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Thursday, 21 June 2007
Page: 138

Mr CADMAN (10:29 AM) —Australian manufacturing industries have for a long time been an interest of mine. Whether it be the building industry, the metal trades or the chemical and plastics industries, which are some of the industries involved in the legislation we are looking at today, they have always been an interest of mine. We need to retain a high level of skills in Australia so that we can not only pay our way in the world by manufacturing, onshore, things that are economically possible to manufacture but also maintain a defence capacity, a security for the nation, with a wide range of skills available for the use of the community should we ever need them. So there are two aspects of my interest in manufacturing industries.

Today we are looking at industries which are affected by NICNAS. The bill is entitled the Industrial Chemicals (Notification and Assessment) Amendment (Cosmetics) Bill 2007. It really deals with the NICNAS program for low regulatory concern chemicals. I would remind the House while we are dealing with cosmetics that it is notable that some of the great regents of Britain died in fact because of the cosmetics they used. Arsenic was a very significant component that Queen Elizabeth I used to maintain an unflawed complexion. It is said that the arsenic contained in the cosmetics she used were one of the reasons for her death. Whether or not that is truth or legend, I do not know, but I refer to the previous discussion in the House regarding the role and the use of cosmetics being widespread, and the fact that safety is a significant factor. I do not think anyone would be reluctant to draw back from the need for the National Industrial Chemical Notification Assessment Scheme, NICNAS, to have some sort of role in identifying problems with chemicals.

For some time I have been corresponding with NICNAS and with various ministers about the implementation of NICNAS. It goes back to discussions I had with an organisation called ROAM early in 2006. ROAM stands for Remove Obstacles to Australian Manufacture. I know some of the members of ROAM. What they have talked about to me and to government members’ committees is the unnecessary removal of Australian jobs in the manufacturing sector. That is something I feel strongly about and something that needs looking at. I will read briefly from a statement by ROAM:

Over the past 40 years or so manufacturers as a proportion of GDP have declined from about 35 per cent to below 10 per cent and are still falling. Many private sector economists believe that the Australian economy cannot be sustained in the longer term if serious steps are not taken now to reverse this trend. Australia is a high labour cost economy and hence will not be able to manufacture goods that will be cost competitive with lower labour cost countries. There are many areas where we could product cost effective goods but are prevented from doing so by legislation and regulation that serves no real purpose other than to guarantee that we export manufacturing jobs.

The statement goes on to explain:

ROAM is an informal group of people who have come together because they feel strongly about these issues. The new Industrial Chemical Notification Assessment Scheme is one such area identified that prevents the use of new raw material and ingredients by manufacturers and exerts control on the use of existing raw materials.

NICNAS requires that all new substances be accredited before listing on the Australian Inventory of Chemical Substances. Such accreditation is time demanding and extremely expensive, with estimates ranging between 250,000 and 500,000 per ingredient. All new ingredients must be accredited, even if safer than the one being replaced.

We will present to you examples in support of our claim that this legislation is contributing to the demise of Australia as a manufacturing economy and we suggest options that will still address the very reason given for enacting the NICNAS legislation initially—that is, to protect the worker, the environment and the consumer.

I would have to say that to a good degree NICNAS has been dealt with by ROAM. I find the ROAM arguments convincing, despite responses from parliamentary secretaries and ministers, who seem to follow a very rigid department of health line but do not really take into account the rest of the world or some practical matters.

I will read from a NICNAS letter of 18 July 2006:

Whilst the NICNAS legislation is about new substances the principal thrust is regarding new industrial chemicals but it is not really the industrial chemical manufacturers that are being effected. It is the Australian manufacturing industries generally that are being harmed by not being able to gain access to new substances ... that their overseas competitors are able to access & use. All manufacturing industries are effected, whether it be a steel maker (industrial chemicals are used in the steel making/refining processes) or a manufacturer of bread (stabilisers & emulsifiers). Even commercial offices rely on computer and photocopier inks, and to manufacture welding electrodes requires industrial chemicals. Personal care products be they simple anti perspirants or hair shampoos are reliant upon such ingredients.

Australia is not really a large manufacturer of industrial chemicals. Of course we produce high tonnages of agricultural fertilisers & things like caustic soda and sodium cyanide where sizeable domestic markets exist. Then there are more speciality industrial chemicals but by & large only substances of a ‘traditional’ nature where use was well established prior to the introduction of the NICNAS legislation. There is very little R & D now into such new industrial chemicals in Australia—almost all new substances are developed overseas.

There are a number of foreign owned producers of industrial chemicals here e.g. Huntsman, Shell, Monsanto, Borden Chemical etc who produce ‘traditional’ ingredients & have a capacity to import & market new substances from their foreign parents. Then there are the Australian producers like Orica, Nuplex/APS etc who spend most of their R & D budgets on process development/refinement rather than on new product (ingredient/substance) ...

It is the producer of plastic pipe that is hurt by NICNAS because he cannot access the latest ingredients such as plasticizers, UV inhibitors, stabilisers, impact modifiers etc—in many cases that producer of pipe may not even be aware of the latest ingredient or the reasons why he cannot buy & use them.

Mostly new industrial chemicals would be introduced to the Australian market by trading companies or the trading divisions of manufacturers. Those traders have sales volumes from say A$1 million pa up to A$500+ million pa & they represent foreign manufacturers of industrial chemicals. Not wishing to detract from the efforts of Australian scientists ... almost all new industrial chemicals are produced overseas hence the local representative is relied upon to introduce such substances to potential users in Australia. Even our Government owned CSIRO & ANSTO whilst inventing new substances generally license off shore manufacture/sale which frankly is another subject!

Naturally, if the potential sales volume of a new industrial chemical is such that the cost of accreditation under NICNAS legislation cannot be recovered in a reasonable time then that substance is not submitted to NICNAS for accreditation, thereby removing the opportunity for that substance to be used by the Australian manufacturing industry. It matters not that the new substance is in use and accredited within, say, Europe, the USA or Japan—that substance must still be accredited for use by NICNAS or it cannot be imported or used in Australia.

It is absolutely ridiculous to think that other countries have unacceptable accreditation processes and that Australia is correct in reinventing the wheel. Even new industrial chemicals rather than the substance being replaced must be subjected to NICNAS with the same costs and delays. Similarly, new industrial chemicals that would be far more acceptable environmentally must be accredited by NICNAS. Whilst the application fee for accreditation might be considered modest, the total cost to the applicant to develop and provide all the NICNAS required data is put at around $200,000 per substance as well as a totally unacceptable time period.

In the years now that NICNAS has been in place in Australia not one worker’s or consumer’s life has been spared, nor has any other upside been detected, but there are many examples of Australian manufacturers shifting their manufacturing jobs offshore because of NICNAS and leaving behind products of old technology that cannot compete in international markets let alone contribute to a better Australia—a true dumbing down of our industry at the same time as reducing our manufacturing.

Technically speaking, it is illegal to import an item that contains an ingredient that is not listed on the Australian Inventory of Chemical Substances, but in reality NICNAS has neither the knowledge nor the resources to police such matters. Hence you find biodegradable plastic bags being imported and used while the very resin polymer from which they are made cannot be imported for use in Australia by plastic bag makers. I have not heard anything so ridiculous—the finished product can be produced overseas and be imported into Australia but Australian manufacturers cannot buy the resin polymer whereby they could make those same bags in Australia. Manufacturers, as a proportion of GDP, have reached a low level.

The letter from ROAM says that there are groups of Australians who have some real problems, that there are anachronisms and obstacles to their productivity and that they are all caused by the difficulties they confront with the processes adopted by NICNAS. The letter finishes by referring to the Productivity Commission inquiry into NICNAS and says that, in spite of Professor Bell’s recommendations, there have been taskforces established but with guidelines that do not allow consideration of the elimination of the NICNAS legislation or the development of a viable alternative.

The letters go on over a period of time in much the same vein, but one of the most revealing factors was in a letter of April this year from ROAM. They go into some of the details of this legislation, which is always presented as a simplification of the process but seems to end up costing more and taking more time. They go on to say that they do represent manufacturers and have a knowledge of the industry but they do not claim to represent chemical manufacturers. Claims of simplified accreditation by NICNAS is a smokescreen as is the cost-recovery argument. The facts are that Australia NICNAS is leading the world in the disastrous race to overregulate all aspects of business. We simply cannot afford such ill-conceived concepts, especially schemes like NICNAS.

It is important to note that, when NICNAS was first foisted on Australian industry, a line was drawn which effectively grandfathered some 138,000 substances. NICNAS has assessed a small number of these grandfathered substances and caused, to our knowledge, none to be banned. The fact that only 3,000 or so new substances have been accredited by NICNAS since its inception and that Europe now has 110,000 accredited substances shows why Australian manufacturing jobs are moving offshore: they cannot compete.

I think that is the nub of the problem. Even though there was a grandfathering proposal for some 38,000 substances, there has only been, according to ROAM, a few thousand more added to that, whilst in Europe—and we know how stringent the green requirements are in Europe—some 110,000 accredited substances can be used by European manufacturers. This seems a strange inconsistency and yet we keep pursuing it. Letter after letter, response after response say we are protecting the Australian people. Can we seriously argue that Europeans are unprotected? Can we seriously argue that the regimes of the greens in Germany, of the Left in France and of all the activists that are so often on the television screens across Europe have been ineffective in persuading their governments to protect their communities? I think not. I think that those political forces in Europe have been extremely effective and in some instances have gone beyond what is required by Australian authorities.

In the chemical manufacturing industry and the provision of chemicals—which is such an important part of the manufacturing industry in general, whether it be in steel, plastics, food products or day-to-day things such as cosmetics—Australia needs to get its act together. We cannot compete by regulation. We must not compete in the regulatory field, saying that we are 10 years ahead of Europe in restrictive legislation. If the Europeans can approve 110,000 products for use in chemical manufacture and Australia cannot get much over 40,000, then we are suffering a huge disadvantage. The chemicals that we are missing out on are the newest ones, the most advantageous ones, the ones that are going to create the greatest benefit and, most often, the ones that are far less deleterious than the ones currently in use.

That process which I have just read to the House is described by the ROAM organisation, a group of seriously minded Australians who do not want to slash and burn all the legislation and regulation. They are reasonable people who want to see Australia advance but be safe at the same time. They have families and consider their families. When one reads their correspondence one cannot help but understand the heart and soul of these people and their interest in Australian jobs, Australian families and Australian opportunities and that this process limits our access to new products and new chemicals to less than half that the rest of the world uses. That puts us completely in the hands of overseas manufacturers. It is a reverse tariff process. It is giving them a tariff advantage, if you like, by the regulation of imports into Australia instead of having Australia compete. It is ridiculous.

I have not had a reasonable response from anybody on this issue. Of course, from a ministerial point of view, it is no good blaming the ministers because when dealing with chemicals—none of us are experts in chemical manufacturing or the danger of various chemicals—how can a minister possibly assess this as more dangerous than something else? So a minister must listen to experts. A minister must be guided by what he or she is told by a range of people skilled in these affairs who can make the appropriate assessment.

The stark fact is that we are at a disadvantage, and I want to know why. Why can we not use the same amount of chemicals in our manufacturing industries as they can in Europe? Why do we have to draw a barrier and say that in Australia the climate, the soil and everything else is so different that we cannot accept European or American standards? We do in human products. In human products the TGA has a very different and much better system to this. A lot of Australian chemical manufacturers say, ‘If only we could have a chemical manufacturers TGA we’d be a lot better off,’ because the rigour that is imposed on them, the slowness and the cost excels that of the TGA. That is their most rigid and solid criticism of what goes on in this industry. My colleague Wilson Tuckey dealt with some of the veterinary chemical industry issues that have been matters of discussion over the last few weeks. That is a different area of regulation, but many similar problems are imposed upon us there.

I would appeal to those administering NICNAS and to those in authority who look over this area to look at these regulations and say: ‘Let’s adopt a more reasonable and practical approach but one that is safe and one that is secure for the wellbeing of Australian families. Let’s not ditch Australian manufacturing and Australian jobs simply because we’re slow or cautious or just because we want to do our own thing which is different to the rest of the world.’