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MOTOR VEHICLE STANDARDS AMENDMENT BILL 2001

1998-1999-2000-2001

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA






HOUSE OF REPRESENTATIVES

MOTOR VEHICLE STANDARDS AMENDMENT BILL 2001

EXPLANATORY MEMORANDUM














(Circulated by authority of the Minister for Transport and Regional Services,
the Honourable John Anderson, MP)

ISBN: 0642 459797

MOTOR VEHICLE STANDARDS AMENDMENT BILL 2001

OUTLINE

The Motor Vehicle Standards Amendment Bill will amend the Motor Vehicle Standards Act 1989 (the Act).

The proposed amendments to the Act will:

• allow for a register of specialist and enthusiast vehicles to be established which will be used to restrict the importation of used vehicles (except used motorcycles) to those assessed to be specialist and enthusiast and prevent the importation of what are, effectively, standard vehicles;

• introduce a scheme to regulate registered automotive workshops;

• require imported used vehicles to be modified and inspected by registered automotive workshops, on a vehicle by vehicle basis, to ensure each vehicle’s compliance with the appropriate national standards – provides for vehicles to be modified and inspected and approved for plating on a vehicle by vehicle basis rather than on the basis of vehicle type;

• introduce a charging regime for registered automotive workshops that aims to recover the costs of administration of the scheme;

• limit the number of vehicles a registered automotive workshop may supply during a specified period;

• create various offence provisions;

• replace the existing approvals to modify imported used vehicles with transitional approvals; and

• provide for the transitional approvals to be in force, for a period to be set out in the regulations. The period of the transitional approvals will aim to achieve a smooth transition to the new arrangements.

Financial Impact Statement

The proposed measures will not have an impact on Government expenditure as a cost recovery charging model has been developed in consultation with industry.

Regulation Impact Statement

Revision of Eligibility Arrangements and Introduction of a Registered Automotive Workshop Scheme

INTRODUCTION

The Commonwealth Legislative Review Schedule identified the Motor Vehicle Standards Act 1989 (MVSA) for review. The Review was part of the Federal Government’s commitment to examine all legislation which has an impact on business. An interdepartmental Task Force was established in 1997 to conduct the Review with the then Federal Office of Road Safety (FORS) in the Department of Transport and Regional Services providing the chair.

The Review was undertaken in accordance with the Council of Australian Governments (COAG) Principles and Guidelines for National Standard Setting and Regulatory Action and the requirements of the Competition Principles Agreement signed by the Commonwealth and all State and Territory Governments in April 1995.

The aims of the Review were to:
• assess the appropriateness, effectiveness and efficiency of the legislation;
• identify and assess the costs and benefits to industry of alternative arrangements for ensuring compliance with appropriate road vehicle standards and of harmonising Australian road vehicle standards with international vehicle regulation; and
• report on the preferred approach for meeting future road vehicle standards requirements.

In line with the Terms of Reference, the Review also had the opportunity to consider specific issues such as the Low Volume Scheme (LVS), Australia’s type approval system for vehicle certification, vehicle import arrangements and the effectiveness of the administration of the MVSA.

The Task Force advertised nationally in December 1997 calling for public submissions to the Review and received 55 submissions from stakeholders. Additionally, the Task Force held meetings around Australia with key stakeholders (including those who did not lodge a submission) to ensure the widest possible range of stakeholder views were considered.

The draft report and its associated recommendations were released by the Minister for Transport and Regional Services, the Hon John Anderson MP, on 12 May 1999, for consideration and comment before the report was finalised. This provided an opportunity for all interested parties to put their views to the Task Force prior to the final report being considered by Government. The Task Force considered comments from more than 100 stakeholders.

Subsequent consultations by the Department of Transport and Regional Services engaged other transport and government bodies including Transport Canada, United States Department of Transportation, and the Australian Customs Service. The purpose of the consultations was to gather information on regimes similar to that envisaged for registered workshops.

The Review Task Force recommended that a used vehicle certification scheme, based on vehicle by vehicle approval involving registered workshops, be developed in
consultation with industry. The existing compliance plate holders are to be able to continue fitting identification plates to their currently approved models up to an agreed date, to provide a reasonable transition to the proposed new arrangements.

The Task Force made a number of recommendations concerning the eligibility arrangements for vehicles entering the market through the LVS as specialist and enthusiast vehicles. Included in the recommendations were that consideration be given to revising the current eligibility criteria to make them less subjective and that vehicles with diesel engines or turbo-charged engines not be considered as different models for the purposes of the LVS.

The Government provided its response to the final report on 8 May 2000 and, in a joint media release issued by the Minister for Transport and Regional Services, the Hon John Anderson MP and the Minister for Industry, Science and Resources, Senator the Hon Nick Minchin, announced that:
• diesel/turbo variants of full volume models will no longer automatically qualify for importation and must satisfy the new specialist and enthusiast vehicle criteria.
• type (bulk) approval of compliance with Australian Design Rules (ADRs) was no longer considered suitable for used vehicles, and will be replaced by a system of vehicle-by-vehicle inspection and approval through registered workshops.

The announcement included a commitment to a two-year transitional period before current approvals expire, to allow businesses time to adjust to the new scheme.

BACKGROUND

The Review of the Motor Vehicle Standards Act 1989 examined in detail the current arrangements and the problems that have been identified with these arrangements.

Existing Regulatory Regime

When a vehicle is certified as meeting the ADRs, it is fitted with an identification plate, which is mandatory under the MVSA. It indicates to the registering authority and the consumer that the vehicle complies with the ADRs. The process of obtaining approval to fit an identification plate is called vehicle certification. To date, the Australian certification system for new and used vehicles has been based on a ‘type approval’ system. This means that a vehicle of a certain make-model (the ‘type’ of vehicle) is used to demonstrate compliance with all the applicable ADRs for its vehicle category. If the vehicle complies, then all others of the same design (that is the same ‘type’) and manufacture are accepted as complying.

Full Volume Scheme (FVS)

This scheme is used by the major manufacturers and allows the supply of unlimited numbers of standard vehicles. FVS vehicles are required to meet all currently applicable ADRs and full evidence of compliance (ie full testing) with applicable ADRs must be provided. Vehicles are granted approval as standard vehicles under section 10A of the MVSA. The arrangements do not discriminate between new and used vehicles except that used passenger cars supplied under the FVS arrangements are subject to a $12,000 special duty.

Low Volume Scheme (LVS)

The LVS is a government policy implemented with the discretion of the Minister under sections 10A and 14 of the MVSA. It was introduced in 1970 to facilitate the issue of certificates of compliance to manufacturers (in Australia or overseas) producing fewer than 50 vehicles each year of a particular model. It was originally designed to assist low volume manufacturers of new vehicles. These were imported vehicles such as Ferrari and De Tomaso, USA cars converted to right hand drive such as Buick and Cadillac and Australian built sports cars such as Bolwell.

In 1972 the LVS was extended to include vehicles supplied to the market in volumes of up to 100 vehicles each year. This included two categories, up to 25 vehicles or up to 100 vehicles of a particular category. The 100 vehicles per year arrangement, which requires full testing to a wider range of ADRs than the 25 vehicles per year arrangement, was not available for imported used passenger cars. The Scheme was progressively extended to include low volume second stage manufacturers of limousines, ambulances and bus bodies and, from 1985, to used vehicles that were not covered by a full volume approval. The Scheme today predominantly involves imported used vehicles and as a consequence, most of the participants are vehicle importers and converters, not prime manufacturers.

In 1995 changes to the LVS were instituted due to concern that the arrangements were being used to import ‘family’ cars similar to the ones which were commonly available in Australia. The Government announced that it was conscious of the need to prevent the scheme being used as an avenue to avoid the full costs of certification. The criteria were not applied to other categories because vehicles in other categories did not appear in significant numbers at that time.

The intent of the scheme was to cater for specialist and enthusiast vehicles. These vehicles may otherwise not be viable because the high costs associated with full volume certification can only be spread over a small number of vehicles.

The LVS provides three major concessions:
• It allows alternative forms of evidence of compliance with many of the ADRs. In the main, this applies to ADRs where destructive or expensive testing is required.
• Vehicles are required to comply with the ADRs that were in force at the date when the vehicle was originally manufactured, rather than currently applicable ADRs.
• There is an exemption from the $12,000 special duty on used passenger motor vehicles which applies if they are imported under the FVS.

Personally Imported Vehicles Scheme

A small number of used vehicles are imported outside the Full Volume and Low Volume schemes under the Personally Imported Vehicles Scheme which enables migrants and Australian residents returning from living overseas to treat their vehicle as part of their personal effects.

STATEMENT OF THE PROBLEM

The problem can be summarised as follows:
• The growth in used import numbers may undermine the uniformity objectives of the MVSA.
• The growth in used import numbers may undermine the passenger motor vehicles ‘plan’.
• There is horizontal inequity between the two avenues of supply to the market if the LVS growth continues.

Used vehicles, imported under the LVS, are granted concessions on the basis that the vehicle numbers will be small and limited to specialist and enthusiast vehicles. This intent is consistent with Government announcements made since 1991. However, the number of used vehicles imported under the LVS has grown from approximately 1,000 in 1993 to 16,825 in 2000. The rapid growth includes vehicles that are very similar to those already marketed in full volume.

The number of imported used vehicles supplied to the Australian market under the LVS represented 52.1 per cent (16,825) of the total vehicles issued with import approvals in 2000 (32,286). The numbers are still small compared to the total new vehicle sales in 2000 (787,000) but are growing by a much faster rate (see table below).

Used motor vehicles (except motorcycles) imported under the LVS by category.

Prior to the introduction of the Administrator’s Circular 0-2-12 in October 2000, there was some difficulty in defining objectively what constituted a specialist and enthusiast vehicle. This effectively meant an assessment of whether a vehicle is different to the ‘model’ (eg Camry) to those already available in Australia. This difficulty was partly due to the lack of performance measures and as a consequence, departmental officers who maintained a list of eligible vehicles, made decisions based on experience.

Type Approval vs Vehicle by Vehicle Approval

The current approval system for the supply to the market of used vehicles is a ‘type’ approval system. This means that an approval is given based on a single test and evaluation vehicle. Once the approval is granted the system relies on the ability of the approval holder to demonstrate that all vehicles are the ‘same’ as the original vehicle.

Type approval is considered to be inappropriate for used vehicles as a single used vehicle may not be representative of all vehicles of that model, due to the unknown history of the individual vehicle ie the vehicle may be damaged or components may have been removed or modified. Further, vehicle specifications may vary considerably over the life of a particular model and a used vehicle importer may be unaware of these changes, eg seat belt configuration may change. These uncertainties may result in the vehicle being non-compliant with ADRs on entry to the Australian market and thus contravene the MVSA.

Experience with the current type approval system as applied to used vehicles has raised uncertainty about the quality of work being undertaken and subsequent compliance of vehicles with the ADRs. The Review Task Force found that ‘type’ approval was not appropriate for used vehicles and should be replaced by vehicle-by-vehicle approval implemented through a system of registered workshops. This recommendation was adopted in the Government announcement of 8 May 2000.

Non compliance of vehicles against the ADRs

The LVS allows a lower level of assurance of compliance to the ADRs than the full volume certification arrangements. This is part of the justification for imposing the numbers limit on approvals issued under the LVS (25 vehicles per approval).

The significant growth in numbers of used vehicle imports has caused growing concern that there are a large number of non-compliant vehicles being supplied to the market, however detailed evidence cannot be provided. The ability of used vehicle importers to demonstrate that the vehicle being imported is the ‘same’ as the vehicle they have an approval for, especially in the absence of a comprehensive quality system, (such as the full volume manufacturers do) is questionable.

Numbers limit per approval

While there is currently a limit of 25 vehicles per year per approval for passenger cars and either 25 or 100 for other categories, the number of approval holders is not controlled. Therefore, this limit is not considered a quota; ie operators can open several independent businesses to circumvent the numbers limit.

The absence of a numbers limit might result in further growth in areas driven by commercial interests (cheap vehicles rather than specialist or enthusiast vehicles). However, a numbers limit may affect the viability of some businesses as it prevents them from achieving economies of scale for some vehicles. The number of businesses who do less than 25 vehicles in the low volume industry does not support this argument.

Turbo Diesel and Higher-Powered variants

The Review Task Force found that a vehicle that is the same as a full volume model in every respect except for the engine (ie diesel or higher power) could not be reasonably considered a specialist and enthusiast vehicle.

There were caveats under the previous arrangements that deemed vehicles to be different models if they met particular criteria. Of most concern was that diesel or higher-powered variants of full volume models were of themselves deemed to be different models and therefore eligible. These vehicles became popular with motor traders, as the costs to import and make the vehicles compliant are low.

As the vehicles are similar to models already available and carry a recognised ‘make’ (eg Toyota) consumers may not be aware they are purchasing a vehicle that is granted concession under the MVSA on supply to the market. Imported used vehicles differ from other second hand vehicles that have come from mainstream suppliers, as they may not be designed for Australian conditions (particularly hot temperatures and off-road use). Also, vehicles may not attract the same level of after market sales and support as new vehicles supplied in full volume. This may impact on the reputation of the original manufacturer and understandably, there is considerable concern regarding these arrangements.

The Federal Chamber of Automotive Industries (FCAI) stated in their submission to the Review Task Force that “...An issue of concern to chamber members is the fact that manufacturers often develop vehicles specifically for Australian conditions and this may involve considerable testing and modification. An imported used vehicle would not have the benefit of this work and a buyer would be unwittingly disadvantaged. The issues could be safety related and would leave the uninformed buyer at increased risk. A similar situation applies to running changes which a manufacturer might introduce as a result of field feedback....”

The FCAI also raised three main issues in relation to consumer protection and the LVS, namely: the lack of after sales service, availability of replacement parts and inability to perform vehicle recalls. The FCAI cited an example where a recall action apparently did not take place as the used vehicle importer was not able to obtain spare parts and repair information from the local representative of a similar new model. The FCAI submitted that the above issues would not be a problem if the LVS was limited to specialist or enthusiast vehicles where the potential purchasers are likely to belong to vehicle clubs and have access to service expertise and parts.

In terms of after market sales and support, consumer protection rights under the Trade Practices Act apply across the board to used vehicle retailers and used car yards regardless of whether the vehicles have been imported as used vehicles or were originally supplied as new vehicles in Australia. Under the current LVS when used vehicles are sold a copy of the inspection certificate should be provided to the owner of the vehicle. This inspection certificate contains information about the modifications done to the vehicle and provides further evidence to the State and Territory registering authorities that the vehicle complies with the ADRs. The dealer/importer of the vehicle is also responsible for any recall campaign applicable to that vehicle model which means consumers are exposed to a greater risk if there is a potential safety defect in their vehicle and the dealer/importer does not institute comprehensive recall action.

In January 2001, the FCAI advised that calls to member companies’ national customer relations centres have been rising steadily in the past two years, and now average one or two calls per day in relation to problems with used vehicle imports. Typically, in call volume order, callers request information on parts availability, where to service, servicing and repair specifications, and warranty and service booklets and information.

The majority of inquiries and requests from owners of used vehicles imports were made to regional offices and dealer networks. For example, the number of inquiries and requests to the Victorian regional office of one manufacturer can be as high as 50 calls per week.

Reliable data on the number of inquiries fielded by dealers could not be provided. However some examples of the types of issue and concerns cited by dealers included:
• problems with providing warranty for parts, back-up service and ensuring reliability of vehicle and servicing;
• inability to identify codes for parts as parts and components were not common to local models and replacements were difficult to source;
• parts ordering from Japan takes four weeks or longer, and parts are more expensive than for volume vehicles, which causes customer dissatisfaction;
• diagnosis is difficult without correct manuals and specifications;
• it was difficult to quote accurately for any service work; and
• foreign paint colours are difficult to match.

The FCAI noted that the type and volume of inquiries to their members suggests that vehicle importers appear not to be providing an adequate level of after sales support to owners.

4 Wheel Drives (4WDs)

Approximately 3,500 4WDs were imported in 1999 solely on the premise that they are a diesel variant of a vehicle available in full volume. In 1993, the number of used 4WD vehicles imported under the LVS was three, in 1995 the number had grown to 22 and in 1999 the number had grown to 5,500. This represents an annual compound growth of 150 per cent since 1995 and 250 per cent since 1993. For example the Toyota ‘Surf’ imported in large numbers is the same as a (full volume) Toyota ‘4-runner’ in every respect other than the diesel engine.

New vehicles

The number of new vehicle imports (eg Ferrari) that utilise these concessions has remained fairly constant over several years. The proposed changes do not impact on any of the new vehicle models currently supplied under the LVS (ie type approval will continue for new vehicles). Approximately 200 new vehicles were imported under the scheme in 2000.

Used vehicle imports

In 2000, 16,825 used vehicle imports were brought into Australia. More than 90 per cent of the non-standard used vehicle imports are sourced from Japan where vehicles depreciate faster because of a stricter inspection regime. Australia’s liberal market and common right hand drive configuration with Japan makes it an attractive destination for these vehicles. Opportunistic traders are importing these largely mainstream vehicles under the existing LVS eligibility criteria.

From the following table it can be seen that approximately 60 per cent of the Japanese vehicles are 7-9 years old.





Many are being sold at prices at or above the entry level to a new vehicle. Limiting the supply of imported used vehicles may encourage consumers to consider new vehicles of a similar price range (albeit of lower specifications) and help to lower the average age of Australia’s vehicle fleet with the attendant safety and emission benefits. According to the latest Motor Vehicle Census, dated 31 October 1998, which was released by the Australian Bureau of Statistics in October 1999, the average age of passenger vehicles on Australian roads is 10.4 years.

All new vehicles must comply with currently applicable ADRs. Generally imported used vehicles comply with the ADRs that were in force at the date the vehicle was originally manufactured. This ADR concession does not apply to used trucks with a Gross Vehicle Mass exceeding 12 tonnes and buses with more than 12 seating positions which must comply with the ADRs applicable at the date of importation.

The ADRs are currently undergoing a comprehensive review to establish whether they remain relevant and cost effective. The review takes account of the provisions of the Trans-Tasman Mutual Recognition Arrangement (TTMRA) Annex 4 – Road Vehicles.
This Annex concerns the harmonisation of Australian and New Zealand standards with the internationally recognised United Nations Economic Commission for Europe Regulations, or those national or regional standards that are agreed by the Parties. The review is also expected to result in the deletion of a number of unique Australian regulations.

The Review found that the concessions provided within the LVS lower the level of assurance that these vehicles comply with the ADRs compared with vehicles produced in full volume. Because it is not possible to separate vehicles certified under the LVS
from other vehicles in statistical analysis of vehicle crashes, evidence is not available which shows that the performance of these vehicles is unsatisfactory from a safety perspective.

The costs of meeting ADRs for vehicles supplied under normal arrangements can be quite substantial compared to those supplied under concessional arrangements. These costs are in addition to costs of customising mainstream vehicles to meet the local operating environment.

Mainstream vehicles are customised to operate in Australian environments (eg hot, arid and dusty conditions) to improve their reliability and safety. Vehicles brought into the country by used vehicle importers do not benefit from this additional engineering work, a fact which Australian consumers may not be aware of. Taking the 4WD Prado diesel as an example, the cost of ADR testing (eg brakes, noise, maximum speed) is about $1m, excluding re-engineering expenses. This represents only a part of the aggregate cost because the body of the Prado diesel is based on its petrol-powered counterpart, which already meets ADR requirements (including crash testing). It is possible that the total cost of full ADR testing could be in the vicinity of $5m, excluding re-engineering expenses.

In regard to emissions, imported used vehicles which are older than six years or which have travelled more than 80 000 kilometres must have a new catalytic converter fitted. These vehicles are likely to have a better performance in exhaust emissions than vehicles of a similar age already in the fleet. LVS imports built prior to 1995 are not required to satisfy the more stringent diesel emission standards introduced from 1995. The Review Task Force noted that it was difficult to comment on the overall performance of low volume vehicles without a more critical assessment of the performance of such vehicles in relation to crashes and emissions.

Industry Impact

The escalating growth in used vehicle imports has caused concern in both the mainstream industry and Government as this may impact on the major manufacturers of new vehicles as many of these vehicles are in direct competition with vehicles supplied without concessions.

Australia has an automotive manufacturing industry that directly employs around 51,500 people, and exports nearly $3.3 billion worth of automotive products. It requires stability in policy if it is to maintain current investment levels and realise its planned future investments. The Government reiterated its commitment to a viable automotive manufacturing industry in Australia when announcing the framework for post-2000 automotive policy on 5 June 1997. That framework, elaborated on in subsequent announcements of the Government, put in place substantial measures to secure the industry’s future on a competitive, self-sustaining basis. In response to the post-2000 arrangements, the industry has forecast $4 billion in new investments and $6 billion in annual exports by 2005.

Imports of used vehicles could threaten the viability of automotive manufacturing in Australia if they enter in volumes models which could generate significant substitution for locally manufactured vehicles, whether sold as new or used. This risk is particularly acute if the imported used vehicles have been depreciated in their country of export at a more rapid rate than have vehicles sold new for the first time in Australia. Such a difference in depreciation rates can occur because of the particularly stringent periodic inspection regimes applied in an exporting country.

Vehicle producers supplement their product range with imports as part of their overall commercial operations. However, concessional used vehicle imports at suppressed prices are an unintended and unfair source of pressure to the automotive industry and its distribution chain (ie franchised motor dealers). The new scheme is aimed at limiting the scale of horizontal inequity between running two parallel vehicle supply schemes.

The Review noted that there are a total of around 1,210 individual businesses directly involved in the LVS. In 2000 there were 943 individual businesses that applied for plates under the LVS. Many do not solely rely on used import activities and LVS businesses also have the capacity to switch to other vehicle types. Industry representatives estimate there are approximately 400 of these businesses that will be affected by the tightening of the eligibility criteria. In particular, used 4WD importers will be adversely affected in the immediate term. However, smaller businesses involved in the trade will benefit from an increase in the annual cap from 25 to 100 used passenger motor vehicles per approval holder. This would help to improve the viability of firms currently constrained by the 25 car limit. Information is not available on the value of the turnover of LVS businesses, number of people employed, or contribution to the economy.

OBJECTIVES

On 8 May 2000 in a joint media release by the Minister for Transport and Regional Services and the Minister for Industry, Science and Resources, a new scheme for imported used vehicles was announced.

The MVSA provides uniform standards for vehicles on first supply to the Australian market and is administered by the Department of Transport and Regional Services.

The objectives of the amendments to the MVSA are to:
• achieve a greater level of assurance that all vehicles when first supplied to the market in Australia, comply with the applicable Australian Design Rules;
• reduce malpractices in the trade associated with the importation and supply of used vehicles;
• provide improved consumer awareness for purchasers of used imports;
• return the LVS to its original intent of only allowing vehicles which would not otherwise be supplied to the market; and
• eliminate the cross-subsidisation of the used vehicle import industry by the mainstream vehicle manufacturers.

STATEMENT OF THE PROPOSED REGULATION AND ALTERNATIVES

REVISED ELIGIBILITY ARRANGEMENTS

The proposed amendment to the MVSA and Regulations involves the provision of power for the Minister to determine eligibility requirements for vehicles to be supplied to the market under a concessional scheme. The alternatives considered are set out below. Option B is the preferred approach.

Option A – Status Quo
Given the rapid increase in the number of imported used vehicles supplied to the market, and the number of stakeholders who commented that the concessional scheme should return to its “original intent”, maintaining the status quo was not considered feasible. In addition, the current criteria are complex and require subjective judgements by staff who must determine whether a vehicle is rare or unusual or otherwise unavailable in Australia under the full volume arrangements. The existing decision-making process is not transparent.

Option B – Limit the number of models by tightening up current eligibility criteria to ensure only “specialist and enthusiast” vehicles are eligible.
As part of the 8 May 2000 Cabinet decision new eligibility criteria have been developed that contain quantitative performance measures where possible. These criteria were widely distributed amongst industry and government stakeholders for comment. The criteria developed were found through testing to allow the greatest range of vehicles allowed for import. The criteria offer the greatest flexibility in assessing vehicles in the future. It was recognised that regardless of the criteria chosen some vehicles will always be close to the boundary (‘almost’ eligible) and will require some negotiation.

Entry to the LVS is limited to vehicle make/models that are not, or have not been available to the Australian market under the FVS. Following the Government’s announcement on 8 May 2000, all (non-FVS) imported vehicles are assessed against the new criteria set out in the Administrator’s Circular 0-2-12 Specialist and Enthusiast Vehicle Scheme (SEVS) Eligibility. This describes the requirements regarding the eligibility of motor vehicles for low volume compliance plate approval, under SEVS and will also be used under the Registered Automotive Workshop Scheme when implemented. A list of recent eligibility rulings and eligible vehicles is published on the Internet. This will improve the transparency of the process and remove a considerable amount of uncertainty in the industry.

Option C – Retain criteria similar to the current Administrator’s Circular 0-2-1 but with clearer working eligibility criteria.
This is similar to Option A except that some of the subjectivity is removed from the eligibility decision making process. For the same reason as A, this option is not considered feasible.

Option D – expand the scope of the scheme through having the single criterion that the vehicle model is not already in the Australian market in full volume.

This would effectively expand the scope of the scheme, as it would allow a range of vehicles such as family sedans, similar to those already marketed in full volume, to be imported. Under this option the criteria would simply be all vehicle models that are not, or have not been for an acceptable period of time, marketed in Australia in full volume. This option would still require subjective decisions against the criteria of the Administrator’s Circular 0-2-1.

REGISTERED AUTOMOTIVE WORKSHOP SCHEME

The proposed changes require amendments to the MVSA and Regulations. The alternatives considered are set out below. Option B with a two year transition period, is the preferred approach.

Option A – Status Quo – Retain the Current Type Approval System
Type approval is not suited to used vehicles as their use history is unknown and the specifications may vary over the life of the model. Used vehicle importers cannot meet the fundamental requirements of the type approval system, as there is no control over the production process.

Option B – Registered Automotive Workshop Scheme (RAWS) for used vehicles.
The Review Task Force recommended a vehicle certification scheme, based on vehicle-by-vehicle approval involving registered workshops, to be developed in consultation with industry. Appendix N of the Report set out the elements of the administrative arrangements for a scheme based on registered workshops, including the requirement for ISO 9001 certification, an internationally recognised quality management system. These elements, together with input through consultation with industry, were used to develop the criteria for the proposed RAWS. All RAWS participants will be required to have ISO 9001 certification of the workshop by a JAS-ANZ accredited Certification Body.

The proposed scheme will improve the integrity of the trade and other requirements will increase the level of assurance that vehicles being supplied to the market comply with ADRs in place at the time the vehicle was manufactured. A consumer information document will be issued for each vehicle detailing all items replaced, and other relevant information as required by the Administrator, to ensure the consumer is aware the vehicle is a used imported vehicle. The RAWS will utilise the new SEVS criteria as well as a numbers cap on the vehicles that can be supplied per workshop.

Option C – Self Regulation
A history of systematic non-compliance with the intention of the MVSA, that is systematic avoidance of ensuring imported vehicles comply with national standards, militates against the attractiveness of this option. AAIMA and VICAA have asked for higher inspection and audit standards.

TRANSITION PERIOD

There will be considerable opportunity for abuse of any transitional arrangements ie by participation in both schemes, which may allow a greater number of vehicles to be supplied than intended. Previous experience under the old arrangements has shown the difficulty in determining the ‘independence’ of business operations. The administrative burden of operating two approval systems must also be a consideration: an extensive period of parallel operation would be undesirable.

Transitional arrangements will also be required to accommodate changes in eligibility as per the 8 May 2000 Government decision. Without intervention, the supply of vehicles that had now been determined ineligible by the Government decision could continue for around 10 years as approvals granted prior to 8 May 2000 were for ‘life of model’.

Option A: Terminate 8 May 2000
This would not allow sufficient time for industry to adjust to the new Scheme or time for legislative and administrative arrangements to be put in place.

Option B: Two-year transition
The Review Task Force suggested a reasonable (but not open ended) transitional period to allow time for new legislative and administrative arrangements to be put in place and businesses to adjust to the new scheme. Two years is sufficient time for putting the new legislative and administrative arrangements in place.

Under the two year transition period we expect to see used LVS imports approach 28,000 in 2002. If this transition period is extended to the end of 2005, then this figure could rise to over 50,000 vehicles.

Option C: Life of Model

Existing LVS approvals are issued for a life of model duration. Termination of the life of model approvals after a two year transition period is fundamental to the policy position intended by the 8 May 2000 announcement. If the two year sunset is not adopted numbers growth will continue in the long term as most used vehicle import approvals have a life of 7-9 years. Allowing life of model approvals to continue beyond two years will create unfair competition across the vehicle market. It would also undermine the clear focus of the new scheme in facilitating the concessional importation of specialist and enthusiast vehicles.

IMPACT ANAYLSIS

The Review of the Motor Vehicle Standards Act 1989 sets out arguments for and against each option, which were examined in detail.

REVISED ELIGIBILITY ARRANGEMENTS

Option B – Limit the number of models by tightening up current eligibility criteria to ensure only “specialist and enthusiast” vehicles are eligible.

REGISTERED AUTOMOTIVE WORKSHOP SCHEME

Option B – Registered Automotive Workshop Scheme for used vehicles.

TRANSITION PERIOD

Option B: Two year transition

Concessional Used Vehicle Importers

The aligning of the eligibility criteria for 4WDs with those for passenger motor vehicles means that most of the current crop of 4WDs (eg Mitsubishi Pajero; Nissan Terrano; Toyota Surf) would be ineligible under the SEVS except the Isuzu Mu and 4WDs specifically designed for use by primary producers. As the majority of used 4WDs currently gain eligibility solely on the basis of being a diesel or higher-power variant, the proposed changes are consistent with the announced Measures for a Better Environment.

Affected firms are unlikely to close down as most are retail motor industry professionals who are also involved in the trade of locally sourced used vehicles. Some other business operators do not solely rely on motor vehicle sales activities and have the capacity to re-adjust their businesses. Approximately 112 or 19% of CPA holders currently deal solely with used Japanese vehicles that rely on the diesel or turbo charged engines. These businesses have the option of migrating to genuine specialist and enthusiast vehicles and becoming a RAW, or realigning to other business activities. However, the impact will be moderated by the proposed transitional arrangements.

Small Business

Many of the businesses involved in retail motor distribution are small businesses. The changes would be positive news to franchised motor dealers who, like the importers and converters of used vehicles, are small business operations. Approximately 400 businesses will be affected by the tightening of the eligibility criteria with used 4WD importers the most affected in the immediate term. There would be no major impact on importers and converters of genuine specialist and enthusiast vehicles. In fact, if the business took advantage of the increase in the annual cap from 25 to 100 used passenger motor vehicles per licence holder, this would help to improve the viability of these businesses.

The following lists ministerial representations relating to the new arrangements over the period 8 May 2000 to 30 March 2001. Figures are based on receipt of ministerials and are approximate only.

Supporting decision

Not in favour of decision

*It should be noted that the above figures include 59 letters to Ministers and MPs written by or on behalf of six individual businesses.

Loss of Local Employment

The average amount of time spent on converting a used import to meet ADR requirements for a LVS compliance plate is eight hours. In 1999 some 5,000 used 4WDs were imported and fitted with a LVS compliance plate. Taking the worst case scenario that all 5,000 vehicles are no longer eligible, the new scheme would reduce the level of vehicle converting activities by 40,000 hours a year or around 20 full time positions across the entire vehicle conversion business. However, this scenario will be alleviated by the capacity businesses have to switch to other vehicle types and the increase in volume limits to 100 per licence holder.

Consumers

Imports of genuine specialist and enthusiast vehicles will remain eligible under the SEVS. Vehicles sourced from the USA do not have a similar model sold in full volume in Australia (eg Ford Thunderbird) and sometimes the make of vehicle is not sold in Australia (eg Cadillac). Used vehicles sourced from Europe are mainly models no longer marketed in Australia in volume. These models will continue to be available to consumers.

Consumers of such vehicles should benefit from more professional vehicle conversion and ADR compliance work under the registered incorporated workshop regime. The workshop will also be required to provide consumer information for every vehicle fitted with a used import plate. Included in the information will be the date of importation, country of first registration, and a statement that service and replacement parts for the vehicle may not be available from the recognised franchised dealer. There would be no significant impact on the prices paid by consumers for imported used vehicles.

In contrast, approximately 55 per cent of the used vehicle models currently sourced from Japan depend on having a diesel engine or a turbocharged engine for eligibility under the Low Volume Scheme. For example the Nissan Terrano has a diesel engine and is the same vehicle as the Nissan Pathfinder with a petrol engine sold in full volume by Nissan Australia. The Toyota Hilux Surf has a high powered diesel engine (through turbocharging) and is the same vehicle as the Toyota 4 Runner with a diesel engine sold in full volume by Toyota Australia. While the diesel or turbocharged engine variant will not be available to consumers, there is a ready supply of the vehicles available in either petrol powered or diesel engines sold in Australia new and used.

Primary producers would continue to have access to used 4WD imports. In any case, they are not major purchasers of used vehicle imports. Research suggests that more than 80 percent of purchasers of used 4WD imports are located in capital cities or major population centres. Primary producers have traditionally relied on vehicles marketed by their local franchised dealer networks with readily available after-sales service and spare parts.

Financial implications
The proposed measures would not have an impact on Government expenditure. The proposed Registered Automotive Workshop Scheme will be funded on a full cost recovery basis and a charging regime has been developed in consultation with industry representatives.

Estimated cost to businesses

The Review Task Force considered in detail the benefits of moving from the current type approval under the LVS to a vehicle by vehicle scheme administered through a registered workshop arrangement.

The current costs to business under the LVS are set out in Regulation 14 made under the MVSA. The cost of lodging an application to import a road vehicle or vehicles is $50 per application. Granting authority to place a compliance plate is $7.50 per vehicle ($3.75 per motorcycle), and the supply of a blank compliance or identification plate is $2.50 each. Lodging an application for authority to place a compliance plate on a vehicle of a particular type, if not more than 100 vehicles or derivatives of that type are built or imported in a year, is $500.

The Review Task Force noted that the LVS does not recover even the direct costs of processing approval applications. A 1997 study estimated the actual cost of processing low volume applications at about $3,000 per application. This cost has been reduced with the introduction of the electronic Road Vehicle Certification System for on-line application processing and information management, however other costs have increased.

Meetings were held with industry representatives on 4 August, 11 September and 6 December 2000 with up to 25 attending. Attendees were asked to provide input on the most appropriate charging arrangements, including estimate of number of vehicles and preferred yearly cost base. Several cost recovery models were presented to the group and general agreement was reached on a combination fee structure of a low up front fee plus a per-vehicle import and supply to the market fee. This allows the initial start up costs to be minimised, whilst imposing a user charges methodology.
Proposed Registered Automotive Workshop Charges

*The difference between the registration fee and the screening fee will be refunded to the applicant.
** NB Charges for motorcycles are under further review.

Government

The Government might experience continued lobbying or protests from the AAIMA, a representative body for used vehicle importers, on account of healthy profits under the current scheme, however most other key industry groups support the changes, including the Federal Chamber of Automotive Industries (FCAI) and Motor Trades Association Australia (MTAA).

Department of Transport and Regional Services and Department of Industry Science and Resources
Both departments can expect to receive representations from the automotive industry when decisions are made on eligibility as used importers and the local manufacturing industries interests are diametrically opposed and one side will inevitably be displeased.

Australian Customs Service

We anticipate no changes to Customs procedures.

CONSULTATION

This issue was considered in the light of a Review of the Motor Vehicle Standards Act 1989, which was included in the Commonwealth Review Schedule announced by the Treasurer in June 1996. The consultation process is summarised in the Introduction and detailed in the final Report. Representations were made following release of the draft report. The approximate figures are based on receipt of ministerials that required a response.

Views of key stakeholders

Development of eligibility criteria and Registered Automotive Workshop Scheme

Consultation with industry and stakeholders took place during all stages of the development of the eligibility criteria and registered workshops. Discussions were held on the proposed changes to eligibility at a meeting held on 16 June 2000 with the Vehicle Importers and Converters Association of Australia (VICAA), the Federal Chamber of Automotive Industries (FCAI) and the Australian Auto Importers & Manufacturers Association (AAIMA). Representatives from the Department of Industry, Science and Resources also attended.

Meetings were also held on 4 August, 11 September and 6 December 2000 to consult on the Registered Automotive Workshop Scheme. The attendees included representatives of VICAA, AAIMA, FCAI, Toyota, Honda, Motor Trades Association Australia (MTAA), the state and territory registering authorities, the National Road Transport Commission and the Australian Automobile Association.

In May 2001 a series of seminars on the RAWS was held in the major capital cities. An invitation to attend was sent to all current CPA holders. The Seminars were also promoted through Information Bulletins, by email and on the Internet. Attendance and an indication of interest in becoming a RAW are detailed in the following table.

Positive feedback was received from a number of current importers at the seminars, who acknowledged the new arrangements would remove malpractices in the trade. Other attendees saw the new arrangements at a burden on their industry.

All attendees were provided with a copy of the draft Guide to the Registered Automotive Workshop Scheme, with a request for comments to be provided by the end of May 2001. The draft Guide has also been provided to other interested parties on request. Feedback is being taken into consideration as the details of the new Scheme are developed. Meetings have also been held with representatives from the NSW Roads & Traffic Authority, Vic Roads, and the Society of Automotive Engineers, NSW Signatories Group. Meetings will also continue to be held with industry representatives on behalf of current CPA holders.

CONCLUSION AND RECOMMENDED OPTIONS

REVISED ELIGIBILITY ARRANGEMENTS

Option B – Limit the number of models by tightening up current eligibility criteria to ensure only “specialist and enthusiast” vehicles are eligible.

All vehicle models, including those diesel and high powered variants of models that are imported and supplied to the market in full volume, are assessed against the following ‘specialist and enthusiast vehicle’ criteria:
i. Not marketed in full volume in Australia; and
ii. Supplied to world market for at least 18 months; and
iii. Where the model has previously been supplied to the local market, it has been withdrawn from the local market for at least 12 months; and
iv. (a) meets at least two of four specialists and enthusiast criteria (ie appearance; performance; featured in specialist publications; unusual design features); or (b) is a 4WD with single-cab and open work-tray.

This policy is set out in Administrator’s Circular 0-2-12 and provided for in Regulations.

REGISTERED AUTOMOTIVE WORKSHOP SCHEME

Option B – Registered Automotive Workshop Scheme for used vehicles with a two-year sunset of approvals

All current LVS approvals for used vehicles and any new LVS approvals (issued under transitional arrangements) will expire on 8 May 2002. Approval of vehicles under the current type approval system (under current LVS eligibility) and the new SEVS eligibility criteria will continue to be available until 8 May 2002. Once the legislation is in place vehicles meeting the new eligibility criteria will be accepted for vehicle by vehicle approval through a registered workshop. All workshops will be required to meet the requirements for registration, which will be detailed in the Regulations.

IMPLEMENTATION AND REVIEW

Implementation

As described in the Cabinet Submission, the new arrangements will include a transitional period. LVS approvals were issued for a life-of-model duration and it can take up to 10 years before supply for a particular used vehicle model runs out. In line with approvals under the new SEVS, all current LVS approvals for used vehicles and any new LVS approvals (issued under transitional arrangements) will expire on 8 May 2002, two years from the date of the announcement of the new policy on 8 May 2000.

Under transitional arrangements, applications for new approvals or for updating existing approvals lodged before the announcement of the new policy and which could demonstrate significant prior financial commitment, will be assessed against the current LVS criteria. All other applications, including those lodged after 8 May 2000 will be assessed against the new SEVS eligibility criteria detailed in the Administrator’s Circular 0-2-12.

E-Business

RAWs will have the option of communicating with the Department electronically. Where possible it is intended to administer the Scheme via email and the Internet. The majority of records will be stored in a database as is done with the existing Road Vehicle Certification System (RVCS). The initial registration documents will be lodged manually to include necessary signatures with an eventual transition where possible to an electronic format for all documentation. Development of an administrative system includes consultation with industry.

Participating businesses who wish to use electronic means to communicate with the Department will need to have a standard PC that can run Windows ’95 or better, or a MAC System 7 or better, and an Internet browser. The Department supplies the e-forms software.

Review

The effectiveness of the new scheme in achieving the desired policy outcomes will be closely monitored through the RVCS, which is used to process approvals, with particular attention to the make/model and number of vehicles being imported. Vehicle inspections and audits will also be carried out at the workshop.

At the RAW Scheme meeting with industry on 6 December 2000 and at the Seminars held in May 2001, stakeholders were assured that future reviews of the RAW Scheme would be incorporated in the overall plan and could change charges depending on the number of workshops established. An initial review of charges will be conducted prior to the first anniversary of the operation of the scheme.

Should the policy outcomes not be achieved and imports of used vehicles grow beyond genuine specialist and enthusiast categories, the Minister for Transport and Regional Services will be authorised to require used vehicle imports (other than 4WDs specifically designed for use by primary producers) to meet at least three of the four specialist and enthusiast criteria, in addition to the general eligibility criteria.

MOTOR VEHICLE STANDARDS AMENDMENT BILL 2001

NOTES ON CLAUSES

Clause 1: Short title

1. This clause provides for the Act to be cited as the Motor Vehicle Standards Amendment Act 2001.

Clause 2: Commencement

2. This clause provides for the Act to commence on a day fixed by Proclamation. If the Act does not commence within a 6 month period of the Act receiving Royal Assent, the Act will commence on the first day after the end of the 6 month period.

Clause 3: Schedule(s)

3. This clause provides for each Act specified in Schedule 1 to the Act to be amended as set out in the Schedule.

Clause 4: Transitional – old approvals

Clause 4 sets out the transitional arrangements for dealing with approvals previously granted.

4. Subclause 4(1)

This amendment cancels previous approvals to fit identification plates issued under section 10A for used imported vehicles and grants transitional approvals, in replacement, under subsection 16(2). This is necessary to provide a transition period during which existing businesses can supply vehicles under the transitional approvals while they move through the steps involved in gaining approval as a registered automotive workshop.

5. Subclause 4(2)
This subsection provides that previous approvals to fit identification plates issued under section 10A, other than for used imported vehicles, continue to be in force, together with any conditions attached to those approvals. This will ensure that approvals to fit identification plates for new vehicles continue to be in force.

6. Subclause 4(3)
This amendment cancels previous approvals to supply nonstandard vehicles issued under section 14A for used imported vehicles and grants transitional approvals, in replacement, under subsection 16(2). This amendment is necessary to provide a transition period during which existing businesses can supply vehicles under the transitional approvals while they move through the steps involved in gaining approval as a registered automotive workshop.

7. Subclause 4(4)

This subclause provides for regulations to set an expiry date for the transitional approvals. The purpose is to allow the termination of transitional approvals for vehicles that are not on the register of specialist and enthusiast vehicles (as provided in section 21) on a date to be set in the regulations. The termination of transitional approvals for vehicles that are on the register of specialist and enthusiast vehicles will be set at a date that provides sufficient lead time for existing businesses to migrate to the new arrangements.

8. Subclause 4(5)
This subclause allows for conditions applying to the transitional approvals to be prescribed by the regulations. This is necessary, as the conditions attached to the old approvals are not suitable for application to approvals under subsection 16(2). Such conditions may include a limit on the number of vehicles that can be supplied in a specified period and may set out requirements for the fitting of plates to vehicles.

9. Subclause 4(6)
This subclause provides for transitional approvals to be varied, cancelled or suspended according to the provisions of section 16A.

10. Subclause 4(7)
This subclause provides for regulations to be made, as necessary or convenient, to achieve a transition to the new registered automotive workshop arrangements.

11. Subclause 4(8)

This subclause defines the meaning of used imported vehicle as used throughout section 4.

Clause 5 – Application – breach of conditions on identification plate approvals

12. This clause provides for penalties to apply to breaches of conditions on identification plate approvals before or after the commencement of this Act.

Clause 6 – Application – supply of used imported vehicles

13. The purpose of this clause is to explicitly include under the new supply provisions, of section 16, those used imported vehicles, imported under the former provisions, but not yet supplied, at the time the Act comes in to force.

SCHEDULE 1 – AMENDMENTS TO THE ACT

Item 1 - Section 3

The object of the Act is amended to recognise its role in regulating the supply to the Australian market, of used imported vehicles. This more clearly identifies the main subject matters covered by the Act.

Item 2 - Subsection 4(1)

This amendment updates references to other sections, made in this section, to account for the new and repealed sections this Act introduces. The original intent of the section remains the same.

Item 3 - Subsection 5(1) (definition of imported vehicle)

This subsection alters the definition of imported vehicle to provide that, in the amended Act both new imported vehicles and used imported vehicles are covered by this definition.

Item 4 - Subsection 5(1)

This subsection introduces the definition new imported vehicle. It covers all imported vehicles not used in transport outside Australia. It allows for different requirements for new imported vehicles and used imported vehicles to be specified.

Item 5 - Subsection 5(1) (definition of new vehicle)

This amendment removes an imported vehicle, wherever it occurs, and replaces it with a new imported vehicle. Reference in the Act to new vehicles will now only apply to brand new vehicles, whether locally made or imported.

Item 6 - Subsection 5(1)

The term registered automotive workshop is introduced and defined by reference to section 21B.

Item 7 - Subsection 5(1)

The term used import plate is introduced and defined by reference to section 13D. It creates a distinction between identification plates, which are fitted to new vehicles and used import plates, which are fitted to used imported vehicles.

Item 8 - Subsection 5(1)

The term used imported vehicle is introduced and defined as an imported vehicle that has been used in transport outside Australia. This allows for different requirements for new imported vehicles and used imported vehicles to be specified.

Item 9 - After Section 6

This item provides for Chapter 2 of the Criminal Code Act 1995 to apply to certain offence provisions in the Act.

Item 10 - Paragraph 9(1)(c)

The inclusion of reference to paragraph (b) ensures that the complete range of activities in connection with the operation of registered automotive workshops can be determined, in writing, by the Minister.

Item 11 - Paragraph 9(1)(d)

This amendment adds the keeping of inspection records to the range of activities which may be determined by the Minister. This addition allows for the workshops to be required to keep all relevant records, including inspection records.

Item 12 - Before Section 10

This inserts a new heading, Division 1 – Identification plates. This division will cover the plating of new vehicles.

Item 13 - Paragraph 10(2)(h)

This amendment corrects an error. Approvals are not issued under section 10 as there is no provision in section 10 for the issue of approvals, but rather under section 10A.

Item 14 - Subsection 10A(1)

This amendment restricts the granting of an approval to place identification plates on vehicles of a particular type, or vehicle components of a particular type to new vehicles only. This provides for new vehicles to be fitted with identification plates under section 10A and used imported vehicles to be fitted with used import plates under section 13D.

Item 15 - Subsection 10A(2)(a)

This amendment is for the same reason as given for Item 14.

Item 16 - Subsection 10A(3)

This new subsection provides for approval of nonstandard vehicles on the basis that they are considered suitable for supply to the market. Paragraph (3)(a)(i) links this provision to vehicles on the Register of Specialist and Enthusiast Vehicles. Approvals in this subsection will be granted for new low volume vehicles (eg an Aston Martin).

Paragraph (3)(a)(ii) allows for other new nonstandard vehicles to be approved under circumstances set out in the regulations (eg over-dimension semi-trailers).

Also the provision for the approval of components has been deleted, as policy is not to approve nonstandard components.

Item 17 - Subsection 10A(4)

Subsection 4 allows for the Minister to determine conditions for the placement of identification plates on new vehicles.

Examples of conditions which may be included are:
- the approval holder shall not affix the identification plate to a vehicle that is not a specified vehicle;
- the approval holder shall not without the prior approval of the Administrator affix the Identification Plate to a vehicle that is in any way different from the vehicle described in the final form of the application for this approval. The application includes reports and other documents relating to the application; and
- the approval holder shall by detailed quality control and test ensure continuing compliance with such of the Australian Design Rules specified in Schedule 4.

Subsection 5 makes explicit the condition that the number of plates approved to be placed on certain vehicles may be limited. This condition will be used in setting the number of new low volume vehicles that can be plated with identification plates during a specified period.

Subsection 6 imposes a penalty offence for a breach of a condition of an approval to fit identification plates to new vehicles. Previously, a breach of an approval condition did not constitute an offence.

Item 18 and 19 - Paragraph 10B(1)(a) and Paragraph 10B(2)(a)

These paragraphs have been amended from road vehicles to new vehicles consistent with the changes to section 10A. Used vehicles are now dealt with in new Division 13.

Item 20 - Subsection 10B(4)

This subsection has been amended from road vehicles to new vehicles consistent with the changes to section 10A. Used vehicles are now dealt with in new Division 13.

Vehicle component has been deleted from this subsection to be consistent with Item 16 subsection 10A(3).

Item 21 - Paragraph 11(1)(a)

Authorised and approved are taken to have the same meaning. For consistency approved will be used instead of authorised.

Items 22 - 29 - Paragraphs 11(1)(a), Subparagraph 11(1)(b)(v), Subsection 11(1), Paragraphs 11(2)(a), 11(2)(b), 12(a), 12(d), and Section 13

Authority and approval are taken to have the same meaning. To create consistency within the Act, approval will be used instead of authority.

Item 30 - After Section 13

This inserts a new heading Division 2 – Standard vehicles not to be made nonstandard.

Item 31 - After Section 13A

This inserts a new heading, Division 3—Used import plates, and the new sections 13B through 13G.

13B Placement of used import plates

This section allows for determinations to be made for the placement of used import plates on used imported vehicles. The changes establish a specific plate for used imported vehicles. Subsection 2 lists the procedures and arrangements that may be determined concerning the plating of a used imported vehicle. Arrangements will be determined that require the workshops to obtain plates from the approved plate supplier. This enables a number of controls to be put into place including limiting the number of plates available to a particular workshop for a particular class of vehicle.

13C Application for approval to place a used import plate

This section provides that a registered automotive workshop may make application for approval to place a used import plate. An application for each vehicle must be made in accordance with the regulations. The consequence of this section is that only registered automotive workshops will be approved to place used import plates.

13D Grant of approval

This section covers the granting of an approval to a registered automotive workshop to place a plate on a used imported vehicle. A report, in the form and containing information determined by the Minister, will be required from a workshop that the vehicle has been modified and inspected and meets the requirements as determined in the guidelines. The guidelines will include the arrangements and procedures for providing evidence that the vehicle meets the applicable standards.

Approval a matter of public record
This provides a level of consumer confidence that the vehicle meets the legal requirements. It also provides information to the State/Territory registering authorities to assist in first registration of the vehicle.

Conditions of approval
An approval granted is subject to the conditions specified in the approval. Examples of conditions of approval include that a workshop has documents to confirm that the vehicle is one for which a valid import approval is held; that the workshop must not place a plate on a vehicle that does not comply with the guidelines; and that plates are only fitted to vehicles on the Register of Specialist and Enthusiast Vehicles.

Breach of conditions
An approval holder will be guilty of an offence if the holder contravenes a condition of the approval.

Refusal
The Minister must give a written explanation if refusing to grant an approval.

Disallowable instruments
Determinations under subsections 2 or 3 are disallowable instruments.

13E Number limits on placement of used import plates

This section provides for a limitation on the number of used import plates that a registered automotive workshop can place per vehicle category, per year. Regulations will set the number limits consistent with the government announcement of 8 May 2000.

13F Variation, cancellation or suspension of approval

The Minister may vary, cancel or suspend an approval held by a workshop to plate a vehicle if the Minister is satisfied that the workshop has failed to meet the requirements or contravened a condition of the approval.

The Minister must give written notice to the workshop of any grounds there may be to vary, cancel or suspend an approval and invite a written submission from the workshop and the Minister must consider the submission.

Effect of suspension
A suspended approval ceases to be in force while the approval is suspended. It may be cancelled or varied while suspended.

Notice
The Minister must give the workshop written notice of a decision made to vary, cancel or suspend an approval and specify the reasons for the decision.

13G Offence in relation to the placement of used import plates

This section provides a penalty in the case of manufacture, supply or placement of a plate without approval, or placement of a false plate. It is intended that all used import plates be supplied from a single source that has been granted authority to manufacture and supply used import plates.

Item 32 - Before Section 14

Inserts new heading Division 1—Supply of new vehicles etc.

Item 33 - After Section 15

Inserts new heading Division 2—Supply of used imported vehicles and inserts sections 16 and 16A.

16 Supply of used imported vehicles

Unless a used vehicle being first supplied to the market in Australia is plated with a used import plate or meets the regulations or has the approval of the Minister a person is guilty of an offence. An application for approval must be for a single used imported vehicle and be made in accordance with the regulations. This will ensure that vehicles are applied for and approved on a vehicle by vehicle basis. An approval under this section is subject to any conditions specified on the approval. Contravention of conditions of the approval is an offence.

16A Variation, cancellation or suspension of approval

This section provides for the Minister to vary, cancel or suspend an approval granted under subsection 16(2) if conditions have been contravened, false or misleading statements have been made in the application, or for other actions the Minister considers appropriate. It lists the procedure, effect of suspension and notice as for section 13F described above.

Item 34 - Before Section 17

Inserts new heading Division 3—Import of new and used vehicles

Item 35 - Paragraph 17A(2)(b)

This amendment corrects references to sections, listed in this section, to account for the new and repealed sections this Bill introduces. The original intent of the section remains the same.

Item 36 - After Subsection 20(3)

The purpose of this provision is to set a limit to the number of vehicles that a workshop may import within 12 consecutive months. The number of vehicles that may be imported will be set at, at least the number approved for plating under section 13E.

This section also provides for the regulations to specify the class of vehicles approved for import which will be used to restrict the range of vehicles to models on the register of specialist and enthusiast vehicles as per section 21, except for used motorcycles.

A definition for used vehicle is applied to subsection (3A) as the vehicles provided for in that subsection have not yet been imported and therefore do not fit the definition of used imported vehicle.

Item 37 - After Section 20

Inserts a new heading, Division 4—Register of Specialist and Enthusiast Vehicles and inserts

21 Register of Specialist and Enthusiast Vehicles

This new section provides authority for the Minister to keep a register of specialist and enthusiast vehicles.

Subsection 21(2) provides for regulations to specify, among other things: the form of the Register; the procedures for vehicles to follow to be entered on the Register; the criteria to be satisfied before road vehicles may be entered on the Register; the inspection of the Register; the procedures to be followed for removing vehicles; the notification of relevant decisions; and the review of decisions made under regulations. These regulations will allow the administration of a scheme that assesses whether a vehicle model is eligible to be imported as a specialist or enthusiast vehicle.

The scheme operates by assessing whether the same vehicle model is available in full volume in Australia and if not whether it meets the criteria that would classify it as specialist or enthusiast.

The criteria are:
(a) Appearance – Significant difference in appearance to popular class of vehicle in that category * ;
(b) Unusual Design Features – Significant difference in sub-assemblies to popular class of vehicle in that category;
(c) Performance – Significant difference in level of performance to popular class of vehicle in that category;
(d) Featured in specialist motoring magazines in “as manufactured” condition.

* The national standards define the vehicle categories, for example, motorcycle, passenger car or off-road passenger car.

The specialist and enthusiast eligibility criteria have been introduced to return the low volume scheme (in particular for used vehicles) to its long-term intention of catering for only those vehicles that are genuinely specialist or enthusiast. Low volume vehicles are restricted because demonstration by way of full evidence of compliance with the applicable national standards (which entails, among other things, crash testing) is not required.

The specialist and enthusiast vehicle criteria apply to both new low volume and used imported vehicle models. Once a model is listed on the Register of Specialist and Enthusiast Vehicles it is eligible for supply under the low volume scheme for new vehicles and or for used vehicles, under the Registered Automotive Workshop Scheme.

Item 38 - After Part 4

Inserts a heading, Part 4A – Registered automotive workshops and inserts sections 21A through 21E.

21A Application for approval

This section provides for corporations to apply for approval as registered automotive workshops, in a manner prescribed in the regulations. Used import plates will only be allowed to be placed by registered automotive workshops.

21B Grant of approval

The Minister may grant an approval to a corporation to be a registered automotive workshop if satisfied that the corporation including its directors, officers and shareholders who are in a position to influence the management of the corporation are fit and proper. In determining the fit and proper person status the Minister may determine, in writing, guidelines to be taken into account.

In granting an approval to a corporation to be a workshop the regulations must be met.
The regulations may include limitations on the relationships between an applicant and any other registered automotive workshop. This is to prevent subverting the restriction on the number of used imported vehicles supplied by any one workshop.

If the Minister refuses to grant approval, a written explanation must be given as to why.

21C Period approval in force

This section sets the period that workshops are approved for at 2 years. It describes the process for renewal of an approval. Workshops apply for renewal in the last month of their current approval and in accordance with the regulations. If the Minister has not decided the application before the end of the expiry date, the approval is taken to continue in force until the Minister decides. This is to ensure no interruption to business. A renewed approval commences from the day after the expiry day. Renewals can recur under this section.

A refusal to renew must be accompanied by written notice that includes a statement of reasons why the renewal was refused.

21D Conditions of approval

This section provides for approvals granted to be subject to conditions prescribed by the regulations and subject to any conditions specified in the approval. It also provides for a penalty if conditions of the approval are contravened.

21E Variation, cancellation or suspension of approval

This section empowers the Minister to vary a workshop’s approval at his or her or the workshop’s initiative. Applications to vary an approval, from the holder, must be made in accordance with the regulations. The regulations will set out the requirements for workshops to apply to have additional vehicle models added to their schedule of vehicle models that approval has been given to, to import and modify. This will result in a varied approval.

This section also empowers the Minister to cancel or suspend a workshop’s approval for contraventions of the conditions of the approval, non-compliance with the regulations or any other circumstances the Minister considers appropriate.

If a Minister initiates a variation, cancellation or suspension written notice must be given to the holder of the opinion including reasons for that opinion and must invite the holder to make a written submission to the Minister about the matter within a reasonable specified time period. The Minister must consider matters raised in any submission from the workshop, before handing down a decision. The Minister must give the holder written notice of a decision under subsection (1) or (3). This is to ensure that communication between the Minister and workshop corporation is clear and allows due process to be followed.

Approvals may be cancelled or varied while suspended.

Item 39 - At the end of Section 23

The insertion of
- the power to determine procedures and arrangements for the placement of used import plates on used imported vehicles under section 13B;
- the requirement to determine guidelines concerning the granting of approval to workshops to place plates under subsection 13D(3); and
- the power to determine guidelines concerning fit and proper person checks under subsection 21B(2)
into section 23 provides for an exception to the delegation of powers to an Administrator (or Associate Administrator) in a manner consistent with operation to date. The power to determine the procedures and arrangements for placing used imported plates, the guidelines for workshops to place plates and the guidelines for fit and proper person checks is not delegated to the Administrator but must be subject to Ministerial approval. This ensures that these procedures and arrangements are issued as determinations.

Item 40 - Paragraph 24(1)(b)

This amendment corrects references to other sections listed in this section, to account for the new and repealed sections this Bill introduces. The original intent of the section, that regulations may prescribe fees to be paid to the Commonwealth for applications, remains the same.

NB: The fee arrangements for the importation of used vehicles are to be adjusted to recovery the costs of administrating the scheme.

Item 41 - After paragraph 24(1)(d)

This insertion allows for fees to be charged by the Commonwealth for applications to be, or renew as, or vary an approval as a registered automotive workshop.

Item 42 - At the end of Section 24

This insertion allows for fees that have accompanied applications for approval as a registered automotive workshop to be refunded by the Commonwealth. The intention of this subsection is that an application fee may be refunded if an application is not granted approval, except for an administration fee that may be charged for screening the application.

Item 43 - Subsection 27(1)

Extends the powers of an inspector appointed under the Act to include section 13B, which sets out the arrangements for the placement of used import plates. The intent of section 27 remains the same.

Item 44 - Subsection 28(1)

Extends the powers of an inspector to enter a premise by way of a warrant to include procedures determined under section 9, which refers to procedures and arrangements for determining whether vehicles comply with the Act. The intent of section 28 remains the same.

Item 45 - Subsection 28(1)

Extends the powers of an inspector to enter a premise by way of a warrant to include section 13B, which grants workshops the approval to place used import plates. The intent of section 28 remains the same.

Item 46 - Subsection 29(1)

Extends the powers of an inspector to require information to include procedures determined under section 9, which refers to procedures and arrangements for determining whether vehicles comply with the Act. The intent of section 29 remains the same.

Item 47 - Subsection 29(1)

Extends the powers of an inspector to require information to include section 13B, which grants workshops the approval to place used import plates. The intent of section 29 remains the same.

Item 48 - Paragraph 37(a)

This section provides that used import plates, which are to be distinguished from identification plates, are also subject, like identification plates, to legal proceedings not to lie.

Item 49 - After paragraph 39(1)(a)

This adds the new decision-making provisions under 13D and 13F, concerning approvals to plate used import plates, to the list of decisions by the Minister that may be appealed against through the Administrative Appeals Tribunal.

Item 50 - Paragraph 39(1)(d)

This adds the new decision-making provisions under section16 and section 16A, concerning approvals to supply used import vehicles, to the list of decisions by the Minister that may be appealed against through the Administrative Appeals Tribunal.

Item 51 - After paragraph 39(1)(f)

This adds the new decision-making provisions under section 21B, concerning approval of registered automotive workshops, to the list of decisions by the Minister that may be appealed against through the Administrative Appeals Tribunal.

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