Tuesday, 27 October 2020
Competition and Consumer Amendment (Australian Consumer Law — Country of Origin Representations) Bill 2020; Second Reading
I present the explanatory memorandum for this bill and move:
That this bill be now read a second time.
Today I'm pleased to introduce the Competition and Consumer Amendment (Australian Consumer Law—Country of Origin Representations) Bill 2020. This bill marks the next step towards implementing the government's commitment to establish robust country of origin labelling laws for Australian made complementary medicines.
The amendment lays the foundation for Australian made complementary medicines to have robust access to a safe harbour Australian origin claim and to the 'Australian Made, Australian Grown' logo—the iconic kangaroo in a triangle symbol.
We are justifiably proud of our vitamin and minerals manufacturers, our "complementary medicines" sector, and the high quality, diverse product range it delivers to growing local and export markets.
The sector made various representations to the government, outlining concerns about the impact of changes to country of origin claims in Australian Consumer Law made by the Competition and Consumer Amendment (Country of Origin) Act 2017.
This 2017 amendment limited the circumstances under which products can meet the definition of 'substantially transformed' in the Competition and Consumer Act 2010, which in turn limited access to the safe harbour provisions that apply to an Australian origin claim.
To address these issues, the Minister for Industry, Science and Technology, the Hon Karen Andrews MP, established a task force to review the industry's concerns and identify possible solutions.
This bill has been informed by the task force's extensive consultation with relevant stakeholders including state and territory government agencies, Complementary Medicines Australia, manufacturers within the complementary healthcare sector, industry stakeholders with an interest in 'Made in Australia' claims, consumer organisations and Australian Made Campaign Limited.
Reporting in February 2019, the task force highlighted the importance of origin labelling to the Australian community while also acknowledging the high level of concern from the complementary medicines sector, with the loss of Australian origin labelling.
The report also highlighted the great faith consumers placed in an Australian origin claim.
The research indicated that labels featuring an Australian origin claim, together with a bar chart and a statement indicating the proportion of Australian ingredients, best conveyed this information.
Complementary medicines manufacturers believe the Australian brand, together with our high product safety standards and scrutiny of manufacturing practices by the Therapeutic Goods Administration, are all key to our strong reputation for well-made, safe products.
Following the task force's report, we undertook a public consultation process in October 2019. We sought the views of the public and industry on a number of options to make Australian origin labelling more accessible for complementary medicines.
And finally, we put a reform proposal to the states and territories through the Consumer Affairs Forum.
State and territory ministers representing their consumer affairs portfolios agreed with the Government's proposal to amend the Australian Consumer Law in a two-step process.
That is why in December 2019, as a first step, we restored access to 'Australian Made' claims for complementary medicines manufactured in Australia, by enacting the Competition and Consumer Amendment (Australian-made Complementary Medicines) Regulations 2019. These 2019 regulations were an interim solution.
The ongoing solution we are now preparing to deliver with the passage of this bill is part of the second step the states and territories are supporting us to undertake.
Following passage of the bill, we will make new regulations to prescribe one or more processes in the Australian manufacture of complementary medicines that will meet the definition of 'substantially transformed'. We will also introduce an information standard to govern labelling on complementary medicines when an Australian origin claim is made under these reforms.
The Prime Minister has been very clear in tasking the Minister for Industry, Science and Technology to map the way forward and work, with a whole of government approach, to create the right conditions for Australian manufacturing to grow.
Our export capability is a vital driver for manufacturing. It is difficult to overstate the critical importance of export markets to enabling real growth for our economy.
We are a trading nation, always looking at how to develop and diversify our export markets.
The complementary medicines sector is an important and growing contributor to Australia's economic prosperity through increasing exports. It has a positive reputation, both in Australia and overseas, over a diverse product range.
The industry supports the employment of around 29,000 people, with exports valued at over $1 billion in 2019, up over 15 per cent on 2018.
In the first three months of this year we exported almost $225 million worth of complementary medicines.
It is in the national interest to grow this lucrative sector, and the bill that I am introducing today marks another step on that journey.
In these current challenging times, there has been a groundswell of community support for Australian made products, which is good news for local manufacturers of complementary medicines.
I know businesses are always concerned that, when regulation is introduced, the compliance will be onerous. Regulations made under the changes we are introducing will only apply to those businesses that choose to rely on the new safe harbour provision.
If a business does not want to make an Australian origin claim under these reforms—that is, these changes to the act: the creation of new regulations and an information standard—then that business will not face any additional regulatory burden. It will not be required to comply with new labelling requirements.
These changes will provide long-term certainty to the complementary medicines sector on their safe-harbour Australian origin claims while responding to consumers' concerns on country of origin labelling.
The bill strikes the right balance between encouraging domestic sales and exports and maintaining consumer confidence in the transparency of Australian origin claims and in the value of the widely recognised 'Australian Made, Australian Grown' logo.
This bill reflects the government's commitment to support manufacturers and ensure that they continue to play a critical role in creating more local jobs and further driving Australia's future economic growth.
I commend this bill.
I rise today to speak in favour of this bill. I also move an amendment to the second reading that has been circulated in my name:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House expresses concerns over deficiencies in the bill, including:
(1) that the bill provides the Minister with powers to create new measures without proper parliamentary scrutiny;
(2) while the bill fixes concerns raised by the sector and Federal Labor over two years ago, it has taken too long to be enacted, causing uncertainty for Australian manufacturers; and
(3) despite the Prime Minister and the Minister often citing the importance of Australian manufacturing, their proposal in the bill to require a bar chart on complementary medicines will hinder, if not deter, manufacturers from keeping their production processes in Australia".
Labor has been calling for the government to address the issue that has caused great uncertainty in the complementary medicine sector since 2017. It took more than a year for the Minister for Industry, Science and Technology to respond to Labor's calls and act to stop an industry worth over $5 billion to the Australian economy from being forced offshore, which would put close to 30,000 jobs at risk.
The delay in addressing the definition of substantial transformation, so that manufacturers could claim safe harbour provisions when making Australian made claims, caused much uncertainty in the complementary medicines industry. While this bill will address the issue of what constitutes substantial transformation, it is the proposed information standards and regulations that will follow the passage of this bill that have created new uncertainty about the impact this will have on Australian manufacturers, particularly the requirement to include a bar chart stating the percentage of Australian ingredients.
The industry is calling for the regulation amendment that has already been introduced to be maintained and that no further action in relation to the information standards and regulations is required. Many of the companies affected have made significant investments in manufacturing in this country, including Sanofi's $40 million investment in their Brisbane manufacturing facility. Household names like Blackmores, Swisse, Nature Zone Health and Cenovis were all affected by the previous dithering and delay by the government. This requirement will have further detrimental effects.
While the interim regulations were welcomed by these and other companies, several of them have raised concerns regarding the requirement for complementary medicines to be required to display a bar chart on their packaging that displays the breakdown of Australian ingredients. Specifically Blackmores, in their submission on country of origin labelling, said: 'To be very clear from the outset, the proposed changes will damage a thriving Australian industry and hurt Australian jobs.' Further, they noted that the changes are unnecessary and unjustified. Despite the minister's often repeated aim of reducing red tape, this regulatory burden is unnecessary in an already heavily regulated sector and it demonstrates, as always with this government, that they are all announcement and no follow-up.
The requirement for a bar chart was introduced for food and beverages following the importation of contaminated berries from overseas that caused a hepatitis A outbreak. This was the right thing to do. However, it is unnecessary for the same requirement to now be placed on complementary medicines. Complementary medicines are regulated by the Therapeutic Goods Administration and are therapeutic medicines. They are manufactured in state-of-the-art facilities under the strict manufacturing protocols that apply to the manufacture of pharmaceuticals. This is Australian high-end manufacturing. The nature of complementary medicine manufacture means that certain ingredients are sourced from different parts of the world depending on seasons and supply chains. Many of these ingredients are not grown or produced in Australia. So whilst they may have to be imported the value-adding by transformation of those ingredients is worth $5 billion to the Australian economy every year.
To require manufacturers to display this bar chart means that many will have to assess their raw product and change their labels for each batch, depending on where they can source ingredients from time to time. This is a costly and cumbersome imposition, considering the economies of scale that are involved in preparing labelling. Blackmores have already had to change their labels due to a change in TGA regulation and that cost $7 million. The bar chart requirement would mean they, and all affected manufacturers, would have to scrap those labels and have to spend a considerable amount of money to comply with the proposed regulations.
The submission to the country of origin labelling for complementary medicines has claimed, 'The proposed changes will damage a thriving Australian industry and hurt Australian jobs.' This is one of the few manufacturing industries in Australia that isn't currently declining, so you would that think this government would be doing everything to protect it. But it was only on Sunday that we learned that less than three per cent of the funding slated in the budget for Australian manufacturing will be spent this financial year. COVID-19 has already demonstrated why we need a strong, sovereign manufacturing supply chain here in Australia. Let's not put that at risk. These changes are unnecessary, and the government should listen to the industry and not proceed with the requirement to add the bar chart.
The Australian Made logo gives our manufacturers a competitive edge, especially in Asian markets. Some manufacturers have said that, if, due to the regulatory hassle and the added cost of the bar chart, they aren't able to claim that their products are being made in Australia, they see no benefit to retaining their local manufacturing operations. This is a government putting in place regulations that will literally drive Australian manufacturing offshore.
When the complementary medicines industry and federal Labor first raised the prospect of many of our manufacturers potentially losing their 'made in Australia' status, Minister Andrews stated that the industry 'should be assured that I'm doing all that I can to assist'. Well, here is an easy fix that will assist industry, and the minister can do it today to give this important sector of our economy the confidence that they can continue to operate as they have under the interim operations introduced this year. By not prioritising the issue of country-of-origin labelling when Labor first raised it, the government has hurt Australian manufacturers, workers and consumers. By dragging its feet on this, the government puts close to 30,000 jobs at risk in a $5 billion industry.
The complementary medicines industry has said clearly and loudly that this requirement is not only necessary but potentially dangerous. These products already require strict dosage and duration controls, and, as I said earlier, they're already regulated by the TGA. Australia is one of the few countries in the world that regulate complementary medicines as a therapeutic good. If the government doesn't make that distinction between complementary medicines and food, at the very least it should class them as the same as highly processed foods, such as food for special medical purposes, and exempt them from the bar chart regulation.
Australian products that can claim to be made in Australia have a significant competitive advantage internationally, and we should guard the integrity of that scheme. But the bar chart requirement will prove costly and burdensome, with no benefit. The government's lackadaisical approach to these matters puts a multibillion dollar industry at risk. Australians agree we need to support our manufacturing industries even more than we are now, and even the government is saying this. But the government must now deliver, not just show up for the photo op.
I second the amendment. I too want to speak about the labelling laws and the complementary medicines industry. The complementary medicines sector made various representations to the government and to the federal opposition, outlining their concerns about the impact of this legislation, the Competition and Consumer Amendment (Australian Consumer Law—Country of Origin Representations) Bill 2020. We know that there is a thirst among the Australian public and the Australian consumer for good labelling, knowing what's in their products and where they're sourced. That may be said for food products and different manufacturing products, but in the case of complementary medicines there was a bit of overkill. Many pharmaceutical companies that produce complementary medicines source particular ingredients, parts of ingredients, from other parts of the world when they cannot be grown or sourced here to make that product. What happens is that those ingredients and products come here, and the complementary medicine is manufactured here. The bulk of the work is done here in Australia—as we heard, by over 30,000 people employed in a $5 billion industry. As a parliament we should be doing as much as we can to keep those jobs here, to keep these companies manufacturing products here and to ensure that we are creating jobs out of it.
I will give you some examples of the way that the legislation will work. Let's look at some of Australia's iconic products and names. One that used to exist but no longer exists—and we won't go into the reasons why it no longer exists—is Holden. Can you imagine Holden, an iconic Australian brand and product, manufactured in Australia, as it had been for many years, not being able to meet the requirements to sell itself as an Australian made product because the raw ingredient of the rubber had to come from Malaysia? That's similar to what's happening here in the pharmaceutical industry. Another example is Arnott's, a great, iconic company in my electorate, in Marleston. They produce Tim Tams. You can't get more Australian than Tim Tams. They have to source the cacao from Africa, I think, because we just do not produce it here. It doesn't come from anywhere else. Can you imagine if they weren't allowed to get their Australian Made logo?