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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29/10/2015 6:26:32 AM

The principle and practice of 'levies' differ in no whit from the rip-off called 'Taxation' generally. It's also the principle and practice employed by standover goons of the Mafia and others of the same ilk.---> "Give us your money or we'll hurt you." ....and it's a principle and practice invented by Moses, who needed the support of the murderous goons known as Levites in order to impose his own ambitions (Hence the word 'Levy'. The only people who favour 'taxation' by whatever name are politicians, bureaucrats and other dole-bludgers.
John Michelmore
29/10/2015 7:42:12 AM

Serf, All you need do is stand back and let Barnaby, the industry, government and Dept of Ag introduce some minor changes that achieve nothing without consulting the 90 percent of levy payers out here that are not identified and will get no input into any change. Does that remind you of John Anderson and the AMLI Act of 1996 1997. You see their biggest fear is democracy in the levy system, we can't have that it's just unacceptable to them, and they will find any excuse not to have democratic voting whether that is cost, or because they can't identify the levy payer etc.
angry australian
30/10/2015 2:05:29 PM

David L, while identifying the levy payers and making it democratic is very important, remember the road to hell is paved with good intentions. You say,that farmers are currently paying over $500 m in levies, just exactly do they get for it? Fancy buildings in Sydney,Canberra etc,expensive bureaucrats and other assorted hangers on! R&D of dubious economic value and heaps of Board Members dining out first class! I will say it again for your benefit, there are only so many $ you can take out of farmers before financial stress closes in on them. For many that is now,the system is broken
angry australian
30/10/2015 2:34:02 PM

David L, to complete my comment isn't R&D supposed to be about enhancing farmer productivity and profitability? Next time you're in Estimates you may wish to question just in which century those spending levies anticipate that happening? I have seen no huge increases in either profitability or productivity brought about by the likes of MLA,GRDC,AWI or the rest of the illegitimate brood that Canberra has spawned. In fact I can make a very strong case that all our primary producers are going backward. Until levies are tied to profits and not turnover there is no incentive to fix any problem!
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!
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.
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
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?
John Carpenter
5/11/2015 4:19:31 PM

The solution is to get rid of the levy.
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
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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