Commonwealth Numbered Regulations - Explanatory Statements

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EXPORT INSPECTION AND MEAT (ESTABLISHMENT REGISTRATION CHARGES) AMENDMENT REGULATIONS 2001 (NO. 1) 2001 NO. 93

STATUTORY RULES 2001 No. 93

Issued by the authority of the Minister for Agriculture, Fisheries and Forestry

Export Inspection (Establishment Registration Charges) Act 1985

Export Inspection and Meat (Establishment Registration Charges) Amendment Regulations 2001 (No. 1)

Section 9 of the Export Inspection (Establishment Registration Charges) Act 1985 (the Act) provides that the GovernorGeneral may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The Export Inspection and Meat (Establishment Registration Charges) Regulations 1985 impose charges in relation to the registration of export establishments.

The Dairy Export Program of the Australian Quarantine Inspection Service is responsible for ensuring that exported dairy products are prepared in accordance with the requirements of the Export Control Act 1982, and thereby ensuring products are wholesome and fulfil the certification requirements imposed by importing country authorities. Program costs are fully recovered from the export dairy industry.

The purpose of the Export Inspection and Meat (Establishment Registration Charges) Amendment Regulations 2001 (No. 1) (the Regulations) is to increase registration charges that apply to export dairy establishments, and to make provision for the collection of these charges on a financial year basis. The increased charges are necessary to recover the developmental and ongoing maintenance costs of an electronic documentation system, introduced last year to support the preparation of export documentation for dairy products.

The Regulations reflect the agreement reached between the Government and the export dairy industry about registration charges to be applied for the 2001/02 financial year.

The Regulations commence on 1 July 2001.

Details of the amendment are set out below.

Regulation 1 provides that the Regulations are named the Export Inspection and Meat (Establishment Registration Charges) Amendment Regulations 2001 (No. 1).

Regulation 2 provides that the Regulations commence on 1 July 2001.

Regulation 3 provides that Schedule 1 amend the Export Inspection and Meat (Establishment Registration Charges) Regulations 1985.

Regulation 4 makes -Provision for transitional arrangements to apply to those establishments registered for operations associated with the preparation of dairy products for export, that have made a registration charge payment for a period that includes any period after 1 July 2001. Where this applies, then any amount that the establishment will owe as a result of the proposed new collection arrangements will be reduced by the amount already paid by the establishment for the period after 1 July 2001.

Schedule 1

Schedule 1 Amendments

Item 1 substitutes new definitions for charge day and charge period so that these two definitions apply to dairy establishments as well as meat establishments.

Item 2 inserts a new definition of dairy establishment.

Item 3 amends sub-regulation 4 (1A) to allow for an increase in charges from $330 to $500 payable when a person applies for the registration of a dairy establishment, or the transfer of that registration to another person. The charge in relation to establishments that process, pack or store dried fruit, fish or fish products remains unchanged.

Item 4 exempts sub-regulation 4(2) from applying to establishments that prepare dairy products for export as a consequence of the new collection arrangements introduced by new subregulation 4(3).

Item 5 inserts a new sub-regulation that allows for dairy registration charges to be collected on a financial year basis.

Item 6 amends the heading of regulation 6 to exclude dairy establishments.

Item 7 and 8 exempt regulation 6 from applying to dairy establishments, as a consequence of new regulation 6A.

Item 9 inserts a new regulation 6A that provides for the rate of charge for dairy establishments. Where an establishments is registered from 1 July then the rate of charge for the establishment is that amount specified in schedule 1A of the Regulations, however where an establishment applies for registration throughout the year, then the charge is calculated as per the formulae set out in the regulations.

Item 10 amends the heading of the Schedule to exclude dairy establishments.

Item 11 excludes dairy products, as a consequence of new Schedule 1A, as well as omitting a registration charge for establishments that store dried fruits as this charge will no longer apply.

Item 12 omits items 6 and 7 of Part 3 of Schedule 1 as a consequence of new Schedule 1A.

Item 13 inserts a new schedule 1A and in so doing increases registration charges for establishments that are described at

•       item 1 from a rate of $800 per year to $1,000 per financial year; and

•       item 2 from a rate of $3,100 per year to $4,250 per financial year; and

•       item 3 from a rate of $1,750 per year to $2,350 per financial year.

The Office of Regulation Review has advised that the attached Regulation Impact Statement meets the government's regulatory best practice requirements.

AQIS DAIRY EXPORT PROGRAM

PROPOSED INDUSTRY CHARGING ARRANGEMENTS

REGULATORY IMPACT STATEMENT

1.       Introduction

The Australian Quarantine and Inspection Service's (AQIS) Dairy Export Program are required, by Government directive, as evidenced in CM 13755 of 14 May 1990, CM 13858 of 21 June 1990 and subsequent AQIS charging legislation, to operate on a full cost recovery basis. This means that in any one year, the programs must fully recover operating expenditure from export fees.

The Dairy Export Program is responsible for ensuring that export registered dairy establishments comply with the Export Control Act and its Orders and Regulations. These give effect to importing country authority requirements. The Dairy Export Program fulfils this task by conducting audits or reviews on export registered dairy establishments or by conducting audits of the body and auditors performing this function on behalf of AQIS. In addition the Dairy Export Program provides export documentation to meet importing country requirements. Recent reviews by Peru and Chile have confirmed that AQIS's current inspection systems meet their newly introduced regulatory requirements for dairy products. A review conducted in 1997 by the European Union also confirmed compliance with their requirements for dairy products.

This Regulatory Impact Statement relates to the Export Control (Fees) Orders under the Export Control Act 1982.

2.       Problem

Consistent with the Government's operating requirements for AQIS, the Dairy Export Program must ensure full cost recovery in 2000-2001.

In the case of the Dairy Export Program the full cost of administering the Program in 1998/99 was $894,000. The budgeted program expenditure for 1999/2000 is $1,076,000 and for 2000/2001 is $1,081,000. The reason for the increase in expenditure relates to the development and implementation of electronic export documentation (EXDOC). The amount required for this is $200,000 per year for systems development (and this extends over five years) plus an additional $250,000 per year to maintain and operate this new system. As the development cost will be repaid after 5 years at the end of that period, the overall cost burden for industry is expected to decline.

The introduction of EXDOC is consistent with the Government's Single Electronic Window, internet 2000 and e-commerce initiatives. EXDOC is an integral part of the Dairy Export Program's strategies to meet the Government's Internet 2001 strategy. This strategy was developed in consultation with the Dairy Industry.

3.       Objectives

The objectives are for the program to meet its commitment to the Department of Finance and Administration (DOFA). To do so the AQIS Dairy Export Program seeks to recover all operational costs in a manner that is fair and equitable to both government and the Australian dairy industry.

4.       Options

Option 1:       Retain the current cost recovery and service levels for AQIS's dairy export services.

Option 2:       Reduce dairy export services to a level consistent with the current revenues.

Option 3:       Increase AQIS's dairy export fees to fully recover the cost of the program.

5.        Impact Analysis

Option 1. To retain the current fee levels for AQIS's dairy export services gives rise to complexities. AQIS would not be fulfilling their obligations to the Department of Finance and Administration to fully recover program costs and the program would simply accumulate an ever-increasing debt without means of it being repaid. Consistent with its policy for the operational AQIS programs, Government has rejected the provision of Community Service Obligation funding to assist the program.

Option 2. To reduce the program's services to a level consistent with the current revenue is not an option favoured by the Australian Dairy Industry. By retaining the existing AQIS financial recovery system for the Australian Dairy industry, AQIS is not assisting in the facilitation of exports as the fees recovered are not sufficient to provide the resources necessary to ensure that Australian Dairy exports will be accepted by relevant importing country authorities.

Option 3. The introduction of the revised fees levels will enable the provision of dairy export documentation by electronic means in accordance with Government and Industry requirements. The proposal enables full cost recovery in an equitable manner and includes provision for costs to be recovered from Third Party Certifying Bodies for services provided to them. The full details are provided in Attachment 1.

General Comments

EXIDOC has been operational for dairy exports since October 1999. There are still enhancements occurring to cover all importing country requirements. The Dairy Industry agreed that the target date for full implementation was 1 July 2000 with the manual system for issuing export documentation ceasing from 1 January 2001. Relatively slow industry (some firms are on, with more converting) uptake means that it is unlikely that these dates will be met.

EXDOC provides advantages to the Industry, as the completion of the electronic document provides it immediately to AQIS for verification, and there is no delay connected with the delivery of the paper document to the AQIS office. Where facsimile signatures are accepted, there is the additional advantage of remote printing at the company's site. Thus the delay in obtaining completed export documentation from AQIS offices will also be removed in most cases.

AQIS is considering the option of Total Electronic Documentation. This concept would allow automatic clearance of documents when the authorised signatory proved their capabilities with EXDOC. This would mean almost instant document issuing.

There are savings for the industry but these are not always easy to quantify with precision.

•       The need for transportation of the paper document to and from the AQIS office is generally removed.

•       The speed of processing is significantly increased.

•       The ability to obtain Export Clearance Numbers (ECNs) from the Single Electronic Window is significantly faster than the link via the Customs EXIT system.

•       The greatest benefit occurs with the minimisation of the need to input data and the ability to clone documents. In the paper system, there are between five and ten export documents containing the same information. With the electronic system, the basic information is only put in once per consignment, and with cloning, some information is copied from prior consignments.

The increase in charges would apply until the Dairy Export Industry Consultative Committee (DEICC) agrees to revise the charges. Charges are reviewed on an annual basis and are revised to ensure that revenue matches expenditure. The depreciation component for EXMC is over a period of five years. The Income Equalisation Reserve will be built up to 10% as agreed by the Industry. It is anticipated that charges would be changed in two to three years.

7.       Consultation

Dairy Export Fees

Whilst the Dairy Industry have expressed concern regarding the costs of the development of EXDOC, they have acknowledged the requirement to increase fees to meet the ongoing costs of the program. At the Dairy Export Industry Consultative Committee (DEICC) meeting on 1 February 2000 the Charging Sub-Committee's recommended fee option (see Attachment 1) was endorsed (including the third party related fees). It is proposed that these revised fees come into operation on 1 July 2000.

8.       Conclusion and recommended option

Option 3 allows AQIS to fully and efficiently recover the costs of the dairy export programs and therefore meet its DoFA obligations.

9.       Implementation and review

An explanation of the new charging arrangements will be circulated in a Minute to all relevant AQIS staff. Industry will be advised via the AQIS/industry consultative committee - DEICC.

The impact of the new charging arrangements will be reviewed each quarter by AQIS in consultation with DEICC.

Financial reporting will contain information on the effectiveness of cost recovery and indicate any need for adjustment.