Bills Digest no. 88 2015–16
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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.
Rob Dossor
Economics Section
25 February 2016
Contents
Date introduced: 11
February 2016
House: House of
Representatives
Portfolio: Agriculture
and Water Resources
Commencement: Sections
1 to 3 commence on Royal Assent. Schedule 1 commences on Proclamation or six
months after Royal Assent, whichever is earlier.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
Purpose
of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
The purpose of the Dairy Produce Amendment (Dairy Service
Levy Poll) Bill 2016 (the Bill) is to amend the Dairy Produce Act 1986[1]
(Dairy Act) to remove the requirement for Dairy Australia to make
recommendations about the dairy service levy rate (levy rate) at least every five
years.[2]
The Bill will introduce a new framework for conducting dairy service levy polls
(levy polls).
The Bill contains only one Schedule which repeals and replaces
Division 3 of Part II of the Dairy Act.
Dairy Australia (DA) is a body established by the
Commonwealth at the initiative—and for the benefit of—the dairy sector. Under
subsection 7(1) of the Dairy Act, it is the declared industry services
body.[3]
The functions of DA are to help dairy farmers adapt to a
changing operating environment and achieve a profitable, sustainable dairy
industry.[4]
This is done by way of investment in projects that affect the whole dairy
industry, with a focus towards investment on pre- and post-farm gate research,
development, extension and industry services. [5]
In order to carry out these functions, DA receives funding by way of the dairy
service levy (dairy levy) which the Commonwealth collects from dairy producers
at a rate of 2.9263 cents per kilogram for milk fat and 7.1229 cents per
kilogram for milk protein, on behalf of DA.[6]
Under the Dairy Act, DA is required to conduct a
poll of dairy levy payers before making any recommendations to the Minister
with regards to the levy rate.[7]
The information collected from the poll is then used to develop DA’s
recommendations.[8]
The Dairy Produce (Dairy Service Levy
Poll) Regulations 2006 (Dairy Regulations)
requires DA to provide recommendations to the Minister at least every five years.[9]
This means that DA is also required to conduct a poll of all dairy levy payers
at least every five years.
There have been concerns raised about ‘the regulatory and
financial burden associated with holding a poll every five years’.[10]
DA received feedback from stakeholders that the process involved with the last
poll, which was conducted in 2012, ‘was costly, inefficient,
time consuming and could be done better.’[11]
DA was required to consult with the dairy industry prior
to conducting the levy poll. In the lead up to the 2012 levy poll it conducted
52 presentations around the country.[12]
DA concluded that, due to the varying level of farmer turnout (which was said
to have been reasonable in Victoria, but poor in northern NSW), the
consultation process was inefficient.[13]
Approximately 42 per cent of levy payers responded to the poll, (this
represented about 51 per cent of eligible voters as votes are based on one vote
per dollar towards the dairy service levy).[14]
The outcome of the 2012 levy poll was that 60.13 per cent of valid votes voted
for an increase of the dairy levy, with 54.05 per cent voting for an increase
of 10 per cent and 6.08 per cent of votes in favour of a 15 per
cent increase.[15]
39.87 per cent voted for no levy.[16]
In 2012, the Chair of the DA Board of Directors proposed
an independent review into Dairy Australia’s Constitution by a Constitutional
Review Panel (the Panel).[17]
The review was established by Dairy Australia in consultation with the
Australian Dairy Farmers (ADF— the dairy farmer representative body) and the
Department of Agriculture.[18]
The review commenced in June 2014 (when the review panel was established).[19]
The Dairy Levy Poll Process Review Report to the Board
of Dairy Australia Limited (the Review report) made a number of recommendations,
including that:
- the
levy should be reviewed at least every five years with a view to determining
whether a change to either the levy rate or the mechanism for the imposition of
the levy should be put forward
- the
industry should have flexibility as to the timing of the levy poll and
- a
levy poll would only be held in the circumstances where a change in either the
level of the levy or the mechanism for the imposition of the levy was
recommended by the Levy Poll Advisory Committee.[20]
The Review report also recommended other changes around
the levy poll, such that Group A (dairy farmers) members of DA could request a
levy poll when a bloc comprising at least 15 per cent of Group A members
disagreed with the Levy Poll Advisory Committee decision not to convene a levy
poll.[21]
This would result in a vote by all Group A members on whether to conduct a levy
poll. If this vote determined that a levy poll should be conducted, the Levy
Poll Advisory Committee would be obliged to conduct the poll and include the
option put forward by the bloc.[22]
The review recommended that the Levy Poll Advisory
Committee should appropriately represent the industry while ensuring it remains
a workable size.[23]
It recommended that initial members should comprise:
- an
independent chair
- two
DA representatives
- two
ADF representatives and
- one
Australia Dairy Products Federation (the dairy processing and marketing peak
body) representative.[24]
Starting in October 2015 dairy levy payers were
electronically polled as to whether they supported the proposed changes to the
levy poll process.[25]
The poll drew 24.7 per cent of eligible voters, with 89.95 per cent voting in
support of the changes.[26]
According to ADF President Simone Jolliffe, all levy payers were consulted
during the consultation process (consultation was conducted by ADF with the
support of DA and state dairy farming organisations).[27]
Minister Joyce reaffirmed support for the proposed changes
on 3 February 2016 following a meeting with Simone Jolliffe.[28]
While the review was being finalised, the Senate Rural and
Regional Affairs and Transport References Committee (the Committee) was
conducting an Inquiry into Industry Structures and Systems Governing the
Imposition and Disbursement of Marketing and Research and Development (R&D)
Levies in the Agricultural Sector.[29]
In its final report, which was tabled on 30 June 2015, the Committee did not
reach a conclusion about whether a poll should be required to determine levy
rates across agricultural industries.[30]
As a result the Committee did not make any express recommendations regarding
levy polls. Crossbench Senator David Leyonhjelm, however, while endorsing the
Committee’s recommendations, stated
The wool and dairy sectors both allow levy payers to vote on
the level of levies to be imposed, including the option of zero. While neither
is perfect, they are considerably more representative than other sectors where
voting only occurs when there is a proposal to impose a new levy or increase an
existing one...[31]
Senator Leyonhjelm made additional recommendations including
that each sector undertake a regular poll of levy payers to decide the rate of
levy and the split of levy funds between marketing and R&D and that polls
be conducted at intervals of four years, with the option to defer a particular
poll for up to two years in exceptional circumstances.[32]
Senate Standing Committee for the
Selection of Bills
At the time of writing the Senate Standing Committee for
the Selection of Bills had not considered the Bill.
Senate Standing Committee for the
Scrutiny of Bills
At the time of writing the Senate Standing Committee for
the Scrutiny of Bills had not considered the Bill.
Senator Leyonhjelm is
quoted as stating that he would ‘like to see the dairy industry continue asking
its members if they wish to continue paying the levy but go further than that
and ask how they’d like the levy money spent’.[33]
Otherwise the Bill does not appear to have raised concerns
or commentary from other non-government parties or independent senators or
members, as at the time of writing.
The main dairy industry body, the ADF pushed for the
changes.[34]
The ADF as well as DA were responsible for drafting the Terms of Reference of
the Dairy Levy Poll Process Review.[35]
The Bill will have no financial implications for the
Commonwealth. According to the Government it will, however, provide savings to
DA of up to $1 million every five years.[36]
This is due to DA not being required to hold a levy poll every five years,
which last cost around $720,000 (although the bulk of this was spent on
industry consultation, including media, about the poll).[37]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible as it does not raise any human
rights issues.[38]
Parliamentary Joint Committee on
Human Rights
The Parliamentary Joint Committee on Human Rights considers
that the Bill does not raise human rights concerns.[39]
The Bill contains only one Schedule, which repeals and
replaces Division 3 of Part 2 of the Dairy Act.
Division 3 currently consists of section 9, which covers
recommendations about the dairy levy rate and the requirement to carry out levy
polls. Specifically, subsection 9(1) requires the relevant services body (currently
DA) to make recommendations to the Minister about the dairy levy amount and for
the recommendations to be made within the time prescribed under the regulations.
Subsection 9(2) provides that before making a recommendation, DA must conduct a
poll in accordance with the regulations and the recommendation must reflect the
results of the poll. Subsection 9(3) ensures that the regulations contain
provisions allocating votes to each dairy service levy payer.
Item 1 repeals and replaces Division 3. Proposed
Division 3 inserts new section 9, which sets out the new provisions relating
to polls and recommendations about the dairy service levy amount. Proposed
subsections 9(1) and 9(2) stipulate that DA must conduct a levy
poll about the amount of the dairy levy, in accordance with the legislative
instrument made under this section, if a request for a levy poll is made in
accordance with the legislative instrument.
Proposed subsection 9(3) provides that if DA
conducts a poll, it is to make recommendations to the Minister about the amount
of the dairy levy within the period specified in the legislative instrument and
in accordance with the results of the levy poll.
Proposed subsection 9(4) allows the Minister, by
legislative instrument, to make provision for the making of a request for a
levy poll, the conduct of a levy poll and the making of recommendations to the Minister
about the dairy levy rate. Proposed subsection 9(5) also allows the
legislative instrument to make provision for the persons or bodies who may
request a levy poll, the circumstances in which a request for a levy poll may
or must be made and the form of a request for a levy poll.
Proposed subsection 9(6) requires that the
legislative instrument must include provisions allocating votes to each dairy
service levy payer.
Importantly, new section 9 no longer refers to the
regulations and instead refers to the legislative instrument. The Explanatory
Memorandum notes that it is intended that subordinate legislation in the form
of a legislative instrument will be developed to:
- require
DA to establish a levy poll advisory committee to consider the levy rate every five
years
- require
DA to hold a levy poll if a variation to that rate is recommended by the
advisory committee and
- include
a mechanism for Group A members of DA to request DA conduct a levy poll if they
disagree with the levy poll advisory committee’s decision not to convene a levy
poll. This proposal must be supported by at least 15 per cent of levies paid by
Group A members.[40]
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Dairy Produce Act 1986,
accessed 19 February 2016.
[2]. The
time limits for when recommendations about the dairy service levy rate must be
made are prescribed under the regulations: subregulation 5(5) of the Dairy Produce (Dairy
Service Levy Poll) Regulations 2006, accessed 16 February 2016.
[3]. Department
of Finance (DoF), ‘List
of Australian Government Bodies and government relationships as at 1 October
2009: Agriculture, fisheries and forestry portfolio’, DoF website, October
2009, p. 71, accessed 15 February 2016.
[4]. Dairy
Australia (DA), ‘Who
we are’, DA website, accessed 23 February 2016.
[5]. DA,
Australian
dairy industry in focus 2015, DA, Melbourne, 2015, p. 2, accessed 23
February 2016.
[6]. Department
of Agriculture and Water Resources (DAWR), ‘Information
Sheet [Dairy Produce Levy]’, DAWR website, accessed 23 February 2016. This
levy is distributed to DA minus administration costs.
[7]. Dairy
Produce Act 1986, subsection 9(2).
[8]. Ibid.
[9]. Dairy Produce (Dairy
Service Levy Poll) Regulations 2006, regulation 5.
[10]. Explanatory
Memorandum, Dairy Produce Amendment (Dairy Service Levy Poll) Bill, p. 2.
[11]. I
Halliday (Managing Director, Dairy Australia), Evidence
to Senate Rural and Regional Affairs and Transport References Committee, Inquiry
into Industry structures and systems governing the imposition and disbursement
of marketing and research and development (R&D) levies in the agricultural
sector, 4 February 2015, p. 26, accessed 16 February 2016.
[12]. Ibid.,
p. 30.
[13]. Ibid.
[14]. Ibid.,
p. 31. Regulation 11, Dairy Produce (Dairy Service Levy Poll)
Regulations 2006.
[15]. DA,
‘Dairy
service levy’, DA website, accessed 19 February 2016.
[16]. Ibid.
[17]. Dairy
Levy Poll Review Panel, Dairy
levy poll process review, report to the Board of Dairy Australia
Limited, Dairy Levy Poll Review Panel, Melbourne, 23 April 2015, p. 3,
accessed 17 February 2015.
[18]. Dairy
Levy Poll Process Review, ‘Home’,
Dairy Levy Poll Process Review webpage, accessed 24 February 2016.
[19]. Dairy
Levy Poll Review Panel, Dairy
levy poll process review, op. cit., p. 6.
[20]. Ibid.,
p. 4.
[21]. Ibid.
[22]. Ibid.,
pp. 4–5.
[23]. Ibid.,
p. 5.
[24]. Ibid.;
Australian Dairy Products Federation Inc (ADPF), ‘About’, ADPF website, accessed 25
February 2016.
[25]. Australian
Dairy Farmers (ADF), No
change, no levy poll – you decide, media release, 5 October 2015,
accessed 18 February 2016.
[26]. ‘Dairy
farmers back levy poll change’, The Land, (online edition), 2
December 2015, accessed 18 February 2016.
[27]. ADF,
ADF
update 2015, ADF, November/December 2015, pp. 4–5, accessed 18 February 2016; B Joyce (Minister
for Agriculture and Water Resources), ‘Second
reading speech: Dairy Produce Amendment (Dairy Service Levy Poll) Bill 2016’,
House of Representatives, Debates, (proof), 11 February 2016, p. 3, accessed
19 February 2016.
[28]. B
Joyce (Minister for Agriculture and Water Resources), Joyce
voices support for simplified dairy levy process, media release, 3
February 2016, accessed 18 February 2016.
[29]. Further
information about the inquiry is available on the Committee’s homepage: Senate
Rural and Regional Affairs and Transport References Committee, ‘Inquiry
into industry structures and systems governing the imposition and disbursement
of marketing and research and development (R&D) levies in the agricultural
sector’, Parliament of Australia website, accessed 23 February 2016.
[30]. Senate
Rural and Regional Affairs and Transport References Committee, Inquiry
into industry structures and systems governing the imposition and disbursement
of marketing and research and development (R&D) levies in the agricultural
sector, The Senate, Canberra, 30 June 2015, p. 72, accessed 23
February 2016.
[31]. Ibid.,
p. 79.
[32]. Ibid.,
p. 81.
[33]. C
Bettles, ‘Leyonhjelm
cautions Joyce on Levy reforms’, Farm Weekly, (online edition), 11
February 2016, accessed 17 February 2016.
[34]. Dairy
Review Levy Process Review, ‘Dairy
review levy process: questions and answers’, Dairy Review Levy Process
Review website, accessed 19 February 2016.
[35]. Dairy
Levy Poll Review Panel, Dairy levy poll process review, op. cit., p. 3.
[36]. Explanatory
Memorandum, op. cit., p. 3.
[37]. For
example media and a ‘road show’ cost around $540,000. I Halliday, Evidence
to Senate Rural and Regional Affairs and Transport References Committee, op.
cit., pp. 30–32.
[38]. The
Statement of Compatibility with Human Rights can be found at page 4 of the Explanatory
Memorandum to the Bill.
[39]. Parliamentary
Joint Committee on Human Rights, Thirty-fourth
report of the 44th Parliament, The Senate, Canberra, 23 February 2016,
p. 1, accessed 24 February 2016.
[40]. Explanatory
Memorandum, op. cit., p. 2.
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