'Reform CCA': grassfed levy report

09 Sep, 2014 11:30 AM
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Existing infrastructure should be used and reformed, as necessary, to achieve the desired outcomes

THE federal Senate report into the grassfed cattle levy has recommended establishing a producer-owned body in legislation to manage the industry’s marketing and research and development (R&D) levy funds.

The Senate Rural and Regional Affairs and Transport References Committee report was handed down today detailing seven key recommendations from the inquiry instigated by Federal Agriculture Minister Barnaby Joyce late last year.

It also contained a dissenting report from Queensland LNP Senator Ian Macdonald, who strongly disagreed with the committee’s first five recommendations, including dissolving the Red Meat Advisory Council.

The committee’s top recommendation was to establish a producer-owned body with “the authority to receive and disperse the research and development, as well as marketing component, of the cattle transaction levy funds”.

“The producer-owned body should also be authorised to receive matching government research and development funds,” it said.

“Reforming the Cattle Council of Australia (CCA) to achieve these outcomes should be examined as part of this process.”

Audit on the cards

The committee also recommended the Australian National Audit Office conduct an audit of the cattle transaction levy system, tracing the levy from inception and focusing on the revenue from, and expenditure of, the respective levy components.

But rather than implementing a new oversight body, Senator Macdonald was sympathetic to CCA’s calls during the inquiry to redirect $4 million from the $5 a head levy, to strengthen its oversight powers and bolster long-term industry planning.

Out of the $5 levy, Meat and Livestock Australia (MLA) currently receives $3.66 for marketing activities and $0.92 for research and development (R&D) while $0.13 goes to Animal Health Australia and $0.28 to the National Residue Survey.

CCA president Andrew Ogilvie told the inquiry the $4m would require redirecting about $0.28 of the levy to his organisation – but recent industry consultations showed there was “no appetite” for increasing the total levy.

The $162m total revenue generated by MLA last year comprised $54m from grassfed beef cattle levies, $7.8m from grainfed cattle levies, $800,000 in goat levies and $31m in lamb and sheep levies, while the processing sector contributed $9.4m, government $39m and $9m from private investments.

Macdonald's concerns

In disagreeing with the primary recommendation, Senator Macdonald said many submitters to the inquiry thought the current arrangements were “basically correct”.

But the sector’s representative body needed better resourcing so it could do the job required of it under the red meat MOU.

He said the CCA was charged with representing an $8 billion sector but had operated on an average income over the past five years of $1.39 million - excluding service agreements - with only five staff.

“Many producers voiced concerns about funding CCA any further as there is a common belief (obviously erroneous) that CCA already obtains and manages the $5 levy,” he said.

“Rather than involve the government in legislating for a producer-owned body – something that would be almost unique in today's governance arrangements – and involving the cost that such establishment might involve (which is estimated by some at $15 million both in cash and effort in design and establishment), existing infrastructure should be used and reformed, as necessary, to achieve the desired outcomes.”

Senator Macdonald said the best way to potentially achieve those goals was for the government to legislate to add another category to the existing levy allocations for distribution to CCA.

He said provision of sufficient funding and resources through allocation of a portion of the levy would enable CCA to properly oversight MLA marketing and R&D decisions.

“This is difficult under the current arrangements because the principal source of CCA funding is derived from service agreement payments from MLA, the body CCA is supposed to oversight and direct,” he said.

Strategic levy solution proposed

Senator Macdonald recommended a new allocation within the existing cattle transaction $5 levy be introduced and directed to CCA.

“Termed the 'strategic policy development levy' (SPD levy), I propose that the levy allocation be used by CCA to carry out strategic policy development,” he said.

“Implementation of this recommendation would prevent any increase in the amount of levies paid by producers while also providing the necessary strategic policy development required to resource CCA and the sector to better direct and oversight MLA.

“It should be noted that strategic policy development is already defined in the Australian Pork Ltd constitution and accepted as a legitimate use by that representative body.

“The current levy allocations across three existing areas, namely National Residue survey (29 cents), Animal Health Australia (13 cents) R&D (92 cents matched by an equal government contribution) should remain.

“However, the marketing levy of $3.66 could be reduced by approximately 35 cents with that 35 cents directed to the new strategic policy development levy component.”

Senator Macdonald said his proposed changes to the levy allocations could be achieved by straightforward legislative and administrative amendments.

He said it would provide CCA with the resources, expertise and authority needed to advocate for levy revenue investment “that is better directed and carried out in the interests of the levy-paying majority”.

Senator Macdonald said a better resourced SPD levy funded-CCA would ensure the RMAC can work better.

“The majority of submitters or at least submitters representing the majority of producers see value and merit in RMAC and believe its abolition or change would disadvantage the industry-wide approach and therefore have a detrimental effect on the overall industry,” he said.

The inquiry held seven public hearings in Canberra, Broome, Katherine, Rockhampton and Albury, and received about 190 written submissions.


List of Senate committee recommendations

Recommendation 1

The committee recommends that a producer-owned body be established by legislation. The body should have the authority to receive and disperse the research and development, as well as marketing component, of the cattle transaction levy funds. The producer-owned body should also be authorised to receive matching government research and development funds. Reforming the Cattle Council of Australia to achieve these outcomes should be examined as part of this process.

Recommendation 2

The committee recommends the establishment of a cost-effective, automated cattle transaction levy system. The system should identify levy payers against levies paid. The automated system should provide for more immediate settlement of levy fees paid and the allocation of voting entitlements. It should be subject to regular independent auditing and verification.

Recommendation 3

The committee recommends that the Primary Industries (Excise) Levies Act 1999 be amended to ensure that levies paid by processors are recognised as processor (or slaughter) levies and not as producer (or cattle transaction) levies.

Recommendation 4

The committee recommends that the Australian National Audit Office conduct an audit of the cattle transaction levy system, tracing the levy from inception and focusing on the revenue from, and expenditure of, the respective components of the levy.

Recommendation 5

The committee recommends that the Minister for Agriculture dissolve the Red Meat Advisory Council. The committee further recommends that the Minister for Agriculture establish a new system to manage and disperse earnings from the Red Meat Industry Reserve Fund, in consultation with the industry.

Recommendation 6

The committee recommends that the Minister for Agriculture revoke the status of the MLA Donor Company as an approved donor under the Australian Meat and Live-stock Industry Act 1997.

Recommendation 7

The committee recommends that the Department of Agriculture, in consultation with the cattle industry, conduct an analysis of the benefits, costs and consequences of introducing legislation akin to the Packers and Stockyards Act 1921 and Livestock Mandatory Price Reporting Act 1999.

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

Archibald
9/09/2014 12:30:33 PM

I think Senator McDonald might be "out of touch" with the majority of cattle producers and Senators!!
newbroom
9/09/2014 2:57:25 PM

It looks good to me. Change is certainly needed. Donor company is open to abuse, rorting and has never ever been transparent.
Philip Downie
9/09/2014 4:12:17 PM

The Senator McDonald does not want the situation to change just where the money goes. No ownership by producers and no transparency, same old faces.
angry australian
9/09/2014 4:20:47 PM

Those who fail to learn the lessons of history are doomed to repeat them! The political promises being made on the CCA are very similar to the promises made to the fishing industry prior to the formation of the Aust.Fisheries Mgt. Authority, 22 years later the fishing industry has all but disappeared. Ask the good Senators where the bluefin,scallop, southern shark or south east trawl fisheries are!
GulfHorizons
9/09/2014 4:24:49 PM

Can anyone explain to me why we have a public service if it is not to develop strategic policy? We have a Dept of Ag in each State, a Federal Dept of Ag, a Minister in each State and a Federal Minister all with teams of specialist advisers ........ and then we make the industry pay a levy to pay for long term strategic policy! What are the other guys and gals doing?
Barcoo Battler
9/09/2014 6:11:19 PM

Archie - Sen McDonald the Qld senator from Townsville for the last lifetime- in the heart of cattle country -on a senate inquiry on beef matters- is on record at the Inquiry asking "What is a PIC?" and "who is Ian Burnett?" He would have been around in 2002 for the last report to get shelved by Howard. Looks like a good result though from the other 5 senators so well done all -at long last!
Richard
10/09/2014 8:03:50 AM

Hooray to the report. The current setup clearly isn't helping the producers. I've had enough of low cattle prices. Seeing what cattle producers in other countries receive is bewildering to say the least. We need major changes especially post the farm gate.
daw
10/09/2014 11:51:19 AM

Recommendation No. 7 will probably be more beneficial than the other 6 combined. Nonetheless when a system doesn't work effectively then it needs to be scrapped or so drastically changed that the original is no longer recognisable. A round of applause for Rob Moore's efforts on the Packers and Stockyards idea.
Rob Moore
10/09/2014 7:08:23 PM

Thanks daw.In theory the grassfed levy InQ was not the place for the PPP plan but it was simple arithmetic for me- $5 per head v a potential reclamation of $3-400 per head by way of open and true COMPETITION @ our farmgate.A lot of us put a huge effort into this inquiry and I commend Glen Sterle (ALP senator) for chairing this in such an even handed manner.I am very happy with the recommendations. On a personal level - there is still smoke coming from my ears after reading last night that the ML:A tender on what is totally recommendation 7- has been given to a mystery person- appt by a.......
Rob Moore
10/09/2014 7:16:34 PM

Cont- mystery panel. There were 12 applicants at the close of business when tender shut on Fri 21st Aug. I found out last night that there was no cigar for me- 10 days beyond the start time . A "selection panel within CCA/MLA chose someone out of the 14 appl. Could there have been two come in after the cutoff??? I started on this a year ago and the whole shebang was solely my idea! CCA/MLA dumbed it down to an "inquiry to see if we need an inquiry" I have an email from last Oct to say there is "NO Merit " in my Bill(wtf) The hippocracy is staggering- they are ALL parasites on us PRODUCERS!
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