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Cost Recovery Impact Statement - Seafood 2011-12
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Purpose
The purpose of this Cost Recovery Impact Statement (CRIS) is to outline the new cost recovery arrangement that has been implemented to support new service delivery arrangements for the Department of Agriculture, Fisheries and Forestry’s (the department) Fish and Egg Export Program (the program). This CRIS documents the amendment of the cost recovery arrangements for the delivery of the program including its inspection and certification services. The implementation of fees and charges outlined in this statement coincides with the introduction of the new service delivery model.
Fees and charges for the program were last amended in December 2009. These amendments returned export inspection and certification services to a full cost recovery arrangement in line with the recommendations of the independent review into Australia’s quarantine and biosecurity arrangements ‘One Biosecurity, A Working Partnership’.
To assist exporters through a transition to full cost recovery the Australian Government provided a $127.4 million Export Certification Reform Package for the Meat, Seafood, Dairy, Grain, Horticulture and Live Animal Export industries to:
- reform service delivery
- upgrade IT systems
- review and modernise export legislation
- reduce costs for industry and AQIS
- maintain and work to improve market access.
Joint Industry-AQIS Ministerial Taskforces (MTFs) for the dairy, seafood, grain, horticulture, live animal and meat export industries were set up to deliver the reforms.
For the fish and egg export industry these reforms have culminated in a revised service delivery model. The new service delivery model continues to ensure that the safety, suitability and integrity of Australian fish and egg products destined for export markets are produced to a high standard while delivering substantial efficiencies across the export supply chain. Under the new arrangements exporters will continue to be responsible for safe production of fish and egg products at their facilities. Their ability meet the required standards will be verified through inspection, audit and assessment against a national set of performance standards. These outcomes will be recorded into an improved national database that will enable stronger demonstration of the system’s performance to Australia’s trading partners.
This Cost Recovery Impact Statement (CRIS) presents a new cost recovery arrangement for the Fish and Egg Export Program for the period 1 January 2012 to 30 June 2012. The CRIS highlights the rationale for the structural design of the cost recovery arrangement, the rationale for the setting of fees and charges and demonstrates the cost recovery arrangement’s compliance with the Australian Government Cost Recovery Guidelines.
To effect the changes outlined in this CRIS, amendments have been made to the Export Control (Fees Orders) 2001 and Export Inspection (Registration Establishment Charges) Regulations 1985.
Background
The department is responsible for a wide range of issues relating to agriculture, fisheries, forestry and food. The department’s objective is to implement the government’s policies to improve the production and sustainability of Australia’s agriculture, fishing and forestry industries, to protect Australia from exotic animal and plant pests and diseases, to maintain the animal and plant health status of portfolio industries and to protect the environment.
The program contributes to the department’s objective by:
- Maintaining market access for agricultural products through Australia’s export certification system by providing export inspection, auditing and certification services to the meat, horticulture, grain, fish, dairy, live animal exports and organic industries to ensure compliance with importing country requirements.
- Managing the risk of entry of exotic pests and diseases affecting Australia’s agricultural, food, fisheries and forestry industries and human health by implementing appropriate quarantine controls at Australia’s international border and through post-entry plant and animal quarantine arrangements.
- Inspecting imported food to ensure compliance with Australia’s food safety standards.
The program develops and delivers audit and inspection processes for exported foods in order to mitigate food safety risks and meet importing country requirements to maintain access to export markets. Export inspection, auditing and certification services contribute to the annual generation of an estimated $32 billion in exports by the meat, grain, fish, dairy organic and live animal export industries.
A key reform for the Fish and Egg Export Sector is the establishment of a revised service delivery model which will give the export fish and egg industry greater flexibility in fulfilling their audit obligations. Under the new arrangements establishments will have the choice of utilising the department’s services or the choice of engaging Approved Auditors to undertake the regulatory audit obligations. Approved Auditors will be authorised by the department to conduct federal regulatory obligations and, under recently introduced national Food Safety Auditor competencies, will have the opportunity to be authorised to fulfil state and commercial auditing requirements. These arrangements will reduce duplication and deliver cost and regulatory compliance efficiencies to the fish and egg export industries.
The implementation of the new service delivery model is forecast to reduce the program’s cost recovery arrangement from an estimated $4.39m per annum to $3.77m per annum (contingent on the level of export activity and industry take up of Approved Auditors). The program’s existing fees and charges will not adequately support an appropriate cost recovery arrangement under the new service delivery model. Left unadjusted the existing fees and charges will not recover the full cost of the program and will not align the cost of services to the users of those services.
Australian Government Cost Recovery Policy
In December 2002 the Australian Government adopted a formal cost recovery policy to improve the consistency, transparency and accountability of its cost recovery arrangements and promote the efficient allocation of resources. The underlying principle of the policy is that entities should set charges to recover all the costs of products or services where it is efficient and effective to do so, where the beneficiaries are a narrow and identifiable group and where charging is consistent with Australian Government policy objectives. Cost recovery policy is administered by the Department of Finance and Deregulation and outlined in the Australian Government Cost Recovery Guidelines (Cost Recovery Guidelines).
The policy applies to all Financial Management and Accountability Act 1997 (FMA Act) agencies and to relevant Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies that have been notified. In line with the policy, individual portfolio ministers are ultimately responsible for ensuring entities’ implementation and compliance with the Cost Recovery Guidelines.
Policy Review – Analysis of activities
Description of activity
The primary function of the program is to provide export certification for fish, fish products, egg and egg products exported from Australia. Export certification is required by overseas government authorities to verify the exported product’s compliance with their respective import requirements.
In order to provide export certification, the program is organised into three key deliverables:
- Program management and administration: to provide effective policy and technical direction in relation to national food safety issues, supply chain traceability and regulation, export certification, and inspection and verification requirements for the export of fish and fish products and eggs and egg products.
- Food Safety Auditing: to provide inspection and audit services to meet Australian export requirements, the importing country requirements of Australia’s trading partners and a variety of additional services provided at the request of fish and egg exporters.
- Export Documentation and Certification: to provide export documentation and certification to evidence an exported product’s compliance with Australian export requirements and the importing country requirements of Australia’s trading partners.
Fees and charges for the program are set to recover the costs associated with these key deliverables.
Stakeholders
Costs associated with the key deliverables are recovered from those businesses and individuals who create the need for those activities. These clients include:
- Occupiers of establishments registered with AQIS to produce, prepare, handle and store fish, fish products, eggs, and egg products for export
- Freight forwarders, agents, and processors who request documentation to confirm that exported product complies with Australian export requirements and importing country requirements
- Exporters of fish, fish products, eggs, and egg products
Rationale for Cost Recovery
The Australian Government Cost Recovery Guidelines (2005) require that cost recovery be undertaken on an activity (or activity group) basis rather than across the agency as a whole 1. This Cost Recovery Impact Statement presents a set of fees and charges to support the activities of the Fish and Egg Export Program.
The major rationale for developing and implementing cost recovery for the program is the “beneficiary pays” principle. This principle is applied on the premise that those who benefit from the provision of a function or service should pay for it, thereby decreasing the tax burden on those who do not derive a measurable benefit. Cost recovery arrangements also provide an important means of improving the efficiency with which Australian Government products and services are provided and consumed.
1 DoFD, Australian Government Cost Recovery Guidelines July 2005, Financial Management Guidance No. 4,Canberra 2005.
The beneficiaries of the program’s regulatory activities are the participants in the Australian fish and egg export industries. The activities play an integral role in ensuring that fish, fish products, eggs, and egg products prepared for export comply with importing country requirements and the food safety requirements stipulated by the Export Control (Fish and Fish Products) Orders 2005, and the Export Control (Egg and Egg Products) Orders 2005.
The costs incurred by the program in delivery of its regulatory activities are identifiable. A separate budget is maintained for the program and monthly financial reporting provides opportunity for ongoing detailed review and analysis of revenues and expenses. Costs associated with the delivery of services, and the prices derived from those costs, are formulated under an Activity Based Costing methodology. The ability to accurately identify the costs associated with the functions of the program and the further ability to accurately identify costs associated with particular activities provides a reliable basis for the determination of cost recovery fees and charges.
AQIS has operated some form of cost recovery since 1979. Under various Government policy decisions since that time, AQIS has recovered the costs for most of its activities from users, beginning with 50 per cent cost-recovery from 1979, 60 per cent from 1 July 1988 and 100 per cent cost-recovery for recoverable programs from 1 January 1991. AQIS continued to operate under a full cost-recovery arrangement until 1 November 2001, at which time the Government implemented a temporary rebate on export certification to the value of 40% of the costs invoices. This rebate was renewed in 2005 and terminated, as planned, in 2009.
Design and Implementation
Basis of charging – Fee or Levy
Under “beneficiary pays” arrangements, the costs for providing services are recovered from individuals and businesses that derive a measurable benefit from the program’s particular activities.
The major activities undertaken in the program are;
- The development, implementation and monitoring of operational policy and systems that ensure compliance with importing country requirements and Australian export regulations. These activities serve to maintain the eligibility of commodities for export from Australia and ensure that access to markets is maintained
- The provision of particular services including the granting of thermal processing approvals, exemptions from the Export Control Orders, review of export documentation procedures, attendance at export load-out events and other services made available at the request of clients in relation to the export of fish, fish products, eggs and egg products from Australia
- The provision of inspection and auditing services to registered establishments to ensure that the production of fish, fish products, eggs and egg products for export comply with requirements imposed by overseas import authorities and prescribed conditions of the Export Control Orders
- The issue of certificates regarding compliance with importing country requirements for the export of fish, fish products, eggs and egg products from Australia.
Under this cost recovery arrangement, program costs will continue to be recovered through a mix of charges (or levies) and fees.
The program’s management, administrative and fish and egg inspection infrastructure are essential to the maintenance of a system that meets the requirements of Australia’s trading partners. All participants in the fish and egg export industries benefit from this infrastructure and should contribute to its costs. The costs of these functions and the beneficiaries are identifiable. However, the benefits enjoyed by each participant are not easily measured. Cost recovery charges are therefore the most efficient and cost effective mechanism to recover this component of program costs.
The program also provides a range of direct services to participants in the fish and egg export industries. The costs of providing these services are identifiable as is the extent of client usage of the service. This allows for the calculation of fees that can be closely linked to the costs of providing the particular service. Cost recovery fees are therefore the most efficient and cost effective mechanism for the recovery of costs in relation to the delivery of export audit, inspection and documentation services.
What are the legal requirements for the imposition of charges?
The department has undertaken this program since 1991 on a fully cost recovered basis. A range of legislation has been enacted by the Government from 1982 that gives effect to cost recovery for Fish and Egg Export Program activities. This includes:
Charging Legislation
Export Inspection (Establishment Registration Charges) Act 1985
The Export Inspection (Establishment Registration Charges) Act 1985 imposes charges in relation to the registration of export establishments. These export establishments must be registered with AQIS for operations associated with the preparation of a prescribed commodity.
Export Inspection (Establishment Registration Charges) Regulations 1985
The Export Inspection (Establishment Registration Charges) Regulations 1985 details the specific charges relating to the registration of export establishments for prescribed commodities.
Export Inspection and Meat Charges Collection Act 1985
The Export Inspection and Meat Charges Collection Act 1985 makes provision for the collection of all charges imposed by the Export Inspection (Establishment Registration Charges) Act 1985.
Individual charges set under taxing legislation may not completely align with the cost of providing a service or activity. However, there are important constraints that govern the setting of charges within the program’s cost recovery arrangement:
a) total collections must not exceed the cost of the servicing the user group and
b) individual charges set for participants in the user group should not exact more than a reasonable share from the participant, having regard to the use or benefit derived from those services and activities.
Fee for Service Legislation
Export Control Act 1982
Subsection 25(1) of the Export Control Act 1982 (“the Act”) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act or necessary or convenient to be prescribed for the carrying out or giving effect to the Act.
Paragraph 25(2)(d) of the Act allows regulations to be made for the imposition of fees and charges in connection with the performance of services by authorised officers and the remission of fees so imposed. Paragraph 25(2)(g) of the Act provides that the Governor-General may make regulations empowering the Minister to make orders, not inconsistent with the regulations, with respect to any matter for or in relation to which provision may be made by the regulations.
Export Control (Fees) Orders 2001
The Export Control (Fees) Orders 2001 details the fees imposed for the performance of services by authorised officers and fees imposed for the provision of export certification.
Which issues does this legislation address?
The instruments listed above provide for the imposition of fees and charges in respect to the activities undertaken in the program. Fees and charges included in this cost recovery arrangement will apply from the commencement of the new service delivery model.
In accordance with the department’s policy, and in consultation with the fish and egg export industries, this CRIS has an expected duration of six months and the requirement for a new CRIS will be determined prior to the 2012-13 financial year. The program will then be reviewed annually. The regular review of cost recovery arrangements will ensure that fees and charges imposed on participants remain relevant to the environment in which the fish and egg export industries operate and remain relevant to the functions and activities undertaken within the program to service the requirements of the industry. As the cost recovery arrangement is for the implementation of a new service delivery model, the program expects to formally review the effectiveness of the arrangement in recovering the program’s costs. This review will occur once sufficient experience is achieved against the new service delivery model. Should no amendments be required, the next formal review would occur no later than 1 July 2016.
Costs to be included in Charges
The department and the fish and egg export industries have a commitment to recover the direct and indirect costs associated with managing the export inspection, administration, audit and certification services in a manner that is fair and equitable across the various sectors of the industry.
The fees and charges applied by the program reflect the recovery of the direct and indirect costs associated with the delivery of the three key deliverables. Direct costs are specifically attributed to the cost of providing the relevant service. These include:
- Staffing costs, which can be broken into two components:
o salaries and wages rates of staff; and,
o other staffing on-costs, such as allowances, overtime, annual and long service leave, separation payments and superannuation costs.
- Accommodation costs, including rent, repairs and maintenance, cleaning and utility charges;
- Costs such as minor stores, communications, office machines, stationery, telephonic communications, advertising and insurance;
- Travel costs;
- The costs of materials and services such as stores, computer services (including outsourced provision) and services obtained on a contract basis; and
- Export program services costs such as AQIS Electronic Export Documentation System (EXDOC), training services and documentation services.
Indirect costs form part of general user group costs and are not easily attributed to particular activities. Indirect costs include:
- An appropriate allocation of indirect costs (or overheads), including executive, financial, personnel, registry, library services, internal audit fees and other corporate costs
- Provisions for bad and doubtful debts and fringe benefits tax.
Program expenditure is forecast to be $3.77 million per annum. Program costs are adjusted annually to ensure they are relevant to the anticipated level of export activity, which ultimately drives the demand for services required by export registered establishments and other users of the program’s services.
This CRIS covers a period of 6 months between 1 January 2012 and 30 June 2012 at a forecast cost of $1.89 million. A summary of direct and indirect costs for the program during this period are provided in Table 1.
Table 1 – Program Forecast Expenditures 1 January 2012 to 30 June 2012
| Expenditure Item | Forecast Expenditure 1 January to 30 June 2012 |
|---|---|
| Central office | |
| Employee Salary |
$231,686
|
| Salary On-Costs |
$50,693
|
| Training & Development |
$3,000
|
| Supplier |
$42,237
|
| Other Expenditure |
$30,950
|
| Export Program Services | |
| Executive Manager |
$2,514
|
| General Manager |
$2,998
|
| Certification Integrity |
$46,342
|
| Establishment Register |
$25,178
|
| EXDOC |
$86,772
|
| Food Inspection Services Group |
$688,414
|
| Documentation Services Group |
$223,240
|
| Finance & Governance Unit |
$77,425
|
| Food Service Delivery Admin |
$46,874
|
| Strategic Initiatives Unit |
$16,150
|
| AMS support |
$92,265
|
| Departmental Overheads |
$218,323
|
| Total Expenditure |
$1,885,061
|
| Program Management FTE's |
5.1
|
| Food Inspection Services Group FTE's |
8.7
|
| Export Documentation Services Group FTE's |
1.8
|
* FTE is Full Time Equivalent Positions
All costs incurred by the program are allocated to the three expenditure categories under an Activity Based Costing methodology. The program undertakes regular activity reporting against all functions it undertakes. Analysis of the results allows for the effective identification and allocation of direct and indirect costs for each of the program’s services.
Overheads are incurred through a number of drivers, including employee expenses and property. The overhead profile for each export program differs depending on the structure of service delivery.
All program costs are assessed against the results of the activity analysis to obtain the total cost of providing a particular key deliverable. This process ensures that the total costs for each function, upon which cost recovery charges are based, accurately reflect the cost of undertaking the particular key deliverable.
The outcomes of this assessment are detailed in table 2 below.
Table 2: Cost of Fish and Egg Export Program Key Business Activities allocated to Program Key Deliverables
| Expenditure Item / Key Deliverable | Management and Administration | Audit and Inspection | Certification and Documentation Total | Total |
|---|---|---|---|---|
| Central Office | 358,566 | - | - | 358,566 |
| Export Program Services | 170,607 | 615,299 | 522,268 | 1,308,173 |
| Departmental Overheads | 218,323 | - | - | 218,323 |
| Total | 747,495 | 615,299 | 522,268 | 1,885,062 |
Key Deliverable 1 – Program Management and Administration
Relating to the management and administrative activities associated with the implementation and maintenance of policy and technical objectives to support the ongoing export eligibility products from registered establishments, as required by Australia’s trading partners. The Program Management and Administrative key deliverable category attracts 39.7% of the overall program expenditure. The cost of this deliverable is comprised of 100% of Central Office expenditure, 13% of Export Program Services expenditure and 100% of Departmental Overheads. This key deliverable is recovered through the imposition of Establishment Registration Charges.
Key Deliverable 2 – Audit and Inspection
Relating to the provision of of auditing and inspection services and services which are made available at the particular request of a company or individual. The Audit and Inspection key expenditure category attracts 32.6% of overall program expenditure. The cost of this deliverable is comprised of 47% of Export Program Services expenditure. The costs allocated to this deliverable are primarily drawn from the Food Inspection Service Group and the Food Service Delivery Administration Group. This key deliverable is recovered through the imposition of Fees-for-Services.
Key Deliverable 3 – Certification and Documentation
Relating to the provision of export certification and other documentation to confirm that product complies with the requirements of the importing country and to facilitate the entrance of Australian product into that country. The Certification and Documentation key deliverable attracts 27.7% of overall program expenditure. The cost of this deliverable is comprised of 40% of Export Program Services expenditure. The costs allocated to this deliverable are primarily drawn from the Documentation Services Group, EXDOC and the Food Service Delivery Administration Group. This key deliverable is recovered through the imposition of Fees-for-Services.
Outline of Charging Structure
In anticipation of a transition to a revised service delivery model the program has undertaken a comprehensive review of its costs and recovery structures.
The review has helped to ensure that fees and charges outlined in this proposal are structured so as to:
- to the greatest reasonable extent, reflect the actual cost of providing the particular service
- minimise the extent of administrative and compliance costs, particularly through a reduction in the number of unique fees and charges where appropriate
- Ensure that individuals or firms using a particular service are those charged for that service
- Encourage the most efficient use of resources by clients of the program
- Ensure that the cost recovery structures are able to respond to changes in the level of demand for services in a manner that reduces the potential for over or under recoveries against the program’s expenditure requirements
The following categories, corresponding with the program’s service delivery elements, will continue to apply to the allocation and recovery of costs:
Charges (set under taxing legislation)
Establishment Registration Charges are imposed to recover the Program Management and Administration deliverable. These charges are a fixed annual charge imposed on all establishments registered for the production, preparation, handling and storage of fish and eggs for export.
Fees (set under fees-for-service legislation)
Fees-for-service are imposed to recover the costs of auditing and inspection services necessary to meet Australian export requirements and the importing country requirements of Australia’s trading partners and those made available at the request of a company or individual. These fees are imposed in relation to the time taken to provide a service.
Export certification fees are imposed to recover the costs of export certification and documentation services made available at the request of a company or individual. These fees are imposed against the number of documents issued in relation to a particular export consignment. Certification fees vary dependent on whether the documents can be issued electronically or manually.
All fees and charges are established by assessing the calculated costs against an anticipated volume or level of activity for the particular function. The anticipated levels of activity are based on trends presented in the program’s prior year results. These trends are further tested against the knowledge and forecasts of industry representatives through the Fish Ministerial Taskforce.
Establishment Registration Charges
Establishment Registration Charges are imposed to recover the costs of the Program Management and Administration Key Deliverable. Importing countries impose a number of conditions on the Australian Government and exporters that need to be met in order to make Australian fish and eggs eligible for entry into and across their borders. To meet these strict conditions the program undertakes a range of administrative, management, monitoring and verification activities. These include:
- The employment of highly competent technical staff that are able to interpret and apply national policy instruction to staff and registered establishments in response to frequent changes in importing country conditions
- The maintenance and demonstration of a training program to ensure that the competencies and knowledge of program staff are contemporary and maintained to a high standard
- Negotiation and organisation of direct audits over the entire export certification system by Australia’s trading partners and the ongoing collection and maintenance of performance data to facilitate the conduct of these audits
- Registration of establishments involved in the production, preparation, handling and storage of fish and eggs for export.
These are essential requirements to satisfy importing authorities that particular standards are met prior to the export of goods into their countries and to maintain the highly favourable export status of Australian food products.
All costs incurred by the program in the performance of these requirements are recovered through establishment registration charges. This approach is already employed for the recovery of these activities under the current cost recovery arrangement. However, the structure of the arrangement has been adjusted to maintain an arrangement in which all participants continue to contribute fairly and equitably to Program Management and Administrative costs.
Cost for the delivery of Program Management and Administration activities are forecast to be $1.495m per annum (See Attachment A). The cost of the Program Management and Administration activity during the period 1 January 2012 to 30 June 2012 is forecast to be $0.747m.
The cost associated these activities are recovered through a range of fixed annual Establishment Registration charges. Charges vary depending on the type of establishment and the export processes they are registered to undertake. The rate of charge is set reflect the relative effort applied by the program to support the processes undertaken at these establishment. The effort applied by the program is largely a factor of the risk presented by the operations of an establishment. The assessments that are ultimately used to inform the rate of charge are reached jointly by government and industry and are a result of extensive consultation through the Ministerial Taskforce.
The new structure and rates imposed for the collection of the Program Management and Administrative Key Deliverable are presented in Table 3.
Table 3: Annual Program Management and Administrative Costs in relation to Establishment Classes of Establishments
|
CHARGE CATEGORY |
Unit |
Rate of Charge |
|---|---|---|
|
ESTABLISMENT REGISTRATION CHARGE |
|
|
|
Vessel – Preparation for direct export |
Annual |
$2,446 |
|
Vessel – Preparation not for direct export |
Annual |
$1,223 |
|
Land Establishment – Process fish for export |
Annual |
$2,446 |
|
Land Establishment – Live fish for export |
Annual |
$1,223 |
|
Egg Establishment |
Annual |
$1,835 |
|
Storage and Transportation Establishment |
Annual |
$1,835 |
|
Application charge |
Application |
$600 |
Under this CRIS $0.747m is recovered through fixed annual establishment registration charges. The operations of each export registered establishment are recorded in the department’s Establishment Register database (ER) which provides reliable information for the setting of registration charges for particular classes of establishments. The cost to be recovered against the fixed annual registration charge is assessed against the number of establishments recorded in the ER database to determine the required rate of charge.
The level of effort applied by the program to support an establishment’s export activity varies dependent on the relative food safety and market access risk posed by the operations of the establishment. Given this fact it is not appropriate to set an average fee across all export establishments. Instead, the rate of charge recognises the relative effort and costs attracted by an establishment’s operations and vary according to particular classes of establishments.
Where an establishment falls into either charging categories the charge payable by that establishment is the highest of all applicable charges.
Registration charges will be recovered on an annual basis to be applied on 1 July of each year.
Fees-for-Service
Fees-for-service are imposed to recovery the cost of the program’s Audit and Inspection Key Deliverable. The department provides audit and inspection services to export establishments for registration purposes and to ensure fish, fish products, egg and egg products comply with the Export Control (Fish and Fish Products) Orders 2005, the Export Control (Egg and Egg Products) Orders 2005 and any specific importing country requirements that may apply to production, processing, storage and handling of fish, fish products, egg and egg products for export.
Services are provided by the program and are categorised into the following;
- Inspection – relating to the inspection of product intended for export at an export registered establishment
- Audit – relating to the routine audits of the establishments to ensure that facilities and processes undertaken at the establishment are maintained to standards required by Australia’s trading partners. Follow-up attendance may be required in response to a corrective action after the identification of non-compliant activity at the establishment
- General services – relating to the provision of reports, information and advice supplied at the particular request of a company or individual for the specific benefit of that company or individual
Audit and inspection costs for the program are drawn from the Food Inspection Services Group and the Food Service Delivery Admin group. Costs are allocated to the program based on:
- The level of demand for services generated by the audit and inspection requirements of export establishments, and the demand for other services
- The competencies required to undertake audit and inspection for particular commodities. As different competency levels attract different salaries rates will vary across export programs.
All inspection, audit and general services are recovered through fee-for-service arrangements. A time based fee-for-service continues to apply for the provision of inspection, audit and general services; this arrangement seeks to adjust the rates for that fee.
The new structure and rates for the collection of the program’s Audit and Inspection Key Deliverable are presented in Table 4.
Table 4 – Fees imposed for the recovery of the Audit and Inspection Key Deliverable
|
FEE CATEGORY |
Unit |
Rate of Charge |
|---|---|---|
|
FEE-FOR-SERVICE |
|
|
|
Fee-for-service |
Quarter hour |
$50.00 |
Under this CRIS costs for the delivery of inspection and audit services are forecast to be $0.622m in the period 1 January 2012 to 30 June 2012. This cost is assessed against the forecast demand for services, anticipated at 3,112 hours in the period 1 January 2012 to 30 June 2012, to determine the required rate of charge. Accordingly, the fee-for-service rate is set at $50 per quarter hour. This fee will cover all inspection, audit and general services provided by the program and is payable by the company or individual to whom the service is provided.
The increase in the fee-for-service rate from $40 per quarter hour to $50 per quarter hour results from:
- Increases in the cost of providing these services since fees were last adjusted in December 2009 including employee salaries, employee salary on-costs and additional training expenses required to maintain competencies under the recently introduced national Food Safety Auditor Competency Framework.
- Review of activities associated to the provision of inspection, audit and general services and a revision to the cost allocation approach used to inform previous cost recovery arrangements.
This fee does not apply in respect of services provided by non-government employed AQIS Authorised Officers (AAOs).
Export Certification Fees
Certification and documentation fees are imposed for the recovery of the program’s Certification Key Deliverable. The department provides export certificates and other documents to facilitate the entry of Australian export product into overseas markets. Some export markets require official government certification to accompany fish and egg products as a condition of entry into their markets. Export certificates are primarily delivered electronically, through the electronic export documentation system (EXDOC), but may also be issued manually, by documentation services staff located in the department’s regional offices.
Certification costs for the program are drawn from the Export Documentation Services Group, EXDOC and the Food Service Delivery Admin Group. The allocation of certification costs to export programs employs a range of effort based cost drivers that consider:
- The complexity of export certification requirements required by importing countries
- The degree of manual intervention required by importing countries in the issuance of export permits and export certification
- The level of system maintenance and industry user support requirements
- The volume of export permits and export certificates issued
All costs associated with the provision of export certification and documentation are recovered through certification fees which varies depending on type of certification. Each type of certification requires different levels of program intervention and effort and, as a result, attracts different costs to provide:
- Electronic certification
Requires little direct intervention; information is received, assessed, processed and sent electronically.
- Manual certification
Requires total direct intervention; all information is received, assessed, processed and sent manually.
- Replacement certification
The circumstances surrounding the request for replacement certification must be assessed on a case by case basis with consideration given as to why the original certificate has not been used. The replacement process is the most resource intensive of all certification services.
Certification fees already exist within the program’s current cost recovery arrangement, the new arrangement seeks to adjust the rates for those fees.
The new rates for the collection of the program’s Certification Key Deliverable are presented in Table 5.
Table 5 – Fees imposed for the recovery of the Certification Key Deliverable
|
FEE CATEGORY
|
Unit |
Rate of Charge |
|---|---|---|
|
CERTIFICATION FEES |
|
|
|
Electronic certification and documentation |
Per permit / certificate / document |
$33 |
|
Manual certification and documentation |
Per permit / certificate / document |
$100 |
|
Replacement certification |
Per certificate |
$500 |
Under this CRIS the costs for the delivery of certification services are forecast to be $0.529m in the period 1 January 2012 to 30 June 2012. This cost is assessed against the forecast demand for those services to determine the required rate of charge. Forecast volumes for electronic certification and documentation are set at 14,726 units and manual certification and documentation at 292 units for the period of this cost recovery arrangement. These forecast volumes are assessed against prior year results and adjusted where necessary to incorporate industry intelligence on potential changes to the forecasts (for example, changes to the size and frequency of export consignments or shifts in the destination of export products).
The need to adjust rates for export certification and documentation since fees were last reviewed in December 2009 is primarily attributed to:
- Review of activities associated to the provision of documentation and certification services and a revision to the cost allocation approach used to inform previous cost recovery arrangements
- Restructuring of the certification service delivery arrangements, leading to the alignment of like services in the department and resulting economies of scale
- Adjustments to the forecast volumes of certification and documentation units
- Consolidation of various related fees and alignment to certification recovery arrangements with those already existing in the department.
Under this CRIS the fee for electronic certification and documentation is decreased from $40 to $33, as a result of efficiencies achieved through the centralisation of some electronic certification functions, and in the EXDOC and Food Service Delivery Administration service groups and a forecast increase in the volumes of electronic certification. Manual and replacement certification and documentation rates remain unchanged at $100 and $500 respectively as arrangements for delivery of these services from local regional offices remain unchanged and volumes of manual and replacement certification are forecast to reduce.
Overtime Loading Fees
At a client’s request the department may be required to provide services outside of the normal working hours. Officers who provide services outside of normal working hours attract overtime penalties and generate additional costs for the program. Overtime fees are imposed to recover the additional costs. The department also maintains provisions to set a minimum charge for the provision of overtime services that are not continuous with ordinary duty. The minimum rates reflect the minimum penalty payable to staff who are called on to provide services that are not continuous with the regular duty. The minimum rates are adjusted in line with the adjustments for related overtime fees.
The delivery of services outside of normal working hours will attract different competencies depending on the commodity. As different competency levels attract different salaries overtime rates will vary across export programs.
The new rates for the collection of the program’s Overtime loading fees are presented in Table 6.
Table 6: Overtime fees
|
FEE CATEGORY
|
Unit |
Rate of Charge |
|---|---|---|
|
CERTIFICATION FEES |
|
|
|
Time and a half continuous with ordinary duty |
Quarter hour |
$16.45 |
|
Double time continuous with ordinary duty |
Quarter hour |
$21.93 |
|
Double time and a half continuous with ordinary duty |
Quarter hour |
$27.41 |
|
Time and a half not continuous with ordinary duty |
Minimum |
$197.40 |
|
Double time not continuous with ordinary duty |
Minimum |
$263.16 |
|
Double time and a half not continuous with ordinary duty |
Minimum |
$328.92 |
Overtime fees for the program have been recalculated against the current average salary cost and penalties payable to those staff eligible for extra duty allowances since fees were last adjusted in December 2009. This approach allows the program to determine and set the most efficient prices that are required to recover the costs of this function over a particular period.
Summary of Charging Arrangements – 1 January 2012 to 30 June 2012
A summary of the Program’s charging arrangements for the period 1 January 2012 to 30 June 2012 are provided in the table below;
| Description | 11/12 forecast expenditure 1 January to 30 June 2012 | Sale Unit | Previous Rate | New Rate | Projected Units 1 January to 30 June 2012 | Projected Revenue 1 January to 30 June 2012 | Surplus / Defecit |
|---|---|---|---|---|---|---|---|
|
REGISTRATION
|
$747,495
|
$747,221
|
$(274)
|
||||
| Vessel (Preparation Not Direct Export) | year | $2,298 | $1,223 | 30 | $36,690 | ||
| Vessel (Preparation Direct Export) | year | $2,636 | $2,446 | 133 | $324,095 | ||
| Land estab. Live Only | year | $2,298 | $1,223 | 25 | $30,575 | ||
| Land estab. Processing | year | $2,636 | $2,446 | 93 | $227,478 | ||
| Egg Establishment | year | $- | $1,835 | 8 | $13,763 | ||
| Storage Establishment | year | $1,703 | $1,835 | 52 | $95,420 | ||
| Registration application | application | $600 | $600 | 32 | $19,200 | ||
|
FEE FOR SERVICE
|
$615,298
|
$622,444
|
$7,146
|
||||
| Fee-for-Service | 1/4 hour | $40 | $50 | 12,449 | $622,444 | ||
|
CERTIFICATION
|
$522,268
|
$529,177
|
$6,909
|
||||
| Manual Permit | permit | $100 | $100 | - | $- | ||
| Manual Certificate | certificate | $100 | $100 | - | $- | ||
| Manual Other Documentation | document | $100 | $100 | 292 | $29,229 | ||
| Electronic Permit | permit | $40 | $33 | - | $- | ||
| Electronic Certificate | certificate | $40 | $33 | - | $- | ||
| Electronic Other Documentation | document | $40 | $33 | 14,726 | $485,949 | ||
| Replacement Certificate | replacement | $500 | $500 | 28 | $14,000 | ||
| Total | $1,885,061 | $1,898,842 | $13,781 |
Note: The summary of charging arrangements does not detail expenditures or revenues in relation to Overtime and Shift fees. These fees are in place to meet potential request for program service outside of standard servicing hours. As the level of demand is unknown no forecast is included for revenues or expenditures. These fees are set to reflect the costs of additional servicing requirements and will not carry a material impact to the program’s overall result, ie increases in demand will carry an equal impact to the program’s revenues and expenditures.
Ongoing Monitoring
Monitoring Mechanisms
Regular consultation with the fish export industry on cost recovery and regulatory activity occurs through the Seafood Export Consultative Committee – Finance sub-Committee (SECC FsC). This consultation provides a sound process for monitoring of fees and charges on an on-going basis and provides opportunity for the exchange of information on the changing dynamics of the industry for consideration against current and future cost recovery proposals. The regular consultation allows the department to work in partnership with the industry to:
- review of departmental activities and resources supporting export inspection and certification services for the industry,
- identify improved service delivery arrangements that may lead to further cost-minimisation,
- ensure that risk is appropriately managed within the industry to the benefit of all stakeholders.
The financial position of the program is reported on a monthly basis through internal governance procedures. Detailed reporting, analysis and discussion occurs quarterly with the SECC FsC.
Cost recovery revenue from this arrangement will be reported in the department’s Annual Report in accordance with the Finance Minister’s Orders.
Stakeholder Consultation
As mentioned above, regular consultation regarding the program’s administration of cost recovery arrangements and the delivery of its regulatory responsibilities occurs through the Seafood Export Consultative Committee (SECC). The SECC comprises representatives from key industry sectors and is the principal consultative forum for the department and the fish export industry regarding all issues arising from the management of Australia’s export strategies for fish and fish products. Face to face meetings of the committee are scheduled twice yearly and may occur more frequently if required.
More frequent and detailed consultation occurs through the SECC FsC. Consultation through this forum provides additional opportunity to keep industry participants abreast of the program’s ongoing financial position and strategies. This forum also provides the department with a valuable opportunity to exchange information on the changing dynamics and challenges facing the industry for consideration in the review of charges and associated recovery structures.
Broader communication regarding the amendments to fees and charges is managed through direct mailing all fish and egg registered establishments and the departmental website which includes information on fees and charges and the policy and procedures through which they are applied.
For this proposal, consultation has primarily occurred through the Fish Ministerial Taskforce, which has subsumed the function of the SECC during the reform program. The fees and charges model along with the charging policy has been discussed through the Ministerial Taskforce and the model has been adjusted to incorporate the feedback received through this consultation.
The refined model was again distributed to the Ministerial Taskforce in November 2011 and also to senior representatives of other key stakeholder groups for comment. A special presentation on the fees and charges was also presented to the egg export industry prior to their 2011 Annual General Meeting. No systemic issues regarding the modelling were identified through these consultative processes. The outcome of this is that the program will closely monitor the operation of the fee model and provide regular financial reporting through the established consultative mechanisms.
Periodic Review
Fees and charges are reviewed on a regular basis as part of the routine governance of the department. All proposed amendments to program fees and charges are reviewed against the Australian Government Cost Recovery Guidelines to ensure they remain consistent with the principles outlined in the Guidelines.
Following implementation of the new service delivery model, a formal review of program fees and charges will be conducted in the last quarter of 2011/2012, with further amendments and an updated CRIS scheduled for 2012/2013.
Certification
I certify that this CRIS complies with the Australian Government Cost Recovery Guidelines.
Conall O’Connell
Secretary
Department of Agriculture Fisheries & Forestry
Date:
Forecast annual expenditure position of the Fish and Egg Export Program
|
Expenditure Item
|
Forecast Expenditure Annual
|
|---|---|
| Central office | |
| Employee Salary | $463,373 |
| Salary On-Costs | $101,386 |
| Training & Development | $6,000 |
| Supplier | $84,473 |
| Other Expenditure | $61,900 |
| Export Program Services | |
| Executive Manager | $5,028 |
| General Manager | $5,997 |
| Certification Integrity | $92,683 |
| Establishment Register | $50,356 |
| EXDOC | $173,544 |
| Food Inspection Services Group | $1,376,829 |
| Documentation Services Group | $446,481 |
| Finance & Governance Unit | $154,850 |
| Food Service Delivery Admin | $93,749 |
| Strategic Initiatives Unit | $32,299 |
| AMS support | $184,529 |
| Departmental Overheads | $436,645 |
| Total Expenditure | $3,770,122 |
| Program Management FTE's | 5.1 |
| Food Inspection Services Group FTE's | 8.7 |
| Export Documentation Services Group FTE's | 1.8 |
Distribution of forecast annual expenditures to key deliverables in the Fish and Egg Export Program
| Expenditure Item / Key Deliverable | Management and Administration | Audit and Inspection | Certification and Documentation Total | Total |
|---|---|---|---|---|
| Central Office | 717,132 | - | - | 717,132 |
| Export Program Services | 341,213 | 1,230,597 | 1,044,536 | 2,616,346 |
| Departmental Overheads | 436,645 | - | - | 436,645 |
| Total | 1,494,990 | 1,230,597 | 1,044,536 | 3,770,123 |
Forecast full year effect on expenditures and revenues for the Fish and Egg Export Program
| Description | Forecast annual expenditure | Sale Unit | Previous Rate | New Rate | Projected annual units |
Projected annual revenue
|
Surplus / Defecit
|
|---|---|---|---|---|---|---|---|
| REGISTRATION | $1,494,990 |
$1,494,641
|
$(349)
|
||||
| Vessel (Preparation Not Direct Export) | year | $2,298 | $1,223 | 60 |
$73,380
|
||
| Vessel (Preparation Direct Export) | year | $ 2,636 | $2,446 | 265 |
$648,190
|
||
| Land estab. Live Only | year | $2,298 | $1,223 | 50 |
$61,150
|
||
| Land estab. Processing | year | $2,636 | $2,446 | 186 |
$454,956
|
||
| Egg Establishment | year | $- | $1,835 | 15 |
$27,525
|
||
| Storage Establishment | year | $1,703 | $1,835 | 104 |
$190,840
|
||
| Registration application | application | $600 | $600 | 64 |
$38,600
|
||
| FEE FOR SERVICE | $1,230,597 |
$1,244,888
|
$14,292
|
||||
| Fee-for-Service | 1/4 hour | $40 | $50 | 24,898 |
$1,244,888
|
||
| CERTIFICATION | $1,044,536 |
$1,058,354
|
$13,819
|
||||
| Manual Permit | permit | $100 | $100 | - |
$-
|
||
| Manual Certificate | certificate | $100 | $100 | - |
$-
|
||
| Manual Other Documentation | document | $100 | $100 | 585 |
$58,457
|
||
| Electronic Permit | permit | $40 | $33 | - |
$-
|
||
| Electronic Certificate | certificate | $40 | $33 | - |
$ -
|
||
| Electronic Other Documentation | document | $40 | $33 | 29,451 |
$971,897
|
||
| Replacement Certificate | replacement | $500 | $500 | 56 |
$28,000
|
||
| Total | $3,770,122 |
$3,797,884
|
$27,762
|
31 Jan 2012