Australian Parliamentary Library Bills Digests Australian Parliamentary Library Bills Digests[Index] [Search] [Download] [Help]
National Cattle Disease Eradication Account Amendment Bill 2006
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.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
National Cattle Disease Eradication Account Amendment Bill 2006
Date introduced:
House: House of Representatives
Portfolio: Agriculture, Fisheries and Forestry
Commencement: The Act will commence with Royal Assent
The proposed amendments to the National Cattle Disease Eradication Account Act 1991 will enable residual levy proceeds collected for certain eradication programs to be transferred to an industry disease fund.
… the prevention or control of the entry, establishment or spread of pests and diseases that will or could cause significant damage to human beings, animals, plants, other aspects of the environment, or economic activities.(1)
In some cases there have been campaigns to eradicate or control relevant pests and diseases.
The largest and highest profile disease eradication programs have been in the cattle industry and concerned tuberculosis and brucellosis. Incidence of these diseases dates back to the 1920s and initially State Governments applied control and/or eradication measures in order to protect human health.
Moves to achieve eradication nationally gained urgency during the 1960s and in 1966 the Commonwealth adopted a recommendation of the Australian Agricultural Council (the relevant Ministerial council) that action be initiated on a national basis to eradicate both diseases as soon as feasible. Hence, the nationally coordinated operation originally known as the Bovine Brucellosis and Tuberculosis Eradication Campaign (BTEC) commenced in 1970 and was jointly funded by the Commonwealth and State governments along with industry.
The latter’s contributions were funded by way of a levy which came into effect in 1973. Initially the levy was on all exports of beef and veal to reimburse the Commonwealth’s contribution to BTEC’s operational costs. The levy rate was 1.32 c/kg (0.6 cents per pound). In 1976 the meat export levy was suspended and a slaughter levy introduced with a component directed to brucellosis and tuberculosis eradication. The size of the levy has varied subsequently.
History of cattle disease eradication levy
| Amount of levy per head |
|
| At introduction in 1976 |
$1 |
| 1979-80 |
$3 |
| |
$4 |
| |
$3 |
| February 1991 a |
$2.10 |
| December 1991 |
$0.85 |
| |
$0.52 |
| |
$0.46 |
| |
$0.44 |
| |
$0.30 |
| |
$0.25 |
| |
$0.17 |
a. In February 1991, the slaughter levy was subsumed as a component of the Cattle Transaction Levy.
Source: Stewart, John The National Cattle Disease Eradication
Trust Account (NCDETA) briefing paper prepared for the CCA,
From the start of the BTEC in 1970 to its conclusion in 1997, expenditure
totalled approximately $840 million. This expenditure included spending
on the eradication of brucellosis and freedom status for that disease
was declared in
Alterations in funding arrangements were made at various times as BTEC progressed. From 1988 until the end of the campaign, the industry levy provided 50% of total funds, the States 30% and the Commonwealth 20%.
A mid-term review of TFAP was held in late 2000 and considered the need
for a further period of surveillance for tuberculosis. The review recommended
that a further four-year program be established to commence in January
2003. This program is known as TFAP 2 and is scheduled to conclude on
During the early 1990s it became apparent that consumers along with national and international trading partners required increased accountability for animal health and welfare.
It was agreed that there needed to be high level decisions by governments and industry groups on strategic policy for future planning and funding of national animal health service programs. Following further consideration the Australian Animal Health Council Limited (AAHC) was formed. AAHC was incorporated in January 1996 and commenced operating as a not-for-profit public company under the business name of Animal Health Australia (AHA) in February 2000.
AHA currently has 24 members across four membership categories: Australian Government (1); States and Territories (8); livestock industries (14); and service delivery/non-program participants (2). The structure facilitates flexible and responsive management of animal health issues and accountability is via an independently selected board of directors responsible to members in general meeting.
AHA’s role in the national animal health system has expanded significantly
over the past five years with the number of programs and projects the
company is responsible for growing substantially. Its mission focuses
on ensuring
The TFAP programs have been managed by AHA under a formal Deed of Agreement between the Cattle Council of Australia (CCA), representing the beef and dairy cattle and buffalo industries, the Commonwealth Government and all State and Territory Governments who jointly fund TFAP and AHA.
The Deed of Agreement, signed in May 1998, sets out the scope and objectives of TFAP and the obligations of the parties to it. The Deed detailed the arrangements for funding each component of the program, the role of AHA in the overall administration of TFAP, the Commonwealth Government in providing finances for core activities, the States and Territories in managing field operations and CCA in financing assistance measures to affected producers. A series of schedules to the Deed provide additional detail.
In addition to the specific TFAP component funded by each of the parties, the Deed provided AHA with an additional overall management fee funded through TFAP’s corporate activities component and in equal shares by the eight parties involved.
The funds for the cattle industry to provide the assistance measures and other activities in TFAP were obtained from levies collected from the cattle industry by the Commonwealth Government and maintained in the National Cattle Disease Eradication Account (NCDEA). This is one of the trust accounts operated by the Department of Agriculture, Fisheries and Forests (DAFF) and administered in accordance with public sector standards. The NCDEA’s only income is grower levies and interest. No Commonwealth or State/Territory contributions are included.
Originally, a budget of $33.6 million was forecast for TFAP over five
years. The budgeted expenditure split amongst the various contributing
parties was 52% cattle industry, 12% States/Territory and 36% Commonwealth.
The budget was based on the expectation there would be 15 cases of tuberculosis
by
In the end, expenditure was even lower at $26.8 million. The source of funds were industry $13.3 million, States $9.3 million and Commonwealth $4.2 million with the contribution shares being close to the original estimates. A consequence of the lower than expected number of cases was the emergence of a surplus of TFAP levy funds contributed by cattle producers.
The Cattle Disease Contingency Fund (CDCF) was established in February
2002 by the cattle industry and AHA to support various animal health related
activities that are of benefit to the cattle industry in
The CDCF trust deed refers to agreement among the above three parties
about the “need to fund various animal health related activities which
are to the benefit of the cattle industry in
From
The cattle and buffalo industries have requested that residual funds
in the NCDEA be transferred into the CDCF.(8) The balance of
the NCDEA as at
CCA has recognised a need to expand into other animal health issues apart
from tuberculosis and brucellosis and hence the move towards the CDCF.
The CDCF will allow immediate access to funds in case of an exotic disease
incursion and will also have the backup of an agreement with the Commonwealth
of a zero levy which can be triggered if an incursion occurs.(10)
Schedule 1, item 1 will add proposed paragraph 6(1)(c) to the National Cattle Disease Eradication Account Act 1991 which will permit the transfer of monies currently held in the National Cattle Disease Account into the CDCF.
Item 2 will add proposed subsection 6(3), providing a definition for CDCF Trust.
The practice of establishing public companies owned by industry bodies to undertake delivery of marketing and other services to agricultural industries is now well established. Examples include Meat and Livestock Australia (MLA), Australian Wool Innovation (AWI) and National Food Industry Strategy Ltd (NFISL).
MLA and AWI - both heavily dependent on grower levies as a source of revenue - produce annual reports which include audited financial statements. NFISL publishes an annual report on operations and although it is directly funded by government no financial information is included. However, NFISL operates under a contract with DAFF to implement most parts of the National Food Industry Strategy (NFIS). The agreement covers performance obligations, reporting requirements of NFISL and requirements for the transfer of funds to NFISL in line with programmed requirements.
According to the mid-term review of the NFIS:
The NFIS contractual structure and industry consultation structure places a high level of reporting requirements on NFISL. These include:
An issue of potential interest for Parliamentarians in the case of the CDCF and hence the proposed legislation is that of accountability and transparency and there are a couple of specific aspects to this worth highlighting.
The first relates to the use of statutory powers to generate levy income for a private company. Whilst some might contend that as only private sector funds are involved accountability arrangements are a matter for the entities involved, there is equally an argument that other aspects ought to be considered including the following:
Secondly, given that there is a public interest dimension to animal health issues which goes beyond the commercial interests of the cattle and buffalo industries, Parliament has a legitimate interest in accountability with regard to animal health outcomes.
If enacted the legislation would result in monies that are currently administered by DAFF by way of the NCDEA and hence the subject of direct reporting to, and oversight by, Parliament, no longer being subject to those provisions.
Under the proposed arrangements the Commonwealth - and hence the Parliament - will be even further removed from the administration and oversight of animal health arrangements which are actually underpinned by the levy provisions sanctioned by Parliament.
This paper has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
ISSN 1328-8091
© Commonwealth of Australia 2006
Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by members of the Australian Parliament in the course of their official duties.
Published by the Parliamentary Library, 2006.