Leading food manufacturers could soon be subject to mandatory health star ratings, more onerous labelling on packaged products and restrictions on marketing, especially to infants, under a federal government overhaul.
Unlike several other countries, Australia currently has a voluntary rating system, no sugar taxes, and no stringent requirements on marketing processed foods to children.
The food manufacturing industry has long opposed new regulation and has successfully lobbied political leaders in Canberra against changes to food labelling.
But a recent Senate inquiry into diabetes noted that self-regulation by the food industry and the fast-food industry "has not and will not work".
It cited widespread concern over the "rampant" marketing of highly processed food products for very young infants, including pureed foods in sachets and infant formula.
Assistant Minister for Health Ged Kearney said changes were on the way and that, in the longer term, the government was considering the recommendations of the Senate inquiry including calls to implement a sugar tax.
But to get bipartisan political support, it would need further evidence that such a tax reduced sugar consumption and did not have a disproportionate impact on low-income households.
Data from 2023 shows at least 1.5 million people in Australia are now living with diabetes, a 32 per cent rise since 2013.
"We want food that is presented to consumers with labelling that is factual, that's not confusing, and that doesn't put pressure on parents to buy products that aren't healthy for their kids because of marketing mechanisms," Ms Kearney told the ABC.
"We have an obesity epidemic in Australia and right around the world, and I think poor food choices is a part of that."
How does the health star rating system work?
Front-of-pack health star ratings, which have been in place in Australia since 2014, are meant to help consumers make more informed food purchases and healthier eating choices.
But the Senate inquiry into diabetes found that because the health rating system was voluntary by design, most manufacturers used the system inconsistently and did not display ratings on less healthy items.
It noted that "food labelling is opaque, unintelligible to most people without consideration of the long-term consequences" and that "urgent reform is required in advertising, marketing and community awareness".
The Senate inquiry called on the federal government to act and it put forward 23 recommendations, including making health star ratings mandatory and encouraging food companies to reduce sugar in their products by introducing a tax on certain beverages.
The food industry is not on track to meet targets for keeping health stars voluntary — the aim was for 70 per cent of intended products to have a health star rating by mid-November 2025.
Statistics released in May this year showed health stars were only on 32 per cent of products in Australia.
Ms Kearney said the industry could be forced to place health star ratings on its products as early as 2026.
Longer term, there may also be additional requirements regarding food labelling to make it easier for consumers to make informed decisions.
The government, Ms Kearney said, was looking at ways to make information on the back of packaged foods clearer.
"We're going to have proper kilojoule readings," she said.
"We're going to make it [easy for] people to understand about the carbohydrates and the sugars and the whole listing on the back of the panel, as well as making sure that the health star rating on the front of the panel is well understood."
How food manufacturers can 'game' the ratings system
Food manufacturers have also been accused by health experts of "gaming" the system by using labelling and marketing tactics to distract from the harmful ingredients in ultra-processed foods and other processed foods.
"Generally, processed foods have not had as much done to them as ultra-processed foods," said Food for Health Alliance executive manager Jane Martin.
"Ultra-processed foods are something that you cannot make in your home kitchen, you don't have the ingredients to make them … and they've gone through a lot of different industrial processes in factories to make them so they're not recognisable to you."
Ms Martin wants food manufacturers to stop marketing certain products to children and to stop misleading parents.
Products with a higher star rating are meant to equate to healthier food, and help a consumer choose between the same type of food, not between different categories of products.
But research from Deakin University and others over the years shows that the star ratings do not always make sense or meet nutritional dietary guidelines.
Currently, like for like products are rated on four main aspects of food associated with risk factors for chronic diseases: energy (kilojoules) saturated fat, sodium, and total sugars.
These ratings are then balanced against "positive" aspects of a food, such as dietary fibre, protein and fruit, vegetable, nut, and legume content.
That means sugary breakfast cereals and bars might score higher due to added fibre and protein.
Diet soft drinks, despite their low nutrient value, might also get a good rating if they use artificial sweetener instead of sugar.
In response to possible consumer confusion, experts have over the years called for the use of a traffic-light colour code — which would show the healthiest rating in green and the least healthy in red — to be added to the current health star rating system to help consumers better compare products.
Ms Kearney said the red, yellow, green system was being considered.
"We're also watching those other countries that have different health star rating information, like … the traffic light system," she said.
Calls to slap restrictions on marketing processed foods to children under 16
There have also been suggestions over the years to limit the packaging on products featuring cartoon characters and other promotional techniques designed to appeal to children.
That includes food items such as sugary breakfast cereals and snack bars.
Chile, for example, banned the use of cartoon characters on food packaging as it implemented warning labels.
The Senate inquiry into diabetes also called on the federal government to consider changes to the marketing and advertising of unhealthy food to children under 16 on television, online and on gaming platforms, as well as reforms to food labelling to display the amount of added sugar clearly on the front of the pack.
Australian consumer and mother of two Michelle Andrews would welcome a traffic light system for food labelling in addition to a health star rating, and greater restrictions on marketing processed foods to children.
Ms Andrews said "gimmicky" labelling by food manufacturers was designed to confuse consumers.
"There's no nutritional information on the front of these boxes for parents to see," she said.
She tries to shop online when she can, but when she does go to the supermarket, she says it is a constant fight to stop her daughters Florence, 3, and Poppy, 6, from demanding processed foods.
Ms Andrew said common items — including yoghurt pouches, cereals and muesli bars — were marketed as "healthy" but were often loaded with sugar from products such as apple puree.
And she noted that food manufacturers deliberately placed cartoon characters like Bluey on the front of packaging, while supermarkets often placed these products low on shelves so kids could see them.
"The marketers do a really good job," Ms Andrews told the ABC.
"They try to draw the children with bright pink labels or cartoon characters … and so the children see their favourite cartoon characters on the yoghurt or a box of cereal and they want that one."
Ms Andrews also criticised the health star ratings system, saying: "They're not entirely helpful."
"Some of the star ratings, if you turn it over and look at the nutritional info on the back, it's based on an adult's diet," she said.
"That makes the health star rating look healthier than it is."
'Deceptive' labelling on food marketed to infants and toddlers
Unregulated claims by food manufacturers are duping some parents.
The findings of a study released this week looked at baby and toddler foods on supermarket shelves across Australia and revealed unregulated claims by food manufacturers misled parents into thinking sugar-loaded products were healthy.
Not a single infant or toddler food product stocked in Australian supermarkets met standards set by the World Health Organization (WHO), the research led by the George Institute for Global Health found.
The study assessed more than 300 foods that were sold in Australian supermarkets and marketed for six-month-old to three-year-old children, against the WHO regional office for Europe's nutrient and promotion profile model.
The study, published in Maternal and Child Nutrition, is based on the George Institute's FoodSwitch database, which represents more than 90 per cent of the Australian packaged food market.
It showed that none of the products for children aged six to 36 months met international guidelines for promotion and more than three-quarters failed on overall nutritional requirements, mainly due to excess energy and sugar.
George Institute researchers found that slightly more than a fifth of the products (22 per cent) met all WHO criteria for nutrient composition — with most failing on sugar and calorie content — and none met the "no prohibited claims" requirement.
Prohibited claims include statements such as, "free from colours and flavours", "organic" and "no added sugar".
Ms Martin, from the Food for Health Alliance, said parents were being told processed packaged foods were healthy for their kids, when they were actually loaded with pureed fruit sugar.
"What we want to see is a number of changes made that would support parents and carers to really make the best choice but also to improve the nutrition of those products," she said.
"So that would be not adding sugar to the products, it would be removing the nutrition claims from the products which influence people's intention to purchase the products.
"… And to ensure that the names of the products accurately reflect the ingredients."
At a July meeting, Ms Kearney and state and territory food ministers discussed changes that would give parents and caregivers better information on packaged foods.
Ms Kearney agreed "a lot of baby food products claim no added sugar" but "there's a lot of pureed fruit in them".
She said changes would be introduced over the next four years "to give industry time to adjust their products".
Misleading claims will be prohibited, according to Ms Kearney, and products must present nutritional and other information in a way that is easy to understand.
"We need to ensure that companies don't make spurious claims that have no evidence base to them, so that parents aren't tricked into buying formula that might be a little bit more expensive, or they might think that this formula is better for their baby," Ms Kearney said.
Should there be warning labels on some processed foods?
Following the Senate inquiry, there have been renewed calls to add warning labels that show products high in risky nutrients such as sodium and sugar.
A review published in February by the British Medical Journal found "ultra-processed foods" — which typically include added ingredients such as sugar, salt, fat, and artificial colours or preservatives — were directly linked to 32 health harms.
"Studies have come out in the last few years showing that diets that contain a lot of ultra-processed foods are associated with obesity, chronic diseases such as heart disease, cancers, and even some mental health concerns, depressive symptoms," said Mark Lawrence, professor of public health nutrition at Deakin University who has done research into adverse health outcomes from ultra-processed foods.
"There's the indirect problem of these foods displacing the nutritious foods from the diet.
" People are very unaware often of the processing that goes into these products."
He said some South American countries, including Chile and Mexico, now used warning symbols on ultra-processed foods to give consumers more detailed information that enabled them to make better health choices.
These include a black hexagon that clearly warns consumers about foods with excess calories and sugar and advises them that high consumption of these foods is bad for their health.
"It's not about banning them or anything like that, but just helping consumers realise that these foods are not as healthy as the minimally processed foods," Professor Lawrence said.
Ms Kearney said the marketing of unhealthy food to children was "something that we are all very worried about".
"We have commissioned an independent feasibility study through the University of Wollongong to look at ways we can address this and what needs to change," she said.
But in the longer term, groups like the Food for Health Alliance want the federal government to implement a tax on sugar.
Does Australia need a sugar tax, and how would it work?
One of the main reasons Australia has such high rates of obesity and type 2 diabetes is that Australians consume far too much sugar.
Evidence presented to the Senate inquiry into diabetes suggests Australians drink at least 2.4 billion litres of sugary drinks every year, with the average 375ml can of soft drink containing about 12 teaspoons of sugar.
The Senate inquiry recommended a tax on sugar-sweetened beverages (SSBs) would create a disincentive to buying them by raising the price, as well as encourage companies to make drinks with less or no sugar so they could avoid the tax.
It called on the government to introduce a tax on all sugar-sweetened beverages including soft drinks, cordial, energy drinks, sports drinks, fruit drinks and flavoured mineral waters (but not alcoholic drinks or artificially sweetened diet drinks).
It recommended a tax "should be graduated according to the sugar content", with tiered taxes like in the UK's model.
The Parliamentary Budget Office estimates that after allowing for collection costs and a drop in GST revenue, such a tax on sugar-sweetened beverages introduced on July 1, 2025, would raise almost $1.4 billion in the following two financial years.
Evidence from overseas countries that have a sugar tax, including the United Kingdom, Mexico and South Africa, shows a tax has been effective in reducing consumption of sugary beverages.
The World Health Organization has also suggested "a tax on sugary drinks that rises prices by 20 per cent can lead to a reduction in consumption of around 20 per cent, thus preventing obesity and diabetes".
Locally, the peak body for Australian doctors, the Australian Medical Association, the Grattan Institute and others have supported implementing a tax on sugar.
"The federal government should be taxing ultra-processed foods, with the funds raised being used to reduce the price of healthy foods to make them the easier choice for the benefit of their health and wellbeing," says Mark Zirnsak, a senior social justice advocate at the Uniting Church, who also gave evidence to the inquiry.
"It makes no sense that highly processed foods like biscuits are often cheaper than fresh fruit, despite the costs involved in making the biscuits."
However, the food industry fiercely opposes a sugar tax, and in a dissenting report, coalition committee members part of the diabetes inquiry said they were not convinced a tax "would be an effective or targeted measure" and that it could disproportionately impact low-income households.
While a sugar tax is part of a longer-term view of where Australia could go, the industry is set to put up a tough fight against it.
Industry to fight back against changes it says are not 'evidence-based'
ABC News contacted food manufacturers including Nestlé and brands such as Kiddylicious that market processed foods to children.
A spokeswoman for Nestle said the company had already taken a strong position on marketing to children.
"For example, last year we were one of the first major food and beverage companies to voluntarily restrict advertising to children under the age of 16," she told the ABC.
"For many years we have focused on improving the nutritional value of our products by adding ingredients like whole grains to provide essential nutrients and reducing sugar, salt and saturated fat, while also taking a thoughtful approach to portion sizes."
In terms of possible new regulation, Nestlé argued for "evidence-based policies" and said any approach must consider "food in its whole context, taking its nutritional composition, place in the broader diet, and frequency of consumption into consideration".
A spokeswoman for the peak lobby group representing the food manufacturing industry, The Australian Food and Grocery Council, told the ABC: "Food and beverage companies are constantly innovating to reduce total energy, sugar and salt, and to present products with portion control information to help consumers moderate their consumption."
She said the lobby group was concerned about any changes to ultra-processed food labelling that was "not based on current nutrition principles and does not consider dietary patterns".
"Some of the foods described as ultra-processed are core foods, for example, flavoured yoghurt, whole grain bread, and soy milk, and hence there is the risk of causing consumer confusion," she said.
"Broad and sweeping regulation would likely increase costs for manufacturers and consumers alike with minimal impact on the health of the Australian community."
The Australian Association of National Advertisers told the ABC: "Australia has some of the strictest rules in the world when it comes to food and beverage advertising, and the system is working well, with high levels of compliance by advertisers".
"This includes the strengthened Food & Beverage Code and Children's Code that prohibit the targeting of advertising of unhealthy, unsafe or unsuitable products to children."
But the minister says the government is still considering restrictions on what goes into packaged foods.
That could mean that down the track, there are tougher rules on what processed products can get a health star rating.
"There's a lot more to be done there in the reformulation space to make sure that we're eating less sodium and less fats, but that is an ongoing process," Ms Kearney said.
"We have to make sure that we don't price healthy foods out of people's budgets."
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