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PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2001 (NO. 8) 2001 NO. 234
EXPLANATORY STATEMENTSTATUTORY RULES 2001 No. 234
Issued by the Authority of the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry
Primary Industries (Excise) Levies Act 1999
Primary Industries (Customs) Charges Act 1999
Primary Industries Levies and Charges Collection Act 1991
Primary Industries (Excise) Levies Amendment Regulations 2001 (No. 8)
Primary Industries (Customs) Charges Amendment Regulations 2001 (No. 6)
Primary Industries Levies and Charges Collection Amendment Regulations 2001 (No. 5)
Section 8 of the Primary Industries (Excise) Levies Act 1999 (the Excise Act), Section 8 of the Primary Industries (Customs) Charges Act 1999 (the Charges Act), and Section 30 of the Primary Industries Levies and Charges Collection Act 1991 (the Collection Act) each provides that the Governor-General may make regulations prescribing matters required or permitted by that Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to that Act.
Subclause 14 (2) of Schedule 27 to the Excise Act provides that if there is a body designated in relation to a particular product, and before the Governor-General makes regulations, the Minister must take into consideration any relevant recommendation made to the Minister by the designated industry body for farmed prawns. The Australian Prawn Farmers' Association (APFA) is the designated industry body for fanned prawns.
Subclause 13 (2) of Schedule 14 to the Charges Act provides that if there is a body designated in relation to a particular product, and before the Governor-General makes regulations, the Minister must take into consideration any relevant recommendation made to the Minister by the designated industry body for fanned prawns. The Australian Prawn Farmers' Association (APFA) is the designated industry body for farmed prawns.
The purpose of the regulations is to implement a compulsory levy (including an export charge) scheme to fund research and development (R&D) in the fanned prawn sector. The Primary Industries (Excise) Levies Amendment Regulations 2001 (No. 8), (the Excise regulations), and the Primary Industries (Customs) Charges Amendment Regulations 2001 (No. 6), (the Charges regulations), respectively set the initial rate of levy and export charge at 3.64 cents per kilogram of whole fanned prawns (i.e. before the shell or any part of the skeleton has been removed). The Primary Industries Levies, Charges and Collection Amendment Regulations 2001 (No. 5), (the Collection regulations), provide the framework for the collection of the levy and export charge. The moneys will be managed by the Fisheries Research and Development Corporation (FRDC).
APFA undertook wide industry consultation to find out how to maintain funding for R&D within their industry. Voluntary arrangements failed due to their inequity. There was no known way to prevent non-contributing participants from benefiting from private or voluntary funded R&D in the farmed prawn industry. There has to-date been a lack of an industry mechanism to collect cash contributions from industry to invest in R&D. This is partly due to the disparate and fragmented nature of the industry across various States and Northern Territory.
It was thus realised that a compulsory levy system was the only practical way to overcome the bulk of the problems. The Australian prawn farming sector and government identified the need for a concerted national approach to R&D investment. APFA, in collaboration with FRDC, developed a submission for a national, compulsory levy scheme. This submission, after satisfying the Government's general levy principles, was approved as the basis for commencing the implementation phase for the new levy scheme.
The format of the new levy on farmed prawns follows a similar pattern to other rural levies. The regulations provide that:
1. A levy is to be imposed on farmed prawns that are:
(a) delivered to another person other than for storage; or
(b) sold by the producer; or
(c) used by the producer in the production of other goods; and
2. An export charge will apply on farmed prawns exported from Australia, after the commencement of the regulations (i.e. 1 October 2001), provided that there was no levy previously paid on them; and
3. The levy will be paid by the producer and the export charge by the exporter.
The scheme is expected to raise $100,000 per year for R&D purposes. The Commonwealth will match eligible expenditure on a $1 for $1 basis, making some $200,000 available for R&D annually. A separate set of regulations has been prepared to facilitate this process.
The Office of Regulation Review was consulted in the process of preparing the Regulations. A Regulation Impact Statement is attached.
Details of the regulations, namely, the Excise regulations, the Charges regulations and the Collection regulations, are contained in attachments 1, 2 and 3 respectively.
The regulations commence on 1 October 2001.
ATTACHMENT 1
PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2001 (No. 8).
Regulation 1 provides for the name of the regulations to be the Primary Industries (Excise) Levies Amendment Regulations 2001 (No. 8).
Regulation 2 provides for the regulations to commence on 1 October 2001.
Regulation 3 provides that Schedule 1 amends the Primary Industries (Excise) Levies Regulations 1999.
SCHEDULE 1 AMENDMENTS
Item 1 amends clause 5A of the Reader's guide to include reference to farmed prawns.
Item 2 amends clause 9A of the Reader's guide to include reference to farmed prawns.
Item 3 inserts after Part 2 of Schedule 27 of the Primary Industries (Excise) Levies Regulations 1999 a new Part 3 for farmed prawns.
Clause 3.1 provides a definition of farmed prawns and includes a table (Table 3.1) of the various species of farmed prawns to be levied.
Clause 3.2 provides for the imposition of levy on farmed prawns. Levy is to be imposed on farmed prawns that are:
(a) delivered to another person other than for storage; or
(b) sold by the producer; or
(c) used by the producer in the production of other goods.
Clause 3.3 provides that the initial operative rate of levy is 3.64 cents per kilogram.
Clause 3.4 provides that the producer will pay the levy on farmed prawns. The producer is to be the person who owns the prawns immediately after they are harvested (i.e. after they are removed from the pond).
ATTACHMENT 2
PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT REGULATIONS 2001 (No. 6)
Regulation 1 provides for the name of the regulations to be the Primary Industries (Customs) Charges Amendment Regulations 2001 (No. 6)
Regulation 2 provides for the regulations to commence on 1 October 2001.
Regulation 3 provides that Schedule 1 amends the Primary Industries (Customs) Charges Regulations 2000.
SCHEDULE 1 AMENDMENTS
Item 1 amends clause 5A of the Reader's guide to include reference to farmed prawns.
Item 2 amends clause 9A of the Reader's guide to include reference to farmed prawns.
Item 3 inserts after Part 1 of Schedule 14 of the Primary Industries (Customs) Charges Regulations 2000 a new Part 2 for farmed prawns.
Clause 3.1 provides the definition of farmed prawns. The term "farmed prawns" will have the same meaning as in the Excise Levies Regulations.
Clause 3.2 provides for the imposition of the charge.
(a) charge is imposed on farmed prawns that are exported from Australia after the commencement of the new Part 2 (i.e. 1 October 2001); but
(b) charge is not payable if levy has been previously paid on the prawns.
Clause 3.3 provides that the initial operative rate of charge is 3.64 cents per kilogram.
Clause 3.4 provides that the producer will pay the charge on farmed prawns exported from Australia. The producer (for purposes of the charge) is the person who exports the prawns from Australia. It is intended that this could also be the prawn farmer, as it is (s)he who is to be liable for the charge when they export farmed prawns that have not had levy previously paid on them. The Collection Regulations will allow an "exporting agent" (who facilitates farmed prawn exports for the prawn farmer) to collect the charge and pay it to the Commonwealth for the producer.
ATTACHMENT 3
PRIMARY INDUSTRIES LEVIES AND CHARGES COLLECTION AMENDMENT REGULATIONS 2001 (No. 5)
Regulation 1 provides for the name of the regulations to be the Primary Industries Levies and Charges Collection Amendment Regulations 2001 (No. 5).
Regulation 2 provides for the regulations to commence on 1 October 2001.
Regulation 3 provides that Schedule 1 amends the Primary Industries Levies and Charges Collection Regulations 1991.
SCHEDULE 1 AMENDMENTS
Item 1 amends clause 7A of the Reader's guide to include reference to farmed prawns.
Item 2 amends clause 10A of the Reader's guide to include reference to farmed prawns.
Item 3 inserts after Part 2 of Schedule 37 of the Primary Industries Levies and Charges Collection Regulations 1991 a new Part 3 for farmed prawns.
Clause 3.1 provides that the new Part 3 applies to farmed prawns.
Clause 3.2 inserts definitions of charge, levy and fanned prawns for use in the new part.
Clause 3.3 provides that a levy year is a "financial year". That is, the period from July to 30 June.
Clause 3.4 provides for who is a producer. The producer is to be:
(a) for domestic dealings: the person who owns the farmed prawns immediately they are harvested (i.e. taken from the pond); and
(b) for exports: the exporter. It is intended that this could also be the prawn fanner, as it is (s)he who will be liable for the charge when they export farmed prawns that have not had levy previously paid on them.
Subclause 3.5 (1) provides for farmed prawns to be products to which subsection 7(3) of the Collection Act applies. Subsection 7(3) of the Collection Act provides for an "exporting agent" (who facilitates farmed prawn exports for the prawn farmer) to collect the charge and pay it to the Commonwealth for the producer.
Subclause 3.5 (2) provides that section 7 of the Collection Act does not apply to buying agents, selling agents, first purchasers, receivers and processors in respect of farmed prawns. This is to remove any doubt that the intention is that it is the 'producer' who is liable to pay the charge or levy. Only in the case of exports, where a prawn fanner needs to utilise the services of an exporting agent, would an intermediary become liable for collection and payment of charge to the Commonwealth for the producer.
Clause 3.6 provides who must lodge a quarterly return. The following persons are included: - a producer (the prawn farmer), a person who exports farmed prawns (the exporter/producer), and the exporting agent who exports for the producer. (See also clause 3.4 for who is a producer).
• If a person has applied for, and received notice of the granting of, an exemption or a person has had a previous levy year's exemption extended/renewed, or if the Secretary is still contemplating his/her decision whether or not to continue a person's exemption, then that person may lodge an annual return for that levy year in lieu of quarterly returns.
• Note: that the exemption option is intended as an administrative privilege granted by the Secretary and it should not be implied that it is to be automatic. If a person were not granted an exemption, they would still have to lodge quarterly returns and thus be at no disadvantage to other levy payers. (See also clauses 3.12 to 3.16 for conditions relating to the exemption from lodging quarterly returns).
Clause 3.7 provides for when charge or levy is due for payment for people who lodge quarterly returns. The due date for payment of charge or levy is linked to the date that the return is to be lodged. (See also Clause 3.8). The note gives a reminder that section 15 of the Collection Act provides for penalties for late payment of levy or charges to apply.
Clause 3.8 sets the timing for lodgement of quarterly returns as being within 28 days after the end of the quarter to which it relates. For example a return for the quarter ended 31 December 2001 must be lodged before 28 January 2002. (See also clause 3.16 for requirements if an exemption is not granted or continued).
Clause 3.9 provides for who must lodge an annual return. Only persons who are exempt from the obligation to lodge quarterly returns must lodge annual returns. (See also clause 3.16 for requirements if an exemption is not granted or continued).
Clause 3.10 provides for when charge or levy is due for payment for people who lodge annual returns. The due date for payment of charge or levy is linked to the date that the return is to be lodged. (See also Clause 3.11).
Clause 3.11 provides that an annual return must be lodged on or before 28 August each year. For example: - for the levy year 1 July 2001 to 30 June 2002, the annual return must be lodged by 28 August 2002.
Clause 3.12 provides who may apply for exemption from the obligation to lodge quarterly returns and instead lodge an annual return for that levy year. Only if the person believes, on reasonable grounds, that the total weight of farmed prawns dealt with or will be dealt with, and on which charge or levy is payable, is less than 10,000 kilograms (i.e. 10 tonnes) they may apply for exemption.
Clause 3.13 provides the format for the application for exemption from lodging quarterly returns.
Clause 3.14 provides when and how the Secretary determines an application for, or refusal of, an exemption from lodging quarterly returns.
Clause 3.15 provides when and how the Secretary must determine whether or not to continue an exemption from lodging quarterly returns.
Clause 3.16 provides when a person must resume lodging quarterly returns, if an exemption from lodging quarterly returns is not granted or continued. If a quarter ends just before a person receives notice then the next return must be within 28 days of receiving the notice. In other cases, the return must be lodged within 28 days of the end of the quarter. (See also clause 3.8 for comparison of normal lodgement time).
Clause 3.17 sets out the requirements to be included in returns lodged by producers.
Clause 3.18 sets out the requirements to be included in returns lodged by exporting agents.
Clause 3.19 sets out the requirements for record keeping by producers. A penalty of 10 penalty units (as at 1 August 2001 this equates to $1100) applies for a breach of this provision.
Clause 3.20 sets out the requirements for record keeping by exporting agents. A penalty of 10 penalty units (as at 1 August 2001 this equates to $1100) applies for a breach of this provision.
Clause 3.21 sets out the personal details to be made available in returns and records. The circumstances where personal details are required to be maintained are for:
(1) applications for exemption from the obligation to lodge quarterly returns (clause 3.13);
(2) lodgement of returns (annual or quarterly) (clause 3.17), and
(3) records (clauses 3.19 and 3.20).
Regulation Impact Statement for a National Statutory Research and Development (R&D) Levy for the Australian Prawn Farming Industry RIS ID 2164
Background
The prawn farming industry is one of the most advanced aquaculture industries in Australia. The industry has around 45 active prawn farms in Queensland, New South Wales, Western Australia and the Northern Territory, serviced by 8 feed suppliers. Queensland has the largest proportion of ponds at 85% with NSW at 10% and the NT and WA combined, being 5%. Gross value of production at farm-gate (GVP) was around $50 million in 1999/2000. The industry is growing at a compound rate of approximately 12% per year. GVP is expected to reach $200 million by 2010. The industry currently provides some 600 direct jobs and 1800 indirect jobs.
Without a comprehensive research program the industry will not be able to develop further, nor will be able to compete with improved overseas technology. To this end the industry has now confirmed its intention to more actively contribute to, and manage it's R&D efforts. It has decided to shift the focus to a broader range of R&D projects that cover the whole supply chain, large and small enterprises, with improved portfolio balance between scientific research and development projects. This strategy will enable the industry to more rapidly fulfil its potential as a valuable and viable contributor to the Australian food industry.
The industry has to this end proposed an industry based levy payable by all active farming enterprises, similar to other rural industries. Current industry contributions to R&D are voluntary.
Collection of an R&D levy will enable the prawn farming industry to maximise the amount of funding it can leverage from the Commonwealth Government. As stipulated in the Primary Industries and Energy Development Act 1989 (PIERD) Act, the Commonwealth Government, provides:
• unmatched funds equivalent to 0.5 per cent of the average gross value of Australian fisheries (including aquaculture) production for the three preceding years (AGVP); and
• matches contributions by state, territory and Commonwealth fishers and aquaculturists up to a maximum of 0.25 per cent of AGVP.
Voluntary or mandatory collection of R&D funds will attract matching Commonwealth funds.
Problem
To date, prawn farming R&D has been funded through voluntary contributions from APFA and State, Northern Territory and Commonwealth Governments. APFA contributes around $5,000 per year to the FRDC that is matched dollar-for-dollar by the Commonwealth Government and spent on public good research projects. Individual farmers also undertake and fund R&D activities on their farms on an ad hoc basis. In some cases they may also collaborate or jointlyfund projects with Commonwealth Government and State/Territory research agencies.
State, Northern Territory and Commonwealth Governments have long been critical of major aquaculture industries, such as prawn farming, for not increasing their contributions to R&D and at least matching government contributions. The current voluntary contributions by industry fall well short of providing adequate funding for R&D with the result that industry is forced to rely heavily on R&D funding from governments to undertake public good research.
As long as State, Northern Territory and Commonwealth Governments continue to support prawn farming as a developing and growing primary industry then they will be prepared to contribute to fund R&D. However there is no guarantee that this situation will continue indefinitely. Changes in the economy or government policies in all or some jurisdictions may well see a reduction in government funding of prawn farming R&D.
Prawn farming is a relatively new primary industry having only begun in the early 1980's. There is still much that industry needs to find out to improve farmed prawn production and competitiveness.
For example:
• the industry has been unable due to technical problems, to breed Australian prawn species in captivity, instead they continue to rely on broodstock from wild-fisheries;
• new Commonwealth laws relating to ecologically sustainable development have put considerable pressure on prawn farmers to develop new systems and technologies to optimise feed use and reduce effluent outflow into ecologically sensitive environments such as the Great Barrier Reef Marine Park; and
• possible introduction of exotic diseases from overseas threatens to undermine the industries growth and new methods for disease detection, emergency response and treatment need to be researched and developed.
The current voluntary and ad hoc contributions by APFA and individual prawn farmers fall well short of meeting the industry's R&D needs identified above.
The initial levy rate proposed, of 3.64 cents per kg sold ex-farm gate, allows a collective industry contribution of 0. 19% of GVP (estimated for 2000/01) specifically for R&D purposes. Under the matched funding arrangements outlined previously, approximately $200,000 will be available for R&D, comprising $100,000 from levies and $100,000 from matching Commonwealth Government funds.
Increased funding of R&D will enable the closing of the life-cycle for Australian prawn farms, reducing the prawn farming industries demand for broodstock and reducing competition with the wild-prawn fishing industry over access to the wild prawn stocks.
Government action is required because of the failure of the industry to adequately contribute to R&D due to a number of factors. There has to-date been a lack of industry and government mechanisms to collect cash contributions from industry to invest in R&D. This is partly due to:
• The disparate and fragmented nature of the industry across various States and the Northern Territory. Prior to seeking a statutory levy for R&D, the APFA made a substantial effort to encourage greater industry contribution to a voluntary levy however it lacked the mechanisms and framework to increase member contributions.
• A small number of industry participants who are not willing to contribute to funding R&D and who in turn discourage others from contributing to R&D. There is little scope to limit R&D outcomes to only those who are willing to contribute. Leakage of research outcomes inevitably occurs through word of mouth and poaching of key staff. In many cases, such as R&D for disease prevention and ecologically sustainable development, protection of research outcomes is counter-productive to encouraging further research and overall industry development. It can also exclude others who may have something to contribute. This is not to say that some private R&D cannot be undertaken and the results protected by individual businesses. However individual businesses are rarely able to undertake large R&D projects on their own and most are, understandably, unwilling to be the sole providers of public good R&D.
Objective(s) To implement a national approach to R&D investment for the Australian prawn farming sector.
The aim of the proposed scheme is to provide a process for the collection and administration of funds from the national prawn farming industry for R&D.
The following Acts are relevant to enabling the collection of funds from industry and expenditure on R&D. Primary Industries (Excise) Levies Act 1999 (PIELA) Primary Industries Levies and Charges Collection Act 1991 (PILCC) Primary Industries (Customs) Charges Act 1999 (PICCA) Primary Industries and Energy Development Act 1989 (PIERD)
Options for Analysis
| Option
|
Description
|
| Option
A Existing situation
|
Voluntary
collection of national funds for R&D by the prawn farming industry body APFA
|
| Option
B Collection by States and NT
|
Compulsory
collection of national R&D funds by States and the NT. States/Territories.
|
| Option
C Proposed Regulation
|
Statutory
collection of a national R&D levy by the Commonwealth Government
|
Impact Analysis (costs and benefits) of each option
Option A current situation
Benefits
Industry currently provides $5000 for R&D through voluntary contributions with matching funds from the Commonwealth, this provides approximately $ 10,000 for R&D. Other contributions, in kind and cash, may be made on an ad-hoc basis. Voluntary contributions deliver limited public benefits permitting industry cooperation with existing Sate and Commonwealth environmental management research. Improved environmental management systems deliver a cleaner environment for public use and recreation as well as the long term sustainability of public resources. Limited benefits also accrue to the prawn farming industry through improved prawn health, husbandry, feed manufacture and pond management practices improving the internationally competitiveness of the Australian prawn industry.
Costs
For reasons discussed above, this arrangement has been demonstrated as delivering less cost-effective outcome for industry, governments and the community. Industry has recognised that to remain internationally competitive with viable, efficient enterprises, and to meet and exceed community expectations regarding the sustainable use of resources, it must have a comprehensive and professionally managed R&D portfolio with a guaranteed, viable source of funding.
Option B - Statutory collection of national R&D funds by States and the Northern Territory.
Under State and Northern Territory fisheries and aquaculture legislation, States and the Northern Territory can compulsorily collect funds from industry through annual aquaculture licence fees. Under the Australian Constitution they cannot impose levies or charges (ie duties of excise or of customs) on industry production.
Benefits
• Compulsorily collecting funds from industry through annual licence fees ensures that all participants in the prawn farming industry, governments and community can share and build on the outcomes of prawn fanning R&D.
• It will bring funding of R&D for the farmed prawn industry in line with similar levels of funding currently being contributed by the wild-prawn fishing industry.
• Compulsorily collecting funds from industry through annual licence fees will ensure all prawn farmers contribute financially to the industries future and public benefits in respect of increased industry contribution to regional economies and reduced negative impacts on the environment. This will deliver increased funding for R&D leading to an increased capacity by the industry to improve its international competitiveness by undertaking those projects that they are currently unable to fund with existing voluntary contributions. Similarly it will allow additional research to be undertaken on improving the environmental sustainability of the industry and a cleaner public environment.
• Long-term commitment by industry and governments to R&D funding for prawn farming and encourage strategic planning of the industry's R&D needs.
• States and the Northern Territory have in place mechanisms for collecting funds (ie fees for service) through annual licence fees from the aquaculture industry.
Costs
• States and territories are prevented under section 90 of the Australian Constitution from imposing duties of customs or duties of excise (ie export charges or a levy on farmed prawns).
• If the States were to collect funds for R&D then it is probable that industry would be confronted with 8 different collection methods leading to inefficiency and duplicated costs. For producers operating across jurisdictions, there could be increased compliance costs.
• Disagreements are likely to occur between State/Northern Territory Governments and prawn fanners in each jurisdiction over R&D needs and priorities. This may lead to duplication and inefficiency in R&D effort.
• Any R&D funding cannot be collected by levying production. Consequently less effective and equitable mechanisms must be used to collect R&D funds.
• There is the real possibility that some State and/or Northern Territory Governments may decide not to collect funding for R&D through annual licence fees. For example the 1999 industry survey on a proposed national R&D levy found that the small number of prawn farmers in some jurisdictions were opposed to any compulsory or voluntary R&D levy. Prawn fanners opposed to collection of funding for R&D through licence fees could exert considerable pressure on their government representatives to oppose the collection of funding for R&D through licence fees.
• Each State and Northern Territory jurisdiction with a prawn farming industry would have to amend their fisheries and aquaculture regulations and licences to set out new requirements for collection of funding for R&D.
• While increased R&D spending by virtue of a compulsory R&D levy will increase the competitiveness of Australian prawn farmers. In 1999/2000 the volume of farmed prawn production comprised only 11.4% of total Australian prawn production from all sources. At this level, the farmed prawn industry is unlikely to have a major impact on domestic prawn prices or put pressure on wild-stocks. Issues such as world production and environmental sustainability are the dominant factors in determining domestic prawn pricing and future of wild fisheries management.
Option C - Statutory collection of a national R&D levy by the Commonwealth Government
Under this option, the Commonwealth Government would compulsorily collect an R&D levy from all prawn fanners. The initial levy rate proposed is 3.64 cents per kg sold ex farm gate allows a collective industry contribution of 0. 19% of GVP (estimated for 2000/01) specifically for R&D purposes. Under the matched funding arrangements outlined previously, approximately $200,000 will be available for R&D, comprising $ 100,000 from levies and $100,000 from matching Commonwealth Government funds.
Benefits
A statutory levy, will according to industry provide the following benefits to the Australian prawn farm industry:
• Administratively and more cost effective than B as there will be only one point of collection rather than 8
• A national approach to R&D investment for the Australian prawn farming sector.
• The foundation for a stable, profitable and dynamic industry due to ongoing industry growth
• A planned approach to industry development
• A cohesive national industry managing shared R&D initiatives
• New technology will be available to all industry members resulting in increased adoption
• The capacity to commission long-term projects confidant that the ongoing funding required would be available for the life of the project.
• Industry's research and development direction would be set by the entire industry
• that all participants in the prawn fanning industry, governments and community can share and build on the outcomes of prawn farming R&D.
In addition a national levy will:
• Bring funding of R&D for the fanned prawn industry in line with similar levels of funding currently being contributed by the wild-prawn fishing industry. R&D funding collected from the wild-prawn fishing industry is also being used to leverage additional R&D funding from the Commonwealth Government under the PIERD Act.
• There is an existing mechanism, the Levies Management Services, AFFA, for collecting levies from primary industries. The costs of levy collection are recovered from industry.
• Given the size of the industry (approx 60 active participants) it is more economically viable for the Commonwealth to collect funds.
Costs
• Levies and Revenue Service, AFFA, collection fee is estimated at $4,000.00/year. This will be recovered from industry through a charge to FRDC on gross collections. There would be no additional cost on the FRDC from managing the statutory R&D levy as a pre-existing framework exists to manage voluntary contributions.
• Introduction of a statutory levy through the PIERD Act will require a minor in-kind cost to the Commonwealth Government.
• $ 100,000 in matching contributions from the Commonwealth
• While increased R&D spending by virtue of a compulsory R&D levy will increase the competitiveness of Australian prawn farmers. In 1999/2000 the volume of fanned prawn production comprised only 11.4% of total Australian prawn production from all sources. At this level, the farmed prawn industry is unlikely to have a major impact on domestic prawn prices or put pressure on wild-stocks. Issues such as world production and environmental sustainability are the dominant factors in determining domestic prawn pricing and future of wild fisheries management.
Consultation
Consultants, Macarthur Agribusiness, were engaged by APFA to identify options for increasing industry funding for R&D.
The industry is represented by the Australian Prawn Farmers Association (APFA). APFA members comprise 95% of total industry participants and 98% of fanned prawn production. APFA fully supports a national statutory R&D levy for the prawn fanning industry to be administered through the Fisheries Research and Development Corporation (FRDC).
Three industry surveys were conducted in 1998, 1999, and 2000 to determine industry response to the intended implementation of a national statutory R&D levy. The national industry surveys addressed the issues of a statutory R&D levy, its implementation mechanisms, and collection rate. All surveys demonstrated strong industry support for a statutory R&D levy.
For the major survey undertaken in 1999, surveys were sent to 57 known industry participants and affiliates, both active and inactive.
Of the 43 responses received:
• 33 (76%) were licensed prawn farmers,
• 31 (72%) were currently in production, and
• 6 (14%) were input suppliers.
Of the 43 responses, 35 (81%) supported a levy and 8 (19%) did not.
Note: A follow-up survey undertaken in 2000 found that industry views had not changed since the 1999 survey.
The R&D levy and outcomes of the 1999 survey were discussed at length at the APFA Annual General Meeting on 30 July 2000. APFA members agreed that government could no longer be expected to invest in the industry, if the industry was not willing to invest in itself. The APFA identified support for a levy based on annual prawn production tonnage. A levy of 3.64 cents per kilo was negotiated and agreed.
Conclusion
Compulsorily collecting funds from industry through annual licence fees will ensure all prawn farmers contribute financially to the industries future and public benefits in respect of increased industry contribution to regional economies and reduced negative impacts on the environment. This will deliver increased funding for R&D leading to an increased capacity by the industry to improve its international competitiveness by undertaking those projects that they are currently unable to fund with existing voluntary contributions. Similarly it will allow additional research to be undertaken on improving the environmental sustainability of the industry and a cleaner public environment
Options B and C are favoured by industry and the Commonwealth Government over Option A as the current voluntary contributions by the prawn farming industry are inadequate to meet the industries, governments and communities prawn farming R&D needs.
Compulsory collection of R&D funds would also mean:
• everyone contributes
• a consistent source of funds will be available for R&D
• increased gearing of industry funds
• combined resources will increase the effectiveness of R&D
• targeted and relevant research
• optimum utilisation of available matching Commonwealth contributions for R&D.
Prior attempts by the prawn industry to increase voluntary contributions have failed, largely because the industry has failed to identify a suitable and equitable mechanism for collecting, managing and disbursing R&D funds.
Option C is favoured over option B because this option will be more cost effective, as there will be only only one point of collection rather than 8, and will provide a nationally consistent approach to collecting an R&D levy for the farmed prawn section. The States/Territories lack a clear, transparent and equitable process for collecting and managing R&D funds from industry. Only minor amendments to existing Commonwealth legislation are required to introduce a statutory national R&D levy for farmed prawns.
Implementation
Levies and Revenue Service AFFA, (LRS), has been in the forefront of the discussions with Industry and within AFFA. LRS will be responsible for levy collections and compliance matters. APFA is keen to see the levy implemented by 1 October 2001.
The FRDC will be responsible for administering funds collected under the national R&D levy. Once levy collection is implemented, APFA and FRDC will put in place a consultative process to identify R&D priorities and approve projects. The FRDC. represents an existing, welldeveloped and efficient mechanism for administering R&D funds. The FRDC is a rural research and development corporation that was set up within the Commonwealth Government portfolio of Agriculture, Fisheries and Forestry - Australia (AFFA). It was formed as a statutory corporation on 2 July 1991 under the provisions of the Primary Industries and Energy Research and Development (PIERD) Act, it is a national organisation responsible to its stakeholders (fishing and aquaculture industry, Commonwealth and State/Territory Governments and the public) for:
• planning, funding and managing fisheries and aquaculture R&D programs; and
• facilitating the dissemination, adoption and commercialisation of the results of fisheries and aquaculture R&D,
The FRDC operates under the Commonwealth Authorities and Companies Act 1997, which applies high standards of accountability while providing for the independence required by the FRDC's focus on the needs of industry.
To date the prawn farming industry has missed out on obtaining the full benefits of the R&D leveraging provisions of the PIERD Act because it has fallen well short of contributing 0.25% of AGVP. If prawn fanner contributions to R&D are increased via some form of compulsory State/Territory or Commonwealth collection of funds then overall funding for prawn farming R&D will increase significantly.
Under the Commonwealth Authorities and Companies Act 1997, both APFA and FRDC will be accountable to levy payers and the Commonwealth for funds invested.