The Parliamentary Secretary to the Treasurer, Chris Pearce, today welcomed the Treasurer’s announcement that the Productivity Commission will commence a year-long public inquiry into Australia’s consumer policy framework and its administration.

“This inquiry represents the first substantial review of our consumer policy framework in over two decades. The increasing variety and complexity of products and transaction methods available to consumers mean that we must ensure that Australia’s consumer policy framework is able to assist and empower consumers to meet current and future challenges”, Mr Pearce said.

“Australian consumers and businesses are increasingly participating in national markets for consumer products and it is important that all consumers and businesses can benefit from clear and nationally consistent consumer policy. Accordingly, the Commission has been asked to report on any barriers to, and ways to improve, the harmonisation and coordination of consumer policy and its development and administration across jurisdictions in Australia.

“The Commission’s recommendations promise to make a major contribution to the development of consumer policy in Australia and, in particular, to the work of the Ministerial Council on Consumer Affairs. Responsibility for consumer policy is shared between the Australian Government and the governments of the States and Territories and I look forward to working with my state and territory ministerial colleagues in considering the Commission’s report.

“This inquiry reflects the Australian Government’s commitment to leadership in consumer policy reform and will build on the Government’s ongoing reform agenda, including reform of Australia’s consumer product safety system and the laws governing component pricing.

“Discussion of the Inquiry will feature prominently at the National Consumer Congress to be hosted by the Australian Government in Melbourne in March 2007”, Mr Pearce said.

The terms of reference for the inquiry are attached. Further information about the inquiry can be obtained from the Productivity Commission’s website at www.pc.gov.au or by contacting the Commission directly on 02 6240 3200.

11 December 2006
Melbourne

Contact: Conor O’Brien 03 9887 3890

Terms of Reference

REVIEW OF AUSTRALIA’S CONSUMER POLICY FRAMEWORK

PRODUCTIVITY COMMISSION ACT 1998

I, PETER COSTELLO, Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, request the Productivity Commission to undertake an inquiry into Australia’s consumer policy framework, including its administration, and to report within 12 months of receipt of this reference. The Commission is to hold hearings for the purpose of the inquiry and to produce a draft report.

Australia’s consumer policy framework

The Australian Government and the State and Territory governments share responsibility for consumer policy in Australia. Australia’s consumer policy framework includes policy-making, regulatory and non-regulatory activities. Regulation consists of a combination of self-regulatory, co-regulatory, regulatory and enforcement responses to assist consumers to meet the challenges they face in the market for consumer goods and services.

Within the framework, the principal legislative provisions are those contained in Parts IVA, V (with the exception of Division 1AA (country of origin representations)), VA and VC of the Trade Practices Act 1974 (TPA) and equivalent provisions in state and territory Fair Trading Acts. Australia’s consumer policy framework also includes a range of other industry-specific legislation administered by the Australian Competition and Consumer Commission or state and territory fair trading agencies.

The Ministerial Council on Consumer Affairs (MCCA) and its supporting bodies are responsible for considering consumer and fair trading matters and, where possible, developing a consistent approach to these issues. The membership of MCCA consists of the Australian Government, the governments of the States and Territories, and the New Zealand Government.

Key considerations

In conducting the inquiry and making recommendations, the Commission is to have particular regard to:

1. the need to ensure that consumers and businesses, including small businesses, are not burdened by unnecessary regulation or complexity, while recognising the benefits, including the contribution to consumer wellbeing, market efficiency and productivity, of well-targeted consumer policy;
2. the need for consumer policy to be based on evidence from the operation of consumer product markets, including the behaviour of market participants;
3. the impacts of its recommendations on consumers, businesses and governments, including on small businesses and families, in light of the need to avoid unnecessary increases in regulation;
4. the shared responsibility of the Australian Government and the State and Territory governments for consumer policy; and
5. the importance of promoting certainty and consistency for businesses and consumers in the operation of Australia’s consumer protection laws.

Scope of the inquiry

The Commission is to report on:

1. ways to improve the consumer policy framework so as to assist and empower consumers, including disadvantaged and vulnerable consumers, to meet current and future challenges, including the information and other challenges posed by an increasing variety of more complex product offerings and methods of transacting;
2. any barriers to, and ways to improve, the harmonisation and coordination of consumer policy and its development and administration across jurisdictions in Australia, including ways to improve institutional arrangements and to avoid duplication of effort;
3. any areas of consumer regulation which are unlikely to provide net benefits to Australia and which could be revised or repealed;
4. the scope for avoiding regulatory duplication and inconsistency through reducing reliance on industry-specific consumer regulation and making greater use of general consumer regulation;
5. the extent to which more effective use may be made of self-regulatory, co-regulatory, consumer education and consumer information approaches and principles-based regulation in addressing consumer issues; and
6. ways in which the consumer policy framework may be improved so as to facilitate greater economic integration between Australia and New Zealand and ways to remove any barriers to international trade in consumer goods and services created by the current consumer policy framework.

Considerations

In addition to the key considerations outlined above, in conducting the inquiry and making recommendations, the Commission should have regard to:

1. the complementarities between Australia’s competition and consumer protection laws;
2. the shared responsibility of consumers, businesses and governments for responding to consumer issues;
3. the nature of consumer markets, including regional, national and international dimensions;
4. the implications of its recommendations for the consumer policy framework of New Zealand;
5. recent developments in consumer policy overseas; and
6. the need to maintain consistency between the consumer protection provisions of the TPA and the mirror consumer protection provisions applying to financial services in the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001.

The Commission is further requested to:

1. take into account but not replicate significant current and recent review activity relating to the Taskforce on Reducing the Regulatory Burden on Business, the National Competition Policy reforms, Australian and New Zealand competition and consumer protection regimes, and the Australian consumer product safety system, as well as any other relevant reviews, including those undertaken under the auspices of MCCA; and
2. advertise nationally inviting submissions, hold public hearings, and consult with relevant Australian Government and state and territory government agencies, other key interest groups and affected parties.

PETER COSTELLO