Reforms implementation plan

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Implementing reforms to the National Industrial Chemicals Notification and Assessment Scheme (NICNAS)

September 2015

Part A—Purpose

The purpose of this document is to describe a proposed implementation plan to deliver reforms to the National Industrial Chemicals Notification and Assessment Scheme (NICNAS).

This document:

  • provides contextual information about NICNAS and the need for reform;
  • describes the Government’s decision in relation to the reforms;
  • describes the proposed approach for implementing the Government’s decision;
  • describes the consultation that will inform implementation of the reforms; and
  • details the implementation timeframes.

For more information about the proposed NICNAS reforms please contact us.

Part B—Context

A range of State, Territory and Commonwealth government agencies share regulatory responsibility for chemical safety, with each chemical being regulated according to its use, whether as a therapeutic good (e.g. medicine), veterinary medicine, pesticide, food additive or industrial chemical (which includes any chemical with a use not falling into one of the other categories).

Industrial chemicals (which include chemicals used in solvents, adhesives, plastics, paints, inks, fuels, cosmetics and household cleaning) are regulated through the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) which is a statutory scheme administered by the Australian Government Department of Health.

NICNAS is responsible for:

  • assessing new industrial chemicals for human health and environmental impacts. Any company or person proposing to introduce (import and/or manufacture) a new industrial chemical in Australia must notify NICNAS. Once NICNAS has assessed a chemical for its human health, work health and safety and environmental risks, it publishes an assessment report that may include recommendations for further regulatory control of the chemical (such as by poisons scheduling, work health and safety or environmental controls).  NICNAS also issues a certificate or permit to the introducer, who must report any new information that becomes available about the chemical;
  • maintaining the Australian Inventory of Chemical Substances (AICS). Five years after a certificate has been issued following the assessment of a new industrial chemical, NICNAS authorises the chemical for wider use by listing it on the AICS, which currently includes about 40,000 industrial chemicals that may be used without first notifying NICNAS;
  • reviewing existing industrial chemicals, either as priority existing chemicals, secondary notifications (reassessment of a chemical) or targeted assessments addressing specific health and environmental concerns;
  • providing information on the human health and environmental impacts of industrial chemicals and making recommendations on their safe use. NICNAS promotes the safe use of industrial chemicals by providing information and making recommendations to Commonwealth, State and Territory bodies with responsibilities for the regulation of industrial chemicals;
  • registering introducers of industrial chemicals. All importers and/or manufacturers of industrial chemicals for commercial purposes must register with NICNAS. NICNAS also collates and analyses information about the introduction of chemicals, audits companies for compliance with obligations under the Act, and undertakes relevant enforcement action; and
  • undertaking monitoring and compliance activity, including to verify industry self-assessments and appropriateness of exemptions.

NICNAS also assists in ensuring that Australia meets its obligations under international agreements relating to industrial chemicals.

Part C—The case for reform

For some time there have been strong calls from industry and community sectors for improvements to NICNAS[1]. Industry seeks more timely access to market for newer, potentially safer chemicals and has expressed frustration regarding the regulatory costs and delays associated with pre-market assessments leading to lost market opportunities and reducing its ability to innovate and compete in the market. Community groups, on the other hand, seek assurance that risks to the Australian people and the environment from both new and existing industrial chemicals will be assessed in a timely manner and appropriately mitigated.

Throughout 2012–13 an extensive review of NICNAS was undertaken. The review identified a number of problems affecting the delivery of efficient and effective regulatory outcomes. These included:

  • the framework not being sufficiently based on the likely risk of a chemical;
  • the legislative requirements creating inefficient regulatory processes; and
  • inconsistencies and uncertainties in the regulatory coverage.

For more information about the review, and the problems identified, please refer to the Regulation Impact Statement on the options for reforming NICNAS (available on the OBPR website).

Part D—Government decision in relation to reform

Informed by the review (and also by the Industry Innovation and Competitiveness Agenda and the Deregulation Agendas) Government announced that there would be reforms to NICNAS as part of the 2015–16 Budget.

The reforms agreed by Government are described as Option 3 in the Regulation Impact Statement.

The reforms will ensure that the level of assessment of industrial chemicals is proportionate to the potential risks they pose. The reforms include:

  • rebalancing pre-and post-market regulatory requirements to match the indicative risk profile of a new chemical;
  • streamlining the existing risk assessment process for new and existing chemicals;
  • greater utilisation of international assessment materials; and
  • more appropriate compliance tools.

Government has described its expectations regarding the key benefits of the reforms and has tasked NICNAS with their implementation. There are many implementation details that require resolution and NICNAS proposes to develop these in close consultation with stakeholders.

For more detail on the Government decision, please refer to Attachment A which summarises the reforms that are described in detail in the Regulation Impact Statement.

Part E—Benefits of the Reforms

The benefits of the reforms include the following:

  • the faster introduction of lower risk new chemicals provides an incentive to introduce safer industrial chemicals. This could lead to public health, worker and environmental benefits, if these chemicals are introduced and subsequently replace more hazardous existing chemicals. Although there will be less emphasis on pre-market assessment of lower risk new chemicals, a greater focus on post-market assessment and audit will assist in maintaining the health and safety of consumers, workers and the environment;
  • the realignment of regulatory effort towards chemicals with a higher risk profile will lower the costs to businesses and consumers using lower risk chemicals;
    the number of new chemicals that are subject to pre-market assessment is expected to decrease by more than 70 per cent compared to the current arrangements. Lowering barriers to market entry for a greater number of chemicals should significantly reduce costs to industry for most new chemical assessments. It is expected that the overall reduction in regulatory burden to industry per year will be $23 million;
  • the ability to impose conditions of use on new high-risk chemicals, or even refuse approval, if risks are unable to be managed effectively by other risk managers. This change will safeguard consumers, workers, and the environment against the effects of high-risk chemicals for which other risk management options are not available; and
  • improved compliance powers will help NICNAS to manage non-compliance more effectively in order to maintain current levels of health and environmental protection.

Some specific examples of the benefits include:

  • benefits for introducers of new cosmetic product ingredients: a business introducing a new chemical, such as a suspending agent, for cosmetic use 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; and
  • benefits for introducers of new paint ingredients (polymers): 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 delays that can delay market entry by up to 90 days.

Part F—Implementation of the reforms (Governance)

In order to deliver the reforms agreed by Government, changes will need to be made to:

  • the NICNAS legislation. The regulatory scheme is established under, and operated in accordance with, the Industrial Chemicals (Notification and Assessment) Act 1989 (the ICNA Act) and associated regulations. Changes will be required to both the Act and the Regulations;
  • the NICNAS IT system; and
  • guidance materials, application forms, standard operating procedures and other supporting materials (for NICNAS staff, regulated entities and other stakeholders).

As with any reforms, Government has described its broad expectations regarding the key elements of the reforms. Government has tasked NICNAS with implementing the reforms in accordance with the direction set by Government.

In doing this, there are many implementation details that require resolution.

NICNAS proposes to develop this implementation detail, in close consultation with stakeholders (as discussed in Part I), for consideration by Government.

The detail will be subject to:

  • consultation with relevant Commonwealth agencies including the Department of Prime Minister and Cabinet (including the Deregulation Unit), the Attorney General’s Department, the Department of Finance, the Department of Employment, the Department of the Environment, and the Department of Industry. The mechanism(s) for consultation and frequency of engagement will be discussed between NICNAS and individual departments.
  • ongoing oversight by the Minister for Health and the Assistant Minister for Health.

Prior to introduction of the relevant legislation into Parliament, the legislation will also be subject to agreement by relevant Ministers and by the Prime Minister. This ensures that the implementation detail (as reflected in the legislation) aligns with the broad direction and expectations set by Government.

Once introduced into Parliament, the Parliament will review the legislation and determine whether it achieves the appropriate balance between reducing costs and regulatory burden to industry, and continuing to maintain adequate safeguards for human health and the environment.

Part G—Proposed changes to the NICNAS legislation

As noted above, implementation of the reforms will require changes to the NICNAS legislation.

It is proposed that the legislation will be outcomes-focused and principles-based. One of the current problems with the ICNA Act and ICNA Regulations is that they are overly complex, prescriptive and restrictive. This creates inefficiency and is burdensome for NICNAS and for regulated entities. Further, it does not provide the necessary flexibility to enable NICNAS to undertake assessments that best manage risk, or to take compliance action that is proportionate to the non-compliance.

It is proposed that the legislation will be drafted such that:

  • a broad principles-based framework will be described in the Act; and
  • much of the detail will be in delegated legislation (Regulations) and supporting materials.

Where appropriate, the legislation will be aligned with that of trusted international regulators. For example, definitions from the United States of America, Canada or Europe will be used where possible, rather than a NICNAS-specific definition.

As discussed below, it is proposed that the key implementation matters will be detailed in Consultation Papers, to be progressively released from October 2015.

Part H—Proposed changes to the NICNAS IT system

The NICNAS reform programme includes a new IT system. The IT changes are intended to:

  • streamline notification and assessment processes for introducers. For example, the system will enable companies to directly enter data, for supporting data to be uploaded and stored, and will avoid the need for hard copy documents to be provided to NICNAS;
  • include an integrated payments system (invoice/payment/receipt) which will enable introducers to make payments online;
  • create both internal and external portals for users to access the system. This will, for example, enable introducers to track their applications (for assessment, variation of certificates etc) and overseas companies to directly input confidential data to NICNAS;
  • provide a platform to better enable targeted and risk-based assessments and compliance activity;
  • enhance NICNAS’s assessment and reporting capacity;
  • reduce unnecessary administrative burden for industry and for NICNAS;
  • integrate with other systems such as the Department of Health IT system, the NICNAS website (for upload of AICS information and assessment reports), and chemical modelling applications.

Further information about the IT changes will be included in each of the proposed Consultation Papers.

Part I—Proposed changes to guidance materials, application forms, standard operating procedures and other supporting materials

As a consequence of the changes to the legislation and the IT systems, new guidance materials, forms, and supporting materials (for use by NICNAS staff, for regulated entities and for other stakeholders) will be required. This includes, for example:

  • notification templates;
  • application forms for assessments of new chemicals and variations to assessment certificates;
  • user manuals; and
  • internal standard operating procedures.

All supporting documents will:

  • be integrated into a clear hierarchy of documents;
  • be consistent with the legislation;
  • minimise unnecessary red-tape;
  • be reader-friendly; and
  • utilise electronic lodgement where possible.

Information proposed to be included in supporting materials (rather than in the Act or Regulations) will be identified through the Consultation Papers.

Drafts of relevant supporting material will also be released for public consultation on an ongoing basis, and in line with progressive implementation dates for the reforms.

Part J—Consultation on the NICNAS reforms

In order to develop and operationalise the broad policy set by Government, NICNAS proposes to consult widely and meaningfully. NICNAS is committed to upholding the Council of Australian Governments (COAG) principles for best practice consultation which describe governments’ expectations with respect to continuity, targeting, timeliness, accessibility, transparency, consistency, flexibility, evaluation and review.

It is proposed that consultation on the NICNAS reforms will occur through:

  • the new NICNAS Strategic Consultative Committee;
  • public release of detailed Consultation Papers; and
  • public workshops (to be advertised on the NICNAS website).
Strategic Consultative Committee

In July 2015, the Assistant Minister for Health agreed to the establishment of a Strategic Consultative Committee to advise the Director of NICNAS on strategies for improving the efficiency and effectiveness of NICNAS operations in achieving the objects of the ICNA Act.

The role of the Strategic Consultative Committee is to:

  • facilitate active engagement and input of relevant sectors affected by the functions of the Scheme;
  • provide strategic advice on mechanisms to more efficiently and effectively achieve the objects of the Act; and
  • enable transparent on-going communication and information sharing between different stakeholder groups engaging with NICNAS.

The Strategic Consultative Committee is comprised of:

  • the Director of NICNAS as Chair;
  • four members nominated by national industry organisations approved by the Minister. Approved organisations are:
    • Accord Australasia (Accord)
    • the Australian Chamber of Commerce and Industry (ACCI)
    • the Australian Paint Manufacturers Federation Inc. (APMF)
    • the Plastics and Chemicals Industry Association (PACIA)
  • four members nominated by national community-based organisations approved by the Minister. Community organisations are:
    • the Public Health Association of Australia Inc. (PHAA)
    • the Australian Council of Trade Unions (ACTU)
    • the National Toxics Network Inc. (NTN)
    • vacant[2]

It is proposed that:

  • the advice of the Consultative Committee will be sought on key implementation issues relating to the reforms;
  • the Consultative Committee will be provided with drafts of Consultation Papers for their consideration, comment, and expert input prior to the papers being publicly released; and
  • the Consultative Committee will be briefed on the outcomes of public consultation and further advice sought on unresolved issues.

Where appropriate, ad hoc working groups will be established to explore particular issues in detail.

Consultation Papers

NICNAS proposes to publicly release a series of Consultation Papers outlining the proposed approach to key aspects of the reforms. It is anticipated that at least four Consultation Papers will be released prior to finalisation of the legislation for introduction into Parliament in the Spring sitting of 2016 (subject to agreement by Government).

It is proposed that Consultation Papers will be released (for a minimum four-week consultation period and, where possible, six weeks) in:

  • October 2015;
  • January 2016;
  • March 2016; and
  • May 2016.

It is proposed that each Consultation Paper will deal with a range of issues relating to the reforms. For example, it is expected that Consultation Paper 1 (October 2015) will describe:

  • the criteria proposed to distinguish new chemicals in classes 1, 2 and 3;
    • NICNAS is aware that this issue is of keen interest to stakeholders. It is proposed that the Consultation Paper will detail the proposed criteria (as described in Option 3 of the Regulation Impact Statement), and seek stakeholder comments regarding how the criteria might be improved, without losing the policy intent agreed by Government. Subsequent Consultation Papers will address the detailed data requirements for each class.
  • For Class 2 chemicals, the proposed notification requirements and process (noting that the data required to support categorisations of a chemical as Class 2 will be discussed in subsequent Discussion Papers);
  • for Class 3 chemicals, detailed information about the assessment process, including:
    • the proposed application requirements (noting that the detailed data requirements will be dealt with in subsequent Consultation Papers);
    • the proposed streamlined process for assessment;
    • the assessment outcomes (including the limits on conditions that may be imposed by NICNAS);
    • opportunities for reconsideration and review;
    • the information that will be published in the summary report;
  • a description of the circumstances in which NICNAS may initiate an assessment and call for information from introducers;
  • the interactions between NICNAS and other regulators, including State and Territory risk managers;
  • the interactions between the NICNAS reforms and other related reforms, such as those relating to the environmental risk management of industrial chemicals; and
  • an overview of how it is proposed that NICNAS use international risk assessment materials.

As part of each Consultation Paper, NICNAS will:

  • detail the matters on which it is continuing to work;
  • identify the matters proposed to be addressed in the subsequent Consultation Paper; and
  • seek stakeholder feedback on the sequencing of the implementation of reforms (including advice on which reforms could potentially commence in advance of others).

NICNAS will also seek advice from the Strategic Consultative Committee on the matters of most concern to stakeholders that should be prioritised for inclusion in upcoming Consultation Papers.

Public workshops

Subject to interest, it is proposed that regular public workshops will be held in Sydney and Melbourne (and other cities, if requested). It is proposed that workshops will be held two weeks after the release of each Consultation Paper. This will provide an opportunity for NICNAS to explain the proposals and to answer any questions stakeholders may have.

Registering interest

Stakeholders are invited to register their interest in receiving updates about the reforms and receiving notifications about the release of Consultation Papers.

Stakeholders may also provide advice or comments to NICNAS at any time by email to: NICNAS.reforms@nicnas.gov.au

Part K—Summary of key milestones and dates

NICNAS is committed to ensuring predictable timeframes, wherever possible. This is important for stakeholders (so that they can ensure adequate resources to respond to Consultation Papers), for Government (so that it can be assured that implementation timeframes will be met), and for NICNAS (to ensure efficient use of its resources).

Following is a summary of the key dates and milestones. Should these change, the updated timeframes will be included on the NICNAS website and also notified to stakeholders who have registered their interest with NICNAS. The following table does not include timeframes relating to the proposed IT changes. Some IT changes will be dependent on legislative changes first being made, and others will be progressed in advance of the legislative changes. Updates regarding progress with the IT changes will be included in each of the Consultation Papers.

Key Dates

Milestones

September 2015

  • Release of Implementation Plan

October 2015

  • Release of Consultation Paper 1 for 6 week consultation
  • Workshops in Sydney and Melbourne to discuss the Consultation Paper[3]
January 2016
  • Release of Consultation Paper 2 for 6 week consultation
February 2016
  • Workshops in Sydney and Melbourne to discuss the Consultation Paper
March/April 2016
  • Release of Consultation Paper 3 for 4 week consultation
  • Workshops in Sydney and Melbourne to discuss the Consultation Paper
May/June 2016
(Note: deferred due to Federal Election, released October 2016)
  • Release of Consultation Paper 4 for 4 week consultation period
  • Workshops in Sydney and Melbourne to discuss the Consultation Paper
Spring sittings 2016 (from August 2016)
(Note: deferred due to Federal Election) 
  • Subject to agreement by Government, introduction of Bill to Parliament
  • Subject to an agreement by Parliament, passage of Bill in Spring/Autumn sittings
February - July 2017
(Note: deferred, awaiting passage of legislation) 
  • Public consultation on draft Regulations
  • Making of Regulations
August-December 2017
  • Development of, and consultation on, all supporting materials (eg Guidelines, notification and assessment application forms, standard operating procedures etc)
January 2018
  • Public release of supporting materials
January-May 2018
  • NICNAS staff training and workshops/training for regulated entities
July 2018
  • Full implementation date (noting that reforms will be progressively implemented from 2016). Discussion Papers will identify reforms that may be commenced earlier, and seek stakeholder input.

Attachment A—Further detail about proposed NICNAS reforms

In summary, Government has agreed the following.

  • There will be three classes of new chemicals based on risk:
    • Class 1: Very Low Risk Chemicals
    • Class 2: Low Risk Chemicals
    • Class 3: Medium-High Risk Chemicals
  • Criteria will be developed for classifying chemicals into the classes. The criteria will:
    • be based on indicative risk (intrinsic hazard and anticipated exposure);
    • be broadly based on the criteria described for Option 3 in the Regulation Impact Statement; and
    • will be subject to further consultation with stakeholders which may give rise to adjustments to the broad criteria described in the Regulation Impact Statement.
  • For Class 1 chemicals there will be automatic market entry and post-market compliance checks by NICNAS.
  • For Class 2 chemicals, introducers will be expected to self-assess against criteria set by NICNAS, notify NICNAS of proposed introductions (pre-market notification) and complete an annual compliance declaration. NICNAS will undertake a post-market audit/assessment of approximately 10% of the chemicals introduced under Class 2.

-        The use of international assessments will be included in this option through the inclusion in Class 2 of new chemicals based on the assessment by a comparable agency where the use of the chemical is the same and the volume is the same as or lower than that assessed overseas, provided the introducer complies with any conditions recommended by the overseas regulator.

-        Introducers will also be able to use international information (including industry self-assessed classification—e.g. REACH, CLP databases) to determine the chemical class without the need for the introducer to hold the original study data.

  • For Class 3 chemicals, pre-market assessment will be undertaken by NICNAS, a summary of the assessment will be published on the NICNAS website and targeted post-market audit/assessment by NICNAS will also occur. The pre-market assessment process will be streamlined and will better utilise international information, where appropriate.
  • An assessment of a Class 3 chemical may give rise to a number of different regulatory outcomes:

-        issuance of an assessment certificate with particulars of use (parameters of NICNAS assessment):

  • with or without recommendations to risk management agencies; and
  • with or without conditions of use (conditions of use may only be imposed in very limited circumstances and where existing risk managers cannot manage the risk. Conditions of use will be limited to annual volume, sites of use, or time); and

-        refusal of certificate—when conditions of use or existing risk management frameworks cannot manage risk.

  • Chemicals will continue to be able to be entered on AICS either following the expiration of an assessment certificate or on the request of an applicant for assessment/certificate holder. NICNAS will also have the capacity to refuse entry on AICS where any risks cannot be managed by other risk managers or through conditions of use (volume, site or time).
  • NICNAS will continue to assess Class 3 industrial chemicals for use in cosmetics. However, the Australian Competition and Consumer Commission (ACCC) will become responsible for the administration of cosmetics standards.
  • NICNAS may assess or re-assess any chemical, on its own initiative. The existing PEC process will be replaced by a streamlined process. A NICNAS initiated assessment may result in no changes, recommendations to risk managers, changes to particulars of use, changes to conditions of use, withdrawal of an assessment certificate, or removal of the chemical from AICS.
  • NICNAS will have access to more contemporary tools to enable it to monitor compliance and take action in the event of non-compliance. Specifically, it is proposed that:
    • wherever possible, offences and compliance tools will be aligned with like regulators;
    • NICNAS will be able to issue improvement notices and prohibition notices in response to non-compliance;
    • NICNAS will be able to require introducers to keep records and produce documents where necessary; and
    • NICNAS will be able to revoke assessment certificates if necessary (for example, based on non-compliance or risk) before a chemical is listed on AICS.
  • 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.
  • A number of technical amendments to address anomalies or uncertainties in the legislation.
  • The reforms will be rolled out progressively between 1 September 2016 and 1 September 2018.
  • The cost of the reforms will be recovered from the regulated industry. 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 IT systems).

Please note that the above is a summary of key elements of the Government’s decision. Further information is available in the Regulatory Impact Statement.


[1] Productivity Commission Research Report: Chemicals & Plastics Regulation, July 2008.

[2] NICNAS is seeking expressions of interest to fill this vacancy.

[3] Workshops may be held in other locations, should there be sufficient stakeholder interest.

Last update 29 July 2018