Beef, grains levies under microscope

04 Sep, 2014 02:00 AM
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Senator David Leyonhjelm.
Levy payers are starting to contact me now with some messages of support
Senator David Leyonhjelm.

AGRICULTURAL levies will be heavily scrutinised during a federal Senate inquiry over the next three months, with beef and grains likely targets of potential changes.

The Senate Rural and Regional Affairs and Transport Legislation Committee inquiry is scheduled to table its inquiry report by November 24 this year.

A motion detailing the inquiry’s terms of reference was agreed by the Senate this week.

It was moved by NSW Liberal Senator Bill Heffernan and co-sponsored by NSW Liberal Democratic Party Senator David Leyonhjelm and Western Australian Liberal Senator Linda Reynolds.

Senator Leyonhjelm achieved amendments to the terms of reference to add the terms “imposed” and an “imposition” in describing the use of industry levies and their governing systems.

Another key amendment underscored Senator Leyonhjelm’s recent push for all agricultural Research and Development Corporations (RDCs) to operate three year plebiscites similar to the WoolPoll.

Senator Leyonhjelm believes levies are taxes on growers but three year plebiscites would achieve the key aim of increasing scrutiny on how the money is spent on R&D and marketing, through a more democratic process.

His addition called for the inquiry to look at “opportunities levy payers have to approve and reapprove the imposition of levies”.

Collaboration on research to benefit multiple industry and research sectors and industry governance arrangements, consultation and reporting frameworks will also come under consideration.

The inquiry has been ignited by Senator Leyonhjelm’s controversial push for a disallowance motion that aims to reverse budgeted increases to the mushroom, onion and mango levies.

A vote on his disallowance was postponed last week as industry groups descended on Canberra to fight against the motion and support levy increases they say growers approved democratically.

The Senate inquiry will also consider what opportunities levy payers have to influence investment of their specific levies.

Levy discontent

Senator Leyonhjelm said he would be a participating member on the levy inquiry which would be his first full committee examination since his Senate term started on July 1.

“The thing is I don’t think it will be practical to prescribe how levies are spent to keep everybody happy,” he told Fairfax Agricultural Media.

“To have a generic set of rules for each of the industry sectors would not be practical because they each have their own individual characteristics.

“To me the better way to be accountable to is to have the RDCs or different bodies justify every three years how they spend the levies, to the levy payers.”

In 2012-13, the Grains Research and Development Corporation (GRDC) generated about $200 million in revenue including $118.2m in grower levies and $62.8m in matching government funds, while Meat and Livestock Australia (MLA) collected $93.8m from sheep and cattle producers and $40m in federal funds.

Other groups such as Australian Wool Innovation (AWI), Horticulture Australia, Dairy Australia and the Cotton RDC operate under a similar funding structure.

Senator Leyonhjelm said the committee would meet this week to decide specific details of the inquiry, including whether all levy paying groups would be called to testify at public hearings.

But he said the inquiry would need a “practical limit”, otherwise it would continue on for “donkey’s years”.

However, he indicated he had an “acute interest” in scrutinising the operation and use of the grains and beef industry levies and some horticultural groups.

“I’m aware there’s quite a lot of discontent with the GRDC and MLA,” he said.

Senator Leyonhjelm said his disallowance motion was still listed on the Senate notice paper for a vote on September 24 but he was prepared to withdraw it.

“If everything is looking positive in terms of general indications that nobody is adverse to my plan for levy democracy I’ll withdraw it,” he said.

“But it will sit there for a while yet until I’m satisfied the message is getting through that these issues need to be addressed.”

Coalition's promise

Federal Agriculture Minister Barnaby Joyce said the inquiry into agricultural levies met a Coalition pre-election promise.

“This fulfils that promise and gives me opportunity as the Minister to hear both sides of the arguments, where they provide evidence under the orders of the Senate,” he said.

“Therefore people are less inclined to stretch the truth.

“I’ve already been talking to some of the key groups about how they see themselves and my message is quite simple.

“You get to read what the other people say about you and they get to read what you say about them in a public forum and I get to reflect on what I do after I hear both sides of the story.”

Mr Joyce anticipated the Senate inquiry would segue with the implementation of key outcomes from the Horticulture Australia Limited review earlier this year, which recommended setting up a more grower-owned and focused RDC.

“This levy space gives us an opportunity to lance this boil which has been around for a long while where people say ‘spending on my levy is not efficacious’,” he said.

“Whether it is or it isn’t, I’m agnostic on that until such time as I read the report.

“In a perfect world you would all agree on improvements and ways people can get a real sense of confidence in the ways in which levies are spent.”

Poking the 'bee hive'

Senator Leyonhjelm said he knew he was “poking a bee hive” by raising the levy issue on his arrival in Canberra.

“I hate using the term 'vested interests' in a general sense but boy there are some vested interests involved in this issue,” he said.

“Nearly all of the voices are the people, levy-spenders, who benefit from the levy money or they’re so close to it that they identify with the benefits.

“But the levy payers are starting to contact me now with some messages of support and I always knew if they got angry the people spending the levies would need to have a good look at themselves.”

Senator Reynolds said she’d been made aware that many primary producers believed flaws exist in the current levy system that need addressing, and an inquiry will enable all sides to have their say on the operation of the system as it stands and provide suggestions on how it can be improved.

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FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

John from Tamworth
4/09/2014 4:54:37 AM

Once again David thank you very much for supporting farmers against these entrenched vested interests.End all levies now.
Jock Munro
4/09/2014 5:48:01 AM

The GRDC director appointment process is rife with cronyism. The selection process is undemocratic. At present there is an incestuous relationship between the GRDC,GPA (with no members) and the various grains committees of the State Farming organisations.
Gecko
4/09/2014 6:20:58 AM

This is just the start by Senator Leyonhjelm to wreck Australian agriculture. He will progressively "white ant" every structured arrangement with Australian agriculture. He is on record stating his dislike at the treatment agriculture receives. I guess he will only stop when there is just a bunch of rag-tag peasant farmers remaining in Australia.
LTF
4/09/2014 6:54:00 AM

Gecko, we do not have far to go to get down to your small group of peasant farmers. However, maybe David is not all wrong about the need for reform of the present farmer levies. I just wish he would take the same zealous approach to waste and mismanagement of out taxes by Governments at Federal and State level. That is a much greater priority with much greater impact on our economy. He promised to attack that issue but so far has done nothing that I can see. If he is really concerned for farmers he should seek removal of all Govt regulations costing us, starting with labour award reforms.
Bushfire Blonde
4/09/2014 6:55:21 AM

Good on you David - put it to others so that we can get some value out of all the levies that we pay. While you are at it, have a good look at the NLIS - it would be one of the biggest waste of money going. The markets are being led to believe pure trace-ability. What a whole lot of nonsense - how many white tags that have fallen out are being replaced with orange ones? Until somebody comes up with a tag that will not fall out for 13 years, there will never be pure trace-ability. And how many Markets want trace-ability anyhow?
Archibald
4/09/2014 7:09:39 AM

Gecko, How come you fear democracy?/ The Senator is proposing the return of democracy in place of crony capitalism and I just don't understand you. Cattle prices have ben stagnant in real terms for 50 years (David Palmer MLA quote) and the levies have done nothing to address this, in fact they perpetuate it. Most cattle producers are now peasant farmers and it needs to change .
Deregul8
4/09/2014 8:02:45 AM

Here here JFA. Australian agriculture has in part been bankrupted by this legally sanctioned taxation on gross profits. End the rot and purge the system of the parasites that cling to this gravvy train. At last a politician with the courage to adhere to the principles of sound Austrian economic theory. Pity the Liberals weren't so courageous. The nations futures depends on it or else it is to the goolags we all head.
pepper
4/09/2014 9:46:24 AM

Well put Bushfire Blonde, Gecko may change colour when the abolition of these useless unproductive imposts are deleted. The hidden costs are rarely if ever highlighted viz; downgrade of carcase at processor because a tag read fail. This is a non negotiable cost to a producer even though it read perfectly when it was loaded on the truck. Missing tags at saleyards... again, perfect when loaded, but inflated replacement costs as well as reading costs to producer. These costs are crippling and should be worn by the consumer... until tags and readers can be certified 100% which they never can be .
Philip Downie
4/09/2014 2:09:19 PM

I don't think he is advocating getting rid of levies. What he wants is the "growers" to decide if they want levies, how much and what they are spent on and make the researchers accountable at the end of every 3 yrs. Now if the Researchers don't like this then there is something wrong. What growers want is evidence of improved profitability for instance. What levy payers don't want is money being used to improve the profitability of parts of the chain that they get no benefit from.
seethelight
4/09/2014 4:53:17 PM

According to Gecko a compulsory levy on a farmer's gross income is a 'structured arrangement' which D.L. is white anting.But if the levy is delivering no net benefits and its consuming 20% + of a farmer's net income ,if he is making a net at all,then shouldn't the 'structured arrangement' be reviewed from time to time? Or do we have it wrong?Should the business of agriculture be to prop up 'structured arrangements' at the negligible cost of going broke if the farmer can't handle the burden?Give us break.Better still give us a choice.Its the only way to make the parasites honest.
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