James Paterson (Victoria, Liberal Party) Share this | Hansard source

I'm very pleased to have the opportunity to contribute to this debate and I congratulate the Nick Xenophon Team for bringing this important issue before the Senate. I don't doubt for a moment the very genuine sincerity of the Nick Xenophon Team in seeking to address an issue that many Australians are concerned about. However, the government does not support the bill. I will outline some of the concerns the government has about the proposed bill and some of the reasons why the government has reservations about this approach to tackling this issue.

We absolutely understand that Australian consumers are concerned about the ingredients in the products they purchase for themselves and their families. Primarily, what consumers want to know about the food they eat is that it's safe and that the household products that they purchase will not harm them or their families. This is how consumers make decisions about the products that they buy. They are also concerned, very critically, about the price of the products that they buy and they want to receive good value for those products. That's something we should never lose sight of.

The other issues that consumers do and should take into account when buying products include environmental concerns. However, the purpose of government regulation for labelling is first and foremost, as it should be, about the health and safety of consumers and ensuring that consumers get the information they need so that they can make informed choices, including on environmental matters, if they so choose.

Palm oil is a product that is widely used in the foods and products that Australian households use every day. As the bill acknowledges, there is a difference between the sustainable production of palm oil and the production of palm oil that damages the environment, and the habitat of orangutans in particular. It is worth pausing and reflecting on that for a moment. Not all palm oil is bad, and there are ways and means of harvesting palm oil that are environmentally sustainable and do not have a negative impact on animal life. That is a very critical thing, because sometimes in this debate you are left with the impression that palm oil is an evil product that only does harm, when in fact that is not the case.

Currently, manufacturers and importers can—and many do—voluntarily declare in the ingredient list on their labels that there is palm oil in their products. Many businesses operating in Australia are taking action on this issue and seeking to use sustainable palm oil in the products that they manufacture and sell. In addition, these businesses clearly label the use of palm oil. If we think about it, that makes perfect sense. Businesses are aware of and responding to a consumer preference. They know that this issue is of concern to consumers and they're providing consumers with the information to make an educated choice about their purchases. That is something we should welcome. In addition, I think it is very promising and welcome to see that many companies are members of the Roundtable on Sustainable Palm Oil, which promotes the supply of palm oil that is sourced from eco-friendly areas.

Voluntary certification allows businesses to provide information to consumers, who may be motivated by social, environmental, economic or other ethical concerns, by labelling their products as using sustainable palm oil. Voluntary certification is a really powerful tool that is used in a range of areas. Everyone will be familiar with, for example, the Heart Foundation's tick of approval. It's not government mandated; it is not compulsory; but many consumers value that Heart Foundation tick of approval in making their choices in the supermarket. It allows them to choose products which are healthier for them and their families. This solves the problem in the market without any government intervention. There are consumers who are motivated to buy products of this type, there is a private certifier who is willing to certify that products meet these standards, and there are businesses who want to ensure that their products receive this certification and meet those standards so that they can reach those consumers. Not every business wants to participate in this, and not every product will be labelled in this way. But if you are a consumer for whom this is an important issue then there is the necessary information in the marketplace for you to make an informed choice, and it didn't require any government regulation.

There are lots of other examples like the Heart Foundation's tick of approval—for example, many of the Fairtrade and organic-certified products are done in a completely private-sector way, with no government regulation requiring it. There are other companies that choose to market their products based primarily on their environmental sustainability. A good example is—and this followed some media controversy—companies that sell tuna and choose to emphasise that it is sustainably harvested and dolphin-free. No government required them to do that, but they've gone out and done that because they know that it's important to consumers. This is now beginning to take place in the palm oil space, and I think that's a very welcome development.

The private senator's bill that Senator Kakoschke-Moore has outlined proposes to amend schedule 2—Australian Consumer Law—of the Competition and Consumer Act 2010. The Australian Consumer Law provides broad protections for consumers by ensuring that the information that businesses provide is not false, misleading or deceptive. The proposal to amend the ACL by inserting a new section 134A would require the government to make an information standard specifically relating to the labelling of goods containing palm oil within 12 months of the bill's passage. Importantly, this would include all goods that contain any amount of palm oil as an ingredient, including foods, shampoos, cosmetics and washing powders. To my knowledge, it doesn't differentiate between palm oil that is sustainably harvested and other palm oil; it just requires that any use of palm oil be labelled. Given that we know that some palm oil is unsustainably harvested and problematic but some is harvested in a sustainable and environmentally friendly way, this is one area of concern.

The explanatory memorandum to the bill states that the amendment is for the purpose of environmental protection. This is not consistent with the role of the Australian Consumer Law. The purpose of the Australian Consumer Law is to improve consumer wellbeing through consumer empowerment and protection to foster effective competition and enable confident participation in markets. It is not the purpose of Australian Consumer Law to impose an obligation on businesses to provide all of the information that consumers may find useful in deciding whether or not to purchase a product. The Consumer Law is there to protect consumers from false and misleading representations that may appear on the label. Of course, it is not practical to mandate that every piece of potentially useful information is on the label of every product. There is a limited amount of real estate to do so. If we required companies to provide every potential piece of relevant information, there would be no room for anything else on a product's label other than government-mandated warnings and information.

This bill is motivated by genuine environmental concerns about deforestation—particularly in countries like Malaysia and Indonesia—but it is not particularly motivated by a concern that consumers are being misled about the nature of the goods or that palm oil poses a safety issue for consumers, which is the primary purpose of the Australian Consumer Law.

The explanatory memorandum also provides that the proposed bill encourages the use of certified sustainable palm oil. However, there is nothing in the wording of the bill that would make such a proposal enforceable, nor is the Consumer Law the appropriate vehicle for environmental protection measures, as I've mentioned. The Consumer Law's objectives are to ensure that consumers are not disadvantaged when they engage in trade or commerce and that they are protected from unfair practices.

Importantly, the bill is also inconsistent with the requirements of the Intergovernmental Agreement for the Australian Consumer Law, which requires that any amendment to the Australian Consumer Law—including the making of information and standards—is subject to formal consultation and voting by states and territories. This process has not been followed with this bill—and it's worth noting that this intergovernmental agreement process is, in fact, not a coalition government process but a Labor process that was put in place by the previous government.

If the proposed bill was successful, there is a very real possibility that the states and territories may decide not to apply the provision because the changes were not made in accordance with the intergovernmental agreement. This is appropriate, given many areas of consumer law are regulated by the states. In addition, while it's possible to insert such a provision, it would potentially be legally ineffective in compelling the minister to make an information standard—that is, the bill could have no effect.

The proposed amendment to the Australian Consumer Law is inconsistent with the generic nature of Australian consumer law, which is currently sufficiently broad enough to cover conduct relating to the representation of ingredients such as palm oil. The passage of the bill has the potential to erode the benefits of having a national, generic, consistent consumer law. Information standards are only considered as a regulatory option after other responses have been considered as insufficient and where there is strong evidence of consumer detriment or widespread noncompliance. To date, the government does not believe there has been strong evidence of consumer detriment presented.

The bill has not been subject to any regulatory impact analysis. The proposal would likely impose significant compliance costs on businesses, including the cost of designing new labels and potentially relabelling existing products. It would also potentially require stringent record keeping and information transfer procedures as the bill requires all products containing any palm oil be labelled—as I said before, even if it is not necessarily harmful or in meaningful amounts.

The labelling of palm oil or palm oil derived chemicals in cosmetics and products is already regulated through the Trade Practices (Consumer Product Information Standards) (Cosmetic) Regulations 1991. This information standard requires that cosmetic products list all ingredients or palm oil derived chemicals. While the Australian Consumer Law is not the appropriate place to deal with these issues, the Australian government is taking action in other areas.

The government acknowledges that there is community interest and concern in the use and labelling of palm oil as an ingredient in food products in particular. The government is well aware of the issue of palm oil in foods and is currently examining these issues with our state and territory colleagues. Currently, the labelling of added fats—including palm oil and sugars—in food is being considered by the Australian and New Zealand Ministerial Forum on Food Regulation, with regulatory and non-regulatory options being developed. This is the appropriate forum to consider food labelling.

Currently, manufacturers do not have to list palm oil as an ingredient in food. They can, as Senator Kakoschke-Moore mentioned, use a generic term such as 'vegetable oil'. The issue of food labelling should be left to be considered in detail by the forum. This is important work, and it would be inappropriate for this bill to circumvent that process. The government must endeavour to balance improving the information on food labels to meet consumers' needs against maintaining the marketing flexibility and minimising the regulatory burden on industry and barriers to trade.

It's worth reflecting on the previous bill that Senator Xenophon introduced in 2011, which was called the Food Standards Amendment (Truth in Labelling—Palm Oil) Bill 2011. It sought to amend section 33 of the Australian Consumer Law. That bill was introduced and read for the first time on 4 July 2011. The bill was subsequently removed from the Notice Paper on 20 March, 2012, during the 43rd parliament. The 2011 bill was examined by the House Standing Committee on Economics. On 19 September, 2011, the House Standing Committee on Economics presented its report recommending that the House of Representatives at the time should not pass that Food Standards Amendment (Truth in Labelling—Palm Oil) Bill because the legislation was flawed and would result in a range of unintended consequences. The government members of the day—and I should point out that they were Labor members—recommended that the House not pass the bill.

Coalition opposition members at the time were also concerned about the bill. They particularly mentioned the trade related considerations raised in evidence to the committee. The coalition members were concerned that this issue was only briefly touched upon in a Senate inquiry report and that the evidence presented to the committee highlighted Australia's trade obligations as a legitimate area of public policy concern. Evidence to the committee highlighted a number of trade related risks. Opposition members at the time—coalition members—recognised that it may well be arguable that the bill offended World Trade Organization rules by indirectly advancing the interests of local vegetable oil production that may be a substitute for palm oil products and may invoke potentially harmful retaliatory action and lengthy dispute resolution processes.

These are the reasons the government is reluctant to support the bill, while still respecting the genuine motivations of the Nick Xenophon Team in raising this issue.