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What changes are needed in Australian consumer policy to improve product safety?

A Treasury consultation paper discussing a series of options to improve the current consumer product safety system is currently out for comment. Responses are open til 30 November.

Options range from retaining the status quo, to introducing a comprehensive requirement into the Australian Consumer Law (ACL) to ensure all products are safe before they are put onto the market.

Six ‘options’

In the briefest of terms:

  • Option 1: No change
  • Option 2: No change to the law, but more education and increased industry engagement
  • Option 3: A new provision that would allow regulators to issue a ‘notice of risk’ and prohibit future supply
  • Option 4: A new power for regulators to make direct orders on companies that are causing significant detriment
  • Option 5: A new duty for suppliers to take ‘reasonable steps’ to ensure products are ‘not unsafe’ – a type of general safety provision (GSP). The paper says this is comparable to the work health and safety laws.
  • Option 6: A new duty, with a higher threshold – for suppliers to only place safe products on the market – also a type of GSP, but with more prescriptive requirements.

Although it sounds like the same thing expressed two ways, the difference between Options 5 and 6 are significant.

One point to remember is that the options are not mutually exclusive. Several of the options could be brought in to complement one another. For example, Options 2 and 3 could co-exist. As could Options 2 and 5 or 6.

We need a paradigm shift

Last year I published a white paper: Consumer product safety in Australia: Challenges for practitioners and business managers In the paper I say that a paradigm shift is needed in the way consumer product safety is regarded – both within government and within business.

In the paper I explain that it doesn’t need to involve vast investment of funds. In many ways, it is about attitude and leadership.

Should a GSP be introduced, it will serve to highlight the importance of product safety and compliance within the market. It would raise the profile of product safety, but also place new onus on those most responsible for safety and compliance.

My white paper sets out a clear case for better industry engagement and education, as provided in Option 2.

Don’t put unsafe goods on the market – a reasonable ask

I believe Option 5 is a necessary and justified change. Product safety continues to increase in complexity. A regime that relies primarily on self-regulation, and reactive  government intervention, is simply inadequate as we progress in the 21st Century.

Option 2, to raise supplier awareness and understanding, would not by itself achieve the necessary shift in approach by the industry sector.

Industry has the greatest opportunity to achieve safety – through safe design and good product management. Government’s role should be to facilitate this, and where necessary, enforce the law. Without a legal obligation to ensure hazardous goods are not put on the market, consumers will become more and more at risk of illness and injury.

As I wrote in a previous article, a key element in product safety policy is the message that’s conveyed to the industry community. Without a GSP, suppliers of most products are far less aware of safety and have far less incentive to give safety priority over business costs and other practical matters.

Having a GSP in the ACL could engender a much higher awareness of product safety across all suppliers and provide clear motivation to only design, source and supply safe products. It would also provide (and capitalise on) leverage within companies and within supply chains.

But a GSP will need to be accompanied by substantial guidance.

Product safety guidance

Better supplier awareness, education and engagement

From my point of view, Option 2 is essential in every respect.

At present there is nowhere near enough guidance made available for suppliers across the board to understand product safety. Better industry education is essential to enable improvements. This will be the case if the law stays the same. It will be absolutely critical if a broader duty, as in Options 5 or 6, is enacted.

Also, assuming government resources may not be funded for all needs, I would place far more weight on improving industry awareness, understanding and action than on consumer education. As industry embraces product safety, this in itself could encourage more companies and associations to take a lead on providing consumer education for their specific products.

Product safety resources available to suppliers have substantially improved in recent times. Guidance sources now include the ACCC’s Product Safety Australia website, as well as ISO standards on supplying safe products and product recall; a series of ISO Guides; and Standards Australia’s Product Safety Framework: Handbook 295. Such material provides access and guidance to all suppliers, facilitating safety in all consumer goods.

Yet, such resources are not readily suited to helping micro, small and medium sized suppliers get to grips with the details of product safety. More practical assistance will be needed. I like the idea of an online tool, but far more is needed than the information sheets and FAQs cited in the consultation paper.

It’s also important to remember that while there are many useful published standards, there are many products for which no standard exists. Suppliers will need education on how to achieve safety where there’s no available benchmark.

Combined effort

To help government work out effective ways of raising awareness and educating suppliers, I believe an advisory group should be formed. Such a group could be comprised of experienced product safety practitioners from large retailers, business and industry associations, online retail platforms, online traders, test companies and less experienced industry representatives from small business.

Contrary to section 6.3.3 of the consultation paper, government would not need to fund the industry education alone. Why not explore a joint initiative with business and industry associations?

Overall, there is much to be gained by greater industry engagement by regulatory agencies.

Other options

Of the other options, in my view:

Option 1 – to make no changes – is untenable.

Option 3 may be a useful addition to government’s toolkit.

Option 4 does not seem to fit readily with consumer product safety.

Option 6 goes beyond what is necessary in the balance of consumer protection and industry costs. The more prescriptive requirements in Option 6 are likely to create substantial extra process, and stress, for the various members of the supply chain. While it may improve consumer safety in some respects, in reality, companies are unlikely to add the resources commensurate with the extra work. This would mean further stress for product safety staff and, more importantly, spread their work too thin. In such circumstances, many product hazards could go unaddressed and everyone would be worse off.

Conclusion

The fundamental thrust for change is that in the current, very open and dynamic consumer goods market, primary onus for safety must be shifted from government to industry.

My vote goes to the new Option 5 provisions, combined with the additional education and engagement in Option 2.

Have your say

Treasury’s consultation paper Improving the effectiveness of the Consumer Product Safety System is online here. Anyone can make a submission until 30 November 2019. There’s also surveys for consumers and businesses to complete, from the same page.

A further round of consultation will take place in 2020.

See also my white paper: Consumer product safety in Australia: Challenges for practitioners and business managers