Concerns over food business levy proposal

A government proposal to impose a levy on food businesses to administer safety regulations could be opposed by the Dunedin City Council.

Among concerns likely to be raised is the impact on small businesses, such as dairies, and the potential "unnecessary" introduction of another layer of bureaucracy.

The Ministry for Primary Industries (MPI) proposes "maintaining and expanding" the service it provides to support a robust food safety system.

It envisages food businesses and importers would chip in through a levy.

The levy for domestic food businesses would be phased in over three years, starting at $57.50 per site from July next year, then $86.25 in 2026-27 and $115 from 2027-28 on.

City councillors are to discuss the issue tomorrow and there are indications they could take issue with a "disproportionate burden" being placed on food businesses.

The council’s draft submission pointed out many domestic food businesses were in recovery mode after the Covid-19 pandemic and its economic, social and business consequences.

The council may also object to being asked to collect such a levy.

Councils were already struggling to meet increasing costs to deliver services to residents, the draft submission said.

"This would impose additional financial and administrative burdens on councils, compounding the existing pressures facing the local government sector and, in turn, their ratepayers.

"As well as financial and administrative burdens, new MPI levies would introduce an unnecessary layer of government administration."

It is expected a domestic food business levy would end up bringing in about $5.7 million a year.

A food importer levy could generate almost $1.5m of revenue from 2024-25.

There are 39,000 registered domestic food businesses in New Zealand and they operate 44,800 sites.

The ministry did not have data about the economic size of individual businesses.

The city council’s draft submission said the approach to cost-sharing was inequitable.

"This would mean a large, high-turnover business such as a supermarket would have the same levy as a small low-turnover business such as a dairy."

The ministry proposed to expand some services.

This included providing "robust and modern risk management through improved rules setting", at the same time as easing rules that placed an "unreasonable regulatory burden on food businesses".

The ministry said there would be education support, oversight that "appropriately reflects the level of risk" and monitoring to provide assurance the system was working well.