A quick guide to compensation and valuation in an EAD response

QUICK FACTS 

  • In the event of an emergency disease outbreak, compensation is determined by state/territory legislation and processes. 
  • The Emergency Animal Disease Response Agreement (EADRA) does not determine whether compensation will be paid. 
  • Cost-sharing of response costs, including compensation is: 
    • requested by the responding jurisdiction and detailed in the Emergency Animal Disease Response Plan (EADRP)
    • recommended by the Consultative Committee on Emergency Animal Diseases 
    • approved by the National Management Group 
    • managed and administered by Animal Health Australia. 

What is compensation? 

Compensation is money that is paid by governments to the legal owners of livestock that have died from an Emergency Animal Disease (EAD), or livestock and property that is damaged or destroyed as part of the official EAD response.

It’s important to note that while compensation is often made available during EAD responses, it is not guaranteed as part of any given response.

The main aim of compensation is to encourage early reporting of emergency diseases, so that they can be identified and a response initiated in the shortest possible timeframe. Compensation arrangements are in place to ensure that people who report suspicion of disease early are not financially disadvantaged.

Compensation issues are dealt with by the government officials at the local control centre set up to manage the response.

How is compensation determined?

Compensation is determined and managed by state and territory governments under their own legislation. The payment of compensation, the process for claims, and the time frame in which a claim may be made can vary between states and territories.

The process involves the valuation of the livestock on the property that have died from an EAD, or the livestock or property that have been destroyed or damaged, followed by the owner making a claim through the local control centre.

The Emergency Animals Disease Response Agreement (EADRA) does not determine whether compensation will be paid, it sets out how government and industry share the funding of a response.

What is valuation?

The aim of valuation is to achieve agreement between the owner and the state or territory on the amount to be paid in compensation.

There are consistent standard valuations for most classes of commercial livestock. Local market value, or ‘farm gate value’ is the primary basis for valuation. Valuation occurs at the time of detection or reporting of the disease. Breeding animals and other high value animals are valued by trained, licensed valuers or value assessors.

Owners may choose to submit a dispute with the local control centre if they disagree with the valuation, subject to the state or territory’s rules and procedures governing compensation.

What is covered by compensation?

The livestock and other property damaged or destroyed in the response effort may be eligible for compensation, however states and territories usually exclude paying compensation for consequential losses, such as loss of profit, loss of production, loss of markets or losses incurred by breach of contract.

Following the response, owners who have been authorised to restock their property may be eligible for a second compensation, or ‘top-up’ payment, if the cost of the replacement livestock outweighs the compensation paid for the loss of the original stock. This payment balances the potential fluctuations in the value of livestock during and after a response to an EAD.

Animal welfare issues

Response activities such as the application of quarantine measures and movement controls may result in risks to animal welfare on some premises. If these risks cannot be adequately managed, jurisdictional welfare legislation may require affected animals to be humanely destroyed. Compensation or financial assistance may then be available for the animal owner if they meet the conditions outlined below:

  • all alternative non-destruction options must have been considered, and
  • the destruction occurred under an animal welfare plan approved by the relevant chief veterinary officer and
  • it is clearly identifiable as directly contributing to the disease management outcomes of the response.

These payments may be eligible for cost-sharing if the NMG has agreed to cost share welfare related compensation payments in an approved Emergency Animal Disease Response Plan (EADRP).

 

Who pays the compensation claim?

The compensation claim is submitted by the owner to the local control centre and assessed and paid by the state or territory department of agriculture or primary industries.

Who pays for the costs of compensation?

During an EAD response governed by the Emergency Animal Disease Response Agreement (EADRA), compensation costs may be shareable as part of the overall response costs if compensation is part of an approved response plan. In this case eligible costs will be shared between governments and the affected industries.

Cost sharing under the EADRA means that all the response costs (including compensation) that are eligible for cost sharing are shared between affected parties.

For example, foot-and-mouth disease (FMD) is a category 2 disease in the EADRA, and thus the government share would be 80% of the response costs, and the relevant industries’ share would be 20% of the eligible response costs. The Commonwealth initially pays (underwrites) industry’s share of the costs and industry repays the loan through levies over a period of up to 10 years.

Individual farmers do not pay for the cost of controlling the disease on their properties, but levies contributed by the industry may help to pay for the response.

What’s the difference between compensation and recovery?

Compensation should not be confused with recovery or business continuity processes. Costs associated with the recovery from an EAD have separate funding mechanisms outside of the EADRA and state or territory disease control legislation.

Recovery and business continuity services during and after emergencies are provided by recovery agencies from all levels of government and non-government organisations.

Compensation is not intended to maintain profitability or business continuity. Its primary intention is to promote early reporting.

Who do I contact to find out more?

Before an EAD response you can find out more about compensation, valuation and recovery services by contacting your local government department of agriculture or primary industries.

If you’re located in or near an affected area during an EAD response, contact your local control centre.

Further information