Consumer Affairs in Rural New Zealand

Gretchen Larsen

Robert Lawson

Wolfgang Chr Fischer

Abstract

Recent changes in many areas of Government policy in New

Zealand, as well as changes in the private sector have

had major impacts on the provision of services in rural

areas of New Zealand. This report describes the results

of a New Zealand survey of 795 rural consumers. The

results emphasise how the problems perceived as most

important to people in rural areas are essentially linked

to fundamental services such as housing, water,

communications and transport. Though this element of

basic needs is covered in the consumer policy literature

it is not a feature that tends to be emphasised. The

survey also gauges some aspects of rural consumers’

knowledge of their entitlements under New Zealand

consumer law and their familiarity with, and use of,

consumer advisory and support services.

Introduction

Consumer policy is generally developed and implemented on

the basis of the circumstances of the majority of the

population and those most closely involved in the

business sector (Fischer, 1999; Tiemstra, 1992).

1

Consequently the needs of minority groups are often not

reflected by consumer policy, but it is these minority

groups who, for various reasons, require the most support

in maintaining their rights as consumers (Benge, 1988).

In most western countries, the majority of the population

resides in urban areas. Therefore consumers who reside in

rural areas comprise a minority groups whose needs may

not be addressed in the development and implementation of

consumer policy. This research examines consumer issues

as perceived by rural New Zealanders and their

perceptions of the support services available for

consumer advice and information.

In New Zealand recently, consumer problems associated

with residence in rural areas have become topical. The

Government has been actively pursuing a policy of

deregulation and ‘user pays’. As a result many rural

areas have found that some public services have been

removed, as it is no longer regarded as economic to

operate them in these areas. Many private businesses have

also faced this situation. This has left a large

proportion of rural consumers with no easy access to

retail outlets, hospitals, post offices, banks and

consumer information services (e.g. Fairweather, 1989).

It has also led to differential pricing for rural

consumers who pay more for some services such as postal

deliveries or telephone installations on the basis that

they are more expensive to supply and maintain in rural

2

areas. Paying more for privately traded articles, such

as grocery items, has long been established as a feature

of rural life due to lack of local competition and higher

distribution costs, but until recently “public” services

were all supplied at a uniform price across the country

irrespective of location. Recent exploratory research has

supported the notion that New Zealand’s rural consumers

remain disadvantaged, as they are less able to assert

their consumer rights of information, choice, redress,

education and the right to be heard (Larsen 1996). This

indicates that any efforts that may have been made to

cater to the needs of rural consumer in New Zealand have

not been successful. This is in contrast to some

reported views by consumer policy experts and officials

who have suggested that because of independent and self

employed nature of many rural occupations, rural

consumers are knowledgeable and well equipped to protect

their own self interests (Larsen 1996). The research

documented in this paper aims to contribute to our

knowledge of consumer affairs in rural areas and consider

the implications for consumer policy. The paper reports

on the results of a survey of rural consumers in New

Zealand that aimed to fulfil three objectives:

1. to scope the relative importance of consumer issues as

perceived by rural consumers;

2. to assess the levels of knowledge held by rural people

of their rights as consumers;

3

3. to document the use and access to consumer advice and

support services by rural consumers.

Consumer Policy in New Zealand

The principle basis for the development of consumer

policy measures and of the independent organisations that

support consumers is that the customer is in an unequal

bargaining position with suppliers of goods and services.

The central focus of consumer policy has therefore been

to equalise the bargaining positions of consumers and

suppliers in the marketplace (Benge, 1988). In attempting

to achieve this policy, the New Zealand Government is

moving away from regulation and protection, with the aim

of creating a more competitive market. As identified in

the literature however, competition does not ensure

consumer sovereignty nor overcome the “caveat emptor”

principle (e.g. Collinge, 1971). Consequently policy

makers are aware that some level of regulation may be

required in order to ensure that competition exists in

the free market and that consumers are able to make

informed purchase decisions.

In general, the New Zealand Government prefers policies

that enlarge consumer choice and those that preserve the

freedom of sellers to market their most profitable goods

and services. Consumer policy provisions are mostly in

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the area of consumer law and consumer information.

Consumer legislation is quite varied, however the two

main complementary pieces of legislation, the Fair

Trading Act 1986 and the Consumer Guarantees Act 1993

cover all types of products and services. Essentially

the Fair Trading Act deals with supply and pre-purchase

issues such as advertising and pricing, while the

Consumer Guarantees Act deals with post-purchase issues

such as performance, servicing and redress (Commerce

Commission, 1994, Skinnon and Sligo, 1993).

Additionally, there are specific pieces of legislation

that deal with certain industries such as food, credit or

motor vehicles. Consumer information is provided through

a variety of public, semi-public and private

organisations including the Ministry of Consumer Affairs,

the Consumers Institute and Citizens Advice Bureaux (see

Larsen and Lawson pp 87-103 in Fischer and Lawson, 1999).

The Government of New Zealand has not historically

focused on consumer education as a specific consumer

policy strategy, however some initiatives have been taken

to provide consumer education through both the formal

school system and adult education (Ministry of Education,

1995). Most provisions are administered on a national

basis and little attempt is made to distinguish and cater

to the specific concerns of minority groups, including

rural consumers.

Rural Consumers in New Zealand

5

Rural areas are usually sparsely populated and are often

located on or near mountains or islands, or even in

places subject to climatic extremes. Typically,

transportation between rural areas and major population

centres is time-consuming and inconvenient, which limits

commuting or even relatively casual business travel.

Populations are scattered and the topography frequently

difficult, the per-unit or per-capita costs of providing

many public services and infrastructure are often high.

Such rural areas are the finals to be added to electrical

supply grids and modernised telephone systems. The

operating and maintenance costs of conventional water and

sewerage treatment systems for communities in rural areas

in New Zealand are often prohibitively high as well. Per

student costs of education in rural areas are high

because schools are very small, and require extensive

transportation systems, in some cases boarding

arrangements, or distance education through radio and in

nowadays starting with Internet.

The smaller and more rural settlements generally have the

narrowest economic bases; poor income-earning

opportunities, especially for women and young people; and

comparatively low average incomes, largely because the

barriers that make them remote also make it difficult for

them to integrate economically with the rest of their

countries. In addition many have ageing and declining

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populations. Overall, private companies and even the

Government regard some rural areas as not any more

profitable locations. New Zealand’s rural towns and

communities are vulnerable to economic and political

changes. The pastoral and broad-acre farming regions

depend for their survival almost exclusively on foreign

markets. Downturns in the commodity markets, or

unfavourable changes in exchange rates, quickly impact on

local economies and effects soon become obvious on

service centres. Altogether, trends of exploitation of

rural resources and insufficient understanding of the

rural context underlie the demand for change in rural

development practices. There is a need for stronger

governmental programs to revitalise small country towns

and rural areas, in particular for young families to make

their life attractive in remote areas.

In New Zealand one element that may have contributed to

policy-makers’ interest in rural areas is the increasing

degree of powerlessness of many rural people.

Powerlessness in rural areas may come from isolation,

poor communications and invisibility. This feeling may

have been encouraged by recent trends of rural

depopulation and the resulting effects that this has had

on rural communities' size and infrastructure. Another

reason why policy-makers need to be concerned with rural

communities pertains to the economic policy of ‘user

pays’. Rural services are no longer supplied as right to

7

rural areas, and the policy of equal costs regardless of

location no longer applies. The majority of government

services are now organised on the basis of user pays.

Consequently, rural inhabitants are likely to be

disadvantaged in their access to some social services.

Rural consumers are restricted by cost, distance and the

lack of appropriate services to obtain redress for the

problems they face, and are not always in a position to

protect themselves, as the appropriate education and

information services may not be available. Therefore the

principle is that consumer policy should attempt to cater

for all consumer's needs, including those of minority

groups, and should not assume that the needs of consumers

in certain groups are homogenous. Consumer affairs as a

part of governmental policy are based on the constitution

in most OECD countries. Basically, this is related to the

aim of a sustained economic and social development of the

society, and therefore aimed at increasing the standard

of living.

According to official statistics, rural consumers

represent a sizeable portion of New Zealand’s population

- 23.3% (Census 1996). Despite this there has been very

little research conducted on the nature of being a rural

consumer in New Zealand. At a more general level, there

is also a distinct lack of sociological literature with

regard to rural New Zealand, which is surprising for a

country that “proverbially lives off the sheep’s back”

8

(Carter, 1990). Like many definitions of rural, the

official definition on which the rural population is

defined can be described as a rather “negative”

definition. Cities and towns are defined by population

size and by definition anything that is left after these

areas have been removed is classified as rural. Such an

approach does little to apply meaning to the nature of

rural places and has been heavily criticised as a method

by Carter (1990). For any person with a small knowledge

of the geography of New Zealand, it also emphasises how

it is dangerous to make assumptions or

oversimplifications concerning the nature of communities

covered in this type of definition. Rural areas can

include anything from the fairly intensive and prosperous

agricultural areas surrounding Christchurch or Hamilton,

through to the remote and rugged forested areas of the

South Island West Coast or East Cape on the North Island.

In those places isolated communities are often supported

by single industries such as forestry, fishing, hunting

or perhaps tourism. However, partially because of a lack

of detailed research on rural areas in the country, there

seem to be a number of traditionally held assumptions

about the nature of rural life and of being a consumer in

rural areas. Larsen’s exploratory research in 1996

indicated that, at a consumer policy level, most

knowledge about rural consumers is limited to simplistic

views that most rural consumers can cater for their own

needs quite adequately and without special consideration.

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The opinions of consumer policy experts that she

interviewed were founded on traditional views that most

of the rural community was engaged in primary production,

often running their own business i.e. a family farm. It

was argued that this experience would make them astute as

consumers. Furthermore, the close knit nature of rural

communities would mean that they were able to get good

local support from family and friends, and probably had

excellent relationships with rural traders who would be

keen to help solve any problems that did arise.

Furthermore, where rural consumers did have problems, it

was argued that effective advice and information systems

could be provided by distance methods such as telephone

or the Internet. These sentiments clearly did not match

those expressed by the rural consumers that Larsen spoke

to in the focus group interviews who articulated a series

of problems they faced as consumers and demonstrated

demand for services such as those offered by the

Citizens’ Advice Bureaux (MAFF &, CAB 1993).

Consequently it was perceived that there was a need for

survey information which would (a) clarify what rural

consumers saw as the most important issues they faced;

(b) investigate the levels of knowledge they held about

their rights as consumers and the services available to

help them if needed; and (c) explore current demand for

and access to consumer support services.

10

Methodology

Information to answer these questions was gathered using

a nation-wide mail survey. The surveys were sent to a

geographically stratified sample of 3,000 rural dwellers

identified from New Zealand telephone directories.

Incomplete addresses are the only major drawback of

telephone directories as a sampling frame in New Zealand

since there are very few unlisted numbers. Consequently

242 questionnaires were returned as wrong or incomplete

addresses. A total of 795 fully completed and usable

responses were returned, which equates to an effective

response rate of 28.8%. The accompanying cover letter

requested that the person who is responsible for the

household shopping complete the questionnaire, and no

follow up or reminders were issued. Exact comparisons of

the sample to the relevant population are not easy

because there is no comparable publication of aggregate

rural demographic statistics in the census. However, the

sample profile is very varied and matches the “expected”

characteristics in all except two regards. Firstly,

there is an under-representation of those aged below 25.

This is possibly the result of using telephone

directories and therefore missing consumers yet to reach

householder status. It may also be a feature of shopping

responsibilities within the household. Secondly, there

is an under-representation of people identifying

themselves as Maori in the survey. This is a usual

11

feature for surveys in New Zealand that is not fully

understood. It is believed to have a complex set of

cultural and social causes relating to values structures,

education and language. There are no corresponding

simple over-representations that counter these

deficiencies in the sample.

Data has been analysed by a variety of appropriate and

conventional statistical methods including cluster

analysis, anovas, crosstabulations and basic descriptives

and frequencies using SPSS10 for Windows.

Results

a) Important issues Faced by Rural Consumers

The questionnaire included a set of 45 items designed to

measure the importance of different consumer issues as

problems for the respondents. These questions were

devised as a set of questions as to measure consumers’

perceptions of their rights (Larsen, Lawson and Fischer

2001) and covered the eight established entitlements

adopted by the United Nations resolution as well as

perceived entitlements relating to product quality and

levels of service. Each entitlement was measured by a

minimum of three rating statements and reliabilities for

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all 10 sets of issues were over .77. Table one

summarises the mean scores for each issue.

Table 1: Perceived Importance of Consumer Issues

Consumer

Issues

Mean Importance score

(5 = most important)Basic Needs 4.22Safety 3.87Environment 3.83Heard 3.79Redress 3.74Information 3.72Choice 3.70Education 3.61Quality 3.61Service 3.58

Obviously, rural consumers see all issues as important

but the really significant result is the emphasis that is

placed on the provision of basic needs. In this case

basic needs are defined as services such as education,

telecommunications, transport and power. It is difficult

to escape the conclusion that the emphasis on basic needs

is the direct result of the “user pays” philosophy

described above which has been applied by New Zealand

governments since the mid 1980s. Although definitions of

basic needs (like those of poverty) may vary between

countries of different standards of living, the emphasis

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and concern on basic needs in rural New Zealand is an

important issue for a developed economy to face.

In order to look for variation between individuals or

groups in the importance ratings in an efficient way, the

respondents were grouped on the importance ratings using

k-means clustering methods. Since all the issues were

rated with fairly high levels of importance the data was

adjusted to reflect the relative importance of each issue

for the respondents. This was done by calculating the

mean importance score across all 45 items for each

respondent and subtracting the mean from each of the

original ratings. The clusters were then formed on these

differences which emphasise the most and least important

issues for each respondent. This process is an accepted

way of transforming data with limited distributions such

as values or satisfaction (e.g. Schwartz 1992) and

prevents cluster solutions based simply on patterns of

responses where some individuals might tend to rate all

items more highly than other respondents. Although groups

were derived from the relative ipsatized scores the

profiles and discussion below are based upon the absolute

scores from the original data in order to provide

accurate contrasts between the groups. A range of

solutions were considered from three to five groups and

eventually a three group solution was chosen on the basis

of its face validity and the strength of associations

with the socio-economic and demographic data in the

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survey. 25 cases were omitted from the cluster solution

because of missing data.

Cluster one (n=351): Overall this group identify more

issues as problematic but are particularly concerned with

issues relating to access to basic services (e.g.

electricity, telephone, transport), and product quality.

Guarantees and satisfactory redress are also an issue for

this group in comparison to the other two clusters.

Demographically, this group are biased towards the 30-39

age group, are married or separated and have dependent

children. Geographically this group is more concentrated

in the North Island of New Zealand and they are biased

towards the bottom three levels of the Elley-Irving

index.

Cluster two (n=203): This group are less concerned about

consumer issues in rural with the exception of problems

relating to choice and lack of competition where they are

the most critical group. Issues relating to information,

advertising, product quality and standards, the

environment and consumer voice are relatively unimportant

for this group. Demographically this group contains

more under 25s than would normally be expected, but is

still spread over all age ranges. They are also more

likely to be married than the other groups but not

necessarily have dependent children and they are

concentrated in the three highest Elley-Irving socio-

15

economic groups. Geographically they are well dispersed

throughout New Zealand.

Cluster three (n=206): The primary concerns of this group

relate to information on legal rights, consumer voice and

the environment. They are especially unconcerned with

issues relating to retail service standards. This group

represents a slightly older part of the population with

more people over 65 than would be expected, and

consequently more people who are divorced and widowed.

Consistent with this, they are more concentrated in the

Nelson/Marlborough area at the top of the South Island.

This area is recognised as having one of the best

climates in the country and is favoured by some people

for retirement. This group is spread well through all

socio-economic groups but contains the highest percentage

in the top two strata.

It should also be noted that income itself was not

directly related to these groups but if the likely

discretionary income is considered, then the first group

is likely to be less well off than the other two. Hence

the concern with product quality and more basic issues is

easier to understand. The second group has higher socio-

economic status and fewer dependents. Consequently,

consumer issues may be less of a problem as long as they

have a suitable spread of choices. This attitude amongst

the younger element of this group is also consistent with

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what has been written about Generation X and their

attitudes to consumption and other work on consumer

lifestyles in New Zealand (Todd, Lawson and Jamieson,

2001). This study identified younger consumers who are

slightly cynical in their attitudes to the market place

but at the same time they are independent and unconcerned

about consumer policy issues. They normally emphasise

individual as opposed to collectively orientated values

and consume explicitly out of self-interest. We presume

that the concern with choice reflects the limited nature

of supply in rural areas, while this group do not

perceive any deficiencies in information or quality

standards regarding products that are available. The

results of the questions on knowledge of consumer rights

given later suggest that younger respondents who form a

major part of this group do have better knowledge and our

interpretation is that, given adequate choice, they feel

capable of looking after their own interests and that

they do not wish to become involved in more socially

concerned issues. This is contrast to the third group who

are older and more socially orientated. The consumer

issues that they regard as most important are the

“societal” ones concerned with representation and the

environment. There is a likely cohort effect here since

these older consumers will have been influenced by

experiences prior to 1984 in New Zealand when there was

heavy state involvement in almost every aspect of life

and many more controls on competition, distribution and

17

delivery of services. Inputs into policy for these

people would have been a more normal part of life at one

time.

b) Consumers’ Knowledge of their Rights

Knowledge was assessed in two ways. Firstly, respondents

were provided with lists consumer protection legislation

and consumer service organisations in the survey and

asked to indicate which Acts and organisations they had

heard of and which they understood the purpose of. The

results of these questions are summarised in tables 2 and

3. In this simple self –report form with a list for

aided recall it is possible that there will be some

upward bias in these figures but overall they appear to

carry some face validity. The major pieces of

legislation such as the Fair Trading Act and Consumer

Guarantees Act both appear well known and both the

Privacy Act and the Motor Vehicle Dealers act have had

prominent publicity in the 1990s. The privacy

legislation was regarded as internationally very

innovative and caused much comment including adverse

criticism from some areas of business. In contrast, the

Motor Vehicle Dealers Act has been the subject of some

recent ridicule as it has been shown to be outdated in a

number of ways as it has failed to accommodate new

trading patterns and methods, such as internet or direct

advertising. As expected, the proportion of respondents

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claiming to understand the purpose of each piece of

legislation is lower than awareness in each case.

Examination of the reported knowledge of legislation

against the clusters and demographic variables revealed a

few understandable statistically significant

relationships. In most cases knowledge declined with

age, especially amongst those over the age of 60. The

exceptions to this were the Sales of Goods Act (1908) and

the Door to Door Sales Act (1967). These are the oldest

of the pieces of legislation and more likely to be known

by the older generations. Increased knowledge of both

the Fair trading Act and the Privacy Act was associated

with higher levels of education and there were several

significant relationships between reported knowledge and

work status. Full-time homemakers claimed a higher level

of knowledge regarding the Sale of Goods Act but lower

levels of knowledge regarding the Credit Contracts Act

and the Motor Vehicle Dealers Act while self-employed

respondents claimed much higher levels of awareness

regarding the Credit Contracts Act than other

respondents. Both these are understandable since many

small businessmen will come into contact with credit

legislation as part of their work, while full-time

homemakers without a personal income are less likely to

be signatories on a credit agreement, or to be involved

in actual payment for a motor vehicle.

TABLE 2: Awareness and Understanding of Consumer Legislation

19

Legislation

Heard Of Understand Purpose

Yes No Yes No

n % n % n % n %

Consumer Guarantees

Act

570 78.0 161 22.0 426 62.4 257 37.6

Fair Trading Act 750 96.8 25 3.2 552 74.4 190 25.6Sale of Goods Act 578 78.4 159 21.6 319 46.1 373 53.9Privacy Act 745 96.5 27 3.5 582 78.1 163 21.9Door to Door Sales

Act

335 46.2 390 53.8 216 32.7 444 67.3

Motor Vehicle Dealers

Act

652 85.8 108 14.2 419 58.5 297 41.5

Credit Contracts Act 322 40.5 406 55.8 190 23.9 470 59.1

As well as legislation, respondents were similarly asked

about their knowledge of consumer service organisations.

Claimed awareness of these is generally very high and the

lower proportion for Community Law Centres makes sense as

they offer limited geographic coverage and are more

concentrated in urban centres. There are some

interesting differences in this table between the

proportions who have heard of and those who claim to

understand the purpose of different consumer service

organisations. Apart from “Fair Go” which appears as a

nationally broadcast TV programme, the organisations that

are most understood relative to awareness are those run

by voluntary agencies such as the Citizens Advice Bureau.

The two government services, the Ministry of Consumer

Affairs and the Commerce Commission, both have lower

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levels of understanding, as does the Retailers and

Manufacturers’ Association. As for the legislation,

there are generally higher levels of claimed knowledge by

younger respondents. Also, understandably, knowledge of

the Commerce Commission and the Retailers and

Manufacturers’ Association is higher amongst those who

are self-employed. Again, these are not surprising

results considering the nature of both organisations will

involve businesses as well as consumers.

TABLE 3: Respondents Awareness and Understanding of Consumer

Services

Service

Heard Of Understand

Purpose

Yes No Yes Non % n % n % N %

Citizens Advice

Bureau

759 99.2 6 0.8 680 90.3 73 9.7

Ministry of Consumer

Affairs

715 95.2 36 4.8 431 60.1 286 39.9

Commerce Commission 665 89.9 75 10.1 296 41.9 410 58.1Fair Go 756 99.2 6 0.8 742 96.9 24 3.1Consumers Institute 720 94.9 39 5.1 551 74.4 190 25.6Community Law Centre 434 59.4 297 40.6 277 40.6 405 59.4Safety Standards

Association

634 85.6 107 14.4 527 73.6 189 26.4

Retailers/

Manufacturers Assn

586 79.4 152 20.6 330 46.7 377 53.3

Disputes Tribunal 740 97.1 22 2.9 625 84.1 118 15.9

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As well as the awareness and understanding questions,

respondents were also presented with a series of 5 short

scenarios of consumer problems and asked to select the

appropriate options that would be available to them as

consumers to remedy the problem. We regard this as a

potentially more accurate way of acquiring a more

detailed understanding of their knowledge of their rights

as consumers. The overall results are presented in table

4 where the shaded areas depict the correct legal

opinions for each scenario. The ideas for all five

scenarios came from earlier qualitative work for the

study. In all the scenarios except number two, the

majority of the respondents successfully identified at

least one of the correct options, though identification

of all the remedies available by any individual was low. 1

Responses to these questions have also been

crosstabulated with the clusters and the demographic

characteristics with some interesting results that

generally support the trends outlined in the associations

on the previous questions. Firstly, identification of

the correct answers for all the scenarios is associated

with age. Younger respondents show more knowledge and in

particular those over 60 are less accurate. There are no

such differences in relation to the incorrect options.

Following from this association with age, those people in

cluster three are also generally less knowledgeable.1 Note that all possible solutions were presented as separate questions requiring a ‘yes’ or ‘no’ response and respondents were told that any, all or none of the answers to each scenario may be theconsumers’ correct legal entitlement.

22

Respondents with dependent children were much more likely

to be accurate with scenario three, indicating that the

relevance of the scenario to their situation is probably

important. The employment status of the respondent is

also associated with many of the correct responses, with

those people who describe themselves full-time homemakers

showing much more knowledge on the scenarios related to

the heater, the shoes and the toy. In all those cases

both retired and self-employed were much less aware. For

example:

79% of homemakers knew money could be refunded for the

heater compared to 75% of self-employed and 64% of

retired people;

39% of homemakers knew that the shoes must be kept as

opposed to 21% of self-employed and 20% of retired

people;

93% of homemakers knew the toy required a warning label

compared to 65% self-employed and 64% of retired

respondents.

TABLE 4: AWARENESS and Understanding of Legal Rights

Scenario 1: A person buys a new heater. When they get it home it does not

work.Option Money Heater Heater Credit None of

23

Refunded Replaced Repaired Note the AboveFrequency 580 548 321 76 13 Percent 74.0 69.9 40.9 9.7 1.7Scenario 2: A person buys some new shoes. They are sure that they are theright colour, so they do not ask if they can return them if they are not.The person gets the shoes home and decides they are not the right colour.Option Keeps shoes Exchanges

shoes

Receives

Refund

None of the

AboveFrequency 183 449 188 140Percent 23.4 57.4 24.0 17.9Scenario 3: A child’s toy has a part that is small enough for a childunder 3 years to swallow. However, if the part is removed, the toy willno longer work.Option Nothing Is

Done

Warning Label Part Altered None of the

AboveFrequency 33 566 304 67Percent 4.2 72.6 39.0 8.6Scenario 4: A hire purchase deal for a television is advertised as a nointerest deal. A person purchases a television and signs the hirepurchase agreement. When they get home they check the calculations anddiscover that interest has been added to their monthly payments. Theconsumer returns to the retailer.Option Nothing Is

Done

New Agreement New Agreement

and Discount

None of the

AboveFrequency 77 585 139 72Percent 10.0 75.7 18.0 9.3Scenario 5: A new vitamin tablet is being sold. It is found that overuseof the vitamin causes extreme tiredness. However, this is not indicatedon the bottle.Option Nothing Is

Done

Product

Recalled

Compensation

Given

Warning Label None of the

Above

Frequency 11 321 630 37Percent 1.4 41.2 80.9 4.7

(Note: the correct legal options for each scenario are shaded)

24

Since no comparisons on consumer knowledge exist for the

general population is difficult to be absolute in

summarising the findings regarding this assumption

regarding consumer knowledge. Clearly many consumers

have a good knowledge of many of their rights and the

legislation and services available to them but there is

no evidence that suggests that this is due to the rural

nature of their lifestyle. Even those people who are

self-employed do not reveal any extra knowledge except in

areas that might be related to some aspect of business.

Overall, it can be said that knowledge seems to vary by

individual circumstance and relevance and that in the

generalised areas covered in the scenarios, the

experience of the full-time homemaker showed through. It

is interesting to speculate that this may be the same

kind of result as that found in the old studies on price

knowledge by Gabor and Granger (1964) who identified

higher levels of knowledge amongst full-time homemakers

and attributed it to experience and social role. Being a

consumer and acting on behalf of the rest of the family

group is an important part of the full-time homemaker’s

daily set of duties but it is not a phenomenon restricted

to people in rural areas.

c) Accessibility and Use of Consumer Services in Rural Areas

The third objective of the survey was to document the

access and use of consumer affairs services by rural

consumers. In order to address this objective respondents

25

were asked about the availability of services to them and

about any past history of usage of these services. They

were also asked about their preferred methods of access

in order to see if remote services (e.g. Internet or

telephone) provided adequate alternative services.

Respondents were provided with a list of ten consumer services that

may be available for their use in their community. The respondents

were required to indicate whether the service was available to them

and in which of the seven forms provided it was available.

Respondents were able to indicate as many forms of contact as applied

to each service. The results are detailed in Table 5.

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TABLE 5: Availability of Consumer Services in the Respondents Community

Service

Availability Forms Through Which Services Are Available

Yes No Don’t

Know

1 2 3 4 5 6 7 8

n % n % n % FrequencyCitizens Advice Bureau 479 64.

0

177 23.

7

92 12.

3

148 75 235 178 6 2 16 38

Ministry of Consumer

Affairs

115 16.

0

370 51.

3

236 32.

7

180 48 3 48 1 1 14 1

Commerce Commission 104 14.

6

354 49.

8

253 31.

8

189 19 3 47 1 10

Fair Go 242 33.

4

348 48.

1

134 18.

5

293 33 23 2 24 21 2

Consumers Institute 163 22.

9

346 48.

6

203 28.

5

215 28 3 36 1 63 3

Community Law Centre 151 21. 296 41. 267 37. 122 18 33 104 11 4 2

27

1 5 4Link Centre 75 10.

5

267 37.

5

370 52.

0

103 14 13 44 8 5 1

Safety Standards

Association

94 13.

1

330 46.

2

291 40.

7

169 15 3 41 2 10 1

Retail/Manufacturers

Association

148 20.

8

270 37.

9

295 41.

4

140 18 33 64 2 5 1

Disputes Tribunal 232 32.

1

255 35.

3

236 32.

6

172 19 40 123 9 8 8

Key: 1= Phone – Toll 5= Periodic Visits

2= Phone – Freephone 6= Internet

3= Local Office 7= Publications

4= Nearby Town 8= Combinations

28

The results indicate that in all cases, except for the Citizens

Advice Bureau and Fair Go, there were a higher percentage of

respondents who did not know if the service was available in

their community than those who did. It is difficult to know how

many of these respondents who answered either yes or no are

correct as it is not known where each respondent resides and

exactly what services are available in their community.

However, the Ministry of Consumer Affairs, Commerce Commission,

Fair Go and the Consumers Institute all provide nation-wide

coverage through the phone, Internet or distribution of

publications. Nation-wide coverage is also attempted by the

Citizens Advice Bureau, Safety Standards Association, and

Disputes Tribunals, but these services will not be locally

available to all rural dwellers. Community Law Centres, Link

Centres and Retailers/Manufacturers Associations are more

intermittently dispersed, but will still be available by

telephone. Generally, the frequency of ‘yes’ responses should

be higher than what has been shown, as most of the services

will be available in some form to rural dwellers.

The differentiation between telephone access via toll calls and

free telephone lines was included to measure if respondents

were aware of free/0800 telephone lines provided by some

services. However a disproportionate amount of respondents

indicated the option of access via a toll call. In fact all

services will be able to be contacted through a toll call and

it seems evident that there is a low awareness of the free

phone options available to consumers. It is a particular

29

concern that a large proportion of respondents (51.3%) believed

that the services of the Ministry of Consumer Affairs were not

available to them when the Ministry provides a free telephone

line, dedicated solely to consumer issues that is available to

all New Zealanders

The Citizens Advice Bureau obtained very high levels of

awareness of both its residency in the respondents community

and the forms through which it is available. Many respondents

identified access to the Citizens Advice Bureau as either

through a local office or in a nearby town. The Citizens Advice

Bureau obviously maintains a strong presence in rural New

Zealand areas and has promoted both its role and availability

successfully.

Another striking result detailed in the table is the very low

awareness of the Consumers Institute publications such as

‘Consumer’ magazine. A total of only 63 respondents identified

that the Consumers Institute services were available through

publications, although 74.4% of respondents had indicated that

they understood the purpose of this service. The main function

of the Consumers Institute is to provide information to its

members through the Consumer publication. It has been suggested

that rural dwellers place more emphasis on themselves to be

better consumers through the use of product and service

information (Liefeld, 1981). If this is found to be true, then

these results present an area of concern. The Consumers

Institute is one of the few independent consumer services in

30

New Zealand that is able to provide the information regarding

product test results, the quality of services and other

consumption related issues that consumers require to make

better consumption decisions.

The final point of interest is the relatively low level of

awareness of the availability of services through the Internet.

Many services such as the Consumers Institute, the Ministry of

Consumer Affairs and the Commerce Commission now run websites

where consumer related information and consumer advice can be

obtained. These low levels of awareness could be due either to

lower usage rates of Internet services in rural areas, or that

rural consumers do not use the Internet as a source of consumer

related information.

In order to determine the forms of contact that rural dwellers

prefer to use when accessing consumer services, respondents

were given a list of eight different forms from which they were

asked to select as many forms as they would prefer to use. The

results are presented in the following table.

TABLE 6: Preferred Forms of Contact with Consumer Organisations

Form of Contact Yes NoFrequency Percent Frequency Percent

Personal Visit to

Local Office

326 42.2 447 57.8

0800/Toll Free

Telephone Line

570 73.7 20.3 26.3

Personal Response Advice Telephone Line

221 28.6 552 71.4

31

Automated Response Advice Telephone Line

13 1.7 760 98.3

Visit When they Make a Community Visit

105 13.6 668 86.4

Write to Them 179 23.2 594 76.8Website on the

Internet

31 4.0 741 96.0

Pamphlets/Leaflets/

Brochures

116 15.0 657 85.0

The most popular form of contact amongst the respondents was

via 0800 or toll free lines. These can obviously be accessed

immediately without any travel or direct cost. The second most

preferred form of contact was a ‘personal visit to a local

office’. This is understandable but what is more significant is

the dislike by respondents for automated response telephone

services and website contacts. The reasons for this dislike

were not collected in the survey and they may be related to

issues such as the impersonal nature of the service, or even to

cost since they both involve potentially expensive options for

rural dwellers in New Zealand. For example, the “User Pays”

cost based policies described above have meant that urban

dwellers in New Zealand have had far quicker and cheaper

internet access than have the rural population. These dislikes

are particularly important for the service providers to

understand since Larsen (1996) reported many organisations to

be keen on developing these options as cost effective ways of

distributing their services.

In order to gauge the extent of consumer problems faced by

rural consumers and demand for consumer support services

32

respondents were asked a series of questions about their

previous use of services. 285 respondents (37.5%) said that

they had used one of the services listed above and a further 84

respondents (11.1%) admitted that they should or would have

liked to have used a consumer service on at least one occasion.

59 of the cases had been within the six months prior to the

survey, a further 66 cases between six months and one year and

all except for 40 cases were within the last five years. If

memory recall is accurate and these figures can be relied upon

to accurately reflect the use of services over time they

indicate that the use of services had increased more recently

with almost 44% of contacts being within the last 12 months.

Crosstabulations with the personal characteristics of the

respondents showed that people who had used consumer services

were more likely to be female and educated with professional or

university qualifications. Those less likely to use the

services were unemployed males and female homemakers with few

educational qualifications. These are not surprising

associations but they emphasise the difficulties that face many

social policy organisations in ensuring that those who may have

most need for some of their services do actually take up the

opportunities available to them. The distribution of the

actual services used by respondents is given in table 7.

33

TABLE 7: Consumer Service Used by Respondents

Service Frequency Valid PercentCitizens Advice Bureau 179 61.7Ministry of Consumer

Affairs

22 7.6

Commerce Commission 15 5.2Fair Go 14 4.8Consumers Institute 60 20.7Community Law Centre 34 11.7Link Centre 27 9.3Safety Standards

Association

9 3.1

Retailers/Manufacturers

Assn

7 2.4

Disputes Tribunal 98 33.8

Of the respondents who have previously used a consumer service,

a large proportion of them has turned to the Citizens Advice

Bureau for assistance. This is consistent with the high levels

of awareness and understanding associated with this consumer

service as identified previously.

An attempt was made to discover why the particular used was

chosen and if the selection of the consumer service agency had

been constrained in any way by lack of availability and choice.

In effect most respondents simply identified that the agency

used was the chosen because it was the appropriate one for the

problem they faced and there was little evidence to suggest

that they were chosen to use any service because of access or

availability. Perhaps the most interesting point in the reasons

34

for choosing a particular agency was that almost a quarter of

the respondents used a particular consumer service because it

was personally recommended to them. This emphasises the

potential importance of word-of-mouth in the take up and use of

consumer services and the potential difficulties facing an

organisation like the Ministry of Consumer Affairs without a

high public profile or widespread understanding of their role.

Over 80% of the people who had used a consumer service

expressed satisfaction with the outcome of action taken. Those

who were dissatisfied explained that this was because the

preferred course of action would have been to settle the issue

directly with the business or supplier concerned. These

responses indicate that consumer service agencies are seen as

effective when called upon.

Conclusions

This study has attempted to provide information and insights in

a topical but little researched area. It is argued that the

specific problems of rural consumers are often overlooked when

consumer policy is developed and support services for consumers

are provided. Though primarily an urban society, New Zealand

still retains a sizeable rural population, which provides a key

role in the economy. For example, all the most important

export industries, including tourism, are essentially based in

the rural sector. Therefore understanding and meeting the

needs of rural communities is not only a question of equity in

35

social policy but also potentially an important investment in

terms of the general economy.

The issues that consumers might perceive as important problems

were approached by looking at the established set of consumer

entitlements supplemented by issues relating to quality and

service. The outstanding issue in the minds of most rural

dwellers was the provision of services supporting basic needs

such education, health, transport, telecommunications and

power. A cluster analysis did show some variation with some

one group also emphasising lack of choice and another issues

relating to consumer voice and the environment. A feature to

note about all these services is that they have traditionally

been supplied from the public sector and even after

deregulation and privatisation of many public services in New

Zealand, the provision of these services still has a strong

Government influence.

Amongst the services traditionally supplied or supported by the

Government are also the consumer affairs services that provide

information and advice to people relating to consumer problems.

Though we have no benchmarks for comparison, the respondents of

this survey showed that they had made extensive use of some of

these services, especially the Citizens Advice Bureaux. Over

one eighth of the sample claimed to have used one of the

services in the twelve months preceding the survey – allowing

for the non-response element to the mail survey this suggests

that the real rate of contact lies somewhere between 4% and 14%

36

of the population. Even the lowest figure would represent a

sizeable proportion of the total rural community. Regarding

the consumer support services available to consumers in New

Zealand, it seems quite clear that the public do not have good

levels of awareness regarding those directly supplied by the

central government and that there should be an opportunity for

the Ministry of Consumer Affairs in particular to improve

understanding of the services it offers and the usage levels.

It is also clear that usage of the services is biased towards

the younger and better-educated people in the sample.

In contrast to the actual support services run by the

government, there does seem to be widespread knowledge of

consumer legislation and an understanding of many courses of

action available under that legislation. Both the Commerce

Commission and the Ministry of Consumer Affairs, as well as the

independent Consumers Institute have given substantial

publicity to consumer entitlements in the 1990s around and

following the introduction of the Consumer Guarantees Act in

1993. Knowledge of entitlements as a consumer is linked to age

and falls especially amongst the over 60s. This is an

important finding in a local context. Like other developed

countries, New Zealand has an ageing population and there are

substantial concentrations of older and retired people in some

areas – including rural parts of Northland, Nelson, Marlborough

and Central Otago where good climates and cheap housing make

attractive retirement communities. Amongst the support needed

for these communities, the provision of adequate consumer

37

education and advice should not be ignored. Among other

factors influencing knowledge of consumer entitlements the most

important would seem to be employment status. Knowledge of

particular legislation such as credit contracts was linked to

self-employed status while full-time homemakers were more

knowledgeable concerning some of the relevant scenarios that

respondents were asked to judge. Neither of these is

indicative of any particular characteristic of a rural life

that would support the assumptions made by consumer

policymakers that Larsen reported in 1996. Those assumptions

were based on a stereotype of rural consumers as a self-

employed farmer and family who were astute and knowledgeable at

managing their affairs. This is an obvious oversimplification

of the rural community and in any case it is disconnected from

the pressures on essential services that nearly all respondents

in our survey rated as the most critical issue for them.

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