1. Introduction

Cost recovery involves government entities charging individuals or non-government organisations some or all of the efficient costs of undertaking specific government activities. This may include the delivery of goods, services or regulation, or a combination of them. The Australian Government Charging Framework (Charging Framework), sets out how government entities design, implement and review regulatory charging activities, consistent with the Public Governance, Performance and Accountability Act 2013.

Purpose of the Cost Recovery Implementation Statement 

This Cost Recovery Implementation Statement (CRIS) provides information on how the Australian Industrial Chemicals Introduction Scheme (AICIS) will implement cost recovery for its regulatory activities in 2023-24. The purpose of this document is to transparently demonstrate how regulatory charging has been developed to comply with the Charging Framework and to clearly outline the regulatory charges to be applied from 1 September 2023. The CRIS also reports financial and non-financial performance information for these charging activities and contains financial forecasts for Financial Years (FY) 2023-24 through to 2026-27.

Description of regulatory charging activity

The Industrial Chemicals Act 2019 establishes AICIS as the regulatory scheme for the importation and manufacture (introduction) of industrial chemicals in Australia. The scheme is administered by the Executive Director supported by staff within the Australian Government Department of Health and Aged Care. The Department of Climate Change, Energy, Environment and Water (DCCEEW) undertakes the environmental component of AICIS assessments and evaluations under a service level agreement with AICIS. 

The main purpose of AICIS is to aid in the protection of human health and the environment by assessing the introduction and use of industrial chemicals and providing information and recommendations about managing any identified risks. AICIS is designed to make regulatory effort proportionate to the risks posed by industrial chemical introductions and to promote innovation and encourage the introduction of lower-risk chemicals. 

The information from AICIS assessments and evaluations is made available to state and territory and other Commonwealth agencies to assist in regulating the use, release and disposal of industrial chemicals and to support the wide range of chemicals management legislation for the protection of human health and the environment.

Key AICIS regulatory activities are summarised below and described in more detail in Section 3:

• Scientific assessment and evaluations of industrial chemicals
• Compliance monitoring and enforcement of statutory obligations on industrial chemical introducers under the Industrial Chemicals Act 2019
• Maintenance of the Australian Inventory of Industrial Chemicals (the Inventory)
• Strategy, planning and organisational support activities
• Implementing Australia’s obligations under international agreements (relevant to industrial chemicals).

The full cost of administering the scheme is recovered from the regulated industry through fees for services and registration charges (levies). Fees for services apply to regulatory activities attributable to a service provided to a specific introducer. The registration charge relates to the regulation of the market as a whole and funds regulatory activities that are not attributable to a service provided to a specific introducer. 

AICIS fees for services apply to activities such as pre-market assessments and authorisations of unlisted chemicals, listing chemicals on the Inventory or amending Inventory listings, applications to protect confidential business information and authorisations to import/export industrial chemicals subject to international agreements. All registrants pay an annual application fee to be listed (or re-listed) on the Register of Industrial Chemical Introducers.

Most of AICIS’s operational costs are met from the annual registration charge levied on importers and manufacturers (introducers) of relevant industrial chemicals. Where an introducer imports and/or manufactures relevant industrial chemicals above a certain threshold, an annual registration charge is payable. The applicable levy depends on the introduction value of relevant industrial chemicals introduced in the previous financial year and is calculated based on a statutory formula¹. 

Activities supported by the annual registration charge include: evaluation of chemicals (including those listed on the Inventory), post-market compliance monitoring and enforcement, provision of information and recommendations about managing risks from the introduction and use of industrial chemicals, collection and publication of information and statistics, and corporate activities to support the efficient operation of the scheme. 

Appropriateness of cost recovery and who pays

It is Government policy that the full cost of AICIS regulatory activities be recovered from regulated entities (introducers of industrial chemicals). Refer to Section 2 for details on the policy authority that supports AICIS charging arrangements and Section 3 on the design of those charges.

Consistent with the Government’s policy position, full cost recovery is considered appropriate because:

• introducers create the need for the regulatory activity to be undertaken by Government by placing industrial chemicals in the market;
• to effectively regulate the introduction of industrial chemicals under the Industrial Chemicals Act 2019, Government requires skilled staff and sufficient technical resources to undertake a number of essential activities; and
• charging provides transparency about the cost of resources involved in regulating the introduction of industrial chemicals. It also promotes equity by ensuring that those who use or create the need for Australian Government regulatory services continue to bear the costs.