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Dairy Adjustment Levy Termination Bill 2008 [2008] AUSStaCSBRp 54 (12 November 2008)

Dairy Adjustment Levy Termination Bill 2008

Introduction

The Committee dealt with this bill in Alert Digest No. 11 of 2008. The Minister for Agriculture, Fisheries and Forestry responded to the Committee’s comments in a letter dated 6 November 2008. A copy of the letter is attached to this report.

Extract from Alert Digest No. 11 of 2008

Introduced into the House of Representatives on 24 September 2008

Portfolio: Agriculture, Fisheries and Forestry

Background

This bill amends the Dairy Produce Act 1986 to finalise the Dairy Industry Adjustment Program by terminating the Dairy Adjustment Levy, winding-up the Dairy Structural Adjustment Fund, and terminating the Dairy Adjustment Authority. The Bill seeks to ensure that all surplus monies collected under the Dairy Adjustment Levy are returned to the Commonwealth.

The bill repeals the Dairy Adjustment Levy (Customs) Act 2000, the Dairy Adjustment Levy (Excise) Act 2000, and the  Dairy Adjustment Levy (General) Act 2000  which set the dairy adjustment levy rate; and makes consequential amendments to the Income Tax Assessment Act 1997, the Remuneration Tribunal Act 1973 and the Social Security Act 1991.

The bill also contains an application provision.

Delegation of legislative power
Schedule 1, items 2 and 6

Item 3 in the table to subclause 2(1) provides that Schedule 2 is to commence on the day after the day declared for the purposes of subclause 94(1) of Schedule 2 to the Dairy Produce Act 1986, while item 5 in the same table provides that item 3 of Schedule 3 is to commence immediately after the day specified for the purposes of subclause 55(2) of Schedule 2 to the Dairy Produce Act 1986.

New subclauses 94(1) and 55(2) are added to the Dairy Produce Act 1986 by items 6 and 2 respectively of Schedule 1 to the bill, and reveal that the Minister has an apparently unfettered discretion to declare when the 'levy termination day' (for the purposes of the Dairy Produce Act 1986) occurs, and when the Dairy Adjustment Authority ceases to exist.

Since these two determinations are clearly legislative in character, the Committee seeks the Minister’s advice about the reason for the conferral of this apparently unfettered discretion on the Minister to undertake legislative acts. The Committee notes that the only limit on the exercise of the Minister's discretion is that it must be done by legislative instrument, and is therefore subject to review by the Senate Standing Committee on Regulations and Ordinances. Nevertheless, the Committee also seeks the Minister’s advice whether limits on the exercise of the Minister's discretion to make the relevant declarations might be included in the bill.

Pending the Minister’s advice, the Committee draws Senators’ attention to the provisions, as they may be considered to delegate legislative powers inappropriately, in breach of principle 1(a)(iv) of the Committee’s terms of reference, and insufficiently subject the exercise of legislative power to parliamentary scrutiny, in breach of principle 1(a)(v) of the Committee's terms of reference.

Relevant extract from the response from the Minister

The Bill proposes amendments to the Dairy Produce Act 1986 that will have the effect of closing the Dairy Industry Adjustment Program. It amends the Act to enable the minister to more accurately determine a date to terminate the Dairy Adjustment Levy, and to close the Dairy Adjustment Authority and the Dairy Structural Adjustment Fund.

The complexity of removing the levy and closing the authority requires the Australian Government to retain some flexibility in determining specific dates for both actions. This was taken into consideration in drafting the Bill and resulted in the mechanism proposed. The Office of Parliamentary Counsel, in consultation with drafting instructors in the Department of Agriculture, Fisheries and Forestry (the department) and with the Attorney-General’s Department, has determined that the ministerial action meets the definition of a ‘legislative instrument’ under section 5 of the Legislative Instruments Act 2003.

The Bill provides the minister with additional guidance in terminating the levy to that already in the Act. The Bill also provides legislative guidance for the closure of the authority while still allowing any outstanding functions to be performed. I do not see a need to include any further limits on the exercise of the minister’s powers than already proposed in the Bill and both of these actions will enjoy the scrutiny of the parliament.

Levy termination date

The Act already provides the minister with the power to declare the levy termination day by notice published in the Government Notices Gazette. The Bill makes a simple amendment to an existing power to ensure excess collections are minimised. The alternative, under existing arrangements, would be likely to result in the collection of around $50 million more than is needed for the adjustment program.

To achieve this, the Bill enables the minister, in setting the levy tennination day, to take account of levy that has been paid by consumers but not yet receipted into the adjustment fund and to reduce the notice period for levy collection from 28 to seven days. The minister would not have unfettered discretion in declaring the levy termination date, as the Bill provides that that the minister would need to be satisfied that sufficient revenue has been collected to cover remaining costs associated with the adjustment fund.

The mechanism to remove the levy proposed by the Bill better balances the desire to ensure that consumers do not continue to pay the levy on drinking milk after all costs associated with the adjustment program have been met against the need to ensure sufficient revenue is collected.

Cessation of the Dairy Adjustment Authority

The Bill also provides for the minister, in finalising the adjustment program, to close the Dairy Adjustment Authority (the authority). The authority was established for the purpose of making eligibility determinations for payments to farmers under the two largest components of the adjustment program. With the exception of finalising its 2007/08 reporting requirements and a small number of other minor outstanding issues, it has completed its job.

The legislation currently makes no provision for closing the authority. The Bill proposes measures to avoid a redundant statutory authority continuing for an indefinite period, with all of the associated reporting requirements.

The Bill does not specify an exact closing date for the authority. This will enable authority staff to progress the small number of remaining unclaimed monies cases, complete the authority’s 2007-08 reporting obligations and transfer authority records to the department.

Once these matters are finalised, or substantially progressed, the Bill provides for the minister to declare the authority closed at which time the authority’s functions, including reporting requirements, will be transferred to the Secretary of the department. This reflects the current situation where the secretary is the sole member of the authority.

Thank you for raising these matters with me. I trust this information is of assistance to the committee.

The Committee thanks the Minister for this comprehensive response, which addresses the Committee’s concerns.