Commonwealth Numbered Regulations - Explanatory Statements

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PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2003 (NO. 8) 2003 NO. 139

STATUTORY RULES 2003 No. 139

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 2003 (No. 8)
Primary Industries (Customs) Charges Amendment Regulations 2003 (No. 6)
Primary Industries Levies and Charges Collection Amendment Regulations 2003 (No. 4)

Section 8 of the Primary Industries (Excise) Levies Act 1999 (the Levies 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) provide that the Governor-General may make regulations prescribing matters required or permitted by those Acts to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to each Act.

The purpose of the regulations is to implement a marketing and research and development (R&D) levy and export charge scheme for the mango industry. The levy and export charge will be imposed on mangoes directed to fresh domestic or fresh export markets and payable by mango growers or exporters.

Horticulture Australia Limited (HAL) is the relevant industry services body. It co-ordinates marketing and R&D programs for many horticultural industries and will be the body to manage moneys for the levy and export charge scheme for the mango industry. HAL is funded by statutory levies and export charges, voluntary contributions and Commonwealth Government matching funding for eligible R&D expenditure. This matching funding is provided under the Horticultural Marketing and Research and Development Act 2000.

Subclause 4(1) of Schedule 15 of the Levies Act and subclause 3(3) of Schedule 10 of the Charges Act provide that regulations may fix rates of levy and export charge, respectively, for marketing purposes.

Subclause 4(3) of Schedule 15 of the Levies Act and subclause 3(5) of Schedule 10 of the Charges Act provide that regulations may fix rates of levy and export charge, respectively, for R&D purposes.

Subclause 6(4) of Schedule 15 of the Levies Act and subclause 5(3) of Schedule 10 of the Charges Act provide that before the Governor-General makes regulations to fix rates of levy and export charge respectively for marketing, the Minister must take into consideration any relevant recommendations made to the Minister by HAL.

Subclause 6(6) of Schedule 15 of the Levies Act and subclause 5(5) of Schedule 10 of the Charges Act provide that before the Governor-General makes regulations to fix rates of levy and export charge respectively for R&D, the Minister must take into consideration any relevant recommendations made to the Minister by HAL.

Subclause 6(7) of Schedule 15 of the Levies Act and subclause 5(6) of Schedule 10 of the Charges Act respectively require HAL to consult with the body that is the eligible industry body for the relevant horticultural product before recommending rates of levy and export charge for marketing to the Minister.

Subclause 6(8) of Schedule 15 of the Levies Act and subclause 5(7) of Schedule 10 of the Charges Act respectively require HAL to consult with the body that is the eligible industry body for the relevant horticultural product before recommending rates of levy and export charge for R&D to the Minister.

Subclause 6(9) of Schedule 15 of the Levies Act and subclause 5(8) of Schedule 10 of the Charges Act require that a recommendation made by HAL to the Minister be accompanied by a written statement of the views of the industry body consulted in relation to the recommendation.

The regulations prescribe the Australian Mango Industry Association (AMIA) as the eligible industry body with which HAL must consult in relation to mangoes. HAL recommended the initial operative rates of levy and export charge to the Minister after consultation with the AMIA. The regulations give effect to the recommendations of HAL, which are consistent with the mango industry's request.

Subclause 2(4) of Schedule 15 of the Levies Act provides that regulations may exempt certain horticultural products from levy. The regulations exempt mangoes directed to processing from levy.

The Collection Act specifies no conditions that need to be met before the power to make regulations may be exercised.

Schedule 22 of the Primary Industries Levies and Charges Collection Regulations 1991, sets out the details for payment of levy and export charge, provision of returns by liable persons and other collection matters for various leviable horticultural products.

The regulations: -

·       prescribe AMIA as the eligible industry body to be consulted by HAL before making recommendations to the Minister about levy and export charge;

·       impose a statutory marketing and R&D levy and export charge on mangoes directed for sale on fresh domestic or fresh export markets;

·       set an initial operative marketing levy and export charge of 1 cent per kilogram(/kg) and an initial operative R&D levy and export charge of 0.75 of a cent/kg on mangoes, payable at first point of sale. The moneys raised will to go to HAL to fund marketing and R&D. The Commonwealth will match eligible expenditure by HAL on R&D on a dollar for dollar basis; and

·       provide for the manner of payment of levy and export charge, the provision of returns by persons who become liable to pay the levy and export charge and the keeping of records.

The Office of Regulation Review was consulted in the preparation of the Regulations. A Regulation Impact Statement is attached, as annex "A".

Details of the regulations are set out in the Attachment.

The regulations commence on 1 July 2003.

0302872A
0302873A
0302874A

ATTACHMENT

PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2003 (No. 8)

Regulation 1 provides for the name of the regulations to be the Primary Industries (Excise) Levies Amendment Regulations 2003 (No. 8).

Regulation 2 provides for the commencement date to be 1 July 2003.

Regulation 3 provides that Schedule 1 amends the Primary Industries (Excise) Levies Regulations 1999 (the Excise Levies Regulations).

SCHEDULE 1       AMENDMENT

Item 1 inserts a new Part 21 about mangoes into Schedule 15 of the Excise Levies Regulations.

PART 21        MANGOES

Clause 21.1 provides that mangoes are leviable horticultural products for the purposes of the definition in clause 1 of Schedule 15 to the Levies Act.

Clause 21.2 specifies that mangoes are exempt from levy where:

(a) a producer sells mangoes by retail sale in a levy year and the total amount of levy that the producer would be liable to pay in a year on mangoes sold by retail sale would be less than $100;

·       Note provides a cross-reference to the definition of retail sale.

or

(b) the mangoes are directed to processing.

·       Note 1 provides a cross-reference to the definition of operations that are not considered to be processes in clause 21.4 of Schedule 22 of the Primary Industries Levies and Charges Collection Amendment Regulations 2003 (No. 4).

·       Note 2 states levy is not imposed on mangoes exported.

Clause 21.3 sets an initial operative rate of marketing levy on mangoes of 1 cent per kilogram(/kg).

·       Note states levy is not imposed on mangoes exported.

Clause 21.4 sets an initial operative rate of R&D levy on mangoes of 0.75 of a cent/kg.

·       Note states levy is not imposed on mangoes exported.

Clause 21.5 provides that the Australian Mango Industry Association (ABN 50 713 775 301) is the eligible industry body for mangoes.

PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT REGULATIONS 2003 (No. 6)

Regulation 1 provides for the name of the regulations to be the Primary Industries (Customs) Charges Amendment Regulations 2003 (No. 6).

Regulation 2 provides for the commencement date to be 1 July 2003.

Regulation 3 provides that Schedule 1 amends the Primary Industries (Customs) Charges Regulations 2000 (the Customs Charges Regulations).

SCHEDULE 1       AMENDMENT

Item 1 inserts a new Part 21 about mangoes into Schedule 10 of the Customs Charges Regulations.

PART 21        MANGOES

Clause 21.1 provides that mangoes are chargeable horticultural products for the purposes of the definition in clause 1 of Schedule 10 to the Charges Act.

Note provides that clause 21.2 is intentionally not used.

Clause 21.3 sets an initial operative rate of marketing charge on mangoes of 1 cent/kg.

·       Note indicates that charge is not imposed on mangoes that have had levy previously paid on them.

Clause 21.4 sets an initial operative rate of R&D charge on mangoes of 0.75 of a cent/kg.

·       Note indicates that charge is not imposed on mangoes that have had levy previously paid on them.

Clause 21.5 provides that the Australian Mango Industry Association (ABN 50 713 775 301) is the eligible industry body for mangoes.

PRIMARY INDUSTRIES LEVIES AND CHARGES COLLECTION AMENDMENT REGULATIONS 2003 (No. 4)

Regulation 1 provides for the name of the regulations to be the Primary Industries Levies and Charges Collection Amendment Regulations 2003 (No. 4).

Regulation 2 provides for the commencement date to be 1 July 2003.

Regulation 3 provides that Schedule 1 amends the Primary Industries Levies and Charges Collection Regulations 1991 (the Collection Regulations).

SCHEDULE 1       AMENDMENT

Item 1 inserts a new Part 21 about mangoes into Schedule 22 of the Collection Regulations.

PART 21        MANGOES

Clause 21.1 provides that the part applies to mangoes.

Clause 21.2 provides definitions for use in the part.

Clause 21.3 provides that a levy year for mangoes is a financial year.

Clause 21.4 prescribes operations that are not considered processes in relation to mangoes.

Clause 21.5 defines who is a producer of mangoes.

·       Note 1 clarifies that a producer can be the person who owns the product immediately after it is harvested (as defined in paragraph (b) of the definition of producer in the Collection Act. Mangoes are prescribed for the purposes of that definition).

·       Note 2 identifies the person who exports chargeable horticultural products, in this case mangoes, from Australia as a producer.

Clause 21.6 prescribes mangoes for the purpose of subsection 7(3) of the Collection Act in relation to the liability of exporting agents.

·       Note indicates that exporting agents are liable to pay, on behalf of producers, unpaid charge and late payment penalty.

Clause 21.7 prescribes when charge or levy is due for payment by people who lodge a quarterly return.

·       Note indicates penalties can be imposed for late payment.

Clause 21.8 prescribes who must lodge a quarterly return.

·       Note indicates offences may be applicable.

Clause 21.9 provides that a quarterly return must be lodged within 28 days of the end of the quarter to which it relates.

·       Note indicates offences may be applicable.

Clause 21.10 prescribes when charge or levy is due for payment by persons who lodge annual returns.

·       Note indicates penalties can be imposed for late payment.

Clause 21.11 specifies that a producer who sells leviable mangoes by retail sale in a levy year must lodge an annual return.

·       Note indicates offences may be applicable.

Clause 21.12 prescribes that an annual return must be lodged by 28 August in the next levy year.

·       Note indicates offences may be applicable.

Clause 21.13 stipulates what must be included in a quarterly or annual return.

·       Note indicates offences may be applicable.

Clause 21.14 stipulates what records must be kept by producers. A penalty of 10 penalty units is provided for breaches of the regulations. As at 1 May 2003 a penalty unit equals $110.

·       Note indicates where definition of strict liability can be found.

Clause 21.15 stipulates what records must be kept by first purchasers and buying agents. A penalty of 10 penalty units is provided for breaches of the regulations.

·       Note indicates where definition of strict liability can be found.

Clause 21.16 stipulates what records must be kept by exporters and exporting agents. A penalty of 10 penalty units is provided for breaches of the regulations.

·       Note indicates where definition of strict liability can be found.

Clause 21.17 stipulates what records must be kept by selling agents. A penalty of 10 penalty units is provided for breaches of the regulations.

·       Note indicates where definition of strict liability can be found.

ANNEX A.

REGULATION IMPACT STATEMENT

MANGO MARKETING AND PROMOTION AND RESEARCH AND DEVELOPMENT LEVY AND CHARGE

Background

The Australian Mango Industry is made up of approximately 2,000 producers located in QLD, WA, NSW and the NT. Total tree numbers have risen rapidly with 14,000 ha and a total of 2.5 million trees now planted. According to the ABS for 2001, approximately 75% of mango production occurred in Queensland, with the Northern Territory accounting for a further 18%. The remaining 7% was divided between New South Wales and Western Australia. Nationally, between 10-25 per cent of mangoes are processed, with variations depending on seasonal and regional factors.

Average industry GVP is approximately $90 M. The biennial bearing pattern combined with un-seasonal weather has resulted in several disastrous seasons for mango producers, with volatile market returns ranging from highs in excess of $50/tray in the early season to lows of $3/tray in the peak season, with typical production costs of production being in the range of $10-12/tray.

Mango production is growing at an estimated 8% per year. The industry's primary focus remains on the domestic market, with export growth stalled at 8% of total production. Exports are primarily to established markets of Hong Kong and Singapore. Market access has recently been secured to Japan with access to China, USA and New Zealand also being pursued.

While in the short term farm production and product quality issues are the more important issues to be addressed there is a need to fund medium term export access and market maintenance programs backed by consumer and market research, pest risk analysis and the development of disinfection protocols.

1.       Problem to be addressed

There is market failure in the Mango Industry because of the externalities associated with research & development and marketing for fresh mangoes. There is under investment in marketing and R&D because of the 'free rider' problem, where consumers and producers receive benefits from marketing and R&D but do not have to pay for the benefits. This has resulted in under investment in these activities by the mango industry. The mango industry has not identified significant market failure to exist in the provision of R&D and marketing and promotion of processed mangoes.

Market failure and the resulting under investment in marketing and R&D for fresh mangoes has resulted in:

-       quality breakdown with an ongoing problem of declining shelf life and post harvest breakdown of mangoes

-       low orchard productivity and inferior orchard disease management

-       the industry is still substantially based on one variety which is difficult to handle in the export supply chain

-       inadequate mango marketing information evidenced by the high domestic market focus and the main mango variety produced not being well known in many export markets

-       lack of consumer knowledge of mango quality characteristics and health benefits of mango consumption

-       less than optimal adoption of sustainable environmental management practices

-       poor adoption of results of research and development

-       farm and supply chain quality management systems not being developed

The market failure in the mango industry can be corrected by R&D that is jointly funded by the mango industry and government. This would ensure that all who benefit from the R& D will pay for it either as mango producers, mango consumers or taxpayers.

Mango producers will benefit through improvements in orchard and supply chain efficiency, which will also allow domestic and export markets to be further developed. Consumers will benefit from improved access to healthy food, improved product reliability, product quality and food safety. The broader Australian Community would also benefit from improved natural resource management, environmental sustainability and worker safety. Such R&D would not occur at an optimal level from the point of view of producers, consumers and the general community without funding from the Mango industry and the general community.

A national mango levy on mango producers that is used to fund marketing and promotion will overcome the problem of under investment in marketing and promotion by the mango industry. Without this investment to increase the market demand for mangoes on domestic and export markets there is a danger of significant mango price falls, because of the expected doubling of production over the next 5 years.

2.       Objective of the Regulations

The objective of the Australian Mango Industry Association (AMIA) seeking the implementation of a national statutory levy and export charge of 0.75 cents/kg for research and development and 1.0 cent/kg for marketing and promotion, is to correct market failure in funding industry marketing, promotion and R&D activities. The R& D levy would be to fund on farm and post harvest research, development and extension projects. The marketing and promotion levy is to fund marketing and promotion activities for both domestic and export markets.

Existing voluntary levies have been inadequate to meet the current and future challenges of the Mango Industry. In the AMIA's Australian Mango Industry Business Development Plan and Levy Proposal, critical industry issues identified were: overproduction, quality breakdown, low orchard productivity, under consumption, under performance in export markets and poor adoption of results of research and development. A national levy for marketing, promotion and R&D should help address these issues.

3.       Identification of options to achieve objectives above

Existing Compulsory Queensland R&D Levy

The Australian Mango Industry has benefited significantly from the compulsory R&D levy imposed on Queensland growers by QVFG (Queensland Vegetable and Fruit Growers). However this levy is inequitable because mango growers in other states and the NT have not contributed in proportion, to fund mango industry development programs. The QFVG levy is to become voluntary at 30 June 2003, with the sunset of State Legislation and the implementation of the new QFVG structure.

Voluntary levies

With the phasing out of statutory levies in Queensland after June 2003, voluntary levies will effectively be the status quo for the collection of funding for R&D and marketing and promotion after June 2003.

Voluntary contributions have not been recommended by the industry because of the potential for some growers to act as 'free-riders', failing to contribute while gaining the benefit of the marketing and R&D activities. The NT Mango Industry Association attempted to implement a voluntary mango levy with modest success.

There are regional mango industry bodies in NSW, WA, NT and Queensland. However these bodies have voluntary membership arrangements with approximately only 50% of potential industry support. While these organisations provide leadership and guidance on industry issues they are not able to fund significant R&D and marketing programs for the mango industry.

Industry cooperatives/marketing groups

There are a number of regional and national marketing cooperatives and marketing groups that play a limited role in research and development, but are playing an increasing role in marketing and promotion programs. In spite of this there is still only one (Chiquita) significant fresh horticultural product brand name in the market place.

In general these cooperatives have not been interested in funding R&D activities for the broader industry or community benefit. They are however avid users of the results of publicly funded R&D and market development programs.

Private research providers

In the mango industry there is some evidence of private research into "on farm" best practice. There is very little research in the areas of Integrated Crop management which affects natural resource sustainability, crop forecasting, consumer research or export market research. However there is privately funded research increasingly conducted in the areas of plant breeding, crop regulation and the improved post handling of exported product.

Proposed Compulsory National Levy

The AMIA has proposed a national statutory levy and export charge of 0.75 cents/kg for research and development and 1.0 cent/kg for marketing and promotion to correct market failure in funding industry marketing, promotion and R&D activities. The AMIA has identified possible program expenditure areas to include:

•       Orchard best practice

•       Supply chain best practice

•       Market development

•       Industry development

•       Product development

•       Industry consultation

The proposed compulsory national mango levy is regarded as the only effective means of funding R&D and marketing and promotion to correct the market failure that exists in the industry.

4.       Impact analysis

Likely Cost Impacts

Mango producers will pay the proposed levy and export charge of 0.75 cents/kg for research and development and 1.0 cent/kg for marketing and promotion. For an estimated production level of 6.5 million trays in 2003/04 this would equal mango producers paying $340,00 for R&D and $455,000 for marketing and promotion. Processing grade mangoes which comprise around 20% of the total production, are exempt from the levy.

Administration costs are estimated to be up to 20 % of the levy with identified costs including: (paid initially by producers but passed on to some extent by consumers)

-       Levies and Revenue Service collection fees 2% to 3%

-       Horticulture Australia Management fees 10% for R&D programs and up to 20% for marketing programs (lower for R&D because of matching government funding)

-       AMIA can also apply for levy funds for approved activities such as consultation, communication and project review. Industry has a high expectation of accountability, this however comes at a cost. Based on the experience of other industries this could be 5% to 10%.

The Commonwealth Government would match the value of the mango levy collected for R&D. On the basis of 2002/03 mango production the Commonwealth Government would pay an additional annual cost of $340,000 to the Mango R&D programs. This cost will vary with the level of mango production. There is no government matching contribution to the Mango Marketing and Promotion Programs.

It is not expected the imposition of the levy will have a significant impact on consumer prices. However in the future the R&D, marketing and promotion programs funded by the levies should lead to better quality produce becoming available and enhanced consumer demand for mangoes. This may result in higher prices for the better quality mangoes.

Likely Benefits

The AMIA believes the levy and export charge will benefit all mango growers in the industry as well as mango consumers and the general community.

The benefits for producers would include: reduced production and marketing costs, improved orchard productivity and increased domestic and export sales.

For consumers benefits would include: increased product shelf life, improved product quality, a wider range of product varieties and perhaps a broader price range of mangoes that reflect quality differences.

The community would benefit by the expansion of the industry generating employment, investment and increased export income as well as environmental benefits of reduced chemical use and more efficient water use.

The net returns to industries from investment in R&D have generally been shown to be highly positive. In February 2002, Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, Senator The Hon. Judith Troeth, launched the report, Innovating Rural Australia: Research & Development Corporation (RDC) Outcomes, which demonstrates the need to maintain our investment in rural R&D in Australia's long-term interests. Returns from our investment in rural R&D have been estimated by independent surveys at greater than 7:1. The RDC model is a successful investment management model, and represents a true partnership between Government and industry. This partnership is based on the Commonwealth Government's commitment to match dollar-for-dollar industry contributions to 0.5 per cent of each industry's gross value of production.

Competition Policy

The levy will be applied equitably to all mango growers, and the marketing and R&D activities are designed to assist the industry as a whole.

5.       Consultation

The proposal conforms to the Government's levy principles and guidelines. The AMIA has conducted a thorough consultation campaign throughout the industry. The AMIA has advised the Government that all known potential levy payers, and collection agents were provided with detailed information on the proposed levy through printed material, radio and television. The AMIA has advised every potential levy payer was given an opportunity to vote in a postal ballot.

The levy proposal was circulated in November 2001 to more than 2000 known mango producers and a summary of the proposal was also included with the industry newsletter Mango Matters, which was posted to all potential mango producers in February 2002. Additional copies of the levy proposal were also distributed at 21 meetings organised by AMIA with the assistance of Horticulture Australia Limited in the major mango producing regions of NSW, QLD, NT and WA. These meetings were held between November 2001 and March 2002, with 360 growers attending for the presentation and discussion of the Australian Mango Industry Business Plan and Levy Proposal. Plans were posted to additional mango growers as they were identified.

While the regional meetings generally supported the proposed mango levy some concern with and opposition to the levy proposal was noted and the specific issues raised were addressed in a letter to mango growers sent out with the mango ballot papers. The research and development levy proposal was supported overall, and in all regions except the NT and Far North QLD, where it was narrowly lost. The marketing and promotion levy proposal was supported in all regions. These results can be seen from Table 1.

Table 1: Count of postal votes by region

Region	R&D Levy	R&D Levy	Marketing Levy	Marketing Levy	Total returned	Production 2001 (% of national)
	Yes	No	Yes	No
North QLD	40	19	50	18	68	25% (*)
South East QLD	53	16	50	18	72	20%(*)
Far North QLD	38	45	46	39	86	30%(*)
NSW	10	8	10	9	19	1 %
WA	32	24	29	28	58	6 %
NT	61	68	74	60	136	18%
Other	3	4	2	5	7	-
Total Votes	237	184	261	177	446	100%

(*) Estimate from industry sources. Other data from ABS.

The voter turnout for this ballot was 21.8 % (of the 2043 producers who received ballots, 446 returned them), and resulted in 56.3 per cent support for the research and development component and 59.6 per cent support for the marketing and promotion component.

Subsequent to the declaration of the poll there was opposition to the mango levy by a group of major QLD producers, who were unhappy about the proposed quantum of the levy. The issues raised in the petition were mainly regarding the determination of voter eligibility for the ballot and the ability of producers to afford the levy/charge. The AMIA comprehensively addressed these concerns in Attachment Two of the AMIA Submission in Support of the Implementation of a Statutory Mango Industry Levy. Other issues raised by individuals and organisations concerning the introduction of the levy were also addressed in this submission.

This opposition forced the AMIA Board to reconsider its position and it concluded that the original levy proposal no longer enjoyed the support of a significant faction of potential levy payers. The result was a compromise proposal where the levy was reduced to 50% of the rate previously proposed. The AMIA Board agreed to conduct a full ballot of mango levy payers after 5 years to assess the level of industry support for the mango levy. The ballot will include the options of: leave the levy as proposed, raise it, reduce it or abolish it.

The Government's levy principles and guidelines require the initiator of a levy to demonstrate majority industry support for the proposal. The AMIA submission demonstrated majority industry support:

•       A sufficient majority of growers voted for both the research and development and marketing and promotion components of the initial levy/charge of 3.5 cents/kg. Support for the proposal was gained in each of the four States/Territories (except in the Northern Territory and far-North Queensland where the research and development component was narrowly defeated);

•       It would appear a higher proportion of voters favoured a marketing/promotion levy over a research and development levy, presumably because promotion is seen by some voters as a higher priority and/or is of more immediate benefit to the industry;

•       There is little reason to assume that those who voted for a levy/charge of 3.5 cents/kg would oppose a reduced levy/charge of 1.75 cents/kg;

•       The AMIA widely advertised the compromise proposal in industry publications, and during the 90-day period for industry comment, the Government received a number of letters and petitions in opposition to the proposal, although none clearly demonstrated support of 50 per cent of actual or potential levy payers in opposing the levy/charge. The Government's Levy Principles and Guidelines require that formal objections lodged during the 90-day period demonstrate this 50 per cent opposition.

•       While there was dissent within the Mareeba/Atherton Tablelands area on the levy proposal, HAL noted that a significant proportion (perhaps 38 per cent) of this region's production is allocated to processing which would not be liable to pay the proposed levy.

1.       In-principle support for the implementation of the compromise levy/charge can be inferred from the positive result of the first ballot. In addition, the AMIA widely advertised the compromise levy/charge in industry publications and the Government did not receive evidence of majority industry opposition during the 90-day period for industry consultation. It is also clear from the evidence presented in the Business Development Plan and Levy Proposal that action urgently needs to be taken in order to correct significant market failures within the industry. The industry is facing an expected major increase in supply in the next five years and industry leaders and HAL believe that action is needed now to develop and fund programs to help address that situation.

6.       Conclusion and recommended option

The proposal for a national statutory levy and export charge for research and development and marketing and promotion for the mango industry:

•       conforms to the Government's levy guidelines and principles;

•       does not restrict competition,

•       has limited financial impact on the Commonwealth, and

•       has clear potential to benefit the industry.

7.       Implementation and review

The levy is to be implemented as soon as practicable, depending on the legislative process. The proposed implementation date is July 1 2003. The AMIA has agreed to conduct a full ballot of mango levy payers after 5 years to assess the level of industry support for the mango levy. This ballot will determine whether the levy is unchanged. increased, reduced or abolished.

The Federal Government has placed two conditions on the approval of the levy. First, the Industry Advisory Committee established to advise Horticulture Australia Limited (HAL) on the programs funded under the levy is to be representative of the major sectors of the mango industry. This will ensure a broad range of views in the industry are voiced. Second, the programs and initiatives undertaken as a result of the levy are to be independently reviewed against the industry strategic plan after three years.