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Rural and Regional Affairs and Transport Legislation Committee—Senate Standing—Primary Industries (Customs) Charges Amendment (Dairy Cattle Export Charge) Bill 2020—Report, dated July 2020


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July 2020

The Senate

Rural and Regional Affairs and Transport Legislation Committee

Primary Industries (Customs) Charges Amendment (Dairy Cattle Export Charge) Bill 2020 [Provisions]

© Commonwealth of Australia

ISBN 978-1-76093-092-9

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

Printed by the Senate Printing Unit, Parliament House, Canberra

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Members

Chair Senator Susan McDonald NATS, QLD

Deputy Chair Senator Glenn Sterle ALP, WA

Members Senator Alex Antic LP, SA

Senator Nita Green ALP, QLD

Senator Gerard Rennick LP, QLD

Senator Janet Rice AG, VIC

Secretariat Gerry McInally, Committee Secretary Emma Banyer, Principal Research Officer James Strickland, Principal Research Officer Trish Carling, Senior Research Officer Joshua Wrest, Senior Research Officer Michael Fisher, Research Officer Jason See, Administrative Officer

PO Box 6100 Telephone: (02) 6277 3511

Parliament House Fax: (02) 6277 5811

CANBERRA ACT 2600 Email: rrat.sen@aph.gov.au

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Contents

Members ............................................................................................................................................. iii

Recommendation ............................................................................................................................. vii

Chapter 1—Introduction and background ..................................................................................... 1

Referral of inquiry ................................................................................................................................ 1

Conduct of the inquiry ....................................................................................................................... 1

Acknowledgement .............................................................................................................................. 1

Structure of the report ......................................................................................................................... 1

Purpose of the bill ................................................................................................................................ 2

Consideration by other committees .................................................................................................. 2

Chapter 2—Key issues........................................................................................................................ 5

The dairy cattle export industry ...................................................................................................... 5

Directing the funds .............................................................................................................................. 6

Animal welfare ..................................................................................................................................... 6

Breeder cattle and the Export Assurance Supply Chain System (ESCAS) .................................. 7

Administration and review ................................................................................................................ 7

Committee view ................................................................................................................................... 8

Additional comments from the Greens ........................................................................................ 11

Appendix 1—Submissions .............................................................................................................. 13

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Recommendation

Recommendation 1

2.29 The committee recommends the Senate pass the bill.

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Chapter 1

Introduction and background

Referral of inquiry 1.1 On 12 June 2020, the Senate referred the provisions of the Primary Industries (Customs) Charges Amendment (Dairy Cattle Export Charge) Bill 2020 (the bill) to the Rural and Regional Affairs and Transport Legislation Committee

(the committee) for inquiry and report by 30 July 2020.1

1.2 The proposal to refer the bill to the committee suggested a number of issues for consideration as part of the inquiry, including:

 to investigate the effectiveness of the bill with regards to funding the Dairy Cattle Export Program; and  investigate including breeder cattle into the Export Assurance Supply Chain System (ESCAS).2

Conduct of the inquiry 1.3 The committee advertised the inquiry on its webpage, calling for submissions by 30 June 2020. The committee also wrote to a range of key stakeholder groups and organisations, drawing their attention to the inquiry and inviting

them to make written submissions.

1.4 The committee received six submissions, which are listed at Appendix 1. Submissions were published on the committee's inquiry webpage.

1.5 The committee completed its inquiry on the basis of these submissions, and on other publicly available information regarding the bill and its provisions, including the bill's Explanatory Memorandum (EM).

Acknowledgement 1.6 The committee thanks those organisations which provided written submissions to the inquiry. This work has informed the committee's deliberations.

Structure of the report 1.7 The report consists of two chapters. Chapter 1 provides information about the inquiry and the purpose of the bill. The second chapter presents the key issues raised by submitters, and the committee's views and recommendation.

1 Journals of the Senate, No. 54, 12 June 2020, p. 1870.

2 Senate Selection of Bills Committee, Report No. 5 of 2020, 12 June 2020, Appendix 2.

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Purpose of the bill 1.8 The bill would amend the Primary Industries (Customs) Charges Act 1999 (the Act) to impose an export charge on the export of dairy cattle, which are currently exempt from duties of customs collected on the export of other types

of cattle. The bill would also amend the rate provisions in the Act to provide for two different rates of charges: a per head charge on dairy cattle and a per kilogram charge on cattle other than dairy cattle. These customs charges are used to fund research and development, and marketing activities.3

1.9 A voluntary charge has been in place since 2006 with proceeds funding research and development ‘focusing on animal health and welfare; supply chain efficiency and regulatory performance; and market access for dairy cattle exports’. However, the voluntary nature of the charge has reportedly resulted in ‘under-collection’ of funds, eventually leading the industry to abandon the voluntary program and seek a statutory charge.4

1.10 The peak industry body, Australian Livestock Exporters’ Council, conducted stakeholder consultations in 2017. The consultations found that a majority of industry participants were in favour of a non-voluntary, statutory charge to support research and development, animal welfare and marketing activities for the sector.5

1.11 In developing the bill, the Department of Agriculture, Water and the Environment consulted with other Commonwealth agencies, including the Department of the Prime Minister and Cabinet, the Department of the Treasury, and the Department of Finance.6

Consideration by other committees 1.12 The bill was considered by the Senate Standing Committee for the Scrutiny of Bills in June 2020. The committee expressed concern that the bill did not set a ‘maximum charge’ per head of cattle in the primary legislation. The committee

requested the minister's advice in relation to ‘whether a maximum rate of charge that may be imposed on the export of dairy cattle can be included on the face of the bill’.7 At the time of tabling this report the Ministerial response had not been received.

3 Explanatory Memorandum, p. 1.

4 Explanatory Memorandum, p. 1.

5 Explanatory Memorandum, p. 1.

6 Explanatory Memorandum, p. 2.

7 Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2020, 10 June 2020, p. 27.

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1.13 The Parliamentary Joint Committee on Human Rights considered the bill in its 6th Report of 2020, and stated that the committee had ‘no comment’ on the bill from a human rights perspective.8

8 Parliamentary Joint Committee on Human Rights, Human rights scrutiny, Report 6 of 2020, 20 May

2020, p. 22.

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Chapter 2 Key issues

2.1 Submitters expressed strong support for the bill and the proposal to introduce a per-head charge for the export of Australian dairy cattle. For example, the National Farmers Federation commented on the extensive consultation leading to the proposal, and recommended the bill be passed ‘without delay’.1

2.2 While all submitters supported the imposition of the charge, a number also expressed views in relation to how the money would be allocated, and the importance of transparent reporting and administration.

The dairy cattle export industry 2.3 The dairy cattle export industry is valued at approximately $200 million per annum and, according to the Department of Agriculture, Water and Environment (the department), provides ‘an important alternate source of

income for many Australian dairy farmers, which has positive flow on effects for rural and regional economies and communities’.2

2.4 Australia dairy cattle is exported to China, Indonesia, Pakistan, Malaysia, Japan, and other countries.3

2.5 According to Australian Dairy Farmers, around one third of dairy farmers chose to sell heifers to live export in 2018-19. A total of 92 456 Australian dairy heifers were exported during 2018-19, with a value of approximately $188 million. Australian Dairy Farmers noted that if the $6 per head levy proposed in the bill had been in place, this would have provided $554 736 in direct funding for the sector in 2018-19.4

2.6 The vast majority of dairy cattle sold to export were from Victoria (approximately 90 000 heifers).5

2.7 Highlighting the importance of research and development, the department submitted that:

The implementation of a $6 per head charge on exported dairy cattle will revitalise the R&D and marketing program for the industry. It will provide certainty in funding and allow the industry to plan into the future.6

1 National Farmers Federation, Submission 6, p. 2.

2 Department of Agriculture, Water and Environment, Submission 4, p. 3.

3 Department of Agriculture, Water and Environment, Submission 4, p. 3.

4 Australian Dairy Farmers, Submission 1, p. 1.

5 United Dairyfarmers of Victoria, Submission 3, [p. 1].

6 Department of Agriculture, Water and Environment, Submission 4, p. 5.

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Directing the funds 2.8 Funds raised from the $6 per head charge would be spent on a combination of marketing, and research and development activities. The department submitted that the Australian Government matches research and development

levy contributions ‘to a specific cap’, but does not match funding for marketing activities. 7

2.9 Australian Dairy Farmers reported that the Australian Livestock Exporters’ Council has proposed to direct $1 of the $6 per head to research and development funding, which would be matched by government funding, and the remaining $5 per head to marketing activities (which would be unmatched). 8

2.10 Australian Dairy Farmers and the Western Australian Farmers Federation’s Dairy Council submitted that ‘any funds raised [should] be spent in consultation with the dairy industry, in order to facilitate improvements in the dairy cattle export trade’.9

2.11 The United Dairyfarmers of Victoria similarly called for funds to be spent in consultation with the dairy industry. However, it added that, due to the high percentage of dairy cattle exports originating from Victoria, ‘the major participating state bodies’ should participate in the allocation of funds from the levy, alongside the national dairy industry body.10

2.12 The Australian Livestock Exporters’ Council submitted that:

The levy revenue will be invested by LiveCorp into the Dairy Cattle Export Program, delivering against strategic priorities to meet the needs of the dairy cattle export trade in areas of animal health and welfare, supply chain efficiency and regulatory performance, market access and stakeholder communications.11

Animal welfare 2.13 Australia Dairy Farmers proposed that the funds collected should be used to ensure animal welfare standards for exported heifers are able to meet the expectations of the Australian community, as well as those of farmers, to

protect the industry going forward.12

2.14 The department responded to questions around animal welfare, saying:

7 Department of Agriculture, Water and Environment, Submission 4, p. 5.

8 Australian Dairy Farmers, Submission 1, p. 1.

9 Australian Dairy Farmers, Submission 1, p. 1; and the Western Australian Farmers Federation,

Submission 2, [p. 1].

10 United Dairyfarmers of Victoria, Submission 3, [p. 1].

11 Australian Livestock Exporters’ Council, Submission 5, [p. 5].

12 Australian Dairy Farmers, Submission 1, p. 1.

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Animal welfare issues arise from time to time in the breeder trade. Typically these issues stem from the way in which animals adjust to new conditions and local managers/landholders adjust their farm management practices to suit larger imported cattle. Managing these issues is first and foremost the responsibility of farmers in the recipient country. Australia respects the sovereignty of trading partners and will not intervene without their permission.13

Breeder cattle and the Export Assurance Supply Chain System (ESCAS) 2.15 Many categories of livestock that are exported from Australia are covered by the Export Assurance Supply Chain System (ESCAS). However, breeder cattle

are excluded.

2.16 The ESCAS is an animal welfare, tracing and audit assurance system based on principles including that ‘the exporter has control of all supply chain arrangements for livestock transport, management and slaughter’.14

2.17 The proposal to refer the bill to the committee suggested the inquiry should investigate including breeder cattle into the ESCAS.15

2.18 In its submission, the department addressed this suggestion, submitting that expert inquiries have determined it is ‘unreasonable for exporters to be generally responsible for breeder livestock through to the point of death or to be responsible for the progeny of livestock exported from Australia’. This would require exporters to ‘follow’ livestock in foreign countries for timeframes as long as 10 years.16

Administration and review 2.19 Submitters argued for transparent reporting on the use of the funds. For instance, Australian Dairy Farmers recommended information on the ‘progress and outcomes’ of the expenditure be ‘clearly articulated in LiveCorp’s annual

report’.17

2.20 In its original 2018 proposal for the establishment of the statutory charge, the Australian Livestock Exporters’ Council stated:

Payers of the Dairy Cattle Export Charge will be provided considerable ability to influence levy investment through; the LiveCorp company and

13 Department of Agriculture, Water and Environment, Submission 4, p. 7.

14 Department of Agriculture, Water and Environment, Exporter Supply Chain Assurance System

(ESCAS), https://www.agriculture.gov.au/export/controlled-goods/live-animals/livestock/information-exporters-industry/escas (accessed 15 July 2020).

15 Senate Selection of Bills Committee, Report No. 5 of 2020, 12 June 2020, Appendix 2.

16 Department of Agriculture, Water and Environment, Submission 4, p. 6.

17 Australian Dairy Farmers, Submission 1, p. 1.

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membership structure; strategic and operational planning; operational approval and consultation processes and Annual General Meetings.18

2.21 The Council also recommended that the statutory Dairy Cattle Export Charge ‘be reviewed within 7 years following its implementation’.19

Committee view 2.22 The bill would introduce a statutory export charge for dairy cattle, which are currently exempt from such charges under the Primary Industries (Customs) Charges Act 1999.

2.23 The committee is convinced of the need for the legislation, as the previous voluntary scheme faced problems with under-collection, leaving the industry without sufficient funds for research and development and marketing activities.

2.24 It is apparent that the Australian Livestock Exporters’ Council consulted widely with producers on their support for the imposition of a statutory charge, and that the legislation was developed with adequate consultation.

2.25 The committee is satisfied that a number of key industry stakeholders made submissions to this inquiry, and notes that all were in favour of the bill.

2.26 The committee is sympathetic to views expressed by submitters from the dairy industry who argue they should have a say in how the funds are spent. We specifically note the evidence provided by United Dairyfarmers of Victoria that a vast majority of exported heifers originate in that state.

2.27 The Australian Livestock Exporters’ Council needs to ensure that the major dairy farming industry bodies, including the Victorian body, have an ongoing say in how the funds are spent.

2.28 The committee notes the suggestion made by the Australian Livestock Exporters’ Council in 2018 that the charge be reviewed within seven years. The committee asks the department consider the merits of this proposal and plan accordingly.

18 Australian Livestock Exporters’ Council, Submission 5, Attachment 1: Dairy Cattle Export Charge:

Industry Proposal, 2018, p. 9.

19 Australian Livestock Exporters’ Council, Submission 5, Attachment 1: Dairy Cattle Export Charge:

Industry Proposal, 2018, p. 1.

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Recommendation 1

2.29 The committee recommends the Senate pass the bill.

Senator Susan McDonald Chair

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Additional comments from the Greens

1.1 The Greens have significant and ongoing concerns about the cruelty inherent to the live export trade, including the well-documented impacts of heat stress on sheep and cattle during voyages from Australia, and experiences in destination countries. Australians have been shocked by revelations of thousands of animals dying from heat stress and overcrowding on ships and overwhelmingly want this cruelty to end. Animals continue to die on live export ships. The live export industry should be shut down.

1.2 For any charge on the export of dairy cattle, all funds raised, including co-contributions from the government should be allocated directly to animal health and welfare initiatives, and not for marketing and profitability. All animal health and welfare initiatives, including research, should be undertaken transparently, with regular public reporting and appropriate oversight.

Recommendation 1

1.3 Recommendation: That all funds raised by the dairy cattle export charge, including co-contributions from the government, be allocated directly to animal health and welfare initiatives, to be undertaken transparently, with regular public reporting and appropriate oversight.

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Appendix 1 Submissions

Submissions 1 Australian Dairy Farmers Limited 2 The Western Australian Farmers Federation 3 United Dairyfarmers of Victoria 4 Department of Agriculture, Water and the Environment 5 Australian Livestock Exporters’ Council 6 National Farmers Federation