Live exporters face 66pc fee hike

27 Jun, 2014 11:40 AM
Sheep being loaded for live export in WA.
We cannot sustain it, the producers of Australia cannot handle the added costs
Sheep being loaded for live export in WA.

"AN act of bureaucratic bastardry" is how the Australian Livestock Exporters Council has described the federal government's decision to hike up fees by 66 per cent.

ALEC chief executive Alison Penfold said the move to increase live animal export document processing, inspection, certification and registration fees and charges has "angered and disappointed exporters" - and could potentially put producers out of business.

The decision was sent to exporters at 7.30pm on Thursday night and comes into effect from July 1.

The legislation - which passed both houses - seems at odds with both the Coalition’s election promise to cut farm business costs and Agriculture Minister Barnaby Joyce's vocal support for the live export industry.

Western Australian Liberal Senator Chris Back said the recovery charges of $671.80 an hour being forced onto the industry were “unsustainable” and needed to be urgently addressed by the Agriculture Department.

“We cannot sustain it, the producers of Australia cannot handle the added costs upon them, and I urge government and the Department to address this,” he said.

Ms Penfold said the government was gouging a 500pc premium out of producers' pockets.

“The Minister for Agriculture has made a huge play on his commitment to support the live trade as well as increase agricultural competitiveness across the sector’s industries," she said.

"We thought he would take our representations through the Cost Recovery Impact Statement process seriously. Yet here we are facing outrageous fees and charges that directly fly in the face of the Minister’s statements and the government’s red tape and deregulation agenda.”

Ms Penfold said the decision entrenched cost recovery arrangements that were unfair, unreasonable and in breach of the government’s own cost recovery guidelines.

“Exporters are prepared to pay for services delivered, but those services must be efficient, transparent, sustainable and at least placed under some level of competitive pressure to ensure competitive pricing.

“The simple fact is that none of that exists in the new fees and charges schedule released today – a schedule that deems it acceptable to charge some exporters $671.80 per hour for simple document processing.

“There is no correlation between the services provided and the fees charged. For example, we know that Departmental officers within a range of job classifications undertake this task. Some of the work is done by veterinarians at the APS4 and APS 6 levels.

"The salaries for these officers range from $62, 818 to $109,584. If we add a 30pc salary on cost and then add the Department’s 56pc overhead costs, the hourly rate for these two job levels comes in at $75 and $130.70.

“That means the government is gouging a 500pc-plus premium out of the pockets of the livestock export supply chain, including producers and exporters."

Senator Back also highlighted an “anomalous situation” where the hourly rate charged for inspection services changed dramatically.

He said the price per animal for feedlot cattle (tier 2) was $3.90 per beast - but after 22 hours (a small number of hours for the complexity of the work being undertaken) that cost changed dramatically to $70.50; which the tax invoice he read from referred to as a penalty fee.

“This is totally and utterly unacceptable and without exception,” he said.

“I understand that the officials of the Department of Agriculture are very diligent, but if you know very well that for the first 22 hours you are going to get $3.90 per beast and after that you are going to get a very much higher figure - and in the case I quoted it is $70.50 - where is the incentive to get the work done more efficiently, in a shorter amount of time?

“More particularly, if it is the statement of our government - and it is - that we are trying to reduce red tape, that we are open for business, then it is incumbent on us to be driving these prices down, to be improving efficiency.”

Senator Back also raised concerns that small exporters were being priced out of the market.

“In one circumstance put to me the gross return for a small export was going to be $1000 and the cost of processing the documentation to actually give effect to that export was $1000 – 100pc of the actual return to the producer,” he said.

A Public Service Commission capability review released in March stated 60pc of the Department’s budget came from cost-recovery operations.

The Senator said US Department of Agriculture officials told him on a US tour last year that all costs associated with export inspections were met by the American taxpayer. In contrast, Australia’s cost recovery circumstances were continuing to climb, he said.

“I was recently advised that research undertaken by the red meat sector to 2012 estimated that government-influenced costs and charges in Australia account for almost 30pc of all costs incurred after the purchase of livestock - and that did not take into account those incredibly increasing costs for the Exporter Supply Chain Assurance System (ESCAS),” he said.

“It is unsustainable that 30pc of all costs would be related to government."

A spokesperson for the Department of Agriculture said "the government is committed to Australia’s live animal export industry and is determined to see the trade grow".

Cost recovery charges for live animal export certification are designed to recover the full cost the department incurs in demonstrating compliance with importing country requirements and the administration of the ESCAS, the spokesperson said.

"The government is committed to improving and streamlining the ESCAS system and is conducting a review of the system to identify ways in which the regulatory framework can be delivered more efficiently, at a lower cost, whilst maintaining the international animal welfare outcomes that Australians expect.

"The Department of Agriculture currently spends $10.1m a year in live animal export certification and ESCAS services, but only recovers $6.5 million to pay for those services.

"This shortfall has been a major contributor to the department’s operating deficit over the last three years and is not sustainable."

The spokesperson also noted that since September 2013, the government has re-opened the live trade to Egypt, Bahrain and Iran, and is now negotiating with Saudi Arabia, a former key market for Australian sheep.

"Increasing shipments of live cattle and sheep to overseas markets has been occurring and this will improve marketing opportunities for producers and exporters of livestock in Australia."

Ms Penfold said the Minister needed to make urgent changes to offset the new charging regime and "rectify the internal archaic and inefficient Department of Agriculture business and service delivery systems".

“The Minister must exert some influence on his Department immediately if he is true to his word, and seek an urgent package of changes to offset the costs that now threaten the viability and sustainability of the live trade”.

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27/06/2014 1:19:03 PM

Put the process out to competitive tender. I'm sure we can find any number of suitably qualifield vets and pen pushers who can do the same job for a 10th of that hourly rate. Screeming out for productivity increases in private enterprise but it seems not required of Government depts, they just pass the supposed cost back (including all their inefficiences) on to the producers and exporters. When we all throw in the towel who will they recoup the costs from then.This beuracracy has absolutely no idea about market forces and operating in a competitive environment
27/06/2014 2:03:57 PM

Liberal/National promise to cut red and green tape was obviously a little "porky pie" as usual. I'd say this looks more like "protection" for the Australian processors. When will the rural voters learn that promises before an election are most likely lies!!
27/06/2014 2:16:08 PM

Get rid of the whole live export industry. It is nothing but an embassassment.
Alison Penfold
27/06/2014 4:01:08 PM

The cost of ESCAS processing is no justification for running an inefficient program that creates costs of $670 an hour. Exporters support cost recovery but the services required must be efficient, fair, and sustainable. Attempts to blame exporters for the cost overrun is no justification to raise fees and charges, particularly given industry's efforts to seek efficiencies through the 3 year MTF AQIS Reform Agenda. Market access is great but we may be lucky to have exporters around to use it.
27/06/2014 7:44:20 PM

It looks as though it is not just the veges and greens trying to stop live exports The Govt & it's bureaucracies look set to trump the lot
Old cowpoke
28/06/2014 8:37:03 AM

Another kick in the guts for Australian farmers, this time by a Coalition Government. Have the Nationals completely lost their mojo? What's the point in being in a coalition when they don't have the muscle to stand up to their coalition partners? Would Barnaby Joyce make a better leader? Earle Page certainly would have; but that was when politicians stood up for their principles.
28/06/2014 9:00:00 AM

This is just another example of a Government and a community ignorantly expecting an Australian wealth creating industry, to survive on deregulated global export income while carrying the excessive burdens of a inflated and highly regulated cost system. All the Free Trade talk by our MP's is hereby exposed as a giant fraud. Until our Govt addresses the biggest anomaly to Free Trade, it is just peeing into the breeze.
28/06/2014 7:03:01 PM

The typical shrieking from the exporters when they are expected to pay their way. Of more interest is who has been poicking up the shortfall up until niow - the unwilling, hapless taxpayer - Ms Penfold, tell the truth, How much do you cost the taxpayer a year - say, over the past 5 years?
Michael B
29/06/2014 7:18:01 AM

The only reason producers want to do live export rather than sell to processors is to make money. Why should this be at the taxpayers expense? On the other hand, the government should not be earning a profit from this cruel trade as that would make them complicit.
29/06/2014 8:00:34 AM

just get rid of ESCAS
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Why do they forget the small producers they are the backbone of the industry. What. Did this
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Good these guys will be able to help the farmers they are treating like second class peasants.
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Lets' hope Troy Grant doesn't Delforce's website or it will be yet another NSW