Discussion PaperA review of the National Trade Measurement Regulations 2009, Part 4: Packaging

October 2015www.industry.gov.au/packagingreviewl

Contents

Introduction.................................................................................................................3

Have your say.............................................................................................................3

Background.................................................................................................................4Purpose.............................................................................................................................................. 4

History................................................................................................................................................ 4

Related International Standards.........................................................................................................4

Related Australian Standards and Regulations..................................................................................5

Current enforcement.......................................................................................................................... 5

Discussion of regulations............................................................................................6Overview............................................................................................................................................ 6

Division 4.1 (Regulation 4.1)..............................................................................................................7

Division 4.2 (Regulations 4.3-4.6)......................................................................................................7

Division 4.3 (Regulations 4.7-4.8)......................................................................................................8

Division 4.4, Subdivision 1 (Regulations 4.9-4.16).............................................................................8

Regulation 4.10 General position of measurement marking...........................................................9

Industry Concerns with Regulation 4.10.....................................................................................9

Consumer group concerns with Regulation 4.10......................................................................10

Regulation 4.11 Set-out and form of measurement marking........................................................11

Regulation 4.12 Size etc. of characters in measurement marking................................................12

Regulation 4.13 & Schedule 5 Expression of measurement marking...........................................12

Division 4.4, Subdivision 2 (Regulations 4.17-4.22).........................................................................14

Division 4.4, Subdivision 3 (Regulations 4.23-4.25).........................................................................14

Division 4.4, Subdivision 4 (Regulation 4.26)...................................................................................15

Division 4.5 (Regulation 4.27-4.29A)................................................................................................15

Division 4.6 (Regulations 4.31-4.32)................................................................................................16

Division 4.7 (Regulations 4.34 - 4.44)..............................................................................................16

Division 4.8 (Regulation 4.46)..........................................................................................................17

Appendix 1- List of considerations to prompt feedback.............................................18

Packaging Review: Discussion Paper industry.gov.au 2

IntroductionThe National Trade Measurement Regulations 2009 underpins the trust between strangers when entering into financial transactions, ensuring they have trust and confidence that they are receiving what they paid for. This trust and confidence is essential for a well-functioning economy, however, it is important to ensure that these regulations are optimal. This review examines Part 4 of the National Trade Measurement Regulations 2009, which predominately provides rules related to measurement marking on packaging (i.e. the “330ml” marking on a can of soft drink).

The Australian Government is focused on improving productivity and encouraging innovation in the Australian economy. The Government has undertaken a deregulation agenda focused on eliminating inefficient and unnecessary regulations on businesses, individuals and the community. As part of this agenda the Government has committed to reducing the regulatory burden by $1 billion annually.1 The labelling requirements laid out in Part 4 of the National Trade Measurement Regulations 2009 were identified by the Department of Industry and Science as an area of regulation which could be reformed to remove unnecessary burdens on businesses and consumers.

In undertaking this review the Australian Government is keen to understand the impacts that regulatory changes may have on consumers, businesses and trade. The aim of this review is to examine the impact that changes to regulations regarding measurement markings on products would have on Australian consumers, businesses and trade should the regulations be amended to allow greater flexibility of where measurement markings are placed. The review will:

maintain confidence in Australia’s regulatory system for measurement markings; assess the regulations for their appropriateness for the Australian market; attempt to align Australia’s regulatory regime with national and international standards; try to reduce the costs of business compliance; reflect the efforts of Australian Government officials to tasks which maintain confidence in

Australia’s measurement system; and base decisions on the best available data and considerations of how changes will impact all

sections of the community.

Have your sayThe Government is seeking responses to the issues raised in this paper. The questions and considerations outlined within this paper are designed to prompt responses, however respondents do not need to answer all of them.

It is strongly recommended that readers refer to the regulations when considering the issues raised in this discussion paper, as many of the references relate to specific regulations and their impacts.

All details can be found on the ComLaw website: https://www.comlaw.gov.au/Details/F2015C00010.

Material that is not covered by the questions, but that is within the scope of the review, can be included in submissions. To help in the process of the review any calculations of costs or benefits of changes to the regulations would be useful in supporting a case for change.

All submissions received will be considered by the Government in the process of finalising the proposal. We encourage those who have a view on the issues outlined in the discussion paper to make a written submission by 18 December 2015.

Submissions can be made on the website: https://consult.industry.gov.au/ . If you have difficulties or questions, please email packagingreview@industry.gov.au .

1 Australian Government, The Australian Government Annual Deregulation Report 2014, p.6 <https://www.cuttingredtape.gov.au/sites/default/files/files/ausgov_annual_dereg_report_2014.pdf>.

Packaging Review: Discussion Paper industry.gov.au 3

Submissions received may be made public on the consultation website unless otherwise specified. Submissions should indicate whether any part of the content should not be disclosed to the public.

Background

PurposePart 4 defines how the measurements related to packaging are controlled. It describes how the name, address and measurement mark should be displayed. It states what expressions are prohibited on the package relating to measurements, and details whether the product matches the weight marking.

This document has been compiled by reviewing previous information provided to the department relating to these regulations and consulting industry and consumer associations. As a result of this preliminary process, there are three questions that form the basis of the review of Part 4.

1. Can the regulations be simplified? 2. Could the exemptions be increased or decreased? 3. Should a principles based approach be adopted for the regulations overseeing the measurement

mark?

The regulations relating to the measurement mark offer the greatest opportunity for reform, from the perspective of all three questions.

The questions above reflect possible options for reform, from a relatively minor change to the regulations with question 1, to a targeted reduction of the scope of the regulations with question 2, and finally to adopting a more flexible approach with question 3.

Additional questions are provided later in the paper, specific to sections of the regulations. It is with these details that the above questions can be considered further.

HistoryThe Commonwealth has power under the Constitution Section 51 (xv) to create legislation regarding ‘weights and measures’. The National Measurement Act 1960 is the central legislation with regards to weights and measures.

In the early 1990s, the states and territories developed uniform trade measurement legislation (UTML). Despite each state and territory enacting legislation based on the UTML, subsequent changes to the UTML were introduced at different times leading to inconsistent regulation across the states and territories.2

On 13 April 2007, the Council of Australian Governments (COAG) decided to implement a national trade measurement system. On 8 December 2008, Royal Assent was given to the National Measurement Amendment Bill 2008, which amended the National Measurement Act 1960 to create the legislative framework for a national system of trade measurement. The new legislation contains many provisions that substantially correspond to the UTML.3

Related International StandardsAustralia uses the recommendations of the International Organization of Legal Metrology (OIML) to guide the formation of our measurement regulations. OIML’s aim is to harmonise regulations and metrological controls applied by its 60 full member states and 68 corresponding members.4 OIML recommendation R79: Labelling requirements for pre-packaged products is the most relevant 2 Explanatory Memorandum, National Measurement Regulations 2009,p.1 <http://www.austlii.edu.au/cgi-bin/sinodisp/au/legis/cth/num_reg_es/ntmr2009n233o2009457.html?stem=0&synonyms=0&query=National%20Trade%20Measurement%20Regulations>.3 Ibid., p1-2.4 International Organization of Legal Metrology, What is OIML?, <https://www.oiml.org/en/about/about-oiml> [Accessed 7 May 2015].

Packaging Review: Discussion Paper industry.gov.au 4

recommendation for this review.5 Australian regulations are not an exact replication of OIML’s recommendation with the recommendations adapted to meet the needs of Australian businesses and consumers. This adaptability of OIML’s recommendation has led to different member countries enacting and enforcing the OIML recommendations to different degrees.

Codex Alimentarius is another relevant international standard that relates to Australia’s trade measurement regulations. Codex Alimentarius is an international body for food standards which was established by the World Health Organization and the Food and Agriculture Organization of the United Nations.6 The CODEX STAN 1-1985: General Standard for the Labelling of Pre-packed Foods relates to this review however the standards only cover food labelling and do not extend to other product types.7

Further, Australia also has obligations to ensure labelling is not an unnecessary obstacle to trade under the General Agreement on Tariffs and Trade and Technical Barriers to Trade Agreement administered by the World Trade Organisation.8 9

Related Australian Standards and RegulationsAustralian Consumer Law in the Competition and Consumer Act 2010 also provides protection for consumers with regards to measurement labelling. Section 18 of the Australian Consumer Law states ‘A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’.10 Placing the incorrect weight measurement on a package would be considered misleading or deceptive and would be in contravention of the act. This law covers both business to consumer transactions and businesses to business transactions.11

The Australian New Zealand Food Standards Code includes sections on the labelling of food products. The code’s labelling requirements predominately deal with issues only relevant to food products such as listing of ingredients, nutritional information and allergen warnings.12 There is some overlap with the National Trade Measurement Regulations 2009 with regards to address labelling which is discussed further in Division 4.3.13

Current enforcementThe consequence of a breach under the legislation can range from issuing notices of non-compliance through to infringement notices, fines, court-enforced undertakings and criminal prosecution. The range of enforcement actions are in place to prevent, stop or minimise contraventions of national measurement laws and deter future contraventions. The enforcement options are commensurate with both the level of consequence and the level of likelihood of non-compliance. When both levels are low to medium, a warning letter may be issued in the first instance. Failure to comply with this written warning will in most cases lead to the issuing of an infringement notice. The infringement notice penalty is currently 5 penalty points ($900) for each provision of the legislation that has been contravened.14

5 International Organization of Legal Metrology, Labelling requirements for pre-packaged products, <https://www.oiml.org/en/files/pdf_r/r079-e97.pdf> [Accessed 7 May 2015].6 Codex Alimentarius, Codex Members and Observers, <http://www.codexalimentarius.org/members-observers/en/ > [Accessed 7 May 2015].7 Codex Alimentarius, General Standard For The Labelling Of Pre-packaged Foods, <http://www.fao.org/docrep/005/y2770e/y2770e02.htm> [Accessed 7 May 2015].8 World Trade Organization, The General Agreement on Tariffs and Trade, < https://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf > [Accessed 7 May 2015].9 World Trade Organization, Agreement on Technical Barriers to Trade, <https://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm> [Accessed 7 May 2015].10 Competition and Consumer Act 2010 (Cth) < https://www.comlaw.gov.au/Details/C2011C00003>. 11 Commonwealth Government of Australia, The Australian Consumer Law: A guide to provisions, 2010, <http://www.consumerlaw.gov.au/content/the_acl/downloads/A_guide_to_provisions_Nov_2010.pdf>. 12 Australia New Zealand Food Standards Code (Cth) <http://www.foodstandards.gov.au/code/Pages/default.aspx>. 13 Ibid.14 National Measurement Institute, Compliance and Enforcement Policy, 2011, <http://www.measurement.gov.au/Publications/trademeasurement/Documents/ComplianceandEnforcementPolicy.pdf>

Packaging Review: Discussion Paper industry.gov.au 5

The National Measurement Institute (NMI) tests products to ensure they comply with the National Trade Measurement Regulations 2009. In 2013-14 trade measurement inspectors examined almost 35,000 lines of packaging following compliance checks relating to product shortfall. A compliance examination of product packaging is undertaken following other regulation breaches to ensure products display the correct measurement marking and correct packer identification.15 The majority (86 per cent) of pre-packed articles examined were labelled in accordance with the legislation.16 Figure 1 shows the percentage of correct and incorrect package labelling under different product categories; the lowest categories of compliance were seafood (28 per cent incorrect) and beverages (28 per cent incorrect).17

Figure 1: Percentage of Correct/Incorrect Labelling of Pre-packed Articles 2013-14.18

In 2013-14 the NMI issued 138 infringement notices with $150,400 in fines imposed. Of these infringement notices, 1 per cent related to the labelling of pre-packed articles.19

Discussion of regulations

OverviewPart 4 of the National Trade Measurement Regulations 2009 is split into 8 divisions with 40 regulations. Division 4.1 defines terms used in this part and Division 4.2 makes provisions with regards to the operation of Part 4, in particular exemptions to requirements of Part 4. Divisions 4.3 and 4.4 are the two core requirements with respect to packaging labels in the regulations; address and measurement marking respectively. Division 4.5 states prohibited expressions and Division 4.6 deals with allowable deficiencies for mushrooms and soap. Division 4.7 contains the provisions that require the product weight to match the weight marking. Division 4.8 has provisions for miscellaneous matters. Several Divisions are divided into Sub-Divisions, as noted below.

15 National Measurement Institute, National Data 2013-14, <http://www.measurement.gov.au/TradeMeasurement/NationalData/Pages/default.aspx> [Accessed 8 May 2015].16 Ibid.17 Ibid.18 National Measurement Institute, National Data 2013-14, <http://www.measurement.gov.au/TradeMeasurement/NationalData/Pages/default.aspx>19 Ibid.

Packaging Review: Discussion Paper industry.gov.au 6

The discussion below provides a summary of the regulations and the issues arising from them. If you wish to view the full regulations, they are available at https://www.comlaw.gov.au/Details/F2015C00010.

Division 4.1 (Regulation 4.1)The first division of the National Trade Measurement Regulations 2009, Part 4 outlines the definitions for terms used in Part 4. These definitions clarify the application of the terms used in the following divisions.

Key definitions for this review are:

Measurement marking ‘means the marking of measurement required by these Regulations to be made on a pre-packed product’.

Principal display panel ‘in relation to a package, means the part of the package that is most likely to be displayed under normal and customary conditions of display’. This typically is understood to mean the front of the product.

Considerations:

1) Are the terms in Regulation 4.1 properly defined?

2) Should any of the definitions be omitted?

3) Should any definitions be added?

Division 4.2 (Regulations 4.3-4.6)Division 4.2 makes a provision with respect to the operations of Part 4; in particular packages that are exempt from the legislation.

Regulation 4.3 states the requirements of Part 4 must be applied to both inner and outer packaging of a product. This was included to ensure ‘the information contained in a marking will be available to consumers, when, for whatever reason, an inner package becomes separated from its outer package.’20 The exemptions to this regulation are stated in Regulation 4.25(2); which are for any inner package ordinary sold in an outer package and for when the outer package is only for transportation.

Regulation 4.4(1) states the exemptions to the legislation are outlined in Schedule 4 of the National Trade Measurement Regulations 2009.

Subregulation 4.4(3) outlines that if an exempt package has an address or measurement mark the package must comply with the regulations when placing the information on the package. An industry group has raised concern over this clause.21 They give the example of a cosmetic pack which may include a 12mL nail polish bottle which is exempt as its content is less than 15mL (under Schedule 5(5)(3)). If the company does decide to disclose the contents of the nail polish they have to comply with the full requirements of Division 4.3 and 4.4 (i.e. the measurement marking would not be allowed to be placed on the back of the bottle, it must be displayed on the front).22 The regulation was included to ensure that there is uniformity in marking across all the pre-packaged goods and to prohibit display of misleading information to customers.

Further exemptions are made in Section 4.5 for certain paper packages.

20 Explanatory Memorandum, Op. Cit., p.44. 21 ACCORD, Submission to NMI Regulation Reform, 2014 < http://www.measurement.gov.au/Documents/RegulatoryReform/Accord.pdf>. 22 Ibid.

Packaging Review: Discussion Paper industry.gov.au 7

Considerations:

4) Should the products that are currently exempt from address and measurement marking be exempt? Are there other products that should be exempt?

5) Should a product that is deemed to be exempt have to comply with the regulations for measurement or address marking if they wish to place the mark on their product?

6) If an exempt product chooses to display the measurement mark, should they:

a. be bound by the full requirements of the regulations?

b. retain their exemption for all aspects of the measurement marking display, however measurement markings must be factual?

Division 4.3 (Regulations 4.7-4.8)Division 4.3 outlines the first core requirement of the regulations of marking of name and address on packaging (Regulation 4.7). Regulation 4.8 gives exemptions to packaged seeds and imported pre-packaged products.

The purpose of these name and address requirements is to ensure compliance and take any enforcement action necessary such as the serving of papers for legal enforcement.

An industry group has raised the issue that requirements for address labelling under the National Trade Measurement Regulations are not consistent with address labelling required under the Australia New Zealand Food Standards Code. Subregulation 4.7(1) of the NMI regulations requires the ‘name and address of the person who packed or on whose behalf it was packed’ and 4.7 (3) requires the address to be ‘a place in Australia where a document may be served personally on the person’. In contrast, the Australia New Zealand Food Standards 1.2.2.3 (1) requires the address be in Australia or New Zealand and be the supplier of the food.23

Considerations:

7) Should packaged seeds and imported pre-packaged products be exempt? Should other products be exempt?

8) Should address requirements be consistent or harmonised with the requirements of the Australia New Zealand Food Standards 1.2.2.3 (1)?

a. Should packages that comply with Australia New Zealand Food Standards be exempt or deemed to comply with the NMI regulations?

i. Are there significant legal differences between a place in Australia where a document may be served personally on a person, and a location that is liable for food packaging?

Division 4.4, Subdivision 1 (Regulations 4.9-4.16)Subdivision 1 of Division 4.4 outlines the second core requirement of the regulation that a pre-packaged product must be marked with a statement of measurement (Regulation 4.9). Subregulation 4.9(2) sets the requirement for the measurement marking. The statement must be clear, conspicuous and readily seen.

23 Australia New Zealand Food Standards Code (Cth) <http://www.foodstandards.gov.au/code/Pages/default.aspx>.

Packaging Review: Discussion Paper industry.gov.au 8

Regulation 4.10 General position of measurement markingRegulation 4.10 states that a measurement marking on a package must be made on the principal display panel. As per the definition set out in division 4.1 (discussed previously) this typically means the measurement marking must be on the front of the package. If a package is cylindrical, spheroidal, conical or of oval cross section, the measurement marking must be positioned so that no part of the marking is further than one-sixth of the circumference of the package from the line that vertically bisects the part of the package on which the marking is to be made. Exemptions are made for the packaging of automotive parts and certain bottle or casks of wine.

Industry Concerns with Regulation 4.10This requirement has been flagged by industry groups as creating an unnecessary burden as imported products often need to be relabelled to meet Australian requirements.24 25 26 They state this is particularly an issue given the relative small size of the Australian manufacturing industry. The European Union is one such region from where imported products allegedly need to be relabelled. Despite being a member of OIML, the European Union does not require front of pack labelling.27

The European Union’s packaging regulations are not as prescriptive as Australia’s. European legislation states that all pre-package markings should be ‘indelible, easily legible and visible on the pre-package in normal conditions of presentation’.28 As part of consultations into the metrological requirements for pre-packaged products in 2005, the European Union found business associations were unanimous in rejecting changing their legislation regarding size and placement of the measurement marking.29 The business associations also cited the losses on existing labels and the cost of restyling the labels. Furthermore, they also stated the primary label could become too full and confusing.30 The European Union decided these considerations outweigh the fact that the legislation would conflict with OIML and would cause trade barriers for businesses when exporting their products.

The European Union also conducted an Interactive Policy Making Survey of 382 consumers about pre-packaging labelling. This survey found the majority of consumers (55 per cent) were of the opinion that it is sufficient to at least have the quantity indication somewhere on the packaging. However, it should be noted that there is an age gap with two thirds of respondents under 25 of the view the marking could be anywhere on the packaging whereas 50 per cent of over-55-years want front of package labelling.31

Industry groups have estimated the cost of relabelling a product to be 25c to $1 per unit, this can compound to $10,000 to $75,000 for a product run.32 Industry groups have stated that there are a large number of costs associated with relabelling a product such as cost of the label itself, designing of the label, cost to unpack the good, repack and re-seal and, the damages resulting from the relabelling. Some businesses decide to place stickers on the front of the package to meet the legislation requirements, however, they have stated it devalues the brand.

Fast moving consumer goods such as cosmetics and alcoholic beverages products often need relabelling, particularly products from the European Union. In 2013-14, $867 million and $665 million 24 ACCORD, Op. Cit.25 Australian Food and Grocery Council, Submission to NMI Regulation Reform, 2014 <http://www.measurement.gov.au/Documents/RegulatoryReform/AFGC.pdf>. 26 National Retailers Association, Submission to NMI Regulation Reform, 2014 <http://www.measurement.gov.au/Documents/RegulatoryReform/NRA.pdf>.27 Official Journal of the European Communities, Council Directive 76/211/EEC, <http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31976L0211&from=EN> [Accessed 7 May 2015].28 Official Journal of the European Communities, Council Directive 76/211/EEC, <http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31976L0211&from=EN> [Accessed 7 May 2015].29 European Commission, 2005, Metrological Requirements for Pre-packaged Products: Follow-up to the public consultation and WELMEX wg6 consultation, p10. 30 Ibid.31 Ibid.32 ACCORD, Op. Cit.

Packaging Review: Discussion Paper industry.gov.au 9

of alcoholic beverages and perfumery and cosmetics (excluding soap) respectively were imported into Australia from the European Union.33 Imports in these sectors have increase by 7.4 per cent and 20.6 per cent respectively over the last five years.34 A decrease in regulation could possibly lead to a decrease in costs of imported European products. Furthermore, removing the need to relabel could possibly increase Australia’s attractiveness as an import market leading to new products entering Australia. Consumers would also save through a decrease in enforcement costs.

Industry groups have suggested the following options for change with regard to Regulation 4.10:

Allowing certain economies to be deemed-to-comply with Australian requirements (provided the labelling is in English) as is currently used by New Zealand; or

Adopting a simplified approach to Regulations 4.10 to 4.16 such that the requirements would be that the label must be in English, prominent and legible and have the nominal weight in volume or mass on the product.35

Industry groups have stated they believe the market will determine whether the measurement marking needs to be on the front of package. They believe if consumers desire front of pack measurement marking on a product they will buy products which have this characteristic or businesses will place the marking on the front to increase the desirability of the product. This will encourage other businesses who sell the same product to place the measurement marking on the front. Products which are not sold on a measurement comparison basis but by other factors such as by brand name will not place the measurement on the front of the package as consumers and the market would not desire the measurement marking to be on the front panel.

Considerations:

9) Should the measurement marking requirements be:

a. Changed to a principles approach similar to that undertaken by the European Union, the Australian Competition and Consumer Commission and Food Standards Australia and New Zealand?

b. Adapted to account for further exemptions of products such as cosmetics, distilled spirits or from a specific region (i.e. imports from other OIML signatory countries)?

10) Do you have examples or evidence of the costs associated with re-labelling products?

a. What kind of products typically require re-labelling?

b. What volume of product do you have to relabel on a given year?

c. What is the unit costs associated with relabelling?

Consumer group concerns with Regulation 4.10 Consumer groups have concerns about removing the requirement to have the measurement marking on the front of the package. Consumer groups have expressed concern that it is becoming more common for companies to decrease the content of the package without decreasing the size of the package or the price. They argue that removing this requirement would decrease consumer awareness of this practice.36 Trade Practices (Industry Codes — Unit Pricing) Regulations 2009 requires unit pricing which could raise some awareness of this practice but the regulation is limited to

33 Department of Foreign Affairs and Trade, Composition of Trade Australia 2013-14, p129 < http://dfat.gov.au/about-us/publications/Documents/cot-fy-2013-14.pdf>. 34 Ibid.35 Australian Food and Grocery Council, Op. Cit.36 Queensland Consumers’ Association, Letter to Hon Bob Baldwin, 2014.

Packaging Review: Discussion Paper industry.gov.au 10

grocery retailers with more than 1,000 square metres of floor space.37 Consumer groups have also stated that unit pricing does not overcome this issue as the information is often not presented well nor in the correct units. Consumer groups believe this is particularly relevant given the increasing proportion of products bought by consumers in pre-packs with great variation in quantity.38 Not requiring front pack measurement marking could also increase the time needed for consumers to make decisions about what size is appropriate for them and decide between differing packages. Given the millions of transactions undertaken by consumers each year, a small loss of time would have a multiplying effect to a possible large cost for the economy.

A 2014 survey conduct by CHOICE asked participates ‘How important is it to you that the quantity is shown on the front of the food or drink packet, not the back?’. This survey found 74.1 per cent of the 3,104 participants considered it very/somewhat important that the information be shown on the front of the package, 19.4 per cent were neutral and 6.5 per cent percent considered it very/somewhat unimportant. The location on the front was also found to be considered very/somewhat important by more females (76.2 per cent) than males (72 per cent) and also by fewer high school only educated respondents (70.3 per cent) than the average (74.2 per cent).39

Consumer groups have also stated that although products from Europe need to be relabelled, it does not mean we should adjust our regulations. The European Union regulations, they allege, are not in accordance with the recommendations made by OIML. They believe Australia should not harmonize international regulations to the ‘lowest common denominator’ but Europe should change their regulations to meet OIML in order to ensure consumers are protected.

Further, consumer groups have stated they believe that having these regulations help Australian businesses. As many countries require front of pack labelling but no country prevents it, they believe this makes it easier for Australian businesses to export their products as they would already meet this regulation. They have also stated their concern about the industry groups’ proposal for products from certain countries to be deemed to comply with Australian regulations. They believe this would disadvantage Australian business as they would have to comply with the regulations but importing business would not have met the same requirements.

Regulation 4.11 Set-out and form of measurement markingThe rules regarding the set-out and form of measurement marking are specified in Regulation 4.11. This regulation details the way to achieve the requirements set out by Regulation 4.9. The marking must be close to any name or brand of the product and be read in the same direction. It must be at least 2mm from the limits of the package and any other graphic matter. These regulations were included to help ensure that the measurement information is readily available to, and comprehensible by, consumers.40

Industry groups have expressed their desire for a less prescriptive approach similar to New Zealand and the European Union’s approach for cosmetic products.41 42 43 Specific concern has been raised with the need for the measurement to be read in the same direction as the brand name. One particular soft drink company had designed its brand name vertically and they placed the measurement marking horizontally on the front of pack. This stock had to be discarded as the marking

37 Australia Competition and Consumer Commission , Unit Pricing Code, <https://www.accc.gov.au/business/industry-codes/unit-pricing-code> [Accessed 8 May 2015].38 Queensland Consumers’ Association, Letter, Op. Cit.39 CHOICE, CHOICE unwraps industry push to hide shrinking packs, <https://www.choice.com.au/about-us/media-releases/2014/september/choice-unwraps-industry-push-to-hide-shrinking-packs> [Accessed 8 May 2015].40 Explanatory Memorandum, Op. Cit., p.46 41 ACCORD, Op. Cit.42 Australian Food and Grocery Council, Op. Cit.43 National Retailers Association, Op. Cit.

Packaging Review: Discussion Paper industry.gov.au 11

did not comply with the regulation that the measurement marking was the same direction as the brand name.44

Regulation 4.12 Size etc. of characters in measurement markingRegulation 4.12 prescribes the rules related to the characters used in the measurement marking. This regulation details the way to achieve the requirements set out by Regulations 4.9 to ensure that the measurement information is readily available to, and comprehensible by, consumers. Subregulation 4.9(1) outlines the methods by which the characters can be marked onto the product. The characters can be printed, stamped, embossed, marked by an approving printing device or handwritten. If the characters are printed or stamped, then they are required to be in a colour contrasting to the background and if the characters are embossed, the characters need to be of a certain height.

Consumer groups support keeping this requirement as it removes the uncertainty for businesses about what is compliant . In addition, they are concerned that some businesses will use the less specific regulations to their advantage and to the detriment of consumers. Consumer groups have also highlighted their desire for greater compliance with subregulation (2) about colour contrast as they state it results in clear, noticeable and legible information for consumers.

Industry groups compare the National Trade Measurement Regulations to the Australian New Zealand Food Standards Code. The Code does not have minimum height requirements for information that are serious health considerations for the consumer such as food allergen labelling. They, therefore, believe that not as critical information should have similar requirements to those set out in the Code (Option 2 suggested under Regulation 4.10).

Regulation 4.13 & Schedule 5 Expression of measurement markingThe type of measurement units (volume or mass) used for different products are set in Regulation 4.13 and Schedule 5.

Industry groups and consumer groups have highlighted potential issues with Schedule 5. Industry groups have stated concerns with the treatment of aerosol products, which currently have to be measured in terms of mass.

In Europe, where the largest proportion of aerosols are produced, and some Asian countries, aerosols are marked by volume.45 This has led to dual measurement marking for aerosol manufacturers who wish to export their product. Industry have stated their desire for a more flexible approach, similar to New Zealand legislation, in which aerosol products can be marked in weight, volume or both measurements.46 The industry claims that being able to measure aerosols by volume would allow consumers to make an easier comparison to competing packing systems such as triggers and pump sprays.47

Mass and product shortfall in aerosols are currently tested by expressing the contents of an aerosol can and comparing its weight to further samples of the product. This test method limits the number of products needed to be used or destroyed to determine the average mass, and can be carried out on-site by NMI inspectors without the need for expensive laboratory tests.

OIML Recommendation 86 (R86) currently states that aerosol products should be sold by reference to mass. In allowing the measurement mark to be measured by Volume, OIML will need to agree to valid test procedures. OIML is currently seeking advice from industry on proposals for test methods. Alternative test measures must be considered in light of the economies of scale of new technologies, ease of enforcement and costs to business.

44 Australian Food and Grocery Council, Op. Cit.45 Aerosol Association of Australia, Submission to NMI Regulation Reform, 2014, < http://www.measurement.gov.au/Documents/RegulatoryReform/Aerosol.pdf>. 46 Ibid.47 Ibid.

Packaging Review: Discussion Paper industry.gov.au 12

Other products for which industry wish for more flexible labelling requirements include toothpaste (to measure in terms of mass or volume) and products sold in tablet or capsule form (to measure by the number of tables/capsules).48

Consumer groups have expressed the view that Schedule 5 needs to be changed to ensure that it is sufficiently uniform and allows for easier comparison for consumers.49 For example, skin cream in jars can be marked in mass or volume but if the same product was not in a jar it can only be marked by mass. Therefore, consumers may have to compare similar products which are measured in different units.50

If the product measurement units are not defined in Schedule 5, Schedule 6 states the expression by which the measurement should be written. The Secretary of the Department of Industry and Science can determine if a product can be sold by number, linear or area measurement if he/she is satisfied that a significant proportion of merchants in Australia sell the good in reference to that method. If the Secretary does determine that a product can be sold using one of those methods they must publish this information on the National Measurement Institute website (http://www.measurement.gov.au/TradeMeasurement/Documents/ApprovalSaleProductsNumberLinearAreaMeasurement.pdf ) .51 The Secretary’s list is not included in the legislation due to its continually evolving nature. Consumer groups have highlighted the need for review of this list as the goal of the regulations is to minimize the number of products measured by number.52

In its report into the relative costs of doing business in Australia focused on retail trade, the Productivity Commission outlined how economic, social, demographic and technological factors are changing what, when and how Australian consumers purchase products53. Transaction based estimates produced by the Commonwealth and National Australia Bank suggest that online shopping accounts for approximately 6 per cent of total retail sales. Approximately 25 per cent of Australian consumers’ online purchases are from international sites. In terms of the scope of this review, the use of the measurement mark in online retailing environments and how consumers make purchase decisions is important in determining the relevant use of the marking.

Transaction-based estimates of Australian consumers’ online activity suggest that online shopping accounts for around 6 per cent of total retail sales54. Currently around 25 per cent of Australian consumers’ online purchases are from international retailers55. Of Australian internet users (83 per cent of persons 15 years and over), around 76 per cent used the internet in 2012-13 to purchase or order goods or services56. Of those who shop online, around 30 per cent make online purchases on a weekly basis (Ewing 2014).

The increasing use of online retailing by consumers identifies the limitations that regulations can have in informing consumers at the point of sale. The national measurement legislation applies to and can be enforced in Australia and its jurisdictions. Consequently with regard to online sales, the legislation applies to online sales where the vendor is located in Australia. This assists trade measurement inspectors who have to follow up on non-compliance issues relating to the prepackaged products.

48 ACCORD, Op. Cit.49 Queensland Consumers’ Association, Submission to NMI Regulation Reform, 2014 <http://www.measurement.gov.au/Documents/RegulatoryReform/QCA.pdf>.50 Ibid.51 National Measurement Institute, Approval for the sale of products by number or linear or area measurement, <http://www.measurement.gov.au/TradeMeasurement/Documents/ApprovalSaleProductsNumberLinearAreaMeasurement.pdf> [Accessed 7 May 2015].52 Queensland Consumers’ Association, Submission, Op. Cit.53 Productivity Commission Research Report September 2014, Relative Costs of Doing Business in Australia:Retail Trade, < http://www.pc.gov.au/inquiries/completed/retail-trade/report/retail-trade.pdf> [Accessed 9 September 2015].54 ibid55 Productivity Commission Research Report September 2014, Relative Costs of Doing Business in Australia:Retail Trade, < http://www.pc.gov.au/inquiries/completed/retail-trade/report/retail-trade.pdf> [Accessed 9 September 2015].56 ibid

Packaging Review: Discussion Paper industry.gov.au 13

Where the vendor is based overseas, the matter is a jurisdictional one as Australian law would not apply. This is because the Australian Government does not have power to govern outside Australia.

Additionally the role of the measurement mark in online sales can be less relevant, as consumers can use online tools such as filters or display panes to more easily identify a product’s measurement rather than the physical label on the product.

The issues posed by online sales of products complicate the enforcement and effectiveness of national measurement legislation, and pose questions as to the relative importance of the location of the measurement mark to consumers if when they buy a product online, it is not used for reference.

Considerations:

11) Do the regulations around measurement marking need to be simplified? If so, how should they be simplified?

12) Should the measurement marking be on the principal display panel?

13) Does the direction and placement of the measurement marking need to be legislated?

14) What type of products should be listed in Schedule 5? What should the measurement be for the product type?

15) With regard to aerosols how should Australia adopt the requirements to allow labels in reference to volume?

a. In considering alternative testing methods, what methodologies can be used to ensure that business is not unnecessarily burdened?

16) With the volume of online purchases increasing, how important is the measurement mark in maintaining confidence for consumers?

Division 4.4, Subdivision 2 (Regulations 4.17-4.22)Subdivision 2 gives special provision for measurement marking of certain products. These products are eggs, products packed in sheets, packages comprising of one tonne, bedsheets, tarpaulins and similar products, pairs of window curtains and, products where the marking of width or thickness directly affects the price. The products which have special provision correspond to the relevant provisions of the UTML.57

Considerations:

17) Do any other products need special provision? Should any of the special provision be removed?

18) Should any of the current special provision be adjusted?

Division 4.4, Subdivision 3 (Regulations 4.23-4.25)Subdivision 3 deals with measurement marking of outer packages. This subdivision gives specifics to the regulation outlined in Regulation 4.6. There are different regulations depending on if a package contains products of the same kind and measurement (Regulation 4.23), are the inner and outer packages of a single product (Regulation 4.24) or the package contains products of different kinds or measurement (Regulation 4.25).

Consumer groups have raised concerns with having an exemption for marking outer packages.58 This exemption is if the package does not contain more than 8 inner packages which are usually sold in

57 Explanatory Memorandum, Op. Cit., p.47-48. 58 Queensland Consumers’ Association, Submission, Op. Cit.

Packaging Review: Discussion Paper industry.gov.au 14

the outer package and part of the outer package is transparent with the measurement clearly visible through the outer package (Regulations 4.23(3)/4.24). Consumers groups have expressed the view that these products should have to state the number of the packages and their measurement (subregulation 4.23(2)(b)).59 They believe this is required so it is easy for consumers to determine the total amount of product on offer and the price by unit.60

Considerations:

19) How should outer packages be marked and should a choice be given to businesses to decide the method chosen?

20) Should there be exemptions to this regulation? If so, which products or types of packaging should be exempted?

Division 4.4, Subdivision 4 (Regulation 4.26)This subdivision relates to unit pricing for particular foods by mass. The different food products listed in subregulation 4.26(1) must be marked with a total price and a price per kilogram according to subregulation 4.26(2). Exemptions to this regulation are outlined in subregulations 4.26(3)&(5). The foods which must comply correspond to the relevant provision of the UTML.61

Under the previous Weights and Measures Act, all packaged grocery products were a standard size so they could be easily converted back to the unit price for comparison. Now, with more items sold by random weight, this regulation has been included to allow customers to make informed purchasing decisions. For example, unit pricing makes it easier to compare products that consist of random weight such as two cut pumpkin pieces (one weighing 520g and the other 612g), which is considered the same product and with the same unit pricing, but packed in random weights.

Consumer groups support this regulation as it allows for consumers to easily compare products allowing for better informed decision making and competition.62 It is worth noting, under Trade Practices (Industry Codes — Unit Pricing) Regulations 2009 unit pricing for all products is mandatory for grocery retailers with more than 1,000 square metres of floor space.63

Considerations:

21) Should unit pricing for foods be required?

22) Are there products on the list that shouldn’t have to display unit pricing and are there some not on the list that should?

Division 4.5 (Regulation 4.27-4.29A)Division 4.5 examines when certain measurement expressions can be used and which expressions are prohibited. ‘Mass when packed’ can only be used for fresh mushrooms or soap that is not hermetically sealed pre-packaged as they are traditionally exposed for sale unpackaged and will lose moister and therefore mass quickly.64 ‘Gross mass’ is also prohibited unless a permit is given by the Secretary or the package is only being used for the purpose of transport.

Any other expression that is not a marking that is required by the Act and directly or indirectly relates to or qualifies a measurement marked on the packaging is a prohibited expression under Regulation 4.29. Furthermore, any expression related to the measurement, ingredient or component of the product that cannot be tested for its truth is a prohibited expression under the Act.

59 Queensland Consumers’ Association, Submission, Op. Cit.60 Ibid.61 Explanatory Memorandum, Op. Cit., p.4962 Queensland Consumers’ Association, Submission, Op. Cit.63 Australia Competition and Consumer Commission, Op. Cit.64 Explanatory Memorandum, Op. Cit., p.50.

Packaging Review: Discussion Paper industry.gov.au 15

Industry groups have raised the issue of inconsistent regulation between the National Trade Measurement Regulations 2009 and Commerce (Imports) Regulations 1940. Commerce regulations require ‘net’ on imported packs but this expression is prohibited by the trade measurement regulations.65

Considerations:

23) How should this inconsistency between the National Trade Measurement Regulations 2009 and Commerce (Imports) Regulations 1940 be addressed?

24) Should other terms be specifically prohibited or allowed?

Division 4.6 (Regulations 4.31-4.32)Division 4.6 outlines the permissible deficiency for types of mushrooms and pre-packed soaps.

Under the UTML, pre-packages of a large number of products (such as cotton wool, flax, manila, tobacco and whole hams) were able to be marked with the expression “mass when packed”. However, consultation revealed that consumers and consumer groups opposed the use of the expression. Modern packaging materials retain moisture for longer periods of time and mass marketing techniques result in shorter shelf retention times for these products.66

The deficiencies correspond to those that were set out in the relevant provision of the UTML.67 An example of a deficiency is the permissible actual (what does this mean? Actual?) deficiency for pre-packed fresh mushrooms, if measured on the day they are packed, is 5%.

Considerations:

25) Should any other products be allowed deficiency?

26) Are the percentages of deficiency correct?

Division 4.7 (Regulations 4.34 - 4.44)Division 4.7 states the methods for determining if a product or group of products have failed to comply with regulations.

Under National Trade Measurement Regulations 2009, packers and importers can choose from two systems to calculate shortfall, the Average Quantity System (AQS) or the method adopted by the states and territories under UTML.

Subdivision 1 deals with packages that choose to use the AQS, which is intended for use in large-scale packaging plants where goods are packed in the same quantity in large numbers. AQS is an internally agreed method of determining the measurement articles with a ‘constant nominal content’. This means it provides confirmation of the measurement or quantity of goods sold by measure (weight, volume, length or area) or count (number of items). AQS is based on recommendations developed by OIML R87 Quantity of Products in Pre-packages.68

Subdivision 2 deals with packages that choose to use the method adopted by the states and territories under UTML. This is used for products that are not produced in large numbers where it would not be meaningful to calculate an ‘average’ measurement. These packages are tested in accordance with national single article test procedure, where there is a shortfall if the measurement

65 Australian Food and Grocery Council, Op. Cit.66 Explanatory Memorandum, Op. Cit. ,p.50.67 Ibid.68 National Measurement Institute, Pre-packaged Goods, <http://www.measurement.gov.au/TRADEMEASUREMENT/BUSINESS/Pages/Pre-packagedGoods.aspx> [Accessed 7 May 2015]

Packaging Review: Discussion Paper industry.gov.au 16

marking on the package is larger than the actual weight of the product. The inspector must test 12 packages if available or a minimum of 6 packages (subregulations 4.42(3)&(4)).69

Considerations:

27) Is this the best method for calculating when a product has lots of more than 100 packages (subdivision 1) has not met the regulations?

28) Is this the best method for calculating when a product is not marked with the Average Quantity System mark (subdivision 2) has not met the regulations?

Division 4.8 (Regulation 4.46)Division 4.8 is for miscellaneous packaging issues.

Considerations:

29) Do any other packaging issues need to be regulated?

69 Ibid.

Packaging Review: Discussion Paper industry.gov.au 17

Appendix 1- List of considerations to prompt feedbackThese questions are to prompt your feedback, not all questions need to be answered and material not covered by the questions but is within the scope of the review can be included in submissions. To help in the process of the review any calculations of costs or benefits of changes to the regulations would be useful.

1. Are the terms in Regulation 4.1 properly defined?2. Should any of the definitions be omitted?3. Should any definitions be added?4. Should the products that are currently exempt from address and measurement marking be

exempt? Are there other products that should be exempt?5. Should a product that is deemed to be exempt have to comply with the regulations for

measurement or address marking if they wish to place the mark on their product?6. If an exempt product chooses to display the measurement mark, should they:

a. be bound by the full requirements of the regulations?b. retain their exemption for all aspects of the measurement marking display, however

measurement markings must be factual?7. Should packaged seeds and imported pre-packaged products be exempt? Should other products

be exempt?8. Should address requirements be consistent or harmonised with the requirements of the Australia

New Zealand Food Standards 1.2.2.3 (1)?a. Should packages that comply with Australia New Zealand Food Standards be exempt or

deemed to comply with the NMI regulations?i. Are there significant legal differences between a place in Australia where a

document may be served personally on a person, and a location that is liable for food packaging?

9. Should the measurement marking requirements be:a. Changed to a principles approach similar to that undertaken by the European Union, the

Australian Competition and Consumer Commission and Food Standards Australia and New Zealand?

b. Adapted to account for further exemptions of products such as cosmetics, distilled spirits or from a specific region (i.e. imports from other OIML signatory countries)?

10. Do you have examples or evidence of the costs associated with re-labelling products?a. What kind of products typically require re-labelling?b. What volume of product do you have to relabel on a given year? c. What is the unit costs associated with relabelling?

11. Do the regulations around measurement marking need to be simplified? If so, how should they be simplified?

12. Should the measurement marking need to be on the principal display panel?13. Does the direction and placement of the measurement marking need to be legislated? 14. What type of products should be listed in Schedule 5? What should the measurement be for the

product type? 15. With regard to aerosols how should Australia adopt the requirements to allow labels in reference

to volume?a. In considering alternative testing methods, what methodologies can be used to ensure

that business is not unnecessarily burdened?16. With the volume of online purchases increasing, how important is the measurement mark in

maintaining confidence for consumers?17. Do any other products need special provision? Should any of the special provision be removed?18. Should any of the current special provision be adjusted?

Packaging Review: Discussion Paper industry.gov.au 18

19. How should outer packages be marked and should a choice be given to businesses to decide the method chosen?

20. Should there be exemptions to this regulation? If so, which products or types of packaging should be exempted?

21. Should unit pricing for foods be required? 22. Are there products on the list that shouldn’t have to display unit pricing and are there some not on

the list that should?23. How should this inconsistency between the National Trade Measurement Regulations 2009 and

Commerce (Imports) Regulations 1940 be addressed? 24. Should other terms be specifically prohibited or allowed?25. Should any other products be allowed deficiency?26. Are the percentages of deficiency correct?27. Is this the best method for calculating when a product has lots of more than 100 packages

(subdivision 1) has not met the regulations?28. Is this the best method for calculating when a product is not marked with the Average Quantity

System mark (subdivision 2) has not met the regulations?29. Do any other packaging issues need to be regulated?

Packaging Review: Discussion Paper industry.gov.au 19