Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Hansard source

I rise to speak about the Water Efficiency Labelling and Standards Amendment (Scheme Enhancements) Bill 2012. In talking to this bill, I would like to propose a number of enhancements beyond what is in this bill that I think would support the reliable and cost-effective implementation of what is a good idea—an initiative instigated under the previous coalition government. The bill before the parliament today allows the minister to determine changes to the WELS scheme without those changes requiring endorsement at state and territory level through their own legislation. As I mentioned, the WELS scheme is a proud achievement of the previous, coalition government. In 2005, the coalition government created the world's first national scheme of its kind, providing for water efficiency labels on shower heads, washing machines, toilets, dishwashers, urinals and taps. These labels give consumers an easy-to-understand star rating and water consumption information on the water efficiency of different products. This was all about empowering consumers so they can make better decisions in terms of their purchase of water and water-related articles and fittings.

This bill amend the WELS Act to allow the Commonwealth minister to determine more of the scheme's details, particularly those relating to the registration of products and cost recovery. This differs from the current position in that some aspects of the scheme, such as the five-year period of product registration, cannot be changed without changing nine sets of legislation. The minister will make changes by disallowable legislative instrument, the terms of which must be agreed by the majority of states and territories—and, as we know, there is an opportunity for the parliament to dissent from those instruments if they are unbecoming. If the bill is passed it is expected that the minister will make a number of changes to the WELS scheme including revising registration fees to meet the cost recovery target of 80 per cent, which the industry finances through fees set against users of the WELS system to pay for its administration.

Further amendments are proposed in the bill to the enforcement provisions of the WELS Act. I will talk more about that in a few moments. Civil penalty provisions have been added to provide a more cost-effective enforcement response. The bill will also apply strict liability to more provisions because it is currently difficult to prove intent in relation to breaches of the act—for example, not labelling a product properly.

Some other changes of an administrative nature have been made, and some of them reflect on the practical experience of implementing the scheme, such as the need to remove the requirement for gazettal of registration decisions and instead requiring decisions to be published on the WELS website, and providing for further reviews of the operation of the WELS scheme at five-year intervals. The coalition supports this bill as it builds on and improves a successful scheme that was first introduced by the coalition.

I turn to aspects of the regulatory and enforcement overreach that I think is happening under the current arrangements. In my travels with my coalition colleagues I have met with those directly at the coalface in the use of the WELS scheme—I am talking primarily about retailers and wholesalers of water technology that is covered by the WELS legislation. I thank a very impressive business owner, Glenn Powell of Who Bathroom Warehouse at Varsity Lakes in Queensland, for walking me through what the practical implementation measures look like from the point of view of a small business seeking to work within the WELS framework. As a business owner, he and his team are very keen to meet the needs of their customers, so they are very oriented towards providing relevant information that helps inform consumer decisions.

Glenn has a display facility in one of the main areas, and Ms Andrews, the local member, took me there and we sat down and had a chat. In that facility there are probably at least 100 items on display. Some of them are displayed in homelike environments so people can get a sense of the look and feel of the different articles available through Glenn's business. The majority of the items are presented in what would be a more familiar retail arrangement—not a display arrangement but more of a retail arrangement where customers can identify the item they wish to purchase and take it to the cash register. Where you actually get the item from the stock, from the shelving areas, there is no question about the labelling—every item is labelled; every individual product that is covered by the WELS scheme complies with the requirements. The display area, where you get the look and feel and the feng shui of what your bathroom or your kitchen might look like, is beautifully done, overwhelmingly so, and the products also carry WELS information on swing tags and the like.

A WELS inspector attended this business and observed that six of the items did not have a swing tag on them. There was no malicious intent, no ambition to deceive the customer—as I mentioned, Glenn Powell and his dedicated team are very keen to provide all the consumer information that customers might want. But in this case some swing tags were missing. It did not matter that if you saw an item you were attracted to you would walk over to the shelved area and lift it out. Before any purchase was made the consumer would have been fully informed of the information that the WELS scheme seeks to communicate. But taking the item off the shelf and seeing the information before buying the article was not enough—there were six articles that did not have a swing tag on them.

When this scheme was conceived under the former Howard government I believed that that kind of strict non-compliance could easily have been addressed by some encouragement to put a swing tag on the items, so that the display item and the stocked item, within reach of the customer—the article which a customer would grab and see the WELS information on before making a transaction or decision to purchase had been made—carried the same information. There was not a swing tag on six of the articles, but would it not have been better to say, 'We notice you have done a terrific job with all the point-of-sale information at the point where you reach for the packaged article to take it over to the cash register; good job to you, Glenn, and your team—but on six items there are no tags.' Who knows what might have happened. Someone might have lifted the swing tag off to actually write down the article. Or, heaven forbid, they might have gone through a Swedish furniture manufacturer and marketer that you are all very aware of where you are encouraged to take the tag off the display item to go and connect it up with the stock item that you get when you buy it. For those people who are familiar with that kind of experience, they may well have just lifted the tag off and gone over to the area where the WELS material is on the packaging and thought, 'This is the article I want because I've got the tag.' Or there might have been a lag time and it not going back, or they might have pocketed it or they might have written down a phone number on it. They might have done anything to it. The bottom line is that there was not a swing tag on that article but there was on the box that you actually buy.

What happened? What happened was that Glenn—and I thank my colleague—got smashed. He was told that he was now subject to a fine of potentially $6,000 per breach—$36,000 for the six swing tags not on the display item. But all of the WELS materials that you would hope would be available, and which the law says should be available to the consumer, they are staring at them on the package they would pick up to go and purchase it. So there is no lack of information—but no swing tag. There is a $6,000 fine for each breach. The staff member was very courteous. I do not have their name, and it would not add anything to the debate if I did. They pointed out that that is what the law said and they had very little wiggle room—to deviate from the strict prescribed requirements put them at risk of a $6,000 fine for each breach.

But there was an option. There was a $36,000 fine hanging over the head of a small business. We all know things are pretty tough in small business and there are no sloppy margins around anywhere. You can pay the fine or you can enter into a voluntary undertaking which was an enforceable undertaking. Once you had entered into, if you deviated from it, guess what? Here come the fines again. So here is a small business person doing all that the parliament could ask of them in giving effect to a scheme designed to inform consumers, entirely in keeping with his business mode and meeting all the requirements on the shelved items that people would purchase—but on the funky presentation in the showroom area someone might have pinched the six tags and done the IKEA trick: 'I want one of those.' 'Okay, we've got one of those.' They go for the shelf. 'See this? There are all the WELS labels. Great.' But that was on the tag you have got, too. Because it did not go back, or whatever happened to the tag, there was a $36,000 fine.

And then the enforceable undertakings come in. Glenn did what was required of him. They said, 'You need to produce a compliance training program.' He said, 'Who am I training? Am I training my customers not to pinch the tags like they are taught to do at IKEA? Or am I training me, when I fully know of these obligations? That is why I spend so much time meeting them.' This is a guy who had flagged to the department that he had imported an article for display that he did not think had been registered. He was proactively working collaboratively with the department. This is not someone trying to flinch on his responsibilities, yet he gets told to do an enforceable undertaking. Well, that enforceable undertaking has cost him absolutely thousands. He was instructed to produce a compliance training manual—and I have the handsome beast here. Do you think there would be a template on the website? Do you think every plumber, retailer or wholesaler within the country has the wherewithal to produce one of these manuals? There is actually useful feedback coming back to him about a range of things that were included in the manual, all the way down to the form, the text and the style—many of the lifts from the legislation—that he is fully aware of. But how do you train the customers not to pinch the tags? That must be in the next edition!

Let us work collaboratively with Australian small businesses to achieve the public policy objectives of this scheme—that is, to communicate to consumers information relating to water products in terms of their water efficiency and performance. Let us work collaboratively. Here is a guy who I respect and admire for his courage in being involved in small business at a time when this government has no inclination whatsoever to assist him. There are cost pressures—he has got to be top-class in his customer service. He aims to achieve that. He has got his business set up in such a way that you cannot help but have the WELS information hit you in the face, because that is what is on the packaging of the article you wish to purchase. But, in the funky display areas—where there are those people who like to watch home renovation programs or want to get a feel for the size, shape and the feng shui of their purchase—six of these swing tags swung off. I do not know why and neither does he. He is alert to the need for them to be there, yet a $6,000 fine is just completely over the top.

There is the suggestion that you can voluntarily go into an enforceable undertaking. I think this publication might have cost him $12,000 to produce. He now has to get himself audited every three months, because of the swing tag. He proactively contacts the department to identify plumbing items which he does not believe have been registered to assist the department with its work. He can look forward to routine raids to make sure he is doing okay. He has got a higher infringement notice risk available to him that could add up to over $100,000.

I would have thought the best thing to do was say to Glenn: 'You've clearly embraced the spirit of the scheme. You share our motive to have customers aware of what is going on. Do you know a couple of those swing tags are missing? We know that a customer can't help but see the WELS information before any purchase because it is on the packet. Once they see something they like, they can reach for it and there it is. We'd like it to be on the articles themselves.' He would say, 'Me too'.

We systematically have people run through the store to make sure customers are aware that the IKEA training of pinching the tag—so that you go and buy the article that is the one that is on display—might set him up each time for a $6,000 fine for each breach—and, if he does not pay that fine, he has got a voluntary enforceable undertaking that is about as voluntary as a gun to the head.

I think we can do better with this scheme. This bill talks about a review. Let's have a look at a more collaborative, engaging and shared purpose approach to the implementation of this arrangement—not this arrangement, which I think is a regulatory and enforcement overreach that serves no good purpose, that sets up some tension between agencies that should have a shared purpose. It is just way too much for small business to have to cop when they are trying to do the right thing.

See this speech in context