Summary of options
The regulatory impact of five options for food safety regulations were compared. The options were:
1 Continue with the current system. Food safety regulations would continue to be developed by individual States and Territories at the expense of a nationally consistent approach.
2 Implement national outcomes-based food safety standards. States and Territories would adopt the food safety standards as described in the previous chapter which contain minimal prescription and require food businesses to adopt food safety programs.
3 Implement nationally consistent prescriptive standards. ANZFA would coordinate development of nationally uniform, prescriptive standards which would describe in detail what food businesses have to do to comply. Food safety programs would not be required.
4 Apply the proposed food safety standards only to high risk food businesses. States and Territories would adopt the food safety standards containing minimal prescription and mandatory food safety programs but apply them only to food business assessed as high risk. Notification requirements would apply to all food businesses so businesses could be identified and changes in risk monitored.
5 Self-regulation and consumer education. The existing food safety regulations would be repealed and no nationally uniform food safety standards would be adopted. The food industry would self-regulate and government would help in consumer education on foodborne diseases and related health matters.
Each option is summarised in Figures 18 to 21.
Cost to government
Figure 18 Comparison of options for food safety regulation: costs to government
Option | One-off establishment cost ($m) | Annual recurring cost ($m) | Annual net cost 1 ($m) |
Option 1 |
|
|
|
(status quo) | 47.6 | 18.6 | |
(with additional enforcement) | – | 59.7 | 30.7 |
Option 2 |
|
|
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(food safety standards) | 16.7 | 70.6 | 41.6 |
Option 3 |
|
|
|
(national prescriptive standards) | 5.75 | 47.6 | 18.6 |
(national prescriptive standards with |
|
|
|
additional enforcement) | 5.75 | 59.7 | 30.7 |
Option 4 |
|
|
|
(standards for high risk businesses) | 9.4 | 24.3 | 2.6 |
(standards for high risk businesses plus status quo for remainder) |
|
|
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4.2 | 53.4 | 24.4 | |
Option 5 |
|
|
|
(industry self-regulation and consumer education) 2 | – | 4.0 | - 25.0 |
1 Based on the current amount of cost recovery ($29 million). Governments may choose to seek a higher level of cost recovery.
2 Based on the cost of advertising for the ‘gun buyback’ advertising campaign.
Note: There would be an additional cost to government for monitoring and surveillance to assess the effect of the regulatory approach on the incidence of foodborne illness. This would apply to all options.
Impact on government and the community
Figure 19 Comparison of options for food safety regulation: qualitative impact on government and consumers
Option | Impact |
Option 1(status quo) | There are no long-term benefits to government or the community of continuing with the current system of food hygiene regulation. The annual cost is estimated to be over $2.6 billion with 4.2 million people contracting foodborne illness every year and suffering unpleasant symptoms, costs andlifestyle compromises. There are no new costs for government to continue with the current food regulatory system. However, unless investment is made into a preventative system, the high costs for health care and pharmaceuticals benefits would increase. Additional resources for enforcement would see a reduction in foodborne illness but as the regulations are not preventative, any reduction is expected to be less than that for Option 2. |
Option 2 | Government would face increased costs for establishing and maintaining the (food safety proposed food safety standards. With this investment, a substantial reduction standards) in the incidence of foodborne illness is expected with savings to the health care system far outweighing additional regulatory costs. Consumers would benefit through fewer incidents of foodborne illness and its associated costs, stress and inconvenience. Consumer confidence in the food supply would be increased.
|
Option 3 | Prescriptive standards would be easier and cheaper for government to (national implement than would Option 2. Unless additional resources are provided to prescriptive enforce them, no decrease in the incidence of foodborne illness can be standards) anticipated. Even with additional resources, this option would be less effective than would Option 2 in reducing foodborne illness since the standards are not preventative. As such, there would be an increased cost, monetary and personal, to consumers compared with Option 2. |
Option 4 | There is significantly less cost impost on government for establishment and (standards ongoing funding off this option. Current resources allocated to enforcement for high risk could be targeted entirely at high risk businesses. If risk is accurately businesses) determined it may represent minimum effective regulation. However, food safety failures would continue to be caused by medium and low risk businesses and reduction in the incidence of foodborne illness would not be as great as for Option 2. It is not in keeping with an ‘all of food chain’ approach. It would be less likely to deal with new and emerging pathogens, changes in eating patterns and changes to food production which can change the risk category of a business. Government would need to constantly review such issues and amend risk categories appropriately. Since it is less likely to control the incidence of foodborne illness than Option 2, the cost to consumers, and government through the healthcare system, would be higher.
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Option 5 | There are immediate short-term cost savings to government through (industry self-deregulation. However, without mandatory standards the incidence of regulation and foodborne illness would increase through market failure. If an outbreak consumer occurred, litigation against government may proceed on the grounds that it education) had abrogated its responsibility to protect public health and safety. Education of consumers would aid their decision making in some cases. However there are many occasions, such as dining out or purchasing takeaway food, where it would be difficult for consumers to use this information and avoid food poisoning when shoddy practices may be taking place out of sight. There would be increased cost to consumers, and government would face increased costs for health care. |
1 Assuming the same contribution as government (Figure 18).
Cost to industry
Figure 20 Comparison of options for food safety regulation: cost to industry
Option | One-off establishment cost ($m) | Annual recurring cost ($m) |
Option 1 |
|
|
(status quo) | – | 249 1 |
Option 2(food safety standards) |
39.6 |
142 |
Option 3 |
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(national prescriptive standards) | – | <2492 |
(national prescriptive standards with notification, skills and knowledge and recall requirements) |
|
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13.2 | 12.9 + (<249) 2 | |
Option 4 |
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(standards for high risk businesses) | 12.4 | 36.0 |
(standards for high risk businesses plus status quo for remainder) |
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12.4 | 36.0 + (<249) 2 | |
Option 5(industry self-regulation and consumer education) |
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– | 4.0 3 |
1 Based on cost to small businesses as described inOvercooked: A Study of Food Compliance Costs for Small Businessbut excluding capital costs (26 per cent).
2 As outdated regulations would be removed and there would be national consistency, this is expected to be less than the current cost as described in Overcooked: A Study of Food Compliance Costs for Small Business. With a reduction in prescription, capital costs are also expected to reduce (currently $88 million).
3 Assuming the same contribution as government (Figure 18).
Impact on industry
Figure 21 Comparison of options for food safety regulation: qualitative impact on industry
Option | Impact |
Option 1(status quo ) | No additional effort or cost would be required for compliance provided businesses are meeting the current regulations. As a preventative approach to food safety is not taken and there is no encouragement for businesses to take responsibility for the safety of food produced, no reduction in the current level of foodborne illness would be expected. As such, no reduction in costs due to prosecution and civil litigation would occur. At the same time, consumer confidence would be affected and productivity losses would continue. The burden of out-of-date, prescriptive and inconsistent regulations is maintained. There would be no encouragement for industry to develop better or less expensive ways to maintain food safety. Inconsistency with marketplace initiatives to rely on food safety programs and recently introduced regulations for meat and poultry processing would add to the burden on business. Inconsistency with Codex and the standards of Australia’s major trading partners, would not promote export initiatives to help Australia compete more effectively on world markets. |
Option 2(food safety standards) | Business would have to adjust to a new style of regulation with new requirements and up-front costs. However, the new costs would not be in addition to current costs but would partially replace them. The preventative approach to food safety would reduce the incidence of foodborne illness in Australia. It would also benefit industry through higher productivity, greater consumer confidence and a reduction of costs due to less prosecution and civil litigation. Food safety management systems can benefit businesses through better staff management and delineation of responsibility, better stock management and less wastage. Removal of outdated, prescriptive and nationally inconsistent regulations would reduce the burden on industry and is consistent with Australian standards for meat and poultry processing. It would encourage an environment in which businesses can take full responsibility for producing safe food. HACCP-based food safety programs are consistent with marketplace initiatives and Codex standards and would support export initiatives to help Australia compete more effectively on international markets. |
Option 3(national prescriptive standards) | Abolishing outdated standards and achieving national consistency would reduce the burden on industry and the prescription inherent in the standards would detail exactly what a business would have to do to comply. However, meeting inflexible prescriptive standards would be a cost and a frustration to industry when their current practices (such as HACCP-based food safety programs) are achieving an equivalent food safety outcome but are unrecognised by authorities. Prescriptive standards are less likely to reduce the incidence of foodborne illness compared with outcomes-based preventative standards. They do not encourage business to take full responsibility for the safety of food produced or seek better or less expensive ways to maintain food safety. As such the potential benefits to industry through higher productivity, greater consumer confidence and a reduction of costs due to less prosecution and civil litigation, would not be realised. Prescriptive standards are not consistent with Australian standards for meat and poultry processing, Codex or those of Australia’s major trading partners. As such they would not support export initiatives. |
Option 4(Standards for high risk businesses) | There would be an overall reduction in cost to the food industry. However, the (standards absence of a ‘level playing field’ may cause disquiet among high risk businesses. There would be less certainty to industry as to legislative requirements when their food operations and their risk category change. The reputation of the entire food industry may be compromised by food safety failures caused by lower risk businesses. As such the competitiveness of the Australian food industry would not be enhanced. While there would be national consistency, the opportunity to take an ‘all of food chain’ approach to food safety would be lost. Inconsistency with marketplace initiatives to rely on food safety programs and recently introduced regulations for meat and poultry processing would add to the burden on low and medium risk businesses. Similarly, inconsistency with Codex and the standards of Australia’s major trading partners, would not promote export initiatives to help low and medium risk businesses compete more effectively on world markets. Many businesses would still need to develop and implement food safety programs to meet the needs of the marketplace. |
Option 5(industry self-regulation and consumer education) | Deregulation would remove the compliance burden on industry. However, there is still a cost to ensuring food safety, be it driven by government or the marketplace. The majority of businesses are expected to maintain the level of food safety expected by the community and there would be ongoing costs to do this. There would be additional cost to the food industry due to food safety failings caused by market failure caused by irresponsible operators who choose not to implement a food safety management system and compromise the entire industry. There is no incentive for business to take full responsibility for the safety of food they produce and such deregulation would be likely to detract from Australia’s ability to compete on world markets. It would reduce consumer confidence in the food supply. |
Conclusions
Five options for food safety regulation in Australia were assessed against key criteria which included their ability to:
• reduce the incidence of foodborne illness;
• reduce the regulatory burden on business;
• be cost effective for the community, government and industry;
• introduce a preventative approach to foodborne contamination;
• encourage a business environment that can respond quickly to new hazards;
• encourage businesses to take full responsibility for the safety of food they produce;
• be consistent with international best practice;
• support export initiatives for Australia to compete more effectively on world food markets; and
• facilitate trade through consistency with moves, by some primary industry sectors and other industry-driven initiatives, to rely on HACCP-based food safety programs to ensure food safety.
Ability to reduce the incidence of foodborne illness
Option 2 is assessed as the most effective legislative means to help reduce the incidence of foodborne illness. 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 only to high risk businesses 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.
Option 2 also encourages businesses to take full responsibility to ensure the food they sell is safe which will promote a ‘safe food’ culture. Consequently, Option 2, the proposed food safety reforms, is seen as the most effective way to reduce the current incidence of foodborne illness in Australia.
Ability to reduce the regulatory burden on business
Options 2, 3, 4 and 5 would reduce the regulatory burden business endures under the current outdated and prescriptive food hygiene regulations. In addition, the current system is inconsistent:
• among States and Territories;
• with the standards introduced into the meat industry;
• with industry-driven initiatives; and
• with the standards of our major trading partners.
The advantages of Option 2 are that it would not only introduce national consistency and remove outdated and prescriptive regulations but it is consistent with industry initiatives and international standards. A move to such broad consistency would reduce the regulatory burden on industry.
Option 3 would see removal of outdated and inconsistent standards amongst States and Territories. However, their prescriptive nature would be out of step with the Australian Standards for the meat industry, industry initiatives and standards of our major trading partners.
Applying the proposed food safety reforms to those food businesses classified as high risk would reduce the regulatory burden on the remaining 75 per cent of food businesses. However, many of these would still have to comply with industry-driven safety and quality assurance schemes which, through their duplication, are already seen to be a burden on a number of food businesses. By applying the standards to all food businesses there is the opportunity for industry recognition of equivalence and a reduction in duplication.
Option 5 would have the greatest effect on reducing the regulatory burden on industry. However, there would still be costs associated with ensuring food safety, be they driven by government or by the marketplace. Again duplication of audit for compliance with industry-based schemes is likely to continue and be a burden to business.
Cost-effectiveness for the community: government, industry and consumers
All options have associated costs and benefits for the community. Analysis of the options shows that Option 2 has additional initial cost to business and government but at the same time is most likely to reduce the incidence and hence the cost of foodborne illness. Government, particularly local government, faces increased recurring costs under this option. However, government as a whole would benefit through reduced health care costs and other factors as described in Figure 7.
While retaining the current system or adopting Options 3, 4 or 5 would have less initial costs to government than would Option 2, the potential cost savings would be substantially less. There would be a better net return to government if it adopts Option 2.
Similarly, there are new initial costs to industry under Option 2 but a range of benefits would follow, through removal of the current regulations, and efficiencies resulting from adopting food safety programs and staff education. Option 3 would also benefit businesses through removal of outdated and inconsistent regulations, and for some businesses would be less confronting than having to develop a preventative food safety program. However, it is expected that industry initiatives would continue to require many food businesses to adopt HACCP-based safety and quality assurance programs.
While self-regulation, as proposed under Option 5, may have an immediate appeal for some industry sectors, there would always be a legal obligation to sell safe food which must be met to avoid prosecution, business failure, litigation and to meet consumer and industry expectation.
Consumers would benefit from adoption of Option 2 through reduced incidence of foodborne illness and commensurate reductions in financial, emotional and lifestyle costs.
Ability to facilitate trade
Both in Australia and internationally there is a move to implement outcomes-orientated, preventative food safety standards based on the principles of HACCP. Governments and industry alike recognise that ‘prevention is better than cure’ and that putting in place schemes to assure food safety is the way of the future.
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 would create problems through the perception of an ‘uneven playing field’. Option 2 provides the best way to facilitate trade.
Summary
While it is recognised there are new initial costs to industry and substantially higher recurring costs to government under Option 2, the ongoing benefits for the entire Australian community make this the preferred option. The proposed food safety standards represent the best way to minimise the incidence and cost of foodborne illness in Australia. It provides industry with a flexible regulatory environment with minimal prescription, national consistency and the opportunity to compete effectively in international markets.