Observer-program-consideration-market-testing-report-2013

The AFMA Observer Program:
consideration of market testing
December 2013
Prepared by Charlene Trestrail

2
Acronyms
ABARES Australian Bureau of Agricultural Resource Economics and Sciences
AFMA Australian Fisheries Management Authority
CCAMLR Convention for the Conservation of Antarctic Marine Living Resources
CCSBT Commission for the Conservation of Southern Bluefin Tuna
CSIRO Commonwealth Scientific and Industrial Research Organisation
E-monitoring Electronic monitoring
EPBC Act The Environment Protection and Biodiversity Conservation Act 1999
FTE Full-time staff equivalent
GVP Gross value of production
HR Human Resources
ISMP Integrated Scientific Monitoring Program
MAC Management Advisory Committee
OBIS An AFMA cost centre involved in the allocation of observer program costs
OBOF An AFMA cost centre involved in the allocation of observer program costs
RAG Resource Assessment Group
RFMO Regional Fishery Management Organisation
SEWPaC Department of Sustainability, Environment, Water, Population and
Communities
TEP species Threatened, endangered and protected species; listed under the
Environment Protection and Biodiversity Conservation Act 1999

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Contents
Acronyms .................................................................................................................................... 2
Contents....................................................................................................................................... 3
Summary ..................................................................................................................................... 4
Introduction ................................................................................................................................. 5
Section 1: The Program in the current context............................................................................ 7
1.1 Developments which can influence the Program.............................................................. 8
1.2 Drivers for market testing.................................................................................................. 9
Section 2: Details of the Program.............................................................................................. 11
2.1 Objective and outputs...................................................................................................... 11
2.2 Program structure and responsibilities ............................................................................ 12
2.3 Staffing arrangements...................................................................................................... 17
2.4 Costs................................................................................................................................ 18
Section 3: Alternative observer service delivery models.......................................................... 22
3.1 Service delivery options.................................................................................................. 22
3.2 Risks of outsourcing........................................................................................................ 32
Section 4: Recommendations.................................................................................................... 37
Appendix A: History of changes to the Program ...................................................................... 38
Appendix B: Program roles in each fishery .............................................................................. 39
Appendix C: Individuals and organisations contacted.............................................................. 43
Appendix D: Extract of Hansard............................................................................................... 45
References ................................................................................................................................. 49

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Summary
The in-house fishery observer program (the Program) delivered by the Australian Fisheries
Management Authority (AFMA) collects the independent fishery data used to support
fisheries management decisions. In addition, the Program produces intangible outputs:
operational information that enhances the functions of other AFMA sections, a
communication channel between AFMA and vessel operators, and stronger government-
industry relationships. The Program is well integrated with the functions of other AFMA
sections, and has a strong reputation with AFMA staff and external stakeholders.
As part of its commitment to cost efficient fisheries management, AFMA is considering
whether to market test the administration and observer components of the Program to
assess whether external companies can deliver these services more efficiently and cost-
effectively than in-house arrangements. Several forums have called on AFMA to explore
external provision, and during Senate Estimates in 2012 the AFMA Chief Executive Officer
expressed a willingness to adopt externally provided observer services if they prove more
cost effective and efficient.
Outsourced components are a feature of several international fishery observer programs.
Such arrangements are claimed to deliver more cost effective services, but there are
associated risks. A common theme that emerged from consultation with AFMA staff is the
concern that external providers may not be able to collect the quality data currently
delivered by the Program, and the downgrading (or loss) of the intangible outputs described
earlier.
This report recommends that:
1. This report be used as the key source of information on the AFMA observer program
if a decision is made to market test the program. Other reliable sources of
information may also be used;
2. Should market testing go ahead, the Evaluation Panel needs to be well informed of
the issues identified in the report by the Steering Committee when assessing
applications for market testing;
3. Should market testing proceed the current Steering Committee be reformed as an
internal Reference Group;
4. The Reference Group’s duties include providing support and/or advice to any market
testing process; and
5. The Reference Group work closely with the Evaluation Panel to draft the criteria for
market testing noting that getting the criteria right is critical and that their
development should be carefully considered.

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Introduction
The AFMA Observer Program (the Program) ‘provides fisheries managers, research
organisations, environmental agencies, the fishing industry and the wider community with
independent, reliable, verified and accurate information on the fishing catch, effort and
practice of a wide range of boats operating inside, and periodically outside, the Australian
Fishing Zone’ (Australian Fisheries Management Authority [AFMA] n.d., para. 1).
The data collected by the Program forms an integral part of monitoring fisheries and
evaluating the environmental impacts of fishing practices. The data enables AFMA to meet
its legislative objectives: the development of stock assessments and bycatch risk
management strategies, satisfying threat abatement plans under the Environment
Protection and Biodiversity Conservation Act 1999 (EPBC Act), and meeting international
reporting obligations for Regional Fisheries Management Organisations (RFMOs) which
regulate high seas fishing.
The Program is cost recovered from industry and can be a sizeable component of a fishing
business’s overall budget. AFMA has previously researched the capabilities that exist for
observer services within the market (referred to in this document as market testing) to
ensure the Program is the most cost effective and efficient service available. In 2008, the
Cost Efficiency Working Group recommended AFMA again consider the feasibility of
alternative approaches to observer coverage, including using external service providers
(AFMA, 2008, p.5). This view is supported by the Review of Commonwealth Fisheries, which
called on AFMA to examine opening its observer services to competition (Borthwick, 2013,
p. 72). During Senate Estimates in 2012, the AFMA Chief Executive Officer expressed a
willingness to adopt externally provided observer services if they prove more cost effective
and efficient than the current in-house service provision1.
In light of these factors, AFMA is considering whether to again market test the Program and
gauge suppliers’ level of interest in providing observer services to Commonwealth fisheries.
This report has been produced to inform the Chief Executive Officer’s decision regarding
whether or not to proceed with market testing. Drawing on a range of sources, including
consultation with AFMA staff, this document collates current information about:
• The existing Program's function, management and costs;
• Preliminary considerations for alternative observer service delivery models, drawing on
international examples; and
• The potential benefits and risks of market testing and outsourcing.
1
The AFMA Chief Executive Officer said “If we can get that data [for evidence-based decision making] more
cheaply and more effectively, then we will do so… we have tested our observers a number of times in
the market place and they have performed reasonably well on four occasions. We are happy to go
and have a look again” (Commonwealth of Australia, 2012, p.18). The relevant extract of Hansard is
provided in Appendix D.

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This report does not evaluate the current Program’s objectives, funding arrangements or
coverage levels. Analysing the efficacy of these elements of the Program is beyond the
scope of this report, but has been assessed in previous reviews (Centre for Regional
Economic Analysis, 1995; ACIL Consulting, 1998; Williams, 2008). It is also outside the scope
of this document to suggest an alternative observer service delivery model for AFMA-
managed fisheries. Instead, this report collates information to support a decision about
whether or not to proceed with market testing.

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Section 1: The Program in the current context
This section provides an overview of the current context in which the Program operates. It
explores how the Program contributes to AFMA’s objectives and legislative requirements, the
factors which may influence the Program in the future, and the drivers behind the
consideration of market testing.
In general, the Program contributes to the cost effective management of uncertainty in
fisheries. AFMA manages fisheries by considering the trade-off between costs and risks (as
described by Sainsbury, 2005. See Figure 1), both of which are influeneced by data collection.
As data collection increases so too do the management costs required to fund it, but the
larger amounts of data facilitate more informed fishery management decisions and so
reduces the risk associated with harvesting.
Figure 1 Cost effective management of uncertainty in fisheries.
Source: Sainsbury, 2005, p.12.
AFMA-managed fisheries are subject to stringent data collection requirements that
collectively form a monitoring program; the program regularly collects data and information
to support the implementation of management strategies. Whilst the specific data needs vary
between fisheries, monitoring programs are generally designed to record and measure:
• Which species are being caught, and how much;
• How, when and where species are caught; and
• Which habitat and ecosystems are being impacted by the fishing activity.

8
Primarily, AFMA’s monitoring program collects the required data through self-reported
fishery logbooks and catch disposal records. Due to the potential for misreporting, logbook
data must be independently validated to generate the confidence necessary to inform
decision-making. This is achieved by using on-board observers, whose work verifies and
adjusts the reported or recorded catch to reflect the real catch taken at sea.
Specific observer programs operate in 15 fisheries and high seas fishing to collect, store and
disseminate data related to fisheries catch, effort and practices on commercial fishing vessels
(details provided in Appendix B).
Data collected through the Program facilitates a range of fishery management decisions and
demonstrates AFMA’s commitment to ecologically sustainable fishing. The data assist AFMA
to address the Ministerial Direction delivered in 2005, which seeks to reduce overfishing and
manage the broader ecological impacts of fishing practices (Commonwealth of Australia,
2005). Specifically, observer data is a key component of target species’ stock assessments and
rebuilding strategies required under the Harvest Strategy Policy. Program data also informs
the development of Management Strategies, bycatch and discard work plans, which mitigate
fishing impacts on the broader marine environment. The Threat Abatement Plan for the
Incidental Catch (or bycatch) of Seabirds During Oceanic Longline Fishing Operations, which
was established under the EPBC Act, also requires Program data. Finally, data collected by the
Program enables AFMA to meet its reporting requirements for RFMOs.
1.1 Developments which can influence the Program
The Program does not have a formal, long-term plan. However, the increased interest in
Threatened, Endangered and Protected (TEP) species interactions with fishing activities, and
the trend of shrinking government resources, suggest that the Program may be required to
deliver more data using a similar (or smaller) budget in the future.
The Program, and monitoring in general, is operating against the backdrop of evolving
expectations for fisheries management. The Review of Commonwealth Fisheries suggests
that, where practical and in areas of highest risk, the use of observers or video monitoring
surveillance should increase (Borthwick, 2013, p. 64). The recently completed Harvest
Strategy and Bycatch Policy Reviews may also impact AFMA’s function, with one possibility
being increased requirements for data relating to bycatch and TEP species interactions.
However, it is not yet known which recommendations identified by these reviews will be
adopted by the broader Government in developing new policies and consequently, the full
implications for AFMA and the Program.
It is unclear how the Program will be influenced by developments in electronic monitoring (e-
monitoring). E-monitoring is a potential alternative to conventional observer coverage for
collecting independent fishery data. AFMA has introduced electronic monitoring in the
Gillnet, Hook and Trap sector of the Southern and Eastern Scalefish and Shark Fishery, and is
intending to implement the technology in the Eastern Tuna and Billfish Fishery (AFMA, 2011).
The technology cannot entirely replace physical observers because it cannot collect biological
samples which may be required (AFMA, 2011), but it will likely alter observers’ coverage

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levels and the skills required to perform their job. For example, land-based staff will need the
skills to interpret video data. A supplier of electronic services has been selected to supply
equipment and analyse recorded footage, and AFMA is currently developing a formal plan to
introduce electronic monitoring in other fisheries.
1.2 Drivers for market testing
The Program is almost entirely funded by concession owner levies2. The Program’s cost has
long been an area of concern (described in 1998 by ACIL Consulting) as the levies can be a
sizeable component of the overall fishing business budget: the Program represents up to 25
per cent of the levy across many fisheries. Industry’s concerns were noted in the recent
Review of Commonwealth Fisheries (Borthwick, 2013, p. 72). The Commonwealth Fisheries
Association was asked to comment on industry perceptions of the Program in March 2013,
but has not done so at this stage.
Other drivers for market testing include calls for enhanced cost efficiency from several
sources:
• The Cost Efficiency Working Group3
– the Group recommended that AFMA consider
alternative approaches to observer coverage, including the use of electronic monitoring
and external providers (AFMA, 2008, p.5);
• Senate Estimates – The Program’s cost, and options for external provision of observer
services, was closely queried in 2012 by Senator Colbeck (Commonwealth of Australia,
2012, pp. 17-22); and
• The Review of Commonwealth Fisheries – this much publicised review of fisheries
legislation, policy and management suggests “Opening up AFMA to competition in the
area of observers, for instance, should also be examined” (Borthwick, 2013, p. 72).
The Program has previously been market tested. Industry concerns regarding Program cost
prompted AFMA to request tenders in 1999. Following the tender process, AFMA decided to
retain the Program in-house (MRAG Americas Inc, 2000, p. 25). Details surrounding this
decision are unknown as the tenders and internal evaluation documents have been
destroyed in accordance with record keeping guidelines.
In 2003, AFMA requested tenders for the provision of observer services for the period
January 2004 –December 2006 through a government-contractor model. Three tenders were
received; AFMA did not submit a competing tender, but sought to compare tenders against
its current standards. The evaluation panel concluded that two tenders had the necessary
technical capabilities to deliver observer services, but no tender could compete with AFMA’s
2
The exception is the Torres Strait Prawn Fishery, for which government covers 20 per cent of the Program’s
cost.
3
Cost Efficiency Working Group members are industry representatives, AFMA employees, and independents.

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service delivery costs4. The service was retained in-house, but a following review of cost
recovery for fisheries management and a review of AFMA overheads applicable to observer
services resulted in reduced cost of observer services to industry (AFMA, 2004, p. 119).
As part of co-management arrangements, the Northern Prawn Fishery undertook a tender
process in 2012 for outsourcing observer services, data entry and validation in that fishery.
The AFMA delegate decided to retain observer services for this fishery in-house, because it
was more cost effective to do so. However, this tender process did not prove or disprove
whether outsourcing is more cost effective for the entire Program.
4
The AFMA baseline costs did not include overheads that were determined to be irrelevant or costs for services
that would be retained by AFMA.

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Section 2: Details of the Program
This section presents information about the Program’s structure, function and costs to
provide an understanding of how the Program currently operates. This report does not seek
to evaluate the efficacy of the Program’s operations, which have been the focus of previous
reviews (Centre for Regional Economic Analysis, 1995; ACIL Consulting, 1998; Williams, 2008).
2.1 Objective and outputs
The Program aims to collect reliable, independent and high quality fishing and biological data
to support assessments that cannot be obtained via other means, such as logbooks. The data
objectives vary between fisheries and over time. Data needs are largely driven by the
legislative objectives, fisheries policy and management arrangements, which are assessed by
the Resource Assessment Groups (RAGs), Management Advisory Committees (MACs) and
AFMA managers. Appendix B provides a breakdown of observer services provided in each
fishery in 2011-2012.
The Program delivers four direct and indirect (or intangible) outputs:
1. Fisheries data. The Program meets its objective by delivering independent and timely
biological, catch and effort data, which verifies logbook data and catch disposal records.
The data collected through the Program informs stock assessments and subsequent catch
limits, reporting on TEP species interactions, and international reporting obligations to
RFMOs. The data collected varies according to each fishery’s needs, and is detailed in
Appendix B.
2. Enhanced operational information5
. Whilst observers’ primary role is fisheries data
collection, they also observe and record operational information, which feeds into other
AFMA activities. Examples of this include:
• Recording operational information associated with the vessel and crew that aids and
supports AFMA’s compliance risk assessment process;
• Enhancing the safety of AFMA personnel who board vessels by reporting potential on-
board safety hazards; and
• Facilitating estimates of logbook misreporting through the ‘observer effect’6
.
3. Communication channel. AFMA observers are a communication channel between
government and industry, and facilitate the distribution of information (such as
identification manuals, and updates on fishery and environmental issues) to vessel
5
Operational information encompasses a wide range of information, including: at-sea living conditions, the
presence and location of firearms on vessels, and breaches of AFMA legislation and the EPBC Act.
6
The ‘observer effect’ refers to fishers changing their normal fishing practises, location and reporting as a
consequence of having an observer on-board. Comparisons of logbook entries from observed and unobserved
fishing trips enable AFMA to estimate levels of logbook misreporting.

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operators. AFMA predominantly communicates with concession holders whereas
observers’ work with vessel crew which assists in disseminating information further down
the line. Communication also occurs in the reverse direction, as occasionally fishers
contact Program staff to inform government of other vessels’ compliance transgressions.
Observers also facilitate information flow between AFMA and the scientific community,
which sometimes includes conservation non-government organisations. Conservation
organisations occasionally contact observers to seek advice about bycatch mitigation
technology, and observers keep AFMA managers informed about new technology trials
they see run by other groups to keep fishery managers abreast of new developments.
4. Government - industry relationship building. AFMA observers act as ‘the face of
government’ as they are often the only government representatives that vessel crews
and/or owners have contact with. A previous review (Williams, 2008, p. 6) highlighted
that this situation can raise AFMA’s profile with industry. Whilst this is perhaps the least
tangible of the Program’s outputs, the benefit of government officials interacting with
industry, and the maintenance of such relationships, should not be overlooked.
Occasionally, outputs 2, 3 and 4 occur in tandem. The observer administration team advised
that some operators prefer to report other fishers’ compliance violations to them, rather
than to AFMA Compliance staff. In this case, the relationship between fishers and Program
staff makes fishers feel comfortable using this communication channel to provide operational
information to AFMA.
The Program’s outputs are the product of years of effort and relationship building. Program
staff have worked hard to increase vessel operators’ acceptance of on-board observers, and
operational information outputs in particular are the result of a long-term process to build
relationships between observers and AFMA Intelligence staff.
Indirect outputs are often overlooked because they are challenging (sometimes impossible)
to quantify, but they undeniably have value. The difficulty lies in achieving consensus about
the significance of these indirect outputs, as significance reflects value judgments and thus
will vary between individuals.
2.2 Program structure and responsibilities
To meet its objective, the Program integrates data collection, storage, retrieval, and
archiving. This requires the cooperation and coordination of several elements within the
Program. The roles of each element are summarised in Table 1.

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Table 1 Responsibilities of Program elements.
Program elements Responsibilities
RAGS, MACs and
fishery managers7
• Determine data requirements for each fishery, which are then fulfilled
by the Program and other data collection processes.
Administration • Coordinate logistics of observer deployment, including pre-trip briefing,
transport, accommodation and equipment.
• Monitor observer location and safety. This includes having one
administration staff member on-call at all times.
• Arrange training sessions (including first aid and sea safety) and develop
Observer procedure manuals.
• Manage paperwork for observer pay and reimbursements.
• Perform data quality checks with Data Entry staff.
• Check and distribute observer reports; create progress reports for RAGs
and MACs.
• Calculate fee-for-service invoices for fishers.
• Conduct post-deployment debriefing sessions with observers.
Observers • On-board observers and port-based samplers record data and
collect biological samples.
• Act as communication channels between government and vessel
operators, and between AFMA and the scientific community.
• Produce observer reports, provide AFMA with fisheries data and
enhanced operational information.
• Work with outsourced data collection officers in the sub-Antarctic
fisheries.
• Design and implement at-sea research projects with external
agencies.
• Provide in-house training to new observers.
Data Entry
(currently
contracted to D&S
Datafix)
• Input paper-based observer data into the database.
• Perform data quality checks in conjunction with Administration
Data Management • Conduct some analyses on observer data, and distribute data to other
organisations (e.g. CSIRO) for advanced analyses.
• Distribute data for ad hoc requests from AFMA staff.
• Maintain databases and manage any changes or upgrades to the
storage system.
The network in Figure 2 depicts the interactions that occur between Program elements, and
between the Program and other AFMA sections. These interactions enable the Program to set
and achieve data goals, and deliver outputs to stakeholders.
7
This element is not part of the Program per se, but is included here to provide a more thorough understanding
the responsibilities that influence the Program.

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Yearly, the data requirements for each fishery are determined by the relevant stakeholders,
including the RAGs, MACs, fishery managers and in some fisheries (such as the Southern
Bluefin Tuna Fishery), RFMOs. An administration staff member advised that fishery managers
often seek advice from the administration team on setting data requirements. In this way,
the Program is individually tailored to each fishery’s needs (see Appendix B for details of
observer services provided to each fishery in 2011-2012).
The administration team coordinates the deployment of at-sea or port-based observers
throughout the year to gather the required data. This involves several responsibilities,
including training, equipment provision, and the logistics of getting observers to ports. The
location and safety of deployed observers is constantly monitored, and an administration
staff member is on call at all times in case of emergencies. The administration team also
manages the paperwork for observers’ pay and reimbursements, and calculates invoices for
fisheries where observer services are paid for through fee-for-service arrangements (see 2.4
Costs).
At-sea and port-based observers collect the required biological and TEP species interaction
data, and a range of operational information that is utilised by other AFMA sections.
Observers’ roles are very demanding; they may be required to travel long distances to
remote regions, they often spend extended periods away at sea, and they must live and work
with vessel crew who may not support their presence. Observers submit their reports and
data to the administration team, and participate in post-deployment debrief sessions to
discuss feedback.
In addition to the standard data collected for monitoring, observers work with external
research organisations, such as universities, to design and conduct at-sea research projects.
These projects are run through separate agencies, but align with AFMA priorities and can
include topics such as the effectiveness of bycatch mitigation technologies.
The administration team performs quality control checks on observer data, to identify and
rectify errors. In addition to the regular data progress reports supplied to RAGs, MACs and
fishery managers, the observer reports written after every trip provide a snapshot of fishing
activities as they occur in real time. The administration team brings particularly important
data to the attention of fishery managers and Intelligence staff as it arrives. This includes, for
example, if a fishery is approaching a bycatch limit for a particular species or the presence of
weapons on a vessel. Data entry staff input observer data into the database, and interact
with administration to ensure data quality. The information management that occurs at this
stage is key to achieving the Program’s objective of delivering high quality, timely data.
The data management team maintains the database, and manages any changes or upgrades,
which ensures that the large amounts of stored data can be utilized effectively. Additionally,
the data management team conducts some data analyses (complex models are completed by
other organisations, such as CSIRO and ABARES) and disseminates data for ad hoc requests
within AFMA. A slight variation of responsibilities occurs in the sub-Antarctic fisheries, where
data is managed by the Australian Antarctic Division and delivered to AFMA, who then

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reports to the Convention for the Conservation of Antarctic Marine Living Resources
(CCAMLR).
One fishery manager advised that the current Program enables RAGs to easily contact
observers and obtain ad hoc information. This is valuable in assisting RAGs and fishery
managers to understand reasons underlying unusual data patterns. Further, being able to
contact observers and ask them to note emerging issues on their upcoming deployment
assists AFMA managers to keep abreast of developments.
2.2.1 Outsourced elements
AFMA controls all elements of the Program, with the delivery of some responsibilities
contracted to external companies. Currently, AFMA:
1. Contracts the external business D&S Datafix to provide data entry staff. The D&S Datafix
employees operate from AFMA’s Canberra office, and have delivered data entry services
for AFMA for 25 years; and
2. Accredits external ‘data collection agencies’ to work alongside AFMA observers in the
sub-Antarctic fisheries. This situation was developed to address industry’s concern about
the cost of using AFMA observers to satisfy the CCAMLR requirement of 100% observer
coverage using two on-board observers. Currently, AFMA has accredited two
international companies, and would consider accrediting more if requested by industry.
Accredited companies are contracted by the vessel operators, and their staff work as
‘data collection officers’ under the direction and supervision of an AFMA observer. The
roles of the AFMA observer and the data collection officer are clearly delineated.
Accredited data collection companies are carefully managed to avoid conflicts of interest.
AFMA prefers that no company directors or employees have been employed by a fishing
company, and any previous affiliations with fishing companies must be declared. Staff
must not be associated with any functions of a fishing company for a period of 12 months
prior to employment as an observer. In addition, there are severe penalties for non-
compliance. If a data collection officer fails in their obligations, or if there were to be any
improper dealings, the contracted agency would be de-accredited and the fishing
company permanently loses its access to the fishery (MRAG Americas Inc, 2000, p.25).

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Legend
A RAGs, MACs and fishery managers determine the data requirements for each fishery.
B Administration manages all aspects of observer recruitment and deployment.
C At-sea and port-based observers collect the required data, and deliver observer reports to
administration. Debriefing sessions between observers and administration enable feedback
communication.
D Administration accredits private companies (‘data collection agencies’) to collect data in sub-
Antarctic fisheries.
E Observers from data collection agencies work on the same boats as AFMA observers in sub-
Antarctic fisheries, but roles are clearly delineated.
F Data quality is assessed by administration, and entered into the database by data entry staff.
Communication continues between the teams to ensure data quality.
G Data management maintains the database and perform some analyses on observer data.
More complex analyses are performed by external organisations, including CSIRO and
ABARES.
H Data management disseminate data for fishery managers’ ad hoc requests.
I Administration communicates operational information from observer reports to AFMA
Compliance.
J Administration alerts fishery and environment managers to relevant observer data as it
arrives.
K RAGs, MACs and fishery managers can contact observers to clarify reasons behind unusual
data patterns and to obtain information on emerging issues on vessels.
Figure 2 Network of interactions between elements of the Program (depicted in squares) and
AFMA sections (shown in circles). Arrows indicate the direction of communication and/or
activities.

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2.3 Staffing arrangements
As of May 2013, 30 staff across four different AFMA sections were involved in the Program’s
operations (Table 2). However, the number of observers and data entry staff varies
throughout the year depending on the workload, and so it may sometimes be more useful to
consider the full-time staff equivalent (FTE). Approximate FTEs for each Program element are
provided, but should be interpreted with caution:
a) Observer FTE includes both sea days and land days, and so does not reflect the length of
time observers are deployed on boats;
b) Fortnightly hours worked by data entry staff fluctuates depending on the work load, and
so this element’s FTE will also fluctuate; and
c) The data management FTE cannot be entirely attributed to the Program as this team
manage work other than Program data.
Administration and data management staff have on-going employment, and observers are
employed on non-ongoing (casual and intermittent) contracts. The business D&S Datafix is
contracted by AFMA until June 2015 to supply data entry and related services. Observers are
the only element of the Program that is not located at AFMA’s Canberra office.
Table 2 Program staffing arrangements as of May 2013.
Program
element
Number
of staff
Approximate FTE Employment type Location
Administration 6 5.3 On-going Canberra
Observers 19* 11 Non-ongoing Contract Field-
based
Data entry8 2* 1.2
(approximately 86
hours per fortnight)
Part-time, contracted
from the external
business D&S Datafix
Canberra
Data
management
3 2.7 On-going Canberra
Note: Each element’s duties are detailed in Table 1. Asterisks indicate variable staff numbers.
2.3.1 Staff retention and skills
Administration staff advised that the Program currently has high staff retention rates. This is
an improvement on the low retention rates which affected the Program in 2008 and which
could have been due to the difficult nature of observers’ work (Williams, 2008, p. 8).
Administration staff advised that observers who have left the Program in recent years gain
employment in higher qualified jobs, suggesting that Program observers have obtained skills
that are desirable elsewhere in the Australian workforce.
8
These are not AFMA staff, but are included here to provide a complete picture of the Program. Note that the
data entry team consists of several staff members: two staff work on observer-collected data, and other staff
that manage different data, such as logbooks and catch disposal records.

18
High staff retention increases the Program’s capacity to achieve its objective. Experienced
observers collect consistent and high quality data (Office of Inspections and Program
Evaluations [OIPE], 2004, p.19), and can provide stakeholders with confidence in the data
integrity. Experienced observers also deliver services more proficiently than new observers
because they are familiar with the difficulties of sea-time, create fewer safety concerns for
vessel crews, and are more certain in assessing compliance issues (OIPE, 2004, p.19). With
relevant training, experience and support, new observers can also deliver high quality
services, but staff retention reduces the frequency, intensity and costs of training needed.
Observers require strong interpersonal skills to deal with the challenges of living onboard
vessels, sometimes with crew who may not support their presence. Observers must also work
in uncomfortable conditions involving long travel times, working in extreme weather
conditions and in remote locations where accommodation and travel options may be limited.
High staff retention can mitigate these difficulties as it enables familiarity and relationship-
building between observers and vessel operators.
A strong theme that emerged from communication with many AFMA staff is the dedication of
AFMA observers to their roles which extends beyond the commitment to collecting quality
data. For example, one observer provided first aid to injured crew, another shared his
practical knowledge to assist a fisher to build his own bycatch mitigation equipment. An
external report (Marine Resources Assessment Group [MRAG] 2006, p.47) notes that there is
a high level of industry respect for AFMA observers’ professionalism and quality of work.
2.3.2 A commitment to improvement
A culture of improvement exists within the current Program, most notably demonstrated by
post-deployment debriefing sessions. These debriefings provide a forum for feedback about
the success of the trip or topics of concern. In the sub-Antarctic fisheries, debriefing sessions
are particularly extensive and involve AFMA observers and Compliance staff, and members of
the Australian Antarctic Division. This is followed by a debrief with the vessel operator to
discuss improvements on issues such as workplace health and safety.
Debriefing sessions contribute to the success of observer programs and are considered to be
an integral part of international programs (MRAG Americas Inc, 2000, p. 76). Debriefing
sessions provide a forum to evaluate data collection methods and the work of each observer,
determine the quality of data, identify problems and instill a sense of pride in a job well done.
2.4 Costs
Historically, government has contributed up to 20 per cent of the costs of the Program.
Today, under the latest AFMA Cost Recovery Impact Statement (AFMA, 2010), the Program is
wholly funded by industry, except in the Torres Strait Prawn Fishery, for which government
contributes 20 per cent of the cost. Most Commonwealth fisheries pay for observer services
through an industry levy base. The exception is three fisheries (Heard and McDonald Island,

19
Macquarie Island and the Eastern Tuna and Billfish Fishery9), where observer services are
paid for partly through the levy base and partly through fee-for-service arrangements.
A fixed sea day model is used to determine the exact coverage period (driven by data needs)
in advance of observer deployment, and vessels are then levied accordingly. The base cost
(which includes salaries, training, equipment, and observers’ at sea allowance) is combined
with overheads, and the cost is then divided equally amongst the number of sea days. The
Program plans to deliver 2465 sea days in 2013 – 2014 (a breakdown of sea days per fishery is
provided in Table 8, page 39).
The Program’s final budget for the financial year 2013 – 2014 is approximately $3.502 million.
The total includes the cost of the Administration team, observers and data entry staff (D&S
Datafix). The Program budget is split between direct costs and administration costs. The
direct costs are those attributed to cost centre OBOF and OBIS, and includes salaries,
allowances and some incidental expenditure. Overheads are then applied to these two cost
centres, however a discount is applied because observers take up no physical space in the
Canberra building (no type C overheads are applied) and receive a 50 per cent discount for
information technology, human resources and accounting functions (type B overheads). The
Administration function is captured in OBOA and includes training, travel, administration
salaries and wages. Full overheads are applied to this function (Table 3). The costs for these
Cost Centres are then disbursed based on sea days as a cost driver.
Note that there is a slight difference between the total Program budget of $3.502 and that
presented in Table 3. This is because AFMA undertakes Observer activities for the Torres
Strait which is 80 per cent cost recovered from industry and 20 per cent funded by
Government. This arrangement reduces the total amount AFMA cost recovers from the
Torres Strait and therefore the total amount cost recovered by the whole Program from
$3.517m to $3.502m. This arrangement is not present in any other Fishery and the Observer
function is wholly cost recovered.
The direct sea day costs for observers are captured in the FinanceOne Budget. However all
indirect costs and administration costs are not, they are simply averaged out across all
Fisheries dependent on total Sea Days.
Using the final budget for 2013 – 2014 and the estimated 2456 sea days, the Observer
Program costs $1589 per sea day and this is separated into:
$1064 for direct costs and associated overheads; and
$465 for administration and associated overheads.
9
For boats fishing in the Southern Bluefin Tuna zone during winter.

20
Table 3 Program final budget for the financial year 2013 – 2014.
Cost
Centre Description Base ($)
Overheads ($)
Total ($)
Type A Type B Type C Type D
OBIS Observers - ISMP Field 695,215 75,050 102,234 0 21,958 894,458
OBOF Observers - Field 1,200,320 129,577 209,167 0 37,911 1,576,977
OBOA Observers - Administration 670,697 72,403 210,359 71,261 21,183 1,045,906
Total 2,566,234 277,031 521,760 71,261 81,053 3,517,342
The large number of Program staff and the direct budget means the Program attracts large
overheads ($951 108). Overheads are divided into four categories, and represent the cost of
management, corporate activities and facilities (Table 4).
Table 4 Description of overhead types and allocation methods.
Overhead What the overhead pays for Allocation
A Senior staff time, including: the Chief Executive
Officer; General Manager of Corporate Services;
legal and policy staff; the AFMA Commission
secretariat.
Based on direct budget
expenditure for the
financial year.
B Information technology application and
operations; financial management; risk
management and property services; human
resources; training; long-term leave.
Based on full time
equivalents staff members
in the financial year.
C Canberra accommodation and facilities. Based on Canberra full
time equivalent staff
members in the financial
year.
D Staff time of the AFMA Commission, the General
Manager of Fisheries and the General Manager of
Operations.
Based on direct budget
expenditure for the
financial year.
Importantly, the introduction of e-monitoring (described in 1.1 Developments which can
influence the Program) will affect the Program’s cost as it reduces the number of sea days
allocated to physical observers. This in turn reduces administrative costs and potentially
observer staff numbers. Therefore, the draft costs presented here do not necessarily indicate
what the Program may cost in the future.

21
Providing services to remote geographical locations is seldom cheap. However, the Program’s
costs can be difficult to explain to industry and may seem excessive compared to external
providers in the absence of like-for-like comparisons.
The internal budgeting process can make it difficult to identify the costs associated with
running the Program. In the last two financial years AFMA has over-projected the costs of
running the Program to the extent of approximately $200 000. Budgeting the expected costs
and allocated administration down to this fine level could provide greater costing accuracy
and may be useful if the Program is market tested with external providers. Ways of achieving
greater accuracy should be investigated in the future.

22
Section 3: Alternative observer service delivery models
This section critically reviews alternative observer service delivery models, and assesses the
risks of outsourcing the administration and observer components of the Program. The data
entry team is already outsourced, and AFMA is not considering the possibility of outsourcing
the functions of the data management team. Therefore, these teams are not discussed in this
section. Whilst this report provides the strengths and weaknesses of potential outsourcing
options, it does not aim to provide an observer services delivery model tailored to Australian
fisheries.
3.1 Service delivery options
Globally, there is a range of observer service delivery models. In general, they fall into the
following categories (MRAG Americas Inc, 2000, p. 56):
• Government program – Government is responsible for delivering all aspects of the
program;
• Government-contractor model – Company(ies) directly contracted by Government are
responsible for some or all elements of the program; and
• Third party contracting – One or more government-certified companies are contracted
directly by vessel operators to fulfill certain observer requirements.
The current Program combines the three categories; it is predominantly a government
program, has established a government-contractor model with the data entry team, and third
party contracting of external ‘data collection agencies’ in the sub-Antarctic fisheries. Table 5
lists the potential benefits and costs for each service delivery model. One option is not
necessarily superior to another, rather, one option may better suit the Australian context and
AFMA objectives.
Table 5 Potential benefits and costs of different observer service delivery models. Sources: MRAG
Americas Inc, 2000; Davies & Reynolds (eds.) 2003; consultation with AFMA staff.
Service
delivery model
Benefits Cost
Government
program
• Least likely model to have
perceived conflict of interest.
• AFMA maintains complete
control over the Program.
• Retains skills and expertise
within government.
• Full integration with AFMA’s
fisheries management, science
and compliance elements.
• Personnel have a close
relationship with broader
fishery issues.
• No market pressure to improve
efficiency and quality.
• Does not address ongoing
industry concern regarding the
Program’s cost.
• Does not address issues raised
by the Cost Efficiency Working
Group, Senate Estimates
enquiries, and the Review of
Commonwealth Fisheries.
• The net effect of all government
procedures can lead to

23
Service
delivery model
Benefits Cost
• AFMA can ensure high levels of
observer support.
• Maintains existing
government-industry
relationships.
• Allows cost sharing of
personnel and equipment.
• Can quickly alter coverage
levels to address emerging
issues.
inefficiencies.
Government-
contractor
model
• Market competition can drive
more rapid cost efficiencies.
• External providers could
potentially deliver higher
standards compared to current
Program.
• Faster, integrated access to
new monitoring technology.
• Wider links to expertise
through marketplace
associations.
• External companies may be
better able to respond to
fluctuating data and labour
requirements.
• Partial integration with AFMA’s
fisheries management, science
and compliance elements.
• Program may not be
constrained by government
procedures (e.g. for
recruitment).
• Contract between the two
parties allows AFMA to directly
oversee the company’s
performance.
• Possible loss of indirect outputs
delivered by in-house service
(described on page 11).
potentially deliver lower
Program.
• AFMA’s ability to alter coverage
levels at short notice may be
hindered by the process to
change contracts.
• More clumsy links between
data collection and data entry
and management.
• Difficulties integrating program
planning and service delivery.
• AFMA managers, MACs and
RAGs have reduced access to
observers.
• AFMA may need to manage
several contracts depending on
the number of companies
employed.
Third party
contracting
• Market competition can drive
more rapid cost efficiencies.
potentially deliver higher
AFMA model.
• All the costs addressed in
government-contractor model
(above).
• AFMA has minimal control over
the Program.
• The ability for AFMA to evaluate

24
Service
delivery model
Benefits Cost
• Faster, integrated access to
new monitoring technology.
• Wider links to expertise
through marketplace
associations.
• Companies may be better able
to respond to fluctuating data
and labour requirements.
Frees AFMA from the day-to-
day responsibility of the
Program; frees up time and
resources to focus on other
core priorities.
• Program may not be
constrained by government
procedures.
and influence contractor
performance is limited because
there is no contract between
the two parties.
• May create the appearance of
conflict of interest.
• Unclear how other agencies,
such as the Department of
Sustainability, Environment,
Water, Population and
Communities, would respond to
this arrangement.
• Managers, MACs and RAGs
have minimal access to
observers.
This report was unable to identify any international examples which closely mirror Australia’s
observer delivery model. This is unsurprising as observer services are typically shaped by
different needs and local contexts. New Zealand’s observer program most closely resembles
AFMA’s Program, and is undergoing similar drivers to consider alternative service delivery
models (see Case study , page 27). This report was unable to identify any reviews of observer
programs that have transitioned from in-house to external provision.
The international outsourced observer programs described in Table 6 demonstrate that
governments can select which responsibilities are retained in-house, and which are
contracted to external companies. In some fisheries, observer services are delivered by
several companies, which can be more cost effective because it utilised competition.
However, there is a risk that, in tailoring their services to more closely meet industry’s needs,
service providers neglect data quality (Black, 2010, p. 30), or competition causes companies
to undercut payment to the point that observers leave the industry (as seen in the United
States, described by Bache and Evans, 2003, p. 14).

Table 6 International examples of outsourced observer service delivery models.
Location Program/Fishery Government-
contractor
model
Third
party
contracting
Single/multiple
service
providers
Description
British
Columbia,
Canada10
Groundfish fishery X Multiple service
providers
Government-certified service providers are
selected through a competitive bidding
process. A single provider delivers services for
an entire fishery or fleet group, and industry
associations contract providers directly.
Canada11 Pacific Groundfish
At-sea Observer
Program & Trawl
Groundfish
Dockside
Monitoring
Program
X Single service
provider
Government contracts a single company to
deliver all aspects of observer deployment
(including recruitment and training) and data
management.
Alaska,
USA12
North Pacific
Groundfish
Program
X Multiple service
providers
Multiple government-certified companies
compete daily to provide observer coverage for
industry clients. It should be noted that reviews
identify this arrangement as the cause of
problems.
USA13 Pacific Drift Gillnet
Fishery
X Single service
provider
Government retains responsibility for observer
training and auditing contractors. The
contracted company is responsible for observer
recruitment, deployment, and data delivery.
10
McElderry, H & Turris, B 2008, p. 13.
11
Black, 2010, p. 17.
12
MRAG Americas Inc, 2000; Bache & Evans, 2003.
13
MRAG Americas Inc, 2000; National Oceanic and Atmospheric Administration, n.d.

Location Program/Fishery Government-
contractor
model
Third
party
contracting
Single/multiple
service
providers
Description
USA14 Northeast Fishery
Observer Program
X Single service
provider
Companies are competitively employed on
one-year contract (with four-option-years), and
are responsible for observer recruitment,
employment and deployment.
14
Black, 2010, p. 9.

27
A decision to market test the Program would enable AFMA to explore the feasibility of
altering the Program’s service delivery model, and would align with AFMA’s objectives of
cost-efficient fisheries management (AFMA, 2012). However, market testing would obviously
consume AFMA resources and staff time. Therefore, before a decision to market test is made,
there should be a high degree of confidence that outsourcing is, in fact, feasible.
New Zealand’s Ministry for Primary Industries delivers an in-house observer program
similar to AFMA’s Program. Fixed-term contracted observers collect fishery data and
compliance-related information, and the cost is largely recovered from industry. Unlike
AFMA observers, observers in New Zealand may perform a limited compliance-related role
in some situations.
As part of initiatives to improve the economic performance of the seafood sector, the
Ministry is considering adopting a government-contractor model to deliver some parts of
the observer program. Sea days that do not have a compliance component (that is, days
purely dedicated to data collection) may be outsourced to one or more external
companies. The Ministry called for Registrations of Interest in May 2013, a process similar
to the market testing that AFMA is considering. Integrity and independence are critical
features of the observer program. Potential providers of observer services will need to
demonstrate how they satisfy the requirement for independence and manage any
potential conflict of interest.
If the decision to outsource some observer services goes ahead, the Ministry aims to have
externally sourced observers on vessels from mid-late 2014. The amount of externally
delivered coverage may gradually increase over time, and the Ministry’s role would
change to include auditing service providers.
The Ministry expects that outsourcing will deliver several benefits, including:
• Increased professionalism and flexibility in the delivery of observer services
• Improved quality and integrity of information and data
• Enhanced transparency in the delivery of observer services
• Cost efficiencies
• Better alignment of industry and Ministry expectations of observers and their costs
The consideration of outsourcing has received some negative media attention concerning
the quality of data external observers can deliver (One News, 2012).
Case study New Zealand considers a government-contractor model for observer services. Sources: One
News, 2012; Ministry for Primary Industries, 2013.

28
Table 7 presents a benefit, cost and risk assessment of outsourcing the administration and
observer components of the Program. The information presented in this table is not
exhaustive but represents the key themes that emerged during consultation with AFMA staff
and state government employees who are experienced in delivering fishery observer
programs (see Appendix C for a list of stakeholders contacted).

29
Table 7 Benefit, cost and risk assessment of outsourcing the Program’s administration and observer components. The identified benefits, costs, risks and consequences presented here are not exhaustive but draw on the key themes from
consultation with AFMA staff and state government employees who have experience delivering observer services. Key risks are explored in detail in 3.2 Risks of outsourcing, page 32.
Program component Benefits of outsourcing Costs of outsourcing L15 Risks of outsourcing C16 Risk mitigation strategies
Observer recruitment
and training
• Recruitment may occur faster
than government recruitment
processes.
• Training may be more cost-
effective than in-house training.
• AFMA and external companies
may vary in the skills they desire
in observer candidates.
• Training may not include skills
AFMA considers important.
• Training costs can become
expensive if there is high staff
turnover.
3 • Observers may not have the same
skills as AFMA observers; observers
may be unable to collect data to
AFMA’s desired standards.
• Lack of commitment to AFMA goals
and objectives because observers
are not AFMA employees.
3 • AFMA specifies to external
companies the basic qualification
levels, skills and training external
observers must possess.
• AFMA contributes to the
development of training sessions.
Observer deployment
(including logistics,
equipment provision,
payment)
• Greater ability to meet increased
observer coverage at short
notice, and respond to peak
periods of activity (e.g. good
weather conditions) because of
faster recruitment processes.
• Frees up AFMA’s time to focus on
other functions.
• Short term priority changes to
coverage levels may require
contract changes.
• External companies may not
understand the particularities of
each fishery’s requirements
• Potential deployment of
inappropriately skilled observers.
3 • AFMA incurs fees associated with
contract changes.
• Poor data collection.
• AFMA reputation is damaged
• AFMA may have primary duty of
care responsibility in relation to the
workplace health and safety of
external observers.
• AFMA’s duty of care may extend to
outsourced observers.
2 • Thorough pre-season planning of
coverage levels to prevent
unnecessary contract changes.
• Extensive consultation with service
provider regarding each fishery’s
requirements.
• Audit of provider’s processes.
• Comprehensive safety training for
observers to minimise injuries;
contractual obligations could shift
liability to contracted companies.
• Further investigation re: duty of care
and possible insurance
requirements.
Biological data
collection (at-sea and
port-based)
• Can be more cost-effective than
AFMA observers.
• Perceived independence of data
may increase some stakeholders’
confidence in data integrity.
• May deliver poor or variable data
quality.
• Perception of observer bias
affecting data collection or
reporting (e.g. reporting bycatch
of TEP species); employment
incentive structure could
encourage observer bias.
• Lack of industry acceptance for
external observers; potential
cultural conflict using
international observers.
• Contracted companies may have
different information privacy
standards to AFMA.
3 • Reduced data quality leads to
diminished accuracy of stock
assessments and more risk prone
fishery management decisions.
• Stakeholder concern regarding data
integrity.
• Diminished levels of social license
within the broader community for
externally provided observer
services.
• Reduced acceptance of observers
on vessels and resultant impacts on
data collection.
• Contracted companies may leak
sensitive data to third parties.
4 • AFMA involvement in data quality
checks
• AFMA could evaluate and authorise
each service provider and individual
observers
• Incorporate standards and
performance assessment into
contracts; options to terminate
contracts if breached. AFMA
maintains auditing role to manage
contractors’ performance.
• Specify conflict of interest standards
for contractors
• As with the current Program,
external observers could be rotated
amongst fisheries to reduce the
change of observer bias.
• Establish severe repercussions for
15
L- Likelihood rating: (1) Rare, (2) Unlikely, (3) Possible, (4) Likely, (5) Almost Certain
16
C- Consequence rating: (1) Insignificant, (2) Minor, (3) Moderate, (4) Major, (5) Severe

30
bias behaviour.
• Strong support system for
observers; debriefing sessions to
address issues.
• Communicate the performance of
contracted companies to
stakeholders to allay concerns.
• Collaborate with industry to address
concerns before a new service
delivery model is implemented;
build a sense of ownership to
enhance industry acceptance.
• Bind service providers with privacy
of information requirements.
Collection of
operational
information
• Can be more cost-effective than
AFMA observers.
• Observers may be unfamiliar with
fisheries legislation.
• Inexperienced observers may not
realise that seemingly innocuous
information can help AFMA
operations.
• Observers do not report
operational information in a
timely manner.
• Perception of observer bias
affecting the collection and
dissemination of operational
information and reporting
transgressions.
3 • Reduced reporting on legislative
transgressions.
• Decreased operational information
provided to AFMA Intelligence.
• Time-lag for operational
information to be communicated to
AFMA.
3 • Observer training packages include
legislation training.
• Encourage observers to be vigilant
for operational information that can
assist other AFMA sections.
• Specify timeframes for information
delivery.
• Specify conflict of interest standards
for contractors.
• Establish severe repercussions for
bias behaviour.
• Provide a strong support system for
observers; debriefing sessions to
address issues.
Communicating with
vessel operators
• External observers may be seen
as a neutral party, and enhance
feedback from industry to
government.
• Similar to AFMA observers,
external observers can be used
to deliver information such as
identification manuals.
• External observers may fail to
capitalise on opportunities to
communicate to fishers about
fishing regulations and protocols.
• Observers may not communicate
messages about AFMA policies
that they do not support.
4 • Observers rectify fewer fisher
misconceptions or behaviours.
• Potentially fewer messages are
communicated to vessel operators.
2 • Emphasise to external companies
the role of observers in educating
fishers.
• Messages that are frequently
communicated to fishers can be
incorporated into training packages.
• Debrief with vessel operators after
trips to assess if observers are
conveying messages.
Post-deployment
debriefing sessions
• Frees up AFMA’s time to focus on
other functions.
• Time lag for feedback from
debriefing sessions to reach
AFMA.
2 • It may take extra time for AFMA to
become aware of problems, such as
ineffective data collection
procedures or difficulties with
vessel crews.
3 • Contractual obligations specify
acceptable time frames to deliver
debriefing information to AFMA.
• AFMA can be involved in debriefing
sessions to obtain immediate
feedback.

31
Cost • Potential to reduce costs. • Outsourcing the program could
significantly affect AFMA’s
overall budget and levy base.
• Outsourcing the program could
lead to a reduction in overhead
allocation for cost recovered
activities.
3 • It would be managed through a
contract that is subject to cost
recovery and which would in turn,
also attract overheads. This could
lead to no discernable reduction in
the total cost recovered activities.
• Will alter AFMA’s duties (duties will
change to contract management).
3 • Apply overheads to the contract
where appropriate.
• Fundamentally alter AFMA’s cost
recovery model – ensuring it still
complies with whole of government
cost recovery guidelines.

32
3.2 Risks of outsourcing
The diversity of stakeholders and values connected to the Program means there are several
risks surrounding outsourcing. However, the existence of multiple outsourced international
observer delivery models suggests that the risks are not insurmountable. This part of the
report explores in detail the key potential risks of outsourcing, and potential mitigation
strategies. This section should be read in conjunction with the benefit, cost and risk
assessment presented in Table 7, page 29.
3.2.1 Delivery of outputs
It is uncertain whether all of the outputs delivered through the AFMA Program (see 2.1
Objective and outputs, page 11) can be obtained using external service providers. These
considerations are:
1. Fisheries data. External companies may be unable to produce the consistent, high quality
data currently delivered by the Program. This risk can be caused by several factors:
• Poor recruitment or training standards for external observers;
• Biased observer behaviour, for example avoiding certain boats; and
• Low observer retention.
Variable data could reduce the accuracy of stock assessments which use it, and depending on
the extent and duration of variability, this could potentially have long term consequences for
marine resources. Tensions may arise if policy makers, scientists and industry are not
confident in the integrity of data used to support fishery management decisions. Poor data
quality could also concern the broader community and conservation non-government
organisations, resulting in diminished levels of social license for externally sourced observer
services.
There are several activities which could mitigate the risk of poor data quality. AFMA can
specify minimum qualifications and skills for external observers, and can be involved in the
development and delivery of observer training, to ensure contracted observers possess the
skills necessary to collect accurate data. The possibility of biased observer behaviour, which is
discussed in more detail below, could be reduced using conflict of interest standards and
dissuaded using severe repercussions. Further, AFMA could mirror intentions of New
Zealand’s Ministry for Primary Industries (see Case study , page 27) and adopt an auditing
role to assess and manage the performance of contracted companies.
Observer programs worldwide struggle with poor observer retention (highlighted by MRAG
Americas Inc., 2000 and Williams, 2008, p. 8). The constant flow of inexperienced observers
that this creates reduces the quality and efficiency of data collection (OIPE, 2004, p.19).
Contributing factors to this include employment terms, the difficult nature of the job, limited
incentives to remain in the profession, and university graduates who only intend to use the
role as a platform to move on to other jobs (MRAG Americas Inc., 2000). AFMA can take
actions to try and mitigate these by ensuring companies provide strong observer support.

33
A second data related concern is the potential for contractors to mishandle sensitive data and
share information with third parties. Anecdotal evidence suggests this may have occurred in
an Australian jurisdictional observer program, but confidentiality prevents these details from
being discussed. Strict confidentiality standards could be one way to avoid the potential for
data mishandling by contracted companies. AFMA has experience in this regard through its
contractual arrangement with the data entry business D&S Datafix.
2. Enhanced operational information. The scope of using observers for gathering
operational information could be diminished if observers are privately employed. This risk
arises because external observers may be inexperienced with Australian fishing legislation
and so are unable to identify and report legislative transgressions. There may also be
concern amongst stakeholders that outsourced observers will seek to curry favour with
industry by not reporting transgressions they observe.
Further, the detection of some operational information relies on a certain degree of observer
vigilance; more experienced staff are better able to identify when overheard, seemingly
innocuous information is important for AFMA Intelligence functions. This means that external
companies may be unable to deliver some of the operational information collected through
the current Program if they have high observer turnover or poor understanding of AFMA’s
other functions which utilise operational information.
Certainly, comprehensive training for outsourced observers would go some way to
ameliorating these potential problems; training would help observers feel more confident in
their understanding of fisheries legislation and educate them about the types of operational
information to look for during deployments. Also, vigilance for operational information can
be encouraged during pre and post-deployment briefing sessions with observers. However, it
is hard to determine the potential effectiveness of such techniques.
3. Communication channel. A decision to use external observers could have a positive
impact on the use of observers as communication channels. Some vessel operators may
feel more comfortable communicating with external observers if they are perceived to be
at arm’s length from government. However, it is possible that outsourced observers could
hinder communication between AFMA and vessel operators. External observers could fail
to capitalise on spontaneous opportunities that arise to correct fishers’ behaviour or
misunderstandings. Additionally, outsourced observers may decide not to convey
messages about AFMA policies that they do not support.
Since it is impossible to quantify the importance of this output, the consequences of these
risks are unclear. Potentially, observers could be encouraged to facilitate communication
during training and debriefing sessions, and talking with vessel operators after each trip could
help assess whether observers are conveying messages.

34
4. Government – industry relationship building. The government-industry relationship
maintained through the Program would almost certainly be weakened by the loss of
AFMA observers. Although there are high level forums, notably the MAC meetings, which
allow for industry to interact with government, the value of government interaction at
the individual fisher level is also important.
3.2.2 Observer bias
Negative incentives exist at the individual observer level which may lead to inaccurate data
reports. For example, MRAG Americas Inc (2000, p. 53) note that in some overseas fisheries,
observers directly benefit from underreporting bycatch of protected species as this extends
the open fishing season and hence the requirements for observer coverage.
It is also possible that observers may be intimidated or bribed by vessel crew to falsify reports
(Hall, 1999, para. 2.7.4) or ignore legislative infringements (Watling, 2012). Poor pay and
working conditions, and few repercussions for inappropriate behaviour, could influence
observers’ susceptibility of bribes. Further, because observers have to return to the same
boats every fishing season, there may be an incentive to misreport data to curry favour with
vessel crew and make working relationships easier.
Undeniably, there is potential for bias in any government-provided service. Indeed, some
people may perceive that the familiarity between AFMA observers and vessel operators could
potentially encourage observers to ignore fishery transgressions. To mitigate this risk,
Administration rotates observer deployment so that individual observers do not work
exclusively on the same boats. Further, the repercussions that exist for government
observers exhibiting biased behaviour, together with debriefing sessions and data quality
checks, can provide stakeholders with confidence that this is not a systemic problem. These
techniques could be used to reduce the possibility of bias behaviour in external observers.
The processes AFMA currently adopts to manage the potential for observer bias when
accrediting data collection agencies for the sub-Antarctic fisheries offer could also be used to
mitigate potential contracted observer bias. The use of strict conflict of interest standards is a
sensible starting point, and a method common to other outsourced observer models (CCSBT,
n.d; MRAG Americas Inc, 2000). Strict repercussions for both contracted agencies and fishing
companies in the event of improper dealings could also dissuade bias behaviour. This
includes the loss of contract for external companies and the permanent loss of access to the
fishery for fishing companies (MRAG Americas Inc, 2000). Electronic monitoring cameras
might also deter biased observer behaviour.
It is unknown whether the mitigation options identified here will generate the same level of
stakeholder confidence for contracted companies that AFMA observers currently enjoy, and
at a minimum, it would take some time to do so.

35
3.2.3 Industry acceptance
Industry calls for external service providers are driven by anticipated cost-efficiency, but it is
unclear whether this will translate into acceptance of external observers by individual vessel
operators. Fishers’ perceptions of external observers’ abilities could undermine effective
working relationships with contracted observers, and cultural differences could potentially
play a role if international companies were engaged. Potentially, industry could boycott one
observer supplier in preference for another, which occurred in Alaska when there were
multiple service providers available (Bache & Evans, 2003, p.17).
It is difficult to predict the likelihood and consequences of this risk occurring. The topic is
given special consideration here because social risks are often overlooked when making
business decisions. A process of genuine engagement with industry to identify and address
concerns can help build industry ownership and acceptance of changes to the Program.
3.2.4 Loss of Australian jobs
Outsourcing the Program could potentially redirect employment to international businesses
and workers, a prospect that has understandably drawn concern from AFMA staff in two
sections. As a government agency, AFMA’s contracting of a company which may employ
foreign observers could draw criticism from the broader community, and some elected
officials.
There is considerable concern from Program staff regarding their job security. This is
reflected both in consultation with AFMA staff and the interest the Community and Public
Sector Union17
have shown in the market testing process. Whilst a decision to proceed with
market testing has not yet been made, uncertainty surrounding job security may reduce
observers’ productivity.
3.2.5 Changes to AFMA’s budget and duties
Outsourcing the Program could significantly affect AFMA’s overall budget and levy base. Of
particular concern is, in the event of outsourcing, what would happen to the overheads
currently allocated to the Program. Calculating an exact figure the effect outsourcing the
Program, or part thereof, would have on AFMA’s budget is complex and beyond the scope of
this report but it would need to be done should market testing occur. However, two points
worth noting are outlined below.
Firstly, outsourcing the Program could lead to a reduction in overhead allocation for cost
recovered activities. This is because overheads are allocated based on aggregates; less direct
budget and less direct staff employed in the administration of the Program itself would result
in a reduction of overhead allocation to cost recovered activities. However, these overhead
costs might still remain for AFMA, at least in the short term, and an issue may arise for
AFMA’s budget position in that not enough revenue is collected to offset those costs.
17
The Community and Public Sector Union is a party to AFMA’s Enterprise Agreement and represents staff on
issues that affect working life, including protecting jobs and rights.

36
Secondly, under the AFMA CRIS the Cost Recovery model works by allocating overheads to
the direct FTE and direct budgets or actual expenditure. If AFMA outsourced the Program, or
part of it, it would be managed through a contract that is subject to cost recovery and which
would in turn, also attract overheads. This could lead to no discernible reduction in the total
cost recovered activities as essentially overheads shift from the Program to Fisheries
management.
Outsourcing will also alter AFMA’s duties. AFMA would need to manage one or more
contracts with external service providers; if AFMA adopts a third party contracting model it
would need to manage the process of accrediting external companies. With any form of
outsourcing, AFMA would need to adopt an auditing role to monitor the quality of
contractors’ performance and fulfilment of contractual obligations. This could require
additional layers of management, which will of course incur a cost. Further, flexibility to
respond to changing demands could be reduced or become costly to maintain through third
party contracting if changes to contracts are required.
The extent of AFMA’s duty of care responsibility in relation to the recently amended
workplace health and safety Act and its implications for outsourced observers also requires
further investigation. Under the Work Health and Safety Act 2011 and the Work Health and
Safety Regulations 2011, ‘workers’ includes employees of contractors and subcontractors,
and the term ‘workplace’ encompasses any location where workers are engaged in a work
activity (Comcare, n.d., part 2). This suggests that the primary duty of care for outsourced
observers rests with AFMA. Risk mitigation such as ensuring observers complete
comprehensive training (e.g. sea safety training) can reduce the risk of staff injuries and
should be included in contractual obligations.

37
Section 4: Recommendations
This report recommends that:
1. This report be used as the key source of information on the AFMA observer program
if a decision is made to market test the program. Other reliable sources of
information may also be used;
2. Should market testing go ahead, the Evaluation Panel needs to be well informed of
the issues identified in the report by the Steering Committee when assessing
applications for market testing;
3. Should market testing proceed the current Steering Committee be reformed as an
internal Reference Group;
4. The Reference Group’s duties include providing support and/or advice to any market
testing process; and
5. That the Reference Group work closely with the Evaluation Panel to draft the criteria
for market testing noting that getting the criteria right is critical and that their
development should be carefully considered.

38
Appendix A: History of changes to the Program
The Program began in 1979 with the establishment of the 200 nautical mile Australian Fishing
Zone. The Program was initially situated within the then Commonwealth Department of
Primary Industry and Energy (now the Department of Agriculture, Fisheries and Forestry).
From 1979 – 1989 the program focused on verifying logbook data of fishing operators,
principally in the tuna fisheries under the Bilateral Agreement between Australia and Japan
(described by ACIL Consulting, 1998) to achieve a more reliable stock assessments and thus
improved fishery management.
In 1992, full responsibility for the program was transferred to the newly established AFMA,
from which point the program gradually concentrated on domestic fishing activity. By 1998-
1999 the Program was solely focused on domestic fishing activity as bilateral fishing
arrangements with Japan had ceased.
In December 2005, the then Minister for Agriculture, Fisheries and Forestry, issued a formal
direction to AFMA to address overfishing and prevent overfishing in the future. Specifically, it
directed AFMA to “Enhance the monitoring of fishing activity, for example through increased
use of vessel monitoring systems with daily reporting on-board cameras, and observers”. The
Program adapted to meet these new requirements, and its function moved from log book
verification to research.
The scope of the Program was largely focused on gathering information on target species. In
the 1990s, the federal agency responsible for the environment increased its focus on the
environmental impacts of fishing, and the EPBC Act was enacted. This, together with the
implementation of Ecological Risk Management in Commonwealth fisheries drove the
demand for information about fishery interactions with TEP, bycatch and discard species. The
Program again adapted to new requirements, and observers’ roles expanded to collect
species interaction data which contributed to ecologic risk assessments.
Beginning in 2005, AFMA explored the potential of electronic monitoring to contribute to
monitoring needs through a series of trials. AFMA introduced electronic monitoring as a
business-as-usual function in the gillnet sector of the Southern and Eastern Scalefish and
Shark Fishery, and is looking to implement the technology in the Eastern Tuna and Billfish
Fishery (AFMA, 2011). Electronic monitoring is facilitated through recent amendments to the
Fisheries Management Regulations 1992, and policies such as the Fee for Service Policy
(introduced in July 2013).

39
Appendix B: Program roles in each fishery
The Program is tailored to meet the individual data needs of each fishery as identified by
RAGs, MACs and fishery managers. Table 8 details the sea days delivered through the
Program for the financial year 2011 – 2012, and the target sea days for the financial year
2012 – 2013. Note that the number of high seas fishing days cannot be predicted and so does
not have a sea day target.
For each fishery, the Program collects the data outlined in Table 9 together with the fishery-
specific data described in Table 10.
Table 8 The Program’s target sea days for 2012 – 2013 and the total sea days delivered in 2011 – 2012.
Fishery
Sea days
target
2011 -
2012
Total
days
2011
-
2012
Sea days
target
2012 -
2013
Bass Strait Central Zone Scallop 20 18 10
Commonwealth Trawl Sector
(Blue Grenadier spawning season)
46 61 46
Coral Sea 30 24 30
Eastern Tuna and Billfish 550 616 550
East Coast Deepwater Trawl 40 56 40
Heard Island and McDonald Island 480 603 480
High Seas
Not
applicable
367
Not
applicable
ISMP Gillnet, Hook and Trap sector (autoline) 104 125 104
ISMP Gillnet, Hook and Trap sector (bottom longline) 42 17 42
ISMP Gillnet, Hook and Trap sector (dropline) 5 0 5
ISMP Gillnet, Hook and Trap sector (gillnet) 431 408 431
ISMP Great Australian Bight 24 33 35
ISMP South East Trawl 204 257 126
Macquarie Island 70 153 70
Northern Prawn 151 184 186
North West Slope Trawl 44 46 15
Small Pelagic Fishery 15 0 15
Southern Bluefin Tuna 90 40 90
Torres Strait Prawn 40 48 40
Western Deepwater Trawl 25 0 25
Western Tuna and Billfish 20 22 50
TOTAL 2431 2645 2390

40
Table 9 Observer data collected in all fisheries, 2011-2012. The general data outlined here is collected in
addition to the fishery-specific data outlined in Error! Reference source not found..
Data collected Description of data
Biological data The biological data collected varies between fisheries
and can include:
• Length, weight, sex
• Life status and fate
• Presence of research tags
• Otolith and vertebrae samples
• Life stage
• Processing codes
Catch composition • The proportion of different species in each catch
Conversion factors • Conversion factor between catch and processed
amount
Gear details • Measurements of gear
Hospitality • Details conditions on the boat relating to the crew and
their attitudes to observer work
• Accommodation and food quality
Length frequency • Length measurements for target species
Marine pollution • Disposal of waste at sea
• Oil discharge/spills
Shot details • Target Species
• Bait used
• Catch retained/discarded
• Percentage of observer coverage
• Gear damage
• Reasons for shot
• Shot outcome
Vessel details • Crew details
• Electronic equipment
• Boat specifications
Vessel activity • Date, time and position of operation
• Meteorological data
• Offal discharge
Voyage summary • Summarises trip length and effort
Wildlife abundance • Five minute snapshot of all wildlife abundance during
differing periods including seabirds and mammals
Wildlife interactions • Detailed data relating to interactions with TEP species
Wildlife mitigation • Assessment of mitigation devices and procedures
Workplace health and safety • Safety induction checklist

41
Table 10 Fishery-specific data collected by the Program during the financial year 2011-12. Fishery-specific data is collected in addition to the general data described in Error! Reference source not found., Error! Reference source not found..
Fishery Data collected At-sea/port-based
sampling
E-monitoring End use for data
Bass Strait Central Zone Scallop • Length Frequency
• Catch Composition
At-sea sampling Not available • Reports go to fishery managers, MACs and RAGs.
Coral Sea • Biological data
• Otolith collection
• Length frequency
• Catch composition
Eastern Tuna and Billfish Fishery • Biological sampling of all catch,
including length and sex
• Life status
• Monitoring Bluefin tuna catch for high
grading
• External research projects (sunfish,
swordfish, 60 gram swivel)
At-sea sampling Available in June
2013
• Reports go to fishery managers, MACs and RAGs
• International reporting obligations.
East Coast Deepwater Trawl/High Seas/Blue
Grenadier spawning season
• Tagging (fish and skates)
• Conversion factor testing
• Thaw tests
• Sink rate testing
• Camera work
• Biological data
• 100% coverage
• Length frequencies
At-sea sampling Not available • Reports go to fishery managers, MACs and RAGs, and the
Australian Antarctic Division data collection.
• International reporting obligations (CCAMLR).
Gillnet, Hook and Trap sector
(autoline/dropline)
• Biological data
At-sea sampling/Port
Sampling Otolith
Length Frequency
Available • Reports go to fishery managers, MACs and RAGs.
Gillnet, Hook and Trap sector (gillnet/bottom
longline)
• Biological data (every fish)
• Vertebrae collection
At-sea sampling/Port
Sampling Otolith
Length Frequency
Not available • Reports go to fishery managers, MACs and RAGs.
Great Australian Bight • Biological data
• Catch composition (extrapolated
catch)
Northern Prawn Fishery/Torres Strait Prawn
Fishery
• Length frequencies of commercial
prawn species
• Catch composition using bycatch sub-
samples
• TEP interactions (sea snakes, turtles
and pipefish)
• Documentation of species of interest
At-sea sampling Not available • Reports go to fishery managers, MACs and RAGs

42
Fishery Data collected At-sea/port-based
sampling
E-monitoring End use for data
North West Slope Trawl • Biological data
Small Pelagic Fishery • Biological data
South East Trawl • Biological data
• Catch composition (extrapolated
catch)
At-sea sampling and
port sampling of otoliths and
length frequency
Not available • Reports go to fishery managers, MACs and RAGs.
Southern Bluefin Tuna • Biological sampling of all mortalities,
length and sex
• Life status
• Monitoring mortalities
Southern Oceans • Tagging (fish and skates)
• Conversion factor testing
• Thaw tests
• Sink rate testing
• Camera work
• Biological data
• 7 days per week 12 hour
• 100% coverage
• CCAMLR requirements
• Length frequencies
At-sea sampling Not available • International reporting obligations (CCAMLR).
• Reports go to fishery managers, MACs and RAGs.
• Australian Antarctic Division data collection
Western Deepwater Trawl • Biological data
Western Tuna and Billfish Fishery • Biological sampling of all catch,
including length and sex.
• Life status
• Monitoring Bluefin tuna catch for high
grading.
• External research projects

43
Appendix C: Individuals and organisations contacted
Table 11 lists the people and organisations contacted for information in the development of
this report.
Table 11 Individuals and organisations contacted.
Name Organisation Role
Federal government
Steve Bolton AFMA Senior Manager,
Northern Fisheries & Co-management
Section
Ross Bromley AFMA Assistant Senior Fisheries Management
Officer,
Demersal and Midwater Trawl Section
Chris Burns AFMA Senior ISMP Planning Officer,
Observer Program
Julie Cotsell AFMA Administrator,
Observer Program
John Garvey AFMA Data Manager,
Intelligence, Planning & Data
Management Section
Steve Hall AFMA Observer,
Observer Program
Libby Jenkins AFMA Senior Manager,
Human Resources Section
Justine Johnston AFMA Australian Technical Coordinator,
CCAMLR Observer Program
Tony Lawless AFMA A/g Chief Financial Officer
Finance Section
Peter Neave AFMA Manager,
Antarctic Fisheries Section
David Power AFMA A/g Manager Gillnet, Hook & Trap
and Squid Fisheries,
Demersal & Midwater Fisheries
Section
Phil Ravanello AFMA National Intelligence Manager,
Intelligence, Planning & Data
Management Section
Jeremy Richter AFMA Senior Manager,
Service One
Paul Ryan AFMA Environment Manager,
Policy, Environment, Economics &
Research Section
Martin Scott AFMA Foreign Compliance Officer, Fisheries
Operations Branch

44
Name Organisation Role
Anne Shepherd AFMA Manager,
Licensing and Data Services Section
Evelyn Walden AFMA Manager Human Resources,
Human Resources Section
Sally Weekes AFMA Senior Fisheries Management Officer,
Policy, Environment, Economics &
Research Section
Mike Yates AFMA Manager, Observer Program
State & territory governments
Dr James Andrews Fisheries Victoria,
Department of
Environment &
Primary Industries,
Victoria
Leading Scientist Aquatic Sciences &
Technical Services,
Fisheries Management & Science
Branch
Douglas Ferrell Department of
Primary Industries,
New South Wales
Manager,
Resource Planning Group
Dr Ross Quin Fisheries
Queensland,
Department of
Agriculture, Fisheries
& Forestry,
Queensland
Manager,
Fisheries Information & Science
Coordination
Dr Rick Fletcher Department of
Fisheries, Western
Australia
Executive Director,
Research
Dr Thor Saunders Department of
Primary Industries &
Fisheries, Northern
Territory
Researcher,
Fisheries Research Team
Annabel Jones Department of
Primary Industries &
Regions, South
Australia
Program Leader,
Commercial Fishing
International governments
Neville Smith Ministry for Primary
Industries, New
Zealand
Principle Scientist,
Fisheries Management Directorate
Australian fishing industry
Trixi Madon
*contacted but has not yet
provided information on
industry concerns
Commonwealth
Fisheries Association
Chief Executive Officer

45
Appendix D: Extract of Hansard
The following extract of Hansard contains Senator Colbeck’s queries regarding the Programs
cost during Senate Estimates on 22 May, 2012. At this meeting, the AFMA Chief Executive
Officer (Dr Findlay) expressed willingness to market test the Program and adopt cheaper and
more effective Program alternatives (lines 44 – 46).
Hansard extract 1: The Program’s cost was queried during Senate Estimates and the AFMA Chief
Executive Officer expressed willingness to market test the Program (lines 44 – 46). Source: Commonwealth
of Australia 2012, pp. 17 – 22.
Senator COLBECK: I will just go to the observers and how you calculate the cost for an observer.
Dr Rayns: It is quite a process. Briefly, we work out a daily cost. The current cost is around $1,100 to
$1,200 a day for an observer. In broad terms, the observer receives around $450 a day. Then there is also the
at-sea allowance for each day they are at sea. Remember that we pay our observers for some of their travel
time to distant ports as well as at-sea time. When they are at sea, they receive an at-sea allowance of $215 a5
day. So that is their main component. On top of that, we have the costs of administering the program. We
have several staff who have essentially to deploy the observers, make sure they receive training and so forth.
For example, our training budget at the moment is around $130,000 or $140,000 a year. That is because they
require training in safety at sea, first aid, conflict resolution, data collection, including on otoliths, and so
forth. They need to know how to handle knives safely on board fishing vessels, because you have to dig the10
otolith out of the fish et cetera. So there is a lot of training involved for observers, which is part of the cost.
So we have those key components—what the observer gets, the administration of the program and training.
On top of that, we have the normal distribution of overheads in the agency to the staff concerned, as Mr
Bridge mentioned, on a particular basis using certain classifications of overheads. Some of them are applied
to observers and others are not because they do not take up space in our office, for example, but they do15
require services from our HR and finance people. So they pay essentially some of those overhead costs but
not all of them.
Senator COLBECK: So your direct costs are about $665?
Dr Rayns: Nearly $700 a day in round terms, yes.
Senator COLBECK: Then you have $400 to $500 for overheads on top?20
Dr Rayns: We have about $500 for FTEs who have to manage and oversee the program, organise training
and so forth and deploy the observers et cetera. They come on top of that, and then we have corporate
overheads on top of that again.
Senator COLBECK: So if we say about $700 a day direct costs and about $400 to $500 a day overheads?
Dr Rayns: But they are very different types, because some of that is the oversight of the program—25
deploying observers and so forth. The other part of the overheads are the overheads as described by Mr
Bridge.
Senator COLBECK: So some direct management and some overhead?
Dr Rayns: Yes. That is correct. The exact split of that, unfortunately, I do not have in front of me but I can
get for you, if you wish.30
Senator COLBECK: I would be interested to see how that is made up. The comparison has been given to
me. I know it cannot be given as a direct comparison because things are different, but my understanding is
that the cost in New Zealand for an observer is something like $600 a day on a New Zealand boat.
Dr Rayns: We are aware of those comparisons. We test our observers in the marketplace from time to time.
Indeed, the Northern Prawn Fishery went out last year and did a market test and decided not to proceed35
because AFMA was still better value. They are going out again this year, I understand, in the next two or
three months.
Senator COLBECK: What do you mean by market test?
Dr Rayns: We basically go out and see if we can find another party who can deliver our observer services
to the standards that we require more cost effectively and give value for money.40
Senator COLBECK: A private third-party provider, effectively?

Observer-program-consideration-market-testing-report-2013

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