Cost Recovery Impact Statement - Post Entry Animal Quarantine Program Fees - April 2009

This Cost Recovery Impact Statement (CRIS) outlines the Australian Quarantine and Inspection Service's (AQIS's) proposal to amend fees in relation to Post Entry Animal Quarantine services from 7 August 2009.

This CRIS demonstrates the compliance of AQIS's cost recovery with the Australian Government's cost recovery policy set out in the Australian Government Cost Recovery Guidelines (2005).

Table of Contents

• Overview
• Policy Overview - Analysis of Activities
• Design and Implementation
• Ongoing Monitoring
• Certification
• Cost Recovery Links

1. Overview

1.1 Purpose

This Cost Recovery Impact Statement (CRIS) outlines the rationale for the proposed changes to the AQIS Post Entry Animal Quarantine (PEAQ) program fee schedule, to set fees for the remainder of the 2008/09 financial year through to the end of the 2010/11 financial year. It is anticipated that the new fees will be introduced in April 2009.

1.2 Background

The Australian Government Department of Agriculture, Fisheries and Forestry (the Department) is responsible for a wide range of issues including:

• Quarantine, export inspection and certification based on monitoring of food safety standards, which are essential for the maintenance of Australia’s highly favourable animal and plant health status, and support Australia’s position in global trade.

The role of the Department is to assist the Government to achieve its policy objectives and administer legislation in these areas by contributing to the following outcome identified in the Department’s Business Plan 2008 - 2009:

• Australian agricultural, fisheries, food and forestry industries that are based on sustainable management of and access to markets; are protected from diseases and are underpinned by scientific advice and economic research.

The Australian Quarantine and Inspection Service (AQIS) is an Output Group of the Department. AQIS contributes to the achievement of the Department’s Outcome by meeting the following Output objective:

• To protect Australia’s animal, plant and human health status and maintain market access through delivery of quarantine and export services.

AQIS provides the following performance information for the provision of effective quarantine services:

• quarantine intervention at the border;
• quarantine risk effectiveness at the border; and
• level of public awareness of AQIS quarantine services.

AQIS has a vital role in implementing and administering strict quarantine controls at Australia’s borders to minimise the risk of exotic pests and disease incursions. AQIS performs its role in consultation with industry and the community and responds to potential quarantine threats in order to maintain Australia’s animal, plant and human health status and protect Australia’s agricultural industries.

The primary function of PEAQ is to manage potential biosecurity risks associated with the importation of live animals prior to their release into the domestic population. To perform this function AQIS provides and maintains secure housing for imported animals requiring post arrival quarantine. PEAQ currently provides quarantine station services for importers of dogs, cats, hatching eggs, live birds, ruminants, bees and rabbits. However, please note that fees for bees and rabbits are not considered in this CRIS. A detailed explanation is outlined in section 3.4 below.

There are four AQIS operated animal quarantine stations within Australia:

• Eastern Creek Animal Quarantine Station (ECQS), New South Wales, catering for cats, dogs, horses, bees, ruminants and rabbits.
• Spotswood Animal Quarantine Station (SQS), Victoria, catering for cats, dogs, horses, avians and ruminants.
• Torrens Island Avian Quarantine Station (TIAQS), South Australia, catering for fertile eggs and;
• Byford Animal Quarantine Station (BQS), Western Australia, catering for cats and dogs.

AQIS, through the PEAQ program, charges daily fees that are consistent with the charging parameters outlined in Part 3 of the Quarantine Service Fees Determinations 2005. These fees recover the AQIS costs of providing services for the care and housing of animals undertaking post-arrival quarantine.

• As a result of the outbreak of Equine Influenza a fee review was delayed until the outcomes of the Commission of Inquiry into the outbreak of equine influenza were known. The PEAQ program had an accumulated deficit of $0.840m by the end of the 2007/08 financial year.
• Following the release of the Equine Influenza Inquiry Report in June 2008, a restructure was announced within AQIS that resulted in the establishment of the new Animal Quarantine Branch. This new Branch comprises the existing PEAQ Program, Live Animal Imports Program and a new program for horse imports. This new program was established to isolate all costs relating to horse import activity currently residing in PEAQ. As such a separate review of the fee structure applying to horse imports is also presently underway.
• Following the development of the 2008/09 budgets for PEAQ and the Horse Imports Program (HIP), analysis of expenses and revenue relating to the importation of horses including property, full time equivalent employees (FTE) and field expenses was completed. This process determined that $0.703m of the PEAQ accumulated deficit was related to horse import activity and therefore attributed to the HIP. This left the PEAQ program with an accumulated deficit of $0.136m. After the deficits were determined, cost modelling commenced in conjunction with AQIS Finance to determine the proposed fees for the PEAQ program.

1.3 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.

2. Policy Review - Analysis of Activities

Description of Activity

The cost model has been developed to measure the cost of revenue streams, not individual fees. The data from these revenue streams was used to determine the effectiveness of the current fee structure of PEAQ.

Following the mid-year review of the Post Entry Animal Quarantine program (PEAQ) budget in 2008/09, the projected revenue with the implementation of fees in April 2009 is $5.328m. Projected expenditure is $5.957m resulting is a full year deficit of $0.629m. The program supports approximately 40 full time equivalent employees (FTE). AQIS recovers over 90 per cent of the PEAQ program expenses through the charging of fee for service, with the remainder recovered through government funding of $0.350m allocated for anti-smuggling activities under a Community Service Obligation (CSO). The CSO is historical in nature and has been provided for many years. This funding is primarily allocated to the Spotswood Quarantine Station and the Torrens Island Avian Quarantine Station to offset the high costs of operating the live bird and hatching egg facilities at these locations. The daily accommodation rate is then reduced to facilitate the legal importation of these commodities and discourage importers from subverting the import process by smuggling the commodity into Australia.

The PEAQ program has three main commodity based activity streams:

Dogs and Cats

The majority of consignments (98 per cent) imported into AQIS quarantine stations are dogs and cats. Therefore the program is highly dependent on revenue generated from these imports. Whilst undertaking the cost modelling process it was apparent that there were a number of activities performed at the quarantine stations that were not cost recovered. Information relating to each additional activity was collected from relevant staff at the stations and factored into the model as a separate revenue item. These additional activities include:

• Additional feeding upon request
• Administering of medication
• Transport of animals to private veterinary clinics in the case of an emergency
• Return transport to the airport in the case of re-export
• Transport of samples to a laboratory for testing
• Destruction of abandoned transport crates
• Grooming of animals requiring additional attention.
• Staff overtime

Each of these items was then rolled into the daily accommodation charge. The rationale for developing a fee in this manner is outlined in the “AQIS Cost Recovery Policy”. This states that fees and charges will be set to recover the full costs of providing services to the relevant “user group”, while consideration must be given to the efficiency of the charging structure and revenue collection processes. Although there is additional effort in providing these additional services, the number of animals receiving them is minimal compared to the volume of animals imported. To minimise the administrative burden for staff, and provide a clear charging structure to clients making it easier for them to determine the costs of quarantine, the daily accommodation charge was determined.

The PEAQ program also provides transport from the airport to the nominated quarantine station (conveyance), housing, daily monitoring, sustenance and cleaning of facilities.

A separate additional animal charge for those animals of the same species sharing accommodation with another animal in the same consignment is applicable as the associated costs are reduced. If animals in the same consignment share accommodation there is less space used and less effort required by quarantine station staff for the cleaning of the facilities. By encouraging importers to accommodate their animals of the same species together where possible, it also allows more vacancies which in turn will reduce waiting periods and allow a greater number of animals to undertake quarantine at any one time.

Pregnant cats or dogs giving birth in quarantine is a very rare occurrence. The associated one off fee has increased significantly and takes into account the requirement for a dedicated staff member to monitor the animal before, during and after the birth, staff overtime, transport to veterinary treatment, administering of medication and cleaning of soiled bedding, equipment and facilities and the disposal of any associated quarantine waste.

Avians

Avian imports are comprised of two distinct service fees – live birds and fertile (hatching) bird eggs. Two highly technical facilities are provided at the Spotswood Quarantine Station in Victoria and the Torrens Island Avian Quarantine Station in South Australia. These facilities have been specially designed to prevent wild birds from roosting and contaminating the facility. They are temperature controlled with computer systems monitoring environmental factors within the facilities and sounding alerts if anomalies are detected. Pathogens for avians are airborne and highly virulent and infectious; as such the facilities operate in a bio-secured area under negative pressure and HEPA filtration. HEPA filters and airlocks are very costly and prevent micro-organisms escaping into the air. Although funding contributes to offset expenses related to maintenance, ongoing expenses such electricity and water, other property costs and FTEs, the high costs of operating these facilities necessitate the significantly increased daily accommodation fees in comparison to other commodities.

Housing is provided to facilitate the shared responsibility concept between AQIS and importers for the servicing of consignments. All expenses associated with the maintenance of the housing is the responsibility of AQIS.

Along with a booking fee paid 18 months in advance for fertile egg imports and 6 months in advance for live bird imports, a deposit paid in advance will also be required for avian consignments. This is to facilitate the use of the quarantine facilities for competing importers, due to the length of quarantine period for hatching eggs at the Torrens Island Quarantine Station and live birds at Spotswood Quarantine Station. It is proposed that for hatching eggs, this fee be equivalent to 25 days ($13,125) paid 6 months in advance of the consignment arrival date. It is proposed that for live birds the fee be equivalent to 7 days ($3,150) payable 1 month in advance of the consignment arrival date. These amounts will subsequently be taken off the final invoice.

Ruminants

Ruminant facilities are provided at the Spotswood and Eastern Creek Quarantine Stations. Expenses incurred for this commodity are in relation to the associated FTEs and property and accommodation expenses. With few imports of ruminant expected over the coming 3 year period, it is anticipated that the program will only be able to recover for 945 accommodation nights.

In line with charging recommendations arising from the Callinan Inquiry into the outbreak of Equine Influenza, the ruminant fee has been simplified to a per animal per night fee rather than charging a different rate for the first 25 animals in a consignment. Reference to this recommendation will be detailed in a separate CRIS for Horse Imports. There is also the inclusion of a booking fee to be paid 9 months in advance of the intended consignment arrival date.

Booking Fees

The policy rationale for a $1000 booking fee for the hatching egg, ruminant and live bird commodities is based on the staff costs associated with administering the booking process. Records need to be maintained, and in the case of hatching eggs these bookings are tentatively 10 years in advance. There is also considerable staff effort involved in the cancellation of a booking as extensive liaison between AQIS and all relevant importers is required to fill the vacancy. This process ensures fair access to the limited facilities for all commercial importers. The booking fee, unlike the deposit mentioned under ‘Avians’ and ‘Ruminant’, is not deducted from the final invoice.

The booking fee also indicates to AQIS the full intention of the importer to use the facility at the nominated time and is not just a way of limiting or eliminating the use of the facilities for a competitor.

Deposits

The deposit is to confirm the initial booking and in the case of hatching eggs, for which the relevant facility is fully booked until 2013 with tentative bookings until 2019, allows all importers to plan correctly for the continued genetic improvement of their stock. The hatching egg facility is in such high demand because a consignment is often held for up to 95 days with a 3-4 week process between consignments to clean, decontaminate, sterilise and undertake facility maintenance. These timeframes only allow approximately 3 consignments per year to pass through the facility. The deposit is deducted from the final invoice for all commodities. Timeframes and amounts are outlined in the relevant commodity description above.

Stakeholders

The majority of import permits issued for live animals are for dogs and cats. Most of these importers will import only once and as such there is no peak industry body to represent these individuals. For the purpose of this CRIS the program contacted the Pet Industry Association of Australia (PIAA) to seek comment on the proposed fee increase. To date PIAA has not provided a response.

The program also engaged the Torrens Island Stakeholder Group (TISG) which represents the fertile egg importers who utilise the Torrens Island Quarantine Station. Correspondence was sent to all members of this group outlining the proposed fees increase and seeking comment. A response was received stating the understanding for increased fees and a request for further consideration of the implementation date.

The Australian Alpaca Association (AAA) will be advised of the reduction and simplification of associated fees prior to implementation.

Conclusion

Expenses have increased significantly since the introduction of revised program fees in 2005. As a result the fees associated with the housing of imported live animals at AQIS quarantine stations need to be increased to fully recover the costs associated with the operation of these facilities.

Consistent with previous consultation between AQIS central office and regional staff, the Commission of Inquiry into the outbreak of equine influenza identified a critical under-resourcing issue within the PEAQ program. In order to mitigate the risks associated with the importation of live animals, strengthen the management of biosecurity measures and minimise the risks of further outbreaks of exotic diseases, the integration of lessons learnt from the inquiry across other species was required. Expected changes in business practices arising from the recommendations of the recent review of Quarantine and Biosecurity conducted by Roger Beale AO were also considered, although the detail of the changes is still being considered.

3. Design and Implementation

3.1 Basis of Charging – Fee or Levy

In accordance with the user pays principle applicable to cost recovery arrangements, clients who receive PEAQ program services are required to pay associated fees.

The cost recovery arrangements for the provision of program services include:

• the detention, maintenance and movement of animals housed at an AQIS operated quarantine stations;

This proposal is an adjustment to fees that are already imposed under the ‘user pays’ principle. In this way, the individual or business that is the recipient of the benefit of the service provided by the program directly pays for the service rather than levying charges across an industry sector or the industry as a whole.

3.2 Legal Requirements for the Imposition of Charges

Section 86E of the Act (Quarantine Act 1908) provides that the Minister may determine fees in respect of specified services provided under the Act. The current fees are set out in the Quarantine Service Fees Determinations 2005.

The legislation will be amended to:

• continue to underpin current and proposed program business practices;
• further clarify under what circumstances program services will be cost recovered;
• accommodate the proposed fee structure so that the program will be able to recover its costs.

3.3 Costs to be Included in Charges

AQIS seeks to meet the commitment to recover the Program’s direct and indirect costs associated with managing the quarantine risks in relation to the importation of live animals from AQIS Approved Countries in a manner that is fair and equitable to all importers.

There are three main expenses for the program: staffing, property and accommodation and corporate overhead expenses. Staffing costs comprise approximately 45 per cent of the program expenditure budget with property and accommodation comprising 23 per cent with overheads and costs associated with management programs comprising 12 per cent. The remaining 20 per cent includes expenses such as contract staff, technical and field expenses.

Staffing

Staffing costs are directly associated with the level of quarantine activity expected in each year. Each station manager will allocate FTEs, sufficient to deliver the service required for each animal species and takes into consideration factors such as the DAFF certified agreement and OH&S concerns. Overall the trend is for an increasing number of animal imports with a 20 per cent growth evident in cat and dog imports over the previous three years. Staffing allocations at the stations have not varied significantly over this time despite an increasing number of animal imports. However staffing costs have increased due to variations to employment conditions.

Property Maintenance

PEAQ is obliged to maintain the buildings on each station to a standard as specified in each lease. Financial resources are therefore required to meet the obligations contained within these agreements. Despite preventative maintenance programs property maintenance costs at the stations have increased due to a combination of the age of the stations and their regular use. Both the Spotswood Quarantine Station and Torrens Island Avian Quarantine Station attract a portion of the $350K anti smuggling subsidy to offset these costs.

Rent

The commercialisation of rents for the stations by the Department of Finance occurred in 1999/00, increasing the costs to the program. A rental subsidy was provided which gradually decreased from $301,000 in 99/00, to zero in the 2003/04 financial year. The program has been required to fund the full cost of leasing the four stations since 2003/04. An exception to the increased lease costs previously was TIAQS. The property was leased from the South Australian Government at a rate of $1 per year. This arrangement will cease on 30 June 2009 with market rent to be applied thereafter.

3.4 Outline of Charging Structure

The proposed amendments to the PEAQ fee structure allow for the simplification of charges providing ease of understanding for clients and staff alike.

There are three species groups that have been considered in the cost modelling process (dogs & cats, ruminants and avians). Each species group is considered a revenue stream and the suitability of the current fee structure assessed.

Charges for other species not considered in this fee review, outlined in the Quarantine Service Fees Determination 2005 Part 3 Animals, will remain the same. Those species have not been considered at this time given the number of consignments is minimal with no future imports currently expected. In the case of horse imports, a separate program was established with its own budget and a fee review has already commenced.

Following is a detailed breakdown of expenditure by revenue source, along with FTE numbers and assumptions for each financial year.

1 April 2009 – 30 June 2009

		Dogs/Cats	Avians	Ruminants
FTEs (average April 09 – June 09)	38.0	36.85	1.0	0.15
Employee Expenses		$880,800.66	$15,067.07	$5,076.73
Supplier Expenses		$696,963.00	$17,896.38	$208.00
Temporary & Contract Staff		$76,567.00
Travel and vehicles		$64,462.00	$9,126.00
IT Comms & Office Equip		$48,412.00	$526.48
Property & Accommodation		$350,733.00	$8,243.90
Technical & Field		$156,789.00
Other		$118,952.58	$2037.43	$208.00
Total Expenses	$1,737,021.85	$1,696,736.23	$35,000.89	$5,284.73
Revenue	$1,824,520.00	$1,778,625.00	$42,270.00	$3,625.00
Government funding	$87,500.00		$87,500.00
Surplus/deficit	$174,998.15	$81,888.77	$94,769.11	- $1,659.73

Assumptions:

• Expenses have been allocated based on expected usage of each expense type.
• Included in “Other” are expenses such as depreciation, overheads, general office supplies and legal. 

1 July 2009 – 30 June 2010

		Dogs/Cats	Avians	Ruminants
FTEs (full year average)	40	36.85	3.0	0.15
Employee Expenses		$3,529,851.10	$237,720.97	$10,602.10
Supplier Expenses		$1,873,570.52	$236,657.32	$1,000.00
Temporary & Contract Staff		$203,056.25
Travel and vehicles		$13,292.07	$283.39
IT Comms & Office Equip		$150,392.60	$13,629.29
Property & Accommodation		$1,194,497.17	$213,413.98
Technical & Field		$312,332.43	$9,330.66
Other		$1,001,084.60	$47,807.76
Total Expenses	$6,938,294.37	$6,404,506.23	$522,186.04	$11,602.10
Revenue	$7,283,420.00	$7,099,680.00	$172,240.00	$11,500.00
Government funding	$350,000.00		$350,000.00
Surplus/deficit	$695,125.63	$695,173.77	$53.96	- $102.10

Assumptions:

• Expenses have been allocated based on expected usage of each expense type;
• Staffing costs have been indexed at 4 per cent to take account of expected increases under the new Collective Agreement;
• Supplier expenses have been changed to take account of changes in usage. The rates for supplier expenses have been increased by 3.55 per cent, being the average of the ABS ‘all groups’ index for the past two financial years.
• Included in “Other” are expenses such as depreciation, overheads, general office supplies and legal.

1 July 2010 – 30 June 2011

		Dogs/Cats	Avians	Ruminants
FTEs (full year average)	40	36.85	3.0	0.15
Employee Expenses		$3,690,780.07	$249,921.29	$11,066.19
Supplier Expenses		$1,945,082.27	$245,058.64	$1,000.00
Temporary & Contract Staff		$210,264.74
Travel and vehicles		$18,763.94	$293.45
IT Comms & Office Equip		$155,731.54	$14,113.13
Property & Accommodation		$1,236,901.82	$220,990.17
Technical & Field		$323,420.23	$9,661.89
Other		$1,040,040.95	$49,720.24
Total Expenses	$7,232,669.65	$6,675,903.29	$544,700.18	$12,066.19
Revenue	$7,299,170.00	$7,099,680.00	$187,990.00	$11,500.00
Government funding	$350,000.00		$350,000.00
Surplus/deficit	$416,500.35	$423,776.71	- $6,710.18	- $566.19

Assumptions:

• Expenses have been allocated based on expected usage of each expense type;
• Staffing costs have been indexed at 4 per cent to take account of expected increases under the new Collective Agreement;
• Supplier expenses have been changed to take account of changes in usage. The rates for supplier expenses have been increased by 3.55 per cent, being the average of the ABS ‘all groups’ index for the past two financial years.
• Included in “Other” are expenses such as depreciation, overheads, general office supplies and legal.

Existing PEAQ Fees

Item Code	Category	Description	Unit	Charge
SQQ05	Conveyance	Transport of animal from airport to quarantine station during business hrs	Per consignment	$95
SQQ05A		Transport of animal from airport to quarantine station outside business hrs	Per consignment	$120
SQQ0C1A	Cats	First cat in a consignment	Per Day	$13.55
SQQ0C3A		For each additional cat sharing accommodation	Per Day	$10.55
SQQ0C2		A cat that bears kittens in quarantine	One off fee in addition to daily rate	$300
SQQ0D1A	Dogs	First dog in a consignment	Per Day	$17.55
SQQ0D6A		For each additional dog sharing accommodation	Per Day	$12.55
SQQ0D4		A bitch that bears pups in quarantine – up to 7 hrs supervision	One off fee in addition to daily rate	$400
SQQ0D4A		A bitch that bears pups in quarantine – for each additional hr of supervision	Hour	$19
SQQ0D5		For each pup	Per Day	$5
SQQPARA	Parasite Treatment	External parasite treatment for dogs and cats	Per Animal	Product Cost
SQQOVER	Stowage of Animals	Animals not removed. The same daily rate applies.	Per Day	$0
SQQ0B1	Avians	Live bird consignment	Per Day	$400
SQQ0B2A		Hatching egg consignment	Per Day	$472
SQQ08A	Ruminants	For up to 25 animals in a consignment	Per Day	$40
SQQ09A		For each additional animal in the consignment	Per Day	$4.00

3.5 Summary of Charging Arrangements

Schedule of Fees and Charges 2008-09

Activity	Method of Recovery	Volume of Activity	Current Price	Cost Recovery Price	Total Cost Recovered for Activity	Total Cost of Activity
Dogs & Cats
Daily Accommodation – First Cat	Fee Per Day	13,625 (Accom Nights)	N/A* (Note 1)	$29	$395,195
Daily Accommodation – Additional Cat	Fee Per Day	4,918 (Accom Nights)	N/A*	$23	$113,131
A cat that bears kittens in quarantine	One off fee in addition to daily rate	1 (litters)	$300	$1500	$1,500
Daily rate to care for a cat & kittens	Fee Per Day	10 (Accom Nights)	N/A*	$40	$400
Daily Accommodation – First Dog	Fee Per Day	27,605 (Accom Nights)	N/A*	$39	$1,076,595
Daily Accommodation – Additional Dog	Fee Per Day	5,753 (Accom Nights)	N/A*	$33	$189,873
A bitch that whelps in quarantine	One off fee in addition to daily rate	1 (litter)	$400	$1500	$1500
Daily rate to care for dogs with puppies	Fee Per Day	10 (Accom Nights)	N/A*	$50	$500
Dogs & Cats Sub Total					$1,778,625	$1,696,736
Avians
Live Birds – Daily Accommodation	Fee Per Day	35 (Accom Nights)	$400	$450	$15,750
Hatching Eggs – Daily Accommodation	Fee Per Day	40 (Accom Nights)	$475	$525	$21,000
Rent for Importer Housing	Fee Per Week	14 (weeks)	N/A*	$180	$2520
Booking Fee	Fee Per Consignment	3 (bookings)	N/A*	$1000	$3000
Avians Sub Total					$42,270	$35,000
Ruminants
Ruminants – Daily Accommodation	Fee Per Animal Per Day	105 (Accom Nights)	N/A*	$25	$2625
Booking Fee	Fee Per Consignment	1 (booking)	N/A*	$1000	$1000
Ruminants Sub Total					$3,625	$5,284
Government Funding	Per Year				$350,000
*Note 1 – All references to N/A are due to the fact that no current fee applies in an equivalent fee structure so no comparison can be provided.   Note 2 - This table represents data from the introduction of new fees from April 2009.   Note 3 – The total accumulated deficit includes the prior year deficit of $0.136m and the 2008-09 projected deficit.					Total new fee revenue (April - June)	$1,824,520 (Note 2)
					Total budget funded (April - June)	$87,500 (Note 2)
					Total Expenditure (April - June)	$1,737,020 (Note 2)
					2008/09 Surplus (April - June)	$175,000
					Deficit (July – March)	($804,000)
					Total Accumulated (Deficit)	($765,239) (Note 3)

 

Schedule of fees and charges 2009-10

Activity	Method of Recovery	Volume of Activity	Current Price	Cost Recovery Price	Total Cost Recovered for Activity	Total Cost of Activity
Dogs & Cats
Daily Accommodation – First Cat	Fee Per Day	54,380 (Accom Nights)	N/A* (Note 1)	$29	$1,577,020
Daily Accommodation – Additional Cat	Fee Per Day	19,765 (Accom Nights)	N/A*	$23	$454,595
A cat that bears kittens in quarantine	One off fee in addition to daily rate	1 (litter)	$300	$1500	$1500
Daily rate to care for a cat & kittens	Fee Per Day	19 (Accom Nights)	N/A*	$40	$400
Daily Accommodation – First Dog	Fee Per Day	110,300 (Accom Nights)	N/A*	$39	$4,301,700
Daily Accommodation – Additional Dog	Fee Per Day	23,105 (Accom Nights)	N/A*	$33	$762,465
A bitch that whelps in quarantine	One off fee in addition to daily rate	1 (litter)	$400	$1500	$1500
Daily rate to care for dogs with puppies	Fee Per Day	10 (Accom Nights)	N/A*	$50	$500
Dogs & Cats Sub Total					$7,099,680	$6,404,506
Avians
Live Birds – Daily Accommodation	Fee Per Day	70 (Accom Nights)	$400	$450	$31,500
Hatching Eggs – Daily Accommodation	Fee Per Day	240 (Accom Nights)	$475	$525	$126,000
Rent for Importer Housing	Fee Per Week	43 (weeks)	N/A*	$180	$7740
Booking Fee	Fee Per Consignment	7 (bookings)	N/A*	$1000	$7000
Avians Sub Total					$172,240	$522,186
Ruminants
Ruminants – Daily Accommodation	Fee Per Animal Per Day	420 (Accom Nights)	N/A*	$25	$10,500
Booking Fee	Fee Per Consignment	1 (booking)	N/A*	$1000	$1000
Ruminants Sub Total					$11,500	$11,602
Government Funding	Per Year				$350,000
*Note 1 – All references to N/A are due to the fact that no current fee applies in an equivalent fee structure so no comparison can be provided.					Total fee revenue	$7,283,420
					Total budget funded	$350,000
					Total Expenditure	$6,938,294
					2009/10 Surplus/(Deficit)	$695,126
					Total Accumulated (Deficit)	($67,113)

 

Schedule of Fees and Charges 2010-11

Activity	Method of Recovery	Volume of Activity	Current Price	Cost Recovery Price	Total Cost Recovered for Activity	Total Cost of Activity
Dogs & Cats
Daily Accommodation – First Cat	Fee Per Day	54,380 (Accom Nights)	N/A* (Note 1)	$29	$1,577,020
Daily Accommodation – Additional Cat	Fee Per Day	19,765 (Accom Nights)	N/A*	$23	$454,595
A cat that bears kittens in quarantine	One off fee in addition to daily rate	1 (litter)	$300	$1500	$1500
Daily rate to care for a cat & kittens	Fee Per Day	19 (Accom Nights)	N/A*	$40	$400
Daily Accommodation – First Dog	Fee Per Day	110,300 (Accom Nights)	N/A*	$39	$4,301,700
Daily Accommodation – Additional Dog	Fee Per Day	23,105 (Accom Nights)	N/A*	$33	$762,465
A bitch that whelps in quarantine	One off fee in addition to daily rate	1 (litter)	$400	$1500	$1500
Daily rate to care for dogs with puppies	Fee Per Day	10 (Accom Nights)	N/A*	$50	$500
Dogs & Cats Sub Total					$7,099,680	$6,675,903
Avians
Live Birds – Daily Accommodation	Fee Per Day	105 (Accom Nights)	$400	$450	$47,250
Hatching Eggs – Daily Accommodation	Fee Per Day	240 (Accom Nights)	$475	$525	$126,000
Rent for Importer Housing	Fee Per Week	43 (weeks)	N/A*	$180	$7740
Booking Fee	Fee Per Consignment	7 (bookings)	N/A*	$1000	$7000
Avians Sub Total					$187,990	$544,700
Ruminants
Ruminants – Daily Accommodation	Fee Per Animal Per Day	420 (Accom Nights)	N/A*	$25	$10,500
Booking Fee	Fee Per Consignment	1 (booking)	N/A*	$1000	$1000
Ruminants Sub Total					$11,500	$12,066
Government Funding	Per Year				$350,000
*Note 1 – All references to N/A are due to the fact that no current fee applies in an equivalent fee structure so no comparison can be provided.					Total fee revenue	$7,299,170
					Total budget funded	$350,000
					Total Expenditure	$7,232,669
					2010/11 Surplus/(Deficit)	$416,501
					Total IEA Balance	$349,388

Please note that predicted levels of activity have been based on historical figures. While demand is fairly predictable, through the cost modelling process an average was determined using figures from good and bad years for the importation of animals.

4. Ongoing Monitoring

4.1 Monitoring Mechanisms

To ensure transparency in the financial status of PEAQ cost recovery outcomes are reported monthly to the AQIS Finance Sub-Committee and the AQIS Executive Management Board.

The impact of the fee increase will be closely monitored on an ongoing basis and reported to these groups and the Torrens Island avian quarantine station consultative committee. If it becomes evident that there is likely to be a gap between revenue and expenditure of ten percent or greater due to a change in cost recovery levels, PEAQ will develop a strategy to either recoup the under recovery or return an over recovery to industry.

4.2 Stakeholder Consultation

The program will continue to engage the Torrens Island Stakeholder Group regarding issues affecting the Torrens Island Avian Quarantine Station.

Both the Alpaca Association of Australia and the Pet Industry Association of Australia will be consulted regarding matters affecting their respective industries as appropriate.

4.3 Periodic Review

Fees and charges are reviewed on a regular basis as part of routine governance arrangements within AQIS.

Historical figures on the amount recovered compared to the costs are outlined below.

	2006/2007	2007/2008	2008/2009 Year- end Projection
Total Revenue	$4,825,494	$4,861,431	$5,328,076
Total Expenditure	$4,927,675	$5,282,247	$5,957,415
Gross surplus/ (Deficit)	($102,181)	($666,815)	($629,339)
Accumulated Deficit	($172,523)	($839,338)*	($765,339)

*Following the outbreak of equine influenza and the creation of the Horse Imports program (HIP) $0.703m of this deficit was transferred to HIP leaving $0.136m attributed to the PEAQ program.

The principal purpose of the Industry Equalisation Account is to enable AQIS and industry to overcome unforeseen downturns in the recovery of expenditure within each industry over a period of years. This account is designed to reduce the need for constant changes to fee/charging levels to accommodate unforeseen and often uncontrollable circumstances.

The program should endeavour to manage the balance of such an account at between 2 percent and 10 percent of the annual expenditure for the program.

As a result of the outbreak of equine influenza the fee review was delayed pending the outcome of the Callinan Inquiry to gain a better understanding of expected costs.

Any change in fees and charges are underpinned by financial review. On the basis of present forecasts, a further formal fee review is planned for 2010 with implementation being 1 July 2011. In addition to this, the PEAQ program will continue to monitor performance against the budget on a monthly basis and report on its financial position through established governance processes such as the AQIS Finance Sub Committee (FSC).

5. Certification

I certify that this CRIS complies with the Commonwealth Cost Recovery Guidelines for Regulatory Agencies.

[signed]

Rob Delane
Executive Director
AQIS

Date: 20 April 2009

6. Cost Recovery Links

• The Australian Government Cost Recovery Guidelines and the accompanying Finance Circular.

• For proposals that involve regulation or amendment to regulation that affects business, a Regulation Impact Statement is required. Contact the Office of Best Practice Regulation for further information.