Farquharson and Anor and Dairy Adjustment Authority [2003] AATA 8 (31 January 2003)

Last Updated: 31 January 2003

DECISION AND REASONS FOR DECISION [2003] AATA 85

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/297, Q2001/307

GENERAL ADMINISTRATIVE DIVISION	)
	Re	PETER FARQUHARSON First Applicant SANDRA DACK
		Second Applicant
	And	DAIRY ADJUSTMENT AUTHORITY

Respondent

DECISION

Tribunal

Senior Member KL Beddoe

Date 31 January 2003

Place Brisbane

Decision

The Tribunal decides that the decisions under review are affirmed.

.....................(Sgd).....................

KL Beddoe

Senior Member

CATCHWORDS

PRIMARY PRODUCTION - dairy adjustment scheme - entitlements and benefits - whether applicants' entitlement to standard payment right correctly assessed - whether applicants entitled to exceptional events supplementary payment right - whether there is a reviewable decision in relation to the exceptional events supplementary payment right

Dairy Produce Act 1986

Dairy Industry Act 1993 (Qld)

REASONS FOR DECISION

31 January 2003

Senior Member KL Beddoe

1. The first and second applicants own and operate a dairy farm enterprise in their own names. For the purpose of the reasons for decision I will refer to them jointly as "the applicants".

2. By an application dated 8 August 2000 the applicants claimed payment under the Dairy Structural Adjustment Program Scheme 2000 ("the Scheme").

3. The respondent subsequently decided that the applicants were each entitled to a standard payment right with a face value of $50,555 subject to conditions (T8).

4. The applicants sought internal review of those decisions in a letter dated 15 January 2001 (T13) addressed to the respondent. That letter stated that the applicants wished to appeal their standard payment right. The reasons given may be summarised as follows:

(a) production has been pushed down because of corruption in the Queensland dairy industry;

(b) as a consequence the applicants have been denied their true legal income; and

(c) supporting argumentative material enclosed by the applicants (T13).

5. The dispute arises in this case because the applicants had also applied for an "exceptional events supplementary payment right". The applicant describes the exceptional event as (T4):

"Court Case: Entitlements with Dairy Industry Tribunal and Crown Law Office. Organised crime by QDA and numerous Gov't. bodies. Entitlements were illegally issued under the Queensland Dairy Industry Act 1993."

6. By letter dated 19 February 2001, the respondent advised the applicants that they were not eligible for an exceptional events supplementary payment (T15-T16). The applicants were also advised that they could seek internal review of that decision (T16).

7. By notices of decision dated 8 March 2001, the respondent notified the applicants that following internal review the primary decision dated 7 December 2000 was confirmed (T16).

8. On 5 April 2001 the applicants applied for review in this Tribunal referring to notices of decision received on 16 March 2001 (T1).

9. There has been no application for internal review of the decision notified on 19 February 2001 in relation to the claim for exceptional events supplementary payment. I am satisfied that there is no reviewable decision in relation to the claim for exceptional events supplementary payment under the Scheme.

10. At the hearing it became clear that the real issue is the standardisation of the milk industry in relation to market milk and manufacturing milk. The applicants claim that they produce market milk but are only paid market milk rates for part of the production, the balance deemed to be manufacturing milk paid for at a lower rate.

11. The essence of the applicants' case arises from the arbitrary application of quotas in respect of their milk production into some milk accepted as market milk and the balance as manufacturing milk, albeit their production is mainly the more valuable market milk, thereby subsidising producers who produce mostly inferior manufacturing milk. The applicants have a number of deep-seated concerns about the dairy industry but I have tried to summarise those concerns relevant to the issue before the Tribunal.

12. With effect from 1 July 2000, the dairy industry was de-regulated. To assist this program the Commonwealth introduced a structural adjustment program under the Dairy Produce Act 1986. That scheme provided for payments to be made to eligible entities. Eligible entities are parties eligible for a payment right. There are three classes of payment rights:

(a) standard rights;

(b) exceptional events supplementary payment rights; and

(c) anomalous circumstances payments rights.

13. It is the category (b) rights that are sought to be put in issue here, the applicants having received payment in respect of standard payment rights.

14. At the hearing the applicants conducted their own case and Mr Pizer appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the "T" Documents. No other evidentiary material was put before the Tribunal except for Exhibit 1, which is a statement by James Richmond Forsyth. That statement is mainly concerned with the procedural steps in this matter rather than the merits. It does establish that the supply and management system for milk marketing applied throughout Queensland from 1 January 1999. Under this system producers delivered milk to processors according to allocated entitlements.

CONSIDERATION

15. Document T7 satisfies me that the applicants' milk production figures for fiscal 1998/1999 were as follows:

Total Milk Deliveries 447,885 litres

Market Milk Sales

- Quota 139,362 litres

- Non-quota 27,366 litres

Manufacturing Milk

- Fat 10,996 kg

- Protein 8,766 kg

16. The applicants adopted those figures in the application for the standard payment right.

17. Insofar as the applicants assert that they delivered more market milk than their quota, I am satisfied that section 30 in Division 4.2 of the Scheme does not apply because Queensland was not a pooling State and the applicants carried on their business in Queensland.

18. The Dairy Industry Adjustment Program ("the Program") set out in Schedule 2 of the Dairy Produce Act 1986 ("the Act") provides the statutory basis for formulation of the Scheme.

19. The essence of the Scheme is set out in section 1 of the Program in Schedule 2 of the Act. So far as is relevant, the main object of the Program is to help the dairy industry adjust to re-regulation by providing four types of grants, but here I am only concerned with the grant under the Program ("the DSAP payment").

20. The DSAP payments are calculated by reference to 1998/1999 milk deliveries at a rate of 46.23 cents per litre for market milk and a national average rate of 8.96 cents per litre for manufacturing milk.

21. Section 21 of the Scheme provides for determination of the standard payment right in the applicants' circumstances so that the face value of the applicants' standard payment right is equal to the overall enterprise amount. Because the applicants are in partnership, on an equal basis, they are each entitled to 50% of the standard payment right.

22. The overall enterprise amount is defined and determined in clause 2 of the Program as follows:

"overall enterprise amount, in relation to a dairy farm enterprise, means the sum of:

(a) the amount calculated at the rate of 46.32 cents per litre of market milk delivered by the enterprise in the 1998-1999 financial year; and

(b) the amount calculated at the rate of 76.03 cents per kilogram of the milk fat content of manufacturing milk delivered by the enterprise in the 1998-1999 financial year; and

(c) the amount calculated at the rate of 178.77 cents per kilogram of the protein content of manufacturing milk delivered by the enterprise in the 1998-1999 financial year.

Note 1: It is expected that the result of applying the rates mentioned in paragraphs (b) and (c) will be a national average rate of 8.96 cents per litre of manufacturing milk.

Note 2: See also clause 30 (which deals with the transfer of the whole or part of market milk delivery rights).

Note 3: See also clause 31 (which deals with abnormal market milk pool distributions)."

23. In the Dairy Industry Act 1993 (Qld) "market milk" is defined to mean dairy produce intended for sale for human consumption as milk including dairy produce classified by regulation as market milk. For present purposes I am prepared to accept that the defined meaning approximates the meaning attributed to market milk in the industry. If that meaning were to be adopted in determining the overall enterprise amount, then it is not difficult to understand why the applicants feel aggrieved.

24. However, clause 2 of the Program defines "market milk" as follows:

"market milk means milk on which levy was imposed by whichever of the following is applicable:

(a) paragraph 5(1)(a) of the repealed Dairy Produce Levy (No.1) Act 1986;

(b) paragraph 6(1)(a) of Schedule 6 to the Primary Industries (Excise Levies Act 1999."

25. I was told, and I accept, that the milk on which levy was imposed in the applicants' case is the amount of 447,885 litres as stated by the applicants in their application.

26. I am satisfied that the applicants lodged a correct application for standard payment right and the respondent accepted that application without adjustment.

27. For these reasons I am satisfied that the decisions to confirm the decisions notified on 7 December 2000 were correct. The decisions on reconsideration will be affirmed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member KL Beddoe

Signed: Sarah Oliver

Associate

Date of Hearing 28 May 2002

Date of Decision 31 January 2003

The Applicants appeared in Person

Counsel for the Respondent Mr J Pizer

Solicitor for the Respondent Mallesons Stephen Jacques