- Introduction
- Summary of Main Changes
- Rationale for Setting Charges
- Proposed Levy: Gypsy Moth Surveillance Programme
- When Any Changes Come into Effect
- Revocation of Forestry-Related Regulations
- Items Not Part of this Review
- Future Changes to Cost Recovery Regulations
Part One: Summary of the Proposals
Introduction
The Crown funds the majority of MAF's biosecurity work. Where costs are recovered, this is largely carried out under the Biosecurity Act 1993, the Biosecurity (Costs) Regulations 1993, the Forest Disease Control Regulations 1967 and the Forest Produce Import and Export Regulations 1989.
Biosecurity services that MAF charges for include border inspections, treatment or destruction of risk goods, applications for import permits and supervision of transitional facilities (such as quarantine facilities).
The Biosecurity (Costs) Regulations 1993 have not been reviewed since they were made. Further, the costs contained in these regulations were based on earlier calculations, making them very outdated.
An update to the regulations is needed to:
- provide for cost recovery for these biosecurity services under fewer regulatory instruments;
- take into account new activities being undertaken since parts of the Hazardous Substances and New Organisms Act 1996 (HSNO) came into effect;
- reflect structural changes (such as the merger of the Ministries of Agriculture and Forestry) that impact in a range of ways on the cost of providing services;
- remove cross subsidies;
- reflect today's prices and the actual costs of providing services.
All charges in the Biosecurity (Costs) Regulations 1993 have been reviewed.
The Biosecurity Act 1993 requires that consultation be carried out before regulations are made. This discussion paper has been written to explain the proposed new cost recovery provisions and facilitate comment on them.
Summary of Main Changes
The main changes proposed are as follows.
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Rationale for Setting Charges
The Crown funds 74 percent of MAF's biosecurity budget1. The other 26 percent is funded by third parties. These may be:
- those who benefit from the service (such as the industries that benefit from protection from certain pests); and/or
- those whose actions give rise to the need for the service (such as importers).
In setting proposed charges, MAF has to strike a balance between a number of (sometimes competing) objectives while achieving the outcome Government desires.
These include considerations such as:
- efficiency and minimising costs;
- equity and fairness;
- keeping administration and transaction costs low;
- keeping evasion at acceptable levels;
- certainty of costs.
Cost recovery for biosecurity services fits into the Government goals to
- grow an inclusive, innovative economy for the benefit of all;
- protect and enhance the environment.
In this instance, MAF seeks:
to facilitate an integrated, cost-effective and acceptable biosecurity risk management regime that maintains and enhances biodiversity and facilitates (safe) trade.
Specifically, those who give rise to the need for a service and/or its beneficiaries are asked to bear or share costs imposed. This includes consideration of the extent to which taxpayers generally should meet costs.
MAF must aim to set charges that recover only the cost of providing services. The regime must also aim to recover the correct share of the overall cost from each client and minimise over or under recovery in any one year.
MAF uses a cost recovery framework to assess who it is best to charge in each situation2. This includes considering whether taxpayers generally should fund services. A summary of the framework is provided in part five. An example of the framework in action is given in part eight (where a new charging regime for the gypsy moth trapping programme is proposed).
The two main types of charging regimes are those based on standard charges and those based on hourly rates. Standard charges (called "specific amounts" in the regulations) are based on the average time to complete an activity.
The advantages and disadvantages of each approach are summarised in table one below.
Table One: Advantages and Disadvantages of Two Different Charging Regimes
| Efficiency | Equity/distributive | Administrative costs | Certainty | |
| Hourly rate |  Can create incentives for clients to manage biosecurity risks
(thereby reducing inspection times). |
Final fee may more closely reflect actual time spent on each
inspection (more of an issue for one-off importers). |
x May result in greater administrative costs, especially where services involve a number of steps occurring at different times completed by different inspectors. | x More difficult to predict costs as different charges may be faced for each consignment. |
| Specific amount | x Creates fewer incentives for individual clients to manage biosecurity risks so that inspection times are reduced. | x Final fee (when converted to hourly rate) may be less representative of actual time spent on each inspection (more of an issue for one-off importers). | Likely to minimise administrative costs. |
Promotes certainty. |
MAF proposes a system that contains elements of both charging regimes.
In general, it is proposed that specific amounts be charged for all services that take on average:
- less than half an hour; or
- more than half an hour and less than two hours where the variability in inspection time between consignments is low.
Hourly rates are proposed for all services that take on average:
- more than two hours
- between half an hour and two hours where the variability in inspection time between consignments is high.
Therefore, the minimum charge under an hourly rates regime is half an hour. Beyond the initial half-hour, processing time will be charged at one quarter of the hourly rate for every additional quarter hour or part thereof.
The hourly rate charged will depend on who does the work.
There are two different rates for specialist inspectors. Veterinarians will cost $82.95 an hour, while biosecurity scientists will be charged out at $104.40 per hour. A third rate ($72.30) is for general inspectors.
Import health permits, and approvals for transitional and containment facilities and their operators are handled by various biosecurity authority advisers. The hourly rate proposed is $130.00 per hour. Further information on how this rate was calculated is set out in part three.
Proposed Levy: Gypsy Moth Surveillance Programme
A levy of 85 cents per unit (under the Biosecurity Act 1993) on all imported containers and used vehicles is proposed to fund the gypsy moth monitoring programme. The cost of the programme is currently recovered under forestry-related regulations. These regulations will be revoked as part of this review of the Biosecurity (Costs) Regulations.
An analysis of the proposed fee is included in part eight.
When Any Changes Come Into Effect
When any changes come into effect will depend on whether the Minister for Biosecurity approves the final proposals and on the outcomes of the consultation process being conducted. It is anticipated that new Biosecurity (Costs) Regulations will be in place by the end of 2001.
Revocation of Forestry-Related Regulations
MAF is revoking the Forest Produce Import and Export Regulations 1989 and the Forest Disease Control Regulations 1967. Costs that were recovered under these regulations will now be recovered under the Biosecurity (Costs) Regulations.
Currently, shipping companies can retain as a collection fee ten percent of revenue from full container loads for collecting forestry-related fees. Under the proposed regime of a fee per landed container, the collection fee system will no longer apply.
Items Not Part of this Review
Biosecurity clearance of passengers and their baggage and the clearance of craft are not covered in this review.
Future Changes to Cost Recovery Regulations
The current cost recovery provisions have been in place since 1993. MAF considers that the regulations should be reviewed more frequently to ensure that charges more accurately reflect the costs of providing services. Assuming an amendment is made before the end of 2001, another review is planned within two years.
A separate project considering cost recovery for the development of import health standards and bilateral quarantine agreements has started. Consultation is likely to take place on any proposals arising from this during 2002. Submissions are not being sought on these issues yet.
1 Funding position for 1999/2000
2 Clarke, Mary (2000) An Approach to
Recovering the Costs of Services Provided by MAF. Wellington: Ministry of
Agriculture and Forestry.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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