1998

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

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MOTOR VEHICLE STANDARDS AMENDMENT BILL 1998
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EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Transport and Regional Services, the Hon John Anderson MP)

ISBN:  0642 379181

OUTLINE

The purpose of the Bill is to:
•	enable implementation of the Government’s policy to mandate model specific vehicle fuel efficiency labelling via and Australian Design Rule; 
•	improve the administration of the Act by restoring some provisions inadvertently removed or adversely affected by previous amendments; and
•	create a position of Associate Administrator to improve the system for issuing approvals under the Act. 

FINANCIAL IMPACT STATEMENT

The amendments will have no impact on business. The Department will be able to function more efficiently due to the administrative improvements.  

The Prime Minister’s policy of fuel efficiency labelling is to be introduced by the development of an Australian Design Rule which will be a determination under the Act.  This will be the subject of a separate Regulatory Impact Statement and consultative process.

REGULATORY IMPACT STATEMENT

Background

The Motor Vehicle Standards Act 1989 (the Act) provides the legislative framework for standards for motor vehicles when they begin to be used in transport in Australia.  It also provides for the administrative framework for enforcing compliance with these standards.  These vehicle standards are determinations under the Act and are known as Australian Design Rules (ADRs). 

The proposed amendments: 
•	broaden the scope of the definition of “vehicle standard” to include measures promoting the saving of energy, 
•	make procedural changes to the administration of the Act including the appointment of an Assistant Administrator, 
•	improve enforcement of the provisions of the Act by restoring the link to the Customs Act 1901 severed inadvertently when that Act was amended and
•	provide the ability to revoke approval to place compliance plates on a motor vehicle.

The Office of Regulation Review has advised that only the amendment expanding the scope of the definition of a vehicle standard requires a Regulatory Impact Statement.  Consequently, the rest of this RIS focuses on the change to the definition and the rationale for this proposal.

Problem

The Government has decided to introduce an ADR for fuel efficiency labelling.  In his Climate Change Statement of 20 November 1997, the Prime Minister announced that model specific fuel efficiency labelling will be implemented as an Australian Design Rule as part of the Automotive Industry Environmental Strategy.  The labelling proposal is a key element in a wider package of measures designed to improve the fuel efficiency of the Australian vehicle fleet.

The Department has received legal advice, which is confirmed by independent advice to the Australian Greenhouse Office, that the scope of the current MVSA would not permit the making of an ADR for fuel consumption labelling.  Currently subsection 5(1) of the Act provides that:

“vehicle standard means a standard for road vehicles or vehicle components that is designed to:
(a)	make road vehicles safe to use; or 
(b)	control the emission of gas, particles or noise from road vehicles; or 
(c)	secure road vehicles against theft.”

Objective

The objective of the proposal is to empower the Commonwealth to implement a labelling standard.  

The objective of the labelling standard is to reduce greenhouse gas emissions from motor vehicles, by influencing aggregate fuel consumption.  An effective labelling scheme would inform consumers of the relative fuel efficiencies of various models at the point of sale and encourage selection of more fuel efficient vehicles.  Over the longer term this should in turn encourage manufacturers to produce and market more fuel efficient vehicles.  The United States, Japan and the United Kingdom require a form of model specific fuel efficiency label to be placed on all vehicles. 

The labelling scheme will contribute to a reduction in greenhouse gas emissions from the transport sector in the period to 2010-2015 if it is assumed that the ADR would commence in 2002 and then affect a significant percentage of the motor vehicles in the fleet.

This scheme will be implemented by developing an ADR which is the subject of a separate consultative and legislative process, including a detailed regulatory impact statement.

Options

Options to achieve the desired objective include:

1.	The current situation
2.	Introducing a non-regulatory voluntary code of practice
3.	Amending the Act’s definition of a vehicle standard to incorporate only the current policy proposal for model specific fuel efficiency labelling
4.	Amending the Act’s definition of a vehicle standard to incorporate the exact wording of an international agreement to which Australia is considering acceding 
5.	Amending the Act’s definition of a vehicle standard to include a provision to “promote the saving of energy”.

Impacts

1)	The current situation

Model specific fuel consumption information is currently available through the Fuel Consumption Guide published until 1996 by the former Department of Primary Industries and Energy and now the responsibility of the Australian Greenhouse Office.  This information is provided voluntarily by most vehicle manufacturers and importers under the Federal Chamber of Automotive Industries’ voluntary code of practice. Until 1996 this information was published in booklet form and up to 500,000 copies were printed.  Currently the information is only available on the Internet. 

The guide is thought to have been used primarily by fleet managers with commercial imperatives to consider relative fuel consumption performance rather than by private consumers.  These guides were also not always available at the point of sale.

Improving the distribution of the guide could contribute to the consumer information objective of the proposal.  However vehicle retailers cannot be to display these guides prominently in showrooms.  Such displays are likely to be less effective that stickers on vehicles as research has demonstrated that, when intending to purchase a vehicle, consumers focus on the vehicle rather than the showroom surroundings.  

This option has the advantage of not requiring a legislative amendment.

2)	Introducing non-regulatory voluntary codes of practice

Under this option the Act would not require amendment.

In principle, it would be possible to develop a voluntary code for model specific fuel efficiency labelling, but the automotive industry has consistently expressed opposition to such a scheme for a number of years. 

The industry favours a generic fuel consumption label which would not contain any information about the fuel consumption of an individual vehicle or model, coupled with continuation of the Fuel Consumption Guide.  After a thorough examination of the issues, the Government has concluded a generic label is of limited value.

The Government has decided to pursue a mandatory approach, as the introduction of model specific labelling through a voluntary mechanism has not been achieved, despite a significant period of negotiation with the industry.

3)	Amending the MVSA definition of a “vehicle standard” to incorporate only the current policy proposal for model specific fuel efficiency labelling.

This option would achieve the policy objective, but it is very limiting and not consistent with the definition in the UN agreement for vehicle standards.

This narrower addition to the definition would be along the lines of a vehicle standard “to require model specific fuel consumption labelling”.  Should further ADRs related to energy saving be required in the future then the Act would require further trivial amendment.  The preferred option (option 5) removes the need for such an amendment.

4)	Amending the Act’s definition of a vehicle standard to incorporate the exact wording of an international agreement to which Australia is considering acceding 

Australia is currently considering acceding to the United Nations Economic Commission for Europe 1958 Agreement on the harmonisation of vehicle standards (the 58 Agreement). Article 1 of this Agreement provides that the agreement covers objects “whose characteristics have a bearing on road safety, protection of the environment and energy saving”.  

It is Government policy to harmonise Australian motor vehicle standards with international standards, wherever possible, in order to improve Australia’s trade position in relation to motor vehicles and components, and to avoid the imposition of additional compliance costs on the motor vehicle industry which would be passed onto the consumer in higher prices.  Australia is currently considering acceding to the 1958 Agreement.  Some 60 per cent of the ADRs already conform to international standards.

This proposal would allow the development of the proposed ADR on fuel consumption labelling.

However, notwithstanding the policy of international harmonisation, the rest of the MVSA does not bear any resemblance to the 58 Agreement.  Should Australia accede to the Agreement, adoption of the ECE regulations will be considered on a case by case basis.  The rest of the MVSA is very different to the wording of the 58 Agreement and there is little logic in having a single harmonised part of the Act.  If the Act requires amendment in order to accept international regulations, this should be done after a decision to accede has been made.

5)	Amending the Act’s definition of a vehicle standard to include a provision to “promote the saving of energy”.

This is the preferred option for a number of reasons.

Firstly, it achieves the objective of providing a capacity in the Act to deliver an ADR meeting the Government’s specific policy decision.  As indicated earlier, this ADR will be the subject of a separate Regulatory Impact Statement.

Secondly, it is broad enough to enable other greenhouse/fuel conservation objectives which may be agreed in the future to be adopted, without the need for separate amendments.  Such regulations would not be introduced without a separate individual Regulatory Impact Statement.

Finally, it is broad enough to encompass the Government’s policy commitment to conserving energy without being too broad.

This proposal will have no impact.

It simply provides the capacity to implement a specific Government initiative under its commitments to reduce greenhouse gas emissions from new vehicles (through encouraging more fuel efficient vehicles).  Mandatory model specific fuel efficiency labelling is designed to assist the community to make more informed choices regarding fuel efficient vehicles.  It is essentially a consumer information initiative.

The impacts of the labelling standard will be assessed via separate RIS which will be developed in the process of drafting the ADR.  In summary though, the vehicle manufacturing industry already performs the tests required to report fuel consumption, so the main impact on business as a result of the subsequent development of the ADR, will be the costs associated with the printing of labels and their application to vehicles.  In addition, an economic assessment of greenhouse gas abatement measures by the Bureau of Transport and Communications Economics, concluded that model specific labels represent a cost-effective ‘no regrets’ option, by encouraging and assisting consumers, particularly private buyers, to take fuel efficiency into account in their vehicle purchase decisions.  

Consultation

As indicated, the proposal to amend the Act merely enables the later development of the ADR for fuel consumption labelling.  The FCAI have been advised of the proposed amendments, and has advised that the Chamber has no objections or difficulties with the amendments, noting that the labelling ADR will be subject to its own review and public comment process. 

Approval for the ADR will be sought through the established consultative processes involving the Motor Vehicle Environment Committee (MVEC). The key bodies involved are the National Environment Protection Council, the National Road Transport Commission, the Australian Transport Council, the Committee on Regulation Review and finally the Council of Australian Governments.

As part of the consultative process, the draft ADR and RIS will be circulated for public comment, including to groups such as the FCAI, Australian Automobile Association, the Motor Traders Association of Australia, and the Australian Consumers Association.

The ADR proposal has already been the subject of detailed consultation with the motor vehicle industry, as well as motorist (consumer) organisations over a significant period of time.  Consultation occurred in the lead up to the Prime Minister’s Climate change Statement of November 1997, and prior to this in the context of the 1992 National Greenhouse Response Strategy and the 1995 greenhouse statement, Greenhouse 21C.

Conclusion

The preferred option for providing the capacity to develop standards relating to fuel efficiency is through an amendment to the Motor Vehicle Standards Act 1989 to broaden the definition of “vehicle standard” to include standards promoting the saving of energy.

While this approach will cover more than the current policy intention of making model specific fuel efficiency labelling mandatory, the advantage of this approach is that it:
•	harmonises with the intent of international agreements; and
•	removes the need to amend the legislation in future should international or other regulations be adopted locally.

The new definition does not, in itself, require the development of further, more demanding standards.  This option was chosen after a consideration of a number of alternatives because it is the most straightforward and practical way to implement the Government’s specific commitment. 

Implementation and Review

There are no activities associated with the implementation of these amendments beyond the separate development of an Australian Design Rule which will be the subject of a separate RIS.  The implementation of the design rule will be discussed in that document. 

NOTES ON CLAUSES

Clause 1    Short title

This clause provides for the Act to be cited as the Motor Vehicle Standards Amendment Act 1998.

Clause 2    Commencement

This clause provides for the Act to come into operation on the date on which it is proclaimed. 

Schedule 1

Item 1   Subsection 5(1)

This amendment provides a definition of “Associate Administrator” of Vehicle Standards for the purposes of the proposed amendment to section 22. 

Item 2   Subsection 5(1)

This amendment to subsection 5(1) extends the definition of vehicle standard to include standards for energy saving.

The amendment allows standards to be made to promote the saving of energy.  This broad provision would enable the introduction of an Australian Design Rule for labelling vehicles with model specific fuel consumption information in accordance with the Prime Minister’s Climate Change Statement of 20 November 1997.  The amendment also makes the scope of the definition consistent with that applicable to international standards promulgated by the United Nations.  This is desirable because of Australia’s efforts to promote the international harmonisation of vehicle standards.

Item 3   Paragraph 11(1)(a) 

The proposed amendment is necessary to rectify inconsistencies in the Act following the amendments made in 1995.

Section 11 details the Minister’s capacity to withdraw identification plate authority.  The arrangements in relation to identification plates are covered in section 10 and approval for placing plates on vehicles is covered in section 10A.  To enable the Minister to have the capacity to withdraw a plate authority for all types of approval, section 11 must refer to both sections 10 and 10A.

Item 4   Subparagraph 11(1)(b)(i)

This amendment clarifies the existing provision so that it is clear that the arrangements with which the Minister must be satisfied are the arrangements referred to in section 10.

Item 5   At the end of Subparagraph 11(1)(b)(iv)

This provision allows for the addition of a further condition under which an approval can be revoked.  This is described in the next provision.

Item 6   After subparagraph 11(1)(b)(iv)

Subsection 10A (4) enables the Minister to apply conditions to the authority to place identification plates on vehicles.  The amendment provides a mechanism for the Minister to cancel, suspend or vary the person’s authority if the person breaches a condition of that authority.

Item 7   Paragraph 12(d)

This amendment removes the conjunction and terminates section 12 at this point.

Item 8   Paragraph 12(e)

This provision repeals paragraph 12 (e) to remove the anomaly of having a criminal penalty attach to a matter which is more appropriately dealt with under the provisions of section 11.

Item 9   Subsection 17A(1)

Section 39 of the Customs Act 1901 has been repealed and the importation provisions are now referred to elsewhere in that Act.  The amendment restores the intended link between the two Acts to allow an authority holder to deal with an imported vehicle.  

Item 10   Subsection 22(1)

As the national system for formulating and applying national road vehicle standards has developed since the introduction of the Act in 1989 the workload of the Administrator has steadily increased.

Section 23 empowers the Minister to delegate specified functions and powers under the Act to the Administrator or another Senior Executive Service Officer.  Some non Senior Executive Service staff have appropriate experience and expertise to carry out some of the more routine duties currently carried out by the Administrator.  The amendment to section 22 creates the position of Associate Administrator and removes the  requirement for the delegation to be made to a member of the Senior Executive Service.

Item 11   At the end of section 22

This amendment specifies that an Associate Administrator is to be appointed by the Secretary to the Department and is to hold an office in the Department.

Item 12   Section 23

This amendment changes the current arrangements by omitting the provision under which the Minister is able to delegate certain of the powers under the Act to a member of the Senior Executive Service and replacing it with a reference to the newly created position of Associate Administrator.

Item 13   Paragraph 23(e)

This amendment removes the semi colon at the end of paragraph 23(e).

Item 14   Paragraph 23(f)

Section 23 empowers the Minister to delegate specified functions and powers under the Act with the exception of those listed in paragraphs 23(a) to (f).  Paragraph 23(f) relates to “the power under section 11 to cancel an authority”.  It is appropriate for the Minister to be able to delegate that power and accordingly paragraph 23 (f) has been repealed.

Item 15   After paragraph 39(1)(aa)

Section 10A of the Act deals with approvals for the placement of identification plates on vehicles and was inserted into the Act in 1995.  Section 39 specifies the provisions of the Act under which an application for review by the Administrative Appeals Tribunal may be sought.  The insertion of paragraph 39 (1) (aa) allows a person to apply to the Administrative Appeals Tribunal for a review of a decision made under section 10A.

Item 16   Paragraph 39(1)(b)

This amendment restores review rights inadvertently affected when the Act was amended in 1995.  Paragraph 39(1)(b) refers to subsection 14(2) which was repealed in 1995.  Provisions relating to approval for supply of nonstandard vehicles now appear in section 14A.  It is therefore appropriate that these decisions be subject to application for review by the Administrative Appeals Tribunal.