Committee view and recommendations
While the committee acknowledges the mixed views regarding industry
representation and levy investment matters, the inquiry has revealed that there
is general support across the agricultural sector for the levy system.
Notwithstanding this point, the committee recognises that there are a number of
challenges within the levy system which need to be addressed.
Considerable evidence to the committee focused on governance and
management arrangements within RDCs rather than R&D and marketing
investment. For these reasons, the following recommendations focus on providing
greater flexibility and responsiveness within the levy system in order that
industry aspirations can be realised in a timely, cost-effective manner.
There is no question that the levy system and the structures that
underpin it are complex, convoluted and difficult to penetrate. This complexity
is evident at every stage of the process, including in relation to the
introduction and modification of levy rates, collection arrangements,
investment decision-making, extension and return, and representation and
oversight. While there is considerable diversity across industries in terms of
these dynamics, processes and visibility, the key issue of commonality across
all industries was the need to know who the producer levy payers are.
Fundamental principles underpinning the agriculture levy system
The committee appreciates that a one-size-fits-all approach to
agricultural levies would be totally inappropriate, given the diversity across
the various commodities subject to levies and the unique characteristics of
each industry. Nevertheless, the committee recognises that the underpinning
principle of the levy system should be that producer levy payers can trace
their levies from payment to investment and return. They should also have a say
on the investment and utilisation of their own levy. For many levy payers, the
levy system is abstract, removed from their daily lives and confusing.
Decision-making processes in relation to levy investment are perceived by some
to be unreachable and intangible. However, the integrity of the agriculture
levy system into the future rests on the fundamental principle of levy payer
The mechanism and means through which this is achieved is a matter for
each industry. Nevertheless, the committee recognises that AGMs provide an
important opportunity for levy payers to raise their concerns directly with RDC
boards and thereby improve board accountability. For this reason, the committee
strongly encourages statutory RDCs to seriously consider cost-effective methods
to initiate AGMs as a means to engage directly with levy payers and their
representative bodies. The ability to discuss concerns and priorities directly,
and in an open forum, could only contribute to greater understanding and
agreement upon research imperatives and levy investment priorities.
The following committee recommendations are not directed at addressing
each of the concerns raised during the inquiry across all agricultural
industries but rather seek to ensure that the structures that underpin the levy
system are reformed to provide producers with the means to manage their own
levies. It is not the place of the committee to comment on the best methods to engage
levy payers or to detail the most appropriate representation models, except to
say that levy payers must have a clear say about R&D decisions and where
relevant, marketing investment decisions. They must have oversight of how their
levies are invested and the process undertaken to make that determination.
While there was considerable debate as to whether a regular poll should
be required across agricultural industries to determine the levy rate and
allocations within the levy, this is a matter for each respective industry.
However, it is noted that without a comprehensive database or register of levy
payers, there is considerable risk that mandating a regular poll (or
prescribing other opportunities directed at securing levy payers with a greater
say in the levy) would lead to decision making based on assumptions, rather
than serve as a true reflection of the aspirations and priorities of levy
Automated and transparent levy collection and vote entitlement system
The levy collection systems used in relation to agricultural commodities
vary considerably in terms of method of collection, collection point, rate and
means of measurement, as well as documentation provided to levy payers on their
levies paid. It is at the point of levy collection that the important
information regarding levy payers is diluted. Yet, much of the complexity and
confusion in relation to levy arrangements, and questions regarding
transparency and accountability to levy payers, arises from the lack of a
mechanism to identify those payers.
The committee repeatedly made the point throughout the inquiry that a
levy payer register was fundamental to the levy system. Furthermore, it could
potentially be used in a variety of additional and exceptional circumstances (such
as biosecurity, quarantine and food safety events) to contact producers
immediately, and thereby serve a wider public good.
The committee holds the view that the premise of a transparent and
accountable levy system is that of knowing who the levy payers are. Without a
levy payer database, the basis on which RDCs and industry bodies communicate
with levy payers will remain ad hoc. In this regard, the committee recognises
as a fundamental flaw, the fact that there is no mechanism to directly advise
levy payers about the ways in which their levy funds are being invested.
For this reason, the committee strongly encourages agricultural
industries, in cooperation with the department, to consult on the most
appropriate and cost-effective way to develop an electronic levy payer
database. In this regard, the committee reiterates its 2014 recommendation for
such a system in relation to the grass-fed cattle levy. The committee notes
that the introduction of an automated levy collection system would:
provide for transparency in terms of levy collection;
provide an accurate mechanism to record levy payers' details;
enable the rapid settlement of levy payment and timely transfer
of levy revenue to the department;
provide a mechanism to determine voting entitlements;
be subject to regular independent auditing and verification; and
provide an accurate audit trail.
The committee recognises that an electronic system may also positively
impact levy collection costs and the administrative charges that industries are
subject to. It has the potential to alleviate the reporting burden currently
placed on agents as levy collectors. It may also address other challenges in
relation to agents, including that of payment for services and liquidation.
The committee notes the department's concern that one model for the
identification and documentation of levy payers should be established across
all agricultural industries, and that the introduction of fifteen or more
different models should be avoided. While the establishment of levy payer
databases should not serve as an additional layer of difference or divergence
between industries, the committee appreciates the challenges in establishing
one model when levy collection systems vary considerably across the
agricultural sector. Nevertheless, the committee strongly encourages
agricultural industries to work together, and with the department, to identify
appropriate mechanisms to capture levy payer details.
The move to an automated mechanism to identify levy payers against
levies paid also provides the opportunity for relevant industries to allocate
voting entitlements to levy payers. In this regard, the committee supports the
evidence that eligibility for membership of industry-owned RDCs should be
automatically assigned to levy payers.
Furthermore, the committee understands that agricultural levies are paid
at both the federal and state levels. Ideally, therefore, any such database or
databases should capture both levy structures. Such an effort would require
industry, in conjunction with the federal and respective state departments, to
identify a system that can be used uniformly. Furthermore, the establishment of
a database could serve as an opportunity for industries to review their levy
collection methods, with a view to streamlining the collection process,
particularly in relation to state-based levies, which should be merged where
possible in order to reduce duplication.
As the levy system is extremely complex and opaque for many levy payers,
the provision of information on levy payers would enable industry bodies
(including relevant RDCs) to target and tailor the information they provide to
levy payers. The committee takes the view that if used appropriately,
information gleaned vis-à-vis the database will provide for voting entitlements
of levy payers and enable levy recipients to demonstrate to levy payers where
and how their levies are invested.
The committee further considers the collection of such data would assist
relevant authorities and industry to communicate timely information to levy
payers in the event of biosecurity emergencies, and assist authorities in
better identifying risks in such emergencies.
As a first step towards achieving these objectives, the committee
recommends that the Primary Industries Levies and Charges Collection Act
1991 be amended, consistent with subsections 27(3) concerning wool and
27(3A) concerning dairy to allow for the collection and distribution of levy
payer information in relation to other agricultural industries. Such an
amendment, which identifies both the authorised person and eligible recipient
in relation to the publication of levy payer information, would make it clear
which bodies have responsibility for, and access to, levy payer data.
The committee recommends that the Primary Industries Levies and
Charges Collection Act 1991 be amended, consistent with subsections 27(3)
and 27(3A), to enable the collection and distribution of levy payer information
which will allow the creation of levy payer databases for all agricultural
industries that pay agricultural levies. The committee further recommends that
levy payer databases be established within two years of the legislative
The committee recommends that data collected for the purposes of levy
databases and held by the Department of Agriculture should be limited to
information sufficient to enable organisations responsible for spending or
allocating levy funds to communicate with levy payers and enable votes to be
allocated on a production basis. Data should include location, contact details,
crop or enterprise type and production volume and/or value. Databases should be
held by the appropriate levy-payer owned body, and be available to appropriate
authorities under circumstances of biosecurity emergencies.
The committee recommends the establishment of a cost-effective,
automated agricultural levy system. The system should identify levy payers
against levies paid. The automated system should provide for more immediate
settlement of levy fees paid and the allocation of voting entitlements where relevant.
It should be subject to regular independent auditing and verification.
The committee recommends that where industry sectors are subject to
levies by both states and territories and the Commonwealth, the merging of
record keeping and levy collection should be investigated to avoid duplication
and reduce costs to producers.
Flexibility and transparency in levy change arrangements
Evidence to the committee highlighted the often lengthy and complex
processes involved in seeking changes to levies – including introducing new
levies, changing the rate of existing levies and changing the amounts allocated
within a single levy. The evidence focused on the extensive, time-consuming and
resource intensive processes and administrative burden placed on industries in
The committee acknowledges concerns raised by both RDCs and industry
representative bodies regarding what has become an inflexible and
time-consuming process. Evidence to the committee suggested that at times, this
resource-intensive process hindered rather than supported the process of levy
modification, and with it, industry aspirations for R&D and marketing.
It was suggested to the committee that it was excessive red tape which
deterred agricultural industries from increasing investment in R&D,
marketing and biosecurity rather than a lack of desire. While the committee
recognises that there may be other contributing factors, the point remains that
these administrative obstacles have contributed to a situation in which levy
adjustments are rarely undertaken. The committee is sympathetic to the view
that if such adjustments were carried out more regularly, levy increases may
not seem as substantial when submissions for them are made.
Furthermore, opportunities to rationalise levies (and potentially reduce
collection costs which could accompany such adjustments) are also not
undertaken. The efforts of the Australian Chicken Meat Federation to pay back a
debt by raising a component of its levy to repay its industry's share of the
emergency animal disease response was one such example which highlighted the
unnecessary complexity of the process.
While the committee acknowledges that industries must demonstrate
producer levy payer support for any modification to a levy, the point was
repeatedly made that the bureaucratic burden placed on industries hinders and
prevents responsiveness to industry changes while also redirecting focus and
resources away from R&D and marketing investment. What is fundamental to
such a system is certainty and responsiveness in terms of funding arrangements
to ensure the realisation of long-term outcomes in RD&E as well as the
ability to respond to issues that arise suddenly, such as a biosecurity
For these reasons, the committee acknowledges that there is a need to identify
methods to reduce the compliance burden and therefore the time, resources and
costs involved, particularly in relation to levy rate amendment proposals.
The committee takes the view that there is scope for the department to
rationalise the process without compromising the levy principles and
guidelines. To this end, the committee strongly encourages the department to
establish a clear and transparent timeframe in relation to the decision making
process once levy applications are submitted. Further, the committee recommends
that the department in cooperation with agricultural industries and RDCs,
conduct a review of levy introduction and amendment processes, with a view to
identifying methods to provide for a more cost-effective and responsive levy
The committee recommends that the Department of Agriculture provide
agricultural industries with a timeframe for levy application and amendment
The committee recommends that the Department of Agriculture, in
cooperation with relevant agricultural industries, conduct a review of the
process to establish and amend agricultural levies including modifications to
levy components. The review should identify methods to provide for a more
cost-effective and responsive process while maintaining an appropriate level of
Prescribed Industry Bodies
The committee notes, and to an extent, agrees with concerns raised by
some submitters and witnesses regarding the true level of representation
provided to levy payers by peak industry bodies and the lack of uniform,
transparent criteria determining the recognition of PIBs under legislation. The
committee further notes concerns raised about voting systems based on volume,
area or value as opposed to 'one man, one vote' systems; the former allows
relatively few large levy payers to dominate votes determining expenditure of
levies – potentially at the expense of smaller levy payers – while the latter
may potentially not reflect large levy payers' significant investment in
R&D with an expectation to have a proportional influence over expenditure.
The committee notes the diversity and disparity of various PIB voting
systems, and significant under-representation in some cases in votes
determining levy rates and expenditure.
The committee recommends that the Department of Agriculture review and
if necessary, redraft the criteria for Prescribed Industry Bodies (PIBs) with a
view to developing a transparent, uniform and contestable process, including
published criteria and thresholds as applicable, for the recognition of PIBs
for the purposes of collecting levies.
The committee further recommends that PIBs already recognised under
legislation should be required by the Department of Agriculture to conclusively
demonstrate, within a period of no more than five years, that they meet the
criteria referred to in Recommendation 7 in order to remain the recognised PIB
for their relevant industry sector.
Senator Glenn Sterle
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