The tax forum as a platform for a grand bargain?

In his Challenges of Federation speech we referred to in a previous article, Prime Minister’s Department Secretary Terry Moran said:

There are business leaders who hold the view that Australia can’t work well unless states cede regulatory authority to the Commonwealth, and that as much as possible affairs should be run from the centre. Proponents of this view often see government as a giant corporation, where everything is subject to the power of the CEO. This is not an arrangement for stable and effective democratic government. It is a recipe for authoritarianism, and would be a long way from the liberal democratic ethos we now enjoy.

Yet this is how the Australian federal model operates.

In an earlier article we referred to Peter Phelps’ maiden speech to the NSW Legislative Council.

In another part of the speech he said:

The problem (with the Australian federal structure) is compounded by vertical fiscal imbalance or, to put it in the language of humans rather than economists, the States have the attitude of teenagers:

"Come on, dad, give us some more money.""Why don't you just get a job, son?""Aw, dad, now you're just being mean".

This puts the situation well.

The Intergovernmental Agreement on Federal Financial Relations provides:

The Commonwealth will provide National Partnership payments to the States and Territories to support the delivery of specified outputs or projects, to facilitate reforms or to reward those jurisdictions that deliver on nationally significant reforms or service delivery improvements.

The National Policy and Reform Objectives underwriting the Federal Financial Relations IGA reads:

National Partnership incentive payments will be provided to reward the States and Territories which deliver reform progress or continuous improvement in service delivery.

These payments will be structured in a way that encourages the achievement of ambitious milestones or performance benchmarks.

Graduated benchmarks may be specified in National Partnership agreements to provide that States receive some proportion of funding for activity that has not fully achieved the reform or service delivery objectives but has resulted in partial attainment of the agreed outcomes.

The achievement of milestones and performance benchmarks will be assessed by the independent COAG Reform Council, in order to provide transparency and enhance accountability in the performance assessment process.

National Partnerships should set out clear, mutually agreed and ambitious performance benchmarks that can be assessed by the COAG Reform Council. These should be structured in a way that encourages the achievement of ambitious reform targets and continuous improvement in service delivery, and provide better outcomes than would otherwise be expected.

A practical example of a ‘reward payment is clause 32 of the National Partnership Agreement to Deliver a Seamless National Economy which provides:

32. The Commonwealth will provide reward payments to the States and Territories following CRC advice as to the achievement of key milestones, as set out in the Implementation Plan for the 27 deregulation priorities. The maximum distribution of funds to be paid is set out in Table 1 above.

And as we referred to in an earlier article, the NSW Parliament passed reforms relating to directors liability because they were reforms as they were COAG reforms for which reward payments were payable for ‘meeting key milestones’ - and the NSW Government was keen to secure passage to win ‘brownie points’ for making the necessary changes to the law.

If the state’s play up the Feds won’t pay up.

And, despite the wishes of Terry Moran the Commonwealth is hardly slowing down the areas of public administration in which it wishes to become involved.

The last article discussed the grand bargain that never was.

It was a pity a succession struggle within the federal ALP derailed an attempt of a grand bargain.

We remain of the view there should be a grand bargain establishing:

1. which level of government should have responsibility for particular public policy areas;

2. what taxation bases should be assigned to the states and territories; and

3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:

(a) indirectly, through an agreement made under section 96 of the Constitution; or

(b) through a reference of power by the states to the Commonwealth or directly by constitutional amendment.

Clearly, the proposed tax forum to discuss the Henry Tax Review to be held on 4 and 5 October 2011 would be the perfect opportunity

Except it won’t happen.

The forum will apparently:

....continue the decade-long conversation we started with the release of Australia's Future Tax System (AFTS) Review last year. It will focus on the broad sweep of topics in the Review, with sessions to discuss personal tax, transfer payments, business tax, state taxes, environmental and social taxes, and system governance.

But won’t discuss the GST, areas of the Henry Review the Government has already indicated it won’t implement and most importantly what elements of the federation will perform which function.

This is a wasted opportunity.

OHS and NOLS - a rockier passage for seamless economy national schemes?

As we have previously discussed, the COAG process is an exercise in ‘executive federalism’.

When it comes to 'seamless economy' national schemes, the relevant Ministerial Council signs off on legislation that is then usually rubber stamped by state parliaments with nary a change, because ‘COAG said’.

However there have been some signs that state parliaments may be less inclined to acquiese.

States and territories are introducing legislation that broadly introduces the model Work Health and Safety Act agreed by the Workplace Relations Ministerial Council (the WMRC).

We have previously noted the relevant intergovernmental agreement permitted some variation from the model legislation provided it doesn't ‘materially affect the operation of the model legislation’.

A major commitment of the incoming NSW Government was to implement the model law as agreed.

This meant not re-enacting some current NSW provisions, including the ability of unions commencing OHS prosecutions, hearing OHS cases in specialist industrial courts rather than courts of general jurisdiction, the reversal of the onus of proof and the effective imposition of absolute liability on employers.

However, the Shooters and Fishers Party were successful in moving some amendments in the Legislative Council.

As the party’s leader said:

If politics is the art of the achievable this is the best that we believe could be achieved in terms of a middle ground between both starting positions, that is, what the Government, farmers and business wanted and what the unions wanted. A number of issues raised with us have been considered by our party in coming to our position.

The Shooters and Fishers Party supports the concept of harmonising occupational health and safety laws in New South Wales with those in the rest of Australia. This gives effect to a Council of Australian Governments [COAG] agreement signed on 3 July 2008, when each State and Territory agreed to develop and implement uniform national occupational health and safety laws by December 2011.

At the same time we recognise that there will be minor differences between States and Territories. I believe that most members of this House and the Legislative Assembly would acknowledge the unique position of the New South Wales economy in the Commonwealth, and it is imperative for all of us to maintain and develop the competitive position of New South Wales in respect of other States and Territories.

In the event, unions will be able to prosecute in some circumstances (but not claim a moiety or bounty) and some prosecutions will still be heard in the Industrial Court rather than the Local and District courts.

In South Australia, the model bill was introduced and then withdrawn by the Government in the Legislative Council.

This was because there was some dissention about the ambit of the primary duty of care imposed by the legislation.

The model bill imposes a general duty on people conducting a business or undertaking to take all reasonable steps to ensure health and safety.

However, some argue this duty should be restricted to duty holders who have ‘control' over the relevant workplace.

It is understood the Government may not have got the bill as introduced through the Council.

However, an unamended bill was reintroduced into the House of Assembly on 19 May 2011.

So it will be interesting to see if the opposition to the terms of the model law will be sustained.

Western Australia is considering the Occupational National Law Bill 2011.

This is an ‘applied’ law - where one jurisdiction passes a 'template’ law (in this case, Victoria), and the others adopt that law as a law of the jurisdiction.

Sadly, the WA Legislative Council Uniform Legislation and Statutes Review Committee hated the law, saying:

1.2 The Bill does not introduce national occupational licensing. It proposes a process for developing a national licensing system. Other than that, it largely consists of a list of matters about which regulations may be made. It is not uncommon for uniform legislative schemes to leave detail to regulations. However, the Bill goes beyond this. It requires the substance of the licensing scheme to be in regulations.

1.3 Given this, it is particularly important that the Bill meet minimum standards for good legislation. It should provide a reasonable degree of certainty and coherence as to the legislative framework , to which the regulation-making powers relate. The Bill does not meet this standard. It lacks clarity. Too often the Bill is silent. Too much is still to be developed. Too many options are left open. Too much is left to regulations. The Bill is not clear on what is permitted and what is not, what is to occur and what is not.

1.4 As a result, it is not clear whether the Bill asks Parliament to delegate its legislation making power (to a Ministerial Council) in respect of the proposed licensing system or abrogate it.

Other jurisdictions have passed the law, although in most the law has yet to be proclaimed – that is, it is not in operation.

Proposed draft occupational licensing regulations for the occupations regulated by the so-called NOLS scheme (ranging from real estate agents to refrigeration mechanics) are about to be released.

It will be interesting to see that whether, following consideration of the regulations stakeholders and governments will be happy to see NOLS continue as proposed.

It is finally noted the South Australian House of Assembly has been given notice to consider providing the parliament’s Legislative Review Committee a reference to develop a process to consider ‘the issue of sovereignty separate to any other debate on a bill, thereby avoiding unnecessary debate on this issue in parliament and instead enabling the debate to focus on the purposes and content of a bill.’

This is because:

(o)n many an occasion when a bill has sought to apply a law scheme from another jurisdiction—the most recent example I am aware of is the Controlled Substances (Therapeutic Goods and Other Matters) Amendment Bill—the issue of sovereignty is raised and an unnecessary amount of time is spent debating constitutional law issues instead of debating the purposes and content of the bill.

During the debate on that piece of legislation, and one other, I said to the member for Morphett—because I understand the issues being raised by the opposition in terms of sovereignty—'How about we refer the matter to the Legislative Review Committee to see if it can come up with an appropriate way of dealing with these types of measures so that we can reach some consensus about how to do it?' So, that is what I seek to do. The I advice I have is that, given the nature of what I am asking the Legislative Review Committee to do, it has to go through both houses of parliament, so I commend this motion to the house.

Unfortuately the reference lacks clarity.

The issue of whether a state should yield (or if a European Union fanatic, 'pool') sovereignty with other jurisdictions is a threshold issue when considering whether a particular Bill has merit. It is difficult ot divorce this consideration from others.

Perhaps the question is whether the South Australian Parliament should either create, or clothe the Legislative Review Committee with responsibility for, the functions discharged by the WA Legislative Council’s Uniform Legislation and Statutes Review Committee.

It would be appropriate to have the matter clarified, as this reference could play an important national role as a mechanism that can assess the appropriateness of the model law and applied law models of implementing ‘seamless economy’ national legislative schemes.

The Mugging of Bruce Baird (and the Carbon Tax) Shows Why a Tax Summit is Needed Now

It is a shame that political reality has forced NSW Shadow Treasurer Mike Baird stop thinking about imposing a profits based tax on mining, rather than the current royalties system of taxing an amount for each tonne of mineral extracted.

It probably is a more efficient way to bring mining to taxation.

We hope Baird isn't forced to drop the other parts of his observations made to The Australian:

A NSW Coalition government would push for radical reform of federal-state relations at the looming tax summit by demanding the states directly receive a greater share of overall taxes. NSW opposition Treasury spokesman Mike Baird said that, if elected on March 26, he would use the federal government's promised summit to address the imbalance in state and federal taxation powers and spending needs.

States were responsible for 40 per cent of service delivery, but raised only 16 per cent of taxes, he said, adding that NSW would operate more efficiently if it had greater responsibility for raising revenue.

We have previously noted the recommendations contained in the Henry Review, and, like Baird hopes that the proposed summit will determine:

1. which level of government should have responsibility for particular public policy areas;

2. what taxation bases should be assigned to the states and territories; and

3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:

(a) indirectly, through an agreement made under section 96 of the Constitution; or

(b) through a reference of power by the states to the Commonwealth or directly by constitutional amendment.

The importance of getting the taxation mix right is now more important than ever should the the God Knows What It Will Look Like Carbon Tax ever get up, discussed in our previous post.

Efficient public administration deserves nothing less.

Forget What We Said Earlier: COAG, Still the Fourth Tier of Government

We have previously noted that some people such as WA Premier Colin Barnett have suggested that COAG is becoming another tier of government.

The content of the COAG communiqué of 13 February 2011 suggests the tendency is continuing.

The main event was the signing of the Heads of Agreement on National Health Reform

However, other matters were dealt with.

A National Vocational Education and Training Regulator is to be established to ‘drive better quality standards and regulation across the Australian VET sector'.

This new body will join the Australian Health Practitioners Regulatory Agency, the National Occupational Licensing Authority and the Australian Curriculum Assessment and Reporting Authority as brand new national bodies to drive and determine a single set of national standards.

Another decision was to speed up the Seamless National Economy from June 2013 to December 2012, with options to be developed for a further wave of regulatory and competition reforms.

This will undoubtedly lead to the development of more national regulation.

However, the most interesting development was the establishment of Standing Councils to operate under COAG, designed to:

undertake legislative and governance functions relevant to their scope, and provide an annual report to COAG which includes an overview of the decisions made by the Council. (our emphasis)

The idea is to:

….(provide) a clear role for Ministers from all jurisdictions to support COAG in tackling 21st century policy challenges. There will be sustained collaborative effort on the long-term reform agenda while allowing for the flexibility needed to address more urgent challenges.

However, this classic ‘executive federalism’ model of governance suffers from one significant deficiency – ‘democratic deficit’.

The somewhat murky structure of the proposed new ministerial council process makes it difficult to see how anyone interested in a policy matter (other than larger players with the capacity to maintain a Canberra presence) will have the capacity to adequately participate in the regulation development process.

More particularly, once a COAG Council has ‘undertaken a legislative function’ (which presumably means approving a draft national law to be passed by (usually) state parliaments) one fears the opportunity to amend what could be a bad law will be limited because as COAG (or, in this case, a National Council of COAG) said a law has to pass, and so it will.

We harbour sincere doubts that this manner of rule making will necessarily lead to better laws.

However, one thing illustrated by the COAG communiqué is that even though Council membership may no longer be wall to wall Labor, the introduction of non-Labor members has not changed the function of COAG as another tier of government determining the rules of the Australian federation without any parliamentary oversight.

Plus ca change, plus c'est la meme chose.

COAG - Quo Vadis?

We have previously indicated it is time to decide:

1. which level of government should have responsibility for particular public policy areas;

2. what taxation bases should be assigned to the states and territories; and

3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:

(a) indirectly, agreements made under section 96 of the Constitution; or

(b) a reference of power by the states to the Commonwealth or directly by the states or by constitutional amendment.

The political class really must come out one way or another and declare whether Australian States are either:

1. ‘incubators of innovation’ within a country where there is genuine ‘competitive federalism’ –where different jurisdictions will make different rules and regulations and have different levels of taxation, with each jurisdiction ultimately picking up what is ‘best practice’ or face the loss of people and investment; or

2. effectively English style County Councils providing a narrow range of services within an Australia with a single seamless economy with a centrally set of rules and taxation levels in force uniformly throughout the country.

The Senate has quietly formed a Select Committee on the Reform of the Australian Federation.

Only constitutional (and parliamentary) savants would have known that the Committee existed.

It would appear that some respondents are disposed towards something called a ‘Convention for the Federation’.

Others submissions are keen to ensure that the position of COAG within the federation is either formalised or, at the very least, clarified.

The Select Committee is currently to report by 17 November 2010.

In our view the work of:

(a) the Select Committee (and its submitters);

(b) the Henry Review on Taxation;

(c) the treasury heads report to be prepared for COAG; and

(d) a ‘Domesday Book’ which would look something like the List of Australian Government Bodies and Governance Relationships, and would assist in identifying what governments actually do and what duplications exist

would both form the basis of developing suitable terms of reference of a ‘Convention for the Federation’ as well as commence the conversation that would accompany the creation of such a body.

It will be interesting to see how reform of the federation will fare within Canberra’s ‘new political paradigm’.

The Slow Breakdown of COAG - Part 1

The slow breakdown of COAG – Part 1

NSW Labor leader Kristina Keneally is leading the most unpopular Labor Government in the history of Newspoll.

To stay relevant, she is playing to her core constituencies.

One of the ways she is trying to ‘save the furniture’ is to renege on promises made to accept changes to the NSW occupational health and safety (OHS) issue to permit OHS to be harmonised around Australia.

This is an interesting development. As we said at the time the OHS intergovernmental agreement was made:

As part of the (Workplace Relations Ministerial Council) decision, unions will not be able to commence prosecutions, and prosecutors must prove OHS offences beyond reasonable doubt – the Council expressly voted down the current position in NSW – making union stakeholders quite cross.

WA declined to sign the communiqué as they were unhappy about the use of conciliation to resolve OHS issues, the low standard of proof for workplace discrimination claims, union right of entry to workplaces and the level of gaol terms. It remains a question how much of the national model each jurisdiction takes into its own law, although it is noted that uniform OHS laws are one of those things for which states and territories receive ‘reward payments’ under the National Partnership to Deliver a Seamless Economy

It is disingenuous for Keneally to argue her position on not agreeing to harmonised OHS provisions is the same as WA. At least WA refused to sign the agreement. NSW folded.

As the Sydney Morning Herald said on 14 May 2009:

(Then Minister) Mr Tripodi said NSW was committed to harmonisation of legislation, and he was disappointed that NSW laws allowing unions to prosecute for safety breaches were not adopted.

As one would nearly expect the Prime Minister has threatened NSW its ‘reward payments', with the Prime Minister reported as saying that 'the Council of Australian Governments must work on the basis that jurisdictions honour their commitments.'

This yet again raises the issue of the proper function of COAG within the Australian federation.

This will be discussed in the next couple of articles.

Funding the Social Democratic Project (and the Federal Structure)- comments on the Henry Review

The Report on Australia’s Future Tax System (the Henry Report) has finally been released by the Government.

As expected from his various speeches, the Review canvasses a number of different policy areas.

It will be a smorgasbord of policy options that will be dined on over the years as was the 1975 Asprey Report.

We will satisfy ourselves with two observations.

The first is what constitutes a ‘super profit’. It would appear the starting point of what constitutes a ‘super profit’ is the ten year government bond rate (currently averaging 5.7%) – the figure identified as the ‘risk free return benchmark’.[1]

We would hope that any return above the risk free return benchmark would not become the standard benchmark for ‘super’ profits made in the (insert here the industry to be picked off) whenever government requires extra revenue.

By definition it would discourage risk taking – the very thing that keeps the economy advancing.

The second relates to the fiscal federal structure.

Economists tend to think that a federal structure is an anathema to their guide star of allocative efficiency.

Whilst begrudgingly acknowledging that Australia will have three levels of government ‘at least for the foreseeable future’[2], the Review nevertheless acknowledged that as long as State governments have significant expenditure responsibilities they should have access to significant and sustainable tax revenue with a residual own source taxation capacity to finance marginal expenditure decisions.[3]

However, the Review nevertheless recommended on efficiency grounds that a resource rent tax (RRT) replace state based royalties as the way to bring mineral extraction to taxation - with the Australian and State Governments to ‘negotiate an appropriate allocation of the revenues and risks from the resource rent tax’.[4]

The report also suggests the abolition of a slew of State based taxes.[5]

In particular, payroll tax would be replaced in favour of a broad based ‘cash flow tax’ imposed at a uniform rate across Australia (and thus deprive states the further capacity to change the rate to suit the needs of the jurisdiction).[6]

It also suggests that the States and Australian Government could share, in particular, the income tax base.[7]

It is clear that for these reforms to work, the Commonwealth would have to allow the states some access to income tax and a reasonable flow of resource rent tax revenues.

It ain’t going to happen.

The Review adopted the standard view that as the national government is better placed to coordinate actions, taxes used to redistribute income should be levied by the national government.[8]

The fact is the federal government requires a lot of money to fund the broad ‘social democratic project’ established by pl.51(xxiii) and (xxiiiA) of the Constitution –income transfer payments, health, hospitals and (undoubtedly in the immediate future) disability support and will need more money (and not less) as an increasing number of worthy needs are identified as requiring support in a country with an aging population and an atomising society.

It is also the fact (undoubtedly assisted by taking in 82 per cent of total tax revenue[9]) that the Feds are assuming more and more state government responsibilities.

A simple illustration: an portion of the proposed RRT is to help ‘build the roads, rail, ports, electricity and water supply, and other facilities needed to unlock Australia’s resource wealth’.

Like housing, health and education, these are subject matters formally considered to be largely state responsibilities increasingly falling under Commonwealth control.

The Feds will increasingly need tax revenues to fund their projects in these areas on their terms.

Then there is the ‘seamless economy’ and the wish to remove duplication. Currently, the Government proposes that miners pay both royalties and the RRT, with royalty payments a claimable tax rebate.

But it won’t be too long before calls are made that this is an inefficient way of doing things – only one tax should be levied (in this case) on the extraction of minerals. There isn’t much doubt which tax will go.

Finally, there is the history of Australian federation.

As the report itself says:

Tax sharing of income tax operated in Australia before the Second World War, although there was little coordination between the two levels of government. In 1976, the Australian Government introduced the possibility of the States levying a personal income tax surcharge to replace financial assistance grants. No State took up the option. A key reason for this was that the Australian Government did not reduce its own tax rates to make room for the States.[10]

As the report itself admits, the States are more likely to be tied to the Deakin’s ‘chariot wheels of central government’ tighter than ever before:

The implementation of a number of recommendations related to state taxes would require cooperation between the Australian government and the states. Further, some recommendations related to Australian government taxes would also impact on State taxes……... Depending on when some of the recommendations are implemented, the states may also be subject to losses in revenue that could not easily be made up from other revenue sources (our comment – ask WA about the loss of royalties!) funding from the Australian government may at times be necessary to ensure that the financial position of a state is not adversely affected.[11]

As we have recently said, it is time to decide

1. which level of government should have responsibility for particular public policy areas;

2. what taxation bases should be assigned to the states and territories; and

3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:

(a) indirectly, through an agreement made under section 96 of the Constitution; or

(b) through a reference of power by the states to the Commonwealth or directly by constitutional amendment.

The Henry Review advances the discussion.

However, following the firestorm arising from the introduction of the RRT this is a matter that should form part of the discussion at the next election.

[1] See Part C1-1 of Volume 2 of the Report (esp.p.223 and footnote 2 of page 332 of volume 1)
[2] Page 570 of Volume 2
[3] Page 574 of Volume 2
[4] Page 680 of Volume 2
[5] See table on page 680 of Volume 2
[6] Page 681 of Volume 2
[7] Page 682 of Volume 2. The Commonwealth would retain control over the tax base.
[8] Page 673 of Volume 2
[9] Page 676 of Volume 2
[10] Page 682 of Volume 2
[11] Page 684 of Volume 2

When Should Legislation be Federalised?

Safe Work Australia has now published an exposure draft of occupational health and safety legislation to be largely adopted by Australian jurisdictions.

It was accompanied by a consultation regulatory impact statement prepared by Access Economics, which proves again that the ‘seamless economy’ agenda is for the big end of town.

As it says in the part of the RIS dealing with impact on businesses:

While dealing with multiple OHS regimes does impose significant costs on a number of businesses, only a small proportion of businesses are affected.

Not only are the vast majority of Australian businesses small, but
the Productivity Commission (2004) estimated that 99% of Australian businesses only operated within one jurisdiction in 1998.

Of the businesses that do operate in multiple jurisdictions, nearly two-thirds (65%) only operate in one other jurisdiction than their home one (ABS, 2007).

Even for large businesses with over 200 employees, the Productivity Commission (2004) reported that the majority (58%) still only operate within one jurisdiction.

However, of the remaining large businesses that operate across jurisdictions, they tend to have operations in around five jurisdictions on average (ABS,2007).

These ratios are somewhat different if weighted by employees. While only 0.3% of businesses have more than 200 employees, according to the Productivity Commission, these businesses accounted for 44% of private sector employment. Because of large businesses’ higher propensity to operate across borders, and large employment share, this means that an estimated 28.5% of private sector workers are employed in businesses that operate in multiple jurisdictions.

Access says in its conclusion:

The costs and benefits of the model Act are small and not readily quantifiable.

The qualitative assessment so far suggests that the model Act is expected to bring medium sized benefits for business, principally in reduced red tape for multi-jurisdiction operations. These will be partially offset by a small increase in adjustment costs…. There will probably be some small safety benefits for workers, with no significant offsetting costs to workers. There will be a small increase in adjustment costs for government (relative to such ongoing costs in the counterfactual); partly offset by some marginal benefits in improved compliance efficiency.

Combining these effects, Access Economics expects that the model Act will confer an overall marginal to small net benefit.

An ‘overall marginal to small net benefit seems a small reason to change the legislative requirements for 99% of the regulated cohort – not to mention the loss of clear political responsibility for the development of OHS law in Australia as it passes from parliaments to an unelected COAG ministerial council.

As various pieces of economic literature have suggested, state level governments within a federation should minimise taxing highly mobile tax bases.

Using similar logic, perhaps there should be a threshold test applied when redesignating responsibilities within the Australian federation so that if the thing being regulated is either fixed in one spot (in particular, anything fixed to the land), or happens at a particular spot (for example, law and order issues, or the provision of services to residents) it is appropriate for legislation to be state or territory based.

However, if it is genuinely something that is mobile - for instance either the trade of goods (particularly consumer goods) capable of easy movement across state borders or the setting of performance standards for such moveable goods - it is more appropriate for national regulation.

This would appear to maximise economic efficiency, without overly forfeiting all the advantages of competitive federalism, or, if in particular if the outcome is government by COAG committee, of democracy itself.

The challenge to the seamless economy commences

The ACTU is commencing a campaign against the harmonised OHS law being developed by Safework Australia on behalf of the Ministerial Council on Workplace Relations.

The Secretary of the ACTU (Mr Lawrence) said ‘the draft legislation was unacceptable and safety standards needed to be ''improved, not reduced in any shape or form''’.

The AMA is equally unhappy with the proposed legislation proposing to introduce a national registration scheme for health professionals, which in its view ‘fails the public interest test’.

These reforms form part of the ‘seamless economy’ agenda, which generally collapses eight laws developed at state or territory level into one law operating throughout Australia.

As we have said earlier:

As a general proposition, the ‘applied model’ of legislation – where one jurisdiction will develop and pass model legislation through its parliament with the remaining states or territories subsequently passing legislation that picks up the model legislation is the favoured way of introducing harmonised
legislation when regulating areas previously the province of states and territories.Whilst nominally capable to amend legislation, state parliaments – including those chambers without government majorities - have typically accepted the national legislation without batting an eyelid, on the grounds that ‘COAG decided’.

The COAG executive federalism model of public administration, in which state parliaments passively pass laws decided by either COAG as a body (or a ministerial council within the COAG structure) is now at an interesting stage of its operation.

This is because the legislation designed to implement the ‘seamless economy’ is now being rolled out - stakeholders are now challenging the merit of the contents of the finalised legislation.

This beggars the question: to which democratically elected body can these stakeholders appeal?

It can hardly be to those legislative chambers where the governments who form COAG have majorities.

So, the interesting thing will be whether the AMA and the ACTUs of the world actively lobby state parliaments for amendments to COAG approved harmonised legislation.

If so, it will be fascinating to see whether those parliamentary chambers where there are government minorities – the Legislative Assemblies of the ACT and the NT, the upper houses of NSW, Victoria, Tasmania and South Australia and both houses of the Western Australian Parliament (if the National Party can be persuaded to side with the ALP on a particular issue) – have the chutzpah to amend COAG legislation – particularly as it could cost their state money.

It will be finally interesting to see what the Liberal Party chooses to do in this situation. In most legislatures, it will be the vote of the Liberals that will determine whether an amendment will pass.

It would therefore be desirable for the Liberal view on the role of COAG and (more generally) the role of state parliaments as standard setters to be clarified. This will be discussed more in the next article.

COAG Meets in Darwin and Paul Everingham scrubs the States

COAG met in Darwin on July 2.

The previous day – Territory Day - the NT News reported comments from the ‘father of Self Government’ Paul Everingham which said that states and territories were a waste of taxpayer money and that the Northern Territory should be run out of Canberra.

He was reported as saying that when self-government for the NT was granted 31 years ago:

‘Back then people were still getting telegrams…but communication has improved. It is the internet age. People can also fly everywhere on relatively cheap airlines'.

This is a more earthy way in expressing something we have mentioned in an earlier article:

Many will say the Seamless Economy Project is good idea - Australia is an integrated common market, with people and companies commonly undertaking activities across state borders.

Moreover, Australia exists in a globalised world, with the complication of different rules in different states a reason not
to come to Australia.Regulatory difference is nothing more than a mere compliance cost that distort allocative efficiency with no public benefit.

The majority of the COAG decisions appear to underline the Everingham view of the world.

Those decisions include:

1. the development of a national regulatory body for vocational education and training;
   
2. the development of a unified national system of child care licensing;
   
3. the Coordinator-General mechanisms set up by the Commonwealth to take responsibility for Nation Building programs and projects funded by the Commonwealth and delivered by the States under the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund;
   
4. the creation of national regulation for maritime safety, rail safety and heavy vehicles, including the appointment of the Australian Maritime Safety Authority as the national safety regulator for all commercial shipping in Australian waters and a single national heavy vehicle regulator; and
   
5. the development of national performance measures for development applications (DA).
   

Quite a list really for one COAG, really.

And there are other Ministerial Councils working on uniform legislation.

For instance, the Standing Committee of Attorney-Generals (SCAG) is working on the issue of whether there should be a national regulator for the legal profession, as well as on uniform succession laws on administration of estates of deceased persons.

This followed a debate immediately before the Darwin COAG as to whether the Federal Government should take over the administration of the hospitals system.

The time is coming where an overt (rather than a covert) decision should be made as to whether Australia is to be a federation or a unitary nation.

A new Australian Consumer Law

On 24 June the Government introduced amendments to the Trade Practices Act 1974.

It is the first step towards bringing together 13 consumer (fair trading) laws that operate in Australia within the TPA.

The Bill is called the Trade Practices Amendment (Australian Consumer Law) Bill 2009.

Generally based on Victorian legislation, the most important aspect of the legislation is to create a mechanism to void ‘unfair’ standard form contracts involving ‘an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption’.

It was expected that the reach of this legislation would include business to business transactions.

However, as Consumer Affairs Minister Emerson said in his second reading speech:

The unfair contract terms law reforms were agreed by COAG in October 2008 and were based on the extensive consultation undertaken by the Productivity Commission.

These reforms are based on the extensive practical experience of the Victorian government in implementing and enforcing similar laws.

Since then the government has sought views on both the reforms more generally in February and on an exposure draft of the unfair contract terms provisions in May. In response to these consultations the Treasury received just under 200 submissions from many consumers, businesses and other stakeholders.

The government has also had numerous meetings with key stakeholders about these changes. And I understand that the Treasury has met and spoken with a wide range of people about these provisions.

We have consulted, and we have listened. And this is reflected in the provisions set out in this bill, which differ in key respects from those that the government exposed in May, particularly in respect of the exclusion of business-to-business transactions.

In relation to the question of whether business-to-business contracts—and particularly those involving small businesses—should be included under the unfair contract terms provisions, the government is currently reviewing both the unconscionable conduct provisions of the Trade Practices Act and also the
Franchising Code of Conduct.

It would appear that the Franchise Council of Australia, satisfied with the protection contained in its sector specific legislation (principally the Trade Practices (Industry Codes – Franchising) Regulations 1998, had an excellent lobbying win.

However, smaller businesses who perceive they face unequal bargaining power when seeking goods and services from larger suppliers could feel less sanguine.

Larger businesses will undoubtedly be happy that business to business transactions have been removed from the ambit of the legislation.

However, they could still be concerned that aggressive use of the legislation will remove the certainty that standard form contractual documentation offers the market place.

On 25 June the Senate referred the Bill to the Senate Economics Committee for report by 7 September.

The closing date for submissions is 31 July.

As the Minister said in his second reading speech:

The government has also indicated its intention that this bill should be referred to a senate committee, and this issue will—no doubt—be further considered as part of that process.

No doubt.


It is finally noted that COAG signed off on an Intergovermental Agreement to underpin a uniform Australian Consumer Law at its Darwin meeting on 2 July.

Harmonising Australia's OH&S law - the next step

On 10 June the new Safe Work Australia Council held its first meeting.

One of the first things it was charged with was to give effect to the decisions of the Workplace Relations Ministerial Council (the WMRC) made on 18 May 2009 as to how model occupational health and safety legislation should be framed, following consideration of the two volume National Review Into Model Occupational Health and Safety Laws prepared by a committee chaired by Robin Stewart-Compton.

It decided it would release the model occupational health and safety legislation (and accompanying regulatory impact statement) during September.

The legislation is broadly based on the Victorian model.

The general test for liability will be whether it is ‘reasonably practicable’ to avoid a hazard in a particular workplace.

However, there is no longer a concept of ‘employers’ having duties to ‘employees’.

Indeed, the objective is to move away from the traditional emphasis on the employment relationship when working out whether a duty of care is owed; rather, the intention is to provide greater health and safety protection for all persons involved in, or affected by, work activity.

Company officers will be have a duty to exercise ‘due diligence’ to ensure that workplace hazards are reduced or removed.

The new legislation will also capture independent contractors as well as people working from home.

One significant change is the expansion of the duty of care imposed by OHS legislation owed by a business to anyone who is ‘in or adjacent to’ a workplace.

Whilst the Ministerial Council did say in its consideration of the Stewart-Compton report:

Care needs to be taken during drafting to ensure that the scope of the duty is limited to matters of occupational health and safety and does not further extend into areas of public safety not related to the workplace activity

this will be a tricky drafting job.

Done poorly, it could impact broadly on the general law relating to occupiers liability and negligence.

It remains open how uniform OH&S legislation will be.

As we have remarked earlier, paragraph 5.1.8 of the COAG agreement on OHS reform says:

The adoption and implementation of model OHS legislation is not intended to prevent jurisdictions from enacting or otherwise giving effect to additional provisions, provided these do not materially affect the operation of the model legislation, for example, by providing for a consultative mechanism within a jurisdiction.

And as we remarked earlier:

And so in this case legislation will be uniform – unless it isn’t.

As part of the WMRC decision, unions will not be able to commence prosecutions, and prosecutors must prove OHS offences beyond reasonable doubt – the Council expressly voted down the current position in NSW – making union stakeholders quite cross.

WA declined to sign the communiqué as they were unhappy about the use of conciliation to resolve OHS issues, the low standard of proof for workplace discrimination claims, union right of entry to workplaces and the level of gaol terms.

It remains a question how much of the national model each jurisdiction takes into its own law, although it is noted that uniform OHS laws are one of those things for which states and territories receive ‘reward payments’ under the National Partnership to Deliver a Seamless Economy.

So money may ultimately speak in favour of uniformity.

National Registration of Health Professionals - the next step

In a previous article we noted that a national scheme for the regulation of health professionals was being developed.

We said:

An intergovernmental agreement (IGA) to establish a scheme of national registration for health professionals was signed on 26March 2008.It is designed to establish a single national registration and accreditation scheme for the nine currently regulated medical professions ranging from doctors to osteopaths.

We also noted:

To allow the national scheme to commence on time (1 July 2010), the Queensland Parliament has passed the Health Practitioner Regulation (Administrative Arrangements) National Law Act 2008,which establishes the a single registration board for each of the nine professions as well as an Australian Health Practitioner Regulation Agency as (effectively) a company under Queensland law, that will support the various boards.

However, the finer details of the scheme are still being developed.

Another piece of legislation now being developed will fill these in.

It is intended to introduce the relevant Bill into the Queensland Parliament before the end of the year.

However, there is concern as to what sort of parliamentary oversight the Agency will be subject to once it commences operation – it is nominally an entity created by the Queensland Parliament, but exercises legal powers in all Australian states and territories.

There is also concern that the Australian Health Ministers Council rather than specialist professional boards can make the standards that health practitioners must meet – instruments not subject to parliamentary disallowance by any legislature. (UPDATE: the new legislation (discussed below) vests the making of accreditation standards with national registration boards)

It would appear that this issue in particular will not be subject to change because it is a structure that has been decided by COAG.

That said, the Senate Community Affairs Committee has decided to inquire into the proposed national registration scheme.The timing is a bit odd – well after the IGA that set the ball rolling, but only just before a draft of the proposed Bill setting out the nuts and bolts of the national scheme is released.

However, it is nevertheless a review.

The exposure draft of the legislation designed to introduce a national scheme of registration for health information (called the Health Practitioner Regulation National Law) has now been released, with the Committee (thankfully) extending its report date 16 August, so comments on the legislation can be taken.

One of criticisms we have with the executive federalism model of developing regulations (encapsulated by the COAG process) is the absence of parliamentary oversight of subordinate regulatory instruments made under the scheme.

Unlike its interim predecessor, the proposed final law allows for parliamentary disallowance of regulations.

This is good, but disallowance is not extended to registration standards, accreditation standards and codes of practice that go to who can (or cannot) practise as a health professional as well the guts of the detail as to how the professions will be regulated.

The issue of the level parliamentary oversight in the COAG regulatory model still requires to be worked through – hopefully this is where the working through will happen.

Harmonised occupational regulations for specified occupations - the next step

On 30 April COAG signed the Intergovernmental Agreement for a National Licensing System for Specified Occupations.

The national system will regulate a mish-mash of occupational areas.

The nominated occupation areas are: air conditioning and refrigeration mechanics;, building and building related occupations; electrical; land transport (passenger vehicle and dangerous good drivers); maritime; plumbing and gasfitting; and property agents.

As expected, COAG followed the advice of the decision regulatory impact statement and adopted a ‘national delegated agency’ model of licensing.

A national licensing board will head a national licensing body charged to develop national licensing policy.

This will enable the body to develop rules in areas including licence eligibility and maintenance requirements, licence classes, compliance and enforcement standards, disciplinary arrangements and licence fees.

The body will be aided by specific occupational licence advisory committees, who will provide ‘the principal source of advice’ on licensing policy.

Existing jurisdictional regulators will be expected to continue performing current registration/enforcement functions.

Victoria is the host jurisdiction for the proposed legislation. Other states will pick up the Victorian law by reference.

It is proposed to expose a draft of the proposed legislation in October with a view of introducing legislation into the Victorian Parliament in the second quarter of 2010.

It is an interesting licensing model.

Decision makers framing the laws governing what a particular trade can or can't do should have some background in the area so what is done is both workable and appropriate.

The National Licensing Board (which presumably will make rules such as licence standards) will constitute an independent chairman and up to eight other people, including two ‘regulators’ appointed on a rotating basis.

It is difficult to see how such a board (or the bureaucracy that supports it) would have the capacity to have a genuine understanding of, and thus make optimal regulations for, sparkies and realos and some classes of truckies….and air conditioner mechanics (amongst others).

One imagines the specialist subcommittees will be the real decision makers.

That is probably why the IGA requires a representative of the committee to ‘attend the board meeting to discuss (the measure to be enacted)’.

The proposed national legislation will need close examination to see whether this structure is genuinely workable.

To that extent, now that a host jurisdiction has been identified (Victoria), it is hoped that the parliament of that state will establish some form of committee structure to test the quality of the policy – and not just assess something against how well the wishes of an unelected COAG council has been given effect.

This includes appropriate measures to allow parliamentary scrutiny of rules that will govern who can enter the various trades and professions, and how they will be subsequently regulated.

The Seamless Economy Regulatory Project - Some Reforms

This series of articles illustrate that the manner by which Australian legislation is made is changing.

The articles show that whilst some consultation is undertaken at the margins, in many circumstances once something forms part of an intergovernmental agreement (an IGA) or is contained in a COAG resolution, it is next to cast in stone.

This leads to an undesirable democracy deficit.

A parliamentary process allowing the review of decisions emanating from the COAG process should be formalised.

In June 2008 the House of Representatives Standing Committee on Legal and Constitutional Affairs published a paper discussing constitutional reform.

The sole recommendation contained in the paper is that intergovernmental agreements should be automatically referred to a parliamentary committee for scrutiny and report to the Parliament.

This idea should be adopted.

It should also apply to draft bills that flow from an IGA.

IGAs and draft bills should also be referred to relevant committees of state and territory parliaments such as the Western Australian Uniform Legislation and Statutes Review Committee.

There should also be some capacity to permit parliamentary review where some COAG recognised body such as a Ministerial Council can make rules and regulations having the full force of law, such as the capacity to make standards for the national scheme for health professionals referred to in an earlier article in this series.

Thus, if a parliament of a participating jurisdiction disallows a subordinate instrument made by a ministerial council within the period of time that state or territory law permits the disallowance of subordinate instruments, the instument should be taken not to be in force anywhere in Australia.

In this way, the interests of all stakeholders can be heard, better legislation developed and the protections of a federal system of government retained whilst allowing the development of harmonised regulations that are seen as necessary to allow the Seamless Economy to efficiently function.

Decision makers in companies and industry associations will have to establish strategies to ensure their interests are protected as the new regulations underpinning the Seamless Economy develop.

The Seamless Economy Regulatory Project and Democracy Deficit Part 2

There are some signs that state parliaments may be commencing to assert their sovereignty over rule by COAG.

The Queensland Scrutiny of Legislation Committee considered the Health Practitioner Regulation (Administrative Arrangements) National Law Bill 2008, which established the framework to allow for the national scheme of registration for health professionals to commence.

It said:

It is the committee’s practice to draw to the attention of the Parliament any provisions of a bill which are to give effect to national scheme legislation. The committee, in common with the legislative scrutiny committees of the Parliaments of other Australian States and the Commonwealth, has identified concerns that elements of intergovernmental legislative schemes might undermine the institution of Parliament. The committees’ concerns relate to the potential for the executive to formulate, manage and possibly alter such schemes to the exclusion of legislatures. The committee has also warned against a perception of a reduced need for legislative scrutiny of an intergovernmental agreement proposed for ratification.

……

In The Constitutional Systems of the Australian States and Territories, Professor Gerard Carney provides a summary of concerns regarding the legislative scrutiny of national scheme legislation:

A risk of many Commonwealth and State cooperative schemes is ‘executive federalism’; that is, the executive branches formulate and manage these schemes to the exclusion of the legislatures. While many schemes require legislative approval, the opportunity for adequate legislative scrutiny is often lacking, with considerable executive pressure to merely ratify the scheme without question.

Thereafter, in an extreme case, the power to amend the scheme may even rest entirely with a joint executive authority. Other instances of concern include,for example, where a government lacks the authority to respond to or the capacity to distance itself from the actions of a joint Commonwealth and State regulatory authority. Public scrutiny is also hampered when the details of such schemes are not made publicly available. For these reasons, a recurring criticism, at least since the Report of the Coombs Royal Commission in 1977, is the tendency of cooperative arrangements to undermine the principle of responsible government. A further concern is the availability of judicial review in respect of the decisions and actions of these joint authorities.

Certainly, political responsibility must still be taken by each government for both joining and remaining in the cooperative
scheme. Some blurring of accountability is an inevitable disadvantage of cooperation – a disadvantage usually outweighed by the advantages of entering this scheme. But greater scrutiny is possible by an enhanced and investigative
role for all Commonwealth, State and territory legislatures.

Drawing from some specific criticisms made by the Committee, the Queensland Opposition said this when debating the Bill:

From the outset, it is important to note that there is broad support for national registration for health practitioners. Again, I repeat that there is broad support for national registration for the health professions.

There is overwhelming consensus of the need for consistently high standards and portability of registration of health practitioners across Australia. However, the problem lies with the national law that will establish an unaccountable political institution that will not only control and influence what health practitioners are taught but also how to treat and help sick people while following orders from politicians and bureaucrats without reproach.

The bill before this House is a sugar-coated toxic blend of important and required reform for a national health practitioner registration scheme with an accreditation and training proposal that threatens Australia’s envied position as having one of the best and most comprehensive professional standards of training and practice for our medical practitioners.

There is a need for a greater capacity for public involvement in the development of the regulatory structure of the Seamless Economy evolves is required. This is dealt with in the final article of this series.

The Seamless Economy Regulatory Project and Democracy Deficit Part 1

As a general proposition, the ‘applied model’ of legislation – where one jurisdiction will develop and pass model legislation through its parliament with the remaining states or territories subsequently passing legislation that picks up the model legislation is the favoured way of introducing harmonised legislation when regulating areas previously the province of states and territories.

Whilst nominally capable to amend legislation, state parliaments – including those chambers without government majorities - have typically accepted the national legislation without batting an eyelid, on the grounds that ‘COAG decided’.

This system can give rise to what can be called a ‘democracy deficit’, as can be seen in this example.

During 2008 the Australian Parliaments considered the Australian Gas Law, which instituted a single law for the Australian natural gas market.

South Australia was the lead jurisdiction. The Greens wanted to move an amendment to the legislation in the Legislative Council.

However, as the Greens Member said:

We are going through the motions here. We are able to ask some questions; I guess there is a democratic exercise there but, in terms of amendments, the pressure is very much on legislators here not to propose or to accept any amendments. Really, if we were honest, we are not the lead legislative jurisdiction; we are not the lead legislator: we are the lead rubber stamp. I think that is an outrageous way to pass laws in this country. Having got that off that my chest, I will move my amendments when we get to them.

As an Opposition member (and former Minister) explained:

The only other point I would make is that I doubt very much whether minister Conlon and indeed probably all the other ministers at the moment actually understand the legislation that is going through the council. It is actually only being driven by hard-working and very competent officers who work on this
as their livelihood, and the point that the Hon. Mr Holloway made is almost entirely accurate.

It is certainly my experience that, in trying to debate some of these issues as they were, not in relation to national gas but national electricity, and have a debate with some ministers in the past, they had no comprehension at all of the details of the legislation. Ministers get a summary brief from their office which says 'here is what has been arrived at. These are the major issues.'

The Green member continued:

There were no meritorious reasons that these ought not be accepted. However, as the Hon. Rob Lucas says, we are all in a difficult position, because our various executives have got together and decided what our laws should be, and here we are effectively being invited to rubber-stamp them.

Whilst supportive of uniform national approaches, I for one am not prepared to be a rubber stamp to the extent that I turn my back on sensible amendments that incorporate into our legislation recognised environmental and social principles. It just makes sense that we do it, and I do not think that it undermines the uniform national legislation.

In the ACT Legislative Assembly, when discussing the same legislation, the Green member said:

The reform or harmonisation of the national electricity market, as agreed at COAG's Ministerial Council on Energy meetings, has been happening steadily in the background without much, if any, input by state and territory governments.

Especially now that Australia has Labor governments across all states and federally, an ever-increasing number of decisions are being made at COAG level, meaning that decisions are not subject to the usual scrutiny that parliaments would otherwise have.

This means that these decisions can be made by ministers and their advisers without any public or stakeholder input and without any community consultation; we should be satisfied if they take external views into account at all. It seems that COAG is the new government that counts. It is appointed by premiers and chief ministers, not elected by people.

She also said:

Given the process through which this legislation has been developed, it is a farce to even discuss the matter here in this chamber. The agreements have already been made at the ministerial council level; even though the states and territories are going through the motions of debating the bill in each place, in actual fact the bill that just passed in South Australia is the only one that counts.

A colleague in South Australia, Mark Parnell, put some amendments forward which would take social and environmental aspects into account. However, these were defeated by the two major parties as there was significant pressure there in South Australia not to make any changes at all. Mr Parnell is concerned that the South Australian government is not the lead legislator but the lead rubber stamp for the energy reforms.

She concluded:

Due to the ambulatory forces, whenever South Australia amends its schedules, our legislation is automatically updated. This puts a lot of pressure on our minister for energy, the Chief Minister, to be alert and fully engaged in the COAG processes, where ultimately all decisions about our energy markets are decided—not here in the Assembly. It also leaves the Chief Minister with the responsibility for informing the rest of the Assembly when there are significant updates, as the schedules are inbuilt and not disallowable or even notifiable.

Thus, up until now it has been the case that ‘COAG says’. However as the next article shows, this could be changing.

The Seamless Economy Project - Is it a Good Idea?

The previous four articles illustrate how the regulations are made in an Australia with a seamless economy.

Many will say the Seamless Economy Project is good idea - Australia is an integrated common market, with people and companies commonly undertaking activities across state borders.

Moreover, Australia exists in a globalised world, with the complication of different rules in different states a reason not to come to Australia.

Regulatory difference is nothing more than a mere compliance costs that distort allocative efficiency with no public benefit.

In this case, there to be only one set of rules (usually encapsulated in legislation), preferably made by one legislative body – in our case, the Australian Parliament.

The states would have the role of (effectively) an English county council, concentrating on service provision based on national standards.

However, there are alternative arguments.

The (few) supporters of a federal system argue that citizens benefit where there is genuine "competitive federalism" –the idea that different jurisdictions will make different rules and regulations and have different levels of taxation, with each jurisdiction ultimately picking up what is "best practice" or face the loss of people and investment.

A similar argument is one holding that States are "incubators of innovation" –a place where different ideas can be tried, with the good ones taken up in the bad ones discarded - and if an idea is really bad, the entire nation doesn’t have to face the consequences.

To that extent, it is noted that in February 2009 the Standing Committee of Officials on Consumer Affairs have developed a discussion paper An Australian Consumer Law – Confident Consumers to assist in the development of a single national consumer law that will generally replace state based fair trading legislation.

Part III of the paper is entitled Consumer Law Reforms Based on Best Practice in Existing State and Territory Laws.

The Paper identifies a number of areas where activities (such as door to door sales, or lay-bys) are regulated in different ways (or not at all) and then asks for comments on what is ‘best practice’.

By definition, a single Australian consumer law would preclude this capacity to trial different forms of legislation.

Another danger is the development of a ‘democracy deficit’. This is discussed in the next article.

The Seamless Economy Regulatory Project - an Australian Consumer Law

On 2 October 2008, COAG adopted a recommendation from the Australian Council of Consumer Affairs Ministers to implement a national consumer law, based on the consumer provisions of the Trade Practices Act 1974.

The proposal is for current state based fair trading legislation to be replaced by agreed amendments to the Trade Practices Act, which will be picked up by state legislatures through the applied law model.

State based fair trading law will largely be repealed, with significant responsibility for consumer protection vested in the ACCC.

A discussion paper has been released seeking a degree of input into the structure of the IGA.

However, the input sought is limited. As pages 1 and 2 of the Discussion Paper says:

The purpose of this information and discussion paper is to:

Explain how the national consumer law will be developed; and

Explain the nature and scope of COAG's agreed reforms to create the national consumer law, and, in some limited circumstances, seek views on specific aspects of those reforms.

For example, COAG has decided that the law will provide consumers relief from an ‘unfair contracts’ contained within standard form contracts such as hire purchase agreements.

The ‘unfair contract’ provision proposed to be used is drawn from the law currently in force in Victoria.

The Discussion Paper seeks comment on whether small businesses should also be able to get relief from ‘unfair’ standard form agreements. However, relief from other forms of ‘unfair contracts’ appear to be ruled out because COAG has so decided.

That would appear to (notionally, at least) close off consideration of some of the recommendations of the Senate Standing Committee on Economics relating to relief from ‘unfair contracts’.

At page 49 of a report dealing generally with the unconscionable conduct provisions contained in Part IVA of the Trade Practices Act, non-government senators said:

We (the non government Senators) believe that the current Victorian legislative framework for dealing with unfair contract terms in consumer transactions should be extended to cover business to business relationships involving small business.

It will be interesting to see if the COAG decision will mean that it will be argued that this recommendation can’t be considered – simply because COAG has considered the matter and has made a decision.

The question of whether uniform legislation through the COAG process is a good idea or not is discussed in the next few articles.

The Seamless Economy Regulatory Project - National Licensing for Specifed Occupations

COAG has decided to harmonise the regulation of a number of trades and professions.

So as to improve efficiency and labour mobility, it is proposed to remove overlapping and inconsistent occupational licensing regulations.

The list of affected trades and professions is an eclectic one, constituting air conditioning and refrigeration mechanics, building and building-related tradesmen, electricians, land transport passenger vehicle and dangerous goods drivers, participants in the maritime industry, plumbers and gasfitters and property agents.

A regulatory impact statement (RIS) was prepared seeking comment on a number of issues.

However, as page 15 of the RIS makes clear, irrespective of comments received from stakeholders, it is proposed that a single national body will be responsible for ‘setting licence policy and a framework for operations’.

As with the registration of health professionals, there is no indication as to:

1. which parliament would have specific oversight of the single national body; and

2. whether it is anticipated that there is any parliamentary involvement in the development of ‘licence policy’.

COAG will sign an Intergovernmental Agreement (IGA) which will reflect the agreement between jurisdictions as to how the various trades and professions will be regulated at the proposed meeting on 30 April.

The next article looks at the development of a single Australian consumer law.