Guest Post: The inefficient EPA

A reader writes in:

The EPA is responsible for various things including assessing new hazardous substances for import or manufacture for New Zealand. The majority of these are agrichemicals. There has been fairly vocal criticism of them from companies and farmers about their slow processing, for a few years now. Notably, the legislation they operate under (The Hazardous Substances and New Organisms Act) has barely changed since over the last 15 years. The only substantive changes are that some functions were stripped out and given to WorkSafe, and then another approval pathway that was supposed to speed up the assessment process for things already approved overseas was added.

For all the following graphs, each value is for the year to date, ending on 30 June of the labelled year. This aligns with the EPA’s annual reports.

To start with, here is the total number of applications decided by the EPA over time. 

So there’s a clear downward trend since Labour entered office in terms of overall output.

Not all applications are alike, and the EPA has four different pathways. In order of increasing complexity, they go Rapid, Category A, Category B, Category C. Over the last 14 years they’ve processed 475, 417, 58 and 65 of these respectively. Category C usually means a new active ingredient and so usually means more work for the regulator, but also something more innovative being introduced. According to what they’ve said in cost recovery consultations (see page 19 herehttps://www.epa.govt.nz/assets/Uploads/Documents/Hazardous-Substances/Fees-consultation-Feb-2023/Hazardous-Substances-and-New-Organisms-Fee-Proposals-consultation.pdf) the EPA thinks it takes about 8-10 times the resource to process a Category C application than it does a rapid. In theory if the EPA were processing more Category C applications and fewer of the less complex ones, then the above trend may not mean any decrease in output/productivity.

However, when we break down for each category, the same trend of fewer applications decided, and taking significantly longer for each application, is apparent.

When a new active ingredient is taking 1600-1700 days rather than the 400-500 it did previously, its no wonder that companies like Bayer have said that they’re not going to bring future new active ingredients to NZ unless they’ve already started the NZ-specific work on them already, as they did last year.

One of the EPA’s go to excuses has been that they are not resourced appropriately to do the work required of them (particularly over Covid, although the downward trend started two years before then). This was mentioned by the EPA board chair in a letter to Rural News last month trying to hit back at critics. However below is the graph of the number of FTEs who work on hazardous substances applications and reassessments combined over time. It’s important to include reassessments here as until 2018 there was one unified team who processed both new applications and reviews of existing substances, so it makes it a like for like comparison. Some of these FTE’s may have relatively minor input into the process, but the key thing is that it’s a like for like comparison. Also, being in FTEs rather than $ accounts for potential impacts of inflation. 

In summary, resourcing remained relatively stable over time, until the last of the Labour years and National’s return, when they’ve had a boost. With this, we can then look at their overall productivity per staff member over time.

Even if we ignore 2012 as a possible outlier, there has been a massive drop in the output of applications by the EPA, when controlled for their level of resourcing which they claim is the primary cause of their issues.

Given that there have not been any substantive changes to the legislative framework under which they operate, it looks like a clear case of operational decisions that introduce inefficiencies being allowed when Labour was in power, and now the EPA is refusing to reverse these. Given that there has been such strong pushback from public sector agencies over efforts to shift back to pre-Labour headcounts and ways of operating, I wouldn’t be surprised if similar trends were observed across other agencies too.

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