Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 8 - Evidence, June 2, 2005
OTTAWA, Thursday, June 2, 2005
The Standing Senate Committee on Fisheries and Oceans met this day at 10:50 a.m. to examine and report on issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans.
Senator Gerald J. Comeau (Chairman) in the chair.
[English]
The Chairman: I call the meeting to order.
In October 2004, the Senate gave this committee an order of reference to examine issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans. On May 19, the committee tabled an interim report, which is available for everyone to peruse on the World Wide Web.
The committee has been focusing on the impact of the government fisheries policy on coastal communities. We issued a report a few days ago to start disseminating some of this committee's ideas on a policy framework, particularly on the West Coast fishery, although not to neglect the East Coast fishery.
Today we have before us from Newfoundland and Labrador, His Worship Don Stewart, Mayor of Harbour Breton; from the Harbour Breton Industrial Adjustment Services Committee, Mr. David Vardy, Chair, and Mr. Bill Carter, Research Coordinator; and from the Fish, Food and Allied Workers of Harbour Breton, Mr. Eric Day, Chair.
Good morning and welcome, gentlemen. We are glad to have you here today. I believe your testimony will be extremely valuable to our study of the impact of government policies on coastal communities.
Mr. David Vardy, Chair, Harbour Breton Industrial Adjustment Services Committee: Good morning. In November 2004, a bombshell in the form of a decision fell on the small community of Harbour Breton on the south coast of Newfoundland. Harbour Breton is the largest community in the region. It is a community of 2,000 people in a relatively remote region with a little over 8,000 people. The single industry in Harbour Breton was compromised overnight by that decision.
As a result, people who had worked for 50 years in a plant that operated year round were put out of work immediately. There was no notice and there were no adjustment programs in place. There was a fisheries moratorium in 1992, but even before that seven plants in Atlantic Canada had closed. In comparison to that, the situation in Harbour Breton had a dramatic impact on the town. We want to tell you about that and a little about the community.
One of our concerns is that most of the decision makers involved in this in the Government of Canada operate in an urban environment. There is a failure to understand that the rural environment in Canada is totally different. As I said, Harbour Breton is the largest town in the region, yet it is 337 kilometres from Grand Falls, which is a town of 15,000 people in Central Newfoundland. When a town loses its major industry, it has a devastating impact.
We are here to talk to you today about adjustment, fish, quotas and the management of the fishery in Canada. There are some fundamental problems in the management of the Canadian fishing industry that we want to bring to your attention. Our presentation has been circulated to you. It contains only our key points, without much elaboration.
I will ask Mayor Stewart to say a few words, after which Mr. Day, the Chair of the FFAW, will speak to you. I will then summarize the points that we consider to be of critical importance.
As a result of this session today we would like your committee to make a recommendation to the decision makers in cabinet, the Department of Human Resources and the Department of Fisheries and Oceans. We are at the eleventh hour and decisions must be taken. Otherwise, people will be leaving Harbour Breton, which will compromise the future of the community and the entire region. We are here today with a sense of urgency. There is a Damoclean sword hanging over our heads and a sense of high expectation in our region. We are here today to speak on behalf of people in a highly rural and isolated part of Canada.
His Worship Don Stewart, Mayor, Town of Harbour Breton, Newfoundland and Labrador: Good morning. I will leave a copy of my written brief with all honourable senators. I apologize for not having it in both official languages. However, I was unable to have it translated in Harbour Breton.
The Chairman: We can post your entire brief on our committee's website.
Mr. Stewart: That would be appreciated. This brief is my reflections after 38 years of volunteer work on economic development in a rural part of Newfoundland and Labrador.
On the day the moratorium was announced in 1992, over 30,000 Newfoundlanders lost their livelihoods. Consider the impact of 600,000 Ontarians losing their jobs overnight. The magnitude of the fishery crisis cannot be overstated. Thank you for the opportunity to speak to this important committee in the governance of this industry. We make this representation today to impress upon our leaders the importance of due diligence in protecting our most valuable resource. We commend your efforts to work with us in ensuring that we have a viable future for our communities and in the fishing industry as a whole.
Harbour Breton is located in the Coast of Bays on the south coast of Newfoundland in fishing zone 3PS. It is 269 kilometres from the Trans-Canada Highway and 539 kilometres from the provincial capital of St. John's. The region is home to 22 communities settled around five bays over 200 years ago — Hermitage Bay, Fortune Bay, Connaigre Bay, Bay D'Espoir and Great Bay d' L'eau. Harbour Breton is the largest community, with 2,080 residents.
On November 19, 2004, Fishery Products International announced that it would be permanently closing its Harbour Breton facility. The reasons cited were structural integrity of the property, competition from China and the strengthening Canadian dollar. This announcement directly affected the lives of 348 people employed at the plant and caused grave concern among businesses, organizations and residents in the entire Coast of Bays region. With a total population base of only 8,540, the sudden loss of 350 direct jobs is staggering.
Harbour Breton and the Coast of Bays have been involved with the fishery ever since settlement began in the 1700s. Residents have fished inshore and offshore and worked in plants, ranging from whaling in McCallum to lobster canning in Rencontre and groundfish in the Connaigre Peninsula. The primary seafood processing facility in Harbour Breton has been in operation since 1960 under several operators, including British Columbia Packers Limited, Fishery Products, and now Fishery Products International Limited.
Prior to the cod moratorium in 1992, the fish plant was the major employer for the entire Coast of Bays region, employing up to 550 people in peak periods, both onshore in the plant and offshore on its six deep sea trawlers. Historically, it produced a variety of species, including cod, flatfish, herring, lumproe and redfish, which has been a primary focus in recent years.
Harbour Breton has the largest inshore fishing fleet outside of St. John's in what we call the eastern fishing region, with 56 fishing enterprises.
The town has over 40 businesses offering a wide array of goods and services, including building supplies, furniture, food and beverage establishments, a senior care facility, a modern hotel, an RV campsite, grocery stores and a marine service centre. We also have a new regional hospital that opened in 1999 and which services the whole Connaigre Peninsula. The town was also successful in its proposal to provide broadband Internet service to the area under the federal broadband program.
Harbour Breton has been one of the success stories for rural Newfoundland and Labrador. However, since the plant shut down, morale is low, tension is high, there are layoffs in the small business sector, and retail enterprises as far away as Grand Falls and Gander are feeling the pinch.
Let us consider some of what Newfoundland and Labrador has given to Canada. We entrusted the governance of our most valuable resource to our nation when we joined Confederation in 1949. This has enabled Canada to reap great rewards, leading the world in fish production and facilitating political deals that have led to substantial foreign investments throughout Canada. What have we received in return? Our own communities are dying.
For over 200 years, the people of the Coast of Bays made a living from the sea, either by fishing or trading. Towns such as Harbour Breton, Gaultois, Hermitage and Belleoram enjoyed booming economies as a result of the processing plants. Harvesting thrived in the smaller communities as well, with an abundance of fish and a nearby plant to sell to. Until the 1980s, residents were able to fish off their homesteads and catch fish, something which is unheard of for our children today.
The impact of the fishery on the provincial economy and social well-being of coastal communities is staggering. While many of our larger centres have benefited from the diversified economy, the smaller rural areas have no such advantage. When the groundfish sector was shut down in 1992, over 1,000 residents of the Coast of Bays lost their jobs.
Since then, the overall population has dropped from over 10,000 in 1991 to about 8,500 in 2001. Plants have closed, boats have been sold and far too many families have moved away. This is increasing the strain on the level of services we can provide as municipalities, discouraging business investments and placing an enormous burden on our volunteers.
Those most dependent on the fishery for their economic lifeblood are being squeezed out. After 50 years of mismanagement, our rural communities continue to suffer economic decline.
Canada must become accountable for the damaging effects that have resulted from its governance. ``Resource giveaways'' were negotiated for political gain, and by the 1970s, the Canadian government had permitted 600 foreign trawlers, employing some 40,000 non-Canadian residents. There are many examples of mismanagement: damaging technology, abundant licensing, subsidies, excessive fish plant construction and ignoring clear warning indicators: first, a reduced size in the individual fish landed and, second, an overall drop in inshore landings. If this mismanagement continues, it will be the death of rural Newfoundland and Labrador. Communities in the Coast of Bays such as McCallum, Gaultois, Hermitage, Sandyville, Seal Cove, Harbour Breton, Wreck Cove, Coombs Cove, Boxey, Mose Ambrose, English Harbour West, St. Jacques, Belleoram, Pool's Cove and Rencontre East will become ghost towns.
Perhaps one of the most serious weaknesses in the fishery management is the inability to move from consultation to action. Individuals and organizations have been invited to consultations for decades and have offered endless suggestions. Instead of addressing many of the issues, government's response is yet another study and another consultation.
The call for improved governance and conservation has been repeatedly ignored. Concerned Newfoundlanders have stated the issues and suggested solutions over and over for decades.
I would just use one example from 1964. In an address delivered by MP Walter Carter to the House of Commons, he states:
... the great advantages we enjoy with such a tremendous coastline and with such great fishery resources on our very doorstep, resources from which the fishing fleets of other nations are able to reap more advantages than we do ourselves. Here is a problem that is crying out to be solved and we must find some satisfactory resolution to it.
In that same address, he identified the need for more science on the Nose and Tail of the Grand Banks and to slow the intensification of fishing activity there, particularly that using damaging gear or technology. Forty years later we are still asking to have this issue addressed.
The only people who have a strong vested interest in the health of the fishing communities are the people who govern them and those who live in them. Our well-being is largely dependent on the economic whim and competence of commercial fish companies that are not based in the community. You have the power to change that. Otherwise, the day is fast approaching when the fishery will be effectively controlled by corporate giants and foreign interests.
There are also major problems with the current policy on quota allocation. One is the lack of accountability. Individuals, corporations and countries are given quotas for a specific purpose, but there is no enforcement to uphold this purpose. For example, FPI's quota was allocated on the basis that it operated three offshore plants, Marystown, Fortune and Harbour Breton. Now that Harbour Breton is closed, what will happen to that quota? What will happen to all the quotas now under moratorium?
We do not want to be dependent on projects and government transfers that we should all know by now cannot possibly sustain our communities in the long term. Conservation of, and access to, the renewable fishery adjacent to our communities can. The solution as we see it is innovation in thinking. The long-term solution is not in projects but in policy reform.
Commercial fishing of northern cod stocks, managed since 1949 by the federal government, was closed in the moratorium of 1992, and the social and economic welfare of our rural communities has been dying since. We must reverse this trend, and with your decisive action we can. Revitalizing our rural communities does not have to cost millions of dollars. It requires policy change and more efficient allocation of existing resources.
It must be understood that this is about sustaining the very backbone of our lives in Newfoundland and Labrador. Decisions made in the legislature in the coming weeks must not only address the current situation but also the well- being of our people and our province. Recent events have come about because of weaknesses in the governance of the fishery, weaknesses that we now have the opportunity to correct before any more damage is done.
Governments must enforce the principles of historic attachment, rights of adjacency, and regional balance in quota allocations. Government should increase accountability for the privilege of quota access.
The present policy of the Department of Fisheries and Oceans is to make quotas transferable from one holder to another. If sustainable development will mean anything worthwhile, some quotas will have to be strategically attached to coastal communities, not controlled by an individual, family or corporate giant. Quotas belonging to companies should revert back to the federal government if not being used.
We are also recommending that there be an annual or biannual review of companies and individuals that have received quota privileges to ensure they are still in line with the purpose for which they were allocated.
DFO should allocate a percentage of the quota formerly given to FPI for its three offshore plants, now under moratorium, to Harbour Breton when the moratorium is lifted.
FPI's plan to use freezer trawlers to harvest fish and have it processed in China will mean that the profits from the resources will go to the stockholders and Harbour Breton's processing jobs will go to China. This is leading to yet another resource giveaway. We must access some of this quota to ensure we can offer meaningful jobs here at home.
The fishery in foreign countries continues to thrive on the resource from the banks of our landmass, yet at home there is very little employment from the fishery. The Government of Canada must use its conservation policy and the International Law of the Sea to put a stop to foreign overfishing.
Consider that Canada's quota for white hake inside and outside the 200-mile limit is 2,500 tonnes while Spain's is 5,000. Redfish — Canada has a 6,000-tonne quota, Spain has 7,000 and Russia has 6,500. Turbot — Spain has a quota of 8,254 tonnes off the east coast of Newfoundland while our fishermen are only allowed to catch 2,112 tonnes. Shrimp — the Faroe Islands has three times our quota of shrimp in zone 3M off Newfoundland's continental shelf; Spain has eight times our quota, Norway four times and Russia five times, all from the same zone.
The recent DFO policy document, ``A Policy Framework for the Management of Fisheries on Canada's Atlantic Coast,'' places considerable emphasis on the role of DFO in supporting viable coastal communities. Sustainable use and self-reliance are stated as the core objectives to be achieved. Support for such sustainability is also evidenced in the government's document entitled ``The Federal Framework for Action in Rural Canada,'' which states that it is ``committed to the promotion of vibrant communities, based on sustainable resource use, in which citizens make informed decisions about their own future.''
Quota allocation must consider regional balance. Coastal rural communities in Newfoundland need not disappear or fall into poverty. A renewable resource is at our doorstep. With adequate, sustainable access, this resource can provide meaningful employment and income for generations to come.
Other important considerations are the principles of adjacency and historic attachment. Fishing zones around Newfoundland and Labrador contain an abundance of groundfish, shrimp and other species. Newfoundland and Labrador was built by resilient, hardworking people who endured severe hardships over the centuries with the rise and fall of the fisheries. Fishermen have risked their lives, orphaned children and raised families in communities often lacking basic social amenities. We have struggled to survive and we are not prepared to give everything up. We want to work together to provide a meaningful future for our grandchildren.
Harbour Breton has been attached to the fishery since settlement began over 200 years ago. The south coast of Newfoundland was never a seasonal fishery until 1992 because the ports are ice free and the adjacent resource is abundant. Even during the moratorium, many local residents continued to work and a large percentage of Harbour Breton's residents never did draw TAGS. Presently, there are around 450 groundfish licences in the Coast of Bays region, resulting in approximately 20 per cent of the region's workforce being involved in fish harvesting. We have three core processing facilities and two others that provide jobs to some 850 people, another 30 per cent of our workforce. Add to this related service industries and a retail sector dependent on the industry and the overall impact of the fishery on employment in our region can be estimated at about 75 per cent.
For any fishing community to be sustainable, it must have, at a minimum, fish to catch, to process and to sell. Through conservation and governance, there must be fish available, not depleted through environmental damage and overfishing, and there must be fish to access, not all being caught to be processed elsewhere. This is such a simple and obvious proposition that is hard to see why it is not apparent to those who set fishery policy in Canada.
We want to be self-sufficient, not reliant on ad hoc government intervention. With access to a quota, we can be. Community quotas are not new. For example, on the Quebec north shore, eight isolated communities have been allocated quotas that are shared amongst them equally. In Newfoundland, there are Gaultois, the Fogo Island Co-op and SABRI, and there are community quotas in Prince Edward Island.
Harbour Breton is situated in a coastal zone that has the following key features: coastal clustering, remoteness, historical significance, offshore attachment, adjacency, regional balance and an economy solely dependent on marine resources. Our region demonstrates a clear need for access to community quotas to achieve sustainability and we are respectfully requesting a community quota for Harbour Breton.
Harbour Breton has three options for the future: decline, stability or growth. Without access to a quota, decline is inevitable. This will result in a worst-case scenario, where there will be mass out-migration, erosion of social services such as health care and education, and those who stay will be reliant on welfare. Using numbers obtained from the provincial department of human resources and labour, this scenario would cost the taxpayers over $3 million a year.
With a quota, we will be able to maintain the status quo. With a quota and a diversification fund, we will endeavour to grow. Through the Harbour Breton Industrial Adjustment Committee, we are preparing a diversification plan to strengthen the town's capacity to cope with problems and pursue opportunities. We are proposing to build a future based on a combination of economic diversification and value-added fish production. The strategy will take time to develop and implement, necessitating a short-term income relief program for the plant workers affected by the closure. In the longer term, the community will need a community diversification fund and access to a quota.
From the corporate perspective, amending the quota allocation policy may mean a few less dollars in the hands of a few business people; but to the province, it means sustaining a decent quality of life through protecting our resources. First and foremost, we must consider the long-term implications of today's decisions for the benefit of present and future Newfoundlanders and Labradoreans, your fellow Canadians. We urge government to move quickly.
Mr. Eric Day, Chair, Fish, Food and Allied Workers, Harbour Breton: I will not make a presentation because I was not notified and because the presentation has changed. However, I will talk from the point of view of a former fish plant worker.
I went to work in 1970 as a student in the summer months. From there, I decided not to return to school. I am a high school dropout, and there are a good many more who worked in the fish plant with me.
Basically, a good portion of the workforce had a grade 7 or grade 8 education. When they went to work in the summer months, they got a few dollars in their pockets and they felt comfortable, and so they did not pursue their education.
I am 50 years old and I never did anything else. For the last 34 years I have worked in the fish plant. The majority of people alongside me did the same. We had some good and bad years, but we took it all in stride and we came through it.
How to sort it out from here? I would like to talk about B.C. Packers, who were the original owners of our plant. They started the plant off in the 1960s as a salt fish operation and turned it into a fresh fish plant in the late 1960s and early 1970s.
We had no reason to move out of our community. We are proud of our community and we were proud of our workforce.
B.C. Packers moved on and did not take the quota with them. Fishery Products moved on and did not take the quota with them. Fishery Products International decided that when they go everything will go with them, including the quota. That is why we are here today. We are looking for support, as we believe that this should not happen.
The federal and provincial governments should be preventing this. They are letting the community of Harbour Breton die. This should not be allowed to happen and the governments should be accountable. I hope your committee will take some responsibility to make these people accountable.
Foreigners are allowed to rape our stocks. They are allowed into Canadian waters and to have quota. Yet, plants are closing down, as in Harbour Breton. That is ridiculous and should not be allowed.
I will be pleased to answer your questions.
Mr. Vardy: Is this a management issue that the federal government is compelled to deal with? We believe it is. As you know, the federal government manages the fishery as per the Constitution of Canada. During the 1990s, there were quota cuts and moratoria. We have heard the argument that there have been no quota cuts in recent years that would have triggered this event, and this is being used in some quarters to deny responsibility. My response to that is that the federal government continues to be responsible for the management of the resource. In the mid-1980s, when this plant was in its heyday, it was landing and processing approximately 30 million pounds of fish. Over the past 10 years, it has been landing and processing half of that, and that is due to quota reductions. The economics of this operation have been compromised due to quota reductions, notwithstanding that there has been a consolidation of plants through closures. The economic fragility of Harbour Breton is as a result of quota cuts.
As Mr. Stewart and Mr. Day have said, the foreign overfishing issue has not been addressed. The renewable resource stocks on the south coast of Newfoundland and Labrador are not recovering because we have allowed foreigners to continue to fish. Canada has not taken the management action necessary to turn that around. We believe that this is a federal government responsibility. It derives from the management of the fishery under the Constitution. Although it may not be directly related to a quota reduction that took place in 2004, there is still a compelling argument that this is a federal government responsibility.
Because Harbour Breton continued to operate during the moratoria of the 1990s, it did not receive an infusion of funds to diversify its economy as other areas did. In fact, the whole fishery of Newfoundland and Labrador moved from groundfish into shellfish — shrimp and crab. That is what must happen on the south coast of Newfoundland, and in Harbour Breton in particular. The community needs assistance to diversify.
In looking at the experience of other towns that have had shutdowns, we have seen that the best solution is diversification within the fishery. The business plan that we have undertaken to develop in Harbour Breton will focus on diversification within the fishery without ignoring the possibilities of diversification outside the fishery. We think it is important to diversify both within and without. However, we have not yet had the opportunity to do that.
We wish to leave two key points with you. The first is that for this community to be viable in the future it needs a quota, an allocation of fish. It does not have to be groundfish. It could be shrimp or other species, although shellfish seems to be the most viable at the moment.
That is key for the long term, but in the short term we need income to enable us to put bread on the table. Currently, people are moving out of the community because there is no way for them to put bread on the table. All the adjustment programs that were paid for in the 1990s by the Government of Canada are no longer available. We desperately need to put a square peg in a round hole, because the round holes that currently exist do not fit Harbour Breton. If Harbour Breton had closed in the 1990s, there would have been all kinds of diversification assistance and income support, but we did not get that.
The Government of Canada can allocate quotas. An increased allocation of shrimp off the east coast of Newfoundland is expected to be approved in September, and we are looking for 6,000 tonnes of that quota. With regard to income support, we have put forward to the Department of Human Resources and other federal departments a proposal for cost sharing on an economic development and diversification program that will cost the taxpayers of Canada in the order of $4 million over two years. That is critically important. The Province of Newfoundland and Labrador has indicated that they are prepared to come to the table. We also have support from Fishery Products International in the form of some money to supplement that program.
I will not get into the details, but this $4 million has to be forthcoming from the Government of Canada in order for this community to survive.
I will leave you with those key points. We look forward to responding to your questions.
The Chairman: Thank you very much. We appreciate the powerful way in which you gentlemen have presented your case.
Mayor Stewart, you indicated that the Fisheries Products International quota was conditional on landing its catch at three locations in Newfoundland, and I believe Harbour Breton was one of the three. Was this part of the 1982 Kirby task force report, or was it related to some other condition under which FPI operated?
Mr. Stewart: When Fishery Products International was restructured, they agreed to operate three plants on the south coast of Newfoundland, at Marystown, Fortune and Harbour Breton, and based on their commitment to these three communities they were assigned a quota.
The Chairman: This would relate to the Kirby report?
Mr. Day: It goes back further than that. Fisheries Products International had 14 or 15 fish plants in the late 1970s and 1980s. In the 1990s, they started to get rid of some of those plants. They divided their quota up among various groundfish plants, crab plants and shrimp plants.
We had a strategy worked out over the last number of years so that we had three groundfish plants left: Harbour Breton, Fortune and Marystown. We shared the fish so that each of the three got its portion. In their wisdom, FPI decided this was no longer viable and that we would do it differently. They closed Harbour Breton and Fortune is just hanging on until they announce that closure later. Basically, they moved their catch to one location.
The Chairman: Do you have a document that references this information? We would love to get our hands on it.
Mr. Stewart: Are you asking about a document that says there are a certain number?
The Chairman: Yes. The fish belong to Canadians, and DFO holds the fish in trust for Canadians. If DFO enters into arrangements with companies or individuals and quota is apportioned based on conditions, it would be ideal for this committee to be able to look at the original document to help in its determinations. If this is available, I will leave it in your hands.
Mr. Stewart: Whether it is writing I cannot say. Back then, Harbour Breton did cod flats and red fish, and Marystown and Fortune did the same. Over a period of time, they moved all the flats to Marystown because it was more economically feasible. In the last couple of years Harbour Breton became known as the red fish operation. Traditionally, Harbour Breton was the first plant to do all species of fish. If there is something written down about the arrangements and quotas I do not know about it. It is something that is assumed.
Mr. Day: I do not think there is anything written, other than that Harbour Breton had its own share of the quota. Harbour Breton people crewed Harbour Breton boats and historically fished adjacent to the waters. That was traditionally done for hundreds of years. When Fishery Products International Ltd., FPI, came on the scene, they drifted away from that. They decided to do it this way, this way and this way until they left nothing.
Mr. Vardy: To clarify this issue, in the late 1990s and into the new century, there was a change in ownership and corporate structure at FPI. The company had an interest in changing its modus operandi and concentrating its operations, essentially, in one plant in Marystown. Intense conversations took place involving the union, the Government of Newfoundland and FPI. The result was a decision that FPI continue with the plan known as the three- plant operation, Fortune, Harbour Breton and Marystown. That continued until last year. This condition was not imposed by the Government of Canada. The resource manager was not party to that decision. Our fundamental problem is that these resources are allocated to corporate citizens without obligations, so at the end of the day, in 2004 FPI can decide to walk away and take the quota to another community. There is no process to prevent that. They do not have to file an application with DFO for permission. If you are dealing with another resource such as oil or gas and you want to change the way you operate and increase production from 200,000 barrels per day to 250,000 barrels per day, you have to go to the regulator, the Canada-Newfoundland Offshore Petroleum Board. Permission has to be obtained to make those changes. However, that does not apply in the fishing industry today. These decisions were made in a corporate boardroom about a public resource that has never been alienated from the people of Canada. It is fundamentally wrong.
That is why a community quota makes so much sense, because the community can decide who offers the best deal or arrangement and the best social and economic benefits. The community is in a position to deal with companies like FPI. In this particular situation, the community had absolutely no voice at the table because they were not there. There was a decision-making process and the people who were most directly affected were not even at the back of the room because they were not even told about it; and they were given no severance pay. There is a requirement under Newfoundland law for 12 weeks' severance pay to employees. Those payments were not made. This was a very capricious decision taken in a way that is extremely detrimental to the community and the community has no say.
This deal that was put in place a few years ago to operate the three plants was not embodied in a legal document enforceable by the Government of Canada. FPI was quite at liberty to do whatever it wanted.
There is a piece of provincial legislation, which I will not get into, called the FPI Act. It imposes certain restraints on what FPI can do. Right now, there is a financial transaction that FPI wants to carry out but it is being prevented by virtue of the FPI Act. Suffice it to say, the FPI Act has not prevented FPI from closing the plant in Harbour Breton. Therefore, the people of Harbour Breton can rightfully say that the act is of little use to them.
Senator Hubley: You have provided us with a great deal of information. It is valuable to the committee to know the various players in your community and the effects of losing the quota. You have demonstrated that very well and it will help in the committee's determinations.
I would like to visualize a viable model if a community-based quota were in place in Harbour Breton. Would it be attached to the processing plant, or would it be a cooperative made up of the people — fishermen, plant workers, et al? Do you have an idea of how you would like to see a community-based quota system work? Mr. Stewart, as Mayor of Harbour Breton, would be familiar with the infrastructure of your community. How would you like to see that handled?
Mr. Stewart: We talked about many issues. We realize that in the future any quota would basically be owned by the community and would not necessarily be given to the town. It would be given to a group comprised of plant workers and town and business people. We looked at the co-op model but we are unsure about the best way to set this up. Right now we are in the process of doing a business analysis of that. Mr. Vardy might comment on that in more detail.
Mr. Vardy: There are a number of models whereby these quotas can be put together. One is a community quota, and a regional quota is another approach. In the north of Newfoundland, there is an area known as St. Anthony Basin where there is a corporate entity called St. Anthony Basin Resources Inc., SABRI. They have a shrimp quota that is used to benefit the entire region. Another model is a small town close to Harbour Breton called Gaultois, where the community development association holds a quota. The key is that local people have some input into the decision- making process, so that nobody can simply take the quota away without the concurrence of the community. That does not mean they can force private companies to operate there, because private companies will operate only if it is profitable.
For example, if FPI decided they could not make a profit in Harbour Breton that is fine. It is fair game that they can pick up and leave the quota behind, decide to go somewhere else and invest their money in some other enterprise in Newfoundland or internationally. Nobody is objecting to that; that is what free enterprise is all about. However, when you are dealing with a public resource, surely there is some obligation to keep that resource in the community.
What is the legal basis for all of this? There is an international law issue here that we must be cognizant of. Canada was at the forefront in negotiating the Law of the Sea — Mr. Stewart mentioned Walter Carter, a former member of Parliament who was Minister of Fisheries at one point, and he was involved in a lot of these discussions. When Canada went to the international table to say we wanted to claim ownership of the resources within 200 miles for users within Canada, it was based upon the situation of coastal communities. If you look at the language in the Law of the Sea convention, it refers to the historical rights and adjacency of coastal communities.
We are arguing that the Law of the Sea should be applied internally as well as externally. In other words, it should provide a framework whereby these coastal communities have access to the resource that we claimed through international negotiations on the Law of the Sea. Community quotas, in our view, fit Canada's international position.
Right now, Canada is schizophrenic on this point. We have one set of rules domestically and another set internationally. It is time for us to get rid of our schizophrenia.
Senator Hubley: I am wondering if I might ask Mr. Carter, who is the research coordinator, exactly what his role is.
Mr. Bill Carter, Research Coordinator, Harbour Breton Industrial Adjustment Services Committee: I am at the disposal of the chair, I guess. My role would be to facilitate the income adjustment process and any other issue that the committee might want to address.
Senator Hubley: It has more to do with administration than research.
Mr. Carter: It is a facilitative role.
The Chairman: I was just reading a provision under the United Nations Convention on the Law of the Sea — I have the direct quote here — which ``recognizes the importance of the connection of coastal people to the sea and calls upon states to consider the economic needs of coastal fishing communities.''
This was recently ratified by Canada, in the past couple of years.
I would like to refer also to the U.N. Food and Agriculture Organization's code of conduct for responsible fisheries, which recognizes ``the important contributions of artisanal and small-scale fisheries to employment, income and food security...in fishing-dependent communities, which should receive preferred access to fisheries.''
Finally, under Canada's Oceans Strategy, coastal communities are to be actively involved in the development, promotion and implementation of sustainable ocean activities. These are three powerful documents, one of them being a Canadian document, the Law of the Sea being one in which Canada was a drafter; and Canada is a signatory to all three. You are in good company with the case you are making.
Mr. Vardy: Thank you.
Senator Merchant: Thank you so much for your presentation this morning. It gave us a lot to think about.
In the news a few days ago we saw that a Portuguese trawler was seized by the Canadian authorities. How do you feel about this? This is the first time, apparently, in the last 10 years that they have seized a foreign vessel. How does this help you? What signal does this send? Is this a major occurrence or just a news item?
Mr. Day: I think that was done before by Brian Tobin — the Spanish trawler — and it was a slap on the wrist kind of thing — do not do it again. That is how I see it.
Senator Merchant: That was at least 10 years ago, so this happens once every 10 or 15 years. How is that helpful to you?
Mr. Day: In their minds, it is not too bad. It is only a bother every 10 years, so it is just a slap on the wrist.
Mr. Vardy: I think this is the kind of action that we want in Newfoundland. We are looking for more effective control of foreign overfishing. NAFO, of course, has not been very effective. This particular vessel came within the 200-mile limit, so we could go out there, unlike the flap that took place 10 years ago when Brian Tobin went out and captured a ship that was on the high seas. It was a little easier to do that within the 200-mile limit.
What it showed was that this vessel was using liners. In other words, the mesh size was much smaller than is allowed under international law. Of course, these vessels are not allowed within the 200-mile limit in any event.
This is a vitally important issue. If you look at where Harbour Breton's fleet has been fishing historically, it is on the southern Grand Banks. Those stocks should be recovering. There are several flatfish stocks that are recovering; one in particular — yellowtail — and American plaice are also coming back. However, cod and other stock, redfish and so forth, on the southern Grand Banks are not coming back. They should be because we have not been fishing them, but the foreigners have.
Until such time as we bring that under control, the south coast of Newfoundland will be devastated, and we are talking about plants other than Harbour Breton. We are talking about a number of plants, some of which have already closed. These are year-round industrial operations.
One of the things you must understand about Harbour Breton, and communities like it, is that these are the net contributors to society. These are not communities where people have been working three or four months of the year. These are communities where people have worked 12 months of the year, the same as the car manufacturers in Ontario, in Windsor. It is the same kind of industrial operation. These people have been contributing to employment insurance.
If you look at how much fish has been produced in Harbour Breton over the last 50 years, you are talking about half a billion dollars worth of product that has been contributed to society. When you think about this and how important it is, surely the Government of Canada must take action against foreign overfishing. This is a critically important issue because that is the reason the stocks have not recovered. Other countries are out there fishing and using liners in their nets. They are fishing for species beyond their quotas, and they are setting their quotas unilaterally, because under NAFO they are allowed to do that.
People in a community like Harbour Breton are impotent to deal with this foreign overfishing. They are impotent in dealing with companies like Fishery Products International. They need to be empowered. How do you empower them? You do it by giving them some control over their lives. That means giving them a quota. It means giving them some co- management of that quota so that they have an involvement in the future of the fishery.
Mr. Stewart: Most people, when this happened a few days ago, basically sat back and said is this something similar to what happened 10 years ago? Most people, I think, are willing to sit and watch this for a little while and wonder how far Canada is willing to go in pursuing this particular situation. Like Mr. Day said, if it is just another slap on the wrist, we do not want to go down that road again. We hope Canada is sincere this time and will go the full nine yards.
Senator Merchant: I have a strong feeling for your concerns, because I come from Saskatchewan and we have a similar crisis with our agriculture. As you said, these crises — like the crisis in the fishery — compromise the life of communities and the future. Can you give us an idea as to what life will be like in your community vis-à-vis your education services, health services, if things keep going the way they are? How is the life in your community changing?
Mr. Day: If something is not done quickly, it will be a welfare town. As I said earlier, some of our residents are uneducated. Some people have health problems and cannot move to Ontario or Alberta. Some people have mortgages and simply cannot leave their homes and start over at 50-plus years of age. They have too much to lose, although they will lose as it is. People will declare bankruptcy. They will lose everything they have invested in for the last 30 years. Some of the younger people will leave. For people who have worked in that plant until 49 years of age, it will not be easy to find work elsewhere. Some will, but the majority will not. It just will not happen.
Mr. Stewart: Ten or fifteen years ago, Harbour Breton's community workforce worked 12 months of the year. The husband generally worked the day shift and the wife worked the night shift at the plant, or vice versa. Between the husband and the wife, these families were taking home from $40,000 to $60,000 a year. In rural Newfoundland at that time, that was a pretty penny.
Of course, they spent what the earned. In the community of Harbour Breton today you will not find one shabby home. People have nice cars and the other things they need. Then, on November 19, 2004, the company that had operated for years says, without any prior notice, ``Effective tomorrow morning, you are all out of work.'' These same people are now working for $6.24 an hour. They are making EI claims for $93.
People gear their lifestyle to their income, and they cannot cope with the stress of a drastically decreased income level. Most of these people have never been behind in payments in their life, and being in that situation now is more stressful than anything. We are even seeing the results in our schools. Kids who used to have a certain lifestyle are now being ostracized. It is not a healthy atmosphere. Stress levels are very high and the tension is causing division within the community. We are going through a very hard time. I fear that if something is not done soon, the results will be devastating.
Mr. Day: In November 2004 we were told officially that the plant would be closed. In October of that same year, I purchased a car. I have payments to make on that car for two and a half years. I would not have purchased it if I had known this would happen. Many people purchased new vehicles costing up to $30,000. Some people even built new homes. No one would have bought a new vehicle or built a new home if they had known this would happen in November and we would be earning $6 an hour by Christmas.
We had no warning of this. Now people are having their lights and phones cut off, as well as their Internet service, which their children really need. It is having a big effect as we speak. The sad thing is that there was no warning.
Senator Merchant: I am very sorry that you are in this situation. Some of our rural people in the West are even taking their own lives. People are in a very critical situation due to BSE and various other problems. I wish you improved circumstances soon.
Senator Watt: I went through your report quickly and find it to be very informative. Your oral presentation was also excellent.
I am from a small community like yours. It is always difficult to be properly heard by politicians when you do not have large numbers. This is of great concern to this committee in making tangible recommendations to the government.
We have had quite good success in the past in having our recommendations to the Department of Fisheries and Oceans acknowledged. I am not saying that we can perform miracles, but at least we are heard and periodically responded to. However, I am thinking that in this case we should be looking to something a little higher than that. When policy is set by the government, that is not necessarily done only by the department. It is set by cabinet.
In my experience, the unwillingness of the government to deal with things often has to do with lack of understanding, a disconnect between the people who have to deal with a particular subject.
I can relate to the problems you are going through as your economy is taken away from you, because the same has happened to the Aboriginal people in this country. For many years, we tried to be heard by the government authorities and for many years we have not been heard. Only recently are we starting to make some progress on the serious issues that must be dealt with. If they are not dealt with, the country will pay for it, economically, socially and culturally.
The predicament of coastal communities today is becoming more and more serious.
Since the Department of Fisheries and Oceans has already decided this is the direction in which to go, the fishing industry will have to be economically viable. In other words, it is shifting to the corporate structure, toward the people who have money. Those who really need it to survive as a community are becoming victims. How do we deal with that situation? If we are to survive, this is a critical issue.
We have heard from other countries that have had similar experiences and have gone through the privatization concept. Their stories are not always nice to hear, because the people who really need the industry become the victims. The others, who have already had success in the economy, get more and more benefit. That is a problem.
How do we deal with it? Your report should be attached to the report that we have already produced. Hopefully, the cabinet will acknowledge it.
Let me give you an example of what went through this week. Aboriginal people, who have had difficulty over the years being heard properly, have finally signed a deal with the Government of Canada saying they would no longer follow policy until the leaders are present with the government to work out strategy. Maybe that kind of concept is needed now if the coastal communities are to survive.
This is something we have to work out amongst ourselves in our report, and to try to elevate it, not only focusing on Fisheries and Oceans but on the higher levels also. Can you comment on that? Does that suggestion have any merit?
Mr. Vardy: I could segue into that. In the points you sent to us and asked us to address, one of the issues was the role of provincial, federal and municipal governments. In this case, the crisis occurred as a result of a corporate decision. The first immediate action and reaction were taken at the local level. This impacted on local people. The local group, with the FFAW, Mr. Day's group, and the town council, came together. They felt there was a need to take action and they agreed to set up an IAS committee. They also agreed at the same time to put together community development projects, to put people to work to find solutions. That is not the role of municipal governments. Their role is with regard to water and sewer services and to provide garbage removal. At the local level, the leadership came forward and had to be dealt with.
The problem at that level is that they have no involvement in the resource management decisions. That is where there is a disconnect that needs to be fixed.
Referring to questions of sustainability and viability, you have to create sustainable economic opportunities in a region. Fortunately, we are dealing here with a renewable resource. It is not a mine; it is a renewable resource that has the potential to regenerate and to provide income into the future. What is missing is the opportunity for local people to manage that resource in a beneficial way. That involves some delegation of authority from the federal and provincial governments to the local level. It also means some decisive action at the provincial and federal levels to deal with issues beyond the ambit of local authorities, such as foreign overfishing in particular.
Until the quota issue is dealt with, unless there is an allocation of fish to a community, we will continue to be stuck with a very difficult situation. Right now we are faced with a situation where people in Ottawa are making decisions with regard to the future of this community without understanding the circumstances in which it finds itself.
I was once in Hyde Park at Speakers' Corner. A speaker was giving a lecture and a heckler said, ``You know the reason you are here? The reason you are here is you are not all there.''
We are here because we are faced with a desperate situation of lack of understanding. We are trying to bridge two solitudes, one the small communities in rural Newfoundland and the other the urban culture in charge of this country today. There is a big disconnect. That is why we felt it was necessary for us to be here today to talk to you. Your role is central, because you are providing the forum for the discussion of vitally important issues. How do we bring these issues to the attention of the federal cabinet and prevent the disaster that Eric Day is talking about from taking place? It comes down to the role of the community and empowering the people, and to strategic planning that must be done and which we have embarked upon.
Senator Watt: I believe Senator Hubley was asking you what you envisage down the road in terms of structures. Your reply was that there is a community base but there is also a regional base. Do you prefer the community base, or a combination of community and regional bases?
Mr. Stewart: We wrestled with that to a certain degree. You would have to know the geography of what we call the Coast of Bays region. We are on a peninsula with a cluster of communities. You can almost say we are one community, but having said that, Harbour Breton is a community. Sometimes we use ``regional'' because all these 13 communities of which Harbour Breton is the service centre are somewhat dependent on Harbour Breton. Depending on whom we are speaking to, we talk about a regional quota, but really we are referring to one and the same.
What we do not want to see is what FPI did. They took what I would call a regional quota, which basically provided a livelihood to 13 communities, and unilaterally moved it to another part of the province, to the devastation of these communities.
Yes, we would need a community quota, which would be based in Harbour Breton. However, it is still, in a sense, a regional quota because it will also sustain 13 other communities on the Connaigre Peninsula. Would it be a regional quota? I hate to use the word ``regional'' because maybe in the federal context a region might be all of Newfoundland or all the south coast of Newfoundland.
That is why we put the word ``community'' in there as well. I would not want someone to decide to give us a regional quota with that region being all of the south coast of Newfoundland. That would not be beneficial to us. That is why I say ``community,'' being that particular community of Harbour Breton.
Mr. Day: The region does have two more plants on the south coast of the Connaigre Peninsula. We are talking about Gaultois and Hermitage. The Burin Peninsula has half a dozen plants. That is a region.
Fisheries Products International has moved it from one region, in Harbour Breton, to the region on the Burin Peninsula, with five or six more plants in that region. That does not make sense to me.
It would be better to say it has to stay in the community. If you say ``region'' rather than ``community,'' then it could end up 50 miles down the road, which would not help Harbour Breton. Moving it across the water does not help Harbour Breton because it would be too far away. The next service centre for us is 223 kilometres away at Grand Falls, with a population of 14,000 to 15,000. In Ontario's forest industry the mills are built close to the timber source. For us, the salt water with the fish is at Harbour Breton.
Senator Watt: You also indicated the urgency for the government to shift its direction. Could you elaborate a little on the amount of time before the community begins to deteriorate? Otherwise, it will cost the government even more.
Mr. Vardy: I would like to respond to that. In terms of timing, an announcement was made a week ago that a decision would be taken by the end of May. It is now June 2 and the signal given to the people was that they should hold on. Each day that goes by signals that this is not a fishery town but rather a mining town; that the mine is used up and so it is time for the people to move out. The timing is critical. Once these people pull up stakes, they will be gone. They will look to build new lives elsewhere and then the whole region will go down the drain. From a national standpoint, is it a good thing for this town and region to close down? This area is exemplary and a paradigm in many respects. Do not look at it through the prism of the last 12 months but rather of the last 12 years. These people work hard and are role models for the rest of Canada. It is not a welfare community or region. The question is whether it is worth preserving, and someone must make that decision, and quickly, because timing is critical. It is a matter of days right now. The context is very different from what it was in the 1990s. At that time, the towns that closed as a result of fish quota reductions had many programs to fall back on. People have used terms such as TAGS, NCARP and other acronyms that mean nothing to people around this table. NCARP was the Northern Cod Adjustment and Recovery Program. Those programs meant money to the towns, which provided an opportunity for communities to adjust. Now, none of that applies to the situation in Harbour Breton. Early retirement is not available at this time.
These plant workers had only a miniscule pension plan, and I will explain the context. If an auto plant is closing down in Schefferville, or Windsor, Ontario, the workers are likely to have a pension plan and opportunities to do something different. That was not the case in Harbour Breton, where they do not have those kinds of opportunities. The difference between a closure in Harbour Breton and a closure in a large Ontario rural community is the difference between night and day. I would ask Mr. Day to speak to that.
Mr. Day: We did have a so-called pension plan that we had to wind up in 2004. We had paid into it for the last 15 years, and the way the fishing industry staggered up and down, the employees could not contribute to it regularly and only the employer contributed at times, so it was worth less. Some people had paid into it for 15 years and when they retired at 64 years of age, they drew about $60 per month from that pension. In other words, someone would have to pay into it for 30 years to draw $130 per month. It was basically worthless and so we had to wind it up. It was a matter of survival. We had to do that to get our hands on a little money to try to survive.
Senator Watt: If I understand correctly, you are not only talking about administrative adjustment, but also about empowering the coastal communities and the people so they would have some say in what happens to the fish because that is their economic base. Is that correct?
Mr. Stewart: Yes.
Senator Cowan: You have made a powerful presentation today and I join senators in congratulating you. I have not been to your community but I have been to many along that coast and I know the effects of plant closures on them. At the time those plants were closed, programs were in place that, as you mentioned, perhaps did not deal adequately with the situation but at least provided support. Those programs are no longer available so it is a unique situation that we deal with today and, therefore, more critical for the communities.
Senator Comeau and Senator Hubley have covered some of my points with respect to how a model of community management would work and the issue of two sides of the coin — consultation and accountability. I will come back to that in a minute. First, I have one specific question about the closing. I believe that one of you said there is a requirement under Newfoundland and Labrador law to provide severance pay. In Nova Scotia we call it a ``plant closure notice,'' which is 12 or 16 weeks. That was not given in this case. Is that right?
Mr. Day: That is right. It was not given. They closed us down on April 3, 2004. That was the normal close-down period. Then we would start again in September through to December and would close down for Christmas and so on.
Senator Cowan: Did you say that was in April 2004?
Mr. Day: Yes.
Senator Cowan: I have a note of November 2004.
Mr. Day: We had our annual shut down April 3, 2004, with the intention of returning in September 2004. September came and we tried to set up meetings but we were ignored. They put us off, saying that they needed more time to do more planning. That shutdown took us into October and the same thing happened. It was in November that we said we had had enough and asked where this was going. They said then that they would not reopen because the plant was closed permanently. We never received notice of the shutdown. They are trying to say now that that period from April 3, 2004 until November 2004 was the period of notice.
Senator Cowan: Is there any action on that front?
Mr. Day: The matter is before a board of appeal but I do not know whether we will be successful.
Mr. Vardy: Back in the early 1990s a number of large plants closed, like in Harbour Breton, and the government of the day decided that they would not only enforce the provisions of the Labour Standards Act, which required a certain number of weeks' notice, but they worked out an arrangement whereby there were twice as many weeks actually worked than were required under law. What that effectively meant was that the plant workers in St. John's, Trepassey, Gaultois and Grand Bank ended up with two 20-week seasons of notice. In other words, they were told two years in advance about the closing of the plant. The plant continued to operate for two additional seasons. There was a loss involved in that because the fish had to be redistributed among other plants, so those other plants had fewer fish to process. Therefore, there was a cost-shared program with 100 per cent funding from the Government of Newfoundland. That was an adjustment program. We have asked that the same thing be done this time and we have been told no, it cannot be done because it is precedent setting.
In any event, what we are dealing with now is in stark contrast to what happened back in the 1990s. We are dealing with a much more hostile, draconian and cold-blooded environment.
Senator Cowan: There was much talk about accountability and some discussion about whether there were in fact written conditions attached these licences, or was it simply an understanding that they would operate three plants in return for the quota. My question is not with respect to this particular licence, but is there a precedent for licences being granted and quotas being given on the basis that certain conditions will be followed? Is that done elsewhere?
Mr. Vardy: In other sectors, certainly in the oil and gas industry, it is quite common. The fishery is an egregious exception that needs to be corrected. It is a public policy failure in Canada. It really needs to be corrected because it is a public resource. Now there are other jurisdictions like New Zealand, for example, where they have ITQs and the fishing industry is actually privatized. In that environment, they would own the quotas. They could do with them the same as with their trawlers. They are totally free to do whatever they want. That is not the situation in Canada. I believe the situation in Canada is one that demands there be some obligations put in place because this is a public resource, and right now there is a total lack of accountability.
The Chairman: Our understanding was that in the Chatham Islands in New Zealand, the government recognized that some communities did have historical and heavy dependence on the fishery, therefore special provisions were made for certain areas. As well, the U.S. and the U.K. are specifically looking at this as we speak because they foresee that certain communities cannot be left high and dry, and so they are working it into their programs. They are making sure that some quotas are attached to communities because they recognize the value of that. We will be having a closer look at some of the jurisdictions, from a distance, of course.
Senator Adams: In Nunavut, where I come from, the situation is similar to yours. I represent 26 communities in Nunavut and only one community is on the mainland. The rest, the other 25, are along the coastline. In the last two or three years we have been trying to see how the economies of our communities, including the economy of the fishery, can grow for Nunavut's future. Before the land claims were settled in Nunavut, some places had been set up under DFO, about 15 years ago, and finally there was an agreement signed in 1993. In the year 2000, in an agreement between the community and some of the organizations of the Nunavut Wildlife Management Board, some quotas were set up in some of the communities.
Although the situation is similar, my question concerns the fact that right now, Nunavut has a system that began before the settling of land claims, when we had an organization for the hunters and trappers in the communities. People still do a little trapping there, with polar bears, for example, and between the fishery and hunting, there is a quota and the people in the communities have control of the quotas. The same thing applies to different types of whales. We have to have quotas because certain mammals, according to the government, are on the verge of becoming extinct. In the meantime, we hunt in order to get food for the communities. People who do not have employment are allowed to have quotas in order to provide food for their tables.
In the beginning, some ministers allowed quotas to go to foreigners, much like the quotas down in Newfoundland, in order to make sure there was a benefit to the local economy by setting up fish plants to provide work for people in our communities. Now our concern is how people who have quotas will manage them for the future. How will we do that? We do not want to see a benefit from the quotas going to people who are not living in the communities. How do we change that? How do we enable the people in the community to control the quotas, have them go to local fishermen and enable them to make a profit out of this system? How do we arrange that? The government makes the policy, and in some ways it does not work. The person who owns the quota but does not live in one of the communities passes it on to a family member, including through inheritance. How do we change that? How can we arrange to give them back to the people in the community who are fishermen?
Mr. Stewart: I will comment briefly. We know that government quotas are passed out based on certain criteria and put before DFO based on certain conditions. I think it is very important that DFO have an internal review committee that will sit down at least on a yearly basis to review some of these licences, because we all know there are people retired in Florida who are leaving the quotas to relatives in their wills as part of their estate. If such a system was in place and if they are way beyond the original intent, or if they have deviated from that a great deal, then these quotas should be taken back. They are the people's resources and they should be given to someone who uses the quota in the way it was intended. That is my opinion.
Mr. Vardy: I will add a supplementary comment from a different perspective, and it relates to the fact that we have been talking this morning about offshore quotas that have been vested in corporations. A lot of our fishery is vested in inshore fishermen — fish harvesters, to use the more politically correct term — and those people can pass their quotas along from one generation to the other. There is also the ability for one fish harvester to sell quota to another, and that has the potential to remove the quota from the region — and that is getting to the point. Therefore the question becomes: How do you do that?
How do you deal with that? We have not really talked about this because we have been focused mostly on the offshore as opposed to the inshore, but there are ways to put some kind of public policy framework in place. For example, if individual fishermen in a region like the Connaigre Peninsula wanted to transfer their quota to another part of the province or to another province, there should be a review mechanism in place that would provide for public input from people in the region as to whether this would be beneficial. Your committee should look at recommending some kind of mechanism to review the transfer of quotas, because it can be quite detrimental.
On the other hand, it is possible that quotas might be transferred into this particular region, but they would be from somewhere else, and there should be some kind of review process. I am speaking in the context of an inshore, rights- oriented fishery. Many questions need to be addressed with respect to this issue, and I do not believe we have come equipped to deal with them this morning.
Mr. Stewart: My comments were based more on the offshore than the inshore.
Senator Adams: In Nunavut, we do not have any set quotas on fishing inshore. No research on inshore fishing in Nunavut had been done in many years. The DFO never studied how much fishing there is within the 12-mile limit. Now we have a 200-mile limit, and we have OA and OB. For turbot, we had close to 8,000 metric tonnes in the two areas in Nunavut, and about 3,000 metric tonnes for cold water shrimp.
In the last 10 years, the foreigners have come in and taken the quotas and sold them. Between other companies and the Nunavut quotas, $60 million to $80 million of fish a year is not coming into the community. With the system and the DFO policy, it is very difficult for us to even settle a land claim. We do not have any quotas, other than the 12-mile limit, where we can do what we want. We had to set up the quotas. We fish up to the 12-mile limit between Greenland and Baffin Strait, because it belongs to Canada. The ministry has set Nunavut quotas every year. I thought it would be good for the community, for Nunavut, to set Nunavut quotas, but somebody else had taken them. It is really difficult for us. We must somehow change the policy of Fisheries and Oceans Canada.
The Chairman: The impression I got from reading the newspapers was that the excuse given for the closure of the Harbour Breton plant was overwhelming competition from China and a currency exchange difficulty.
Where does that take us? I understand that the board of directors of FPI had its meeting in Toronto, of all places. I guess they could not meet in Newfoundland. The optics could not be any worse. If they are saying they had to close the plant because of Chinese competition, does that mean they will now have to move the catch to a country with low wages and low labour standards in order to compete?
Mr. Day: They are doing that as we speak. There are a lot of fish already being shipped into China unprocessed.
The Chairman: From Canadian waters?
Mr. Day: Yes, from Newfoundland. It is going on all the time. They are counted as undersized fish. They told us when they started off that it was 300,000, and then it went to 350,000. Now it is up to 400,000.
The Chairman: This is Canadian fish?
Mr. Day: Yes, fishery products. I should say Harbour Breton fish.
The Chairman: Let us say it belongs to Canadians. Harbour Breton fish are being shipped to some cheap-labour countries because FPI needs to be competitive on a world market.
Let me play the devil's advocate for a moment. Can we process the fish in Harbour Breton and other such plants and still make it viable, without having to transport the fish to cheap-labour countries?
Mr. Day: There are plants owned by other than Fishery Products International still in business, still shipping their fish. It is all about profit. It is greed on the part of the shareholders. There is not enough profit for the shareholders. We have more fisheries in business than Fishery Products International.
The Chairman: We are trying to get a handle on this as parliamentarians, because we try to keep an eye on what the machinery of government is currently doing and determine whether there are alternatives. Are we now in a position where we must ship or transport our raw resources outside the country? New Zealand has often been used as a shining example of how fisheries should be run. I have read some newspaper clippings from New Zealand recently revealing that the crews on the fishing vessels are actually paid very low wages and very few labour standards exist. People are almost abusing other people from poor countries to fish off New Zealand.
Is this the direction that we seem to be going as Canadians? We always seem to get on our high horse and say how bad the Americans are in everything they do, but the Americans are actually taking care of communities that are beholden to their local resources. Should we not be doing a little reflection here as Canadians when we allow this to happen?
Mr. Vardy: Under the North American Free Trade Agreement, there was a grandfathering provision. In Newfoundland, we have processing requirements. The Government of Newfoundland can impose requirements. They can say, ``You cannot export this raw material without processing it.'' Those examples that Mr. Day referred to were where the federal government allowed undersized fish to be exported. There is a public policy authority that is able to prevent that from happening.
The bigger issue is that it is like any other industry. We in Canada, as in the entire industrialized world, must compete with low-wage economies like China. The only way we can do that is by being smarter, through innovations and ideas and creativity. We will produce a better mousetrap, and we will be able to sell it as long as it is different. That is what it comes down to.
If we are dealing with basic commodities, a simple commodity like a fish stick, we cannot hope to compete. Our hope to compete in the future must be related to our ability to develop innovative products, secondary processing and those kinds of things.
We are talking about raw products. We just cannot; it is very difficult.
We have to look at reinventing our entire fishing industry in Canada so it becomes much more upscale. That involves putting money into the plants and into the people. That is exactly where we are not going right now, because we are not putting money into training people in the fishing industry. We have to totally transform the fishing industry.
If we intend to be internationally competitive in the fishing industry, or the textile industry or whatever, we have to put some investment into it as a country. That is what the rest of the world is doing. However, if we plan to compete with low-wage economies by playing their game and importing low-wage people to work in our plants, I do not think that is where we want to be.
Mr. Stewart: We know in Canada that we cannot compete with 45 cents an hour, which they say is the going rate in China. Part of this probably was created by the fact we have given out too much of our Canadian fish to foreign countries that have been coming in and taking advantage and are now opening up there. It is so easy for companies like FPI to look to foreign countries to do their processing because there are very few restrictions.
As we speak, there are still quite a number of people in Harbour Breton who go out on boats owned by FPI. As of about two months ago, all of these people were notified that they must now have a passport to work on their boats. You do not have to be an Einstein to figure out why. That is telling me that their intent is for these boats to start landing in foreign countries.
We will see, over the next little while, these trawlers fishing off our shores and not even landing in Canada. They will go directly to the country involved.
The Chairman: I am glad you brought that up. That is interesting.
Mr. Stewart: In fact, my next door neighbour came to see me before I came here, as I had to sign his passport application. He is a trawler man.
The Chairman: It has been an interesting and eye-opening experience for us today and very helpful. I have just a few points before I close. When you were having a dialogue with Senator Watt and talking about the urban culture, I could not resist thinking that we have heard about the cities' agenda for the past couple of years; maybe it is about time we had a rural agenda — gas tax to cities and fish to rural areas. How is that?
Mr. Stewart: Hear, hear.
The Chairman: We will see what happens there.
I should note in passing that the committee recommended two weeks ago that the DFO needs to take into account the social and economic impact of its major decisions on coastal communities. I bring that up as well. It is on our website, along with some other goodies — there are what we think are some extremely valuable suggestions on it.
For members of the committee, I will wrap this up and advise that next Thursday, June 9, at 10:45 a.m., we will have a meeting with the British Columbia Seafood Alliance in this room. It should prove to be a very interesting meeting.
Thank you, gentlemen, and thank you members for your patience this morning. It was a long meeting.
The committee adjourned.