WATER EFFICIENCY LABELLING AND STANDARDS BILL 2004 Explanatory Memorandum

(Circulated by authority of the Hon Dr David Kemp MP,
Minister for the Environment and Heritage)

WATER EFFICIENCY LABELLING AND STANDARDS BILL 2004

OUTLINE

The purpose of the Water Efficiency Labelling and Standards Bill 2004 is to provide for the establishment and operation of a scheme to apply national water efficiency labelling and minimum performance standards to certain water-use products. The aim of water efficiency labelling is to encourage the uptake of water efficient products and appliances in domestic and commercial areas while maintaining individual choice and accounting for regional variations in water supply.

The objects of this Bill are to:
(a) conserve water supplies by reducing water consumption;
(b) provide information for purchasers of water-use products; and
(c) promote the adoption of efficient and effective water-use technology.

The Bill provides for the establishment of a national Water Efficiency Labelling and Standards (WELS) scheme, to be implemented cooperatively by Commonwealth, State and Territory governments. It draws on powers under paragraph 51 of the Constitution in relation to corporations, trade and commerce to underpin the scheme. As there are expected to be small gaps in the Constitutional coverage of this Bill, it is anticipated that the State and Territory governments will enact complementary “mirror” legislation to cover these gaps. The Bill makes provision to accommodate such State and Territory legislation.

The Bill provides for the determination of “WELS products” to be subject to the scheme, and for the specification of “WELS standards” to apply to WELS products, setting requirements for water efficiency, performance, registration and labelling of these products.

A Regulator is established to administer the scheme and is empowered to make arrangements with Commonwealth, State and Territory agencies to assist with his or her functions.

The Bill creates offences and associated penalties in relation to failing to comply with registration, labelling and minimum efficiency and performance requirements, and in relation to the misuse of standards. It provides for an enforcement regime that includes infringement notices, enforceable undertakings and injunctions. The Bill also provides for the appointment of inspectors to investigate possible contraventions and sets out their powers and obligations.

A WELS Account is established as a Special Account, to receive funds and to make payments in relation to the operation of the WELS scheme. Provision is made for fees to be charged and credited to the WELS Account, for services provided in performance of the Regulator’s functions. Provision is also made for contributions to be made from the State and Territory governments to be credited to the Account. Once established, it is possible that the WELS scheme could be administered on a cost-recovery basis to the extent decided by Government.

The Bill includes provisions for internal and Administrative Appeals Tribunal review of decisions, for compensation for certain losses, for the making of regulations, and for independent review after 5 years of operation of the Act.

Rationale for the Bill/Policy Background

Water is a national priority issue and urban water use is a relatively small but significant component of this. There is considerable technical potential to increase the efficiency of household water use in Australia, as there is a wide range in the water-efficiency of different product models. However, cost-effective options to increase water-efficiency are often passed up by consumers because of low awareness of water issues and water prices, poor access to water efficiency information during product search and selection and because products are often chosen by intermediaries such as builders or plumbers, rather than by the party who will bear the ultimate running costs.

The Bill will assist in overcoming this lack of information through water efficiency labelling by providing consumers with information on the water efficiency and/or water consumption of products they are considering purchasing.

FINANCIAL IMPACT STATEMENT

The Government has committed $1.8 million over five years from 2003/2004 to establishing and implementing the WELS scheme under the Sustainable Cities program. Once the scheme is in full operation, total costs are estimated at approximately $900,000 per year.

It is possible that cost recovery could be implemented to help meet expenditure requirements.

REGULATION IMPACT STATEMENT

REGULATION IMPACT STATEMENT:

Proposed National System of Mandatory Water Efficiency Labelling for Selected Products

Executive Summary (only)

(Note: The full RIS is available at: http://www.deh.gov.au/water/urban/ris.html)

The Problem

The growing demand for water in urban areas is a major policy challenge for all Australian jurisdictions. Technologies to increase the efficiency of water use in urban areas are readily available, but they are not being adopted as rapidly as is necessary to limit growth in water use. The issue is particularly pressing for household water use.

Households account for about 16% of the consumption of mains-supplied water in Australia, the second largest share of mains water use after agriculture. A further 4% is used in the commercial and other sectors, much of it for similar purposes as in households and employing similar end use devices.

There is evidence of several types of failure in the market for water-using appliances, with the consequence that cost-effective options to increase water-efficiency are being passed up, especially in the residential sector:

• Imperfect cost-reflectiveness in water pricing (although price signals are becoming more cost-reflective, at least for water supply if not for wastewater disposal);

• Low public awareness of water and wastewater prices;

• The widespread practice of central metering in multiple-dwelling households, which weakens the incentive for individual users to manage their water consumption;

• Poor information on the relative significance of end uses and on the water efficiency of different models; and

• The split incentives problem. For developers of commercial and residential property there is an incentive to minimise capital costs rather than lifetime operating costs, because water (and energy) charges will be borne by the buyer or tenant of the property.

Objectives

The main objective of the proposed regulation is to bring about reductions in the consumption of water in households and in non-residential buildings in Australia and New Zealand below what it would otherwise be (the “business as usual” or BAU case), in a cost-effective manner.

The secondary objectives are to bring about reductions in the energy consumption associated with water use and the environmental impacts associated with both water and energy use, below the BAU case.

Current Regulation

A voluntary water efficiency labelling scheme has been in existence since 1988. It is now managed by the Water Services Association of Australia (WSAA). The WSAA program covers shower heads, toilets, taps, clothes washers, dishwashers, urinal flushing devices and flow regulators. The test requirements for each product type, the water efficiency levels required for each rating and the label design are all specified in Australian and New Zealand Standard AS/NZS 6400, Water efficient products – Rating and labelling, the latest version of which was published in February 2003.

The coverage and impact of the existing program are limited. Because the scheme is voluntary, few suppliers have chosen to label, and those that have only label their better performing products. The main incentive for participation has been the support of the water utilities (the members of WSAA), many of whom have publicised the scheme, or offered cash rebates to their customers for the purchase of labelled appliances. These limitations are inherent in any voluntary approach.

On 2 October 2003, the Environment and Heritage Ministers of the Commonwealth, State and Territory governments and of New Zealand agreed to implement a national mandatory water efficiency labelling scheme covering showerheads, washing machines, dishwashers and toilets. Other products would be covered on a voluntary basis. The Ministers agreed to a collaborative approach to implement the scheme nationally (implementation in New Zealand is up to the New Zealand Government).

Options

1. Status quo: this incorporates the assumptions that water demand will continue to increase and that the current voluntary water efficiency labelling program will be maintained.

2. The development of a voluntary agreement between industry and government on labelling.

Under a voluntary regime, the suppliers and retailers of water using products would be encouraged to label their products voluntarily, ie in the absence of regulation. There has in fact been a voluntary WEL scheme in place for the last 16 years, with limited effect, so it is reasonable to consider whether this could form the basis of a comprehensive WEL program.

The water industry does not have a single industry association — the WSAA represents the large urban water utilities, but not the manufacturers or importers of water-using products. Coverage is divided between the Australian Industry Group (AIG), the Australian Tapware & Plumbing Manufacturers Association (AUSTAP), the Queensland Brass Manufacturers Association, and – for clothes washers and dishwashers – the Australian Electrical and Electronics Manufacturers Association (AEEMA) and the Consumer Electronics Suppliers Association (CESA). There are also many smaller suppliers unaffiliated to any of these associations. This fragmentation increases the difficulty of making and maintaining an agreement on labelling between Governments and industry.

For this and other reasons, voluntary water efficiency labelling is not considered a realistic alternative to the proposed regulation. The approach is not likely to be any more effective than the existing voluntary labelling scheme in addressing information failure in the markets for water using products.

3. The use of economic instruments such as increasing the cost-reflectiveness of water pricing, or customs duties or tax rates which influence the relative prices of water-using products according to their water efficiency.

While there is general agreement that the current pricing of water services is not fully cost-reflective, there is little agreement on the ways to increase cost-reflectiveness, there is active resistance to measures which increase the price of water services, and
increasing cost-reflectiveness alone would not overcome the information failures in water product markets.

As the main problem is information failure, rather than the relative costs of water using products (which are affected by many factors other than water-efficiency), the use of economic instruments bearing on the relative price of products according to their water efficiency would not be effective, even if the considerable legislative impediments to their implementation could be overcome. As a result, the use of economic instruments is not considered a realistic alternative to the proposed regulation.

4. Regulation providing for the mandatory registration of the water efficiency of selected products, the mandatory water efficiency labelling of selected products and mandatory water efficiency standards for toilets, all to take effect in 2005, and providing for the possible introduction of mandatory water efficiency standards for additional products in the future.

Given that options 1, 2 and 3 will not meet the objectives, all further analysis in the Regulation Impact Statement (RIS) was concentrated on Option 4.

Impact analysis

Status quo

Some improvements in water efficiency are likely to take place even in the absence of any market intervention. A “BAU” water use projection has been developed for each State and Territory and New Zealand, taking into account the projected sales and trends in average water efficiency of products. The BAU assumptions for each product have been used as the baseline for the cost-benefit analysis.

The Status Quo option would, by definition, fail to meet the objectives of the regulation. There would be no reduction in water use below the BAU case, and there would be no greater correction of identified market failures than at present. On the other hand, there would be no negative impact on product price, quality or function, and no negative impacts on manufacturers and suppliers.

National system of mandatory water efficiency labelling for selected products

The major quantifiable economic benefits of water efficiency labelling are the value of the water saved (both freshwater supply and wastewater disposal) and the value of the energy saved through the operation of products that are more water efficient than would be the case without labelling. The major economic costs are the increase in the cost of products and the program administration costs.

The projected costs and benefits of WEL have been evaluated from two points of view – the impacts on the economy and the impacts on end users of water services. The program is cost-effective on both criteria, under a wide range of assumptions.

There is considerable uncertainty regarding the future resource costs and prices of water services. Information from WSAA indicates that water demand already exceeds the “safe yield” of storages in some capital cities, and if demand grows at the BAU rate major supply augmentation will be necessary in most capitals between 2010 and 2020. A range of marginal cost and price scenarios consistent with these projections was developed for each State and Territory and for New Zealand.

Impacts on Water Users

Water users as a group will save water and energy costs if they act on the information made available to them by WEL, and water users as a group will ultimately bear the costs of the program, even if those costs are initially incurred by other parties.

From the end user perspective, the projected benefit for water users as a group is about $M 900 (NPV at 10% discount rate, assuming medium rate of price increase), and the NPV of the projected costs is about $M 225. This indicates a net benefit of about $M 675 at a benefit/cost ratio of 4.0 (Table S1). About three quarters of the net benefit comes from improved water efficiency in showers and clothes washers, and the balance from other products. Although toilets represent a large proportion of household water use they are already subject to effective minimum efficiency standards in most parts of Australia, where the use of 6/3 litre dual flush cisterns is mandatory in new installations, so the potential for further gains is somewhat less.

Under most assumptions WEL is cost-effective for all products analysed, but the projected benefits of WEL for dishwashers and taps fall slightly short of the projected costs under some scenarios. On balance, dishwashers and taps should also be subject to mandatory WEL, especially as their inclusion would greatly reinforce the impact on consumers of the program as a whole.

The program appears to be cost-effective under a range of price increase projections and discount rates, including the most severe combination of conditions modelled: no increase in the real resource costs of water services or energy, and a discount rate of 10%. Under these conditions the combined benefit/cost ratios for the program as a whole are still between 2.5 and 3.3. On the other hand, if resource cost and price increases are high the program’s cost-effectiveness would rise to between 4.1 and 4.7.

Table S1 Retail Price Perspective, Medium Real Increase in Water and Energy Costs, 10% Discount Rate

	Total	Benefits(a)				Net Benefits	Benefit/ cost
	Costs(a)	Water	Elect	Gas	Total
	$M	$M	$M	$M	$M	$M
Showers - res use	$14.1	$118.5	$120.7	$47.2	$286.4	$272.3	20.3
Showers - com use	$2.3	$21.9	$22.3	$8.7	$52.9	$50.6	22.6
Toilets- res use	$13.7	$88.4	$0.0	$0.0	$88.4	$74.7	6.5
Toilets- com use	$6.3	$43.3	$0.0	$0.0	$43.3	$37.0	6.8
Clothes washers	$143.0	$269.5	$70.0	$27.9	$367.5	$224.5	2.6
Dishwashers	$28.6	$13.5	$16.5	$1.3	$31.2	$2.7	1.1
Taps - res use	$10.7	$6.6	$6.7	$2.6	$15.9	$5.2	1.5
Taps - com use	$1.0	$0.6	$0.6	$0.3	$1.5	$0.5	1.6
Urinals	$3.6	$12.4	$0.0	$0.0	$12.4	$8.8	3.4
Administration	$2.0
Total	$225.3	$574.7	$236.9	$88.0	$899.5	$674.2	4.0
Household uses	$210.0	$496.5	$213.9	$79.0	$789.4	$579.4	3.8
Commercial uses	$13.3	$78.2	$23.0	$9.0	$110.2	$96.9	8.3
Showers	$16.5	$140.4	$143.0	$55.9	$339.3	$322.9	20.6
Toilets	$20.0	$131.7	$0.0	$0.0	$131.7	$111.7	6.6
Household appliances	$171.5	$283.0	$86.5	$29.2	$398.7	$227.1	2.3
Taps	$11.6	$7.2	$7.3	$2.9	$17.4	$5.8	1.5
Urinals	$3.6	$12.4	$0.0	$0.0	$12.4	$8.8	3.4

(a) Net Present Value of projected additional costs and additional benefits (compared with Business as Usual) for products sold between 2004 and 2021

Impacts on industry participants

Manufacturers and Importers

Mandatory WEL will apply equally to products manufactured locally (ie in Australia and New Zealand) and to imported products. Both manufacturers and importers have indicated that a year’s notice between finalisation of the regulations and commencement of labelling should be adequate.

All firms will need to follow the same steps leading up to implementation:

• Take note of the regulations and standards (when finalised) applying to the products they supply, and the intended commencement date;

• Ensure that all models or model families are tested for water consumption on the standard test (it is likely that the regulations will permit initial tests to be carried out in suppliers’ own laboratories, but compliance check tests initiated by the regulator will be carried out by accredited independent laboratories);

• Register the products and their performance characteristics with the program regulator in advance of the commencement date. The regulator will make the register public;

• Devise a system for ensuring that the labels are displayed as required at the points of sale on and after the commencement date: this may involve fixing a label to every product in the factory, changing packaging designs to incorporate the label image, or working with retailers to ensure that product displays incorporate the correct labels.

Manufacturers and importers of clothes washers and dishwashers tend to be larger firms, are already familiar with these processes through the energy labelling program, and are well placed to implement water labelling at minimal additional cost. Similarly, toilet suppliers are large firms with a high rate of participation in the current voluntary labelling program, and should be able to adjust at minimal cost.

Importers will need the full year to respond, since the new standards tests and labelling requirements will need to be communicated to their overseas suppliers. They will need to ensure that products are labelled correctly, either at the point of origin or after import. For rated showers (ie those having a flow rate of less than 15 l/min and meeting the flow stability and other performance requirements) it will be necessary to ensure that the label matches the product, and the best way to ensure this would be to label the products in the factory, or adopt a form of clear display packaging which makes separate labelling necessary only for those few units that are taken out of the package.^[1] Non-rateable showers, which currently account for the majority of sales, will only have to carry the disendorsement message label. As it will not be necessary to differentiate between models, adding the labels in the warehouse or even in the retail store can done at relatively low cost.

The costs associated with initial compliance are likely to be moderate, and unlikely to cause any participants to withdraw from the market. The demand for more water-efficient models is likely to drive up the average retail price of the labelled products, so supplier revenues should increase by more than the costs of testing, registration and labelling.

As WEL increases its influence on consumer preference, the relative advantage of manufacturers and importers will depend on the water-efficiency of their product ranges. Manufacturer and importers that only offer products of low water-efficiency will obviously be disadvantaged, and may need to cut prices and margins to retain market share. However, most manufacturers and importers have access to a range of products with different levels of water efficiency, and can switch their production or source different models from their overseas suppliers to meet changing demand. Local manufacturers already offer products at the higher end of water efficiency, so should be well placed to respond to the marketing opportunities offered by mandatory WEL.^[2]

Retailers

The revenues of wholesalers and retailers should increase to some degree as the average retail price of the labelled products rises.

Retailers will also incur some costs, from:

• Training staff to understand and explain the water label;

• Ensuring that all products displayed carry a label (the absence of a label will be a readily verifiable breach of the proposed regulation); and

• In some cases, actually affixing the labels in the store. (Retailers will probably wish to negotiate arrangements with their suppliers whereby the retailer’s workload and room for error is minimised).

Again, those retailers which carry at least some water-efficient models will be advantaged, while those that specialise in low-cost products with low water efficiency will be disadvantaged. In general however retailers have more flexibility than manufacturers or importers to alter their model ranges at short notice, so they should be less impacted by shifts in consumer preference, provided these are not so abrupt as to leave them with hard-to-sell stock. As the awareness of water labels is likely to build up gradually rather than abruptly, retailers should have ample time to sell their old stocks and to order in more water-efficient models. This lead time can be increased through the awareness programs that will need to be implemented for the retail sector as soon as the regulations are finalised.

Plumbers and builders

The impact of WEL on plumbers and builders is likely to be gradual. These groups will still be free to select or recommend products irrespective of water efficiency, as many do now, and will be able to remove the water efficiency labels before the end users see it. Indeed, plumbers or builders who install non-rateable showers that by law will have to carry the disendorsement label at time of sale will almost certainly wish to remove the label before handing over the building or the installation to the user, in order to avoid having to justify their selection of low-efficiency fittings.

On the other hand, plumbers or builders who install highly-rated products may wish to leave the label on, and even call the end user’s attention to it.

Over time, as more householders are exposed to the water label, they will inevitably take greater interest in the water-efficiency of products recommended by or installed by plumbers and builders. This will assist those plumbers and builders who take an interest in, or seek competitive advantage from, advising clients on water- and energy-efficient products. There are already a number of programs under way to raise plumbers’ awareness of product water efficiency, including the Green Plumbers program run by the Master Plumbers and Mechanical Services Association of Australia, with funding from the Australian Greenhouse Office. Such programs provide an ideal vehicle for making plumbers aware of the details of the proposed regulations.

Building Specifiers and Regulators

The public register of products will be of considerable value to building specifiers and regulators. As market demand and policy pressure for greater resource-efficiency in buildings increases, specifiers are being called on to ensure that designs incorporate products of acceptable water-efficiency, and to certify this to building approval authorities. The existence of a register of product water-efficiency will enable parties to meet these requirements at minimal cost.

Water Services Authorities

WSAA is a major stakeholder in the existing voluntary WEL program, and is a strong supporter of the introduction of a mandatory WEL program. Many of the water services authorities that are WSAA members face rapidly increasing demand for water services on the one hand, and major impediments to augmentation of supply and wastewater capacity on the other. Some water authorities are subject to formal government-endorsed water conservation targets. WSAA has expressed its commitment to programs which are likely to significantly increase the efficiency of water use, even if there are short term revenue loss implications for its members.

Whether or not the current voluntary labelling program continues to be effective up to the time the regulated scheme is introduced is largely in the hands of the government agencies and water authorities that support the voluntary scheme. Buyers will not be aware of the impending introduction of a new scheme or a new label until it is actually introduced, and until then will have no reason to change their response to the voluntary labels or to the incentive schemes linked to them. The water authorities will have as much notice as product suppliers to plan for the termination of incentive schemes using the current label and the introduction of new schemes based on a new label. In fact, a new label will provide an opportunity to increase public interest in and hence cost-effectiveness of incentive schemes.

The introduction of mandatory WEL will be in the interest of WSAA members in two key ways. It would be in their commercial interests in that they would no longer need to pay incentives for suppliers to participate on a voluntary basis. If they still wished to offer incentives for customers to select more efficient appliances, they could do this no less effectively under a mandatory program, whatever methods of rating and labelling were adopted.

Secondly, a nationally mandated WEL program – with the option of nationally mandated WES - is likely to be far more effective in containing growth in water consumption than the existing voluntary WEL program and state-based regulations on plumbing work.

Impacts on Small Business

Most suppliers of the products that would be affected are medium sized enterprises, although some manufacturers, importers and distributors of showers, tapware and flow control devices are in the small business category.

There is likely to be a higher representation of small businesses among product retailers. Unincorporated entities not involved in interstate trade would not be subject to the proposed Commonwealth regulation, so the onus of compliance would be not on them but on their suppliers. Small business retailers, like other retailers, who choose to stock more water-efficient products in response to changing buyer preference would be able to benefit from higher average sales prices.

Effectiveness

Impacts on Water Consumption

Extensive modelling was undertaken of the likely impact of mandatory water efficiency labelling on product purchases and hence on water consumption, based on the experience of the market changes induced by mandatory energy labelling.

The projected impact of WEL on water consumption is illustrated in Figure S1. It is estimated that total Australian water consumption will be about 18,900 million litres (ML) per annum below BAU by 2011 and about 87,200 ML below BAU by 2021, the end of the projection period. The corresponding reductions for New Zealand are projected to be 3,500 ML and 15,800 ML per annum respectively. The reduction in total household water use is projected to reach about 5% by 2021, with the impacts ranging from about 9% for clothes washers to less than 0.3% for taps

It is projected that water savings over the period 2003 to 2021 will total about 610,000 ML. Nearly half of this would come from clothes washers, about 25% from showers and 22% from toilets. Over 86% of the water savings would occur in the residential sector, and the rest in non-residential buildings.

Greenhouse Gas Impacts

WEL is projected to reduce greenhouse gas emissions from electricity and gas use by reducing the amount of hot water used in showers, taps, clothes washers and dishwashers. This is calculated from the share of water heaters in each jurisdiction that are electric, solar-electric and gas. WEL will also reduce the electricity required for pumping freshwater and wastewater. Showers account for about 57% of the projected electricity savings (4,380 GWh over the period) and nearly 64% of the gas savings (14.3 PJ). The total reduction in greenhouse gas emissions for Australia is projected to reach about 135 kt CO₂-e per annum in 2010 and 570 kt CO₂-e per annum in 2021. The corresponding values for New Zealand are 20 and 95 kt CO₂-e respectively.

Other Environmental Impacts

The environmental benefits of avoiding, deferring or reducing the scale of additional water supply and wastewater disposal infrastructure would be significant, though unquantifiable, benefits of the proposed program. (The quantifiable economic benefits are embodied in the projections of rising costs and prices).

The projected reduction in annual water demand from WEL is equivalent to about one year’s annual growth in water demand over the period 1997 to 2001. All else being equal, this would delay the need for new water supply infrastructure in each capital city by about one year. Labelling alone is not likely to avoid the need for augmenting water supply capacity indefinitely: economic measures such as more cost-reflective water pricing, and programs such as WES (for which the proposed regulation provides a framework) would still be required.

Overall Impact

From a national perspective, the main findings are:

• From the resource cost perspective (as distinct from the water user perspective) the projected benefit for Australia from mandatory water efficiency labelling is about $M 386 and the projected cost is about $M 119. This indicates a net benefit of about $M 267, at a benefit/cost ratio of 3.2;

• The program would be cost-effective for every product covered under most assumptions, although dishwashers and taps, the cost-effectiveness is slightly below 1 under some sets of assumptions;

• About 89% of the costs of the program would be the additional resource costs of increasing product water-efficiency. Testing, registration and labelling costs would account for about 9%, and other administration costs for about 2%;

• The value of savings in water services account for nearly 72% of the benefit, electricity cost savings for about 19% and gas cost savings for about 9%;

The testing, registration and administration costs of WEL are largely fixed, in that they would be incurred whether or not product buyers actually use the labels to change their purchase behaviour. The product costs, however, are variable in that they closely correlate with buyer behaviour. If buyers made less use of the label, average product costs would not increase as much. The very high ratio of variable to fixed costs means that the program benefit/cost ratios are relatively insensitive to program impact, although of course the projected reduction in water and energy would be lower if program impact were lower.

Consultations

During the development of the WEL proposal an extensive program of consultations were held with a wide range of stakeholders. Most parties consulted, including product suppliers and retailers, actively supported the introduction of a mandatory WEL program and none opposed it. The main points of debate were the technical standards, the form of the label and which products should be subject to mandatory and optional coverage.

On 13 March 2004 the Department of the Environment and Heritage posted a Public Comment version of the RIS (version 7, dated February 2004) on its internet site, and advertised its availability in the national press, together with an invitation for written comments and responses by 16 April 2004. By the close of the comment period responses were received from 22 parties. The main issues raised by respondents are reported in the final RIS, and the recommendations have been modified as follows.

In the light of the arguments (with supporting data) advanced for the mandatory labelling of bathroom basin, kitchen sink and laundry taps, and the progress made with definitions in the revision of AS/NZS 6400, it is now recommended that these products also be scheduled for mandatory registration and mandatory labelling for water efficiency, to commence at the target date.

In the light of the arguments advanced for the mandatory labelling of urinals and the components of urinal flushing systems, it is now recommended that these products also be scheduled for mandatory labelling for water efficiency, as well as mandatory registration, to commence at the target date.

Conclusion and recommended option

The main conclusion is that the implementation of mandatary water efficiency labelling is likely to meet the objectives of the regulation, with net economic benefit to the community. None of the other options considered in the RIS is likely to meet the objectives of the regulation. The recommended initial program coverage is summarised in Table S2.

It is recommended that:

16. The proposed regulatory framework to support a mandatory water efficiency labelling (WEL) program and a mandatory water efficiency standards (WES) program should be implemented;

17. The regulatory framework should incorporate powers to schedule products for which registration would be mandatory, products for which WEL would be mandatory, products for which registration would be optional, products for which WEL would be optional and products for which WES would be mandatory;

18. The target implementation date for the regulations should be mid to late 2005, to give adequate notice and lead time from the finalisation of the regulatory framework, tests, algorithms and label designs;

19. Shower heads, shower assemblies and shower sets should be scheduled for mandatory registration and mandatory labelling, with effect from the date of implementation of the regulations;

20. Clothes washers should be scheduled for mandatory registration and mandatory labelling, with effect from the date of implementation of the regulations;

21. Dishwashers should be scheduled for mandatory registration and mandatory labelling, with effect from the date of implementation of the regulations;

22. Toilets should be scheduled for mandatory registration, mandatory labelling, and mandatory water efficiency standards (expressed as a maximum weighted average flush volume of 5.5 litres) with effect from the date of implementation of the regulations;

23. Taps intended for bathroom basin, kitchen sink and laundry tub applications (as specified in AS/NZS 6400) should be scheduled for mandatory registration and mandatory labelling, with effect from the date of implementation of the regulations;

24. Urinal flushing systems (ie combinations of stalls, flush mechanisms and sensors) should be scheduled for mandatory registration and mandatory labelling, with effect from the date of implementation of the regulations;

25. Flow control devices (or selected subgroups of flow control devices) should be scheduled for optional registration and optional labelling, with effect from the date of implementation of the regulations, subject to satisfactory product definitions being included in the relevant test standard;

26. Showering systems (ie combinations of shower heads, taps and/or flow control devices) should be scheduled for optional registration and optional labelling at such time as a satisfactory Standard incorporating product definitions, water efficiency tests and performance standards is finalised;

27. The technical basis of the program (apart from showering systems) should be Australian and New Zealand Standard AS/NZS 6400 Water efficient products – Rating and labelling as currently being revised, subject to the revision meeting the needs of the regulation;

28. The Standard should retain the present links between the water consumption tests and the energy consumption tests for clothes washers and dishwashers (noting the recent and proposed revisions of those tests);

29. The Standard/s should retain the present links between the water efficiency rating tests and other essential product performance requirements (eg shower performance, clothes washer and dishwasher cleaning, drying and rinse performance), but products should not be excluded from the market solely as a result of failure to meet performance criteria that are not related to water consumption or efficiency;

30. The following principles should be adopted for phasing the program in:

• For product for which WEL is mandatory, it should be an offence from the nominated commencement date to display a product not labelled in accordance with AS/NZS 6400;

• There should be a finite period (say 6 months) during which it is lawful to display a product bearing only a label previously properly registered under the then-terminated voluntary scheme, or both such a label and a properly registered WEL label;

• There should be no new registrations under the voluntary program as soon as the pre-registration period for the WEL program commences (which is likely to be about 6 months before the mandatory labelling start date);

• The commencement of labelling for clothes washers should not be delayed beyond the start date for other products because of the development of the rinse performance test and subsequent testing. Provisional registration should be considered if necessary.

16. For the scheduled products, the regulations should prohibit any form of water efficiency labelling other than the regulated form (after the phasing in period);

17. Suppliers of flow regulators and (once the Standard is developed) showering systems should be encouraged to take up the option of participating in the program, and/or to include water efficiency data and ratings in their product catalogues and websites;

18. If suppliers choose to take up the option of labelling, they should be subject to the same compliance obligations as for products for which WEL is mandatory;

19. There should be a large-scale promotional program to establish and support the mandatory WEL program when it is implemented;

20. The case for mandatory WES for showers, clothes washers, dishwashers, taps and urinal flushing systems should be reviewed once the WEL program has been established and its effectiveness has been evaluated;

21. The case for mandatory rather than optional labelling for flow control devices should be reviewed once the WEL program has been established and its effectiveness has been evaluated;

22. WSAA and the water authorities should be encouraged to maintain the voluntary water efficiency labelling program until the mandatory program takes effect.

Table S2. Proposed initial schedule of products and application of provisions

Product	Registration	Water Efficiency Labelling	Water Efficiency Standards
Shower heads, assemblies and sets	Mandatory	Mandatory	Not at present
Toilets	Mandatory	Mandatory	Mandatory
Clothes washers	Mandatory	Mandatory	Not at present
Dishwashers	Mandatory	Mandatory	Not at present
Taps (basin, sink, laundry tub)	Mandatory	Mandatory	Not at present
Flow regulators	Optional	Optional	Not at present
Urinal systems	Mandatory	Mandatory	Not at present

Implementation and review

The program will be implemented as described above. The nominal Water Efficiency Regulator will be ex-officio the Secretary of the Department of Environment and Heritage, who will head a standing committee comprising State, Territory and New Zealand officials, analogous to the National Appliance and Equipment Energy Efficiency Committee which manages the energy labelling and minimum standards programs. There will also be advisory committees comprising the other stakeholders.

The Department of Environment and Heritage intends that there will be annual reviews of the operation of the program, with public workshops and opportunities for stakeholder involvement, on the lines of the annual National Appliance and Equipment Energy Efficiency Program (NAEEEP) Forum.

Decisions regarding the administration and review of the WEL program will be initiated in the first instance by the Regulator. Major changes such as changes to the scheduling of products will be subject to Declaration by the Minister, with the usual provisions for review and disallowance by Parliament.

The proposed review processes should give stakeholders adequate opportunity to monitor, comment on and participate in the management and evolution of the WEL scheme.

The full RIS is available at: http://www.deh.gov.au/water/urban/ris.html

NOTES ON CLAUSES

2. This clause provides that the substantive provisions of the Bill will commence on the 28^th day after which it receives the Royal Assent.

3. This clause sets out the objects of the Bill. The Bill is intended to ensure that purchasers of particular types of water-use and water-saving products are provided with information to assist and encourage them to select more water-efficient products. It is also intended to encourage (and in some cases require) suppliers of these products to adopt more water-efficient technology. Ultimately, it is envisaged that the purchase of more water-efficient products will result in reduced water consumption, thus contributing to the conservation of water supplies.

4. This clause provides that the Crown is bound to comply with the provisions of the Bill, but is not liable to be prosecuted for an offence.

6. This clause makes clear that the general principles of criminal responsibility contained in chapter 2 of the Criminal Code apply to all offences against this Bill.

• acquisition of property is defined as having the same meaning as in paragraph 51(xxxi) of the Constitution. (This paragraph provides for the Parliament to make laws for the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has the power to make laws.)

• affected person is defined (by reference to subclauses 69(2) and (3)) as a person whose application to register a WELS product is refused or whose registered WELS product has had its registration cancelled or suspended.

• agency is defined as including agencies within the meaning of the Financial Management and Accountability Act 1977, State and Territory Departments of State, and bodies corporate established for a public purpose under Commonwealth, State or Territory law. (In the Financial Management and Accountability Act 1977, an agency is defined as meaning a Department of State, a Department of the Parliament, or a body, organisation or group of persons prescribed by the regulations as a “prescribed Agency”.)

• applicable WELS standard is defined (by reference to clause 32) as the standard under which a WELS product is registered or, where the product is not registered, the most recent WELS standard relating to that type of product.

• Commonwealth Minister is defined as the Minister appointed to administer the Commonwealth Department that deals with the matters to which this Bill relates. (This is currently the Minister for the Environment and Heritage.)

• Commonwealth Secretary is defined as the Secretary of the Commonwealth Department that deals with the matters to which this Bill relates. (This is currently the Secretary of the Department of the Environment and Heritage.)

• corresponding State-Territory law is defined (by reference to clause 12) as a State or Territory law declared by the Commonwealth Minister to correspond to this Bill and whose operation involves the use of determinations under clause 18 that certain products are WELS products.

• damage, in relation to data, is defined as including damage by erasure or addition of data.

• evidential material is defined as anything that may be relevant to the investigation or prosecution of an offence against this Bill.

• Executive Agency is defined (by reference to the Public Service Act 1999) as an Executive Agency established by the Governor-General.

• just terms is defined as having the same meaning as in paragraph 51(xxxi) of the Constitution (see definition of acquisition of property above).

• occupier, in relation to premises, is defined as including a person who apparently represents the occupier of the premises.

• participating State or Territory is defined (by reference to subclause 18(5)) as a State or Territory that has a corresponding State-Territory law for that State or Territory.

• person who has WELS information is defined (by reference to clause 60) as a person whom the Regulator believes on reasonable grounds to be capable of providing information, documents, etc relevant for the purposes of investigating or preventing an offence under the Bill.

• registered relates to those products defined as registered under a WELS standard.

• Regulator is defined (by reference to clause 21) as the Commonwealth Secretary.

• reviewable decision is defined (by reference to subclause 69(1)) as a decision by the Regulator to refuse to register a WELS product or to cancel or suspend the registration of a WELS product.

• reviewable State-Territory decision is defined (by reference to subclause 17(2)) as a decision made by the Regulator in the performance of a function or the exercise of a power conferred by a corresponding State-Territory law, where the law under which the decision was made provides for review by the Administrative Appeals Tribunal and the regulations declare it to be a reviewable State-Territory decision.

• Statutory Agency is defined (by reference to the Public Service Act 1999) as a body or group of persons declared by an Act to be a Statutory Agency.

• supply is defined as being supply or offer to supply for consideration, and is intended to include (without limiting the general meaning of the term) supply by way of lease, hire or hire purchase.

• water-saving product is defined as a device, appliance or fitting designed to operate in place of a water-use product (but which is not itself a water-use product).

• water-use product is defined as a device, appliance or fitting through which, or into which, water flows as part of its normal operation.

• WELS Account is defined by reference to subclause 64(1) as a Special Account for the purposes of the Financial Management and Accountability Act 1997, which is established for the purposes of furthering the object of this Act (as set out in clause 3) and otherwise in connection with the performance of the Regulator’s functions under this Act, the regulations or a corresponding State-Territory law.

• WELS business premises is defined as a WELS premises that is open to the public on a regular basis and used for, or in connection with, the supply of WELS products.

• WELS inspector is defined (by reference to subclause 45(1)) as a Commonwealth, State or Territory employee or officer appointed as a WELS inspector by the Regulator.

• WELS-labelled is defined (by reference to subclause 20(1)) as describing a product labelled in accordance with requirements set out in the WELS standard for products of that kind.

• WELS premises is defined as a premises used for, or in connection with, the supply of WELS products.

• WELS product is defined (by reference to subclause 18(1)) as a water-use product or water saving product of a kind specified by the Commonwealth Minister to be a WELS product.

• WELS scheme is defined as the water efficiency labelling and standards scheme established by this Act and corresponding State-Territory laws.

• WELS standard is defined (by reference to clause 19) as a standard relating to a given type of WELS product, specifying any registration and labelling requirements and any minimum standards to apply to products of that type, and also setting out the criteria for rating the water efficiency and/or performance of products of that type.

1. This clause notes that this Bill is intended to form a part of a cooperative scheme between the Commonwealth and the States and Territories. The relevant State and Territory Ministers have agreed in principle to introduce complementary ‘mirror’ legislation to operate in conjunction with this Act. The effect of the complementary legislation will also be to compensate for the small jurisdictional gaps in the coverage of Commonwealth powers in relation to the operation of the WELS Scheme.

2. This clause defines the application of the Act. It is intended to cover all supplies of the relevant WELS products. It draws on relevant Constitutional powers and is expected to cover the great majority of relevant suppliers such as manufacturers, wholesalers, importers, retailers and so on. There may be some suppliers, in particular retailers, which are not incorporated and operate within a single State, and so cannot be directly regulated under the corporations or trade and commerce powers of the Constitution. However, this is not expected to impede the effective operation of the Act. Also, complementary State and Territory legislation will capture these suppliers that otherwise fall outside the ambit of the Commonwealth powers under the cooperative scheme in due course.

3. This clause clarifies that the provisions of this Act do not replace or override any existing Commonwealth laws.

4. This clause indicates that this Act is not intended to affect the operation of compatible State or Territory laws. For example, States and Territories may wish to adopt stricter minimum standards in relation to plumbing installations than will be specified under this scheme for the sale of a product.

Clause 12: Meaning of corresponding State-Territory law
Clause 13 Commonwealth consent to conferral of functions etc. on the Regulator or inspectors by corresponding State-Territory laws
Clause 14 How duty is imposed by corresponding State-Territory laws
Clause 15 When a corresponding State-Territory law imposes a duty

5. As noted in relation to clauses 8 and 9, it is anticipated that the States and Territories will enact complementary legislation to effectively capture those suppliers that otherwise fall outside of the ambit of the Commonwealth powers. clause 12 provides for such legislation to be recognised as “corresponding State-Territory law”. It is intended that all jurisdictions use the Regulator established under this Act for administration, monitoring and enforcement of the scheme. clauses 13, 14 and 15 provide for corresponding State-Territory laws to confer functions, powers and duties on the Regulator or inspectors and enable the Regulator or inspectors to carry out these functions and duties and exercise these powers, consistent with the reasoning of the High Court in The Queen v Hughes (2000) 171 ALR 155 (where the Court held that a Commonwealth law which imposes upon a Commonwealth officer or body a duty to perform functions or exercise powers created and conferred by State law must be supported by a Commonwealth head of power).

6. This clause prevents persons from being punished or penalised twice for an offence under this Bill, if they have already been punished or penalised for the same offence under State or Territory law.

7. This clause provides for application to be made to the Administrative Appeals Tribunal (AAT) for review of a ‘reviewable State-Territory decision’; defined as a decision made by the Regulator in the performance of a function or exercise of a power conferred by a corresponding State-Territory law (if that law provides for review by the AAT; and the regulations declare the decision to be a reviewable State-Territory decision for this purpose).

(Note that clause 69 defines a reviewable decision for the purposes of this Act as a decision by the Regulator to refuse to register a WELS product under clause 29 or to cancel or suspend the registration of a WELS product under clause 31. clauses 71 and 72 also provide for review of reviewable decisions made directly under this Act (as distinct from reviewable State-Territory decisions).

Clause 18: WELS products
Clause 19: WELS standards
Clause 20: Meaning of WELS-labelled

8. The WELS scheme is intended to subject certain products to water-efficiency labelling and/or minimum water-efficiency standards. clause 18 enables the Minister to specify the kinds of products to be covered by the WELS scheme, subject to disallowance by either house of Parliament. Before such a determination can be made, however, the Minister must have the agreement of a majority of the participating States and Territories to the terms of the determination. For the purposes of this clause a ‘participating State or Territory’ is one in which there is a corresponding State-Territory law (this condition reflecting the cooperative nature of the scheme as described in clause 8.)

9. As set out in clause 19, each of these kinds of WELS products is also required to have a WELS standard. Pursuant to clause 19, the WELS standard for each WELS product type is to set out any registration and labelling requirements and any water efficiency and/or general performance requirements to apply to products of that type. The WELS standard is also to set out the criteria for rating the water efficiency and/or performance of WELS products of the relevant type. These criteria will be the basis for the ratings to be displayed on the labels for WELS products of that type. It is intended that products to be WELS labelled will be required to carry a rating label to reflect their relative water-efficiency, similar to the labels currently in use for the energy rating scheme. Clause 20 allows the labelling requirements to encompass the characteristics, use and display of labels.

Clause 21: The Regulator
Clause 22: Functions of the Regulator
Clause 23: Powers of the Regulator

1. Clause 21 establishes the Commonwealth Secretary (i.e. currently the Secretary of the Department of the Environment and Heritage) as the Regulator. Clause 22 sets out the functions of the Regulator, which are essentially to oversee the operation of the scheme, and include:

• To administer the WELS scheme: The Regulator will, inter alia, receive and process applications for registration and issue registrations, fund and provide WELS inspectors, and administer operation of the WELS Account.

• To undertake or commission research in relation to water-use and water-saving products, and provide advice in relation to determining that water-use or water-saving products are WELS products: The Regulator will evaluate which products should be subject to the scheme and the provisions that should apply to them and advise on this. The intent of this provision is to provide for a mechanism that will continuously identify products to be included in the scheme over time, and possibly also some products that no longer ought to be included.

• To undertake or commission research in relation to WELS standards and their effectiveness in reducing water use, provide advice to the Commonwealth Minister about the operation of WELS standards, and assist in the development of WELS standards: The Regulator will evaluate the standards that should apply to particular WELS products and the effectiveness of standards in meeting the objects of the Act, and advise the Commonwealth Minister on this, as well as contributing to work to develop standards. (This could result in changes to standards. Some products might need to be modified in order to comply with the revised standards, or have their registration withdrawn.)

• To provide information and advice to the public, the Commonwealth Minister, and the States and Territories, about the operation of the WELS scheme: The office of the Regulator will be the principal contact point for members of the public on the WELS scheme and will be responsible for the preparation and dissemination of information regarding the scheme. It will also provide advice to, and circulate information on behalf of, government.

• Such other functions as are conferred on the Regulator by this Act, the regulations, a corresponding State-Territory law, or any other Commonwealth law.

1. Clause 23 empowers the Regulator to do all things necessary or convenient to be done for or in connection with the performance of these functions.

2. This clause provides for the Regulator to make arrangements with other government agencies to assist with carrying out functions and duties and exercising powers under the Act. Other Commonwealth, State and Territory agencies may have expertise in areas relevant to the operation of WELS, and it may increase efficiency and cost-effectiveness for the Regulator to draw on this. For example, it is envisaged that the certain State and Territory trade practices and consumer affairs agencies could assist with compliance and enforcement action.

3. This clause provides for the Regulator to delegate powers, including those conferred under a corresponding State-Territory law, to other officers (subject to the Regulator’s directions). It is envisaged that much of the work undertaken to fulfil the Regulator’s functions will be carried out by officers within the Regulator’s Department, so it will be necessary for the Regulator to delegate powers to the principal officers involved. Also, given the provision under clause 24 for the Regulator to make arrangements with other government agencies, including those of States and Territories, to assist with carrying out functions, it would be necessary for the Regulator’s capacity to delegate to be extended to relevant officers of such agencies. Delegation of powers to a State or Territory government officer or employee is subject, however, to the agreement of the relevant State or Territory.

Clause 26: Applying for registration
Clause 27: Documentation etc. to be provided with application for registration
Clause 28: Registration of products
Clause 29: Grounds for refusing to register

4. Clause 26 provides for the manufacturer (who may be defined for the purposes of this Bill by regulation) of a WELS product to apply for registration of the product. The purpose of registration is to develop better knowledge of the market and assist with compliance monitoring and enforcement of the WELS scheme. Information obtained through registration will be used to assess whether products comply with the relevant standards and to determine the appropriate rating labels. While it is intended that some types of WELS products will not be subject to mandatory registration, because the benefits of subjecting them to the scheme appear to be marginal, it will still be possible for products of those types to be voluntarily registered, so that, for example, the manufacturer of a water-efficient product of that type who wishes to demonstrate the product’s water-efficiency is able to do so. Once a product has been registered, even if registration for that product is optional, the product must comply with any registration requirements, including labelling requirements, set out in the applicable WELS standard.

5. Clause 27 sets out requirements for how an application for registration is to be made and the conditions that must be met to maintain registration. Subject to disallowance by either house of Parliament, it provides for the Minister to specify the form an application is to take, together with the documentation and registration fee that is to accompany the application. It is intended that the documentation required of applicants for registration of a WELS product is to include evidence of the results of testing the product against the relevant WELS standard, as well as (where relevant) a sample of the water efficiency label to be used for the product. It is also intended to charge a registration fee at a level sufficient to cover the costs of administering the WELS scheme, in line with Government cost-recovery policies.

6. Clause 28 requires the Regulator to register, by notice published in the Commonwealth of Australia Gazette, a WELS product for which an application for registration has been received and approved by the Regulator, or, where an application for registration has been refused, to give the applicant written notice of the refusal. If the Regulator has neither registered the product nor notified the applicant of refusal within 3 months of the application being made, the application is automatically taken to have been refused. Clause 29 specifies grounds upon which the Regulator may refuse to register a WELS product. These are that the application has not been made in accordance with the requirements of clause 27, that the Regulator is not satisfied as to the accuracy of the information provided in the application, or that the product fails to satisfy the requirements of the relevant WELS standard.

1. Subclause 30(1) provides for 5-year registration periods for WELS products (unless the registration is cancelled or suspended under clause 31). A 5-year registration period has been stipulated to mirror the arrangements in place for the existing energy labelling program and is accepted by industry as a suitable registration period due to the rapid changes in technology and the frequent introduction of new models. However, if during the registration period for a WELS product the Minister makes a determination on a new or revised WELS standard, Subclause 30(2) provides that existing registrations under the superseded standard will expire 12 months after the introduction of the new or revised standard. The Minister may, however, extend the period under subclause 30(3), subject to disallowance by either house of Parliament.

2. This clause empowers the Regulator to cancel or suspend the registration of a WELS product where conditions of registration are not being complied with or where the Regulator subsequently becomes aware that the information provided in the application for registration was not accurate at the time of application or is no longer accurate because changes have been made to the product. In circumstances where the Regulator determines that the registration of the WELS product is to be suspended or terminated, the Regulator is required to provide the person on whose application the product was registered with written notice of the cancellation or suspension of registration of the WELS product.

3. Subclause 31(3) requires the Regulator to cancel a registration upon request from a manufacturer of a WELS product, in circumstances where the current WELS standard for that product type does not require the product to be registered. This provision is for the benefit of manufacturers who no longer wish to WELS-label products that are not required to be registered.

1. This clause defines applicable WELS standard as the standard under which a WELS product is registered or, where the product is not registered, the most recent WELS standard relating to that type of product.

Clause 33: Registration requirement
Clause 34: Labelling registered products
Clause 35: Minimum water efficiency—products required to be registered
Clause 36: Minimum general performance—products required to be registered
Clause 37: Misuse of WELS standards and information
Clause 38: Information inconsistent with WELS standards
Clause 39: Using information in the supply of products

2. These clauses set out offences for not complying with the registration and labelling requirements or minimum efficiency and performance requirements, and for misusing WELS standards and information. Specifically:

• Clause 33 makes it an offence to supply an unregistered WELS product where the applicable standard requires the product to be registered.

• Clause 34 makes it an offence to supply a registered WELS product without a label, where the applicable standard requires the product to carry a label if registered. (Note: in some cases, a product may not be required to be registered, but the standard may specify that if the product is registered, it must carry a label. In such a case, it would not be an offence for the product not to be registered, but if it were registered, it would then be an offence for it not to carry a label.)

• Clause 35 makes it an offence to supply a WELS product required to be registered that does not comply with minimum water efficiency requirements specified in the applicable WELS standard.

• Clause 36 makes it an offence to supply a WELS product required to be registered that does not comply with minimum performance requirements specified in the applicable WELS standard.

• Clause 37 makes it an offence to use a WELS standard or information included in a WELS standard, in a manner that is inconsistent with the standard, for example by supplying a labelled product that is not registered.

• Clause 38 makes it an offence to use information for or in relation to supply of a WELS product, that is inconsistent with information in the applicable WELS standard. For example, this would include supplying a product with additional labels or markings of a type that contradict the message of the approved label.

• Clause 39 elaborates on the meaning of using information for the purposes of clauses 37 and 38. Without limiting the general meaning of words used in those clauses, it specifies that information is used for, or in relation to, the supply of a product if the information is conveyed on or by a label, packaging, document or other material provided with or in connection with the product or any advertising relating to the product.

3. Offences against clauses 33, 34, 35, 36, 37 and 38 are all offences of strict liability. Strict liability is imposed to facilitate the expedient enforcement of the provisions given that there are expected to be a high number of inadvertent contraventions of the Act. A strict liability regime is intended to facilitate the imposition of penalties for the physical elements of the offences without proof of fault. Without a strict liability regime in place, it would be very difficult to enforce these provisions.

4. This clause provides for the making of regulations for the purposes of allowing for a person alleged to have committed an offence relating to the supply of WELS products to pay a penalty to the Commonwealth as an alternative to prosecution. In such circumstances, the penalty is limited to a maximum of one-fifth of the maximum fine that may be imposed by a court if the person were prosecuted and convicted for the offence under the Act. This provision is aimed at facilitating the speedy resolution of minor offences against the Act and to minimise the time and resources spent on litigation.

5. This clause allows the Regulator to publicise convictions against the Act, without placing any limitations on the Regulator’s powers in this regard. Nor does it prevent anyone else from publicising an offence against the Act or affect any obligation on anyone to publicise an offence against the Act. It is envisaged that publicising offences against the Act will act as a deterrent to others against further offences against the Act.

Clause 42: Acceptance of undertakings
Clause 43: Enforcement of undertakings

6. Clause 42 enables the Regulator to accept undertakings (or variations to or withdrawal of undertakings) in connection with matters relating to compliance with a WELS standard or registration condition. This provision is intended to act as an alternative to prosecution in those circumstances where non-compliance with the Act would otherwise result in an offence in relation to the compliance with a WELS standard or a registration condition. Where the Regulator considers that a person has breached any terms of an undertaking given, clause 43 provides for the Regulator to apply to the Federal Court for an order to direct the person either to comply with the terms of the undertaking, pay the Commonwealth an amount up to that of any financial benefit the person has gained as a result of the breach, compensate any other person for loss or damage resulting from the breach, or anything else that the Court considers appropriate.

7. Subclause 44(1) empowers the Federal Court, on the application of the Regulator, to grant an injunction either to restrain a person who is engaging in or proposing to engage in conduct constituting an offence against the Act from engaging in that conduct, or to require the person to take such specified action as the Court determines in order to comply with the Act.

8. Subclause 44(2) empowers the court, on application, to grant an injunction, by consent of all parties to the proceedings regardless of whether the court is satisfied of the commission or potential commission of an offence.

9. Subclause 44(3) enables the court to grant an interim injunction pending its determination of an application. The purpose of this is to enable the court to prevent any potential damage, destruction or the removal of the products from the jurisdiction while it is considering the application. Subclause 44(4) prevents the court from requiring the Regulator or anyone else to give an undertaking as to damages as a condition of granting an interim injunction.

10. Subclauses 44(5), 56(6) and 56(7) enable the court to discharge or vary the injunctions referred to above.

1. In order to assist the Regulator in the administration and operation of the Act, this clause empowers the Regulator to appoint Commonwealth, State and Territory government officers and employees as WELS inspectors. The appointment of State and Territory government officers and employees as WELS inspectors is, however, subject to the agreement of the relevant State or Territory government. This clause also requires WELS inspectors to comply with any directions of the Regulator in exercising their powers or performing their functions as WELS inspectors.

2. This clause requires the Regulator to issue photographic identity cards (the form of which is to be prescribed by regulation) to all WELS inspectors. It requires that WELS inspectors must carry their identity cards at all times while operating as WELS inspectors. Clause 46(5) prohibits a WELS inspector from exercising powers as a WELS inspector without being able to produce his or her identity card at the request of the occupier of premises to be inspected. Clause 46(3) makes it an offence for WELS inspectors to fail to return their identity cards to the Regulator as soon as practicable after ceasing to be WELS inspectors, and imposes a maximum penalty of 1 penalty unit for this.

Clause 47: Purposes for which powers can be used
Clause 48: Inspection powers—public areas of WELS business premises
Clause 49: Inspection powers—with consent
Clause 50: Refusing consent is not an offence
Clause 51: Inspection powers—with warrant
Clause 52: Announcement before entry under warrant
Clause 53: Copy of warrant to be given to occupier
Clause 54: Occupier must provide inspector with facilities and assistance

3. These clauses collectively set out the powers of WELS inspectors. Clause 47, as a general provision, enables WELS inspectors to exercise their powers for the purposes of determining whether a person is complying with the Act or regulations or for the purposes of investigating offences against the Act or regulations.

4. In exercising their powers, clause 48 allows WELS inspectors to enter WELS business premises at any time when the premises are open to the public (i.e. during normal business hours) to monitor compliance with the Act, and to do essentially the same things as members of the public are able to do on the premises during normal business hours, including inspecting WELS products; purchasing of any WELS product that is available for sale; inspecting or collecting written information, advertisement material or any other documentation that is available to the public; discussing product features with any person; or observing practices relating to the supply of products. However, this does not affect any rights of occupiers to refuse to allow inspectors on their premises.

5. Clause 49 allows a WELS inspector to otherwise enter premises with the consent of the occupier of the premises. In seeking the consent of the occupier, the WELS inspector must make the occupier aware that he or she may refuse or withdraw consent at any time. Clause 50 makes it clear that it is not an offence for occupiers of WELS premises to refuse to allow WELS inspectors to enter or remain on their premises without a warrant. These safeguards are in line with the Scrutiny of Bills Committee's views in its Fourth Report of 2000 into entry and search provisions in Commonwealth legislation (that is, that consent must be "genuine and informed" and refusing entry, where entry is not under a warrant, must not be an offence).

6. Clause 51 authorises a WELS inspector to enter premises with a warrant, irrespective of the occupier’s consent. WELS inspectors who do enter premises with consent or with a warrant are provided general powers of search, inspection and information gathering. This clause also empowers a WELS inspector (who has entered a premises with a warrant) to require any person on the premises to answer questions and produce documentation. Failure to comply with such a request from a WELS inspector is an offence. This clause also empowers the inspector to seize or secure any evidential material on the premises and ensures that the Regulator has the powers needed to take immediate action to secure evidence relevant to an investigation or prosecution. (Note that clauses 55, 56 and 57 set out requirements relating to seizing, securing and holding of evidential material).

7. Notwithstanding the provisions of clause 51, clause 52 requires a WELS inspector, before entering WELS premises under a warrant, to announce that he/she is authorised to enter the premises and to provide any person at the premises the opportunity to allow entry. However, a WELS inspector need not comply with this if he or she reasonably considers that immediate entry is necessary to ensure the effective execution of the warrant.

8. Clause 53 requires a WELS inspector to give to the occupier of premises (if present) a copy of the warrant being executed in relation to the premises and identify himself or herself to the occupier. The copy of the warrant need not include the signature of the magistrate who issued the warrant. (Note: this is to allow for clause 59 urgent warrants, where there may not be an opportunity to obtain the magistrate’s signature before executing the warrant.)

9. Clause 54 makes it an offence for the occupier of WELS premises (at which a warrant is being exercised), not to provide the WELS inspector executing the warrant with all reasonable facilities and assistance for the effective execution of the warrant.

Clause 55: Seizing or securing evidential material
Clause 56: Holding evidential material for more than 90 days
Clause 57: Returning evidential material

1. These clauses set out requirements relating to seizing, securing and holding of evidential material. Clause 55 requires a WELS inspector who seizes or secures evidential material to issue a receipt for such material to the occupier of the premises. The Regulator is permitted to make copies of the material, and to examine or test the material, even if that might result in damage to the material. The Regulator is, however, required to return or release the material when it is no longer needed for the purposes for which it was seized or secured, or within 90 days at the latest. The purpose of this provision is to prevent businesses from being impeded for longer than is necessary. Where 90 days is insufficient time, clause 56 enables the Regulator to apply to a magistrate for an order allowing possession or control of the material for a further specified period. In determining an application, the magistrate must allow the owner of the material to appear and be heard, and must not make an order for the extended possession or control of evidential material unless satisfied that it is necessary for the purposes of prosecuting an offence against this Bill.

2. Clause 57 allows the Regulator to dispose of evidential material, as the Regulator thinks appropriate, where the Regulator is unable to locate the owner of the material despite making reasonable efforts.

1. These clauses provide for the issuing of ordinary and urgent warrants to WELS inspectors to enter premises.

2. In the case of ordinary warrants, clause 58 enables a magistrate to issues a warrant to a WELS inspector, if the magistrate is satisfied that entering the premises is necessary to determine whether a person is complying with the Act or regulations or to investigate a possible offence against the Act. The magistrate may require further information to be provided with a warrant application in order to determine the need or otherwise for the warrant to be issued. A warrant authorises the WELS inspector to enter the premises using such assistance and force as is necessary and reasonable. The warrant must state the purpose for which it is issued, indicate when the entry is authorised, and specify the day on which it ceases to have effect (warrants may be issued for a maximum of one week).

3. In the case of urgent warrants, clause 59 allows for a WELS inspector to apply for a warrant by telephone, fax or other electronic means. Where practical, the magistrate may require communication by voice and may record such communication. In such circumstances, before applying for the warrant the WELS inspector must still prepare information setting out the grounds on which the warrant is sought and of the necessity to enter the WELS premises, but if necessary the WELS inspector may apply for the warrant before the information is sworn or affirmed. If the magistrate is satisfied that there are reasonable grounds for doing so, he/she may then issue a warrant as if the application had been made under clause 58. The magistrate must then advise the WELS inspector of the terms of the warrant, the day on which and the time at which the warrant was signed, specify the day on which it ceases to have effect (warrants may be issued for a maximum of one week), and record on the warrant the reasons for its issue. The WELS inspector must complete a form of warrant in the same terms as advised by the magistrate and record the name of the magistrate and the time and date on which the warrant was signed. The WELS inspector must send this form of warrant to the magistrate within one day after the execution or expiry (whichever is earlier) of the warrant, together with duly sworn or affirmed information pertaining to the grounds on which the warrant was sought. The magistrate is then required to attach these documents to the warrant and deal with them as if they were an ‘ordinary warrant’.

1. This clause defines a person who has WELS information as being a person whom the Regulator believes to be capable of providing information relevant for the purposes of investigating or preventing an offence under the Act.

Clause 61: Regulator may require a person to provide information
Clause 62: Regulator may require a person to appear before a WELS inspector

2. Clause 61 enables the Regulator, by written notice, to require a person who has WELS information to provide such information, documents or records as specified in the notice to a WELS inspector within a specified period of not less than 14 days. Clause 62 enables the Regulator, by written notice, to require a person who has WELS information to appear before a WELS inspector in order to answer questions and provide to the inspector documents or records referred to in the notice, within a specified period of not less than 14 days.

3. It is an offence not to comply with requirements under clauses 61 and 62. Notices given by the Regulator under clauses 61 and 62 are required to set out the effects of clauses 137.1 and 137.2 of the Criminal Code. These provisions make it an offence to knowingly give false or misleading information, or produce false or misleading documents, to the WELS inspector respectively.

1. This clause provides that a person is not obliged to comply with the provisions of clauses 45 to 62 where to do so might entail self-incrimination.

Clause 64: WELS Account
Clause 65: Credits to the WELS Account
Clause 66: Purposes of the WELS Account

2. These clauses provide for the establishment and use of a WELS Account. Clause 64 establishes the WELS Account as a Special Account for the purposes of the Financial Management and Accountability Act 1997. (Note: the effect of a Special Account is that money from the Consolidated Revenue Fund is able to be appropriated for expenditure for the purposes of the Special Account up to the balance of the Special Account.)

3. Clause 65 requires all money appropriated or received for the purposes of, and in connection with, the WELS scheme to be credited to the WELS Account, including those contributions by participating State and Territory Governments. Clause 66 identifies the purposes of the WELS Account as being to make payments for furthering the objects of the Act and for other reasons connected with the performance of the Regulator’s functions and the administration of the Act and regulations.

Clause 67: Regulator may charge for services
Clause 68: Recovery of amounts

1. Clause 67 enables the Regulator to charge fees for services provided in the performance of the Regulator’s functions. Clause 68 allows for the recovery of fees and other amounts payable to the Commonwealth in connection with the WELS scheme as a debt due to the Commonwealth. These provisions provide for the option to run the scheme on a cost-recovery basis. It has been established (Attorney-General v Wilts v United Dairies Ltd (1921) 38 TLR 781) that the imposition of fees or charges in respect of the performance of statutory duties needs to be authorised expressly by legislation or by necessary implication, which is the purpose of this clause. To avoid the imposition of taxation, any fees would be charged in respect of activities and services provided by the Regulator for the benefit of the fee payer, and the level of fees would be reasonably related to the costs of performing that function.

Clause 69: Meaning of reviewable decision and affected person
Clause 70: Notification of decisions and review rights
Clause 71: Internal review
Clause 72: Review of decisions by Administrative Appeals Tribunal

2. These clauses make provision for the review of certain decisions made under the Act. For the purposes of the Act, clause 69 defines a reviewable decision as a decision by the Regulator to refuse to register a WELS product under clause 29 or to cancel or suspend the registration of a WELS product under clause 31. It also defines an affected person as a person whose application to register a WELS product has been refused or whose WELS product has had its registration cancelled or suspended. Clause 70 requires the Regulator to ensure that the affected person, in relation to a reviewable decision, is given written notice containing the terms of the decision, reasons for the decision and information regarding the person’s review rights. Nevertheless, failure to comply with this provision does not affect the validity of the decision.

3. Clause 71 provides for an affected person to apply for internal review by the Regulator of a reviewable decision made by a delegate of the Regulator. The Regulator is then required to review the decision personally. The Regulator may affirm, vary or revoke the decision and substitute such other decision as he/she sees fit. An application for internal review must be made within 30 days of receipt of the decision by the applicant.

4. Clause 72 allows an affected person to apply to the Administrative Appeals Tribunal for review of a reviewable decision made by the Regulator or of an internal review decision made under clause 71. Subclauses 72(2) and (3) are included to limit the appeal right to the affected person only. Despite subclause 27(1) of the Administrative Appeals Tribunal Act 1975, third party appeals (i.e. an appeal made by another person on behalf of the affected person) are also intentionally excluded. This is for consistency with the internal review provisions under clause 71, which provide only for an affected person to apply – it would be unusual to then allow additional parties to appeal at the external review stage. This provision is also consistent with the model set by the Gene Technology Act.

1. This clause requires the Commonwealth to pay compensation to the owner of electronic equipment or the user of data or programs, where in the course of the operation of such equipment as provided for in clause 49, damage or corruption results to the equipment, data recorded on the equipment or programs associated with the use of the equipment or data, arising from insufficient care being exercised by the person operating the equipment or in selecting that person to operate the equipment. Where the Commonwealth and the affected person disagree over the amount of the compensation, the person may take the matter to the Federal Court to determine. In determining the compensation payable, the Court is to have regard to whether the occupier, or the occupier’s employees and agents had provided appropriate warning or guidance on the operation of the equipment.

2. This clause requires the Commonwealth to pay reasonable compensation where operation of the Act would result in the acquisition of property from a person otherwise than on just terms as required under paragraph 52(xxxi) of the Constitution. Where the Commonwealth and the person disagree over the amount of the compensation, the person may take the matter to the Federal Court to determine.

3. This clause requires the Regulator to provide the Commonwealth Minister at the end of each financial year with an annual report on the operation of the WELS scheme, which the Minister must then cause to have tabled in both Houses of Parliament within 15 sitting days. The Minister is also required to forward a copy of the report to each participating State and Territory.

4. This clause provides for an independent review of the WELS scheme after it has been in operation for 5 years. The persons undertaking the review must be appropriately qualified and at least one must be a non-APS employee. The persons undertaking the review are required to provide the Minister with a written report of the review, which the Minister must then cause to have tabled in each House of Parliament within 15 sitting days. The Minister is also required to forward a copy of the report to each participating State and Territory.

5. This clause provides for the making of regulations prescribing matters necessary or convenient to be prescribed for the purposes of the Act. This may include (but is not limited to) prescribing fees and penalties.

^[1] One cost-effective way for retailers to deal with such situations would be cut out the label image from the package and fix it to the display model as a swing tag.
^[2] All ANZ-manufactured shower heads have high water-efficiency ratings. All ANZ-manufactured toilet suites have the highest rating. ANZ-manufactured top-loader clothes washers all have medium to high ratings. There are no ANZ-made front loaders at present. ANZ-manufactured dishwashers all have medium to high ratings.

Commonwealth of Australia Explanatory Memoranda