Kedgley Sue: International Treaty Examination — Consideration of Report of Health Committee Agreement between the Government of New Zealand and the Government of Australia for the establishment of a Joint Scheme for the Regulation of Therapeutic Products 
Kedgley Sue: International Treaty Examination — Consideration of Report of Health Committee Agreement between the Government of New Zealand and the Government of Australia for the establishment of a Joint Scheme for the Regulation of Therapeutic Products 
[Volume:620;Page:15516] 
SUE KEDGLEY (Green) 
: 
 This international treaty that we are considering today must be one of the most contentious treaties to come before this House. The majority of MPs in this House oppose it the Health Committee opposed it most New Zealanders oppose it and certainly most in the industry oppose it. So how on earth one might ask is it that we would be considering in this House today something that the majority of members of Parliament and of New Zealanders are opposed to? 
Just to recapitulate briefly in October 2000 Cabinet quietly agreed to establish a joint trans-Tasman agency to regulate dietary supplements and pharmaceuticals. Now it agreed to this in secret behind closed doors. It did not consult New Zealanders and it did not consult the industry. The industry thought that Cabinet was busily agreeing on legislation—begun under the previous National Party administration—to set up a New Zealand - based regulatory system. The industry thought that the legislation was well advanced and that Cabinet was happily working on it. Then suddenly to its astonishment the industry discovered that behind its back the Government had agreed to a treaty that will—and it will it does not matter what Steve Chadwick says—be a first in the world where an agency based in one country will have total control to regulate an industry in another country. 
So then Cabinet put out a discussion document and an overwhelming majority opposed it. Then the Green Party collected 30000 signatures opposed to the proposed trans-Tasman treaty. That triggered a Health Committee inquiry as Paul Hutchison has mentioned. Once again the overwhelming majority of submissions were opposed to it. Then the Health Committee itself unanimously agreed to oppose the idea of harmonisation through a trans-Tasman agency and proposed that instead we should seek mutual recognition and strengthened domestic regulation which the industry thought would happen through the legislation I spoke about earlier and that that would be the most appropriate method of governing complementary health-care products in New Zealand. 
Three days before the Health Committee’s unanimous report was to be released we learnt suddenly that the Government was quietly and sneakily signing the treaty behind closed doors. In that case it was quite open I must say. It actually invited a few of the media along. The Government signed the treaty and a couple of days later our unanimous Health Committee report came out opposing what it had done and we had the extraordinary and indeed probably unprecedented in recent times occasion when MPs from all of the Opposition parties joined in a press conference to denounce what the Government had done. 
Why as Paul Hutchison asked is the Government not listening? Why is Steve Chadwick just saying that all we are doing is fearmongering; that all that New Zealanders are opposed to is based on fearmongering? I can assure members that it is not; it is based on rigorous analysis of that treaty through a prolonged Health Committee inquiry and then an examination of the treaty. We have looked at the fine print. The more I look at the fine print the more implacably opposed I am and the Green Party is to that treaty. As part of the treaty examination process the Government had to conduct a national interest analysis of the proposal. Finally it had to make public its regulatory impact and a statement of the likely impact on New Zealand businesses and consumers from joining it. 
Those documents confirmed what we had all predicted. I quote: “There would be significant increases in compliance costs for manufacturers and distributors of complementary medicines especially smaller New Zealand - based companies higher prices for consumers and some brands have been taken off the market and that has led to decreased consumer choice.” That is what the national interest analysis showed. It showed that dietary supplements would be classified and regulated under the same system as medicines and that the new agency would operate basically as an expanded version of the existing Australian therapeutic goods agency. All it would be doing is extending its authority and control to New Zealand. We had been constantly reassured during the Health Committee that it would be quite different. When we looked at and analysed the treaty it was exactly the same apart from what I will mention about some of the governance arrangements. There would be 100 percent cost recovery. Manufacturers would have to obtain product licences for every single product they sold meet good manufacturing practices and so forth as well as 100 percent cost recovery. The major impact would be on small businesses and importers of products from overseas. 
We also had access to the Australian Government’s regulatory impact statement and that was very interesting. It stated that Australian businesses that already had approval in Australia would have “an early competitive advantage over New Zealand firms that have to seek local approval for new products and Australian businesses would benefit financially from having products on the market earlier than New Zealand firms with great potential for enhanced profit.” In other words the Australian businesses sought to benefit enormously by extending their market here getting an early competitive advantage over New Zealand. The Australian regulatory impact statement also acknowledged the likelihood that companies would shift their operations to Australia as a result of the high compliance costs which would reduce the New Zealand Government’s tax take. 
The other point about the agency is that it will be headquartered in Australia and it will have legal personality in Australian domestic law. The treaty states: “To avoid doubt the agency shall not have international legal personality.” It will not be an international organisation. It will be set up under Australian legislation. Basically it will be staffed principally by Australians and will essentially be an extension of the Australian Therapeutic Goods Administration. Most significantly the agency will not only make all of the decisions and regulations about dietary supplements it will also monitor and police all of those industries in New Zealand. We will have the spectre of Australian inspectors coming to New Zealand—Australian police possibly—to enforce and monitor the dietary supplements industry presumably closing down agencies or small shops that they feel do not comply. That is extraordinary. When I asked where is there another example in the world where an agency in one company has those sorts of powers they said that there was not one. 
The Minister has made great play about the fact that there will be a Minister from New Zealand and a Minister from Australia in a ministerial council and that unlike the food agency where we have one vote out of 10 we will have those two Ministers at the top. That all sounds great until one analyses the fact that basically all of the key powers over this industry will be delegated to a managing director who will have complete delegated powers for all regulations. Basically it will not matter what the Ministers say in their ministerial council all the key powers are delegated to a managing director who will be able to make rules without any recourse to our Parliament but which will have an immediate effect in New Zealand. 
It is worth remembering that the whole point of pursuing trans-Tasman mutual recognition with Australia was to benefit New Zealand businesses and consumers by eliminating regulatory impediments to trade with Australia. But the effect of this agency will be to burden New Zealand businesses with increased compliance costs and regulatory impediments that will be passed on to consumers open up competitive trading opportunities for Australian businesses and hand over control and sovereignty to that other agency. It is not only dietary supplements that will be affected. Pharmac has expressed grave concerns about it. As Paul Hutchison said this could end up costing the taxpayer between $85 million and $135 million over 3 years. Pharmac says there will be significant increases in the cost of some medicines resulting in their likely withdrawal from the market and a reduction in the number of generic medicines approved. 
The question is what on earth is the point of this? Where is the benefit to New Zealand? All there is is downside. That is why New Zealanders the New Zealand dietary supplements industry and members of Parliament are completely opposed to this. Hopefully the Government will find that it will never get the votes to implement this unfortunate treaty into law in this Parliament.