Chapter 2 Analysis of the Bill
2.1
This chapter analyses the Bill in relation to five key issues that were
raised throughout the inquiry. These were:
n its unintended
consequences;
n whether the Bill
properly informs consumer choices in relation to health risks;
n whether the Bill properly
informs consumer choices in relation to deforestation;
n whether costs to
industry would increase and by how much; and
n its effects on
international trade.
2.2
For some of these issues, the evidence was contradictory and the
committee was not able to draw a definitive conclusion. Where the evidence on
an issue was clear, the arguments opposed the Bill. In no case did the
committee find clear evidence in support of the Bill.
Unintended consequences
Background
2.3
The Bill seeks to amend two Acts: the Food Standards Australia New
Zealand Act 1991 and the Australian Consumer Law under the Competition
and Consumer Act 2010. Both Acts have been the product of a great deal of
negotiation and agreement between the Commonwealth and the States and Territories.
2.4
The Department of Health and Ageing advised the committee that the
reason for this approach for food standards is that the Commonwealth does not
have power under the Constitution to legislate for food. Regulation (including
legislating) and enforcement in this area is primarily the responsibility of
the States and Territories. However, by setting up an agreed national system,
which has taken ‘many decades’, Australia now enjoys the benefits of nationally
consistent food standards. The main cost of this system is the complexity
required to coordinate and take into account the views of the different
jurisdictions.[1]
2.5
As the Department of Health and Ageing noted, the same reasoning applies
to the amendments to the Australian Consumer Law.[2]
Treasury stated that this legislation originated in a Productivity Commission
report in 2008, which estimated that the national economy would benefit by up
to $4.5 billion a year if the different consumer laws across the country were
standardised. The benefits would accrue through such mechanisms as reduced
compliance and transaction costs.[3]
2.6
In evidence, Treasury confirmed that many firms operate at a national
level, stating:
We have all been round long enough to know that the economy has changed markedly since 1900. We basically
deal in national markets.[4]
2.7
In other words, the two Acts are coordinating legislation that the States
and Territories follow and support because they are involved in policy
development, and there are substantial benefits in having a nationally consistent
approach.
Analysis
2.8
Treasury and Food Standards Australia New Zealand (FSANZ) both gave
evidence to the committee that the Bill would be of limited effect. In the case
of FSANZ, this was because it is only changing a coordinating Act and that the
processes under the various pieces of legislation that trigger legal effect
have not been complied with:
The first thing to note if
this bill were passed, which would oblige FSANZ to prepare the standard, is
that the standard would not go into the Australia New Zealand Food Standards
Code, because it has not been developed under the process that has been agreed
through the intergovernmental agreements. Essentially that standard would go
onto the website and would sit there. In that respect there would be no enforcement
of the standard because States and Territories would not have adopted it. The
mechanism by which they adopt standards is that, once they go into the code,
then they are automatically adopted into State and Territory legislation under
their food acts. In this instance that would not happen because the standard
would not be in the code.[5]
2.9
In the case of Treasury, the Bill would be of limited effect because it
would not materially change the meaning of the current section 33 of the
Australian Consumer Law, which is the misleading conduct provision:
Our submission mentioned that the current section 33 is
already sufficiently broad enough to capture
characteristics, including palm oil being a characteristic of a good. Our view
is that you really do not need to amend section 33 to capture palm oil as a
particular characteristic of a good.[6]
Can I just add there that my understanding is that if a
good—talking here about food—listed a list of ingredients and the good actually
included palm oil, it would be misleading under the current section 33 if that
list did not indicate that it included palm oil. Just to repeat that: if the
good lists its ingredients and it actually contains palm oil, it would be
misleading to omit palm oil from that list under the current law.[7]
2.10
Therefore, if a producer of food provided an ingredients list on the
packet and the label omitted to mention palm oil when this was an ingredient,
then it would breach section 33 regardless of whether the Bill became law or
not. However, current labels do not breach section 33 because they do not claim
to be a complete ingredients list and there is no legal requirement for them to
fully list the ingredients either. The Bill would not change the operation of
section 33 if it became law.
2.11
Further, the Bill has the potential to jeopardise the benefits gained
from nationally consistent legislation, particularly in relation to the
Australian Consumer Law. Treasury stated in evidence:
There is a potential consequence if the Commonwealth
parliament passed the law and one or more of the States or Territories decided
not to apply that. That could result in individuals and unincorporated
businesses in those jurisdictions being subject to a different set of
requirements. As I understand it, there was a brief period 20 or 30 years ago
where the consumer law was quite homogeneous across the country, and quite
quickly that unravelled.[8]
2.12
The committee also notes that the current food labelling and consumer
law systems have a great deal of support from industry. For example, the
Australian Food and Grocery Council mentioned in evidence that the Bill has
‘circumvented the process,’ that ‘The process is really quite clear’ and that
FSANZ had already considered an application from the public to specifically
label palm oil and rejected it.[9] In relation to the
Australian Consumer Law, Accord Australasia stated that, ‘the decision of the
Senate to tinker with this law for very specific single-issue legislative
goals, such as palm oil labelling, to be somewhat reckless’. It also described
the Bill as a ‘willy-nilly piecemeal amendment’ of an ‘important micro-economic
reform law’.[10] The Bill has increased
risk for food and cosmetic producers because it has bypassed widely known and
supported regulatory systems.
2.13
Finally, the committee observes that the current system is already
considering labelling specific vegetable oils through the Labelling Logic
review. Implementing recommendation 12 of the review would make practice in
Australia similar to that in Canada and the United States. The Bill is
superfluous in this context.
Conclusion
2.14
One of the strongest reasons to reject the Bill is that it interferes with
stable, well known processes that deliver uniformity to Australian consumers
and businesses. The Bill does not recognise the regulatory systems that give
Australia uniformity while remaining true to our constitutions, where a great
deal of lawmaking power rests with the States and Territories.
2.15
The same food labelling system that the Bill seeks to override is
already considering labelling individual vegetable oils. The committee is of
the view that this process should run its course.
Consumer choices about health risks
Background
2.16
The Palm Oil Action Group stated that the Bill was worthy of support
because it would allow consumers to determine if a product has high levels of
saturated fat. The Group also argued that higher intake of saturated fat is
associated with increased rates of diabetes, heart attacks and angina.[11]
Analysis
2.17
The counter argument presented to the committee is that current labelling
standards already require that the level of saturated fats be included in
labels and that it is an individual’s total intake of saturated fats that is
the most relevant to health outcomes. Sanitarium made this point, as did
Professor Sinclair of Deakin University and the Department of Health and Ageing.[12]
2.18
Further, Sanitarium raised the possibility that, if palm is the only oil
that is specifically labelled, then consumers may make purchasing decisions
based only on this criterion, without considering the more important, general
question of the total amount of saturated fats in a product:
The TILPO Bill would single out [palm] oil, even if it were
added at nutritionally insignificant levels. A consumer driven to avoid palm
for ‘health’ reasons may end up choosing products higher in saturated fat than
one containing a small amount of palm oil. Not all saturated fats are the
functional equivalent of palm oil, and for that reason are not necessarily
nutritionally equivalent at the ‘functional’ level of addition.[13]
2.19
In fact, palm oil has fewer health implications than other oils that are
high in saturated fats. The Department of Health and Ageing advised the
committee that, ‘There are no known safety issues with palm oil’.[14]
This contrasts with other oils such as peanut, soybean or sesame. FSANZ stated
in evidence that these are specifically labelled because they represent an
allergy risk.[15]
Conclusion
2.20
The committee concludes that there is no particular health reason to
specify palm oil alone on food labels if other saturated fats are not labelled
in the same way. What is important for health outcomes is the amount of
saturated fat in the food and the amount of particular foods that consumers
choose to eat. Specifying palm oil singly may lead consumers to focus on one
ingredient at the expense of total intake of saturated fats, when the latter is
the relevant factor for health outcomes. Therefore, the Bill may have the
result of distorting consumers’ choices about their health.
Consumer choices about deforestation
Background
2.21
One reason for popular support for the Bill is the claim that Malaysia
and Indonesia are clearing forest to increase palm oil production. The
Australian Orangutan Project stated that the Sumatran orangutan is critically
endangered with less than 6,300 alive in the wild. The Bornean orangutan is
endangered with 55,000 alive in the wild. Eighty percent of the current
population live outside protected areas. Clearing forest will reduce food for orangutans
and reduce the population.[16] As the Taronga
Conservation Society Australia stated in evidence, ‘the only chance for
survival, of course, is protection of habitat’.[17]
2.22
This issue has generated a great deal of concern in the community. In
2009, Zoos Victoria ran a public campaign in support of protecting the native
habitat of orangutans and the need to label palm oil in food. The campaign produced
approximately 70,000 online responses where individuals wanted to have palm oil
labelled in order to prevent the loss of orangutan habitat. Zoos Victoria also
received approximately 164,000 cards signed by individuals to the same effect.[18]
2.23
The Palm Oil Action Group described the business model behind palm oil
production:
Palm oil is one of the most profitable crops in the world,
mainly because the true cost of the degradation of the environment is not
costed into it. As a palm oil company, your first preference is to get some
beautiful rainforest, chop down the trees and sell them for a massive price and
then plant palm oil on that land. Your second choice, however, is to take
already degraded land and plant palm oil on that ...
... they can chop down the trees and sell them for a terrific
price, as the introduction to that bit of commerce; so they have a large amount
of money in the bank to then go and plant the palm oil trees with ...
[Pulp paper and rubber are] nowhere near as profitable, which
is why there is so much palm oil and so little of all the other things. In
fact, in Malaysia virtually all the rubber plantations have now been planted
out as palm oil plantations and, no, the pulp paper industry is nowhere near as
profitable at the moment as the palm oil industry.[19]
2.24
In other words, conservation groups argued before the committee that economic
forces and development are reducing natural habitat for orangutans and reducing
their numbers in the wild. The Institute of Public Affairs interpreted events
differently. They suggested that poverty was the underlying cause of
deforestation as farmers seek to raise their incomes through commodities that
have international demand.[20]
2.25
These developments have encouraged industry to develop the Roundtable on
Sustainable Palm Oil (RSPO) on a voluntary basis. The Roundtable grew out of
discussions between the World Wildlife Fund and industry between 2001 and 2003.
In 2004, the Roundtable was established under Swiss law. It is formally located
in Zurich with offices in Kuala Lumpur and Jakarta. The Roundtable’s mission is
to, ‘transform markets to make sustainable palm oil the norm’.[21]
2.26
There is a number of criteria required to classify palm oil as
sustainable. In evidence, the Palm Oil Action Group stated that one of the main
criteria is that land cannot be cleared for planting after a certain date.[22]
Documentation produced by the Roundtable indicates that primary forest or areas
of high conservation values cannot be cleared for palm oil production after
November 2005.[23] The principal goal for
many firms and industry groups during the inquiry is to use sustainable palm
oil by 2015. In most cases this statement was made with the caveat of ‘supplies
permitting’.[24]
Analysis
2.27
This aspect of the inquiry was subject to a high degree of factual
disagreement. For example, the Malaysian Palm Oil Council stated in evidence
that a large degree of forest will be preserved:
... for every one hectare of land developed for oil palm,
four hectares of forest are preserved. This is due, in large part, to the
remarkable properties of the oil palm being high yielding but, more
importantly, to Malaysia's decision to ensure that its environment would be
preserved in perpetuity for our people, even though we know that revenue from
forest land is 30 times less than revenue from agricultural land.
We hope that you recognise the commitment for what it is: an
unsolicited promise to curtail or sacrifice economic development for the
national and world good. We set a high standard for ratio of forest to total
land area in our country of at least 50 per cent.[25]
2.28
Conversely, the Taronga Conservation Society Australia argued that the
50 per cent figure does not fully reflect how the land will be used in future:
A report from the Malaysian Timber Council lists that, of the
total forest area in Malaysia, 74 per cent of that land is allocated as
permanent reserved forest. So that sounds good. However, if we look at the
detail, the report lists that the majority of this permanent reserved forest—78
per cent of it or 11 million hectares—is actually allocated to a term called
'production forests' for growth and harvesting for timber export. So the
landmass and the vast tracts of production forests are grouped together with
the lesser areas of protected forests. This produces some confusing statistics
and can cause us to misunderstand the impact on the species that rely on these
habitats. The source for that information is Malaysia: sustainable forest
management, March 2007, page 7, the Malaysian Timber Council. So that is the
Timber Council's own understanding of how the reserved forest is split up.[26]
2.29
Another example of the wide difference in views relates to the number of
orangutans in the wild. The Malaysian Palm Oil Council stated that numbers are
increasing, whereas the Australian Orangutan Project stated that numbers are
decreasing.[27]
2.30
The effectiveness of the RSPO was also the subject of debate. The Palm
Oil Action Group argued that the system does not work in practice because of
the difficulty in drawing a distinction between an independent audit of
compliance with RSPO requirements and simply being a member of the RSPO:
But, importantly, it needs to be certified by an independent
body and not by the RSPO themselves. This is one of the big problems—people are
claiming that their palm oil is okay because they are members of the RSPO and,
so far, the RSPO has expelled nobody.[28]
2.31
Industry’s response has been that it has taken some time to develop the
appropriate production and supply chains to commence large scale production of
palm oil. The New Zealand Food and Grocery Council stated:
Efforts to date have been criticised but the momentum has
taken time to build and in 2010 the volume of certified sustainable palm oil doubled from the previous year. If this pace
of sustainability continues, the majority of
palm oil production could be certified as sustainable within 5 years.[29]
2.32
The Department of Innovation, Industry, Science and Research advised
that Roundtable certified sustainable palm oil accounts for eight per cent of
world output.[30] Given that oil palms
take a few years to start bearing fruit, it would appear that this 8 per cent figure
is likely to grow in the next few years.
2.33
A final case of a divergence of views relates to the economic benefits
of palm oil production in Malaysia and Indonesia. World Growth, an
international consultancy, argued that the World Bank has used palm oil as a
way of alleviating poverty:
Since the 1960s the Malaysian Government and the Federal Land
Development Authority(FELDA) has used palm oil as a highly successful poverty
alleviation tool. In just 10 years between 1970 and 1980, poverty levels
amongst oil palm smallholders in Malaysia fell from over 30 per cent to 8 per
cent – the lowest incidence of poverty in any Malaysian agricultural sector.
Poverty levels amongst subsistence farmers including paddy farmers was at 73
per cent at the same time.[31]
2.34
On the other hand, Taronga Conservation Society Australia advised the
committee that the World Bank’s investment arm, the International Finance
Corporation (IFC), had placed a moratorium on palm oil investments due to ‘very
concerning practices by a large palm oil producer’.[32]
2.35
In March 2011, the World Bank and the IFC released their new policy on
investing in palm oil, which ensures that investment decisions will fully
incorporate social and environmental considerations, which are among these
organisations’ goals. The report also states that, ‘The industry has played a
significant role in generating export earnings and reducing poverty in the
producing countries’. The report is supportive of the role of agriculture more
generally in reducing poverty. It states, ‘growth originating in agriculture
has been three times more effective in raising the incomes of the poor that
growth generated from other sectors’.[33]
Conclusion
2.36
Given the shift by palm oil producers, food producers and the World Bank
towards sustainable palm oil, in the committee’s view, the Bill’s focus on the
product palm oil, whether produced sustainably or not, is heavy handed and
ignores the significant work being done to move towards sustainable palm oil by
2015, supplies permitting.
2.37
The committee is of the view that the Bill would not affect
deforestation of orangutan habitats because it will not act on the factors
driving deforestation. Deforestation is occurring because Indonesia and
Malaysia wish to improve their living standards, and one of the most effective
means of doing so is through agriculture. Further, one of the most commercially
successful crops in the tropics is palm oil.
2.38
While the committee is very much aware of community support in
preserving orangutan habitats, the Bill is unlikely to achieve that aim. The
committee notes that the Australian Government already funds projects over $300
million, which seek to address deforestation and illegal logging in South East
Asia.[34]
Costs to industry
Background
2.39
A common theme during the inquiry was that the Bill would increase costs
to industry due to the work required, within a relatively short space of time,
to change labels on a large number of products. The Australian Food and Grocery
Council gave an overall view of the costs to industry:
Firstly, for people to change their labels, the costs range
from about $5,000 for a minor change to about $15,000 for a major change. In
many cases this could be a minor change, depending on the size of the label,
how much you have to rejig it, all that sort of stuff. Of the 30,000 products
on supermarket shelves in Australia, a very large percentage has palm oil. Some
already are labelled, some are not. We do not have the figures on exactly how
many are and how many are not, but it is a new cost.[35]
2.40
Industry representatives from the Australian Chamber of Commerce and Industry
gave a small business view of the potential costs:
When the last mandated labelling changes were put through, we
ran surveys, both nationally through AFGC and locally through the WA Chamber of
Commerce and Industry, and the result there was quite horrifying.
The cost of the labelling change was, on average, $60,000 to each small
business concerned. Across the nation, it was around half a billion dollars.
They are great concerns for industry, and they should be of great concern to
the committee.[36]
Analysis
2.41
The committee accepts that a one-off label change at short notice can
have significant costs for industry and that label changes are a serious
matter. However, a number of factors need to be taken into account. For example,
the committee notes that the cost of a minor change to a label was costed by
consultants for FSANZ in 2008. For eight out of the 11 types of packaging
considered in the study, the cost of a minor change was between $3,000 and
$4,000. For aluminium cans, plastic bottles, and plastic jars, the cost
approaches $5,000.[37]
2.42
Further, the cost of changing a label depends on the lead time in which
industry has to act. In Schedule 1, the Bill gives six months for FSANZ to
develop a food standard requiring the labelling of palm oil. Schedule 2 of the
Bill, relating to amendment of the Competition and Consumer Act will apply to
goods manufactured after 12 months starting from the date of assent. This
compares with the two year period that the Food and Grocery Council states is
the standard minimum time.[38]
2.43
The committee also notes that businesses can turn the cost of a minor label
change into an opportunity to update labels more comprehensively. While there
is still a cost to businesses, they can limit it if their wider business
strategy permits. This argument is similar to comments made by the CEO of
Taronga Conservation Society:
I have to let you know that, throughout the 1990s, I worked
for three multinational organisations in consumer marketing roles, consumer
health care and consumer cosmetics—Wella,
Schwarzkopf and Faulding. I can confirm that, during this time, package
labelling was a useful marketing tool for me and would often include short-term
promotional offers for special information—'new improved' and all those sorts
of things which I am sure that you see on a regular basis as you go through the
aisles. Today—a luxury that I did not have when I was in the industry—we have
digital technology, which has made the process even less of an impost to
consumer packaged goods companies and their marketing departments.[39]
Conclusion
2.44
The committee is of the view that the cost of a label change must be
compared against the benefits that society expects to gain from the improved
information to consumers. For example, if in the unlikely event a common food
ingredient is found to have adverse health effects, then the committee would
expect that food labelling standards would be changed in short order and
products recalled. While the costs to business would be considerable, they
would be far exceeded by the benefits to consumers.
2.45
It is noted that the food sector is competitive and businesses must
constantly monitor costs. Industry groups have advised that the Bill would
result in compliance costs due to the need to re-label certain food and
groceries. While this point is noted it is not the major reason why the
committee is opposed to the Bill.
2.46
As stated earlier, the committee is of the view that there is
considerable doubt that the Bill will deliver its required effect. Further,
there are two very important reasons why the committee opposes the Bill. These
are its unintended consequences, discussed earlier, and its effects on
international trade, which are discussed below.
International trade
Background
2.47
There were two concerns raised about the Bill under this category. The
first was that it potentially breached a food agreement made in 1995 with New
Zealand. The Australian Food and Grocery Council, the New Zealand Food and
Grocery Council, the New Zealand High Commission and the Department of Health
and Ageing all raised this in their submissions.[40]
Article 4(4) of the food regulation treaty[41] between the Governments
of Australia and New Zealand states:
Australia shall not introduce any amendments to the
Australian legislation establishing the Authority, or move government amendment
to that legislation, without effective consultation with New Zealand during
their development. Australia shall use its best endeavours, including
reflection of New Zealand’s position in any relevant papers for the Australian
Commonwealth government, to reach agreement with New Zealand on these, and any
other, amendments to the Australian legislation.
2.48
Article 4(5) applies with similar effect to New Zealand. Article 5(3) states:
Subject to Annexes D and E of this Agreement, neither Member
State shall by legislation or by other means establish or amend a food standard
falling within the scope of this Agreement other than in accordance with this
Agreement.
2.49
The second concern was that the Bill breaches Australia’s commitments
under the World Trade Organisation (WTO). Accord Australasia, the Indonesian
Palm Oil Commission, the Department of Foreign Affairs and Trade, and World
Growth all raised this in their submissions.[42]
2.50
The basis for this claim is that the Bill only requires the labelling of
palm oil and not other oils. Therefore, it may be more trade restrictive than
necessary to fulfil a legitimate objective. The Department of Foreign
Affairs and Trade advised that a legitimate objective should have a:
... domestically focused nexus and can include: prevention of
deceptive practices in Australia; protection of human, animal or plant life or
health in Australia; or protection of the Australian environment.[43]
2.51
The Department of Health and Ageing advised that the European Union is
in the process of mandating more comprehensive labelling of vegetable oils, in
particular that the vegetable origin of the oils used (palm, coconut etc.).
This is also a current requirement in the United States and Canada.[44]
This approach is similar to that proposed in recommendation 12 of the Labelling
Logic review.
2.52
This type of provision does not raise trade issues because it does not
discriminate between different types of vegetable oils.[45]
Although this approach solves one problem, it should be kept in mind that it
would require additional record keeping for businesses and their suppliers
because chemical analysis cannot distinguish the vegetable origin of an oil
once processing takes place. It would also reduce sourcing flexibility for producers.[46]
Analysis
2.53
The position in relation to the food regulation treaty is clear. The
committee is aware of no consultation between the Australian and New Zealand Governments
about the Bill. At the minimum, it would appear that this should occur before
the Bill proceeds any further in the Parliament. The treaty supports economic,
social and political benefits that flow from increased trade with New Zealand,
with which Australia has a very close and highly valued relationship. The importance
of this relationship far outweighs the potential gains from the Bill.
2.54
The Department of Health and Ageing is coordinating the Government’s
response to the Labelling Logic review of food labelling, which is
expected to go to the Ministerial Council on 9 December 2011. New Zealand is
represented on this body.[47] The committee would
expect that, if the Government decided to accept recommendation 12 of the
review, then the appropriate consultations with New Zealand would occur as a
matter of routine.
2.55
The position in relation to Australia’s WTO commitments is also clear.
In the previous Senate committee inquiry, World Growth provided a legal opinion
on the original version of the Bill by Andrew Mitchell and Elizabeth Sheargold of
Melbourne University Law School. Although the Bill has since been amended,
their observations still apply to the new version.
2.56
In particular, the legal opinion states that the original Bill was more
restrictive than necessary to achieve either a health or environmental purpose.
As discussed earlier in this chapter, they key health objective with oils
generally is to describe the saturated fat content of a food, which is already
a labelling requirement. In order to meet an environmental objective, the Bill
would have to show that it reduces the amount of unsustainable palm oil
produced and that this reduction makes ‘a material contribution to’ reduced
deforestation. The legal opinion then states:
Although evidence might be produced to show that the Palm Oil
Labelling Bill would reduce consumption of non-sustainably produced palm oil in
Australia, it would be difficult to establish that this would stop or
materially reduce deforestation in Malaysia or Indonesia. A reduction in the
land used to produce palm oil would not necessarily restrict land clearing.
Deforestation is still likely to occur, to support the production of timber and
other commodities.
Even if it could be shown that the Palm Oil Labelling Bill
would make a material contribution to the objective of reducing or stopping
deforestation, the Bill may still be more trade restrictive than necessary to
achieve that aim. The Bill does not explicitly discriminate between imported
and domestic goods, but it is likely to restrict or distort trade because palm
oil is predominantly produced in Malaysia and Indonesia, and other vegetable
oils that may be substitutes for palm oil (such as rapeseed, sunflower seed and
soya oils) are largely produced in other countries, including Australia. By
making palm oil a less competitive product, the Palm Oil Labelling Bill has the
effect of restricting imports of palm oil from Malaysia and Indonesia to
Australia.[48]
2.57
The first passage is consistent with the committee’s earlier reasoning
that the Bill is unlikely to prevent or slow down rates of deforestation. The
second part shows that Australia is unlikely to win a complaint made by either
country if the Bill became law.
2.58
The Department of Foreign Affairs and Trade noted that, ‘Defending a WTO
dispute is a costly, resource intensive and lengthy exercise’. If Australia was
found to have contravened its trade obligations, Australian exports could be
subject to retaliation in the form of higher tariffs overseas.[49]
Conclusion
2.59
As currently drafted, the Bill most likely contravenes Australia’s WTO
obligations because it only requires the specific labelling of palm oil and not
other oils. Requiring each type of vegetable oil to be labelled, along the
lines of recommendation 12 of the Labelling Logic review, would address
this problem.
2.60
In addition, the Bill is also inconsistent with the food regulation
treaty between Australia and New Zealand, which requires that both countries
effectively consult with each other on changes to food standards. No such
consultation has yet occurred, although the committee expects that it would
occur if the Australian Government accepted recommendation 12. Our
international obligations and the importance of our relationship with New
Zealand are sufficient reasons to oppose the Bill.
Overall conclusion
2.61
The inquiry has demonstrated that some consumers do want accurate
labelling information so that they can make informed decisions about whether
they purchase groceries or goods containing palm oil. The Senate Committee
inquiry into the Food Standards Amendment (Truth in Labelling‑Palm Oil)
Bill, received over 520 submissions mostly from individuals arguing that palm
oil be listed on food and grocery labels. In 2009, Zoos Victoria ran a public
campaign in support of protecting the native habitat of orangutans and the need
to label palm oil. The campaign produced approximately 70 000 online
responses. In addition, Zoos Victoria also received approximately 164 000
cards signed by individuals to the same effect. This level of concern about deforestation
of orangutan habitat for palm oil production cannot be dismissed. However, the
committee does not accept that this is an excuse for passing flawed and
potentially damaging legislation which would not achieve the results intended.
2.62
If the Bill was passed it could have a range of serious unintended
consequences including circumventing the proven food labelling practice
administered by FSANZ. This body advised the committee that if the Bill was
passed it would have to prepare a standard ‘that would not go into the
Australia New Zealand Food Standards Code because it has not been developed
under the process that has been agreed through the intergovernmental agreements’.[50]
This would mean that there would be no enforcement of the standard because State
and Territories would not have adopted it.
2.63
Similarly, Australian Consumer Law would be compromised if the Bill were
passed. Treasury advised that the Bill has the potential to jeopardise the
benefits gained from nationally consistent legislation. This would occur if the
Commonwealth passed the law and one or more States or Territories did not. The
Treasury noted that this ‘could result in individuals and unincorporated businesses
in those jurisdictions being subject to a different set of requirements’.[51]
2.64
In view of these major concerns, the committee is not prepared to
recommend that the House pass defective legislation that would have serious
unintended consequences.
2.65
It should be noted that a process for dealing with all oils has
commenced through the report Labelling Logic: Review of Food Labelling: Law
and Policy. In particular, Recommendation 12 of this report stated:
That where sugars, fats or vegetable oils are added as
separate ingredients in a food, the terms ‘added sugars’ and ‘added fats’
and/or ‘added vegetable oils’ be used in the ingredient list as the
generic term, followed by a bracketed list (e.g., added sugars (fructose,
glucose syrup, honey), added fats (palm oil, milk fat) or added
vegetable oils (sunflower oil, palm oil)).
2.66
On 9 December 2011 the Australian and New Zealand Food Regulation
Ministerial Council will consider a whole of Commonwealth, State, Territory and
New Zealand Government response to the Report, Labelling Logic: Review of
Food Labelling Law and Policy. The committee notes recommendation 12 of the
report and encourages the Ministerial Council to give it serious consideration.
Recommendation 1 |
| 2.67 |
The House of Representatives should not pass the Food
Standards Amendment (Truth in Labelling‑Palm Oil) Bill 2010 because the
legislation is flawed and would result in a range of unintended consequences.
The House should note that an alternative and superior approach to addressing
palm oil labelling is already under consideration.
On 9 December 2011 the Australian and New Zealand Food
Regulation Ministerial Council will consider a whole of Commonwealth, State,
Territory and New Zealand Government response to the Report, Labelling
Logic: Review of Food Labelling Law and Policy. Recommendation 12 of this
reports states:
n That
where sugars, fats or vegetable oils are added as separate ingredients in a
food, the terms ‘added sugars’ and ‘added fats’ and/or ‘added vegetable oils’
be used in the ingredient list as the generic term, followed by a bracketed
list (e.g., added sugars (fructose, glucose syrup, honey), added fats (palm
oil, milk fat) or added vegetable oils (sunflower oil, palm oil)).
The committee supports the Ministerial Council giving
serious consideration to recommendation 12 of the report. |
Julie Owens, MP
Chair
14 September 2011