2016 Chemical Labelling Duplication Review

Response from the Hon. Barnaby Joyce MP, Deputy Prime Minister and Minister for Agriculture and Water Resources

I welcome the review by Deloitte Touche Tohmatsu Ltd. of the regulatory interaction between the labelling rules found in WHS regulations, and existing agvet chemical legislation.

The terms of reference for the review may be found in regulation 80E of the Agricultural and Veterinary Chemicals Code Regulations 1995. Two reports comprising the Deloitte review have been published on the Department of Agriculture and Water Resources’ website.

I am grateful for the assistance of my colleague Senator the Hon. Michaelia Cash, Minister for Employment in seeking an optimal outcome to the chemical labelling issue. Senator Cash shares my view that regulation should only be imposed where it is beneficial to do so.

Decisions relating to the GHS labelling requirements are made by Safe Work Australia (SWA), which is a statutory body responsible for developing policies for workplace health and safety. Members of SWA comprise delegates from the Commonwealth, state and territory WHS authorities and representatives of employer and employee interest groups.

At the request of Minister Cash, SWA convened an extraordinary meeting of its members in August 2016, to consider the outcomes of the Deloitte review and associated labelling issues. The meeting allowed representatives from the agvet chemicals industry, the Australian Pesticides and Veterinary Medicines Authority (APVMA) and the Department of Agriculture and Water Resources to explain how agvet chemicals are regulated (including how agvet regulation protects safety), describe likely impacts of the new labelling requirements on industry and outline the review findings.

I am pleased that after being provided with a draft report from the review, and presentations from industry, the APVMA and my department, SWA agreed to exempt certain veterinary chemical products from the labelling requirements. The exempted products are those classified under Schedule 4 (when supplied in a form and packaging for direct administration to animals—including small containers, tablets, syringes and chewables) and Schedule 8 of the Poisons Standard. This decision will reduce the burden of unnecessary regulation on veterinary chemical product manufacturers and importers.

Members of SWA had previously agreed that users of hazardous agvet chemicals will no longer be required to re-label or dispose of ‘old’ stock (held in workplaces such as farms) with labels that do not comply with the GHS requirements (under WHS regulations, possession of such stock would have been an offence). Both of these measures directly addressed issues identified in the review.

SWA also later considered and rejected extending the commencement date of 1 January 2017 for GHS labelling of agvet chemicals to allow time for it to consider the matters raised by the review and by stakeholders.

On 25 November 2016, after the review had been completed, SWA met to consider exempting all agvet chemicals from the GHS labelling requirements. SWA members did not agree, and, while I accept SWA’s authority to make the decision, I do not consider that it was supported by a compelling policy or safety case.

I am advised that SWA did, however, agree to exempt stock manufactured or imported before 1 January 2017, from re-labelling. I welcome this common sense decision by SWA. It will help ensure a smoother transition to GHS labelling and avoid a further, unnecessary cost burden on manufacturers and importers. It will also avoid the potential distruption of supply associated with recalling or re-labelling stock already in the supply chain. Information about these amendments has now been published on the SWA website. I understand that each jurisdiction is responsible for implementing the new GHS labelling requirements under its own regulatory framework.

I am also encouraged by subsequent decisions by New South Wales and Tasmania to grant extensions in those jurisdictions for GHS labelling of agvet chemicals until 31 December 2017 (providing that products are labelled correctly under APVMA requirements). I encourage other states and territories to follow suit. I understand that information on implementation timeframes and other related matters will be made available by the respective WHS agency in each jurisdiction.

The new GHS labelling requirements lie outside the regulatory responsibilities of the APVMA. They will not remove or affect the label content that it requires. Therefore, any decisions about mandatory precautionary and hazard statements (and their equivalence to APVMA-approved label content) remain a matter for affected businesses and Safe Work Australia.

I am advised that SWA, in consultation with the APVMA, has compiled some compliance guidance materials specifically for the agvet chemical sector. SWA has also developed tables from information in the review listing GHS hazard and precautionary statements that are equivalent to approved agvet chemical label statements. I understand the APVMA has assisted SWA with this work and I encourage this cooperation with SWA.

The APVMA is also directly assisting the agvet industry with specific enquiries through its communication with relevant peak bodies and by providing information on its website, including references to the supporting guidance material developed by SWA.

I expect the Department of Agriculture and Water Resources to continue to work closely with the APVMA on any operational consequences that may arise from any labelling changes in the future. Should any further consideration be given to agvet chemical labelling reform, I recommend that it be considered in terms of the classification and labelling requirements set out in the Poisons Standard.

Deloitte review findings and recommendations

The review confirmed that Australia’s agvet chemical regulatory system manages health and safety risks to workers, including those involved in the transportation, storage, processing, use and disposal of agvet chemicals. It acknowledged the requirement for APVMA-approved mandatory label information on agvet chemical products and noted this is just one control amongst many designed to protect the health and safety of people handling these products. Deloitte found that while the agvet chemical and WHS regulatory frameworks protect both the health and safety of people in the community and workers in the supply chain, the two systems differ in their respective objectives, implementation and enforcement.

The review also found that the new labelling requirements are not consistent with Australia’s major trading partners with similar risk-based regulatory frameworks for agvet chemicals. For example, although the USA, Canada, and Japan have implemented GHS labelling for hazardous chemicals generally, none of these countries has implemented GHS labelling for either agricultural chemicals or veterinary medicines. New Zealand has similarly implemented GHS labelling for hazardous chemicals, but this remains optional for both agricultural chemical products and veterinary medicines.

The review noted that the new GHS labelling requirements adopt a ‘hazard-based’ approach to mandatory agvet chemical label content. These requirements are in addition to, and separate from, the mandatory label information requirements required by the APVMA, which applies a ‘risk-based’ approach to labelling and assessment (i.e. one that considers exposure as well as hazard).

The review noted that although the additional GHS label information could help inform workplace safety assessments, this information is already available on the safety data sheet for each product. The review also noted that APVMA-approved label content was previously considered sufficient to meet WHS regulatory requirements and that it complements other safety controls available in the industry.

Deloitte considered that there is ‘likely to be a small ongoing health benefit’ from providing additional GHS information on agvet chemical labels, primarily for a group of supply chain workers who are already familiar with handling chemical products displaying this information. Deloitte also felt the additional information may benefit ‘some of those who consider illegal off-label use of the agvet chemical products’ (i.e. people who wilfully and illegally ignore label safety instructions). These conclusions reflected Deloitte’s opinion but were not supported by evidence.

Although there was insufficient data available with which to conduct a robust cost-benefit analysis, Deloitte estimated the likely cost to the agvet industry of the GHS labelling requirements to be approximately $15–$15.8 million (excluding the costs to re-label stock but assuming all products require additional labelling). A separate review was also conducted by Ernst & Young in 2016 on behalf of the agricultural chemicals industry. It estimated the cost of re-labelling stock in the supply chain at around an additional $40 million for agricultural chemical products alone.

Deloitte clarified that APVMA assessments consider both chronic and acute effects, physicochemical effects (e.g. ‘flammability’ or ‘corrosiveness’) and potential for exposure to an agvet chemical product or its residues during handling, transport, use or disposal of the chemical or its containers. It noted that assessments by APVMA also specifically consider workers, such as spray contractors, who may have long-term exposure to agvet chemicals in the workplace. Risk management measures based on assessed risk are applied to reduce any identified health risks to acceptable levels. These measures include engineering controls, safety directions, use restraints, scheduling recommendations and requirements for the use of personal protective equipment.

The review recommended that the APVMA allow veterinary medicine manufacturers to ‘re‑stick’ any new labelling at the point of supply without the need for stock to be returned to the manufacturer for re-labelling in accordance with Good Manufacturing Practice (GMP).

In Australia, the majority of veterinary chemical products must be manufactured in accordance with the Code of Good Manufacturing Practice. Correct labelling of chemical products is one step in the GMP manufacturing process. Any market label with APVMA-approved content must be affixed to the product at a manufacturing site with a GMP licence issued by the APVMA. I am advised that the problem of needing to re-label existing stock will be largely eliminated by SWA’s decision to recognise existing labelling for stock manufactured or imported before 1 January 2017.

Deloitte also queried why veterinary medicines, including those whose use involves a qualified veterinary professional, are treated differently to human therapeutic goods which are exempt from GHS label requirements. It noted that the United Nations Economic and Social Council’s Sub-Committee of Experts on the Globally Harmonised System of Classification and Labelling of Chemicals, which is the body responsible for the GHS labelling system, does not assume that veterinary chemicals would generally be subject to the requirements of hazard labelling and that GHS labelling would not ordinarily be applied to such products as a result. Deloitte also noted that any potential risks in the medical use of veterinary chemicals are generally addressed in package inserts and are not part of the UN’s harmonised GHS process. The exemption that SWA Members agreed to provide for Schedule 8 and some Schedule 4 veterinary medicines partially addresses these concerns.

Deloitte also noted that as a concept of sound regulatory review, a post-implementation review of the effectiveness of GHS statements on agvet chemical labelling may be advantageous. Although this decision rests outside my portfolio responsibilities, the principle of post-implementation review of regulations is sound, and I support such a review. I am advised that SWA intends to conduct a review of model WHS law during 2018, and that the review process will cover WHS labelling rules.