Fisheries Cost Recovery Standing Committee Meeting #11

7 August 2006

Venue: 1 Spring Street, Melbourne

Chair's Summary

Chair:

Mr Ian Cartwright

Attendees:

Mr Paul Welsby (Industry member)
Mr David Lucas (Industry member))
Mr Gerry Geen (Industry member)
Mr Tim Mirabella (Industry member)
Mr Jon Presser (DPI member)
Mr Peter Rawlinson (DPI)

Permanent Observers:

Mr Ross McGowan (SIV)
Ms Karen Weaver (DPI)

Observers:

Bill Allen (Eel fishery)

Apologies:

Mr Michael Hodder (DPI member)*

Introduction

The FCRSC continued its work to refine the cost recovery process. It was rewarding to note that the Committee consider they are 90% satisfied with the cost recovery methodology and associated processes. It is however important to ensure that industry share the same level of comfort with the system. The Committee believes this will assist with industry understanding of, and support for, FACs. The Committee discussed progress with defining a future role for industry and the Committee in the budget cycle, and the possible role for Service Level Agreements (SLAs). In considering of the FACs and Expenditure Report, the Committee noted that overall expenditure in 2005/06 had increased by 7% over 2004/05. This level of increase was considered to be broadly acceptable provided a reasonable rationale was forthcoming to provide assurance that this sort of increase would not occur each year. DPI undertook to provide a further detail on this increase.

The eleventh meeting of the FCRSC focused on the following issues:

a timetable for working towards SLAs;
increasing understanding of FACs within industry;
content of the FCRSC TORs which are currently under review by DPI and SIV;
the 2005/06 Expenditure and FACs Report;
a base level charge to help address cross subsidies between fisheries in the application of cost recovery;
the 2007 Draft Regulatory Impact Statement (RIS); and
the Minister's response to the Bay and Inlets issue with respect to reducing numbers of licenses and increased cost burden on those remaining.

Refinement of Cost Recovery

One meeting between DPI and SIV has occurred on this issue, which included consideration of the introduction of service level agreements (SLAs). As at the last meeting, the Committee saw SLAs as a useful way to identify expectations and projected costs prior to budgets being struck. However, it was considered too early for their introduction until the baseline charge and other 'bedding in' cost recovery issues a have been addressed. The Committee agreed that given that 2007 was the first year of the full implementation of cost recovery and the start of the second triennium of the implementation of cost recovery. SLAs would next be discussed at its August 2007. For that discussion, DPI would focus on the key deliverables in compliance and management services and report to the Committee on ways to include industry in the forward planning for these services.

The Committee noted that the move to performance based assessment be included in the discussion on SLAs. In considering performance assessment, The Committee agreed that it would be important not to spend too much time on economic indicators as they are difficult to apply accurately and therefore not particularly meaningful. Rather, the focus would be on developing key performance indicators (KPIs) associated with the delivery of compliance and fishery management services.

Industry FACS briefing

The Committee agreed that it had now gained a level of confidence with the FACS system and that it was appropriate that this confidence now be transferred to the broader fishing industry. As agreed at previous FCRSC meetings, FACs briefings are now being rolled out to industry to increase understand of, and support for FACs. The first briefing was held at SIV on 28th July 2006, and further briefings are planned for western Victoria (Warrnambool and/or Portland) and eastern Victoria (Lakes Entrance).

Review of FCRSC Terms of Reference

The Committee discussed the development of new Terms of Reference. The committee also noted that it would have an audit role in checking whether the recovery rates are being applied appropriately against yet-to-be developed criteria and where they fell outside these criteria, to recommend an appropriate rate of recovery.

With respect to research, the Committee reiterated that one of its roles is to determine the overall criteria on the recoverability rates of certain classes of projects (eg stock assessments).

There were seen to be some significant benefits in amalgamating the FCRSC and the ACRSC and the Committee agreed that it would have no objection to providing advice to the Minister on the appropriateness of combining the two Committees with provision being made for one member from the aquaculture sector to be included on the new Committee.

Other issues still to be addressed in the draft TORs include developing principles on forward budgeting; discretionary services and associated costs; and principles concerning the the Committee's role in providing advice to the Minister on cost recovery where a particular sector had been affected by a change in broader Government policy.

2005/06 Expenditure and FACS Report

DPI reported that the overall expenditure (recoverable and non-recoverable expenditure combined) for 2005/06 had increased by 7% over 2004/05. While the Committee were not surprised at the result, it was noted that a clear explanation of the source of increased costs were required, and that clearly, this sort of annual increase could not be sustained over time. DPI undertook to provide a further detail on this increase.

The Committee reaffirmed that as a principle, a base level charge will be applied to avoid any cross-subsidisation of smaller fisheries, and that this charge will apply in the 2006/07 year. A number base rate options were discussed and a final decision will be taken after the Committee considers further advice from the Department out of session.

Draft RIS.

The Committee noted that the draft 2007 RIS incorporates both aquaculture and wild harvest sectors. The draft was considered by the Committee and a number of suggestions for improving the clarity of the document were made. The Committee agreed that greater clarity in identifying overhead costs was required and that an additional overheads cost category would be developed for the 2008 RIS.

Other business

Eel industry

DPI explained that an error had occurred in the application of the 22% increase in the 2006 RIS. This error, which had been picked up by both industry and the Committee will be rectified in the near future. This highlights the need for the DPI and the Committee to be vigilant in identifying abnormal increases in costs and ensuring adequate explanations were sought and provided. That said, the Committee noted that the process followed after the discovery of the error was transparent and effective.

Minister's response to Bays and Inlets Fishery letter

The Committee received a response from the Minister, indicating he had noted the concerns of the committee and had sought futher advice. The Committee had previously written to the Minister to inform him of the possible increased financial impact on the remaining Bay and Inlet fishery licence holders as a result of fishers accepting buybacks initiated by the Government. Essentially the relatively inflexible costs of managing the fishery would now be spread across a diminishing pool of operators, who in most cases were unlikely to receive financial benefit from the buybacks.

As a mechanism, the Committee agreed that compliance and research fees and management levies should be apportioned across pre-buy-back numbers of licence holders for the forthcoming (2007) RIS. The balance could be met by the recreational sector as the beneficiaries of what was effectively a re-allocation arising from the buyback. The Minister would be advised accordingly.