Hon Heather Roy speech to the New Zealand Juice and Beverage Association Annual Conference; Novotel Lakeside Hotel, Lake End, Tutanekai Street, Rotorua; Thursday, October 1 2009.

Thank you members of the New Zealand Juice and Beverage Association for the invitation to speak to you today at your annual conference.  I'd like to take the opportunity too to congratulate you on your 15th birthday.

The juice and beverage industry is one that refreshes and hydrates the nation, whether that be after a workout in the gym or - hopefully in the next month or so - entertaining on a warm spring afternoon in the sun.

Consumption
New Zealanders spend $1.2 billion a year on cold non-alcoholic beverages, making your industry very important - both to the consumer and to the wider national economy.  I understand that a remarkable 75 companies - which, I'm sure, many of you represent here today - are involved in the manufacture and importation of cold beverages in New Zealand.  I am also aware that Kiwis annually consume 640 million litres of cold non-alcoholic beverages - soft drinks, fruit juice, bottled water, sports and energy drinks, and flavoured milk.  These are very impressive figures.

As well as being a Minister I am, of course, a consumer.  The range of drinks of all descriptions always seems to be rising - increasing consumer choice as new tastes and flavours are brought to the shop shelves.

As health and wellbeing become increasingly important to individuals, it also appears that more and more consumers are seeking products that are considered to be more 'natural'.

According to Zenith International Consultants fruit juice consumption overall in Europe, Australia, the US and New Zealand has increased in recent years - possibly a reflection on the increased public interest in health issues and the view that fruit juices are a healthy, natural source of nutrients.

Increased consumption may also be the case for your industry's sports and energy drinks sector.  I know that in the UK, for example, there has been a significant 11 percent growth in the combined sports and energy drinks in 2008 - translating to an average consumption of 8.3 litres per person for that year.

The Industry
Here in New Zealand, your association fulfils the vital role of representing and promoting the interests of the non-alcoholic drinks industry.
It's encouraging to see that you do this predominantly through self-regulation, through developing and monitoring industry standards, and by promoting innovation and sustainability.

Having said that, promotion of any industry will always be an ongoing task.  One of the best things about an association such as yours is the ability to present a combined voice on key issues.  This speeds up processes and ensures that consumers and media get a unified perspective from across the entire industry sector.

Your association is strengthened by continuing to support your member organisations through communication, education, and knowledge-sharing both in New Zealand and internationally.  And, of course, through regular get-togethers like your conference here over the next three days.

As both competitors and colleagues, however, it can sometimes be a balancing act to protect your industry whilst at the same time protecting your individual brand.  But, when there is a chance to advance the industry's reputation as a whole, it's important to work together.

As an industry you can create a strong reputation for quality and integrity - demonstrated by examples such as your industry Code of Practice and compliance logo.  While you can and do individually market your own brands, there is an obvious benefit in having a cross-industry logo - one that is easily recognisable and signals consistency for consumers; if consumers can place their trust in a logo they are free to make informed choices about their own needs and tastes. The confidence that comes with a respected combined brand via a cross-industry logo is invaluable.

Self-Regulation
As an ACT MP it will come as no surprise to you that I am an ardent supporter of industry self-regulation and I'd like to congratulate you on the steps you have taken thus far to self-regulate.  Your website is a good example of where consumers can go to get information and guidance on topics relevant to your industry - such as finding the nutritional context of various beverages, or obtaining information on what your compliance logo stands for.

It speaks for itself that more than 95 percent of all juice sold in New Zealand is supplied by association members who are signatories to your Voluntary Code of Practice.  Buy-in from industry groups and members is a crucial element of self-regulation.

It is pleasing that your industry prides itself on the importance of self-regulation and I note that your association's aim is to be:

"New Zealand's leading self-regulating industry association, enabling the sustainable growth of the non-alcoholic cold beverage industry."

You have committed to a code of practice and invested time and effort into rigorous testing for compliance.  This shows you are undertaking a level of responsibility to ensure quality within your industry.

While many regulatory issues are covered by laws and legislation, other issues can be effectively dealt with through self-regulation and this is my preference.  No lawmaker can know your industry as you do, and your combined knowledge can be pulled together to achieve a greater level of confidence from consumers.
 
Government Regulation
Many of the regulations that currently govern your industry fall into the area of Food Safety, which is outside of my Ministerial portfolio.  However, I have responsibility for Country of Origin Labelling and my Ministry - the Ministry of Consumer Affairs - is responsible for the Fair Trading Act and Consumer Guarantees Act, both of which apply equally to your industry as they do to any other consumer products.

Under the protection of New Zealand law, consumers can assume that all juice in New Zealand complies with food safety and fair trading laws and regulations.  You will obviously be aware though, of some of the negative publicity around drinks labelling and other claims.

For instance: you will no doubt be aware that in 2007 GlaxoSmithKline pleaded guilty to 15 representative charges of breaching the Fair Trading Act by making misleading claims about the Vitamin C content of Ribena.  GlaxoSmithKline was fined $227,500 and the case is still being referred to today, demonstrating the need to adhere to legislation.

More recently, a distributor of a range of imported products marketed as fruit juice agreed to recall all their products following tests by the Commerce Commission - which enforces the Fair Trading Act.  The Commission's investigation found that at least two of the products were labelled inaccurately.

Testing at an independent laboratory showed that the products - which claimed to be 100 percent blackcurrant juice and 100 percent peach juice - contained little or no traces of fruit of any kind, let alone the fruit that was claimed on the labels.

The key to the Fair Trading Act is that it is the overall impression created by a product's advertising that is important - pictures and images, as well as words, must be taken into account; products must be true to their label.

This means that any claims made in labelling, marketing or promotion must be accurate and not misleading.  Obviously when a claim isn't true it not only misleads consumers, but disadvantages those competitors who do provide accurate information.

Drink products are what are called 'credence goods' - as it is not easy or practical for consumers to test the claims that are made, they need to rely on those claims and take them at face value.

Enquiries that the Commerce Commission receives about juice labelling tend to fall into two main areas: one relates to where the fruit comes from, and the other is around the composition or nature of the juice.  While New Zealand doesn't have mandatory Country of Origin Labelling, any claims made on labels about the country of origin have to be accurate.  Work on a voluntary Country of Origin Labelling scheme for whole foods is currently underway.

Similarly, claims around freshness and composition must be accurate - a label cannot claim to be '100 percent pure' orange juice when the product is actually a mixture of juice concentrate, tap water, sugar and preservatives.

The Government will only step in to regulate if it sees that industry is not taking the initiative to self-regulate on important protections for consumers.  I believe the New Zealand Juice and Beverage Association has a great opportunity to step up and put into place solutions to any exaggerated claims, misrepresentations and confusion over issues such as daily intake, for example.

If an industry shows itself to be responsible, it will retain the trust and confidence of both consumers and Government.  If consumers clearly have all the information they need to make the best decision for themselves, and that information is correct, then the Government has no need to regulate. Everyone can be assured that the marketplace is fair and that consumers can transact with confidence, knowing that any product purchased is as described.

Compliance Programmes

That's why it's a good idea to have a Compliance Programme, an in-house checking system designed to ensure that businesses and their staff comply with the Fair Trading Act.

A compliance programme can pick up mistakes and oversights that could otherwise land you in trouble and can sometimes help a business establish a legal defence if prosecuted under the Fair Trading Act.  The court may also view favourably the existence of a compliance programme when imposing penalties for breaches of the Act that have occurred despite the diligent supervision of the business.

Another benefit of a compliance programme is that it can result in improved customer service from better-informed staff.  Dealing with complaints effectively can also feed good information back to management to help identify problems before they become major issues.

The Benefits of Proactive Best Practice
There are certainly benefits to industry - especially in the court of public opinion - to effectively self-regulate, instead of requiring Government to step in or for the media to expose any misleading claims.

Self-regulation may also cover industry responses to faulty products.  While a simple replacement or voucher may be acceptable for a minor fault - such as encountering a bottle of flat soda - it may not satisfy the consumer if there has been a serious product failure.  Under the Consumer Guarantees Act a consumer who encounters a serious problem with a product - or if the product causes a safety risk -  has the right to choose a refund, replacement or compensation.  The consumer can also claim for any consequential loss caused by the product failure.

To really be a leading self-regulator, you need to think about how you can be one step ahead of any demands that regulations may place on you.  This way, regulations are on your terms and your expertise can ensure that they are the most effective option.  When you are providing consumers with quality information, consumers will appreciate the respect that you are showing for their choices.

One Door, One Law
This Government is actively working to reduce the negative impacts of regulation on business and has made two important commitments on regulatory reform.

New regulation will only be introduced when Government is satisfied that is required, reasonable and robust.  And existing regulation will be reviewed to identify and remove unnecessary, ineffective and excessively costly requirements.

We are scrutinising proposed regulation harder, prioritising the review of regulations that create the most impact, and looking at how other legislation could be rationalised and compliance costs reduced.

The Government believes that excessive regulation reduces productivity which has a detrimental effect on the economy.  We don't want budding businesses to fail because of the high cost of compliance.  We don't want new products to be blocked from the market because they have to wait too long for approval.  We want businesses to create jobs, boost the economy, and bring a higher quality of life to all New Zealanders.

My job as a legislator is to create an environment that is fair and conducive to business - a level playing field for all. Your job is to take things from there. To build, run and grow your business from that sound base.

We need to do all that whilst at the same time providing adequate protection for consumers.  Without reliable and detailed information, consumers make decisions in a vacuum.  Our markets work efficiently when consumers can trust the information that they are given.

That's why we have the Fair Trading Act and Consumer Guarantees Act to assure consumers that any product they look to purchase has the qualities that it states and be fit for purpose.

My aim as Minister of Consumer Affairs is to ensure consumers have easy access to quality information. That way they are well placed to make their own decisions. I also want them to have access to resolutions if there are problems.  This creates an environment in which consumers get what they expect when purchasing goods and services.  Problems should have a straight-forward system for getting dealt with effectively and efficiently.

I test any proposed or existing legislation or regulation by asking: "Does the economic benefit outweigh the compliance cost?"

I am working towards simplifying consumer law in New Zealand.  I have called this project 'One Law, One Door'.

'One Law' relates to simplifying the range of legislation that applies to consumer purchases.  The over-arching purpose of the 'One Law' for the Consumer Legislation Review is to simplify and rationalise consumer legislation to provide for freedom of choice and minimal Government intervention in the market.

While this will probably not result in simplifying down to one single piece of legislation, there is definitely potential to bring a number of laws together under one Act.

Like the Privacy Act, this Act should be principles-based rather than a prescriptive 'paint by numbers' approach that can limit flexibility and innovation - and the juice and beverage industry is very innovative!

In this first stage, the review can be described as a series of questions:

* What is the legislation for?
* What is the history of the legislation?
* Is the legislation still relevant?
* What is the cost of implementing the legislation?
* What are the gaps or unintended consequences?
* Can the legislation be future-proofed?

I will be seeking input into this process as we move forward with this review.

The 'One Door' concept is to make it easier for consumers to find a resolution to their problem.  There are currently many places that aim to solve consumer problems - with a lot of these being product specific.

It is not reasonable for consumers to be able to expect to easily navigate and find the right agency for their issue.  I want to make it simpler for consumers to find where to take their problem and get it resolved.

I am currently looking at the different options available and will be consulting with industry when making a decision on how to move forward with this initiative.

Conclusion
While we all know that there are challenges ahead for all of us - especially in this current economic environment - I hope you take with you the assurance that I strongly intend to support a fair marketplace that respects consumer's choices; one that is unhindered by compliance costs and that operates effectively without unnecessary intervention by Government.

Thank you for your invitation to speak today, and I wish you well for the rest of your conference.