Executive Summary

Background

Australia's current food hygiene regulatory system costs government $18.6 million (net) to enforce, and small business $337 million in compliance costs each year. Yet 11,500 consumers contract foodborne disease every day, costing the Australian community over $2.6 billion every year.

The proposed national food safety standards described in this report incorporate requirements that can reduce the incidence of foodborne illness in Australia. Reducing foodborne illness by just 20 per cent would realise an annual saving to the Australian community of over $500 million.

The Australian community- consumers, industry and government- will benefit from a reduction in the incidence of foodborne illness through lower health care costs, less absenteeism, improved business productivity, increased competitiveness on world markets and a reduction in business failure and associated costs, including civil litigation . In 1996-97, absenteeism due to food poisoning, resulted in productivity losses of over $370 million.

The failings of the current food hygiene regulatory system were highlighted in 1995 when Commonwealth, State and Territory health ministers asked the Australia New Zealand Food Authority (ANZFA) to develop nationally uniform food safety standards for Australia. ANZFA has developed four draft standards which will be recommended to the Australia New Zealand Food Standards Council (ANZFSC) in mid-1999. If approved, the standards will be adopted into theFood Standards Codeand become law in each State and Territory of Australia.

The standards will replace current State and Territory food hygiene regulations which:

• lack national consistency;
• rely on inspections and do not promote a preventative approach;
• are in significant need of updating in some States and Territories; and
• do not align with international best practice or the standards of our major trading partners.

The Australian food industry

There are currently around 131,500 food businesses in Australia with an annual retail turnover, in 1996- 97, of $52 billion. The success of the food industry depends on consistently selling safe food and maintaining consumer confidence in the food supply.

Australians consume over 20 billion meals every year. Of these, it is estimated that less than 0.02 per cent result in foodborne illness. Nevertheless, this equates to about 4.2 million individual cases of foodborne illness every year in Australia.

In Australia, many companies have recognised that producing safe food is essential to their viability and have implemented preventative food safety management systems. Manufacturers, larger retailers, fast-food franchises and Australia's export markets increasingly demand that their suppliers implement audited food safety programs as a means of verifying the safety and quality of the products they buy.

The proposed standards

The proposed food safety standards were developed in conjunction with State and Territory health authorities and are minimum effective regulations. They are outcomes-based and incorporate international best practice. Before drafting the standards, over 600 submissions were evaluated during four rounds of public comment.

Public health and safety outcomes were the principal parameters used in developing the standards. They are evidence-based, and take into account standards developed by the Codex Alimentarius Commission and countries including the United States, Canada and the United Kingdom.

The standards were drafted to provide industry with greater flexibility in achieving safe food outcomes. They incorporate modern food safety practices and remove outdated and prescriptive requirements.

Four standards are proposed as part of the food safety reforms. Standard 3.1.1Interpretation and Applicationsets out the interpretation and application provisions that apply to the other food safety standards.

Standard 3.2.1Food Safety Programsrequires food businesses to develop and comply with a food safety program where one or more hazards are identified in their food handling operations. This includes physical, chemical and microbiological hazards.

Standard 3.2.2Food Safety Practices and General Requirementsrequires food businesses to:

• carry out specific practices in relation to food handling, cleaning, sanitising and personal hygiene to ensure food is safe and suitable;
• notify the relevant authority of their existence and the nature of the food business;
• provide for food recalls; and
• ensure their staff and supervisors have the skills and knowledge in food safety commensurate with their work activities.

Standard 3.2.3Food Premises and Equipmentsets out design and construction parameters for food premises and the equipment used in food premises.

The proposed reforms reflect an approach which has already gained acceptance and been implemented by most of the larger food businesses in Australia. Assuring safe food requires management and control of microbiological, chemical and physical hazards food safety programs based on Hazard Analysis and Critical Control Points (HACCP) are seen as being effective tools to achieve this end. HACCP is increasingly seen as the basis for good business practice. Acceptance of the concept by larger food industry players has put significant pressure on others to adopt preventative approaches to food safety.

Internationally, our major market competitors (including the United States, Canada, New Zealand and Europe) are establishing safe food systems comparable to those proposed for Australia, with the clear goal that assurances of safe food will deliver a market return.

Options considered

The proposed standards are one of five options considered for food safety regulation in Australia. The options considered were:

1. continue with the current system;
2. introduce the proposed outcomes-based food safety reforms;
3. introduce nationally uniform prescriptive requirements;
4. apply the proposed food safety reforms to high risk businesses only; and
5. rely on industry self-regulation and consumer education.

In this report, the regulatory impact of each option is compared with that of the proposed food safety standards.

Preferred option

HACCP-based food safety programs, in combination with good hygienic practices and education of food handlers, are seen as pivotal to reducing the incidence of foodborne illness. Unlike Options 1 and 3, Option 2 introduces a preventative approach to food safety and encourages businesses to take full responsibility for the safety of the food they produce and to respond quickly to new hazards.

Although Option 4 promotes a preventative approach, its application to high risk businesses only is likely to limit its ability to reduce foodborne illness compared with Option 2. Deregulation of food safety, as proposed under Option 5, may well increase the incidence of foodborne illness as a result of market failure.

Another advantage of Option 2 is that it not only introduces national consistency and removal of outdated and prescriptive regulations but it is also consistent with industry initiatives and international standards. A move to such broad consistency will reduce the regulatory burden on industry.

Options 1, 3 and 5 are not consistent with international best practice or industry initiatives and as such do not facilitate trade domestically or internationally. Option 4 does not encourage an industry-wide approach to food safety and will create problems through the perception of an ' uneven playing field' .

The proposed food safety standards represent the best way to:

• reduce the incidence of foodborne illness in Australia;
• reduce the incidence of foodborne contamination reaching the marketplace rather than detecting it after it has been presented;
• encourage a business environment that can respond quickly to emerging foodborne pathogens;
• encourage a business environment in which business can take full responsibility for the safety of food produced; and
• support export initiatives to enable Australia to compete more effectively on world food markets.

Costs and benefits to industry

The proposed standards will have an average initial cost of approximately $300 per business with an annual on-going cost of $1,080. Further studies estimate the annual cost of compliance for a small business at $1,071. The annual costs are not in addition to current costs but will partially replace them. For small retail businesses, compliance with current food regulations excluding capital costs has been estimated as $1,640 per annum. ¹

ANZFA commissioned a study in 1998 to assess strategies to implement the proposed food safety reforms in small business. The results have now been published and are available from ANZFA. For many small businesses, documentation of key aspects of their process controls such as refrigeration and hot storage temperatures will satisfy the requirements for a food safety program. Business will carry the direct costs of any additional record keeping, training, equipment and auditing.

Reducing the incidence of foodborne illness will have a positive impact on the food industry which will far outweigh the costs. In addition, the reforms will enhance Australia s reputation as both a supplier of safe food and as a safe tourist destination. Implementing the reforms will benefit businesses through:

• better stock management leading to less wastage (spoilage);
• improved management through clear delineation of staff responsibilities;
• increased staff understanding and commitment to food safety;
• improved performance within the sector; and
• greater consumer confidence.

Industry also benefits through removal of prescriptive, out-of-date, inconsistent and complex food hygiene regulations. Fewer legislative boundaries will exist and thus experimentation in developing and applying new approaches to food safety is not inhibited. The proposed reforms encourage innovation by industry.

Furthermore, the reforms are in line with international trends. They will enhance the competitiveness of Australian food exports on international markets and maintain parity with other countries whose products are promoted as being produced safely using HACCP-based food safety systems.

Costs and benefits to government

The net expenditure by food regulators on enforcement of food hygiene regulations in Australia is less than 0.3 cents/person/day. If governments are to realise the significant cost savings which will result from a reduction in foodborne illness, there will have to be increased investment, both initial and ongoing.

In 1995 the Office of Regulation Review identified limited resources as the main constraint on food law enforcement. ² ANZFA estimates that adequate enforcement of the current food hygiene regulations would require an additional 250 full-time Environmental Health Officers nationally at a cost of around $12 million. This would increase the net expenditure on enforcing the current food hygiene regulations to $30 million per annum or 0.45 cents/person/day. Cost estimates of the proposed food safety reforms includes this additional $12 million to ensure adequate enforcement.

Of the $54 million spent by State, Territory and local government on food regulation, $47.7 million or 90 per cent was related to food hygiene. Revenue raised in some jurisdictions reduced the net annual cost of food hygiene regulation to government to $18.6 million.

As a result of implementing the proposed food safety reforms, government would incur an estimated  one-off cost in the first two years of $16.7 million and an annual cost thereafter of $70.6 million. This annual cost supersedes the current cost of $47.7 million and is not in addition to it. Hence there will be a $22.9 million increase in the annual cost to government as a result of introducing the reforms.

Additional cost recovery, at the same percentage rate, as is undertaken currently would reduce the additional cost to government to $8.9 million. Local government currently bears 74 per cent of the net cost of enforcing food hygiene regulations and would require additional resources to implement and enforce the standards effectively.

There are short-term cost savings to governments if they choose not to invest in a system to provide safer food. However, without this investment, none of the returns in reduced costs to the community and government, and reduced regulatory burden to industry will ensue.

Primary production sector

ANZFA believes all food producers, including those in the primary industry sector, have an obligation to make and sell safe food. Both theFood Standards Codeand State and Territory Food/Health Acts (which are Primary Acts) currently apply to the primary industry sector.

The proposed standards were drafted with a view to achieving a  paddock to plate approach to food safety. They avoid duplication by recognising initiatives in the primary industry sector which achieve an equivalent level of food safety.

In keeping with the risk-based philosophy of the standards, Standard 3.2.2Food Safety Practices and General Requirementsand Standard 3.2.3Food Premises and Equipmentwould only apply to primary industry businesses which sell directly to the public, are involved with 'home stays' or undertake substantial transformation operations. In relation to Standard 3.2.1Food Safety Programs,businesses in the primary industry sector which comply with mandatory statutory standards such as the Australian standards for meat for human consumption are seen to meet the outcomes of the proposed standards. Similarly, independently audited industry schemes which address food safety are seen to meet the outcomes of the proposed standards.

Low risk businesses in the primary industry sector will not have to meet the requirements of the food safety standards. This will be reviewed in 2002. However, medium and high risk primary industry sector operations which do not have an independently audited food safety program in place would be expected to develop one as the food safety standards are implemented.

Assessing the performance of the standards

The best way to gauge the success of the standards is to monitor the incidence of foodborne disease over the next 10 years as the standards are implemented and businesses become attuned to new requirements and operating procedures.

Currently, Australia does not have a system such as 'FoodNet' (the United States Foodborne Diseases Active Surveillance Network) to assess how many people are affected every year by foodborne illness. Consequently, we are not well placed to monitor accurately any changes to the incidence of foodborne disease which may result from the food safety reforms. In 1998, the Hunter Area Health Service initiated a sentinel site to monitor foodborne illness in the Newcastle region of New South Wales. Meanwhile, the Commonwealth Department of Health and Aged Care is currently considering measures to improve the reporting and analysis of foodborne illness in Australia.

ANZFA recognises the need for a system to accurately measure the incidence of foodborne illness to assess the effectiveness of the food safety reforms. Without accurate baseline data on the current rates of foodborne illness, it will be difficult to quantify the long-term impact of the reforms, particularly as the majority of cases are hidden, are not notified and do not gain media attention.

Benefits to the community

An immediate reduction in the incidence of foodborne illness is not envisaged with the introduction of the reforms. However, ANZFA anticipates there will be a reduction over time as the food industry complies with the requirements of the standards.

The current cost of foodborne disease to the Australian community is estimated at over $2.6 billion per annum. The application of HACCP principles in other countries has resulted in lower levels of pathogens in food and the preventative nature of the standards is expected to reduce the incidence of foodborne illness in Australia. In addition, it is known that around 60 per cent of cases of foodborne illness develop as a result of time/temperature abuse of food. The standards specifically address this problem through time and temperature requirements for storing food and by requiring food handlers to have skills and knowledge in food safety and hygiene.

As mentioned, a 20 per cent reduction in the incidence of foodborne illness would realise an annual saving of over $500 million. No one can guarantee that all 20 billion meals consumed each year in Australia will be free of foodborne pathogens. However, by seeking improvements in the hygienic production and handling of food in direct relationship to the hazard posed, it is possible to minimise the risk to public health and reduce the incidence of foodborne illness.

The proposed food safety standards represent a tangible means of achieving highly significant savings which would benefit the entire Australian community.