More about owner reimbursement costs

Owner reimbursement costs (ORCs) are payments made to affected parties following an incursion. They aim to reimburse owners for the cost of eradication, loss of income or the value of destroyed crops.

The payment of ORCs also aims to provide an incentive for growers and other stakeholders so that they report suspected emergency plant pests (EPPs). The incursion of pest, even a suspect that is later determined a false alarm will, at the very least, be an inconvenience to the property owner, which may result in some reimbursement of costs.

How much does each party contribute to the cost of the response plan?

Growers of an affected industry may be eligible for owner reimbursement costs, but they may also be required to contribute to the costs of the implementation of the response plan. The cost sharing arrangements are based on the category of the emergency plant pest.

Category Funding Example
Category 1 100% government Sudden oak death
Category 2 80% government | 20% industry Khapra beetle
Category 3 50% government | 50% industry Banana freckle
Category 4 20% government | 80% industry Army worm

When do owner reimbursement costs apply?

ORCs apply once a response plan to eradicate an emergency plant pest (EPP) has been approved by the National Management Group. They are included in the budget for the response plan.

ORCs only apply to crops and property that are directly affected by the implementation of the response plan.

Who is eligible for owner reimbursement costs?

The owner of a crop or property which is damaged or destroyed as a result of the implementation of an approved response plan may be eligible for reimbursement payments under the EPPRD.

How are owner reimbursement costs calculated?

ORCs are calculated using an agreed valuation approach based on defined ORC evidence frameworks that are outlined in the EPPRD.

Although the calculation is dependent on the type of crop affected, in general:

ORCs = Asset value (Previous – Damaged) + Response costs

PHA is working with industry and government parties to develop ORC evidence frameworks for each industry, ensuring that the ORCs are as fair as possible.

What is covered by owner reimbursement costs?

Costs considered in the calculation of ORCs include:

  • direct eradication costs incurred by the owner
  • any other costs that are additional to ordinary operating costs resulting from the response plan implementation
  • the estimated farm gate value of a crop that is destroyed or the economic value of which is destroyed as a consequence of the implementation of a response plan
  • the loss of the estimated farm gate value of crops foregone, less production costs, resulting from a requirement under a response plan that, for a specified period, land be left fallow.

In the case of perennial tree and vine crops, the ORCs also cover the loss of profit during the non-bearing period of immature tress.

What is not covered by owner reimbursement costs?

ORCs do not cover:

  • the reduced value of any balance of plantings which remain after implementation of a response plan and which are no longer commercially viable
  • the cost of replanting a replacement crop, except for perennial tree/vine/nut crops and broadacre perennial crops
  • the difference in farm gate value between the owner’s preferred crop and an alternative crop or agricultural use as a result of action taken under, or a quarantine requirement of, a response plan
  • lost consequential income
  • emotional stress
  • legal fees and valuation costs incurred by an owner seeking to appeal against their ORC assessment.

Definitions

‘Affected’ party

An industry party may be affected if their crops party’s members’ crops are or may be affected by the EPP. Members of an affected party may are eligible for owner reimbursement costs but they are also required to contribute to the costs of the implementation of the response plan.

The term ‘affected’ does not include any industry party whose members are impacted by a response plan, but not the EPP itself. These industry parties are invited to meetings of the CCEPP as observers and they may still be eligible for owner reimbursement costs under the EPPRD.

Consultative Committee on Emergency Plant Pests (CCEPP)

The Consultative Committee on Emergency Plant Pests (CCEPP) is a technical group made up of the Australia Chief Plant Protection Officer (chair), the Chief Plant Health Managers of each state and territory, the industry party affected, and Plant Health Australia. This group has primary responsibility for co-ordinating the national technical response to EPPs and advising the NMG.

At any stage of the incursion, the CCEPP may decide that eradication cannot be justified and will recommend that eradication should not be attempted or should cease. In the latter situation, the CCEPP provides advice on whether Cost Sharing should no longer apply and on alternative management strategies

Scientific Advisory Panel

The Scientific Advisory Panel (SAP) provides technical information and recommendations to assist with decisions. The members of the panel may change during an eradication campaign as different questions may need to be answered. Examples of questions include pest biology, diagnostic methods, surveillance methodologies and pest epidemiology.

National Management Group

The National Management Group (NMG) is a policy group made up of the Secretary of Department of Agriculture, Fisheries and Forestry (chair), the CEOs of each of the state and territory agriculture departments, the chair or president of the affected party and the chair of Plant Health Australia. The NMG has primary responsibility for the making of decisions regarding the eradication campaign.