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Coarse Grains Levy Amendment Bill 1994



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House: House of Representatives

Portfolio: Primary Industries and Energy

Commencement: The amendments changing the basis on which levies are imposed on barley and triticale will commence, if this proposed Act receives Royal Assent before 1 October 1994, on that date, or otherwise on 1 October 1995. The other amendments commence on Royal Assent.

Purpose

To change the basis on which levies are imposed by the Coarse Grains Levy Act 1992 on barley and triticale from a flat rate per tonne to an ad valorem rate.

Background

Levies are imposed on the following coarse grains:

- Barley,

- Triticale,

- Oats,

- Cereal Rye,

- Sorghum,

- Maize,

- Millet, and

- Canary Seed.

Production of barley totalled 4 530kt (valued at $681m) in 1991- 92, is estimated to total 5 559kt (valued at $892m) in 1992- 93, and is forecast to total 6 815kt (valued at $925m) in 1993- 94. 1 Barley exports totalled 2 374kt (valued at $421m) in 1991- 91, are estimated to total 2 813kt (valued at $522m) in 1992- 93, and are forecast to total 2 490kt (valued at $464m) in 1993- 94. 2

Triticale is the name of a grain developed by crossing wheat and rye. Significant commercial production of triticale commenced in the 1970s. The area sown in Australia in 1993 was 120 000ha (99 000ha in 1992) and this yielded 278t (175t in 1992). 3 The gross value of the Australian triticale crop in 1992- 93 was $36.2m ($24.1m in 1991- 92). 4 Most of the triticale produced is used as animal feed, mainly for pigs and poultry. Present uses for human consumption are as flakes of muesli, for flour and whole grains in speciality breads and the manufacture of triticale macaroni. It has been claimed that triticale has an advantage over breadwheats in highland areas, in acid soils and in areas where drought tolerance is needed. However, there is no evidence that triticale varieties in Australia survive drier

conditions better than wheat or that they are resistant to stem rusts. Varieties of triticale have been shown to do well on heavy and in acidic soils.

The levies are imposed on coarse grains by the Coarse Grains Levy Act 1992 and the National Residue Survey (Coarse Grains) Levy Act 1992. 5

The levies are payable by the producer. The Primary Industries Levies and Charges Collection Act 1991 provides for the collection of the levy. Proceeds raised by the levies are apportioned between the Grains Research and Development Corporation, under the provisions of the Primary Industries and Energy Research and Development Act 1989, and the National Residue Survey, under the provisions of the National Residue Survey Administration Act 1992.

The operative rates of levy, as at 1 February 1994, are:

- Barley $1.133 per tonne,

- Triticale $1.00 per tonne,

- Oats 1.03% ad valorem,

- Cereal Rye 1.00% ad valorem,

- Sorghum 0.23% ad valorem,

- Maize 0.20% ad valorem,

- Millet 1.00% ad valorem, and

- Canary Seed 1.00%ad valorem. 6

The levies imposed by the Coarse Grains Levy Act 1992 are imposed by the Commonwealth at the request of the coarse grains industry, and funds raised are matched by the Commonwealth up to a maximum of 0.5% of the industry's gross value of production. The principal uses of proceeds raised by the levies include the funding of research and development and health and safety monitoring. It is estimated that receipts from the coarse grains levy for 1993- 94 will total $7.077m and $6.602m in 1994- 95. 7

The main amendments proposed by this Bill will change the basis on which levies are imposed by the Coarse Grains Levy Act 1992 on barley and triticale from a flat rate per tonne to an ad valorem rate. 8 The term "ad valorem" means a surcharge based on a percentage of the value product. The amendments have the support of the Grains Council of Australia and the Triticale Grain Association of Australia, and will bring the basis on which levies are imposed on barley and triticale into line with the other levies imposed on coarse grains.

Main Provisions

Section 9 of the Coarse Grains Levy Act 1992 (the Principal Act) provides that a levy is imposed, subject to sections 13 and 14, on leviable coarse grain produced in Australia. The levy is not payable unless the producer delivers the grain to another person, other than for storage on his/her own behalf, or processes the grain. The term "leviable coarse grain" is defined in section 3 to be grain harvested from barley, triticale, oats, cereal rye, or any kind of prescribed coarse grain.

Section 13 of the Principal Act provides that levy is not imposed on leviable coarse grain if it is produced by a producer and processed by or for him/her, and all products and by- products of processing that grain are used by the producer for domestic purposes. In addition, the regulations may exempt a specified class of leviable coarse grain from levy.

Section 14 of the Principal Act provides that levy is not imposed on triticale delivered to a particular person, or processed by a producer, in a financial year, if the total weight of the triticale is less than the leviable weight. The term "leviable weight" is defined by section 3 to be 15 tonnes, or a prescribed weight.

Clause 4 will amend section 9 of the Principal Act by adding at the end of subsection (1) "after 1 October 1992". Following this amendment subsection 9(1) will now read:

Subject to sections 13 and 14, levy is imposed on leviable coarse grain produced in Australia after 1 October 1992.

The object of amendment is to ensure that only oats and cereal rye produced after 1 October 1992 is leviable. It is stated in the Explanatory Memorandum that this amendment "will avoid confusion that has been occurring amongst some levy payers regarding their liabilities in respect of oats and rye harvested prior to 1 October 1992 but delivered or processed after that date."

Section 10 of the Principal Act deals with the rates of levy for barley and triticale. Section 10 provides that the operative rate of levy for barley is $0.75 per tonne and $1.00 per tonne for triticale, or such other rate as is prescribed, up to a maximum rate of $5.00 per tonne.

Clause 5 repeals section 10 of the Principal Act.

Section 11 of the Principal Act deals with the rates of levy for oats and cereal rye. Section 11 provides that the operative rate of levy for oats and cereal rye is 0.5% of sales value, or such other rate as is prescribed, up to a maximum rate of 5% of sales value.

The effect of clause 6 is to set an operative rate of levy for oats, cereal rye, barley and triticale of 1% of the value of the grain, or such other rate as is prescribed, up to a maximum rate of 5% of sales value.

Clause 7 repeals section 14 of the Principal Act.

Endnotes

1. Australian Bureau of Agricultural and Resource Economics, Australian Commodities, Vol. 1, No. 1, March 1994, pp. 134 and 137.

2. ibid., pp. 141 and 144.

3. Australian Bureau of Statistics, 1992- 93 Summary of Crops Australia, pp. 5 and 6.

4. Australian Bureau of Statistics, 1992- 93 Value of Agricultural Commodities Produced Australia, pp. 6 and 7.

5. The National Residue Survey monitors residues of agricultural and veterinary chemicals in raw agricultural products to ascertain whether they meet national and international health and safety requirements.

6. The rates of levy have been obtained from the Levies Management Unit of the Department of Primary Industries and Energy, relevant principal legislation and regulations.

7. The Commonwealth Public Account 1994- 95, Budget Paper No. 2, p. 39.

Ian Ireland (Ph. 06 2772438)

Bills Digest Service 16 June 1994

Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1994.

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Published by the Department of the Parliamentary Library, 1994.