Total recall: States offer regulation of burning washing machines to Canberra, ACCC

By Julian Bajkowski

December 13, 2016

The prospect of any federal takeover of state government powers is usually a trigger for political disputes and bureaucratic pushback, especially when regulation, enforcement and revenue are thrown into the mix.

Unless it’s Samsung’s infamous self-combusting washing machines, that almost every jurisdiction would prefer not to have to deal with.

The Productivity Commission late last week released its draft report, Consumer Law Enforcement and Administration, which calls for states and territories to relinquish “powers to issue interim bans and compulsory recalls in relation to unsafe products” and hand them to the Australian Competition and Consumer Commission.

It could be a watershed in how product recalls are nationally coordinated and administered and the kind of centralisation consumer advocates have been calling for for years to get rid of the regulatory equivalent of rail gauges.

The Productivity Commission document also calls for fines to be significantly hiked because state penalties are seen as “as insignificant when compared to the commercial returns gained and are out of step with penalties currently available under the Competition laws.”

Toys destroyed in Christmas crackdown from DFSI Newsroom on Vimeo.

It’s a bold call, especially when state ministers routinely harness the retail value of crackdowns on dodgy products to literally steamroller home the point that they are protecting vulnerable consumers — as the above clip of NSW Minister for Innovation and Better Regulation Victor Dominello demonstrates.

Despite providing plenty of photo opportunities for ministers — think burning hoverboards — state government fair trading commissioners certainly aren’t complaining about the ACCC’s mooted takeover of recall powers to make them a nationally consistent instrument.

As the official New South Wales warm response to the draft report points out, it was state “consumer affairs senior officials” who “resolved to request that the Commonwealth engage the Productivity Commission to undertake a study into the effectiveness of the “single law, multiple regulators” model.”

“I welcome the draft report. The recommendations will further improve the enforcement and administration framework in which consumer regulators operate, and help ensure the best outcomes for Australian consumers,” NSW Fair Trading Commissioner Rod Stowe said.

There was an identical deficit of controversy from the director of Consumer Affairs Victoria, Simon Cohen.

Vic Dominello keeps it retail: nothings says ‘policy in action’ more than a steamroller.

“I look forward to working with my national, state and territory colleagues to develop a detailed and considered response,” Cohen said, also welcoming the draft report and recommendations.

It was the same story in Queensland from Fair Trading Queensland executive director Brian Bauer, again almost to the letter — perhaps to stress the importance of national consistency.

One of the big issues state regulators and federal regulators are trying to resolve is that consumers can be baffled about who to turn to when they have a problem with a product or service.

But just how confused is an open question.

“Having 10 separate regulatory agencies to administer one consumer law, plus a multitude of specialist regulators in areas like food safety, electrical appliances and building products, could give rise to confusion, duplication, inconsistency and ineffective enforcement,” Productivity Commissioner Julie Abramson said.

“There is definitely scope to improve the system, but the regulatory agencies have put a lot of effort into mitigating these risks and generally appear to be working together well.”

And while the system might not be broken, it’s not particularly transparent.

A key issue the Productivity Commission has identified is that there is still no national picture of miscreant behaviour, which is a problem when it comes to identifying serial offender who often just pack-up shop and move states.

“The case for a national database should be revisited,” the draft report says, noting that a previous effort to create a complaints “faltered for a number of reasons, including IT interoperability, taxonomy issues and, ultimately, a lack of funding.”

Expect that issue to re-emerge in coming months. The Productivity Commission’s final research report is due to be released in March 2017.

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