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TRADE PRACTICES (CONSUMER PRODUCT SAFETY STANDARD) (BASKETBALL RINGS AND BACKBOARDS) REGULATIONS 2005 (SLI NO 228 OF 2005)

explanatory Statement

Select Legislative Instrument 2005 No. 228

Issued by the Authority of the Parliamentary Secretary to the Treasurer

Trade Practices Act 1974

Trade Practices (Consumer Product Safety Standard) (Basketball Rings and Backboards) Regulations 2005

Subsection 172(1) of the Trade Practices Act 1974 (the Act) provides, in part, that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Paragraph 65C(1)(a) of the Act provides that a corporation shall not, in trade or commerce, supply goods that are intended to be used, or are of a kind likely to be used, by a consumer, if the goods are of a kind in respect of which there is a consumer product safety standard and they do not comply with that standard.

Subsection 65C(2) of the Act provides that a regulation may, in respect of goods of a particular kind, prescribe a consumer product safety standard consisting of such requirements as are reasonably necessary to prevent or reduce risk of injury to any person.  These requirements may relate to: performance, composition, contents, methods of manufacture or processing, design, construction, finish or packaging of the goods; testing of the goods during, or after the completion of, manufacture or processing; and the form and content of markings, warnings or instructions to accompany the goods. 

The purpose of the Regulations is to require basketball rings and backboards to be labelled with a warning about the usage of these products, and thereby reduce the incidence of deaths and serious injuries associated with misuse of the products.

The Regulations give national application to a mandatory labelling requirement which is already in force in Victoria.

Details of the Regulations are at Attachment A.

A Regulation Impact Statement for these Regulations is at Attachment B.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

 


Attachment A

Details of the Trade Practices (Consumer Product Safety Standard) (Basketball Rings and Backboards) Regulations 2005

 

Regulation 1 -- Name of Regulations

The regulation provides that the name of the Regulations is the Trade Practices (Consumer Product Safety Standard) (Basketball Rings and Backboards) Regulations 2005.

Regulation 2 -- Commencement

This regulation provides that the Regulations commence on the day after they are registered.

Regulation 3 -- Definitions

This regulation provides that, unless the contrary intention appears Act means the Trade Practices Act 1974.

Regulation 4 -- Purpose

This regulation provides that the Regulations set out the consumer product safety standard for the purposes of subsection 65C(2) of the Trade Practices Act 1974.

Regulation 5 -- Warning and symbol to accompany supply of ring or backboard

This regulation specifies the form and content of the warning that must be carried on a basketball ring or backboard and their packaging.  Subregulation 1 requires the supply of a basketball ring or backboard to be accompanied by a warning and a warning symbol.  Subregulation 2 details the form of the warning .  Subregulation 3 details the form of the warning symbol.  Subregulation 4 details how the warning must be marked on the package.  Subregulation 5 details how the warning must be marked on the ring or backboard if a ring or backboard is not supplied in a package.

Regulation 6 -- Permanent warning on backboard

This regulation specifies the form, content and placement of the permanent warning to be marked on the backboard.

Schedule 1 -- Warning symbol

This schedule provides the graphic warning symbol required by Regulation 5 (3)(a).


Attachment B

 

REGULATION IMPACT STATEMENT

 

 

 

 

TRADE PRACTICES ACT 1974

CONSUMER PRODUCT SAFETY STANDARDS

BASKETBALL RINGS AND BACKBOARDS

 

 

AUGUST 2005

 

ID NO:  7314

 

 

 

Product Safety Policy Section
Compliance Strategies Branch
Australian Competition & Consumer Commission


INTRODUCTION

This paper considers the need for government regulation to address the safety hazards associated with the use of basketball rings and backboards for basketball rings.  It is an ACCC Regulation Impact Statement (RIS) and the decision maker is the Parliamentary Secretary to the Treasurer. 

PROBLEM

What is the problem being addressed?

Basketball rings and backboards have been associated with three deaths in Australia and an extremely serious injury earlier this year.  The problem is not the safety of the product itself but hazards associated with inappropriate use of the product.  The deaths and injuries have occurred when players have been practising "slam dunks". Slam dunking is where a basketball player leaps at the goal ring and puts the ball through the ring, whilst momentarily holding on to the ring during descent.  During this manoeuvre, a player's full body weight is supported by the basketball ring and the supporting fixture of the basketball ring.

The following deaths and injuries have occurred:

The exact number of basketball rings/backboards installed on walls of homes or garages in Australia is not known, but 200,000 would probably be a conservative estimate.  Many of these are likely to be installed inappropriately and would present a potentially very serious but not easily recognisable hazard. 

The main danger with basketball rings is in the installation.  The accidents and deaths occur when either the structure, or the way the ring is attached to the structure, cannot cope with the stresses placed on it.  Parents and other people responsible for providing recreational and sporting opportunities for children, teenagers and young adults have no way of knowing whether the fixing is safe.  They cannot tell whether the structure was correctly erected in the first place or has become unsound in the meantime.  Unless it is something obvious, like the mortar missing from between the bricks or huge cracks in the wall, it is not possible to assess the dangers.

The ongoing incidence of deaths and injuries associated with basketball rings and backboards is an issue which has been raised in coronial inquests and is a continuing community concern.  Ultimately any reduction in deaths and injuries will benefit the community at large.

OBJECTIVES

What are the objectives of government action?

The Government's goal, in the case of basketball rings and backboards, is to develop a cost-effective strategy to significantly reduce the rate of serious injuries and deaths and the hazards associated with the use of this product.

Is there a regulation currently in place?  Who administers it?

There is currently no regulation under the Trade Practices Act 1974. 

On 9 July 2002 the Victorian Fair Trading (Safety Standard) (Basketball Rings and Backboards) Regulations 2002 came into force.  The regulations require product labelling to provide a prescribed warning, regarding improper installation or swinging on the ring, to be displayed on the external packaging of all basketball rings and backboards, where those goods are supplied in packaging, or contained on a swing tag or label to be attached to the ring or backboard, where the goods are not packaged; and a prescribed warning not to swing on the ring to be displayed in a prominent position on the backboard.

The prescribed warning to be displayed on the external packaging or attached to the ring or backboard is designed to alert the purchaser of the product to the dangers of improper installation or use.  The prescribed warning to be displayed on the backboard is designed to alert basketball players to the dangers of swinging on the ring.

OPTIONS

There are three options that might be considered at the national level to reduce deaths and injuries associated with basketball rings and backboards:

  1. industry self-regulation (status quo);
  2. consumer education; and
  3. Government regulation mandating standards applicable to basketball rings and backboards.

While the use of basketball rings and backboards has been connected to a number of deaths and injuries, the primary cause of the deaths or injuries has been the misuse of the product rather than any inherent defect in the product.  Consequently banning the supply of the product is not considered to be an appropriate response to address the problem (and would be unlikely to attract community or industry support.)  Banning the supply of basketball rings and backboards is also arguably not possible under the existing provisions in the TPA, as injuries result from misuse of the product rather than from any inherent problem with the products themselves.  Accordingly a TPA ban is not included in the proposed options.

Option 1:  Industry self-regulation

Industry self-regulation involves voluntary action by industry to control the supply of particular products for the benefit of consumers.

The continuing incidences of deaths and injuries associated with basketball rings and backboards demonstrates that self regulation is not working.  There is no industry association to coordinate a self regulation campaign and the products appear to be imported from Asia by a wide range of small importers, who are difficult to identify. There is a clear need for suppliers of basketball rings and backboards to be required to provide adequate warnings outlining the dangers associated with the misuse of basketball apparatus. 

Option 2: Consumer education

Education of consumers can be in different forms and could involve both industry and government participation.  It could be directed towards increasing consumer awareness of problems and dangers connected to the misuse of basketball rings and backboards.

Option 3: Government regulation mandating standards applicable to basketball rings and backboards

The Government has the power to regulate the supply of consumer products under the product safety provisions of the Trade Practices Act 1974 (the TPA) by either prohibiting the supply of unsafe goods or by permitting the supply of goods only if they comply with mandatory safety or information requirements.  TPA mandatory standards are enforced by the Australian Competition and Consumer Commission (ACCC) through surveys and monitoring of the market and legal action where required.

The appropriate regulatory option for dealing with problems associated with the use of basketball rings and backboards is to establish a mandatory consumer product safety standard requiring basketball rings and backboards sold in Australia to have warning labels attached.  The essential characteristics of a warning label are that the label would have to be permanent (ie not easily removed) and be conspicuously visible whenever the product was being used.  This would provide a focused response to the problem and provide a continuing and appropriate warning to consumers of the dangers involved in the misuse of basketball rings and backboards.  The warning labelling introduced by Victoria, and which the Commonwealth proposes to replicate, is attached.

It is established practice to complement the introduction of mandatory TPA standards with a targeted education/information campaign to raise awareness of the serious nature of the potential hazards and how to avoid the associated deaths and injuries.

IMPACT ANALYSIS

Who is affected by the problem and who is likely to be affected by the proposed solution?

Any response to the problem identified in this paper involving the use of basketball rings and backboards would affect all Australian consumers, businesses involved in the supply of sporting goods (importers, distributors and retailers) and government.

Costs and benefits of each option (see table at Attachment B)

Option 1: Industry self-regulation

Industry self-regulation has to date not proven effective in achieving desired outcomes.

Costs

Costs to consumers

It is unlikely that independent businesses will voluntarily stop supplying basketball rings and backboards that do not have key labelling requirements and in consequence consumers may inadvertently purchase basketball rings and backboards which fail to provide adequate warnings about the dangers of misuse.  This could lead to a continuation of unacceptable levels of injuries and deaths associated with the product.  Any direct costs which are incurred by businesses through self-regulation will be passed on to consumers as part of the product price.  The cost of providing appropriate warning labels is estimated to be about 50 cents per unit, for a product with an average cost of around $100.

Costs to industry and small business

Industry is required to bear the cost of implementing and monitoring any permanent labelling regime or advertising which is undertaken to forestall the possibility of government regulatory intervention.  If the overseas manufacturers do not agree to incur these costs, they would be borne by importers and passed on to consumers.  For example, there would be costs involved in the development and circulation of a code of practice,.  Previous experience with industry codes of practice such as the Infant and Nursery Products Association of Australia (INPAA) Safe Baby Code suggests that these costs would amount to approximately $20,000 in the first year.

Costs to government

The Government would be subject to criticism for failing to protect the lives of children, teenagers and young adults.  If industry self-regulation were ineffective, there would be a continuing cost to the community involving the supply of health care and other government services as a result of injuries connected with the use of basketball rings and backboards.

Benefits

Consumers and industry might benefit from an increased range of safer products if any self-regulation adopted was effective, and the government would not incur the enforcement costs which would be applicable if any regulatory option were to be adopted.  There could also be unquantifiable savings to government in reduced health care costs, if the self regulation is successful.

Option 2:  Consumer education

It is open to governments to seek to educate purchasers and users of basketball rings and backboards by the publication of posters, leaflets and brochures. Such promotional activities, however, are not of an on-going nature.  It is self-evident that the benefits of educational activities are likely to be proportional to the magnitude of the activities involved.  However, educational activities in relation to hazardous consumer goods usually involve expenditure in the vicinity of $50,000 (incorporating publication of posters and leaflets, accompanied by the use of media releases, public launch by the responsible Minister etc). 

The capacity of educational activities alone to adequately address the ongoing problem of deaths and injuries is considered to be limited.  To be effective, it has been argued that education needs to be on-going and targeted, and this would be most effectively achieved by product labelling which is apparent when basketball rings and backboards are installed and used.

Costs

Costs to consumers

Educational activities by suppliers will have the primary goal of increasing product sales and may therefore not be in the form most appropriate to consumers' needs.  Government funded education may be inadequately targeted if it is directed to point-of-sale and may not have a lasting impact on the manner in which basketball rings and backboards are used by consumers.

There is no direct monetary cost to consumers, only the cost of their time.

Costs to industry and small business

Costs will relate to advertising and product differentiation.  However, these costs would be entered into voluntarily and only if the expected return was greater than the costs.  Small businesses at the retail level are unlikely to be subject to any substantial impact.

Costs to Government

Insofar as misuse of the product has been identified in coronial inquests as being the most significant contributing factor to deaths involving the use of basketball rings and backboards, it is contended by some that attitudes to the use of basketball rings and backboards need to change, and that this can only be achieved through education.  While this is undeniably true, there is no clear consensus on how to achieve changes to community paradigms in a cost efficient manner.

Government would be responsible for direct costs involved in funding any consumer education campaign it undertakes.  A suitable strategy might comprise, for example, the publication and distribution of information leaflets to basketball sporting organisations, schools, community health clinics, hospitals, and advertising in sporting magazines.  The costs of such a program could potentially be substantial but are not quantifiable, as their magnitude would depend on the nature and extent of the educational activities envisaged.  The cost of a 'normal' campaign for a hazardous consumer product would approximate $50,000 (whether as a stand alone educational activity, or to support the introduction of a regulatory initiative).  The value of any such campaign needs to be assessed against the perhaps differing goals of the specific educational activity.

Benefits

Benefits to consumers

Information would be available to consumers on the risks posed to users by the misuse of basketball rings and backboards.  The campaign would also inform consumers on how to minimise risks associated with the use of these products.  The benefits of consumer education (if directed broadly enough) are likely to flow to a wider class of consumer than simply those purchasing new products, and would benefit consumers who might be using second-hand products.

Benefits to industry and small business

The firms that supply basketball rings and backboards with the labelling requirements warning about dangers involved in their misuse would be able to use consumer knowledge to differentiate their product from those that are less satisfactory in meeting consumers' needs.  Consumer education has as obvious spin-off, in that it promotes safe usage of a manufacturer's products.  This is obviously in the interests of the manufacturers as it is likely in the long term to reduce costs of product liability insurance, etc. 

The compliance cost involved in ensuring that government regulations are not inadvertently breached would also be avoided.

Benefits to government

Consumer education has the potential to reduce injuries and deaths by raising consumer awareness of the risks associated with the inappropriate use of basketball rings and backboards.  An education campaign could also be effective to convince parents to prohibit slam dunk manoeuvres.  Government would also benefit from the commensurate reduction in health care and other support costs associated with child/teenager/young adult injuries or deaths.


Option 3:  Government regulation

Costs

Costs to consumers

Government regulation would eliminate from the new product market the basketball rings and backboards that did not carry permanent warning labels and may conceivably reduce product choice if manufacturers decide to withdraw from the market.  In doing so, it may increase the overall cost of the product to consumers as the costs to business might reasonably be expected to be passed on through the supply chain.  As previously mentioned, the costs involved are not great, at approximately 50 cents per label.

Costs to industry and small business

The manufacturing costs of basketball rings and backboards will increase, as manufacturers will be required to supply goods which comply with mandated labelling requirements.  The increased cost to suppliers of purchasing complying products would be passed on to consumers in increased retail prices.  However as the average price of the product is $100, the impact on prices would be 0.5%.  The effect of this on purchasing patterns is difficult to estimate, however, as there is no evidence whether or not the demand for these products is price sensitive.

Costs to government

The introduction of a mandatory safety standard would result in a cost to government in the administration and enforcement of the requirements.  Costs include the establishment and review of the regulation, the associated education campaign to promote awareness of the requirement in the industry and the community and enforcement activities such as market surveys and legal proceedings to ensure compliance.

Based on Australian Competition and Consumer Commission (ACCC) estimates, the cost of mandatory standard enforcement using visual compliance checks of the product in the marketplace would be about $20,000 per annum. 

The introduction of the proposed safety standard would be supported by an awareness campaign.  Based on ACCC estimates and previous Product Safety experience in promoting awareness of other mandatory safety standards, the demand for information brochures on basketball rings and backboards might total 100,000 copies per year, at an estimated annual cost of $5,500.  The cost of adding the information to the Departmental website would be about $1000 and the cost of advertising in magazines to raise awareness of the safety standard and safety hazards would be about $5000pa.

Combining these costs with the establishment costs amortised over the proposed 5 year duration of the mandatory standard, the overall cost to government for administration of the proposed standard and the supporting advertising campaign is estimated to be about $34,000 pa.


Benefits

Benefits to consumers

The proposed safety standard would benefit consumers by ensuring that all new basketball rings and backboards have specified key permanent warning labelling features, making it a constant reminder to consumers of the need to be safety aware when using these products.  An additional cost of 50 cents per item is more than compensated for by the value of the safety warning to the consumer.

The introduction of a mandatory safety standard would be supported by a consumer education campaign similar to that described above.  The campaign would advise consumers and suppliers of the mandatory standard and provide advice on the safe use of basketball rings and backboards.

Benefits to industry and small business

Mandating the warning labelling requirements will establish a minimum standard throughout the supply chain, making it easier for retailers and small businesses to determine whether particular products should be supplied.  Suppliers would also benefit from enhanced consumer confidence in the product.

Benefits to Government

Government regulation would ensure that all new basketball rings and backboards on the market comply with key safety labelling requirements, thereby maximising the potential for these safety features to reduce injuries and deaths.

The well being of the community in general is a keystone of government policy, and the establishment of the regulation will reassure the community that product safety is being addressed.  Although some consider it inappropriate to put monetary value on life,  it can be inferred from a study on the value of a life that each child saved from accidental death can reasonably be valued at $2.5 million for Australian public policy purposes (Abelson, P., 2003 'The value of life and health for public policy', Economic Record 79, S2-S13).

While the savings to the community achieved through the avoidance of death and injury might better be categorised as a saving for the community generally rather than as a saving to government, it should be noted that the number of lives likely to be saved as a result of government regulatory intervention is impossible to estimate, as deaths and injuries may obviously continue to occur as a result of misuse of products already installed.  In consequence the savings to the community flowing from the mandatory labelling of basketball rings and backboards are not quantifiable.

CONSULTATION

Consultations were held with the following:

suppliers of basketball rings and backboards;

Archicentre (Royal Australian Institute of Architects);

Australian Building Codes Board;

Australian Consumers Association;

Australian Retailers Association;

Australian Institute of Building Surveyors;

Australian Local Government Association;

Basketball Australia;

Department of Education, Science and Training;

Engineers Australia;

Kidsafe;

Local Government Association;

Manufacturers and importers;

National Basketball League;

Standards Australia; and

The Ministerial Council on Consumer Affairs (MCCA), the Standing Committee of Officials of Consumer Affairs (SCOCA), the Consumer Products Advisory Committee (CPAC) (these bodies comprise Commonwealth, State, Territory and New Zealand Consumer Affairs/Fair Trading Ministers/officers).

The regulation impact statement was also made available to the general public on the ACCC website.

All parties consulted were broadly supportive of a mandatory standard.  Some suggested that the standard should include engineering features.  However the ACCC considers that the inclusion of such features is outside the scope of the present proposal, and that Standards Australia should be asked to look into the development of a design and engineering standard.

CONCLUSION AND RECOMMENDED OPTION

A mandatory consumer product safety standard

A mandatory consumer product safety standard under the Trade Practices Act 1974 appears the most efficient means of addressing the hazards associated with basketball rings and backboards, insofar as the economic and social benefits of reducing the incidence of death and injuries will substantially outweigh any direct or indirect costs involved.

The cost of the preferred option is $34,000 and the benefits $2.5 million.  Option 2 is a higher cost at $50,000.  Option 1 would be ineffective, mainly because there is no industry association and a large number of small importers.

Other options which seek to achieve the desired outcome are unlikely to be as effective as permanent labelling, as users of basketball rings are not provided with an ongoing reminder that swinging on the ring may cause serious injury or death.  While mandatory labelling may not necessarily reduce the incidence of deaths and injury, it possesses the potential to do so, whereas other options do not.  It is expected to reduce risk taking behaviour.

The issue was discussed at the April 2005 meeting of the Consumer Products Advisory Committee (CPAC), an advisory body to the Ministerial Council on Consumer Affairs, and members agreed:

*        to work towards a uniform product safety law based on the Victorian regulation; and

*        to develop a national public education campaign, in cooperation with State and Territory Consumer Affairs/Fair Trading agencies, and relevant sport and recreation agencies.

The proposed mandatory standard would in essence mirror the Victorian Fair Trading (Safety Standard) (Basketball Rings and Backboards) Regulations 2002.  The standard will require basketball rings and backboards for basketball rings to be accompanied by the following warning and symbol :

"WARNING: IMPROPER
INSTALLATION OR SWINGING ON THE
RING MAY CAUSE SERIOUS INJURY
OR DEATH"

If a basketball ring or backboard for a basketball ring is contained in a package the above warning must be marked in a conspicuous position on the package or marked on a label affixed in a conspicuous position on the package.  If a basketball ring or backboard is not contained in a package the warning must be marked:

(a)  in a conspicuous position on the ring or backboard; or

(b)  on a label affixed in a conspicuous position to the ring or backboard; or

(c)  on a tag affixed in a conspicuous position to the ring or backboard.

A backboard for a basketball ring must also be accompanied by a warning that consists of the following words:

WARNING: SWINGING ON THE RING
MAY CAUSE SERIOUS INJURY OR
DEATH 

The warning must be marked in a permanent manner and in a conspicuous position on the backboard or in a permanent manner on a label affixed in a permanent manner and in a conspicuous position on the backboard.

IMPLEMENTATION AND REVIEW

The mandatory standard will be implemented by registration on the Federal Register of Legislative Instruments.  As a legislative instrument subject to the Legislative Instruments Act 2003, it will be exposed to 'sunsetting' pursuant to the relevant provisions of that Act (ie 10 years) and will require review at the relevant time to determine the need for its continued application.  However, ACCC policy is to review standards at least every five years, or sooner if market forces make review essential.

Additional to this statutory review requirement, it is also intended that the adoption of a mandatory labelling regime be examined further and evaluated after five years of operation to determine whether its effectiveness can be enhanced by other supplementary measures. 

 


ATTACHMENT A

 

WARNING LABELLING FOR BASKETBALL RINGS AND BACKBOARDS

 

A basketball ring and a backboard for a basketball ring must be accompanied by a warning that consists of the following words:

"WARNING: IMPROPER INSTALLATION OR SWINGING ON THE RING MAY CAUSE SERIOUS INJURY OR DEATH";

and the following symbol:

                            

The warning must be clearly legible, in upper case, in red letters on a white background and:

                               the word "WARNING:" must be in characters at least 15 millimetres in height; and

                               the words and expressions following "WARNING:" must be in characters at least 10 millimetres in height.

The symbol must be:

                               clearly legible; and

                               on a white background and consist of a red circle and a red diagonal line, each not less than 5 millimetres in width, a black basketball ring, a backboard to the basketball ring outlined in black and a black figure; and

                               of a diameter of not less than 120 millimetres from outer edge to outer edge of the circle.

If a basketball ring or a backboard for a basketball ring is contained in a package, the warning must accompany the ring or backboard by being marked in a conspicuous position on the package or marked on a label affixed in a conspicuous position on the package.

If a basketball ring or a backboard for a basketball ring is not contained in a package, the warning must accompany the ring or backboard by being marked:

*        in a conspicuous position on the ring or backboard; or

*        on a label affixed in a conspicuous position to the ring or backboard; or

*        on a tag attached in a conspicuous position to the ring or backboard.

A backboard for a basketball ring must also be accompanied by a warning that consists of the following words:

"WARNING: SWINGING ON THE RING MAY CAUSE SERIOUS INJURY OR DEATH".

The warning must:

*        accompany the backboard by being marked:

                                  (i)  in a permanent manner and in a conspicuous position on the backboard; or

                                 (ii)  in a permanent manner on a label affixed in a permanent manner and in a conspicuous position on the backboard; and

*        be clearly legible; and

*        be in characters at least 10 millimetres in height.

 


ATTACHMENT B

TABLE OF COSTS AND BENEFITS

 

 

Option1: Industry Self Regulation

Option 2: Consumer Education

Option 3: Regulation (preferred
option)

COSTS

Consumers

Purchase of products which fail to provide adequate warnings about the dangers of misuse, leading to a continuation of unacceptable levels of injuries and deaths.

Direct costs incurred by industry will be passed on to consumers as part of the product price.  The cost of providing warning labels is estimated as 50 cents per unit, for a product with an average cost of around $100.

 

Educational activities by suppliers will have the primary goal of increasing product sales and may not be in a form appropriate to consumers' needs.

Government funded education may be inadequately targeted if it is directed to point-of-sale and may not have a lasting impact on the manner in which basketball rings and backboards are used by consumers.

There is no direct cost to consumers, only the cost of their time.

Regulation would eliminate from the new product market products that do not carry permanent warning labels and could reduce product choice if manufacturers decide to withdraw from the market. 

Regulation may increase the overall cost of the product to consumers as the cost to industry might reasonably be expected to be passed on through the product chain.  The costs involved are not great, at approximately 50 cents per label, and is only 0.5% of the cost of the item.

 

Industry and Small
Business

Development and circulation of an industry code of practice would amount to approximately $20,000 in the first year.

Labelling would cost approximately 50 cents per unit

Costs will relate to advertising and product differentiation.  However, these costs would be entered into voluntarily and only if the expected return was greater than the costs.  Small businesses at the retail level are unlikely to be subject to any substantial impact.

Manufacturing costs will increase as manufacturers will be required to supply goods which comply with mandated labelling requirements.  These costs are estimated at about 50 cents per label.

 

Government

The Government would be subject to criticism for failing to protect the lives of children, teenagers & young adults. 

If industry self-regulation were ineffective there would be a continuing cost to the community involving the supply of health care & other government services as a result of injuries connected with basketball rings and backboards.

Government would be responsible for direct costs involved in funding any consumer education campaign it undertakes.  The magnitude of the costs would depend on the nature and extent of the educational activities envisaged.  The cost of a 'normal' campaign for a hazardous consumer product would approximate $50,000 (whether as a stand alone educational activity, , or to support the introduction of a regulatory initiative) but the value of any such campaign needs to be assessed against the perhaps differing goals of the specific educational activity.

The introduction of a mandatory safety standard would result in costs to government in the administration and enforcement of the requirements. Costs include the establishment and review of the regulation, the associated education campaign to promote awareness of the requirement in the industry and the community and enforcement activities such as market surveys and legal proceedings to ensure compliance.

Based on ACCC estimates, the cost of enforcement using visual compliance checks of the product in the marketplace would be around $20,000 per annum.
The introduction of the proposed standard would be supported by an awareness campaign.  Cased on previous product safety experience in promoting awareness of standards, the demand for information brochures might total 100,000 copies per year, at an estimated annual cost of $5,500.  The cost of adding the information to the ACCC website would be about $100 and the cost of advertising in magazines to raise awareness of the safety standard and safety hazards would be about $5000 pa.
Combining these costs with the establishment costs amortised over the proposed 5 years duration of the mandatory standard, the overall cost to government for administration of the proposed standard and the supporting advertising campaign is estimated to be about $34,000 pa. 

 

BENEFITS

Consumers

Consumers might benefit from an increased range of safer products if self regulation was effective

Information would be available to consumers on the risks posed to users by misuse of basketball rings and backboards .  The campaign would also inform consumers on how to minimise risks associated with the use of these products.  The benefits of consumer education (if directed broadly enough)are likely to flow to a wider class of consumer than simply those purchasing new products, and would benefit consumers who might be using second-hand products.

The proposed safety standard would benefit consumers by ensuring that all new basketball rings and backboards have specified key permanent warning labelling features, making it a constant reminder to consumers of the need to be safety aware when using these products.  An additional cost of 50 cents per item is more than compensated for by the value of the safety warning to the consumer.

 

Industry and Small Business

Industry might also benefit from an increased range of safer products.

The firms that supply the products with the labelling requirements warning about dangers involved in their misuse would be able to use consumer knowledge to differentiate their product from those that are less satisfactory in meeting consumers needs.  Consumer education promotes safe use of a manufacturer's products which is obviously in the interests of the manufacturers as it is likely in the long term to reduce costs of product liability insurance.

Mandating the warning labelling requirements will establish a minimum standard throughout the supply chain, making it easier for retailers and small businesses to determine whether particular products should be supplied.

Suppliers would also benefit from enhanced consumer confidence in the product.

 

Government

The government would not incur the enforcement costs which would be applicable if any regulatory option were to be adopted.

There could also be unquantifiable savings to government in reduced health care costs.

Consumer education has the potential to reduce injuries and deaths by raising consumer awareness of the risks associated with the inappropriate use of basketball rings and backboards.

Government would also benefit from the commensurate reduction in health care and other support costs associated with child/teenager/ young adult injuries or deaths.

Government regulation would ensure that all new basketball rings and backboards on the market comply with key safety labelling requirements, thereby maximising the potential for these safety features to reduce injuries and deaths.

The well being of the community in general is a keystone of government policy, and the establishment of the regulation will reassure the community that product safety is being addressed. 

It can be inferred from an Abelson study on the value of a life that each child saved from accidental death can reasonably be valued at $2.5 million for Australian public policy purposes.

CONCLUSION

 

Not workable, mainly because of no industry association

At a cost of $50,000 the benefits are not as good as option 3.

$34,000 cost and $2.5 million benefit

 

 


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