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Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001

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1998 - 1999 - 2000 - 2001

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

DAIRY PRODUCE LEGISLATION AMENDMENT

(SUPPLEMENTARY ASSISTANCE) BILL 2001

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by Authority of the Minister for Agriculture, Fisheries and Forestry,

the Hon Warren Truss MP)

 



DAIRY PRODUCE LEGISLATION AMENDMENT (SUPPLEMENTARY ASSISTANCE) BILL 2001

 

GENERAL OUTLINE

 

1.                   The Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001 provides the framework for implementation of additional, targeted funding to individuals and regions dependent on the dairy industry which are experiencing greater than anticipated adjustment pressure following deregulation of market milk farmgate prices by State governments.

 

FINANCIAL IMPACT STATEMENT

 

2.                   The proposed Dairy Produce Legislation Amendment (Supplementary Assistance) Bill 2001 has no budgetary impact as it is fully funded by levy revenue raised through the Dairy Adjustment Levy (General) Act 2000 , Dairy Adjustment Levy (Excise) Act 2000 , and Dairy Adjustment Levy (Customs) Act 2000 .

 

3.                   An additional application of this levy, expected to be up to 10 months, will generate Commonwealth revenue to fund the payment rights and regional grants under the supplementary dairy assistance measures, including administrative and financing costs.

 

REGULATION IMPACT STATEMENT

 

Background

 

4.                   The ending of the Domestic Market Support Scheme on 30 June 2000 and the repeal of State regulatory arrangements in July 2000 marked deregulation of the Australian milk marketing arrangements.  Following a request from industry, the Commonwealth Government provided a major Dairy Industry Adjustment Package (DIAP) to assist farmers adjust to the new commercial circumstances of a deregulated market. 

 

5.                   The implementation of the Package is well advanced.  It consists of three programs: the $1.63 billion Dairy Structural Adjustment Program (DSAP), the $30 million Dairy Exit Program (DEP), and $45 million for the Dairy Regional Assistance Program (Dairy RAP).  In total, the package is estimated to cost approximately $1.78 billion over a period of around 8 years.  It is designed to assist dairy farmers address adjustment pressures following deregulation, or exit agriculture if that is their choice.  Specific assistance for dairy dependent communities was provided to assist in developing sustainable employment opportunities and community infrastructure in these regions.

 

Nature and Extent of the Problem

 

6.                   Following deregulation on 1 July 2000, a number of sections of the industry have been identified as facing significant hardship and/or disadvantage.  These are mainly producers who were reliant on market milk price premiums as a proportion of their milk sales revenue, people who were excluded, or who received a significantly lower than normal DSAP entitlement because of narrow eligibility criteria and dairy dependent communities. 

 

7.                   A report undertaken by the Australian Bureau of Agricultural and Resource Economics (ABARE) in January 2001 found that some dairy regions, particularly those in the former quota states of New South Wales, Queensland and Western Australia, have been severely affected by deregulation.

 

8.                   In assessing the impacts of deregulation, ABARE found that the average farm gate milk price had fallen by up to 30% (Table 1.).  This compared with industry expectations of a fall of up to 15 cents per litre for market milk, equal to around 15% in the average all-milk price in former quota states (assuming no change in manufactured milk prices). 

 

Table 1. Farmgate milk prices by State - all milk

 

State

Farmgate prices

Estimated post-deregulation change (%)

 

1999-2000 (c/l)

2000-2001(p) (c/l)

 

New South Wales

36.0

25.4

-29

Victoria

26.0

25.1

-3

Queensland

39.3

30.0

-24

South Australia

28.0

24.2

-14

Western Australia

36.0

25.0

-30

Tasmania

25.9

24.0

-7

Australia (a)

28.8

25.4

-12

Note:            (p) Projections based on information provided by farmers and major dairy companies in November 2000.  (a) Estimated prices are not adjusted for State and Commonwealth levies including adjustments related to the Domestic Market Support Scheme, which terminated on 30/6/2000.

Source:        ACCC, Report into impact of farmgate deregulation on the Australian milk industry.

 

9.                   The fall in prices received for market milk deliveries is in turn projected to flow through to lower than expected farm cash incomes, with those worst affected in the former quota states where ABARE expects farm cash incomes to fall by an average 50.5% in 2000-2001 (Table 2). 

 

Table 2. Estimated income changes following deregulation

 

State

Farm cash income

(excluding DSAP payments)

% income change

 

1999 - 2000 (p)

2000 - 2001 (s)

 

New South Wales

$81,942

$37,264

↓54.5%

Victoria

$57,148

$57,789

↑1.1%

Queensland

$80,350

$47,517

↓40.8%

South Australia

$75,322

$57,515

↓23.6%

Western Australia

$127,185

$55,823

↓56.1%

Tasmania

$91,158

$68,187

↓25.2%

Note:            (p) preliminary estimate.  (s) provisional estimate.

Source:        ABARE Report 2000, Selected estimates for common sample dairy farms

 

10.               While the DIAP was weighted to provide a proportionately higher level of assistance to those farmers more dependent on market milk, the extent and speed of the fall in market milk prices post deregulation now means additional assistance is considered necessary to enable those producers significantly dependent on market milk deliveries to better adjust to industry deregulation.  It is estimated that around 3100 dairy enterprises are significantly dependent on market milk deliveries in Australia.

 

11.               In addition, the greater than anticipated impacts of deregulation on former market milk dependent producers is expected to have a flow through effect to associated regional economies.  Accordingly, funding for the Dairy Regional Assistance Program is to be increased by $20 million with an emphasis on funding projects in dairy dependent regions identified by ABARE as most affected by deregulation.

 

12.               It is also intended that assistance be provided to those individuals who experienced a significant event, significant crisis or significant anomalous circumstances which limited their eligibility under DSAP. 

 

Objective(s)

 

13.               The regulatory objective of the supplementary dairy assistance measures is primarily to facilitate coordinated and targeted assistance measures to dairy farmers and regions most adversely affected by the fall in market milk prices.  The measures will also include provision of assistance to those individuals who experienced a significant event, significant crisis or significant anomalous circumstances, which limited their eligibility under DSAP.  This assistance is an extension of the measures provided under the existing DIAP and remains consistent with Australia's international trade obligations and with the principles of the National Competition Policy.

 

Options

 

14.               Options for supplementary measures to assist dairy farmers and dairy dependent regional communities through the process of structural adjustment should:

 

-           be targeted and transparent;

-           be well developed and generally agreeable to most stakeholders;

-           consider the timeframe and magnitude of the option;

-                       consider how the option is to be funded; and

-           be consistent with Australia’s international trade obligations.

 

15.               In the lead up to deregulation, dairy industry leaders through the Australian Dairy Industry Council (ADIC) considered a range of options for addressing the impacts of deregulation, including maintaining regulation through other forms.  Coming out of this review process, the industry concluded only full deregulation coupled with a national adjustment package was considered feasible.

 

16.               Within a deregulated industry framework, two possible options for supplementary assistance to market milk producers were identified:

(a)     providing an additional payment to producers of market milk irrespective of the extent of enterprise reliance on market milk sales in the 1998/99 base year; or

(b)    providing an additional payment to producers of market milk who were significantly reliant on market milk sales in the 1998/99 base year.

 

17.               Option (a) of providing additional payments to all producers, irrespective of the extent of reliance on market milk deliveries, was not considered feasible as it would have increased the overall cost of the package or conversely, reduced the level of assistance to those most in need.  Without a minimum level of market milk dependency, it was possible that all 13,000 enterprises under the DSAP may have been eligible to receive assistance, including those enterprises that had not experienced significant income falls following deregulation.  This would have resulted in a higher cost of the total package and as such, imposed an unnecessarily high burden on milk consumers.

 

18.               Option (b) of providing payments to those producers previously significantly reliant on market milk deliveries therefore provides a targeted and lower cost means of delivering additional assistance to those dairy farmers most in need.  It was judged that a dependency on market milk of at least 35% in 1998-1999 was representative of significant reliance and would mean payments would go to entities currently suffering income falls well above that typical of normal business cycles in dairying.

 

19.               A number of options were then considered to meet the cost of the supplementary dairy assistance measures:

(a)     appropriation of funds from the budget;

(b)    increasing the levy rate; or

(c)     continuing operation of the levy for a longer period.

 

20.               Option (a) was not considered feasible because of the level of competing demands on the Budget.  Further, as the beneficiaries of deregulation, it is considered reasonable for consumers to meet the transition costs.

 

21.               Option (b), of increasing the levy rate by an amount sufficient to ensure that the DIAP (inclusive of the supplementary dairy assistance measures) is funded within the current target period of around eight years was not considered viable as it would be likely to have a negative impact on consumer demand, and thereby reduce the overall effectiveness of the supplementary measures.

 

22.               Option (c) of meeting the costs of the supplementary dairy assistance measures by running the existing levy of 11 cents per litre on sales of liquid milk products for a longer period of time was considered the preferred option as it is expected to have little impact on consumers in the short term as the rate of levy remains unchanged, and current falls in retail prices have already secured significant benefits to consumers.

 

23.               Based on these considerations, the Federal Government has agreed that supplementary dairy assistance measures be directed to those dairy farmers and regions most adversely affected by deregulation.  These supplementary measures, estimated to be worth around $140 million comprise:

 

-                       additional market milk payments to producers where the proportion of market milk relative to total enterprise milk sales was significantly greater;

-                       discretionary payments to those entities who were excluded, or received a significantly lower DSAP entitlement than was considered normal; and

-                       additional funding to the Dairy Regional Assistance Program to assist dairy dependent communities.

 

24.               Funding of the supplementary dairy assistance measures will be through continuing the current 11 cents per litre levy on sales of liquid milk products for an estimated additional period of up to 10 months.

 

Impact Analysis

 

25.               The key stakeholders likely to be affected by the supplementary dairy assistance measures are:

 

(a) Dairy farmers

 

26.               The supplementary dairy assistance measures will provide additional, targeted funding to those dairy farmers most adversely affected by changes following deregulation, in particular the fall in market milk prices. 

 

27.               The ABARE report, in January 2001, showed that adjustment to deregulation is well underway, with f armers using their payments under DSAP for a variety of purposes to improve farm productivity and profitability in the new market environment.  However, while adjustment by industry is underway, the nature of the adjustment burden varies markedly across the country.

28.               As previously indicated, the falls in market milk prices following deregulation have been higher than the industry expected and some farm operators are experiencing lower than anticipated farm incomes as a result.  This is primarily occurring in the ex-quota States where dairy farmers generally had a high dependency on market milk and falls in the farm gate price for all milk delivered has been as great as 30%.  The supplementary dairy assistance measures provide $100 million in additional payments to producers with an interest in dairy farm enterprises that delivered more than 35% of their total deliveries as market milk in 1998-99.  This will further enable these producers to adjust to changes brought about by industry deregulation.

29.               Information regarding the proportion of market milk deliveries of a dairy farm enterprise in 1998-99 was provided to the DAA by entities through the initial application for entitlements under DSAP.  As such, it is anticipated that the DAA will be able to process supplementary market milk payments to those farmers identified as eligible promptly following passage of the enabling legislation.

30.               A second group of dairy farmers identified as facing undue hardship are those who were unintentionally denied, or received lower DSAP payment entitlements than was intended.  This situation may have occurred through a combination of circumstances associated with a relatively small proportion of entities who experienced a significant event or crisis, or a coincidence in the timing of the package announcement and changes to their farm management arrangements during the eligibility period which affected entitlements when assessed against relatively narrow eligibility criteria appropriate for the majority of applicants.

31.               Individuals who fall into this second group may be eligible to receive a discretionary payment right.  Eligibility will, in principle, involve demonstration that a significant event, significant crisis or significant anomalous circumstance had affected their deliveries or earnings in 1998/99.  Events that may be considered might include personal circumstances such as illness, incapacity, death or animal disease that significantly disrupted production. 

32.               Individuals may be required to provide additional relevant evidence to the DAA to enable their consideration for a discretional payment.  It is estimated that around $20 million in total will be allocated as discretionary payments.

(b) Dairy dependent communities

33.               The ABARE report identified over 50 statistical local areas (SLA) where deregulation has had a high average on-farm impact.  All of these SLA's are located in the former quota states of New South Wales, Queensland and Western Australia.   Of these, over 50% were further identified as having a medium or high regional dependence on dairying.

34.               An additional $20 million will be provided through the Dairy Regional Assistance Program (Dairy RAP) to further assist dairy dependent communities adjust to deregulation.  Dairy RAP commenced on 1 July 2000 and has as its primary objectives creation of sustainable regional employment opportunities and to support the provision of services that lead to ongoing regional benefits in communities adversely affected by dairy deregulation.  Priorities for the additional funding will be focussed on those regions identified in the ABARE report as being most adversely affected by deregulation.

(c) Consumers

35.               To fund the total cost of the supplementary dairy assistance measures, it is anticipated that the consumer levy on liquid dairy products will need to be applied for an estimated additional period of up to 10 months.  This would extend the term of the levy from a target of around eight years to up to eight years and 10 months.

36.               Extending the term of the levy by up to ten months is expected to have little impact on consumers as the rate of levy will remain probably unchanged and substantial falls in retail prices have already secured significant benefits to consumers since deregulation.  The report by the Australian Competition and Consumer Commission (ACCC) into the "Impact of farmgate deregulation on the Australian milk industry" found that prices for plain milk in supermarkets, including the levy of 11 cents per litre, have decreased in all states by an average 22 cents per litre.

37.               Over the longer term, beyond the current projected levy term, the extension will mean that consumers will be paying for a longer period than they would have otherwise have been without the supplementary dairy assistance measures.  However prior to deregulation, Commonwealth and State regulatory arrangements generated monetary transfers of around $500 million annually from Australian consumers.  Accordingly, deregulation provides substantive benefits to consumers and as such, it is in the interest of consumers that the industry be allowed to adjust to deregulation with adequate assistance to ensure the long-term viability of producers.

38.               By maintaining the current strength and competitiveness of the dairy industry (Australia's third largest rural industry based on farmgate production) it can be expected that the cost savings to the consumer following deregulation (conservatively estimated by the ACCC to realise around $118 million per year from sales of supermarket milk), can be sustained .

39.               Further, by extending the operation of the current levy to fund the supplementary dairy assistance measures, funds will not be appropriated out of the budget and accordingly consumers will not face reductions in government funded services in other areas.



(d)    Processors and retailers

40.               Continuation of the 11 cents per litre levy will impact indirectly on retailers and processors due to the extended impact on consumers.  This impact however is expected to be only minor in the context of any overall impact on consumer demand and thus sales.  Over the longer term, as with consumers, retailers and processors are expected to benefit from a more flexible deregulated commercial environment.

 

Conclusions

 

41.               The overriding intent of the DIAP was to provide all dairy industry members with assistance to adjust to deregulation.  With the advent of deregulation, it is apparent that the adjustment burden for producers predominantly reliant on market milk deliveries was significantly greater than farmers anticipated prior to deregulation.  As such, the level of funding provided under the DIAP is not considered sufficient to allow these producers, and associated regional economies, to manage the adjustment pressures adequately. 

 

42.               Provision of additional targeted funding to those producers, and associated regional economies, identified as most affected by industry deregulation will enable this section of the industry to adjust more fully and thereby make the transition to a more competitive, export-orientated industry environment.

 

43.               An extension of the consumer levy at the current rate will ensure minimal impact on consumers while allowing the industry to successfully adjust to deregulation.  This will provide long term benefits to the consumer through a more competitive industry capable of future growth and diversification.

 

Consultation

 

44.               Industry leaders were consulted on the major elements of the supplementary dairy assistance measures.  In addition, ABARE undertook extensive consultations with industry and other stakeholders as part of the report to the Government on the impacts of industry deregulation.

 

Implementation and Review

 

45.               Implementation of the supplementary dairy assistance measures will commence as soon as possible following passage of the enabling legislation through Parliament.  Notifications to market milk producers of entitlements will occur as soon as possible following Royal Assent and payments will commence as soon as necessary acceptance procedures are met.  Consideration of eligibility for the discretionary payments will commence within as short a timeframe as possible following passage.  Consideration of Dairy RAP projects will take account of the additional funding provided and the priority given to allocating this additional funding to projects in regions most affected by deregulation.

 

46.               As required under the existing package, the Australian Dairy Corporation's role in providing administrative support for the total dairy package ($1.93 billion) will be reviewed by the DAA in 2001/2002.  The overall arrangements will be reviewed by the DAA in 2002/2003.

 

NOTES ON CLAUSES

 

Clause 1 Short title

 

47.               This Act will be called the Dairy Produce Legislation Amendment (Supplementary Assistance) Act 2001 .

 

Clause 2 Commencement

 

48.               The Act will commence on Royal Assent.

 

Clause 3 Schedule(s)

 

49.               Clause 3 provides that the amendments or the repeal of Acts specified in the Schedule to the Bill and any other Item in the Schedule will have effect according to the terms of that Item.  Schedule 1 provides for the amendment of the Dairy Produce Act 1986 , including the establishment of the Supplementary Dairy Assistance Scheme. 

 

SCHEDULE 1 - AMENDMENTS

 

Dairy Produce Act 1986

 

50.               Item 1 provides for the SDA scheme within the meaning of Schedule 2 to be excluded from this section as the Dairy Industry Adjustment Program has its own provisions in respect to secrecy and protection of confidentiality of information.

 

51.               Item 2 provides for the inclusion of SDA payments as one of the four grants provided for through the Dairy Industry Adjustment Program.

 

52.               Item 3 inserts into the simplified outline of the Schedule two types of SDA payment rights to be implemented under the Dairy Industry Adjustment Program, additional market milk payment rights and discretionary payment rights .

 

53.               Item 4 specifies that the DAA will administer both DSAP payment rights and SDA payment rights.

 

54.               Item 5 provides for SDA payments to be funded through the levy paid into the Dairy Structural Adjustment Fund.

 

55.               Item 6 amends the definition of a payment right to mean a payment right under either the DSAP scheme or the SDA scheme.

 

56.               Item 7 inserts a definition of SDA payment as a term used in the Bill.

 

57.               Item 8 inserts a definition of SDA Scheme as the scheme referred to under clause 37B.

 

58.               Item 9 includes reference to SDA payments in the heading for Part 2.

 

59.               Item 10 provides for inclusion of Division 1A in Part 2 of Schedule 2 of the Dairy Produce Act 1986 .  Division 1A contains the SDA scheme.

 

Clause 37A Simplified outline

 

60.               Clause 37A provides a simplified outline of the SDA scheme.

 

Clause 37B Formulation of scheme

 

61.               The Minister must formulate the SDA scheme with the inclusion of the key elements outlined in clause 37B.

 

Clause 37C General policy objectives for the SDA scheme

 

62.               In formulating the SDA scheme, the Minister must seek to ensure the policy objectives set out in clauses 37D to 37P are achieved.

 

Clause 37D Types of payment rights

 

63.               Clause 37D outlines the 2 types of payment rights under the SDA scheme  - additional market milk payment rights and discretionary payment rights .

 

Clause 37E Additional market milk payment rights - eligibility etc.

 

64.               An additional market milk payment right will only be available to an entity which has been granted a payment right under the Dairy Structural Adjustment Program (DSAP) Scheme in respect of a qualifying enterprise .  The entity must also have held an interest, as defined in the SDA scheme, at a time referred to in the Scheme. 

 

65.               Subclause 37E(1)(c) provides for the calculation of a market milk number to determine that an entity is eligible for an additional market milk payment .  A qualifying enterprise must have had a dependency on market milk of greater than 35% in 1998-1999 which is reflected as a market milk number of at least 35.1.

 

66.               Subclauses 37E(2) to 37E(6) outline the calculation of the face value of an additional market milk payment right in accordance with the overall amount of market milk taken by the DAA to have been delivered in 1998-1999 by the qualifying enterprise.  An entity's additional market milk payment right is a share of the overall market milk amount taken to have been delivered by the qualifying enterprise and will be worked out in accordance with the SDA scheme.  The combined face value of all additional market milk payment rights in respect of a qualifying enterprise is limited to a maximum of $60,000.

 

Clause 37F Additional market milk payment rights-offsetting

 

67.               Clause 37F allows for the DAA to reduce the face value of an entity's additional market milk payment right by an amount equal to the value of the entity's payment under the DSAP scheme which was in excess of their eligible amount.

 



Clause 37G Discretionary payment rights-eligibility

 

68.               Clause 37G outlines eligibility for a discretionary payment right .

 

Clause 37H    Discretionary payment rights-entity affected by significant event, crisis or anomalous circumstances etc.

 

69.               Clause 37H will provide for discretion to grant a discretionary payment right to an entity that held an interest, as defined in the SDA scheme, in a dairy farm enterprise during 1 July 1998 and 6.30 pm on 28 September 1999 and the entity can show they have been affected by a significant event, significant crisis or significant anomalous circumstances.  It is intended that the SDA scheme will provide for the Minister to make the decision to grant a discretionary payment right, though this decision making power may be delegated to the DAA.  An entity is only to be taken to have been so affected if the Minister or delegated decision maker is so satisfied.

 

Clause 37J     Discretionary payment rights-entity suffered a fall in lease income etc.

 

70.               Clause 37J provides for land lessors who derive more than 50% of their total gross income from dairy leasing arrangements and who have suffered a fall in this leasing income in 2000-2001 of at least 20%, to be eligible to receive a discretionary payment right to a maximum amount as set out in the SDA scheme.

 

Clause 37K Units in payment rights

 

71.               Clause 37K provides for the calculation of the number of units in a payment right where each unit will have a value of $32.  For example, a payment right of $32,000 would equate to 1000 units.

 

Clause 37L Cancellation of units

 

72.               This clause clarifies that the DAA has the power, under clauses 50, 51, 52 and 53, to cancel payment rights where they have been granted on the basis of false statements, error, failure to dispose of units as directed or when an exit payment is granted. 

 

Clause 37M Duration of scheme

 

73.               Clause 37M provides that SDA payments cannot be made later than the quarter ending on 30 June 2008.

 

Clause 37N Register of units etc.

 

74.               Clause 37N provides that the DAA is to include the particulars of SDA payment rights, including ownership, on the DAA register established in clause 21.

 

75.               Subclause 37N(3)(a) provides that the transfer of ownership of a unit is not to be registered unless the transferee is an eligible entity.  However, subclause 37N(3)(b) provides that where a transfer is not to an eligible entity, the transfer can be registered provided that the transferee gives the DAA a written undertaking to assign the unit to an eligible entity within 60 days after the transfer is registered.  For example, in the case of bankruptcy, the liquidator has 60 days to sell the units to an eligible entity.

 

76.               Subclauses 37N(6) and 37N(7) prevent the undermining of subclause 37N(3) by the use of trusts and equitable assignments.

 

Clause 37P Making of SDA payments

 

77.               Clause 37P provides for lump sum or quarterly payments under the SDA Scheme to be paid to registered owners of units or should the entity die before the SDA payment right is payable, to the legal personal representative of an eligible entity.

 

Clause 37Q Conferral of administrative powers etc.

 

78.               Clause 37Q provides that the SDA scheme can confer discretionary powers on the DAA or the Minister.  Where the Scheme confers a power on the Minister, subclause 37Q(2) allows for the Minister to delegate that power to the DAA.

 

Clause 37R Review of decisions

 

79.               Clause 37R states that the SDA scheme must provide for the review of decisions made by the DAA or the Minister.

 

80.               Subclause 37R(2) states the Scheme must provide for review by the Administrative Appeals Tribunal or the Administrative Review Tribunal (as the case may be) of a decision made by the DAA or the Minister.

 

Clause 37S Fees

 

81.               Clause 37S provides that the SDA scheme may provide for fees.  For example, updating the register to reflect changes in ownership may be subject to a fee.

 

Clause 37T Statutory declarations

 

82.               Clause 37T provides for statements made in claims under the SDA scheme to be verified by statutory declaration.

 

Clause 37U Methods by which SDA payments may be made

 

83.               This clause allows for the SDA scheme to make provision for the methods by which SDA payments may be made, including by electronic funds transfer.

 

Clause 37V Adjustment of eligibility for payment rights etc. - death

 

84.               Clause 37V allows for the SDA scheme to make provisions in relation to the death of an individual who would have otherwise been eligible for a payment right under the SDA scheme. 

 

Clause 37W Ancillary or incidental provisions

 

85.               If the Minister considers appropriate, the SDA scheme may contain other ancillary or incidental provisions.

 



Clause 37X Scheme-making power not limited

 

86.               In formulating the SDA scheme, while the Minister must have regard to the policy objectives outlined in clauses 37C to 37W inclusive, the Minister is not limited by these objectives.

 

Clause 37Y Variation of scheme

 

87.               This clause provides for variation of the SDA scheme.

 

Clause 37Z Scheme to be a disallowable instrument

 

88.               The SDA scheme, to be formulated by the Minister, will be a disallowable instrument.

 

Clause 37ZA Application to things happening before commencement

 

89.               This is a technical provision to clarify that although Division 1A refers to the present tense, it does not mean the provisions contained in Division 1A cannot be applied in the past.

 

Clause 37ZB Use and disclosure of information obtained under the DSAP scheme

 

90.               This clause allows the information gathered for the purpose of administering the DSAP scheme to be used for the purposes of administering the SDA scheme.

 

91.               Item 11 enables the DAA to obtain from a person information and documents that the DAA has reason to believe are relevant to the operation of the SDA scheme.

 

92.               Item 12 provides that the DAA may require a person to give evidence which the DAA has reason to believe is relevant to the operation of the SDA scheme.

 

93.               Item 13 specifies what an entrusted person may do with protected information, or protected documents related to the SDA scheme, and expressly outlines what information an entrusted person may record or disclose.

 

94.               Item 14 provides that the entrusted person is not required to produce any protected document or disclose protected information to a court unless necessary for the purposes of this Part or the SDA scheme.

 

95.               Item 15 amends the definition of protected document to include reference to the SDA scheme.

 

96.               Item 16 amends the definition of protected information to include reference to the SDA scheme.

 

97.               Item 17 provides for a scheme debt to include recovery of SDA overpayments by the DAA.

 

98.               Item 18 provides that a SDA overpayment may be recovered from an entity by deducting the overpayment from one or more future SDA payments payable to the entity.

 

99.               Item 19 provides that where a SDA overpayment is deducted from a SDA payment or a DSAP overpayment is deducted from a DSAP payment (as the case may be), the payment is then considered to have been paid in full.

 

100.           Item 20 specifies that a scheme debt is due on the same day that the relevant SDA payment was paid.

 

101.           Item 21 clarifies that if a scheme debt is the result of an error made by the DAA or the Corporation and the SDA payment concerned was received in good faith, the penalty does not apply.

 

102.           Item 22 states that the SDA scheme must authorise the DAA to remit all or part of any penalty amount owing.

 

103.           Item 23 provides for the cancellation of units due to a false statement made by an entity in relation to the SDA scheme.

 

104.           Item 24 provides that the SDA scheme must give the DAA the power to cancel all units entirely or cancel the excess units where the making of a false statement results in a payment right being granted or the face value of the payment right exceeding what it should have been if the statement was not false.

 

105.           Item 25 clarifies that where a unit is cancelled due to false statement, the unit is considered under the SDA scheme to have never existed.

 

106.           Item 26 provides that the SDA scheme must give the DAA the power to cancel all units entirely or cancel the excess units where the DAA has made an error, which is not the result of a false statement, in relation to the granting of the SDA payment righ t.

 

107.           Item 27 provides that the SDA scheme may provide that the DAA not cancel units where the DAA is satisfied an entity that received a payment in respect of a unit acted in good faith.

 

108.           Item 28 provides the DAA discretion in cancelling units that an entity received in respect of a SDA payment.

 

109.           Item 29 clarifies that where a unit is cancelled due to error by the DAA, the unit is considered under the SDA scheme to have never existed.

 

110.           Item 30 clarifies that this subclause refers to units in a payment right under the DSAP scheme, and excludes application of this subclause to units in a payment right under the SDA scheme.

 

111.           Item 31 provides that if an entity breaches their undertaking to assign a unit in a payment right under the SDA scheme to an eligible entity in accordance with paragraph 37N(3)(b) (ie within 60 days after the transfer is registered), the DAA must write to the entity directing them to comply with the undertaking within 60 days.  If the entity does not comply with the written direction, the SDA scheme must authorise the DAA to cancel the unit at the end of that 60-day period.  Item 31 further defines eligible entity in respect to this subclause.

 

112.           Item 32 gives effect to Item 31 by removing reference to eligible entity in this paragraph.

 

113.           Item 33 provides that the SDA scheme must give the DAA the power to cancel all units in a SDA payment right if an entity qualifies for the DEP scheme.

 

114.           Item 34 provides for functions to be conferred on the DAA under the SDA scheme.

 

115.           Item 35 provides that SDA payments will be subject to income tax.

 

116.           Item 36 provides for the review in 2002-2003 to allow the Minister to assess the adequacy of levy collections to fund DSAP payments, SDA payments and dairy exit payments .

 

117.           Item 37 specifies money to be credited to the DSAF includes fees relating to the SDA scheme.

 

118.           Item 38 specifies money to be credited to the DSAF includes civil penalties relating to the SDA scheme.

 

119.           Item 39 specifies that the specific purposes for which the Corporation may spend the money in the DSAF includes SDA payments .

 

120.           Item 40 provides for reimbursing the Commonwealth or Corporation the costs involved in development and implementation of the dairy industry adjustment package, including the supplementary assistance measures, as specific purposes for which the Corporation is to spend the money in the DSAF.

 

121.           Item 41 specifies that the specific purposes for which the Corporation may spend the money in the DSAF includes meeting expenses incurred by the Commonwealth in administration of the SDA scheme.

 

122.           Item 42 provides that the Corporation and the Minister must take all reasonable steps to ensure that there is sufficient money in the Fund to make DSAP, SDA and DEP payments and meet any other calls on the Fund as those calls fall due.

 

123.           Item 43 provides that although fees collected under the SDA scheme must be paid into Consolidated Revenue, the Commonwealth must pay this money to the Corporation.

 

124.           Item 44 removes the requirement that payments under the Dairy Regional Assistance Program can only be made during the three years commencing 1 July 2000.

 

125.           Item 45 increases the amount available for the Dairy Regional Assistance Program from $45 million to $65 million.

 

126.           Item 46 removes the requirement that payments under the Dairy Regional Assistance Program must not exceed $15 million in any particular financial year.

 

127.           Item 47 provides for the Dairy Adjustment Levy to be terminated by the Minister publishing a notice in the Gazette once the Minister is satisfied that certain costs associated with the Dairy Industry Adjustment Program have been met, including making SDA payments.

 

128.           Item 48 provides for the false or misleading information provisions in Clause 135 to apply to the SDA Scheme.

 

129.           Item 49 provides for the false or misleading information provisions in Clause 135 to apply to the SDA Scheme.

 

130.           Item 50 creates an offence where a person produces a document to another person, knowing it to be false or misleading and it is produced in compliance or purported compliance with the DSAP scheme, SDA scheme or this Schedule. 

 

131.           Item 51 provides for the disclosure of DEP information to the DAA where it is in connection with the administration of the SDA scheme.