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 and Copyright Details
Primary Industries (Excise) Levies Bill
Date Introduced: 3 December 1998
House: House of Representatives
Portfolio: Agriculture, Fisheries and
Commencement: With the exception of Schedule
26 which commences on 1 January 2000, the Bill commences on 1 July
The Bill is part
of a package of five Bills, the major purpose of which is to
consolidate 40 levy and charge imposition Acts into two Acts. The
Bill imposes 27 levies that are excise duties.
Current Legislative Regime for the
Administration of Levies and Charges
A significant proportion of the legislation of
the each of the last four Parliaments has comprised legislation
originating with the Agriculture, Fisheries and Forestry portfolio.
A significant proportion of this activity is made up of legislation
imposing levies and charges on agricultural, livestock and forestry
The principal uses of proceeds raided by such
levies and charges include the funding of research and development,
statutory marketing authorities and health and safety monitoring.
Levy and charge legislation is imposed by the Commonwealth at the
request of the relevant industry, and funds raised are matched by
the Commonwealth up to a maximum of 0.5% of the relevant industry's
gross value of production.
There are currently three principal pieces of
legislation in the administration of agricultural, livestock and
An imposition Act imposes or sets the levy or
charge. For example, the Coarse Grains Levy Act 1992, the
Oilseeds Levy Act 1997 and the Wine Grapes Levy Act
1979 are imposition Acts.
A collection Act provides for the collection of
the levy or charge imposed by an imposition Act. The majority of
primary industry levies and charges are collected under the
provisions of the Primary Industries Levies and Charges
Collection Act 1991 (the PILCC Act). Prior to the commencement
of the PILCC Act each primary industry levy and charge comprised
two pieces of legislation, an Act imposing the levy or charge and a
collection Act. The principal effect of the PILCC Act 1991 was to
do away with a separate levy or charge collection Act for each levy
or charge imposed.
A distribution Act provides for the distribution
and administration of moneys collected under a collection Act. For
example, the Primary Industries and Energy Research and
Development Act 1989 provides for the disbursement of proceeds
collected under the relevant collection Act.
Rationale for Amendments
This Bill is part of a package of five Bills,
the major purpose of which is to consolidate 40 levy and charge
imposition Acts into two Acts. The other Bills in the package
- Primary Industries (Customs) Charges Bill 1998
- Primary Industries (Consequential Amendments) Bill 1998
- National Residue Survey (Customs) Levy Amendment Bill 1998
- National Residue Survey (Excise) Levy Amendment Bill 1998
The stated rationale given by the Government in
the Second Reading Speech to the Bill for consolidation is to
introduce administrative efficiencies and make the law more
accessible to those involved in agriculture, fisheries and
The stated benefits the Government expects to
derive from the consolidation are:
It will enable the Government to better service
industry by simplifying the process and reducing the long leadtimes
surrounding changes to levies and charges and being more flexible
and responsive to industry requests for such changes as well as for
new or additional levies. It will introduce new efficiencies to the
public sector by streamlining and improving the administration of
levies and charges legislation. Finally it will reduce the call on
the time of Parliament for the often involved process of making
changes to levies and charges, by reducing the number of imposition
Acts that will have to be amended to affect changes in the future
from the current 40 to two.(2)
Primary Industries Levies Bill 1995,
Primary Industries Charges Bill 1995 and Primary Industries Levies
and Charges (Consequential Amendments) Bill 1995
On the 29 June 1995 the then Labor Government
introduced the Primary Industries Levies Bill 1995, Primary
Industries Charges Bill 1995 and Primary Industries Levies and
Charges (Consequential Amendments) Bill 1995.
The Primary Industries Levies Bill 1995 and
Primary Industries Charges Bill 1995 provided for levies and
charges to be imposed on specified products:
- in circumstances specified in the regulations
- where the products were produce of primary industry and
- where the levy/charge was an excise or customs duty.
The Bills provided for the rate of levy or
charge to be determined in accordance with the regulations and that
the regulations must specify, or specify a way of determining, the
maximum total rate of levy that may be imposed on specified
products. The levy or charge was to be payable by the person
specified in the regulations as liable and the regulations could
provide for exemptions from a levy or charge.
The rationale given by the then Government in
the Explanatory Memorandum to the Primary Industries
Levies Bill 1995 for the proposed amendments was:
A large proportion of the Department's
legislation program is taken up with amending levy Acts. This
amalgamation of levies into a standard framework will streamline
the process and will involve significant savings in Parliamentary
time. It will enable the operative rates of levies to be amended
expeditiously at the request of the designated body/bodies by the
tabling of a disallowable instrument rather than inclusion on the
The then Liberal/National Party Opposition
opposed the package of Bills in the House of Representatives. The
Deputy Leader of the National Party, Mr Anderson M.P., in
announcing that the Coalition would oppose the package, stated:
The numb of our concern is that these Bills
would allow levies and charges to be imposed by regulation instead
of having the present system, which requires legislation to
establish levies and then to vary them. We know that the levies and
charges in question are not imposed by the government but are
sought by industry in order to undertake research and development
and other activities beyond the scope of small scattered
enterprises to organise and to put in place on their own.
The government's rationale in changing the
process is to reduce the amount of time parliament spends amending
levy and charge acts by introducing a standard framework that
streamlines the process. But, so far as the coalition is concerned,
this allows the government to fulfil an objective: it seems to want
to remove one of the few opportunities afforded this parliament to
debate the circumstances of industries whose efforts are
fundamental to the economic health and prosperity of all
This is not our principal reason for opposing
the legislation, important as it is. Our primary objection is to be
found in the problems identified by the Senate Standing Committee
for the Scrutiny of Bills, which has clearly identified problems
that primarily concern the Coalition. The Committee found that the
Primary Industries Charges Bill 1995 and the Primary Industries
Levies Bill 1995 effectively delegate power to the minister to
impose a tax. Quite simply, they remove from the primary
legislation the power to establish a tax. The Coalition believes
that this is inappropriate.(3)
The package of Bills were not debated in the
Senate and lapsed with the dissolution of Parliament for the 1996
Tax, Excise or Customs Duty?
It should be noted that the regime proposed by
this Bill and the Primary Industries (Customs) Charges Bill 1998
authorises the imposition of levy or charge by regulation where the
levy or charge is an excise or customs duty. This will necessitate
a determination each time a levy or charge is intended to be
imposed by regulation of whether the levy or charge to be imposed
is a duty of excise, a customs duty, or another type of impost such
as a tax.
What is a tax?
The definition of what a tax is important, as
duties of customs and excise are taxes, while royalties and fees
for service are not.
The seminal definition of a tax is found in
Matthews v Chicory Marketing Board (Vic), where Latham CJ
stated that a tax is:
a compulsory exaction of money by a public
authority for public purposes, enforceable by law, and is not a
payment for services rendered.(4)
This definition was widened in Air Caledonie
v Commonwealth, where the High Court said that there was no
the compulsory exaction of money under statutory
powers could not be properly seen as taxation not withstanding that
it was by a non-public authority or for purposes which could not
properly be described as public.(5)
The elements which identify what is a tax were
discussed further in Australian Tape Manufacturers Association
Ltd. v Commonwealth(6), in the context of an impost levied by
the Commonwealth on blank tapes. The alleged royalty was to be paid
by sellers of blank audio tapes according to sale, with the
proceeds going towards a fund nominated by the Attorney-General.
The High Court held that the levy was a tax, since it could not be
categorised as a fee for a licence or privilege, fee for service,
fine or penalty, or charge for the use of property. On the whole,
the levy appeared to be an excise duty, as it was a charge imposed
on vendors which could be passed on to the consumer.
This case shows that the traditional test of
what is a tax is becoming more flexible, and that there is
potentially scope for a wide range of imposts, levied by various
authorities, to be classified as taxes and therefore subject to
What is an excise?
On 5 August 1997 the High Court handed down a
landmark decision on the customs and excise power in the
Constitution (section 90): Ha and Hammond v NSW.(7)
Section 90 provides in part:
On the imposition of uniform duties of customs
the power of the Parliament to impose duties of customs and excise,
and to grant bounties on the production or export of goods, shall
Over the past ninety years the High Court has
been divided in its approach to the definition of 'duties of
excise'. Initially such duties were confined to taxes on the
production or manufacture of goods. This definition was gradually
extended to include taxes on goods imposed at any point in the
distribution process. Over time the Court came to accept that
exceptions should be made for taxes on alcohol, tobacco and petrol,
and hence the States have been permitted to tax these goods.
In Dennis Hotels Pty Ltd v Victoria(8)
the High Court accepted in a 4:3 decision, that a licence fee
calculated by reference to the value of alcohol purchased for sale
in the previous year was not an excise. This backdating device has
been upheld in Dickenson's Arcade v Tasmania(9), in
relation to tobacco, and in HC Sleigh Ltd v South
Australia(10), in relation to petrol, and was at issue in
Ha and Hammond.
In Capital Duplicators Pty Ltd v Australian
Capital Territory (No 2)(11) the High Court rejected the use
of the backdating device when applied to the sale of X rated
videos. The majority, however, refused to reconsider Dennis
Hotels and Dickenson's Arcade.
In Ha and Hammond v NSW the plaintiffs
were charged under the Business Franchise Licences (Tobacco)
Act 1987 (NSW) with selling tobacco in NSW without a licence.
The Act provides for a licence fee, which includes a set amount,
plus an amount calculated by reference to the value of tobacco sold
during the 'relevant period'. The 'relevant period' is defined as
'the month commencing 2 months before the commencement of the month
in which the licence expires'. The plaintiffs argued that the
licence fee imposed by the Act was an excise and hence invalid due
to section 90 of the Constitution. A majority of the High Court
(Brennan CJ, McHugh, Gummow and Kirby JJ) agreed:
Their Honours stated:
[D]uties of excise are taxes on the production,
manufacture, sale or distribution of goods, whether of foreign or
domestic origin. Duties of excise are inland taxes in
contradistinction from duties of customs which are taxes on the
importation of goods. Both are taxes on goods, that is to say, they
are taxes on some step taken in dealing with goods. (12)
What are customs duties?
In Australia, there has been little judicial
exposition of what constitutes a duty of customs for the purpose of
section 90 of the Constitution, although early cases did suggest
that there was something unique which served to differentiate
customs and excise duties from the range of other forms of taxation
imposed by governments.
In Attorney-General (NSW) v Collector of
Customs for NSW,(13) the Steel Rails Case, the High Court
considered the nature of a duty of customs, in the context of
customs duty imposed on State property. The majority, Giffith CJ,
Barton, O'Connor and Higgins JJ, found that duties of customs were
imposed not on the goods the subject of the duty themselves, but on
the act of importation. This conclusion was to be drawn from the
language of the Constitution, most notably the recurrence of the
use of the phrase 'duties of customs' when referring to federal
import duties, in contrast to levies and charges of the States
imposed for the purpose of inspection laws under section 112 of the
Constitution. Furthermore, it appeared that the Commonwealth was
given exclusive power over the subject of imports, thereby
supporting the contention that customs duties related to the
taxation of importation, rather than the goods themselves. The
distinction between customs duties as being taxes on imported or
exported goods and excise duties as being taxes on locally produced
goods was maintained in a series of cases.
In Vacuum Oil Co. Pty. Ltd v
Queensland(14), both Dixon J and Starke J referred to customs
duties as duties on import or export. The issue of customs duties
also arose in Carmody v Lovelock(15), where the High Court
once again affirmed the view that such duties are taxes imposed on
imports or exports. Gibbs J, with whom Windeyer J and Owen J agreed
It is clear that a tax imposed on the
importation of goods into Australia is a duty of customs within the
ordinary meaning of that expression and within the meaning it bears
in the constitutional provisions ... The impost in the present case
answers that description. It purports to be a tax levied on goods
imported into Australia. The evident object of the duty, the
conditions in which it may be levied and the manner in which the
amount of the duty is determined show that it is in reality what it
purports to be, a tax imposed on the importation of goods. The fact
that the tax might not become exigible until after the importation
had been completed did not make it any the less a tax imposed in
respect of the importation, or in other words the fact that the tax
was retrospective in operation did not prevent it from being a duty
Section 55 of the Constitution
Section 55 of the Constitution provides:
Laws imposing taxation shall deal only with the
imposition of taxation, and any provision therein dealing with any
other matter shall be of no effect.
Laws imposing taxation, except laws imposing
duties of customs or of excise shall deal with one subject of
taxation only; but laws imposing duties of customs shall deal with
duties of customs only, and laws imposing duties of excise shall
deal with duties of excise only.
Given that this package of Bills seeks to
consolidate 40 taxes into 2 Acts, the question might be asked
whether the package is in breach of section 55 paragraph 2, by
virtue of dealing with more than one subject of taxation.
The answer to the above question is, in my
opinion, no. Laws imposing customs and excise duties, even though
they are taxes, are excepted from the requirement of section 55
paragraph 2 that laws imposing taxation shall deal with one subject
to taxation only (Mathews v Chicory Marketing Board
(Vic))(17). Thus, provided a customs law deals with customs,
or an excise law with excise, multiple customs or excise items
within the one document are, in my opinion, of no consequence.
The consolidation of 40 taxes into 2 Acts as
proposed by this package also raises the question of why this
action was not taken decades earlier. The answer to this question
is unclear. Most probably the answer is a combination of reasons,
including uncertainty of what an excise is was and political
reasons such as those expressed by the then Opposition when
opposing the Primary Industries Levies Bill 1995, Primary
Industries Charges Bill 1995 and Primary Industries Levies and
Charges (Consequential Amendments) Bill 1995.(18)
The Government indicates in the Second Reading
Speech to the Bill that it has consulted with industry about the
consolidation package and that industry is in support of the
package. There has been no adverse reaction to the Government's
proposal reported in either the rural press or the major national
In addition to consolidating 27 levies into the
one Act, this Bill provides for future levies to be imposed by
regulation. By virtue of section 48 of the Acts Interpretation
Act 1901 such regulations are subject to disallowance by
In relation to Parliamentary scrutiny of levies
imposed by regulation, the Government states:
The Government intends that such regulations
will be required to be accompanied by a report setting out the
extent to which the proposed levy or charge complies with the
Government's general principles for new primary industry levies and
charges, when tabled in Parliament and will be subject to
disallowance by Parliament. In addition, the Office of Regulation
Review examines new levies through its regulation impact process
and a Regulation Impact Statement is required for each new levy or
Clause 6 provides that the Bill
only authorises the imposition of levies in so far as the levies
are duties of excise within the meaning of section 55 of the
Constitution. The reader is referred to the 'Background' of this
Digest for an explanation of why the proposed levies must be duties
Imposition of Levies - Schedules
Schedules 1-26 impose levies on
27 agricultural, livestock and forestry products. The Schedules do
not impose any new levies or additional rates of levy.
Schedules 1-26 replace provisions for the
imposition of levies contained in 27 separate levy imposition Acts.
These Acts, which are being repealed by the Primary Industries
Levies and Charges (Consequential Amendments) Bill 1998 are
Beef Production Levy Act 1990
Buffalo Slaughter Levy Act 1997
Cattle Transactions Levy Act 1997
Coarse Grains Levy Act 1992
Cotton Levy Act 1982
Dairy Produce Levy (No. 1) Act 1986
Deer Slaughter Levy Act 1992
Deer Velvet Levy Act 1992
Dried Fruits Levy Act 1971
Forest Industries Research Levy Act
Goat Fibre Levy Act 1989
Grain Legumes Levy Act 1985
Grape Research Levy Act 1986
Honey Levy Act (No. 1) 1962
Honey Levy Act (No. 2) 1962
Horticultural Levy Act 1988
Laying Chicken Levy Act 1988
Livestock Slaughter (Processors) Levy Act
Livestock Transactions Levy Act
Meat Chicken Levy Act 1969
Oilseeds Levy Act 1977
Pasture Seed Levy Act 1971
Pig Slaughter Levy Act 1971
Rice Levy Act 1991
Sugar Cane Levy Act 1987
Wheat Levy Act 1989
Wine Grapes Levy Act 1979
Imposition of Levies by
Item 2 of Schedule
27 provides that the regulations may impose a levy on the
produce of a primary industry. The term 'produce of primary
industry' is defined by item 1 of Schedule
27 to mean products that result from any of the
- agriculture or the cultivation of land
- the maintenance of animals for commercial purposes
- forest operations
- hunting or trapping
- any other primary industry activity.
Two or more levies may be imposed on the same
products or on different products (item 3 of
Schedule 27). In addition, a levy may be imposed
on a particular product even if another Schedule of this Bill
applies to the product (item 5 of Schedule
Item 6 of Schedule
27 provides that the rate of a prescribed levy is as set
out in the regulations. Item 9 of Schedule
27 provides that the total rate of levy, or rates of
levies, that may be imposed on animal products must not exceed
whichever is the greater of the following maximums:
- $5 per unit of the animal product
- 35 cents per kilogram of the animal product, or
- 7% of the value of the animal product.
The term 'animal product' is defined by
item 1 of Schedule 27 to mean an
animal, any part of an animal, anything produced by an animal, or
anything wholly or principally produced or derived from an
Item 10 of Schedule
27 provides that the total rate of levy, or rates of
levies, that may be imposed on plant products must not exceed
whichever is the greater of the following maximums:
- $5 per unit of the plant product, or
- 5% of the value of the plant product.
The term 'plant product' is defined by
item 1 of Schedule 27 to mean a
plant, any part of a plant, anything produced by a plant, or
anything wholly or principally produced or derived from a
The person liable to pay a prescribed levy will
be as set out in the regulation (item 11 of
The regulations may provide for exemptions from
levies (item 12 of Schedule
1. Primary Industries (Excise) Levies Bill 1998,
Second Reading Speech, p. 1.
2. Ibid., p. 2.
3. Parliamentary Database, Extract from the
Weekly House Hansard, 19 October 1995, p. 2485.
4. (1938) 60 CLR 263 at 276.
5. (1988) 165 CLR 462 at 467.
6. (1993) 176 CLR 480.
7. (1960) 104 CLR 529.
8. (1959-1960) 104 CLR 529.
9. (1974) 130 CLR 177].
10. (1977) 136 CLR 475.
11. (1993) 178 CLR 597.
12. (1997) 189 CLR 465 at 499.
13. (1908) 5 CLR 818.
14. (1934) 51 CLR 108.
15. (1970) 123 CLR 1.
16. (1970) 123 CLR 1 at 27.
17. (1938) 60 CLR 263.
18. See p. 3 of this Digest.
19. Primary Industries (Excise) Levies Bill
1998, Second Reading Speech, p. 3.
20 January 1999
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to
Senators and Members of the Australian Parliament. While great care
is taken to ensure that the paper is accurate and balanced, the
paper is written using information publicly available at the time
of production. The views expressed are those of the author and
should not be attributed to the Information and Research Services
(IRS). Advice on legislation or legal policy issues contained in
this paper is provided for use in parliamentary debate and for
related parliamentary purposes. This paper is not professional
legal opinion. Readers are reminded that the paper is not an
official parliamentary or Australian government document.
IRS staff are available to discuss the paper's contents with
Senators and Members
and their staff but not with members of the public.
© Commonwealth of Australia 1999
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by Members
of the Australian Parliament in the course of their official
Published by the Department of the Parliamentary Library,
Back to top