John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Hansard source

Though the substance of the National Measurement Amendment Bill 2008 may appear dry and difficult to digest, it deals with significant reforms that are, without question, in the public interest. Trade measurement involves the exchange of goods at a price determined by volume, weight or some other type of measurement. Australia’s trade measurement system, which this bill seeks to reform, has been described comprehensively by Robert McEntyre in a speech entitled ‘Australia’s technical infrastructure: its value and importance to trade’ as:

… the collection of activities, rules, principles and concepts that establishes, maintains and gives authority, traceability and confidence to the measurements, quantities … and qualities … of a nations products.

In simple terms, a robust trade measurement system is needed to ensure instruments that are used to measure the weight, quantity or quality of traded goods are accurate enough to give fair results to buyers and sellers. If left to their own devices, it would not come as any surprise if a seller’s definition of a kilogram was somewhat lighter than a buyer’s definition of a kilogram. We often take for granted the accuracy of measurements coming from scales in supermarkets, pumps at petrol stations or indeed liquor dispensers at the local pub or club. Yet customers need to be assured that, when packaging states that its contents are a specific weight, volume or quality, it is an accurate statement of the actual contents. We accept that 30 litres of petrol actually is 30 litres of petrol because of our trust in Australia’s system of measurements.

There can be no doubt that, while legal metrology and Australia’s trade measurement system may not always be known or understood by the population at large, they impact on all Australians in their day-to-day lives. With Australia’s trade measurement system underpinning much of the production and provision of commercial goods and services, to the tune of more than $400 billion a year, there is an ongoing need to ensure our systems are uniform, simple and relevant. Australia’s trade measurement system has undergone some significant changes in the past 20 years. Our three former legal metrology organisations—the National Measurement Laboratory, the National Standards Commission and the Australian Government Analytical Laboratories—have all come together to form a single national metrology body known as the National Measurement Institute.

In 1990, most states and territories agreed to enact and maintain separate but uniform trade measurement systems according to the legislative model set out in the uniform trade measurement legislation. Among other measures, the uniform legislation controls the approval and use of measuring instruments in trade, the packaging and marking of prepackaged articles, the licensing of measuring instrument servicing persons, and the powers of inspectors and sanctions.

Despite these changes and the outward appearance of standardisation, there has been waning regulatory oversight over the consistency of processes involved in Australia’s trade measurement system. As far back as 1995, the Kean inquiry into Australia’s standards and conformance infrastructure noted a decline in the trade measurement system and the lack of uniform implementation of trade measurement legislation. These problems were compounded over the course of the next 13 years in light of inconsistent changes to legislation at different times in different jurisdictions. The resulting divergence in fees, licensing schemes and legislative interpretation across jurisdictions has clearly impeded economic activity and created inefficiencies. One need only think about the impact on retailers’ selling methods when they operate in different states with different packaging requirements or the impact on the 800 firms that repair and verify measuring instruments who have to deal with differing licensing criteria, fees and reporting requirements.

It should not take seven or eight regimes to ensure a level playing field for transactions based on measurement. That nothing much has changed for the past decade has only served to undermine the very transparency and confidence trade measurement systems are designed to promote. It is absurd that companies operating nationally in a country like ours, with a population of 21 million, should face more regulatory obstacles in trade measurement than those in the United States, with its population of 300 million. Replacing eight state and territory based systems with one national system is the logical approach. It is an approach that has long been logical to the industry also. That much was confirmed by the ‘Review of the national trade measurement system: discussion paper’, released in June 2006. It found, inter alia:

… industry’s choice of options are national legislation; consistent interpretation and application of legislation; and a single licensing system for servicing licensees.

It is an approach which the review team itself concluded was logical. Yet it is an approach that should have been met with more vigour by the Howard government.

The National Measurement Amendment Bill 2008 introduces a new national trade measurement system for Australia by replacing the current fragmented situation across each state and territory. The bill inserts general trade measurement provisions into the act, including (1) provisions dealing with the accuracy and reliability of trade measuring instruments, (2) provisions to ensure prepackaged articles contain the stated quantities, (3) the appointment of inspectors and details of their powers and (4) licensing requirements for those involved in verifying and repairing measuring instruments.

A trade measurement system administered by the Commonwealth will also be better placed to deal swiftly with the many challenges presented by new measurement technologies. Technology has been advancing rapidly in many areas, including automation, software and measurement instrumentation. Measuring instruments are also changing in this new age of technology with, for example, smart electricity meters being rolled out in many countries. I have no doubt there will be future changes and corresponding regulatory impacts in physical, chemical and biological measurements.

The benefits of the eradication of unnecessary costs are clear for businesses that operate across borders. The Productivity Commission has estimated the cost of complying with Australia’s disparate business regulations, such as trade measurement systems, to be in the order of $40 billion. It further estimates that reforming business regulation could add up to $16 billion a year to our gross domestic product. So there can be no doubt that the crippling regulatory burden faced by many Australian businesses is a dead weight on our economy.

It should come as no surprise that the Council of Australian Governments, COAG, has on more than one occasion sought to harmonise business laws across each state or create a single layer of Commonwealth regulation. Yet regulatory reform through COAG under the previous government was sporadic at best. On countless occasions we read of reforms being talked about, but nothing happened. We read of reforms stalling or being delayed. Countless concerns were raised during the Howard government’s tenure that there was a gap between reform rhetoric and reform implementation in the context of regulatory hot spots.

Trade measurement was identified in 2006 by COAG as one of the regulatory hot spots in need of urgent regulatory reform. The reformist zeal of the pre-2008 COAG is perhaps best described by Mike Steketee in an article published in the Australian on 28 October 2006 when he said:

… the co-operation that is supposed to be the hallmark of COAG is looking more and more like coagulation.

In stark contrast, the Rudd government has rolled up its sleeves on this and has already achieved real outcomes on cooperative federalism. Take, for example, the Council of Australian Governments’ meeting communique dated 26 March 2008, which finally delivered the breakthrough on trade measurement—of which this bill is a direct product. That same communique stated:

The COAG reform agenda is underpinned by a common commitment to clear goals, genuine partnership and the governance and funding arrangements needed to deliver real reform. A fresh spirit of goodwill has delivered breakthrough agreements in areas unresolved by COAG for too long.

Rather than turbocharging the COAG process to turn reform rhetoric into outcomes, the Howard government became complacent and chose to rely on the commodities boom to steer it through trouble while playing the blame game with the states.

This bill is a step in the right direction not only for national economic growth but for the creation of a seamless economy in which companies can operate across jurisdictions without facing inconsistent laws and regulations. The more we do to create a seamless economy, the more it will help our companies compete domestically and internationally. An efficient trade measurement system is also essential for the international competitiveness of our exporters. Accurate, reliable and consistent measurements can boost international consumer confidence in our goods and, in turn, international trade and commerce. A national system may, for example, make it easier for Australia to enter into mutual recognition arrangements with other nations on trade measurement matters. These arrangements allow Australian exporters to have their products tested, measured or certified in Australia for compliance with the requirements of importing countries. Such arrangements are effective in reducing the time and cost involved in getting goods to international markets.

The importance of legal metrology to exporters cannot be overstated. I again quote from Robert McEntyre’s address to the Queensland Studies Authority Asia Pacific Forum. He stated:

Desired outcomes of an effective Australian technical infrastructure include:

…            …            …

• Increased competitiveness, market share, innovation and lower operating costs for Australian industries and companies, through optimising trading environments as a result of removing technical barriers to trade.

An example is the food sector, where the measurement of pesticide residues and chemical and microbiological contaminants can be technical barriers to trade. Ongoing progress in implementing efficient measurement systems will only assist the Australian food export industry. The importance of quality measurements in trade can also be evident in assessments of the protein content of grain or the sugar content of cane sugar.

As we work towards reducing global tariffs and opening international markets, ongoing reforms to technical measures and procedures will assume even greater importance. Market access is simply not enough. Our exporters must be afforded every opportunity to export their products quickly and cost-effectively. At the heart of this bill lies another significant change which will ensure this is the case. The bill introduces an option for manufacturers to use, voluntarily, an average quantity system rather than the current minimum quantity system. Under the minimum quantity system, an offence is committed where a tested product shows a shortfall of the product in the package. With most filling and packaging processes automated, it is almost impossible to meet this standard in a production run—forcing packers to overfill packages to avoid an offence. The average quantity system allows packers to use a statistical measure that a batch of goods would be, on average, within statistical normal distribution. This measure increases the efficiency of production while protecting consumers.

It is important to note, for the sake of our exporters, that the average quantity system has been adopted by our major trading partners, including Canada, China, the European Union, Japan, the United States and New Zealand. I also note that the International Organisation of Legal Metrology—an intergovernmental treaty organisation established to promote the global harmonisation of legal metrology—has recommended the adoption of the average quantity system for international trade in prepacked goods. Given prepacked goods form the bulk of international trade and the importance of the International Organisation of Legal Metrology’s recommendations to underpinning international trade, the amendments in this bill are both prudent and timely. The adoption of the average quantity system will enable our exporters to compete on a more equitable basis with international traders now and in the future.

I note that in his contribution to this debate the member for Groom, who is the shadow minister for industry and resources and also has an abiding interest in trade matters, raised concerns that it is still not clear that the national trade measurement system will have a significant net positive value. It is prudent for me to quote a section of the final report into the review of national arrangements for administering trade measurement in Australia which deals adequately with such concerns as raised by my friend the member for Groom. It states:

Direct financial benefits to industry have proved difficult to quantify, but productivity benefits have been clearly identified and would justify the additional investment on the part of the Australian Government … The cost of implementing national legislation and administration of the trade measurement system is insignificant in comparison with its importance to the Australian economy.

I conclude on that salient point and commend this bill to the House.

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