Review of the Australian Consumer Product Safety System

1
Review of the Australian Consumer Product Safety
System

• Robert Fitzgerald AM
• Commissioner
• Productivity Commission

2
The reference

• Horror stories
• Revealed Deadly Bath Cradles In Thousands Of
  Homes
• How Laws And Years Of Warnings Failed Our
  Children
• Rethink on child safety laws
• Ministerial Council Discussion Paper
• 12 options for reform

3
Consumer products

• 1000s of the generally less hazardous products
• not motor cars and pharmaceuticals
• but cots, prams, car jacks and knives
• range of hazards and big differences in level of
  risk CDs to chain saws
• Not those addressed by specialised regulatory
  regimes
• Therapeutic Goods Authority
• Food Standards Australia and New Zealand

4
Consumer product safety regulation

• The TPA and the fair trading acts, provide
  safety-net protection for the relatively risky
  products in this group
• bans
• blow guns, gas masks containing asbestos,
  dinnerware with lead, expanding novelty toys
• recalls
• vast majority are voluntary
• up to 200 a year
• standards
• 27 national standards
• most pose a danger to children nursery furniture
• car jacks, sunglasses, elastic straps

5
Overarching points

• Consumers perception of safety protection often
  wrong
• Consumers expect a minimum level of safety
• Australia delivers a reasonable level of safety

6
The consumer product safety system

• Number of mechanisms which support safe outcomes
  
• the market place
• liability
• Consumer advocates
• media
• research
• insurance
• health system

7
Market failure?

• Some hazards are intrinsic to the value of some
  products
• Market failure
• information
• not all hazards and their risks are observable to
  anybody
• information asymmetry
• risk misperceptions
• externalities
• negative third party effects
• subsidised health system
• Diverse but relatively limited
• A small proportion are subject to significant
  market failure and present significant risks

8
Declining accidental injury deaths
9
Size of the problem and challenges

• Claimed to be large
• But significant challenges in testing such
  claims
• difficulties in assigning causation
• data problems
• weaknesses in past estimates

10
Assigning causation

• Often difficult to determine with precision the
  role played by a product
• Product failure
• Faulty components or poor assembly/quality
  control
• Design
• Inadequate warnings/instructions
• Poorly serviced or maintained
• Consumer behaviour/misuse
• Product present but no causal role

11
Data problems

• Data problems
• death and injury data not coded in ways that
  allow identification of product role often no
  supporting narrative
• some lower-level injuries never picked up by
  datainjury pyramid
• Past studies
• Helpful but limited

12
Injury pyramid
13
UK DTI findings 1999

• Product fault contributed directly to a very
  small number of incidents
• Most provider faults judged to be due to a lack
  of servicing and maintenance
• The contributory role of product faults in
  fatalities fell continuously from 2.0 per cent
  in 1990 to 0.9 per cent in 1999

14
DTI findings

• Behavioural factors a significant role
• Major types of risky behaviour causing death or
  injury included
• undertaking an activity under the influence of
  alcohol
• leaving unsuitable items in the reach of a child
  
• smoking related incidents
• working up a ladder or stepladder and
• careless actions by another person

15
DTI findings
16
Our estimates
17
Significance

• Applying these ratios in Australia (developed
  economy, similar education levels and range of
  products)
• Up to 32 unintended deaths, and up to 513
  serious injuries, could be due to manufacturing
  fault
• a similar or greater number caused by faults due
  to failure to service and maintain
• but over 700 deaths and 30 000 to 90 000 serious
  injuries due to user behaviour

18
Problems with the system

• The system is not broken but its efficiency and
  effectiveness can be improved
• Insufficient research and data collection to
  reliably tell what are the major causes of injury
• Ad hoc identification of hazardous productsby
  individual jurisdictions haphazard coordination
• Fragmented policy making, enforcement and
  duplication of effort
• Mutual recognition not working

19
The GSP net benefits not evident

• Already have reasonable safety outcomes
• Can already ban or recall products before they
  cause injury
• Unlikely to reduce existing regulatory
  arrangements
• Evidence overseas shows a GSP less effective than
  liability rules
• Liability rules already make suppliers proactive
• Instead selective adoption of some elements
  other options

20
Reduce inconsistencies

• Inconsistencies across jurisdictions
• 111 product bans, only 12 apply nationwide
• 57 product standards (only 28 are TPA standards)
• Address common issues
• same products
• same risks
• same response

21
Models for Greater National Consistency

• One law, one regulator model Trade Practices
  Act and the Australian Competition and Consumer
  Commission
• Limit State powers to interim bans
• Agreement on core uniform provisions, eg
• services supply, installation and maintenance
• pre-condition for mandatory safety standards
  reasonably necessary to prevent or reduce the
  risk of injury to any person

22
Options harmonisation

• Permanent bans and mandatory standards should be
  national
• Coordinate enforcement practices

23
Other options

• Include reasonably foreseeable use in the
  definition of unsafe
• Services
• ensure the consistent coverage of the supply,
  installation and maintenance of consumer products
• Second-hand goods
• increase awareness that they are covered
• explicitly address in mandatory standards

24
Other options (continued)

• Better hazard identification and risk management
• clearinghouse to gather and disseminate existing
  data
• national electronic registration of consumer
  complaints
• Require businesses to report products associated
  with
• serious injury and death or
• a successful liability claim or multiple
  out-of-court settlements
• Improve information to businesses and consumers
• internet-based one-stop-shop on legal
  requirements for all jurisdictions
• case-by-case selection of optimal information
  strategies.
• Review recall guidelines

25
Beyond the options

• Make risk management central
• implications for developing mandatory standards
• More strategic and transparent enforcement
• More focus on the global market
• greater use of international standards
• Challenge of e-commerce

26
Options research

• Current levels are extremely limited
• not possible to establish with confidence, in
  Australia, incidence and costs of
  product-related injury
• more accurate hazard identification and analysis
  would aid policy-makers in devising appropriate
  risk management strategies
• At a minimum conduct a baseline study to
  establish
• number of incidents and their costs
• roles played by product fault, bad design and
  consumer behaviour
• whether there are public instruments which can
  cost-effectively reduce identified causes

27
The Commissions approach economic principles

• Efficiency balancing costs and benefits
• Applying risk analysis
• Responsibility for addressing risks should
  generally be assigned to the party with greatest
  capacity to influence them
• Decision to intervene should demonstrate
  governments can improve on outcomes,
  cost-effectively
• nature of any market failure
• its size
• government effectiveness

28
The Commissions approach regulatory principles

• Institutions and good regulatory processes are
  central to delivering efficient and effective
  outcomes
• Regulation Impact Analysis is key
• Coordination of policy making and reform efforts
  across jurisdictions is often very important to
  ensuring policy objectives
• are consistent
• are met cost-effectively
• minimise costs imposed on business
• Enforcement efforts should
• use evidence-based risk analysis to target
  biggest risks
• identify parties at greatest risk of low
  compliance and target them
• develop an enforcement strategy to enable
  tailor-made responses to non-compliance