Covid 19 Delta outbreak: Testing companies say Ministry of Health should contract, not commandeer

A demonstration of saliva-based testing services by Rako Science. Photo / Michael Craig

Testing companies have urged MPs to remove clauses from Covid response legislation which would give the powers to take over laboratories in the event of an emergency, warning the powers may lead to less capacity being available.

MPs from the health select committee heard submissions on the Covid-19 Public Health Response Amendment Bill (No 2) on Wednesday, which includes clauses giving the Government powers to substantially take control of Covid-19 testing companies and requisition tests.

Leon Grice, a director of Rako Science, said the powers were unnecessary and even though ministers had indicated the powers were unlikely to be used, it still posed risks for the business.

"Why put risky and dangerous statues on the books?" Grice asked.

"This is legislation which will harm the public health response and it'll disincentivise investment in testing," Grice said.

"To force a deemed market price with no negotiations, no contract discussions, no arbitration and recourse only to the District Court with no right of appeal is simply bad law."

Grice said the committee should, rather than recommend the clauses be included, urge the Ministry of Health to get on and contract capacity with companies such as Rako.

"There's nothing stopping the ministry contracting, right now, for the capacity it needs to prepare for the emergency."

In March 2021 Rako had offered its testing protocol to publicly owned labs, for use in the public health response to Covid-19 "for a peppercorn" Grice said.

"That offer has not been taken up, acknowledged or discussed. We remain ready to contract with the ministry at any time."

Dr Jonno Hill, chief executive of Hill Laboratories, said the company was quite uncomfortable with the legislation. The company had been around for about 40 years and mainly did work for the food and agriculture sectors, but had moved into health testing recently.

"Essentially it would give the Ministry [of Health] power to reach into our laboratory and commandeer consumables if they wish to and instruct us to do testing for them."

Hill believed the ministry should enter into normal contracts based on trust and mutual benefit.

The Ministry of Health would help create more testing capability by "sharing testing contracts around those laboratories that are able to participate and indeed who the ministry would be seeking support from in the event of surge testing," Hill said.

This would "keep all laboratories suitably fed in between surge testing events so we're able to build capacity that would be required or may be required in periods of intensive testing".

Hill said it would be "pretty confronting" if the Ministry of Health ever did invoke its powers. The company may seek to provide the Government with the capacity it needed in an emergency even if it was not required.

"We are here to help and support and we want to be acting in the best interests of the public response and if the right thing to do is to be allocating testing resources into the ministry's needs, then we may well feel inclined to even without legislative compulsion."

Hill said it was hard to know how to manage the risk the legislation posed and while he believed the force majeure provisions in the company's other contracts may cover the risk, it might be something it did not want to discuss with customers, which did not fit with its preferred way of operating.