Why Agricultural Levies Must Be Accountable

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Taxation without representation sucks.

It is inherently unfair to be required to pay for a system but have no say in how the system works.

Welcome to the world of agricultural levies.

A levy may sound more benign than a tax but make no mistake: R&D levies, marketing levies and biosecurity levies are all taxes on production.

And even if it is accepted that each of these levies is useful and should be paid by agricultural producers, very few levy payers are ever actually asked.

Earlier this year two Senate inquiries recommended to the Agriculture Minister that this should change.

I was an active participant in the second inquiry, which examined the levy system across all agricultural and horticultural sectors.

By the end of the first hour of evidence at the first hearing, it was apparent the system is broken.

Not only are most levy payers never consulted, nobody even knows who most of them are.

But changing this does not suit government, most industry bodies or the levy spenders.

They do not want genuine accountability, but prefer the current system in which the well-connected have a small say while fundamental questions, such as whether to impose the levies in the first place, are never raised.

In reality, government is only listening to peak industry bodies and R&D organisations, whose main interest is in spending the levies, and not the producers who pay the levies.

Lest the scale of the problem be misunderstood, compulsory paid by producers each year amount to $500 million.

In some sectors the amount paid in levies is more than the profit made by individual producers, and numerous producers pay hundreds of thousands of dollars per year.

By any measure, levy payments are a significant impost that should be fully justified.

And in reality, most producers do not actually begrudge paying a levy if they see value in it.

Two sectors have moved in the right direction.

Tens of thousands of dairy farmers and wool producers are polled every few years to determine the rate of the levy.

Quite rightly, this includes a zero option, which if adopted would mean levy payments ceased and various people would lose their jobs.

So far, this has never been chosen.

Other levy payers are occasionally given an opportunity to vote on a levy when it is first introduced, but never asked again.

And, as the inquiry heard, there are many sectors in which levy payers have never had an opportunity to express a view despite paying levies for decades.

And now we hear the dairy industry suggesting it should abandon its poll, blaming excessive cost.

To this I have a four word response: over my dead body.

The argument that it is too expensive to give producers a democratic say in raising and spending levies is disingenuous.

The real fear is that, given the option, levy payers might choose the zero option.

The only absolute requirement for democracy is a database of levy payers.

In this age of the internet, secure online polls can be undertaken at very low cost, and even a postal vote is not expensive.

Most of the cost attributed to the wool and dairy polls is a result of the inclusion of campaign costs by levy spenders seeking to convince producers to vote for a particular option.

Counting this in the overall cost is false and deceptive.

Setting up a database of levy payers was a key recommendation of the Senate inquiry.

Both the Minister and Department need to get busy making it happen.

Yes, it might require a change in legislation to allow the collection and aggregation of levy payer details, but this would have bipartisan and crossbench support.

Sure there may be some teething problems, but developing a database is hardly rocket science.

And of course, a database of levy payers would also be very useful in managing future biosecurity issues.

It is interesting to observe the enthusiasm of peak industry and R&D bodies for collecting and spending producer levies, but then see their enthusiasm dissipate when the discussion turns to giving levy payers a say on whether to pay the levies in the first place and how their money should be spent.

This same problem does not confront the general community.

We all get to vote for a government every three years, and can choose a party that promises higher or lower taxes.

It is time we gave primary producers a similar say over their hard earned money.


David Leyonhjelm
Contributor, The Daily Reckoning

David Leyonhjelm

David Leyonhjelm

David Leyonhjelm is a regularDaily Reckoning contributor. He has worked in agribusiness for 30 years and is a NSW federal senator — and somewhat of a controversial figure. David represents the Liberal Democratic Party in the Senate. The LDP is a libertarian party which advocates personal freedom and choice, and limited government.
David Leyonhjelm

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