Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill

, on behalf of the Minister for the Environment: I move, That the Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Education and Science Committee for consideration, that the committee report the bill finally to the House by 13 February 2004, and that the committee have the authority to meet at any time while the House is sitting, except during questions for oral answer, and during an evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 193 and 196(1)(b) and (c).

In June the Government announced a strategy to improve the workability of the hazardous substances provisions of the Hazardous Substances and New Organisms Act. This strategy was developed in close consultation with industry leaders and focuses on improving workability to enable the Act to better serve its purpose—that is, to protect the environment and the health and safety of people and communities by preventing or managing the adverse effects of hazardous substances. The strategy identified a number of prioritised actions, with the most critical actions delivered first. This bill is the first legislative action identified in the strategy. The bill’s primary objectives are to enable the practical application of controls to all hazardous substances, and to provide for practical management of the transitional period.

This bill, in providing for those outcomes, reduces the cost to the Government and industry, reduces barriers to innovation, and better protects the environment and the health and safety of people and communities. The bill does not affect the Act’s operation over new organisms, at all.

As I stated earlier, the changes in this bill reduce the costs to industry and to Government, and will reduce the barriers to innovation. Costs to industry are reduced by providing for cost-effective controls to be assigned to all hazardous substances, existing or new, regulated under the Hazardous Substances and New Organisms Act, whether they are explosives, ammunition, fuels, solvents, printing inks, window cleaners, lubricants, poisons, or fly sprays. Costs to the Government are reduced by removing unnecessary constraints on the processes of transferring existing hazardous substances. The transfer is the process of assigning each existing hazardous substance a hazard classification and appropriate Hazardous Substances and New Organisms Act controls, thereby replacing the controls that previously applied under former laws, such as the Explosives Act, the Pesticides Act, and the Toxic Substances Act. Transfer is primarily a technical process that will bring the regulation of hazardous substances under one statute—the Hazardous Substances and New Organisms Act.

The bill provides for transfers to be effected by publication of a decision of the Environmental Risk Management Authority as a notice of transfer in the New Zealand Gazette, rather than by making an Order in Council. That is more efficient and timely, with the same health and environmental outcomes as a result. The level of consultation with the community and industry will be the same as for the present day transfer process. Once the existing hazardous substances are transferred, they will be used as similar reference substances by applicants when applying to introduce a new hazardous substance. That enables processing via the lower cost, lesser information, and faster rapid-assessment pathway. Therefore, by enabling a transfer to proceed in a more efficient and timely way, costs to industry are reduced as approvals for new hazardous substances become faster and more cost-efficient to obtain.

I stated earlier that the bill provides for protecting the environment and the health and safety of peoples and communities. The level of protection afforded by the Hazardous Substances and New Organisms Act is strengthened by this bill. By enabling faster and more cost-efficient approvals, we make the introduction of safer new-generation substances easier, thereby helping to reduce the overall level of risk from hazardous substances. This also reduces barriers to innovation, and provides greater opportunity for smart economic growth.

This bill reduces the costs to industry by providing for exemptions that allow the Hazardous Substances and New Organisms Act controls to be phased in, as long as the predecessor controls are complied with in the meantime. An example of this is labelling that clearly communicates the hazards of any given substance to all users of that substance. The bill enables the authority to specify that Hazardous Substances and New Organisms Act labelling requirements need not be met until a date specified by the authority, provided that, in the meantime, retail stocks comply with the predecessor requirements. This avoids the costs of relabelling existing retail stock. New retail stock only will require the labelling. This provides legal clarity for business, management of risks, and cost-effective implementation of change. Hazardous Substances and New Organisms Act controls allow businesses to develop innovative cost-saving measures in managing the risk of substances. That scope for innovation is a significant benefit for business. The bill allows those businesses that wish to take advantage of performance-based Hazardous Substances and New Organisms Act controls to do so proactively, prior to the substances they manage being transferred to the Hazardous Substances and New Organisms Act, and further removes a dual regulatory regime that would otherwise apply.

In conclusion, this bill includes a number of provisions that, though individually modest, collectively will provide meaningful reductions in cost to industry and the Government, and will reduce barriers to innovation. Importantly, the provisions will do so without compromising the level of environmental and health protection afforded by the Hazardous Substances and New Organisms Act. The changes in this bill will ensure that the processes of the Hazardous Substances and New Organisms Act work better, without compromising what the Act originally set out to achieve, which is a healthy environment for all New Zealanders. I commend the bill to the House.

It was very interesting to hear the Minister for Courts give a speech on the bill, which is very technical and in many respects holds great hope in terms of doing what is needed in New Zealand, and that is reducing compliance costs. Unfortunately, the Labour Government does not have a legacy of reducing compliance costs, but National will be supporting this bill to the select committee because it does hold that hope. The explanatory note states: “The amendments minimise the costs to business and Government, and reduce barriers to innovation”, and that is exactly what the New Zealand Biotechnology Strategy and the Biotechnology Taskforce have pleaded with the Labour Government to implement, in order to achieve transparency, predictability, and best regulatory practice.

As I say, I am optimistic that this bill, after it has been to the select committee, may achieve those things. But what does the Government say about it that gives us some degree of hope? It says that it hopes the amendments will minimise the costs to business and Government, and reduce barriers to innovation by five different mechanisms, the first of which is “enabling practical controls to be assigned to previously assessed existing hazardous substances by providing the Environmental Risk Management Authority with flexibility when assigning controls:”. There is no doubt that in the old regime there was a real merry-go-round of compliance costs and regulatory requirements that, hopefully, will be smoothed.

The second mechanism is “streamlining the transfer process through removing the need to effect transfers by making an Order in Council:”. So, again, the somewhat cumbersome process of going through an Order in Council for each of these new substances will be circumvented—provided all the checks and balances are in place. Hopefully, during the select committee process, we will be able to confirm and improve that situation.

The third mechanism is “providing for a smooth transition by enabling the Authority to grant businesses exemptions from complying with transitional controls to proactively move to the HSNO controls prior to transfer of the substances they use, manufacture, or import:”. That might seem a somewhat complicated phrase, but in essence it means that those businesses that will move to the new Act and the new amendments to the Act will be able to avoid having to have dual compliance with the old regulations, as well as with the new and the transitory. One always worries when one sees the term “grant business exemptions”, but, as far as I can gather, in this circumstance it seems reasonable. The fourth mechanism is “providing for a smooth transition by enabling the Authority to allow businesses to continue their compliance with transitional controls and move them to HSNO controls under a staged programme:”. Again, that seems sensible. The fifth mechanism is “enabling the assignment of cost-effective controls to all hazardous substances.”

I hope that is not just Government rhetoric. I hope indeed that there are cost-effective controls for all hazardous substances, because certainly when we were dealing with the new organisms part of this bill, the controls went to extreme lengths that, I believe, were totally unnecessary and inappropriate. In many respects, they were symptomatic of a Labour Government gone berserk, in terms of not understanding risk management. Hopefully, the fifth mechanism, “enabling the assignment of cost-effective controls to all hazardous substances”, will become a reality.

There are some very interesting statements regarding the regulatory impact and compliance cost statement. It is important to be aware that, collectively, these problems affect all existing hazardous substances—of which there are about 80,000—and an estimated 90 percent of new hazardous substances. It is pointed out that those unintended costs reflect a huge regulatory failure of the past, and Government intervention is required to remove those costs. It certainly seems to be extremely reasonable, in that respect.

I note some optimistic predictions that the net benefits to industry will be considerable, and obviously it will be important to ensure that submitters are in agreement with what the Government is trying to do here. The net benefits to society, the Government says, are that improved compliance due to improved understanding will result in health, safety, and environmental gains. Again, it is very useful to have these fine words—I remember one of the submitters to the Hazardous Substances and New Organisms Act saying that fine words do not necessarily butter turnips—but it would also be useful to have an audit to know whether there really are net benefits to society.

💬 Jeanette Fitzsimons: Parsnips.

Parsnips, or turnips—I think either would be appropriate. The primary benefit to Government is improved efficiency in assigning controls to all hazardous substances, and ensuring compliance with those requirements. There is no doubt that it is important they all come under one bill, rather than under the diverse number of bills they have been under for a long period of time. That also is sensible.

I want to give one other quote from the regulatory impact and compliance cost statement: “… the HSNO controls replace any former controls (under previous legislation). All existing hazardous substances must be transferred by July 2006.” So there is an imperative on the Government to make sure this legislation is worked through, and it certainly gives the Government plenty of time. The Act came into force for hazardous substances on 1 July 2001, and these are the amendments that will mean this operation is feasible.

Finally, I want to make a point about new section 95B, inserted by clause 6, which creates a licence that authorises the possession of a hazardous substance. A licence under this section is required if the authority makes it a condition of the authority’s approval of a substance, and the authority must grant a licence if it is satisfied the applicant is a fit and proper person to possess the substance and meets the relevant test certification requirements. The “fit and proper” test will be prescribed by regulations made under the Act. Once granted, the licence authorises the possession of the substance specified in the licence, in accordance with the terms and conditions of the holder’s licence, and the approval of the substance. As members can see, this is a highly technical bill. Hopefully, it will achieve what the Government plans. The National Party is supportive of the bill going to the select committee. We will be scrutinising it carefully, to ensure we achieve that substance of greater efficiency and cost-effectiveness.

Debate interrupted.