Legislative Council: 26 August 2005 Part 1

LEGISLATIVE COUNCIL FRIDAY, 26 AUGUST 2005

 

(Part 1: The Fisheries Conservation and Management Bill 2005 and Explanation)

 

Commentary by J. Brock (FINN)

 

A special meeting of Legislative Council took place in the Court and Council Chamber of the Town Hall at 1030 on Friday, 26 August 2005.  Reverend Kathy Biles, Associate Minister at Christ Church Cathedral lead the prayers.

 

The Speaker, the Hon. Tim Blake, called the meeting to order and the first item of business was to confirm the record of the last Leg-co meeting held on the 24^th and 25th of May 2005.  The Speaker signed the record as a true record of the meeting.

 

Papers were then laid on the table by the Hon. Chief Executive.  They were copies of Subsidiary legislation published in the Falkland Islands Gazette since the last sitting of Legislative Council and laid on the table pursuant to Section 34.1 of the Interpretation and General Clauses Ordinance 1977.

 

Currency No. 3 Order 2005,

Coins No. 4 Order 2005,

Electoral Amendment Ordinance 2005, Correction Order 2005

 

The Fisheries Conservation and Management Bill was then debated.  The Bill had been published in the Gazette and did not require a first reading.

 

The Chief Executive Mr. Chris Simpkins (CS):

 

Mr. Speaker, Honourable members, I rise to move the second reading of the Fisheries Conservation and Management Bill 2005. 

 

In terms of potential impact on the future economic vitality of the Falkland Islands, and certainly the management of the fisheries, this Bill represents perhaps the most important single legislative provision that has been brought before this House for many years. 

 

The Bill represents the first major reform and re-statement of law relating to fisheries resources and fisheries management since 1896, when the Fisheries Conservation and Management 1986 was introduced.  It was introduced to coincide with the introduction of the Falkland Islands Interim Conservation and Management Zone.  There have been significant developments in fisheries in the Falkland Islands in the intervening nineteen years, as well as a range of developments in the international level in that period.  This Bill provides for updating the law to reflect these developments and, if passed, will stimulate the modernisation of the fisheries industry and the promotion of economic growth.

 

A major review of the fisheries policy was undertaken during 2002.  It was a far-reaching review, which addressed fisheries policy, marine farming and port development.  Whilst the fisheries policy focused on fisheries resource allocation issues, it also reviewed the mechanics of resource allocation together with other areas where the private sector interacts with the Falkland Islands Government as a regulatory authority.

 

The key outcome was the proposal to change from the current system of relatively short-term licences to introducing a system based on transfer or property rights in order to give fishing companies a long-term interest in the management and development of the fishery as a sustainable resource. 

 

The Fisheries Policy Review provided numerous opportunities for comment by the fishing industry and the public.  The process began with a discussion with the fishing industry early in 2002 in order to gage the direction which the Review should take.  A Policy Review Group, including representatives from the Fisheries Sector was established and a discussion document incorporating recommendations on future policy was prepared and published for public and industry comment midway through 2002. 

 

The results of the consultation process were taken into account and policy recommendations were examined by Executive Council during a series of meetings between March and October 2003.  Since then Executive Council has continued to oversee the preparation of this Fisheries Conservation and Management Bill, which incorporates all the policy proposals approved by Executive Council. 

 

The most significant outcome of the policy review was the recommendation to introduce property rights in the fishery.  The Falkland Islands has successfully met many challenges in the management and development of its fisheries resources over the last 20 years.  In order to meet a new generation of challenges, the current licensing system, which is based on the allocation on non-transferable variable duration licences to individual vessels is to be replaced by a system of long-term individual transferable rights owned by Falkland Islanders.

 

The anticipated gain is the enhanced economic performance of the sector because fishing businesses will have increased security and flexibility, which will encourage diversification from a simple harvesting process into value-added activities.  Increased international competitiveness will also be achieved and poorly performing companies will be able to sell rights to better performing companies, should they so wish.

 

Mr. Speaker, implementing a rights based regime in a relatively small maritime state is challenging.  Small markets for rights, a desire to maintain local control of fishing rights and a dependence on foreign investments in the fisheries sector are key considerations in the design of an effective and efficient management regime.  Additional considerations include the trade-off between the economic efficiency gains derived from output control fisheries and the relative administrative simplicity of input control fisheries.  Under the proposed rights based system, monitoring of economic performance, including the value of rights, trade and rents agreed, will be key performance indicators alongside traditional biological measures of management performance.

 

Falkland Islands’ expectations of the new regime are based on international experience with rights-based systems over the last 30 years.  These expectations help establish the basis or benchmarks against which the performance of a system can be judged. 

 

First, overall performance of a sector is expected to be enhanced because fishing businesses have increased security of access to the resource and flexibility in the way they decide to structure activities to take advantage of the business opportunities.

 

Second, diversification should occur in the industry as companies look to investing value-added activities, such as processing and marketing.

 

Third, it is expected that seafood companies would invest more in research and development because long-term rights mean that they will benefit from their investment and where those investments have longer (sounds like: tied on) periods.

 

Fourth, and as I have said, international competitiveness should also be increased as poorly performing companies sell rights to better performing companies.  No longer will they be forced to stay in a fishery, unable to exit without losing everything.

 

Finally, and as the profitability of the domestic seafood sector increases, Government income from personal incorporation tax and resource rents should increase.  Unusually, a win - win economic environment is created.

 

Fisheries in the Falkland Islands have traditionally been managed using effort limitation.  This bill has been framed with the flexibility to allow fisheries to be declared either in terms of total allowable effort, as now, or total allowable catch.  In the first instance, fisheries will continue to be managed using effort controls.  The terminology of individual transferable quota systems will be used and, whilst elsewhere these usually refer to catch, in the Falkland Islands, the quota will refer to a unit of fishing effort.

 

Companies awarded property rights or quota in a particular fishery will be awarded a proportion of the total allowable effort declared for that fishery.  In due course, total allowable catch could be used particularly for the longer lived species.

 

Property rights may also be allocated either as individual transferable quota or provisional quota.  The nature of the fisheries will determine which type of right is used.  This will be assessed, taking into account the levels of biological exploitation and the levels of local investment in each fishery.  Both individual transferable quota and provisional quota generate an annual or seasonal catch entitlement at the start of each season or year.

 

Catch entitlements accommodate the joint venture arrangements, which currently abide in some of the fisheries but also serve to create a more robust market for trading rights.  Catch entitlements are tradable but expire at the end of a fishing season or fishing year.   Catch entitlements, rather than individual transferable quota, or as now the fishing licence, become the day to day currency of the rights based regime.  Fishing vessels will still be required to have a fishing licence.  The fishing licence is retained in the new management system to regulate fishing activity with respect to gear types and sizes and mitigation measures to limit the impact of fishing on dependent and associated fish stocks, on Marine Mammals, Seabirds and the Marine Environment.   Conservation and sustainability of the fishery remain key.

 

Unlike individual transferable quota, joint venture companies can own catch entitlements even if Falkland Islands status holders have a minority share holding.  The threshold for local ownership may be set at different levels in different fisheries.  This allows existing joint ventures to continue with minimal disruption and leave the security of short-term access to fisheries to foreign investors.  It is also expected that local companies will be more willing to trade short-duration catch entitlements rather than individual transferable quota because this trade does not affect the company’s long-term access to the fishery.

 

In time the catch entitlement mechanism should see a faster rationalisation of the fishing fleet and effort than would otherwise have been the case if individual transferable quotas alone were to be implemented.

 

The Fisheries Ordinance has always covered main-stream fisheries management and conservation.  In the current system, the issue of priority in licence applications and long-term licences has been a matter of policy rather than legislation.

 

This Bill incorporates the issue of access to resource into the main instruments of fisheries legislation.  There are still issues, which will be the subject of policy decisions but the process is set out much more tightly in this Bill.

 

The proposed property rights system entails significant change in the operating environment for the private sector.  There are also significant changes in the administration of the fishery, particularly in relation to the process of creating, awarding and administering property rights. 

 

The new system does not alter the Falkland Islands Government’s powers to manage the fishery to achieve conservation targets.  If anything, these provisions are strengthened.  Similarly, the new system does not alter the Government’s ability to raise revenue from the fishery.  Fees for individual transferable quota and provisional quota can be levied in much the same way as licence fees are currently levied. 

 

Property rights are not necessarily a panacea for fisheries development.  Current Fisheries Policy, or what might more appropriately be described as Licence Allocation Policy has served well.  However, current policy has run its course and is in need of major revision and development.  Whilst a range of options were available for policy development, the property rights route was selected as the most appropriate.

 

The Bill before the House makes provisions for international co-operation in relation to information exchange and combating illegal, unregulated and unreported fishing activity.

 

The Bill formalises existing procedures whereby any vessel fishery blacklisted by CCAMLR or other regional fisheries management organisations would not be authorised to fish in Falkland waters.  Information including evidentiary material could be exchanged with other countries in support of the objectives of the agreement to promote compliance with International conservation and management measures by fishing vessels on the high seas and the agreement for the implementation of the provisions of the United Nations Conventions on the Law of the Sea, relating to the conservation of straddling fish stocks and highly migratory fish stocks.

 

Part 5 of the Bill provides for the establishment of a disputes commission.  The purpose of the disputes commission is to review and adjudicate on certain matters, which may be referred to the commission.  It provides a dispute resolution mechanism, which can focus of fisheries issues and deal with them in an expeditious manner.

 

It is expected that the introduction of property rights will see to greater engagement between the Government and Industry on some fisheries management issues.  Experience elsewhere suggests that strong and dynamic industry associations are likely to develop.  The Bill provides for the establishment of a Falkland Islands fishing companies association.  Additionally, provision is made for the application of a levy, which may, in turn, fund the activities of the association.

 

The provisions in relation to enforcement and penalties are substantially overhauled.  The Bill proposes that the powers of fisheries officers in relation to offending vessels should be extended.  The circumstances in which the Courts may order a forfeiture of a fishing vessel upon conviction for certain offences are also extended. 

 

The Bill introduces a requirement that any overseas person in charge of a fishing vessel in Falkland Waters must be in possession of an Overseas Master Fishing Licence.  The licence may be revoked if the holder is convicted of an offence under the ordinance or if the holder has been convicted of any offence involving violence towards or maltreatment of any member of a crew of a fishing vessel, of which he was, at the time, an officer.

 

The Bill also provides that, in these circumstances a person may be prohibited from holding an Overseas Master Fishing Licence for a period of up to five years, with a prohibition being published in the Gazette.

 

Finally, the Bill requires Executive Council to review the operation and success of the fisheries policy at least every 12 months.  Executive Council will be required to examine whether objectives are being achieved in relation to the property utilisation, conservation and management of fisheries resources and associated issues in order to consider whether policies in relation to fisheries resources and fisheries management control and conservation should be changed.

 

Mr. Speaker, Honourable Members, some three years have passed since the review of fisheries policy began.  That alone indicates the process has not been rushed.  On the contrary, consultation with all relevant interested parties has been extensive.  An enormous amount of effort and time and energy has been invested in the process, which results in the Bill before the House today.

 

And, I would, in particular, wish to pay tribute to the Hon. Cllr. Cockwell, the Attorney General, the Director of Fisheries and the former Economic Advisor, not least for their stamina throughout the process.

 

I beg to move the second reading of the Fisheries Conservation and Management Bill 2005.  And, the Attorney General will respond to any particular legal points requiring explanation.

 

In part two of this transcript Councillors spoke to the Bill.

 

(100X Transcription and Monitoring Service)

 

 

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