Bills Digest No. 25 2001-02
Motor Vehicle Standards Amendment Bill 2001
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
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Motor Vehicle Standards Amendment Bill
Date Introduced: 28 July 2001
House: House of Representatives
Portfolio: Transport and Regional Services
Commencement: On a day to be fixed by
Proclamation, or failing that, six months after Royal
To amend existing arrangements under the
Motor Vehicle Standards Act 1989 for the importation and
supply of 'low volume' motor vehicles. In particular, it creates a
new approval regime for the importation of low volume used
In general, vehicles being supplied to the
Australian market must comply with a series of Australian Design
Rules (ADRs). ADRs set the design and performance requirements for
vehicle safety and emission standards. Before introduction into the
Australian market, each model is tested for compliance with the
relevant ADRs.(1) Once a model is certified as
complying, identification plates may be fixed to all vehicles of
that model, allowing the relevant authority in each jurisdiction to
register individual vehicles on the basis of the identification
plate. This is the so-called bulk 'type' approval system. The
Motor Vehicle Standards Act 1989 (MVSA) is the main
legislative instrument for achieving Australian uniform standards
through the ADRs.
The Low Volume Scheme (LVS)
The Low Volume Scheme (LVS) provides
concessional treatment in complying with ADRs. The original idea
behind the introduction of the LSV in 1970 was to service the
specialist and enthusiast vehicle market. It was recognised that
for this market, the costs of complying with ADRs in the normal
manner was prohibitive, as these costs could only be recouped from
a relatively small pool of buyers. In recent years, the LVS
provided three major concessions compared with the 'normal'
procedures of the Full Vehicle Scheme:
- alternative certification procedures which allow for lower
levels of assurance of compliance with some ADRs
- applicability of ADRs for used vehicles which were current when
the vehicle was originally manufactured, and
- exemption from the $12 000 special duty on imported used
passenger motor vehicles.
Under the LSV, if a person wished to import a
vehicle for resale it must first meet certain LSV eligibility
criteria - for example, that the model was not marketed in
Australia in full commercial volumes. If the vehicle is deemed
eligible, it was then inspected by Government-employed inspectors
for compliance with relevant ADRs. If it met the required standard,
a compliance plate approval (CPA) was given, allowing special
compliance identification plates to be fitted,(2)
effectively enabling it to be registered and sold. CPAs are granted
to the importer, not the vehicle: thus a person wishing to import
the same type of vehicle for which another person already holds a
CPA would still have to go through an inspection process before
getting a CPA.
While the LSV was originally designed to assist
low volume manufacturers of new vehicles, today it predominantly
involves imported used vehicles. The number of used vehicles
imported under the LVS has grown from approximately 1000 in 1993 to
16,825 in 2000.(3) Particularly from the late 1990s,
many of these were imported from Japan and required little work to
comply with ADRs, but because of the $12 000 exemption, could
be sold in Australia at considerable profit.
The 1997-99 review of the Motor
Vehicle Standards Act 1989 and the Government response
In December 1997, the Minister for Transport and
Regional Development commissioned a interdepartmental
review(4) of the MVSA, including related
regulatory and administration matters such as the LSV. The review
was also required to have regard to national competition policy.
A draft report of the review was
released for comment in April 1999 with a final report (the Review
Report) delivered to the Government in August 1999.(5)
The Government response was released on 8 May 2000.(6)
Some changes to the LSV, such as amended eligibility criteria, came
into effect from then.
Eligibility criteria, import
caps and the impact of increased LSV numbers on the Australian car
Given the rapid increase in the numbers of
vehicles being imported under the LSV in the late 1990s, the review
task force requested and received advice from the Department of
Industry Science and Resources (DISR) in relation to car industry
policy. Part of that advice that was included in the Review
Imports of used vehicles could threaten the
viability of automotive manufacturing in Australia if they enter in
volumes and as models which could generate significant substitution
for locally manufactured vehicles, whether sold as new or used.
This risk is particularly acute if the imported used vehicles have
been depreciated in their country of export at a more rapid rate
than have vehicles sold new for the first time in Australia...On
balance, therefore, it may not be possible to continue the
concessional treatment currently afforded imports of used vehicles
under the LVS without compromising the Government's commitment to a
local automotive manufacturing industry...[the Industry
Minister]... has stated in relation to the current MVSA review that
the Government would consider whether any measures needed to be
taken to ensure the integrity of existing automotive policy was
Commenting on these views, the Review Report
the rapid increase in the numbers of imported
used motor vehicles over the last three years, but considers that
they are small compared with new vehicle sales. It has not been
possible to quantify the impact of these vehicles on safety or the
environment, however, the Task Force appreciates that at some
number there would necessarily be a shift in the balance and
safety/environment risks would increase. If the Scheme is to
continue, [the Federal Office or Road Safety] should closely
monitor the numbers of vehicles and continually assess whether the
Scheme is compromising the objectives of the Act. Other areas of
government (such as DISR) have the responsibility of ensuring that
industry policy is not suffering as a consequence of the numbers of
used vehicles being imported into Australia.
It also commented(9)
It is clear to the Task Force that industry
policy is more sensitive to increasing numbers of imported used
vehicles rather than the safety and emissions aims of the MVSA.
Early in the review the Task Force formed the view that the
intertwining of industry policy and uniform vehicle standards in
the operation of the Low Volume Scheme under the MVSA was the major
cause for the administrative problems engendered by the Scheme. The
Task Force would like to see industry policy addressed elsewhere
and the legislation return to its safety, emissions and anti-theft
The Task Force believes that the Government
should re-visit the concessional duty treatment afforded to
imported used vehicles under the Low Volume Scheme. The scrapping
of the $12 000 special duty concession for the Low Volume
Scheme or its replacement with a protective/concessionary treatment
which reflects the Government's industry policy by containing
numbers at appropriate levels should be contemplated.
There have been two main regulatory influences
on the number on vehicles imported under the LSV: firstly, the
eligibility criteria and secondly, a function of the number of CPAs
issued and the cap on the number of vehicles that can be imported
under each CPA.
In relation to eligibility criteria, the review
report noted that submissions to the review suggested that the
various changes of the eligibility criteria over the years had lead
to a situation that the LVS had departed from its 'original
intent'.(10) However, it also noted that there were many
different conceptions of what the original intent actually was. It
did find that the LSV criteria were overly subjective, with the
result that decision-making regarding eligibility was very time
consuming. It considered three options in recommending the criteria
- Option 1 - limit the number of models by tightening up current
eligibility criteria to ensure only "specialist and enthusiast"
vehicles are eligible
- Option 2 - retain the current criteria with clearer working
- Option 3 - expand the scope of the scheme through having the
single criterion that the vehicle models not be already in the
Australian market in full volume.
The review report recommended option 2, provided
the amendments or guidelines were developed to make the criteria
less subjective. Option 1 was rejected because 'it would have an
adverse impact on the viability of small business and would reduce
consumer choice...[we]...do not see any positive benefits for
restricting the vehicles to enthusiast
However, in releasing its response to the review
in a policy announcement on 8 May 2000, the Government decided on
Option 1. The Explanatory Memorandum to the Bill seems to indicate
the major motivation behind this decision was the 'rapid increase
in the number of imported used cars supplied to the
market'.(12) The reflect the tightened criteria, the LSV
was renamed the Specialist and Enthusiast Vehicle Scheme
In relation to CPAs, each Australian business
that is holder of a CPA under the LSV is limited to supplying 25
vehicles per year per approval for passenger cars and either 25 or
100 for other types. However, the number of CPA holders is not
controlled and an individual or company can operate several
businesses each holding separate CPAs for the same type of vehicle.
As at June 1998, figures suggested there were 527 holders of
CPAs(13) although in 2000 over 900 had applied for
approvals. The Review Report did not make a specific recommendation
on this issue, although it commented that 'it may ultimately be up
to the Government to decide on the limit of vehicles per workshop
and/or the number of workshops'.(14)
Two options were considered by the review
- Option 1 - retain the current type approval system, or
- Option 2 - registered workshop scheme for used vehicles.
In relation to the existing 'type' approval
system,(15) the Review Report found this to be
inappropriate for used vehicles because of the lack of uniformity
between cars and thus a single test vehicle may not be particularly
representative of all cars of that model. This raised issues of
whether safety and emission standards could be properly regulated.
The report recommended that the system should be replaced by
vehicle-by-vehicle approval undertaken through a system of
Amongst other reasons, option 2 was favoured due
the advantages of:(16)
- the potential for development of co-regulation with
- the workshop will provide a higher level of assurance that the
vehicles comply with the ADRs
- the workshops can provide a network of service and spare
- the workshops may be held responsible to conduct vehicle safety
- it would restrict the Scheme to legitimate vehicle
This recommendation was accepted by the
Government in its announcement of 8 May 2000.
As previously mentioned, the review report
stated that as at 30 June 1998, there were 527 holders of low
volume CPAs. The report also noted that the submission by the
Vehicle Importers and Converters Association of Australia estimated
that the LSV sector employed 1,800 people directly and 2,500
indirectly and contributed $350 million annually to the national
economy, although the review task force 'was unable to substantiate
these figures'. (17)Other estimates of the value of the
sector are that there are 1,500 small businesses importing vehicles
under the LVS, employing 5000 people.(18)
In 2000, the Office of Small Business (OSB), at
the request of the Minister for Employment, Workplace Relations and
Small Business, prepared a report on the impact of small business
of the Government's decision to replace the LVS with the SEVS. The
OSB reported on 8 August 2000. The report was prepared in
consultation with industry organisations representing low volume
importers, but remains confidential and has not been
The Explanatory Memorandum makes the following
comments on possible impact of the proposed changes on businesses
involved in the LVS (20)
Many [businesses] do not solely rely on used
import activities and LVS businesses also have the capacity to
switch to other vehicle types. Industry representatives estimate
there are approximately 400 of these businesses that will be
affected by the tightening of the eligibility criteria. In
particular, used 4WD importers will be adversely affected in the
immediate term. However, smaller businesses involved in the trade
will benefit from an increase in the annual cap from 25 to 100 used
passenger motor vehicles per approval holder. This would help to
improve the viability of firms currently constrained by the 25 car
limit. Information is not available on the value of the turnover of
LVS businesses, number of people employed, or contribution to the
economy....the average amount of time spent on converting a used
import to meet ADR requirements for a LVS compliance plate is eight
hours. In 1999 some 5,000 used 4WDs were imported and fitted with a
LVS compliance plate. Taking the worst case scenario that all 5,000
vehicles are no longer eligible, the new scheme would reduce the
level of vehicle converting activities by 40,000 hours a year or
around 20 full time positions across the entire vehicle conversion
business. However, this scenario will be alleviated by the capacity
businesses have to switch to other vehicle types and the increase
in volume limits to 100 per licence holder.
Clause 4 provides for transitional arrangements.
In particular it will replace existing 'type' approvals applying to
used imported vehicles with 'transitional' approvals. These
approvals will remain in force for a certain period so as to allow
existing businesses to sell vehicles whilst they gain 'registered
automotive workshop' status. Clause 4 also
provides for regulations to set an expiry date for the
transitional approvals. The purpose is to allow the
termination date of transitional approvals for certain
vehicles to be set by regulations. Finally, it provides that
regulations may set out conditions applying to the transitional
Clause 6 provides that used
vehicles imported under the 'old' arrangements, but not yet been
supplied to the market when the Bill becomes law, will be subject
to the new arrangements proposed by the Bill.
Item 1 amends the object of the
Act as currently set out in section 3. The change
expands the object to explicitly recognising the role of the MVSA
in regulating the 'first supply' of used vehicles imported into the
Australia market. It is notable that item 1 is
not consistent with the Review
recommendation (p25). The review recommendation emphasised objects
of safety, environmental quality and anti-theft and made no mention
of supply regulation.
Item 9 applies the Criminal
Code Act 1995 to a number of new offences created by the Bill.
The criminal code contains a standardised set of definitions,
concepts, defences etc applying to Australian criminal law.
Items 14 and
15 amend parts of existing section 10A. Section
10A provides for the granting of approval to fix plates on (new or
used) vehicles or vehicle components that identify them as being of
a type or model that comply with national standards (eg ADRs). As
it stands, section 10A reflects the existing bulk 'type' approval
system discussed in the background section. The amendments under
new section 10A will restrict approvals to new
vehicles and vehicle components only.
Item 16 replaces existing
subsection 10A(3) with a new version.
Subsection 10A(3) provides for the granting of
approval to fix identification plates on vehicles or vehicle
components under certain circumstances even when there is
significant non-compliance with national standards. As for
items 14 and 15, item 16 means
that used cars are not eligible for new subsection
10A(3) approvals. A further new restriction is that
approval can only be given if the vehicle is on the new Register of
Specialist and Enthusiast Vehicles (see item 37)
or listed in regulations.
Item 17 replaces existing
subsection 10A(4) with a new version.
Subsection 10A(4) provides that conditions may be
attached to approvals granting under section 10(A). Item
17 makes it clear that conditions can include a limitation
on the number of identification plates fixed on a certain class of
vehicle over a fixed period.
Item 31 inserts new
sections 13B-13G. These deal with the fixing of 'used
import plates' on imported used vehicles.
New section 13B provides that
the Minister may make determinations about 'procedures and
arrangements' for the placement of used import plates on vehicles.
These determinations are disallowable instruments under section 46A
of the Acts Interpretation Act 1901.
New section 13C allows a
'registered automotive workshop' (see item 38) to
apply for an approval to place a used import plate on a used
imported vehicle. As the Explanatory Memorandum comments, the
effect of new section 13C 'is that only registered
automotive workshops will be approved to place used import
New section 13D addresses the
granting of an approval by the Minister in relation to a used
import plate. The workshop must give a report on the relevant
vehicle to the Minister. After 'having regard' to the report, the
Minister may grant the approval if he or she 'is satisfied that it
is appropriate' to do so. Guidelines are to be developed to which
the Minister must comply in making a decision regarding approval.
These guidelines are disallowable instruments. If approval is
refused, the Minister must give a written statement of reasons to
the applicant why it was refused.
A new section 13D approval may
be made subject to any condition. A breach of any condition may
constitute an offence carrying a penalty of 60 penalty units ($6
600). New subsection 13D(6) provides that the
holder of the new section 13D approval - that is
the corporation in whose name the workshop is registered under
new section 21B - is responsible for the offence
rather than say the employee that took the action that breached the
condition in question.
In relation to new subsection
13D(6), two key elements would have to be proved: (i) that
the holder intentionally took or omitted to take an action: and
(ii) that they knew that the action or omission contravenes the
condition or is reckless to this fact. The criminal code provides
that actions of employees may be attributed to their corporate
employers in certain circumstances. In relation to element (i),
this means if the employee's action or omission was within the
actual or apparent scope or authority of their employment, the
corporation is deemed to have taken the action or omission.
Likewise the employee's mental fault elements of intention and
recklessness in (i) and (ii) must be attributed to the corporation
if they expressly, tacitly or implied authorised or permitted the
commission of the offence. This attribution can be established if
amongst other ways, proving that the actions of a 'high managerial
agent' tacitly authorised or permitted the offence or if the
corporation failed to create and maintain a corporate culture that
required compliance with the relevant provisions. The bottom line
is that the workshop's corporate operators cannot escape liability
for their employee's actions if they fail to exercise appropriate
managerial oversight and control.
New section 13E provides for
regulations to place a limitation on the number of used import
plates that a workshop can place per vehicle category over a
particular period. The government announcement of 8 May 2000
indicated this limit would be set at 100 vehicles, per vehicle
category, per year.
New section 13F provides that
the Minister may vary, cancel or suspend a workshop's used import
plate approval if the Minister is satisfied that it workshop has
not conformed to new section 13B arrangements,
contravened a condition of the approval, or some other failure has
occurred. Before doing so, the Minister must give written notice to
the workshop stating the grounds for the possible variation,
cancellation or suspension and invite the workshop to make a
written submission about the matter. The Minister must consider the
submission in making his or her decision. The Minister must give
the workshop written notice of his or her decision regarding
variation, cancellation or suspension of an approval and specify
the reasons for the decision.
New section 13G creates an
offence for the unauthorised manufacture, supply or placement of an
used import plate, or placement of a false plate. The penalty is
120 penalty units ($13 200). The Explanatory Memorandum
comments that 'it is intended that all used import plates be
supplied from a single source that has been granted authority to
manufacture and supply used import plates'.(21)
Item 33 inserts new
sections 16 and 16A.
Under new section 16, a person
supplying the market with a used vehicle not previously supplied to
the market is guilty of an offence unless the vehicle has a used
import plate, or is supplied in accordance with regulations, or is
supplied with the written approval of the Minister. The penalty is
120 penalty units ($13 200). An application for Ministerial
approval can cover only one vehicle. There are no matters or
guidelines that the Minister must consider in relation to an
application. An approval may be made subject to any condition. A
breach of conditions may be an offence carrying a penalty of 60
penalty units ($6600).
New section 16A provides for
the Minister to vary, cancel or suspend a new section
16 approval for breach of conditions, the making of false
or misleading statements in relation to the approval application,
or for 'other actions the Minister considers appropriate'. Before
doing so, the Minister must follow the same procedures as contained
in new section 13F.
Item 37 inserts new
section 21, which provides for regulations to be made in
relation to the Minister keeping a register of specialist and
enthusiast vehicles (SEV). Regulations may specify, among other
things, the criteria to be satisfied before road vehicles may be
entered on the Register. The Explanatory Memorandum
The scheme operates by assessing whether the
same vehicle model is available in full volume in Australia and if
not whether it meets the criteria that would classify it as
specialist or enthusiast.
The criteria are
Appearance: significant difference in appearance
to popular class of vehicle in that category
Unusual design features: significant difference
in sub-assemblies to popular class of vehicle in that category;
Performance - significant difference in level of
performance to popular class of vehicle in that category;
Featured in specialist motoring magazines in "as
The specialist and enthusiast eligibility
criteria have been introduced to return the low volume scheme (in
particular for used vehicles) to its long-term intention of
catering for only those vehicles that are genuinely specialist or
The specialist and enthusiast vehicle criteria
apply to both new low volume and used imported vehicle models. Once
a model is listed on the Register of Specialist and Enthusiast
Vehicles it is eligible for supply under the low volume scheme for
new vehicles and or for used vehicles, under the Registered
Automotive Workshop Scheme.
Item 38 inserts new
sections 21A-21E which deal with registered automotive
New section 21A provides for a
corporation to apply for approval as a registered automotive
workshop, in a manner prescribed in the regulations. Used import
plates will only be allowed to be placed by registered automotive
New section 21B covers to the
process by which the Minister may grant an approval to a
corporation to be a registered automotive workshop. The Minister
may do so if satisfied of various criteria, including that the
corporation including its directors, officers and shareholders who
are in a position to influence the management of the corporation
are fit and proper. In determining the 'fit and proper person'
status the Minister may determine, in writing, guidelines to be
taken into account. These guidelines are disallowable instruments.
Further criteria may be set down by regulations, including criteria
placing restrictions on the relationships between an applicant and
any other registered automotive workshop. As the Explanatory
Memorandum comments, this last point is to 'prevent [the subversion
of] the restriction on the number of used imported vehicles
supplied by any one workshop'.(23) If the Minister
refuses an application, he or she must give a written statement of
reasons why it was refused.
New section 21C provides that
new section 21B approvals last for 2 years. It
also sets out the process for renewal of an approval.
New section 21D provides that
approvals may be subject to conditions prescribed by the
regulations and subject to any conditions specified by the Minister
in the approval. A breach of any condition may constitute an
offence carrying a penalty of 60 penalty units ($6 600). The
comments made in relation to new section 13D on
corporate responsibility are also applicability to new
section 21D offences.
New section 21E provides that
the Minister may vary, cancel or suspend a workshop's new
section 21B approval. A variation can be done on
the Minister's or workshop's initiative. If done on the Minister's
initiative, the Minister must follow the same procedures as
contained in new section 13F. The grounds for
cancellation or suspension are contraventions of the conditions of
the approval, non-compliance with new
subsection 21B(1) criteria (eg being a fit and
proper person) or 'any other circumstances the Minister considers
appropriate'. Again same procedures as under new section
Item 39 inserts new
paragraphs (f)-(h) to section 23. Section 23 lists those
decisions that the Minister cannot delegate to
prescribed departmental officials. Those new decision-making powers
introduced by the Bill that will now fall under section 23 are;
- the power to determine procedures and arrangements for the
placement of used import plates under new
- the requirement to determine guidelines for the granting of
approval to workshops to place plates under new subsection
- the power to determine guidelines concerning 'fit and proper
person' checks under new subsection 21B(2).
Items 40-42 allow for the
charging of fees for the various applications introduced under the
Bill. The Act already allows for the charging of fees for current
Existing sections 27-29 deal with the powers of
appointed inspectors to enter premises, require the production of
information etc. Items 43-47 extend these powers
to cover new provisions introduced by the Bill.
Items 49-51 provide that the
various Ministerial decisions under new sections 13D and F,
16-16A, 21B-E are subject to appeal through the
Administrative Appeals Tribunal.
- This might include tests that destroy the relevant car, eg
- Approval may be given to fix plates even if the vehicle type
does not comply with all ADRs.
- For comparative purposes, total new vehicle sales in Australia
for 2000 was 787 000.
- The review task force was chaired by the Federal Office of Road
Safety, and overseen by an 'independent reference committee'.
- Report of the Review of the Motor Vehicle Standards Act
1989, August 1999 (Review Report)
- The Hon John Anderson and Senator Nick Minchin 'New Scheme for
Imported New Vehicles' Joint Press Release 8 May 2000. The
release can be viewed at:
- Review Report, op cit pp 75-76.
- Ibid, p. 89.
- Ibid, p. 95.
- Ibid, p. 79.
- Ibid, p. 90.
- Explanatory Memorandum, p. 13.
- Review Report, op cit p. 75.
- Ibid, p. 95.
- That is, based on a single test and evaluation vehicle.
- Review Report, op cit, p. 94.
- Ibid, p. 74.
- Question without Notice on Used Motor Vehicles: Low Volume
Import Arrangements by Senator Harris to Senator Minchin, Senate
Debates 5 October 2000, p. 17969.
- Answer to Question on Notice: Office of Small Business: Report.
House of Representatives Debates 6 February 2001, p.
- Explanatory Memorandum, pp. 12-16.
- Ibid, p. 30.
- Ibid, p. 13.
- Ibid, p. 32.
27 August 2001
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