The Victorian Government has shut down another commercial fishing industry in a move aimed at increasing the number of recreational fishers.

Key points: The Victorian Government has announced that commercial fishing in the Gippsland Lakes will be banned from 2021

The Victorian Government has announced that commercial fishing in the Gippsland Lakes will be banned from 2021 This is the second commercial fishing industry phase out the Victorian Government has implemented

This is the second commercial fishing industry phase out the Victorian Government has implemented The 10 remaining licence holders are eligible for a compensation, but the industry says the package is not generous enough

Gippsland Lakes commercial fishing licence holders, in eastern Victoria, will be stripped of their right to fish from 2021 after legislation passed Victorian Parliament.

Commercial netters have fished the Gippsland Lakes since the late 1800s, and the industry relies primarily on black bream used by Melbourne's Asian restaurant sector.

The Labor government took the fishing ban policy in the Gippsland Lakes to the 2018 state election in which it won a landslide victory.

The Gippsland Lakes has been home to a commercial fishing industry since the 1800s. ( Supplied: Gippsland Lakes Commercial Fishery )

Fishers negotiate compensation package

Those who elect to have their licences cancelled in April next year will receive a base payment of $371,000 plus money to compensate for equipment, as well as an additional amount calculated from the value of their catch.

But those who hold off until the following year will be eligible for a package reduced by 20 per cent.

Seafood Industry Victoria executive director Johnathon Davey said the compensation package was not fair.

"Some of these families have been fishing the Gippsland Lakes for over 140 years, it's really devastating," Mr Davey said.

"Some of the licence holders are up around the 60 or 70 mark, they aren't going to be looking for employment opportunities going forward, simply because they can't.

"We are looking at somewhere around the $700,000 mark for the person with the lowest catch history, and then upwards of $1 million for the person with the highest catch history.

"A starting figure of $1.5 million would have been fair and reasonable in terms of the mental stress these guys are going through.

"Even though there is a compensation component for the catch history, that is taxable.

"When we talk about that figure people are going to be paid, it's not going to be anywhere near that, in terms of what they receive into their bank accounts, to set themselves up for the future."

Fears for fish supply

The Victorian Government started phasing out commercial net fishing in Port Phillip and Corio Bays in 2015.

The 43 commercial fishing licence holders in that fishery had eight years to phase out the industry, and shared in a compensation package worth $27 million.

Mr Davey said the closure of the Gippsland Lakes commercial fishery has further reduced the amount of seafood available to Victorian consumers.

"When we look at us as an industry and the amount we provide to the local Victorian consumers, we've literally seen over 520 tonnes chopped from our local seafood consumers," he said.

"This is significant, for us an industry this is something that is really major."

Leading chefs, seafood suppliers and commercial fishers protesting against a Port Phillip Bay commercial fishing ban in 2015. ( ABC Local: Clare Rawlinson )

Government acknowledges fishing families

The new laws are part of the Victorian Government's 'Target One Million' plan, which aims to get more people fishing for fun.

But Victorian Fishing and Boating Minister Jaala Pulford acknowledged fishing families and said it would be hard for commercial fishing businesses to adjust.

"A lot of people working in this industry find themselves in this industry because they were born into it and they are multi-generational businesses, as was the case in Port Phillip Bay," Mr Pulford said.

Fishing and Boating Minister Jaala Pulford says the Government's decision hasn't been made lightly. ( 7.30 Report )

"This is not something we do lightly … and this is why we have sought to provide adequate compensation and support them through this journey because it is tough.

"It's a big change — and it's a big change for anyone for the circumstances of their employment to change — but we want to make sure that people have the support that they need."

Nationals MP Melina Bath said the 10 affected fishers were left disappointed by the process.

"Now ultimately they have seen the writing on the wall, they indeed reluctantly understand that the Government put to the election that they would buy out these last 10 remaining licences on the Gippsland Lakes, and they understand that this is coming," Ms Bath said.

"However they have conveyed to me … the fact that the process has been quite flawed and they feel quite disrespected."

Council calls for stimulus package

The East Gippsland Shire Council is lobbying the Victorian Government to provide a stimulus package for the town of Lakes Entrance, which will be affected by the netting ban.

"We're really looking for some sort of economic stimulus package or support package," councillor Joe Rettino said.

"Because it's not just the direct licence holders affected by something like this, there are the workers and the businesses that support that fishing industry as well."

Cr Rettino said a stimulus package similar to that given to the Latrobe Valley after the Hazelwood power station closed is needed.

"We have significant disadvantage and less opportunity in Gippsland," he said.

"We have to help people transition to other opportunities."

Commercial bait, eel and mussel fishing operations will not be affected by the ban, nor will the offshore commercial fisheries that use Lakes Entrance as a port.