Australia and New Zealand’s health star food rating system has been dismissed as flawed in a new study because salty, sugary and fatty products are scoring too highly due to loopholes in the system and unhealthy items often avoid carrying the labels entirely.

The front-of-pack nutrition labelling system ranks food from ½ to 5 stars to represent its nutritional content.

Public health researchers from the George Institute for Global Health examined the system and found that while it was pioneering, the influence of the food industry was reducing its potential to be an effective tool to improve public health.

The institute’s public health lawyer, Alexandra Jones, argued the system should be based on science not vested interests.

“Unhealthy diets are the leading cause of death and disability in the world and our obesity rates are being fuelled by the abundance of packaged foods high in sugar, salt and fat,” she said.

“Right now most unhealthy products simply don’t have the health star rating being displayed on them. In fact, some products high in salt, sugar and fat are scoring too highly by gaming loopholes in the algorithm.”

A study published in the Australian and New Zealand Journal of Public Health on Thursday found the health star ratings had been displayed on 10,333 products in Australia and more than 3,900 in New Zealand.

As of 2018 the ratings were displayed on 31% of eligible foods in Australia and 21% in New Zealand.

Researchers found the labels were only being displayed on about a third of all packaged foods.

In Australia, more than 118 manufacturers were using the label system in 2018, but the biggest retailers, Coles, Woolworths and Aldi, were responsible for the lion’s share of the uptake.

Packaged foods that scored at the upper end of the five-star scale – healthier foods – were more likely to carry the labels, whereas products with a low health star rating often avoided the voluntary star scheme altogether.

The study found the system was slowly gaining some traction with consumers.

“Awareness and trust were reported as increasing, though unprompted awareness remained modest,” the study concluded.

The scheme was introduced in 2014 and had a controversial start, after it was revealed the then assistant health minister, Fiona Nash, ordered a website to be taken down a day after its launch, despite approval from participating governments. Soon after, Nash’s chief of staff, Alastair Furnival, resigned when his links to the junk food industry were raised as a potential conflict of interest.

The rating system has been voluntary for the past five years and is under review.

Peak industry bodies have indicated their support for the system, conditional on it remaining voluntary because of the business costs of changing labels.

The George Institute for Global Health argues the scheme should be mandatory and that the algorithm underpinning the rating system should be improved by adding sugars, increasing penalties on salt content and removing undue benefits from protein.

The study says Australia could learn from Canada and France which require labels to have a uniform position, size and colour so they are more readily recognisable to consumers.

A draft report released in February, formally reviewing the system, recommended the scheme remain voluntary and for it to continue for another four years.

The review recommended changes to the way the ratings were calculated for foods to better align with dietary guidelines. This included higher penalties for sugar and tweaks to salt calculations.

Ministers responsible for food regulations from the the Australian federal and state and territory governments and New Zealand are expected discuss the official review at a forum later this year.