The Great Barrier Reef Structural Adjustment Package: How It Grew Out of Control, and Its Implications for Future MPA Processes

Independent reviews of the Australian program to help fishers displaced by rezoning of the Great Barrier Reef Marine Park show the program suffered both from uncontrolled costs and widespread dissatisfaction among stakeholders.

Managed by the Australian government from 2004-2010, the “Structural Adjustment Package” or SAP was initially budgeted at A$10 million (US$10.1 million). But over time its cost ballooned to at least A$214 million (US$216 million) as government officials continually expanded its scope and the amounts of assistance available – in part to curry political favor among affected communities, according to one review. Another analysis finds that despite the inflated payouts, a majority of stakeholders feel the SAP failed to compensate them adequately for the impacts of the rezoning. (The new zones increased no-take coverage of the marine park from 4.7% to 33%.)

The findings come from two publications: one a report commissioned by the Australian Environment Department and the other an academic review that analyzed the SAP based on hundreds of government documents (see box at end of this article).

Background

When the Great Barrier Reef was rezoned in 2004, policymakers anticipated that some adverse impacts would be felt by fishermen. The new closures would displace them from accustomed fishing grounds, and the displacement could lead to lower catches or higher costs from having to fish elsewhere, at least in the short term. In turn, these impacts could have financial ripple effects on fishing-related businesses (wholesalers, processors) and communities on shore. The Great Barrier Reef Marine Park Authority (GBRMPA) estimated in 2003 that the rezoning would result in an economic impact of A$2.8 million per year – equal to the estimated net value of fish production in the closed areas.

To account for this, the Australian Government launched the SAP. It provided payments for multiple types of assistance: fishing license buyouts, business restructuring grants, direct payments to people who lost their fishing-related jobs, and more. The program was run completely separately from GBRMPA, which had managed the rezoning process. Instead it was managed by the federal Environment Department, which implemented the policies of the ruling Government party. It was the Government that determined the parameters of the assistance package and adjusted them over time.

The Government’s criteria to determine who was eligible for assistance, and how much they could receive, were loosened over and over. The cap on business restructuring assistance was removed completely in 2006, and closing dates for applications were extended. To pay for it all, additional money was continually allocated.

The independent reviews each conclude that the lack of a strict limit on SAP funding was a major mistake. “Without a well-defined set of…guidelines and boundary conditions – e.g., which elements of the affected industry and associated up- and down-stream industries will and won’t be considered; whether or not compensation will be capped; how individual businesses will be evaluated – there is increased probability of ‘gaming’, ‘special circumstances’ pleading and associated political influence, scope creep, cost overruns, and stakeholder dissatisfaction,” concludes the Environment Department-commissioned report.

The current Australian Government is engaged in a process of planning new commonwealth MPAs. What precedent the SAP sets for future structural adjustment packages related to these MPAs is unclear. Both independent reviews offer recommendations for making future packages more cost-effective. John Gunn, lead author of the government-commissioned report and chief scientist of the Australian Antarctic Division, says of his review, “I understand it is being used by the Department of Environment to guide their policy development.”

Expert opinion: Should GBRMPA have been in charge of the SAP?

To gather opinions on the SAP, its management, and implications for future adjustment processes, MPA News asked three experts for their insights:

• Andrew Macintosh, associate director of the Australian National University Centre for Climate Law and Policy, and lead author of the academic review of the SAP;
• Imogen Zethoven, who served as WWF’s Great Barrier Reef campaign manager during the rezoning process and is now director of Pew Environment Group’s Coral Sea Campaign; and
• John Tanzer, who was executive director of GBRMPA during the rezoning process and launch of the SAP, and who now works as a consultant in marine resource management, especially in the Coral Triangle region.

MPA News: Considering the political interference that occurred under the Australian government’s oversight of the SAP, would it have been better for the program to be managed by GBRMPA instead?

Andrew Macintosh:
GBRMPA was ideally suited to the task of designing the SAP. It has corporate knowledge and expertise on the GBR fisheries and it could ensure that the rezoning and assistance packages were delivered together and in complement to one another. As an independent statutory agency, it is also meant to be at arm’s length to the government, providing a buffer against undue political influence.

Having said this, it is rare that governments sacrifice control of compensation and assistance packages where their political interests are threatened. The Government at the time (under Prime Minister John Howard) knew the rezoning process was controversial and that, if certain groups were not appeased, its chance of re-election could be put in jeopardy. This is not an excuse for what happened with the SAP but the reluctance of the Government to hand over the SAP to GBRMPA was not surprising.

Imogen Zethoven:
The politics of the SAP would have been present regardless of which agency administered the program. Although the Environment Department lacked experience in administering such a complex program and lent a sympathetic ear to anyone who claimed they were affected by the new zoning plan, there were overriding factors at play that would have resulted in an inflated cost, regardless of who administered the program. These factors included very little time to develop the program leading to a poorly designed scheme; gaming by applicants and business advisors to increase the cost of claims; and inflated expectations by applicants due to government MPs’ pleading on their behalf for more generous grants, among other factors.

GBRMPA would not have been able to escape the political context in which the program operated. However, the exclusion of GBRMPA from any role in the SAP resulted in its becoming the scapegoat for all the faults associated with the program. This has been damaging to the Authority’s status and influence. More importantly, the cost of the program has raised expectations in the fishing sector that future no-take reserves will be similarly compensated. If GBRMPA had been allowed to play an active role in the program, it might have been able to inject some much-needed accountability.

John Tanzer:
I don’t think it would have been my want to have GBRMPA in charge of the SAP. At the time, there was no high-level policy framework set by the Government to guide implementation of such a scheme. In these circumstances a small statutory authority like GBRMPA would have found itself essentially trying to develop national policy without the access to central agencies and coordination mechanisms this requires. However, I do believe it would have been sensible to have GBRMPA more actively involved in both the design and implementation of the SAP. After over two years of intensive consultation and negotiations associated with the rezoning, GBRMPA staff had a detailed knowledge of the stakeholders and the broader community. The GBRMPA fisheries group in particular had a very good understanding of where the fishing occurred, using what gear and who was involved down to an individual fisher level.

The fishing industry was adamant they did not want GBRMPA involved to any degree in the SAP and lobbied hard on this point. I believe the reason why they pushed this view was because they knew they had a better chance of gaining financially if they did not have to confront the level of local knowledge and expertise that GBRMPA had. That knowledge and expertise would have added considerably to the transparency of the program, particularly at the local community level.

I don’t think GBRMPA standing alone would have been any better able to withstand the political pressure that resulted in the guidelines and components being continually changed. In fact if GBRMPA had tried to confront that level of political interference directly, it is arguable that the agency may not have survived. It had used up most of its political currency with the Government of the day getting the rezoning through.

MPA News: In light of the precedent set for future MPA planning in Australia by this overspending, do you think the SAP as it was carried out may have done more harm than good?

Macintosh:
In the early stages of the SAP, the finance minister at the time warned that allowing it to swell beyond reasonable bounds would have long-term consequences for natural resource management. He was correct. The SAP has raised expectations across the board that, when the government makes changes to environmental regulations and management arrangements, it will distribute large amounts of compensation to affected parties, even if their equity claims are weak. This is creating an obstacle to effective environmental management, and it is certainly impeding the creation of a comprehensive, adequate, and representative system of marine protected areas.

Zethoven:
The SAP has been widely criticized for its expense. However, its long-term legacy has yet to be determined. The federal government is about to release a new displaced activities policy. This policy, due for release within a few weeks, may be a set of principles that is hard to contest. It may not be clear until 2012, at the earliest, how the next round of MPA structural adjustment will work programmatically.

There is concern by government that the mistakes of the Great Barrier Reef SAP are not repeated. But the expectations of fishers remain high. The current Australian Government lacks a majority in its own right in Parliament and the high expectations of fishers could make the Government nervous. This could have a deleterious impact on the extent of marine protection.

Tanzer:
There is a danger that if the SAP is used as a model for how to undertake structural adjustment, then its cost will act as a major financial and political barrier to future implementation of large-scale spatial planning or major fisheries management interventions. However, I think any close objective examination will reveal it was as much a “generous compensation” program as a structural adjustment program and the distortions attributable to its politicization resulted in much higher levels of expenditure than was necessary to deal with the real impacts of the rezoning. The way it has unfolded, the SAP ended up being seen by industry as a way of dealing with a whole range of impacts that had been building for some time and causing hardship for many in the commercial sector: high fuel costs, escalating labor scarcity, high currency, diminishing returns, and catch restrictions under ongoing fisheries management programs.

As for the payouts to land-based businesses such as boat and gear retailers, the fact is that the number of new recreational vessels being registered along the Queensland coast has continued to rise at rates equivalent to or greater than those that existed prior to the rezoning. Volume of tackle and fishing gear sold overall has continued to rise as well, although there has been considerable structural change as larger-chain retail outlets have displaced smaller operators.

Another factor that should mitigate the SAP being used as a precedent is the increasing evidence of the ecosystem benefits of the Great Barrier Reef rezoning. I am confident the economic benefits of the network in terms of sustaining fish populations for key target species – including in areas open to fishing – will become increasingly obvious and measurable. More and larger fish will benefit the fishing industry (commercial and recreational) and will further enhance the attractiveness of the Great Barrier Reef as a premier dive tourism site. Future programs examining the impacts of MPAs should take into account the economic benefits as well as the short-term costs.

MPA News: Imogen, you support the idea of the Australian Government protecting at least part of the Coral Sea as a no-take marine reserve. Would you support a structural adjustment program for affected individuals and businesses?

Zethoven:
There is a reasonable argument that commercial fishers who have a substantial history of effort in the Coral Sea Conservation Zone should be eligible for structural adjustment to avoid an unsustainable concentration of their fishing effort in areas outside a no-take marine reserve. A new adjustment program ought to be developed with sufficient time to plan it properly. The objectives should be clear and shouldn’t change during the implementation of the program. The focus should be on buying back commercial fishing licenses and providing adjustment to any immediate downstream seafood processing businesses if they can demonstrate a significant impact from the no-take reserve. The agency administering the program should be able to communicate the program clearly and the process should be as simple as possible. And it should be considered in parallel with the conservation proposal to minimize conflict from businesses affected by the reserve proposal.

For more information:

Andrew Macintosh, Australian National University, Canberra, Australia. E-mail: MacintoshA@law.anu.edu.au

Imogen Zethoven, Pew Environment Group, Australia. E-mail: IZethoven@pewtrusts.org

John Tanzer, managing director, Environmental Pathways and Solutions, Australia. E-mail: jmtanzer@bigpond.com

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