SINGLE collection points and increased online administration would improve the transparency and management of agricultural levies, says the federal Department of Agriculture.
The Senate Rural and Regional Affairs and Transport References Committee’s inquiry into agricultural marketing and research and development (R&D) levies continued last week with a half-day hearing in Canberra.
The Department, Horticulture Innovation Australia Limited (HIAL) and the Grains Research and Development Corporation (GRDC) all faced questions, mostly focussed on ways to improve levy transparency and accountability.
Ahead of the hearing, NSW Liberal Democratic Party Senator David Leyonhjelm said the Department was the first witness to appear at the inquiry’s first public hearing last November.
He said the Department’s initial position at the time was essentially ‘there is no problem, nothing to see here, we don’t really know what the concern is’.
But ahead of last Friday’s hearing, he said he hoped the Department had now devised their own ideas, to help inform the inquiry which is due to report by June 30.
“We’ve had a stream of witnesses pointing out, black and white, this is an unaccountable taxation without representation system,” he said.
“If the Department have been paying attention you’d hope they would say ‘yes, we understand what the point of this inquiry is now and now we see why it was established and the problems seeking to be solved’.”
Opaque and unaccountable
At the hearing, Western Australian Liberal Senator Linda Reynolds said - as an ex Auditor-General - she had a “particular passion” for compliance auditing for assurance purposes.
But she said if the most complicated, difficult, opaque and unaccountable process possible was developed to deliver the levy process, “I think we now have it”.
“Clearly, it is not about the system itself but how we can bring it into the 21st century, streamline it and make it easier,” she told Department officials.
Speaking about underlying principles to improve the levy system, Department agricultural policy division first assistant secretary Fran Freeman said there was “no magical wand that we can wave”.
“The issue for us is complex,” she said. “On the one hand we have a lot of responsibility using the taxation powers to collect a lot of money.
“The Commonwealth government's contribution is a quarter of a billion dollars.
“All the way through the system, probably three quarters of a billion dollars comes through, so there is a real need to have proper checks and balances in a system that is responsible for those funds.
“Equally, we are trying to decrease the regulatory burden on people and that is a good principle to follow but at the same time it is a bit of a balancing act.”
Ms Freeman said, “I think we would all safely say that no one size fits all”.
“Even if you took one industry and look at the issues where things are collected for R&D, marketing, animal or plant health, the National Residue Survey or whatever, there is a reason why those funds are used for a range of different purposes,” she said.
“It is hard to just say, 'tick a box, put it in and away you go’.
“Equally, there are enormous complexities involving the role of industry, and the industry representative bodies and how they bring forward what they want and how they can demonstrate that they have actually consulted (and) it is accountable, information is two-way etcetera.
“So there are some real issues along the food chain, if you like, at what you might look at to streamline it I think.”
Department Assistant Secretary, Industry Support Branch, Matt Ryan said complexities in the levy-collection system were “an artefact of a number of years” – but the system could be improved, through a redesign, by having a single collection point.
He said a single collection point already existed in some industries because the market constricted in a certain place, as did the supply chain.
Mr Ryan said returns and payments which are submitted online also simplify the task for his department.
But he said for different industries, the only potential single collection point was at the producer level.
“There are lots of producers so there are a lot of people that we need to cover, educate and get information out to, to make sure the levy is being collected and they understand their roles and responsibilities,” he said.
Senator Reynolds said one suggestion - met with mixed response during the inquiry - was for growers to pay levies through their business activity statements (BAS) which went direct to the Australian Tax Office (ATO).
Mr Ryan said he had no opinion on that option but said the tax department already collected a lot of information that may be relevant to the purpose.
“But again would it be simpler?” he said.
Senator Reynolds said to achieve genuine accountability, a link was needed between those who pay the levies - whether they be individual growers or the taxpayer - and how they are spent.
“It is clearly a broken system and I think one thing that needs to be fixed,” she said.
“I understand the Department has no way of knowing who the growers are and every commodity has a different process and different visibility.
“Some of it is retained by commercial collectors and is commercial-in-confidence.”
Department Agricultural Policy Taskforce assistant secretary Cathrine Stephenson said dairy and wool were the only two industries where the Department currently had true visibility of who the growers are.
She said that was because the legislative framework for those industries allowed the Department to collect levy payer information - including the levies they paid - from the intermediaries, and pass it onto the relevant research and development corporations.
Those two industries also conduct polls, she said.
“We do not have that visibility for the others because our role, as it is currently prescribed in legislation, is purely to collect the levy from the intermediaries and pass the levy on but not to pass on information about who the levy payers are or what they pay,” she said.
Ms Stephenson said the Department was starting to work with GRDC, HIAL and Meat & Livestock Australia to look at options to potentially set up a levy payer register or registers on a general premise of the model being set up according to what industry wants.