Cutting red tape in agriculture: Rob Forlong, Environmental Protection Authority New Zealand

Thanks very much, Karen,
and thanks to ABARES for organising the conference
and to all the people behind the scenes who
have made it work so well. The idea of cutting
red tape in agriculture is really important, and
we need to free businesses from the unnecessary bureaucracy
and cost that it creates. But it’s also
important that we don’t get so focused on
cutting away the red tape that we remove
necessary safeguards. It’s a balance that we strive
to get right in New Zealand, and I’ll be the first to
tell you that it’s hard work. I hope that sharing
some of our experience will help you here in Australia. Firstly, I was just going
to give a quick overview of my organisation. But in the interest
of time, I’ll miss out our regulation of
the exclusive economic zone. But I will make a point
that we don’t actually prepare the regulation. We’re in charge of
implementing it. So this is more about
what you do once you’ve got the regulation in place. And of course, some of
it’s great and some of it’s not so great. We also administer the
emissions trading scheme that’s been mentioned. We manage what we call proposals
of national significance, which are large
infrastructure projects. They have a nine-month
time frame to be approved, and they’re too big
for local councils. Obviously, it’s a big job to
get this done in nine months. And we’re just finishing
one for an irrigation dam, so that affects
agriculture and things. What I’m going to
touch upon most is we’re the responsible
agency for regulating hazardous substances
in New Zealand, and that ranges from cosmetics
to explosives, pesticides, fit meds, all those
sorts of things. We also regulate
new organisms, which can be new crops, new animals as
well, and genetic modification. So we’ve got teams of
highly-experienced scientific researchers who
assist applications for these sorts of things. And theoretically at
least anyway we’ve got a role in assisting
activities in Antarctica. But we haven’t done that yet, so
I’m not sure that we ever will. Our work’s complex,
and I often liken us to a referee in a sports match. And like that referee,
we get many critics. Part of our reality is that
when we decline an application, we’re a bunch of out
of control greenies. And when we approve
one, we get called the environmental
pollution authority. But I’m pretty
proud of what we do. We’ve got pretty
efficient processes. Our decisions are sound, and
we do usually make a difference in the areas we regulate. Across the wide
scope of areas we regulate there’s one uniting
feature, and that’s risk. And I really enjoyed the
presentations yesterday on that. It’s on our minds when we
look at something about whether we’re going
to allow a microbe in to improve New Zealand’s
pastures or our application rates for agricultural sprays
and that sort of thing. I know that many of
you in the audience will have been involved
in exciting business ventures like these,
and you’ve probably had experience
talking to regulators and sharing your
plans with them. I really enjoy
people’s enthusiasm when they discuss their
business proposals, often with some really cool and
compelling presentations that outline the benefits. But I can tell you my
mind always comes back to this issue of risks. We are interested in the
benefits of a proposal, but we’re also really
interested in how the risk will be managed. It’s how our sad little
regulatory brains work. The other point I want to make
about our sad little regulatory brains is we always look
beyond the PowerPoint. What a company actually does
on the ground to reduce risk is far more important to me
than the fancy documentation or what they talk about doing. And I know that’s the same as
for all dedicated regulators. We’re all looking past
the shiny, polished side of the ball to see
what’s on the other side. Of course, as regulators we
see more than our share of bad practise. And I’d love to have
a bunch of companies like Terry’s just to
regulate, but that’s not what they all are. And as a result,
it’s tempting for us to be overly conservative and
try and eliminate all risk, even though we know that it’s
not practical or even possible. I think as a regulator and as
a society we have to realise the limits of regulation and
be very clear about that. Nothing, including regulation,
can ever eliminate all risk. And if we completely tie
people up in red tape, there’s still going to
be those who break out and go beyond the rules. So as a society, the
role of regulation has to be acknowledged
and confined to reducing risk and never
eliminating it entirely. Because no matter how much
regulation is in place, something can always go wrong. The reality is that
when things do go wrong, the regulator gets to share
the blame with the perpetrator. It gets called regulatory
failure, even when the rules have clearly been broken. In New Zealand, regulators have
shared the blame for things as diverse as leaky buildings
and finance company collapses. It’s interesting,
because no one ever expects the police to catch
every criminal before they commit a crime. But we often expect
the regulatory system to prevent things
from going wrong within our environmental
and safety systems, and I’m thinking of
frozen berries here. Regulation does two things. Firstly, it reduces,
but never eliminates, the chance of
something going wrong. And secondly, it
ensures there are consequences for rule breakers. I always worry when the
latest piece of regulation goes up before parliament
and someone claims it’ll fix a problem. It never will fix it by itself. So what can our
experience offer Australia as you act to cut some
of the red tape involved in regulating agriculture? I’d really like to
be able to offer you exactly this, a silver bullet. Surely there should be some
standard, fail-safe way of regulating that makes the
public feel engaged, allows businesses to turn profits, and
vanquishes all possible risks. But of course, there is none. The tools we use are
far less whiz bang. Looking at the shoes
here, as regulators we need to get out and see
what’s happening on the ground so that we can see the reality
of the regulated parties and particularly how our
regulation affects their costs and practises. We also need to sit down with
people and listen to them, and we also need to explain
what they need to do and why. Answer their questions so that
they know what’s important. Looking at the pen here,
we need to truly take note of what people are saying. Given that a regulator exerts
some considerable power over a regulated party, it
can take some bravery for them to tell us we’ve got it wrong. However, I’ve found
that sometimes when people tell us we’ve got it
wrong, they’re exactly right. And looking at the phone here,
we need to keep in contact and maintain that
relationship, all being available to
accept feedback. We need to maintain
that relationship not only with regulated parties
but with interest groups in the community
while maintaining our own levels of impartiality. So while regulators
have laws to back us up, we ultimately regulate with
the permission of the community and the regulated parties. And we need to act
in a way that allows those people and businesses
to build trust in us. At the EPA, we try and do this
by being predictable, providing strong customer service, and
by following through with what we say we’re going to do. It doesn’t always
make people like us, but it does help to build
some mutual trust and respect. In addition, we need to keep
up with the developments all around the world so that we can
make sure that what we’re doing is best practise. It’s through employing these
sorts of tools that I’ve learnt that cutting red tape is a
really complex proposition. And there are many reasons
for that, some of which you’ve already heard today. I’d just like to address
some of the issues that we faced when we moved to
outcome-based regulation, which is a fashionable
way– and you’ve heard Terry talk about it– of
reducing the regulatory burden. But like everything,
it’s not perfect. Essentially, it seeks to
make rules less prescriptive, and instead regulated
parties have a choice to how they
achieve the end result. The speed limit is a
classic regulatory tool used to reduce the road toll. We all know it’s
designed to save lives, but it still frustrates us. Sometimes at 2
o’clock in the morning on a dead straight road, there’s
no reason not to go faster. And then in bad conditions,
the speed limit’s equally unsuitable. It’s a classic example of
prescriptive regulation and takes no account of driver
skill, the safety of the car, and often the state of the road. If the goal is simply
to have drivers keep to a safe speed
for the conditions, why not move to an
outcome-based regulation and replace it with
a rule like this? We’d probably all
consider ourselves to be good judges of a safe speed. In fact, I’ve read that
over 80% of drivers reckon that they’re
better than average. Certainly, we have no incentive
to hurt other road users. But what happens when
you’re in a hurry? When’ve you budgeted enough
time to get there in the dry, but it starts to hose down? Safe becomes a shaky ideal. So here, we see one problem. Our motivation to
use good judgement, and in fact our good judgement
itself, is not always reliable. I don’t want to bring up a
sore point about pavlova, so I’m not going
to talk about that. But what I do want to do is
illustrate another difficulty in looking at
outcome-based regulation. For an experienced
baker, a pavlova is pretty straightforward. The ingredients are simple. And if you follow the
steps carefully and avoid humid weather, you should
end up with something that looks vaguely like this. But for a kitchen novice like
me, it’s an absolute nightmare. The chances of ending up with a
perfect pav are virtually nil, and I’d end up smearing
cream on something that resembled a cow pat. It’s similar when we look
at our outcome-based system of regulating hazardous
substances like pesticides. Larger businesses and
innovative businesses either have their own
internal expertise or they can afford to
buy it, so they usually have few problems meeting
the limits and targets. They actually don’t need
to be told what to do. It’s the small and
inexperienced outfits that tend to run into trouble. Often they don’t have the
expertise, time, and money to devise their own strategies,
for example, to use chemicals safely. New Zealand’s farmers,
like Australia’s probably, are renowned as doers. Most of them would much
rather be applying fertiliser than preparing a detailed
chemical management strategy. So expecting them to do
so is a bit like showing your average person a picture
of a pav and then saying, off you go. Go to it. The least we can do
is give them a recipe and show them a tip or
two about beating eggs. So the point I want to
make here is sometimes the small businesses,
they’re actually more burdened by
outcome-based regulation if you cut that
red tape too far. It sets them up to fail. If you’re going to go with
outcome-based regulation, you also need some
simple, clear guidelines to make it easy for those
businesses to remain compliant. I’ll move on from pavlova now,
because obviously hazardous substances are a little more
complex than making dessert. For one, we’re dealing
with thousands of chemicals with different properties
and levels of risks. New formulations
come in every week. And that myriad of
products are being used by hundreds of thousands of
people in different workplaces, and all of those people
have different levels of skills and expertise. And yet, on the
other hand, we need to keep our rules simple
enough to be workable. So obviously, a “one size
fits all” isn’t going to work. Neither is one rule
for every situation. So it’s important that we
get our balance points right. In New Zealand, we’ve found
some good opportunities to reduce red tape in the
hazardous substances sector. And just by way of an example,
we had a situation where two organisations were both working
on issuing separate approvals for new veterinary medicines. We were doing it from an
environmental perspective, and a section of our Ministry
of Primary Industries was doing it from
a food safety line. That meant obviously that
importers and manufacturers had to go through the
same red type twice. We started to reduce this by the
two agencies sharing their data to reduce compliance costs. But in the end, basically
we got sick of it. And we decided that the
best option was for the EPA to remove ourselves from
active regulation in this area, knowing that the Ministry
of Primary Industries was actually covering
off what they needed to and that those parties
being regulated would appreciate
both the cost savings and having one less
layer of red tape. We also have other
systems, two tools that we call group
standards and what we call rapid similar
approvals for regulating similar products. This means that importers
and manufacturers with a product similar to
something already on the market can avoid some of
the red tape by going through an abbreviated process. Where approvals are
required, the cost is relatively inexpensive and
the time frames sit in statute. That means that
regulated parties know when they can
expect their approval and can plan accordingly. The issue for us
is we always get a hugely busy
period for ag comms in winter, ready for
the spring launch. So it all comes down to
striking the right balance, and that’s what I’ve
tried to explain to you here this morning. To summarise, we need to
keep totally focused on risk. It’s central to
everything we do. We need to have open
two-way communication between the regulator and
those being regulated. And as a regulator, we’ve got
to provide strong customer service, manage our costs, and
be clear about our intentions and follow through. And finally– this is
probably the hardest task of all– we need to keep the
system as simple as we can and as flexible as we can. So thanks for asking us to
share our experiences with you. I just want to acknowledge
here the benefit that we in New Zealand get
from the Australian regulators. I see APVMA have a stall out
there, and NICNAS in this area and some of our other areas,
NOPSEMA and other regulators, because we’ve got a great
tradition of working together. So I look forward
to your questions. Thanks very much.

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