Market Insight: Mandatory ESC pros far outweigh cons

THE federal government has calculated that the introduction of legislation requiring mandatory fitment of electronic stability control in light commercial vehicles could save dozens of lives and generate up to $145 million more in net benefits compared to non-regulatory options.

The results of a cost-benefit analysis undertaken as part of a regulation impact statement (RIS) on the control of LCV stability were central to the department of infrastructure and transport recommending that laws are passed to make the life-saving technology standard on LCVs from 2016, bringing them into line with passenger cars and SUVs.

While vehicle manufacturers selling LCVs have responded to increasing Australian market demand for ESC, driven largely by trade and fleet operators and organisations representing private motorists, less than half of all LCVs sold here (45 per cent) are fitted with the technology.

This marks a huge climb from only 8.3 per cent in 2010, but with expectations that it will take the industry until at least 2020 before 99 per cent of LCVs are fitted with ESC under a voluntary system, the federal government is now working to achieve a 100 per cent fitment rate in a shorter timeframe.

The department explored a range of options, including taking no action, conducting user information campaigns, revising government fleet purchasing practices and initiating a code of practice, but found that only regulation under the ‘Motor Vehicle Standards Act 1989’ would guarantee industry-wide fitment and ensure ongoing provision of ESC in new vehicles.

The cost-benefit analysis also found that regulation generated the highest net benefits of the options examined as well as the highest number of lives saved, at $79 million and 29 respectively over a 15-year regulation period.

“This shows that ESC has the potential to make a difference even over a short period of increased fitment rates,” the department says in the RIS.

In comparison, a targeted user information campaign was found to offer net benefits of up to $48 million and 17 lives saved, while an advertising campaign was deemed to provide a loss of $66 million and save only 10 lives.

While the case for regulation may seem counter-intuitive given the increased voluntary fitment of ESC and industry targets of 99 per cent by the end of the decade, the department makes the point in its RIS that there are often “advantages to intervening through regulation, even at high voluntary rates, such as when a technology offers significant benefits that have been proven in real-world conditions”.

It also says: “There can be no guarantee that the other options would deliver an enduring result. Changing economic pressures, or the entry of new players into the market, could see a shift away from the current move to provide ESC-equipped LCVs.”

There are other factors at play behind the government’s decision to legislate, such as its commitment to keeping up with international standards (particularly vehicle safety legislation introduced in Europe), the substantial number of new LCV sales in Australia (almost 200,000 last year, 18 per cent of the entire market, according to VFACTS), and an increasing body of evidence on the effectiveness of ESC technology.

On the latter, the federal government commissioned research by the respected Monash University Accident Research Centre (MUARC) on the effectiveness of the technology in LCVs – specifically to assist with the regulation impact study – and found effectiveness of ESC to be similar to that as for passenger cars.

The MUARC study estimated that ESC in LCVs is likely to be 32 per cent effective in reducing relevant crashes, such as single-vehicle crashes where ESC would be able to assist, across all severities.

According to federal government figures, the cost of road crashes to the Australian economy is estimated to be at least $27 billion a year, which is borne widely by the general public, businesses and government.

As the government notes in the RIS, road trauma also has a further impact on the wellbeing of families “that is not possible to measure”.