Primary Industry Funding Schemes (Sheep Industry Fund) Regulations 2014

The Primary Industry Funding Schemes (Sheep Industry Fund) Regulations 2014 (SA) (the Regulations) continue the South Australian Sheep Industry Fund (the Fund) and impose compulsory per-head monetary contributions on commercial sheep sales. The Fund is administered by the Minister (r 4(2)). Two contributions apply to each contract of sale under which five or more sheep are sold for an average price of $5 or more per sheep: a dog fence rebuild contribution of 12 cents per sheep (or such other amount, including zero, as the Minister determines by Gazette notice) and a general contribution of 55 cents per sheep (r 6(1)). The vendor of the sheep must pay the contributions, but if a collection agent (a stock agent, an abattoir operator purchasing directly, or a person who buys sheep for slaughter and sells the carcasses) is involved, that agent must pay on the vendor’s behalf (r 6(3)-(4)). The collection agent, or the vendor if no agent exists, must keep proper records, make them available for inspection, and within 14 days after each quarter furnish the Minister with a financial statement and forward the contributions (r 6(5)-(6)). The Regulations also create a refund mechanism. A vendor may claim a refund for dog fence rebuild contributions or general contributions (or both) paid in the immediately preceding financial year (r 6(7)). The refund amount is calculated using a formula that adds to the total contributions an interest component based on the four quarterly contribution amounts and the annual short term interest rate published by the Reserve Bank of Australia (r 6(8)). However, a vendor who has been refunded general contributions is not entitled to receive a direct benefit from the Fund for the two following financial years (r 8). The Fund may be applied by the Minister for: payment of dog fence rebuild contributions (for rebuilding the dog fence to prevent wild dog entry into pastoral areas); payments to the Dog Fence Board for fence maintenance or improvement; payments, on the advice of a body representing sheep producers, for that body’s operating expenses, sheep industry programs, promotion, research and development, industry forum participation, and other purposes; payments for other purposes for the benefit of sheep producers; repayment of contributions; and administration expenses (r 7). The Minister may require recipient bodies to provide financial statements, annual reports, business plans, and other information (r 9(1)), and may provide those bodies with information identifying persons who have paid or been refunded contributions (r 9(2)). Making a false or misleading statement in information provided or records kept under the Regulations carries a maximum penalty of $5,000 (r 14).

Contribution means a dog fence rebuild contribution or a general contribution (r 3(1)). The dog fence rebuild contribution is a levy of 12 cents per sheep (or a different amount set by the Minister, possibly zero) intended to fund the reconstruction of the dog fence under the Dog Fence Act 1946. The general contribution is a fixed levy of 55 cents per sheep that feeds into the general pool of the Fund for broader sheep industry purposes.

Collection agent is defined in three limbs. For a contract of sale conducted by a stock agent, that stock agent is the collection agent. If the sale is to a person who operates an abattoir and is not conducted by a stock agent, the abattoir operator is the collection agent. If the sale is to a person who carries on a business involving the purchase of sheep for slaughter and the sale of the carcasses (and is not conducted by a stock agent), that person is the collection agent (r 3(1)). This definition is designed to capture the main points in the supply chain where payment for sheep changes hands, ensuring that a single entity is responsible for remitting contributions.

Vendor of sheep means the owner of the sheep immediately before the sale (r 3(1)). The definition of owner of sheep excludes a mortgagee not in possession, meaning that only the beneficial owner (usually the farmer or grazier) is treated as the person liable for contributions.

Default in relation to general contributions: a vendor is in default if, within the immediately preceding two financial years, all or some of the general contributions payable on sales of that vendor’s sheep have not been paid, or the vendor has been refunded general contributions from the Fund (r 3(2)). Default status does not directly attract a penalty in these Regulations, but it triggers the loss of entitlement to receive a direct benefit from the Fund under r 8.

Quarter is a three-month period starting 1 January, 1 April, 1 July or 1 October (r 3(1)). Reporting and remittance obligations are tied to quarters. The refund formula uses quarterly contributions to calculate interest.

Refund formula is set out in r 6(8). The refund amount equals:

R = Ct + [(C1 × (3/12) + C2 × (2/12) + C3 × (1/12) + C4 × (0/12)) × I/100]

where Ct is total contributions paid in the preceding financial year, C1-C4 are contributions paid in each respective quarter, and I is the annual short term interest rate published by the Reserve Bank of Australia expressed as a percentage. The formula compensates for the time value of money by applying a simple interest fraction based on the quarter when each contribution was paid: for C1 (first quarter) the interest period is 3/12 of a year, for C2 it is 2/12, for C3 it is 1/12, and for C4 it is 0.

The Regulations directly affect sheep owners in South Australia who sell sheep, stock agents, abattoir operators, and persons who buy sheep for slaughter and sell carcasses (collectively, collection agents). Indirectly, the Regulations affect the Dog Fence Board, any body that represents sheep producers and receives Fund payments, and ultimately all participants in the South Australian sheep industry.

Sheep vendors (owners): any person who owns sheep and sells them under a contract where the sale triggers the contribution threshold (5 or more sheep at an average price of $5 or more). Vendors are primarily liable for the contributions. They must either rely on a collection agent to remit or, if selling privately or without an agent, comply with record-keeping and quarterly reporting obligations themselves. Vendors who chose to claim refunds must accept a two-year disqualification from direct Fund benefits, which may affect their eligibility for industry programs funded by the general contribution.

Collection agents: these are the primary collection and reporting points. Stock agents who conduct sales must collect contributions from the sale proceeds and remit them. Abattoir operators who buy directly from farmers without a stock agent become collection agents and must similarly account. Businesses that purchase sheep for slaughter and sell the carcasses (e.g., processors) fall into the third limb. Collection agents bear the compliance burden of keeping records, preparing quarterly statements, and forwarding contributions within 14 days after each quarter. They are not reimbursed for their administrative costs out of the Fund, so the collection mechanism imposes an uncompensated cost on private intermediaries.

The Minister: administers the Fund (r 4(2)), determines the dog fence rebuild contribution amount by Gazette notice (r 6(1)(a)(ii)), and decides on applications of the Fund (r 7). The Minister also has power to require information from recipient bodies (r 9(1)) and to authorise persons to inspect records (r 6(5)(b)). This centralises significant discretion in a single political office, with limited statutory criteria constraining how Fund money is allocated to “other purposes for the benefit of sheep producers” (r 7(d)).

The Dog Fence Board: receives contributions from the Fund for maintenance or improvement of the dog fence (r 7(b)). The Board is a statutory body under the Dog Fence Act 1946 and is not accountable to the sheep producers who fund it, but rather to the Minister.

Duty to pay contributions: the vendor of sheep is primarily liable for both the dog fence rebuild contribution and the general contribution (r 6(3)). Payment is triggered by each contract of sale meeting the thresholds. If multiple contracts with the same purchaser each involve fewer than five sheep but the total exceeds four in a financial year, they are aggregated into a single contract (r 6(2)). This prevents avoidance by splitting sales.

Duty of collection agents to remit: where a collection agent exists, that agent must pay the contributions on behalf of the vendor (r 6(4)). The agent’s duty is to pay the contributions to the Minister, not merely to collect them. The agent is not made personally liable for the contribution if the vendor defaults on payment to the agent? The Regulations do not explicitly address the situation where the vendor does not provide funds; the agent is still required to pay on behalf of the vendor. This could leave the agent out of pocket if the vendor is insolvent.

Duty to keep records: the collection agent or, in a direct sale, the vendor, must keep proper records relating to contracts of sale and contributions (r 6(5)(a)). The records must be made available for inspection at any reasonable time by a person authorised by the Minister (r 6(5)(b)). No minimum retention period is specified, but prudent retention of at least three years (covering the default look-back period) is indicated.

Duty to furnish quarterly statements and forward contributions: within 14 days after the end of each quarter, the responsible person must provide the Minister with a financial statement in the form and containing the information required by the Minister, and if the person has the necessary equipment, in an electronic form acceptable to the Minister (r 6(6)(a)). Simultaneously, they must forward the required contributions (r 6(6)(b)).

Right to claim refund: a person who was the vendor at the time contributions became payable may claim a refund for dog fence rebuild contributions, general contributions, or both, in respect of contributions made in the financial year immediately preceding the financial year in which the claim is made (r 6(7)). The claim must be by written notice to the Minister (r 6(8)). The Minister must pay the refund if satisfied the person is entitled, calculated according to the formula (id). The refund includes interest based on the RBA short term rate, which is a notable concession: it compensates the vendor for the time the Fund held the money.

The only penalty expressly created by the Regulations is for making a false or misleading statement in a material particular (whether by inclusion or omission) in information provided or records kept for the purposes of the Regulations, with a maximum fine of $5,000 (r 14). This is a relatively modest penalty and applies to any person, including vendors, collection agents, and possibly recipient bodies. The offence is a summary offence under South Australian law, meaning it can be dealt with in the Magistrates Court. The penalty amount has not been indexed to inflation in the Regulations themselves, though it may be updated by the general Sentencing Act provisions.

The Regulations do not create specific penalties for late payment of contributions, failure to keep records, failure to furnish statements, or failure to forward contributions. Those failures may be addressed under the enabling Act, the Primary Industry Funding Schemes Act 1998, or under general law (e.g., debt recovery by the Crown). The Regulations themselves are silent on interest for late payment, but the refund formula (which pays interest only on refunds) does not impose an equivalent charge on late remitters. This asymmetry creates an incentive for a cash-strapped collection agent to delay remitting contributions to the Minister, since the only consequence is the $5,000 false statement penalty if they misrepresent the amount, not a penalty for delay.

Enforcement is likely to rely on the Minister’s powers to inspect records (r 6(5)(b)) and to require information from recipient bodies (r 9(1)). The Minister can also withhold Fund payments to non-compliant bodies under r 7, but that is a discretionary enforcement tool.

The default regime under r 3(2) and r 8 acts as an indirect enforcement mechanism. A vendor who fails to pay general contributions, or who has them refunded, loses the entitlement to receive direct benefits from the Fund for two financial years. This is not a penalty in the criminal sense, but it deters non-payment and refund claims by excluding the vendor from industry programs funded by the Fund. The ultimate sanction for a vendor or collection agent who persistently fails to remit may be recovery action by the Minister under the Act, but the Regulations do not spell out the procedure.

The Regulations are made under the Primary Industry Funding Schemes Act 1998 (SA) (the Act). The Act is the enabling legislation that confers the power to establish industry funding schemes and to make regulations imposing contributions. The Regulations do not reproduce the Act’s provisions on, for example, the mechanism for establishing a scheme, the variation of contributions, or the judicial review of decisions. Practitioners must read the Act alongside the Regulations to obtain a complete picture. The Regulations repeatedly refer to “the Minister” and do not specify which portfolio Minister; that is likely determined under the Act and the Administrative Arrangements Act.

The Regulations incorporate by reference the Dog Fence Act 1946 for the definition of “dog fence” and the composition of the Dog Fence Board (r 3(1); r 7(b)). The Dog Fence Act establishes the fence and the board responsible for its maintenance. The Regulations channel funds to the Board, but do not control how the Board spends those funds beyond the general purpose of “maintenance or improvement” of the fence. Any amendment to the Dog Fence Act could affect the operation of the Regulations.

The Regulations also implicitly interact with other industry funding schemes under the same Act. For example, other primary industries (beef, grains) have separate funds. The Regulations are specific to sheep and do not create cross-subsidisation between industries, but the Act may have provisions for combining funds.

The Regulations have been amended in 2016 and 2019. The 2019 amendment was significant: it removed all references to Johne’s disease, which had formerly been a major purpose of the Fund (including property eradication plans). It deleted Part 3 (which presumably contained specific provisions about disease eradication) and repealed the definition of “Johne’s disease order” and “Johne’s disease property eradication plan”. This indicates a shift in focus from disease control to dog fence maintenance and general industry promotion.

The Regulations may interact with the Australian Consumer Law (as part of the Competition and Consumer Act 2010 (Cth)) in terms of record-keeping and false statements, but the Regulations provide their own specific penalty for false or misleading statements. The State’s legislation generally deals with false statements to a public official; federal law may also apply if the false statement concerns a trade or commerce matter.

The Regulations are silent on privacy law. The Minister’s power to share contributor information with recipient bodies (r 9(2)) may engage the Information Privacy Principles under the South Australian Information Privacy Act 2015, but the Regulations do not carve out an exception or provide for consent. Recipient bodies are likely not government agencies and may not be subject to the Privacy Act (Cth) unless they have annual turnover above $3 million. This could create a privacy gap.

The Regulations were originally made in 2014 (Gazette 14.8.2014 p4036, commenced 14.8.2014) and revoked the earlier 1999 Regulations. The legislative history shows two subsequent amending instruments and one editorial change.

2016 Variation (No 193 of 2016): gazetted 11.8.2016, commenced 10.9.2016. This variation omitted regulation 2 (which had dealt with commencement) under the Legislation Revision and Publication Act 2002, presumably because the commencement date had passed. It also omitted Schedule 1 (which had likely contained the original description of the Fund). The amendment did not alter contribution rates or the application of the Fund.

2019 Variation (No 237 of 2019): gazetted 7.11.2019, commenced 7.11.2019. This was a substantial rewrite. It:

• Deleted the definition of “consultative committee” (r 3(1)) - the committee was removed from the scheme.
• Inserted definitions for “contribution”, “dog fence”, “dog fence rebuild contribution”, “general contribution”.
• Deleted definitions for “Johne’s disease order” and “Johne’s disease property eradication plan”.
• Deleted “prescribed amount” definition.
• Varied r 3(2) to replace references to “Johne’s disease purposes” with the current default definition based on general contributions.
• Deleted regulation 5 (which had dealt with Johne’s disease programs).
• Substituted a new r 6(1) - this introduced the dual contribution structure (dog fence rebuild contribution and general contribution) replacing a single “prescribed amount” contribution based on a formula. The new r 6(1) set fixed rates instead of a formula.
• Varied r 6(3) and (4) to refer to the new contribution types.
• Substituted new r 6(7) and (8) - the refund provision changed from a general entitlement to a specific claim period and a new interest formula.
• Substituted a new r 7 - the previous r 7 had been limited to Johne’s disease control; the new r 7 greatly expanded the Fund’s permissible uses to include dog fence rebuilding, contributions to the Dog Fence Board, payments to a representative body for industry purposes, and a catch-all.
• Varied r 8 (which had previously prohibited benefits after refund) to refer to general contributions only and changed the period from “life of the fund” to “2 financial years”.
• Inserted new r 9(1) and redesignated existing r 9 as r 9(2). This gave the Minister power to require financial statements, annual reports, business plans, and other information from recipient bodies.

There are no references to any court proceedings in the Regulations themselves, and no cases are cited. The legislative history does not note any litigation. However, practitioners should be aware of potential grounds for judicial review or disputes under the Regulations.

Possible litigation scenarios include:

• A collection agent disputing liability to pay contributions on behalf of an insolvent vendor. The Regulations do not explicitly make the agent liable if the vendor does not pay the agent. An agent might argue that the duty under r 6(4) is only to “pay the contributions on behalf of the vendor”, implying the agent must have received the funds from the vendor; otherwise the agent would be a gratuitous surety. No case has tested this.
• A vendor challenging the Minister’s refusal to refund contributions. The Minister must be “satisfied that the person is entitled to the refund” (r 6(8)). This discretionary language could be the subject of an application for judicial review if the Minister forms an unreasonable view of the evidence.
• A body representing sheep producers challenging the Minister’s decision not to pay it under r 7(c). The condition is that the body is “in the opinion of the Minister” representative. If the Minister forms an opinion that no body is representative, or chooses a different body, the excluded body might seek review. The Regulations do not specify criteria for being “representative”.
• Disputes about the calculation of the refund formula, particularly the interest rate and the quarterly allocation. The formula uses “the annual short term interest for that financial year (as published by the Reserve Bank of Australia)”. If the RBA publishes multiple rates, which one applies? No clarification.
• A false statement prosecution under r 14. The maximum penalty of $5,000 is low, but a defendant might argue that a statement is not “material” or that the person did not know it was false. No cases are recorded.

Given that the Regulations are subordinate legislation under the Act, any challenge to the validity of the Regulations themselves (e.g., for inconsistency with the Act) would be litigated under the Act’s provisions. The Regulations appear to be within power, but the broad discretion in r 7(d) (“other purposes for the benefit of sheep producers”) could be challenged as an unlawful delegation of legislative power if the Minister used it to spend on purposes unrelated to sheep.

Aggregation trap for small sales: regulation 6(2) treats multiple contracts of less than five sheep with the same purchaser in a financial year as a single contract. This means a farmer who sells three sheep to a neighbour in March, then three more in August, could be deemed to have a single contract of six sheep, thereby triggering the contribution obligation. Vendors must track cumulative sales to each purchaser, not just per-transaction thresholds.

Quarterly reporting even for zero contributions: if a collection agent or vendor has no sales in a quarter, must they still furnish a statement? Regulation 6(6) requires a financial statement relating to contributions arising from contracts “during that quarter”. If there are no contracts, arguably no statement is required, but the prudent approach is to submit a nil return to avoid the Minister’s assumption of non-compliance.

Refund timing trap: the refund claim must be made in the financial year immediately following the financial year in which contributions were paid (r 6(7)). For example, contributions paid in the 2023/24 financial year must be claimed by the end of the 2024/25 financial year. After that, no refund is available. The claim must be by written notice; oral requests are insufficient.

Two-year exclusion from direct benefits: claiming a refund of general contributions triggers default under r 3(2)(b) and disqualifies the vendor from receiving a direct benefit from the Fund for two financial years following the year of refund (r 8). This can include exclusion from industry programs, grants, or rebates funded by the Fund. The term “direct benefit” is not defined, creating uncertainty. For example, is attendance at a free industry workshop funded by the Fund a direct benefit? The Minister’s interpretation will prevail.

Dog fence rebuild contribution can be zero without warning: the Minister can determine an amount “(which may be 0)” for the dog fence rebuild contribution by notice in the Gazette (r 6(1)(a)(ii)). This means the effective contribution rate can change without amending the Regulations. Vendors and agents must monitor the Gazette for changes.

No explicit penalty for late payment: the only penalty in the Regulations is for false statements. Late payment of contributions is not specifically penalised, but the Minister may still recover the overdue amount as a debt under the Act. Collection agents who delay may face accumulation of liabilities without a statutory interest charge, but the Minister could potentially refuse to accept late payments without penalty, creating uncertainty.

For sheep vendors: identify each sale of five or more sheep at $5 or more average price. If you use a stock agent or sell to an abattoir operator that qualifies as a collection agent, you are not required to remit contributions yourself, but you should ensure the agent is reputable and will remit. Keep copies of sale contracts and any correspondence with the agent regarding contributions. If you sell directly (e.g., to a neighbour or private buyer) without a collection agent, you must pay the contributions to the Minister within 14 days after the end of each quarter. You must also keep proper records (r 6(5)) and furnish a quarterly financial statement (r 6(6)). The statement must be in the form required by the Minister, and if you have the necessary equipment, in electronic form. The statement must cover all contracts entered into that quarter. If you have multiple contracts with the same buyer each under five sheep, monitor the total for the financial year; once the cumulative exceeds four sheep, those sales are aggregated and contributions become due.

For collection agents (stock agents, abattoir operators, slaughter/carcass buyers): you must collect contributions from the vendor at the time of sale (r 6(4) obliges you to pay on behalf of the vendor). Deduct the dog fence rebuild contribution (12 cents per head unless varied) and the general contribution (55 cents per head) from the sale proceeds payable to the vendor. You must keep proper records of each sale, including the number of sheep, average price, and contributions (r 6(5)). Records must be available for inspection at any reasonable time by a person authorised by the Minister. You must prepare a quarterly financial statement (within 14 days after the end of each quarter) in the Minister’s required form, and forward the contributions with the statement (r 6(6)). If you have electronic capability, use the electronic form. Ensure your records are accurate to avoid false statement penalties (r 14). If a vendor disputes the contribution or refuses to pay, you must still remit the contributions; you may then seek recovery from the vendor separately. Note the aggregation rule: if you handle multiple small sales to the same buyer on behalf of a vendor, keep a running total.

For vendors seeking a refund: within the financial year after the year contributions were paid, submit a written notice to the Minister requesting a refund of dog fence rebuild contributions and/or general contributions. The claim should clearly identify the financial year and the amounts. The Minister will calculate the refund using the formula in r 6(8). Provide any supporting documentation the Minister requests to verify entitlement. Be aware that claiming a refund for general contributions will bar you from receiving a direct benefit from the Fund for two financial years (r 8). This may affect your eligibility for industry programs funded by the Fund. Consider whether the refund is worth the loss of benefits.