Views raised in evidence
Support for the bills
3.1
A large majority of the submitters to the inquiry supported the overall
policy intent of the Road Vehicle Standards Bill 2018, and commended the
government for its modernised legislative approach.[1]
3.2
Mr Trevor McPherson highlighted the point that the bill reduces an
unnecessary cost to some users by removing the need to replace in-service items
such as tyres, catalytic converters, filters and charcoal canisters, regardless
of the age of the imported vehicle.[2] Karaday also supported these changes.[3]
3.3
The Federal Chamber of Automotive Industries (FCAI) recognised that the
proposed legislation will continue the government's policy to harmonise new
vehicle standards with international standards and that it caters for future
developments in international vehicle regulations.[4]
3.4
The FCAI also welcomed the introduction of independent Authorised
Vehicle Verifiers (AVVs). The proposed legislation will facilitate the
establishment of a network of approved corporations known as AVVs to verify
that vehicles entering the Australian market via a Registered Automotive
Workshop comply with relevant standards. According to the FCAI, the requirement
for AVVs to access each vehicle delivered by a Registered Automotive Workshop
to establish its identity, will ensure that the vehicle is free from structural
damage and meet its type approval.[5] NatRoad added that AVVs will assist to 'level the playing field' for Registered
Automotive Workshops by ensuring vehicle standards are consistently applied.[6]
3.5
Nichibo was also supportive of the establishment of an AVV network.
However it noted that more could be done to establish a business case to assist
those businesses which may consider becoming an AVV. According to Nichibo, this
could be as simple as extending the authorisation period from two to five
years, to enhance the return on investment and provide more commercial
certainty.[7]
3.6
With regards to the civil penalty regime triggered by the new
legislation, the Caravan Industry Association of Australia was generally
supportive. It noted that the provision of false or misleading information with
regards to a road vehicle or road vehicle component would be adequately
penalised through the offences set out in clause 31 of the bill. However, it suggested
that the penalties regime could go even further to ensure that non-compliance
with the national road vehicle standards are policed satisfactorily.[8]
3.7
Support was also expressed in relation to the modernisation and
strengthening of certain safety standards. The Caravan Industry Association of
Australia noted that allowing trailer manufacturers who supply less than four
vehicles a year to self-certify compliance was a 'significant step forward', with
those supplying more than four vehicles required to register with the
Department to obtain type approval. It explained:
The streamlining of provisions whereby heavy trailer
manufacturers will be able to utilise a Model Report (MR) to allow a single
assessment by the Department is also a sensible and more efficient way of
gaining type approvals. We also warmly welcome the government's commitment to
compliance with and enforcement of, RVSA obligations supported by enhanced
monitoring and investigation powers, and new enforcement tools...[9]
Concerns raised in evidence
3.8
Whilst many of the issues raised in evidence concerned the regulatory
details contained in the draft Rules, submitters to the inquiry also
highlighted a number of provisions in the bills for which they held concerns. The
following section details those concerns and provides the Department's response
to them.
Risk to Australian businesses
3.9
Under the proposed legislation, the existing twelve concessional
importation pathways are to be consolidated into two distinct streams –
temporary/non-road use vehicles, or road use vehicles. Road use vehicles may be
imported through the revised Registered Automotive Workshop Scheme (RAWS).
3.10
As part of the current arrangements, the RAWS allows for the importation
and supply of used specialist or enthusiast vehicles to the market in
Australia. The New Low Volume Scheme (NLVS) for new vehicles allows for the
supply to the market of up to 25 or 100 new vehicles per vehicle category. The NLVS
for new vehicles is limited to vehicle make/models that are on the Register of
Specialist and Enthusiast Vehicles.
3.11
Under the proposed changes, the new RAWS will encompass some vehicle
types currently supplied under the existing RAWS and the NLVS. As the current NLVS
will not exist under the proposed changes, RAWS will be amended to cater for
both new and used vehicles under revised arrangements. Therefore, under these changes,
Registered Automotive Workshops will be able to modify both new and used
specialist and enthusiast vehicles, rather than just used vehicles. In
addition, existing New Low Volume manufacturers will be able to become
Registered Automotive Workshops.
3.12
The Australian Automotive Aftermarket Association (AAAA) raised concerns
with regard to the inclusion of the NLVS under RAWS. The NLVS provides a major
concession in that it allows alternative forms of evidence to be submitted
against some Australian Design Rules. According to the AAAA, there is
significant evidence from local manufacturers to demonstrate that Low Volume
Approvals have been granted without the requirement for individual vehicle
inspection. It argued that this is because individual vehicle inspections are
'unnecessary for these minor modifications and impose a prohibitive financial
burden on consumers, which acts as a disincentive to upgrade a vehicle's
suspension to make it safer'.[10]
3.13
The AAAA argued that the proposed incorporation of the NLVS into the
RAWS, coupled with the additional requirement of individual vehicle
inspections, could impact up to 500 vehicle upgrades per annum per company. It
estimated that the cost for businesses to change to the proposed scheme will be
close to $500,000 per company. It noted that these proposed changes will have
the practical effect of 'shutting down the market' for Gross Vehicle Mass (GVM)
upgrades on lower volume platforms as they will not be economically viable.[11]
3.14
The AAAA raised a number of additional concerns regarding the proposed
incorporation of the NLVS into RAWS including significant safety concerns. It
upheld the view that the proposal required a full engineering and regulatory
assessment.[12]
3.15
The RAWS Association raised specific concerns regarding the viability of
the existing 130 small Registered Automotive Workshops under the proposed
changes. It suggested that the changes will benefit major vehicle manufacturers
and importers, as well as major vehicle dealer networks at the expense of
smaller Registered Automotive Workshops by restricting vehicles imports to only
those determined by manufacturer supported retailers.[13] It held the view that the reforms would 'concentrate power within big business'
and that small businesses participating in the RAWS will lose 'thousands of
direct and downstream jobs'.[14] It suggested that the draft bill threatens the existence of the RAWS industry
with the potential loss of 130 mum and dad businesses and 1200 jobs.[15] It continued:
A simple example demonstrates the effect of tightening
regulation: The RAWS campervan segment processes 400 used and new vehicles per
annum. 350 of them are used vehicles. The proposed new rules restrict imports
to new campervans only. That will effectively reduce the campervan segment to
just 50 vehicles – an unviable level of business. [16]
3.16
A number of other submitters raised concerns about the impact of the
proposed changes on small businesses including vehicle importing services. The
Auto Services Group, a small business based in Adelaide, noted that without any
certainty regarding the number of imported vehicles that will enter Australia
following enactment of the bill, questions remain regarding the viability of
the independent imported vehicle industry, with some businesses facing the
prospect of shrinking in size or having to close down.[17]
3.17
The Auto Services Group highlighted that the two reports commissioned by
the Department in 2014 and 2015 had concluded that the importation of used
vehicles in greater numbers would provide significant financial savings to
Australian consumers while also reducing the fleet age and improving overall
vehicle safety. It argued that the proposed changes had failed to adhere to
these findings as the proposed new Rules will provide for a restricted
automotive market which will reduce the number of vehicles eligible for import by
75 per cent.[18]
3.18
The Auto Services Group informed the committee that the proposed changes
have already begun to take a toll on local businesses. It submitted that:
Managing the mental health of our fellow industry members has
become a priority in the last twelve months, as many come to terms with the
prospect that their businesses, into which they've invested countless millions
of dollars without any form of government assistance, will shrink in size or
close down. Some operators have already opted to close their doors rather than
go through the stress of wondering whether their businesses will still be
viable in the future.[19]
3.19
AutoTerminal Australia suggested that without sufficient modelling to
indicate the number of vehicles expected to be eligible under the new Rules,
there is a lack of business certainty. This view was echoed
in evidence from the Australian Imported Motor Vehicle Industry Association
which suggested that the proposed changes will not provide the vehicle volumes
necessary to avoid business closures and automotive job losses.[20]
Campervan and motorhome conversion
3.20
The Senate Selection of Bills Committee report drew attention to the
specific impact of the new legislation on businesses importing vehicles for the
purpose of conversion to campervans and motorhomes.[21]
3.21
A unique pathway under the current SEV eligibility criteria allows for
the importation of vehicles for the purpose of conversion to campervans and
motorhomes. According to the RAWS Association, a loophole within the
legislation was utilised by many Registered Automotive Workshops who imported
thousands of cars without subsequent conversion and enjoyed a highly profitable
business.
3.22
Notwithstanding this point, it noted that there are many companies
employing Australian workers currently using this scheme appropriately and that
the total removal of used vehicles for fabrication into campervans or
motorhomes would be 'negligent and dismissive of the business that use this
criteria correctly'. It suggested, therefore, that the removal of this provision
could damage many small businesses, and potentially impact on the tourism
industry, which services a high volume of backpackers and 'grey nomads' through
the provision of campervans and motor homes.[22]
3.23
Hybrid Australia echoed this view, explaining that:
The department's rule change would restrict import of
vehicles building into Campervans/Motorhomes. If enacted this rule change would
effectively shut down a segment that delivers more benefits to the Australian
economy than just providing affordable campervan/motorhomes. Our family
business, Hybrid Australia is one of these businesses that will be forced to
shut down.[23]
3.24
Conversely, the Caravan Industry Association of Australia welcomed the
new legislation and expressed hope that the legislation would be 'implemented
expeditiously', stating:
Caravan Industry Association of Australia is particularly
pleased that the RVSA includes tougher measures in getting RV [recreational
vehicle] product onto the road for manufacturers, and far reaching penalties for
businesses not adhering to their compliance obligations.[24]
Department response
3.25
The Department noted that the current regulatory framework imposes
regulatory costs in the order of $249 million per year. It made the point that,
by streamlining elements of the new regulatory framework, such as the
introduction of the RAV, and consolidating the twelve existing concessional
approval pathways, businesses will be expected to save almost $20 million. Of
this, around $4 million will accrue to small businesses such as Registered
Automotive Workshops.[25]
3.26
With regards to the volume of vehicles expected to enter the country
through the revised importation pathways, the Department informed the committee
that it anticipated that 'the new opportunities provided by the increased range
of eligible vehicles, and the reduced compliance costs, will at least maintain
the numbers of vehicles being processed by registered automotive workshops'.[26]
3.27
As previously noted, under current arrangements, New Low Volume
Manufacturers are able to supply up to 25 or 100 new vehicles per category per
year, depending on the vehicle category. However, under the reforms, they will
be able to supply vehicles that comply with the SEV criteria under the RAWS,
with the benefit of model reports, or under type approvals in 'unlimited
numbers'.[27]
3.28
The Department made the point that these changes will replace not only
the existing RAWS and NLVS, but also the Low Production Passenger Car Scheme
and some of the arrangements for second Stage of Manufacture. Overall, the
reforms aim to remove unnecessary regulatory requirements while improving
compliance. At the same time, the Model Reports are expected to streamline and
reduce the amount of compliance documentation by replacing the current 'evidence
packs' used by Registered Automotive Workshops. Furthermore, and as previously
highlighted, for these Registered Automotive Workshops:
There will be no caps on the number of vehicles proposed by a
single workshop or entered onto the RAV using this pathway.[28]
3.29
The Department acknowledged that there would be costs involved in
implementing these changes including industry adjustment costs to RAWS and the
New Low Volume Importers, depending on their current specialisation and
business model. However, it also highlighted the benefits of consolidating the
concessional schemes, noting that it would provide increased clarity for import
decisions as regulatory processes are simple, streamlined and clear.[29]
3.30
The Department directly addressed stakeholder concerns regarding the SEV
eligibility criterion which allows the importation of used vehicles for the
purpose of campervan and motorhome conversion. It stated that it is 'widely
recognised' within the industry that this importation pathway is 'a loophole' exploited
for the purposes of supplying thousands of used people movers to the Australian
market which have not undergone the required conversion into a campervan or
mobile home.
3.31
The Department highlighted that this is a highly profitable business
model due to the significant arbitrage available on these vehicles, and the
minimal compliance work undertaken. It further noted that the average age of
vehicles imported through this pathway has increased, now 8 to 12 years old.
Moreover, as these vehicles receive concessions against Australian vehicle
standards, the loophole is 'acting to circumvent the safety standards expected
by the community'.[30]
3.32
At the same time, the Department acknowledged that there is genuine
market demand for some campervans and mobile homes that are not available in
Australia. As such, the proposed two-year grandfathering arrangement will
ensure that the two most popular models can continue to be imported into the
country. It argued that businesses, and particularly those based entirely on
the exploitation of this loophole, will have a transition period during which
to adjust their schedules to meet the new SEV requirements.[31]
3.33
The Department further advised that, based on the consultations that
took place in 2018 with regards to the draft Rules, the government is now working
to allow for the importation of used vehicles 'intended for substantive
conversion to campervans and motorhomes'. To ensure that businesses continue to
comply with Australian standards, third party vehicle verification would be
required under the new legislation.[32]
Non-compliance with Australian
vehicle standards
3.34
Some submitters expressed the view that the new legislation could pose a
threat to Australia's high road safety standards, by allowing the importation
of vehicles that do not meet Australian standards.[33]
3.35
The FCAI drew the committee's attention to the criteria for entry on the
SEV register, questioning 'what concessions to the national safety and
environmental standards will continue to be allowed'.[34] In particular, the FCAI questioned the suitability of micro-car subcategory
vehicles that may be eligible for importation under the environmental criteria of
the SEV register:
The FCAI does not support the inclusion of such micro-cars
into the environmental criteria as many vehicles that would meet these criteria
do not meet modern safety standards (both occupant protection and active
safety) and therefore are not suitable for operation on Australia’s road environment.[35]
3.36
A similar concern was expressed by OT Solutions regarding the mobility
criteria for SEV register entry:
...the act will enable used Japanese vehicles with disability
related modifications to be imported and sold without the same level of
compliance and safety that is currently required within Australia.[36]
3.37
Assistive Technology Suppliers Australasia emphasised the need to
maintain Australian Standards across all vehicles, whether for daily use or for
a specific disability need. Such an approach would ensure that all vehicles adhere
to appropriate safety standards, regardless of whether they had entered through
the RAWS, or through a concessional import pathway.[37]
3.38
Submitters acknowledged that the establishment of AVVs would play a vital
role in ensuring that road vehicles that have been modified by a Registered Automotive
Workshop meet an acceptable standard of quality.[38]
3.39
Under the proposed changes, AVVs can operate outside Australia. However,
some submitters expressed concern that the operation of AVVs overseas could
undermine the government's safety focus. The Truck Industry Council argued:
Allowing RAWS's and AVV's to operate overseas and not conduct
(at least) a final inspection within Australia to ensure compliance does not
address the current issue of some RAWS's supplying non-compliant vehicles. Once
entered into service the ability of Federal or State governments to locate and
inspect SEV's non-complying vehicles is currently a significant issue...[39]
3.40
The FCAI added:
To meet the Government's consumer rights policy objectives,
the final AVV inspection must be conducted within Australia at the RAWs
facility.[40]
Department response
3.41
The Department emphasised the point that the automotive industry is
global in nature, and that overseas manufacturers provide a large majority of
vehicles to the Australian market. However, it noted that the combination of
'highly qualified and experienced vehicle industry auditors' and 'a spectrum of
enforcement options' will ensure that any contravention of Australian standards
is prevented.[41]
3.42
According to the EM, in the case of differing international and
Australian standards for mobility access vehicles, the new legislation will
require 'that the Australian Standards...be used as a compliance requirement – which
can be done by a Registered Automotive Workshop using a Model Report'.[42]
3.43
With regards to compliance, the Department stated that the bill provides
for improved compliance and enforcement powers through triggering the Regulatory
Powers (Standard Provisions) Act 2014, which contains a set of provisions
to deal with monitoring, investigation and the use of civil penalties,
infringement notices, enforcement undertakings and injunctions.[43]
3.44
The new legislation also provides the Minister with powers to issue a recall
notice for road vehicles and road vehicle components where necessary, and sets
the framework for voluntary recalls. These provisions replicate and extend the
current recall powers contained in the Australian Consumer Law.
3.45
In addition to these measures to reduce non-compliance with Australian
vehicle standards, the Department notes that the bill provides for
extraterritorial application. This ensures that persons located outside of
Australia that demonstrate non-compliance with the conditions required for the
import approval for a vehicle, can be appropriately regulated. Whilst the
Department acknowledged the difficulties associated with bringing an overseas
entity to account in the Australian court system, it noted that the amendment,
suspension or revocation of an import approval may potentially deny that entity
further business in Australia—thereby preserving Australia's road safety,
environmental and anti-theft standards. It added that the government is
proposing to require these independent vehicle inspections to occur
domestically.[44]
Reduction in personal choice of
vehicles
3.46
The RAWS Association argued that the changes provided for in the bill may
limit Australian consumers' choice in vehicles. It suggested that this
reduction in personal choice would result from the 'very restrictive'
definition of a 'variant', removal of the Personal Import Scheme,[45] and tighter rules for entry on the SEV register.[46]
3.47
The draft Rules provide that the Secretary may enter a variant of a road
vehicle model on the SEV register if the variant has not been provided in
Australia, at any time, under a road vehicle type approval. Prestige Motorsport
argued that this is 'a step backwards from the current scheme' and creates an
'unreasonable' restriction on the import of model variants that are no longer
sold in Australia.[47]
3.48
AutoTerminal Australia submitted that the cessation of the Personal
Import Scheme will force Australians to purchase domestic cars that are older,
more costly, and with significantly more mileage.[48] RAWS Association echoed this view, suggesting that continuing the scheme would
have allowed up to 30 000 vehicles into the country.[49]
3.49
Mr Jeff Ash added that a tightening of the current SEV criteria for
importation would restrict his freedom of choice in purchasing vehicles from
overseas,[50] whilst Karaday urged the committee to join the international market 'instead of
being restricted and held back from enjoying the freedom of choice' that
consumers in other nations now enjoy when purchasing road vehicles.[51]
3.50
A number of submitters also drew on the findings of the 2014 Productivity
Commission Report to argue for a relaxation of import restrictions to 'improve
the choice of the Australian car buyer'.[52]
3.51
Auto Services Group agreed with this, stating:
It is ludicrous that new car dealers and the Government
should consider a used imported vehicle a "parallel import" once the
model has been withdrawn from sale through new vehicle dealers in Australia
(particularly when the review team has already publicly conceded that even
genuine parallel importing would have no effect on new vehicle sales).[53]
Department response
3.52
In his second reading speech, the Minister noted that the new
legislation aims to 'strike a balance between applying appropriate safety,
environmental performance and security standards to vehicles entering the
Australian market for the first time and providing as much consumer choice as
possible'.[54] The focus on consumer choice is one of the five principles on which the Minister
relied in designing the new package of legislation.
3.53
With regards to the Personal Import Scheme, the Department informed the
committee that it had conducted a series of consultation sessions with
stakeholders about the scheme throughout 2016 and 2017. The decision to remove
this aspect of the legislation was a direct result of this consultation process
which established that 'the community risks of the proposed personal new import
scheme outweighed the benefits'.[55] The Regulatory Impact Statement provides further justification for the change:
The Government's more detailed work has been unable to negate
the cost and complexity of providing appropriate consumer awareness and
protection arrangements. This would include investigation of each vehicle
before it was imported to Australia; ensuring consumers were aware that the manufacturer's
warranty may not apply in Australia; and establishing systems to deal with a
manufacturer's safety recall. It would also have been necessary to ensure that
subsequent purchasers of a vehicle, which had been personally imported into
Australia as a new vehicle, were aware of this fact—and the consequences of
this, such as the manufacturer's warranty not applying. In weighing these
issues up against the modest benefits of the personal import
arrangements—including price reductions estimated to be less than 2 per cent
across the market—the Government concluded that the benefits did not justify
the cost and complexity of this particular change.[56]
Committee view
3.54
The committee acknowledges the majority support for the policy intent of
the bills and the general agreement that the proposed legislation provides a
flexible and responsive framework for road vehicle standards in Australia. It
also appreciates that an extensive consultation process has been undertaken over
a number of years and that 'no issues were raised in the consultation that
required amendments in the bills introduced to Parliament'.[57]
3.55
The committee notes the concerns expressed by some submitters about the regulatory
framework for concessional vehicle importation, which is to be set out in delegated
legislation. However, it appreciates that the government is working to refine
the details of the Rules and subsequent technical and administrative
arrangements provided for by the bills, and will continue to consult with
stakeholders throughout this process.[58]
3.56
The Road Vehicle Standards bills package will set minimum performance
standards for safety, environmental performance and anti-theft security for all
vehicles entering the Australian market. Noting that the Motor Vehicles Standards
Act 1989 has operated for nearly 30 years, the committee recognises that
the package of bills will provide for a modern, clearer and more updated regime
to set and maintain Australian road vehicle standards.
Recommendation 1
3.57
The committee recommends that the bill be passed.
Senator Barry O'Sullivan
Chair
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