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FACT SHEET
Poisons Amendment (Poppy Advisory and Control
Board Levy) Bill 2012
The Tasmanian opiate alkaloid industry is the world's largest producer of licit
narcotic raw material supplying around half of the world's demand for use in
pharmaceuticals.
A joint decision of the Federal and State Governments in 1972 restricted the
growing of opium poppies to Tasmania for reasons of security. Cultivation,
possession or refining of opium poppies are all criminal offences under the Misuse of
Drugs Act unless the activity (growing and processing) is licensed by the Minister for
Health and Human Services - licences to grow poppies in Tasmania have been issued
annually since 1966.
Approximately 1000 licences to grow opium poppies are being issued each year to
over 750 poppy-growers to grow some 34,000 hectares of opium poppies on
contract for the three licensed pharmaceutical companies GlaxoSmithKline;
Tasmanian Alkaloids Pty Ltd and TPI Enterprises Ltd. Growers' licences are
conditional on the grower having a contract with one of the three processors. The
three processors provide the seed, assist in the growing process, arrange for
harvesting and take the heads for processing. The processing industry now grosses
in excess of $100 million per annum and the farm gate return to growers is
estimated at between $70 and $90 million each year.
The Poppy Advisory and Control Board (PACB) is a statutory body located in the
Department of Justice - it has an independent chair and a number of Government
(State and Commonwealth) representatives. The annual cost of the operation of the
Board most of which is the day to day oversight of the growing of poppies is
approximately $700,000 which is currently funded from the Consolidated Fund
through the Department of Justice.
There has been no industry contribution to the operation of the Board since its
inception although there have been various proposals for the imposition of some
level of cost recovery over the years.
There is a division of responsibility between the Minister for Justice and the Minister
for Health and Human Services in relation to the overall regulation of the industry
but the operation and cost of the Board is currently borne by the Department of
Justice. Some other costs are borne by the Department of Police and Emergency
Management in relation to surveillance and security particularly during the growing
period when the poppy heads may be stolen and during harvesting seasons.
In the 2011/12 State Budget, the government announced that funding for the Poppy
Advisory and Control Board (PACB) would be shifted from the Consolidated Fund
to an industry funding model for the 2012-13 financial year.
It is proposed that only $650,000 will be raised by the levy in the first year of the
levy with the full amount of the estimated costs of the operation of the Board and
the inspectorate being raised through the levy in subsequent years.
Consultation has occurred both face to face and through the circulation of a
Discussion Paper with the industry (growers and processors) and other interested
bodies including the Tasmanian Farmers and Graziers Association.
Levying the processors would be the simplest process. It also has the advantage that
the processors can pass the costs of the levy either back to the growers or to their
purchasers in their pricing structures they use to either pay their growers or to sell
their products. They have the capacity to pass the costs in either direction.
The funding model is as equitable as possible considering the nature of poppy
growing and processing and the proposed collection method would ensure that
compliance costs for the industry and administrative costs for the Government are
kept to a minimum.
Some of the submissions to the funding paper sought a review of the Board's
operations before the levy is introduced. This would delay the levy for a further
twelve months so it is proposed to go ahead with the levy and the Government will
undertake a review of the operation of the Board looking at its relevance and
efficiency; consultative processes and structure during the next twelve months.
If, as expected, the total hectares being sown and harvested in 2012/13 is around
34,000 the rate of the levy will be approximately $20.00 per hectare which given the
estimated value of the crop is a reasonably moderate amount.