Fisheries Cost Recovery Standing Committee Meeting #12

1 March 2007

Venue: 8 Nicholson St, Melbourne

Chairman's Summary

Attendees:

Mr Ian Cartwright (Chair)
Mr Paul Welsby (Industry member)
Mr David Lucas (Industry member))
Mr Jon Presser (DPI member)
Mr Terry Truscott (alternate for Michael Hodder)
Mr Peter Rawlinson (DPI)

Permanent observers:

Mr Ross McGowan (SIV)

Apologies:

Mr Michael Hodder (DPI member)
Mr Gerry Geen (Industry member)
Mr Tim Mirabella (Industry member)

Introduction

The FCRSC had its first meeting of 2007. The Aquaculture Cost Recovery Standing Committee has now been disbanded, and its work has been combined with the work of the Fisheries Cost Recovery Standing Committee. The aquaculture sector will be represented on the FCRSC when the Terms of Reference and MOU (between the Minister and SIV) governing the work of the FCRSC are finalised. The Committee noted that the cost recovery system was now bedded in and that the process had become more routine than in the past. The number of responses to the RIS were again much reduced from previous years. It was felt that reasons for this are a combination of acceptance and general satisfaction that the data are now reliable and the costs being recovered from industry are at an acceptable level. That said, the Committee considered that while the day to day operation of the FACS system was routine, it had an ongoing role to continue to monitor costs on behalf of industry. Perhaps more significantly, the Committee will increase efforts to work with DPI on appropriate forward-looking and participatory budget processes. This will include consideration of service level agreements, under which an agreed level of cost for certain services will be agreed up front. Performance measures will also be developed.

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

Review of the 2007 RIS and submissions from industry
Industry Communications Strategy 2004/05 – 2005/06
Management and Compliance Costs
Abalone Western Zone 2006 Royalty
Terms of Reference & MOU Review
Socioeconomic Research

2006 RIS Submissions

The Committee considered a total of 6 submissions, 3 of which were from the aquaculture sector and the balance from wild fisheries. The Committee worked through each of these submissions and a course action was suggested for DPI to follow. It was satisfying to note that the transparency of the FACS system and the ability to 'drill down' into the detail of costs made it possible to directly address issues concerning anomalous costs and categorisation of costs. In the majority of cases, the Committee accepted the issues raised in the submissions. One submission supported the use of an individual licence holder "user pay" system rather than the licence class system used by the current cost recovery method The Committee, in noting the proposal, agreed that there is no demonstrable net benefit (given the onerous administrative costs) associated with individual licence-based invoicing and reaffirmed support for the current method of allocating costs by licence class.

Industry Communications Strategy

The Committee noted that the industry now had a more comprehensive understanding of the cost recovery process and that this has been reinforced by SIV's ongoing support for the process through the Committee and other initiatives. These included the Chair's report and incorporation of a report on cost recovery to the rock lobster sector during the annual Management Forum and TAC meetings. As a consequence, it was agreed that it would be unnecessary to hold any more port meetings regarding the cost recovery framework. The Committee noted the process of communications regarding its work was ongoing, and that if industry required more information to assist members then it (and DPI/Industry) would seek to oblige.

2004/05 – 2005/06 Review of Management and Compliance Costs

In reviewing the management and compliance FMS costs and hours expended across all licence holders over the last two years, it was noted that wild-catch sector expenditure had risen by 7% and that aquaculture expenditure had declined by 0.3%. DPI indicated that a large part of the increase that occurred in the wild sector was due to an increase in regional salaries (due to a comprehensive process of work value reclassification). All fisheries that had expenditure increases greater than inflation of 3.9% (Victorian CPI increase) were analysed in detail and DPI provided detailed explanations as to why the delivery of certain FMS activities increased. These explanations were accepted by the Committee

Abalone Western Zone 2006 Royalty

The effect of the virus outbreak and subsequent closure of areas to abalone fishing on royalty paid by Western Zone abalone licence holders was discussed. The Committee noted that the TAC was reduced due to the abalone virus in 2006/07 licensing year and that this meant that the GVP would be less than it was when the royalty was calculated in March 2006. As a consequence of this the licence holders in the Western Zone paid more royalty than would have been the case if the GVP was based on the reduced TAC.

The Committee accepted the principle that conditions had changed through the year due to exceptional and unforeseeable circumstances (the abalone virus) which meant that licence holders in the Western Zone had paid more than they should have been required. The Committee agreed that there had been an overpayment and recommended that a refund be made. DPI will canvass options to resolve the anomaly in the royalty payments. The Committee agreed also that there was no reason to revisit the royalty equation and that as the issue of overpayment was an exceptional event the occurrence of further refunds such as this would be rare.

Terms of Reference & MOU Review

The Committee reviewed a draft of the new Terms of Reference/ MOU for the FCRSC. The Committee requested consideration of a number of issues in the next draft. These included: a minimum of three meetings per annum (down from quarterly meetings; observers to be allowed to attend meetings at the discretion of the Chair; and FCRSC objectives and directions to be set in MOU, including the need to investigate ways of increasing the efficiency of FMS delivery.

Socioeconomic Research

The role of the Fisheries Economic Impact Survey (FEIS) Program was discussed by the Committee. Interest by the Rock Lobster (Western Zone) licence holders in the conducting of such a survey was noted. The Committee agreed that the Rock Lobster fishery could be used as a pilot to a standardised FEIS program that would be carried out on a regular basis on a three year rolling contract with an external economic consultant. The Committee agreed that the FEIS Program (conducted annually) would be considered to be a recoverable research program at the rate of 50%.