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Mai Chen
Public and employment law specialist Mai Chen on current events

Mai Chen: Milk inquiry will have to dig deep

Botulism scare raises questions over complacency and the effectiveness of our food safety regulations

Fonterra's botulism scare has hit the China market, and chief executive Theo Spierings  will face questions over his company's actions. Photo / AP
Fonterra's botulism scare has hit the China market, and chief executive Theo Spierings will face questions over his company's actions. Photo / AP

A food scare as serious as the risk of botulism in infant formula produced by New Zealand's biggest company will inevitably result in a call for heads to roll, and for Government inquiries into what went wrong.

But the cause, including the as-yet-unexplained delay in public notification, may lie deeper than a question of the adequacy of food safety regulations. In particular, some may ask whether Fonterra's statutory quasi-monopoly contributed to its apparent complacency in reporting the botulism scare.

The Dairy Industry Restructuring Act 2001 was enacted to authorise the creation of Fonterra. It gave Fonterra a statutory authorisation under the Commerce Act 1986, without which its creation would have breached the prohibition in the Commerce Act on contracts or other arrangements which substantially lessen competition in a market.

There were good reasons for creating Fonterra - to set up a nationwide co-operative that could pool its resources and compete with global rivals.

It has been very successful in achieving that, but has the cost been Fonterra taking its eye off the ball in terms of food safety?

The key matter that has not been adequately explained by Fonterra is why a concern raised in May last year about bacteria known to be precursors to botulism was not reported to the Ministry of Primary Industries, which regulates food safety through the Food Safety Authority, or reported to AsureQuality, the state-owned enterprise for food safety, or publicly announced until last Friday night.

As well as Fonterra's own internal inquiry, the Prime Minister has announced one into the Government's response. The success of merging the Food Safety Authority into what is now the Ministry for Primary Industries will need review. The Minister for Food Safety can set standards and put in place monitoring programmes, but enforcement is always the key to successful regulation.

The question is whether the backstop nature of the current regulatory model (self-regulation with regulatory oversight) is working or if the Government's oversight of food safety needs to stand alone and have a single focus, as it did before July 2010.

On July 2, the Minister for Food Safety, Nikki Kaye, took the rare step of sending the Food Bill back to the primary production select committee. This is an opportunity for food safety to be given more teeth, if a lack of teeth is the problem.

New Zealand has always had the advantage of clean air and water, of rigorous food safety standards that are enforced, and of low corruption. That together with the Government's openness about the botulism scare, and putting its own officials into Fonterra and Nutricia to hunt down and recall all the contaminated product, is probably why milk prices did not fall substantially at the global dairy trade auction this week.

But the downside of claiming 100 per cent purity is that any failure implies complacency within Fonterra and in New Zealand's food safety regulation.

After the problems with the ministerial inquiry into the leak of Rebecca Kitteridge's report on the GCSB, the Government's Fonterra inquiry must have powers of compulsion to find out what went wrong. The leak inquiry had no such powers and now questions have arisen about whether David Henry, the Prime Minister's office and the Department of Prime Minister and Cabinet breached the privacy of Andrea Vance and Peter Dunne in trying to obtain what the inquiry thought was relevant evidence.

Whether the Henry inquiry breached privacy depends on who sought what, what was collected, and whether a failed attempt to open email attachments nevertheless breached privacy. Further revelations may arise from the privileges committee inquiry, which may affect any complaint to the Privacy Commissioner.

The privileges committee inquiry will also review the "more general issue about developing principles for the access to and release of information from parliamentary information and security systems", which this matter shows are clearly needed. But it also raises issues as to whether the Parliamentary Service should continue to fall outside the Privacy Act and the Official Information Act.

The fact that we now have a privileges committee inquiry into the Henry inquiry, which itself was an inquiry into the leak of a report by an inquiry, shows the importance of getting the right public law tool in the first place.

The same can be said for any inquiry into the Fonterra botulism scare, which will need to have powers of compulsion if New Zealand is to prevent this happening again.

Mai Chen is a partner at public and employment law specialists Chen Palmer and an adjunct professor at the University of Auckland Business School.

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- NZ Herald

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