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Bills Digest No. 196  1999-2000
Primary Industries Legislation Amendment (Vegetable Levy) Bill 2000

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.

Passage History

Date Introduced: 21 June 2000

House: House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement: The Bill commences retrospectively on 1 March 1996.

Purpose

To amend the Primary Industries Levies and Charges Collection (Vegetable) Regulations in order to adjust retrospectively the amount of levy payable by certain vegetable growers between 1 March 1996 and 30 June 1999.

Background

A levy payable by producers of vegetables was introduced on 1 March 1996 to fund research and development activities in the vegetable industry. The levy was imposed under the Horticultural Levy Act 1987. The rate of the levy was set by the Primary Industries Levies and Charges Collection (Vegetable) Regulations.⁽¹⁾ The rate of levy for vegetables was set at 0.5% of the amount paid for the vegetables at the first point of sale.⁽²⁾

Australian Vegetable Industry

Vegetables, including potatoes, make up the largest sector of Australia's horticulture industry. According to information published by the Australian Bureau of Statistics (ABS), the gross value of vegetable production increased by 9% to $1.8 billion in 1997-98 with all states recording an increase. Victoria was the major contributor with a gross value of $487.2 million or 27% of the total, slightly more than Queensland with a value of $471.1 million.⁽³⁾ Potatoes, mushrooms, carrots, onions and tomatoes have the highest production values.⁽⁴⁾

It is estimated by the National Farmers' Federation that there are about 15 000 vegetable growers operating in all states.⁽⁵⁾ ABS statistics indicate that about 5 000 establishments are primarily involved in vegetable growing. The total workforce engaged in vegetable growing in 1998 was 22 390 people, comprising working proprietors and partners, and paid employees. The following table shows the number of paid employees in vegetable growing, compared with other agricultural industries.

Source: Australian Bureau of Statistics, Agriculture 1997-98, (ABS catalogue no. 7113.0), p. 12.

The average vegetable farm size is about 25 hectares, producing vegetable worth about $230 000 per annum at the first point of sale.⁽⁶⁾ In some areas, such as the Riverland of South Australia, the Murray Valley and the Murrumbidgee Irrigation Area, there has recently been a change to broad acre vegetable production for crops such as potatoes, tomatoes, lettuce and broccoli.

While there is a strong demand for regular supplies of fresh produce, the processing of vegetables offers a number of advantages, particularly by reducing the perishability of the product and allowing the producer to manage marketing in accordance with supply and demand. In recent years a small number of growers have begun to process the vegetables they grow.

Vegetable growers are organised through local and regional grower groups that are affiliated with state vegetable grower organisations. Each state vegetable grower organisation is a member of the Australian Vegetable and Potato Growers Federation Inc. (AUSVEG) which represents the industry at the national level in generic policy issues.⁽⁷⁾

The change which this Bill introduces was requested by the peak industry body, AUSVEG, at the request of members who are both vegetable growers and processors. The change which is proposed applies only to people who are both growers and self-processors, and according to AUSVEG, will apply to only a small number of people.⁽⁸⁾

Proposed change

On 1 July 1999 the Primary Industries (Excise) Levies (Vegetable) Regulations 1999 were made under the Primary Industries (Excise) Levies Act 1999.⁽⁹⁾ Regulation 6 (Rate of Levy) provides that, where vegetables are first sold after being processed, then the rate of levy is set at 0.5% of the amount that would have been paid for the vegetables if they had been first sold before processing. The change that is proposed by this Bill is to apply the same criteria to the levy paid by growers who are self-processors from the period 1 March 1996 (when the levy was introduced) to 30 June 1999 (when the current requirements commenced). The change will have a beneficial effect on the few people to whom it applies.

Assuming that the growers who sold their vegetables after processing sought to recoup the cost of the levy, where possible, in the price they charged, it might be asked whether the beneficiaries of this legislative change will receive a windfall gain, with none of the benefits being passed to those who may have paid higher prices for the processed vegetables. In similar circumstances, where the sales tax on in situ pools was found to be invalid, refunds were only provided where the manufacturer could show that the benefits would be passed back to the consumers.⁽¹⁰⁾

This Bill proposes to implement the change by repealing Regulation 7 of the Primary Industries Levies and Charges Collection (Vegetable) Regulations which sets the rate of the levy and substituting a new regulation which uses the same words as the 1999 Regulation. The process of using principal legislation to amend subordinate legislation is unusual. The Amending Forms Manual prepared by the Office of the Parliamentary Counsel in February 1999 says that:

Main Provisions

Proposed subsection 4(1) provides that the amendments made by Schedule 1 are restricted to vegetables either sold or processed by the grower between 1 March 1996 and 30 June 1999. The effect of proposed subsection 4(2) is to ensure that the retrospective regulation is not continued in force after 1 July 1999, which is the date on which the Primary Industries (Excise) Levies Act 1999 commenced. This Act imposes the vegetable levy after 1 July 1999.

Item 1 of Schedule 1 repeals Regulation 7 of the Primary Industries Levies and Charges Collection (Vegetable) Regulations and substitutes a new Regulation 7 which uses the same words as the Primary Industries (Excise) Levies (Vegetable) Regulations 1999. This has the effect of ensuring that the assessment of the levy on vegetables that are processed before being first sold is consistent since the commencement of the levy.

Endnotes

1. Statutory Rules 1996, No. 18.
2. Primary Industries Levies and Charges Collection (Vegetable) Regulations. Regulation 7.
3. Australian Bureau of Statistics, Agriculture, 1997-98, (ABS catalogue no. 7113.0), p. 62.
4. ibid., p. 75-76.
5. Newman, Brian, 'The Vegetable Industry', Australian Agriculture, Sixth edition, 1997/98, National Farmers' Federation, 1997, p. 285.
6. ibid., p. 285.
7. ibid., p. 285.
8. Mr Brian Newman, Executive Director of AUSVEG. Personal communication 20 June 2000.
9. Statutory Rules 1999, No. 306.
10. Mutual Pools and Staff Pty. Limited v The Commonwealth of Australia (1994) 179 CLR 155; (1994) 94 ATC 4103; (1994) 119 ALR 577; (1994) Aust Sales Tax Cases 85-181; (1994) 27 ATR 357; (1994) 68 ALJR 216 F.C. 94/005.
11. Office of the Parliamentary Counsel, Amending Forms Manual, February 1999, paragraph 38 and footnote 7, p. 8. At http://www.opc.gov.au/about/documents.htm [27 June 2000].

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