Australian Government
National Measurement Institute
(Division of the Department of Industry, Innovation, Science,
Research and Tertiary Education)
COST RECOVERY IMPACT STATEMENT
1 July 2012 – 30 June 2013
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National Measurement Institute 2012-13 CRIS
Table of Contents
1.
OVERVIEW
1.1
Purpose
1.2
Background
1.3
Australian Government Cost Recovery policy
2.
POLICY REVIEW – Analysis of Activities
3.
DESIGN AND IMPLEMENTATION
4.
3.1
Basis of charging – fee or levy
3.2
Legal requirements for the imposition of charges
3.3
Costs to be included in charges
3.4
Outline of charging structure
3.5
Summary of charging arrangements
ONGOING MONITORING
4.1
Monitoring mechanisms
4.2
Stakeholder consultation
4.3
Periodic review
5.
CERTIFICATION
6.
COST RECOVERY LINKS
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National Measurement Institute 2012-13 CRIS
1. OVERVIEW
1.1
Purpose
The National Measurement Institute (NMI), a division within the Department of Industry, Innovation,
Science, Research and Tertiary Education (DIISRTE), has been undertaking activities on a cost
recovery basis since its establishment in 2004. Since NMI’s total cost recovery revenue exceeds $5
million a year, NMI’s cost recovery arrangements are considered significant, which triggers a policy
requirement to prepare a Cost Recovery Impact Statement (CRIS).
The purpose of NMI’s CRIS is to transparently demonstrate compliance of its cost recovery activities
with the Australian Government Cost Recovery policy as documented in the Australian Government
Cost Recovery Guidelines. This CRIS also replaces NMI’s previous CRIS prepared in 2007 to comply
with the policy requirement that cost recovery arrangements should be subject to periodic review no
less frequently than every five years.
Given a number of significant developments in NMI’s activities over recent years, the allocation of
costs between appropriation and cost recovery funded activities, and the underpinning costing
methodology, will be reviewed during 2012-13.
NMI expects to present recommendations of the review to the Government for consideration during
2012-13 and to develop the next CRIS based on the outcomes of the review process, subject to the
Government’s agreement.
1.2
Background
The Australian Government announced on 13 May 2003 that it would establish NMI. The
announcement was part of the Government’s 2003-04 Budget initiatives. On 25 March 2004, the
legislation establishing NMI, the National Measurement Amendment Act 2004, received Royal Assent.
Establishment of NMI merged the National Standards Commission, the National Measurement
Laboratory (a national facility within CSIRO) and the Australian Government Analytical Laboratories
into a single organisation. The Government provided $3 million from the resourcing of the then
Department of Industry, Tourism and Resources for the establishment of NMI. No new funding was
provided for NMI at the establishment, with existing funding for the three amalgamating organisations
constituting the funding of NMI.
The National Measurement Amendment Act 2004 amended the National Measurement Act 1960 to
establish NMI and to introduce governance and operational arrangements for it. The NMI was
established within the then Department of Industry, Tourism and Resources as a clearly identified unit
of a specialist nature with specified functions set out in the National Measurement Act 1960, with
metrological functions of the Commonwealth given to the Secretary. The Explanatory Memorandum
to the National Measurement Amendment Bill 2003 clarified that the Commonwealth may make
charges for services in connection with the functions given to the Secretary; and that this is a normal
part of the operation of the constituent agencies, which provide services on a cost recovery basis or in
line with market rates.
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National Measurement Institute 2012-13 CRIS
NMI began operating within the then Department of Industry, Tourism and Resources from
1 July 2004. After a number of machinery-of-government changes, NMI is currently a division within
DIISRTE.
NMI carries out statutory functions under the National Measurement Act 1960 and its subordinate
regulations that:
o prescribe Australia’s units of measurement;
o assign responsibility for maintaining the national standards that realise these units of
measurement;
o define the metrological control infrastructure that is required to assure the accuracy and
reliability of measuring instruments used for trade and regulation; and
o prescribe the operations of the National Trade Measurement system, which commenced on
1 July 2010.
NMI’s budget comprises a combination of appropriation (taxpayer) funding and fees for services
provided. Appropriation funding supports NMI’s work as the peak body in Australia’s measurement
system, that is, in developing and maintaining the legislative framework and the national measurement
standards, and in ensuring the international acceptance of Australia’s measurement system and
standards.
Where work is carried out specifically for the benefit of a particular organisation or business, NMI
charges for its services and seeks to recover relevant costs, in accordance with the Government’s Cost
Recovery Guidelines. A more detailed description of NMI’s measurement services on a fee-for-service
basis is provided in Section 2 of this CRIS.
The 2011-12 NMI budget included approximately $48 million in appropriation funding and
$34 million in fee revenue from both government and industry clients.
On 13 April 2007, the Council of Australian Governments (COAG) decided to establish a national
system of trade measurement funded and administered by the Commonwealth. In line with the above
decision, the Government, in the 2007-08 Budget, provided $30.1 million over four years (until 201011) to establish a national trade measurement system assuming the role undertaken by state and
territory governments.
The funding supported the establishment of a national licensing system for private sector certifiers of
trade measuring instruments and a national trade measurement inspectorate within NMI. The measure
also included $3 million in capital funding from 2009-10 to 2010-11 for leasehold improvements at
Australian Government offices. The allocated funding included an amount of $0.8 million for the
Office of the Commonwealth Director of Public Prosecutions.
Amendments to the National Measurement Act 1960 were made in December 2008 to give effect to
the COAG’s decision. The corresponding National Trade Measurement Regulations 2009 were made
in September 2009. NMI began administration of the national measurement system on 1 July 2010.
In the 2009-10 Budget, the Government announced the National Enabling Technologies Strategy with
funding of $38 million over four years (2009-10 to 2012-13). This measure included funding of
$18 million for NMI to deliver measurement capability for biotechnology and nanotechnology that
supports effective regulation and improved industry uptake.
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National Measurement Institute 2012-13 CRIS
1.3
Australian Government Cost Recovery Policy
In December 2002 the Australian Government adopted a formal cost recovery policy to improve the
consistency, transparency and accountability of its cost recovery arrangements and promote the
efficient allocation of resources. The underlying principle of the policy is that entities should set
charges to recover all the costs of products or services where it is efficient and effective to do so,
where the beneficiaries are a narrow and identifiable group and where charging is consistent with
Australian Government policy objectives. Cost recovery policy is administered by the Department of
Finance and Deregulation and outlined in the Australian Government Cost Recovery Guidelines (Cost
Recovery Guidelines).
The policy applies to all Financial Management and Accountability Act 1997 (FMA Act) agencies and
to relevant Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies that have been
notified. In line with the policy, individual portfolio ministers are ultimately responsible for ensuring
entities’ implementation and compliance with the Cost Recovery Guidelines.
2. POLICY REVIEW – ANALYSIS OF ACTIVITIES
NMI undertakes a diverse range of activities related to measurement. The diversity of NMI’s activities
means that a variety of user charging arrangements apply. For example, competitive neutrality
considerations are taken into account in user charging for Analytical Testing Services and Dioxin
Analysis, or when bidding on on Commonwealth Government tenders. Where NMI receives grant
revenue it observes the terms of the grant in using the grant funds.
For cost recovered activities covered by this CRIS, NMI charges government and non-government
clients on the same basis for identical activities.
These cost recovery activities can be grouped as follows:
o Chemical and Biological Metrology Services
o Legal Metrology Services
o Metrology Training Services
o Physical Metrology Services
In the tables that follow, historical trends have been used to estimate forward external revenues and the
same basis has been used to estimate costs for information activities. The exceptions are metrology
training services which are subsidised from appropriation (taxpayer) funding and the high voltage
laboratory, flow facility, trade measurement laboratories related activities where cost recovery is being
phased in.
Chemical and Biological Metrology Services
Certified Reference Materials
NMI conducts ongoing research to produce an up-to-date range of certified chemical reference
materials (CRMs) relevant to NMI’s and Australian strategic requirements. This work is done as part
of appropriation funded activities to fulfill NMI’s responsibilities under the National Measurement
Act 1960 Section 18 (2)(b) “ realising units of measurement through the development and maintenance
of standards of measurement, reference materials and reference techniques”. The development of
CRMs of reliability appropriate to NMI requires specialised scientific capabilities of the highest order
that are not generally available commercially in Australia.
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National Measurement Institute 2012-13 CRIS
NMI uses CRMs to support the development and delivery of new services and to underpin the
accuracy of its internal analysis services. NMI sells CRMs to Australian laboratories where they are
used (as consumables) for the same purpose. A technically practical production volume of CRMs
generates a significant surplus that is inventoried and carefully stored. There is ongoing Australian and
international demand for this inventory. NMI participates in international co-ordination efforts to
optimise the range of CRMs available across the globe.
Proficiency Testing
NMI provides proficiency testing (PT) services to chemical laboratories in Australia in areas such as
food, forensic and environmental testing. This is done to fulfill NMI’s responsibilities under the
National Measurement Act 1960 Section 18 (2)(d) “promoting best practice in measurement in
industry and the scientific and wider community, including by training;” Proficiency testing is a means
of assessing the ability of laboratories to competently perform specific tests and measurements. In
order to gain and maintain National Association of Testing Authorities (NATA) accreditation,
laboratories are required to participate in proficiency testing schemes such as that administered by
NMI. PT provides assurance on the quality of testing laboratories around Australia thereby supporting
activities including safe food production, environmental protection and law enforcement. NMI’s PT
services are currently not fully cost recovered so as to encourage their uptake, consistent with National
Measurement Act 1960 Section 18 (2)(d) above. Charges for proficiency testing will be re-evaluated as
part of the NMI’s cost recovery review in 2012-13.
Gas PT and standards
NMI also develops and maintains standards for gas composition measurement, referred to as reference
gas mixtures. NMI is a sole provider of proficiency testing in gas for Asia Pacific region. The rationale
for this work is the same as set out above for CRMs and PT.
Chemical and Biological Metrology Services Cost Recovery Revenue and Expenditure for 2011-12
$000
Sale of CRMs
Proficiency
Sale of gas
testing of 3rd
proficiency testing
party laboratories
schemes and
standards
Costs
1002
664
100
Cost recovery revenue
1002
245
100
- from public sector
111
0
0
- from private sector
891
245
100
Appropriation funding
0
419
0
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National Measurement Institute 2012-13 CRIS
Legal Metrology Services
The Legal Metrology branch is responsible for measurements used for trade and other legal purposes
under the National Measurement Act 1960 and subordinate legislation. It is responsible for trade
measurement, including pattern approval of instruments and issuing of licences for verification of
instruments.
Since federation, trade measurement regulation has been administered by each Australian State and
Territory. As of 1 July 2010, NMI has assumed responsibility for regulation and administration of a
national system of trade measurement as per the COAG decision made in 2007 (further information on
the national trade measurement system is provided in Chapter 1 of this CRIS).
It should be noted that currently NMI does not recover costs of trade measurement compliance and
enforcement activities as direct charging for these activities is considered counter-productive. While
NMI is currently appropriation funded for these activities, the policy rationale for appropriation
funding and possibility of cost recovering some of these activities will be investigated as part of the
cost recovery review in 2012-13.
Trade Measurement Laboratory Services
NMI's Trade Measurement Laboratories provide industrial-level calibration and certification testing
services to both public and private sector clients, which include government departments, traders,
industry, servicing licensees and other organisations such as sporting bodies.
As part of transition to the national system of trade measurement, NMI inherited State and Territory
fee schedules for Trade Measurement Laboratory services some of which were set well below full cost
recovery levels. To ensure a smooth transition to a single national fee structure NMI has embarked on
a gradual phase-in of full cost recovery over a longer term, involving fee increases of up to 10 per cent
per year.
For the above reasons Trade Measurement Laboratory services are currently partially cost recovered
while the cost recovery is being phased in. NMI will re-evaluate the appropriateness of the above rate
of phasing in full cost recovery fees as part of the cost recovery review in 2012-13 present any
relevant recommendations for Government’s agreement prior to implementing any changes to this
approach.
Trade Measurement Licensing
Individuals and organisations involved in verifying measuring instruments used for trade are required
to hold a servicing licence. In addition, owners of public weighbridges are required to hold a public
weighbridge licence. A licence is granted once NMI is satisfied that an applicant meets the licence
criteria under the National Measurement Act 1960 and the licence conditions under the National Trade
Measurement Regulations 2009.
NMI has assumed responsibility for issuing licences as the regulator and administrator of a national
system of trade measurement which commenced on 1 July 2010. The cost of issuing a licence is
recovered via an application fee, with a licence valid for three years, however this fee does not include
the costs of licensee monitoring and compliance activities. As part of the cost recovery review in
2012-13, NMI will consider appropriate charging options for licensee monitoring and compliance
activities.
Servicing licensee fees are prescribed under Division 2.4 and Public Weighbridge licence fees are
prescribed under Division 3.2 of the National Trade Measurement Regulations 2009.
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National Measurement Institute 2012-13 CRIS
Pattern Approval
Manufacturers and importers of measuring instruments (e.g. retail scales, weighbridges, petrol
dispensers, breath-alcohol analysers etc) are generally required to have a Pattern Approval certificate
from NMI before instruments can be used for trade or regulatory purposes in Australia. The process of
issuing a Pattern Approval certificate involves NMI testing the equipment under a range of conditions
to ensure that the measurements provided by the equipment are accurate under the conditions in which
they are likely to be used.
NMI does not have any competitors for its statutory pattern approval activities. Pattern approval fees
currently do not recover the full cost of pattern approval activities,
Pattern approval through an Australian authority underpins confidence in the accuracy of measuring
instruments used for international and local trade without undue reliance on overseas
authorities, whose focus may not be on protecting Australian trading interests. Most international
jurisdictions retain national responsibility for regulatory decision-making of this kind.
The measuring instrument manufacturing industry is an international industry with Australian and
overseas participants. Due to population, geography and politico-economic factors including regional
trading arrangements, the effective market size for instruments assessed by many overseas pattern
approval authorities is much greater than for Australia, so instrument manufacturers may spread the
costs of pattern approval in those jurisdictions over a greater number of instruments. By comparison
Australian pattern approval costs may seem disproportionately high in the context of the international
industry. Since pattern approval acts as part of the fundamental infrastructure for supporting reliable
and accurate trade measurement, it is important that Australia is able to benefit from innovations in
this field. High pattern approval fees may act as barrier to uptake of innovation in Australia in this
field. Partial cost recovery reduces this barrier and, when combined with mutual acceptance
arrangements, also promotes Australian industry participation in the production of measuring
instruments used for trade.
Pattern Approval fees are set by regulation with the fee structure detailed in Schedule 13 of the
National Measurement Regulations which can be accessed at
http://www.comlaw.gov.au/Details/F2011C00445
Appointment of Legal Metrology Authorities
NMI has the power to appoint authorities that can offer services to support the needs of the national
measurement system. The names and contact details of the legal metrology authorities appointed by
NMI are listed on NMI’s website.
Legal Metrology Services Cost Recovery Revenue and Expenditure for 2011-12
$000
Laboratory
Trade
Pattern
Appointment of
Services
Measurement
Approval
Legal Metrology
Licensing
Authorities
Costs
1242
456
1438
25
Cost recovery revenue
562
500
513
25
- from public sector
80
0
15
0
- from private sector
482
500
498
25
Appropriation funding
680
(44)
925
0
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National Measurement Institute 2012-13 CRIS
Metrology Training Services
NMI provides metrology training services to improve measurement skills in the Australian economy.
This is done to fulfil NMI’s responsibilities under the National Measurement Act 1960 Section 18
(2)(d) “promoting best practice in measurement in industry and the scientific and wider community,
including by training;” Metrology training is highly specialised, and there is limited competition
between Australian training providers in this field. NMI conducts training courses only where there is
no other suitable Australian provider and where there is a demonstrated need to support the national
measurement system.
The full cost of providing metrology training services is high and may be viewed as prohibitive for
potential participants. NMI presently recovers approximately 50 per cent of the direct cost of
providing training services, with the remainder of costs met from appropriation funding.
NMI has set the share of costs recovered so as to encourage uptake of training by industry,
government and wider community while recovering some of NMI’s costs in training delivery. In
setting the charges, NMI also has regard to prices charged by other training providers for training
courses of a similar specialist nature. Charges for training will be re-evaluated as part of the NMI’s
cost recovery review in 2012-13.
Metrology Training Services Cost Recovery Revenue and Expenditure for 2011-12 $000
Costs
1005
Cost recovery revenue
450
- from public sector
93
- from private sector
357
Appropriation funding
555
Physical Metrology Services
Calibration and Consulting Services
NMI provides calibration of equipment to the highest levels of accuracy, directly traced to primary
Australian measurement standards. NMI uses its high-level expertise to develop calibration
methodologies for new and complex devices which cannot be calibrated by commercial laboratories.
NMI also provides contracted and consulting services to develop and manufacture highly specialised
scientific equipment for particular applications. In most cases, NMI is able to provide services with a
level of technical integrity, an extent of international recognition, or a formal standing in Australia’s
legal system which is not matched by the private sector.
Calibration services are provided to both public and private sector clients. To avoid significant impact
on actual or potential competitors, NMI discusses requirements for major calibration projects with a
potential client, and if the level of accuracy is such that other laboratories could undertake the work,
the client is referred to those laboratories. In general, NMI provides calibration services only when
other competitors are unable to provide such services or to provide them with the level of accuracy
required.
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National Measurement Institute 2012-13 CRIS
High Voltage Laboratory and Flow Facility
NMI maintains custom calibration facilities in the area of high voltage measurements and liquid
hydrocarbon flow. These facilities do not maintain realisations of primary physical units for Australia,
and are consequently dependent on other physical metrology standards, but are nevertheless important
for Australian industry and infrastructure.
The High Voltage Laboratory provides calibration and testing services for high voltage instruments
and systems such as voltage and current transformers or insulator assemblies used in supply grids. No
other laboratory is able to match the high accuracy services provided by NMI, nor provide the very
wide range of parameters (for example, impulse voltages to 2.5 MV and above) used for testing
services. Although some of these services could in principle be provided by overseas national
institutes, this is not viable for Australian clients in practice owing to prohibitive shipping costs,
extended downtime of production systems, and limited ability to interact with the service provider.
The Flow Facility provides calibration and measurement services for LPG and other liquid
hydrocarbon flow meters, previously provided by the National Standards Commission (NSC) prior to
its incorporation into the NMI in 2004. A new facility was commissioned at Londonderry in Western
Sydney in October 2009. This allows these important services to be delivered safely.
Fees for services provided by the High Voltage Laboratory and Flow Facility do not currently recover
the full cost of operating these facilities, with the remainder met from appropriation funding. Ability to
recover these costs is limited by industry demand. The policy arguments for ongoing partial cost
recovery and any potential impact on the fees for these services will be re-evaluated as part of the
NMI’s cost recovery review in 2012-13.
Physical Metrology Services Cost Recovery Revenue and Expenditure for 2011-12
$000
Calibrations1 Consulting1
High Voltage
Flow Facility
Costs
1,489
1,160
1,583
468
Cost recovery revenue
1,489
1,160
385
55
- from public sector
285
0
74
11
- from private sector
1,204
1,160
311
44
Appropriation funding
0
0
1,198
413
1
Calibration and consulting services exclude those provided by the High Voltage Laboratory and Flow Facility.
3. DESIGN AND IMPLEMENTATION
This section explains how NMI establishes charges for cost recovery activities.
3.1
Basis of Charging – Fee or Levy
NMI charges are invoiced to each client on a fee for service basis.
NMI does not recover any costs through levies.
3.2
Legal Requirements for the Imposition of Charges
The metrological functions of the Commonwealth are set out in section 18 of the National Measurement
Act 1960 (the Act).
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National Measurement Institute 2012-13 CRIS
Under subsection 18(1), the Secretary has metrological functions of the Commonwealth which are outlined
as a non-exhaustive list under subsection 18(2).
Subsection 18(3) of the Act states that: “The fact that the Secretary has the functions mentioned in this
section does not limit the power of the Commonwealth to charge fees for things done in performing those
functions.” This allows the Commonwealth to charge fees for the metrological functions of the
Commonwealth.
Subsection 18C of the National Measurement Act 1960 states that: “The Secretary may delegate all or any
of his or her functions or powers under this Act or the regulations to:
(a) an SES employee or acting SES employee in the Department; or
(b) the Chief Metrologist; or
(c) an APS employee within the National Measurement Institute who has the expertise appropriate
to the function or power delegated. (s18(2) in writing)
Subsection 18A(2) states that the Chief Metrologist has the functions conferred on him or her under the
Act and regulations.
Subsection 18A(3) states that “The fact that the Chief Metrologist has the functions conferred on him or
her under this Act and the regulations does not limit the power of the Commonwealth to charge fees for
things done in performing those functions.” This allows the Commonwealth to charge fees for the
functions of the Chief Metrologist conferred on him under the Act and regulations.
Additionally the Commonwealth has the power to charge fees as outlined in the National Measurement
Regulations 1999 (Cth) (the Regulations).
Subsection 20(1) of the Act allows the Governor –General to make regulations which are necessary and
convenient to be prescribed for carrying out or giving effect to the Act.
In particular, paragraph 20(1)(k) allows for the regulations to include the prescribing of fees for
applications.
Paragraph 20(1)(l) allows for the regulations to prescribe fees for activities undertaken in respect of:




the examination and certification of patterns of measuring instruments;
the verification of measuring instruments used for trade;
the issue of a certificate in relation to the verification of a measuring instrument used for trade; and
the issue of a permit for a packed article under Division 5 of Part VI of the Act.
In relation to the National Measurement Institute’s regulatory services, subsection 20(2) of the Act states
that: “The regulations may set a fee mentioned in subsection (1) by setting the amount of the fee or a way
of working out the fee.”
Subsection 20(3) of the Act states that: “A fee mentioned in subsection 20(1) must be reasonably related to
the expenses incurred or to be incurred for the activities undertaken and must not be such as to amount to
taxation.”
The Regulations contain a fee structure in Schedule 13 for the National Measurement Institute’s regulatory
services. This was initially made on 1 July 2004 and has been amended each year from 2007 to 2012,
normally with effect from 1 July.
3.3 Costs to be Included in Charges
NMI’s cost recovery charges include direct and indirect costs which can be identified specifically with
or traced to an activity in an economically feasible way. It is important to note that both cost
recovered and appropriation funded activities are often performed by the same organisational unit,
using the same staff, equipment and laboratory space. Staff time is used as the proxy for allocating
costs as described in detail in the example below.
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National Measurement Institute 2012-13 CRIS
A significant component of NMI’s cost recovery revenue arises from one off or specialised jobs.
Generally NMI uses staff time as the main proxy for estimating costs and charges for jobs for its
clients. The hourly rate is established for each activity as described below and includes indirect or
overhead costs attributable to the activity (detailed below). Time spent on the activity comprises time
spent directly on the client’s job plus where applicable time spent in support of the activity. If specific
goods or services need to be procured by NMI for a particular job those direct costs are passed on to
the client in full.
In the interests of efficiency and where it is reasonable to do so a particular salary classification rate
may be selected for pricing particular activities. In cases where a particular activity should take a
consistent amount of time and resource, a fixed fee is established as the basis for charging clients.
As previously mentioned fees for some Legal Metrology services are set by regulation - in those cases
the prescribed fee is charged.
A more detailed description of the current charging methodology follows together with a worked
example. Exceptions to the method described here are detailed in section 3.4.
Generally expenses are allocated to activities based on staff time spent on the job and their expertise
approximated by their salary level. In most cases, an hourly rate has been calculated as the basis for
charging.
The hourly rate is calculated on the following principle:
Hourly
Salary Rate
per
Classification
Level
X
Expense
Allocation
Factor
=
Hourly Rate
The annual salary rate for each classification level is set by the Enterprise Agreement, the conversion
from an annual salary to an hourly salary rate is based on the working hours per annum. The result is
then discounted to allow for time spent on internal activities that don’t relate directly to the services
being provided.
The Expense Allocation Factor is calculated by dividing all the expenses directly traceable to an
organisational unit by the salary only expense allocated to that unit. This method assumes the driver
of expenses is staff time and expertise, that is the amount of operational expenses consumed,
laboratory space occupied and equipment operating hours is driven by the staff member involved
directly in the cost recovery activity. For information products that are subject to the cost recovery
guidelines, only those cost components that would not have been incurred if the product was not
provided are included in the expense allocation factor.
Specifically, cost components included in cost recovery through the expense allocation factor are:
o Employee expenses – salary and on-costs for staff directly involved in an activity, such as
workers compensation insurance;
o Operational expenses – include laboratory consumables, contractors, repairs and maintenance
for laboratory equipment and administrative expenses to coordinate an activity;
o Property expenses – lease costs for laboratory and administrative offices;
o Depreciation – depreciation on assets used in activity; and
o IT maintenance expenses – corporate information technology charges.
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National Measurement Institute 2012-13 CRIS
Costs which have been excluded from cost recovery charges by excluding them from the expense
allocation factor are:
o Executive, specifically NMI CEO/Chief Metrologist and Senior Executive Officers;
o NMI corporate and finance management;
o Quality assurance and occupational health and safety services;
o Information management, including records management system and library;
o Compliance with international metrology treaty obligations;
o Insurance; and
o Corporate services attributable to the main Department (DIISRTE).
As part of the review of NMI costing methodology in 2012-13, NMI will re-assess which overhead
costs may be appropriate for recovery.
A worked example:
1. Calculation of Expense Allocation Factor:
Costs for Organisational Unit:
Employee Expense + On costs
Operational Expense
Property
Depreciation
IT Maintenance
Total “Directly Attributable” Expenses for
Organisational Unit
Divided by Employee Expense
Expense Allocation Factor
$’000s
3,390
500
1,000
1,200
140
6,230
2,800
2.23
2. Calculation of Hourly Rate:
Salary Rate
per
Classification
Level
NMI APS 6
$63 per hour
X
Expense
Allocation
Factor
=
Chargeable
Hourly Rate
X
2.23
=
$140
per hour
3. Calculation of Cost Recovery Charge:
Chargeable
Hourly Rate
X
Time Spent
on Activity
=
Charge
$140
per hour
X
4 hours
=
$560
No specific indexation rate is applied to charges from year to year, however the calculation method
incorporates increases in cost components.
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National Measurement Institute 2012-13 CRIS
3.4
Outline of Charging Structure
The following outline the charging structure and identify deviations from the methodology described
in Section 3.3 “Costs to be Included in the Charges”. Links to published prices lists have been
included.
Chemical and Biological Metrology Services
Sale of CRMs
Proficiency testing
of 3rd party
laboratories
Charging Structure
As outlined in
Section 3.3
Cost, market and
historical
considerations
Sale of gas
proficiency testing
schemes and
standards
Cost, market and
historical
considerations
Published Price
List
NMI Website at:
http://www.measureme
nt.gov.au/Services/Page
s/ChemicalReferenceM
aterials.aspx
NMI Website at:
http://www.measureme
nt.gov.au/Services/Page
s/ChemicalProficiencyT
esting.aspx
NMI Website at:
http://www.measureme
nt.gov.au/Services/Page
s/ReferenceGasMixture
s.aspx
Legal Metrology Services
Laboratory
Services
Charging Structure
Published Price List
Trade
Measurement
Licensing
Pattern
Approval
As outlined in
Section 3.3
moderated by
market and
historical
considerations
Regulation:
Regulation:
National Trade
Measurement
Regulations 2009
Schedule 13 of
the National
Measurement
Regulations 1999
NMI Website at:
http://www.meas
urement.gov.au/T
radeMeasuremen
t/Pages/TradeMe
asurementService
s.aspx
http://www.comla
w.gov.au/Details/
F2011C00446/Ht
ml/Text#_Toc298
151305
http://www.comla
w.gov.au/Details/
F2011C00445/Ht
ml/Text#_Toc298
146465
Appointment
of Legal
Metrology
Authorities
As outlined in
Section 3.3
$1,100 per
appointment for
three year term
Metrology Training Services
Charging Structure: as outlined in Section 3.3, however in some cases the hourly rate is discounted
based on the “National interest” in section 18(d) of the National Measurement Act 1960
Published Price List: NMI Website at
http://www.measurement.gov.au/Services/Training/Pages/default.aspx
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National Measurement Institute 2012-13 CRIS
Physical Metrology Services
Calibrations
Consulting
As outlined in Section 3.3
Charging Structure
Published Price List
3.5
High Voltage
Cost, market
and historical
considerations
Flow Facility
Cost, market
and historical
considerations
NMI Website at:
http://www.measurement.gov.au/Services/calibrationtesting/Pages
/default.aspx
Summary of Charging Arrangements
Estimated costs and revenue for NMI’s cost recovery activities for 2012-13
Activity
($’000s)
Chemical and Biological
Metrology Services
Sale of certified chemical
reference materials
Proficiency testing for
laboratories
Reference gas mixtures
Legal Metrology Services
Trade measurement laboratory
services
Trade measurement licensing
Pattern approvals
Appointment of legal metrology
authorities
Metrology training services
Physical Metrology Services
Calibration and Consulting
Services
High Voltage Laboratory
services
Flow Facility services
Volume
(no. of
services)
Various
Total Cost
Cost Recovery Revenue
From
From
Public
Private
Sector
Sector
Appropriation
Funding
1,030
114
916
0
729
0
255
474
105
0
105
0
Various
1,254
61
368
825
200
300 certificates
for approval
90 renewed
every three
years
95 courses
10 consultancy
courses
500
1,532
0
16
500
546
0
970
25
0
25
0
1,095
104
395
596
840
2,020
193
1,827
0
Various
1,674
79
333
1,262
Various
506
11
47
448
21 schemes
with 8-40
participants
34 PT samples
3 Gas Analysis
12 Gas Cert
9 Gas Std
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National Measurement Institute 2012-13 CRIS
4. ONGOING MONITORING
4.1
Monitoring Mechanisms
NMI monitors both expenditure and revenue for all organisational units and cost centres on a monthly
basis so changes in trends or the volume of activity can be identified without unreasonable delay.
NMI will also continue to monitor changes in policy requirements and implement changes to its
business processes in response to policy changes that may arise in the future.
Cost recovery revenue will be reported in DIISRTE’s annual financial statements in accordance with
the Finance Minister’s Orders.
4.2
Stakeholder Consultation
NMI consults widely with stakeholders at national and international forums. NMI uses a number of
consultation methods for the different activities, for example:
o Stakeholder surveys including a value for money question. Most recently these were conducted
by the Physical Metrology and Legal Metrology branches in 2009 and 2011 and by the
Chemical and Biological Metrology branch in 2010.
o Any proposed variations to the fees set out in regulations undergo normal legislative change
processes which involve consultation with industry and other stakeholders.
o Trade Measurement laboratory services: clients are advised by letter of an annual fee increase
six months prior to the increase and again a month before it is implemented in July each year.
New fees are posted on the NMI’s website in June (a month before the annual increase).
o Pattern approval: major industry groups representing instrument manufacturers are consulted
prior to any significant change in pattern approval fees. Both major and minor changes in fees
are subject to Ministerial approval before being implemented. Prior to implementation, fees are
published on the NMI’s website and companies which have had recent contact with NMI in
regards to a pattern approval submission are notified by letter.
o Feedback from participants is sought after each training course.
o NMI is included in the Department’s annual stakeholder satisfaction surveys.
4.3
Periodic Review
Given a number of significant developments in NMI’s activities over the recent years, it is timely to
review the allocation of costs between appropriation and cost recovery funded activities. NMI will
undertake the review during 2012-13, which will include review of NMI’s costing model.
The review will also include an appropriate level of consultation with affected stakeholders.
NMI expects to present recommendations of the review to the Government for consideration during
2012-13 and to develop the next CRIS based on the outcomes of the review process, subject to the
Government’s agreement.
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National Measurement Institute 2012-13 CRIS
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