1 A recent performance review of New Zealand Food Safety Authority (NZFSA) identified some concerns regarding the accountability arrangements governing the NZFSA. The concerns stemmed from the fact that NZFSA is a semi-autonomous body (SAB) attached to MAF. In establishing NZFSA as a SAB, Cabinet wanted to provide the Executive Director of NZFSA with the delegated authority to provide advice on food safety matters independent to advice from the Director-General of MAF while, at the same time, capturing the benefits that come from attachment to MAF (including sharing of corporate support services).
2 From an accountability perspective, the SAB model gives rise to some tensions. Under the State Sector Act, the Director-General is accountable to the Responsible Minister for carrying out the functions and duties of the Ministry including NZFSA. While the Director-General can delegate the performance of roles and duties to the Executive Director, he cannot delegate the responsibility that derives from the State Sector Act. Similarly, under the Public Finance Act, the Director-General is accountable for the financial management and performance of MAF including NZFSA. Again, this responsibility cannot be delegated. For example, under the Public Finance Act, a document such as the statement of forecast service performance cannot be a unilateral agreement between the vote Minister and the SAB. The vote Minister and the Departmental Chief Executive must sign the statement of forecast service performance.
3 There is, therefore, potential for tension between the desire for independence and the requirements of the relevant legislation. There are signs that these tensions have spilled over into the relationship between MAF and NZFSA and that the relationship is not working as well as it needs to.
4 The brief for this review has required consideration of the advantages and disadvantages of maintaining existing arrangements, of options for modifying current arrangements including, in particular, separating NZFSA into a stand-alone entity and of the need for any other changes to arrangement that might be appropriate.
5 The main focus of the review has been on the choice between retaining NZFSA as part of MAF or separating it into a stand-alone entity.
6 The review concludes that the preferred option is to retain NZFSA as part of MAF.
7 The main reasons for this conclusion are the strong links that need to exist between the two agencies and the synergies that stem from this. The need for close links reflects several considerations:
- International trade is a fundamental part of NZ's economic health. Traditional barriers to trade are being replaced by those which focus on biosecurity, food safety, environmental and animal welfare issues. There needs to be close co-ordination between NZFSA and MAF (including, in particular, Biosecurity NZ) because of the need to maintain a consistent and principled approach to the design and application of the regulatory regime and a consistent voice when representing NZ in international fora.
- A large part of NZFSA's work involves providing assurances to trading partners. Its main focus is on animal products, but in order to provide assurances in respect of these, it relies upon assurances from Biosecurity NZ regarding the health status of NZ's livestock.
- The two agencies collaborate, at a day-to-day level, on a wide range of trade and regulatory issues.
- NZFSA makes a direct contribution to three of the four high-level outcomes described in MAF's Statement of Intent.
- The nature of the work undertaken by NZFSA and Biosecurity NZ has common scientific and risk-based underpinnings and this is reflected in the composition of staff within NZFSA and Biosecurity NZ.
- Good regulatory design and application needs to be based on a blend of technical and policy perspectives.
- The effectiveness of response in the event of biosecurity incursion or food safety risk depends on close integration between MAF, Biosecuirity NZ and NZFSA.
- In general, across government there is a desire for greater collaboration and horizontal integration across agencies reflecting concerns that the relatively fragmented nature of the public sector can hinder achievement of Government's desired outcomes.
8 The nature of the links between NZFSA and MAF is not temporary or new. Many of the functions currently performed by NZFSA were previously undertaken by MAF prior to the establishment of NZFSA in 2002.
9 Notwithstanding the advantages that stem from closely integrating the work of NZFSA with that of MAF, there are some potential disadvantages. At the time that NZFSA was being established, concerns were raised that attaching NZFSA to MAF would allow producer interests to dominate and compromise food safety. External stakeholders interviewed as part of this review do not consider that this view has any real validity. They believe it is more important that approaches to domestic food safety align with those governing the export and import of food and related products, reflecting the reciprocal nature of trade agreements.
10 Of more substance is the concern that the SAB model gives rise to accountability arrangements that are more complex than normal and more likely to give rise to tensions. For this reason, the stand-alone option warrants careful consideration. Two main factors, however, count against the stand-alone option. The first of these is that the stand-alone option increases the risk that the links between NZFSA and MAF will become harder to maintain and/or will lose their effectiveness. Several reasons lie behind this view including:
- general concerns that further fragmentation means more points of connection and, by definition therefore, greater risk that one of the links in the chain will break
- it is harder to achieve integration and collaboration if agencies are at arm's-length from one another, and
- the nature of the links that exist between NZFSA and MAF create synergies in terms of the approach to issues (e.g. the science/principled approach to regulation) and the competencies of staff involved. These synergies will be much harder to achieve if the agencies are separated. In this regard, it is worth observing that Agriquality NZ achieves synergies and commercial reward through closely integrating biosecurity and food safety under the umbrella of the Company.
11 A second consideration that works against the stand-alone option is cost. This was a significant consideration at the time NZFSA was being established. Estimates prepared by MAF indicate that to implement the stand-alone option, ongoing operating costs could increase by around $5 million per annum with a further one-off transition cost of $6 million (mainly in relation to IT and reflecting the fact that NZFSA's requirements differ from those of MAF). The review concludes that the benefits that the stand-alone model has in terms of clearer accountabilities are unlikely to outweigh the additional fiscal costs involved nor outweigh the less quantifiable costs that would arise through losing the benefits of close integration as outlined above.
12 Consideration has been given to making NZFSA a division of MAF rather than continuing as a SAB. This would also help to address the accountability tensions while retaining the advantages of close integration. However, the "division" option is not recommended at this stage. There are some advantages in maintaining a degree of separate identity for NZFSA in terms of providing focus and building on the considerable success already achieved by NZFSA since its establishment. Furthermore, from an external stakeholder perspective, retaining NZFSA as a SAB implies no disruption or change.
13 Accordingly, the review concludes with a preference in favour of retaining the SAB model for NZFSA. This is tempered, however, by the need for the parties involved to address some underlying relationship issues by focusing on enhancing the formal and informal mechanisms that need to be in place to foster effective working relationships.
14 The added complexity of the SAB model, in terms of accountability arrangements, increases the onus on the parties involved to make the relationship work. To this end, the review has identified some formal and informal mechanisms, over and above those already in place, to assist with the effective functioning of the relationship between NZFSA and MAF. These include:
- formalising NZFSA's requirements relating to corporate support services into a shared services agreement
- further articulating, and aligning, values and cultures and reflecting these in key governance documents and policies
- greater joint participation in industry meetings and fora
- making better use of induction processes, and
15 The review encourages the Director-General and Executive Director to explore further, and implement, opportunities for strengthening the functioning of the relationship.