Fisheries Cost Recovery Standing Committee Meeting #19

10.30am Wednesday 26 October 2009

Venue: Treacy House, 126 The Avenue, Parkville.

Chairman's Summary

Attendees:

Ian Cartwright – Independent Chair
Ross McGowan (SIV) – Permanent Observer
Gerry Geen (Industry member)
Bill Allan (Industry member)
Terry Truscott (DPI member)
Robert Krix (DPI member) - Executive Officer
Chris Padovani (DPI member) – Executive Support

Invitees:

Anthony Hurst, A/Executive Director Fisheries Victoria
Luke Cromie, A/Director Fisheries Policy and Licensing Fisheries Victoria (for Jon Presser)
Kirsty Henry, Principal Economist, Policy & Strategy Group (DPI)
Francis Karanja Senior Economist, Economics and Policy Research Branch (DPI).

The meeting was the second Fisheries Cost Recovery Standing Committee (FCRSC) in 2009. Key issues discussed included:

Cost recovery move to forward-budgeting and review of Fisheries Activity Costing System
Review of comparative 2009/10 FACS data
Clarification of Marine Parks programme services in relation to attributed costs
Cost recovery for abalone green lip units
FCRSC consultation
Cost recovery - Victorian wild catch abalone fishery
Abalone industry input into FCRSC

Cost recovery move to forward-budgeting and FACS review

The Committee noted progress with the previously endorsed DPI/FV proposal to conduct a review of fisheries cost recovery and the Fisheries Activity Costing System (FACS), noting that the review commenced on 1 July 2009 and is expected to be completed by 30 June 2010.

The review will examine the practice of cost recovery in other fisheries jurisdictions, both overseas and interstate, taking into account the benefits to the community, industry and individuals. It was broadly agreed that the review should be a 'health-check' of the cost-recovery system, rather than seeking to make major changes to the current system, the principles of which had been the subject of lengthy negotiations between industry and government.
It was further suggested that the review should look at how FCRSC has been working and consider improvements, particularly in light of the proposed move to forward-budgeting. The Committee recommended that the Department maintain momentum in developing participatory forward-budgeting for cost recovery.

Review of comparative 2009/10 Fisheries Activity Costing System data

Comparative Fisheries Activity Costing System (FACS) data for the provision of Fisheries Management and Compliance Services (M&C), the Research levy for the past three financial years, and the FRDC levy for 2009/10 were tabled and discussed. The Committee identified a range of anomalies and sought explanation and clarification from the DPI on a number of issues.

DPI expressed a strong preference to not run a RIS for cost recovery in 2010/11 and hoped that the current costs, adjusted for CPI of 2.5% could be carried into the next licensing year. There was general support for such an approach, noting that some fisheries would receive 'hidden' benefits in terms of an undercharge, while others would be overcharged, relative to actual costs. It was agreed that with the exception of the scallop and abalone fisheries (for fees applied for 2008/09), all other fisheries should be exempted from any adjustments that may be due to any anomolies in the combined cost of the provision of Management & Administration and Compliance services for 2008/09. Where there is an apparent overcharge in 2009/10 proposed fees for the abalone fishery, it was recommended that the lesser amount plus 2.5% CPI be applied to determine the total combined applicable Management & Administration and Compliance costs for this year.

DPI will investigate options relating to the refund of any apparent overcharging in the scallop fishery for the provision of Management and Compliance services. The Committee noted the proposed FRDC research and FMS research levies for 2009/10.

Clarification of Marine Parks programme services in relation to attributed costs.

The Committee considered the history associated with Government's introduction of Marine Park Areas (MPA) and the expectation that in lieu of compensation, it would be compensated by the increased resource availability outside the 'no take' areas achieved through:

Significant reductions in the level of illegal take in these areas achieved through the $3.4M per annum "Enhanced Compliance Program" proposed by Government; and
Re-direction of fishing effort into areas of currently under-utilised resource, to be identified and assessed with assistance of scientific and technical support.

The Committee noted that in 2003, the Marine Parks Initiative allocated $300,000 over two years to assist in the identification of under-utilised areas for abalone harvesting potential and strategic assistance via substantial increase in enforcement funding. Government made a commitment of $14.1 million over four years and $3.4 million on-going to boost fisheries enforcement, representing a 75% increase in recurrent funding. In relation to the $3.4 million per annum of FMS formerly provided through the Marine Parks and Sanctuaries compensation initiative, the general consensus (of the Committee) is that these funds should continue to be exempt from cost recovery.
DPI's position will be clarified on Marine Parks programme services in relation to attributed costs and advice will be provided to the Committee out-of-session.

Cost recovery for abalone green lip units

At the previous FCRSC meeting (FCRSC #18 - 3 June 2009), VADA identified what it considers to be an anomaly, whereby licence holders were charged a total of $909 per greenlip unit, however, based on its GVP, the abalone green lip unit cost charges should be $224 per unit - a difference of $685.

The Committee noted that under current arrangements:

The green lip and black lip abalone fisheries are treated as one for the purpose of all cost categories.
DPI has agreed to allocate costs for green lip and black lip abalone on a per-kilogram unit basis.
Royalty and FMS are considered at a whole of fishery level.

The matter was referred to Fisheries Victoria for response directly to VADA; as of 26/10/09 the response is pending.

FCRSC consultation

In the absence of an aquaculture sector peak body, concerns regarding communications with the sector remain and the Committee agreed to develop a method by which aquaculture could be further involved with in fisheries cost recovery. It was agreed that DPI, in consultation with SIV, would develop a briefing paper to consider options and opportunities to further involve the aquaculture sector. Additionally, the Committee wished to involve industry associations in the process of cost recovery to better understand FACS. A draft 'standard' presentation on fisheries cost recovery was developed with customisation of data for each sector.

Cost recovery - Victorian wild catch abalone fishery

The Abalone Industry Committee (AIC) wrote to FCRSC requesting further discussion about FMS costs attributable to the Victorian wild catch abalone fishery and cost allocation through FACS.

The AIC proposed the establishment of a sub-committee, under the aegis of FCRSC, to review all costs associated with the Victorian wild catch abalone fishery.

In discussing the views raised by the AIC, the Committee noted that the initiatives suggested are already the role of the FCRSC, which would be considerably enhanced by the pending appointments of two industry representatives who are familiar with the abalone industry.

Furthermore, the Committee felt that moving to forward-budgeting would alleviate many of the concerns about cost recovery, in that those specific services and costs would be negotiated with industry in advance, rather than being charged retrospectively. It was agreed that FCRSC would communicate with the AIC and A/EDFV responding to concerns raised by AIC, and that Executive Officer is to facilitate a meeting with the Abalone Industry Committee to provide an overview of FACS and cost recovery as it pertains to the abalone industry

Next meeting: Mid February 2010
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.