Commercial and Economic Regulation in Australia

Commercial and Economic Regulation
1
Economic context
Key terms and concepts
Key Players in Australia
Principles of Regulation
Self regulation?
This lecture
2
Australia is a developed country rich in natural resources
:Mining and farming major exports
Major service industries: financial services, tourism, transport,
communication and education
Major Trade partners: China, japan, Korea, US and UK

Increasingly shaped and influenced by golbal economy and
reducing trade barriers
Economy
Australia has a mixed free enterprise economy and as Australia
has joined the word economy it has significantly de-regulated a
number of industries such as banking and aviation. Has moved
faway from the idea of government as delivering primary
services toa view that government is guide to policy similar to
many Western democracies
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As economy has grown markets have increasingly gone from
predominantly state and regional to national ones
Has led to need to harmonize Australian laws in key areas e,g
Australian Consumer law
Since 1970s has moved away from protectionism sought to
promote a more competitive environment by allowing foreign
entrants into market e.g aviation and banking
National economy
World is increasingly inter-connected and Australia is impacted
by developments around the world
“globalisation”: trend towards crossing of national boundaries
facilitated by internet, multi-national corporations, NGOs and
mass media
Economic globalisation driven by WTO which in turn drives
domestic policies

Impacts on regulatory responses e.g. legislation to respond to
challenges of the internet, harmonised IP laws, privacy laws
Global context
Australian Senate : has made it difficult to move ahead on major
reforms e.g Medicare co-payment
Government debt
Growth in sectors other than mining poor
High cost economy (particularly energy costs)
Need for more foreign investment
Management of scare resources :particularly water
Climate Change
More support for innovation, particularly small business
Strengthen Relationships with Trade Partners
Appropriate Regulation
Some Economic Challenges
Corporate entities are primary economic vehicle in Australia
Corporation:
separate legal entity recognised under legislation
Owned by shareholders
Managed by board who delegates responsibility usually to CEO
Economic operators

Are others: sole traders(individuals trading on own) and
partnerships
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Regulation may refer to:
legal rules imposed by government, the courts, regulators and
industry
enacted law: legislation made by parliament and delegated
legislation.
may also be more broadly defined as “Any rule endorsed by
government where there is an expectation of compliance”.
The term “regulations” refers to specific legal rules or can refer
specifically to provisions of delegated legislation or rules in
respect of which the government expects compliance
What is regulation?
Various definitions
8
Regulators” bodies tasked by government with supervising a
particular activity or industry which may include legal and non-
legal rule making powers.
What are regulators?
9

Most common
Direct government regulation comprises primary and
subordinate legislation
For example direct government regulation applies to the
classification of publications, films and computer games under
the Classification (Publications, Films and Computer Games)
Act 1995 (Cth) (Classification Act).
Direct Government Regulation
Industry bodies and associations who create non legal rules and
enforcement mechanisms by which the members agree to abide.
Self regulation?
Self-regulation is generally characterised by industry-
formulated rules and codes of conduct, with industry solely
responsible for enforcement. For example, the content of
advertising is subject to a self-regulatory system created by the
Australian Association of National Advertisers (AANA) in
1998. The AANA established a Code of Ethics and the
Advertising Standards Bureau (ASB), which incorporates an
independent Advertising Standards Board to hear complaints
regarding advertising content.
Often preventionsist measure developed in response to a
perceived threat by government to regulate an area.
can include technical ethical and economic standards

Typically driven by most influential firms in an industry
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Quasi-regulation describes those arrangements where
government influences businesses to comply, but which do not
form part of explicit government regulation
Quasi-Regulation
Under a typical co-regulatory scheme, the responsibility for
regulation is shared between the government and the regulated
industry.
Typically, the industry and government develop a code of
practice, which is then monitored by the industry itself but has
legal consequences for breach
The OECD notes,
This approach allows industry to take the lead in the regulation
of its members by setting standards and encouraging greater
responsibility for performance. It also exploits the expertise and
knowledge held within the industry or professional association
Co-regulation
For governments, co-regulatory measures offer significant
benefits.They are cost-effective, as the government does not
bear the burden
of directly developing the regulation.
Governments are not directly responsible for the content of the
regulation, minimising the potential political harm from
misguided regulation. Furthermore, governments often prefer

the use of co- regulatory measures because they can be
introduced and amended without reference to Parliament.
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Examples:
Australian Competition and Consumer Commission (ACCC)
ensures compliance with Commonwealth competition and
consumer protection laws
Australian Prudential Regulation Authority (APRA) ensures
financial institutions can honour their commitments
Australian Securities and Investment Commission: one stop
regulation of areas like business names, financial services,
companies, credit and insurance
Australian Securities Exchange Limited (ASX) Australia's
primary national exchange for equities, derivatives and fixed
security interests
Australian federal police: investigating serious and complex
crime against the Commonwealth
Reserve Bank of Australia (RBA) responsible for monetary
policy and stability of financial system
Director of public Prosecutions: prosecutes crimes against the
Commonwealth
Australian Financial Services Authority(AFSA) regulates
bankruptcy
Australian Taxation Office (ATO); administers tax regulations
and superannuation funds
Australian Business Regulators
Modern regulatory agencies are statutorily independent,.They
are created
by legislation, but are operationally separate from parliament
and

elected representatives. They frequently exercise executive,
judicial
and legislative power over their jurisdiction. They are restricted
by the
application of administrative law and judicial review, but hold
significant
discretionary power. They are delegated authority, but remain at
‘arms-length’ from those who delegated the authority to them.
This independence is intended to insulate the regulators
from the political process, and therefore political pressure—
both
from party political interests, and lobbying interests. The
doctrine of
regulatory independence attempts to ensure that the regulator is
impartial.
It is also possible that keeping regulatory agencies at arms-
length,
politicians are able to distance themselves from the sometimes
unpopular
actions of the regulator, as well as rely on the regulator to
provide
credibility for their own policies.. Agencies provide a buffer
between
politicians who are accountable to the voters, and the policies
enacted
by the government..
Delegation of authority by elected reps can be reconciled with
representative democracy by ensuring that elected
representatives are accountable for the actions
of their delegated agents The democratic precept is the ultimate
accountability of elected representatives to the
voters they represent
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Examples:

Australian Bankers Association responsible for the Code of
Banking Practice
Insurance Council of Australia responsible for General
insurance code of practice
Press Council of Australia : standards of practice for print and
on-line media
Advertising Standards Bureau : various Code of Practice /ethics
advertising industry
Australian Digital Advertising Alliance (ADAA)The Australian
Best Practice Guideline for Online Behavioural Advertising
Association Data Driven Marketing and Advertising: Group
Buying Code of Conduct.
Australian Self- Regulators
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An example of quasi-regulation is the agreement by Telstra,
Optus and Primus to filter voluntarily a list of child abuse URLs
compiled and maintained by the Australian Communications and
Media Authority (the ACMA). This arrangement was entered
into against the background of the Australian Government’s
proposed system for mandatory internet service provider level
filtering of URLs
Quasi-regulators
Regulation of radio and television content is co-regulatory.
Various industry groups have developed codes under the

Broadcasting Services Act 1992 (Cth). Most aspects of program
content are governed by these codes, which include the
Commercial Television Industry Code of Practice and the
Commercial Radio Australia Code of Practice and Guidelines.
Once implemented, the ACMA monitors these codes and deals
with unresolved complaints made under them
Co-regulators
Compliance :to comply with or fulfil regulatory requirements
Governance: system by which an organisation is controlled and
operated and the mechanisms by which it and its people are
called to account
Corporate Governance: above for corporate entities.
Increasingly, the concept ‘corporate governance’ is used in the
public sector as well as the private sector.
Compliance and Governance
No universal definition: this one from Australian Governance
Institute. Others:
Organisation for Economic Co-operation and Development
(OECD):
Corporate governance involves a set of relationships between a
company’s management, its board, its shareholders and other
stakeholders. Corporate governance also provides the structure
through which the objectives of the company are set, and the

means of attaining those objectives and monitoring performance
are determined.
ASX Corporate Governance Council:
Corporate governance is ‘the framework of rules, relationships,
systems and processes within and by which authority is
exercised and controlled in corporations’. It encompasses the
mechanisms by which companies, and those in control, are held
to account.
Justice Owen, HIH Royal Commission, ‘The Failure of HIH
Insurance, Volume 1: A Corporate Collapse and Its Lessons’,
Commonwealth of Australia, April 2003 — pg xxxiii; Justice
Owen, ‘Corporate Governance: Level upon Layer’, Speech to
13th Commonwealth Law Conference 2003, Melbourne, 13–17
April 2003 — pg 2
Some others: Governance as concept can apply not just to
organisations but also our system of government and its
branches
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While, governance is concerned with “how an organisation is
managed”, it is important to understand that governing is not
the same as managing.
Broadly, governance involves the systems and
processes in place that shape, enable and oversee management
of an organisation.
Management is concerned with doing – with co-ordinating and
managing the day-to-day operations of the business.
Governance and Management

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The three most common are:
accountability – both internal and external;
transparency/openness; and
recognition of stakeholder/shareholder rights.
Often to these are added:
efficiency, integrity,
stewardship,
leadership,
an emphasis on performance as well as compliance,
and stakeholder participation or inclusiveness.
Principles of Good Governance
Good Governance associated with improved organisation
performance, better risk management, regulatory compliance,
ethical conduct and social responsibility. Significant
organisations failures like HIH have made this a significant
focus on this topic by government, regulators and industry
bodies
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Governance Risk Compliance Institute: Peak body for
development and practice of compliance and for working
compliance , risk, ethics and governance into the fabric of
organisations
Other bodies: ASIC, Institute of Company Directors etc,
Australian Public Service Commission
Industry Compliance Bodies

e.gThe ASX Corporate Governance Council’s principles and
recommendations provide one benchmark for good corporate
governance in Australia
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An important trend: emphasises the role of organisations in
society
Example issues: use of sweat shop labour in Bangladesh,
reducing carbon emissions
Has been applied to government
E.g. In 2008 senate passed motion that emphasised recognition
responsibility of government is to "foster a corporate culture of
human rights at home and aboard”
Corporate Social Responsibility
Federal policy agency .
At highest level is steward of the economy responsible for
macroeconomic and microeconomic development and reform
Department of Treasury

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Independent Research and Advisory body
Important role conducting reviews e.g
Economic Structure and Performance of the Australian Retail
Industry 2011
Various other advisory bodies such as Export Meat Industry
Advisory Committee
Productivity Commission
The Productivity Commission is an advisory body. It does not
administer government programs or exercise executive power. It
contributes by providing quality, independent advice and
information to governments, and on the communication of ideas
and analysis.
The Commission is an agency of the Australian Government,
located within the Treasury portfolio. However its activities
cover all levels of government and encompass all sectors of the
economy, as well as social and environmental issues.
The core function of the Commission is to conduct public
inquiries at the request of the Australian Government on key
policy or regulatory issues bearing on Australia's economic
performance and community wellbeing.
In addition, the Commission undertakes a variety of research at
the request of the Government and to support its annual
reporting, performance monitoring and other responsibilities.
The Commission also acts as secretariat to the inter-
governmental Review of Government Service Provision, under
the auspices of the Council of Australian Governments. And it
has a role in advising on the competitive neutrality of
Commonwealth Government business activities

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Include;
Professional organisations and Chambers of Commerce (
associations of participants in a commerce and industry)
Employer Interests e.g Business Council of Australia
Small Business: Council of Small Business Operators Australia
(COSBOA)
Employee Interests: Trade unions
Stakeholder Representatives
The ‘public interest’ model argues that regulation is constructed
and applied to solve economic and social problems which affect
the community as a whole.
Public choice: regulation arises from self interested pressure
groups.
Models of regulation
These problems can be inefficiencies derived from market
failures, or non-economic problems, such as welfare or equity.
Carefully drafted
regulation, judiciously and objectively applied, can, at least in
part,mitigate these problems. Regulation is therefore a
complement to the
market, a mechanism governments use to improve market
outcomes

for economic or social goals,. The public interest model of
regulation assumes that regulators and legislators act in
accordance to the best interest of the society
at large.
the ‘public choice’ model of regulation treats regulators and
legislators as self interested and flawed actors like any other
within an economic system. Regulation is the result of self-
interested pressure groups competingto mold the legal
framework for their own gain. The theory of regulatory
capture—in which a regulator is ‘captured’ by the industry
it regulates, and is therefore manipulated for private, not public,
gain— arises from this model.
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This ‘command and control’ view, where legislators/regulators
define the range of prohibited and permissible behaviour, and
use coercive sanctions to punish breaches, has been the most
commonly used form of government regulation throughout
history.
“responsive regulation” belief that governments should be
responsive to the conduct of the subjects of regulation and vary
their enforcement measures accordingly.
Regulatory Approaches
responsive regulation is that governments should be responsive
to the conduct of the regulated firm and vary their enforcement
measures accordingly.84 Rather than producing a binary
distinction between a compliant and a non-compliant
firm, the regulator assesses the extent to which the firm is
compliant, and the level of enforcement necessary to ensure

ideal compliance.
According to its proponents, responsive regulation seeks to
resolvequestions of compliance through negotiation rather than
coercion
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The formalist might say armed robbery is a very serious evil.
Therefore it should always be dealt with by taking it to court,
and if guilt is proven, the offender must go to jail. Responsive
regulation requires us to challenge such a presumption; if the
offender is responding to the detection of her wrongdoing by
turning around her life, kicking a heroin habit, helping victims,
and voluntarily working for a community group ‘to make up for
the harm she has done to the community,’ then the responsive
regulator of armed robbery will say no to the jail option.
Example
This approach to compliance and enforcement is widely used in
Australian regulatory activity of business. Many regulatory
agencies have explicitly adopted the responsive regulation
approach. Many would describe their approach as ‘principles’
focused, arguing that ‘the regulatory emphasis has moved away
from black letter enforcement to setting high industry tandards
and leaving it to industry to comply with the legislative
requirements’.
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Model 1: State Regulation: top down
Model 2; Private Regulation with State Oversight: Bottom Up
Top Down
Model 2: Keeping the State Honest: as above but more public
accountability

Model 3: Balancing Interests: bottom up
Regulatory systems
1. Direct regulation and consistent with command and control
view of regulation
2. the job of regulation is a demanding and difficult one that the
state cannot do alone. This requires the coordination of
regulatory resources under the direction of the state. In
particular it is argued that self-regulation should be encouraged
and utilised by the state. The idea put forward is to create a
hierarchy of regulatory capacities with the state at the top and
private regulators and citizens at the bottom all working
towards the same goals. In this hierarchy, regulation would be
done by the
bottom but controlled from the top bottom-up performance and
top-down control. Each level in this regulatory hierarchy would
be
policed by regulators at the next level up; equates to co-
regulatory approach.
3. This model is as a complement to, more than an alternative
to, the second. Its proponents argued for greater regulatory
accountability to keep the process honest. The principal issue
debated is how to make the regulatory process more directly
answerable to the public. An idea put forward is the use of
public
interest groups to watch over the regulatory process on behalf
of the public. This model accepts that the regulatory process
must be more responsible. E.g productivity commission has in
past done reviews or regulatory performance of government but
only does this ad hoc.
4. Proponents of this view favour the presence of independent
regulatory entities who would act to promote their conception of

the public interest. Regulatory bodies are ostensibly
independent of government but as can be seen by debate around
HR Commission report into children in detention can still be
subject to political pressure and outcomes influenced by
appointment process of senior bureaucrats
our system has a number of these
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Regulation, as a governmental activity, has come to rival, and in
some respects eclipse, the traditional spending and taxing
powers of government as a means by which government seeks to
influence, direct and control economic and social behaviour.
The most striking feature of the overall level of regulation and
of the regulatory burden in Australia is its growth over time.
the changing nature of Australia’s federal structure has
significantly expanded the jurisdiction of the Commonwealth
including regulatory activity
Growth of regulatory bodies:600 plus?
As the volume and complexity of regulation grows, the cost and
expertise required to administer it grows similarly
Poorly made or conceived regulation can encourage more
regulation to resolve the original flaws.
Growth of regulation
The Incomes Tax Assessment Act is often used as a barometer
of legislative and regulatory growth, and has grown from 120
pages in 1936 to a bookshelf crushing [7,000 pages]. 2007
30
A key characteristic of Australian regulatory culture is said to
be the fragmentation and “parochialism” which accompanies the
Australian federal system.

Impact of Federalism
e.g until recently Australia had nine separate regulatory
regimes for occupational health and safety. This framework
does not include all workers in the mining, petroleum and
maritime industries, which in some jurisdictions are subject to
other regulatory regimes. Occupational health and safety
standards, and enforcement practices, differed across state and
territory jurisdictions. The consequences of this fragmentation
are profound, especially for national industries. They caused
inefficiencies to the mobility of labour
and capital which is essential to microeconomic reform and to
the improvement of Australia's position in the international
economy. The
duplication of regulatory effort inevitably occurring in nine
separate jurisdictions was wasteful and inefficient, and is an
unnecessary burden on
Australian taxpayers. Moreover, inconsistencies in standards
and in their enforcement was detrimental to the health and
safety of Australian
workers, with resulting social and economic costs.
Consider large policy areas such as health and education largely
state controlled.
2011 cth ws able to enact model legislation with State
cooperation now being implemented in most jurisdictions but
long tortured process.
Compare to Europe where EU has promoted considerable
regulatory conformity.
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Business and economic regulation is a major

challenge facing Australia's competitiveness in the world
economy.
To this end, both sides of politics have accepted that gratuitous
intervention in the business of business is something to be
avoided. At the same time, there must be some safeguards to
ensure that the 'public interest' is not threatened.
Regulatory Policy :Challenge
There is recognition that regulation should be part of our
competitive advantage: need to facilitate trade and commerce to
fuel economic growth and investment .
Recent history is littered with examples of 'market failure',
where tremendous harm has been done to the public interest e.g
HIH collapse
Australia's goal is to achieve regulatory outcomes which are
economically efficient. The ideal is an optimal level of
regulation, one which imposes no gratuitous burdens on
Australian enterprise, yet one which protects Australian society
from the worst excesses of market failure.
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Generally, Australian regulators do not adopt a law enforcement
ideology when it come to business regulation . They trust
business as socially responsible and willing to be law abiding.
They favour of a cooperative posture and adversarial
confrontation is a last resort.
Less restrictive standards comparative to US and Europe but
more so comparative to China/Asia
Less aggressive enforcement than US (Regulators
The use of undercover tactics and other elements of deception

in the course of regulatory investigation is rare in Australia.
Australian Regulatory Culture
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Model introduced by Ronald Reagan in US in 1980
RIAs have proved popular with governments trying (or trying to
be seen) to improve the quality of their regulation.
Australia and early adopter and from 1985 had adopted formal
policies mandating the use of RIA in domestic policy-making
Regulatory Impact assessment
The idea of an RIA is to make regulation more efficient and
effective byhaving its designers justify the reasons for
implementing a new regulation,
consider the costs and benefits of different options at an early
stage and take acommunity-wide perspective of their effects, to
ensure that the benefits to society
(broadly conceived) of a regulation are greater than the costs
(also broadlyconceived) and to encourage the design and
adoption of the regulation with the
greatest net benefit.
International studies, however have, questioned whether an
RIA process improvesregulatory outcomes. Common themes
include non-compliance with the
regulatory process and poor-quality RIAs.

In Australia Twenty years after the RIA process was
established, the 2006 Taskforce o nReducing Regulatory
Burdens on Business pointed out that the 1990s and 2000s
saw a dramatic growth in the volume of regulation (Regulation
Taskforce 2006:
5). And no-one has detected any improvement in the quality of
new regulation.
Indeed, complaints about growing regulatory burdens led to the
Taskforce
inquiry.
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Expressed Aim is to cut red-tape i.e. reduce the regulatory
burden for individuals, businesses and community
organisations.
Series of questions that need to be addressed. as part of
development of regulatory proposal
Australian Best practice Guidelines
35
Ten principles for Australian Government policy makers
Regulation should not be the default option for policy makers:
the policy option offering the greatest net benefit should always
be the recommended option.
Regulation should be imposed only when it can be shown to
offer an overall net benefit.
The cost burden of new regulation must be fully offset by
reductions in existing regulatory burden.
Every substantive regulatory policy change must be the subject
of a Regulation Impact Statement.

Policy makers should consult in a genuine and timely way with
affected businesses, community organisations and individuals.
Policy makers must consult with each other to avoid creating
cumulative or overlapping regulatory burdens.
The information upon which policy makers base their decisions
must be published at the earliest opportunity.
Regulators must implement regulation with common sense,
empathy and respect.
All regulation must be periodically reviewed to test its
continuing relevance.
Policy makers must work closely with their portfolio
Deregulation Units throughout the policy making process.
Australian Best Practice Guidelines
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1. What is the problem you are trying to solve?
The RIS requires you to explain the problem—and your
objective—simply and clearly. A crisply defined problem offers
scope for innovative, non-regulatory thinking.
2 Why is government action needed?
Ask yourself: is it a genuine priority? Is it government’s job? Is
the problem serious enough to justify government intervention?
Will intervention work?
3What policy options are you considering?
A RIS will reveal whether you’ve thought through all of the
viable options, including the option of not regulating. Until
you’ve analysed the problem from every angle, you may be
overlooking a viable, low-impact alternative.
4. What is the likely net benefit of each option?

Policy interventions often come at a cost. The RIS obliges you
to assess the benefit of your proposed intervention against the
burden you impose. If that burden is greater than the benefit,
you should look for alternatives or reconsider the need to
intervene at all.
5 Who will you consult about these options and how will you
consult them?
Transparency and accountability are not optional. The RIS
encourages you to walk in the shoes of the people, business
decision makers and community groups affected by your policy
proposal.
6 What is the best option from those you have considered?
The RIS will help make clear whether your decision making
processes are robust enough to cope with scrutiny. The public
don’t just need to know what you’ve decided; they want to
know why and on what information and arguments your decision
was based.
7 How will you implement and evaluate your chosen option?
Too often this question is left until the last minute. The RIS
process ensures you give adequate and timely consideration to
the real-world problems of making your policy work—and
makes sure you will test its effectiveness and ongoing
relevance.
Regulatory Impact statements: Australian Government
Guidelines
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Public service bureaucrats and politicians have their own
interests and objectives and the political process does not

automatically lead to policies in the public interest.
no effective sanctions and, thus, low incentives of compliance.
the RIS may be prepared too late in the policy development
process to be of any real assistance to decision-makers.
Actual process in government guidelines may not be adhered to
and may be insufficient public transparency early enough in
process
Challenges to good regulation
The pressures and incentives that lead to bad regulation are
still present — such as the influence of specialinterests and
populist pressures to ‘do something’ about the problem of the
day Politicians respond to these pressures. Further, bureaucrats
may have their ownobjectives, such as empire building, which
may encourage them to support
excessive and inefficient regulations.
Both the regulatory agencies and the central regulatory monitor
can lack the incentive to carry out policies to improve the
regulatory process.
Since 2007 some improvement : regulatory proposal with
medium compliance costs, or significant impacts on business
and individuals or the economy, should not proceed to Cabinet
or other decision-maker unless it has complied with the
regulatory impact-analysis requirements, and non-compliant
regulations must have a post-implementation
review within two years. But not all regulations require cabinet
approval.
More recently the Office of Best Practice regulation established
and the processes in the best practice handbook improved.
2013/14 review showed improvement in compliance and post
review processes.

In those circumstances, it effectively becomes little more than
an ex-post justification for a policy decision already taken.
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Industry develops its own solution so may not account for
interests of other stakeholders e.g consumers
No defined process as exists for regulatory and co-regulatory
approaches so may lack rigour e.g. may not be sufficient
consultation with affected groups,
No independent oversight
Variable quality in drafting
May raise barriers to entry in a market and affect competition
Lacks legal backstop for enforcement
Self Regulation?
Flexible and adaptable :particular advantage in fast moving
industries such as internet based.
Lower compliance and administrative costs
Harnesses industry knowledge and experience
Quick and low costs complaints mechanisms
Self –Regulation?
Delays in government regulatory decisions can cause
considerable uncertainty for businesses and result in significant
costs or deferred opportunities e.g regulation of native title
claims creates uncertainty for mining industry

overlap and inconsistency in regulation between jurisdictions.
This imposes costs on businesses operating in more than one
jurisdiction, creates additional costs when new ventures are
initiated in another state or territory and limits businesses in
their efforts to achieve economies of scale. An example of this
is the lack of recognition of licences, gained in other
jurisdictions e.g. mining management licenses
Costs can also be imposed on businesses where different
jurisdictions agree to implement similar regulations, but in
doing so they administer and enforce the regulation differently
e.g use of agricultural fertilizers by farmers
Issues for Business
Where regulatory bottlenecks develop, the loss of competitive
advantage, or other lost or forgone opportunities, can be
significant.
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Government regulatory responses have been implemented to
respond to citizens 'concerns without giving sufficient weight to
scientific assessment. An example was the lack of approval by
state governments to grow genetically modified crops that have
already been approved for release in Australia.
Regulations which aim achieve community-wide objectives can
impose a loss of property rights and/or reduce the value of the
resources or assets held by individual businesses. For example,
changes to the operation of regulations protecting native

vegetation, have diminished the value of property rights held by
some agricultural producers, and led to a corresponding decline
in the value of their assets.
information about any policy or regulatory change ought to be
communicated to those affected, this is not always done well.
Issues for Business
Running head: Business Problem 1
Business Problem 2
Business Problem
Author Note

Business Problem
One of the problems encountered by leadership teams in
organizations is to finding the right staff, retaining them, and
ensuring that they buy into an organization’s vision. Workers
have a direct impact on the performance of every organization
both in the short- and long-term As such, it is quite imperative
for MovieFlix to focus on enhancing the leadership activities
and practices that have a direct implication on recruiting and
retaining workers and ensuring that they focus on meeting the
organization’s vision.
There are several specific reasons why recruiting the right
personnel, retaining them and ensuring that they focus on
meeting the vision of an organization is a problem for
MovieFlix and other businesses. To start with, failure to recruit
the right people implies that they will not be able to carry out
the assigned tasks effectively (Power, 2007). In the case of
MovieFlix, for instance, people who do not have the knowledge
and skills needed to carry out tasks related to subscription
service for on-demand internet streaming media and DVD-by-
mail may not be able to do so, or they may offend the
customers. The wrong people are also not innovative, implying
that the organization’s ability to compete in its industry will
decline. It is essential for an organization to recruit individuals
who have a desire for the job and have an inner motivation to do
it (Power, 2007). Employing individuals who lack inner
motivation to do the job or who perceive it as a wrong career
means that they will not have the inner motivated needed to
carry out their tasks effectively. In the same vein, workers who
do not focus on meeting an organization’s vision hardly work
hard to achieve it (Power, 2007).
The problem persists in almost all organizations for several
reasons. Firstly, finding workers with adequate knowledge,
skills, and experience needed to carry out tasks effectively in a

business is difficult (Pinnow, 2011). In case of need to recruit
more workers, for instance, MovieFlix will be seeking to recruit
motivated individuals with adequate knowledge, skills, and
experience to carry the organization’s tasks effectively.
However, it is difficult for the organization to find individuals
with all the aforementioned credentials (Preston & Jefferson,
2009). Organizations compete to recruit the best workers and
thus, it requires an organization to make a sacrifice through
offering incentives such as higher level of remuneration in order
to attract such workers (Preston & Jefferson, 2009). However,
an organization can still hire motivated staff with little
knowledge and skills and then offer them with training,
irrespective of the fact that the training process may be
expensive. After that, however, the problem of retaining them
emerges since they are often attracted to higher compensation
and other incentives, as well as better relations in other
organizations (Preston & Jefferson, 2009). In addition, workers
keep on forgetting their responsibilities in facilitating an
organization to meet its vision and thus, they need to be
reminded frequently.
Several major consequences may emerge if the problem is not
solved effectively. Firstly, the quality and quantity of products
and services of an organization usually declines (Macey et al.,
2011). The decline is caused by inability of the wrong workers
to carry out their tasks effectively, due to lack of motivation
and due to lack of focus on meeting the organization’s vision,
objectives, and goals. Ultimately, the decline translates into
poor financial performance of an organization. Further, the
workers turnover rate increases, leading to a poor reputation of
an organization. In extreme cases, an organization’s operations
are halted to the extent that it is closed (Macey et al., 2011).
Overall, it is vital for MovieFlix’s leadership team to constantly
focus on solving the issues related to recruitment and retaining
personnel and ensure that they focus on the organization’s
vision. In doing so, the firm will avoid encountering the
negative consequences brought about by the problem and will

ultimately benefit from the improvement.
References
Macey, W. H., Schneider, B., Barbera, K. M. & Young, S. A.
(2011). Employee Engagement: Tools for Analysis, Practice,
and Competitive Advantage. London: John Wiley & Sons
Pinnow, D. F. (2011). Leadership - What Really Matters: A
Handbook on Systemic Leadership. Heidelberg: Springer
Power, J. (2007). Staff Development. Journal of Access
Services, 3(3), 65 – 70
Preston, A., & Jefferson, T. (2009). Labour markets and wages
in 2008. Journal of industrial relations, 51(3), 313-330.

1
2
Table of Contents
1 Introduction 3
1.1 Objectives of the Code 3
1.2 About Group Buying 3
2 Definitions 4
3 Compliance with Australian Laws 5
4 Marketing Claims 6
4.1 Misleading and / or deceptive conduct 6
4.2 Products that can’t be advertised 7
4.3 Refunds and Credits 7
5 Complying with the Spam Act 8
5.1 Consent 8
5.2 Identification 8
5.3 Opt out 8

6 Privacy 9
7 Complaints 11
8 Enforcement 12
8.1 Complaints received by ADMA 12
8.2 Complaints outside the Scope of this Code or
against organisations that aren’t signatories 12
8.3 Potential breach of the Code by a Signatory 12
8.4 Hearing before the Authority 13
8.5 Sanctions for Breach 14
8.6 Publication of Enforcement Action 15
9 Review 16
3
1. Introduction
Group Buying is a relatively new phenomenon in Australia and
it is growing at a

substantial rate. A new market report published by Telsyte
shows that the group
buying market grew from $123.9 million in quarter 2 2011 to
$158.5 million in quarter
3 2011 and is well on track to exceed market forecast of $400m
for the 2011
calendar year.
Group Buying offers benefits for both consumers and
Merchants. Consumers benefit
from being able to access discounts on compelling activities and
experiences.
Merchants benefit by being able to access new customers and
promote their
business to a broader audience.
As the Group Buying channel grows into an established channel
the industry
recognises the importance of coming together to develop a Code
of Conduct that is
specific to the Group Buying experience.
The Code has also been developed to demonstrate the industry’s
commitment to
high ethical standards and best practice.

Objectives of the Code
The objectives of the Code are to:
a) Ensure that consumers (Subscribers) have access to product
and service
information they need to make informed choices;
b) Promote compliance within the industry with relevant laws
including
Competition and Consumer Act 2010, Privacy Act 1988
including the National
Privacy Principles and the Spam Act 2003;
c) Promote fair, honest, ethical best practice within the Group
Buying industry;
d) Increase consumer confidence in dealing with Group Buying
Platforms
(GBPs).
This Code outlines best practices that GBPs should observe
when engaged in Group
Buying activities including ensuring that:
a) the Subscriber fully understands the Offer before accepting it
b) appropriate policies and procedures are in place
c) all commercial electronic messages comply with relevant
legislation.

About Group Buying
Group Buying, offers products and services at significantly
reduced prices usually on
the condition that a minimum number of buyers would make the
purchase. Typically,
these websites feature a deal of the day, with the deal kicking in
once a set number
of people agree to buy the product or service. Buyers then print
off a voucher to
claim their discount at the retailer.
[1]
Many of the group-buying sites work by
negotiating deals with local merchants and promising to deliver
new customers in
exchange for discounts.
To find out more about Group Buying go to
http://en.wikipedia.org/wiki/Group_buying.
2. Definitions
4
Code this document

Group Buying offers products and services at significantly
reduced prices usually on
the condition that a minimum number of buyers would make the
purchase. Typically,
these websites feature a deal of the day, with the deal kicking in
once a set number
of people agree to buy the product or service. Buyers then print
off a voucher to
claim their discount at the retailer.
[1]
Many of the group-buying sites work by
negotiating deals with local merchants and promising to deliver
new customers in
exchange for discounts.
1
Group Buying Platforms (GBP) are organisations that promote
Group Buying Offers.
Subscribers are consumers that sign up to Group Buying
Platforms to access Group
Buying services.
Offer means an invitation on behalf of and / or for a Merchant
to a Subscriber to

purchase a specific good or service.
Merchants are vendors who advertise through Group Buying
Platforms and offer
goods and services to the Group Buying Platform’s Subscribers.
Signatory means a Group Buying Platform that it is signatory to
this Code.
1 http://en.wikipedia.org/wiki/Group_buying
5
3. COMPLIANCE WITH AUSTRALIAN LAWS
3.1 All GBPs must comply with all relevant Australian laws
including but not
limited to:
a) the Competition and Consumer Act 2010 (Cth)
b) the Privacy Act 1988 (Cth)
c) the Spam Act 2003

6
4. MARKETING CLAIMS
4.1 MISLEADING AND / OR DECEPTIVE CONDUCT
4.1.1 GBPs should promote the Offer in clear and easy to read
language.
4.1.2 GBPs should not engage in false and misleading conduct.
4.1.3 GBPs should provide Subscribers with accurate
information about
each Offer provided including:
a) The price of the goods or services
b) The description of the goods or services and
c) The discount
4.1.4 GBPs should include more detailed terms and conditions
as part of the
Offer or via a link from the Offer (where more detailed terms
and
conditions exist).

4.1.5 The terms and conditions for each Offer should include
the following
information:
a) The period for which the Offer is available
b) Any limitations or restrictions on the Offer
c) any date by which the Member has to book the Offer
(especially if
this is different from the expiry date)
4.1.6 GBPs should confirm with Merchants the accuracy of any
claims made
about the benefits, value or characteristics of the Offer.
4.1.7 GBPs should take care not to portray products as free
when purchase
of another product is required to secure the good or service.
Terms
such as complimentary should be used instead.
Example 1 Disclosure of Discounts

A GBP offers a $29 deal on an eat-in dinner at a discount of
50% on the usual
price. The same Merchant is currently offering a $35 special
during the period of
the Offer. The consumer is misled regarding the size of the
discount.
Remedy – the GBP should revise the discount based on the price
currently
offered by the Merchant.
4.2 PRODUCTS THAT CAN’T BE ADVERTISED
4.2.1 There are certain categories of advertising that may be
subject to regulation.
GBPs should consider the application of the following statutes
to their
business and the Offers that they are making available to
Subscribers:
a) Tobacco Advertising Prohibition Act 1992 (Cth)
b) Therapeutic Goods Act 1989 (Cth)
7
c) state based legislation including the Liquor Licensing Act
1997 (SA),

Liquor Control Reform Act 1998 (VIC), Liquor Act 2007
(NSW), Liquor
Control Act 1988 (WA)
d) Interactive Gambling Act 2001 (Cth) and various state
legislation relating
to gambling and betting
e) The Health Practitioner Regulation National Law.
4.3 REFUNDS AND CREDITS
4.3.1 GBPs should have a refund policy.
4.3.2 A GBPs refund policy should be clear and unambiguous.
4.3.3 A GBP refund policy should include an example of what
will occur in the
following three situations:
a) The Merchant goes into liquidation
b) The Merchant fails to provide the goods or services
c) The goods or services provided by the Merchant are not as
advertised.
4.3.4 GBPs should prominently display its refund policy on its
website.
4.3.5 GBPs should ensure that its refund policy can be easily
accessed through the

purchase process and the home page of its website.
8
5. COMPLYING WITH THE SPAM ACT
5.1 CONSENT
5.1.1 GBPs must only send emails that promote and advertise
offers, goods and
services to individuals when the GBP has consent.
5.1.2 Consent can exist where:
a) Someone has opted in to receive offers
b) Where someone has an existing business or other sort of
relationship with the GBP
c) Where an individual sends a promotional email to a friend,
relative
or family member in accordance with the e-marketing code of
practice.

5.1.3 Factual messages such as bills, service messages, refunds
can be sent by
GBPs regardless of whether there is consent or not.
5.2 IDENTIFICATION
5.2.1 GPBs must include information that identifies them
including:
a) Name of the organisation
b) Australian Business Number (ABN) or Australian Company
Number (ACN)
c) Business address or website
d) Telephone number or email address
5.3 OPT OUT
5.3.1 GPBs must include an electronic and functional opt-out.
5.3.2 Opt out facilities provided by GBP:
a) Must go back to the GBP
b) Must be operational for 30 days
5.3.3 Where a consumer opts out of receiving electronic
commercial messages
from the GBP this opt out request must be actioned within five

days.
9
6. PRIVACY
6.1 GBPs should have a clear and easy to read Privacy Policy.
6.2 GBPs should prominently display their Privacy Policies on
their websites.
6.3 GBPs Privacy Policies should include information such as:
a) the company’s name
b) how the GBP uses personal information
c) the companies or types of companies the GBP discloses
personal
information to
d) how individuals can request access to the information that a
GBP hold
on that individual
e) what will happen if an individual doesn’t provide their
information (for
example the GBP won’t be able to provide the service)

f) any laws that requires the GBP to collect information
6.4 GBPs should not use or disclose personal information except
as outlined in
their Privacy Policies.
6.5 Where an individual requests not to receive marketing
communications,
GBPs must, as soon as possible, take action to ensure that the
individual
isn’t contacted in the future for marketing purposes.
Note
Actions that might be taken to ensure the individual doesn’t
receive any further
marketing communications include the GBP removing the
recipient’s data from
it’s marketing database or adding them to a suppression list.
6.6 GBPs should keep personal information they hold secure
and have
appropriate information security and data security procedures in
place.
6.7 GBPs should allow individuals whose information they hold
to access and
correct that information.

6.8 Consumers should be provided with easy-to-use, secure
payment
mechanisms and information on the level of security such
mechanisms
afford.
6.9 GBPs should only transfer information overseas if:
a) the information to be transferred is going to a country with a
similar
privacy protection regime to Australia's; or
b) the GBP or related company has a contract in place with the
overseas party that specifies that the party will comply with the
Australian Privacy Act or that the party will treat the
information as
confidential; or
c) if the transfer is a necessary part of the offer (for example,
the offer
relates to an overseas holiday or goods where the merchant is
based
overseas).
6.10 Sensitive Information
6.10.1 GBPs should only collect sensitive information directly
from the

10
individual.
6.10.2 Sensitive information includes:
a) Health information
b) Criminal record
c) Sexual preferences or practices
d) Membership of a professional or trade association
e) Membership of a trade union
f) Religious beliefs or affiliations
g) Philosophical beliefs
h) Membership of a political association
i) Political opinions
ii) Racial or ethnic origin
11
7 COMPLAINTS
7.1 GBP should display contact details for how a Member can
make a complaint.
This should include at least one of the following:

a) telephone number
b) email address
c) postal address
d) online chat
7.2 GBP should acknowledge receipt of complaints promptly
within five working
days of a complaint being forwarded to them.
7.3 GBPs should have clear and effective procedures for
handling complaints.
7.4 GBPs should take appropriate action to resolve complaints
reasonably
promptly.
12
8 ENFORCEMENT
Complaints in relation to this Code will be administered by the
ADMA Code
Authority.
8.1 COMPLAINTS RECEIVED BY ADMA

8.1.1 Any regulator, individual or consumer who considers that
a Signatory has
breached a provision of the Code may lodge a complaint with
ADMA.
8.1.2 Complainants are encouraged to lodge complaints via the
ADMA website at
8.1.3 Complainants that do not have access to or do not want to
use the ADMA
website may send complaints by postal mail to the following
address.
Code Compliance Officer
Australian Direct Marketing Association
GPO Box 3895
Sydney NSW 2001
8.1.4 The complainant should set out the following details:
a) his or her name and contact details;
b) the name and, if known, the contact details of the GBP;
c) a brief outline of the complaint including substantiation of
the claim.
8.2 COMPLAINTS OUTSIDE THE SCOPE OF THIS CODE
OR AGAINST

ORGANISATIONS THAT AREN’T SIGNATORIES
8.2.1 Complainants that make complaints to the Code Authority
that do not relate to
this Code or do not relate to a signatory of the Code will be
referred to the
appropriate regulatory or advisory body.
8.3 POTENTIAL BREACH OF THE CODE BY A SIGNATORY
8.3.1 The Code Authority officer will assess each complaint
and if it appears that
the Signatory may have breached the Code the officer will send
the complaint
to the Signatory.
8.3.2 Signatories must respond to complaints within 15 days.
8.3.3 If a Signatory can provide clear evidence that they
haven’t breached the Code
or resolves the matter successfully with the complainant then
the Code
Authority officer will advise the complainant that no breach has
occurred and
will close the complaint.
8.3.4 If a Signatory can provide clear evidence that they haven’t
breached the Code
then they may respond with a clear outline of the steps that they
have taken

to resolve the matter to the satisfaction of the complainant.
8.3.5 If the Signatory doesn’t respond within 15 days or the
matter cannot be
resolved with the complainant then the Code Authority officer
will refer the
matter to the Code Authority.
8.3.7 Upon reviewing the complaint, the Code Authority may:
13
a) direct the Code Authority officer to investigate the complaint
further
and report the results of the investigation to the Code Authority;
b) cause the Code Authority compliance officer to send a notice
to the
Signatory inviting the organisation to attend a hearing regarding
the
alleged breach of the Code by the signatory.
8.4 HEARING BEFORE THE AUTHORITY
8.4.1 A signatory will be given access to any documents that
relate to the case or
case(s) before the Code Authority and may also provide written
submissions

to the Code Authority prior to the hearing.
8.4.2 At the Code Authority hearing, the signatory will be
given a reasonable
opportunity to present its case. The signatory may make verbal
submissions
in relation to the allegations. The signatory may appear in
person or may be
represented by some other person. The Code Authority may, at
its
discretion, invite a complainant to participate in the Code
Authority’s
hearings through written and/or verbal submissions.
8.4.3 Within 14 days of the conclusion of the Code Authority
hearing, the CEO of
ADMA will send the Signatory a notice containing the decision
of the Code
Authority.
8.4.4 If the decision affirms the allegations, then the notice may
also include any
remedial action and/or sanctions the Code Authority considers
appropriate
the Code Authority should advise the complainant in writing of
the decision
of the Code Authority in relation to his or her complaint and
provide a
statement of any reasons the Code Authority has for making that
decision.

8.4.5 The signatory will have 14 days unless impractical from
receipt of the
decision of the Code Authority to take the necessary steps to
comply with
the decision.
8.4.6 If within 14 days from receipt of the decision of the Code
Authority the
Signatory is unable to demonstrate compliance with the
decision, the Chair
of the Group Buying Code Committee will call a special
meeting of the
Group Buying Code Committee to consider removing the
Signatory status of
the organisation to the Group Buying Code of Conduct.
8.4.7 If the Code Authority records indicate that the Signatory
has breached the
Group Buying Code on two or more occasions in the preceding
12 months,
the Code Authority may recommend to the CEO of ADMA that
that status of
signatory to this Code be revoked.
8.4.8 If the signatory withdraws from the Group Buying Code at
any point:

a) during the consideration of a complaint by the Code
Authority; or
b) subsequent to a determination being reached by the Code
Authority
rendering sanctions unenforceable;
the Code Authority forwards the complaint, including relevant
documentation
and the determination, to the appropriate regulatory authority
for further
action.
8.5 SANCTIONS FOR BREACH
8.5.1 Where the Code Authority finds that a Signatory has been
in breach of the
Code it may impose such sanctions as it considers appropriate
including,
14
without limiting the generality of its powers to:
a) requiring a formal apology for breach;
b) requiring corrective advertising or the withdrawal of
offending
advertisements or statements;

c) requiring the correction or deletion of relevant records and
personal
information;
d) recommending refund or replacement of goods or services
where
appropriate;
e) requiring the Signatory to take specified remedial action to
correct the
breach and avoid re-occurrence;
f) seeking a written undertaking from the Signatory that the
breach will not
be repeated;
g) recommending the relevant supply chain or media channel
used by the
Signatory to communicate with its customers cease to supply
and not
cooperate with the Signatory in respect of future direct
marketing activities
planned by the Signatory until the breach is rectified;
h) recommending to the Group Buying Code Committee that
Signatory
status be suspended or revoked.

8.5.2 The CEO of ADMA may, on recommendation of the Code
Authority, impose
the following sanctions:
a) order the payment of money, the transfer of property
(including goods)
or the delivery of goods;
b) suspend or cancel Signatory status of the organisation;
c) issue a formal written admonishment to the non-compliant
Signatory,
which may, where appropriate, be made public.
8.5.3 This will include specifically informing other signatories
to the Group Buying
Code that action has been taken. The non-compliant Member
will be given
the opportunity to both see and comment on the statement prior
to
publication.
8.5.4 During suspension or after termination, the Signatory
should take immediate
steps to cease implying in any way that it is a Signatory to this
Code.
8.5.5 On suspension or termination, the CEO of ADMA may
notify any relevant
industry body and/ or issue a public statement giving reasons
for the

suspension or expulsion.
8.6 PUBLICATION OF ENFORCEMENT ACTION
8.6.1 The ADMA Code Authority will publish in its Annual
Report:
a) the number of the complaints received by the Code
compliance
officer during that year;
b) the number of breaches established by the Code compliance
officer and Code Authority during that year;
c) an analysis of the enforcement action taken during that year;
d) a statistical analysis of complaints by company.
9 REVIEW
9.1 This Code will be reviewed in 12 months of its
implementation.
9.2 Comments in relation to the Code and its operation can be
directed to
[email protected] at any time.

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