2. REVIEW OF NATIONAL SCHEME

In December 1998 the Ministerial Council on Consumer Affairs (MCCA) appointed the Centre for International Economics (CIE) to conduct a review of the National Scheme, in accordance with National Competition Policy principles.

The terms of reference for the review required CIE to:

• clarify the objectives of the National Scheme and legislation;
• identify the nature of any restrictions on competition;
• analyse the likely effect of any restrictions on competition and on the economy in general;
• assess and balance the costs and benefits of each restriction;
• consider alternative means of achieving the same result including non-legislative approaches; and
• consider whether the legislation giving effect to the National Scheme contravenes the competitive conduct rules in Part IV of the Trade Practices Act 1974 (Cth) and the Competition Codes of each jurisdiction.

As part of the review, CIE was also asked to consider the sphere of activity relevant to the objectives of the National Scheme and:

• Review existing definitions and exemptions contained in legislation to determine whether they appropriately specify that sphere of activity.
• Assess the need for the National Scheme, and in particular the need for licensing and the Travel Compensation Fund, having regard to the following Fair Trading outcomes:
  • access to appropriate information to enable informed decisions to be made by participants;
  • security of monies paid in advance for travel services;
  • supply of travel services with due care and skill;
  • appropriate post contractual protection for consumers;
  • access to rapid, inexpensive dispute resolution facilities;
  • minimal misleading, deceptive or unconscionable conduct by market participants; and
  • minimal compliance costs for business.

• Consider future strategies which might influence those regulated by the National Scheme towards improved performance against Fair Trading outcomes.
• Consider the extent to which industry self-regulation or co-regulation (industry in partnership with government) might contribute to the objectives of the National Scheme.

The review was steered by a MCCA Working Party comprised of Government representatives from each participating jurisdiction as well as the Northern Territory.

CIE undertook extensive public consultation which included the preparation and distribution of a background paper to all travel agents, meeting with all state and territory regulators, key industry bodies and other interested parties. The review was also advertised in prominent newspapers in all jurisdictions.

CIE completed its review in March 2000. Its report was presented to MCCA in July 2000 and contained three key recommendations:

1. The introduction of a competitive insurance system so that private insurers can compete with the TCF (compulsory TCF membership to be abolished).
2. Abolition of mandatory qualification and experience requirements for travel agents as a condition of licensing.
3. Retention of the present licensing framework but modified so that it is limited to a "fit and proper person" test and a check to ensure that compulsory insurance requirements are satisfied.

CIE saw the complete removal of prescriptive licensing and mandatory TCF requirements, as the preferred model in the long term.

Other recommendations made by CIE include changes to the current licence exemption threshold and removal of the Crown exemption.

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