Economists query agri-law merit

By KEVIN TAYLOR

A report by a top economic research organisation backs agri-chemical and animal remedy industry claims that new hazardous substance laws will force up compliance costs.

And the Institute of Economic Research report says there is a risk the laws may create a big cost as the competitiveness of the agricultural sector declines.

Agri-chemical and animal remedy firms predicted last month that the laws, introduced last July, would stymie product releases, force development work overseas and incur huge costs.

The Hazardous Substances and New Organisms Act and the Agricultural Compounds and Veterinary Medicines Act replaced the Pesticides and Animal Remedies Acts.

They have substantially changed the regulatory environment governing agricultural remedies and pesticides.

The report, commissioned by the Ministry of Agriculture and Forestry, said the changes increased compliance costs and added complexity and uncertainty to the industry.

But Agriculture Minister Jim Sutton, who released the report last month, said it would be used as a benchmark in assessing the effects of the new regulatory regimes.

He said MAF had wanted a benchmark against which to monitor the implementation of both acts - to provide early warning of unintended consequences.

The report said questions remained whether the cost of the Hazardous Substances Act would outweigh its benefits.

The probable cost in the loss of competitiveness in the agricultural sector could be substantial, the report warned.

"While the aims associated with the act and thus its probable benefits are worthwhile, it is unclear the extent to which they can be achieved or even measured.

"Quantification of these benefits - even in broad terms - is elusive."

The Employers and Manufacturers Association northern branch said the new laws were endangering innovation.

Chief executive Alasdair Thompson said the laws flew in the face of other Government initiatives to create an enterprise culture.

He said the NZIER report was a "further damning indictment" of the cost of the Hazardous Substances Act on agricultural chemical and animal remedy companies.

"We have heard other accounts of research and innovation work ceasing because of the impact of the [Hazardous Substances Act]," Mr Thompson said. "It's endangering innovation. The Government seems to be saying 'we want you to be successful but we're going to make it extremely difficult for you'."

In late November, agri-chemical and animal remedy firms predicted that the new rules would stymie product releases, force development work overseas and incur big compliance costs.

Farming and other companies feared being lumbered with an $8 million bill for the Environment Risk Management Authority to do its job under the Hazardous Substances Act.

Mr Sutton said MAF would continue its monitoring to see if the "speculative concerns and issues" raised about the acts were borne out.