Our Accountability

Overview

Ensuring clear public understanding of our roles and priorities

Strengthen and enhance our corporate governance arrangements

Ensure clear understanding of our responsibilities / accountabilities

Objectives

Ensure clear public understanding of our roles and priorities (FSANZ Corporate Plan 2003-2006).
Strengthen and enhance our corporate governance arrangements (FSANZ Corporate Plan 2003-2006).
Ensure clear understanding of our responsibilities and accountabilities in delivering statutory obligations (FSANZ Corporate Plan 2003-2006).

Highlights

Development of a new Four Year Financial Plan.
Enhancement of financial reports.
Implementation of quarterly financial and performance reporting.
Development of the FSANZ Strategic Plan 2005-2006.

Performance

Our performance in meeting Our Accountability goals is measured by

the level of compliance with external reporting requirements, including departmental financial reporting;
the extent to which our management reporting and planning processes track progress against agency priorities;
the level of cooperation between ourselves and our jurisdictional partners;
stakeholder response to our Strategic Review;
the effectiveness of our strategic issues management; and
the extent to which staff performance agreements are directly linked to corporate priorities.

Overview

We continued to focus on developing our corporate governance environment during the year particularly with respect to our performance and our accountability. There is an increasing interest in how well public sector agencies such as FSANZ perform, how well we achieve value for money and how accountable we are to our stakeholders.

We reported last year that one of our major challenges is to improve our internal management information systems in order to provide the Executive and managers with appropriate information to manage more effectively what is an increasingly complicated and rapidly changing environment. We placed considerable effort in developing systems that allow us to provide a level of financial analysis that is more useful and informative to internal management and external stakeholders.

FSANZ faces considerable cost pressures over the next few years. It has become apparent that we need to start making some changes to our financial arrangements to address the competing pressures of fixed future annual revenues and increasing workloads and costs. In particular, we are trying to achieve an appropriate ratio between staff costs and operating costs. Accordingly, we undertook a major review of our forward financial plans and developed a new Four Year Financial Plan with assistance from financial consultants, Deloittes. This involved setting some revised financial targets, including a target equity level and a working capital level.

During the year we continued to focus on improvements to our governance and administrative practices. A rolling program of internal audits ensured that our processes and procedures followed, where practical, better practice guidelines.

The effective management of agency performance continues to be a challenge but considerable groundwork was put in place to develop an appropriate performance regime and we expect to obtain dividends from our efforts in 2005-2006 and in 2006-2007.

Our Corporate Plan highlights the four key areas that we plan to demonstrate our results, lists the strategies that we think will get us there, and indicates how we plan to measure our progress. Our annual report is structured to focus on those four key result areas.

Ensure clear public understanding of our roles and priorities

Our structure, roles and responsibilities within the food regulatory system were established in 2002. We clarify and communicate these roles as they relate to other agencies in New Zealand and the States and Territories.

Our performance in this regard is measured by the level of cooperation between ourselves and our jurisdictional partners and the response of our stakeholders to our Strategic Review.

The establishment of Food Standards Australia New Zealand (FSANZ)

Food Standards Australia New Zealand is an Australian Government Statutory Authority established under section 6 of the FSANZ Act effective from 1 July 2002.

Membership of the Board changed at that time from that of the former Australia New Zealand Food Authority (ANZFA), as did the way FSANZ develops standards. These changes were part of a broader package of reforms to the food regulatory system in Australia as a result of a COAG decision in November 2000 following consideration of the Food Regulation Review (Blair Report) that was presented to Government in August 1998.

Structures for the regulatory partnership

The Australia and New Zealand Food Regulation Ministerial Council (Ministerial Council) decides on policy guidelines based on advice from the Food Regulation Standing Committee, comprising senior government officials from New Zealand and the Australian, State and Territory governments.

FSANZ must have regard to the Ministerial Policy Guidelines when it develops or reviews food standards. We also provide technical advice during the development of the policy guidelines. FSANZ is responsible for developing food standards for the whole food chain. FSANZ has responsibility for approving and varying standards, which it then notifies to the Ministerial Council. The Ministerial Council may then seek a review of any standard notified to it by FSANZ otherwise standards become law in each State, Territory and New Zealand once gazetted.

Organisation structure

An independent, external review in 2003 identified a number changes to enable FSANZ to best fulfil its role in the changed food regulatory environment. As reported last year, changes were made to FSANZ’s structure and to some of its operational arrangements. These have been largely implemented.

A key feature of the restructure was the separation of the scientific risk assessment and risk management functions. The Authority comprises four Branches, with a Food Standards Branch in both Canberra and Wellington largely responsible for risk management in relation to the Standards in Chapters 1 and 2 of the Code. The New Zealand office has an expanded role with increased responsibility for labelling standards. The Food Safety & Services Branch manages FSANZ’s responsibilities for the development of standards for the primary production sector and food safety standards.

FSANZ’s science function was strengthened with the establishment of a Scientific Risk Assessment & Evaluation Branch, with responsibility for scientific risk assessment. The arrangements provided for an enhanced role for the Chief Scientist and increased line management responsibility for science functions within the organisation.

We fine-tuned our organisational structure in late 2004-2005 by transferring the Secretariat function to the Office of Legal Counsel, within the Food Standards Branch, Canberra.

The Chief Executive Officer is the head of the organisation and works closely with the other members of the Executive who are the Chief Scientist (Scientific Risk Assessment & Evaluation Branch), the General Manager (Food Standards Canberra Branch), the General Manager (Food Standards Wellington Branch), and the General Manager (Food Safety and Services Branch).

We introduced a flatter organisational structure in 2003-2004, with fifteen sections reporting directly to a General Manager. In 2004-2005 we created a discrete planning and capability function reporting directly to the General Manager, Food Standards Canberra. At 30 June 2005 the sections are:

Product Safety Standards.
Public Health Nutrition Standards.
Labelling and Information Standards.
Office of Legal Counsel and Secretariat.
Economic, Social Analysis & International.
Communication.
Planning & Capability.
Strategic Science Unit.
Risk Assessment - Chemical Safety.
Risk Assessment – Microbiology.
Risk Assessment - Public Health Nutrition.
Modelling, Evaluation & Surveillance.
Primary Production & Food Safety.
Post Market Operations.
Corporate.
Finance.

Partnership with States and Territories

Under a 1991 Inter Governmental Agreement (IGA) between all Australian governments, the States and Territories adopt, without variation, food standards recommended by the National Food Authority (now FSANZ). The purpose of the 1991 agreement was to consolidate responsibility for developing food standards in one specialist agency and to ensure the uniformity of food standards across all States and Territories, which continue to have primary responsibility for enforcing food laws.

On 3 November 2000, COAG signed an Inter Governmental Agreement for a new food regulatory system. The Australian Government and the States and Territories are signatories to the Agreement. The new arrangements required a renegotiation of the Treaty with New Zealand prior to full implementation.

The Australian Parliament passed an amendment Act setting up these new arrangements. The Act came into force on 1 July 2002, following the finalisation of the amendments.

Partnership with New Zealand

On 1 July 1996, an Agreement to establish one joint food standards system between Australia and New Zealand came into force. The joint arrangement aims to harmonise food standards between the two countries, reduce compliance costs for industry and help remove regulatory barriers to trade in food.

The Agreement does not cover maximum residue limits, food hygiene provisions and export requirements relating to third country trade. It also contains provisions that allow New Zealand to opt out of a joint standard for exceptional reasons relating to health, safety, environmental concerns or cultural issues. In such cases, FSANZ may be asked to prepare a variation to a standard to apply only in New Zealand.

The Agreement between Australia and New Zealand to develop joint food standards requires that FSANZ and the New Zealand Minister of Health conclude a funding and performance agreement. This agreement details the services FSANZ is to provide and includes quarterly performance reporting, details of New Zealand’s contribution and the payment schedule. A new Partnership Agreement for 2004-2007 was negotiated during the year.

Advisory Groups and Committees

FSANZ works closely with the key bodies established under the intergovernmental Food Regulation Agreement. Details of our involvement are reported in more detail in the section of the report under ‘Our Stakeholders’.

Service Charter

FSANZ’s Service Charter sets out our roles and responsibilities and those of other food agencies and industry bodies. The Service Charter also provides details on the nature of services we provide, our statutory obligations with regard to food standards setting and our commitment to perform our functions in an open and transparent manner. The Charter is also a way of assisting people to participate in the food standards system.

Information on our Service Charter and complaints handling mechanism may be found on our website. No formal complaints were referred for action through our official processes during the year.

Strengthen and enhance our corporate governance arrangements

We seek to do this by reviewing and amending or supplementing, as necessary, our corporate governance policies and practices.

Our performance is measured by the level of compliance with external reporting requirements (including departmental financial reporting), the extent to which our management reporting and planning processes track progress against agency priorities, and the effectiveness of our strategic issues management.

Our Accountabilities

FSANZ is a statutory authority. It is accountable to the Australian people through the Australian Government.

FSANZ is subject to the Commonwealth Authorities and Companies (CAC)Act 1997 which provides specific levels of accountability as well as a planning and reporting framework.

As an Australian Public Service agency, our relationship with the Government and the Parliament is a key element of our accountability and governance framework.

The Government and Parliament

We have a number of policies and practices in place to manage the interaction with Ministers and their offices in order to ensure quality services, to manage the workload efficiently and to meet our statutory obligations. As to be expected, the level of contact with the Ministerial Office increased during the year with the appointment of a new Parliamentary Secretary, the Hon Christopher Pyne, and new ministerial advisers.

The majority of contact with the Parliamentary Secretary’s office concerns the provision of program related information, parliamentary related functions, and the provision of public affairs support to the Parliamentary Secretary. We provide the Parliamentary Secretary’s Office with a weekly ‘Hot Issues’ report.

We use a number of quality control and evaluation measures in meeting our obligations to responsiveness to Ministers. Our quality control measures include:

a central coordination function for the quality assurance of material to and from the Minister’s and Parliamentary Secretary’s office;
policies and protocols on the minimum classification level for signing off Ministerial briefs;
a policy and protocol on the minimum classification level for phone contact with Ministerial advisers; and
policies on record keeping in relation to interactions with ministerial offices.

Regular feedback from Ministers and their staff is highly desirable and there are a number of mechanisms in place that provide feedback. Our evaluation includes:

internal peer review of written briefing material; and
formal Ministerial feedback is provided through the Department’s Parliamentary and Public Affairs unit.

FSANZ Performance – Ministerial Briefings and Correspondence

Senior staff appeared before Senate Estimates on two occasions during the year. We took steps to ensure that managers understood their rights and responsibilities and accountability obligations in relation to the Parliament.

Approximately 20 staff attended an in-house training seminar on Parliamentary Procedures provided by the Department of Health and Ageing. In addition, three members of staff attended courses provided by the Department of the House of Representatives. Our legal staff regularly attend seminars organised by the Australian Government Solicitor’s Government Law Group as well as attending the Freedom of Information Practitioners Forum.

Board of Directors

FSANZ has a 12 member Board appointed by the Australian Government Minister for Health and Ageing following consultation with the States and Territory Ministers. Members of the Board have been drawn from specialist areas – public health, food science, human nutrition, consumer affairs, food allergy, medical science, microbiology, food safety, biotechnology, veterinary science, primary food production, the food industry, food processing or retailing, small business, international trade, food regulation, consumer rights and consumer affairs policy, the National Health and Medical Research Council (NHMRC) and government. All members are part-time except the Chief Executive Officer. (Refer to Appendix 12 for a list of Board members, their qualifications and their attendance at Board meetings).

The Chairman and Board members were appointed on 1 July 2002. Directors are appointed for varying terms. Professor Chris Hudson, Associate Professor Heather Yeatman, Professor Kerin O’Dea and Professor Ken Buckle retired at 30 June 2005.

The Board meets at least five times a year and also convenes through teleconferences to discuss urgent issues. Outcomes of FSANZ Board meetings are published regularly on the FSANZ website.

The Board is supported administratively by the FSANZ Secretariat. During the year this included 5 meetings, 3 teleconferences, and 2 community forums.

FSANZ has well-established procedures in place to ensure that conflicts of interest issues are addressed prior to Board consideration of any issue. A register of interests is maintained and is available for public scrutiny on our website.

Finance, Audit and Risk Management Committee

The Board’s Finance, Audit and Risk Management Committee comprise four Board members. The General Manager, Food Safety & Services is the Secretary. The Committee has principal responsibility for overseeing FSANZ’s corporate governance arrangements, including financial management, internal audit and risk management and compliance systems. It approves an annual internal audit program based on a risk analysis of our corporate arrangements and advises the Board in relation to financial management within FSANZ (Refer Appendix 12 for members of the Finance, Audit and Risk Management Committee and their attendances at meetings this year).

Board Charter

In 1999-2000 ANZFA developed its first Board Charter, in accordance with the Australian National Audit Office (ANAO) better practice guidelines that were current at the time. Since then, corporate governance in Australia has advanced considerably.

FSANZ routinely reviews its corporate governance framework and monitors corporate and government advances in this field. In recent years increased emphasis has been placed on the assessment of Board performance. As part of that process and in light of an ANAO Guidance paper on the assessment of Board performance, the Board reviewed its Charter and endorsed a revised document. This is available on our website.

Senior management

Management coordination is undertaken through the Executive and the Management Group (MGM). The Executive, consisting of the Chief Executive Officer, the Chief Scientist and General Managers, meets weekly. The Executive’s role is to provide leadership, stewardship and control of the organisation. It manages the implementation of the statutory functions of the organisation consistent with the strategic priorities set by the Board.

The Management Group, comprising Section Managers as well as the Executive, meets weekly. The Management Group provides for a two-way information flow between Section Managers and the Executive on our progress against strategic directions, day-to-day management and the coordination of section activities. It also promotes information flow between sections and the co-ordination of cross-section functions.

Section Managers, and their General Managers, are responsible for supervising the activities of Section staff to ensure milestones are met, budgets and staffing resources are appropriately utilised and the section outputs contribute effectively to our goals and outcomes.

A multi-disciplinary team manages each application and proposal for varying the Code. The teams are headed by project managers, chosen for their particular expertise and experience. The multi-disciplinary teams typically have scientific expertise from a variety of disciplines, and social/economic analysis, legal and communication skills. Other non-standards work is progressed collaboratively through the formation of cross-section teams.

The Senior Executive

FSANZ has a five member Executive team comprising:

Mr Graham Peachey – Chief Executive Officer

As Chief Executive Officer, Mr Peachey is responsible to the Board for the efficient administration of FSANZ and, in conjunction with the FSANZ Board, for the corporate and strategic directions of the organisation.

Dr Marion Healy – Chief Scientist

As Chief Scientist, Dr Healy has executive responsibility for FSANZ’s scientific work and the risk assessment of hazards affecting public health safety, FSANZ’s data collection activities, development of collaborative relations with scientific institutions and the program that evaluates the impact of FSANZ’s standard setting activities.

Ms Melanie Fisher – General Manager

As General Manager, Food Standards (Canberra), Ms Fisher is responsible for the risk management functions associated with the development of food standards that primarily address health and safety matters as well as for the agency’s legal, communication, consultation and regional activities. She is also responsible for coordinating FSANZ’s relations with international food regulatory bodies and for the provision of Board services.

Ms Claire Pontin – General Manager

As General Manager, Food Safety & Services, Ms Pontin is responsible for the development of primary production and processing standards and food safety standards, coordination of enforcement, compliance and recall activities, risk assessment for imported foods and has senior management responsibility for corporate services, financial management and corporate governance arrangements.

Mr Dean Stockwell – General Manager

Mr Stockwell is General Manager, Food Standards (Wellington). He is responsible for the risk management functions associated with the development of food standards that primarily address labelling and information matters. He is the senior FSANZ representative in New Zealand.

Performance bonuses

6 senior executive (SES) staff received performance bonuses totalling $36,165.66 and 23 managers received performance payments totalling $98,032.33 during the year.

Financial management

FSANZ prepares accrual accounting financial statements in accordance with the Department of Finance and Administration’s Guidelines for Commonwealth Authorities and Companies. The Australian National Audit Office performs an annual audit of these statements.

All managers are responsible for ensuring appropriate use of resources. During the year senior managers undertook training in financial management. Under FSANZ’s organisational structure, financial reporting and management are coordinated by the Finance section.

Four Year Financial Plan

Each year FSANZ revises its forward financial plan. During the year the Board considered it was timely to undertake a major review and commissioned Deloittes to assist in revising the plan. In particular, it was recognised that there was a need to make some changes to our financial arrangements to address the competing pressures of fixed future annual revenues and increasing workloads and costs. Details are covered in the Corporate Overview section at the beginning of this report.

Internal and external scrutiny

Our performance in achieving our Accountability goals is measured, in part, by the level of compliance with external reporting requirements. Commonwealth public sector agencies have numerous accountabilities to external agencies, ranging from the Parliament and its many committees to the Auditor General, the Commonwealth Ombudsman, the Administrative Appeals Tribunal and the courts;

FSANZ’s external accountability requirements are acquitted through a variety of means:

annual report to Parliament;
the provision of detailed budgetary information through the Portfolio Budget Statements tabled in Parliament;
monthly reporting of financial performance to the Department of Finance and Administration and to the Department of Health and Ageing;
the examination of our accounts by the Auditor-General; and
performance audit reports by the ANAO.

Key elements of FSANZ’s internal corporate governance arrangements include:

a Board Charter setting out the objectives, roles and powers of the Board;
internal audit and review processes and functions;
documentation of the objectives, roles and powers of other committees (e.g. FARMC, Remuneration);
risk management;
corporate and business planning arrangements;
performance planning, monitoring and reporting;
a statutory compliance register and report;
fraud controls and processes;
rules relating to financial and other delegations;
policies on handling conflicts of interest and standards of professional and ethical behaviour; and
various internal operating policies and procedures.

FSANZ will continue to work to ensure clarity of roles and clarity of communications about decisions and actions. We recognise that the food regulatory environment is complex and have taken steps during the year to clarify our role and assist our stakeholders in achieving a better understanding of our role and responsibilities.

Internal Audit / Risk Management

The Finance, Audit and Risk Management Committee (FARMC) oversees our financial management, internal audit, risk management practices and our corporate governance arrangements.

Our internal audit activity over a three-year period is based on the risks we face, derived from the risk assessment process (including risk management and fraud prevention) and those audits required to provide assurance over the effectiveness of internal controls.

Walter Turnbull were the contracted suppliers of internal audit services to FSANZ during 2004-2005 and conduct a number of internal audit reports based on the three-year Strategic Internal Audit Plan. Reports are provided to the Board along with management comment. All internal audit recommendations made are tracked, monitored and the Board regularly updated on progress regarding implementation.

During the year Walter Turnbull conducted the following internal audit reports:

Internal Audit Report into the Food Recall System

An audit of the Food Recall System was conducted in accordance with the approved Strategic Internal Audit Plan . The report reflected positively on FSANZ’s current procedures and practices and confirmed that action being taken met all legislative requirements.

Internal Audit Report on the Standards Management System

An audit of the Standards Management System reflected positively on the development of the Standards Management System. The system has already reaped cost savings and has the potential to achieve not only additional savings but provide a transparent interface for stakeholders when fully developed.

Internal Audit follow up of the Travel Policy and Arrangements with FSANZ

The internal audit reported positively on FSANZ’s current procedures and processes. The report noted that FSANZ has been proactive with the implementation of the original review completed in 2003.

Annual Report Processes and Procedures

An audit of FSANZ’s Annual Report Processes and Procedures focussed on the preparation of the 2003-2004 Annual Report. The annual report was produced in accordance with the guidelines set out by the Department of Prime Minister and Cabinet and the Australian National Audit Office.

The audit noted that the preparation and content of the 2003-2004 Annual Report was significantly different to the procedures of previous years and that the amendment has significantly enhanced the annual report. However, the audit found that there is not an implicitly clear linkage between the performance measures, the Portfolio Budget Statement and the stated outcomes and outputs of FSANZ. The audit also noted that there was scope for improvement with regard to performance reporting on the contribution FSANZ makes to shared outcomes.

Corporate Governance Processes – Follow Up Review

A follow up audit on FSANZ’s Corporate Governance processes concluded that the corporate governance processes within FSANZ continue to function in an efficient and effective manner and are largely consistent with what is seen to be better practice throughout Australian government agencies.

Follow up on Information Technology Security Arrangements

A follow up audit of Information Technology Security Arrangements concluded that the IT security function at FSANZ continues to function in an effective and efficient manner to address the risks faced by the Authority. The review did highlight, however, that there remains scope for further improvement in the documentation of current practices to ensure a robust control framework is governing the function.

Follow Up of Contract Management

The audit formed the view that the contract management function remains governed by an effective control framework and continues to operate in an efficient and effective manner.

Risk Management Arrangements

The FSANZ Board endorsed a risk management policy for the Authority in April 2000. This policy is currently under review in light of the organisational restructure carried out in 2004 and the recent revision to the Australia/New Zealand Standard on Risk Management 4360:2004.

Comcover undertakes an annual survey of agencies risk management practices in which each agency is measured against a series of key performance indicators. As an incentive to participate agencies are given a discount of up to 5% of their Comcover premiums depending on how well they perform. In 2004-2005, in recognition of the improvements achieved in its risk management practices, FSANZ was awarded a rating of 4 by Comcover. This placed FSANZ in the top group for small agencies and, as a result, received the full 5% discount on its Comcover premiums.

An area in which we performed particularly well was the development and application of our risk assessment/risk management framework introduced for the assessment of Applications and Proposals. FSANZ achieved a maximum score. As a result of this we were invited to make a presentation at the inaugural Comcover Champions Forum on our risk management practices as a way of assisting other agencies to develop their own risk management frameworks.

Following the identification that not all areas of risk management within FSANZ had been handled as well in 2003-2004, we made significant improvements in those areas so that we are now equal to or above other similar agencies. Areas improved include business continuity planning, non-insurance risk transfer (where risks are transferred to a contractor rather than retained by us), the monitoring of resources and the measurement of performance.

Our business continuity planning is well advanced, but not completed, and monitoring of our financial performance is being improved (refer item above). Performance measurement is a key component of our planning focus and is being addressed o

NUTTAB: What's in your food?

Food Standards Australia New Zealand