COMPARISON OF STATUTORY
MEASURES APPLICABLE IN
SOUTH AFRICA AND
AUSTRALIA
SCHALK BURGER: SENIOR MANAGER
26 MARCH 2010
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PRESENTATION OUTLINE
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Background
What is regarded as statutory measures?
The application for statutory levies
Evaluation of statutory levies
Defaulters and legal action
Review of statutory levies
Conclusion
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LEGISLATION
South Africa
Australia
One Act , namely the Marketing of
Agricultural Products Act, 1996
Number of Acts
• Imposing legislation – 7 Acts
• Collecting legislation – 2 Acts
• Disbursement legislation – 15 Acts
Once approved by the Minister, the
statutory measures be promulgated
through different Government Notices
Sub-ordinate legislation that set out
further details
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STATUTORY MEASURES
South Africa
Australia
We have five (5) statutory measures,
namely –
• Statutory levies
• Registrations
• Records & returns
Has only one statutory measure,
namely statutory levies, although
Records & returns is included in
statutory levies
• Marketing pools
• Control of exports
What is a statutory measure?
Compulsory, approved and
promulgated
They don’t have compulsory
registration (very much a law abiding
nation)
The same!!!
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ROLES OF NAMC / LRS
South Africa
Australia
National Agricultural Marketing Council
(NAMC), a statutory body not part of
the DAFF.
The NAMC only facilitate the process,
investigate an application and make a
recommendation.
Once approved, the relevant industry
organisation collect and administer the
statutory levies.
NAMC be funded by tax money.
One office, 3 people.
NAMC has other duties.
Levy Revenue Services (LRS), a
government body and part of the
DAFF.
LRS also investigate and make a
recommendation.
Once approved. LRS will collect and
distribute the levy funds
LRS be funded by statutory levies
Six offices, 47 people
LRS focus only on levies
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SIZE OF AGRIC SECTORS
South Africa
Australia
Agriculture is 3% of GDP
Also 3% of GDP
Agric land – 101 mill hectare
Agric production –
• Field crops - 33%
• Horticulture - 23%
• Animal production - 44%
460 mill hectare
Agric production –
• Field crops – 18%
• Horticulture – 26%
• Animal production – 56%
Gross value of agric production
• R120 billion
Gross value of agric production
• Aus$44 billion (R308 billion)
Net exporter???
50% of agric production be exported
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WHY STATUTORY LEVIES?
South Africa
Australia
To finance generic functions such as
research, information, promotions and
transformation
To finance functions such as research,
promotion, residue testing and plant /
animal health programmes.
Transformation?
Must promote the objectives of the
MAP Act.
Levies only be introduced to address
market failure and then the benefits of
the levy must be more than the cost of
the levy.
MOTIVATION TO APPLY!!!!
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Australian Government pay LRS a
matching grant for each Aus$
collected for research.
66% of agric products levied
99% of agric products levied
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THE APPLICATION PROCESS
South Africa
Australia
An industry body identifies the need
for a statutory levy to finance generic
functions. Before an industry could
apply, they need to lobby the support
from directly affected groups.
An industry body identifies the need
for a statutory levy in order to respond
to a market failure which require
collective industry funding.
Process could take app 8 months
Process – 5 to 6 months
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LEVY PRINCIPALS AND
GUIDELINES
South Africa
Australia
In SA we have the guideline that not
more than 10% of levy income be
used for admin purposes, 20% for
transformation and 70% for functions
such as research , information and
promotion.
The Australian DAFF introduced 12
levy principles that must be met before
an industry could apply for a levy.
These principles relate to support,
objections, the business plan and the
type of market failure.
Then the levy must not be more that
5% of the guideline price at first point
of sale.
Levies be approved for a maximum of
4 years.
There is no limit!!
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LEVEL OF SUPPORT
South Africa
Australia
A guideline that two-thirds (67%) of
producers and production have to
support an application for statutory
levies.
Majority support, more than 50%, of
producers and production is needed.
NAMC has a register of directly
affected groups for each commodity.
They are consulted during the
investigation process.
An industry must have a voting
register of all potential levy payers to
consult and to lobby their support.
The NAMC wants to avoid possible
court cases regarding statutory levies
The LRS has a minimum of court
cases. Australians are used to
regulations.
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REFERENDUMS
South Africa
Australia
A referendum not being held with
every application. It will only be held if
there is uncertainty about the level of
support for an application.
A referendum being held when there is
not sufficient industry structures for a
comprehensive consulting process.
An independent returning officer is
In 1998, after a referendum in the wool required to ensure the integrity of the
industry, the NAMC decided not to
ballot.
recommend an application for
statutory levies, to the Minister for
Levies will not be submitted to their
approval.
Minister if there is not sufficient
support.
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DEFAULTERS / LEGAL
ACTION
South Africa
Australia
Interest is payable on outstanding
levies. The current rate is 15% per
annum.
A penalty of 2% per month
compounding is payable to LRS on
unpaid amounts.
In 2007/08 the levy collection rate was
99%.
During the same period, the levies
outstanding, was only 0.12% of levies
payable.
Due to the fact that the Minister
approved the statutory levies, she will
also be involved in possible court
cases and we must avoid it as far as
possible.
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EXTEND OF LEVIES
South Africa
Australia
In 2008, a number of 14 different
levies were promulgated.
Over the same period, 60 different
levies were promulgated.
An amount of R222 million was
collected.
An amount of Aus$621 million was
collected (20x more).
Administration cost – 7%
Administration cost – 1%
Main functions: Research, information, Main functions: Research and
promotion and transformation
promotion.
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ALLOCATION OF LEVIES
South Africa
Australia
Admin – 7%
Research – 32%
Information – 17%
Transformation – 23%
Export promotion – 12%
Local promotion – 5%
Other – 4%
Admin – 1%
Research – 31%
Information – 0%
Transformation – 0%
Export promotion – 60%
Local promotion – 8%
Other – 0%
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OTHER ISSUES
South Africa
Australia
Value Added Tax (VAT) payable on
levies.
Goods and Services Tax (GST) not
applicable on levies.
Period of validity: 4 years
Indefinite
Levies an a percentage of the value of
the agric products levied – 0.5%
Approximately 1.4%
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SUMMARY
• Australian DAFF (LRS) is collecting
statutory levies
• LRS being funded by statutory levies
• Driving force of applications for statutory
levies in Australia
• Admin costs: 7% compare to 1%
• Best system????
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THANK YOU
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