Leyonhjelm's levy labyrinth: inquiry

11 Dec, 2014 01:00 AM
Senator David Leyonhjelm.
We do not have a list of every single levy payer in Australia that we can draw upon
Senator David Leyonhjelm.

THE first hearing of the Senate inquiry into agricultural R&D and marketing levies justified its establishment within 30 minutes, according to Liberal Democratic Party Senator David Leyonhjelm.

The Rural and Regional Affairs Transport References Committee inquiry was implemented in September and is scheduled to report by June 30 next year.

The lengthy inquiry has sparked a steady stream of submissions with more than 40 farmer groups and individual growers expressing concerns or support for their individual levies.

Senator Leyonhjelm has been criticised for pushing the controversial inquiry due to his deep seated philosophical opposition to levies as a form of taxation on growers, rather than a necessary investment to advance agricultural productivity.

But he said the first public meeting of the inquiry in Canberra on November 28 exposed serious structural issues within the levy system, something other committee members noted.

“Within 30 minutes there was a clear realisation that there are legitimate concerns about agricultural levies,” he said.

Ag group accountability

Senator Leyonhjelm said a key issue raised at the initial hearing was the level of accountability to levy-paying growers.

He said organisations like the Grains Research and Development Corporation (GRDC) believed they’re spending levy monies efficiently – with matching government funds – and “it’s quite likely they are spending that money wisely”.

But he said the hearing showed the various Rural Research and Development Corporations (RDCs) had difficulty proving or demonstrating that efficient spending to levy-payers.

Agriculture Department Levies Section director Noel Robson said his team dealt primarily with levy agents, who lodge returns and remit funds to the department.

But when asked by South Australian Liberal Senator Anne Ruston if the department knew who all the levy payers were, Mr Robson said the Levies Revenue Service did not.

“In terms of the collection and disbursement of the levies, we have limited contact with those levy payers,” he said.

“However, when we carry out, for example, record inspections of levy agents to ensure they pay correctly, we follow all of the transactions for the period we have chosen back to the original levy payer records - that is, the source documents for the levy - to ensure that that levy payer has been advised of the levy collected and that there is a proper process to ensure that levy payer's levy has been passed on to the department.

“But we only deal with levy payers directly if they are also the person who has to lodge the return and make the payment.”

Do ag groups know levy payers?

Agriculture Department policy division acting first assistant secretary Matthew Koval said there were mixed views about the Research and Development (R&D) system, “but there is general support for the system as a whole”.

However, he said the methods used by some industries to track levy-payers are “radically simple” but others are “a lot more complicated”.

“We sit down with the actual companies themselves like Australian Pork Ltd (APL), Australian Wool Innovation (AWI) or Horticulture Innovation Australia Limited (HIAL) and talk to them about how they are consulting,” he said.

“We ask them if they are not just talking to the prescribed industry bodies - the peaks.

“They need to be attempting to talk to levy payers more fully.

“Do we actually know all the levy payers in Australia?

“We do not know the answer to that,” he said.

“We do not have a list of every single levy payer in Australia that we can draw upon and send information out to at this point in time.”

Zero levy-payment option

Western Australian Liberal Senator Linda Reynolds also agreed the first hearing had highlighted the need for greater accountability and transparency in the bodies that administer agricultural levies.

“This inquiry is about ensuring that taxpayer and levy payer funds are spent in a transparent and accountable manner to make sure levy payers receive the best possible research, development and marketing outcomes for their respective commodities,” Senator Reynolds said.

“After the first hearing ... the need for this inquiry is very apparent.”

Representatives of the Department of Agriculture, Council of Rural Research and Development Corporations, Sugar Research Australia, APL and the GRDC appeared before the hearing.

Senator Leyonhjelm said he would use the inquiry to push for a regular periodic vote to determine levies, as used by the wool industry, giving growers an option on whether to pay any levy or what amount.

He said that poll would help to improve accountability but “isn’t a silver bullet method”.

Senator Leyonhjelm said there wouldn’t be a “one size fits all” polling system as individual commodities had unique differences,

but adopting a regular poll, with a zero levy-payment option, was a minimum outcome.

According to Senator Leyonhjelm, to change a levy structure the Department of Agriculture currently facilitates a consultation process with the various agents and growers - but participation rates are low and the process is hindered by inability to accurately identify levy-payers.

“I think what we’ll get out of this inquiry is some recommended changes that will attempt to make the system more accountable,” he said.

“Some of the RDCs have already said they’re already moving in that direction but we still need to ensure there’s more accountability in the system which improves value for levy-payers.”

The broad-ranging inquiry is scheduled to hold further public hearings on February 3 next year in Sydney and the following day in Melbourne.

Committee chair and Western Australian Labor Senator Glenn Sterle recently told Fairfax Media he was “rock solid” in supporting and maintaining the levy system.

He said he didn’t want to pre-empt the inquiry but “there’s absolutely no way known that I see this inquiry as a tool or a vehicle to recommend that there are no levies in the agricultural industry”.

Fast facts on levies:

- Current statutory RDCs were established in 1989 as a partnership between industry and government to jointly fund R&D for agricultural industries to improve productivity, sustainability and product quality.

- At present there are five statutory RDCs and 10 industry owned RDCs.

- The Department of Agriculture is responsible for the collection, administration and disbursement of levies on behalf of primary producers across Australia.

- In 2013-14 there were 99 statutory levies representing 74 commodities paid to 19 levy recipient bodies.

- In 2013-14 $467 million in levies was disbursed to 19 levy recipient bodies, contributed by Australian primary producers, along with the Australian Government matching funding for eligible R&D of approximately $250 million.

Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


Fred Haskins
11/12/2014 5:36:03 AM

Until the Federal Government in forces a mandatory code of conduct in the horticultural industry neither government of producers will have any idea whether their levy money collected has gone to the levy board or into an Agents back pocket. As for producer in put. A series of meetings around the country where we the producers are told what they the peak bodies "are" going to do!
11/12/2014 5:50:10 AM

Love him or hate him, this bloke is going to expose some facts.
11/12/2014 6:31:08 AM

This senator would use the ringing of Santa's bell to claim justification of what he says. The Senator must listen and wait for all discussions at the inquiry to be heard, not just 30 mins!
Top Ender
11/12/2014 10:11:12 AM

All very well pushing productivity but what about profitability? All very well to have excellent productivity but if it ain't profitable, what is the point. Perhaps we should be spending the levy money to get farmers to understand how to run and measure profitability in their business, and then leading that into the productivity space!
Brad Jones
11/12/2014 11:00:17 AM

Well said Top Ender. Understanding cost curves to determine profit relative to risk is a far more important metric then productivity with risk as a background.
John NIven
11/12/2014 1:47:57 PM

David Leyonhjelm is 100 % correct, compulsory unionism is illegal.
11/12/2014 4:41:23 PM

Looks like Senator Leyonhjelm has done the right thing in bringing attention to this issue. And his proposed solution (letting the levy payers decide themselves) seems like a good compromise between the pro-levy and anti-levy arguments.
Bushie Bill
11/12/2014 6:47:55 PM

Do you really understand what productivity is, Top Ender?
John NIven
12/12/2014 9:12:04 AM

I thought Top Ender was on the right track. Seems Bushie Bill would like to see producers pay higher levies, increase productivity, and go out backwards at a faster rate. We can import all our food, a wonderful result for everybody.
Bushie Bill
12/12/2014 2:47:05 PM

And you, John, do you understand what productivity is?
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