EXPLANATORY STATEMENT

 

Select Legislative Instrument 2009 No. 345

 

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

 

Export Inspection (Quantity Charge) Act 1985

 

Export Inspection (Quantity Charge) Amendment Regulations 2009 (No. 2)

 

The Export Inspection (Quantity Charge) Act 1985 (the Act) imposes a charge on the inspection of certain commodities intended for export. The charge is calculated based upon the quantity of the prescribed commodity for which an export permit is granted.

 

Subsection 7(1) of the Act provides that the rates of charge in respect of a prescribed commodity are the rates that are prescribed under the regulations. Subsection 7(3) sets out the rates of charge that must not be exceeded for certain commodities.

 

Section 10 of the Act provides, in part, 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 (Quantity Charge) Regulations 1985 (the Regulations) currently provide the rates of charge for prescribed commodities, for the purposes of subsection 7(1) of the Act.

 

The Export Inspection (Quantity Charge) Amendment Regulations 2009 (No. 2) (the Amendment Regulations) are part of a package of amendments that related to fees and charges associated with export related activities. The ‘package’ included amendments to the following:

1. Export Control (Fees) Orders 2001
2. Export Inspection (Establishment Registration Charges) Regulations 1985
3. Export Inspection (Quantity Charge) Regulations 1985
4. Australian Meat and Live-stock Industry (Export Licensing) Regulations 1998
5. Export Inspection and Meat Charges Collection Regulations 1985.

 

Amendments to the Export Control (Fees) Orders 2001 were made by the Minister for Agriculture, Fisheries and Forestry on 26 November 2009. Amendments to all the regulations were made on the same day as these Amendment Regulations.

 

The purpose of the Amendment Regulations is to amend the rates of charge set out in the Regulations that are applicable for the export of grain, which is a prescribed commodity.

 

The Amendment Regulations simplify the existing rates of charge for grain (currently 2.3, 7.7 and 26 cents per tonne) by providing a single rate of charge of 20 cents per tonne applicable to grain that is exported in bulk and not prepared under an arrangement. The Amendment Regulations remove charges entirely for grain prepared under arrangements (whether for export in bulk or in container system units). The last alteration made to these charges was in 2001, when the rates of charge that applied were reduced by 36 per cent. This reduction in charges was a result of the Australian Government (the Government) providing a 40 per cent contribution towards the cost of providing export inspection and certification services to the meat, grain, fish, dairy, live animal and horticulture export industries. This contribution lapsed on 30 June 2009.

 

The contribution was not equally applied to all charges. Based on advice from the various Industry Consultative Committees the contribution was directed to those areas where it was considered to generate the greatest returns for the particular industry. This 40 per cent Government contribution lapsed on 30 June 2009. The rate of charge has been amended to cover the costs of providing services associated with the inspection of bulk grain. The new rate of charge of 20 cents per tonne does not exceed the limitation of $1.00 per tonne for grain that is exported in bulk as imposed by subsection 7(3) of the Act.

 

Previously, an amendment was made to the Regulations which commenced on 1 July 2009 to support a return to full cost recovery. On 15 September 2009 the Senate passed a motion to disallow the Export Control (Fees) Amendment Orders 2009 (No. 1), the Australian Meat and Live-stock Industry (Export Licensing) Amendment Regulations 2009 (No. 1), the Export Inspection (Establishment Registration Charges) Amendment Regulations 2009 (No. 1), and the Export Inspection (Quantity Charge) Amendment Regulations 2009 (No. 1). The disallowance decision by the Senate was in line with the recommendation of the Rural and Regional Affairs and Transport References Committee inquiry into the Government’s management of the removal of the 40 per cent fee rebate for the Australian Quarantine and Inspection Service (AQIS) export certification functions.  The Committee recommended that the Senate move to disallow the export fees and charges in its report released to the Senate on 14 September 2009.

 

Following disallowance, AQIS export fees and charges immediately reverted to those that were in place prior to 1 July 2009. The disallowance of the export fees and charges did not reinstate the 40 per cent contribution which was in place prior to 1 July 2009. Consequently, significant shortfalls in revenue have been experienced by all export programs.

 

Section 48 of the Legislative Instruments Act 2003 provides that if a legislative instrument is disallowed then another legislative instrument, that is the same in substance, must not be made within six months of the disallowance unless the disallowance has been rescinded.

 

The Minister for Agriculture, Fisheries and Forestry reached an agreement with the Opposition and Greens senators to facilitate Senate passage of a $127.4 million industry reform program.  Agreement to this package enabled the Senate to reverse its previous decision from 15 September 2009 to block new export certification fees and charges to return industry to full cost recovery. On 25 November 2009 the Senate passed a rescission motion which allows an instrument that is same in substance to be made within six months of the disallowance. The Amendment Regulations support a return to full cost recovery.

 

In addition to increasing fees and charges, the Amendment Regulations also make a minor amendment to one definition.

 

AQIS commenced consultation with its Industry Consultative Committees (ICCs) following the Government’s decision to allow the 40 per cent contribution to lapse. Further to this, joint AQIS/Industry Ministerial Taskforces were also established for the fish, grain, dairy, meat, horticulture and live animal export industries. The Ministerial Taskforces were consulted regarding the revised fees and charges resulting from the impending cessation of the 40 per cent Government contribution.

 

Consultation with the grain industry was undertaken through the AQIS Grain Industry Consultative Committee (AGICC). Consultation through the AGICC ensured that all relevant industry groups were consulted. The AGICC comprises of representatives from the following key industry sectors:

·        AWB Ltd

·        ABB Grain Ltd

·        Australian Seed Federation

·        National Agricultural Commodities Marketing Association

·        Australian Oilseeds Federation

·        Sunrice

·        GrainCorp Operations Ltd

·        Australian Fodder Industry Association

·        Australian Cotton Seed Industry Association

·        Pulse Australia Ltd

·        CBH Group and Grain Pool Pty Ltd.

 

As these amendments make changes in relation to cost recovery, a Cost Recovery Impact Statement was prepared.

 

The Amendment Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Amendment Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Details of the Amendment Regulations are set out below.

 

Regulation 1 specifies the name of the Amendment Regulations as the Export Inspection (Quantity Charge) Amendment Regulations 2009 (No. 2).

 

Regulation 2 provides that the Amendment Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Regulation 3 provides that Schedule 1 amends the Export Inspection (Quantity Charge) Regulations 1985.

 

Schedule 1 – Amendments

 

Item 1 substitutes a new regulation 2 into the Principal Regulations. The effect of the insertion is to remove the term ‘certification assurance arrangement’ and replace it with the term ‘approved arrangement’. This updates the terminology used to refer to arrangements between the Department and a person who prepares a prescribed commodity for export. The substance of the definition has not been altered. The definition of the term ‘the Act’ is also replaced by the term ‘Act’ in new regulation 2. This reflects modern drafting practice and does not change the substance of the definition.

 

Item 2 amends paragraph (c) in column 2 of item 1 in Schedule 1 to the Regulations by omitting the term ‘certification assurance arrangement’ and replacing it with ‘an approved arrangement’. This reflects the amendment made to the definition of ‘certification assurance arrangement’, which updates the terminology used to refer to the arrangements (see item 1 of the Amendment Regulations).

 

Item 3 amends column 3 of Item 1 in Schedule 1 to the Regulations by increasing the rate of charge from 7.7 cents to 20 cents for each tonne or part of a tonne.

 

The rate of charge, which is payable by a person in whose name the export permit is granted, recovers the cost of services associated with inspecting bulk grains (not shipped in container system units) at flow rates at and above 400 metric tonnes per hour. Services for the inspection of bulk commodities involve, amongst other things, verifying the importing country conditions, conducting the physical inspection of the commodity, as well as completing associated inspection documentation.

 

The revised rate of charge takes into account the lapsing of the 40 per cent Government contribution and was modelled on an expected bulk export activity of
15 million tonnes for the 2009–10 financial year. The revised rate of charge has been determined on the basis of the proposed total expenses per annum to deliver the inspection service associated with inspecting 15 million tonnes of grain per annum, divided by the average number of recoverable tonnage units (hours) to conduct bulk grain inspection encompassed by two financial years 2006–07 and 2008–09.

 

The revised rate of charge also takes into account the direct and indirect costs of providing the service. The direct costs include staffing costs, accommodation costs, travel costs, capitalisation costs, as well as the cost of materials and services such as stores, computer services and services obtained on a contract basis. The indirect costs form part of general user group costs and are not easily attributed to particular activities. These include executive, financial services, personnel, registry, library and audit services and other corporate costs.

 

The revenue collected by the Grain and Plant Products Export Program for grain quantity charges in 2008-09 was $3,076,416. Of this, $1,842,165 was derived from quantity charges, while $1,234,251 was received from the 40 per cent Government contribution. The projected revenue for quantity charges for grain in 2009-10 is expected to be $3,969,024. All of this will be derived from grain quantity charges in line with the return to 100 per cent cost recovery. The figures represent an increase in total revenue of $892,608.

 

For completeness, all other fees that are applicable to the export of prescribed grain under the Export Control (Fees) Orders 2001 are payable in addition to this rate.

 

Item 4 amends Schedule 1 by omitting Items 2 and 3 of Schedule 1 to the Regulations.

 

The effect of these amendments is to remove all charges for grain prepared under an arrangement (whether shipped in bulk or in container system units). This leaves a single tonnage charge for grain that is exported in bulk.

 

In early 2008, the Government commissioned an independent review of quarantine and biosecurity arrangements to identify areas for improvement. The review was conducted by a panel chaired by Mr Roger Beale AO. The final report, One Biosecurity: A Working Partnership (September 2008), recommended a number of reforms to Australia’s biosecurity system. Recommendation 76 of the final report stated that the number of individual charges where possible, should be reduced. This change is in accordance with this recommendation.