Commonwealth Numbered Regulations - Explanatory Statements

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PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT REGULATIONS 2003 (NO. 3) 2003 NO. 13

Statutory Rules 2003 No. 13

Subject:       Primary Industries (Excise) Levies Amendment Regulations 2003 (No. 3)

Primary Industries (Customs) Charges Amendment Regulations 2003 (No. 3)

Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2003 (No. 1)

Section 8 of the Primary Industries (Excise) Levies Act 1999 (the Excise Act), section 8 of the Primary Industries (Customs) Charges Act 1999 (the Customs Act), section 30 of the Primary Industries Levies and Charges Collection Act 1991, section 8 of the National Residue Survey (Customs) Levy Act 1998 and section 8 of the National Residue Survey (Excise) Levy Act 1998 provide that the Governor-General may make regulations prescribing matters required or permitted by those Acts to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to each Act.

Funds corresponding with the amounts of excise levies and customs charges revenue raised under the above Acts in respect of cattle transactions are appropriated to various destinations, namely Meat & Livestock Australia Limited (MLA) for marketing, MLA for research, Australian Animal Health Council Limited (Animal Health Australia) and National Residue Survey (NRS). Around $47 million is raised annually by way of excise levies and customs charges in respect of grass-fed cattle, lot-fed cattle, and bobby calves.

The amending regulations made under the above provisions comprise the Primary Industries (Excise) Levies Amendment Regulations 2003 (No. 3) (the amending excise regulations), the Primary Industries (Customs) Charges Amendment Regulations 2003 (No. 3) (the amending customs regulations), and the Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2003 (No. 1) (the amending NRS regulations).

Subclause 8(1) of Schedule 3 to the Excise Act provides that the Minister may declare an industry body to be the body for the purposes of subclause 8(2). Subclause 8(2) provides that if a declaration is in force under subclause 8(1), then, before the Governor-General makes regulations for the purposes of the paragraph to which the declaration relates, the Minister must take into consideration any relevant recommendation made to the Minister by the body specified in the declaration in relation to that paragraph.

The same procedure applies in respect of Schedule 3 to the Customs Act. This is by way of clause 5 of Schedule 3 to that Act.

No declarations have been made under subclause 8(1) of Schedule 3 to the Excise Act or subclause 5(1) to the Customs Act. In any event, the amending regulations implement recommendations from the peak industry bodies that represent the grass-fed cattle production sector (Cattle Council of Australia) and the lot-fed cattle production sector (Australian Lot Feeders' Association).

The purpose of the amending regulations is to alter the make-up of the levies and charges that apply in respect of grass-fed cattle and lot-fed cattle.

The term "cattle" as used below in this memorandum means cattle other than bobby calves. The amending regulations do not change any rates in respect of bobby calves.

The changes in the make-up of the levies and charges described below are summarised by way of a table at Attachment A.

In respect of grass-fed cattle, the amending excise regulations and amending customs regulations increase the research component of the levy from 72 cents per head to 92 cents per head. The amending NRS regulations decrease the NRS component from 32 cents per head to 12 cents per head. The overall excise levy rate and customs charge rate for grassfed cattle remains at $3.50 per head.

In respect of lot-fed cattle, the amending excise regulations alter the marketing component from $1.77 per head to $1.97 per head. The amending NRS regulations alter the NRS component from 32 cents per head to 12 cents per head. The overall excise levy rate and customs charge rate remain at $3.50 per head. The make-up of the customs charge rate for lot-fed cattle remains the same as for grass-fed cattle.

The alterations to the lot-fed cattle levy rate are being implemented in a two-stage process. Stage one commenced on 1 January 2003 by way of the Primary Industries (Excise) Levies Amendment Regulations 2003 (No. 12). Overall, the two stage process alters the levy rate in respect of lot-fed cattle by decreasing the marketing component from $2.27 per head to $1.97 per head, increasing the research component from 61 per head cents to $1.11 per head, and reducing the NRS component from 32 cents per head to 12 cents per head. A two-stage process has been necessary so as to commence the bulk of the changes on 1 January 2003, whilst allowing the NRS alteration commencement date to coincide with the grass-fed cattle sector NRS alteration commencement date, ie 1 March 2003. Maintenance of an overall rate of $3.50 per head for the period 1 January 2003 to 1 March 2003 for lot-fed cattle is being done by changing the marketing component in the two-stage process mentioned above.

The amending regulations also postpone the sunset clause applying to the Animal Health Australia component of the levy and charge in respect of both grass-fed cattle and lot-fed cattle.

From 1 March 2001, the 17 cents per head levy destined for the National Cattle Disease Eradication Reserve (NCDER) was discontinued. The levy destined for Animal Health Australia was increased from 13 cents per head to 30 cents per head, with the revenue raised from the extra 17 cents per head going to the Cattle Disease Contingency Fund (CDCF) held by Animal Health Australia. In the absence of the amending excise regulations and amending customs regulations, the Animal Health Australia levy would revert to 13 per head on 1 March 2003.

The Tuberculosis Freedom Assurance Program (TFAP) being funded by NCDER had been due to wind up at end December 2002. This would have allowed for the remaining reserves in NCDER to be transferred to CDCF (by enabling legislation) making up (together with funding from two years of 17 cents per head) a CDCF of around $15 million, the desired ceiling for the CDCF.

The amending regulations provide for a continuation of the 30 cents per head Animal Health Australia levy beyond 1 March 2003 to 1 January 2007 thereby allowing for a continuation of 17 cents per head funding for the CDCF. The NCDER will be used to fund the changed circumstances regarding TFAP, namely TFAP2, which is a supplementary program currently being finalised by Animal Health Australia. TFAP2 will run from 1 January 2003 to 31 December 2006 and use around $11 million of the NCDER reserves of which there are currently $17 million, leaving $6 million at the end of TFAP2. A continuation of the 30 cents per head Animal Health Australia levy should raise at least $9 million for the CDCF by end 2006. The remaining $6 million in NCDER could then be transferred to the CDCF to arrive at the desired $15 million ceiling for that fund.

The amending regulations (except for Schedule 2 of the amending excise regulations and Schedule 2 of the amending customs regulations) commence on 1 March 2003. Schedule 2 of the amending excise regulations and Schedule 2 of the amending customs regulations commence on 1 January 2007.

Attachment A

Summary

Excise levy and customs charge rates for grass fed adult cattle and customs charge rates for lot fed adult cattle

Destination	Current rate    $	Change in rates from    1 March 2003 by way of    amending regulations    $
MLA - marketing	2.16	2.16 (no change)
MLA - research	0.72	0.92
National Cattle    Disease    Eradication    Reserve	0.00	0.00 (no change)
Animal Health    Australia	0.30 (sunset clause to    reduce rate to 0.13 from          1 March 2003)	0.30 (extend sunset clause to 31    Dec 2006 so that rate changes to          0.13 per head from 1 January    2007
National Residue        Survey	0.32	0.12
total	3.50	3.50

Excise levy rates lot fed adult cattle -

Destination	Rate    immediately    prior to    1 January 2003          $	Rate from 1 January    2003 to 1 March    2003    $	Change in rates from    1 March 2003 by way    of amending    regulations    $
MLA - marketing	2.27	1.77	1.97
MLA - research	0.61	1.11	1.11 (no change)
National Cattle    Disease    Eradication    Reserve	0.00	0.00	0.00 (no change)
Animal Health    Australia	0.30	0.30 (sunset clause to          reduce rate to 0.13    from 1 March 2003)	0.30 (extend sunset    clause to 31 Dec 2006          so that rate changes to    0.13 per head from 1    January 2007)
National Residue          Survey	0.32	0.32	0.12
total	3.50	3.50	3.50