Funding Model Review – Consultation Period 10 January 2022 to 18 February 2022

10 January 2022

The DFSV funding model review consultation period commences 10th January 2022 and closes Friday 18th February 2022 at 5.00pm AEST.

Consultation paper can be viewed here.

Webinars – You can register for these events here

DFSV welcomes stakeholders’ views and will be seeking feedback on proposed changes.

The consultation objectives include:

  • Create awareness of the review amongst DFSV’s dairy industry licensees, dairy industry associations and government stakeholders
  • Provide clear and concise information on the review and to seek feedback and views early in the consideration of options
  • Demonstrate how industry has and will have input to help shape changes
  • Ensure consistent messaging to government and industry stakeholders on the review process
  • Ensure stakeholders are informed how their involvement affected the decision

DFSV will also report on our licensees’ satisfaction with our consultation process in the 2021-2022 annual report. 

 

Frequently Asked Questions

Is DFSV introducing new or additional services?

Yes.

  • Implementation of Dairy RegTech for manufacturers in January 2021 enabling the provision of data on a regular basis as the main form of compliance monitoring.
  • From early 2022, licensee interaction with DFSV will occur through a licensee portal within the new licencing and compliance management system providing access to information held by DFSV about their business, including profile data, electronic licence certificates, their own approved food safety program, a compliance data dashboard (e.g. from manufacturer-supplied data), audit reports and access to specific DFSV resources such as Dairy RegTech tools or technical support
  • DFSV will review and approve a farm food safety program and enter into an agreement with the associated manufacturer to undertake monitoring of farms compliance to this program. This arrangement will be verified at the manufacturer audit removing the need for DFSV to separately audit farms, reducing audit burden and unnecessary duplication of existing manufacturer requirements.
  • DFSV will reduce administrative burden for manufacturers reporting milk volumes on behalf of licensed farms for the purpose of fee calculation, by processing milk volume reports quarterly as opposed to monthly.
  • DFSV will introduce an annual compliance audit of food safety systems for dairy carrier licensees. This will be undertaken as a system review across a licensed carrier’s operational fleet and include a visual verification of a sample of carrier vehicles.
  • Licensable distribution activities will be limited to bulk distribution of dairy foods (i.e. accumulation and storage of bulk milk/dairy foods not in primary packaging). All other activities involving storage and distribution of finished dairy goods will be licensed by local government under the Food Act 1984
  • Licensees undertaking more than one activity associated on a common site (including carriers, where the vehicle is registered to the common site) can apply for a single integrated licence. This allows for a single food safety program covering all licensable activities to reduce licensing costs along with the number of audits required for each business.

 

How many options are being proposed?

DFSV is seeking feedback on the current situation (Option 1, the status quo) and an alternative option (Option 2) for each part of the dairy supply chain (farms, manufacturers, carriers and distributors). You can view the consultation paper here and make a submission.

If you have any questions, please email This email address is being protected from spambots. You need JavaScript enabled to view it.

 

What are the changes being proposed under Option 2?

The main changes are summarised below for each part of the dairy supply chain.

For Farms
  • Licence fees for non-bovine farms will be aligned with those charged for bovine farms, as the food safety risk associated with the activity and DFSV services provided are the same
  • DFSV will reduce administration burden with farms by reducing the frequency of reporting milk volumes by manufacturers for the purpose of calculating fees from monthly to quarterly
  • Introducing an administration fee, in addition to the licence volume fee to recover processing costs for those bovine and non-bovine farms not using the milk volume reporting payment system
  • Charging for time incurred by DFSV officers on-site to close out corrective action requests
For Manufacturers
  • Simplify application fees by replacing tiered fees with a single flat application fee
  • Recover costs for time spent to review food safety program amendments of existing licensees (such as introduction of a new product line or moving from domestic to export time for audit activity)
For Carriers
  • Issue a licence and fee for each vehicle (rather than a flat fee regardless of the number of tankers) and introduce an annual system-based audit per carrier business
For Distributors
  • Exempt activities involving storage and distribution of finished dairy goods from licensing under the Dairy Act 2000

 

Why is DFSV introducing a licence fee per vehicle and an annual systems-based audit?

Carriers play an important role in maintaining the safety of dairy products through good maintenance, sanitation and cleaning of vehicles. DFSV has a statutory responsibility to monitor carriers’ compliance with the relevant legislation.

Introducing a licence fee per vehicle:

  • Enables DFSV to monitor individual vehicles compliance under a rolling surveillance program
  • Improves oversight of operators to strengthen assurance across the whole supply chain
  • Does not place a disproportionate burden on individual carriers
  • Increases equity along the dairy supply chain
  • Is consistent with equivalent arrangements in other states

 

How does DFSV define a vehicle for licensing purposes?

The following are to be treated as one vehicle:

  • Rigid body truck (tanker)
  • Semi-trailer (single trailer)
  • B-Double or larger (2 or more trailers)
  • Refrigerated vehicle (e.g. refrigerated van with bulk pallecon)

 

Will carriers moving finished dairy products need to be licensed?

No.

 

Do these changes mean that DFSV is proposing to change to the way our licence fees are calculated?

For manufacturers there is no change to the way licence fees are calculated.

There is a change to the way licence fees are calculated for non-bovine farms and those bovine farms not currently paying licence fees through the milk volume reporting payment system.

The licence fees for carriers will also change, with a per vehicle licence fee rather than a flat fee regardless of the number of tankers.

Distributors that are exempt from having to be licenced with DFSV will no longer pay a licence fee.

 

What is the financial impact of these changes for farms?

For the majority of farms there will be no financial impact from the proposed changes.

There is expected to be a small increase in total farm licence fees (approximately $3,000 per annum) with the introduction of a licence administration fee and volume fee for those farms not currently part of the milk volume reporting system, which will include non-bovine farms. Overall, for non-bovine farms total licence fee revenue will remain similar to current revenue, however for a small number of large non-bovine farms (approximately 7 farms) they will pay more under the proposed changes (volume plus administration fee). The remaining smaller non-bovine farms will pay less in licence fees under the proposed changes (based on volume data provided for the previous renewal period).

Charging for time to close out major or critical corrective action requests issued to farm licensees is expected to increase DFSV’s revenue by approximately $2,000 per annum as historically, there are minimal circumstances where DFSV staff are required to attend on site.

 

What is the financial impact of these changes for manufacturers?

The proposed changes will not impact the current licence fees paid by manufacturers. DFSV will retain the current output model based on volume produced. Manufacturers will continue to pay a base fee plus volume fee.

The introduction of a single flat application fee will result in a decrease in DFSV revenue of approximately $10,000 per annum.

The charging for time spent (cost recovery) to review food safety program amendments, such as the introduction of a new product line or moving from domestic to export, is expected to increase DFSV audit revenue by an estimated $15,000 per annum (based on an anticipated 4-6 hours of officer time per month).

 

What is the financial impact of these changes for carriers?

The majority of carrier licensees will pay more under the proposed changes to licence each vehicle. The change in licence fees is expected to increase DFSV revenue by an estimated $18,000. The biggest increase will be on the largest transport businesses. Those businesses (approximately 12) who have only one vehicle, would pay slightly less in licence fees under the proposed changes.

The introduction of an annual system-based audit per carrier business will result in all carrier licensees paying an audit fee (capped at 2 hours) and estimated increased revenue for DFSV of $12,000 (based on an average of 1.5 hours audit time per transport business).

 

What is the financial impact of these changes for distributors?

Exempting activities involving storage and distribution of finished dairy goods will result in a significant decrease in the number of distributor licences and result in a decrease in DFSV revenue of approximately $11,000.

There will be no financial impact on those distributors that will remain licenced with DFSV. They will continue to pay the current licence fees.

 

How will the proposed changes compare with the current fees and charges?

This is summarised below:

 Funding model table

 

How much extra does DFSV expect to raise from the proposed changes to fees and charges?

The changes proposed under Option 2 would see DFSV’s revenue increase by less than $30,000.

 

Do the proposed changes align with other states?

Yes, for example the charging of a single flat application fee, a per vehicle licence fee and bovine and non-bovine farms paying the same cents per litre licence fee. 

DFSV collected fees and charges information for other state regulators as part of the review process.

 

Were other options considered?

Yes, but were not progressed.  These included a single flat fee for farms which introduces more equity issues with small and large farms paying the same fee and a tiered fee for farms which adds more complexity to the current system and increases administrative burden. DFSV also looked at an annual fee for manufacturers to cover licence and audit costs however this presented the potential for cashflow issues.

 

What will be the impact of the proposal of automatic annual indexing of fees and charges?

DFSV has previously consulted the dairy industry each year on any indexation increase for fees as set by the State Government. For example, in May 2021, DFSV consulted on an increase of 1.5% be applied to fees and charges.

DFSV is proposing an automatic annual indexing of fees and charges for the period 1 July 2022- 30 June 2025 to reflect any Victorian Government approved increase. DFSV will publish all fees and charges that are automatically indexed and the effective date of the increase on the DFSV website by 1 July each year.

 

Click here to view a short video on the proposed changes and consultation process from DFSV CEO Amanda Hill.