Regulatory reform is a long, hard process, but will be worth it in the end.
Food regulations are detailed and prescriptive, and while some products do not always pass the sniff test for commonsense, most meet Australia’s high standards of health and safety.
Importantly they are well documented and reasonably transparent, and food manufacturers and importers have a sporting chance of knowing the rules.
It is not a major exaggeration to suggest we currently have one specialist regulator for every aisle of the typical supermarket, and a mess of overlapping regulation that creates costs, complexity and uncertainty for business. To give some idea of the extent of regulation, here is what is involved for a non-food FMCG product.
- National Measurement Institute requirements for pack marking
- Australian Consumer Law requirements and prescribed standards such as cosmetic ingredient labelling
- Therapeutic Goods Administration requirements for listed over-the-counter pharmaceuticals
- National Industrial Chemicals regulation of ingredients, including importer registration fees
- Environmental Protection Agency requirements around packaging and waste
- Hazardous Substances and Dangerous Goods regulations.
The Australian Food & Grocery Council (AFGC) is committed to regulatory reform that ensures the level of regulation is appropriate and does not strangle the opportunity of the sector. Further, the council is in it for the long haul because reform can be a long, grinding process. For example, three years ago the AFGC commissioned research with its members to identify reforms for the sector. Despite the intervening years, this report is just as relevant today.
Five major problems with the regulatory practice for food and groceries were revealed by the research.
- Reinventing the wheel, where international standards were not accepted, resulting in duplication and overlap
- Not achieving best-practice regulation, where basic requirements for regulatory impact statements were either not completed, or were poorly completed
- Regulatory conservativism and high-risk outlooks that negatively impact on jobs, the cost of living, and health and safety
- Australian-specific standards that impact export opportunities
- Regulation creep, resulting in over-regulation and onerous approval processes.
We face three main consequences from these regulatory trends. First, consumer choice will be limited by global companies simply deciding not service the Australian market, which in global terms is remote and small. Secondly, Australia’s high, even excessive, costs for doing businesses can flow through to higher consumer prices. Thirdly, local investment, employment and growth opportunities are lost as competing countries become more attractive places to do business.
It is important to note that we have made some progress in driving sound regulatory reforms for the sector. The Australian government has developed an express statement of expectation around best-practice regulation, and has recognised the importance of accepting international risk assessments and product approvals.
Time for change
In many cases, policy reviews have been initiated to address specific issues identified by the AFGC reform agenda, including, for example, front-of-pack measurement markings.
While due process is vital to any regulatory debate, it is disappointing that actual reform in these areas remains elusive. Actual reform is what is needed if the FMCG sector is to remain responsive to consumer demands and social expectations. It is time for regulators to accept international risk assessments, rather than finding reasons not to do so. It is time to change laws so actual benefits can start to be realised.
The FMCG industry contributes almost $120 billion to the national economy, or 30% of Australian manufacturing, with a value add of more than $32 billion in 2013-14. Non-food manufacturing employed 28,500 Australians in 2014-15.
Meanwhile, the AFGC continues to ensure governments take stock of what is important to our national quality of life, and perhaps think twice about placing even more burden on the goose that lays Australia’s manufacturing golden egg.
Chris Preston, director of legal and regulatory, Australian Food & Grocery Council
