In brief 11 min read
The frozen berries contamination scare that unfolded in 2015 and its 2017 repeat has exposed a regulatory gap at the Australian border. That incident has prompted the introduction of the Imported Food Control Amendment Bill 2017 which, if enacted, will amend the Imported Food Control Act 1992 (Cth). The new Bill, among other things, grants substantial new coercive powers to the Secretary of the Department of Agriculture and Water Resources, and is intended to arm the Department with more tools to prevent future imported food safety scares. The key question is, will the proposed amendments have any considerable affect on food safety, and more importantly, at what cost? Associate Adrian Chang and Law Graduate Annie Cao report.
The background
Following an outbreak of Hepatitis A linked to the consumption of frozen berries in February 2015, a Department of Agriculture and Water Resources holding order was placed on the two Chinese manufacturers associated with the outbreak. The holding order was imposed by the Secretary pursuant to their powers under the Imported Food Control Act 1992 (Cth) (the Act). This required any consignment of frozen berries from those suppliers to be held at the border, sampled and tested for the presence of E.coli, as an indicator of processing hygiene. It was the strongest order available to the Secretary at the time.
Following a risk assessment by Food Standards Australia New Zealand (FSANZ), the holding order was not extended to frozen berries sourced from other manufacturers in China. Accordingly, while 100 per cent of the consignments subject to the holding order were tested for indicators of the Hepatitis A virus, only 5 per cent of berries imported from other overseas suppliers were tested at the border following the incident.
In June 2017, cases of Hepatitis A linked to the consumption of frozen berries resurfaced. A spokeswoman for the Department of Human Services in Victoria reported that the batch of frozen berries responsible were sourced from the same plant and area in China, at around the same time as the berries responsible for the 2015 recall. The berries were found to have the same genetic sequence as the strand found in the contaminated frozen berries discovered in 2015, and are understood to have been subject to a common source of exposure.
What has changed?
Holding orders
Under the Act as it currently stands, the Secretary can make a holding order if an inspection and/or analysis of the food indicates that the food is a 'failing food', or the Secretary is satisfied that there are reasonable grounds for believing that the food would, on inspection and/or analysis be identified as a 'failing food'. 'Failing food' is food that, as a result of inspection and/or analysis, is either found not to meet the applicable standards of that food, or is found to pose a risk to human health. Holding orders essentially mean that food subject to a holding order cannot be brought into circulation in Australia unless every unit of the food is proven (by testing) to be safe.
Currently, food safety interventions for new and emerging risks are delayed by the need to pinpoint and confirm the source of the risk in question. In 2015 when the Hepatitis A outbreak was identified, the Department of Agriculture and Water Resources did not issue a holding order until nine days after the link was made between the Hepatitis A cases and the berries. Even when the holding order was made, its scope was restricted to the two manufacturers linked to the Hepatitis A outbreak, presumably due to a lack of evidence of contamination outside those manufacturers.
Under the proposed amendments (in the form of the Imported Food Control Amendment Bill 2017 (the Bill)), the Secretary will be able to make a holding order if satisfied that there are reasonable grounds for believing that food of a particular kind may pose a risk to human health, and that risk is serious. This will substantially widen the circumstances in which the Secretary will be able to make a holding order, particularly where the food safety hazard is still unconfirmed, or there is no reliable test to detect the hazard. If the proposed amendments were implemented before the frozen berries incident, the Secretary could potentially have made a holding order to cover a much wider class of goods (for example, all imported frozen berries, or all frozen berries from China) at a much earlier stage in the investigation.
While the proposed changes certainly address the legislative shortcomings revealed by the frozen berries incident, the expansion of power granted to the Secretary raises concerns. The Secretary could wield the power to make sweeping holding orders in the absence of scientific substantiation, and in circumstances where any review of the decision would occur well after the damage was done. For example, this new power would support initial holding orders drafted in very broad language, with subsequent replacement orders progressively narrowing the scope as new information comes to light. In contrast, the current system does not allow an order to be made until the food is identified as a 'failing food' or there are reasonable grounds to believe that it would be identified as a 'failing food'.
Arguably, the proposed changes are justified by the strong public interest in reducing and preventing food safety risks. However, the health and safety impact of the changes is limited by the fact that holding orders merely restrict a food from distribution in Australia, and do not change the circumstances in which consumer warnings or recalls will be initiated. An overly precautionary approach to the making of holding orders may therefore be unjustifiable, particularly as it places importers in a vulnerable position. It remains to be seen how the Secretary will exercise this power.
Increased inspections
Under the current regime, imported foods are given one of three classifications, being 'risk food', 'surveillance food', and 'compliance agreement food'. 'Risk food' is food which has the potential to pose a high or medium risk to human health. 'Compliance agreement food' is food subject to a food import compliance agreement. 'Surveillance food' is food that is not classified as 'risk food', 'compliance agreement food', or the subject of a holding order. The classification by the Minister determines the rate at which food is referred for inspection by an officer of Customs, and the rate at which the referred food is inspected by the Department of Agriculture and Water Resources.
The restrictive classification of food with prescribed rates of inspection for each classification makes it difficult to investigate new and emerging risks. For example, 'surveillance foods' that enter Australia are tested for common contaminants at a set rate of 5 per cent, which cannot be altered until the risk has already been established. While this difficulty does not exist for other categories of food, for example 'risk food which is referred for testing at 100 per cent, new and emerging risks are often associated with 'surveillance foods'. Accordingly, the category of food that is most likely to pose an unknown risk, is also the category of food that the Secretary has the least power to inspect.
The proposed amendments empower the Secretary and the Minister (through the Imported Food Control Regulations 1993 (Cth)) to make orders specifying the percentage at which certain categories of food will be referred for inspection and/or analysis. This is intended to enable the Department to develop an appropriate risk management action plan for different types of food, and to ensure that inspection and analysis are proportionate to the likelihood or seriousness of the food safety risk.
The impact of this change will depend on the type of food and the type of hazard being tested for. Certainly one way to increase the chances of detecting a hazard is to increase the rate at which food is referred for inspection. Assuming there is a reliable test, it is reasonable to assume that this will result in better health outcomes. Ironically, it seems doubtful that increased testing would have assisted in the frozen berries incident given that no simple test for Hepatitis A exists and detection is unreliable unless the contamination is severe. However, what is certain in every case where increased testing is imposed, is that importers will face increased costs and delays (as it is the importers who bear the cost of testing).
Food Safety Management Certificates
In acknowledgement of the limitations of testing, the Bill introduces a new regime for Food Safety Management Certificates. Importers of certain foods (the list of which is not yet provided) will be required to provide a certificate evidencing that effective food safety controls have been implemented throughout an importer's supply chain. Presently, importers do not have a direct obligation, at the border, to take reasonable measures to ensure that imported food is safe and suitable. The obligations imposed by state and territory legislation to supply safe and suitable food are confined to post border activities. By holding importers accountable, it is hoped that importers will be pressured to carefully examine the food control practices exercised by their suppliers.
However, the effectiveness of this approach will depend on the Guidelines issues by the Secretary, determining the conditions on which a Food Safety Management Certificate will be issued. More critically, it will be contingent on how the Department monitors and enforces the issuing of these certificates. Further information on the Guidelines are yet to be provided.
Additional changes under the Bill
Record‑keeping
Until recently, the Department has experienced difficultly accessing and analysing information to identify importers of potentially unsafe foods during an incident. To address this issue, the Bill requires importers, at the time of importation, to keep records containing information determined by the Secretary. This is likely to include information identifying the immediate supplier and immediate customer of imported food. The Secretary also has the power to require a person to produce the records, and any information or document the Secretary believes to be relevant to the Act. These amendments will be critical in circumstances where the time taken to obtain information by other means, for example by warrant, significantly increases the risk of unsafe food entering or remaining in the food supply chain.
Reducing compliance intervention
The Bill also provides a mechanism to reduce testing of food at the border where food is imported from countries whose food safety standards have been determined to be equivalent to our own. Australia has already assessed the US FDA food regulatory system, which has been deemed equivalent to Australia's food safety system.
However, we anticipate that the number of opportunities for these types of arrangements will be small. As stated in the Regulatory Impact Statement, it is expected that countries with equivalent imported food safety standards will be identified based on comprehensive imported food data, compliance behaviour, trade priorities, and consultation with key stakeholders. However, it is estimated that over the next ten years, potentially only an additional two countries may be considered for an equivalence assessment.
Targeted orders and enforcement
The Bill introduces a framework for civil penalty orders, infringement notices, and enforceable undertakings to provide a more flexible and effective means of deterring proscribed conduct, some of which will become strict liability offences.
In addition, an order or determination (eg. a holding order or a regulatory determination) under the Act may now refer to a kind of food by reference to certain characteristics, including the country of origin, the manner in which the food has been manufactured and managed, physical properties and constituents of the food. By targeting particular characteristics, the proposed changes aim to avoid unnecessary inspection and analysis of food at the border
Changes, but at what price?
There may be substantial costs associated with the increased regulatory powers and requirements proposed by the Bill, in particular, the increased ability to hold food at the border. If the proposed amendments were implemented before the 2015 frozen berries incident, 29 importers of frozen berries other than the importer in question could have been subject to the initial holding order. This would have resulted in delay that could have extended for days or weeks pending the FSANZ risk assessment, given the uncertainty around Hepatitis A testing. The costs for all stakeholders in the supply chain for the targeted product arising from this delay can be significant, and includes the cost of managing the imports, storage, service fees and, in some circumstances, contractual breaches.
The expansion of food testing requirements also heralds increased costs for importers as a higher percentage of food may be referred for inspection and analysis. Provisions in the Bill requiring importers to maintain a documented food recall system will add to this burden on importers, as they will need to undertake investigative work to improve their knowledge about suppliers. While many large businesses already maintain traceability systems, this is likely to make life harder for small to medium‑sized businesses.
For food types customarily imported by small to medium‑sized businesses, for example, ethnic or speciality foods, we anticipate higher costs for consumers, or reduced choice if importers of those foods find the increased regulatory burden to be too great.
Conclusion
The amendments introduced by the Bill certainly have the potential to strengthen the current risk based approach to food safety. However, the risks to importers posed by the Secretary s broadened powers, particularly those to hold, seize and test foods at the border in the absence of evidence of fault, means businesses need to be ready to react if their products are caught in a broad holding order, or their products are required to submit to substantially higher rates of testing. In the face of a food safety incident (or even potentially on a day to day basis), importers may be left paying steep costs, notwithstanding their compliance with the Act. With that being said, we ve put a holding order on our final assessment of this Bill until further implementation information comes to light.