EXPLANATORY STATEMENT

 

Select Legislative Instrument 2006 No. 42

 

Issued by Authority of the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry

 

National Residue Survey (Excise) Levy Act 1998

 

Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2006 (No. 1)

 

 

Section 8 of the National Residue Survey (Excise) Levy Act 1998 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

The National Residue Survey (NRS) implements chemical residue monitoring programmes and recovers the costs of the programmes from participating industries.  These programmes form the basis for documentation that enables the Australian Government to certify that raw food products bound for export and domestic consumption are free from significant chemical contamination.

 

Statutory levies are the preferred mechanism by which primary industries choose to meet the cost of compulsory residue-monitoring programmes required for access to international and domestic markets.  These levies are collected at the same time, and in the same manner, as other statutory levies such as marketing, research and development (R&D) and Animal Health Council levies in order to reduce collection costs for industries.

 

Subclause 1(5) of Schedule 11 to the Act imposes NRS excise levy on the slaughter of pigs, while clause 4 of Schedule 11 currently sets the rate of levy at 8.5 cents per head, or such other rate (not exceeding 40 cents per head) as may be prescribed by regulation.

 

The purpose of the Regulations is to raise the NRS excise levy on pigs to 17.5 cents per head to meet the rising costs of the NRS Pig Residue Monitoring Programme (RMP).

 

The NRS excise levy rate on pigs has not been previously altered by regulation and since 1993 has remained at 8.5 cents per head.  However, in recent years the pig RMP revenue from the levy has been depleted by rising programme costs.  As a result, the relevant industry body - Australian Pork Limited (APL) - moved in September 2002 to significantly reduce the testing programme for the 2002-03 financial year.  This was an interim measure only while APL undertook a review of the programme to improve efficiencies and reduce the costs of the programme.

On the recommendation of the review, the APL Board agreed in 2003 that the testing programme be expanded for the 2004-05 financial year in order to meet market access requirements.  The APL Board also agreed to fund a shortfall in the cost of the programme from APL reserves.  This was done to delay the need to increase the pig RMP levy in the face of financial hardships for producers from the combined impact of the drought, global pig price recession and imports.  The APL Board was also advised that the current pig RMP levy of 8.5 cents per pig at slaughter would be insufficient to fund the testing and market access requirements of the pig RMP for 2005-06 and subsequent years.

In light of these factors, APL considered it imperative that the pig RMP levy be raised to fully fund the programme and replenish reserves.  APL assessed that it would be required to contribute approximately $215,000 in 2005-06 and $528,000 from its annual operating budget in 2006-07 to

supplement the NRS programme without a levy change.  The APL review also showed that it was not feasible to permanently reduce the testing programme without losing market access and possibly consumer confidence.

In consultation with the NRS, APL determined that the pig RMP levy would need to be increased to 17.5 cents to meet these requirements.  This would allow the programme to be fully funded over the next seven years and allow for a small level of reserves to build up to meet any contingencies.  This analysis was also supported by a Cost Benefit Analysis completed by private consultants employed by APL in 2005.

The proposal to increase the pig RMP levy from 8.5 cents per pig at slaughter to 17.5 cents from 1 April 2006 was put to the APL Annual General Meeting held in Canberra on 23^rd November 2005.  The motion was carried, with 24 of 34 delegates in agreement and 8 delegates against, with 1 delegate abstaining and 1 delegate absent.  The vote represents a clear majority of support for the increase in the pig RMP levy, made up of 71% of producers affiliated with APL, or 53% of total Australian production.

Prior to the APL Annual General meeting a considered consultation process was carried out within the pig industry through direct consultation with APL members and a media campaign through rural radio and advertisements/articles in rural newspapers (including major Australian pork industry newspapers, journals and newsletters).  APL also closely consulted with the National Residue Survey, Levies Revenue Service and Food and Agriculture Division in the Department of Agriculture, Fisheries and Forestry to ensure that the Government's General Principles applying to levy changes were also being met.

 

Details of the Regulations are in the Attachment.

 

The Act specified no conditions that needed to be satisfied before the power to make the Regulations was exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations will commence on 1 April 2006.

 

0519438A-060206Z

 

ATTACHMENT

 

DETAILS OF THE PROPOSED PRIMARY INDUSTRIES LEVIES AND CHARGES (NATIONAL RESIDUE SURVEY LEVIES) AMENDMENT REGULATIONS 2006 (No. 1)

 

Regulation 1 gives the name of the Regulations as the Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2006 (No. 1).

Regulation 2 provides for the Regulations to commence on 1 April 2006.

Regulation 3 provides that Schedule 1 amends the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998.

SCHEDULE 1                      Amendments

 

Item 1 Omits notes 1 and 2 under Regulation 205 of the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998 for the purposes of clause 4 of Schedule 11 to the National Residue Survey (Excise) Levy Act 1998.  Note 1 referred to the current levy of 8.5 cents per head on pig slaughter while Note 2 referred to Regulation 206 intentionally not being used.

 

Item 2 Inserts a Regulation 206 that sets an amount of levy of 17.5 cents per head on the slaughter of pigs for the purposes of clause 4 of Schedule 11 of the National Residue Survey (Excise) Levy Act 1998.