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Thursday, 16 December 1993
Page: 4811


Senator BROWNHILL (Deputy Leader of the National Party of Australia) (12.50 p.m.) —I wish to speak in the debate on the Domestic Meat Premises Charge Bill and the Export Inspection Charges Laws Amendment Bill because the bills received a lot of attention from the Senate Standing Committee on Rural and Regional Affairs. I think the committee achieved quite a lot with the legislation. It passed through the House of Representatives with little time for consideration and certainly no time for consultation. I am not going to let it go through this place without having a few words to say about it. It is good to see that the chairman of the rural and regional affairs committee, Senator Burns, is in the chamber.

  Given the structure of the legislation, the coalition opposed the bills. When the bills arrived in the Senate, they were referred to the Senate rural and regional affairs committee, with an original reporting date of 22 November, which was extended until 7 December to allow due processes of consultation to occur. Modestly, I have to say that the rural and regional affairs committee continues to demonstrate how committees to which bills are referred should function. We have demonstrated repeatedly, on matters such as resource security legislation, the deer industry and now the meat processing industry, that consultation with industry very often brings about legislation with which most people become happy.

  We have legislation now before the parliament that is, by and large, understood and accepted by industry to a great degree. Some reservations remain, and I will deal with those shortly, but what is in place now, I think, is going in the right direction. Additionally, we now have a federal government department that has benefited from the consultative processes and has become more understanding of the industry and more accessible to it.

  In dealing with the bills, the committee invited several groups and leading processors to address it. The committee also took the opportunity, which it often does, to visit and inspect processing works around the country. In this instance we went down to Geelong to appreciate the issues relevant to the bills. During the course of those discussions, it became apparent that there was considerable disquiet within the industry. The main areas of concern were the proposed three-tier charging regime, the throughput charge, the equity of the premises charge, the effective abandoning of the three-tier principle on future charging structures, and the level of consultation by the Australian Quarantine and Inspection Service. Overriding all of this was the stated aim of AQIS to reform its processes and become more efficient and effective.

  There were considerable doubts expressed—I certainly repeated them often—as to whether this legislation would deliver the desired reforms, whether it was not better to throw away the legislation and start again or stay with the single per-inspector charge, as is the case now, and make sure that those charges come down by reforming the quantity of work done, getting a better quality assurance program and that sort of thing. We found numerous examples of a government department that was remote from the industry it was purportedly trying to serve, of correspondence never answered, of concerns never addressed. This legislation was a result of that lack of consultation.

  The legislation essentially implements a premises charge on domestic meatworks where AQIS inspectors are employed. However, the system intended to operate post-passage of this bill was a three-tiered charging regime made up of a current charge per inspector per unit of time, a fixed annual charge per premises and a throughput or volume charge. Whilst these bills address only the second point—that of a fixed annual charge or a premises charge—it was not appropriate for the rural and regional affairs committee to take it in isolation of industry's other concerns about present and proposed cost structures.

  The second reading speech of the Minister for Transport and Communications (Senator Collins) foreshadowed further legislation to cover a throughput charge, a fixed price per beast process charge. To those outside the rural industry, the principal matters dealt with in the legislation are complex. I do not believe time would be well spent in explaining the cost structure of the meat processing industry. Suffice to say that the proposed regulations were flawed and showed considerable discrimination or unintended consequences for some companies. The proposals were particularly obnoxious to the Cattle Council of Australia, which argued that the concept of a three-tier charge had already been put out to industry in 1992 and was rejected at that time. It felt that the industry did not want such an arrangement and that AQIS was merely trying to force processors into costings they did not need to make.

  The Cattle Council was of a view that charges should accurately reflect costings but that the proposed legislation was inflated to allow fat in the present AQIS administration. The Cattle Council executive took their concerns to a full Cattle Council meeting at Wagga during the AMLC annual general meeting and at that meeting resolved to support a two-tiered charging system conditional upon the capping of the per meat inspector charge at a level that reflects the actual cost associated with the inspector's time and service, and the broadening of the categories applying for the establishment charge such that effort by innovative operators to adopt quality assurance programs and various cutting edge technologies were accommodated.

  Subsequent to that meeting, AQIS convened a meeting with the Cattle Council, various meat processing groups and industry representatives at which several options were canvassed. In effect, the result was a choice of a two-tiered charging regime with 12 categories or the adoption of a two-tiered regime involving 18 categories with varying timetables. The increase in category option provided a more accurate assessment of costs. For example, an abattoir with an export licence but low-volume exports would pay something like $6,190 in registration charges this year, moving to $10,000-odd in 1997-98, while one licensed for export with US and EC listing would pay $49,516 in 1994 and $82,527 by 1997-98. This has by and large been accepted as a more equitable cost carve-up. Under the original proposed charging regime there were only eight categories and numerous abattoirs would have been unfairly charged.

  The minister had argued in his second reading speech that he was seeking a system that had the objectives of efficiency, equity, consistency, transparency and simplicity. The Cattle Council, amongst others, argued that the legislation was not based on equity, it was not transparent, and it would not produce the desired efficiencies.

  One processor particularly disadvantaged was one close to my home—Gunnedah abattoir. Gunnedah abattoir would have been hard hit by the new rules and yet, prior to the committee hearings, had been denied any opportunity to put its case. Ray Grout, the abattoir manager, appeared before the committee and argued that the new charges would cost his abattoir dearly. He outlined a frightening scenario where his works would be charged on a multiple of levels simply because no-one had thought about consulting him. It would have possibly put his works out of business.

  Gunnedah abattoir has separately registered lease portions within a single premises. Its situation was one completely overlooked by AQIS when drafting the charging models. By appearing before the committee and in subsequent discussions with AQIS, Gunnedah abattoir was able to have the charging levels more accurately reflect the true position in the market. That would not have happened had the legislation been processed through this chamber as so many other pieces of legislation are. This government is poor at consultation. AQIS has a very poor track record in communication with industry. That is an appalling—


Senator Panizza —Hear, hear!


Senator BROWNHILL —That is correct, Senator Panizza. That is an appalling situation when one considers that it has just increased its consultancy cost by over 100 per cent in the last 12 months. Nevertheless, in drafting this legislation, the draftsman failed to take into consideration the myriad of Gunnedah abattoirs. The department has not done its homework properly and, while the committee endorsed the legislation and recommended no amendment to it, it did so in the knowledge that there had already been considerable change by the department in its fee structures.

  There are two other areas which need to be canvassed. The first is the move within the industry to a quality assurance scheme. Under the original arrangement there would have been little incentive for works to have moved towards quality assurance. The preferred 18-level option now supported will preserve the incentive for quality assurance inspection arrangements.

  Another benefit to come from the industry consultations was an undertaking by AQIS to reconvene a charging review committee to act as a forum between industry and AQIS to assess the progress of the two-tiered charging mechanism and to review AQIS cost structures and operations in the period up to 30 June 1995. After 1995, new charges will be applied based on what the review committee determines. The review committee will also review arrangements for establishments with separately leased portions during the next two years transition period. That wants to be qualified, and we might have to have a talk about that later.

  However—and I make this a clear warning to AQIS—the Senate Standing Committee on Rural and Regional Affairs in its report said:

It places on record its intention to monitor the reforms of AQIS and, if necessary, seek a specific reference on this matter from the Senate if it does not go ahead with its cost saving structures.

I can assure AQIS that I will be monitoring very closely its costings and efforts to reform and the timetable for those efficiencies to which it aspires.

  I still have some residual reservations about this legislation. Whilst sound in intent, it is still perhaps only tinkering at the edges of reform. Certainly not everyone in the industry is happy. Let us look at what the reforms really are. In the year 1992-93, the actual revenue coming in to AQIS is $80-odd million; by 1997-98, it is going to be about $70-odd million—a saving of $10 million. There are people who are in category 15, for example, which is export boning, European Community listed and export slaughter, no US or EC listing, and in that category their charges per premises go from $38,000-odd to $60,000-odd. So there is a bit of an extra charge for some of those people.

  Last week the Victorian Farmers Federation contacted my office, claiming there had not been the formal consultation process required and the Victorian domestic meat industry was opposed to the bills even with the changes. The Meat and Allied Trades Federation of Australia echoed those objections. Both groups want a single per inspector charge to remain, claiming it would encourage the industry to move towards quality assurance.

  The committee took evidence on the issue. Clearly there is an argument to be made that, under the present cost structure, smaller, non-continuous works are not paying their fair share of inspection costs. That needed to change if that were the case. However, the VFF says that it should be possible for AQIS to incorporate as many charges in the per inspectorate rate as are necessary for AQIS fully to recover the cost of providing the service.

  Domestic meat processors are also opposed to a premises charge, arguing it will be another deterrent to the domestic industry embracing quality assurance programs. A letter from the VFF said:

Domestic meat processors . . . believe the introduction of a premises or registration charge as a component of AQIS's fee-for-service charging will be a deterrent to widespread uptake of domestic quality assurance . . .

It continued:

Industry has been planning quality assurance process for at least two years in the belief that efficient users of AQIS's services were to be fully rewarded.

The Meat and Allied Trades Federation of Australia said:

Industry has been planning quality assurance approaches for at least two years in the belief that efficient users of AQIS' services were to be fully rewarded. The Government has openly encouraged industry to give priority to quality assurance to offset increased inspection costs, and the industry has responded by seeking to install quality systems which improve . . .

It continues:

Two major domestic quality assurance ventures have commenced on the basis that the Government will safeguard industry's large investment through its incentive policy of single per-inspector charging.

The Refrigerated Warehouses and Transport Association of Australia remains opposed, arguing that the new charges will result in the deregistration of approximately eight export cold store establishments, or 50 per cent of those currently registered. It argues that, if cold stores are to be categorised, there should be only two categories: those with and those without quality assurance programs in place.

  I have reservations about how committed the department is to adherence to a true user-pays system. However, I am prepared to give the department the benefit of the doubt. It has made genuine attempts to accommodate the concerns of industry and has listened, admittedly belatedly and perhaps a little unwillingly at times, to industry and politicians. The legislation, while not technically amended, is better structured. Its implications and its outcomes have been improved because of the Senate committee's process.

  As I have already outlined, not all sectors of the industry are happy. There is an argument to suggest that these fees will have the net effect of forcing the smaller operators out of the market. If it is because in the past they have not carried the fair share of the cost of inspection, then so be it. If they are forced out—and maybe a lot will be in your state of Victoria, Mr Acting Deputy President, because they have been in contact with me a lot about this matter—because of unfair, inflated costings by government inspection services, then this parliament has a duty to intervene. I have already flagged my interest in ensuring that AQIS delivers quality at an affordable price. It is a challenge for AQIS, but one I am confident that AQIS is capable of meeting provided it has the appropriate cost consciousness. It needs to establish that and this legislation provides an opportunity for it to do so.