Measurement in everyday life

BACKGROUND
Consumers Federation of Australia (CFA)

The CFA is the peak body for consumer organisations in Australia. CFA represents a diverse range of consumer organisations, including most major national consumer organisations. Our organisational members and their members represent or provide services to millions of Australian consumers.

CFA’s member organisations include membership-based organisations, organisations that provide information, advice, counselling or assistance to consumers and organisations that identify regulations or market features that harm consumer interests and propose solutions. A list of CFA’s organisational members is available at http://consumersfederation.org.au/members/cfa-organisational-members/.

CFA advocates in the interests of Australian consumers. CFA promotes and supports members’ campaigns and events, nominates and supports consumer representatives to industry and government processes, develops policy on important consumer issues and facilitates consumer participation in the development of Australian and international standards for goods and services.

CFA is a full member of Consumers International, the international peak body for the world’s consumer organisations.

Contact Person: John Furbank, CFA Representative NMI Consumer and Industry Liaison Committee email: johnfurbank@internode.on.net

CFA appreciates the opportunity to comment on this options paper.

This submission is supported by the Consumers Association of South Australia.

General:
Australian consumers have been protected by Weights and Measures legislation for over 150 years when states introduced legislation based the law of weights and measures of Great Britain. The legislation evolved controlling the way pre-packed food and other goods are labelled and sold for over 50 years. Since 1967 clauses and sections have been amended but certain elements, namely the quantity statement on the main display panel and the minimum font size for the measurement marking, have remained consistent. This has enabled established consumers to become familiar with and use the information on labels and new consumers (young persons, immigrants) to quickly learn where to look for the quantity statement.

The objective of the National Measurement Act 1960 (the Act) is to minimize the costs of error that arise due to poor measurement of the overall quantity of a given product. The cost of errors whether type I (under-inclusive) or type II or (over-inclusive) have a material effect on the allocation of resources within the economy. The asymmetrical protections in place likely reflect a historical assumption that all, rather than some sellers are at an informational advantage over their counterparty. This appears to reflect historical economic structures rather than anything else.
CFA considers that although the Act could be clarified by rewriting and made simpler to use for both consumers and industry, the supporting regulations work well.
CFA also considers that the Review should take full account of the many uses made of measurement information and its implications for other legislation. For example, ensuring the units of measure prescribed for the unit pricing of packaged products in the unit pricing legislation administered by the ACCC reflect the requirements of measurement law.
Principles based regulation:
CFA has reservations about moving to principle based legislation and care must be taken that amendments to the Act and associated regulation is not an excise of simply ‘getting rid of red tape’ or removing clauses that certain vested interests claim adversely affects their particular industry.
A movement to a principles based approach will not eliminate the costs associated with determining a given quantity, but rather will shift these costs to the consumers and small businesses. Aside from potentially resulting in higher error rates and reducing consumer confidence in business, reforms that move away from a standardized approach would increase transaction costs and create market frictions (Coase 1937). This is antithetical to the intent of market based reforms that have occurred over the course of the last half-century.
Although prescription may entail costs to business, these costs must be considered against the significant costs that are avoided on the part of businesses and consumers as a consequence of standardization and increased consistency.
Prescription can be efficient:
The adoption of a prescriptive approach to the measurements used for some commodities is reflective of the efficiency gains that may be attained through a standard system of measure. This is clearly demonstrated by Australia’s decision to adopt the SI system of measurements.
For consumers and businesses there can be significant information cost and search cost savings that arise through having a standard point of reference rather than different measures (Stigler 1961). As a consequence of adopting a standardized framework (irrespective of what that the unit may be) there are savings because consumers save time when comparing products and suffer reduced risks associated with making sub-optimal choices.
Under the current Act and regulations consumers are protected and informed and small manufacturers, packers and retailers are provided with a level playing field in which to conduct business.
CFA supports moving to legislation is that easily understood and using supporting legislation for processes and detail. However, CFA has some concerns about moving current regulatory requirements into guidance material as suggested in the 2015 Independent Review Paper. Given they are not enforceable, guidance documents have little value in law and could lead to a mixed interpretation by industry.
CFA is concerned about the view that the existing legislation is ‘very prescriptive’ and the aim of the Review is to ‘reduce prescription’. Trade measurement legislation, by its very nature, contains a lot of detail and is based on providing precise information based on established practices. A quick read of the legislation could certainly provide an impression that it is prescriptive, but it is the actual detail that provides certainty to consumers and industry.
The current Unit Pricing legislation provides for the display of unit prices to be ‘legible and unambiguous’ but provides no guidance on font size or contrast. This had led to supermarket shelf labels (particularly bottom shelf labels) to be unreadable to consumers. This particularly impacts the elderly and infirm.
The majority of the Australian retail, packaging and manufacturing sector currently comply with the Act and regulations. They have established systems which enable them to comply and compete in both the local market and for export. Removal of some the existing protections would not only affect consumers but could have an adverse effect on local packers, manufacturers and producers. For example, currently packers are required to place the quantity statement on the principal display panel which protects both consumers and local industry from the unfair practice and competition of ‘size shrinkage’ of imported products.
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e.g. NSW Weights and Measures Act of 1852
Packages Act, 1967 No. 67 of 1967 [Assented to 16 November 1967]
Trade Practices (Industry Codes-Unit Pricing) Regulations 2009
Coase, R. 1937, ‘The Nature of the Firm’, Economica, vol. 4, no. 1, pp. 386–405.
Stigler, G. 1961, ‘The Economics of Information’, The Journal of Political Economy, vol. 69, no. 3, pp. 213–25.
Page 4 Measurement-Based Transactions Measurement Law Review 2019 discussion paper
Trade Practices (Industry Codes-Unit Pricing) Regulations 2009
In June 2017 the UK Guardian newspaper reported that European port officials warned the British Government that with the devaluing of Pound Sterling exporters to the UK were quietly shrinking the size of products such as chocolate bars and fruit juices since the Brexit vote but not reducing the prices charged to British consumers in the shops

CFA does not accept that the current law creates an unnecessary burdens for business and supports the continuation of current regulations designed to ensure that consumers have access to consistent, comparable information including the price per unit of measurement, and where and how legal metrology information is provided on package labels.

For example:
• The requirement that a retailer’s weighing instrument shall be in full view of the purchaser enables the consumer to clearly see the goods being weighed, the precise quantity and, in most transactions, the price to be paid.

• The cosmetic industry has been arguing for many years to remove the positioning requirement that controls the size, orientation and position of the quantity statement on pre-packed cosmetics citing cost. While there may be some cost benefits for industry there appears to be little consideration of the benefit to consumers not having to spend time searching for the quantity to facilitate comparing the cost of cosmetics including everyday creams and hair products. It is important that consumers are able to easily compare the quantity of different products. There is no evidence that any cost savings would be passed on to the consumer.

It is arguable that with less clarity and detail in the regulation, compliance monitoring and enforcement costs for government will increase due deliberations on whether particular information complies with the legislation and dealing with non-compliance. Currently Australian industry, particularly small businesses, benefit from certainty that their placement and size of the quantity statement complies with the law. With the uncertainty of what is ‘visible’ or ‘prominent’, non-compliance is likely to increase and there will be greater difficulty in successfully proving non-compliance.

CFA considers that to achieve policy objectives such as consumer protection, information provision, and stimulating competition, much detailed specific regulation will be required even within a principle based regulatory framework. For example, the character size in quantity displays and accuracy tolerances on measuring instruments.

There are major benefits from having well designed, clear, specific requirements in legal metrology which provide for effective compliance monitoring and enforcement. Clear and specific requirements offer businesses, particularly small businesses, with easily transferable information that may be passed on to label and package producers and provide confidence that they are complying with the law.

There are a number of industry practices that are currently exempt and/or could be improved for the benefit consumers in measurement-based transactions. This area of the Review could form a review paper on its own.
NMI covers a vast range of measurement instruments but as the paper suggests, many do not fall within the scope of the Act or are exempt. This results in not only confusion in the marketplace but is often detrimental to consumers who are often in the hands of suppliers who are responsible for accuracy and the type of tests being applied to a measuring instrument.

Market place changes

In relation to those areas which are currently within the scope of the Act, new methods of selling and services have created a need for clearer quantity information to be provided to consumers and the provision of appropriate measuring equipment and practices. For example, on-line selling, pay-as-you-pick mobile supermarket transactions , waste disposal and baggage weighing at airports.
In the absence of regulatory requirements for consistent and accurate measurement approaches, industry will have no incentive to invest in technologies that accurately reflect usage. Rather there will be incentives to consistently over-estimate the amount consumed by a business or a consumer. For example:
• Energy suppliers, unlike independent government enforcement agents or licensed certifiers, may not always act in the best interest of consumers. For example, in a recent paper on energy meters In his paper Dr Martin Gill states that studies show the accuracy of meter measurements falls well outside reasonable limits as the level of harmonics increases across the network. Australian consumers are being billed using measurements that ignore the effects of harmonics, despite expert advice questioning the veracity of the method. Dr Gill also states that increasingly consumer electricity bills are calculated using untested five-minute measurements. Since these measurements are used for billing, they should also be tested.

• In the supply of digital data, the costs associated with inaccurate data measurement practices can be significant for consumers and businesses that pay for data on the basis of notional usage. The approach to measuring the amount of data used over a mobile connection varies considerably and lacks transparency. Some providers round the volume of data used on by the kilobyte or megabyte, which has implications on whether consumers receive the full volume of data for which they have paid. This may initially appear innocuous; however, when the price of excess data can be in the order of $10 per gigabyte, a charge which is a trigger once a consumer exceeds their data limit, measurement errors can be extremely costly for consumers. For consumers seeking to minimize their communications expenditure and purchase low cost plans, an additional charge of $10 can represent an increase in cost of between 50-100% of their intended expenditure.
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Footnotes
Pay-as-you-pick technology enables consumers to take an item from a store shelf and pay for that item at the time of selection using their mobile phone or digital watch. Where loose goods are selected future technology could connect the consumers mobile or watch to the stores weighing instrument.

Measurement law review Dr Martin Gill https://www.linkedin.com/pulse/how-australias-measurement-law-fails-consumers-martin-gill/

The creation of an offence of giving short measure (shortfall) has been the main thrust of trade measurement legislation since its commencement. The basis of any transaction involving quantity is that a person receives the quantity purported. CFA supports the general thrust of the Act where the consumer is protected if they receive shortfall and the legislation also provides protection for traders who buy goods by quantity from another trader.
CFA believes that it should be an offence to provide less quantity that purported, both when the person selling the goods is responsible for the measurement and where a seller sells goods and the buyer is in control of the measurement. For example, in the scenario examples provided in the Review Paper in relation to the sale of gold to a merchant or being charged for waste collection. In both scenarios the merchant is the expert in their field and, it is assumed, the owner of the measuring instrument on which the price is based. This puts the consumer selling the gold at a considerable disadvantage and the consumer should be protected by the Act.
The current interaction with other consumer laws appears to be minimal. The act of giving shortfall where deliberate or otherwise is to the detriment of the purchaser, the consumer. Under the Act the collection of evidence is straight forward and normally easily established by ascertaining whether the measurement is as purported. CFA does not support using the misleading provisions in the ACL because it would be much more difficult to establish an offence and the evidence, in the majority of shortfall cases needs to be provided by an expert in measurement techniques and practices.
The incentives set under the ACL and the Act also differ considerably, with the Act adopting in effect a strict liability approach. Accordingly sellers have strong incentives to ensure that their equipment is sufficiently accurate to meet the obligations set out in the Act. Reliance on consumers to pursue disputes over measurement errors shift the burden of ensuring compliance to consumers who are not well placed to enforce their rights.
In a recent article by Rod Sims Chairman, ACCC in a recent Journal of Competition & Consumer Law Mr Sims argues that this ongoing push to diminish role of specialist regulators and reliance on generalist regulators amounts to ‘unintended deregulation’.
In the case of non-pre-packaged goods, CFA supports the current system of zero tolerance within prescribed tolerances. It is accepted that, as with any instrument a tolerance must be given for small inaccuracies. However, in the case of measuring instruments delivering fuel it is suggested that with today’s accurate measurement capability the tolerance should be in the plus side only.
In relation to pre-packaged goods the tolerances currently available under the Act (e.g. minus 5% provided the average is zero) has been accepted by consumers for many years and is a practical approach for the packer.
In response to the comment in the Review Paper where a seller has an incorrect instrument or has followed appropriate practices CFA is not opposed to the inclusion of specific defences. However, it would be expected that any defence would take into account the steps taken to ensure the instrument is correct.
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Footnotes
Rod Sims Chairman, ACCC Journal of Competition & Consumer Law (2019) 27 AJCCL 119

See above (3.2.1)

The Review Paper appears to argue that the existence of differing approaches to measuring different types of goods means that there should not be a nationally consistent approach to the measurement of goods. However, for the purposes of standardization consumers and businesses only need relate to goods within the direct or relevant category of goods to be measured in the same fashion. Consistency within rather than across categories of product is the key point for reducing information costs. For example, the sale of peaches by dry weight as fresh fruit does not confuse consumers who are seeking to purchase tinned peaches in syrup (which is sold consistently by volume).
Differences between categories of products does not increase information costs as long as each of these products are sold in a consistent fashion. Selling chicken schnitzels by weight could be accommodated by a definition. Legislation involving food can be complex and increasingly so as food is modified and reconstructed but if the principle of de-regulation because of food complexity were applied to the National Food Standards, the safety, quality and consumer information of food sold in Australia would be considerably diminished.
CFA supports the retention of the requirement that certain goods must be sold in a prescribed manner and does not accept that the character of measure places a too high regulatory burden on business. The legislation was based on tradition and custom where meat with few exceptions was sold by weight and fruit and vegetables were sold by weight and count.
The assertion that ‘The way the sale of meat is treated by the Act and NTMR creates confusion, inconsistencies, and additional work for business in interpreting their regulatory obligations’ is not supported by actual commercial practice. Modern-day measuring instruments and software can accommodate a complex range of legislative and commercial demands. The instruments and software are continually being updated to suit changing selling methods. When compared with the changes introduced for normal commercial and competition the relatively small requirements currently required by the Act and regulations are not a burden to industry.
Removing the requirement that specific good are sold in a particular manner would leave consumers open to misrepresentation or fraud. For example:
• A pack of 12 chops sold by number could be any thickness and visually appear substantial whereas when chops are sold by weight the price reflects the thickness of the 12 chops. When a sale is by weight a consumer can compare prices simply by reference to weight.

• A consumer may ask for three slices of bacon, where, as currently sold, the quantity of the food and price is clear to both parties. Where the transaction is based solely on count the buyer is totally dependent on the propriety of the seller as the actual quantity.
It is also important to consumers that the price is consistently by reference to a price per kilogram not, for example, a mixture of price per 100 grams and price per kilogram.
Sale of beer, wine and spirits
Under the Act the method of determining quantity of alcoholic drinks has evolved into a set of requirements leading to a mismatch of different approaches on how, and which alcoholic drinks, are controlled. For example,
• The requirements for non-prepacked sprits only apply to the sale of brandy, gin, rum, vodka and whisky and the size of each spirit drink (15mL, 30mL or 60mL) is controlled by the quantity dispensed from an approved sprit dispenser or a batched tested simple (pouring) measure. The size of the drink is controlled by the pattern approval process.

• Beer, stout and ale must be sold in batch tested ‘glasses’ which may be any size. The size is difficult to determine by the purchaser because the quantity is hidden on the base and cannot be easily seen until the beer has been consumed.

• The quantity of wine sold is not controlled by the Act but some sellers use a badged measure purporting the quantity and others use glasses that have a line embossed on the glass. The line is notionally set at 150ml to provide for five glasses to a bottle. This practice has been determined by NMI not to be a sale by measure. CFA has no hard data but anecdotal evidence from inside the trade indicates that some licensees give a more generous measure while others have glasses with line set at 130ml or as low as 120ml.
This mixed approach to the sale of alcohol is detrimental to consumers economic wellbeing and health. Notwithstanding any consumer loss in relation to the quantity purchased, given the amount of evidence as to the adverse effects of alcohol on a person’s health and their ability to drive or operate machinery CFA believes that consumers should have sufficient information to clearly appreciate the quantity of drink they are about to consume.
CFA recommends that the sale of wine and spirits be reviewed with a view to ensuring wine is sold in specified quantities; the current spirit provisions are extended to other spirits and the capacity of beer and wine glasses be stated on the side, where consumers can readily see it.

Provision of information
The provision of adequate information to consumers is enshrined in a United Nations charter. Australia is a member of the UN. The General Principles of United Nations guidelines for consumer protection state Governments should develop or maintain a strong consumer protection policy, taking into account the guidelines and relevant international agreements. The Guidelines include ‘Access of consumers to adequate information to enable them to make informed choices according to individual wishes and needs’.
In Australia the Harper Review of Competition Policy acknowledged the contribution consumer information added to competition in the marketplace. The Harper Review recommended: ‘Governments should work with industry, consumer groups and privacy experts to allow consumers to access information in an efficient format to improve informed consumer choice’ and, ‘…governments, both in their own dealings with consumers and in any regulation of the information that businesses must provide to consumers, should draw on lessons from behavioural economics to present information and choices in ways that allow consumers to access, assess and act on them.’
One of the biggest issues for consumers is the provision and visibility of information. CFA supports the continuation of current regulations designed to ensure that consumers have access to consistent, comparable information including the price per unit of measurement and where and how legal metrology information is provided on package labels.

For example:
• Requiring the provision of the price per kilogram on random measure packages of products such as meat, fish, fruit and vegetables and cheese ensures retailers provide value comparison information for consumers in a consistent and legible format. These requirements greatly enhance price transparency and price comparison for consumers.

• Specifying the position, set out, form, and minimum character size for the display of ‘measurement markings’ on pre-packaged products is designed to ensure that consumers are provided with consistent, easily accessible, noticeable and legible information about the quantity of product in packages. In a 2014 national survey undertaken for Choice 74% of over 3,000 consumers said it was ‘very’ or ‘somewhat important’ that the quantity information be shown on the front of the pack.
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Footnotes
http://www.un.org/esa/sustdev/publications/consumption_en.pdf

Harper Review 2015 http://competitionpolicyreview.gov.au/final-report
www.choice.com.au/about-us/media-releases/2014/september/choice-unwraps-industry-push-to-hide-shrinking-packs

See above (5.2.1)

CFA is unable to specifically comment on this area but believes that where the use of AQS is suitable for large scale packaging the 12 packs approach facilitates enforcement in relation to small packers and retailers.