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Cost Recovery Proposals for Dairy under the Animal Products Act 1999

2 Background

The current New Zealand Food Safety Authority (NZFSA) fees and charges for the dairy industry are collected under Animal Products (Dairy Industry Fees and Charges) Regulations 2005.

No changes are proposed for the cost recovery method for dealing with most of the services provided by the NZFSA to the dairy industry. However, there have been changes in how the fees and charges are calculated and the amount of costs to be recovered, and for some standard setting costs, who pays.

A number of factors have influenced these changes. These factors include:

• The last review took place in the 2004/05 financial year and in the past 3 years there has been an increase in indirect, salary and overhead costs for NZFSA but no corresponding increase in the fees and charges set out in the Dairy Regulations 2005.

• The restructure of NZFSA away from sector-based service delivery to a functionality-based service delivery approach now covers a wider base of services and has necessitated a change in how services are costed and allocated to sectors or services delivered.

• Some costs, previously funded from a component of Crown funded generic activity are proposed to be funded from industry funds i.e., some components of standards setting services were previously Crown funded and now proposed to be funded by industry.

• A review of the actual NZFSA resources needed to provide services to the dairy sector such as the Export Standards and Market Access Groups shows a historical under recovery of industry funding for the dairy programme.