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Paua (PAU) 6 Fishery

Paua (PAU) 6 Fishery – Review of the Eighth Schedule Minimum annual holdings of Annual Catch Entitlement

Executive Summary

  1. The Ministry of Fisheries (MFish) recommends amending the Eighth Schedule of the Fisheries Act 1996 (the Act) to reduce the minimum holding of annual catch entitlement (ACE) for the PAU 6 fishery.1
  2. The Crown plans to tender its quota shares in the PAU 6 fishery in early 2007. PAU 6 is a small (1 tonne TACC) fishery. Existing quota aggregation and minimum ACE holding rules will severely impede quota share owners’ ability to utilise the ACE generated from PAU 6 quota shares.
  3. A quota aggregation limit and a minimum ACE holding both apply to paua stocks. The quota aggregation limit restricts anyone from owning more than 20 000 000 quota shares (or 20 per cent of the TACC) in any paua fishery2. The minimum ACE holding prevents fishers from harvesting any paua fishery unless they hold at least 1 tonne of ACE in the fishery.
  4. Given the quota aggregation limit, there will be multiple quota share owners in PAU 6. But because the minimum ACE holding is the same as the current TACC, all quota share owners would need to agree to sell all their ACE to the same fisher in order to utilise the fishery.
  5. Reducing the minimum ACE holding for PAU 6 in the Eighth Schedule would improve the ability of quota share owners to manage the use of their ACE by reducing the proportion of quota share owners having to cooperate in order to utilise the fishery. Improving the ability of quota share owners to manage the use of their ACE is consistent with MFish’s overall fisheries outcome, which is: “The value New Zealanders’ obtain from the sustainable use of fisheries resources and protection of the aquatic environment is maximised”.
  6. Reducing the minimum ACE holding will have negligible impacts on non-commercial users. Sustainability of the PAU 6 fishery will not be affected as the TACC will remain unchanged.

Summary of Options

  1. Existing rules applying to PAU 6 will impede the ability of PAU 6 quota share owners’ to utilise the ACE generated from their quota shares. This paper considers the following management options for the PAU 6 fishery:
    1. Option 1 – Retain the minimum ACE holding at 1 tonne (status quo);
      or
    2. Option 2 – Reduce the minimum ACE holding to 200 kilograms;
      or
    3. Option 3 – Reduce the minimum ACE holding to 100 kilograms.
  2. This paper does not consider increasing the TACC for PAU 6. MFish has no new information on which to base an increase to the TACC.
  3. Increasing the quota aggregation limit under s 59 of the Act is also not considered. Increasing the quota aggregation limit requires a legislative amendment which is outside the scope of this review process.

Rationale for Management Intervention

  1. Section 8(1) states the purpose of the Act “is to provide for the utilisation of fisheries resources while ensuring sustainability”. Utilisation of ACE generated from PAU 6 quota shares is impeded by existing rules applying to the fishery.
  2. MFish plans to tender the Crown’s 90 000 000 PAU 6 quota shares in the early 2007 Crown-held quota tender round (Te Ohu Kaimoana Trustee Ltd (TOKM) owns the remaining 10 000 000 quota shares). The tender round will be in advance of the 200708 fishing year (starting 1 October 2007)3. Section 59(1)(c) of the Act provides for a quota aggregation limit. It restricts anyone from owning more than 20 000 000 quota shares (20 per cent of the TACC) for paua in any one quota management area, unless they have been granted consent by the Minister under s 60 to own quota shares in excess of the quota aggregation limit. The intent of quota aggregation limits is to try to prevent the unacceptable trade practices or lack of a competitive market that can arise from a concentration of rights.
  3. The PAU 6 fishery is listed in the Eighth Schedule of the Act, which prescribes a minimum ACE holding of 1 tonne. Section 74 of the Act states that “no commercial fisher may take any stock listed in the Eighth Schedule unless the fisher holds, at the time of the taking, the minimum amount of annual catch entitlement” that is specified for that stock.
  4. Minimum ACE holdings were put in place to limit the number of small fishers in a fishery, who may otherwise have caused high administration and compliance costs relative to the size of their quota holding. Minimum ACE holdings were applied to paua fisheries because they are highly valued, single species fisheries that are vulnerable to theft.
  5. Unlike other fisheries where aggregation limits and minimum ACE holdings apply, the PAU 6 fishery is very small - the current TACC is 1 tonne. When applied to the 1 tonne PAU 6 TACC, the quota aggregation limit and minimum ACE holding act to severely impede the ability of quota share owners to utilise the ACE generated from their quota shares. This is because:
    • The maximum quota shares any single person can own is 20 000 000;
    • 20 000 000 quota shares generates 200 kilograms of ACE under the current TACC; and
    • he minimum amount of ACE a fisher must hold at the time of fishing in PAU 6 is 1 tonne.
  6. Therefore, the only way PAU 6 quota share owners can fish the PAU 6 fishery is if they all sell their ACE to the same fisher, thus enabling that fisher to achieve the 1 tonne minimum ACE holding. If quota share owners fail to agree to sell their ACE to the same fisher, the PAU 6 commercial fishery cannot be harvested, and quota share owners cannot realise any value from their quota shares.

Assessment of Management Options

Option 1: Retaining the minimum ACE holding at 1 tonne

  1. PAU 6 quota share owners can utilise the ACE generated from their quota shares if the minimum ACE holding in the Eighth Schedule is retained at 1 tonne (status quo). However, to utilise the ACE all quota share owners (including existing share owner, TOKM) will need to agree to sell all their ACE to the same fisher, as the minimum ACE holding is the same as the current TACC, and the maximum amount of quota shares one person can own only translates to 200 kilograms of ACE. This severely impedes the ability of quota share owners to manage the use of their ACE and makes each quota share owner reliant on the decisions of all other quota share owners.
  2. Whilst the TACC for PAU 6 may be reviewed in the future, a TACC adjustment is unlikely to be significant enough in the short to mid term, to improve the ability of quota share owners to use their ACE without recourse to other quota share owners, as PAU 6 is a small fishery. Furthermore, should the commercial fishery go unharvested because quota share owners fail to agree to sell their ACE to the same fisher, it is unlikely MFish will obtain good information that might inform a future TACC review.
  3. Retaining the minimum ACE holding of 1 tonne assures low administration and compliance costs, as under Option 1 there can only be one fisher.
  4. Option 1, and indeed all the options, would not affect sustainability of the fishery as no change to the TACC is proposed. All options also have negligible impact on non-commercial users of the PAU 6 fishery.

Option 2: Reducing the minimum ACE holding to 200 kg

  1. Reducing the minimum ACE holding to 200 kilograms would improve the ability of PAU 6 quota share owners to manage the use of their ACE. For example, those who own the maximum amount of quota shares allowable would be able to fish or sell their ACE without recourse to other quota share owners under the current TACC. However, any future reduction to the TACC would hinder this ability.
  2. If a person purchases less than the maximum amount of quota shares allowable, or the TACC is reduced, they would still have to come to an agreement with other quota share owners to sell their ACE to the same fisher. This impedes the ability of such quota share owners to manage the use of their ACE. MFish notes a 200 kilogram minimum ACE holding would still prevent existing quota share owner TOKM from utilising the ACE generated from its quota shares, unless they are able to reach agreement with other quota share owners to sell their ACE to the same fisher.
  3. Option 2 improves the ability of PAU 6 quota share owners to manage the use of their ACE by reducing the proportion of quota share owners that would have to cooperate to utilise the fishery. Consequently, there would be more opportunities for the PAU 6 fishery to be harvested.
  4. A minimum ACE holding of 200 kilograms maintains the integrity of the minimum ACE holdings framework by limiting the number of fishers in PAU 6. Under Option 2 there would be a maximum of five fishers, so administration and compliance costs would be low, although potentially higher than for Option 1.

Option 3: Reducing the minimum ACE holding to 100 kg

  1. Of the three options presented, reducing the minimum ACE holding to 100 kilograms provides the greatest ability for PAU 6 quota share owners to manage the use of their ACE whilst still maintaining the integrity of the minimum ACE holding framework.
  2. People who purchase less than the maximum amount of quota shares allowable (but more than 10 000 000) would be able to fish or sell their ACE without recourse to other quota share owners under the current TACC. Only a reduction of 50 per cent or more to the current TACC would reduce this flexibility to the same level as provided by Option 2.
  3. A person purchasing less than 10 000 000 quota shares, would still have to come to an agreement with other quota share owners to sell their ACE to the same fisher. MFish notes a 100 kilogram minimum ACE holding would allow TOKM to manage the use of its ACE without recourse to other quota share owners.
  4. Option 3 improves the ability of PAU 6 quota share owners to manage the use of their ACE by further reducing the proportion of quota share owners that would have to cooperate to utilise the fishery. Consequently, there would be more opportunities for the PAU 6 fishery to be harvested.
  5. A minimum ACE holding of 100 kilograms maintains the intent of the minimum ACE holdings framework by limiting the number of fishers in PAU 6. Under Option 3 there would be a maximum of ten fishers, so administration and compliance costs would be low, although potentially higher than for Options1 and 2. MFish notes that there are more than ten fishers in most other paua quota management areas.

Other Management Issues

  1. A number of commercial stakeholders have expressed a desire to amalgamate two quota management areas (PAU 7 and PAU 5A) with PAU 6. Any proposal of this sort would need the approval of the Minister, and, if such an amalgamation were to occur, an appropriate harvest level would need to be set to reflect the abundance of paua within the newly amalgamated area. None of the management options would affect these amalgamations, should they occur.

Statutory Considerations

  1. Section 8: None of the management options affect the sustainability of the PAU 6 fishery as no change to the TACC is being proposed. Utilisation of the fishery would be best provided for by Option 3 and the least provided for by Option 1, as the lower the minimum ACE holding, the greater the ability PAU 6 quota share owners would have to manage the use of their ACE.
  2. Section 9(a) and (b): There is no bycatch of any associated or dependent species in this fishery as the method of harvesting is diving. Option 3 is likely to result the largest increase in the numbers of fishers participating within the fishery, but this will not lead to any additional impact on the biological diversity of the aquatic environment due to the benign nature of the harvesting method.
  3. Section 9(c): No habitats of particular significance for fisheries management have been identified within the paua fishery area in PAU 6. It is considered unlikely that an increase in the number of fishers under Option 2 and Option 3 would have a demonstrable adverse effect on such habitats, due to the benign nature of the harvesting method.
  4. Section 5(a): There is a wide range of international obligations relating to fishing (including sustainability and utilisation of fishstocks and maintaining biodiversity). MFish believes the provisions of general international instruments such as the United Nations Convention on the Law of the Sea (UNCLOS) and the United Nations Fish Stocks Agreement (UNFSA) have been implemented through the provisions of the Fisheries Act 1996 and given effect to under all the management options. MFish is unaware of any specific international obligations that are applicable to PAU 6.
  5. Section 5(b): MFish considers provisions of the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992 are adequately addressed in the management options for this stock.
  6. Section 11(2A)(b): No approved Fisheries Plan exists for this fishery yet.
  7. Section 11(2A)(a) and (c): No relevant conservation services or fisheries services exist in this fishery.

1 The PAU 6 fishery extends from Kahurangi Point to Awarua Point on the west coast of the South Island.

2 However, under s 60 of the Act, a person may apply to the Minister of Fisheries for consent to own quota shares in excess of quota aggregation limits.

3 It is anticipated that PAU 6 ACE will be included in a tender of Crown ACE holdings in October 2006, in time for the 2006-07 fishing year.

Updated : 16 November 2007