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Compulsory Levy Proposal

5 December 2016

RIRDC have have uploaded Advice from the Commonwealth to the Website on the RIRDC Home page under news and updates and on the TTO Program page.

22 November 2016

ATTIA has received a letter from Jo Grainger, Assistant Secretary - Wool, Dairy, Wine, Small and Emerging Industries at the Department of Agriculture and Water Resources acknowledging receipt of the levy submission and noting that the Australian Government's Levy Principles and Guidelines provide for a six-week period for lodgement of objections to a levy proposal.

In light of the upcoming holiday period, the formal period for any objections will be held over seven weeks-commencing at 9am AEDT on 28 November 2016 and expiring at 5pm AEDT on 13 January 2017.

ATTIA will take all reasonable steps to make this known to all potential levy payers to ensure they are aware of the tea tree oil levy submission and the objection period assigned by Assistant Secretary Granger.

A copy of the letter from Jo Granger is available HERE.

A copy of the ATTIA Submission is available HERE.

Objections may be made in writing to the government, through the Department of Agriculture and Water Resources - Levies, by email to: levies.management@agriculture.gov.au, or by post to:

Attn: Levies Management
Department of Agriculture and Water Resources
Locked Bag 4488

Objections may also be made in writing through the Hon. Barnaby Joyce MP, Minister for Agriculture and Water Resources, by email to: minister@maff.gov.au, or by post to:

The Hon. Barnaby Joyce MP
Deputy Prime Minister
Minister for Agriculture and Water Resources
PO Box 6022
Parliament House

If you would like more information about the proposed R&D levy, please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336.

17 November 2016

ATTIA has made a formal submission to Hon. Barnaby Joyce MP, Minister for Agriculture and Water Resources for the establishment of a tea tree oil Research and Development (R&D) levy and the establishment of a nil-rated Emergency Plant Pest Response (EPPR) levy.

A copy of this can be downloaded HERE.

This submission is underpinned by the results of a producer ballot that saw 96% of producers who chose to vote, equivalent to 94% of production, vote in favour of the establishment of a compulsory R&D levy set at a rate of $0.25 per kilogram.
ATTIA used the levy consultation and submission process to also seek approval from tea tree producers for the establishment of a nil-rated EPPR levy, 93.9% of producers who chose to vote, equivalent to 93.7% of production voted in favour of this.

ATTIA once again extends its gratitude for the inclusion of an appropriation for a Tea Tree R&D Levy in the Agricultural Competiveness White Paper; this continued support from the Australian Government for the continuation of our industry R&D program is appreciated.

30 September 2016

Formal voting results

A declaration postal ballot was held in August 2016.

To create voter roll ATTIA identified existing producers known to the Association through the monitoring of production and during March 2016 advertised for other producers (not known to ATTIA) to register for the ballot and provided an independent organisation, The Australian Election Company, with 119 records of tea tree oil producers who are eligible voters. Of these 75 are ATTIA members with the balance (44) not holding membership.

The Ballot was conducted as a Declaration Postal Ballot. Each eligible voter was sent a Ballot Pack consisting of a Compulsory Levy Information Sheet developed by ATTIA, Ballot Paper with Instructions, a Declaration Envelope, which had to be signed by the voter, and a “Reply Paid” return addressed envelope.

The ballot paper had two questions:
Question 1
Do you support establishing a levy of 25c/kg of tea tree oil produced to invest in research,
development and extension to improve the productivity and profitability of the tea tree oil
Question 2
Do you support the establishment of the 0.0c/kg EPPR levy which may be set to a positive
rate to cover tea tree oil industry costs in an agreed response to an emergency plant pest
incursion affecting the tea tree oil industry?

The ballot closed at 4:00pm Wednesday 31 August 2016 and the formal count took place from 10:00am on 1 September 2016 at the Office of Australian Election Company.

The results of the postal ballot:

Ballot results.jpg

The ballot had a 46% participation rate of eligible voters, representing 60% of production. Two ‘no’ votes were received. One ‘no’ voter was in support of the levy in principle but did not have confidence in ATTIA’s leadership, raising issues unrelated to management of the R&D program. The second no vote was received from an organic producer who claimed the Tea Tree R&D program was not applicable to their operation.

If you would like more information about the proposed R&D levy, please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336.

30 Jun 2016

The four month levy consultation period is now complete; ATTIA received three formal submissions and several informal phone and email queries.

All three formal submissions related to the point of collection and mechanisms to ensure an efficient and practical levy collection mechanism. Two suggested that the first point of sale or export may be an unnecessary complication and that collection at the point of distillation may be a better option. The third suggested an area based collection mechanism is a better model; this was unanimously rejected in October 2015 meeting ATTIA members and observers.

ATTIA has responded to these submissions and provides the information for grower consideration:

Collection of the levy at first point of sale is the preferred mechanism for the Levies Management Unit (LMU). Almost all of the 74 levied industries use first point of sale or export as the collection point, because it is simple to understand for industry and easy for governments to administer.  It also ensures that non-payment by the producer is minimised.

The producer (the person who owns TTO immediately after harvest) is liable to pay the levy. The purchaser of that TTO must remit the levy to the LMU and recover the amount of levy paid from the producer by offset or otherwise.

Seeking to levy at distillation creates some cost and transparency issues. The LMU has limited expertise in distillation operations and as the distilleries are widely spread with some in remote locations audit costs will be far higher than at first point of sale or export where comprehensive records must be kept.

Other informal contacts related to where, when and how the proposed levy would be spent. Information packs were emailed and posted to all potential levy payers to address these questions and those who contacted ATTIA were taken through the process.

The survey had a limited response from potential levy payers with 25 respondents:

The survey asked producers to identify priority areas for tea tree R&D and the main issues were international regulation, REACH, supply and quality control, adulteration and managing nutrition of tea tree plantations. These are all areas that have been identified by ATTIA as areas of prime concern and major drivers for proposing a levy.

Several questions were raised in the survey; most of these are comprehensively answered in the circulars sent out to all potential levy payers; some of these are answered again below:

Q: Have you considered the fact that organic growers already pay a large proportion of their income to certifying bodies for most of the things you are trying to enforce a levy for?
A: Yes, the levy funds R&D that is beneficial to all growers regardless of their affiliation with other bodies.
Q: Will all producers be required to contribute?
A: Yes, a compulsory levy must be paid by all producers.
Q: ATTIA members are used to paying a levy but how will the levy be collected from those TT growers that have historically elected not to be part of the industry levy?
A: The compulsory levy will be collected at first point of sale through the Department of Agriculture and Water Resource’s LMU and distributed through RIRDC.
Q: Will this levy support market development activities?
A: Potentially, although only ‘foundation’ activities that benefit all levy payers will be supported
Q: Can you confirm that ATTIA board would set the rate of the levy?
A: No. The levy rate is set by the producers through a secret ballot. Initially ATTIA is proposing a 25c/Kg levy, if this is to change (up or down) then there must be majority support through a secret ballot.

If you would like more information about the proposed R&D levy, please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

1 March 2015

After consultation with the Department of Agriculture & Water Resources - Levy Revenue Service ATTIA has commenced a four month consultation period today. This will run until 30 Jun 2016.

As part of this consultation ATTIA is running a SURVEY.

Please take a moment to complete this as it will help ATTIA to better understand how the TTO industry feels about the proposal.

More information on the proposal can be downloaded from these links:

A formal ballot will be conducted by an independent 3rd party to ensure transparency and accountability. This ballot, commencing 1st August 2016 will be a postal vote due to the wide distribution of the TTO industry. All ballot forms must be returned to the independent ballot provider (to be advised).

If you are a grower of tea tree (Melaleuca alternifolia) for the production of tea tree oil (TTO), are not currently ATTIA members and wish to receive a ballot paper for postal voting from 1st August 2016 to 4th September 2016 please download, fill out and return the following form:

       Registration for a proposed TTO Levy ballot in August 2016 (Non ATTIA member)

All potential levy payers will be contacted by email and direct post wherever possible and advertisments will be taken out in local local and National publications.

If you would like more information about the proposed R&D levy, please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

17 November 2015

In a wide ranging teleconference with officers from the Levies Management Unit (LMU) and the Department of Agriculture and Water Resources a number of points were discussed on implementing a levy for the TTO indusrty:

Industry must demonstrate in its submission that a genuine attempt to reach all potential levy payers who were given ample opportunity to comment on/object to any levy proposal. This can be achieved by demonstrating that several (3-4) points of contact were made or attempted; these could include:
1.    Newsletters
2.    Website
3.    Newspaper adverts
4.    Direct mail out
These must be fit-for-purpose and reduce the chance of an objection post consultation period (ie no one can say “I didn’t know”).

A ballot is the Dept.’s preferred option and must be conducted after the consultation period and include any known objections as well as the ability for any objector to voice their concerns so the Dept can take these into account when the submission is taken to the Minister.

R&D Priorities
The compulsory levy is designed to increase revenue through addressing ‘market failure’ and receipt of matching Federal funding (instead of relying of RIRDC core funds). Industry must provide a rationale for why more funding is needed and how this funding will be allocated. While the primary reason for moving to a compulsory levy is the loss of RIRDC core funding this must be addressed in the submission.
The current 5 year Plan through RIRDC which runs through to 2018 is considered adequate by the Dept especially if it is endorsed and approved by RIRDC however with the change from a voluntary to compulsory levy there may be changes to these priorities based on rules governing expenditure of public money and it is incumbent on industry to demonstrate the priorities are:
1.    Acceptable for expenditure of public money
2.    Acceptable to the majority of levy payers
These priorities must be clearly defined and included in any submission to demonstrate acceptance.
The RIRDC New and emerging plant industries three-year RD&E plan: January 2015 to June 2018 (https://rirdc.infoservices.com.au/downloads/15-014) states:
The following overarching comments relevant to RD&E priority setting were provided by ATTIA members (RIRDC 2013):
•    An agreed industry vision and leadership is needed to drive the next stage of industry’s maturation
•    There is a healthy debate within industry about whether it is better to invest research funds in increasing oil yields or Regulatory Risk •    •    •    Management or better use of the scientifically proven new use R&D to drive market growth
•    The grower voluntary levy should be encouraged and should deliver more grower based research
•    Increasing TTO demand is a high priority for growers and the industry
Sub-program RD&E objectives 2013-2018
1.    Market access through regulatory response, product efficacy and safety research and its communication
2.    Production systems that lower cost and increase productivity including the tea tree breeding program
3.    Proof of concept innovative uses for tea tree oil
4.    Communication and industry capacity building
Key funding priorities within these objectives were identified by industry as being:
•    Retention of support for the tree breeding program
•    Access to new chemicals and pesticides
•    Reduction in the cost of production
•    Regulatory risk management including capacity to respond to threats with science as they emerge
•    Communication of science to major overseas manufacturers and their subsequent support for Australian TTO (rather than low cost alternatives)
•    A ‘big picture’ strategy to drive industry development and demand
This plan coincides with a transition of the tea tree breeding program to an independently run program of research.
Given TTO’s significant and growing commitment to RD&E funding, the drive towards an alternative funding model and shift from a project by project approach to a program approach, is timely. TTO will have stand-alone sub-program status for the period 2015–18. TTO projects that align with both its industry specific RD&E funding priorities and the Core Funded Plant Industries 3YP will be considered by RIRDC.

Compliance burden
Any submission must demonstrate that the compliance burden for the collection and remission of levy money to the LMU is not onerous and that potential collectors are clear about their obligations.
This is best done through a direct mail out to all potential levy collectors clearly laying out their obligations and the support and assistance available from the LMU including the ‘New Agent Education Program’ which will assist anyone with the preparation and submission of a levy return.
Returns can be made through a ‘levies on line’ portal and payments made by EFT or alternatively manual returns and a cheque are acceptable but the cost burden to industry will be higher (see costs below).

LMU costs
The cost burden for collection of levies is based on ‘user pays’ and while the LMU takes into account an industries capacity to pay the user pays model will remain for the foreseeable future.
Industry must determine if there is to be a threshold where levy collection is exempted. An example was given for the melon industry where less than 20 MT is exempted based on a cost/benefit ratio.
For the TTO industry an annual threshold of $50.00 was suggested to the LMU (200 kg @ 0.25c/Kg) who reiterated that the level must be set by industry and there may be no exemptions.
There can be automatic exemptions built into any levy for any ‘road-side’ or local market sales: if a producer sells a small portion of the output through these mechanisms then this is exempted; the LMU will determine at audit if the system is being rorted.

Levy Agents
Industry must consult with and wherever possible provide to the LMU a detailed listing of all potential levy collection agents at least 3 months prior to commencement of the levy to ensure these are entered into the LMU system.

While it is not necessary to prove a negative, industry must ensure as far as practically possible that any opposition to the proposed levy is identified through a consultation and ballot process and that these are noted and addressed in the submission. Industry needs to have a strong case for why the levy should go ahead despite any opposition.

Emergency Plant Pest Response (EPPR) levy
If this is to be included in the submission full detail of the proposal including Plant Health Australia (PHA) involvement and when/how the levy would be activated must be included in the consultation process, the ballot and the submission.

22 October 2015

An industry meeting was held at the Windara Conference & Function Centre. This meeting was well attended with 33 members and stake holders present with a further 27 by proxy representing more than 90% of the total production of TTO in Australia.
Tony Larkman, supported by the ATTIA Board, presented detail of ATTIA’s draft proposal to the Department of Agriculture’s newly formed Small and Emerging Industries Section Agricultural Policy Division. This outlined a compulsory levy of up to a maximum of 0.60 cents/Kg of TTO produced with the actual levy to be set at 0.25 cents/Kg on actual production. The levy is expected to come into effect from 1 July 2017 with a ballot of levy payers every 3 years to ensure continued support.

A copy of a summary document outlining the proposal can be downloaded from HERE.

The presentation included a comprehensive summary of how a levy would be accounted for, the method of collection and the potential amount of the levy including Government contributions. Several examples of reporting obligations were also given.
 A producer proposed an alternative method for determining levy contributions based on production area which has been submitted to the Agricultural Policy Division to determine if this satisfies all levy principles.

After further discussion and several questions on the levy a motion was proposed by Robert Dyason and seconded by Phillip Butlin:
To fund industry research & development (R&D) efforts in a sustainable way ATTIA Ltd supports the establishment of a compulsory R&D levy at a rate of up to 60c per Kg of oil produced commencing 1st July 2017 with the levy to be collected at the first point of sale. The levy will be managed and administered by RIRDC.
This was passed unanimously so based on this overwhelming level of support ATTIA will continue to develop a submission to the Department of Agriculture and Water in the coming months.

Once this has been approved by the Department, the Levies Management Unit and the ATTIA board a formal consultation period followed by an independently run ballot of all potential levy payers will occur. The outcomes from these will be included in a final submission to the Minister of Agriculture for his approval after the Agricultural Policy Division has prepared a Regulation Impact Statement to accompany it.
As always, you are invited to provide your comments and feedback on the need for an R&D levy to fund our research program: Please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

16 October 2015

ATTIA Ltd is seeking the introduction of a Tea Tree Research and Development (R&D) Levy to support industry research efforts. A document has been prepared to summarises the submission currently being prepared for the Department of Agriculture and Water Resources and ultimately the Agriculture Minister.

A copy of the document can be downloaded from HERE.

A copy will also be made available to anyone attending the Industry consultation meeting in Casino, NSW on 22nd October 2015.

If approved by the industry as a whole the levy submission will, once approved by the Minister, be used to prepare and eventually enact legislation in both Houses of Federal Parliament to implement the levy. ATTIA hopes to have this legislation in place on or before 1 July 2017.

As always, you are invited to provide your comments and feedback on anything outlined in the document or any aspect of the need for an R&D levy to fund our research program: Please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

24 September 2015

Joel Fitzgibbon MP, Shadow Minister for Agriculture and Rural Affairs and Janelle Saffin, Australian Labor Candidate for Page visited ATTIA President Robert Dyason's property today accompanied by Peter Entwistle of NEAS and ATTIA Directors Leigh Hicks & Michael Flanagan to learn more about the industry and see how pure Australian TTO is grown and distilled. Mr Fitzgibbon said he was was thoroughly impressed by the tea tree planation visit and also noted that he is “...supportive of a levy for TTO, however, this does need to be supported by the industry as a whole and I am assured by the industry leaders that this is actually the case”.

150924 - Tea Tree - Leeville (24).JPG150924 - Tea Tree - Leeville (48).JPG

Joel Fitzgibbon inspects a separator           Leigh Hicks, Joel Fitzgibbon, Janelle         
with Janelle Saffin and Robert Dyason        Saffin and Peter Entwistle inspect a        
                                                                   stand of ready-to-harvest tea trees

150924 - Tea Tree - Leeville (34).JPGPeter, Leigh, Joel, Janelle, Robert
                                                                 and Michael Flanagan in a recently
                                                                 harvested tea tree paddock

 Photos courtesy of Natasa Sikman

31 August 2015

More good news today with feedback from the Department of Agriculture who said "....thank you for the opportunity to comment on the draft proposal ...as a stand-alone document the final levy submission should be able to demonstrate a strong claim against the requirements of the Australian Government Levy Principles and Guidelines (LPGs)".

Based on this advice ATTIA will now develop a full levy submission document which will be circulated to all stake holders once it too has been approved by the Department of Agriculture. At ATTIA's Annual General Meeting on Thursday 22 October 2015 Tony Larkman will outline the proposal to all members who will then be asked to vote on it as a resolution to implement the levy.

As always, you are invited to provide your comments and feedback on the need for an R&D levy to fund our research program: Please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

21 August 2015

We had some good news with the release of the Agricultural Competitiveness White Paper, which announced an allocation of funding for a future Tea Tree R&D Levy.
This doesn’t mean a levy is guaranteed. We still need to go through the proper processes and put a case to government that has the support of producers. But it’s provided some momentum for our efforts.
We submitted an outline of how a tea tree R&D levy might work to the Department of Agriculture last month and are waiting for feedback.
Once we have that feedback, we’ll be able to share that with you and continue to develop the levy proposal.
As always, you are invited to provide your comments and feedback on the need for an R&D levy to fund our research program: Please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336

25 June 2015

For more than two decades ATTIA, with the continued support of RIRDC and many research institutions, has conducted ground-breaking research into the efficacy, safety and uses of pure Australian tea tree oil (TTO), funded a world class breeding program to improve productivity, developed marketing tools (including ATTIA’s widely accepted Code of Practice & Chiral Purity testing) and addressed several regulatory issues that are a potential barrier to trade. This vital work must continue well into the future to ensure that pure Australian TTO maintains its global position as the premium source for quality assured TTO.

 Changes to funding available to the Rural Industries Research & Development Corporation (RIRDC) over the past few years has resulted in a significant (more than 50%) cut in financial support to the tea tree industry for Research, Development & Extension (RD&E) activities by ATTIA. The tea tree industry will retain its current (much reduced) funding until 2017 when RIRDC has flagged further cuts are likely as the TTO industry matures.

Levies are taxes initiated by primary industries and imposed on the producers in that industry. Effective use of primary industry levies can greatly assist producers: by pooling their effort and resources, an industry can work together to find solutions to priority issues.

Levy Principles and Guidelines have been developed by the Australian Government Department of Agriculture to help industry bodies prepare a sound case for the introduction of a levy; this must be considered by industry members. They require industry bodies to inform all potential and existing payers about the proposal and to provide an opportunity for all prospective and existing levy payers and other interested parties to express their views. ATTIA intends to do this over the coming months.

To ensure RD&E activities can be maintained for the benefit of the whole industry the Board of Directors of ATTIA are actively pursuing a compulsory levy which will likely be based on the current model: production in Kg. Further discussion and consultation is required to resolve how, where and when this proposed levy will be collected. The TTO industry as a whole needs to make firm decisions on the following:

Once these decisions have been made a plan must be drawn up and presented to the Department of Agriculture for approval. Once approved the industry as a whole must be informed of the scheme and asked to vote. If the ballot is successful the entire package is then be sent off to the Minister for Agriculture for his approval at which point it goes before Federal Parliament in turn for a vote.

The current voluntary levy, at AU$ 0.25 per kg raised AU$ 122,000 on 491,000 kg in 2014; the 2015 levy is expected to be 12% - 15% higher.

If a levy is successfully passed the Australian government matches levy contributions up to a maximum of 0.5% of the farm gate value. Based on current projections this is estimated to be AU$ 26.6 million (700,000 kg at AU$38); 0.5% = AU$ 133,000, which potentially results in a total funding pool of just over AU$ 250,000. This would be paid to RIRDC for disbursement to the industry less the cost of collection by the Levy Management Unit or LMU (which cannot be estimated until a plan has been submitted) and RIRDC's own administration costs.

Apart from the obvious advantage of having a large pool of funding available for RD&E there are other significant advantages:

  1. It provides funding certainty for industry research A surplus can be accrued either for future projects or for lean times
  2. The funds can never be stripped from the industry
  3. An industry committee, in conjunction with the ATTIA Board of Directors and RIRDC decides when, where and how the funds are used
  4. RIRDC will continue to manage and provide independent oversight of all projects funded

If you would like more information about the proposed R&D levy, please either email ATTIA’s CEO Tony Larkman tlarkman@attia.org.au or call 02 4017 1336


Page last updated: 05 Dec 2016