Image: RMAC
A BIG unknown surrounding the red meat MoU review process currently underway is where the Federal Government stands.
The Commonwealth is an important player in the reform process for two key reasons: it is a major contributor to red meat industry research through matching dollar-for-dollar funding, and, because the restructure proposed in the white paper involve changes to levy flows, and therefore changes to legislation, the reforms would also need Government support to enact.
The white paper recommends that all red meat levies (cattle, sheep and goat transaction levies, red meat slaughter levies and live animal export levies) be reallocated from the research development corporations Meat & Livestock Australia, Australia Meat Processor Corporation and Livecorp into a new body to be called Red Meat Australia, to serve as a powerful single voice for the entire red meat sector.
Achieving changes to levies has never been an easy process, as highlighted by industry feedback to a Senate inquiry into agricultural levies in June 2015. “Extremely difficult, arduous, exhaustive and expensive” were words various peak industry councils used to explain their experiences trying to make even minor adjustments to levies, largely because of the number of pieces of regulation in which levies are enshrined.
Changes to both “primary and subordinate legislation” would be needed to enable the type of reform recommended in the white paper, a Department of Agriculture spokesperson said in response to Beef Central’s questions last week.
What is also not yet clear is what level of levy payer support for the final red meat restructure proposal (the white paper is still out for industry feedback) will have to be demonstrated for the Government to support it.
Jim Varghese AM, Taskforce Chair
Task force chair Jim Varghese told Beef Central at the release of the green paper that it will be up to RMAC, the peak industry councils and the Minister of Agriculture of the day, to consider what action should be taken after his white paper recommendation is released.
A timeline contained in the Red Meat White paper document says the next step after the current consultation phase of the white paper will be to create a transition taskforce, and for the NewCo 1 (the new super overarching red meat body currently referred to as ‘Red Meat Australia’) to be launched by 1 July 2020.
The green paper/white paper process has provided widely-advertised opportunities for every levy payer to contribute and have their say.
Whether the Government will accept the outcome of this process as constituting adequate industry consultation or whether it will still require a ballot of levy payers, as occurred when the cattle transaction levy was increased from $3.50/head to its current rate of $5/head in 2005) is yet to be clarified.
The Department of Agriculture’s Levy Principles and Guidelines state that changes to levies cannot take place without demonstrated levy payer support.
“For a levy proposal to be considered by government, industry must show that there is majority support from actual and/or potential levy payers,” the document stipulates.
‘A majority’ is defined as “50 percent plus one of the voting allocations of those producers who choose to vote in a levy ballot” or 50 percent plus one of producers, if the vote is conducted on a one-vote-per-producer basis.
Asked what industry would be required to demonstrate before proposed changes to existing levy flows take place, the Department of Agriculture’s response to Beef Central pointed to a need to demonstrate “majority levy payer support”.
The input of, and support from, levy payers and producers was a critical part of any future red meat industry structure, the Department statement said:
“The nature and level of industry support required to agree to implement a proposal is a matter for the Minister and government.
“It is long-standing government policy that majority levy payer support be explicitly demonstrated for changes to levy arrangements.”
Should an industry advocacy body receive levy funding?
Whether the Government will allow a single organisation to collect all industry levies and perform an industry advocacy role, as recommended in the white paper, is another point in question.
Former Agriculture Minister Barnaby Joyce previously rejected a 2014 senate inquiry recommendation for the grassfed cattle sector to establish a new organisation that would receive all grassfed cattle transaction levy funds and also advocate on behalf of the grassfed industry.
Mr Joyce explained at the time that statutory levy funds were classified by Government as tax revenue, which limited how they could be used. An organisation funded by statutory levies would be beholden to the Federal Government and unable to freely express its views without fear or favour, not a desirable outcome for an industry organisation, he warned.
(One exception to this was Australian Pork Limited (APL), created in 2000 from combining the Australian Pork Corporation, the Pig Research and Development Corporation, and the Pork Council of Australia. APL receives and controls statutory pig slaughter levy funding for research and marketing, but is also responsible for strategic industry policy development and advocacy. https://australianpork.com.au/about-us/australian-pork-limited/.)
AFI report comes to light
In recent months the recommendations of an independent industry funded report completed in December 2016, but only recently made available to the broader industry, have just come to light.
The report, prepared by Australian Farm Institute, recommended, in contrast to Mr Joyce’s position, that statutory red meat levies should be used to fund industry policy analysis, strategic planning, performance monitoring of levy-funded industry service organisations and potentially also policy planning and industry advocacy, but not “agripolitical” activities.
The AFI report was commissioned in 2016 by RMAC with funding from the Red Meat Industry Fund, reportedly at the request of Mr Joyce.
The report was handed to Mr Joyce’s office by RMAC upon its completion by AFI in late 2016. However the report sat in the Minister’s office without being released for more than two years. A few months ago, with the MoU review process pushing into the next phase, the RMAC board made the decision to publish the report on its website.
Perhaps it was that the findings did not fit with Mr Joyce’s position that explains why it was not released by his office, but the executive summary of the AFI report can now be found on the RMAC website https://rmac.com.au/policy-leadership/submissions-2017/.
Where does Bridget McKenzie stand?
Attentions now turn to where Federal Agriculture Minister Bridget McKenzie stands on questions such as whether a single organisation should be able to receive levies and perform advocacy duties, as the white paper recommends.
Minister for Agriculture Bridget McKenzie.
The Minister has yet to give an indication of her position on the reform proposed in the white paper.
After its release she issued a statement thanking the work of RMAC and the independent review taskforce led by Jim Varghese in “addressing a number of long-standing concerns around funding and representational issues the Government has had about the red meat sector, and which have also been raised in a number of Senate inquiries”.
“Industry and taxpayers alike deserve to have confidence in the agriculture levy system, and in the bodies that monitor this investment.
“The Minister is pleased that the RMAC have led an assessment of their structures, and will be considering the recommendations outlined in the White Paper in a broader reform agenda.”
In response to questions from Beef Central about whether the Minister supports the recommendations made in the AFI report, the Minister’s office passed the inquiry on to the Department of Agriculture ‘as the responsible department’.
The Department’s response referred questions relating to the AFI report to RMAC, and summarising the white paper process to date:
“On 4 July 2019 RMAC released a White Paper that sets out proposed reform to the red meat sector’s current governance arrangements.
“This report was developed by an independent taskforce following extensive stakeholder consultation and would provide a more contemporary perspective from the industry on its governance and funding arrangements.
“The department understands RMAC is consulting with the industry on the White Paper ahead of providing a reform proposal to government.”
In comments to Beef Central RMAC independent chair Don Mackay said the review taskforce led by Jim Varghese spent a significant amount of time with the Department of Agriculture to check the regulatory environment to ensure it didn’t recommend things that weren’t technically possible.
RMAC chair Don Mackay
On the question of demonstrating industry support for the reform proposal, Mr Mackay said it was clear the whole of industry had been calling for reform. “I don’t think there is anybody who is at odds with that,” he said.
“We’ve been working with the Department and the Minister’s office right through the process and we have continued to do that,” he said.
“We are not aware of what they may require, broad consensus of industry or whether they would need something more than that, we don’t really know.”
Mr Mackay said there was an active dialogue occurring throughout the industry with varying views on the white paper’s recommendations and ideas on refinements, which he encouraged.
He urged individuals or groups to take this opportunity to provide their thoughts on improvements or alternative solutions.
In particular he urged groups to ensure that what they were asking for was achievable, and within the limits of what levy funding can be used for and the rules of independent governance.
Mr Mackay said the restructure proposed in the white paper provided a direct line of sight for a board to have influence over how levy funds are invested. The model was also in line with AFI reports recommendations that development of policy and advocating of policy was a legitimate use of levy funds.
“If you can get that level of high level of capacity within Red Meat Australia to develop policy and prosecute the case and be a big strong organisation, then I think the whole of industry is going to be in a better place.”