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Magazine Stories September Issue 2009
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Friday, 13 February 2009
LEGISLATIVE changes that came into effect on July 1 have removed the 40 per cent government export subsidy that helps run the Australian Quarantine Inspection Service (AQIS)
Despite pressure from the Australian Horticultural Exporters Association (AHEA) — the peak industry body representing exporters of fresh fruit and vegetables — to retain the subsidy, the decision means AQIS will be forced into a full recovery fee model from industry.
A spokesperson for the Department of Agriculture, Fisheries and Forestry said the subsidy lapsed on June 30 and all fees and charges returned to full cost recovery on July 1. This follows the recommendation in the Beale Review that the previous government’s decision to allow a 40 per cent export subsidy to lapse should not be overturned.
AQIS had pointed out that recent annual costs were around A$7.4 million, that it had a A$800,000 shortfall debt from previous years to repay and it wanted a ‘good business’ buffer of around 10 per cent to deal with future contingencies. This would mean asking the export industry for around A$9.1 million in the 2009/10 financial year.
The spokesperson said that as part of industry discussions, the Rudd government had finalised the new fee structure for export certification, which came into effect on July 1. Some fees will increase, others will be abolished and some will be streamlined. Fee increases have been kept to a minimum where possible.
The new fee schedule has wide industry support, according to the spokesperson, who said the government had also announced a A$40 million reform package for major improvements to make the export process more efficient and cut red tape.
“This will provide additional help to expand access to trade markets and support work with international trading partners to outline Australia’s improved export certification systems. The package represents the biggest reforms in this area in a generation and would achieve a world-class Australian agricultural sector.”
The AHEA earlier had strongly-criticised the removal of the 40 per cent export subsidy that helps run AQIS.
It believed it was not a subsidy, but a government contribution to proving a monopolistic service which was inherently inefficient.
“For example, even today when AQIS inspectors undertake inspections in the field and enter the details onto their computers, they cannot ratify the shipment for export in the field, because their computers don’t have the necessary software to allow them to do this,” said Davis Minnis, AHEA’s deputy chairman. “Instead, they have to return to head office all the time to issue the completed RFP Request for an Export Permit. This is time consuming and inefficient and delays shipments getting away. For air freight exports it can mean flights are missed, so exporters have returned to manual paper export documentation, which is more costly to the exporter, but at least the shipment makes the aircraft cut-off time.”
According to Minnis, industry was never aware of the sunset clause in the legislation that provided the 40 per cent government contribution up to June 2009. “Certainly, the AHEA only became aware of it in February 2009.”
He said the AHEA opposed the removal of the 40 per cent government contribution at a time when fresh fruit and vegetable exports from Australia had declined A$250 million since 2002/03, because of international competition - much of it government supported - such as exports from the US and Chile, lack of access to markets in Asia, because of quarantine and non-tariff trade barriers, a high internal cost structure and a generally strong currency that made Australia’s exports very expensive.
“Australian fresh fruit and vegetables are invariably the most expensive on any market on South, South East or North East Asia,” said Minnis. “The AHEA believes that removal of the 40 per cent government contribution for a service that exporters have to use by law and which is expensive (it will be A$300 an hour for inspections), inefficient and unable to service the industry during peak periods of exporter demand, is unjustified and poor government policy. To hide behind the excuse that it was recommended in the Beale report is just unacceptable.
“Beale never to our knowledge came to and discussed the effects of this recommendation with any spokesperson for the horticultural industry.
“The AHEA has led the charge in the horticultural industry in opposing the proposed increase in AQIS fees, which will increase the cost of business and make us even less internationally competitive now and in the future. The promised contribution by government to improving efficiencies in AQIS should be a government funding responsibility anyway, given exporters have no alternative service provider and have to use AQIS whether they like it or not if they want to export overseas,” added Minnis.
