21 December 2002

Shared Resource: Allocation between stakeholders

This paper discusses the matters that the Minister of Fisheries is required to address in determining catch limits for particular fisheries and the process followed in allocating the allowable catch between the various stakeholders. Some of the important considerations are addressed in more detail in the associated papers "Maintaining the marine environment and recreational fishing rights"; "Obligations to Maori"; and "The legal nature of recreational fishing rights".

Setting a total allowable catch

The Fisheries Act 1996 requires the Minister of Fisheries set a total allowable catch (TAC) with respect to each quota management area for each stock subject to the quota management system (QMS). For fish stocks not yet subject to the QMS the Minister may set a catch limit including a commercial catch limit but is not required to do so.

The TAC is divided into shares for each of the respective stakeholder groups' catch allocation, after allowing for other fish mortality arising from the exercise of the catch entitlements in a particular fishery. For non-commercial interests, that interest is expressed as an allowance. The commercial entitlement is specified in the Act as a total allowable commercial catch (TACC). The process by which the allowance for non-commercial interests in the fishery is made is undertaken in conjunction with the setting of the TACC.

The Fisheries Act does not prescribe the extent of the respective allowance for each stakeholding interest, or the priority to be accorded to those interests. The Minister has wide powers of discretion in deciding the allocation to each stakeholder. However, the Act does contain provisions establishing the nature of a stakeholders right and the manner in which it can be modified. In addition, a number of court decisions have provided further guidance as to the nature of the Minister's responsibilities when allocating the TAC between stakeholders.

In allocating the TAC the Minister is required to consider the following factors under the Fisheries Act:

o Maori customary non commercial fishing interests [section 21(1)(a)(i)];

o Recreational fishing interests [section 21(1)(a)(ii)];

o Commercial fishing interests [section 20]; and . All other mortality of the stock caused by fishing [section 21(1)(b)]

The Act requires the Minister to give consideration to the Maori customary non-commercial and recreational interests and all other mortality before setting a TACC. Although the Act does not accord any of these factors priority there are practical reasons why the "other mortality" caused by fishing is considered first. Illegal catch (under reporting, poaching, and discards), incidental gear mortality, and scientific research are sources of "other mortality". Such mortality is a fundamental element that affects the TAC available for apportionment between competing interests. Attributing priority to this factor acknowledges that such mortality is an unavoidable component of the utilisation of fisheries resources. However, where the "other mortality" can be attributed to a particular source it is equitable that the attributed mortality is subtracted from the share of the TAC apportioned to the relevant sector. '

Maori Customary Interest

The Crown has obligations under Section 10 of the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992 and Section 5 of the Fisheries Act 1996. [See "Obligations to Maori" paper.] The setting of the customary allowance under section 21 should account for the extent of customary non-commercial take as authorised under the customary regulations. The Minister must balance these sets of rights with those rights enjoyed by recreational and commercial fishers set out elsewhere in the Act. There may be some circumstances where the TAC is set so low that only Maori customary non-commercial fishing can be accommodated and the Minister chooses to exclude other fishers.

Recreational Interests

Every person has a right to fish for recreational purposes. This right is subject to statutory controls in New Zealand. [See the paper "The legal nature of recreational fishing rights".] The Fisheries Act 1996 provides for both commercial and recreational fishing. It affords no legal priority to recreational interests in terms of the allocation of the TAC for a fish stock. In New Zealand Federation of Commercial Fishermen (inc) & Ors v Minister of Fisheries & Ors (HC, Wellington CP237/95) (SNA1) McGechan J, without determining the issue of whether recreational fishers are accorded priority under the Act, stated that to allow for non-commercial fishing interests, arguably does not mean that an allowance must fully satisfy estimated non-commercial requirements.

Where there are competing demands, which will exceed the availability of the resource, the Act does not require the Minister to satisfy the needs of all groups. Justice McGechan concluded in SNA1 that the requirement to "allow for" the recreational interest is to be construed as meaning to "allow for in whole or in part".

The Minister of Fisheries has discretion under the Fisheries Act 1996 to determine the nature and extent of any priority between recreational and commercial interests on a case by case basis. [McGechan J New Zealand Federation of Commercial Fishermen (Inc) 7 Ors v Minister of Fisheries & Ors (HC, Wellington CP 237/95 page 89) and New Zealand Federation of Commercial Fishermen (Inc) 7 Ors v Minister of Fisheries & Ors(CA 82/97, judgement of the Court delivered by Tipping J pages 17-18)].

Total Allowable Commercial Catch

The Minister of Fisheries is required to fix a TACC for all QMS fish stock. The allocation of quota under section 47 of the Act creates a property right for individuals who hold individual transferable quota (ITQ) in a QMS fish stock. It is not an absolute property right as the Fisheries Act 1996 makes it subservient to the exercise of the Minister's powers pursuant to the Act. It is an inherent element of the QMS that the TACC can be reduced, with a consequential reduction in ITQ. In considering a reduction of the TACC the Minister is required to consider, amongst other matters, the economic impact of his decision. The Court of Appeal in CA82/97 held that it is in the Minister's power to vary the ratio between commercial and recreational interests. once the initial allocation was made. Similarly McGechan J in CP237/95 considered that a conscious transfer of catch between interests is a legitimate activity within the context of the Act.

"'other mortality" in large part arises from illegal fishing and to a lesser extent commercial fishing.

The use of ITQ to settle Maori commercial fisheries claims places an additional onus on the Crown to maintain the integrity of the overall fisheries management framework - a framework based on transferable property rights that provide access in perpetuity to sustainably managed fishstocks. Crown actions [such as reallocating fishstocks between commercial and recreational fishers] that may diminish the worth of the fisheries redress accorded to Maori, directly or indirectly, need to be considered in full light of their potential implications for the longevity of the settlement and the need to avoid creating a new Treaty grievance.

Section 308 provides that a reduction of the TACC for the purposes of ensuring sustainability is not liable to compensation. The Act is silent on the issue of compensation where a reallocation between commercial and non-commercial interests takes place.

Determination of Stakeholder Interest

The primary method by which the extent of an interest in a fish stock is assessed is by a measure of the existing utilisation of the fish stock by each sector group. The manner of calculation of that interest will vary according to the level of information available. In the commercial sector, reported catches for each existing QMS species is considered to be an accurate record of commercial utilisation. Information detailing catch levels for other sectors is generally less comprehensive. Monitoring of the recreational and Maori customary noncommercial harvest occurs retrospectively through recreational harvest surveys and liaison with tangata whenua. Increasingly information on the Maori customary harvest is being provided through reporting mechanisms under customary fishing regulations. In the absence of precise information reliance is made on the best available information. This is consistent with the information principles set out in section 10 of the Act. Consultation under section 12 of the Act is also used to determine stakeholder interests.

Allocative Process

The Fisheries Act 1996 sets out an allocative process that involves three steps-the setting or varying of a TAC; the provision of an allowance for specified interests; and the setting or varying of a TACC. These steps are interrelated but may occur independently of each other. For example the TAC may be altered without affecting the TACC.

No explicit mechanism to guide the apportionment of the TAC between sector groups is set out in the Act. A number of provisions, however, do provide some guidance. The purpose of the Act, as set out in section 8, is to provide for the utilisation of fisheries resources so as to enable people to provide for their social, economic, and cultural well being. Section 13 (3) requires that the Minister have regard to social, economic and cultural factors when considering the way in which, and the rate at which, fish stocks are moved towards a level that can produce a "maximum sustainable yield". This can be over a time period of the Minister's choosing. Section five requires the Minister to have regard to the Crown's international obligations, and those under the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992. Section 9 sets out environmental principles that the Minister is required to have regard to when reaching decisions. (See the paper "Maintaining the marine environment and recreational fishing rights".) Other factors that may be relevant to informing a decision are:

· Current stock levels
· Existing allocations
· Current harvest levels
· Previous decisions
· Equity of allocation (shared pain/shared benefit)
· Participation levels and the importance of the resource
· Population trends
· Relative value of the resource to respective sectors
· Current and past fishing practices (including over fishing and voluntary closures by
· stakeholders)
· Investment and initiatives taken to develop or enhance the resource
· Impact on the ability of sector to take allocation provided
· Economic impact of allocative decisions; and
· Social and cultural impacts of decisions.

Information about the current status of the stock relative to the statutory target level, existing catch levels, existing allowances and catch levels, plus previous decisions may indicate the actions which need to be taken.

The Fisheries Act gives no priority to either commercial or recreational interest. The Act is directed at providing for both recreational and commercial [as well as customary] fishing. It permits the preference of one sector to the disadvantage of the other (although the reallocation of catch from commercial to non commercial fishers may give rise to an issue in respect to the payment of compensation). Although the Minister has discretion with regard to the allocation between commercial and recreational fishers, case law suggests that it is not unreasonable for both groups to share any of the pain arising from a reduction in the TAC. There is no requirement for the interests of both groups to be met in full. In the absence of information about the relative benefits to be derived from allocating a stock to one group or the other it would be reasonable for both groups to ensure the sustainability of a fish stock through a shared reduction in the TACC and the recreational allowance. Equally, both groups should derive shared benefit from the rebuild of a fishery.

When the TAC and the TACC are to be reduced for sustainability purposes there is a relationship between managing recreational catch levels and reducing the TACC and vice versa over which the Minister has discretion. Although there is no legal obligation to undertake a proportional reduction between commercial and recreational interests, consideration of fairness suggests that it would be unwise to reduce one without taking steps to constrain the other.

Those parties who are responsible for the enhancement of a resource should, for equity reasons, receive the benefit of their activities. There are, however, difficulties in ascertaining the increased harvest from a fishery arising from such activities. This is a matter the Minister can consider at his discretion.

Population trends are reflected in the level of recreational fishing undertaken at a regional and national level. Growth in urban centres has a significant impact on some fisheries. The allowance set and the associated management controls need to take account of existing population growth and distribution.

Certain fisheries are considered to be of importance to particular groups of fishers. The value attributed to a resource is not limited to its economic value but may include its aesthetic and non market values. Some species, such as snapper, are a medium to high value fish, but also have a high value as an important recreational target species. Certain species such as kingfish may be valuable to particular groups, such as charter boats, and may have significance for tourism. The abundance of a species and the availability of a particular size of fish are also important factors determining the value of a species of fish to particular groups. These factors need consideration in allocation decisions.

Over fishing of a TAC may result in the subsequent reduction of the TAC. Reported over fishing by individual commercial fishers is subject to control under the Fisheries Act. The consistent over fishing of the TACC or an allowance, that results in a reduction of the TAC, as a general principle, should be attributed to the stakeholder group responsible for the over fishing. This is a matter at the Minister's discretion.

The Minister has an obligation under the Act to consider the economic, social and cultural impacts of altering the TAC and its subsequent allocation. The Court of Appeal [SNA1] has suggested that a careful cost benefit analysis needs to be undertaken to support a particular decision and that it should cover a reasonable range of options available to the Minister in rebuilding stock levels towards that level allowing the maximum sustainable yield. The Court considered it prudent for the decision to clear identify the economic, social, and cultural factors considered relevant to the decision and those not seen as relevant. Those affected by a decision ought to be able to establish that all other reasonable possibilities had been considered.