Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

by leave—I wish report to the House on the important agreement reached between the Commonwealth and the states on 23 May 2008 in Auckland on a single national product safety regime across the country.

This is an area in which reform has been debated for years. In 2002 the Consumer Products Advisory Committee (CPAC) received a report from an officials meeting which examined the existing administrative arrangements and practice amongst jurisdictions in relation to product safety. Despite being an agenda item on the Ministerial Council on Consumer Affairs (MCCA) since August 2003 and all of the six ministerial council meetings since then, up until last year, there was no progress and no move to a national product safety law.

There are not too many things as important and vital to consumers as product safety. Consumers look to our product safety laws for effective and swift protection, enforcement and remedies against unsafe products. It is also important that we look, where possible, to reduce the compliance and red tape burden on business. These reforms address one of the 27 regulatory hot spots outlined by COAG and the Business, Regulation and Competition Working Group.

When it comes to product safety, currently, there are approximately 117 product ban orders and approximately 60 mandatory standards adopted by the federal, state and territory governments. Furthermore, only nine per cent of bans and standards currently apply in a majority (five or more) of jurisdictions. None of these bans or standards applies across all jurisdictions.

While our economic and competition laws have become increasingly national in nature in response to growing national consumer product markets, our product safety laws have failed to keep up. This is an unacceptable state of affairs in an Australian economy with sophisticated businesses and consumers in the 21st century. On 23 May, at the Ministerial Council on Consumer Affairs the Commonwealth, state and territory governments reached a landmark agreement that will see the creation of a single, national product safety law and framework.

Once the new national product safety framework is in place, finally, consumers and business will look to the national law and be covered by national permanent safety standards and bans. These reforms will provide significant cost savings for business and provide greater protection for consumers by streamlining the responsibilities of the Commonwealth and the states and territories.

Apart from a single, national product safety law, other features of the new framework will include:

• giving the Commonwealth sole responsibility for making permanent product bans and safety standards;
• joint Commonwealth-state enforcement of the national law, and;
• an interim ban power for state and territory consumer affairs ministers in the event of a localised product safety hazard.

The revised arrangements will be in place during 2010. Between now and 2010, MCCA, in conjunction with COAG, will develop the legislative and administrative changes necessary to implement the system. The revised regulatory arrangements will be underpinned by an intergovernmental agreement between all Australian jurisdictions. The IGA will set out the processes by which the product safety law can be changed and will facilitate communication between jurisdictions. The IGA will ensure that product safety regulation remains harmonised into the future.

Prior to 2010, MCCA is also making improvements within the existing regulatory arrangements, to ease the regulatory burdens on business and provide clarity to consumers. MCCA is undertaking a thorough review of existing product bans and mandatory standards, to align, to the extent possible, the bans and mandatory product safety standards that apply across jurisdictions.

Under the project, each jurisdiction, respectively, and after a thorough risk assessment, will revoke all ban orders that:

• apply in one or two jurisdictions;
• were made more than 10 years ago (and have not been reviewed in the last 10 years); and
• where a breach of that ban order has not been detected for more than 10 years.

In addition, in January 2008, the states and territories agreed, through MCCA, to mirror existing Commonwealth mandatory safety standards, as quickly as possible.

Australian consumers expect swift action to be taken to remove dangerous products from the Australian community, as soon as possible and regardless of which state or territory those hazards are first identified in. To this end, I recently announced that Ms Ruth MacKay would head up the ACCC’s new Product Safety Branch. The new product safety branch continues the consumer watchdog’s strong focus on product safety at the national level.

In the past 18 months, the ACCC enforcement of product safety standards and bans has led to approximately:

• 16 enforceable undertakings;
• four cases taken to litigation; and
• in late 2006, a prosecution resulting in record penalties of more than $800,000.

Mr Speaker, when it comes to product safety I note the comments of the shadow minister for consumer affairs. On 8 May this year he made the following comments:

Rudd is caving in to the states who will retain the existing fair trading offices. The states are protecting their own vested interests instead of helping to deliver lower prices to consumers and less red tape for business.

These comments force me to confirm to the House that the states and territories would continue to have fair trading offices under the Productivity Commission’s report into Australia’s consumer policy framework and its recommendation for a single law, multiple regulator model under a new single, generic consumer law.

The suggestion that you would just abolish state and territory fair trading offices and take over all of their functions is quite absurd. It also carries a price tag of approximately $526 million a year.

I also note that it proved impossible for the previous government to deliver this type of reform, partly because they did not have a minister for consumer affairs, which signals to consumers, businesses, as well as the states and territories, that the Commonwealth had no real concern about consumer policy. This state of affairs saw a parliamentary secretary represent the Commonwealth at MCCA and, therefore, no-one at a senior level in the government to argue for the necessary pro-consumer reforms.

The ministerial council that convened in Auckland on 23 May was indeed historic, not just because of the landmark agreement that was reached between the federal government and the states and territories on product safety, as important as that was. What was just as important was the renewed sense of optimism in taking the reform agenda forward.

I am also pleased to report that following the handing down of the Productivity Commission’s report into Australia’s consumer policy framework, the Ministerial Council on Consumer Affairs agreed on a road map towards COAG in October where Australian governments will reach an agreement on consumer policy issues ranging from consumer credit and unfair contract terms, to simplifying alternative dispute resolution arrangements, and removing business compliance costs through reforms to industry-specific consumer legislation.

The Productivity Commission estimates that its consumer policy package would provide a net gain to the community of between $1.5 billion and $4.5 billion a year in today’s dollars. The federal government does not underestimate the difficulties in reaching the goal of a single, generic consumer law; however, it is a major reform and a worthwhile one.

I would like to thank all of the state and territory ministers for their cooperation on national product safety reform. This is an agreement that will benefit both consumers and businesses alike. This is a significant breakthrough in reforming consumer protection laws in Australia and will be to the benefit of both consumers and business. I commend the national product safety reform to the House.

I ask leave of the House to move a motion to enable the member for Cowper to speak for seven minutes.

Leave granted.

I move:

That so much of standing orders be suspended as would prevent  Mr Hartsuyker speaking for a period not exceeding 7 minutes.

Question agreed to.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of Opposition Business in the House) Share this | Link to this | Hansard source

We on this side of the House welcome moves towards a single national product safety regime. We continue to have reservations about whether what it proposes goes far enough in the broader context. We trust this is only the first move towards rationalising federal and state legislation in general. There are great benefits to be drawn from rationalisation, for consumers, business and the Australian economy as a whole.

Product safety is an important issue for every consumer. We all need to have confidence that the goods we buy are safe and, if they are found not to be so, we need confidence that an efficient system exists for prompt and thorough recall. Under the current system with differing state regimes, we run the risk of confusion, with the possibility of products being declared safe in one state and unsafe in another. Clearly, with nearly all products being sold interstate and many being imported, the current state of affairs does not work to the advantage of the consumer.

The Assistant Treasurer has drawn attention to the gaps in the current system and the fact that none of the current bans or standards apply across all jurisdictions. This is clearly not satisfactory for consumers and, with many children’s products being imported, parents will, I am sure, welcome the move towards a single national regime. We look forward to examining the details of the national product safety law and its implementation. The Assistant Treasurer can rely on the support of the opposition for measures which genuinely improve the position of the consumer, be they in relation to petrol, groceries or child care. However, there are two areas of the Assistant Treasurer’s statement with which I would like to take issue.

Firstly, he noted that this measure has been on the agenda of the Ministerial Council on Consumer Affairs since 2003 without any progress. Indeed, many issues have been on the agenda of COAG and the ministerial council for some time without progress. I hope the Assistant Treasurer has also drawn to the attention of his colleagues in the state governments this sad lack of progress. It was quite clear that, during the tenure of the coalition government, it was a point of principle for the state representatives on COAG not to agree to any progress on the rationalisation of responsibility between the two levels of government, whatever the potential benefit. But, if progress on product safety represents a change of heart on the part of state governments, it would be churlish of us to do anything other than welcome it. So I hope the change of heart is permanent and I look forward to a similar announcement from government in the areas of workers compensation and occupational health and safety, for instance.

Secondly, the Assistant Treasurer referred to fair trading offices remaining in the control of the states and territories under the Productivity Commission’s recommendation for a single law, multiple regulator model. As long ago as February 2006, the Productivity Commission made it clear in its report on product safety that its preferred approach was the establishment of a single law and single regulator requiring the referral of existing state and territory powers to the Australian government. The single regulator would be the ACCC. Let us turn to volume 2, chapter 2, section 4.3 of its report on consumer policy framework issued earlier this year, to which the Assistant Treasurer referred. Under ‘Who should enforce the new generic law?’ it says:

The choice between the two options—

a single national regulator or the current approach of separate regulators in each state and territory—

is finely balanced.

The report said:

The ... advantages of a one regulator model are that it should help to:

• ensure that the intent of the single law ... was not undermined by unwarranted variations in enforcement approaches ...
• preclude wasteful duplication of regulatory effort where the same issue is needlessly pursued by more than one regulator ...
• allow for the linkages between consumer and competition policy to be reflected in all enforcement of the generic consumer law, rather than only in the ACCC’s more limited current enforcement remit in the consumer policy area.

The report goes on to say:

Further, the Commission is sceptical about the contention that a single national regulator would be intrinsically less well placed or inclined to apply the new national generic law to local issues. Under the current regime, the ACCC’s focus has sensibly been on applying the consumer provisions in the TPA to nationally significant issues. But there is no inherent reason why an appropriately tasked and resourced national regulator could not effectively apply the new law at the local level.

The report states:

... the multiple regulator model—

favoured by the Assistant Treasurer—

does have one important advantage. There are synergies ... between the role of State and Territory Fair Trading Authorities in enforcing the generic consumer law and their other regulatory roles.

But it is fair to say that the balance of advice from the Productivity Commission, in not just one but two reports, was in favour of a single regulator. Against that background, it comes as something of a surprise to read the final recommendation in this year’s report:

... for the time being ... the new national generic law should be jointly enforced by the Australian Government and the States and Territories.

I note that the commission states that a single regulator has intrinsic merit, especially in the longer term. The Assistant Treasurer has also mentioned that the price tag for taking over fair trading offices would be $526 million a year. The Productivity Commission puts the annual budget for the eight state and territory generic consumer regulators at more than $300 million:

It was put to the Commission that, based on the current experience with shifting responsibility for trade weights and measures to the national level, these transfer costs could be considerable. Such costs could be reduced through a staged process, drawing on the experiences from similar transfers that occurred in the 1990s in the corporations and financial services areas. But this does not negate the more general point that the transactions costs of the resource transfers required to ensure effective application of the new generic consumer law to local issues under a one regulator model (or to deal with constitutional issues), must be factored into the overall benefit cost calculus.

Finally:

In the Commission’s view, the ACCC would be the logical choice as the regulator for the new national generic law under a one law, one-regulator model. It has extensive experience in enforcing the TPA—on which much of the new generic law will be based—across all jurisdictions.

A reading of these two reports makes it quite clear which option the Productivity Commission preferred. It is also quite clear that the government could not wring any more concessions out of the state and so has left the job half done.

Just look at the Financial Review for 8 May in which the New South Wales Minister for Fair Trading, Linda Burney, is quoted as saying that the state offices have had to be part of the enforcement regime. (Time expired)