Productivity Commission report hones in on Albanese Government’s ‘deeply flawed’ biosecurity levy

Federal Labor’s new biosecurity levy has been singled out in a damning report by the Productivity Commission, prompting renewed calls for the unpopular “tax” on farmers to be scrapped.

The report found Australia’s overly complex system of industry taxes and levies — which have grown from 26 in 1980 to a whopping 248 in 2023 — was hindering productivity growth.

If found inefficient taxes, levies and surcharges were in some cases not being used for their stated purpose — and that politicians appeared to be imposing new ones with little regard for the overall system.

The Albanese Government’s controversial biosecurity protection levy was cited as an example, with the report questioning why it only targeted primary producers when the benefits were shared across a broad range of sectors and the community.

“(There is) potential for some individual sectors (within agriculture) to face additional costs from the levy that are greater than the benefits that they receive,” the report said.

The levy — part of an overhauled biosecurity funding model handed down in the last Federal Budget — will apply to all producers in agriculture, forestry and fisheries from July 1.

While the Government has spruiked the model as a way to lock-in consistent funding to protect Australia’s $90b agriculture sector from pests and diseases, the report noted it was “unlikely” levy payers would be able to monitor and influence how proceeds were spent.

“Levy proceeds will only fund a proportion of overall biosecurity activities, and it is not proposed that those revenues will be hypothecated for particular activities,” it said.

“How will primary producers know whether levy proceeds are going to activities that they value?”

National Farmers’ Federation president David Jochinke said the report raised “numerous red flags” which the Government must address before introducing legislation to implement the levy.

“The report has identified the biosecurity protection levy has a number of significant design faults — something the NFF has been saying consistently,” he said.

“This report should be ringing the alarm bells in the Albanese Government’s offices. It’s not too late to correct course.”

The levy will raise about $50m annually, with primary producers set to shell out about an extra 10 per cent on top of what they already pay in agricultural levies.

Grain Producers Australia has estimated the average grain grower’s total contribution in agricultural levies will rise from about $13,600 per year to $15,000.

“This new analysis has clearly belled the cat on the Government’s deeply flawed policy proposal and called it for what it really is — another tax on all Australian agricultural producers,” GPA chair and Miling farmer Barry Large said.

“If they want to continue calling it a levy — even though the funding is going into consolidated Government revenue with no transparency or accountability — and producers are not the only beneficiaries, they’re actually choosing to deepen divisions with the agricultural sector.”

WAFarmers grains council president Mark Fowler said the Government had not consulted or been transparent with producers, who would have to “shoulder an additional burden”.

“WAFarmers producer members already contribute their equitable shared responsibility through contributing existing producer levies, import levies on the goods they import, as taxpayers, and through passenger traveller levies,” he said.

Productivity Commission deputy chair Alex Robson said levies were originally used in agriculture for fundraising for the benefit of producers — but now were used in cases simply as a way to raise general tax revenue.

“Taxes work best when they are simple and efficient — but many industry levies are relatively expensive to collect, unnecessarily distort business activity and waste the time and resources of business and government,” he said.

“Limiting their growth in favour of more efficient taxes is a simple ... reform that could make a material difference to productivity growth.”

Federal Agriculture Minister Murray Watt has repeatedly defended the funding model, saying it was “the fairest approach” and describing the levy as “a modest ask of farmers”.