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RURAL INDUSTRIES RESEARCH AND DEVELOPMENT CORPORATION AMENDMENT REGULATIONS 2003 (NO. 1) 2003 NO. 144
EXPLANATORY STATEMENTSTATUTORY RULES 2003 No. 144
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 and Energy Research and
Development Act 1989
Primary Industries (Excise) Levies Amendment Regulations 2003 (No.
9)
Primary Industries (Customs) Charges Amendment Regulations 2003 (No.
7)
Primary Industries Levies and Charges Collection Amendment Regulations
2003 (No. 5)
Rural Industries Research and Development Corporation Amendment
Regulations 2003 (No. 1)
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), Section 30 of the Primary Industries Levies and Charges Collection Act 1991 (the Collection Act) and Section 149 of the Primary Industries and Energy Research and Development Act 1989 (the PIERD 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 Australian Honey Bee Industry Council, the peak body representing the honey and bee industry in Australia, has proposed that a new research and development (R&D) levy and export charge on queen bees, payable to the Rural Industries Research and Development Corporation (RIRDC), be implemented. The RIRDC is a statutory body that undertakes and coordinates R&D programs for a number of agricultural industries.
The purpose of the regulations is to implement a new R&D levy and charge on queen bees, imposed on and payable by queen bee breeders.
Subclause 2(1) of Schedule 27 of the Levies Act and subclause 2(1) of Schedule 14 of the Charges Act provide that regulations may impose levy and export charge respectively on a specified product.
Clause 6 of Schedule 27 of the Levies Act and clause 5 of Schedule 14 of the Charges Act provide that the rate of levy and export charge respectively is ascertained in accordance with the regulations.
Clause 12 of Schedule 27 of the Levies Act and clause 11 of Schedule 14 of the Charges Act provide that regulations may provide for exemptions from levy and export charge respectively.
There are no conditions under the Levies Act and the Charges Act that need to be met before the power to make these regulations may be exercised. Consultation requirements in clause 14 of Schedule 27 of the Levies Act and clause 13 of Schedule 14 of the Charges Act do not apply in the present case, as the Minister has not declared any specified body to be the designated body in relation to the bee industry.
Subsection 30(2) of the Collection Act allows the regulations to make provisions relating to the payment of levy or charge. The Collection Act specifies no conditions that need to be met before the power to make regulations may be exercised.
Subsection 5(1) of the PIERD Act provides for regulations to attach levy (including export charge) to an R&D Corporation.
Section 40 of the PIERD Act provides for regulations to require an R&D Corporation to keep separate accounting records in relation to the funding of specified classes of R&D activities.
The PIERD Act specifies no conditions that need to be met before the power to make regulations may be exercised.
The regulations:
· impose a statutory R&D levy and export charge on queen bees;
· set an operative levy at a rate of 0.5 per cent of the sale price at the first point of sale to a maximum of 10 cents per queen bee and an operative charge at 0.5 per cent of the value of the queen bee immediately before export to a maximum of 10 cents per queen bee, subject to specified exemptions;
· set out the details for payment of levy and export charge, provision of returns by liable persons, keeping of records and other collection matters; and
· attach the levy and export charge to the RIRDC and set out details for accounting records.
Details of the regulations are set out in the Attachment.
The Office of Regulation Review (ORR) was consulted in the preparation of the Regulations. A Regulation Impact Statement is attached as annex "A".
The Regulations commence on 1 July 2003.
0206509B
0206548B
0206547B
0207721B
ATTACHMENT
PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2003 (No. 9)
Regulation 1 provides for the name of the regulations to be the Primary Industries (Excise) Levies Amendment Regulations 2003 (No. 9).
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 5 about Bees into Schedule 27 of the Excise Levies Regulations.
Schedule 27, Part 5 Bees
Clause 5.1 provides for the definitions of bee and queen bee.
Clause 5.2 imposes a levy on queen bees produced in Australia and sold by the producer.
Clause 5.3 sets the operative rate of R&D levy at 0.5 per cent of the sale price for each queen bee at the first point of sale to a maximum of 10 cents per queen bee; and states that a queen bee is deemed to be sold for $9 if the sale price cannot be determined note indicates that the sale price excludes GST.
Clause 5.4 provides that levy is payable by the producer of the queen bees
· note indicates that the producer is the grower or breeder of the queen bees.
Clause 5.5 provides that queen bees are exempt from levy in a levy year if the total amount of levy and charge on queen bees payable by the producer is less than $50 in that levy year.
PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT REGULATIONS 2003 (No. 7)
Regulation 1 provides for the name of the regulations to be the Primary Industries (Customs) Charges Amendment Regulations 2003 (No. 7).
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 3 about Bees into Schedule 14 of the Customs Charges Regulations.
Schedule 14, Part 3 Bees
Clause 3.1 provides for the definitions of bee and queen bee.
Clause 3.2 imposes a charge on queen bees produced in and exported from Australia.
Clause 3.3 sets the operative rate of R&D charge on queen bees at 0.5 per cent of the free on board value of the queen bee immediately before export to a maximum of 10 cents per queen bee; and states that a queen bee is deemed to be sold for $9 if the sale price cannot be determined.
Clause 3.4 provides for the charge to be payable by the producer of the queen bees.
· note indicates that the producer is the exporter of the queen bees.
Clause 3.5 provides that queen bees are exempt from charge in a levy year if the excise levy has been previously paid on the queen bee or the total amount of levy and charge on queen bees payable by the producer is less than $50 in that levy year.
PRIMARY INDUSTRIES LEVIES AND CHARGES COLLECTION AMENDMENT REGULATIONS 2003 (No. 5)
Regulation 1 provides for the name of the regulations to be the Primary Industries Levies and Charges Collection Amendment Regulations 2003 (No. 5).
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 5 about Bees into Schedule 37 of the Collection Regulations.
Schedule 37, Part 5 Bees
Clause 5.1 provides that the part applies to bees.
Clause 5.2 provides definitions for use in the part.
Clause 5.3 provides that a levy year for queen bees is a financial year.
Clause 5.4 prescribes chargeable queen bees for the definition of producer relating to exports (that is, the person who exports the queen bees from Australia).
· note 1 indicates that the exporter is taken to be the producer chargeable queen bees
· note 2 indicates that the producer is the grower or breeder in relation to leviable queen bees.
Clause 5.5 prescribes when charge or levy is due for payment by people who lodge a quarterly return.
· note indicates penalties for late payment can be imposed.
Clause 5.6 prescribes who must lodge a quarterly return.
· note indicates offences may be applicable.
Clause 5.7 prescribes 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 5.8 prescribes when charge or levy is due for payment by people who lodge annual returns.
· note indicates penalties for late payment can be imposed.
Clause 5.9 specifies that a producer who sells leviable queen bees or exports chargeable queen bees in a levy year and is exempt from lodging a quarterly return must lodge an annual return for the levy year.
Clause 5.10 prescribes that an annual return must be lodged by 28 August in the next levy year.
· note indicates offences may be applicable.
Clause 5.11 specifies what information must be included in a quarterly or annual return.
· note 1 indicates that a queen bee is deemed to be sold for $9 if the sale price cannot be determined
· note 2 indicates offences may be applicable.
Clause 5.12 prescribes that a producer may apply for an exemption from lodging quarterly returns for a levy year if the total of levy and charge they are likely to pay in that year is less than $2,000.
Clause 5.13 specifies what information must be included in an application for exemption from lodging quarterly returns and where that application must be sent.
Clause 5.14 stipulates that the Secretary must make a decision whether to grant or refuse an exemption and give the applicant written notice of the decision within 14 days of receiving an application. It also specifies the information the Secretary must consider in making that decision.
Clause 5.15 stipulates that the Secretary must make a decision whether to continue an exemption and give the producer written notice of the decision within 14 days of receiving an annual return. It also specifies the information the Secretary must consider in making that decision.
Clause 5.16 prescribes when a quarterly return(s) must be lodged if an exemption to lodge annual returns is refused or discontinued.
· note indicates offences may be applicable.
Clause 5.17 stipulates what records must be kept by people who deal with leviable or chargeable queen bees and that an offence under this clause is an offence of strict liability.
· note indicates that a queen bee is deemed to be sold for $9 if the sale price cannot be determined
· note indicates where definition of strict liability can be found.
Clause 5.18 prescribes that a producer may apply to the Administrative Appeals Tribunal for a review of the Secretary's decision to refuse to grant or continue an exemption to lodge annual returns.
RURAL INDUSTRIES RESEARCH AND DEVELOPMENT CORPORATION AMENDMENT REGULATIONS 2003 (No. 1)
Regulation 1 provides for the name of the regulations to be the Rural Industries Research and Development Corporation Amendment Regulations 2003 (No. 1).
Regulation 2 provides for the commencement date to be 1 July 2003.
Regulation 3 provides that Schedule 1 amends the Rural Industries Research and Development Corporation Regulations 2000 (RIRDC Regulations).
Schedule 1 Amendments
Item 1 substitutes Regulation 13 of the RIRDC Regulations to provide for the changed definition of the honeybee industry as a consequence of the introduction of the bee levy (including export charge) by removing reference to the breeding, sale and distribution of queen bees.
Item 2 inserts a new Part 2, Division 10 about Bee levy into the RIRDC Regulations.
Part 2, Division 10 Bee Levy
Regulation 34 defines the queen bee breeding industry as the breeding, sale and distribution of queen bees.
Regulation 35 deals with the attachment of bee levies to RIRDC via section 5 of the PIERD Act.
Regulation 36 provides for certain accounting records to be kept by RIRDC for the funding of R&D activities relating to the queen bee breeding industry.
REGULATION IMPACT STATEMENT
QUEEN BEE RESEARCH AND DEVELOPMENT LEVY AND CHARGE
Industry Background
Managed honey bees are found in all Australian states and territories. There are around 673,000 registered hives in Australia, producing not only honey and beeswax but also live bees (queens and package bees), and other products such as pollen and royal jelly. Around 467,000 hives are operated by beekeepers with a minimum of 200 hives, representing the commercial industry. There are also approximately 28,000 recreational beekeepers.
It is estimated that an average of at least 35,000 tonnes of honey are produced each year, with nearly 45% of this total coming from NSW. Approximately, 11,000 tonnes of honey are exported each year. Major markets are SE Asia (31.2%), Middle East (30.4%) and Europe (24.4%). In 2001-2002 Australia imported a total of 305 tonnes of honey worth $2.06 million, mainly from New Zealand, Argentina and the USA.
The gross value of production over all sectors of the industry is estimated as being between $60 and $65 million per annum, of which $49 million comprises honey production. Previous estimates of the total value of paid and unpaid pollination services are around $1.2 billion per year.
The Australian Honey Bee Industry Council (AHBIC) is the declared peak industry body of the existing Primary Industries (Customs) Charges Regulations and Primary Industries (Excise) levies Regulations. Contained under this umbrella organisation are the Federal Council of Australian Apiarists' Associations, the Honey Packers' and Marketers' Association of Australia, National Council of Pollination Associations and the Australian Queen Bee Breeders' Association.
The industry currently pays a levy and charge of 1.6 cents per Kg, which is made up of an R&D levy on honey production of 0.8 cents per Kg that goes to the Honey Bee Research and Development Committee (HBRDC) of the Rural Industries Research and Development Corporation (RIRDC), 0.3 cents per Kg that goes to the National Residue Survey (NRS) and 0.5 cents per Kg that goes to Animal Health Australia
. The proposed levy and charge on Bees will be set at for queen bees sold for $20 or less - 0.5 per cent of the sale price at the first point of sale of each queen bee sold, or in any other case - 10 cents for each queen bee sold at the first point of sale. If a queen bee is sold as part of a transaction and the price for the queen bee is not separately determined, the queen bee is taken to have been sold for $9.
BEES LEVY AND CHARGE
1. Problem to be addressed
Specific funding for queen bee research and development R&D will assist the sector to address current problems faced in the breeding of stock, genetics, production and post production issues. These problems will receive dedicated funding which will assist in the long-term sustainability and profitability of the sector.
In the past, the honeybee industry has funded queen bee R&D through funds from the HBRDC R&D levy on honey production. The proportion of R&D monies directed to queen bees has been relatively small and it is agreed that the research to date assists Australian honey producers. However, as access to international markets is likely to increase in coming years it is argued that any direct sales of queen bees will not assist honey production in Australia. Honey producers may well become resentful that funds, provided by them, are assisting queen bee producers who are exporting their product overseas into competitors markets. It is suggested that a more equitable approach that queen bee producers fund their own R&D programs which will result in a direct benefit to their sector of the industry.
R&D issues such as more efficient production, transport and storage as well as quality assurance are industry wide problems that will be addressed through the bee levy and charge. The queen bee industry's major growth potential is coming from exports, yet there is only minimal funding being directed specifically to bolster this export drive. Industry specific R&D will assist in developing export market growth, that is critical factor in the future success of the Australian queen bee industry.
2. Objective of the Regulations
AHBIC'S objective in seeking regulation is to assist the queen bee sector to correct a market failure in funding its R&D. The intended outcome is a more efficient, effective and internationally competitive industry.
The industry's objective is to initially raise approximately $14,000 to improve its efficiency in queen bee breeding and thus assist in the sales of queen bees. This amount can be expected to increase if access is provided to markets in the United States of America as is expected in the near future. The industry has already benefited from the results of R&D conducted with the resources garnered from its honey R&D levy - the industry recognises such benefits have come as a result of dedicated and long term investment in R&D programs.
3. Options
Not proceed with a levy on bees.
Having no specific levy for bees would mean relying on funds being provided from existing honey levy funds raised by the current HBRDC levy. It is more equitable that queen bee producers fund their own R&D programs, the results of which can then provide a direct benefit to their sector of the industry.
Put in place a voluntary levy.
It is highly likely that a levy leakage problem would occur under a voluntary levy. We consider the risk of voluntary levy paying producers dwindling to low levels would be quite high. Considering that there are approximately 30 queen bee breeders in the industry, it is likely producers will want to be able to compete with those who are not paying the levy and therefore not factoring its cost into their queen bee sale price.
Establish a levy with the strict purpose of enabling R&D research specifically on bees.
The industry argues that R&D is essential to its continued profitability and competitiveness. Other industries with statutory levies in place have also confirmed the benefits of these arrangements for their long-term viability and competitiveness. Their decisions to continue their statutory levies over the longer term also provide evidence of the advantages of this course. As stated in the first option, there is also the equity issue of this sector of the industry paying industry levies to fund their own R&D programs.
4. Impact analysis
Likely costs
The levy and charge will be charged to queen bee producers and collected by them at the first point of sale. This is the most equitable and efficient collection point. It is estimated that 0.25 per cent of the total amount of levies collected will be spent on that process of levy collection.
Based on an industry average sale price of $10.00 per queen bee, a rate of 0.5 per cent of the sale price represents approximately 5 cents per queen bee. The proposed levy is expected to raise initially about $14,000 a year, based on a total sales figure of 300,000 bees. The industry is hopeful that future market access and Australia's disease free status will increase the level of sales and as a consequence will increase the amount of levy and charge raised.
The impact of the levy regulations on the industry as a whole should be minimal. Queen bee production is dominated by a small number of individuals operating as small businesses. There is no dominant producer and thus no individual would be disproportionately affected by the levy and charge compared with other producers.
There would be a minimal additional cost to the Commonwealth of about $14,000 annually through the R&D matching policy.
Likely benefits
AHBIC believes the levy and charge will benefit all queen bee breeders. The advantages of collective investment include increasing the purchasing power and economies of scale.
Imposition of the levy and charge will enable RIRDC to establish and implement a dedicated long-term strategic plan for the sector. RIRDC has supported the new levy and charge. In accordance with the sectors requests it will carry out the desired R&D programs providing benefit to the industry. Expected benefits from implementing the R&D levy and charge on Queen bees are:
• involving and uniting the industry towards common goals,
• increasing profitability by improving live husbandry and management practices,
• advancing the industry by breeding bees that meet the needs of the marketplace,
• increasing efficiencies in breeding and throughout the entire supply chain,
• use of more environmentally friendly bee breeding practices.
These outcomes are in line with the Government's R&D priorities for agricultural industries.
Competition Policy
The levy will be applied equitably to all queen bee producers, and the R&D activities will be designed to assist the industry as a whole. The proposed levy and charge will therefore have no impact on competition within the industry. Separate and continuous funding for R&D will enhance the industry's efficiency.
5. Consultation
This proposal that has been under consideration by the Australian Queen Bee Breeders' Association (AQBBA) since 1999 when it was put forward and approved at their annual general meeting. AHBIC as the peak representative body then contacted AFFA on behalf of AQBBA to put forward the proposal that a levy for R&D purposes be placed on the sale of queen bees. The proposal at that time did not contain sufficient information or detail to receive the support of the department. Following consultations with AHBIC it was agreed that further information was necessary and they would put forward a more complete submission.
Over two years that this proposal has been under active consideration, the members of the AQBBA have consistently supported the proposal. In that time, clarification of the proposal has occurred which has resulted in the current submission being presented to the Government.
The proposal conforms and satisfy's the Government's levy principles and guidelines. AHBIC has conducted a thorough consultation campaign within the queen bee sector, which is relatively compact compared with the rest of the honey industry. AHBIC has advised AFFA that all known potential levy payers (numbering 30 at the time of consultation) were provided with detailed information on the proposed levy through newsletters and at meetings. AHBIC have advised that every potential levy payer was given an opportunity to vote in general meetings, either at the state associations, the representative association and at AHBIC's annual meeting. Many of the consultation meetings attracted attendance by almost 50% of commercial queen bee producers at any one time. It is estimated that over the two-year period all commercial bee breeders were given the opportunity to comment and vote on the proposal.
We are not aware of any opposition to the introduction of a bees levy.
Research and Development
The industry has made a strong case for the levy and charge that will address the industry's priority R&D problems and deficiencies. Theses include:
- improving the genetics of Australian queen bees,
- developing new storage and transportation devices for bees, and
- export orientated research and development in relation to quarantine issues.
6. Conclusion and recommended option
The proposal for a statutory R&D levy and charge on queen bees:
• conforms to the Government's levy guidelines and principles,
• has minimal impact on the Commonwealth, and
• has clear potential to benefit the industry.
It is therefore recommended for implementation.
7. Implementation and review
The levy is to be implemented as soon as practicable, depending on the legislative process. The proposed implementation date is 1 July 2003. The industry is to review the levy and charge rates and the performance of the R&D programs in two years to determine whether they are to remain in place, be adjusted, or be removed. In the past AHBIC has reduced its marketing and promotion honey production levy to zero due to its perceived ineffectiveness. This is a responsible industry and can be relied on to review its own levy initiatives on a regular basis.
Horticulture Policy
Food and Agriculture
Agriculture, Fisheries and
Forestry - Australia
16 June 2003