BILLS DIGEST NO. 78, 2017–18              9 February 2018

Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017

Paula Pyburne
Law and Bills Digest Section 

Date introduced: 25 October 2017

House:  House of Representatives

Portfolio: Agriculture and Water Resources

Commencement: Various dates as set out in the body of this Bills Digest

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at February 2018.

Purpose of the Bill

The purpose of the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017 (the Bill) is to amend the various statutes relating to agricultural and veterinary chemical products (agvet) to make minor and technical amendments. In addition the Bill clarifies ambiguities and removes redundant provisions.

Structure of the Bill

The Bill has a single Schedule of eight Parts:

•       Part 1 amends the Agricultural and Veterinary Chemicals Products (Collection of Levy) Act 1994 (Collection of Levy Act) and the Agricultural and Veterinary Chemicals (Administration) Act 1992 (Administration Act) in relation to annual returns and record-keeping

•       Part 2 amends the Agricultural and Veterinary Chemicals Code Act 1994 (Code Act) in relation to rectifying defects to an application as part of the preliminary assessment process

•       Part 3 amends the Code Act in relation to the variation of relevant particulars and conditions

•       Part 4 amends the Code Act in relation to the variation of a label approval if the approval is suspended

•       Part 5 amends the Administration Act and the Code Act to make the provision of false and misleading information in specified circumstances subject to a civil penalty

•       Part 6 amends the Code Act with respect to notification about variation to the Maximum Residue Limits Standard and

•       Parts 7 and 8 make minor amendments to the Code Act and the Administration Act.

Background

Regulation of agricultural and veterinary chemicals

The regulatory framework for managing pesticides and veterinary medicines in Australia is collectively referred to as the National Registration Scheme for Agricultural and Veterinary Chemicals (NRS). The NRS is a partnership between the Commonwealth and the states and territories.[1]

The Australian Pesticides and Veterinary Medicines Authority (APVMA) is responsible for administering and managing the parts of the NRS that oversee registration, quality assurance and compliance of agvet chemicals up to and including the point of retail sale.[2] The key regulatory activities undertaken by the APVMA include: assessing and registering agvet products; approving active chemical constituents; issuing permits and licences; monitoring compliance with registration, permit and licence conditions; and investigating suspected non-compliance.[3]

Pre-2014

The APVMA was the subject of reviews by the Australian National Audit Office in 2006[4] and by the Productivity Commission in 2008.[5] Both of those reviews made recommendations for improvement.

In response to the reviews and to complaints about the performance of the APVMA,[6] the Government enacted the Agricultural and Veterinary Chemicals Legislation Amendment Act 2013 (2013 Amendment Act).[7] The 2013 Amendment Act represented a significant modernisation of the APVMA’s regulatory activities. The key reforms which were required to be implemented from 1 July 2014 included:

•       new regulatory guidance to industry under the reformed legislative arrangements

•       a structured, upfront pre-application assistance scheme for applicants

•       a system to electronically receive all applications online

•       stricter preliminary assessment arrangements that focus on basic application requirements (restricting the ability of the applicant to rectify a defect in their application during this phase of assessment)

•       revised maximum assessment timeframes based on the type of application being made, with increased time for the assessment of certain products and chemical applications

•       additional requirements for the review of registered products and chemicals (such as the development of work plans for each review) and statutory timeframes for completing chemical reviews and

•       procedural, technical and transitional arrangements, including limiting the acceptance of additional material from applicants and introducing requirements to provide notices of certain proposed decisions to applicants.[8]

The reforms also included the introduction of a mandatory scheme for re-approval and re-registration of registered products. These provisions were subsequently repealed by the Agricultural and Veterinary Chemicals Legislation Amendment (Removing Re-approval and Re-registration) Act 2014.

The reforms in the 2013 Amendment Act were intended to:

… encourage the development of newer and safer chemicals by providing more flexible and streamlined regulatory processes with higher levels of transparency and predictability for business seeking approval for agvet chemicals to enter the market. The reforms should result in a more straightforward assessment process that is easier to understand and more cost effective to administer. In many cases, particularly for products of low regulatory concern, the reformed system as established by these amendments should be faster, deliver more predictable outcomes and result in improved health and environmental protection for the broader community.[9]

Post-2014

Agricultural Competitiveness White Paper

On 4 July 2015, the Government released its Agricultural Competitiveness White Paper which promised ‘a fairer go for farm businesses by creating a better business environment with better regulation …’.[10]

The White Paper acknowledges that ‘Australian agricultural and veterinary (agvet) chemical regulation imposes a large regulatory burden’ that is ‘often disproportionate to the risks these products pose’.[11]

The White Paper sets out the Government’s intention to lower the regulatory burden in the following ways:

The Government is putting in place a new approach for the APVMA to streamline access to products and better manage the risks these products can pose, while ensuring human health protection.

Working with industry, the Government will limit pre-market assessments of low- and medium-risk products. The Government will focus its attention on products that pose the highest risk. The Government will recognise assessments from accredited third party suppliers and trusted chemical regulators to reduce the paper work. Where products are available in trusted overseas countries, the Government will examine risks that are different in the Australian market, such as where we have different human health requirements, agricultural practices or environmental assets. In collaboration with industry and the States and Territories, the Commonwealth will explore opportunities to improve post-market compliance and national control of chemical use.[12]

Productivity Commission

In November 2015, the Treasurer requested the Productivity Commission to undertake an inquiry into the regulatory burden imposed on Australian farm businesses, focussing on regulation with a material impact on domestic and international competitiveness.[13]

The Productivity Commission’s final report, published in March 2017[14] noted that, despite numerous reviews and subsequent reforms, concerns remain about:

•       unnecessarily lengthy, complex and duplicative registration procedures and

•       interjurisdictional inconsistencies, particularly in control-of-use regimes,[15] which can make it costly and confusing to comply with regulatory requirements.[16]

2016–17 Budget and consultation

The 2016–17 Budget included $17.1 million over a four year period to streamline agvet chemical regulation consistent with the intentions set out in the Agricultural Competitiveness White Paper.[17]

The Department of Agriculture and Water Resources carried out a public consultation in relation to an exposure draft of this Bill between 20 June 2017 and 19 July 2017.[18] The consultation proposed ten amendments which were intended to ‘deliver operational efficiencies for the APVMA, clarify ambiguities in the legislation and remove unnecessary and redundant provisions’.[19]

Fourteen submissions were received.[20] This Bill contains only eight of the original ten proposed amendments. It should be noted that the two measures which are not included in this Bill relate to:

•       clarifying the confidential commercial information provisions to improve their operation and reduce uncertainty for APVMA staff and

•       adding the potential for human exposure to antimicrobial resistant micro-organisms as a specific safety consideration to which the APVMA must have regard for chemical products and active constituents.[21]

These two measures were the subject of the majority of the comments by stakeholders. The Government has stated that it is developing a second legislative package.[22] It is not known whether the amendments which were not included in this Bill will be part of that package.

Move to Armidale

The performance of the APVMA has been the subject of considerable scrutiny since the making of the Public Governance, Performance and Accountability (Location of Corporate Commonwealth Entities) Order 2016 (the Order) which requires the APVMA to relocate to a regional community which is within 10 kilometres by road of the main campus of a regional university that is recognised for research and teaching in the field of agricultural science.

The APVMA’s move to Armidale is currently in the planning phase and is expected to be completed in 2019.[23] In the meantime, timeliness of decision-making has been affected by an increase in applications and staff vacancies.[24]

It should be noted that the amendments in the Bill are generally minor in nature. They do not attempt to resolve issues that have arisen due to the proposed move.

Committee consideration

Senate Standing Committee for Selection of Bills

At its meeting of 7 December 2017, the Standing Committee for Selection of Bills deferred consideration of the Bill to its next meeting.[25]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[26]

Policy position of non-government parties/independents

At the time of writing this Bills Digest no comments had been made about the contents of the Bill by non-government parties or independents.

Position of major interest groups

The views of stakeholders are canvassed along with the relevant amendments in each Part of the Bill, below.

Financial implications

According to the Explanatory Memorandum, the Bill ‘will have no financial impact on the Australian Government Budget’.[27]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[28]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considers that the Bill does not raise human rights concerns.[29]

Part 1—annual returns and record-keeping

Commencement

The amendments in Part 1 of the Bill commence on the day after Royal Assent.

Current law

Payment of levies

Currently, levies under the agvet scheme are payable based on the dollar value of sales (known as leviable disposals) of registered products.[30] The interested person in relation to the chemical product is liable to pay the levy.[31]

For the purposes of the Collection of Levy Act, the interested person, in relation to a registered chemical product, is:

•       the person (the original applicant) who applied for the registration or, in the case of a chemical product whose registration has been renewed, applied for the renewal, or the last renewal of the registration

•       if the original applicant has entered into a contract with another person in relation to the product so that the other person will or may apply to the APVMA to have the other person’s name entered in the relevant particulars in relation to the product, or to have a label approved in relation to containers for the product—the other person

•       if the person who would be the interested person was an individual who has died or is an individual whose affairs are being lawfully administered by another person—their legal personal representative or the person’s administrator or

•       if the interested person was a body corporate—a successor in law of that body corporate.[32]

Annual returns

The requirement for annual returns is contained in 69E of the Administration Act. Under that section a person who imports into, manufactures in, or exports from Australia, chemical products or active constituents for proposed or existing chemical products during a financial year must give the APVMA a return, setting out the respective quantities of those active constituents, or of the active constituents contained in those products. The return must be provided to the APVMA within three months after the end of the year concerned.

Together, these provisions require companies to collate information on both quantities of active constituents contained in products and sales of product and to report those matters to the APVMA at different times.

What the Bill does

Lodging returns

Item 5 of Part 1 of the Bill repeals section 69E of the Administration Act.

Item 2 of Part 1 of the Bill inserts proposed section 35 into the Collection of Levy Act to align the requirement to lodge a return with the requirement to pay levies.

Proposed subsection 35(1) of the Collection of Levy Act requires the interested person in relation to a chemical product who is liable to pay a levy in respect of leviable disposals of the product to give the APVMA a return. The return must set out the total quantity of chemical product that was disposed of anywhere in Australia at any time during a financial year. The return must be provided before 30 November in the next financial year.

A failure to give the APVMA the required return gives rise to an offence of strict liability.[33] The maximum penalty for the offence is 50 penalty units.[34] In addition, proposed subsection 35(1) is a civil penalty provision.[35] This is consistent with the APVMA’s existing power (and the position under section 69E of the Administration Act) to apply to a court of competent jurisdiction for an order that a person who is alleged to have contravened a civil penalty provision must pay the Commonwealth a pecuniary penalty.[36]

There is an exception to the general rule about providing an annual return—that is, a return is not required for a quantity of product that is less than the quantity prescribed by the regulations or for a chemical product that is prescribed by the regulations.[37] This exception is in similar terms to the exception in existing subsection 69E(2), which is to be repealed. According to the Explanatory Memorandum to the Bill, the regulation may:

… prescribe low quantities of chemical products for which an interested person is exempt from the requirements to provide an annual return… [and may also] … prescribe a limited range of ‘low regulatory concern’ chemical products that could be exempted from the annual return reporting requirements.[38]

The APVMA must give the Secretary of the Department a statement setting out the total quantities of each active constituent for each chemical product covered by those returns before the end of the next financial year.[39] For the purposes of this requirement, item 1 of Part 1 of the Bill inserts the definition of the term active constituent into subsection 3(1) of the Collection of Levy Act.[40]

Keeping records

Item 3 of Part 1 of the Bill inserts proposed section 37 into the Collection of Levy Act to require an interested person who is liable to pay levy in respect of leviable disposals of the product to keep records. The relevant records are those that are reasonably necessary to enable the APVMA to find out whether the requirement to give an annual return has been complied with. The records are to be retained for six years.

A failure to comply with that requirement gives rise to an offence of strict liability. The maximum penalty for the offence is 50 penalty units.[41] In addition, proposed subsection 37(1) is a civil penalty provision.[42]

Stakeholder comments

The simplification of the reporting requirements for annual returns was welcomed by stakeholders.[43] CropLife Australia commented favourably on the repeal of section 69E of the Administration Act, which it considered ‘is an unnecessary regulatory burden’ which ‘serves no genuine policy purpose’.[44] The Veterinary Manufacturers and Distributors Association (VMDA) was also supportive stating:

We accept that there is a need to provide some degree of information, and support this proposal as a practical means of providing the information without imposing on industry a complex and unwieldy system that is, in the end, inaccurate.[45]

Part 2—preliminary assessments

Commencement

The amendments in Part 2 of the Bill commence 12 months after Royal Assent.

Current law—approvals and variations

Prior to the enactment of the 2013 Amendment Act, the Department of Agriculture was concerned that the APVMA had to:

… go back to registrants with every small defect it finds with an application … They have to continually do this and it takes an inordinate amount of time, and lots of letters back and forth to be able to accept the application, because of these small deficiencies.[46]

In order to remedy this perceived defect in the process, the 2013 Amendment Act did two things. First, it prescribed what it meant to meet the application requirements.[47] Second, it gave the APVMA one month to complete a preliminary assessment of an application.[48]

An application meets the application requirements if:

•       it  is lodged with the APVMA in the approved manner and form, is accompanied by the prescribed fee and contains the required information

•       the constituent, product or label in relation to which the application is made complies with any requirement prescribed by the regulations

•       any requirement prescribed by another provision of the Agvet Code in relation to the application has been complied with and

•       any amount (including an amount in respect of a tax or penalty) that is due and payable by the applicant to the APVMA has been paid.

Where the application appears to meet the application requirements, the APVMA must notify the applicant that the application has passed the preliminary assessment, in writing, within 14 days of making that preliminary assessment. The notice must state, amongst other things, that the application has passed preliminary assessment, and it must set out any matters prescribed by the regulations.[49] In addition, the APVMA must publish a summary of the application that includes any details prescribed by the regulations.[50]

Where the application does not appear to meet the application requirements, the APVMA must refuse the application.[51]

The requirement for an application to undergo a preliminary assessment was a key feature of the 2013 Amendment Act—an application for a variation of an approval or registration is the subject of a preliminary assessment process in equivalent terms.[52]

What the Bill does

The requirement that the APVMA complete a preliminary assessment of the application within one month after it is lodged remains. However, the Bill removes the requirement that the APVMA refuse an application at first instance if it does not appear to meet the application requirements.

Application for approval

Item 10 of Part 2 of the Bill repeals subsection 11(3) and inserts proposed subsections 11(3) and 11(3A). Under proposed subsection 11(3) where it appears to the APVMA, after completing a preliminary assessment of the application, that the application does not meet the application requirements but that the defects in the application can reasonably be rectified, the APVMA must give written notice to the applicant within 14 days setting out the relevant defects and requiring that they are rectified within one month.

Item 9 of Part 2 of the Bill amends subsection 11(2) of the Agvet Code so that where an applicant who has been given a notice to rectify a defect does so within the specified time, the APVMA must give the applicant a written notice that the application has passed the preliminary assessment and will be determined under the relevant provisions of the Agvet Code.

Proposed subsection 11(3A) of the Agvet Code provides that where the APVMA is not satisfied that defects in the application can reasonably be rectified, or the defects are not rectified within the specified time, the APVMA must refuse the application .

Application for variation

The Agvet Code allows a holder[53] to apply to the APVMA for a variation of the relevant particulars or conditions of:

•       the approval of an active constituent

•       the registration of a chemical product or

•       the approval of a label for containers for a chemical product.[54]

An application for such a variation must meet the application requirements.[55]

Section 28 of the Agvet Code sets out the requirement for a preliminary assessment of such an application in equivalent terms to section 11. Items 11 and 12 of Part 2 of the Bill amend subsections 28(2) and 28(3) in equivalent terms to items 9 and 10, as discussed above, where a holder makes an application for a variation, and the application contains defects that can reasonably be rectified.

Stakeholder comment

CropLife Australia gave qualified support to this measure stating:

Care must, however, be taken in its implementation as this proposal could easily result in unintended consequences. An increase in administrative burden could potentially result if mistakes that are considered by the APVMA to be reasonably rectifiable can be repeatedly made by an applicant. Consequences in the form of penalties or additional fees could assist in ensuring applicants do not repeat mistakes. It is also paramount that sufficient guidance is developed operationally by the APVMA to ensure consistency in what is considered to be reasonably rectifiable.[56]

Competitive Advantage also gave qualified support to the relevant amendment, expressing concern about the short time frame for rectifying defects in an application. In particular it noted that there may be circumstances where ‘a critical person in a company is away during a period when a response is required’.[57]

The VMDA did not support proposed subsection 11(3A) of the Agvet Code which requires the APVMA to refuse the claim where it is not satisfied that the defects in the application can reasonably be rectified:

It is quite possible that an APVMA assessor would “believe” incorrectly that a particular defect could not “reasonably be rectified” when in fact it could be. The APVMA cannot know what resources or information the applicant has on hand or has access to that may rectify any defect regardless of how “major” it may appear to the APVMA assessor at Preliminary Assessment.[58]

Current law—permits

All agricultural and veterinary chemical products sold in Australia must be registered by the APVMA. In addition:

The APVMA administers a permits scheme that allows for the legal use of chemicals in certain ways that are contrary to the label instructions or, in certain circumstances allows for the limited use of an unregistered chemical product.[59]

A person may apply to the APVMA for a permit in respect of an active constituent for a proposed or existing chemical product, or in respect of the chemical product.[60] The application must meet the application requirements.[61]

Like approvals and variations, applications for permits are subject to a preliminary assessment process. However, the process differs because it already contains the right for the APVMA to give notice to an applicant to rectify defects.[62]

What the Bill does

Items 13 and 14 of Part 2 of the Bill make minor amendments to the wording in existing subsections 110A(2) and 110A(3) of the Agvet Code so that they are in equivalent terms to the preliminary assessment provisions for applications for approval which are discussed above.

Part 3—variation of relevant particulars and conditions

Commencement

The amendments in Part 3 of the Bill commence three months after Royal Assent.

Current law

A stated above, a holder may apply to the APVMA for a variation of the relevant particulars or conditions of:

•       the approval of an active constituent

•       the registration of a chemical product or

•       the approval of a label for containers for a chemical product.[63]

Under existing subsection 29(1) of the Agvet Code the APVMA must vary the relevant particulars or conditions if it is satisfied that the application meets the application requirements and that the variation would meet applicable statutory criteria and established standards as required by paragraphs 29(1)(b)–(d) of the Agvet Code. If the application does not satisfy those provisions, the APVMA must refuse the application.[64]

Essentially those paragraphs only give the APVMA the authority to approve the variation precisely as it is set out in the relevant application. They do not authorise the APVMA to partly approve an application for variation.[65]

What the Bill does

Item 18 of Part 3 of the Bill amends paragraphs 29(1)(b)–(d) of the Agvet Code by deleting references to a variation ‘in accordance with the application’ and substituting references to a variation of particulars or conditions ‘in a particular way (which may not be the same way as set out in the application)’. This will allow the APVMA to vary an approval or registration in a way which differs from the application.

Items 16 and 17 of Part 3 of the Bill make consequential amendments to the notice provisions in existing section 8S to require the APVMA to give an applicant a written notice of its intention—prior to approving a variation of an approval or registration in a way other than that set out in the application. The effect of the amendments is to provide the applicant with the opportunity to make submissions to the APVMA about the proposal.

Item 19 of Part 3 of the Bill is also a consequential amendment. It inserts proposed paragraph 167(1)(ca) into the Agvet Code so that a decision to vary relevant particulars or conditions in a way other than set out in the application for variation is subject to review by the Administrative Appeals Tribunal.

Stakeholder comments

Stakeholders either supported this amendment, or made no comment in relation to it.[66]

Part 4—variation of label approval while approval suspended

Commencement

The amendments in Part 4 of the Bill commence three months after Royal Assent.

Current law

The Agvet Code provides for both:

•       the making, and assessment of, applications for approval of an active constituent for a proposed, or existing, chemical product, the registration of a chemical product and

•       approval of a label for the containers of a chemical product.

Section 15 of the Agvet Code provides that the APVMA must not register a chemical product unless each active constituent of the product, as well as a label for the container of the product, have been approved. The APVMA must not approve a label for the container of a chemical product unless it also registers the product.

Division 5 of Part 2 of the Agvet Code provides for suspending and cancelling approvals and registrations. It sets out the procedure to be followed by the APVMA before it takes action to suspend and the circumstances in which it may exercise that power.

In particular, the APVMA may suspend an approval for a label for containers for a chemical product. This may be because, amongst other things, there has been a contravention of a condition of the approval,[67] the label does not meet the labelling criteria, or it does not comply with a requirement prescribed by the regulations.[68] The Agvet Code provides that an approval is taken not to be in force during any period in which it is suspended.[69] The suspension is made by entering the information, including the period of the suspension, into the APVMA file.[70]

The effect of these provisions is that where the problem with the label may be addressed by an amendment to or variation of the label, the APVMA must first revoke the suspension.[71]

What the Bill does

Item 22 of Part 4 of the Bill inserts proposed subsections 43(4) and (5) into the Agvet Code to address this problem.

In particular, proposed subsection 43(4) provides that the suspension of an approval[72] of a label for containers for a chemical product does not prevent a person from requesting a variation of the relevant particulars of the approval, provided that the variation relates to the reasons for the suspension of the approval. This means that suspended label approvals may be rectified without first revoking the suspension. 

Stakeholder comment

None of the stakeholders commented negatively in relation to this amendment.

Part 5—false and misleading information

Commencement

The amendments in Part 5 of the Bill commence three months after Royal Assent.

Current law

Importation offence

Subsection 69B(1) of the Administration Act prohibits a person from importing into Australia:

•       an active constituent for a proposed or existing chemical product that is not approved or

•       a chemical product that is not a registered chemical product, a reserved chemical product or an exempt chemical product.

Similarly, a person is prohibited from arranging such importation into Australia, on behalf of another person who, at the time of the arrangements, is neither a resident of, nor carrying on business in, Australia.

Subsection 69B(1AA) of the Administration Act provides that a person who contravenes these prohibitions commits an offence (known as an importation offence)—the maximum penalty for which is 300 penalty units.[73] However, an offence will not be committed if the person has the APVMA’s written consent for the relevant importation.[74]

False and misleading information

Subsection 69ER(1) of the Administration Act provides that where a person who has applied to the APVMA for written consent (as above) gives information (whether orally or in writing) that the person knows to be false or misleading in a material particular, the person commits an offence. In the alternative, the offence arises if the person produces a document that the person knows to be false or misleading in a material particular without:

•       indicating to the person to whom the document is produced that it is false or misleading and the respect in which it is false or misleading and

•       providing correct information to that person if the person producing the document is in possession of, or can reasonably acquire, the correct information.

Similarly to the importation offence, the maximum penalty for the offence is 300 penalty units.[75]

Lesser offence

Subsection 69ER(2) of the Administration Act provides that a person commits an offence if, when complying with a requirement made by an inspector under, or for the purposes of, or in connection with any provision of Part 7A,[76] Part 7AA or Part 7AB of the Administration Act the person gives information that the person knows to be false or misleading in a material particular. An offence is also committed if the person produces a document that the person knows to be false or misleading in a material particular without:

•       indicating to the person to whom the document is produced that it is false or misleading and the respect in which it is false or misleading and

•       providing correct information to that person if the person producing the document is in possession of, or can reasonably acquire, the correct information.

In this case, the maximum penalty for the offence is 60 penalty units.[77]

What the Bill does

The 2013 Amendment Act introduced a range of enforcement options for the APVMA which included seeking civil penalty orders, issuing infringement notices, accepting and enforcing undertakings, seeking injunctions, requiring claims to be substantiated and issuing formal warnings.

However, there was no legislative link from the two offences created by section 69ER of the Administration Act to a right to seek civil penalty orders.

Item 27 of Part 5 of the Bill addresses this problem by inserting proposed subsections 69ER(3)–(5) into the Administration Act.

Proposed subsections 69ER(3) and (4) are in equivalent terms to existing subsections 69ER(1) and (2) respectively. Proposed subsection 69ER(5) of the Administration Act specifies that those subsections are civil penalty provisions. Accordingly if they are breached, the APVMA may apply to a court of competent jurisdiction for an order that a person pay the Commonwealth a pecuniary penalty.[78] 

Item 29 of Part 5 of the Bill amends the equivalent offences for false and misleading information in the Agvet Code by inserting proposed subsections 146(3)–(5) which are in similar terms to proposed subsections 69ER(3)–(5) being inserted into the Administration Act. The difference between the provisions is that proposed subsection 146(3) makes reference to matters referred to in section 5A,[79] 5B,[80] 5C[81] or 5D[82] or subsection 123(1)[83] of the Agvet Code rather than to Part 7A, Part 7AA or Part 7AB of the Administration Act.

Amount of civil penalty

The amount of the pecuniary penalty is worked out under section 69EJA of the Administration Act. Importantly, it applies not only to persons but to bodies corporate.

Subsection 69EJA(1) of that Act provides that the pecuniary penalty for a contravention of a civil penalty provision by a body corporate must not exceed five times the amount of the maximum monetary penalty that could be imposed by a court if the body corporate were convicted of an offence constituted by the same conduct. Subsection 145AA(1) of the Agvet Code is in equivalent terms. This means that for a contravention of proposed subsection 69ER(3) of the Administration Act or proposed subsection 146(3) of the Agvet Code, a body corporate would be liable for a maximum penalty of 7,500 penalty units—being $1,575,000. For a contravention of proposed subsection 69ER(4) of the Administration Act or proposed subsection 146(4) of the Agvet Code, a body corporate would be liable for a maximum penalty of 1,500 penalty units—being $315,000.

In addition, subsection 69EJA(2) of the Administration Act and subsection 145AA(2) provides that the penalty for an individual for contravening a civil penalty provision must not exceed three times the amount of the maximum monetary penalty that could be imposed by a court on an individual convicted of an offence constituted by the same conduct. This means that for a contravention of proposed subsection 69ER(3) of the Administration Act or proposed subsection 146(3) of the Agvet Code, an individual would be liable for a maximum penalty of 900 penalty units—being $189,000. For a contravention of proposed subsection 69ER(4) of the Administration Act or proposed subsection 146(4) of the Agvet Code, an individual would be liable for a maximum penalty of 180 penalty units—being $37,800.

Problems that are addressed by civil penalties

Prior to the enactment of the 2013 Amendment Act all of the offences in the Agvet Code were criminal offences—most (but not all) of which were strict liability offences. The standard of proof in a criminal case is ‘beyond a reasonable doubt’. To establish an offence of strict liability it is only necessary to prove that the relevant conduct or event took place. However the defence of ‘mistake of fact’ (honest and reasonable mistake) is open to those who mistakenly but reasonably believe certain facts to exist which, if true, would have shielded them from liability. Those offences, if proven, generally allowed for financial penalties to be paid rather than imposing a term of imprisonment.

Unfortunately, the APVMA had limited success in prosecuting holders of registrations and approvals in circumstances where alleged breaches of the Agvet Code had occurred.[84] That being the case, the 2013 Amendment Act provided for existing offence provisions to also be civil penalty provisions to enable the APVMA to apply to the court for a civil penalty order against a person who has contravened a civil penalty provision. In that case, the standard of proof is lower being ‘on the balance of probabilities’.

The tension within the Agvet statutes, then, is that a pecuniary penalty may be higher than an amount payable as a fine were the person is prosecuted under a criminal offence, even though the conduct is essentially the same.[85]

Stakeholder comments

Few of the stakeholders commented on these amendments. CropLife Australia supported the measure on the grounds that the newly created civil penalties for giving false and misleading information are similar to those in the Biosecurity Act 2015.[86]

On the other hand, the VMDA stated that it did not support the proposal as matters relating to false and misleading statements are regulated by the Australian Consumer Law (located in Schedule 2 of the Competition and Consumer Act 2010).[87] However, reliance on the Competition and Consumer Act would have the effect of removing this aspect of the regulation of agvet chemicals from the jurisdiction of the APVMA.

Part 6—notification about variation to Maximum Residue Limits Standard

Commencement

The amendments in Part 6 of the Bill commence on the day after Royal Assent.

Background

The APVMA registers and approves all agvet chemicals in Australia and sets maximum residue limits (MRLs) for these chemicals. Levels are set based on how much of the chemical is needed to control pests and/or diseases. The product's chemistry, metabolism, analytical methodology and residue trial data are also assessed.[88]

The MRLs apply to agvet chemicals in agricultural produce—particularly produce entering the food chain. They are set at levels that are not likely to be exceeded if the agricultural or veterinary chemicals are used in accordance with approved label instructions.[89]

Current law

Existing subsection 8E(1) of the Agvet Code requires the APVMA to notify Food Standards Australia New Zealand (FSANZ) if an approval, registration, variation or permit proposed under the Code would be likely to require a variation to the Maximum Residue Limits Standard.[90] Currently the notice must be given to FSANZ within 28 days after the APVMA completes a preliminary assessment of the application.[91]

That notification triggers the process to be carried out by FSANZ including the preparation of a dietary exposure assessment of the proposed variation, any relevant consultation about the dietary exposure assessment and the eventual publication of the variation.[92]

What the Bill does

Item 31 of Part 6 of the Bill repeals and replaces paragraph 8E(2)(c) of the Agvet Code so that the notice is to be given to FSANZ before the approval, registration, variation or permit is given, made or issued.

According to the Explanatory Memorandum to the Bill this will ‘provide the APVMA and FSANZ with the flexibility to agree on appropriate timeframes for notification’.[93]

Other provisions

The provisions in Parts 7 and 8 of the Bill commence on the day after Royal Assent.

Item 33 of Part 7 of the Bill amends the definition of expiry date in section 3 of the Agvet Code to omit the reference to ‘should’ and substitute a reference to ‘must’. This is intended to ensure that the definition ‘reflects the timeframe in which the use of a chemical product is safe, effective and does not cause unmanageable risks’.[94]

Item 35 of Part 8 of the Bill repeals Part 7B of the Administration Act as it is now redundant.

Concluding comments

It would appear that a number of problems with the regulation of agvet chemicals are long-standing. Some stakeholders who commented in relation to this Bill were critical that the efficiencies which were supposed to be achieved by the 2013 Amendment Act have not been delivered.[95] That being the case, their frustrations pre-date the Order for the APVMA to relocate to Armidale which seems to have been the source of considerable angst for both agvet chemical users and manufacturers.

According to the Minister for Agriculture and Water Resources, Barnaby Joyce, the Bill is a response to the chemical industry which has sought ‘simple non-controversial changes … that improve the efficiency of the regulator and increase the speed to which farmers can get access to safe effective chemicals’.[96]

Consistent with that chemical industry request, the Bill delivers small changes. However, those changes do not address the larger problem of the efficiency and efficacy of the APVMA at the current time.

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[1].              Department of Agricultural and Water Resources (DoAWR), ‘The National Registration Scheme’, DoAWR website, last reviewed 16 October 2015.

[2].              Explanatory Memorandum, Agricultural and Veterinary Chemical Legislation Amendment Bill 2012, p. 9.

[3].              Australian National Audit Office (ANAO), Pesticide and veterinary medicine regulatory reform, Audit report, 56, 2016–17, ANAO, Barton, 2017, p. 7.

[4].              ANAO, Regulation of pesticides and veterinary medicines, Audit report, 14, 2006–07, ANAO, Barton, 2006.

[5].              Productivity Commission (PC), Chemicals and plastics regulation, Research report, PC, Canberra, July 2008.

[6].              For example, D Jopson and R Pollard, ‘Name your poison—it’s legal’, The Sydney Morning Herald, 22 October 2007, p. 1; D Jopson, ‘Banned chemical on shelves despite fears it can harm health’, The Sydney Morning Herald, 22 October 2007, p. 15; M Denholm, ‘Regulator stalls on review of weed killer’, The Australian, 27 June 2008, p. 8.

[7].              Parliament of Australia, ‘Agricultural and Veterinary Chemicals Legislation Amendment Bill 2013 homepage’, Australian Parliament website.

[8].              ANAO, Pesticide and veterinary medicine regulatory reform, op. cit., p. 17. For further details of the amendments see P Pyburne, Agricultural and Veterinary Chemicals Legislation Amendment Bill 2012, Bills digest, 89, 2012–13, Parliamentary Library, Canberra, 2013.

[9].              Revised Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment Bill 2013, p. 1.

[10].              T Abbott (Prime Minister) and B Joyce (Minister for Agriculture), Agricultural Competitiveness White Paper—stronger farmers, stronger economy, joint media release, 4 July 2015, p. 1.

[11].              Australian Government, Agricultural competitiveness white paper: stronger farmers: stronger economy, Commonwealth of Australia, 2015, p. 37.

[12].              Ibid., p. 38.

[13].              S Morrison (Treasurer) and B Joyce (Minister for Agriculture and Water Resources), Productivity Commission to examine regulation of Australian agriculture, joint media release, 20 November 2015.

[14].              PC, Regulation of Australian agriculture, Inquiry report, 79, 2016, PC, Canberra, 2017.

[15].              Control-of-use regimes are regimes controlling the use of chemical products after retail sale.

[16].              Ibid., p. 291.

[17].              Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2016–17, p. 65.

[18].              DoAWR, ‘Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017’, DoAWR website, last reviewed 26 October 2017.

[19].              DoAWR, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, Agvet Chemicals Branch, Sustainable Agriculture, Fisheries and Forestry Division, p. 1.

[20].              DoAWR, ‘Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017’, op. cit.

[21].              DoAWR, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, op. cit., p. 2.

[22].              Ibid., p. 1.

[23].              Senate Rural and Regional Affairs and Transport Legislation Committee, Official committee Hansard, 25 May 2017, p. 17.

[24].              Ibid., p. 8.

[25].              Senate Standing Committee for Selection of Bills, Report, 15, 2017, The Senate, Canberra, 7 December 2017.

[26].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 13, 2017, The Senate, 15 November 2017, p. 1.

[27].              Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 1.

[28].              The Statement of Compatibility with Human Rights can be found at pages 33–62 of the Explanatory Memorandum to the Bill.

[29].              Parliamentary Joint Committee on Human Rights, Twelfth report of the 45th Parliament, 28 November 2017, p. 96.

[30].              Collection of Levy Act, subsection 12B(1). Section 12C sets out the formula for calculating the amount of the levy based on the total leviable value in respect of the product for the financial year and the rate of the levy. The rate of the levy is set in regulation 6A of the Agricultural and Veterinary Products (Collection of Levy) Regulations 1995.

[31].              Collection of Levy Act, subsection 12B(2).

[32].              Collection of Levy Act, subsection 3(1).

[33].              Collection of Levy Act, proposed subsection 35(3). The imposition of strict liability means that a fault element does not need to be satisfied, but the offence will not criminalise honest errors and a person cannot be held liable if he, or she, had an honest and reasonable belief that they were complying with relevant obligations.

[34].              Under section 4AA of the Crimes Act 1914 a penalty unit is equivalent to $210. This means that the maximum penalty is $10,500. Subsection 4B(3) of the Crimes Act provides that the maximum penalty that may be imposed on a body corporate is five times the maximum penalty that could be imposed on an individual convicted of the same offence. Accordingly, the maximum pecuniary penalty for a corporation is $52,500.

[35].              Collection of Levy Act, proposed subsection 35(4).

[36].              Administration Act, subsection 69EJ(1). Subsection 69EJA(1) of the Administration Act sets out the maximum amount of the penalty for a body corporate, which is five times the maximum monetary penalty that could be imposed if the body corporate was convicted of an offence constituted by the same conduct. As explained in footnote 34, the maximum penalty that could be imposed on a corporation for an offence against proposed subsection 35(1) is $52,500. This means that the maximum civil penalty that can be imposed on a corporation is $262,500. Subsection 69EJA(2) of the Administration Act sets out the maximum amount of the penalty for an individual, which is three times the maximum monetary penalty that could be imposed if the individual was convicted of an offence constituted by the same conduct. This means that the maximum civil penalty that can be imposed on an individual is $31,500.

[37].              Collection of Levy Act, proposed subsection 35(2). See regulation 4.10 of the Agricultural and Veterinary Chemicals (Administration) Regulations 1995.

[38].              Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 8.

[39].              Collection of Levy Act, proposed subsection 35(5).

[40].              Active constituent, in relation to a proposed or existing agricultural chemical product or veterinary chemical product, means the substance that is, or one of the substances that together are, primarily responsible for the biological or other effect identifying the product as an agricultural chemical product or a veterinary chemical product, as the case may be. See section 3 of the Schedule to the Code Act.

[41].              Collection of Levy Act, proposed subsection 37(2). See footnote 34 for more information on penalties for individuals and corporations.

[42].              Collection of Levy Act, proposed subsection 37(3). This replicates the existing penalty which is imposed under section 69EA of the Administration Act in respect of annual returns that are required under section 69E of the Administration Act—which is to be repealed. See footnote 36 for more information on the quantum of the penalties.

[43].              Australian Dairy Industry, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, July 2017, p. 2; Animal Medicines Australia, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, 19 July 2017, p. 3; Competitive Advantage, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, 19 July 2017, p. 1.

[44].              CropLife Australia, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, 19 July 2017, p. 3.

[45].              VMDA, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, n.d., p. 3.

[46].              M Kelly (Director, Reform Development and Implementation, Department of Agriculture, Fisheries and Forestry), Evidence to the Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the Agricultural and Veterinary Chemicals Legislation Amendment Bill 2012, Senate, Hansard, 4 February 2013, p. 56.

[47].              The Agvet Code is located as Schedule 1 to the Code Act. Agvet Code, section 8A.

[48].              Agvet Code, subsection 11(1).

[49].              Agvet Code, paragraph 11(2)(a). Agvet Code, section 156A operates so that if the APVMA is required to give a person information in writing, the requirement will be taken to have been met if the person consents to the information being given electronically and it is so given, the information includes the Chief Executive Officer’s electronic signature and, in the event of a breach of a civil penalty provision (arising from a person’s failure to do, or not do, a thing set out in the information), the APVMA has in place systems for proving the person received the information.

[50].              Agvet Code, paragraph 11(2)(b).

[51].              Agvet Code, subsection 11(3).

[52].              Agvet Code, section 28.

[53].              Agvet Code, subsection 3(1) defines a holder as (a) in relation to an approval or registration: the person entered in the Record, Register or relevant APVMA file as the holder of the approval or registration; if the holder was an individual who has died or is an individual whose affairs are being lawfully administered by another person—the legal personal representative of the individual or the person administering the individual’s affairs or if the holder was a body corporate—a successor in law of the body corporate or (b) in relation to a permit or licence: the person to whom the permit or licence was issued.

[54].              Agvet Code, subsection 27(1).

[55].              Agvet Code, subsection 27(3).

[56].              CropLife Australia, Submission to the Department of Agriculture and Water Resources, op. cit., p. 4.

[57].              Competitive Advantage, Submission to the Department of Agriculture and Water Resources, op. cit., p. 1.

[58].              VMDA, Submission to the Department of Agriculture and Water Resources, op. cit., p. 3.

[59].              Australian Pesticides and Veterinary Medicines Authority (APVMA), ‘Permits’, APVMA website, last updated 1 July 2014.

[60].              Agvet Code, section 110.

[61].              Agvet Code, section 110A.

[62].              Agvet Code, subsections 110A(3) and (4).

[63].              Agvet Code, subsection 27(1).

[64].              Agvet Code, subsection 29(2).

[65].              Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 18.

[66].              See for example: Grain Producers Australia, Submission to the Department of Agriculture and Water Resources, Consultation on the Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 7; Australian Dairy Industry, Submission to the Department of Agriculture and Water Resources, op. cit., p. 2.

[67].              Agvet Code, section 36.

[68].              Agvet Code, subsection 41(2).

[69].              Agvet Code, subsection 43(2).

[70].              Agvet Code, section 45. Agvet Code, section 21 sets out how approval of a label takes place.

[71].              Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 21.

[72].              Agvet Code, suspension of an approval or a registration may be made under section 36, subsection 41(2) or subsection 44(2).

[73].              Under section 4AA of the Crimes Act 1914, a penalty unit is equivalent to $210. This means that the maximum penalty for the offence is $63,000. Subsection 4B(3) of the Crimes Act provides that the maximum penalty that may be imposed on a body corporate is five times the maximum penalty that could be imposed on an individual convicted of the same offence. Accordingly, the maximum pecuniary penalty for a corporation is $315,000.

[74].              Administration Act, subsection 69B(1B).

[75].              Administration Act, subsection 69ER(1). See footnote 73 for more information on penalties for individuals and corporations.

[76].              Other than section 69B, which is covered by subsection 69ER(1).

[77].              Administration Act, subsection 69ER(2). The maximum penalty is equivalent to $12,600 for an individual and $63,000 for a corporation.

[78].              Administration Act, subsection 69EJ(1). The amount of the pecuniary penalty is worked out under section 69EJA of the Administration Act (as discussed further below).

[79].              Section 5A of the Agvet Code sets out the matters to be considered in determining whether an active constituent or chemical product meets the safety criteria.

[80].              Section 5B of the Agvet Code sets out the matters to be considered in determining whether a chemical product meets the efficacy criteria.

[81].              Section 5C of the Agvet Code sets out the matters to be considered in determining whether a chemical product meets the trade criteria.

[82].              Section 5D of the Agvet Code sets out the matters to be considered in determining whether a label for containers of a chemical product meets the labelling criteria.

[83].              Subsection 123(1) of the Agvet Code sets out the matters to be considered in determining whether a licence to carry out steps in the manufacture of chemical products at particular premises must be issued.

[84].              For example Australian Pesticide and Veterinary Medicines Authority v Administrative Appeals Tribunal, [2008] FCA 1393 (12 September 2008).

[85].              Although additional, non-monetary consequences, such as a criminal record, flow from conviction for a criminal offence.

[86].              CropLife Australia, Submission to the Department of Agriculture and Water Resources, op. cit., p. 5.

[87].              VMDA, Submission to the Department of Agriculture and Water Resources, op. cit., p. 5.

[88].              Food Standards Australia New Zealand (FSANZ), ‘Chemicals in food—maximum residue limits’, FSANZ website, May 2017.

[89].              APVMA, ‘Pesticides and veterinary residues’, APVMA website, 9 March 2017.

[90].              Subsection 82(3) of the Food Standards Australia New Zealand Act 1991 contains similar requirement.

[91].              Agvet Code, subparagraph 8E(2)(c)(i).

[92].              FSANZ Act, section 82.

[93].              Explanatory Memorandum, Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, p. 29.

[94].              Ibid., p. 30.

[95].              For example: Grain Producers Australia, Submission to the Department of Agriculture and Water Resources, op. cit., 19 July 2017, p. 3; CropLife Australia, Submission to the Department of Agriculture and Water Resources, op. cit., 19 July 2017, p. 1.

[96].              B Joyce (Minister for Agriculture and Water Resources), ‘Second reading speech: Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017,’ House of Representatives, Debates, 25 October 2017, p. 11889.