Levy payer groups on the offensive

02 Oct, 2014 02:00 AM
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CEO of Cotton Australia Adam Kay.
The levy system is the envy of the world and we don’t want to jeopardise it
CEO of Cotton Australia Adam Kay.

AGRICULTURAL levy payer groups are considering formulating a joint submission and attack on the government’s controversial inquiry into the sector’s marketing and research and development levy system.

The inquiry was referred to the Rural and Regional Affairs and Transport References Committee in early September and will accept submissions until October 20 ahead of scheduled reporting date of November 24.

The political investigation was sparked by Liberal Democratic Party Senator David Leyonhjelm’s disallowance motion that threatened to suddenly scrap regulations doubling the mushroom and onion levy and increasing the mango levy.

A vote on the disallowance motion was postponed while Senator Leyonhjelm negotiated for the Senate inquiry into all farm levies, which the Coalition agreed to, saying it fulfilled an election commitment.

The Greens and Palmer United Party expressed a lack of support for the disallowance motion, which was eventually withdrawn last week in a move roundly praised by levy-paying groups.

Staunch response continues

Industry lobbying on the disallowance motion attracted a staunch response that is now set to continue as the inquiry unfolds.

That includes maintaining the re-convened Across Agriculture Group (AAG) which represented 18 peak industry bodies like Cotton Australia and Grain Producers Australia.

AAG convenor and Cotton Australia CEO Adam Kay said the AAG was representing the views of levy-paying growers and not the 15 Research and Development Corporations (RDC) which conduct the R&D or marketing work, like grains, which has an annual operating budget of about $180 to $200 million.

“We haven’t just formed this group to fight Senator Leyonhjelm’s views on levies; we’ve been working together collaboratively for the past three years, since the Productivity Commission reviewed RDCs,” he said.

“We’re not trying to make enemies with a new Senator but the levy system is the envy of the world and we don’t want to jeopardise it.

“This is an issue that’s very close to growers’ hearts.”

Levy system's value

In a statement responding to the Productivity Commission (PC) report tabled in June 2011, former Agriculture Minister Joe Ludwig said the government would not adopt the PC’s recommendation to halve the cap on government matching contributions to the RDCs.

“While the Productivity Commission’s report notes several areas for improvement in the RDC model, it recognises that the matching funding arrangements, the high level of industry engagement and the strong support from all sectors for the RDC model make it unique among R&D funding models around the world,” he said in the report.

“The commission also indicates that the strengths of the model include the close links with industry and the ‘systems integrating’ role that the RDCs play in terms of collaborating with other research funders and influencing research priorities and framework reform.”

Mr Kay said the AAG would work together collaboratively now to highlight common ground on the levy system’s value, including benefits to growers.

He said each of the peak industry groups had an individual story to tell about their levy’s value but they also had common ground to express about the system’s mutual benefits.

The AAG’s joint submission to the Senate inquiry would highlight common points about levies and subsequent benefits, “we all agree on”, he said.

No precedents considered

As the inquiry unfolds, the government is also considering results from the recent inquiry into the grassfed beef cattle levy, which recommended establishing a producer-owned body in legislation to manage the industry’s marketing and R&D levy funds.

However, Mr Kay dismissed suggestions of any precedents for other commodities saying each levy’s individual needs must be considered and repaired where needed, rather than taking a generic approach.

“If an individual levy was to go off the rails you would identify the actual problems which caused that to happen and fix them, rather than dismantle the whole system,” he said.

The AAG also wrote to Senator Leyonhjelm in August reiterating similar messages about the levy system.

A copy of the letter – seen by Fairfax Agricultural Media – said the vast majority of producers valued the agricultural levy system and “the benefits it brings to our industries and our country”.

“The purpose of this letter, supported by so many producers, is to reinforce that and highlight that without the agricultural levy system there would be market failure in agricultural R&D, marketing and biosecurity,” it said.

“This would impact the competitiveness of our agricultural sector and threaten Australia’s ability to continue to produce high quality food and fibre.

“The current levy system prevents free riders, provides scale and allows funds to be directed at outcomes that not only benefit producers and the supply chain but also the regional communities that depend on them for direct or indirect employment.”

Avocados Australia has also hit back at recent criticism of the avocado levy by three of Western Australia’s biggest levy-payers who produce about 50 per cent of the State’s annual avocado crop and pay $500,000 to $900,000 in levies.

Avocados Australia CEO John Tyas rejected suggestions by the three growers that they’ve received poor returns from the levy.

“I would argue that they have received very good returns on their avocado levy investment,” he said.

“The Australian market is currently moving 25 per cent more avocados than it was at the same time last year and the year before.

“That doesn’t happen by accident.

“The people who are pushing for change with regard to levies are currently benefiting from the efforts and levy investment paid by other growers over the past 25 years or more.

“I think they should be grateful and they should be able to see the value in industry working together to address issues of market failure to deliver further benefits into the future.”

But Farmer Power secretary Steven Garner this week stressed the importance of the Senate inquiry as an opportunity for farmers to communicate their discontent.

“This is the first real chance for paying members of dairy industry representative bodies to put forward their concerns about how their money is spent to an independent body,” he said.

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Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

John Hine
2/10/2014 4:35:55 AM

Trick with the current levy system is that it almost assumes everyone's research and marketing needs are the same. What about (say) halving the levies and getting the government to allow farmers access to the R&D tax incentive that all other businesses get. Then there would be funds for long term research and individual companies or groups of farmers could do their own thing. This will speed the move from commodities to products.
Archibald
2/10/2014 6:54:57 AM

No the levy system is undemocratic in many instances and denies the levy payers the right to a democratic say. Expenditure is often not beneficial and no cost benefit analyses are carried out. IT IS TIME FOR A COMPLETE OVERHAUL!!
The Serf
2/10/2014 9:50:38 AM

The cattle industry under MLA/RMAC Federal Government control is very similar to the Government of Hong Kong in the media at present - The central government controls MLA through legislation and controls the membership of the Directors by only allowing the individuals they desire to stand for election onto the Board of MLA through the selection committee. That is straight out of China, a communist doctrine, its here alive and well in Australia's cattle grass-fed sector. It must change if we are to progress to the the 21st century...
Qlander
2/10/2014 10:49:11 AM

The levy system is the envy of the bureaucratic.
Philip Downie
2/10/2014 11:10:46 AM

Anyone who denies the people who provide the funds a say in how they are spent is hiding something. Also there is rarely a cost/benefit or even a usefulness test ie how big was the uptake. Time to open this can to the light and let democracy in.
Mug
2/10/2014 12:05:54 PM

Yes Philip Downie. I agree, and while we are about it a VERY close look at GRDC.
Jock Munro
2/10/2014 12:15:33 PM

The Hong Kong student rallies are protesting against the communist Chinese government's version of democracy where they present the candidates for the locals to vote on. GRDC,DA,HA and MLA use the same system-who copied who!?
levyman
2/10/2014 12:22:35 PM

As a vegetable grower I get no say on who represents me. The supposed peak industry body isnt even democratic and we can't see their books.I welcome the inquiry too much levy money is spent in administration. I bet received administrators are just fighting for their salaries. Tomatoes and melons don't pay levies and they haven't gone bacwards, tomatoes even got a HAL project done on a food safety guide, I wonder who funded that one?
Joey
2/10/2014 2:25:19 PM

To those who say bring it on, you will halve the R&D effort, Joe Hockey is loving the work that Leyonhjelm is doing for him. He is making the case to remove the matching dollars from government ($250M) Why not let the RDC's that are not working get dealt with ie like MLA inquiry and like AWI 3 years ago and leave alone the ones where it is working ie rice, fish etc Why bring down a good system. Don't worry there will be no bureaucrats involved when we loose the matching government dollars
wtf
2/10/2014 4:15:25 PM

I'am accountable, why shouldn't they be?
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