In November 2014 the Australia federal government released its Industry Innovation and Competitiveness Agenda (the Agenda), a report1 outlining the government’s action plan to improve the international competitiveness and efficiency of Australian industries through the reduction of regulatory and administrative burdens.
The Agenda indicates that the government is committed to deregulating and streamlining the myriad of Australian laws relating to industry regulation in order to make it easier and cheaper to do business in Australia. In particular, the government intends to:
- reduce the burden of regulation - by removing inefficient regulation, simplifying compliance procedures and assessments and improving regulator responsiveness to help businesses;
- reduce the burden of taxation - by working to reduce taxes and simplifying and clarifying the tax system for businesses; and
- increasing domestic and international competition - by implementing and adopting more international standards and risk assessment procedures within the Australian regulatory environment, as well as opening up the Australian economy to competition and investment to improve Australian consumers’ access to high-quality, low-cost goods and services.
At this stage, the Agenda provides only a high-level overview of the government’s intentions and does not detail the concrete steps to be taken in order to achieve its relatively complex objects. However, the Agenda provides some insight into the shifts in the regulatory environment that Australian businesses, and particularly importers and exporters, may expect to see in the future.
Of particular relevance to the direct selling sector are the proposed amendments to the regulatory framework of therapeutic goods and industrial chemicals in Australia.
Therapeutic Goods Administration
The government is seeking to rectify the problem faced by Australian businesses as a result of the standards and risk assessments of ‘highly regarded’ regulators in other economies overseas not being recognised in Australia, and vice versa.
In general, the Australian Therapeutic Goods Administration (the TGA) requires that all therapeutic goods that are intended to be supplied in Australia (including medical products and medical devices that make therapeutic claims) must meet the relevant regulatory guidelines and unless an exemption applies, be registered in the Australian Therapeutic Goods Register (the Register).
In respect of medical devices, there was until recently an inconsistency between the manner in which medical devices manufactured or supplied by overseas entities were approved in Australia, and the certification process applicable to Australian manufacturers and suppliers of medical devices.
Previously, the TGA would accept, without further certification required, medical devices manufactured or supplied by overseas businesses which had already been certified by notified regulatory bodies in the European Union.2 This permitted the importation and use in Australia of EU certified medical devices without requiring the overseas manufacturer or supplier to apply for additional TGA certification.
However, a different process was applied to domestic manufacturers of medical devices based in Australia. Under the former regulatory regime, all Australian manufacturers or suppliers of medical devices were still required to obtain certification from the TGA in respect of their medical devices. This requirement applied even if the Australian manufacturer had already received certification from an appropriate regulator overseas, for example by regulators in the EU.3
The Agenda indicates that the government regards differing requirements of this type as an unnecessary burden on Australian manufacturers and places domestic manufacturers at a disadvantage to their competitors overseas on the basis that domestic manufacturers would effectively be required to undergo two certification processes.
Accordingly, as of 5 November 2014, following the passing of amendments made to the Therapeutic Goods (Medical Devices) Regulations 2002 (the Therapeutic Goods Regulations), Australian manufacturers of medical devices are now permitted to use EU certification instead of being required to obtain an additional TGA certification. These regulatory changes enable Australian manufacturers of medical devices to register routine medical devices in Australia using conformity assessment certification from European notified bodies. High-risk medical devices still require Australia-specific conformity assessment.
At this stage, the government’s Agenda and the recent changes to the Therapeutic Goods Regulations is limited to the approval and registration process of medical devices. However, if the amendments prove to be successful, it is possible that there may be a further relaxation of the TGA framework in respect of therapeutic goods generally. This will certainly assist in reducing the complexity of the current TGA approval process for registration on the Therapeutic Goods Register, therapeutic goods or products which make therapeutic claims.
National Industrial Chemical Notification and Assessment System (NICNAS) Regulation
The Agenda also criticises the inefficiency of the Australian industrial chemical risk assessment system, describing the current process required to secure registration of chemicals as ‘slow’ and ‘expensive’.4
In a similar manner to the proposed TGA reforms, the government is therefore seeking to bring about a system wherein the testing procedures and assessments of ‘highly-regarded overseas regulatory authorities’ are utilised in the process of chemical registration in order to make these processes easier to navigate for Australian businesses.5
Adopting these measures is intended to recognise and accept international standards in the chemicals notification and assessment scheme, while maintaining a risk-based approach.
What about the food industry?
Significantly, a noted omission in the Agenda was any mention of reform of the Australia New Zealand Food Standards Code (the Food Standards Code) as administered by the regulatory body Food Standards Australia and New Zealand (FSANZ).
The status of FSANZ as a dual Australian and New Zealand government agency created under different statutes may result in greater inertia in achieving any level of regulatory reform in one of our major export and import markets. A proposed revision of the Food Standards Code is currently underway, with final submissions expected to be considered by the FSANZ Board in late 2014.
What does this mean for the direct selling sector?
The Australian government’s Agenda and intentions to streamline significant industry regulation is a positive step for both Australian and overseas direct selling companies who intend to supply, manufacture, sell and/or import goods in Australia that fall within the ambit of therapeutic goods or NICNAS regulation, in particular medical devices and cosmetic products.
It will be of particular interest to see whether consideration is given to any proposals to amend or relax the regulatory framework of the food industry. Given the complexity of the requirements under the Food Standards Code and further, the nexus between the Food Standards Code and the TGA framework, it may well be the next logical step on the Australian government’s agenda.
We will be monitoring closely any further new proposals for reform that arise.