Chapter 3
Conclusions and Recommendations
3.1
Overwhelmingly, the submissions to the inquiry and evidence given by
witnesses from industry organisations show significant concerns about the Government’s
cost recovery reform process.
3.2
The decision to remove the 40 per cent rebate has taken many in industry
by surprise. While the recommendation came out of the Beale review, a number of
industry representatives expressed concern there was no indication during the
Beale review that there would be a recommendation to remove the 40 per cent
rebate and revert to full cost recovery. By example, the red meat industry,
making up 70 per cent of Australia’s agricultural exports, was not asked for
its opinion by Beale according to witnesses from AMIC.
3.3
To compound the situation, the Government has tied the delivery of the
funds necessary to deliver the reforms to the safe passage of the revised fee
structures through Parliament. In this way the government has sought to place
this cost recovery beyond parliamentary scrutiny.
3.4
The Government has, to all intents and purposes, delivered Australia's
export industries an ultimatum: accept 100 per cent cost recovery with no
transition period or jeopardise progress on long overdue regulatory reform.
Unfortunately, the increase in costs to industry at this time extends beyond
the 40 per cent co-contribution of government. The committee has received
evidence that the increased fees amount to significantly more than 40 per cent.
3.5
The removal of the 40 per cent fee rebate for the AQIS Export
Certification functions, increases costs for Australian exporters which could
adversely affect the competitiveness of many Australian exporters, and
ultimately could impact on trade growth in established markets and in new
market opportunities.
3.6
There has also been evidence provided that the significant extra impost
on exporters will greatly reduce their international competitiveness. Many
industries are already operating on wafer thin margins and any extra cost
through the supply chain will cost jobs and future investment.
3.7
Most other nations around the world believe that export certification is
a public good and do not charge full cost recovery or anything near it. By
going to full 100 per cent cost recovery, Australian exporters are being placed
at a disadvantage to their international competitors.
3.8
Industry organisations, including members of the various industry
taskforces, have largely indicated they are not confident that timelines for reform
implementation provided to them by the Government can be met. Witnesses have
indicated the reforms could take up to five years to be properly implemented
and cost efficiencies thus realised.
3.9
Many submissions and witnesses have been unable to directly identify
efficiencies that could be delivered within the set times. It could be said
that they are taking a ‘leap of faith’, not knowing whether the reforms can
necessarily be identified and/or implemented.
3.10
There is also a concern that the reform process will result in a
transfer of cost from AQIS to industry which might give the impression of cost
saving, but, in an overall sense, does not represent real saving to industry.
Many organisations are also still enormously uncertain about whether they can achieve
efficiencies to the value of the 40 per cent rebate.
3.11
Overall, the almost unanimous view of industry organisations is that the
reform process has been poorly designed. Industry is very prepared to engage in
a reform agenda with government, but it is not prepared to pay massive extra
costs for the Government to make itself more efficient, especially when there
is no confidence that the efficiencies can be delivered.
3.12
Australia’s reputation as a provider of disease free, clean, quality
products is worth billions of dollars a year in trade premiums which are
beneficial to all Australians and there is a very real ‘public good’ in
ensuring that products leaving Australia conform with our reputation, therefore
the Government does have a role in ensuring that goods leaving the country
conform with our reputation and should make a contribution to guaranteeing our
reputation.
3.13
Reforms to the AQIS Export Certification program are necessary but must
be phased in with additional funding provided where needed.
3.14
At this stage the removal of the 40 per cent AQIS Inspection
Certification is not warranted and will lead to the loss of markets, jobs
losses and business closures, the majority of which will occur in Regional
Australia.
3.15
The Government’s decision to return to full cost recovery for this
service has the potential to have a significant impact on small to medium
exporters and in particular may have an adverse effect on regional exports and
business development. Any reduction in regional exports due to barriers at the
Australian border may have wider undesirable economic impacts. The broader
impact is likely to be a reduction in Australia’s competitive position in key
international markets.
Recommendation 1
3.16
The committee supports regulatory reform of AQIS oversight of export
certification but recommends that the Senate move to disallow the Export
Control (Fees) Amendment Orders 2009 (No. 1).
Recommendation 2
3.17
The committee recommends that the government continues the current
regulatory reform process, and commits sufficient public funds to it, until
such time as all reform initiatives identified by each of the ministerial task
forces have been successfully implemented.
Senator Fiona
Nash
Chair
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