Exports

Aggregation Limits on fishing quota

Thursday June 21, 2018 Julian Williams

Are aggregation limits on fishing quota under s59 of the Fisheries Act (1996) fit for purpose?

 

This question interests us all, including : commercial fishing companies; small fishers; Māori iwi quota holders; recreational fishers; and of course, the government.

 

BERL’s 2018 report for the Ministry for Primary Industries (MPI) leads us to conclude that the aggregation limits regulatory regime is still necessary, in particular to protect property rights of quota holders and others. At the same time, current industry practices support updates of it.

 

MPI asked BERL in 2017, to provide it with a confidential report, that is now publicly available on request to MPI. The report  is designed to inform expert policy advisers on the question together with other particular issues. No industry or public consultation was permitted. MPI provided a compendium of Ministerial briefing papers since 1996, showing policy advice and submissions for applications under s60 for exemption to the regime.

 

You can request the report directly from MPI, together with MPI’s comment on the scope of the report; an independent expert peer review commissioned by MPI; as well as our brief comment on this review.

 

Here is a summary of our report. 

 

Consolidation of the fishing industry and development of its processing and marketing activities for it were signalled as important and necessary for the growth and viability of the commercial fishing industry when the QMS was introduced in 1986.

The aggregation limits regime was introduced to achieve policy objectives to avoid the detrimental effects of consolidation.

The commercial fishing industry has changed since the introduction of the quota management system (QMS) in 1986. Importantly:

  • consolidation in the fishing industry
  • Crown guarantee of quota title under the Fisheries Act (1996)
  • the annual catch entitlement (ACE) regime in 1996 to separate catch entitlements from quota title
  • improved accounting for bycatch in 1996
  • cooperative arrangements between fishers and licensed fish receivers (LFRs)
  • cooperative arrangements between ACE sellers and LFRs

have variously changed the merits of provisions of the aggregation limits regime introduced under the Fisheries Act (1986).

Evidence showing the merits, in the contemporary fishing industry, of the policy concerns and policy objectives of 1986, is provided in the many cases of applications for exemptions from the aggregation limits. In particular, much expert and complex discussion is contained in submissions, cross-submissions and government policy advice to Ministers.

This report provides:

  • a strong theoretical examination of the merits of aggregation limits
  • a pragmatic assessment of the merits of such tools in the modern fisheries sector.

This study has assessed the policy concerns and the policy objectives underpinning the aggregation limits regime of 1986. Subsequent changes to the Fisheries Act in 1996, together with changes in industry consolidation and symbiotic cooperative arrangements have changed the merits of an aggregation limits regime to achieve these.

Importantly, the industry as a whole, working together, is more able to support:

  • sustainability of stocks and species
  • viability and competitiveness of on-shore processing and marketing
  • support for participation of small fishers in inshore fisheries
  • supply of ACE to where it is best utilised.

For these reasons, domination of the ACE market is not a significant policy concern and was not when the ACE regime was established in 1996. At that time, the ACE market was specifically excluded from the aggregation limits regime. Hence the aggregation limits regime is properly targeted at the quota market.

At the same time, there remain policy concerns from 1986 to safeguard:

  • property rights of quota holders and others in society
  • rights to access and utilise technology for efficiency gains
  • against abuses of market power that can compromise access to fisheries and management of stocks and species.

The Commerce Act (1986) by itself is insufficient to provide these safeguards. The evidential requirements in some provisions of the regime such as for “willingness” and “ability” are impractical. The numerical limits themselves may also be unsuitable and impractical in some cases and could be usefully reassessed. For both these reasons (evidential and numerical) the aggregation limits regime is not as fit for purpose as it could be.

Given the national significance of the policy concerns for current and future generations, it is fitting and proper that the Minister of Fisheries should possess wide powers in making decisions on exemptions.