Explanatory Statement
Issued by Authority of the Deputy Prime Minister and
Minister for Agriculture and Water Resources
Primary Industries (Customs) Charges Act 1999
Primary Industries (Customs) Charges Amendment (Melons) Regulation 2016
Legislative authority
Section 8 of the Primary Industries (Customs) Charges Act 1999 (the Charges Act)
provides that the Governor-General may make regulations prescribing matters required or permitted by the Act for carrying out or giving effect to the Act.
Schedule 10 to the Charges Act provides for the ability to impose charges on horticultural products. Part 31 of Schedule 10 to Primary Industries (Customs) Charges Regulations 2000 provides that melons are chargeable horticultural products.
Purpose
The purpose of the Primary Industries (Customs) Charges Amendment (Melons) Regulation 2016 (the Regulation) is to establish statutory charges on melons for research and development (R&D) at a rate of 0.3 of a cent per kilogram of melons; Plant Health Australia (PHA) membership at a rate of 0.1 of a cent per kilogram of melons; and Emergency Plant Pest Response introduced at a nil rate. The Regulation also declares the Australian Melon Association Incorporated (AMA) as the eligible industry body for melons. It provides for the AMA to be consulted or to make recommendations about charges imposed on melons.
Background
Historically, R&D for the melon industry was funded by voluntary contributions made by supply chain partners and only a negligible number of committed melon growers. These contributions were not made on an equitable basis nor were the contributions able to meet the total cost of the melon industry’s research and development and biosecurity preparedness programmes.
On two occasions, February to September 2005 and October 2010 to October 2011, the AMA sought to establish melon biosecurity levies, however, both attempts were unsuccessful in the ballot and majority support was not received from the industry. The driving force behind the most recent attempt by the AMA to explore the statutory levy and export charge option with growers was again to establish melon biosecurity levies, made more pressing by the incursion of Cucumber Green Mottle Mosaic Virus (CGMMV), and the broader benefits that would be available to all melon growers by the implementation of the levy. The melon industry’s reluctance to consistently contribute funding for national biosecurity activities further highlights the high level of risk that the industry would face to manage further incursion of plant pests and diseases such as CGMMV. The AMA believes that these risks can be minimised by collectively investing in nationally coordinated R&D and biosecurity activities.
Impact and Effect
Melon growers will be required to pay 0.4 of a cent per kilogram of melons, however, a clear majority of melon growers who voted supported the introduction of statutory levies and charges on melons.
Establishing statutory R&D, PHA and EPPR levies and charges would raise approximately $1.4 million annually. This figure is based upon average production figures of 200,000 tonnes of melons per annum. An R&D levy on melons at a rate of .3 of a cent per kilogram is expected to raise $600,000, which could attract up to $600,000 of Australian Government matched funds, subject to the prescribed cap for matched R&D funds set at 0.5 per cent of the gross value of production of the horticulture industry. PHA membership at a rate of .1 of a cent per kilogram is expected to raise $200,000 in unmatched revenue.
The Regulation would provide for R&D charge revenue to be paid to Horticulture Innovation Australia Limited (HIA Ltd), the prescribed industry services body for horticulture under Section 9 of the Horticulture Marketing and Research and Development Services Act 2000. R&D charge funds would ensure continued funding is provided to expand melon research and development programmes that the industry has identified as priorities. These include: boosting productivity and adding value to rural production; effective operation of market chains for existing and new products; and building resilience to climate variability and change.
The Regulation also provides for the melon industry to equitably fund its membership costs to PHA and the employment of a biosecurity development officer at 0.5 the full time equivalent. As a member of PHA, the industry has access to melon biosecurity programmes and resources to conduct surveillance activities. In the event of a biosecurity incident affecting the melon industry, and following direct consultation with all affected industries, the EPPR charge is activated to a rate that enables the government to reasonably recover the biosecurity response costs.
Consultation
Consistent with the Australian Government’s Levy Principles and Guidelines, the AMA conducted a thorough consultation campaign with all known potential levy payers, over a three month period from August 2015 to the commencement of the ballot period in October 2015. The AMA’s consultation campaign included 4 grower meetings across the major melon-growing regions, including a teleconference with growers in Western Australia; one-on-one telephone conversations with 172 of the 180 growers on the AMA’s registration list; information package mail-outs to regional grower organisations; industry publications including updates to the AMA’s website, e-newsletters, media releases and advertisements in relevant journals, magazines and newsletters.
During the consultation period some growers raised concerns with the AMA about the amount of revenue the PHA levy and charge could collect. To address grower concerns, the proposed PHA levy and charge rate was revised from 0.2 of a cent per kilogram down to 0.1 of a cent per kilogram, representing a total levy and charge of 0.4 of a cent per kilogram.
The ballot was conducted from 7 October 2015 to 6 November 2015. An independent Levy Returning Officer was employed by the AMA to scrutineer and tally the votes received in response to the levy proposal. Only businesses with an Australian Business Number (ABN) were eligible to vote. On occasion, multiple growers align with one business and were therefore only eligible for one vote on behalf of the business. Ballot packs were sent by post to individual businesses registered with the AMA and additional voting packs were sent out on request. A total of 166 ballot packs were issued. A total of 89 votes were received representing 55 per cent of eligible voters. 8 votes were deemed invalid. Of the 81 valid votes received, 57 supported the establishment of a PHA and EPPR levy and charge, representing 70 per cent; and 55 supported the R&D levy and charge, representing 68 per cent.
On 19 February 2016, the department commenced the six-week objection period for prospective levy payers to lodge their concerns about the levy submission. The objection period closed on 1 April 2016 and 5 objections were received, to which the department is satisfied the AMA adequately responded.
The AMA consulted with Horticulture Innovation Australia about the recommendation to establish a statutory levy and charge on melons, prior to making the recommendation to the Minister for Agriculture and Water Resources. The Regulation would give effect to the recommendations of HIA Ltd, which are consistent with the AMA’s written submission of December 2015 to establish a statutory levy and charge on melons.
The Office of Best Practice Regulation was consulted in the preparation of the Regulation and a Regulation Impact Statement (RIS) was prepared (OBPR ID 20458). The RIS was assessed as best practice and will be available on the Best Practice Regulation Updates website. The Department of Agriculture and Water Resources also consulted the departments of the Prime Minister and Cabinet, Treasury, and Finance in the preparation of the Regulation. The AMA’s proposal reflects the government’s support of industry through charges and levies that facilitate collective industry investment in R&D, plant health management and marketing to improve competitiveness and biosecurity preparedness.
Details of the Regulation are set out in Attachment A.
The Regulation is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.
The Regulation is a legislative instrument for the purposes of the Legislation Act 2003.
The Regulation commences on 1 January 2017.
Attachment A
Details of the Primary Industries (Customs) Charges Amendment (Melons) Regulation 2016
Section 1 – Name
This section provides that the name of the Regulation is the Primary Industries (Customs) Charges Amendment (Melons) Regulation 2016.
Section 2 – Commencement
This section provides for the Regulation to commence on 1 January 2017.
Section 3 – Authority
This section provides that the Regulation is made under Primary Industries (Customs) Charges Act 1999.
Section 4 – Schedules
This section provides that the Primary Industries (Customs) Charges Regulations 2000 is amended as set out in Schedule 1.
Schedule 1 – Amendments
Schedule 10 – Horticultural products
Part 31 – Melons
Division 31.1 – Product charge
31.1 Melons are chargeable horticultural products
This section provides for the definition of melons as a chargeable horticultural product.
Schedule 22 to the Primary Industries Levies and Charges Collection Regulations 1991 provides for the definition of melons as a species.
31.2 What melons are exempt from charge
This section provides for the exemption of persons who exports less than 20 tonnes of melons in a levy year.
This section refers to clause 31.2 of Schedule 22 to the Primary Industries Levies and Charges Collection Regulations 1991, which defines a levy year as a fiscal year in which the levy or charge is imposed.
31.3 Rate of charge – research and development component
The section prescribes the R&D charge payable on melons at a rate of 0.3 of a cent per kilogram of melons.
31.4 What is the eligible industry body for melons
This section prescribes the Australian Melon Association Incorporated (ABN 36 990 325 012) as the eligible industry body for melons.
Division 31.2 Special purpose charges
31.5 PHA charge
This sections prescribes the PHA charge payable on melons at a rate of 0.1 cent of a kilogram of melons. This charge is payable by the producer of the melons.
The collection and payment of the PHA charge are provided for under the Plant Health Australia (Plant Industries) Funding Act 2002.
31.6 EPPR charge
This section prescribes the EPPR charge payable on melons at a nil rate .This charge is payable by the producer of the melons.
The collection and payment of the EPPR charge are provided for under the Plant Health Australia (Plant Industries) Funding Act 2002.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Primary Industries (Customs) Charges Amendment (Melons) Regulation 2016
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Regulation is to establish an Australia Government statutory charge and levy on melon to meet the industry’s research and development priorities and Plant Health Australia membership.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
The Hon. Barnaby Joyce MP
Deputy Prime Minister and Minister for Agriculture and Water Resources