ACCORD Australia supplementary submissions

Public submissions to the review of the National Industrial Chemicals Notification and Assessment Scheme.

Page last updated: 20 March 2012

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NICNAS Review
Department of Health and Ageing
MDP 88
GPO Box 9848
CANBERRA ACT 2601

Email: NICNAS.review@health.gov.au

Dear Sirs

As indicated in our submission of 14 December 2011, Accord Australasia is pleased to provide this additional submission in response to the Better Regulation Ministerial Partnership Review of NICNAS (BRMP Review).

The attachment further addresses the four issues the NICNAS Review Team sought specific advice on as well as expanding the features of a new improved regulatory framework as identified in our earlier submission.

Attachments 1 and 2 of this submission are provided on an in-confidence basis for the purposes of the NICNAS Review Team only and are not for public disclosure.

Should you have any questions in relation to this submission, the contact officer is Ms Dusanka Sabic, Director of Regulatory Reform who can be contacted on 02 921181 2322 or by email at dsabic@accord.asn.au.

Yours sincerely


Authorised for electronic submission


Bronwyn Capanna
Executive Director

11 January 2012


ACCORD Australasia Limited (formerly ACSPA) ACN 117 659 168 ABN 83 205 141 267
PO Box 290 BROADWAY NSW 2007
Tel: 61 2 9281 2322 Fax: 61 2 9281 0366 Website: www.accord.asn.au
Innovative solutions for healthy living and a quality lifestyle

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1 The role and functions of NICNAS as set out in the Industrial Chemicals (Notification and Assessment) Act 1989 and the extent to which they adequately reflect stakeholder expectations and international best practice, having regard to the broader context of chemicals regulation in Australia.

Role and function of ICNA Act – current utility of regulatory framework and recommended improvements
In considering this question, it must be remembered that the ICNA Act was written over 20 years ago. In 1986, the Business Regulation Review Unit (BRRU)1 provided a report on Social Regulation: Issues Concerning Industrial Chemicals (Information paper No 3, October 1986). In its conclusion regarding the future regulation of industrial chemicals, the BRRU stated that a scheme for the management of chemicals should balance the following features:
  1. an inventory of chemicals used in Australia;
  2. mechanisms for ensuring that chemicals with known hazards are identified and treated accordingly;
  3. a focal point for ensuring dissemination of information on the safe handling/storage/usage/disposal of chemicals to the workforce and those responsible for environmental controls and emergency services;
  4. uniformity throughout Australia and compatibility with schemes used by nations which trade with Australia;
  5. means for safeguarding information regarded by suppliers (and international business law) as commercially sensitive;
  6. no impediment or undue delays to the introduction of innovative chemicals;
  7. minimum cost burden to industry and government.
In this Report’s analysis of the various options, the favoured option was for a notification scheme. While it was recognised that maintaining the present option (at that time) of self regulation was the least costly option, the establishment of a notification only scheme for chemical products was the most cost effective, while the option of a notification and assessment scheme for chemical entities was the most costly option. In 1986 it was estimated that a notification only scheme would cost industry $6M while a notification and assessment scheme for chemical entities would cost in excess of $30B (p18).

The option put forward at that time as the favoured option is not too dissimilar to that which industry would support as the revised model for a scientific assessment body, and as proposed in the 2008 Productivity Commission (PC) Report. It is unclear as to why the government of the day opted for the most expensive model which was summed up by the BRRU as:

Option 4 is an entity based, assessment-orientated, approval scheme, with wide scope for approval delays. Potential cost of implementation to industry and government is likely to be considerable and the achievement of benefits is largely dependent upon re-assessment in Australia drawing out more accurate findings than in other countries.

Conversely, the option not chosen:

Option 2 is a notification scheme with control by exception. It could cover entities and formulated products, and would rely upon voluntary commitment of industry to develop dissemination of information for protection of workers and the environment. Delays might occur in certain new product introductions. Cost to industry would be minimal for most products.

1 The Business Regulation Review Unit (BRRU) was established in May 1985 to service the Industry Committee of Cabinet in the area of business regulation and was within the Department of Industry, Technology and Commerce.



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Based on industry’s unfavourable experiences with NICNAS’ operations and the administration of the ICNA Act over many years, it is unfortunate that Option 4 was chosen over Option 2. The seven criteria for a balanced regulatory chemical scheme which industry still endorses are better reflected in Option 2, and indeed reflect the scheme adopted by New Zealand, a pragmatic regulatory framework with a light touch focussing primarily on controls for hazardous chemicals and accepting certain expert decisions from comparable regulatory authorities.

The New Zealand scheme works extremely well in terms of all key policy parameters. It is low cost, poses few barriers to entry and innovation and provides essential protection for public health, worker safety and the environment from hazardous chemicals. It is now widely regarded as a success despite its initial implementation issues which have since been addressed. The initial barriers were as a result of certain hazard classifications differing from those as used elsewhere. Being the first economy to introduce GHS, New Zealand took an overly cautious approach to hazard classification which it is now in the process of remedying. Australia would do well to learn from the lessons of New Zealand.

As stated previously, Accord supports the PC’s findings and recommendations contained in its research report on chemicals and plastics regulation (July 2008). Accord agrees with the PC assessment regarding the future regulatory arrangements to achieve more efficient and effective management of industrial chemicals in Australia. In particular, we strongly endorse and support Recommendation 4.3:

The Australian Government should generally limit the role of NICNAS to the scientific assessment of the hazards and risks of industrial chemicals. The power to annotate the Australian Inventory of Chemical Substances to ban or phase out chemicals, and the responsibilities for administering the Cosmetic Standard 2007, and for implementing the Rotterdam Convention, should be removed from NICNAS.

Implementation of this recommendation would more adequately reflect industry stakeholder expectations for an efficient and effective chemical regulator and bring Australia’s chemical management scheme more in-line with the approaches used in advanced economies and/or regions such as the US, EU, Canada and New Zealand.

We agree wholeheartedly with the PC’s recommendation regarding the future role of NICNAS. In its Report into chemicals and plastics regulation, the PC outlined a best practice governance framework (p32) which it argued needed to be built on clear objectives, responsibilities and processes at each of the following four broad levels of regulatory tasks:
  • policy development and oversight – a coordinated national approach for the management of chemicals is currently lacking for industrial chemicals as a range of entities provide policy undertaken in silos such as NICNAS, the Office of Chemical Safety (OCS) within the DoHA, Safe Work Australia, and the Departments of Attorney-Generals, Prime Minister and Cabinet, Foreign Affairs and Trade, Industry, Environment and Transport;
  • assessment of chemical hazards and risk – for industrial chemicals while the assessment of hazards may be confined to NICNAS and Safe Work Australia, with regard to risk, this is currently undertaken by a range of Commonwealth, state and territory based entities such as NICNAS, Safe Work Australia, Environment, the ACCS for the scheduling of domestic chemicals and OHS entities for the transport and storage of dangerous goods;
  • risk management standard setting – for industrial chemicals undertaken at the Commonwealth level by DoHA (scheduling), ACCC, NICNAS and Safe Work Australia and increasingly by Attorney-Generals, by states and territories for environment, public health, transport and additional OHS controls;
  • administration and enforcement – for industrial chemicals this is currently undertaken by NICNAS, the ACCC and AQIS and by the states and territories for OHS, public health, transport, food safety and environmental controls with local government also having responsibility for some of these controls.
It is for this reason that the PC recommended a changed role for NICNAS which would provide clarity in policy setting, risk management and standard setting to avoid overlaps and duplication at the Commonwealth level.

Since the PC report, industry has seen little by way of rationalisation of responsibilities for enforcement, administration and policy setting. The recently established Standing Committee on Chemicals (SCOC) is still very much on a learning curve and coming to terms with the complexity, duplication and fragmentation of chemical management within Australia. The reform process to date has resulted in little real reform to industry, but has resulted in increased costs and compliance burden. Industry should not bear the costs of reform but unfortunately we have only seen the costs of regulatory agencies increasing. Australia is the only advanced economy which fully recovers the cost of chemical management for industrial chemicals from its industry.

We support the refocussing of NICNAS activities towards scientific excellence and technical expertise in assessing the characteristics of hazardous chemicals. NICNAS has not shown itself to be an effective risk management body. As the PC noted throughout its report, Australian government regulators are risk averse and NICNAS is no exception. NICNAS should have no risk management functions. And, in fact, for it to do so as sometimes currently occurs, leads to duplication of other risk management bodies such as the Advisory Committee on Chemicals Scheduling (ACCS) and Safe Work Australia.

While on paper, NICNAS’ role in this regard is currently limited to certain controls in permits, industry experience is that NICNAS regards itself as a ‘player’ and is constantly making recommendations to control the use of certain ingredients. A classic example is NICNAS’ attempt to change the level of permissible triclosan from 0.3% in consumer goods to 0.2%. There is no sound scientific justification for the lower rate and not only is it inconsistent with the findings of its own Priority Existing Chemical (PEC) report but it is not aligned with international practices. In 2009, NICNAS published the results of its PEC into triclosan, after five years of scientific research. The NICNAS report recommended that triclosan when used in cosmetics at greater than 0.3% should be under Schedule 6 of the Poisons Standard. This was reported on page 37 of the NICNAS Annual Report for 2010-11. However, NICNAS without any apparent new evidence or consultation recommended to the ACCS that triclosan be used at 0.2% for cosmetic products. Fortunately this recommendation was rejected. If Australia had adopted the NICNAS recommendation to lower the limit to 0.2% in consumer goods, this would have presented a significant impediment to trade.

Fortunately, in the majority of cases, such decisions are undertaken by the appropriate risk management entity for public health and safety, OHS and the environment and not NICNAS.

Under the proposed changed arrangements, the role of NICNAS would be similar to that of one of the Scientific Committees as established by the Director-General for Health and Consumers in the EU. Currently, there are three Scientific Committees established under this Directorate-General and these are governed by strict rules of procedure which expressly prohibit these committees from making risk management recommendations. The mandate is for scientific excellence, independence and transparency. Currently Australia has risk management bodies for OHS and public health and safety, with an environmental risk management entity under active consideration. These risk management bodies would be responsible for making decisions regarding the safe use of chemicals and to what level Australia can accept decisions made by comparable advanced economies regarding the hazard or otherwise of chemicals which may be deemed to be new to Australia.

One of the features of the model proposed previously by the BRRU was an inventory of chemicals used in Australia. Accord takes this to mean that the inventory proposed in the model was broader than just the current Australian Inventory of Chemical Substances (AICS). We propose that Australia develops an Australian Integrated Chemical Inventory (AICI) which includes all chemicals currently available for use in Australia as approved by the Therapeutic Goods Administration (TGA), Agricultural Pesticides and Veterinary Medicines Authority (APVMA) and Food Standards Australia New Zealand (FSANZ).

Any chemical appearing on the AICI would not be regarded as new for the purposes of industrial chemicals. Further any chemical appearing on an inventory of an approved comparable advanced economy such as the EU, USA, Canada, Japan, South Korea or New Zealand would also not be considered as new in Australia. The use of these chemicals would simply require notification to the Scientific Assessment body for inclusion on the AICI and then, if necessary, consideration by the relevant risk management body.

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As mentioned in our Submission of 14 December 2011, the features of a new regulatory framework for Australia would include:
  • Risk management through risk prioritisation of industrial chemicals with a focus on hazardous chemicals - risk management decisions would be made by three independent expert bodies in the areas of OHS, public health and safety and the environment.
  • Harmonising the regulatory treatment of new industrial chemicals with that of other advanced economies to improve Australia’s competitiveness and innovation.
  • Removing cosmetic products and ingredients from the scope of industrial chemicals regulation and harmonising their treatment with that of the EU, ASEAN economies and New Zealand.
  • Lowering the costs of regulation through notification only of certain low risk categories such as polymers, non hazardous new chemicals and recognition of chemicals on international inventories.
Rationalisation of assessment functions for the new Scientific Assessment body should also be considered. Australia is the only jurisdiction with a new chemicals programme which requires the regulator to consider public and safety, OHS and environmental hazards. We believe that there is duplication and considerable overlap between NICNAS’ current role for OHS assessment and that of Safe Work Australia. When NICNAS was co-located with the then National Occupational Health and Safety Commission (NOHSC), this duplication of effort may have been reduced, but with the movement of Safe Work Australia to Canberra and NICNAS in the Health Portfolio, this has only exacerbated the duplication of effort. In any future arrangement Safe Work Australia should have sole responsibility for an OHS chemical risk assessment. Further, there is also scope for the Scientific Assessment body to rationalise hazard assessment processes. Currently, NICNAS outsources environmental hazard assessment to the Department of Environment. In rationalising hazard assessment processes for industrial chemicals due consideration should be given to the role of the Scientific Assessment body also having this responsibility and not referring it to a third party such as is done presently with NICNAS. This co-location of services could deliver efficiencies and also contain costs to industry.

Streamlining the management of chemicals in Australia will refocus the regulators at the high end of the risk spectrum as well as reduce unnecessary costs on industry and facilitate a more innovative and competitive chemical manufacturing sector for Australia without undermining public health and safety. Figure 1 is a diagrammatic representation of how the proposed new model could operate whereby Figure 2 represents the current arrangements. Figure 1 demonstrates the advantages of a rationalised system which reduces the fragmentation, overlap and duplication of decision making, i.e. it addresses the concerns raised by the PC in its report. Figures 1 and 2 are attached at the end of this submission.

The Scientific Assessment body would be responsible for an existing chemicals programme, maintaining the AICI, maintaining a register of introducers and assessing new industrial chemicals referred to it by one of the risk management bodies. It would not have a role in determining what a new chemical was outside of agreed to prescribed criteria and industry could make an application for an assessment on a cost recovery basis much in the same way as it does now. However, the circumstances of what constitutes new should be redefined. For example, to be considered new a chemical would not be in commercial use in an approved comparable advanced economy, not appear on an inventory in those economies and would be of a hazardous nature. Any new non hazardous ingredient would only require notification as is currently done in New Zealand.

The risk management entities would play a greater role in determining a new chemical entity for the purposes of Australian regulation. This would facilitate more rapid introduction of innovative chemical entities at a lower cost for Australia, those with a history of safe use and prior approval from advanced economies which Australia would recognise as having comparable or superior chemical management systems in place. Australia would leverage off the technical expertise from these economies rather than create a costly and burdensome system which stifles innovation and competition.

While this is a departure from the current arrangements – it does not lessen the control of chemicals; rather it appropriately recognises assessments and hazard decisions undertaken by comparable advanced economies with which Australia trades and from which the vast majority of useful chemical innovations emanate. National sovereignty on the control of chemicals in Australia is maintained through the risk management bodies – which are expert bodies with the power to take advice about the use (and any relevant limitations) from a range of sources including industry, overseas entities or Australia’s own scientific assessment body.

Cost recovery could still apply as companies involved in the chemical industry will still be required to register similar to the current arrangements. Industry believes that the revenue derived solely from the registration process is sufficient to enable the Scientific Assessment body to properly function.

The PC’s Recommendation 4.2 will complement the new Scientific Assessment body.

4.2 The Australian Government should establish a technical advisory committee within NICNAS, as a statutory requirement.

We support the establishment of a high level expert technical advisory committee within the new structure as proposed above. An expert body would oversight the operations of the Scientific Assessment body in much the same way as the EU’s Scientific Committees operate.

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Reflecting stakeholder expectations
The ICNA Act no longer refects stakeholder expectations. The Low Regulatory Concern Chemicals (LRCC) process has identified that reform is difficult to achieve given the requirements for both notification and assessment under the Act. It is not seemingly possible to have notification and self assessment categories, as these processes including the so-called exemption categories require the provision of information to NICNAS. The current treatment of new chemicals in Australia is not aligned with international practice. In particular the requirement to notify new chemicals in cosmetic products already deemed safe for use in comparable economies such as the EU and USA is unique to Australia. The Australian system requires considerable modernisation.

The regulatory treatment of cosmetic products is an example where Australia is not aligned with international regulatory practice for these predominantly low-risk products. For this reason, the PC recommended that

The Australian Government should transfer responsibility for the administration and enforcement of the Cosmetic Standard 2007(Cwlth) from NICNAS to the ACCC (Recommendation 5.5).

We are unaware of any justifiable delay in the implementation of this recommendation. The PC in its report on chemicals and plastics regulation recommended reforms to NICNAS’ arrangements to limit its risk management responsibilities and allow it to focus on its chemicals’ assessment responsibilities (p117). The PC commented in its report on chemicals and plastics regulation that it was concerned with the overlap and confusion that result from having more than one regulator involved in cosmetics regulation. Industry agrees – currently three regulators are involved – the TGA, NICNAS and ACCC.

While we supported this recommendation initially, the delay has given us time to refine our policy position and we now believe we can provide a better policy solution – consistent with the PC’s intent and that of the Government’s reform agenda.

International best practice
The Australian Government has recently signed a Treaty with our ASEAN neighbours and is engaged in discussions on a Trans Pacific Partnership Agreement. Economies of the ASEAN region have adopted cosmetic regulation based on the then EU Directive which has since become a Regulation (Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products). Accord supports the adoption of an EU style regulatory framework administered by the ACCC for cosmetics.

The ACCC already has responsibility for consumer product safety and cosmetic product ingredient labelling. In essence, there are three specific areas for cosmetic product regulation: product safety (including ingredient and manufacturer/importer labelling); the substantiation of efficacy and consumer claims; and the avoidance of therapeutic claims – all of which are currently regulated by the ACCC and the Australian Consumer Law. As to whether Australia needs to adopt specific regulation such as the EU Regulation for cosmetics, or leave it under the general provisions of the Australian Consumer Law are matters which require further consideration. Given that the ACCC already has the power to control consumer products this would provide for more flexibility by providing deemed-to-comply provisions which could apply to imported products from comparable regulatory regimes such as the EU, USA, Canada, Japan and New Zealand, as meeting the regulatory requirements for Australia. This would reduce costs and allow more timely access to innovative products by Australian consumers – something they are already able to do via on-line purchase anyway. Public health and safety would be managed by the risk management bodies the ACCS and/or the ACCC.

Industry has always questioned the need to create a Cosmetic Standard as the existing regulatory controls through the use of the TGA’s Excluded Goods Order which had been in place since 1998 for this class of products, has proven to be more than adequate. The reforms of 2007 merely expanded the group of product categories excluded from the TGA’s jurisdiction. The introduction of the Cosmetic Standard to mirror the cosmetic provisions of the Excluded Goods Order was detrimental to chemicals regulation in Australia. It perverted the fundamental nature and focus of NICNAS. NICNAS is a notification and assessment scheme for chemical entities. The Cosmetic Standard implies NICNAS has responsibility for cosmetic products – not just chemical entities – a role which the PC was critical of in its report. Further more, anomalies exist between the Excluded Goods Order and the Cosmetic Standard. While industry has pointed this out to both regulatory agencies with responsibility, i.e. the TGA and NICNAS, nothing has been done to ensure that the two regulatory documents are completely harmonised. As it stands at the moment – there are differing regulatory requirements for cosmetic products by these two entities.

Creation of the 2007 Cosmetic Standard, also changed an important reform measure of 2004 when the Industrial Chemicals (Notification and Assessment) Act 1989 (ICNA Act) was amended to align the definition of a cosmetic product with that as used in the Trade Practices Regulations and enforced by the ACCC, and closely harmonised to that of our major trading partners.

Instead, what we have now is a unique Australian definition – a retrograde step – particularly given the situation that Australia is a net importer of cosmetic products and only constitutes 1.2% of global trade. The reform of products at the cosmetic therapeutic interface also did not deliver the reform outcomes as intended and has instead created in some areas a greater burden for these products than had previously existed when they were regulated and recognised as low risk by the TGA, rather than as happens now under NICNAS which considers cosmetic products to be at the high end of their risk spectrum. Email advice from a NICNAS staff member in relation to a question regarding cosmetic products is provided below to illustrate the case in point:

As you are aware, the reform principle was to maintain or increase the level of protection without undue impost on business, not with reference to any particular framework. The aim of the reform was to remove a possible discrepancy between data requirements under an Australian therapeutic framework versus an overseas non-therapeutic framework, and to increase the number of cosmetic ingredients available for use in Australia (noting that under the TGA, companies have to pay annual sponsor fees). As you would also appreciate, the transfer products have moved from what is the low-end of the risk spectrum in the therapeutics context to the high-risk end of the spectrum in the industrial chemicals context (to wit, for example, UV filters, colouring agents and preservatives are not eligible for the new chemicals cosmetic exemptions as they are deemed to be hazardous substances in keeping with overseas regulation). It is therefore not appropriate to consider that because cosmetics have a light touch under the TGA, they do/should have a light touch within the context of the NICNAS framework
    The above indicates that not only do NICNAS staff not understand their own responsibilities under the ICNA Act, but also have little concept of risk assessment and risk management.

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    In 2007, Accord completed a survey of its members and provided the outcomes of the survey to the PC study into chemicals and plastics regulation. The main findings of Accord member survey were:
    • Ninety-three percent (93%) of respondents who have experienced difficulties with NICNAS reported that products/formulations from their worldwide portfolio are unavailable in Australia due to Australian regulatory factors.
    • Products are formulated/reformulated to avoid dealing with NICNAS.
    • The current regulatory system is a barrier to innovation.
    • The consequences of regulatory burden reported by members show that Australia is placed at a disadvantage with regard to commercial opportunity, compared to the major EU and US markets.
    • Costs, data and time factors are individually cited in over fifty percent (50%) of cases as causes of regulatory burden.
    • Based on financial estimates provided by a reasonably representative sample of Accord member companies, it is estimated that the lost opportunity cost to the industry represented by ACCORD (in terms of products being unavailable on the Australian market) is $400 million.
    • The current regulatory system is biased towards larger companies (companies with a turnover of greater than $10 million).
    In 2007, members raised serious concerns about the impact of NICNAS processes on their day to day operations. The reform to products at the cosmetic therapeutic interface was anticipated to deliver real benefits in both compliance costs and time to market. While Accord members noted that the delay in passing the legislation, (i.e. it was first announced in November 2005 and legislation was passed in September 2007) was estimated to have cost a $21M loss in sales per annum, it can also be argued that industry stood to gain from reduced evaluation fees, no therapeutic Good Manufacturing Practice requirements and subsequent medicinal-level auditing for certain products now regarded as cosmetic. At the time of the survey in 2007, it was felt that these changes had the potential to deliver savings and reduce complexity.

    From February to March 2011, Accord conducted a survey on the performance of NICNAS. The aim of the survey was to benchmark Accord members’ experiences on the overall NICNAS performance and progress on reform activities since the 2007 survey. The 2011 survey questions were closely modelled on the 2007 survey questions. The intent was to compare the results of the two surveys, with the expectation that the progress since the finalisation of the PC study may become apparent. Regrettably given the two differing survey methods (phone follow-up versus survey monkey) the results are not directly comparable. Not withstanding, the summary of the main findings of the 2011 survey follows and is further evidence of a very poor performing regulator:
    • 56.5% of respondents have reported negative impact resulting in regulatory burden from NICNAS regulations or processes
    • 39.1% of respondents have indicated that NICNAS was a barrier to innovation.
    • 32.6% have indicated that products that are available in the EU and US are not available in Australia.
      56.5% indicated that lack of harmonisation with major trading partners (EU and US) hinder business operations.
    • 21.7% have identified lack of coordination between national regulators as one of factors that hinder business operations.
    • 26.1% of respondents indicated that new materials are not introduced in Australia because NICNAS data request is excessive.
    • 39.1% of respondents indicated that NICNAS data request is excessive.
    • 34.8% have indicated that data requests are greater than expected from guidelines.
    • 23.9% of respondents indicated that the cost to obtain Australian specific data is too high.
    • 34.8% of respondents indicated that NICNAS assessment timeframe is too long and delays product launches.
    The full summary report of the 2011 Member Survey is at Attachment 1 and is provided to the NICNAS Review Team on an in-confidence basis. We do not wish to publicly disclose the details of the survey at this point in time as the particular case studies referenced may disclose the identity of the particular Accord members.

    2 The governance and consultation arrangements of NICNAS and the extent to which they support the effective delivery of NICNAS’ functions.

    In 2010, Accord undertook a member satisfaction survey with the three Commonwealth regulatory agencies with which they deal i.e. the TGA, NICNAS and the APVMA. The survey revealed that Accord members were highly dissatisfied with the regulatory performance of all three agencies. The Regulator Report Card is attached for information. It shows that all three agencies are not meeting the needs of its client base with regard to providing value for money, risk benefit analysis and an understanding of industry business operations. The results at Attachment 2 are provided on an in-confidence basis to the NICNAS Review. As this was an internal Accord member survey and the regulatory agencies have not been privy to this information we do not support its public disclosure. However, the results of NICNAS’ own survey of client satisfaction also reflects the overall dissatisfaction with NICNAS’ performance and poor understanding of its role.

    Ad-hoc/sporadic consultation
    NICNAS has a range of stakeholder engagement processes ranging from more formal arrangements such as the Industry Government Consultative Committee (IGCC) to ad hoc requests for information. Of late, NICNAS is perceived by industry to be ‘forum shopping’ which is of concern to industry associations such as Accord where members rely on Accord to represent their views. This was of such concern at one point that the Accord Chair wrote to the Director NICNAS seeking assurances that Accord submissions were given due weight as to the many businesses and considerable size of the industry represented and should not be considered as one submission following anecdotal advice from NICNAS staff that Accord’s submission on a particular consultation would be considered only as a single submission and carried no greater weight than any other submission, including those from individuals.

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    Although Accord is a member of the IGCC and also participates on the Industry Engagement Group (IEG), we are never certain as to what consultations are currently in progress. For example, NICNAS recently sought the views of certain individuals regarding exemption forms it was proposing to modify. None of the existing consultative fora were aware of this process such as IGCC or IEG – the technical advisory group specifically established for such consultations. Members raised their concerns with Accord on the nature of this ad hoc consultation. While NICNAS has attempted to consolidate consultations through the one point on its website – it can still be a ‘hit and miss’ process. It is a worry when the established consultative bodies are not aware of the consultations that NICNAS is undertaking.

    Unresponsive
    NICNAS often fails to adequately respond to the concerns of industry. For example, in September 2009 Accord wrote to the Director NICNAS with an industry suggestion for managing cosmetic claims by providing a Draft Document for Discussion: Joint Industry/Government Initiative on Cosmetic Claims, Management Framework of Common Understanding as the basis for discussion with the three regulators involved in cosmetic claims management. The aim of the document was to create a common understanding between industry and regulators by which cosmetic product claims will be evaluated in a fair and consistent manner. We saw this as a tool for industry and regulatory agencies to ensure the smooth and effective implementation of the then new regulatory requirements for those products previously at the cosmetic therapeutic interface.

    To date industry has had no formal response to our paper apart from an acknowledgement that it had been received by NICNAS. In an attempt to move the process along, Accord has met with various individuals from NICNAS and the TGA. However, neither the TGA nor NICNAS would assume responsibility for progressing the document or providing concrete advice to industry as to how our document could be progressed to finalisation – if at all possible. To this day, industry had no idea as to what the three regulatory agencies thought about the document.

    Surprisingly when reading the NICNAS Annual Report 2010-11, we became aware of a document jointly released by NICNAS, the TGA and ACCC in April 2011 on Complaints Management and Compliance Responsibilities - Cosmetic Products. NICNAS apparently undertakes the role of Chair for the three agencies which have a responsibility in managing cosmetic claims. Accord sits and the Cosmetic Advisory Committee (CAG), a body established to assist the Director NICNAS on implementation issues arising from the reforms to products at the cosmetic/therapeutic interface. Neither the CAG, IGCC or Accord were advised of this document and disappointingly, Accord was not consulted in its development, despite having indicated our interest in this issue in September 2009. This is extremely poor stakeholder engagement.

    Another example of NICNAS’ failure to respond to industry concerns is in relation to the burden of annual reporting arising from the LRCC reform process. Australia is the only advanced economy with a new chemicals regime which requires such reporting and despite Chairing the OECD New Chemicals Clearing House which is supposedly working towards international harmonisation in the treatment of new chemicals – NICNAS has refused to address this significant reporting anomaly.

    Case Study 1 – the burden of annual reporting for low volumes of exempt industrial chemicals

    The 2004 amendments to the ICNA Act introduced a range of exemptions for low risk chemicals with the added requirement of annual reporting for chemicals introduced under these exemptions. Annual reporting was a mechanism introduced in order to identify chemicals in use in Australia which had not been subject to notification or assessment processes. NICNAS was required to provide an analysis of these chemicals and report annually on the types of ingredients being introduced in this manner. We note that NICNAS is yet to provide sufficient data and/or analysis of information gained through the annual reporting process. This analysis would highlight the nature of the chemicals being introduced through exemptions and whether they pose a risk or not.

    An Accord member has advised that due to the reform process it was required to nominate 450 new ingredients in 2007/08 and 750 in 2008/09 to NICNAS as part of its annual reporting requirements. These ingredients which were previously assessed by the TGA are not recognised by NICNAS as they are not on AICS. The NICNAS Annual Report for 2007-08 states, In its preparations for introduction of the reforms, NICNAS was committed to seamless regulation of cosmetics by the involved agencies (NICNAS, the Therapeutic Goods Administration and the Australian Competition and Consumer Commission). (p24) Industry is not convinced of the veracity of this statement as we are still waiting for the transfer of ingredients from ARTG to AICS. Many of these ingredients which are required to be reported annually are either of very small amounts such as fragrance ingredients or are introduced at less than 1% of the product formulation and are not considered to be a risk.

    More rigorous analysis of the costs and benefits of NICNAS activities may lead to a more streamlined and efficient system which is seen to deliver benefits to the regulated industry while also maintaining public health and safety objectives. For example industry has raised concerns for some time with the compliance burden which annual reporting poses. NICNAS has accumulated reports and amassed significant data for a number of years now but there has been no analysis of the chemicals which are brought in under these exemption categories. An analysis of the data would demonstrate if there is a net benefit from the collection of this data.

    Accord believes that a simpler approach would be to require a one-off notification of chemicals which meet the exemption requirements. If an issue arises in relation to the notified chemical, NICNAS will have the necessary information required in order to take the appropriate action. A simple notification system is more cost effective and reduces the compliance burden but could still deliver the same health and safety outcomes. In the absence of any analysis and reporting on the benefits of annual reporting, industry must question why this requirement continues.

    Accord has consistently raised its concerns about the unnecessary burden of annual reporting for a considerable period. Accord supported the independent consultants review into the LRCC reform process and in general supported most of the report’s recommendations. In particular we were very supportive of the review’s recommendation that NICNAS review the efficiency of current annual reporting requirements. As has been more than adequately identified in the review, the burden of reporting appears to have outweighed any benefits.

    The LRCC Review raised industry’s expectations that issues regarding the efficiency and effectiveness of the reform process would be addressed. A considerable amount of industry cost recovered funds, estimated to be around $400K in total including staff time and consultant’s fees, went into the review with no outcomes of significance to date. The NICNAS Annual Report for 2009-10 stated that:

    NICNAS implemented several options proposed that related to the administrative refinement of the assessment processes. The remaining options, including identification of additional opportunities for further refining regulatory models, are currently being considered and will be focuses for 2010-11(p25).



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    This did not occurred with NICNAS subsequently advising the IGCC it did not have sufficient resources to finalise this work. Given the lack of action by NICNAS on this important issue for industry and with the benefit of hindsight we believe the above statement is therefore potentially very misleading. This represents another significant loss of investment in time and money for industry from a non responsive regulator.

    Governance Questions
    Another area of growing concern for industry is the governance structure surrounding NICNAS. There is no clarity in responsibility for chemical safety policy and administration of the ICNA Act. NICNAS’ international work is an example of this. Accord to this day is unclear how Australia became the Chair of the OECD New Chemicals Clearing House when the OECD made a decision to cease its new chemicals activities. Papers provided to the IGCC Meeting 31 March 2009 advised that the OECD Joint Meeting in November 2008 agreed to terminate the New Chemicals Task Force. Its activities were to be managed by the OECD New Chemicals Clearing House to be chaired by Australia (NICNAS). Accord is interested to know under what authority did the Australia Government agree to participate in the new structure and under what authority did the Director NICNAS come to be its Chair. Other questions include, how was this decision made, who was consulted and why is industry funding this activity through NICNAS cost recovery arrangements?

    Of late, the only active participants of the OECD New Chemicals Clearing House appear to be APEC Member Economies. Meetings in the last two years have been set to run back to back with the APEC Regulator’s Forum. Accord members see little benefit in Australia Chairing this forum. Australia does not adopt the regulatory treatment of comparable participating members such as in the treatment of polymers, annual reporting burden and management of low risk chemical entities. We therefore see no benefit in Australia’s participation as we continue to have a unique system which creates significant barriers to trade, particularly in the area of the introducing of low risk innovative products where data requirements are different in Australia.

    We are also unclear as to how policy decisions are made. For example we do not know under what authority the decision to move ahead with the accelerated prioritisation of existing chemicals. In 2008, COAG proved an interim response to PC Recommendation 4.6.
    • NICNAS should implement a program to greatly accelerate the assessment of existing chemicals that:

    • Screens all existing chemicals to develop a list of priority chemicals for assessment
    • Makes greater use of simulation techniques based on the hazards of chemical analogues
    • Reviews the scope of recognising the existing chemical assessment schemes of a range of other countries as ‘approved foreign schemes’. Priorities should be the schemes operated by Canada, the European Union and the United States.

      The Australian Government should meet the cost of screening all existing chemicals from budget funding. NICNAS should continue to recover the costs of subsequent assessment of chemicals of concern.

      Response

      COAG notes the response of the Commonwealth as set out below. The Productivity Commission's recommendation envisages a resource intensive, Government-funded approach to assessment of existing chemicals. The extent and speed of implementation of this recommendation would be dependent on available funding. The recommendation for budget funding of this activity is not consistent with current cost-recovery policy as implemented in the National Industrial Chemicals Notification and Assessment Scheme. Resource implications require consideration in the development of an implementation plan.


    Parliamentary Secretary King announced that an accelerated programme for the assessment of existing chemicals would commence from 1 July 2012. In the absence of any implementation plan which has been forwarded to COAG for its consideration as well as sign off on the cost impact to industry, Accord is uncertain where the authority to make a decision in absence of appropriate consideration of cost impact on industry was made. We have written to the Prime Minister seeking an explanation, as it is not contained in any publicly available documents.

    3 The efficiency and effectiveness of NICNAS’ operating arrangements and business processes, with particular regard to the protection of human and environmental health, the management of risk, and compliance costs for business.

    NICNAS is an extremely risk averse regulatory agency. This makes it less effective than it should be in the eyes of industry. The PC also noted in its report on chemicals and plastics regulation the risk averse nature of Australian regulatory agencies. It cited the failure of the LRCC to deliver the intended outcomes an as an example of the risk averse nature of NICNAS. Further, NICNAS’ risk averse culture has led to regulatory creep which makes industry compliance difficult and burdens industry with further unnecessary costs.

    In our submission to the NICNAS Cost Recovery Discussion Paper of 2009, we noted that NICNAS by its own admission has seen a significant reduction in new chemical assessment activity. The NICNAS Annual Report for 2008-09 notes that NICNAS issued 153 assessment certificates and published assessment reports for each, a decrease of 22 per cent over last year. A total of 67 new chemical permits were issued, down 45 per cent on the last year (p32).

    The data in Table 1 below indicates there is a consistent downward trend in new chemical activity compared to the level of activity covered in the previous Cost Recovery Impact Statement (CRIS) for 2001 to 2004. The level of new chemical activity has decreased with new chemical permits at less than 50 per cent of the 2003-04 figure of 151 compared to the 67 in 2008-09. At 30 June 2004 there were 36 staff employed.

    It is difficult to assess the level of existing chemicals activity as available data is not presented in a format which makes it possible to compare year on year activity. Certainly from information on NICNAS’ website – outputs in this area have not been significant over recent years with only 1 PEC published in 2009 and 2010, nothing for 2008 and only one for 2004, 2005 and 2006 respectively. The last Existing Chemicals Information sheet was placed on the NICNAS website in June 2009. The low level of activity indicates that this is an area of work which could be subject to a competitive tendering process.

    Yet NICNAS staffing levels have increased significantly from 36 in 2003-04 which appears to be NICNAS’ most productive year to 60 in 2008-09 which appears to have been NICNAS’ least productive year. The concern in the Government Cost Recovery Guidelines that a levy does not produce efficiencies to the same extent as activity based costs is certainly borne out by NICNAS. Since the introduction of the registration levy for Tier 1, NICNAS’ revenue and staffing has increased, but its outputs based on Annual Reports and Operational Plans appears to have significantly decreased.

    Table 1 Comparison of data from last CRIS to current CRIS reporting period
    NICNAS Activity from 2001-02 to 2004-05 – based on data in respective Annual Reports
    2001-022002-032003-042004-05*
    New chemical certificates issued164125189200
    New chemical permits issued119151162106
    Total NICNAS staff numbers 38 37 36 42
    Cost recovered revenue3.9284.0824.9616.812
    Retained surpluses1.1181.6992.4101.461
    NICNAS Activity from 2005-06 to 2008-09 – based on data in respective Annual Reports
    2005-062006-072007-082008-09
    New chemical certificates issued202185197153
    New chemical permits issued120146122 67
    Staff numbers 45 45 45 60
    Cost recovered revenue8.3427.9928.1008.117
    Retained Surpluses2.5503.3363.8653.618

    *In 2004-05 NICNAS revenue increased to 6.812 as a result of the introduction of Tier 1 Registrations.

    NICNAS is continually failing to meet targets it sets for itself as outlined in its annual business plans. Industry has already raised its concerns with the serious delays in achieving goals such as disinfectant and cosmetic reforms – despite these activities being well funded over the years. We note that even meeting important Government requirements such as undertaking a CRIS every five years will not be met as this CRIS was supposed to have been completed in the 2009-10 financial year and will now be some 12 months late.

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    Case study 2 – three examples of regulatory creep

    A Chemical Nomenclature
    Industry had been advised that NICNAS cannot accept a nomination of a chemical ingredient if a Chemical Abstracts Service name and number (CAS name and number) is not provided. Many of the chemicals nominated have a long history of use within the cosmetic industry and are identified within the cosmetics industry by their International Cosmetic Ingredient (INCI) name and INCI Monograph ID numbers, but some do not have a CAS number.

    The ICNA Act does not mandate a CAS name or number to determine chemical identity for placing on the AICS. In relation to a chemical name, the Act in Section 5 Interpretation states:

    Chemical name, in relation to a chemical means:
    (a) in the case of a pure chemical - the Chemical Abstracts preferred Index Name, or, if such a name is not available, the name to be used, by the International Union for Pure of Applied Chemistry; or
    (b) in any other case - a complete description the chemical;
    including, in the case of a biopolymer, a description of the biological source of the biopolymer.



    We have written to NICNAS on a number of occasions regarding its insistence for a CAS name and number as the only form of acceptable chemical identity. This insistence on behalf of NICNAS appears contrary to the ICNA Act. Indeed, we wrote in February 2009 regarding a February 2009 Chemical Gazette notice which implied through truncation of the above quoted section of the ICNA Act that only the CAS name and IUPAC name are acceptable forms of chemical names. In a response received on 3 February 2010, NICNAS did not address the issue we raised of misquoting the Act, instead insisting that current NICNAS practice requires CAS name and number.

    More recently, we were surprised to find in the April 2010 Chemical Gazette, consultation on a proposal to amend the identification of a chemical by removing the International Union of Pure and Applied Chemistry (IUPAC) name. The justification for this reform was on the basis that is was a minor amendment in accordance with international best practice.

    This reform proposal had not been previously discussed with industry. It is neither minor, nor international best practice.

    IUPAC is an internationally recognised body, which amongst other things, is recognised for its work in chemical nomenclature. NICNAS’ intention to move away from this international system on the basis of international best practice is an embarrassment. We made a submission to the consultation in the Chemical Gazette indicating our concern on this issue. This matter regarding IUPAC has since been dropped, but the cosmetic industry still faces difficulties with NICNAS’ insistence that it cannot recognise INCI names. In refusing to accept other forms of nomenclature, in the transfer of ingredients from the ARTG to AICS, to date NICNAS looks to only accept some 30 odd ingredients from a total of 197 nominated by industry and previously in supply when regulated by the TGA. Again, a reform with potential to be of significant value means that industry will see little benefit arising - it also took over five years and considerable cost to implement.

    B Power to request MSDS
    As a member of the Industry Government Consultative Committee (IGCC), Accord received a draft gazette notice regarding MSDS and label requirements for New Chemical Notification for comment in January 2009.

    The draft notice put into words NICNAS’ current practice in requiring the provision of Material Safety Data Sheets (MSDS) for New Chemical Notifications.

    The notice acknowledges that;

    "Duties and obligations for the production, review, revision and supply of MSDS are prescribed in the State and Territory regulations that give effect to the National Model Regulations for the Control of Workplace Hazardous Substances [NOHSC:1005(1994)] (National Model Regulation) (http://www.ascc.gov.au/NR/rdonlyres/F23EA1CD-33AE-478A-9363-BB0BD81EC64F/0/WorkplaceHazardousSubstancesmodel_regs _NOHSC1005_1994.pdf) and the National Standard for the Storage and Handling of Workplace Dangerous Goods [NOHSC:1015(2001)] (National Standard) (http://www.ascc.gov.au/NR/rdonlyres/B157A229-4D9B-4648-B462-A06EA18E2A93/0/NOHSC10152001_STANDARD.pdf)
    All MSDS should be compiled in accordance with the National Code of Practice for the Preparation of Material Safety Data Sheets 2nd Edition [NOHSC:2011(2003)] (MSDS Code) (http://www.ascc.gov.au/NR/rdonlyres/6AA1E55D-D444-4909-B18B-812688B49A7F/0/MSDSCodeNOHSC20112003.pdf)”,



    and therefore within the jurisdiction of the Australian Safety and Compensation Council (ASCC) now known as Safe Work Australia as of 3 April 2009, formerly the National Occupational Health and Safety Commission (NOHSC) and not within NICNAS’ jurisdiction. However, the Notice proceeds to outline requirements that are not within any ASCC document relating to MSDS detailed above.

    According to the MSDS Code, MSDS are only required for Hazardous Substances and Dangerous Goods. However, the NICNAS Notice states that:

    “MSDS are required for all chemicals notified under NICNAS, not just hazardous chemicals.”

    According to the National Model Regulation and the National Standard, the responsibility to write, review and maintain the MSDS is with the supplier of the product (where reformulation of the product occurs, the reformulator), not the importer of the raw material. However, the Notice requires that:

    “Where reformulation of the chemical occurs in Australia by the notifier (or known other parties) and the chemical is required to be disclosed on the MSDS (either by its full chemical name or generic name), then MSDS for those products must also be submitted. NICNAS may request the MSDS for products containing the chemical in other circumstances. If the chemical is reformulated into a large number of products e.g. a range of paints, then NICNAS will accept an example MSDS covering the range of products”.



    The National Model Regulation, the National Standard and the MSDS Code only requires MSDS for chemicals in the form that are introduced in Australia. The Notice states:

    If the chemical is only to be introduced into Australia in a product, then an MSDS for the chemical itself should also be provided. An overseas version is acceptable.”



    These requests for MSDS may now be a common practice in NICNAS, however it must be noted that it has not always been the case.

    The draft notice indicated that the provision of MSDS to such extent was a requirement as detailed in the ICNA Act. As Accord has been unable to find such a requirement in the ICNA Act, request was made to NICNAS in a letter dated 6 February 2009 to cite the relevant sections of the Act. We are yet to receive a formal response to our letter.

    At the Industry Engagement Group meeting held on 19 March 2009, Accord again requested that the relevant section of the ICNA Act be cited. Although Accord was assured once again that such a section existed in the Act, no citation was provided.

    Accord members also inform us that they too have requested the regulatory basis for such requests, only to be informed that it is within the ICNA Act. However to our knowledge, NICNAS has never provided the citation from any specific section within the Act.

    Industry is at a loss to explain why NICNAS believes it has the powers to demand MSDS for products and substances that are not legally required by the responsible jurisdictions in Australia, including Safe Work Australia), the regulatory body that is responsible for the National Code of Practice for the Preparation of Material Safety Data Sheets.

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    Again, this example strengthens the argument to remove OHS responsibility from NICNAS and leave it with Safe Work Australia to avoid duplication of responsibilities and effort.

    C SPF testing requirements for tinted and lip foundations
    Accord wrote to the Director NICNAS on 3 December 2007 about an anomaly in the new Cosmetic Standard 2007 regarding the regulation of Face and Nail tinted bases or foundations and lip products with sunscreens. Industry had identified that the Cosmetic Standard had inadvertently specified more onerous requirements for these product types than was previously required under the Therapeutic Goods (Excluded Goods) Order No. 1 of 2005.

    Accord had previously advised NICNAS of our concerns and potential inadvertent ramifications with rephrasing the existing specified use conditions in Column 3 of the Excluded Goods Order for products transferred to the Cosmetic Standard. The previous issue was in relation to labelling requirements which could have resulted in these cosmetic products being labelled as medicines with regard to their SPF. This issue had been dealt with immediately by the regulator.

    Unfortunately in an effort to standardise the terminology of the Cosmetic Standard with that of the legislative amendments in the ICNA Amendment (Cosmetics) Bill 2007, the rewording has resulted in more onerous requirements than was the case under the Excluded Goods Order.

    The Cosmetic Standard now imposes as mandatory that SPF claims for these product types can only be made in accordance with the testing methodology as outlined in Appendix B of the AS/NZS 2604:1998. In the Excluded Goods Order, the requirement was simply that …if any such claims are made they relate only to a sun protection factor or equivalent category description (or both) in the Australian/New Zealand Standard (AS/NZS 2604-1997). It specifically did not mandate which testing methodology was required. Equivalence of USA FDA or EU test methods was accepted. One Accord member has advised that it cost $100,000 to have the company’s product range retested in accordance with the new requirements.

    The Excluded Goods Order has been in operation successfully for many years and has provided the necessary flexibility recognising that the majority of cosmetic products are fully imported. This approach has not compromised public health or safety. NICNAS has advised Accord that it would seek advice from the Cosmetic Advisory Group (CAG) as to whether the Cosmetic Standard should be amended. In its Agenda Paper to the CAG on this issue, NICNAS states:
    • The conditions for these products in the Cosmetic Standard reflected the agreed position of the Cosmetic Reform Implementation Working Group (CRIWG).
    • The decision to specify testing accordance with AS/NZS 2604:1998 for this product category was to maintain health and safety standards and consistency between all cosmetic products containing SPF, that is moisturisers with secondary sunscreens, sunbathing products, foundations and lip products.
    Accord disputes this interpretation of the CRIWG position. Industry has always had difficulty in interpreting the SPF requirements and the CRIWG was initially interested in making the statement unambiguous, not increasing the level of regulatory intervention.

    The SPF for lip and tinted foundations was never part of the interface reforms as these had always been excluded by the TGA. It is difficult to accept that a higher level of regulatory intervention can be justified because the regulator believes there should be consistency between product ranges in the absence of any regulation impact assessment and public consultation.

    We believe this to be an example of regulatory creep where the Director NICNAS has exercised her powers beyond prior existing regulatory conditions as they existed in the Excluded Goods Order 2005.

    4 Any implications for and constraints on, transferring risk management functions to alternate agencies.

    As outlined above, NICNAS has a limited legislative role in risk management. This is confined to aspects of control in permits for certain chemical entities. There is duplication of effort in some risk management strategies such as in public health and safety and OHS and in making recommendation arising from PEC reports.

    We believe that enhancing the role of the existing public health and safety and OHS risk management bodies as well as establishing a risk management body for environmental matters and reducing the role of NICNAS to scientific assessment and expertise would benefit the overall health and safety outcomes as well as facilitating innovation in chemicals industry.
    Figure 1 – Proposed Regulatory Framework for the Management of Chemicals

    Figure 1 – Proposed Regulatory Framework for the Management of Chemicals
    Text from above flow chart
    Independent Scientific Assessment Body
    Workplace safety
    (Safe Work Australia)
    Public safety
    (Department of Health, with ACCS as an expert advisory body)
    Environmental Safety
    (Department of Environment and/or new entity)

    Australian Integrated Chemicals Inventory (AICI)
    Cosmetic Ingredients
    Agvet Ingredients
    Food and beverage ingredients
    Therapeutic Goods Ingredients

    ACCC
    APVMA
    FSANZ
    TGA

    Agvet Products
    Therapeutic Goods

    Scientific Assessment Body
    Policy Responsibility / Risk
    Management
    Chemical Substance Inventories
    Risk Management Authority
    Product Inventories




    Text from Figure2 flow chart


    NICNAS
    Workplace safety
    (Safe Work Australia)
    Public safety
    (Department of Health, with ACCS as an expert advisory body)
    Environment protection (Department of Environment)

    Australian Inventory of Chemical Substances (AICS)
    Consumer and Cosmetic Ingredients

    Food and beverage ingredients
    ACCC
    APVMA
    FSANZ
    TGA
    Agvet Products
    Therapeutic Goods

    Scientific Assessment Body
    Policy Responsibility / Risk
    Management
    Chemical Substance Inventories
    Risk Management Authorities
    Product Inventories