Thoroughbred R&D Levy Proposal - Discussion Paper
Closing Date For Levy Submissions Extended to 31 July 2013
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15. Some Frequently Asked Questions (FAQ):
In recent months, TBA has received valuable input from Thoroughbred breeders obtained from a series of levy seminars, feedback forms and written submissions. Whilst feedback to date has been encouraging, a number of questions have been raised by breeders which TBA has carefully considered in consultation with seminar attendees, representatives from the Rural Industries Research and Development Corporation (RIRDC), Australian Stud Book (ASB), Department of Agriculture, Fisheries and Forestry (DAFF Levies), Australian Racing Board (ARB) and one on one meetings with key industry decision makers.
As a result of these consultations, TBA has put together a list of frequently asked questions (FAQ) and answers to ensure breeders make an informed decision when voting at the forthcoming Levy postal ballot to be conducted by the Australian Electoral Commission (AEC) commencing Monday, 15 July 2013 and ending on Thursday, 8 August 2013.
Please take the time to examine the following FAQ’s:
FAQ: Why was the proposed levy set at $10 per broodmare return and $10 per covering?
A: TBA modelling indicates that the proposed levy will raise over $400,000 annually. This together with matching contributions from the Australian Government and voluntary contributions from the Thoroughbred racing sector will raise more than $1 million annually, which RIRDC believes will be sufficient for a viable Thoroughbred R&D program.
FAQ: Are all Thoroughbred breeders required to pay Thoroughbred R&D levy?
A: Yes, all broodmare returns and coverings registered with the ASB will be levied a flat $10 charge. The levy amount will be itemised and compulsorily collected by the ASB from the operative date, which is proposed for 1 August 2014.
FAQ: Will the levy apply if my mare does not produce a foal?
A: Yes, the $10 levy will apply to all broodmare returns and coverings registered in accordance with ASB rules. If exceptions were to apply, then the $10 levy on broodmares would need to be increased in order to raise the required funds to support the proposed Thoroughbred R&D program.
FAQ: Isn’t a Thoroughbred breeder paying the levy twice if their broodmare is covered a their resident stallion?
A. Yes. However, during the initial consultation process TBA originally proposed a broodmare levy of $20, although it was considered more equitable to split this amount between broodmare owners and stallion owners.
FAQ: Why is it that only Thoroughbred breeders are being levied?
A: To date the Thoroughbred racing sector has provided the majority of voluntary funding to support the current Horse R&D Program on behalf of all horse breeds and disciplines. Pleasingly the racing sector has agreed to continue its involvement in R&D by investing $150,000 annually towards the new Thoroughbred R&D fund. By way of background, there have been many failed attempts to introduce a broader horse industry levy that have proven too impractical to implement due to the diverse number of horse breeds and disciplines. Given the current Horse R&D funding arrangements will end on 30 June this year, unless the Thoroughbred breeding industry acts now there will not be sufficient funds to commission new R&D. If the proposed levy is approved, TBA will endeavour to attract new voluntary contributions from other Thoroughbred industry sectors to help raise additional funds. The benefit is that the Thoroughbred breeding industry will now be able to determine research priorities and objectives that are specific to the Thoroughbred breeding industry in proportion to its contribution to the Thoroughbred R&D fund.
FAQ: Would an ad valorem levy be more equitable?
A: No. TBA has carefully considered a range of alternative levy models including an ad valorem (In proportion to the value) levy on stallions and broodmares. Whilst an ad valorem levy may appear to be more equitable, it must apply to all Thoroughbred breeders and horses and be efficiently collected; otherwise it fails the equity test as required under the Australian Government Levy Principles and Guidelines.
FAQ: Would a Stallion ad valorem levy be more equitable based on advertised “service fees”?
A: No. The ASB and DAFF Levies would not consider it equitable or feasible as some stallions are listed with the ASB as “Fee On Application” (FOA). Subsequently, an advertised service fee would need to be established for these stallions to form the basis of an ad valorem levy. Furthermore, some Service Agreements offer a “live foal guarantee,” and/or “Free Return.” These issues would need to be addressed in accordance with the Australian Government Levy Principles and Guidelines. If exceptions were to apply, then the levy on coverings would need to be increased in order to raise the required funds to support the proposed Thoroughbred R&D program.
FAQ: Would a Sales based ad valorem levy be more equitable?
A: No. DAFF Levies would not consider it equitable because not all Thoroughbred horses are sold at auction.
FAQ: How will Thoroughbred levy funds be spent?
A: If the proposed levy is approved, Thoroughbred breeders will have a major say in how the levy is spent. A new Thoroughbred RD&E Plan will be prepared by RIRDC in consultation with TBA and the ARB, providing a framework for future R&D investment decision-making. The new plan will include a combination of new and old objectives which have been identified by breeders such as wastage, education, training and extension programs to up-skill the industry, economic studies and market research to assist in developing new domestic and export markets, as well as addressing emerging pest and disease threats which affect the lives of humans and horses.
FAQ: Who will decide how Thoroughbred levy funds are to be expended?
A: A new Thoroughbred R&D Advisory Committee will be formed to provide expert advice to RIRDC. The formation of the new Advisory Committee will be determined by TBA, ARB, ASB and RIRDC and comprise a balance of Thoroughbred industry participants and others with appropriate technical, veterinary and scientific skills.
FAQ: What assurances can TBA provide that levy contributions will be spent wisely?
A: As the representative industry body for Thoroughbred breeders, TBA will ensure that appropriate consultative arrangements are in place to identify and address Thoroughbred breeding industry needs, including those at State and regional level. TBA will also ensure that R&D outcomes are communicated in layman's terms and made available to all levy payers.
FAQ: What are the costs of administering the levy funded R&D program?
A: DAFF is yet to provide a formal estimate of the levy setup and ongoing compliance program, although our estimate is $10,000 per annum. RIRDC will charge a management fee of around 10% of the R&D program to cover program staff and program administration costs. The ASB will retain any interest accrued on the levy funds during each annual collection period, estimated at less than $10,000 per annum. Please note that TBA will receive zero funding from the Thoroughbred R&D Levy.
FAQ: Will the levy be increased automatically in the future?
A: No. The Thoroughbred R&D Advisory Committee will review the levy after 5 years of operation. It must be noted that statutory levies can only be varied after undertaking a comprehensive industry consultation and levy ballot process, which will require Australian Government approval. There is no suggestion to increase the Thoroughbred R&D Levy beyond the proposed fee after the levy is introduced. If additional funding is required in the future due to a decline in breeding numbers, then the Thoroughbred R&D Advisory Committee will canvass other Thoroughbred industry sectors to invest additional voluntary contributions towards the Thoroughbred R&D fund.
FAQ: What result is needed in the levy ballot to gain Government approval?
A: The levy Principles and Guidelines require a 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 then be eligible for government consideration. TBA encourages all breeders to vote on this important matter.
FAQ: Who makes the final decision to approve the levy proposal?
A: If the levy proposal is well supported in the forthcoming ballot, TBA will prepare a detailed submission addressing each of the Levy Principles & Guidelines in order to demonstrate that the levy is indeed supported by prospective levy payers. The final decision on the levy is one for the Australian Government.
FAQ: How will the levy ballot work and when does the levy ballot commence and end?
A: The ballot is a postal vote conducted by the Australian Electoral Commission (AEC) using the ASB database. The reply paid ballot papers will be posted on Monday 15 July and must be returned to the AEC no later than 10.00am (Melbourne Time) on Thursday 8 August 2013.
FAQ: Who is eligible to vote?
A: All registered contact breeders will receive a ballot paper that will be weighted to reflect the total number of Thoroughbred broodmares covered and returned by each contact breeder.
FAQ: Can I submit an absentee vote?
A: Yes. If a voter will be absent from their usual address during the ballot they have the following options:
Either immediately notify the AEC of an alternative address (including overseas), or
Authorise an alternative person or entity to vote on their behalf (eg. The Manager of a Stud farm or agistment property where the broodmare resides).
FAQ: Are all Thoroughbred breeders required to pay the statutory R&D levy?
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?
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?
FAQ: How do levy payers know how much levy they are paying?
A: 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 2011-2016 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?
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.
Included with this discussion paper are: