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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
Level 15/628 Bourke Street
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
6.5 Costs and benefits associated with Option 2 37
6.6 Costs and benefits associated with Option 3 39
6.7 Costs and benefits associated with Option 4 41
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
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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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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
Level 15/628 Bourke Street
Melbourne VIC 3000
Public comment is open until 7 August 2015.
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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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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:
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
Home garden and pest products – including, fly sprays, pesticides and herbicides
Paints, coatings and related products – including decorative paints, lacquers, varnishes
and mineral turpentine.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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).
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
By being out-of-step with international practice, stakeholders have identified that the ADG Code is
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:
Inner, intermediate and outer labelling requirements
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.
Documentation requirements
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
13
identification number(s) and certifying that the operation has been carried out in accordance with
certain requirements of the model regulations.
7
Placard load amounts
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.
Inner, intermediate and outer labelling requirements
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.
Documentation requirements
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.
Placard load amounts
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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).
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
By being out-of-step with international practice, stakeholders have identified that the ADG Code is
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).
Regulated under the ADG Code.
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Regulated under the ADG Code.
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.
Regulated under the ADG Code.
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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:
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
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. 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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
6.5 Costs and benefits associated with Option 2
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
39
Possible change in risk Assessment Rationale for assessment
(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.
6.6 Costs and benefits associated with Option 3
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
40
Table 9. Estimated regulatory savings associated with Option 3
Industries
Freight cost due to
LQ compliance
$M
Reduction in
compliance costs
$M
Manufacturing
Paint and Coatings Manufacturing $17.2
↓-$9.8
Cosmetics, Perfume and Toiletries Manufacturing $0.8
↓-$0.5
Aerosol Manufacturing $5.6
↓-$3.2
Retail
Supermarkets $8.3
↓-$5.8
Department stores $2.4
↓-$1.7
Duty free $1.8
↓-$1.2
Online
Online groceries $0.0 $0.0
Online Perfume and Cosmetic Sales in Australia $1.6
↓-$1.3
Direct Selling
Direct Selling Businesses in Australia $4.3
↓-$3.7
TOTAL $41.9
↓-$27.2
Change in risk profile
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Possible change in risk Assessment Rationale for assessment
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.
6.7 Costs and benefits associated with Option 4
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
Paint and Coatings Manufacturing $5.4
↓-$21.6
Cosmetics, Perfume and Toiletries Manufacturing $0.3
↓-$1.0
Aerosol Manufacturing $1.8
↓-$7.0
Retail
Supermarkets $2.1
↓-$12.0
Department stores $0.6
↓-$3.4
Duty free $0.5
↓-$2.6
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
42
Industries
Freight cost due to
LQ compliance
$M
Reduction in
compliance costs
$M
Online
Online groceries $0.0 $0.0
Online Perfume and Cosmetic Sales in Australia $0.3
↓-$2.6
Direct Selling
Direct Selling Businesses in Australia $0.8
↓-$7.2
TOTAL $11.7
↓-$57.4
Change in risk profile
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
Possible change in risk Assessment Rationale for assessment
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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.
Transporting Limited Quantities of Dangerous Goods – Regulatory Impact Statement June 2015
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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)?
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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.
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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.
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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
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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>