Finances
The Vote Fisheries departmental output expense budgets for 2005/06 in the Main Estimates total $85.744 million (excluding GST), split between departmental output expenses as follows:
|
Table 1 - Vote Fisheries expense budgets
| Departmental output expense |
Main Estimates ($m) 2005/06 |
As % of Total |
|
| Fisheries policy advice |
5.446 |
6% |
| Fisheries information |
29.642 |
35% |
| Fisheries operations |
19.232 |
|
| Fisheries compliance |
29.742 |
35% |
| Aquaculture settlement |
1.682 |
2% |
|
| Total |
85.744 |
100% |
|
The above figures for Aquaculture relate only to the Ministry's operational costs for such issues as establishing and maintaining the settlement register and collecting and managing information relating to existing and new marine farming space. However, from 2007/8 onwards, there will also be costs related to the purchase of aquaculture space or the provision of financial equivalent where the space cannot be provided. These are capital costs and are estimated at $35 - $48 million over seven years. There is a specific Crown risk associated with this purchase. This was noted in the 2005 Budget document and is reproduced below.
Crown risk – Aquaculture Settlement
The Maori Commercial Aquaculture Claims Settlement Act 2004 addresses Maori claims in commercial marine farming space from 21 September 1992 to 31 December 2004 ("precommencement space") by providing iwi with 20% equivalent space. This obligation is to be met through three possible options: the provision of additional new space, or Crown purchase of existing farms from 2008, or provision of the financial equivalent of space from 2013.
Under the Act, any Maori claim relating to new aquaculture space after 31 December 2004 will be met by the provision of 20% of the new space. To the extent that financial compensation or Crown purchase of existing farms is necessary to address Maori interests (as opposed to using new space), this would decrease the operating balance. The risk is unquantified as the amount or timing of any funding is unclear, and in addition, disclosure could compromise the Crown in negotiations with either commercial marine farm owners or iwi.
Cost recovery levies
The Fisheries Act 1996 empowers the Crown to recover its costs in respect of the provision of fisheries services. Section 262 of the Act sets out the specific principles to be followed in determining which services are subject to cost recovery.
Cost recovery levy orders occur annually, with the levies being set in time for the commencement of the fishing year on 1 October. The levy order for 1 October 2005 has been set. Additionally, there will be at least one revised cost recovery levy order, effective 1 April 2006, to accommodate:
- any TAC/TACC changes that may be approved by the Minister
- introduction of new species into the QMS
- latest information for research tenders and withdrawn/deleted projects
- application of prior year under and over recovery
- application of the remaining settlement sum relating to the 1994/95 to 2001/02 under and over recovery.
Industry Contributions
The following table shows the extent of industry contributions, including a share of Ministry overheads, to the cost of delivery of the Ministry's outputs. Part A relates to the planned industry contributions as determined through the Statement of Intent consultation process. Part B details the amounts to be recovered annually as per the 1 April levy order (after the application of the adjustments noted above).
|
Table 2 – Industry contributions
| Part A: Planned industry contributions |
2001/02 ($m) |
2002/03 ($m) |
2003/04 ($m) |
2004/05 ($m) |
2005/06 ($m) |
|
| Core departmental services |
17.169 |
16.465 |
16.844 |
17.008 |
15.993 |
| Research |
14.126 |
16.133 |
15.223 |
14.704 |
15.742 |
| Planned cost recovery levies |
31.295 |
32.598 |
32.067 |
31.712 |
31.735 |
| Transaction charges |
1.972 |
1.137 |
1.733 |
2.356 |
2.423 |
| Total planned industry contributions |
33.267 |
33.735 |
33.800 |
34.068 |
34.158 |
| Contribution as % of Vote: Fisheries |
50% |
51% |
47% |
45% |
40% |
|
| Part B: Actual charges |
2001/02 ($m) |
2002/03 ($m) |
2003/04 ($m) |
2004/05 ($m) |
2005/06 ($m)
(planned
Oct '05) |
|
| Levy order |
30.605 |
32.012 |
22.891 |
31.220 |
31.735 |
| Transaction charges |
1.089 |
1.173 |
1.733 |
2.304 |
2.423 |
| Planned contributions before adjustment |
31.694 |
33.185 |
24.624 |
33.524 |
34.158 |
| Net historic under and over settlement |
0 |
0 |
(14.836) |
(6.199) |
* |
| Net prior year under and over recovery applied |
0 |
0 |
(0.801) |
0.108 |
** |
| Actual costs to be recovered |
31.694 |
33.185 |
8.987 |
27.433 |
|
| Net industry contribution as % of Vote: Fisheries |
47% |
50% |
13% |
36% |
|
* There is $2.691 million still to be applied as settlement credit for fisheries services. Some portion of this will be used in determining the 2005/06 cost recovery levies. The remaining amount will be applied in future years.
** Net under and over recovery of 2004/05 cost recovery levies cannot be determined until the audited results for the Ministry for the 2004/05 financial year are available. Historically, the pattern of Ministry expenditure throughout the year has not fully reflected its budgeted expenditure, which has been the basis for determining cost recovery levies. The result is that there have been both under and over recoveries from the commercial fishing sector. The Ministry has processes and protocols in place to manage over and under recovery of cost with industry.