MPI updates fees and charges

On 1 July 2015, updated fees and changes to the way the Ministry for Primary Industries (MPI) recovers costs for its services from businesses and industries will come into effect.

Changes and updated fees are a result of a recent review of cost recovery, which MPI consulted on in February this year. Throughout consultation, MPI held 21 consultation meetings around the country and received a total of 247 submissions.

“MPI provides a range of important food safety and biosecurity services,” says Dan Bolger, MPI’s Deputy Director-General, Office of the Director-General. “This includes the development and maintenance of domestic and overseas standards, monitoring and testing of products to ensure consumer safety, gaining market access, and providing assurances to overseas customers.”

“Fees recovered allow MPI to provide services that are integral to the growth of our $37.4 billion primary sector export industry, keep food consumers safe, here and overseas, and ensure New Zealand maintains its reputation as a reliable producer of safe, high quality goods,” says Mr Bolger.

This is the first review of biosecurity fees since 2010 and the first review of food safety fees since 2008. It is also the first review since MPI was formed in 2011.

“Since the last review, demand for MPI’s services has increased, driven by increasing imports and exports, the need to provide new services, as well as a greater number of food businesses. In addition, inflation pressure has meant that the real cost of delivering services is also increasing,” says Mr Bolger.

The models and processes for recovering costs for the food safety and biosecurity systems were developed at different times and before MPI was formed. Over time this has led to potential inequities in charges.

“Throughout the review, we have worked hard to identify and address potential inequities in current charges. We have also worked hard to strike a balance between making sure that costs are fair and making sure we are charging the right amount to continue doing the job for industry and New Zealand. Industry feedback and participation during consultation has played an important part in helping us to achieve this.”

Over the next year, MPI expects the amount recovered from industry for biosecurity to increase by approximately $6.0 million to $36.4 million, and to increase by approximately $5.9 million to $61.2 million for food safety.

Key updated fees and policies include:
• updating around 250 biosecurity and food safety fees, charges and levies
• reducing costs to small dairy processors by decreasing their annual levy and the creating a new levy category for medium dairy processors
• introducing cost recovery for infant formula exports
• introducing cost recovery for the essential services that the Government provides the wine industry, such as setting industry standards and helping the industry gain market access
• increasing the biosecurity entry levy fee
• revising the rules and fees around biosecurity transitional and containment facilities
• increasing the veterinary professional hourly rate for all live animal veterinary inspections
• increasing resources for approvals of registrations for trade names for agricultural compounds and veterinary medicines to reduce the processing time; and
• the adoption of a single (export and domestic) levy for poultry production.
At the same time as the cost recovery review, MPI ran a separate consultation which looked at proposals to introduce cost recovery for regulatory services under the new Food Act 2014.

As a result of this consultation, MPI will recover costs from food businesses associated with providing essential services such as registration and the clearance of imported food.
Updated fees and policies will take effect on 1 July 2015, except for fees under the Food Act 2014, which comes into effect on 1 March 2016.

For more details on the updated fees and policies, please visit http://www.mpi.govt.nz/law-and-policy/legal-overviews/updated-fees-charges/

ENDS

Questions and Answers

Why is MPI updating its fees?
This is the first review of biosecurity fees since 2010 and the first review of food safety fees since 2008. It is also the first review since MPI was formed in 2011.

Since the last review of fees there has been:
• an increase in imports and exports
• an increase in the number of food businesses
• changes to trading patterns which means MPI has had to provide new and improved services
• inflation pressure which means the real cost of delivering services is also increasing.

In addition, the different systems for recovering costs from industry were not developed at the same time which, over time, has led to potential inequities in current charges. The proposed updates have been designed to address these inequities and ensure all industry – large and small – is treated fairly.

How much is MPI expecting to recover from industry and businesses?
Over the next year, MPI expects to the amount recovered from industry for biosecurity to increase by approximately $6.0 million to $36.4 million, and to increase by approximately $5.9 million to $61.2 million for food safety.

In addition, under the Food Act 2014 MPI expects to recover around $3 million per year, beginning from 1 March 2016.


Why have costs for MPI’s services gone up?
Not all costs for services have gone up and in some cases business will see a reduction in costs. For example, as a result of the review, small and artisan dairy processors will see a reduction in the annual amount they have to pay.

In other areas we have had to increase our fees and charges to meet an increase in demand which has been driven by increasing imports and exports and a greater number of food businesses. This has meant that MPI has had to provide new services as well as make improvements to existing services. In addition, inflation pressure has meant that the cost of delivering services is also increasing.

It is important to note that this is the first review of fees for the biosecurity and food safety services in a number of years and generally across the board, increases in the cost of existing services are much less than the rate of inflation.

Throughout the review we have worked hard to keep costs down and to ensure fees and charges are fair and appropriate.

For more details on the updated fees and policies, please visit http://www.mpi.govt.nz/law-and-policy/legal-overviews/updated-fees-charges/

Is cost recovery a new initiative?
No. It is a longstanding and important part of the way New Zealand government funds its services to industry.

This review will be part of regular ongoing reviews around the way MPI recovers costs for its services to ensure our fees are fair and appropriate.

Does everyone pay the same?
No. Different businesses will pay different amounts depending on the services they receive. For more details on the updated fees and policies, please visit http://www.mpi.govt.nz/law-and-policy/legal-overviews/updated-fees-charges/

What will this mean to my business?
The costs that businesses will need to meet will vary according to the nature of the particular business. For more details on the updated fees and policies, please visit http://www.mpi.govt.nz/law-and-policy/legal-overviews/updated-fees-charges/

Has MPI considered other alternatives to updating fees?
MPI considered a wide range of possibilities when reviewing the way we recover costs, including the option of keeping costs to business as they are. However, rising costs and potential inequities, means that change is needed.

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