Bills Digest no. 44 2006–07
National Cattle Disease Eradication Account Amendment
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
Contact Officer & Copyright Details
National Cattle Disease Eradication
Account Amendment Bill 2006
Date introduced: 16 August 2006
House: House of
Portfolio: Agriculture, Fisheries and Forestry
Commencement: The Act will commence with Royal Assent
The proposed amendments to the
National Cattle Disease Eradication Account Act 1991 will
enable residual levy proceeds collected for certain eradication
programs to be transferred to an industry disease fund.
Australia is free of many of the major agricultural pests and
diseases found in other parts of the world. This status brings a
range of benefits to the Australian cattle industry primarily
relating to access to export markets and lower production costs.
There are also human health benefits. For many years the objective
of Australian biosecurity policy has been:
the prevention or control of the entry,
establishment or spread of pests and diseases that will or could
cause significant damage to human beings, animals, plants, other
aspects of the environment, or economic
In some cases there have been campaigns to eradicate or control
relevant pests and diseases.
The largest and highest profile disease eradication programs
have been in the cattle industry and concerned tuberculosis and
brucellosis. Incidence of these diseases dates back to the 1920s
and initially State Governments applied control and/or eradication
measures in order to protect human health.
Moves to achieve eradication nationally gained urgency during
the 1960s and in 1966 the Commonwealth adopted a recommendation of
the Australian Agricultural Council (the relevant Ministerial
council) that action be initiated on a national basis to eradicate
both diseases as soon as feasible. Hence, the nationally
coordinated operation originally known as the Bovine Brucellosis
and Tuberculosis Eradication Campaign (BTEC) commenced in 1970 and
was jointly funded by the Commonwealth and State governments along
The latter s contributions were funded by way of a levy which
came into effect in 1973. Initially the levy was on all exports of
beef and veal to reimburse the Commonwealth s contribution to BTEC
s operational costs. The levy rate was 1.32 c/kg (0.6 cents per
pound). In 1976 the meat export levy was suspended and a slaughter
levy introduced with a component directed to brucellosis and
tuberculosis eradication. The size of the levy has varied
History of cattle
disease eradication levy
Amount of levy per
At introduction in
1 October 1982
1 July 1986
1 March 1993
1 July 1993
1 July 1995
1 August 1996
1 December 1996
1 July 1997
February 1991, the slaughter levy was subsumed as a component of
the Cattle Transaction Levy.
Stewart, John The National Cattle Disease Eradication Trust
Account (NCDETA) briefing paper prepared for the CCA, 15 June
From the start of the BTEC in 1970 to its conclusion in 1997,
expenditure totalled approximately $840 million. This expenditure
included spending on the eradication of brucellosis and freedom
status for that disease was declared in Tasmania in 1975, Western
Australia in 1985, Victoria, New South Wales, the ACT and the
southern part of the Northern Territory in 1988, then Queensland
and the remainder of the Northern Territory in 1989.
Australia was declared provisionally free of brucellosis in 1986
and freedom status was achieved in 1989.
Alterations in funding arrangements were made at various times
as BTEC progressed. From 1988 until the end of the campaign, the
industry levy provided 50% of total funds, the States 30% and the
Australia was declared free of tuberculosis in 1997. However,
because the disease can remain dormant in animals for long periods
and the available tests fail to detect some cases, sporadic
residual cases may occur. Consequently, the Operational Management
Review of BTEC conducted in 1995 recommended the establishment of
the Tuberculosis Freedom Assurance Plan (TFAP), initially for 5
years, to continue BTEC activities following the achievement of
national tuberculosis freedom. Thus, TFAP was put in place to
ensure that any resurgence of tuberculosis in Australian cattle was
promptly and effectively eliminated. The program commenced in 1998
following the declaration of Australia as a Free Area for bovine
tuberculosis and ended in December 2002.
A mid-term review of TFAP was held in late 2000 and considered
the need for a further period of surveillance for tuberculosis. The
review recommended that a further four-year program be established
to commence in January 2003. This program is known as TFAP 2 and is
scheduled to conclude on 31 December 2006. The last case of
tuberculosis was in 2002.
During the early 1990s it became apparent that consumers along
with national and international trading partners required increased
accountability for animal health and welfare.
It was agreed that there needed to be high level decisions by
governments and industry groups on strategic policy for future
planning and funding of national animal health service programs.
Following further consideration the Australian Animal Health
Council Limited (AAHC) was formed. AAHC was incorporated in January
1996 and commenced operating as a not-for-profit public company
under the business name of Animal Health Australia (AHA) in
AHA currently has 24 members across four membership categories:
Australian Government (1); States and Territories (8); livestock
industries (14); and service delivery/non-program participants (2).
The structure facilitates flexible and responsive management of
animal health issues and accountability is via an independently
selected board of directors responsible to members in general
AHA s role in the national animal health system has expanded
significantly over the past five years with the number of programs
and projects the company is responsible for growing substantially.
Its mission focuses on ensuring Australia s national animal health
status delivers a competitive advantage and preferred market access
for Australia s livestock industries.
The TFAP programs have been managed by AHA under a formal Deed
of Agreement between the Cattle Council of Australia (CCA),
representing the beef and dairy cattle and buffalo industries, the
Commonwealth Government and all State and Territory Governments who
jointly fund TFAP and AHA.
The Deed of Agreement, signed in May 1998, sets out the scope
and objectives of TFAP and the obligations of the parties to it.
The Deed detailed the arrangements for funding each component of
the program, the role of AHA in the overall administration of TFAP,
the Commonwealth Government in providing finances for core
activities, the States and Territories in managing field operations
and CCA in financing assistance measures to affected producers. A
series of schedules to the Deed provide additional detail.
In addition to the specific TFAP component funded by each of the
parties, the Deed provided AHA with an additional overall
management fee funded through TFAP s corporate activities component
and in equal shares by the eight parties involved.
The funds for the cattle industry to provide the assistance
measures and other activities in TFAP were obtained from levies
collected from the cattle industry by the Commonwealth Government
and maintained in the National Cattle Disease Eradication Account
(NCDEA). This is one of the trust accounts operated by the
Department of Agriculture, Fisheries and Forests (DAFF) and
administered in accordance with public sector standards. The NCDEA
s only income is grower levies and interest. No Commonwealth or
State/Territory contributions are included.
Originally, a budget of $33.6 million was forecast for TFAP over
five years. The budgeted expenditure split amongst the various
contributing parties was 52% cattle industry, 12% States/Territory
and 36% Commonwealth. The budget was based on the expectation there
would be 15 cases of tuberculosis by 30 June 2000 and 5 further
cases by the end of TFAP. Due to the number and nature of the
tuberculosis cases found early in TFAP, the estimated budget was
initially increased to $36.5 million. However, with less than
expected numbers of tuberculosis cases being found, the funding
estimates were revised downwards in November 1999 to $31.2
In the end, expenditure was even lower at $26.8 million. The
source of funds were industry $13.3 million, States $9.3 million
and Commonwealth $4.2 million with the contribution shares being
close to the original estimates. A consequence of the lower than
expected number of cases was the emergence of a surplus of TFAP
levy funds contributed by cattle producers.
The Cattle Disease Contingency Fund (CDCF) was established in
February 2002 by the cattle industry and AHA to support various
animal health related activities that are of benefit to the cattle
industry in Australia. It operates as a trust fund under a deed
made between the Cattle Disease Contingency Fund Pty Ltd and AHA.
The Cattle Disease Contingency Fund Pty Ltd is the Trustee of the
CDCF and is a company established under Corporations Law in
February 2002 by CCA, the Australian Lot Feeders' Association
(ALFA) and AHA. AHA provides administrative services for the
The CDCF trust deed refers to agreement among the above three
parties about the need to fund various animal health related
activities which are to the benefit of the cattle industry in
Australia. It also specifies the purposes for which monies from the
CDCF may be used including prevention, eradication and control of
cattle diseases and pests; research into pests and diseases of
cattle; compensation for those affected by cattle diseases; and
other animal health activities likely to benefit the Australian
cattle industry. The deed also requires preparation of an annual
report including audited accounts and a description of the
activities funded. Copies are to be provided to CCA, ALFA and
From 1 March 2001 the 17 cents component of the Cattle
Transaction Levy which had been allocated to the NCDEA was
redirected to the CDCF. This was due to cease on 31 December 2006
along with TFAP 2. CCA and ALFA have proposed that this amount be
redirected to the National Residue Survey.(6) At 30 June
2005 the assets/members equity in the CDCF totalled $9.5 million
while revenue from levy funding was $1.4 million.(7)
The cattle and buffalo industries have requested that residual
funds in the NCDEA be transferred into the CDCF.(8) The
balance of the NCDEA as at 30 June 2006 is estimated at $13.5
million.(9) This represents the accumulated reserves of
producers levy contributions under the BTEC and TFAP programs.
CCA has recognised a need to expand into other animal health
issues apart from tuberculosis and brucellosis and hence the move
towards the CDCF. The CDCF will allow immediate access to funds in
case of an exotic disease incursion and will also have the backup
of an agreement with the Commonwealth of a zero levy which can be
triggered if an incursion occurs.(10)
Schedule 1, item 1 will add
proposed paragraph 6(1)(c) to the National Cattle Disease
Eradication Account Act 1991 which will permit the transfer of
monies currently held in the National Cattle Disease Account into
Item 2 will add proposed subsection 6(3),
providing a definition for CDCF Trust.
The practice of establishing public companies owned by industry
bodies to undertake delivery of marketing and other services to
agricultural industries is now well established. Examples include
Meat and Livestock Australia (MLA), Australian Wool Innovation
(AWI) and National Food Industry Strategy Ltd (NFISL).
MLA and AWI - both heavily dependent on grower levies as a
source of revenue - produce annual reports which include audited
financial statements. NFISL publishes an annual report on
operations and although it is directly funded by government no
financial information is included. However, NFISL operates under a
contract with DAFF to implement most parts of the National Food
Industry Strategy (NFIS). The agreement covers performance
obligations, reporting requirements of NFISL and requirements for
the transfer of funds to NFISL in line with programmed
According to the mid-term review of the NFIS:
The NFIS contractual structure and industry
consultation structure places a high level of reporting
requirements on NFISL. These include:
- Contractual obligation to report quarterly and annually to DAFF
in the appropriate format;
- Annual reporting required under corporations law;
- Reporting of progress on programs to NFIC meetings; and
- Reporting on the progress of programs to the Board Advisory
Committees of NFISL.(11)
An issue of potential interest for Parliamentarians in the case
of the CDCF and hence the proposed legislation is that of
accountability and transparency and there are a couple of specific
aspects to this worth highlighting.
The first relates to the use of statutory powers to generate
levy income for a private company. Whilst some might contend that
as only private sector funds are involved accountability
arrangements are a matter for the entities involved, there is
equally an argument that other aspects ought to be considered
including the following:
- unlike MLA and AWI, individual levy payers are not shareholders
in companies which manage the CDCF and hence they do not have a
direct role in the decisions relating to the operations of the
- similarly, there is no obligation for any direct reporting to
levy payers. This is at the discretion of CCA, ALFA and AHA
- although the CDCF already receives grower levies, there appears
to be no public reporting in relation to the funds and operations
of the CDCF, and
- Parliament has a legitimate interest in monitoring the effects
and effectiveness of its power to institute levies.
Secondly, given that there is a public interest dimension to
animal health issues which goes beyond the commercial interests of
the cattle and buffalo industries, Parliament has a legitimate
interest in accountability with regard to animal health
If enacted the legislation would result in monies that are
currently administered by DAFF by way of the NCDEA and hence the
subject of direct reporting to, and oversight by, Parliament, no
longer being subject to those provisions.
Under the proposed arrangements the Commonwealth - and hence the
Parliament - will be even further removed from the administration
and oversight of animal health arrangements which are actually
underpinned by the levy provisions sanctioned by Parliament.
- Biosecurity Australia 2003, Import risk analysis
handbook, Department of Agriculture, Fisheries and Forestry,
- This section draws heavily on Industries Assistance Commission
Bovine brucellosis and tuberculosis eradication campaign
Report no 297, Canberra, 1982 and Animal Health Australia
Tuberculosis Freedom Assurance Program Final Report
1998-2002 Canberra, 2003.
- This section draws heavily on AHA s website
2004-05 Annual Report.
- The TFAP Deed of Agreement appears not to be a public document.
The information presented in this section is drawn from the
Tuberculosis Freedom Assurance Program Final Report
1998-2002 which also contains some further information
about the Deed.
- Trust Deed Cattle Disease Contingency Fund
- Cattle Council of Australia brochure
Cattle Transaction Levy http://www.cattlecouncil.com.au/Levy
- Cattle Disease Contingency Fund Trust Financial Report for year
ended 30 June 2005
- Explanatory Memorandum, National Cattle Disease Eradication
Account Amendment Bill 2006, p. 2.
- DAFF Portfolio Budget Statements 2006-07, p. 33.
- Stewart, John The National Cattle Disease Eradication Trust
Account (NCDETA) briefing paper prepared for the CCA, 15 June
- Ridge Partners, Mid-term review of the NFIS Final
Report, 10 May 2005.
Law and Bills Digest Section
18 October 2006
Bills Digest Service
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