Australia does not need a general safety provision, says the Productivity Commission

The Productivity Commission (comission) has published its final report in relation to the review of the Australian consumer product safety system. The review was focused upon the ‘general’ category of consumer products—being consumer products not otherwise regulated by specific legislation, such as therapeutic goods, food, motor vehicles, electrical goods and veterinary and agricultural chemicals.

Following is a summary of some of the report’s findings.

General safety provision

One of the more controversial options considered by the commission concerned the introduction of a ‘general safety provision’ (GSP), which, if introduced, would create an explicit legal obligation on businesses to supply only ‘safe’ consumer products throughout Australia. Similar provisions to this have existed in the United Kingdom and Europe for some years and a similar concept is applied in a number of Australian product-specific regimes, including food and electrical goods.

Of all the reform options that were considered by the commission, this was the one that attracted perhaps the most interest and keen debate. The commission identified the following potential benefits that a GSP might achieve:

• making clear the objective of supplying only safe products 
• applying notions of consistency with other product regimes in which a similar concept already exists 
• promoting ‘cultural change’ by creating stronger incentives for businesses to consider safety 
• making it easier for regulatory authorities to take pre-emptive action before a product causes injury 
• conferring greater flexibility to businesses in meeting safety obligations and reducing the need for mandatory standards 
• forestalling the creation of more product-specific regulatory regimes, such as for toys or nursery furniture.

The commission, however, recognised that the implementation of a GSP would result in additional costs to businesses and were not convinced that a GSP would generate net benefits over and above those currently achieved.

The commission also took into account that the current system seems to be generating reasonable safety outcomes and it is not clear that a major shift in ‘culture’ is required. Regard was also had to the fact that action can already be taken to recall or ban unsafe products, irrespective of whether an injury has occurred and, based on experience in other sectors and countries, most if not all of the existing regulatory framework would remain.

Foreseeable use or misuse

Another topic that was keenly debated was the extent to which a product might be unsafe as a result of ‘reasonably foreseeable misuse’, that is, products can potentially cause harm because of the way in which they are used, even when this usage is not intended by the manufacturer or supplier.

The commission observed that there are various interpretations across different jurisdictions within Australia as to whether foreseeable use can be taken into account. A recommendation has been made that this be clarified and that reasonably foreseeable use should be explicitly covered in any definition of ‘unsafe’ products.

Harmonisation

It became apparent from the work undertaken by the commission, particularly the round table conferences, that there is a great deal of concern at the lack of consistency and duplication across different jurisdictions concerning product safety. Comment was received from businesses and other participants in the industry to the effect that this alone is a cause of significant compliance costs to business. Examples were given of approaches that are acceptable in one jurisdiction not being acceptable in another, and the resultant confusion and duplication of effort.

The commission concluded that there is little justification for separate regulation of product safety, given that for the most part there is a national market for products, the risks and hazards are generally the same across the country and public resources are scarce. The commission also noted that the growth in e-commerce will continue to erode the capacity of jurisdictions to enforce differences in regulatory responses, such as through different standards and bans.

Ultimately, the commission expressed the view that the most appropriate way to achieve uniformity is to centralise decision-making with one regulator administering a single law and that this body should be the ACCC. The commission concedes, however, that the local jurisdictions will wish to be able to act quickly and locally to deal with unsafe product issues. It suggests, therefore, that a modified alternative may be for the states and territories to retain the ability to temporarily ban a suspected unsafe product, while referring the powers to determine whether a national permanent ban or standard should be implemented to the Australian Government, with enforcement through the ACCC.

Self reporting

The commission recognised that difficulties might be encountered in enforcing a requirement to report goods that are ‘under investigation’. It conceded that this might discourage businesses from investigating potentially dangerous products, because of the consequences that might follow. The commission suggests, however, that a requirement for suppliers to report products associated with ‘serious’ injury and death may be more timely to provide net benefits to the community, including providing more timely information to regulators and allowing the pooling of information to enable regulators to make better judgments about serious product-related injuries.

Recalls of unsafe products

One of the options identified by the Ministerial Council on Consumer Affairs (MCCA) discussion paper was that businesses be required to recall products that are found to be ‘unsafe’.

The commission noted that there are about 160 voluntary recalls of general consumer products each year, although the success rate of recalls was found to be variable at best, with only a fairly small proportion of the total number of products sold being retrieved or returned.

The commission found that the current recall guidelines could be improved and that the MCCA should initiate a review of current recall guidelines with a view to improving the effectiveness of recalls.

The commission did not support the notion that regulators should be given specific powers to audit voluntary recalls.

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Name : Peter Holloway
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