Explanatory Statement
Issued by Authority of the Deputy Prime Minister and Minister for Agriculture and Water Resources
Primary Industries (Excise) Levies Act 1999
Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017
The Primary Industries (Excise) Levies Act 1999 (the Levies Act) provides for the imposition of levies, which are excise duties, on the products of primary industries. This includes the imposition of a levy on producers of tea tree oil.
Section 8 of the Levies Act provides that the Governor‑General may make regulations: prescribing matters required or permitted by the Levies Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Levies Act.
The purpose of the Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017 (the proposed Regulations) are to establish a statutory levy of $0.25 per kilogram of tea tree oil to fund research and development (R&D) activities for the tea tree oil industry, and an emergency plant pest response (EPPR) levy that will allow the tea tree oil industry to re-pay the government in the event of an emergency pest or disease incursion. The EPPR levy rate will initially be set at $0.
R&D activities to support the tea tree oil industry are currently funded from voluntary contributions from tea tree oil producers, and the industry’s R&D program is administered by the Rural Industries Research and Development Corporation (RIRDC). The program has contributed to a doubling of plantation yield, efficacy research, market access, and increased efficiency in harvesting, distillation and storage. RIRDC proposes to continue to administer the R&D program using an industry-based advisory panel to make recommendations on the investment of available funds.
Rather than relying on voluntary industry contributions to R&D, establishing a statutory tea tree oil R&D levy will ensure that all tea tree oil producers invest equitably in R&D. A statutory levy will also provide the tea tree oil industry with greater certainty about the amount of revenue that will be collected and would enable forward-year planning to deliver priority R&D for the benefit of the whole industry. The overall increase in investment in R&D would allow industry to receive the benefits of additional Commonwealth matching payments for R&D expenditure.
The Australian Tea Tree Industry Association (ATTIA), the national tea tree oil industry representative body, proposed a statutory R&D levy at a rate of $0.25 per kilogram of tea tree oil. Based on estimates of future tea tree oil production in Australia, the levy rate of $0.25 per kilogram of oil will allow for sufficient funds to be collected from the tea tree oil industry, along with funds from charge set at the same rate, to ensure that priority R&D projects can continue over the long term. Investment in R&D aims to improve the profitability, sustainability and international competitiveness of Australia’s tea tree oil industry. In July 2015, the Australian Government announced in the Agricultural Competitiveness White Paper that it would provide matched Commonwealth funding for a new statutory R&D levy on Australian tea tree oil.
In addition to the R&D levy, ATTIA proposed a statutory EPPR levy (introduced at a nil rate) to contribute to emergency responses to pest and disease incursions. The tea tree oil industry may choose to raise the EPPR levy to a positive rate in future, where there is a need for the tea tree oil industry to make a financial contribution to an agreed emergency response to a pest or disease incursion. Without emergency responses, incursions could result in substantial costs to the industry and risk its biosecurity status. Government action to implement an EPPR levy, as sought by the industry, provides a contingency mechanism to share the industry’s responsibility for the cost of an eradication response.
ATTIA and the majority of potential levy payers support the introduction of an R&D levy and an EPPR levy. ATTIA undertook a detailed consultation process on the levies in 2016, including an independent postal ballot, to consult all known and potential levy payers.
Ninety-six per cent of voters supported the introduction of an R&D levy and ninety-four
per cent of voters supported the introduction of an EPPR levy.
The Office of Best Practice Regulation (OBPR) was consulted on the introduction of a tea tree oil R&D and EPPR levy and assessed the Regulation Impact Statement (RIS). On 31 March 2017, the OBPR assessed the RIS as being compliant with Government requirements. The OBPR reference number for this assessment is 21687.
Details of the proposed Regulations are set out in Attachment A.
The Regulations are 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 Regulations are a legislative instrument for the purposes of the Legislation Act 2003.
Attachment A
Details of the Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017
Section 1 – Name
This section provides that the name of the Regulations are the Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017.
Section 2 – Commencement
This section provides for the Regulations to commence on 1 July 2017.
Section 3 – Authority
This section provides that the Regulations are made under the Primary Industries (Excise) Levies Act 1999.
Section 4 – Schedules
This section provides that the Regulations are amended as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.
Schedule 1 – Amendments
Item 1 inserts a new Part 11 relating to tea tree oil into the Primary Industries (Excise) Levies Regulations 1999. Notes on the individual clauses are set out below.
Part 11‑ Tea tree oil
Division 11.1 – Product levy
11.1 Definitions
This clause provides that that tea tree oil has the same meaning as in clause 13.2 of Part 13 of Schedule 37 to the Primary Industries Levies and Charges Collection Regulations 1991 (Collection Regulations). Tea tree oil is defined in the Collection Regulations as oil that is distilled from Melaleuca alternifolia, in accordance with Australian Standard AS 2782-1997, as in force at the commencement of Part 13 of the Collection Regulations.
11.2 Imposition of levy
This clause imposes a levy on tea tree oil produced in Australia and sold by the producer in Australia.
11.3 Rate of levy
The rate of the research levy imposed on tea tree oil is 25 cents per kilogram of tea tree oil.
11.4 Who pays the levy
The levy imposed on tea tree oil is payable by the producer of the tea tree oil.
Division 11.2 – EPPR levy
11.5 Imposition and rate of EPPR levy
The EPPR levy is imposed on tea tree oil on which a research levy is also imposed. The rate of EPPR levy on tea tree oil is initially set at nil.
The payment of the EPPR levy to Plant Health Australia is provided for under the Plant Health Australia (Plant Industries) Funding Act 2002.
11.6 Who pays the levy
The EPPR levy is payable by the producer of the tea tree oil.
Division 11.3 – Exemption from levy
11.7 Exemption from levy
A producer of tea tree oil is exempt from paying levy if the total amount of levy that the producer would be liable to pay in a financial year is less than $25.
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017
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 Primary Industries (Excise) Levies Amendment (Tea Tree Oil) Regulations 2017 is to establish a statutory levy of $0.25 per kilogram of tea tree oil to fund research and development activities for the tea tree oil industry, and an emergency plant pest response (EPPR) levy that will allow the tea tree oil industry to re-pay the government in the event of an emergency pest or disease incursion. The EPPR levy rate will initially be set at $0.
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