Fisheries Cost Recovery Standing Committee Meeting #23
10.00am Monday 21 October 2011
Venue: DPI 50 Collins St, Melbourne Vic 3001.
Chairman's Summary
Attendees:
1. Ian Cartwright – Independent Chair
2. Vince Collins (Industry member)
3. Hugh Meggitt (Industry member)
4. Renee Vajtauer (SIV) – Permanent Observer
5. Terry Truscott (DPI member)
6. Mark Edwards (DPI) - Observer
7. Chris Padovani – Executive Support
Invitees:
Bill Fisher, Principal Economist, Economics and Policy Research Branch, DPI
Anthony Ciconte, Industry nominee to the FCRSC
The meeting was the second Fisheries Cost Recovery Standing Committee (FCRSC) in 2011. Key issues discussed included:
- Aquaculture representation on FCRSC
- FACS data summary for 2010/11 for consideration in setting levies for 2012/13
- RDC levy
- Progress towards forward budgeting and the FACS review
Aquaculture representation on FCRSC
The matter of aquaculture representation on the Committee was discussed. In the absence of a peak body and regular cross-sectoral meetings between Fisheries Victoria and aquaculture producers, obtaining and representing a sectoral view is difficult. FV have undertaken to progress options to address this issue.
FACS data summary for 2010/11 for consideration in setting levies for 2012/13, including the FRDC levy
The Committee reviewed the Fisheries Activity Costing System (FACS) data, including levies recovered in 2010/11, and proposed amounts to be recovered in 2012/13 for the provision of Management, Compliance and Research services to the wild-catch and aquaculture sectors, determined using the existing cost recovery framework for levy setting (FACS).
Whilst the Committee agreed that the 2009/10 FACS data presented at meeting #21 contained anomalies that could not easily be explained, DPI members suggested that the FACS data for 2010/11 appeared to be more stable and equate to variations in Fisheries Victoria's overall budget.
The Committee noted that this proposal represented an increase in most fisheries, and in some cases significant increases. Members expressed their concern about the potential impact of these significant proposed increases in levies on some fisheries, and the basis (FACS) on which they were calculated.
The Committee noted that for the 2008/09, 2009/10 and 2010/11 licensing years, levies had been rolled over (with inflation adjustment) each year originally based on FACS data for the 2006/07 year.
The Committee noted that the issue of a disparity between actual costs and recovered costs for some fisheries had been an on-going concern, and that whilst there was an expectation that this gap was widening, the Committee was surprised at the size of the disparity as illustrated in the 2010/11 FACS data.
The Committee reaffirmed its view that a move towards forward budgeting will allow an increase in transparency of costs, and the ability for industry to confer on services to be provided by DPI or alternative service providers, with a view to increased transparency and realising both improved efficiency and potential cost savings.
The Committee was unable to reach a consensus on a recommendation on the setting of the 2012/13 levies for the recovery of costs for the provision of Management, Compliance and Research services to the wild-catch and aquaculture sectors in 2010/11.
FRDC levy
The total amount of funds raised through the FRDC levy is equal to approximately 0.25% of the averaged (over three years) combined fisheries GVP (Gross Value of Production).
The Committee recommended an approach for the 2012/13 licensing year whereby current levy values would be adjusted downwards to equate to 0.25% of GVP in fisheries where there was an effective overcharge, and remain as is for fisheries where less than 0.25% of GVP will be collected.
Progress towards forward budgeting and the FACS review
The Committee has previously endorsed a DPI/FV proposal to conduct a Cost Recovery Review which is being done by DPI's Economics and Policy Research Branch (E&PRB) to under the direction of, and in collaboration with Fisheries Victoria, with regular consultation with the FCRSC. The projectn is designed to consider all means of improving the cost-effectiveness and efficiency of the current fee and levy setting approach for cost recovery from industry. The review will place particular emphasis on moving towards implementing an up-front (prospective process) approach to setting levies for planned management services to be delivered during the forthcoming year(s), rather than the current process for recovering costs after the fishery management services (FMS) have been delivered (a retrospective process). The project includes a review of the Fisheries Activity Costing System (FACS).
An update on progress of the review was provided by Bill Fisher, Principal Economist, DPI's Economics and Policy Research Branch. Mr Fisher spoke to a paper explaining a cost-benefit analysis comparing the existing retrospective system and a proposed prospective system, which is needed in order for industry and government to be confident that any change will provide net benefits to the community.
The Committee noted that a cost benefit analysis will be included in the review report.
The Committee discussed process changes that would be needed to support a prospective cost recovery system. These included the need to be able to link DPI/FV corporate planning and budgetary processes, and to be able to measure actual nature and extent of services delivered compared with those proposed. This would provide improved transparency and accountability.
The Committee noted that a move towards forward budgeting will allow an increase in transparency of costs, and the ability for industry to be involved in determining services to be provided by DPI or alternative service providers, with a view to realising both improved efficiency and cost savings.
The Committee provided feedback to Mr Fisher on the review, and noted that DPI intends to continue to consult with FCRSC, and also to undertake a consultation process with industry prior to implementing any recommendations arising from the completed review.
The draft Review report is expected to be completed before the end of the year (2011). DPI will be scheduling a meeting of FCRSC to seek feedback on prior to the completion of the Draft Report.