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Analysis of the Legislation and its Administration
The Imported Food Inspection Program (IFIP) largely operates on a risk and performance-based approach to food imports, which is discussed in more detail in Section 4.2.1. End-point inspection and testing are the main bases for determining the compliance of imported foods with the applicable standards. There are provisions in the Act for recognition of overseas production control systems and government supervision of production which are implemented by IFIP through certification agreements with overseas authorities.
The "risk" of foods is determined by ANZFA and the program then assesses food using this scientifically based risk assessment. The program has detected a range of failing foods through its various processes and these foods are then dealt with in the following manner:
- destroyed, or
- treated to bring it into compliance with Australian standards, or
- re-exported, or
- downgraded to animal food if applicable.
For the period 1995 to 1997, the number of entries referred to IFIP for action has remained fairly steady, being between approximately 19 500 and 20 500 each year with IFIP closely inspecting up to 18 000 of these each year. From IFIP management statistics, the Review Committee has determined that failure rates have been between 5.9 and 6.8 percent for all lines of food inspected. Most of these certainly over the past 18 months have been for labelling, making up just over 60 percent of all failures detected.
The types of food failures have been analysed by the Review Committee for the three-year period ending June 1998. Reasons for failure were classified in six categories of declining significance to public health and food safety:
Category 1: Microbiological failures with the potential to pose high risk to human health, and extraneous failures with the same potential.
Category 2: Failures with the potential of longer term health risks, including: heavy METAl, chemical residues, aflatoxins, histamines and ethylene oxide residues.
Category 3: Composition failures, such as illegal additives or additives in excess of allowable limits.
Category 4: Extraneous matter that renders products unusable in presented form, and dented cans.
Category 5: Major labelling failures, including misleading health claims, missing health warnings and undeclared ingredients.
Category 6: Minor labelling failures, including lack of importer details, lack of lot codes and failure to declare country of origin.
The failure data is presented on a quarterly basis for risk foods (foods of a high inherent risk to human health and safety, as determined by ANZFA, see Section 4.2) and surveillance foods (foods other than risk foods) in Figures 4.1a and 4.1b, respectively. The data needs to be interpreted cautiously as a different approach to inspection is taken depending on the classification of food under the Act and Regulations (see Section 4.2). Risk foods are tested for the contamination identified by ANZFA as a potential health risk (categories 1 and 2 above) as well as for labelling compliance (categories 5 and 6 above). Tests for risk and surveillance foods vary to reflect the inherent characteristics of the foods.
For risk foods, failures for health risks (categories 1 and 2) have declined over the period. For surveillance foods, there have been few failures in the past two years on grounds of high risk to human health. Failures for the presence of non-permitted additives or for the level of permitted additives above the maximum allowed limit have, however, remained constant. One explanation is that, as discussed in Section 2.5.2, Australia's food standards are highly prescriptive and have tended to be out of step with international practice on permissions for additives. These standards are currently under review.
Non-compliance with labelling requirements has been the major cause of failures. Indeed, the one category of failures showing an increase is minor labelling failures for surveillance foods. The high incidence of labelling failures is a major concern for importers and has serious implications for the operations of IFIP, especially in regard to the administration of Holding Orders. The issues surrounding labelling are discussed in Section 4.5.
The program costs of IFIP are fully recovered from industry. Current charges are shown in Table 4.1.
Food subject to certification agreements (see Section 4.7.2) does not attract inspection or testing charges but the documentation processing fee is charged for each consignment. Inspection fees are applicable to inspection of imports, and supervision of the treatment, destruction or re-exportation of failing food. Importers of all but certified food are liable for the costs of any analysis carried out by the Australian Government Analytical Laboratories (AGAL).
While there has been strong support in submissions and consultations from stakeholders for the need for government regulation and an imported food inspection program, stakeholders have indicated there is a need for improvement in a number of areas of program delivery.
Figure 4.1a Imported food failures by type: 1995-1998
The failures are listed by type, each successive chart representing failures of a decreasing order of severity. Failures have been aggregated by quarter. The vertical axis shows the number of failures and the horizontal axis the relevant quarter.
Figure 4.1b Imported food failures by type: 1995-1998
The failures are listed by type, each successive chart representing failures of a decreasing order of severity. Failures have been aggregated by quarter. The vertical axis shows the number of failures and the horizontal axis the relevant quarter.
Note: The scale on the vertical axis varies from Figure 4.1a.
Table 4.1 Current program charges
Electronic entry lodgement
Lodgement in AQIS Import Monitoring System (AIMS)
In its submission, the Australian Food Council observed:
The benefits of food regulations are that they create a framework providing confidence to the consumer in the integrity of food, and an environment conducive to business producing and marketing food products.
The Australian Consumers' Association submission stated:
There is a special case for having a special program for inspecting imports of food and beverages. Over the past ten years, our research has shown that food has risen to the top of the consumer agenda. Consumer concerns have come to focus on food safety; and also on issues of quality, and labelling and other information deemed necessary by consumers to make an informed choice.
However, in their submissions and during consultations, many stakeholders raised the following issues:
- an inequity in the level of testing between different importers;
- a lack of recognition of a good compliance history for importers;
- costs associated with inappropriate testing, inspection and analysis delays;
- a lack of transparency in the operation of the scheme; and
- a perceived lack of expertise of some inspectors.
These and other stakeholder views have been carefully considered and form an integral part of this report. See Appendix F for major stakeholder concerns.
The Act and Regulations have three inspection categories which determine the frequency of inspection: risk, active surveillance and random surveillance. The risk and active surveillance foods are determined and routinely reviewed by ANZFA. Upon advice from ANZFA, the Minister of Agriculture, Fisheries and Forestry may make an order specifying food within the inspection categories.
All risk categorised foods are inspected and tested, whereas all surveillance foods referred to IFIP are inspected, but not all are tested.Risk categorised food: Food that has the potential to pose a high or medium risk to public health. At the point of entry, the Australian Customs Service (ACS) refers 100 percent of risk categorised foods, electronically, to AQIS for inspection status.
Examples of risk categorised foods and the program tests that are determined for them, based on the inherent risks associated with these foods, are shown in Table 4.2.
A performance-based approach applies. Food products from foreign producers with a consistent history of compliance are inspected less frequently than products from new suppliers or those with a history of failure against Australian standards. The three inspection rates are defined in legislation (Imported Food Control Regulations), and any failure results in immediate intensification of the inspection regime. Risk categorised food remains subject to AQIS control pending the analytical results. The performance-based inspection levels are as follows:
- the first five shipments of a particular food first arriving from a particular producer are inspected; after five consecutively cleared shipments, inspection intensity drops to next level;
- one in four shipments is then inspected (the other three are automatically released); after 20 cleared inspections and, if importation follows a steady pattern, inspection intensity drops to the next level;
- one in 20 shipments is then inspected (the other 19 are automatically released)
Active surveillance category: 10 percent of shipments of designated active surveillance foods, from every supplying country, are inspected. These products are released upon sampling. The test results of active surveillance foods are analysed by ANZFA to determine the appropriate category classification for the foods.
Table 4.2 Examples of risk categorised foods and program tests
Cheeses, soft and selected
Random surveillance category: 5 percent of all consignments of all other foods not included in the risk or active categories are inspected. These products are released upon sampling. Neither AQIS nor the importer have the ability to predict which shipment or which foods will be impeded for inspection.
A Holding Order can be issued where an active or random surveillance food does not comply with the standards. A Holding Order against a foreign supplier effectively raises the inspection category of the food up to "risk" status. This means that all future shipments of that food from the offending supplier are automatically detained and held until compliance with Australia's requirements is confirmed. After five clear inspections, the food reverts back to its prior category. Holding Orders are described in more detail in Appendix G.
The Review Committee noted that stakeholder submissions and interviewees have supported the current approach to dealing with risk categorised food used by IFIP, but were less satisfied with the surveillance category referrals, particularly the active surveillance foods. The Food and Beverage Importers Association submission stated that:
. . . the active surveillance classification, as currently operating, is inflexible, leads to overtesting and not in line with risk analysis principles. There might be need for a classification for emergency or special testing, but the current scheme is an unnecessary cost for importers, which is passed on to consumers.
No commodities have been elevated to risk status through monitoring active surveillance foods.
Other stakeholders provided similar comments and further commented that, considering the tests are used by ANZFA as a policy assessment tool, levels of testing in this category are high, and costly to industry and the community. The issue of inspection levels is discussed in Section 4.2.2.
The Review Committee was of the opinion that there appear to be no health-related reasons for the continuation of the active surveillance category, given that the monitoring conducted in the past six years has not resulted in any foods being reclassified. On the other hand, there still remains a need to target specific foods should the potential for a health concern arise a function best performed by IFIP, in consultation with ANZFA (see Section 4.2.3).
The continuation of a new combined surveillance category with a random inspection element is considered necessary by the Review Committee to provide a deterrent to non-compliance by importers. The data presented in Figure 4.1b clearly demonstrates the deterrent effect of the inspection of foods in the surveillance category for health-related failures.
Recommendation 2: The Review Committee recommends that a new combined surveillance category be established in legislation for all foods other than risk categorised foods.
4.2.2 Inspection levels and strategies
Stakeholders commented that under the present system, no account was taken of measures that importers used to ensure that surveillance foods they imported complied with Australian requirements. As such, there is no incentive for importers of surveillance foods to take measures offshore in regard to the foods they import. The submission provided by the Industry Working Group on Quarantine (IWGQ) stated:
The current IFIP appears to be driven by the assumption that every importer, and every product is an equal potential risk and therefore a percentage of every importer's product should be inspected. . . The opinion of industry service providers and importers was that this situation effectively increased the risk of other possible contaminated foods and beverages passing the import barrier undetected by AQIS.
The Review Committee noted that the AQIS submission dealt with this subject as follows:
Surveillance categories do not provide relief even when a good compliance record may exist for the particular product. For example, because of the relatively high proportion of imported alcoholic spirits (a random surveillance food), there is a consequential high rate impediment of this commodity. There has been no finding of noncompliance of a food safety nature, yet the legislation requires that the products are impeded and evaluated at the 5% rate.
The Review Committee supports the principle of encouraging importers to accept greater responsibility. Measures taken by importers of surveillance foods, and factors such as company and industry performance should be taken into account under a performance-based system as with risk foods. The current inspection regime results in the anomalous situation where the importer of a risk food with a good compliance history is inspected at a 5 percent rate, the same as an importer of a random surveillance (low risk) food, and an importer of an active surveillance (low risk) food with a good compliance history is inspected at a 10 percent rate.
It is six years since the Act was introduced and, since that time, changes have occurred in the imported foods industry and in approaches to food safety. Although stakeholder concerns focussed on testing surveillance foods, the Review Committee believes that it is timely to reassess the inspection levels and strategies for both risk and surveillance foods.
The Committee is of the opinion that assessment should be undertaken by AQIS (in consultation with stakeholders) to determine appropriate inspection levels and a performance-based testing regime for risk and surveillance foods to achieve the objectives of the Act. Factors which should be taken into account in such a system include :
- compliance history of the importer and supplier; and
- whether the importer has a compliance agreement with AQIS based on of a quality assurance-type system as proposed in Section 4.7.3.
A performance-based system for surveillance as well as risk foods would have the twofold benefit of:
- providing incentives for importers to source compliant products from reliable sources; and
- better targeting of program resources based on risk profiling, eliminating the need to routinely inspect imports from importers with a good compliance record and products with a good compliance history.
This would result in an inspection system which would target resources more efficiently and effectively, and overcome stakeholders' concerns that the present inspection and testing system does not reflect food safety risk or company performance. While IFIP would become more proactive, ANZFA would still determine the risk categorised foods.
Recommendation 3: The Review Committee recommends that:
assessment be undertaken by AQIS, in consultation with stakeholders, to determine appropriate inspection levels and strategies for risk and surveillance foods to achieve the objectives of the Act; and
AQIS consult with stakeholders to develop and implement an assurance regime that is based on individual and collective performance in the imported food industry.
The rates at which types of food are inspected are currently specified in the legislation. The Review Committee is of the view that this makes the system too inflexible and reduces the effectiveness and efficiency of the inspection regime.
Legislation which specifies testing rates constrains risk profiling and targeting, based on current information. The principles on which inspection and testing policies are based should be specified in the legislation but the testing rates should not be specified in the legislation. These should be authorised at a suitable level (eg, the Secretary of the Department of Agriculture, Fisheries and Forestry).
Recommendation 4: The Review Committee recommends that:
- inspection rates not be detailed in the legislation; and
- legislation specify the factors to be taken into account when setting inspection strategies and rates.
In the Committee's opinion, reviewing the testing rates, and introducing greater flexibility and performance-based testing for all imported foods and beverages, together with changes to labelling recommended in Section 4.5, will overcome stakeholder concerns about the inequities of the current surveillance foods system and alleged over-inspection. In addition to these recommendations, the Committee gave extensive consideration to changing inspection of surveillance foods from a line-based system to a container-based system. Whilst the latter approach may provide some advantages for importers of multi-commodity shipments who commented that most of their shipments are currently referred to IFIP further consideration of that approach is premature and should be deferred until the recommended changes have been evaluated.
4.2.3 Policy development
To ensure the safety of imported food for consumers, AQIS and ANZFA need to be able to make objective scientific risk assessments on the products that are imported. Many factors are involved in this process, including gathering data about the potential risks. For example, if AQIS or ANZFA consider there is a risk of a contaminant in cereal products from certain countries or geographical locations, but have no data to support increasing the inspection category to "risk", then IFIP is a valid mechanism to collect data and to determine if the suspected risk exists. This activity would not be performed for compliance purposes, but for enabling scientifically based risk assessments to be conducted. The active surveillance category is presently utilised in this role together with activities undertaken by ANZFA, and so both industry and government fund this area. As an activity conducted for the public good, its funding is best sourced from government (ie, community service obligation funding) rather than recovered from industry.
Recommendation 5: The Review Committee recommends that the legislation includes provision for imported food to be tested specifically for the purpose of policy development by ANZFA and AQIS, this testing, as now, to be funded by government.
Many stakeholders commented on the perceived inappropriateness of much of the testing performed under IFIP. They see this as imposing a considerable cost burden. The Committee defined the following issues as central to the tests applied:
- tariff codes and the selection of tests using AQIS Information Management System (AIMS);
- the selection of tests types by ANZFA; and
- officers' expertise (see Section 4.8.5).
4.3.1 Selection of tests using tariff codes and AIMS
Tests are allocated within AIMS for various commodities most of these being risk categorised foods or those on Holding Orders and the results provide a history for each producer and food. This history determines the inspection rate of those foods, with compliant producers benefiting from lower inspection rates and those with compliance problems remaining on or elevated to higher rates of inspection. This system works well, subject to the problems of tariff code definition of products. The relatively broad definition afforded by the tariff codes does not always match the precision required by IFIP, and has led to inappropriate tests being allocated against products. For example, a test allocated for dried peppercorns (a risk category food) will also affect peppercorns in brine, which are not subject to the same health risks. It is necessary, therefore, to be able to distinguish between the two.
Tariff codes are an internationally accepted method of classifying foods for trade and (as such) would be difficult to change. IFIP will need to continue to have a computer system that is able to record a history against various criteria that are selected. This information is needed to maintain a national database to ensure that imports are treated consistently, irrespective of where they are inspected. The nature of the products imported can often only be verified at inspection. AQIS is presently investigating the potential for expanding the scope of statistical codes associated with tariff codes, for quarantine purposes, and the Committee would encourage AQIS to extend this to imported foods. The problems with tariff codes are further exacerbated by the lack of officer expertise and for this reason AQIS officers should be sufficiently trained to ensure that inappropriate tests allocated by AIMS are not done on products. This issue is discussed further in Section 4.8.5.
Recommendation 6: The Review Committee recommends that AQIS investigate the use of the tariff code system with a view to achieving more focussed referrals of imported food.
4.3.2 Selection of test types by ANZFA
ANZFA, using its scientific risk assessment procedures and in consultation with AQIS and industry, determines the tests that are to be undertaken for the various commodities in the risk, active surveillance and random surveillance categories. IFIP then issues notices which detail the range of tests to be allocated against the various commodities that are imported and the notices are made available to all officers and interested parties.
The category listings and tests are current until they are reviewed by ANZFA. In one instance, the active surveillance category list and associated tests were in place for over two years, leading to many complaints from importers that performing the same tests on the same foods was of little value, especially when there had not been any failures on previous imports under these conditions. In response, many IFIP officers extended the range of tests performed on these foods, leading to more uncertainty for importers. Lengthy delays in changes to category lists and associated tests have caused problems, and in the opinion of the Review Committee may have been through a lack of resources being allocated by both ANZFA and AQIS to this function. Implementation of the recommendation of the Review Committee to have only risk and surveillance categories will simplify these reviews, as the risk category list is likely to remain reasonably consistent.
The appropriateness of tests determined by ANZFA has been questioned by stakeholders and on occasions by experienced IFIP officers. Some of the problems result from the difficulties encountered with tariff code selection, discussed in more detail in the previous section. The ANZFA submission supported this view, commenting on:
. . . [the] difficulty in identifying the correct tariff code to use to impede product where a potential public health and safety risk is known; . . . [and the] difficulty in providing generic instructions to AQIS inspectors on what tests to apply to particular foods.
The Review Committee welcomes the moves by both agencies to relieve this problem by developing more detailed interpretive guidelines on testing for officers at an operational level. Problems have been exacerbated by the lack of expertise of some of the officers undertaking IFIP inspections (see Section 4.8.5 for more discussion on this point), and both agencies not taking into account difficulties in implementing policy decisions at an operational level. The incidence of problems, together with the reasons, needs to be determined and solutions adopted to suit both parties. Additionally, the program needs to be flexible in its approach to ensure that any policy changes are able to be implemented in a timely fashion.
Recommendation 7: The Review Committee recommends that AQIS and ANZFA allocate adequate resources to ensure operational effectiveness of the Imported Food Inspection Program.
IFIP laboratory analysis costs industry in the order of $1.2 million per year. There were many written and oral submissions made to the Committee concerning laboratory testing, which can be separated into issues concerning client service and technical accuracy. While most stakeholders were satisfied with the standard of work being performed by the Australian Government Analytical Laboratories (AGAL), there were comments on the length of time taken for testing and claims of high charges.
4.4.1 Client service
Section 34 of the Act allows the Secretary to appoint analysts to test imported food. However, Cabinet Minute No 11946 of 1988 specified that all analytical work for the program should be performed by AGAL. Recently, following changes to government policy, this was altered to allow importers to use other service providers that meet the requirements for the analysis of surveillance food. The Committee noted that as at 25 August, 1998, 12 laboratories other than AGAL had been appointed as analysts under the Act.
In its submission AQIS states:
Ideally, importers should have a wider choice as to what laboratory service providers can be used to test imported food. In the view of AQIS such arrangements would be technically defensible, where participating laboratories are National Association of Testing Authorities (NATA) accredited and participate in regular performance testing programs.
This approach is repeated in submissions from the Customs Brokers' Council, Food and Beverage Importers' Association, New Zealand Ministry of Health, the Tasmanian Department of Health and others.
The Committee considered that a more contestable environment for laboratory testing would be beneficial to the importing industry. This would allow importers to "shop around" for analytical service providers who meet their requirements for factors such as price, turnaround time, and reporting. However, at present, not all laboratories supply all services needed or required for imported food, and there may be some restrictions on usage.
Use of laboratories other than AGAL may result in changes in operation for AQIS, particularly in respect of the transportation of samples and release of consignments of surveillance foods. Samples are now delivered to AGAL by AQIS. As importers choose to use other analytical service providers, AQIS may need to review the mechanisms for the delivery of samples to ensure their integrity.
Recommendation 8: The Review Committee recommends that suitably accredited laboratories be permitted to analyse imported food samples for both risk and surveillance categories of food.
IFIP previously notified importers of the results of all testing and issued releases on all tested foods which passed, but this has been changed recently to providing only releases on foods that had been held pending results. This had led to a level of importer dissatisfaction with service delivery by IFIP. AGAL stated that flowing from the AQIS decision, calls from firms about release of food had increased its workload. These calls are referred on to AQIS, which is the authority for providing releases on consignments. In its submission AGAL states:
This issue is complicated by the recently changed arrangements whereby importers are required to "self-assess" results provided by AGAL and to make a decision to proceed with distribution/sale of food without a confirmatory indication from AQIS. Prior to this administrative change, AQIS inspectors performed a useful role in providing a pass/fail message to importers, particularly those from small to medium sized enterprises who do not necessarily have the appropriate knowledge base in-house to interpret test results.
The Review Committee is of the opinion that IFIP, as the body responsible for sampling and testing, should provide notification of results and releases to importers for allfoods tested. This would provide efficiencies to industry, assisting importers to make considered decisions on future imports of the same products.
Recommendation 9: The Review Committee recommends that AQIS provide notification of results and releases to importers for all foods tested under the Imported Food Inspection Program.
4.4.2 Technical accuracy
The accuracy of results is critical as any errors could have the potential for serious impacts to importers, consumers and AQIS. False negative results could culminate in a (preventable) food poisoning incident, while false positives have measurable cost disadvantages for industry and the community. To assist in controlling this situation, the Committee noted that AQIS has developed a set of requirements for laboratories to be appointed under the Act. The primary requirement for appointment of laboratories is NATA registration, in keeping with the Memorandum of Understanding between the Commonwealth and NATA. AQIS also demands that laboratories meet other criteria including minimum turnaround times, lines of reporting, and notification to AQIS if NATA registration or method accreditation is discontinued or inoperative.
An important control in maintaining integrity and technical accuracy is the proficiency testing process, and laboratory participation is part of the criteria set by AQIS. The Committee noted the comments regarding the availability of proficiency testing made by Dr Terry Spencer (AGAL) as well as those made in the AGAL submission.
Dr Terry Spencer (AGAL) commented:
Satisfactory performance in proficiency testing should be part of the agreements between commercial laboratories and AQIS.
Recommendation 10: The Review Committee recommends that AQIS facilitate the development and implementation of a system to verify the validity and accuracy of test results provided by laboratories.
As part of its normal practice, AGAL provides extended reports on tests in addition to those specified by IFIP, if such testing is seen as warranted by AGAL. For example, if a sample appears to have high coliform counts, AGAL routinely extends analysis and looks for E. coli. Routinely, pesticide analysis is extended beyond the standard list. AQIS is given reports on these if any positives are found. AGAL amortises the cost of this across all testing done for IFIP. In the opinion of the Review Committee, extended reporting is appropriate and testing charges may, in some circumstances, need to be increased to reflect extra laboratory costs.
The Review Committee encourages AQIS to consider including these and any other extended reporting as part of the agreements with commercial laboratories.
Stakeholders identified labelling requirements as an important issue. The Review Committee found that there are many different agencies involved in monitoring labelling compliance, with a wide range of regulatory requirements:
- IFIP (AQIS and ANZFA);
- State Health and local government agencies;
- Australian Competition and Consumer Commission (ACCC);
- Fair Trading agencies (States/Territories); and
- Australian Customs Service (ACS).
Labelling requirements are part of the Food Standards Code which applies to both domestic and imported foods. The State/Territory Food Acts require labelling satisfying the Food Standards Code to be on products at the time they are sold, in contrast to the Imported Food Control Act for which all requirements must be met at the time of importation. The latter potentially places an unfair burden on importers and the Committee considered whether this could be avoided.
Recommendation 11: The Review Committee recommends that:
- the legislation specify that labelling conform to Australian requirements at the time of inspection or prior to the product leaving the importer's premises (which ever comes first);
- the legislation specify that failures for labelling should be recorded and actioned against the importer, rather than the producer;
- the use of Holding Orders against producers for minor labelling failures be discontinued; and
- AQIS, in consultation with relevant agencies and industry, develop a system to verify labelling compliance of imported foods, post border.
It has been the practice of AQIS to release surveillance food upon sampling, based on the low expectation of a serious food failure. The benefits in the system of "sample and release" are seen as marginal by some importers and customs brokers, who now routinely hold some surveillance foods targeted by IFIP until results are returned from the laboratory. Most stakeholders interviewed make their own risk assessment on surveillance foods, and on this basis hold or release the food in question. This is a commercial decision based on whether the risk of a recall, and the associated costs, justifies the expense of holding the food.
AQIS in its submission to the Review suggested that practices should be amended to remove the "sample and release" approach for "low risk" foods and replace with "sample and hold". The following reasons were stated.
A custom of the IFIP has been to release low risk food upon sampling. The cost of conducting food recalls to the State/Territory Health Authorities has been considerable (although estimates in dollar terms are difficult to get) if the tests later reveal the food failed testing . . . Within the group [of importers] that do not practise this cautionary procedure, are the importers who may gain from quickly on-selling the food.
Because the importers are legally able to "deal" with the goods, low risk food has been treated as a lower priority by AGAL. Samples are often "batched" and delays in commencing the analysis have created a situation where importers, who choose to hold the food, are penalised.
The States which responded pointed to the fact that costs were incurred in the case of product recalls.
The Review Committee considered that the issue of enforcing food safety for surveillance foods which, based on the ANZFA scientific risk assessment, have been determined to pose a low risk, needs to be balanced against commercial considerations:
- the cost of holding all foods subject to test until results are received; and
- the cost of recalls.
The Review Committee believes that it is logical to release all foods to the discretion of the importer because selection for inspection and testing is done on a random basis. The fact that the non-compliant food may be more easily detected by IFIP simply points to the different characteristics of an end-point inspection system, compared to inspection of the production establishment, where problems would be discovered and corrected much earlier. The company decision to release after sampling is purely a business decision. The New Zealand Ministry of Health's submission observes:
On the condition that the importer is responsible for the food product and its compliance with food standards, food should be released after sampling, if the product has a history of compliance or is perishable. Product with a non-existent or non-compliant history should be held pending results. This puts the onus on the importer whether to hold or distribute the food into the marketplace. Where the importer has justified confidence in the food, they can make that informed decision.
If a change to a "sample and hold" regime were put in place, inventory costs would increase. All importers, not just importers of risk categorised food, would bear the cost of the additional stock needed to cover for possible delays in the release of products. The resulting increase in cost would be at least $6.1 million, assuming (as described in Section 5) that the change causes extra stock to be held for 25 percent of surveillance foods imported.
In the opinion of the Review Committee there is not sufficient reason for a change and there are strong reasons not to change from the present release after sampling for surveillance foods. Commercial decisions are based on risk assessment, and domestic producers already make this type of decision. The prime need is to ensure that there are similar standards for both domestic and imported product.
Recommendation 12: The Review Committee recommends that AQIS continue the current policy of release on sampling for non-risk categorised foods.
Ultimately, it is the responsibility of industry to provide safe food. The government sets safe food standards and puts a mechanism in place to monitor compliance, while industry should be responsible for implementing an internal process to ensure those standards are met. The food importing and manufacturing industry is increasingly using technically advanced and integrated systems along the entire food supply chain to identify risks to the production of safe food. These systems offer a greater assurance of food safety, and are less reliant upon end-point testing. An example of such a system is the Hazard Analysis Critical Control Point (HACCP), where a set of steps are used to identify and control specific physical, chemical and biological hazards in a given production process.
The Review Committee considered the impact of equivalence agreements developed between trading partners in respect of food trade. The Committee noted that the Codex Committee on Import and Export and Food Inspection and Certification Systems (CCFICS) has developed Principles for Food Import and Export Inspection and Certification (CAC/GL 20-1995) which state:
Countries should recognise that different inspection/certification systems may be capable of meeting the same objective, and are therefore equivalent. The obligation to demonstrate equivalence rests with the exporting country.
The Review Committee noted that the principle of equivalence was discussed at the last meeting of CCFICS in February 1998 in respect of a proposed guideline on judgment of equivalence of sanitary measures associated with different food inspection and certification systems. Although the future of the proposed guideline is not yet certain, a number of basic principles were documented, including:
- the SPS Agreement obliges Members to accept sanitary or phytosanitary measures as equivalent, and that Members shall, upon request, enter into consultations with the aim of achieving bilateral and multilateral agreements which recognise the equivalence of specified sanitary or phytosanitary measures; and
- CCFICS deliberations confirmed that the equivalence of food control systems, but not the equivalence of specific requirements or standards, should be required.
The Review Committee noted the progress of the CCFICS in developing a guideline on equivalence and strongly supports the underlying principles.
4.7.2 Certification agreements
As mentioned previously, Australia is under an obligation to recognise other countries' inspection/certification systems if those systems deliver outcomes which are equivalent to those delivered by Australian systems. Under the current legislation, AQIS can enter into certification agreements with specified foreign government agencies allowing those agencies to certify that the subject goods met Australian food standards at the time of their production. Shipments are accompanied by a certificate from the overseas authority and, in most cases, a certificate of analysis from an approved overseas laboratory. AQIS presently accepts certificates from nine foreign governments as shown in Table 4.3.
Table 4.3 Certification agreements
All seafood products
Canned mushrooms from approved sources with certification being subject to less intensive post-arrival testing
These certified agreements not only ensure access to Australia's domestic market but also provide for a testing rate of 5 percent, with the exception of canned mushroom from China. While the legislation does not preclude AQIS from charging, AQIS has refrained, in order to encourage importers to use recognised foreign governments to verify the safe production of food. Notwithstanding the incentive provided, the Review Committee found awareness of the certification process relatively low in industry, particularly among the smaller firms (see Section 4.8.9).
The establishment of the certification agreement with a foreign government has usually been on the basis of a written submission, with little or no field assessment by AQIS or its agents. However, auditing of supplier countries' export control systems is routine for many importing countries, and Australia's export controls are, for example, regularly assessed by the European Commission, the United States Department of Agriculture and the United States Food and Drug Administration.
In its submission, AQIS states that in 1997 about 10 percent of the certified shipments, which were analysed, failed to meet Australian requirements and additional costs were imposed on AQIS in pursuing these failures with foreign governments, and the costs passed on to industry. The rate of failure is higher than that of normal shipments and supports the need for on-site audits and a tightening of the certification agreements. Further, because the cost of audit inspections of certified shipments is cost recovered by AQIS from other inspections, cross-subsidisation presently occurs between the importers of certified and uncertified shipments.
The Thailand Centre of Export Inspection and Certification for Agricultural Products (CEICAP) submission states:
AQIS has agreed with CEICAP in certifying system that CEICAP has to certify the process establishment and inspect every consignment of exported products. CEICAP will audit the certified establishments to verify the efficiency of their operations. But AQIS still requested analysis certificate to accompany with certificate of inspection..... The certificate of inspection issued by CEICAP has covered the requirements of Food Standards Code and Imported Foods Program in itself, so it is not necessary to have addition certificate of analysis.
The Review Committee agrees and believes the present certification system appears to have an over-reliance on the accompanying certificate of analysis, rather than the reliance being on the equivalence of outcomes certified by the overseas authority.
Under the present certification system, there have been instances where certified product when tested in Australia was found not to have been held at a suitable temperature. In most cases this has been the result of transport failures that have occurred after the product has left the certifying country. Quality assurance-type arrangements such as compliance agreements between AQIS and the importer designed to include the transport chain up to arrival in Australia would potentially reduce the risks of such occurrences, and would be more consistent with a risk-based approach to food safety. This would particularly apply to perishable produce.
As an incentive to encourage more importers to use certified agreements, the Committee supports greater flexibility in the rate of inspection of certified shipments. The rate of inspection (and associated costs) could then be reduced for importers choosing this option. The Review Committee recommends that the inspection rates should not be stated in the legislation (Recommendation 4).
One consequence of the Trans-Tasman Mutual Recognition Arrangement (TTMRA) is that Australia and New Zealand must have agreement about acceptable certificates from third countries. This has already triggered a review of certification arrangements and will be used as a basis to assess the efficacy of existing arrangements.
Recommendation 13: The Review Committee recommends that legislation be amended to permit AQIS to expand the use of certification agreements with other countries food inspection authorities and that it build more rigour into the present certification system, by provision for:
- review of agreements every three years;
- linking on-site audits to the country's compliance history;
- improved flexibility in relation to inspection rates, including removing them from the legislation(as in Recommendation 4); and
- adoption of an appropriate charging structure to minimise cross-subsidisation, while encouraging uptake of certification.
4.7.3 Quality systems
Quality assurance arrangements and overseas suppliers
The Imported Food Control Act (Section 19) provides the facility for AQIS to enter into quality assurance agreements with overseas suppliers and so have their product treated upon entry to Australia as if it were certified food. This facility recognises that not all foreign governments have reliable export inspection systems, yet individual companies in those countries may well have excellent quality assurance (QA) systems in place. There has been no uptake at this stage. This indicates that the Australian market is not large enough for an overseas company to go to the expense of documenting its system specifically for Australian authorities, or to develop a special QA system that would satisfy Australian requirements. Under the circumstances, quality assurance arrangements with AQIS will only be commercially viable when the overseas company has the potential to benefit by securing some type of recognition. Furthermore, AQIS requirements for approved quality assurance arrangements with overseas suppliers should be sufficiently flexible to allow approval of overseas manufacturers' QA systems which deliver equivalent food safety outcomes. This is consistent with the CCFICS's principle of equivalence.
Quality assurance-type arrangements (compliance agreements) and importers
Some importing companies have told the Committee that they already have in place sophisticated food safety assurance systems; for these businesses IFIP imposes an additional and unnecessary cost. The Committee acknowledges advantages in assuring food safety by extending the concept of approved quality assurance-type arrangements to include importers and notes that this would require legislative change. AQIS favours a quality assurance-type system (a compliance agreement with the importer) that:
- exempts products imported by an approved importer from routine sampling;
- allows AQIS to conduct detailed audit of the importer's system, including access to import records;
- includes a notification clause so that any noncompliance is immediately notified to AQIS;
- is acceptable as part of the food safety plan required by ANZFA;
- is on the basis of an auditable documented system equivalent to other quality assurance-type programs run by AQIS, which includes the controls implemented throughout the production, transport checks upon arrival, etc; and will encompass any certification provided by foreign governments;
- has a "fall back" inspection regime if the importer either is proven unreliable, or voluntarily suspends or revokes the quality assurance arrangement;
- has an "emergency" provision to over-ride the compliance agreement arrangement if the need arises; and
- includes a charging rate for audits.
The Review Committee accepts the AQIS concept of a compliance agreement but stresses the need to assure food safety. A compliance agreement with an importer would need to cover the entire production, transport and storage chain to provide this assurance. Further, regular audits will be required to ensure compliance. Assuming that a QA-type system forms part of an importer's normal management and administrative operations, this process should lower a company's cost by reducing the need for border inspection.
Some importers have indicated to the Committee that, given the range and type of products they import, a quality assurance-type arrangement such as a compliance agreement with AQIS may not be justified. The Review Committee notes that importers will have to institute food safety plans at a future date when the proposed Food Hygiene Standards are implemented. Indications are that it may take as long as six years to complete implementation. This would need to be considered by AQIS when developing requirements in relation to compliance agreements with importers. Further, importers will need access to information regarding AQIS requirements and compliance agreements. This should form part of the information available to stakeholders as discussed in Section 4.8.9.
AQIS is undertaking a pilot project with one importer trialling an inspection mode that will allow the incorporation of a company's QA program into the AQIS overall assessment of food imported by the company.
The Review Committee investigated the pilot scheme and strongly supports this pilot initiative.
The approach being used in the pilot project is consistent with other quality assurance-type programs and compliance agreements operated by AQIS and the ANZFA-proposed food safety plans. When developed, the food safety plans could become part of an approved quality assurance-type arrangement.
It is important for proper effectiveness that there is an appropriate degree of industry maturity. To be effective, compliance agreements should:
- include the production, transport and storage of food to offer a flexible and non-prescriptive approach to food safety; and
- ensure that company-based controls are supported by AQIS audits carried out by inspection staff with appropriate auditing skills and technical knowledge.
Recommendation 14: The Review Committee recommends that:
- legislation be amended to clearly allow AQIS to enter into compliance agreements with importers based on approved quality assurance-type arrangements;
- AQIS develop a compliance agreement option that includes specifications for importers, and auditing functions consistent with other inspection systems functions conducted by AQIS;
- the compliance agreement option has the ability to cover the entire production chain and, where appropriate, the transport chain; and
- overseas suppliers be encouraged to enter into approved quality assurance arrangements with AQIS by permitting these arrangements, where appropriate, to be sourced from the importer's own QA systems.
4.8.1 Administration of the program
Under the present arrangements importers (or, more commonly their customs brokers) lodge entries describing their imports with the ACS's COMPILE system. This information includes the tariff codes for each individual import commodity. Entries of relevance to IFIP are transferred electronically to the AQIS Import Management System (AIMS).
AIMS was initially developed to manage quarantine matters associated with imports, and IFIP used a different computer system to manage its operations. A decision was made in 1994 to transfer IFIP operations to AIMS to provide a co-ordinated computer system to serve both programs' needs. AIMS was enhanced and had IFIP requirements added. Thus, the AIMS system was not purpose designed to meet IFIP's needs, and required further enhancements. AQIS has acknowledged that there is a need for further redevelopment and enhancement of the AIMS system to facilitate IFIP operations, and is progressively rectifying identified problems.
The various IFIP-related databases, held within COMPILE and AIMS, are not always up to date nor are they completely accurate. ACS allows brokers to create and enter new importers, suppliers' names and codes when they are lodging entries. Any slight variation in a name (eg, changes in the spelling or abbreviation of aspects of importer and supplier names) often means that the broker will create duplicate listings for that supplier in both COMPILE and AIMS. This can result in products being over-impeded by IFIP because the COMPILE and AIMS systems would identify such consignments as coming from a new supplier. As this could also result in imports from a single supplier being imported under multiple supplier names, the rate of inspection will be higher than would be the case if the imports were treated as being from a single supplier. This has led to many complaints from importers claiming over-inspection and over-referral by IFIP (see Appendix G for a more detailed discussion). With the data available to IFIP management and the Committee, it was not possible to verify the actual inspection rates for categories of food. This was seen as a major deficiency of the current operations of the program.
As discussed in Section 4.3.1, the AIMS system is also used by IFIP to allocate tests to various commodities. These tests are then assigned to the products as they are processed through AIMS. This system allocates tests against commodities on a broad basis. As already noted, this can result in instances of inappropriate tests being allocated against specific products.
Another difficulty with AIMS concerns the way that data is collated within AIMS and what can be retrieved in the way of reports. AIMS contains a wealth of potentially useful data which cannot be utilised because there is no capacity to extract that data in a meaningful form. Effective program management requires the analysis of relevant data to ensure that emerging problems with various types of foods are identified. The reporting modules within AIMS are neither detailed nor flexible enough to be able to extract the data required to make sound, risk-based, and informed decisions. AIMS was not designed for statistical data collection. In order to get limited information for the purpose of this Review, it was necessary to download and manipulate COMPILE and AIMS data (see also Section 4.8.3).
Recommendation 15: The Review Committee recommends that AQIS investigate and institute changes to AIMS that would ensure effective administration of IFIP, including:
- databases that are accurate;
- reporting modules which provide information relevant to management requirements;
- reporting modules with improved flexibility to meet the need for queries and for changes to requirements; and
- a system which provides information to support field activities.
Customs brokers who were interviewed have raised two issues of particular concern to their operations:
- the accounting system used by AQIS for IFIP services; and
- the ability of brokers to cost recover functions provided on behalf of IFIP.
Some brokers have indicated to the Review Committee that accounts have been received from AQIS for IFIP services long (up to two years) after the service had been provided. This creates difficulties for brokers as they may no longer have the importer as a client, and the time taken to find the relevant documents and deal with the client cannot be cost recovered and must be borne by the broker.
Brokers were also concerned about their ability to cost recover services they provide on behalf of AQIS, such as provision of information. While importers may grumble about government charges they will pay them, but attitudes may change when brokers charge for these services instead.
The possibility of additional costs being imposed on brokers should be considered by AQIS when administrative changes are contemplated.
The Review Committee encourages AQIS to implement a more timely accounting system to avoid delays and additional costs being imposed on customs brokers.
4.8.2 Location of the function
Responsibility for domestic food standards policy has rested with ANZFA and its predecessors. It is this body which develops the food standards. The Imported Food Inspection Program has, from its inception, been located in AQIS and since October 1996 has been part of the Import Clearance program. AQIS is the only Commonwealth body with a national food inspection program and there is a Memorandum of Understanding between AQIS and ANZFA. This arrangement has worked satisfactorily, from a functional viewpoint. In addition, AQIS has responsibility for assurance of all transborder food movements.
The Review Committee is of the opinion that the current location of the border/barrier control function is appropriate, and in no way detracts from the efficiency and effectiveness of the program. The Review Committee also notes that Australia's border control responsibilities are currently under review and that this is the forum in which to consider such issues on a long term basis.
4.8.3 Administrative efficiency and effectiveness
Aspects relating to costs particularly relating to stakeholder operations are discussed in Section 5. This section relates to the internal efficiencies and effectiveness of IFIP.
IFIP is responsible for overseeing the importation of some $3.6 billion worth of foods and beverages annually (ABS 1998a). The charges for inspection and testing paid by industry annually is approximately $3.6 million. This cost represents 0.1 percent of the value of food imports. To this needs to be added industry costs attributable to IFIP (see Section 5).
It is essential, for maximising efficiency and effectiveness in IFIP, to provide minimal impact on the operations of industry, and hence facilitate trade and contribute to lower prices to consumers. As discussed in Section 4.8.5, AQIS has located IFIP and Quarantine within the one administrative and functional grouping, with the objective of improving efficiency and, if feasible, effectiveness.
Some stakeholder comments indicate that there is potential for improvement in efficiency. Small firms in particular stated that:
- inspections were taking too long;
- appointments were not being kept on time;
- inspectors have been unprepared for the job at hand; and,
- it has taken up to 3 to 5 days to secure a booking (compared with next day before the amalgamation with Quarantine).
Efficiency is questionable if the program imposes excessive costs or if service delivery is poor. The Committee considers that performance indicators which relate to the performance of the function are essential. They do not exist at the moment in any meaningful state. There are no benchmarks to measure the effectiveness of the program. During the course of the Review, it was time-consuming and difficult to obtain any information which could be used meaningfully in assessing the efficiency and effectiveness of the program. As discussed in Section 4.8.1, there is a need for more information on testing rates to be available to both management and stakeholders.
Recommendation 16: The Review Committee recommends that AQIS define, develop and use performance indicators to ensure efficient and effective program delivery.
The Review Committee considered two issues concerning equity:
- any differences in treatment accorded imported food and domestically produced food; and,
the relative impact of the Act and its administration on different sectors of industry (eg, small and large importers).
Numerous comments were received on each of these issues.
To comply with WTO requirements, it is necessary to ensure that a balance in regulation is maintained between local manufacturers and importers of overseas-produced food. Generally, domestic manufacturers claim that importers are treated more leniently because of border inspection only, whereas importers point to higher levels of inspection. These contentions are not easily resolved.
To achieve the balance of regulation between importers and local manufacturers, inspection of local manufacturing processes must produce the same outcomes as end-point inspection, certification agreements and quality assurance-type systems (compliance agreements with the importer) for imported food. This is particularly difficult to determine, and precise determination will require a considerable amount of research and judgement. Ultimately, the answer may lie in the determination of equivalence (see Section 4.7.1). Currently, the Committee believes that, on the information available, the balance has been appropriately struck.
Concerning the relative impact on different areas of the importing community, the Review Committee has found that improvement is possible, and desirable. Stakeholders have consistently commented on inequities in the testing regime, the cost and time taken with laboratory tests, and the effects of a disproportionate concentration on labelling Recommendations elsewhere in this section (principally at 4.2.2, 4.4.1 and 4.5) have taken up this issue.
4.8.5 Consistency of delivery and staff training
The existence of an imported food inspection function is accepted because importers, consumers and the government recognise the value of safe food. All importers benefit from the perception that imported food is safe, hence the regulatory costs of ensuring safe food need to be shared by all importers. A consistent application of regulation is essential for fair competition, and is consistent with National Competition Policy principles.
The Review Committee noted allegations that there are inconsistencies amongst ports in relation to the level of inspections and the types of food inspected. One stakeholder claimed that "certain ports target particular products for inspection that are not inspected elsewhere" while another said "that inspection rates were much less in the busy ports of Sydney and Melbourne when compared to elsewhere". Such alleged inconsistencies decrease the competitiveness of those importers faced with inspection costs that their competitors do not share, and may mean that the program is not consistent with relevant Codex guidelines (see Section 2.5.3).
Inconsistent treatment could lead to "port shopping" a practice where importers seek an "easy entry" port, particularly for potentially non-complying food imports. Allowing this practice disadvantages competition in two ways. First, other ports are deprived of their share of the trade which would normally come their way if inspection were more even handed. Second, companies with interstate operations and offices can have an advantage over smaller and more localised firms by being able to switch ports at their discretion.
The Committee also noted reports of incidents of inconsistent treatment by different inspectors, associated with problems relating to the sampling procedures. Inconsistent enforcement was often described by stakeholders as facilitating "unfair competition". More importantly, inconsistency could also potentially lead to food safety problems. AQIS management needs to develop statistically designed sampling plans to address this problem (see Recommendation 18).
Integration with Quarantine
As previously noted, AQIS Imported Food and Quarantine functions were brought together towards the end of 1996. The programs were integrated to provide clients with a single service point for import clearance. Benefits expected were:
- reduced inspection costs through single inspection for both AQIS programs;
- quicker access to goods for importers with associated savings; and
- efficiencies within AQIS.
Some stakeholders commented that not all of the expected efficiencies have been realised. Consignment release has been slowed in some cases by delays in scheduling inspections and/or returning results to importers. The Committee observed that importers in some regions appeared to be disadvantaged over importers using other more efficient ports.
Quarantine has traditionally dealt with customs brokers primarily rather than with importers, whereas IFIP has generally dealt with importers directly, rather than through brokers. This direct relationship has come about because importers are often more knowledgeable about their products and the relevant food regulations than their brokers. Problems of compliance are thus more easily resolved directly with the importer rather than through the broker.
These observations point to the need to unify the approach to delivering Import Clearance services for imported food functions around Australia. The Committee noted that AQIS has moved to appoint a National Co-ordinator. The duties of this position are to monitor the operations and ensure that a consistent and efficient service is delivered to all clients.
The Review Committee strongly supports the appointment of the National Co-ordinator in order to assist in realising the efficiencies inherent with the amalgamation of IFIP and Quarantine.
Training of inspection staff
As reported by the Australian Quarantine Review Committee (Nairn et al. 1996), staff training had (at that time) suffered in Quarantine. This is also the finding of this Review in regard to training for IFIP.
The Review Committee recognised that there are differences in the focus of Quarantine inspections and Imported Food program inspections and, consequently, in the expertise and knowledge that officers require to perform each function. The separate skills and knowledge required should be acknowledged and properly provided for in training.
The Review Committee believes that the amalgamation of IFIP with Quarantine has led to a lessening of expertise of some of the officers undertaking IFIP duties. Training has not been given the prominence it requires, leading to a dilution of officers' abilities in this complex area. Many stakeholders have commented on the unnecessary costs imposed on them through inappropriate selection of tests (see Section 4.3) and delays. Throughout the Review, the Committee noted that adequate training of inspection staff could alleviate many of the highlighted problems.
The submission from the New Zealand Ministry of Health observed:
The Ministry feels that some AQIS staff lack experience in food manufacturing and the public health risks associated with imported food. The integration with Quarantine has diluted previously established expertise . . . We believe that this area needs specialists, especially with the increasing world trade in food.
Further, the submission from the Australian Seafood Importers Association states:
There are many new inspectors coming into the field at the moment since the amalgamation of Quarantine and AQIS [sic] and as a result, these people are not experienced in carrying out their duties [and] . . . inspections by inexperienced staff are causing a lot of aggravation within industry in general.
The training presently given to Quarantine officers who are to take up imported food inspection work, consists of one week's formal training followed by a varying amount of "field" training. The individual field training varies from "a couple of days" to around three weeks. The training is not co-ordinated and the appointment of a national training officer for IFIP is necessary for optimum effectiveness.
The Committee observed that inspector qualifications and training needs should be competency based to ensure that all officers inspect and treat goods in a consistent manner. The Committee noted that food safety and food technology training is essential for competent inspection staff. The Committee also noted the high degree of dedication to food safety and client service amongst IFIP inspection staff, as well as the high levels of expertise of many of the more senior and experienced inspectors.
The effectiveness of IFIP must be able to be verified by the program's management. At present there does not appear to be any system in place to verify this or the competency of officers undertaking IFIP duties. This was seen as a failing and the Review Committee is of the opinion that there should be an ongoing co-ordinated review of regional IFIP operations to identify and remedy any inconsistencies in delivery.
Recommendation 17: The Review Committee recommends that a competency-based, comprehensive training program, co-ordinated by a National IFIP Training Officer, be developed and delivered to all officers undertaking IFIP inspections.
4.8.6 Paper work - minimisation of the paper burden
The area of paper work and the design of forms is reasonably satisfactory, except for the easy confusion between Quarantine and IFIP forms. The IFIP makes use of ACS and Quarantine systems where possible, thus keeping the paperwork to a realistic minimum.
There are possibilities for improved efficiency by introducing electronic forms, offering the option of submission and access from site, even though the present system appears to be efficient. The use of electronic forms offers potential savings to both the imported food industry and to IFIP. However, standardisation and acquisition of information technology systems should be implemented in a way that:
- does not impose cost burdens on the companies;
- does not disadvantage firms in particular sectors; and
- makes use of information technology consistent with systems already used by importers.
The Review Committee endorses current approaches and advocates continued monitoring of information technology in order to take advantage of any opportunities for increases in efficiency and improvements in service, including introducing electronic forms.
Two basic types of sanctions are available: punitive and operational.
- Punitive sanctions consist of penalties or fines, which can be imposed for not complying with legislative requirements. The legislation must specify the penalty or fine, which should apply for specific breaches.
- Operational sanctions can constitute such measures as reverting to a higher level of inspection, incurring extra audits, incurring costs for rectification, or removal (temporary or permanent) of the ability to operate in the industry.
The major objective of sanctions is to ensure compliance rather than to act as a source of revenue. Sanctions should punish obvious non-compliant behaviour and encourage compliance but should not distort the marketplace beyond this.
Many stakeholders (particularly importing companies) were in favour of excluding from the marketplace those firms which engaged in extended non-compliant behaviour, but exclusion is a serious matter and, as already noted, compliant behaviour is the overriding objective.
Court imposed penalties tend to affect smaller firms more than larger ones, by virtue of company size in relation to the penalty. Operational sanctions are generally more effective as they can be administratively imposed, timely to apply, operate in a manner proportional to the company's size, and more specifically encourage compliant behaviour. However, such sanctions are more prone to misuse and do not have the same level of checks and controls as court imposed penalties.
The Review Committee was of the opinion that the following areas of the Act require some attention in relation to sanctions:
- quality assurance-type systems (compliance agreements with the importer) and certification failures (discussed in Sections 4.7.3 and 4.7.2, respectively);
- assurance that impeded foods are inspected;
- prompt action by importers on failures; and
- labelling failures (discussed in Section 4.5).
At present there are no effective sanctions in place to deal with importers who do not arrange for impeded foods to be inspected. This could have the effect of discouraging importers from having their food inspected, particularly if that food could possibly fail. IFIP management needs to develop a system to verify that all impeded foods are inspected and then apply appropriate sanctions to importers or their agents who do not fulfill their obligations to have the foods inspected.
While the present legislation specifies that officers must indicate a period in which any agreed treatment, destruction or re-export of failed food is to take place, this does not generally occur in practice, leading on occasions to lengthy delays in failed foods being dealt with by the importer. The legislation includes a penalty of $20 000 for refusal or failure to comply with the requirement to treat, destroy or re-export the failed food but does not specifically provide a sanction for deliberate delaying moves by an importer. This may be an appropriate area for the development of an operational sanction that could be uniformly applied across all regions.
Recommendation 19: The Review Committee recommends that:
- legislative sanctions should be reviewed for effectiveness, appropriateness and conformity with the Criminal Code Act 1995;
- the size of the penalty be struck with reference to analogous legislation (eg, State Food Acts, Quarantine Act 1908, etc), via the normal process of consultation with the drafters and the relevant areas in Attorney-Generals;
- appropriate sanctions be developed with the extension of certification and quality assurance-type systems (compliance agreements with the importer); and
- legislative sanctions have a proper legislative basis and suitable avenues of appeal and redress, and that they are transparent, and imposed in an accountable manner.
4.8.8 Interface with external agencies
The Committee noted that IFIP performs only with the assistance of external agencies, primarily Australian Customs Service (ACS), ANZFA and AGAL. In its operation, the program also has dealings with the State, Territory and foreign governments.
The Committee noted that, while the relationship with ACS is critical to the functioning of IFIP, there was no formal Memorandum of Understanding (MOU) or service level agreement between the organisations.
Recommendation 20: The Review Committee recommends that a formal Memorandum of Understanding or service level agreement with the Australian Customs Service be established for imported foods.
ANZFA's responsibilities are defined in legislation and an MOU exists between AQIS and ANZFA. AQIS also participates in the State and Territory Senior Food Officers meetings run by ANZFA. These are held twice a year and supplemented with a teleconference every four weeks.
The relationship with AGAL has been dealt with in Section 4.4.
Interaction with State and Territory governments is at an operational and policy level. Operationally, State governments are the initial point of contact for AQIS when a surveillance food (released upon sampling) fails to meet the requirements. Decisions to recall non-complying foods lie with the States, once the food has been released. There may be some need to develop a more interactive relationship with these agencies. IFIP and State Health departments collect a large amount of intelligence about products which should be shared. This intelligence could, with advantage, be utilised to assist in resource allocation by IFIP and to avoid duplication of service by both sectors. Policy decisions, including the interpretation of food standards, are the subject of the Senior Food Officers meetings.
4.8.9 Consultation, communication and transparency
Two of the key themes of the report of the Australian Quarantine Review Committee (Nairn et al. 1996), were that quarantine and, by implication, other AQIS operations are a shared responsibility and that AQIS should operate in an environment of full consultation between stakeholders. To give effect to these recommendations AQIS began reforming its existing AQIS/industry consultative committees, so that they included consultation on important policy and strategic issues, as well as concerning themselves with major operational issues. To achieve this, it was necessary to alter the terms of reference for each committee and reconsider their membership to ensure that all relevant sectors were involved. AQIS committed itself to establishing these committees as its peak industry consultative committees and ensuring that representation on these committees reflected their new broader roles. So far, AQIS has reformed ten of its industry consultative committees as part of this process.
The Review Committee recognises the necessity of ensuring that the decision making and processes of IFIP are transparent to stakeholders. It was evident that there are currently some problems with transparency in the areas of information dissemination, reasons for decisions and background to testing. However, IFIP management is actively seeking to improve the information flow to clients.
The Review Committee endorses the activity in IFIP to improve the information flow to clients and stakeholders and advocates its continuation in terms of the issues covered below.
The Imported Food Advisory Committee (IFAC), currently comprising ANZFA, AQIS and industry members, does not appear to have the profile or the agenda to be a fully effective consultative committee. While the represented industry groups are working well, these groups are not fully representative of all importers and stakeholders. There is a need to reconstitute IFAC to provide an effective mechanism to ensure that industry receives full information on the program's activities, that views are properly represented and that enquires can be made in relation to issues such as decisions, testing and inspection profiles.
Recommendation 21: The Review Committee recommends that AQIS, together with ANZFA, reform the current consultative committee for the imported food program with a view to making it consistent with the consultative arrangements for its other programs, ensuring shared responsibility, transparency in decision making, broad-based representation and full consultation among stakeholders.
The Review Committee was of the opinion that a proper communication strategy is desirable to provide all stakeholders with timely and appropriately detailed and accurate information. The strategy should reach all stakeholders regardless of the size of the business or the nature of the food imported.
The Committee noted that an effective communication strategy would deliver:
- relevant information for business (large and small) to make informed decisions;
- timely advice regarding changes to the program that has potential to affect business; and
- information regarding the responsibilities of business.
The means of communication recognised by the Review include:
- printed matter (hand-outs, notices, AQIS Bulletin etc);
- electronic (internet, AQIS home page, Customs Bulletin Board);
- dissemination by inspectors in the course of their duties;
- seminars, training and "open days"; and
- interaction via industry or other business associations.
Evidence from interviewees was that the current means of communication is ad hoc and does not reach all concerned, which has led to a level of dissatisfaction from stakeholders. The Australian Seafood Importers Association submission observed:
The Australian Seafood Importers Association wholeheartedly supports the Review and also the function of ANZFA and AQIS, however I must comment at the moment the relationship between industry and the above two bodies is at an all time low. This I firmly believe is because of a lack of communication. Over the last 12 months it has been extremely difficult to communicate with people and get satisfactory answers on a number of issues.
Transparency is a basic principle of public administration and is central to the partnership process with industry, giving proper confidence that imported food processes are even-handed and that no companies are disadvantaged. A number of companies have complained about apparently inconsistent actions towards industry members, and it is important that they have the means of:
- assuring themselves that operations are, on an overall basis, fair; and
- obtaining feedback where there are perceived problems.
Transparency also enables the community to see for itself that the process is working. In its submission, the Australian Consumers' Association stated:
Another major concern . . . has been . . . an increasing lack of trust in both government and industry when it comes to consumer protection, . . . exacerbated by the increasing trend towards deregulation. . . . Consumer confidence could improve if there was improved transparency of AQIS's actions and increased communication to consumers of the monitoring and surveillance roles of AQIS. Currently it is very difficult to find out whether foods have been rejected by AQIS at the Australian border. . . . Publication of rejections and quarantines on the internet would provide an important contact for consumers.
A second issue concerning transparency is informing foreign governments on failures, where this is applicable. Currently, the relevant government is informed when surveillance food fails (thereby activating a Holding Order) and when certified shipments of risk food fail, but not otherwise. It would be logical to inform other governments of all failures. It would further be reasonable for AQIS to ascertain what the most effective solution might be. Use could be made of Section 35 of the Act (with legal advice on the extent of information which can be released) in order to increase transparency of the program through providing relevant information regarding failures to government authorities of exporting countries.
The Review Committee received many comments about the difficulty in obtaining information from the various government authorities that have jurisdiction over importing food. Problems included:
- determining agency responsibility for aspects of importation; and
- contradictory advice from different agencies leading to confusion and, in some cases, adoption of incorrect advice.
This Review highlighted the need for a co-ordinated approach by government agencies involved in barrier control, particularly co-ordination of information delivered by AQIS for its Quarantine and Imported Food programs.
Recommendation 22: The Review Committee recommends that AQIS develop and implement a communications strategy that:
- provides all stakeholders with timely and detailed information;
- provides transparency in imported foods policy and operations;
- develop an overview booklet for food importers containing details of all relevant agencies and their requirements; and
- establish an inter-agency "shopfront" facility to disseminate information about the responsibilities of the various government agencies involved in food importing.
Education of industry
The Committee considered two elements in education of industry:
- provision of information to assist industry to meet government requirements; and
- technical aspects of the commodities imported.
The Committee considered that AQIS has a responsibility to facilitate the training and education of industry to ensure that government requirements are clear to all participants, while training in respect of technical aspects of food commodities was the responsibility of industry.
As the regulatory approach moves towards sharing responsibility between industry and AQIS for imported foods, it is necessary that industry has the required skills to meet its obligations. The Committee noted that industry has taken up the training issue in respect of Quarantine functions. The submission by the Industry Working Group on Quarantine (IWGQ) outlined the purpose and function of the "Course in Quarantine and Exports" delivered to industry by the IWGQ and AQIS. The AQIS Industry Cargo Consultative Committee has recently finalised the development of a nine module training course "Quarantine and Export". The Committee noted the IWGQoffer to sponsor an additional module dealing with imported food inspection requirements and procedures and considered this a positive approach which should be encouraged by AQIS.
The Committee noted that as AQIS is now moving to accept quality assurance-type systems (compliance agreements with the importer) to conduct designated IFIP functions, some stipulated qualifications of relevant company personnel could be a useful prerequisite to entering into compliance agreements with the importer based on quality assurance-type systems. The Review Committee noted that the IWGQ training package could, if appropriately developed, go some way to providing those qualifications.
The Review Committee endorses the IWGQ training for industry and encourages AQIS to enter into discussions with a view to developing industry training in food inspection and procedures.
23 Apr 2007