EXPLANATORY STATEMENT

Select Legislative Instrument 2006 No. 240

Issued by Authority of the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry

National Residue Survey (Excise) Levy Act 1998

Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2006 (No. 3)

Primary Industries (Excise) Levies Act 1999

Primary Industries (Excise) Levies Amendment Regulations 2006 (No. 5)

Section 8 of the National Residue Survey (Excise) Levy Act 1998 (the NRS Act) and section 8 of the Primary Industries (Excise) Levies Act 1999 (the PI Act) provide that the Governor-General may make regulations prescribing matters required or permitted by those Acts to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to those Acts.

The National Residue Survey (NRS) implements chemical residue monitoring programmes and recovers the costs of the programmes from participating industries.  These programmes form the basis for documentation that enables the Australian Government to certify that raw food products bound for export and domestic consumption are free from significant chemical contamination.

Statutory levies are the preferred mechanism by which primary industries choose to meet the cost of compulsory residue-monitoring programmes required for access to international and domestic markets.  These levies are collected at the same time, and in the same manner, as other statutory levies such as marketing, research and development (R&D) and Australian Animal Health Council levies in order to reduce collection costs for industries.

Clause 2 of Schedule 5 to the NRS Act imposes NRS excise levy on the slaughter of game animals, including kangaroos, while subclause 3(1) of Schedule 5 sets the operative rate of levy at 4 cents per kangaroo carcase, or such other rate (not exceeding 40 cents per carcase) as may be prescribed by regulations.  The actual levy rate as specified in regulation 61 of the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998 (the NRS Regulations) is currently 0.5 of a cent per kangaroo carcase.

Subclause 2(1) of Schedule 27 to the PI Act provides that regulations may impose a primary industry levy on a specified product.  Clause 6 of Schedule 27 to the PI Act provides that the rate of levy is ascertained in accordance with the regulations.  The levy rate for kangaroos and other macropods intended for human consumption is specified in Part 1 of Schedule 27 to the Primary Industries (Excise) Levies Regulations 1999 (the PI Regulations) as 6.5 cents per carcase.  This levy is directed to R&D for the industry.

The purpose of the Regulations is to raise the NRS excise levy on kangaroos to 3.0 cents per carcase (an increase of 2.5 cents) to meet the rising costs of the NRS Kangaroo Residue Monitoring Programme and to reduce the R&D excise levy on kangaroo (or macropod) carcases intended for human consumption to 4.0 cents per carcase (a decrease of 2.5 cents).  Thus, there would be no change to the overall levy.  It is anticipated that the lower R&D levy would sufficiently fund any ongoing R&D programme.

Background on the Regulations is in Attachment A and details are in Attachment B.

The Regulations are legislative instruments for the purposes of the Legislative Instruments Act 2003.

The Office of Regulation Review (ORR) was consulted in the preparation of the Regulations.  ORR has advised that it is not necessary to prepare a Regulation Impact Statement on this matter (ORR Number 2006/8510).

The Regulations commenced on 1 October 2006.

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ATTACHMENT A

BACKGROUND ON THE REGULATIONS

In January 2001, the NRS levy which funds the kangaroo industry’s residue monitoring programme was reduced from 4 cents per carcase to 0.5 of a cent per carcase and a new R&D levy of 3.5 cents per carcase introduced on kangaroo meat intended for human consumption.  The R&D levy is specified in paragraph 1.3(a) of Schedule 27 to the PI Regulations.

At the time there was no overall increase in the levy imposed on the kangaroo meat for human consumption industry, only a re-allocation of the then current levy rate of 4 cents per carcase between residue testing and R&D.

The NRS held substantial funds in a special reserve at the time, mainly brought about by an increase in throughput by the industry over the previous four years.  It was estimated that sufficient funds could be maintained over a five year period through a wind-down of the existing reserves, plus revenue from a nominal 0.5 of a cent levy.

The five year period has now ended and financial planning for the next five year term of operation for the NRS kangaroo residue monitoring programme suggested that an increase in the cost recovery will need to be implemented from 1 October 2006.

A draft budget on indicative costs over the medium term period was prepared by the NRS in April 2006 and forwarded to the Kangaroo Industry Association of Australia (KIAA), the peak industry body, for consideration.  The draft budget took into account increases from the implementation of two tender rounds for the supply of analytical testing (2006-07 and 2008-09), the implementation during 2006-07 of a new three year certified agreement for staff working for the NRS, a nominal CPI increase of 4%, and the likely impact of unstable fuel cost on NRS operations.

Based on indicative costs available to the NRS at that time, the NRS recommended that the levy rate needed to be increased from the current level of 0.5 of a cent per carcase to a level of 3 cents per carcase.  This would correspondingly reduce the R&D component of the levy imposed for human consumption from 6.5 cents to 4 cent.

The KIAA has recently obtained member approval for an amendment to its cost recovery mechanism for its NRS residue monitoring programme from 0.5 of a cent per carcase for human consumption to 3 cents per carcase for human consumption.  The kangaroo industry also agreed to the corresponding decrease in the R&D component of the levy from 6.5 cents per carcase to 4.0 cents per carcase.  This decrease does not impact on the separate R&D levy of 3 cents on pet-food operators that is specified in paragraph 1.3(b) of Schedule 27 to the PI Regulations.  Therefore, the new overall R&D levy rates are 4 cents per carcase intended for human consumption and 3 cents per carcase intended for animal consumption. 

ATTACHMENT B

DETAILS OF THE PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2006 (No. 5)

Regulation 1 gives the name of the Regulations as the Primary Industries (Excise) Levies Amendment Regulations 2006 (No. 5).

Regulation 2 provides for the Regulations to commence on 1 October 2006.

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

SCHEDULE 1  Amendments

Item 1 Amends paragraph 1.3(a) of Part 1 of Schedule 27 to the Primary Industries (Excise) Levies Regulations 1999 to reduce the levy rate on macropods intended for human consumption from 6.5 cents per carcase to 4.0 cents per carcase.

DETAILS OF THE PRIMARY INDUSTRIES LEVIES AND CHARGES (NATIONAL RESIDUE SURVEY LEVIES) AMENDMENT REGULATIONS 2006 (No. 3)

Regulation 1 gives the name of the Regulations as the Primary Industries Levies and Charges (National Residue Survey Levies) Amendment Regulations 2006 (No. 3).

Regulation 2 provides for the Regulations to commence on 1 October 2006.

Regulation 3 provides that Schedule 1 amends the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998.

SCHEDULE 1  Amendments

Item 1 Amends subregulation 61(2), at Part 7 of the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998 to increase the NRS levy rate on kangaroos from 0.5 of a cent per carcase to 3.0 cents per carcase.