3. Evaluation of the Goods Model
Page Index
- Is the Mutual Recognition Agreement generally achieving its objectives?
- Issues raised in submissions
Is the Mutual Recognition Agreement generally achieving its objectives?
3.1 The Review Group received a number of submissions on the way the MRA had worked in relation to goods.
3.2 The Review Group reinforces the point that it is difficult to monitor the impact of mutual recognition on goods. In its 1997 Information Paper, the Office of Regulation Review (ORR) wrote:
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"Little is known about the impact of mutual recognition on goods markets because:
- data about its impact is dispersed among various Commonwealth, state and territory agencies and firms that have used this process to sell goods in other jurisdictions; and
- this process was established - and is able to operate - in a decentralised fashion without ongoing monitoring by governments." (Office of Regulation Review, 1997: 36).
3.3 Available evidence would suggest that, overall, the effect of mutual recognition has been very positive on goods markets, particularly in reducing burdens on manufacturers to comply with multiple regulations for the same goods, and in encouraging harmonisation.
3.4 This is supported by ORR analysis, which suggests:
"Following the introduction of mutual recognition in 1993, there have been some regulatory reforms and changes in markets resulting from greater interstate trade. For example, mutual recognition has removed regulatory impediments in markets such as bread, oysters, game meats, fruit and vegetables, resulting in increased interstate trade." (Office of Regulation Review, 1997: 39-40).
3.5 The ORR developed a table showing a number of these changes (see Table A, following).
Table A: Examples of products with interstate regulatory trade barriers and regulatory/market changes since 1993
Product type |
Relevant regulatory agencies |
Description of barrier to trade between jurisdictions |
Regulatory/market changes after 1993 |
Bread |
Various regulators |
Different standard sizes |
Non-standard sizes can be sold |
Eggs |
State/Territory egg boards |
Different grading and stamping requirements |
Accelerated the negotiations for national standards |
Dried fruits |
State/Territory dried fruit boards |
Different grading requirements |
Accelerated the negotiations for national standards |
Abattoir meats |
State/Territory Departments of Health or meat authorities |
Some jurisdictions such as Queensland required a fee to be paid and/or permission from a regulator before meat could be sold |
No longer need permission or have to pay a fee |
Game meat |
State/Territory Departments of Health, meat authorities or equivalent |
Interstate meat could not be sold. Production often banned within jurisdictions |
These meats are now sold in NSW, Victoria and Queensland following agreement about uniform minimum standards. But production still banned in some states e.g. NSW |
Oysters |
State/Territory Department of Fisheries |
In NSW, interstate oysters had to be soaked (depuration) for 36 hours before sale |
This requirement has been dropped |
Fruit & vegetables |
Various regulators |
Fruit and vegetables imported into Queensland had to meet grading and packing requirements before sale permitted |
Queensland Act repealed in 1993 |
Pressure vessels |
Various regulators, NSW Workcover Authority in NSW etc |
State/Territory regulatory authorities differed on the design, construction and testing of equipment. |
National standards developed and in process of being implemented through legislation in various State/Territories |
Packaging & labelling |
Various regulators |
Different requirements |
National standards being developed |
Consumer products |
State/Territory departments of consumer affairs or equivalent |
Product bans |
Cases where bans have been removed, such as repeal of NSW product safety regulation for safety footwear. |
Sources: ORR 1997, from information provided by various state and territory regulatory agencies, Sturgess 1994 and Wilkins 1995.
3.6 Submissions to the Review supported the view that the MRA is working effectively in meeting its objectives for goods, which include encouraging the development of national standards.
3.7 The Environment Protection Group of Environment Australia wrote that the MRA principles:
"have made a significant contribution to promoting the goal of freedom of movement of goods and service providers in a national market in Australia"
3.8 The Queensland Department of Minerals and Energy commented that:
"The application of MRA has underscored the need for all jurisdictions to ensure that there is complete compatibility of the regulations applying to energy labelling and minimum energy performance standards....
The most significant impact has been enhancement of the rate at which ANZMEC jurisdictions have introduced complementary regulations."
3.9 The Western Australian Water Corporation has also commented on the beneficial effects of the MRA on the national market:
"Mutual recognition has assisted with the ongoing implementation of a scheme for the national certification of the plumbing and drainage product.
The Mutual Recognition (Western Australia) Act 1995 has reduced the activity required to authorise plumbing and drainage products and simplified the acceptance of these products into Western Australia."
3.10 Concerning product safety, the Western Australian Department of Fair Trading concluded that:
"Overall the effect of Mutual Recognition has been very positive in the Product Safety area. It is leading to greater uniformity between the States and Territories."
3.11 The ORR also found that mutual recognition has encouraged or accelerated the development of national standards:
Top"Mutual recognition has contributed to uniform standards being developed in dried fruits, pressure vessels, and packaging and labelling. The mutual recognition scheme has also liberalised attitudes to interstate trade by the state/territory authorities responsible for meat regulation." (Office of Regulation Review, 1997: 40)
Issues raised in submissions
3.12 Whilst the mutual recognition scheme is generally working well, submissions to the Review did raise a number of significant issues which merit attention:
Should the MRA cover "use"?
Although there is evidence of some success in the goods area of mutual recognition, one issue which has been evident since the commencement of the scheme is the connection of sale of goods to the use of those goods.
As an example, a Queensland manufacturer of fish nets is able to sell fish nets in New South Wales even though those fish nets may not meet the environmental regulatory requirements for use in New South Wales. In effect, the nets may be sold and possibly used for purposes other than fishing.
Other examples exist where there is a level of frustration that the product can be sold but not placed into use until it has met further regulatory requirements. Examples include, pressure vessels which meet the regulatory requirements for production and sale in one State, and whilst they can be sold in another State, cannot be used until they have been certified for operation. The argument is however no different when considering a motor vehicle which could be sold in one State where it is registered for use but to be registered and used in another State must go through a further compliance process. Further comments were received in submissions to the review as detailed below.
3.13 The Commonwealth Department of Industry Science and Tourism (DIST) stated in its submission:
"The mutual recognition agreement applies to the sale of goods and not their use. This is a particular cause for concern in the area of occupational health and safety where there is currently a distinct lack of uniformity across State and Territory jurisdictions in relation to the National Standard for Plant, developed by the National Occupational Health and Safety Commission.
The ORR Information Paper notes that uniform standards and regulations are used for "food, occupational health and safety, dangerous goods, trade measurement, registration and labelling of agricultural and veterinary chemicals and boiler and pressure vessels."
In relation to pressure equipment, uniformity has not happened and consideration should now be given to examining the inclusion of a use provision in the Mutual Recognition Agreement since it is clear that regulators in the occupational health and safety area cannot agree on a uniform approach to the adoption of the national standard for plant."
3.14 In a submission to the Review, Standards Australia also proposed that the MRA be extended to include the use of goods.
3.15 A further issue in relation to 'use' is that of performance standards, raised by the WA Public Health Service in relation to Wastewater Treatment Plants.
"Western Australia has legislated certain specifications in respect to the performance of these systems to protect public health. However, systems approved in other states do not meet WA design standards.
The question is whether such wastewater treatment plants are considered a 'good' for the purpose of the Mutual Recognition Act.
The Health Department of WA would recommend that domestic wastewater treatment plants and systems not be considered a 'good' under mutual recognition."
3.16 A similar issue has occurred in NSW where a manufacturer of composting toilets was of the view that the MRA meant that once his products were certified for sale in one State, those products could be used in all jurisdictions. However, each local council has different standards that establish whether or not composting toilets can be used. Therefore, the issue was not a matter of mutual recognition of a good, but one of "use".
3.17 The examples above highlight the difficulty of including regulations that cover the use of goods under the MRA. This is because of the vast differences in climate and environmental issues that exist across rural, regional and metropolitan areas of Australia.
3.18 On consideration of whether the MRA should be extended to cover use requirements, the Review Group was not convinced that such an extension should be considered at this time. The Review Group concluded that the CRR should continue to monitor this issue and that further consideration be given to this matter in the context of the next five yearly review of the MRA.
Recommendation 2
That the MRA not be extended to cover regulatory requirements relating to the use of goods, but that the COAG Committee on Regulatory Reform continue to monitor this issue to ensure use requirements are not used to undermine the objectives of the MRA.
Product safety
3.19 While some submissions commented on the benefits of the MRA to developing greater uniformity on product safety, others identified shortcomings in relation to the recall of defective goods.
3.20 The Electrical Regulatory Authorities Coordinating Committee (WA) commented that:
"The legislation of the various States and Territories does not allow a uniform and efficient system for the recall of defective electrical equipment and sale prohibition notices to apply."
3.21 The Queensland Department of Justice's Consumer Safety Section raised similar issues:
"Prohibition orders made under s.85 of the Fair Trading Act 1989 have effect for a period of 18 months before automatic expiration. Under mutual recognition, the reality is that prohibition orders only have effect for a period of 12 months unless other jurisdictions pick up the order.
The wording of each jurisdictions' legislation in this area varies considerably.
Political sensitivity to safety issues also impacts on whether a particular product is considered unsafe versus the requisite amount of action required to address safety concerns.
But in terms of mutual recognition, there is the potential for a product to be banned in one jurisdiction and not in others.
The integrity of product safety standards risks being compromised in the mutual recognition outcomes focus on getting any standard in place for the sake of administrative or legislative expediency, rather than the quality or level of protection the standards offer."
3.22 However, the Department has also commented that:
"Jurisdictions involved in product safety matters tend to consult more widely with each other, and the focus appears to be on the "bigger picture". This is seen as a benefit of MR."
3.23 The issue of developing a uniform approach to product recalls is one of importance. This issue arose late during the passage of the Trans-Tasman Mutual Recognition Act 1997 through the Commonwealth Parliament. There is now a special exemption dealing with product banning in that legislation.
3.24 This is not an issue that can be dealt with easily through a change to mutual recognition. However, it is clearly an issue that should be referred to the Ministerial Council on Consumer Affairs to assess whether harmonisation can be achieved. Indeed, one of the aims of mutual recognition is to bring issues like this to the fore and to encourage harmonisation to take place.
3.25 The Review Group acknowledges the need for greater cooperation between regulatory agencies involved in the banning and recall of goods under product safety regulation. The issues raised are best addressed by the development of cooperative arrangements between jurisdictions to ensure that product bans/recalls imposed in one jurisdiction are not undermined by the MRA. The Review Group recommends that the Ministerial Council on Consumer Affairs develop cooperative arrangements to resolve the issues raised by lack of coordination between Governments in respect to product safety regulation.
Recommendation 3
That the Ministerial Council on Consumer Affairs develop national arrangements for product recalls and product safety bans to ensure consistent approaches between jurisdictions to the banning and/or recall of dangerous products.
"Lowest common denominator"
3.26 One issue that is often raised about mutual recognition is that it leads to the "lowest common denominator" becoming the standard.
3.27 The Citrus Council Of Western Australia wrote:
"The development of the Mutual Recognition Regulations has, by removing recognition of State requirements for labelling and standards, impacted quite severely on some aspects of the Western Australian Citrus industry.
Since the implementation of mutual recognition, the quality of some citrus produce being imported from the eastern states, in particular those with no grade standards, has dropped significantly."
3.28 The WA Citrus Council believed that the scheme could be improved by:
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ensuring that where a state has no grade or quality standards of its own then the standards of the importing state apply, and
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the minimum standard does not automatically apply.
3.29 The MRA is based on the premise that regulatory intervention in goods markets can generally only be justified on health, safety and environmental protection grounds. Consumers should be free to consider issues price and quality and the trade off between them when they make purchasing decisions. The Review Group considers that grade/quality standards for fruit fall into this category and does not support amendments to the MRA to reintroduce barriers to trade between jurisdictions created by regulations not related to the protection of health, safety or the environment.
3.30 Another issue was raised by the NSW Health Department. It wrote in its submission that there are:
"Potential problems which could arise are in a prosecution under section 11 of the NSW Tobacco Advertising Prohibition Act 1991. That section prohibits the sale of smokeless tobacco and cigarette-like confectionery.
Health authorities in NSW would therefore be in a potentially difficult position because of the mutual recognition principle in a prosecution for the sale of such products manufactured in or imported from other States.
NSW takes the position that appropriate action should be taken as soon as possible so that a permanent exemption for laws relating to controls on tobacco products is included in Schedule 1 of the Commonwealth's Mutual Recognition Act 1992."
3.31 Restrictions on the sale of cigarette-like confectionary are generally established under product safety regulatory regimes. This issue would be best resolved by the Ministerial Council on Consumer Affairs through consideration of a national approach to the sale of such products. States concerned about these products can put the matter before the Ministerial Council by invoking the Temporary Exemption mechanism or through a referral to the Council.
3.32 The Review Group is not aware of any evidence that mutual recognition has resulted in goods with unacceptably low standards being sold in Australia.
Recommendation 4
Where jurisdictions are concerned about variations in the standards or other regulatory requirements relating to goods, these issues should be resolved by the relevant Ministerial Council, through the use of the Temporary Exemption or referral mechanism.
Level of awareness
3.33 Two submissions commented that awareness of the scheme in relation to goods appeared to be low.
3.34 The Queensland Department of Justice Client Services Branch commented:
- "The general public do not really have an understanding that this legislation is in place, and it would appear that perhaps a broader publicity program needs to be undertaken to educate the general community."
- It is interesting to note that very few organisations dealing with goods replied to the survey. This compares with a relatively high awareness of people in registered occupations. There may be a need for an education campaign.
Recommendation 5
That the Industry Ministers' Council consider carrying out an awareness campaign aimed at raising awareness among manufacturers and retailers of mutual recognition.
Dispute resolution
3.35 Unlike occupations, there is no designated tribunal to hear disputes. Any disputes would be heard in a local magistrate's court or district/county court.
3.36 No evidence was submitted to the Review Group in respect of disputes relating to goods.