Levy system must be accountable

Not only are most levy payers never consulted, nobody even knows who most of them are.

TAXATION without representation sucks.

It is inherently unfair to be required to pay for a system but have no say in how the system works.

Welcome to the world of agricultural levies.

A levy may sound more benign than a tax but make no mistake: R&D levies, marketing levies and biosecurity levies are all taxes on production.

And even if it is accepted that each of these levies is useful and should be paid by agricultural producers, very few levy payers are ever actually asked.

Earlier this year two Senate inquiries recommended to the Agriculture Minister that this should change.

I was an active participant in the second inquiry, which examined the levy system across all agricultural and horticultural sectors.

By the end of the first hour of evidence at the first hearing, it was apparent the system is broken.

Not only are most levy payers never consulted, nobody even knows who most of them are.

But changing this does not suit government, most industry bodies or the levy spenders.

They do not want genuine accountability, but prefer the current system in which the well-connected have a small say while fundamental questions, such as whether to impose the levies in the first place, are never raised.

In reality, government is only listening to peak industry bodies and R&D organisations, whose main interest is in spending the levies, and not the producers who pay the levies.

Lest the scale of the problem be misunderstood, compulsory paid by producers each year amount to $500 million.

In some sectors the amount paid in levies is more than the profit made by individual producers, and numerous producers pay hundreds of thousands of dollars per year.

By any measure, levy payments are a significant impost that should be fully justified.

And in reality, most producers do not actually begrudge paying a levy if they see value in it.

Two sectors have moved in the right direction.

Tens of thousands of dairy farmers and wool producers are polled every few years to determine the rate of the levy.

Quite rightly, this includes a zero option, which if adopted would mean levy payments ceased and various people would lose their jobs.

So far, this has never been chosen.

Other levy payers are occasionally given an opportunity to vote on a levy when it is first introduced, but never asked again.

And, as the inquiry heard, there are many sectors in which levy payers have never had an opportunity to express a view despite paying levies for decades.

And now we hear the dairy industry suggesting it should abandon its poll, blaming excessive cost.

To this I have a four word response: over my dead body.

The argument that it is too expensive to give producers a democratic say in raising and spending levies is disingenuous.

The real fear is that, given the option, levy payers might choose the zero option.

The only absolute requirement for democracy is a database of levy payers.

In this age of the internet, secure online polls can be undertaken at very low cost, and even a postal vote is not expensive.

Most of the cost attributed to the wool and dairy polls is a result of the inclusion of campaign costs by levy spenders seeking to convince producers to vote for a particular option.

Counting this in the overall cost is false and deceptive.

Setting up a database of levy payers was a key recommendation of the Senate inquiry.

Both the Minister and Department need to get busy making it happen.

Yes, it might require a change in legislation to allow the collection and aggregation of levy payer details, but this would have bipartisan and crossbench support.

Sure there may be some teething problems, but developing a database is hardly rocket science.

And of course, a database of levy payers would also be very useful in managing future biosecurity issues.

It is interesting to observe the enthusiasm of peak industry and R&D bodies for collecting and spending producer levies, but then see their enthusiasm dissipate when the discussion turns to giving levy payers a say on whether to pay the levies in the first place and how their money should be spent.

This same problem does not confront the general community.

We all get to vote for a government every three years, and can choose a party that promises higher or lower taxes.

It is time we gave primary producers a similar say over their hard earned money.

THE report on the Senate Rural and Regional Affairs and Transport References Committee inquiry into agricultural marketing and research and development (R&D) levies was handed down in June. It recommended making legislative changes, on the collection and distribution of agricultural levy-payer information, to help create more detailed and accurate databases to increase transparency and accountability. However, the federal government is yet to respond to the report’s seven recommendations.

David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
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Rob Moore
18/11/2015 1:15:09 PM

Q-time: Sen DL to Ag Min " Do you have faith in the integrity of the MLA voting register and the subsequent Processor domination of the Producer Company via their Grainfed feedlot levies?"SUPPLIMENTARY Q1 for when he says "of course"-" Can you explain where the one in four grainfed cattle entries to the Levies Collection Unit (LRS) originate from?"When he starts waffling SUPP Q2 " Have you had this discrepency of $200M in tax&Ley funds-sitting on your desk for several months in a WHISTLEBLOWER capacity?" Be most interesting as telling porkies is a serious offence -when from a public servant!
Graham Clune
18/11/2015 10:08:30 AM

John your comment is spot on and yes David, the answer to Robb's question has to be answered. This cloud has been hovering around for far too long
John Carpenter
17/11/2015 3:57:49 PM

Why hasn't the DoA, the RMAC,or MLA got the courtesy and just plain manners to give Rob Moore the answer to the perfectly reasonable question he has asked time and time again?Are the processors being allowed to improperly vote at MLA general meetings on the basis of cattle they have owned for less than 60 days? If Rob is wrong then it should be a simple matter to explain and clear up but no these people just hide behind the protection racket provided by the National Party's beef industry structure.David,why don't you raise this in the Senate?
Rob Moore
17/11/2015 8:48:12 AM

At mla-agm last week-RMAC wheeled out their MISP2020 fantasy with a +$12.9B extra windfall due to the ponzi accounting of their paid consultants.Just how did your last 5yr plan eventuate boys??The RMAC boss confirmed that Processors that own feedlots DO pay the grainfed levy from their own lots to works & that it is according to the act!(not voluntary).This eliminates half the equation of the answers I'm seeking form MLA/DA and Joyce!All I want now is -explaination of the 1in4 grainfed entries from Levies Agency- that RECORDS Grainfed Levy EXEMPT-I can't wait for the answer??Fraud??Oversight??
Chick Olsson
7/11/2015 4:01:24 PM

Agree Rob Moore. We need some new thinking in Ag rather than continually rely on levy bodies for our future prospects
John Carpenter
5/11/2015 4:19:31 PM

The solution is to get rid of the levy.
Rob Moore
5/11/2015 1:09:27 PM

Chick-Red meat must firstly get a roll of levy payers-ATO,NLIS?? and give every person a vote on levy level-with a zero optionGOVT must pay public servants(meat inspectorsAQISetc)- not Levypayers.OTHERWISE no more levies.................pretty simple Barnaby- something you should be able to handle before xmas?
Chick Olsson
4/11/2015 12:17:02 PM

BTW David L, what is your actual solution? What practical steps do you intend to follow to make levies more accountable? Chick Olsson
Chick Olsson
3/11/2015 11:28:33 AM

Great article David. The levy model is now fairly much outdated, a product of a past era that will have to end one day if we are to enjoy the fruits of free market principles. Lets face it, if there is a dollar in it, farmers generally embrace that chance and take the punt, with or without any levy body assistance.
angry australian
2/11/2015 10:08:50 AM

David how much have farmers and the taxpayer contributed to this super expensive work for the dole scheme for researchers,industry and government bureaucrats over the last 20 odd years? $4 billion?$5b? $6b? $7.5b? Does the word billion even mean anything in Canberra any more? Who are the beneficiaries? Certainly not farmers or the taxpayer. If farm profits were going up due to these schemes, the taxes paid would make a hole in our deficit.Despite $billions to the MLA domestic red meat sales are dropping,AWI hasn't increased the price of wool and GRDC waste money, the whole show needs review!
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com


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Sorry did i get it wrong..? Rankins Springs is still open..?!
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No doubt a few frosted Freddies out there who will wish they had taken a closer look at the AGC
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Matthew, I was wondering if you had followed up this story with the farmer after the whole