A leaked Ministry for Primary Industries (MPI) report shows its own officials believe that between 20 to 100 percent of some quota fish are being discarded during every haul.
It follows a study released earlier this week by the Fisheries Centre at British Columbia University, in collaboration with Oxford and Auckland universities, that showed deliberate and systematic fish dumping, high levels of wastage and institutionally embedded misreporting over six decades - all of which was questioned by the ministry.
The leaked MPI preliminary report, written by a ministry investigator, looked at video footage on six vessels operating in the Timaru and Ōāmaru ports between November 2012 and March 2013.
The report said MPI's own failure to prosecute skippers is contributing to over-fishing and illegal dumping.
An investigation began following the capture of two Hector's dolphins - one of which was unreported - by one commercial fisher on December 2012.
While reviewing the footage, installed as part of a pilot programme, the investigator saw numerous quota species fish, including substantial quantities of elephant fish and gurnard, being discarded.
As a result, the investigator began reviewing the footage of the other five vessels, and found four of those were also openly dumping or not reporting fish required under the Fisheries Act.
"Early data capturing samples show that between 20 to 100 percent of some quota fish are being discarded during every haul," the report said.
"These discards are taking place even though the captain and crew are aware that they are being monitored by camera."
The report said one captain and crew discarded about 35 percent of their elephant fish while a ministry observer was on board.
Greenpeace said it was amazed no one had been prosecuted.
Its executive director, Russel Norman, told Morning Report it showed fishing was unsustainable.
"They say they have looked at this video and they've seen systematic - I mean just widespread - chucking overboard of large amounts of the fish that are caught."
The Ministry for Primary Industries said it was disappointed it did not have enough evidence to prosecute skippers who were dumping or not reporting fish.
The ministry's deputy director general, Scott Gallacher, told Morning Report the investigation highlighted some issues.
"To be honest we're disappointed that we didn't have enough evidence to do the prosecution but everything we have got off the back of that has resulted in far stronger measures being in place," he said.
Forest and Bird said MPI had not clearly explained why it did not prosecute skippers for dumping fish, despite having footage which showed it happening.
Its advocacy manager, Kevin Hackwell, said the report was clear that rules had been breached and he wanted the footage to be released.
The report said one vessel turned off the camera before the haul was completed, with a number of elephant fish still visible in the net - and it was not the first time it happened.
The investigator said the "callous" disregarding of simple reporting requirements in some cases, which has no bearing on quota or a financial disincentive, showed the dumping was not all about money.
"It is not just a financial incentive that motivates offending, but also the lack of any punitive action against the fisher if the regulations are not adhered with.
"This results primarily from the fact that this type of offending is almost impossible to detect to an evidential standard sufficient for prosecution using traditional investigative techniques."
The investigator said it was understood the ministry had previously ignored offending because of assurance given that prosecution would not be pursued and the same may have occurred again.
"To be honest we're disappointed that we didn't have enough evidence to do the prosecution" - Scott Gallacher
But the investigator said the ministry now had "compelling" proof of serious offending and action must be taken, not only for the sake of sustainability, but also because the ministry was "relying on misleading and incorrect data to sustain our fisheries".
The investigator warned the images could damage the country's green image if released, and said it would appear the ministry knew about the dumping for many years and did little to stop it.
"The resulting damage that could be caused not just to MPI but to the New Zealand fishing industry and economy as a whole could be extensive."
A second report, on Operation Hippocamp, also showed an MPI investigator saying the issue of dumping has been known for a long time, but has "generally been considered in the too hard" basket.