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Behind The News: Food Authority Amendment

SOURCE: search.aph.gov.au

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA SENATE

AUSTRALIA NEW ZEALAND FOOD AUTHORITY AMENDMENT BILL 2001

REPLACEMENT EXPLANATORY MEMORANDUM

Circulated by authority of the Parliamentary Secretary to the Minister for Health and Aged Care, Senator the Hon Grant Tambling


THIS MEMORANDUM REPLACES THE EXPLANATORY MEMORANDUM PRESENTED TO THE SENATE ON 8 FEBRUARY 2001

OUTLINE
The Australia New Zealand Food Authority Amendment Bill 2001 amends the Australia New Zealand Food Authority Act 1991 (the Act) to implement those aspects of the new food regulatory system agreed to by all Australian jurisdictions that require immediate Commonwealth legislative change. The Bill reflects the arrangements for the new system that are set out in the Inter-governmental Food Regulation Agreement agreed to by members of the Council of Australian Governments (COAG) on 3 November 2000.

The new food regulatory system was developed by a Senior Officials Working Group of COAG, and is in response to recommendations of the Food Regulation Review Committee that was chaired by Dr Bill Blair, OAM, and reported in August 1998. This Committee was tasked with recommending to Government on how to reduce the regulatory burden on the food sector and improve the clarity, certainty and efficiency of the current food regulatory arrangements whilst, at the same time, protecting public health and safety.

The Agreement establishes a new Ministerial Council, the Australia and New Zealand Food Regulation Ministerial Council. The new Ministerial Council will develop domestic food regulation policy as well as policy guidelines for setting domestic food standards. Recognising the primacy of public health and safety considerations in developing such policy, the Australia and New Zealand Food Regulation Ministerial Council will be based on the existing Council of Health Ministers (ANZFSC), but can be complemented by other Ministers nominated by individual jurisdictions covering portfolios such as primary or processed food production, or trade. Each jurisdiction will have only one vote on all resolutions.

The Bill will establish a new statutory authority, Food Standards Australia New Zealand (the Authority), to be based upon the existing Australia New Zealand Food Authority.

The prime function of the Authority will be to develop domestic food standards that are to be adopted nationally. These standards are to be developed based on scientific and technical criteria and in accordance with the objectives set out in section 10 of the Act. The standards will be approved by the Food Standards Australia New Zealand Board and notified to the Ministerial Council. The Council will be able to direct the Authority to review any standard, and can reject any proposed draft standard.

The Bill sets out the process for the development of food standards that takes into account the role of the Ministerial Council. The Bill also makes provision for the transition from the Australia New Zealand Food Authority (ANZFA) and other amendments that are consequential on the re-naming of the Act and the creation of the new Authority.

The new system provided for in this Bill strengthens the focus on public health and safety. The Authority will eventually be able to develop all domestic food standards that are to be adopted nationally and with New Zealand, including those that under current arrangements are or would be established by the (Ministerial) Agriculture and Resource Management Council of Australia and New Zealand. The arrangements for the development of these primary product standards will be developed by the new Ministerial Council and may require further legislation. New Zealand has indicated that it will not be adopting these primary product food standards because it has other systems in place for their development.

Regulation is an integral part of any system designed to achieve safe food in that it provides the overarching framework and legal obligation for food businesses to produce food that is safe and suitable for human consumption. To be effective, this framework must apply across the whole food supply chain.

The new food regulatory arrangements will strengthen Ministerial authority and accountability. The requirement of the Ministerial Council to develop policy guidelines enables it to direct, rather than react to, proposals by the Authority.

All policy guidelines determined by the Council must be consistent with the objectives of the Act, of which protection of public health and safety remains the highest priority. The Bill provides that all policy guidelines be made public.

The Ministerial Council will also determine the arrangements to provide for high level consultation with key stakeholders.

The new arrangements are designed to enable food standards to be developed more quickly, if agreed by the members of the Ministerial Council. All standards (except those urgent standards that must commence immediately to protect public health and safety) will commence if the Council has informed the Authority that it does not intend to request a review of a draft standard approved by the Authority, if a period of 60 days has expired without the Council requesting the Authority to conduct such a review, or, in relation to an approved draft standard that has already been reviewed twice, the Council does not reject the draft standard.

Because of the proposed capacity of the Authority to eventually develop all domestic food standards to be adopted nationally, the Board will be able to have a wider range of expertise than does ANZFA (for example, the Bill enables the appointment of members with expertise in primary food production and small business).

There are other key elements of the new food regulatory system that do not require legislative change. First, a Food Regulation Standing Committee will support the Council. The membership of this Committee consist of heads of health departments, and heads of other government departments that reflect the membership of the Council, as well as a senior representative from the Australian Local Government Association. The Committee is to be chaired by the Commonwealth Department of Health and Aged Care. Secondly, the Council will establish a mechanism for the provision of stakeholder advice by representatives of the interests of consumers, small business, industry and public health. It will be able to provide this advice to the Council itself, the Standing committee, the new Authority, and an implementation committee to be established by the Standing Committee to assist it in the performance of its functions.

FINANCIAL IMPACT

The financial impact of this Bill will be low. The Department of Health and Aged Care will establish and fund a secretariat to provide administrative support for the Ministerial Council and related committees. There will be some minor expense associated with establishing the statutory authority Food Standards Australia New Zealand and the new standards setting process.

REGULATORY IMPACT STATEMENT

BACKGROUND
The current food regulatory system includes a number of food regulatory agencies. The Australian Quarantine and Inspection Service (AQIS) has responsibility for developing and enforcing export food regulations and standards. The Australia New Zealand Food Authority (ANZFA) develops domestic food standards for adoption by the Australia New Zealand Food Standards Council (ANZFSC). Other agencies, such as the National Registration Authority (NRA) and the Therapeutic Goods Administration (TGA) also have a role in relation to food standards development.

There are currently three Ministerial Councils with responsibility for food regulatory policy (Health, Agriculture and Fisheries). Under this arrangement, as noted above, national domestic food standards are developed by ANZFA and are considered for national approval by Commonwealth, State and Territory Health Ministers who constitute ANZFSC. However, food safety related standards in relation to the primary industry sector may also be developed by Agriculture and Fisheries Ministers. For example, national domestic meat food standards are developed and approved through processes established by the Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ).

The Food Regulation Review (the Blair Review) was established by the Prime Minister in 1997 to make recommendations to government on how to reduce the regulatory burden on the food sector and improve the clarity, certainty and efficiency of the current food regulatory arrangements while, at the same time, protecting public health and safety. The Blair review found that, while the current system is effective at producing safe food, its efficiency could be improved.

State and Territory Governments have taken the Blair Report recommendations into account in rationalising their individual food regulatory arrangements in ways that accommodate their particular jurisdictional circumstances. Some of these arrangements are already in place.

PROBLEMS
The major concerns highlighted by industry during the course of the Review relate to the significant and unwarranted costs of:

* having to deal with the large number of food laws;
* inappropriate food laws and regulations, that is, they are too prescriptive, costly to comply with, unenforceable or ambiguous;
* duplication of effort between regulatory agencies;
* the inconsistency of regulatory approaches between States/Territories and local governments, not only in terms of the regulations, but also in their interpretation and enforcement.

These broader concerns include more specific concerns regarding:

* the lack of clarity and consistency in agency roles and responsibilities;
* inefficient food standards setting processes;
* inappropriate food standards and regulation; and
* insufficient consultation with industry in government decision making.

Decisions made by Health Ministers (ANZFSC) in relation to the adoption of food standards in the interests of public health and safety can have an adverse impact on industry if industry concerns or existing food safety related standards or regulations which are the responsibility of other areas of government (such as primary industry, trade and small business) have not been adequately taken into account in the standards development process. This has, in some cases, resulted in industry and governments both bearing the costs of meeting or enforcing duplicated and overlapping regulations/standards.

The requirement for ANZFSC to adopt food standards that are then to be adopted nationally means that the standards development process is sometimes influenced by factors other than those that are science-based. As a result, industry may have to bear the costs of meeting requirements that do not contribute to the improvement of the protection of public health and safety, while government may bear the cost of enforcing them.

ANZFSC approval of a food standard currently involves a formal and lengthy process. Industry may lose market advantage or suffer market disadvantage because of the time it takes for a standard to be approved.

It is not surprising that the Blair Report found that the food industry views the current food regulatory decision making arrangements as complex and fragmented, and that the general industry perception is that its views are not sufficiently represented in the decision making process.

These problems, noted by industry through the Blair Review process, result from inefficiencies in Government processes and structures related to the development, administration and enforcement of food laws, that is, institutional failure. For example, the costs to Government of maintaining separate and independent national food regulatory policy decision making and standards development processes may be avoidable. Similarly, a rationalisation and simplification of national food standards setting processes could provide cost savings to Government. Therefore, the problem will not be solved through the operation of the market alone and some kind of Government action will be necessary to address the problem.

OBJECTIVES

The Governments objectives are to improve the efficiency of the food regulatory system by ensuring that:

* the regulatory framework maintains public health and safety by ensuring the production of safe and suitable food;
* there is national consistency in the interpretation, administration and enforcement of food regulation:
* the regulatory framework is appropriate, is the minimum necessary to be effective and that it operates efficiently by reducing costs to industry, government and consumers; and
* consumers have sufficient information to make informed choices.

In particular, it seeks to improve the timeliness, responsiveness and transparency of food standards setting processes.

OPTIONS

Three possible options have been identified for achieving the governments objectives.

Option 1 Implement the food regulatory model recommended by the Blair Report

The food regulatory model recommended by the Blair Report proposes amalgamation of at least the food export policy development function, and possibly the food export regulatory function, of AQIS with those of the current ANZFA. The functions of other Commonwealth agencies such as the National Registration Authority (for agricultural and veterinary chemicals) and the Therapeutic Goods Administration could also be amalgamated with ANZFA into a single national agency responsible for developing all food regulations/standards, operating within the Commonwealth Health portfolio.

ANZFA would continue to operate as a separate unit of the Health and Aged Care portfolio and would report to a new Council of Food Ministers. ANZFSC membership would be expanded to include representation from agriculture portfolios, that is, Agriculture and Fisheries Ministers. The Food Ministerial Council would make nationally agreed decisions on food regulatory policy proposals and proposals for the adoption of food regulations and standards developed by ANZFA.

Option 2 Implement the food regulatory model recommended by the Senior Officials Working Group on Food Regulation (SOWG) in its report to the Council of Australian Governments (COAG)

The food regulatory model recommended by SOWG proposes a new, single Ministerial Council responsible for developing nationally agreed domestic food regulatory policy. The Ministerial Council would also develop policy guidelines for the setting of all domestic food standards. In addition to Health Ministers, jurisdictions would be able to nominate other Ministers with a portfolio responsibility for food regulation, for example, in the areas of primary industry, trade and small business, as members of the Ministerial Council. Local Government would also be represented on the Council. Formal, inclusive and cooperative consultative processes would be established by the Ministerial Council to facilitate coordination and streamlining of domestic and export food regulatory functions, including compliance and enforcement functions, and the harmonisation of export and domestic food standards.

Export food regulatory functions will remain with AQIS, in recognition of the different drivers for export regulation and standards and of the importance of the high international profile of AQIS. A single new, national domestic food standards development agency, Food Standards Australia New Zealand (FSANZ), based on the food standards development related functions of ANZFA and incorporating model best practice in food regulation, would replace ANZFA. COAG agreed that FSANZ would develop all domestic food standards, including those currently developed by ARMCANZ, in accordance with any developed Ministerial Council guidelines.

However, COAG did not specify details as to how these standards are to be developed. As primary production legislation is the responsibility of various State and Territory portfolios, there will need to be extensive discussions with Australian jurisdictions and relevant stakeholders including consumer and food industry representatives before the new Ministerial Council can decide upon a development process for these standards.

Accordingly, the expertise of the current members of ANZFA would be expanded to include expertise in the field of primary food production, small business, trade, government, and the administration of food In keeping with its whole-of-chain responsibility for the development of food standards, FSANZ would operate as an independent agency whilst remaining under the Commonwealth Health and Aged Care portfolio.

There would be no formal Ministerial Council approval process. Instead, in recognition of Ministerial accountability for public health and safety, the Ministerial Council would, within a set timeframe, request the review of existing or proposed standards and ultimately reject a proposed standard if a jurisdiction represented on the Council considers that it does not meet certain specified criteria. This would occur where the jurisdiction considers that the standard is not consistent with the Councils policy guidelines or the objectives of the legislation establishing FSANZ, or that the standard does not protect public health and safety, promote consistency between domestic and international food standards that are at variance, or provide adequate information to make informed choices. The Council would also request a standard be reviewed if a jurisdiction considers that it is difficult to enforce or comply with in practical or resource terms or places an unreasonable cost burden on industry or consumers.

In addition to existing consultative processes for food standards development, a new stakeholder consultative council or equivalent consultative mechanism established by the Council would provide the opportunity for stakeholder involvement in high level strategic decision making processes, including food regulatory policy and food standards development.

A formal, inclusive consultative and cooperative process (the Food Standards Implementation Sub-Committee) would be established under the new Council to progress the rationalisation of food regulatory functions, improvement of clarity and consistency of food regulatory approaches and harmonisation of domestic and export food standards and regulations.

Option 3 No change

The current food regulatory system would continue to operate under the current inter-governmental agreement between the Commonwealth, States and Territories to develop nationally uniform food standards which is reflected in the 1996 Treaty with New Zealand to develop joint food standards. ANZFA and ANZFSC would continue to carry out their functions in accordance with the Australia New Zealand Food Authority Act 1991 (the ANZFA Act). ANZFA would continue to develop and make recommendations to the Council on national domestic food standards and regulations for Australia and New Zealand and ANZFSC would continue to make decisions on the adoption of food standards and regulations. AQIS would continue to exercise its export food regulatory functions.

IMPACT ANALYSIS

* Impact group identification

The groups likely to be significantly affected by the regulatory initiative include:

government Commonwealth, State and Territory and local and the Government of New Zealand

food industry businesses primary food producers, food manufacturers, food retailers, and food service providers supplying either the domestic or export market

consumers/the general community.

* Assessment of costs and benefits

Option 1 Implement the food regulatory model recommended by the Blair Report

BENEFITS
The significant benefits to government relate to efficiencies achieved through improved coordination and interaction between Commonwealth, State and Territory and local government and the integration of food regulatory agency functions and food standards setting processes.

Business would benefit from cost savings and market advantages of a reduced food regulatory burden achieved by a simplified, integrated food regulatory system and food standards setting process.

Consumers and the community in general would also benefit from the passing down of these cost savings to business and from improved clarity and access to information on food regulation and food safety provided by a single national food regulatory agency.

COSTS
The cost to government of making the necessary and fundamental changes to Commonwealth portfolio structures, functions and agencies to implement the system would be high. Once the new system is in place, the costs to government of retaining the formal Ministerial Council process of food standards approval would remain. Given the degree of change proposed by this option, implementation of the new system will take some time and will disrupt well established communication and operational networks between business, consumers and government, resulting in increased costs to government.

Business would bear increased costs and market disadvantage from the disruption of established information networks and to government operations. In moving the food export certification function from AQIS to ANZFA business would experience increased costs and market disadvantage due to uncertainty and delay caused by the disruption of the export certification arrangements. Overseas governments and business have a high level of confidence in AQIS export certification which could be undermined by this move. This would have a longer term impact on trade and therefore on food export businesses.

Given that export standards are developed to meet the requirements of overseas countries, integration of export and domestic food regulatory functions would not, of itself, reduce the costs of meeting different export and domestic food standards. Developing food standards could continue to involve the current costs and market disadvantages in relation to the time it takes for standards to be approved and the need to take into account broader considerations unrelated to public health and safety or economic impacts.

Consumers and the community in general would continue to bear the public health and safety impact of the time taken to set standards and the setting of inappropriate standards, as well as the impact of the costs of the standard setting process on business. The impact on government and business of the disruption of information networks and government operations during the transition period would therefore also be felt by consumers.

Option 2 Implement the food regulatory model recommended by SOWG in its report to COAG

BENEFITS
The benefits to government relate to the efficiencies achieved through improved coordination and cooperation between Commonwealth, State/Territory and local government and industry and improved responsiveness delivered by the streamlining of the domestic food standards setting process.

Cost savings would also be derived from the simplification of food regulatory structures and increased transparency and improved decision making through the direct involvement of the proposed stakeholder consultative council in high level decision making processes and the greater focus on technical and economic factors in the standards development process achieved by the removal of the formal Ministerial Council approval process. The operation of the food standards development agency as an independent statutory authority would provide both business and government with further assurance that all interests are taken into account in the standards setting process.

Business would benefit directly from cost savings and market advantages achieved by a streamlined, more responsive food standards setting process. Cost benefits would also be gained from more appropriate food standards and regulations achieved by stakeholder input into high level food regulatory policy and standards development decision making processes, the cooperative and consultative process for rationalising food regulatory agency functions and harmonising export and domestic food standards, and the removal of the formal Ministerial Council approval of standards. An independent national domestic food standards agency would give primary producers more confidence that food standards relating to their operations will be reasonable and appropriate.

Consumers and the community in general would benefit from these cost savings to business and government and improved public health and safety outcomes delivered by a more responsive and technically focussed food standards setting process, the transparency provided by the increased involvement of consumers in high level strategic decision making processes and the increased clarity provided by a simplified food regulatory system.

COSTS
Implementation of the SOWG model would be largely achieved by agreed formal and inclusive consultative and co-operative processes, together with some minimal structural changes. At Commonwealth level, government would bear the costs of establishing the secretariat and formal consultative processes supporting the operation of the Ministerial Council and the costs of establishing FSANZ as an independent authority with the increased responsibility for developing all domestic food standards.

Business, consumers and the community in general would bear to some extent the costs to government in effecting these changes. Those businesses which also export food would continue to bear the costs of dealing with two food regulatory agencies and different requirements for export and domestic product.

Option 3 no change

BENEFITS
Retaining the current food regulatory system will not require any government action and will generate no additional costs to government, business or the community in general.

COSTS
Government, business and the community will continue to bear the costs of the current inefficiencies of the current food regulatory system.


CONSULTATION

Extensive public consultation was undertaken with all stakeholders (government, industry, business, consumers and the community in general) in the process of developing the Food Regulation Review Report and its recommendations, which provide the basis for the development of the model for the new food regulatory system.

The model for the new food regulatory system referred to in option 2 was developed through a formal process established by COAG Senior Officials to develop a whole-of-government response to the Blair Report recommendations and involved consultation with all relevant Commonwealth and State/Territory Government Departments. This process included the consideration of submissions from the Agriculture, Fisheries and Health Ministerial Councils and from the Governments of all jurisdictions. The New Zealand Government was consulted in relation to New Zealand involvement in the new food regulatory system and implications for the Treaty between Australia and New Zealand. Key food industry organisations, representing all parts of the food supply, chain consumer and public health groups were informally consulted during the process of developing the model.


CONCLUSION AND RECOMMENDED OPTION

Option 1 involves a high establishment cost to government. Its implementation will disrupt food regulatory arrangements that will generate further costs for government, as well as to business and consumers and the community in general. However, once it is in place, the new system would achieve a more efficient food standards setting process that would result in cost savings to government. In particular, it will increase the clarity and consistency in agency roles and responsibilities and improve the efficiency of the food standard setting process by integrating all domestic and export food standards setting arrangements under a single agency and single Ministerial Council system.

It will reduce the duplication and overlap of food standards and regulations. It will not, however, keep food standards development focussed on economic and technical considerations. Because of this, option 1 will contribute to the inclusion of some inappropriate requirements in food standards which do nothing to enhance the protection of public health and safety. It depends on the simplified structure to ensure more inclusive consultation in government decision making, for example, by including primary industry Ministers on the Ministerial Council and by an industry-wide consultation network that ensures that all parts of the food supply chain will have the opportunity to provide their views in the development of food standards.

Option 2 is the preferred option. It proposes an approach to food regulatory reform which will achieve a more efficient, transparent and responsive food standards setting process over time and, as such, it involves a small establishment cost to government compared with option 1 and will cause minimal disruption to food regulatory processes and hence to government, business and the community in general.

Like option 1, option 2 proposes a single Ministerial Council, but in this case it is more representative of food regulatory interests (it provides opportunity for primary industry, trade and small business interests to be included). It integrates domestic food standard development processes by incorporating primary industry food standard development under a single national domestic agency responsible for domestic food standards development across the whole food supply chain. In addition, it further improves the efficiency of the standards setting process by replacing the formal and lengthy Ministerial Council approval process with a review/reject mechanism that operates within a set timeframe.

Rather than integrate all food regulatory functions as a way of improving the efficiency of the food regulatory system, it proposes the establishment of formal and accountable consultative and co-operative mechanisms to improve the clarity, transparency and consistency of food regulatory approaches, progress the rationalisation of compliance and enforcement arrangements and facilitate the harmonisation of domestic and export food standards. In this way, for example, it recognises that the export food regulatory functions of AQIS are different and have different drivers and the importance to business and government of preserving the high international profile of AQIS. It also takes into account the rationalisation of food regulatory structures already being put in place by the States and Territories in their response to the Blair Report recommendations.

Option 2 includes a formal consultative process with all stakeholders in high level strategic decision making, in addition to the consultation process in relation to the development of standards, to ensure greater opportunity for involvement of industry, business and consumers in food regulatory policy, food standards development and enforcement and compliance decision making processes.

The proposals put forward in option 2 will improve the transparency, responsiveness and timeliness of the food standard setting process. They will do it over time and, therefore, with minimal disruption. By integrating domestic food standards setting processes, changing the role of the Ministerial Council in the standards setting process and introducing inclusive consultative and co-operative mechanisms, option 2 would be more effective in improving the clarity and consistency in agency roles and responsibilities, the efficiency of the food standards setting process, ensuring appropriate food standards and regulations are made and increasing the transparency of decision making processes. Option 2 will, however, retain ministerial oversight of the standards-setting process as Ministers will be able to seek review of any standard that does not satisfy specified criteria and ultimately to reject such standards.

Option 3 will not change the food regulatory system. It will, therefore, not achieve the efficiencies which would be achieved under options 1 or 2.

Option 2 will improve the transparency, timeliness and responsiveness of the food standards setting process with minimal cost impact and disruption and is, therefore, the recommended option.


Implementation and review

Option 2 will be implemented in four ways:

by the Food Regulatory Agreement of 3 November 2000 between the
Commonwealth, States and Territories under which COAG has agreed to the new food regulatory system developed in response to the Report of the Food Regulation (Blair) Review (the IGA);

by this amending Bill that will establish the new statutory authority Food Standards Australia New Zealand and the new development process for standards other than primary product standards;

by amendment of the Treaty between Australia and New Zealand establishing a System for the Development of Joint Food Standards made on 5 December 1995;

and
by the Ministerial Council developing the process for the development of standards relating to primary products in consultation with all relevant stakeholders. This may involve the need for further legislation.

Under the IGA, the Commonwealth has agreed to introduce legislation to make changes to the Australia New Zealand Food Authority Act 1991. The IGA includes provision for the Commonwealth, States and Territories to jointly conduct a review of the effectiveness of the agreement within 5 years of the agreement being signed.

[NOTES ON CLAUSES, FULL TEXT, READINGS & AMENDMENTS ALSO AVAILABLE VIA WWW.APH.GOV.AU]

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