Second reading: Electricity Safety Amendment (Electrical Equipment Safety Scheme) Bill 2018

Debate resumed from 7 February; motion of Ms D’AMBROSIO (Minister for Energy, Environment and Climate Change).

Mr SOUTHWICK (Caulfield) (14:07:00) — I rise to speak on the Electricity Safety Amendment (Electrical Equipment Safety Scheme) Bill 2018. Can I say at the outset that the opposition will not be opposing this bill. I also want to put on the record my thanks to the minister’s office and the department, which gave us a very comprehensive briefing about this bill and ensured that we were up to speed on its intent.

It would be fair to say at the outset that this is a piece of work that has not happened in the last 5 minutes. It is the result of work that has been generated over a fair period of time. It is my understanding that this safety scheme has been in development for around 10 years in various jurisdictions. I note the work that many have been doing to ensure that we get harmonisation around electrical safety requirements in this state but also other jurisdictions in Australia and also New Zealand.

Although the scheme has been in development for 10 years in various jurisdictions, this bill is where we have arrived at in relation to the harmonisation of the various schemes that currently exist and have operated independently. It would be fair to say that there are a number of independent schemes and that there is a lot of duplication of those schemes and ultimately a lot of additional red tape and cost. The intention, as I understand it, is to reduce the red tape and costs for industry — for suppliers and manufacturers — and hopefully pass those savings on to consumers. We on this side of the house support any opportunity to reduce costs and ensure that we have less red tape and smaller governments, where this is possible, while obviously ensuring protection for consumers and that they ultimately benefit. That is why we are not opposing this bill that is before the house today.

I do note that one jurisdiction, New South Wales, is not participating in this scheme. It is unfortunate that jurisdiction is sitting outside of this scheme, and I hope to see New South Wales come on board and also take up its obligations of sharing some of the costs and other burdens that are associated with these schemes going forward.

The bill will amend the Electricity Safety Act 1998 to implement the electrical equipment safety scheme, which is a harmonised scheme for participating jurisdictions in Australia and New Zealand that will ensure that consistent safety requirements are in place for the regulation of in-scope electrical equipment. Some of the details of this bill include that it will replace current separate jurisdictional schemes, as I mentioned earlier, that operate independently and also ensure that there is less confusion around the regulatory burden.

Also in this particular scheme are the actual different types of associated risk. Currently there are two types of risk that apply to those who supply equipment or manufacture electrical equipment. There have been two different types — high risk and low risk. What this bill looks to doing is putting in a third category, which is — surprise, surprise — a medium risk that will then allow further classification, obligation and cost. It will be up to each of those suppliers and manufacturers to ensure they meet those categories and then apply for the various categories on the single database. That will be introduced, and I will talk about the categories a little bit later.

The bill will require manufacturers and importers of in-scope electrical equipment, known as responsible suppliers, to register themselves. There is an obligation to actually register not in level 1, which is a low-risk category, but in level 2 and level 3 to ensure they are on the central database. The new registration requirement will enable industries to register themselves and their equipment once in a single database for the purposes of each participating jurisdiction, replacing the duplication of registrations in multiple databases. The bill also introduces a new requirement for responsible suppliers and onsellers of in-scope electrical equipment to ensure that the equipment they offer or supply carries an approved regulatory compliance mark. What we are talking about here — again, rather than having a whole range of different marks that sit on the equipment itself, which is very confusing particularly to consumers to understand whether some equipment is compliant or not — is one mark under this particular legislation.
One single mark will act as the compliance mark
and will therefore hopefully make it easier for consumers to make sure that their product meets the regulation criteria.

The bill will introduce new and amended offences in the Electricity Safety Act 1998 to incentivise compliance with the new obligations. The penalty for one of these offences will be a maximum of 60 penalty units or approximately $9500 for individuals, and up to 240 penalty units or approximately $38 000 for companies. The bill will increase the powers of Energy Safe Victoria (ESV), including an ability to issue infringement notices in relation to the new offences and the continuation of power to issue prohibition notices. Energy Safe Victoria will have the power to cancel registration, to refuse, to vary, to suspend and to cancel certificates subject to the right and review of the Victorian Civil and Administrative Tribunal.

Here we have Energy Safe Victoria, which is putting the scheme into place. One of the elements of this scheme is obviously there is a cost in putting this scheme together. There is a database they are putting together. There is a website, there is marketing and promotion of the whole scheme, and there is also obviously compliance. Currently Energy Safe Victoria collect fees for registration and have been doing so for a number of years. In 2016–17, 54 per cent of Energy Safe Victoria’s income came from levies, which was consistent with previous years. Overall the levy this year was 4.7 per cent higher than in 2015–16 — that is almost 5 per cent, a bit more money there to be able to potentially look at marketing and getting the scheme up to speed. Overall the income was 2.9 per cent higher than in 2015 and 3.5 per cent better than the budget.

There are no other significant changes affecting the ESV; we have got $36.4 million worth of income in Energy Safe Victoria and expenses are $34.751 million. There is a net surplus of $1.5 million in the 2016–17 budget. Part of their work with that $36 million is to administer and run this scheme. I do note that part of their operating expenses has PR and advertising at $2 million. It is just a question more than anything in terms of the rollout and the marketing of the scheme — whether that comes into that expense and how it will be managed — because we are talking about quite a major piece of work here. You are talking literally about a huge amount of suppliers and manufacturers that all need to comply. You have got a whole lot of retailers that need to understand this. There are obvious obligations to the retailers as well when they are selling these products. When you have got all of this activity going on, Energy Safe Victoria and the government need to make sure that they are able to inform those of the risk and certainly of the penalties that apply if they do not adhere to this new scheme.

The bill will include transitional arrangements, which are part of this, so that certificates that are in place at the commencement of the bill will remain valid for five years and will complement equipment that is in stock that may be supplied or offered six months from the bill’s commencement date. Here we are talking about how there might be a small retailer who has a number of toasters and electrical appliances. On top of that, they could have a product that will take time for them to sell and then ensure they be compliant once that stock turns over.

Just flagging some of the concerns, the scheme has been in development for 10 years and the fact that New South Wales has not come on board, as I said at the outset, is a little bit of a concern. Certainly the department discussed this in the briefing, and I raised this point with them. I understand that it is very difficult to oblige another jurisdiction to take something up, but I would hope that there would be a continued effort made to bring them on board or to at least understand what some of the issues are and ensure that those issues are taken into account.

There is also the costing associated with maintaining and operating the scheme. Those costs are paid by suppliers. However, given this scheme has been driven primarily by Victoria and Queensland, we want to ensure that Victoria will not face additional costs if other jurisdictions are slow to join the scheme and ultimately do not. We do not want to pick up the pieces here. We think that there should be an opportunity for others to take up their fair share. We have no problem with Victoria taking the lead on these kinds of things, but ultimately everyone should be paying their fair share of the costs.

One last point that I will raise comes back to the core of what I said at the very outset, which is that when it comes to any of these types of schemes, we as members of the Liberals and The Nationals are very, very concerned about any additional costs that get passed on to consumers. I understand it is taken up from existing levies, but the last thing we would want to see are the costs of equipment being passed on to consumers, particularly vulnerable people when they need some of this equipment. We are talking about basic things like toasters, refrigerators, heaters and air conditioners — basic equipment that is purchased.

This particularly comes at a time where the cost of living continues to rise under the current government. On many, many occasions we have made the point that affordability will be our focus going into the election. It has been our focus all along and will continue to be so. When we talk about this — electrical equipment, ultimately run by electricity — we want to make sure electricity is affordable and reliable. It is all very well to have safe equipment, but if you cannot run your air conditioners and your heaters because you cannot afford to pay for them, that becomes an issue that needs to be addressed, and sadly it is not under the Andrews Labor government.

I just wanted to pick up on a few elements, particularly with regard to the categories. There is now a new category, which is level 2, medium risk. The kinds of things that we are talking about in the level 3 category — and I again thank the department for providing me with this information — are high risk, including arc welding machines and, ironically, clothes dryers. Even a bread toaster can fit into category 3. You have got industrial equipment, and then you have also got the kinds of things like, as I said, toasters along with hedge clippers, kitchen machinery, lawn-care appliances and liquid heating appliances. They are all level 3. Then you have got things like floor polishers or scrubbers and flexible heating pads, which now move into level 2.

Items have all been categorised according to their level of risk: microwave ovens, level 3; projectors, level 2; power supply chargers, level 3; sewing machines, level 2; and therapeutic lamps and television receivers, level 2. Some television receivers are level 3, so I suppose it depends on the type of appliance, its complexity and its safety as to what category it fits into. The provision of that additional category allows those machines that do not pose a threat to safety to be categorised in a lower category.

In terms of the number of registrations — this is what I was talking about before — what is currently known by ESV about electrical equipment is that at level 3 you have got 15 354 different types of registration. At level 2 you have got 77, and at level 1 you have got 38 595. That is a total of 54 026 different types of appliances and equipment that we are talking about. That is huge, and it comes back to the point I made earlier that there is a fair bit of work that needs to be done in educating the market that is currently on one scheme about a new scheme and making sure it is compliant. I would again point out that hopefully that is all covered in the costs and there are no additional costs as part of the scheme.

In terms of searching the register, the register lists all equipment registered by the responsible supplier. It allows searches to be conducted by consumers and retailers. These searches do not require a login. They will be searchable by equipment type, responsible supplier, name or trading name and responsible supplier number, if that is known. The idea is that you jump into the database to check to ensure that there is compliance.

So far there have obviously been costs incurred in developing this scheme up to this point. ESV has incurred an estimated $420 000 to date to develop, operate and maintain the register. Initial estimates are that the register requires $60 000 to $115 000 to operate, recovered from fees for registering equipment on it. That comes to the point that I mentioned earlier. We have been given this information from the department, so we would expect that out of the total operating revenue of $36 million or thereabouts we are talking in the vicinity of — let us call it at the top end — $115 000 to operate the register, which is not a lot of money when you are talking about the kind of revenue that it always brings in. Again I just hope that that is not on the light side, because that is barely a wage.

This is a pretty complex system, and when you are whacking in $115 000 to operate a scheme of this magnitude, I just hope that this is not underdone. I would hate for it to go back and ultimately for consumers to be out of pocket because we have not got enough money built into the scheme. That may be covered, and I know the wages for ESV represent a large component of the total revenue. My understanding is that the wages are about $19 million out of the $36 million. Maybe some of the wages will be deployed to run the program, but I do not have clarification on that.

I will mention the regulatory compliance mark. It is really important to get that right and for people to understand what that mark is, how to read it and all that kind of thing. When I saw some examples of that in my briefing I was a little bit unsure in terms of the clarity of that mark and the understanding of that mark. It may come through education or modification, but I just flag that as being one of the things to be looking at. New South Wales also has an approved number which will be required to be marked on products. Again, with the New South Wales scheme being different, you have effectively got two marks that need to be deployed.

On that note I have said enough on this particular bill. Energy and electricity safety is of paramount importance in everything we do. We need to get it right. We need to make sure that consumers are protected in all particular elements when it comes to this and everything we do in this place. That is why we will not be opposing this particular bill. There are a number of issues that we are certainly able to take up, and we look forward to seeing how the government proposes to implement this scheme going forward.