Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report entitled Advisory report on the Food Standards Amendment (Truth in Labelling—Palm Oil) Bill 2011, incorporating dissenting reports, together with the minutes of proceedings. I ask leave of the House to make a short statement in connection with the report.

Leave granted.

The Food Standards Amendment (Truth in Labelling-Palm Oil) Bill 2011 seeks to amend the Food Standards Australia New Zealand Act 1991 and the Australian Consumer and Competition Act 2010. If passed, it would require Food Standards Australia New Zealand, FSANZ, to develop and publish a standard requiring food producers to label palm oil on packaging if it were an ingredient in the product or had been used in its production. It would also specifically list palm oil as a characteristic of all goods in relation to the misleading conduct provisions in the Australian Consumer Law.

The drivers behind the bill are claims that the rates of deforestation in Indonesia and Malaysia are reducing habitat for orangutans and that orangutans are in danger of extinction. Deforestation is in turn said to be driven by agricultural interests in these countries clearing land to plant oil palms. Oil palms are a very productive crop which can deliver yields five or more times per hectare than other oil crops.

The committee understands the strong community support for the goals of the bill. Zoos Victoria gave evidence of its online and hard-copy campaigns where thousands of Australians expressed concern about the connection between palm oil and the reduction of orangutan habitat. However, the committee has come to the view that the bill will not bring about the result that so many people in the community desire. Instead, it will have a range of unintended consequences that will cause a great deal of damage to our commercial arrangements and international relations. Indeed, one industry group, Accord Australasia, described the bill as 'reckless'.

For example, its only legal effect for food labelling is to require FSANZ to draft a food standard and publish it on its website. In order for the states and territories to enforce the standard, it would have to be determined in accordance with agreed processes. This has not occurred. In short, the bill is not enforceable as it operates outside of agreements between the Commonwealth, state, territory and New Zealand governments. Its passage could lead to inconsistencies in labelling across these jurisdictions.

In relation to the Australian Consumer Law, the bill will not change its legal effect. Currently, if a producer of food provided an ingredients list on the packet and the label omitted to mention palm oil when this was an ingredient, then it would breach section 33 regardless of whether the bill became law or not. However, current labels do not breach section 33 because they do not claim to be a complete ingredients list. Nor is there a legal requirement for producers to fully list the ingredients. The bill would not change the operation of section 33 if it became law.

The bill overlooks the fact that much of the legislative power in Australia resides in the states and territories. In order to generate the benefits of a uniform national market, complex processes and negotiations are required to harmonise regulatory systems. In the case of consumer law, the Productivity Commission estimated in 2008 that the gain to the economy from uniformity is $4.5 billion annually. The bill simplistically overrides these important commercial arrangements without addressing the risks.

The bill also places our international relationships at risk. The food regulation treaty between Australia and New Zealand states that neither party can amend their legislation regarding FSANZ without effectively consulting the other party. This has obviously not occurred. Further, singling out palm oil means that it is more discriminatory than necessary to fulfil a health or environmental objective. Australia would then be at risk of a trade dispute under World Trade Organisation rules, and Malaysia and Indonesia have already indicated that they are prepared to do this.

Another negative feature of the bill is that, separately to it, the Council of Australian Governments has initiated a review of food labelling in Australia. The government released the review report, Labelling logic, in January this year. Recommendation 12 states that, where sugars, fats or oils are added as separate ingredients in a food, the label should list the actual ingredients This is already the approach in the United States and will most likely become law in the European Union. The whole of the Commonwealth, state, territory and New Zealand government response to Labelling logic is under development. It is expected to be considered by the Australia and New Zealand Food Regulation Ministerial Council on 9 December 2011. Given that a rigorous process is covering the bill's subject matter, there is even less reason to proceed with it. Therefore, the committee has recommended that the bill should not proceed.

I would like to thank the organisations and individuals that assisted the committee during the inquiry through submissions or participating in the hearing in Canberra. I also thank my colleagues on the committee for their contribution to the report. I commend the report to the House.