In the post-election hiatus the Ministry for Primary Industries could still get on with an important project.
That is a pan-primary sector cost recovery review that appears to have been abandoned without notice.
That is despite an independent review being set up, a chairman appointed in the form of former High Court Judge Sir John Hansen, four pan-primary meetings over 18 months, extensive submissions from primary sector groups, separate sector working group meetings, allocation of senior MPI staff and substantial cost in time and effort.
An industry reference group for the first principles review of cost recovery was set up in 2015 including wine, deer, pipfruit, food and grocery, forestry, farming, horticulture, meat and dairy sectors as well as seafood.
The seafood sector is the one in the primary sector most hard hit by cost recovery levies, taxes by another name that total $30-$35 million annually, but all groups are subject to varying levels of charges for everything from veterinary inspections to observers on fishing vessels.
The review reference group led by MPI agreed to adopt the guiding principles of equity, efficiency, justifiability and transparency.
It undertook to determine when and who should be charged, which costs should be recovered and how charges should be structured.
Separate to this MPI agreed to undertake a more targeted review of the cost recovery rules pertaining to fishing. This was to run in parallel with the operational review of the Fisheries Act 1996 that was announced by Primary Industries Minister Nathan Guy at the 2015 Seafood NZ annual conference in Wellington. The review of the Act has morphed into the Future of Our Fisheries that incorporates the problematic electronic reporting and monitoring system that was partially launched on Oct 1 and remains riddled with unknowns, errors and needless cost.
However, the fisheries cost recovery review, like the wider pan-primary sector one, has sunk without trace.
That is a disservice to fishing, the primary sector and the country as a whole.
Export targets under the National Government’s ambitious Business Growth Agenda will not be met if key industries are saddled with onerous levies that inhibit investment.
There is no incentive for MPI to be either economical or accountable.
Cost allocation processes for operational activities remain a mystery.
An opaque cost-plus model allows the regulator to dictate that a service costs whatever it says it costs – and then add 20 percent for “overheads” to cover its administrative costs.
And we have been here before.
Much work was done a decade ago by the seafood sector in analysing the cost recovery regime, pointing to its flaws and proposing redress.
Good progress was being made until then Fisheries Minister Jim Anderton took umbrage at a legal challenge on a separate matter and shelved cost recovery review in retaliation.
That 2007 study was dusted off and reviewed in light of the cost recovery review. In the seafood sector’s view it remained highly relevant.
It was submitted to MPI that it remained the case that the industry sought levies that were legally valid within the existing provisions of the Fisheries Act, that were reasonably and transparently set, were commensurate with the value of benefits and risks generated, incentivised service efficiency and recognised the general public interest through an equitable Crown/industry sharing of costs.
The cost recovery rules were constructed on the premise that a number of MPI services may be able to be provided more efficiently by industry or a third party.
They were set as a transition measure, anticipated at the time to be two to three years.
Fifteen years on, we are still waiting.