This inquiry has brought to the fore frustrations felt by many grass-fed
cattle levy payers with MLA's management of levy funds, investment decisions,
as well as with the levy system and underpinning structures. For levy payers,
the levy system is complex and difficult to understand while mechanisms
available to influence investment decisions regarding levy revenue are almost impenetrable.
The committee was therefore pleased to note MLA's announcement on 18
August 2014 that it was restructuring its R&D investment consultation model
in an effort to provide all levy payers with an opportunity to have their say.
MLA noted that the restructure addressed the recommendations of the 2013 review
of MLA's Livestock Production Innovation unit and responded to concerns raised
by levy payers raised during the committee inquiry. As part of the proposed
restructure, producers would be invited to provide input at the local level on Research,
Development and Extension (RD&E) priorities which then feed into the regional
RD&E investment plans. These plans would then be provided to the Northern
Australian Beef Research Council (NABRC), a reinvigorated Southern Australia
Meat Research Council (SAMRC) and a new regional group encompassing southern
Western Australia. The chairs of these groups, together with representatives
from the peak industry councils and MLA, would then develop the national
RD&E investment plan which would also be informed by the National RD&E
Framework and the Meat Industry Strategic Plan.
MLA stated that it expected the full efficiency and effectiveness review
to be completed within weeks of the announcement, while the new restructure would
be operational by October 2014. According to MLA, its review will inform
decisions that are required to achieve a 10 per cent reduction in fixed costs
(or $6 million) over the next 12 months. At the same time, MLA announced that
it has taken steps to initiate the development of a full assessment of the
automation of levy payments to voting entitlements. MLA also flagged the
prospect of a resolution at its 2014 annual general meeting to amend the
composition of the MLA board selection committee.
To the extent that the proposed reforms seek to provide levy payers with
a greater say in how their levy funds are invested, MLA's announcement is a
step in the right direction.
In light of the substantial changes that have taken place to the
industry since the current systems were put in place, the committee has
identified in this report a series of gaps and flaws within the existing
system. These shortcomings require structural reforms that go well beyond MLA's
announced changes. In detailing the mechanisms available to levy payers to
influence the quantum and investment of the levy, the committee has raised
serious questions about accountability and transparency in relation to the both
the current levy system and red meat industry structures. Issues of
contestability, transparency and efficacy within the red meat industry structures
and levy system has led the committee to the conclusion that serious reform is
required to ensure the future viability of the Australian cattle industry.
In this report, the committee has formulated seven recommendations to
achieve this reform. The recommendations are directed at providing levy-paying
producers with the opportunity to represent themselves, manage levy investment
decision processes and to enjoy the resultant benefits. The objective
underpinning the committee's recommendations is to maximise the benefits and
opportunities for Australian cattle producers into the future.
The principle that levy payers have greater control over their levies
underpins both MLA's announced changes and the committee's recommendations. Both
sets of reform are therefore necessary and complementary. MLA's reforms simply
provides a starting point from which the wider structural reforms recommended
by the committee will flow.
Finally, on 25 August, an online article reported that a draft of this
report had been leaked prior to being tabled in the Senate and authorised for
publication. The article provided some detail of the contents of the draft
report. The committee is extremely disappointed that the draft report was
disclosed and notes the disquiet brought about by speculation regarding the contents
of the draft and its implications for the Australian cattle industry,
particularly when the industry is already at crisis point. However, the
unauthorised disclosure cannot undermine the importance of this report to
cattle producers, many of whom provided valuable evidence to the committee. To
this end, securing the future livelihood of Australian cattle producers is the
central tenet of this report of the committee.
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