The APVMA's performance of its functions under the
order
3.1
This chapter examines the Australian Pesticides and Veterinary Medicines
Authority's (APVMA) performance of its functions as a result of the relocation
order. The chapter focuses in particular on the risks associated with the
relocation, the impact these will have on the performance of the APVMA, and the
strategies being employed by the APVMA to mitigate the disruption caused by the
move.
The risks associated with the move
3.2
A number of key risks were identified in the government commissioned Ernst
and Young cost-benefit analysis for the relocation of the APVMA:
-
the APVMA may be unable to relocate, or recruit and replace, key
APVMA executive, management and technical assessment staff;
-
during transition and in the short term, the APVMA may not be
able to sustain its rate of effort for registration of new agricultural and
veterinary chemical products;
-
the APVMA may be unable to maintain and grow its capability in
the medium term; and
-
the APVMA may have reduced access to stakeholders.[1]
3.3
Ernst and Young highlighted that the most significant risk will be the
loss and replacement of staff. The former CEO of the APVMA, Ms Kareena Arthy,
agreed. In a letter to the Minister for Agriculture and Water Resources, the
Hon Barnaby Joyce MP, Ms Arthy noted that 'being able to source regulatory
scientists in a new location is a critical consideration'. Ms Arthy expressed
her concerns around the loss of staff and replacing them if the move went
ahead:
It is highly questionable whether recruitment of the scale
needed to get the APVMA back to full strength in terms of scientific capability
would be possible in a capital city let alone a regional centre. Finding a
minimum of 55–60 scientists with sufficient attributes or experience either in
the region or willing to move to the regional location would be difficult and
would take time...it could be years before capability is restored.[2]
3.4
The loss of staff and its subsequent impact on the performance of the
agency as well as the mitigation strategies recommended in the cost-benefit
analysis will be discussed later in the chapter. The cost-benefit analysis
recommended a number of mitigation strategies which will also be discussed
later in the chapter. The effects on current and future performance of the
APVMA are discussed in the next section with a specific focus on capability,
economic, environmental and animal welfare factors.
Performance of functions
3.5
Many submitters who are key stakeholders of the APVMA put forward their
opposition to the APVMA's move from Canberra.[3]
The key reason for this opposition is the potential impact that the relocation
will have on the APVMA's performance.
Effect on capability
3.6
A number of submitters highlighted their concerns with the current and
future performance of the APVMA.[4]
The APVMA itself has acknowledged that the proportion of applications that were
meeting expected timeframes are falling noting that 'we are missing the
deadlines by between two and five weeks'.[5]
The Ricegrowers Association (RGA) noted that only '50 per cent of pesticide
applications for the quarter were completed on-time'. RGA made a further
observation:
This inefficiency has flow on impacts for the Australian rice
industry as the adoption of pesticides that improve production is delayed due
to the administrative inefficiency.[6]
3.7
The Veterinary Manufacturers and Distribution Association (VMDA)
provided their assessment of the APVMA's current performance citing its
'inability to meet timeframes for registration approvals':
It is important to note that while the authority's reported
'time frame performance' appears to be in excess of 80% for veterinary
applications, that 80% figure applies almost exclusively to applications that
are administrative in nature, or to applications that require no or minimal
scientific assessment. 80% of the assessments that the APVMA receives are in
this category, and given that these should be completed within time
frame because of their relatively simple nature, it follows that of the other
20% of applications that are for actual new products, and that do require
scientific assessment, virtually none is completed within the statutory
time frame.[7]
3.8
Croplife observed:
The performance statistics show that the APVMA only processed
50 per cent of crop protection product applications within statutory
timeframes. This is a sharp fall from processing 82 per cent of crop protection
product applications within statutory timeframes in the previous quarter and
below the 57 per cent recorded in the 2015–16 December quarter. Thus, the
number of crop protection product applications currently 'in progress' has also
increased with only 69 per cent of those are still within timeframe, indicating
that performance is unlikely to improve in the short to medium-term.[8]
3.9
Since submissions were received for this inquiry, the agency's
performance has deteriorated further. The most recent performance statistics
detailing the March quarter results (January to March 2017) showed that only 30
per cent of pesticide product applications were completed on time. This fell
from 50 per cent in the previous quarter (October to December 2017). In the
2014–15 year, 81 per cent of applications were completed on time.[9]
There is a clear downward trend during the period since the relocation was
first flagged and then announced.
3.10
Mr Ron Marks, a Community and Public Sector Union (CPSU) delegate at the
APVMA spoke of the effects on remaining staff of not meeting the timeframes as
well as the economic consequences for applicants:
Our statistics, which are public, pretty much indicate that
only 50 per cent of pesticide applications are coming in on time. It is almost
a case of: if you get one application off your desk, two get put back on. It is
quite distressing for people because they want to meet what is the kind of
implied contract with a registrant, which is: you give us what we need and, if
it passes muster, we will give you an answer within a time frame. That can have
very serious financial implications for some companies because they only have a
very narrow time, for instance, where they can sell a particular product—if it
is only used at seeding, for instance. They do their marketing plans based on
us meeting our time frame. If we miss our time frame then they have lost income
from that product for at least 12 months. I noticed that one of the submissions—Agsense,
I think it was—quoted one client who lost $750,000 in sales because the product
was registered late. This really has a very distressing effect on staff. It is
a challenge to their professional esteem.[10]
3.11
Many of the submitters expressed concern that the relocation to Armidale
would further compromise the APVMA's capabilities.[11]
One submitter observed that 'steady improvements in performance by the APVMA
have been obliterated by the impact of the order'.[12]
Animal Medicines Australia noted that the relocation of the APVMA 'will result
in net costs to our members as well as diminishing the productivity and
profitability of Australian farmers'.[13]
Croplife provided the following assessment:
Relocating the APVMA from Canberra to a regional centre
without adversely impacting its ability to regulate consistency, predictability
and efficiency presents a significant challenge. The core concern is the loss
of key senior and experienced technical assessment staff, which is a key driver
of the regulator's capability and efficiency.
A significant negative disruption to the operations of the
APVMA is not just a threat to the plant science industry or individual crop
protection product companies, it is a threat to the nation's farming sector and
its productivity, profitability and international competitiveness.[14]
3.12
In their submission, Mr Stephen Pettenon and Mr Michael Gaven—who hold a
combined 42 years' experience dealing with the APVMA—observed that 'the APVMA
has taken a dramatic downturn since the possibility of a regional relocation
was formalised'.[15]
Statutory and governance
performance requirements
3.13
The committee heard that the APVMA has a statutory obligation to process
applications within certain timeframes.[16]
Currently and in the past, these timeframes have not been complied with.[17]
Submitters are concerned that the relocation will increase these timeframes.
Ms Arthy explained that this statutory performance requirement would continue not
to be met in the foreseeable future noting:
I can quite unequivocally say that we will not be meeting our
100 per cent time frame performance.[18]
3.14
In relation to governance, Animal Medicines Australia pointed out that
the 'Government Policy Order appears inconsistent with the general governance
duties outlined in section 15 of the PGPA Act'.[19]
Section 15 of the PGPA Act places a duty of governance on Commonwealth entities
to 'promote the proper use and management of public resources' and 'to promote
the achievement of the purposes of the entity'.[20]
The cost-benefit analysis has highlighted a number of financial and capability
risks to the APVMA, and as such, Animal Medicines Australia has argued that the
relocation order undermines the 'APVMA CEO's duty under [section] 15' of the
PGPA Act.[21]
Economic and commercial impacts
3.15
Throughout the inquiry, the committee heard about the critical role that
the APVMA plays for Australian agriculture and other users of pesticides and
veterinary medicines. Submitters described the importance of crop protection
products—such as herbicides, insecticides and fungicides—to farmers, consumers
and environmental managers:
Farmers need these products because of the benefits they
provide to their businesses. Consumers need these products to ensure they have
access to safe, affordable and nutritional food. These products also enable
land and environment managers, such as parks and wildlife services, to protect
Australia's native flora and fauna from noxious weeds and invasive pests.[22]
3.16
Croplife elaborated:
The [Food and Agriculture Organization of the United Nations]
estimates that with access to current crop protection products, between 20 and
40 percent of global crop yields are reduced each year due to the damage
wrought by plant pests and diseases. Without access to these tools, up to 50%
of current crop production would be lost. By way of example, Australian farmers
would not be able to commercially produce almonds, apples, asparagus, grapes,
hops, lettuce, nectarines, peaches, pears, strawberries, many other fruits,
vegetables, nuts and many other crops without crop protection products.[23]
3.17
The committee heard that there can be profound impacts to the pesticides
and veterinary medicines industry and the agricultural sector more broadly with
any delays to the registration of products by the APVMA:
Based on conservative estimates of a one year delay in the
approval of new products, the potential impact on the agriculture sector for
crops alone could be between $64 million and $193 million per annum. The risks
to the agvet chemical industry associated with moving the APVMA are also
significant with a one year delay in the approval of new chemicals potentially
impacting industry to the value of between $0.8 million and $2.7 million per
annum in terms of lost revenues.[24]
3.18
The importance of this role was underlined by many submitters and
witnesses to the inquiry including Mr Matthew Cossey, CEO of Croplife:
The plant science industry in Australia is worth more than
$2.5 billion annually. Most importantly, it is our industry's products, those
registered by the APVMA, that directly underpin and facilitate more than $18
billion a year of agricultural crop production in Australia.[25]
3.19
Since the announcement of the relocation, current applicants before the
APVMA are experiencing greater delays. These delays have real financial imposts
on applicants and their customers. A practical example of delayed registration
was described by representatives from Croplife:
To give a realistic example, I know from a discussion just
the other week that one of our member companies has a brand-new,
mode-of-action, pre-emergent herbicide that was meant to have been approved by
the end of last year or the beginning of this year and has missed the time
frame. It is out of time frame and will miss the entire season, and to them
alone it will be about a $1.7 million loss, let alone the loss of productivity
that farmers would have from that...
The example provided by Mr Cossey explains that a
pre-emergent herbicide only has a small window in a year for it to be used, so
if there is a delay and you miss that window then it is effectively a 12-month
delay.[26]
3.20
Another potential outcome of the announced relocation is that
multinational chemical companies are considering whether to enter the
Australian market due to the lack of certainty around registration prior to and
during the relocation process. These companies could target other markets where
greater certainty exists around registration timeframes:
We have heard anecdotally from our heads of companies
discussion about how they are at a global level having to assess whether they
come to the Australian market with everything just at the moment. Certainty is
a very important thing for bringing a new product to market. It is not simply a
matter of dropping a registration in and being ready to go. There are 3½
thousand retail distribution stores around the countries—logistic suppliers and
launchers. The stats that the APVMA recently released confirm that there are
clearly people bypassing the market with a 28 per cent reduction in the number
of applications going in.[27]
3.21
Animal Medicines Australia agreed and were specific about the effect in
their industry:
We talk about innovation and most of the innovation right now
in this space that is coming through internationally is to protect pets against
the paralysis tick in Australia, which is deadly. I know that a number of our
members, including ourselves, have had significant delays to the tune of 12
months, 18 months and two years in getting some of these products through
registration and onto the Australian market. That is just on the pet side.
If you look at the agricultural side, what is a greater risk
is that we are not even bothering. We are not even investing because we have no
certainty of a result through the regulator. We make investment decisions every
day, and I certainly know that New Zealand is far more attractive for us
because their [Agricultural Compounds and Veterinary Medicines] is much more
open and pragmatic on the importance of agriculture to New Zealand. So we
invest our money there, particularly in the dairy industry and so forth. It is
unfortunate. We are making commercial decisions that are not to the benefit of
Australia.[28]
3.22
The effect of increased timeframes is that Australian farmers and pet
owners will not have access to the most effective products to protect their
crops and animals in a timely manner. Ultimately, this lack of access will
result in Australian agriculture becoming less competitive and animal welfare
outcomes becoming compromised. Mr Benjamin Stapley, Executive Director at
Animal Medicines Australia explained:
The potential delay in access to the latest veterinary
medicines is likely to have an impact on animal welfare and animal health. So
not only will that put agricultural producers at a disadvantage in comparison
to overseas competitors; on the animal medicines side there will be an impact
on pet owners who may not be able to access in a timely manner products for
their pets which may be available to pet owners in other comparable markets.[29]
3.23
A number of case studies are provided in Box 3.1 which outline the
impact on applicants of delays to registration of their products.
Box 3.1: Case studies outlining the impact of delays
to pesticide applications with the APVMA
Case Study 1 - Client A
spends 40 months and over $150K in preparing a data package in support of an
Item 10 registration application. The applicant prepares the application on
advice following the use of a pre application service. Submitted in Jan 2017,
the APVMA accepts the application and initial fee of $15K and advises of a
December 2017 finalisation date. On request, the APVMA confirms that the
application is complete but advises that it cannot commence processing the
application until July 2017. Due to staff shortages, the client is advised by
the APVMA that approval by the legislative time frame cannot be confirmed. In
order to enter the 2018 market in time, Client A is now considering entering
into a commercial agreement with an existing registration holder and
withdrawing the January lodged application.
Case Study 2 – Client B
lodges an innovative product combination aimed at improving the control of
tolerant broadleaf weeds in wheat and barley. The application is lodged in June
2015 after 3 years in preparing data for the submission at a cost of $200K. In
January 2016, the APVMA advises that a full OHS assessment is required and
requests an additional $15K in processing fees. Due in October 2016, the
application is held up because assessment of the OHS Module is yet to be
completed. The product is finalised 5 months overdue in March 2017. It is
revealed that the draft OHS assessment that was due in June 2016 had been
completed in April 2016 but not finalised until January 2017 due to staff
movements. This delay changed the launch strategy for the client at an
estimated loss in the order of $750,000.
Case Study 3 – Client C lodges an application for a new product in
November 2015 and is advised in December 2015 that a full toxicology assessment
is required. The APVMA confirms a finalisation date of October 2016 although
the product remains in evaluation and has not entered the month long
finalisation stage. Status of the application remains a mystery. Client’s plan
to launch product delayed at significant financial cost.
Case Study 4 – Client D
successfully lodges an Item 10 application in January 2016 and is advised by
the APVMA that finalisation is expected in December 2016. Status of the
application is still in assessment and the APVMA is unable to advise when it
will be completed.
Source:
Agsense and Gaven & Associates, Submission 39, pp [3–4].
Possible environmental and animal
welfare impacts
3.24
There are impacts to the environment and to animal welfare which will
result from the further deterioration of the APVMA's performance. Witnesses
indicated that the APVMA is currently empowered to issue emergency permits to
deal with emergency situations that require swift registration of a chemical
for a specific purpose such as responding to a locust or mouse plague. The
committee received evidence suggesting that the relocation may impact on the
APVMA's capacity to respond to such requests.[30]
Chemistry Australia submitted that the relocation will impact on the APVMA's
capacity to 'respond to any potential animal health outbreak that might require
the emergency approval of veterinary medicines'.[31]
Although the committee did not receive any evidence quantifying the impact of
delays to emergency permits, it is likely that significant crop and animal
losses could be incurred as a result of any delays to emergency approvals.
Staffing
3.25
It is clear that the decline in the APVMA's performance is largely
driven by the loss of experienced staff and the difficulties in recruiting
suitably qualified replacements. A number of submitters have expressed concerns
about the APVMA's staffing arrangements during and after the relocation to
Armidale.[32]
In evidence to the committee, Mr Lee noted:
Our concern is the loss of expertise. As has already been
stated earlier, 90 per cent of the regulatory scientists are saying they will
not move with the APVMA. No proper-functioning organisation could lose 90 per
cent of its expert staff and not have a serious impact upon their ability to do
the job. If Telstra lost 90 per cent of the staff that were doing crucial
engineering work, I am sure it would impact Telstra's ability to deliver.[33]
3.26
In its cost-benefit-analysis, Ernst and Young highlighted that 'stakeholders
are concerned that delays to the approval of new chemicals will arise as a
result of the loss of staff'.[34]
As noted earlier, the delays to pesticide registration will impact not only on
companies seeking to register and sell pesticides but also on the agricultural
sector more broadly.
Loss of experienced staff
3.27
In a July 2015 letter to the Deputy Prime Minister, the Hon Barnaby
Joyce MP, the CEO of APVMA, Ms Kareena Arthy explicitly warned against the
relocation on the basis that experienced staff would be lost and not able to be
replaced which would adversely impact the performance of the APVMA:
A loss of regulatory scientists of the magnitude indicated by
the staff survey would have major impacts on the APVMA and its ability to
deliver its legislative obligations. There would be major gaps in the expertise
needed to assess the 3 500 applications for chemical registration the APVMA
receives each year.[35]
3.28
Many submitters have highlighted the fact that less than 29 employees (15
per cent) of the APVMA's current staff have expressed an interest in relocating
from Canberra to Armidale.[36]
Furthermore, of these 29 employees, 24 have indicated that 'they may
be willing to move' and that only 5 'are willing to move'.[37]
3.29
In previous evidence to the Senate Rural and Regional Affairs and
Transport Committee (RRAT), Ms Kareena Arthy noted that one-fifth of the
APVMA's regulatory scientists (20 out of 100 staff) had left the APVMA in the
last 12 months. APVMA has noted previously that the average length of service
for all ongoing APVMA staff is 6.5 years.[38]
3.30
The CPSU has stated that since the relocation plans came to light, over
half (96 out of 172 employees) of the APVMA's
staff have left the organisation causing a 'significant loss of corporate knowledge and the
inability to meet key timeframes'.[39]
Animal Medicines Australia observed in the 'last eight months since the election,
nearly 25 per cent of APVMA staff have departed the agency', some with more
than 20 years' experience.[40]
3.31
The loss of staff
compounds an already heavy workload on the staff that remain. The pressure to
perform under these circumstances often exerts a personal toll on each of these
workers. Mr Ron Marks observed:
I expect that the current high level of staff stress and
distress will not ease and I expect their passion to continue being eroded by
this as the job gets harder and harder to do adequately. Consequently, it is my
opinion that staff losses are very likely to continue at the high rate that is
currently occurring, as staff decide their only solution to this stressful and
distressing situation is to leave.[41]
Difficult to replace
3.32
Not only are staff leaving amid the uncertainty but it is difficult to replace
them. In February 2017, Ms Arthy explained to RRAT why it is so difficult to
replace such highly specialised staff:
The area where we are finding our
gaps at the moment is in our regulatory science area, and that is because
people leave. We do not deal with just one species. We deal with multiple
crops. We are not like the TGA, where we just deal with humans. We deal with
multiple crops and multiple animals. We have people who are experts in
particular areas and, if they leave, we have a gap. We do not have the sort of
luxury of having the depth and backup.[42]
3.33
Ms Arthy also explained that it was 'proving challenging' finding new
recruits who were prepared to move to Armidale.[43]
In a letter to the Minister, Ms Arthy noted that once regulatory scientists
leave the APVMA they are not easily replaced:
Most regulatory scientists exist in government or in the
chemical industry itself. It is not as matter of directly recruiting university
students or academics as they are not suitably skilled to do the type of
analysis the APVMA undertakes. It takes between two and five years to train a
regulatory scientist, on top of their university qualifications, depending on
the discipline.[44]
3.34
In its submission, the Community and Public Sector Union (CPSU)
observed:
CPSU members have also raised concerns that APVMA may be
approaching a critical point where the number of remaining experienced staff is
insufficient to maintain current work levels (i.e. time frame performance), and
train the new staff coming on board (particularly in the science ranks). This
extra stress, above the already high stress levels, may cause a significant
number (especially scientists) to leave sooner than later.[45]
3.35
In the event that new staff are recruited, there is a lag period as new
recruits are trained and are brought up to full working capacity. Mr Cossey highlighted
some of the difficulties in recruiting new inexperienced scientists and the
impact this has on the timeliness of the application process:
Our member companies know that, if you get a new regulatory
scientist who has just joined the APVMA on your case, you are going to have an
application that takes significantly longer than if you get one that has five
years experience. Like all things, experience adds high value to it. But,
longer term, a connection with an educational institution specifically training
to the needs of a regulator will certainly provide some benefit.[46]
Impediments to staff relocating to
Armidale
3.36
As noted, the overwhelming majority of current APVMA staff are reluctant
to move to Armidale with the agency. There are good reasons for this
reluctance. The staff survey conducted by the APVMA found that the predominant
factors related to an employee's personal circumstances including:
-
difficulty for an employee's partner to find work (75 per cent of
employees who were against move);
-
limited opportunities for future employment progression (72 per
cent);
-
strong ties to the Canberra region (58 per cent);
-
extended family responsibilities or family support in the
Canberra region (50 per cent); and
-
children settled in school in Canberra (44 per cent).[47]
3.37
These concerns are not isolated to the APVMA. The Rural Industries Research
and Development Corporation (RIRDC), another government agency subject to
relocation from Canberra, experienced similar impediments to relocation within
its staff.[48]
3.38
It was pointed out to the committee that the decision making process of
government in relation to the relocation is not consistent with the decision
making processes that the staff apply in their regulatory roles.
[APVMA staff] are required to make evidence-based decisions,
and one of the reactions to members in this agency comes from the lack of
evidence, so it is a particularly blunt instrument. There is a lack of evidence
in terms of, 'Does this particular relocation make sense?' That is what would
appear to be the evidence that they see, and these are people required to make
decisions based on evidence. So it is really difficult coming from that space,
as you expect your public servants to do.[49]
3.39
The proposed centre of excellence in agriculture to be established in
Armidale was discussed earlier in this report. The VMDA made the point that the
centre of excellence in Armidale should not come at the expense of the 'centre
of opportunity' that already exists here in Canberra for many highly qualified
and dedicated APVMA staff, their families and extended networks.[50]
3.40
No staff member within the APVMA is immune from the challenges of being
asked to relocate from Canberra. Notably, the APVMA CEO Ms Kareena Arthy has
resigned to accept a comparable position in Canberra.[51]
Importance of the location of the regulator
3.41
The Australian Veterinary Association (AVA) noted the importance of
having the regulator located in Canberra:
The AVA appreciates the direct access to APVMA that is
currently possible as a result of the organisation's location in Canberra,
where the AVA’s veterinary policy activities are based. We value the level of
interaction between the two organisations and the ability to consult directly
with the APVMA’s management and expert scientists as required.
It would seem similarly advantageous that the APVMA is
located near its other key stakeholders, who are the livestock industry peak
bodies, and the representatives of the product registrants such as Animal
Medicines Australia, all largely based in Canberra.[52]
3.42
The CPSU has also noted that 'the ability to meet and have easy access
to all [of APVMA] stakeholders is important' for it to conduct its work.[53]
In an answer to a question on notice, APVMA held '109 face-to-face meetings
with external stakeholders per month in Canberra'. Some of these meetings were
held with regulatory partners such as the Therapeutic Goods Administration
(TGA), the National Industrial Chemicals Notification and Assessment Scheme
(NICNAS), and Food Standards Australia and New Zealand (FSANZ). Many of these
organisations are based in Canberra.[54]
3.43
The VMDA pointed out that, whilst moving the regulator to regional
Australia may place it closer to the end-users of pesticides and veterinary
medicines, the APVMA has very few dealings with end-users. The 'primary areas of consultation are
with peak bodies representing industry, government and others on a national
level', most of whom are based in Canberra.[55]
3.44
The committee also heard about the added impost and cost for chemical
applicants having to travel to Armidale instead of Canberra. Mr Trevor Ranford,
a representative of companies who regularly make applications to the APVMA
submitted:
As an individual, representing horticultural industry
organisations, I have had and continue to have a need to meet with APVMA
representatives to discuss specific issues through face-to-face meetings.
While travelling to Canberra, from Adelaide, is costly enough
having to travel to Armidale is going to be even more costly. I have a meeting
planned with APVMA on the 15th March.
To go to Armidale would have cost me at least an additional $150 in airfare
costs and the loss of a complete day for maybe a 1 to 2 hour meeting. All of
these costs would be passed onto the industry and ultimately a cost to the
growers.[56]
3.45
In their submission, Agsense and Gaven & Associates agreed,
highlighting their current interactions with the APVMA and how those will
adversely change when the APVMA relocates to Armidale:
Both authors of this submission travel interstate to attend
all seminars held by the APVMA. In the last three years, venues have been in
Sydney, Melbourne, Canberra and Perth. Moving the APVMA to a regional centre is
a problem for interstate clients already burdened by the time and cost of such
travel. Less interaction between clients and the APVMA will rein in the
progress made through regular face to face contact.[57]
Funding for the relocation
3.46
Some witnesses expressed concern that the government had allocated
insufficient funding for the move and that additional costs and the cost of
product registration delays may be borne by industry. Mr Matthew Cossey of
Croplife explained:
An associated issue of concern relates to the cost and
funding of relocation. The Ernst & Young report highlights a transitional
funding cost of $34.7 million to relocate the APVMA to Armidale over the first
four years. However, the government is only providing $25.6 million. We have
serious concerns regarding this funding shortfall. The relocation of the APVMA
should not come at the cost of the Australian plant science industry or the
national farming sector. In addition, any cost caused by the inevitable delays
to product registrations should be a matter that is given consideration by the
government and should not be borne by product registrants.[58]
3.47
Mr Cossey emphasised the importance of this issue:
Our concern is that the entire risk of those efficiencies
being delivered is being borne by the regulator. We think the whole amount
should be provided to the regulator and when those efficiencies are delivered
it is then paid back to the Commonwealth as opposed to that risk being borne
directly by the regulator. This is a very specialised regulator. There is no
other like it, in that its entire operating budget is provided through industry
fees and levies. Costs that are borne by the regulator are then borne by our
members and other registrants, which are then obviously passed on at the farm
gate. That is only with regard to relocation. We think it is very important
that those costs are met.[59]
3.48
As an agency run largely on a cost-recovery basis, other submitters and
witnesses also expressed fears that registration and application fees may
increase to cover any shortfall in funding related to the move. The VMDA noted:
There is no doubt that there will be additional, unforeseen
and ongoing costs associated with the move would be borne by industry, with a
consequent flow-on effect to farmers and other consumers.[60]
3.49
Mr Stephen Pettenon, an applicant, argued that the trend over recent
years has been for the APVMA to increase registration and application fees:
...the registrants, who pay in excess of $30 million annually
through registration and application fees. These fees have increased in recent
years, and this burden has been borne solely by the registrants.[61]
3.50
Furthermore, Mr Pettenon and others expressed their opposition to any
registration fees being applied to the relocation:
We do not want to see these funds allocated to the relocation
of the APVMA.[62]
3.51
The Deputy Prime Minister has not clarified how the entire cost will be
met. In a letter to the APVMA CEO, he acknowledged that the relocation cost
would need to be absorbed by the agriculture portfolio, but did not specify
how:
As the APVMA is a cost-recovered agency, I will need to find
offsets from within my portfolio to fund the move.[63]
Office space
3.52
A more practical consideration for the APVMA is where it will be based
in Armidale, both during the transition and permanently. The Department of
Agriculture and Water Resources (DAWR) has indicated that the construction of a
new purpose built office will be required, co-located at the UNE campus in
Armidale. DAWR confirmed that arrangements for the new building were in the
development phase, with DAWR still undecided about commissioning construction
itself or entering into a pre-commitment lease arrangement.[64]
As noted in Chapter 2, construction of a new building was the more expensive
option identified in the cost-benefit analysis with the construction of the new
office block modelled to cost $11.65 million.[65]
3.53
A corporate property services company has been contracted to locate
suitable transition premises.[66]
The next challenge for the APVMA rests with securing the construction of their
permanent accommodation in Armidale, which the APVMA expects to be completed
and able to be occupied by mid-2019, a little over two years away.[67]
3.54
Although remote working and the digital strategy will be discussed in
more detail later in the chapter, it is appropriate to briefly mention the
remote working arrangements in respect to office arrangements. The APVMA's
intent is to provide interim remote working arrangements for current staff who
do not wish to relocate to Armidale. These staff will work from home rather
than from an office co-located with other employees. This goes against Ms
Arthy's own view on how workplaces should be structured:
..it is always better when you have an organisation that is
co-located and can be able to have that more structured presence and where we
can really get the culture and the team building working.[68]
3.55
The NSW Farmers Association also expressed its concern at the
inefficiencies of the proposed digital strategy that seek to make staff work
from home rather than in a co-located space. The NSW Farmers Association
suggested that a co-located space in Canberra should be pursued as this would
create a more productive workplace at no additional cost to the Commonwealth:
Finally, the Association is concerned that the proposed
remote working model, where more than half of the APVMA’s regulatory scientists
will remain Canberra-based, is an inefficient use of taxpayers’ resources...
Noting the Commonwealth’s significant over-supply of rented
property in the Canberra market place, we believe a suitable workspace could
easily be found within this surplus property leasehold which would enable these
staff to work together. Given the Commonwealth is already meeting the expense
of the rent until the end of the property’s relevant lease period, this would
not result in any additional expense to the Commonwealth taxpayer. This should
be pursued in the best interests of improving the efficiency of the APVMA and
enabling flow-on benefits for Australian agriculture.[69]
Mitigating the damage
3.56
As a response to the significant relocation risks identified in the
Ernst and Young report, two key mitigation strategies have been proposed. The
first element is the establishment and implementation of a relocation strategy.
The APVMA Relocation Advisory Committee (ARAC) comprised of industry
stakeholders provides advice to the APVMA on the development and implementation
of the strategy. The second component is the formation and application of a digital
strategy.
Relocation Strategy and the
Relocation Advisory Committee
3.57
As part of its planning for the relocation to Armidale, the APVMA has
'prepared a high level relocation strategy'.[70]
This strategy was released in November 2016, and it:
...outlines the broad activities needed to efficiently transfer
APVMA functions from Canberra to Armidale. This relocation strategy is focussed
on what needs to happen to move the APVMA, while minimising potential issues
during the transition, and to maximise capacity when it operates from Armidale.
It is necessarily high-level and the detailed transition planning to follow
will ensure that all risks to the APVMA's operations are identified and
mitigation measures implemented.[71]
3.58
In addition, the APVMA has established the APVMA Relocation Advisory
Committee (ARAC). The purpose of ARAC is 'to
provide strategic advice on major aspects of the relocation and the transition
of the APVMA from Canberra to Armidale'.[72]
3.59
At the Canberra hearing, Mr Cossey emphasised the constructive manner in
which the APVMA has used these processes to engage with stakeholders on the
move:
I would have to commend the APVMA on their very open and
constructive consultations, on the way they are engaging with all stakeholders.
They are being extraordinarily open in the challenges and issues that they are
dealing with and the detailed ways in which they are seeking to address the
relocation.[73]
3.60
Despite these positive comments, some concerns were raised about where
these processes were up to. For instance, members of ARAC could not identify a consolidated
risk register or risk management document. One of the reasons that a risk
register has not been finalised is that risks are still being identified:
...in terms of separate documentation of a risk register, that
has never actually been presented. Certainly, there have been some surprises. I
think the biggest surprise to the whole of the APVMA, particularly in terms of
human resources, has been the impact of partners being in other parts of the
Public Service and the impact on people actually wanting to move and things
like that. So it is quite significant that they are uncovering a number of
risks which were not originally identified and which I do not think anyone
would have actually gone looking for.[74]
3.61
The APVMA also highlighted that the relocation strategy is being rolled
out at the same time as a broader long-term 'change agenda'.[75]
Ms Arthy noted:
We have been undergoing change for a few years now—looking at
how we can improve our efficiency, implement lower regulatory pathways to
registration and improve our customer service. We began to see the results of
this work in the middle of 2016, and we were very pleased to see our time frame
performance get over 80 per cent in the September quarter.[76]
Digital Strategy
3.62
As part of the relocation process, the government will provide '$288 000
to support developing a fully-costed digital strategy to underpin the APVMA's
new business model for operating from Armidale'.[77]
The department has stated that this approach will 'bolster its relocation' and
provide a further 'risk mitigation measure'. [78]
3.63
In correspondence to the Minister, Ms Arthy stressed the practical role
that the digital strategy would play for APVMA and its relocation:
I propose to change the business model of the APVMA and
enable regulatory scientists to work remotely.
While my strong preference is to have regulatory scientists
based in Armidale—and incentives will be provided to staff to encourage them to
relocate—having the option to work remotely will enable me to retain current
expertise and open up options for recruitment from elsewhere in Australia.[79]
3.64
Notwithstanding this, the CEO warned that this approach would not enable
the APVMA to maintain its current workforce numbers and capability:
Please note that I don't expect this approach to fully offset
the risks posed in relation to access to scientific expertise as I anticipate a
number of staff will retire or choose not to work remotely, meaning there will
likely be a smaller pool of scientists interested in obtaining employment with
the APVMA, both in the lead up to relocation and once in Armidale.[80]
3.65
The APVMA has been clear that it does not intend to operate an office in
Canberra for remote workers. Mr Marks, CPSU delegate at the APVMA provided his
assessment of the remote working policy, especially if remote workers are
compelled to work from home isolated from their colleagues:
That is one of the main concerns that the staff have, and
that is why they are very keen to get the remote working policy draft and to be
consulted on it, because that is exactly what staff said: 'How will we have
collaboration within our immediate work group? How will we have collaboration
between the work groups?' IT management could be a bit of a nightmare because
you could have people in Bungendore, Yass and Canberra. These concerns may not
be insurmountable, but nobody has put together a package indicating how it might
work.[81]
3.66
In evidence to the 2016–17 Additional Estimates hearing of the RRAT, Ms
Arthy noted that the funding envelope of $288 000 would not cover the
implementation of the digital strategy. Ms Arthy was not able to provide an
indicative figure for the implementation, but noted that 'the remote working
relies on our IT systems being completely rebuilt'.[82]
Again, at the committee's Canberra hearing, Ms Arthy was not able to provide a
costed figure on the digital strategy beyond an acknowledgement that it would
be a 'multimillion' dollar figure.[83]
3.67
Under further questioning, Ms Arthy and the department told the
committee that not only was the strategy un-costed, but that when the figure is
finally announced, it would be considered outside the 'standard budget processes'.[84]
3.68
The committee was also informed that the digital strategy would be
developed and costed, agreed to by government and then put out for consultation
with the ARAC.[85]
Additional mitigation measures
3.69
Some submitters have flagged additional measures which may be used to
mitigate the APVMA relocation if it goes ahead.[86]
3.70
Although opposed to the move, the NSW Farmers Association made a number
of constructive suggestions to mitigate the disruption that will be caused by
the relocation. The NSW Farmers Association told the committee that the
relocation should occur in a 'staged manner':
This
could begin with the transfer of some limited functions now, with a staged
transfer of responsibilities to Armidale over time. This will ensure the
retention of knowledge within the organisation along with the opportunity to
refresh with new staff in a new setting...
The Association would support the relocation on the basis
that it was voluntary and staged, enabling those scientists willing to move to
Armidale now to do so, while preferring new scientists to be based in Armidale
as vacancies arise.[87]
3.71
As noted earlier, the NSW Farmers Association also recommended that a
co-located space be retained or established for remote workers who would remain
in Canberra. The committee notes that such an approach would preserve elements
of the APVMA workforce who do not wish to relocate but would otherwise remain
working at the APVMA. Those who leave the APVMA as a result of natural
attrition could then be replaced with new staff in Armidale.
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