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MINORITY REPORT BY THE AUSTRALIAN LABOR PARTY
In the Minister's Second Reading Speech it is stated that this legislation
is needed to enable the Authority to plan, manage and prioritise its work
load. In particular it is claimed that the Authority suffers from certain
deficiencies within the current legislation namely:
- Firstly, the Authority has no control over the number of applications
which it is legally bound to handle at any one time. As resources must
be provided for the processing of each of those applications, the Authority
is placed in the invidious situation of either compromising the quality
of the assessment of each application, or breaching its statutory obligation
to finalise applications within 12 months.
- Secondly, the Authority is obliged to utilise available resources
on a `first come - first served' basis so preventing it from taking
into account the relative importance or value of each application (according
to the objectives set out under section 10 of the Act);
- Thirdly, the Authority's obligation to assess each application individually
means that the Authority is required to make variations to the Code
on a fragmented, one by one basis in response to individual applications
which generally only benefit a particular sector of industry. This in
turn prevents the Authority from undertaking more comprehensive and
thorough reviews of groupings of standards. These reviews of groupings
of standards are urgently needed to make the Code less prescriptive,
easier to use and more consistent (Senate Hansard, 20 March
1997, p.2006).
In order to address these alleged problems it is proposed, inter alia,
to amend the current Act to provide for a system of assessing and prioritising
applications to the Authority. Furthermore, and most significantly, the
Authority will be given power to impose charges for assessing applications
which do not fit within the work program.
The charges that can be levied (as set out in the draft regulations)
amount to $1500 for a preliminary assessment plus either $15 000,
$40 000, or $90 000 depending upon the nature of the assessment.
In evidence before the Committee, ANZFA stated that this is not a revenue
raising measure but rather involves a system of partial cost-recovery
for processing applications. It is essentially designed to enable the
Authority to handle an excess of applications which may be made within
the year and cannot be properly assessed at the same time as other reform
activities, including the review of food standards and the development
and introduction of uniform national food hygiene regulations, are being
undertaken.
The Authority is concerned that its current legislative obligations to
deal with all applications that are submitted does not allow it sufficient
flexibility to manage its resources. Also it is concerned that the major
reform projects will be affected. As Ms McCaughey, Chairperson of
ANZFA, said:
The processes or the obligations that are specified in the current
ANZFA Act mean that the very finite resources of the Authority must
in all cases be devoted to assessing applications to vary the food standards
code ahead of the other important reform tasks, irrespective of priority
or merit.But we have been constantly hampered in getting on with this
review of the codes and hence costing ourselves money by having to handle
every application on a one-by-one basis, and costing industry money
by them having to always put in individual applications. (Hansard,
p.CA20)
However, the Authority also acknowledged on a number of occasions whilst
giving evidence that they expect to be able to cope with the number of
applications expected over the next few years: As Ms McCaughey said:
We are fairly confident that, with the reinstatement of the funding
of the ANZFA budget this year, the number of applications which we are
likely to receive will be pretty much in line with the amount of money
we have. So if we have this amount of money set aside in our budget
program, we hope it is not going to be too different from the number
of applications that we receive. (Hansard, p.CA21)
Mr Peachey, General Manager, ANZFA stated:
What we are talking about here, I would like to suggest, is probably
a fraction of the overall workload of the authority. To put it into
context, as Harris Boulton mentioned, we suspect there will be very
few, if any, applications falling outside the work program in the foreseeable
future. In terms of dollars and cents, the authority has a budget of
around $7 million I would say 60 per cent of that is devoted to standards
work of some sort in an industry with a total value in the order of
$40 billion. We have discussed matters of public and private good and,
as I think is clearly evident, there are some grey areas about that
and where do you put the dividing line?
The work program arrangements we have set up we see as a way of ensuring
the protection of the public good. We do not foresee any circumstance
where an application to vary the code which has any impact on public health
and safety would in fact fall outside the work program. (Hansard,
p.CA36)
Similarly, Mr Preston, Principal Legal Adviser, ANZFA, indicated
that:
If I could perhaps address the problem coming from another way,
on the budget for the forthcoming year we expect to be handling around
30 items on the work program. Thirty is roughly average for the number
of applications we receive in a year, so if it is an average year this
year, we probably will not get any money. (Hansard,
p.CA42)
The Authority's own expectations are in accord with those of the industry.
The Australian Food Council indicated that, with the co-operation of ANZFA,
it had surveyed its members to determine likely applications during 1997-98.
In response to a question on the likely number of applications Mr Boulton,
Policy Director, AFC, stated:
I said this morning that, if the funding that was provided in
this latest budget for ANZFA continues in real terms for the next three
years, it is my guess that there will be very few [applications submitted].
That is an informed guess; as you would see in our submission, we did
a survey of our members. ANZFA put out an advertisement in December,
asking people to nominate what applications they would be likely to
make during the year 1997-98, and got very few responses. We undertook
to do a specific survey of our members on that, and we got very few
responses. People generally said, “If the review goes ahead, that
will deal with the applications we might have been going to make in
the next year or two or three”.
On the basis of that it is our view that, with current funding, there
would be very few applications that would fall into the fee for service
category. (Hansard, p.CA32)
In summary both the industry and the ANZFA acknowledge that current funding
levels are expected to be adequate to enable all applications to be dealt
with as and when they are received over the course of the next few years.
The acknowledged purpose of introducing a fee for service scheme is to
give ANZFA the capacity in future to charge for some applications, even
though the Authority does not envisage needing to use this capacity in
the foreseeable future. The industry equally fears that once having achieved
the power to levy fees it will lead to reduced government funding for
ANZFA and consequently the application of a user-pays approach.
To quote Mr Boulton:
Our big worry, though, which gets away from the specifics of
the regulations, is simply that, at some stage in the future, governments
of whatever persuasion might decide that they will cut ANZFA for funding
by half, or whatever. The only option then is that companies who need
to have a standard considered will have to pay for it. It just transfers
that contingent liability, which is the term that I have used. (Hansard,
p.CA32)
The Opposition agrees that these concerns are well-founded. Given
that the Government and ANZFA do not expect to actually need to implement
a system of fees or cost recovery over the next few years, there is no
valid reason at this stage why ANZFA should be given such power. This
is particularly the case where the fees structure to be established by
regulation envisages a level of fees up to $90 000 per application.
There are however two other reasons why this proposal should be rejected.
Firstly, ANZFA is currently involved in three major review/reform projects
namely the review of the Food Standards code, the introduction of uniform
hygiene standards and a review of the food regulatory system across federal,
state and local government.
It is expected that these reviews will be completed at various times
within the next 6 years.
ANZFA has been given additional resources in this year's Budget and for
the next three years to enable it to complete these tasks. The 1997-98
Budget Papers state:
Commonwealth funding for the Australia New Zealand Food Authority
(ANZFA) was to reduce to $5.6 million in 1997-98 and to a base
of around $4m in 1998-99, with funding above this level to be provided
from industry through cost-recovery arrangements.
However, the implementation of major cost-recovery activity will be delayed
pending the completion of the Review of Food Regulation in Australia (also
included in this Budget). It is envisaged that a new cost-recovery arrangement
will be developed as part of a national streamlined approach to food regulation,
which should reduce the regulatory burden imposed on industry by all levels
of government.
In recognition of the delay in implementation of these cost-recovery
arrangements, the Commonwealth is providing the ANZFA with additional
resources to supplement the expected shortfall in its funding levels prior
to the introduction of the new cost-recovery arrangements. (Budget Paper
No. 2 Budget Measures 1997-98, p.60).
Given that additional funding has been provided, that any future arrangements
for cost-recovery have been delayed, and that ANZFA expects to be able
to cope with the expected work-load this year the proposed amendments
in the legislation enabling the imposition of charges is unnecessary.
Secondly, the role of ANZFA is the development, promotion and maintenance
of food standards and regulation for the health and protection of the
public. ANZFA exists to provide a public service. Ultimately the benefit
of the Authority's activities is for the public, not for the proprietary
benefit of the particular industry or company involved in an application.
It is therefore appropriate for ANZFA to be publicly funded through
the budget process. If ANZFA's workload does increase due to some unexpected
increase in applications then this is something that should be met through
an increased budget allocation.
Industry does already make a significant contribution to the work of
ANZFA and to improved food hygiene standards both in dollars and in kind.
Industry organisations and companies participate in the work of ANZFA
through committees, working groups, the provision of expertise and resources
and assisting in the assessment process. Ultimately, industry is also
responsible for the expenditure involved in ensuring safety and hygiene
is maintained and improved within their establishments.
Finally, concerns also exist that the introduction of a fee-for service
regime could undermine the independence and impartiality of the Authority.
In contrast to the proposal for the introduction of fees there are other
aspects of the legislation which are desirable in improving the planning
and management of ANZFA. These include:
- giving ANZFA the ability to prioritise its work;
- utilising other Agencies to undertake assessments; and
- simplification of requirements and fast-tracking of applications.
The Opposition supports these aspects of the legislation as they will
improve the efficiency of ANZFA and will also enable it to complete the
major review tasks currently under way.
SUMMARY
The Opposition rejects the proposed amendments to the regulation-making
power in Section 66 of the Australia New Zealand Food Authority
Act 1991 which would give the Authority the power to implement
a system of fees or charges for cost recovery over the next few years.
The Opposition supports the management improvements and other regulatory
reforms contained within the two Bills.
The Opposition foreshadows that it will be moving an amendment in Committee
of the Whole to remove the capacity for the Authority to impose fees or
charges on industry for cost-recovery purposes.
| Senator Michael Forshaw |
Senator Kay Denman |
Senator Sue West |
| (ALP, New South Wales) |
(ALP, Tasmania) |
(ALP, New South Wales) |
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