Monday, March 4, 2013

Apelgren on Fishing Levies

Ms Greta Apelgren-Nakardien's press briefing last week provided a number of bizarre and wacky statements. Besides referring to Feike as a "mickey mouse" fishing specialist and she could not understand why journalists and others consider us specialists in the field, Ms Apelgren-Nakardien made the following rather odd statement about fishing levies:
"We cannot possibly use levies for everything, but you will see – I think it is only 18 percent – that contributes to our entire budget.”
The existence of the Marine Living Resources Fund (MLRF) established under section 10 of the Marine Living Resources Act (having previously existed as the Sea Fisheries Fund) was justified to Treasury at the time on the basis that the South African fishing industry ought to pay (at least substantially) for the costs associated with the management and administration of fisheries. The application of the internationally renowned "user-pays" or "cost-recovery" principle in fisheries is premised on the understanding that the broader tax paying public should not have to finance an industry where right holders exploit a national resource held in trust by the government for profit.

Accordingly, and for this reason, levies and related fees charged by the regulator (the Fisheries Branch) do not get deposited into the national fiscus - instead these fees are paid directly to the MLRF, which is a ring-fenced account solely used to finance the administration and management of South Africa's marine and aquaculture fishing industry. 

So when Ms Apelgren-Nakardien says that the total contribution of levies to the fisheries budget is "only 18%" one needs to raise at least two eyebrows out of concern. Firstly, does she actually know what she is talking about and secondly why "only 18%"? 

Well, lets look at the numbers and see how these stack up. Back in 2007/2008, Feike undertook a detailed analysis of Marine and Coastal Management's (as it then was) levies with a view to reviewing the department's levy policy. If we recall, MCM at that time was already facing serious financial and institutional ruin. However, in 2007, fish levies contributed 28% to the MLRF's total budget. Government grants and transfers (taxpayers) contributed a further 50% of the total budget of approximately R300 million.

However, the fishing industry does not only pay levies on fish landed; it pays a plethora of additional fees such a permit fees and licence fees and fish export fees.

So, if one looks at each of the 22 commercial fishing sectors and the fish landed by these, in 2012 the department ought to have collected something in the order of R71 million in levies alone. It must also be noted that the last time the levies on fish were reviewed was back in September 2010 so this is another area of maladministration. An additional R55 million ought to have been collected from various sources such as fish processing establishments, the recreational fishing sectors and export and permit application fees. In other words, a conservative R120 million ought to have been earned by DAFF from the fishing industry during 2012 via administrative fees and levies.

If one considers DAFF's most recent annual report for the MLRF (year ending March 2012), total revenue generated is stated at R350 million with R46 million generated from the sale of confiscated abalone and the balance earned via government grants and transfer funding. Accordingly, if one was to strip out the income generated from the sale of confiscated abalone (13% of total budget), the fishing industry contributes no less than 39% of the MLRF's total budget. And remember that this figure of R350 million includes government transfer funding to the MLRF which is aimed at maintaining and managing the fleet of patrol and research vessels which - as we all know very well - was not used as these vessels were rotting away in Simonstown thanks to the joint incompetence of our Naval and Fisheries officials.

Ms Apelgren-Nakardien's missive about what she "thinks" about fishing levies is a further indication why one requires a qualified fisheries expert to lead the fisheries branch and why one should really understand and know the subject matter before addressing a press briefing. The financial contributions of the fishing industry to the fund are substantial and ought to be wisely used to fund fisheries research, administration, management and compliance. The fact is the department's incompetence and mismanagement has forced industry in a number of sectors to step into the breach and facilitate and fund fisheries research, management and compliance; and all the while the department continues to charge levies and fees as if it provides any service to the industry!

We hope that Ms Apelgren-Nakardien now more than doubly values the contribution made by the fishing industry. 

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