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Wednesday, 24 August 1983
Page: 167


Mr KERIN (Minister for Primary Industry) —by leave-I wish to deliver to the House a statement on the progress of the Export Inspection Service of the Department of Primary Industry. This statement is to inform the House of the measures taken by the Government in the area of primary produce inspection, measures that have been taken with the express purpose of improving the efficiency and cost effectiveness of the Export Inspection Service and at the same time to improve Australia's international competitiveness and reputation as a reliable and responsible exporter of primary produce. This Government's well developed rural policies recognise fully the important part primary industries play in our national economy.

Australia's major rural industries are heavily dependent on export markets as outlets for their products. Indeed, over the past decade our major rural industries have become increasingly export dependent, with exports now accounting for around two-thirds of the gross value of agricultural production. Over the past five years Australian agriculture has accounted for an average of 45 per cent of all export income. However, this is only one side of the total picture. Although the proportion of primary products we export is high, they account for only a relatively small proportion of total world exports for most products, with the exception of wool. It is vital therefore for the survival of a number of our primary industries that Australia is regarded as a reliable supplier of products of the highest standard produced at an internationally competitive price.

In developing its primary produce inspection policies, the Australian Labor Party was very aware of the great damage caused to the meat industry's reputation both here and overseas as a result of the meat substitution scandal of 1981. Our policies were developed and our efforts have been directed to ensure that such a situation will never again arise and place an entire industry in jeopardy. Following the Royal Commission into the Australian Meat Industry, which was established to inquire into the 1981 meat substitution scandal, the meat inspection service was reorganised.

On 16 March 1982, a new Export Inspection Service, or EIS, as it has become known, operating within the administrative framework of the Department of Primary Industry, formally commenced operations. It consolidated the inspection elements for all primary products including meat, fish, wheat and grains, dairy products, wool, fresh and processed fruit and vegetables, under one management umbrella. This consolidation was a necessary first step to pave the way for the establishment of an entirely new service. This Government is building on that foundation.

The export value of the commodities inspected is about $7 billion a year. To operate the service, EIS currently employs some 2,600 staff. Most of those staff are employed on meat inspection. This Government remains convinced that the best way of significantly improving the efficiency of meat inspection and reducing costs is the establishment of a single national inspection service as proposed in the Australian Labor Party's rural policy. We have made, and are continuing to make, significant advances in achieving this goal. I will speak of these later. However, we are not standing by, waiting for the States to be convinced of the overwhelming advantages of a national inspection service. We are moving on with initiatives on many fronts and the introduction of new measures which, both individually and collectively, are consistent with our two principal objectives-a more efficient and cost effective inspection service.

As I mentioned, the establishment of the Export Inspection Service heralded the start of a new look inspection service, fully attuned to the requirements of importing countries and committed to working with all sectors of primary industry in discharging its regulatory responsibilities and in improving Australia's international competitiveness. This Government has ensured that the inspection service has a clear charter. This charter will shortly be published as an element in a five-year corporate plan. It will express the objective as being the provision of an effective and economical inspection service for primary industry products to ensure they are safe and wholesome, informatively and honestly described, and that trade is facilitated.

Achievements to Date

In the short time it has been operating the new inspection service has achieved a great deal. The actions taken so far have been aimed at achieving an efficient and cost effective organisation run along commercial lines. Some of the more significant items include new legislation, a fundamental new system of trade descriptions for meat, based on objective measurement to come into operation on 1 October this year and new compliance monitoring measures. Additionally, inspection practices for all products are under active review with several at an advanced stage, and new inspection standards are being devised for all products. There has also been a strong emphasis on delegating responsibility to regional offices so that the inspection service operates on an increasingly decentralised management approach.

Consultants have been engaged to determine the training needs of inspection staff; to examine the method of charging and study the feasibility of introducing a fee for service charging arrangement, to study and make recommendations on management and human resources; to study and recommend on the needs of the inspection service for greater use of computer technology; and to prepare a corporate plan for the Export Inspection Service. From the examples I have just given I trust that honourable members will appreciate that much has been done and much is still in the pipeline. In looking at the future of the inspection service, I am encouraged by the dedication and sense of responsibility of its staff, who frequently operate under difficult conditions.

While the Government, as well as the industries concerned, are most anxious to see tangible savings from our efforts materialise as quickly as possible, I make the point that the really significant savings will flow from the reviews of inspection practices for all commodities, which are presently at various stages of completion, and about which I will speak shortly. Of course, it is not just a matter of the Government deciding to make major changes; they must be negotiated with importing countries, States and Territories. Also, this Government is committed to consultation as an essential element of the decision-making process and, accordingly, we place importance on working closely with industry and staff associations. We are determined to avoid the band-aid approach to inspection that has been so evident in the past and which has proved a dismal failure. I turn to some of the major areas of particular importance.

Security and Integrity

In a highly competitive world trading situation, it is essential that Australia is in a position at all times to be able to guarantee the integrity of the product we export. After the meat substitution scandal, it became necessary to substantially strengthen security to maintain access to key overseas markets. I am mindful that, while those security requirements have proved effective, they are costly both to industry and to the Government.

Accordingly, much effort is being devoted to the development of equally effective, but less costly, security systems. Significant advances have already been made, including the development of a compliance program to prevent the entry into the export chain of ineligible products. A proven compliance program is a necessary key to securing the agreement of the United States to less restrictive controls. A senior official of the United States Department of Agriculture visited Australia in November last year and made recommendations on the development and reinforcement of the inspection service's compliance program . These recommendations have been vigorously pursued.

Sitting suspended from 1 to 2.15 p.m.


Mr KERIN —The compliance program, together with other initiatives, such as the development of inexpensive on-plant species test systems, will result in a less costly security system while ensuring the integrity of product and maintaining our credibility as a reliable exporter of meat and meat products. Following disclosure during the Royal Commission of malpractice by departmental inspection staff, an investigation unit has been established and specifically charged with ensuring the integrity of inspection service personnel and with thoroughly investigating allegations of malpractice relating to those personnel. Additionally, an integrity program is being further developed to stress the importance to this country of the inspection service being seen as a regulatory agency of high integrity.

Meat Inspection Standards

A second important area involves meat inspection standards. Veterinary and public health experts in Australia have recognised for some time that consideration should be given to alternatives to traditional inspection systems. The new systems are based on scientific evidence, new techniques, the changing disease status of livestock, and an emphasis on public health. These factors, together with the obvious need to standardise domestic and export inspection arrangements no doubt contributed to the Royal Commission recommendation that common standards of construction, hygiene and meat inspection should apply in Australia. The Australian Agricultural Council supported this recommendation and endorsed the principle that such standards should apply to those overseas markets which would accept them.

A task force has been established in the service to look into these complex issues and already draft standards on construction of abattoirs have been prepared and discussed with the States and the Northern Territory and a code of practice is presently being developed. Draft standards for meat processing establishments and equipment have also been prepared and circulated to the States and Northern Territory for comment and discussion. A key feature of the inspection service's approach to the standards question has been that there should be a progressive development of hygiene and quality control to industry, with the inspection service concentrating its efforts on public health, the mandatory requirements of overseas countries, and monitoring industry activities to ensure inspection standards are maintained.

A detailed analysis of inspection procedures has been carried out and quality control schemes are being developed in conjunction with the Commonwealth Scientific and Industrial Research Organisation. The new concepts have been discussed with inspection authorities in the United States of America, Canada, the European Economic Community and a number of its member countries. Australia has been complimented on the initiatives shown. It is obvious that there is a growing realisation internationally of the need to re-evaluate meat inspection procedures in the light of modern knowledge and Australia is in the forefront of these developments. The stage has now been reached where detailed discussions are about to begin with industry, the States, the Northern Territory and staff associations. The Government considers their support and co-operation are absolutely necessary to trial successfully and introduce the new proposals.

I now turn to the need to improve Australia's international competitiveness in primary products. It is vitally important that through our high standards and ability to meet specific market requirements Australia place itself in the most favourable light with importing countries. To do this it is necessary that close consultation be maintained both with importing countries-in order to determine their requirements-and with Australian industry to ensure how best we can meet such requirements. There are two outstanding examples of significant developments in this are-firstly, in the introduction of objective trade descriptions and, secondly, in halal certification for entry of meat to Islamic markets.

In April I announced that revised objective descriptions for Australia's meat exports will be introduced from 1 October 1983. The Export Inspection Service has been working closely with the meat industry to ensure the changeover is a smooth one. The new system is a major advance that will assist domestic marketing initiatives, such as computer selling, and enhance Australia's competitiveness and reputation on the export market. In today's highly competitive international meat trade, the ability accurately and consistently to provide the product sought by buyers is a major factor in enhancing Australia's trade position. Intelligent use of the revised trade descriptions should also lead to increased sales of higher quality meats in the more exacting tourist and table trades in Asian markets. The revised product descriptions have also been developed for application to the domestic meat market. States are currently examining the changes necessary to their legislation.

Agreement on the new descriptions was reached after extensive consultation between the inspection service and State departments of agriculture, the Australian Meat and Livestock Corporation, industry organisations and Australia' s major overseas customers. The new system will replace the existing subjective first, second and third grades which often do not match the preferences of importing countries and will overcome the problems of maintaining uniform standards throughout the country.

I also referred to halal certification. In the Middle East and elsewhere, the Islamic markets for Australian meat are extremely valuable; for the embattled sheep meat industry, they are critical. For these markets, meat must come from animals slaughtered in strict accordance with Islamic ritual, and be certified by a responsible Muslim as halal, which means suitable for consumption by Muslims. To ensure Islamic confidence in the halal status of Australian meat, the inspection service has introduced a scheme to endorse, as authentic documents, halal certificates issued by recognised Australian Islamic bodies. It is proposed that this interim scheme be replaced in the near future with a totally new system of halal slaughter control.

The proposed new system is a joint venture between the Export Inspection Service, the Australian meat industry and the Australian Muslim community. It will provide a level of confidence in the halal status of our meat which will be unique in the non-Islamic world, and will provide a valuable marketing point. The new system of halal slaughter and certification is an example of the inspection service moving into a non-traditional inspection area, in the interests of the trade. Those responsibilities which can be discharged most efficiently by meat processing company employees have been left to company employees with service inspectors largely undertaking a monitoring role.

New Legislation

The inspection service is now operating under its own legislation, the Export Control Act. Under the Export Control Act the total legislative framework for export inspection is being fundamentally rebuilt. A new approach is being used involving the development of ministerial orders, a mechanism which allows for the speedy amendment to the legislative base in order to meet changed situations or new demands. Already draft ministerial orders covering halal certification, objective trade descriptions and certain requirements relating to the security of export product have been circulated to industry for comment. Over the next 12 months, comprehensive orders relating to inspection practices and controls will be issued for all commodities under the control of the inspection service. These orders will also detail criteria used to determine the integrity of owners and operators of export establishments to ensure the continued uninterrupted access of Australian products to those markets.

Basis for Future Charging of Inspection Services

Another major development is the basis for future charging of inspection services. Present charging arrangements provide little financial incentive for individual companies to use inspection resources in a more efficient manner with the consequential effect of reducing their costs. I believe that this is an essential ingredient of any effective charging arrangement. Industry is entitled to be provided with an efficient inspection service if it is paying part of the cost. However, this service should be tailored to the specific level of inspection required, which in turn should be based on a company's approach to quality control and track record. An examination of the basis for the Department 's present charging arrangements for all inspection services is being undertaken by a firm of consultants. They have been asked to recommend a more cost effective and equitable recovery system, with particular emphasis on the fee for service concept. I expect that their report will be available shortly. There will be consultation with industry and other relevant bodies before the Government takes a final decision on any revised charging arrangement.

Inspection Practices for Products Other Than Meat

The importance of primary products other than meat, such as wheat and grains, wool, dairy products, fish, and fresh and processed fruit and vegetables whose export trade exceeds $4,500m annually, has not been lost sight of in the development of comprehensive inspection procedures. A fundamental review of all inspection procedures for these products is well advanced. Inspection in these areas ensures that basic standards of production, hygiene, and fitness for consumption are maintained. It also seeks to ensure that Australian products remain acceptable and competitive on international markets. Similarly to meat, the reviews are aimed at ensuring that export inspection is both efficient and cost effective. It is also critical that inspection criteria be objectively oriented. Where inspection takes the form of random product monitoring it must be based on sound statistically-validated sampling techniques. Several significant developments are worth mentioning. They include:

a new quality assurance approach to inspection for processing establishments which have effective in-house quality control regimes;

development of a system of inspection for other exporters, where appropriate, which would be tailored to the exporter's past record of compliance with regulatory requirements;

development of simplified and streamlined trade description and documentation requirements;

rationalised and simplified export standards which will, importantly, be tailored to levels necessary to maintain access to overseas markets, and will also take account of relevant domestic standards;

an optional system of quality grading to replace the mandatory grading currently applicable to some products.

It is planned that the new proposals will take full effect from July 1984. In the meantime, the improvements will be progressively introduced and tested, in full consultation with industry and inspection staff. Importantly, reassessment and revision of product standards and inspection procedures will continue in consultation with industry after that time so that the revised system can be monitored and new developments in technology and exporting requirements can be quickly accommodated. The introduction of the system of ministerial orders under the Export Control Act will be a central part of this process.

Continuing dialogue has been maintained with the fishing, dairy, honey, dried fruit and export grain industries and proposals in these areas are well advanced . A number of significant changes have already been introduced. A special task force of State and Commonwealth officers has been established to review standards and procedures for the inspection of fresh fruit and vegetables and other horticultural products. Approaches to industry for discussions in these areas are currently being made. Initial proposals are also shortly to be put to canned and processed fruit and vegetable processors for comment.

In respect of some specific product categories, significant changes have been made. For example, following extensive consultation with industry, government involvement has been reduced for the export of shrimp and scollops; negotiations are under way to obtain a memorandum of understanding with the United States of America which will allow access for Australian oysters to that large and important market; in the dairy product area, export controls on products that contain refined tallow have recently been rationalised; the dried fruit export industry has already benefited from amendments to processing and product requirements which simplify inspection procedures, and further changes are under way; and a review of plant health certification of exports as required by importing countries under the international plant protection convention has identified where procedures can be further strengthened to facilitate Australian trade in field crops. I welcome the development by bulk handling authorities of automated sampling systems for large grain export terminals; this allows effective inspection to be maintained while enabling the benefits of higher out- loading rates to be realised.

In the horticultural area indications are that significant increases in commercial production are imminent, especially for sub-tropical fruits. In anticipation of increased exports, much closer contact is being developed with quarantine and other relevant authorities in countries where potential markets exist. On the basis of information obtained as a result of the closer contact, the inspection service is actively involved in assisting and advising exporters on technical aspects of developing potential markets as well as advising on the out-turn of consignments of horticultural products.

Training and Manpower Planning

I now turn to two other very important aspects of the operations of the Export Inspection Service-training and manpower planning. Training requirements have increased considerably as a result of deficiencies highlighted in the Royal Commission report as well as the many changed inspection procedures and practices to which I have referred. The Australian Labor Party's rural policy provides for the retraining of inspection staff to meet the new standards. This is a crucial element in the new look inspection service and in implementing the changes under way. Accordingly, the Government has provided funds in 1983-84 for this purpose.

The effective and efficient use of a work force comprising 2,600 staff located throughout Australia and operating in largely seasonal industries subject to often unpredictable highs and lows in production can be achieved only by the flexible management of resources on a national basis. To this end, a number of initiatives are in place and others are under development to make better use of manpower resources and to achieve economics of scale nationally. Modern computer technology is being used to develop an Australia-wide man-power system which allows regional offices to plan for, and respond to, the day to day needs of industry, while at the national level, facilitating medium to long term planning in areas such as transfers between States, recruitment levels and training.

National Inspection Service

I move now to the matter of a national inspection service. For some time the Australian Labor Party has advocated the establishment of a single national meat inspection service. We remain convinced that, if real cost savings and efficiencies are to be achieved in meat inspection, there must be an integrated national inspection service which covers all aspects of the export and domestic meat industry. The concept is not new. It has been recommended by a number of inquiries and supported by the Royal Commission into the Australian Meat Industry.

Because this Government places such importance on the matter, we have pursued it vigorously, and I am pleased to advise honourable members that significant advances have been recently made towards achieving a national service. However, before coming to these developments I would like to outline the basis of a national inspection service, the major advantages that it offers over the present arrangements and to give honourable members a few details of how it will operate. We firmly believe there are a number of advantages of a single national service which collectively cannot be obtained by any other arrangement. Some of these are that it would eliminate the existing fragmentation between export and domestic inspection and provide for a uniform system of inspection across Australia; provide for national control over the meat chain with resultant increase in security but at a reduced cost compared to present arrangements; increase flexibility in the use of staff, allowing peaks and troughs in production, a feature of the meat industry, to be more readily accomodated; provide a single uniform fee structure; make reform in inspection procedures at the national level more easy to achieve; and give producers, processors, State and Commonwealth governments and employee organisations the opportunity for greater participation in the efficient operation of the service.

The existing foundation for a single national service is larger than is generally recognised. Of the 2,450 full time meat inspectors employed in Australia at 1 July this year, 1980 or 80 per cent were employed by the Commonwealth's Export Inspection Service. The number of State and Northern Territory full time inspectors working in non-export establishments was approximately 310 or only some 13 per cent of total full time meat inspectors in Australia. Of all meat produced in Australia, approximately 85 per cent is produced at export establishments under the control of the Commonwealth's Export Inspection Service.

I come now to the present situation. Honourable members may be aware that on 1 July this year the responsibility for domestic meat inspection in New South Wales passed to the Commonwealth along with the staff formerly employed by the New South Wales domestic Meat Inspection Service. This transfer is particularly important and welcomed by the Government because it will mean by the end of this year the establishment in that State of a single meat inspection service with full integration of the domestic and export inspection services. A number of areas have already been identified where cost savings can be brought about through more efficient use of resources and a full scale review has been commenced. The dual fee at export works has already been eliminated in New South Wales.

A further and more recent development has occurred in respect of Victoria. The Prime Minister (Mr Hawke) recently received a letter from the Victorian Premier indicating his Government's willingness to participate with the Commonwealth in examining possible arrangements for the establishment of a single inspection service. Should Victoria agree to join a national inspection service, the Commonwealth would then employ in the vicinity of 92 per cent of the full time inspection work force and a single national meat inspection service would be close to reality. With the other States and the Northern Territory, there have been high level discussions on the single service proposal and I am aware they have the matter under active consideration.

I am convinced of the benefits of a single national inspection service and I remain optimistic that such an arrangement can be achieved in a spirit of co- operation between the Commonwealth and the States. In concluding let me assure all honourable members that this Government is determined that Australia gain the benefits which will flow from an efficient and effective inspection service and we will ensure that the present momentum is continued.