EXPLANATORY STATEMENT
Select Legislative Instrument 2006 No. 318
Issued by Authority of the Minister for Agriculture, Fisheries and Forestry
Primary Industries (Excise) Levies Act 1999
Primary Industries (Customs) Charges Act 1999
Primary Industries (Excise) Levies Amendment Regulations 2006 (No. 7)
Primary Industries (Customs) Charges Amendment Regulations 2006 (No. 5)
Section 8 of both the Primary Industries (Excise) Levies Act 1999 (the Excise Levies Act) and the Primary Industries (Customs) Charges Act 1999 (the Customs Charges 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.
Clause 2 of Schedule 27 to the Excise Levies Act provides that regulations may impose a levy, and Clause 2 of Schedule 14 to the Customs Charges Act provides that regulations may impose a charge on primary industry products.
The Regulations ceased the imposition of certain levies on sugar after 30 November 2006. The domestic sugar levy was introduced on 1 January 2003 to help fund the Sugar Industry Reform Programme (SIRP) 2002 that was originally intended to provide funding of up to $120 million. In April 2004, those elements of SIRP 2002 which had not been completed were incorporated with some new initiatives under SIRP 2004 which provides funding of up to $444 million.
The levy has collected $77.9 million to date and is expected to collect $79.7 million by
30 November 2006. This is significantly less than cumulative administered expenditure on SIRP 2002 ($22.2 million) and SIRP 2004 (exceeding $260.6 million).
The Primary Industries (Excise) Levies Regulations 1999 provided for the imposition of the levy. Part 6 of Schedule 27 to these regulations imposed the levy on (a) retail-packaged sugar produced in Australia and (b) sugar that is used as an ingredient in goods that are produced in Australia for human consumption. The levy was set at a rate of three cents per kilogram. However, clause 6.6 of Schedule 27 provided that the levy will cease on 31 December 2007.
In parallel, Part 4 of Schedule 14 of the Primary Industries (Customs) Charges Regulations 2000 imposed a customs charge of three cents per kilogram on retail-packaged sugar imported into Australia, with a sunset date of 31 December 2007.
Funding provided by the levy has played an important part in delivery of the SIRP 2004 which has been instrumental in helping the industry through a very difficult period. The success of the programme will provide significant benefits to sugar users by ensuring continued access to cheaper high quality sugar.
The marked improvement in world sugar prices since 2004 and the cost price squeeze affecting sugar users has prompted the Government to remove this levy sooner than originally planned. The removal of the levy is an important respite for sugar users such as Australia’s food manufacturing and beverage industries, which have also faced increased input costs combined with strong overseas market competition. It will help investment, innovation and employment growth in these industries and make Australian manufacturers more competitive in international markets.
The removal of the levy sooner than originally planned will not affect the Australian Government’s commitment to the reform and restructure of the Australian sugar industry through funding of SIRP 2004.
The Regulations removed the levy at midnight on 30 November 2006, (i.e. cessation date of 1 December 2006).
The Regulations are legislative instruments for the purposes of the Legislative Instruments Act 2003.
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Overview
The Primary Industries (Excise) Levies Amendment Regulations 2006 (No. 7) and the Primary Industries (Customs) Charges Amendment Regulations 2006 (No. 5) were introduced to address the issue of funding shortfalls in the Sugar Industry Reform Programme (SIRP) 2004. Enacted by the Australian Government, these regulations were aimed at modifying the existing levies on sugar to provide relief to the sugar industry and its users amidst rising costs and competitive pressures. The policy objective was to ensure the industry's continued viability and to support users such as food manufacturing and beverage industries by removing the domestic sugar levy earlier than planned, which had been set at three cents per kilogram on retail-packaged sugar produced in Australia and on sugar used as an ingredient in goods produced in Australia for human consumption. This early removal of the levy was intended to mitigate the financial strain on these industries while still supporting the broader reform and restructure of the Australian sugar industry.
Scope and Application
The Primary Industries (Excise) Levies Amendment Regulations 2006 and the Primary Industries (Customs) Charges Amendment Regulations 2006 apply to entities and individuals involved in the production and importation of sugar in Australia. Specifically, the regulations concern the cessation of a domestic sugar levy and a corresponding customs charge on imported sugar, both of which were initially imposed to fund the Sugar Industry Reform Programme (SIRP). The cessation of these levies took effect from midnight on 30 November 2006, earlier than the originally planned cessation date of 31 December 2007. The regulations are applicable nationwide, extending to all states and territories of Australia, and are an extension of the Primary Industries (Excise) Levies Act 1999 and the Primary Industries (Customs) Charges Act 1999. The cessation of these levies aims to provide relief to sugar users, particularly the food manufacturing and beverage industries, which have been facing increased input costs and intense market competition. Despite the early cessation, the Australian Government assures that the funding commitment to the ongoing reform and restructure of the Australian sugar industry through SIRP 2004 remains unaffected.
Key Provisions
The Primary Industries (Excise) Levies Amendment Regulations 2006 (No. 7) and the Primary Industries (Customs) Charges Amendment Regulations 2006 (No. 5) primarily focus on the cessation of the sugar levy. Under section 8 of the Primary Industries (Excise) Levies Act 1999 and the Primary Industries (Customs) Charges Act 1999, the Governor-General is empowered to make regulations that prescribe matters necessary for implementing these Acts. Specifically, clause 2 of Schedule 27 to the Excise Levies Act and clause 2 of Schedule 14 to the Customs Charges Act allow for the imposition of levies and charges, respectively, on primary industry products. The regulations in question have altered these provisions to cease the levy on sugar as of 1 December 2006, which is earlier than the previously set sunset date of 31 December 2007.
The obligations imposed by these regulations include the cessation of the sugar levy, which was initially introduced to fund the Sugar Industry Reform Programme (SIRP) 2002 and later SIRP 2004. These programmes aimed to provide financial support to the sugar industry, with SIRP 2004 offering up to $444 million. The levy, set at three cents per kilogram, applied to both domestically produced retail-packaged sugar and sugar used as an ingredient in goods for human consumption. However, due to changes in global sugar prices and the financial strain on sugar users, the levy was removed earlier than planned to alleviate some of the cost pressures on the industry.
Failure to comply with these regulations could result in various legal consequences, although the specific offences and penalties are not detailed in the explanatory statement. Generally, breaches of regulations under the Excise Levies Act and Customs Charges Act may lead to fines, legal actions, or other administrative penalties. The exact penalties would depend on the specific nature of the breach and would be in line with the general provisions of the relevant Acts. The cessation of the levy, however, is not expected to impact the Australian Government’s commitment to supporting the sugar industry through SIRP 2004, ensuring continued access to high-quality sugar for users and maintaining the industry’s competitiveness.