Fisheries Cost Recovery Standing Committee Meeting #18
10.30am Wednesday 3 June 2009
Venue: Treacy House, 126 The Avenue, Parkville.
- Ian Cartwright – Independent Chair
- Jon Presser (DPI member)
- Ross McGowan (SIV) – Permanent Observer
- Hugh Meggitt (Industry member)
- Gerry Geen (Industry member)
- Bill Allan (Industry member)
Robert Krix (DPI member) - Executive Officer Chris Padovani (DPI member) – Executive Support
Apologies: David Lucas (Industry member), Terry Truscott (DPI member)
Invitees: Mr Vincent Gannon, EO Victorian Abalone Divers' Association. Mr Geoff Ellis, EO Eastern Zone Abalone Industry Association.
The meeting was the first Fisheries Cost Recovery Standing Committee (FCRSC) in 2009.
Key issues discussed included:
- Improving the outputs of the FCRSC
- Cost recovery arrangements for 2009/10
- Consideration of preliminary comparative 2008/9 -2009/10 FACS data
- Review of abalone industry cost recovery charges
- Funding and delivery of actions under the Abalone Fishery Management Plan
- Abalone royalty/cost recovery issues
Improving the outputs of the FCRSC
A previously endorsed, the DPI/FV proposal to conduct a Cost Recovery Review during 2008/09 is expected to get underway on 1 July 2009. Funds have been committed to the review which will be conducted by DPI's Economics and Policy Research Branch. The review will consider all means of improving the cost-effectiveness and efficiency of the Fisheries Activity Costing System (FACS) and the current fee, levy and royalty-setting approach for cost recovery from industry. The review will also look at options for a system of forward-budgeting which will include agreeing services and costs in advance rather than retrospectively as is done currently.
The FCRSC will be seeking to have a general oversight of the review and will provide input into its draft Terms of Reference.
Cost recovery arrangements for 2009/10
The Committee noted that a decision will be required as to whether or not to roll-over the current cost recovery arrangements into next year, with a simple CPI adjustment, as was applied for the current licensing year. There was a general view that in light of the upcoming FACS review, it would be sensible to roll-over the current fees and levies. The only key issue identified with this approach was fisheries research-related costs, which might have a need for specific project-related changes.
Consideration of preliminary 2008/9 FACS data
In reviewing the preliminary 2008/9 data provided by Fisheries Victoria, the Committee noted a number of areas where costs were disproportionately above expectations. The Department was asked to provide details of these cost variations to the next FCTSC meeting. Fisheries Victoria will contact SIV and aquaculture FCRSC representatives to have preliminary discussions regarding any anomalies.
For the aquaculture industry as a whole, the costs recovered in 2009 are not expected to exceed costs recovered in 2008. The commercial sector's costs of the first nine months of 2008/09 financial year are slightly higher than for the same period in 2007/08.
Review of abalone industry cost recovery charges
The Committee considered a request from the Victorian Abalone Divers' Association (VADA) to undertake a review of the charges applicable to DPI's provision of Fisheries Management Services (FMS) to the industry for the past five years. The Committee noted that this information was required on the basis that VADA believes that some agreed services and programs that have been agreed to, and in some cases paid for, have not been delivered.
In addition, the VADA provided a paper to the FCRSC, noting a range of further concerns. These included concerns about the contestability of research and other services, the nondelivery of services to support fine-scale abalone management and other fishery management plan initiatives, and the notion that Departmental emergency response might be cost recovered.
In discussing the issues raised by VADA, the Committee felt that moving to forwardbudgeting would alleviate many of these concerns, in that specific services and costs would be negotiated with industry in advance, rather than being charged retrospectively. It was also noted that there is considerable scope under the proposed forward-looking model for industry to help identify stock, compliance and other risks to enable DPI to introduce appropriate, cost-effective control measures.
With the introduction of Marine Parks, the Government provided additional compliance services to the abalone industry through a $3.4 million annual payment. This special initiative payment has now ceased. There is concern from the abalone sector that this funding might now be cost-recovered. FV indicated that it was their understanding that these (or similar) services were being provided and that the cost of delivering these services are not currently being recovered. This issue will be clarified at the next FCRSC meeting.
In relation to the accuracy of FACS, there is general satisfaction amongst the Committee that the current system is sufficiently robust and reliable such that fisheries management, compliance and research services delivered are apportioned and, where appropriate, costrecovered from industry. The Committee is hopeful that the upcoming review of the FACS will address many of VADA's concerns. In addition, the Committee suggested that the abalone industry and SIV may wish to work with FV to obtaining a better understanding of the operation of FACS through direct demonstration, as had successfully occurred with the eel sector.
Funding and delivery of actions under the Abalone Fishery Management Plan
VADA expressed its view that a number of key strategies and services to be actioned under the current abalone fishery management plan have not been implemented, including spatial management, research and some elements of enforcement/compliance. Further, as discussed above, VADA believes that the industry has been charged for these services through cost recovery. The issue of appropriate charging for services delivered has been dealt above. The Committee noted that a policy/outcome in a management plan to deliver services or undertake activities which are not subsequently implemented, is not an issue for the Committee; rather is should be taken up directly with Fisheries Victoria.
Abalone royalty/cost recovery issues
With the introduction of cost recovery within Victoria, the abalone industry obtained a commitment from Government that industry payments for FMS and royalties would be capped at 7.21% of annual GVP.
VADA, and the broader abalone industry, is concerned that the costs of "additional" management and other services will be charged outside the 7.21% of GVP agreement.
There appears to be a different interpretation between industry and Government in the interpretation of the 7.21% limit on combined royalty/fisheries services, as outlined in the industry/Government agreement. The Committee noted that there was a need for the abalone industry and Fisheries Victoria to address these differences as a matter of urgency, particularly in relation to the Abalone Fishery Management Plan which is currently under review and redevelopment.
Eastern Zone Abalone Industry Association request for the introduction of a research levy on eastern zone licence holders.
Mr Geoff Ellis EO, Eastern Zone Abalone Industry Association addressed the meeting and requested FCRSC support the introduction of a research levy on eastern zone licence holders. DPI confirmed that it could not charge a levy/fee on renewal of licence as an additional charge, without completing a Regulatory Impact Statement; this is subject to confirmation by DPI. The Committee agreed to provide in-principle support to EZAIA for the introduction of a resource development levy through SIV, specific to the Eastern Zone, in line with a similar levy that applies for the Western and Central Zones.
Bush fires. The Committee noted that aquaculture operations in some areas of country Victoria impacted by bushfires have been totally lost, or have suffered severe economic impact. The Committee considered that Fisheries Victoria should exempt fisheries-related operators who have been seriously impacted by the February 2009 bush fires from the requirement to pay licence levies.
Industry consultation. Some concerns remain over communication with the aquaculture sector in the absence of a peak body; in response, the Committee agreed to develop a method by which the aquaculture sector can be further involved with FCRSC. The Committee will also seek to further involve industry associations in the process of gaining a better understanding of cost recovery and the Fisheries Activity Costing System.
Next meeting: Wednesday 7 October 2009
The Chair's Summary of FCRSC meetings held in 2007 and 2008 are available and can be viewed on the Fishing and Aquaculture/FCRSC web page at the DPI web site: www.dpi.vic.gov.au.