Additional costs attached to the Federal Government’s backdown on part-subsidy of the AQIS inspection process could cost the beef industry $6 to $8 a head, it was suggested this morning.

Meat exporters have slammed the Federal Government’s actions, saying that during Senate Estimates last week, the Government had virtually admitted it was proposing a new tax on the Australian export meat industry from July 1.

“After five years of attempting to reform Australia’s meat inspection system, the Government has proposed a new fee structure for meat inspectors that will substantially increase costs for every export meat processor in Australia,” the chairman of the Australian Processor Council Gary Burridge said this morning.

The Government had said the reforms were supposed to deliver ‘the opportunity to remove substantial costs from the export supply chain for industry and AQIS.’

“In reality the proposed new fee structure does just the opposite,” Mr Burridge said.
“This is nothing but a blatant tax on exports, reducing our competitiveness in the global market and threatening the viability of a number of regional meat processors already under pressure from soaring power bills, livestock and labour shortages and with a carbon tax on the way.”

“Our global competitors in the US, Canada and Brazil do not pay full cost recovery for the inspection service they operate, so the Australian Government’s proposed tax will only serve to hamstring our export industries on the global stage.”

“Recent media comments suggest that the biggest threat to the future of livestock farming in Australia was the reduction in market competition. These increased Government charges are going to threaten the economic viability of marginal regional operators; potentially reducing competition and costing regional jobs.”

Mr Burridge said 50,000 Australians worked in the meat processing and export sector, with 50 percent of processors operating in regional Australia where the Government says that jobs are a priority.

“We agree with that assessment,” he said.

“These processing establishments play a vital role in contributing to the economic fabric of the rural towns in which they operate. Threatening their survival is likely to have direct impact on jobs and indirect impact on small businesses that rely on them for work.”

The meat processing industry was a low-margin business and the increased Government costs would not be able to be passed forward in a global market where Australia was already losing its competitiveness because of the strength of the A$, Mr Burridge said.

“There is only one way these increased Government costs can go, and that is back to the livestock producer,” he said.

The Federal Government’s own estimate suggested that cost could easily reach $6 to $8 a head for slaughter cattle, sources close to the issue said this morning.

The meat industry had offered a compromise solution to the Government that it believed could resolve the issue and allow once-in-a-generation change in meat inspection systems to be implemented, Mr Burridge said.

“With this new tax, the Government appears willing to risk generational reform and waste $127 million of taxpayer’s money allocated by Government in 2009 to get to this point,” he said.