Bills Digest no. 29 2012–13
PDF version [625KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Moira Coombs and Leah Ferris
Law and Bills Digest Section
10 October 2012
Contents
Purpose
Background
Financial implications
Structure of the Bill
Main issues and key provisions
Concluding comments
Date introduced: 12 September 2012
House: House of Representatives
Portfolio: Health and Ageing
Commencement: Sections 1-3 and Schedule 2 commence on Royal Assent. Schedule 1 commences on 1 July 2013.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.
The Industrial Chemicals (Notification and Assessment) Amendment Bill 2012 amends the Industrial Chemicals (Notification and Assessment) Act 1989 (the ICNA Act)[1] to:
- amend the threshold and tier structure for annual registrations charges
- introduce an application fee for businesses seeking to import or export certain hazardous industrial chemicals
- remove an obsolete provision which enables a fee to be levied for an application process that no longer exists and
- make a number of minor technical amendments.[2]
The Bill also proposes a minor amendment to the Agricultural and Veterinary Chemicals Code Act 1994 (the Agvet Code) which cross references the ICNA Act.[3]
Primarily the proposed amendments seek to give effect to several outcomes arising from a review of the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) cost recovery arrangements conducted in accordance with the Australian Government Cost Recovery Guidelines. This process, together with the resultant Cost Recovery Impact Statement (CRIS) agreed to by Government, are further outlined below.
NICNAS was established in 1990 under the ICNA Act. It is the Australian Government’s regulatory scheme for industrial chemicals within the portfolio of the Minister for Health, with responsibility delegated to the Parliamentary Secretary for Health and Ageing. The Director of NICNAS is a statutory office holder with specific functions under the ICNA Act.[4]
As stated on its website, NICNAS:
provides a national notification and assessment scheme to protect the health of the public, workers and the environment from the harmful effect of industrial chemicals; and assesses all chemicals new to Australia and assesses those chemicals already used (existing chemicals) on a priority basis, in response to concerns about their safety on health and environmental grounds.[5]
NICNAS operates on a full cost recovery basis[6], where the costs involved in implementing the scheme are recovered through imposing compulsory fees on entities seeking to import or manufacture industrial chemicals in Australia.[7] Fees are also charged where NICNAS has provided technical services to other government agencies.[8]
In 2002, the then Minister for Finance and Administration, Senator Nick Minchin, announced the introduction of Australian Government Cost Recovery Guidelines (the Guidelines)[9], to apply across all Government departments.[10] The purpose of the Guidelines was to ‘heighten the transparency, consistency and accountability of cost recovery by government agencies’.[11]
As a result of the implementation of these Guidelines, NICNAS underwent a subsequent review of its current cost recovery arrangements in June 2010.[12] This review involved engaging independent consultants to undertake an Activity Based Costing study (ABC study), releasing a discussion paper inviting submissions from stakeholders and organising face-to-face stakeholder consultation meetings.[13] The outcome of this review was the release of the NICNAS Cost Recovery Impact Statement 2012–13 to 2015–16.[14]
A draft of the NICNAS Cost Recovery Impact Statement 2012–13 to 2015–16 (CRIS) was released on 19 October 2011[15], with the final draft agreed to by the Government in July 2012.[16] The CRIS outlined a number of proposed changes to the NICNAS framework, including:
- better aligning service fees with the costs associated with delivering the relevant services
- amending the annual registration charge tier structure and
- recovering the cost of stage one of the accelerated assessment and prioritisation of existing chemicals.[17]
In considering how service fees could be better aligned, the CRIS provided for the:
- introduction of some new fees
- reclassification of some existing fees and
- abolishment of those fees that no longer apply.[18]
On the 8 September 2011, the Parliamentary Secretary for Health and Ageing, Catherine King, and the Minister Assisting on Deregulation, Senator Nick Sherry, announced that the Government would be conducting a Better Regulation Ministerial Partnership review of the NICNAS.[19]
The review would focus on making recommendations with regard to:
- the role and functions of NICNAS as set out in the ICNA Act and the extent to which they adequately reflect stakeholder expectations and international best practice, having regard to the broader context of chemicals regulation in Australia
- the governance and consultation arrangements of NICNAS and the extent to which they support the effective delivery of NICNAS’ functions
- the efficiency and effectiveness of NICNAS’ operating arrangements and business processes, with particular regard to the protection of human and environmental health, the management of risk, and compliance costs for business and
- any implications for the resourcing of functions currently cost recovered, should the review recommend changed responsibilities.[20]
As stated in the media release:
The review will be undertaken as a Better Regulation Ministerial Partnership between the Minister for Finance and Deregulation and the Minister for Health and Ageing and will build on the recommendations of the Productivity Commission Research Report: Chemicals and Plastics Regulation, July 2008 and relevant commitments made under [the Council of Australian Governments’] COAG’s Seamless National Economy National Partnership Agreement, 2009.[21]
A discussion paper, which outlined various options for reforming NICNAS, was released on the 1 June 2012, with submissions closing on the 27 July 2012.[22]
In her second reading speech[23], Ms King made the following statement:
I am very pleased to report that these amendments have been developed in close consultation with industry, government and the community. The proposed amendments enable NICNAS to provide more equitable cost-recovery arrangements for business. The bill does this while maintaining existing levels of worker safety, public health and environmental standards. And, as I stated, it also provides for the opportunity for the priority assessment of some 38,000 chemicals that sit on the register that are on the inventory that have not been assessed for health and safety, the first 3000 of those to be done in the [next] few years.
These amendments therefore represent a very important step in ensuring equity in regulatory charges and consistency across regulatory sectors. They reflect the government’s commitment to ensure the most efficient regulatory system is in place for industrial chemicals.[24]
As noted above, the amendments proposed in this Bill arise from the review of NICNAS’s cost recovery measures and not from the Better Regulation Ministerial Partnership review of NICNAS (which is still currently underway). Further comments on the timing of the proposed amendments are outlined below.
At its meeting of 28 June 2012, the Senate Selection of Bills Committee determined that the Bill not be referred to any committee for inquiry and report.[25]
The Senate Scrutiny of Bills Committee had no comment to make in regards to this Bill.[26]
The Statement of Compatibility with Human Rights can be found at page two of the Explanatory Memorandum to the Bill. As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011, the Government has assessed the Bill’s compatibility with human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.
In its third report of 2012, the Parliamentary Joint Committee on Human Rights (the Joint Committee) examined all bills introduced in the 10–14 September period, which included this Bill.[27] The Joint Committee advised that it:
…has no substantive comments in relation to this bill as it does not appear to raise any human rights concerns and the statement of compatibility appears adequate.[28]
While acknowledging the Opposition’s support for the Bill, the Shadow Parliamentary Secretary for Primary Healthcare, Dr Andrew Southcott, commented on the timing of implementing the amendments proposed in the CRIS[29]:
A number of industry stakeholders expect that the better regulation ministerial partnership will recommend changes to the cost recovery arrangements of NICNAS as part of broader NICNAS regulatory reforms. The coalition questions the benefit of implementing the cost recovery impact statement through this legislation only months before the better regulation ministerial partnership review is released and responded to, considering the likelihood of further changes to the CRIS. As stated originally, the coalition will not be opposing this bill. We do, however, question the benefit of implementing the cost recovery impact statement before the better regulation ministerial partnership is concluded.[30]
In the stakeholders comments set out in the CRIS, reference is made to concerns regarding the deferment of the amendments until after the current ongoing review of NICNAS has been concluded.[31] However, community and union submissions have emphasised the importance of NICNAS having enough funding to carry out its role, especially when there are 38 000 chemicals waiting to be reviewed.[32]
According to the Explanatory Memorandum, the initiatives implemented by the Bill will be cost neutral.[33] This means that any costs incurred as a result of amending the scheme will be recovered.
The Bill consists of two schedules. Schedule 1 of the Bill addresses the amendments related to cost recovery and the timeframes in which they are to apply. Schedule 2 provides for other minor consequential amendments to both the ICNA Act and the Agvet Code to reflect new laws based on the model Work Health and Safety Regulations 2011.[34]
Main issues and key provisions
Under the ICNA Act, an entity which has imported or manufactured industrial chemicals is required to pay an annual registration fee to NICNAS and be listed on the Register of Industrial Chemical Introducers.[35] In addition to the registration fee, a registration charge is imposed on commercial producers of industrial chemicals with an annual value of imported or manufactured industrial chemicals in excess of $500 000.[36] The amount of the levy is dependent upon the value of the introduced chemicals, with companies importing or producing more than $5 000 000 worth of chemicals being required to pay the highest registration charge. There are three tiers under which a company can fall:
- Tier 1- companies importing or producing under $500 000 worth of chemicals, who are only required to pay the registration fee
- Tier 2- companies importing or producing between $500 000 - $4 999 999 worth of chemicals, who are required to pay both the registration fee and the registration charge and
- Tier 3- companies importing or producing more than $5 000 000 worth of chemicals, who are required to pay both the registration fee and a higher registration charge than those companies which fall under tier 2.[37]
The total charge currently payable for each tier is set out in a table in the CRIS.[38]
It is currently the situation that the higher the annual value of chemicals introduced by a company, the less the company pays, proportionally (that is, as a percentage of the value of the chemicals introduced), in registration fees and charges.[39] It is also the case that the majority of companies required to register with NICNAS are introducing less than $500 000 worth of relevant chemicals annually, with 94 out of approximately 3470 of these companies paying more than 100 per cent of the value of the chemicals introduced.[40]
To address any inequality within the current system the Government considered a range of possible options in which the cost recovery structure could be adjusted.[41] Ultimately, the preferred option involved moving from a three-tier structure to a four-tier structure (by splitting the current tier 1 into two parts). The purpose of this model is to ensure that the direct costs associated with the annual registration process are covered by the annual registration fee and the registration charge for each tier will equitably cover the total amount needed to be recovered. For 2013–14, the proposed registration fees and charges equate to 0.29 per cent of the minimum introduction value (for all tiers except tier 1).[42]
A table setting out the new tier structures is available in the CRIS.[43]
While some companies will be paying more than they did under the current system, the greater percentage of companies introducing chemicals will be paying less.[44] The proposed transition to the new structure will commence in 2013–14.
Items 1-9 of Schedule 1 of the Bill set out the provisions for the establishment of the new registration cost recovery structure. Item 1 of the Bill amends subsection 5(1) of the ICNA Act to change the definition of threshold value from $500 000 to $100 000.
Current section 80T of the ICNA Act sets out how the registration charge payable by a company is determined. Items 8 and 9 of the Bill amend section 80T, including by inserting a new four-tiered table setting out how registration charges are calculated. However, as is the current situation, the new provision does not actually set out the amount payable. Instead, for each of items 1-4 of the table in proposed subsection 80T(2), the amount payable will be prescribed by regulation.
Items 3-7 provide for consequential amendments to the ICNA Act as a result of the proposed changes to section 80T of the ICNA Act:
- item 3 of the Bill repeals existing paragraph 80F(e) of the ICNA Act and replaces it with proposed paragraph 80F(d) of the ICNA Act.[45] Existing section 80F of the ICNA Act concerns the application for registration on the Register of Industrial Chemical Introducers (the Register). Under the current provision, the registration must use the approved form (paragraph 80F(a)), include the information required by the form (including information about industrial chemicals introduced in the previous financial year but not limited to that (paragraph 80F(b)), and be accompanied by the prescribed registration fee (paragraph 80F(c)) and, if applicable, the prescribed registration charge (paragraph 80F(e)). The current requirements set out at paragraphs 80F(a) to (c) will remain. However, the reference in the current paragraph 80F(e) to the payment of the prescribed registration charge reflects the current arrangement in section 80T. The Bill will remove this provision and replace it with proposed paragraph 80F(d), which refers to the revised arrangements for calculating the registration charge payable by a company, which will be inserted into subsection 80T(2) of the ICNA Act by item 9 of the Bill and
- existing section 80KA of the ICNA Act relates to renewal applications for the Register and existing section 80KB deals with late renewal applications, which are subject to a penalty. Item 4 repeals and replaces paragraph 80KA(1)(e) of the Act and item 5 repeals and replaces paragraph 80KB(2)(c) of the Act. Both these amendments insert references to the new table at revised subsection 80T(2) of the ICNA Act.
The CRIS also recommended that fees that are no longer relevant should be abolished.[46] Under section 18A of the ICNA Act, it was possible to transfer a chemical from a non-confidential section of the Australian Inventory of Chemical Substances (AICS) to the confidential section during a transitional period in 1997.[47] This transfer attracted a fee under paragraph 110(1)(c) of the ICNA Act. As transfers under section 18A are no longer possible, there is no longer any need for the transfer fee to be listed under the fee schedule.[48]
Item 10 of the Bill therefore repeals paragraph 110(1)(c) of the ICNA Act.
On the 20 May 2004 Australia ratified the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade (Rotterdam Convention).[49] The main objectives of the Rotterdam Convention are to:
- promote shared responsibility and cooperative efforts among Parties in the international trade of certain hazardous chemicals in order to protect human health and the environment from potential harm and
- contribute to the environmentally sound use of those hazardous chemicals, by facilitating information exchange about their characteristics, by providing for a national decision-making process on their import and export and by disseminating these decisions to Parties.[50]
Each country that has signed and ratified the Rotterdam Convention is required to implement the Prior Informed Consent (PIC) procedure.[51] Under PIC, Australian companies wishing to export chemicals listed in the Annex to the Convention must first seek authorization from NICNAS. As part of its review, the Government has recommended introducing a service fee in respect of chemicals needing PIC authorisation.[52] The ABC study determined that the resources required in providing authorisation would vary depending on the destination of the proposed export.[53]
It was therefore recommended that there be two separate fee categories:
- Category A–where the chemical is being exported to a country whose status regarding the Rotterdam Convention is clearly defined and
- Category B–where the chemical is being exported to a country where additional resources will be required to determine the country’s acceptance of the chemical being exported.[54]
Items 11-13 of Schedule 1 of the Bill set out the provisions for establishing this new fee. Item 12 of the Bill amends subsection 110(1) of the ICNA Act to enable NICNAS to charge a fee in respect of an application for authorisation for the import or export of certain hazardous chemicals listed under the Rotterdam Convention, while item 13 of the Bill allows NICNAS to charge different fees for different chemicals and classes of chemicals and/or for different countries or classes of countries.[55] The amount of any fees imposed is to be prescribed in the regulations to the ICNA Act.
Items 1-9 of Schedule 2 of the Bill make minor amendments to the ICNA Act and the Agvet Code to replace the term ‘Material Safety Data Sheet’, with ‘Safety Data Sheet’. As noted above, this is to reflect the change in wording under the new work health and safety laws.[56]
While the Opposition has raised concerns with the timing of these proposed amendments, with NICNAS currently undergoing another review, various submissions have highlighted the urgency in amending the current cost recovery arrangements to ensure that NICNAS is adequately funded. In the CRIS, the Government has commented that no timeframe has been set with regard to implementing any subsequent changes to NISCAS’s cost recovery arrangements that arise out of the Better Regulation Ministerial Partnership review.[57]
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2442.
[16]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit.
[17]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16 at a glance’, NICNAS, Canberra, June 2012, p. 2, viewed 2 October 2012, http://www.nicnas.gov.au/current_issues/CRIS.asp
[21]. C King and N Sherry, Better regulation of industrial chemicals, op. cit.
[22]. Department of Health and Ageing and Department of Finance and Deregulation, Review of the National Industrial Chemicals Notification and Assessment Scheme, op. cit.
[31]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit., p. 99.
[33]. Explanatory Memorandum, Industrial Chemicals (Notification and Assessment) Amendment Bill 2012, op. cit., p. 1.
[35]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit., p. 37.
[37]. Explanatory Memorandum, Industrial Chemicals (Notification and Assessment) Amendment Bill 2012, op. cit., p. 4.
[38]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit., p. 37.
[41]. Further information on these options is set out in the CRIS: Ibid., pp. 94-97.
[45]. It is noted that paragraph 80(F)(d) of the INCA Act does not currently exist. The proposed amendment under item 3 of the Bill will correct this sequence.
[46]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015-16,’ at a glance’, op. cit., p. 2.
[47]. Explanatory Memorandum, Industrial Chemicals (Notification and Assessment) Amendment Bill 2012, op. cit., p. 6.
[48]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16 at a glance’, op. cit., pp. 2-3.
[50]. Article 1 of the Rotterdam Convention, Ibid.
[51]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit., p. 35.
[54]. Explanatory Memorandum, Industrial Chemicals (Notification and Assessment) Amendment Bill 2012, op. cit., pp. 6–7.
[56]. Further information on these amendments is set out in the Explanatory Memorandum, ibid., p. 8.
[57]. Department of Health and Ageing, ‘National Industrial Chemicals Notification and Assessment Scheme: Cost Recovery Impact Statement 2012–13 to 2015–16’, op. cit., p. 99.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.
Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.