Transporting Limited Quantities of Dangerous …3434C2D2-F7E4-45A7-8916-FC0B80F… · Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015

Transporting Limited Quantities of Dangerous Goods

Regulatory Impact Statement

June 2015

Report outline

Title Transporting Limited Quantities of Dangerous Goods

Type of report Draft Regulatory Impact Statement

Purpose Public Consultation

Abstract This regulatory impact statement sets out and analyses options for reform

to the regulation for transporting limited quantities of dangerous goods by

road and rail in Australia.

Submission details

Submissions will be accepted until 7 August 2015 online at www.ntc.gov.au

or by mail to:

Att: Limited Quantities Regulatory Impact Statement Submissions

National Transport Commission

Level 15/628 Bourke Street

Melbourne VIC 3000

Key words Dangerous Goods, Limited Quantities, UN Model Regulations, Retail

Distribution Loads, Australian Dangerous Goods Code

Contact National Transport Commission


Melbourne VIC 3000

Ph: (03) 9236 5000

Email: [email protected]

www.ntc.gov.au

ISBN 978-1-921604-79-9

Contents

Scope and objectives of the regulatory impact statement 1

Nature and extent of the problem 1

Regulatory reform options 2

Cost benefit analysis 2

Conclusions 3

Public consultation 4

1 Introduction 5

1.1 Opportunities to provide comment on the RIS 5

1.2 Structure of this report 6

2 Context 7

2.1 Regulation of the transport of dangerous goods 7

2.2 Dangerous Goods packed in limited quantities 8

2.3 Developments in limited quantity requirements 12

2.4 Regulation of limited quantities overseas 12

2.5 Focus of the regulatory impact statement 14

3 Statement of the problem 15

3.1 Overview 15

3.2 Not a ‘risk based’ approach 16

3.3 Causing an unnecessary compliance burden 20

3.4 Not aligned with accepted international standards 21

3.5 Inconsistencies in the regulatory approach 22

3.6 Out of step with current circumstances 23

3.7 Regulatory complexity and lack of enforcement 23

4 Objectives of government action 25

4.1 Objectives of the UN Model Regulations 25

4.2 Objectives of the ADG Code and model legislation 25

4.3 Objective of proposed amendments to the ADG Code 25

5 Options considered 27

5.1 Option 1 – maintain the status quo 27

5.2 Option 2 – extend the ACCORD exemption industry-wide 28

5.3 Option 3 – adopt the provisions of the European ADR 29

5.4 Option 4 – adopt the UN Model Regulations 30

6 Costs and benefits of the options 31

6.1 Cost-benefit analysis 31

6.2 Identification of the impacted groups 32

6.3 Compliance costs 33

6.4 Costs and benefits associated with Option 1 35




7 Assessment of competition effects 43

8 Conclusions 44

8.1 Conclusions about the risk of transporting limited quantities 44

8.2 Conclusions about the costs and benefits of the options 44

9 Consultation strategy 46

9.1 Objectives of the consultation process 46

9.2 Consultation undertaken to-date 46

9.3 Proposed future consultation plan 47

9.4 Consultation questions 48

10 Implementation and review 49

10.1 Implementation plan 49

10.2 Post-implementation review 49

Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015

1

Executive summary

NERA Economic Consulting (NERA) has been engaged by the National Transport Commission

(NTC) to prepare this Consultation Regulatory Impact Statement (RIS) in relation to the ‘Limited

Quantities’ provisions of the Australian Code for the Transport of Dangerous Goods by Road and

Rail (the ADG Code). This RIS sets out and analyses options for reform to the regulation of the

transport of limited quantities (LQs) of certain dangerous goods in accordance with the

requirements in the Australian Government Guide to Regulation.

Scope and objectives of the regulatory impact statement

The transport of dangerous goods needs to be regulated in order to prevent, as far as possible,

accidents to persons or property and damage to the environment.

In Australia, the key regulatory instrument, the ADG Code is modelled on a set of widely adopted

international standards – the United Nations Model Regulations for the Transport of Dangerous

Goods (the UN Model Regulations).

The UN Model Regulations treat the transport of individual packages containing small amounts of

some dangerous goods as a lower-risk activity than transporting bulk quantities of dangerous

goods. Due to the lower level of risk associated with transporting LQs, they have simplified labelling

requirements and less restrictive packaging requirements compared to dangerous goods

transported in larger quantities.

The current LQ requirements in the ADG Code are aligned with the 15

th

edition of the UN Model

Regulations, which were released in 2007. As such, the current Australian requirements for the

transport of LQs are over eight years behind international best practice.

The UN Model Regulations are now in their 18

th

edition and there has been a significant change in

how LQs are regulated. While LQs must still be packaged and labelled in accordance with all

limited quantity provisions, they are now exempt from many of the other requirements under the

ADG Code, including certain requirements for marking, aggregation, placarding and

documentation. There is also no limit to the total quantity per load that can be carried in this way.

The majority of these changes were introduced in the 16

th

edition of the UN Model Regulations,

which was published in 2009.

By being out-of-step with international practice, stakeholders have identified that the ADG Code is

creating an unnecessary regulatory burden for businesses, is limiting the productivity of Australia’s

transport system and is not reflective of the actual level of risk of transporting LQs.

This RIS identifies the problems associated with the current regulatory approach to LQ

transportation and assesses three alternate options to reduce the regulatory burden, while

maintaining high levels of safety.

Nature and extent of the problem

Within the current approach to regulating the transport of LQs, a number of areas of regulatory

failure have been identified, including:

Not a ‘risk based approach’– Although there is a lack of data on incidents involving the

transport of dangerous goods, evidence from Australia and overseas suggests the current

ADG Code does not adequately reflect the lower level of risk associated with transporting

LQs and does not justify the costs of complying with the current regulatory requirements.

Causing an unnecessary compliance burden – By not reflecting changes in international

practice since 2007, the current regulations are imposing an additional compliance burden

on Australian businesses without additional benefit.

Not aligned with accepted international standards – The lack of alignment is

inconsistent with the Australian Government’s policy announcement in December 2014,

that ‘if a system, service or product has been approved under a trusted international

standard or risk assessment, then our regulators should not impose any additional

requirements for approval in Australia, unless it can be demonstrated that there is a good

reason to do so (Prime Minister of Australia, 2014).

Inconsistencies in the regulatory approach – There are a number of inconsistencies in

the regulatory approach across industries which are not based on the risk profile of

transporting the LQ goods.

Out of step with current circumstances – The current regulatory arrangements do not

reflect the changing nature of the distribution of goods, in particular the increase in online

and direct-selling. Such businesses could face surcharges of up to 50 per cent on their

transportation costs as a result of compliance with the LQ requirements.

Regulatory complexity – There is evidence that the current approach has resulted in a

lack of clarity of the regulatory requirements for the transport of LQs which could be driving

high levels of non-compliance.

Regulatory reform options

The NTC had NERA assessed four options in this RIS:

1. Maintain the current approach to regulating the transport of LQs. This is the base case against

which the other options are assessed.

2. Address problems with aspects of the ADG Code by creating a new LQ exemption:

a. Create an new exemption that effectively extends the current provisions of the

ACCORD exemption industry-wide, for all household-use LQs

b. Create a new exemption that provides the same exemptions as the above, but for

all LQs

3. Amend the ADG Code to adopt the standards for the transport of LQs used across Europe

under the European Agreement concerning the International Carriage of Dangerous Goods by

Road (ADR).

4. Amend the ADG Code to adopt the standards for the transport of LQs applied under the

UN Model Regulations.

Cost benefit analysis

For this RIS, the cost benefit analysis has focussed on producing an estimate of the overall

compliance costs associated with the current regulations. This has been calculated for the base

case (Option 1) and the costs and benefits of the alternative options for regulating the transport of

LQs (Options 2, 3 and 4) have then been determined in reference to the base case costs.

The benefits have been calculated based on quantifying the reduction in compliance costs from

Options 2, 3, and 4, while the cost component of the cost benefit analysis (CBA) focuses on

assessing whether there will be an increase in the risk of transporting LQs as a result of introducing

a more permissive regulatory scheme. Given a lack of data on the current risks of transporting LQs,

it has only been possible to undertake a qualitative assessment of these risks.

Businesses affected

The main groups that have been identified as being impacted by the ADG Code’s approach to

regulating the transport of LQs are the businesses that import, export, distribute and sell LQ

products. Although there are several hundred dangerous goods that can be packed and

transported under the LQ provisions of the ADG Code, the most common LQ products include:

Cosmetics and personal care products – including, perfumes, some lipsticks, nail polish,

nail polish remover, hair spray, mascara, antiperspirant deodorant, facial cleanser and

toner, alcohol-based hand-rubs and mouthwash

Household cleaning products – including, hard-surface cleaners such as oven cleaners,

toilet cleaners, glass cleaners and some laundry products


3

Home garden and pest products – including, fly sprays, pesticides and herbicides

Paints, coatings and related products – including decorative paints, lacquers, varnishes

and mineral turpentine.

These products are frequently sold in retail stores such as supermarkets, department stores and

hardware stores. Cosmetics and personal care products are also frequently sold in duty free shops,

online and by direct sellers. The cost-benefit component of the RIS has therefore focussed on

these sectors.

Types of compliance costs

The three main categories of compliance costs associated with the transport of LQs are marking

and labelling requirements; preparing transport documentation; and complying with vehicle

placarding requirements.

As the majority of businesses that transport LQs outsource their transport and logistics operations

to couriers or transport businesses, the cost of complying with the LQ provisions of the ADG Code

is therefore generally reflected in the additional price charged by transport businesses for moving

LQ goods compared to non-dangerous goods.

These additional costs are sometimes charged by transport businesses in the form of a fixed

surcharge (around $50 to $65 per load) or as a proportion of the total transport cost (around a 15

per cent to 25 per cent increase compared to the cost of transporting non-dangerous goods).

Characterisation of the risks in transporting limited quantities

There is a degree of risk involved in all transport operations, particularly where heavy vehicles are

involved. These risks include harm to individuals, including drivers, other motorists and emergency

services workers; damage to vehicles, transport infrastructure and property; and environmental

damage. In the event of an accident, the presence of LQs could potentially contribute to an

increase in the consequences of the accident. For this to happen, the accident would typically need

to involve a secondary event, such as an engine fire spreading to LQs in the vehicle’s cargo, or a

spill of the vehicle’s cargo, including LQs. In the case of a fire, the flammable properties of some

LQs may cause the fire to be larger or more intense and therefore cause more damage. In the case

of a spill, the toxic qualities of some LQs could result in harm to individuals or damage to the

environment that would not occur in the absence of LQs.

State and territory regulators and emergency services organisations in Australia do not collect

information on the number of accidents or incidents involving the transport of LQs and there is also

an absence of overseas data on this issue. Given this, it has not been possible to precisely quantify

the level of risk associated with the transport of LQs. However, the common nature of many LQs

and the frequency that these goods are transported in Australia without evidence of accidents or

incidents supports the conclusion that transporting LQs is a very low risk activity.

Similar conclusions have also been reached by transport regulators around the world, including at

the UN, in Europe and in the USA.

Conclusions

Compliance costs associated with the transport of LQs are substantial. The total costs associated

with the current regulatory framework (Option 1) are estimated to be $69.1 million per year. The

three alternate options considered in the RIS would provide a cumulative reduction in these costs.

Options 2a or 2b would provide the least reduction in compliance costs. This would primarily come

from a reduction in transport documentation requirements and would result in a reduction in

compliance costs of approximately $23.5 million per annum. However, these options would also be

a further departure from international standards and may create confusion for transport companies

when interpreting the ADG Code.

Option 3 would provide slightly greater benefits than Options 2a and 2b, mainly due to the higher

aggregate quantity of LQs that would be allowed to be transported without placarding restrictions

applying. This option also has the advantage incorporating simplified documentation requirements

in the ADG Code. It would result in a reduction in compliance costs of approximately $27.2 million

per annum. The risks associated with an increase in placarding limits are considered to be very

low, evidenced by the lack of any apparent problems in jurisdiction that have adopted these limits.

The regulatory requirements in this option have been in operation in Europe for a number of years,

without any indication of an increase in the risks to emergency services workers or an increase in

the damage to property

Option 4 is effectively a non-regulatory option. It would result in a reduction in compliance costs of

approximately $57.4 million per annum. Option 4 provides the greatest reduction in compliance

costs of the three options, but does not have the same track-record of having been safely

implemented in other comparable jurisdictions. Although the USA has determined to fully

implement the UN Model Regulations by 2020, to-date no jurisdiction has implemented them

without amendment. Hence there is no operational evidence base on which to form a risk

assessment of the non-regulatory option.

Figure 1. Cumulative annual benefits of the three options

As this is a Consultation RIS, the NTC welcomes additional comments, information and data from

stakeholders that should be taken into account in developing the Decision RIS. If information of

sufficient quality and volume can be obtained from submissions, it will be used to conduct further

quantitative impact analysis on the proposed options for the Decision RIS. This could result in the

NTC altering its conclusions about the options.

Public consultation

The NTC now seeks comment on this Consultation RIS, including the regulatory options it

assesses, and their potential impacts. In particular, the NTC invites views on the RIS assessments

and any evidence or experiences that may support or contradict the RIS’s conclusions.

The following questions are intended to assist stakeholders in their assessment of the options:

Do you support the assumptions used in the regulatory costings?

Are there any additional costs or benefits associated with the current regulatory

arrangements that have not been identified in the RIS (including any data or evidence to

quantify the costs and benefits)?

Is there any further evidence from Australia or overseas to estimate the actual risks

associated with transporting LQs?

Which reform option do you/does your organisation support and why?

What considerations should be taken into account during the implementation process (if an

amendment is supported)?

Public comment is open until 7 August 2015 and comments may be submitted via the channels

specified at the beginning of this report.


5

1 Introduction

NERA Economic Consulting (NERA) has been engaged by the National Transport Commission

(NTC) to prepare this Regulatory Impact Statement (RIS) in relation to the ‘Limited Quantities’

provisions of the Australian Code for the Transport of Dangerous Goods by Road and Rail (the

ADG Code). This RIS sets out and analyses options for reform to the regulation of the transport of

limited quantities (LQs) of certain dangerous goods.

The RIS follows the Australian Government Guide to Regulation by:

Describing the problem this reform is seeking to address and establishing why action is

needed

Identifying policy options that would address the problem

Determining the net benefit of these policy options

Describing who was consulted on the options, how they were consulted and setting out the

issues raised in consultation

Picking the best option from those identified

Setting out the process for implementation and evaluation of the preferred option.

The RIS also adheres to the Council of Australian Government’s (COAG’s) Best Practice

Regulation: A Guide for Ministerial Councils and National Standards Setting Bodies.

1.1 Opportunities to provide comment on the RIS

The NTC has undertaken extensive consultation with key stakeholders to inform the development

of the proposed regulatory options prior to the release of this RIS for public comment. Informal

consultation has been occurring with industry associations and regulators on this issue over the

past four years. The NTC has also received continual feedback from industry in public submissions

and during consultations associated with recent amendments to the ADG Code.

In October 2014 the NTC conducted a workshop with key stakeholders specifically on the

regulation of LQs. The attendees at this workshop included transporters, retailers, industry peak-

bodies, regulators and emergency services organisations. The workshop was used to collect

information about the types of LQ dangerous goods being transported in Australia, the way these

goods are transported and risks associated with their transport. A number of the organisations who

attended the workshop also provided the NTC with written submissions.

NERA has also undertaken consultations in the preparation of this RIS, with a focus on collecting

further information about the transport of LQs in Australia, the effectiveness of the current

regulatory arrangements and collecting data to inform the evaluation of different regulatory options.

Public comments and submissions are invited on the proposed regulations, in response to

information provided in this RIS. Written comments and submissions can be made online at

www.ntc.gov.au or by mail to:

Att: Limited Quantities Regulatory Impact Statement Submissions

National Transport Commission


Melbourne VIC 3000

Public comment is open until 7 August 2015.


6

1.2 Structure of this report

This RIS is structured as follows:

Chapter 2 provides contextual information in relation to dangerous goods, LQs and the

regulatory environment

Chapter 3 describes the nature of the problem and sets out the issues with the current

regulatory approach

Chapter 4 outlines the objective of government action

Chapter 5 describes the options available to government to address the problem

Chapter 6 assesses the costs and benefits of these options

Chapter 7 discusses the conclusions of the analysis

Chapter 8 assesses the competition impacts of the proposed changes

Chapter 9 outlines the consultation strategy

Chapter 10 outlines the intended process for implementation and review.


7

2 Context

This section describes the current approach to the regulation of dangerous goods, special

provisions applying to the transport of limited quantities of these goods and the different

approaches to the regulation of the transport of LQs in Australia and other jurisdictions.

2.1 Regulation of the transport of dangerous goods

Dangerous goods, due to their flammability, ability to react dangerously with other chemicals, either

explosively or corrosively, and acute toxicity, present significant risks to people, property and the

environment, especially when being transported.

In Australia, the laws governing the transport of dangerous goods by road and rail are based on

Australian Code for the Transport of Dangerous Goods by Road and Rail (the ADG Code), the

Model Law on the Transport of Dangerous Goods by Road or Rail and a Model Subordinate Law

on the Transport of Dangerous Goods by Road or Rail.

The ADG Code covers provisions applicable to the transport of dangerous goods including:

Classification

Packaging and performance testing

Use of bulk containers, freight containers and unit loads

Marking and placarding

Vehicle requirements

Segregation and stowage

Transfer of bulk dangerous goods

Documentation

Safety equipment

Procedures during transport emergencies.

Together, the ADG Code and the model laws provide a single national set of rules to reduce the

risks of personal injury, death, property damage and environmental harm arising from the transport

of dangerous goods by road or rail.

Australian Code for the Transport of Dangerous Goods by Road and Rail

The ADG Code and the associated model laws are based on the United Nations Model

Regulations for the Transport of Dangerous Goods (the UN Model Regulations), which form the

framework for the regulation of the transport of dangerous goods in most countries around the

world. The UN Model Regulations are produced under the auspices of the United Nations by the

United Nations Subcommittee of Experts on the Transport of Dangerous Goods.

The UN Model Regulations are generally updated every two years. The most recent edition of the

regulations (the 18

th

edition) was released in July 2013.

1

In Australia, the ADG Code has been in use since 1980. Major changes were made to the ADG

Code in 1997 to improve national uniformity in regulations for the transport of dangerous goods and

further changes were made in 2007, when the 7

th

edition of the ADG Code (ADG7) was adopted.

The current version of the ADG Code (edition 7.3) was published in 2013. It is mainly based on the

17

th

edition of the UN Model Regulations, with some amendments and specific provisions to reflect

current Australian practices and conditions.

1

A copy of the UN Model regulations can be found at: http://www.unece.org/index.php?id=33193&L=0


8

The ADG Code and the associated model laws are used as a guide for states and territories to

create their own laws, and therefore they have no legislative force of their own.

Role of the National Transport Commission

The NTC is an independent statutory body established by the National Transport Commission Act

2003. It is an inter-governmental agency, charged with improving the productivity, safety and

environmental performance of Australia’s road, rail and intermodal transport systems.

As an independent statutory body, the NTC develops and submits reform recommendations for

approval to the Transport and Infrastructure Council, which comprises federal, state and territory

transport, infrastructure and planning ministers.

Among the responsibilities of the NTC are policy issues relating to the development and

maintenance of Australia’s transport of dangerous goods laws.

Role of the Competent Authorities

Under the model law, state and territories are responsible for appointing a ‘Competent Authority’ to

administer and enforce their legislation.

These Competent Authorities in each state and territory are:

Australian Capital Territory - Worksafe ACT

New South Wales - WorkCover NSW and the Environment Protection Authority

Northern Territory - NT WorkSafe

Queensland – the Department of Transport and Main Roads

South Australia – Safework SA

Tasmania – Worksafe Tasmania

Victoria – Worksafe Victoria

Western Australia – Department of Mines and Petroleum.

These agencies also make up the Competent Authorities Panel (CAP), a body whose prime

responsibility is to consider submissions requesting national exemptions, determinations and

classifications that may operate at variance to the ADG Code. The Australasian Fire and

Emergency Services Authorities Council (AFAC), the Australian Marine Safety Authority (AMSA),

the Civil Aviation Safety Authority (CASA) and the NTC are observers to the CAP and its

secretariat is provided by the Commonwealth Department of Infrastructure and Regional

Development.

2.2 Dangerous Goods packed in limited quantities

The current regulatory system treats the transport of individual packages containing small amounts

of some dangerous goods as a lower-risk activity than transporting bulk quantities of dangerous

goods. The ADG Code refers to this as ‘Dangerous Goods Packed in Limited Quantities’ (LQs).

The types of dangerous goods that can be transported as LQs are set out in Chapter 3 of the ADG

Code. There are several hundred of these, including common household items such as:










9

Chapter 3 of the ADG Code also lists the upper limit on the amount of the good for it to be

considered treated as an LQ. These upper limits range from 100g (or ml) to 5kg (or litres),

depending on the type of good. The limit is generally lower for more risky types of dangerous

goods and the most high-risk dangerous goods cannot be transported as LQs in any quantity.

2

LQs are considered lower risk than bulk quantities of dangerous goods because they are small

amounts within individual packages that could contain the dangerous goods in the case of an

incident. Due to the lower level of risk associated with transporting LQs, they have simplified

labelling requirements and less restrictive packaging requirements compared to dangerous goods

transported in larger quantities.

Regulatory concessions for the transport of limited quantities

Under the ADG Code, the transport of LQs is subject to all of the provisions and requirements of

the ADG Code, unless it has been specified otherwise in Chapter 3.4. The two main exemptions

made in Chapter 3.4 for the transport of LQs allow for reduced packaging requirements and

simplified labelling and marking of LQ packages.

Simplified packaging requirements

Goods that are permitted to be transported as LQs are required to meet the general packaging

requirements of the ADG Code and cannot be transported in individual packages exceeding limits

of the ADG Code (100g or ml to 5kg or litres, depending on the type of good). However, these

goods can be transported without meeting all of the packaging requirements that apply to bulk

quantities of dangerous goods. The relevant requirements for LQ packaging are:

LQs must be packed only in inner packaging placed in suitable outer packaging and

Intermediate packaging may be used

Inner packaging is not necessary for the transport of LQs such as aerosols

Packaging must meet certain quality and construction requirements of Chapters 4 and 6 of

the ADG Code and the total gross mass of the packages must not exceed 30 kg

Shrink-wrapped or stretch-wrapped trays are acceptable as outer packaging for articles or

inner packaging containing LQs

Where inner packaging is liable to break or be easily punctured (those made of glass,

porcelain, stoneware or certain plastics) LQs are required to be placed in suitable

intermediate packaging and the gross mass of the package must not exceed 20 kg

Class 8 (corrosive) LQs in packing group II (medium danger) in glass, porcelain or

stoneware inner packaging must be enclosed in a compatible and rigid intermediate

packaging

Different LQs packed together may be placed in the same outer packaging provided they

will not interact dangerously in the event of leakage. Segregation provisions for LQs do not

apply within a vehicle or freight container.

Simplified labelling and marking requirements

The ADG Code generally requires outer packaging containing dangerous goods to display the

proper shipping name of each type of dangerous good in the package as well as its UN Number,

prefaced with either “UN” or “UN No.”.

3

LQs that are transported by road, rail or sea are exempted from some of these requirements. They

do not need to be marked with their shipping name or the UN number of their contents, where they

bear the limited quantity marking shown in the figure 2 (left). Packages containing dangerous

2

See column 7a of the list of dangerous goods in Chapter 3 of the ADG Code.

3

The UN No. is an identification number assigned to the dangerous goods by the United Nations Committee

of Experts on the Transport of Dangerous Goods (see ADG7 volume 1, chapter 3).


10

goods consigned for air transport must bear the marking shown in the figure 2 (right). They are also

not required to be marked with the consignor’s details.

4

Figure 2. Limited Quantity markings

Source: ADG7, Page 307

Under the current ADG Code, LQ goods are still required to meet the other regulatory requirements

applying to dangerous goods. These requirements include:

Inner, intermediate and outer labelling requirements

The ADG Code requires every inner package that contains 20g (or ml) or more dangerous goods to

be clearly marked with the proper shipping or technical name for the dangerous goods in the inner

package, the class label for the dangerous good in the packaging and labels for any subsidiary risk

applicable to the goods. Packages may also be marked according to the United Nation’s Globally

Harmonised System of Classification and Labelling of Chemicals (the GHS).

An inner packaging that is an aerosol must also be marked with the markings applicable to

dangerous goods of Class 2 and, where relevant, any subsidiary risk of the aerosol.

In addition to the LQ labelling requirements listed above, there are a number of other specific

labelling requirements that apply to the transport of LQs (set out in chapter 5.2 of the ADG Code),

including orientation arrows and ‘overpack’ markings (where the goods are being transported

outside Australia).

Documentation requirements

Except in certain exempted circumstances transport documents are required at all times dangerous

goods are being transported. Consignors who send dangerous goods for transport by road must

ensure the driver has a transport document describing the dangerous goods.

Drivers must ensure their transport documents are carried in the vehicle’s cabin and if the vehicle is

transporting a ‘placard load’, transport documents must be carried in an emergency information

holder. The information that is required to be included in the documentation includes:

The consignor's name and telephone number

A description of the dangerous goods including:

o United Nations number (UN number)

o The proper shipping name

o Dangerous goods class or division

o Subsidiary risk (if applicable)

o Packing group (if applicable)

o A description of each receptacle, e.g. 'drum' or 'intermediate bulk container' (IBC)

The number of packages or receptacles of each type

The 'aggregate quantity' of the dangerous goods.

In the event of an incident or accidents involving the transport of LQs, documentation may be

accessed by emergency services workers and used to assess risks associated with the incident

4

See clause 5.2.1.1.1 in chapter 5.2 of the ADG Code.


11

and inform the response or clean-up approach. Transport documentation is also used to determine

whether a load has reached the threshold for dangerous goods ‘placarding’, as described in figure

3.

Figure 3. Example of documentation required for the transport of Dangerous Goods

Transport document

Consignor's name Consignor's contact number

Jones Australia Pty Ltd (02) 8888 8888

Parramatta NSW 2222

Order number J44376 Invoice number 83456

To Date 30 November 2011

Brown & Jolly Transported by

Stuart Terrace SCD Transport

Richley Heights NSW 2879 Petersham NSW

UN

number

Proper

shipping

name

Class/

division

Subsidiary

risk

Packing

group

Container

type

Number of

containers

Aggregate

quantity

1223 Kerosene 3

− III 200 L drum 2 400 L

1831

Sulfuric

acid,

fuming

8 6.1 I 1 L bottle 5 cartons 15 L

n/a

Washing

powder

n/a n/a n/a 10 cartons 400 kg

Source: http://www.epa.nsw.gov.au/dangerousgoods/FS3transdocs.htm

Placard load amounts

The term placard load is used in the ADG Code to refer to the quantity of dangerous goods being

transported that requires placards to be displayed on the transport unit (e.g. truck or container).

Generally, the ADG Code requires placarding of loads of more than 1,000kg (or litres) of

dangerous goods and this limit also apply to the transport of LQs.

5

Additional controls apply to placard loads, including the requirement to display vehicle placards,

and carry additional safety equipment as well as comply with stowage, load segregation

requirements and some route restrictions.

Concessions for limited quantities in retail distribution loads

Further exemptions from the regulatory requirements of the ADG Code are applied to certain LQs

when they are transported from a retail distribution centre to a retail outlet as part of a retail

distribution load (RDL).

RDL’s have simplified documentation requirements, reduced labelling requirements and do not

require vehicle placarding as long as they meet the requirements set out of Chapter 7.3 of the ADG

Code.

6

Up to 2,000kg (or litres) of LQs can be transported in a RDL, as long as the aggregate

quantity of dangerous goods in the load does not exceed 20 per cent of the total quantity of goods

in the load.

5

Note: the ADG Code also sets out some cases where the threshold for a placard load is less than 1,000kg/L.

6

Section 7.3.1.1of the ADG Code sets out the required characteristics for a load to be considered a RDL.


12

Concessions for the transport of limited quantities by ACCORD members

A further exemption to the standard regulatory requirements of the ADG Code applies to members

of ACCORD, the peak association for the hygiene, cosmetic and specialty products industry. This

exemption allows ACCORD members to transport up to 2,000kg (or litres) of dangerous goods

packaged in accordance with LQ provisions, and where the goods are for household use, without

the marking, aggregation, placarding and the usual documentation requirements that would

otherwise apply (generic transport documentation is still required).

Where LQs that are transported under this exemption are transported in a load with other

dangerous goods, the quantity of LQs in the load also does not count towards the aggregate

quantity of dangerous goods in the load for placarding purposes.

This exemption has been in place since 2011.

2.3 Developments in limited quantity requirements

The current LQ requirements in the ADG Code are aligned with the 15

th

edition of the UN Model

Regulations, which were released in 2007. As such, the current Australian requirements for the

transport of LQs do not reflect changes to international practice since 2007.

The UN Model Regulations are now in their 18

th

edition and there has been a significant change in

how LQs are regulated. While LQs must still be packaged and labelled in accordance with all

limited quantity provisions, they are now exempt from many of the other requirements under the

ADG Code, including marking, aggregation, placarding and documentation. There is also no limit to

the total quantity per load that can be carried in this way. The majority of these changes were

introduced in the 16

th

edition of the UN Model Regulations, which was published in 2009.


creating an unnecessary regulatory burden for businesses that operate across different countries,

limiting the ability of Australian businesses to compete in a global market.

2.4 Regulation of limited quantities overseas

Like Australia, most countries around the world regulate the transport of dangerous goods using

either the UN Model Regulations or a variation of these regulations. However, unlike Australia,

most international jurisdictions have implemented changes to their LQ provisions, since the 15

th

Edition of the UN model Regulations were published, which have reduced restrictions on the

transport of LQs.

By not updating the LQ provisions in recent years, Australian requirements for the transport of LQs

are generally more restrictive than those in place in other jurisdictions around the world. More

information on the arrangements in place in other jurisdictions is provided below.

The UN Model Regulations

The UN Model Regulations require LQs to be packaged and labelled in accordance with all LQ

provisions, but has more relaxed requirements for marking, aggregation, placarding and

documentation of LQs. The key features of the UN requirements include:


Under the UN Model Regulations, LQs are exempt from many of the marking and labelling

requirements that apply to other dangerous goods. Although LQs are required to display the LQ

marking (see Figure 1), they are not required to display other markings or labels, other than

orientation arrows and ‘overpack’ markings (where relevant). Inner labelling of LQs is also not

required under the UN Model Regulations.


There are no documentation requirements for the transportation of LQs by road or rail under the

UN Model Regulations. LQs that are packed or loaded into a container or vehicle which will be

transported by sea require “container/vehicle packing certificate” specifying the container/vehicle


13

identification number(s) and certifying that the operation has been carried out in accordance with

certain requirements of the model regulations.

7


There is no requirement in the UN Model Regulations for placarding loads of LQs, regardless of the

quantity of LQs being transported on a load.

European approach

The European Agreement concerning the International Carriage of Dangerous Goods by Road

(ADR) has been adopted in 48 Countries. This agreement is based largely on the UN Model

Regulations. However, there are several significant variations for LQs.


Labelling requirements of the ADR are consistent with the UN Model Regulations. LQs are required

to display the LQ marking, but they are not required to display other markings or labels, other than

orientation arrows and ‘overpack’ markings (where relevant). Inner labelling requirements also do

not apply.


The ADR allows for more simplified documentation for the transport of LQs than the ADG Code.

Paragraph 3.4.12 of ADR 2011 requires consignors to provide information about the total gross

mass of the load to be in a traceable form. This does not imply a document must be generated, as

text messages or emails are considered a traceable form.


Unlike the UN Model Regulations, the ADR does place a limit on the quantity of LQs that can be

transported without vehicle placarding. This limit is eight tonnes per transport unit. However, only

transport units and containers with a maximum mass of 12 tonnes or more are required to display

LQ placards. In the UK, the maximum mass is interpreted to mean the unladen weight of the

transport unit. Therefore the transport unit must exceed 12 tonnes unladen weight before it needs

to be marked in accordance with these provisions. Marking/placarding of the transport unit is then

only a requirement if the total gross mass of the packages containing dangerous goods exceeds 8

tonnes per transport unit.

8

United Kingdom variation to the provisions of the ADR

The UK has adopted the provisions of the ADR, but also has a ‘derogation’ which relaxes the

package labelling and marking requirements for the final stages of carriage in retail distribution.

Under the derogation, some LQs may be removed from their outer packaging and carried from

distribution depot to retail outlet or end-users without the packaging needing to be marked with UN

certification marks or the hazard symbols. The journey must be part of the final distribution stages

from depot to retailer or end-user, or an equivalent return journey.

United States of America

The United States of America (USA) uses a classification system called Other Regulated Material,

Category D (ORM-D) to regulate the transport of LQs. This system applies to materials packed in

accordance with the LQ provisions that were also consumer commodities, which are defined as

goods intended or suitable for sale at retail agencies and for use in households.

However, the USA is phasing out this system and will fully adopt the UN Model Regulations for LQs

by 2020. The ORM-D system had additional concessions to the LQ sections of the UN Model

Regulations, including a concession on the requirement for transport documentation. However, as

these LQ requirements have now been removed from the UN model regulations, the USA is in the

process of eliminating the ORM-D classification.

7

See section 5.4.2 of the UN Model Regulations.

8

A copy of the derogation is available at: http://www.transportsfriend.org/pdf_files/dg/transport-marking-lq.pdf


14

In the reasons for their decision to adopt the UN Model regulations, the USA’s Competent Authority

(the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration

(PHMSA)) referred to the long safety record of both ORM-D and LQ shipments and noted there

had been considerable interest from within the USA in pursuing further harmonisation

internationally due to the potential for substantial savings in transportation costs and improved

transportation efficiency.

The PHMSA also assessed that the adoption of the UN Model Regulations would enhance safety

by facilitating a single, uniform system of transporting limited quantity materials (Department of

Transportation (USA) 2011).

2.5 Focus of the regulatory impact statement

This RIS is focussed on the main differences in the approaches to regulating the transport of LQs

in Australian and overseas. These differences primarily relate to the intermediate and outer

marking requirements for LQs; documentation requirements; and the total quantity of LQs that can

be transported in a load before placard restrictions apply.

Changes to inner packaging labels are not included in this review of LQ regulations. While these

requirements do have an impact on the transport of LQ products, they are not unique to these

products and the implications of any changes will need to be considered in a broader context.

The ADG Code’s current inner packaging label requirements have remained in place to support the

five year transitional period for moving to the new Globally Harmonised System of Classification

(GHS) labelling system. This has allowed industry to use the two systems concurrently. From

1 January 2017 industry must comply with the GHS Classification and Labelling of Chemicals 3rd

Revised Edition. The NTC will consider reviewing the ADG Code’s inner label requirements

separately to this RIS, as part of its usual maintenance process.

The RIS has also not considered any variations to the types of goods that can be transported as

LQs or the size of the individual packages these are allowed to be transported in (Column 7a in the

table of dangerous goods in Chapter 3 of the ADG Code). These are mainly consistent with global

regulations and any changes were considered to be likely to result in confusion for industry,

especially for companies that move LQs across international borders.


15

3 Statement of the problem

The first stage of a RIS is to provide the ‘case for change’ for the regulatory proposal. This involves

clearly identifying and defining the problem you are trying to solve. This definition is then supported

with evidence of the magnitude of that problem and the cost of non-intervention.

3.1 Overview

The transport of dangerous goods needs to be regulated in order to prevent, as far as possible,

accidents to persons or property and damage to the environment, the means of transport employed

or to other goods. In Australia, the approach to regulating the transport of dangerous goods is well

established and is broadly accepted. The key instrument, the ADG Code is modelled on a set of

widely adopted international standards, which have been used to regulate the transport of

dangerous goods in a large number of countries around the world since the 1950s. The ADG Code

has been used in Australia since 1980 and the current version of the ADG Code (ADG7) has been

in use since 2007.

The focus of this RIS is on evaluating the approach to regulating the transport of dangerous goods

in limited quantities, where there is evidence of a ‘regulatory failure’. The issues identified with the

current approach to regulating the transport of LQs include:

Not a ‘risk based approach’

Although there is a general lack of data on accidents or incidents involving the transport of

dangerous goods, evidence from Australia and overseas suggests the current ADG Code does not

adequately reflect the lower level of risk associated with transporting LQs and does not justify the

costs of complying with regulatory requirements for the transport of these goods.

Causing an unnecessary compliance burden

While the rest of the ADG Code is mainly aligned with the 17

th

edition of the UN Model Regulations,

LQ requirements are aligned with the 15

th

edition the UN Model Regulations, which were released

in 2007. By not reflecting changes in international practice since 2007, the current regulations are

imposing an additional compliance burden on Australian businesses. The total value of this

compliance burden is difficult to estimate, given a lack of data available. However, the

requirements appear excessive given the lack of incidents involving the transport of LQs.

Not aligned with accepted international standards

The LQ requirements in the ADG Code do not reflect a relaxing of regulatory requirements that has

occurred in other jurisdictions in recent years. This is inconsistent with the Australian Government’s

policy announcement in December 2014, that ‘if a system, service or product has been approved

under a trusted international standard or risk assessment, then our regulators should not impose

any additional requirements for approval in Australia, unless it can be demonstrated that there is a

good reason to do so.’

9

Inconsistencies in the regulatory approach

There are a number of inconsistencies in the regulatory approach across industries. For example,

the relaxation of the ADG Code for LQs transported as part of retail distribution loads (RDLs) is

based on the final destination of the goods that are being transported (i.e. to or from a retail outlet

or retail distribution centre). The destination dangerous goods are transported to or from are not

risk-factors in the transport of these goods and should therefore not be used determine the

regulatory requirements for the transport of these goods. Similarly, the ACCORD exemption, in

applying only to members of that industry association creates a further inconsistency in the

regulatory approach, which is not based on the risk profile of transporting these goods.

9

See the statement from the Prime Minister: https://www.pm.gov.au/media/2014-10-14/further-measures-cut-

red-tape-accepting-trusted-international-standards


16

Out of step with current circumstances

The current regulatory arrangements do not reflect the changing nature of the distribution of goods,

in particular the increase in online and direct-selling. Amounts sold by direct sellers are typically

very small quantities, sent out in packages of mixed goods. These are estimated to be in the lower-

scale of risk for transporting LQs, but are subject to LQ provisions, which result in transport costs

that are up to 40-50 per cent higher than for non-dangerous goods.

Regulatory complexity

There is evidence that the current approach has resulted in a lack of clarity of the regulatory

requirements for the transport of LQs. This was evident in the consultations undertaken to prepare

this RIS. Although, the large distribution businesses and larger businesses involved in the transport

of LQs had a strong understanding of current regulatory requirements, it is apparent that smaller

businesses or those that only transport LQs irregularly do not have as strong an understanding of

the current regulatory requirements, which could be driving high levels of non-compliance.

3.2 Not a ‘risk based’ approach

Risk analysis is an important part of the Government’s RIS requirements as it can shed light on

sources of uncertainty about the possible impacts of proposed regulation on outcomes. The Office

of Best Practice Regulation (OBPR’s) guidance note on risk analysis in RISs requires it to focus on

objective risks rather than ‘perceived’ risks, noting that perceptions about risk can be founded on

bias and misinformation about the true magnitude and severity of risks (Department of Prime

Minister and Cabinet, 2014).

This is highly relevant in the case of the regulation of the transport of LQs, where a major challenge

in preparing this RIS has been the lack of data collected either in Australia or overseas on the

volume of LQs transported per annum or any accidents or incidents associated with the transport of

these LQs. The OBPR notes, in cases like this, where there is a lack of information about risk,

individuals can often perceive a risk to be much greater than it actually is. This appears to be true

for the transport of LQs. During consultations no incidents were identified where LQs had

contributed to the cause of or increased the consequences of an accident. However, some of those

consulted maintained strong concerns about the risks associated with transporting LQs.

Characterisation of the risks in transporting limited quantities

The significance of a risk is usually characterised by an assessment of the likelihood (or probability)

of an event occurring and the consequences should the event occur. In considering these issues

for the RIS, every attempt has been made to identify and quantify both the probability of a vehicle

accident or incident involving the transport of LQs and the consequences of these accidents. The

broad approach taken is shown in the figure below.

Figure 4. Approach to transport of LQ risk analysis

Probability analysis

The probability analysis has focussed on identifying and quantifying the amount of LQs transported

in Australia, the number of accidents involving LQs and whether LQs have contributed to the cause

of those accidents.

Quantities of limited quantities transported in Australia

The amount of bulk and non-bulk freight transported by road and rail in Australia has increased by

approximately 55 per cent over the past decade (from 2.1 billion tonnes to 3.3 billion tonnes)

(BITRE 2014, Table 2.1c). There are varying estimates of the proportion of dangerous goods in


17

these freight trips. In 2011 the Audit Office of NSW estimated this to be in the range of 10-15 per

cent (The Audit Office of NSW 2011). Dangerous goods in the UK make up 7.6 per cent of total

goods transported, while they are estimated to be 4.4 per cent of total goods transported across

Europe (ECE 2014).

No data is available on the quantity of LQs transported around Australia each year, but it is likely to

be only a small proportion of dangerous goods (especially when measured by weight or volume).

However, many common household items are classified as LQs and these products are routinely

transported to and from retail stores and elsewhere along supply and distribution chains. This

includes an estimated 240 million aerosols (the majority of which are treated as LQs for the

purposes of the ADG Code), which are transported around Australia for domestic sale each year.

10

Estimates provided by supermarkets and department stores suggest that LQs could make up 3-5

per cent percent of the total goods they sell and some LQs are estimated to be prevalent in most of

the mixed loads of goods transported by these organisations.

Feedback from consultations suggests that LQs often make up only a very small proportion of a

load of goods. But there are some cases where large volumes of LQs could be transported in a

single load.

Accidents involving the transport of limited quantities

State and territory regulators and emergency services organisations in Australia do not collect

information on the number of accidents or incidents involving the transport of LQs and there is also

an absence of overseas data on this issue. Some overseas jurisdictions do collect information

about accidents involving the transport of dangerous goods, but this information is typically focused

on bulk quantities of dangerous goods and does not identify whether LQs were present or were a

factor in the accident.

Given the common nature of many LQs and the fact transport accidents are not uncommon; it is

likely that there are a number of transport incidents each year where LQs are present. However, a

thorough desktop review did not identify any specific accidents or incidents associated with the

transport of LQs in Australia or overseas. The transport regulators and emergency services

organisations that were consulted for this RIS also did not identify any specific incidents.

The failure to identify any incidents involving LQs may be because LQs were not the cause of the

accident and did not increase the consequences of the accident in any significant way. These

points are discussed further in the section below.

Consequence analysis

In the absence of data from any actual incidents associated with transporting LQs, it has been

necessary to rely on qualitative information to analyse the consequences of an accident or incident

involving the transport of LQs. This information has been provided through consultations and from

a review of the literature on the transport of dangerous goods.

Potential consequences of an accident involving limited quantities

There is a degree of risk involved in all transport operations, particularly where heavy vehicles are

involved. These risks include harm to individuals, including drivers, other motorists and emergency

services workers; damage to vehicles, transport infrastructure and property; and environmental

damage. For example, from 2003 to 2012 there were 787 worker fatalities in Australia involving

trucks (Safe Work Australia 2014). In almost all cases, these deaths were due to road accidents

and were not related to the cargo the vehicle was carrying.

While there is no evidence to suggest LQs were a contributing factor in any of the deaths referred

to above, in the event of an accident, the presence of LQs could potentially contribute to an

increase in the consequences of the accident. For this to happen, the accident would typically need

to involve a secondary event, such as an engine fire spreading to LQs in the vehicle’s cargo, or a

spill of the vehicle’s cargo, including LQs. In the case of a fire, the flammable properties of some

LQs may cause the fire to be larger or more intense and therefore cause more damage. In the case

10

Estimate provided by the Aerosol Association of Australia


18

of a spill, the toxic quantities some LQs could result in harm to individuals or damage to the

environment that would not occur in the absence of LQs.

Figure 5. Possible sequence events for an accident involving limited quantities

Some examples of the potential risks of an accident involving LQs are shown in the table below.

However, given that no specific accidents or incidents involving the transport of LQs in Australia

could be identified for the RIS, these are hypothetical only.

Table 1. Examples of risks associated with transporting limited quantities

Risk Example of risk

Harm to

individuals

Increased risk of harm to drivers/transport operators in the event of an

accident due to the flammability, explosive, toxic or other characteristics of

LQs relative to non-dangerous goods.

Increased risk of harm to emergency services workers in both responding to

and cleaning up after incidents involving LQs (e.g. during consultations the

potential risk to emergency services workers from exploding aerosols while

attending incidents involving LQs was highlighted).

Increased risk of harm to other transport system users or bystanders as a

result of incidents involving LQs, especially in the event of a fire or

explosion.

Damage to

property

Increased risk of damage to vehicles and other transport equipment in the

event of a fire or explosion involving LQs, relative to incidents not involving

dangerous goods.

Increased risk of damage to transport infrastructure (e.g. roads, rail lines,

bridges) in the event of a cargo fire or explosion, following an accident

involving LQs, relative to incidents not involving dangerous goods.

Harm to the

environment

Increased risk of damage to the environment as a result of spills of LQs into

sensitive environmental areas (e.g. waterways).

Other costs

Increased risk of indirect costs to other road users due to delays associated

with longer closure periods as a result of a more cautious approach taken to

responding to and cleaning up after incidents involving LQs.

Source: adapted from a study on risks associated with the transport of LQs (INIERS, 2002) and feedback from

consultations.

Contribution of limited quantities to the consequences of an accident

LQs can only be transported in small amounts and must be individually packaged. In the event of a

transport accident this packaging is designed to protect the LQs. Should some of these packages

fail, limits on the amount of LQs that can be carried per individual package will mean that only a

small amount of dangerous goods will be involved, which will limit the consequences of the

breakage. In consultations it was noted that, regardless of whether a truck is carrying LQs, it could

be carrying several thousand litres of fuel, which is stored closer to the vehicle’s engine and is

more likely to explode or cause a fire following an accident than LQs transported as cargo.

Many non-dangerous goods can also pose a hazard when transported, but are not subject to any

of the requirements applied to dangerous goods or LQs. While searching for incidents involving


19

LQs, two truck accidents were identified, both of which occurred on the Hume Highway between

Melbourne and Sydney in early 2015. Each of these incidents resulted in fires and extensive

damage to the vehicles involved, but did not involve dangerous goods or LQs of any kind. The first

involved an engine fire spreading to a cargo of furniture and the second involved a fire that ignited

a cargo of mail.

As noted above, despite a thorough search, no actual cases where LQs have contributed to the

consequences of an accident could be identified and none were provided during consultations.

Even in the absence of specific data on incidents or accidents involving LQs, the absence of any

known accidents suggests there is a very strong track-record of safely transporting LQs in Australia

and supports the conclusion that the risks associated with transporting LQs is typically very low.

Further evidence about limited quantity risks from overseas

Evidence from overseas about the transport of LQs also supports the conclusion that the risk

associated with transporting these goods is typically very low. Although, overseas jurisdictions also

do not collect data specifically on accidents or incidents involving LQs, a thorough search of

published literature and news sites and other sources did not identify anything to suggest that the

transport of LQs has anything other than a very low risk profile. This included speaking with

regulators and experts in jurisdictions with more permissive systems for regulating the transport of

LQs than what currently applies in Australia.

In the absence of data on LQ accidents, the next best source of evidence identified is a study

undertaken in France in 2002 by the National Institute of Environmental and Industrial Risks

(INERIS), along with response to this study from European regulators.

The INERIS study of limited quantity risks

The INERIS study on the relevance of the system of exemption for the transport of hazardous

goods packed in limited quantities was undertaken in 2001 and 2002 to test assumptions about the

risk levels transporting LQs.

This study considered risks to the environment, corrosion risks and fire risks for a range of

substances that are permitted to be transported under the LQ provisions of the UN Model

Regulations and the ADR. In relation to environmental risks, the study found that some moderately

toxic substances that can be transported as LQs, could present risks to the function of effluent

treatment plants if they were to be spilled into waterways. And in relation to corrosive risks, it was

found that some corrosive LQ substances could cause damage to the skin of people handling

these substances. The implications of these conclusions for the transport of LQs was not always

clear, as the study did not specifically test how the LQs packaging would perform in the event of an

accident or the likelihood that the substances tested would come into contact with waterways or

human skin in the event of an incident.

The study also analysed fire risks for a range of flammable products that can be transported as

LQs, including aerosols. In relation to aerosols, the study found the effects produced by a fire

involving aerosols are not negligible, but are less substantial than those generated by the total

mass of the contents if they had been placed in a single container. This finding was consistent with

assumptions about the reduced risk of transporting LQs and supports the reduced regulatory

requirements for their transport.

The study also involved setting fire to various class 2 and 3 flammable substances to analyse the

risks associated with (non-aerosol) flammable substances that can be transported as LQs. The

study found that the flammable nature of the substances brings a real danger of a self-perpetuating

fire, no matter what the type of container or quantity per container, but that the spread of a fire can

be slowed down by splitting up the flammable liquids into smaller volumes. However, although it

does have an effect, splitting up flammable liquids into small capacity containers does not always

limit the consequences of a fire. Again, this finding was broadly consistent with assumptions about

the reduced risk of transporting LQs and is consistent with the reduced regulatory requirements

applying under the current regulatory systems around the world.

When the aerosols used in the study were set alight, the study found that the power of the fire, the

radius of the action of the flames and the debris hurled about as the aerosols exploded would be

likely to considerably impede the actions of the emergency services in the event of an accident.


20

The study also noted that the seriousness of the consequences and the scale of a fire involving

flammable liquid is linked to the total quantities involved.

Response to the study

The study was discussed at meetings of the UNECE, where it was heavily criticised by regulators

in the UK. Some of the criticisms of the study related to the starting point assumption that there

were no risks associated with transporting LQs, which is acknowledged as not being the case.

Other criticisms related to the design of the study, including that none of the experiments were

conducted to specifically test for scenarios actually related to the transport of LQs.

After analysing the study, the UNECE eventually determined that there should be some relation

between the marking requirements (placarding) and the amount of LQs in the load, because the

risk may be proportional to that amount. The marking requirement for the ADR was subsequently

set at 8,000kg (or litres).

Additional considerations for safety in tunnels

A further consideration for the risks associated with transporting LQs is the safety of transporting

these goods through tunnels. This issue has been considered extensively by the UNECE. The

UNECE refers to a study undertaken by the Organisation for Economic Co-operation and

Development (OECD) and the World Road Association (PIARC), which involved scientific analysis

of individual dangerous goods and concluded that LQs should not be restricted from being

transported through tunnels (OECD and PIARC 2001).

Conclusions on the risk of transporting limited quantities

It has not been possible to precisely quantify the level of risk associated with the transport of LQs.

However, the common nature of many LQs and the frequency that these goods are transported in

Australia without evidence of accidents or incidents supports the conclusion that transporting LQs

is a very low risk activity.

Similar conclusions have also been reached by transport regulators around the world, including at

the UN, in Europe and in the USA, resulting in a relaxing of the regulatory requirements for the

transport of LQs in many jurisdictions. This has included relaxing the requirements for the marking

and labelling of LQs; transport documentation; and increasing the aggregate quantity of LQs that

can be transported without vehicle placarding. The ADR Code has not been updated to for these

changes and does not adequately reflect the very low level of risk associated transporting LQs.

3.3 Causing an unnecessary compliance burden

Cost of compliance with regulations

Compliance with the current regulatory requirements of the ADG Code for the transport of LQ is a

significant burden for the manufacturers, importers, exporters, retailers and direct sellers of LQs.

These costs fall into three main categories:

Marking and labelling LQ packages

Preparing transport documentation

Placarding loads and other costs associated with placard loads.

The costs affect businesses in different ways. Businesses that undertake their own transport and

logistics operations incur a range of financial and non-financial costs associated with complying

with the current requirements. Businesses that have outsourced their transport and logistics

operations generally pay a mark-up for the transport of dangerous goods, including LQs. More

information about these costs is set out in table 2.


21

Table 2. Example of costs associated with compliance

Cost category Example of cost

Marking and

labelling

Cost of printing and time spent attaching inner packaging labels for LQs

Cost of printing and time spent attaching intermediate and outer packaging

labels for LQs, including LQ markings, overpack markings and directional

markings.

Documentation

Time spent preparing transport documentation for LQs.

Cost of printing and time spent collating transport documentation for LQs.

Time spent of splitting or aggregating transport documentation for LQs at

intermediate points along the distribution chain (e.g. when two small loads

containing LQs are aggregated into a larger load).

Costs of establishing systems to manage LQ documentation.

Placarding

One-off cost of purchasing vehicle placards.

Time spent attaching vehicle placards for each load of LQs over 1,000kg (or

litres) (2,000kg (or litres) for RDLs and ACCORD members).

Cost of obtaining licenses for the drivers of placard loads.

Some additional travel time and costs due to the route restrictions that apply

to placard loads (primarily restrictions on driving through tunnels and CBDs)

One-off cost of purchasing additional safety equipment required for placard

loads and ongoing costs associated with maintaining this equipment.

Other costs

The surcharge applied by logistics businesses for transporting LQs.

Businesses that outsource their transport and logistics reported during

consultations, that they are being charged 40-50 per cent more for the

transport of LQs than for transporting equivalent volumes of non-dangerous

goods.

The time taken to determine the regulatory requirements for the transport of

LQs and how to comply with these requirements.

For businesses that outsource their logistics, the most significant cost is the surcharge applied by

logistics businesses for transporting LQs. Logistics businesses attribute these additional costs to

the range of regulatory requirements applying to LQs, but highlighted the time spent preparing

transport documentation and splitting or aggregating this documentation at different points along

the supply chain as the main contributor to this cost.

There is evidence the additional mark-up for the transport of LQs may have a disproportionate

impact on small businesses. Consultations indicated that larger businesses may pay a lower mark-

up or no mark-up at all for the transport of LQs through negotiated agreements with logistics

businesses, while smaller businesses may not have the same capacity to negotiate these kinds of

discounts.

3.4 Not aligned with accepted international standards

Policy on the adoption of trusted international standards

As part of the Industry Innovation and Competitiveness Agenda, the Australian Government has

announced that it is examining opportunities for greater acceptance of international standards and

risk assessments. The Government has adopted a new principle that:

“if a system, service or product has been approved under a trusted international standard or risk

assessment, then our regulators should not impose any additional requirements for approval in

Australia, unless it can be demonstrated that there is a good reason to do so.”

According to a statement from the Prime Minister of Australia in October 2014, the aim of this

policy is to remove regulatory duplication, reduce costs and delays for businesses and consumers,

increase the supply of products into the Australian market and allow regulatory authorities to focus

on higher priorities (Prime Minister of Australia, 2014).


22

Trusted international standards and risk assessments in this context, has since been clarified by

the OBPR to include those agreed multilaterally (e.g. through the World Trade Organisation) or

standards or assessments from certain overseas jurisdictions that are at the forefront of

international best practice (Department of Prime Minister and Cabinet 2014).

Relevance to the transport of limited quantities in Australia

As noted in Chapter 2, in recent years there has been a significant relaxation in how LQs are

regulated internationally. The majority of these changes were introduced in the 16

th

edition of the

UN Model Regulations, and many have been in effect in Europe since 2011. The USA will also fully

adopt the UN Model Regulations with respect to the transport of LQs by 2020 and has cited the

strong safety record of transporting these goods as a reason for doing so.


creating an unnecessary regulatory burden for businesses that operate across different countries

and impact on Australian industries trying to compete in a global market.

The policy above applies specifically to Australian Government regulation and does not currently

apply to state and territory regulations.

11

However, the principle should be supported that, where

trusted regulators in other jurisdictions have adopted less onerous regulatory requirements, these

should be considered in Australia unless there is a compelling reason not to do so. In the case of

LQs, regulators at the UN, in Europe and the USA have adopted less onerous requirements for the

transport of LQs than Australia. In Europe, these arrangements have been in place though the

ADR since 2011, without any safety issues having being identified.

3.5 Inconsistencies in the regulatory approach

There are a number of inconsistencies in the current regulatory approach to LQs. These

inconsistencies mean the transport of the same products can be regulated in very different ways

depending on who transports these goods and where they are transported to and from. This is

despite agreement this does not generally affect the risk profile of transporting these goods. The

table below highlights the different regulatory arrangements that can apply to the transport of LQs,

using the example of an aerosol deodorant can (an LQ).

Table 3. Example: regulatory arrangements for the transport of aerosol deodorant cans

No. Scenario Regulatory requirements

1.

A single can, transported by a

customer from a supermarket to

the customer’s home, with a

load of other groceries.

Not regulated.

Goods transported privately are not subject to the

requirements of the ADG Code.

2.

A single can, delivered by the

supermarket to a customer from

a retail outlet to the customer’s

home, with a load of other

groceries.

Regulated under the ADG Code.

Subject to all labelling, marking and documentation

requirements applying to LQs.

Not able to be treated as an RDL, because it is not

being transported between a distribution center and a

retail outlet.

3.

A single can, couriered by a

direct-selling business with

other goods to a customer’s

home (seller is not an ACCORD

member).


Generally would be subject to all labelling, marking

and documentation requirements applying to LQs.

Not able to be treated as an RDL, because it is not

being transported between a distribution center and a

retail outlet.

11

The Australian Government has indicated that is working with states and territories through the Council of

Australian Governments on this issue.


23

No. Scenario Regulatory requirements

4.

As above, but seller is an

ACCORD member.

As above, but entitled to use the simplified

documentation requirements of the ACCORD

exemption, subject to meeting the other requirements

of that exemption.

5.

Dozens of cans, transported

with mixed goods (not

dangerous goods) from a

warehouse to retail outlet.


Likely to be treated as a RDL (subject to meeting the

requirements of Chapter 7.2 of the ADG Code) and

therefore subject to simplified packing and

documentation requirements and a higher placard

limit.

6.

Dozens of cans, transported

with a mixed goods, where LQs

exceed 2,000kg (or litres) in

total volume.


Subject to all labelling, marking and documentation

requirements applying to LQs.

Subject to additional placarding requirements, as the

total volume of LQs exceeds the threshold limit.

The first four of the scenarios above involve the transport of a single deodorant, which is

transported with other (not dangerous goods) to a customer’s home. This activity would have

essentially the same risk profile, but is subject to considerably different regulatory requirements,

depending on the transporter and the destination the can is transported to and from.

The 5

th

and 6

th

scenarios have more onerous regulatory requirements that apply to the transport of

a much larger quantity of LQs, which could be expected to contribute to the risk of transporting

these goods.

3.6 Out of step with current circumstances

There has been a significant increase in recent years in both online retailing and direct-selling.

12

Many online retailers and direct-sellers sell and dispatch LQs, particularly perfumes and personal

care products. In the case of online retailing of perfume and cosmetics, this industry in Australia is

estimated to have risen by 17.1 per cent per year over the five years through 2014-15, to $259

million (IBIS World 2015). The direct-selling industry in Australia is estimated to be worth $1.5

billion annually, with about 25 per cent of direct sellers involved in the sale of cosmetics and

personal care products (DSAA 2015).

The ADG Code does not reflect these changes in the industry structure and imposes compliance

costs that may disproportionately impact direct sellers and online businesses. Australia Post will

not knowingly transport LQs, so these businesses almost exclusively transport their goods through

logistics businesses, who typically charge 40-50 per cent surcharges for the transport of LQs.

These businesses also aren’t generally able to make use of the RDL and ACCORD exemptions,

which only apply to store-based retailers and ACCORD members respectively.

3.7 Regulatory complexity and lack of enforcement

From consultations with industry groups and regulators, there is a common consensus that the

regulatory framework for transporting LQs is overly complex and many businesses involved in the

LQ supply chain are not fully aware of their regulatory requirements. Businesses and industry

association representatives reported that businesses spend considerable time understanding the

regulatory framework and how they need to structure their logistics systems to ensure compliance

(particularly during the start-up phase of their operations). Several industry association

representatives stated that they are often called upon to provide advice in interpreting regulatory

requirements and exemptions.

12

Direct-selling is defined by the Direct Selling Association of Australia as taking place when an independent

sales person sells goods and services directly to consumers in their homes, work places and other meeting

places instead of in a fixed retail store


24

There was anecdotal evidence that smaller businesses or those that only have a small proportion

of LQs as part of their overall operations do not have a strong an understanding of the current

regulatory requirements and that this is likely to be resulting in high levels of non-compliance.

It was also noted by a number of the stakeholders that there is a lack of enforcement of LQ

regulatory requirements. The lack of an active enforcement regime may imply that the competent

authorities have implicitly determined that the transportation of LQs is a low risk activity.

Regulatory failure can occur when it is commonly understood that there is widespread non-

compliance and there is a lack of enforcement. A lack of enforcement may be a common-sense

response to managing disproportionate regulatory requirements. However, it can undermine the

integrity of the regulatory framework and result in greater levels of non-compliance in areas of

higher risk where the consequences of non-compliance could be much greater.


25

4 Objectives of government action

The objectives for the regulation of the transport of dangerous goods, including LQs are set out in

the UN Model regulations and Australia’s model legislation – the National Transport Commission

(Model Legislation — Transport of Dangerous Goods by Road or Rail) Regulations 2007.

The objective of the proposed amendments to the regulations is to improve the productivity, safety

and environmental performance of the transportation of LQs in Australia.

4.1 Objectives of the UN Model Regulations

The objective of the UN Model regulations is to regulate the transport of dangerous goods to

prevent or mitigate, as far as possible, incidents that could endanger public safety or harm the

environment. The regulations should be framed so that they do not hamper the movement of

dangerous goods, other than those too dangerous to be accepted for transport.

The aim of regulations, therefore, is to make transport feasible and safe by reducing risks to a

minimum (UNECE 2010).

4.2 Objectives of the ADG Code and model legislation

The ADG Code and the associated model laws are used as a guide for states and territories to

create their own laws. The overarching purpose of the model legislation it to be the single reference

point for model legislation relating to the transport of dangerous goods by road or rail.

Objectives of the model legislation

The purpose of the Model Act on the Transport of Dangerous Goods by Road or Rail 2007 is to:

1. Regulate the transport of dangerous goods by road and rail in order to promote public safety

and protect property and the environment.

2. Achieve this in the context of nationally consistent road and rail transport laws, having regard to

regional and modal differences.

Objectives of the model subordinate law

The purpose of the Model Subordinate Law on the Transport of Dangerous goods by Road or Rail

2007 is to:

1. Set out the obligations of persons involved in the transport of dangerous goods by road or rail.

2. Reduce as far as practicable the risks of personal injury, death, property damage and

environmental harm arising from the transport of dangerous goods by road or rail.

3. Give effect to the standards, requirements and procedures of the ADG Code so far as they

apply to the transport of dangerous goods by road or rail.

4. Promote consistency between the standards, requirements and procedures applying to the

transport of dangerous goods by road, rail and other modes of transport (ComLaw 2015).

4.3 Objective of proposed amendments to the ADG Code

The objective of the proposed amendments to the ADG Code is to ensure that the regulatory

framework for LQs is consistent with regulatory best practice and that the regulatory requirements

are commensurate to the risks associated with transporting LQs.

The principles for regulatory best practice are set out in the COAG Best Practice Regulation Guide

and include: adopting an option that generates the greatest net benefit for the community; ensuring

government action is proportional to the issue being addressed; and ensuring that regulation

remains relevant and effective over time. The Guide also states that: “Wherever possible,

regulatory measures or standards should be compatible with relevant international or internationally


26

accepted standards or practices in order to minimise the impediments to trade. Compatibility in this

context does not necessarily imply uniformity, however” (COAG 2007).

With respect to the regulation of Australia’s transport systems, the principles of best practice

regulation imply the need for a regulatory framework that improves the productivity, safety and

environmental performance of Australia’s transport systems.


27

5 Options considered

A RIS is required to identify a range of viable options including, as appropriate, non-regulatory, self-

regulatory and co-regulatory options. To address the problems identified in Chapter 2, the options

considered in this RIS are:

1. Maintain the current approach to regulating the transport of LQs.

2. Address problems with aspects of the ADG Code by creating a new LQ exemption:

a. Create an new exemption that effectively extends the current provisions of the

ACCORD exemption industry-wide, for all household-use LQs

b. Create a new exemption that provides for the same exemptions as the above,

applied to all LQs

3. Amend the ADG Code to adopt the standards for the transport of LQs used across Europe

under the ADR.

4. Amend the ADG Code to adopt the standards for the transport of LQs applied under the

UN Model Regulations.

5.1 Option 1 – maintain the status quo

Option 1 involves maintaining the current approach to regulating the transport of LQs, as set out in

the Chapter 3.4 of the ADG Code. Under this option, changes to the UN Model Regulations that

have occurred since the 15

th

Edition was published in 2007 would not be reflected in the ADG

Code.

The key features of this option are:

All inner, intermediate and outer marking and labelling requirements of the current version

of the ADG Code would remain in place for all LQs

The requirement to prepare and carry transport documentation would remain in place for all

LQs, except where concessions are provided under the ACCORD exemption or the RDL

provisions of Chapter 7.2 of the ADG Code

Up to 1,000kg (or litres) of LQs can be transported in a load, before this is considered a

placard load and becomes subject to the regulatory requirements for placard loads

Up to 2,000kg (or litres) of LQs can be transported without placarding requirements, where

a load, meets the requirements of the ACCORD exemption or the RDL provisions of

Chapter 7.2 of the ADG Code.

Advantages

The main advantages of this option are:

There is no increase in risks associated with the transport of LQs

There are no costs to industry associated with adapting to any new LQ requirements.

Disadvantages

Maintaining the current arrangements for the transport of LQs would not address the problems

associated with these arrangements that were identified in Chapter 2. The main disadvantages of

this option are:

Compliance costs will continue to be onerous for the transport of LQs, relative to the level

of risk associated the transport of these goods


28

The regulatory approach will continue to be inconsistent with approaches adopted

overseas, creating additional compliance costs for businesses and a disadvantage for

trade-exposed businesses

There will continue to be inconsistencies in the regulatory approach that impose higher

compliance costs on certain business models (e.g. online retailers and direct-sellers),

without reference to the risk profile of the transport activities of these businesses

The regulatory approach will continue to cause unnecessary confusion and is likely to

continue to result in significant, ongoing non-compliance.

5.2 Option 2 – extend the ACCORD exemption industry-wide

Option 2 involves addressing problems with some aspects of the ADG Code by creating a new LQ

exemption. A new exemption could be created that effectively extends the current provisions of the

ACCORD exemption industry-wide, for all household-use LQs (Option 2a) or for all LQs (Option

2b). At the time of preparing the RIS a similar exemption was being drafted, intended for future

consideration by the CAP. However, the final form of the proposed exemption was not known and

time-frames for its approval were unclear. For the purposes of this RIS, the key features of this

option are:

The existing provisions of the ACCORD exemption would effectively be extended to apply

industry wide, for all household-use LQs (Option 2a) or for all LQs (Option 2b)

Household-use LQs (or all LQs) could be transported with simplified transport

documentation, similar to what is allowed under the current ACCORD exemption

Up to 2,000kg (or litres) of household-use LQs (or all LQs) could be transported in a load,

before this is considered a placard load and becomes subject to the regulatory

requirements for placard loads

Household-use LQs (or all LQs) would not count towards the aggregate quantity of

dangerous goods in the load for placarding purposes

Other features of the current ADG Code, with respect to LQs would not change.

If Option 2a is pursued, household-use LQs will need to be properly defined. For the purposes of

evaluating the option the definition is assumed to be similar to the definition currently used for

RDLs, which applies only to dangerous goods that are packed and distributed in a form intended or

suitable for sale through retail agencies for consumption by individuals for purposes of personal

care or household use.

Advantages

The main advantages of this option are:

For Option 2a, it is highly unlikely there will be any increase in the risks associated with the

transport of LQs. Similar household-use LQs have been transported under the ACCORD

exemption since 2011, without any adverse outcomes, so extending this to non-ACCORD

members is highly unlikely to change the risk profile of transporting these goods

For Option 2b, it is also unlikely there would be any significant increase in risk. Some non-

household-use LQs may be more risky to transport than typical household-use LQs.

However, the level of risk associated with transporting different types of dangerous goods

is already taken account of in the ADG Code. Under the ADG Code, the most-dangerous

types of dangerous goods cannot be transported as LQs at all, while the more-dangerous

types of dangerous goods can only be transported as LQs in smaller individual quantities

than less-dangerous types of dangerous goods

Either option would effectively override the exceptions made for LQs transported as RDLs

in Chapter 7.2 of the ADG Code. This would remove the unnecessary distinction in that

chapter for LQs transported between distribution centres and retail stores that is not based

on the risk of this activity


29

There are unlikely to be any significant costs to industry associated with implementing

either of these changes and any costs that are incurred will be offset by savings from a

reduction in regulatory requirements.

Disadvantages

Although this option would address some the problems associated with the current regulatory

approach, many of the disadvantages would remain. Disadvantages with this option include:

Either of the two proposed exemptions would create a further deviation from accepted

international approaches to regulating the transporting of LQs

The use of an exemption makes understanding regulatory requirements more complex, as

exemptions are not directly referred to in the ADG Code and transporters of LQs would

need to familiarise themselves with the exemption to be able to take advantage of it

Either of the proposed exemptions may create confusion with the application of RDLs,

which are similar to the proposed exemptions (e.g. the 2,000kg or litres placarding

threshold), but have a slightly different scopes of application and requirements

Neither of the two proposed exemptions would address inconsistencies in the regulatory

approaches that impose higher compliance costs on certain business models (e.g. online

retailers and direct-sellers), without reference to the risk profile of these businesses

Option 2a may create further confusion about regulatory requirements if it creates a

distinction between household-use LQs and other LQs, which would not appear to reflect

the risk of transporting these products.

5.3 Option 3 – adopt the provisions of the European ADR

Option 3 would involve adopting the provision of the European ADR, with respect to the transport of

LQs. The key features of this option are:

LQs are required to display the LQ marking, but they are not required to display other

markings or labels, other than orientation arrows and ‘overpack’ markings (where relevant),

but as noted in Chapter 2, inner-packaging labelling requirements would continue to apply

Simplified documentation for the transport of all LQs would apply, with consignors only

required to provide information about the total gross mass of the LQs in the load

The total quantity of LQs that can be transported in a load, before that load becomes

subject to placarding requirements would increase from 1,000kg (or litres) to 8,000kg (or

litres) and would only apply to transport units and containers with a maximum mass greater

than 12,000kg (or litres)

Should the UK approach to applying the ADR be adopted, LQs could also be removed from

their outer packaging for the final stage of their transport (e.g. to the retailer or consumer)

and be carried without the packaging having to be marked with UN certification marks or

the hazard symbols.

Advantages

The main advantages associated with this option would be:

The increase in placarding thresholds and reduction in documentation requirements would

result in a significant reduction in compliance costs from transporting LQs

Any increase in the level of risk associated with transporting LQs would be minimal, as the

approach proposed has a proven safety record, having been examined by European

regulators and been in place across Europe since 2011

The regulatory approach in Australia would become largely consistent with approaches

adopted overseas, removing a disadvantage for Australian trade-exposed businesses that

transport LQs


30

Allowing LQs to be removed from their outer-packaging for the final stages of their

transport (as in the UK) and not requiring them to be marked with UN numbers or hazard

symbols would reduce the compliance costs for businesses that do comply with these

requirements.

Disadvantages

The main disadvantages associated with this option would be:

Transport documentation would still be required, including to demonstrate that the total

amount of LQs per load do not exceed the threshold amount for a placard load

In the case of an incident, there will potentially be less information available to emergency

services workers, including information about the dangerous goods contained in the load.

This may pose a risk to the first responders and create delays in managing the incident.

5.4 Option 4 – adopt the UN Model Regulations

Option 4 would involve adopting all of the provision of the UN Model Regulations. For the purposes

of the RIS, this is considered to be the non-regulatory option. This is because the UN Model

Regulations specifically exempt the transport of LQs from most of the provisions that apply to the

transport of other dangerous goods, including documentation and placarding limits.

The key features of this option include:

LQs are required to display the LQ marking, but they would not be required to display other

markings or labels, other than orientation arrows and ‘overpack’ markings (where relevant)

There are no documentation requirements for the transportation of LQs by road or rail (LQs

that are packed or loaded into a container or vehicle which will be transported by sea would

still require a “container/vehicle packing certificate”)

There is no requirement in the UN Model Regulations for placarding loads of LQs,

regardless of the quantity of LQs being transported on a load.

Advantages

The main advantages associated with this option would be:

The removal of placarding thresholds and documentation requirements would result in a

substantial reduction in the compliance costs associated with transporting LQs

The regulatory approach in Australia would become more consistent with approaches

adopted overseas, removing a disadvantage for Australian trade-exposed businesses that

transport LQs.

Disadvantages

The main disadvantages associated with this option would be:

Although the USA will fully implement this option by 2020, it does not have the same

proven track-record of having been implemented in other jurisdictions as Option 3

In the case of an incident, there will be minimal information available to emergency

services workers, including what dangerous goods are contained in the load. This may

pose a risk to the first responders and create delays in managing the incident.


31

6 Costs and benefits of the options

An assessment of the costs and benefits of each of the options identified in Chapter 5 has been

undertaken to determine the option with the greatest net benefit to the community.

6.1 Cost-benefit analysis

Cost-benefit analysis (CBA) is an analytical tool that can be used to measure the economic and

social impact of government action and measure the ‘net social benefits’ that action might produce.

CBA requires that all major costs and benefits of a proposal be quantified in monetary terms. This

allows the outcomes for a range of options to be translated into comparable terms in order to

facilitate evaluation and decision making.

Overview of the approach

For this RIS, the CBA has focussed on producing an estimate of the overall compliance costs

associated with the current regulations. This has been calculated for the base case (Option 1). The

costs and benefits of the alternative options for regulating the transport of LQs (Options 2, 3 and 4)

have then been determined in reference to base case costs.

The three alternative regulatory options considered in the RIS each involve a more permissive

approach to regulating the transport of LQs than the current arrangements. The benefits

component of the RIS has therefore focused on quantifying the reduction in compliance costs from

these options. The cost component of the CBA focuses on assessing whether there will be an

increase in the risk of transporting LQs as a result of introducing a more permissive regulatory

scheme. However, given the lack of data on the current risks of transporting LQs, it has only been

possible to undertake a qualitative assessment of these risks.

The approach taken to the CBA is summarised in the figure below.

Figure 6. Approach undertaken for the CBA

Industry cost of

LQ compliance

Annual industry

turnover

=

% of industry

turnover spent

on freight

% additional

costs due to LQ

compliance

x

% additional

costs due to LQ

compliance

Marking and

labelling costs

=

Placarding costs

+

Documentation

costs

+

% of turnover

related to LQs

x x

• Licensing

• Registration

• Safety equipment

• Placards

• Training

• Route restrictions

• Preparing manifests

• Aggregating docs.

• Splitting docs.

• LQ marking

• Intermediate labels

• Outer labels

• Other requirements

Base case: determination of LQ compliance costs

Change in

compliance costs

Base case

compliance

costs

=

Reduction in

compliance costs

for option

-

Benefits analysis : compliance cost savings associated with each option

Cost analysis : increased risks associated with each option

A qualitative assessment of the increase in risk (if any) associated with each of the options considered.


32

6.2 Identification of the impacted groups

Businesses affected

The main groups that have been identified as being impacted by the ADG Code’s approach to

regulating the transport of LQs are the businesses that import, export, distribute and sell LQ

products. Although there are several hundred dangerous goods that can be packed and

transported under the LQ provisions of the ADG Code, the most common LQ products include:









These products are frequently sold in retail stores such as supermarkets, department stores and

hardware stores. Cosmetics and personal care products are also frequently sold in duty free shops,

online and by direct sellers. The cost-benefit component of the RIS has therefore focussed on

these sectors. Transport businesses are also impacted by the regulatory requirements for the

transport of LQs. However, these businesses generally pass on the additional costs of complying

with LQ transport requirements to their customers. To avoid double-counting the cost of

compliance with the current regulations these businesses have been excluded from the CBA.

The table below indicates annual revenue amounts from the sectors that hare assumed to stock

LQs, the estimated proportion of this revenue that is attributable to LQ products and the estimated

amount of revenue attributable to LQs.

Table 4. Sectors assessed as being most impacted by LQ regulations

Industries

Annual revenue

$M

Estimated Share

of revenue from

LQs

%

Estimated

revenue from

LQs

$M

Manufacturing

Paint and Coatings Manufacturing $3,000 60% $1,800

Cosmetics, Perfume and Toiletries

Manufacturing

$960 25% $240

Aerosol Manufacturing $650 90% $585

Retail

Supermarkets $94,000 2% $1,880

Department stores $18,000 3% $540

Duty free $1,000 20% $200

Online

Online groceries $2,000 2% $40

Online Perfume and Cosmetic Sales $259 30% $78


33

Industries

Annual revenue

$M

Estimated Share

of revenue from

LQs

%

Estimated

revenue from

LQs

$M

Direct Selling

Direct Selling Businesses in Australia $2,000 20% $400

TOTAL $5,763

Sources: Annual revenue figures are taken from IBIS World Industry Reports

Estimated share of revenue from LQs is taken from consultation with businesses

and industry associations

Individuals affected

Individuals can also be affected by the LQ provisions of the ADG Code. For example, individuals

sending LQ products by courier may be affected by restrictions on the transport of these products

or face higher transport costs. Individuals may also pay more for LQ products, as the sellers of

these products are likely to incorporate their compliance costs into the final price of these products.

However, as the transport of dangerous goods for private use is generally exempted from the

requirements of the ADG Code, the focus of the CBA has been on quantifying the impacts on

businesses of the current regulatory approach and the options considered. This approach would

also capture any compliance-related costs that these businesses pass onto consumers of LQ

products.

6.3 Compliance costs

The three main categories of compliance costs associated with the transport of LQs are marking

and labelling requirements; preparing transport documentation; and complying with placarding

requirements. The costs associated with these requirements and the impact on businesses is

described below.

Marking and labelling requirements

As described in Chapter 3, the ADG Code includes a range of requirements for the labelling of

inner, intermediate and outer packages containing LQs as well as requirements to apply LQ

‘markings’, orientation arrows and ‘overpack’ markings.

The cost of complying with these requirements includes the financial cost of printing labels, the cost

of time spent attaching the labels and the cost of any time taken to understand the requirements.

The total cost of compliance varies depending on the logistics arrangements of the organisations

transporting the LQs. Where LQs are unpacked or repacked into intermediate or outer packages at

multiple stages in the supply chain new labels may need to be attached and the costs are therefore

incurred multiple times. During consultations, compliance with the marking and labelling

requirements of the ADG Code was identified as a major cost for online retailers. These

businesses often need to prepare and attach intermediate markings and labels for transporting a

single LQ product to a customer. For store-based retailers, compliance with marking and labelling

requirements were not seen as being as onerous as some other requirements.

Transport documentation requirements

Transport documentation requirements were considered a major cost of complying with LQ

regulatory requirements. Transport documents are required for the transport of all dangerous

goods, although simplified versions of the documents may be used if the goods are being

transported in accordance with the provisions of either the ACCORD exemption or as a RDL.


34

The cost of complying with documentation requirements includes the financial cost of printing

transport documentation, the cost of time spent compiling documentation into transport manifests

and the cost of any time taken to understand the documentation requirements of the ADG Code.

Like the marking and labelling requirements of the ADG Code, the total cost of complying with the

transport documentation requirements of the ADG Code increases where LQs are transported in

multiple trips along the supply chain. This is because the transport documentation is required to

include the aggregate quantity of the dangerous goods in the vehicle, which must be updated as

dangerous goods are loaded or unloaded from the vehicle.

This is an issue for businesses that have outsourced their transport and logistics functions, which

includes most small businesses as well as many large businesses. Large transport businesses will

often aggregate many smaller loads of goods (including LQs) at distribution centres, before

transporting them interstate to another distribution centre, where the load may be split into smaller

loads, for delivery to their final destinations. At each point along this journey the transport

documentation is required to be updated. The transport businesses that were consulted with for the

preparation of the RIS cited this as being the largest cost of complying with LQ requirements.

Placarding requirements

As noted in Chapter 2, once a load of LQs exceeds the thresholds for a placard load, this is the

trigger for other dangerous goods controls such as vehicle placarding, the carrying of additional

safety equipment, stowage, some segregation requirements, some route restrictions and additional

driver training requirements. A selection of the vehicle and training costs are provided below:

Vehicle costs

o Dangerous goods registration – $125 per trailer, per annum

o Dangerous goods placards – $55 each, one-off

o Emergency information panels – $100 per trailer, one-off

Training driver costs

o Dangerous goods course costs – approximately $350 per driver, every three years

o Wage costs to attend course – approximately $210 per driver, every three years

13

It is not possible to attribute all of the costs directly to the regulatory requirements for the transport

of LQs, as the same vehicles and drivers may also be used to transport bulk quantities of

dangerous goods, which would also require these costs to be incurred.

Total additional costs from transporting limited quantities

A small number of typically very large businesses undertake their own transport and logistics

operations and the costs of complying with LQ regulations are therefore incurred directly by these

businesses. However, the majority of businesses, especially small and medium sized businesses

outsource their transport and logistics operations to couriers or transport businesses. Therefore,

the cost of complying with the LQ provisions of the ADG Code for these businesses is reflected in

the additional price charged by transport businesses for moving LQ goods compared to non-

dangerous goods.

These additional costs are sometimes charged by transport businesses in the form of a fixed

surcharge (around $50 to $65 per load) or as a proportion of the total transport cost (around a 15%

to 25 per cent increase compared to the cost of transporting non-dangerous goods.

In consultations, stakeholders report that, for small amounts of LQ goods, the LQ surcharge can

represent around 50 per cent of total transport costs. However, this amount is lower for larger

quantities of LQs or for LQs transported under the provisions of the ACCORD exemption or as a

RDL.

13

Provided by a transport company during consultations


35

Rather than quantify each individual component of the costs of transporting LQs, compared to

transporting non-dangerous goods, an estimate of the distribution of these costs across the three

main cost categories has been made. This has been based on the feedback of transport

businesses, sellers of LQ products and industry associations.

Table 5. Estimated distribution of limited quantity regulatory costs

Cost category Proportion of costs

Marking and labelling requirements 15%

Transport documentation requirements 60%

Placarding requirements 25%

TOTAL 100%

Source: Feedback from consultations with businesses and industry associations

6.4 Costs and benefits associated with Option 1

Option 1 involves maintaining the current approach to regulating the transport of LQs. The total

costs associated with this option are estimated to be $69.1 million per year, spread across the

industries identified at the beginning of this chapter. This figure is based on assumptions about the

total freight costs of the sectors that frequently transport LQs and an estimate of the freight cost

attributable to complying with LQ regulations.

Freight costs as a percentage of industry revenue

There is limited information available on the percentage of freight costs to total revenues. The

following is based partly on research undertaken about transport costs faced by Australian

manufacturers and retailers and assumptions about other sectors:

Manufacturing – 3.5 per cent to 6 per cent – based on a study of the ratio of logistics

costs to total sales for Australian manufacturing businesses undertaken by the Australian

Industry Group (AIG) in 2006 and feedback from industry associations.

The AIG study is one of only a few published studies into Australian logistics costs (which

includes both warehousing and transport costs). This study found that Australia’s

manufacturing industries incur logistics costs of between 3.9 per cent and 10.1 per cent of

total sales. The lower estimate used in the RIS is based on the contribution of transport

costs to total logistics costs for the industries analysed by the AIG that are most similar to

those used in this study. The upper-estimate is based on feedback from industry

associations.

14

Retail – 5 per cent – based on the rate estimated by the Productivity Commission in its

report, Relative Costs of Doing Business in Australia: Retail Trade. This is also a

commonly used benchmark for transport costs in the retail sector.

Online sales of cosmetics – 7.5 per cent – based on retail transport costs, with an

allowance for the additional transport costs incurred by online retailers, shipping small

orders of cosmetics, including LQs. This may be a conservative estimate, given that many

small online retailers reported paying substantial surcharges for transporting LQ goods.

Freight costs attributable to limited quantity requirements

Verifiable estimates of the proportion of freight costs that are attributable to complying with the LQ

provisions of the ADG Code have also been difficult to obtain. The assumptions used in the

modelling are as follows:

14

http://www.aigroup.com.au/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/LI

VE_CONTENT/Publications/Reports/2006/transport_logistics_FINAL.pdf


36

Manufacturing – 15 per cent to 25 per cent – Australian manufacturers of typical LQ

products, such as paints, cosmetics, and aerosols will face different compliance costs to

transport these products, depending on the structure of their supply chain. For example,

manufacturers that dispatch goods in smaller quantities (e.g. a few boxes at a time to many

customers) are likely to face higher surcharges for the transport of LQs than those who

transport these in large quantities (e.g. multiple pallets or placard load quantities). The

estimate of 25 per cent is based on feedback from consultations and has attempted to

allow for this mix of different transport methods. A lower estimate of 15 per cent has been

applied to the Cosmetics, Perfume and Toiletries Manufacturing, as some participants in

this sector may face lower compliance costs because they are able to transport LQs using

the ACCORD exemption.

Retail – 15 per cent – supermarkets and department stores generally distribute goods to

their stores via centralised distribution centres. Feedback from consultations suggests this

is often done under the concessions provided in the ADG Code for RDLs and would

therefore have a lower average of transporting LQs than industries that do not have access

to these concessions.

Online groceries – 0 per cent – As outlined in Chapter 2, the delivery of LQs as groceries

purchased online is subject to regulation by the ADG Code, including marking and

documentation requirements. However, feedback from consultations indicates there is wide

spread non-compliance in this area and regulators do not seem to be enforcing the current

requirements. No compliance costs have been attributed to this sector, although this is still

evidence of a problem with the current regulatory arrangements.

Online sales of cosmetics – 50 per cent – online sales of cosmetics are assumed to

occur in small volumes and therefore be subject to the higher end of the ranges quoted

during consultations.

Table 6. Estimated annual regulatory costs associated with Option 1

Industries

Annual

revenue from

LQs

$M

Freight cost

% of revenue

Freight cost

due to LQ

compliance

% of cost

Freight cost

due to LQ

compliance

$M

Manufacturing

Paint and Coatings

Manufacturing

$1,800 6.0% 25% $27.0

Cosmetics, Perfume and

Toiletries Manufacturing

$240 3.5% 15% $1.3

Aerosol Manufacturing $585 6.0% 25% $8.8

Retail

Supermarkets $1,880 5.0% 15% $14.1

Department stores $540 5.0% 15% $4.1

Duty free $200 5.0% 30% $3.0

Online

Online groceries $40 5.0% 0% $0.0

Online Perfume and Cosmetic

Sales in Australia

$78 7.5% 50% $2.9


37

Industries

Annual

revenue from

LQs

$M

Freight cost

% of revenue

Freight cost

due to LQ

compliance

% of cost

Freight cost

due to LQ

compliance

$M

Direct Selling

Direct Selling Businesses in

Australia

$400 5.0% 40% $8.0

TOTAL $5,763

$69.1


Option 2 involves creating a new exemption to the ADG Code, which would effectively extend the

current provisions of the ACCORD exemption industry-wide, for all household-use LQs (Option 2a)

or for all LQs (Option 2b).

Reduction in compliance costs

Introducing an exemption like this is likely to result in a decrease in the compliance costs of

transporting LQs of around $23.5 million per annum, based on the following assumptions:

Implementing simplified transport documentation will reduce the costs of preparing

documentation by around one-half for the transporters of household-use LQs. This is

based on drafts of a similar proposed exemption, which include a requirement to record the

aggregate quantity of LQs in a load in the transport documentation

Increasing the amount of goods that can be transported without placard restrictions

applying from 1,000kg (or litres) to 2,000kg (or litres) will reduce placard costs across

industry by around 10 per cent for the transporters of household-use LQs

The reduction in placarding costs will also be due to the fact that LQs transported under the

proposed exemption do not contribute to the aggregate quantity of dangerous goods in the

load.

Table 7. Estimated regulatory savings associated with Option 2a

Industries

Freight cost due to

LQ compliance

$M

Reduction in

compliance costs

$M

Manufacturing

Paint and Coatings Manufacturing $17.8

↓-$9.2

Cosmetics, Perfume and Toiletries Manufacturing $0.8

↓-$0.4

Aerosol Manufacturing $5.8

↓-$3.0

Retail

Supermarkets $9.3

↓-$4.8

Department stores $2.7

↓-$1.4

Duty free $2.0

↓-$1.0

Online

Online groceries $0.0 $0.0


38

Industries

Freight cost due to

LQ compliance

$M

Reduction in

compliance costs

$M

Online Perfume and Cosmetic Sales in Australia $1.9

↓-$1.0

Direct Selling

Direct Selling Businesses in Australia $5.3

↓-$2.7

TOTAL $45.6

↓-$23.5

Option 2b, extending the proposed exemption to all LQs, is unlikely to provide much greater benefit

to the industries listed above, as these industries deal mainly in household-use LQ products. This

option would provide additional benefits to the transporters of non-household-use LQ, but there

was not enough information available about the volume of these goods that are transported each

year to quantify the additional savings from this approach.

Change in risk profile

This option is not expected to increase the risk of transporting LQs. Similar provisions to the

proposed exemptions have been in place through the RDL and ACCORD arrangements for some

years, without any problems being identified. The option effectively extends these arrangements to

a broader group, which is not expected to result in any increase in the risks associated with

transporting LQs.

Table 8. Analysis of risks associated with Options 2a and 2b

Possible change in risk Assessment Rationale for assessment

Extend the current

concessions allowed

under the ACCORD

exemption to other

transporters of LQs

No change

There is no risk-based rationale for limiting the use

of concessions allowed under this exemption to

members of ACCORD.

No risks have been identified with extending

existing concessions to other transporters of LQs.

Increase in the amount of

LQs that can be

transported in a load

without placarding from

1,000kg (or litres) to

2,000kg (or litres)

No change

2,000kg (or litres) placard limits have applied for

RDLs and ACCORD members in Australia for

many years without incident.

Much larger quantities of LQs are also permitted

to be transported in other jurisdictions without

vehicle placarding and without any evidence of an

increase in risk.

Simplified documentation

requirements under the

exemption

No change

In the event of an accident, emergency services

workers would still have access to transport

documentation showing the vehicle is carrying

LQs and the aggregate quantity of LQs being

carried (based on current drafts of the exemption).

The RDL and ACCORD concessions have

allowed LQs to be transported with similar,

simplified documentation without evidence of a

problem.


39


(2b) allowing LQs that are

not for household use to

be transported under the

proposed exemption

Negligible

Some dangerous goods that are not for household

use may have a higher risk-profile than the LQs

that are typically used in households. However,

the risk level of different types of dangerous goods

is taken into account in the ADG code, where

dangerous goods with higher risk profiles can only

be transported as LQs in smaller quantities than

other dangerous goods, or not at all.


Option 3 involves adopting the main provisions of the EU’s ADR for LQs. The main features of this

option are an increase in placarding limits from the current limit of 1,000kg (or litres) to 8,000kg (or

litres), with placarding requirements only applying to transport units and containers with a

maximum mass greater than 12,000kg (or litres) as well as simplified documentation requirements

for LQs, like those described for Option 2.

The ADR is currently more permissive about the form of transport documentation than the ADG

Code, allowing documentation requirements to be met by any traceable means (including emails

and sms). However, alternative forms of documentation are not being considered as part of this

RIS, as this is not specifically a LQ-related issue.

For this option, it is also assumed that a concession would be applied to allow LQs to also be

removed from their outer packaging for the final stage of their transport (e.g. when being

transported to a retail outlet or end-user) and be carried without the packaging having to be marked

with UN certification marks or the hazard symbols. As noted in Chapter 2, changes to inner

labelling requirements for LQs have not been considered as part of this option. The key

assumptions about the costs and benefits of this option are:

Simplified documentation requirements would be implemented for the transport of all LQs

in a manner that is broadly consistent with Option 2. This would deliver similar compliance

savings to Option 2, but by retaining a placard limit, compliance costs would still be

incurred for keeping track of the total quantity of LQs in a load.

The total quantity of LQs that can be transported in a load, before that load becomes

subject to the placarding provisions of the ADG Code would increase from 1,000kg (or

litres) to 8,000kg (or litres) and would only apply to transport units and containers with a

maximum mass greater than 12,000kg (or litres).

Consultations have suggested that very few loads contain LQs in quantities of 8,000kg (or

litres) or more. However, the increase in the placard limit to this level would effectively

remove the need to placard any vehicles under 12 tonnes. An estimated 55 per cent of

Australia’s trucks fit into this category (ABS 2014). Under this proposal, some of these

trucks and their drivers would no-longer need to be registered or licensed to transport

dangerous goods (e.g. in cases where LQs are the only types of goods they currently

transport). This has conservatively been assumed to reduce placarding costs by 25 per

cent for the industries analysed.

Allowing LQs to be removed from their outer packaging and carried from distribution depots

to retail outlets or end-users, without the packaging having to be marked with UN

certification marks or the hazard symbols, is assumed to reduce marking and labelling

costs by half for online and direct sellers and by a quarter for store-based retailers.

The estimated compliance savings for this option are shown in table 9.


40

Table 9. Estimated regulatory savings associated with Option 3

Industries

Freight cost due to

LQ compliance

$M

Reduction in

compliance costs

$M

Manufacturing


↓-$9.8


↓-$0.5


↓-$3.2

Retail

Supermarkets $8.3

↓-$5.8


↓-$1.7

Duty free $1.8

↓-$1.2

Online



↓-$1.3

Direct Selling


↓-$3.7

TOTAL $41.9

↓-$27.2


There are two main differences in the potential risk of transporting LQs for this option. These arise

from there being less documentation available about LQs in the event of an accident, and also

there potentially being more severe consequences in the event of an accident, due to vehicles

carrying larger amounts of LQs without placards.

Reduced documentation requirements

As discussed in Chapter 3, the transport documentation in vehicles carrying LQs may be used by

emergency services workers to inform their response to an accident, including in cases where the

driver of the vehicle is unable to provide this information. However, emergency services workers

may also obtain this type of information in other ways (e.g. by inspecting the accident scene and/or

communicating with the transport company). The proposed system has operated in Europe for a

number of years, without any indication of an increase in the risks to emergency services workers

or an increase in the damage to property as a result of the reduced documentation requirements.

This suggests that any increase in the risk of transporting LQs due to a reduction in documentation

requirements will not be significant.

Increased placarding limits

The best evidence from overseas about the risks associated with increasing placard limits to ADR

levels are the INERIS study in 2002 and the subsequent debate at the UNECE and the risk

analysis undertaken by the OECD and PIARC concerning the transport of LQs in tunnels. The

UNECE analysed the risks associated with not having any placard requirements for LQs, but

ultimately agreed to an 8 tonne limit, while the risk of transporting LQs in tunnels was not

considered to be any greater than transporting these goods on an open road.


41

Overall, the increase in the risk of transporting LQs under provisions similar to the ADR is not

considered to be substantial enough to offset the reduction in compliance costs this option would

generate.

Table 10. Analysis of risks associated with Option 3


Simplified documentation

requirements applying to

all LQs

No change

As for Option 2.

Increase in the amount of

LQs that can be

transported in a load

without placarding from

1,000kg (or litres) to

8,000kg (or litres)

Very small

increase in

risk

As discussed above and in Chapter 3, transporting

higher volumes of LQs may increase the

consequences of an accident. However, the

likelihood of this is considered very low and the

increase in risk from a vehicle transporting these

goods not displaying placards is marginal.

Higher placard thresholds for LQs have been in

place in Europe for some years, with no evidence

of safety problems.

Allow LQs to be

transported to retailers

and end-users without

outer markings

Negligible

In the event of an accident, any LQs are likely to

be protected by their inner packaging.

Similar arrangements are in place in the UK

without any evidence of a problem.


Option 4 involves adopting the provisions of the UN Model Regulations for LQs. This is mainly

consistent with the ADR (Option 3), except for the complete removal of documentation

requirements and the removal of a limit on the quantity of LQ goods that can be transported in a

single load without vehicle placarding. The key assumptions about the costs and benefits of this

option are:

Documentation requirements are completely removed for LQs

All placarding costs are removed for LQs (although some LQ loads would still be

placarded, e.g. where other dangerous goods are transported in the same load).

Table 11. Estimated regulatory savings associated with Option 4

Industries

Freight cost due to

LQ compliance

$M

Reduction in

compliance costs

$M

Manufacturing


↓-$21.6


↓-$1.0


↓-$7.0

Retail

Supermarkets $2.1

↓-$12.0


↓-$3.4

Duty free $0.5

↓-$2.6


42

Industries

Freight cost due to

LQ compliance

$M

Reduction in

compliance costs

$M

Online



↓-$2.6

Direct Selling


↓-$7.2

TOTAL $11.7

↓-$57.4


As for Option 3, increases in risk associated with this option is due to less documentation being

available for emergency services workers in the event of an accident, and there potentially being

more severe consequences in the event of an accident, due to vehicles carrying a larger quantity of

LQs in vehicles without placards. In both of these cases, this could potentially contribute to an

increase in the consequences of an accident.

In assessing these risks, the key difference between Options 3 and 4 is the absence of a proven

track-record of other jurisdictions operating safely in this way. Following the removal of placard

limits in the UN Model Regulations, some jurisdictions, including the UK advocated for the

complete removal of placard limits for LQs in the ADR. However, jurisdictions in Europe ultimately,

decided to adopt the eight and 12 tonne limits described for Option 3. The reasons for choosing

these limits are unclear, and they may be somewhat arbitrary. However, the decision to have a limit

was based on the concerns about the consequences of an accident, should one occur involving a

very large quantity of LQs.

Table 12. Analysis of risks associated with Option 4


Removal of transport

documentation

requirements for LQs

Small

increase in

risk

In the event of an accident, emergency services

workers would have less access to information

about the goods that a vehicle is carrying.

This may result in a small increase in the risk of

responding to an accident. However, transport

documentation is only one form of information that

emergency services can use to determine whether

there are additional risks present at an accident

scene and there are no known incidents where

LQs have caused injury to emergency services

workers, following a transport accident.

Remove the limit on the

amount of LQs that can

be transported in a load

without placarding

Small

increase in

risk

As for Option 3, but in the case of Option 4 there

is not the same track-record of the regulatory

arrangement having been applied elsewhere.

Allow LQs to be

transported to retailers

and end-users without

outer markings

Negligible

As for Option 3.


43

7 Assessment of competition effects

Principle 4 of the Guide to Regulation requires that, in accordance with the Competition Principles

Agreement, legislation should not restrict completion unless it can be demonstrated that the

benefits of the restrictions to the community as a whole outweigh the costs and the objectives of

the regulation can only be achieved by restricting competition. In practice, this is demonstrated by

completing the competition assessment checklist in the Guide to Regulation.

Table 13. Competition assessment checklist

Question Answer Significance

Would the regulatory proposal affect the

number and range of suppliers?

Grant exclusive rights for a supplier to

provide a good or service?

No

Establish a licence, permit or authorisation

process as a requirement of operation?

No

Affect the ability of some types of firms to

participate in public procurement?

No

Significantly alter costs of entry or exit to a

supplier?

No

Create a geographic barrier to the ability of

businesses to supply goods or services,

invest capital or supply labour?

No

Would the regulatory proposal change the

ability of suppliers to compete?

Control or substantially influence the prices

at which a good or service is sold?

No

Alter the ability of suppliers to advertise or

market their products?

No

Set standards for product/service quality

that is significantly different from current

practice?

No

Significantly alter costs of some suppliers

relative to others?

Possible

The current regulations provide

concessions to some suppliers (e.g.

store-based retailers and industry

association members) that are not

available to others. The options

considered would remove these

distinctions and provide a more even

basis for competition.

Would the regulatory proposal alter

supplier’ incentives to compete vigorously?

Create a self-regulatory or co-regulatory

regime?

No

Impact on the mobility of customers

between suppliers?

No

Require/encourage the publishing of

information on company outputs/price,

sales/cost?

No

Exempt an activity from general

competition law?

No


44

8 Conclusions

This chapter briefly outlines the conclusions about the assessment of the options considered and

the extent they address the problems identified in Chapter 3.

8.1 Conclusions about the risk of transporting limited quantities

The analysis presented in this RIS supports the conclusion that transporting LQs is a very low risk

activity. A thorough desk-based search for and consultations with regulators and emergency

services organisations did not identify any incidents in Australia where LQs have contributed to the

cause of a transport accident or the consequences of an accident. Many of the concerns raised

about the relaxation of the regulatory requirements for the transportation of LQs are based on

hypothetical situations and are not supported by evidence of an actual risk.

Internationally, there has been a significant relaxation in how LQ transportation is regulated.

Australia has not adopted these changes and as a result imposes regulatory requirements that are

more onerous than comparable jurisdictions. No problems have been identified in jurisdictions that

have implemented more permissive regulatory arrangements for the transport of LQs and given the

strong track record of safety in the transport of LQs in Australia and the lack of evidence of a high

risk consequence and/or probability rating, the compliance burden imposed by the current

regulations does not appear to be justified.

8.2 Conclusions about the costs and benefits of the options

Compliance costs associated with the transport of LQs are substantial. The three options

considered in the RIS would provide a cumulative reduction in these costs.

Figure 7. Cumulative annual benefits of the three options

Options 2a or 2b would provide the least reduction in compliance costs, primarily from a reduction

in transport documentation requirements, but it would also be a further departure from international

standards and may create confusion for transport companies when interpreting the ADG Code.

Option 3 would provide slightly greater benefits than Options 2a and 2b, mainly due to the higher

aggregate quantity of LQs that would be allowed to be transported without placarding restrictions

applying. This option also has the advantage incorporating simplified documentation requirements

in the ADG Code. The risks associated with an increase in placarding limits are considered to be

very low, evidenced by the lack of any apparent problems in jurisdiction that have adopted these

limits.


45

Option 4 is effectively a non-regulatory option. It provides the greatest reduction in compliance

costs of the three options, but does not have the same track-record of having been safely

implemented in other comparable jurisdictions.

As this is a Consultation RIS, the NTC welcomes additional comments, information and data from

stakeholders that should be taken into account in developing the Decision RIS. If information of

sufficient quality and volume can be obtained from submissions, it will be used to conduct further

quantitative impact analysis on the proposed options for the Decision RIS. This could potentially

result in the NTC altering its conclusions about the options.


46

9 Consultation strategy

In accordance with Principle 5 of the Australian Government Guide to Regulation, the NTC is

proposing a comprehensive consultation process to enable impacted stakeholders to provide input

into the policy development process. The NTC’s consultation strategy is outlined below.

9.1 Objectives of the consultation process

The objectives of the consultation process on the proposed amendments to the LQ provisions of

the ADG Code are to:

Gather information on the effectiveness of the current regulatory requirements and their

impact on businesses, regulators and emergency services and gain an understanding of

the real-world risks involved in the transportation LQs

Gain an understanding of the current regulatory burdens experienced by businesses

transporting LQs and understand the implications of retaining the status quo

Collect data, other evidence and validate assumptions to inform the cost benefit analysis of

the proposed options

Provide stakeholders with an opportunity to input into the development of reform options to

achieve greater productivity while managing risk and to state their preferred option for

regulatory reform.

9.2 Consultation undertaken to-date

The NTC has undertaken extensive consultation with key stakeholders to inform the development

of the proposed regulatory options, prior to the release of this Consultation RIS for public comment.

Summary of consultations

Informal consultation has been occurring with industry associations and regulators over the past

four years. The NTC has received feedback on the LQ provisions from industry representatives in

their public submissions to the previous two ADG Code amendment packages and as part of the

implementation review of ADG7.

In October 2014, the NTC published an Issues Scoping Paper (Transport of Dangerous Goods:

Limited quantities and retail distribution loads) to seek feedback from industry, regulators and

emergency services on the current practices, the strengths and weaknesses of the regulatory

framework and the elements that could be improved. The Paper asked a number of questions

about the LQ market in Australia and the benefits and costs of the regulatory model.

The NTC also conducted a workshop with key stakeholders on the regulation of LQs in October

2014. The attendees at this workshop included transporters, retailers, industry peak-bodies,

regulators and emergency services organisations. These consultations were used to collect

information about the types of LQ dangerous goods being transported in Australia, the way these

goods are transported, and the risks associated with their transport.

A number of the organisations provided the NTC with written submissions:

3M

ACCORD Australasia

Aerosol Association of Australia

Australia Post

Direct Selling Association of Australia

Greencap


47

Haztech

Heat Group

Plastics and Chemicals Industries Association (PACIA).

During the development of this Consultation RIS, NERA has undertaken a series of consultations,

with a focus on collecting further information about the transport of LQs in Australia, the

effectiveness of the current regulatory arrangements and to collect data to inform the evaluation of

different regulatory options. NERA consulted with the following organisations:

ACCORD Australasia

Aerosol Association of Australia

Australian Paint Manufacturers Federation

Direct Selling Association of Australia

Emergency service representatives from NSW and Victoria

Environment Protection Authority (NSW)

Myer

Plastics and Chemicals Industries Association (PACIA)

Toll Group

TNT Express Australia

WorkSafe Victoria.

NERA also had discussions with representatives from regulators and policy agencies within

European jurisdictions and the United Nations with regards to the introduction and application of

the recent changes to the ADR LQ regulatory requirements, their risk implications and likely impact

on regulatory burden.

Key issues raised to-date

Stakeholders have raised a number of concerns with the current regulatory requirements for the

transportation of LQs, including:

The lack of alignment with accepted international standards

The inconsistencies in regulatory requirements between various transportation modes

placing a disproportionate burden on non-traditional sales and distribution methods

Regulatory complexity and an acknowledgement that non-compliance is high due to a lack

of understanding and a lack of enforcement.

Stakeholders recognise that there is a lack of evidence on the risks of transporting LQs and that

there is also a lack of data on the LQ market in Australia to definitively cost the regulatory impact to

the sector.

Stakeholders have divergent views with regard to the level of actual versus perceived risk, the level

of acceptable risk to be managed, and whether Europe’s track record of no identifiable increase in

risk under a more permissible scheme can be considered a precedent for Australia.

9.3 Proposed future consultation plan

The NTC intends to undertake the following consultation process:

Publish the RIS on the NTC website for public consultation and request stakeholder

submissions by 7 August 2015

Conduct further targeted consultations with industry associations, regulators and

emergency service representatives.


48

The NTC will take all submissions received during the public consultation phase into account when

developing the Decision RIS and forming its final recommendations for consideration by the

Transport and Infrastructure Council.

9.4 Consultation questions

The NTC invites all interested stakeholders to comment on any aspect of the proposed options

and/or the cost benefit analysis outlined RIS.

When providing a submission, the NTC specifically seeks responses to the following questions:

Do you support the assumptions used in the regulatory costings?

Are there any additional costs or benefits associated with the current regulatory

arrangements that have not been identified in the RIS (including any data or evidence to

quantify the costs and benefits)?

Is there any further evidence from Australia or overseas to estimate the actual risks

associated with transporting LQs?

Which reform option do you/does your organisation support and why?

What considerations should be taken into account during the implementation process (if an

amendment is supported)?


49

10 Implementation and review

If the Transport and Infrastructure Council commits to a reform to the LQ requirements in the ADG

Code, the NTC and the Competent Authorities in each state and territory must implement and

review the regulatory change consistent with the Guide to Regulation’s principles of:

Implementing the regulation with common sense, empathy and respect (Principle 8)

Reviewing the regulation periodically to test its continued relevance (Principle 9).

10.1 Implementation plan

Approval processes

Following the consultation process on the Consultation RIS, the NTC will develop a Decision RIS

and seek endorsement from the Transport and Infrastructure Senior Officials Committee (TISOC)

on its preferred reform option. Subsequently, the NTC will present its preferred option to the

Transport and Infrastructure Council for policy approval. Based on current timelines, the NTC

intends to present the preferred option at the Council’s November 2015 meeting.

Legislative amendments

Once the Transport and Infrastructure Council has provided policy approval for the reforms,

amendments to the ADG Code, model law and model subordinate law will be drafted.

It is intended for the LQ amendments to be incorporated into the next ADG Code amendment

package (ADG 7.5) to be implemented by July 2017.

Upon publication of the new edition ADG Code, model law, model subordinate law, states and

territories have one year to amend their respective legislation and implement the package of

amendments.

Communication and training

The Competent Authorities in each state and territory are responsible for providing technical advice

on the application of the ADG Code and for the enforcement of the LQ requirements. It is expected

that each state and territory will conduct its own communication and education campaign to ensure

its regulated entities understand their compliance obligations.

Key risks to be managed

Regulatory complexity and a lack of compliance have been identified as significant problems with

the status quo option. If a regulatory amendment is supported, it will be essential that the

subsequent amendments to the ADG Code are drafted in a manner that supports the regulatory

best practice principles of clarity and simplicity.

In order to manage this risk, an effective communications and education campaign will be required

during the implementation of the amendments and on an ongoing basis. Without a clear

understanding of the regulatory requirements, the issues of non-compliance may continue and the

benefits of a reduction in transportation costs for LQs may not be realised.

10.2 Post-implementation review

As part of its commitment to undertake a best practice approach to regulation, the NTC has

included a ‘routine maintenance’ program to conduct rolling reviews of its regulations to ensure

they are current and support the strategic goals of improving transport productivity, safety and

environmental outcomes.


50

The NTC conducts an annual review (with subsequent amendments) of the ADG Code as part of

its maintenance program and to ensure ongoing alignment with the UN Model Regulations. The

NTC will continue to review the appropriateness, effectiveness and efficiency of the LQ regulations

as part of this routine maintenance program.


51

Appendix A: Glossary

Term Definition

ADG Code The Australian Code for the Transport of Dangerous Goods by Road and Rail

ADG7 The 7

th

edition of the ADG Code

ADR

The European Agreement concerning the International Carriage of Dangerous

Goods by Road

AFAC The Australasian Fire and Emergency Services Authorities Council

AIG Australian Industry Group

AMSA Australian Marine Safety Authority

CAP Competent Authorities Panel

CASA Civil Aviation Safety Authority

CBA Cost-benefit analysis

CBD Central Business District

COAG Council of Australian Governments

GHS

United Nation’s Globally Harmonised System of Classification and Labelling of

Chemicals

INERIS National Institute of Environmental and Industrial Risks

LQ

Limited Quantities – dangerous goods transported in limited quantities, according

the provisions of chapter 3.4 of the ADG Code

NERA NERA Economic Consulting

NTC National Transport Commission

OBPR Office of Best Practice Regulation

OECD Organisation for Economic Co-operation and Development

ORM-D Other Regulated Material, Category D (USA)

PHMSA Pipeline and Hazardous Materials Safety Administration (USA)

PIARC World Road Association

RDL Retail Distribution Load

RIS Regulatory Impact Statement

UK United Kingdom

UN United Nations

UN Model

Regulations

The UN Model Regulations for the Transport of Dangerous Goods

UNECE United Nations Economic Commission for Europe

USA United States of America

WTO World Trade Organisation


52

Appendix B: References

Australia Bureau of Statistics (ABS) 2014, Motor Vehicle Census, ABS, Canberra

Australian Government ComLaw 2015, National Transport Commission (Model Legislation -

Transport of Dangerous Goods by Road or Rail) Regulations 2007, accessed May 2015

<http://www.comlaw.gov.au/Details/F2007L03868/Html/Text#param194>

Bureau of Infrastructure, Transport and Regional Economics (BITRE) 2014, Yearbook 2014:

Australian Infrastructure Statistical Report, BITRE, Canberra ACT

Council of Australian Governments 2007, Best Practice Regulation – A Guide for Ministerial

Councils and National Standard Setting Bodies, accessed May 2015

<https://www.coag.gov.au/sites/.../COAG_best_practice_guide_2007.pdf>

Department of Prime Minister and Cabinet 2014, International Standards and Risk Assessments,

accessed May 2015

<https://www.cuttingredtape.gov.au/resources/guidance/international-standards-and-risk-

assessments>

Department of Transportation (USA) 2011, Federal Register Vol. 76 Wednesday No. 12 January

19, 2011, accessed May 2015

<http://www.gpo.gov/fdsys/pkg/FR-2011-01-19/pdf/2010-33324.pdf>

Department of Justice (UK) & Department of Transport (UK) 2012, Carriage of Dangerous Goods:

Approved Derogations and Transitional Provisions, TSO, London

Direct Selling Association of Australia (DSAA) 2015, accessed May 2015

<http://www.dsaa.asn.au/research-statistics.asp>

European Commission for Europe, Road freight transport by type of goods, accessed May 2015

<http://ec.europa.eu/eurostat/statistics-explained/index.php/Road_freight_transport_by_type_of_go

ods#Road_freight_transport_of_dangerous_goods>

European Commission for Europe 2010, Guiding Principles for the Development of the UN Model

Regulations, accessed May 2015

<http://www.unece.org/fileadmin/DAM/trans/danger/publi/unrec/GuidingPrinciples/Guiding_Principl

es_Rev16.pdf>

IBIS World 2015, accessed May 2015

<http://www.ibisworld.com.au/industry/online-perfume-and-cosmetic-sales.html>

Ministry of Equipment, Transport and Housing (France) 2002, Study on the relevance of the system

of exemption for the transport of hazardous goods packed in limited quantities

National Transport Commission (NTC) 2014, Australian Code for the Transport of Dangerous

Goods by Road & Rail - Edition 7.3, NTC, Melbourne

OECD & PIARC 2001, Safety in Tunnels: Transport of Dangerous Goods through Road Tunnels,

OECD Publishing, Paris

Prime Minister of Australia 2014, Further measures to cut red tape - accepting trusted international

standards, accessed May 2015

<https://www.pm.gov.au/media/2014-10-14/further-measures-cut-red-tape-accepting-trusted-

international-standards>

Safe Work Australia 2014, Work-related Fatalities Involving Trucks, Australia 20013 to 2012, Safe

Work Australia, Canberra

The Audit Office of NSW 2011, Performance Audit: Transport of Dangerous Goods, accessed May

2015

<www.audit.nsw.gov.au/.../212_Transport_Dangerous_Goods.pdf.aspx>

Documents

Transporting Limited Quantities of Dangerous …3434C2D2-F7E4-45A7-8916-FC0B80F… · Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015