back bench of his party that it was an open and shut case—and he lost big time. Now, New Zealand First is having a whip around to pay Bob Clarkson’s legal expenses. Winston Peters lost Hunua and lost Tauranga twice—the first time he lost with the people of Tauranga, and the second time he lost with the High Court judges who released their judgment today.

The ACT party stands opposed to this bill, and we will be voting against it. People dislike spam. Of course, people dislike spam, but the ACT party is prepared to vote only for legislation that actually works, and this bill is feel-good legislation. It might make parliamentarians feel good that they are pretending to deal with spam—

Sue Kedgley: It feels very good to me.

RODNEY HIDE: I know that Ms Kedgley feels good. She feels good when she gets into a pig crate on the front steps of Parliament. She feels good about that, but it does not achieve anything. When members come to Parliament they should be passing law that will make a difference, but this law makes no difference, whatsoever.

Hon Marian Hobbs: What have you done, Mr Hide?

RODNEY HIDE: That is very interesting, is it not? Marian Hobbs, the former failed Minister of Broadcasting, who was nicknamed “Boo Boo” by TVNZ, yells out and asks what I have achieved. I will tell people what I have done. We got an inquiry into TVNZ going, which the Labour Government did not want because it had to cover up Marian Hobbs’ cock-ups and the mess that Steve Maharey made. We got that going, and now we hear about the level of dysfunction in TVNZ. That is just a small achievement that I have made since the election. I would love to know what Marian Hobbs has done in her entire political career other than be destructive. [Interruption] I can see why the people of Wellington Central tried to vote for Mark Blumsky. I just wish they had made a bit more effort and had delivered.

Here is the point: this bill does nothing for spam that comes from overseas. I want members to put up their hands and say where the spam they receive in their in-boxes comes from. I ask Ms Kedgley where it comes from.

Sue Kedgley: Nigeria.

RODNEY HIDE: Well, I ask Ms Kedgley what this bill will do to stop that. It will do nothing. I will tell Ms Kedgley how to stop it from coming: she should stop sending Nigerians the money. If she stops sending them the money, they will stop sending her the spam. I know that Green members have a high level of belief in fairies and goblins, but they should stop sending money through to Nigeria and the spam will stop. There is nothing in this bill to address the spam that Ms Kedgley receives in her emails from Nigeria—nothing, whatsoever.

Dr Pita Sharples: Denis loves the Viagra.

RODNEY HIDE: Yes—I am a bit lost for words, which is the first time for me in this House!

The US CAN-SPAM Act made absolutely no difference. [Interruption] They are feeling nasty, because Winston Peters lost. I can understand that that will make Dr Cullen feel nasty for a day.

Hon Dr Michael Cullen: The case was found not proven—read it more carefully.

RODNEY HIDE: Not proven—that is like Mr Benson-Pope’s case, is it not? Winston Peters went to court to win, but he lost; that is the point. Bob Clarkson, bless his cotton socks, is the MP for Tauranga, and Winston Peters is not. The only reason Winston Peters went with Labour was so that Labour would not stand against him when he had his court case, because that is what Labour promised. That is also why we have a Labour Government. Indeed, Winston Peters lost his court case and Bob Clarkson, bless his cotton socks, is the MP for Tauranga.

The US CAN-SPAM Act made no difference, and after the European Commission passed its anti-spam law—Michael Cullen should listen to this—Microsoft’s UK head of information services said: “We filtered out 2.46 billion spam emails today—just as we have done every day for months.” The ITN news source ZDNet Australia said of Australia’s anti-spam bill—and our bill is modelled on Australia’s, I tell Mr Cunliffe—that the new legislation would probably do little to stop the flood of overseas spam, but that the compliance issues it posed would be a new reality for businesses.

So the members of Parliament voting for this bill are voting for more compliance for no result, because the bill will not stop Sue Kedgley’s Nigerian spam from coming into her in-box. Most of the spam messages we get are from what are called “zombies”—not Labour Party zombies, but machines infected with a virus or worm that are sending out mail without the knowledge of the machines’ owners. In fact, it could be coming out of Sue Kedgley’s machine, and she could be the one prosecuted under this legislation—even though she is not sending the spam. Someone else is sending it from Nigeria, where this legislation has no impact.

Claims that this bill is part of an international effort, or of a multi-pronged approach, are hollow. Why? In China there is no anti-spam law and no approach towards dealing with the problem. So we will have legislation that will prove costly to businesses, that could see innocent people prosecuted, and that will not make one bit of difference. As Steve Linford, the founder of the Spamhaus Project, said about such legislation: “The whole problem with these laws is that they are geared to spammers being honest and respecting laws.” Once again, those who flout the laws, and those who are overseas sending spam from Nigeria and China, will not be affected one bit by what this Parliament does. This is bad law.

Hon Tau Henare: That’s right.

RODNEY HIDE: I am pleased to hear Tau Henare say that I am right, and I am looking forward to him voting against this bill.

Hon Tau Henare: We’ll fix it in the select committee.

RODNEY HIDE: Tau Henare says that he will fix it in the select committee. I would love to know how that fix will work. Perhaps Mr Henare could enlighten us on how he will fix it in the select committee.

Hon Tau Henare: Come to the select committee.

RODNEY HIDE: He says I have to go along; he is not giving away his trade secrets. Well I tell people that if Mr Tau Henare has a legislative fix for this bill that will see it stopping Sue Kedgley’s spam coming in from Nigeria, the guy is worth every dollar the taxpayer pays him, and I commend him. I said before that he is the best thing ever to come out of New Zealand First, and we are looking forward to having a few more members come out of New Zealand First in the coming weeks and months ahead, because they know that Mr Peters told them a porky when he said that Bob Clarkson had overspent. Mr Peters said: “I am going to win. That’s why I’ll become the Minister of Foreign Affairs, and that’s why we’ll support the Labour Party—the Labour Party will not stand against me, and I will win back the seat.”

Well, that ploy failed and so, too, will this legislation. It is bad law and it will not work. The ACT party and its entire caucus—to a man and to a woman—stand against this bill.

SUE KEDGLEY (Green) : I take a very brief call to say that the Green Party warmly welcomes the bill, defects and all. We would wish, as Rodney Hide has pointed out, that the bill was able to extend its reach beyond our shores, so that we could be mercifully released from the spam that comes from Nigeria and other countries. But the fact that it will not be able to stop spam coming in from Nigeria is not a reason to say that we should not have the bill at all and that we should not try to stop spam that comes from within New Zealand. So we see this bill as the first positive step in trying to rid our lives of spam.

We would love to understand why we cannot extend the provisions of the bill further. Tau Henare suggested that he will seek to amend it at the select committee so that it can extend its reach, and we would welcome that. If we were able to extend the bill’s reach to beyond our shores, I am sure it would be one of the most popular bills that has ever come before Parliament. I am sure it will sail through Parliament, notwithstanding the comments of Rodney Hide. So as far we are concerned, let us bring it on. We will see whether we can amend the bill and extend its reach. Would it not be wonderful if we could rid our lives of the endless, ridiculous emails from Nigeria and elsewhere, including New Zealand?

I congratulate David Cunliffe on getting the bill to this stage. Let us hope it has a speedy passage through the House.

NICKY WAGNER (National) : There is no doubt that something has to be done about email.

Katherine Rich: Absolutely.

NICKY WAGNER: Absolutely. Unsolicited electronic messages flood into everybody’s in-boxes every day. One thing that we agree on is that we do not want it and we should get rid of it. It accounts for 40 to 75 percent of all email in New Zealand, clogs our in-boxes, and reduces workers’ productivity. Even in the carefully controlled information technology environment in Parliament, we cannot seem to stop it. National supports this bill going to the select committee. We support it as a first step in dealing with spam, but we do not believe that it will have any significant effect on the vast majority of spam, which comes from overseas.

The bill attacks the issue in three separate ways. It bans the sending of commercial spam with a New Zealand link without the prior consent of the recipient. That is the opt-in option. In other words, the receiver must choose to receive the commercial or promotional email. I think that is reasonable. The bill also requires commercial or promotional electronic messages to include accurate identification, details of the sender, and an unsubscribe option. That is reasonable. The bill bans the use and distribution of address-harvesting software, and that is reasonable. However, legitimate businesses already follow those protocols voluntarily, and this bill will do nothing to curtail the illegitimate spammers who have no intention of following our regulations. They will just operate internationally.

We are all aware of the frustrations of spam—the offers of cheap drugs and software, the invitations to visit pornographic sites, the offers to enhance our sexuality, and the thousand and one scams that tell us we have been miraculously picked to receive competition money, inherit mysterious benefits, or look after money from Nigeria. Oh, that I should be as lucky as that! The amazing thing is that the whole system keeps going, simply because people respond to the emails. Spam is a relatively new phenomenon, and although there is a suite of existing laws that can deal with computer viruses, pornographic, offensive, and misleading material, forgery, and harassment, some legislation is needed to specifically ban unsolicited marketing material.

This legislation will be unable to protect us from the overseas spam, but it does bring us into line with other countries, and it is an important signal that New Zealand is not a soft target for spammers and a place that welcomes their operation. At present the only method of controlling spam is filters. Filters are a hit-and-miss affair; they filter out legitimate emails as regularly as they do spam. Filters are designed to reject messages with “hot” words in them—words like “free” or “sex”. Members will all have had experience of their innocent emails disappearing into cyberspace, simply because they have used “hot” words. I do not recommend inviting one’s children by email to see the movie Free Willy or to listen to a sextet playing chamber music. Filters use technology to fight technology, but they reduce the effectiveness of e-communication and often penalise legitimate opt-in communication.

Nobody likes spam. It is out of control internationally, so National will support this bill going to a select committee. We will support it as a necessary evil to support the global fight against spam and to stop New Zealand being seen as a welcoming home for spammers. But we do see the bill as a first step in dealing with spam, and we do not believe that it will have a significant effect on the vast majority of spam, which comes from overseas.