Deemed Values under the 1983/86 Act provide a defence against taking fish without the authority of Quota for bycatch stocks. The Act is worded such that section 105A provides a defence in the case of inevitable bycatch taken in the course of the lawful taking of other fish, and 28ZD requires the payment of Deemed Values for all stock taken other than under the authority of quota. The effect of these two provisions is to allow fishers to take other than target species without ACE, and not to be liable to criminal prosecution.

Under the 1996 Act, the role is changed, but is still very muddled.

Under the 1996 Act the role of Deemed Value is supposedly to provide an incentive to cover catch with ACE. The actual wording is " … purpose of ensuring that there is an incentive for every commercial fisher taking fish, aquatic life, or seaweed of that stock to acquire annual catch entitlement to balance against catch …", and then goes on to say "the Minister shall have regard to-

1. The need to remove the economic benefit to any person from the taking, processing, or sale of any fish …".

This approach is not an incentive but a penalty. The penalty must be high, therefore the temptation for fishers is to dump the fish, kick it over the side like it never existed. The risk of detection of dumping is in most cases very low, and must always remain so. Therefore the net effect of this approach is to increase the risk to the sustainability of threatened stocks.

Alternative approaches that actually reduce the risk to stocks in practice have not been considered in depth by the ministry.

There are some logical flaws that come out of the old way of thinking about Responsibility and Criminality.

The Fisheries Act starts from the presumption that the fisher can control the outcome of their actions, and the puts the onus on the fisher to prove otherwise. The problem with this approach is that it catches everyone at some time. Every person who over fishes any stock is liable to the charge from a fishery officer that they knew there was a substantial risk that they would over-fish that stock, and they should have stopped fishing (even if they had many other stocks that were substantially uncaught). It very much depends on the frame of mind of the judge at the time as to whether or not they give a conviction. If I were the judge, looking at the very strong assertions in the Act that no fisher is to take fish without authority, it would be a hard call to make. The problem being, once a judge sets a precedent, all others will follow it. If the first case is clearly a "guilty crim", and the ministry secures a conviction, then they are likely to get one in all subsequent cases (guilty or not).

Every fisher knows that there is a risk that they will catch any species each time they set their gear. In many cases the risks are small, but none the less real. A navigation error of 100m can change a shot for Bluenose into a catch of Ling. A stray school of Warehou or Snapper in a set of flounder nets. Migrating crayfish in trawl gear. The examples are numerous, and they happen every day (but not to everyone every day). They do happen to everyone sometime in their fishing career, and many times to many of some of them.

It is also possible to deliberately make the change in navigation, or to target the Snapper with flounder gear, or to target the migrating crays. How does one distinguish? Sometimes people get lucky, or unlucky, consistently. Why have a system that is so inflexible that the unlucky and the criminal are indistinguishable (particularly in an environment where everyone gets unlucky sometime)?

The risks to a fisher under this structure are too great.

There is no defence in the 1996 Act for inevitable bycatch.

There is a defence under section 243 of payment of Deemed Value, but section 71 limits it to one year, and if used in one year, may not be used in the next. This provision effectively negates the deemed value defence, and introduces enormous risk to any fisher in a multi-species fishery. No one can risk being over at the end of the year, so no one will risk trading any ACE that they hold. Trading breaks down, all fishers know they are at risk from the system. Dumping of "at risk" stocks becomes endemic, to reduce the "risk" (survival to the fisher) of possible over-catch. Voluntary compliance reduces to almost zero, as fishers simply try to survive under an impossible structure. Sustainability for "at risk" stocks is severely threatened, as they pose a threat to the economic survival of fishers.

This scenario is highly probable, unless there are some fundamental shifts in the structure of the balancing regime.

Having Deemed Value and By Catch Trade Off defences both suffer from the fact that the fish landed is not recorded against quota. This aspect devalues quota owner's rights and responsibilities. It prevents quota owners from taking effective collective action as people can still operate outside their sphere of influence.

The only way out of this scenario is to give fishers the flexibility they need to be able to cope with massive "local" variation in abundance of stocks. If the system has flexibility, and cannot be harnessed to blackmail individuals, then a free and open market for ACE will develop, and the incentives will be to conserve "at risk" stocks.

It is only possible to secure voluntary compliance if one starts from the presumption that most fishers want the system to work. They do. If one then has a legal system that starts with the presumption that all fishers are criminals, then most fishers will rapidly stop complying. This is simple common sense.

Treat individuals with respect, and in the vast majority of cases they will help. Treat them as criminals and they lose respect for you, and you lose their support. The balancing regime of the 1996 Act is a disaster from this aspect of human relations.

Simple solutions do exist, but they are alien to compliance thought. Presume guilty, and let them prove innocence, is much easier from a compliance point of view. It is abhorrent to natural justice.

If we have a system that gives fishers the flexibility they need to be able to comply in practice (in all cases, even if at some cost for the unlucky ones), and that is sufficiently tight to minimise any risk to sustainability, then the nett risk to sustainability is vastly reduced.

The greatest risk to sustainability that exists is the risk of alienating fishers, and losing voluntary compliance. The current 1996 Act balancing regime will do that in its current form.

If we adopt a system that:

1. requires all fishers to have a substantive portfolio of ACE at all balance dates, or have their permit automatically suspended; and
2. requires them to balance by the end of the year, or pay a substantial bond and an ongoing penalty until they balance with ACE from some future year(s); and
3. suspends permits for non payment of bonds or penalties; and
4. has an open and cost effective trading environment; and
5. give fishers sufficient flexibility to carry forward unused ACE (20%) without penalty; then

we have a chance of meeting both our sustainability and voluntary compliance objectives. Criminal law then only applies to fishing without a permit, or fraud. Fishing with a permit has strong incentives (not criminal liability) to balance with ACE of the appropriate stock at all times. Fishing with a permit also has strong responsibilities that are easily met, and is an easily lost privilege if abused.

Such a system is workable in practice, and will greatly reduce the threat to the sustainability of any stock.

The 1996 Act with its presumption of criminality and harsh penalties is unworkable in practice, and will prevent voluntary compliance. It must be changed.

Deemed Values, as enacted in the 1996 Act, must go; or must evolve into a bond against future acquisition of ACE.

Ted Howard 27 January 1998