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Discussion Paper: Review of the National Industrial Chemicals Notification and Assessment Scheme (NICNAS), June 2012

Making a submission

In an email dated 18 July 2012 PACIA sought an extension for submissions from PACIA and its members until 10 August 2012.

Please use this form to make your submission in response to the discussion paper. You may delete any sections that you do not wish to comment on.

While submissions may be lodged electronically or by post, electronic lodgment by email is preferred. For accessibility reasons, please email responses in a Word or RTF format not as a .pdf.

Email: [email protected]

Mail: NICNAS Review Department of Health and Ageing (MDP 71) GPO Box 9848 CANBERRA ACT 2601

Organisation or Individual: Plastics and Chemicals Industries Association

Principal contact: Geoff MacAlpine

Position: Director Industry Development

Phone: 0409 111 179 Fax:

Mobile: 0409 111 179

Email address: [email protected]

Street address: 10 Queen Street

Suburb/City: Melbourne State: VIC P’code: 3000

Postal address: PO Box 422 Flinders Lane

Suburb/City: Melbourne State: VIC P’code: 8009

Please note:

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Summary

PACIA submission

The Plastics and Chemicals Industries Association (PACIA) is the peak national body representing the Australian Chemistry Industry. PACIA members include chemicals manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, plastics fabricators and compounders, recyclers, and service providers to the sector.

Key considerations that need to be addressed in Review of the National Industrial Chemicals Notification and Assessment Scheme include:

Clear roles and responsibilities of the policy and operational entities contributing to Australia’s integrated framework of chemicals and plastics regulatory management

Delivering economic, social, public health, work health and safety and environmental outcomes

Achieving effective and efficient regulation

Ensuring appropriate policy and operational settings within Australia’s integrated framework of chemicals and plastics regulatory management.

The Productivity Commission’s proposed institutional and regulatory approach for chemicals and plastics regulation provides a robust approach to setting a framework. PACIA has provided diagrammatic application of the model for those elements of the chemicals and plastics regulatory framework that relate to NICNAS.

Roles and responsibilities is a recurring theme throughout the review considerations and decisions on this critical aspect will assist to inform other elements. This should be a ‘stage 1’ outcome as other options will be directly impacted.

An independent report has raised serious issues with regard to both the relationship between NICNAS and its policy Department and activities undertaken by NICNAS. This matter needs to be dealt with urgently.

Industry is limited is its ability to contribute to delivering economic, social, public health and environmental outcomes due to endemic impediments in the regulatory arrangements. PACIA has provided examples of such impediments.

As deregulation has been embraced in many areas of the economy, the policy of ‘minimum effective regulation’ was adopted in Australia in 1986. A succinct statement of its philosophy was offered by Gary Banks, the Chairman of the Productivity Commission (2003), as follows:

To be ‘good’, regulation must not only bring net benefits to society, it must also:

be the most effective way of addressing an identified problem; and

impose the least possible burden on those regulated and on the broader community

This policy of ‘minimum effective regulation’ is relevant to the NICNAS Review considerations.

PACIA strongly supports appropriate chemicals and plastics regulation and works closely with a wide range of regulators at the Commonwealth and jurisdictional levels to support a viable and responsible industry that adds value to Australia’s interests. The review of NICNAS needs to be seen by all stakeholders as a key opportunity.

PLASTICS AND CHEMICALS INDUSTRIES ASSOCIATION ABN: 77 063 335 615 Level 10, 10 Queen Street, Melbourne, Victoria, 3000 Phone: 03 9611 5400 Fax: 03 9611 5499 PO Box 422 Flinders Lane, VIC 8009 Email: [email protected] Web: www.pacia.org.au Canberra Office: 02 6230 6985

NICNAS Review Department of Health and Ageing GPO Box 9848 CANBERRA ACT 2601 [email protected]

Dear Review Team

Review of the National Industrial Chemicals Notification and Assessment Scheme (NICNAS)

The Plastics and Chemicals Industries Association (PACIA) is the peak national body representing the Australian Chemistry Industry. PACIA members include chemicals manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, plastics fabricators and compounders, recyclers, and service providers to the sector.

Throughout the course of the review it has become very clear that there needs to be a staged approach to consideration of options. A decision-point on ‘roles and responsibilities’ has been reached and will impact on consideration of other key options.

The chemistry industry continues to face a range of efficiency and effectiveness impediments with the National Industrial Chemicals Notification and Assessment Scheme. Significant progress will only be made through strong commitment to improving Australia’s regulatory approaches for industrial chemicals.

PACIA is pleased to provide the attached submission to the 2011 Review of NICNAS. Information contained in PACIA’s previous submission to the NICNAS Review, dated 14 December 2012 also remains relevant.

If I can provide additional information at this stage please do not hesitate to contact me directly on (02)4392 7643, 0409 111 179 or by email.

We look forward to working with the Review Team in progressing this important reform program.

Yours sincerely

Geoff MacAlpine

Director, Industry Development

10 August 2012

PACIA Submission: Review of the National Industrial

Chemicals Notification and Assessment Scheme

10 August 2012

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Review of NICNAS – PACIA Submission 10 August 2012 i

Contents

1. Executive summary ........................................................................................................ 1

2. Recommendations .......................................................................................................... 1

3. Key issues ....................................................................................................................... 2

4. Roles and responsibilities ............................................................................................... 2

4.1 NICNAS relationship with its policy department ............................................................ 3 4.2 NICNAS relationship with risk‐management standard setting entities .............................. 4 4.3 NICNAS relationship with States and Territories ............................................................ 5 4.4 Productivity Commission Recommendation 4.3 ............................................................ 5 4.5 A model that delivers certainty and clarity .................................................................... 6

5. Delivering economic, social, public health, work health and safety and environmental outcomes ............................................................................... 6

5.1 Impediments to delivery of benefits .............................................................................. 6 5.2 Supporting appropriate regulation ................................................................................ 8

6. Achieving effective and efficient regulation .................................................................... 9

6.1 Resolving the issues of roles and responsibilities .......................................................... 9 6.2 Removing impediments to innovation ........................................................................... 9

7. Ensuring appropriate policy and operational settings ..................................................... 9

8. The NICNAS Review Discussion Paper ........................................................................... 10

8.1 NICNAS Review Better Regulation Ministerial Partnership .......................................... 10 8.2 The NICNAS Review Discussion Paper .......................................................................... 10

Attachment 1: Model for efficient and effective management of certain aspects of industrial chemical regulation

Attachment 2: Additional responses on NICNAS Review Discussion Paper

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Review of NICNAS – PACIA Submission 10 August 2012 1

1. Executive summary

Key considerations that need to be addressed in Review of the National Industrial Chemicals Notification and Assessment Scheme include:





The Productivity Commission’s proposed institutional and regulatory approach for chemicals and plastics regulation provides a robust approach to setting a framework. PACIA has provided diagrammatic application of the model for those elements of the chemicals and plastics regulatory framework that relate to NICNAS.

Roles and responsibilities is a recurring theme throughout the review considerations and decisions on this critical aspect will assist to inform other elements. This should be a ‘stage 1’ outcome as other options will be directly impacted.

An independent report has raised serious issues with regard to both the relationship between NICNAS and its policy Department and activities undertaken by NICNAS. This matter needs to be dealt with urgently.

Industry is limited is its ability to contribute to delivering economic, social, public health and environmental outcomes due to endemic impediments in the regulatory arrangements. PACIA has provided examples of such impediments.





This policy of ‘minimum effective regulation’ is relevant to the NICNAS Review considerations.


2. Recommendations

The fundamental ‘immediate’ need is to work to address roles and responsibilities. This includes the matters that have been raised with regard to the relationship between NICNAS and its policy Department.

Consistent with PACIA’s previous submission of 14 December 2011, PACIA recommends the following as key contributors to effectively reforming NICNAS:

Accept the outcomes of assessments from recognised overseas regulators

Fix the system for consideration of chemicals of low regulatory concern

Implement the NICNAS focused Productivity Commission recommendations

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3. Key issues

PACIA welcomed the opportunity to attend the June/July 2012 NICNAS Review Workshops in Canberra, Melbourne, Sydney and Brisbane. These also provided a catalyst for further discussions with other government regulators at the national and jurisdictional levels. These have helped PACIA to distill key considerations that need to be addressed in the NICNAS Review and include:





4. Roles and responsibilities The 2008 Productivity Commission Report1 proposed an institutional and regulatory approach for chemicals and plastics regulation:

Formulation of strategic policy and oversight of the institutional and regulatory arrangements — a national function, to be undertaken by ministerial councils underpinned by intergovernmental agreements.

Assessment of the hazards and risks of chemicals — a national, science-based function to be undertaken under statutory independence.

Risk-management standard setting — a national function to be undertaken by independent statutory agencies within the policy frameworks of the ministerial councils.

Administration of agreed standards and monitoring of their impact — jurisdiction-specific functions to be undertaken by their own agencies or delegated to other bodies such as national regulators.

The Productivity Commission made its recommendations following extensive consultation, assessment and analysis across the spectrum of Australia’s chemicals and plastics regulatory framework. The model applied to NICNAS is detailed at Attachment 1 and a truncated version provided opposite.

Taking a first-principles approach, as intended by the Productivity Commission, provides a clear framework for establishing roles and responsibilities. It also assists with clarifying where feedback loops are best placed for:

informing policy

informing risk-management

It is instructive to consider whether NICNAS MOUs with States and Territories were well positioned in the first place – recognising they have not been effective and not updated for more than 20 years. A more important role for informing risk-management is directly from the

1Productivity Commission 2008, Chemicals and Plastics Regulation, Research Report, Melbourne

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States and Territories to the risk-management standard setting entities.

The direct relationship and engagement between the risk-management standard setting entities and the States and Territories should also work towards achieving national consistency for implementation.

As identified at Attachment 1, NICNAS is one part of the chemical and plastics regulatory framework. Many parts of the framework are quite independent from NICNAS activities. Whilst not exhaustive, some include:

Chemical labelling, packaging, provision of safety data sheets

Dangerous Goods transport (air, land, sea)

Dangerous Goods storage

Chemical diversion (illicit drugs, security concern)

Waste Management

Water management including trade waste

Contaminated land management

Work Health & Safety

Hazardous chemicals

National Pollutant Inventory

Australian Packaging Covenant

Food Standards Code

Major Hazard Facilities

Trade measurement

Gene technology regulation

Ports management

Land use planning

Product Stewardship legislation

Control of use legislation

Regulation of agricultural and veterinary chemicals and therapeutic goods

Explosives regulation

Management of a range of international conventions and treaties

The Standing Committee on Chemicals has the broad objective to achieve an effective and efficient national system of chemicals and plastics regulation.

Notwithstanding, the role of NICNAS has key implications that currently works against desired outcomes in innovation, introduction of new chemicals and technologies, and other areas identified under Item 5 of this submission.

4.1 NICNAS relationship with its policy department

For many years industry has expressed concerns with the blurring of roles between NICNAS and the Department of Health and Ageing. These concerns have related to the separation of strategic policy development and oversight and the core NICNAS operational role of implementing the Industrial Chemicals (Notification and Assessment) Act 1989; and the Industrial Chemicals (Notification and Assessment) Regulations 1990. Some of industry’s concerns have related to what has appeared to be cost-shifting from the Department to the fully cost-recovered NICNAS operations.

The report commissioned by the Department of Health and Ageing and the Department of Finance and Deregulation (the Protivity Report2) to inform the NICNAS Review has identified fundamental problems, including the following observations:

“The absence of active policy guidance from DoHA (and others) has required NICNAS to make policy judgments and undertake activities that may otherwise be provided by other authorities.”

2Protivity 2012, Efficiency and Effectiveness Review of the National Industrial Chemicals Notification and Assessment Scheme Final Report

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“NICNAS’s decision to pursue activities which may not be essential in performing its core role in the industrial chemical regulatory framework (being notifications and assessments) diverts limited organisational resources and focus from the regulator’s statutory business of notification and assessment of industrial chemicals.”

“The poor standard of corporate support services delivered by DoHA is a key source of operational inefficiency and absorbs significant organisational attention and resources.”

“NICNAS invests significant time and resources in compensating for shortcomings in the current regulatory framework for industrial chemicals, which diverts organisational resources and attention from NICNAS’s core role in that framework, being notification and risk assessment.”

“The governance arrangements for NICNAS are outdated and complicated, and do not effectively or efficiently support organisational performance or decision making.”

“There has been slow progress in the complete implementation of key NICNAS reform activities designed to improve efficiency and regulatory outcomes.”

The Protivity Report notes:

“…. NICNAS has not received timely or proactive policy guidance. In the absence of robust policy guidance, NICNAS has been making certain policy judgements and undertaking activities that may for other regulatory agencies involve, or be the responsibility of, policy departments. This has included:

calibrating the regulator’s risk appetite and the development of risk assessment policy;

determining the appropriate regulatory approach and response to managing emerging issues;

consideration of the use of international chemical assessments by NICNAS, including the criteria in which assessments can be used and conditions or parameters on their use;

participation in international forums and multilateral activities relating to the regulation of industrial chemicals that are not primarily technical in nature, which may include the Asia-Pacific Economic Cooperation (APEC) Chemical Dialogue Regulator's Forum and Organisation for Economic Co-operation and Development (OECD) Joint Meeting of the Chemicals Committee and The Working Party on Chemicals, Pesticides and Biotechnology;

drafting and consultation on amendments to the ICNA Act to implement reforms activities and improve regulatory outcomes;

determining the appropriate regulatory framework for cosmetics; and

input to the Standing Committee on Chemicals, the policy committee established under the COAG reforms to achieve an effective and efficient national system of chemicals and plastics regulation. “

The Protivity Report further identifies:

“NICNAS is obliged due to its legislative mandate, cost-recovered funding structure and limited resources to focus on its core business of the notification and assessment of industrial chemicals. However, the Review identified certain areas within the regulatory universe where NICNAS had made a conscious decision to pursue (generally with a rationale of improved regulatory outcomes), although such areas appeared beyond the scheme’s core business.”

PACIA contends that these are very serious governance issues that must be urgently addressed.

4.2 NICNAS relationship with risk-management standard setting entities

Consistent with the issues raised in Item 3.1 above, NICNAS has difficulty in understanding its role with regard to risk-management standard setting entities – relevant Ministerial Standing Councils, DoHA (chemical scheduling), DEEWR/Safe Work, DSEWPaC and ACCC.

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In its 14 December 2011 submission to the NICNAS Review PACIA provided a case study (p.12-14) for the Priority Existing Chemical Draft Assessment Report for the fire retardant Hexabromocyclododecane (HBCD). In this instance, NICNAS made risk-management recommendations on the basis of its technical assessment but had not considered the consequences of its recommendations.

PACIA sought advice from the Office of Best Practice Regulation on whether regulatory impact analysis was required. OBPR was helpful in its advice of 23 February 2012 which included:

“The Office of Best Practice Regulation (OBPR) has sought advice from the Department of Health and Ageing and NICNAS in relation to your concerns and is of the view that the processes undertaken by NICNAS to date do not require a RIS. This is because the process of undertaking a full risk assessment in accordance with the Industrial Chemicals (Notification and Assessment) Act 1989 is not a regulatory decision.

When NICNAS provides its recommendations for risk management measures to industry and/or government, there is no obligation under the legislation for industry or government to consider the recommendation and no obligation to implement the recommendations.

However, the recommendations in the report are likely to be considered further by the relevant regulatory bodies, in this case Safe Work Australia and the Standing Council of Environment and Water. Decisions made by these bodies will be subject to the appropriate best practice regulation requirements including the preparation of a RIS.”

PACIA’s 14 December 2011submission also provided an example of NICNAS non-compliance with RIS requirements (p.12) with NICNAS being named in OBPR Annual Reports (2007-08 and 2010-11) as being “non-compliant”. From a policy and legislative perspective this matter remains problematic because there was not referral to appropriate risk-management standard setting entities and there is not appropriate legislative underpinning at the jurisdictional level.

NICNAS is perceived to be a regulator that lacks appreciation of its role within Australia’s chemicals management framework. PACIA’s believes this is confounded by the lack of policy support and governance oversight from the policy Department – resulting in a regulator that is largely left to its own devices, making its own attempts at policy and taking on the roles of other regulators based creating duplication, conflicts and burdens.

4.3 NICNAS relationship with States and Territories

The relationship between NICNAS and the jurisdictions has languished over a long period. PACIA’s discussion with some state regulators indicates that they largely don’t see relevance of NICNAS to their operations or administration of their legislation. This is also reflected in the absence of meaningful and current MOUs.

The question arises as to what should the relationship between NICNAS and the States and Territories. The optimal level of engagement may be minimal. The more critical relationship is that between the jurisdictions and the national risk-management standard setting entities where there are established processes and engagement – focused on risk-management.

4.4 Productivity Commission Recommendation 4.3

The Productivity Commission made the following key recommendation:

“The Australian Government should generally limit the role of NICNAS to the scientific assessment of the hazards and risks of industrial chemicals. The power to annotate the Australian Inventory of Chemical Substances to ban or phase out chemicals, and the responsibilities for administering the Cosmetics Standard 2007, and for implementing the Rotterdam Convention, should be removed from NICNAS.”

Implementation of this recommendation is a key element in resolving the issues of roles and responsibilities

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4.5 A model that delivers certainty and clarity

PACIA strongly supports the institutional and regulatory approach for chemicals and plastics regulation developed by the Productivity Commission.

Application of the model to the component of the industrial chemicals regulatory framework that includes NICNAS provides for a clear and credible regulatory model with certainty for all stakeholders. The model is provided at Attachment 1 to this submission.

5. Delivering economic, social, public health, work health and safety and environmental outcomes

For industrial chemicals, the challenge for small economies such as Australia (0.6% of world sales or chemicals) is maintaining first world regulatory standards at a cost to governments, industry, and the community that facilitates:

access to chemicals for not only current needs but also to deliver solutions to the many challenges facing humanity, including climate change, water shortage, population increases, and resource constraints

innovation and competition

trade – both imports and exports of chemicals and products

a skilled workforce and technology transfer to other sectors

reduced sovereign risk through an active, integrated chemicals manufacturing sector

positive contribution to the economy and wellbeing of its inhabitants

The chemistry industry continues to face a range of efficiency and effectiveness impediments with NICNAS. These have ramifications for other areas of government and the broader community.

5.1 Impediments to delivery of benefits

At the series of June-July 2012 NICNAS Review Workshops industry participants described their experiences that lead to new chemicals and new technologies not being introduced to the Australian market whilst the same chemicals and technologies were widely available in advanced economies such as the European Union and North America. A number of workshop participants also confirmed the results of earlier studies on LRCC Reforms that their chemical/product introduction processes rejected proposals if any NICNAS activity was required.

PACIA members have reported a range of examples and indicative comments are provided. Commonly, the introduction of new chemicals does not pass even modest expectations for return on investment – this builds a barrier where Australia is just not considered for new introductions. Many companies no longer keep track of foregone opportunities and practice NICNAS avoidance.

Company experiences:

Company A: In the past 18 months we had the opportunity to submit 6 notifications in Australia. None proceeded due to the high cost involved.

Company B: For new products that have more than one new chemical not on the inventory. Regardless of whether the product will be more sustainable and have less of a negative impact on the environment in comparison with similar products, it is not cost effective to proceed with new chemical notifications. This also restricts business growth and opportunities.

Company C: Each year, we have at least 3 or 4 polymers which have potential application in Australia and are already sold in Europe or USA, but which we can’t import into Australia as they are not listed on AICS. In Europe/USA, non-hazardous polymers are usually exempt, so there is minimal testing performed. In Australia, if the polymer does not meet the NICNAS PLC requirements then additional testing must be performed. We have been advised by our European suppliers that the cost to generate the additional data is about Eur 35,000. In most cases, this additional cost cannot be justified and the project does not go ahead.

Company D: Difficulty to complete new chemical notification for chemicals that we have had assessed overseas, due to differing data submission expectations.

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From an economic standpoint there will always be a market for chemicals in Australia (demand and supply) but from a government perspective there needs to be a clear realisation that without significant regulatory reform, this market will be high cost, lack innovation which potentially reduces competition, have a reduced range/quality of products compared with other Markets, and lack access to world best technologies and products.

PACIA recognises a valid role for NICNAS in providing regulatory access to new chemicals. PACIA also supports an appropriate existing chemicals review program. Notwithstanding, there are endemic issues with the Scheme that frustrate execution of its policy intent. Such issues include:

the Australian Inventory of Chemical Substances contains significantly fewer chemicals than equivalent schemes operating in Europe and the United States resulting in less chemicals being available to Australian manufacturers or importers than their overseas counterparts. Some companies have reported that their efforts to produce formulated products for local sale and export have been hampered as they are at a competitive disadvantage in export markets

duplication of assessment effort where chemicals have been subject to contemporary evaluations in jurisdictions such as Europe or North America

lack of recognition of the “outcomes” of assessments from recognised European or North American regulatory agencies

the costs for introduction of chemicals, in a range of situations, are regarded by industry as not viable for the local market

of the approximately 4790 companies that are subject to NICNAS company registration NICNAS has indicated that only about 2% of these companies introduce new chemicals

need for improved risk-resource allocation that appropriately addresses chemicals at the lower end of the risk-spectrum

cumbersome legislative processes that lead to inefficiencies

compliance with Regulatory Impact Statement requirements, noting that NICNAS has previously been cited as non-compliant with Office of Best Practice Regulation requirements

Many of these issues are not new. The 1996 Report of the Small Business Deregulation Task Force Time for Business proposed that the Productivity Commission inquire into and report on the most efficient and effective way to regulate industrial, agricultural and veterinary chemicals. The Report noted:

Company E: A raw material manufactured in Europe is used as a flame retardant in the manufacturer of industrial products in Europe. It is classified as non-hazardous and non-dangerous according to EEC regulations. A standard submission was sent to NICNAS so that it could be imported into Australia. The application was in rubber conveyor belts so the risk to the environment was small as the product would be encapsulated in the rubber belt. NICNAS said that due to the potential for the product to be persistent in the environment, further environmental testing would be required (additional to that already submitted for the standard assessment). We got a quote for the testing which would have to be conducted in the UK as we could not find anyone who could do the testing in Australia and the cost would have been over AUD 100,000. This ended the project as this additional cost could not be justified.

Company F: For new chemicals that fall under the Standard Notification category, if we do not have the full data package it is not cost effective to proceed with a new chemical notification as the costs of data generation cannot be justified in this small market.

Company G: Applications under the Approved Foreign Scheme Provisions can be made for a chemical that was notified and assessed in Canada as a new chemical under a comparable to a Standard (STD), Limited (LTD) or Polymer of Low Concern (PLC) notification in Australia. We have a new chemical notification submitted as a Schedule 10 for Canada, which is comparable to Australia’s Limited notification. However in Australia, this chemical does not meet the criteria for a Limited notification and falls under the criteria of a Standard notification. Therefore by proceeding with the Standard notification we will require further study tests.

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“Small business is concerned about the assessment procedures for chemicals, the dissemination of information about the chemicals, costs of assessment and registration, labelling and lack of consistency and coordination between chemical assessment schemes.

The cost of assessment and registration of both schemes restricts the entry of small innovative manufacturers who wish to market chemicals less hazardous than those currently available.”

“Where such disincentives exist the effectiveness of the regulation should be questioned.”

“Regulation that aids the protection of the community through assessment of the risks to occupational health and safety, public health and the environment are legitimate and have a significant public benefit. However, where the regulations impede firms from participating in the industry or prevent the development of low risk products, the legislative arrangements should be re-focused to ensure that such benefits to the community can be achieved.”

The 2001 Chemicals and Plastics Action Agenda recommended that:

“the relevant regulatory bodies be required to alter their assessment procedures to ensure recognition of chemical approvals from approved countries …..”

In 2005, the Taskforce on Reducing Regulatory Burden on Business in its Rethinking Regulation report to the Prime Minister and Treasurer found that:

“Underpinning a country’s competitive success internationally is the effectiveness of its domestic regulatory structures. Good regulation can enhance Australia’s ability to compete and prosper economically; inappropriate or costly regulation will handicap our performance. Like many other developed countries, Australia has undergone a relatively rapid rise in regulation over the past couple of decades, in response to a succession of social, environmental and economic needs and pressures. In our view, business is justified in protesting at the compliance and other burdens that this regulatory inflation has entailed.” (underlining added)

The report also noted:

“A major area of concern for industry is the apparent increase in the time and cost involved in obtaining approvals or renewals. Submissions contained a range of examples, many concerning NICNAS accreditation processes.”

In 2008 the Ministerial Taskforce on Chemicals and Plastics Regulation developed an “early harvest” reform package that was agreed by the Council of Australian Governments at their July 2008 meeting. The reforms included:

“Reform 14. National Industrial Chemicals Notification and Assessment Scheme to evaluate the effectiveness of the low regulatory concern chemical (LRCC) reforms introduced in 2004.”

The 2008 Productivity Commission Research Report: Chemicals and Plastics Regulation identified a suite of reforms directed at improving the governance and efficiency and effectiveness of chemicals and plastics regulation. Eight recommendations were specifically directed to NICNAS reforms. These reforms were welcomed or noted by the Council of Australian Governments at their November 2008 meeting.

To date little progress towards securing outcomes for the majority of reforms has been achieved.

The chemistry industry continues to face a range of efficiency and effectiveness impediments with NICNAS. Significant progress will only be made though strong commitment to improving Australia’s regulatory approaches for industrial chemicals.

5.2 Supporting appropriate regulation


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6. Achieving effective and efficient regulation

The Protivity Report paints an unfortunate picture of a NICNAS organisation that lacks key policy support, is left to its own devices, feels forced to undertake roles of other regulators (and its policy Department), and struggles with understanding its role within Australia’s chemicals and plastics regulatory system. This also raised concerns with the appropriate expenditure of industry cost-recovered funds

6.1 Resolving the issues of roles and responsibilities

Item 4 of this submission deals with the critical issue of roles and responsibilities:

NICNAS relationship with its policy department

NICNAS relationship with risk-management standard setting entities

NICNAS relationship with States and Territories

Resolving these issues is critical to further progress and ensuring that robust governance arrangements are in place with regard to industry cost-recovered funds.

6.2 Removing impediments to innovation

Australia is the world’s most expensive regulator for industrial chemicals. The NICNAS Cost Recovery Impact Statement provides some comparisons for industrial chemical regulatory systems in the European Union, Canada and United States. Coupled with a small market compared to other economies the costs associated with NICNAS are prohibitive.

Examples of chemicals, products, and technologies not being introduced to the Australian market have been provided to various reviews over a long period of time.

Increasing efficiencies of NICNAS processes to:

focus on core activities – assisted by resolution of roles and responsibilities

avoid duplication of assessment – supported by accepting the outcomes of recognised oversea regulators such as in the EU and North America3

develop very simple systems for chemicals that are either classified as non-hazardous or of low regulatory concern

As previously stated, from a government perspective, there needs to be a clear realisation that without significant regulatory reform, this market will be high cost, lack innovation which potentially reduces competition, have a reduced range/quality of products compared with other markets, and lack access to world best technologies and products

7. Ensuring appropriate policy and operational settings





This policy of ‘minimum effective regulation’ is relevant to the NICNAS Review considerations

3NICNAS would maintain an important gatekeeper role that should be clearly defined.

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8. The NICNAS Review Discussion Paper

8.1 NICNAS Review Better Regulation Ministerial Partnership

PACIA agrees that the current review of NICNAS should examine:

The role and functions of NICNAS….having regard to the broader context of chemicals management and regulation in Australia

The Governance and consultation arrangements of NICNAS to the extent to which they support the effective delivery of NICNAS’ functions

The efficiency and effectiveness of NICNAS operating arrangements, with particular regard to the protection of human and environmental health, the management of risk, and compliance costs for business

Any implications for the resourcing of functions currently cost recovered, should the review recommend changed responsibilities.

PACIA endorses the view that the review should have “particular regard to the recommendations of the Productivity Commission Research Report: Chemicals and Plastics Regulation, July 2008”…and reforms under the COAG Seamless National Economy partnership.

8.2 The NICNAS Review Discussion Paper

The Discussion Paper is disappointing (deficient) in that there is no strategic policy analysis or policy framework leading to the described options. The options are commonly a set of tasks that do not address key issues confronting the regulation of industrial chemicals. They do not lead to improvements in regulatory efficiency or effectiveness.

PACIA’s responses to the questions raised in the Discussion Paper are provided at Attachment 2

Attachment 1

Model for efficient and effective management of certain aspects of industrial chemicals regulation

Formulation of strategic policy and oversight

Assessment of hazards and risks

Risk-management, Standard setting

Administration of agreed standards and monitoring impacts

Department of Health and Ageing

NICNAS

Relevant Ministerial Standing Councils, DoHA (Scheduling), DEEWR/Safe Work, DSEWPaC, ACCC

States/Territories • Health• Environment• Work Health

Safety• Consumer

Protection

Strategic

policy/oversight

Implementation

strategy

Informing

policy

Assessment outcomes,

recommendations

Informing risk-

management

A few examples of chemicals

regulation and management not

directly NICNAS related:

• Chemical labelling, packaging, SDS

• Dangerous Goods transport (air, land, sea)

• Dangerous Goods storage

• Chemical diversion (illicit drugs, security concern)

• Waste Management• Water management

including trade waste• Contaminated land

management• Work Health & Safety• Hazardous chemicals• National Pollutant

Inventory• Australian Packaging

Covenant• Food Standards Code• Major Hazard Facilities• Trade measurement• Gene technology

regulation• Ports management• Land use planning• Product Stewardship

legislation• Control of use

legislation• Regulation of

Standing

Committee on

Chemicals

The SCOC

objective is to

achieve an

effective and

efficient national

system of

chemicals and

plastics

regulation. The Committee is

part of the

governance

framework.

Attachment 2

NICNAS Review Discussion Paper - Questions

Part 4 – The regulatory framework for industrial chemicals (options A1 – A3)

Do you think that an industrial chemicals risk assessment and risk management manual would assist? If not, why not?

If so, what are the specific matters that could usefully be addressed in the manual?

What are the strengths and weaknesses of the options?

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The Options presented above do not address any of the substantive issues for The Regulatory Framework for Industrial Chemicals.

The 2008 Productivity Commission Report4 proposed an institutional and regulatory approach for chemicals and plastics regulation:

Formulation of strategic policy and oversight of the institutional and regulatory arrangements — a national function, to be undertaken by ministerial councils underpinned by intergovernmental agreements.

Assessment of the hazards and risks of chemicals — a national, science-based function to be undertaken under statutory independence.

Risk-management standard setting — a national function to be undertaken by independent statutory agencies within the policy frameworks of the ministerial councils.

Administration of agreed standards and monitoring of their impact — jurisdiction-specific functions to be undertaken by their own agencies or delegated to other bodies such as national regulators.

The Commission made the following key recommendation:

The Australian Government should generally limit the role of NICNAS to the scientific assessment of the hazards and risks of industrial chemicals. The power to annotate the Australian Inventory of Chemical Substances to ban or phase out chemicals, and the responsibilities for administering the Cosmetics Standard 2007, and for implementing the Rotterdam Convention, should be removed from NICNAS.

Recommendation 4.3

The role clearly articulated by the Productivity Commission was that NICNAS fitted the second bullet point above - Assessment of the hazards and risks of chemicals.

From time to time NICNAS has tried to dabble in risk management, most recently with draft recommendations for the fire retardant HBCD (2011) and been required to change its position

The objectives of any reform under this section must be to define the roles and responsibilities of NICNAS (giving consideration to the PC recommendation) and the roles and responsibilities of other agencies in the industrial chemicals regulatory framework.

This must occur before any other considerations – it sets the regulatory policy and operational framework.

Option A1: develop a risk assessment and risk management manual - This is a ‘task’ that can only be completed once the regulatory policy and operational framework has been defined and agreed.

Option A2: establishment of a body to succeed the Standing Committee on Chemicals The Standing Committee was established by the Council of Australian Governments (COAG) as a governance structure for all chemicals and plastics regulation. Continuation of the Standing Committee or a successor organisation will be determined by COAG.

4ProductivityCommission2008,ChemicalsandPlasticsRegulation,ResearchReport,Melbourne

Option A3: NICNAS MOU – The MOUs are key coordinating instruments. It is unfortunate that good governance has not resulted in their updating for more than 20 years. As for Option A1, this is a ‘task’ that can only be completed once the regulatory policy and operational framework has been defined and agreed.

Option K1: NICNAS relationship with the Department of Health and Ageing – Whilst this option is the final option under ‘other …’ at the end of the document it, the separation of policy and operational roles between the Department and NICNAS has been of significant concern to industry over many years. The Protivity Report has clearly identified very serious issues. This must be given high priority and status under the Regulatory Framework considerations.

Part 5 – New industrial chemicals (options B1-B6)

What are the strengths and weaknesses of the options for addressing the problems and objectives identified?

If weaknesses are identified in relation to any of the options, are there other options that also meet the objectives?

If these options were to be adopted, what are some of the implementation issues that would require consideration?

What would be the likely impact on your organisation, if this approach were adopted?

If NICNAS were able to refuse both an assessment certificate (Option B4) or listing on AICS (Option B5), under what circumstances would this be appropriate?

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The Discussion Paper notes that each of the options would likely result in legislative changes. There is need for considerable scoping of some of the options.

There is merit in further consideration of options B1 and B2 including other options identified in the LRCC evaluation report.

Option B3 does not reflect the intent of the PC Recommendation 4.5 which was to introduce a statutory time frame for screening.

There is merit in further consideration of option B4-1st bullet with regard to a ‘drop’ approach.

Various options confuse the roles of risk assessment and risk management – again highlighting the need for resolution of the key considertion of roles and responsibilities.

The proposal that NICNAS takes on the role of an interim risk manager (B4, B5-3rd bullet) is not supported and again highlights the key consideration of roles and responsibilities.

Option B5 misrepresents the considerations of the Productivity Commission in arriving at its Recommendation 4.5:

“The Commission does not consider that the response of the standard-setting bodies should be a pre-requisite to NICNAS issuing an assessment certificate. First, general regulatory requirements already require some regard for chemical assessments. For example, a generic legislated duty for managing OHS risks applies regardless of any decisions by the standard-setting body on the specific chemical, making it prudent for employers to take into account relevant NICNAS recommendations. Similarly, generic duties not to cause an environmental hazard exist in state and territory environmental legislation. Second, provisions already exist for urgent decisions by some standard-setting bodies (for example, in poison scheduling), so the regulatory lag can be minimised when the risks are deemed sufficiently high. Third, requiring the standard-setting bodies to respond before an assessment certificate is issued could impose significant costs on introducers of chemicals through delays.

RECOMMENDATION 4.4

All relevant national standard setting bodies should be required to respond to NICNAS recommendations within defined time limits. NICNAS should maintain a public schedule of all responses.”

The options presented do not address the significant disincentives for the introduction of new chemicals to the Australian market.

Of the approximately 4790 “introducer” companies that are subject to NICNAS company registration NICNAS has indicated that only about 2% of these companies introduce new chemicals.

Decisions on whether or not to introduce new chemicals are made based on a number of factors, including:

market size and value

fees and charges for the application

submission preparation costs and submission management through the process

data availability

generation of data specifically for Australia (even though the chemical may be freely available overseas)

time to market

post-market requirements such as annual reporting

post-market restrictions

lost opportunity costs – diversion of resources to servicing the NICNAS processes and requirements

differences between Australian and overseas regulatory approaches

At the international level, decisions on introduction of new chemicals in Australia (0.6% of global) sales) are sometimes made very easily. As identified in the 2009 LRCC Evaluation Report, some companies practice general avoidance of new chemical introductions based on concerns of the regulatory burdens. However commonly the introduction of new chemicals does not pass even modest expectations for return on investment – this also builds a barrier where Australia is just not considered for new introductions.

There is critical need to implement processes that accept the assessment of outcomes from recognised overseas regulators – this is not the subject of any of the options. The industrial chemical regulatory systems of Europe, United States and Canada service combined populations of more than 850 million people. There is need for Australia to move away from arguing whether or not there are differences in methodologies or approaches and accept the outcomes of assessments from the major recognised regulatory systems

Part 6 – Existing industrial chemicals (options C1-C6)

Do these options address the problems identified in relation to existing chemicals? If not, why not?

What are the implementation implications?

If these options were (or were not) to be adopted, how would this impact on your organisation?

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There is little industry confidence in the current NICNAS approaches to the review of existing industrial chemicals. IMAP is seen as an expensive “academic” rather than regulatory approach to existing chemicals, noting that there are already significant programs in Europe and North America from which information can be harvested.

There is a disconnect between the level of scrutiny that is applied to programs such as this under a “cost-recovered” agency such as NICNAS verses if the money was to be recovered from consolidated revenue.

Options C1, C2, C3 cannot be considered in isolation of a detailed description of changes within a package of reforms.

Option C4 can only be considered following resolution of the Productivity Commission recommendation:

The Australian Government should generally limit the role of NICNAS to the scientific assessment of the hazards and risks of industrial chemicals. The power to annotate the Australian Inventory of Chemical

Substances to ban or phase out chemicals, and the responsibilities for administering the Cosmetics Standard 2007, and for implementing the Rotterdam Convention, should be removed from NICNAS.

Recommendation 4.3

A key issue is where Regulatory Impact Analysis occurs in the processes.

Option C5 (essentially a 5 year inventory update) is very high cost to industry (breaking up formulations for mixtures/products, seeking information from overseas suppliers, re-aggregation of information etc) and would require significant NICNAS resources (industry funded) that might be ‘nice’ housekeeping but would not achieve a health, safety or environment outcome. It seems likely that this would not pass a cost-benefit analysis under Regulatory Impact Analysis.

Option C6 is dependent on outcomes from the other options.

Part 7 – Post market monitoring and enforcement (Options D1-D3)

What are the strengths and weaknesses of the options?

Does an adverse effects reporting system address the problems and objectives identified?

What would be the impact of an adverse effects reporting system on introducers?

Are there other ways in which NICNAS’ post-market monitoring and enforcement capacity could be improved?

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Option D1: NICNAS started a consultation on the issue of secondary notification in late 2011. PACIA’s 29 February 2012 submission to the NICNAS consultation made the following recommendations:

a. NICNAS implements the following measure:

add a statement in each AICS record of a chemical assessed as a new chemical that secondary notification conditions may apply. This approach is consistent with that used for assessed existing chemicals and can be implemented easily and quickly by updating the record template for assessed chemicals

b. that the obligations of introducers, with regard to secondary notification, be considered as part of the major review of NICNAS, or other process that may entail legislative development

c. that measures that directly link AICS entries and assessment reports, or provide for identification of assessment reports, are not progressed

There is inadequate information presented under Option D1 to be able to make further comment on proposals.

Option D2: Consideration of an adverse experience reporting scheme was raised as part of the LRCC Review process in about 2004. It was “parked” as requiring further scoping. There has been no further scoping.

In the past the National Drugs and Poisons Scheduling Committee considered information from Poisons Information Centres when reviewing specific substances. There are a range of existing mechanisms.

Establishment of a separate adverse experience reporting scheme under NICNAS does not necessarily have any merit. Raw information e.g. a person found a dead pigeon in their backyard does not have value – it is only after investigation that a chemical caused the death (and the circumstances) that information may become relevant. This is a more appropriate consideration for the risk-management entities.

As identified separately in this brief, there is a key need to define NICNAS roles and responsibilities with regard to risk-management.

Option D3: There may be merit in consideration of the NICNAS compliance tools – this needs to be properly scoped in context of future NICNAS regulatory roles and responsibilities i.e. it is not a stand alone.

Part 8 – Other reforms – release of information and confidential commercial information (Options E1-E2)

How would the release of information to other relevant government agencies impact introducers?

What are some of the implementation issues that would require consideration?

What would be the impact of these options?

Are there any other ways in which the identified problems can be addressed?

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There have been no consultations or discussions with industry. The issue needs scoping with particular regard to regulatory treatment of commercial business information, protections and other aspects.

This is not a simple consideration and requires a detailed process.

Part 8 – Other reforms – use of foreign schemes / international assessments (Options F1-F2)

Do these options strike an appropriate balance between the use of international assessments/harmonisation and the need to ensure that Australia retains the capacity to undertake Australian relevant risk assessment and management where necessary?

If these options were to be adopted, what are the implications?

If these options were (or were not) adopted, how would this impact on your organisation?

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Use of foreign schemes/international assessments

PACIA’s 14 December 2011 submission to the NICNAS Review made the following recommendation:

Accept the outcomes of assessments from recognised overseas regulators

The industrial chemical regulatory systems of Europe, United States and Canada service combined populations of about 850 million people

There is need for Australia to move away from arguing whether or not there are differences in methodologies or approaches and accept the outcomes of assessments from the major recognised regulatory systems

Part 8 – Other reforms – chemicals in articles (Options G1-G2)

Do these options address the problems relating to articles?

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The role of NICNAS with regard to articles has been an issue for regard approaches to the recent HBCD Priority Existing Chemical assessment. There is need to clarify the role of NICNAS with regard to articles i.e. NICNAS should be in compliance with its legislation.

Part 8 – Other reforms – chemicals in cosmetics (Option H1-H2)

If these options were (or were not) to be adopted, how would this impact on your organisation?

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Option H1: PACIA supports the Productivity Commission recommendation:


Recommendation 4.3

Option H2: PACIA members supply ingredients for cosmetic products rather than market cosmetic products. PACIA therefore sees ACCORD Australasia as the lead industry association dealing with cosmetic products.

Part 8 – Other reforms – Import and export of chemicals under the Stockholm and Rotterdam Conventions (Option I1-I2)

What are the implications of maintaining the status quo?

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Options I1 and I2 appear to be contradictory

PACIA supports the Productivity Commission recommendation:


Recommendation 4.3

Part 8 – Other reforms – Governance – Committees (Option J1)

If the options in this Discussion Paper are preferred, what does this mean for the governance committees of NICNAS?

What committees are needed? For example, would it be useful to have a strategic advisory committee advising the Director of NICNAS?

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Option J1 proposes that once the preferred reform options have been identified that consideration be given to the most appropriate role and membership of committees to best support the Director of NICNAS. This consideration needs to be informed through consultation with stakeholders

Part 8 – Other reforms – Governance – Relationship with the Department of Health and Ageing (DoHA) (Option K1)

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Option K1: NICNAS relationship with the Department of Health and Ageing – Whilst this option is the final option under ‘other …’ at the end of the document it, the separation of policy and operational roles between the Department and NICNAS has been of significant concern to industry over many years. This must be given high priority and status under the Regulatory Framework considerations.

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