Bills Digest No.
103, 2019–20
PDF version [542KB]
Dinty Mather
Economic Policy Section
Paula Pyburne
Law and Bills Digest Section
10
June 2020
Contents
Purpose of the Bill
Background
Committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Key issues and provisions
Date introduced: 13
May 2020
House: House of
Representatives
Portfolio: Agriculture,
Water and the Environment
Commencement: Sections
1-3 on Royal Assent; all remaining provisions on the earlier of a day to be
fixed by Proclamation or six months after Royal Assent
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at June 2020.
Purpose of
the Bill
The purpose of the Primary Industries (Customs) Charges
Amendment (Dairy Cattle Export Charge) Bill 2020 (the Bill) is to amend the Primary Industries
(Customs) Charges Act 1999 (the Customs Charges Act) to:
- provide
for the imposition of an export charge on the export of dairy cattle and
- amend
the rate provision to provide for two different rates of charges—a per head
charge on dairy cattle and a per kilogram charge on cattle other than dairy
cattle.[1]
Background
LiveCorp (the Australian Livestock Export Corporation
Limited) is fully owned by Australian livestock exporters through the Australian
Livestock Exporters’ Council (ALEC). It is responsible for identifying and
supporting research and development initiatives in the interests of livestock
exporters, developing and administering industry standards, accrediting
livestock exporters against those standards, and providing training for people
in the industry.[2]
In 2006, LiveCorp established a Dairy Cattle Export
Program which was funded by voluntary levies on exported dairy cattle.[3]
At the time of introduction, the charge amounted to $3 per head, although this
was increased to $6 per head in 2014.[4]
The Dairy Cattle Export Program provides advice and
support for market
access,[5]
conducts research
and development[6]
for dairy cattle exports and participates on and provides funding to the National
Arbovirus Monitoring Program[7]
to underpin market access opportunities.[8]
The Dairy Cattle Export Program priorities include animal health and welfare,
supply chain efficiency and regulatory performance and market access.[9]
Problems
with the voluntary levy
In a written submission to the Senate Standing Committee on
Rural and Regional Affairs and Transport Inquiry into industry structures and
systems governing the imposition of and disbursement of marketing and research
and development (R&D) levies in the agricultural sector,[10]
LiveCorp stated:
LiveCorp’s experience in maintaining a voluntary levy based
program has provided some insights into the challenges it presents for the
management of the program and the industry, including:
- The fluctuating and unreliable
funding and cash flow, which limits effective budgeting and resource
allocation;
- The limitations on long term
corporate engagements, such as recruitment and contracting;
- The efficiency losses through monitoring,
identifying and chasing payments;
- The inability to enter into
long-term, strategic or higher cost projects;
- Managing the risks of
over-servicing the program or the levy payers beyond the levy payments
received;
- Managing the expectations from
levy payers and stakeholders that exceed the capacity of the program; and
- Under a voluntary contribution
arrangement, it is more difficult to get consistent payment across a group of
levy payers for industry good functions, as potential levy payers often have
expectations linked to the service or benefits received by their individual
businesses.
These challenges have constrained LiveCorp from successfully
integrating the dairy program into its routine operations or meeting the
expectations of stakeholders...[11]
These comments essentially foreshadowed the need for the
levy to be made mandatory, rather than voluntary. During 2019 the industry
exported just over 90,000 head of live dairy cattle with a value of over $100
million. The revenue collected in 2019 through the voluntary charge was just
over $15,000, while the potential revenue collection would have been over
$550,000 if a Dairy Cattle Export Charge set at $6 per head was mandatory. As a
result, a stand-alone dairy cattle export program has become unfeasible and
cannot be continued into the future under current arrangements.[12]
Graph 1 below shows the number of live dairy cattle exported between 2011 and
2019, and the value of those exports.
Graph 1:
Live dairy cattle exports and value: 2011 to 2019
Source: The number of dairy cattle exported was supplied by the
Australian Livestock Export Corporation Limited and the export value is based
on DFAT, Trade
Statistical Pivot Tables, Australia AHECC export pivot table.
The collection of voluntary charges as a percentage of
potential revenue from a mandatory levy has declined from 92 per cent in 2011
to three per cent in 2019. This is shown in Table 1 below.
Table 1:
Cattle exported, revenue collected and potential revenue: 2011 to 2019
|
Cattle exported (head)
|
Charge rate
($ per head)
|
Collected revenue ($)
(voluntary charge)
|
Potential revenue ($)
(mandatory levy)
|
Collected revenue
potential revenue
(per cent)
|
2011
|
48,253
|
$3
|
$133,014
|
$144,759
|
92%
|
2012
|
58,773
|
$3
|
$95,796
|
$176,319
|
54%
|
2013
|
87,422
|
$3
|
$133,324
|
$262,266
|
51%
|
2014
|
92,340
|
$6
|
$149,578
|
$554,040
|
27%
|
2015
|
73,217
|
$6
|
$176,436
|
$439,302
|
40%
|
2016
|
71,907
|
$6
|
$164,358
|
$431,442
|
38%
|
2017
|
72,811
|
$6
|
$78,942
|
$436,866
|
18%
|
2018
|
47,017
|
$6
|
$38,892
|
$282,102
|
14%
|
2019
|
92,347
|
$6
|
$15,132
|
$554,082
|
3%
|
Source: Data supplied by the Australian Livestock Export
Corporation Limited
Consultation
In May 2018, ALEC recommended that a statutory Dairy
Cattle Export Charge be implemented at a rate of $6 per head, payable at the
point of export and collected monthly.[13]
The rationale for the proposal was that ‘[d]ue to the nature of the voluntary
arrangement, the Dairy Cattle Export Charge is significantly (and historically)
under-collected and is not sufficient to meet the R&D and marketing needs
of the dairy cattle export sector’.[14]
According to the Explanatory Memorandum to the Bill, ALEC
undertook stakeholder consultation about a statutory Dairy Cattle Export Charge
of $6 per head from 31 May to 13 October 2017.[15]
In a ballot held in December 2017, ‘the majority of eligible registered voters’
supported the proposed mandatory charge.[16]
Eligible voters were those that held a current Australian Government-issued
livestock export license.[17]
The result was that 80 per cent of voters supported the imposition of the levy.[18]
A further six-week objection period from 5 October to 16
November 2018 provided stakeholders with an additional opportunity to express
their views on the proposal. The Explanatory Memorandum advises that ‘[t]here
were no objections received’.[19]
The imposition of the Dairy Cattle Export Charge will
enable the stand-alone Dairy Cattle Export Program to continue into the future.
Committee
consideration
At its meeting of 13 May 2020, the Senate Standing
Committee for the Selection of Bills deferred consideration of the Bill.[20]
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing this Bills Digest, the Senate
Standing Committee on the Scrutiny of Bills had not commented on the Bill.
Policy
position of non-government parties/independents
At the time of writing this Bills Digest no comments on
the Bill by non-government parties or independent Members and Senators have
been identified.
Position of
major interest groups
During its stakeholder consultation period, ALEC consulted
with its licenced livestock exporter members and its state chapter members.
During the course of their consultations two objections were raised by dairy
cattle exporters, namely:
- the
proposed $6 export charge should be applied to all cattle exported as ‘breeder’
animals and
- the
levy rate of $6 per head is too high and that it should be implemented at a
rate of $4 per head.[21]
Despite these concerns, the result of the final vote was,
as stated above, 80 per cent support for the imposition of the levy.[22]
Financial
implications
The Explanatory Memorandum to the Bill states:
This measure is estimated to have a nil net financial impact
over the forward estimates period.
Costs associated with the collection and administration of
the Dairy Cattle Export Charge are to be cost-recovered from industry by the
Department of Agriculture, Water and the Environment.[23]
However, the ALEC estimated that the Australian Government
will match R&D funding with $1 for every head of dairy cattle exported.[24]
Based on the data in the background section, this could have an impact over the
forward estimates of between $50,000 to $90,000 per year.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[25]
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights had no
comment on the Bill.[26]
Key issues
and provisions
The Customs Charges Act authorises the imposition
of primary industries charges that are duties of customs. The Act provides for
the operative rates of charges to be set through Regulations.[27]
Each of the Schedules to the Customs Charges Act
imposes a particular charge and makes provision for:
(a) the operative rate of
the charge
(b) the person who is
liable to pay the charge and
(c) any exemptions
from the charge.
Schedule 2 to the Customs Charges Act is about
cattle exporters. Schedule 2 specifies:
- the
term cattle means bovine animals other than buffalo and
- the
term dairy cattle means bovine animals that are,
or, if they were not exported from Australia, would be likely to be, held on
licensed dairy premises for a purpose related to commercial milk production,
including but without limiting the generality of the above, bulls, calves and
replacement heifers.
Imposition
of charge
Currently subclause 2(1) of Schedule 2 imposes a charge on
the export of cattle (other than dairy cattle) from Australia. Item 1 of
the Bill inserts proposed subclause 2(1A) into Schedule 2 so that a
charge is imposed on the export of dairy cattle from Australia.
Rate of
charge
Under existing clause 3 of Schedule 2 the rate of the
charge is calculated by reference to amounts per kilogram of cattle that are
exported.
Items 2 and 3 of the Bill amend clause 3 to
differentiate the manner in which the rate is calculated for export of cattle
and export of dairy cattle. Proposed paragraphs 3(1)(a) and 3(1)(b)
provide that the rate of charge imposed on the export of cattle is the sum of:
- for
cattle other than dairy cattle—the amounts prescribed by kilogram of cattle
exported and
- for
dairy cattle—the amounts prescribed per head of cattle exported.
The notes to clause 3 are unchanged. They state that,
under the Australian
Meat and Live-stock Industry Act 1997, the amounts paid under paragraph
3(1)(a) are destined for the live-stock export marketing body whilst the
amounts paid under paragraph 3(1)(b) are destined for the live-stock
export research body.[28]
LiveCorp is the declared livestock export and marketing body.[29]
Regulations
Clause 5 of Schedule 2 to the Customs Charges Act
provides for the making of Regulations about customs charges for cattle exporters.
Items 4–10 of the Bill amend clause 5 to:
- allow
the Regulations to prescribe amounts for charges in respect of the export of
cattle (other than dairy cattle) and dairy cattle
- require
the Minister to take into account recommendations from the declared livestock
export marketing body and the declared livestock export research body about the
prescribed rate of marketing and R&D charges on exported cattle (including
dairy cattle) and
- prevent
Regulations from prescribing a charge rate that is higher than the rate
recommended above.
[1]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 1.
[2]. J
Keniry (Chairperson), Livestock export
review: final report, report to the Minister for Agriculture, Fisheries
and Forestry, [Canberra], December 2003, pp. 18–19.
[3]. Australian
Livestock Export Corporation Limited (ALEC), Dairy
cattle export charge: industry proposal, 28 May 2018, p. 3.
[4]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 1.
[5]. LiveCorp,
‘Market access’,
LiveCorp website, n.d.
[6]. LiveCorp,
‘Research
and development’, LiveCorp website, n.d.
[7]. Animal
Health Australia (AHA), ‘National
Arbovirus Monitoring Program’, AHA website, last updated 12 February 2020.
[8]. ALEC,
Dairy
cattle export charge: industry proposal, op. cit., p. 10.
[9]. Ibid.
[10]. Senate
Rural and Regional Affairs and Transport References Committee, Industry
structures and systems governing the imposition and disbursement of marketing
and research and development (R&D) levies in the agriculture sector,
The Senate, Canberra, June 2015.
[11]. LiveCorp,
Submission
to the Senate Standing Committee on Rural and Regional Affairs and Transport, Inquiry
into industry structures and systems governing the imposition of and
disbursement of marketing and research and development (R&D) levies in the
agricultural sector, [Submission no. 142], n.d., pp. 12–13.
[12]. Livecorp,
LiveCorp annual
operational plan: 2019–20, LiveCorp, North Sydney, [2019], p. 19.
[13]. ALEC,
Dairy
cattle export charge: industry proposal, op. cit., p. 1.
[14]. Ibid.
[15]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 1.
[16]. Ibid.
[17]. ALEC,
Dairy
cattle export charge: industry proposal, op. cit., p. 6.
[18]. Ibid.
[19]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 1.
[20]. Senate
Standing Committee for Selection of Bills, Report,
4, 2020, The Senate, 14 May 2020.
[21]. Ibid.,
p. 5.
[22]. Ibid.
[23]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 2.
[24]. ALEC,
Dairy
cattle export charge: industry proposal, op. cit., p. 7.
[25]. The
Statement of Compatibility with Human Rights can be found at page 2 of the Explanatory
Memorandum to the Bill.
[26]. Parliamentary
Joint Committee on Human Rights, Human
rights scrutiny report, 6, 2020, Parliament of Australia, Canberra, 20 May
2020, pp. 21–22.
[27]. Primary Industries
(Customs) Charges Regulations 2000.
[28]. Australian Meat and
Live-stock Industry Act 1997, paragraphs 64A(1)(a) and 64B(1)(b).
[29]. Explanatory
Memorandum, Primary Industries (Customs) Charges Amendment (Dairy Cattle
Export Charge) Bill 2020, p. 5.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth
Coat of Arms, and to the extent that copyright subsists in a third party,
this publication, its logo and front page design are licensed under a Creative Commons
Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and
communicate this work in its current form for all non-commercial purposes, as
long as you attribute the work to the author and abide by the other licence
terms. The work cannot be adapted or modified in any way. Content from this
publication should be attributed in the following way: Author(s), Title of
publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists
in third party quotes it remains with the original owner and permission may
be required to reuse the material.
Inquiries regarding the licence and
any use of the publication are welcome to webmanager@aph.gov.au.
Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament.
They are produced under time and resource constraints and aim to be available
in time for debate in the Chambers. The views expressed in Bills Digests do
not reflect an official position of the Australian Parliamentary Library, nor
do they constitute professional legal opinion. Bills Digests reflect the
relevant legislation as introduced and do not canvass subsequent amendments
or developments. Other sources should be consulted to determine the official
status of the Bill.
Any concerns or complaints should be
directed to the Parliamentary Librarian. Parliamentary Library staff are
available to discuss the contents of publications with Senators and Members
and their staff. To access this service, clients may contact the author or
the Library’s Central Enquiry Point for referral.