The Food Standards Amendment (Truth in Labelling—Palm Oil)
Bill 2011 seeks to amend the Food Standards Australia New Zealand Act 1991
and the Australian Consumer and Competition Act 2010. If passed, it
would require Food Standards Australia New Zealand (FSANZ) to develop and publish
a standard requiring food producers to label palm oil on packaging if it were
an ingredient in the product or had been used in its production. It would also
specifically list palm oil as a characteristic of all goods in relation to the
misleading conduct provisions in the Australian Consumer Law.
The drivers behind the Bill are claims that the rates of
deforestation in Indonesia and Malaysia are reducing habitat for orangutans and
that orangutans are in danger of extinction. Deforestation is in turn said to
be driven by agricultural interests in these countries clearing land to plant
oil palms. This is a very productive crop, which can deliver yields five or
more times per hectare than other oil crops.
The committee understands the strong community support for
the goals of the Bill. Zoos Victoria gave evidence of its online and hard copy
campaigns where thousands of Australians expressed concern about the connection
between palm oil and the reduction of orangutan habitat.
However, the committee has come to the view that the Bill
will not bring about the desired result. Instead, it will have a range of
unintended consequences that will cause a great deal of damage to our
commercial arrangements and international relations. Indeed, one industry
group, Accord Australasia, described the Bill as ‘reckless’.
For example, its
only legal effect for food labelling is to require FSANZ to draft a food
standard and publish it on its website. In order for the States and Territories
to enforce the standard, it would have to be determined in accordance with the
processes they have agreed to, which has not occurred. In short, the Bill is
not enforceable as it operates outside of agreements between the Commonwealth,
State, Territory and New Zealand Governments and its passage could lead to
inconsistencies in labelling across these jurisdictions.
In relation to
the Australian Consumer Law, the Bill will not change its legal effect.
Currently, 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.
overlooks the fact that much of the legislative power in Australia resides in
the States and Territories. In order to generate the benefits of a uniform
national market, complex processes and negotiations are required to harmonise
regulatory systems. In the case of consumer law, the Productivity Commission
estimated in 2008 that the gain to the economy from uniformity is $4.5 billion
annually. The Bill simplistically overrides these important commercial
arrangements without addressing the risks.
The Bill also
places our international relationships at risk. The food regulation treaty
between Australia and New Zealand states that neither party can amend their
legislation regarding FSANZ without effectively consulting the other party.
This has obviously not occurred. Further, singling out palm oil means that it
is more discriminatory than necessary to fulfil a health or environmental
objective. Australia would then be at risk of a trade dispute under WTO rules
and Malaysia and Indonesia have already indicated that they are prepared to
take this step.
feature of the Bill is that, separately to it, the Council of Australian
Governments has initiated a review of food labelling in Australia. The
Government released the review report, Labelling Logic, in January this
year. Recommendation 12 states that, where sugars, fats or oils are added as
separate ingredients in a food, the label should list the actual ingredients.
This is already the approach in the United States and will most likely become
law in the European Union.
The whole of
Commonwealth, State, Territory and New Zealand Government response to Labelling
Logic, which is under development, is expected to be considered by
the Australia and New Zealand Food Regulation Ministerial Council on 9 December
2011. Given that a rigorous process is covering the Bill’s subject matter,
there is even less reason to proceed with it. Therefore, the committee has
recommended that the Bill should not proceed.
I would like to
thank the organisations and individuals that assisted the committee during the
inquiry through submissions or participating in the hearing in Canberra. I also
thank my colleagues on the committee for their contribution to the report.
Julie Owens MP