Fisheries Cost Recovery Standing Committee Meeting #1

Phased Cost Recovery Program for Victorian Commercial Fisheries

Chairman's Summary

October 2004

Introduction

The first meeting of the Fisheries Cost Recovery Standing Committee (FCRSC) was held on the 22^nd October at the DPI Offices. The following representatives attended

• Mr Ian Cartwright (Chairman)
• Mr Tim Mirabella (industry)
• Mr Paul Welsby (industry)
• Mr David Lucas (industry)
• Mr Gerry Geen (industry)
• Mr Ross McGowan (observer industry)
• Mr Stephen McCormack (DPI)
• Mr Graeme Hanel (DPI)
• Mr Peter Rawlinson (DPI) (supporting expertise Fisheries Activity Costing System and budgetary analysis)

There was an acknowledgment by all that the meeting was a positive step. Seafood Industry Victoria (SIV) the industry peak body and Fisheries Victoria (DPI) both noted in their opening remarks that the FCRSC signalled a strengthened partnership between industry and Government to deal with implementation of cost recovery.

The Meeting was concerned primarily with:

• considering how best to give effect to tasks outlined in the terms of reference for the Committee and the guidance given in the MOU between the Minster and SIV regarding cost recovery for fishery management services;
• agreeing a strategy to develop and agree recoverable costs for the 2005/6 season, based on the financial year 2003/4 and levied in April 2005; and
• preliminary discussions on key fisheries management activities and their respective rates of attribution to the commercial sector.

While significant differences of opinion exist between industry and Department regarding the attribution of costs, there was agreement that the FCRSC offers an opportunity to work through these differences in a transparent and structured manner. The Committee noted the need for a more comprehensive and consultative approach to cost recovery.

The committee agreed that it was important to achieve consistency in the application of cost recovery. It was agreed to use principles governing cost recovery as laid out in the Review of Fisheries Levy Administration 2003 document.

Communication was considered to be an important issue. Priority was given to the Committee for the development of a communication strategy to improve links with industry. As a first step, it was agreed to circulate a brief Chairman's summary after each meeting.

Overview of Expenditure

The cost recovery process was discussed and the results of six months of data (April to September 2004) from the Fisheries Activity Costing System (FACS) reviewed. Information on cost recovery from this data will be extended and used to form the basis of cost recovery for the 2005/6 season.

The following key trends were noted:

• 40% of total Management and Compliance Fisheries Management Services (FMS) was spent on the recreational sector, 43% on the commercial sector, 14% on aquaculture, 2% on Habitat and 1% on other activities.
• Total expenditure by Fisheries Victoria for 2003/04 on FMS (management, compliance and research) for the commercial sector was $10.5 million.
• Estimated Full cost recovery (FCR), to be achieved by 2006, represents approximately 35% of total public expenditure dedicated to the commercial sector.

The setting of Rock Lobster FMS levies for the Eastern Zone levies will be equal to the Western Zone (on a $ per kilo basis) for the next two fishing seasons. This equates to a subsidy to the Eastern Zone.

Phased Cost Recovery Approach

The % increases in recovery over the 3 year phase in period will be approximately:

• 2004: 45%
• 2005: 82%
• 2006:100%

These increases are based on underlying principle of a phased introduction of cost recovery using 33% and 67% steps in the difference between what is paid and full cost recovery).

Regulatory Impact Statement

The Regulatory Impact Statement (RIS) for the Fisheries (Fees, Levies, Royalties and Miscellaneous) Regulations 2004 will be advertised on December 18^th 2004 followed by a public consultation period which closes January 14^th 2005. The new FMS and other levies (FRDC and Peak Body) will be used to set 2005 fishing season levies.

Next FCRSC Meeting

The next FCRSC will be held on Monday 15th November. This meeting will review the underlying principles associated with setting FMS levies for 2005.

Ian Cartwright
Chair Fisheries Cost Recovery Standing Committee