Questions and Answers
Last updated: February 2016
What is the primary objective of the reforms?
- The primary objective of the reforms is to refocus the efforts of NICNAS on higher risk industrial chemicals. The role of NICNAS - to aid in the protection of human health and environment by identifying risks arising from the use of industrial chemicals - will not change with this reform.
What will the reforms achieve?
- The reforms will reduce the regulatory burden to help Australian industry become more internationally competitive, while maintaining current levels of human health and environmental protection.
- The Regulation Impact Statement undertaken on the overall reforms found that the regulatory burden on industry will be reduced by around $23 million per annum, with a faster time to market for lower risk new chemicals and changes to annual reporting.
- For new chemicals, pre- and post-market regulatory controls will be re-balanced by applying a risk-based framework to match assessment effort to the risk profile of individual chemicals:
Form of treatment
(Very Low Risk)
(Medium to High Risk)
- More than 70 per cent of new chemicals that are currently assessed by NICNAS are expected to be introduced as Exempted or Reported via industry self-assessment, reducing the time to market and the cost of assessment.
- For existing chemicals, the prescriptive Priority Existing Chemical (PEC) process will be replaced, allowing NICNAS to tailor the scope of an assessment to the nature of any concern about the chemical.
- NICNAS’s monitoring and compliance powers will also be modernised to better suit the more risk-based and proportionate regulatory approach.
What informed the Government’s decision to reform NICNAS?
- Throughout 2012–13, an extensive review of NICNAS was conducted in consultation with stakeholders from industry, all governments and the public.
- The review identified a number of problems affecting the delivery of efficient and effective regulatory outcomes:
- NICNAS’s assessment framework is not sufficiently based on the likely risk of a chemical (regulatory effort not proportionate to risk)
- legislative requirements create inefficient regulatory processes (regulatory burden not proportionate to risk)
- inconsistencies and uncertainties in regulatory coverage.
- A Regulation Impact Statement (RIS) entitled “Options for Reforming the National Industrial Chemicals Notification and Assessment Scheme” was prepared, describing the key steps taken during the review and includes an assessment of the costs and benefits of four reform options developed for consideration by government.
- The Australian Government has agreed to implement option 3 from the RIS, which is available on the website of the Office of Best Practice Regulation. Implementation details will be subject to ongoing consultation with interested parties.
What will be the impact of the reforms on the general public?
- The faster introduction of lower risk chemicals provides an incentive to introduce safer new industrial chemicals to replace more hazardous existing chemicals.
- Although there will be less emphasis on pre-market assessment of lower risk chemicals, a greater focus on post-market assessment and audit will assist in maintaining the health and safety of consumers, workers and the environment.
- Chemicals expected to be of medium to higher potential risk will continue to be subject to pre-market assessment and require a certificate before introduction.
- To further protect the public, NICNAS will be able to impose conditions of use on an assessment certificate for a new chemical, or even refuse to issue a certificate at all if risks are unable to be managed effectively.
- Improved compliance powers will help NICNAS to manage non-compliance more effectively.
Will there be duplication with other regulators?
- NICNAS’s primary function as a risk assessor that provides recommendations to risk management agencies will be unchanged.
- The reform will not duplicate or interfere with regulatory activities undertaken by risk managers at either the Commonwealth, state or territory level.
- New compliance powers provided to NICNAS under the reforms are designed only to promote adherence to the requirements of the Industrial Chemicals (Notification and Assessment) Act 1989 (the ICNA Act) and will not duplicate risk management compliance activities undertaken by other regulators.
- The changes will allow NICNAS to better direct compliance efforts towards ensuring that the requirements of the ICNA Act are met.
Where will I see the savings for my business?
- The realignment of the regulatory effort towards chemicals with a higher risk profile should lower the costs to industries and consumers using lower risk chemicals.
- For a new cosmetic product ingredient: A business introducing a new chemical for cosmetic use, such as a suspending agent, under the new assessment framework would expect savings of up to 80 per cent over the previous process. This reduction is driven by the chemical being of low risk and therefore subject to self-assessment, meaning the introducer will avoid approval delays that can delay market entry by up to 90 days.
- For a new paint ingredient (polymer): A business introducing a new chemical polymer for water-based architectural paint could enjoy savings of up to 60 per cent over the previous process. This reduction is driven by the chemical being of low risk and therefore subject to self-assessment, meaning the firm will avoid application and approval processes that can delay market entry by up to 90 days.
What will implementation of the reforms involve?
- Government has tasked NICNAS with implementing the reforms to deliver the benefits to industry from the reduced regulatory burden while maintaining current levels of protection for human health and the environment.
- Many implementation details will require resolution by NICNAS, and this will occur in close consultation with all stakeholders.
- Implementation of the reforms requires changes to legislation. Prior to introduction into Parliament, the legislation will also be subject to agreement by relevant Ministers and by the Prime Minister.
- Once introduced into Parliament, the Parliament will review the legislative changes and determine whether the appropriate balance has been achieved between reducing costs and regulatory burden to industry, and continuing to maintain adequate safeguards for human health and the environment.
- Implementation also involves development of new guidance materials and information resources for stakeholders, detailed documentation of risk assessment processes, and implementation of new standard operating procedures relating to the notification and assessment of new and existing chemicals.
- Implementation of the reforms also requires the procurement, development, testing and delivery of a new system of information and communication technologies (ICT) to support more efficient notification of chemicals by industry and streamlined risk assessment processes by NICNAS.
How long will implementation take?
- Some of the proposed changes are anticipated to take effect from 1 September 2016, with full implementation by 1 September 2018.
How much will it cost to implement the reforms?
- The NICNAS reforms will cost $12.4 million to implement ($5.4 million non-capital for operational expenses associated with the implementation and $7 million capital for new ICT systems).
Why is industry paying for the reforms? Why has cost recovery already commenced, before the reforms are in place?
- Current government policy requires the direct and indirect cost of all NICNAS activities to be recovered on a not-for-profit basis from the regulated industry - businesses importing or manufacturing industrial chemicals.
- The Australian Government has decided that the additional cost of implementation of reforms will be recovered from industry in line with published Cost Recovery Guidelines.
- The registration charges for 2015–16 were increased to recover the operational expenses of implementing the reforms in 2015–16. This increase in registration charges will continue in 2016–17.
- For the reformed regulatory scheme to work efficiently, new information systems are required both within NICNAS, and for businesses to transact with NICNAS. The Australian Government has made an upfront investment for the capital costs of these systems.
- The capital costs will be recovered from 2017–18 in a depreciation like manner, so that the impact of this additional cost will be offset by the regulatory savings to industry.
Why aren’t funds in the NICNAS reserve being used to fund the reform?
- Funds in the NICNAS reserve are already fully committed.
- The NICNAS reserve mitigates a shortfall in licensing income arising from fluctuations in industry activity. This is an appropriate risk mitigation strategy employed by cost-recovered Commonwealth regulators.
- In refocussing the efforts of NICNAS on high risk chemicals and reducing the regulatory burden on low risk chemicals, changes to cost recovery arrangements are required to ensure that NICNAS can deliver the necessary assessment of high risk chemicals, and maintain the integrity of Australia’s chemical safety system.
What will be the effect on the number of new chemicals assessed by NICNAS?
- Approximately 9,000 ‘new’ chemicals (not listed on AICS) are introduced into Australia each year under exemption provisions of the Industrial Chemicals (Notification and Assessment) Act, 1989 (ICNA Act)
- A further 300 new chemicals each year currently do not fall under the exemption provisions of the ICNA Act and must be assessed by NICNAS before being introduced into Australia.
- Following the reforms, pre-market assessments by NICNAS would drop from approximately 3.3% of all new chemicals to 0.75%.
If I am importing or manufacturing a new chemical in Australia, how do I know which of the three categories my chemical will fall into?
- Three categories of new industrial chemicals will be created based on their level of risk and exposure, each with different pre and post-market requirements for the introduction of new industrial chemicals.
- The different categories of chemicals will be determined by the amount of risk a chemical is predicted to carry.
- The predicted risk is a combination of the inherent hazard properties of the chemical (such as whether it causes skin irritation or has long term effects) and the level and type of expected exposure it has (for example, for how long and at what concentration people or the environment may be exposed to the chemical).
- Categories will be determined by ‘risk matrices’ that plot hazard against exposure. The approach to determining the criteria for hazard and exposure bands for the risk matrices is outlined in the Regulatory Impact Statement, but the details will be subject to stakeholder consultation during the implementation of the reforms.
Does this classification system apply to existing chemicals?
- No, the three categories do not apply to existing chemicals (chemicals listed on AICS), only to new industrial chemicals being imported or manufactured in Australia.
How will adequate safeguards for human health and the environment be managed when fewer new chemicals are being assessed pre-market by NICNAS?
- NICNAS will increase the annual number of targeted post-market assessments and audits to ensure that introducers are compliant with their notifications for Exempted and Reported chemicals.
- Should any changes in risk be identified by NICNAS or jurisdictional regulators for a chemical introduced as an Exempted, Reported or Assessed chemical, NICNAS may review its eligibility for further introduction under that category.
- NICNAS will have access to more contemporary tools to ensure compliance, including new powers to issue improvement and prohibition notices and to revoke a certificate for non-compliance.
Will NICNAS be considering information generated overseas?
- Those chemicals requiring risk assessment by NICNAS will undergo a streamlined process, utilising international assessment materials wherever possible.
Is there a change to the way in which Cosmetics will be regulated?
- NICNAS will continue to assess industrial chemicals in the Assessed category for use in cosmetics.
- Under the reforms, it is proposed that the Australian Competition and Consumer Commission (ACCC) will become responsible for the administration of the Cosmetics Standard.
Is there a change to the way in which Prior Informed Consent (PIC) for certain hazardous chemicals will be regulated?
- Under the reforms, it is proposed that the regulation of the import and export of chemicals in accordance with the Rotterdam Convention will become the responsibility of the Department of the Environment.
How can my organisation take part in future consultations?
- Engagement with the community and with industry will result in better design and implementation of the reforms.
- Regular updates and information about consultation opportunities will be published on the NICNAS website.
- Stakeholders are being encouraged to register interest in engaging with the consultation processes through their relevant peak body.
- Individual organisations will also have the opportunity to participate directly in discussions about the reforms.
- Extensive consultation will be undertaken with industry and other stakeholders on the drafting of amendments to legislation and the delegated legislation (regulations and guidelines) as well as for the development of guidance documents, forms and IT systems.
Will there be any training sessions provided on the changes?
- Yes. Training sessions will be provided through workshops that will be advertised on the NICNAS website.
Where can I find additional information about the NICNAS reforms?
- On 26 May 2015, the government announced reforms to the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) that simplify the assessment process for industrial chemicals to reduce the regulatory burden on the sector, while ensuring Australia’s robust safety standards are maintained.
- The final Regulation Impact Statement associated with the reforms for NICNAS is available from the Office of Best Practice Regulation.