Commonwealth Numbered Regulations - Explanatory Statements

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PRIMARY INDUSTRIES LEVIES AND CHARGES COLLECTION AMENDMENT (SEED COTTON) REGULATIONS 2017 (F2017L00296)

Explanatory Statement

Issued by Authority of the Deputy Prime Minister and Minister for Agriculture and Water Resources

Primary Industries Levies and Charges Collection Act 1991

Primary Industries Levies and Charges Collection Amendment (Seed Cotton)

Regulations 2017

Legislative Authority

The Primary Industries Levies and Charges Collection Act 1991 (the Act) authorises the collection of primary industry levies and charges imposed by various Acts. Section 30 of the Act provides that the Governor-General may make regulations not inconsistent with this Act, prescribing matters required or permitted by this Act to be prescribed; or necessary or convenient to be prescribed for carrying out or giving effect to this Act.

Purpose

The purpose of the Primary Industries Levies and Charges Collection Amendment (Seed Cotton) Regulations 2017 (the proposed Regulations) is to authorise the Australian Government through the Department of Agriculture and Water Resources (the department) to collect an excise levy or customs charge on seed cotton intended for export and establish the liability of intermediaries.

Background

The cotton industry's Research and Development (R&D), plant health and Emergency Plant Pest Response (EPPR) activities are funded by excise levies imposed on producers of cotton lint. The current excise levy imposed by the Primary Industries (Excise) Levies Act 1999 is paid against the 'natural fibrous hairs that are produced from seed cotton by separating the hairs from the seeds and not further processing those hairs'.

Exports of seed cotton, which by definition have not undergone processing to remove the fibrous hairs from the seeds at the time of export, do not attract this levy, thus creating an anomaly. Exports of seed cotton have recently become economically viable, meaning that this anomaly did not exist when the current excise levy was first imposed. Amendments through the Primary Industries (Customs) Charges Amendment (Seed Cotton) Regulations 2017 and Primary Industries (Excise) Levies Amendment (Seed Cotton) Regulations 2017 will resolve this anomaly.

Impact and Effect

The proposed Regulations will define seed cotton, who is a producer of seed cotton, and intermediary to the producer of seed cotton. The proposed Regulations will also stipulate when the excise levy or customs charge payable on seed cotton is due for payment and identify who must lodge a return. The proposed Regulations will also detail when a return must be lodged, what information must be included in a return, what records must be kept for the month in which the return is lodged and stipulate that an offence against those provisions is an offence of strict liability.

The proposed amendments will prevent the undermining of the cotton industry's research systems by ensuring all cotton producers contribute proportionately to the statutory levy scheme regardless of where primary processing (ginning) occurs. There will be no net change to the amount of levy paid by producers against the total amount of cotton they produce, or the government matching contribution paid for R&D. The proposed Regulations will also enable the maintenance of cotton research programmes. The proposed Regulations will likely have a minimal regulatory burden on cotton producers who may be required to lodge a return within 28 days after the end of the month in which seed cotton is exported, and maintain records on seed cotton harvested, bought, sold or exported to validate their return.

The inclusion of a strict liability offence for record keeping and returns submission is in line with the principles set out in 'A guide to framing Commonwealth offences, infringement notices, and enforcement powers'. This provision will be likely to enhance the effectiveness of the enforcement regime, as record keeping will be essential to ensure that the levy or charge is paid by producers and their intermediaries is at the correct rate. Strict liability for this purpose ensures that the levy or charge is collected on an equitable basis, which is a key objective of imposing a mandatory export seed cotton levy to fund industry research, development and plant health activities. The offence will be 60 penalty units, and will therefore meet the requirement that the fine does not exceed 60 penalty units for an individual. Producers and intermediaries will be advised of the record keeping requirements so they can guard against the possibility of any contravention. 

Consultation

The department liaised with Cotton Australia, Cotton Research and Development Corporation and the Office of Best Practice Regulation (OBPR) in developing the seed cotton levies. Cotton Australia, which is the peak representative body for the cotton supply chain, consulted closely with its members (including all ginners, cotton co-operatives, consultants and grower associations), and obtained unanimous support to implement a levy on cotton that is exported as seed cotton, at a rate equivalent to the existing levy on cotton lint. The department also consulted the company that indicated plans to export seed cotton and found it was satisfied with the department's proposed approach.

The department consulted OBPR to determine whether a Regulation Impact Statement (RIS) was required for the seed cotton levy amendment proposal. OBPR assessed the proposal to have minor regulatory impact, and determined a RIS was unnecessary at this time (Ref: OBPR ID 21237).

Details

Details of the Regulations is 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 is a legislative instrument for the purposes of the Legislation Act 2003.

Attachment A

Details of the Primary Industries Levies and Charges Collection Amendment (Seed Cotton) Regulations 2017

Section 1 - Name

This section provides that the name of the proposed Regulations is the Primary Industries Levies and Charges Collection Amendment (Seed Cotton) Regulations 2017.

Section 2 - Commencement

This section provides for the proposed Regulations to commence the day after the instrument is registered.

Section 3 - Authority

This section provides that the proposed Regulations is made under the Primary Industries Levies and Charges Collection Act 1991.

Section 4 - Schedules

This section provides that Primary Industries is amended as set out in the applicable items in the Schedule 1.

Schedule 1 - Amendments

Item 1 amends Regulation 8 to omit "Agriculture, Fisheries and Forestry" and substitute "Agriculture and Water Resources"

Item 2 amends Schedule 37 to insert a new part:

Part 12 Seed Cotton

Clause 12.1 provides for Part 12 to apply to seed cotton on which a levy or charge is imposed.

Clause 12.2 provides for the definitions of charge, levy and seed cotton.

Clause 12.3 provides for the definition of levy year.

Clause 12.4 provides that for the definition of a producer for the imposition of a levy, a producer is a person who owns the seed cotton immediately before it is harvested. For the imposition of a charge, a producer is a person who owns the seed cotton before it is exported.

Clause 12.5 provides for the liability of intermediaries (exporting agents) for the charge, and sets out that for the purposes of subsection 7(3) of the Collection Act, seed cotton is prescribed as a product on which charge is imposed is prescribed.

Clause 12.6 specifies when the levy or charge is due for payment.

Clause 12.7 specifies who must lodge the return.

Clause 12.8 provides for when a return must be lodge and stipulate a return for a month must be lodged within 28 days after the end of the month to which the return relates. The note will state that for offences in relation to return, section 24 of the Collection Act should be referred to.

Clause 12.9 provides for what must be included in a return.

Clause 12.10 provides for what records must be kept.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Primary Industries Levies and Charges Collection Amendment (Seed Cotton) 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 Levies and Charges Collection Amendment (Seed Cotton) Regulations 2017 will be to authorise the Department of Agriculture and Water Resources to collect an excise levy or customs charge on seed cotton intended for export and establish the liability of intermediaries.

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