Coalition Senators Additional Comments

1.1        The Coalition is committed to the Water Efficiency Labelling and Standards (WELS) scheme, indeed it was under the Coalition that this world-first reform was established with the passing of the Water Efficiency Labelling and Standards Act 2005. We support the need to conserve water supplies by reducing water consumption, to provide information to purchasers of water-use and water-saving products and to promote the adoption of efficient and effective water-use and water-saving technologies.

1.2        While always mindful of the importance of minimising costs to consumers and industry, the Coalition believes it is reasonable that part of the accreditation cost to ensure the accurate promotion of water saving technologies is recovered from the sector.

1.3        The bills seek to set registration fees to be collected from manufacturers and suppliers of regulated equipment, however the Australian Industry Group (Ai Group) believes that:

If the Scheme administration costs were to be partly recovered from water utilities, those costs would be passed on to all water users (including broader industry). Less cost to bring products to market will broaden access to newer, more efficient equipment. Ai Group further notes that water utilities and their customers are a major beneficiary from the WELS Scheme given that utility infrastructure costs will be permanently offset by reduced consumption due to enhanced water efficiency, and these savings will benefit all water users within the utility area of service. Ai Group contends that passing WELS Scheme administration costs to water users more generally would align costs with these broader benefits and avoid a disincentive for the use of newer, more efficient products.[1]

1.4        The Coalition shares the concern of Ai Group that:

Imposition on manufacturers and suppliers of regulated equipment of increased costs in the form of higher registration fees will necessarily result in these costs being passed through to purchasers of regulated equipment via increased equipment costs. At the margins, some consumers will be deterred from or delay purchasing new equipment because of the higher costs. New equipment will tend to be more efficient, in part because of the requirements imposed by the WELS Scheme. Because of this marginal effect, there will be an impact on efficiency, even though purchasers of new equipment enjoy the direct benefits of efficiency. Manufacturers and suppliers may also be deterred from introducing new, more efficient equipment due to the increased costs of bringing such products to market.[2]

1.5        The Coalition is also mindful of the concerns of the Water Services Association of Australia regarding the potential impact of fees on smaller manufacturers and subsequently consumers.[3]

1.6        Whether by the proposed methodology or by the method recommended by the Ai Group, the costs of this scheme are passed on to consumers, either consumers of new water products or consumers of water generally.

1.7        As the benefits of this scheme are shared broadly, Coalition Senators believe it is preferable for those costs to be shared broadly rather than solely adding to the costs of newer and most likely more efficient water products. Accordingly, we recommend that governments consider whether fees would be better collected to cover part of the accreditation costs of the WELS scheme from water utilities.

1.8        The Coalition also shares the concerns of the Australia Water Association (AWA) that, if fees are imposed on manufacturers, there may be unintended consequences.  

...an unintended consequence of setting a registration fee too high and creating a barrier, may be inflated product costs as manufacturers pass on the fees. This, in turn could lead to reduced competition and less consumer choice...AWA recommends that a review of the impact of the revised fee structure be conducted to ensure that any unintended consequences are taken into consideration, protecting the interests of manufacturers, suppliers/distributers and consumers.[4]

1.9        Therefore the Coalition recommends that the Bills be amended to provide for a review of the registration fees if the Bills are not amended to collect part of the accreditation costs of the WELS scheme from water utilities.

Recommendation 1

1.10      Coalition Senators recommend that government consider whether fees to be collected to cover part of the accreditation costs of the WELS scheme would be better collected from water utilities.

Recommendation 2

1.11      Coalition Senators recommend that the Bills be amended to provide for a review of the registration fees if the Bills are not amended to collect part of the accreditation costs of the WELS scheme from water utilities.

 

Senator Simon Birmingham Deputy Chair Senator for South Australia

Senator Bridget McKenzie Senator for Victoria

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