Fisheries Cost Recovery Standing Committee Meeting #8
Chairman's Summary of the meeting held on 29 November 2005
The eighth meeting of the Fisheries Cost Recovery Standing Committee (FCRSC) was held on 29 November 2005 at the DPI Offices, 1 Spring Street, Melbourne. The following people attended:
- Mr Ian Cartwright
- Mr Paul Welsby (Industry member)
- Mr David Lucas (Industry member))
- Mr Gerry Geen (Industry member)
- Mr Tim Mirabella (Industry member)
- Mr Jon Presser (DPI member)*
- Mr Michael Hodder (DPI member)**
Permanent observers/Advisers/other DPI
- Mr Ross McGowan (SIV Permanent Observer)
- Ms Karen Weaver (DPI Permanent Observer)
- Mr Paul Mainey (DPI)
- Mr Dallas D'Silva (DPI)
Observers (for relevant discussion only)
- Mr Vin Gannon (Abalone fishery)
- Mr Alan Taylor (Abalone fishery)
- Mr Stephen Maher (DPI – FACS expertise)***
* Will be taking over from Dallas D'Silva
** Will be taking over from Paul Mainey
*** Standing in for Peter Rawlinson (until March 2006)
The eighth meeting of the FCRSC focused on consideration of;
- better means of better allocating costs to the fisheries that generate them by improved attribution of overhead and global costs;
- a minimum/base level of cost recovery to reduce cross-sector subsidisation;
- an independent audit report of the FACS system;
- the latest quarterly FACS report (July-September 2005);
- finalisation of the abalone royalty issue;
- the draft Regulatory Impact Statement (RIS);
- research prioritisation, management and cost recovery processes; and
- progress made by the Committee in 2005.
Decision rules in allocation of costs and the breakdown of overheads, global and specific fishery costs 2004/05
Industry reinforced its concern over the process for allocation of "FV Costs" which used relatively small amounts of direct costs to determine the attribution of relatively large amounts of overhead costs. The Committee acknowledged this concern noting that a significant proportion of these costs relate to the provision of services to fishers, but they cannot be attributed down to an individual sector. Further work was to be progressed to categorise costs in such a manner that would identify costs of greatest interest to industry, and in particular better define compliance, management and overhead costs.
The Department indicated that an analysis of FACS data suggests that direct staff costs for services being provided to fishers in small sectors may not be being fully recorded through FACS due to the small amounts of time involved on any particular day, and is reflected in some unrealistically low levy outcomes for some sectors. As a consequence, the Committee noted that some sectors may be being subsidised by fishers in others. Since costing to very detailed levels would not be cost effective, it was agreed to address this issue by investigating the establishment a minimum base / statutory level of cost recovery per licence during 2006 as a means of addressing cross sector subsidisation.
Draft Report on FACS audit
The Committee considered a Draft Report from the consulting firm Acumen Alliance – "Review of Fisheries Activity Costing System". The independent report was commissioned by FV after a request from the Committee. The Committee members considered the report was of good quality, being clear and well written and had addressed the TORs. While the Department is yet to consider the draft report in detail and provide management responses to the individual recommendations, there were no stand out concerns with its content at this stage.
The Committee noted that one recommendation was to consider aligning the licensing year with the fiscal year. While there were currently no compelling reasons for a change, DPI will develop and present to FCRSC a short paper on the pros and cons of implementing this recommendation.
Review of quarterly expenditure
The Committee considered the July-September Quarterly FACS Report. The Committee discussed the relative merits of analysing, in detail, one quarter over another, noting that while there was some value in the exercise, the short time series meant that such analysis needed to be treated with caution. Inevitably, analysis of quarterly FACS data will throw up substantial spikes in effort against individual activities within a particular sector. Of greater value was the analysis of trends over time i.e. monitoring trends in the long term average cost of delivery of those services of greatest interest to individual industry sectors. This will only be possible in the medium term.
The Committee discussed the urgent need to put into place the communication strategy with industry, as previously agreed. Such a strategy will assist fishers to gain a better understanding of the cost recovery program and open a more meaningful dialogue with them on the results of analysis of FACS data relating to the provision of fisheries management services to which they are contributing. The Department, in collaboration with SIV will work on an information paper which will be considered at the next FCRSC meeting.
It was agreed that the Committee would work toward preparing a summary of FACS data for communication to fishers as soon a practical next year.
Finalisation of Abalone Royalty issue
The Committee noted that the preferred option for the new abalone royalty regime, which resembles as closely as possible the royalty scheme which has historically been in place, has been approved in principle by the Minister following DPI achieving in-principle endorsement from DTF. The new abalone royalty regime will be a sliding progressive scale, based on the beach price of abalone ($ per kilogram). The combined royalty and FMS levy collection will be set at 7.2% of GVP.
RIS – status update and consultation process
The Draft RIS was considered by the Committee. It was agreed that DPI would thoroughly review the cost-benefit section of the RIS for 2006 in conjunction with the Committee.
It was noted that the goal of getting the RIS out to industry in advance of the Christmas break had not been achieved, but that it would be circulated early in January 2006, to allow for the statutory 28 day consultation period. In terms of timing for the RIS circulation process for 2007 the Committee reaffirmed its goal of having the Draft RIS finalised in time to complete the public consultation before Christmas 2006.
A number of comments and / or amendments to the RIS were noted and agreed by the Committee.
Co-investment in Fisheries R&D Projects: Process Improvement
The Committee was provided witha preliminary proposal on how better to assess and agree on Fisheries R&D Project priorities and proposals, ensuring appropriate consultation with all stakeholders.
Industry members expressed considerable concern that the process outlined in the preliminary proposal needed to more effectively engage industry in setting R&D investment priorities, and the project development and assessment process.
The Department indicated its willingness to work with industry to establish an effective process for fully engaging industry in identify their research priorities, and in the development and assessment of projects where they are co-investors. In relation to its R&D program, however, FV will determine its own investment priorities internally.
DPI Budget Building Process
The Committee was provided with a brief overview of the DPI budget building process and time lines.
Industry representatives requested that, at the start of each financial year, FV provide the Committee with a broad overview of significant budget adjustments within the Fisheries budget.
The Committee briefly discussed and agreed to explore further the concept of moving to an annual service level agreement (SLA) between FV and industry. This agreement would quantify key performance indicators in terms of key services to be delivered by FV. FACS data analysis could then be focused on monitoring trends in the cost of delivering those services. This would allow the Committee to target its energies into achieving efficiency savings in the delivery of those services.
Review of progress in 2005
The Committee provided feedback on how they considered the Committee had performed over the year. The Comments were on the whole very positive, noting that most outcomes had been achieved and the level of engagement and mutual trust between Industry and the Department had improved considerably. Industry noted that they had given a commitment to the Minister to assist in delivering of robust and defensible cost recovery system, needed transparency and participation to do so. Industry believed that the Committee had met that need.
A number of issues remain to be resolved, including the allocation method for global costs.
The Department noted that the Committee needed strike a balance in terms of the level of detail it is trying to work through. It was important to also focus attention on communicating with fishers, and to start streamlining FACS to better monitor costs of key services as a basis for developing SLAs with key performance indicators.
Work Program for 2006
The Committee agreed a 12 month schedule of meetings, including approximate timing and issues/activities to be dealt with at each meeting.