THE cost of an annual livestock export license in Australia will soar from $25,000 to over $100,000 under the latest round of cost recovery increases planned by the Federal Government.
As it does with other export sectors, the Federal Government aims to recover the full bureaucratic costs it incurs for certifying and regulating the livestock export industry, through a series of fees and charges imposed on livestock exporters.
Every five years or so the Federal Government reviews and updates the rates it charges with a view to ensuring full cost recovery from industry.
In recent years, and particularly since the Awassi Express controversy in 2018, the Federal Government has expanded the size of the Departmental staff and the amount of resourcing it directs to overseeing and regulating the industry.
The Department of Agriculture, Water and Environment recently released a Cost Recovery Implementation Statement for live animal exports for 2020-21.
It shows that the annual cost of departmental employees who now oversee the industry has risen to $15 million.
It is not clear how many employees that expenditure covers.
This is for a sector with a total of 19 licensed exporters (cattle, buffalo, sheep and goats), of whom about half that number account for the majority of trade activity.
Exporters have expressed gratitude to the Federal Government for its decision in October last year to freeze all fees and charges in the 2020–21 financial year, which was applied to all export sectors to help overcome the impacts of COVID.
However, they now fear the new round of touted cost increases will cause potentially insurmountable damage to their viability as the Federal Government moves to return to full export cost recovery arrangements by 2023–24.
The Department’s Cost Recovery statement said fees and charges will remain at their current levels in 2020–21, but will rise year on year from 2021–22 to 2023–24.
To return to full cost recovery by 2023-24 the Department has proposed a wide range of fee increases and charges, in the order of 300pc to 500pc in some cases.
Annual license fees are set to increase from $25,000 to $106,551, approved arrangement fees for sea shipments from $20,000 to $85,241, and the cost to register an export premises will increase from $5000 to $21,311.
‘Our competitiveness is being shot to pieces’
“Our competitiveness is being shot to pieces,” was one livestock exporter’s take on the latest round of Federal Government cost increases.
The Federal Government statement said it also expects that a planned $222.2 million plan to upgrade the Information and Computer Technology system that underpins its export system will streamline and simplify essential export services and make them more efficient for the future.
It said the outcomes of this work are expected to reduce the cost of delivering regulatory services to the live animal export industry as well as reducing the interaction costs that regulated entities (exporters) will face in dealing with the department on regulatory matters.
The Department statement said it projected in 2018-19 that the total cost of all cost recovered arrangements for the Live Animal Export division in 2023–24 would be $28.4 million.
It says it now expects the direct impacts of its reforms to reduce this cost by $4.7 million to $23.7 million by 2023–24.
‘Devastating news’ for industry
Australian Livestock Exporters Council CEO Mark Harvey Sutton said the planned cost hike was devastating news for the industry, particularly given the “incredible work” of the industry to continue uninterrupted during the uncertain COVID period.
While exporters were being asked to shoulder significant cost increases, the Department should also be examining the many areas in which it could increase the efficiency of its operations, he said.
“We were very grateful for the Federal Government’s assistance with export fees and charges with the freeze on fees during COVID that they introduced in the October budget,” he said.
“But the really concerning thing in what has been proposed in the Cost Recovery Implementation Statement are the increases of three and five times higher than what is currently being recovered with minimal justification.
“Exporters are very concerned about regulatory inefficiencies within the Department, particularly at the operational level, and we think there are a number of areas that can be improved.
“For instance approved arrangements were supposed to increase efficiency and reduce cost but what we have seen is a devolution of approved arrangements.
“They exist only in concept at the moment, not practice.
“It is our very strong view there are significant opportunities for DAWE to streamline their regulatory processes and practices, as well regulating consistently, proportionately and in a manner that rewards good performance.”
Mr Harvey Sutton said consultation on the proposed fee increases must be a genuine two-way process to achieve regulatory efficiency and reform, rather than a tokenistic exercise.
The fee increase would also impact the sector’s global competitiveness, he said.
“The fact we pay some of the highest regulatory costs in the world does impact our competitiveness, and that is not just live exports, I think many other export industries would also hold that view.
“We have to be very mindful of the fact that this will have an impact on the economics of the industry if fully instated, at a time when cattle prices are high due to the supply situation and a lot of markets during the COVID period are sensitive to high prices.
“In addition to DAWE meaningfully engaging and examining where efficiencies could be gained, we’re also keeping one eye on our global competitiveness because that is going to be extremely important for agriculture and ultimately Australia’s economic recovery.”