John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

I rise to speak to the Primary Industries (Excise) Levies Amendment Bill 2010. The bill before the House is another example of where an agricultural industry itself has driven sensible, practical measures for reform to ensure that our industries continue to use sustainable production methods and best practice to keep ahead of the game. This bill amends the Primary Industries (Excise) Levies Act 1999 to increase the cap on the research and development, or R&D, component of the laying chickens levy from 10c to 30c per laying chicken. It may seem minor, but it is a major win for the industry and a shining example of how a proactive industry can drive change.

The proposed levy cap increase to 30c will enable increases in the operative levy rate above 10c. It does not mean it will go to 30c. It gives the industry and the minister the ability to raise the levy progressively up to that amount as the industry and the minister see fit. It is in response to the egg industry requesting that the operative levy rate be increased beyond the current 10c levy that is in place. This increase would enable the Australian Egg Corporation Ltd, AECL, on behalf of the egg industry, to meet the core R&D objectives that it and the industry have, as outlined in its 2008-12 strategic plan. The 30c cap will allow industry to seek future levy rate increases within that 30c cap by amendments to the Primary Industries (Excise) Levies Regulations, without any need to amend the act, as I said.

As with other primary industry R&D corporations, AECL has taken a methodical and systematic approach to the evaluation of the impact of R&D. The fact is that with that R&D the Australian agricultural industry in general, but in this case the laying chicken industry in particular, meets its objectives, is on top of the game and continues to set world standards. To assist the consideration of an increase in the levy by the egg industry, it developed a compelling business case which included an independent cost-benefit analysis. That analysis provides the strong support that the parliament needs for increasing the levy.

R&D investment through AECL has totalled in excess of $3½ million in the four years from 2003 to 2007. Independent analysis of the R&D investment showed that there is demonstrable return on that investment, as indeed did the inquiry into R&D held recently, which looked at matching levy funds between government and industry. It showed that the Australian taxpayer is very, very well serviced by the levy, as it is by levies in the other major agricultural industries around Australia. The estimated return on egg R&D of $12.60 for every levy dollar invested is not inconsistent with estimates from other industries. The analysis reveals that 72 per cent of the investments have delivered benefits for egg producers and 65 per cent have also delivered outcomes to the Australian community. That is good, and we are totally in accord with the government in wanting to see this bill go through the House so that the changes can be implemented.

It is also timely to note that, while industry is more than pulling its weight to fund research and development in the national interest, this government has done a real job of slashing and burning this important component of any national food security plan in recent years. Investment in agricultural R&D at the state and federal level has dropped dramatically. Certainly, the federal scene is not as guilty as the state in withdrawing from R&D funding, but at the federal level the then Rudd government cut $63 million from the CSIRO agricultural research budget in its first year in office. It abolished Land and Water Australia. It cut $12 million from the IRDC. It continues to look hard at ways to cut funding. The recent inquiry into the level of R&D funding that the federal government invests to match industry funding was an example of that. That inquiry recommended that 50 per cent of the current matching dollar for dollar by government be withdrawn. The government wants to put it into what I can only refer to as political R&D rather than productive R&D.

This concerns me greatly, because the inquiry I just mentioned showed without a doubt that the taxpayer gets extraordinarily good value for money out of what the Commonwealth puts in through matching funds with industry. If the current government wants to start political R&D—in other words, looking into climate change et cetera—rather than combining with industry to do productivity R&D, all well and good, but do not throw the baby out with the bath water and take away the funding; continue to do the other. If the government wishes to go into separate forms of research and development without industry, all well and good, but do not take away what is working.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

A slightly related process.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

Madam Deputy Speaker Bird, I hope the member for Lyons can prevail upon his colleagues to see this does not happen because I am sure he knows, as I do, that it is the best money the Commonwealth spends.

As with other primary industry R&D corporations, and as I said, AECL took a methodical and systematic approach to the valuation of the impact of R&D investments to assist consideration of an increase in the levy by the egg industry. They developed a compelling business case that includes an independent cost-benefit analysis, and that analysis provides strong support for increasing the levy. Thank you.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The honourable member for Calare is quite right: the levies that are collected in this country play a very important role. But I think all of the issues he mentioned such as climate change and productivity go together, in the sense that you cannot increase productivity without taking into consideration carbon and carbon footprints. It is a bit of a no-brainer. It all has to be linked together to find the best path forward.

The Primary Industries (Excise) Levies Amendment Bill 2010 consists of a measure to increase the cap on the research and development component of the laying chicken levy from 10c to 30c per laying chicken. The Australian Egg Corporation Ltd, on behalf of the egg industry, requested that the increase to the levy rate from 10c to 13.5c be in place by 2010 so that it could meet the research and development objectives outlined in the industry’s 2008-12 strategic plan. Currently, the Primary Industries (Excise) Levies Act 1999 caps the research and development component of the laying chicken levy at 10c per laying chicken. This bill makes amendments to the act in one area: the bill will provide for an increase in the cap on the research and development component of the laying chicken levy from 10c to 30c per laying chicken.

The levy is imposed on laying chickens hatched at any hatchery where at least 1,000 laying chickens are hatched in a financial year. The levy is imposed on laying chickens that are older than 48 hours after hatching. The operators of hatcheries who produce laying hens are legally responsible for paying the levy. However, the cost of the levy is routinely passed on to egg producers.

In May 2009, the Australian Egg Corporation Ltd, on behalf of the egg industry, provided a submission to the Minister for Agriculture, Fisheries and Forestry proposing a two-step increase to the levy—initially from 7.2c to 10c and then, after 12 months, from 10c to 13.5c. The majority of egg producers supported this change. Amendments to the Primary Industries (Excise) Levies Regulations 1999 increased the levy rate from 7.2c to 10c from 1 December 2009. To allow for the further rise to 13.5c cents, an increase in the levy cap is required by amending the act—hence, this amendment bill today.

Under the act, the maximum total rate of levies applying to all animal or animal products is $5 per unit. The current levy caps for laying chickens are 10c for research and development, 33c for the Australian Animal Health Council and 40c for the National Residue Survey. Increasing the R&D cap from 10c to 30c per laying chicken is therefore well under the overall maximum allowable statutory cap. This will cover the proposed levy rate of 13.5c and any further changes required in the future to account for inflation and strategic levy increases. The 30c cap will allow industry to seek future levy rate increases by amendments to the regulations without the need to further amend the act. The bill does not include consequential amendments to other acts. As I said, this increase will enable the egg industry to meet the core R&D objectives outlined in its 2008-12 strategic plan.

However, should the Primary Industries (Excise) Levies Regulations 1999 be changed after the levy cap is increased to establish a levy rate of 13.5c, it would result in additional government matching in the order of $442,000 per annum. An additional contribution of more than $200,000 for the 2010-11 financial year is anticipated. Should the new rate come into effect from 1 December 2010, funding for this would flow from a special appropriation outside the normal budget approval process.

This bill was introduced in the last parliament and is now looking to be adopted by this one. It will ensure that the Australian egg industry maintains its strong tradition of being innovative and adaptive. Levies provide an effective system for funding necessary research and development. I understand that the goal of the AECL’s R&D program is to improve efficiency, sustainability, egg quality, education and technology transfer in the Australian egg industry.

As I said, with this legislation the Australian government is responding to a request by the AECL, on behalf of the egg industry, to increase the R&D levy rate to 13.5c per laying chicken. The levy is currently 10c per laying chicken, the maximum allowed under the legislation. The increased levy weight will assist the industry to expand its R&D objectives as outlined in its 2008-12 strategic plan. The R&D objectives include improving flock health and disease management, animal welfare and environmental sustainability. The request by the AECL followed consultation with the industry and met the government’s levy principles and guidelines. To increase the levy rate from 10c to 13.5c, as requested by the AECL, is a two-step process. The legislation has to be changed to increase the maximum allowable R&D levy rate. The government has decided to increase the cap from 10c to 30c now to cover potential future levy increases that the industry may require.

If the bill is approved by the parliament, the government will amend the Primary Industries (Excise) Levies Regulations 1999 to increase the levy to 13.5c per laying chicken. I have been informed that the AECL considers that, without increased levy proceeds, there will be underfunding of the R&D required to respond to the productivity and sustainability challenges faced by the industry. The AECL’s submission to the Commonwealth proposing an increased levy notes that the egg industry’s current R&D often lags substantially behind that undertaken by competing industries and other food commodities. There is an estimated return of $12.60 for every egg R&D levy dollar.

Most of the primary industries now have to be smarter in the way that they operate. This requires research to ensure that the industry is heading in the right direction for the future. I commend the AECL for taking the initiative to levy growers to allow that work to be done to benefit all of them. The government understands this and wants to assist other industries to help themselves through difficult times. R&D corporations need to put some money into education especially of young people so that they understand the livestock industry in Australia; otherwise, there might not be a livestock industry in the future. There is a real need for that, and the R&D corporations have lagged behind in understanding that. For a small amount, I believe we could do a lot in the education sector.

The research priorities in this strategic plan go out to 2011. I understand from the AECL mission statement that there are plans to develop and drive an integrated on-farm plan for chain and market services that maximises benefits and revenue for the Australian egg industry and the community to minimise barriers and costs for Australian egg producers. The scope of these research and development operations covers the entire supply chain from farm inputs to egg products and by-products. They say the main focus is to provide innovative on-farm solutions—maybe some of that will be for the carbon footprint—and improvements in efficiency. They will also include all associated production factors which are relevant, including consumer needs and expectations, nutritional factors, market demand, supply chain, waste management and quality control. This will allow them to try and meet their mission statement.

This industry has a number of challenges. The most obvious and probably the most public one concerns hen welfare. This is not an easy one for the industry, as there has been a lot of adverse publicity, some of which may not be warranted. Certainly there were some bad operators in the system. The industry recognises that it is difficult to objectively assess and characterise hen welfare associated with production system design. The welfare debate is complex because of the different approaches and priorities of welfare assessment and associated beliefs of stakeholders. Therefore, it is critical to have rigorous and peer reviewed science and communication of key research outcomes regarding best management practice and on-farm animal husbandry available to producers.

Obviously, production that optimises hen welfare is fundamental to all effective and sustainable businesses. Unbalanced publicity and an uncertain regulatory environment impinge on a producer’s ability to invest in or improve production systems to meet consumer demands. There is a risk that changes of practice without rigorous science will compromise hen welfare. Purely from a consumer’s point of view, I have been taking note as I shop for eggs at my local supermarkets. People are taking a more careful approach to egg buying. I have noted at times that people scrutinise the boxes that say ‘free range’, ‘barn reared’ or, even more weirdly, ‘organic’ and seem to be prepared to pay more for those boxes labelled as such. As this is my research and it is anecdotal, it may not play much of a role in decision making. It would be interesting to note if the trend went right across our nation. Is there a change in people’s buying habits? Does this have an impact on the profits of the industry?

There are also the environmental impacts of the industry and the need to minimise the effect of waste, emissions and by-products. Maybe we need to look at ways of using those products and perhaps the energy sources of the businesses themselves. I am pleased that the bill has bipartisan support. I am sure it is good for the industry. I support the bill.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I thank the members for Calare and Lyons for their contributions—particularly the member for Lyons who is a passionate advocate for the primary industries sector in his electorate and is passionately interested in the issues concerning primary industries nationally. In my new capacity I look forward to working closely with the member to advance the cause of primary industries.

The Primary Industries (Excise) Levies Amendment Bill 2010 amends the Primary Industries (Excise) Levies Act 1999 to increase the maximum allowable levy rate cap on the research and development component of the laying chickens levy from 10c to 30c per laying chicken. The proposed change is simple but provides greater flexibility for the egg industry to invest in its research and development effort into the future, providing a positive return for egg producers in the community. The change in the levy cap will allow for a regulation to be made to increase the operative levy rate to 13.5c to allow the egg industry to meet the core research and development objectives outlined in its 2008-12 strategic plan. The levy increase was requested and supported by the industry. It is a wonderful example of the cooperation between government and industry through the levy scheme to promote and support research and development in the primary industries sector. I thank you, Deputy Speaker Bird, and I thank members for their contribution.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.