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Wednesday, 28 May 2003
Page: 15130

Ms WORTH (Parliamentary Secretary to the Minister for Health and Ageing) (9:06 AM) —I move:

That this bill be now read a second time.

The Industrial Chemicals (Notification and Assessment) Amendment Bill 2003 makes a number of changes to the Industrial Chemicals (Notification and Assessment) Act 1989 (the Act). The act establishes a system of notification and assessment of industrial chemicals to protect health, safety and the environment and to provide for registration of certain persons proposing to introduce industrial chemicals.

The proposed changes relate to the commercial evaluation permit system and company registration.

The commercial evaluation permit system allows the chemical industry to introduce new and innovative industrial chemicals to Australia for the purpose of commercial evaluation. The provisions under the act allowing this faster and less costly pathway to introduce new chemicals were first introduced in 1992.

The commercial evaluation permit allows companies to introduce new industrial chemicals at a specified volume and over a defined time. Companies provide information about the chemical and the commercial evaluation process to the National Industrial Chemicals Notification and Assessment Scheme (NICNAS). NICNAS conducts a health and environmental risk assessment and establishes conditions for safe use of chemicals under the permit. The NICNAS director can refuse to grant a permit if not convinced that the volumes are needed for commercial evaluation. In addition, there are penalties for companies that contravene the permit conditions.

The change to the commercial evaluation permit system is to increase the volume of chemicals from the current maximum of 2,000 kilograms to a new maximum of 4,000 kilograms, to be introduced over the existing maximum time period of two years. A volume change was considered following informal representation from chemical companies and formal representation from industry members of the NICNAS Industry-Government Consultative Committee to NICNAS in July 1999. The chemical industry maintained that the volume limit of 2,000 kilograms was too low and that not all industry sectors could access this fast-track mechanism to bring in new and innovative chemicals. The alternative mechanisms under NICNAS have longer assessment times and fees and require more industry resources and chemical data. Consequently, Australia was missing out on some new and innovative chemicals and technology.

The NICNAS Industry-Government Consultative Committee endorsed reform of the category to meet the changing needs of the chemical industry, starting with a survey of industry practices concerning the use of the commercial evaluation permit system. A strong prerequisite for the reform was that worker and public health and environmental standards were not to be compromised.

The survey of industry practices confirmed that an increase in the volume of chemicals available under the commercial evaluation permit was needed, with 28 per cent of those surveyed indicating that the current maximum of 2,000 kilograms is too low to complete the process of commercial evaluation. NICNAS analysed the data and concluded that an increase in volume under permit to a maximum of 4,000 kilograms would enable industry to access this permit in most circumstances.

In moving to the higher volume, there are additional responsibilities for NICNAS and industry in maintaining community standards for chemicals introduction. Applicants are to provide a summary of health and environmental effects of the chemicals for NICNAS to use in the risk assessment. NICNAS is to upgrade its guidance on the use of the commercial evaluation permit system. In addition, it is introducing a raft of administrative changes to help ensure that companies understand and comply with permit conditions, including the requirement that they report back to NICNAS on any adverse effects experienced during the commercial evaluation and the success or otherwise of the commercial evaluation process. NICNAS is to compile this information and provide feedback to the public.

These changes are not expected to lead to a change in the NICNAS assessment fee.

The changes made to the company registration provisions in the act were developed in response to an independent review conducted in 2000 in relation to the company registration program. These aim to streamline administration, deliver reform and enhance regulatory compliance.

One area of change relates to the renewal of registration, with the aim of encouraging timely renewals. The company registration year runs from 1 September to 31 August in the following year. Currently a registered company has to renew its registration with NICNAS by 1 August, 30 days before the registration actually expires. Since the inception of the company registration scheme in 1997, the compliance rate with this renewal date has been persistently low (around 50 per cent each year), and this is despite vast administrative improvements to enable a smoother renewal process. Furthermore, an average of 10 per cent of the registrants failed to renew by the start of the new registration year. NICNAS has had to allocate significant resources to pursue outstanding renewals, and this has added substantially to compliance costs. Although an urgent handling fee is in place, it is not mandatory and cannot be used as a means to encourage compliance.

One reason for the large number of late renewals is the renewal deadline itself. Feedback shows that an early renewal date has caused confusion among industry. Companies cannot understand a renewal deadline which precedes expiry of registration by a month, since most other licences and registrations have up until the expiry date for renewal. The second reason is that some companies take the view that payment will only take place on final demand, knowing NICNAS cannot apply late fees under the act.

To address these issues, this bill will align the deadline for the renewal of registration with the expiry date of registration, that is, 31 August. The bill will also abolish the urgent handling fee and put in place a late renewal penalty for renewals received after this date. Any compliance costs in pursuing late renewals will be shifted to the late registrants.

If a company has not renewed its registration by 31 August for the following year, its registration lapses until the application fee, the registration charge for renewal and the late renewal penalty have been paid, whereupon the registration is deemed to have been reinstated from the beginning of the registration year. A company runs the risk of committing an offence if it introduces relevant industrial chemicals without a registration being in force and, where charges have been laid against the company for such an offence, the company is precluded from paying the applicable fees and charges to retrospectively reinstate its registration to avoid the offence.

Parallel to these changes, the bill also specifies 31 August as the date by which a registered company has to notify NICNAS if, for any reason, it is not renewing its registration for the next registration year. Currently no deadline is specified for such notification and, when a renewal is not received by 31 August, NICNAS cannot tell if the renewal is late or registration is no longer required.

Measures are taken to ensure that the late renewal penalty is viable. This bill stipulates that if a company is registered for one year and seeks registration in the following year, that registration in the following year is treated as a renewal and not as a new registration. This is to prevent companies from using new registrations to avoid the late renewal penalty when their renewals are late.

The other area of change relates to the fee setting mechanism for company registration. Currently company registration fees and charges are prescribed in the act. This is an exception rather than a rule as all other NICNAS fees and charges are placed in regulations. This has resulted in an inflexible fee system which cannot readily respond to cost recovery needs. This bill moves company registration fees and charges out of the act. They will become part of the regulations and will allow for the application of consumer price indexation. Any changes to fees and charges will require due consultation and ministerial approval.

In summary, the changes proposed in this bill are aimed at streamlining administration and delivering reform to the NICNAS scheme. The change in maximum chemical volume allowable under the commercial evaluation permit will enable the faster introduction of new and innovative chemicals and technology, while retaining safeguards to protect human health and the environment. The combined measures taken for company registration will encourage timely renewals and strengthen regulatory compliance. They will improve the collection of cost recovery revenues for the health and safety and environmental regulation of industrial chemicals in Australia.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Stephen Smith) adjourned.