The Greens would like to thank all those who made submissions to this inquiry and did so in the spirit of raising genuine policy reflections, grievances, perspectives, expertise and experience. The number of submissions and the breadth of content was significant from right around the nation, covering individual tradable quota (ITQ) management in both state and Commonwealth waters.
While this Senate report has made recommendations only on Commonwealth fisheries, we hope any reflections, conclusions reached, and recommendations made by this committee will be noticed or adopted by state fisheries managers and other community stakeholders.
The Greens plan to build on this inquiry at both a state and Commonwealth parliamentary and policy level.
The Greens believe the first four chapters of the majority report were an excellent summary of the many complex issues raised during the inquiry, but the final chapter—Chapter 5, 'Conclusions and recommendations'—looks completely out of place and appears inconsistent with the body of evidence collected by the committee.
The first three paragraphs of Chapter 5 (5.1 to 5.3) read like a glossy industry promotion, devoid of reality. For example, claims that our Commonwealth fisheries are the best managed in the world when the inquiry received recent evidence from the Australian National Audit Office (ANAO) that the Australian Fisheries Management Authority (AFMA) was only 'partially effective' in its management of Australian fisheries, raise significant questions over such claims. When the Greens initiated this inquiry, the Liberal National Party were in Government, now they are in Opposition and are chairing the committee that has produced the majority report. That means they have the final say in its content and recommendations.
It is understandable but nevertheless disappointing that LNP Senators would want to ignore the body of evidence in this report and put a positive spin on their last decade of fisheries management in Australia—it is ultimately their legacy they are commenting on after all. The Greens urge readers to keep this front of mind when reading the conclusions of the majority report, which unlike this Greens dissenting report, also contain a noticeable lack of recommendations for reform.
We feel strongly therefore that the majority report, whilst it does contain some critical recommendations, does not go nearly far enough in proposing necessary reform of the Australian ITQ system. Nor does it do justice to the many community and lease fishers doing it tough around the nation; or reflect the opinions of many experts and industry stakeholders who made submissions in good faith.
This was the first ever Federal parliamentary inquiry into quota management in Australian fisheries, and one of only two parliamentary inquiries from around the country in the last 40 years. This is quite remarkable given structural change in the industry over this time and how critical ITQ management is to the health of our oceans, fisheries, economy, and our communities.
Although the inquiry was delayed from reporting in 2021 until late 2022, due to COVID restrictions and a change in government, this proved fortuitous as important developments over this extra 12 months in Australian fisheries management were able to be examined and included.
This inquiry was initiated by the Australian Greens following consultation with commercial fishers who felt government needed to tackle market concentration and other ownership issues surrounding fisheries quota management in their respective fisheries.
Further consultation with a broader array of fisheries stakeholders, including researchers and scientists, revealed several other important issues that demanded examination, and these were reflected in the inquiry's terms of reference.
The Greens feel strongly that this inquiry was long overdue and very timely, given the economic and social evolution of ITQ management in Australian fisheries over recent decades, and given recent recognised environmental and ecological changes to the habitat of Australian fisheries.
The Greens will continue to work at both a Commonwealth and state level with community fishers and other stakeholders to push for changes.
As noted in the majority report, it was clear from reading the many submissions and examining the evidence that there are very strongly held, differing views on the pros and cons of ITQs in fisheries management—at both a state and Commonwealth level. Especially as this relates to the benefits or otherwise to community fishers (terms of reference a, b, c and e).
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) research paper, Conflicting perceptions of quota-based systems in Australian fisheries, published 7 February 2022, specifically examined this issue in relation to submissions to this inquiry. This paper clearly demonstrates a fishing industry divided on the benefits and effectiveness of ITQ management in Australia.
The CSIRO report (perhaps the first of its kind analysing just a Senate inquiry!) is a basic quantitative and qualitative analysis of the submissions to this inquiry. It concluded that individual fishers, from both state and Commonwealth fishing industries, had 'predominately negative perceptions of ITQs across all categories'. These fishers do not feel the quota system is working for them, or is in their interest.
It is no surprise that the division is largely between smaller, community fishers who are often seeking to access quota (or fishing rights), and those holding significant amounts quota in respective fisheries (who may lease it out to fishers), and the industry groups representing the bigger players.
Basically, if you own a lot of fisheries quota you are happy with the way things are. If you do not, you are not so happy!
Quota management has clearly been a critical tool in the evolution of our fishing industry, and has delivered benefits over time. But it is far from perfect, and the idea that ITQ management settings should no longer evolve—especially in the face of growing environmental, social, and economic challenges and demands—should be flatly rejected.
Our ITQ based fisheries management approach should be adaptive to all challenges, and significant evidence was presented on the need for change. While there was collective agreement across most submissions and evidence that there was room for improvement, the quantum of change required was debated.
ITQs are a keystone component of fisheries management in Australia, but other approaches and tools are also important. The Greens recognise the complexity of fisheries management and the fact there will be tensions between reforming ITQs or achieving change through other approaches (including those that sit alongside ITQs). Either way, the discussion and debate surrounding this inquiry has offered a rare moment to scrutinise, raise and discuss such issues; and is an important base to build on for further scrutiny.
Abuses of market power in ITQ markets
As noted above, the Greens initiated this inquiry due to concerns in the Tasmanian Rock Lobster Fishery over quota ownership and market concentration. This inquiry's terms of reference were heavily focussed on how the current quota system affects community fishers, and whether the current system disempowers small fishers and benefits large interest groups (terms of reference b, c and e).
Many submissions noted that the individual tradable component of an ITQ has led, over time, to market concentration and potential market power imbalances—power imbalances between quota holders and lease fishers, and between processors and fishers, etc. This has contributed to negative perceptions of ITQs by smaller fishers, and is well covered in the majority report.
The committee acknowledged receipt of submissions alleging potential breaches of the Competition and Consumer Act 2010, and notes the Australian Competition and Consumer Commission (ACCC) has also received complaints. Any substantive inquiry into competition issues in the fisheries sector would require a serious allegation and evidence of a breach of the Act to progress. An ACCC investigation may also look into only one specific fishery amongst hundreds. That is why it is significant that the committee has recommended a broader inquiry by the ACCC into potential market imbalances and abuses of market power, and we urge the Government to adopt this recommendation.
ITQs and healthy oceans
Key terms of references for this inquiry included: a) Good fishing practice that is ecologically sustainable with an economic dynamic that produces good fishing outcomes, and: d) the enforceability of ecological value on the current system, and the current systems relationship to the health of fisheries.
ITQs have inherent biological, economic, and social components. Put simply, they are essentially a tradeable statutory fishing right based on a determined but variable total allowable catch (TAC). Processes and factors relating to how TACs are set are critical to the success of an ITQ managed fishery and were therefore examined during the inquiry.
TACs are set by fisheries scientists and other interests through structures such as Resource Assessment Groups (RAGs), and overlayed by policies such as fishery management plans and harvest strategies, managed by the Australian Fisheries Management Authority (AFMA). A TAC is supposed to focus on sustainability, incorporating various biological and environmental assessments of fish stocks.
The committee heard evidence there is significant room for improvement in consulting on, incorporating and applying ecosystem and ecological risk approaches to Australian fisheries management—such as in the setting of TACs or development of harvest strategies—especially in relation to emerging risks associated with the impacts of climate change.
In its 2021 performance audit of AFMA, the ANAO found AFMA's management of Commonwealth fisheries was only 'partially effective'; that it was unclear if AFMA's ecological risk framework was appropriate; and that it had not met its requirement to reassess ecological risk to managed fisheries every five years (as required under its 2017 Guide to AFMA's Ecological Risk Management framework). It called for a re-assessment plan, and AFMA agreed to this recommendation.
Additionally, the ANAO criticised AFMA for a lack of accountability on consultation with stakeholders (including on ecological concerns) and recommended that AFMA maintain a current register of interested parties and actively engage with all stakeholders in relation to fisheries management. AFMA also agreed to this recommendation.
Criticisms on managing ecological risk were also made a decade ago in the only 'root and branch' review conducted on AFMA—the 2012 Review of Commonwealth Fisheries: Legislation, Policy and Management (Borthwick Review). The review had a particular focus on better managing the ecological risks of bycatch and discards (that is, minimising effects on non-target species), and 'safe-guarding the broader marine ecosystem' (for example minimising impacts on habitat or benthic areas and interactions across fish species). The review noted that economic or commercial objectives are 'accorded precedence' in Australian fisheries management (through the Fisheries Management Act 1991 (FMA) and the Fisheries Administration Act 1991 (FAA)) over 'maintaining ecological functions and relationships and long-run sustainability of fisheries'.
The review also noted fisheries management plans were completely inadequate for giving effect to public consultation, and that AFMA relied too heavily on 'restrictive', industry-dominated 'in-house' views, facilitated through RAGs and Management Advisory Committees (MACs). Ten years later, AFMA recently announced (during this inquiry) that it is now reviewing the adequacy of these structures to, amongst other things, better incorporate a broader range of inputs and views.
The Borthwick Review concluded that 'environmental objectives can be best safeguarded and met by having AFMA's processes properly accredited and subjected to performance review by both the fisheries and environment ministers'. It also, significantly, recommended the FMA and FAA be 'recast' (amended) so that the objectives relating to the impacts of fishing on marine ecosystems and minimising bycatch are given equal weight in the legislation (to the economic objectives). This would mean they 'must' be pursued, or that AFMA 'must have regard to' them, in all fisheries management decisions—such as when setting TACs.
The Greens agree with this approach, although AFMA does not. Giving evidence to this inquiry, the Chief Executive Officer of AFMA, Wez Norris, suggested AFMA can achieve environmental or ecological objectives without changes to legislation. However, a historical record of inaction when it comes to rolling out an ecological or environmental risk framework casts doubt on whether AFMA's culture is open to change without better incentives and frameworks.
Interestingly, the issues raised in the Borthwick Review ten years ago remain contemporary. They are especially worth emphasising in the context of recent developments in one of the nation's biggest Commonwealth fisheries—the South East Trawl. Just a few months ago AFMA announced a significant $23 million rescue package for this mixed species fishery, following dire ecological assessments on multiple fish species. AFMA acknowledged that uncertainty from 'climate impacts' was a key reason for the latest buyout, and for the failure of ITQ management and other management strategies to sustainably manage certain fish stocks. AFMA has also (indefinitely) closed entire areas to fishing within the trawl boundary, which the Greens understand is unprecedented in Commonwealth fisheries management history.
Whilst evidence of climate impacts on this fishery was supported by numerous stakeholders and experts others questioned if poor fisheries management, and AFMA's failure to prioritise and adapt to ecological risks, were also responsible. Specifically, these criticisms included: a tendency for scientists to consistently overestimate stock biomass due to modelling biases; a tendency by AFMA to set TACs higher than the levels recommended by scientists, following pressure from industry; and a lack of data collection and reporting that could have better estimated bycatch and discard issues. These issues are also well covered in the majority report.
The issue of data constraints is further highlighted in the failure to implement 'enhanced monitoring systems', such as cameras or observers, onboard fishing vessels. The Greens have been told by one stakeholder that just 2–6 per cent of Southeast trawl vessels currently have such systems. Given that, in 2006, the LNP Government prioritised rolling out observers and enhanced monitoring systems in its $220 million Securing our Fishing Future package, why has this not been prioritised by AFMA or respective governments? It appears that having accurate data to better manage environmental risks has never been a priority.
Implementing Recommendations 2, 3, 4, 5, 6 and 12 from the Borthwick Review could address many of these issues.
Recommendation
The committee recommends the Australian Government adopts and implements Recommendations 2, 3, 4, 5, 6 and 12 from the 2012 Review of Commonwealth Fisheries: Legislation, Policy and Management, which propose changes to fisheries legislation to give equal weight to addressing fisheries ecosystem effects, bycatch and discard issues.
AFMA, CSIRO and the Fisheries Research and Development Corporation (FRDC) have recently stated (during this inquiry) that they are now applying a comprehensive climate lens over broader fisheries management and are rolling out programs to change the culture and practices of fisheries management to reflect this. In order to achieve this, it will be critical to change the culture of AFMA to better represent a broad range of stakeholder views.
Recommendation
The committee recommends that the Australian Government formally adopts and implements Recommendation 7 of the 2012 Review of Commonwealth Fisheries: Legislation, Policy and Management (Borthwick Review):
AFMA needs to introduce more transparency and accessibility into its consultation and decision making processes.
Ahead of Commission decisions, in addition to Management Advisory Committee (MAC) and Resource Assessment Group (RAG) processes, AFMA should seek opportunities to prepare issues/options papers on key issues, thereby tapping into broader ranges of input from commercial and recreational fishers, scientists, NGOs and the general public.
The decisions of the Commission, including the reasons for decisions, should be more readily available to the public.
There is no good reason for a statutory requirement for the Commission to meet with the peak industry body following the tabling of a report on AFMA's operations in Parliament and this requirement should be removed from the FAA.
The inquiry received specific evidence from Professor Graham Edgar at University of Tasmania's Institute for Marine and Antarctic Studies (IMAS) that a split had occurred in the scientific community on the effectiveness of existing fisheries modelling in predicting fish biomass and the accurate settings for TACs (a critical part of ITQ management). This split was between a number of well-respected fisheries scientists (who are paid by the fishing industry to produce fisheries science, such as stock assessments) and highly credentialled fisheries ecologists. This split has become voiced in scientific research papers, fisheries forums and in the media. Forums and workshops to bring these opposing 'camps' together to work through their differences were reported to have been positive, but were discontinued years ago. Why would this have occurred if AFMA was serious about incorporating a broader array of views, especially on managing ecological risks, into its decision-making frameworks?
Recommendation
The committee recommends that the Australian Government develops a formal and transparent process to incorporate the advice and expertise of fisheries ecologists into fisheries management plans, the setting of total allowable catches (TACs), and development of harvest strategies.
Recommendation
As part of the Australian Fisheries Management Authority's (AFMA) upcoming assessment of its Resource Assessment Groups, AFMA should consider the inclusion of fisheries ecologists on these committees.
It is clear that ITQ management is an important component of fisheries management in Australia, but it sits alongside other management tools. Whilst Marine Parks are not considered by some to be a fisheries management tool, in light of radical climate impacts on our oceans this should be reassessed.
Recommendation
The committee recommends that the Australian Government considers the failure of ITQ and other managements tools to sustainably manage the South East Trawl Fishery as part of its statutory ten-year review of the South East Bioregional Network, looking at:
the benefits of upgrading green (no take) zones in the existing Marine Park Network; and
the benefits of establishing new Marine Parks as an insurance against climate change uncertainties and to assist existing ecosystems, habitats and fisheries to recover.
Economics of ITQs—delivering for community fishers
Evidence provided to the committee outlined criticisms that ITQ management did not provide an economic dynamic that produced good community outcomes (terms of reference a and e) and questioned if ITQs have been applied in Australia in a manner that is consistent with the legislated objective of 'maximising the net economic returns to the Australian community'.
Along with concerns about ecological risk, in its 2021 audit of AFMA the ANAO outlined significant criticisms about AFMA's lack of progress on establishing an economic risk framework. An economic risk framework would form part of a coordinated approach to managing economic risk across fisheries and include modelling on maximising net economic returns. The ANAO also questioned whether AFMA's purpose statement wholly incorporates its legislated objectives, including maximising economic returns to the Australian community.
IMAS submitted that Australian fisheries management is performing well in terms of preventing overfishing, but it is performing poorly in relation to maximising net economic benefits. It noted that maximising benefits to communities should include the provision of food supply, growing employment and other revenue or returns directly to community from quota holder's profits. IMAS noted that these can not all be maximised at once in wild fisheries, and that tough trade-offs need to be made.
The IMAS submission argued that an objective of maximising economic returns is consistent with Australia's experience with ITQ fisheries management, but this leads to fisheries catch assessments that target maximum economic yield (MEY) rather than maximum sustainable yield (MSY), or other targets.
A trade-off therefore also occurs under ITQ management between maximising economic rent to quota holders and increasing industry employment. This explains why many small fishing towns on the Australian coast have so few vessels in their harbours compared to 30 or 40 years ago, and why so few locals are now employed in fishing. IMAS explained that an important part of ITQ management targeting MEY is minimising costs to quota holders, including employment. Essentially, a predictable consequence of ITQ management was that over time as industry consolidation occurs (as quotas are traded), fish will be caught with a lower number of vessels, and with less fishers. This consequence was understood, and was a controversial subject when ITQs were first introduced. The evidence is irrefutable that significant industry consolidation and loss of employment has occurred in multiple fisheries right around the nation over the last 40 years.
Another important question to ask in relation to maximising the net economic benefits to the Australian community from fishing is, 'what actual economic returns do the Australian people receive for allocating (giving in perpetuity) access to their fish stocks to quota owners?' It appears the answer to this question is as clear as mud!
A significant reason for this is a lack of data and reporting. Economic return data is clearly constrained, or simply not reported or measured. Governments (the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)) and fishing industry stakeholders such as the FRDC provide reports of certain metrics, such as the export value of Australian seafood and sector contributions to our national accounts. However, these are not adequate indicators of maximising economic benefits to the Australian community (as required under the Fisheries Management Act).
Commercial fishers pay a licence fee to governments to contribute towards the costs of managing the fishery—which are incurred by governments and taxpayers—but these are not direct payments to the community. However, where licence fees exceed fishery management costs, these may technically be considered a 'royalty' payment and a return to the community.
Evidence across different fisheries varied as to whether these licence fees even cover management costs, meaning some fisheries are effectively subsidised by their communities or taxpayers (as opposed to communities receiving a return or direct benefit!). The Greens believe it is not acceptable that the extent of effective subsidies received by Commonwealth and state fishing industries cannot be effectively determined with current disclosure and reporting. This must be rectified with the publication of clear indices constructed to outline this.
It is also unclear as to the magnitude of profits, or 'private rents' being made by quota holders in various fisheries around the nation.
Whilst royalty systems or access fees are used in ITQ fisheries overseas (Iceland, Indonesia, Chile, etc.), evidence was provided to the inquiry that the only Australian ITQ fishery established with the intent to pay a royalty (or resource rent tax) to the community (in direct return for being gifted statutory rights of access to a fishery by the community in perpetuity) was the Tasmanian abalone fishery. However, even this fishery is now considered subsidised, as the royalty does not cover all of its management costs.
When ITQ fisheries management was set up in the Tasmanian abalone fishery, a resource rent tax of 9 per cent of the value of the fishery was applied. This royalty has been reduced over time from 9 per cent to 7 per cent, and now incorporates a 5 per cent royalty and a 2 per cent contribution to the Abalone Industry Re-investment Fund. This funding is allocated to directly fund pest management control. Industry is currently lobbying the Tasmanian Parliament to reduce this royalty again.
IMAS also highlighted that if full cost recovery is taken into account in calculating the cost of managing fisheries, such as fisheries research costs, the industry is effectively being subsidised by community taxpayers. The Tasmanian Abalone Council countered this assertion, submitting that whether the industry is paying an effective royalty to the community, or the industry is being subsided, will vary from year to year.
What is clear from the inquiry is that licence fees are often not royalty fees, and clearly do not 'maximise economic returns to the Australian community'. To develop a policy to maximise direct returns to Australian communities from fisheries quota holders—by, for example, specifying the payment of resource rents—it is important to quantify the magnitude of "super profits" or "private rents" being made by quota holders in various fisheries around the nation. Anecdotal evidence provided to the committee, along with data on net economic returns from the Australian Bureau of Agricultural and Resource Economics and Sciences, indicates this is likely to vary in individual fisheries managed under ITQs.
The magnitude of profits or private rents being made by quota holders should be a significant matter of public interest in Australia, given our publicly owned fishery resources have been essentially gifted to individual quota holders over time. But like the data on effective fishery subsidies, there is little disclosure of profitability measures (private rents) for quota management in individual fisheries.
Quota holders should pay income tax on these profits so there is at least some direct benefit to the Australian community, but this is not as clear for foreign quota holders, and given how easy it is to manage personal or corporate financial affairs and minimise tax payments (through trusts, shell companies, etc.). It is also hard to feel confident in quantifying income tax payments when assessing the maximisation of community benefit from ITQ management.
Having settings that encourage consistent or sustainable economic rents through royalty payments should be an important policy development goal in Australian fisheries, and this would unambiguously help maximise returns to the Australian community—but further campaigning and policy development in this area would likely be hampered by a lack of reporting and data availability.
The majority report notes, under its section 'Reporting on economic returns', that AFMA has an economics working group which, according to Professor Gardener, who sits on this committee, 'has developed all the indicators for community return'. However, Professor Gardener indicates these have not been applied. This was confirmed by the Department of Agriculture, Fisheries and Forestry (DAFF) and AFMA. One measure of economic return is the NER (net economic return) survey by ABARES of four key Commonwealth fisheries. These fisheries represent 57 per cent of the estimated $374 million total Commonwealth fisheries production value. NER is a measure of the excess profitability of a fishery, but not its contribution to the Australian economy or community. It is therefore a proxy for potential to pay rents or royalties—so why isn't the NER collected for the rest of our Commonwealth fisheries?
IMAS noted in its submission that Tasmanian ITQ managed fisheries do report on some useful metrics, such as 'net government revenue' (effective royalty or subsidy) or 'percent public rent' (capacity for public benefit), which have proved to 'be of great value for management' of fisheries. This does not happen in Commonwealth managed fisheries. However, the Greens believe it should, as it would assist future policy development and increase public confidence in fisheries management.
In its response to Recommendation 3 from the ANAO, AFMA stated that it would be updating its Strategic Research Plan 'in the near future', with a key focus on developing new priorities around economic performance to 'ensure that the Agency's monitoring and reporting needs against this objective are met'. Considering this, the Greens believe priority should be given to assessing and standardising levels of effective public subsidies or royalty payments (rents) paid in Commonwealth ITQ fisheries.
This will enable a preliminary estimation of effective royalty payments paid or public subsidies provided to individual fisheries over time and help assess whether ITQ management could better deliver economic returns that 'maximise community benefit'.
Recommendation
The committee recommends that the Australian Government surveys and publishes measures of net economic returns (NER) for those Commonwealth fisheries not currently surveyed, and adopts other annual public reporting metrics on economic returns, such as the percentage of public rent for all Commonwealth fisheries.
Recommendation
The committee recommends that the Fisheries Research and Development Corporation supports a research project to build on work submitted by the University of Tasmania's Institute for Marine and Antarctic Studies providing international examples of resource rents, or access payment schemes, and their suitability to Commonwealth fisheries. The project should lead to a publicly available report providing detailed assessments for individual Commonwealth fisheries.
Another way to measure the potential community benefits of ITQ management is through reinvestment of private rents or profits back into the community. IMAS highlighted that ITQ fisheries were established with the expectation that some of the profits flowing to quota holders as a result of the community assigning them ownership of their resource, would be reinvested back into communities, and through the 'stimulus of new enterprises'. IMAS stated that, unlike other countries who have tried to capture returns to communities through resource rents or access fees, 'economic benefit to the community requires trickle down through re-investment by quota holders'.
How much economic benefit has actually 'trickled down' is unknown, and not currently assessed or measured. Once again, no reliable measurements across multiple ITQ fisheries of this metric are available (although limited individual data is available for some fisheries).
The Greens feel it is a fair assumption that the likelihood of the economic benefit to community being maximised is diminished where quota holders are held outside the fishing location or community, meaning the economic rent is exported. This is especially the case if ITQs are owned by foreign investors. Some research has shown that an increasing proportion of economic rents were exported from a jurisdiction each year as ownership of quota shares drift away from fishers to investors.
Ownership of ITQ by professional (non-fisher) investors, or foreign investors, was a controversial topic that constantly arose during the inquiry. Many participants suggested that managing, limiting, or simply banning non-fisher and foreign ownership was an important consideration for government—one that is currently ignored. This was reflected in multiple submissions; because quota is so scarce and barriers to entrants exist, it limits opportunities for those with 'skin in the game', such as lease fishers, new family fishers and other licence holders to get access to quota. The Greens acknowledge evidence provided to the inquiry on how many of these community fishers are doing it tough, and expect governments to look at alternative ways to manage quota, such as is occurring in some international jurisdictions.
The Greens feel it is important that these concerns be addressed through further policy development. However, we note there are limitations in both transparency and Federal law that may not allow for restrictions on foreign ownership of ITQ.
A key barrier to restricting foreign ownership of fishing quota are our myriad of free trade deals which limit our ability to restrict foreign investment from specific countries. The Greens have argued strongly and voted against clauses in international trade agreements that reduce our Government's independence to enact laws to the benefit of the Australian community. Another barrier is the inclusion of ISDS (Investor State Dispute Settlement) clauses, which give foreign investors or corporations the right to sue governments if they feel they have been 'discriminated against'. This can cause 'regulatory freeze', where governments do not act due to perceived negative risk/reward trade-offs.
Additionally, measuring the true level of foreign ownership of quota in any Australian fishery would be next to impossible. Until this is measured and properly monitored it will be impossible to manage. Currently shell companies holding foreign quota can legally use local nominee directors and register local addresses. Until corporations law is changed so we have a UBO (ultimate beneficial ownership) register—which would require all companies to provide evidence and register who is the ultimate (real) beneficial owner of a fishery quota—it is very difficult, if not impossible, to determine the levels of foreign ownership in Australian fisheries. This means it is also very difficult to determine how much community benefit, or return, is lost through foreign ownership.
The Greens have been fighting for a UBO register, and for other changes to laws (such as Tranche 2 AML laws) that would require the gatekeepers of investments (such as accountants, lawyers, brokers) to legally determine the beneficial owner before any investment before it is approved. This policy is being considered by the current government; but, until it is enacted, restricting foreign investment in Australian ITQs would be very difficult to police.
Evidence was provided by multiple stakeholders that the Foreign Investment Review Board (FIRB) should be tasked to address or manage concerns over foreign ownership and increasing concentration of ITQ in Australian fisheries. It is the Greens' view that the FIRB does not have the resources or systems to be a gatekeeper or regulator of ITQ ownership in Australia. It is a body within treasury that provides political advice to the treasurer, but it rarely scrutinises individual foreign investments unless a critical value threshold is reached, or unless it is specifically directed to by government. It also has little experience in banning foreign investments in special asset classes.
The Greens would like to see bans, or at least caps put on foreign investment in Australian ITQs, as has occurred in New Zealand and other countries. We would also like to see similar restrictions put in place to ban or limit non-fisher investment in ITQs (by, for example super funds or professional investors), such as has happened in countries like Iceland and Canada. One simple way to do this is for legislation or regulations to require that quota be attached (and capped) to fishing licences, and only be tradeable between licence holders. ITQs are ownership of an Australia public resource, and maximum access and benefits such as economic returns, employment and supply of seafood should flow to the Australian people and local fishers and divers—not be taken out of local communities, the state or country. Foreign owned or non‑fisher quota could be purchased by the Government at fair market rates (so no loss is incurred), then pooled and leased to smaller community, family and First Nations fishers.
Recommendation
The committee recommends that the Australian Government seeks legal advice and considers adopting amendments to the Fisheries Management Act 1991 and Fisheries Administration Act 1991 that, as in Western Australia's Fish Resource Management Act 1994, enables the control of foreign interests in Commonwealth fishing, and provides the Fisheries Minister with the ability to issue guidelines, bans or caps relating to foreign persons holding, controlling or having an interest in authorisations (quota holdings).
An accurate assessment of the levels of foreign ownership of Australian quota would be a good start in assisting governments with reviewing quota limits (as in New Zealand), applying rent taxes on foreign ownership, or instituting bans on foreign ownership.
Recommendation
The committee recommends that the Department of the Treasury works across government portfolios and agencies to establish a register of foreign and non-fishing interests which reports on the actual level of foreign and non-fishing ownership of Commonwealth fisheries quota, and any barriers to transparency.
An issue raised consistently by community fishers was the difficulty in accessing quota, and how they were being squeezed by both quota owners and buyers of their fish (processors who owned quota). While the committee has recommended a broad ACCC inquiry into market concentration and the potential for abuse of market power, it is unclear how changes could now be made to ITQ management in Australian fisheries. As some stakeholders said, 'how do you unscramble the egg?', especially without significant costs.
One way of doing this would potentially be for the Government to issue new quota, for example on a lease basis. The committee briefly examined a similar approach by the Western Australian Government, but this case study proved to be politically controversial, and appears on the surface not to be a good example for achieving better outcomes for communities or small fishers. This does not mean the concept should be dismissed outright, especially if the right process, including consultation with the industry, was followed.
International examples provided to the inquiry included cases where governments own quota and make it available to lease fishers, First Nations groups, or other interests. This can be done by Government buying back quota on the competitive, open market or issuing new quota. Issuing new quota in a fishery could dilute access to stock total allowable catch (TAC) and—as was demonstrated in Western Australia recently—would likely be resisted by industry. However, this might be less controversial if biomass and TAC had improved significantly in an individual fishery (so no quota holder would have their TAC diluted from current levels).
As noted above, if restrictions such as caps or bans were placed on foreign and non-fisher ownership and enforced, this could make quota available for local or community fishers. The Greens preference would be for such quota to be bought back from foreign and other investors by government, pooled and then leased to local communities at competitive rates, helping maximise economic returns to those communities.
Excellent examples of different approaches to ITQ reform, allocation and management in foreign jurisdictions were provided to the committee and are well covered on pages 48–50 in the majority report.
Recommendation
The committee recommends that the Australian Government explores options to acquire quota, and make this publicly owned quota available for divers, small and lease fishers, community and First Nations fishers, and other stakeholder groups.
Senator Peter Whish-Wilson
Member
Greens Senator for Tasmania