March 2024
Cost recovery proposal to maintain and expand New Zealand Food Safety’s core regulatory services under the Food Act 2014
Introduction
The Restaurant Association of New Zealand (the Restaurant Association) welcomes the opportunity to submit the cost recovery proposal to maintain and expand New Zealand Food Safety’s core regulatory services under the Food Act 2014.
While we recognise the need for the Ministry of Primary Industries (MPI) to recover costs associated with New Zealand Food Safety’s core regulatory services, we propose adjustments to ensure there is a fair balance between the costs paid by micro and small businesses as compared to medium and large.
With respect to the expansion of NZFS’s core regulatory services, we believe that some of the proposals would be better delivered by industry bodies to ensure the support being delivered is responsive to the needs of businesses in our industry.
We do not agree with the proposal to allocate costs for domestic food businesses based only on a per-site basis. We think the costs should be allocated based on business size, to better reflect the fact that the majority of food businesses are micro or small businesses and can not afford the large increase in levies as proposed.
In appendix 1, we have proposed an alternative allocation of cost recovery levies based on business size. The size definition criteria used in these calculations are defined in the table below:
| Business size | FTE Share of industry |
| Micro-business | 0-10 90% |
| Small business | 11-20 7% |
| Medium business | 21-50 2% |
| Large business | 51+ 1% |
Cost recovery of oversight services
While we agree that domestic food businesses benefit from some of the proposed services, we oppose being seen as a default source of funding for those activities that would primarily benefit other sectors—as acknowledged several times over in the consultation document, and as defined by MPI’s Equity cost recovery principle.
We acknowledge that MPI does not have legal powers to levy Territorial Authorities, however we submit that there are other avenues to recover costs from those who perform registration, verification and enforcement functions—including Territorial Authorities.
To that end, the Restaurant Association recommends that a licensing fee be introduced for those performing registration, evaluation, verification and enforcement functions, to recover the costs of ‘oversight of co-regulator systems and services’ and ‘oversight of verification systems and services’.
| Recommendation 1: that a licensing fee be introduced for those organisations performing registration, verification and enforcement functions. |
Appendix 1 outlines our proposed alternative allocation of cost recovery with ‘oversight of co-regulator systems and services’ and ‘oversight of verification systems and services’ separated out, to be recovered from licensing fees. We recommend this model be used to calculate year one and two fees as per the proposal from NZ Food Safety.
As noted on page 6 of the consultation document, ‘Evaluators’ under the Food Act are specialist service providers with the skills to identify critical hazards and evaluate the effectiveness of control points in food production processes. Likewise, ‘Verification Agencies’ are private companies and Territorial Authorities that provide independent assurance checks that a food business is successfully applying the food safety rules. It would make sense for these actors to pay a fee to be licensed to perform these activities.
Should those currently performing these duties not be willing to pay a registration fee, we would welcome the opportunity to discuss ways that these services can be undertaken by industry associations, in order to be standardised across the country.
Business education and support services
We submit that businesses are more receptive to education and support services delivered by an industry association, rather than by a central regulator. To encourage uptake of these services by food businesses, we recommend that business education and support services as proposed in the consultation instead be delivered by industry associations like the Restaurant Association.
| Recommendation 2: that business education and support services as proposed in the consultation be delivered by industry associations. |
Partnering with industry associations to deliver business education and support services will contribute to lowering the overall amount that is levied on businesses, as we already have the infrastructure and capability in place to deliver large-scale education and support programmes. We believe that industry associations are able to deliver the proposed outputs for a considerably lower rate than proposed in the consultation document, and would welcome further discussions on how this could work.
Not only do industry associations like ourselves hold extensive industry knowledge about the challenges faced by our members, but we also hold well-established local and national networks with a team of staff spread across the country.
In delivering these programmes, we would welcome the opportunity to co-design these training modules with NZ Food Safety, to ensure that regulatory and Ministry requirements are being met, while also servicing the actual needs of businesses in our industry.
Industry Association referrals
The regulatory environment for the hospitality industry is fractured and confusing. While industry associations like ourselves navigate that environment and advise our members, many food businesses do not avail themselves of our services.
We recommend that registration bodies for food businesses—the Ministry of Primary Industries and Territorial Authorities—promote relevant industry associations at the point of registration. For example, when a food business registers with either MPI or their local council, we believe they should be provided information on the relevant industry associations that represent them.
| Recommendation 3: that registration bodies for food businesses promote relevant industry associations at the point of registration. |
These referrals would assist with a greater understanding of the hospitality landscape, and ensure food businesses know where they can go for advice and guidance on applying relevant rules, regulations and legislation.
Appendix
Appendix 1: Proposed cost recovery allocations 2027/28
| Domestic food business levy forecast 2027/28 | |
| Amount to recover ($m) 5.777 | |
| Number of sites from which to recover costs 50,239 | |
| Current proposed levy per site $115 | |
| Restaurant Association cost-sharing proposal Sites | Amount raised |
| Micro business, $60 per site 45,215 | 2,712,900 |
| Small business, $75 per site 3,516 | 263,700 |
| Medium business, $100 per site 1,005 | 100,500 |
| Large business, $125 per site 503 | 60,360 |
| Amount recovered from food businesses | 3,134,945 |
| Licensing Fee – co-regulator systems and services | 1,820,000 |
| Licensing Fee – verification systems and services | 766,000 |
| Total levy revenue raised | 5,720,945 |