Mr LAURIE FERGUSON (10:01 AM) —The opposition essentially supports the Therapeutic Goods Amendment Bill 2005, and that support has been assisted in the last day by two events. One is the determination yesterday that the Therapeutic Goods Administration would establish a joint industry-regulator committee to undertake the preparation of guidelines for applications of new sanctions in the complementary medicines sector. That has been welcomed by the complementary medicines industry: ‘It’s a very positive outcome from which we can relieve some of the angst that has been in the industry.’ It will parallel the complementary medicine and industry consultative group. As I say, Mr Crosthwaite, on behalf of the complementary medicines sector, has welcomed the change.

Our support has been augmented by the agreement of the government to an amendment dealing with the seeming difficulty we had of two forms of search warrants for civil and criminal prosecutions. Obviously, there will be some difficulty, as the opposition understands, if you had to decide before a search what type of prosecution you are intending after the evidence is produced. So the government has agreed that there will be one form of search warrant.

The new penalty regime—which, as I say, has caused some concern amongst players—has been described by some as draconian. The establishment of this consultative committee yesterday is a welcome outcome. It should have occurred earlier. It reflects submissions that were made to a Senate inquiry into this legislation which went down the same road of complaints—that there was uncertainty, a lack of a review process and very serious outcomes for companies if they were to be perceived negatively with regard to the enforcement of these provisions.

It is a concern that the Australian National Audit Office was less than laudatory of the operation of the TGA. I will briefly quote a few extracts from its summary of the TGA. Point 19 states:

Point 50 states:

Point 26:

Those kinds of comments flowed throughout the ANAO analysis of the TGA operation. Point 53:

Point 58:

Indeed, that essentially was a condemnation of the TGA’s transparency, its operation with the industry and the perception of the way it audits its own operation. The concern was such that the Minister for Health and Ageing established a review by Deloitte Touche Tohmatsu, which still has not been published. That is indicative of the concerns here. We have a situation where the TGA has come under attack. It has been looked at by the National Audit Office. The Audit Office said that its operation was not as it should be, and the government has decided to launch this separate review into its operation. In that context, one would have to be careful about giving too much power to the organisation if it has attracted this kind of criticism. That is the dilemma we are in.

After the scandal of the Pan Pharmaceutical operation—where it was found that there had been perhaps not enough supervision in the field, that effective remedies and prosecution were not as strong as they should be and that the company operated as it wished for quite a while, endangering Australian consumers—there obviously was a need to act. The opposition does not resile from that. Obviously there was a need for more stringent penalties and more accountability of directors—that was a particular aspect of Pan Pharmaceutical that came to prominence. We have a situation here where, for the health, safety and security of the Australian public, greater penalties were required but at the same time they are in the hands of an organisation that has been subject to extensive criticism. As I say, that is the dilemma we are in.

Given the seriousness of what can occur in these situations, we do support the legislation’s essential thrust. We cannot have harm or injury to people because a company has blandly continued to operate in an unsafe fashion, confident that they will not face serious prosecution. What we see in this legislation is a new faults based offence, with an aggravating element, attracting a maximum of $440,000 for corporations or individuals and/or five years imprisonment; another regime of fault based offence, with no aggravating element, which will continue to operate; and very strong penalties of $220,000 and $440,000. Obviously this has upset a number of players in the industry. However, as I say, we are talking about serious matters. We are talking about great danger that can be encountered by Australians.

The opposition endorses the new liability of the body corporate or executive officers, those directly involved in the day-to-day management of the company, if that corporate body commits an offence or contravenes a civil penalty provision under the act. It is a very significant measure which taps directly into the increasingly demanding obligations of corporate governance in Australia and in this particular field it does seem to be merited.

A major thrust of the legislation is the presence of alternative verdicts in respect of various tier defences. A jury will be entitled to convict a person of a lesser offence, if the jury acquits the person of an offence specifying an aggravating element but is satisfied beyond reasonable doubt of facts which could prove the person guilty of the lesser offence in respect of the same conduct. There is an alternative stream of civil and criminal offences. The civil provisions will apply to certain existing offences and will impose penalties of $330,000 or $550,000 for the individual and $3.3 million and $5.5 million for a corporation.

What we have in this legislation is a stream of civil and criminal alternative penalties and infringement notices. Where that process is possibly very lengthy or where civil proceedings may not be the optimal way of dealing with certain regulatory breaches, the bill proposes to introduce infringement notices as an alternative. They will set out the particulars of the offence and will give the recipient an option of either paying the penalty set out in the notice to expiate the offence or having the matter dealt with by a court. As well as that, there are enforceable undertakings. Those that are in breach of a certain regulatory requirement may have the option of providing undertakings to correct, address or remedy noncompliance as an alternative to having sanctions imposed. Where undertakings are accepted, they would be enforceable by a court.

The essential thrust of the legislation is to provide a large number of alternatives. Obviously, it would be in the interest of some companies and individuals to look at an alternative way of having their matter handled, whether because of the time involved, because of the perceived public image of the company or individuals or because of the process involved and how long that process would take. So a major element of this legislation is the availability of alternatives. Some companies have expressed fears that the availability of these easier options might lead people to admitting guilt in situations where that was actually arguable. Because they are not going to be hit as hard, they might choose to go down that road, and that might act as an unfortunate push for the company to admit guilt.

With regard to overseas conduct, the Therapeutic Goods Amendment Bill 2005 proposes to extend the reach of the act to cover certain conduct by Australian citizens or Australian body corporates overseas. We are quite aware that, with globalisation, the movement of people and the operations of corporations in other countries is increasing. This is an increasing reality, as it is with criminal matters.

Australian law will reach, firstly, the making of false and misleading statements in a material matter in connection with an application to include therapeutic goods on the Australian register; secondly, the manufacture, supply, export or import of counterfeit therapeutic goods; and, thirdly, the manufacture or supply of tampered goods and the failure to notify the secretary of the department about actual or potential tampering of therapeutic goods. The reach of the legislation will be enhanced; that is obviously a laudatory move.

There are concerns that Australian companies face unfair competition from overseas and that some companies would choose to go overseas so that they would gain a competitive advantage over those remaining in Australia.

There is also a greater power in this legislation to provide information to the public. The bill proposes to extend the circumstances in which information about actions taken or decisions made under the act can be released to the public. There is also increased scope for information about an offence or contravention to be released to overseas regulatory bodies. That point is similar to the one relating to the internationalisation of the industry.

The lack of transparency and of timely information was a major criticism levelled at the TGA, as I indicated earlier, by the ANAO report of the way in which they operate in the complementary health care sector. Obviously, this new power will give the TGA the ability to be perceived as more consumer friendly, more open and more willing to provide information. But, at the same time, it does cause a bit of a concern that some companies could be subject to fairly slanderous revelations that might subsequently be found not to be merited. There have been, as I said, some concerns and criticisms from the industry that this power could be abused. One criticism is that the ability to reveal the identity of drug companies and employees that flout the TGA’s rule does lead to a risk of publicly naming and damaging a person’s reputation before their guilt has been proven. To be outed for misdemeanours, particularly if the charge has not been tried or tested in a court, is a serious concern. It has to be balanced against the very obviously serious matters that we are dealing with.

There is also concern about the need for publication of adequate and detailed industry guidelines on when, how and why the different enforcement options will be exercised. The bill is unclear in relation to when the TGA will impose the range of alternative sanctions and penalties. There needs to be more clarity, more certainty, on when a particular road will be chosen by the TGA. Otherwise, there will be a perception of favouritism or victimisation of particular companies if it seems that, in certain circumstances, different modes of prosecution are chosen. There need to be clear and detailed guidelines as to when and how they propose to invoke civil or criminal penalty schemes or other alternative sanctions. As I have said, there are a number in this regime, such as enforceable undertakings and infringement notices.

Other concerns conveyed by the industry go to the broader issue of transparency and accountability. The heightened power of the TGA, whilst understandable in the post-Pan environment, is such that there must obviously be some questioning. ASMI, the industry player, made this comment in a submission to the Senate Community Affairs Legislation Committee’s inquiry:

There must be apprehension as to how the process will operate and about accountability and transparency. The decision in the last day or so to convene this new consultation process is a step in the right direction in allaying very widespread concerns. Many members will have received an array of emails from around the country on this matter. One should not perhaps perceive these as representative of Australian society; it is obviously an area where some people have very intense views and are very proactive in putting them to their representatives. The industry players, the people affected from a commercial point of view, have said that they see the decision to bring them into the consultation process, whilst overdue, as a very good outcome and likely to allay some of the concerns.

The lack of a right of appeal has also attracted criticism from serious players in the field. When you look at the Senate inquiry into this matter you find that even the department has said that there should be an appeals process. The Labor Party feels this should exist at each stage.

There is also the issue of the trans-Tasman agency. The reality is that Australia and New Zealand are moving towards a degree of conformity in this field. The question is how long this new regime will operate—how will it handle the negotiations between the two countries at a later stage, what will the outcomes be et cetera. Again, that is a matter that elicited comment during the Senate inquiry and through the various emails.

This is an area in which there has been a perceived need for stronger government intervention to protect consumer interests. Essentially, we believe that, on balance, the introduction of a tiered criminal offence scheme does provide options that people might choose. It does not deal with every situation. There are concerns about whether, in a particular circumstance, it is appropriate to go down a particular road. However, another player in the field—Medicines Australia, representing the pharmaceuticals industry—put the balance fairly well when they said:

That industry are not particularly concerned commercially. There are some players in the industry who do have a presence in this field but, on balance, they would have a slightly different interest from the major companies in the complementary medicine field. They also feel there are some dangers in this legislation. We believe that the Senate inquiry certainly drove those home to the government. We also believe that the recent events of going towards some further discussions, some transparency with the industry, gives some enhanced guarantees that the process will not be abused. The opposition supports the legislation.