Shark cage-diving operators will now be regulated as a turf war breaks out between the industry and Stewart Islanders who fear their lives are being put at risk.

Conservation Minister Nick Smith announced today that a permit system and code of compliance would be imposed on shark-diving operations by the end of the year.

It comes as the two Stewart Island cage-diving operators face a backlash from locals who say cage-diving is changing the behaviour of great white sharks, leading to more interactions between the sharks and people in the water.

"The concerns and problems around these great white shark tourism businesses have developed to the point where regulation is necessary," Smith said.

"The issue over great white sharks is causing increasing tension within the Stewart Island community between those supporting the tourism operators and those concerned about the risk to divers and others from shark attack." He said there were reports - denied by divers - of people deliberately killing the sharks, which are protected. The cage-diving operators had developed in an environment lacking proper controls, and tightening the rules would help resolve the tension and ensure the sharks and people were offered greater protection, Smith said.

One of the major concerns was around the use of burley to attract the sharks that then associated boats with food which divers believed was putting them at greater risk.

Conservationists were also fearful that the sharks were being injured when coming into contact with the cages.

Smith said tourism operators needed to be careful they did not change the behaviour of wild animals. Locals would have their say in developing the regulations which the minister hoped to have in place by December when the next shark season started.

Commercial and recreational fishers also had a part to play and needed to rethink where they dumped their fish waste, as this was also attracting sharks, he said.

THE DIVER

Commercial paua diver Riki Everest said the industry was particularly concerned with the use of burley to attract the sharks to boats and that cage diving was changing the way the sharks behaved.

"Now every time a boat goes out there to go fishing or to do a bird-watching trip, lots of them are having interactions with sharks," he said.

"Whereas probably in the 15 years before this I might've heard of two encounters, in the last three we've probably heard of 50 - now it's just so much more prominent.

"We honestly believe as an industry that they're changing the behaviour of sharks and that's based on so many more interactions over the last three or four years."

Everest said it was starting to weigh on his mind in the water, potentially affecting his livelihood.

"I spend a lot of time trying not to think about it and I'm spending more time lately," he said.

"With the amount of information that's out there about the density and the numbers that are around the mutton bird islands it scares me now. They just seem so prolific and the amount of encounters that people are having close to the bay you can't help but be affected by it."

Everest said he was often alone in the water and up to 100 metres from shore "and how do you dive if you physically can't hold your breathe because you're full of anxiety".

"I'm scared of losing my edge, if I lost my edge I wouldn't do what I do."

He was already diving closer to safety while the issue was also having an impact on their community.

Everest said they wanted their children and guests to use the water but now they were becoming too afraid for their safety to do so.

Stewart Island had long been a fishing and diving community and the fact that two cage diving operators had arrived in recent years and were changing that was "hard to grasp".

He rejected reports of paua divers intentionally targeting sharks and said it was a rumour started by the cage divers.

"No one on Stewart Island in their right mind would ever harm Great White," he said.

"We're all morbidly fascinated by them. We have the utmost respect for anything in our environment."

Since they could not ban cage diving, regulating it was the next best option as long as the community had a say in developing the regulation.

"If they can maybe cage dive without the feeding I guess that's acceptable and as long as there's rules of conduct, as long as it's put together by all the people in the industry so its community based - a joint agreement - I think that's as good as you can get in a community like this."

Commercial and recreational fishermen also had to be more careful with where they dumped their offal, he said.

He added that the growing seal population was also having an impact on increasing shark numbers.

THE CAGE DIVING OPERATOR

Peter Scott from Shark Dive NZ welcomed the move towards regulation.

"I've been banging this drum for the last five years that this industry needs to be regulated," he said.

"You need regulation to stop the cowboys of the industry, it's as simple as that."

Scott said there had been issues with locals since he began.

"Seven years ago we had issues so we sat around a table and we tried to sort those out," he said.

"There was a few issues that were sorted then but there's also an issue that crops up from time to time."

He was aware of divers' concerns but denied cage diving was having an impact on shark populations or behaviour.

"I've got my opinions on the whole show and they've got theirs and I'm entitled to mine and they're entitled to theirs," he said.

"Those sharks have always been there. No one's been eaten in several years."

Scott said he had seen a "fraction" more smaller sharks lately but said this was the result of conservation efforts and more seals, rather than from cage diving.

There was no scientific evidence to show there was any increase in shark numbers as a result of cage diving.

"Given that we've got an explosion in the seal population which [sharks] eat and we've got water, we've got sharks," he said.

"It's a simple equation. The sharks aren't there because I'm there. They're there because there's a major food source here. They don't come all the way from Fiji just to visit Peter Scott."

He rejected claims that sharks were following fishing boats because they associated with burley.

"I would suggest they're following other fishing industry boats because those fishing industry boats are dumping offal over the side from their catches," he said.

"They need to look in their own back yard before they throw stones in mine. Those boats are throwing a lot more offal into the water than what we ever have."

He said cage diving operators put out four to five kilograms of burley a day.

Divers also had to be smart about where they dived as there were certain areas which were known to have sharks at certain times of the year, he said.

Scott believed cage-diving operators could coexist with divers and fishermen.

The unwritten rule was that if there were divers in the area he wouldn't put a cage down.

"If there's divers there when we get there in the morning we definitely don't go and put a cage on top of them," he said.

"There's got to be a bit of common sense there."

He also frequented the same area rather than moving around too much.

Permits would not end the battle but it would not stop him from running his business, Scott said.

"I've been here seven years and I'm not planning on going anywhere. I'll be back next year."

THE SCIENTIST

Great White Shark expert Clinton Duffy said that while it was an under-studied area, international evidence showed cage-diving operations did affect shark behaviour.

"What has been apparent in Australia is that where there was an intensification of cage diving . . . then the sharks appeared at the cage diving sites earlier in the day," he said.

They anticipated the arrival of the cage boats, stayed throughout the day and lingered after the boats had left and also spent more time on the surface.

Even on days when the cage boats were unable to get out the sharks would turn up and wait, he said, though not all sharks were affected.

Some sharks had also learned to steal baits, snatching them from lures on cage diving boats even though the operators were not supposed to feed them.

The operations did not affect shark numbers, however.

"These sharks are coming to Stewart Island from thousands of kilometres away," Duffy said.

"These sharks are making these directed trips for a specific purpose and it's not cage diving."

Worldwide, areas where there was cage diving also experienced the same conflict being played out in Stewart Island.

In other countries the affected industries learned to coexist, he said.

Scientists had not detected any increase in the great white population at Stewart Island this year, he said.

There was no evidence to show cage diving put divers at increased risk but it could not be ruled out.