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Animal Products (Fees, Charges, and Levies) Regulations 2002: Amendment

Regulatory Impact Statement

Nature and magnitude of the problem and the need for government action

The Animal Products Act introduces regulation on the previously unregulated ostrich, emu and game estate industries.  As a result new services are being provided to those industries by the New Zealand Food Safety Authority (NZFSA).  There is not the capacity for NZFSA to fund those services on an ongoing basis without cost recovery from industry. 

The policy to maintain parity with the fees, charges and levies provided for under the Meat Act, has a neutral impact on business compliance costs.  Regulatory impacts are minor and machinery in nature and therefore such changes are not included in this regulatory impact statement and business compliance cost statement.

Part 9 of the Animal Products Act provides that the Minister and the Director-General are to take all reasonable steps to ensure that so many of the direct and indirect costs of administering this Act as are not provided for by money appropriated by Parliament for the purpose are recovered under this Part, whether by way of fees, levies, or otherwise.

Statement of the public policy objective(s)

To establish a cost recovery system to recover costs of service supplied to the ostrich, emu and game estate industries that complies with the principles for cost recovery established under the Animal Products Act and the Guidelines for Setting Charges in the Public Sector (i.e. to recover the full cost from all industry users and beneficiaries equitably, efficiently, justifiably and transparently).

Feasible options (regulatory and/or non regulatory) that may constitute viable means for achieving the desired objective(s)

Non-regulatory measures

There are no feasible non-regulatory options that would constitute a viable means of achieving the desired objective.  A non-regulatory system would provide an incentive not to pay for services.

Regulatory measures

 Game Estate Listing Fee

The only identified option to recover the cost of listing game estates is to charge each estate directly for the costs of listing.  The option would involve invoicing game estates annually.

Recovering the cost of services provided to the ostrich and emu industries

Options for recovering the cost of services provided to the ostrich and emu industries include:

a.       charging a fixed fee per premises; or

b.      a $5 levy each emu/ostrich slaughtered .

A fixed fee would mean the total estimated cost would be divided equally amongst processing premises.  This would adversely impact on small processors, as the charge would not be commensurate with the size of the business or the benefits received.

 NZFSA considers a levy on each emu/ostrich slaughtered is the most equitable option as it recovers the costs in line with the benefits received from the services.  It is also the preferred option of the industry.

 Benefit of the proposal

 The proposals comply with the principles for cost recovery established under the Animal Products Act and the Guidelines for Setting Charges in the Public Sector (i.e. to recover the full cost from all industry users and beneficiaries equitably, efficiently, justifiably and transparently).

 The proposed cost recovery option would enable the continuation of the supply of services to those industries while minimising compliance costs

 Costs

 Government charges

	Number	Cost per estate/bird	Total industry cost
Game Estates	12	$100 (then ($105 per year)	$1,200 initially then $1,260 per annum
Ostrich and Emu processors	2	$5 per emu/ostrich slaughtered	$40,000 per annum

 It is expected 8000 birds will be slaughtered each year (around 4000 for each major processor) thereby raising revenue of around $40,000.  The revenue is to recover the costs of:

Service	Cost
National Micro Database	$1,900
Residue Programme	$29,000
Administration	$9,000
Standards Development	$2,000
TOTAL	$41,900

 Consultative programme undertaken

The New Zealand Ostrich and Emu Standards Council, which represents all processors of ostriches and emus was consulted on the proposed levy.  The council is in full support of the proposed levy. 

Feedback from the Game Estate Association members on the proposed listing fees is that this is unjustified given that it merely maintains a registry of name and address details.  The members feel a more appropriate level would be half the proposed figure.  They feel this should be more than sufficient to cover the 'less than onerous' ongoing administrative requirements.  The NZFSA response is that the proposed fees are the same for similar listing services provided to other industries and represents the actual cost of providing the function.  Charging a lower fee would involve introducing a subsidy.

Business compliance cost statement

As a result of the proposed changes business will have to incur compliance costs associated with identifying and understanding the new regime.  Apart from the government charges identified in the RIS no other significant compliance costs have been identified. In order to minimise the impact on business NZFSA will notify of the new cost recover regime through a letter to each company advising them of the cost recovery regime and consultation with industry representative organisations.