All agricultural levies in Australia will come under scrutiny in coming weeks and months after the Senate yesterday passed a motion calling for a wide-ranging inquiry.

The motion passed by the Senate yesterday afternoon was co-sponsored by Liberal Senator for NSW Bill Heffernan, Liberal Senator for WA Linda Reynolds and Liberal Democratic Senator for NSW David Leyonhjelm.

It called for a Senate Inquiry into “the industry structures and systems governing the imposition of and disbursement of marketing and research and development (R&D) levies in the agricultural sector”.

The motion was passed.

The Senate Rural and Regional Affairs and Transport committee now has until November 24 to conduct the inquiry and report back. Public submissions are also now being invited until October 20 – see more details on the inquiry home page which was established earlier today here

Three months is a relatively short time for what has the potential to be a wide-ranging and far-reaching inquiry, with agricultural levies across dozens of industries likely to be examined by the inquiry. It is not unusual for senate committees to request, and be granted, extensions to their reporting deadlines, so the proposed time-frame is not necessarily set in stone.

The motion passed yesterday read:

That the following matter be referred to the Rural and Regional Affairs and Transport References Committee for inquiry and report by 24 November 2014:

The industry structures and systems governing the imposition of and disbursement of marketing and research and development (R&D) levies in the agricultural sector, with particular reference to:

(a) an audit of reports, inquiries and reviews relevant to this inquiry;

(b) the basis on which levies are imposed, collected and used;

(c) competing pressures for finite R&D funds;

(d) the opportunities levy payers have to influence the investment of the levies;

(e) the opportunities levy payers have to approve and reapprove the imposition of levies;

(f) the transformation of R&D and marketing into increased returns at the farm gate, including the effectiveness of

extension systems;

(g) collaboration on research to benefit multiple industry and research sectors;

(h) industry governance arrangements, consultation and reporting frameworks; and

(i) any other related matter.

Inquiry about improving accountability of levy-funded groups: Leyonhjelm

Senator David Leyonhjelm, a career veterinarian and agribusiness consultant, has been calling for a full review of agricultural levy arrangements since joining the Senate in July.

Last month he moved a disallowance motion in the Senate against a proposed increase in levies paid by mushroom, onion and mango growers, which followed grower ballots in each industry.

His disallowance motion triggered immediate opposition from a collaboration of some 18 agricultural organisations which are funded by agricultural levies.

Last week, with his disallowance motion appearing to lack the required support it needed to pass from the Coalition and the Greens, Senator Leyonhjelm postponed voting on his motion until late September.

He said more time was needed for growers to understand that his bill was about greater democracy for growers and more accountability by organisations which receive agricultural levies.

Despite that setback, Government Senators have now supported his push for an inquiry into all agricultural levies.

“This arose out of the fact that I moved a disallowance motion on three increases in levies, mushrooms, mangoes and onions, and I moved that because the approval process of the those increase in levies was decidedly dodgy, very small numbers of people voted, and the majority in favour of them was pretty slim,” Senator Leyonhjelm told Beef Central this morning.

“So I am not happy about that kind of approach to levies which are basically taxes, especially when there is no opportunity to go back and revisit it at any time – once the levies are set, that is it, you’re stuck with them for life.

“So I thought I would poke the beehive and see if I could make a difference. This levy inquiry is the outcome.”

Senator Leyonhjelm said his focus was not so much on telling R&D Corporations that they should be doing a better job, but rather to make them more accountable to the people who pay the levies.

“My feeling is that once they are more accountable, then the complaints about the misuse of levies and their misapplication will diminish, if not go away.

“So if there is to be taxation, let’s have representation.

‘We need a vote on all levies by all levy payers in all sectors every three years…’

“My objective is to find a way to convince the Government to hold a vote on all levies by all levy payers in all sectors every three years, with vote weighting according to production or levy payments.”

“If we had (a vote) every three years, then I think the people spending the money will say we have to justify ourselves here, we have to make sure we do a really good job.”

The Senator said he believed a lot of wastage occurred in how compulsory levies are spent, such as in the salaries of some R&D Corporation staff and spending on areas that had little do with grower profitability or success.

“I have been in this business for a long, long time, and I am aware of the fact that there are all sorts of people with their noses in the trough on these levies,” he said.

“I don’t think we in the Government or the Senate can fix that with some sort of blanket rule, so therefore the best way to fix it is to bring accountability in.

“What suits mushroom levy growers in terms of how their levies are spent might not suit beef producers and how their levies are spent, so accountability I think will address most of those issues if not all of them.”

Asked how he managed to secure Government support for the motion, the Senator told Beef Central today that the Government knew it would “have a absolute storm” if his disallowance motion succeeded.

“They knew I had an issue , my background is in agriculture, I have been an agribusiness consultant for 30 years. They knew I know this subject very well and it would have been hard for them to disagree with me.”

“Plus there are other Senators coming under pressure on the quality of the decision making as far as how the levies are spent, there are some very unhappy people out there, and they were getting pressure of their own from a different direction, so it all came together in this inquiry.”

The Senator said his position on levies had been misrepresented in recent weeks, with opponents stating he opposed to all levies and wants to end the levy system.

He conceded that while he would probably vote against marketing levies on his own farm, and may also vote against R&D levies (but not biosecurity levies), he said he had no problem with levies when producers voted to pay them.

“If a majority of levy payers vote to keep their levies then that is their choice, that is exactly what the dairy farmers and wool growers do, they have a vote every few years and they vote to keep the levies and fine, if that is their choice, that is their choice.”

Inquiry will take ‘a helicopter view’ of all levies

In his view the inquiry will take “a helicopter view” of agricultural levies, and is not intended to delve too deeply into the specifics of each individual industry.

‘We will come up with recommendations to help levy payers keep the levy spenders accountable’

“We are not going to come up with recommendations regarding how Horticulture Australia should spend onion grower levies or how the wine people should spend their levies.

“We will come up with if you like generic recommendations that can be applied to all of them as to how levy payers can get good value for money, and also how levy payers keep the levy spenders accountable.

“As I said my plan is to ensure there should be a regular vote on levies. I raised this with the Minister, his only objection really is the cost and I think we can overcome that by coming up with options for levy payers to vote which don’t involve a lot of money.”

‘Inquiry gives everyone with a view a crack’: Heffernan

Senator Heffernan told Sheep Central earlier this week the motion was being put to let “everyone who has got a view about levies have a crack”.

“Obviously the MLA inquiry (into grassfed beef levies) showed up some issue which I can’t discuss because we haven’t put the report out yet,” he said.

“But just for completeness we thought well we better let everyone have a crack, because obviously there are all sorts of views in the industry,” he said.

“Some people would understand it is a bit like taxes; no-one wants to pay tax, but everyone wants to go to hospital if they get crook and not have to pay too much.”