Marine farmers are enraged by Government proposals on aquaculture law reform which they say will suck millions out of the industry and hinder its enormous potential for growth.

Eric Barratt, managing director of the country's largest listed fishing company, Sanford, said the proposals would destroy any confidence a farmer would have in investing further in marine farming.

'This isn't aquaculture reform,' said Barratt. 'This is an aquaculture death-knell.'

Barratt said New Zealand's 500-odd marine farmers were worried as they learned of the proposals through presentations during roadshows held in November and December.

'If this was farmland in New Zealand there would be riots,' said Barratt.

'No government would come out and do that.'

The industry fears the current first right of renewal on a marine farmer's tenure for farming waterspace will be dropped under proposals in the Aquaculture Law Reform bill.

The result would be that the Government would put up marine farms for tender as the terms expire.

Opponents of the proposals say time limits with no guarantee of continued farming rights mean farmers will no longer invest in the waterspace and will be reluctant to hire as the tenure nears its end.

Marine farmers who do not win the tender process will lose out on their investment.

The new regime requires regional councils to create aquaculture management areas which would be covered by coastal plans.

The concerns are mainly about what security there will be for current marine farmers, and explanatory Government roadshows late last year appear to have eroded confidence in the legislation.

The industry is also concerned about what it calls an 'intervention clause', said to be part of the reform package.

A small marine farm - say, up to 5ha - can cost up to $500,000 to set up, and preparing the product for the market can cost as much or more again.

Recovering the investment can take years, say marine farmers.

Under the Marine Farming Act, which was used to provide consent to farm before the introduction of the Resource Management Act (RMA) in 1991, tenures were generally around 14 years.

Many marine farms are still operating under the marine act, while others operate under the RMA, which has granted waterspace farming rights since its introduction.

Tenures under the RMA have been for between 10 and 20 years.

The tenure renewals under the marine act were seen as simply a rubber-stamping exercise so long as farmers complied with various regulations.

The industry says that under the proposed legislation, tenure granted under the RMA will be put up for tender when they expire, while those granted under the MFA will operate under a formula that gives a maximum 20 years of farming rights.

Fisheries Minister Pete Hodgson said marine farm leases almost certainly would be tendered out by regional councils.

He said the Government had balanced the need for businesses against the need not to privatise the space through an indeterminate lease.

'The underlying reason for tendering is simple.

'The aquaculture space has not got a price on it and anything that hasn't got a price has got a bloody long queue.

'If it goes for tender, the people who value the area most are going to get it.'

He said there was no intervention clause because the bill had not yet been written, but the language may be referring to the Department of Conservation 'reserving its right to express an ownership right of some form or another'.

Tom Hollings, of the Coromandel Marine Farmers Association, said proposed changes would put farmers at the mercy of central and local government.

There had not been proper consultation on the idea of putting farming up for tender, he said.

The proposal to tender the waterspace with no first right of refusal for the incumbent farmer was laughable.

'That's almost the reassuring aspect of it.

'It is basically a new tax, a new imposition ... the Government will be taking millions out of the industry.'

Hollings said the industry wanted to meet Hodgson, but if unsuccessful, would fight the proposal through the select committee process.

John Hannah, chairman of the Aquaculture Council, said the plans were contrary to the Government's original objectives of the law reform to help the industry make a greater contribution to the economy.

Under Vision 2020, a document produced by the industry two years ago, it was suggested aquaculture could earn $1 billion in foreign exchange within 20 years if its growth was fostered.

The industry currently earns around $312 million annually.

A two-year moratorium on new marine farms was put in place in late 2001 to stem a rush for waterspace while the new legislation was discussed.

The Seafood Industry Council has commissioned a report on the economic impact of the Government's proposals, and expects to have the data this week.

Hodgson said his impression was that the industry felt the Government was heading the right way on aquaculture.

After the bill was drafted, he said, it would 'be debated through the select committee and, certainly, changes will be considered'.

The Aquaculture Law Reform Bill is scheduled to have its first reading in March.