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Productivity Commission calls for national consumer policy

Productivity Commission calls for national consumer policy

The Productivity Commission is calling for an overhaul of Australia’s consumer protection policy framework, saying inconsistencies between state and territory regimes are leading to additional…

The Productivity Commission is calling for an overhaul of Australia’s consumer protection policy framework, saying inconsistencies between state and territory regimes are leading to additional costs for consumers.

In its Review of Australia's Consumer Policy Framework released last week, the Australian Government Productivity Commission recommended the implementation of national, unified consumer protection law based on the current Trade Practices Act 1974, but with amendments made to expand its coverage and scope.

The review proposes that the Australian Competition and Consumer Commission (ACCC) be in charge of the national enforcement of safety product provisions, with other provisions jointly enforced by the ACCC and state and territory regulators.

State and territories would also have the option to hand over their enforcement powers to the ACCC.

The review concluded that the current system, which divides responsibility for implementing consumer protection laws between federal and state and territory governments (nine separate regulators in total), is no longer appropriate for Australia’s increasingly national consumer markets.

It also found that the current process for making changes to consumer policy has been slow and ineffectual, to the detriment of consumers, because the agreement of nine separate jurisdictions is required.

According to the review, around half of Australian goods and services are now supplied by organisations that operate across multiple jurisdictions, and that the number of businesses operating in every state and territory has increased by more than 70 per cent in the last five years.

Discrepancies that exist in consumer protection regimes between states and territories mean that additional compliance costs are being passed on to consumers, the review found.

Corrs partner Richard Flitcroft agrees that businesses are being burdened by the current system. “I think the report strongly makes the case that there are problems with the current system, not only from a consumer’s point of view but also from a business point of view,” he said.

“You can have businesses that are operating nationally and they’re facing different regulations.

“They may be only slight differenced, but it might require a whole new set of paperwork or a whole new compliance regime for them, or at least variations. To the extent that things can be unified I think it’s a very good thing.”

Among the more minor discrepancies the review identified, the definition of “consumer” varies between jurisdictions.

In addition, only three jurisdictions expand implied conditions and warranties to consumers who may not have had a contractual relationship with the supplier, and in another three jurisdictions implied conditions and warranties may not apply to leased goods in some circumstances.

More significant inconsistencies include legislation which was enacted unilaterally by Victoria in 2003 prohibiting unfair contract terms, as well as the substantial differences that now exist in regulation of telemarketing sales between New South Wales and Victoria.

Perhaps one of the more controversial recommendations made in the report is for the inclusion of a provision voiding “unfair” contract terms that have caused material detriment to consumers.

The provision proposed is subject to numerous qualifications, including that it would relate only to standard, non-negotiable contracts and it would require a number of factors to be considered — such as the broader interests of consumers generally.

According to Flitcroft, the reason the Commission has been deliberately cautious with this proposal is because it is treading into new ground in Australia.

“When the Productivity Commission released the draft report it said it was cautious about introducing an unfair contract provision to avoid regulatory overreach,” Flitcroft said. “I think that was a reflection of the fact that there was a bit of uncertainty because there isn’t really a provision like this [presently] in Australia.

“There’s a more stringent one in Victoria and the Contract Review Act 1980 (NSW) goes part of the way there, but only applies to ‘unjust’ terms. ‘Unfair terms’are a step further and the Productivity Commission has recently been cautious to avoid that ‘regulatory overreach’,” he said.

Among other recommendations, the review proposes the implementation of some additional enforcement mechanisms; namely civil pecuniary penalties.

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