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"What the Government needs from marketers"



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“WHAT THE GOVERNMENT NEEDS FROM MARKETERS"

AANA LUNCHEON ADDRESS

BY THE HON. BARRY COHEN, M.P.

MINISTER FOR HOME AFFAIRS AND ENVIRONMENT

11 SEPTEMBER 1984

"What the Government Needs from Marketers"

AANA Luncheon Address

Introduction

The growth of discussion and action in many business

circles on the principle of corporate responsibility

in society has been a most pleasing development. To

be a 1 1 good corporate citizen" is the genuine aim of

many business entities and this is recognised by the

Government. However this aim is not universal and

some businesses show a greater concern with short

term gain than with sound long term practices.

There has been considerable initiative shown in some

areas of business and industry in introducing self-

regulatory codes and practices directed at providing a fair go for consumers and at protecting reputable

business interests.

- Example: The Code of Practice regulating the

advertising of therapeutic goods.

The Australian advertising industry is well to the

forefront in the area of self-regulation and the Government recognises the clear benefits for both

consumers and business of appropriate and effective

industry self-regulation.

However the social responsibility of marketers goes

beyond the limits of the self-regulation system- .

For marketers to be seen by Governments and consumers

as fully socially responsible, and if the need for

Government intervention in the market is to be reduced,

there must be:

- a commitment to the ideal of fair dealing in the

marketplace; and

- a conscious and continuous drive by marketers to

be responsive to the needs and expectations of

consumers.

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. Government expectations of marketers can be illustrated by issues falling within my. portfolio responsibilities

for consumer affairs.

Consumer Information and Education

One of the most publicised rights of the consumer if the

right to be informed. The consumer has a right to know

accurately what it is he or she is purchasing and if so informed, will generally take responsibility for the

purchasing decision.

Marketers have a role to play in ensuring that when new

products or services are introduced, information and consumer education programs which are both accurate and

appropriate are conducted. This should be a proper cost against the product or service and not one that has to be

picked up by governments as consumer education costs. \

Marketers proud of the product or service they are

promoting should appreciate that by providing adequate and, where appropriate, comprehensive information on the

product or service, benefits accrue to both the consumer

and the supplier. Marketers should also be aware that Australian consumers are becoming more sophisticated and

better educated, and the demand for substantial product

information is increasing.

Examples of consumer items in which increased mutual

benefits could be derived from the provision of

information above traditional levels or statutory

requirements are:

- ingredient labelling of foods - eg accurate salt,

sugar and fat content;

- more detailed ingredient labelling on products which could pose a health hazard - eg some foods, cosmetics,

therepeutic goods, vitamin and mineral preparations,

products promoted as 1 health foods';

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- textile floor coverings - eg better use of

SAA standards or industry codes to provide

reliable information on durability, wear

characteristics, appearance retention.

Product Safety

. The Trade Practices Act provides the power to declare

product safety standards or ban unsafe goods but in many situations the co-operation of suppliers in

voluntary compliance with undeclared standards, and

in keeping unsafe goods of the market is a preferred

first option. .

. Marketers have a responsibility not to promote unsafe

products, particularly to those who may not readily

appreciate hazards.

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. Advertisers should be prepared to warn of the potential

dangers of goods which may fall into the hands of people for whom they were not designed - eg toys

suitable for older children may be quite dangerous in the hands of small children because of small

removeable parts, etc.

. Examples of an unscrupulous practice which has come

to attention: some suppliers of toys which are clearly

designed for infants have labelled them 'Not suitable

for children under 3 years'. However, the toy5‘ in

question may contain small removeable parts, which

are only permitted by the Australian Standard, in

toys which are so labelled. Thus the suppliers have

technically complied with the standard but may be

marketing an unsafe product. The Trade Practices

Commission and my Department are looking into this

aspect.

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Product Recall

. At present the Trade Practices Act contains no powers

which would allow me to require the recall or modification of unsafe goods. Consideration is currently

being given to providing such powers.

. Suppliers have generally been prepared to co-operate

with voluntary recall codes developed in some industries - eg the food and automotive industries. However,

there have been occasional refusals to co-operate which have pointed to the desirability for me to have some residual power to impose a mandatory requirement.

. There has been some opposition to the concept of mandatory product recall, but industry generally has been prepared

to accept the idea especially as a means of controlling

1 rogue1 operators in an industry.

. Whether the recal of unsafe goods is to take place

by voluntary means or by mandatory requirement, the success of any recall system will depend on suppliers

demonstrating a responsible attitude towards identifying

unsafe goods and being prepared to develop effective • systems for notifying consumers of those goods of the

recall campaign. ,

Proposed Amendments to the Trade Practices Act

The Government released a Discussion Paper entitled

iThe Trade Practices Act: Proposals for Change1 on

21 February of this year.

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This document produced reactions, and was expected, from a variety of groups and individuals in the community especially the business community. It

would be naive to expect that all business interests

would welcome with open arms all the proposals, but

some of the reactions to some of the proposals did

reflect an apparent misunderstanding of the present

Trade Practices Act, and the proposals for change, which was somewhat unexpected.

It should be recalled that the enactment of the Trade

Practices Act in 1974 by the Australian Labor Government

marked the major entry of the Commonwealth into consumer

affairs.

The consumer protection provisions of the Act lay down basic standards of commercial conduct which the consumer

in a society such as Australia's has a right to expect.

The Act codifies what reputable businesses would regard

as fair and proper commercial conduct.

Those in business also benefit from the consumer

protection provisions of the Act in that they are

protected against competitors who try to obtain

advantages in the market by unfair or dishonest means.

The general image of business is thereby raised.

While the proposals about the consumer protection and

related provisions contained in the Discussion 'Paper

were extensive and major, they did not represent a

violent change in the objectives of the Act which

have become accepted by the community. As was stated

at the time, the proposals were intended to restore

and enhance the previously understood operation of

the Act; to improve the Act's ability to protect

consumers and reputable business interests; and to

implement election commitments. Some were also

intended to facilitate the achivement of uniform

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consumer protection legislation throughout the Commonwealth. The proposals were not a case of

regulation for the sake of regulation.

The submission by AANA on the amendments raised two

particular proposals of concern to the Association, namely:

- the proposal to prohibit unconscionable conduct

in trade or commerce; - the proposal to allow the Trade Practices *

Commission to obtain compensation orders on

behalf of consumers.

The Government appreciated concerns that have been

expressed about the scope of the provision relating to unconscionable conduct and is reconsidering the

proposal in the light of comments received.

The proposed amendment to allow the Trade Practices

Commission to obtain compensation orders on behalf

of consumers would, if enacted, overcome a major deficiency in the operation of the Act.

At present, the Commission may decide to act on a complaint and prosecute a corporation for breaching _

the Unfair Practices provision of the Act. If the Commission is successful and the corporation fined, the fine goes to the Crown while the complaint is left to

take his or her own action to seek redress in the Federal

Court.

This may be defensible where a large amount is involved and the complaint has considerable

resources available to them. Where only a small

amount of money is involved for the individual, it is unlikely that complainants will find it financially

justifiable to take action to obtain redress.

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A number of the submissions from the business community, including AANA, have indicated their opposition to this

proposed amendment. The thrust of their argument is that the proposal represents the introduction of class

actions and thereby pre-empts the current Australian Law Reform Commission reference on standing and class

actions.

I do not find the substance of this argument very

convincing. What is proposed is a very limited form

of representative action, rather than a class action,

to overcome an existing deficiency in the Act. There

are important limitations on the operation of the

proposed amendment which differentiate it from a class

action procedure:

- the right for the Commission to act on behalf,

of persons depends on the Federal Court first finding a contravention;

- the person must be identified in the application; - the person must have consented to the Commission

acting on their behalf; '

- it does not apply to the Conditions and Warranties in Consumer Transactions and the Actions Against

Manufacturers and Importers of Goods provisions

of the Act.

There are ample precedents for the^proposal in other

legislation:

- Section 15 of Consumer Affairs Ordinance 1973 (ACT)

- Section 17(3) of Consumer Protection Act 1971 (WA)

- Section 9B of Consumer Affairs Act 1972 (Vic) - Section 89A of Family Law Act 1975 (Commonwealth).

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. More generally, over 100 submissions have been received by the Government in relation to the proposed amendments

to the Act. A sizeable number of submissions were received after the nominated deadline of 4 May 1984

and some of the submissions raised important matters which require further detailed examination by the Government. ·

. Accordingly, the bulk of the reforms to the Trade Practices

Act proposed earlier this year will not take place in the current Budget Sittings of Parliament. The only

proposals concerning the consumer protection and related

provisions currently intended to proceed in the Budget

Sittings relate to the enforcement of fines and the

clarification of the application of the Act to Information Providers, including the media. ,

There is .a pressing need for action in these areas and

new sections are to be inserted.

Conclusion

Ladies and Gentlemen, I have appreciated the opportunity

to outline today the Govenrment's intentions regarding the amendments to the consumer protection provisions of

the Trade Practices Act and its expectations of marketers.

Gatherings such as today, with representatives of major

Australian marketers in attendance, assist in progress

to a fully socially responsible business community.

In this regard, I would like to especially mention the

leading role that the President of AANA, Mr Peter Dunstan,

who is a member of the National Consumer Affairs Advisory

Council, has played in promoting dialogue on corporate

responsibility in society.

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