Hearings on the Marine Resources Bill

This meeting is a continuation of the meetings that was held on the 11^th February. Due to be heard today were:

• South Africa Deep Sea Trawling Industry (see appendix 1)
• Small and Medium Enterprises (SME) Eastern Cape
• Oceana
• Western Cape Legislature (see appendix 2)
• Azanian Fishing Co.
• Quenberg Commercial Abalone Divers
• E.C. Fishing Forum
• IMTT Mymoema Poggenpoel
• Recreational Divers Ass. And Rock Lobster
• Underwater African Ass.

Prof. Butterworth was added to the list.

The meeting started with the submissions from the Informal Sector and the Cape Independent Sustainable Fishers, who were carried over from the last meeting.

Mr. Johnston from the Informal sector stated that the new bill did not address the social and economic problems. The white paper was not in line with the consultative "Mandla" paper, as new items were added and other key items left out. The white paper was finally drawn up by a group of 5 or so people. Mr. Johnston indicated that he had a 140 page submission on the white paper which would be made available.

Mr. Johnston then went on to discuss the Bill. He foresaw many problems and law suits ahead. The objectives and principles of saving jobs may well be achieved at the expense of economic freedom for informal fishers. He went on to outline specific issues dealing with clauses in the Bill, as indicated in his further written submission. In summation he stated that the Bill lacked the recognition of the basic rights of the informal fishers, protecting the "haves" at the expense of the bona fide fishers. He stated that people will rush to the paper quota schemes, and with knowledge of the in’s and outs of the industry will create monopolies and underhand dealings.

The main theme of the questions addressed to Mr. Johnston was around his proposal for a CREAD (Control Regulated Equitable equipment Distribution.) based allocation rather than a quota board system. (The CREAD system was outlined in a submission given to the committee). The system would recognise artisanal fishers allowing them greater access to the resource. He stated that a register of fishers would need to be created.

The Cape Independent Sustainable Fishers made a verbal statement to highlight key points in there written submission.

Professor Butterworth, representing the South Africa Marine Scientists made a presentation outlining the key issues in his written submission, which had been tabled with his report. The committee agreed to set up a separate meeting with Mr. Butterworth to look at the scientific aspects of the Bill.

Hearings continued for the rest of the day, however further minutes are not available.

Appendix 1
South African Deep-Sea Trawling Industry Association

REPRESENTATIONS TO THE PORTFOLIO COMMITTEE ON ENVIRONMENTAL AFFAIRS AND TOURISM ON BEHALF OF THE SOUTH AFRICAN DEEP-SEA TRAWLING INDUSTRY ASSOCIATION IN RESPECT OF THE MARINE LIVING RESOURCES BILL [B94-97]

1. INTRODUCTION

These representations are made to the Portfolio Committee on Environmental Affairs and Tourism ("the committee") on behalf of the South African Deep-Sea Trawling Industry Association ("the association") which is an industrial body registered as such in terms of s13 of the Sea Fishery Act, 1988 (Act 12 of 1988 "the Act").

The association comprises eleven members, all of which are currently trawler-operating hake quota holders. Collectively, they have quotas amounting to approximately 83.5% of that portion of the Total Allowable Catch ("TAC") administered by the Quota Board. The two largest hake quota holders are Irvin & Johnson Limited and Sea Harvest Corporation Limited, both of which are members of the association. Of the total of 149297 metric tons allocated by the Quota Board in respect of the 1997 fishing season, Irvin and Johnson received approximately 57000 tons (approximately 38%) and Sea Harvest (including its wholly-owned subsidiary, Atlantic Trawling (Pty) Ltd) approximately 56000 tons (37%).

The Marine Living Resources Bill ("the Bill") [B94-97] proposes the repeal of the Sea Fishery Act.

It is stated in the memorandum on the objects of the Bill, that the Bill is based on the White Paper that was discussed by the Cabinet on 16 April 1997 and 14 May 1997. The Fisheries Policy was adopted by the Cabinet on 14 May 1997.

The Fisheries Policy is founded on the belief that all natural marine living resources of South Africa, as well as the environment in which they exist and in which mariculture activities may occur, are a national asset and the heritage of all its people, and should be managed and developed for the benefit of present and future generations in the country as a whole. It is noted that fisheries is a matter of exclusive national competence in terms of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996, "the Constitution"). Hence, the White paper contemplates that the national Minister is and should be ultimately responsible for fisheries management decisions and that he must have ultimate powers of decision-making. Indeed, if one has regard to the contents of the Bill, it becomes immediately apparent that the Minister enjoys wide regulatory and discretionary powers which, at first glance, appear to be unfettered in their nature and scope.

At the outset, the association wishes to place on record that it has no argument with the concept that this country's living marine resources are a national resource and that as such that resource must at all times enure to the benefit of the whole population of the country. The association also does not oppose the concept that fisheries management needs (ultimately) to be controlled and co-ordinated by the Minister. What does concern the association (and which concern the association hopes to articulate in a constructive fashion in these representations) is that the exercise by the Minister of his wide-ranging powers of discretion as prescribed in the Bill must be subject to the appropriate legal and constitutional constraints.

It is of critical importance to the association that in order to give effect to the principle of sustainable utilisation of Living Marine resources (in this case the demersal fishery), the deep-sea trawling industry remains viable and competitive, both domestically and internationally. Indeed, the White Paper recognises that South Africa's most valuable fishery commercially is the demersal fishery, a fishery dominated by deep-sea trawling for the Cape hakes. (Para 2.1.2 of the White Paper).

It will be submitted on behalf of the association that the demersal fishery is quite different in very important respects from other fisheries such as the pelagic, rock lobster, abalone and line fisheries. Hence, the association's approach in its critique of the Bill will of necessity be different to that adopted on behalf of other fisheries.

A concern which needs to be registered immediately on behalf of the association is that the Bill does not appear to take into account the operational and infrastructural differences which sets demersal fisheries apart from other species of fishery and other sectors of the fishing industry.

In order to illustrate these crucial differences, it is appropriate that the association highlights the historical background which gave rise to the establishment and development of the demersal fisheries sector; the prevailing conditions within the sector; and the structural and other changes which have evolved within the sector having regard to the fundamental changes that have taken place in this country since the early 1990's culminating in the first democratic elections in April 1994.

2. HISTORICAL BACKGROUND

The historical background to the hake trawling industry ("the industry") is characterised by three phases.

2.1 The first phase : 1900 - 1960

This phase started in 1904 at Cape Town with G D Irvin's African Fishing and Trading Company. The firm soon failed but picked itself up again and entered into a co-operative agreement with C O Johnson, then fishing out of Durban. Although the fishing resources at the Cape were acknowledged to be abundant and potentially profitable the new arrangement did not prosper until further capital was procured. The two pioneers entered into partnership in 1910 and merged as I & J in 1912 - 1913 and registered as a public company in 1922.

I & J succeeded by making creative use of rail transport, setting up inland depots and establishing and investing in a distribution network throughout the country. These ideas allowed I & J to establish a demand for a fish species that had not before been fully commercialised. By establishing an inland market, hake proved to be a stable, plentiful and available species ideal for consumption by the nation as a whole. Vertical integration into processing (typically identified with the industry) followed naturally from catch surpluses and the need to handle fish through all stages - from the sea to the consumer.

Although several trawler owners entered the fishery, they all faded or amalgamated with I & J by the middle 1950's. This allowed I & J to generate surpluses needed to reinvest in suitable vessels and upgrade technology.

By 1960 the industry had become static.

2.2 The second phase : 1961 - 1978

The second stage was characterised by renewed competition; international intrusion into the South East Atlantic; development of export markets; resource depletion and the distress of the domestic hake fishery culminating in the declaration of the 200Mile Exclusive Fishing Zone.

During this period, Atlantic Trawling commenced operations at Hout Bay in 1961. This company introduced purpose-built stern trawlers, advanced processing plants and created a competitive brand. In 1963 Kaap Kunene followed with five ships, including the first freezers.

Sea Harvest Corporation emerged as a new force in 1964 through the marketing and catching capabilities of its parents. The Saldanha company concentrated on processed package hake in local and export markets but its future remained in doubt until it obtained a firm foothold in the domestic market.

The trawling industry laid the basis for the modern South African frozen food industry during this time. It applied food technology, established an infrastructure for branding and product disposal and allowed for frozen packaged fish products to be accessed through retail outlets throughout the country. Indeed, the retail distribution of fish was so modernised at this point that South Africa could claim world leadership in this field. Advances in quick freezing and the introduction of factory freezer trawlers revolutionised the industry, enabling it to increase its export performance significantly - so that by 1970 40% of the trawling sector output was consigned to foreign markets.

Advances in technology allowed for competitive exploration leading to the discovery of important new fishing grounds.

However, the foreign "discovery" of the South East Atlantic hake fishery plunged the industry into a crisis. Most of the major cost and supply problems experienced since the early 1970's have their origin in this foreign onslaught. From 1963 distant water fleets pillaged fish stocks in the adjacent waters with growing intensity. The continued viability of the domestic industry was under serious strain. In less than ten years the South African hake catch in the South East Atlantic fell to 15% of the total caught in South African waters and the catch rates fell by more than two thirds.

In the meantime, the draft Third Law of the Sea Convention recommended that provision be made for the 200 Mile Exclusion Zone to be universally adopted. A clause in the draft convention document laid down that nations without the capacity to harvest these resources should accommodate foreigners to achieve that goal. This troubled the domestic authorities and trawling companies were urged to expand their fleets to build up national performance. This resulted in secondhand ships being used to acquire tonnage fast enough to respond to the perception that "performance" had to be improved. This enabled existing South African fishing fleets to be in a position to take advantage of the sustainable yield in the exclusive fishing zone.

An international commission for the South East Atlantic fisheries was established to put a stop to the ruination of the hake fishery. The commission recommended (and the government agreed) to an initial TAC of 165000 tons for 1977, 110000 tons being reserved for the coastal state. This did however not stop the foreign onslaught and the government was eventually compelled to adopt the 200Mile Fisheries Zone.

2.3 The third phase - 1978 - 1995

Following the adoption of the Exclusive Fishing Zone ("EFZ"), this phase was characterised by limitations on access; the systematic patriation of the South African hake fishery; the gradual recovery of the hake resource; the introduction of hake quotas; the introduction of further entrants to the fishery; the rehabilitation of the fishery; and culminating in the establishment of the Quota Board pursuant to the recommendations of the Diemont Commission.

Prior to 1 November 1977, the hake fishery had been completely unrestricted, resulting in significant growth occurring in processing, catching and advanced industrialisation. However, this "open-door policy" resulted in the over-exploitation of the resource and the entry into the market of entrants who clearly did not have the capital or the capacity to effectively and in a sustainable way exploit the resource. It had now become necessary to put a cap on expansion and the open-fishery policy was reversed directly upon the proclamation of the EFZ.

The state immediately excluded foreigners from South African fishing waters except those who were fishing under bi-lateral treaty. It also declared that the fishery would be subject to a TAC in future. In this way, it was hoped that catches would be reduced to the level needed to realise the long-term Maximum Sustainable Yield ("MSY"). It was recognised that the fishery was over-subscribed and that extra effort should be discouraged.

A pilot domestic TAC was set for 1978 but the so-called "global quota" was ineffective. Individual quotas were introduced to the deep-sea trawl fishery in the following year. The allocations reflected the past performance, commitment and catching capacity of the trawling companies and resulted in three enterprises (later merged into two) catching 97.5% of the domestic TAC. The remainder was allocated to smaller enterprises. In addition, the smaller in-shore sole/hake trawlers were allowed a global hake allocation of 5000 tons until they could sort themselves out into individual quotas for sole and hake.

Scientific understanding of the resource had steadily improved and in 1979 (which was the first year of proper quotas), the TAC was set at 155900tons. Individual rights of access to the resource were recognised. In this way members of the industry were assured, after surviving troubled and difficult times, that their efforts would be recognised. With the knowledge that they would be allocated a fixed

share of the hake TAC, those in the industry felt that they could now plan for the future with confidence. This resulted in significant investment in processing and fleet replacement and modernisation.

During this period, however, it became apparent that the resource was not recovering (from the over-exploitation in the previous phase) as fast as anticipated and the TAC was accordingly reduced by 23% over the period 1982 - 1983. In this regard, the industry co-operated with the authorities managing the TAC cuts and it furthermore introduced conservation measures.

The cycle of business failure and consolidation carried on after quotas were introduced and the ownership of two thirds of deep-sea trawling industry quota holders changed hands in the period to 1984. However, despite some minor historical adjustments, the authorities continued to endorse the share of the participants in the TAC as established in 1979.

In 1984 the new Minister introduced a new policy, referred to as the "80/20 arrangement". The 80/20 arrangement decreed that in future only 80% of any increase in the TAC would be allocated to the existing industry and the remaining 20% would be allocated to new entrants. This arrangement ensured stability and predictability in the industry, allowing for long-term investment, while at the same accommodating new entrants.

This development followed the devaluation of the Rand which, coupled with improving catch rates and increasing demand for hake, improved the profitability of the industry which resulted in pressure being put on the government of the day to allow new entrants into the industry. Up to that point, there was little or no interest in gaining access to the industry.

Subsequently the Diemont Commission was appointed. This Commission recognised that performance and the commitment of investment were important criteria for determining access rights in fisheries. It recommended that existing rights and agreements be honoured and that a quota board be set up. The Quota Board was established in 1990 and made its first hake quota allocation in 1991. In addition to augmenting some of the 80/20 newcomers, the Quota Board allocated quotas to another thirty eight entities at one time including trusts formed to promote economic development in fishing communities. Since it was first convened, the Quota Board has not allocated any incremental hake TAC to quota holders pre-dating 1985.

3. THE PREVAILING SITUATION IN THE INDUSTRY

The current membership of the association comprises the following entities:

Atlantic Fishing Enterprises (Pty) Limited

Atlantic Trawling (Pty) Limited

Fernpar Fishing Company (Pty) Limited

Irvin & Johnson Limited

Radaco Sea Products (Pty) Limited

Marpro Trawling Company Limited

Oorsterlig Visserye (Pty) Limited

Sea Harvest Corporation Limited

Viking Fishing Company Limited

Surmon Fishing CC

New South Africa Fishing Company (Pty) Limited

Over the last ten years, the trawling industry has accounted for more than half the wealth generated from the utilisation of the living marine resources in all South Africa's commercial marine fisheries.

The industry focuses on:

(i) conservative management of demersal fish stocks with a view to long-term sustainable utilisation and growth;

(ii) the optimal utilisation of the catch through product beneficiation; and

(iii) an efficient and internationally competitive operation.

In order to operate as successfully as it does, the industry deploys significant fixed-capital assets. Currently there are significant levels of fixed capital asset investment to the tune of R4 billion at current values. Annual investment of over R50 million ensures the maintenance of high standards and efficiency. Other investment both in the industry and related to the industry over the past three years has amounted to R100 million.

Annual catches of 175 000 tons (including by-catch) from a trawler fleet of 55 offshore and 36 inshore vessels are made. These catches generate annual sales of over R1250 million and an export revenue (foreign exchange) of R440 million. An amount of R182 million per annum goes into the fiscus.

The industry is labour intensive and currently employees over 9000 people (excluding those employed in the distribution sector). Employment in the industry is characterised by the following:

1. All employment is on a permanent full-time basis (as opposed to employment on a seasonal, part-time basis);

2. Employees are paid a high fixed wage plus commission (as opposed to working on a purely commission basis);

3. Terms and conditions of employment are negotiated centrally with recognised unions, such as the Food and Allied Workers Union ("FAWU") and the Trawler and Line Fishermen's Union ("TALFU") in terms of collective bargaining agreements entered into with those trade unions. Benefits include membership of pension and provident funds, medical aid and assistance, regular paid shore leave and annual holidays. A significant development in the industry has been the introduction of employee share schemes which give effect to the objectives of empowerment and affirmative action.

One of the major advantages which results from the industry's capacity to add value to its catches, is its capacity for job creation. For example, while approximately 22 jobs per thousand tons of hake quota are created in the catching operation, a further 40 jobs per thousand tons are created by further processing in shore-based factories.

The industry invests considerable amounts of money (in excess of R8 million per annum) into the area of developmental skills, employee advancement and affirmative action.

The employers in the industry (members of the association) are all parties and signatories to a code of conduct (entered into on 8 October 1993) in terms of which:

1. no person will be subjected to discrimination on the grounds of gender, race, colour, sex, language or religion;

2. collective bargaining is recognised as the preferred method of negotiation with the recognised trade unions;

3. a safe work environment will be created;

4. fair and reasonable labour practices will be maintained and applied throughout the industry;

5. systematic development and training will be offered;

6. assistance will be granted in the provision of decent housing and where possible home ownership will be promoted;

7. the welfare of neighbouring communities will be improved through positive action entailing:

(i) promotion of sport and recreation;

(ii) the granting of study bursaries to suitable and meritorious candidates; and

(iii) the promotion of quality of life within the community; and

8. employers will treat employees with dignity.

At the distributive level, the trawling industry provides approximately 80% of the fresh and frozen seafood consumed by all South Africans, either directly through shops and supermarkets, or indirectly through catering and hospitality institutions. The industry is committed to serving the domestic market requirements fully in a competitive environment. The industry remains a major supplier of raw material to an extensive range of fish processors. Domestic sales generate R750 million at wholesale level.

The industry has developed a wide international market with the accent on high value added products. It is the largest South African exporter of perishable frozen products and exports to the USA, Europe and Australia. The industry has become a leading foreign exchange earner for the government. South African hake suppliers are highly regarded by overseas users and the industry enjoys a reputation as a consistent and reliable source of the world's highest quality hake products. Indeed, the industry has set an example to other industries in the production and marketing of value-added products derived from natural resources.

The industry is also of regional importance in the Western Cape Province in that it provides for the purchase of goods and services from local suppliers to the tune of R370million per annum. Hake alone represents 1.3% of the Gross Regional Product ("GRP") of the Western Cape, quite impressive considering that agriculture and forestry account for some 5% of the GRP. Affirmative action has been encouraged and implemented and this is done by way of regional out-sourcing to the tune of R25 million and continues to grow.

In summary then, the industry is characterised by high levels of capital investments, stable (and relatively high) levels of employment regulated by sophisticated and mature collective bargaining structures; a long and historically proud record of the long-term sustainable utilisation of the resource; a vibrant and competitive local market; and a good reputation as a reliable supplier on the international market. The industry is a stable one which has over the past five to six years sought to transform and restructure itself to give effect to the constitutional imperatives of equality and access to the historically disadvantaged sectors of the industry.

4. THE WHITE PAPER

The policy outlined in the White Paper and which is derived from the Fisheries Policy Development Committee ("FPDC") rests on the following objectives and principles:

4.1 Optimisation of long-term social and economic benefits to the nation;

4.2 Promotion of sustainable utilisation and the replenishment of living marine resources;

4.3 Management and development of fisheries must comply with the principles of the Constitution and the long-term objectives and principles of the RDP;

4.4 Transparency and accountability in marine resource management;

4.5 Fair and equitable access;

4.6 Management of living marine resources must be based on the best available knowledge and multi-disciplinary research within the context of sustainable utilisation;

4.7 An holistic approach to fisheries and the utilisation of marine resources;

4.8 Participation in resource management; and

4.9 Acceptable conditions of employment.

It is submitted on behalf of the association that its members and those involved in the industry have already given effect to these objectives and that its record in this regard speaks for itself.

The memorandum on the objects of the Bill states in clear terms that the most important part of the Bill is that which relates to the establishment of the basis on which resource allocation decisions are to be made. Access and access rights are dealt with in Part 4 of the White Paper on pages 15 - 26. The issue of access to the resource is dealt with on the premise that access to South Africa's fishing resources has not always been fair and equitable. In terms of the White Paper, in order to address the problems of the industry, it is necessary to develop mechanisms which achieve the following objectives:

(i) A fairer system of allocation of access to rights to harvest South Africa's living marine resources;

(ii) A system which ensures greater access to the resource by those who have been denied access previously;

(iii) A reduction in the current levels of pressure on the resource which in some cases threatened the very sustainability of resource.

The White Paper contemplates that those who enjoy the privilege of access should pay an appropriate fee and that the commercial sector will pay the fee in the form of either a royalty or suitable rate based on quota, catch or effort.

In this regard, it is useful to quote directly from the White Paper:

"A dynamic, thriving fisheries sector depends on a sound resource base. The primary objective of South African fisheries' policy must therefore always be to protect and safeguard the resource and its environment, in order to be able to reap an optimum, long-term sustainable harvest. To achieve this, limiting entry is imperative. The alternative, open or liberal access to the resource, inevitably leads to over-exploitation, depletion or even extinction of stocks, wasteful over-capitalisation of the industry and consequent loss of income and jobs...

Recent political change has raised expectations that the industry has scope for many new small operator entrants. This is not the case. In fact, most of South Africa's marine resources are already being harvested at sustainable levels and in some cases are under severe pressure. If we are to avoid the demise of some of our fisheries, as has occurred so often elsewhere in the world, pressure on the resources must be reduced in order to sustain them. In some cases this might even mean the number of fishers may have to be reduced .... redistribution and empowerment must take place without destabilising the industry unduly.

Any restructuring process is difficult and painful. The number of persons and organisations who harvest the resource has to be limited. The proposals in this Chapter will cause a necessary restructuring of the industry, but will help to put in place a sustainable industry able to contribute to South Africa's macro-economic objectives of employment, competitiveness and economic growth..." (emphasis supplied).

It is submitted that currently the industry enjoys high and stable levels of employment, is the subject of healthy competition amongst industry players and has achieved a sustained economic growth over the past ten years which has outstripped any of the other sectors in the fishing industry.

Although the White Paper proposes that small and medium enterprises be encouraged to enter the industry in order to make it globally competitive, the association is of the view that such an initiative is likely to fail. This view is informed by the historical growth and performance of those involved in the industry. The industry requires large-scale highly capitalised operations. Employees are relatively highly paid and in addition are entitled to benefits (such as housing) which benefits new entrants (whether they be small or medium enterprises) are highly unlikely to afford. It will also be very difficult for new small or medium enterprises to break into the international market, if only because of the high standards set by, for example, the European Union.

The association would prefer to consider ways in which its existing members can achieve the empowerment criteria which will enable them to compete for access rights. Some of these ways include:

(i) restructuring equity ownership in companies;

(ii) encouraging contracts with fish-processing companies;

(iii) helping small-scale operators improve efficiency;

(iv) unbundling, mergers and the formation of co-operatives, joint ventures and other forms of formal commercial co-operation;

(v) out-sourcing; and

(vi) incentive schemes and the adoption and implementation of social responsibility programmes.

It is proposed that these matters be dealt with either in the form of some equity legislation or be the subject of discussion in the proposed Consultative Advisory Forum on Living Marine Resources. It is respectfully submitted that the members of the association have already met all or most of these criteria and they continue to strive to do so successfully.

The new access regime proposed by the White Paper stipulates that rights of access will not be made available as at present through the allocation of permits and quotas, but rather be converted to real rights or other forms of secure rights, purchased through a transparent and competitive process. It is contemplated by the White Paper that new entrants will be given the opportunity to tender for rights on an open basis where they can demonstrate that they are able to establish the capacity to harvest the resource and that they have invested in the industry or have a history in the industry. Of significance to the association is the recognition in the White Paper that previously advantaged companies who have made significant progress in transforming themselves and in broadening participation, will be eligible to tender. It is respectfully submitted that the members of the association fall into the category whereby they have implemented empowerment and affirmative action strategies over the past five years or so. Aspects of the transformation and the broadening of participation in the industry have included:

(i) transferring significant equity to previously disadvantaged persons and communities;

(ii) changing the boards of directors by bringing in new directors from previously disadvantaged sectors;

(iii) transforming management;

(iv) transferring skills;

(v) restructuring to become globally competitive; and

(vi) introducing (successfully) employee participation schemes.

These aspects of transformation are endorsed at para 4.1.6.3 of the White Paper.

The White Paper goes on to deal with the definition and characteristics of an access right and describes it as

"the right to catch or to harvest one or more specified species of South Africa's living marine resources through the exercising of some specific fishing effort, subject to and conditional upon certain restrictions, restraints or limitations..."

placed on it by the Minister (para 4.6.2.1 of the White Paper). Surprisingly, this definition is not repeated in the Bill. It goes without saying that it needs to be inserted in s1 of the definition section of the Bill. Both the White Paper and the Bill contemplate that an access right will be transferable, inheritable and divisible.

Part 5 of the White Paper deals with fisheries' management, in particular relating to fisheries research in management, the impact of exploiting the resource on the environment and matters relating to the monitoring, control and surveillance of the exploitation of the resource.

In this regard, the association and its members have a long tradition of providing co-operation and assistance (both material and financial) to, for example, the Sea Fisheries Research Institute. The association and its members have also made available to the department and the Institute their vessels for the purposes of conducting scientific research and surveillance of the resource. It is envisaged that the association and its members will continue to provide assistance and co-operation since it is not only in their commercial interests to do so, but also in the interests of the optimum utilisation and protection of the resource for the benefit of the country as a whole.

5. THE BILL

5.1 The Bill provides that the Minister shall exercise his powers under the Act having regard to the following objectives and principles:

(a) the need to achieve optimum utilisation and ecologically sustainable development in Living Marine resources;

(b) the need to conserve Living Marine resources for both present and future generations;

(c) the need to apply precautionary approaches in respect of the management and development of Living Marine resources;

(d) the need to utilise marine living resources to achieve economic growth, human resource development, employment creation and a sound ecological balance consistent with the development objectives of the national government;

(e) the need to protect the ecosystem as a whole, including species which are not targeted for exploitation;

(f) the need to preserve marine biodiversity;

(g) the need to minimise marine pollution;

(h) the need to achieve to the extent practicable a broad and accountable participation in the decision-making processes provided for in this Act; and

(i) any relevant obligation of the national government or the Republic in terms of any international agreement or applicable rule of international law.

In criticising the Bill, it needs to be recorded at the outset that notwithstanding the fact that the Minister is accorded such wide and discretionary powers under the Act, the exercise of those powers must, as a matter of statutory interpretation, be constrained by the statutory requirement that the exercise of these powers must be in accordance with the objectives and principles prescribed in s2(a)-(i).

5.2 Chapter 2 deals with matters relating to the administration of the Act and to this end, s5 establishes a body called the Consultative Advisory Forum for Marine Living Resources ("the Forum"). S6 prescribes that the Forum shall advise the Minister on a range of matters but the Minister is not obliged to listen to the advice of the Forum.

In terms of s7(1) the Forum shall consist of at least five members appointed by the Minister, the only criteria for appointment being that the Forum must be broadly representative and multi-disciplinary, with members qualified to make a substantial contribution towards the proper functioning of the Forum.

S8 provides that the Minister may recognise any industrial body or interest group in a branch of the fishing industry which, in the opinion of the Minister, is representative of the specific body or group. S8(2) provides that the Forum shall give consideration to information submitted to it by the industrial bodies and interest groups recognised in terms of s8(1).

It is noticeable that the function and composition of the Forum differs materially from that provided for in the White Paper (para 5.10.4.1). The White Paper contemplates the Forum being "an independent statutory body appointed by the Minister from nominations made by appropriate groups...". It is also apparent that the White Paper contemplates the Forum advising the Minister on a range of issues including advising the Minister on appropriate TAC levels, departmental structures and "any other matter referred to it by the Minister". The Bill appears to limit the functions of the Forum significantly.

It is respectfully submitted that in order to secure the credibility of the Forum, the Forum should consist, amongst others, of members nominated by industrial bodies or groups recognised by the Minister in terms of the Bill. (In this regard industrial bodies or interest groups "shall" be recognised by the Minister if they meet certain minimum threshold requirements, to be prescribed by the Minister). It is respectfully submitted that the Forum should be an independent statutory body and that the Bill be amended to require the Minister to consult with the Forum, not only in relation to the range of matters mentioned in s6(a)-(e), but also (additionally) in relation to the determination of the TAC and the Total Applied Effort (TAE), the determination of those portions of the TAC and TAE given to the different sectors, the determination of the Allowable Commercial Catch, the determination and allocation of the Excess Allowable Catch, the determination of the tender process and tender criteria, and the making of regulations.

In other words, it is submitted that the status and functions of the Forum be significantly enhanced in order that those involved in the fishing industry (including the demersal fishery) be given a significant say in the running of the affairs of the industry. It is submitted that the Bill must provide that the Minister "shall" consult with the Forum. This does not imply that the Minister "shall negotiate" by having to reach agreement on a range of matters to be prescribed in an amended Act. The association recognises the need for the Minister to have the ultimate say in the control and management of the affairs of the fishing industry, in all respects. However, it is imperative that those involved in the industry (such as the association and its members) have a meaningful say in regard to matters which materially affect it.

It is accordingly proposed that the Forum be retained as a concept but that it be restructured.

The association proposes that separate chambers for each sector of the industry be established. This will allow for each sector (fishery) to focus on that sector and to dedicate itself to developing and promoting that sector. Quite frankly, it is difficult to envisage that the current composition proposed in the Bill (with five members) can dedicate themselves to dealing with the various sectors of the fishing industry and deal with the various factors and circumstances which impact on each sector, differently. Accordingly, it is proposed that separate chambers be established to deal with the demersal, pelagic, rock lobster, abalone and line fisheries; that each chamber comprise five members nominated by those involved in a specific sector, appointed by the Minister, and the Minister should be entitled to nominate other representatives. Each chamber should be required to make decisions and recommendations on the basis of consensus. Should a chamber fail to reach consensus, provision should be made for a dispute resolution procedure which provides for mediation and/or arbitration of disputes.

It is furthermore proposed that the Minister should be obliged to consider recommendations made by a chamber or the Forum. The elected chairpersons of each chamber should form a central committee. This committee should as far as possible attempt to co-ordinate the functions of the various chambers and formulate overall policy in consultation with the Minister.

5.3 Management of marine living resources

The memorandum to the Bill describes this as the most important Chapter of the Bill, as it establishes the basis on which resource allocation decisions are to be made.

The provisions of this Part are predicated on the key objective of the Bill, namely that the allocation of resources is to be done on a national basis, and that it is the Minister who determines the TAC, the TAE or a combination thereof, as well as which portions of the TAC or the TAE shall be allocated in any year. The power to decide how much fish is to be caught in any year or season therefore vests in the Minister, who will also determine what proportion of the catch is allocated to the following sectors:

(a) commercial fishing;

(b) recreational fishing;

(c) subsistence fishing; and

(d) foreign fishing.

The association is concerned with commercial fishing, which is dealt with in Part 3 of the Bill (s23-s26). Commercial fishing may only be undertaken if a right of access, a permit and a fishing vessel licence have been granted or issued. Once a right of access has been granted, the applicant has to apply for a permit which shall be issued annually. The right of access shall be granted on the basis that a certain proportion of the right reduces over this period of duration at a rate to be determined by the Minister at the time when the right is granted. If no rate of reduction has been determined by the Minister, the right of access shall terminate on its expiry.

The key principles or characteristics of these access rights are that:

(a) only a South African person may acquire or hold the right of access to undertake commercial fishing;

(b) a right of access may be sold, leased, inherited, divided or otherwise transferred; and

(c) any holder of the right of access who wishes to transfer part or all of the right can only do so with the permission of the Minister.

This part of the Bill raises a number of concerns and gives rise to a number of questions which require to be answered.

S22(1) provides that the Minister "may" annually determine the allowable commercial catch, the TAE, or a combination thereof in relation to commercial fishing. There is no requirement that the Minister "shall" annually determine the allowable commercial catch. In this regard, it is submitted that the Bill be amended to provide that the Minister "shall" annually determine the allowable commercial catch, the TAE or a combination thereof and that he "shall" do so in consultation with the Forum or the relevant chamber thereof (whichever is applicable).

S23 deals with the rights of access and provides that in granting a right of access the Minister shall, in order to achieve the objectives contemplated in s9(2) of the Constitution have particular regard to:

(a) the need to permit new entrants, particularly those from historically disadvantaged sectors of society; and

(b) the need to promote stability within the commercial fishing industry.

The association's approach to this part of the Bill is based on the need for stability and certainty in the industry; stability because of the large number of employees (and their dependants) dependent on a vibrant and growing industry and the large scale capital investment employed in the industry; and certainty, not only because employees (justifiably) demand job security but also because of certainty of supply demanded by both the domestic and international markets.

It is respectfully submitted that the criteria laid down in s23(3)(a) and (b) are too vague and give rise to uncertainty and to a great potential for unnecessary and costly litigation. It is proposed that s23(3) be amended to provide that the Minister "shall" consult with the relevant chamber of the Forum, alternatively the Forum, before granting a right of access. Indeed, the association would prefer it if the Minister were required to determine the criteria for the granting of a right of access (in order to achieve the objectives contemplated in s9(2) of the Constitution) in consultation with the Forum. The association welcomes the criteria provided for in s23(3)(b), i.e. the need to promote stability within the commercial fishing industry. As previously indicated, the association is not opposed to new entrants being permitted into the industry, provided they meet certain prescribed threshold requirements, and provided the Minister consults with the Forum or the relevant chamber in regard thereto. However, given the pressure on the resource as it is, the association would prefer that the Minister prescribes (by for example setting targets and taking account of the unique features of each particular sector) that the sector transform and restructure in order to give effect to the principles and objectives prescribed by s2 of the Bill. It has already been submitted that the association and its members have gone a long way towards complying with these principles and objectives.

Where a right of access is granted (in consultation with the relevant chamber of the Forum, or the Forum), the association supports the grant of such a right for a lengthy period of time. The grant of such a right over a long period of time will ensure stability and certainty and the industry can look forward to the future with confidence. However, the association is opposed to the provision in s23(5) which provides that a right of access granted in terms of the section "shall reduce over its period of duration at a rate which may be determined by the Minister at the time when the right is granted". This sub-section would appear to contradict and undermine the granting of a real right over a long period of time (fifty years). In this regard, it is proposed that this sub-section be deleted. The right of access shall terminate in its entirety on the expiration of such a right as provided for in s23(6), provided that where it is established that the holder of the right has complied in all material respects with the conditions attaching to the right of access, such a holder shall be entitled, alternatively shall have a legitimate expectation, to be re-allocated or granted a new right of access.

It is submitted that an application to transfer a right of access or a part thereof should be submitted to the Forum which should, in consultation with the Minister, determine whether to approve the right of access or a part thereof.

It is proposed that s23(9) be amended to require that the Minister "shall" consult with the relevant chamber of the Forum, alternatively the Forum, before making regulations regarding the matters mentioned in s23(10)(a)-(l).

S24(1) provides that from a date fixed by the Minister in the Gazette, rights of access shall, subject to s29 (which deals with the allocation of rights of access to the Company), be sold by the State through a tender process. S24(3) provides that the Minister may prescribe the tender process for rights of access referred to in s24(1), including criteria for granting of rights of access to applicants who may or may not be highest bidders. It is submitted that it is to be preferred that rights of access be granted subject to a prescribed fee determined by the Minister in consultation with the Forum, and subject to the criteria prescribed by the Minister in consultation with the Forum. It is submitted that this will achieve the same objective which is sought to be achieved by the selling of rights of access by the tender process. It is submitted furthermore that the selling of rights by the tender process is fraught with difficulties and contradictions and is likely to be a fertile source of litigation. The association accepts that long term rights of access must be paid for and submits that the proceeds should be applied for fisheries purposes. The sale of rights through a tender process is however, likely to attract similar problems and difficulties currently experienced by the Quota Board. It is suggested that the committee should consider a system whereby royalties are paid for access rights and that the basis of the determination of the amount to be paid should be the creation of an incentive scheme whereby those in the industry

with rights of access who have complied with certain criteria such as restructuring, transformation, empowerment and job creation, should be required to pay less. It is submitted that such a scheme would also be consistent with the government's growth, employment and re-distribution programme ("GEAR").

It has already been submitted that rights should only be reduced once the Minister has consulted with the Forum. It is submitted that the Act must provide that the Minister "shall" consult with the Forum in this regard having considered the available scientific evidence and whether or not such evidence indicates a deterioration in the resource.

Part 4 of the Bill deals with the establishment and incorporation of "the Company". It is submitted in this regard that the good intentions which underpin the concept of the formation of a Company are likely to be undermined by the fact that the Bill provides that the sole shareholder shall be the State and that the Minister may appoint a board of directors and is otherwise wholly in control of the affairs of the Company. The association does not object to the establishment of such a company which has as its main objective and main business the leasing of rights of access to small and medium size enterprises which do not have such rights. It is submitted however, that such a company should be a public company having the State as the majority shareholder. It is furthermore submitted that the Forum, or the relevant chamber of the Forum, be required to nominate a prescribed number of directors to serve on the board of directors of the Company. It is submitted that it is only common sense that representatives of industry sitting on the Forum or one of its chambers, be seated on the board of directors. This will also give effect to one of the objectives and principles enshrined in s2(h) of the Bill which provides that the Minister shall in exercising any power under the Act have regard to "the need to achieve to the extent practicable a broad and accountable participation in the decision-making processes provided for in this Act".

It is submitted that s29 be amended to provide that the Minister "shall" consult with the Forum in regard to rights of access allocated to the Company.

In regard to the issue of foreign fishing, the association is in agreement with other stakeholders of the hake industry, including the Food and Allied Workers Union, Trawler and Line Fishermen's Union, the Weskus Werkersunie and the Informal Fishing Sector that s43 of the Bill should reflect the policy of the Fisheries Policy Development Committee that no access rights be granted to foreign parties in any South African fishery where sufficient domestic capital and technical competence already exists to harvest the designated sustainable yield of the target species and that such foreign fishing as is permitted should take place within genuine joint venture structures in which the majority of the shareholding and employees are South African and the catch is landed and processed in South Africa.

5.4 The association has no submissions in regard to Chapter 5 which deals with prohibited activities and stowage of gear, Chapter 6 dealing with matters of law enforcement, and Chapter 7 which deals with judicial matters.

5.5 S80 of Chapter 8 deals with the Minister's power to make regulations. The association notes that the Minister has wide-ranging powers to make regulations affecting every aspect of the fishing industry. In this regard submissions have already been made that the Minister should be obliged to consult with the Forum, or the relevant chamber of the Forum, in regard to "matters of mutual interest". This will give effect to the objectives of transparency and accountability on the part of the national Minister.

The need for the Minister to consult with the Forum or the relevant chamber of the Forum becomes even more necessary if one has regard to s82(1) of the Bill which provides that the Minister may delegate any or all of his powers (save the power to make regulations) to the director-general or an officer of the department nominated by the director-general. As it is, the Minister has an enormous amount of powers under the Bill and it is of concern to the association that (clearly) the Minister will not be able or will not have the capacity to exercise all his powers or his functions under the Bill as currently provided for. It is often the delegation of powers or functions to officials of a government department which provides fertile ground for litigation either on legal or constitutional grounds. This must be avoided at all costs especially since new entrants (from the historically disadvantaged communities) are likely to have limited access to justice because of the time and expense involved in litigation. It is for this reason that it is proposed that the Minister's power to delegate be further circumscribed in an amended Bill.

5.6 It is noted that s83(1) provides for an appeal to the Minister, but it is submitted that this will not oust the jurisdiction of the courts and that it is to be preferred that some alternative dispute resolution mechanisms be substituted for s83 providing for mediation and ultimately final and binding arbitration and that the costs of such procedures be borne out of monies paid into the Fund.

5.7 It is respectfully submitted that the ambit and scope of s84 (dealing with exemptions granted by the Minister) is inordinately wide and it appears to allow the Minister to exercise his subjective discretion as to what "sound reasons" mean. It is submitted that s84 be amended to require that the Minister may grant exemptions from the provisions of the Act only after he/she has consulted with the Forum. Should this amendment not be effected, then in all likelihood it will make nonsense of the requirement that the Minister consult with the Forum in other important respects required by the Bill both in its current form and as proposed by the association.

6. CONCLUSION

In conclusion, it is submitted that the Bill is a huge improvement on the current Act and that on balance, it is welcomed by the association. It is respectfully submitted however, that the amendments proposed in these representations be given effect to by the Minister after being endorsed by this Committee.

Finally it should be noted that there is a large measure of consensus within the hake sector in regard to many of the issues raised in this submission. Following a suggestion by the chairperson of the Committee, representatives of interest groups held two meetings during January 1998 with a view to establishing common ground regarding the provisions of the Bill. The association prepared a statement following the meetings, a copy of which is annexed hereto. The association respectfully submits that account should be taken of the large measure of consensus which exists within the hake sector.

Appendix 2
SUBMISSION OF THE PROVINCE OF THE WESTERN CAPE TO THE NATIONAL ASSEMBLY ENVIRONMENTAL AFFAIRS PORTFOLIO COMMITTEE ON MATTERS RELATING TO THE MARINE LIVING RESOURCES BILL

16 February 1998

Provincial Overview

*Some 87% of all catches along the South African coastline occur off the Western Cape coast.

*Only one major species, squid, occurs predominantly outside the Western Cape waters.

* Some 25,000 persons are directly employed by the local industry with many in small isolated communities that are largely dependent on fishing for survival.

* All 13 proclaimed small boat harbours, serving fishing communities, are to be found in the Western Cape most in an increasing state of decay with R24 million rands worth of repairs outstanding.

*Currently there are some 130 inspectors employed to cover the 3,000 km South African coastline and associated fishing activities

* With the notable exception of one or two species, the general state of the fishery could he considered to be in decline or questionable stability

*The ongoing collapse of fisheries elsewhere around the globe continues to make South Africa an attractive destination - especially by those countries whose fleets enjoy substantial state assistance to keep them afloat.

Introduction

The Marine Living Resources Bill is to be welcomed in that there is an urgent need

a) to conserve a strategic and renewal protein resource that is under severe stress;

b) to correct unfair imbalances of the past;

c) to bridge gaps in existing legislation in order to protect the resource from wholesale commercial extinction by default;

d) to restructure the administration of and access to the resource with an equitable policy that is easy to understand.

The Western Cape supports the desirability of this Bill but is particularly concerned about certain aspects and perceptions that are raised in its current form. These include:

i) lack of involvement or recognition of the role played by the four coastal provinces,

ii) absence of a management plan for the upkeep of the vital small harbours

iii) the exceptional and unfettered powers of the minister and potential political consequences,

iv) the omission of contributions made by experts to this Bill, including scientists, that may well undermine its credibility and implementation,

v) the failure to include an all-inclusive policing mechanism for the resource which could incorporate all relevant State departments, other tiers of government and the public, including volunteers,

vi) the proposal to dramatically increase individual access rights without consequential ability to control,

vii)lack of a mechanism to recognise historic communities and uplift them as a whole,

viii) a tender system that may encourage speculation or `paper quotas',

ix) inadequate attention to address wasteful and dishonest practices like dumping, trashing and bycatches,

x) absence of a compulsory register of users - preferable broken into categories,

xi) lack of reference to the destructive nature of hightech gear and areas of operation e.g. distance of trawlers from the coast or other specific use areas

Some specific comment chapter

Chapter 1

Definitions: There are various omissions of especially important technical terms that need to be included. These and other additions can be found in the SANCOR document, which is appended herewith. Such an authoritative document cannot be ignored. For example, if "commercial" is not inserted before the "mariculture", this Bill will render every decorative salt water fish tank illegal.

Objectives and principles

Add: 6(f) The need to increase our understanding of marine living resources through active scientific research.

Chapter 2

Paragraph 5. It cannot be left to the minister alone to establish such a body. The political implications will tarnish its credibility.

Paragraph 7 (1) Suggest 9 in number with a representative from each coastal province whose name will he submitted by the province concerned.

Paragraph 7 (2) No person with a vested commercial interest should serve on the body. Also there must be scientific; representation.

Fishery control officers

Add: Paragraph 9 (4) The Director General shall actively encourage the participation and training of volunteer (honorary) fishery control officers.

Maritime Living Resources Fund

Will the old Viskor funds be added to this or the Company?

Register

Add: Paragraph 12 (4) A consolidated register shall be kept of every fisherman, by category; commercial fishing vessel; quota holder; including all company directors and any offences committed in terms of this Act or its predecessor.

Chapter 3

PART 1

Paragraph 14(2) Change "portions" to "percentages".

PART 2

Paragraph 18(1) (b) (i) Will such a community be able to establish a Trust fund recognised by the Department?

PART 3

Paragraph 23 (8) Will be open to abuse. If the current Quota Board cannot properly police the quotas, what measures will be put in place to ensure that the Minister is any better equipped?

Paragraph 24. What is the purpose of tendering - to raise funds? By allowing a person to buy something they don't in fact own until they have caught it, can lead to a very negative attitude toward, the environment.,

It will also accelerate the "Tragedy of the Commons" theory as stated by Le Blanc:

If you let loose that kind of economic self-interest, with everyone fishing as he wants (now a right by tender) , taking from a resource that belongs to no individual, you end up destroying your neighbour and yourself" - (Own words in brackets)

PART 4

Comment: The Quota Board failed for 3 primary reasons;

(i) lack of funds

(ii) lack of staff to verify applications

(iii) failure to use available knowledge in the Department

In what way will this system be better?

Paragraph 31. Will provinces be represented on the Board? Can foreigners be members?

Fishing Harbours

Paragraph 40 (3) This will not sustain any harbour. Either a business concept must be incorporated herein or a separate Act will have to he drafted to ensure viable management of harbours. NB. Without these harbours, the industry will effectively cease to exist.

Paragraph 41(4) After "the Minister may" ... add "after consultation with the Forum,"

Chapter 5

Add new paragraph 48 (3)

Dumping or trashing of fish

Comment: In a world that has increasingly scarce resources, the practice of rejecting fish in part or in whole should be prohibited. This should include dumping of non-target or undersized fish or offal ; shredding of the same ; definning of sharks and any other practice that can be considered to be wasteful.

The principle of "what comes over the side, stays on board" should be adopted.

Add new paragraph 48 (4)

By-catch

Comment: How would this affect the catcher's quota, the TAC's and by-catch?

Would there be a market for trash fish?

1) Fishing technology is sufficiently advanced for there to be accurate targeting the species on the boat's quota.

2) Any other species caught must be kept and recorded as such. There is a market for all species and all sizes. Skippers should not be allowed to pick and choose their catch. All have their value.

3) The benefit of this approach will be to reduce the overall impact of the `take out' and stop a practice that is both wasteful and inherently dishonest.

4) Should a skipper consistently show by-catches greater than his quota species, he should be fined or his quota reduced or taken away.

Chapter 6

Add new clause to paragraph. 60 (6)

Comment: There is a need to indemnify those who wish to assist the authorities from prosecution for previous offences. A mechanism should be devised to encourage this. It will also have to be referred to in Chapter 7.

Chapter 7

Judicial Matters

Comment: One of the major shortcomings of the court system is the lack of expert knowledge of the courts and its officia1s relating to fisheries matters. Also the inconsistent sentences from one court or province to another. The cost and failure of justice is enormous.

The Department should assist in the recruiting and training of expert assessors - possibly drawn from the ranks of the volunteers - to assist in this process.

Paragraph 65 (6) After "The Minister..." add "with the consent of the court".

Chapter 8

Paragraph 84(1) After "... the Minister..." add "after consultation with the Forum".

Conclusion

This Bill has the ability to make or break the industry, impoverish thousands of people who have few other job prospects and do incalculable harm to the environment if not thought through thoroughly.

The Western Cape Province urges Parliament to proceed with all due caution while at the same time offers whichever assistance it can to you to make a good and equitable law that will ensure a fishing profession for generations to come.

DELIVERED BY: Minister Piet Meyer MPP

Mr Mark Wiley MPP