While the intention was to base fisheries development on the offshore resources, the fishing effort in the prime inshore fisheries also expanded rapidly. In fact, by the early 1980s, overfishing of species in these zones and overcapitalization within the inshore fleets had become a problem. Measures aimed at restoring control in these fisheries were introduced at this time. They included:
- a declaration designating these zones as controlled fisheries, a new licensing regime that limited vessel numbers and a blanket moratorium on new entrants to the inshore fisheries;
- the removal of "part-time" fishers from the inshore fisheries;
- enhanced powers, under the Fisheries Act 1983, in the regulation of fisheries using management plans that would be formulated after extensive public consultation and would identify the resources to be managed and the regulatory controls (on fisheries inputs) to be applied.
The cumbersome nature of the consultation and planning process was such that, while it was still under way, the inshore fisheries advanced further into an overfished and overcapitalized state. In 1984, the inshore harvesting sector was overcapitalized by an estimated $NZ 28 million (present value) and, where inshore fisheries were most concentrated, overcapitalization was estimated to represent about 44 percent of the existing fishing capacity.
After an intense period of policy development, the government and industry agreed to the introduction of total allowable catches (TACs) to ensure stock conservation, and individual transferable quotas (ITQs) to facilitate industry restructuring. This approach to controlling capacity through controls on the outputs of fisheries was seen as the most likely to succeed in meeting these two objectives. Furthermore, it was accepted that the initial TACs and ITQs would be set so as to effect a reduction in fishing activity. The main elements of the scheme were:
- the allocation of a case history to each fisher, on a national basis (with case history defined as the fisher's catch in two of the three years of 1981, 1982 or 1983); and
- the buy-back of case histories to a level that is equivalent to the TAC for each fishery.
The government ultimately spent $NZ 45 million (present value) to buy out 15 800 tonnes of fishers' case histories. The important outcome was that a viable and more sustainable future was secured for the affected fisheries and the industry in general. The additional advantages perceived by the fishers included the "right" to buy, sell or lease their entitlements to engage in the fisheries without undue government restrictions or the requirement of consent, and the ability to shift their vessels throughout the year between different fisheries for which they had quotas. The government benefited by being able to purchase case histories at prices that did not reflect their full value, owing to the absence of an established ITQ market at the time.
The introduction of ITQs followed extensive consultations with the fishing industry to ensure their commitment. In this respect, the involvement of industry representatives in the planning, development and implementation of the quota management system was seen as an important element in the successful introduction of ITQs.
By this process, ITQ management was established for 29 species, including 21 inshore and eight deep-water species. Other species have been included since 1986, and there are now 33 species managed under ITQs. These represent about 80 percent of the total commercial catch from New Zealand's EEZ. The Fisheries Act provides for additional commercial species to be managed using ITQs.
There are approximately 117 species currently outside the quota management system, and they are being managed by a system of permits and regulations. For reasons of fisheries management, the government's intention is to bring additional species into the quota system as soon as possible. At present, a moratorium has been placed on the issuing of new permits for non-ITQ species as a means of controlling the fishing effort prior to these species' inclusion in the quota management system.
The introduction of ITQs, together with the financial assistance to restructuring, was designed to reduce fishing capacity. The initial adjustment retired 15 800 tonnes of catch from New Zealand fisheries. The reduction in the size of the fleets, whether it was due to this assistance scheme or to the subsequent introduction of ITQs, was dramatic. The number of vessels dropped by 22 percent between 1983/84 and 1986/87 and there was a further 53 percent reduction resulting from the use of ITQs between 1986/87 and 1994/95. As this rationalization primarily occurred in the country's inshore fisheries, one of its effects was to redirect investment into deep-water fisheries.