The Standing Senate Committee on Fisheries Has the Honour to Table Its
Third Report
Your committee,which was authorized by the Senate on Wednesday, November 19, 1997, to examine and report upon the questions of privatization and quota licensing in Canada's Fisheries, now tables its report entitled Privatization and Quota Licensing in Canada's Fisheries.
Gerald J. Comeau
Chair
Privatization and Quota Licensing in Canada's Fisheries
Report of the Standing Senate Committee on Fisheries
First Session :Thirty-Sixth Parliament
Chair : The Honourable Gerald J. Comeau
Deputy Chair : The Honourable Raymond J. Perrault, P.C.
December 1998
MEMBERSHIP
THE STANDING SENATE COMMITTEE ON FISHERIES
The Honourable Gerald J. Comeau, Chair
The Honourable Raymond J. Perrault, P.C., Deputy Chair
and
| The Honourable Senators: | Adams |
Butts |
|
Cook |
|
*Graham (or Carstairs) |
|
*Lynch-Staunton (or Kinsella) |
|
Mahovlich |
|
Meighen |
|
Robertson |
|
Robichaud, P.C. (Saint-Louis de Kent) |
|
Stewart |
*Ex Officio Members
The following Senators also served on the Committee during its study:
The Honourable Senators Carney, Petten, Rossiter, Jessiman and Gill.
Extract from the Journals of the Senate of Wednesday, November 19, 1997:
"The Honourable Senator Comeau moved, seconded by the Honourable Senator Doyle:
That the Standing Committee on Fisheries be authorized to examine and report upon the questions of privatization and quota licensing in Canada’s fisheries;
That the papers and evidence received and taken on the subject during the Second Session of the Thirty-Fifth Parliament and any other relevant Parliamentary papers and evidence on the said subject be referred to the Committee;
That the Committee have the power to permit coverage by electronic media of its public proceedings with the least possible disruption of its hearings; and
That the Committee submit its final report no later than December 10, 1998."
Paul C. Bélisle
Clerk of the Senate
WHAT ARE INDIVIDUAL QUOTA LICENCES?
A. New Zealand
B. Iceland
C. The United States
THE CANADIAN CONTEXT: A FISHERY DIVIDED
A. Conventional Wisdom
B. The Blackcod Fishery
A. Are Private Quotas Property?
B. Rationalization, Concentration, and Corporatization
C. Conservation, Monitoring, and Enforcement
D. Social Equity, the Distribution of Wealth
E. Employment and Community Survival
A "PUBLIC RIGHT TO FISH" A PRIVATE QUOTA?
CONCLUSION AND RECOMMENDATIONS
This inquiry proposed :
- to review the literature on quota licensing;
- to identify the theoretical advantages and drawbacks associated with individual quota licence management regimes;
- to assess the social, economic and biological effects of the individual quota licences so far introduced in Canada’s fisheries. More specifically, the inquiry attempted to identify the effects, if any, such licences may have had on: the resource; the profitability of fishing operations; the distribution of access to fisheries resources (e.g., the possible impact on non-quota licence-holders of having an individual quota system operating alongside a competitive fishery); incomes, employment and fishing communities; the overall fishing effort (e.g., amount of capital employed, number of fishing vessels); industry structure and the degree of concentration of ownership; surveillance, monitoring, enforcement and compliance; and management costs;
- to determine whether certain types of fisheries are more suitable to individual quota management than others; and
- using insights and experience gained in Canada and elsewhere, to present the possible benefits or adverse effects of further expanding the use of individual quotas licences to other Canadian fisheries.
The Senate Committee’s hearings sampled a wide spectrum of opinion from several nationally and internationally recognized authorities. Mindful of the costs of such an undertaking, the Committee made extensive use of videoconferencing -- the first Senate Committee to do so. In the first phase of the study, testimony came mostly from selected Canadian experts and the spokespersons of representative groups. In the second stage, the Committee gained an international perspective by hearing about quota management schemes in New Zealand and Iceland.
A review of the literature on individual quota licensing was initiated in December 1996. To better inform the public and stakeholders on its work and activities, and to promote better understanding and awareness of the issues under study, the Committee created a site on the World-Wide Web. By this means the transcripts of the testimony and background material have been made readily available to all interested parties.
…[I]n the examination that your Committee is making, the Senate is very much fulfilling its traditional and extremely important role. -- The Honourable David Anderson, PC, MP, Minister of Fisheries and Oceans, 26 November 1998
I am delighted to learn that your Committee is investigating the whole question of quantitative rights for fishermen as a fisheries policy matter. I should tell you at the outset that I am sort of a godfather to this idea, in the academic world. -- Dr. Peter H. Pearse, Professor, University of British Columbia, 5 May 1998
This debate has many sides to it. … I do not think any other forum is capable of having that type of discussion. … A discussion about the structure of the industry is most welcome at this time. -- Brian Giroux, Executive Director, Scotia-Fundy Mobile Gear Fishermen’s Association, 21 May 1998
You are certainly dealing with what I feel is one of the crucial issues in fisheries across Canada. -- Dr. Anthony T. Charles, Professor of Management Science, Saint Mary’s University, 30 April 1998
I want to thank you for your interest and the time that you have taken to gather this information and do the work that you are doing. I think it is very timely. --John Radosevic, President, United Fishermen and Allied Workers Union, 5 May 1998
[Property rights-based fisheries] is one of the major study topics for the committee right now and it is one that I very strongly support and think is a very important initiative. -- Marshall Moffat, Director, Economic Analysis, Economic and Policy Analysis Directorate, Department of Fisheries and Oceans, 19 March 1998
Canada’s fisheries are at a very important stage. I felt it would be useful to give you a different perspective from what you usually see. We tend to speak positively about the New Zealand experience and brush over the cracks in the floor. If you are to head down that line, you should know about some of the cracks in the New Zealand system… -- Hamish Rennie, Lecturer, Department of Geography, University of Waikato, New Zealand, 4 June 1998
Thank you for your obviously very thorough study. There is some contrast between what you are doing and what our jurisdiction does. I am most impressed. -- Catherine Wallace, Senior Lecturer in Public Policy and Economics, School of Business and Public Management, Victoria University of Wellington, 27 October 1998
I am glad to see that a committee is taking the time to review this in detail. … I really believe that the discussions you are engaged in are absolutely critical to what DFO is going to be doing for the next several years. -- Philip M. Saunders, Assistant Professor, Dalhousie Law School, 1 October 1998
The reasons for undertaking this study on questions of privatization and quota licensing were compelling.
Canada’s commercial fisheries are undergoing wrenching changes, the likes of which we never before have seen. The policies that governed them for decades are essentially being rewritten as core services within the Department of Fisheries and Oceans (DFO) are being redefined and departmental programs are becoming more "client-focused" and "demand-driven." At the same time as reductions are being made in spending on fisheries management, the federal government is promoting "co-management" in the fishery. New powers are being proposed in the Fisheries Act to allow the Minister of Fisheries and Oceans to enter into long-term "partnership agreements" with certain fisher groups to formalize their role in the decision-making process for the management of their particular fishery, to share the costs of management, and to provide greater security of tenure for licence holders.
Although a number of matters may be brought up under the rubric of "privatization" (e.g., direct or indirect subsidies, employment insurance, the imposition of fees for services, etc.), much of the debate centres on giving fishing operations some form of private ownership of fish stocks in the form of individual quota licences, also known in Canada as IQs, IVQs, ITQs and EAs.
Because of its theoretical appeal, individual quota licensing is a well-articulated model of fisheries management and one enthusiastically embraced by classical economists, by neo-conservative theorists, and certain newspaper columnists and editorial writers. The Vancouver-based Fraser Institute, the Halifax-based Atlantic Institute for Market Studies (AIMS), and other think-tanks have strongly advocated quota licences, and ITQs in particular, as the management device of choice. Such licences are heavily promoted by the corporate sector of the fishing industry, and have long-committed and prominent supporters within the federal fisheries bureaucracy.
In Canada, the tide of privatization of fishing rights began in the early 1980s. Very much a bureaucratic initiative, the process has been gradual, involving successive governments over the years, and taking place under several fisheries ministers. Although quota licences are still
regarded by many as a panacea for all the problems of the fishery and the salvation of fish stocks, some advocates of individual quotas now appear to be more willing to acknowledge that, in practice, in Canada and elsewhere, they can create new, if not more serious, types of management problems.
Property rights-based fisheries stir up strong emotions -- understandably so. They not only represent a fundamental break with the traditions of the common property competitive fishery, but they undermine the heart of a value system dear to those who have always considered themselves to be independent fishers. In Canada, the issue has sharply divided fishers and fishing communities into two camps, for and against privatization.
In all the presentations to the Standing Senate Committee on Fisheries since its creation in 1985, perhaps no other matter has been raised more frequently by witnesses or attracted such polarized views. In its June 1993 report on the inshore fishery, the Senate Committee recommended that the short-term and long-term social, economic and biological effects of quota licences be more thoroughly studied by the Department of Fisheries and Oceans. Still another recommendation was that the Senate instruct the Standing Senate Committee on Fisheries to study the management of fisheries in Iceland, Norway, and comparable countries. In its December 1995 report on the future of the Atlantic groundfish fishery, the Committee recommended that the Department review and assess the effectiveness of its regulations aimed at limiting the ownership of private quotas.
We hope that those with a stake in the industry will find our study instructive and constructive. We will consider our efforts worthwhile if they have made the Canadian public and taxpayer more aware of this highly important matter of public policy.
The Committee acknowledges the assistance received from its two Committee Clerks: Marie Danielle Vachon and Barbara Reynolds. The Committee would also like to thank Claude Emery, Research Officer of the Parliamentary Research Branch, for his strong research skills and his ability to synthesize many hours of testimony into a clear and concise report. We appreciate his valuable contribution to our work.
Gerald J. Comeau
Chair
1. The Committee recommends that the Government of Canada issue a clear, unequivocal and written public statement as to what individual quotas are and what their role will be in the future fishery.
2. The Committee recommends that the Department of Fisheries and Oceans issue a clear, unequivocal and written public statement on what is meant by the terms "legally-binding, long-term, multi-year government/industry partnerships" (or "partnering agreements"), and state whether such agreements are meant to extinguish "the public right to fish" that exists in common law. The Department should indicate the impediments in the existing Fisheries Act that prevent the Minister of Fisheries and Oceans from entering into such fishing agreements with industry groups.
3. The Committee recommends that the issue of privatization and individual quota licensing in Canada's fisheries be debated in the Parliament of Canada.
4. The Committee recommends that no new individual quota or individual transferable quota licences be issued in Canada until written public statements on individual quotas and partnership agreements (recommendations 1 and 2) are issued, and a parliamentary debate (recommendation 3) has taken place.
5. The Committee urges the Department of Fisheries and Oceans to more thoroughly consider the long-term social and economic effects of individual quota licences, especially those that are transferable, on Canada's coastal communities, Aboriginal and other, and not extend the individual quota regime until the needs of coastal communities, Aboriginal and other, have been fully assessed.
6. The Committee recommends that the Department of Fisheries and Oceans issue a clear, unequivocal and written public statement on whether it views Canada's commercial fisheries as primarily industrial or rather as the economic basis of a traditional Canadian way of life.
7. The Committee recommends that the Senate refer the Estimates of the Department of Fisheries and Oceans to the Standing Senate Committee on Fisheries for parliamentary scrutiny.
8. The Committee recommends that the Department of Fisheries and Oceans immediately begin to enforce its Atlantic fleet separation policy -- that is, regulations preventing the vertical integration of processors into fish harvesting -- and policies aimed at restricting the ownership of individual quotas to certain maximum limits. The Department should continue to enforce regulations restricting the ownership of fishing licences by foreign interests.
9. The Committee recommends that the Department of Fisheries and Oceans more equitably distribute the resource in order to allow small-scale fishers a better opportunity of participating in the fisheries.
10. The Committee recommends that the Department of Fisheries and Oceans stop using the examples of individual quota management systems in New Zealand and Iceland until the Department has taken full account of the criticisms of individual quotas emanating from those countries.