abare.gov.au – Australian Fisheries Surveys Report 2008

3	Southern and eastern scalefish and shark fishery

The fishery

The southern and eastern scalefish and shark fishery (SESSF) is a complex, multi-sector, multi-gear and multi-species fishery. It covers an area from southern Queensland, around Tasmania and west to Cape Leeuwin in Western Australia. The fishery operates under complex jurisdictional arrangements which exist between the Australian Government and the various state governments. Major ports used by the fleet include Ulladulla, Eden, Lakes Entrance, Hobart and Portland.

The SESSF was established in 2003 following AFMA’s implementation of the Southern and Eastern Scalefish and Shark Fishery Management Plan 2003. The management plan provided for the merger of three previously separate Commonwealth fisheries in order to create the SESSF (Smith and Wayte 2004). The SESSF is now divided into four separate sectors managed under a common set of management objectives. The sectors include:

the Commonwealth trawl sector;

the gillnet, hook and trap sector;

the Great Australian Bight trawl sector; and

the east coast deepwater trawl sector.

ABARE’s economic survey this year was limited to the Commonwealth trawl sector and the gillnet hook and trap sector.

Commonwealth trawl sector

Previously managed as the south east trawl fishery, the Commonwealth trawl sector (CTS) is one of Australia’s oldest commercial fishing sectors, commencing operation off Sydney in the early 1900s (DEH 2003). The sector is the largest in the SESSF, extending south from Barranjoey Point (north of Sydney) around the New South Wales, Victorian and Tasmanian coastlines to Cape Jervis in South Australia (map 2).

The primary harvesting method used in the sector is otter trawling, although a number of Danish seine vessels operate out of Lakes Entrance in Victoria (Smith and Wayte 2004). The total number of active trawlers in the CTS declined from 1992 to 2006, although total fleet capacity and horsepower in fact increased over this period (Larcombe and McLoughlin 2007). The recent Commonwealth funded structural adjustment buyout further reduced the number of statutory fishing rights (SFRs) and active vessels in the fishery.

More than 100 species are routinely caught in the CTS, however, five key species constitute more than 60 per cent of the landed trawl tonnage. In 2006-07, total landings in the sector were approximately 16 300 tonnes, 47 per cent less than the peak catch of 30 600 tonnes in 2002-03 (figure d). The total 2006-07 catch included 3800 tonnes of blue grenadier, 2600 tonnes of tiger flathead, 910 tonnes of orange roughy, 2400 tonnes of silver warehou and 650 tonnes of ling.

After peaking at $98.2 million in 1997-98, the sector’s gross value of production (GVP) steadily declined, falling to $46.4 million in 2005-06 (figure e). Driving this decline were reductions in the total allowable catch of orange roughy, which resulted in the real production value of this species decreasing by $30.4 million (83 per cent). In 2006-07, the real gross value of production increased by 21 per cent to $56.4 million. This increase was primarily the result of higher prices for key quota species, particularly blue grenadier and tiger flathead. These two species combined accounted for 48 per cent of the sector’s gross production value in 2006-07.

Gillnet, hook and trap sector

The gillnet, hook and trap sector (GHTS) consists of what were previously the south east non-trawl fishery and the southern shark fishery. Both fisheries had been in operation for long periods of time prior to being merged into the GHTS; the south-east non-trawl fishery has operated since the early 1900s and the southern shark fishery since 1927 (AFMA 2004).

The sector extends south from southern Queensland to the South Australian - West Australian border and includes waters to the south of Tasmania (map 3). Gear types used in the sector include demersal gillnets, droplines, demersal longlines and traps. However, operators are only permitted to use gear types specified on their boat SFR or fishing permit (AFMA 2004).

The total landed catch for the GHTS declined from a peak of 5040 tonnes (whole weight equivalent) in 2004-05 to 4250 tonnes in 2006-07 — a drop of 16 per cent in two years (figure f). Contributing to this decline was a 57 per cent decrease in landings of ling, from 890 tonnes in 2004-05 to 380 tonnes in 2006-07, as well as an 11 per cent drop in gummy shark landings, from 2450 tonnes (whole weight equivalent) in 2004-05 to 2190 tonnes in 2006-07. Gummy shark accounted for 52 per cent of total landings in 2006-07.

Compared with other sectors in the SESSF, the production value of the GHTS has remained relatively stable in recent years, averaging $25.2 million (in real terms) over the five years to 2006-07. More recently, the real GVP for the sector increased slightly from $22.9 million in 2005-06 to $24.6 million in 2006-07 (figure g). This increase was largely the result of an increase in both landings and prices for blue eye trevalla and, to a lesser extent, gummy shark.

Biological status of major species in the fishery

The Bureau of Rural Sciences (BRS) publishes stock assessment results for the main target species of all Commonwealth fisheries in its annual Fisheries Status Report (Larcombe and Begg 2008). A brief description of the most recent stock status of each of the quota species in the fishery is presented in table 4.

4	Biological status of key species in the southern and eastern scalefish and shark fishery

Species

Status

Blue eye trevalla

Not overfished and not subject to overfishing.

Blue grenadier

Not overfished and not subject to overfishing.

Blue warehou

Stock status uncertain.

Eastern school

whiting

Not overfished and not subject to overfishing.

Flathead

Not overfished and not subject to overfishing.

Gemfish

– eastern stock

Overfished but is currently not subject to overfishing.

– western stock

Stock status uncertain.

Jackass morwong

Stock status uncertain.

John dory

Uncertain whether overfished but not subject to overfishing.

Mirror dory

Uncertain whether overfished but not subject to overfishing.

Ocean perch

Stock status uncertain.

Orange roughy

Overfished but not subject to overfishing.

Orange roughy -

(Cascade plateau)

Not overfished and not subject to overfishing.

Pink ling

Not overfished but subject to overfishing.

Redfish (eastern)

Stock status uncertain.

Royal red prawn

Stock status uncertain.

School shark

Overfished but overfishing status uncertain.

Gummy shark

Not overfished and not subject to overfishing.

Elephant fish

Stock status uncertain.

Sawshark

Stock status uncertain.

Deepwater shark

(upper slope)

Overfished but overfishing status uncertain.

Deepwater shark

(mid-slope)

Not overfished and not subject to overfishing.

Silver trevally

Stock status uncertain.

Silver warehou

Not overfished and not subject to overfishing.

Ribaldo

Not overfished and not subject to overfishing.

Oreo dory: smooth

Overfished but not subject to overfishing.

Oreo dory: smooth

(Cascade Plateau)

Uncertain whether overfished but not subject to overfishing.

Oreo dory: other

Uncertain whether overfished but not subject to overfishing.

Source Larcombe and Begg 2008.

5	Total allowable catches – southern and eastern scalefish and shark fishery

Species

Extended 2007
season* TAC

2008 TAC

tonnes

Alfonsino

576

500

Bight redfish

3 338

2 000

Blue eye trevalla

785

560

Blue grenadier

4 113

4 368

Blue warehou

313

365

Deepwater flathead

2 109

1 400

Flathead

4 020

2 850

Gemfish East

121

100

Gemfish west

200

167

Jackass morwong

1 171

560

John dory

237

190

Mirror dory

788

634

Ocean perch

585

500

Orange roughy

– Cascade Plateau

483

700

– Albany/Esperance

– east

– south

– west

Oreo Basket

190

150

Oreo smooth - Cascade

Oreo smooth - other

Pink ling

1 537

1 080

Redfish

896

850

Ribaldo

257

165

Royal red prawn

556

400

School whiting

978

750

Silver trevally

191

296

Spotted (silver) warehou

4 117

3 227

Deepwater shark basket - east

Deepwater shark basket - west

Elephant fish

123

Gummy Shark

2 467

1 800

Saw shark

410

312

School shark

352

240

* The extended 2007 season ran from January 2007 to April 2008.

Management of the fishery

Management of the fishery is predominantly based on output controls in the form of individual transferable quotas (ITQs) and total allowable catches (TACs). These were first introduced in the former south east trawl fishery for gemfish and orange roughy in 1988 and 1990, respectively. In 1992, AFMA further expanded ITQ management in the south east trawl fishery to a total of 16 target species, partly in response to worsening economic conditions across the fishery (Smith and Wayte 2004). Then in 1998, ITQ management was expanded to the non-trawl sector to cover catches of blue eye trevalla, blue warehou and ling, given increasing catches of these species in that sector. ITQ management of all quota managed species in the south east trawl fishery was then expanded to the non-trawl sector with the setting of global TACs across both sectors in 2001. Currently 26 species of scalefish (including deepwater shark) are managed under global TACs that cover all sectors of the fishery (Larcombe and Begg 2008).

The major shark species (excluding deepwater shark) taken in the SESSF were previously managed in the southern shark fishery. ITQs were first introduced into this fishery for school and gummy sharks in 2001 and then saw shark and elephant fish in 2002. The use of quota SFRs to manage these species is expected to take place in the 2009-10 fishing season following the resolution of legal challenges to the quota allocation formula (Larcombe and Begg 2008).

TACs represent the upper limit of catch for a quota species for all concession holders in a given fishing year. Each quota SFR entitles the holder to a specific share of the agreed TAC for the quota species to which the SFR applies. This is adjusted according to overcatch and undercatch allowances from the previous year to arrive at an actual TAC for the fishing year.
In 2005, a harvest strategy framework was adopted for the fishery to provide a more strategic approach for determining TACs. The framework identifies how TACs should be altered when a stock declines or rises above predetermined levels. The rules that guide TAC setting have been designed to incorporate a higher level of precaution when there is an increased level of uncertainty about stock status. The framework also improves the transparency of the TAC setting process. The SESSF harvest strategy framework has been continuously revised and altered in response to a number of shortcomings identified since it was implemented (Larcombe and McLoughlin 2007).

To ensure concession holders comply with their quota entitlements, catches must be reconciled against quota holdings at set intervals. Prior to 2006, quota reconciliation in the SESSF was required only on 31 December for the entire year. In 2006 however, the fishery moved to quarterly quota reconciliation in an attempt to reduce the likelihood of concession holders exceeding their quota entitlements in the fishing season (Shoulder 2006). An additional reconciliation period was first added in 2006, and then quarterly reconciliations were implemented in 2007. An extended season was also introduced in 2007 to allow the fishery to move to a May-April quota season. The 2007 season ran for an additional four months, from January 2007 to April 2008. TACs for individual species were adjusted to account for the extended season. The 2008 quota year commenced on May 1st 2008 and will run until April 30th 2009. The TACs for the recently concluded 2007 season and the current 2008 season are listed in table 5.

In addition to output controls in the form of TACs, input controls are used to manage the fishery. Input controls used include area and seasonal closures, limited entry, catch size restrictions and a variety of gear restrictions. At the start of the extended 2007 fishing season, AFMA introduced a series of new area closures. These closures are primarily designed to protect breeding stock, critical habitat, and vulnerable species.
Automatic longlining is a relatively new method of fishing used in the GHTS. It is a form of demersal longlining in which some of the functions are automated, allowing operators to set and haul more hooks (AFMA 2005b). Operators using this method of fishing are subject to specific rules regulating where and when they may use this method. Furthermore, all operations using this method are required to comply with additional restrictions including an upper hook limit of 15 000 hooks, mandatory use of bird scaring (tori) lines, observer coverage and integrated computer vessel monitoring system (ICVMS) requirements (AFMA 2005b).

Bycatch has historically been an important issue for the SESSF, particularly in the CTS where discard rates of 35 per cent prevailed (DEH 2003). The Southern and Eastern Scalefish and Shark Fishery Bycatch Action Plan 2007-2009, released in March 2007, aims to ensure the impacts of the fishery’s bycatch on the ecosystem are sustainable and consistent with legislative requirements. The plan provides guidelines for reducing bycatch in the fishery, and creates a framework and method to monitor the status of bycatch, and assess annual discard rates and bycatch reduction performance (AFMA 2007b).

In November 2005, the Australian Government announced the $220 million Securing Our Fishing Future Initiative. The initiative aimed to reduce excess effort in fisheries subject to overfishing or at significant risk of overfishing. As part of the initiative, $150 million was set aside for a voluntary tender process for fishing businesses to exit the industry (DAFF 2006). The first round of the tender process was completed in September 2006 and resulted in 142 SESSF boat SFRs being bought out of the fishery (Abetz 2006). A second round tender process was run between October and November 2006 and a further 23 SESSF boat permits were bought out. The final result was a 46 per cent reduction in the number of SFRs in the SESSF (Abetz 2006).

Results for the Commonwealth trawl sector

Boats surveyed

The survey of the Commonwealth trawl sector covered the two years 2005-06 and 2006-07. For each year, the target population was defined as boats endorsed to fish in the sector which caught in excess of 1000 kilograms, with the exception of factory trawlers which were excluded from the analysis.

For 2005-06, 23 vessels were sampled from a population of 81 vessels. For 2006-07, 19 vessels were sampled from a population of 73 vessels.

Financial performance of the fishery

Key measures of the financial performance of all boats in the sector are contained in table 6. Definitions of items contained in this table are outlined in appendix A.

Receipts

In line with the sector’s increased gross value of production and reduced number of vessels, average total cash receipts per boat rose from $673 000 in 2005-06 to $765 000 in 2006-07.

Costs

Average total cash costs per boat increased from $596 000 in 2005-05 to $634 000 in 2006-07. Crew costs, fuel costs, freight and marketing expenses and repair and maintenance costs were the highest cost items in 2005-06 and 2006-07, together accounting for 79 per cent of total cash costs in both years.

As crew are normally paid a percentage share of revenue, the rise in average crew costs to $186 000 per boat in 2006-07 is commensurate with the increase in seafood receipts. Labour costs include payments to skipper and crew, as well as shore-based labour and the opportunity costs of owner and family labour. Similarly, average freight and marketing expenses increased to $119 000 per boat in 2006-07, most likely due to the increase in landings over the survey period. Repairs and maintenance costs also rose, to an estimated $62 000 per boat in 2006-07. In contrast, average fuel costs fell from $150 000 per boat in 2005-06 to $137 000 per boat in 2006-07.

Boat cash income and profit

As total cash receipts rose proportionally more than cash costs, average boat cash income (the difference between total cash receipts and total cash costs) in the Commonwealth trawl sector rose from $77 000 per boat in 2005-06 to $130 000 per boat in 2006-07.

Boat business profit, which is boat cash income less an allowance for depreciation was positive in both 2005-06 and 2006-07, with average values of $58 000 and $108 000 per boat respectively.

Profit at full equity (boat business profit plus interest, leasing and rent) represents the average return earned by the business unit had the boat and capital (including quota and licences) been fully owned by operators. While interest, leasing and rent costs affect the financial position of the operator, they represent some profits which have been redistributed to other investors in the fishery. Average boat profit at full equity, which is boat business profit plus interest, leasing and rent, was approximately $102 000 in 2005-06 and $161 000 in 2006-07.

Rates of return

The rate of return to boat capital is based on the value of boat capital (excluding the value of quota and licences) as if the operators wholly owned all assets so that the financial performance of all boats can be compared regardless of the operators’ equity in the business. The estimated average rate of return to boat capital (excluding the value of quota and licences) in the Commonwealth trawl sector increased from 30.6 per cent in 2005-06 to 57.9 per cent in 2006-07. This rise was the result of a number of factors, including the proportionally higher increase in receipts relative to costs and lower boat capital values in 2006-07.

The rate of return to full equity includes the value of quota and licences in addition to boat capital, and therefore provides an indication of the return to total capital invested in the business unit. It reflects changes in the value of quota and licences as well as changes in the profitability of the fishing operation – that is, the profit from fishing that accrues to the owners of capital.

The estimated value of quota and licences attached to each boat rose from $1.3 million in 2005-06 to $1.4 million in 2006-07. This value includes the estimated market value of quota and licences used by the boat, including the value of endorsements outside the sector, for example, state licences. The rate of return to full equity, which incorporates these endorsement values, rose from 6.2 per cent in 2005-06 to 9.5 per cent in 2006-07.

Economic performance of the fishery

The results presented in table 6 show changes in the average receipts and costs of boats which operated in the Commonwealth trawl sector in 2005-06 and 2006-07. However, they shed little light on the economic performance of the sector as they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the opportunity cost of capital. Table 7 shows fishing receipts, cash costs, boat cash profit and net economic returns (in real terms) generated from the sector for the period 1997-98 to 2006-07. Only receipts and costs earned and incurred in the Commonwealth trawl sector are included.

Fishing receipts in the sector have continued to decline since 2000-01, falling from $83 million to $49.2 million in 2006-07. Although receipts have been declining, boat cash profit, which is fishing income less cash costs, increased between 2005-06 and 2006-07 from $6.8 million to $10.2 million, given a relatively greater reduction in cash costs between the two years (figure h).

Net economic return is a measure of economic performance that incorporates depreciation expenses, the opportunity costs of owner and family labour and the opportunity cost of capital — costs not accounted for in boat cash profit. Net economic return also includes a deduction of fishery management costs. These management costs include both management levies paid for by fishery operators (accounted for under ‘licence fees and levies’ in table 6) and non-recovered management costs paid for by government (not accounted for in table 6). An explanation of the calculation of net economic returns is included in appendix B.

After several years of negative returns (2002-03 to 2004-05), the sector’s economic performance improved in 2005-06 and 2006-07, with net returns rising to $1.5 million and $3.5 million respectively. This improvement can be largely attributed to a decline in operating costs which occured in unison with a sharp fall in the number of active boats operating in the sector in these two years, from 91 boats in 2004-05 to 73 boats in 2006-07. At the same time, fishing income per boat also increased.

It is important to note that factors outside the control of fishery management influence both the net economic returns and other measures of financial performance in the fishery – for example, the movements of the Australian dollar and its impact on the prices received by fishers. Also, the price of inputs such as fuel and gear are not controlled by fishery managers. These types of external factors are likely to have had a impact on the performance of the fishery in recent years. The role of a fishery manager is to ensure a fishery is able to maximise profits subject to these external factors.

6	Financial performance of boats operating in the Commonwealth trawl sector average per boat

2005-06

2006-07

Seafood receipts

621 095

(13)

712 679

(17)

Nonfishing receipts

52 400

(17)

51 924

(23)

Total cash receipts

673 495

(13)

764 604

(17)

Administration

10 270

(15)

14 802

(13)

Crew costs

174 503

(14)

185 770

(16)

Freight and marketing expenses

97 083

(16)

119 113

(20)

Fuel

149 919

(13)

136 552

(16)

Insurance

23 571

(12)

22 742

(12)

Interest paid

11 609

(24)

11 565

(27)

Licence fees and levies

18 048

(12)

12 816

(15)

Repairs and maintenance

47 939

(14)

61 621

(16)

Other costs

63 347

(19)

69 397

(18)

Total cash costs

596 289

(12)

634 378

(15)

Boat cash income

77 206

(38)

130 226

(39)

less depreciation a

19 598

(11)

22 178

(13)

Boat business profit

57 609

(49)

108 048

(47)

plus interest, leasing and rent

44 346

(18)

52 855

(21)

Profit at full equity

101 955

(29)

160 903

(36)

Capital

– excl. quota and licences

333 650

(15)

277 979

(15)

– incl. quota and licences

1 636 565

(12)

1 686 852

(15)

Rate of return

– to boat capital b

30.6

(30)

57.9

(30)

– to full equity c

6.2

(25)

9.5

(29)

a Depreciation adjusted for profit or loss on capital items sold. b Excluding value of quota and licences. c Including value of quota and licences.
Note: Figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A.

7	Boat cash profit and net economic returns in the Commonwealth trawl sector, total for fishery, $2007-08

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

Receipts

Fishing income

78.3

(17)

85.4

(16)

69.7

(14)

76.6

(15)

(12)

80.8

(14)

Cash costs

Operating costs

70.2

(14)

72.4

(14)

61.7

(14)

68.9

(15)

71.7

(12)

73.7

(15)

Boat cash profit

8.2

(46)

13.1

(44)

(36)

7.7

(55)

11.3

(24)

(47)

less

– owner and family labour

7.2

(10)

7.6

(10)

4.8

(13)

6.9

(13)

6.3

(17)

– opportunity cost of capital

3.1

(11)

2.6

(12)

(13)

1.9

(15)

1.9

(11)

1.6

(11)

– depreciation

4.3

(10)

4.1

(11)

2.8

(11)

2.9

(14)

2.6

(10)

2.4

(10)

plus interest, leasing and

management fees

12.2

(24)

10.8

(22)

5.2

(14)

5.4

(16)

6.1

(14)

6.5

(18)

Net return (excl.

management costs)

5.8

(108)

9.6

(63)

3.5

(90)

3.3

(142)

5.9

(56)

3.3

(96)

Management costs

2.6

3.8

3.3

3.5

3.2

2.8

Net return (incl.

management costs)

3.1

5.8

0.2

-0.2

2.7

0.5

Number of active boats

no.

109

103

101

106

Net return (excl.

management costs) per boat

52 843

(108)

87 996

(63)

34 424

(90)

32 572

(142)

55 873

(56)

33 895

(96)

Management costs per boat

24 195

34 537

32 386

34 586

30 143

29 122

Net return (incl.

management costs) per boat

28 647

53 459

2 038

-2 014

25 731

4 773

2002-03

2003-04

2004-05

2005-06

2006-07

Receipts

Fishing income

62.5

(17)

57.3

(13)

(20)

49.5

(16)

49.2

(20)

Cash costs

Operating costs

58.7

(15)

54.6

(12)

(20)

42.7

(16)

(19)

Boat cash profit

3.8

(69)

2.7

(84)

(155)

6.8

(36)

10.2

(34)

less

– owner and family labour

7.5

(14)

6.3

(14)

5.6

(16)

4.7

(24)

4.4

(23)

– opportunity cost of capital

1.5

(16)

1.5

(16)

1.3

(16)

1.1

(16)

1.1

(22)

– depreciation

2.2

(15)

2.4

(16)

(15)

1.5

(15)

1.5

(18)

plus interest leasing and

management fees

5.7

(16)

6.4

(20)

6.9

(37)

4.5

(17)

4.1

(23)

Net return (excl.

management costs)

–1.7

(145)

–1.2

(201)

–1.0

(270)

(53)

7.4

(51)

Management costs

3.5

3.3

3.5

2.5

3.9

Net return (incl.

management costs)

–5.2

–4.5

1.5

3.5

Number of active boats

no.

100

Net return (excl.

management costs) per boat

–17 447

(145)

–12 460

(201)

–11 443

(270)

49 508

(53)

100 917

(51)

Management costs per boat

34 932

33 664

38 233

30 591

52 784

Net return (incl.

management costs) per boat

–52 379

–46 124

–49 676

18 918

48 133

na Not applicable.
Note: Figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A.

8	Financial performance of boats operating in the gillnet, hook and trap sector average per boat

2005-06

2006-07

Seafood receipts

315 448

(15)

379 058

(15)

Nonfishing receipts

9 187

(15)

19 225

(19)

Total cash receipts

324 636

(15)

398 283

(15)

Administration

6 065

(16)

6 148

(12)

Bait

7 805

(54)

7 843

(40)

Crew costs

119 607

(14)

141 503

(14)

Freight and marketing expenses

13 542

(36)

15 555

(43)

Fuel

31 071

(15)

33 762

(17)

Insurance

9 072

(19)

10 317

(17)

Interest paid

11 808

(32)

10 803

(34)

Leasing

42 234

(21)

54 130

(28)

Licence fees and levies

13 631

(21)

9 456

(22)

Repairs and maintenance

33 091

(24)

47 745

(22)

Other costs

12 019

(21)

15 453

(15)

Total cash costs

299 947

(15)

352 714

(14)

Boat cash income

24 689

(77)

45 568

(52)

less depreciation a

22 883

(24)

19 256

(19)

Boat business profit

1 806

(1073)

26 312

(88)

plus interest leasing and rent

54 226

(17)

65 187

(25)

Profit at full equity

56 032

(36)

91 499

(32)

Capital

– excl. quota and licences

335 345

(17)

335 684

(17)

– incl. quota and licences

1 177 553

(15)

1 424 500

(18)

Rate of return

– to boat capital b

16.7

(40)

27.3

(31)

– to full equity c

4.8

(35)

6.4

(30)

Results for the gillnet, hook and trap sector

Boats surveyed

The survey of the GHTS covered the 2005-06 and 2006-07 financial years. For each year, the target population was defined as boats endorsed to fish in the GHTS which had caught more than 1750 kilograms. In 2005-06, 17 vessels were sampled from a population of 80 vessels and in 2006-07, 17 vessels were sampled from a population of 79.

Financial performance of the fishery

Key measures of the financial performance of the sector’s fishing fleet are contained in table 8. Definitions of items contained in this table are outlined in appendix A.

Receipts

Average total cash receipts rose over the survey period, from $325 000 per boat in 2005-06 to $398 000 in 2006-07. Receipts here include receipts accrued from landings in other fisheries including, for example, state lobster fisheries.

Costs

Average total cash costs per boat also increased between the two survey years, from $300 000 per boat in 2005-06 to $353 000 per boat in 2006-07 — an increase of approximately 18 per cent. Crew costs, followed by leasing, repairs and maintenance and then fuel costs were the highest costs items and together accounted for 79 per cent of total cash costs in 2006-07. Most cost items increased by some degree over the survey period – the highest increase in percentage terms was for leasing which rose by approximately one-third in 2006-07 to $54 000 per boat.

Boat cash income and profit

Average boat cash income refers to the difference between total cash receipts and total cash costs. As the rise in total cash receipts was greater than the rise in total cash costs, average boat cash income increased from $25 000 in 2005-06 to $46 000 in 2006-07. Similarly, boat business profit, which is boat cash income less an allowance for depreciation, improved between the two years, from $1800 per boat in 2005-06 to $26 000 per boat in 2006-07.

Profit at full equity (boat business profit plus interest, leasing and rent) also rose significantly over the survey period, from $56 000 per boat in 2005-06 to $91 000 per boat in 2006-07.

Profit at full equity represents the average return which would have been earned by the business unit had the boat and capital (including quota and licences) been fully owned by the operator. While interest, leasing and rent costs affect the financial position of the operator, they represent some profits that have been redistributed to other investors in the fishery.

Rates of return

The rate of return to boat capital is calculated on the value of boat capital (excluding the value of quota and licences) as if the operators wholly owned all assets so the financial performance of all boats can be compared, regardless of the operators’ equity in the business. The estimated average rate of return to boat capital (excluding the value of quota and licences) rose from 16.7 per cent in 2005-06 to 27.3 per cent in 2006-07. These high rates of return are largely the result of the relatively low value of boat and equipment capital in the sector.

The rate of return to full equity includes the value of quota and licences in addition to other capital, and therefore provides an indication of the return to total capital invested in the business unit. It reflects changes in the value of quota and licences as well as changes in the profitability of the fishing operation – that is, the profit from fishing accrued to the owners of capital.

The estimated average value of quota and licences attached to each boat was $1.1 million in 2006-07. This includes the estimated market value of quota and licences used by the boat, including the value of non-GHTS endorsements (for example, lobster licences). The rate of return to full equity incorporating these endorsement values increased slightly between survey years, from 4.8 per cent to 6.4 per cent in 2006-07.

Economic performance of the fishery

The results presented in table 8 show changes in the average receipts and costs of boats operating in the gillnet hook and trap sector in 2005-06 and 2006-07. However, they shed little light on the economic performance of the sector because they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the opportunity cost of capital employed in the sector. Table 9 shows boat cash profit and net economic returns generated from the gillnet, hook and trap sector for the period 1998-99 to 2006-07. Only receipts and costs estimated to have been earned and incurred in the gillnet, hook and trap sector are included.

Total fishing receipts in the sector were relatively stable between 1998-99 and 2002-03, averaging $23.9 million, before rising to $29.6 million in 2003-04. Receipts remained high in 2004-05 ($28.2 million), declined in 2005-06 ($21.9 million) before rising slightly in 2006-07 ($24.3 million). Estimates for boat cash profit in the sector (fishing income less cash operating costs) improved over the two most recent survey years, from $2.8 million in 2005-06 to $3.3 million in 2006-07.

Net economic return is a measure of economic performance that incorporates depreciation expenses, the opportunity costs of owner and family labour and the opportunity cost of capital — costs not accounted for in boat cash profit. Net economic returns also include a deduction of fishery management costs. These management costs include both management levies paid for by fishery operators (accounted for under ‘licence fees and levies’ in table 8) and non-recovered management costs paid for by government (not accounted for in table 8). An explanation of the calculation of net economic returns is included in appendix B.

Net economic returns (including management costs) in real terms show an increasing trend over the period from 1998-99 to 2003-04 (figure i). After reaching a peak of $4 million in 2003-04, net returns declined over the following two years falling to $1 million in 2005-06. Net economic returns improved slightly in 2006-07, rising to $1.5 million. Although this estimate is lower than the peak reached in 2003-04, the rapid decline in boat numbers since 2003-04 has meant the decline in average net returns to each boat in the sector has been proportionally lower, with the average boat achieving a net return of $18 500 in 2006-07 compared with $33 500 in 2003-04.

It is important to note that factors outside the control of fishery management influence both net economic returns and other measures of financial performance in the fishery. For example, movements of the Australian dollar affect the prices received by fishers. Also, the price of inputs such as fuel and gear are not controlled by fishery managers. However, the fishery manager can attempt to ensure profits are maximised given prevailing input and output prices. This may require periodic review of the optimal level of catch and effort in the fishery.