A year on, Australia’s health star food-rating system is showing cracks

Mark Lawrence, Deakin University and Christina Pollard, Curtin University

The government has started the second phase of its awareness campaign for Australia’s year-old health star food-rating system. The A$2.1 million campaign is aimed at educating grocery buyers about how to shop for healthy food and encouraging the food industry to adopt the voluntary system.

But it’s unlikely the campaign will fulfil its first aim because health stars are predominantly being used by the food industry to market highly processed food products. It would be unfortunate if it was successful in its latter aim because unless we change the way the system currently works, consumers will be the losers.

 

Even though it is clearly healthy, this yoghurt gets only one and a half stars. Author provided

 

A good purpose

It has only been a year since the federal government finally introduced the health star rating system after a long and fraught process. The industry is implementing the system over five years and a review is planned for next year.

Under the system’s nutrient profiling criteria, individual packaged foods are rated on their composition. Foods receive “baseline” (or negative) points for the amount (per 100 grams or 100 millilitres) of saturated fat, total sugars, sodium and energy. And they receive “modifying” (or positive) points for the amount (again, per 100g or 100mL) of protein, fibre, fruit and vegetables they contain. Points are then converted to a star rating, from half to five stars.

The system is supposed to help consumers discriminate between similar foods within the same food category that contain different amounts of undesirable ingredients. It should, for instance, help compare two loaves of bread in terms of their salt content.

 

While liquorice gets two and a half stars. Author, Author provided

 

The health star rating system is also supposed to provide an incentive for manufacturers to reformulate their products. In terms of our previous example, it should encourage manufacturers to provide bread with less salt. But because it was developed through compromise between government, industry, public health and consumer groups, it has some inevitable design and implementation limitations.

Badly designed

Its main design limitation is that it simplistically frames the cause of, and solution to, dietary imbalances in terms of nutrients. This is fundamentally at odds with the latest nutrition advice, which uses a food-based approach.

Consider the Australian Dietary Guidelines, which is a nuanced set of eating rules based on the latest nutrition research. It encourages enjoyment of a variety of nutritious foods from all five major food groups (see below), and limiting or avoiding highly processed, energy-dense and nutrient-poor “discretionary” or junk foods and drinks.

 

https://www.eatforhealth.gov.au/food-essentials/five-food-groups

 

Food consists of a complex matrix of nutrients and non-nutrient components, which interact in multiple ways to influence health. Because people eat foods rather than nutrients in isolation, it makes more sense to give nutrition advice based on whole foods.

But the health star rating system looks at nutrients in isolation. And simply awarding stars irrespective of whether a food is from the “discretionary” category is resulting in instances where foods, such as confectionery, are getting higher ratings than five-food-group foods, such as yoghurt.

Badly implemented

The system’s main implementation limitation is that because it’s voluntary, food manufacturers can decide whether a product will display health stars or not. Understandably, although manufacturers might be happy to display stars on foods that attract between two and five stars, they are less likely to put one or half a star on their products.

 

Are chips really healthy enough to attract four stars? Author provided

 

So what the health star rating system ends up doing is encouraging marketing of unhealthy or discretionary foods, as healthy options. Discretionary foods are packaged and highly processed and can have their nutrient composition reformulated to increase stars. Manufacturers of potato chips, for instance, might lower their fat or salt content to gain a higher star rating. But chips with half an extra star are still a discretionary food.

Part of the problem is that the campaign’s main message – “the more stars the better” – is misleading. Many of the items from the five food groups (see above) are not packaged, so they don’t display health stars. The actual health message is to eat more of these foods; it’s not that we should try to eat food with more stars.

What the health star rating system ends up doing is communicating a de facto approval or giving a halo effect to the labels of products that carry stars. People tend to view any visual health information on food as at least suggesting it’s healthy. So packaged foods that carry the star symbol, even if only half a star, could be implied to be healthy.

Making it better

Fixing the system’s design limitations will require placing nutrient profiling within the context of the whole food so consumers are encouraged to choose predominantly from the five food groups. In practice this would mean stars should be available for only five-food-group foods. Health warning symbols should be displayed on discretionary foods.

Part of the problem is that the campaign’s main message – ‘the more stars the better’ – is misleading. heath star rating website

This change would provide food manufacturers with stronger incentive to reformulate discretionary foods to avoid attracting health warning symbols on their product labels.

And fixing its implementation limitations will require mandating the health star rating system – and warning symbols – across all foods that carry a label. We would also need a regulatory body to manage the system’s operation.

These remedies would help make the system consistent with the latest evidence from nutrition science. And it would make the education message simpler. Most importantly, consumers will be able to have confidence that they can use the health star rating system to compare all foods for their relative healthy properties.

Mark Lawrence is Professor of Public Health Nutrition at Deakin University.
Christina Pollard is Research Fellow, School of Public Health at Curtin University.

This article was originally published on The Conversation. Read the original article.

 

Murray Darling Basin CEO’s establish group to lobby government

CEO’s from five major commodity sectors have formed a group to address issues surrounding the ongoing implementation of the Murray Darling Basin Plan.

The Ricegrowers’ Association of Australia (RGA) Executive Director Dean Logan said, “Over the last two weeks I’ve met with and discussed concerns regarding the Murray Darling Basin Plan process with CEOs across five major commodity sectors equating to tens of billions of dollars of investment. The overwhelming response? Policy makers, families, communities and farmers alike deserve a much more constructive, mature and less emotive debate that ultimately leads to real solutions being placed on the table.”

In his meetings with CEO’s, Logan discussed the need for and policy and institutional reform.

The group is concerned the Senate Inquiry will not deliver the outcome needed, as solutions require both State and Federal Government cooperation and political buy-in. In response to the challenges facing the area, the Logan said it is now up to the group “to stand united to help Government deliver social, environmental and economic certainty and reform.”

“A key point we are raising as basin CEO’s is that while social, economic and environmental decline is measured in decades not years, we must look forward positively when seeking to address reform,” Logan said.

“What shouldn’t be missed is that amongst all this so called ‘turmoil’ the rice industry alone, six weeks ago, delivered growers and basin communities an additional $40M of income on top of last year’s crop returns. This is a positive story that demands a more constructive debate when moving forward and working through concerns.

“As CEOs we all agree change is needed and we won’t walk away from a fight, but the Murray Darling Basin is at a critical juncture that demands leadership and calm heads to prevail.

“It is vital we maintain a sense of bipartisanship and inter-jurisdictional leadership and dialogue. We must, this time, get this right. We stand committed with Government – of all persuasions – to do whatever it takes,” Logan said.

The basin group of CEOs will be formalised over the next two weeks. The initiative has been discussed with senior policy makers and leaders at both the State and Federal level and will be officially launched in Sydney.

 

Ministers to reconsider legalising hemp for food

Australian and New Zealand government ministers will reconsider legalising hemp for food in the first quarter of 2016.

The Australia and New Zealand Ministerial Forum on Food Regulation (the Forum) met in Hobart to discuss a number of food regulation matters.

Before the ban on low THC hemp food may be reconsidered, there are some “knowledge gaps” which the Forum has requested be addressed first.

The FRSC Working Group is addressing the knowledge gaps identified regarding roadside drug testing, cannabidiol levels, legal and treaty issues and concerns that the marketing of hemp in food may send a confused message to consumers about the acceptability and safety of cannabis.

In February, the Forum decided to maintain the ban on low THC hemp as food because of concerns that police drug testing would be compromised by the legalisation of the product.

The Forum has asked officials to progress this work as quickly as possible and has agreed to consider the report on the project outcomes in the first quarter of 2016.

Health Star Rating update

The ministers discussed the progress of the Health Star Rating roll out. The Forum tasked the Food Regulation Standing Committee (FRSC) to provide advice in relation to the clarity that is required on the HSR Terms of Reference to strengthen the governance. This will include advice regarding the process for consultation with and oversight by jurisdictions.

Nut- and seed-based beverages in the Health Star Rating system

The Forum considered a request to classify nut- and seed-based beverages as Category 1D dairy beverages’ for the purpose of the HSR system.

A majority of Forum members agreed that under the HSR system, nut- and seed-based beverages may be classified as Category 1D products, if they meet the calcium requirements for that category.

The Forum also agreed to seek further consideration by the FRSC, with advice from Food Standards Australia New Zealand (FSANZ) on how dairy alternative beverages should be categorised within the HSR system, and how they should be treated under the relevant food standard. The Forum is also seeking further advice about reconciling recommendations received from the National Health and Medical Research Council (NHMRC). This will also include the outcome of the current application that is under consideration by FSANZ.

Vitamin D in breakfast cereal

The Forum has asked FSANZ to review a draft standard to permit the voluntary addition of vitamin D to breakfast cereals, to ensure consistency with the ‘Ministerial Policy Guideline for the Fortification of Food with Vitamins and Minerals’. Permitting the addition of vitamin D to breakfast cereals of poorer nutritional quality (e.g., cereals high in fat, sugar or salt) is not consistent with this Policy Guideline. The Forum also agreed that the Policy Guideline will be clarified in conjunction with the FSANZ review.

Country of Origin Labelling

The Forum noted that there was broad community interest in improving the Country of Origin Labelling framework for Australian food. New Zealand didn’t participate in the discussion, as it plans to continue with its current voluntary Country of Origin Labelling scheme.

 

$4 billion investment announced in Agriculture White Paper

Biosecurity, international trade and supply chain transparency are some of the priorities of the Agriculture White Paper.

The Agricultural Competitiveness White Paper pledged $200 million funding increase for biosecurity across Australia to improve biosecurity surveillance and analysis nationally, including in northern Australia.

Agriculture Minister Barnaby Joyce said “this $200 million over four years will improve our ability to understand, detect and respond to pests and diseases that could hurt our farmers, rural communities, agricultural productivity and economy.”

"It will build intelligence and scientific expertise and put more boots on the ground. It will also support development in the north and ensure the northern barrier remains intact.

The Agricultural Competitiveness White Paper also provides an additional $12.4 million over four years to modernise Australia's traceability systems. This will provide even greater assurance that the agricultural goods we send to trading partners can be traced quickly to the point of origin so the source of any disease or residue contamination can be effectively managed.

International Trade

The investment in biosecurity is part of a plan to help farmers’ access premium markets.

The government has also pledged $30.8 million ​to break down technical barriers to trade and appointing five new Agriculture Counsellors.

There will be an additional $12.4 million to modernise Australia’s food export traceability systems to further enhance our food safety credentials.

Supply chain transparency

The White Paper commits $11.4 million to establish an ACCC Commissioner dedicated to agriculture as well as supporting capability at the ACCC concerned with agriculture supply chain issues.

"Many stakeholders were concerned with the lack of transparency in supply chains and the anti-competitive distortions that can result—all too often to the detriment of our farmers," Joyce said.

"The new Commissioner, combined with the new dedicated agricultural-focus of the ACCC, will give the ACCC additional agricultural skills and knowledge to address the concerns of farmers.

"These new resources will enable ACCC staff to attend the saleyards or visit farmers to see the market in action and gather necessary evidence.

The government has also put forward $13.8 million towards educating farmers and providing them with materials on alternative business models like cooperatives and collective bargaining.

"Knowledge is power. A strong supply chain advocate, proactive ACCC investigations and information on alternative business structures will go a long way to reducing farmers' vulnerability to the market power that can be wielded by large processors or retail chains.

"These measures, combined with work this government already has in train through our forthcoming response to the Competition Policy Review; the current review of the Horticulture Code of Conduct; and the establishment of the Australian Small Business and Family Enterprise Ombudsman, show we are serious about ensuring our farmers get a fair deal for their efforts.

Better regulation

The White Paper announced it will be reducing red tape from the economy by $1 billion a year.

$20.4 million has been allocated to further streamline agricultural and veterinary chemicals approvals. Farmers will get access to new farm chemicals more quickly, reducing the cost of doing business.

The Australian Government also reiterated its commitment to improve country of origin labelling.

Minister for Agriculture, Barnaby Joyce, said considerable public interest in the issue made it clear that consumers wanted to know whether the products they were buying were sourced locally or from overseas.

The Australian Government is currently consulting with industry and the community about the best way forward before engaging with state and territory governments.

The White Paper was informed by stakeholder consultation—more than 1000 submissions were received and the government talked face-to-face with more than 1100 people across the country in developing this document. The White Paper is available at agwhitepaper.agriculture.gov.au.

 

Govt to consider legalising hemp for food

Australian and New Zealand government ministers will discuss the possible legalisation of hemp as a food at a Food Regulation forum in Hobart today.

As AAP reports the forum, which will also discuss other issues like country-of-origin labelling, will be chaired by Australian Health Minister Fiona Nash.

Hemp is different to other varieties of Cannabis sativa, commonly referred to as marijuana. Hemp contains no, or very low levels of THC (delta 9-tetrahydrocannabinol), the chemical associated with the psychoactive properties of marijuana.

As such, and given that it is safe for human consumption, there is broad support within the farming community to legalise it.

Historically, the plant has been used as a source of fibre and oil. Hemp seeds contain protein, vitamins and minerals and polyunsaturated fatty acids, particularly omega-3 fatty acids. Hemp seed food products may provide an alternative dietary source of these nutrients.

Hemp oil also has medical applications. For example, last month a New Zealand teenager Alex Renton was granted special permission to use it as a treatment for a severe form of epilepsy.

In February, Australian and New Zealand ministers decided to maintain the ban on low THC hemp as food because of concerns about law enforcement issues. The feeling was that police drug testing would be compromised by the legalisation of the product.

In addition, it was felt that the use of hemp in food would send mixed messages about anti-drug initiatives in the two countries.

Applications for $20 million grants program in Victoria opens

Applications for a four year, $20 million grants and scholarship program are now open to Victorian agri-food producers and manufacturers.

The grants and scholarships, provided by Food Source Victoria are aimed at helping increase exports, build capability and create jobs in regional Victoria.

Executive Director of Trade and Investment, Department of Environment and Primary Industries, Tim Ada said the world’s middle class was growing rapidly, particularly in Asia and Victorian farmers and food manufacturers are well placed to meet the demand for quality, clean and safe products.

“Food and agriculture exports were worth $11.4 billion in 2013-14, however exporting is sometimes challenging and it can be difficult for agri-food businesses to not only access international markets but to keep abreast of consumer trends and requirements,” Ada said.

“Through Food Source Victoria, $18 million in grants is available to support agri-food businesses across regional Victoria to work together, potentially implementing a diverse range of activities and projects to overcome some of these challenges and drive exports and jobs growth.”

“An additional $2 million is available to help regional Victorians working in the agri-food sector to enhance their entrepreneurial, business and export skills, through accredited training and/or professional development, to help accelerate business growth.”

Mr Ada said at least $1 million of the scholarship fund had been allocated to support women in regional Victoria to develop their skills and capabilities.

Program guidelines (including eligibility criteria) and application forms are available here.

Food Source Victoria is funded through the Victorian Government’s $500 million Regional Jobs and Infrastructure Fund and is managed by the Department of Economic Development, Jobs, Transport and Resources.

 

Tasmanian Beer Trail leads tourists to brewers

The Tasmanian government has invested $250,000 in the Tasmanian Beer Tourism Plan, along with $100,000 from the Brewers Association, to promote and grow the industry.

The Tasmanian Beer Trail website, launched Thursday (25 June), is a guide to local breweries, tours, tastings, festivals, events and sales.

The website aims to capitalise on the emerging tourism niche, which attracted more than 125,000 travellers in the year to March according to the latest Tasmanian Visitor Survey.

The Brewers Association has congratulated the Tasmanian Government on the launch.

“It is fantastic to see the implementation of the Tasmanian Government’s plan to boost the tourism potential of the Tasmanian beer industry”, said Denita Wawn, CEO of the Brewers Association.

“The Brewers Association is looking forward to working with everyone in the Tasmanian beer industry to showcase beer and brewing and to highlight the Tasmanian beer tourism experience through the Beer Trail and expand our beer events”, she said.

“Tasmania holds a special place in the history of beer in Australia with Cascade Brewery in Hobart, established in 1832, being the oldest brewery in the country. There is also the James Boag’s brewery which was established in Launceston in 1881 and many other craft breweries.”

 

Senate committee recommends sugar Code of Conduct

A federal parliamentary inquiry into the marketing of Australian sugar has made only one recommendation.

The single recommendation reads “the committee recommends the development and implementation of a mandatory sugar industry Code of Conduct, acknowledging that, provided appropriate stakeholder consultation is undertaken, the work of the Sugar Marketing Code of Conduct Taskforce may provide a foundation upon which a Code of Conduct may be established.”

Dominic Nolan, CEO of the The Australian Sugar Milling Council (ASMC) said the report was largely expected.

“There were clear indications throughout the public hearings conducted by the Committee that the Report from the Inquiry was going to recommend a mandatory Code of Conduct, and that is what we have,” Nolan said.

“The report does not make a case for government intervention, and it does not adequately consider what the impact of such regulation will be for the sugar industry. There is still no clear statement of what the problem is that this recommended regulatory approach is supposed to address.”

“There are no surprises in the Inquiry’s recommendation, however it doesn’t take away from the real imperative: the only viable solution to current challenges around sugar marketing arrangements is through a commercially negotiated outcome between mill companies and their growers,” Nolan said.

 

China-Australia trade agreement a compromised victory

After ten years of marathon negotiations, the China-Australia Free Trade Agreement (ChAFTA) was signed in Canberra this week. Australia now has an FTA with its number one trade partner, becoming one of the few developed economies (Singapore, Korea and New Zealand) to have signed agreements with China.

Negotiating ChAFTA has proven exceptionally fraught. Launched amid much fanfare in 2005, reaching mutually agreeable terms proved harder than expected. Twenty-two rounds of negotiation were required, talks “stalled” on several occasions, and at one point the then Trade Minister Craig Emerson described the FTA as “overrated”. Many in the Australian business and policy communities will be relieved the agreement is finally concluded.

The Abbott government has described ChAFTA as “history making”, and put considerable effort into spruiking the many gains it will offer for Australian exporters.

But the deal is what’s known as a “positive-list” trade agreement, which puts certain limits on the benefits it offers Australian industry.

The type of agreement matters

The “positive-list” and “negative-list” approaches are, broadly speaking, the two methods for negotiating trade agreements. While debates over trade negotiation strategies may seem arcane to all but the most seasoned trade lawyer, they are critically important in shaping the ultimate form of an FTA.

Under the negative-list approach, governments begin by agreeing to liberalise all forms of trade protection (typically, tariffs and quotas) between their two economies. Recognising some sectors as “too sensitive” for full liberalisation, they then negotiate a list of products for exclusion. The negative-list approach presumes everything is on the table, with talks focused on identifying what will be left out of a trade agreement.

Conversely, positive-list negotiations instead focus on what will be included. Governments start by presenting a list of “requests”, and then offer and counter-offer until an agreeable balance is struck. (E.g. “If I agree to your demand X, will you agree to my request Y?”). This presumes nothing is on the table initially, and gradually adds content as governments decide which sectors are most important to them.

These approaches tend to produce different outcomes. Negative-list lends itself to broader and deeper trade liberalisation, because it places the onus on governments to justify why a sensitive sector should be excluded. Positive-list often leads to shallower and narrower agreements, and is often frowned upon by “free trade” purists. However, it is a useful strategy in cases where trade liberalisation is politically contentious or difficult, and governments simply wouldn’t be comfortable with deep reform.

 

Prime Minister Tony Abbott watches as the president of China Xi Jinping shakes hands with Fortescue Metals CEO Andrew Forrest after signing a MOU as part of the free trade agreement. Alan Porritt/AAP

 

Who are the positive-list winners in ChAFTA?

While the ultimate agreement was as much about what Australia requested as what China was willing to concede, there are three sectors which have emerged as the big winners:

  • Agriculture, where tariffs on Australian beef, dairy, wine, fruit, pork, sheep meat, seafood and some grains will be phased out over a period of years
  • Services, where increased market access will be offered to the legal, education, telecommunication, financial, tourism and healthcare sectors
  • Mining, where tariffs on coal, alumina and some base metals will be eliminated.

These commitments will be transformative for the Australian industries that have been lucky enough to get on the positive-list. But they fall well short of what could genuinely be described as “free trade” between Australia and China. If a sector is not on the list, Australian exporters must contend with China’s normal trade policy regime. For these industries – including sugar, wheat, many manufactures, and most professional services – life after ChAFTA will be business as usual.

Even for the industries included, positive-list means ChAFTA commitments often fall short of full liberalisation:

  • Certain commitments in the transport, construction, telecommunication and legal sectors will only apply in the “Shanghai Free Trade Zone”, not the entirety of China.
  • Wool exporters get duty-free access for only a fixed volume of exports (initially 30000 tonnes, rising to 45000 by 2024)
  • Australian-owned hospitals can only be established in four Chinese provinces and three cities.
  • In education, the only firm Chinese commitment is to list some 77 Australian providers on a government website
  • Farmers will have to wait for some time – nine years in the case of beef and cheese – for tariff cuts to fully take effect.

These caveats and carve-outs illustrate the inherent trade-off in the positive-list approach: a tricky trade agreement is made easier, but only by sacrificing across-the-board liberalisation.

Picking winners also means picking losers

The political reality is that the Chinese government is unlikely to have ever agreed to the stronger negative-list approach in ChAFTA. However, this has meant the Australian government has been forced to make difficult choices over what to prioritise, and what to leave out.

First, the government has had to “pick winners” when setting its priorities. The beef, dairy and tourism sectors have been the main beneficiaries. But picking winners also means picking losers, many industries have been left out. The long-suffering sugar and rice industries were both victims, reportedly cut from negotiations in exchange for China shelving requests around state-owned enterprise investment.

In this context, it’s worth asking how and why these decisions were made. Was “beef-in/sugar-out” a conscious decision to maximise national economic interests? Or does it reflect the relative lobbying strength of these sectors?

Second, the government has had to favour current exporters over future economic opportunities. ChAFTA will ensure 95% of Australia’s current (2013) exports to China will enter duty-free. However, by the time the agreement takes full effect in 2024, the Australia-China trade profile will surely have changed. As Chinese urbanisation and growth progresses, service exports are likely to become more prominent while primary commodities less so. Unfortunately, the positive-list ChAFTA agreement targets the export sectors of today, rather than those of tomorrow.

This raises questions about what will happen to emerging service sectors not presently on the list. While telecommunication firms now have access to the Shanghai Free Trade Zone, will this be the most important Chinese market in 2024 or 2034? And what of service sectors Australia has yet to develop?

ChAFTA is an imperfect agreement, borne out of political difficulties and the compromises these have entailed. Some sectors are in, but others are out, and carve-outs and caveats impose limits on many of the concessions. The unpleasant – but unavoidable – reality is that positive-list FTAs are not about “free trade”, but picking winners and commiserating losers.

The Conversation

Jeffrey Wilson is Fellow of the Asia Research Centre at Murdoch University.

This article was originally published on The Conversation. Read the original article.

 

Baiada Group busted by Fair Work Ombudsman

The Fair Work Ombudsman today released the findings of its Inquiry into allegations levelled at the Baiada Group over employment practices at its three poultry processing sites at Beresfield, Hanwood and Tamworth in NSW.

The Inquiry found exploitation of a labour pool comprised predominantly of overseas workers in Australia on the 417 working holiday visa. Exploitation included significant underpayments, extremely long hours of work, high rents for overcrowded and unsafe worker accommodation, discrimination and misclassification of employees as contractors.

It also found non-compliance with a range of Commonwealth workplace laws and very poor, or no governance arrangements, by all parties in the various labour supply chains,

An Inquiry was launched in November, 2013, following complaints from plant workers that they were being underpaid, forced to work extremely long hours and required to pay high rents for overcrowded and unsafe employee accommodation.

Baiada is the largest Australian-owned poultry processing company and has a market share of more than 20 per cent. It produces the Lilydale Select and Steggles chicken brands for customers including Coles, Woolworths, IGA, Aldi, McDonald’s, KFC, Pizza Hut, Red Rooster, Nando’s and Subway.

Baiada refused permission for Fair Work inspectors working on this Inquiry to access the factory floor at its worksites, denying them an opportunity to observe work practices, as well as talk to employees about conditions, policies and procedures.

Baiada also failed to provide the Inquiry with any “significant or meaningful” documentation on the nature and terms of its labour contract arrangements.

However, the Inquiry found that employees working at Baiada sites are not being paid their lawful entitlements.

The company had verbal agreements with an extensive list of labour-hire operators used to source most of its workers, largely 417 working holiday visa-holders from Taiwan and Hong Kong.

Baiada’s labour-hire contractors were unwilling to engage with the Inquiry and produced inadequate, inaccurate and/or fabricated records to Inspectors.

Based on limited material provided, hundreds of thousands of dollars could not be accounted for as money moved through various hands down the company’s labour supply chain.

As at October, 2013, information provided by Baiada indicated that it had verbal agreements to source labour with six principal contractors; B & E Poultry Holdings Pty Ltd, Mushland Pty Ltd, JL Poultry Pty Ltd, VNJ Foods Pty Ltd, Evergreenlee Pty Ltd and Pham Poultry (AUS) Pty Ltd.

Baiada paid these principal contractors per kilogram of poultry processed, rather than hours worked – in other words, irrespective of night shifts, weekends or public holidays.

The six principal contractors in turn sub-contracted to at least seven other second-tier entities, some of whom further sub-contracted down a further two or three tiers, involving up to 34 separate entities in total.

There were no written agreements and the model relied on high levels of trust.

During the course of the Inquiry, four of the six principal contractors and 17 other sub-contractors ceased trading.

One day before the director of two companies was due to meet Fair Work inspectors, he sent an email advising that his two entities were being liquidated. The matter is being referred to the Australian Securities and Investment Commission (ASIC).

Over the course of the Baiada Inquiry, Fair Work inspectors made numerous site visits to registered addresses of the various contractors, as well as attempting to make contact by email, fax and phone using both bilingual staff and interpreters.

The Inquiry found that a large amount of work was performed “off the books”, as amounts paid to contractors did not correspond with the number of workers and wages allegedly paid to them.

The overseas workers were primarily recruited by sub-contractors through Chinese newspapers, Facebook or Taiwanese backpacker websites.

The advertisements frequently asked applicants to respond with details of their nationality, height and weight and were potentially discriminatory.

First-hand accounts from some of the workers at the plants were obtained by bilingual Fair Work inspectors who travelled to Beresfield and Hanwood, and community opinions and experiences were obtained through a series of co-ordinated “listening posts”.

Workers at Beresfield reported that they would not get any work unless they rented accommodation from the labour hire contractor, and rent was allegedly unlawfully deducted from their pay.

One property, found to be sleeping 21 people, was purchased in March, 2012, for $370,000 as a rental accommodation. Based on 20 people paying $100 a week each, it has a potential rental income of over $100,000 a year.

Most of the workers at the Hanwood site were managed by Choy Pty Ltd, which de-registered during the course of the Inquiry.

Choy’s director, Sokhan Sin, is now engaged by other contractors to manage workers at the plant, including overseas workers.

Investigations continue into allegations that Mr Sin directs employees to work very long hours, such as 5.30am to 11pm.

The Inquiry’s findings on each of Baiada’s six principal labour-hire contractors:

B&E Poultry Holdings Pty Ltd

In February this year, two Taiwanese 417 working holiday visa-holders contacted the Fair Work Ombudsman alleging they had worked up to 17 hours a day for three days at Baiada’s Beresfield plant for no wages.

At the time, the minimum wage in Taiwan was equivalent to $A4.95 an hour compared to the Australian national minimum wage of $16.87, plus penalties where applicable.

When Fair Work inspectors contacted B&E Poultry – the principal contractor named on their factory ID card – they were told the workers were engaged by a supervisor contracting to one of its sub-contractors in a personal capacity, and were unable to provide any details about the employer.

However, B&E agreed to resolve the matter by paying the workers at the Award rate.

B&E Poultry did not directly engage any employees at the three Baiada sites – but does employ staff at its own processing factories at Ormeau, in Queensland and Blacktown, in NSW.

Last year, after the Fair Work Ombudsman had received requests for assistance from B&E employees resulting in back-payments of more than $100,000, the Agency required the company to enter into an Enforceable Undertaking to ensure its ongoing compliance with federal workplace laws.

Mushland Pty Ltd

The company failed to disclose information specifically requested by the Inquiry and subsequently the phones of both the company director and its accountant were disconnected.

Baiada was unable to provide any further contact details for Fair Work inspectors.

However, analysis of the limited information which was provided, including invoices and pay records, shows that Baiada paid Mushland $255,415.07 for the month of October, 2013.

Mushland in turn paid $52,460.85 in wages to 18 employees for the same period, leaving a total of $202,954.22 unaccounted for – even though 11 of the workers had been underpaid more than $3300.

Mushland de-registered in July, 2014, and workers were reluctant to act as witnesses for the Fair Work Ombudsman.

JL Poultry Pty Ltd

JL Poultry refused to provide the Inquiry with an accurate contact address.

Fair Work inspectors made two site visits to the registered address, only to be told the director was not known and was not located there.

Written correspondence could only be directed to JL Poultry after a Notice to Produce was served on its financial institution, which provided further contact details.

It took the company seven months to provide Fair Work inspectors with records.

The records revealed that in over one two-week period, Baiada had paid JL Poultry $139,080.37.

However, JL Poultry had only paid wages to nine employees totalling $8746.80, leaving a margin of $130,333.57 unaccounted for.

The Fair Work Ombudsman issued JL Poultry with an on-the-spot fine and Letter of Caution in relation to record-keeping breaches, but the company was de-registered in December last year.

JL Poultry advised that its contract with Baiada had been cancelled.

VNJ Foods Pty Ltd

The Inquiry identified that VNJ Foods Pty Ltd directly engaged only one employee.

Records obtained by Fair Work inspectors show that VNJ made cash payments of up to $150,000 a week to a sub-contractor, Clearview LG Pty Ltd.

Despite repeated site visits, telephone calls and email contact, Clearview failed to provide any records or engage with the Inquiry.

VNJ Foods entered into voluntary liquidation during the Inquiry.

Evergreenlee Pty Ltd

Evergreenlee did not engage any employees directly.

Rather, it sub-contracted to two other companies with one common director – CCKY Pty Ltd and WL Jian Pty Ltd, which engaged 19 and 33 employees respectively.

CCKY ceased operating in June last year.

The Inquiry found WL Jian Pty Ltd failed to keep time and wage records as required by federal workplace laws and issued the company with two on-the-spot fines and a Letter of Caution.

Pham Poultry (AUS) Pty Ltd

The Fair Work Ombudsman ran a separate, parallel inquiry into Pham Poultry after receiving requests for help from more than a dozen employees at Beresfield.

Pham Poultry sub-contracted to four other companies, including FoxInt Pty Ltd, whose director Quoc Hung Pham, was also a director of the principal contractor.

Despite Baiada paying Pham Poultry $1.078 million for the month of October, 2013, FoxInt was paying its workers as little as $11.50 an hour for shifts up to 19 hours a day.

Up to 30 workers were housed in a six-bedroom house with only two bathrooms for which they were required to pay $100 a week.

The Fair Work Ombudsman could not locate Quoc Hung Pham, but the second director of Pham Poultry, Binh Hai Nguyen, agreed to repay 10 workers a total of $20,250 to partially rectify the underpayments.

In response to the ABC’s Lateline report in October, 2013, Baiada advised the Fair Work Ombudsman that it had asked Pham Poultry if workers in the supply chain were being paid correctly, and had received the following information:

  • A letter from Pham Poultry’s accountant stating that the company was “compliant with the Poultry Processing Award”, and
  • An unsigned letter from Pham Poultry on company letterhead, also stating that it was compliant with the Modern Award.

Pay-slips provided by Pham Poultry show that for one week, it paid 12 employees (including the company director) wages totalling $6828.83.

However, the $6828.83 payment contrasts with a total of $196,307.01 paid to Pham Poultry that week by Bartter Enterprises Pty Ltd.

Baiada advised the Fair Work Ombudsman that based on the information above, it was “satisfied” that Pham Poultry was compliant with Commonwealth workplace laws.

The Inquiry does not agree and believes Baiada has failed to implement adequate governance arrangements to monitor its sub-contractors.

NTD Poultry Pty Ltd was named as a principal contractor for Baiada in December, 2013, replacing Pham Poultry.

However, a three-tier supply model remained in place, and the final labour provider continued to be FoxInt Pty Ltd, whose director Quoc Hung Pham was also a director of Pham Poultry and who could not be located by Fair Work inspectors.

The Inquiry received advice that FoxInt employees continued to be underpaid at rates as low as $11.50 an hour, but a reluctance by employees to act as witnesses prevented the Agency from pursuing any enforcement action.

Below is further example of the difficulty Fair Work inspectors encountered with sub-contractors during the course of their Inquiry:

DMY Trading Pty Ltd

DMY Trading and Yu Lin Trading Pty Ltd, operated by husband-and-wife directors, had six sub-contractors supplying workers to Baiada’s Hanwood site.

Based on records provided by DMY Trading, Fair Work inspectors attempted to serve a Notice to produce documents on one sub-contractor.

When they arrived at the address provided, they found an automotive workshop. The business had been there for 25 years and the owner had never heard of the labour-hire contractor.

Similarly, when Fair Work inspectors sought to contact two other sub-contractors, the addresses provided led them to clothing manufacturers who had never been involved in the poultry processing industry.

As a result of its Inquiry, the Fair Work Ombudsman recommends Baiada:

  • Ensures its sub-contractors identify the true employer and display the employer’s name on factory ID cards,
  • Introduce an electronic time-keeping system to properly record the start and finishing times of all employees,
  • Set up a formal complaint and dispute resolution process, including the appointment of a Mandarin-speaking human resources representative,
  • Commission an independent, external specialist to review its labour-recruitment practices,
  • Implement protocols and policies to improve governance arrangements to ensure workers at its sites are being paid correctly for all hours worked, and
  • Prepare industry and language specific induction materials for all workers.

For its part, the Fair Work Ombudsman will continue to work closely and collaboratively with other regulatory agencies and groups to:

  • Use Section 550 of the Fair Work Act and its accessorial liability provisions to ensure parties do not turn a “blind eye” to minimum employee entitlements, and hold to account those we find who are involved in contraventions of Commonwealth workplace laws,
  • Investigate labour supply chain practices, such as sham contracting, which deprive vulnerable employees of basic rights and protections, like penalties, overtime, allowances or leave; and pursue those responsible, 
  • Initiate enforcement action against parties, including any accounting and legal professionals found to be assisting businesses to provide false and/or misleading records to Fair Work inspectors,
  • Engage with major buyers of processed chicken products, such as Coles, Woolworths, KFC, Aldi and others, to raise awareness of the importance of compliant and ethical supply chains and, where appropriate, seek partnership agreements to promote compliance,
  • Assist Baiada to implement the recommendations of this Inquiry,
  • Develop a database, accessible by industry, to record all details and compliance history for contractors in the poultry processing industry. If the pilot is successful, the database could be expanded to include contractor information for other industries, such as the meat, horticulture and cleaning industries, 
  • Provide ongoing reports about the findings of investigations into non-compliance with workplace laws in other supply chains to assist other federal and state agencies, lead businesses and customers to understand the industries and to help promote ethical, moral and socially responsible practices,
  • Release this Report. There has been significant public discussion around the labour supply chain in this industry and there is public interest in the findings of this Inquiry. Baiada customers should have this information to make informed choices. It is also hoped the public release of this Report will give confidence to employees previously too frightened to speak to the Fair Work Ombudsman to now come forward with concerns about potential breaches of workplace law.
  • Inform the activity of Taskforce Cadena and the Phoenix Taskforce.

The Fair Work Ombudsman considers that the information it has obtained to date warrants further investigation into the Baiada Group and its contractors.

Ongoing inquiries will focus on accessories to contraventions, sham contracting, and provision of false and/or misleading records to Fair Work inspectors.

The Inquiry noted that when labour hire contractors were asked to demonstrate to Baiada that they were compliant with federal workplace laws, only “minimal evidence” was supplied, which the company appeared to accept at face value.

“Employees working at the Baiada Group’s sites are not being paid their lawful entitlements,” the Inquiry found.

“There is also a range of other conduct which may contravene the Fair Work Act under way at Baiada sites.

“The Fair Work Ombudsman encountered significant barriers to pursuing further inquiries or taking enforcement action in relation to a number of contractors who directly engaged workers, because they did not co-operate, entered into voluntary liquidation or were de-registered.

“In a large number of instances where Fair Work inspectors attempted (and persisted in attempting) to engage with contractors, they ceased operations and were quickly replaced with new ‘price takers’ – resulting in suppliers of labour forced into accepting market prices with no powers to negotiate a higher price.

“It is important to note the actual work and subsequent non-compliance with workplace laws is taking place on premises owned and operated by Baiada. It is therefore the chief beneficiary of work carried out by this labour force.

“Baiada has the ability to take steps to ensure that workplace laws are complied with on its sites.

“There has been extensive media coverage and public debate regarding underpayment practices occurring at Baiada.

“The Fair Work Ombudsman has a history of investigations at worksites where these issues have been raised with Baiada representatives.

“The findings of this Inquiry place Baiada and the head contractors on notice and therefore aware workplace laws are not being complied with and that correct minimum entitlements may not have been and may not be being met.”

The Fair Work Ombudsman’s ongoing inquiries and use of a range of specialised regulatory powers will continue to target practices that are found to be unlawful in supply chain arrangements in the poultry processing industry.

The Fair Work Ombudsman has asked Baiada to publicly declare that it has an ethical, moral and social responsibility to join with the Fair Work Ombudsman to stamp out exploitation of vulnerable workers at its work sites, and extended an invitation to Baiada to join with them in a compliance partnership.

 

Free Trade Agreement with China signed

Australia’s dairy industry, agriculture sector and beef and sheep farmers are the big winners of the Free Trade Agreement signed today by Minister for Trade and Investment Andrew Robb and his counterpart, Chinese Commerce Minister Gao Hucheng.

Australia’s agriculture sector will be able to capitalise on its well-deserved reputation as a clean, green producer of premium food and beverage products. Tariffs will be progressively abolished for Australia’s $13 billion dairy industry. Australia’s beef and sheep farmers will also gain from the phased abolition of tariffs ranging from 12-25 per cent and all tariffs on Australian horticulture will be eliminated.

China is Australia’s largest trading partner, with total trade worth almost $160 billion in 2013-14, and a growing source of investment.

The China-Australia Free Trade Agreement (ChAFTA) will lock in existing trade and provide the catalyst for future growth across a range of areas including goods, services and investment.

The Agreement secures better market access for Australia to the world’s second largest economy, improves our competitive position in a rapidly growing market, promotes increased two-way investment and reduces import costs. It is a win for households and businesses alike.

On day one of the ChAFTA, more than 85 per cent of Australian goods exports will be tariff free, rising to 95 per cent on full implementation.

Tariffs will be eliminated on a wide range of Australian manufactured goods, including pharmaceutical products and car engines.

Tariffs will be removed on almost all Australian resources and energy products, including the 8 per cent tariff on aluminium oxide on the first day of the Agreement, benefitting our exports worth around $1.3 billion a year. The tariffs on coking coal will be removed on day one, with the tariff on thermal coal being phased out over two years.

ChAFTA completes a trifecta of trade agreements with Australia’s top three export markets, accounting for more than 55 per cent of our total goods and services exports.

Australia’s FTAs with Korea and Japan are only months old and according to a joint release by Tony Abbott and Andrew Robb, Australia is already seeing increased exports compared to a year ago – like a 26 per cent increase in frozen beef prime cuts to Korea and a 84 per cent increase in the same product to Japan. Macadamia exports to Korea have more than doubled, and Japan is importing 82 per cent more of Australian rolled or flaked oats. Increases have also been seen in wine, lamb, horticulture and many other products.

The Agreement will enter into force after the completion of domestic legal and parliamentary processes in China and Australia, including review by the Australian Parliament’s Joint Standing Committee on Treaties, and the Senate Foreign Affairs, Defence and Trade References Committee. Both countries are working to complete these steps and bring the Agreement into force as soon as possible.

The full text of the Agreement is now publicly available online at: dfat.gov.au/chafta.

 

Australian Made launch campaign for the kangaroo logo

While the government is hard at work on a mandatory country-of-origin symbol, Australian Made is reminding consumers of the green kangaroo.

Last week, the Australian Government put six Country of Origin label designs to the public in an online survey.

Only one of the six designs featured the Australian Made, Australian Grown kangaroo logo.

Australian Made is campaigning to remind consumers that until the mandatory country-of-origin symbol is introduced, the Australian Made, Australian Grown kangaroo logo will remain Australia’s only registered country-of-origin certification trade mark for the full range of locally made and grown goods. 

The campaign will see the Australian Made, Australian Grown kangaroo logo with the ‘genuine Aussie’ tagline on billboards, shopping centre displays, print, radio and online advertisements all over Australia this season, to encourage consumers to turn to the logo to verify locally made and grown goods when shopping.

“We hope this campaign will help prompt consumers to look for the logo at point-of-sale,” said Australian Made Campaign Chief Executive, Ian Harrison.

“It is evident that consumers are keen to back local industry and local jobs, but importantly, they are recognising the value in locally made and grown products and produce,” Harrison said.

The Australian Made, Australian Grown logo is used by more than 2200 businesses on over 15,000 genuine Aussie products sold in Australia and around the world.

The Australian Government consulted with industry – including growers, processors and retailers for two months and has is now asking for consumer feedback.

 

6 Country of Origin Label designs put forward in community survey

The Australian Government has opened an online Country of Origin Labelling survey as part of its national consultation process.

The online survey was opened at 8am today (9 June) and will help design the Australian Government’s new labelling system.

The Australian Government has been consulting with industry – including growers, processors and retailers – to implement a clearer, more direct system for food labelling that will give consumers the information they want in a way that is easy to read and understand.

“We have completed a two month industry consultation process, and we are now asking for consumer feedback from the very shoppers who will be in the supermarket making use of the new labels,” said Minister for Industry and Science Ian Macfarlane.

“Consumers have told us loud and clear that they want more useful food labelling, and now we want to hear from them about which options they prefer.

“Based on our consultation sessions in major capital and regional cities, we have valuable industry information on how we can implement a system that is fair and transparent for consumers without adding extra costs to business.”

Macfarlane said the community survey and the Government’s market research data are crucial in defining the new framework, and this is the next step in finding a balance for industry and the consumer.

Minister for Agriculture Barnaby Joyce said the work to improve country of origin food labelling was to make sure Australians had clear and concise information about the food they buy.

“Many consumers and food producers feel strongly about the need for clearer country of origin labelling.” Joyce said.

“It’s important that people can make informed choices about the food they buy at their local supermarket. We want Australians to have confidence in knowing where their food is coming from.

“Australians have asked for simpler food labelling and the Government has listened; now is the chance for people to have their say on simpler and more logical ways to present the information.”

Out of the six ideas for the new labelling system, only one of them features the green-and-gold kangaroo.

The Australian Made Campaign, the not-for-profit organisation that administers and promotes the kangaroo logo, is calling on consumers to 'remember the roo'.

“We have been lobbying for clarity and consistency in food labelling for years now, and worked with the Government on the current proposal,” Australian Made Campaign Chief Executive, Ian Harrison, said.

“We strongly support action on food labelling and welcome the opportunity for consumers to have their say on the best system moving forward."

 

Calls for Australia’s leaders to reduce food waste

OzHarvest will team up with the United Nations Environment Programme (UNEP) and the UN’s Food Agriculture Organisation (FAO) Global Initiative on Food Loss and Waste Reduction (SAVE FOOD) to lead the third annual Think.Eat.Save campaign in Australia and raise awareness on global food loss and waste reduction.

The campaign will launch at Parliament House Canberra on the eve of World Environment Day, June 4, and culminate in the national Think.Eat.Save event taking place across seven Australian cities (capital and regional) on Monday, 27 July.

Environment Minister the Hon Greg Hunt MP, Shadow Environment, Climate Change and Water Minister the Hon Mark Butler MP, Deputy Greens Leader Senator Larissa Waters, UNIC Director Christopher Woodthorpe and OzHarvest CEO and Founder Ronni Kahn will come together to launch the 2015 Think.Eat.Save campaign, bringing attention to the impact of global food waste and raising national debate on how food sustainability and food security can be addressed at a local level.

OzHarvest is calling on the nation’s leaders to set a target to reduce food waste by 50 per cent by 2025 following the example set by EU nations such as France, Germany, the Netherlands and Austria. Food waste is currently costing Australians up to 10 billion dollars each year.

At the launch event, a lunch made from rescued surplus food will be prepared and served to Australia’s leaders by IHG Executive Chef at Parliament House Cris Purcell together with OzHarvest’s Chef for a Cause Travis Harvey.

Members of the public will also be encouraged to make a personal pledge to reduce food waste through a digital Think.Eat.Save campaign launching on the same day.

 

Trade Mission to China opens opportunity for SA

A large trade mission from South Australia to China begins today with a focus on securing new markets for food and wine from South Australia.

More than a quarter of the 250-strong delegation visiting the South Australian sister province of Shandong, China, are from the food, wine and agribusiness industries.

The unique mission is the culmination of four years of relationship building between the two areas and will include the second South Australia–Shandong Cooperation and Development forum that begins today in Jinan, the capital of Shandong Province.

South Australian Minister for Investment and Trade Martin Hamilton Smith said the timing of the trip was important to help Australian companies understand the Chinese market to take advantage of the China-Australia Free Trade Agreement.

Shandong has a population of about 100 million and a gross domestic product of close to $AUD1 trillion.

“A broad range of sectors will be represented on the trip, including representatives from the agricultural, arts, education, health, mining and resources, tourism, and wine sectors,” Smith said.

He said that South Australia’s food and wine, the state’s largest export earner, will be a focus of the trip.

“South Australia has premium products and services that the Chinese are looking for, but we don’t have the size to get attention in the massive Chinese market which is being flooded by business from America, Europe and the rest of Asia. That is why we are consolidating our efforts into this strategic and focussed approach,” Smith said.

Catherine Barnett, the CEO of Food South Australia, said there would be a number of high level meetings with government and industry in Jinan, Beijing and Qingdao.

“There is a significant focus on food and wine and the combination of government and industry will provide a strong and united South Australian presence which should provide significant trade opportunities,” Barnett said.

Today’s mission comes less than a month after Barnett hosted the Australian contingent to SIAL, China’s largest food trade show in Shanghai.

“Shows like this indicate the opening up of the China market and the demand for safe food,” she said.

Daren Thomas, the CEO of Thomas Foods International, said trips to the provinces of China gave him the opportunity to meet buyers for his meat that he could not get if he were to stay in the capitals. He said the trade mission also gave South Australian food producers and processors the backing and depth needed to trade in China.

“China is such a large place that there is no one company or agency that you can deal with to reach consumers across the country. Meeting the business leaders in each province is essential,” Thomas said.

 

SPC opens first stage of $100 mill redevelopment

SPC has delivered of the first stage of a $100 million investment program with the completion of a snack line.

“Today we celebrate the completion of our new snack line. The $100 million co-investment between our parent company Coca-Cola Amatil and the Victorian Government, has been put to work to drive new product innovation,” said SPC chief financial officer James Harvey.

“SPC is an Australian brand icon and, with the support of the Victorian Government, I’m pleased to say that our future is bright. We thank Premier Andrews and his team, who have been unwavering in their support for SPC. They have played a critical role in assisting us with our transformation plans and helping to secure the company’s future in the Goulburn Valley.”

The new SPC Snack Line will improve quality and innovation capability.

“SPC has worked with our suppliers to deliver this first major milestone in our investment plan in just six months – that’s record time from ordering to operating. We were determined to produce this season’s fruit using the new line with our new-look snack cups, which are in store now,” Harvey said.

The new line can produce any of SPC’s food products in cup format. It has an improved gentler cooking process that produces higher quality product.

One of SPC’s new innovations is SPC ProVital – a brand that delivers high quality product for people who have difficulty opening packaging or in some cases swallowing food. “We’re excited about the potential of SPC ProVital because it’s the first of its kind for the healthcare market. It’s a range of easy-open portion-control fruit that is more accessible for patients and reduces waste during serving and consumption,” Harvey said.

“We’re proud to be recognised for our strong commitment to Australian grown and made food. Due to its popularity, this week we’ve extended our #MyFamilyCan campaign to promote our farming families.”

SPC’s incoming Managing Director, Reg Weine, said he was excited by the opportunities ahead. “Our $100 million investment program will continue to build SPC’s capability and capacity as we transition to a modern branded food business. Importantly, it allows us to deliver product and packaging innovation, efficiency and productivity improvements and extend the brand as we enter new channels and markets.”

 

Mid-size food producers looking for share of the budget pie

The $24.6 million to promote Australian products in markets where free trade agreements have recently been signed; is a step in the right direction. However more could have been done.

If Australia is to truly capitalise on the export potential of the Agribusiness, Food & Beverage Industries, real incentives must be provided to our mid-size operators to reach their full potential. We call on the Government to provide export opportunities that extend beyond small businesses.

Government action needs to be bold and facilitate growth conditions for the sector’s mid-size businesses to maximise export potential, according to Tony Pititto, National Head of Food & Beverage, Grant Thornton Australia.

“While small business emerged the big winner of this year’s budget, we would like to see meaningful tax incentives for mid-sized businesses in this sector with aspiring export earnings.

“Real incentives, such as reducing company tax rates for mid-sized agribusiness and food and beverage exporters, would truly encourage these companies to focus on export opportunities; especially the growing Asian market.

“Company tax reductions for the sector must be linked to exports. This could be done by granting reductions in company tax on export income to those food producers with turnovers of less than $250 million; which achieve export revenues of up to $100 million.

“These measures would undoubtedly encourage a real export focus and growth for the sector, said Mr Pititto.

Development of local infrastructure for the sector was a welcomed announcement to further facilitate the export opportunities.

“While the Federal Government is yet to release its white paper on developing Northern Australia, it has promised to help private developers and state governments get concessional loans, of up to $5 billion, for infrastructure like dams, pipelines and power plants, providing more efficient channels to export and local markets.

“The new $100 million Northern Australia Beef Roads Fund will make targeted upgrades to key roads necessary for transporting cattle in northern Australia and provide further efficiencies to market for mid-size operators looking to optimise export opportunities,” said Mr Pititto.

 

Food manufacturers to benefit from the 2015-16 Federal Budget

The 2015-16 Federal Budget has delivered a tax break for small businesses, money to promote trade and will encourage foreign investment.

Small business

Small business is a big winner in last night’s budget, with Hockey announcing a $5.5 billion Jobs and Small Business Package aimed at helping businesses invest, hire and grow.

96 percent of Australian businesses will benefit from the package, which offers $5 billion in tax cuts for small businesses with annual turnover below $2 million.

Small corporations will have their company tax rate cut to 28.5 per cent. Unincorporated small businesses will benefit from a 5 per cent tax discount, up to $1,000 per year.

Starting Budget night and until the end of June 2017, the Government will provide small businesses with an immediate deduction for all individual assets costing less than $20,000. All small businesses will get an immediate tax deduction for every asset they buy costing less than $20,000. Currently, the threshold sits at $1,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they like.

Increasing the depreciation threshold will mean improved cash flow for small businesses. Any assets over $20,000 can be added together (‘pooled’) and depreciated at the same rate. These assets are depreciated at 15 percent in the first income year, and 30 percent per year thereafter. If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.

The Government will reduce red tape in the Fringe Benefits Tax (FBT) system by ensuring all small business work‑related portable electronic devices are FBT free. Small businesses will also benefit from a new Capital Gains Tax rollover relief when changing their legal structures.

The Jobs and Small Business package also provides a helping hand to small business start‑ups by streamlining the business registration processes. Start-ups will also be allowed to immediately deduct professional expenses incurred when they start a business. Removing obstacles to crowd‑sourced equity funding will help promote small businesses access to finance. This will complement expanded tax concessions for Employee Share Schemes.

Trade

The Government will provide $18.0 million over four years from 2015‑16 to Austrade to expand its current programme of Australia Week events. The events will be held in China, India, ASEAN countries and the United States to build Australia's reputation as a tourism destination and as a trade and investment partner. The Department of Foreign Affairs and Trade, the Australian Trade Commission and Tourism Australia will redirect $8.8 million of existing funding over four years to support these events.

The Government will provide $24.6 million over two years from 2015‑16 to promote business understanding of the recently concluded Free Trade Agreements in North Asia and to assist businesses to access and maximise their benefits under these agreements. Advocacy and outreach activities will take place in both Australia and in target offshore markets. Funding of $0.3 million will be met from within the existing resources of the Department of Foreign Affairs and Trade.

Foreign investment

The Government will provide $30.0 million over four years to attract major job creating investment in each of the Government's five investment priority areas: infrastructure; tourism; resources and energy; agribusiness and food; and advanced manufacturing, services and technology.

This funding will establish five senior investment specialists posted offshore, and a new investment promotion and attraction office in Boston, United States of America. This funding will also provide for investment attraction events, detailed market research and analysis to support attracting investment, and provide additional staff dedicated to investment promotion within Australia and overseas.

The Government is also increasing scrutiny and transparency around foreign investment in agriculture, lowering screening thresholds for agricultural land and agribusiness and implementing a comprehensive register of foreign ownership in land.

The introduction of application fees on all foreign investment applications will improve service delivery and ensure Australian taxpayers are no longer funding the administration of the system.

The Government is consulting further on options to ensure Australia has a modern, streamlined foreign investment system.

Cadbury grant

The Government says it will save $16 million over three years following the withdrawal by Cadbury of its grant application regarding the upgrade of its chocolate factory in Claremont, Tasmania. The savings from this measure will be redirected to fund other priorities in Tasmania.

Multinational tax

The Government is going after multinationals that are not paying their fair share of tax by shifting their profits overseas.

It will strengthen domestic laws to combat tax avoidance by multinationals through:

  • a Multinational Anti-Avoidance Law to ensure that foreign businesses cannot escape the Australian tax net using contrived arrangements;
  • closing the digital loophole to ensure that GST is applied to digital products and services imported by consumers;
  • increasing penalties for tax avoidance by large companies; and
  • Working with businesses on a code for the disclosure of the tax affairs of companies operating in Australia.

Australian profits shifted overseas

Above: 

Quarantine

The Government will provide $550.2 million over four years from 2015‑16 to maintain funding for quarantine and border protection activities on an ongoing basis. The funding comprises $274.7 million for the Department of Agriculture and $275.6 million for the Department of Immigration and Border Protection. Funding for this measure has already been provided for by the Government.

Biosecurity risks

The Government will expand its current border surveillance and intelligence activities and increase the audits and assessments of offshore biosecurity systems to better manage risks associated with the increasing complexity of international supply chains and higher volumes of goods being imported to Australia. The expansion of activities will minimise the likelihood of incursions of exotic pests and diseases inside Australia's borders.

Expanded border activities will include: increased surveillance of air and sea cargo terminals; trapping and enhanced testing to monitor for animal and plant species of biosecurity significance; and implementation of a nationally consistent biosecurity intelligence system. Increased offshore risk management activities will include assessing and auditing the supply chain, focusing on verification of overseas governments' systems of biosecurity certification.

Cutting the National Food Plan

The Government will save $30.9 million over four years from uncommitted funding from the former Government's National Food Plan initiatives. Savings for this measure have already been provided for by the Government and savings will fund initiatives associated with the Agricultural Competitiveness White Paper.

For more information on the Federal Budget, click here.

All infographics were sourced from budget.gov.au.

 

Small business to catch a break in tonight’s Budget

Tonight’s budget will announce a package set to help small business to invest, grow and employ more.

In a joint release, Treasurer Joe Hockey and Minister for Small Business, Bruce Billson praised small business as “the engine room of our economy”, whose “innovative and entrepreneurial spirit will drive Australia’s economic future.”

The Government’s Jobs and Small Business package will allow new start-ups, as of July 2016, to be able to immediately deduct professional costs associated with starting a business rather than writing them off over five years.

“Many people need the advice of lawyers and accountants when they start a business. This can be expensive and drag on cash flow. Allowing these costs to be deducted immediately will allow more money to be invested in growing the new business,” Hockey said.

The “fragmented and complex process” of registering a business will also be streamlined with a single online registration site.

Small business owners will also be able to change the legal structure of their business without incurring a CGT liability. This is aimed at reducing some of the complexity of starting a new business and providing business owners with more flexibility to determine how they grow.

Accessing capital will be made easier as part of the package, by removing obstacles to crowd-sourced equity funding. This change compliments the expanded tax concessions for Employee Share Schemes currently before Parliament.

The Government will also consult in the coming months on the current framework that guides the establishment and regulation of corporations. The consultation will investigate whether some of the regulatory requirements can be removed or relaxed to reduce compliance costs and make it easier for small businesses to innovate, grow and create jobs.

The Australian Chamber of Commerce and Industry welcomed the package. Kate Carnell AO, CEO of the ACCI, said: “with more than seven in 10 Australian small businesses unincorporated, it was concerning that they would miss out on the benefit of the 1.5 percentage point cut in company tax for businesses with a turnover of less than $2 million.

“It is encouraging that the government is looking after those 1.7 million unincorporated small businesses, including tradies, sole operators and partnerships, with other support. Making it easier for small businesses to claim tax deductions for their expenses will make it easier for small businesses to invest.

“These deductions are particular powerful when combined with recently announced measures to help new businesses, including allowing new start-ups to immediately deduct professional costs, such as for legal and accounting services, as well as streamlined company registration and removing barriers to crowd-sourced equity funding.

“Small business is the engine room of the Australian economy, so support for these businesses will boost overall jobs and investment. The government’s measures will help to restore confidence among small businesses.”

 

Methyl Bromide: its use in keeping Australian strawberries clean

Yes, methyl bromide is a very effective fumigant and ozone depleter, but it’s playing a big role in keeping Australia’s strawberries disease-free.

“The strawberry fruit industry has absolutely nothing to do with methyl bromide. Absolutely nothing,” says George Weda, managing director of Toolangi Certified Strawberry Runner Growers Cooperative in Victoria.

“We are strawberry plant propagators; we grow strawberry plants and as part of that production cycle, we use a fumigant called methyl bromide. We use that under a Critical Use Nomination, from the United Nations, The Montreal Protocol,” Weda says.

Recent attention on the use of the fumigant in the Toolangi region has led some to assume that the strawberries, too, must be toxic.

But the gas is being used to fumigate the soil and is not used on the strawberry fruit.

“Methyl bromide is only used to fumigate the soil prior to growing the strawberry mother plants that produce the runners, which are then bare rooted and transported to another site to replant, which will, some 6 months later bear marketable fruit, the whole process takes over 18 months from the time of the soil fumigation,” says Kevin Bartolo, Australia/Pacific Region manager for Mebrom. Mebrom is one of the companies that imports methyl bromide into Australia for Quarantine and Pre-shipment use only, which is exempt from any bans or restrictions under the Montreal Protocol.

“So there’s no connection between methyl bromide used under the Critical Use Exemption to fumigate the soil for runner production and the fruit itself. Absolutely none,” he says.

“Under normal circumstances, methyl bromide doesn’t taint food. There are set Maximum Residue Limits (MRLs) and technically those limits should never be breached because we’ve found that you would probably have to treat at relatively high dose rates, three times, before you even start approaching those MRL limits. Realistically, you only have to treat once with methyl bromide.”

In the case of the Toolangi certified strawberry runner growers, Weda says licenced contractors are brought in for the fumigation around April/May.

Once the gas is injected into the soil, it is immediately covered in plastic, trapping the gas. The gas then kills off soil pathogens and breaks down. After a week or so, the plastic is removed.

“To be absolutely on the safe side, within two or three weeks you could plant stuff in and it would grow, but if you were to pull the plastic off and plant immediately afterwards, there’s still residues in the soil and it would kill your plant,” Weda says.

The soil is then left until about August/September, when the strawberry “mother plant” is planted.

Those plants then grow and produce strawberry runners. One mother plant might make 100 “daughters” (the plants that come from strawberry runners) and those daughters are harvested the following April. Those plants are then sold to the fruit growers, who plant them in April/May and they will then get fruit from those anywhere from two months later.

Methyl bromide and the environment

Methyl bromide is an extremely effective broad spectrum fumigant which is used to treat against pests and diseases such as bacteria, fungi, nematodes and insects.

But is also very effective in destroying stratospheric ozone. In fact, it is 60 times more effective than the other major ozone depleter, stratospheric chlorine.[1]

Under the Montreal Protocol, Australia agreed to phase out methyl bromide. From 1 January, 2005, all uses of the chemical, other than for quarantine and pre shipment (QPS) or feedstock applications were prohibited in Australia. However, some 'critical use exemptions' have been allowed by the Montreal Protocol on Substances that Deplete the Ozone Layer and can be granted to sectors where there are no technically or economically feasible alternatives to methyl bromide.

And that’s where the strawberry runner growers at Toolangi, in Victoria's Yarra Valley come in. Each year the strawberry runner growers have to apply for critical use exemption.

The strawberry runners in the Yarra Valley are planted in a very heavy soil and according to Bartolo, “to date, there are no registered fumigants out there that have proven to be totally effective. It’s used on the soil only, to control macrophomina and fusarium and other fungal diseases primarily, plus if there happens to be nematodes there and exerts good control on those diseases which, if not controlled, they would literally decimate the industry.” 

The remainder of methyl bromide use in Australia is under quarantine direction on items such as imported or exported grains, imported fruit and timber, where there is deemed to be a quarantine risk.

Why not phase it out completely?

While there are alternatives to methyl bromide, they are not as effective.

“A lot of countries around the world are signatories to the Montreal Protocol so they’ve undertaken to phase out methyl bromide when a suitable alternative for each industry can be identified and used,” Weda says.

“We’ve been looking for over 15 years now…all around the world the strawberry fruit growers and the strawberry runner growers have been looking for alternatives and there isn’t one out there which is as good as methyl bromide, so we can still use it under this critical use nomination.

“If they were to take it away from us tomorrow, we just would not be able to produce the healthy plants that we do now, which means yields would go down, which means we couldn’t supply the fruit growers with a top class, A-grade, healthy plant. It would have some disease on it because there’s nothing else to control the disease like we’re doing now.

“The fruit grower would get those plants already with some level of disease in them so therefore their production would go down, and there’s potential we would get more imports from overseas. Fruit would have the potential to come in from overseas and ironically, most of those strawberries would have been grown on fumigated soil with methyl bromide.”

One alternative to methyl bromide for soil fumigation doesn’t work in heavy soils.

“For the strawberry runner producers there’s not much point in applying a chemical if it’s not going to work in heavy soils,” Bartolo says.

“You’ve got to balance the good with the bad. It’s no good looking at something and saying ‘that’s toxic’ and it’s a dangerous chemical. Well unfortunately, if you want to kill bacteria, diseases, insects and nematodes, you’ve got to have something that does kill. At this stage there isn’t much of an option. People are looking at other options but over the 20 years there have been lots that have come and gone…but the reality is, sooner or later along the line, resistance raises its head. Once you have resistance issues for a given chemical, it ceases to be fully effective.

“At the current stage, without there being a viable alternative, which the chemical industry have been looking for a viable alternative for 20 years now, [a complete phase out] would probably lead to an outbreak or spread of macrophomina and fusarium, wilt diseases in strawberries, which would literally decimate the industry. It basically would take them to the point where they would lose viability and probably end up destroying the industry.

“It’s a matter of balancing the good that methyl bromide has done against the environmental consequences. We know now that the environmental consequences are minimal,” he says.

According to a CSIRO report (Methyl Bromide: Past, Present & Future Impacts on Stratospheric Ozone) provided to Food Magazine by Bartolo, future regulation of the remaining methyl bromide production/consumption in fumigation will have little impact on ozone recovery.

The report suggests that if as of 1 January, 2015, there was zero production or emissions of methyl bromide from fumigation, the ozone would recover to 1980 levels just one year earlier than predicted if the QPS levels remained constant.

Historically, the largest man-made source of methyl bromide is from fumigation, where about 50,000 tonnes per year were emitted to the atmosphere between 1995 and 1998 from non-quarantine/pre-shipment (non-QPS) methyl bromide use (80 percent of which was largely from soil fumigation) and QPS use (20 percent: largely grain and wood products fumigation at pre-shipment). But since the introduction of the Montreal Protocol restrictions on the consumption of methyl bromide for non-QPS use, this total fumigation source reduced to about 10,000 tonnes by 2012.

While reductions in future total emissions of all ozone depleting substances could significantly hasten ozone recovery, methyl bromide will play a minor role.

It has both man-made and natural sources and according to the report, the scientific understanding of the global methyl bromide budget is not balanced, with current identified sinks (which absorb or break down the chemical) exceeding current identified sources by over 30,000 tonnes – nearly 40 percent of all identified sources. This imbalance has persisted from pre-Montreal Protocol phase-out to recent times (2012), implying there are unidentified, probably natural methyl bromide sources.

“Methyl bromide traditionally, and continues to be the mainstay and one of the most potent weapons against exotic disease incursions, so in other words they’re protecting Australia and Australia, like America and like New Zealand are relatively young countries that don’t have a lot of the diseases that exist in some of the more well-established continents…so we’ve got a lot more to protect,” Bartolo says.

“Virtually all the ozone depletion gains have been courtesy of the reduction of fumigation using methyl bromide but now we’re down the stage where it nearly makes no difference.

“It doesn’t make sense, especially when people’s livelihoods and Australian trade [is on the line]. Our image is clean and green because we haven’t got a lot of diseases and insects and organisms that they have overseas, if we didn’t have methyl bromide, we wouldn’t be able to make that claim.”

[1] P. Fraser FTSE, N. Derek, P. Krummel & Dr P. Steele. (2014). Methyl Bromide: Past, Present & Future Impacts on Stratospheric Ozone, CSIRO Oceans and Atmosphere Flagship.