Review of the Australian Consumer Product Safety System Discussion Paper

Chapter 4 - Options for Reform of Australia's Consumer Product Safety System

The goal of Australia’s consumer product safety system is to minimise the harm caused to Australian consumers from unsafe products in a way which best promotes the overall welfare of the Australian community.

In the main, Australia’s consumer product safety system seeks to achieve this goal through the efforts of responsible businesses and informed consumers. Where this proves inadequate, Governments at both the Australian and State and Territory levels have a range of legislative powers that are designed to protect consumers from unsafe products.

The current system relies too heavily on governments identifying and reacting to safety hazards

The system of government regulation can be improved in a number of areas, which were identified in Chapter 2 of this paper. In particular, the current legislative framework requires governments to identify and react to safety hazards across the large range of consumer products available on the market. This can lead to delays in addressing product safety problems. In addition, difficulties are created by the fragmentation of product safety regulation amongst the different jurisdictions in Australia, accompanied by a lack of uniformity in product safety legislation and its administration.

This Chapter outlines a series of options for reforming Australia’s consumer product safety regulatory system, which seek to address the areas for improvement identified in Chapter 2. The reform options draw upon the regulatory approaches utilised in other countries that are discussed in Chapter 3. They are also organised against the five objectives of Australia’s consumer product safety system introduced in Chapter 1. However, the fourth objective, which concerns consumer redress and compensation, is not addressed in this Chapter, as issues of access to redress and compensation are not confined to consumer product safety and have broad implications that lie outside the scope of this paper.

Objective 1 — Safe products and informed consumers

The principal objective of Australia’s consumer product safety system is to ensure that products which reach the market are safe and that consumers receive sufficient information about their safe use.

The current system seeks to achieve this objective through government action in the form of mandatory safety and information standards, product bans, warning notices and consumer education, as well as through the efforts of businesses. The latter include the design of voluntary standards and industry codes and the investment by individual businesses in quality assurance and providing consumers with safety information.

If government action is required, the current system requires governments to identify and regulate each specific product hazard. The ability of governments to do this is restricted by resource limitations and the substantial time and effort required to implement, review and enforce many government regulations. The capacity of the system to provide comprehensive and timely protection from unsafe products is also affected by the lack of clarity surrounding the legislative coverage of services and second-hand goods and restrictions on the ability to ban products under the TPA which are unsafe as the result of foreseeable misuse.

A number of options for addressing these concerns are outlined below.

General safety provision

One option for reform of Australia’s consumer product safety regulatory system would be the introduction of a General Safety Provision (GSP). This would be similar to the general safety requirement currently in force throughout the EU, including the UK, and which Canada proposes to introduce as part of its current legislative reform programme. The EU and Canadian provisions are discussed in Chapter 3 of this paper.

By placing greater responsibility on businesses to ensure that only safe products are placed on the market, a GSP would seek to address the reactive nature of the current regulatory system under which governments deal with product safety hazards as they come to the attention of regulators. Moreover, when potential problems are identified, a GSP could allow governments to take more effective precautionary action to protect consumers than is now the case. Governments could act once a product is determined to be unsafe, regardless of whether the product had yet caused injury.

A GSP may involve a range of other obligations, such as requirements for businesses to: provide consumers with information on product risks; monitor the ongoing safety of products; take corrective action in the event that a product proves unsafe; and notify regulators of product safety problems and the action the business has taken to correct them.

Such ‘ancillary obligations’ can support the efforts of governments to address other objectives of the consumer product safety system, including ensuring that unsafe products are detected, reported and removed from the market. They are discussed more fully below, alongside further reform options that seek to achieve these other objectives.

As the discussion in Chapter 3 indicates, a GSP can be framed in a variety of ways which will influence its effectiveness in protecting consumers and its impact on businesses. A number of issues would therefore need to be addressed were a GSP to be introduced in Australia. These issues are discussed below, along with the potential benefits and challenges from introducing a GSP.

Scope of a GSP

Under Australia’s current regulatory system, governments expend significant resources on mandatory standards which cover a small proportion of the consumer products on the market. One of the chief advantages of a GSP is that it can provide uniform and comprehensive cover of a wide range of consumer products.

This advantage is diminished if a significant number of products are excluded from the operation of a GSP. There may, however, be some product categories which should be excluded or subject to a distinct regulatory regime for reasons of public policy.

Options for reforming the regulatory treatment of services and second-hand goods are discussed below. In framing a GSP for Australia, decisions would have to be made as to whether and to what extent services and second-hands goods would be subject to the GSP.

For a GSP to operate smoothly, it would be important for its scope to be clear and well-defined.

Definition of safety

The standard of safety to which businesses would be held is a key issue in framing a GSP

The standard of safety to which businesses would be held under a GSP would be central to its effectiveness. While this paper does not propose a specific standard, a number of factors should be considered in establishing one. These include:

• the level and type of risk to the consumer that is deemed to be acceptable;
• whether the standard refers to the ‘reasonable expectations’ of consumers with regards to product safety;
• whether the standard refers to the average consumer or if the expectations of particular types of consumers, such as children and the elderly, are referred to;
• whether the standard refers only to defects in the product itself or if foreseeable misuse is taken into account;
• whether the information supplied with the product, such as labelling, warnings and instructions, is considered in determining the risk faced by the consumer; and
• the evidence which businesses could offer to demonstrate compliance with the safety requirement. This evidence could include compliance with mandatory standards, Australian or international voluntary standards, or standards applicable to similar products of comparable risk. A further issue would be the weight attached to each of these forms of evidence. While some could represent an absolute defence against a breach of the GSP, others could give rise to a rebuttable presumption of compliance or simply be factors taken into consideration in determining compliance.

Parties subject to a GSP

A further major consideration in framing a GSP is the extent to which obligations should be imposed on businesses throughout the product supply chain, beyond the original manufacturer or importer of the product.

Placing requirements on other categories of businesses such as wholesalers, distributors and retailers could further enhance the safety of consumer products through ensuring greater compliance with the GSP. However, care would need to be taken to ensure that the level and nature of the obligations placed on such businesses reflect their role in the supply chain and are commensurate with the degree of control that they are able to exercise over the safety of the products that pass through their hands. For example, businesses could be required to cooperate with the manufacturer in transmitting safety information to the consumer or be required to not promote or market a product which a business knows does not comply with the GSP.

The need for a varied approach in relation to second-hand goods under a GSP could depend on the level of responsibility for safety placed on retailers and their reasonable capacity to assess a product, relative to the design responsibility of manufacturers.

Potential benefits of a GSP

The introduction of a GSP has the potential to substantially enhance the ability of Australia’s consumer product safety system to prevent unsafe products from reaching the market and ensure that consumers receive adequate product safety information.

The general nature of the obligation on businesses should reduce or eliminate current gaps and inconsistencies in the regulatory treatment of consumer products. Depending on the framing of the standard of safety, a GSP could cover products which are dangerous due to foreseeable misuse. This could allow the Australian Government to protect consumers through product bans or compulsory recalls in cases where this is not currently possible. Overall, a GSP could allow governments to take more effective precautionary action to protect consumers.

The introduction of a GSP, particularly one under which compliance with voluntary standards is taken into consideration, could reduce the need to create new mandatory standards. This could reduce pressure on regulatory resources. Countering this, significant resources may be involved in data gathering, information assessment, and facilitation of voluntary standards under a GSP. Ultimately it is unclear whether a GSP will reduce pressures on regulatory resources.

The introduction of a GSP, accompanied by a reduction in reliance on mandatory standards, may provide businesses with greater flexibility in the delivery of safe products to consumers and result in fewer impediments to product innovation. This is because a GSP would focus on the desired safety outcome for consumers, rather than on the specific means of achieving a safe product.

Potential challenges in introducing a GSP

A GSP may result in some initial uncertainty for businesses

Businesses may be uncertain about the precise application of a GSP. This uncertainty could relate to the interpretation of the safety standard in the GSP or to the application of the GSP to individual businesses or products. Such uncertainty, combined with the broad coverage of a GSP, may increase the costs to businesses from complying with government product safety regulation. Uncertainty may also encourage businesses, at least initially, to stay within existing standards in the design of new products which could restrict product innovation.

However, it is important to note that businesses must already address uncertainty relating to their potential exposure to claims under the product liability provisions of the TPA. In addition, responsible businesses go to significant lengths to ensure the safety of the products they market and would be likely to comply with any safety standard established by a GSP.

Depending on the status of voluntary standards under a GSP, businesses may seek to ameliorate uncertainty arising from a GSP by encouraging the establishment of voluntary standards for products not currently covered by a mandatory or voluntary standard. It may also be necessary for governments to supplement a GSP with guidelines covering aspects of its implementation, as is currently occurring in the EU.⁷

The broad coverage of a GSP may also give rise to pressures on governments to act in a wide range of circumstances to address alleged breaches of the general safety requirement. This would require the development of clear policies on the appropriate grounds for government action.

Other reform options

In addition to a GSP, further options have been identified which seek to enhance the ability of Australia’s regulatory system to ensure that consumer products placed on the market are safe and that consumers receive sufficient information about their safe use.

While some of the options outlined below have been discussed in the context of a GSP, they are presented here as individual modifications to Australia’s current consumer product safety regulatory system.

Revision of the definition of unsafe goods

A key issue is the definition of ‘unsafe goods’

Currently, the provisions in the TPA which allow the Minister to ban or compulsorily recall consumer goods permit action in cases where the goods ‘will or may cause injury’. The effect of this restriction is that the Australian Government can ban or recall goods that are defective, but not those which are unsafe as a result of foreseeable misuse.

Consideration could be given to introducing more flexible wording in the TPA, to permit the Australian Government to ban or recall products in such circumstances. For example, the UK GPSR defines a ‘dangerous product’ as ‘any product other than a safe product’.

These changes may, however, create pressure on the Australian Government to act in relation to a large number of products generally considered safe when used properly. This could increase the potential for unnecessary intervention in the market, as the decision to intervene would become more subjective. This could result in significant uncertainty for businesses.

However, some other jurisdictions, which are not subject to the restriction faced by the Australian Government, have reported that the power to ban or recall products subject to misuse has not led to numerous unwarranted requests for them to do so. Rather, it has been suggested that the power provides an option that can be potentially useful where a product is normally safe but where the environment generates a capacity for its misuse.

An alternative approach may be for governments to utilise mandatory product information standards to provide consumers with more information about the foreseeable risks relating to a product and its use.

Coverage of services

While some State Fair Trading Acts include consumer safety provisions relating to services, this is not the case for all jurisdictions. In particular, the TPA product safety provisions do not cover services.

Amending the product safety provisions of the TPA and relevant State and Territory laws to cover services could increase the protection of consumers by allowing all governments to ban certain services considered unsafe and to introduce safety and information standards designed to ameliorate the dangers inherent in the provision of other services. A particular benefit would be realised in relation to services involved with potentially dangerous products. For example, in the effort to prevent strangulation through blind cords it is understood that the installation of the blind cord is as critical to the safety of a child as the product design.

It can, however, be argued that consumers currently receive protection in respect of services under the common law and other legislative provisions. For example, section 74(i) of the TPA provides consumers with an implied warranty that services will be rendered with due care and skill.

The benefits of services being subject to the TPA product safety provisions may not be large

None of the States whose consumer product safety legislation covers services have yet introduced safety or information standards for any services. Moreover, amending product safety legislation to cover services would significantly extend the scope of potential government regulatory activity and may create additional uncertainty for businesses. If the new powers were used extensively, they could give rise to substantial costs for both businesses and regulators. This could be addressed through introducing limits to the application of any change in the legislative coverage of services.

Coverage of second-hand goods

In all jurisdictions, consumer product safety legislation is silent on whether second-hand goods are covered by the legislation. Despite this, regulators do apply product safety provisions to second-hand goods when they perceive that a second-hand good is unsafe. Such action reduces the threat of consumer injury, but tends to be applied in an ad-hoc manner, resulting in inconsistencies between jurisdictions. Most sellers of second-hand goods are individuals or unincorporated entities and therefore not subject to the TPA.

Safety issues related to second-hand goods are extremely varied and need to be applied across a range of different products, sellers and selling environments. This raises a number of issues, in particular whether it is reasonable for product safety legislation to apply to individuals (who sell second-hand products through garage sales, fetes and the like) in the same way that it is applied to professional second-hand dealers. Other issues include whether some second-hand goods should be exempt from product safety legislation and whether such legislation should apply if the good was regarded as safe when first acquired, regardless of subsequent changes to product safety laws or standards.

Product safety guidelines could be developed in relation to second-hand goods

These issues, coupled with the discretionary application of product safety legislation, create uncertainty for sellers of second-hand goods about their responsibilities under the law. One way of addressing this may be for all jurisdictions in Australia to develop, and agree on, a general policy statement concerning the treatment of second-hand goods which clarifies the responsibilities of sellers, while allowing regulators to continue to deal with such goods on a case-by-case basis.

An alternative would be to amend product safety legislation to specifically provide for second-hand goods. This approach would allow the application of product safety regulation, such as mandatory standards or (potentially) a GSP, to be expressed in relation to second-hand goods with greater precision. However, such amendments may prove to be excessively rigid or too complex to apply, and second-hand goods may be more appropriately dealt with on a case-by-case basis.

Improved product safety information

Governments can assist businesses to deliver safe products to consumers and help consumers use products in a safe manner through the provision of relevant information. Such information could be delivered in a variety of ways, two of which are discussed below.

One approach could be for governments to develop a ‘one-stop shop’ advice service, which would seek to provide businesses with information on the requirements associated with designing or importing safe products. The key staff of such a service would require strong technical skills, possibly supported by a comprehensive product safety information data base. For this reason the service could prove costly.

A second approach to information provision could be targeted advertising campaigns designed to encourage businesses and consumers to more actively pursue product safety objectives. For example, an advertising campaign with the theme of ‘safety sells’ could reinforce for businesses the link between safe products and corporate reputation and performance. Specific ‘high risk’ consumer groups such as families with young children could also be targeted, on the basis that such groups need to be especially vigilant regarding product safety risks.

To be successful an advertising campaign must convince its audience of the need to alter its behaviour, which may be difficult to achieve. In addition, a successful campaign must usually be supported by data, used both to target the campaign and to assess whether it has achieved its objective. Such data is costly to obtain and care must be taken to correctly interpret it.

Objective 2 — Detection and reporting of unsafe products

A key objective of Australia’s consumer product safety system is that any unsafe products that do reach the market are readily detected and reported to those parties, chiefly businesses and governments, who are able to take action to protect consumers.

The current system places the principal responsibility for detecting unsafe products on governments

The current system places the principal responsibility for detecting unsafe products on governments, which have limited resources. Information takes time to reach government regulators and to be interpreted by them. Moreover this information is incomplete and is not well coordinated and shared across jurisdictions. The result is that product hazards are not identified as swiftly as might otherwise occur.

A number of options for improving the operation of the current system are outlined below.

Monitoring and reporting requirements on businesses

Under the current system, businesses are required to report voluntary recalls to the Australian Government Minister responsible for consumer affairs and to some other jurisdictions. This system means that only those product hazards which give rise to a recall are reported. In addition, there is often a time lag between when a business begins to investigate a product hazard and the initiation of a recall. During this period an unsafe good may remain on the market, endangering consumers.

To provide governments with broader and more timely sources of information, businesses could be required to monitor the ongoing safety of the products they sell and report to governments about any products which: are under investigation for possible safety risks; have been associated with serious injury and death; or have been the subject of a successful product liability claim. These obligations could be introduced by themselves or form part of the ‘ancillary obligations’ on business under a GSP, as discussed previously.

This information could allow regulators to respond more promptly to product hazards, in circumstances where government intervention is warranted. It could also alert governments to safety problems with similar products.

Such an approach could, however, discourage suppliers from investigating products which may be unsafe. This is because reporting information relating to such investigations may weaken the position of a business in any potential product liability suit. In addition, once notified of a hazard, governments may arguably face a moral, and possibly legal, obligation to take further action. This obligation, coupled with the potentially large number of reports (including multiple reports concerning the same product), could require a substantial administrative infrastructure to process and assess reports and could also inhibit rapid action by governments in cases where action is necessary. The monitoring and reporting obligations may also impose additional compliance costs on businesses.

These problems could be addressed, to some extent, by providing businesses with guidelines which interpret the new reporting obligations. Such guidelines could: establish the scope of the obligations; define the level and nature of the safety concerns which should prompt a report; establish circumstances when reporting is not required; list the information to be included in the report; establish procedures to minimise multiple reports concerning the same product; and specify the follow-up action that is required of regulators.

Early warning information systems

A second option for improving the speed with which regulators receive information on product hazards is the introduction of an early warning information system. Such a system would assist in detecting trends in injuries at an early stage, encouraging investigation and action by regulators.

Early warning systems need to capture the relationship between product safety risks and injuries

An early warning system would be relatively expensive to establish and operate unless relevant information is already available. However, even if available the data would need to be developed in a way that accurately captured the relationship between product safety risks and injuries. The data generated by the system would need to be interpreted, requiring the exercise of subjective judgment and possibly resulting in governments taking unwarranted regulatory action.

In addition, the data from the system may be incomplete, reflecting its source. For example, a system that is based on emergency room admissions would focus on severe injuries but would not represent all product related injuries. Such data would also not cover all deaths, since when a person is killed at the scene of an accident they are usually not taken to a hospital emergency room.

Linking product safety information systems

As discussed in Chapter 2, the main methods by which governments currently receive information on product hazards are from analysing consumer complaints, information exchanges with other jurisdictions and through the media. There is, however, no efficient mechanism for quickly disseminating such information amongst regulators in all jurisdictions and to other relevant parties.

This problem could be addressed through a centralised electronic data base or central co-ordinating body established to ensure that complaint data as well as other important product safety information is available to relevant parties. There are, however, a number of challenges in establishing an effective detection and monitoring system based on complaint data. In particular, the information in the system must be presented in a consistent and useful form. Guidelines would need to be established to: define the obligations on regulators to provide data for the system; establish criteria for determining when reporting is not required; specify the form and content of the information to be reported; and identify whether any parties need to undertake follow-up action.

Such a system would require significant resources to be spent on staff training and continued surveillance to ensure the information in the system remains current and relevant.

Government and industry funding of product safety research

Effective government regulation of product safety depends on adequate information being available to decision-makers

Effective government regulation of consumer product safety depends on the quality and breadth of information available to decision-makers. Currently, comprehensive national statistics on product-related injuries and deaths are not collected in Australia. This makes it difficult to establish the extent of the harm caused to consumers by unsafe products, the cost of such injuries and the breakdown of injuries between those caused by defective products and those caused by product misuse. It is also difficult to determine which products pose the greatest risk to consumers, which consumer groups face the greatest risk of injury, and the factors that contribute most to significant harm.

Data of this type is required by governments in deciding on the level of resources to devote to consumer product safety regulation and in determining which product safety problems should be targeted by regulation.

This lack of data could be addressed through research, supported by governments and industry, into the cost of product safety injuries and the causes of such injuries. If this data were maintained over time, governments may be better able to assess the success of product safety regulations and be able to target their regulatory efforts more effectively. Such data could also be used to support information and advertising campaigns, as discussed above.

Objective 3 — Removing unsafe products from the market

Once an unsafe product is detected on the market, action must be taken to attempt to recall the stocks of that product in the hands of retailers and consumers. Most product recalls are undertaken voluntarily by responsible businesses. However, the Australian Government and some State and Territory Governments also have the power to order compulsory product recalls.

The ability to remove unsafe products which have already reached the market complements the powers that seek to prevent unsafe goods from entering the market which are discussed above under Objective 1. Such powers include product bans, safety and information standards and warning notices.

Mandatory recalls do not occur until governments detect that a product is unsafe

The principal criticism of the current compulsory recall process is that it may be difficult for governments to exercise these powers in a timely manner. This is because the system relies on governments, who are not participants in the market, to become aware of an unsafe product before its recall can be ordered.

The ability of the Australian Government to act is further limited by the requirement in the TPA that a recall can only be ordered if a good is currently banned, breaches an existing mandatory standard, or if it ‘will or may cause injury’. This latter restriction

means that the Australian Government can act against a good if it is defective, but not if it is unsafe as the result of foreseeable misuse. The option of introducing more flexible wording into the TPA is discussed above under Objective 1.

A further limitation of the current system is that the Australian Government does not formally possess specific powers to audit the effectiveness of voluntary recalls of which it is notified under the TPA. Knowledge of the manner in which a voluntary recall is being conducted can assist in determining whether a compulsory recall is required.

Australia’s current system could be strengthened by introducing a requirement for businesses to recall products which they find to be unsafe. This obligation could be accompanied by a power for governments to be able to audit and assess those recalls and other voluntary recalls. The recall obligation could be introduced by itself or form part of the ‘ancillary obligations’ on businesses under a GSP.

Recall obligation

The greatest challenge in introducing a recall obligation on businesses would be in establishing the circumstances in which a business would be required to recall a product. As a product recall can be very costly to undertake, it would be important to clearly define the extent and nature of the risk to consumers that should prompt a recall.

The potentially high cost of undertaking a recall may also reduce the incentive for businesses to respond swiftly to a perceived safety risk. Instead, businesses may prefer to conduct a full and comprehensive investigation before declaring a product to be unsafe. Moreover, a business may not agree that a product is unsafe or may accept that there is a safety problem but be unable to determine whether this is due to a defect in the product or to its misuse.

Recall audit power

A recall audit power could improve the ability of governments to assess the effectiveness of recalls undertaken by businesses. However, such a power may also inhibit the flexibility of businesses to conduct recalls in the most cost-effective manner available. Whether this occurs would depend on the way in which the audit power is exercised and on the nature of the relationship between businesses and regulators during the recall process.

A recall audit power may discourage businesses from voluntary recalls

If the audit power were to be applied to voluntary product recalls, the administrative processes involved could make such recalls more complex and may discourage businesses from undertaking them.

Finally, a recall audit power may place a significant burden on government regulatory resources and raise legal issues for governments. For example, governments may face pressure in circumstances where a poorly conducted recall has failed to protect consumers and the recall has not been monitored, even though regulators have had the power to do so.

Objective 5 — Efficient markets and efficient use of government resources

In seeking to protect consumers from the harm caused by unsafe products, governments must consider the impact of their regulatory and other actions on the overall welfare of the Australian community. Governments should seek to ensure that their actions do not interfere unnecessarily with trade in consumer products and that government regulatory resources are used as efficiently as possible.

A significant problem is the lack of consistency in product safety legislation, administration and enforcement across jurisdictions

A significant problem in this regard is the lack of consistency in product safety legislation, administration and enforcement amongst jurisdictions in Australia. As discussed in Chapter 2, this may mean that businesses face additional compliance costs and barriers to supplying products throughout Australia. The involvement of multiple jurisdictions in regulating product safety can also lead to duplication of effort and inefficient use of limited government resources.

Harmonisation of legislation, administration and enforcement would improve governments’ collective ability to address problems in the marketplace. Product hazards could be identified more readily and greater collaboration in decision making should lead to problems being handled more effectively.

Several options for improving the efficiency of Australia’s consumer product regulatory system are outlined below.

Harmonisation of product safety legislation

Greater consistency of product safety laws across jurisdictions could be achieved in a number of ways. Four approaches, which are considered below, are a ‘single law and regulator’, ‘template legislation’, ‘uniform legislation’, and ‘core consistent provisions’.

Single law and regulator

The Commonwealth, with the agreement of the States and Territories, could enact a single product safety law and establish a single product safety regulator to enforce that law. The Commonwealth’s constitutional powers are limited, for example, to corporations. However, it would be possible for the Commonwealth to legislate product safety laws with respect to corporations with the States and Territories then applying that law more generally in their own jurisdictions, while also conferring powers and functions on the single Commonwealth regulator. A framework agreement could determine processes for modifying the law and administrative arrangements for the regulator. A similar arrangement has been put in place in relation to the competition provisions of the TPA.

Template legislation

Template legislation involves all jurisdictions developing and adopting identical legislation. There is also an agreement under which amendments made to the legislation in a designated jurisdiction immediately apply elsewhere.

For example, the Uniform Consumer Credit Code has been adopted on the basis of ‘template legislation’. Amendments to the Code in the Queensland Parliament automatically apply in the other States and Territories. However, under the agreement, amendments to the Queensland legislation can only be made by approval of a two-thirds majority of participating jurisdictions.

Uniform legislation

National schemes of legislation, also known as uniform legislation, can be agreed between the Australian, State and Territory executive governments and then presented for passage to their respective parliaments. Each jurisdiction enacts identical legislation, although ongoing cooperation is required to maintain legislative consistency over time. If cooperation does not continue, then an amendment made by one jurisdiction may not automatically be adopted by the others. The uniform legislation model has been used in Australia’s Uniform Trade Measurement Legislation.

Core consistent provisions

The core consistent provisions approach requires all jurisdictions to agree to enact consistent essential (core) legislative provisions. In the case of product safety legislation, core consistent provisions could be enacted in relation to product bans and recalls to ensure that such actions are taken in a consistent manner across all jurisdictions. This approach relies on ongoing cooperation to ensure that the essential provisions remain consistent.

Comparison of the different models

In considering the application of these models to Australia’s consumer product safety laws it is necessary to weigh the importance of achieving legislative consistency, both initially and over time, with the needs of individual jurisdictions for legislative flexibility.

While legislative consistency is a worthwhile objective it does reduce the flexibility with which jurisdictions can amend their legislation. At times, flexibility may be necessary to support legitimate and important differences between jurisdictions. Where such differences exist in abundance, core consistent provisions may be preferred as this model only seeks consistency and agreement on key parts of the legislation. Additionally, the core consistent provisions model can be used where numerous confined local issues do not need to be addressed nationally or it is difficult to do so.

Where differences do not exist or can be negotiated away, a single law and regulator approach or the use of template legislation have several advantages over the other models in achieving legislative consistency, especially over time. Both involve an accepted process for amending the legislation, reducing the risk that inconsistencies will emerge. In the case of template legislation, amendments are also automatically and simultaneously adopted across all jurisdictions, thereby avoiding any problems associated with amendments being enacted more swiftly in one jurisdiction than another. A disadvantage of the template model is that a jurisdiction may have an amendment forced upon it when its views on change are in a minority.

Harmonisation of administration and enforcement

Aside from the single law and regulator approach achieving legislative consistency will not, however, prevent businesses from facing significant differences in administrative and enforcement practices across jurisdictions. Administration of product safety laws can vary widely between jurisdictions, even when legislative provisions are consistent. This can be the result of differences in the resources available to each jurisdiction for product safety regulation.

Consistency in administration and enforcement may be enhanced through improved coordination across jurisdictions, such as through a centralised complaints database or use of a co-ordinating committee. The operation of such a database is discussed more fully under Objective 2, in relation to the detection and reporting of unsafe products. Another approach would be for the ACCC to undertake additional enforcement activities on behalf of the States and Territories.

Decision making at the Australian Government level

Under the TPA, the Australian Government Minister responsible for consumer affairs has two main functions in relation to product safety regulation. The first is the formulation of policy which guides the development of product safety laws. The second role is the administration and management of those laws, for example in establishing mandatory standards and bans.

However, involvement by the Minister in detailed administrative issues is not consistent with the approach taken in other areas of market regulation; it is more usual that such arrangements are handled by the relevant regulator. For example, in the area of prudential regulation, the Australian Prudential Regulation Authority is responsible for determining the details of prudential standards, within the overall framework set out by relevant legislation.

The ACCC’s role could be expanded

One option for possible consideration would be to amend the TPA to provide the ACCC with powers over administrative and enforcement decisions, allowing the Minister to focus on questions of product safety policy and the appropriate legislative framework.

Decisions taken by the ACCC as a result of this shift in responsibilities could be taken alone or made subject to consultation with an advisory panel representing stakeholders, including businesses and consumers. If considered necessary, in relation to some sensitive matters, it would also be possible for decisions to be subject to the final agreement of the Minister.

In order to ensure that affected businesses have adequate opportunity to appeal decisions of the ACCC or the Minister, such decisions could ultimately be subject to appeal through either a tribunal or the court system. In the case of Ministerial decisions, this appeal process could replace the existing conference procedures under which the ACCC incongruously effectively reviews the decisions of the Minister.

The wider international context

It is important to consider the wider international context under which consumer goods are traded when considering options for reform of the product safety system. Reform should support the competitiveness of Australian businesses and the goods and services they supply.

Additionally, Australia is subject to various obligations under both multilateral and bilateral agreements. These are discussed further in Appendix A.

⁷ Further information on the operation of the EC GPSD is available at http://europa.eu.int/comm/consumers/cons_safe/prod_safe/gpsd/index_en.htm.

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