3.8 GOOD FEATURES OF THE LEGISLATION
The two features of the legislation most frequently endorsed by those interviewed, other than the obvious fact that it allowed them to raise funds, related to the advantages of a compulsory levy, rather than the specific legislation permitting the implementation of that levy. These were that it eliminated, or at least minimised the "free-rider problem" and that it provides a measure of security for industry organisations.
In the primary sector where it is extremely difficult for growers, firms or associations to internalise the results of research, the effects of disease management programmes, etc the "free-rider" issue is clearly seen as very important. In several industries which had voluntary levies in place before making their commodity Levy Orders, there was increasing dissent between levy payers and those who declined to contribute voluntarily. This was seen as a contributing factor to the steadily declining rate of voluntary levy payment. It was acknowledged by representatives of organisations representing industries where gate-sales comprise a significant channel for product, that levy evasion does occur. However, the compulsory levy was still regarded as being more equitable.
It was noted by a small number of interviewees that, while growers are no longer able to "free-ride", other sectors of the industry (processors, etc) benefit from the research funded by growers but are not compelled to contribute. In addition, they actually retain part of the grower levy as a collection fee for deducting and forwarding the levy, despite the fact that many firms hold levy funds for a considerable period. These funds are, presumably, earning interest for levy collection agents, before they are forwarded to the industry organisation.
A compulsory levy was seen, by many of those interviewed, as providing the industry organisation with the security of funding required to enter into longer term research funding commitments, pest management strategies, etc. Under a voluntary levy system, the rate of levy collection tends to fluctuate to a much greater extent with the industry's fortunes and therefore long-term planning is difficult.
Other aspects which were favourably regarded generally related more to the structure of the levy under the Commodity Levies Act than to compulsory levies per se. The high level of accountability to growers for the expenditure of levy monies was cited by six interviewees as an incentive for the industry organisation to remain "on its toes". Several others felt that the need to justify the levy before it is granted, and the need to obtain regular endorsement from growers, ensure that the levy is not implemented unless it is required.
Other good features mentioned by only one or two interviewees included an element of industry rejuvenation, or an impetus for restructuring, which were provided by the levy application process. The fact that the levy collection process is enforceable by law and collection agents must, therefore, forward funds, was seen as an advantage by only one of those interviewed (many saw the enforcement provisions as inadequate). The attitudes and concerns of the two large producer boards were notably different from those of smaller organisations. Both saw the only real advantage of the Commodity Levies Act as being that it provides greater flexibility and involves less political intervention than the legislation under which the boards operate at present.
An industry board representative also acknowledged the ability under the Act to levy imports which benefit from local market promotion schemes, as a positive feature of the Act, provided it could be invoked. Before this provision could be used, stringent requirements must be met and the Minister must be satisfied that international trade obligations are met.
The representative of a new organisation, about to embark on the levy application process, noted that under the Act, collection agents are bound to collect levies. At present, the collection of voluntary levies is complicated by the fact that some companies which purchase the output of horticultural industries, are no longer prepared to collect these.
Three interviewees noted that the Act ensures that a compulsory levy is not easy to introduce to an industry, which they regarded as appropriate. While all interviewees felt that procedural improvements were required, the need to justify the levy thoroughly, and consult widely, was endorsed by the majority of those interviewed.
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Senior Policy Analyst
Sector Performance Policy
MAF Policy
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