Thoroughbred R&D Levy Proposal A Discussion Paper

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1 1. Introduction: Thoroughbred Breeders Australia (TBA) is proposing a statutory levy to be paid by all Thoroughbred broodmare and stallion owners registered with the Australian Stud Book (ASB), with the aim of providing a more secure and sustainable funding base for Research, Development and Extension (R,D&E) work for the Thoroughbred Industry. TBA considers an R&D Levy 1 to be the most equitable way of sharing the costs and the benefits of such work, following a decision by the Rural Industries Research and Development Corporation (RIRDC) to phase out its long standing financial contribution to the Horse Program. In summary, the proposed statutory Thoroughbred R&D Levy package is to compulsorily collect: A charge of $10 per mare covered per season and paid by the stallion owner, and A charge of $10 per mare returned per season and paid by the broodmare owner. TBA is now inviting all Thoroughbred broodmare and stallion owners to consider and comment on this R&D Levy proposal that will underpin the implementation of a new Thoroughbred R,D&E Program. This program will be based on the current Horse RD&E Plan , released in 2011 by RIRDC following extensive consultation with industry stakeholders, including Thoroughbred breeders. Thoroughbred breeders will also have the opportunity to attend seminars (levy information sessions) scheduled across Australia during May and June this year, at which the proposed statutory levy will be presented for discussion. Industry consultation on the proposal will conclude with a ballot to be undertaken by the Australian Electoral Commission (AEC) in July If the proposed statutory R&D levy is supported by Thoroughbred breeders, and subsequently approved by the Australian Government, the levy will be payable by Thoroughbred broodmare and stallion owners. The levy would be compulsorily collected by the ASB on all registered broodmare returns and coverings commencing 1st August 2014, or a date otherwise approved by the Federal Minister for Agriculture, Fisheries and Forestry (The Minister). All levy funds collected by the ASB from the levy commencement date will be remitted at the end of August 2015 and annually thereafter to the Department of Agriculture, Fisheries and Forestry (DAFF), who will oversee the levy collection process. Levy funds will then be transferred to RIRDC for investment in approved R,D&E projects. DAFF will recover its levy administration costs from RIRDC, who can use levy funds for this purpose. The Australian Government matches eligible R&D up to an approved funding level. Thoroughbred R&D Levy Proposal A Discussion Paper Further information and updates on the Thoroughbred R&D Levy proposal can be found on the TBA website In This Discussion Paper: Contents: 1. Introduction 2. In this discussion paper (contents) 3. How to respond 4. Industry consultation program 5. Funding Thoroughbred Industry Needs 6. Why a statutory R&D levy? 7. Current horse program objectives, priorities and goals 8. Review of the horse R,D&E program 9. Indicative Thoroughbred R,D&E plan budget 10. Thoroughbred program advisory committee 11. Industry snapshot 12. Levy management 13. Levy ballot arrangements and voter eligibility 14. Levy approval & implementation 15. Some frequently asked questions (faq) 16. Further information and contacts Included with this discussion paper are: An introductory letter from the President and CEO of Thoroughbred Breeders Australia. Attachment 1: Regional seminar program schedule (levy information sessions). Attachment 2: Submission response form, including a review of the Thoroughbred RD&E Plan. (This Attachment will assist the reader to provide written answers to questions and issues presented throughout this discussion paper.) RIRDC Thoroughbred research summary. 3. How to Respond: Your opinions are valued. All Thoroughbred breeding industry stakeholders are encouraged to make written submissions on the issues raised in this discussion paper either by post, fax or . Please address all levy submissions and enquiries to: Thoroughbred R&D Levy Proposal Tel: , Fax: levy@tbaus.com Web: Postal Address: Locked Bag 3, RANDWICK NSW 2031 Submissions on the statutory Thoroughbred R&D Levy proposal must be received no later than 4.00 pm on Friday 21 June A submission response form (Attachment 2) is provided with this discussion paper and can be downloaded from the TBA website. Note: All submissions received will also be included in TBA s levy submission to the Australian Government. 1 Note: Australian Government levies legislation refer only to research and development (R&D), whereas RIRDC prefers to use the term research, development and extension (R,D&E). 2 TBA website: Thoroughbred R&D Levy Proposal Page 1 pg 01 pg 01 pg 01 pg 02 pg 02 pg 03 pg 04 pg 06 pg 06 pg 07 pg 07 pg 09 pg 10 pg 10 pg 10 pg 11

2 At the conclusion of the regional consultation meetings, all registered Thoroughbred breeders will be provided with an update report covering the issues raised, and to advise stakeholders on arrangements for the levy ballot to be undertaken by the Australian Electoral Commission in July. 4. Industry Consultation Program: McFarlane Strategic Services is a consultancy specialising in industry levies and stakeholder consultation. It has been appointed by RIRDC to assist TBA prepare the Thoroughbred R&D Levy proposal, and to undertake a broad industry consultation with stakeholders in accordance with the requirements of the Australian Government s Levy Principles and Guidelines (January 2009) 3. Seminars (levy information sessions) are scheduled to be held across Australia during May and June 2013, providing all potential levy payers with a first-hand opportunity to ask questions and learn more about the Thoroughbred R&D Levy proposal. The specific dates, times and venues for these open seminars, which are hosted by State Thoroughbred Associations are detailed in Attachment 1. Additional information sessions can be arranged as required to ensure that all industry participants have ample opportunity to consider the levy proposal and to have their say. Seminars are open to all, as the proposed statutory R&D Levy will become payable by all registered Thoroughbred breeders. This levy discussion paper provides essential background to the seminar program, and is being widely distributed by direct mail to all registered Thoroughbred breeders, as well as to other interested industry stakeholders through distribution lists. Please feel free to circulate this document through your networks to assist in its wider distribution. Q1: Do you have any comments on the proposed industry consultation program? Please refer to Attachment 2: Thoroughbred Levy Feedback Form, where you are able to record your responses to the questions raised in this discussion paper. 5. Funding Thoroughbred Industry Needs: In this discussion paper we present the case for a statutory R&D levy for the Australian Thoroughbred Industry, to provide adequate and reliable funding to implement a new Thoroughbred R,D&E Plan, based on the current RIRDC Horse R,D&E Plan The current Horse Plan is the fourth five-year plan, released in 2011 by RIRDC following extensive consultation with industry stakeholders, including Thoroughbred breeders. The current plan builds on previous plans with a focus on the areas of Research, Development and Extension activities that are of greatest potential value to Australia s horse industry and where there are capabilities to provide high quality RD&E projects. The return on industry investment in the Horse R,D&E Program is demonstrated through the following study commissioned by RIRDC: The RIRDC Project No. PRJ : Economic Evaluation of Investment in the Horse RD&E Program This RIRDC report presents the results of economic analyses of three clusters of investments within the Horse R,D&E Program, that totalled $1.07 million (present value terms) and produced aggregate total benefits of $3.85 million (present value terms). The Horse R,D&E Program share of the total investment was 38%. The analyses found all three investments provided positive returns with Benefit-Cost Ratios ranging from 1.8 to 6.2. (RIRDC publication No ) 5 RIRDC has provided an overview statement and a list of publications available for purchase or free download for the RIRDC Horse R,D&E Program as an attachment to this discussion paper. Since 1995 TBA has developed an excellent working relationship with RIRDC and is therefore recommending that the Thoroughbred R,D&E Program continue to be administered through RIRDC. 3 The Australian Government s Levy Principles and Guidelines (January 2009): data/assets/pdf_file/0003/253353/levy-principles-guidelines.pdf 4 Horse R,D&E Plan (RIRDC July 2011): Thoroughbred R&D Levy Proposal Page 2

3 For the current five-year plan, RIRDC announced its decision to phase out its core funding contributions to the Horse Program, which will end on 30 June This means the Horse R,D&E Program budget for the 2013/14 financial year is totally dependent on continuing voluntary industry contributions from the Thoroughbred breeding and racing sectors, and is likely to fall below $300,000 per annum. Previous R&D planning workshops have identified the need for an annual Horse Program budget of $1 million, highlighting the fact that current funding arrangements are insufficient. For this reason, TBA believes it has become necessary for the Thoroughbred Industry breeding sector to support the proposed move to implement a statutory R&D Levy (which WILL be matched dollar for dollar by the Australian Government up to an approved funding limit) in order to adequately support the industry s vital R,D&E program. Q2: Do you have any comments on the future funding of the Thoroughbred R,D&E Program? 6. Why a Statutory R&D Levy? TBA believes a statutory (compulsory) production based levy mechanism is a cost-effective method of collecting the necessary funds to deliver industry benefits through R,D&E projects aimed at solving pressing industry problems. In contrast to current voluntary funding arrangements, all Thoroughbred breeders will contribute equitably under the proposed statutory levy scheme based on their level of participation within the Thoroughbred breeding industry. Statutory industry levies are considered by Government to be most appropriate where market failure exists, that is where the benefits of collective action and co-operative behaviour cannot be met by individuals. Currently, Thoroughbred R,D&E activity is increasingly limited, sporadic, and undertaken or funded by a dedicated few. Many of the issues that currently limit the development and profitability of the Australian Thoroughbred Industry are common to all breeders, but expensive to deal with as individual business entities. It is also important for the competitiveness of the industry that all breeders have access to up-to-date R,D&E outcomes so that they can maintain adequate standards and follow proper procedures that enhance the reputation and sustainability of the whole industry. The Australian Thoroughbred industry remains one of the few primary industries of significance that does not have a statutory levy to fund essential research projects. In summary, the proposed statutory Thoroughbred R&D Levy package is to compulsorily collect: A charge of $10 per mare covered per season and paid by the stallion owner, and A charge of $10 per mare returned per season and paid by the broodmare owner. If supported by Thoroughbred breeders, and subsequently approved by the Australian Government, the proposed statutory R&D levy will be payable by Thoroughbred broodmare and stallion owners, to be compulsorily collected by the Australian Stud Book (ASB) on all registered broodmare returns and coverings commencing 1st August 2014, or as otherwise approved by The Minister. A statutory R&D Levy will place the Thoroughbred R,D&E Program s funding on a more secure footing than previously existed, with the added benefit of attracting Australian Government matching funds. Q3: Do you have any comments on the need for a statutory Thoroughbred R&D Levy? Thoroughbred R&D Levy Proposal Page 3

4 7. Current Horse Program Objectives, Priorities & Goals: The current Horse R,D&E Plan identifies five Objectives: 1. Reduce the incidence and impact of diseases and parasites in horses. 2. Reduce injury and breakdown of horses in work and training. 3. Improve breeding outcomes and foal health and development. 4. Improve the safety of industry participants and the welfare of horses, and enhance the environmental sustainability of the industry. 5. Promote education and training for the horse industry through opportunities for training researchers and by effective communication of RD&E to horse industry stakeholders. The following are a few examples of previous work undertaken within each of the five Objectives in the current Horse R,D&E Plan: Objective 1: Reduce the incidence and impact of diseases & parasites in horses This Objective has three Priority areas: Diseases of horses that impact horse health or performance. Diseases of horses that impact human health. Parasite resistance & parasite related conditions. With the following project examples: Research in Progress : Horse and Hendra RIRDC Completed Projects and Research in Progress at June 2012 contains short summaries of projects funded by the Program. RIRDC is also the managing agent for a number of projects funded under the National Hendra Virus Research Program. The Horse Program aims for the horse industry to be nationally and internationally recognised for its excellence as a reputable user and supplier of quality horses, products and services, and for the industry to expand in the global market by having the requisite skills and knowledge for efficient, profitable and sustainable production. (RIRDC publication No ) 6 PRJ : - The 2007 Equine Influenza Outbreak: The 2007 outbreak of equine influenza caused substantial hardships to the horse industry as the disease spread to large geographic areas infecting over horses on around premises in Australia. The disease was eradicated within five months by an extensive disease control program implemented by the State and Federal animal health authorities Thoroughbred R&D Levy Proposal This report presents the results of investigations on the mechanisms of disease spread, the role of meteorological factors and biosecurity practices in facilitating/halting the spread and the perceptions of horse owners/managers about effectiveness of biosecurity practices and about management of the disease. (RIRDC publication No )7 Further research in progress for this objective includes: PRJ : Respiratory disease and biomarkers in the foal: (Research Project Details) 8 PRJ : What role does rotavirus play in equine diarrhea in Australian horses? (Research Project Details) 9 PRJ : An adenoviral vector vaccine against Rhodococcus equi: (Research Project Details) 10 PRJ : Virus and horse specific risk factors for EHVI neurological disease. (Research Project Details) 11 Objective 2: Reduce injury & breakdown in horses at work and training This Objective has two Priority areas: Conditions with serious impacts on horse health or performance. Improved methods for measurement of forces operating on musculoskeletal structures. With the following project examples: PRJ : Bone repair in thoroughbred racehorses: effects of training and rest: (Research Project Details) 12 PRJ : Developing training programs to prevent injury in young racehorses: (Research Project Details) 13 PRJ : Finite element analysis modelling of third metacarpal bone invivo stresses: (Research Project Details) 14 Objective 3: Improved breeding outcomes and foal health & development This Objective has one Priority area: Conditions that have serious adverse impacts at horse and population levels. With the following 2 project examples: PRJ Treatment of placentitis in Thoroughbred mares: efficacy of altrenogest: Placentitis is a significant cause of preterm labour in mares and results in premature delivery of dead or weak, severely compromised foals that require expensive intensive care to survive. As a result of this project, mares with a high probability of a poor pregnancy outcome can now be reliably identified and rational cost effective treatment choices can be made. (RIRDC publication No ) Page 4

5 Objective 4: Improve the safety of industry participants & the welfare of horses, and enhance the environmental sustainability of the industry This Objective has one Priority area: Priority conditions or events that impact health, welfare or the environment. With the following project example: RIRDC Equine Research News includes topical articles and summaries on current research. This publication is available as a free subscription either in print or electronic formats - to subscribe: Further information on the current RIRDC Horse R,D&E Program can be found on the RIRDC website. 19 Q4: Do you have any comments on the current R,D&E objectives, priorities and goals? In this RIRDC project, a new formulation of the steroidal anaesthetic drug alfaxalone was investigated in horses, both neonatal foals and adult horses. (RIRDC publication No ) 17 Objective 5: PRJ Using Alfaxalone as an anaesthetic in horses: potential for improved safety for horses and handlers: Anaesthesia in horses is inherently risky because of their anatomical and physiological makeup. In addition, horses by nature tend to panic if frightened, leading to injuries. Deaths an esthesia for routine procedures are more common than in other domestic animals. The most common causes are cardiopulmonary disturbances and injuries sustained in induction of and recovery from anaesthesia. Thus research continues into the development of new drugs and regimens aimed at improving outcomes. Promote education and training for the horse industry through opportunities for training researchers and by effective communication of RD&E to horse industry stakeholders. This Objective has three Priority areas: Dissemination and application/uptake of R&D outputs. Encourage involvement of individuals and organisations in RD&E. Improve long term security of RD&E funding for the Horse Program. With the following project example: PRJ Production, publication and distribution of Equine Research News: Promoting education and training for the horse industry through opportunities for training researchers and by effective communication of RD&E to horse industry stakeholders RIRDC Horse Program: Thoroughbred R&D Levy Proposal Page 5

6 8. Review of the Horse R,D&E Program: With the proposed statutory Thoroughbred R&D Levy, and assuming voluntary contributions to the Thoroughbred RD&E Program also continue, it is important that the Thoroughbred breeding and racing sectors identify their priority expenditure areas within a new Plan. TBA will ensure that annual stakeholder input will contribute to identifying priorities for research, development and extension activities, and ensure the program continues to address topical issues of importance for the Thoroughbred breeding and racing sectors. With the assistance of RIRDC a review of Horse Program Objectives, Priorities and Goals will be undertaken in conjunction with consultation on the proposed statutory levy. A New R&D Objective? Program planning, economic benefit studies and market research It is suggested that the Thoroughbred R,D&E Program needs to include industry planning activities, economic benefit studies, and market research for both the domestic and export markets. What do you think? Please refer to Attachment 2: Thoroughbred Levy Feedback Form, which invites stakeholders to provide further input to the Review of the RD&E Plan. Q5a: Are there any other R,D&E needs you think the Thoroughbred R,D&E Advisory Committee should consider when allocating R&D funds? If so, please list any additional Objectives (including Priorities and Goals if possible): Q5b: Thinking about the many Objectives, Priorities and Goals listed above, which (including those you may have suggested) do you believe are the three most important Goals for the Thoroughbred Industry: 9.Indicative Thoroughbred RD&E Program Budget: The following indicative budget projections are derived from the Horse R,D&E Plan adjusted to reflect Thoroughbred Industry priorities for expenditure. Based on ASB data, the proposed statutory Thoroughbred R&D Levy is expected to raise around $400,000 per annum. Whilst voluntary contributions from industry have historically been around $300,000 per annum, there is no forward commitment by contributors to continue voluntary payment at this level. To achieve the target $1 million per annum Thoroughbred R,D&E investment fund, would require levy funds plus ongoing voluntary contributions from the Thoroughbred Industry of around $150,000 per annum, together with matching Australian Government financial contributions on eligible project expenditure as summarised in Table 1: Thoroughbred Levy & Voluntary Contributions RD&E program budget Levy Approval YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 5 Year Total 2013/ / / / / / /20 REVENUE Voluntary Industry Contributions (ARB/RISA) $ 250,000 $ 250,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 750,000 Thoroughbred R&D Levy (nett of collection costs) $ - $ - $ 383,800 $ 408,780 $ 396,160 $ 383,920 $ 371,000 $ 1,943,660 RIRDC Contribution (ended 30/6/2013) $ - $ - $ - $ - $ - $ - $ - $ - Australian Government matching funds $ - $ 250,000 $ 467,075 $ 488,933 $ 477,890 $ 467,180 $ 455,875 $ 2,356,953 Total Revenue $ 250,000 $ 500,000 $ 1,000,875 $ 1,047,713 $ 1,024,050 $ 1,001,100 $ 976,875 $ 5,050,613 EXPENDITURE VC Only VC Only YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 5 Year Total 2013/ / / / / / /20 Objective 1: Reduced Diseases & Parasites $ 50,000 $ 100,000 $ 116,769 $ 122,233 $ 119,473 $ 116,795 $ 113,969 $ 589,238 Objective 2: Reduced Injury & Breakdown $ 50,000 $ 100,000 $ 116,769 $ 122,233 $ 119,473 $ 116,795 $ 113,969 $ 589,238 Objective 3: Improved breeding outcomes $ 25,000 $ 50,000 $ 280,245 $ 293,360 $ 286,734 $ 280,308 $ 273,525 $ 1,414,172 Objective 4: Improved Welfare, Safety & Environmental Sust $ 50,000 $ 100,000 $ 93,415 $ 97,787 $ 95,578 $ 93,436 $ 91,175 $ 471,391 Objective 5: Education, Training & Communications $ 25,000 $ 50,000 $ 93,415 $ 97,787 $ 95,578 $ 93,436 $ 91,175 $ 471,391 New Objective: Planning, Economic & Market Research $ - $ - $ 140,123 $ 146,680 $ 143,367 $ 140,154 $ 136,763 $ 707,086 RIRDC Program Management $ 50,000 $ 100,000 $ 93,415 $ 97,787 $ 95,578 $ 93,436 $ 91,175 $ 471,391 Reserve Funds (unmatched) 12.5% $ 66,725 $ 69,848 $ 68,270 $ 66,740 $ 65,125 $ 336,708 Total Program Expenditure $ 250,000 $ 500,000 $ 934,150 $ 977,865 $ 955,780 $ 934,360 $ 911,750 $ 4,713,905 Including Reserves $ 5,050,613 Table 1: Indicative Thoroughbred RD&E Program budget over 5 years from 2014/15 Less LRS costs - $ 50,000 - $ 12,000 - $ 12,000 - $ 12,000 - $ 12,000 Decline in levy funds collected Thoroughbred R&D Levy Proposal Page 6

7 Budget Notes: Note 1: TBA will be seeking Australian Government matching funding to apply to eligible R,D&E program expenditure, using Thoroughbred R&D Levy funds and voluntary contributions (subject to required legislative changes being approved), from the operative date of the levy (proposed for 1 August 2014). Note 2: DAFF is yet to provide an estimate of levy administration costs, which will be recovered from levy funds held by RIRDC. Note 3: Levy funds collected during the 2014/15 breeding season will not be available for expenditure until the 2015/16 year. Note 4: In line with a projected decline of 12% in broodmare returns and coverings over the 5 year period, projected levy income is estimated to decline by 3% per annum during this period. Note 5: It is suggested that 12.5% of industry funds be set aside in each year for up to 5 years to generate a contingency reserve fund. Note 6: The split of expenditure between the suggested 6 program Objectives in Table 1 is flexible and able to be changed annually in accordance with industry circumstances at that time. Note 7: RIRDC is implementing full program cost recovery which is around 10% of total program funds, in line with other Research & Development Corporations. Q6: Do you have any comments on the indicative Thoroughbred RD&E plan budget? 10. Thoroughbred Program Advisory Committee The RIRDC management model uses predominantly industry based Advisory Committees to make recommendations on the investment of available funds, and is proven to be successful with the industries it manages. RIRDC will disband the current Horse R,D&E Advisory Committee and call for nominations from TBA, ARB and RIRDC to form a new Thoroughbred Program Advisory Committee when the levy has been put in place. 11. Industry Snapshot: The Australian Thoroughbred breeding industry supplies weanlings, yearlings, 2 year olds, and broodmares to Thoroughbred sales and supports a vibrant Australian racing industry, which according to the Australian Racing Board (ARB) 2011/12 20 data has 12,872 Thoroughbreds registered to race in Australia. According to Australian Stud Book (ASB) 2011/12 data, the Australian Thoroughbred breeding industry comprises 24,633 registered broodmares, 765 registered stallions, owned by a total of 7,500 breeders. In the same period there were 22,275 mares covered, producing 15,540 live foals. In 2010/11 there were 7,744 Thoroughbreds (mostly yearlings) sold at auction with a total value of $317 million. Australia also exports around 1,500 to 2,000 Thoroughbreds each year, and imports around 900. The structure of the industry is diverse, with some 80% of Thoroughbred breeders owning three or less broodmares comprising a total of 40% of the national herd. The largest individual breeders have more than 200 broodmares. As detailed in Table 23 (Figure 1) below, NSW is the largest breeding state with 37% of broodmares, followed by Vic with 23%, QLD 19%, WA 12%, SA 5%, Tas 2%, and ACT and NT <1%. NSW also leads the field with 46% of the coverings and producing 43% of the live foals, as well as having the highest number of live foals to mares returned (73%), and the highest average book per stallion (43). Whilst the data in Chart 4 (Figure 2) below indicates a contraction of the Thoroughbred Industry of around 40% over the past 20 years, the percentage of live foals to mares returned has actually improved from around 50% to over 60% during the same period, as a consequence of the R&D program to increased breeding outcomes, meaning Thoroughbred breeders are continuing to meet the demands of the racing sector. However the data does have implications for levy collection, with a projected decline in levy collection in line with registered returns and coverings of 3% per annum. The Advisory Committee will consider all project applications received against the R,D&E Plan Objectives, Priorities and Goals, and make recommendations to the Board of RIRDC on future program expenditure. As part of its accountability, RIRDC publishes Research in Progress reports in May/June of each year, and presents an Annual Report later in the year that will show how the levy has been used and the forward expenditure plans for the coming year. Q7: Do you have any comments on the proposed Thoroughbred RD&E Advisory Committee arrangements? /12 Australian Racing Fact Book: Thoroughbred R&D Levy Proposal Page 7

8 Table 23. Breeding Distribution by State 2011/12 NSW VIC QLD WA SA TAS ACT NT Total Stallions % of total 32% 25% 24% 11% 5% 3% 0% 0% 100% Broodmares 9,183 5,771 4,774 2,920 1, ,633 % of total 37% 23% 19% 12% 5% 2% 1% 0% 100% Mares Covered 10,325 5,302 3,463 2, ,275 % of total 46% 24% 16% 10% 3% 2% 0% 0% 100% Foals 6,665 3,603 2,691 1, ,540 % of total 43% 23% 17% 11% 4% 2% 0% 0% 100% Live Foals to Mares Returned Average Book per Stallion 73% 62% 56% 57% 48% 54% 8% 3% 63% Source: Australian Stud Book Please note: All figures are correct as of 31 July Figure 1: 2011/12 Australian Racing Fact Book (page 31) Chart 4. Breeding Trends stallions returned Mares returned live Foals / / / / / / / / / / / / / / / / / / / / /12 30 Figure 2: 2011/12 Australian Racing Fact Book (page 30) Q8: Do you have any comments on future trends for the Australian Thoroughbred Industry? Thoroughbred R&D Levy Proposal Page 8

9 12. Levy Managment: Levy Management & Accountability Australian Thoroughbred Industry Thoroughbred Breeders (Levy Payers) $ s Australian Stud Book (Collection Agent) $ s R&D Fund Management & Accountability Matched $ s Industry Representative Body Levy Collection and Compliance RIRDC RIRDC Thoroughbred RD&E Advisory Committee Management of Thoroughbred R,D&E Projects Thoroughbred RD&E Plan Figure 3: Levy collection, management & accountability The levy collection service is located within DAFF and is the responsible entity for administering levies including, levy collection compliance, and disbursing industry levies to the relevant agencies. Under the proposed statutory Thoroughbred R&D Levy collection model, The Australian Stud Book (ASB) will be required by law to collect the proposed levy on all broodmare returns, and coverings commencing 1st August 2014, or a date as otherwise approved by The Minister. All levy funds collected by the ASB from the operative date of the levy, will be remitted by the end of August each year to DAFF. Levy funds are then transferred to RIRDC for investment in approved Thoroughbred R&D projects, and will attract matching funds from the Australian Government. DAFF will recover its levy administration costs from RIRDC, who can use levy funds for this purpose. DAFF collection and administration costs are based on full cost recovery of including set-up costs, annual collection costs, and levy compliance costs. It is not proposed to have an upper limit (cap) on the total contribution paid by an individual Thoroughbred breeder. Benefits from the contributions paid are considered to be commensurate with the industry holding (i.e. the greater the number of broodmares and stallions owned the greater benefit of the levy to the breeder). Similarly it is not proposed to exempt any minimum (threshold) contribution by an individual Thoroughbred breeder from the scheme. Q9: Do you have any comments on the proposed levy collection arrangements and costs including the no cap and no threshold provisions? Thoroughbred R&D Levy Proposal Page 9

10 13. Levy Ballot Arrangements & Voter Eligibility The levy consultation process will conclude with a ballot of all eligible voters to be undertaken by the Australian Electoral Commission (AEC) during July following the conclusion of the regional seminars have been completed. An eligible voter is a person or entity that is registered with the Australian Stud Book (ASB) as the contact breeder who is responsible for submitting a Thoroughbred broodmare return or stallion return on behalf of the horses owner or owners. Voting rights will be allocated to broodmare contact breeders on the basis of one vote per broodmare return, and to stallion contact breeders on the basis of one vote per mare covered. The ballot paper will involve a simple yes or no response to the following question: Do you support the following statutory Thoroughbred R&D Levy package? A charge of $10 per mare covered per season and paid by the stallion owner, and A charge of $10 per mare returned per season and paid by the broodmare owner. YES The levy Principles and Guidelines require the majority (50% plus 1) of those eligible Thoroughbred breeders who are registered to vote, and who return completed voting papers must support the levy proposal for it to pass and be eligible for government consideration. NO Q10: Do you have any comments on the proposed voter eligibility, voting entitlement and levy ballot provisions? 14. Levy Approval & Implementation: Following the levy ballot (proposed for July 2013), TBA is required to submit to the Minister for Agriculture, Fisheries and Forestry, a formal proposal detailing the consultation undertaken with industry stakeholders, any submissions received and the voting outcome. Formal objections to the levy proposal will then be invited by The Minister, Parliamentary Secretary or department within six weeks of the date of formal lodgement of the levy proposal. DAFF will then assess the levy proposal and supporting documentation against the Levy Principles and Guidelines, and will provide a formal recommendation to the Minister. The levy proposal needs to be approved by the Prime Minister, Treasurer and Minister for Finance and Deregulation. Should the levy proposal be approved, the Australian Government will draft the required legislation to implement the agreed levy. The target levy commencement date is 1 August 2014, in time for the commencement of the Thoroughbred breeding season. All levy funds collected by the ASB from the operative date of the levy will be remitted at the end of August 2015 and annually thereafter to DAFF. Levy funds are paid to RIRDC for investment in approved Thoroughbred R&D projects, together with matching funds allocated by the Australian Government. 15. Some Frequently Asked Questions (FAQ) FAQ: Are all Thoroughbred breeders required to pay the statutory R&D levy? A: Yes. DAFF has the power to audit any levy collection point and or levy payers for compliance, and has the power to prosecute and collect funds from those in arrears or who have avoided payment of a statutory levy. FAQ: By paying the statutory R&D Levy does the breeder become a member of TBA? A: No, to be a TBA member, industry participants must apply to TBA to become an associate member for which there are no membership-joining fees. FAQ: Are statutory levies subject to GST? A: No. FAQ: How do levy payers know how much levy they are paying? Thoroughbred breeders when registering broodmares or coverings will be issued a Tax Invoice by the Australian Stud Book detailing any registration fees and the amount of the levy to be remitted to LRS. Note: Only the levy payers, the Australian Stud Book and DAFF will know how much levy is paid. No individual financial details may be divulged to TBA, State Branches, or to other State or Australian Government departments. FAQ: Who decides how levy funds are expended? A: The Horse RD&E Plan has previously set the priorities for RD&E expenditure, prepared following extensive industry consultation. Thoroughbred Breeders (levy payers) will have a further opportunity to provide input to the Plan through the R&D Priority Review process to be undertaken in conjunction with consultation on the proposed levy. Industry representatives will also be nominated to serve on RIRDC s Thoroughbred Industry RD&E Advisory Committee. The Committee will consider all project applications received against the Plan s priorities. FAQ: Will the levy be increased in the future? A: Statutory levies can only be varied up or down through another comprehensive industry consultation and ballot process. There is no proposal to increase the Thoroughbred R&D Levy beyond the proposed $10.00 per broodmare return to be paid by the broodmare owner, and $10 per covering to be paid by the stallion owner. Q12: Do you have any additional comments or questions on the Thoroughbred levy proposal? Q11: Do you have any comments on the levy approval process? 21 Levies Explained (DAFF): Thoroughbred R&D Levy Proposal Page 10

11 16. Further information and contacts Further general information on statutory levies is available on the DAFF website: Levies Explained 21 : All details, and updates on the Thoroughbred R&D Levy and consultation process, including the seminar program and levy ballot arrangements will be posted on the TBA website: Industry stakeholders are encouraged to contact the following industry representatives and research contacts to discuss the proposed levy and related matters: TBA Directors and Staff: TBA President & Director, New South Wales Name: Trevor Lobb Mobile: tlobb@emiratespark.com.au TBA Director, New South Wales Name: Derek Field Mobile: derek@widden.com TBA Director, Queensland Name: Basil Nolan Mobile: raheenstud@bigpond.com TBA Director, Western Australia Name: Gray Williamson Mobile: mail@mungrupstud.com.au TBA Director, South Australia Name: Chris Watson Mobile: millparkstud@internode.on.net TBA Director, Tasmania Name: David Adams Mobile: info@ausfruit.com.au TBA Vice-President & Director, Victoria Name: Tim Johnson Mobile: ealingpark1@bigpond.com TBA Director, Aushorse Name: Ken Barry Mobile: kdbarry@bigpond.com TBA Executive Officer Name: James Peters Mobile: tbaus@hinet.net.au TBA Chief Executive Officer Name: Chauncey Morris Mobile: chauncey@tbaus.com TBA Treasurer Name: Adam Tims, (Stable Financial Pty Ltd) Mobile: Atims@stablefinancial.com.au TBA Director, Queensland Name: Jeffrey Kruger Mobile: jeff@lyndhurststud.com TBA Director, Western Australia Name: Ian Riley Mobile: ian@woodbridge.net.au TBA Director, South Australia Name: Brenton Parker Mobile: bkandeh@bigpond.com TBA Director, Tasmania Name: Graeme McCulloch Mobile: info@grenville.com.au TBA Director, Victoria Name: Adam Sangster Mobile: adam@swettenham.com.au TBA Director, Aushorse Name: Ron Gilbert Mobile: ron@highgrovestud.com.au TBA Administration & Membership Name: Biddy Oquist Mobile: biddy@tbaus.com Thoroughbred R&D Levy Proposal Page 11

12 Thoroughbred Breeders Australia (TBA) is the parent company of the six state breeders associations and Aushorse Ltd and has a combined membership base of 4,900 individual breeders comprised of 1,200 paid subscribers (State members) and 3,700 associate members (TBA members). TBA is a non-profit industry body established for the benefit of the Thoroughbred breeding industry. Mobile: , Fax: (08) peter@mc.com.au Postal Address: 33 Phillips St, SOMERTON PARK SA 5044 TBA takes a leadership role on matters of national and international importance such as marketing and promotion of Thoroughbred horses both domestically and overseas, quarantine, biosecurity, animal welfare, taxation, immigration and other government and regulatory issues. TBA represents the interests of breeders in dealing with the Australian Stud Book, Australian Racing Board and race clubs in addition to other stakeholder organisations. Chauncey Morris, Chief Executive Officer (CEO) Mobile: , Phone: , Fax: chauncey@tbaus.com Web: Postal Address: Locked Bag 3, RANDWICK NSW 2031 RIRDC is a statutory authority established by the Primary Industries and Energy Research and Development Act The Corporation was established by the Australian Government to work with industry to invest in R&D that is adopted and assists rural industries to be productive, profitable and sustainable. Rural Industries Research and Development Corporation Nigel Perkins, Research Manager, Horse R&D Program Phone: (07) or Mobile: nigel@ausvet.com.au Web: Postal Address: PO Box 4776, Kingston ACT 2604 McFarlane Strategic Services is a consultancy specialising in industry levies and stakeholder consultation, appointed by the Rural Industries Research & Development Corporation (RIRDC) to assist Thoroughbred Breeders Australia (TBA) develop the Thoroughbred R&D Levy proposal, and undertake a broad industry consultation with stakeholders in accordance with the requirements of the Australian Government s Levy Principles and Guidelines. Peter McFarlane, McFarlane Strategic Services Chief investigator for RIRDC Project: PRJ : Thoroughbred R&D Levy Thoroughbred R&D Levy Proposal Page 12