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Wednesday, 18 March 1987
Page: 1077


Mr KERIN (Minister for Primary Industry)(6.36) —I move:

That the Bill be now read a second time.

This is the first of two Bills which are being introduced to establish new research levy arrangements for the egg industry. The new arrangements will supersede the present levy mechanism whereby egg producers contribute towards research through a small component of the levy they pay under the Poultry Industry Levy Act 1965. This levy, commonly known as the Commonwealth hen levy, has been collected primarily for use by State Egg Boards in equalising the impact on individual producers of losses incurred in disposing of egg surpluses.

In recent years, the States have been able to reduce surplus egg production significantly by a progressive tightening of hen quotas which limit the number of hens an egg producer is licensed to keep. Accordingly, a decision was made in 1984 to phase out the Commonwealth hen levy, and legislation was amended to end the levy on 30 June 1987. It is thus necessary to provide an alternative mechanism for securing producer contributions towards research sponsored by the egg industry with the assistance of matching Commonwealth grants.

Consultation with industry, States and Territories resulted in agreement being reached last year on the introduction of a research levy to be imposed annually on a producer's licensed hen quota. This method was seen to be the most cost effective way of raising the funds required. Unlike the present hen levy, which is applied at fortnightly intervals to hens actually kept, the proposed levy does not require physical hen counts to verify fluctuating bird numbers, and involves only two payments a year as instalments of the total levy payable.

It was considered that abolition of hen quotas by a State would render the proposed levy inoperable and thus jeopardise ongoing research programs. Accordingly, the agreed proposals called for a standby levy mechanism which could be activated in such an eventuality. The proposed fallback mechanism is a levy on chickens hatched for egg production. My original intention was to seek enactment of this alternative arrangement concurrently with the preferred hen quota mechanism. However, the large volume of legislation to be dealt with in the current sittings has necessitated a postponement of contingency measures at this stage. Nevertheless, the standby levy legislation will be submitted to the Parliament as early as practicable.

Against this background, I now turn to the provisions of the Bill before the House. Under the Bill, a levy is to be imposed on the quota of hens which a producer holds under a licence issued by State or Territory authorities. This means that the amount of levy paid will reflect the number of hens specified in the licence and not necessarily the number of birds actually kept. I have already mentioned the advantage of imposing a levy on this basis, which is applicable to all States and currently also to the Australian Capital Territory.

The Northern Territory does not have a quota licensing system for hens, but local egg producers have indicated they are prepared to contribute to research funding. To enable the Territory to participate, there is provision in the Bill for declaring producers, in a notice published in the Commonwealth of Australia Gazette, to be holders of a quota licence. Individual levels of quota will be based on advice from the Northern Territory Government.

A maximum levy rate of 10c per hen is provided for in the Bill, with the operative level to be set by regulation after taking into account recommendations from the Australian Council of Egg Producers. An operative rate of 3c to 4c per hen would provide funds comparable with those currently received under the hen levy and sufficient to fund research programs at existing levels.

Under clause 12, the levy will be discontinued if any State abandons the hen quota system. As I have already mentioned, it is considered that abolition of hen quotas by a State would render the levy inoperable. The general view is that such deregulation in one State would have repercussions on egg marketing which would force other States to follow suit. This would not necessarily be the case if hen quotas were abolished in the Australian Capital Territory. Accordingly, clause 6 provides that in such an event, notional quotas may be established for the Australian Capital Territory, as in the case of the Northern Territory.

For constitutional reasons, arrangements for the collection of the proposed levy have been provided for in a separate Bill which I will presently place before the House. The sole purpose of the new levy arrangements is to replace the existing mechanism for collecting egg industry contributions towards research. Accordingly, they do not involve any new financial commitments for the Commonwealth or the industry.

Since the egg industry first began to sponsor research some 20 years ago, almost $3m has been contributed for this purpose by the industry and matched by the Commonwealth. The results of this research have been of benefit to egg producers and the community alike. This legislation will enable potentially valuable research work to continue. I commend the Bill to honourable members and, in doing so, I present the explanatory memorandum to the Bill.

Debate (on motion by Mr Cadman) adjourned.