Industry funding WRL and a New Lobster Institute Independently of Government through a Separate GVP Levy
It is proposed that a mechanism be established for industry members to directly fund the western rock lobster peak body, which will fund a research institute, unit registry and a quota trading platform.
This initiative seeks to gain independence for the peak body to better represent industry’s interests through self-funding. This includes responding without constraint to any type of threat or opportunity, increasing independent research capacity and capability, increasing the peak body’s ability to co-manage the industry, facilitation of industry development and building community support for the western rock lobster industry.
Further independent funding details requested
The development of the preferred funding mechanism will be completed and made available to Members prior to the plebiscite. In response to industry requests for more information, WRL developed further details as to how the preferred independent funding mechanism would operate. The following is a summary of the additional information and the full reference document will be made available in due course.
- Current legislation will be amended (or new legislation enacted) to allow WRL to collect a levy directly from MFL holders. The collection mechanism will be modelled (but modified to apply to the WCRLMF) on the New Zealand levy collection legislation.
- The funds collected will only be able to be used for specific purposes set out in legislation, but for the primary purpose of best representing the views and interests of those persons paying the levy.
- The WRL Board (i.e., not the Minister) will be responsible for how the funds are spent and managed. The funds will be spent according to the goals and directions requested by industry, as outlined in documents such as the Board-approved Strategic Plan.
- The funds will be collected by WRL (or a third party appointed by WRL). Current legislation will be amended to allow for debt recovery, with interest penalties imposed to assist with compliance.
- The government will be involved only to establish (or to approve any industry requested change to) the levy collection and debt recovery framework.
- WRL may recommend to the Minster that the amount of the levy be changed. This may only be done if supported by Members by referendum.
- WRL will keep full financial records and disclose those records to levy contributors within an annual financial report including balance sheet and statement of revenues and expenditure.
- WRL will appoint an auditor to access and review its financial records.
How the independent funding mechanism would operate
The preferred independence would have Government only renewing individual licences after receipt of advice from WRL that the applicable licensee has made the annual industry payment.
It is proposed that a fee per unit is paid by the owner of the unit of usual entitlement, directly to WRL (the peak industry body). This contribution will meet the industry cost for representation, co-management, research and development and crisis management for the western rock lobster fishery.
The annual fee will be determined on a per-unit basis, using a three-year rolling average of GVP.
A total industry fee equivalent to 1.00 per cent of GVP is proposed for the 2021/2022 season. This equates to:
- approximately $4 million using the 2020/21 three-year rolling average GVP figure of around $405M; and
- approximately $3.92/unit in A Zone, $5.60/unit in B Zone and $5.68/unit in C Zone. These fees would be tax-deductible.
Approved business cases will need to be developed for accurate budgeting, however WRL anticipates an indicative breakdown of the $4 million as follows:
- $1.5 million for WRL (a $500,000 increase on current funding);
- $1 million for the new institute;
- $1.5 million for research and development seed funding (a $500,000 increase on current funding); and
- any additional or surplus funds will be directed into a contingency fund for rapidly responding to unforeseen market, environmental and other risks including to resource access security.
It is proposed that a change in the GVP fee rate of 1.00 per cent would require approval of Members, with the WRL Board determining how those funds are allocated through annual budgets.
How the independent funds would be used
The proposed additional funding of WRL will increase capacity for co-management and enable the establishment and operation of the unit registry, quota trading platform, local supply program, industry promotion and governance for the research institute.
It is proposed that Government commit to supporting an industry-managed quota trading and licensing platform and unit registry for western rock lobster, subject to an approved business case.
The proposed unit registry would incorporate the same functions as those currently undertaken by DPIRD including licensing, trading and leasing of quota (ACE), security of interests, real-time register of unit holders and membership of WRL, and data to understand the demographics of unit ownership.
The funds allocated to establish and operate a collaborative research institute will facilitate:
- industry development;
- economic and market assessments;
- industry promotion;
- community-based programs; and
- science to complement the core research being undertaken by Government for best practice in resource management.
WRL will provide the industry funding for research and development through the proposed institute; and will seek Federal Government commitments for matching funds through the Fisheries Research and Development Corporation (FRDC). This may lead to a higher than the current level of contribution to research and development in Western Australia. This will also create the opportunity for greater co-investment by third-party research providers.
Further research institute details requested
Following industry requests for more information, WRL commissioned an Institute Briefing Paper to develop the proposal in further detail. The following is a summary of the additional information and the full Institute Briefing Paper will be made available in due course.
- The Institute will take a partnering approach with other research providers in order to maximise skill base and financial leverage. The Institute will not attempt to replicate infrastructure and capability found in government agencies or universities.
- Western Rock Lobster industry will continue to work with FRDC and contribute toward natural resource and seafood industry-wide research and development. This will support and assist smaller Western Australian fisheries with their RD&E.
- Research areas (as previously identified by industry) could include maintaining optimal sustainable harvest, improving productivity in the fishing effort and maintaining social licence to operate, new lobster products and markets, downstream productivity and supply chain optimisation, lobster feedlot and holding facility optimisation and policy for industry growth.
- The WA Government would be expected to continue undertaking core sustainability research.
- Formal agreements with FRDC and the Commonwealth Minister for longer-term funding partnership are to be finalised.
- Similar ‘virtual’ research institutes have annual operating costs in the range of $0.5 to $1.0 million. A detailed financial forecast for the Institute will be undertaken as a key component of the business planning exercise.
- The peak decision-making body for the Institute will report directly to the WRL Board and will likely be comprised of industry leaders including fishers, exporters and technical experts and possibly government representatives.
- The Research Priorities Plan will be developed through industry consultation and will guide the function of the Institute.
Progress on this initiative will depend on continued Government commitment to current funding for best practice management and for biological research programs, including rock lobster stock assessment and wildlife mitigation measures.
How the current funding arrangements would change
Government is to retain the full 5.75 per cent GVP fee collected from the western rock lobster fishery. This is intended to facilitate ongoing funding of WAFIC for the whole of Western Australia seafood industry representation and promotion, as well as additional funding for minor fisheries and aquaculture representation and research and development.
REASONS FOR THIS INITIATIVE AND ANTICIPATED BENEFITS
- Delivers industry’s desire over the last decade for self-funding and independence.
- Allows the western rock lobster peak body full discretion in how it represents industry and relates to government.
- Greater independence from Government for industry in representation and co-management.
- Greater involvement of industry in determining the directions for planning, and co-investment in opportunities to increase the economic return of industry.
- These arrangements will not negatively impact current Government funding for WAFIC and the other sector bodies, with the potential to reallocate the WRL funding (currently $0.7 million / year) towards increasing the representation, development and therefore value of the other seafood sectors.
- The western rock lobster derived contribution presently being made to FRDC (approx $1 million / year) could be utilised by the WA Research Advisory Committee for research and development of minor fisheries and aquaculture in WA to build a stronger seafood industry.
- Government will receive an increasing return as the value of the western rock lobster industry increases through these industry initiatives.
- A changing international export market can be expected to alter the economic outlook for western rock lobster, which makes a more urgent case for industry diversification including the potential establishment of a domestic quota.
- Historically, WRL’s investment research has received limited, if any, leverage. The Institute will achieve leverage of up to three times industry’s investment (past modelling suggests approx. $13.8 million in total) and will ensure industry’s investment is targeted as its strategic research priorities.