Business Case to review the Nursery Products Levy (NY24001)
What is it all about?
This project is assessing the current Nursery Products Levy collection mechanism, its effectiveness and appropriateness to meet industry’s strategic needs.
Challenge
The Nursery Products levy is one of 263 Commonwealth agricultural levies funding research, development, marketing, and biosecurity. Unlike most levies, it is based on a production input—i.e. plastic pots—rather than product value or output. This system was chosen for practicality due to the diverse nature of nursery products and the complexity of tracking first points of sale.
While levy revenue has grown with the industry, structural weaknesses exist. The levy does not cover all imports, places a higher burden on nurseries using more pots, and is at risk of under-collection as production methods shift away from using new pots.
Response
The project will produce a comprehensive report with actionable recommendations that have been worked through with key industry stakeholders (nursery levy payers, industry stakeholders and representatives, value chain members) and will identify alternative levy models. Other deliverables include a progress report, an engagement plan and a draft business case.
Benefit
This project will provide many benefits for the Nursery industry, including:
- Improved Revenue Collection: A more fit-for-purpose levy rate and collection mechanism will ensure that the levy more accurately reflects industry production methods. This will help avoid under-collection and ensure the levy keeps pace with industry growth.
- Equitable Levy Burden: By addressing the current skew in the levy burden—where nurseries that use more pots bear a larger share—the reform can create a fairer system, ensuring that all businesses contribute proportionally to the industry’s RD&E, marketing, and biosecurity efforts.
- Better Industry Support: A reformed levy can provide a more sustainable funding model for vital research, development, and extension activities, which can drive innovation, improve productivity, and help address emerging challenges e.g. sustainability.
- Alignment with Industry Changes: With shifts in production methods and imports, reforming the levy will ensure that the collection system remains relevant and effective, better reflecting current industry dynamics.
- Future Flexibility: A reformed levy model will be adaptable to future changes in the industry, allowing the system to be easily updated as new challenges or opportunities arise, ensuring long-term sustainability and responsiveness.
- Increased Stakeholder Confidence: Engaging with industry stakeholders and building support for the reform process will foster greater industry buy-in and cooperation, strengthening the overall effectiveness of the levy system and enhancing trust in its outcomes.
This project is a strategic levy investment in the Hort Innovation Nursery Fund