Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]


EXPORT INSPECTION AND MEAT (ESTABLISHMENT REGISTRATION CHARGES) AMENDMENT REGULATIONS 2001 (NO. 3) 2001 NO. 299

EXPLANATORY STATEMENT

STATUTORY RULES 2001 No. 299

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. 3)

Section 9 of the Export Inspection (Establishment Registration Charges) Act 1985 (the Act) provides that the Governor-General 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 (the Regulations) impose charges in relation to the registration of export establishments whose operations are in association with the preparation of a prescribed commodity.

On 29 August 2001 the Deputy Prime Minister announced as part of his regional industry statement, "Stronger Regions, A Stronger Australia" that the Commonwealth Government would fund 40 percent of the cost of providing export inspection and certification services to the meat, grain, fish, dairy, live animal, horticulture and organic export industries. The Australian Quarantine and Inspection Service (AQIS) currently provides these services on a fully cost recovered basis. In consultation with established industry specific consultative committees, AQIS has developed a revised fee structure that recovers 60 percent of the cost of providing export inspection and certification services provided to each industry group. Under the revised fee structure registration charges are either reduced or removed.

The purpose of Export Inspection and Meat (Establishment Registration Charges) Amendment Regulations 2001 (No. 3) is to introduce the revised fee structure as it relates to registration charges by

       reducing application charges that apply to dairy establishments by forty percent;

       reducing registration charges that apply to fish and dairy establishments by forty percent;

       retrospectively removing registration charges that apply to meat, poultry and game establishments; and

       retrospectively removing registration charges that apply to fresh fruit, fresh vegetables, dried fruit and grain establishments.

The retrospective amendments that apply in relation to meat, poultry and game establishments and establishments that prepare, inspect or store fresh fruit, fresh vegetables, dried fruit or grain are as a consequence of the agreement reached between AQIS and the relevant industry. The retrospective introduction of the revised registration charges will be of benefit to those affected because the amendments will remove or reduce a financial liability imposed on those establishments. As a consequence the proposed Regulations do not breach section 48 of the Acts Interpretation Act 1901 because the rights of any person are not adversely affected, nor is any liability imposed.

The Regulations commence on

       1 November 2001 in relation to fish and dairy establishments,

       1 October 2001 in relation to meat, poultry and game establishments and,

       1 July 2001 in relation to fresh fruits, fresh vegetables, dried fruit and grain establishments.

Details of the Regulations are set out below.

Regulation 1 provides that the Regulations are named the Export Inspection and Meat (Establishment Registration Charges) Amendment Regulations 2001 (No. 3).

Regulation 2 provides that the Regulations would commence on

       1 July 2001 with respect to establishments dealing with fresh fruits, fresh vegetables, dried fruit, and grain;

       1 October 2001 with respect to establishments dealing with poultry, game meat or meat; and

       1 November 2001 with respect to establishments dealing with fish, fish products or dairy products.

Regulation 3 provides that Schedules 1, 2 and 3 amend the Export Inspection and Meat (Establishment Registration Charges) Regulations 1985.

Schedule 1        Amendments taken to have commenced on 1 July 2001.

Item 1 omits the definitions of fresh fruits, fresh vegetables, grain, plants and plant products from the regulations. These definitions are no longer required as a consequence of amendments made by items 2 and 3 of this schedule.

Item 2 removes dried fruits, fresh fruits, fresh vegetables and grain from the list of prescribed commodities. This amendment is necessary because registration charges will no longer apply to establishments that prepare these commodities.

Item 3 deletes the registration charges that apply to establishments that prepare store or inspect dried fruits, fresh fruits, fresh vegetables, and grain, as these charges will no longer apply.

Schedule 2        Amendments taken to have commenced on 1 October 2001.

Item 1 deletes the definitions listed by the item, as these definitions are no longer required as a consequence of the amendments made by items 2 to 5 of this schedule.

Items 2 and 3 remove poultry meat, meat, including meat products and game meat from the list of prescribed commodities. This amendment is necessary because registration charges will no longer apply to establishments that prepare these commodities.

Item 4 deletes the rules applying to the imposition of charges in relation to meat establishments. This amendment is necessary because registration charges will no longer apply to meat establishments.

Item 5 deletes the registration charge that applies to establishments dealing with poultry or game meat, as these charges will no longer apply.

Item 6 deletes the registration charge that applies to establishments dealing with meat, as these charges will no longer apply.

Schedule 3        Amendments commencing on 1 November 2001.

Item 1 renames the Regulation as the Export Inspection (Establishment Registration Charges) Regulations 1985.

Items 2 and 3 deletes the definition of "the Act", and using the same meaning, defines "Act".

Item 4 amends subregulation 4(1A) by reducing the registration application charge and the transfer of registration charge that applies to establishments processing, packing or storing fish or fish products from $330 to $198. The application charge and the transfer of application charge that applies to establishments processing, packing or storing dried fruit is removed.

Item 5 amends subregulations 4(1B) (a) and (b) by reducing the application charge and the transfer of application charge that apply to an establishment processing, packing or storing dairy products from $500 to $300.

Item 6 amends Schedule 1 and Schedule 1A by reducing all registration charges that apply to establishments dealing with fish or fish products by 40 percent. Schedule 1A is amended by reducing all registration charges that apply to dairy establishments by 40 per cent.

A Regulation Impact Statement, agreed by the Office of Regulation Review, accompanies this explanatory statement.

THE AUSTRALIAN QUARANTINE AND INSPECTION SERVICE

FEES AND CHARGES IMPOSED UNDER EXPORT INSPECTION PROGRAMS

Introduction

The Australian Quarantine and Inspection Service (AQIS) is responsible for providing operational service delivery for the export of a range of commodities prescribed under the Export Control Act 1982. International market access for these goods is maintained through the provision of essential inspection and certification services in accordance with overseas countries' requirements as well as in accordance with Australia's international commitments. To acquit these responsibilities AQIS has established a number of programs established in consultation with various sections of industry. Each program is responsible for setting the fees and charges to recover the full cost of providing inspection services to their clients. These costs include all the direct and indirect costs reasonably attributed to the program's activity. Fundamental to AQIS's charging policy is that there should be no cross-subsidisation between programs. The seven export programs are as follows:

1.       The Meat Inspection Program is responsible for ensuring that export meat is safe and wholesome and complies with specific requirement imposed by importing countries. The program provides export certification in relation to these matters.

2.       The Dairy Export Program is responsible for ensuring that export registered dairy establishments produce dairy products that are safe and wholesome, thereby meeting importing country authority requirements. This is achieved by auditing or reviewing export registered dairy establishments. In addition the Dairy Export Program provides export documentation to meet importing country requirements.

3.       The Live Animal Exports Program is responsible for providing export health certification in relation to the export of live animals and animal reproductive material to meet the importing country requirements. The Live Animal Export Program is also responsible for ensuring reasonable animal welfare practices are followed, that is that the animals are, fit to undertake the export Journey and their preparation and travel arrangements are adequate.

4.       The Organic and Biodynamic Program is responsible for the operation and administration of prescribed goods that are certified by AQIS approved certifying organisations. The Program ensures through audit that all procedures and goods certified by these organisations comply with the Export Control (Organic Produce Certification) Orders 1997, importing country requirements and the National Standard for Organic and Biodynamic Produce. Prescribed goods are any products that have been labelled as organic or biodynamic.

5.       The Fish Export Program is responsible for ensuring that export registered fish establishments comply with the Export Control Act and its Orders and Regulations. These give effect to importing country authority requirements. The Fish Export Program fulfils this task by conducting audits or reviews on export registered fish establishments or by conducting audits of the body and auditors performing this function on behalf of AQIS. In addition the Fish Export Program provides export documentation to meet mandatory importing country requirements. The Fish Exports Program also provides similar services in relation to the export of egg and egg products, processed fruit and vegetables and other non-prescribed goods under appropriate legislation.

6.       The Grains Program is responsible for inspecting and certifying exports of prescribed grains (and other grains and plant products requiring some form of certification to comply with Australian export standards, the requirements of the importing countries and the principles of the International Plant Protection Convention (IPPC). Currently, the prescribed grains are wheat, oats, barley, lupins, field peas, sorghum, canola, lentils, vetch, faba beans, soybeans, and mung beans. Other 'grains' such as rice or maize, when they do not require certification, can be exported without AQIS inspection.

7.       The Horticulture Program is responsible for inspecting and certifying exports of prescribed fresh fruits and vegetables. The Program is also responsible for inspecting and certifying nursery stock and cut flowers that require a phytosanitary certificate. Inspection and certification is required to comply with (i) the requirements of the importing countries and (ii) the principles of the International Plant Protection Convention (IPPC). Nursery stock and cut flowers that do not require certification, can be exported without AQIS involvement.

Each program, in consultation with industry determines the appropriate mix of fees and charges to recover the operational costs of the program. The fees and charges imposed for service delivery by the seven export programs can broadly be described as follows.

       Service Fees - for the provision of inspection and certification services

       Registration Fees - for premises registered to produce goods for export

       Volume Fees - a charge imposed on the export of goods, based on the tonnage of goods exported

       Documentation Fees - for the provision of documents required as part of the export process

The legal basis for the imposition of fees and charge for export inspection and certification services is set out in attachment A.

Problem

Currently each program imposes a number of fees, developed in consultation with industry specific consultative committees, to fully recover operational costs. Typically, the indirect costs of the program are recovered under one of the taxing pieces of legislation, while the direct costs to the program such as, the costs of providing inspection services and preparing documentation are provided for under the fee for service legislation. Under this structure, frequent users of AQIS services will pay more than infrequent users of AQIS services. To ensure that the program's overhead costs are met, however, many programs also impose annual registration charges or a charge relating to the volume of product that is exported.

On Wednesday 29 August 2001, the Deputy Prime Minister announced in his Regional Industry Statement, "Stronger Regions, A Stronger Australia" that AQIS inspection and associated charges for its seven export commodity programs would be reduced by 40 per cent. The reduced fees are to apply from 1 November 2001. The reduction in fees and charges is designed to give recognition to the role that agricultural industries play in supporting rural and regional Australia and is designed to assist them to maintain their momentum in expanding global market opportunities. The reduction in fees and charges arises from the government' concerns about the cost pressure facing rural industries in an increasingly competitive but unfair global market.

The implication of this decision is that AQIS will no longer be required to fully recover the costs of providing export inspection and certification services to its clients. As a consequence AQIS in consultation with the export industry needs to develop a revised fee structure that will recover 60 percent of the cost of providing export inspection and certification services to its clients. The expected savings to industry are estimated to be in the order of $30 million.

Objective

AQIS seeks, in consultation with industry, to meet its commitment to the Department of Finance and Administration to recover 60 percent of the operational costs of all export inspection and certification programs in an efficient, equitable and transparent manner.

Options

1       Decrease all fees by 40 percent.

2       Determine a new fee structure, in consultation with industry, based on agreed principles.

Impact Analysis

Option 1: Reduce all fees by 40 percent

Option 1 is the simplest and most transparent means to implement the revised cost recovery arrangements, however this approach may encourage unwanted industry inefficiencies or provide an unfair advantage to some members of an industry. Additionally, as fee structures differ for different industry groups, it is unlikely that an across the board fee reduction would suit the needs of all industry client groups. For example, the horticulture industry has been actively encouraging industry to move from full inspection of export product to the use of quality assurance systems. Such systems are designed to ensure commodities are produced in accordance with legislated standards as well as the requirements imposed by importing countries. This approach is based on the rationale that such systems produce better outcomes than end point inspection. Additionally industries operating under quality assurance systems undergo less AQIS inspections and hence benefit from the associated reduction in inspection service charges. For this reason a significant drop in the price of inspection services may not be in the long-term interest of the industry, as establishments operating under a full inspection regime would benefit more than those establishments operating under a quality assurance arrangement. Of greater benefit to the horticulture industry would be the removal of those charges that are designed to recover the program overhead costs, for example, registration charges.

This option does not afford AQIS the opportunity to address inequalities built into current charging structures. For example, the fish program currently imposes a quantity charge on the export of fish based on the weight of exported fish. This charge is designed to recover the overhead costs of running the program. The fish export industry has raised concerns about the equity of this fee since under this structure, the cost of exporting low value products such as carp, is the same as the cost of exporting a high value product such as abalone.

Option 2

Under option 2, three principles were identified as necessary to achieve the stated objective.

1.       Wherever possible those charges that aim to recover the fixed costs of a program should be reduced in the first instance, before reducing variable costs such as inspection and documentation charges.

2.       Overtime service charges, and related charges should remain 100% cost recovered.

3.        The revised fee structures should be developed in consultation with industry and continue to support the industry reform process.

Adherence to the principles outlined above will allow AQIS to continue to drive efficiencies within AQIS, and industry. For example the retention of overtime recovery rates at current levels will provide an incentive for exporters to engage AQIS services within normal hours. One of the principles underlying the use of cost recovery for government services is that those who benefit from the government service should pay for those services. This mechanism encourages more efficient resource use by reducing the overuse of government services. Where the costs of service provision are correctly priced, the efficient use of resources is also enhanced because AQIS is able to respond to market signals, for example, falling demand for inspection services. On the basis of this rationale, this option supports the reduction of those charges that are designed to recover the indirect costs of a program in the first instance, rather than those charges that recover direct costs.

Direct costs are those costs that can be clearly and specifically identified and attributed on an unequivocal basis to a user group and are more likely to vary with a change in the level of output. Direct costs include:

(a) Staffing costs. This can be broken into two components:

       salaries and wages rates of staff expressed in annual, fortnightly, daily and hourly terms; and

       other staffing on-costs, such as allowances, shift/penalty payments, overtime, annual and long service leave, separation payments and superannuation costs.

(b) Accommodation costs, including rent, repairs and maintenance, cleaning and utility charges;

(c) Costs such as minor stores, communications, office machines, stationery, telephonic communications, advertising and insurance;

(d) Travel costs;

(e) The costs of materials and services such as stores, computer services (including IPEX) and services obtained on a contract basis;

(f) Provisions for bad and doubtful debts and Fringe Benefits Tax; and

(g) Capitalisation costs, including depreciation on plant and equipment.

Indirect costs form part of general user group costs and are not easily attributed to particular activities and include:

(a) an appropriate allocation of indirect costs (or overheads), including executive, financial, personnel, registry, library and audit services, internal audit fees and other corporate costs;

(b) Technical and Operational costs including development of the Electronic Documentation system, Quality Assurance and Training, Public Awareness and the Establishment Register.

This option recognises that strict adherence to principle one will not always be possible. As an example all charges imposed under the live animal program are based on time and recover both direct and indirect costs of the program. As a consequence a reduction in a fee imposed under this program will reduce the recovery of both direct and indirect costs. This approach however is seen as consistent with cost recovery principles since there is a direct link between service delivery and the fee imposed for that delivery.

This option provides sufficient flexibility to address specific industry issues, such as those discussed under option 1. An issue specific to those industries that operate in an environment of fluctuating export volumes is the difficulty to project activity levels and consequently apportion indirect program costs to ensure 60% cost recovery of service provision. The Live Animal Export program has addressed this issue by proposing that an income equalisation reserve (IER) fund be established. The fund will be maintained at 4% of program revenue and will assist the program balance its budget in years where there are unforeseen fluctuations in export volumes, thereby providing for constancy in fee levels.

Further, as this option includes a significant level of industry consultation in the development of a revised fee structure, equity issues are more easily identified and addressed. For example, the dairy industry considered that the abolition of registration charges and the retention of documentation charges would favour some sectors of the industry over others. This industry sought a flat reduction of 40% to all fees other than service fees. The fish export industry on the other hand, elected for a reduction in the cost of inspection services and to adjust documentation fees in the future after the industry moved from a paper export documentation system to an electronic export documentation system.

Consultation

Following the announcement of 29 August 2001, AQIS arranged for a series on meeting with established industry consultative committees. This outcome of this process is summarised below.

       AQIS/Grains Industry Consultative Committee (AGICC). The AGICC is the principle advisory forum for AQIS to consult with the grains industry, and related industries, on export certification, export market access, quarantine and other issues relevant to the grains industry. The AGICC supports the recommended option.

       Live Animal Export Consultative Group (LAEGC). The LAEGC consists of key AQIS and industry stakeholders and covers the majority of exporter clients. The LAEGC supported the recommended option, and although there was a strong push from some sectors of the industry for a reduction in charges for travel expenses, this issue was resolved favourably.

       Horticulture Exports Consultative Committee (HECC). The Horticulture Exports Consultative Committee Finance sub-committee expressed concern that the abolition of registration charges from 1 November would disadvantage those companies which had paid registration between 1 June 2001 and 31 October 2001. This concern has been addressed and the revised cost recovery arrangements in relation to registration charges will be applied retrospectively.

       The AQIS/Meat Industry Task Force was consulted in the first instance with the Australian Meat Council (AMC) and the National Meat Association of Australia (NMAA) represent the red meat industry on this committee. A further meeting was conducted with all sectors through the AQIS/Meat Industry Charging Review Committee. The peak bodies participating in this forum are the AMC, NMAA, Small Exporters of Australian Meat, Refrigerated Warehouse Transport Association, The Australian Game Meat Producers Association, Australian Ostrich Association, Australian Food Council, Kangaroo Industries Association, Sheep Meat Council of Australia and the Cattle Council of Australia. The Sheep Meat Council of Australia, Kangaroo Industries Association and The Australian Game Meat Producers Association did not attend the Charging Review Committee meeting but have been advised of the agreed recommendations.

       The revised charging arrangements were considered by the charging subcommittee of the Dairy Export Industry Consultative Committee (DEICC). The preferred option of the sub-committee was subsequently distributed to all DEICC members for comment; the recommendation has subsequently been endorsed. The DEICC members include the Australian Dairy Products Federation, Tatura Milk Industries, Murray Goulburn Cooperative, Dairy Farmers, Pauls Ltd, Bonlac Foods, Kraft Foods Ltd, Australian Dairy Corporation and State Dairy Authorities.

       The reduction options were considered by he Financial Working Group of Seafood Export Consultative Committee (SECC). The preferred option of the sub-committee was distributed to all SECC members for comment who have subsequently endorsed the recommendation. The SECC members are the Abalone Fisherman's Co-operative Ltd, Australian Seafood Industry Council, Harbourside Services Pty Ltd, Netcraft Pty Ltd, Ocean Foods Pty Ltd, NSW Oyster Farmers' Association, Austrimi Seafoods, Kailis Lobster Division, Food Factotum, Queensland Seafood Industry Association and the Tuna Boat Owners Association.

       Organic Produce Export Committee - OPEC. OPEC is the principle forum in which members of the Australian organic industry liaise with AQIS on operational, administrative and policy matters. Within this framework, OPEC considers program budgets, cost recovery options and charging appropriations. OPEC consists of nominated members from the industry, government (eg SCARM, AQIS) and non-government organisations (eg Organic Federation of Australia, IFOAM). However, in relation to financial issues, OPEC considers it appropriate that only industry organisations vote on such matters as it is these organisations who are directly involved with financial matters and AQIS.

Conclusions and Recommendations

Option 2 is seen as the best approach in determining a new fee structure that will give effect to the decision to recover 60% of the cost of providing export inspection and certification services. The following recommendations have been developed in consultation with industry, and endorsed by that industry, based on the principles described under option 2. The specific needs of industry, have been addressed in the development of the revised structure. The recommendations are as follows.

       The Live Animal Export Program recommends the reduction of all service fees by 36% with the exception of travel and overtime charges. The program also recommends establishing an IER fund that will manage an estimated over recovery of fees by 4%.

       The Grains Program recommends a 34% reduction in inspection and audit fees, a reduction in volume charges of 36% and the retention of overtime and travel charges.

       The Horticulture Export Programs recommends the abolition of registration charges, a reduction in service fees of 9% and a reduction in documentation charges of between 12% and 72%.

       The Meat Inspection Program recommends the abolition of all registration charges, a reduction in meat inspection fees of 35%, a reduction in other inspection fees of 40% and the retention of existing overtime charges.

       The Dairy Export Program recommends a flat reduction of 40% to documentation charges, registration charges and service fees.

       The Fish Export Program recommends the abolition of the quantity charge, a 40% reduction in registration charges and service fees and the retention of current documentation charges.

       The Organic and Biodynamic Program recommends a revised fee structure of $6000 per approved certifying organisation and an auditing charge of $350 per hour. The revised structure ensures the 40% reduction is fully passed on to industry.

Implementation and Review

The implementation of the recommendation requires amendment to:

       The Export Inspection and Meat (Establishment Registration Charges) Regulations 1985.

       The Export Inspection (Quantity Charge) Regulations 1985

       The Export Inspection (Service Charge) Regulations 1985

       The Export Control (Fees) Orders

Most revised fees will commence from 1 November 2001, however retrospective commencement will apply in relation to registration charges that apply to meat, poultry and game establishments and establishments that prepare, inspect or store fresh fruit, fresh vegetables, dried fruit or grain. The retrospective introduction of the revised registration charges will be of benefit to those affected because the amendments will remove or reduce a financial liability imposed on those establishments and is as a consequence of the agreement reached between AQIS and the relevant industry.

The revised fee structure will be published in the Internet. Industry has been involved in the consultation process and there is strong support for the revised fee structures. Industry consultative committees provide a mechanism for further review of the revised arrangements if required.

A graphic exists here. Use Browse to view it


[Index] [Related Items] [Search] [Download] [Help]