Taxation with representation

Half of all marketing (levy) expenditure is wasted; the challenge is to identify which half

WHEN I moved in the Senate to disallow regulations that would increase levies on mushrooms, onions and mangoes, you would think it signalled the end of the world as we know it.

I was misrepresented, criticised and widely abused.

An organisation emerged that nobody had ever heard of, Across Agriculture, claiming to represent 45 producer organisations opposed to my plan. There was even a rally by onion growers in Tasmania.

None of that matters much, but the claim that I am out of step with the overwhelming majority of growers does matter. I have been listening to levy payers for decades and I know what I’ve heard. In many sectors, if not all, there is deep discontent about levies.

As a result I have deferred consideration of the disallowance motion until late September. By then I anticipate that many levy payers will have taken the trouble to inform those with a vested interest in letting levy dogs sleep that they are the ones out of step. I have also co-sponsored a motion to establish a Senate inquiry into levies which will consider opportunities by levy payers to approve and reapprove their imposition.

As I have written previously, levies are a form of taxation based on turnover. A farm can be highly unprofitable but still pay a lot of money in levies. Some farmers pay millions.

Levies come in three flavours: biosecurity, research and development, and marketing. Of these, biosecurity is not in question. Indeed, a levy to fund biosecurity programs is a commendable approach to relieving taxpayers of the cost of controlling major disease outbreaks. I doubt if many levy payers would begrudge them at all.

My concern is with the other two and the lack of accountability of levy spenders to levy payers.

A majority of growers would probably approve of R&D levies, at least some of the time. While some R&D corporations pay their senior staff grossly inflated salaries and a lot of money is wasted on matters that do nothing to improve farm performance, profitability or prospects, occasionally there is wonderful research undertaken from which the entire industry benefits, and which would otherwise never have occurred.

Marketing levies are a different matter. As the saying goes, half of all marketing expenditure is wasted; the challenge is to identify which half. The only certainty is that those spending the money mostly have less idea than almost anyone else. While generic marketing can certainly be valuable at times, particularly when developing an export market, much of it is a total waste.

My impression is that quite a lot of growers, perhaps a majority, know all that quite well. I also expect most would vote to retain R&D levies if they were given the option, and many would vote to retain marketing levies. Wool growers and dairy farmers, who have a vote every three and five years respectively, do exactly that.

But for all the other levy payers, the situation is comparable to what someone once said about democracy in much of Africa; there is one man, one vote, once. That is, levy payers get one chance to vote on whether to impose or increase a levy, but never vote again. It’s set and forget.

That leads to disengagement from the entire system. It’s like paying any other kind of tax; there is no sense of ownership. Levies are compulsory and must be paid, but there is little interest in how they are used.

This can be seen from the votes of growers who were asked to approve increases in levies on mushrooms, onions and mangoes. Of 793 levy-paying mango growers, 69 voted in favour and 66 against. Of 244 levy-paying onion growers, 20 voted in favour and 15 against the increase. Of 68 mushroom growers, 33 voted in favour and 11 against.

From this we are expected to believe that the noisy voices raised against me represent the dominant opinion.

What Across Agriculture and its members need to explain, if indeed it has members, is whether they genuinely believe their own assertions. Do they seriously believe that growers are overwhelmingly in favour of the current levy system? Because if they are, then they have nothing to fear from my proposal for a three-yearly vote by levy payers in each sector, weighted according to production.

Indeed, the obvious question is, if growers are as keen to pay levies as they insist, why is it necessary to make them compulsory?

In my view primary producers should be alarmed that an ad-hoc organisation nobody has heard of is lobbying politicians to prevent them from having a say in levies.

Some, including the Minister for Agriculture, are arguing that it is too expensive to give levy payers a regular vote, citing the cost of the wool and dairy votes. That is garbage; most of the cost of those votes is attributable to arguing for or against the levies. It is like including TV advertising by political parties in the cost of running an election.

All that’s required for levy democracy is a register of levy payers. With that, voting can occur online or by post at minimal cost. Enrolling levy payers, where no register exists currently, could occur online too. If levy payers prefer not to enrol to vote, or enrol but choose not to vote, that ought to be their choice.

Many of the complaints about the expenditure of levies would disappear once those spending them were fully accountable to those who paid them. It’s called taxation with representation.

David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
Date: Newest first | Oldest first


12/09/2014 1:31:49 PM

Dear Sir. Please do not use your donkey vote numbers to impede a clear majority elected govt to carry out their policies to get the budget back in shape. Get those macro settings right first. Onion levies, not sure but too many noses in the troughs of agriculture and doing studies of their own like PhD while they should be working for levy payers. Clean out required.
8/09/2014 6:36:19 PM

“PAYG, when you suggest that only people with no brains join State Farmer Organisations. I would say to you, (based on many of your posts) "people in glass houses should not throw stones".” – argis……I’m just absolutely devastated that a comment referred, rusted-on and dwindling member of the referred obnoxious old boys club, that refuses to acknowledge or adopt the concept of any form of modernisation based on individual free-enterprise, would think that I live in a glass house. Throw all the stones you like mate, my house is made of a more modern material.
8/09/2014 8:51:36 AM

PAYG, when you suggest that only people with no brains join State Farmer Organisations. I would say to you, (based on many of your posts) "people in glass houses should not throw stones".
Rylstone Sceptic
8/09/2014 8:09:27 AM

Compulsory levies that do not produce measureable outcomes are just another tax on producers. When we see measurable results from these invisible bodies growers will be happy to pay them, me included. Levy organisations are just gravy train groups in the main. When we have people like the muzzled Ag Minister Joyce in parliament and Op Ag Minister Fitzgibbon who is a non farmer being in opposition I suspect your informed opinions will go no where, but thanks for raising the issue David, now how about flood them with all the other rural issues we face that inhibit our success.
know all
8/09/2014 6:19:22 AM

its time to make these compulsory levies voluntary and ignorant 'disciples' like gecko can then go & do their own self funded research on climate change and methane emissions if it is so important. the whole levie project is an insane waste of money generating negligable TANGIBLE returns to the hard working australians funding the gravvy trains and generating the real wealth this country is gonna need to pay off what is an almost unpayable debt now. and the sooner the banks move the unprofitable disciples to the coast the better australian agriculture will be
5/09/2014 2:23:53 PM

You whinge about levies being wasted David, then suggest more accountability. Accountability requires paperwork and reporting (i.e. bureacracy), that costs time and money. Can't have efficient use of funds and 100% accountability. Also do not see much difference between politicians in their ivory tower being paid by my taxes and levy organisations from my levies. Of course, you could always give up your 'entitlements' to lead the way.
Just Saying
5/09/2014 10:48:03 AM

''ad-hoc organisation nobody has heard of" - sounds a lot like the Liberal Democrats.
5/09/2014 8:15:21 AM

“There is a heap of money wasted on Senators. Need to find out which $$ need to be shaved off and save tax payers a whole lot of money!” – there’s even more money wasted on levy-funded, undemocratic, non-transparent, unsupported, socialistic bodies so it looks like that a priority list will need to be drawn up and the Senators will more than likely end up on the second page at least.
5/09/2014 6:37:18 AM

There is a heap of money wasted on Senators. Need to find out which $$ need to be shaved off and save tax payers a whole lot of money!
4/09/2014 8:33:57 AM

David – when you come up against the suffocating ‘old boys club’ you will always be misrepresented, misdirected and lied to and about. That’s the way this tax-eating club works and always has. Their problem, of course, is that their dwindling rusted on membership still believe that their model is not due for an overhaul. Stupidly, they believe that the 90% of farmers that are not members can be encouraged to join, or re-join, by constantly referring to them as ‘freeloaders’. Apparently, not having any brains is a prerequisite to becoming a member of the old boys club.
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at


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