Fisheries Amendment Bill (No 2)

Mr Acting Chairperson, it is good to see you resident in that Chair. I am hopeful it is a signal of things to come. This side would certainly support that.

By way of introduction to Part 1, “Preliminary provisions”, it is worth outlining what the bill is about generally. Part 1 includes the purpose clause, which I believe is reasonably adequate but not perfect. I shall table an amendment to improve it and get it a lot closer to perfection than it currently is. The bill ensures a full and final settlement of historic under-recovery and over-recovery of levies collected by the Ministry of Fisheries and the Department of Conservation.

A cost-recovery regime was introduced into fishing legislation in 1994. It allowed fisheries services, such as monitoring, research, and so on and so forth, to be undertaken by the Crown, and it allowed Department of Conservation services, such as monitoring and research, to be undertaken. It also allowed the costs of that research, monitoring, and other services provided by both the Ministry of Fisheries and the Department of Conservation to be recovered by them, and to be paid by fishers in the various sectors.

The levies for research, monitoring, and other services are collected from a particular fishery such as the snapper fishery. Those services are returned to the snapper fishery. The services are not returned to individual fishers; they are returned to the fishery in question. So levies are collected from all fishers within a fishery, and the services are returned to the fishery in general, not to individual fishers. That may seem a pedantic point, but when we get into the debate as to how this money, this over-recovery, is redistributed in the industry, it becomes a very important point.

I would like to move an amendment—and I shall be putting it on the Table shortly—to the purpose clause of the bill. We note that clause 3, “Purpose”, contains three purposes. I will move that the primary purpose state—it will be No. 1—the following: “This Act acknowledges the discrepancies in conservation and fisheries services levies collected for the period 1 October 1994 to 30 September 2002.” There is a good reason for that. I know that Ian Ewen-Street will agree that although we see a negotiated agreement here, we have never seen an acknowledgment or an apology from the Ministry of Fisheries or the Minister of Fisheries, or from the Department of Conservation or the Minister of Conservation, that those levies were collected and underspent. It is alluded to, certainly, in the negotiated agreement. But I recall that back in 2002 a bill was passed that had come from the Regulations Review Committee, and that actually confirmed and validated the levies that had been collected. It made legal what appeared to be unfair and unreasonable. That particular validation bill made legal the levies that had been collected and underspent—and that should not have happened; certainly, it should not have happened year in, year out. I think it is important that clause 3, “Purpose”, acknowledges that discrepancy, because it would mean that the Ministry of Fisheries and the Department of Conservation put on the record that, yes, they did collect and underspend, and, in some cases, under-collect and overspend—I acknowledge that also.

I just put that to the Committee. I shall move an amendment to insert a new subclause (1A) in clause 3.

One of the questions that we kept raising in the Primary Production Committee was why the levies were not spent. It is clear that the ministry collected the levies legitimately. The money that was supposed to be spent by the Department of Conservation was forwarded to it, but the money was not spent on the purpose for which it was collected. Also, a lot of money was required to be spent, but was not spent, on research by the Ministry of Fisheries itself, and I have never had a satisfactory answer to the question of why that money was not spent on research. I think that is a very important question, not just for the sake of money that has been collected and not spent, but because when one thinks about the ecosystem and the need for research on the fisheries, one realises the money was there for that research to be conducted, but it was not done.

It is sad to say that the fishing industry in New Zealand is one of the most rapacious and destructive industries, in terms of its impact on natural resources in this country. They, the fishers, do not want the research to be done. What sort of message is the ministry sending to them if it says it will collect all that money so that research can be done to help the fishers to keep in balance with the ecosystem, but then says that that was not even sufficiently important to warrant spending the money in the manner in which it was designed to be spent?

The total risk the Ministry of Fisheries was subject to in relation to the collection of levies was a very considerable figure. I believe that it was in excess of $200 million. One company, Barine Developments, said all that money was being spent on levies, and it was not getting any benefit from it. Rather than simply refusing to pay its levies and being prosecuted by the ministry, Barine Developments paid its levies, but not to the ministry. It paid the levies into a trust fund, so that they were secure. The Barine Developments case did not go to court, but it was going to go to court. It was only when the Ministry of Fisheries was advised, I believe by Crown Law, that it would lose the case against Barine Developments that it settled out of court with the company. The ministry then realised that, having been open to that risk with Barine Developments, it was open to a much bigger risk with regard to the rest of the fishing industry, and this legislation was mooted so that that loophole, or that possibility, would be closed off.

I think that the ministry really has some soul-searching to do on this issue. [Interruption] It does need to do some soul-searching. Why did it collect that money, but not spend it in the way in which it was supposed to have been spent? We do need more research. The ministry says that it will bring a particular species into the quota management system, as if that were an end in itself. It is not an end in itself. The quota management system is certainly a step in the right direction, but it is not the end of the journey. Just putting a species into the quota management system does not solve the problems. We have in the quota management system a process that, in effect, gives property rights to individuals. We are talking about very valuable assets that can be passed on to other people—bought and sold, and traded. The quota management system vests ownership in a small number of people; rights to quota are valuable things to have. But the quota management system is not the solution to the problems of the industry, and we do need research to be done on the species. I was amazed to learn, a couple of years ago, that at the time there were 32 species of fish in the quota management system and the ministry had confessed that it knew the life cycles in some detail of seven of those species. Yet the ministry believes that simply putting species into private ownership under the quota management system will in some way resolve all the problems of those species. That is not the way to go.

In the next part of this debate I want to address the issue of the rebate of levies to small fishers, but I will leave that until a later moment.

I want to make a contribution on Part 1, in support of my colleague Phil Heatley and the wise words he has spoken, and also to make some complementary remarks to those of Ian Ewen-Street about the sorry state of both the Department of Conservation and the Ministry of Fisheries in respect of the history associated with these provisions. It is a pretty sad state of affairs when money is collected from private individuals for a particular stated purpose, and then it is found out that it has not been used for that. It is an indictment on both the Department of Conservation and the Ministry of Fisheries that this bill is even needed, let alone that it contains some provisions that will result in substantial compensation being paid out to the fishing industry. When I look at the schedules I note that those who hold quota for yellow-eyed mullet will receive a full dollar of compensation, to share amongst themselves—I hope they do not spend it all at once—but that is not to belittle some of the larger sums that are involved in some parts of the fisheries, in terms of the compensation arising from the sorry history of this matter.

There are a couple of quite specific points that I want to make in respect of the Department of Conservation. Specific agreements were met in respect of the conservation service’s levies. They were quite specifically for a purpose. I remember well that at the time the fishing industry expressed concern that the Department of Conservation did not have the programmes in place, nor the researchers in place, to use that expenditure for the intended purpose. The Department of Conservation, hand on heart, said we should trust it. Members in both the previous National Government and the Labour Government did trust the department, but it was not worthy of that trust. It breached that agreement. The department made Ministers and, more important, made officials look stupid, and that is a lesson that must be learnt. I am concerned that there is still a culture in agencies like the Department of Conservation and the Ministry of Fisheries whereby if someone else is doing the paying, not enough careful thought is given either to the quality of the programmes or to the expense levied on an industry. If we look today at the state of the fishing industry, we see it is in a pretty difficult position. I hope some lessons have been learnt from this bill.

I think there needs to be a far greater degree of scrutiny by this Parliament of the Department of Conservation and the Ministry of Fisheries. It is something of a disgrace that the levies system was going wrong from as early as 1994, but as has been pointed out by Ian Ewen-Street, that did not come through until 2002. That says that this Parliament must bear some responsibility for not providing the level of scrutiny, alongside agencies like Audit New Zealand that we rely on for advice, to ensure that the moneys were used for the purposes for which they were intended.

So we have ended up with this bill, a pragmatic bill that in Part 1 sets up the framework for the agreement that was struck to resolve this issue. National supports the core of that, as a pragmatic way out of the hole, but is still concerned about the culture that remains within the Department of Conservation and the Ministry of Fisheries. We are not yet satisfied that those agencies have clearly in their minds the responsibilities that go with imposing such levies. When I look at the raft of extra taxes and levies that have been introduced under this Government at a whim, I do not have very much confidence that things will improve in future. We need to be vigilant in making sure that money taken for the purpose of important research is spent exactly in those areas. I think we have a challenge to ensure that the reporting standard from both the Department of Conservation and the Ministry of Fisheries is tightened up, so that those who do the paying receive a lot more feedback on the quality of the research that is undertaken.

Finally, I say that if money is to be taken compulsorily in this way, it relies on trust. This bill is about that trust being broken. Neither the Department of Conservation nor the Ministry of Fisheries should be under any doubt that parliamentarians want to see a greater degree of scrutiny around these issues in future.

I would like to begin by conveying my thanks and the thanks of the ministry to the Primary Production Committee for the very positive and productive way in which it addressed this vexed issue. I thank Mr David Carter for his stewardship of that process, and equally thank my colleague Janet Mackey, who is the deputy chair of that committee.

I would like to comment on the comments Mr Heatley made earlier. I am a little surprised that I have no reports of those concerns being raised as part of the select committee process. They were not referred to, from my rereading of the commentary, so I am surprised that the amendments he is proposing this evening have not been previously canvassed. He will be able to enlighten us about the reasons for that.

I would like also to refer members who have not yet taken the trouble to look at the purpose clause. I think one of the key issues around this resolution, and I know it will be reinforced by the select committee chair, is that what we have in front of us as a Parliament is a negotiated settlement between the ministry and the industry. I think that will affect our decisions on such issues as those Mr Ewen-Street alluded to earlier. Although I will not traverse the issues on which I understand Mr Ewen-Street will raise some amendments, I have to say that I do not think it is helpful, now or in the future, to refer to such an important industry as the seafood industry as being rapacious or destructive. I think the relationships that are being forged with the industry, with the ministry, and with the non-governmental organisations and environmental groups in this area are to be encouraged, and should not be undercut or damaged by that sort of extravagant statement.

I want to say at the outset that New Zealand First will not be supporting the amendment proposed by the National Party, through Phil Heatley, because the bill’s whole purpose concerns a negotiated settlement. What more can be said than to say that this bill is about redressing a situation that needs to be fixed. That says it all. We do not need an amendment that humbles somebody, or takes somebody down, to make that point. That is what this bill is about. It is about fixing up the unders and overs.

This industry is still in the reasonably early years of a quota management regime. One must remember, going back just a few years, that the industry was fighting against paying anybody any levies for anything—industry-good, or not. It was an industry that believed. I am not blaming it for that; I am saying that it was an industry where people could get larger and larger vessels, go out, find a fishery and virtually capture it, and do their business. There was no limit on what they caught, apart from their own good judgment. There were no levies to be paid, except income taxation, in the normal course of events.

From the previous speaker’s comments, one would assume that Government departments just went out there and did precisely as they wanted. Those departments had Ministers at their head, from both the National Party and the Labour Party as they took their turns to be Government, so it is not as though those departments did not have an overview from the very people who are criticising them in this debate. The ministry put in place a regime that was to collect levies for the greater good of the fishery, and to ensure that a quota management system was implemented in the correct way.

No one is saying they did not take too much. This bill is designed to cure the over and unders situation and to put matters right—to pay back to those in the industry from whom too much was taken. That is what the bill is about. We agree with that and we support the bill, unlike some others, because we want to see that matter put right. However, to go off on some tangent and say this should not be happening, or to say there were some nefarious means or terrible actions taken, is simply to deny the fact of the basis on which those levies were made in the early days. I can assure the Committee that fisher people of the day—and, again, I do not blame them—were not going out there saying: “Look, I will tell you how many fish I caught so that you can have an accurate levy.” or “I will tell you how much I took from the sea last year so you can have an accurate levy.” That could not be established. We had to have some guesswork—and when I say “we” I am talking about the Government of the day, of which I was not part—

💬 Hon David Carter: The royal “we”.

R DOUG WOOLERTON: —the royal “we”—so the levy was too high.

This bill addresses that matter. New Zealand First agrees with this bill. I am somewhat amazed at some of the flim-flam coming from my colleagues, who did mention this issue in the select committee, it is true, but it did not make it into the commentary because it is a nonsense.

It is not very often I agree with the Minister in the chair, David Benson-Pope, but he does make a point that the purpose of this bill is to implement a negotiated settlement, reached between the Crown and the commercial seafood industry, in respect of the under-recovery and over-recovery of costs of the fishery services and conservation services relating to the period 1 October 1994 to September 2002.

It is fair to say that there was a large degree of unanimity within the select committee, except on one particular issue relating to those who did not pay their levies. Even though the courts have said it was illegal, or the obligation by the Department of Conservation, and, indeed, the ministry, did not occur, these fishers are still required to front with these levies.

It is an indictment on the Department of Conservation and on the ministry that they did not perform their side of the contract. If the fishing industry is paying a levy, then it seems to me that that is a contract of obligation on the part of the Department of Conservation and the ministry to fulfil. That certainly did not happen, yet there is no full explanation as to why it did not happen. The Government departments, of course, are totally avaricious, in terms of revenue gathering. They are not really concerned how much they gather, as long as they get it. Then they realised that this has had a very deleterious impact on many in the fishing industry, some of whom, no doubt, have had to find serious sums of money to pay these levies—possibly mortgage their houses—and others did not pay them. This is where the anomalies start to arise.

It is entirely pertinent and prudent for the ministry to negotiate a settlement with the seafood industry. One of the problems that has occurred is that there have been accusations that the smaller players in the fishing industry, who have since left, and who have paid all these levies for research have totally lost any benefits, and the benefits that remain of this $24-odd million will go to the major players within the industry. I certainly have some real sympathy for that particular point of view, yet to take the situation forward, as it has to be, it is reasonable that we should support this negotiated settlement between the representatives of the fishing industry and the Crown to ensure that there is some way forward.

However, it is worth reflecting on the fact that so often with Government departments we do not get any benchmarking. We do not get the indicators flowing back to show that the benefits are accruing, and that we are getting some performance from Government departments. So here we are, some time later, yet again tidying up the mess of the bureaucracy. There is no other way of putting it. It is a mess. It is not so long ago that we finished the scampi inquiry, which was also something of a mess. I say to the Minister in the chair that he has his work cut out to ensure that this ministry and this industry gain the credibility that they should have.

The fishing industry has enormous potential to sustain a very, very worthwhile income for this country, and, indeed, for itself, but it needs to ensure that the structures it has in place are workable, that they are benchmarked, that when anomalies arise they are sorted out promptly, and that the public can have confidence in the system and in the ministry.

As I stand to debate this bill I say that one thing is an absolute mystery. The mystery is this: how did the industry get to a point where there were such overs and unders with the collection of these levies that we are now in a position of having to do such a massive tidy-up? The unders and overs with the levies that have been collected were supposed to go to the Department of Conservation and the Ministry of Fisheries to undertake research. In situations where the research has not been carried out this is very difficult to understand because, from working within the scientific community, one thing is very clear. Scientists up and down the country are struggling to get funding for their various research projects. They are keen to get more research undertaken. So when some money has been collected for the express purpose of carrying out research, it seems an absolute scandal that the money has not been apportioned to that particular area. I think there will be a number of scientists who shake their heads, wondering why this money was not spent and is now being redistributed to the fishery.

I commend the work of my colleagues Phil Heatley and David Carter on the Primary Production Committee, because I know that they have worked extremely hard to bring up issues relevant to the industry, but also to point out some of the holes that were apparent when the first bill came before them. When one looks at some of the fisheries and the huge amount of money to be redistributed, we are not talking about small change, but large dollars. The payment to the hoki fishery is $2.3 million, and that in itself could have funded very significant research into that particular area. I look at some other fish, such as the swordfish, the Arrow squid, snapper, orange roughy, or even the big-eyed tuna, at $791,000. That amount, in itself, could have funded significant research that could have gone some way towards better things for those involved in the industry. We do support the idea that the funding is being returned to the fishery, and not to individual fishermen within the fishery. I think we have seen this as a system that has been used in other aspects of our agricultural industries, as well.

The whole point, though, is not to overspend and undercollect, or to overcollect and underspend. Hopefully, by efficient management of the collection of levies, in more cases than not one would hope that the amount has been equally spent and allocated towards projects that needed to be done. It is a shame that we are having to hand money back because, as many of us know, getting money in the first place so that people can undertake scientific research is often very difficult. Research, in itself, is not easy to champion within some sectors and, particularly since the hard work had been done and the levy had been extracted, it is a shame that it had not been put to good work for the betterment of the industry.

This is an omnibus bill. It is a fisheries amendment bill that oversees most of the different fish within the industry. The bill itself is a quite small but technical bill. As Phil Heatley has explained, it attempts to tidy up some of the problems that have occurred for some time now, in terms of not only the overcollection of levies in certain cases, but, more important, the undercollection of levies in other cases. So this is a common-sense approach to dealing with what is quite a complex issue. I do find it interesting to read the Greens’ report and some of the concerns that they have raised. Their concern is that the funding is not being returned to individual fishers. It seems interesting that those members take issue with funding being returned to individual fishers, when they do not do so with the tax system.

I will start my contribution to Part 1 of the Fisheries Amendment Bill (No 2) by taking this opportunity to congratulate the Minister. Earlier this evening the Minister made his maiden ministerial contribution to fisheries legislation in the Committee of the whole House. Now that he has made his contribution for the first time—we noted that he did not bother to stand through the earlier fisheries legislation this afternoon—I have a very important question for him to answer as to whether he has confidence that, once this legislation is passed, both Ministry of Fisheries officials and Department of Conservation officials will manage to set levies correctly into the future.

Here we are again, passing fisheries legislation—and I tell the Minister that I have forgotten the number of occasions on which I have been involved in discussing fisheries legislation in this House—because the original Act has not been operated as envisioned by Parliament. So I take this opportunity of asking the Minister to please take a call at the end of my contribution and take the opportunity to assure this Committee and, more important, the industry that he has absolute confidence in the officials who will set the levies. I want to know from the Minister that we will not be back in 3 or 4 years’ time contemplating another fisheries amendment bill that establishes that levies were not collected correctly. In this case, there is a negotiated settlement by industry members and by officials from the Ministry of Fisheries and the Department of Conservation.

In hindsight, one of my regrets as we discuss this legislation is that many fishers wrote to members of Parliament through the 1990s and earlier, saying they did not feel there was fairness in the levy-setting process. Those people complained bitterly that levies were set at a level that would drive fishers out of business, and in many cases those fishers were driven out of business. I will not be so bold as to say that was entirely because of the levies set, but clearly the levies were set at a level that was too high. I think that, as members of Parliament, and as my colleague Nick Smith referred to, we had faith in the officials who established the levies, because the correspondence would have gone to them for assistance with answering. We probably in many cases sent letters back to those fishers, saying: “No, we think the levies are fair and reasonable.”

Now here we are, some years later, having to agree to a settlement process negotiated by officials and by industry representatives, which acknowledges that the levies were not correctly set and that hardship has been incurred by a lot of fishers. In my mind, the most important words in the commentary are in a very brief paragraph stating that the select committee accepts “that the Fisheries Act 1996 was not implemented as contemplated by Parliament in relation to cost recovery.” That is the essence of this legislation. Parliament passed that Act back in 1996, and we had every right to express confidence then that bureaucracy would have the means and the will to establish levies that were fair and reasonable. Yet here we are, 8 years on, acknowledging in Parliament tonight that that did not occur.

I congratulate the industry and I congratulate the lead officials on at least presenting us with a mature response that has been negotiated and that is a means by which the industry can move forward. That is at least something, because time and time again in this industry we have seen a less mature response that has involved solicitors, barristers, and many thousands—in fact millions—of dollars being involved in the court system. So at least, on this occasion, there is a response that in my mind is more pragmatic. But I still think the Minister should take this opportunity to assure me as a member of the Opposition that he has confidence we will not see this sort of problem having to be rectified in another 8 years’ time.

The question was put that the following amendment in the name of Phil Heatley to clause 3 be agreed to:

to insert, before subclause (1), the following new subclause (1A):

(1A) This Act acknowledges the discrepancies in conservation and fisheries services levies collected for the period 1 October 1994 to 30 September 2002.