02 May 2018


'What do trial judges cite? evidence from the new south Wales district court' by Russell Smyth in (2018) 41(1) University of New South Wales Law Journal examines
the citation practice of the New South Wales District Court, using all decisions reported on AustLII/Caselaw NSW decided between 2005 and 2016. This study is the first to examine the citation practice of an 'inferior' trial court. The study suggests some important differences between the citation practice of the New South Wales District Court and what existing studies have found about the citation practice of superior courts in Australia. The proportion of citations to decisions of the High Court and New South Wales Court of Appeal is higher than in the superior courts. The proportion of citations to the Court's own previous decisions are lower than in the superior courts. The proportion of coordinate citations to courts in other states at the same level in the judicial hierarchy are extremely small. The Court cites fewer secondary sources than is the case in the appellate courts.

01 May 2018

new Australian Data Commissioner

The national Government has released its response to the Productivity Commission Inquiry into Data Availability and Use.

The report was noted here.

The response refers to $65 million over the forward estimates to 'reform the Australian data system and introduce a range of measures to implement the Productivity Commission’s recommendations'.

Three key features:
1. A new Consumer Data Right will give citizens greater transparency and control over their own data 
2. A National Data Commissioner will 'implement and oversee a simpler, more efficient data sharing and release framework. The National Data Commissioner will be the trusted overseer of the public data system' 
3. New legislative and governance arrangements will enable better use of data across the economy while ensuring appropriate safeguards are in place to protect sensitive information
The response refers to 'A new Data Sharing and Release Act'
The Government will introduce laws underpinning a new system for data sharing and release in Australia. This legislation will establish institutional and governance arrangements including Accredited Data Authorities and a trusted user framework to facilitate better sharing of data. The legislative package will set clear rules and expectations for data sharing and release, including making clear when data can be shared, and embedding strong safeguards for sensitive data and effective risk management practices. 
Balancing access and secrecy through a trusted user framework 
The Productivity Commission found, in some cases, secrecy provisions in existing laws could unreasonably hinder data sharing and release for matters of public interest. Australia's secrecy provisions relating to access to and use of identifiable data have been set after thorough consideration of our national interests, and will not be changed without careful consideration. The data sharing and release legislative package will provide a robust authorisation process, balancing the operation of secrecy provisions with data sharing and release for public interest purposes. Importantly, the new legislation will not affect existing protections applying to particularly sensitive data, such as national security and law enforcement data. A number of key data safeguards will apply.
Presumably development of the Act will involve consultation, with the response stating
The Government agrees to actively engage with the community on matters related to data availability and use. Engagement is key to the OpenGovernment National Action Plan 2016–2018 and the Data Integration Partnership for Australia, and will be acore function of reformed institutional and governance arrangements. The Open Government National Action Plan 2016-2018 commits to providing better access to government-held information and data, while improving privacy risk management capability across the public sector.
A position to be called the National Data Commissioner will be established alongside 'a new data sharing and release framework' (and alongside the OAIC?).
This will streamline the way public data is shared and released, which will in turn:
  • Promote greater use of data 
  • Drive economic benefits and innovation from greater use of data, and 
  • Build trust with the Australian community about the government’s use of data.
Realising benefits from data for all Australians needs a powerful champion with a mandate to unlock the productivity benefits of valuable datasets, identify opportunities for improved data use, and build national frameworks and guidelines. 
Many benefits of better data use within governments arise from improvements in economic productivity—by providing a stronger evidence base, more efficient systems, and competitive product and service offerings in the market economy. However, a balance must be struck between utilising data for the benefit of the Australian economy and society, and ensuring community trust in the way government uses data. 
The National Data Commissioner will provide a consistent and well-defined approach to data management, including proactively managing risks, dealing with complaints and monitoring the integrity of the data sharing and release framework. This will increase community trust and confidence in the way government manages and uses its data. 
The Australian Bureau of Statistics will provide technical guidance and support to the National Data Commissioner. 
A new National Data Advisory Council will advise the National Data Commissioner on ethical data use, technical best practice, and industry and international developments. 
A cultural change is required from agencies to ensure greater data sharing within government and support for whole-of-government initiatives and reforms. The new data sharing and release framework will support a drive for cultural change within government towards greater data sharing while mitigating the risks associated with sharing of personal data. Better legislative and governance arrangements will ensure government gets the maximum benefits from the data it already holds and collects while maintaining public trust in how data is being used. This will enable government to meet community expectations to be efficient and to use the data it already has more productively.
Let's trust that the enthusiasts within the Prime Minister's Department - where there is a disjunct between the suits and digital hipsters - heed the lessons of the UK Care.Data debacle.

Credit 'Fixing' and the ACL

The Federal Court has found that 'credit repair' business Malouf Group Enterprises Pty Ltd and its sole director, Jordan Francis Malouf, breached the Australian Consumer Law during the period January 2014 to December 2015 by making false and misleading representations and by engaging in unconscionable conduct. The Court described the conduct as "cynical and calculated"

 Action was taken by the Australian Securities and Investments Commission (ASIC) on a delegated basis from the ACCC under the ACL.

The penalty for that misleading and unconscionable conduct was $1.7 million, with $100,000 towards ASIC's costs. In determining the penalties, the Court took into account an enforceable undertaking in which the respondents will refund $1.1 million to consumers who did not have any negative listings on their credit files when they entered into contracts with Malouf Group during the 2014-2015 period. The penalties were towards the limit of the financial resources available to the respondents.

Malouf Group claimed to “clean up” a consumer's credit history by removing negative listings. It primarily operated through on-line and by telephone sales. The Court accepted ASIC's  allegation that the Malouf Group sales tactics misrepresented the services that Malouf Group actually provided because Malouf Group had not ascertained if the consumer had negative listings or if any negative listings were able to be removed.

The Court found that Malouf Group engaged in misleading or deceptive conduct in inducing consumers to enter into contracts, with  false representations on Malouf websites regarding its standing as a credit repair company; the display of false testimonials on the Malouf Group websites; the making of false representations as to Malouf Group's ability to clean up a consumer's credit history; and the making of false representations in Malouf' Group's sales scripts about the work  done for the consumer prior to the payment of the Malouf Group fee.

It characterised  examples of the tactics used to induce consumers to enter into contracts as "disturbing and unconscionable". It found that Mr Malouf was knowingly involved in the contraventions of the Australian Consumer Law, having devised and implemented the business model of Malouf Group; approved the content of the websites and advertising; approved the content of the sales scripts; and was involved in the training and supervision of sales staff to ensure that they followed the sales scripts.

APRA report on Commonwealth Bank

APRA has very belatedly responded to banking sector problems - evident in hearings of the current Hayne Royal Commission - with a report on the Commonwealth Bank.

Scholars of regulatory theory, whistleblowing and consumer protection might wonder what APRA has been doing up till now ... and whether it will in future engage more effectively with its regulatory responsibilities.

The Executive Summary in the report states
Community trust in banks has been badly eroded, globally and in Australia.
Globally, the financial crisis exposed a series of corporate scandals in banks. Governance weaknesses, serious professional misbehaviour, ethical lapses and compliance failures have resulted in substantial financial losses and record fines and penalties. ‘Conduct risk’ has entered the lexicon of bank Boards and regulators as a clear and present danger.
Banks in Australia were resilient through the crisis but their conduct is far from unblemished. Failings in the provision of financial advice, dubious lending practices, mis-selling of financial products, shortcomings in the setting of benchmark interest rates and compliance breaches have undermined community trust, drip by corrosive drip. Trust is the currency of banks, and improper conduct that undermines confidence or causes harm to customers devalues that currency.
The Commonwealth Bank of Australia (CBA) has acquired the status of a financial icon, built on its history, its continued financial success and its innovation in customer-facing technology. As Australia’s largest financial institution, CBA touches a wide range of Australians. Hence, the community holds high expectations for the institution, as does CBA itself. Nonetheless, it too has had a succession of conduct and compliance issues – AUSTRAC’s legal action a recent high-profile example – and these expectations have not been met. CBA has ‘fallen from grace’. How can this happen in a bank of CBA’s stature and sophistication? This, fundamentally, is the question that the Inquiry Panel has been asked to address.
There is no simple answer, no ‘silver bullet’ remedy. A complex interplay of organisational and cultural factors has been at work. However, a common refrain has emerged from the Panel’s intensive analysis and enquiries over the past six months: CBA’s continued financial success dulled the senses of the institution.
This dulling has been particularly apparent, at least until recently, in CBA’s management of its non-financial risks (that is, its operational, compliance and conduct risks). These risks were neither clearly understood nor owned, the frameworks for managing them were cumbersome and incomplete, and senior leadership was slow to recognise, and address, emerging threats to CBA’s reputation. The consequences of this slowness were not grasped.
The Panel has identified a number of tell-tale markers:
  • inadequate oversight and challenge by the Board and its gatekeeper committees of emerging non-financial risks; 
  • unclear accountabilities, starting with a lack of ownership of key risks at the Executive Committee level; 
  • weaknesses in how issues, incidents and risks were identified and escalated through the institution and a lack of urgency in their subsequent management and resolution; 
  • overly complex and bureaucratic decision- making processes that favoured collaboration over timely and effective outcomes and slowed the detection of risk failings; 
  • an operational risk management framework that worked better on paper than in practice, supported by an immature and under-resourced compliance function; and 
  • a remuneration framework that, at least until the AUSTRAC action, had little sting for senior managers and above when poor risk or customer outcomes materialised (and, until recently, provided incentives to staff that did not necessarily produce good customer outcomes).
In the environment of continued financial success, two critical voices became harder to hear, leaving CBA vulnerable to missteps. One was the ‘voice of risk’, particularly for non-financial risks. The fact that there had been no large loss-making events in this area (though reputational damage clearly), the heavy emphasis of the risk function on financial risks, and the ineffective operational risk and compliance frameworks, muted that voice.
The other was the ‘customer voice’. Notwithstanding the customer focus enshrined in CBA’s Vision and Values, and its industry-leading customer satisfaction scores, the customer voice (in particular, customer complaints) did not always ring loudly in decision-making forums and product design.
In the Panel’s view, cultural factors lie at the heart of these shortcomings. Four broad and interlinked cultural traits stand out. First, and obviously, a widespread sense of complacency has run through CBA, from the top down. CBA’s first ranking on many financial measures created a collective belief within the institution that CBA was well run and inherently conservative on risk, and this bred over-confidence, a lack of appreciation for non-financial risks, and a focus on process rather than outcomes. CBA was desensitised to failings with customers. Delays in (or premature closing of) risk and audit issues and the late delivery of projects were readily tolerated, with limited remuneration or other consequences.
Secondly, CBA has been reactive – rather than proactive and pre-emptive – in dealing with risks. Operational risk and compliance issues tended to receive attention only once they had emerged clearly or reputational consequences began to rear, but that attention did not always guarantee timely and effective resolution. A slow, legalistic and reactive, at times dismissive, culture also characterised many of CBA’s dealings with regulators. Taken together, complacency and reactivity led to a sense of ‘chronic ease’ in CBA, rather than the ‘chronic unease’ that has proven effective in driving safety cultures in other industries.
Thirdly, CBA became insular. It did not reflect on and learn from experiences and mistakes (its own and others’), including at Board and senior leadership levels. Lessons from previous incidents have not been readily captured or shared across CBA. A lack of intellectual curiosity and critical thinking about the ‘bigger picture’ and the full depth of risk issues inevitably limited CBA’s ability to learn, anticipate and adapt. CBA turned a tin ear to external voices and community expectations about fair treatment.
The fourth cultural trait is the collegial and collaborative working environment at CBA, which places high levels of trust in peers, teams and leaders. Reinforcing this is the significant value placed on the ‘good intent’ of staff. These are positive elements of a sound culture. However, they have had a downside. Pursuit of consensus has lessened constructive criticism and has led to slower decision-making, lengthier and more complex processes, and a slippage of focus on outcomes. It has also impeded accountability and the individual ownership of risk issues. Trust has not been continually validated through strong metrics, healthy challenge and oversight. Good intent has been too readily used to excuse poor risk outcomes.
The Panel has made a series of specific recommendations designed to strengthen governance, accountability and culture within CBA. They focus on some key levers of change:
  • more rigorous Board and Executive Committee governance of non-financial risks; 
  • exacting accountability standards reinforced by remuneration practices; 
  • a substantial upgrading of the authority and capability of the operational risk management and compliance functions; 
  • injection into CBA’s DNA of the ‘should we?’ question in relation to all dealings with and decisions on customers; and 
  • cultural change that moves the dial from reactive and complacent to empowered, challenging and striving for best practice in risk identification and remediation.
The Panel has also identified a number of ‘better practice’ benchmarks that CBA should aspire to meet.
CBA had acknowledged shortcomings ahead of the AUSTRAC action and this Inquiry. Remediation had begun, with a particular focus on upgrading risk management and compliance. These efforts will need to be substantially enhanced under CBA’s new leadership.
CBA’s new remediation program is ambitious and on a scale that exceeds previous risk management initiatives. In some areas, it has anticipated the Panel’s recommendations; in other areas, however, it remains a blank canvas. To succeed, it will be critical that the program breaks the mould – it cannot succumb to the weight of bureaucracy, unclear accountabilities and porous deadlines that have challenged earlier CBA projects. Milestones must be clear, realistic, and enforced. Senior leaders must take ownership and their remuneration should be linked to successful delivery. 
Regaining community trust will require time, hard work and an undistracted risk and customer focus. Many of CBA’s working practices and cultural traits are deeply ingrained and must be squarely addressed if the ‘reset’ of the institution recommended by the Panel is to succeed. The CBA Board must be up to this challenge, and the signs are positive. Significantly, the ‘light hand on the tiller’ of earlier years has been replaced by a firmer and more visible hand and oversight and challenge has intensified. In the end, however, it will be results that count.
The Report that follows may read as a long catalogue of shortcomings. That would be too narrow a read. The Panel acknowledges the undoubted financial strength and acumen of the CBA, its global standing, and the avowed commitment of staff to servicing customers. CBA needs to translate this financial strength and good intent into better meeting the community’s needs and the standards expected of a systemically important bank in Australia. The Report is a road map for this journey.

30 April 2018

ACCC Dairy Sector Restructuring report

The ACCC has released its final report regarding investigation of the Australian dairy industry, calling for changes to the regulatory framework to address substantive market failure.

The report refers to ...
significant imbalances in bargaining power at each level of the dairy supply chain. This begins with the relationships between retailers and dairy processors, and progresses down to the relationship between processors and farmers.
The ACCC has identified a range of market failures resulting from the strong bargaining power imbalance and information asymmetry in farmer-processor relationships. These features of the industry result in practices which ultimately cause inefficiencies in dairy production. Neither the existing provisions of the Competition and Consumer Act 2010 (CCA), nor a voluntary code of conduct, sufficiently address these market failures. Therefore, the ACCC makes eight recommendations for improved transparency and allocation of risk in the commercial relationship between Australian dairy processors and farmers. Most significantly, the ACCC recommends that a mandatory code of conduct be introduced to address the market failures we have identified.
The report states
The typical Australian dairy farm is a family owned and operated enterprise which involves high fixed costs and requires year-round intensive work amid uncertain and sometimes damaging climate conditions. For most dairy farmers, profitability is uncertain and subject to many variables beyond their control.
Many farmers believe that the major supermarkets pricing their milk at $1 per litre devalues the work they, their families and staff do to consistently produce high quality milk. The ACCC acknowledges and respects these concerns. $1 per litre is an arbitrary price that has no direct relationship to the cost of production for the supply of milk by farmers and processors to the supermarkets.
Recognising these concerns, the ACCC conducted an in-depth examination of the effects of retail pricing along the dairy supply chain. This included the use of compulsory information gathering powers to obtain data and documents from supermarkets and processors from FY2010 to FY2016, and summonsing all relevant processing and retailing businesses to give evidence under oath in private hearings.
The ACCC did not obtain any evidence that supermarket pricing, including $1 per litre milk, has a direct impact on farmgate prices. Importantly, we found that contracts for the supply of private label milk allow processors to pass the farmgate price paid to farmers through to the wholesale prices they charge to retailers. This means that processors do not have an incentive to reduce farmgate prices as a result of the lower wholesale prices they receive for private label milk, as the farmgate prices are passed through to the supermarkets.
Further, farmers’ lack of bargaining power means that they are unlikely to benefit from an increase in the retail (or wholesale) prices of private label milk or other dairy products. Even if processors were to receive higher wholesale prices from sales to supermarkets, this does not mean the processors will pay farmers any more than they have to secure milk.
Farmers’ ability to capture their appropriate share of profits will, as in all industries, depend on their bargaining power. As noted above, most dairy farmers have little bargaining power and limited scope to reposition their businesses or switch to a different farm enterprise. Farmers are also disadvantaged by a significant imbalance in the amount of pricing, market and product information available to them compared with processors. Processors are also far better informed about the minimum price that farmers are likely to accept than farmers are about the maximum price that processors are willing to pay. These information asymmetries mean that farmers are more likely to settle for a good offer rather than a better offer that could be available if they were better informed.
We have found that the bargaining power imbalance and this information asymmetry result in practices that transfer disproportionate levels of risk to farmers and soften competition between processors. These include complex and poorly timed pricing information, and contract terms which deter switching. These features add to uncertainty of farm income and make it difficult for farmers to identify and act when it is in their interests to switch to a competitive offer from another processor.
An example of this risk transfer was the retrospective price step-downs in 2016, which demonstrated that contractual arrangements between processors and farmers are structured in a way that allows processors to lessen the impact of their poor commercial decisions by retrospectively reducing the price they pay for farmers’ milk, long after the milk has left the farm.  ... 
Two main concerns arise from the ACCC’s key findings. First, bargaining power imbalances deter productivity-enhancing investments by farmers if they are unable to capture a sufficient share of the returns to make their investment worthwhile. Second, restrictions on switching soften competition between processors and reinforce farmers’ poor bargaining position.
Following consultation with the industry on our interim findings and recommendations, the ACCC concludes that a mandatory code of conduct would improve the quality of information and price signals, enable fairer allocation of risk, and remove restrictions on farmers’ ability to switch processors. While the introduction of a mandatory code will not overcome farmers’ relative bargaining disadvantage, it will mitigate some of the significant negative consequences. The removal of barriers to switching will also enhance existing competition between processors for raw milk.
Most major dairy processors are now corporations and not farmer-based cooperatives. However, industry practices have not substantially changed to reflect that processor and farmer are interests are no longer closely aligned. A mandatory code will assist this transition, by clearly setting out the rights and obligations of farmers and processors.
A change to industry practices to the benefit of farmers will mean some loss of bargaining power for processors relative to farmers. As expected, therefore, most processors opposed this recommendation. However, having carefully considered the submissions opposed to this recommendation, we consider that a mandatory code of conduct can be designed in a manner that improves the efficiency of the industry without substantial regulatory burden on processors.
It goes on to comment
Supermarkets have significant bargaining power in their dealings with processors in most circumstances. This is reflected in the low wholesale prices supermarkets are able to negotiate and the terms of supply agreements between supermarkets and processors. Due to their bargaining power, supermarkets also have significant control over the level of risk they choose to be exposed to and the risks they pass onto processors. The type and extent of the risks that processors are exposed to depends on the products they manufacture and the nature of their wholesale supply agreements with customers. These include, for instance, exports, long term private label contracts with supermarkets or short term domestic supply agreements. Processors that are able to diversify by producing a variety of products and supplying a mixture of international and domestic customers reduce their exposure to specific risks.
Processors that mainly supply fresh dairy products for domestic consumption generally have more certainty about wholesale prices. As a result they are more likely to offer farmers fixed price contracts, which results in more price certainty for farmers. However, these processors face some uncertainty over continuity of supply to supermarkets which can limit their appetite for offering multi-year supply contracts to farmers. In recognition of the significant imbalance in bargaining power between supermarkets and their suppliers, including processors, supermarkets’ dealings with processors are presently governed by the Food and Grocery Code of Conduct.  This is a prescribed voluntary code under the Act.   Processor discretion to vary prices allocates disproportionate risk to farmers
Processors have significant bargaining power over farmers. Dairy farm businesses are typically small operations supplying much larger and financially stronger processors. Further, as raw milk is an essentially generic product, processors’ options for acquiring milk far outweigh farmers’ options for selling it. This makes it easier for a processor to threaten to not purchase from farmers in negotiations. This is aggravated by the perishable nature of milk, which prevents farmers from withholding supply to negotiate better terms with processors. Consequently, farmers are rarely able to negotiate contracts or prices with processors.
The bargaining power imbalance is reflected in farmgate prices, milk supply contract terms that favour processors and the extent to which processors can pass on risk to farmers.
Supply contracts between processors and farmers vary significantly, ranging from multi-year fixed- price contracts to arrangements that are effectively day-by-day, relying on terms in the processor’s Supplier Handbook which can be varied by the processor at any time. Farmers can face significant uncertainty in both the price they receive for their milk and the costs they incur to produce milk. This uncertainty can make it difficult for farmers to plan and make investment decisions to increase their productivity.
Farmers in export-focused regions in particular face uncertainty about the milk price they receive from year to year and within a season. This uncertainty, and the associated risks, largely reflects the market uncertainty faced by processors.
Farmers in domestic-focused regions experience greater price certainty, but have greater cost uncertainty due to their stronger reliance on fodder inputs to produce year-round milk.
In general terms, processors that pass on uncertainty and risks to farmers do so by adopting any or all of the following practices: ƒƒoffering only indicative pricing for a contract period (in some cases changing farm gate prices mid- season) ƒƒincentivising flat milk supply (or, penalising seasonal milk supply) ƒƒoffering only short term supply contracts to farmers.
The events of 2016 demonstrate that within-season price step-downs can cause significant detriment to farmers and the industry more broadly. The 2016 step-downs also demonstrate that processors generally have significant discretion when deciding whether to vary farmgate milk prices. The ACCC’s view is that processors should be able to manage their risk exposure during a dairy season without needing to shift this risk to farmers through mid-season milk price adjustments. This might be achieved by processors offering fixed prices for most of the milk they acquire within a season, so that farmers can choose the level of milk price risk their business is exposed to. Partially fixed price contracts have the capacity to reduce price uncertainty for farmers, allowing them to make better planning and investment decisions.
Farmers have limited insight into how farmgate milk prices are set by individual processors. Pricing offers from processors are complicated and often difficult to interpret. Final pricing is determined by many variables. These can be difficult for processors to forecast accurately at the time they make their opening offers to farmers for consideration, meaning that prices received by farmers can vary significantly from both the announced headline farmgate price, and the income estimates provided by the processors. This uncertainty arises even in the absence of mid-season price adjustments such as step-downs.
Dairy farmers rely heavily on income estimates prepared by processors when budgeting for a dairy season. However, they may not be aware of the assumptions made to produce these estimates, and the consequences of these assumptions not being met. As such, some farmers receive payments that are significantly less than they projected. Initial price offers from processors are often made very close to the commencement of, or sometimes after a new contract period has commenced. When combined with the complexity of offers, this timing reduces farmers’ ability to make well-informed decisions about production and budgeting, and whether to switch to a better offer from another processor.
Practices associated with the timing of Opening Price announcements have the potential to soften competition between processors and lower farmgate prices, especially if processors simply follow the price leads of other processors to avoid price competition. However, the ACCC analysed the historical price leadership behaviour of Victorian processors over time, and did not find any clear pattern of price leadership. In particular, we did not find evidence to suggest that Murray Goulburn or any other processor has in the past consistently signalled an Opening Price which other processors have then followed. Announced prices often do not reflect actual prices paid to farmers Processors typically make uniform pricing offers by announcing a single farmgate price at the start of the season. However, the actual prices that individual farmers receive vary significantly from the announced price. Further, farmers each receive different prices from processors despite the opening offers generally being uniform. The extent to which farmers generally receive prices above or below a processor’s announced price varies from processor to processor and from year to year.
A range of factors influence the farmgate milk price paid to farmers. These include: ƒƒCompetition between processors for the acquisition of raw milk—the degree of competition for farmgate milk varies significantly between regions and at different times of the milk production cycle. ƒƒFarm size—the largest farms typically receive better farmgate milk prices than smaller farms. This occurs for a number of reasons, including pricing incentives in contracts being tailored to favour larger farms and in some cases, the largest farms negotiating their own supply contracts. ƒƒIncentives for year-round milk production—processors may set price offers to encourage farmers to adopt a less-seasonal milk supply profile (flat production). The extent to which processors encourage flat production varies between regions and processors. In some regions the ability of a farmer to respond to seasonal pricing has a significant impact on the overall farmgate milk price they receive. ƒƒThe quality of milk produced—quality factors significantly affect the farmgate milk price. .... Overly complex milk supply contracts and price offers, delayed loyalty payments, and price announcements which allow farmers insufficient time to compare alternative offers, also restrict farmers’ ability to compare and switch between processors soften competition at the farmgate. Exclusive supply clauses in milk supply agreements do not restrict farmer switching and can be efficient for both farmers and processors. However, these kinds of clauses can be anti-competitive if they have the purpose or effect of substantially lessening competition in a market.
In discussing the 'supermarket milk wars' the report comments
From 2014 onwards, supermarkets have used their bargaining power to encourage increased competition between processors for the supply of private label milk. This has enabled supermarkets to negotiate lower wholesale milk supply costs and improve their profit margins. While margins earned by supermarkets on private label milk are lower than for many other products, including branded milk, supermarkets still generally sell private label milk at a gross profit, except at times in Tasmania and Queensland (once distribution costs are taken into account). Supermarkets choose to absorb lower and sometimes negative margins in higher cost regions while making higher margins in lower cost states and from more profitable products. This is not particular to their dairy products, and enables them to maintain a competitive and consistent national pricing policy designed to build trust among consumers. In some instances supermarkets stock locally-sourced produce to support farmers in the region. Processors’ gross margins on private label milk have generally fallen, with wholesale prices approaching average production costs. Despite this, processors have continued to compete strongly for private label $ per litre milk contracts because the volumes of milk involved provide economies of scale in production, adding to overall profitability. Processors generally earn significantly higher profits on most other dairy products. These margins vary significantly between products, states and processors, but range between 30 and 60 per cent. Evidence obtained by the ACCC indicates that processors appear to offset lower margins on private label contracts with the higher margins earned on branded products. Margins for most other dairy products have been stable or decreasing since 2011.The ACCC did not obtain evidence of wholesale prices falling below levels that would force efficient processors to exit the industry. Although processors’ gross margins are very small for private label milk, they are positive, and processors are generally profitable overall. ...
Deregulation, and the gradual removal of pricing support for farmers, has had a pronounced impact on milk production and farmer profitability in Australia. Farmgate prices in Queensland and WA fell significantly immediately following deregulation, as processors sought to reduce production volumes to the level required to meet domestic demand. Many higher cost farms exited at this time. The ACCC has found that: ƒƒproduction volumes have trended down in these higher cost regions since price support was removed; the price of private label milk does not appear to have altered this trend ƒƒfarm exit trends in the higher cost regions have not changed in response to the introduction of one dollar per litre milk ƒƒtotal farm numbers, output and profitability trends have not changed since the introduction of one dollar per litre milk.
Competition between processors facilitates the lowest possible wholesale prices. Therefore it is not in the interests of supermarkets to force wholesale prices down to a point which causes processors to be unprofitable and exit. Processors’ margins on private label milk are already small and it may be hard for processors to achieve further cost efficiencies. Private label milk prices also constrain the wholesale prices that processors can achieve with non-grocery customers. This is straining processor profitability in high cost regions where supermarkets sell private label milk at low or negative margins. Therefore, wholesale prices will likely have to rise at some point in the future to maintain processor profitability. In turn, this would require action by the supermarkets which could include: ƒƒincreasing the retail price of private label milk ƒƒabsorbing any losses at the retail level into their own margins ƒƒrestructuring their supply chain in such a way that reduces costs, but maintains incentives for farmers to produce required volumes of raw milk. Contracting practices Contract arrangements in the dairy industry between processors and farmers are favourable to processors and exacerbate most farmers’ weak bargaining power. There appear to be few differences between the contracting options and terms offered by corporate processors and farmer-owned co-operatives. Certain contract terms and the complexity of contracts have limited the ability of farmers to switch between processors, and resulted in a lack of milk price transparency, and the uneven allocation of risk between processors and farmers. Contracts for the supply of raw milk may also contain some terms that are potentially unfair. The Unfair Contract Terms (UCT) legislation introduced by the Australian Government in 2016 provides protections for small businesses contracting with large businesses, and is likely to apply to some of these contracts. The ACCC is presently considering potential issues under the UCT arising from milk supply contracts for the 2017–18 season. Contract termination notice periods and automatic contract rollover clauses are problematic in most circumstances. Notice periods that require farmers to make supply decisions with limited or no access to price and/or other contract information may impact their choices and could also raise concerns under the UCT laws. Automatic rollover clauses may also raise concerns under UCT laws where they can be extended by significant periods of time. Although many milk supply agreements currently contain dispute resolution clauses, these often do not specify the process that is to be utilised to resolve disputes and therefore are rarely satisfactory. Given the significant imbalance in bargaining power between processors and farmers, the ACCC considers that the industry should develop a dispute resolution process that allows for mediation, arbitration or expert determination, where disputes cannot be resolved through negotiation. 
This inquiry has revealed that many farmers are not aware of the terms and conditions of their milk supply contracts or agreements with processors. While the ACCC has concerns with the transparency and fairness of terms, farmers should more actively analyse their supply agreements and obtain relevant legal or financial advice where appropriate, including from representative groups, given the large monetary value involved. That said, their limited bargaining power will ultimately reflect the terms they are offered.
Referring to  collective bargaining and boycotts the report states
Collective bargaining authorisation is a legal tool available to farmers seeking to act collectively to redress bargaining power imbalances. The ACCC considers that although collective bargaining has worked in some circumstances in the dairy industry, it is not a broad remedy to the issues arising from the bargaining power imbalances that exist in the dairy industry.
Processors mostly lack incentives to negotiate with, or enter into agreements with collective bargaining groups. They rarely achieve gains from engaging in collective negotiations and therefore commonly choose not to engage with CBGs.
Processors are often in a position to circumvent engagement with bargaining groups by offering standard form contracts for milk supply to farmers on a ‘take it or leave it’ basis. These contracts are generally favourable to processors. This is not to say that current collective bargaining groups are ineffective or that collective bargaining should be disregarded as an option in the future. The ACCC has examined the history of collective bargaining groups in the dairy sector and found examples that work well. However, some of these groups were formed in unique circumstances, and have features that typically do not apply to most groups. Collective boycott arrangements, if authorised by the ACCC, might improve the negotiating strength of collective bargaining groups and help overcome the shortcomings observed. However, due to the perishable nature of milk, the threat of a boycott may be less effective in bringing dairy processors to the negotiating table and reaching a negotiated outcome than is likely to be the case in other industries. The need for a mandatory code of conduct Market failure in the dairy industry results from the strong bargaining power imbalance between processors and dairy farmers, combined with the information asymmetry between them. These features result in contracting and industry practices that are weighted heavily in favour of processors and which make it difficult for farmers to make efficient investment decisions. Efficient investments are likely to be deterred if farmers do not have the certainty that they will be able to capture a sufficient share of the returns to make their investment profitable. In addition, the barriers to switching between processors that we have outlined above reduce the effectiveness of competition for raw milk, and suppress farmgate prices.
Australia’s competition and consumer laws are able to retrospectively address isolated instances of behaviour and conduct which harm competition and efficiency in the industry. These laws include the unfair contract terms laws and prohibitions on misleading and deceptive, and unconscionable, conduct. However, the problems we have identified in the dairy industry emanate from the broader and inherent bargaining power imbalance across the industry, particularly between processors and farmers. The resulting effects and risks to the industry are widespread, and cannot be effectively addressed through the particular provisions of the CCA. The recently developed Voluntary Dairy Code has led to some processors offering improved terms in milk supply contracts for the 2017–18 dairy season. However, the Voluntary Code is not enforceable and processors can choose not to participate or comply with the code at any time. The ACCC does not consider that the Voluntary Code will adequately address the structural bargaining power imbalance, and the associated contracting practices in the longer term. Further, a process for monitoring compliance with the Voluntary Code currently does not exist, and it is unlikely this code could be effectively enforced in the future.
The ACCC considers the issues identified and examined in this inquiry are of such magnitude as to warrant being addressed by a mandatory code of conduct for processors. It may be appropriate to exempt certain processors from the application of a mandatory code based on market share, revenue or other threshold to ensure that regulatory compliance costs are distributed appropriately relative to businesses’ capacity to manage these.
The ACCC makes several recommendations for improving interactions through the supply chain and supporting market conditions that facilitate efficient production and supply of dairy products -
1. Processors and farmers should acknowledge in writing the terms and conditions for milk supply.
This recommendation seeks to increase the clarity and transparency of the arrangements between processors and dairy farmers by ensuring that farmers are aware of, and acknowledge, the terms and conditions of their supply. This recommendation does not require the creation of any new or additional documents. Acknowledgement may simply take the form of signing or initialling a page in a Supplier Handbook, or sending a processor an email confirming that the contract has been accepted. Most importantly, contract variations that occur during a season or the duration of a contract should not be implemented until a farmer has acknowledged the contract variation in writing. For the avoidance of doubt, this recommendation does not suggest that parties be required to enter into contracts of fixed duration.   
2. Processors should simplify their contracts where possible, including by minimising the number of documents and clearly indicating which documents contain terms and conditions of milk supply. 
For example, in some cases the terms of a Supplier Handbook and a Milk Supply Agreement could be incorporated into a single document. This will provide benefits to processors and farmers, as contracts will be more transparent and easily understood. Clearer price signals can increase certainty and transparency in contracting practices and can improve efficiency in the market. The Australian Dairy Industry Council (ADIC) is in a position to work with processors to identify how contracts can be simplified and ensure this recommendation is implemented. 
3. Processors should provide all contractual documents simultaneously before the commencement of the dairy season or contract term.
Farmers should be provided with all the proposed terms and conditions of their contract—whether that be the Supplier Handbook, any Milk Supply Agreement and/or any other documents that contain terms and conditions—simultaneously and with a sufficient time to properly consider them before the season (or contract term) commences. This will increase transparency and ensure farmers have the necessary information to make supply decisions before they have committed to supply a particular processor. For clarity, this recommendation does not require Opening Price Letters to be provided at the same time as contract documents, but does require Opening Price Letters to be provided before the new contract is entered into and commences. 
4. Milk supply contracts should not include terms which unreasonably restrict farmers from switching between processors. 
Many milk supply agreements contain clauses which act as switching barriers. These include loyalty bonuses or other payments that are paid in respect of one dairy season but require ongoing supply into a new dairy season. This recommendation is currently reflected in the requirements of the Voluntary Code, but this code is not enforceable. 
5. The industry should establish a process whereby an independent body can mediate and arbitrate in relation to contractual disputes between farmers and processors. 
The ACCC recommends ADIC should be responsible for establishing the body, and as part of this process should consult closely with farmer representative groups to determine the scope and procedure of the dispute resolution process. The ACCC also recommends that processors include detailed dispute resolution clauses in farmer contracts that allow for binding determination or arbitration. For the avoidance of doubt, this dispute resolution process should govern disputes between farmers and processors, and between collective bargaining groups and processors. 
6. Farmers should ensure they have properly considered the legal and financial implications of their contracts with processors. 
The average value of a supply contract varies across farms and regions, but in 2015–16 was just under $700 000. The ACCC’s view is that contracts of such significant value should be carefully and actively considered by farmers before they are entered into. However, we understand that in general, many farmers do not seek professional legal or financial advice before entering into a contract, and many are not aware of the terms and conditions of their milk supply agreements that apply to them. Farmer representative groups are well placed to provide general guidance about how common contract terms operate and how these can impact farm income. Because of the significant impact contracts can have on farmers’ operations, farmer representative groups should prioritise facilitating farmers’ general understanding of the procedures and key aspects of supply contracts. This may involve procuring legal advice to assist with providing guidance to farmers at a generalised level. This may include assistance in interpreting contracts, identifying emerging contracting trends and directing farmers to specialist legal and financial advisers. Farmgate milk prices 
7. Processors should publish information identifying how their pricing offers apply to individual farm production characteristics to enable better farm income forecasts. 
Processors need to improve the transparency of their contract pricing terms. This could be achieved through an interactive online model which allows farmers to enter their own production characteristics and obtain a reliable estimate of the final income to be received. Processors should publish information identifying how their pricing offers apply to a standardised set of model farms, accounting for common differences in farm size, seasonality of production, whether production is growing or retracting and how penalties, such as those relating to quality requirements, impact on pricing offers. This will improve transparency of pricing, allow farmers to make better comparisons of processors’ milk supply terms and enhance competition. A mandatory industry code of conduct 
8. A mandatory code of conduct within the act should be established for the dairy industry. 
The ACCC recommends that a mandatory code of conduct to apply to processors be prescribed for the dairy industry. Our view is that the inherent bargaining power imbalance between processors and dairy farmers, combined with unequal availability of information between them (information asymmetry) results in market failure in the Australian dairy industry.
Contracting and industry practices are weighted heavily in favour of processors. This has led to inappropriate allocation of risk, increased potential for inefficient investment decisions by farmers and less effective competition between processors. A mandatory code should therefore be designed to improve transparency and certainty in contracts, set minimum standards of conduct and provide for dispute resolution processes. In particular, a mandatory code should contain obligations on processors to improve the timing and manner of processors’ communication of price and other key information, and increase farmers’ ability to switch in response to significant changes to their trading terms. We have reached this view having considered alternative remedies, including relying on the existing provisions and mechanisms of the CCA (including collective bargaining), and other types of industry codes of conduct, namely a voluntary code or prescribed voluntary code of conduct.
The ACCC notes it may be appropriate to exempt certain processors from the application of a mandatory code based on market share, revenues or another threshold to ensure that regulatory compliance costs are distributed appropriately relative to businesses’ capacity to manage these.

29 April 2018

Cosmetic Surgery Regulation

The NSW Health Department has released a report from the Review of the Regulation of Cosmetic Procedures.

The report features the following recommendations -
1. The Private Health Facilities Regulation is amended to create an offence for a medical practitioner to provide prescribed services and treatments in an unlicensed facility. 
2. The Ministry consult with stakeholders regarding whether any non-surgical cosmetic procedures should be required to take place in a licensed facility. 
3. The Ministry keep the definition of cosmetic surgery under consideration to ensure that it continues to remains appropriate. 
4. The Minister raise the issue of protecting the title “cosmetic surgeon” with the COAG Health Council. 
5. That additional regulation be imposed for extreme body modification procedures relating to informing clients about the risks of the procedure, the measures taken to mitigate the risks and preventing body modification procedures being undertaken on minors. 
6. The Minister write to NSW Fair Trading to raise consumer protection relating to cosmetic procedures. 
7. That a new subclass of S4 medicines used in non-surgical cosmetic procedures in the Act should be created. This would allow regulations to tailor rules relating to the storage, use and administration of the medicines, as well as requiring additional consumer protections. This subclass could also apply to other S4 medicines that are prone to misuse or supplied outside of normal medical models of care. 
8. That consultation occurs with stakeholders before the regulatory rules for the new subclass of S4 medicines are made. 
9. That the penalties for breaches of the Poisons and Therapeutic Goods Act and Regulation be increased.
It states
There are a large variety of cosmetic procedures that aim to alter or modify a person’s body or appearance and the procedures vary greatly in risk to patients or clients. High risk procedures include major cosmetic surgery and the use of certain scheduled medicines. On the other end of the scale, there are relatively low risk cosmetic surgery procedures (such as mole removal for a cosmetic purpose) and low risk procedures that do not involve the use of surgery or medicines, such as hair removal. There is a range of regulation affecting persons and premises carrying out cosmetic procedures. The review by the Ministry of Health has considered whether the current regulation of cosmetic procedures is appropriate to ensure the safety of patients/clients and makes a range of recommendations to improve the regulatory environment. However, the issue of the regulation of cosmetic procedures is likely to continue to remain an area of concern. As such, the Ministry will continue to monitor the issues, including implementation of the recommendations, and any other issues that arise following investigations that are currently underway, to determine if further action is necessary.
It goes on to discuss the regulation of cosmetic surgery and facilities
Cosmetic surgery ranges from minor cosmetic surgical procedures that are carried out in a medical practitioner’s rooms through to high risk procedures, such as breast augmentation, that must be carried out in licensed private health facilities.
Regulation of facilities
The Private Health Facilities Act 2007 and Regulation 2017 requires facilities that carry out certain procedures to be licensed and comply with a range of licensing standards. These standards are aimed at protecting patients and relate to the safety of the premises (such as complying with the relevant sections of the Building Code of Australia and Australasian Health Facility Guidelines) and clinical care and patient safety (such as engaging with the National Standards and Accreditation Scheme, having procedures for the transfer of patients who require higher levels of care, minimum staffing requirements and appropriate equipment). While the Private Health Facilities Act provides extensive regulation in respect of licensed facilities, it only applies to facilities that carry out procedures that fit within one of the classes of private health facilities.
One of the relevant classes is the surgical class. However, the surgical class only requires facilities to be licensed if the surgery is undertaken using general, epidural or major regional anaesthetic or sedation resulting in deeper than conscious sedation..1 The use of general or major regional anaesthesia can create significant risks to patients. These risks can be associated with airway management (in the case of general anaesthesia) and/or risks associated with the immobility of the patient. These risks can be appropriately mitigated by way of licensing requirements.
Facilities that perform surgical procedures using local anaesthesia or conscious sedation are not required to be licensed in the surgical class2 as they are generally considered to be of lower risk and the facility in which the procedures take place is not seen as requiring licensing as generally professional standards, such as relating to infection control, can mitigate the risk.
The Royal Australasian College of Surgeons (RACS), the Australian and New Zealand College of Anaesthetists (ANZCA) and the Australian Society of Plastic Surgeons (ASPS) recently released a position paper on Day Surgery in Australia. The Colleges recommend increased standards for day surgery clinics that use intravenous sedation or significant amounts of local anaesthesia in day surgery clinics.
The Ministry of Health has considered the position paper and considers that the current licensing requirements for facilities under the Private Health Facilities Act and Regulation are generally appropriate.
Licensing requirements for facilities are extensive and impose a regulatory burden on business. Licensing requirements should only be imposed if there is a health and safety risk that can only be appropriately mitigated by way of requiring facilities to be licensed. All procedures that involve the use of sedation or local anaesthesia will carry a risk to patients. However, in some cases that risk can be mitigated by way of professional responsibilities and competencies required by the individual practitioner. For example, some minor cosmetic surgical procedures, using conscious sedation or local anaesthesia, can be safely carried out by a medical practitioner in an unlicensed private health facility eg mole removal for a cosmetic purpose. If multiple moles were being removed, it would be expected that a medical practitioner would assess the patient and whether or not adequate local anaesthetic could be administered safely in an unlicensed facility. This consideration would, among other things, take into account the cumulative toxicity of the local anaesthetic administration required for the multiple mole removals. Failure to properly consider these issues could be grounds for taking disciplinary action against the practitioner.
However, the Ministry of Health also recognises that reliance on the level of anaesthesia and/or conscious sedation to determine licensing requirements will not always be a sufficient criterion for determining whether or not a facility should be licensed. This is particularly the case with cosmetic surgery where some procedures that carry high risks to patients can be carried out using local anaesthesia and/or conscious sedation.
As such, in 2016 the Private Health Facilities Regulation was amended to create a new class of private health facilities, being the cosmetic surgical class. Under the Regulation, certain cosmetic surgical procedures are required to be carried out in a licensed private health facility (or a public hospital). These surgical procedures are:
a) any cosmetic surgical procedure that is intended to alter or modify a person’s appearance or body and that involves anaesthesia (including a Biers Block), or 
b) any of the following surgical procedures (however described):
(i) abdominoplasty (tummy tuck), 
(ii) belt lipectomy, (iii) brachioplasty (armlift), 
(iv) breast augmentation or reduction, 
(v) buttock augmentation, reduction or lift, 
(vi) calf implants, 
(vii) facial implants that involve inserting an implant on the bone or surgical exposure to deep tissue, 
(viii) fat transfer that involves the transfer of more than 2.5 litres of lipoaspirate, 
(ix) liposuction that involves the removal of more than 2.5 litres of lipoaspirate, 
(x) mastopexy or mastopexy augmentation, 
(xi) necklift, (xii) pectoral implants, 
(xiii) penis augmentation, 
(xiv) rhinoplasty, 
(xv) superficial musculoaponeurotic system facelift (SMAS facelift), 
(xvi) vaginoplasty or labiaplasty, but does not include any dental procedure.
There are two categories of cosmetic procedures that are required to be conducted in licensed facilities:
cosmetic surgical procedures that use high levels of anaesthesia or more than conscious sedation; or
certain listed surgical procedures, regardless of the level of anaesthesia or sedation used.
Requiring certain listed procedures to be carried out in a licensed private health facility (or public hospital) recognises that there needs to be a broader consideration of risks of cosmetic surgery other than just the level of anaesthesia or sedation used.
The current list of procedures that are required to be carried out in a licensed private health facility was determined in 2016 following extensive consultation. Whether a cosmetic surgical procedure is required to be carried out in a licensed private health facility is based on the risks to the patient, being:
  • The risk of the procedure itself (such as the inherent risks of the procedure eg risk of significant blood loss or other complications, whether there are significant risks the patient may need to be transferred to a higher level of care facility and whether the type of procedure is likely to mean that a patient would be non-ambulatory if they needed to be evacuated during an emergency), and 
  • the risk that the procedure will require high levels of anesthesia or sedation such that there is a significant risk of the patient inadvertently becoming unconscious and/or significant risk of local anesthesia toxicity.
The listed procedures are considered to be appropriate. However, a listed procedure is only required to take place in a licensed facility if the procedure is a surgical procedure. The Ministry is aware that some of the listed procedures, such as breast augmentation and penis augmentation, can also be carried out non-surgically. Such non-surgical procedures generally involve the injection of fillers (such as collagen) or, in some cases, a transfer of fat from one part of the body to another. All procedures, whether surgical or not, carry risks. As noted above, licensing requirements should only be imposed if there is a health and safety risk that can only be appropriately mitigated by way of requiring facilities to be licensed. If the listed procedures are carried out non-surgically, the risks are different than if the procedures are carried out surgically. Non-surgical procedures do not generally carry a risk that the patient will be non-ambulatory and the risk of the patient becoming unconscious due to high levels of anaesthesia or sedation is lower. However, if there is an incorrect administration of the filler, then there are risks of drug toxicity. Further, if a local anaesthetic is injected along with a filler, there is a risk of toxicity from the local anaesthetic if excessive doses are used.
There are risks associated with the use of all drugs and requiring any procedure and requiring procedures to be conducted in a licensed private health facility should only occur where a licensing requirement is proportionate to the risk.
In the case of non-surgical procedures involving the use of drugs, would be expected that the risks would be mitigated by way of professional responsibilities and competencies required by the individual practitioner and the normal regulation in relation to the use of medicines. It is noted that product information for prescription-only fillers provide detailed warnings about incorrect administration which all practitioners would be expected to consider and that medicines regulation limits who can access drugs. Therefore at this stage no substantive changes to the Private Health Facilities Regulation are considered necessary. However, as detailed later in the report, the Ministry recommends that additional regulation should be put in place in respect of the use of medicines commonly involved in cosmetic procedures. As part of the consultation on the detail about the additional regulation of medicines used in cosmetic procedures, the Ministry will also consult with stakeholders as to whether any non-surgical cosmetic procedures should be required to take place in a licensed facility.
More generally, as the definition of cosmetic surgery in the Private Health Facilities Regulation relies on a list of specific procedures, and the types of procedures may change over time (or the risks of the procedures can change) the Ministry will keep the definition under review to ensure that the list remains appropriate and, if necessary, changes to the Regulation can be pursued.
It comments
The Poisons and Therapeutic Goods Act and Regulation places controls on the use, storage, administration, prescription and supply of poisons and scheduled medicines. The controls differ depending on the category of scheduled medicines. For example, Schedule 3 medicines are pharmacist only medicines, while Schedule 4 medicines can only be accessed with a prescription.
The Commonwealth also plays a role in regulating medicines, with the Therapeutic Goods Act 1989 (CTH) requiring that medicines to be registered on the Australian Register of Therapeutic Goods (ARTG) in order to be marketed and used in Australia. There are some exemptions which allow nonregistered medicines to be used with special authorisation or in other circumstances but these are not relevant to this review. The Commonwealth also places controls on the importation of medicines through regulations made under the Customs Act 1901 (CTH). Botulinum toxin and injectable hyaluronic acid dermal fillers are Schedule 4 (S4) medicines. The Act and Regulations currently provides that:
  • As a S4 medicine, botulinum toxin and injectable hyaluronic acid dermal fillers need to be prescribed by an authorised practitioner (medical practitioner, dentist), 
  • A wholesaler can only supply S4 medicines to an authorised practitioner or other person authorised to possess the medicine, 
  • Any person who is assisting in the care of a person can administer botulinum toxin and injectable hyaluronic acid dermal fillers to a patient, in accordance with the authorised practitioner’s prescription. Injectable Schedule 4 medicines are not distinguished from medicines ingested or applied topically. It is a matter of professional responsibility for the medical practitioner who prescribes the Schedule 4 medicine to ensure that the person who is to administer the medicine is able to competently do so, and 
  • S4 medicines must be stored in a room or enclosure to which the public does not have access.
Based on a number of investigations by the Pharmaceutical Regulatory Unit, the Ministry is concerned as to whether medical practitioners who prescribe these medicines used in cosmetic procedures, such as botulinum toxin and injectable hyaluronic acid dermal fillers, have appropriate oversight over the receipt, storage, access, use and administration of these medicines at cosmetic clinics. In addition there are also concerns that certain cosmetic clinics are in breach of the Act and Regulation by importing medicines from overseas, without going through licensed Australian wholesalers. v Accordingly, there is a need for stronger regulation of certain types of S4 medicines that are used in cosmetic procedures. Stronger regulation will better ensure that medical practitioners who prescribe these medicines have appropriate oversight over the receipt, storage, access, use and administration of these medicines at cosmetic clinics and that appropriate action can be taken against persons who breach the Poisons and Therapeutic Goods Act and Regulation.
In order to strengthen regulation of the use of S4 medicines that are being used in cosmetic procedures, it is proposed to create a new subclass of S4 medicines, with regulations tailoring the rules relating to the storage, use and administration of the medicines, as well as requiring additional consumer protections. It would be expected that the exact regulatory rules would be subject to consultation with stakeholders but could include matters such as:
  • Requiring that a medical practitioner or dentist who prescribes botulinum toxin and injectable hyaluronic acid dermal fillers must directly consult with the patient, 
  • Providing that botulinum toxin and injectable hyaluronic acid dermal fillers can only be accessed at premises when a medical practitioner is present during operating hours, and 
  • Placing limitations on who, such as a registered health practitioner, may administer the medicines in the course of providing a service.
The regulatory rules could also include matters relating more broadly to consumer protection, such as information given to patients. During consultation on the regulatory rules, consultation would occur with Fair Trading.
There are other types of S4 medicines that can be prone to misuse or supplied outside of normal medical models of care. Such medicines often provide for a lucrative business model, which can in turn fuel a black market. As such, similar concerns about inappropriate use arise and these medicines could be included in the new subclass. Examples of such medicines, include Sildenafil (Viagra), human growth hormone and injectable peptides (which can be used for performance improvement).
In addition, it is noted that the Poisons and Therapeutic Goods Act is 50 years old and the penalties applying to breaches of the Act and Regulation are not in keeping with the seriousness of the offences under the Act and Regulation. It is therefore recommended that the penalties in the Poisons and Therapeutic Goods Act be increased. It is noted that issues relating to penalties are being considered more broadly as part of the review of the Poisons and Therapeutic Goods Act.
The Ministry’s recent investigations have also uncovered concerns about the illegal importation of prescription medicines for use in cosmetic procedures the lack of appropriate labelling of hyaluronic acid dermal fillers product, which can contain lidocaine local anaesthetic. These are matters that concern the Commonwealth Therapeutic Goods Act. The Minister has already written to the Commonwealth Minister about these concerns. In addition, the Minister has already placed on the COAG Health Council agenda the issue of the use of medicines in cosmetic procedure so that other jurisdictions are aware of the issues.