3.1
The introduction of a system of total allowable catch (TAC) and individual tradable quotas (ITQs) is generally seen to have positive economic and environmental benefits, but social and community outcomes are less clear. While a quota system may curb overfishing and make fisheries more efficient, it often leads to a reduction in fleet activity, fewer jobs in fishing and related industries, and a reduction in the number of small, locally-based fishers.
3.2
Throughout the inquiry industry associations, scientific and research bodies, regulators, and larger fishers who own quota were generally positive the quota system, while a number of individual fishers who made submissions perceived themselves to be 'highly disadvantaged by ITQs'. The Commonwealth Scientific and Industrial Research Organisation (CSIRO) identified possible reasons for this divergence in views, including:
Industry associations 'largely represent quota owners' rather than lease‑dependent fishers.
Quota ownership status can affect 'perceptions of fishery performance'. And
Individual fishers who submitted may not be 'representative of the larger body of fishers'. In particular, the CSIRO observed that fisher views in inquiry submissions are 'substantially more negative than those found in a national survey of ITQ fishers' conducted in 2019.
3.3
Taking this divergence into account, this chapter considers reported impacts of the current quota system—and ITQs in particular—on communities and smaller fishers, including:
social and community outcomes of ITQs;
disempowerment of smaller fishers;
impacts of the quota system on fishing practices; and
options for reform, as suggested by inquiry participants.
3.4
The committee's conclusions and recommendations on the quota system as a whole are presented in Chapter 5.
Social and community outcomes
3.5
While views conflicted among different 'categories' of submitters, a majority of submissions to the inquiry noted that ITQs have been associated with some 'negative social impacts' (see Figure 3.1 below). However, negative perceptions of the social impacts of ITQs are 'not universally held', with some inquiry participants reporting positive social benefits from ITQs—mainly through 'increased security and higher incomes of the remaining fleet'.
Figure 3.1: Distribution of social impact scores by stakeholder group
3.6
Potential negative impacts of ITQs identified in submissions included:
disadvantages resulting from an 'inequitable approach [to] initial ITQ allocation'—particularly in contexts where there are stakeholders with different needs and values;
a reduction in fleet size and activity;
concentration of quota holdings leading to a sense of 'inequality', which may erode 'social norms and cultural heritage in fishing communities';
a transfer of ownership 'from small family business to large corporates'; and
declining employment; and
a reduction in 'flow-on benefits to the local community'.
3.7
Dr Nick Rayns observed that the first few years of ITQ management 'can be difficult', as the aim of long-term economic and environmental sustainability can conflict with the short-term objectives of fishers. However, the Commonwealth Fisheries Association Inc. (CFA) suggested the quota system's 'focus on economic efficiency' does not 'mean poorer outcomes for the community'. While there has been a reduction in fishing fleets across many fisheries over time, there remain many 'thriving' regional fishing towns, such as Port Lincoln, Lakes Entrance and Mooloolaba. Similarly, CEO of Seafood Industry Australia, Veronica Papacosta said she believes 'fishing in regional communities and local communities is strong'.
3.8
A number of fishers made confidential submissions to the inquiry arguing that concentration of quota ownership and vertical integration under ITQ systems has negatively impacted their businesses, as well as local communities. Public submissions expressing similar views included those from:
Mr Brad Warren, a long-time fisher in NSW and previous director of the NSW Seafood Industry Council;
the Queensland Seafood Industry Association (QSIA);
long-time fisher with experience in the Southern Shark Fishery, Mr Brian Bolding;
retired shark fisherman, Mr Steven Brockwell;
the Professional Fisherman's Association.
3.9
It is notable that many—but not all—fishers opposed to the quota system were those fishing in smaller, multispecies fisheries and state fisheries where ITQs have been more recently introduced.
3.10
CSIRO noted the challenges in assessing the impacts of the quota system and developing fisheries policy, 'when aiming to appease multiple stakeholders with differing objectives'. It concluded that regulators are required to 'trade off' between economic and sustainability outcomes, on the one hand, and social impacts, on the other.
3.11
The Australian Marine Conservation Society (AMCS) suggested there are mechanisms government can explore to address negative social impacts of quota management. However, AMCS urged the committee not to place 'community benefits' over sound environmental outcomes, which it says have been successfully achieved through quota management.
Employment
3.12
The committee heard evidence from across Australia that introducing TAC and ITQs reduces employment in a fishery. Professor Caleb Gardener from the Institute for Marine and Antarctic Studies at the University of Tasmania (IMAS) said ITQs have been deliberately used 'to minimise employment' and increase efficiency and profit:
In Tasmania I spent most of my time on the lobster fishery over the last 25 years working in management and research. In my time we used ITQs to cut 500 direct FTEs out of the lobster fishery, and that has been used to create economic rents.
3.13
Employment in the Tasmanian rock lobster fishery went from around 620 full time equivalent (FTE) fishers to around 250 FTE following the introduction of ITQs. Professor Gardener said if governments wanted to increase employment in the fishery again, it could use input controls, such as 'reducing the length of the open season, or specifying the gear allowed'. This would make boats less efficient and ultimately increase the number of jobs available.
3.14
QSIA estimated there has been an overall reduction of 67 per cent in active commercial fishers in Queensland due to the introduction of a quota management system. QSIA was concerned that the ITQ system in Queensland represents 'a resource reallocation exercise' with no compensation provided for fishers.
3.15
Evidence suggested there are differences between state and Commonwealth fisheries in relation to the employment profile. While many state fisheries are fished by small family operators who live in the area, Simon Boag from the South East Trawl Fishing Association (SETFIA) acknowledged that most of the workers employed by SETFIA's members (who fish in Commonwealth waters, further from the shore) are from the Philippines, with locals increasingly unwilling to 'go to sea'.
3.16
Participants observed there is a tension in fisheries management theory between supporting employment or 'having highly efficient fisheries that maximise the rents'. Professor Gardener argued that, while many other countries have set policy parameters to achieve a balance of these aims, Australia has 'gone to one extreme, where we maximise the rents'. He suggested policymakers could look at the Alaskan salmon fishery or the Maine lobster fishery as examples of 'very good, sustainable fisheries' that are 'well managed' but generate 'almost no rent', as they have been set up to maximise employment.'
3.17
However, Professor Gardener did not advocate this approach. He clarified that he, personally, would prefer to retain a system geared to creating 'highly efficient fishing industries', minimising labour and maximising profits, but see it amended to capture more of the profits and return them to the community. It was Professor Gardener's view that a lot of jobs in fisheries are low quality jobs and having more efficient industries is better for the economy overall. However, he argued that parliamentarians should look at the issue and determine the extent to which fisheries policy should be set to maximise employment or otherwise.
Returns to the Australian community
3.18
The Fisheries Management Act 1991 (the Act) includes as primary objectives that the Minister and the Australian Fisheries Management Authority (AFMA) 'must' manage Commonwealth fisheries by:
(c) maximising the net economic returns to the Australian community from the management of Australian fisheries; and
(d) ensuring accountability to the fishing industry and to the Australian community in AFMA's management of fisheries resources; and
(e) achieving government targets in relation to the recovery of the costs of AFMA.
3.19
Inquiry participants held conflicting views on whether fisheries are currently being managed in a way that 'maximises returns to the Australian community'. Professor Gardener said this objective is 'fundamental to ITQs', which were implemented to improve both economic returns and the sustainability of fishing but have failed to maximise economic returns to the Australian community. Professor Gardener said the system has been used 'to give away public resources for free', with only private shareholders benefiting from the profits of fishing, not the Australian community.
3.20
To support his position, Professor Gardener pointed to the toothfish fishery—Australia's 'most valuable' Commonwealth fishery. He explained that the fishery employs 'overseas skippers and crew', processing is done overseas, the fish is consumed overseas, and the profits, or 'rents', mainly flow to 'foreign shareholders':
So Australia charges nothing for access to this fishery, and there is some recovery of management cost, but that's not at 100 per cent either. That means that the public is subsidising these foreign shareholding firms who hold these shares to these Australian fisheries … clearly this is not maximising the economic benefit to the Australian community.
3.21
CFA disputed this assessment, arguing that current fisheries management complies with the Act by ensuring the sustainability of Australia's fisheries, which provides a net economic return to the community. CFA Director, Brian Jeffriess AM claimed IMAS's submissions to the inquiry were 'patently factually wrong'. He pointed to the Port Lincoln southern bluefin tuna industry, saying 100 per cent of the profit made 'goes back into the Port Lincoln community' and only one per cent of the quota is owned by an investor, with the rest owned by 'historical families' of the region. Mr Jeffriess said he believes this applies broadly across Commonwealth fisheries and that, wherever anyone has 'made a lot of money' in Commonwealth fisheries, they have reinvested it into the fishery. However, CFA also acknowledged the substantial foreign ownership in the toothfish fishery.
3.22
There was debate among Tasmanian stakeholders about whether or not fisheries in that state are providing sufficient returns for the community. An IMAS report from May 2021 on the risks and benefits of adopting a proposed 'Deed of Agreement' between the rock lobster fishing industry and the Tasmanian Government recommended against the idea. IMAS found the rock lobster fishery 'had extraordinarily high levels of profitability relative to most businesses in the economy over the last few decades' (notwithstanding a recent downturn related to Chinese trade bans), with little benefit flowing back to the community.
3.23
In response, the rock lobster fishing industry commissioned Australian Venture Consultants to prepare a report from the industry's perspective. The report, published in December 2021, was highly critical of IMAS's findings, saying it provides 'an incomplete account of the contribution that the Tasmanian commercial lobster fishery makes to the Tasmanian economy and community, including an incomplete and simplistic discussion on industry taxation flows and fiscal impact'. The report said the southern rock lobster fishery makes a 'substantial' contribution 'to Tasmanian communities and households at large', paying $38.9 million in 'wages, salaries and other payments by industry to households' in 2018/19.
3.24
Commercial fisherman and member of the Tasmanian Rock Lobster Fishermen's Association (TRLFA), Captain Roger King, described the IMAS report as 'qualitative and unreferenced', disputed its findings, and encouraged the committee to consider the industry report. Commenting on that report, Professor Gardener said it is understandable that industry would like to have a deed of agreement approved, but this would be 'problematic for the government' as it would involve the government 'giving away more, without getting something back in return'.
Reporting on economic returns
3.25
Along with a view that fishing industries are not providing sufficient returns on profit to the Australian community, IMAS said that reporting on economic returns from fisheries is underdeveloped. Thirty years into the administration of the present quota system, the sector has 'excellent data and reporting of sustainability and ecosystem health and the impacts of fishing', but data on community returns remains largely unavailable. Professor Gardener suggested there should be 'reports for every fishery on how much economic return is coming into the community'. However, while AFMA has an economic working group, which Professor Gardener is a member of, it has 'developed all the indicators, but they don't get applied'.
3.26
The Department of Agriculture, Fisheries and Forestry (DAFF) confirmed that the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) regularly surveys four Commonwealth fisheries to ascertain their net economic returns (NER). The four fisheries represented 57 per cent of the 'estimated' $374 million total Commonwealth fishery production value in 2020–21; they are the Eastern Tuna and Billfish Fishery, the Northern Prawn Fishery and two sectors of the Southern and Eastern Scalefish and Shark Fishery (the Commonwealth Trawl Sector and the Gillnet, Hook and Trap Sector).
3.27
NER is a measure of the excess profitability of a fishery, not its contribution to the Australian economy or community. ABARES estimates the NER using 'surveys of financial performance of vessels operating in the fishery, adjusted to reflect the economic costs to the community of operating the fishery'. Costs include fuel, crew, repairs, fishery management, depreciation, and 'the opportunity cost of capital and owner operator labour':
Maximising NER is about maximising the return attributed to the resource. At zero NER fishers are generating a return on their capital and labour used in the fishery, but any returns attributed to the resource itself are lost.
3.28
The most recent ABARES analysis shows strong and rising NER in the Eastern Tuna and Billfish Fishery; 'significant and positive' NER in the Northern Prawn Fishery; positive and increasing NER in the Shark Hook and Shark Gillnet sectors; and estimates of near zero NER in the Commonwealth Trawl and Scalefish Hook sectors, 'driven in part by declining terms of trade'. Out of 23 fisheries listed in the report, estimates of NER were 'unavailable' for six. These findings relate to mainly 2016–17 data or 2018–19 data.
3.29
AFMA was asked about its Economic Working Group which was set up in 2017 to 'provide AFMA with strategic advice on a range of fisheries economic matters'. DAFF confirmed that the Working Group last met in September 2020 and discussed the 'development of key performance indicators to monitor economic performance of AFMA's fisheries' and the challenges of 'quota price cleaning/filtering', among other issues.
'Super profits' and reinvestment
3.30
There was debate among inquiry participants as to whether fisheries produce super profits and whether quota holders are reinvesting profits back into the industry and/or communities.
3.31
IMAS defined 'super profits' as a colloquial term for the 'economic rent … paid from the fishery to holders of quota shares', and argued:
This situation of unusually high economic rents going to private shareholders from a public resource is unusual because governments usually capture most or all the rent from public resources as a return to the community. For example, a community return from forestry occurs through tendering access to public reserves, royalties are charged on mining, and public land is sold at market rate.
3.32
Mr Boag disputed IMAS's assessment, saying most fishers are 'not making an enormous amount of money'. He estimated return on capital to be eight or 10 per cent, with the rest 'invested back into their business, through fuel, wages, GST or management levies'. Mr Boag said fishers in the trawl fishery are 'probably only making $1,000 or $2,000 profit a day'. Similarly, Captain King argued that super profits in fisheries 'are a myth'. He estimated abalone ITQs currently return around 5.5 per cent, western rock lobster returns around 4.4 per cent and Tasmanian rock lobster returns around 3.4 per cent—before fees and royalties are paid.
3.33
Tasmanian Seafoods also rejected the concept of super profits in fisheries, saying profits made are reinvested back into the industry, create jobs and contribute to science and fisheries development, which benefits all fishing sectors. Mr Chauncey Hammond highlighted work Tasmanian Seafoods is doing in the Northern Territory, where the company has 'spent 16 years developing a sea-wrenching project' to benefit Indigenous communities.
Tasmanian Seafoods submitted its 'exclusive ownership of Sea Cucumber licenses in the NT' have allowed it to focus on reinvestment:
I believe more than we have taken from the fishery in income, we have put back in developmental work designed to restock to historical levels (depleted by Macassans before European settlement) with multiple millions of dollars in investment and employment. To justify doing that, one needs determination, capacity and long time-horizons to invest years of funding from external sources (in our case the Tasmanian abalone fishery) before seeing a positive return.
3.34
Despite some reinvestments, IMAS argued there is little evidence of a 'trickle-down effect' across Australian fisheries, with research showing 'economic rents from fisheries don't get reinvested into new businesses'. For example, Professor Gardener said around one per cent of the rents in the South Australian abalone fishery 'went back into new businesses', and two or three per cent of the rents have been reinvested in Tasmanian fisheries.
3.35
CSIRO research also found new investment into established fisheries has been 'pretty slow' over the last few decades, especially in terms of new boats. Dr Pascoe said 'big investment items haven't been capital', they have mainly focussed on quota, fishing gear and new technology.
Disempowerment of small fishers
3.36
The Fisheries Research and Development Corporation (FRDC) defined small fishers as 'owner-operators' and/or 'lessee or part-lessee fishers' (fishers who lease quota from quota holders). According to the FRDC, it is common for quota fisheries in Australia to be 'operated by single vessel and family-operated businesses'. This is less common in Commonwealth fisheries. The CFA explained that fishing in Commonwealth waters, which are away from the shore, generally requires a large, costly vessel, extensive equipment and infrastructure, and sizable crew. As such, for businesses to be 'viable', they need a certain 'scale of operations'.
3.37
The committee heard from a number of stakeholders that the quota system has squeezed the industry, forcing many to leave, and leading to insufficient quota for those who remain. Acknowledging these concerns, Managing Director of Tasmanian Seafoods Group, Darvin Hansen explained that reducing TACs was needed to try and 'fix an ecological issue' and 'there has to be some consolidation'.
3.38
Some inquiry participants argued that ITQs allow smaller fishers to exit the industry with significant returns by selling their quota—'to exit with dignity'. However, Professor Gardener said this is a 'myth', with many fishers 'existing in great financial distress or even suiciding', because they are 'so incredibly leveraged':
In the absence of ITQs people used to exit the fishery, but the difference here is that you have this extreme leveraging and so when they go bust, they go bust in a big way. So the financial impact on mum and dad fishers is extreme.
3.39
The committee heard evidence from fishers impacted by the quota system, including Christopher Parker, a fourth-generation rock lobster fishman in Tasmania and Director of the Tasmanian Seafood Industry Council (TSIC). Mr Parker said the transition to ITQs, competition for quota, ever-reducing TACs, and influx of investors has changed the industry and means he will be the 'last in the family' to make a living from fishing. NSW fisher, Mr Brad Warren revealed that the allocation process for pipi quota shares in the NSW Estuary General fishery in 2018 meant his business was given a quota 'equating to 11%' of his previous entitlement.
3.40
In relation to abalone, Captain King confirmed some fishers have exited the industry in distress. While the TAC has decreased, 'there are still 123 diving entitlements', meaning some diving entitlements may not be able to get quota to catch: 'Those remaining entrants get squeezed even more. There's an inflection point where, if you don't have enough quota, you don't have a business'.
3.41
Evidence from Queensland, where quota systems are newer, indicated significant negative mental health issues among fishers impacted by economic hardship as a result of ITQs. IMAS also referred to empirical data and research showing the impacts of financial stress on fishers and their physical and mental health.
3.42
The FRDC submitted that the ITQ system can impact small fishers more negatively due to inequalities in bargaining power and information:
Disempowerment may be heightened due to concentration of quota holdings because concentration provides an opportunity for strategic market behaviour. Socially, disempowerment may occur or be exacerbated by unequal access to information on unit availability and price, or access to decision makers especially where consultative arrangements favour one type of ITQ holder (e.g. quota unit owners)'.
3.43
Ultimately, most participants acknowledged that there are 'winners and losers' in the ITQ system, which is a policy challenge for governments. Captain King concluded:
That's one of the dichotomies for the department. I said things are great; someone else said things are awful. Who do you believe? You have to look at catch averages and things like that.
Lease-dependent fishers
3.44
A detailed study into ITQs published by the FRDC in 2019 identified qualitative data and case study information which 'suggests that lease dependent fishers were not receiving the same level of benefits as quota-owning fishers'. CSIRO noted that fishers who submitted to the inquiry were 'largely negative' about the effects of ITQs on 'economic performance', with the primary reason given that ITQs disadvantage lease-dependent fishers, who may have 'higher costs' associated with leasing and managing their quota.
3.45
Dr Sean Pascoe from the CSIRO pointed to evidence suggesting that many smaller fishers 'see fishing more … as a lifestyle rather than a business' and resent being pushed into a 'business model'. Captain King suggested lease fishmen are more likely to be opponents of ITQs because they 'sold out of the fishery or have not invested in the fishery in which they participate'.
3.46
Professor Gardener said IMAS has observed similar issues. The system is 'designed to try to contract the fleet' and 'create economic efficiency', leading to a situation where there are more lease fishers than required. Over time, lease fishers compete for quota, bidding the price up and pushing down their own earnings, 'hoping that they're not the next person who gets to go bankrupt and be pushed out the door'.
Impacts on fishing practices
3.47
While most evidence to the inquiry suggested the quota system reduces the 'race to fish', the FRDC said research indicates ITQs may incentivise lease fishers 'to undertake unsafe fishing due to potential economic incentives to fish in unsafe conditions'. Professor Gardener said IMAS has analysed the impacts of financial stress on fishing practices and noted among lease fishers in particular a 'willingness to go to sea when conditions are bad and dangerous', along with 'an elevation of risk-taking in fishers' under the quota system.
3.48
IMAS said research indicates the introduction of ITQs led to a 'dramatic reduction' in deaths in the Tasmanian Rock Lobster Fishery over the first 10 years. However, as the number of lease-dependent fishers has increased, becoming the majority, 'the number of deaths has increased'.
Recreational and cultural fishing
3.49
The inquiry was mostly focussed on commercial fishing, with the vast majority of evidence coming from or related to the commercial fishing sector. However, inquiry participants were interested in the interactions between commercial and recreational fishing, data issues, and the potential for more consultation and partnerships with First Nations communities.
3.50
The AMCS observed that quota allocation processes have 'rarely involved consultation with or respected the rights and access of Traditional Owners in their Sea Country'. AMCS recommend government considers making 'explicit allocations' to Traditional Owners, 'with appropriate flexibility for the exercising of these rights'.
3.51
CFA reported an increase in investments into commercial fishing by Aboriginal and Torres Strait Islanders over recent years, including through 'partnerships with existing businesses'. Mr Jeffriess pointed to current or proposed investments in Southern bluefin tuna, Torres Strait rock lobster, Goolwa pipi and Tasmanian abalone. However, AMCS suggested a more active approach could be taken by providing 'a defined allocation' for 'community fishers', as long as 'a clear and transparent policy position and justification' are established.
3.52
FRDC submitted that 'the potential for modified ITQ systems to be used to resolve inter-sectoral shares' between commercial and other fishers has been underexplored. In response to these suggestions, CSIRO noted that AFMA's fisheries management committees now have 'a recreational fisheries member' and an Indigenous representative, where available. Management committees no longer seek to develop 'just single economic yield or single maximum sustainable yield', but now try to allocate the TAC 'between commercial fishers, recreational fishers and Indigenous and cultural fishers'.
3.53
AFMA confirmed that it has partnered with FRDC and a team from the University of Technology Sydney to help 'develop some pilots of how we might better engage with the Indigenous sector on specific issues', rather than on specific fisheries.
3.54
Fishers—especially those in Queensland—were concerned that recreational catch is not being adequately measured, despite impacting the setting of TACs and the sustainability of the resource. CFA argued it is too expensive to model recreational fishing in the same way as commercial fishing. However, some states' fisheries are introducing 'voucher systems' and allocating a specific portion of the TAC for recreational fishing, including Victoria and South Australia.
Options for reform
3.55
This inquiry set out to consider whether the existing fisheries quota system, including ITQs, 'results in good fishing practice that is ecologically sustainable and economically dynamic, and produces good community outcomes'. Evidence suggested the quota system has benefitted some people and disadvantaged others. In light of this, TSIC argued 'the time has come to have a robust discussion about where we're at with ITQs'.
3.56
Proposals for reforms that could be used to increase the benefits of fisheries to local communities and the nation are outlined below.
Royalties
3.57
IMAS proposed that ITQ fisheries in Australia should be subject to 'royalty payments' in order to capture excess profits or 'resource rents'. Professor Gardener argued that fisheries are the only natural resource industry where rents are not captured:
That's something which we would never dream of having in any other resource industry. I don't understand why it hasn't happened in fisheries, to be honest. Everyone from Treasury I speak to can't believe it either. You look across every other resource industry: mining, forestry, anything with a scarcity, parking spaces, native forests, radio bandwidth, native flower nectar even—we charge beekeepers to put their beehives into native forest, so we should be charging an access fee to use these valuable community resources of fishery stocks.'
3.58
An effect of consolidation in fishing industries means companies become 'large and sophisticated', reducing the likelihood of capturing profits through company taxes, and increasing the shifting of profits across jurisdictions. Professor Gardener suggested royalty payments could capture rents from shareholders based in other jurisdictions and use the revenue to support regional communities—so it wouldn't matter where the quota holder was located.
3.59
Mr Hansen responded to these IMAS suggestions, saying he supports the current abalone royalties paid in Tasmania, but that, broadly, fishers making good profits already pay high income taxes and would likely prevent further royalty schemes from being 'contested successfully'.
3.60
Captain King questioned the comparison of fishing with mining in terms of royalties, saying fishing investments are 'high-risk, low-reward investments'. Where mining impacts non-renewable resources, fishing impacts 'sustainable, renewable resources':
I think that's an important differentiation. The royalties on a renewable resource should be less than those on a non-renewable one, because there is a one-off benefit, which is predominantly to the mining companies, with a lesser flow-on community benefit.
3.61
Dr Stewart Frusher argued that the benefits from fishing should be distributed to communities all over Australia, as it is 'a public resource'. However, he also pointed out that communities may have concerns that any royalties may not come back to benefit the community.
3.62
FRDC submitted that ITQ systems increase NER, which means that some form of royalties are possible. However, in Australia, such mechanisms have not 'generally' been incorporated into ITQ systems, meaning 'any rents earned are now capitalised in the quota itself'. Some newer ITQ systems capture rents through fees or charges, or auctioning ITQs:
The estimation and collection of rent is a complex task and would vary across fisheries. In Iceland, for example, resource rent charges implemented by public agencies are considered mechanisms to ensure 'good community outcomes' at the state level.
3.63
The committee heard evidence on existing royalties, including the seven per cent Tasmanian abalone industry royalty. Professor Gardener said this is essentially a licence fee, rather than royalty. Over time payments from the industry have 'been reduced', while the cost to government in managing the fisheries have increased to the point where they equal or exceed the fees collected—so the industry is now effectively subsidised. Professor Gardener said the only Australian fishery currently paying a royalty is the King Island kelp fishery.
3.64
IMAS highlighted that royalties for fishing are 'common in other parts of the world', including 'most South American countries, most European countries, Canada', and Iceland, where royalty payments are being implemented. Catch fees are in place in Nambia, the United Kingdom, Chile, Russia, Estonia and a number of South Pacific Nations.
3.65
SETFIA was opposed to resource rents or royalties, saying it is 'just another cost in the supply chain' and would make Australian fisheries 'even less competitive'. Mr Boag said Australian fisheries find it hard to compete with imported seafood because management costs are high, fisheries are small, and wages are high:
Probably what [royalties] will do is make Australian fishing businesses scarcer and encourage and expand imports, which are already really large. So we don't support resource rents for that reason. Our benefit to Australia is in paying tax, employing people and giving Australian seafood consumers local fresh fish at a reasonable price.
3.66
Mr Hansen supported the existing abalone royalty payment, where 2 per cent is currently invested into the industry through the Abalone Industry Reinvestment Fund, but argued that any royalties should be 'across the board, and abalone shouldn't be singled out versus any other industry'.
Modified quota systems
3.67
Dr Frusher suggested that the quota system could be configured to achieve community development outcomes, such as supporting cooperatives and providing employment for Indigenous populations. One way of doing this is to allocate quota through a tendering process, rather than the units simply going to those with the most capital. Another is to target a certain portion of the quota for community outcomes, and potentially reduce the price.
3.68
Professor Gardner said he has reviewed literature on quota systems around the world and found that Australia and New Zealand are 'on the extreme, having the closest thing towards pure ITQ systems' in the world. His research suggests there is a 'general trend' globally for ITQs to be implemented, but 'with a little more thought around trying to get other social and community benefits out of them'.
3.69
Examples of modified quota systems provided by IMAS included:
the allocation of Community Development Quota in the United States, where the government collects returns by leasing a portion of the quota;
the allocation of quota to cooperatives, rather than individuals, in France;
the provision of ITQ shares to First Nations communities in Canada, with a requirement to employ First Nations people;
dividing quota into different types of units (quota for large operators and quota for small operators only), implemented in Canada, Sweden and the Gulf of Mexico; and
quota share allocations, for instance in the United States West Coast ground fish, where 10 per cent of the catch is allocated to government and auctioned.
3.70
Professor Gardener added that systems where the units are owned by non‑profit organisations, or government, are 'widely used around the world' and have 'great outcomes':
Most of the Pacific nations are highly reliant on tuna fisheries. They are effectively ITQ systems where all the shares are owned by the government. Nauru gets 70 per cent of its government income from the tuna fishery ITQs. They wouldn't have the health system they've got now without that.
3.71
IMAS noted that, in 2019, the Western Australian State Government undertook to 'capture a share' of economic rent from the highly profitable lobster fishery by issuing new quota shares. However, this 'created a backlash from western lobster quota shareholders who were able to have the proposal defeated'.
3.72
Mr Hammond said Tasmanian Seafoods can see 'merit' in the concept of allocating quota for community development but cautioned against an approach which 'nationalises' the quota with no compensation to existing quota holders.
3.73
Officials from the AFMA responded to IMAS's suggestions, saying that AFMA's establishing framework means that, with the exception of cost recovery, 'all of those areas of suggestion fall outside of AFMA's remit'. Any royalties schemes, or modifications to the quota system to achieve community or employments outcomes, would require amendments to legislation or, 'at the very least, change direction in government policy'. It was the view of Wez Norris, CEO of AFMA, that AFMA's economics working group 'is not the right forum for a serious discussion on changing those things'.
3.74
Mr Norris said there could be a benefit to providing 'policy clarification' around the objective in the Act that fisheries 'maximise returns to the Australian community', but that as far as AFMA is concerned, its direction is set by the Harvest Strategy. The 2018 Harvest Strategy 'explicitly requires [AFMA] to use [maximum economic yield] as our management target to achieve the NER objective'. However, Mr Norris confirmed that the Harvest Strategy is currently under review and 'that'll obviously have a big bearing on the instructions to AFMA as to how we go about our work'.
3.75
The committee's views on options for reforming the quota system are presented in Chapter 5 of this report.