Proceedings of the Standing Senate Committee on
Fisheries
Issue 8 - Evidence - May 21, 1998 (morning sitting)
OTTAWA, Thursday, May 21, 1998
The Standing Senate Committee on Fisheries met this day at 8:30 a.m. to consider the questions of privatization and quota licensing in Canada's fisheries.
Senator Gerald J. Comeau (Chairman) in the Chair.
[English]
The Chairman: Our first witness this morning is Sarah Huskilson, Chair of the Eastern Shelburne Fishermen's Association. Ms Huskilson is also Mayor of Lockeport. In recent years, she has been one of the more vocal opponents of individual transferable quota licensing. We welcome you, Your Worship, to our committee. We appreciate you taking the time to provide us with your ideas on the question of privatization. We have had a great deal of discussion on the downsides of ITQs and privatization, but we are now trying to get a little more information on alternatives to ITQ, so if you could address that issue in your comments, we would most appreciate it.
Her Worship Sarah A. Huskilson, Chair, Eastern Shelburne Fishermen's Association: Honourable senators, I have provided to the clerk of the committee a transcript of a presentation that I made at St. Mary's University last year. I will not go over that again; you have it in front of you. The facts contained in it are important. It basically states the inequity of the ITQ and the IQ community quota system. I do not have to re-emphasize that because it is contained within that literature.
The organization that I represent is not concerned about a bucket of fish. The inshore hook and line fishermen are fighting for their preservation as fishermen in the East Coast fishery. The small coastal communities are having a difficult time as a result of the economic downturn caused by DFO management policies and regulations.
In South West Nova, we do not have a problem with our fish stocks. Even though the FRCC is stating that the codfish has been decreased, quota-wise, we have surplus stocks of cod, haddock and pollock. However, the information presented to the FRCC was presented as the result of a survey where they had picked ITQ boats and IQ boats that had dumped and discarded fish. Therefore, they were missing certain year classes when those fish were landed because they brought in only the big fish. The big fish are the marketable ones, so you throw the small fish over the side. It is called a "shopping list fishery." It is happening throughout the fishery and it is destructive.
The fishermen of the Inshore Fishermen's Defence Federation, Eastern Shelburne Fishermen's Association, the South West Nova Fixed Gear Association, the Professional Fishermen's Conservation Association, and the South West Fishermen's Rights Association have a solution that will make the fishery equitable and will lead to the survival of our small coastal communities; that solution is called "square one." The presentation I made at St. Mary's University is entitled "square one."
According to square one, all Scotia-Fundy allocations for groundfish will be harvested in an equal-opportunity, equitable-access, competitive, effort-controlled, owner-operator, days-at-sea fishery. As part of this program, the fishermen will have cooperation in management by both the DFO and the independent inshore fishermen. The DFO must practice and enforce conservation and do the dockside monitoring. Accurate trip logs will be the responsibility of the fishermen.
Although this may sound like a simple solution, a significant amount of time and effort has gone into square one. The input for this has come from all over Nova Scotia as well as Newfoundland and Labrador. A good cross-section of East Coast fishermen says this will work. Square one will sustain our small coastal communities, the inshore independent hook and line fishermen, and the Canadian fishery and it will preserve the stocks.
The advantage is the economic survival of Shelburne County coastal communities through the sustainability of groundfish stocks in Scotia-Fundy. The majority of fishermen in Scotia-Fundy are multi-licence holders. This plan promotes a policy of no licence splits, which ensures that time spent fishing one species is time that cannot be used fishing other species. Fishermen cannot do two things at one time. Therefore, fishing effort will be disbursed over a wide range of species for shorter periods of time. This eliminates the DFO's theory that there are too many fishermen chasing too few fish. This plan will function efficiently and effectively as a multi-licence fishing strategy.
The industry and our communities feel strongly that square one is the solution to the problems in the fishery on the East Coast.
This can also be incorporated eventually into the Newfoundland inshore fishery once their stocks have rebounded. However, please understand that southwestern Nova Scotia fishermen have been fishing for 450 years. We have not stopped fishing.
We started practising conservation 25 years ago, when we closed some of the areas. It worked very effectively. Our haddock, cod and pollock stocks regenerated because we left areas that were not to be fished in, that we commonly referred to as "the area within the fence."
As a result of that, our stocks are still in healthy condition. Yet, because of management policy of quota systems, of IQs, known as individual quotas that are transferable, enterprise allocations, we are seeing many foreigners coming into inshore waters. I have many statistics that will prove that what I am telling you is correct. Licensing 22 factory freezer trawlers in February off Newfoundland is absolutely ridiculous. I feel badly for the Newfoundland small coastal communities with whom I have spoken at least once every two weeks. I talk with their representatives. I have talked with the native groups in Labrador. They are extremely upset by what is happening. They feel as if they are losing their coastal communities, too. The natives are joining with us in this stand. We are fighting for the survival of our small coastal communities and a way of life that is still viable.
In Shelburne County, these are the statistics: In 1995, we had 11 to 12 per cent unemployment; in 1996, we had 19 per cent unemployment; today, we have in Shelburne Country alone 34 per cent unemployment. It is not because the fish are not there. It is because the fishermen of Shelburne County are not allowed by DFO to go fishing because the department has put in place an invalid system. There is no legislative act to back what they are imposing. The fishermen will challenge this government when it comes to that. However, the government has put in place an invalild system that discriminates and, as a result, fishermen and coastal communities in Shelburne County are being devastated.
The DFO talks about the system being industry-driven. Well, no, it is the other way around. The DFO is driving industry right out of the fishery. It is the inshore fishermen who are being driven.
These statistics that I have will show you that Shelburne County has landed more groundfish and more shellfish than any other area on any coast of Canada, the Pacific coast, the Arctic coast, or the Atlantic coast. Shelburne County alone has landed more groundfish and more shellfish consistently throughout the decades. As a result, we have 2,390 all-species licences in Shelburne County alone, as of January, 1997.
You see, the fishing fleet that is still viable is the fleet in Shelburne County, and that is why we have been hit first with this IQ system, much more quickly than any other area. As a result of this, with 2,390 licences that are usable, DFO wants to eliminate, through Shelburne County, the independent, inshore fishermen. Once they break our back, the rest will follow, because there are not that many of them. The strength of the East Coast fishery is sitting in Shelburne County now, and that is why Shelburne County has had all of these experimental, destructive pilot projects through which DFO has imposed this invalid system.
I know my time is limited, and I have only touched on a very few of the major problems, but our municipal leaders are extremely concerned about the economy of Shelburne County because -- and please understand -- our main industry is the fishery. It was yesterday, it is today, and it will be tomorrow. We are struggling, yes, as are many communities in Canada. I look at Newfoundland. I have been to Newfoundland. In the past eight months, I have been to the outports, I have talked to the fishermen and the community leaders. I am in contact with Labrador, with the native communities in Labrador. I am in contact with New Brunswick, and this is on a weekly to bi-weekly basis. What I am hearing is that this is unnecessary. We have done nothing wrong, yet we are being punished. I tell them that the fact of the matter is that it is privatization of a public resource here in Canada. It is the global privatization of the fishery, and that is being promoted by the World Bank and large corporations; I found that to be a fact in September in Newfoundland at the Summit of the Sea which I attended.
I went to Toronto, even though DFO had made every effort to keep me from going to Toronto, to represent the fishermen and to fight for a Canadian code of conduct for reasonable fisheries. You will find in the St. Mary's University presentation that is before you a section called "The Code of Conduct" -- and this is important because this is what is happening in Canada. Canada is attempting to exclude section 6.18 of the United Nations Code of Conduct for Responsible Fisheries.
That section states:
Recognizing the important contributions of artisanal and small scale fisheries to employment, income and food security, states should appropriately protect the rights of fishers and fish workers, particularly those engaged in the subsistence, small scale and artisanal fisheries, to a secure and a just livelihood, as well as preferential access, where appropriate, to their traditional fishing grounds and resources in the waters under their national jurisdiction.
Canada is attempting to legislate an inferior code of conduct for responsible fishing operations by deliberately excluding and denying the small coastal communities, the fish workers, and the inshore, independent, artisanal and small-scale Canadian fishermen, their rights to their traditional fishing grounds, their priority rights, and their equitable access rights, which are recognized in the United Nations Food and Agriculture Organization code of conduct, adopted and supported by Canada.
Remember, Canada assisted in the formulation of this United Nations code, along with other participating nations. This was signed by Canada on October 31, 1995, in Rome, Italy.
This point is important because Canada helped to formulate it. However, after having done that, the government proceeded to see that it conflicted with that code by the infamous Bill C-62. Otherwise, the code would have ensured our independent, inshore fishermen their right of access to their traditional fishing grounds, which would have sustained our communities.
I speak as Mayor of Lockeport. Lockeport was the first town on the East Coast of Canada to have been affected by the downturn in the fishery. During 1981 and 1982, after National Sea closed its doors even though the government had spent approximately $12 million to $15 million in rebuilding the National Sea plant, the federal government of Canada made an allocation to Lockeport for the Lockeport community plant of 20 to 28 million pounds of fish. When National Sea closed the doors in Lockeport in 1989 and left 350 people out of work in a town with a population of 1,200 people -- we are now at 750, by the way -- our community was totally devastated, and it was the first one on the East Coast to be affected. Now other communities along the East Coast of Canada are suffering what we have gone through for nine years.
If anyone knows what is going to happen, the people of Lockeport do. We know. We have been there. We have been going through devastation for nine years. Perhaps we fight harder because we have to in order to survive, but survive we will, and so will our independent, inshore fishermen, with the help of the Senate. You can be of great assistance to us in our fight, our fight to retain our small coastal communities, and our fight to retain our rights and our equitable access which are being denied to us by privatization in an invalid system that has no legislation to back it. There is not one legislative act to back this system that DFO is imposing upon not only our communities, but our fishermen and their families. Our suicide rate is up and our social assistance rates are skyrocketing.
I have some figures. By the way, I will fax all of this information to you. I will ask my secretary to do that either later today or tomorrow.
When I was in St. John's, Newfoundland, at the Summit of the Sea, I talked with Dr. Sergio Garcia, who is director of the FAO committee concerning fisheries. Dr. Garcia told me that if the United Nations FAO committee could be of any assistance to our inshore, independent fishermen, to please contact him. Well, I have, and he is still telling us that he will be of any assistance that he can. He is limited by his mandate, but he is supporting us morally. It is a great comfort to know that at least the United Nations recognizes what our own government does not recognize, that these fishermen and the people of these small coastal communities are as oppressed as some Third World countries. We have been placed in that position by DFO.
Senators, that is all I have to say.
The Chairman: Your Worship, in your opening comments, you made some very important points, and I am sure we will be expanding on some of them. I can now understand why the citizens of Lockeport think so highly of you. Your presentation was forceful and you made a strong case for your community.
Senator Stewart: Your Worship, I should like to begin by discovering just what area you are dealing with particularly. I have a pretty good idea.
You mentioned 2,390 licences. Where is the western boundary of the area in which those licences reside and where is the eastern boundary? It is all of Shelburne County or is it Shelburne and part of Queen's?
Ms Huskilson: That is all of Shelburne County, the western boundary and the eastern boundary.
Senator Stewart: You say that by reason of the policies of DFO, the persons holding those licences are being deprived of their rights. Where are the boats that are taking the fish which, in your view, should be accessible to those licence holders? Where are those boats based? Is it Lunenburg, Halifax, Yarmouth or Canso?
Ms Huskilson: We are talking about the inshore, under-45-foot fleet. DFO has allocated 78 per cent of all Scotia-Fundy groundfish to Shelburne County alone. That means that 78 per cent of that fish is not accessible for other communities within Scotia-Fundy. They have made eight geographical management areas throughout Scotia-Fundy, from Cape Smoky, around through the Bay of Fundy to southern New Brunswick. That is Scotia-Fundy. They have taken the area and divided it into seven geographical land management areas, but because Shelburne County has so many fishermen and we fought so hard for our competitive fishery, they divided Shelburne County into two "management boards," which is very confusing and very difficult. They have placed in Shelburne County 78 per cent of all of the under-45-foot hook-and-line fixed gear quota. As a result, the majority of the fish are with company-owned boats. When I say company-owned, I am not talking about owner-operator, but company-owned boats with fishermen who have signed an agreement under the table because these companies cannot own the licences. A DFO regulation states that they cannot own those licences. Therefore, they have "front fishermen" captains fishing on boats they do not own. The company owns the boat.
Do you see what I am getting at, senator? That is where the majority of the quota resides.
Senator Stewart: Where is that fish landed and processed?
Ms Huskilson: It is landed in Shelburne. It is mostly shipped out to market in the United States. It is not being processed because it costs too much for them to process most of it. They ship it out whole.
Senator Stewart: Are you implying that it is cheaper to process in the United States than in Canada?
Ms Huskilson: Yes, I am. Their labour regulations are not as stringent as ours. We have standards in Canada that they do not maintain in the United States. Yes, that is true.
Senator Stewart: How many of these companies are there, the ones that managed to get under-the-table access to licences? Are we talking about 6 or 12 or 15?
Ms Huskilson: In 1996, there were 113 boats, of which approximately 10 are owner-operator and the rest are all company-owned. They have the majority of the fish in all of Scotia-Fundy. They have control.
Senator Stewart: If the regulation could be enforced -- the one stating that the licence cannot, in effect, be transferred -- would the problems to which you have been referring be resolved?
Ms Huskilson: No, because DFO has allocated the "privileged catch history" fish to these licences. They have taken a competitive fishery and privatized it by putting it in individual hands. They did this by using certain years where these company boats had landed a lot of fish. DFO chose those years, with encouragement from the industry and encouragement from that sector of 100 boats and their representatives.
My St. Mary's University presentation refers to the inequity. There are 644 boats in Shelburne County, of which 531 were licensed for hook-and-line groundfish. Of the 644 boats, 113 of these -- mostly company-owned boats -- landed, on the average, 74,677 pounds of cod, haddock and pollack per vessel. The remaining 531 "not so privileged" fishermen landed an average of 13,942 pounds of multi-species groundfish per vessel. That represents a very large gap in income -- 531 families who had to depend for the whole year on 13,000 pounds of fish, whereas the 113 boats ended up with 75,000 pounds of fish per boat, approximately, and they existed rather well. They are buying fish from other areas and other associations.
Senator Stewart: I want to go back to my question. You made reference to under-the-table licence transfers.
I asked you if the kind of concentration to which you have been referring could be stopped. You have given me data, but I have not heard an answer to my question.
Ms Huskilson: It can be stopped if the will is there with DFO to stop it. Yes, it can be stopped -- that is, if they enforce their regulations.
Senator Stewart: Would the stopping of those under-the-table transfers arrest the concentration about which you are talking?
Ms Huskilson: Yes, it will do that. However, please understand that each one of those licences has been given catch history by DFO.
Senator Stewart: Yes; that is helpful.
You made reference to 22 freezer trawlers -- and, it was off either Labrador or Newfoundland -- within Canada's 200-mile limit. Do you know what species of fish they were licensed to catch?
Ms Huskilson: Yes. Bycatch of cod, haddock and pollock is known as an incidental bycatch, but in the industry it is always referred to accidental bycatch. They will also direct for shrimp, crab, and other species, but it is the bycatch of groundfish that is so important. They will process these aboard factory-freezer trawlers. That fish will not be landed.
Senator Stewart: Technically, they are fishing for crab, but what they are really going for is the bycatch. Is that right?
Ms Huskilson: That is absolutely correct.
Senator Stewart: In the first document, you described the alternative that you would prefer. I saw the word "competitively" in that document.
Let us talk about a particular fish, for example, haddock or cod. In your area, is that fishery open year-round? Would there be a TAC, a total allowable catch, on cod, if that is the fish you want to talk about?
Ms Huskilson: Let us discuss haddock. Yes, there is a TAC. Anything within that total allowable catch is within the conservation limits. In southwest Nova, we have gone one step further. We have closed certain areas of southwest Nova -- waters known as 4X, 5Y and 5Z. At certain times of the year, we have closed the fenced-in areas because we know that spawning is taking place there. We do not fish for that species in that area. In fact, we do not fish for any species in that closed area.
It is a lot easier to explain this if we refer to haddock. If you can remember, in that plan there is reference to the owner-operator, but it is the days at sea effort control that will work. You can only fish so many days of the year. If you are allotted 30 or 35 days per year, then that is the only amount of time you have to fish. You can only fish so much gear with hook and line in that period of time. Therefore, it is limited because of time on the water -- that is, time at sea. That is also why it will be so successful. However, we cannot get DFO to agree to do this.
The input for this plan came from throughout the East Coast of Canada, from the fishermen. They say that it can be applied to the hook-and-line fishery or any fishery for any species.
Senator Butts: I wish to welcome you here today. What does the membership of your fishermen's association include?
Ms Huskilson: It includes groundfish-, pelagic- and shellfish-licensed fishermen. In the federation, it includes fishermen from throughout Scotia-Fundy, from New Brunswick, from as far as Pictou, the Digby area, Yarmouth, Shelburne, Queen's and Halifax. It covers that whole area.
Senator Butts: Are these all inshore fishermen?
Ms Huskilson: Yes, they are.
Senator Butts: Is there any mobile gear?
Ms Huskilson: No, there is not. We do not support mobile-gear fishing; it is destructive. We fully support hook-and-line and fixed-gear fishing. We do not support mobile-gear fishing because of the destruction of the habitat and the coral. It is and it has proven to be totally destructive.
Senator Butts: You spoke about the measurement of fishing history by DFO and the fact that the figures were incorrect. Could you explain to me why they were incorrect?
Ms Huskilson: It involves DFO's tabulation of landings. At that time, they did not have a reliable system set up. Therefore, many of the "fish slips" with respect to landings never reached DFO. This can be proven. There are fishermen who have their landing slips from these years that DFO has chosen for catch history, but DFO will not look at them. These are legitimate fishing landing slips, but because DFO does not have it in their computer, they do not want to see it. Therefore, the catch history is inaccurate because it does not reflect the reality of the time.
Senator Butts: It is inaccurate, but by choice?
Ms Huskilson: Yes.
Senator Butts: I am interested in your solution. You state that the inshore fishermen in these communities will have licences but that they will not have quota.
Ms Huskilson: That is true. The existing licence holders will not have quota.
Senator Butts: The quota only relates to number of fishing days.
Ms Huskilson: Yes; that is what I am saying. You have an overall TAC for, say, haddock. Therefore, X-number of thousands tonnes of haddock can be caught. If each fishermen has 30 to 35 days allocated for his haddock fishery, that covers the whole year. He already knows that he cannot fish in certain areas. Most of the time, he will not use all the days he has been allotted. He cannot trade it and he cannot sell it. He must use it himself because he is an owner-operator. You must be an owner-operator inshore fishermen. You must also be a hook-and-line fishermen because we do not support mobile gear; it is far too destructive.
This will work because you are not assigning living quota fish. Shelburne County has been given 78 per cent of the quota for groundfish. That is not fair to Digby, the Eastern Shore, Queen's County or Yarmouth County, because those fishermen are limited under the present system. That is wrong. Even within Shelburne County, it is wrong to have individual quotas because they have concentrated them in company hands.
The TAC square one plan eliminates the dumping of fish. The square one plan will eliminate dumping and discarding. As the fishermen have told me, any quota system will encourage dumping and discarding.
The dumping and discarding of fish has become so bad that some fishermen have written letters to the minister. One fisherman wrote to Minister Mifflin right after he docked his boat. He wrote to tell him that he was ploughing his boat through dead fish. He has a large boat and he could see dead fish for miles around. This has been documented, yet nothing has been done. That was 18 months ago and not one thing has been done. The government has encouraged more and more individual quotas and quota systems. The dumping and discarding are continuing.
The government has said that they will use an observer program to get rid of this. That will not work. Those fishermen cannot afford to do the DFO's job for the DFO.
Senator Butts: Who sets the TAC?
Ms Huskilson: The minister sets it on the recommendation of the FRCC and the input they get from the RAPP committee. The RAPP committee is a resource committee appointed by the DFO. It is by invitation only. I can assure you, senators, that I, as the representative of my fishermen and my community, will never be invited because, due to my scientific background, I would seriously question the statistics given to the FRCC.
The input is limited because it is all being formulated by the companies through the RAPP committee.
Senator Butts: How do you hope to organize your community so that it will be able to have input?
Ms Huskilson: Could you be a little more explicit, please?
Senator Butts: I am wondering how you will get community representation to make recommendations.
Ms Huskilson: That can be done through the RAPP session. I want the RAPP committee opened up rather than being by invitation only. Rather than scientists presenting information directly to the FRCC, the process should be open to individual fishermen and their representatives. The companies are invited to sit on the RAPP committee.
As I have said before, I was contacted last year at home by a DFO scientist who told me anonymously that he had to formulate the fish stock status and survey reports according to the government's political agenda. If the scientists do not do what is asked of them, they will be fired. How can I have faith in the DFO's science?
Senator Butts: Would you ever conceive of a community having a quota?
Ms Huskilson: Lockeport is a fine example of what can happen with a community quota. Someone has to hold the quota in their name. The town cannot have it because the town cannot go into business. The federal government gave Lockeport's quota to National Sea to hold for the town. It was never to be removed from Lockeport. However, National Sea walked away with it.
The same thing happened in Iceland. They gave small coastal communities in Iceland fish quotas to help them survive. The corporations started cutting the price, which affected the market. What was the sense of fishing? They could not sell their fish for a profit. The large corporations offered to buy the quotas from the communities. That money ran out in a couple of years and those communities are now boarded up. They could not diversify. The people have moved to the two largest cities in Iceland, one of which is Reykjav<#00ED>k.
I read about this on the front page of the Reykjav<#00ED>k newspaper which was sent to me by my counterpart in Iceland who has been fighting for a competitive fishery for the inshore fishermen.
Senator Butts, it is a very good idea, but how can we practically apply it without endangering our communities? As I said, Lockeport is an example of what can happen, as are those communities in Iceland where those people are homeless and eating from food banks.
I do not want to see any more of that. I have seen too much of that in my own home town of Lockeport and the outports of Newfoundland. It will become worse if the system is allowed to continue as it is now. The fishermen want a competitive fishery.
The Chairman: We will be looking at the Iceland experience as an example of the impact it can have on communities. Thank you very much for passing that on.
Senator Robichaud: Where are the hundred or so companies where you say the quota is concentrated? Are they from the communities on the coast of Nova Scotia?
Ms Huskilson: Yes, they are, senator. In the last couple of years they have brought these boats from other communities to Shelburne. In my lecture at St. Mary's University, I explained how they did it.
They formulated an association where they brought boats in from the eastern shore, from the Digby area, only if they had large catch histories and if they were company-owned, and the companies started buying up more and more boats and having these young fishermen, these young skippers, take their boats with this under-the-table agreement. On the surface, it looks like individual fishermen are fishing these boats, but they are all company-owned, every one of them.
Senator Robichaud: You again mentioned an under-the-table agreement. How is DFO to know that this is an under-the-table agreement?
Ms Huskilson: DFO knows who pays for the licence and the dockside monitoring and the observers. It is not that young skipper; it is companies. The company lawyer draws up these agreements. They get the young skipper to sign on the dotted line that this is his licence, but it is not. It is the company's licence, and he fishes it for a percentage, usually 10 per cent.
Senator Robichaud: However, if that young skipper is willingly signing an agreement that he thinks is a good deal for him, should we prevent him from doing that?
Ms Huskilson: Yes, because the law and regulation are absolutely adamant. It states owner-operator, and it states that no company can own that licence. A fisher must own the licence.
Senator Robichaud: Ownership here could be debatable if he owns the licence and sells the fish. I am just being the devil's advocate here. I am sure you understand that. It is not so easy to separate just who does what.
Ms Huskilson: Yes, I understand that; but in a few cases, the devil turned upon himself. Some of these young skippers would not give up those licences and kept them. There are documented court cases where fishermen have been taken to court by these companies. The outcome was that the companies lost because DFO states that that licence must be in a fisher's name, not a company's name.
Senator Robichaud: Let us say that a global quota was given to all 531 boats, plus the 113 boats, to go out and get that fish. That would mean that you would need to redistribute the part that is actually allocated to the 100 or so companies. What reaction would there be in the communities along the shore? I bring you to the exercise that DFO tried to put through for snow crab in northern New Brunswick when all hell broke loose because we were trying to redistribute some quota to inshore fishermen.
Would you elaborate as to what reaction we could expect to get on the shore of Nova Scotia?
Ms Huskilson: If I remember correctly, the snow crab fishery in northern New Brunswick was one of the newer fisheries. It had been set up a certain way and then was changed, and they tried to expand it. Am I correct, senator?
Senator Robichaud: It has been going since the 1960s, but it was developed. In that sense, it is a newer fishery than the cod, of course.
Ms Huskilson: Until two-and-a-half years ago, we had our equal-opportunity, competitive fishery. It was always that way before DFO instituted this pilot project -- this experiment, as DFO calls it. We are talking now about Scotia-Fundy, not only Shelburne County. I talked about Shelburne County because that is where they initiated the pilot project on the IQ system. The other areas of Scotia-Fundy do not have an IQ system. It is only in Shelburne County where DFO has been instrumental in implementing the ITQ system in hook and line.
The rest of Scotia Fundy is fishing in competitive fisheries even though they have been divided in management areas. They have taken their quota, and they are fishing it competitively. It is the same idea as Scotia-Fundy. It has been a global competitive fishery, but not in Shelburne County. DFO has made one licensed fisherman less privileged than another fisherman. On the other hand, in Digby, they are all privileged because they all have the opportunity to fish in a competitive fishery. It is not so in Shelburne County because they have implemented individual quotas, and they are discriminating against 531 of those fishers compared to 113. The majority of fishers in Scotia-Fundy will be and are being discriminated against because of this system.
Senator Robichaud: Suppose we were to go into a competitive situation in the hook-and-line fishery. Is that type of fishery sufficiently selective to prevent what you call a "shopping-list" fishery?
Ms Huskilson: Absolutely; we do not fish in the closed areas at a certain time of the year. Therefore, we will not be taking any of those smaller fish. Our fishermen refer to spawning fish as sick fish because they will not bite a hook. Mobile gear is not discriminating but will take anything in its path. I know all about the mesh, but it still takes anything in its path. Within five years of a hook-and-line fishery in an effort-controlled, days-at-sea, competitive fishery on the East Coast of Canada, there would be no danger to the cod, haddock and pollock stocks throughout the coastline.
Norway proved that in its five-year experiment. They stopped the draggers for five years by implementing a moratorium; their fishers used only hook and line. In five years, their stocks came back, and they are still going strong. Now they are making the mistake of reintroducing the draggers and IQ system to Norway. The cycle will continue. Norway proved that the hook-and-line fishery was a conservation measure.
The licensed fishers will not need TAGS, and will not need EI, because with multi-species licence holders who can fish their hook-and-line fixed gear no support programs will be needed. The small communities will not be begging the federal and provincial governments for money because those communities will be self-sustaining, as was proved in Norway.
That is the reason the fishers from Newfoundland, Labrador, right down through to Yarmouth, came up with the idea of square one. They all say that it will work in our area and that it will save our livelihood and our communities. That is why square one is so important.
Senator Robichaud: Thank you. You have made your points well.
The Chairman: I have a few questions. The method of effort control that you propose is days at sea, if I understand correctly, which will involve the fishers choosing which days he or she wishes to fish. Do I understand correctly?
Ms Huskilson: Yes.
The Chairman: That is, given certain limitations that they cannot fish on certain spawning grounds, and so on.
I am trying to see this as an alternative to what is presently being proposed either under the ITQ program or under the community-management system.
I assume you would need sound information on your TAC, which would mean that if a fishermen decides to spend his days at sea DFO could not come in and do in-season adjustments; in other words, if new information suggests that the TAC was wrong, DFO would be reluctant to reduce the TAC because it would impact on those fishermen who have not yet fished their days at sea. Am I following this correctly?
Ms Huskilson: Yes, but in a case such as that, DFO science could not possibly be that far off. When the minister sets the TAC, he sets it from information that has been supplied to DFO. Even though we question some of the information that is given to the minister, it cannot be off to the point that that would ever happen.
However, if it did, a variation order would be issued temporarily closing the fishery in those areas that they feel are being affected, and that would apply to all fishermen fishing those different species or that particular species. It is easily controlled, because that is the way the conservation system works, in addition to the original TAC allocation.
The Chairman: One of the major limitations of ITQs is the difficulty of doing in-season adjustments. The whole concept of ITQs is to stop the supposed race for the fish. I am sensing that your days-at-sea, as effort control, seems to be running into the same difficulty. I am referring to the TAC adjustment, the in-season adjustment.
Ms Huskilson: In-season adjustment can easily be made in this system. Remember, Mother Nature is a great leveller when it comes to conservation. With days-at-sea, the TAC is allocated having met the conservation criteria. There will not be a race for fish with a days-at-sea effort control system. A fishermen will not rush out to sea as soon as the season opens, because, in January, he is limited by size, and we are talking about inshore fishermen. You will not be hitting the groundfish in January, with the inshore under-45-foot boats, because you just do not go fishing offshore in those boats at that time. You will then be running right into the spawning time from February through April.
What we are looking at is a May, June, July, August fishery. A six-month fishery is basically what you are a looking at with days at sea. It will be spread out over that period of time. The fisher will not have to rush out to fish because he knows he has a certain amount of time. He is also aware of the fact that DFO will not be off that much, that badly, when it comes to the overall TAC.
The onus is on the minister and his staff to set the TAC. That is the conservation measure. If DFO makes that mistake, it is DFO's problem. Given the TAC being set, then this system will work.
The Chairman: In effect, one of the downsides of ITQ being mentioned by certain people is that there is a certain amount of data-fouling caused by apparently high-grading. Therefore, under your days-at-sea concept, it would not be in the fisher's interest to high-grade. You would then not have the kind of data-fouling that is apparently creeping into the scientific statistics now.
Ms Huskilson: We have asked DFO if our associations could have the opportunity to apply the square one pilot project but they will not allow it. The fishers on the East Coast are experienced; they know their fishery better than anyone knows it. In that sense, they know what will work and they want it to work.
The Chairman: Your worship, I thank you for your presentation this morning.
Ms Huskilson: Thank you, honourable senators.
In closing, I wish to say that I am wearing my chain of office because the symbol of the Town of Lockeport on its town crest is the cod fish. That is the history of our town. We know our fishery.
The Chairman: You have certainly demonstrated that this morning.
Our next witness is Mr. Brian Giroux. Mr. Giroux last appeared before the committee in March of 1993. At that time, he gave a most useful and interesting presentation on the subject of ITQs, which he said that had prevented massive bankruptcies in the Nova Scotia inshore fleet, the sector which he represents.
Mr. Giroux will probably have a very different view than that presented by the previous witness. We look forward to his testimony.
Please proceed.
Mr. Brian Giroux, Executive Director, Scotia-Fundy Mobile Gear Fishermen's Association: I have nothing formally prepared, but I wish to discuss privatization and ITQ issues that relate to the fishery in general. It is my assertion that we are well down the road to privatization in this industry.
To give you some background, as soon as you create a licence under the act, a licence for someone to harvest something, you exclude people who do not have that licence and include people who do have that licence. You have, in effect, differentiated between the rights of a citizen and the rights of a licence holder.
Imagine a speedometer. The creation of a licence is, say, 20 kilometres an hour. You have a class of people who can harvest lobsters, and the vast majority of the people in the country, 98 per cent of them, cannot harvest lobsters. This goes back to the dawn of our licensing system in the 1950s and 1960s. Essentially, the system created people who were licensed to fish species.
A 1970s report, called the Levelton report, was commissioned by the government of the day for the minister of the time, minister LeBlanc. It talked about the hardships in the fishing sector and about the necessities for the future stability of the sector and the industry. One of the recommendations was to allow the licences to be quasi-property in nature so that a licence holder could transfer that licence at his retirement to a new participant. The arrangements in the past have been off and on. However, generally speaking, a licence holder had the ability to designate his successor.
The Levelton report talked about retirement planning for the individual involved, protecting his assets so he could have a retirement nest egg. There is no pension plan scheme in the industry. You have to build up your net worth or savings for retirement. The Levelton report basically said that fishermen should be allowed to transfer the licence and their vessel to a designated person of their choice. Once you state that this special class of people who have licences are allowed to designate who receives that licence, you create value. Your speedometer has gone from 20 kilometres an hour to maybe 50 kilometres an hour. That leaves the situation open for purchase or for cash transfer or other remuneration to be attached to that licence.
That was in the 1970s. The practice has become entrenched in the industry, and the transfer of licences created a bit of a problem. For example, if an area has 1,000 licences, 99 per cent of them may be not well used, but some people use them a few months a year. As a fisherman, how do you place a value on that when you sell it? Given that most of our management regimes are relatively open-ended, you have the prices for those licence transfers being assigned to the landed value of the best-performing licences within the 1,000-licence pool. You may say, "Someone over there with that same licence is making so many dollars; therefore, I think it is worth that much." In effect, the value of the licences that the government has condoned transferring starts to creep up. One guy made a good dollar out of it and all of these licences are capable of doing the same thing; therefore, the value creeps up.
If you look at that in isolation to the capital costs of fishing, the cost of entry into the industry throughout the 1960s and 1970s started escalating. In many areas, it continues to this day. A lobster licence may be worth $250,000 in some districts.
The system we created has allowed for this incremental creep or inflationary pressure. Unfortunately, it is always the resource that has to pay. If you pay more for the licence, you have to catch more fish to pay for the licence and you end up with these inflationary spirals. If management regimes are not capped -- for example, if everyone has the potential to go out and expand into some kind of a landing -- then you have a problem because people will essentially put more pressure on the resource in order to pay more dollars. It becomes a spiral that keeps going up and up. "Joe Blow made that much fishing lobsters, so I will go out and buy a bigger boat or a faster boat to do the same thing."
I am only use lobsters as an example. It is true that in a large number of species the inflation of the value of the licences alone has driven some of these things. There are also new boats, new gear, new technologies, and all those costly items that are added into the equation. The resource must still pay the bill, so to speak.
I am talking about moving from a system that allows for the transfer of licences at the discretion of the current holder to a system such as mine, which is an ITQ system. We were originally groundfish licence holders. We went through a crisis in 1989 where we had an ITQ system imposed upon us. We went through a matching of capacity with the resources available to us -- i.e., the quotas. We divided the quotas amongst the licences. I think there were 436 licences at the time. We looked at a dozen scenarios, but we based it on past history because the vessels were required by law to report their landings. We divided that quota, and then people made arrangements amongst themselves. If I had too little, I would buy your quota.
There was a clearly defined point in that negotiation. You may have had two tonnes of allocation and that is all. You did not have an open-ended licence to catch under a loose management regime. You had two tonnes of allocation. If you wanted to buy it or sell it, your calculator told you that there were only so many dollars to be made from that allocation. You had a much more controlled discussion of the value of the licence, which dropped dramatically once quotas were assigned to those licences. Licences started to take on a very nominal value then, at least in my sector.
The quota itself is subject to the discussion of what it can yield in terms of sale, cash flow or price.
By now, your speedometer is up to 75 kilometres an hour. You can take a portion of what you are licensed to fish, and you can transfer it to someone else. However, we are still in the system that started at 20, went to 50 and then to 75 kilometres an hour. The transfer of a licence from myself to someone else is a private property transaction or a quasi-property transaction. The next step would be the transferring of the quota alone, without transferring that licence. Again, that is a quasi-property transaction. People base expectations on saying that, if they can catch the two tonnes of fish, they can yield so much profit and therefore be viable.
Honourable senators, I know the issues. I am squarely in the middle of this all the time. People like to criticize this type of system. I feel that it was directly responsible for us having a structured reduction in the number of participants and vessels in an effort to reach sustainability. It has allowed us to manage that great reduction of over 50 per cent in the number of vessels and participants without the assistance of a TAGS program or government intervention of any kind. It is not well liked. Some communities have lost vessels and some communities have won vessels, but that happens even in ordinary licensing systems.
On the eastern shore of Nova Scotia, for example, in the last few weeks there have been bitter battles between lobster fishermen from different districts competing for the same grounds. In a district that stretches for hundreds of miles along the coast, those licences can go from one community to the next. The movement of a licence into a new community can cause extreme frictions, and the movement of a licence out of a community can cause frictions and hardships too. Most people generally agree that you need some movement.
If you tie the licences directly to the ports and then process everything in those ports, generally speaking the market to which you are selling the product does not yield any increased value for that, but they will give you a premium for processing it in your home town. Usually the price to fishermen, the primary producer, drops dramatically; usually by a factor of half. The Newfoundland experience has shown that when you put restrictions on where, when and how fish are caught, processed and handled, the value to the primary producer drops by over half.
On the debate about privatization and concentration, I was criticized in 1989 because we had too many boats; we were far over capacity. I remember one of our prominent long-line representatives saying that there were too many draggers. We took the bull by the horns, adapted to the system and decreased the fleet by half, and now people are telling me we are too concentrated. I tried to do the job requested of me, and now I am being criticized for doing it too effectively.
In the minds of many people, the fundamental issues are concentration and the access of these resources between communities. People talk about under-the-table deals and other arrangements. The fatal flaw in our system is that we have a quasi-property rights system. The minister's discretion can erase, extinguish, adapt and change these rights at any time.
Imagine being in a situation where whether you will have a salary next year depends upon the minister's discretion. There can be some interesting changes in this industry. The further you go from having a structure that is sound and businesslike and the more insecurity you build into your system, the less people are able to borrow, adapt and plan.
On the other side of the spectrum is the New Zealand system. Theirs is a property-rights-based system entrenched in their management regime. Transactions are handled in much the same way as are real estate transactions. They can go to bank and take an assignment against a licence, and basically buy it.
The New Zealand lobster fishery is regulated to have small participants with tight aggregation rules. It is backed up by a variation of their income tax act. Because the fishermen have property rights under the fishery, they can borrow money from a bank, whereas in the past they had to borrow money from the fish merchants. The fish merchant has access to capital and can lend the money to buy the licence. The banks will not lend the money in our system.
On one hand, we are saying that we do not want concentration; we do not want the fish plants involved in this industry; we want to keep it as separate as possible. It is almost a trade union style discussion between labour and management. That is the paradigm that the different unions in Atlantic Canada will try to portray to you.
If you have a system that gives the fishermen a quasi-property right rather than a concrete asset on which they can borrow money to purchase the licence, you are basically throwing them into the hands of people who can lend them money without the security of an asset. It is like we are half sick. If we go one way, we get criticized for concentration, et cetera; if we go the other way, which may be the solution -- that is, having a more property right driven system -- the holders of those licences would have the ability to get the secured funding they need to purchase them.
However, I do think that if you have a delineated portion you can make much more rational decisions. There is tough competition. It is a tough world out there right now. It is not the same world we had in the 1980s when the health craze was on. We now have competition from all over the world. There are a million tonnes of farmed salmon in the marketplace. Haddock and cod are landing from Iceland, Norway and Russia every day in our traditional northeast markets.
It is a tough world out there and we have to be careful that we do not hobble our ability to compete in these situations. Often the best way to compete is to be slightly vertically integrated. Many people in our area started out as fishermen, got a little boat and built a little fish plant. Now the son runs the boat and the father runs the fish plant. It is a more resilient structure than having just a fisherman on a boat battling with buyers.
It is a tough call to try to adapt the policy of owner-operator licensing only. We like to stretch it a bit and have these things Canadian-owned with an owner-operator, such as a father and son running their business. I do not advocate breaking up family businesses that have operated for generations simply to meet a licensing policy driven by a union that likes to have clear demographics between labour and management.
Privatization in the fishery has existed for a long time and will continue for a long time. I advocate going a little further, to give people more ability to get the capital they need to buy those licences instead of having to make another arrangement.
Keep in mind that we must compete with the rest of the world on these products. The slump in the Japanese markets and the competition we are experiencing from around the world will make for an interesting couple of years. The last thing we should do is set up a structure that cannot compete so that, as a result, in two to five years we are negotiating with government for another TAGS. You have to have resilient economic structures that can survive this industry.
The Chairman: Thank you very much, Mr. Giroux. We appreciate your presentation.
Senator Stewart: Mr. Giroux, would you tell us how many members there are in your association and from what part of Nova Scotia they come.
Mr. Giroux: There are 75 vessels in the organization. The principal membership is in southwest Nova, although we do have members in the Glace Bay and Sydney areas. The membership changes from year to year, but basically 75 per cent of the membership is west of Halifax with the rest being east of Halifax.
Bear in mind that east of Halifax there is little or no groundfish quota available. It is a pretty depressing situation there.
Senator Stewart: What are the principal species landed by members of your association?
Mr. Giroux: They land cod, haddock, pollack, redfish and flatfish. We are now in the development of silver hake. We have been responsible for landing 4,000 our 5,000 tonnes of it in the last few years. We are actually in the process of trying to find a way to get silver hake to a number of processing plants along the coast.
My fleet is now starting to creep up on the silver hake quota that hitherto was always a foreign fishery. If we are successful, we should be able to replace the last foreign fishery inside the Canadian zone within in a few years.
Senator Stewart: What is the size of the boats in your fleet?
Mr. Giroux: Most of them range from 43 feet to 65 feet, the 65-foot rule basically being that any vessel less than 65 feet or licensed less than 65 feet is called in-shore.
Senator Stewart: You are in-shore.
Mr. Giroux: Yes.
Senator Stewart: For a long time, I have been told that mobile gear is highly destructive of fish stock, probably in two principal ways. The first is that it disrupts the habitat on the bottom. The second way is that, regardless of how many restrictions there are on the size of the mesh and so on, it catches, indiscriminately, whatever is taken up in the big bag. Consequently, the fisherman who is fishing for haddock, because that is what his quota is in, gets rid of the red fish. I have been told by people who have been out on boats that the sea was red behind the boat because of discarded red fish.
Is that accurate? We have had testimony before this committee perhaps eight or ten years ago to that effect. As I say, I have heard it anecdotally from fishermen whom I know.
Mr. Giroux: Personally, I have never seen it myself. I was an international observer for four years in the early 1980s on many domestic vessels. Yes, there have been many stories in the fleets -- and that is true for all species, by the way, not just groundfish. You know the story on tuna.
In 1993, it became illegal to discard fish other than skates and dogfish, I believe. A person who does that is very clearly breaking the law. However, it is difficult to control because it might be in the dark of the night in the middle of the ocean that some guy decides to do something like that. I would say that the practice of shopping-list fishing is a very small fraction of what it was in the days when the larger vessels were shopping-list fishing. That does not really exist any more in terms of the large fleets. They are virtually gone.
All in all, I would say, yes, it does exist. However, it is highly illegal; if a fisher was caught doing it, his or her licence would probably be cancelled forever. The fishers know that, and they know that this practice must stop.
We have various ways of checking for that. For example, in certain areas we implement high concentrations of observation and then measure the fish on land from vessels that are both observed and not observed. Our experience is that we do not find that shopping-lists fishing is going on much right now.
Senator Stewart: I wish to ask you a related question. We have been told that there are freezer trawlers out on the fishing grounds ostensibly fishing for shrimp. The truth of the matter is that what they are really interested in is the by-catch. What they are really looking for is the species for which they are not licensed to fish. From your experience, does this happen?
Mr. Giroux: A case in point is the shrimp fishery in which many of my fleets members participate in eastern Nova Scotia. In the deep water holes and structures coming out from Canso, the very deep water, hundred fathoms plus, there has been a shrimp fishery off and on. Every 10 years or so, there is a little peak. It seems if there is no cod, there is lots of shrimp, and when there is no shrimp, there is lots of cod. It is a very interesting relationship.
We could not fish that fishery effectively during the 1970s because of the cod by-catch, so we stopped fishing it. In the mid-1980s, we imported a piece of technology from Norway, a grate that goes into the net two-thirds of the way back. The grate is at a 45-degree angle to the length of the net. It has an opening above it. The fish will come down and sense the pressure wave coming off this grate, and they will go out the net. They will not even touch the grate. The shrimp will go right through it. The bar spacing is about 25 millimetres. The introduction of this technology eliminated the by-catch problem totally. I could show you videos, and we could take you out on the boats, but compared to the old days, the by-catch today is a fraction of percentage.
The same technology, by the way, was adapted to silver hake; in so doing, we virtually eliminated the by-catch of cod and haddock and pollock in the silver hake fishery. I know they use the grate in the northern shrimp fishery and the Flemish cap, which Ms Huskilson mentioned. By adapting this technology, by-catch is unnecessary. I find it hard to believe that they would be targeting the by-catch.
Senator Stewart: You say it is unnecessary, but let us say this is a foreign freezer trawler and they really want that by-catch.
Mr. Giroux: Most foreign vessel licences of which I am aware have rigid rules about the configuration of their nets and gears. I can only assume that our negotiators have put those in place.
Senator Stewart: You have been an observer. Is it true that when observers go to sea they become very sleepy and must spend a lot of time in their bunks?
Mr. Giroux: It is a tough job to go out on a vessel in the middle of the ocean when you are basically in a tense situation because you are there to observe, record, and report the activities. It is a tough job to go out there with foreign crews, Canadian crews, anyone. I guess I could say that many, many trips I did not miss a single fishing set. There are 300 or 400 fishing sets in a trip, and I would never miss one. My estimates would come in within 5 per cent of the landed weights of the vessel.
Many people out there are very good and are doing a good job. Obviously, you cannot see 100 per cent of what is taking place; it is not physically possible to be everywhere all the time. However, I would guarantee that at least the people I knew and with the type of training we receive, the vast majority of the people are doing what they are supposed to be doing.
Yes, you will hear the occasional story. I also hear stories that politicians get a little sleepy and get a little pay-pack out the back door too, but is that true? I do not think many of our politicians are on the take, so to speak. It is difficult to say that people in a tough situation trying to do a good job are not doing it.
Senator Stewart: I do not think that example will help very much in making your point. The argument will be made that if the observers are as bad as the senators -- even worse, the members of the House of Commons -- then the observers should not be trusted at all.
You are telling us that mobile gear is not destructive of the fish stock because now it discriminates.
Mr. Giroux: Let me back up a little bit. You made several points about discrimination and the impact on the bottom. Yes, I agree it is very powerful technology, and it was used indiscriminately through the 1960s and 1970s. It was then that we started to understand that we had to change things and change the selectivity. We changed to a square-mesh fishery, to minimize the impact on the fish during their escape. We have tried to change the technology to adapt to the rules of the game, to have little impact on the fish, only catch fish of a certain size, whatever, as you are supposed to. In effect, we try to pre-empt the person from discarding on the surface by trying to ensure that the gear is incapable of catching things that they want to discard.
On the second issue, the issue of the impact on the bottom, by and large, below 40 feet in the ocean is a very different place. What you see on the shore front with lush seaweed and lobsters and everything else is in the shallow waters.
It is a very different place down 30 or 40 feet. There are few marine plants. If you go deeper -- if you look at the bottom photographs that you can get at the Bedford Institute of Oceanography; they have thousands of photographs there -- it looks like a gravel pit. There is gravel, sand and mud. There is very little lush and tropical rain forest-type growth as people like to portray it.
In this industry, we harvest groundfish, shrimp and scallops with mobile gear. Probably the mobile gear fishery accounts for approximately 60 per cent of the landings in Atlantic Canada at this time. We fished with mobile gear on George's Bank for almost 100 years for scallops and pretty close to 70 years for groundfish. The bank is still one of the most productive that we have. It has not been destroyed to the point where it is not producing any more.
This is a contentious issue. We have studies under way to try to find out definitively if there is a negative impact or whether it is transitory. The jury will be out for another year until our scientists are finished their research.
Senator Butts: I should like to return to your historical data. You said that once we begin by giving a licence, which becomes quasi-property, then we are on that road and you obtain transferability and the buy-outs and the rest. Are you saying that that is inevitable?
Mr. Giroux: If we had said in the 1970s, "Okay, you cannot transfer that to somebody else by your discretion," then if there is a licence that becomes available through retirement, we might have some other mechanism to reassign that licence -- perhaps a community council or some kind of a mechanism where new entrants could be drawn out of a hat. We could have come up with a new mechanism for allocation of those licences as people retired. There should be a mechanism by which a fisher could transfer or reassign his or her licence to someone else. We could have chosen a different course.
The Levelton report, in the 1970s, recommended this choice; it is a bit late to go back now. You must give people some warning. You must allow them time to pay off debts because they will not receive that money when they get out.
Senator Butts: Should there be a limit on how many licences you can own?
Mr. Giroux: That is a choice for the fishery. We agree in the general sense that too much concentration is bad for anything. You should look at the specifics of it and say, "Well, how big or small do you want these structures?" We must be careful to not legislate poverty in terms of giving people just enough to survive but not necessarily enough to yield a decent living.
Senator Butts: When you buy, do you own the licence, the quota, the vessel or the owner?
Mr. Giroux: I do not buy. The system that exists is simply a contract between the holder of the licence and the financier of the licence. It is similar to a farmer when he gets crop insurance and a number of other things he will try to pre-sell the crop. It is a standard practice in agriculture. I do not think you ever own an individual; it is a business arrangement.
Senator Butts: Your argument hinges on the fact that you are making the fishery the same as any other business and you are trying to make it sound. Would you deny that the fishery as an industry is not like all the others at least because there is a social dimension of the necessity of that industry supporting a coastal community which has no other support?
Mr. Giroux: I agree it is a tough issue. You must tread through here carefully. However, we must ensure that we do not legislate poverty. We must be careful not to create structures that are unsound.
I have no trouble encouraging people to assign quotas or licences to very specific materials and conditions. We have many terms and conditions on our licences now. However, it is a big step if you start tying these things down too dramatically.
In other parts of our culture, I see that the forestry is important to forestry-based communities; farming is important to farming-based communities; and manufacturing and small business is very important to other communities. The fishery is treated differently in terms of the way that it is structured, the way we try to control certain aspects of it. I do agree that it is a Canadian industry and that ownership must be in Canadian hands. I agree we should try to keep it as close to the community as we possibly can. The people should be there that are in these businesses. How far you go in that direction is a tough question.
Almost every other industry in our country -- mining, forestry, agriculture, business and shop-keeping -- has changed dramatically in the 40 years that I have been alive. However, for reasons that are socially driven, the brakes keep being put on in fishing. In some respects, we have created some of the problems. There are too many people living marginal existences. The rest of the economy has changed. This part of the economy has been held back and we have must talk about solving problems ourselves.
Senator Butts: If I come at that same thing from another point of view, how would you define efficiency in the fishing industry?
Mr. Giroux: Certainly if you went to the obscene right wing of it all, you would have a couple of factory freezer trawlers. Obviously, that is not viable in our country. We have chosen different courses, especially in the lobster fishery where you cannot have factory freezer trawlers. Lobsters exist under rocks and along the shorelines in nooks and crannies. That will never be an industry that will be concentrated on larger vessels. There is a natural barrier there.
The size of vessels must be related to the size of the industry, to the species and the fishing plants that are being operated. I think you are alluding to the fact that large if you go too large you squeeze out all employment and all opportunities for people to benefit from this resource. Somewhere in the middle there is a balance.
Senator Robichaud: How do we set quotas? There have been individual quotas set that have been based on catch history. You have also said that we should not legislate poverty. I also think that we should not legislate in such a way that a selected few get the best of the crop and the rest get practically nothing.
How do we set in place a structure that would create a fair distribution; and who should set the minimums and the maximums? That is a loaded question.
Mr. Giroux: How do you set the quotas? I will not deal with the issue of science. Rather, I will deal with the discussion on management. I assume you are asking: How do you distribute or organize this thing?
I do not know the answer. Essentially, the slate is clean. For example, in the shrimp fishery in eastern Nova Scotia, there were six participants from Caraquet and about 23 participants from different areas of Nova Scotia. The people talked about it. They said they wanted an IQ system initially; they did not want transferability. They got together and, through some discussions, decided to divide the quota equally to all participants. The Bay of Fundy scallop fishery did much the same thing in the last year. Other systems have been set up not being based on catch history but on the number of traps per participant.
It depends upon the participants and their willingness to try other ideas. By the time we did our distribution, I guarantee I went through five calculators. We looked at many mechanisms. We looked at portions equally divided or portions based on history. We looked at dozens of ways of distribution. Some scenarios would bankrupt all active people and give a windfall to inactive people. That is not necessarily the right thing to do.
Another scenario would give very little to the inactive people and not quite enough to survive on for the active people. I know these are social decisions but, certainly, if 50 percent of the licence holders never fish at all, you must try to put in place some kind of system. The 50 percent of people who are participating have made investments; they employ crew members; they supply plants; their families depend on them. They should have a bit more priority than the people who are inactive and who obviously have other reasons to hold a licence or they have other incomes.
Essentially it boils down to the goodwill of the participants and being as fair as possible. Many people will feel disenfranchised; they will feel they have lost something here. In reality, if those people were inactive, then all they have lost is their expectations. The active people have dependants and they deserve greater focus.
This distribution can be set up in many different ways. The choice of system should belong to the people active in the industry. People from the outside will be looking in and asking for a piece of the system or demanding their share. This will always be a tough call. The minister's office, as you probably know very well, is always faced with these dilemmas. They are faced with cutting 10 slices out of a pie that really should only have 6 or 8. It is a tough call. The minister, in the end, must make the tough decision on how to deal with competing interests.
The Chairman: Mr. Giroux, of the 75 vessels still in your association, how many would you estimate are still owner-operated?
Mr. Giroux: This goes back to the discussion about owner-operators. Let us use the example of some fellow in Pubnico who is no longer fishing his vessel but is in the plant while his son is fishing the vessel -- technically, the fellow is no longer an owner-operator because he has a hired captain. Probably 99 per cent of the structures are owner-operators, from the point of view of these small clusters of three or four or five vessels. The owners of those operations are working in the operations although they may not be on the vessel. Individuals with one vessel or two vessels are still running the operation. About one-third of vessels are being driven by the classic fisherman who owns the licence and is driving his only boat.
The Chairman: Would there be any reason to continue the present boat size or capacity restrictions on vessels given the nature of the present quota structure? Is it time now to allow someone with a concentrated quota to have a larger vessel, or should we keep away from that?
Mr. Giroux: That is a real pit. We are not supporting any change from our current licence length of 65 feet. We have just negotiated a bit of movement amongst the fleet, in terms of the small details of giving numbers and so on, but technically anything above 65 feet is in the midshore/offshore field.
To talk specifics for a minute, any boat of less than 65 feet is allowed inside of 12 miles. Any boat longer than 65 feet must stay outside of 12 miles. In the Bay of Fundy and other areas where the tides are significant and the bottom conditions allow, the fishery is predominantly mobile-gear fishery because the strong tides make it difficult, although not impossible, to use fixed gear. For a significant proportion of the fleets landing in the Bay of Fundy, it would be very difficult to take one of those licences and go above 65 feet.
An inshore fisherman usually fishes within a few miles of his village. It would be difficult for us to have a discussion amongst ourselves to change that 12-mile rule. We are an inshore fleet, albeit one of the larger fleets in terms of size of vessel, but there is no movement. There is no interest. Clearly a large majority of the fleet wants to stay on their traditional fishing grounds, which is inside 12 miles in the Bay of Fundy.
The Chairman: On a different topic, we have looked into it and there has never been a public debate on the subject of property rights in the fisheries. Most of the ITQ regimes now in place have been department-driven. Over the years, this has created a question on the safety of quotas in ITQ sectors. Dr. Peter Pearse stated this last week as one of the central points of his presentation that the ITQs are not secure. In order to make the ITQ fleet workable, there should be more security to these quotas. He went as far as saying that there should be a government declaration to the Canadian people that this is the direction of the future and that, without that, ITQs will not have the future they should have.
You were raising that point this morning when you said the owners are not able to go to the bank and borrow money. So far, this has not happened. There has been no public discussion at all on this subject, other than through newspapers. How supportive would you be of a public debate on the subject in order to decide once and for all the policy of Canada towards ITQs?
Mr. Giroux: I would welcome it at any time. It needs to be based on sound principles and on some kind of a rational discussion. It is a system where we are almost in purgatory. In the Fisheries Act, as it is currently structured and will continue to be structured in terms of licensing, the minister has absolute discretion. If the minister said tomorrow to our industry, "Everyone must paint their boat green or not go fishing," then that is the law. The minister has absolute discretion. The minister could also say, "Monday, Wednesday and Friday only the pink boats can fish; the green boats can fish after that." That is a significant amount of power.
In 1993, after the federal election, there were significant adjustments to the ITQ program, where a significant portion of our quota was taken away from us and our fleet was closed down. That quota was then de facto given to another sector. You might as well say that our fleet lost $8 million. We had to lay off about 1,800 people on the vessels and in the plants, ostensibly in the riding that you formerly represented. It was a pretty nasty time. The minister, in his infinite wisdom, or not, can do virtually whatever he wants in this industry.
In some respects, this is too much power. I remember talking to a few ministers about this dilemma, as I mentioned to Senator Robichaud a few minutes ago, namely, always having to make these decisions about who can fish and how much they can or cannot catch. It is always very highly charged and political. No matter what you do in this industry, it is an exercise in annoying the least amount of people. No matter what you do, almost everyone will be annoyed a little bit. They either did not quite get what they wanted or did not get enough, or their way, or whatever. It is always a road fraught with land mines.
I would welcome a debate about this. You could also have a debate about how the country is benefiting from these resources. Yes, we are landing dollars and bringing that money back to the country and paying our income tax, and so on, but some of us are also paying almost $1 million a year in royalty fees, directly to the federal treasury. In order to be licensed, we had to pay $1 million a year, thanks to former minister Tobin. Many of these other sectors are landing larger economic value for the country, but they are paying back to the treasury little or nothing other than their income tax. If you had a property rights discussion, you could also have a discussion about what the Crown accrues from these systems. In my opinion, this is a public resource. Even if you assign the rights in a property-type mechanism, it is still subject to revocation or modification, or whatever, by our system. If you do not obey the rules, you are out.
We must also have a discussion about what the public yields from these resources. Obviously, in the forestry industry, the public has Crown lands and the public yields something directly from the ownership of those resources. The same discussion must be held in relation to fish, which is tied in with that property rights discussion. That is to say, "Here is a property right to fish but here are your responsibilities."
Senator Stewart: I wanted to follow up on something that Mr. Giroux said concerning owner operators.
You were talking about the situation with which you are intimately familiar. Are you saying that there are no cases or, if there are any, that they are very few, where one person is the real owner of two or more of the licences?
Mr. Giroux: Senator Stewart, you must go back. In our system, up until 1989, in the Scotia-Fundy region, you could own more than one licence. I know many people in this industry who do own more than one licence -- for example, long liners, draggers, and so on. Up until 1989, they were able to own more than one licence. Furthermore, if they owned more than one licence, they were allowed to designate operators on it.
The ability to designate an operator on a licence applies to almost 1,400 people within the former Scotia-Fundy region. This applies to all fleets -- for example, the groundfish fleets, the herring fleets, the scallop fleets, and so on. Almost 1,400 people in our region were legally allowed to designate an operator on their vessel and a large number of those people were multiple vessel owners. In 1989, the licensing policy changed and you had to be an owner-operator. The people who had the ability to designate operators in the past were grandfathered in and if those licences moved around, then that privilege would drop. In our sector, we also had pre-1979 companies. In 1979, when Minister LeBlanc imposed a licensing regime on the industry creating the bona fide program in the gulf, he looked at my industry in southwest Nova, which was, by and large, well developed by then. We had a number of small, family-owned companies, such as Saint Mary's Bay Fisheries, Scotia Fisheries, Inshore Fisheries Limited and Highland Fisheries Limited. He looked at a number of these structures that were already small, vertically integrated operations, ostensibly family operated, and he grandfathered those in. Right now, those structures still exist and are still owner-operator businesses. They are in amongst our fleet and they are legally allowed.
The pre-1979 companies could own a few licences and some fishermen could own a few licences. So, yes, there are people in our region who are legally allowed to own more than one licence, but that has changed. Right now, anyone who is in the industry and wants to obtain a licence is only allowed to own one licence that designates fishing for a specific species, such as groundfish, lobster, or whatever. Perhaps, over time, this will change as people retire.
Senator Stewart: Let me ask the question from the other side: How many genuine licence holders have only one boat?
Mr. Giroux: Again, I mentioned this figure to Senator Comeau. About one-third of the fleet has one vessel and fishes with their boat. That is the extent of their enterprise.
The Chairman: If there are no further questions, we will conclude this session.
I should like to extend again my appreciation to Mr. Giroux for driving all the way from Halifax this morning and appearing before us. It is always a pleasure to hear from you. Please give our best to your fleet. We wish you continued success in the future.
You have gone through some difficult periods in the last couple of years, since 1989, but you and your fleet have made a good corporate contribution to the community up to now and we hope that that will continue into the future.
Mr. Giroux: This debate has many sides to it. Realistically, you could foster some discussion about the idea of entrenching these things a little more. I do not think any other forum is capable of having that type of discussion. If you are examining the issue, this is the spectrum to look at. Obviously, that is one area that could benefit from discussion.
Concerning the controls, you must base the control back on the Income Tax Act and the structure and wording of that act when it comes to things like beneficial ownership. New Zealand did some interesting things about controlling concentration and aggregation, in terms of trying to make this right much more defined to give the participants a much better ability to operate their lives. If you could explore this spectrum here, perhaps it would help solve some of problem.
We are halfway. Things go one way for a while and then they go in the other direction. The climate is really insecure. A lot of people do not even know what tomorrow will yield. A discussion about the structure of the industry is most welcome at this time.
The Chairman: The analogy you gave of being half sick is very relevant. Let us try to make the industry healthy again.
The two witnesses that we had scheduled for this afternoon cancelled this morning because they wanted to attend the minister's announcement on the coho fishery. That leaves us with Professor Copes, who is to appear at 3:15. We have contacted Professor Copes and are attempting to have him come in earlier. We will adjourn for lunch and, hopefully, he will have contacted us by then. We will then decide how we will proceed.
The committee adjourned.