plate) only Proofing – not required Package redesign – no change to packaging shape / size change to label layout Amendments to country of origin information – no change to label layout Additions to requirements of manufacturer’s details – no change to label layout Amendments to text regarding serving or preparation instructions – no change to label layout Amendments to text regarding storage instructions – no change to label layout Medium change Label design – changes to text and label layout Label production – change to three colours (three printing plates) Proofing – required Package redesign – no change to packaging shape / size Additions to ingredients list – change to label layout Change to health or product claim – change to label layout Change to mandatory warning statements – change to label layout Removal/addition/change of endorsements (e.g. ‘tick of approval’) – minimal change to label layout Change to the contents of nutritional panel – change to label layout Amendments to country of origin information – change to label layout Additions to requirements of manufacturer’s details – change to label layout Amendments to text regarding serving or preparation instructions – change to label layout Amendments to text regarding storage instructions – change to label layout Major change Label design – changes to text and label layout Label production – change to six colours (six printing plates) Proofing – required Package redesign – change required to packaging shape / size Re-naming of product Redesign or amendment of image/logo/graphic Removal / addition / change of endorsements (e.g. ‘tick of approval’) – redesign of label layout To select a per unit price from the 2014 Cost Schedule, PwC has based its full cost estimate on a ‘medium’ complexity change scenario. Because the full cost of changing labels varies considerably from product to product, it is impossible to estimate an aggregate change complexity that could apply across all products. As such, the ‘medium’ complexity scenario represents a ‘median’ estimate of complexity. Further, based on the complexity descriptions, on the whole, PwC believes that this is a reasonable approach for two main reasons: Based on a review the of ‘minor’ change complexity scenario, the change will likely be more substantial than changes to existing textual elements. The current style guide has been developed in consultation with industry to explore a variety of mechanisms to incorporate the HSR system with minimal
Appendix B Assumptions & limitations Key assumptions Costing assumptions The following table summarises key parameters used in developing our industry cost estimate. Table : Summary of Key Parameters Data point Used Comments Total number of food and beverage SKUs 7,200 Provided by industry stakeholders. Adoption rate 20% p.a. PwC has assumed a steady uptake over a five year period. While different uptake rates would vary the overall cost estimate (relating to the time value of money), this impact is likely not material and would not impact PwC overall conclusion. Implementation period and lifecycle 5 year period Based on PwC industry survey. Real discount rate 7% There is no ‘hard and fast rule’ as to appropriate real discount rates. A 7 per cent real discount rate is the default rate used by the Productivity Commission. The Office of Best Practice Regulation cites between 5%-10% in its guidance materials. Global assumptions While it is not within the scope of this engagement to review the implementation and operation of the HSR system, stability and continuity of the implementation and operations of the HSR system is a key assumption of this report. We understand that key implementation and operational plans are/have been developed separately. Clearly, there is risk inherent to any new venture. However, should any of these elements not be presented or sufficiently developed, the likelihood that intended benefits may not be realised could increase. As such, at a minimum, PwC has assumed that implementation and operational planning includes (as appropriate and tailored to scope and size of a voluntary system):