Plastics and Chemicals Industries Association (PACIA)

Submitted: 17 December 2015

Introduction

1. The Plastics and Chemicals Industries Association (PACIA) welcomes the opportunity to provide this submission on the consultation paper.

2. The PACIA is the peak national body representing the chemistry industry. PACIA members include chemicals manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, plastics fabricators and compounders, recyclers, and service providers to the sector.

3. The Australian chemicals and plastics industry is the second largest manufacturing sector in Australia. Our industry employs more than 64,000 people, with every job also creating five more in related supply chains. The industry contributes $11.6 billion to gross domestic product, and supplies inputs to 112 of Australia’s 114 industries.

4. Australia’s entire society – businesses, consumers and governments – along with its natural environment receive enormous benefits associated with the safe, responsible and sustainable use of industrial chemicals. By supplying 112 of 114 Australian industry sectors, chemistry assists Australia to respond and address global challenges of protecting the environment, ensuring a safe and sustainable food supply and improving standards of living in Australia and elsewhere.

5. PACIA members are key participants in the NICNAS and NICNAS reform remains a priority for PACIA  and its members. Australia is a small economy by global standards and the current approach to industrial chemical assessment under the NICNAS imposes considerable economic costs on the Australian economy by imposing burdens that prevent Australian industries accessing innovative and safer chemistry.

6. Meaningful NICNAS reform will reduce costs and allow Australian industries to access the latest chemistry at the same time as their overseas competitors. These outcomes are essential if Australia is to be competitive in the evolving global economy which is now characterised by increasingly liberalised trade from developments like the Transpacific Partnership (TPP), China Australian Free Trade Agreement ChAFTA, and other similar agreements across the globe. These outcomes are also necessary for Australia to take full advantage of the Government’s recently announced Innovation Agenda. The NICNAS cannot be allowed to operate as a handbrake on Australian innovation and competitiveness – Australia deserves better.

7. Turning to the consultation paper, PACIA would make the following comments:

Framework and regulatory approach to chemicals

8. With respect to chemical substances that are not on the Australian Inventory of Chemical Substances (AICS), the consultation paper outlines the proposed introduction of 3 classes of chemicals. These classes will be differentiated on the basis of risk and the regulatory response and requirements applicable to each class will also vary. The following provides a basic summary of the regulatory requirements in respect of each of the 3 classes:

  • Class 1 – “very low risk chemicals” - will be eligible for introduction without prior notification to NICNAS. There will also be no requirement to provide annual returns in respect of Class 1 chemicals.
  • Class 2 – “low risk chemicals” - will be subject to self-assessment and general pre-entry notification requirements and an annual declaration of the volume imported or manufactured.
  • Class 3 – “medium-high risk chemicals - will undergo full regulatory assessment by NICNAS.

9. PACIA supports the general framework applicable to each of the 3 classes that are proposed in the consultation paper.

Determination of the chemical class (the classification criteria)

10. The classification criteria proposed in the consultation paper and as explained at the workshops held in Sydney and Melbourne on 19 and 24 November 2015 respectively (the workshops) are a major concern to PACIA. In essence, under the proposed classification criteria, the benefits afforded Class 1 chemicals will be limited to chemicals transshipped through Australia and chemicals used in extremely small scale R&D activities. If unchanged, the classification criteria will result in the majority of chemicals falling to Class 2. This outcome would actually increase regulatory burden and complexity over the current scheme. Given that the aim of NICNAS reform is to reduce the regulatory burden and complexity, the classification criteria will require substantial revision.

11. PACIA and other industry stakeholders have previously proposed classification criteria that we consider appropriate. These classification criteria strike an appropriate balance between risk and regulatory burden and reflect volume thresholds that are practicable in the context of industrial chemical use (see Attachment “A”).

12. PACIA is also concerned that the proposed framework and classification criteria when combined with the shift to a post-introduction audit regime will result in introducers opting for Class 3 assessments by NICNAS. Introducers may prefer Class 3 assessments to gain certainty regarding the treatment of a particular chemical and to avoid the risks associated with self-assessment and the post-introduction audit regime. If this occurs, the benefits of the reforms will be lost and the costs and resources required to administer the NICNAS will be much greater than those envisaged by the Government and industry.

Limited use of international assessments

13. In its Industry Innovation and Competitiveness Agenda (IISA) announced in October 2014 the Commonwealth Government committed to the principle “that if a system, service or product has been approved under a trusted international standard or risk assessment, then Australian regulators should not impose any additional requirements for approval in Australia, unless there is a good and demonstrable reason to do so.” The Government recommitted to this principle in its National Innovation and Science Agenda (NISA) announced earlier this month.

14. The consultation paper proposes limited use of international assessments, including a complete rejection of the use of assessments carried out by the US EPA. The proposed approach is completely at odds with the Government’s announced policy. Greater use of assessments undertaken by trusted overseas regulatory agencies is a critical element of the NICNAS reforms. To be truly effective, the reforms must ensure that Australian industries have access to the latest chemistry at the same time as their overseas competitors on the basis of the assessments carried out by trusted overseas regulators.

15. Recognising the importance of the access to the latest chemistry to Australian innovation, competitiveness and economic structural transformation, PACIA believes that the development of the mechanisms to make effective use of overseas regulatory assessments should be a principle focus of future work on the NICNAS reforms. PACIA is committed to working with NICNAS to develop these mechanisms.

Globally harmonised approaches to health and environmental assessment

16. The proposed approaches to health and environmental assessment were extolled at the workshops as being uniquely Australian. PACIA is firmly of the view that Australian approaches to health and environment assessment must be consistent with globally established practices employed by overseas regulatory agencies. Australia simply cannot afford to “go-it-alone” on these important facets of chemical assessment – the economic cost is too great.

17. A uniquely Australian approach to assessments also increases administrative costs for industry participants. For example, the adoption of approaches and practices that differ from those applying overseas can require the costly adaptation of business ERP systems to meet Australian requirements.

Proposals that disadvantage Australian Manufacturers

18. It was clear, particularly at the Melbourne workshop, that the proposed classification criteria would have a significant negative impact on Australian manufacturing. Australian introducers of certain raw materials will be subject to the full regulatory burden of the NICNAS on raw materials used to manufacture end-use products in Australia notwithstanding that the end-use products manufactured and sold on the Australian market contain concentrations of those raw materials below the proposed thresholds. However, importers of similar competing end-use products manufactured overseas will not be subject to the NICNAS.

19. The NICNAS should treat locally manufactured and imported products in a consistent manner. The focus of the NICNAS should be on the end-use products dispatched from manufacturing sites in Australia for general consumption. Workplace safety laws and regulations operate to control the use of chemicals used in manufacturing sites across Australia. In fact, Australian workplace safety standards and risk management approaches are world’s best practice. Australian manufacturers are required to assess the potential risks associated with industrial chemical use and ensure safe management of chemicals within the workplace.

20. The NICNAS cannot be allowed to disadvantage Australian manufacturers who make an important contribution to the Australian economy, providing jobs and opportunities for Australian workers.

NICNAS should not be a risk manager

21. The consultation paper proposes a role for NICNAS as a risk manager. PACIA is unaware of any gaps in the current national risk management framework that would warrant NICNAS assuming such responsibilities. PACIA, therefore, does not support this proposal.

Protection of Confidential Business Information (CBI) requirements not transparent

22. The ability to protect CBI from disclosure is key element in fostering innovation within Australia. Australia constitutes 0.8%1 of global chemical sales and its low market share makes it susceptible to “bypass” for new chemistries, especially where rules are ambiguous and not balanced with appropriate CBI protection.

23. The decision process for commercially sensitive information must provide confidence to applicants that decisions to protect sensitive commercial information will be conducted fairly, transparently and accountably. Notifiers will not risk their global competiveness and intellectual property in countries which have low market share where there is uncertainty about the treatment and protection of their CBI.

24. It is imperative that NICNAS foster a practice for CBI that supports the reforms and aids the introduction of new chemistries in Australia.

Lack of transparency on how third party data should be handled in self-assessments and audits

25. Substances may contain third party confidential chemistry in products marketed in Australia. It would be beneficial if a guidance document is produced with the new framework on how businesses should maintain records and steward this process where third party CBI is involved to aid transparency in the process.

AICS – Ability to update or amend

26. PACIA reiterates industry’s previous comments regarding the ability to update or amend AICS. Any legislative change to the NICNAS should make provision for notifiers to remove a chemical from the AICS and introduce new equivalent CAS numbers to existing substances.

27. Allowing amendments to AICS would overcome the rigidity associated with the current framework and make AICS dynamic and reactive to changes in market conditions and changes in marketing strategies employed by businesses.

Internal Appeals Process

28. It is proposed that where there are disputed decisions, a notifier can seek an internal review of a decision by NICNAS or seek a review by the Administrative Appeals Tribunal (AAT). PACIA supports the introduction a low burden internal merits review process into the framework to ensure that there is a mechanism to consider and address any unfair or inappropriate outcomes arising from decisions which also provides an alternative to the formal AAT process. However, internal review processes need to be robust, incorporating adequate separation, to ensure impartiality. Consideration should be given to establishing the internal review process as an independent function.

Transitional times are deficient

29. Many PACIA members operate in a global marketplace. Products and chemicals introduced in Australia may be underpinned and supported by other third party chemical(s). Therefore, there will be significant challenges for industry to manage the framework if transition times are short. The changes will not just impact local introducers, but also the global supply chain as chemicals are traded and supported globally.

30. An extended transitional time, beyond the 6 months, would allow business to better manage and engage the new requirements with their global supply chains to support a more seamless roll-over to the new framework. There will be burden for industry to review a significant number of products in commerce that are currently introduced under an exemption/permit/limited assessment and reassign these under the new risk matrix framework. An extension timeframe would also ensure that businesses that operate complex product lines are not disadvantaged and it would minimise the potential for temporary product deselection in the marketplace.

31. Further to the above, to ensure business can meet the obligations of the new requirements and regulators ability to implement the changes efficiently, documents supporting the new framework need to be made available well in advance, which ensures sufficient time for familiarisation and implementation.

Extension of assessment timeframes

32. PACIA agrees that the current approach to timeframes for assessments is complicated, overly prescriptive and can result in significant delays. PACIA welcomes the certainty and the transparency of the proposed assessment timeframes, however we consider that 120 days with an additional 28 day (risk manager referral) option to be too long. Furthermore, the proposed automated compliance check prior to the 120 days potentially adds additional delays which could mean that the assessment timeframe may take longer than 148 days.

33. The timeframes proposed are not considered best-practice and are longer than those of other comparable agencies, such as Canada which has assessment timeframes from 60 and 75 days for polymers and chemicals respectively.

34. PACIA considers that the NICNAS framework has been operating for a significant amount of time and as a system matures, the time in stewarding the review should reduce due to a number of contributing factors, these can include; maturity of systems and people, technology, improved processing through practical experience and improved submissions from industry due to better understanding of the regulator’s expectations.

35. Therefore, PACIA encourages NICNAS to review any additional efficiencies that can be adopted in assessment reviews to support business’ need for a reduced timeframe.

Annual declaration frequency is too frequent

36. The proposed annual declaration for Class 2 chemicals is burdensome and unnecessary (particularly where 3rd party data is involved). PACIA would propose requiring a volume declaration in the first year of introduction. A declaration in subsequent years should only be required where there is a significant change from what was notified in the first annual declaration.

The sample % of compliance audits is excessive

37. The consultation paper proposes and audit regime targeting 10% of chemicals introduced under class 2 each year. In the EU, ECHA targets 5% in its compliance program. PACIA considers the 10% target proposed by NICNAS too high, unnecessary and too burdensome on industry and NICNAS.

Absence of data is deemed positive data

38 .Categorisation of chemicals into classes will be self-determined by Industry. It should be noted, that industry may not have data on all GHS endpoints (i.e. PLCs) in circumstances. The draft criteria notes, that for any hazard, no matter its band, the absence of data to satisfy the required criteria is deemed to be positive data for the purpose of allocation of a chemical to a Class.

39. PACIA does not support this approach and considers that chemicals should not be precluded from entering a hazard class if data is not available. Expert judgement should be allowed to justify the absence of data. The proposal imparts unjustified increase in regulatory burden.

Scope and applicability of excluded substances from the framework lacks transparency

40. The consultation paper fails to address the boundary of what chemicals are excluded from the framework.

There are a number of exclusions introduced under the current framework and these include: non- industrial chemicals, impurities and by-products with no commercial significance, hydrates, articles, etc. We consider that the current exclusions needs to be maintained as the minimum, otherwise significant regulatory burden and cost would be stewarded on industry and NICNAS. This could lead to significant trade-impacts and diminish the ability to deliver a $23M saving annually to industry.

Polymers of Low Concern

41. Polymers are divided into two groups: polymer of low concern (PLC) and non-PLCs. The OECD2 has defined polymers of low concern as those deemed to have insignificant environmental and human health impacts. Therefore PLCs should have reduced regulatory requirements. The rationale behind this is that polymers with high molecular weight are less likely to cross biological membranes and cause harm.

42.Under the proposed criteria, most PLCs will be introduced under Class 2, unless they can satisfy the very low exposure bands (i.e. low volumes). PACIA considers that PLCs should be included in lower risk Hazard Band A, in that they are non-hazardous (minimal risk) and should be regulated under a similar risk to other Class 1 chemicals which are deemed non-hazardous chemicals.

Biodegradable criteria in Hazard Band A, unbalances the risk matrix.

43. PACIA considers that the current risk matrix fails to balance risk appropriately. Hazard Band A introduces biodegradable provisions to establish the very low environmental risk criteria. A chemical that does not readily degrade cannot be considered within the Hazard Band A under the proposed framework. Chemicals are engineered to meet a function and biodegradation might not be desirable feature for its use (e.g. surface coatings). PACIA strongly opposes the proposed position; a chemical that is slow to degrade should not be precluded from a Hazard Band A listing if environmental risk is not a concern.

The risk matrix is not balanced and takes an overly conservative approach

44. The regulatory burden on chemicals is not proportionately distributed within the risk matrix framework. Below is an example of over-burden on a chemical with low risk consequence:

A new R&D product is proposed which will introduce a new chemical with a total volume 120 kg/year, with ‘no direct release to environment’. The new chemical in the product is suspected of having ozone depleting potential and is formulated at 0.007% concentration. Under the risk criteria the product will be considered as a class 3, which will require full assessment. PACIA considers that the risk is low and it places even further burdens on industry from today’s requirements.

45. The proposed risk matrix clearly needs to be further refinement to deliver on the Government’s commitment to reform – where the assessment effort is proportionate to risk. PACIA considers the currently proposed hazard banding overly conservative with respect to some hazard risk endpoints, exposure scenarios and with regard to volume thresholds that are far too low in the context of industrial chemical use. This results in an unbalanced framework.

Conclusion

46. PACIA is committed to working with NICNAS and other industry stakeholders to develop a meaningful and effective package of reforms. The proposed regulatory framework and approaches to regulation provide a good foundation for the reforms. However, significant refinement of the classification criteria and the approach to the use of overseas regulatory assessments are needed to deliver the outcomes envisaged  by industry stakeholders and the Government when the reform process was commenced.

1 PACIA extraction from the latest available statistics released from the International Council of Chemical Associations.

2 OECD REPORT - Data analysis of the identification of correlations between polymer characteristics and potential for health or ecotoxicological concern (2009)

Last update 29 July 2018