EXPLANATORY STATEMENT
Issued with the authority of the Minister for Agriculture, Fisheries and Forestry.
Quarantine Act 1908
Quarantine Service Fees Amendment Determination 2009 (No. 3)
Legislative Authority
Section 86E of the Quarantine Act 1908 (‘the Act’) provides that the Minister may make determinations that require specified fees to be paid for or in relation to the doing of anything in connection with, among other things, the management and maintenance of animals at a quarantine station in Australia.
The Quarantine Service Fees Determination 2005 (‘the Determination’) sets out the fees that must be paid in respect of specified services carried out or provided under the Act. The Determination sets out fees for services performed by Programs of
the Australian Quarantine and Inspection Service (‘AQIS’), including caring for animals in quarantine at quarantine stations.
Background
AQIS has operated in a cost recovery environment since 1993. The Australian Government Cost Recovery Guidelines (July 2005) have provided a framework for cost recovery practices.
Prior to the outbreak of equine influenza in August 2007, horse imports formed part of the AQIS Post Entry Animal Quarantine Program. Following the release of the Report of the Equine Influenza Inquiry (the Callinan Report) in June 2008 the new Horse Imports Program (HIP) was established with its own budget. The HIP budget includes all horse imports related revenue and expenditure. The formation of HIP, with its separate budget, was necessary to implement the government’s response to Recommendation 37 of the Callinan Report, which required that the fees and charges associated with horse importation and quarantine be isolated, reviewed and set so that they cover the full cost of the required level of service for horse imports.
The primary function of the Horse Imports Program (HIP) is to manage potential biosecurity risks associated with the importation of live equines prior to their release into the domestic population and to manage implementation of the government’s response to the Report of the Equine Influenza Inquiry. To manage biosecurity risks AQIS provides and maintains secure housing for imported horses requiring post arrival quarantine.
There are two AQIS operated animal quarantine stations within Australia that house horses:
- Eastern Creek Animal Quarantine Station, New South Wales (Eastern Creek); and
- Spotswood Animal Quarantine Station, Victoria (Spotswood).
Prior to the Quarantine Service Fees Amendment Determination 2009 (No. 3) (‘the Amendment Determination’) AQIS charged daily fees which partially recovered the cost to AQIS of providing services related to horse imports. In October 2008, the daily fees were increased from $34 a day for all horses to $165 a day for thoroughbred stallions and $65 a day for all other horses. This increase gave effect to recommendation 38 of the Callinan Report, which stated that these fee amounts should be introduced until such time that the fees charged in relation to the importation and quarantine of horses could be reviewed (recommendation 37). These fees were intended to only operate until a full fee review could be conducted. This Amendment Determination follows this full fee review.
Despite the October 2008 fee increase HIP continued to accumulate a deficit. The deficit reached $2.5 million at the end of the 2008‑09 financial year. During the course of the fee review recommended by the Callinan Report and undertaken by HIP, and in subsequent discussions, agreement was reached with the horse import industry that the import of horses into Spotswood should be suspended to reduce the cost of HIP services. The Minister for Agriculture Fisheries and Forestry agreed to the suspension of HIP services at Spotswood subject to a review of the suspension six months later. The Minister also agreed that $1.5 million of the HIP deficitthe amount attributed to measures taken in direct response to the August 2007 outbreak of equine influenzawould be absorbed into the operating budget of the Department of Agriculture, Fisheries and Forestry. The remaining $1 million portion of the deficit would be recovered from horse importers through increased quarantine fees.
The fee review found that increasing horse fees to $196 per day per equine animal would be appropriate to ensure all AQIS costs associated with the import and quarantine of horses are recovered. This amount would also allow the $1 million portion of the HIP deficit to be recovered over time. Once the deficit is recovered HIP will conduct another fee review in line with cost recovery principles. It was appropriate to introduce a single fee which does not discriminate between types of horses because each equine animal represents an equivalent biosecurity threat.
Prior to this Amendment Determination, fees were charged for persons accommodated at quarantine stations alongside their animals. While the drafting was not explicit, in practice these fees only ever applied to horse grooms. There had never been any practical provision for people to be accommodated alongside any other type of animal at a quarantine station. The new $196 fee includes an amount to recover AQIS’s costs in providing accommodation for horse grooms. The decision to collect one fee in place of several was in line with recommendation 76 of the report by Roger Beale AO: One Biosecurity: A Working Partnership (2008) (‘the Beale Report’), which recommended that programs using cost recovery should continue in that mode, but should aggregate charges for like activities.
Purpose and Impact
The purpose of the Quarantine Service Fees Determination 2005 was to amend the Determination to increase horse fees and alter the fee structure for horses in post-entry quarantine. Specifically, the Amendment Determination:
(a) aggregated six separate fees relating to quarantine services for imported horses into a single fee; and
(b) increased the amount paid by horse importers for quarantine services to cover costs and recoup the HIP deficit.
This amendment was applied only to activities relating to the import of horses at Eastern Creek and Spotswood. These quarantine stations were the only two on mainland Australia which could accommodate horses, though the import of horses into Spotswood was destined for suspension at the time of the amendment. Quarantine stations in Australia’s external territories have their own fee sets which did not require amendment.
Consultation
The Office of Best Practice Regulation determined that the amendment would have a low impact on business, and would impose no or low compliance costs. Consultation was undertaken with an industry consultative forumthe Horse Industry Consultative Committee (HICC)HICC was established in late 2008 to provide a forum for consultation with industry. AQIS consulted with HICC and the HICC Finance Sub-Committee about the amendment. The HICC Finance Sub-Committee agreed the amendment was appropriate.
HICC and HICC Finance Sub-Committee members include:
- the three horse import agentsNew Zealand Bloodstock, Crispin Bennett International Horse Transport and International Racehorse Transport
- Thoroughbred Breeders Australia (TBA)
- the Australian Horse Industry Council
- the Australian Racing Board
- Equestrian Australia
- Australian Harness Racing
- the Australian Veterinary Association
- Racing Victoria Limited; and
- a representative of Sydney Airport Corporation Limited and Melbourne International Airport.
Operation
Details of the Amendment Determination are set out below.
Section 1 provides that the name of the Amendment Determination is the Quarantine Service Fees Amendment Determination 2009 (No. 3).
Section 2 provides that the Amendment Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
Section 3 provides that Schedule 1 amends the Quarantine Service Fees Determination 2005.
Section 4 provides for transitional arrangements for the fee increase and fee structure change. It provides for the fee increase and new fee structure to apply to an animal which ‘starts to be held in quarantine’ on or after the day the Amendment Determination commences. The phrase ‘starts to be held in quarantine’ was used to ensure that the new fee structure would apply to consignments that arrive on or after the day the Amendment Determination commenced. Animals already being held in quarantine at the Amendment Determination’s commencement will continue to be charged under the previous fee structure until their release.
SCHEDULE 1 AMENDMENTS
Item 1 omits the definition of ‘thoroughbred stallion’ in section 5. The previous subitem 36(b) which is replaced as part of this Amendment Determination contained the Determination’s only reference to ‘thoroughbred stallion’ (see item 2 below). Hence the Determination no longer requires a definition of ‘thoroughbred stallion’.
Item 2 substitutes into Schedule 1 a new subitem 36(b) which creates a new fee applicable to all equine animals of $196 per animal, per day. The new subitem 36(b) replaces the previous subitems 36(b) and 36(ba). These previous subitems provided for a fee of $165 per day for thoroughbred stallions and $65 per day for all other equine animals.
The new fee of $196 per day per equine animal is set to recover staffing, property and accommodation and corporate overhead expenses for HIP. Staffing costs comprise approximately 51 per cent of HIPs expenditure while property and accommodation comprise approximately 28 per cent, and overheads and costs associated with management programs comprise approximately 6 per cent. The remaining 15 per cent includes expenses such as disinfectants, safety equipment, disposable overalls, and technical and field expenses. The new fee also recovers over time, a $1 million portion of the HIP deficit from horse importers.
This Amendment Determination also gives effect to recommendation 76 of the Beale Report, that programs using cost recovery should continue in that mode, but should aggregate charges for like activities. The new fee applied in the new 36(b) aggregates six fees which were previously charged individually. These six fees were made up of the two separate fees applicable to equine animals and the four fees applicable to accommodation for horse grooms under the previous item 38 which was omitted (see below) as part of this Amendment Determination. The new 36(b) has been worded to make it clear that the fee does not cover care and maintenance or the provision of feed or veterinary supplies.
Item 3 omits item 38 of Schedule 1. The fees previously contained in item 38 applied to the use of accommodation at quarantine stations by importers. They applied where importers employed grooms to stay at quarantine stations to care for equine animals while they were held in quarantine. These four separate fees have been aggregated and this cost is now included in the single fee per animal per day that is now payable under new subitem 36(b). This simplifies the fee structure and reduces administration costs. This approach is consistent with recommendation 76 of the Beale Report, which recommended that programs using cost recovery should continue in that mode, but should aggregate charges for like activities.