In May 2016, the Federal Government issued a consultation paper proposing that product safety standards from other countries could, in future, be mandated under the Australian Consumer Law. This change was probably inevitable, reflecting the decline of consumer product manufacturing in Australia and the growth of on-line shopping; but what will it mean for consumers?
Under the Australian Consumer Law, it an offence to supply a product if it doesn’t meet the relevant “mandatory standard” and the current list of mandatory standards is extensive. Some of the better known examples are cyclists’ helmets and child restraints for cars.
The current law, and its forerunner the Trade Practices Act, provide for the Minister to declare a “mandatory standard” based on a voluntary standard prepared by Standards Australia, or by another association prescribed in the regulations. However, up to now, no other standards developing associations have been prescribed in the regulations.
The consultation paper proposes to rectify this, and add a number of overseas standards producing bodies, including the International Organisation for Standardization (ISO), the European Standards Committee (CEN), Underwriters Laboratories Inc. (US/Canada), the BSI Group (Great Britain), ANSI and ASTM (USA) and the Canadian Standards Association.
In each instance, a public consultation would be held to decide on which technical standard should be adopted and whether any elements of it need to be added to, or excluded. This should provide sufficient checks and balances to ensure that the government does not select an overseas technical standard that provides inadequate protection for Australian consumers.
The international situation
The premise that Australia should adopt the product safety standards used elsewhere in the world makes good sense. However, things are rarely that simple. In many cases, there is no single overseas standard that fits the bill.
These days, consumer products are typically manufactured in Asia with the bulk of production designed to meet the standards applicable in the major target market, typically the USA (ANSI/ASTM) or Europe (ISO/CEN). To make a third line of products to meet a unique Australian Standard, for our tiny market, adds significantly to the price.
So, for Australia to reap the benefit of a wider range of products at more competitive prices, we will have to pick one or other of the dominant overseas standards to make into our mandatory standard.
Australia could, of course, accept more than one overseas technical standard; however, that brings enforcement difficulties. It’s hard enough to prove that a product doesn’t meet one standard; but it becomes even trickier when you have to prove that it fails multiple standards. What if a bicycle helmet meets all the requirements in standard A, except those for impact absorption; but it passes the impact absorption tests in standard B, despite not complying with some other requirements in standard B? It gets very messy.
The missing part of the puzzle
The enforcement problem comes about because our Consumer Law operates differently to what happens in many of those countries whose standards the Federal Government is now proposing to use. In Australia, there is no requirement for suppliers to demonstrate compliance with the mandatory standard before they put a product on the market. The onus is on the consumer to prove the product didn’t comply after they have purchased it.
This is a legacy of a different time, when the Australian market for consumer products was dominated by locally-based manufacturers, retailers and other players in the supply chain, who collaborated to ensure that unsafe products didn’t reach consumers. Only the odd, dodgy backyard operator, would try to put on a product on the market if it didn’t comply with a mandatory standard. It just wasn’t the Australian way.
In the 1980’s, the Federal Government’s main concern was that the players in the local market were all a bit too cosy; and it was using competition policy as a tool to make the market more efficient. At the time, Standards Australia held a natural monopoly as the source of standards for this country (remember, they were printed books back then); and it was also the sole source of product certification against those standards.
The Federal Government decided that handing Standards Australia yet another monopoly, as product certifier as well as standards provider, was a step too far in terms of competition policy. So, it took the decision that product certification should no longer be a requirement in any mandatory standard. Standards Australia went on to divest both the sales of Australian Standards and the associated certification business to the ASX-listed company, SAI Global Pty Ltd, which further justified the competition policy argument.
However, if we are now talking about using overseas standards, concerns about competition policy, as it relates to certification, diminish. The product certifiers will be overseas bodies already servicing a world market. Of course, some Australian Standards will continue to be used as mandatory standards, but there are now multiple product certification companies operating here.
A guarantee of compliance
The case for having another look at requiring product certification goes deeper than just the changes to the competitive environment. The reactive system currently used to enforce Australia’s mandatory standards is out of step with today’s supply chain for consumer products. It has never been easy to prove a negative, i.e. that the product you just bought doesn’t meet the mandatory standard, because of the highly technical nature of the standard’s requirements. But it will be all the more so in future, when a regulated product sold here is made overseas to an overseas standard, and where we may not even have the expertise in Australia to test to that standard. In such a scenario, consumers need a guarantee of compliance before the product is sold on our market. A mandatory standard offers no protection whatsoever if it cannot be enforced.
The way forward
The government’s reform of the way that mandatory standards are created, to reflect the global market we live in, is a realistic and necessary step. But the government also needs to review the compliance regime that accompanies those standards.
A system that requires the supplier to subject their product to some sort of assessment against the mandatory standard before the product goes on the market will be essential to embracing international safety standards. Those pre-market compliance mechanisms already exist in the world beyond our shores, we just need to include them when creating future mandatory standards. However, before that can happen, the Federal Government must take a long hard look at some past decisions around certification.
John Henry was a senior executive at Standards Australia, and then at the inter-governmental agency, NMSC. He is a past chair of the APEC committee on standards and conformance and served on the Commonwealth State Consumer Product Safety Committee. He now consults to industry and government on standards and compliance-related matters, as well as representing CFA on several SA committees, including QR-014 Compliance Systems.