5.1
Evidence received throughout the inquiry, from a broad cross section of stakeholders, has informed the committee's view that quota management in Commonwealth fisheries has been a success, and the committee supports its continued application and development as a best practice management system.
5.2
Fisheries and aquaculture industries provide an important source of nutritious food, support Australian jobs and make a valuable contribution to Australia's economies, including regional economies. Along with New Zealand, Australia is a world leader in fisheries management, having introduced innovative systems of output controls from the late 1980s.
5.3
The quota system, comprising individual tradable quotas (ITQs) within a total allowable catch (TAC), represents world's best practice in fisheries management. The introduction of ITQs in Commonwealth fisheries has successfully reduced overfishing, made fishing industries more profitable and efficient, provided relative stability and security to businesses in the sector, and improved the safety of fishers by all but eliminating the 'race to fish'.
5.4
This inquiry set out to determine whether the quota system 'results in good fishing practice', having regard to:
ecological sustainability and the health of fisheries;
impacts on small fishers; and
impacts on fishing practices.
Conclusions on the quota systems
5.5
The committee acknowledges the diverse viewpoints expressed throughout the inquiry and the differing impacts of the introduction of quota management on fishers and fishing communities.
5.6
Fisheries management is a complex and evolving area of policy. Governments at state and territory, and the Commonwealth level, have a clear responsibility to manage fisheries resources in a way that maximises returns for Australian communities while ensuring the long-term sustainability of the marine environment and fish stocks. This task can only be achieved through careful regulation and management which fosters strong partnerships between administrators, fisheries scientists and the fishing industry. Reforms introduced with the aim of making fishing safer and more efficient, and improving ecological outcomes in Australian fisheries, may have other impacts, which policymakers must consider.
5.7
While the committee heard important evidence about the impacts of quota management in state managed fisheries, the committee is necessarily constrained in its comments on these matters. The recommendations that follow focus on the committee's primary jurisdiction—Commonwealth fisheries.
5.8
Evidence of positive outcomes arising from quota-based management in Commonwealth fisheries is clear. Despite a lower gross value of production—due to lower overall catch—Commonwealth fisheries have experienced increased profitability under the quota system, and the status of many fish stocks has improved. By supporting statutory fishing rights, ITQs provide relative certainty and security for quota holders, allowing them to invest and develop their businesses and Australia's fisheries industries. Compared with previous management systems, the quota system has proven to support a more efficient and cost-effective use of fisheries as a resource, and has demonstrated better ecological outcomes.
5.9
However, quota systems also have drawbacks. Policymakers must balance a range of competing priorities and conflicting stakeholder views when implementing a quota system. The move to TAC and ITQs may inadvertently benefit some fishers, while disadvantaging others, and may change the character of the fishing industry in a community over time. The committee recognises these factors and acknowledges the potential impacts on fishers and their families.
5.10
Issues including a lack of clarity around the objectives of Australian fisheries management and returns to the community from fishing, quota market and competition concerns, and the challenges of a changing climate, were prevalent throughout the inquiry.
5.11
While the committee believes that economic performance, safety and ecological sustainability have generally increased under quota systems, there may be further room for improvement. Notwithstanding a number of previous reviews and inquiries—which have led to refinements in the regulatory system—the Fisheries Management Act 1991 and current quota system have not changed substantially in 30 years, while the structure of fisheries and the industry have continued to evolve.
5.12
Recommendations outlined in the sections below are designed to improve fisheries management in Australia by addressing some of the key concerns associated with ITQs.
Objectives of fisheries management
5.13
The committee agrees that the objective in the Act regarding 'maximising returns to the Australian community' provides limited direct guidance on how fisheries are to be managed on a day-to-day basis. Evidence to the inquiry indicates that this objective was designed to require fisheries to be managed in a way that maximises efficiency and net economic returns (NER) from each fishery, but is less clear on how returns from fisheries should flow 'to the Australian community'.
5.14
In making fisheries more efficient, quota systems have reduced employment across Australian fisheries and coastal communities. This may lead to other, positive outcomes, but there is also an opportunity for governments to consider whether this outcome is desirable in all fisheries. Modified ITQ systems can and have been used in Australia and internationally to increase employment or achieve other social and cultural outcomes. The option to do this remains open to policymakers. Proposals should be considered on their merits and on a case-by-case basis.
5.15
Research and data collection around returns to the nation and fishing communities from fisheries are underdeveloped. The committee notes only four Commonwealth fisheries are regularly surveyed for NER, with surveys happening periodically in other fisheries, and notes in particular that these reports do not include analysis of the social and community benefits flowing from fisheries.
5.16
The committee believes the Australian Fisheries Management Authority (AFMA) is managing fisheries in a way that broadly conforms with the requirements in the Act, and notes AFMA's evidence that any substantial change to fisheries management policy is outside of its remit and would require legislative or policy change.
5.17
While fishing includes many low-value sectors, some fisheries do return substantial profits to quota owners and investors. Governments need to ensure fisheries regulation is still fit-for-purpose and policy settings continue to meet community expectations regarding the exploitation of Australia's fisheries resources.
5.18
The committee recommends that the Australian Government reviews the Fisheries Management Act 1991, and associated regulations and guidelines, to ensure that their aims align with the objective that fisheries are managed sustainably and in a way that maximises economic and social returns to the Australian community. The review should consider:
the adequacy of current cost recovery fees and licencing charges;
whether maximum economic yield (MEY) remains the preferred measure for setting total allowable catches (TACs);
employment outcomes of the quota system and whether these align with government and community priorities;
the performance of modified quota systems and royalty schemes that have been implemented in international jurisdictions, and their applicability in Commonwealth fisheries; and
how the current resource sharing model can incorporate recreational and customary fishing into the fisheries management framework.
5.19
The committee recommends that the Australian Government builds on its establishment of the Commonwealth fisheries resources sharing framework to make publicly owned quota available for small and lease fishers, community and First Nations fishers, and other stakeholder groups.
5.20
The committee recognises the benefits of the quota system and supports its continued use in fisheries that are suited to ITQ management. However, quota systems may not be the best option in many small and multispecies fisheries. While this issue is more prevalent in state fisheries, there could be benefit in clarifying the Commonwealth's position on ITQs to recognise that ITQs are one way of managing fisheries and not necessarily the best way in all fisheries.
Market and competition issues
5.21
Evidence suggests there may be unintended consequences of the quota system, including concerns around increasing aggregation of quota by large entities, vertical integration leading to the potential for misuse of market power and/or price fixing, and barriers to entry for those wanting to get into the industry. Industry members are also concerned about an increase in non-fishing investors and foreign ownership of Australian fishing quota.
5.22
Some of these concerns may be addressed through the provision of better and more transparent information around quota holdings. The committee has recommended changes to AFMA's current quota holdings registers and the development of additional sources of information. However, the committee is also aware of competition issues in fisheries quota markets that may warrant further investigation.
5.23
Commonwealth fisheries legislation is designed to restrict competition in the market, which is necessary to correct market failures and protect the industry and ecology long-term. However, this does not mean quota holders are exempt from Australia's competition laws.
5.24
As discussed in Chapter 2, the Australian Competition and Consumer Commission (ACCC) is currently investigating potential anti‑competitive conduct in the fishing industry. The committee will be interested in the findings of this investigation and any implications for fisheries regulation. In particular, the committee is interested in the ACCC's assessment of whether there are limitations imposed by fisheries legislation that would prevent the competition regulator addressing any cartel conduct, exclusive dealing, price fixing or misuse of market power that may occur in the sector.
5.25
Notwithstanding the ACCC's current investigation into specific allegations, the committee believes a broader review of competition issues in fisheries quota markets is warranted. The committee notes that the ACCC has previously examined competition issues affecting specific sectors, such as pricing in the fertiliser industry in 2008. The ACCC also supports codes of conduct for a number of industries, including the dairy industry, food and grocery sectors, horticulture, sugar and wheat ports.
5.26
The committee sees a potential benefit in the ACCC developing guidance for industry on how Australia's competition laws apply in the fisheries quota market and across fishing industries.
5.27
The committee recommends that the Australian Fisheries Management Authority increases the transparency of quota holdings by:
improving the format and readability of current registers to more clearly identify quota holders;
improving communication with industry around existing registers; and
developing a more robust register of quota for sale, or a trading platform, to better connect sellers with potential buyers.
5.28
The committee recommends that the Department of the Treasury works across government portfolios and agencies to ensure that there is transparency about the actual level of foreign ownership of Commonwealth fisheries quota.
5.29
The committee recommends that the Australian Government asks the Australian Competition and Consumer Commission to inquire into current competition issues in the fisheries quota system.
5.30
The committee recommends that the Australian Government asks the Regional Investment Corporation to establish a loan facility for small and lease fishers to assist with the purchase of quota, vessels and equipment in Commonwealth-managed fisheries.
Improving ecological performance
5.31
While the quota system has improved ecological outcomes in Commonwealth fisheries, the committee agrees that ITQs do not produce good community outcomes on their own. The quota system must be tailored to each fishery using harvest strategies, appropriate input controls and dynamic management plans. Regulators must also retain the ability to change course when information becomes available that indicates fisheries are not meeting their sustainability objectives.
5.32
The committee notes that some authorities believe that 'historical experience in managing fisheries is becoming less valuable' as the impacts of climate change become apparent across Australia's south east fisheries in particular. Any new stock assessment processes, that take into account the movement of fish species and changes to growth and reproduction occurring due to warming ocean temperatures and other impacts, must be based on clear evidence and take into account their broader impact, given the overall objective of the Act is to maximise returns to the Australian community.
5.33
The regulator must implement more responsive public reporting to ensure that information on its website better reflects the known status of fish stocks that are declining or at risk. The committee notes that AFMA, CSIRO and the Department of Agriculture, Fisheries and Forestry are undertaking significant work in these areas.
5.34
Noting the significant impact of recreational fishing on some species, governments should explore options for more accurately measuring the take in recreational fishing and ensuring commercial TACs reflect its impact.
5.35
The committee notes concerns raised regarding stock assessments for Spanish mackerel and believes that an independent assessment of Spanish mackerel stock levels could give fisheries managers and industry greater confidence in the management of these stocks.
5.36
The committee also notes that Spanish mackerel is a large, offshore pelagic fish with populations widely distributed across several fisheries in Western Australia, the Northern Territory, Queensland, New South Wales and the Torres Strait. Due to its pelagic nature, the committee is of the view that the assessment would be most appropriately carried out by the Commonwealth government, rather than one of the individual states or territories.
5.37
The committee recommends that the Australian Government undertakes an independent stock assessment of the Spanish Mackerel fishery.
Senator the Hon Matthew Canavan
Chair