The Federal Government has today released an options discussion paper for the review of the Motor Vehicle Standards Act 1989, in which it puts forward eight different scenarios to change motor vehicle regulation in Australia.
The Motor Vehicle Standards Act delivers national vehicle standards for new motor vehicles and regulates the first supply of used imported vehicles to the Australian market.
The discussion paper will also consider the options put forward by the Productivity Commission’s final report titled, Australia’s Automotive Manufacturing Industry, released last week, in which the PC called for the easing of restrictions on used and new vehicles coming into Australia from 2018 onwards.
The paper also looks closely at personal importation of new vehicles and other opportunities to lower the average age of Australia’s car fleet while increasing the competitiveness of the Australian car market.
Given the significant changes in the sector since the Act was last reviewed 14 years ago, the review will seek to ensure the balance between appropriate safety standards, in line with international best practice, and consumer access to vehicles at the lowest possible cost, particularly given the end of vehicle manufacturing in Australia.
Minister for infrastructure and regional development, Jaime Briggs, says: “No decision has been taken by the government to reduce these restrictions and we have no intention to allow Australia to become the dumping ground for other countries’ second-hand lemons.”
The PC’s proposal to reduce restrictions on second-hand imports is one of eight options canvassed in the paper. The required consideration of a ‘no changes’ approach and a total repeal of the legislation is also included so that the full spectrum of options is considered. In summary, the options include:
- no changes to the legislative framework (the base case);
- repeal the legislation;
- modernise the legislation language, clear up definitional issues and resolve legislative gaps;
- strengthen the legislation, modernise compliance and enforcement approach, amend scope of legislative
coverage; - full harmonisation with international standards;
- 6. streamline new vehicle certification;
- reduce the barriers to personal importation of new vehicles and the importation of quality second-hand
vehicles; and - reduce/consolidate/remove the concessional schemes.
In regards to option 7, the discussion paper points out that in its final report released last week, the PC recommended (recommendation 5.4) that restrictions on the importation of second-hand vehicles should be eased within a framework of regulations to balance the risk to the community with the reduction in cost to the industry and consumers.
However, the full impacts of further opening up the importation of new and used vehicles were not assessed in the PC report. In identifying these impacts, key issues to consider in detail if option 7 was to be adopted would include:
• short and long term impacts on the price of second-hand and new vehicles including:
* possible effects on the range of new vehicles available;
* changes in vehicle distribution and service support networks; and
* vehicle depreciation rates;
• the effect on the safety, environmental performance and anti-theft measures of the Australian vehicle fleet, including the effect on its average age—newer vehicles are generally safer and more environmentally friendly than equivalent older vehicles;
* impacts on supply chains and availability of vehicles in overseas markets that meet the ADRs or equivalent standards;
* provision of consumer protection such as vehicle warranties, recall mechanisms, after sale parts and service; and
• the regulatory cost of assessing each individual vehicle history to preclude the importation of vehicles that have been subject to structural damage, inadequate repair, theft or odometer tampering.
Impacts of easing luxury imports into Australia
The discussion paper also notes that there could be ‘big impacts when it comes to importing second-hand vehicle and personal imports of new vehicles in the short, medium and long term.’
The discussion paper suggests that a number of submissions to the 2013 public consultation process and to the PC’s inquiry asserted that some classes of vehicles, typically premium classes, are being sold at considerably higher prices in Australia than they are in comparable overseas markets.
Comparing the prices paid for cars in different markets is not straightforward due to the potential to differentiate models by the inclusion of various features in different markets and the point and type at which domestic taxes are applied. For example, one submission compared the Australian and overseas price of 80 comparable vehicle models and adjusted prices to account for differences in taxes and charges.
The submission claimed that of these 80, only four models were sold more cheaply in Australia than overseas. The submission indicated that the cumulative impact of the price differences for these 80 models cost Australian consumers an additional $2.6 billion for new cars in 2011 compared to overseas consumers.
Other research comparing new and used car prices in Australia and Europe has found that in each of the cases examined, there was a substantial premium being paid by Australian consumers that could not be explained by taxes, or the logistics of transporting vehicles to Australia. This research concluded that the current regulatory framework is ‘so complex that it is almost impossible for private individuals other than migrants to import cars to Australia’.
However the research suggested that easing these restrictions would see Australian car prices approach those of other big car markets and that, if restrictions were removed, the price of a Mercedes-Benz C-Class would fall by $20,000 – $25,000, less the price of shipping.
“Any potential changes to the Act will be closely examined in close consultation with stakeholders, and I strongly encourage interested parties to put forward their views,” Briggs notes.
Consultations will close on October 13, 2014 and feedback will inform the preparation of a Regulation Impact Statement (RIS) to examine the road safety, environmental and consumer protection impacts of all policy proposals for consideration by the government.
The options paper and information on how to participate in the consultation process can be accessed online by clicking here.
Workshops
Public workshops will be held for any interested person or organisation to discuss the content of the Options Discussion Paper in the following cities:
- Sydney (Parramatta), Tuesday 23 September 2014—afternoon
- Brisbane, Wednesday 24 September 2014—morning
- Melbourne, Friday 26 September 2014—morning
- Adelaide, Wednesday 1 October 2014—morning
- Perth, Thursday 2 October 2014—morning
Please note, places at these workshops are limited. For more information or to book in for a workshop, please go to the attached booking site by clicking here.
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