QUARRY UNDER FEE THREAT

Tom McKenny, Roving Reporter

The sharp escalation of a Crown Land licence fee has pressured a central Victorian dimensional stone quarry to the brink of closure.

Mr Oliver contacted the CMPA both dismayed and at a loss of how to address this issue. Mt Granite quarries, operating on just 1 1/2 hectares of Crown Land near Harcourt in central Victoria has been subject to Crown Land licence fees issued by the Department of Sustainability and Environment for the past 18 years with fee reviews undertaken regularly.

Reviews in recent years had seen the fee double from $1250 to $2490 per annum (% rise over 3 years), but owner Vin Oliver has recently been advised of a fee review increase to $5600 – an increase of 125 per cent on the 2004 amount.

Mr Oliver subsequently protested to the Department about the excessive nature of the fee increase and following their direction sought further assistance from the CMPA.

The CMPA arranged for an independent valuation to review the impost in context of the current land valuation, a specialist in government regulation and had Regional Coordinators contact him to assist in establishing a response.

At this point, Mr Oliver believed he had no option but to assume the DSE was attempting to close down the operation through excessive financial pressure.

Writing to the Department, Mr Oliver indicated production levels and income had been static for some time adding that the licence fee represented a substantial impost to the operation’s income.

“The proposed licence fee is not sustainable for my business and threatens the future viability of our third generation dimensional stone quarry.”

In his written responses to DSE, Mr Oliver argued that were the licence fee originally based on production with annual increases adjusted for inflation, the fee chargeable would be substantially lower.

Production based licence fee rates are governed by the Department of Treasury and Finance and require ministerial approval for any rate rises above automatic increases which are typically based on inflation levels, while this fee had seemingly been calculated arbitrarily, Mr Oliver indicated.

He has questioned the random nature of the DSE’s calculation in setting the licence fee. “On what legal basis has the DSE determined the licence fee to be adjusted with land values? The licence fee increases are difficult to understand from my point of view.”

An independent valuer also determined that the current site value and capital improved value for municipal rating assessments by Mt Alexander Shire Council were “not acceptable values within the current market place.”

The proposed DSE licence fee represented a return of some 11.2 per cent which seemed excessive according to the valuer. “The return of 11.2 per cent on the site value is excessive when consideration is given to the type of property and alternative uses, and an increase of 125 per cent over a 12 month period must also be considered unrealistic.”

Analysis of the licence fee in context of the operation’s revenue revealed the proposed $5600 fee (plus GST) represented almost six per cent of total sales.

Further impacting this heavy annual impost was that Mr Oliver’s site occupation now only has 12 months security at any time given the annual reviews.

The valuer estimated that the proposed fee had been calculated at a rate of seven per cent of a value estimated in isolation by the DSE. The valuer’s report suggested “the proposed licence fee will produce a return of 11.2 per cent on the Site Value and that is an unrealistically high return for land included within a regional park and where the use is held on an annual licence. A Work Authority does not run with the land and within the current Planning Scheme and a declaration of the Regional Park, the alternative uses are nil and do not even include grazing.”

The fee increase should represent a warning sign for the industry, the valuer reported. “The raising of an annual licence fee by 125 per cent in an industry such as a dimensional stone quarry is a reason for serious concern for not only the licence holder but also the industry. It is a common practice for a fee for a licence to enter Crown Land to be kept at a relatively low rate per hectare in the knowledge that royalties are paid to the Crown (DPI) for all stone extracted.

Note licence fees are separate to Crown royalties (paid per cubic metre to DPI) for stone removed, local rates, annual charges for a bank guaranteed reclamation bond, and other fixed government charges. The raising of a levy to occupy under an annual licence to such an extent as is proposed, is in my opinion double dipping, and is likely to place the current operation in a position where it eventually will fail and cease to exist.”

CMPA spokesman, Mr Ron Kerr, CMPA Honorary CEO, said the Association would continue to follow the case with great interest . “We are concerned that the imposition of excessive government regulation like this, with its impact in increased costs, may lead to the exit of this and other operators from the industry.

The CMPA feels that there is a need for a clear and transparent protocol to be jointly developed by the government and the industry, taking into account the need for the DSE to be accountable for delivering reasonable outcomes on the assets under their management.

We will support Vin and other concerned Members on this and other associated matters in receiving a proper and reasonable outcome with the DSE, considering the implications on business closures and the resulting importation of dimensional stone.

We appeal to the Department to review the proposed impost in the context of destroying a business and adding to the states already high unemployment levels in rural Victoria,” Mr Kerr said.

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