Overview of NZFSA and its establishment

22 The Authority was established in 2002 and brought together the primary production and export role of the MAF and the Ministry of Health's roles in relation to the administration of the Food Act and the regulation of the sale of food in the domestic market. There is approximately 420 permanent staff employed in NZFSA. The appropriations for Vote: Food Safety total $81.540 million for 2005/06. f this amount, roughly a third is funded by the Crown and the balance is funded by third parties (primarily levies on the meat industry).

Role of NZFSA

23 NZFSA has two main areas of focus:

  • to protect and promote public health and safety through the administration of food related legislation, and
  • to facilitate access to markets for NZ food products and related products.

24 According to information provided by MAF, roughly 80% of NZFSA's direct activities are related to facilitating access for NZ's food based primary products to external markets. Many of the functions undertaken by NZFSA stem from those undertaken, prior to NZFSA's establishment, by MAF. At the time of its establishment, NZFSA also took on roles formerly undertaken by the Ministry of Health in relation to the safety and suitability of food for sale in New Zealand.

25 The scope of NZFSA's mandate covers the entire food and related products chain from production through to processing and to sale (both domestic retail sales and exports). Food covers primary and processed products for human or animal consumption or use. Related products include, for example, hides, skins and wool. The main activities of NZFSA can be summarised as:

  • administering all food and related product legislation 2
  • administering food safety and hygiene matters in the production, primary processing, distribution, retail sale, preparation of food for sale and assurance of food exports
  • managing the relationship with Australia in relation to joint food standards setting Treaty
  • providing advice and information to the public and to the Government on food safety matters
  • co-ordinating food and related product policy advice across Government agencies
  • negotiating and providing official assurances to overseas governments for animal and plant products (other than those assurances that are provided by Biosecurity NZ), and
  • contracting with relevant agencies for the provision of food safety services. This includes contracts with the public health units of District Health Boards and territorial authorities.

Characteristics of the SAB model

26 The main formal characteristics of the SAB model for NZFSA can be summarised as follows:

  • The Executive Director of NZFSA has the delegated authority to provide policy advice on food safety matters that is independent of advice from the Director-General of MAF.
  • The Executive Director has day-to-day responsibility for the administration of NZFSA and relevant legislation and servicing the needs of the Minister for Food Safety.
  • The Executive Director has delegated authority from the Director-General for recruiting and appointing NZFSA personnel (although personnel are formally MAF employees) and ensuring that obligations in relation to employment-related legislation are observed.
  • The Director-General is expected to provide an environment that is supportive and conducive to enabling the roles of the Executive Director to be undertaken. This includes providing the Executive Director with strategic direction and leadership and ensuring that the Executive Director has access to MAF corporate services at a level and quality compatible with effective performance of NZFSA.

27 At the time that Cabinet approved the establishment of NZFSA, it expressed several expectations regarding the relationship between NZFSA and MAF. In particular, Ministers expected:

  • NZFSA to operate under a brand which is distinct and separate from MAF
  • NZFSA to project a commitment to establishing its reputation as a trusted, credible and independent guardian of public health with respect to the safety and suitability of New Zealand's food, both in domestic and international markets
  • there to be a close and collaborative working relationship between NZFSA and MAF's biosecurity and trade policy functions
  • NZFSA to contribute to the development of, and operate off, MAF corporate infrastructure (HR, IT, Finance etc), and
  • NZFSA to operate within MAF's corporate policies.

Why was the SAB model chosen for NZFSA?

28 In the lead up to the establishment of NZFSA, consideration was given to a wide range of options including the option of establishing NZFSA as a stand alone entity. The options were evaluated in light of several considerations. The decision to establish NZFSA as a SAB reflects the outcome of trade-offs between the various considerations (and some have characterised the choice of the SAB model as something of a compromise). In brief, several considerations pointed toward establishing NZFSA as a stand-alone entity rather than attaching it to MAF. Included among these were:

  • concerns that food safety objectives could be subject to producer capture. These concerns had essentially three elements:
    • that MAF's historically traditional focus on production and producers would allow it to be unduly influenced by producer interests
    • that the interests of producers would override those of consumers
    • that the objectives around promoting trade and producer interests would be in conflict with protecting public health
  • concerns that the traditional focus of MAF on trade and agricultural issues would crowd out a focus on food safety (although there were similar concerns that food safety was being crowded out within the Ministry of Health), and
  • a desire to give food safety greater prominence, recognition and focus. Establishing NZFSA as a stand-alone entity was seen as a better option for reinforcing these objectives.

29 Equally, however, there were several considerations that pointed toward keeping food safety within MAF. These included:

  • recognition of the strong links that existed (and needed to be maintained) between food safety functions and the biosecurity activities undertaken by MAF
  • a strong desire for domestic food safety and biosecurity regulatory regimes to be based on the same science and risk based principles, both in terms of design and application (this point is discussed further below)
  • a recognition of the credibility attaching to the MAF brand and the importance of the brand to NZ's trade and wider economic interests, and
  • concerns regarding the costs associated with establishing a stand-alone entity. Estimates prior to the decision to establish NZFSA as a SAB indicated that establishing a Ministry of Food would involve one-off costs of around $6.6 million plus additional ongoing costs of $1.6 million per annum. In contrast, at the time, it was estimated that the one-off costs for establishing NZFSA as a SAB would be approximately $0.5 million with ongoing costs in the range of $0.4-$0.7 million per annum (i.e. substantially less than the stand-alone option).

30 The decision to establish NZFSA as a SAB reflected the outcome of balancing these considerations. The SAB option was considered to be a lower cost option than a stand-alone entity. The stand-alone option would have separated export food assurance from biosecurity and, in so doing, risked creating a dual regime in relation to export assurance. It would also have risked creating inconsistencies between import and export sanitary and phytosanitary 3 (SPS) approaches and NZ's approach to SPS issues internationally (and thus run counter to the desire at the time to improve the coordination of SPS issues across Government).

31 At the time, the NZFSA brand did not have the standing it now has and accordingly, it was perceived there would be advantages in leveraging off the internationally recognised MAF brand. The semi-autonomous nature of NZFSA helped to provide assurance that advice would be independent of the "parent" organisation.

Other options considered

32 In addition to the SAB and stand-alone options, several other options were considered. The table below summarises these and the main reasons why the options were not chosen ahead of the SAB model.


Main reasons against the option

Crown entity

Nature of the issues requires decision making close to Ministers.

Overseas partners require Government to Government assurances and they do not perceive Crown entities as being consistent with this requirement.

Attached to Ministry of Health

Different regulatory frameworks.

Food safety would struggle for status and recognitions within the Ministry of Health.

Most personnel were located within MAF and so it was a much lower cost option to transfer Health personnel to MAF rather than the other way around.

Ministry of Food and Biosecurity

Some consumers may perceive a potential for food assurance to be compromised by producer interests.

Biosecurity stakeholders likely to view this option negatively, particularly non-food industries, reflecting lack of synergy between their industry and food.

This option would have involved significant change that would have radically altered the nature and scope of MAF.

At the time, it was considered that further and more detailed analysis would be required before proposing this option.

"Super" Ministry with individual agencies (food, agriculture and forestry, fisheries, border control, biosecurity

There was little advantage perceived, from a food perspective, by integrating with Fisheries and Customs.

Domestic Food Agency

This option risked creating a dual regulatory regime in relation to export assurances.

Separating food assurance and biosecurity risked creating potential for inconsistencies to develop between import and export sanitary and phytosanitary (SPS) approaches and NZ's approach to SPS issues internationally.

Business unit within MAF

Issues of independence (i.e. risks of producer capture and trade bias) were seen as counting against this option.

Establishment of NZFSA as a SAB

33 The considerations that led to the decision to establish NZFSA as a SAB also had an influence on the way in which the SAB option was implemented. In particular, the following features were agreed to as part of the establishment in addition to those features described in paragraph 26 above:

  • a separate Vote for food safety was established
  • a separate ministerial portfolio (The Minister for Food Safety) was established, and
  • an independent Food Safety Advisory Board was established to provide advice to the Minister.

34 All of these features were intended to reinforce the sense of separation and independence from MAF while, at the same time, not losing the benefits of being part of MAF in terms of the linkages with biosecurity (and MAF Policy), the cost advantages in utilising corporate support services (finance, administration, IT, legal etc) provided by MAF and, initially at least, leveraging off the MAF brand while the NZFSA brand took time to establish itself.

35 The desire to establish arrangements that afforded NZFSA a sense of separation from MAF is, however, at the heart of the accountability issues raised in the recent performance review (the Scott report) of NZFSA. The risks stemming from the SAB model are discussed further in the next section.

Concerns and risks with the SAB model

What are SABS?

36 Semi-autonomous bodies have been established within departments to separately exercise distinct functions from the "parent" department. The characteristics of SABs include the following:

  • They exercise distinct functions either at the direction of Cabinet or pursuant to statute although the functions have some relationship with those of the parent department.
  • They exercise the distinct functions separately from the "parent". This does not mean that they exercise functions without regard to the "parent". There is a general obligation on all Ministries to undertake their duties and responsibilities in collaboration with other arms of Government. This applies equally to SABs.
  • SABs have their own Vote and a direct reporting relationship with the Vote Minister.
  • SABs typically operate with their own brand and name although there are differences between the SABs in terms of the degree to which their branding acknowledges the parent (e.g. the Ministry of Consumer Affairs is recognised as being part of the Ministry of Economic Development in its branding).
  • SABs are legally part of the "parent" department.
  • The head of the SAB is appointed by, and is an employee of, the Chief Executive of the "parent" department.
  • SABs are established on a permanent, rather than time-bound, basis.

SABs operating in the public sector

37 Although not a common organisational arrangement, there are a number of SABs currently operating in the public sector. They include:


"Parent" Department/Department




Ministry of Foreign Affairs and Trade

Crown Company Monitoring Advisory Unit

The Treasury

Ministry of Consumer Affairs

Ministry of Economic Development

Ministry of Tourism

Ministry of Economic Development

Ministry of Youth Development

Ministry of Social Development

Ministry of Civil Defence and Emergency Management

Department of Internal Affairs

Risks stemming from the SAB model

38 The Scott report drew attention to some potential problems with the SAB model in terms of tension and conflict with public sector management and financial management principles. In short, in establishing SABs to create an element of separateness (i.e. independence of advice) from the parent, there are some fundamental tensions with the accountability frameworks that are embodied in the State Sector Act 1988 and the Public Finance Act 1989 (the PFA).

39 Under the State Sector Act, the departmental chief executive is accountable to the responsible (i.e. ownership) Minister for carrying out the functions and duties of the department, the tendering of advice to Ministers, the general conduct of the department and the efficient and effective management of the department and its resources. In the case of NZFSA/MAF, this means that the Director-General is accountable to the Minister of Agriculture and Forestry for all that goes on within the Ministry including the advice that is tendered to the Minister for Food Safety. This position is not changed as a result of the Director-General delegating duties to the Executive-Director in relation to food safety matters. The Director-General can delegate the performance of roles and duties, but he cannot, under the State Sector Act, delegate his responsibilities.

40 This point is reinforced by reference to the Public Finance Act. For the purposes of a chief executive's financial accountabilities under the PFA, semi-autonomous bodies are part of the department administering the Vote from which the semi-autonomous body is funded. MAF is the administering department for Vote: Food Safety and, accordingly, it is the Director-General who is held to account for the administration of that Vote. This has two significant implications:

  • Under the Public Finance Act, the Director-General is accountable to the Responsible Minister (ie the Minister of Agriculture and Forestry) for the financial management and the financial performance of the Ministry including the financial management and performance of NZFSA. The Responsible Minister is accountable to Parliament for the operations and performance of the Ministry as a whole.
  • The Director-General must negotiate and sign the purchase/output agreement with the relevant Vote Minister which, in NZFSA's case is the Minister for Food Safety. The Minister for Food Safety and the Director-General are the only two parties who are legally accountable for Vote: Food Safety under the PFA and the purchase/output agreement represents a formal agreement between them. While it is feasible for the Executive-Director of NZFSA to be a co-signatory, the Executive Director should not sign without the signature of the Director-General.

41 There is also a requirement on the Director-General to comply with any lawful actions required by the Minister of Finance or the Responsible Minister.

42 In establishing a SAB, Cabinet cannot of itself legally delegate the Director-General's powers and functions to the Executive Director of NZFSA. Further, it cannot absolve the Director-General of his legal responsibilities by stating that the Executive-Director is directly responsible to the Minister for Food Safety for the delivery of outputs funded from Vote: Food Safety. Delegation of functions must come from the Director-General and must be in accordance with the provisions of section 41 of the State Sector Act which govern the delegation of functions and power.

43 There is, therefore, a tension between Cabinet's desire for a degree of separateness between NZFSA and MAF on the one hand and, on the other hand, the fact that the legal responsibilities and accountabilities rest with the Director-General. Several risks stem form this tension.

44 From Government's overall perspective, there is a risk that in establishing NZFSA as a SAB, Cabinet believed that it was establishing an entity with a greater degree of autonomy and separateness than is actually feasible within the accountability framework established through the State Sector Act and PFA.

45 From the perspective of the Minister for Food Safety, there is a risk that accountabilities get blurred. The Vote Minister will naturally look to the Executive Director of NZFSA for advice in relation to food safety and will look to hold the Executive Director to account for that advice. It is the Director-General, however, who is formally accountable under the output agreement.

46 From the perspective of Executive Director, there is a risk of being faced with two masters; the Minister for Food Safety and the Director-General.

47 Finally, from the perspective of the Director-General, there is a risk that his role and responsibility will be compromised. If the Director-General is not kept abreast of the advice being given to the Minister for Food Safety, and if he is not actively involved in the monitoring and management of the performance of NZFSA, there are risks that his accountability under the purchase/output agreement and accountability under the State Sector Act to the Responsible Minister, will be compromised.

48 A further potential for conflict arises from one of the requirements upon the Director General that is embodied in a Relationship Agreement between the Director-General and the Executive-Director. Under that Agreement, there is an obligation on the Director-General to ensure that the Executive Director of NZFSA receives strategic direction and leadership consistent with the Government's strategic directions for, inter-alia, food safety. This is difficult to do if, as a result of Cabinet's preferences regarding the need for independent advice, the Director-General is distanced from the provision of advice to the Minister for Food Safety. To an extent this difficulty is mitigated as a result of the obligation on the Executive Director to keep the Director-General informed of advice being given to the Minister (as provided for under the Relationship Agreement), but the Director-General's ability to provide strategic direction is potentially compromised if the Director-General is not generally involved in discussions with the Minister for Food Safety.

Operation of the SAB in practice

49 Based on discussions with MAF, NZFSA and various external stakeholders who were interviewed as part of the review process, a number of instances have been raised by interviewees of situations where one or more of the risks noted above have eventuated in some form. The following examples are provided, although it is important to note that there is not necessarily a shared view between MAF and NZFSA regarding the relevance, or legitimacy, of the points raised through these examples:

  • There are concerns that the Statement of Intent, and the process for its development, has not afforded sufficient distinction between NZFSA and MAF. As a consequence, there has been tension between NZFSA wanting to stamp its own mark on this key accountability document and the responsibility that the Director-General of MAF has for overall direction, strategy and operations of MAF. More generally, and based on discussions with other SABs, it can be the case the SABs struggle to achieve the prominence that they would like in key accountability documents although in some cases this can be a function of size relative to the parent department.
  • Consistent with general approaches in the public sector to achieve greater levels of connectedness and collaboration, MAF has been following a strategy aimed at drawing its divisions closer together into a unified "one-MAF". Concerns have been raised that the "one MAF" approach will cause the NZFSA brand and identity to be subsumed within, or subordinated to, MAF and that, in so doing, this will lead to confusion among stakeholders regarding NZFSA's core regulatory responsibilities.
  • The Minister for Food Safety became involved in decisions regarding the office location for NZFSA. Clearly there was a difference of view between MAF and NZFSA on this issue, but it is not the sort of issue that would normally be expected to be escalated to Minister level (let alone the Vote Minister).
  • NZFSA has relationships with many Government agencies that need to be maintained for the effective discharge of NZFSA's roles and responsibilities. A point has been raised that NZFSA needs to manage each of these relationships on an equal footing, but that this is difficult to achieve this when one of those relationships is with the parent organisation (i.e. MAF). The perception is that having MAF as the "parent" risks compromising the ability of NZFSA to effectively discharge its responsibilities.
  • The Executive Director is on the senior management group of MAF and through this role, and others, is involved in a range of MAF-wide initiatives. Some concerns have been raised that these roles risk consuming too much of the Executive-Director's time at the expense of core NZFSA roles and responsibilities.

50 Among the issues raised in the lead up to NZFSA's establishment, were concerns surrounding producer capture and undue focus on trade-related functions at the expense of domestic food safety matters. A cross section of organisations involved in the domestic food industry was interviewed as part of this review. None of those interviewed considered this perception to have any real basis in fact. Some went as far to say that the perception is, in reality, nonsense. Given this, and the nature of the tensions noted above, it can be concluded that where tensions arise, it is primarily around the fact that it is attached to a "parent" department and, therefore, is subject to scrutiny by the parent as well as the day-to-day issues that affect the parent. Such tensions could be seen as being a normal part of a relationship that in many respects is similar to that of any subsidiary/parent relationship.

51 Moreover, the examples of where tensions have arisen need to be put into context. Overall, it is important to remember that the overall conclusion reached in the recent Scott review is that "NZFSA is an outstandingly competent regulator". 4 This is despite the views expressed in the Scott report that the SAB form tends to be unstable over time 5 and concerns raised by some stakeholders that MAF and NZFSA need to work more closely together in some areas.

52 Notwithstanding the potential for conflicting accountabilities inherent in the SAB model, several points need to be noted.

  • In establishing the SAB model and setting an expectation that the Executive Director would have a line of advice to the Minister for Food Safety, independent of MAF, Cabinet did not intend this arrangement to mean that such advice would be tendered without regard to MAF. Rather, Cabinet's expectations were that there would be a close and collaborative working relationship between NZFSA and MAF's biosecurity and agricultural trade policy functions. These expectations have been embodied the Relationship Agreement between NZFSA and MAF.
  • Good advice relies on considering issues and their solutions from different perspectives. In tendering advice to the Minister for Food Safety, NZFSA is bound, notwithstanding the SAB model, by the normal convention that officials consult with relevant agencies as part of the policy development process. As reflected in the Relationship Agreement, there is an obligation on the Executive Director to consult with relevant MAF groups on policy issues. In general, this appears to be occurring although there are always instances where groups within MAF would contend that they should have been consulted earlier and/or in a more substantive fashion. The same point can probably be made, however, from time to time with all inter-departmental relationships on policy issues.
  • Further, providing the Executive Director with an independent line of advice does not diminish the general onus of responsibility on the Director-General to provide free and frank advice to the Minister for Food Safety of matters affecting the Minister's portfolio. The Relationship Agreement provides that where the views of NZFSA differ from those of MAF, the Director-General will ensure that the tendering of NZFSA views is not impeded.
  • Under the Relationship Agreement, there is an obligation on the Director-General to ensure that the Executive Director has access to MAF corporate services at a level and quality compatible with effective performance by NZFSA. This review has found no evidence of any instance in which there has been any material failing in this regard. The favourable conclusions of the Scott report regarding the performance of NZFSA presumably would not have been reached had there been ongoing and major issues around the provision of corporate support services.

53 On the basis of these observations and, more generally, the considerable success that NZFSA has had since it was established in 2002, it is reasonable to conclude that the SAB model is not fatally flawed (as might be interpreted from the Scott report). There are, however, inherent tensions between the model and the accountabilities under the State Sector and Public Finance Acts. These tensions need to be managed. In this respect, the current Relationship Agreement that exists between the Director-General and the Executive Director is, on paper at least, a sensible set of working arrangements for managing the accountability tensions. The contents of the Relationship Agreement reflect a set of arrangements that also exist between MFAT and NZAid and which, in that context, appear to work well.

54 Notwithstanding the arrangements set out in the Relationship Agreement, to make the SAB model work, the parties involved have to want to make it work. There are signs that the relationship between the Director-General and the Executive Director is not working as well as it needs to. There has been correspondence between the two alleging that one is unreasonably intruding on the "patch" of the other and, in so doing, not respecting the principles set out in the Relationship Agreement. Moreover, external stakeholders have commented to the effect that they perceive there to be significant relationship issues between the two. Incidents, such as the disagreement over accommodation arrangements, which escalated to Ministers, are further evidence of a relationship that is below the standard required.

55 This issue is discussed further in the section entitled 'Making the SAB model work' with some recommendations as to how the relationship can be made to function more effectively.

2 The Agricultural Compounds and Veterinary Medicines Act 1997, the Animal Products Act 1999, the Food Act 1981, the Meat Act 1981 and the Winemakers Act 2003.

3 The World Trade Organisation (WTO) "Agreement on the Application of Sanitary and Phytosanitary Measures" covers many animal and plant related health and safety measures that affect trade between WTO members. It is a key part of the regulatory framework governing NZ's trade interests.

4 Scott G., and McKenzie, L., (2005) op.cit., p16

5 Ibid., p 14

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