Haztech Environmental 14th October 2019 feedback on the

Principles for the Design of Fees & Charges for the New Industrial Chemicals Scheme, AICIS

(Australian Industrial Chemicals Introduction Scheme)

I am concerned about the lack of details / examples for the cost recovery principles that are proposed for the new AICIS.

 

AICIS Cost Recovery Principles (some extracts and comments):

 

p9: The changes to capabilities and processes under the new scheme have substantially changed the way activities undertaken by OCS are delivered. For example, the ban on using animal test data to assess unlisted introductions of cosmetic chemicals, and the move towards the use of in vitro assays in general, mean that the assessment of hazard and risk is inherently more complex.

Jeff Simpson: This seems to indicate higher costs for industry to prepare Introduction Reports under AICIS, where the AICIS review staff then also need to maintain their knowledge (but this is the same sort of continuing education that is needed in the current NICNAS system), so a similar cost for AICIS staff compared to NICNAS staff would be expected.

Question: Does AICIS plan to offer paid for training for industry specialists in new areas of toxicology?

 

p12: Most other introductions (Listed, Exempted or Reported introductions) will not require

pre-market assessment by AICIS, and thus not incur a fee.

Jeff Simpson:  The Reported Introductions will require a similar level of information to be brought together to existing NICNAS notifications but there will be a higher cost for industry to prepare these reports as more direct data and analogue data will be required to be accessed and then assessed.

In Jeff Simpson’s opinion, the Exempted Introductions will require a higher level of information to be brought together by Industry, compared to existing NICNAS notifications that are quite accepting of missing (but less important) information; and much higher level of details than required for the No Unreasonable Risk <100kg chemical introductions (that my customer generally has as low % ingredients in products).

 

p12: The new scheme will include greater emphasis on post-market monitoring and enforcement.

Jeff Simpson:  As AICIS staff will normally now know all the Exempted Chemicals CAS No.s and have a basic understanding of the products they are in, this monitoring should be able to be targeted at chemicals with potential hazards of concern, and accordingly non-hazardous chemicals will not require any monitoring other than being on their database so the database can now be more focussed to alert to increased or additional hazards for these chemicals and the product matrix they are in.

Jeff Simpson:  to make creation and evaluation as simple as possible, Industry and AICIS need to follow a highly consistent Report preparation approach, and for each aspect of the Report have an agreed rating system so that the AICIS database computer program can alert both industry and AICIS staff to the most relevant chemicals needing to be monitored. We need an approach that yields the best benefit to industry, the community and the environment before we then add in the AICIS staff time to monitor the chemical.

 

p13: Tiered fee – charges when the effort associated with an activity may vary based on the different classes of an activity. For example, an application for a certificate may be of low, medium and high complexity, and different fees could apply to each tier of complexity.

Jeff Simpson:  This is similar to the current system, but we need better details to understand what sort of fees do they mean for AICIS activities and tiers.

With the experience of the current NICNAS scheme fees and knowing the average costs to undertake each type of current evaluation, this should be relatively straight forward to estimate. 

 

p14: Proposed structure of fee or charge (RH column)

Preferred levy option (under AICIS): A fixed percentage of the previous financial year’s introduction value

e.g. 0.26%, with a cap on the maximum fee charged.

This option reduces the financial impact of moving to a higher tier (e.g. tier C to tier D) as happens under the current levy structure

Jeff Simpson:  $5M+ Level D currently pays $24640, so 0.26% of $5M would be $13000.

However assuming most of the larger companies with $5M+ may be around $20M or higher, this would be a $52000 levy.

Q: What sort of levy cap are AICIS considering?

Jeff Simpson suggests that the current charge for Level D is not significantly exceeded, as it is already a large fee.

Suggestion: Retaining the current $25K and no more than $30K annual fee, could mean that the Registration costs for chemicals be lowered, so that there is a better option for businesses to Register a chemical rather than maintain a Reported Chemical document over many years possibly decades whilst the chemical continues to be introduced.

Position: Jeff Simpson is NOT in favour of a % levy system for several reasons:

– There may be security problems providing such commercially sensitive financial introduction value data to AICIS.

– Collecting the previous financial year’s AICIS chemical Introduction Value will be an added cost, and raises significant issues of separating out the chemical Introduction Value from other financial values a company may have. E.g. Food Chemicals, TGA Chemicals, APVMA Chemicals, vs Industrial Chemicals, let alone other imported / manufactured item values.

  1. Assuming 0.26% is chosen, will the AICIS also be following a similar introduction value auditing approach to the APVMA?

– Currently the APVMA target the introduction value of each APVMA registered product and then spend a lot of time auditing companies to pick up oversights / errors. This introduction value audit process is wasteful in my opinion.

  1. If a % levy is chosen, how does AICIS expect to manage the scenario of large volume industrial chemical imports of say $100M, but a low rate of return (such as 5%) to a business on this chemical import?

–           Also, these high volume, low return chemicals may have very little need for regulatory attention by AICIS.

Jeff Simpson:  The current NICNAS system is very straightforward for Companies in the $5M+ introduction value group.

As the top introduction values were set up 20+ years ago, the introduction current dollar value has approximately doubled (based on the RBA cpi) since then, so additional $10M and $20M+ introduction value groups could be considered.

The new system would continue to be very straightforward for Companies in the $20M+ introduction value group.

I suggest: Level A $200, B 100-<500K $500, C 0.5-<5M $2500, D 5-<10M $7.5K, E 10-<20M $15K, Level F >20M+ $25K

The lower group ranges are simpler to decide than having to provide a % of a detailed financial turnover value, and if near the top of a range, the step up in AICIS charge should be less than the detailed financial data evaluation and management costs.

 

P17: Fee or Charge – Application for listing on the Inventory before 5 years

An Applicant currently pays a Flat Fee of $940 and it is proposed the Applicant continues to pay a flat fee.

Jeff Simpson: Where there is only the Applicant as the Certificate and CBI Holder, this fee needs to reduced to just a basic administrative cost. I suggest $200. 

 

p20: 5 – Forecasting charge volumes for AICIS

The fundamental change to the design of the scheme requires us to make some key assumptions on the expected volume of activity.

Method used to determine Registration volumes:

Registration volumes will be forecast using historical registration numbers and introduction values.

Method used to determine other Fee for Service (FFS) volumes:

These include Assessment Certificates, Variations to Certificates and Inventory Listings.

The volumes for these charges will be informed by a mixture of historical information where relevant, as well as management estimates of volumes under AICIS.

It is anticipated that fewer and more complex assessments will be applied for under the new scheme.

 

Jeff Simpson:  AICIS will only start to understand the volume of activity after the end of the 2nd year of the new AICIS approach, so there will need to be an agreed basis of review by Industry & Government & AICS of how the AICIS needs to be adjusted to be a fair approach for several years until the AICIS is fully in place.

 

Jeff Simpson: Overall Comment: There is a significant lack of detail to help us to gain an adequate perspective,

for industry to comment on for these proposed Principles for the design of fees and charges for the new industrial chemicals scheme, AICIS.

From our feedback NICNAS need to map out draft ACTUAL estimated details of fees and charges for the new industrial chemicals scheme, AICIS. This needs to occur as soon as possible.