Commonwealth Numbered Regulations - Explanatory Statements

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PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2011 (NO. 5) (SLI NO 207 OF 2011)

EXPLANATORY STATEMENT

Select Legislative Instrument 2011 No. 207

Issued with the authority of the Parliamentary Secretary for Agriculture, Fisheries and Forestry

Primary Industries (Excise) Levies Act 1999

Primary Industries (Excise) Levies Amendment Regulations 2011 (No. 5)

Legislative Authority

Section 8 of the Primary Industries (Excise) Levies Act 1999 (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.

Schedule 27 to the Act provides that the regulations may impose levies or charges on one or more specified primary industry products in the circumstances, at the rates, and payable by the person, ascertained in accordance with the regulations. Primary industry produce includes horticultural products and products that result from agriculture or the cultivation of land (clause 1 of Schedule 27).

Subclause 4(3) of Schedule 15 to the Act provides that the regulations may fix a rate of levy for the purposes of research and development in relation to a class of leviable horticultural products. Subclauses 14.1 and 17.2 of Schedule 15 to the Primary Industries (Excise) Levies Regulations 1999 (the Regulations) provides that unprocessed potatoes and vegetables are a leviable horticultural product.

Background

The Act prescribes levies on products of primary industry for the purposes of marketing, research and development (R&D), industry body membership and/or emergency pest and disease response.

The Emergency Plant Pest Response Deed (EPPRD) is a formal agreement between the Australian Government, all state and territory governments, Plant Health Australia (PHA) and plant industry signatories on how to manage the costs and responsibilities for responding to an emergency plant pest outbreak. Under the EPPRD, the Commonwealth Government may initially meet an industry's cost-sharing obligations, but the industry will then repay the Commonwealth within a reasonable time period--generally up to 10 years.

Industry signatories to the EPPRD must nominate how they will meet their financial liabilities--this is usually done by establishing an EPPR levy and/or charge. An EPPR levy and/or charge is usually set to zero and only activated when an emergency plant pest incident occurs. Where an industry is required to pay back the Commonwealth, the industry and Commonwealth will negotiate a time period for the industry to repay the debt. The rate for the response levy and/or charge will be calculated based on the time period.

Ausveg Limited (Ausveg) is the representative body for unprocessed potatoes and vegetable commodities, and is signatory to the EPPRD on behalf of these industries. Ausveg has requested that zero-rated EPPR levies be established for the unprocessed potato and vegetable industries.

In addition to the EPPR levies, Ausveg requested changes to the existing PHA and R&D levies for unprocessed potatoes and vegetables.

PHA was established in 2000 as a company responsible for coordinating national plant health matters. Its members consist of the Commonwealth and all state and territory governments and national industry bodies representing major plant industries. PHA's core annual running costs are shared between its members. The Plant Health Australia (Plant Industries) Funding Act 2002 provides a mechanism which plant industry members can elect to use to meet their annual member subscriptions through levies imposed under the Act.

Ausveg, the peak national representative body for the vegetable and unprocessed potato industries, is a member of PHA. As with other industry members of PHA, Ausveg's annual membership liabilities are met through a PHA levy and charge.

Purpose and Impact

The Primary Industries (Excise) Levies Amendment Regulations 2011 (No. 5) (the Amendment Regulations) amend the Regulations to establish EPPR levies for unprocessed potatoes and vegetables. The Amendment Regulations also amend the existing R&D and PHA levies on unprocessed potatoes to reduce the R&D levy by 1 cent per tonne and increase the PHA levy by 1 cent per tonne.

Additionally, the Amendment Regulations amend the R&D and PHA levies on vegetables to reduce the R&D levy by 0.0075 percent of the vegetables at the first point of sale and increase the PHA levy by 0.0075 percent of the value of the vegetables at the first point of sale.

These changes enable Ausveg to meet increases in the financial contribution it is required to make to PHA. The total amount of levy imposed on vegetables and unprocessed potatoes will not change.

These Amendment Regulations are part of a package of amendments. The package also includes amendments to the Primary Industries (Customs) Charges Regulations 2000.

The amendments to Primary Industries (Customs) Charges Regulations 2000 implement equivalent EPPR charges on unprocessed potatoes and vegetables and also make an equivalent amendment to the previous PHA and R&D charges.

Consultation

The Act specifies that, if there is a single body that is a designated body in relation to a particular product, then the Minister must take into consideration any relevant recommendation made to the Minister by the body before the Governor-General makes a regulation in relation to the product (clause 14 of Schedule 27). At the time of making these Amendment Regulations, there were no designated bodies declared by the Minister for the products with which these Amendment Regulations were concerned. However, the Minister did take into account recommendations from the national peak representative industry body for unprocessed potatoes and vegetables in approving these Amendment Regulations.

Subclause 6(6) of Schedule 15 to the Act provides that, before the Governor-General makes regulations for the purpose of prescribing an R&D levy, the Minister must take into consideration any relevant recommendation made to the Minister by the industry services body. Horticulture Australia Limited is the declared industry services body for unprocessed potatoes and vegetables at the time of making these Amendment Regulations (see clause 1 of Schedule 15 to the Act and section 9 to the Horticulture Marketing and Research Development Services Act 2000). The Minister has taken into consideration the recommendation made by Horticulture Australia Limited on 1 June 2011 in making the Amendment Regulations.

Subclause 6(8) of Schedule 15 to the Act provides that, before making a recommendation to the Minister, the industry services body must consult with the eligible industry body prescribed under the regulations. Ausveg Limited is the prescribed eligible industry body for the unprocessed potatoes and vegetable industries at the time of making these Amendment Regulations (see paragraph 14.5(a) and clause 17.6 of Schedule 15 to the Regulations). HAL and Ausveg worked together during the entire levy payer consultation process prior to requesting the changes to the levies.

For a new levy to be imposed, or for a levy to be amended, industry (generally through its representative body) must demonstrate that the Australian Government Levy Principles and Guidelines have been complied with. This includes demonstrating that sufficient consultation has been undertaken with all sectors of the potentially effected industry or current levy payers, and that there is industry support for the new levy or change in levy rate. Ausveg's submission of 4 January 2011 to the Department of Agriculture, Fisheries and Forestry, further information received on 23 May 2011 and the correspondence received from HAL on 1 June 2011 indicate that there is widespread support for the amendments to the PHA and R&D levy rates and the establishment of zero-rated EPPR levies amongst members of the vegetable and unprocessed potato industries.

The Office of Best Practice Regulation determined that the amendments would have a low impact on business and impose low compliance costs. Therefore, no further consultation in the form of a Business Cost Calculator or a Regulation Impact Statement was required for the amendments.

Operation

Details of the Amendment Regulations are set out below.

Regulation 1 specifies the name of the amendments to the Regulations as the Primary Industries (Excise) Levies Amendment Regulations 2011 (No. 5).

Regulation 2 provides that the Amendment Regulations commence on 1 January 2012.

Regulation 3 provides that Schedule 1 amends the Primary Industries (Excise) Levies Regulations 1999.

Schedule 1 Amendments

Item 1 inserts a new heading for Division 14.1 into Part 14 of Schedule 15 titled 'Product levy'. This Division covers previously existing marketing and R&D levies for unprocessed potatoes and processed potatoes. A new Division 14.2 titled 'Special purpose levies' has also be inserted by the Amendment Regulations (see Item 4). This covers the previously existing PHA levy and the newly prescribed EPPR levy that have been inserted by Item 5. The new Divisions are consistent with those of other parts of Schedule 15 and assist in reading the legislation.

Item 2 amends the R&D levy rate on unprocessed potatoes specified under paragraph 14.4(a) of Schedule 15. The item substitutes the previously existing R&D levy rate of 49 cents per tonne of unprocessed potatoes with a new rate of 48 cents per tonne. In conjunction with the increase of the PHA levy from 1 cent per tonne of unprocessed potatoes to 2 cents per tonne (see Item 5), Ausveg Limited, as the unprocessed potato industry representative body, is able to meet the unprocessed potato industry's increase in PHA annual subscription fees without increasing the overall levy liability on the industry.

Item 3 omits the previous clause 14.4A of Schedule 15. This clause previously prescribed the PHA levy on potatoes. This clause has been renumbered as clause 14.6 and moved to Division 14.2 as the PHA levy is a 'special purpose levy' (see Item 5). This assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15.

Item 4 inserts a new heading for Division 14.2 titled 'Special purpose levies'. This division covers the previously existing PHA levy and the newly prescribed EPPR levy that have been inserted by Item 5. This assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15.

Item 5 inserts new clauses 14.6 and 14.7 to deal with the PHA levy for potatoes and to impose an EPPR levy on unprocessed potatoes.

New clause 14.6 imposes the PHA levy on potatoes. This is not a new type of levy imposed on the potato industry, as it was previously imposed by clause 14.4A of Schedule 15. Moving the PHA levy clause to this Division assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15. The wording of new clause 14.6 provides separate PHA levy rates for unprocessed and processing potatoes under subclause 14.6(2). For processing potatoes there has been no change of PHA levy rate.  For unprocessed potatoes paragraph 14.6(2)(a) provides an increase from 1 cent per tonne of unprocessed potatoes to 2 cents per tonne. This enables Ausveg Limited to meet the unprocessed potato industry's increase in PHA annual subscription fees. There is no overall increase in levy liability on the unprocessed potato industry as a corresponding decrease in the R&D levy by 1 cent per tonne of the producer's sale price for unprocessed potatoes has been made (see Item 2).

Once the PHA annual subscription is paid, any further funds collected via the payment of the PHA levy under clause 14.6 will be automatically appropriated to the industry's R&D fund in accordance with section 7 of the Plant Health Australia (Plant Industries) Funding Act 2002. Ausveg Limited requested the changes to the unprocessed potato R&D and PHA levies in accordance with the Australian Government Levy Principles and Guidelines.

Item 4 also inserts a new clause 14.7 prescribing an EPPR levy on unprocessed potatoes. New subclause 14.7(1) prescribes 'unprocessed potatoes' as the commodity on which the EPPR levy is imposed for the purposes of clause 2 of Schedule 27 to the Levies Act. The EPPR levy applies only to unprocessed potatoes. New subclause 14.7(2) specifies a nil levy rate on unprocessed potatoes for the purposes of clause 6 of Schedule 27 to the Levies Act. The reasons for setting the rate at nil have been outlined above. New subclause 14.7(3) specifies that the levy on unprocessed potatoes is payable by the producer of the unprocessed potatoes for the purposes of clause 11 of Schedule 27 to the Levies Act.

Item 6 inserts a new heading for Division 17.1 into Part 17 of Schedule 15 titled 'Product levy'. This Division covers the previously existing marketing and R&D levies for vegetables. A new Division 17.2 titled 'Special purpose levies' has also be inserted by the Amendment Regulations (see Item 9). This covers the previously existing PHA levy and the newly prescribed EPPR levy that have been inserted by Item 10. The new divisions are consistent with those of other parts of Schedule 15 and assist in reading the legislation.

Item 7 amends the R&D levy rate on vegetables specified under subclause 17.5(1) and 17.5(2) of Schedule 15. This item substitutes the existing R&D levy rate of 0.4925% of the amount paid for vegetables at the first point of sale or of the amount that would have been paid for the vegetables if the vegetables had first been sold before processing with a new rate of 0.485%. In conjunction with the proposed increase of the PHA levy from 0.0075% of the amount paid for vegetables at the first point of sale for vegetables or of the amount that would have been paid for the vegetables if the vegetables had first been sold before processing to 0.0150% of the amount paid for vegetables at the first point of sale for vegetables or of the amount that would have been paid for the vegetables if the vegetables had first been sold before processing (see Item 10), Ausveg Limited, as the industry representative body for vegetables, is able to meet increases in the vegetable industry's PHA annual subscription fees without increasing the overall levy liability on the industry.

Item 8 omits the previously existing clause 17.5A of Schedule 15. This clause previously prescribes the PHA levy on vegetables. This clause has been renumbered as clause 17.8 and moved to Division 17.2, as the PHA levy is a 'special purpose levy' (see item 9). This assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15.

Item 9 inserts a new heading for Division 17.2 titled 'Special purpose levies'. This covers the existing PHA levy and the new EPPR levy that have been inserted by Item 10. This assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15.

Item 10 inserts new clauses 17.8 and 17.9 to deal with the PHA levy for vegetables, and imposes an EPPR levy on vegetables.

New clause 17.8 imposes the PHA levy on vegetables. This is not a new type of levy imposed on the vegetable industry, as it was previously imposed by clause 17.5A of Schedule 15. Moving the PHA levy clause to this Division assists in reading the legislation and sets out the numbering and divisions in line with other parts of Schedule 15. The wording of the new clause 17.8 is the same as in the previously existing clause 17.5A. However, the rate of levy in subclause 17.8(2) has been increased from 0.0075% of the amount paid for vegetables at the first point of sale for vegetables to 0.0150% of the amount paid for vegetables at the first point of sale for vegetables. Further the rate of levy in subclause 17.8(3) has been increased from 0.0075% of the expected price of vegetables which are first sold after being processed to 0.0150% of the expected price of vegetables which are first sold after being processed.  This enables Ausveg Limited to meet the vegetables industry's increase in PHA annual subscription fees. There is no overall increase in levy liability on the vegetables industry as a corresponding decrease in the R&D levy 0.0075% of the amount paid for vegetables at the first point of sale or of the amount that would have been paid for the vegetables if the vegetables had first been sold before processing has been made (see Item 2).

Once the PHA annual subscription is paid, any further funds collected via the payment of the PHA levy under clause 17.8 will be automatically appropriated to the industry's R&D fund in accordance with section 7 of the Plant Health Australia (Plant Industries) Funding Act 2002. Ausveg Limited requested the changes to the vegetables R&D and PHA levies in accordance with the Australian Government Levy Principles and Guidelines.

Item 10 also inserts a new clause 17.9 prescribing an EPPR levy on vegetables. New subclause 17.9 (1) prescribes 'vegetables' as the commodity on which the EPPR levy is imposed for the purposes of clause 2 of Schedule 27 to the Levies Act. The EPPR levy applies to both processed and unprocessed vegetables. New subclause 17.9(2) specifies a nil levy rate on vegetables for the purposes of clause 6 of Schedule 27 to the Levies Act. The reasons for setting the rate at nil have been outlined above. New subclause 17.9(3) specifies that the levy on vegetables is payable by the producer of the vegetables for the purposes of clause 11 of Schedule 27 to the Levies Act.

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