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The Regulatory Model:An Explanation NZFSA Public Information Paper

April 2008

Important Disclaimer

Every effort has been made to ensure the information in this report is accurate.

NZFSA does not accept any responsibility or liability whatsoever for any error of fact, omission, interpretation or opinion that may be present, however it may have occurred.

Further copies

Requests for further copies should be directed to:
New Zealand Food Safety Authority
P O Box 2835
WELLINGTON
Telephone : (04) 894-2500
Fax : (04) 894-2501

Website
A copy of this document can be found at www.nzfsa.govt.nz

ISBN number 978-0-478-32204-0

Table of Contents

1 Introduction 3

2 A description of the Regulatory Model 5

2.1 The Structure of the Model 5

2.2 The Participants in the Model 5

2.2.1 The Regulator 6

2.2.2 The Verifier 7

2.2.3 The Industry Operator 8

2.3 A role for the consumer 9

3 The basis for the Model 10

4 The benefits of the Model 12

5 The challenges faced by the Model 14

5.1 The availability of verifiers 14

5.2 The capacity of industry to fulfil its role 17

5.3 An expanded role for the regulator 19

5.3.1 Relationships with Industry Operators and Verifiers 19

5.3.2 Diversification of the Regulator 19

5.4 Evaluation as an example of the Model evolving 20

6 Conclusion 21

Appendix 1: Glossary of terms 23

Appendix 2: Original Optimal Regulatory Model 27

Appendix 3: Further reading 28

1 Introduction

This paper provides an explanation of the food safety Regulatory Model (the Model) as it operates at the present time, a decade on from its introduction in the late 1990s.

The paper outlines:

• the participants in the Model and their roles and responsibilities;

• the basis for the development of the Model;

• the benefits that the Model delivers; and

• the issues that impact on the Model, now that it has made the transition from being a theoretical concept to a structure that has been tested in operation. Many of these issues have arisen as a result of the realities of the structure and size of the New Zealand food industry. The paper addresses how the Model has needed to evolve to accommodate these issues.

The paper amasses information about how the Model has been put into practice both in the past and currently. It aims to facilitate understanding of the Model and to provide a context for any discussion and consultation that may occur in the future about the roles and responsibilities of the participants in the Model.

The Model emerged from the work of the Independent Scoping Review Team, which was established in 1996 to review the Quality Management division of the then Ministry of Agriculture and Forestry. The Model built on developments which had occurred in prior years, such as the adoption by the food industry of self-regulating quality control assurance measures, often based on HACCP methodologies; and a corresponding reduced reliance on prescriptive end-point inspections by government officials.

In 2007, the New Zealand Food Safety Authority (NZFSA) initiated an internal qualitative review (the Review) of the Model. The Review was undertaken in the context of the work being undertaken to develop the proposed new domestic food regime and took into account the results of consultation with industry on the Domestic Food Review. The objective of the Review of the Model was to examine how, during its ten years in operation, the Model had translated from theory into practice. NZFSA was concerned to determine whether the Model remains an effective and appropriate tool, including for the new domestic food regime.

The Review concluded that the Model remains of central relevance to the overall food safety risk management framework. The principles of the Model are now incorporated into New Zealand’s food safety legislation, such as the Animal Products Act 1999 (APA) and the Wine Act 2003. However, the lessons learnt from putting the Model into practice have encouraged some refinements to be made to the roles of the participants in the Model. These refinements essentially represent alterations in approach and interpretation, rather than wholesale change, and are in accordance with both the needs of New Zealand industry and good regulatory practice. An example includes the Model now needing to accommodate more than one type of regulator (NZFSA and Territorial Authorities for instance).

NZFSA concludes that the Model is a living structure which may continue to evolve. It is expected that, from time to time, there may be further debate and as appropriate consultation about the need for the roles and responsibilities of participants in the Model to adjust to reflect developments in the New Zealand food industry.

2 A description of the Regulatory Model

2.1 The Structure of the Model

The New Zealand Food Safety Regulatory Model

2.2 The Participants in the Model

The Regulatory Model consists of three participants: the regulator, the verifier and the industry operator. Each participant is represented by a tier in the Model. The three participants assume complementary roles and responsibilities which, when combined, enable the Regulatory Model to function as a robust and effective tool to protect and enhance New Zealand’s position as a trusted supplier of safe, “fit for purpose” and truthfully labelled food for domestic and international consumers.

The Model will be consistently applied across all sectors of the food industry, regardless of whether products are sold domestically or exported. The Model is relevant to products which pose both lower and higher risks to public health.

The key roles and responsibilities of the three participants in the Model, as it operates at the present time, can be defined as follows:

2.2.1 The Regulator

• Audits and monitors the overall food safety system for effectiveness and efficiency.

• Develops, negotiates and sets standards (including technical and operational standards for domestic requirements; generic export standards and specific standards relating to bilateral trade access agreements; and international standards, such as those set by the Codex Alimentarius Commission (Codex)).

• Provides official assurances, including export certificates, where these are required as a condition of overseas market access.

• Provides technical input and policy input to laws and regulations.

• Defines competency criteria for, and approves or recognises, the verifier. Also approves, recognises or appoints other essential components in the food safety system, such as laboratories. May work closely with accreditation bodies (the International Accreditation New Zealand (IANZ) and the Joint Accreditation System of Australia and New Zealand (JAS-ANZ))¹ in assessing conformance with competency criteria.

• Monitors and audits the performance of the verifier.

• May provide advice, and promote or foster initiatives, related to increasing the capability of the verifier. (An example could be the regulator running calibration or information workshops for verifiers).

• Develops resources that may assist the industry operator to develop and to implement risk based management plans². (Resources can include off-the-peg plans, templates for plans, codes of practice and other guidance material).

• Approves and registers risk based management programmes adopted by the industry operator.

• Ensures compliance costs for industry are minimised, by setting standards and other requirements that are commensurate with the risk(s) and robust enough to deliver the appropriate level of control.

• Undertakes compliance, surveillance and enforcement roles to remedy non-compliance issues.

• Responds to food emergencies and recalls.

2.2.1.1 More than one type of regulator

There can be more than one type of regulator. For example, whilst NZFSA is the central government agency with overall management responsibility for the food safety system, Territorial Authorities also undertake regulatory functions within the domestic food sector.

2.2.1.2 The relationship between the regulator and the verifier

The three-tier Model recognises that regulation and verification are closely related. Following on from this, a regulator can act as a verifier. For example, the NZFSA Verification Agency (the VA) provides verification and related services to a number of New Zealand food sectors. Indeed in some cases, the VA is the only supplier of verification services, either due to the mandatory requirements of overseas markets or the absence of any other approved or recognised verifier. The VA operates under statutory authority to the NZFSA Chief Executive and is a business group within NZFSA (although there is a significant degree of organisational separation between the VA and the other groups with NZFSA).

Likewise, under the proposed new Food Act (if agreed by Parliament), Territorial Authorities will act as both regulators and verifiers.

However, where a single entity fulfils the role of both a regulator and verifier, it is essential that robust principles and procedures are in place to ensure adequate separation between the regulatory and verification roles.

2.2.2 The Verifier

• Undertakes independent verification functions via audit to ensure that appropriate risk based management programmes are in place and are being met.

• Evaluates and assesses the validity of risk based management programmes.

• May support authorisation for Government certification that product is produced in accordance with risk based management plans.

• Reports to the regulator. The verifier has a prime obligation to the regulator.

• Meets performance and competency standards and/or criteria set by the regulator. This increasingly includes obtaining accreditation to relevant New Zealand or international standards.

• Initiates and/or takes action under risk based management programmes, in instances of non-compliance with legal and regulatory requirements.

2.2.2.1 Competency and independence

Verifiers must satisfy competency requirements set by the regulator. It is possible that, the regulator may set varying requirements for verifiers working with different risk categories of industry operators or sectors.

Verifiers must also operate independently of industry operators and free from conflicts of interest.

2.2.2.2 Contestability

Wherever possible, verifier services will be provided on a contestable basis. Ideally and in theory, an industry operator would be able to select from a choice of verifiers. However the realities of the size and structure of the New Zealand industry, and/or the demands of overseas markets, mean that at times operators will only be able to access the services of a single verifier.

2.2.3 The Industry Operator

• Has responsibility for developing risk based management programmes which meet the requirements of relevant laws, regulations and standards.

• Has input into the selection of methods and processes used to meet regulatory standards.

• Maintains and demonstrates compliance with risk based management programmes.

• Engages and pays for verifiers.

• Produces food that is safe and fit for purpose for domestic and international consumers.

2.3 A role for the consumer

The outcome of the various roles and responsibilities encompassed by the Model is that the needs of domestic and international consumers for safe and suitable food are met in full.

Some commentators highlight this connection between the Model and its deliverables by adding a fourth participant and tier to represent the consumer.

3 The basis for the Model

The Regulatory Model, which was originally known as the Optimal Regulatory Model (ORM), was developed and adopted in the late 1990s.

The ORM represented a major shift away from the former prescriptive “command and control” form of government intervention in food safety, which involved the Government not only acting as the rule maker and enforcer but also taking responsibility for ensuring product safety. Government officials were frequently involved in the micro management of the safety aspects of food operations, usually through the mechanism of official inspection. This encouraged many businesses to believe that, providing they passed inspection, they had little need to develop understanding of the risks associated with their products and production processes. The onus was on the Government to prove non-compliance, rather than on industry to demonstrate compliance³.

The development of the ORM was linked closely to trends and influences which came to prominence during the 1980s and 1990s. New Zealand governments of the day were pursuing policies to, for example:

• minimise government intervention in the economy;

• separate the policy and regulatory functions of government from service delivery;

• remove the monopoly provision by government of services which could be devolved to the private sector or to State Owned Enterprises; and

• introduce user pays and cost recovery policies and mechanisms.

There was widespread consensus that services provided by the private sector should be more cost-effective and efficient than similar services provided by the public sector, especially if open to competition from more than one private sector operator⁴.

At that time, industry in New Zealand and overseas was devoting resources to developing and adopting risk management and quality control systems, including gaining accreditation to relevant International Standards Organisation (ISO) standards such as the ISO 9000 series. Likewise, international organisations such as the Codex Alimentarius Commission (Codex) and the World Trade Organization (WTO) were encouraging food producers to assume responsibility for the safety and suitability of their products and to adopt risk based management practices.

Prior to the development of the ORM, some initiatives had already been introduced to encourage the New Zealand food industry to adopt self-regulating quality control assurance measures and to reduce reliance on prescriptive end-point inspections. These initiatives included the Dairy Industry Regulations 1990, made pursuant to the Dairy Industry Act 1952, which enabled dairy companies to use product safety programmes (PSPs) to manage food safety and provided for the separation of functions between the Government as regulator, independent auditors/verifiers and industry. The 1996 amendment to the Food Act 1981 introduced Food Safety Programmes (FSPs) as a voluntary alternative to the prescriptive Food Hygiene Regulations 1974. In 1996, Cabinet also reviewed the functions of MAF Quality Management (MQM), the service delivery arm of the MAF, and determined that a range of the services MQM delivered should be made contestable, including meat inspection.

In 1997, the ORM was proposed as an appropriate model in the report of the Independent Scoping Review Team, which had been established in 1996 to undertake a strategic review of MQM.⁵ The ORM proposed by the Review Team took the shape depicted in Appendix 2.

The ORM was then further clarified in several MAF publications over the following years. These included a January 1999 MAF Discussion Paper entitled The Optimal Regulatory Model in the New Zealand Dairy Industry and Cherie Flynn’s The Optimal Regulatory Model: The Application of Risk Management to Government Intervention. The Animal Products Act 1999 (APA), which took effect from November 1999, was based strongly on the ORM and provided an opportunity for the theory underlying the ORM to be translated into legislation.

4 The benefits of the Model

At the time it was adopted in the late 1990s the Regulatory Model was expected to generate a number of significant enhancements to the food safety system. Many of these benefits reflected New Zealand Government policy objectives, as outlined in Section 3 above. Consultation at the time revealed that industry also anticipated the Model would deliver cost savings and efficiencies.

In the years since its adoption, further benefits associated with the Model have been identified, especially relating to wider public health and consumer issues, and these have lent support to the continued implementation of the Model.

In 2007, the NZFSA Review of the Regulatory Model concluded that the Model has enhanced the New Zealand food safety framework significantly as follows:

• By refocusing the role of the regulator: The Model has enabled the Government, as the regulator, to be relieved of the responsibility for delivering inspection services, allowing it to instead focus on managing the overall food safety system. The Model has also enabled the regulator to devolve some responsibilities to others and to largely separate its policy and regulatory functions from service delivery.

• By giving industry responsibility for food safety: The Model has made it possible for industry operators to assume an appropriate level of responsibility for the quality control, safety, suitability and labelling of their products. This is a significant change from the former reliance on government inspection under the old “command and control” regime.

• Providing clear and transparent delineation of roles: The Model has clarified and made transparent the roles and accountabilities of each of the participants in the food safety framework. Purchasers and providers of services are distinguishable and independent.

• Facilitating the use of HACCP methodologies: Under the model, standards are outcomes based rather than prescriptive, and the Model provides for verification systems rather than reliance on inspection based checking. HACCP methodologies are widely recognised internationally, and the establishment of a New Zealand food safety framework compatible with an HACCP based approach has played a role in securing the position of New Zealand as a trusted supplier of safe and suitable food on international markets. Within the context of the risk management framework, Good Operating Practice (GOP) provides supporting systems and a foundation for the HACCP approach, and covers all aspects of good practice relevant to food production and processing including, where relevant, Good Agricultural Practice (GAP), Good Hygienic Practice (GHP) and Good Manufacturing Practice (GMP).

• Supporting and enhancing access to overseas markets: The Model incorporates a robust verification step in the official assurances/certification process. This ensures that consumers and officials in overseas markets have confidence in the integrity and ethics underlying the official assurances and export certificates provided by the New Zealand Government.

• Facilitating a contestable market for verification services for some sectors: Operators in some food sectors can now choose between two or more suppliers of verification and related services. This may deliver cost savings and other benefits.

• Managing public health risks: The efficiencies and risk based approach encouraged by the Model has helped ensure management of the full range of risks to public health, not just those risks likely to be revealed by the former traditional inspection methods.

• Establishing a direct relationship between industry and consumers: By assuming responsibility for managing risk and quality control, the onus has been placed on producers to respond to consumer and retail demands for safe and suitable products.

5 The challenges faced by the Model

At the time it was developed in the late 1990s, the Regulatory Model was subjected to policy and economic analysis and to scrutiny by industry. However, the Model was, because of its newness and its basis in theory, essentially untested in the New Zealand setting or anywhere else in the world.

Now that the Model has been operating for a number of years, it has become clear that the realities of the structure and size of the New Zealand food industry and the markets for New Zealand food products do pose some challenges to the way in which the Model operates in practice. A variety of these challenges were identified by the 2007 Review of the Model and are discussed below, along with the steps that have been taken, where possible, to address these challenges.

5.1 The availability of verifiers

One of the more significant challenges facing the Model during its years in practice has been the limited pool of verifiers who have applied for, and been granted, recognition or approval by NZFSA.

At the time of the 2007 Review of the Model, operators who came under the Animal Products Act 1999 (APA) regime were nearly always limited to sourcing verification services from either the VA or from the State Owned Enterprise AsureQuality⁶, and in many cases they had no choice as to which of the two agencies they use. There were 44 Food Safety Programme Auditors approved under the Food Act 1981, but 60% of these auditors were again employed by either the VA or AsureQuality. It was also estimated that only 15 private sector evaluators were available to industry operators under the APA regime.

This shortage of verifiers has been noted by our trading partners, for example by the European Commission Food and Veterinary Office during its audits.⁷ At times, NZFSA has also been made aware that some industry operators have faced difficulties when sourcing verifiers and/or would have preferred to have a greater choice of verifier.

The limited numbers of verifiers does not necessarily result from an inherent flaw in the Model. Instead, it can be attributed largely to the characteristics of the New Zealand food industry which have constrained the development of the contestable market mechanisms which were expected to come into play when the Model was introduced. These characteristics include size; some sectors being dominated by a few large operators; and the reliance of some sectors on export markets which means that it is imperative that overseas market access requirements are satisfied. The Review of the Model concluded that most of these industry characteristics are outside the control of any of the participants in the Model, i.e. the regulator, verifier or industry operator.

The factors which contribute to limit the number of verifiers include:

• The mandatory requirement imposed by some key export markets that only government provide services to the export meat sector. Both the United States and the European Union continue to require that supervision of meat hygiene activities, verification and input into official assurance processes be undertaken by government employees who form part of a government “competent authority”. This means that the NZFSA Verification Agency (the VA) must provide verification and related services to the export meat sector (and in this context it is noted that there are only a very few meat processors in New Zealand who do not export). This work is therefore non-contestable, with no possibility at this time that third party agencies can compete as alternative suppliers. This has removed, or not seen develop, a significant source of potential income for verifiers and may act as a disincentive for verifiers to enter and/or remain in the market for verification services.

• The New Zealand dairy sector has undergone rationalisation since the Model was introduced. The number of major players in the sector has shrunk, with Fonterra now accounting for a very large majority of the sector’s activities. In a similar way, the number of third party agencies available to work with both Fonterra and the more minor players in the dairy sector has rationalised. Two former suppliers of verification services to the dairy sector have, for various reasons, exited the market in recent years with the result that for some time there were only two recognised agencies available to provide verification services to the dairy sector: AsureQuality and the VA. However, SGS New Zealand Limited has recently also become a recognised agency for the dairy sector.

• Under the proposed new Food Act (if agreed by Parliament), Territorial Authorities will also become exclusive verifiers, for at least the first five years, for off-the-peg Food Control Plans for a large number of food businesses. This decision has been taken for practical reasons and to ensure the implementation of the new domestic food regime is as smooth as possible. It will, however, preclude other independent verifiers from being able to offer verification services to this group of businesses.

• Some of the industry sectors that are open to the contestable provision of verification services have characteristics which may deter some potential verifiers. For example, such industry sectors are often of small size and value when compared to the meat or dairy sectors, and can contain a large proportion of operators who are geographically widespread and/or inexperienced with risk based management processes. As a result, potential third party agencies may find it difficult to build a business case to justify their entry into the market for verification and such sectors sometimes have to rely on the VA in its capacity as a “verifier of last resort”.

• Demographics in New Zealand also constrain the numbers of persons with the appropriate skills to provide verification and related services.

• Industry operators across a sector may be reluctant to make use of new or different verifiers, preferring someone familiar with their industry or company processes and systems, thereby giving existing service providers an advantage in that sector.

• Conflict of interest and independence rules preclude agencies or persons from undertaking multiple roles relating to a specific risk based management plan. For example, it is not possible for the same person to design a plan for an industry operator and then go on to verify the same plan. This can reduce the choices which industry operators have when choosing suppliers of verification services, especially if they are operating in highly specialised areas.

• The size of the market for evaluation of risk based management plans has contracted as greater assistance has been offered to industry when developing risk based management programmes; for example, through industry codes of practice and templates.

• Potential verifiers can be reluctant to take on a role which may require them to take action when legal requirements are not met. It can, for example, be a very unpopular responsibility to contribute to the shutting down of a substandard operation.

Steps can be taken, however, to reduce the impact of the limited number of verifiers. As the Model allows for competition, this can also ensure that signals from the market can encourage new entrants to verification services. Developments in food regulation, for example as more sectors within the food industry come under the risk management framework and require the services of verifiers, can also send signals encouraging new entrants. Specific factors which have helped to minimise the impact of the limited number of verifiers in recent years include:

• New entrants do continue to enter the market to supply verification services, perhaps encouraged by the signals from the market that suggest there is an opportunity for business growth. NZFSA as the regulator looks to foster the development of verification services, for example by ensuring that it effectively communicates opportunities for the supply of verification services publicly.

• New industry sectors continue to be introduced to the risk management framework, thus creating further opportunity for existing and potential suppliers of verification services. For example, many winemakers will be required to operate under wine standards management plans from late 2008. The proposed new Food Act (if agreed by Parliament) will see domestic food businesses required to operate under food control plans; and whilst Territorial Authorities will be exclusive suppliers of verification services for some types of food control plans, other types of food control plans will be open to contestable verification.

• NZFSA is working towards the future adoption of common principles relating to performance and competency standards and/or criteria for verifiers operating across different industry sectors. This may open up future opportunities for verifiers.

5.2 The capacity of industry to fulfil its role

The Model attributes industry with the responsibility for developing and implementing risk based management plans.

Experience has shown that industry ability to assume this responsibility can vary. For example, small to medium sized enterprises (SMEs) may find the responsibility more onerous than larger operators with greater resources. SMEs may have more limited managerial resources and less relevant experience upon which to formulate risk based management programmes. The costs of developing a risk based management plan may also be proportionally greater for smaller businesses with more limited turnovers.

During its years in operation, NZFSA as the regulator has responded to this challenge by developing measures to help all industry operators meet their obligations and to minimise compliance costs wherever practicable. Such measures have included:

• Working with industry to develop codes of practice, templates for risk based management plans and guidance tools which can streamline and cut costs in the process of developing a risk based management plan. For example, under the new domestic food regime, NZFSA will develop off-the-peg Food Control Plans which will be able to be adopted by the majority of domestic food businesses. There are efficiencies and cost savings to be gained by relieving the many small businesses with similar operations and limited resources (such as the approximately 4,000 ‘corner’ dairies in New Zealand) from the need to individually develop food control plans.

• Where NZFSA and the VA provide services to industry operators, this is done under the discipline of transparent and scrutinised systems of cost recovery, wherever cost recovery is applied.

• Where industry operators are being introduced to the Regulatory Model framework, NZFSA adopts a pragmatic and staged implementation approach. This means, for example, that industry operators will be given a transition time in which to adopt risk based management plans. This occurred under the Animal Products Act 1999, where different classes of animal product businesses were required to register risk management programmes according to a staggered transition spread over 4 years. Likewise, food businesses affected by the proposed new Food Act (if agreed by Parliament) will phase into the jurisdiction of the Act over a five year transition period. This staged approach is helpful both to allow industry operators to adopt new requirements in a measured way and to build capability amongst verifiers and the regulator.

5.3 An expanded role for the regulator

5.3.1 Relationships with Industry Operators and Verifiers

To ensure that the Model works effectively, and as equitably as possible amongst industry, the role of the regulator has been required to evolve and expand since the Model’s introduction.

The 2007 Review of the Model found that NZFSA, as regulator, now plays a key role in assisting industry operators to develop and to implement risk based management plans, including through the development and provision of tools such as off-the-peg plans, other types of templates for plans and industry codes of practice.

In response to the ongoing need to grow the pool of verifiers available to work with industry, NZFSA now also looks to foster existing and potential verifiers. For example, NZFSA communicates publicly as sectors are introduced to the risk management framework, thus indicating new opportunities for verifiers. It has also on occasion played a role in developing capacity amongst existing and potential verifiers, for example the recent workshops that NZFSA hosted for those interested in gaining recognition as verifiers of wine standards management plans⁸.

5.3.2 Diversification of the Regulator

The Model now incorporates the need for several types, or tiers, of regulator. For example, whilst NZFSA is the central government agency with overall management responsibility for the food safety system, under the proposed new Food Act (if agreed by Parliament), Territorial Authorities also assume some regulatory functions, such as registration of off-the-peg Food Control Plans and investigation into some types of complaints and non-compliance within its territorial boundaries.

At times, it is also necessary that a regulator fulfils the roles attributed to the verifier by the Model. For example, under the proposed new Food Act (if agreed by Parliament) it is intended that Territorial Authorities will act as both regulators and verifiers. Where this duality of roles occurs it is however essential that conflicts of interest are avoided and that documented and robust policies and procedures are in place to ensure that there is adequate separation between the persons within the organisation who undertake regulatory and verification functions.

5.4 Evaluation as an example of the Model evolving

An example of how the Model is subject to ongoing scrutiny and can evolve as necessary, in order to address weaknesses or challenges, is evaluation. Evaluation of risk based management plans is an aspect of the Model which has attracted considerable scrutiny in recent times. NZFSA’s experiences as a regulator, and the feedback which it has received from industry, have identified some problems with the system for evaluation. These problems relate both to the limited supply of evaluators and to concerns about the quality and consistency of work undertaken by a few evaluators.

In response to these concerns, NZFSA issued a Discussion Paper in 2007⁹ outlining a proposal for NZFSA to manage evaluation, including by allocating work to third party suppliers of evaluation or, if necessary, to the VA. This proposal provoked robust discussion about both the current framework for evaluation and the form that evaluation could take in the future. It generated numerous suggestions about improvements that could be made to the current system of evaluation, such as strengthening mechanisms for monitoring the consistency of evaluation, enhancing training for evaluators, and providing additional resources for evaluators, such as checklists or templates for reports. In the light of this feedback, NZFSA is now analysing these industry suggestions for improvements to the current system for evaluation, rather than proceeding with the proposal that it manage evaluation. Any significant improvements to evaluation that might be proposed as a result will be the subject of future consultation.

6 Conclusion

This paper charts the development of the food safety Regulatory Model, during the approximately ten years since its introduction.

It describes the critical roles played by the three participants of the Model: the regulator, the verifier and the industry operator. It also details how these roles have adjusted and grown as necessary in order to accommodate the changing needs of the New Zealand food industry.

The paper aims to facilitate understanding and to provide a context for discussion and any future consultation with industry about the roles and responsibilities of participants in the Model.

The Model has brought about some significant enhancements to the food safety system. These include that:

• the regulator no longer has to deliver inspection services and has been freed up to assume overall responsibility for managing the food safety system;

• industry is increasingly taking responsibility for producing safe and suitable food;

• there is greater clarity as to the roles and accountabilities of the regulator, verifier and industry;

• the Model has helped facilitate the introduction of HACCP based methodologies; and

• a robust verification loop that can be used to demonstrate the ethics and integrity of official assurances and export certification processes.

During its decade in operation, the Model has not been immune to challenges, many of which can be directly related to the characteristics of the New Zealand food industry. These challenges include:

• the limited supply of verifiers;

• the need for assistance to be provided to some industry operators, especially small to medium sized enterprises, to ensure that they are able to fulfil their responsibilities under the Model for developing and implementing risk based management plans; and

• the need for the role of the regulator to expand to cover functions not always anticipated when the Model was first developed.

In 2007, NZFSA initiated an internal Review of the Regulatory Model. This Review was undertaken in the context of the work being undertaken to develop the new domestic food regime and drew upon the results of consultation about the Domestic Food Review. The Review concluded that the Model continues to be an effective tool. While application of the Model has been, and may be subject in the future, to ongoing change and development, it is this very ability to exhibit flexibility that enables the Model to continue to provide a robust and beneficial framework for food safety management in New Zealand.

Appendix 1: Glossary of terms

accreditation	Provided by a body of international standing, established to perform assessments of agencies and organisations against an international standard and additional secondary criteria/standards (if any) set by the regulator, for a particular function, and may be applied to a specific category.
certification	The process of issuing an export certificate which is a form of an official assurance determined by the NZFSA Chief Executive, pursuant to New Zealand food safety legislation.
code of practice	A document reflecting acceptable industry-agreed practice, and providing information on ways of meeting regulatory requirements that are appropriate to the purpose and scope of the code.
Codex	Codex Alimentarius is the international food standards code developed by the FAO/WHO Codex Alimentarius Commission (CAC).  The CAC is the international food standards setting body that develops food standards for use by all member nations.
competent authority	For New Zealand products, this is NZFSA, which issues export assurances as to the safety and suitability of New Zealand food exports.
contestable services	Services can be provided by a range of providers who can choose to enter or exit the market (providing they meet any legislative requirements relating, for example, to competency). Even if there is only a single current supplier of services, its prices and profits can be constrained by the possibility of new entrants to the market.
evaluation	An appraisal of a risk based management plan by a person, independent of the industry operator, to determine that a plan complies with regulatory requirements, is appropriate to the operation concerned, covers the scope of the operation, is technically sound and will minimise and adequately manage the food safety and suitability risks.
Food safety	All aspects of food hygiene that contribute to the production, processing, distribution, storage and sale of food.
Good Operating Practice	All practices regarding the conditions and measures necessary to ensure the safety and suitability of food at all stages of the food chain, plus components of Good Agricultural Practice/Good Hygienic Practice/Good Manufacturing Practice that affect safety and suitability appropriate to the operation.
HACCP or Hazard Analysis and Critical Control Points	A systematic preventative approach to food safety that addresses physical, chemical and biological hazards as a means of prevention rather than finished product inspection.
International Accreditation New Zealand (IANZ)	A national authority for the accreditation of testing laboratories, radiology services, and inspection services.
Joint Accreditation System of Australia and New Zealand (JAS-ANZ)	Government appointed accreditation body for Australia and New Zealand responsible for providing accreditation of bodies in the fields of certification and inspection services.
Off-the-peg plan	A food control plan which involves a food business adopting a template plan for managing food safety and suitability.
Provider of last resort	Required when: • domestic and/or importing country requirements allow for verification and related services to be provided by third party agencies but no third party agency comes forward to provide these services. In such circumstances it has to date fallen to the VA to supply industry with the verification and related services which are required by New Zealand food legislation; or • domestic and/or importing country requirements allow for verification and related services to be provided by third party agencies and one or more third party agency(ies) does come forward to provide these services but the services available and/or provided by the third party agency(ies) are assessed by NZFSA to not be capable, competent or performed acceptably. In such cases NZFSA, as the competent authority, can require that the VA undertakes the verification and related services required under New Zealand food legislation.
recognised agency/person	An agency or person recognised by the NZFSA Chief Executive for the purpose of providing verification or related services.
Regulatory Model	The government approach to regulating the food chain; comprises the regulator (primarily but not exclusively NZFSA), the verifier and the industry operator involved.
risk based management plan	A documented programme to identify, control, manage and eliminate or minimise hazards and other risk factors in the processing of food in order to ensure food is fit for intended purpose, meets legislative requirements and any overseas market requirements. Examples include Food Safety Programmes under the Food Act 1981, Risk Management Programmes under the Animal Products Act 1999, Wine Standards Management Plans under the Wine Act 2003 and Food Control Plans under the proposed new Food Act (if agreed by Parliament).
Risk management framework	Risk based approach to policy setting and overarching decision making on risk management in general.
template	A ‘form’ risk based management plan in whole or in part, that includes Good Operating Practice and regulatory requirements and is used to assist an operator to develop their plan; may consist of a simple form and checklist that refers the operator to the Good Operating Practice components within a code of practice.
Territorial Authority	A city council or district council (as defined in the Local Government Act 2002),
third party agency	An agency or individual who provides verification or related services required by New Zealand food legislation and who forms part of the private sector, or Territorial Authorities, public health units or other interests which are not located within central government.
verification	The application of methods, procedures, tests and other checks to confirm: • ongoing compliance of a risk based management plan to legislation (including regulations and specifications) and overseas market access requirements; • compliance of the operation to the documented risk management plan; and • the applicability of the risk based management plan to the operation.
Verification Agency (VA)	The food safety and assurance delivery arm of NZFSA.
verifier	For the purposes of the Model, one of the three participants in the Model alongside the regulator and industry operators.

Appendix 2: Original Optimal Regulatory Model

The original Optimum Regulatory Model, as depicted in the 1997 report of the Independent Scoping Review Team: Regulation, Biosecurity & Government took the following shape:

The Optimum Regulatory Model circa 1997

Appendix 3: Further reading

Flynn, C., (1999), The Optimal Regulatory Model: The application of Risk Management to Government Regulation: Paper Presented to the 10^th World congress on Food Safety, October 1999.

Independent Scoping Review Team 1996/1997, Ministry of Agriculture and Forestry, (11 March 1997), Regulation, Biosecurity and Government: A Strategic View of MAF.

Mayes, Tony & Mortimore, Sara, (2001), Making the Most of HACCP.

Ministry of Agriculture and Forestry, (January 1999), Discussion Paper: The Optimal Regulatory Model in the New Zealand Dairy Industry.

Ministry of Agriculture and Forestry, (December 1988), Review of Meat Act 1981: A Discussion Document.

New Zealand Food Safety Authority (February 2007) Cost Recovery Proposals for Dairy under the Animal Products Act 1999: NZFSA Public Discussion Paper No 01/07.

New Zealand Food Safety Authority, (February 2006), Domestic Food Review Position Paper, NZFSA Discussion Document No 01/06.

New Zealand Food Safety Authority, (October 2006), Domestic Food Review: Transition Policy and Related Implementation, NZFSA Discussion Document No 06/06.

New Zealand Food Safety Authority website: www.nzfsa.govt.nz.

Papa, Simon, (January 2002), The Optimal Regulatory Model for Food Safety: An Effective Application of the HACCP System?: A dissertation for the degree for Bachelor of Laws (Hons).

¹ For further information, refer Appendix 1: Glossary of Terms.

² The term risk based management programmes takes a wide meaning in this paper and includes all types of risk based management programmes falling under the various legislation which NZFSA administers. These include RMPs (Risk Management Programmes) under the Animal Products Act 1999, FSPs (Food Safety Programmes) under the Food Act 1981 and FCPs (Food Control Plans) which will be established under the proposed new Food Act.

³ Flynn, C (1999) The Optimal Regulatory Model: The application of Risk Management to Government Regulation, Paper Presented to the 10^th World Congress on Food Safety, Sydney, 3-10 October 1999, p 5.

⁴ For example, submissions received in response to the 1988 MAF discussion document Review of the Meat Act 1981 demonstrated considerable industry support for the introduction of competition in meat inspection, including support from producer boards and Federated Farmers. Consultation undertaken by the 1996/1997 Independent Scoping Review Team, which undertook a strategic review of MAF Quality Management (MQM), also indicated “universal support” for the introduction of contestability to services provided by MQM.

⁵ Independent Scoping Review Team 1996/1997 (11 March 1997) Regulation, Biosecurity and Government: A Strategic View of MAF. Ministry of Agriculture and Forestry, Wellington, p 83.

⁶ Prior to 1 October 2007 AsureQuality was two separate SOEs – Asure New Zealand and AgriQuality Limited – both of which provided verification (and related) services.

⁷ “A general shortage of TPA individuals approved for evaluating and/or verifying PSP and their components, and monitoring the performance of the dairy industry was observed”, extract from the European Commission FVO (2005) Final Report of a Mission Carried Out in New Zealand from 19 to 30 November 2004. p28.

⁸ These technical sessions and workshops were held during the early months of 2008.

⁹ New Zealand Food Safety Authority (2007), Public Discussion Document No 11/07: Proposal for NZFSA to manage the evaluation of risk based management plans.