Dáil Éireann díospóireacht -
Tuesday, 19 Oct 2010

Vol. 719 No. 1

Chemicals (Amendment) Bill 2010: Second Stage

Deputy Dara Calleary

I move: "That be Bill be now read a Second Time."

I am pleased to bring before the House today the Chemicals (Amendment) Bill 2010. The main purpose of the Bill is to meet EU obligations to implement and enforce certain EU regulations. These include the EU regulation on the classification, labelling and packaging of substances and mixtures, known as the "CLP regulation"; a replacement EU regulation on the export and import of dangerous chemicals implementing the Rotterdam Convention; and periodic technical amendments to these two EU regulations and to the EU REACH and detergents regulations. The Bill also includes some minor technical changes to the Safety, Health and Welfare at Work Act 2005.

The provisions of the EU regulations, with which this Bill is concerned, are directly applicable in Ireland. That means that their provisions must be complied with, and cannot be changed by any implementing legislation. Therefore, the provisions of the Bill relate only to measures necessary for enforcement.

By way of background, the EU CLP regulation was introduced into EU law on 20 January 2009. This has its origin in the UN Globally Harmonised System of classification, labelling and packaging of chemicals. It is useful to understand the aims of this UN system. Some chemicals, from their production right through to their ultimate use, can be a danger to human health and the environment. All classes and ages of people can be confronted on a frequent basis with potentially dangerous products.

Given the global trade in chemicals and the need to develop programs to ensure their safe use, transport and disposal, it was recognised that an internationally harmonised system for classification and labelling would be desirable. Such an approach would facilitate the creation of national frameworks to control chemical exposures and protect people.

The globally harmonised system of classification and labelling of chemicals, otherwise known as GHS, was created to meet this need. GHS classifies chemicals by types of hazard. It generates harmonised templates for communicating hazards, including labels and safety data sheets.

GHS seeks to ensure that information on physical hazards and toxicity from chemicals is available in order to enhance the protection of human health and the environment during the handling, transport and use of these chemicals. The GHS also provides a basis for harmonisation of rules and regulations on chemicals at national, regional and worldwide level, an important factor also for trade facilitation.

The EU CLP regulation is the EU's expression of that global system. As with the global system, the main aims of the CLP regulation are to help protect human health and the environment by determining which properties of substances and mixtures lead to classification as hazardous, and by correctly identifying and communicating hazards. The changeover to the new rules will be phased and will fully replace the existing body of EU law in this area from June 2015. The first notable change will be the requirement on manufacturers and importers to reclassify their substances from 1 December 2010. All substances placed on the market on or after 1 December will be required to be notified to the European Chemicals Agency within one month. I am informed that the European Chemicals Agency's feedback from industry predicts that the number of notifications could be two million or even more.

I indicated at the publication of the Bill last week that it is very important for our industry to meet the CLP notification deadline. The European Chemicals Agency will maintain an inventory of all notified classifications and this inventory is one of the cornerstones of CLP. As well as the potential health and environmental benefits of the inventory, there should also be business benefits through improved trade flows throughout the EU.

The Health and Safety Authority has a dedicated helpdesk to provide information and assistance to manufacturers and importers in meeting their obligations. The second new EU regulation concerns the export and import of dangerous chemicals. It replaces an EU regulation from 2003 and implements in the EU the Rotterdam Convention on Prior Informed Consent. The aims of that convention are: to promote shared responsibility and co-operative efforts in the international trade of certain hazardous chemicals; to contribute to the environmentally sound use of those hazardous chemicals by facilitating information exchange about their characteristics; and to provide for a national decision-making process on their import and export.

The convention covers pesticides and industrial chemicals that have been banned or severely restricted for health or environmental reasons by Parties to the Convention. In the context of the EU regulation, this means that dangerous chemicals and pesticides listed in the annexes of the EU regulation may only be exported with the prior consent of the importer in the importing country. In addition to provisions relating to chemicals and pesticides listed in the annexes, the regulation contains provisions that apply to all chemicals when exported. These provisions address, in particular, requirements on packaging and labelling as specified by EU legislation.

I will now outline to the House the provisions of the Bill. Section 1 is a standard section, and defines references to "Principal Act" as meaning the Chemicals Act 2008. Section 2 contains technical amendments to definitions in Section 2 of the principal Act. These changes reflect the new EU regulations being brought within the enforcement framework of the Act.

Section 3 clarifies the regulation making powers of the Minister in section 5 of the principal Act in relation to classification, labelling and packaging of chemicals, and permits the Minister to amend the Act by regulation for the purpose of giving effect to an EU act relating to chemicals. This is an important amendment as it means that there will not be any unnecessary recourse to primary legislation for the purposes of implementing changes to the EU acts within the enforcement scope of the Chemicals Act.

Section 4 amends section 8 of the principal Act by providing for the competent authorities for the purposes of the CLP regulation, namely, the Health and Safety Authority; the Minister for Agriculture, Fisheries and Food, in respect of pesticides; and the Minister for Health and Children, in respect of appointing the bodies responsible for receiving information relating to emergency health response. This allocation of responsibilities reflects the division of responsibilities under current legislation. Section 5 amends section 9 of the principal Act to ensure that co-operation arrangements apply also to competent authorities for the CLP regulation.

Co-operation between competent authorities is a very important feature of this legislation. The IDA has highlighted the extent to which the pharmachem industry in general is regulated. At the same time, Forfás identifies regulation as one of the key elements to the mix that should provide a supportive business environment in order for business to grow. Indeed, the degree of regulatory compliance is one of the key measures in determining the competitiveness of an economy. Putting in place such co-operation arrangements should contribute to a clear regulatory framework for business and should allow us to make optimum use of resources and to avoid unnecessary costs for both the competent authorities and industry.

Sections 6 and 7 amend sections 14 and 15 respectively of the principal Act. This amendment seeks to rectify weaknesses in the provisions of the Act which deal with improvement notices. This came to light as a result of a High Court ruling on similar provisions of the Safety Health and Welfare at Work Act 2005. The Bill is making it clear that an improvement plan or revised improvement plan prepared by an operator and submitted to an inspector must be adequate in the view of the inspector and must be implemented by the operator. It is important to rectify this if the section is to retain its usefulness and to avoid the need for competent authorities to use more stringent enforcement powers. A similar amendment to the Safety, Health and Welfare at Work Act 2005 is included in the technical amendments under section 12 of the Bill.

Section 8 amends section 16 of the principal Act to make it clear that the power to issue prohibition notices applies with regard to the enforcement of EU rules concerning major accident hazards involving dangerous substances. Section 9 amends section 29 of the principal Act to create offences for breach of the CLP regulation and to allow the penalties under section 30 to apply. Section 10 amends section 30 of the principal Act to increase the maximum custodial sentence on summary conviction from six months to 12 months, following the advice of the Attorney General.

Section 11 has the effect of including within the enforcement framework of the Chemicals Act purely technical amendments to the four EU regulations within the scope of the Act as amended, namely, the REACH, CLP, detergents, and Rotterdam regulations. This will keep the regulatory framework simple, avoid gaps in the legal basis for enforcement activities, and avoid unnecessary demands on the resources normally required in the preparation of regulations.

Section 12 makes technical amendments to the Safety, Health and Welfare at Work Act 2005, including the completion of the transposition of Directive 91/383/EEC, which supplements measures to encourage improvements in the safety and health at work of workers with fixed-duration or temporary employment relationships, of 25 June 1991. It also clarifies the Minister's obligations to carry out consultation when making certain regulations, clarifies the provisions on improvement plans and revised improvement plans, as I mentioned under sections 6 and 7, and increases the maximum penalties on conviction for summary offences from a fine of €3,000 and/or 6 months' imprisonment to a fine of €5,000 and/or 12 months imprisonment. Section 13 is a standard section, providing for the Short Title of the Bill, collective citations and commencement.

The chemicals sector is a key economic sector for Ireland. By its nature, this sector includes highly dangerous chemicals which have the potential to cause serious and widespread damage to human and environmental health, and it is vital that the regulatory framework is up to date. The Chemicals (Amendment) Bill 2010 builds on the enforcement system of the Chemicals Act 2008, which aims to provide a clear regulatory framework for business, aimed at ensuring high levels of compliance and increased co-operation between the various competent authorities involved in enforcement to optimise the use of State resources and, most importantly, alleviate any unnecessary administrative costs to business. I commend the Bill to the House.

Deputy Richard Bruton

In principle, I welcome the provisions of this Bill, which build on EU initiatives in this area. Clearly, it is important for public health and safety that there be a robust regulatory system. I understand the changes in the Bill are based on regulations pertaining to the same REACH provisions as those on which the principal Act were based, but it introduces obligations with regard to labelling and packaging. This will provide extra protection and is to be welcomed.

What surprises me is that there is no regulatory impact statement accompanying this Bill. I understood it was Government policy that such a regulatory impact statement would be introduced for any new regulation that imposed compliance costs on industry. The parent initiative, the original REACH directive, placed substantial obligations on Irish industry with an estimated cost of €450 million. It seems strange that the Minister of State would not advert to the cost to industry of this measure. Just because a measure is worthy does not mean the House should not be informed of its regulatory impact. We would not advocate the withdrawal of this Bill, but we have learned from experience that Ireland, in its desire to be a good European citizen, introduces legislation in a way that is quite inflexible and imposes unnecessary costs on industries that must comply. At this time, when small and large businesses alike are struggling under the pressure of the recession to retain employment, we should be hearing assurances from the Government that the compliance cost and the effect of the implementation of the directive have been minimised. However, it seems the Government is not in this instance complying with its own principle of providing regulatory impact statements.

The Minister of State indicated that the implementation of the provisions would involve no cost to the Exchequer. If there are additional responsibilities involved, a zero cost estimate seems surprising to say the least. However, we must take it at face value that something else will make room for it, or that it will be done in co-ordination with other work.

The Minister of State rightly adverted to the need for co-operation across agencies to avoid the creation of significant compliance costs, and drew the attention of the House to a section 5 amendment that encourages such co-operation. However, as I read that section I see that this is not a new initiative but is very much the existing approach. We should go back and read the advice that has come to us from the National Competitiveness Council, a sister organisation of Forfás, to whose work the Minister of State referred glowingly. The Forfás report Driving Export Growth: Statement on Sectoral Competitiveness states:

There is a perception that the implementation in Ireland of EU legislation such as the REACH Directive goes beyond the standard requirements and places Irish based firms at a disadvantage. There is also a concern that Irish regulatory authorities may not always give sufficient recognition to the competitiveness implications of the legislation they develop and enforce.

It goes on to state:

Identifying best practice in the application of EU legislation (e.g. the REACH directive) by other member states will help ensure that the implementation of EU legislation in Ireland does not present a competitive disadvantage to Irish firms. The NCC recommends that relevant Government departments, agencies and sector representative groups monitor the application of EU legislation elsewhere to ensure that the Irish interpretation and implementation, while meeting the required standard, does not place an unnecessary or excessive burden on the Irish chemicals and pharmaceuticals sector.

The Minister of State did not mention in his speech the extent to which that recommendation is being acted upon, yet we have come to the House to propose additional burdens under this legislation, worthy though they may be. We have not heard any assertion from the Minister that this is the least costly approach or that other EU countries are not doing it in a different way. These are important principles at this time. The document to which I referred is an important one which identifies bottlenecks in Ireland that might prevent the development of key sectors, one of which, as the Minister knows, is the pharmaceutical industry.

I read in the Financial Times, apropos of the transposition of the REACH directive in the UK, that the Secretary of State for Business, Innovation and Skills, Vince Cable, in a letter to senior officials at the European Commission, has called for the phasing in of some aspects of the new rules to be postponed to avoid disruptive knock-on effects on large sections of industry. The Minister of State might comment in his response on whether we are being over-diligent European citizens, applying rules that some of our competitors and colleagues are taking the opportunity to drag their feet on. Some of these regulations have long transposition times, while others have shorter times. The Minister needs to be alerted to these issues.

The report from Forfás that I mentioned earlier expresses concern that regulation could hamper development in the pharmaceutical and medical devices sector. It is very critical of the obstacles placed in the way of research and development in these sectors in Ireland, by virtue of the very complicated system for operating clinical trials. It points out that significant delays are being experienced by companies in establishing clinical trials in Ireland for medical technology and pharmaceutical products. It states that the delays primarily arise from the need to obtain ethics approval from each participating centre in multi-centre clinical investigations and sequential review processes, whereby Irish Medicines Board approval can only be sought after approval is obtained from the relevant ethics, rather than in parallel. It states that this is a significant development opportunity where an Irish based plant can capture the development and pilot stage of new devices if we are in a strong position to apply the clinical trials and develop them.

Here we have recommendations to the Minister of State's Department about how we need to streamline processes and open up opportunities. While the Department pays lip service to the need to remove regulatory obstacles, and set a target three years ago valued at €500 million, it can only report progress on 4% of this target. The Department has to get its finger out. Is it serious about unnecessary regulatory burdens? Forfás has given us specific examples where this has held back opportunities. Deputy Penrose had an interesting presentation at his committee from some of those medical device companies, who spoke about this sort of problem.

This is probably a fairly pedestrian Bill, but we really have to wake up and smell the coffee. The reality is that we cannot rely on these sectors. They are in a very competitive environment and we have to make sure that we anticipate the pressures that will be put on. When bodies that study these sectors for opportunities and players in the sector tell us that we need to move on these things, we need to sound a red alert to those agencies involved. The Minister of State's Department has volunteered to champion the cause of reducing unnecessary burdens, but it is not producing the goods. There are many things the Department cannot influence, such as the state of economic growth, the state of external markets and so on. However, what I have outlined above are things that we can influence and the Minister of State has set out that he is determined to do so, but is not delivering.

The annual output statement would be one of those areas where the Minister of State might be looking for progress on last year. However, compliance burdens got no reference whatsoever in the statement. It was not even mentioned that the Government had made this commitment. What are we to make of a Department that claims in front of industry leaders that it will deliver on this big issue, but when setting its own internal targets, is entirely silent? It is a Department that has lost touch with what exactly are the pressures on business at the moment. The Minister of State and his Department have to regain that touch because we are in such dire straits that we have to sweat every asset in this time of crisis.

While I welcome this Bill, the Minister of State could be doing much more work to remove bottlenecks that hold back sectors in Ireland that other countries would give their proverbial right arm to have, such as the pharmaceutical and medical devices sectors. They are strong clusters. They provide great opportunities. They have difficulties in seeing the flow of new products coming forward for different reasons, and we need to position ourselves to make that an easier process. I ask the Minister of State to have a look at those issues that I have raised and see how his Department can become more engaged.

The new strategy statement to recognise new ministerial appointments was due in the middle of September, but I gather it has been held back to be checked out by other Departments, which may or may not be reasonable. I would like to see some hard statements saying that in the first year, the Government will be delivering €150 million of that €500 million in compliance cost reductions. The same is true for other areas where the Minister of State has taken responsibility upon himself to implement the competitiveness reform agenda. We need to see timelines and dates and people being made responsible for their performance against those targets. The public are sick of hearing that bonuses are being dished out even when targets are not being hit. We need to bring back those bonus payments, impose the cuts in pay that those senior officials should have taken, and let them go and earn their bonus payments by delivering on this agenda.

Deputy Willie Penrose

I welcome the opportunity to contribute on behalf of the Labour Party on this Bill. We are broadly supportive of the regulatory framework that has been incorporated into this Bill on foot EU regulations. I was one of the first spokespersons for agriculture to make some of the points that were just made by Deputy Bruton. I remember somebody saying that I was a eurosceptic at the time. I was not a bit of a eurosceptic, but I realised that the more impositions and unnecessary burdens imposed on a business, the better chance there is that the business will go to the wall. It is important that we examine every regulation and Bill that is brought forward.

The Minister of State pointed out how important this is for human health, the environment and so on. When they are used properly, chemicals such as pesticides can be very positive, but they also can have deleterious consequences if they are not used properly or if contamination arises as a result of their utilisation. Therefore, I certainly understand the Minister of State's point. However, the regulatory assessment regime in this country needs greater fuelling and needs somebody to drive it in order to ensure that various hurdles that are placed in the way of businesses by the legislative framework can be examined.

I heard the Minister of State speaking of the standard modelling cost system and he seemed to have a particular interest in it from his days with Chambers Ireland. I wonder where would this Bill fit within that context, and I certainly concur with some of the points made by Deputy Bruton in this area.

There is a feeling of déjà vu, because only two years ago we spent quite an amount of our valuable time and energy enacting the Chemicals Act 2008, which had to be implemented as a matter of urgency to comply with pressing timelines. This Bill has again been brought forward to amend that Act and primarily to meet the EU obligations and provide for the enforcement of two new directly applicable EU regulations. This is part of the problem with chemical regulations, the main regulation being the classification, labelling and packaging of chemicals. This is important in the context of the EU Reach chemical regulations, which was arduous legislative work and taxed our understanding, appreciation and absorption of complex law and legal principles.

The directly applicable aspect of this legislation means that we do not get much choice, and I do not think we can make many amendments. We are left with the baby and we have to nurse it. We have no input other than the timeline, and rights arise from it. The Government might be afraid of the EU when a registration process is to be put in place and we might be left behind in that context. The Bill is necessary given that the EU's deadlines for the implementation of the two regulations have passed, although I know there is an extension to 2015 for part of it, so time is of the essence. The Labour Party will co-operate in getting the Bill passed into law to stave off any difficulties that might arise. However, one must take cognisance of the points Deputy Bruton mentioned that we cannot take everything as handed down. We must put it through the rigour of evaluation and assessment of the impact it would have on pharmaceutical and chemical businesses, which are important. He referred to the medical device area. Members of the Oireachtas Joint Committee on Enterprise, Trade and Innovation were flabbergasted to hear that companies in the medical device sector cannot even get cohesive Government action across the Department of Enterprise, Trade and Innovation and the Department of Health and Children. We submitted a motion in that regard to both Departments to try to get a degree of cohesion to the approach in that area.

In effect the Bill puts in place a series of largely technical amendments to the 2008 Act and amends in relatively minor ways the Safety, Health and Welfare at Work Act 2005, particularly regarding improving notices which arose as a result of a High Court case.

We are all aware that the development, production and trade of chemicals represent a very significant industry giving rise to approximately 9% of our international trade. Approximately 30,000 people are employed in Ireland in the chemical and pharmaceutical sector. Revenues from the chemical sector approximate to 10% of GDP in 2009, which indicates it is a significant area.

We are all aware of the significant benefits that derive from chemical applications once they are properly utilised — the use of chemicals is important in the context of helping to reduce the spread of malaria and other diseases. In the agriculture area herbicides have been important in helping to secure significant increases in crop yields. Chemicals having been fully tested against the impacts of toxicity when used properly and not overused have a very beneficial effect. However, there are cogent reasons to regulate the use of chemicals owing to the potential harm to human health and the environment. In that regard strict regulation is important to minimise the risks to human and plant life, and the environment in general.

The 2008 Act deals with the impact of dangerous chemicals. The detergents regulations imposed a two-tier testing regime on the biodegradability of the active ingredients of detergents, which achieved harmonisation of rules of the biodegradability of surfactants in detergents leading to the necessity for precise and additional labelling of detergents. This was substantial legislation and without the help of staff in the library and research section we would not have been able to get stuck into it at all. The major regulation was EC 1907/2006, the regulation on registration, evaluation, authorisation and restriction of chemicals, REACH, which aimed to improve the protection of human health and environment through better and earlier identification of the intrinsic properties of chemical substances. A major criticism of the REACH regulation was the fear of the imposition of the unnecessary costs of compliance on businesses, particularly in the storage and transportation of chemicals, a point made by Deputy Bruton and the National Competitiveness Council. In his speech the Minister of State referred to the role for Forfás. The National Competitiveness Council made a number of observations in this regard and we should not dismiss them lightly. The Minister of State needs to balance this with the enhanced safety that has arisen as a result of the significant reduction in exposure to chemicals and the positive impact it will have on everybody's health in the longer term.

One could ask whether there has been a significant level of compliance with the registration process. The Minister of State stated that under the provisions of section 3 the Minister can amend the Act by regulation and therefore can act speedily to ensure any urgent EU regulation relating to chemicals is incorporated into the corpus of domestic law, which is a useful tool. However, I would like to see that all regulations of that nature would be laid before both Houses of the Oireachtas in due course. I have an abhorrence of laws being implemented by regulation. It not as though I want to have to read Bills such as this which can be difficult for everybody concerned, but I have a deep distaste of anything introduced by way of regulation. I remember all sorts of things were promised to be done after the introduction of the Diseases of Animals (Amendment) Act 2001, but they became embedded and were never revisited after having been laid before the Oireachtas.

I note the HSA is engaged in a monitoring process. Given the imposition of additional regulatory burdens, it is important to have a helpdesk to provide information and assistance to manufacturers and importers in meeting their obligations. People should see this as an opportunity to be constructive and helpful rather than seeing it as just another burden to be placed upon the companies involved.

The Health and Safety Authority plays the lead role, along with other competent authorities, such as the Minister for Agriculture, Fisheries and Food, the EPA, the Minister for Health and Children and the Revenue Commissioners, in making proposals on initiatives. It also carries out inspections and acts as a supervisory authority.

The essence of the CLP regulation is that substances and mixtures will need to be appropriately classified labelled and packaged before being made available on the market. It will be effective from December 2010 for substances and from June 2015 for mixtures. It is largely a technical Bill in so far as it incorporates amendments made to regulations and it amends the 2008 Act.

The division of responsibilities of the various competent authorities — the HSA, the Minister for Agriculture, Fisheries and Food, the Minister for Health and Children — are clearly set out. I wonder whether the 2008 Act was drawn so widely that there was an overlapping of responsibilities. I always interpreted the HSA as having a lead role in the 2008 Act. Great care seems to have been taken to ensure the division of responsibilities are more explicitly laid out in this legislation, but I could be wrong in my interpretation.

National authorities will be required to co-operate together under the enhanced co-operation provisions. While that always applied, it now seems to have become almost mandatory to have the exchange of information and advice, and the carrying out of joint inspections, checks, examinations and investigations. The Bill allows the HSA to enter into co-operation arrangements with its equivalents in other member states, which I hope will lead to a more seamless transition to what is acceptable in all states. If something originates here it will be possible to determine the degree of acceptability it will achieve in another market. I hope that enhanced co-operation and information exchange will be available and useful to all the companies involved.

Section 14 of the 2008 Act required that where an inspector had formed an opinion that an activity was being carried out involving a risk to human health or the environment, he or she could require or direct that an improvement plan be submitted in respect of the particular activity, in other words a process or plan for remedial action to be taken. Section 6 of the Bill amends section 14 of the 2008 Act by providing for a new procedure to be followed by the HSA inspector upon receipt of an improvement plan, which streamlines the process involved in the implementation of the improvement plan. The Minister of State clarified that this amendment arose following a High Court case in a related area.

Section 7 provides for a simpler formulation of the contravention notice which was issued under section 15 of the Act. Offences and penalties seem to be a significant part of all the Bills that come before the House and significant changes have been made in the Bill in respect of array of offences and penalties provided. The maximum term of imprisonment has been increased from six months to 12 months. I understand the Attorney General advised that change, although I do not know why it has been made. The fines that will apply have been revised. Furthermore, a list of individuals is specified in terms of the commitment of offences under the CLP regulation in that context.

This legislation is subject to the various caveats I outlined on behalf of the Labour Party. We must recognise that the protection of human health and the environment are the main objectives of the Rotterdam regulation, the detergents regulation and the REACH regulation, which were before us two years ago. The CLP regulation is now coming into force. It carries a corpus of additional obligations in regard to compliance, classification, labelling and packaging of substances and mixtures.

This regulation in terms of this Bill is directly applicable but there must have been some incongruence between that 2008 Act and the regulation, otherwise, we would not have had to revisit this legislation. Am I correct about that? Could the Minister of State have adopted the regulation by the simple process he will use under section 3 of the Bill? Is that how such matters will be dealt with from now on, rather than by revisiting the relevant legislation and introducing an amending Bill? We have to amend the principal Act, the 2008 Act, to ensure that what was brought in under the CLP regulation can now be incorporated. Is that the position?

Once chemical hazards are identified, the onus will be placed on the various people within the supply chain to ensure that information about the risk is disseminated or communicated with a view to reducing the risk to the environment and, principally, to human health.

The Health and Safety Authority will have a significant role in ensuring that we comply with the CLP regulation. Will the Minister of State indicate if adequate staff are available to ensure that level of compliance, or is this part of the Croke Park agreement such that another item of legislation will require significant attention in the context of the CLP regulation and the other regulations to ensure that all the various regulatory responsibilities that will be imposed on us will be carried out? On the passing of this Act, I understand that the European Union must be notified as to what steps are being taken in this regard.

We broadly welcome the legislation and we may table amendments to it. I understand that it must be dealt with by the end of November and I assume it will be considered by our committee. It is purely a technical Bill. Given that it is directly applicable and that it amends an Act to ensure that directly applicable provisions are encompassed in the corpus of the principal legislation, there is not a great deal we can say or do in that context, other than to send out a signal that we should not simply accept measures carte blanche. In terms of measures we have adopted in the agricultural sector — I note that Deputy Johnny Brady is in the Chair — other countries have not been as easily fobbed off as we have been in Ireland. Other countries put down markers and they interpret legislation in the way that is best fitted to their particular circumstances, as opposed to us who seem to be — as I said here one day as a result of which various accusations were made against me — too good as Europeans. We are almost lapdog-like in our attitude to any measure that comes from Europe.

Under the recent referendum, I thought a critical change was that we would all have a chance to have an input into much of this legislation and ensure that some of the worst excesses, which some bureaucrats seems eager to impose, would be at least addressed in a positive fashion from the perspective of Ireland before they get on to the EU Statute Book. That might be one of the good measures that will be helpful in that context.

I understand where the Minister of State is coming from in terms of this Bill and we will try to facilitate its passage.

Deputy Michael Ahern

I am delighted to have this opportunity to say a few words on the Bill and on the industry and sector in particular.

In 2011 the International Year of Chemistry will be celebrated but because of the chemical industry's diversity and the fact that most of its products are not sold directly to the ordinary consumer, the importance of the chemical industry is frequently not widely appreciated. The chemical sector in Ireland directly employs approximately 25,000 people and is one of the major sectors in the economy.

Unemployment, especially among honours chemistry graduates, is currently virtually unknown, even in these times. Within the industry chemists are employed in production, research and development, quality control, environmental monitoring and chemical analysis. However, with their strong technical background, chemists frequently move into other areas, for example, food and drink manufacturing and power stations as well as electronics and material science industries. Despite the economic recession and the loss of traditional industries, chemistry and the chemical industry remain vigorous and dynamic areas of growth, especially in the Cork area. The skills involved will always remain essential.

The following are some of the companies that employ graduates and manufacture a wide range of chemical and pharmaceutical intermediates in the east Cork area. They are Alkem Chemicals, Biocel Limited, Cara Partners, Cascade Biochem, Henkel, Irish Refining Company in Whitegate, Irotec Laboratories, Janssen Pharmaceuticals, all of which are located in Little Island, Millipore and GE Healthcare in Corrigtwohill, PepsiCo in Little Island, Pfizer, which is located both in Little Island and Ringaskiddy, Novartis in Ringaskiddy and other chemical and pharmaceutical businesses, especially around the Cork Harbour area.

Ireland remains one of the leading global locations for the manufacture and development of pharmaceutical and chemical products and the sector is and will remain an excellent employer. As it starts to move up the value chain, the demand for graduates of chemistry and life sciences is likely to increase. In recent years, even in these times, there has been major capital investment by many companies in this sector and of great significance is the fact that most of these investments are in biotech and research and development at the cutting edge of the sector. This bodes well for the long-term future of the industry in the country.

Currently, even in these times, it is well to remember that eight of the top ten companies — eight of the top world leaders — have operations in Ireland. Companies have spent significant capital investment during 2009. Ten of the top selling drugs are manufactured in Irish sites. The sector's exported products in 2009 up to a value of €44 billion, which represents 51% of the national total. It is also important to note that Ireland is the largest net exporter of medicines in the world.

The Irish pharmaceutical chemical industry directly employs approximately 25,000 people and upwards of 25,000 people are employed in the provision of services to the sector — more than half of these employees are third level graduates. This emphasises the importance of this sector to our economy.

The Irish pharmaceutical and chemical industry remains a strong contributor to the economy and it is continuing to growth. The sector has flourished because of deep-seated economic strengths, an innovative and resourceful young workforce, a proven level of manufacturing and compliance experience and an inherent ability to comply with tough and demanding international regulations and competitive corporation tax rates. We have high education standards which have underpinned this performance.

Chemicals have proved to be of benefit to humans in many ways. A substantial use of chemicals is essential to meet the social and economic goals of the world community. Today's best practice demonstrates chemicals can be used in a cost-effective manner and with a high degree of safety. Positive examples include the use of pesticides to reduce the spread of malaria and other diseases and the development of herbicides as a part of the 20th century's green revolution which led to massive increases in crop yield and food production.

However, many chemicals can be harmful to human health and to the environment. Several international agreements aim to control these associated risks. One goal of the world summit on sustainable development, held in Johannesburg 2002, was that by 2020 chemicals will be used and produced in ways that lead to the minimisation of significant adverse effects to human health and development.

The Bill's main purpose is to meet certain EU obligations and implement and enforce certain EU regulations in this area. These will protect human health and the environment by determining which properties of substances and mixtures will lead to classification as hazardous, by correctly identifying hazards and communicating them. To protect and ensure continued growth in this vital sector which employs over 50,000 people and contributes to 50% of exports, it is essential the regulatory framework is up to date. This Bill builds on the enforcement system of the Chemicals Act 2008. It aims to provide a clear regulatory framework for business and ensure high levels of compliance and increased co-operation between the various competent authorities while optimising the use of State resources and alleviating any unnecessary administrative costs to business.

I commend the Bill to the House.

Deputy Kieran O’Donnell

While this is a technical Bill, there are some issues with sections 3 and 4 which I wish to raise. Will the Minister of State clarify if section 3 will require further amendments to this area to be introduced through regulation and directive rather than through primary legislation?

Deputy Penrose already referred to the provisions in section 4 and the level of resources required for the Health and Safety Authority, the Department of Agriculture, Fisheries and Food and the Health Service Executive to implement the legislation. Have resources been set aside already? What will be the cost of implementing the legislation?

This legislation seems to be rushed in nature because the Government is required to introduce the regulations before the end of November. Accordingly, the implementation of the directives in question may become draconian. In a report on driving export growth, Forfás stated "the manner in which the regulation evaluation authorisation and restriction of chemical substances, REACH, directive is applied in Ireland will have direct implications on the competitiveness of Ireland as a location for the chemicals sector". On the other hand, the Minister of State claimed in his speech "the degree of regulatory compliance is one of the key measures in determining the competitiveness of an economy".

The Forfás report also stated:

There is a perception that the implementation in Ireland of EU legislation such as the REACH directive goes beyond the standard requirements and places Irish based firms at a disadvantage. There is also a concern that Irish regulatory authorities may not always give sufficient recognition to the competitiveness implications of the legislation they develop and enforce.

Regulation is needed in this area but, at the same time, we cannot forget the chemicals sector accounts for 50% of goods exports. It is concentrated in two sectors, namely organic chemicals and medical and pharmaceutical products which together account for 80% of chemicals exports. A balance must be struck between being competitive and compliant with regulations. We must monitor how our neighbours implement these regulations too, a task on which the Government often falls down. For example, in the case of NAMA, why did the Government not monitor how larger EU member states resolved their banking problems? Germany hived off the toxic assets from its banks into separate companies with a 10% to 20% discount. The Government went off——

Acting Chairman

Will the Deputy stick to the Bill?

Deputy Kieran O’Donnell

It is relevant to regulation.

The Forfás report on driving export growth stated:

Identifying best practice in the application of EU legislation, for example, the REACH directive, by other member states will help ensure that the implementation of EU legislation in Ireland does not present a competitive disadvantage to Irish firms. The National Competitiveness Council recommends that relevant Government Departments, agencies and sector representative groups monitor the application of EU legislation elsewhere to ensure that the Irish interpretation and implementation, while meeting the required standard, does not place an unnecessary or excessive burden on the Irish chemicals and pharmaceuticals sector.

In his speech the Minister of State pointed out:

The first notable change will be the requirement on manufacturers and importers to reclassify their substances from 1 December 2010. All substances placed on the market on or after 1 December will be required to be notified to the European Chemicals Agency within one month. I am informed that the European Chemicals Agency's feedback from industry predicts that the number of notifications could be two million or even more.

How much will these new regulations cost the Irish chemical industry and those bodies responsible for their implementation, such as the Health and Strategy Authority and the Health Service Executive? There seems to be no regulatory impact assessment with this legislation. Will the Minister of State give a commitment that one will be carried out?

The problem is that it is very hard for Members of the House to have a proper debate when we do not know what the impact of the legislation transposing this directive will have. There is a strong need for regulatory impact assessments to become standard in terms of how the Government does its work. I am anxious to hear the Minister's views in that regard. In future, if the Government is transposing directives, it should introduce them in adequate time for regulatory impact assessments to be carried out. These should be provided to Opposition Members so we can have a constructive debate at an early stage on the impact a directive will have on an industry.

Over half of our goods exports are produced by an industry that will be directly affected by this Bill. Here we are, however, with a lack of information to have a proper debate on the issue. Industry in Ireland is experiencing difficulties in the current environment, yet we are now imposing a further regulatory burden on it by 1 December, with no quantifiable indication of how much it will cost, how this directive has been implemented in other EU jurisdictions so we can assess the pitfalls, the level at which it has been implemented or what has become the norm. When it was decided to bring this legislation before the House, did the Department carry out a review of its implementation in other EU jurisdictions in terms of the cost to industry? In this country there are three regulatory bodies involved, the HSA, the Department of Agriculture, Fisheries and Food and the Department of Health and Children. Is that the case in other EU jurisdictions or does just one body carry out the regulation, which cuts down on the cost of regulation and makes it more efficient?

Such information would ensure we could have a proper and detailed debate on something that is technical in nature but that will ultimately cost an industry which is providing an enormous number of jobs to Irish people, many in the multinational sector. It is imperative that we retain those jobs. I hope the Minister will address this.

Minister of State at the Department of Enterprise, Trade and Innovation (Deputy Dara Calleary)

I thank the Deputies for their contributions. This Bill does not impose any additional obligations on industry. The regulatory impact assessment which was prepared for the 2008 Act included the CLP regulation, which was a draft EU regulation at that stage. It was not adopted in time for full inclusion in the Act but we included the provisions and obligations of the CLP in the regulatory impact assessment at that time. The regulatory impact assessment clearly showed that the regulatory framework under the Chemicals Act was the most cost effective available to us.

The rules we are applying apply to all operators in every member state of the EU. I am holding a copy of the official journal of what we are trying to implement in this legislation. It contains all the rules, regulations, appendices and everything that goes with this legislation. It is similar in size to the telephone directory we had fadó fadó of all telephone numbers outside Dublin. This is what we are trying to implement, and we are trying to do so in a way that minimises the burden on industry, as we did in 2008.

There is no need for extra resources for the HSA or the EPA as a result of this. Under the 2008 legislation, 38 inspectors were assigned to the HSA to deal with this. It is interesting to reflect on the general approach of the HSA. It is generally not enforcement but encouragement, specifically with regard to this legislation and compliance with the 2008 Act. In 2008, the HSA conducted 1,480 inspections under the Act and to date this year it has conducted 1,104. With regard to the items inspected, on the first visit compliance with the various regulations under the 2008 Act ranged from 36% to 48%. However, following advice and encouragement from the HSA, compliance on second visits was reported in all but 1% of those who received such advice. The HSA approach is to be helpful and to try to encourage rather than to enforce. That is the approach it adopts across all of its remit.

I noted the concerns about medical devices and the chemical industry generally. We all support the role of the medical device and chemical industries so I will follow up on the concerns. It is important to note, however, that the difficulties Deputy Penrose has encountered have not necessarily stopped the expansion of the medical device or chemical industries. Indeed, there was a very good announcement in my home town yesterday of 250 extra jobs as a result of a product designed in Ballina——

Deputy Willie Penrose

I noticed the Minister in the photographs. I missed one person though.

Deputy Dara Calleary

——regardless of whatever impediments the Deputy suggests were put in place. However, I will convey his remarks to the Minister.

With regard to Deputy Bruton's worry about compliance in the Department, we are absolutely committed to reducing the regulatory burden on business by 25% by 2012. It is difficult in many areas to strike a balance — one is dealing with people's lives and daily working conditions — but it is something we are committed to doing. We will be bringing forward the strategy statement. I agree with the Deputy on streamlining procedures and processes. The pharmaceutical industry's clinical trials and obligations are requirements of the Irish Medicines Board and the European medicines agencies. They are specifically excluded from this legislation but I will convey the Deputy's remarks on the matter.

As regards research in the chemical sector, the REACH regulation recognises that research should not be hampered by the rules applicable to chemicals that are already on the market. There is a provision in Article 9 of the REACH legislation for exemption from the general obligation to register for product and process orientated research and development. That is aimed to stimulate research and development, particularly in the chemical industry.

Deputies Penrose and O'Donnell expressed concerns about regulations instead of primary legislation. Any proposed regulations will be placed before the House. I agree there is a necessity to bring more power back to this House. The Office of the Attorney General has drafted the specific provision in such a way as to respect the policy and principles that apply to this legislation particularly. Any regulations that are changed will be brought before the House and will be subject to consultation.

Deputy O'Donnell made a point about competent authorities. The reason we specifically mentioned the Department of Agriculture, Fisheries and Food, the Department of Health and Children and the HSA is that they are the agencies with specific remits and expertise to carry out any additional work. That reflects the reality of cross-cutting policies. There are a number of Departments with responsibility in this regard. We have, however, given the HSA the responsibility of being the lead agency and it is has engaged in a detailed process of engagement across a large number of sectors since the implementation of the 2008 Act.

Deputy Penrose referred to the 2008 Act. It might be useful to inform the House on the current position since the implementation of that Act. The HSA has recruited 33 staff with a range of very scarce technical expertise, including some of the skills mentioned by Deputy Michael Ahern. That team has been involved in helping Irish industry to meet the demands of the new framework as well as setting up the inspection and monitoring regime that is required by the framework. The chemicals operation has won widespread respect from industry for the manner in which it has implemented these regulations and co-operated with industry. Since 2008, over 97,000 substances have been pre-registered for REACH by over 3,200 legal entities. That is actually only 240 companies, so the impact is not as wide as people might suggest.

Chemical related activity of the HSA in 2009 included 1,513 inspections, 1,198 of which specifically related to REACH, and 472 inspections of all major accident hazard sites covered by the Seveso regulations and other high risk work places storing and using large quantities of dangerous chemicals. Our EU obligations require the HSA to inspect all major accident sites and all its targets have been achieved. It has also signed a memorandum of understanding with other agencies in regard to this area and it has a dedicated REACH help desk, which answered 470 detailed queries throughout 2009. The authority presented at industry and general business conferences and hosted two seminars for people working in this area. The HSA has also participated in and given feedback to all the export committees of the European Chemicals Agency, which is a heavy workload given the documentation required, and has involved itself in UN and OECD activity regarding EU legislation.

In 2010 the REACH-CLP inspection campaign focused on the availability of chemical inventories in the workplace or the existence of some form of chemical amalgam system for chemicals stored and used in workplaces for compliance with the pre-registration of registration of chemical substances under REACH and the preparedness for the first registration deadline of 30 November 2110 as well as the availability of safety data sheets and preparedness for the classification and labelling notification deadline under the CLP regulation of 3 January 2011. That is a brief outline of the detailed work and engagement of the HSA with the industry regarding this legislation.

I thank Members for their remarks. Committee Stage will be taken during the second week of November.

Question put and agreed to.