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Minister announces AQIS reform package

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Significant savings jn meat inspection costs, a streamlined business-like approach, further reductions in staff numbers, and a strengthened role in export facilitation are just some of the changes contained in a comprehensive Australian Quarantine and Inspection Service (AQIS) organisational reform package which was unveiled today

by the Minister for Resources, Alan Griffiths.

The package is the culmination of a process of intensive review by the Minister and AQIS that involved industry submissions; external reviews by management consultancy firm, Ernst & Young, and the Quarantine and Inspection Policy Council (QIPC); a national review of domestic meat inspection; industry, producer, and consumer group consultation; and an AQIS internal review.

"The major thrust of the reforms is to make AQIS more business-like," Mr Griffiths said.

"This means becoming more cost-conscious and more efficient in the use of resources, with a greater focus on the needs of clients, consumers and overseas markets.

"A major initiative is the identification of export facilitation as a specific program focus within AQIS. As part of its role of ensuring Australian produce has maximum access to overseas markets, AQIS, through a toll-free telephone advisory service and an information and awareness program, will keep producers informed of changing entry conditions for their produce, and offer assistance and guidance in gaining and maintaining entry.

"Reforms under the micro-economic reform banner include cost savings to industry through changes to domestic meat inspection requirements, award restructuring and multi-skilling training for AQIS inspectors, continuation of a staff reduction program that has already seen the shedding of more than 600 positions in the last five years, and an avenue for further industry cost savings through the accelerated adoption of quality assurance programs.

"Over the past five years, AQIS inspection staff numbers have been reduced by a quarter. They will reduce by another quarter over the next three years.

"AQIS has already managed the introduction of quality assurance approaches for fish inspection, for dairy exports, export cold stores and, in a specialised form, for certain activities in export abattoirs."

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COMWONWE^rn- ! Phone: (06) 2777480

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Mr Griffiths said AQIS's adoption of a more commercial approach would be supported by the introduction of commercial accounting practices, and the establishment of a trust account into which cost recovery revenues will be paid and from which expenditure will be funded.

" AQIS will not, however, be converted to a statutory authority at this time. The . significant effort involved in making the change would divert AQIS from other, more urgent items on the agenda.

"Many of the advantages commonly perceived to be associated with corporatisation can be achieved by other means, and I am not convinced that corporatisation could be implemented without substantial extra cost to industry," Mr Griffiths said.

For the past four years, the Quarantine and Inspection Policy Council (QIPC) has served as the peak advisory body to the Minister on AQIS matters. The QIPC will be replaced by a new body, the Quarantine and Inspection Advisory Council, whose members will be selected on specific expertise rather than as representatives of client


"All aspects of the reform package are geared to capitalise on AQIS's inherent strengths - its professional scientific base and its network of bilateral and multilateral relationships with associated agencies, international organisations, and customers for its services," Mr Griffiths said.

"In both its inspection and quarantine roles, AQIS's activities and decisions are taking on an ever-increasing international dimension, and are linked more and more to issues like food safety, chemical residues, and consumer confidence.

"In this respect, the Government and AQIS are well ahead of the Coalition. This reform package does not represent short term cuts for short term situations, nor is it a case of 'cuts for cuts sake'.

"Australia is a major exporter of food, with billions of dollars worth of international market access dependent upon AQIS ensuring our export product meets the often stringent requirements of some countries.

"Food inspection and export facilitation are not short term concerns. For example, Australia has the potential to more than double its meat exports to Japan, but to achieve this AQIS - and a responsible, long-term vision for AQIS - is vital.

"These changes will ensure that AQIS enhances its already high international reputation for integrity and professional performance. Cost savings, greater efficiency in export performance, a more commercial operation, and a scientifically- based commitment to food safety and consumer concerns are part of AQIS's contribution to the 'clever country'," Mr Griffiths said.

Further information: Kristen Barry, Ph: (06) 277 7480


The major initiatives of the AQIS reform package announced by the Minister for Resources, Alan Griffiths, on 26 November 1991, are:

1. Export Facilitation AQIS will concentrate resources and expertise in providing advice and assistance for producers seeking entry to foreign markets. Links will be strengthened with AUSTRADE, Dept. Of Foreign Affairs and Trade, and the various agricultural commodity marketing authorities.

2. Quality Assurance AQIS will coordinate the accelerated transition from traditional inspection approaches to industry-managed, AQIS-audited quality assurance inspection programs that will reduce reliance on end-product inspection, while maintaining health and hygiene requirements of domestic and international agreements and legislation.

3. A More Business-like Culture AQIS will become more cost-conscious and more efficient in the use of resources, with a greater focus on the needs of clients, consumers and overseas markets.

4. Financial Management AQIS's more commercial approach will be supported by commercial accounting practices and the establishment of a trust account into which cost recovery revenues will be paid and from which expenditure will be funded. AQIS will not, at this stage, be converted to a statutory authority.

5. Accountability From this year, AQIS will publish an annual report to its clients, additional to its input to the Department of Primary Industries and Energy (DPIE) annual report.

6. Consultation The Quarantine and Inspection Policy Council (QIPC) will be replaced by the Quarantine and Inspection Advisory Council, an advisory body made up of members with specific expertise in quarantine and inspection matters.

7. Management and Industrial Relations A business manager will be appointed to oversee industrial relations, human resources, financial services and information technology. It is expected that the AQIS inspection workforce will decline by 25 per cent over the next three years. Retraining and multi-skilling are priorities.

8. Food Safety

Within DPIE, AQIS will have the coordinating role on food safety matters. AQIS will strengthen its links with the new National Food Authority, the organisation responsible for developing Australia's food standards.

9. Scientific Excellence AQIS is to reinforce its scientific‘competency, particularly in the areas of risk assessment, chemical residues, food safety and consumer confidence.


Mr Speaker,

Today I am announcing major changes to the organisational form and management arrangements of the Australian Quarantine and Inspection Service.

The changes follow an intensive process of review initiated by me last December and reflect the broad thrust of proposals contained in submissions from industry and unions; from independent consultants Ernst and Young; and from the Quarantine and Inspection Policy Council.

The significance of the changes to Australia's trading interests should not be underestimated. Food inspection and certification - covering, animal, plant and human health - provides the basis for continued entry

to overseas markets. Quarantine protects producers and consumers, and our environment, from exotic pests and diseases. It also helps in meeting overseas requirements for our products to be free of pests and diseases.

Australia is a leading world producer of food. Not only do we provide about 95 per cent of our local needs, but we are the world's second largest exporter of meat, the fourth largest of wheat and a major

international source of dairy produce, grains and a range of other food exports. Food exports and related produce generated over $9.5 billion in export income in 1990/91.

It is in this context that AQIS has a vital role to play in safeguarding Australia's trading interests and protecting Australian industries and consumers.

Control or exclusion of animal and plant diseases, and pests which are endemic in other countries, contribute to the well being of Australians and give our producers a competitive advantage in markets overseas. The growing concern about food safety world-wide underlines the importance of maintaining firm control over chemical residues and other contaminants in foodstuffs.


Quarantine policies and operations keep out exotic pests and diseases which could damage or destroy agricultural industries or fisheries. It similarly helps to protect the natural environment. Inspection of export foodstuffs, plants and animals to meet the requirements of other countries is a pre-requisite for trade. Inspection of food for domestic consumption, whether produced in Australia or imported, protects Australian consumers.

AQIS has an annual budget in 1991/92 of $179m including $41 m to fund quarantine and inspection operations performed on behalf of the Commonwealth by State/Territory Government agencies. There are approximately 2,400 direct employees, and the equivalent of 700 quarantine and inspection staff employed by the States.

The costs of providing quarantine and inspection services are recovered from users wherever appropriate. The introduction of full cost

recovery from January 1991 has greatly intensified scrutiny of AQIS' efficiency by those who pay its bills. The amount subject to cost

recovery this financial year is $147m. AQIS' activities must be

conducted as efficiently as possible and with a strong focus on its clients' circumstances and needs.

Mr Speaker,

AQIS is now five years old.

It has achieved the objectives set out in its first strategic plan five years ago.

Its quarantine risk assessm ent procedures are amongst the most progressive in the world. A single quarantine service integrating animal, plant and general quarantine functions has been implemented.

Many quarantine procedures have been stream lined and the

establishment of private quarantine stations has been facilitated.

On the inspection side, the recommendations of the 1982 Royal Commission have largely been implemented and the reputation of the meat inspection service has been re-established.


Following modifications to inspection standards and procedures and the progressive introduction of new approaches based on quality assurance systems, the number of AQIS inspection staff has declined from about 2,250 to below 1,650 - even though throughput is higher.

AQIS' prompt and professional response to the residue crisis which threatened Australia's .meat export trade to the USA in 1987, and in other similar situations before and since, has maintained access for our products in overseas markets.

An inspection scheme for imported foods has been established and there are many other achievements which could also be mentioned.

The challenges AQIS faces now are different but no less demanding. New threats must be evaluated rapidly and appropriate action taken. The stakes are very high: a single lapse in quarantine effectiveness which permitted entry of foot and mouth disease in cattle or Newcastle disease in poultry could decimate Australian industry and cause losses running to billions of dollars.

At the sam e time, however, quarantine decisions must not unduly impede trade nor impose excessive restrictions on the importation of new genetic material needed by Australian primary producers. Furthermore, AQIS must maintain the confidence of Australians that its risk management decisions are well considered and based on sound science.

Australia's favourable pest and disease status compared with many other countries' and the high quality of our primary produce give us a marketing advantage overseas which can be nullified by arbitrary and unjustified quarantine restrictions or food standards applied by authorities in importing countries. If the GATT Uruguay Round is successful in restricting the use of conventional m easures to protect dom estic agriculture such a s m arkets a c c e s s restrictions,

protectionist countries may try to erect alternative barriers in the form of quarantine controls or food standards.


AQIS must use bilateral and multilateral forums to spotlight and oppose any trade barriers disguised as sanitary or phytosanitary m easures. The excessive inspection requirements imposed on our meat exports by the USA and the EEC will be a major focus of attention for AQIS.

The cost of quarantine and inspection services is significant in totaj even if it is not a substantial component in the cost structure of user industries. AQIS cannot merely limit the rate of increase of costs; it must continue to actively pursue real cost reductions by all possible means.

In this regard, AQIS is very much part of the Government's agenda for micro-economic reform.

Regulation must be the minimum necessary to meet the circumstances and industry must be encouraged to assum e a greater degree of

responsibility. Charging policies must encourage efficient use of public sector resources.

With that background in mind, let me now turn to future arrangements.

Strategy and Vision

Over the next five years AQIS will maintain its fine record in

protecting human, animal and plant health in Australia and ensuring access for Australian products overseas through its quarantine and inspection functions. But it will become significantly smaller in terms of its staff numbers and in terms of its total cost to users - without

compromising effectiveness or integrity.

The substitution of traditional AQIS product inspection by industry quality assurance schemes audited by AQIS will accelerate, with the benefit of the additional development support committed by the Government in the 1990/91 Budget. Operations staff will be more

highly trained, with a wider range of skills.


Scientific competence will be built up.

Cost effectiveness will be enhanced by structural change, regulatory reform and investment in human and technical resources.

Communication with client groups will be strengthened through formal structures and issue-related strategies.

AQIS will maintain its leadership role in international multilateral activities and strongly pursue bilateral agreements advantageous to Australian trading interests. The Service will adopt a Quality

Management approach to all of its activities.The strategies which will turn this vision into reality will build upon the major reforms already underway. To quote the independent management consultants Ernst & Young -

"AQIS is, by its own initiative, a highly reformist organisation. Over the last several years AQIS has been undergoing a process of major change directed towards reducing the cost and improving the quality of inspection services .... There is a clear vision on the part of top management within AQIS for a more efficient, effective and responsive quarantine and inspection service based on Quality Assurance principles with industry taking greater

responsibility for providing traditional inspection tasks."

Quality Assurance

The centre-piece of AQIS' strategies for the next five years is the continued transition from traditional inspection approaches, serving both quarantine and food standard objectives, to the widespread adoption of quality assurance approaches.

Under quality assurance, responsibility for ensuring that a product m eets quality requirem ents rests in the first instance with the

producer who must design, implement and maintain systems for this purpose and demonstrate competency in their use. Quality assurance systems are built into the production process, reducing reliance on end- product inspection.


It must be emphasized that the QA approach in no way involves any abrogation of AQIS' ultimate responsibility to ensure that statutory or other requirements are met. There will be no reduction in the quality or reliability of Australian products as a consequence of switching to QA systems as the means of achieving regulatory objectives. In particular, AQIS will ensure that QA options are underpinned by firm and effective sanctions policies.

AQIS has already managed the introduction of QA approaches for fish inspection, for dairy exports, export cold stores and, in a specialised form, for certain activities in export abattoirs. As a consequence industry has been relieved of the need to pay for a significant number of inspectors. Changes now approved for domestic meat inspection practices represent a major extension.

Indeed, the quality assurance approach to be developed and trialled for use on slaughter floors in domestic abattoirs is probably the most advanced in the world.

While AQIS is managing the introduction of QA options in food and quarantine control in an evolutionary way, the consequences for industry may be revolutionary. AQIS' approach is a catalyst for a major

change in culture and methods in industry.

To take one example, meat processing is one of Australia's larger and m ost com petitive m anufacturing industries. Its production

methodology and employment practices, however, are traditional and it has a surplus of production capacity in old, out-dated abattoirs spread across Australia. Commitment to quality is often poor. It is extremely difficult for AQIS to provide inspection services efficiently to this industry on an on-demand basis. Introduction of a quality assurance based approach shifts responsibility to industry in the first instance to address the difficulties of achieving appropriate standards in this operating environment.


Scientific Excellence

A second broad strategy for AQIS is to reinforce its scientific


Since the Government adopted the recommendations of the Lindsay Committee on quarantine policy, AQIS has been developing a formal quarantine risk assessm ent procedure. Assessed risk has always been the basis of AQIS' decisions about particular quarantine issues such as the conditions, if any, under which importation of commodities from overseas can be allowed.

However the increasing requirement to be able to fully justify

quarantine restrictions to domestic constituencies and international trading partners requires formal risk assessm ent based on sound science. AQIS is served by the Bureau of Rural Resources and by its own existing scientific staff in the provision of scientific analysis, and it '

will enhance its capabilities in this area. Similar considerations apply to food science and technology in AQIS.

International developm ents underline the crucial importance of scientific excellence for AQIS activities. There is now a strong -j

probability that, as part of an agreed outcome in the Uruguay Round, the GATT contracting parties will conclude an agreement to prevent the m isuse of food standards and quarantine control as unjustified

technical barriers to trade. Under that agreement on so-called sanitary and phytosanitary m easures, countries which are not following international standards when setting food standards or quarantine restrictions may be challenged to justify their approach. The

justification must show that national requirements are based on sound science, risk assessm ent and consistency in risk management. AQIS may be called upon to provide such an explanation, and therefore it must ensure that the sanitary and phytosanitary measures which it applies have a competent scientific basis.

It is also important that a new GATT agreement on sanitary and

phytosanitary measures can be the means by which Australia can exert leverage to improve our access to markets overseas, provided we have superior technical and scientific argument in support of our case.


A More Business-like Culture

A major theme among strategies for the future is the need for AQIS to adopt a more business-like approach. The report from Ernst and Young put its main emphasis on this point.

AQIS will be more business-like in future, and not only because it must now cover its "commercial" costs.

"Business-like" means cost-consciousness and efficient resource use. It means market and customer orientation; it means a commitment to serving the interests of its stakeholders, and it m eans being

competitive and entrepreneurial.

I shall be communicating with the State and Territory Ministers responsible for the agencies which deliver quarantine services in the field to discuss the adoption of a more business-like approach in those activities also.

Considering Australia's need for sustained improvement in our export performance, the Government believes that AQIS' more business-like approach must be focussed particularly in that direction.

Export Facilitation

There is a widespread perception that AQIS' operations unduly inhibit the export potential of Australia's food and livestock industries, whereas controls over competing imported foodstuffs are more relaxed. Similar concerns have been expressed in relation to quarantine controls.

These perceptions, which are incorrect, probably derive largely from AQIS' role in ensuring that the requirements of other countries which are importing Australian produce are met. In general AQIS intervenes in the export process to ensure that Australian products are of a standard such that they will be permitted to enter foreign markets. In addition, there is an over-riding international obligation to ensure that food exported from Australia is fit for human consumption, and that animals and plants which are exported are healthy.


In pursuing these goals, however, AQIS will carry out its functions in a manner which aids export activities to the maximum extent.

AQIS will develop and implement an Export Facilitation Program, a particular feature of which will be the better utilisation of AQIS' considerable professional knowledge in the spheres of food and livestock trade. AQIS already provides detailed advice on demand to intending exporters on conditions of entry applying to foodstuffs and livestock in overseas markets, and it circulates information to trade

associations on prospective changes to entry conditions as they become known. It is likely that entry conditions will tend to become more restrictive and complex as consumer awareness of potential hazards associated with foodstuffs increases.

To improve access to advice on these matters, AQIS will now identify and train individual officers at regional locations and in AQIS' Canberra office as export facilitators accessible through a toll-free telephone line. Callers will either receive an immediate response or be

transferred to an officer who has special expertise in a particular area.

A second elem ent of the Program will be the preparation and

dissemination of advisory notes on regulatory matters which frequently cause problems in export trading.

The information program will be guided by a survey of exporters’ needs in this area. AQIS will also develop its linkages with AUSTRADE, the Department of Foreign Affairs and Trade and the various statutory marketing authorities for agricultural commodities.

AQIS' professional and technical staff will be available, on a

consultancy basis, to contribute to the development of export marketing plans in their specialist areas of expertise.

Further information on this and other elements of the Program will be circulated in the near future.

Financial Management

To develop a more business-like approach to financial management within AQIS, the Government has decided that AQIS will operate under the financial discipline of a trust account into which cost recovery revenues will be paid and from which expenditures will be funded.

The Government will still meet the cost of "government business" and quarantine surveillance by Budget appropriation. The non user- attributable components of AQIS costs will be reviewed in 1992.

The discipline of operating on a trust account basis requiring services to be self funded will reinforce cost-consciousness in AQIS. For many who pay for AQIS' services, however, the central consideration in a. more business-like approach is whether AQIS is offering its inspection and other services not only at least cost but also in the precise form which best suits the purchaser.

Abattoir operators, for example, expect inspection services to be provided wherever and whenever they want them, and some at least do not expect to be charged for on-costs such as superannuation or for administrative overheads.

The Government's view is that the full costs of providing services must be met by users. The meat processing industry must meet the costs which AQIS incurs because of the geographic dispersion of the industry, seasonal fluctuations in activity, inefficiencies caused by abattoir design, and so on. It is not reasonable to make tax-payers bear the



Part of a more business-like approach is accountability to "customers" and stake-holders.

As from this year, AQIS will prepare and publish an annual report, additional to the coverage of the Service in the annual report of the Department of Primary Industries and Energy.

AQIS' five year strategic corporate plan will be published shortly for the information of all interested parties.




It is also timely to revamp the Quarantine and Inspection Policy Council (QIPC) which has served as the peak advisory body to the responsible Minister for the past four years. A new body, the Quarantine and

Inspection Advisory Council, will be responsible for advising me on AQIS' broad strategies, the direction and priority of programs and services, resource issues, technical developments, and economic and industry considerations.

Unlike QIPC, the new Council's membership will be selected on the basis of specific expertise rather than to represent particular client groups.. It will be expected to consult widely, including with industry, and it will be kept fully informed of AQIS relations with client groups.

One of the first tasks of the new Council will be to review established consultative arrangements between AQIS and interested parties and suggest any appropriate improvements. In particular the Council will be asked to consider Ernst and Young's proposal that two new Industry Consultative Councils be established.

I take this opportunity to thank the chairman of QIPC, Mr Bill Meynink CBE and the members of the Council for their valuable service to the Government and to the interests of quarantine control and food


Management and Industrial Relations

To implement the strategies I have described a number of important administrative changes will be made in AQIS. The most significant will be the creation of a new position of business manager responsible for human resources, financial services and information technology. The

business manager will also have responsibility for the oversight of commercial consultancy developments.


One major focus for the business manager will be industrial relations.

The changes in prospect for AQIS are of fundamental concern to its staff. Over the past five years AQIS has managed the introduction of major change with minimal industrial disruption by em phasising planning, consultation, and communication together with a program of

investment in human resources to fit AQIS' capabilities to the needs of the nineties and beyond. One major element in AQIS' training effort is the development of purpose-built tertiary-level courses in food technology which a significant number of AQIS inspection staff are successfully undertaking. These policies will continue.

The process of introducing new methods and rationalising across all AQIS functions will accelerate and so will the reduction in staff


As a result of the changes I am announcing today, I expect that the inspection work force will decline by about 25 per cent over the next two to three years.

It is difficult to be more precise because the demand for inspection by AQIS depends on the rate at which industry takes up quality assurance options, but the Government has provided in the order of $20m to fund a redundancy program over the period to 1993/94. The Government is shouldering this burden of adjustment as part of its desire to foster greater efficiency and com petitiveness in Australia's food and

livestock exporting industries.

AQIS has recently completed an award restructuring agreement with inspection staff which provides for a number of significant changes.

A new, unified structure will provide the framework for employment of inspectors as Food Standards Officers with the capacity through additional skill training to work across the range of commodities. The upgrading of skills has a particular focus on expertise in auditing, as the logical complement of AQIS' push to make quality assurance options

available to industry as an alternative to intensive, on-line inspection.


The award restructuring package also encourages a significant reduction in supervisory staff at meat processing establishments and increased flexibility in supply of AQIS services by means of provisions for seasonal and part-time employment and for relocation of staff when, for example, .establishments serviced by AQIS close down operations.

Executive management structure will also be revised. A corporate management group comprising the Executive Director and the heads of the quarantine, food inspection and business management groups will have responsibility for corporate decision-making. AQIS' regional directors, who have line responsibility for implementation of food

inspection programs, will have a somewhat broader mandate in future and, in particular, will have a collegiate role in overall program


Where AQIS has been the subject of debate in recent times, a central issue has been whether AQIS should be converted to a statutory


Management consultants Ernst and Young concluded that no significant near term improvements in efficiency would necessarily flow from conversion to statutory authority status, and that such status would not be appropriate until the processes of change and improvement in the meat inspection industry are further advanced. The QIPC also concluded that AQIS should not be made a statutory authority at present, but should nonetheless actively pursue options for corporatisation or statutory form.

In my view, there would be significant costs in administrative effort and much industry opposition to an immediate shift to statutory

authority status. This option may become more appropriate three to five years hence and accordingly will be the subject of further review by 1994.


Food Safety

As I mentioned earlier, the maintenance of Australia's reputation as a producer of clean, high quality food is critical to the continuing

marketability of Australian produce and therefore to the health of our food production industries. .

AQIS' role on food safety is reflected not only in the conduct of its regulatory functions but also in promotion of quality assurance approaches, liaison with counterpart agencies overseas and other

activities. Within the Department of Primary Industries and Energy, AQIS will have the co-ordinating role on food safety matters. AQIS will strongly develop its linkages with the new National Food Authority, which has responsibility for developing Australia's food standards.

The Opposition's Policies

I am aware that in. its recent pronouncement on a goods and services tax the Opposition has had something to say about AQIS.

There is a proposal also for a $19m saving through a cut in

administrative costs and a $10m cut in the salaries bill for inspection.

It would not be appropriate for me to go into detail in this statement, but these suggestions are at best improbable. The suggested reduction in administrative costs could be achieved only if there was a

significant decrease in the effectiveness of quarantine services provided by State and Territory Governments. The risk of exposure to overseas pests and diseases would consequently increase. Large cuts in salary costs are achievable only by means of a large scale redundancy program and, as I pointed out earlier in this statement, involve even greater up-front expenditure by the Government on redundancy


I hope that the Opposition will, nonetheless, consider this statement thoughtfully, instead of subordinating its views on AQIS to its wider political agenda. .



I conclude this statement, Mr Speaker, by repeating that AQIS is already a competent organisation which has crucial roles to play in support of Australian primary industry, our national environment and the welfare of Australians.

It is well advanced on a major program of change.

The Government has decided that the change process should be broadened and accelerated in key areas.

The reforms I have announced today will ensure that AQIS enhances its already high international reputation for integrity and professional performance. Cost savings, greater efficiency in export performance, a more commercial operation, and a scientifically-based commitment to food safety and consumer concerns are part of AQIS's contribution to the 'clever country.'.

I commend the reforms to the House.