National Competition Policy Review of the Imported Food Control Act 1992

Executive Summary

Overview
Timeliness of the Review
Factors leading to market failure
Costs and benefits
Considerations
Conclusions

List of recommendations

Recommendation 1 - Objective of the Imported Food Act
Recommendation 2 - New combined surveillance category
Recommendation 3 - Inspection levels and strategies for risk
Recommendation 4 - Inspection rates not be detailed in the legislation
Recommendation 5 - Legislation includes provision for imported food
Recommendation 6 - AQIS investigate the use of the tariff code system
Recommendation 7 - AQIS and ANZFA allocate adequate resources
Recommendation 8 - Accredited laboratories be permitted to analyse imported food
Recommendation 9 - AQIS provide notification of results and releases to importers
Recommendation 10 - AQIS facilitate the development and implementation of a system
Recommendation 11 - Labeling conform to Australian standards
Recommendation 12 - Policy of release on sampling for non-risk categorised foods
Recommendation 13 - AQIS to expand the use of certification agreements
Recommendation 14 - AQIS to enter into compliance agreements with importers
Recommendation 15 - AQIS investigate and institute changes to AIMS
Recommendation 16 - AQIS define, develop and use performance indicators
Recommendation 17 - Competency-based, comprehensive training program
Recommendation 18 - Review of all regional IFIP operations
Recommendation 19 - Legislation sanctions should be reviewed
Recommendation 20 - Formal Memorandum of Understanding or service level agreement
Recommendation 21 - Reform the current consultative committee - Imported Food Program
Recommendation 22 - AQIS develop and implement a communications strategy
Recommendation 23 - The Imported Food Act be retained

Executive summary

Overview

The Imported Food Control Act Review is part of the comprehensive examination of legislation being undertaken by the Commonwealth Government to ensure compliance with the National Competition Policy. The principle behind National Competition Policy, as stated in the Hilmer Report, is that it "seeks to facilitate effective competition to promote efficiency and economic growth while accommodating situations where competition does not achieve efficiency or conflicts with other social objectives". This Review focuses on those parts of the Imported Food Control Act 1992 which restrict competition or which result in costs or benefits for business.

The Review received 28 written submissions from a broad cross-section of the food importing and processing industry, government departments and consumer representatives. In addition, the Review Committee consulted with food importers and customs brokers, peak industry and consumer organisations, relevant government instrumentality's and health experts. The Review Committee undertook industry site visits and held discussions with policy and operational staff of Australian Quarantine and Inspection Service (AQIS) responsible for the Imported Food Inspection Program (IFIP). The Committee released its Draft Report at the beginning of October, and nineteen responses were received.

Approximately ten percent of the food consumed by Australians is produced overseas. Because Australia has no direct control over food production in exporting countries, a system was introduced to ensure compliance of imported food with Australian public health and food standards. To achieve that objective the Imported Food Control Act has relied, in the main, on barrier inspection and end-point testing.

Timeliness of Review

The Review has occurred at a time when food safety regulation and food safety practices in Australia and overseas are undergoing major change. At the same time, there is rapid growth in world food trade, Australian food consumption patterns are changing and there is increasing consumer concern about food safety. Much of the food now consumed by Australians is relatively underprepared or "fresh" compared to the traditional thoroughly cooked or salted foods. Such foods come with higher inherent risk if not prepared under adequate safety regimes. In that regard, the development and application of preventive safety programs, such as those based on a HACCP approach, have been found to be more effective in producing safe food than traditional end-product inspection and testing.

Factors leading to market failure

The Review Committee has examined the nature of the food market and identified a number of factors pertinent to the food industry, which can lead to market failure and impede the efficient operation of the market. Government regulation through the setting and enforcement of food standards provides confidence to consumers that commonly available foods are safe for human consumption and requires manufacturers to identify the contents of their food. Another major source of market failure in the food sector results from the costs arising from the sale of contaminated food not being fully borne by the suppliers of the food but spilling over to the wider community.

Costs and benefits

The Review Committee examined the costs and benefits of the Imported Food Control Act and, where possible, attempted to quantify them. The costs of the scheme were estimated to be in the order of $9 million annually, representing 0.25 percent of the value of food imported into Australia. These costs are largely borne by the importing industry and consumers. Where imported foods are used as ingredients for further processing, export competitiveness may be affected. Benefits relate mainly to the reduction in costs of illness. Based on only three bacterial contaminants in imported food detected by IFIP in 1997, the scheme is estimated to have potentially saved Australians at least $21 million for that year in medical expenses and lost production. The estimate of the benefits is considered conservative because it does not take into account all failures detected by the program or the educative and deterrent effects of the scheme. In the absence of such a scheme, it is likely that the incidence of sub-standard or unsafe food entering the Australian market would increase. The Review Committee recommends that the Imported Food Control Act be retained and that changes be made to the legislation and the operation of the scheme to increase its effectiveness and efficiency.

Considerations

In developing its recommendations, the Review Committee was cognisant of the need for the Act to be consistent with Australia's international obligations and trade objectives, and for it to be compatible with advances in food processing and food safety. The Committee's recommendations reinforce the conformity of Australia's controls on imported foods with the principles of the Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade. In order to maintain the relevance and effectiveness of the Act, it is important that the Act allows the delivery of a program that adheres to scientific risk-management principles, and is performance-based, transparent and flexible, consultative, efficient and effective.

Conclusions

On the basis of its analysis and consultation with stakeholders, the Review Committee concluded that the best way to ensure that imported food complies with Australian public health and safety standards is to develop a partnership (or co-regulatory) approach between industry and government. The partnership approach will encourage industry to take greater responsibility for ensuring food safety while, at the same time, retaining government control over the food importing system through regular government-controlled audits. The changes recommended will lead to:

  • increased industry responsibility and the use of compliance agreements with the importer, based on quality assurance-type systems;
  • greater flexibility to adopt the method of compliance which best suits an importer's operations;
  • improved targeting of resources through greater use of risk profiling and performance-based testing;
  • simplification of the inspection system by reducing the inspection classifications (categories) from three to two;
  • reduction in incorrectly referred food through improved methods of dealing with labeling failures and enhancement of the tariff code system;
  • increased contestability in the market for laboratory services;
  • improved communication through a reconstituted consultative body and enhanced communication strategies;
  • better management and operational effectiveness through the development of performance indicators and improved training of staff; and
  • more appropriate enforcement.
The Review Committee's recommendations provide the basis for a more effective and efficient imported food safety system to ensure the safety of imported food and to provide the flexibility to respond to the changing food safety environment.

List of recommendations

Recommendation 1

The Review Committee recommends that the Act be amended in order to more clearly state its objectives. The following should be considered:

  • The objective of the Imported Food Control Act is to provide for the compliance of imported food with the Australian public health and food standards.
Recommendation 2

The Review Committee recommends that a new combined surveillance category be established in legislation for all foods other than risk categorised foods.

Recommendation 3

The Review Committee recommends that:

  • assessment be undertaken by AQIS, in consultation with stakeholders, to determine appropriate inspection levels and strategies for risk and surveillance foods to achieve the objectives of the Act; and
  • AQIS consult with stakeholders to develop and implement an assurance regime that is based on individual and collective performance in the imported food industry.
Recommendation 4

The Review Committee recommends that:

  • inspection rates not be detailed in the legislation; and
  • legislation specify the factors to be taken into account when setting inspection strategies and rates.
Recommendation 5

The Review Committee recommends that the legislation includes provision for imported food to be tested specifically for the purpose of policy development by Australia and New Zealand Food Authority (ANZFA) and AQIS, this testing, as now, to be funded by government.

Recommendation 6

The Review Committee recommends that AQIS investigate the use of the tariff code system with a view to achieving more focussed referrals of imported food.

Recommendation 7

The Review Committee recommends that AQIS and ANZFA allocate adequate resources to ensure operational effectiveness of the Imported Food Inspection Program.

Recommendation 8

The Review Committee recommends that suitably accredited laboratories be permitted to analyse imported food samples for both risk and surveillance categories of food.

Recommendation 9

The Review Committee recommends that AQIS provide notification of results and releases to importers for all foods tested under the Imported Food Inspection Program.

Recommendation 10

The Review Committee recommends that AQIS facilitate the development and implementation of a system to verify the validity and accuracy of test results provided by laboratories.

Recommendation 11

The Review Committee recommends that:

  • the legislation specify that labeling conform to Australian requirements at the time of inspection or prior to the product leaving the importer's premises (which ever comes first);
  • the legislation specify that failures for labeling should be recorded and actioned against the importer, rather than the producer;
  • the use of Holding Orders against producers for minor labeling failures be discontinued; and
  • AQIS, in consultation with relevant agencies and industry, develop a system to verify labeling compliance of imported foods, post border.
Recommendation 12

The Review Committee recommends that AQIS continue the current policy of release on sampling for non-risk categorised foods.

Recommendation 13

The Review Committee recommends that legislation be amended to permit AQIS to expand the use of certification agreements with other countries' food inspection authorities and that it build more rigour into the present certification system, by provision for:

  • review of agreements every three years;
  • linking on-site audits to the country's compliance history;
  • improved flexibility in relation to inspection rates, including removing them from the legislation (as in Recommendation 4); and
  • adoption of an appropriate charging structure to minimise cross-subsidisation, while encouraging uptake of certification.
Recommendation 14

The Review Committee recommends that:

  • legislation be amended to clearly allow AQIS to enter into compliance agreements with importers based on approved quality assurance-type arrangements;
  • AQIS develop a compliance agreement option that includes specifications for importers, and auditing functions consistent with other inspection systems' functions conducted by AQIS;
  • the compliance agreement option has the ability to cover the entire production chain and, where appropriate, the transport chain; and
  • overseas suppliers be encouraged to enter into approved quality assurance arrangements with AQIS by permitting these arrangements, where appropriate, to be sourced from the importer's own QA systems.
Recommendation 15

The Review Committee recommends that AQIS investigate and institute changes to AIMS that would ensure effective administration of IFIP, including:

  • databases that are accurate;
  • reporting modules which provide information relevant to management requirements;
  • reporting modules with improved flexibility to meet the need for queries and for changes to requirements; and
  • a system which provides information to support field activities.
Recommendation 16

The Review Committee recommends that AQIS define, develop and use performance indicators to ensure efficient and effective program delivery.

Recommendation 17

The Review Committee recommends that a competency-based, comprehensive training program, co-ordinated by a National IFIP Training Officer, be developed and delivered to all officers undertaking IFIP inspections.

Recommendation 18

The Review Committee recommends that a comprehensive review of all regional IFIP operations be undertaken as soon as practical to identify and rectify present inconsistencies while the training package is being developed, and that monitoring of the quality of service should be an ongoing function.

Recommendation 19

The Review Committee recommends that:

  • legislative sanctions should be reviewed for effectiveness, appropriateness and conformity with the Criminal Code Act 1995;
  • the size of the penalty be struck with reference to analogous legislation (eg, State Food Acts, Quarantine Act 1908, etc), via the normal process of consultation with the drafters and the relevant areas in Attorney-General's;
  • appropriate sanctions be developed with the introduction and extension of certification and approved quality assurance arrangements; and
  • legislative sanctions have a proper legislative basis and suitable avenues of appeal and redress, and that they are transparent, and imposed in an accountable manner.
Recommendation 20

The Review Committee recommends that a formal Memorandum of Understanding or service level agreement with the Australian Customs Service be established for imported foods.

Recommendation 21

The Review Committee recommends that AQIS, together with ANZFA, reform the current consultative committee for the imported food program with a view to making it consistent with the consultative arrangements for its other programs, ensuring shared responsibility, transparency in decision making, broad based representation and full consultation among stakeholders.

Recommendation 22

The Review Committee recommends that AQIS develop and implement a communications strategy that:

  • provides all stakeholders with timely and detailed information;
  • provides transparency in imported foods policy and operations;
  • and that AQIS, in co-operation with other agencies:
  • develop an overview booklet for food importers containing details of all relevant agencies and their requirements; and
  • establish an inter-agency "shopfront" facility to disseminate information about the responsibilities of the various government agencies involved in food importing.
Recommendation 23

The Review Committee recommends that, in line with considerations described in this Report, the Imported Food Control Act 1992 be retained, with:

  • timely amendment of legislation consistent with Recommendations 1, 2, 4, 5, 11, 13, 14 and 19; and
  • enhancement of administrative processes supporting the legislation consistent with the other recommendations in this Report.
Last updated on 23 Oct 2007