Fisheries Cost Recovery Standing Committee Meeting #17

Wednesday 10 December 2008

Venue: Treacy House, 126 The Avenue, Parkville

Chairman's Summary


  • Chair: Mr Ian Cartwright
  • Members Mr David Lucas (Industry member)
  • Mr Jon Presser (DPI member)
  • Dr Terry Truscott (DPI member)
  • Apologies: Mr Hugh Meggitt (Industry member)
  • Mr Gerry Geen (Industry member)
  • Permanent Observer: Mr Ross McGowan (SIV)
  • Executive Support: Mr Robert Krix (DPI member)
  • Alternate Member: Mr Bill Allan


This was the third meeting of the Fisheries Cost Recovery Standing Committee (FCRSC) for 2008.

The Committee noted that the Minister (responsible for Victoria's fisheries) had agreed to a simple indexing of the proposed fees and and levies for 2008/9, in line with the Treasurer's 2008/09 inflation index of 3 per cent. This will save the cost and time associated with a completing a Regulatory Impact Statement (RIS) process. The Committee continues to operate without full membership, with two vacant industry posts.

As usual, the Committee reviewed a number of aspects relating to cost recovery for the provision of Fisheries Management Services to the commercial wild-catch and aquaculture sectors, with the aim of ensuring that the process is carefully monitored, anomalies are identified and the principles underpinning cost recovery, including the accurate and equitable distribution of costs, are maintained.

Mr Bill Allan attended the meeting as an alternate member to Hugh Meggitt, who was unable to be present.

The issues covered by the 17th meeting of the FCRSC are outlined below:

Levy relief for western zone abalone licence holders

Fisheries Victoria previously signalled that it would be willing to consider levy relief for those licence holders in the western zone abalone industry who chose not to fish commercially during 2008/9 season, in line with the arrangements adopted in the eel fishery as a result of drought impacts. The FCRSC supported this arrangement at its previous meeting. The 17th FCRSC meeting was advised that Fisheries Victoria (FV) had discussed this matter with the Western Abalone Diver's Association (WADA), which had indicated a preference to continue to maintain a small conservative TAC for areas not impacted by the abalone virus and therefore, there was a need for industry to maintain a current abalone fishery access licence.

Royalty charges for green lip and black lip abalone in the western zone

To ensure equity in the value of green lip and black lip quota units, it is proposed to differentiate the royalty charges for green lip and black lip abalone in recognition of their different quota unit values in the central and western zones. It was initially thought that to achieve this differentiation, a change in Fisheries Regulations would be required.

Following close examination of the components of the formula for the calculation of abalone royalty, FV considers that the calculation of the Gross Value of Product enables different royalty charges to be determined by merely applying the per unit weight values for black lip and green lip abalone quota units as they apply to the western and central abalone zones. While this conclusion needs to be confirmed, it appears that there is no change required to the Fisheries Regulations to differentiate the royalty charges for green lip and black lip abalone for these zones and, subject to this confirmation, separate royalties will be implemented for the 2009/10 quota year. As such, a Regulatory Impact Statement is not necessary as the proposed changes will not have an adverse impact on those affected.

Central zone abalone royalty refund

The central zone abalone industry paid a royalty at the time of licence renewal (1 April 2006) based on the initial TAC of 620 tonnes. Due to a reduction in the TAC (from 620 tonnes to 570 tonnes) in April 2007, the Victorian Abalone Divers Association (VADA) wrote to Fisheries Victoria requesting a royalty refund to abalone unit licence holders in lieu of the 50 tonnes reduction. After consideration by the FCRSC and the Minister, a levy refund based on the reduced 50 tonnes is being paid to industry.

The FCRSC suggested that if a reduction in the TAC were to happen again this year, then it was preferred that an adjustment to the royalty should be made prior to 1 April - rather than on the basis of a refund, and that Seafood Industry Victoria (SIV) should consult VADA to determine the likely central zone TAC for next year in this regard.

Impact that government reductions in commercial fishing licences or access to the fishery may have on cost recovery for remaining licence holders

The FCRSC wrote to the Minister in April 2008 advising of basic principles that it believed should apply to resource reallocation, and the consequential distribution of recoverable costs arising from government-instigated reductions in the number of commercial fishing licences i.e. similar costs spread over fewer operators. These principles are based on not unduly burdening those remaining in the fishery. The Minister has accepted these principles and requested that the FCRSC continues to assess the consequence to licence fees and levies for the remaining licence holders, and advise on how any adverse impact should be managed.

The Committee suggested that a case study be conducted using the example of the removal of commercial netting from Western Port (WP) and the subsequent reduction in access licences. This would require comparing 2009/10 data (for 42 FALs) with that of 2008/09 (with 46 FALs). However, since the fees for 2009/10 will be at CPI-adjusted on 2008/9's fees the remaining WP/PPB licence holders will not be affected by the reduction of licences due to the buy-back.

Vacant positions on FCRSC

Mr Paul Welsby (Industry member - abalone) and Mr Tim Mirabella (Industry member - bays and inlets) resigned from the Committee effective April and July 2008 respectively. As per the Committee's Terms of Reference the SIV Board has recently nominated two candidates to be considered by the Minister for appointment to the Committee. The FCRSC is awaiting advice regarding the appointments.

Proposed Fisheries (Fees, Royalties and Levies) Amendment Regulations 2008

FCRSC expressed unanimous support at Meeting #16 to increase fees and levies for 2008/09 in line with the Treasurer's 2008/09 3 per cent inflation index. Extending from this, and in the process of making the Fisheries (Fees, Royalties and Levies) Amendment Regulations 2009, it was proposed, that, as far as possible, the new fees and levies are expressed in 'fee units' rather than in 'dollar values'.

The Treasurer sets the value of a fee unit annually on 1 July. For 2008/09, the value of a fee unit is $11.35 (3% CPI-adjusted on the 2007/08 fee unit of $11.02).

If fees and levies are increased in line with the annual increase in the Consumer Price Index inflation rate, then a Regulatory Impact Statement is not required. The CPI inflation rate does not apply to the determination of abalone royalty payable in respect of each individual quota unit, which is calculated in accordance with the formula prescribed in the Fisheries (Fees, Royalties and Levies) Regulations 2008.

It was noted that the Amendment Regulations 2009 do not include the application of a $75.00 base-rate FMS Management levy for the aquaculture sector that the Committee had previously supported. In accordance with the recommendation by the FCRSC, Fisheries Victoria will consult with the aquaculture sector, concerning application of the fee for the subsequent licensing period (commencing 1 April 2010). After consideration of the fee unit schedule, the Committee identified some apparent anomalies in the proposed fee units applicable to the licence types shown and requested that they should be reviewed accordingly; it was agreed that minor increases in fees would be acceptable. FV considered the anomalies identified by the Committee and their response was referred to FCRSC members on 16 Dec. 2008 for comment out-of-session. The anomalies were addressed to the satisfaction of the

Review of Fisheries Activity Costing System and forward-budgeting action plan

There is a need under the current cost recovery arrangements to amend fisheries fees, levies and royalties regulations each year to account for the variations in the level of Fisheries Management Services (FMS) applied to each fishery. In addition, the recovery of attributed costs is undertaken on a retrospective basis, such that the fees and levies that are regulated and collected on 1 April each year are based on the costs of services incurred in the previous financial year.

The FCRSC considers that this current system is a complex, costly and timeconsuming process, given the need to develop, publish and consult on the related Regulatory Impact Statement where cost increases exceed increases in the annual Consumer Price Index; this does not allow industry to have input into expenditure planning, based on the FMS to be provided.

As signalled previously, a Cost Recovery Review is planned which will consider all means of improving the cost-effectiveness and efficiency of the current fee, levy and royalty-setting approach in relation to cost recovery from industry. It will have a particular emphasis on investigating the option of implementing a prospective process for planned FMS delivered during the following year (or years), rather than a retrospective cost recovery process for FMS delivered in the preceding year.

It was further proposed that the introduction of the new forward-budgeting approach would be tested using the rock lobster fishery as a pilot study.

As fees and levies for the 2009/10 licensing year will be the same as for the 2008/09 year – except for a 3% CPI adjustment, the proposed new arrangements will need to be in place for the setting of the 2010/11 licensing year; this will require the making of the new fees, levies and royalties regulations by February 2010.

DPI will consult the commercial wild catch and aquaculture industries regarding the project through the FCRSC.

NEXT MEETING - 5 march 2009 (to be confirmed).

FCRSC Contacts:

Executive Officer Fisheries Committees
Fisheries Victoria
Department of Primary Industries (DPI)
GPO Box 4440
1 Spring St
Mobile no: 0411 258 216
Ph: (03) 9658 4727 Fax: 9658 4333

Ross McGowan
Executive Director
Seafood Industry Victoria
Ground Floor, 484 William St
Ph 03 9329 5660