The majority of submissions to the inquiry were provided by industry stakeholder groups and were generally supportive of the purpose and intent of the bill. Several submissions acknowledged that the provisions contained in the bill progress a range of measures which were originally included in the two bills which lapsed (when the previous parliament was dissolved in April 2019).
Stakeholders expressed support for proposed reforms to the regulation of the agvet chemical sector; in particular, those reforms which aim to improve the efficiency and effectiveness of the current regulatory environment. Several submitters noted that they had provided input (and submissions) during the development of the bills, or to the committee's previous inquiry.
Consideration of the legislation by other committees
Streamlining Regulation bill
During its consideration of the Streamlining Regulation bill, the committee noted that the Parliamentary Joint Committee on Human Rights had considered the bill "and determined that it does not raise human rights concerns".
The Standing Committee for the Scrutiny of Bills (Scrutiny committee) did, however, raise a number of concerns in relation to the Streamlining Regulation bill. Primarily, the Scrutiny committee's concerns related to provisions in the Streamlining Regulation bill which allowed the incorporation of legislative provisions by reference to other documents. The Scrutiny committee argued that:
Such an approach raises the prospect of changes being made to the law in the absence of parliamentary scrutiny, can create uncertainty in the law, and may create difficulties for those seeking to access the terms of the law in order to obey them.
In responding to the Scrutiny committee's concerns about the proposed third party accreditation scheme, the then Minister for Agriculture (the Minister) explained that the use of such schemes by Commonwealth regulators was not uncommon. The Minister pointed to examples such as the Australian Maritime Safety Authority, and noted that it was not unusual for the content of these types of schemes to be set out in delegated legislation.
The Minister also suggested that including detailed content of the proposed accreditation scheme in primary legislation could inhibit the APVMA from making timely adjustments to assessor accreditation and operational requirements.
The Scrutiny committee acknowledged the Minister's response, and the justification provided in the Explanatory Memorandum (EM) as to why material may need to be incorporated from time to time. A proposal for incorporated material to be available without a fee and published on the APVMA's website 'where possible' was also noted.
In finalising its comments in relation to this issue the Scrutiny committee:
…left the matter of the appropriateness of incorporating material that may not be freely and readily available to all those interested in the law, to the Senate as a whole.
Agricultural and Veterinary Chemicals Legislation Amendment (Australian Pesticides and Veterinary Medicines Authority Board and Other Improvements) Bill 2019
As noted in the previous chapter, Item 36 of the bill proposes that a new section 5F be inserted into the Agvet Code. This new section would allow the APVMA to arrange for the use of computer programs for any purpose for which the APVMA may make a decision, exercise a power or comply with an obligation, or do anything related to those matters.
The Scrutiny committee observed that the explanatory materials did not appear to adequately address this matter, and requested that the Minister provide more detailed advice as to:
why it was considered necessary and appropriate to permit the APVMA to arrange for the use of computer programs for any purpose for which the APVMA may or must take administrative action;
whether consideration had been given to how automated decision-making processes would comply with administrative law requirements (for example, the requirement to consider relevant matters and the rule against fettering of discretionary power); and
whether consideration had been given to requiring that certain administrative actions (for example, complex or discretionary decisions) be taken by a person rather than by a computer.
The Minister advised that, where applied properly, and with appropriate safeguards, authorising the APVMA to implement computerised
decision-making would provide the agency with the flexibility to further streamline services, reduce costs and liberate resources. It would also support efforts by the APVMA to provide enhanced services, reduce the length of time for some transactions and generally improve efficiency. The Minister also advised that mechanisms would be put in place to ensure that only appropriate decisions would be made by computers.
In acknowledging the Minister's advice, the Scrutiny committee also noted that there was no limitation placed on the types of decisions that could be subject to computerised decision-making on the face of the primary legislation. In light of the Scrutiny committee's concerns, it requested the Minister's further advice as to whether the Minister anticipated bringing forward amendments to the bill which would:
limit the types of decisions that can be made by computers; and/or
provide that the APVMA must, before determining that a type of decision can be made by computers, be satisfied by reference to general principles articulated in the legislation that it is appropriate for the type of decision to be made by a computer rather than a person.
The Scrutiny committee noted that an EM accompanying legislation provided a point of access to understanding the law, and was a document that contained, if required, extrinsic material which could assist with interpretation (section 5AB of the Acts Interpretation Act 1901). With this in mind, the Scrutiny committee requested that key information (provided by the Minister) be included in the EM.
At the time of tabling, the Minister has yet to provide a response to the Scrutiny committee's request for further advice.
Advice provided by the Department of Agriculture
The Department of Agriculture (the Department) drew attention to the measures contained in the lapsed bills, and noted that those measures had received "broad industry support and had been subject to previous committee inquiries". Further, the Department indicated that:
The opposition supported the measures in the Bill that were previously included in the lapsed Agricultural and Veterinary Chemicals Legislation Amendment (Operational Efficiency) Bill 2017, except for the board measure. The opposition also supported the measures from the lapsed Agricultural and Veterinary Chemicals Legislation Amendment (Streamlining Regulation) Bill 2018, when it was considered by the Senate Rural and Regional Affairs and Transport Legislation Committee Inquiry that reported on 11 February 2018.
The Department also noted that the Opposition's support for the previous legislation had been conditional on measures relating to the accreditation of assessors being removed, which had also been raised as a concern by a number of stakeholders. At the time, the concerns raised about the amendments contained in Part 5 of the Streamlining Regulation bill – Accreditation of third party assessors – included a caution from submitters that:
…allowing chemical companies to pay accredited third party providers to undertake assessment services directly on their behalf could risk the integrity, credibility and reputation of the regulatory process.
The Department indicated that this particular measure has been removed from the current legislation.
Consultation on reforms
An exposure draft of the Operational Efficiency bill was released for public consultation in June 2017. In July 2018, an exposure draft of the Streamlining Regulation bill was also released for public consultation. The committee was advised that these public consultation processes were conducted following periods of targeted consultation with key stakeholders, and that consultation on both lapsed bills was also undertaken with relevant state and territory authorities and Commonwealth agencies. Both bills were amended following this consultation.
The committee was advised that the proposal to establish an APVMA governance board (which was included in the Government amendment to the Operational Efficiency bill) followed a process of targeted consultation with agvet chemical industry stakeholders. This consultation was undertaken between November 2017 and July 2018.
Issues raised by stakeholders – APVMA governance board
As noted above, the bill progresses a range of measures which were included in bills which lapsed on the dissolution of the previous parliament. It was acknowledged by a number of stakeholders that the bulk of the proposed reforms had, over recent years, been the subject of public consultation and parliamentary inquiry. A number of submissions did not go into further detail, or offer additional views on these measures, but focused primarily on the major new measure introduced in the bill – the proposal to establish an APVMA governance board.
Schedule 2 of the bill proposes the establishment of a governance board for the APVMA and the cessation of the existing APVMA Advisory Board. It is argued that establishing a governance board will "strengthen the APVMA's governance arrangements and provide the necessary oversight to help the regulator manage operation, financial and performance matters". The governance board will also replace the CEO as the accountable authority under the PGPA Act. It is also proposed that the board will set the APVMA's "strategic direction, drive its operational performance, set an appropriate risk management framework and ensure greater accountability".
The Department pointed to the fact that the APVMA is one of only a few corporate Commonwealth entities that does not have a board. It was argued that despite the APVMA's complex regulatory responsibilities, the critical impact of its decisions on human health, animal welfare, the environment and trade, all the responsibility for its strategic leadership, governance and day-to-day operations rests with its CEO:
The CEO is therefore responsible for setting, implementing and monitoring the APVMA's policies and procedures without additional oversight or support. This creates a potential vulnerability, and the recent performance and financial difficulties experienced by the APVMA separate from those pressures created by relocation, indicate the cost of more robust governance is warranted.
The committee was advised that the proposed governance board has strong parallels with the establishment of the Organ and Tissue Donation and Transplantation Authority (OTA) board in 2017 and the re-establishment of the CASA board in 2009.
As noted in the previous chapter, it is proposed that the board will include members with an appropriate mix of skills and expertise to govern the APVMA effectively and improve its performance.
It is noted that the Minister will continue to have the power to direct the APVMA, and will be provided with the power to direct the board in the performance of its functions. It is also noted that any written directions made to the board by the Minister will be notifiable instruments, "with the particulars and effects of these directions reported in the APVMA's annual report".
The committee was advised that the costs to establish the governance board are estimated at approximately $200,000. The cost to run the board during its first year is expected to be approximately $400,000. The total cost in the first year – $600,000 – will be met through existing APVMA appropriations.
The committee was advised that ongoing costs (of approximately $400,000 per year) will be met through the APVMA's cost recovery arrangements. According to the Department, this is consistent with the Australian Government Charging Framework, and with previous iterations of APVMA boards – the costs of which were recovered as part of the APVMA's overheads.
Support for the re-establishment of a governance board
The National Farmers' Federation (NFF) indicated that it was not opposed "to the establishment of a skills-based APVMA governance Board", and suggested that a governance board had the potential to "strengthen our system for regulation of agvet chemicals by driving improved operational performance and accountability of the APVMA".
The NFF clarified, however, that its support was based on the understanding that the:
…establishment of such a Board has been recommended as the best mechanism to strengthen the APVMA's governance arrangements and assist the regulator to manage operational, financial and performance matters – and drive improvement in those areas. The expertise and professionalism of the APVMA's regulatory scientists is not in question, however it is in the best interests of all agvet chemical users that the national regulator for agvet chemicals is subject to the best corporate governance standards as possible.
The NFF submitted that in relation to the bill, it also welcomed:
provisions in Section 16, which specify that the functions and powers of the governance board do not include making decisions under agvet chemical legislation, other than certain parts of the Administration Act (this is an important distinction that will reinforce the independence of the APVMA's regulatory decision making);
provisions in Schedule 2 which require that any written directions given to the Board by the Minister be included in the APVMA's annual report; and
provisions in Subdivision G which enable an independent review of the operations of the board within four years of the legislation commencing.
As detailed above, the NFF indicated its general support for the establishment of a governance board. In acknowledging the Government's intention to fund (from APVMA appropriation) the costs associated with the establishment of the board, and its first year of operation, the NFF also advised that:
…it would appreciate clarity on longer-term funding arrangements, including a comparison with the arrangements in place for other national regulators.
Grain Producers Australia (GPA) indicated its support for the introduction of Schedule 2 and the establishment of a governance board for the APVMA (and the cessation of the existing APVMA Advisory Board). GPA argued, however, that it was critically important that the governance board is both skills based and independent.
Further, GPA submitted that:
To ensure absolute public confidence in the independence of a skills based APVMA board, the costs associated with the appointment and operation of this board should be fully funded by the Australian Government in annual appropriation budgets rather than funded through the APVMA by registrant levies which are indirectly supported by producers through pesticide sales.
Opposition to, and concerns raised about the re-establishment of a governance board
CropLife Australia (CropLife) told the committee that since the announcement of the APVMA's relocation to Armidale, it had been seeking the urgent implementation of regulatory amendments to streamline operations. CropLife noted that the "cost of agricultural chemical regulations is already three times greater per product per annum in Australia than in the United States (despite the Australian market being a tenth of the size of the US market)", and expressed its disappointment that:
…the government has chosen to pursue the urgent implementation of an APVMA Governing Board, instead of regulatory reforms that are at least capable of delivering regulatory efficiency.
CropLife observed that the APVMA's previous governance board was abolished in 2007, following recommendations made in the Independent Review of Corporate Governance of Statutory Authorities and Office Holders (the Uhrig Review). It also submitted that:
The APVMA currently has a functioning governance structure, including an audit committee with external appointees, and changes should only be implemented after proper and comprehensive assessment and consideration. Adding an additional layer of bureaucracy also comes at the significant cost of $600,000 per year, a cost that will ultimately be borne by Australian farmers. The government is only funding the nominal first year costs, which means its ongoing costs will ultimately fall to Australia's farmers, who should not be expected to foot the bill – especially at a time when so many are doing it tough, due to extreme drought conditions.
CropLife advised the committee that despite its "lack of support for the urgency and necessity of a Governing Board for the APVMA", the organisation did provide the Department with the specific criteria required "for a Governing Board to be effective and protect the independent evidence- and science-based decision-making of the APVMA". CropLife made clear that:
The direct and associated costs of a Board should be fully funded by government as an appropriate contribution to the effective operations of the Regulator. Without government funding, the cost of a Governing Board would be an additional direct cost to the farming sector, further limiting access to crucial crop protection products by farmers. The $600,000 a year cost attributed to the APVMA Governing Board, as referenced in Senate Estimates in May 2018, is an exorbitant and unnecessary cost to what is already one of the world's most expensive agricultural chemical regulators for industry.
CropLife concluded its submission by indicating that – on behalf of its members and the entire Australian plant science industry – Croplife will "continue to respectfully request that the Government withdraw from this Bill the provision that would re-establish an APVMA Governing Board".
Animal Medicines Australia (AMA) noted that it supported, or did not oppose, all of the key measures contained in the bill; and had the expectation that their implementation would "provide minor improvements in operational efficiencies for both registrants and the regulator".
The AMA did advise, however, that the one thing it has been consistent in not supporting was the establishment of a governance board, for the following reasons:
a clear case for establishing a board has not been established - the AMA encouraged the government to consider the problems and challenges facing the APVMA and conduct an independent and transparent process to consider which solutions were likely to achieve the greatest benefits at lowest cost;
it was not clear whether any benefits that accrue from establishing a board will exceed the costs imposed - as a cost-recovered agency, the APVMA is funded by a mix of fees and levies imposed on the regulated industry (which includes AMA members);
the government has recently announced a 'first principles' review of the Agvet Code and the intergovernmental agreement that established the national registration system for agricultural chemicals;
the review of the Agvet Code includes governance arrangements (as outlined in the 2013 inter-governmental agreement between all states, territories and the Commonwealth); and
implementing a governance board at this time pre-empts the findings of the Agvet Code review.
The committee notes that evidence to the inquiry indicated broad support for the provisions of the bill and its objective – to improve the effectiveness of the regulation of agvet chemicals in Australia.
The committee notes that the concerns raised by the Scrutiny committee reflect some of the concerns raised in its recent inquiry in relation to the Streamlining Regulation bill. These concerns arise from the fact that much of the detail regarding how the amendments will operate in practice will be specified in regulations. The committee also notes, however, that the Department has committed to consulting with industry and other stakeholders as it prepares the regulations. To support this process, the committee encourages the Department to draw on the evidence provided to this inquiry, previous inquiries and during the consultation period.
The committee acknowledges the concerns raised by some submitters about the proposal to establish an APVMA governance Board. The committee recognises that several stakeholders either oppose, or have reservations about, a governance board for the APVMA. In particular, stakeholders have raised specific concerns about the financial costs associated with establishing and maintaining the Board.
The committee also notes, however, that the proposal to establish a governance board was reached following a period of targeted consultation with affected stakeholders, during which the Government's intentions were clearly articulated. Furthermore, the committee is of the view that given that all other Commonwealth regulatory bodies (with direct responsibility for safeguarding human life and health) have governance boards, it is appropriate that a governance board is established for the APVMA.
The committee is of the view that the measures proposed in the bill will improve the efficiency and effectiveness of the national system for regulating agvet chemical products in Australia. Therefore, the committee recommends that the bill be passed.
The committee recommends the Agricultural and Veterinary Chemicals Legislation Amendment (Australian Pesticides and Veterinary Medicines Authority Board and Other Improvements) Bill 2019 be passed.
Senator Susan McDonald