Bills Digest No. 22 2002-03
Plant Health Australia (Plant Industries) Funding Bill
2002
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Plant Health Australia (Plant
Industries) Funding Bill 2002
Date Introduced:
26 June 2002
House: House of Representatives
Portfolio: Agriculture, Fisheries and
Forestry
Commencement:
The formal provisions
come into effect on Royal Assent. The other clauses and schedules
will take effect on the first day of a quarter on or after the day
of Royal Assent.
Purpose
To require the Commonwealth to pay amounts of
levy and charge it has collected on behalf of certain plant
industries to Plant Health Australia Limited. The Bill also
provides a mechanism for any excess levies or charges that are
collected to be appropriated to relevant plant industry research
and development bodies.
Background
Primary industry levies and charges are used to
fund activities such as research and development, marketing and
promotion, residue testing and animal health programs. These
activities are usually beyond the scope of small, scattered rural
enterprises to put in place on their own. The need for a levy is
usually identified by a peak industry body in response to a problem
or an opportunity that needs collective industry funding to address
effectively. The Government has issued Levy Principles and
Levy Guidelines to provide guidance to rural industries in
preparing a case for a new levy. These guidelines also ensure that
the peak industry body has informed levy payers of the proposal and
provided them with an effective opportunity to express their views
on it, before the proposal is presented to Government for
approval.
In considering the industry s case for a new
levy, the Government needs to be convinced, firstly, that only
collective action by levy payers will ensure the desired outcome in
a cost effective manner; secondly, that the benefits to the
industry will exceed the costs of raising and funding the levy; and
finally, that there is a practical way of collecting the
levy.(1) A proposal for a new levy must:
-
- show how the levy will benefit levy payers and the industry in
general
-
- estimate the amount of levy that will be raised
-
- provide a clear plan as to how the levy money will be spent,
and
-
- recommend how the levy is to be calculated, for example on
boxes, trays, tonnes, or value of product, individual head of stock
etc.
The Levies Revenue Service of the Department of
Agriculture, Fisheries and Forestry Australia (AFFA) administers
and collects most levies on a cost recovery basis. In the financial
year 2000/2001 the Levies Revenue Service collected approximately
$420 million from over 14,000 levy payers.(2) The cost
of collections was $3 million or 0.6 per cent of total collections
for 2000/2001.(3)
All levies must be paid into consolidated
revenue without deduction and are subsequently dispersed to the
appropriate marketing and promotion body, or research and
development organisation or relevant program. To assist primary
industries undertake research and development, the Commonwealth
Government matches the money raised by research and development
levies on a dollar-for-dollar basis up to 0.5 per cent of the gross
value of production in any financial year.
The purpose of this Bill is to put in place a
levy on plant producers in order to fund the plant industries share
of the running costs of Plant Health Australia Limited (PHA). PHA
was established under Corporations Law on 27 April 2000 as a
non-profit company limited by guarantee. It is the national
coordinating body responsible for addressing priority plant health
issues in Australia, and for promoting international and domestic
confidence in Australia s plant industries.(4)
The 1996 Nairn Review of Quarantine introduced
the idea of a national coordinating body to deal with plant health,
after finding that there was generally a greater emphasis on animal
health issues.(5) With the majority of plant industries
having or developing a significant export component to their
business, the need for Australia to enhance its plant health status
and plant health arrangements has become increasingly important.
The Nairn review proposed the formation of a coordinating body
between government and industry to identify and address national
priorities in plant health.(6)
In early 1998, the Plant Industries Incursion
Management Consultative Committee (PIIMCC) representing industry,
and the Standing Committee on Agriculture and Resource Management
(SCARM) representing government, began work to come up with a
structure for a central coordinating body to address plant health
issues. An intensive period of consultation, and a number of
industry-government workshops held in 1998 and 1999, led to the
registration of PHA in April 2000.
By August 2002 PHA had a total of 26
members.(7) The Commonwealth and all State and Territory
governments are members, as are a number of peak bodies that
represent most major plant industries. The peak industry bodies
include the Grains Council of Australia, the Australian Cotton
Growers Research Association, the Nursery Industry Association of
Australia, and the Australian Apple and Pear Growers
Association.(8)
According to PHA s first annual report, its
long-term goal is to improve Australia s plant health status and
the sustainability and profitability of Australia s plant
industries.(9) PHA has identified four priorities in
plant health that are required at a national level. These are:
-
- a nationally coordinated plant health preparedness and
prevention system
-
- an enhanced plant pest and disease emergency response
system
-
- a national perspective on plant health service capability,
and
-
- a national system of plant health information through the
creation of an accessible web-based database of plant pests and
diseases. (10)
PHA has observer status on several government
decision-making committees concerned with plant health. In March
2001 they received $7 million from the Government under the
Commonwealth Budget initiative entitled Building a National
Approach to Animal and Plant Health. This funding is for high
priority plant issues over a four-year period to 2004.
(11)
PHA s running costs are approximately $1.5
million a year. These costs are shared between the members, with
the plant industry s share being about $500,000 annually. The
remaining $1 million is contributed by the Commonwealth, State and
Territory governments. Since April 2000, as an interim measure
pending development of the arrangements that will be implemented by
this Bill, the plant industry s share of PHA s costs have been paid
either directly from industry association funds, or through their
industry s Research and Development Corporation.
This legislation does not impose the new levy or
charge on participating plant industry members. It directs the
Commonwealth to pay certain monies out of Consolidated Revenue to
PHA on behalf of participating plant industries. The new PHA levy
and charge will be imposed on plant producers by regulations under
Schedule 27 to the Primary Industries (Excise) Levies Act
1999 and under Schedule 14 to the Primary Industries
(Customs) Charges Act 1999. According to the Explanatory
Memorandum, there will be no increase in the overall levy and
charge burden on producers. (12)Instead, it is proposed
that the operative rate of the PHA levy or charge for initial
participants will be exactly offset by a corresponding decrease in
that industry s existing research and development levy and charge
rate. For those plant industries that choose to use this
arrangement, the effect will be that funds previously raised for
research and development in the participating industries (which
would attract a dollar-for-dollar contribution from the
Commonwealth), will be re-directed to pay for the administration of
the PHA.
The amount of the PHA levy for each plant
industry will be calculated based on the farmgate value, or local
value of production of each industry.(13) If the PHA
levy collects more funds than is needed to meet an industry s PHA
liability, the excess funds will be re-directed to fund other
research and development activities for the industry. Should this
happen, then those re-directed funds will attract a Commonwealth
dollar-for-dollar contribution.
Some industry members of PHA represent more than
one product. For example, the Grains Council of Australia is a
member of PHA representing producers of wheat, coarse grains, grain
legumes and oilseeds. This Bill provides for PHA to advise the
Minister of the portion of the grain industry s share of PHA s
costs that are attributable to each grain sector, based on their
share of production for a relevant year. The Minister must publish
the details of the apportionment of the levy between the relevant
plant products in the Commonwealth Gazette.
This legislation provides for the Commonwealth
to collect the levy (on a cost recovery basis) and to make payments
directly to PHA. The effect of this Bill is similar to the
legislation that funds the Australian Animal Health Council (AAHC),
the Australian Animal Health Council (Live-stock Industries)
Funding Act 1996. AAHC is also a non-profit, public company
limited by guarantee with its membership comprised of the
Commonwealth, all State and Territory governments and the peak
national representative bodies of Australia s livestock-based
industries. It is funded by government and industry members, with
the industry members contributions being collected as a levy and
dispersed by the Commonwealth to the AAHC.
PHA is required under Corporations Law to be
accountable to its members. It must produce an annual report and
report to members at an annual General Meeting. During the debate
on the Australian Animal Health Council (Live-stock Industries)
Funding Act 1996, the question arose whether the AAHC would be
required to report on its operations to parliament through the
estimates committee process. It was stated at that time that the
collection of levies by the Commonwealth and their payment to AAHC,
did provide grounds for AAHC (and in this case, PHA) to report to
parliament through the estimates committee process if
required.(14)
Clause 4 will apply where there
is an existing plant industry research and development levy or
charge in place. Currently the grain, horticulture and forestry
industries have levies for marketing and research and development.
In this situation, clause 4 requires the
Commonwealth to pay to PHA all the levies and charges it receives
in respect of PHA levies and charges, up to the limit of the
individual industry s yearly contribution, as well as any late
payment penalties. If excess funds have been collected,
clause 7 is to apply.
If the Commonwealth does not receive enough
levies and charges to cover an individual plant industry s yearly
contribution, then the Commonwealth must pay to PHA whatever
amounts it receives through the plant levy and charge
arrangements.
For its part, PHA is required to use those
levies and charges to discharge, as far as possible, the relevant
plant industries liabilities to PHA.
Clause 5 will apply where a
plant industry does not have an existing research and development
levy or charge. In this case, all the PHA levy and charge funds
will be directed to PHA and any excess funds cannot be directed to
other industry research and development activities.
Clause 6 provides that the PHA
levies and charges as defined in clause 3, are to
be paid out of Consolidated Revenue.
Clause 7 provides that any levy
or charge received by the Commonwealth in excess of the plant
industry s yearly contribution to PHA must be redirected to the
industry s prescribed research and development body, unless the
relevant plant industry body does not have existing research and
development levy or charge arrangements in place.
The Commonwealth will be paid for any costs
associated with the collection and administration of the levies and
charges on behalf of PHA (clause 8). Should the
Commonwealth refund levies or charges that have been overpaid by
plant industries, then PHA must reimburse the Commonwealth an
equivalent amount (clause 9).
Clause 10 is to apply if two or
more plant products are represented by the same peak industry body.
In this case, PHA is required to advise the Minister of the
proportion of the individual plant industry s yearly contribution
that is attributable to each of the plant products being levied
(sub-clause 10(2)). The Minister in turn must
publish this information in the Gazette
(sub-clause 10(3)). It is possible for regulations
to be made to modify this arrangement in future. Similarly, should
two or more peak industry bodies represent the same PHA plant
product, then regulations may be made to apply to the situation
(clause 11).
Schedule 1 makes consequential
amendments to the Horticulture Marketing and Research and
Development Services Act 2000 and to the Primary
Industries and Energy Research and Development Act 1989.
-
- Information about agricultural levies and charges is to be
found at www.affa.gov.au/content/levies
(site visited 25 July 2002).
- Levies and Revenue Service, Report to Clients
2000-2001, Agriculture, Fisheries and Forestry Australia, p. 3. (On
AFFA s figures, this works out at about $30,000 p.a. for every levy
payer. However, large companies pay the bulk of these levies while
small farmers pay much less.)
- ibid.
- Plant Health Australia, Who we are . Information from their
website at http://www.planthealthaustralia.com.au
- Australian Quarantine Review Secretariat, Australian
quarantine: a shared responsibility, by M.E. Nairn [ and
others], Canberra, Department of Primary Industries and Energy,
1996.
- ibid., p. 173 175.
- Personal communication with PHA 15 August 2002.
- Plant Health Australia, Company structure . Information from
their website at http://www.planthealthaustralia.com.au
- Information from their website at http://www.planthealthaustralia.com.au
- Information from their website at http://www.planthealthaustralia.com.au
- Hon Warren Truss, The fight against plant pests and diseases
receives a $7 million boost , Media Releases AFFA01/78WT,
6 April 2001.
- Explanatory Memorandum, Plant Health Australia (Plant
Industries) Funding Bill 2002, p. 2.
- Plant Health Australia, Our resources . Information from their
website at http://www.planthealthaustralia.com.au
- Sen Bob Collins, Speech on the Australian Animal Health Council
(Live-stock Industries) Funding Bill 1996 , Senate,
Hansard, 10 October 1996, p. 3894.
Rosemary Bell
20 August 2002
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 2002
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