Country of origin labelling—a long and winding road
1.1 These reforms contained in the Competition and
Consumer Amendment (Country of Origin) Bill 2016 aim to provide consumers with
clear, more meaningful and easier to find country-of-origin information so they
can make informed purchasing decisions. I have long advocated for reforms to
improve an ineffective and often misleading labelling framework, so it will be
easier for consumers to make purchasing decisions that support Australian
farmers, Australian manufacturers and Australian jobs.
1.2 In 2009, I, alongside my colleagues at the time
former Senator Bob Brown and the then Senator Barnaby Joyce, introduced into
the Senate the Food Standards Amendment (Truth in Labelling Laws) Bill 2009.
The Food Standards Amendment (Truth in Labelling Laws) Bill 2009 was designed
to require Food Standards Australia New Zealand in its authority to develop and
approve certain food labelling standards regarding the use of the word
'Australian' on packaging and also to require greater detail of the country of
origin of ingredients used in food products.
1.3 During committee hearings on the Food Standards
Amendment (Truth in Labelling Laws) Bill 2009, it was clear the 50 per cent
cost production test for companies to claim that a product was 'made' in a
country was inherently problematic. The impact on citrus growers was
significant due to the volume of cheap imported fruit juice being sold as 'Made
in Australia' because of the flawed 'substantial transformation' test.
1.4 Further, in 2012 I participated in the Senate Select
Committee on Australia's Food Processing Sector. As part of that inquiry, I
recommended an urgent overhaul of Australia's country of origin food labelling
laws to provide truthful and useful information to customers.
1.5 I outlined then, as I did in 2009, that there were
serious concerns about our current labelling regime and the extent to which it
allows foreign imports to be classified as 'Made in Australia'. I welcome the
changes in the Competition and Consumer Amendment (Country of Origin) Bill 2016
and would like to acknowledge the work undertaken by all stakeholders during
the consultation process. While it is a step in the right direction, I believe
there are more steps the Government can take to strengthen Australia's food
labelling framework.
Room for improvement
1.6 In its submission to the Competition and Consumer
Amendment (Country of Origin) Bill 2016, Australian Made Campaign Limited
(AMCL) stated that overall it "...supports the removal of the 50% cost
test..." however it noted "...some concerns that it may result in
adverse consequences for some Australian suppliers of inputs". It noted:
This will occur where a manufacturer opts to source cheaper
inputs offshore, knowing that it will not affect their capacity to make a Made
in Australia claim. An example of this is a manufacturer of soft gel capsules
who currently purchases gelatin from an Australian manufacturer because it
assists them to meet the 50% threshold. The local packaging industry may also
be impacted adversely by this change.[1]
1.7 I note that this issue was recognised in the
Committee report, as well as the need for greater guidance on what does and
what does not constitute substantial transformation. The Committee also noted
the concerns by AMCL that that there was currently no mechanism by which
manufacturers could obtain a definitive answer regarding Country of Origin
claims and this could result in companies being hesitant to make a claim for
fear that competitors would challenge its validity.
1.8 While not making a submission on the Competition
and Consumer Amendment (Country of Origin) Bill 2016, consumer group CHOICE has
stated that "[U]nfortunately, the new system looks less useful for
consumers wanting information about any of the 195 countries that are not
Australia. For example, claims such as 'Made in Australia from imported
ingredients' will still have you wondering where your food comes from."
1.9 The Competition and Consumer Amendment (Country of
Origin) Bill 2016 does not require manufacturers to list the origin of specific
ingredients on their label. I am concerned that this will leave many consumers
left in the dark when it comes to finding out the origin of the ingredients that
are not made or grown in Australia. This could be addressed by manufacturers
disclosing the country of origin of specific ingredients on product labels.
Alternatively, (given seasonal and other variations) the Government could
require manufactures to disclose the country of origin of specific ingredients
to the Department of Industry for publication on its website. This could work
effectively by requiring disclosure on a six monthly basis (with reporting
required within one month of each six month period) of the average percentage
of the country of origin of the particular ingredient. For instance, this would
be particularly informative for orange juice products which may contain a mix
of Australian oranges and imported concentrate depending on the season.
1.10 The Government should take steps within the next 12
months so that manufacturers are required to disclose the origin of specific
ingredients in their products. In the absence of such a requirement, I urge
food manufacturers to be more transparent about the ingredients that are in
their products so that consumers can make a more informed decision.
1.11 In relation to the issues surrounding the definition
of substantial transformation, AMCL has previously argued for a simple
administrative mechanism to address this issue, similar to what exists in the
US, which will give manufacturers the ability to apply for a ruling on Country
of Origin Labelling claims. I welcome the comments by the Committee that there
could be benefit in the Government exploring such a mechanism and urge the
Government to do so with alacrity, and with any event within the next 12
months.
Recommendation 1
1.12 Within 12 months, the Government take steps which
will require manufacturers to regularly disclose the percentage and country of
origin of specific ingredients to the Department of Industry for publication on
its website.
Recommendation 2
1.13 As a matter of urgency, the Government undertake
an analysis and report on the benefit of an administrative mechanism which will
give manufacturers the ability to apply for a ruling on Country of Origin
Labelling claims, and to introduce legislation to this effect within 12 months.
Senator Nick Xenophon
Senator for South Australia
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