Laurie Ferguson (Reid, Australian Labor Party, Shadow Minister for Consumer Affairs) Share this | Link to this | Hansard source

Graeme Samuel, ACCC chairman, has pointed out that the Trade Practices Act provides a framework for effective industry regulation. However, he also argues that while government provides a solid regulatory foundation business should also have the opportunity to raise the bar of corporate behaviour over and above the black-letter law through a process of coregulation, meeting widespread community standards and expectations. Similarly, the Corporations Act provides a sound foundation for the provision of either traditional command and control regulation or the more common system of coregulation derived from principles based legislation.

The ACCC’s current preferred approach to regulation represents a move away from the self-regulatory models to a coregulatory approach to industry codes. This approach is viewed by the ACCC as being a ‘supported form of self-regulation’. This support will be in the form of providing advice and endorsement of an effective industry code and a framework to monitor ongoing compliance with the code. I do not discount the need to reduce regulation. Certainly we have witnessed an exponential growth in regulation. However, often this has been due to the increasing complexity of products and services on offer. The challenge that we ought to consider is not how to reduce regulation as an unchallengeable, infallible doctrine but rather what is its best combination.

Consumer groups have also supported the coregulation model. This model is essentially regulation with a regulatory hook attached to it, such as government licensing or broader principles based legislation. According to the joint consumer submission to the Taskforce on Industry Self-Regulation in 2001:

... self-regulation by industry has been shown to require a regulatory hook, thereby becoming co-regulation. Examples of such a ‘regulatory hook’ include membership requirements pursuant to legislation or licence conditions required by industry regulators to ensure they have the capacity to enforce standards where necessary against recalcitrant members of the industry. Thus the remainder of this submission will concentrate on models for co-regulation, on the basis that the submitting organisations are aware of no successful model of self-regulation in consumer markets in Australia.

Functioning, efficient, self-regulatory schemes may promote good practice and target specific problems within industries, impose lower business compliance costs and offer quick, low-cost dispute resolution. Effective self-regulation can also avoid the often overly prescriptive nature of regulation and allow industry the flexibility to provide greater choice for consumers and to be more responsive to changing consumer expectations. Indeed, the recently implemented amendment to the Corporations Act takes the practical form of principles as opposed to distinct black-letter prescriptions which may be cumbersome and unable to keep up with the pace of industry change.

With these points in mind, regulation needs to be considered as a means to an end. Self-regulation ought not be imposed as a normative policy posture to be pursued regardless of needs. I note the further critical point that, first and foremost, regulation underpins markets. Contract law provides certainty for market participants. Markets, such as those in electricity, are entirely constituted by regulation. Secondly, where markets fail, appropriate regulations provide essential safeguards needed to protect vulnerable consumers and maintain consumer confidence in the fairness and security of the markets.

The general insurance industry provides us with a good example of an effective coregulatory structure. Late last year my office was visited by representatives of the Insurance Council of Australia to highlight to me the benefits deriving from the recent review of the general insurance industry code of practice. I am pleased to recognise the work of the insurance industry and the efforts of the consumer movement in assembling a highly fastidious and well-enforced code. It promotes consumer and industry interests. Indeed, in looking at the code and the manner in which it was formulated, it becomes clear that in a coregulatory environment neither industry nor consumer groups can afford to take an adversarial approach to promoting good public policy. The self-regulation task force would be well served to take a closer look at the manner in which coregulatory methods have worked and pay less attention to those elements which seek to do away with regulation altogether.

The alternative reality is a system that lacks public confidence and opens the options for exploitation. The government itself has had the obvious experience in the migration agents market, a system of dogmatic approaches we saw over many years where the industry could supposedly be trusted to look after itself. Despite assurances from the ministers in the current government that that was the way to go, in recent years we have seen a significant backdown and the need for coregulation in that field to be maintained.