Regulatory Impact and Compliance Cost Statement

October 2006, updated June 2008

Statement of the nature and magnitude of the problem and the need for government action

Food production in New Zealand stands out among food-producing OECD nations as a dominant contributor to the country’s manufacturing production, Gross Domestic Product, export intensity and trade balance.

It comprises 35,000 – 40,000 food manufacturing, importing, retail and service businesses and up to 200,000 additional part-time food premises.

It provides jobs for 20 percent of the working population.

According to the Food and Beverage Task Force (August 2006), the retail value of food and beverage was $13.8 billion per annum, and food service was valued at $5 billion per annum.

New Zealand’s food sector accounts for at least 10% of Gross Domestic Product (GDP).

According to the Food and Beverage Task Force (August 2006), food product and food ingredient export revenue earned New Zealand around $15 billion per annum, thus the food sector represented more than 50% of the total merchandise exports from New Zealand.

Particularly because of its positive contribution to New Zealand's trade balance, food production is likely to be a crucial sector in any economic strategy to lift New Zealand’s rate of economic growth.

There are two broad categories of problems facing the domestic New Zealand food sector:

i. Continuing significant rise in incidence of foodborne illnesses

There is a continuing significant incidence of foodborne illnesses, with rises occurring in some particular diseases. Otago and Canterbury have the highest rates of illness. Every year in New Zealand there are about 18,000 cases of enteric (intestinal) illness notified, with over 1,000 of these resulting in hospitalisations and up to five deaths. ‘Notification’ is statutory reporting of clinical suspicion, by a doctor, following diagnosis (usually a positive test). Enteric disease notifications were two and a half times greater in 2005 than they were in 1980. In 2005 there were 13,839 notified cases of campylobacteriosis, 1,383 of salmonellosis, 92 of E.coli 0157:H7 infection, 20 of listeriosis, and 407 of yersiniosis.

Estimates suggest there are more than 200,000 actual cases of foodborne illness per year in New Zealand. Unlike notification rates, these estimates include those people that do not visit their doctor when they have suspected foodborne illness. For example, estimated cases of campylobacter are about eight times higher than the notified rate. Although direct comparisons with other countries are difficult, due to different reporting requirements, New Zealand’s foodborne illness rates are generally considered to be higher than those of comparable developed countries such as the USA, the UK and Australia

The economic costs to New Zealand of foodborne infectious disease were estimated in 1999 as $88.8 million. Lost productivity was the major component of cost (Scott WG, Scott HM, Lake RJ, Baker MG. Economic cost to New Zealand of foodborne infectious disease. New Zealand Medical Journal. 2000; 113: 281-284).

ii. Inconsistencies, interface and other issues across the various legislation

Confusion about when government is involved: a significant number of businesses are unaware of the legislation for ensuring that food meets the appropriate standards that applies to them, or who administers it, therefore leading to non-compliance.

Inconsistent controls and inconsistency in their impact on businesses:

Hospitals, aged care homes and childcare centres that prepare food for vulnerable populations are not subject to registration under the Food Hygiene Regulations 1974, meaning they don’t have to have a mandatory inspection; however, a few (less than five) Territorial Authorities inspect such premises but most do not.

Forty (55%) Territorial Authorities have food bylaws to address gaps in the existing food regulatory regimes. The most common are requirements for compulsory training and/or qualifications for food handlers (which are inconsistent between different authorities); provisions for closures; food safety provisions for specific premises types (food stalls, mobile traders, etc.); and licensing and registration requirements. Just under half of the bylaws contained provision for offences, penalties and appeals. Although there are many similarities in bylaw provisions, their ad hoc nature across New Zealand and different requirements has led to inconsistent controls and impacts on businesses

Complexity in responsibilities and legislative framework, and ill-defined roles:

The food regime is made up of layers of legislation coupled with different agencies responsible for compliance and enforcement.

For example, the Food Hygiene Regulations 1974 (enforced by council Environmental Health Officers) are the main control, but can be replaced, at the discretion of a business, by more comprehensive risk-based food safety programmes (enforced by NZFSA and Public Health Units with third-party auditing); but neither tool incorporates compliance with the labeling and composition requirements in the Food Standards Code (2002), administered separately by NZFSA or Public Health Units (because those requirements came into force after the requirements of the Food Hygiene Regulations and food safety programmes came into effect). Such duplication of checks is inefficient.

Lack of practicality of some controls:

The Food Hygiene Regulations 1974 require all food for sale (that are covered by the regulations) to be prepared in registered premises. If enforced, the sale of homemade cakes and sweets at fundraisers would be prohibited.

Lack of clarity and consistency about how much facilitation and guidance NZFSA as regulator will provide:

Government is proactive in engaging with some industry groups in the preparation of Codes of Practice (e.g. speciality cheese makers and ice cream manufacturers).

Government is not proactive in engaging with others (e.g. takeaway food businesses).

Safety and suitability aspects of the food regulatory programme have not generally been addressed together:

The various risk-based plans and programmes should document all in one place all of the applicable requirements that a ‘person’ needs to follow in order to provide safe food.

The plans and programmes do not always cover food suitability, which is required by the joint Food Standards Code for labelling and composition. . This is because some suitability requirements are not directly related to food safety risks but rather are concerned with the provision of consumer information about food products.

These problems directly or indirectly impact across a number of Acts and regulations, NZFSA, 12 Public Health Units, 73 Territorial Authorities, 3,000 registered risk-based plans (food safety programmes and risk management programmes), 23,000 registered food premises, 1,700 registered food manufacturers, an estimated 5,500 unregistered hospitals, childcare facilities, aged care homes or school tuck shops, and an unknown number of occasional food business (estimated between 80,000 and 200,000), such as barbecue fundraisers and galas.

Statement of the public policy objective(s)

The public policy objective is to provide an efficient, effective and risk-based food regulatory regime that manages food safety and suitability issues.

Statement of feasible options (regulatory and/or non-regulatory) that may constitute viable means for achieving the desired objective(s)

Status quo

Currently, most food is regulated by the Food Act 1981. Other food is regulated by the Animal Products Act 1999 and Wine Act 2003 and regulations under these Acts. The key features of the Food Act are outlined below. Most premises (unless exempted) are covered by the Food Hygiene Regulations1974, which are inspected and enforced by Territorial Authorities. Premises exempted from the Food Hygiene Regulations1974 are covered by Food Safety Programmes audited by third parties and enforced by Public Health Units and NZFSA. All persons preparing food for sale or selling food, including imported food, are covered by the Food (Safety) and Food Standards Regulations 2002 (including the joint Food Standards Code for food labelling and composition). Those are inspected and enforced by Public Health Units, third parties and NZFSA.

Under the Food Act 1981 no person can prepare or pack for sale, or sell any food (including at a restaurant, takeaway, retail store, church fair, gala or barbecue fundraiser):

that is unsound or unfit for human consumption or contaminated; or

containing, or having attached to it or enclosed with it or in contact with it, any extraneous thing that is injurious to health, harmful or is offensive; or

in any package that may render the food injurious to health or that may taint the food.

The administration, compliance and enforcement of those requirements is shared among NZFSA, Public Health Units and Territorial Authorities. NZFSA has the overall responsibility; however it contracts Public Health Units to deliver a broad range of food safety and suitability activities; Territorial Authorities undertake inspections for food safety and of premises, funded through local government arrangements.

A variety of Food Act regulatory mechanisms assist with meeting and ensuring compliance with the safety and suitability requirements.

Food Hygiene Regulations1974 (Administered by Territorial Authorities)

These provide for hygiene and food handling practises in premises and are applicable to all persons operating under the Food Act, except those exempted because they have a food safety programme.

Food safety programmes (Administered by NZFSA and Public Health Units)

Under the 1996 amendment to the Food Act, food businesses have the option to develop food safety programmes based on the Hazard Analysis Critical Control Point (HACCP) System and be exempt from the Food Hygiene Regulations 1974. HACCP is a system which identifies, evaluates and controls hazards which are significant for food safety. To date, over 1,700 businesses have opted to obtain a programme, recognising the benefits they offer in food safety, effectiveness and flexibility. Of these, approximately two thirds are ‘general agreement’ businesses including large franchises that have national plans operating throughout the country. The other one third include suppliers whose supermarkets require that they have programmes and exporters where the country they are exporting to may require HACCP requirements to be met. The process is applicable to any size and type of food business.

Food Standards (Administered by NZFSA)

There are five New Zealand Food Standards made under the Food Act 1981. These are the joint Food Standards Code (which provides standards for composition and labelling); Bee Product Warning Statements – Dietary Supplements; Maximum Residue Limits of Agricultural Compounds; Milk and Milk Products Processing; and Prescribed Foods. The Prescribed Foods Standard provides for ‘high risk’ or prescribed foods to be monitored for specific hazards and prohibit the import, manufacture, storage, transportation, sale of these foods if they contain the hazard listed at levels that are outlined in import requirements. These are applicable to all food sold in New Zealand and are administered by the NZFSA.

Food (Safety) Regulations 2002 (Administered by NZFSA)

The Food (Safety) Regulations 2002 contain a variety of regulations (e.g., misuse of food containers, labels on bottles containing food, infected persons and food, low-acid canned food, sale of muttonbirds, wine composition, fluoridated water, and sale of hemp seed oil as food) that generally fall outside of the joint Food Standards System and so are not covered in the joint Food Standards Code. They are applicable to all food sold in New Zealand and are administered by NZFSA.

Risk management programmes, wine standards management plans (Administered by NZFSA)

Under the Animal Products Act 1999 (which covers all primary production, processing and export of animal products – where an official assurance is required) a risk management programme is designed to identify, control, manage and eliminate or minimise hazards and other risk factors so that the resulting animal product is fit for intended purpose. They cover all safety and suitability aspects. Under the Wine Act 2003 (which covers all production of grapes and other material used for wine , wine making and export), wine standards management plans provide a single, comprehensive and verifiable regime for compliance with food safety, food composition, labelling and overseas market access requirements.

Bylaws

Forty (55%) Territorial Authorities have food bylaws. There is no consistency between the bylaws or their enforcements, as the various bylaws are developed by each Territorial Authority taking into account local circumstance, for example, availability of training providers. See above for details of the range and extent of local bylaws.

The status quo does not meet the public policy objective due to inconsistencies with current legislation, interface issues and incidences of foodborne diseases and illnesses.

Proposal: A new Food Bill

A Bill’s objectives are to:

restate and reform the law relating to dealings with food; and

achieve the safety and suitability of food for sale by instituting risk-based measures in order to –

minimise and manage risks to public health

promote and protect public health

require persons who deal with food to take responsibility for the safety and suitability of food

The Bill imposes the primary duty on persons who deal with food to ensure that the food is safe and suitable.

The Bill is required to enable the desired outcome and public policy objectives to be achieved. It would not be feasible to amend the current food legislation because the food safety and suitability regime under the Food Act 1981 does not align with the regime to now be put in place.

The Bill provides sets three types of risk management tools:

food control plans

national programmes

food handler guidance

A decision on the management tool that is most appropriate for a particular sector will take into account factors such as risk, the likely impact of an adverse food safety event, economic efficiency, the capability of regulated parties to develop and implement the tools, and the likely compliance rates. This means that the most efficient and effective approach can be taken to manage food safety and suitability issues in particular food sectors.

Food control plans will either be based on an “off-the-peg” template developed by NZFSA or will be “custom made” by a particular food business.

Off – the - peg food control plans will be developed where there is commonality among products and processes across a significant number of food businesses and there are relatively low risks. The types of businesses that would operate under off-the-peg food control plans include dairies, caterers, restaurants, hospitals, rest homes, retail butchers, and confectionary manufacturers.

Custom-made food control plans may be required for complex businesses. Such businesses are mostly covered by existing food safety programmes (which will be considered equivalent). Where they are not so covered, many will be able to use two or more off-the-peg template food control plans as a basis for developing their own custom-made food control plan. . The types of businesses that will operate custom-made food control plans are large franchises, supermarkets, and manufacturers.

Food control plans will be time bound and will initially be registered for a one year period, however the registration period may be extended for a longer period (up to three years) for those businesses that are good operators and maintain ongoing compliance. Food control plans will also require renewal where there is a significant change in operations and for a change in ownership or operator.

Custom-made food control plans will also be required by those who operate a food business that varies significantly from the scope of an off-the-peg food control plan. For example, a corner dairy will ordinarily only be required to operate an off-the-peg food control plan, but will need to enhance the plan if it conducts additional operations that fall outside of the off-the-peg template food control plan e.g., if they also make jam.

Custom-made food control plans may need to be evaluated to determine compliance with regulatory requirements and appropriateness for the operation. The degree of evaluation required will depend on the degree of customisation and complexity of the plan. For example if a plan is based on an approved off-the-peg food control plan that portion of the plan will require minimal evaluation, if any.

Food handler guidance would apply generally to very small food activities and events such as barbecue fundraisers and foods stalls. It will generally be suitable for operations selling food where:

they have a small sphere of impact because they serve or sell food to a comparatively small number of people;

their frequency is minimal;

the food risks are at the lower end of the risk scale;

they are involved with community and/or fundraising activities (e.g. charitable organisations, bed and breakfasts, tuck shops); or

it is not pragmatic to regulate.

National programmes will be used when the management of food safety and suitability justifies regulatory control, but it is not feasible (or it is inefficient) to manage the risks within a food control plan. National programmes might apply across all or any part, of the food value chain from producer to harvester to food outlet and include, where appropriate, importers. A national programme might co-exist with and be complementary to a food control plan.

Importers of medium or high risk food will be required to have food control plans. Importers of low risk food will be subject to a national programme.

The Bill is based on three-tier regulatory model comprising of three key players:

the regulator: the New Zealand Food Safety Authority and contracted agencies (the Public Health Units of District Health Boards) and territorial authorities

the verifier: agencies accredited to undertake verification

food businesses

This model has been generally applied in other areas of food regulation as the preferred regulatory model. The regulatory model explicitly recognises the obligation on all ‘persons’ preparing and selling food to meet safety and suitability requirements. It also requires verification and audit processes to confirm that plans etc comply with the legislative requirements and that the plans are being implemented effectively. The Bill contains provisions covering this (see below).

NZFSA will continue to take principal responsibility for all regulatory functions, while Public Health Units will continue to have contracted roles in certain areas, including investigations and in assessing plans submitted for registration. Public Health Units in the District Health Boards will remain contracted to NZFSA to provide essential linkages especially in relation to foodborne illness investigations. Their contracted roles will include some or all of the following activities:

contribute to the development of standards and implementation tools and education;

systems audit;

certain food control plan pre-registration activities;

non-compliance investigations in specific (limited) areas beyond Territorial Authority responsibility;

enforcement;

emergency response, including recalls;

monitoring and surveillance;

facilitation of training (industry and businesses) (optional);

foodborne illness response (as provided for under the Health Act); and

education of consumers in conjunction with NZFSA.

in conjunction with the NZFSA

Territorial Authorities will have the regulator functions for the registration, compliance and enforcement of off-the-peg food control plans, a responsibility to deliver food handler guidance to ensure safe and suitable food is delivered by very small food-selling operations and a choice (provided they gain the required competency recognition) to have a role in verifying custom-made plans.

In addition, Territorial Authorities will have an ongoing role in external verification including an exclusive right to conduct verification processes in the case of less complex businesses i.e. businesses that:

have an off-the-peg food control plan;

operate exclusively within a single Territorial Authority jurisdiction (except for mobile businesses, where the lead would be taken by the Territorial Authority where the mobile operator primarily operates); and

have a limited scope of operation and sells directly to the consumer.

NZFSA will monitor the performance of territorial authorities and may review the exclusive right referred to above, following the Bill’s five year transition period.

NZFSA will work with relevant agencies to set national training and education requirements, which may include compulsory training, to requiring basic competencies, to public education programmes.

The Bill sets out a range of compliance tools which provide incentives for compliance and sanctions for non – compliance. The approach to be pursued in a particular case will reflect the degree of non-compliance, and the consequences of non - compliance. For example, minor offending without significant food safety concerns may be dealt with by issuing a compliance order rather than taking a prosecution.

The Bill contains some presumptions which have the effect of reversing the burden of proof for some elements of an offence. For example:

if food is present in retail premises; it is presumed to be there for sale, unless the contrary is proved

a sample is presumed to be representative of the food from which it was taken, unless the contrary is proved

(these examples to be checked when drafting is completed).

NZFSA will monitor the Bill and associated regulatory programme’s performance against key objectives, for example monitoring the impact on foodborne illness, the uptake of regulatory programmes, and compliance costs.

The Bill includes provisions to ensure that the costs of administering the Act are recovered by way of fees, levies, or otherwise. Decisions on which method of cost recovery to adopt will be based on considerations relating to equity, efficiency, justifiability, and transparency and will follow consultation with those affected.

The transition to, and implementation of, the Bill will be staged to ensure an orderly move from existing regimes. A five-year transition period, with a proposed start date of 1 July 2009, will:

allow ‘persons’ time to change to the new regime in a measured way; and

accommodate the need to build capability to develop and implement tools, systems and guidance amongst all stakeholders (‘persons’, agencies and regulator), while spreading effort across the transition period.

Statement of the net benefit of the proposal, including the total regulatory costs (administrative, compliance and economic costs) and benefits (including non-quantifiable benefits) of the proposal

Government - Central (including Public Health Units)

Central government will benefit by having a framework that contributes to achieving its desired outcome of reducing the incidence of foodborne illness in New Zealand, while also being more efficient through a coherent and seamless food regulatory programme (including at the border and applying to imported food). A reduction in the incidence of foodborne illness will reduce overall health expenditure in that area.

All levels of government will benefit by having more clearly defined roles and responsibilities, thereby reducing the potential for gaps, inconsistencies, overlaps and duplication. Government will have a better range of tools to provide for incentives for good compliance, and more appropriate sanctions for varying degrees of non-compliance.

Central government will face costs associated with providing training, guidance and supporting material to stakeholders. It will face transitional costs as regulated parties move from the existing regimes to the new regime. The key areas of cost to government have been identified in:

the development and provision of tools free to businesses (to remove consultancy costs which has been a significant problem in other areas) including templates and guidance material in English and other high use languages. Early provision of this material will greatly enhance application in and compliance by industry;

the provision of assistance to Territorial Authorities to help them attain acceptable competency standards for verification;

training for regulators

education in schools;

enforcement and compliance capacity to support a more consistent approach across New Zealand and to complement/assist Territorial Authorities in this area; and

systems to ensure accountabilities and information flows between central and local government.

Government - local government

Territorial Authorities will face costs associated with becoming familiar with the new regime and in providing training, guidance and supporting material to stakeholders. They will face transitional costs as regulated parties move from the existing regimes to the new regime.

Territorial Authorities will face costs in their enhanced role as the ‘one stop shop’ for food businesses and in having responsibility for delivering Food Handler Guidance. Those are expected to be a marginal cost on existing activities. Costs will also be associated with the following functions (some of which are optional):

exclusive verification of some off-the-peg food control plans;

assessment and registration of mainly off-the-peg food control plans;

investigations and complaints (safety and suitability) of non-compliance arising from food businesses including those that they verify;

enforcement of off-the-peg food control plans;

emergency response, including recalls in conjunction with NZFSA;

education of consumers in conjunction with NZFSA;

evaluation and/or verification of custom-made food control plans (optional); and

facilitation of training (industry and businesses) (optional).

Cost of functions not subject to direct user charges may be recovered as an indirect component of charges such as registration charges or from other Council revenue such as rates.

Territorial Authorities will have exclusive rights (i.e. not be subject to third-party competition) in respect of verification of off-the-peg plans for less complex businesses. Territorial Authorities will also have the option of developing capacity to deal with verification of custom-made food control plans and to compete with other providers for this work.

Territorial Authorities will benefit from having an area of exclusivity (certainty of work and revenue) which will assist in building and maintaining food regulatory capacity. Transaction cost (that would have existed between third party verified and Territorial Authority enforcement officers) will be avoided.

It is estimated that it could take between one - three hours of the regulator’s time to assist a business to move from the Food Hygiene Regulations to a food control plan. Those costs will be able to be spread over a graduated transition programme and could be mitigated in part (e.g. travel costs, if scheduled at the same time of an annual inspection visit).

Territorial Authorities’ costs can be met through fees charged for verification or registration, through other revenue such as rates, or through assistance if offered by the government through NZFSA training programmes.

Industry (manufacture, importation, preparation and sale of food)

Industry as a whole will benefit from having relative seamlessness and coherence across all NZFSA-administered legislation. Each business will have a clear understanding of regulatory or other requirements, as they will be administered through a single food control plan, food handler guidance or a national programme. NZFSA expects that the majority of food business currently covered by registration under the Food Hygiene Regulations would be able to adopt an off-the peg food control plan, which will be developed by the NZFSA. This will have the key benefit of providing for the operator, in one place, reference to all the regulatory requirements that need to be met to ensure the food they produce is safe and suitable as well as documentation on how they will meet those requirements.

A key benefit is that industry will not be bound by prescriptive (one size fits all) regulations and requirements that for some businesses do not contribute to food safety and suitability outcomes, but only add cost. All industries will benefit immediately from best practice that has been implemented in other legislation, and food businesses will have more scope to innovate and adopt new technologies.

All industry participants will face increased costs due to the need to develop or implement new requirements. The extent of change will depend largely on each business’s level of compliance with existing food regulations. The costs will remain largely unchanged in the key areas of safety and suitability, the requirements for good operating practice, and labelling and composition requirements. Those businesses who comply poorly now will face significant costs in ensuring compliance. However, improving such compliance levels through those businesses taking increased responsibility is a necessary cost of achieving the public-policy objective. In general well performing businesses with good systems should have minimal transition costs.

Businesses that have existing risk-based management programmes (e.g. food safety programmes and risk management programmes) will not face any additional costs initially but will face some costs over time in adjusting the existing programmes to fully meet the requirements of food control plans. There may be a slight increase in verification costs associated with checking labelling and composition requirement. Registration cost should remain similar to current costs.

Businesses subject to registration under the Food Hygiene Regulations will generally be required to operate a food control plan (unless an approved alternative such as food handler guidance or a national programme is available to them). Most businesses will be able to use off-the-peg food control plans that require little or no additional development. There will be some initial cost in ensuring that the off-the-peg plan is sufficient to cover all operations of the business. There may also be some additional ongoing costs (mostly in operator time) to ensure all the requirements of the Plan are being met.

Businesses that have an off-the-peg food control plan will face costs associated with the registration of the plan. This initial cost will be decided by the local authority and is expected to be approximately $100-$150. The cost of verification for off-the-peg food control plans will be in the range of $300 to $800 per annum

Businesses that choose, or have to develop custom-made food control plans will face additional costs associated with their development, evaluation and registration. The extent of this cost will depend on the amount of customisation of the plan, and will range from $300 to $3000. The cost of verification of custom-made food control plans will also be in the range of $300 to $3000 per annum.

Businesses that are exempt from the food control plans will either be covered by food handler guidance or a national programme. Food handler guidance will be available from the Local Authority at no cost. Those businesses that are regulated under a national programme will be required to pay a registration fee to the NZFSA, it will be in the region of $100-$150

Society

Society will benefit from having a food regulatory regime that reduces the incidence of foodborne illness in New Zealand, and through increased compliance with existing labelling and composition standards. A reduction in the incidence of foodborne illness will reduce sickness levels, benefit employers, and contribute to improving the health of New Zealanders. Improved compliance will ensure better provision of the required consumer information. Society will also benefit from having a more efficient food regulatory programme. Generally, government charges, verification costs and compliance costs for operators who are already compliant with existing requirements should not pass on any significant costs. This will keep costs to society, in terms of food process increases, to a minimum.

Statement of consultation undertaken

The review of Domestic Food regulation began in March 2003. Subsequently, working groups, workshops and consultations were held throughout the country following the release of the first seven papers. After taking into account submissions received on all seven papers, a Position Paper was released for public discussion in February 2006. This provided a comprehensive package of proposals for the future regulatory regime and was entitled ‘NZFSA Discussion Document Paper No.1/06: Domestic Food Review Position paper’.

NZFSA ran public seminars on the position paper in all main centres in New Zealand during March and April 2006. Approximately 1,000 people attended, including industry organisations, government bodies, other stakeholders and other interested members of public. Submissions on the Domestic Food Review Position Paper closed on 28 April 2006. NZFSA received 157 submissions in total. These comprised: 77 business groups; 34 government bodies (including Territorial Authorities, District Health Boards and/or their Public Health Units). This also included Local Government New Zealand (which is not a government body); 23 industry organisations; 12 community groups, clubs, associations, not-for-profit organisations and schools; nine members of the public; and two academic or professional bodies.

The response to the position paper was generally positive, with broad support for food control plans and food handler guidance. Many submitters sought further clarification on which tools would apply to which sectors. Other key issues that arose included:

costs of compliance including verification;

third party verification;

resource implications for Territorial Authorities;

requests for further clarification of the roles and responsibilities of Public Health Units, Territorial Authorities and NZFSA.

The cost of compliance has been a particular focus of voluntary organisations wanting to run sausage sizzles, bed and breakfast accommodation providers, sport’s clubs and farmers markets. This has been addressed in part through the concept of food handler guidance which is an educational tool. Guidance materials will be made available free of charge.

There will, however, be a boundary where the potential risk, scale of impact or frequency of event means a particular food operation warrants the use of another tool such as a food control plan or national programme. Most businesses will be able to use off-the-peg food control plans that require little or no additional development. There will be some initial cost in ensuring that the off-the-peg plan is sufficient to cover all operations of the businesses. There may be some additional ongoing costs (mostly in operator time) to ensure all requirements of the plan are being met. Registration costs should remain similar to current costs.

Territorial Authorities raised concerns about third parties undertaking verification roles and their ability to build and maintain the capability to perform their roles under the Bill. Their concerns have been addressed by giving Territorial Authorities the exclusive right to verification roles for off-the-peg food control plans for businesses that are located only within their district, and if recognised to do so, verifying custom-made food control plans

Roles and responsibilities of Public Health Units, Territorial Authorities and NZFSA will vary depending on the tool applied to the management of the particular food sector. .

In October 2007, NZFSA released a ‘Policy and Related Implementation Position Paper – Domestic Food Review’ which reflects decisions made in light of the consultation process.

Business compliance costs

Compliance costs will arise from stakeholders becoming familiar with the new requirements and the actions needed to ensure compliance with the new requirements. As it is not proposed to alter any of the high level outcomes, i.e. that all food produced for sale must be safe and suitable, the biggest area of change for food operators is in how they are required to demonstrate that they are achieving those outcomes.

The extent of compliance costs will depend on the type of business and its current regulatory coverage. Those businesses that have good operating practices and are compliant with existing food regulation should have significantly lower compliance costs than those that don’t. The table below identifies compliance costs within broad categories.

Current regulatory framework

Compliance cost resulting from the
proposals

Food safety programmes

(1,700 plans of which approximately two thirds are ‘general agreement’ businesses including large franchises that have national plans operating throughout the country. The other one third include suppliers whose supermarkets require that they have plans and exporters where the country they are exporting to may require HACCP requirements to be met).

One-off adjustment to meet expanded requirements, mostly to demonstrate compliance with the joint Food Standards Code.

This will mostly involve operator time (3-6 hours), and generally can be done within a regulatory programme review.

Compliance costs for registration and verification (formerly auditing) are not expected to be significantly different from these already imposed as those requirements are not expected to be significantly different from those already in place under food safety programmes.

Registered Under the Food Hygiene Regulations

(23,000 registered food premises; 1,700 registered food manufacturers)

One-off uptake of off-the-peg food control plan. This involves operator time with becoming familiar with the contents of the plan and adjusting systems, if necessary, to be in a position to demonstrate compliance with the plan. Ongoing costs associated with implementation of some of the requirements (e.g. record-keeping). This will mostly involve operator time in becoming familiar with the requirements and making adjustments to current practices if necessary, for example additional documentation for recording fridge, freezer or pie warmer temperatures.

Businesses without adequate training programmes will face costs in putting those in place. Staff training will involve ensuring staff are competent and are able to demonstrate compliance with the content of the plan. This could include in house training or use of external providers.

Businesses that choose or need to develop custom-made food control plans will incur one-off development and evaluation costs. For large or complex plans that are fully custom made development costs can be significant.

 

Costs associated with development and evaluation will depend on the size and complexity of the plan and the extent to which it varies from an off-the-peg food control plan and/or codes of practice.

Compliance costs for registration and verification (formerly inspection) are not expected to be significantly different from those already imposed.

Businesses exempted from registration under the Food Hygiene Regulations that need Food Control Plans

(5500 hospitals, childcare facilities, aged care homes or school tuck shops)

As above, plus ongoing registration and verification costs. The size and scope and existing systems of each operation will also determine the likely total compliance cost, for example a hospital will have higher costs than a childcare centre.

Businesses exempted from registration under the Food Hygiene Regulations that are subject to Food Handler Guidance

Cost of becoming familiar with the new requirements.

Businesses subject to National Programmes

(possibility around 5000)

Cost of becoming familiar with the new requirements and costs associated with listing and verification, if required.

There are approximately 3,000 businesses that import food. Some import on a large scale whilst others import occasional or one-off small consignments. Where there are minimal risks associated with the products, it is intended that only Generic Standards (i.e., statements of expected outcomes) will be required and agreement to comply will be done through a national programme and will include registration/listing. No verification will be needed. There will be some cost associated with meeting basic requirements such as record keeping which will involve mostly operator time. Operators importing higher risk foods will be covered by a food control plan or equivalent.

NZFSA will minimise compliance costs by applying the most suitable management tool to each business type. The majority of businesses will be provided with an off-the-peg food control plan that is already evaluated and provided with guidance on how to tailor the plan to accommodate any special features. In addition, NZFSA will supply a wide range of guidance materials.

NZFSA will organise a graduated transition programme that will enable government and industry to manage and spread the cost of transition.