Back to NCP Review of the Uniform Trade Measurement Legislation Index

6. Alternative Approaches.

This section of the report involves the identification of viable alternatives to the current restriction. The alternatives to be reviewed are deregulation and modification of the current restriction.

6.1 Deregulation:

Deregulation would involve removing the restriction on the sale of non-prepacked meat from the uniform trade measurement legislation. This would leave a model similar to Western Australia, which does not include a specific restriction on the sale of non-prepacked meat in their trade measurement legislation.

The general protection for business and consumers provided by the Fair Trading Acts, the Trade Practices Act and common law obligations would apply. The relevant sections of State and Territory Fair Trading Acts are those related to misleading or deceptive conduct. These provisions may act as a deterrent against some meat sellers from engaging in misleading conduct such as displaying good quality and sized meat products and then substituting a smaller/reduced quality product upon purchase. However, the Acts would not provide protection against deceptive practices such as displaying a certain size product for a fixed price and then decreasing the mass of the product over time. The consumer protection of the Fair Trading Acts would also not operate to ensure that a minimum amount of information is provided to consumers to enable them to make a comparison and informed choice between meat products.

The impact of moving to this alternative state on each of the key stakeholders groups is described in the next three subsections. This involves identifying the type, direction (positive and negative) and magnitude of the impact.

6.1.1 Impact on Meat sellers:

Increased sales:

The impact of removing the restriction is that meat sellers would have the choice as to how they intend to sell non-prepacked meat products to consumers. The options are to continue to sell meat by reference to its mass or to sell meat per item. This would involve meat sellers making an assessment of which meat products offered for sale should be sold per item. Consultation has indicated that the majority of meat products would continue to be sold at a price per kilogram. For example, in Queensland, Victoria and the Northern Territory poultry is not interpreted to be subject to this restriction and meat products such as chicken breasts and chicken legs are sold at a price per kilogram. However, it is likely that other meat products such as sausages, lamb chops, rissoles and patties may be sold per each. If these products sell more effectively per each, meat sellers could benefit through a small increase in sales.

It is likely that more specialised meat products would be sold per each. As discussed in section 5.2, specialised meat products are not subject to the restriction and can currently be sold per each. However, uncertainty caused by inconsistent enforcement of the restriction may discourage some meat sellers from pricing per each. Removing the restriction would remove the uncertainty and may encourage more meat sellers to extend their current range of meat products. Meat sellers may find that specialised meat products sell more effectively per each and benefit through a small increase in sales.

Removal of compliance costs:

There would be a very small benefit from the removal of compliance costs. Meat sellers would continue to price and label meat, however, they would not be required to mark meat sold per each with the price per kilogram and mass. As the majority of meat would continue to be sold at a price per kilogram, meat sellers would be required to maintain a measuring instrument.

Increased competition in Queensland, Victoria and the Northern Territory:

The removal of the restriction would impact on Queensland, Victorian and Northern Territory poultry and fish sellers as it is likely that some red meat sellers would price products such as sausages, rissoles and patties and specialised meat products per each. If these products sell more effectively per each it could increase competition in these products. This would only be a small benefit, isolated to Queensland, Victoria and the Northern Territory, as meat sellers can currently sell specialised meat products per each.

Increased transaction costs:

If a meat seller determines to sell meat products by each this could lead to increased transaction costs. This is due to the fact that a price per each is a superadded stage to the basic per kilogram pricing. It requires further effort and calculation on the part of the meat seller. Meat sellers may also find it hard to convince consumers that they are providing good value for money when competitors use various pricing methods. Effective marketing could overcome this problem, however it would increase transaction costs. The increase in transaction costs would be very small.

Remove the equal trading platform:

The removal of the restriction would effectively remove the equal trading platform from which all meat sellers trade. This would impact on all meat sellers as there would no longer be a standard of selling by reference to mass, which promotes fair competition. As the peak industry association has lobbied to remove the restriction it was identified in 5.2 as providing a very small benefit. Therefore, meat sellers would face a very small negative impact from the removal of the equal trading platform.

Labelling restriction for prepacked meat:

The labelling restrictions for prepacked meat could also need to be reconsidered if this restriction was removed. There could be little justification for requiring prepacked meat to be marked at a price per kilogram if the restriction was removed. This would largely impact on supermarkets and grocery stores that prepacked meat. Consultation with one major supermarket has indicated support for the retention of the price per kilogram description, as it is an essential guide for consumers.

Competitors may engage in deceptive practices:

The restriction prevents deceptive practices that competitors may engage in to gain an unfair advantage. Such deceptive practices include displaying a certain size product for a fixed price by each and then substituting a smaller product upon purchase, or decreasing the mass of the product over time while maintaining a fixed price. Such practices not only impact on consumers, but also make it hard for meat sellers to complete fairly on an equal platform. There is limited evidence to indicate that this would be a substantial problem. However consultation has revealed that this is one of the areas of concern to consumer organisations and some meat sellers. As a result, it would be a small cost to meat sellers.

6.1.2 Impact on Consumers:

Advantage consumers who prefer to buy by `each':

The removal of the restriction would impact positively on those consumers who prefer to buy per each as it is likely that more meat products would be sold this way giving them knowledge of the cost immediately and a potentially a greater range to choose from. However, the majority of basic meat products would continue to be sold at a price per kilogram. It is likely that more meat products such as rissoles, patties and sausages may be sold per each. Therefore, the removal of the restriction would provide a small positive benefit to consumers who prefer to buy such products per each.

Increase range of meat products:

As indicated in section 6.1.1, the removal of the restriction may encourage more meat sellers to produce specialised meat products. This would give consumers a small positive benefit through the increased range of meat products.

Disadvantage consumers who prefer to buy by `$/kg':

Consumers who prefer to know the weight/price ratio would face a small negative impact as the price per kilogram description would no longer be guaranteed. The impact will be small as it is only likely to be processed meat products such as sausages, rissoles and patties, higher priced items where the portion size is harder to control and more specialised meat products sold per each. Consumers could ask meat sellers for information on a weight/price ratio for these products or could shop around for a meat seller that sells meat per kilogram. However, this would increase the transaction costs for these consumers.

Increases transaction costs:

As indicated in section 5.3, the restriction minimises transaction costs faced by consumers. If the restriction was removed, consumers would no longer be guaranteed of a standard basis for comparison between meat sellers. Some meat sellers may sell at a price per kilogram and others at a price per each. This would increase transaction costs for consumers.

It was also indicated in section 5.3 that pricing per each represents a superadded stage to the basic per kilogram pricing. It requires further effort and calculation on the part of the meat sellers and in this sense may ultimately increase transaction costs associated with the sale and purchase of meats. Other transaction costs, which may increase, are marketing costs. As a result, there is the potential for consumers to incur excess costs through purchases. Therefore, the increased transaction costs would result in a small to moderate negative cost.

Removes the indication of value for money:

Consumers may find it more difficult to determine the value for money. The scoping study found that meat sellers consulted advised that the more expensive lines sell much more readily when priced per each. This is because consumers tend to avoid such products when the price per kilogram is known. The removal of the restriction will remove the transparency of pricing and consumers will find it more difficult to assess value for money. Section 5.3 identified that there is debate regarding whether the price per kilogram description provides an indication of value for money. Therefore, this would be a very small negative cost to consumers.

6.1.3 Impact on Government:

Consultation has indicated that the removal of this restriction from the trade measurement legislation is unlikely to reduce the cost of administering the legislation significantly. This is because trade measurement officers would still be required to administer other sections of the legislation and officers would continue to visit meat sellers to check trading practices.

6.1.4 Overall Impact of Moving to a Deregulated State:

Stakeholder	Description	Size	Direction
Meat Sellers	Potential increase in sales Removes compliance costs Increases competition in Queensland Increase transaction costs Removes equal trading platform Competitors may engage in deceptive practices	small very small small very small very small small	positive positive positive negative negative negative
Consumers	Advantage consumers who prefer to buy by `each' Increase range of meat products Disadvantage consumers who prefer to buy `$/kg' Increase transaction costs Removes the indication of value for money	small small small small to moderate very small	positive positive negative negative negative
Government	Removes administration and enforcement costs	very small	positive

The impact of moving to a deregulated state on meat sellers would be a very small positive impact. Consumers would face a small to moderate negative impact, while government would face a very small positive impact. Therefore, the overall result is a small negative impact to the community by moving to a deregulated state.

6.2 Modification to the Current Restriction

This alternative would involve modifying the current restriction through the review and clarification of the definition of meat. The Review Committee agreed that the underlying policy of the restriction is that it should apply to any meat seller selling meat for ordinary human consumption. In the current meat market, this would include poultry and fish and new meats such as kangaroo. It was also agreed that the restriction was only intended to apply to meat products that have not been substantially processed. This is because labour makes up a large component of the cost as well as other foods. For example, a beef stir fry would include non-meat products such as vegetables and soy sauce. In these circumstances the weight of the product would include a substantial amount of non-meat ingredients.

Clarifying the definition of meat with regards to these two issues would mean that the restriction would more adequately meet the objectives of the legislation by creating more certainty for meat sellers.

The impacts of the restriction would be similar to the assessment in section 5.5. However the three negative impacts of innovation cost, inequity and reduction in the range of meat products would be removed.

6.2.1 Impact on Meat sellers:

Potential increase in sales:

The innovation cost would be removed because it would be clear for meat sellers that substantially processed products are not subject to the restriction. Therefore, meat sellers would be free to determine how such meat products could be priced. This may encourage more meat sellers to innovate, which could lead to increased sales of such products. This would result in a very small positive impact.

Equal playing field:

The inconsistency in enforcement in relation to poultry and fish sellers created in Queensland, Victoria and the Northern Territory would be removed. However, it appears that most basic poultry and fish products are already sold per kilogram. It will largely impact on poultry and fish products that are currently sold per each which are not substantially processed such as crumbed chicken, chicken rissoles and chicken mini roasts. The number of poultry and fish products marketed this way is small. Out of the 26 meat sellers consulted in Queensland, only 3 were selling crumbed chicken per each and 2 were selling mini roasts per each. The 26 meat sellers consulted were asked whether the extension of the restriction to poultry and fish would impact on their business. 22 meat sellers indicated that there would be no impact, one meat seller indicated that there might be a slight impact on value added products, one meat seller indicated that it would be easier if the restriction applied across the board and two meat sellers were unsure of the impact.

Lenard's Pty Ltd have indicated that extending the restriction to include poultry would have a devastating effect on their selling strategy, which is based on unit sales. For example, consumers are less likely to purchase a chicken kiev at $13.99 per kilogram as compared to $1.99 each. Lenard's Pty Ltd indicated that if all of their products are required to be sold by weight, it has the potential to destroy their business which comprise of 150 stores nationwide serving in excess of 9,000,000 customers involving total gross sales in excess of $91,000,000 in the 1999/00 year. However, it is unlikely that all of Lenard's Pty Ltd products would have to be sold at a price per kilogram as a large proportion of their products would be classified as specialised meat products. Furthermore, Lenard's Pty Ltd is currently operating in other jurisdictions where the restriction applies to poultry.

Therefore, the application of the restriction to all meat sellers in Queensland, Victoria and the Northern Territory would result in a small negative impact on poultry and fish sellers.

6.2.2 Impact on Consumers:

Increased range of products:

Clarifying the definition with regards to specialised meat products may result in more meat sellers innovating. As a result, consumers may derive a small positive benefit by being provided with a greater range of specialised meat products.

Consumers in Queensland, Victoria and the Northern Territory:

In Queensland, Victoria and the Northern Territory, consumers would derive a small positive benefit of being guaranteed of a price per kilogram when they purchase meat, including fish and poultry. However, a small proportion of these consumers may prefer to purchase fish and poultry at a price per each. These consumers would face a small negative impact.

6.2.3 Impact on Government:

Government would derive a small benefit as the application of the restriction would be more readily ascertainable. This would be of assistance to trade measurement officers when enforcing the legislation.

There would also be a small cost to administering departments in educating the community on the restriction. Education is required to ensure that meat sellers are aware of the restriction and how it applies.

6.2.4 Overall Impact of Moving to the Alternative State:

The impacts in the table below of moving to the alternative state have been reproduced from section 5.5, however the impacts discussed in sections 6.2.1-6.2.3 have been included.

Stakeholder	Description	Size	Direction
Meat Sellers	Some Queensland, Victorian and Northern Territory meat sellers may have to change selling method Potential increase in sales Compliance cost Equal playing field Minimises competitors engaging in deceptive practices Minimises transaction costs	small very small very small very small small very small	negative positive negative positive positive positive
Consumers	Disadvantages consumers who prefer to buy by per each Increased range of meat products Minimises transaction costs through information disclosure Indication of value for money Minimises deceptive practices Advantages consumers who prefer to buy by `$/kg'	Small Small Small to moderate very small small small	Negative positive positive positive positive positive
Government	Administration and enforcement cost Education cost More certainty in enforcing restriction	very small small small	negative negative positive

The impact of moving to this alternative state on meat sellers, in all jurisdictions except Queensland, Victoria and the Northern Territory, would be a small positive impact. However, in Queensland, Victoria and the Northern Territory red meat sellers would face a small positive impact, while poultry and fish sellers would face a small negative impact. Consumers would face a moderate positive impact, while governments would face a very small negative impact. Therefore, the overall result is a moderate positive impact to the community of moving to this alterative state.

Back to NCP Review of the Uniform Trade Measurement Legislation Index