Port of Melbourne is the leading exporter of containerised grain and pulses. Photo: Port of Melbourne.

THE Department of Agriculture, Fisheries and Forestry was unable to demonstrate that many of the biosecurity fees and charges it imposes on industry reflect the minimum efficient cost of delivering those services, according to a new Australian National Audit Office performance audit.

The report from the independent audit, titled Cost Recovery for Biosecurity in the Department of Agriculture, Fisheries and Forestry, was released last week.

Under Federal Government cost-recovery policy, DAFF applies fees and charges to recover the costs of regulating Australia’s biosecurity and agricultural exports.

This audit looked at the effectiveness of DAFF’s biosecurity cost-recovery arrangements, but not those for agricultural exports, as the Government announced new cost recovery arrangements for export regulatory services in the 2025–26 Mid-Year Economic and Fiscal Outlook (MYEFO).

The ANAO audit rated DAFF’s administration of its biosecurity cost recovery arrangement, its arrangements for estimating costs and calculating prices and its implementation of its cost recovery arrangements is “partly effective”.

Not all the prices charged by DAFF were clearly linked to the prices calculated by its pricing model, and DAFF was not managing the risk of under- or over-recovery, the report said.

The ANAO made six recommendations designed to improve visibility of prices and ensure they reflect the minimum efficient cost to deliver services.

DAFF agreed to four recommendations and agreed in principle to two recommendations.

Recommendations

Recommendation no. 1
The Department of Agriculture, Fisheries and Forestry improve visibility and monitoring of the minimum efficient cost of key business processes required to deliver its outputs.

Department of Agriculture, Fisheries and Forestry response: Agreed in principle.

Recommendation no. 2
The Department of Agriculture, Fisheries and Forestry improve the accuracy of effort-based cost drivers that are used to inform the allocation of costs, including ensuring consistency in estimation methods between cost centres, where appropriate.

Department of Agriculture, Fisheries and Forestry response: Agreed.

Recommendation no. 3

The Department of Agriculture, Fisheries and Forestry finalise its Cost Recovery Policy and the Charging Guidelines.

Department of Agriculture, Fisheries and Forestry response: Agreed.

Recommendation no. 4

The Department of Agriculture, Fisheries and Forestry: (a) consistently apply its charging model in the setting of cost recovery prices, to ensure that prices are informed by the estimated costs of delivering the activities; and (b) document reasoning and inform decision-makers and
stakeholders when prices are set outside of the model.

Department of Agriculture, Fisheries and Forestry response: Agreed in principle.

Recommendation no. 5

The Department of Agriculture, Fisheries and Forestry ensure that the increase in prices delivered by the application of indexation aligns with the estimated cost of delivering biosecurity activities.

Department of Agriculture, Fisheries and Forestry response: Agreed.

Recommendation no. 6

The Department of Agriculture, Fisheries and Forestry assess the risks relating to under- or over-recovery of cost recovery revenue and apply appropriate controls and treatments to effectively manage these risks.

Department of Agriculture, Fisheries and Forestry response: Agreed.

In 2021-22 DAFF reviewed its biosecurity cost recovery arrangements which found the cost of delivering biosecurity and imported food activities had increased by $121 million in the 10 years to 2023.

That DAFF review led to a new charging model being legislated and introduced in July 2023.

However the ANAO audit report siad the pricing arrangements resulted in more revenue being generated than it was costing the Department to deliver biosecurity services in the past three years.

In June 2026, DAFF reports revealed that April 2026 year to date cost recovery revenue for biosecurity was $21.3 million higher than its expenses.

The ANAO found that the new charging model limited DAFF’s visibility of the cost of delivering its activities and increased the risk that the estimated costs of its outputs did not accurately represent DAFF’s actual costs.

While 81 percent of biosecurity prices introduced in 2023-24 fully or largely aligned with modelled prices, 34 percent of individual charges were not directly informed by the model.

“As a result, DAFF’s ability to ensure prices reflect minimum efficient costs is reduced, as is its capacity to demonstrate to stakeholders that cost-recovered activities are delivered at minimum efficient cost.”

In its response published in the audit report, DAFF said it had already undertaken significant work over the past three years to strengthen its cost recovery framework, including investing in a new cost-modelling system, conducting annual pricing reviews and establishing a Regulatory Efficiency Program.

The department acknowledged that previous decisions to set some prices outside its pricing model should have been better documented, but said the pricing differences identified by the ANAO represented about 3.2 percent of 2025-26 year-to-date biosecurity cost recovery revenue.

The department said it would continue to work to ensure future departures from modelled prices are documented and communicated to decision-makers, while retaining flexibility to apply policy judgement where appropriate.

“The department has not sat idle in maturing our cost recovered processes, methodically investing in our cost recovery capability to address improvement opportunities,” the DAFF response said.

“The department’s current cost recovery improvement program will strengthen standardisation, documentation, quality assurance and supporting evidence, while maintaining a proportionate approach that reflects operational realities and system capability.

“It will also provide targeted investment through the Regulatory Efficiency Program to ensure the efficiency of expenditure and identification of efficiency opportunities.”

To view the full audit report on the ANAO website click here

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