Fisheries Cost Recovery Standing Committee Meeting #27 - Chair’s Summary

Meeting details:

Date: Friday 2 November 2012

From: 10:00am to 3:00pm

Location:

Department of Primary Industries, Room 11, Mezzanine Level, 1 Spring Street, Melbourne, VIC.

Members attending:

Ian Cartwright (Ind. Chair)
Geoff Ellis (Industry)
Mark Edwards (DPI)
Terry Truscott (DPI)
Vin Gannon (Industry)
Renee Vajtauer (SIV Observer)

Executive Support:

Chris Padovani

Ph: 03 9658 4779 (BH)

Advisors/Presenters:

Sean Buck (Industry)
Sue Alcock (Industry)
Bill Allan (Industry)
Gary Leonard (Industry)
Harry Peeters (Industry)
Anthony Hurst (DPI)
James Andrews (DPI)
Ian Parks (DPI)
Iain Bruce (DPI)
Murray Donaldson (DPI)

Introduction

The purpose of Fisheries Cost Recovery Standing Committee (FCRSC) Meeting #27 was to continue to work on the design of a new prospective cost recovery system, as instructed by the Minister at meeting #25, with a specific focus on the nature and extent of services to be provided to the Victoria's 42 fisheries.

The Committee is working to a revised timetable set down by the Minister, which should achieve a new forward-looking/prospective cost recovery system, including the preparation of a Regulatory Impact Statement (RIS), to be phased in over a period commencing 1 April 2014. Industry members of the Committee again expressed reservations about meeting the proposed timeline, however the Committee agreed that whilst there is a lot of work to be done between now and 1 April 2014, it agreed to continue its efforts to work constructively on the development of the new cost recovery regime as requested by the Minister.

The Minister has previously advised that:

he does not require comments from the FCRSC on the matter of 2012/13 levies and the issue of rolling over by the Consumer Price Index, or the application of some other level of increase; This matter will be determined in consultation with Seafood Industry Victoria (SIV); and
there should be a broadening of attendance at the Committee to reflect the major fisheries, broaden the level of expertise available; and increase the level of support for its outcomes. In the short term and to expedite progress, additional attendance would be achieved using the current provision in the Committee's Terms of Reference (TOR), which enables invitations to be extended to advisers. As such, the Committee, at least until the review of the TORs is complete, will remain an expertise-based committee, but with significant and valuable input from a wider range of industry attendees.

The meeting focused on:

Industry attendance at FCRSC.
The definition of cost recoverable services provided to the wild-catch and aquaculture industry, and the level of recoverability for the provision of those services.
The measure of success (deliverables and milestones for each cost recoverable service) for each fishery.

Industry attendance at FCRSC

With the assistance of SIV, additional participation at the Committee has been achieved. Both DPI and Seafood Industry Victoria have made repeated attempts to involve attendees from the Rock Lobster Western Zone and Aquaculture (marine & freshwater) sectors in the development of a new cost recovery regime. Unfortunately, no person has been willing to become involved in the process.

The Committee noted that SIV and the Department of Primary Industries (DPI) are continuing to work together to fill the aquaculture vacancy on the FCRSC following the recent resignation of Mr Hugh Meggitt.

Definition and recoverability of services

A number of DPI staff attended the meeting to answer specific questions that the Committee had as a result of its discussions concerning services.

The FCRSC reviewed the amended definitions and recoverability for the final three cost recoverable services:

Operational management of marine fisheries;
Operational management of freshwater fisheries; and
Operational management of aquaculture.

The Committee were satisfied that the definitions had been amended as instructed by the Committee. It was agreed that the next step is to develop services to be provided to each fishery. The FCRSC noted that DPI will be providing more detail about the relationship between cost recovery and emergency responses at a later meeting following further consultation with internal stakeholders. Once approved by the FCRSC, this information will be included in the 'Guidelines for the operation of cost recovery' document

The Committee discussed the approach that DPI had taken to develop the first draft of proposed levies. DPI directors were asked to estimate the average annual amount of time spent and operating cost against each cost recoverable service provided to industry within each fishery over a four year period, recognising that some costs may only actually be incurred in one or two particular years of that cycle.

The Committee noted that the schedules contain a preliminary estimate of staff effort and costs, and that final staff effort and costs would be contingent on the final nature and extent of services and deliverables determined. Industry expressed a strong desire for fishery specific cost data to be released to industry now, to enable meaningful discussion. It was noted, however, that at this time the 42 schedules were strictly Committee-in-Confidence, as requested by the Minister's Office and agreed by the FCRSC at meeting #26. These schedules have not been endorsed by Government at this stage and are subject to change. Later stages of the process, to be conducted in 2013, will involve wider industry consultation.

The Committee expressed surprise at the difference between the levies paid by industry in 2011/12, and the preliminary levies proposed under the prospective cost recovery system. In many cases, there is a significant increase in the levies, although some fisheries, such as the Abalone Eastern Zone, show a decrease in the total costs to be recovered, excluding the abalone royalty. The Committee noted the reasons for this difference including the underlying differences in recovery for different services, the relative levels of services in different fisheries is likely to have changed since 2006/07, and the fact that recovery has been held, other than CPI increases for the last five years.

Measuring success - deliverables and milestones for cost recovered services

The Committee noted the deliverables and milestones against each cost recoverable service, and the need for each respective fishery's services to be considered.

The Committee discussed the need for a contract or service level agreement to be entered into between the Government and industry regarding the provision of services in which costs are recovered prospectively. However the FCRSC acknowledged that the Victorian Government provides regulatory services to the commercial wild-catch and aquaculture sector in order to meet its obligations under the Fisheries Act 1995. A proportion of some of the costs incurred to deliver those services is then recovered from industry (the beneficiary of those services) in line with Government policy on cost recovery. It is not the same as a contract entered into between two parties in the private sector. However, the FCRSC noted that it does involve similar features such as the description of services, key deliverables, providing transparency and a basis for improved reporting.

In noting the need for transparency about the delivery of cost recovered services, FCRSC also acknowledged the need for practicality and simplicity. The Committee recognised that it would be the deliverables and milestones that would be important within any year, rather than the hours or dollars which would be costly to track. The Committee reiterated the conclusion reached at meeting #26 that reporting at the fishery level would support transparency and accountability. Once the prospective cost recovery system is implemented, a key role of the FCRSC will be to review these fishery-level reports.

Due to the limitations of the Fisheries Activity Costing System (FACS), the data presented to the FCRSC in each of those years was considered unreliable and, as such, have not been used for the last four years except to reduce levies for some fisheries. The FCRSC has noted on numerous occasions the increasing the gap between actual (FACS) and recovered costs. If the FACS data was considered to be reliable, then it demonstrates that DPI has been under-recovering costs since 2006/07. It is on this basis that the Committee considered any comparisons between the preliminary costs outlined in the prospective cost recovery system and the levies paid by industry in 2011/12 do not help in the development of the new cost recovery regime. FCRSC accepted that it would be more productive to focus on the nature and extent of services to be provided to each fishery, as this is what will ultimately determine the costs to be recovered for that fishery under the new prospective approach.

The FCRSC noted that there is no intention to reduce the level of services currently provided to each fishery by DPI. The final services and costs to be recovered, will be determined following a consultation process, firstly, with the FCRSC, and later via other mechanisms such as the public consultation process around the Regulatory Impact Statement.

The FCRSC reviewed a number of the fishery schedules and posed questions to the DPI branch representatives at the meeting. DPI agreed to provide additional information as requested by the FCRSC prior to its next meeting.

The FCRSC agreed that two workshops are required to consider and review all of the services and deliverables/milestones for each fishery. FCRSC agreed that the first workshop should focus on the three abalone fisheries, and that the second workshop, should focus on the remaining wild-catch fisheries. The Committee noted that these workshops should assist in meeting the Minister's timeline of 1 April 2014 to implement the prospective cost recovery system. The Committee noted that as no aquaculture representative had yet agreed to be a part of the process, consultation with the aquaculture sector may need to occur via the RIS process.

Deferred items

Due to the length of discussions regarding the above matters, the following agenda items were deferred until FCRSC meeting #28:

Guidelines for the operation of cost recovery
Breakdown of DPI overhead costs
Progress (of cost recovery) reports to FCRSC
Timing of licensing and financial years
Ownership of research
Attribution of costs – quota vs. licence
A mechanism for consultation regarding the level of services and schedules
VAGO Report on Effectiveness of Compliance and Enforcement Activities
Compliance reporting by other jurisdictions.

Next meeting:

FCRSC meeting #28 – Thursday 22 November 2012.

FCRSC meeting #29 – Friday 14 December 2012.