Jan Davis: Leave levies out of political powerplays

A wide-ranging review of Australia’s agricultural levy system is set to be undertaken by the Senate.

The Rural and Regional Affairs and Transport References Committee has been asked by NSW Liberal Senator Bill Heffernan to inquire into the industry structures and systems governing the disbursement of marketing and research and development levies in the agricultural sector. The inquiry will also look at opportunities levy payers have to influence the investment of the levies.

The review, which has been backed by the federal government, is a move to appease crossbench NSW Liberal Democrat Senator David Ley­onhjelm.

The Senator was elected to the Senate on 1 July this year, and he didn’t take long to make his mark. In his view, levies are compulsory tax that distort market signals and provide subsidies to farmers. He said that blocking proposed increases in mushroom, onion and mango industry levies was the best way he could see of opening a broader root and branch review of the entire levy system.

The decisions to increase these levies were not lightly taken. They were instituted by farmers who recognised the need to invest in their industries for the benefit of all levy payers. They followed extensive and comprehensive industry consultation processes for all three industries. These processes were the culmination of a five-year process that strictly adhered to the Department of Agriculture’s levy principles and guidelines.

Having jumped through these considerable hoops, the federal government had budgeted for the levy increases and all that remained to implement the changes agreed to by the majority of farmers in each of those industries was for the parliament to ratify them.

The NFF wrote to politicians last week, pointing out that it was important the overall levy system wasn’t put at risk due to “a knee-jerk reaction in response to a very small number of individuals”. NFF pointed out that the current levy system and government partnership approach 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 entire Australian community. They also noted that proposals to increase each of these levies were instituted by growers who recognised the need to invest in their industries for the benefit of all levy payers.

The vote was to have taken place last week but, at the eleventh hour, the Senator reneged. The fact that the Coalition, the Greens and some of the cross-benches (including the Tasmanian PUP Senator, Jacquie Lambie) would have combined to defeat him undoubtedly had something to do with it.

Since then, the focus has shifted to the inquiry initiated by Senator Heffernan.

An effective system of primary industry levies and charges underpins the capacity of farmers across the entire agricultural sector in Australia to work together, pooling their effort and resources, to find solutions to priority issues.

Our levy system is the envy of farmers across the world. It has enabled Australia’s farm businesses to become world leaders in production efficiency, sustainability, product quality, innovation and supply and response to market needs.

Over time, state and federal governments have withdrawn funding for agricultural extension services; and farmer-funded levies ensure that investments are still made in the industry, for the benefit of all farmers. With the lowest agriculture subsidies in the world, our levy system is the best way to keep Australian farmers funding their future in a self-sufficient way.

TFGA strongly supports the continuation of our agricultural levy system; and we have been disappointed at the political machinations over the past few weeks that have clearly put that system at risk.

The proposed changes in the mushroom, onion and mango industry levies had been scrutinised by every referee and umpire in the system and they’d all agreed the proposals met the significant requirements for change. Senator Leyonhjelm’s motion effectively held a small number of industries to ransom in order to achieve a wider review – and this is not appropriate. We take the fundamental view that farmers pay the levies and therefore it should be farmers, not politicians, who decide if the system needs changing.

Of course, that doesn’t mean that the system can’t be improved, or that a review is necessarily a bad thing.

In saying that, though, it is important to recognise that there is a high level of farmer support for the current levy system. It will be vital in the coming inquiry to ensure that political agendas do not compromise the benefits that flow from the significant investment made through this system by farmers and governments in much-needed agricultural research, development and extension.
TFGA chief executive Jan Davis