BUILDING ON PROGRESS FISHERIES POLICY DEVELOPMENT IN NEW ZEALAND
By Peter H Pearse
A report prepared for the Minister of Fisheries
Wellington : July 1991
This document was commissioned by the Ministry of Agriculture and Fisheries. The views and proposals it contains are, of course, those of me author and not those of the Ministry.
Copies can be obtained from:
PO Box 2526
Phone: (04) 720-367
I am happy to provide this foreword to Dr Pearse' s study which I commend to everyone with an interest in fisheries management.
From earliest times in New Zealand , fisheries have made a fundamental contribution to our economy and lifestyles. Increasing population and improving technology have come to place ever greater demands on New Zealand ' s wild fisheries. Our fisheries management techniques must evolve to cope with these demands while protecting the health and future productivity of our fisheries.
The last significant step in the development of our fisheries management regime was the introduction in 1986 of the Quota Management System. Thirty-two major commercial species are now managed under Individual Transferable Quotas. After nearly five years experience with the QMS, it is time to take stock of the results of that bold innovation.
With this in mind, the Ministry of Agriculture and Fisheries commissioned Dr Peter Pearse, an internationally recognised expert in natural resources management, to review independently the current state of our fisheries management and to highlight opportunities for improvement.
This report has become available just as I have announced an independent review of all fisheries legislation presently administered by MAF. One of the main challenges of the review is to fit the complex issues of fisheries management into a consistent legal framework.
In this report, Dr Pearse provides a coherent overview of how fisheries policies might progress. That vision should, at the very least, provide a useful reference point on which discussion can focus. I believe the current debate of conservation, commercial, recreational and Maori issues in fisheries management will benefit by having "Building on Progress" as a common starting point.
Hon D L Kidd
Minister of Fisheries
Chapter 1. Introduction
Chapter 2. The Quota Management Experiment
Chapter 3. Extensions of the Quota System
Chapter 4. Terms of Quota Rights, Restrictions and Crown Charges
Chapter 5. The Institutional Framework
Chapter 6. Conclusion
New Zealand embarked on a fundamental reform of fisheries policy in the mid1980s. The intervening years have been a test of the new approach. It is now timely to review the system, to appraise its successes and failures, and to identify opportunities for improvement.
Late in 1990, the Ministry of Agriculture and Fisheries invited me to assess New Zealand ' s experiment in fisheries management. My terms of reference stipulated that my assessment should be independent, that I should consult with interested parties, and that I should identify opportunities for future policy development. This report documents my conclusions and suggestions.
I must emphasise, at the outset, that I have carried out my review with all the advantages and disadvantages of an external observer. My detachment from both government and private interests has enabled me to take a broad view of the regulatory system, unencumbered by involvement in the stresses and strains within the fishing community. However, it leaves me with limited appreciation of New Zealand 's fisheries resources, the complexities of managing them, the subtleties of New Zealand 's governmental system, and the interplay of interest groups. Moreover, my investigations were limited to a few weeks of consultation, study and travel in New Zealand . My observations are therefore tentative - intended to suggest possibilities for further discussion rather than firm proposals for policy development.
I do not attempt, in this short report, to document the historical events leading up to the present management system, or to describe it in detail; these are well documented elsewhere (see "References" at the end of this report). Instead, I turn directly to assess the policy framework as it stands today, its major shortcomings as I see them, and the opportunities for improving it. I confine my commentary to a broad overview of the system, and to a long-term perspective on policy development. Thus I deliberately leave aside much of the operational detail of the regulatory system, and many immediate administrative problems. Finally, I do not attempt to deal with certain matters on which I am not competent to offer useful advice; the most important of these are New Zealand ' s arrangements with other nations, and the whole question of Maori rights.
While I was carrying out my review, the Minister of Fisheries appointed an independent task force to assist in the formulation of new fisheries legislation. That group is expected to undertake a much more thorough and detailed investigation of those issues which I have been able to examine only superficially.
In the following pages I refer to views held by those involved in fishing and in the administration of fisheries. This is based on my consultations, which were mostly with spokespersons for the main interest groups concerned with New Zealand 's ocean fisheries: the fishing industry, recreational and Maori fishing interests, environmental organisations, and agencies of Government. My consultations were intensive, and I believe representative, but I cannot claim to have weighed the opinions of all those who should be consulted in developing fisheries policy.
" We have arrived at the time when exploitation of fish resources and conservation must work together to ensure sustainable ecosystems."
David Thom, Chairman
My investigations benefited a great deal from the commentary and advice I received from others. Without exception, my enquiries met with open, receptive, and constructive response. Any contribution this project makes to New Zealand ' s fisheries policy development must be credited, in large measure, to those who so generously gave me their support, assistance, and guidance in carrying it out.
I am particularly indebted to officials of the Ministry of Agriculture and Fisheries whose helpfulness in providing information, advice, and documentation, made my project manageable, and whose support and hospitality made my visit to New Zealand both productive and pleasant.
As my report explains, I view New Zealand 's quota management system as a promising first step. Indeed, it has made New Zealand the world leader in fisheries management systems. But the policy urgently needs further development. If the improvements are made, New Zealanders will keep their place at the forefront of fishing nations, and, in so doing, realise the fullest possible economic, social and environmental benefits from their ocean resources.
Peter H Pearse CM
Wellington : July 1991
Fishing nations around the world are searching for better ways to manage their resources. The reason is simply that traditional management systems have failed to maintain healthy fish stocks, or to sustain prosperous fishing industries. Recreational and subsistence fishing have suffered also. In both eastern and western nations, in developed and developing economies alike, fisheries have been characterised by depressed resources, overexpanded fishing fleets, low incomes to fishermen, heavy dependence on governmental support and regulation, and conflict among fishing groups.
With ever-increasing pressures on fish stocks, and growing public demands for sustainable development of natural resources, traditional management regimes are proving to be inadequate.
"People say you can 't turn the clock back. I agree, but you can reset the clock." Hon Matiu Rata
In the search for new approaches to fisheries management, New Zealand has been the world's leading innovator. Other fishing nations have watched with keen interest as New Zealand abandoned centuries-old traditions of free-for-all competitive fishing by issuing to each fisher a right to take a defined quota or share of the available catch. This quota management system, introduced in the 1980s, has become the dominant feature of New Zealand ' s fisheries policy. A number of other nations have recently initiated regulatory experiments following New Zealand 's experience.
The quota management system has produced notable benefits but, as must be expected of such a fundamental policy change, it has also given rise to new problems. After five years' experience with the new system, it is time to review the experiment.
This report presents an assessment, from the viewpoint of an external observer, of New Zealand ' s current fisheries policy. It takes the form of a broad overview, concentrating on the basic objectives of fisheries policy, the essential structural and administrative framework for implementing it, and the opportunities for improving it.
In assessing any public policy it is helpful, at the outset, to clearly identify its objectives. Except for certain elements of fisheries policy, notably recreational and Maori fishing and management planning, the objectives of fisheries policy in New Zealand have not been articulated in any official way. However, the available documentation suggests that it is reasonable to assume that they include the following:
- To conserve the natural resources, to ensure that their use and development is sustainable, and to maintain the diversity and integrity of ecosystems.
- To allocate access to fish resources, fairly and equitably among competing users and groups of users.
- To ensure a high level of economic efficiency in commercial uses of fish.
To these primary goals, additional objectives became relevant to ensure the long-term effectiveness of the policy framework, especially:
- To accommodate changing economic conditions and public preferences, and to encourage response to opportunities in resource enhancement and new technology.
- To ensure efficiency and effectiveness in public administration.
In the following pages I try to evaluate present fisheries management arrangements with reference to these objectives, and my proposals are aimed at advancing them.
"No sort of scientific teaching, no kind of common interest, will ever teach men to share property and privileges with equal consideration for all. Everyone will think his share too small and they will be always envying, complaining and attacking one another. " Fyodor Dostoyevsky ;The Brothers Karamazov
I turn first to an appraisal of progress, so far, in the shift toward a new management approach based on property rights and economic incentives. This points to opportunities for improvements which I discuss in separate chapters on extending the quota management system, improving the terms and conditions of quota rights, and harmonizing other parts of the policy framework with the new system.
THE QUOTA MANAGEMENT EXPERIMENT
Until recently, New Zealand 's fisheries management regime was broadly similar to that of other fishing nations. Anyone who wanted to fish could do so in open competition with others. When fishing pressure became excessive, governments tried to protect the stocks by restricting fishing gear, closing fishing areas, shortening fishing seasons and imposing other controls on fishing. Methods were also devised to protect one fishing group from another. As demands on fish resources grew, governments were drawn ever more deeply into managing stocks and yields, prescribing fishing technology and fishing methods, allocating catches and resolving conflicts.
In New Zealand , as elsewhere, the weaknesses of this regulatory approach to managing fisheries became increasingly evident. Fishing fleets expanded well beyond the capacity needed to harvest the available catch, efforts to constrain fishing pressure failed to protect stocks from depletion, fishermen' s incomes often declined, conflicts among fishing groups intensified, and governmental managers often found themselves on a treadmill of regulatory design and enforcement.
During the 1970s, New Zealand , like many other fishing nations in the developed world, began to look for ways of controlling the growth of fishing effort. But in the face of developing technology, and the conflicting incentives of fishermen and vessel owners, these attempts met with mixed success.
Introduction of Quota Management
In the 1980s, after New Zealand extended its authority over fishing 200 miles seaward, and extensive new stocks were discovered, a new regulatory scheme was introduced that involved a fundamental break with the traditional regulatory approach. Instead of issuing licenses to fish and to "catch as catch can", commercial fishing enterprises were allocated individual quotas representing shares of the total allowable catch in a fishery. This is the quota management system, which has become the cornerstone of fisheries policy in New Zealand .
" With the introduction of Individual Transferable Quotas (lTQs), firstly for the deepwater fisheries and subsequently for the majority of the commercial fisheries, New Zealand took a revolutionary step in the management of its fisheries. " Ray Dobson, NZ Fishing Industry Board
The quota management system is intended to eliminate the rush for the fish, the destructive competition for the limited available catch, and the wasteful over-expansion of fishing capacity. Quotas were made divisible and transferable, so that fishing enterprises could adjust their holdings to their needs and organise more efficient operations. It was expected that the new system would facilitate management of fish resources and reduce the burden on regulatory control of fishing. More fundamentally, it represented an attempt to improve the economic performance of the fishing industry, in addition to the traditional objective of protecting the stocks.
The quota management system was introduced first in the offshore fisheries and subsequently to many of the older, more complex inshore fisheries. Today it applies to 32 species in 10 management areas.
Since its introduction, the quota management system has given rise to a variety of problems and controversies over such things as adjustments in the total allowable catch, incidental catches (or by-catches) of non-target species, rental payments for quota holdings, enforcement and other issues, most of which are discussed below.
Experience with the quota management system is now sufficient for those involved in fishing and its regulation to form judgements about its value as an instrument of fisheries policy. My consultations within the fishing community and governmental agencies have revealed a substantial consensus which can be summarised as four general conclusions.
1. The quota system is a better way of managing fisheries and should be retained.
Virtually everyone I consulted - not only those who hold quota rights but also recreational, Maori, and environmental representatives, as well as governmental officials - agreed that the quota management system has proven to be a progressive innovation in fisheries policy. Notwithstanding many criticisms of the way it has been introduced and administered, no-one with whom I consulted argued that it should be abandoned in favour of a return to regulated competitive fishing.
This support for the quota system is consistent with my own observation that it has been beneficial in advancing the policy objectives identified in the preceding chapter. Though many problems and aggravations have arisen, it is easy to underestimate the greater difficulties that would almost certainly prevail under the traditional system of undefined rights to fish.
The quota system can be credited with improving the management of stocks, reducing redundant fishing capacity, alleviating conflicts over the allocation of catches, substantially improving the economic returns from fishing to both the fishing industry and the Government, and reducing pressures on fisheries managers.
" All in all the Quota Management System appears to be an efficient means of controlling commercial fisheries. There is evidence that most fishermen within the industry support it, and there is quite a deal of support for it amongst Maori too. " Waitangi Tribunal
2. Changes are urgently needed to make the system work better.
Everyone I consulted pointed to needed revisions in the quota system, or in other elements of the policy framework. Thus there is considerable support for the review being undertaken by the task force on fisheries legislation, and for the consultative approach it will take toward its work.
In my own opinion, too, substantial changes are needed. If the quota management system is to be retained and built upon, and if its potential contribution to fisheries management is to be realised major improvements must be made to the quota system itself, and to the regulatory framework within which it is embedded.
3. Those who hold rights to fish should have more responsibility for managing them.
Although proposals for policy changes vary widely, I found significant convergence of opinion in favour of assigning greater responsibility for managing fisheries and fishing activity to those who hold the rights to use the resources. The concomitants of this view are that users should bear the costs of management and be accountable for actions that impinge on other interests. This observation is, in effect, an endorsement of the idea that a system based on property rights, and the economic incentives that accompany them, can be an effective alternative to increasing governmental regulation. It also implies that the new approach has been adopted only partially, leaving scope for further development and improvement.
4. Environmental concerns are not well handled.
While the quota system facilitates the management of fishing, it depends on other processes to identify and protect public interests that are sometimes adversely affected by fishing. Such impacts take many forms, such as detrimental effects of fishing some stocks on the food supply of other stocks, mortality of sea-birds and mammals caught up in fishing gear, damage to ocean habitats and impairment of aesthetic values. These concerns often call for sensitive weighing of non-commercial values against commercial values in determining allowable catch levels and the rules of fishing. The present, uncertain, arrangements lack the confidence of both environmental groups and the fishing industry.
"In spite of its admitted shortcomings, the quota management system is working and the establishment of tradeable property rights to harvest fish has had positive consequences."
Directions for Future Development
Hon Douglas Kidd, Minister of Fisheries
These general findings will not be surprising to those within the fishing community. They are nevertheless important, because they serve as the starting point for discussion about further development of fisheries policy, and point the direction in which changes need to be made. They imply that the challenge, today, is to make the quota system work better. They imply also that this can be done by building on the capacity of the quota system to engage users in managing the resources, and by improving the arrangements for taking account of the environmental impacts of fishing. The first of these focuses on the role of private fishing interests, the second on the role of government, suggesting a need to re-examine and rationalise the responsibilities of the two. This issue underlies many of the proposals in the remainder of this report.
EXTENSIONS OF THE QUOTA SYSTEM
Adoption of the quota management system signalled a basic shift in fisheries policy from a regulatory approach to one based on property rights. The new approach eliminates the single-minded competition for fish and the wasteful over-investment in fishing capacity which occurs when the claims of individual fishers to the catch are not defined. Instead, it provides users with well defined, securely-vested and valuable interests in the catch, giving them strong incentives to develop efficient fishing enterprises and to support good, long-term resource management. The benefits of the quota system derive from this realignment of fishers' incentives.
So far, however, the quota system has been adopted only partially. If it is to be developed as the foundation of fisheries policy the remaining gaps in the system should be closed.
" Management of resources must seek to balance social, cultural, environmental and economic costs and benefits arising from different uses." MAF Fisheries ,National Policy for Recreational Fishing
During the past five years the quota management system has been progressively applied to 32 of New Zealand 's most important commercial species. Today, its application remains incomplete in two important respects. One is that some fisheries remain outside the system; the other is that it excludes recreational fishing. Both of these deficiencies impede efficient resource management and orderly fisheries development.
Permits are now issued to fish more than 130 species which are not covered by the quota management system. Most of these are not yet heavily exploited, but some are, and some are potentially highly productive. In many cases catches are largely incidental, and in most cases scientific knowledge about the stocks is meagre. The Ministry' s management control over these stocks is weak.
Quotas on some species, but not others, aggravates pressures on those outside the system. Facing well-defined limits on their catches of quota species, fishers turn their effort to the remaining unrestricted opportunities in non-quota species. Their incentive to do so is sharpened considerably by the usual practice, when quota systems are introduced to new fisheries, of issuing the initial quotas to established fishermen in accordance with their historical catches. This gives rise to the well known practice of "fishing for quota", which means fishing in non-quota fisheries for the purpose of establishing a claim on quotas when they are introduced. The result is that non-quota species are often poorly managed, and they are brought into the quota system only with difficulty.
In my opinion, the sooner the quota management system is extended to include all species, the better. This view is widely shared within the fishing community.
All or most of the non-quota species should be brought under quota management at once. The alternative, of dealing with them sequentially over time, will aggravate distortions in fishing patterns by shifting fishing effort from one excluded species to the next. In the following chapter I consider ways of bringing new species under quota management without the distortions associated with past practices.
The quota management system has been adopted, so far, to commercial fisheries and it has clearly benefited and strengthened commercial claims on fish resources.
Recreational interests have been left behind, and seem to me to be unsatisfactorily provided for within the present policy framework.
"The implementation of the Quota Management System has produced anomalies we must all address. There has been no clear evidence of allowance for recreational fishing allocations."
Bob Burstall, President ,NZ Recreational Fishing Council
Recreational fishing is an important element in the New Zealand lifestyle, with something like a third of the population going fishing every year. It also generates considerable economic activity. Its demands on resources are highly focused on a few species, such as snapper, kahawai and rock lobster, and in these fisheries they compete with commercial fishers.
The Fisheries Act requires the Minister to take account of recreational interests in determining the total allowable catch to be allocated as quota to commercial fishers. This provision, and related policy statements suggesting priority to non-commercial fishing in some circumstances, are valued by recreational fishing groups as protection of their interests. But in the long term they are likely to be inadequate for several reasons:
- The absence of specific rights, and any form of licensing, leaves a dearth of information about the numbers of recreational fishers and their catches of fish. This is essential information that recreational fishing groups need to promote their interests, and resource managers need to manage recreational fisheries;
- Commercial fishers' quotas give them a stronger legal claim on the catch, which is likely to leave recreational fishers in a weak position as their demands grow. Moreover, recreational fishers are left with no means of increasing or adjusting their share of the catch;
- Recreational fishing is vulnerable to the charge that only commercial fishers contribute to the cost of fisheries management. In addition, present arrangements leave recreational fishers with no qualification to participate with quota-holders in collective management pursuits of the kind I propose later in this report.
Ultimately, the solution is to make recreational fishing congruent with the quota management system, by allocating the recreational share as explicit quota. The quota assigned to recreational fishers could be held on their behalf by central or local government, though I suspect that new organisations based on fisheries management areas, and modelled on Fish and Game Councils, would be able to organise and advance recreational interests most effectively. Recreational catches can be monitored by means of periodic surveys.
"Recreational fishing is a cherished, traditional activity making a contribution to the social and economical well-being of New Zealand . " NZ Recreational Fishing Council
This proposal is controversial. It is widely supported by those responsible for fisheries management, but it is resisted by many recreational fishers who perceive it as an unwarranted interference with the traditional freedom to fish in the sea without charge or restriction, and who insist that recreational demands should always be accommodated first, before commercial catch levels are determined. The benefits of an explicit recreational quota, in terms of a more secure share of the harvest and improved resource management, are not yet acknowledged by many recreational fishers, though I have no doubt that, with time, they will be increasingly recognised.
The Government's freedom to allocate quota rights in the face of Maori claims of ownership has been a subject of protracted and complicated litigation, court rulings and findings of the Waitangi Tribunal. At present, injunctions restrict the Government from applying the quota system to additional species unless certain principles are followed, and Maori concur with the procedure. Until outstanding issues are settled, extension of the quota system will be difficult, and any new quota allocations will probably have to be temporary. However, final resolution of the issue of Maori access to the fishery will permit extension of the quota system to the remaining species, and the entrenchment of the rights of Maori and other groups in permanent quota allocations.
"We have been making a noise for years about getting access to our fish. Now the ball is in our court and we had to do something. It is our duty to find work for our young people so we are laying the foundations for the people to take up the challenge. "
Len Te Moana, Chairman, Runanga o Te Whanau
Thus, although much remains to be settled, it appears that Maori interests in commercial fishing can be well accommodated within the quota system. However, Maori rights to take fish in certain traditional ways fall outside the present quota system. Some, but not all of these traditional demands on fish stocks, are taken account of along with recreational interests in determining the catches available to commercial quota-holders.
Traditional rights take several forms, and are administered variously by the Ministry and local Maori elders. Some of these might be more satisfactorily provided for through quota rights. Others, such as traditional shellfish areas, might be better recognised as rights over defined areas, along the lines of the reserves provided for under the Maori Fisheries Act or the leases discussed later in this report. Such alternatives can provide more security, and permit traditional rights to be recognised in ways that are better attuned to the property rights approach to fisheries management. Where they cannot be more explicitly defined, they should be recognised along with environmental constraints in the conservation prescriptions proposed in Chapter 5.
It has been suggested that non-consumptive interests in fish could be provided for through the quota system as well. These interests include the intrinsic value of preserving nature, biodiversity, and the integrity of ecosystems. The suggestion is that those who seek to protect these values could do so through the quota system, by purchasing and not exercising rights to exploit fish stocks. One benefit is that the cost of withholding resources from economic use would become apparent.
However, I believe that environmental interests are so varied and diffuse that the Government must take ultimate responsibility for them. I suggest below that this should be done in the process of prescribing conservation objectives and ground rules for fisheries. This need not preclude interest groups from going further and acquiring exploitation rights from fishers.
TERMS OF QUOTA RIGHTS,
RESTRICTIONS AND CROWN CHARGES
The effectiveness of the quota system as a mechanism for managing fishing depends on the characteristics of the quota rights, the way they are administered and the restrictions on their holders. Experience suggests that some of the present arrangements should be re-examined with a view toward making the system work better.
The permanent quota rights already issued present no further problems of allocation. However, I suggested earlier that species now outside the quota system should be brought into it, and that the method of doing this hitherto was creating difficulties. Most importantly, the method should be altered to avoid the incentive to "fish for quota" in anticipation of new quota fisheries.
It is helpful to distinguish between non-quota species which are already being fished and those that are not. For the former, quotas can be allocated most expediently on the basis of the catch histories of existing fishers. If this is done quickly, it will forestall further distortions of fishing effort, and at the same time respect expectations. If Maori issues delay action, the problem would be alleviated by an official declaration that future catches will have no bearing on new quota allocations, and that some other method, such as auctions, will be adopted henceforth.
Quotas for species yet to be fished can best be auctioned. The successful bidders will thus obtain rights to specific percentages of whatever allowable harvest of the species may be set in future. This would provide a simple one-off process for resolving access to these fisheries. It would eliminate "fishing for quota", give the quota-holders strong incentives to develop the fisheries and to prove up stocks in order to establish allowable harvest rates, and it would provide them with the means of association to take on collective management responsibilities. In short, it would ensure the orderly development of resources which are now inadequately managed.
Term of Quota Rights
Most quota rights have been issued with perpetual terms, but the Government recently undertook to issue no more permanent quota until certain Maori concerns were resolved. Since then, special legislation has been adopted to enable rock lobster to be brought into the quota system with quotas carrying limited terms of 25 years.
"You cannot make long term investment decisions on the basis of short term access to resources. " NZ Fishing Industry Association Inc.
Limited terms reduce the security and value of fishing rights. They also reduce the incentive of quota-holders to conserve and enhance stocks, and to undertake long-term investments in the fisheries, especially as the terms approach expiry. These disadvantages are not likely to be outweighed by any public benefit from periodic reallocation of term quotas, especially if the Government maintains its opportunities to purchase and sell permanent quota. Thus, as soon as the issue of Maori entitlement can be resolved, it will be advantageous to resume the practice of issuing new quotas with perpetual terms.
Proportionate Versus Specific Quota
Until1989, quotas were denominated in specific quantities of fish, usually in tonnes. It was expected that the Government would raise revenue by auctioning additional quota as information about stocks accumulated and allowable catches increased, and if reductions were necessary the Government would purchase quota back. However, when it became clear that the productivity of orange roughy stocks had been significantly overestimated, the cost of effecting the needed reduction in catches by purchasing quota was considered unmanageable (the idea of keeping revenues from quota sales in a revolving fund for such purposes having been rejected when the policy was originally designed). To solve the problem, all quotas were changed to percentages of the total allowable catch, so that total catches could be adjusted without requiring the Government to intervene as a buyer or seller in the quota market.
Percentage quota, as it is now administered, has two significant disadvantages over specific tonnages. One is that it is much less certain and secure; hence it is a less valuable property right. The second is that it puts the responsibility for making adjustments to allowable catches on the Government, while the costs and benefits of adjustments are borne by quota-holders. This division of responsibilities inevitably creates conflict.
On the other hand, percentage quota can advance the policy objective of engaging those who hold fishing rights in the responsibilities of resource management. By assigning quota-holders defined shares not only in the current catch but also in all potential yields, percentage quota gives them strong incentives to support good management, research and enhancement.
In any event, percentage quotas are now widely accepted. Accordingly, in Chapter 5, I suggest arrangements to take advantage of the incentives of quota-holders to support resource management, and at the same time to alleviate the present dichotomy of responsibilities between decision making and cost-bearing.
Restrictions on Quota-Holders
Quota-holders are restricted in the amount of quota any one may hold; generally to not more than 35 percent of the total commercial quota in offshore fisheries and 20 percent in inshore fisheries (though the limit for rock lobster is 10 percent). Another restriction is that quota-holders must be citizens of New Zealand . (Corporations holding quota must be at least 75 percent owned by New Zealanders.)
Both of these restrictions raise issues of general economic policy, extending well beyond fisheries management, which I cannot deal with in this review. However I can offer two comments. One is that restrictions of any kind tend to lower the value of quota, so it is important to ensure that they are effective in their intended purpose. The purpose of restricting the amount of quota held is apparently to protect small fishing enterprises from large, and the purpose of the restriction on foreign holders is to maintain domestic control of the fishery. Recent trends in the structure of the fishing industry suggest that the intended effect of these restrictions has been limited and that there may be more effective means of achieving the desired results.
My second observation is that these restrictions bear on issues of general economic policy, having to do with the concentration of industry, and foreign investment and control. Accordingly, they would seem to be better dealt with, and more consistently incorporated into economic policy, in the Commerce Act rather than in fisheries legislation.
Restrictions on Pledging Quota
Quota-holders seeking to borrow money face formidable obstacles in using quota rights as collateral. The Government cannot guarantee the integrity of its register of quota-holders, so lenders are reluctant to accept borrowers' quota as security; the registration system does not provide for registrable interests against quota rights, nor protection of collateral in the event that quota is forfeited as a result of an offence by its holder; and the prohibition against foreign holders means that quota is meagre security for foreign-owned banks. These impediments significantly lower the value of quota rights, impair the financial security of quota-holders, and aggravate tendencies toward concentration of holdings in large enterprises. Obstacles to raising funds also make it difficult to take on management responsibilities. Just as agricultural improvements often depend on farmers' ability to mortgage land, the ability of quota-holders to invest in resource development and enhancement depends on their access to capital.
Development of the property rights approach to fisheries management calls for a legal register of property rights and interests, like that for registering interests in land and the recently-introduced system of registering radio frequencies. Both of these other models provide for registering mortgages, and are well accepted by financial institutions. Modest administrative changes would provide corresponding arrangements for quota rights.
Charges for Fishing Rights
Among the most contentious issues of fisheries policy are the Crown charges for fishing rights. There are many complicated aspects to this question, including those of fairness, financial incentives, cost recovery, and the resource owner's financial interest, all of which give rise to endless debate within the fishing community. The whole issue has been aggravated by the financial arrangements under the Ministry' s 1989 "Accord" with the fishing industry, when the denomination of quotas was changed from specific quantities of fish to percentages of the available catch. In compensation, the Government undertook to return to the industry roughly $20 million annually in rentals to be collected during the ensuing five years.
"Above all else the industry wants simplicity, predictability and certainty from the rental setting process. " NZ Fishing Industry Board
Rental arrangements have not been administered as originally intended, and they have had unintended impacts on the management of fisheries. The Ministry had hoped to collect all the net value - the so-called "resource rent" - thereby keeping the market value of quota low, and so being able to effect necessary reductions in allowable catches by purchasing back quota at tolerable cost. In the event, resource rentals were substantially capitalised in quota values. Thus, when it became apparent that significant reductions in catches of orange roughy were needed, the cost was unmanageable; quotas were converted to percentages, and quota-holders were promised compensation in the form of reimbursement of rental revenues. These arrangements, and litigation over them, continues to strain relations between the Government and the fishing industry.
In retrospect, the financial outcome for the Crown has fallen far short of expectations. Between 1986 and 1989 the Ministry's cost of operations was roughly matched by revenues from rentals and sales of quota. Since then, with the reimbursement of rentals, revenues have fallen well short of costs. Far from generating a return to the Crown, the fisheries produce a substantial net loss to the Treasury, expected to amount to some $200 million over the five years of the "Accord".
Clearly, a more considered and durable revenue policy is needed for the long term. But before the arrangements are manipulated further, some fundamental questions should be addressed. The first question is the government's financial objective in revenue raising. Given all the usual taxes levied on goods and services and on business and personal incomes, what special public charges, if any, should be applied to those who hold fishing rights?
The two main justifications for levying charges are to recover the public cost of managing the resources, and to provide a financial return to the public owner. I have found widespread support, in principle, for the first of these: that is, a policy of recovering, from the resource users, revenues at least sufficient to cover the public cost of fisheries management.
Support for cost recovery usually carries with it certain caveats, however. One, of special concern to commercial fishers, is that users must contribute equitably, and the burden must not be borne by one sector to the exclusion of another. Broadening the quota system to include recreational fisheries, as suggested above, would facilitate such even treatment.
Another condition is that, if users are to pay management costs, they must have the opportunity to take over management functions which they believe they could carry out more efficiently than government. Users' management associations of the kind I propose in Chapter 5 would provide a suitable vehicle for assuming such responsibilities. I believe, as do some commercial, Maori and recreational groups, that there is considerable scope for those who hold fishing rights to take over management functions in this way, as long as the Government retains ultimate responsibility for quality control and compliance.
The question of charges in addition to the cost of management, as a return to the public owners of the resources, is much more contentious. It raises fundamental questions about ownership, the interpretation of the Treaty of Waitangi, the responsibilities of government, and consistency with policy in other sectors. These are issues of a fundamental legal and political nature, on which I can offer only a couple of observations.
First, experience in New Zealand and elsewhere demonstrates convincingly that it is impractical to try to assess and capture the entire resource rent by means of an annual charge. The concept of economic rent is so elusive, hard to quantify, and so volatile in the face of changing markets and resource conditions that it does not provide a feasible basis for assessments.
Second, resource rents have, for the most part, already been capitalised in the market value of quota. More than 80 percent of quota rights have changed hands at prices that incorporate these resource values, so they cannot now be captured without expropriating quota-holders' investments. The only feasible way to capture all economic rents is by tendering the rights when they are first allocated, but the opportunity to do that has been lost except for fisheries still outside the quota system.
Third, notwithstanding legal niceties, the quota management system has effectively transferred property interests in fisheries from the Crown to quota-holders, thus weakening the Crown's claim for a return to the owner.
All this leads me to suggest that, if it is decided that a charge in addition to the cost of management is appropriate, it should not attempt to capture the full economic rent; it should take the form of a simple supplement that does not depend on recurrent calculations of revenues, net returns or other economic variables; and it should be kept stable over time.
Once the Government's revenue objective is decided, a separate issue is the way in which the burden is to be distributed and assessed. The range of possibilities for raising the revenue is almost infinite, including royalties on the catch, rental charges on quota rights and special taxes. Whichever device is adopted, it must be distributed among species or fisheries in some fashion. Hitherto, the bulk of fisheries revenues has been raised from initial sales of quota and annual rentals on quota holdings. Rentals have been calculated and assessed on each species with reference to several somewhat inconsistent statutory criteria including quota prices, likely net returns and cost differences between domestic and foreign vessels. Moreover, so many adjustments and limitations have been applied to the rates that they are not now systematically related to either management costs or resource values.
Any system of levies that depends on the prices of fish or the profitability of fishing enterprises is fraught with difficulty. The landed value of fish and fish products (especially when they are directly exported), and the allocation of costs and revenues associated with integrated operations, are difficult to determine reliably. Such assessments give rise to costly surveillance and endless dispute. Moreover, differences in the landed price of fish are not reliable guides to the relative value of fishing rights.
In my opinion the guiding principle in distributing the burden of governmental charges should be cost recovery: that is, the required revenue should be raised through charges on holders of fishing rights, distributed among them in a way which corresponds, as closely as possible, to the costs they impose on the Treasury. This is the principle which is most widely acceptable, and it also focuses desirable incentives for economy in resource management and administration.
The Ministry can attribute most of its costs of research, management and enforcement to particular fisheries, so a breakdown of total costs by fisheries is the first step in cost allocation. Some costs cannot be easily attributed to particular fisheries, of course, but they can be assigned in proportion to those that can. The Government can then levy a charge on each quota-holder in a fishery according to his share of the total quota, which is the closest approximation of his share of management costs.
Where a fishery has an effective association of quota-holders of the kind described in the following chapter, the total cost attributed to the fishery might simply be levied on the association, allowing it to distribute the burden among its members as it sees fit. This would likely lead to further application of the user-pay principle, since some costs (for example, the cost of official observers for trans shipments at sea) can be assigned to specific enterprises.
THE INSTITUTIONAL FRAMEWORK
The most complicated and subtle part of policy development, and at the same time the most critical to the outcome, is the design of the institutional structures intended to give effect to the policy. Quota rights are new instruments of policy, but they work within a framework of other structures such as legislation and fisheries management plans which collectively determine how fisheries are managed and used, and how well objectives are achieved.
New Zealand 's quota management system has been superimposed, to a large extent, on regulatory mechanisms that were designed for managing fisheries under the former, highly regulatory, system. Under the new management system, some of these mechanisms are no longer necessary, and others are not well suited to needs. To accommodate future development of the system within a new legislative framework, some streamlining of the regulatory structure is desirable. In this chapter, I review the present mixture of old and new mechanisms, and suggest how they might be rationalized to complement the new property rights approach to fisheries management.
Existing Policy Instruments: An Awkward Combination
New Zealand ' s fisheries policy is embodied in formal rules set out in legislation and regulations, in the permits and rights issued to those who fish, and in procedures for planning, administration and enforcement. The present institutional machinery is the accumulated responses of government to problems and needs as they arose over more than a century.
The Government's main fisheries legislation is the 1983 Fisheries Act, which replaced and incorporated much of an act of the same name passed in 1908. Some aspects of fisheries policy are dealt with in other statutes, such as the 1971 Marine Farming Act, the 1989 Maori Fisheries Act, and the 1977 Territorial Sea and Exclusive Economic Zone Act. These statutes, and their supplementary regulations, constitute the fisheries law, and are the most traditional instruments of fisheries management.
For more than eighty years all commercial fishers have been required to obtain fishing permits. These annual permits are issued for specific fisheries by the Director-General of Fisheries, who may attach conditions to them to regulate fishing.
In 1977, a provision was made for designating problematical fisheries as controlled fisheries, which are assigned to a special management authority with strong powers to regulate fishing, including closing it altogether. Where fishing is allowed, commercial fishers require special controlled fishery licenses in addition to fishing permits.
When the quota management system was introduced in 1986 it required commercial fishers to hold, as well as a permit, a quota, (or an individual transferable quota, or ITQ), which authorises them to take specific portions of the total allowable catch in any fishery included in that system.
Before the quota system was adopted, the 1983 Fisheries Act had made the Ministry responsible for defining fishery management areas and preparing a fisheries management plan for each. The planning process was meant to provide a channel for public consultation, and the plans were intended to provide the Ministry with authority to manage all aspects of fishing. Certain geographical designations, in addition to fishery management areas, are authorised under other statutes for special purposes, two of which are important here. Marine reserves are provided for in the Marine Reserves Act and administered by the Department of Conservation for the protection of special marine areas in their natural state. The Maori Fisheries Act provides for taiapure, which are defined coastal areas enclosing fisheries for the use of local communities.
This panoply of regulatory instruments, and especially the way in which they inter-relate, demands review. If we begin with quota management as the centrepiece of the management system, and seek a policy framework that will give it more scope, some of the present mechanisms appear redundant and others inappropriate.
An urgent issue is the ambiguity about the legal precedence among all these arrangements. For example, it appears that regulations override conditions on permits, but it is unclear whether they override the provisions of controlled fishery licences and fishery management plans. When quota rights were introduced their status relative to these other mechanisms was left unclear, though courts have ruled that regulations and plans must not interfere unduly with these rights. How they all apply to marine reserves, marine farms, and taiapure is uncertain. Obviously, this confusion needs to be sorted out.
A more fundamental issue is the awkward mixture of regulatory and property interests in this framework. Some mechanisms, such as fishing permits and management plans, were introduced when fisheries management was based entirely on governmental planning and regulation. Today, they encumber, and sometimes conflict with, quota management.
Deficiencies and Redundancies
The traditional regulatory approach to fisheries management is epitomized by fisheries management planning, which is entirely out of tune with the new reliance on property rights and self-regulation of fishing. Fisheries management plans envisage the Ministry as the official "hands-on" manager of everything to do with fishing. It therefore needs wide and detailed authority to attend to its broad responsibilities (in the words of the Fisheries Act ) "...to conserve, enhance, protect, allocate and manage the fishery resources...." through fixing harvest limits, allocating catches and controlling fishing operations.
In the context of the new policy approach these plans are inappropriate, as a management device, in several important respects:
- They are over-ridden by quota rights. Plans can impose controls such as gear restrictions on quota-holders, but the legal status of the property rights in quota means that plans cannot infringe upon them. The Maori Fisheries Act has further narrowed the scope of management plans, and their status in controlled fisheries is unclear. In short, the legal scope for planning control has shrunk, and the status of plans in relation to other mechanisms is ambiguous.
- The primary purpose of the management plans, when they were introduced in 1983, was to prevent depletion of fish stocks. This role has been usurped, in large part, by the allocation of catch quotas.
- The planning process is an unsatisfactory channel for the needed public input into decision-making. Establishing environmental ground-rules for fishing calls for broad and meaningful consultation with public interest groups concerned with such diverse issues as sea-birds and mammals, other interdependent stocks of fish, the health of reefs and seabed habitats. The present management planning process provides for public consultation, but it gives participants the false impression that their efforts will result in enforceable rules and outcomes for which the Ministry can be held accountable.
- Management plans are too inflexible for effective resource management. In the first place, their production is an excruciatingly slow process: after eight years and much effort on the part of the Ministry and private interest groups, no plans have yet been approved. Second, their specifications can be rapidly overtaken by developments in technology, resource conditions, markets and public demands. Third, they obstruct new initiatives, responses to local opportunities, and experimentation.
The planning and regulation approach to fisheries management is fundamentally at odds with a system based on property rights and economic incentives. The former presupposes day-to-day regulatory control of fishing operations, while the latter establishes a framework to enable fishers to efficiently manage their own affairs. In 1983, when fisheries management plans were introduced, the planning and regulatory approach to fisheries management was the only approach considered; since then, the adoption of a property rights system suggests that the responsibility for managing fishing and related activities should be carved off and assigned to users; what is needed in addition is a carefully structured consultative process for establishing the ground-rules within which the resource users are permitted to pursue their interests.
For these reasons I find the present provisions for fisheries management plans anachronistic and inappropriate, and I conclude that they should be abolished in favour of a more suitable process (which I describe below) for establishing the parameters within which those with rights to fish may manage and use resources.
Fishing permits, also, serve no obvious purpose in the new framework. They have traditionally been used to apply various rules and restrictions about fishing methods, fishing areas and so on. Bur courts have insisted that all the permits issued for a fishery must be generally the same, and so general rules are now usually set out in regulations instead. As fisheries policy has evolved from a largely regulatory approach to one based on property rights, with rights to fish embodied in quota holdings, permits seem to have lost their function. I therefore suggest that consideration be given to simply abolishing permits in the new legal framework for fisheries management. The necessity of controlled fisheries licenses is also questionable.
Specifying Conservation Standards: The Role of Government
The new approach to fisheries management implies separating the responsibility for managing fishing from the responsibility for protecting broader public interests in the conservation of resources. The former can be assigned, for the most part, to those who hold the rights to fish; the latter is the responsibility of government.
The Government's essential role is to identify the public interests that are affected by fishing, and to protect them by setting out enforceable ground-rules within which those who have rights to fish can organise themselves and exercise their rights. This is consistent with the accepted role of the Government in planning land and water resource use in New Zealand , and is reflected in the new Resource Management Law Reform Bill as well.
"Our interests in the management of fisheries reflect a broader concern for the marine environment. " Gordon Ell, President ,Royal Forest and Bird Protection Society of NZ Inc
Broader public interests in a fishery can best be protected by specifying the standards of management that those who use the resources are obliged to achieve. These standards, which I refer to as conservation prescriptions , should deal strictly with conservation objectives and related environmental concerns, and how performance will be measured and enforced.
Conservation prescriptions should be:
- Specific to particular fisheries (or complex of fisheries), recognising their special environmental circumstances and problems.
- Based on clearly defined objectives and measurable standards of performance, with appropriate provisions for information gathering, monitoring, quality controls and auditing.
- Enforceable against those who fish, with appropriate financial and other penalties.
- Adaptable, providing for specific needs such as gradual expansion of stocks or staged reduction of by-catches, and incorporating defined responses to unforeseen contingencies.
- Durable over time, so that those with fishing rights can plan and conduct their operations within a stable set of rules.
The conservation prescriptions for a fishery should thus set out the constraints within which the resources can be harvested and developed. In contrast to the present fisheries management plans, they should not be concerned with managing fishing and allocating catches, but rather with long-term conservation objectives and the standards of performance to be achieved. They should leave decisions about harvesting and stock management as much as possible to those who hold the fishing rights.
The process of designing conservation prescriptions affords an opportunity to bring to bear the full range of environmental impacts and interests at stake. Effective consultation can improve communication and understanding between public interest groups and planners, increase the information available, and improve public acceptance of the results.
However, the benefits of consultation can be realised only if the process is perceived to have a meaningful influence on the results. This calls for a systematic consultation process, to accommodate public participation, and to channel the views and advice of interest groups into the decision making. Contributions should be sought from both private groups and public bodies such as the Department of Conservation and local government whenever their interests may be affected, as suggested in the Ministry for the Environment's procedures for assessing environmental impacts.
Responsibility for preparing conservation prescriptions and organizing public participation can be assigned to the Ministry, or to a quango appointed for this purpose. Its task will be partly technical, so it will need access to technical information and professional advice, which should be accessible to other interested groups as well. But its decisions will also involve subjective assessments and compromises between commercial and non commercial values. Because the balancing of conflicting interests inevitably involves value judgements, and because the standards of performance must have legal status, the Minister should ultimately be responsible for resolving any outstanding issues, and for officially approving the final conservation prescriptions.
The complexity of conservation prescriptions is likely to vary widely. For an entirely commercial fishery like the orange roughy fishery, which presents relatively few special environmental problems and where the number of quota-holders is small and they have similar interests, the rules can be simple, specifying mainly the minimum stock size or productivity that must be maintained, and how it will be monitored. Prescriptions for other fisheries will have to deal with such diverse matters as the protection of birds and mammals, impacts on other fish species and on ocean habitats and ecosystems, in addition to conservation objectives for the stock. However, these are not novel issues in fisheries regulation.
For established fisheries, initial prescriptions might draw upon existing arrangements, but new fisheries should require at least temporary prescriptions for the exploratory phase before fishing begins. A standard reference document or manual, setting out scientific standards and techniques for testing and measuring biological relationships, would expedite the preparation of these conservation prescriptions.
Managing Fisheries: The Role of Resource Users
Within the limits of official conservation prescriptions, those who hold the rights to fish should be encouraged to manage resources and their fishing operations, taking account of all the costs and benefits of their actions. This will involve making collective decisions about fishing patterns and fishing rules, projects of enhancement, exploratory fishing and research, financing these activities, and administering their arrangements with the Government, among other things.
To enable quota-holders to engage in this kind of collective action in an orderly fashion, they should have legal authority to organise themselves. This can be provided by a simple legislative provision authorizing the quota-holders in a fishery to form an association, and (within the constraints of the conservation prescriptions) to make rules, undertake projects and levy assessments on themselves, subject to endorsement by, say, two-thirds vote based on quota holdings. This arrangement is needed to ensure that mutually beneficial programmes and projects can be undertaken with assurance of the co-operation and compliance of all participants in the fishery. It is consistent, in principle, with the provisions of the 1990 Commodity Levies Act .
The quota-holders in a fishery would then be expected to form such an association, or co-operative, to govern their activities and to manage their mutual interests. They would retain control of their association much like shareholders in an enterprise. The participating members of each association would indulge recreational as well as commercial fishing interests to the extent that they hold quota in the fishery.
"It is my view that it is timely to begin considering ways in which the users can plan to take on the mantle of managing the resource upon which they are dependent and over which they have stewardship. " Peter Talley, President ,NZ Fishing Industry Association
Fisheries associations would thus become the vehicle for management by the users. They would be in a position to design fishing regimes for the benefit of their members, alleviate resource management problems such as local depletion, and comply with conservation prescriptions about by-catches and related matters. They might find it advantageous to adopt more stringent conservation targets than those provided for in their conservation prescriptions, to build up stocks and hence their harvests, to reduce their fishing costs or to produce more valuable products.
The Government, or other body holding quota on behalf of recreationalists, could participate in the affairs of associations along with other quota holders. Some protection for minority interests may be needed in some cases. This could be provided by raising the percentage approval required for collective decisions, by appeal arrangements, or by veto rights for certain quota-holders or for government-held quota (along the lines of the so-called "Kiwi share" in some former state enterprises).
The fishing regimes designed by fisheries associations for their members would provide an important vehicle for taking account of the differing requirements of recreational and commercial fishers and for resolving conflicts between them. Agreement on arrangements such as excluding commercial activity in certain inshore areas of special recreational value, or live release of game fish caught incidentally in commercial operations, would go a long way to alleviate some of the present friction between these groups.
Exploration, Research and Enhancement
With these arrangements in place, those who hold the rights to the resources will be well placed to assume management responsibilities. In addition to organizing fishing, they will be able to sponsor research to establish the yield capacity of fish stocks, find new stocks, organise surveillance systems, and undertake enhancement for their mutual advantage, taking account of all the costs and benefits involved.
Until recently, private fishing interests have had little incentive to voluntarily invest in fisheries research, exploration and enhancement. However, the quota management system encourages such initiatives by clearly identifying those who will reap the benefits, and the change to percentage quotas has given the quota-holders all the potential, as well as the present, yield of a fishery.
Holders of commercial quota have already begun to show interest in these activities. In both the southern scallop fishery and the Chatham Islands paua fishery, the quota-holders have begun organizing enhancement projects at their own cost; orange roughy quota-holders are beginning to organize expensive exploration ventures; and current discussions may lead to management responsibilities being assumed by quota-holders in lobster and squid fisheries. If the general direction of policy development is to shift more management responsibilities onto those who hold the rights to the fish, such efforts should be encouraged.
The proposed fishery associations will stimulate this shift of management responsibilities to resource users by empowering them to act collectively. They will be able to sponsor projects on behalf of all quota-holders, or contract with a subgroup of them, or with outside parties, as they see fit. Meanwhile, the Government will be able to attend to its responsibilities in environmental protection by setting the constraints on private management and use through conservation prescriptions.
My suggestions in this chapter imply an institutional structure built on individual fisheries. This is because fisheries are the basic management units; each has its own resource base, its special conservation problems, its distinct group of quota-holders, and its unique opportunities for development. However, some mechanism, which I refer to here as a fisheries board, is needed to bring all New Zealand ' s fisheries interests together, to attend to matters of common concern.
The Government, as well as private fishing interests, would benefit from a representative body which could:
- Assist fisheries associations with expertise and support services in contributing to the preparation of conservation specifications, and help them in their dealings with the Government generally.
- Provide management services to fisheries associations, including the organization of fishing, research and exploration programmes, monitoring of fishing operations and data processing.
- Give advice to the Ministry about standard practices and quality controls, monitoring systems and other issues of policy administration, and provide a channel of continuing communication between the Ministry and fishing interests.
- Operate a quota exchange.
- (Possibly) assume responsibility for organizing and administering the needed quota registry, and catch-against-quota monitoring system.
Commercial fishing interests are now represented primarily by four nation-wide bodies; Maori, recreational fishing and environmental interests are each represented by several also. None claims the balanced representation of all fisheries interests needed for a fisheries board of this kind except possibly the Fisheries Council, which at present is confined to the role of providing advice to the Minister. While there will always be a place for special interest groups, the fisheries board would provide the forum for dealing with their common interests.
I suspect that such a fisheries board would become the primary resource centre for fisheries associations, providing the economies of scale and professional strength to efficiently organise management and development programmes. In the long-term, if experience is auspicious, it might be assigned increasing responsibilities for fisheries monitoring, data collection and enforcement.
A case can be made for confining the responsibilities of this proposed board to its operational and service delivery roles, leaving out the advisory function, so that it can organize and conduct its affairs in a consistently businesslike style. Thus some commentators advocate retaining the present Fisheries Council to provide a separate forum for fostering communication among interest groups, serving as a sounding board for the Minister, and channelling advice to the government. The logic of separating these functions is persuasive. I am also attracted by the suggestion that the Fisheries Council might be organised on a regional basis (like the present "Fishmacs") to enable them to deal with particular fisheries and assist with their conservation prescriptions. But I am reluctant to propose such arrangements before further exploration of the full range of responsibilities and the organizations to which they can be assigned. It is difficult to avoid the conclusion that there are already too many separate bodies representing each of the major fishing interest groups, which weakens their effectiveness.
To complete this discussion of institutional structures and responsibilities, I should comment further on the role of the public service in the scheme of things envisaged in the preceding pages.
"Sustained high quality fishing depends on fishery resources being maintained through scientific management and research. " NZ Recreational Fishing Council
We can assume that fisheries will continue to be of sufficient economic and political importance in New Zealand to call for a Minister responsible for fisheries. The Minister will need continuing support from a competent body of public servants. While my suggestions in this report imply assigning some of the present functions of the Ministry to resource users and others, it is important to recognise a range of responsibilities that must remain with government.
These responsibilities include:
- Providing the government with continuing, expert policy advice, and analysis of advice received from others.
- Ensuring continuity and consistency in public administration over time, and continuing communication with resource users and interest groups.
- Determining standards of scientific and administrative performance, and how they will be measured and assessed.
- Ensuring that products meet quality standards sufficient to protect public health, and are honestly labelled and represented.
- Conducting audits of commercial practices and environmental protection measures, to ensure that standards are maintained, objectives achieved, and, generally, that the public interest is protected.
- Maintaining a strong enforcement capability.
While government must accept responsibility for these activities, they need not all be carried out within the same ministry, or indeed within government itself.
The governmental role in enforcement is particularly important to the integrity of the quota management system. Some rule-making and policing can undoubtedly be undertaken by holders of quota rights; just as private organisers of commodity and stock exchanges make and enforce rules about market trading and reporting, so the proposed fisheries board could be expected to regulate quota trading. But the government must accept responsibility for ensuring that the arrangements work fairly, efficiently, and in the public interest. This will require a capability to conduct audits of the system to ensure that appropriate rules and standards are in place, and random audits of operations to ensure compliance.
Other dimensions of enforcement include protecting national interests within New Zealand 's vast 200-mile fishing zone, ensuring compliance with conservation specifications, and policing for criminal activity such as black marketing of fish. In these matters, private interests can help through co-operation and supplying information, but the ultimate enforcement capability must be provided by government. The government must also retain direct responsibility for special statutory powers needed to ensure compliance with management systems.
Research presents distinct organisational issues. I have suggested that fisheries associations will require scientific expertise, which they are likely to want to contract from private or governmental agencies. Government will also have a continuing need for research capability, though it need not all be maintained internally. I foresee an increasing need for research results that are contestable, and the Government is likely to find it advantageous to encourage competition for research contracts among governmental, private and university research organizations.
Currently, the organization of governmental research of all kinds is being reviewed, and fisheries research must ultimately fit within national research policy. But it is important to ensure that, somewhere in New Zealand , a substantial centre of fisheries research is maintained, with the scientific expertise needed to respond to the unique natural resource management problems of this region. Moreover, in contemplating possibilities for conducting fisheries research outside government, it is crucial to ensure that the core body of accumulating fisheries data and research findings is kept in a central library and in a form that is continuously available to governmental researchers, those who undertake governmental research, and others concerned with fisheries management.
Many of my suggestions in the preceding pages would require changes in legislation. Since the recently appointed task force has been assigned responsibility for designing new fisheries legislation I will not attempt to deal with it here, except to make a couple of general observations.
One is that the present fisheries legislation is fragmented; for example, marine reserves, taiapure, quota rights and aquaculture are each dealt with under separate statutes. The separation of the last two is increasingly inappropriate as the distinction between fishing and fish farming becomes blurred with developing technology. Fisheries policy would be more consistent and coherent if all fisheries related matters were pulled together in a comprehensive statute.
A second observation is that the present legislative provisions for exclusive geographical rights seem inadequate. Apart from the marine farming licenses issued for physical structures in the sea, the only arrangement of this kind is the taiapure intended to protect traditional fishing resources and sacred sites, and to ensure food for marae use. Though no taiapure have yet been approved, several applications are being prepared. They are expected to be managed by committees appointed by the Minister. However, these committees will not be able to claim exclusive rights to the resources.
Experience in other countries has shown that many fisheries, particularly those involving shellfish and sedentary species, can be best managed under leases or freeholdings which provide exclusive rights over defined areas. In the same way that such arrangements enable efficient agriculture, they can promote fish farming. Such area-based rights are also consistent with the property rights approach to resource management. Provision for leases or other forms of rights over specified areas should therefore be considered in designing new legislation.
A third observation is that the complete dependence on criminal law is out of tune with the shift in policy toward property rights, and the law needs to be redesigned to support the new approach. As a legal basis for regulating property and contractual arrangements, criminal law demands standards of proof that are too onerous, it provides penalties which are not sufficiently discriminating, and it is preoccupied with defining illegal behaviour without adequate attention to procedures for resolving conflicts.
Criminal law remains appropriate for crimes such as poaching and theft, for which severe penalties, including jail, are suitable. But problems that arise among holders of fishing rights call for administrative law, with its emphasis on processes for dealing with disputes; and offences against identifiable commercial interests are better controlled under commercial law with its more appropriate financial deterrents and punishments that fit the crimes. Thus, to bring the regulatory and enforcement system into harmony with the new management system, a better balance between criminal, administrative, and commercial law is needed.
The quota management experiment has succeeded in demonstrating a new and better approach to fisheries management, based on property rights and self-regulation. The task, now, is to build on the successful experiment; expand the quota system, improve it, and harmonize the other machinery of fisheries policy with it.
At present, the partial adoption of the quota system has left an awkward combination of the old and new management approaches. The traditional regulatory approach depends on quite different governmental powers, institutional arrangements and enforcement systems than those needed for quota management. Maintaining both approaches within the same policy framework is costly, confusing and often conflicting. In the interests of coherence, administrative efficiency and consistent treatment of competing interests, the quota management system should be extended to embrace the fisheries, and fishing groups, that it now excludes.
The quota management system has created legal property and substantial financial interests in rights to fish resources. But quota rights have been designed experimentally, and modified in response to unforeseen exigencies. Today, in the light of experience, and with clear policy objectives, there is much room for improvement in the terms and conditions of these key instruments of the quota system. Making them more secure, flexible and valuable property rights will encourage their holders to take on more responsibilities, and to prudently manage and develop the fisheries.
The quota management system has left much of the other regulatory machinery obsolete or deficient. In a fundamental way, the respective roles of government and those who hold the rights to resources need to be redefined, and policy instruments redesigned accordingly. There is now wide support for shifting management responsibilities onto resource users, and a readiness among quota holders to take on more responsibility. The quota system itself provides an effective vehicle for broadening the role of resource users. The critical task is therefore to design a framework for protecting the broader public interest in the environment and in resource conservation, within which those who hold rights to the fish can organise their fishing and resource management.
My tour of fisheries policy in this report has ignored many issues and problems, some of them pressing and important. This has been deliberate, in view of the forthcoming intensive review of the task force on fisheries legislation and my own limitations as an external observer. It has also been influenced by my strong impression that what is most needed at this juncture is a step back from the detail and the on-going aggravations to gain a broad perspective on the policy framework, its objectives, the mechanisms for achieving them, and the coherence of the whole system. In this context, opportunities for developing the new approach to fisheries management over the long term become clearer.
"The return of our property rights in fish is one thing. Developing the skill to maintain and hold them for our mokopuna is the next great challenge. "
Tipene O'Regan, Chairman, Maori Fisheries Commission
I have already explained my hesitancy to address the question of Maori claims on fish resources, though this is a matter that permeates almost all aspects of fisheries policy. As far as I can tell, my suggested changes in fisheries policy would not necessarily interfere with Maori interests, and may even provide means of making them more secure. But the implications of alternative policy arrangements for Maori entitlements calls for separate study and thorough consultation. At the outset of this report I noted that fishing nations around the world have begun to realize that traditional methods of managing fisheries are inadequate to either conserve natural resources or to protect the interests of those who use them. New Zealand has become the leader in developing a new approach. By maintaining the momentum of innovation, and building on the successful experiment in quota management, New Zealanders can continue to lead, and at the same time realize more fully the range of potential benefits of their natural resources.
A selected list of recent publications, papers and other documents relating specifically to New Zealand 's fisheries management and policy.
Peter Ackroyd, Rodney P. Hide and Basil M. H. Sharp. 1990. New Zealand 's ITQ System: Prospect for the Evolution of Sole Ownership Corporations. Report to MAF Fisheries, Wellington.86pp.
L G. Anderson. 1988. Resource Rentals and Other Issues in the New Zealand ITQ Programme. (Unpublished) 76 pp.
Harry F. Campbell. Resource Rent and Fishery Management. Paper presented at the Australian and New Zealand Southern Trawl Fisheries Conference, Melbourne. 16 pp + tables.
Ian Clark, Philip J. Major and Nina Mollett. 1989. The Development and Implementation of New Zealand 's ITQ Management System. In Rights- Based Fishing (Philip A. Neher, Ragnar Arnason and Nina Mollett, eds.). Kluwer Academic Publishers. Dordrecht , Boston and London . pp. 117-145.
Chapman, Tripp, Sheffield , Young. 1990. New Zealand Fisheries Legislation (a compendium of fisheries legislation prepared for MAF Fisheries). Wellington . 122 pp. + 23.
Department of Conservation. 1990. Draft New Zealand Coastal Policy Statement . (ISBN: 0-478-01213-6) Government of New Zealand , Wellington . 26 pp.
Rodney Hide and Peter Ackroyd. 1991. Allocation of Non-QMS Species . A report to MAF Fisheries, January 1991, 81 pp.
R.K. Linder, H. F. Campbell and G. F. Bevin. 1989. Rent Generation During the Transition to a Managed Fishery: The Case of the New Zealand ITQ System. (Unpublished) 19 pp. + tables.
Paul B. MacGillivary. 1990. Assessment of New Zealand 's Individual Transferable Quota Fisheries Management. Report No. 75, Economic and Commercial Analysis Branch, Department of Fisheries and Oceans Ottawa . 19 pp.
D. G. Maloney and P. H. Pearse.1979. Quantitative Rights as an Instrument for Regulating Commercial Fisheries. Journal of the Fisheries Research Board of Canada . 36 (July): 859-66.
Ministry of Agriculture and Fisheries. 1989. National Policy for Marine Recreational fisheries . Government of New Zealand , Wellington . 9 pp.
Ministry of Agriculture and Fisheries. 1990. Policies for Sustainable Growth in the Primary Industries. Ministerial Briefing (Vol. 2). Government of New Zealand . Wellington . 127 pp.
Ministry of Agriculture and Fisheries. Group Plan 1990-91 . Government of New Zealand , Wellington . 32 pp.
Ministry for the Environment. 1987. Environmental Protection and Enhancement Procedures (ISBN 0-477-05832-9). Government of New Zealand . Wellington . 14 pp.
NZ Recreational Fishing Council. 1991. National Recreational Fisheries Policy. Auckland . 9 pp.
Philip A. Neher, Ragnar Arnason and Nina Mollett (eds). 1989. Rights Based Fishing . Kluwer Academic Publishers. Dordrecht , Boston and London .
Parliamentary Commissioner for the Environment and the Controller and Auditor General. 1990. Marine Fisheries Management (joint report). Office of the Parliamentary Commissioner for the Environment and the Audit Office. Wellington . 44 pp.
Peter H. Pearse. 1980. Property Rights and the Regulation of Commercial Fisheries. Journal of Business Administration 11 (1 & 2). 185-209.
A.D. Scott. 1989. Evolution of Individual Transferable Quotas as a Distinct Class of Property Right. In Economics of Fishery Management in the Pacific Islands Region (H. Campbell, K. Menz and G. Waugh, eds). ACIAR Proceedings No 25. pp 51-67.
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