| Proportional
Allocation of Fisheries Resources in NZ
option4 Final Submission
August
2005
What
is Proportional Allocation?
At first glance, proportional
allocation of fisheries resources appears to be a fair system of
allocating fisheries between competing interests. If the fishstocks
increase and additional yield becomes available, then commercial
and non-commercial fishers are allocated more fish to catch. If
a fish stock falls and a rebuild is required, each sector has their
catches reduced.
Theoretically, reductions
or increases in catch are done at the same percentage for both sectors
at the same time. The Ministry of Fisheries (MFish) is promoting
proportional allocations as an equitable way of sharing the pain
of rebuilding a fish stock between sectors and sharing the gains,
once the stocks are rebuilt.
For proportional allocations
to have any chance of working between commercial and non-commercial
fishers it is essential that:
- Consultation with non-commercial fishers is undertaken on whether
the proportional allocation model is acceptable.
- Initial proportions are fairly achieved and set with possibility
of judicial review.
- Reliable scientific information is available on which to base
initial allocations
- Stakeholders have an equal opportunity to catch their allocation.
- The stakeholders can be constrained to their proportion.
- All stakeholders share pain or gain equally and simultaneously.
- Cheating is detectable and avoidable.
- All stakeholders have equally strong rights.
- All stakeholders are similarly resourced.
- There is a way of altering the proportions when they are poorly
set.
- There is a way of increasing the non-commercial proportion if
the number of non-commercial fishers increases, or decreasing
it if less people go fishing.
Unfortunately the Ministry, in trying
to impose a proportional system, fails to mention let alone address
ANY of the fundamental issues above. This reduces the credibility
of their proposals with non-commercial fishers and must, as a result,
call into question their rationale and the outcomes they seek regarding
the implementation of proportional allocation.
A close scrutiny of the Ministry's
Advice Papers that recommend proportional allocation of fisheries
between commercial and non-commercial fishers show it to be a policy
construct of MFish which will placate commercial fishers and avoid
compensation issues. There is no process evident on how this policy
came about, or who was consulted in its formulation. This policy
cannot be found in the Fisheries Act and has been previously rejected
by the courts. When publicly consulted through the " Soundings
" document proportional allocation of fisheries was overwhelmingly
rejected by 98% of the record 60,000 individuals who submitted to
the process.
Proportional allocation now
appears to be the preferred policy for MFish. We believe this is
because it allows them to ignore the history of the fishery, including
serious overfishing and past mismanagement on the part of MFish.
The proportional allocation policy seems to allow the Crown to believe
it is possible to avoid compensation issues, by taking fish from
non-commercial fishers in the name of sustainability and giving
those same fish to commercial fishers to subsidise quota cuts in
fisheries they have depleted.
A major flaw in the MFish
proposals is that those who have depleted fisheries or wasted the
resource are treated no differently than those who have conserved.
In simple terms, proportional
allocation is about giving the commercial fishing interests almost
everything they want, with little or no thought as to the impacts
or consequences on non-commercial fishers. This allocation policy
undermines the public's confidence in the Quota Management System
and removes most of the incentives for non-commercial fishers to
conserve fish stocks.
The expectations that sector
groups could work together under a proportional system to develop
fish plans are most unlikely to succeed in depleted inshore fisheries
where the commercial sector has all the rights and resources and
where their methods and practices can be demonstrated to be the
cause of the depletion.
To expect non-commercial
fishers to accept this system after being allocated their "initial
share" based on known underestimates of catch (flawed research)
compiled while the fishery is a at, or near, it's lowest stock levels
is unrealistic.
One of the worst aspects
of the proportional proposals is that they give non-commercial fishers
the leftovers of a poorly implemented Quota Management System which
has failed to meet it's objectives of rebuilding fishstocks in the
shared fisheries under review.
It is a policy that gives
preference to commercial fishers at the direct expense of non-commercial
fishers. This commercial preference is highest in fisheries commercial
fishers have depleted the most. They therefore suffer least and
the non-commercial stakeholders get severely punished for the actions
of those who ruined the fishery. It's a big lose situation for non-commercial.
TOP
The
History of Proportional Allocation
The MFish agenda to allocate
fisheries resources proportionately between stakeholders was first
raised in the Soundings document. MFish and the NZ Recreational
Fishing Council released the Soundings public consultation
process in July 2000. Soundings strongly promoted proportional
allocation. Options two and three in Soundings were focused
on achieving this.
It is interesting to remember
that during public consultation on Soundings a MFish policy
division representative, Jenni McMurran, was asked what the objectives
of the Ministry were in promoting proportional allocation. She replied
that it was "to cap the non-commercial catch and avoid compensation
issues for the Crown."
The
Courts have also commented on Proportional Allocation
[1] IN
THE COURT OF APPEAL OF NEW ZEALAND CA82/97
JUDGMENT OF THE COURT
DELIVERED BY TIPPING J
22 July 1997 Page 18
A further matter which
points against any implication of proportionate reduction is that
the Minister is in our judgment entitled to bear in mind changing
population patterns and population growth. If over time a greater
non-commercial demand arises it would be strange if the Minister
was precluded by some proportional rule from giving some extra allowance
to cover it, subject always to his obligation carefully to weigh
all the competing demands on the TAC before deciding how much should
be allocated to each interest group. In summary, it is our conclusion
that neither the specific sections (28D and 21) nor the Acts when
viewed as a whole contain any implied duty requiring the Minister
to fix or vary the non-commercial allowance at or to any particular
proportion of the TACC or for that matter of the TAC. What the proportion
should be, if that is the way the Minister looks at it from time
to time, is a matter for the Minister's assessment bearing in mind
all relevant considerations.
The current proportional
system MFish are trying to implement is not about fairness, not
about what is right, it can only be about protecting the Crown from
compensation where fisheries have been misallocated between sectors,
mismanaged or both.
Proportionality of the
type MFish are trying to impose is about using non-commercial fish
as a bank from which the Crown takes fish and gives it to the commercial
sector when commercial fishing has become unsustainable.
The
Initial Allocation Process
The first allocation of fisheries
resources occurred with the introduction of the Quota Management
System (QMS).
The Quota Management
System
In 1986 the Quota Management
System (QMS) was introduced to restrict and manage the excessive
commercial fishing that had seriously depleted inshore fish stocks
during the late 1970's and early 1980's. Clearly the intent was
to constrain commercial fishers to a sustainable level and allow
those fisheries previously depleted to be given the ability to recover.
The target level set for fish stocks was, "at or above the level
that can produce the Maximum Sustainable Yield" (MSY). This is usually
between 20 – 25% of the unfished or virgin stock size.
The initial allocations were
set on the basis of a scientifically determined Total Allowable
Commercial Catch (TACC) for each fishery divided by the total commercial
catch history for that fishery. The result gave the overall catch
reduction required as a fraction. Each commercial fishers catch
history was multiplied by this fraction to calculate their Individual
Transferable Quota Allocation (ITQ).
The key issue was that commercial
fishers were to be constrained to a sustainable TACC, with each
fisher restricted to a defined portion of it. Compensation was paid
to commercial fishers who tendered their quota back to the Crown.
The non-commercial sector
was NOT given a proportion at this time. Non-commercial
fishers were assured by Fisheries Minister of the time, Colin Moyle
that, " Government's position is clear, where a species
of fish is not sufficiently abundant to support both commercial
and non-commercial fishing, preference will be given to non-commercial
fishing" [1]
The Quota Appeals
Authority (QAA)
Almost immediately the commercial
quota was issued, many commercial fishers sought to have their individual
allocations increased by lodging appeals through the QAA. Many were
successful and MFish allowed these new quotas to be cumulative above
the existing Total Allowable Commercial Catch (TACC) thus unfairly
inflating the commercial share of those fisheries.
Quotas on many inshore fish
stocks soon rose alarmingly to 20-30% above the previously "scientifically
determined" sustainable TACC which the commercial fishing interests
had already been compensated to fish to. Within a few years commercial
fishers were again overfishing many stocks.
Many of the species left
out of the quota system were fished hard because there were no catch
limits, quota lease costs and the prospect of these stocks being
introduced to the quota system encouraged fishers to maximise their
catch history. Kahawai, kingfish and many of the reef species were
fished down as a result.
In some key shared fisheries
the additional commercial catch issued by the QAA has prevented
or slowed any rebuild and this has clearly impacted adversely on
all non-commercial fishers. This has unfairly reduced the non-commercial
" proportion" of those fisheries through reducing
the biomass and suppressing non-commercial catches.
It is obvious that for the
QMS to be effective, it must manage and constrain commercial catch
to the scientifically determined sustainable level. It is our view
that the quota generated through successful QAA appeals should have
been contained within the TACC and then, each commercial fisher's
ITQ should have been reduced proportionately. Then the total ITQ
would have been equal to the previously "scientifically determined"
sustainable level of TACC.
Allowing increases in
fishing quotas by appeal without regard to the initial science relating
to the setting of the TACC or sustainability of the fishery has
been at the direct expense of non-commercial fishers. It has resulted
in less fish for the non-commercial fishers and constitutes a direct
reallocation of catching rights to the sector
who were responsible for the over fishing. Many existing TACC's
on stocks, which are below MSY, still include quota issued by the
QAA.
TOP
Deeming
Since the introduction of
the QMS fish taken in excess of a fisher's quota can be sold as
long as a penalty deemed value is paid. Deeming has caused TACC's
to be consistently exceeded in some fisheries. The causes of deeming
range from fishers with unbalanced quota portfolios through to the
blatant exploitation of loopholes where a profitable difference
between the deemed value and port price existed. Thousands of tonnes
of inshore fish have been harvested unsustainably through deeming.
Commercial deeming which
has led to TACC's being exceeded has been at the direct expense
of rebuilding some important depleted shared stocks and is again
to the detriment of non-commercial fishers.
Commercial fishers deeming
catch above quotas has unfairly reduced the non-commercial proportion
of those fisheries through reducing the biomass and suppressing
non-commercial catches.
Dumping
In those commercial fisheries
where price is, or has been, based on the quality or size of fish
landed, the illegal practice of dumping unwanted fish called high
grading has been widespread. This has caused the loss and
wastage of hundreds, possibly thousands, of tonnes of fish in important
shared fisheries. Media reports and Ministry records prove this.
Another form of dumping is
where fishers have insufficient quota to cover the landing of by-catch
species, which are effectively worthless to the commercial fisher
because of new higher deemed values, so they discard the catch.
Commercial dumping has been
at the direct expense of rebuilding some important depleted shared
stocks and to the detriment, yet again, of non-commercial fishers.
Commercial fishers dumping
catch above quotas has unfairly reduced the non-commercial proportion
of those fisheries through reducing the biomass and suppressing
non-commercial catches.
Maximum
Sustainable Yield
In a mythical world where
research provides accurate and timely results it might be possible
to manage a fishery precisely "at or above the level that produces
the maximum sustainable yield (MSY)."
We note that the Act requires
the Minister to manage fisheries at or above MSY and the Ministry
have interpreted this as a "knife edge" with MSY biomass levels
as the target.
Unfortunately, in the real
world by the time it is realised that a stock is overfished it is
too late. This is because the science to determine the extent of
any problem takes years to finalise and the stock continues to decline
to well below MSY before catches are reduced.
For many stocks there is
considerable uncertainty whether they have rebuilt under current
management strategies or not. This demonstrates the inability of
current policies used by Ministry to manage or improve the fishery.
The reality of the "at or
above MSY" policy is that we are actually managing many of our fisheries
below MSY. There is a demonstrable reallocation from non-commercial
fishers to commercial fishers during the fishing down and overfishing
phase, and again when catches are reduced "proportionately" to rebuild
the fishery.
Ministry
Policy is Double Jeopardy for Non-commercial fishers
Fishery decisions that reduce
catches are made when a fishery has been overfished and the biomass
has fallen below MSY. Because non-commercial catch is largely driven
by the abundance of a fish stock, non-commercial catches, individually
and as a sector, decline as the biomass declines.
The ability of the commercial
sector to catch their proportion is largely unaffected by the health
of the fishery, they simply apply more effort or more efficient
methods to maintain their catches and "proportion" in
a declining fishery. They are thus only penalised once when decisions
to cut catches are made.
Proportional allocation inevitably
puts non-commercial fishers in a double jeopardy situation when
fisheries are in poor shape and allocation decisions are being made.
Our catches are eroded in the first instance by the low stock size.
We end up catching smaller fish, fewer fish, or both as the fish
stock declines. The overall tonnage of non-commercial catch drops
as the biomass falls.
When we are allocated our
"share" it is usually based on our current catch in a depleted fishery.
Consequently, under the current proposals we are allocated the minimum
possible amount as an initial proportion . Then
MFish make recommendations on how to further constrain non-commercial
catch through imposing lower bag limits or increased size limits.
Hence non-commercial fishers are penalised twice.
If commercial fishers deplete
a fishery this will inevitably reduce the non-commercial proportion
of that fishery to the advantage of commercial interests.
When subsequent decisions to cut catches are made the non-commercial
sector loses some of its proportion when allowances
are set at current catch levels. This effectively gives commercial
fishers a huge advantage.
When the fishery finally
rebuilds commercial fishing interests have a windfall. The non-commercial
sector is locked into a lower proportion that
obviously attracts less increase in catch as a result of the rebuild.
The commercial sector have gained not only the proportion denied
the non-commercial sector because of the flawed allocation process,
they also get the increased yield from their proportion and the
proportion they have taken from the non-commercial sector.
To make matters worse the information
on which non-commercial allocations are made is extremely questionable.
Estimates vary by a factor of threefold and MFish seems to have
a preference of selecting the smallest number possible and often
that number which best favours the commercial sector.
TOP
Proportionalism
Works Against Conservation
Non-commercial fishers have
a record of being able to implement successful voluntary conservation
initiatives. The billfish tagging program currently sees two thirds
of the recreational billfish catch in New Zealand tagged and released.
A similar voluntary arrangement gave thousands of kingfish a second
chance as non-commercial fishers fished to huge size limits and
self-imposed lower bag limits. Unfortunately when kingfish were
introduced into the QMS it was done proportionately with the proportions
set at current catch levels at the time.
This means that no extra
allowance for fish conserved by non-commercial fishers was made
in the allocation process. The result was a lower allocation of
kingfish for non-commercial fishers than would have been the case
had those fish been landed instead of released.
After deducting the non-commercial
landed catch, the balance of the yield of the kingfish fishery (including
those fish conserved by recreational fishers), was issued as commercial
quota! Recreational conservation efforts were rendered futile by
this reallocation.
There was also some comment
at the time about the legitimacy of some of the commercial catch
history which was thought to be taken by vessels without the correct
endorsements on their permits to target kingfish or some such technicality.
Because a proportional allocation method was used these suspect
fish were automatically counted as catch history and eventually
formed part of the commercial proportion as quota.
If MFish are going to implement
a proportional system of allocation then conservation efforts will
act against non-commercial fishers interests and to the direct benefit
of commercial fishers in the interim. It is an absurd situation!
option4 has a founding principle
that non-commercial fishers should be able to devise non-commercial
fishery plans to prevent fish conserved by non-commercial fishers
from being allocated to the commercial sector (or being used to
reduce our proportion). MFish have yet to engage on this topic.
Proportionalism
May Increase Wastage
Commercial fishers who exceed
quotas and deem catches, dump fish, don't report catch against quota
(black market) or use methods that cause high levels of juvenile
mortality or wastage can benefit immensely from a proportional allocation
system. This is because non-commercial fishers subsidise the risks
for them. If their poor fishing practices cause the stock to decline
they are assured that they do not bear the full cost of their activities.
This perverse outcome is
because non-commercial catch will be cut by the same proportion
as the commercial catch is. In this way non-commercial fishers carry
the bulk of the risks of proportional allocation.
Commercial
Arguments for Proportional Allocation
The commercial sector has
long argued for a proportional allocation system in depleted fisheries.
The usual reasons given are that non-commercial catch will increase
as the biomass increases and some or most of the benefits of rebuilding
the stock will accrue to non-commercial fishers.
It is understandable that
commercial fishers would want to have non-commercial allowances
and proportions determined while the fishery and non-commercial
catch is at its lowest levels. What is surprising is the extent
that MFish have bought into such an unfair proposition.
Non-commercial catch is going
to increase as depleted fisheries rebuild. Everybody seems to agree
on this. Why then is there no acknowledgement in the IPP that non-commercial
catches have been reduced as the fisheries have declined? Surely
this information is crucial if proportions of fisheries are to be
allocated fairly.
In the absence of a fair
process to determine the initial proportion for non-commercial fishers,
those fish lost to non-commercial fishers during the stock decline
are effectively taken from them. These fish are then used to prop
up commercial catches that would otherwise be unsustainable.
Ignoring the history of a
fishery when setting proportional allocations allows commercial
interests to prevent non-commercial interests being fairly allowed
for. Imposing proportional allocation in depleted fisheries guarantees
the worst possible outcome for non-commercial fishing interests.
The result is obvious,
increased commercial proportions and quota holdings. It is an unjust
system.
Compensation
During discussions on better
defining non-commercial fishing rights during the " Soundings
" process (2000-2001), the subsequent Ministerial Consultative
Group (MCG) and the Ministry Reference Group , the Ministry has
consistently tried to force proportional allocation on non-commercial
fishers as a way of "capping the recreational catch" and "avoiding
compensation issues for the Crown". This view has been articulated
by some Ministry personnel and is well documented through speeches
and presentations that various Ministry representatives have made.
Proportional allocation as
a way of avoiding compensation issues for commercial fishers also
appears to have now become a preferred policy of the Ministry of
Fisheries in advice to Ministers in shared fisheries.
As a direct consequence of
the above policy option4 believe the Ministry has no option
but to give preference to commercial fishing interests in advice
to Ministers regarding the management of shared fisheries. This
is because exposure to compensation from commercial fishing interests
is always a possibility when making allocation decisions
in shared fisheries and only commercial fishers can claim compensation.
So, the only certain way of avoiding the possibility of claims for
compensation is to pander to commercial fishing interests.
The following excerpt from
a recent MFish advice paper demonstrates this point:
"However, subject to
this consideration, there is no legal requirement that a decrease
or increase in the allocation of the recreational allocation is
to result in a corresponding proportional adjustment of commercial
catch, and vice versa. MFish notes that the Fisheries Act
assigns no priority between commercial and recreational interests.
The Act is directed at both commercial and non-commercial
fishing. Within that duality the Act permits the preference of one
sector to the disadvantage of another; for example to provide for
greater allowance for recreational interests in proportion to the
commercial allocation . Any reallocation of catch
from the commercial fishers to non-commercial may be subject
to claims for compensation to commercial fishers under s 308 of
the Act, except at the time of introduction."
Note: As
non-commercial fishers cannot sue for compensation (see bold text
above), little consideration needs be given to their interests.
Giving consideration to possible
compensation claims from commercial fishing interests
will always tend to create biased advice from the Ministry unless
all aggrieved parties have similar access to compensation.
Injustices caused by incorrect
initial allocations or subsequent re-allocations (QAA etc) or adjustments
in the respective allowances or proportions between
sectors cannot be addressed while the Ministry follow this policy.
This policy also leaves future Governments exposed to the same compensation
issues the current policy fails to address.
Please also note the ongoing
uncertainty expressed by Ministry about whether or not compensation
is payable to commercial interests in the event of reallocation.
The word "may" offers us no real
information or direction – it simply perpetuates the uncertainty
of how the QMS and Fisheries Act are designed to deal with reallocation
or redistribution of catching rights.
This degree of uncertainty
is mirrored in the submission made by Te Ohu Kai Moana to the Soundings
consultation process in 2000 when they stated "Te Ohu Kai Moana
acknowledges the need for fishers to work co-operatively on solutions.
To provide the conditions for this each party needs to have clarity
of its rights and those of others and incentives to work together.
Te Ohu Kai Moana rejects the status quo option as it does not provide
either clarity or incentives. Te Ohu Kai Moana supports a priority,
unconstrained share for customary harvest with second priority being
accorded to commercial rights. This means that TAC reductions would
be taken firstly from the recreational allowance unless
there was a buy back of commercial quota. However,
in situations where fishers are working co-operatively on solutions,
it will likely mean that Maori will agree to changes that are more
evenly distributed where they believe this will foster long-sighted,
co-operative approaches that enhance the sustainable management
of fishstocks."
Here we see the word "unless"
used to discuss compensation. What does this
word actually mean – where in the fisheries legislation do
we go to find direction about this option identified by TOKM?
How long will the fisheries
managers choose to leave this most fundamental question of compensation
unresolved? For how long are we all to be condemned to the agony
of incomplete and unresolved policy that in turn leads to seriously
compromised fisheries management outcomes?
TOP
Do
Proportional Cuts or Increases to Catch Actually Work?
Commercial fishing interests
will usually argue, regardless of the cause of overfishing, that
if their quota is cut then the non-commercial sector should be cut
by the same proportion. In this year's Initial Position Paper (IPP)
MFish have proposed proportional cuts for most shared fisheries
where catch reductions are proposed. Obviously, MFish also think
there is some merit in this approach.
Besides being unfair for all the reasons
outlined elsewhere in this document option4 does not believe the
need for proportional allocations has been properly demonstrated
or the effects of the system duly analysed. The following excerpt
is based on a document
tabled last December to the Minister and MFish in the hope of commencing
a dialogue with them on this very issue.
Recreational and other
non-commercial catches are mainly driven by three factors:
- Abundance of the
fish stock
- The number of non-commercial
fishers
- Weather
The Minister of Fisheries
is directed by the Fisheries Act to "allow for non-commercial interests."
If a fish stock is below the level required to produce the Maximum
Sustainable Yield, then non-commercial interests will suffer reduced
catch rates and catch smaller fish. Their interests will not be
properly "allowed for."
From the three main drivers of recreational catch above, it is apparent
the Minister can only improve non-commercial fishing by increasing
the biomass of the fishery.
If a non-commercial allowance
is accidentally set too high or, if the Minister intentionally allows
more for them than they actually catch, these fish will go uncaught
because non-commercial fishers have no way of catching more than
they can already catch. Their effort is so limited by the three
drivers above. What this means is that the Minister has no real
way of instantly increasing recreational catch as he can with commercial
catches.
On the other hand, if
the Minister "allows" an insufficient tonnage to cover recreational
interests then the Ministry will attempt to reduce bag limits or
increase size limits or impose some other restraint to constrain
recreational catch to the allowance. What this means is that the
Minister has many ways of instantly reducing recreational catch
yet has no equivalent way of increasing it.
This is a one way valve;
TACC's and commercial catches can go up or down as commercial fishing
interests can quickly adapt their catching capacity to match varying
TACC's, regardless of the health of the stock. Recreational catch
cannot be similarly increased but can easily be reduced. This is
another example of biased policy that gives preference to commercial
interests and is inconsistent with the Moyle's policy statements
made prior to the introduction of the QMS. We believe the proportional
allocation system is irreconcilable with the words "allow for" in
statute.
Because the non-commercial
catch declines as the biomass of a fishery declines it can be stated
without fear of contradiction that non-commercial fishers have already
suffered their burden of "pain" that the proportional system seeks
to equally inflict on users in depleted shared fisheries.
Conclusion
In the absence of addressing
the eleven points on page one concerning the implementation of proportional
allocations it is hard to identify even a single benefit to non-commercial
fishers of a proportional system. The overwhelming majority of benefits
accrue to the commercial interests while a disproportionate amount
of the risk lies with non-commercial fishers. It is a grossly unfair
allocation model.
Recommendations
on Proportional Allocation
As a consequence of the obvious
unfairness of the proposed proportional allocations and reductions
to catches we, as a non-commercial fishing interest stakeholder
representative group, reject completely all proportional options
in the 2005 IPPs.
Before any further proportional
allocation system is proposed the Ministry policy advisers need
to engage with non-commercial fishing interests and resolve the
issues in this document. The non-commercial sector does not, and
will not support the ill-conceived and unconsulted proportional
allocation system in this years IPPs or in any future IPPs.
[1]
National Policy for Marine Recreational Fisheries. Ministry
of Agriculture and Fisheries. June 1989
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THANK
YOU to all those who submitted in support of this option4
submission.
Submission
deadline has closed.
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