- A. Information and Evidence Required to Satisfy the Minister that a Levy Order can be Made
- Benefits and disadvantages of a compulsory levy
- Necessity for a compulsory levy
- Levies on imported produce
- Consultation
- The support referendum
- Financial and accounting systems
- Other matters
SECTION 2
A. Information and Evidence Required to Satisfy the Minister that a Levy Order can be Made
The Act requires that a levy order must be recommended to the Governor-General no later than 12 months after a referendum is conducted. To leave enough time for the Minister to consider an application, have a levy order drafted, and obtain Cabinet approval, you should apply to the Minister for a levy within three months after the closing date of the referendum. Failure to have all the requirements completed within 12 months will mean your organisation has to hold another referendum. [See sections 4, 5(2)(aa)]
The Act forbids the making of a levy order unless the Minister is satisfied that the proposal complies with each and every matter set out in the Act, in particular section 5(2) matters. Some of these matters may be within the Minister’s personal knowledge, but most of them are matters about which you will have to provide information so that the Minister may be satisfied.
These matters have already been discussed under "Satisfying the Minister on Section 5 Matters" (page 2), "Consultations" (page 4), and "Plan to Conduct a Support Referendum" (page 7).
Information that must be supplied is listed below:
The industry organisation
1. An application to the Minister made under the organisation’s own seal, or signed by persons who can show that they have authority to act on its behalf. The application should show that the organisation was a body corporate at the time of the referendum. [See section (5(1)]
2. A plan of how the organisation would spend levy funds collected in the first year. This would be a draft budget indicating the expected amount of levy to be collected and the amounts or percentage that will be spent on each category of expenditure. [See section 5(1)(b)]
3. A copy of the organisation’s rules. The rules should include the mode of voting at a general meeting, how one becomes and ceases to become a member of the organisation, and the objects for which the organisation is established.
4. A description of the following:
- the membership of the organisation;
- how membership compares with the number of levy payers;
- who is eligible to belong to the organisation and the level of any membership fee;
- the composition of the organisation’s executive council; and
- how the members of the executive are appointed/elected.
This information is required to help establish that the industry organisation adequately represents levy payers. [See section 5(2)(l)]
Note that the Minister would want all those paying the levy to be consulted on levy spending and have the opportunity to become members of the organisation. If this is not the case the levy is unlikely to be approved.
5. Evidence that you have notified any other groups that also claim to represent the levy payers. Suggestions of possible other groups were included in the Consultations section, page 6. [See section 5(2)(g)(ii)]
Benefits and disadvantages of a compulsory levy
6. An outline of how the uses to which the levy is to be put will be in the interests of the levy payers. [See section 5(2)(i)]
7. A comparison (quantitative, or qualitative if that is not possible) of the likely benefits and costs to the levy payers of the compulsory levy. Include explicit and implicit (opportunity) costs and benefits (e.g., time and energy spent on attending meetings and maintaining records, the certainty that free-riders will be caught up with, more information to levy payers about how the organisation is spending their levy, anticipated rate of return on research and development expenditure etc). [See section 5(2)(j)]
Necessity for a compulsory levy
8. Evidence that a compulsory levy is necessary. [See page 3, and section 5(2)(m)]
Levies on imported produce
9. Is imported produce to be levied? If so, outline:
- the proposed rate;
- how that rate compares to the rate on domestic produce;
- the benefits to importers of paying the levy;
- the views of importers on the levy; and
- any relevant international legal obligations (e.g., CER, GATT) relating to the imported commodity to be levied that you are aware of.
[See sections 5(2)(k), 6(2)(c), 6(3), 6(4) and 6(5)]
Consultation
10. Evidence of the consultations that were carried out (dated where possible). Attach letters, newsletters to prospective levy payers, public notices in relevant newspapers and industry journals of intention to impose compulsory levy, evidence of discussion at annual general meetings of the industry, etc.
11. Evidence of the efforts that were made to inform and consult with other affected parties of the proposal for a compulsory levy. Affected parties include alternative industry organisations, and third party levy collectors. Was it made clear to them that they could put their views to the Minister? [See sections 5(2)(a), 5(2)(g)]
The support referendum
12. Evidence about how the support referendum was carried out. [See section 5(2)(aa)]
13. Evidence of publicity, which could consist of information pamphlets, newspaper articles, and notices of meetings held to discuss the proposed levy. [See section 5(2)(ad)]
14. Evidence that potential levy payers were given a reasonable opportunity to participate in the support referendum. Evidence may include the number of potential levy payers sent ballot papers, notification of the referendum in newspapers and advice of where a ballot paper could be obtained, and numbers of people attending meetings to consider the levy proposal. [See section 5(2)(ae)]
15. A copy of the ballot paper containing the description of the levy proposal, voting information section and voting paper. (This would represent evidence of the basis of the referendum.) [See section 5(2)(af)]
16. Results, showing that more than half of the participants in the referendum demonstrated support for the levy on the basis of both:
- numbers of persons; [See section 5(2)(ag)] and
- one of either the production, or area, or value, or things used in connection with the production of the commodity. [See sections 5(2)(ah),(ai),(aj),(ak)]
Remember that participants include potential levy payers who returned incomplete voting papers.
For the second requirement above you must provide evidence that the total amount of production, or value of production, or area of production, or number, quantity or capacity of a thing or things of a specified kind used in connection with the production of the commodity, relating to the supporters, was more than half the total amount relating to all the participants in the referendum.
17. Evidence that the matters to be specified in the order (pursuant to section 6(1) of the Act) do not differ in any material way from those specified in the ballot paper. [See section 5(2)(am)]
Financial and accounting systems
18. An outline of the mechanisms that the industry organisation has in place for accounting to its levy payers for the ways it has spent levy funds (e.g., regular newsletters, draft budgets sent out to levy payers or published in industry journals, quarterly statements of accounts sent to levy payers, published final accounts in industry journals or sent directly to levy payers, annual general meetings of levy payers, etc). [See section 5(2)(n)]
Other matters
19. Outline any other matters that might be relevant [See section 5(2)(o)]
Contact for Enquiries
Senior Policy Analyst
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0690
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