2018 product safety and consumer protection priorities

Speakers: 
Mr Rod Sims, Chair
Conference: 
National Consumer Congress 2018
15 March 2018

Chairman Rod Sims has announced the ACCC’s product safety priorities for 2018 at the National Consumer Congress. Mr Sims has reaffirmed the ACCC's support for a general safety provision to be introduced in Australia law to reduce the risk of unsafe goods entering the market, and the nine critical safety issues facing Australian consumers.

Transcript: 

Check against delivery.

Good morning, and thank you for attending our National Consumer Congress.

It’s great to see so many familiar faces again.

We cover many issues at Congress each year but one that is sometimes underdone is product safety. I want to redress that this morning.

2017 was a remarkable year for product safety and consumer protection in Australia, but if the first few months of 2018 are any indication, as our product safety priorities attest, I think it’s fair to say “we ain’t seen nothing yet”.

I am confident almost every Australian with a car has now heard of a Takata airbag and is aware of the dangers. When the compulsory recall was announced by Minister Sukkar recently, there were 4.2 million page views on our Product Safety website, where the recalls are listed, in one week. 

We worked very hard to get the best outcome for consumers through the compulsory recall; I thank the media for their interest, and the advocates here today for helping us raise awareness of this critical safety issue.

The lessons we learn from monitoring the largest vehicle recall in Australia will endure for years to come, guiding how we as an organisation handle large recalls, and communicate important messages to the community in a meaningful way. 

1. Product safety priorities

Today, I am proud to release a new policy which sets out how the ACCC prioritises and manages product safety risks, and the issues we will target in 2018.

As an agency with very limited resources, it is essential that we prioritise our resource allocation. Here’s why.

The ACCC receives 10,600 product safety reports each year, including 6,900 reports through our Infocentre, 3,100 compulsory notices by businesses of deaths and injuries, and 600 compulsory notices by businesses of voluntary recalls.

As an organisation, each year, we monitor about 630 active voluntary recalls, and undertake surveillance to check compliance with about 20 of the 66 safety standards and bans we administer.

We have only 50 people dedicated to product safety across Australia.

We, therefore, only have resources to conduct about 60 initial investigations and to undertake around 10 in-depth safety investigations each year.

When prioritising product safety risk, the ACCC uses five risk factors.

First, where there is a high risk to public safety due to the potential number or severity of injuries.

Second, if users are unable to perceive or safeguard against the risk.

Third, if users of the product expose other people to the risk of death or injury.

Fourth, whether the product is subject to those 66 compulsory safety standards and bans.

Fifth, whether ACCC action is likely to have a broader public benefit.

While much of this work is naturally reactive, we also leave capacity to identify and deal with new and emerging issues.

In developing our product safety priorities each year, our work begins with an analysis of data on product injuries and deaths.

This year, the ACCC will be targeting nine critical safety issues facing Australian consumers:

  • The compulsory recall of vehicles with Takata airbags, which currently affects 2.3 million cars that have not had their airbag replaced yet.
  • Improving the safety of quad bikes which is one of leading causes of deaths on farms. On average, 16 people tragically die each year following accidents on quad bikes, with many more injured, including children.
  • Improving return rates for the Infinity electrical cables recall, which was announced in 2013 but almost five years later, only 52 per cent of the unsafe cabling that is subject to the voluntary recall has been found and replaced, with over 2,000 kilometres remaining in homes and businesses.
  • Reducing the risk from button batteries which can kill or injure a child within a few hours of being swallowed. Every week, around 20 children wind up in emergency departments following exposure to button batteries and, sadly, children have died from their injuries in Australia.
  • Working with state and territory consumer agencies to improve the safety of baby walkers and toppling furniture. About 50 children are in hospital each week due to furniture falling on them and again, there has been deaths following accidents. There have also been many injuries from baby walkers.
  • Improving the safety of products supplied over the internet. With the explosion of online shopping, unsafe products can easily fall through the cracks.
  • Reviewing those 66 compulsory safety standards and bans to make sure they’re working, and checking whether businesses are complying.

In addition, a key priority for the ACCC this year is working towards the introduction of the General Safety Provision into Australian Consumer Law.

2. General Safety Provision

Most consumers are surprised to learn that it is not illegal to sell unsafe products in Australia. Indeed they purchase products with the expectation that they are safe.

This is a totally reasonable expectation!

Consumers put their trust in suppliers and known brand names as we are generally not in a position to assess hidden safety hazards at the point of sale ourselves.

Despite our best efforts, and yours, consumers are tragically injured and killed by unsafe products every year.

As we all know, the ACL Review proposed to introduce a general safety provision into the law.

I know many of you are strong advocates for such a fundamental reform. The ACCC, and I, completely share your enthusiasm.

Why do we need a general safety provision? We need it because our current product safety laws are essentially reactive. They normally only come into play after a problem has occurred.

Like doctors, we believe that prevention is better than cure. We want to ensure that the goods and goods related services supplied in Australia are safe from the outset, and stop injuries and illnesses occurring in the first place.

It would be hard to imagine consumer protection today without the misleading and deceptive conduct or unconscionable conduct provisions of the ACL.

In the future, we need a world where it is hard to imagine life without a general safety provision.

Just like other general protections, a general safety provision would place a clear requirement on business: do not supply unsafe products.

It would support existing consumer remedies in the ACL, and would strengthen the product safety provisions enabling the ACCC to address hazards faster.

Most importantly, it would help businesses improve their ‘product stewardship’ from design phase to point of sale, leading to reduced product safety issues over time.

It is understandable that many businesses would be concerned about the potential cost of a general safety provision. But businesses likewise campaigned against laws that dealt with misleading and deceptive conduct.

Three comments here.

First, a general safety provision does not need to be a costly reform.

Businesses that do incur additional costs will likely be those that don’t have proper product stewardship practices in place already. Putting these in place will in many instances save money for businesses in the long run as they improve the quality of their products and help them avoid expensive and reputation damaging recalls.  

Second as Australia’s current product safety system stands, we are lagging behind the UK, EU, Canada, Malaysia, Singapore and Brazil. It’s time we catch up with them and provide Australians with a reason to have greater confidence in the safety of the goods they purchase.

Third, a general safety provision presents an opportunity for better and more innovative product offerings as consumers are more likely to trust them.

From our perspective, a general safety provision is a no-brainer!

I look forward to working with you all to make it happen.

Another significant development from the ACL review are proposed increases to consumer law penalties.

3. Australian Consumer Law penalties

The Australian Consumer Law is often, most unfortunately in my view, seen as the ‘poor cousin’ of competition law and I have little doubt that lower ACL penalties have played a significant role in this discrepancy.

We will do all we can so that this will be the year that changes.

In its final report on the ACL Review, Consumer Affairs Australia and New Zealand (CAANZ) recommended penalties for a breach of the ACL be raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months.

Penalties against individuals under the ACL are also proposed to increase from $220,000 to $500,000.

Crucially, it was just over a month ago that the bill to raise penalties was introduced to the Parliament by Minister Sukkar which, if passed, will align the maximum penalties under the ACL to the maximum penalties under the competition provisions of the CCA.

This is also consistent with a Productivity Commission recommendation into Consumer Law Enforcement and Administration.

If passed, this will represent a profound change that I believe will improve corporate behaviour significantly.

Currently, for corporations breaching the ACL, penalties are around one-tenth of the lowest maximum penalty for breaches of the Competition Law.

There is no good reason for this difference. Misleading consumers to pay much more than they otherwise would can easily cause more consumer detriment than serious cartel activity.

It is about time the law recognised this.

Last week [9 March 2018] the Treasury commenced Regulatory Impact Statement consultation on a number of other ACL amendments from the ACL Review, including:

  • Clarifying in the consumer guarantees regime that multiple minor failures can amount to a major failure, and exploring the possibility of a refund or replacement for product failure within an a short period of time without needing to argue about whether it is a major failure
  • Applying consumer guarantees to goods bought in online auctions
  • Increasing the disclosure requirements around extended warranties, and
  • Increasing the financial threshold in the definition of consumer from $40,000 to $100,000.

The ACCC supports all these amendments as important improvements to the protections provided to consumers.

These proposed amendments will also increase protection for small business; also long overdue.

For example, the $40,000 financial threshold was last updated in the 1980s, and a lot has changed since then. 

As stakeholders, your views matter a lot.

I encourage each of you to participate in the consultation process to ensure that consumer voices make a strong contribution to the selection of the way forward.

Consultation closes on 20 April, so time is running out.

4. Compliance & Enforcement Policy

Of course, product safety issues aren’t our only priorities for 2018. As I announced last month at CEDA, other key priorities for the ACCC this year include:

  • Competition in the financial services sector, particularly residential mortgages
  • Competition and consumer issues in energy
  • Misleading claims about internet services
  • Large traders who are avoiding or misrepresenting consumer guarantee rights
  • Consumer issues in the new car retailing industry, and
  • The use of consumer data.

These priorities are in addition to our enduring priorities which include vulnerable and disadvantaged consumers and conduct impacting Indigenous Australians.

This work will be taking place against the backdrop of progressing the reforms recommended by the recent review of the Australian Consumer Law. The first of these off the rank, fortunately, is reform of penalties for breaching the ACL.

Access to data

It is a cliché of the digital age that if the product is free, then you’re the product.

Or to be more precise, your data is the price you pay for ‘free’ services.

This is an important distinction as it alludes to an important fact: your data has value.

In the digital age, the ACCC not only believes that access to your own data is a right, but that access to data will enhance competition.

The Productivity Commission’s Data Availability and Use Report says it is essential that access to data, while underpinned by confidence in privacy, is considered through a competition and consumer lens otherwise the full benefits won’t be realised.

Importantly, the Productivity Commission sees consumer data operating as a joint asset between the consumer and the entity holding the data. Both parties would have the opportunity to harness the dataset for their own purposes, and consumers may share their consumer data with third parties.

More broadly, access to data and portability increases competition and creates greater consumer choice by encouraging firms to provide tailored services.

It is difficult to argue against. The Treasurer has announced that the ACCC will be the lead regulator for the new access to data regime.

Digital Platforms Inquiry

And while on the topic of data, it is not surprising that the competition and consumer issues associated with big data are important areas to be considered in the ACCC’s Digital Platforms Inquiry.

As noted in our issues paper:

… the extent to which consumers are aware of the amount of data they provide to digital platforms, the value of the data provided, and how that data is used is another potential source of concern.

How digital platforms collect and use our data has irrevocably changed the landscape for content creators, especially journalists, and advertisers.

Our inquiry will go to the heart of digital platforms’ market influence, including how our news is curated, and what information we receive … or don’t ever receive.

As many of you represent consumer groups, you have a unique contribution to make to the inquiry, not only as representatives of community interests, but also as communicators. Your experience will be invaluable to us.

I want to read your responses to the issues paper. Submissions close on 3 April.  

Electricity

A significant consumer issue is our surveillance of the electricity and gas markets in recent years.

This is both a competition and a consumer issue.

This directly affects every Australian household, especially lower-income and disadvantaged households, as well as thousands of manufacturers and their employee’s job stability.

The Retail Electricity Pricing Inquiry will issue its final report in June and the wholesale gas inquiry will report regularly until 2020.

Although a range of initiatives have led to some consumers now being on lower cost contracts, as we come into winter many Australian families will be dreading the quarterly bill.

Competitive, well-functioning markets are essential for affordable energy.

Our recommendations on electricity and gas will do much to help realise this goal.

Closing statement    

I would like to close by thanking you all for your continued support and advocacy.

The consumer work the ACCC does would not be possible without it.

It is not hyperbole to say that lives are saved when we work together.

As the program I have outlined today should also prove, we need your passion more than ever.

Thank you.

 

Further information on the Product Safety policy is at: ACCC 2018 Product Safety Priorities.