APENDIX A
Minister of Fisheries and Oceans
Ottawa, Canada
K1A 0E6
April 14, 1999
Senator Gerald Comeau
Chair, Fisheries Committee
546 North – Centre Block
The Senate
Ottawa, Ontario
K1A 0A4
Dear Senator Comeau:
I am writing to you in your capacity as Chair of the Standing Senate Committee on Fisheries. The Department has read with interest the Committee’s report on Privatization and Quota Licensing in Canada’s Fisheries. In this context, I would like to point out that the Department will be reviewing its fisheries policies for the Atlantic coast. The objective of this review will be to establish a policy framework that clearly articulates our principles for the fishery and their operating policies. This will allow us to achieve our vision for the fishery of the future, a fishery that is:
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environmentally sustainable – with conservation the top priority and harvesting and processing capacity aligned to what the resource can sustain;
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economically viable – smaller, with participants able to earn a living without government assistance;
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self-reliant, resilient and self-adjusting – supporting a core of full-time, professional fishermen able to withstand periodic downturns, operating in partnership with government.
The recommendations and the views contained in the Standing Senate Committee’s report are thus timely and will be further considered during this review.
At this time, I am forwarding you the Department’s response to the recommendations contained in the Committee’s report. As per Recommendation 7, I assume that the Committee will commence its review of the department’s Estimates in April. I would be pleased to appear before the Committee to respond to any questions you may have in this regard. The Clerk of the Committee should contact Darlene Elie, Director, Cabinet & Parliamentary Affairs, at 993-7728 to arrange to a time that is mutually agreeable.
In closing, I would ask that you convey my appreciation to members of the Committee for the time and effort that went into preparing this report. I appreciate the important role the Senate plays in considering issues that are of interest and concern to Canadians, and providing advice to the government.
Yours sincerely,
David Anderson, P.C., M.P.
Attachment
c.c. Barbara Reynolds, Clerk
Fisheries and Oceans Response
To the Report of the Standing Senate Committee on Fisheries
Entitled “Privatization and Quota Licensing in Canada’s Fisheries”
Recommendation 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.
Departmental Response
A fishing licence issued under the FisheriesAct authorizes the person holding the licence to fish. An individual quota, which forms part of the licence, authorizes the person to catch up to a certain amount of fish. It does not guarantee a certain level of catch. A licence is not a grant of property. It is issued at the discretion of the Minister pursuant to section 7 of the Fisheries Act. It is inaccurate to refer to the notion of privatization in connection to IQs since the licence and the quota only confer a privilege to harvest a fixed share of the total allowable catch in a particular year.
The Department will soon be conducting an overall review of fishing policies for Atlantic Canada. In response to the Senate Committee’s recommendation, the Department of Fisheries and Oceans will be pleased to issue a public statement on the role of IQs in the fishery of the future once the review is completed.
Our vision of the fishery is one of healthy and abundant fish resources supporting sustainable uses. In this vision, the fishery of the future is one that is environmentally sustainable, economically viable and self-reliant. Individual quota regimes have been and will continue to be a valuable tool in seeking to achieve this vision.
Recommendation 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 agreement”), 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.
Section 7 of the present Fisheries Act gives the Minister of Fisheries and Oceans a discretionary power to issue licences. In administrative law, a government authority cannot bind itself by contract to exercise its discretion in a particular way, without specific authority in the statute. Under current legislation, the Minister of Fisheries and Oceans cannot thus enter into a fishing agreement with an industry group that would limit his authority to issue licences or that would guarantee a specific level of allocation.
Regarding the public right to fish, only Parliament can regulate or limit this right and Parliament has already, by enacting the Fisheries Act, created a legal framework for regulating the public right. For most fisheries, regulations made under the Act prohibit anyone from fishing without a licence. The Act authorizes the Minister of Fisheries and Oceans to issue leases and licences at his discretion.
Recommendation 3
The Committee recommends that the issue of privatization and individual quota licensing in Canada’s fisheries be debated in the Parliament of Canada.
Departmental Response
The Department of Fisheries and Oceans does not propose to privatize the resource or its management. Privatization is not an option. Canada’s fisheries are common property in nature and are managed by the federal government on behalf of all Canadians, both present and future.
The Department believes that the best way to deal with the critical issues facing fisheries management is through discussions with Canadians and greater participation of the industry in conservation activities. The Department believes that the most successful way to a viable fishery is by agreeing to common objectives for the industry and the government. Consequently, the most appropriate forum to review the issue of individual quota licensing is at the community level through discussions with industry and other stakeholders involved in the fishery.
Recommendation 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.
Departmental Response
In response to the Senate Committee’s first recommendation, the Government of Canada has agreed to issue public statements on the role of individual quotas in the fishery of the future once a review of Atlantic fisheries policy is completed. However, the Department believes it cannot refuse a request from the industry to consider implementing an individual quota management regime in a specified fishery if the parties involved believe it is in the best interest of fisheries conservation and viable fishing operations. The allocation of individual quota to each participant in a fishery is a management tool that is as acceptable as allowing all participants to fish competitively from a single allocation. Each regime has its pros and cons. As long as conservation requirements are met, the fishing participants are encouraged to be proactive in the decision as to which management regime to adopt, taking into account the conditions of its own fishery.
At the 1995 “Round Table on the Future of the Atlantic Fishery”, industry recognized that individual quotas are an acceptable management tool subject to a number of conditions, including the support of a clear majority of licence holders. The Department concurs with this industry’s position and has consistently maintained that individual quotas would only be introduced on a voluntary basis. As well, the Department has acknowledged that individual quotas may not be suitable for all fisheries, such as species of a highly migratory nature such as salmon.
Individual quotas have been used extensively in recent years to permit temporary access by numerous inshore fishermen to the shrimp and crab fisheries among many others. Individual quotas allowed many more fishermen access to these resources than would have been possible under a competitive quota regime. This is because the large number of fishermen and the excessive level of fishing capacity that exists in the inshore fleet would have compromised the conservation objective for the stock had the fishery been open to a competitive harvest.
Recommendation 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.
Departmental Response
DFO does consider the long-term social and economic effects of its policies and programs such as individual quota licences. The problems in the Atlantic groundfish fishery were extensively examined by the Task Force on Income and Adjustments in the Atlantic Fishery. It concluded that the industry suffered from excessive fishing and processing capacity even before the collapse of important groundfish stocks and recommended a rationalization program. Studies related to the Pacific salmon fishery reached similar conclusions. Implementation of a capacity rationalization program has meant that the fishery would have to be smaller and would be capable of supporting fewer fishermen and plant workers.
The effect of introducing an ITQ program into a fishery with excessive capacity is well understood from both theory and experience. The participants in the fishery are able to rationalize the excess capacity by buying and selling quota. The result is a smaller fishery as was recommended for both examples cited above.
By definition, all marine commercial fishing activities are linked to coastal communities and the benefits generated by fishermen participating in the fishery flow to these communities. The Department of Fisheries and Oceans is fully aware that the downturn in the fishery, whether prosecuted under individual quota regimes or competitive regimes, has affected many of these communities. That is why the government objective is to promote viable fishing enterprises that are self-sustaining and resilient to withstand temporary downturns and bring stability to communities, even if it means that fewer individuals are able to participate in the fishery.
Recommendation 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.
Departmental Response
In Canada, the commercial fishing referred to in this recommendation is a business that has traditionally accommodated large and small enterprises. Like farming or logging, fishing enterprises vary in size and scope. There are small independent family owned and run harvesters with a few crew, small family owned processors, and many mid-sized and larger companies most of which are family owned. Many of the enterprises including some of the very smallest have integrated processing and/or marketing capacity. There is room in the fishery for all viable fleet sectors.
This recommendation assumes there are two distinct views or visions for the fishery. This is far from the case. The Department has issued a statement on its vision of the fishery of the future. It makes no reference to an “industrial” model and it does not adopt policies that would artificially support a “traditional way of life”. The fishery has important aboriginal, commercial and recreational components that must also be considered.
As a result of changing harvesting patterns, due in part to resource declines in Atlantic groundfish and Pacific salmon, the Canadian fishery is undergoing significant structural changes on both coasts. The Department is responding by reviewing its fisheries management policies on both coasts, to help shape the fishery of the future. When the reviews are completed, the Department will share the results of these exercises with stakeholders and the public in general.
Recommendation 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.
Departmental Response
The Minister would be pleased to answer any questions the Standing Senate Committee on Fishery may have upon conducting its planned review of the Estimates of the Department of Fisheries and Oceans.
Recommendation 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.
Departmental Response
The DFO effectively applies its fleet separation policy within the limits of its jurisdiction. This policy applies only to inshore licences (i.e., for vessels less than 65’). With the exception of about 50 licences that are held since 1978 by corporations and that fall under a grandfather provision, inshore licences may only be transferred to individual fishermen. Regarding the permanent transfer of individual quotas, limits have usually been set under individual program guidelines and these limits are applied where a permanent quota transfer is requested (e.g., 2% of the 1991 groundfish quota in the Scotia-Fundy ITQ fleet or 1.755% in the Zone 19 crab fishery). Licences or quotas cannot be transferred without the knowledge of DFO because, by law, DFO has to approve each such transaction.
In the conduct of their fishing businesses, fishermen may have entered into several forms of private arrangements with third parties that may even result in the catch harvested by individual holders of IQs being sold to different third parties. However, the DFO does not require fishermen to disclose such third party contracts which are deemed private.
Also, DFO cannot prevent fishermen from acquiring shares in processing plants as such a question falls under provincial jurisdiction. Fishermen have effectively acquired many plants in recent years.
Regarding the current restriction on foreign ownership of licensed corporation, the DFO does not intend to change its current policy on the matter.
Recommendation 9
The Committee recommends that the Department of Fisheries and Oceans equitably distribute the resource in order to allow small-scale fishers a better opportunity of participating in the fisheries.
Departmental Response
Large and small scale fishermen from all fleet sectors invest over the years in their enterprises based on certain levels of access to the resource. As businesses, fishermen expect some stability as to the amount of resources they will receive from year to year to support these investments. Most fisheries are fully subscribed and many have excess fishing capacity. It is important that fishermen operate in a way that will be consistent with our vision of the fishery of the future, one that is environmentally sustainable, economically viable and self-reliant, resilient and self-adjusting. To support such a vision and provide the industry with a stable operating environment, the Department intends to respect historical shares in allocating fish resource among the different fleets, except in Pacific salmon where the recreational sector is to receive priority allocation over the commercial sector. Each fleet will then be expected to adjust and operate within its level of allocation. A fleet sector that will successfully achieve on its own a balance between its capacity and the available resources should not then be penalized by having a portion of its allocation taken away to support another fleet sector. In addition, redistribution of resources cannot be done in light of the following allocation principles: conservation will not be put at stake, viability of permanent licence holders will not be compromised and new access will be provided on a temporary basis.
It is worth noting that, where additional resource has become available in recent years, most have effectively been allocated on a temporary basis to small scale inshore operators, such as in the northern shrimp in Newfoundland and crab fisheries in the Atlantic.
Recommendation 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.
Departmental Response
The Department of Fisheries and Oceans can learn from the experience of other fishing nations. As a member of the Organization for Economic Co-operation and Development’s (OECD) Fisheries Committee and the APEC fisheries working group, the Government of Canada has the opportunity to obtain international information on the experience of quota management systems in other countries. Moreover, many of these countries have a very large fishing industry and a long history in the use of individual quota management. The Department of Fisheries and Oceans closely examines all information before it is considered for adoption in any Canadian fishery. In order to remain a world ocean leader, Canada must keep abreast of new developments in all aspects of fisheries management worldwide in order to better serve the industry.
The Department has also closely monitored Canadian fisheries that have opted for individual quota management systems to ensure that all objectives are met. Consequently Canada has developed its own expertise in this field and does not have to rely solely on other countries’ experience in managing this type of fishery.