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Thursday, 30 April 1987
Page: 2044


Senator GARETH EVANS (Minister for Resources and Energy)(10.14) - I move:

That the Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows -

EGG INDUSTRY RESEARCH (HEN QUOTA) LEVY BILL 1987

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.

Consultations 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 fall-back 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 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 Senate.

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 senators.

EGG INDUSTRY RESEARCH (HEN QUOTA) LEVY COLLECTION BILL 1987

The purpose of this Bill is to provide the machinery for the collection of the levy which is to be imposed under the Egg Industry Research (Hen Quota) Levy Bill.

A central element of the proposed machinery is a provision enabling the Commonwealth Government to make arrangements with the State governments and the Northern Territory for collection of the levy by State Egg Boards and Territory authorities on the Commonwealth's behalf. Similar arrangements with the States have operated for the collection of the existing Commonwealth hen levy.

As State Boards make charges on producers for administration of marketing costs, it is provided that levy can be deducted from amounts which a Board owes the producer whose eggs pass through the Board. In the case of producers who are authorised to sell eggs direct to wholesalers or retailers on the Board's behalf, payment of levy to the Board will be required.

To ease the financial impact on producers, provision has been made for the annual levy to be paid in two equal instalments in July and January of each financial year. Payments in the initial year have been deferred to September and March so that adequate time will be available for agreements with the States and Northern Territory to be drawn up and signed, and also for regulations prescribing payment arrangements to be promulgated. Among other things, it is intended to prescribe that Australian Capital Territory egg producers be required to pay the levy to the Department of Primary Industry.

Whilst replacing the mechanism now used to collect industry funds for egg research, it is desired to retain the existing Trust Fund and Research Council which hold and administer the money collected. To this end clause 9 of the Bill provides that the relevant provisions in the Rural Industries Research Act 1985, which are built around the existing levy imposed by the Poultry Industry Act 1965, will continue to apply as though the new levy were the existing one.

Since the new levy will be paid only twice a year instead of fortnightly as is the case with the existing egg research levy (collected as a component of the hen levy), there will be minor savings in clerical costs to the Commonwealth. Costs of collection incurred by State Egg Boards will be significantly lower than for the existing hen levy because, in addition to reduced frequency of collection, the new system will be simpler to operate.

The levy collection arrangements provided for in this Bill have been agreed on with the State Ministers responsible for agriculture and endorsed by industry as the most convenient and least expensive way of collecting the proposed levy.

I commend the Bill to honourable senators.

Debate (on motion by Senator Reid) adjourned.