BACKGROUND

1. The Management of the Marine Commercial Capture Fisheries
    

At its core, fisheries management renewal is about asking ourselves one question:  what kind of fishery do we want?  It is only seven words but it is a big question. – The Hon. Geoff Regan, Minister of Fisheries and Oceans, Committee Proceedings, 8 February 2005

 

The problem is that the Department has no accountability. … There is no legislative power to actually put DFO in its place. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

We are being pulled in two directions:  to try to make the fisheries economically sustainable and have viable enterprises, and to maintain coastal communities. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

On one side, there is a great deal of pressure to privatize the resource and allow the large processors to have access to it, while we are telling them “you are on the wrong track.”  That is essentially what this debate is about. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

Privatization of fisheries is stealing from Canadians.  There is no question about that. – Garth Mirau, Vice-President, United Fishermen and Allied Workers’ Union, Committee Proceedings, 7 December 2004

 

Under the Constitution Act 1867, the Government of Canada is vested with exclusive legislative jurisdiction over sea coast and inland fisheries in all parts of Canada.  On behalf of the Crown, the federal government has legal authority to manage fisheries in the public interest, and the Parliament of Canada entrusts the federal Department of Fisheries and Oceans to administer all laws relating to fisheries.([1])  Most controls on fishing are in the form of regulations made by Cabinet.  Section 7 of the Fisheries Act bestows on the Minister of Fisheries and Oceans (hereafter referred to as “the Minister”) very broad discretionary powers to distribute wealth in the form of fishing licences and fish quotas.([2])  In fact, when issuing or authorizing leases and licences for fisheries or fishing, the Minister has absolute discretion in providing access to wealth from the fisheries, the reason for this extraordinary discretion being that fisheries are a “common property resource.”

Stability in the fishery is maintained through DFO’s imposition of regulatory measures.  In this regard, the Department manages more than 300 fish stocks and produces about 180 fisheries management plans each year.  All fisheries are subject to varying degrees of catch monitoring and enforcement.  Ideally, their management should be tailor-made for each unique circumstance because the fishery resource is a complex biological, economic and social system.  Species of fish vary widely with respect to their behaviour, abundance, distribution and market value.  The length of fishing seasons varies not only by species, but also by area and from year to year.  Coastal fishers hold different types of licences, work from boats of different sizes, use different types of gear, belong to different organizations, and invest different amounts of time and money.  The complexion of the operation changes notably from one area to the next, and the social circumstances vary enormously.  Fish processing, too, is as diverse as the harvesting sector.

Beginning with Atlantic lobster fisheries in 1967, what were formerly “open access” commercial fisheries became regulated to the point where, by the mid-1970s, a fishing licence was required to fish commercially for all the major species in Canada.  A fishing licence grants persons or enterprises permission to fish, or “access” to a fishery.  What a licensee essentially acquires is a limited privilege to fish, but not a permanent or absolute right.  An “allocation,” on the other hand, is the amount of fish that is distributed or assigned by the Minister to those who are permitted to fish.

Since 1977, when Canada extended its fisheries zone to 200 miles, a variety of strategies have been employed to help maintain a balance between fishing capacity and available resources:  so-called “input controls” (e.g., restrictions on fishing gear, vessels, fishing season and area), and “output controls,” with Total Allowable Catches (TACs) being the most common measure.  For some species, escapement targets are set instead to allow adult fish to return to the spawning grounds (e.g., Pacific salmon), or recruitment strategies are in place to increase the survival rate of the female population (e.g., prohibitions on harvesting berried lobster).([3])  “Individual quotas” (or “private quotas” as they are sometimes called) are also in place and give individual fish harvesters or fishing operations the right to catch a specified quantity and species of fish in a specific location during a specific period of time, as a share of each year’s TAC.  When managed by IQs, fishing organizations representing the licence-holders have separate and specific agreements with the federal government reflecting the characteristics of each of the fisheries being managed.

In the past, when overcapacity problems have arisen, restructuring and adjustment programs were brought in, such as licence buy-back and early retirement programs, short-term income support, retraining, and economic diversification to assist affected fisheries workers and communities with their transition out of the industry.  When making decisions on access and allocation, the Minister’s first priority is conservation, followed by the Aboriginal right to fish for food, social and ceremonial purposes.  Once the constitutional protection of Aboriginal and treaty rights is taken into account,([4]) the next priority is resource sharing in particular fisheries.  Recreational fishing interests must also be taken into account.  Besides conservation, factors that may influence ministerial decisions include international policies, any legislative obligations that the Government of Canada may have assumed, and political and socio-economic considerations.  Traditionally, the criteria invoked by DFO when making decisions on access and allocations included adjacency, historic dependence, economic viability, and social equity.  Under this hierarchical system of governance, the Department is responsible and accountable for the fishery’s management.

Significantly, a key part of DFO’s strategic plan in the last decade has been to decrease its involvement in fisheries management in favour of greater industry involvement in the form of “co-management” in many of Canada’s fisheries.  In the last decade, more formal approaches were gradually adopted through such activities as the development of multi-year Integrated Fisheries Management Plans and Joint Project Agreements.  Initiatives related to the “professionalization” of fish harvesters were also supported by the Department.  In practical terms, this has meant accrediting existing fishers, formalizing an apprenticeship regime for new entrants, and education and training standards, with the Canadian Council of Professional Fish Harvesters taking the lead.([5)

 

2. Individual Quota Licensing

From our perspective, ITQs have been a cheaper process for the Government of Canada to manage … but they are not for everyone. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

At the highest levels in the Department, the quest to privatize Canada’s fisheries and turn them over to private investors has never stopped. – Nuu-chah-nulth First Nations, Brief Submitted to the Committee, 10 March 2005

 

Not everything should be bought and sold on Bay Street.  Fishing rights should be viewed as a heritage of coastal people not as another commodity like futures in pork bellies or something. – Earle McCurdy, President, Canadian Council of Professional Fish Harvesters; President, Fish, Food and Allied Workers, Committee Proceedings, 24 February 2005

 

The economistic thinking of DFO is very well established and its effects are very much negative effects on rural communities, on coastal communities. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

Privatization of fisheries resources through ITQs and EAs [Enterprise Allocations] has often been the unwritten cornerstone of fisheries policy for the last twenty years. – The Coastal Communities Network, Brief to the Atlantic Fisheries Policy Review (AFPR) Consultation, 16 May 2001

 

Beginning in the 1980s, a noticeable policy shift took place as DFO accepted a new, market-related, “property-based” fisheries management approach recommended by theoretical economists.([6])  Canadian fisheries managers (and their counterparts abroad, notably in New Zealand and Iceland) began to implement “property rights-based management” in the form of “individual quota” fisheries.  Very much a bureaucratic initiative within the Department, the process of privatization took place under several fisheries ministers and involved successive governments in the last two decades.  This important matter of public policy was last examined by this Committee in 1998.

In essence, IQs provide what has been described in the Canadian context as a “quasi-property right” to harvest annually a certain quantity of fish – a sort of swimming inventory.  When IQ licences are issued by DFO, predetermined shares of the Total Allowable Catch (percentages) are assigned to either fishers or enterprises.  An “individual transferable quota” is an IQ that the Department allows to be transferred, traded, sold or leased to others, like a commodity.  When assigned to a boat, individual catch quotas are known as an “individual vessel quotas,” or IVQs.  Over time, in Canada, individual catch quotas have been slowly introduced into one fishery after another.  Their usual pattern of introduction involved successive steps:  non-transferable quotas were first introduced, and over time these became transferable.  As such, non-transferable quotas have been described as the start of a “slippery slope” on the way to transferability. By 2000, they were in place in over 40 different fisheries and accounted for over half of the value of landings.([7])  Canada’s commercial fishery may now be described as a mix of competitive and IQ-managed fisheries.([8])

Instead of relying on regulations to ensure compliance, IQs emphasize the outputs of fishing.  Advocates of IQs, especially ITQs, view them as a means of rationalizing the industry and allowing it to operate in a more stable, orderly, and efficient manner.  Under such a management regime, the incentive is the maximization of net income from a specific quantity of fish, the annual share allocated to each fisher or fishing enterprise.  Quota licensing is a well-articulated model of fisheries management.  Some of its most often cited economic advantages are:

• security of access to the resource;
• the elimination of the costly and often dangerous derby-style “race to the fish”;([9])
• greater safety in fish harvesting because of increased flexibility in choosing the rate and timing of fishing;
• longer work seasons and more effective coordination of supply with market demand;
• the potential for more effective long-term planning in terms of capital investments (e.g., boats, fishing gear) and market development programs; and
• the reduced need for government regulation.([10])

Quota licensing means that measures to control fishing effort (e.g., restrictions on boat size) are no longer essential because each operator has a specific and guaranteed allocation of fish.  Those in favour of extending IQs contend that this is not only the ideal way to manage and conserve fish stocks, but also the most effective means to reduce harvesting capacity (i.e., the number of fishers) at the least cost to government and taxpayers.  Because of its theoretical appeal, IQ licensing is enthusiastically embraced by classical economists, neo-conservative theorists, and certain newspaper columnists and editorial writers who view it as a means of deregulation.  The Vancouver-based Fraser Institute, the Halifax-based Atlantic Institute for Market Studies, and other “think-tanks” have trumpeted property rights-based fisheries in the form of individual catch quota licences, especially ITQs, as the management device of choice.  Private quotas are strongly promoted by the corporate sector of the fishing industry, and have long had committed supporters at the highest levels of DFO’s bureaucracy.([11])

It is noteworthy that the notion of “property” in fisheries is very much a chameleon term.  While the owners of IQs usually perceive them as “private property,” they constitute, at best, indirect property, or “quasi-property” as DFO has sometimes put it.  This is because a fishing permit, whether it be an IQ licence or a traditional one, is a “privilege” that can be revoked.  While licences are bought and sold, often for substantial sums, they are not a grant of property, either in the fishery or in the fish.  Fish become private property only after they are caught and removed from the water, and the fishery resource belongs to all Canadians.

Lastly, over the years, DFO officials have consistently maintained that if a fleet sector or fishing group voluntarily chooses to adopt an IQ system, the Department would be there to advance the process.  That said, witnesses in the Committee’s 1998 hearings accused the Department of manipulating the process toward IQs by dividing fisher groups and sectors and giving IQ licence-holders preferential access to the resource, thereby gradually forcing non-holders out of the industry.  There were concerns that DFO had been abdicating its role as the manager of the fishery, abandoning the infrastructure of traditional common property fisheries, and working instead to broker partnership deals with special economic interests or specialist fleets.([12])  No consideration is being given to alternative models of fisheries management that would protect community interests.

 

3. Pacific Fisheries Renewal

That is a fishery that is under crisis.  If we do not change how it is managed for the 2005 fishery, it will likely suffer collective bankruptcy.  It is in that serious financial trouble. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

Overall, most salmon stocks in Pacific Region waters appear to be healthy, although some have declined in recent years and will not support full fisheries in 2005. – DFO, “Outlook for 2005 Salmon Fishing Season,” News Release, 16 March 2005

 

All their programs have titles like “renewal” or “revitalized” but under their management our communities are dying and all small-scale fishermen are facing extinction. – Chief Simon Lucas, Co-chair, Nuu-chah-nulth Tribal Council Fishermen’s Committee, Letter to the Chair of the Senate Committee on Fisheries and Oceans, 25 March 2005

 

They do not talk about ITQs in their road show.  They call it “Pacific Fisheries Renewal.”  If ever there were a misnomer, I believe that is it. – Garth Mirau, Vice-President, United Fishermen and Allied Workers’ Union, Committee Proceedings, 7 December 2004

 

[DFO] is aggressively advancing ITQs as a solution to the many problems facing the commercial fisheries in British Columbia. – Nuu-chah-nulth Tribal Council, Brief Submitted to the Committee, 10 March 2005

 

In 2003, the federal government and the Government of British Columbia appointed Don McRae, a University of Ottawa law professor, and Dr. Peter H. Pearse, a high-profile resource economist and advocate of individual catch quotas, as a two-member Joint Task Group on Post-Treaty Fisheries to examine the question of what the West Coast fishery might look like after treaties have been settled.  On 5 May 2004, the Task Group released Treaties and Transition:  Towards a Sustainable Fishery on Canada’s Pacific Coast (Appendix 1).([13])  Because certainty and security for quota holders are created by long term quotas and transferability of quotas, Pearse and McRae recommended that:

• 33% of fishing licences be bought from retiring commercial fishermen and set aside to satisfy treaty fisheries settlements;
• all fisheries (not just salmon) be made into quota fisheries;
• quotas be transferable, issued to persons, corporations, or associations;
• quotas be long-term (25 years);
• the number of quota licences (IQs) be limited; and
• the fishery be managed by annual conditions of licence.([14])

Soon after the Joint Task Group’s report was made public and before finalizing any decisions, DFO announced its intention to “engage First Nations and fishing stakeholders to review the report and to inform decisions about implementation.”  The Department stated that it would also take into account advice from a First Nations Panel on Fisheries, appointed by the First Nations Summit and the B.C. Aboriginal Fisheries Commission, that had been asked to articulate a vision for the future and identify the principles that would achieve the vision.  In June 2004, that Panel released Our Place at the Table, which, among other things, called on the Government of Canada to immediately “allocate to First Nations as an interim measure, a minimum of 50% share of all fisheries, with an understanding that this may reach 100% in some fisheries.”  In addition, the Panel asked that a moratorium be placed on the further introduction of individual property rights regimes, such as IQs and ITQs, unless First Nation interests, including allocations in those fisheries, are first addressed (Appendix 2).

In response to the Joint Task Group and First Nations Panel reports, the Minister outlined a blueprint “to fundamentally change the Pacific fishery, particularly the salmon fisheries” on 14 April 2005 (Appendix 3).  While there remained “disagreement over some key reforms,” the Minister felt that “lack of consensus [was] not an excuse for lack of action.”  Over the course of 2005, considered a transitional year, demonstration projects are to be conducted “to test different options, to determine which reforms might work, and which might not.”([15])  Permanent changes are expected in 2006.

 

4. The Atlantic Fisheries Policy Review and Framework

 

The new framework was the result of years of consultations with stakeholders throughout Atlantic Canada. – The Hon. Geoff Regan, Minister of Fisheries and Oceans, Speaking Notes, Stabilization of East Coast Management Plan Sharing Arrangements, 10 March 2005

 

If I am going to say anything to you today, I will say this; I want you to stop this.  I would very much appreciate it, speaking on behalf of a lot of people that I have worked with over the years, if you could do anything in your power to stop the implementation of the AFPR … – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

CCN calls for a review of privatization, the recommendations of the December 1998 Senate Report titled Privatization and Quota Licensing in Canada’s Fisheries, before any new policy framework is completed. – The Coastal Communities Network, Brief to DFO’s Atlantic Fisheries Policy Review, Press Release, 16 May 2001

 

The [AFPR] discussion paper does not address the question of privatization, the most dominant fisheries management policy over the last twenty years. – Bay of Fundy Inshore Fishermen’s Association, Comments on the AFPR Discussion Paper, Access and Allocations, March 2001

 

We are puzzled and suspicious as to why this [AFPR discussion] document so clearly avoids any discussion on privatization, the very opposite of what was recommended by the Senate Committee. – Mark Butler, Marine Coordinator, Ecology Action Centre, Brief to the AFPR, 15 March 2001

In May 1999, DFO launched the Atlantic Fisheries Policy Review – the first such major review in two decades – to address criticisms from the Auditor General, parliamentary committees and others.  The purpose of the AFPR was to create a more cohesive and consistent policy framework, and a broad vision of the future direction of Atlantic fisheries.

DFO considers the many consultations that have taken place in the last six years to be key in furthering its agenda.  In June 1999, public meetings were held with the Atlantic provinces, Nunavut and industry stakeholders to inform them of the review and to solicit their early views on the process.  This led to the establishment of an External Advisory Board in January 2000 to act as an advisory body to DFO during the AFPR process.  Following the February 2001 release of a discussion document,([16]) public consultations took place in 19 communities in the Atlantic provinces, Quebec and Nunavut in 2001.  In June 2001, an Independent Panel on Access Criteria (IPAC) was established to review and make recommendations on decision-making criteria and processes for providing new or additional access to increasing Atlantic commercial fisheries.  The IPAC released its report in April 2002, and the Minister responded to it in November 2002.  A discussion paper, Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries, was issued in December 2003.([17])

On 25 March 2004, the Minister released A Policy Framework for the Management of Fisheries on Canada’s Atlantic Coast.([18])  Billed by DFO as the culmination of “the most extensive citizen engagement process ever undertaken by DFO,” the Policy Framework is a blueprint for achieving the following four objectives or outcomes:  conservation and sustainable use of fisheries resources; self-reliant fisheries; a stable and predictable access and allocation approach; and shared stewardship with resource users.  The overall objective “is to modernize Government policies to match changing conditions in the fisheries,” and a number of principles are listed to guide fisheries management in the long term.  These include the following elements:

• more transparent and rules-based decision-making processes;
• an independent and viable fleet of inshore fishers;
• longer-term, more stable resource-sharing arrangements;
• multi-year fisheries management plans focused on conservation and risk management; and
• policies to promote the viability and self-reliance of the industry.([19])

DFO proposes to fundamentally transform its role in fisheries management, “from one largely taken up with day-to-day management of fleets and fishing activities to one concerned primarily with developing policy, setting strategic direction and evaluating performance.”  This is said to imply an evolution in the Department’s role, that is to say a move away from top-down management toward shared stewardship.  In achieving this end, certain management responsibilities are to be delegated to resource users.  Also announced in March 2005 was the Minister’s decision to “stabilize” resource-sharing arrangements, where stable, for a period of up to five years.([20])  According to DFO, this was a crucial first step in creating a more stable approach to access and allocation, and giving stakeholders a greater say in decision-making.  Past disputes over access to fisheries and fish allocations were considered to be too much of a drain on energy, resources and time.  In his March 2005 announcement, the Minister also reserved the option of “setting aside small amounts of the resource for public purposes, such as fleet rationalization (reduction) and to support co-management arrangements.”

The AFPR is being completed in two phases.  The first phase produced a long-term policy framework.  The second phase will establish priorities and implement elements of the new policy framework.

 

5. Modernizing the Fisheries Act
    

Obviously, we are talking about working towards proposed legislation.  Clearly, nothing prevents you from debating these issues in advance of that proposed legislation. – The Hon. Geoff Regan, Minister of Fisheries and Oceans, Committee Proceedings, 8 February 2005

 

… We are using right now a 19th century instrument in the 21st century … It is the Fisheries Act that has restricted our ability to find different ways to construct our relationship with fishermen. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

I read that DFO feels that 136 years of the Fisheries Act [is] out of date and must be modernized.  It is not the fisheries policies that must be modernized; rather, DFO must be modernized. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

In addition, the agenda for 2005 includes the adoption of the new vision and principles.  Other building blocks for the future will be assessed such as what amendments to the Fisheries Act are required to move forward on this agenda. – DFO, “Regan Announces Plan of Action to Reform Pacific Fisheries,” News Release, 14 April 2005

 

The work your Committee did in 1998 and the report that resulted from those consultations is even more relevant today than it was in 1998. – Garth Mirau, Vice-President, United Fishermen and Allied Workers’ Union, Letter to the Chair of the Senate Committee on Fisheries and Oceans, 20 December 2004

In future, DFO intends to “stay the course in the reform of fisheries management policies,” “increase Aboriginal participation in the fisheries,” and “modernize Canada’s fisheries.”([21])  In February 2005, the Minister indicated to the Committee that the Department had been looking at possible changes to the Fisheries Act to formalize sharing arrangements and give effect “once and for all” to the new management frameworks being finalized.  The new Policy Framework for Atlantic fisheries frequently mentions the need to possibly amend the Fisheries Act, and so does the Department’s April 2005 Plan of Action for the Pacific fishery concerning permanent reforms anticipated in 2006.

“Modernization” is a word often employed by DFO in connection with the Fisheries Act.  If all goes according to plan, the Department will in future continue to be responsible and accountable for setting conservation standards and ensuring compliance, but stakeholders will assume a greater shared sense of responsibility and be willing participants in conservation.  Under the current legislative regime, DFO is responsible and accountable for all fisheries management decisions (e.g., assessing stocks, establishing the TACs, developing and implementing fishing plans, and evaluating results), a situation of command-and-control regulation which the Department considers to be inconsistent with self-management of regulated groups.  Over time, DFO wishes to remove itself from having to make decisions concerning access and fish allocations.  The reason given is to ensure that lobbying and political considerations no longer play a role in decision-making because, Committee members were told, this results in “a fishery that does not have the optimum performance or the best conservation outcomes.”([22])  In the Minister’s view, shifting decision-making to independent bodies closer to industry and fishers might result in “a more sensible and rational approach to the management of the modern fishery.”([23])

The previous attempt to amend the Fisheries Act was in the mid-to-late 1990s, when new powers were proposed to allow the Minister to enter into long-term, legally binding “partnering” or “partnership agreements” with unspecified industry groups in order to formalize their role in decision-making for the management of their particular fishery and to provide greater security of tenure for licence holders.  Legislation was introduced, but later died on the Order Paper when Parliament was dissolved in 1997.  In September 1998, the Minister appointed an independent three-member Panel on Partnering which was to advise on an appropriate legislative framework for such agreements, but which, however, recommended in December 1998 that the Minister not go forward with legislation because of widespread opposition to the concept.([24])

At the time, there was much confusion amongst industry participants about DFO’s notion of “partnering” or “partnerships” in fisheries, and whether such arrangements differed from “co-management.”  Equally unclear was whether amendments to the Fisheries Act were needed to institute such agreements, and whether currents arrangements between the federal government and certain fisher groups (e.g., those engaged in Aboriginal pilot sales in British Columbia) were even legal.  As well, DFO’s motives and agenda were frequently questioned; independent owner/operators in competitive fisheries perceived the proposed new agreements as part of a deliberate and continuing plan by DFO to increase the corporate sector’s influence over, control of, and access to the fisheries.  Critics maintained that, although not stated explicitly, the real objective of the proposed legislative changes was to extend private fish quotas and the process of “privatization,” and to supplant and extinguish the centuries-old (common law) “public right to fish” that exists in Canada’s tidal waters,([25]) where “exclusive fishing rights” can be created only by the explicit sanction of Parliament (by statute).([26])

 

WHAT WE HEARD:  MAJOR RECURRING ISSUES AND THEMES

 

A.    DFO’s Budget

We definitely have a serious [budget] problem in DFO … If we could provide a different set of legal instruments, we probably would have a lot less of our fiscal and financial headaches. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

Crustaceans bring back the whole inshore. … Is this a happy story?  No.  What does DFO want to do?  It now wants to move in on these people and reorganize them.  Why?  Because … no money for monitoring, no money for anything – and the allegation that people want it. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

We have never heard anyone outside of government call for reductions in DFO budgets – in fact the opposite is true. – United Fishermen and Allied Workers’ Union, Brief Submitted to the Committee, November 2004

 

Once again, the federal government’s cost-cutting measures in fishery management will penalize the regions.  There will be a mass exodus from most of the communities towards the larger urban centres, since, in Gaspé, after tourism, the fishery is the only economic engine. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

Since the Atlantic cod collapse, … the Canadian public has raised its expectations for successful management, while at the same time, persistent budgetary constraints are making it increasingly difficult for DFO to maintain even the catch monitoring standards of yesteryear. – The Hon. Bryan Williams, Chair, 2004 Southern Salmon Fishery Post-Season Review, March 2005

 

It became obvious early on in our hearings that years of budgetary restraints had had a pervasive effect on DFO.  Witnesses doubted the Department had sufficient financial resources and staff, let alone the capability, to fulfill its core mandate of “developing and implementing policies and programs in support of Canada’s scientific, ecological, social and economic interests in oceans and fresh waters.”  We heard that, because of declining budgets, DFO staff did not have the resources to properly perform their jobs.  For example, one witness noted that, in many cases, staff in the Pacific Region did not even have “gas to put in their boats … to go out to do the work.”  It was said that, because the Department is stretched so thin, it has no vision beyond “getting through this meeting or getting through the end of the day without the stockade falling down.”([27])

In 1995, the federal budget made a commitment to privatize many of DFO’s responsibilities and services by entering “into partnerships with the fishing industry and others in the management of capacity, licensing and compliance.”([28])  Also announced was the Department’s divestiture of recreational harbours to municipalities or other interested parties, and the rationalization of commercial fishing harbours.  The Department has been subjected to large reductions in operational budgets ever since, and more are expected.

As a result of Program Review, DFO began to redefine core services, with departmental programs becoming more “client-focused” and “demand-driven.”  In December 1998, the Savoie Panel on Partnering commented:  “It is not simply a coincidence that discussions around co-management and partnering took on a sense of urgency at the time the government of Canada launched its program review exercise.”([29])  More recently, in our meetings, the Committee learned that DFO completed a Departmental Assessment and Alignment Project (DAAP) in order to better align available resources with priorities, and identify possible options for improving the efficiency and effectiveness of programs and services.  This exercise was said to have resulted in a reduction of personnel through attrition, including a significant reduction of staff in Ottawa.([30])

Another message that emerged loud and clear is that DFO lacks the scientific information it needs to carry out its mandate effectively.([31])  Science is key to stability, predictability and the development of sustainable fisheries, and witnesses spoke about cutbacks in DFO-funded science taking place at a time when public expectations and demands for sound scientific information on complex marine issues are growing.  On doing more with less, the Minister informed the Committee that the Department had been undergoing a review process, and that science could be strengthened by developing new strategies for funding and partnering with industry stakeholders, supported by fundamental reforms in how fisheries are governed.  Witnesses mentioned that the Department had already been shifting the cost and responsibilities for scientific activity onto the industry, which raised questions about the transparency of fisheries management and science, that is to say, having corporations pay for science and research while at the same time acting as co-managers of the resource.  In the Atlantic region, spokespersons for the inshore fishery feared that corporate funding of scientific research could possibly lead to the demise of the owner/operator policy (designed to keep corporations out of the coastal, small vessel inshore sector).

Evidence on DFO’s budgetary problems was not limited to science; enforcement issues were brought up as well.  Departmental officials were very much aware of the problem and considered enforcement to be “a real concern.”  While there are more fisheries officers today than there were five years ago, we learned that their number is being reduced through attrition because of insufficient operating funds.  We also heard that DFO wishes to move toward what was described as a modernized, more efficient compliance regime of administrative sanctions, a system that would be less costly than having the Department rely on criminal law to enforce fisheries regulations.  The Committee notes that the recent post-season review on the management of Fraser River salmon stocks in 2004 clearly pointed to inadequate enforcement as a very significant factor with respect to the 1.3 million sockeye that went missing in 2004.([32])

Faced with severe budget restrictions, the notion of “co-management” in self-regulating IQ and ITQ fisheries is one that undoubtedly appeals to DFO.  Not only does this approach allow the Department to shift (or “download”) management responsibilities to industry, it also affords the possibility of cost-recovery.  DFO charges the industry for issuing fishing licences, permits and other privileges – the guiding principle being that those who benefit from access to the resource should pay a fee that reflects the value of the privilege.  The following statements encapsulate much of the testimony about DFO’s budget crunch:

If we had a more collaborative relationship with fishermen, if we had a situation where we had the opportunity to enter into agreements with them and share stewardship of the resource, that … would help us stretch the dollars considerably… – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

Resource monitoring is currently the responsibility of what is called the “protection” branch of the Department of Fisheries and Oceans.  They have also experienced budget cuts.  [DFO’s] other mandate is to reduce spending.  There has been downsizing in the protection branch.  That is one of the reasons why the fishers are finding new ways to become involved in protecting the resource through various projects.  There must be some way to take over the minister’s responsibilities since his budget is constantly being cut by the government. The private sector will not be able to do that.  It is up to the communities to become disciplined, to manage and control their behavior.  This is not something that we see in the privatization model which relies on turning a quick profit. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

I believe that most of the problems in DFO are the result of budget cuts, including the need for cost recovery, which is all-pervasive at DFO.  Quotas are the natural way for cost recovery; I believe they are absolutely linked. – Garth Mirau, Vice-President, United Fishermen and Allied Workers’ Union, Committee Proceedings, 7 December 2004

 

It has been a popular sport in Canada for a number of years for people to talk about and advocate shrinking and reducing the size of government.  It has become like a mantra.  Initially, there was no doubt there was fat to be trimmed, but eventually, the rubber hits the road and there are always consequences in terms of real services. … To a fair extent, the level of interest in the department over the years in partnership or co-management had a lot to do with the matter I referred to earlier, that is, stripping down the department’s resources to do things.  Usually when you look for a partner in business, you are looking for someone to bring dollars to the table.  That was certainly part of the equation.  There is genuine cooperation that can take place between the department and the people who use the resource in a way that would improve the lives of both and improve on the level of management.  Historically, it was what we sometimes refer to as a father-knows-best approach – that is, the people in Ottawa really knew what was best and said “run along” to the fishermen, when they had their own views. – Earle McCurdy, President, Canadian Council of Professional Fish Harvesters; President, Fish, Food and Allied Workers, President of the Canadian Council of Professional Fish Harvesters, Committee Proceedings, 24 February 2005

 

 

2. “Rationalizing” Fisheries

The message from DFO at the time of Mifflin was too many boats chasing too few fish.  This was not true in 1996 and it is even less true today. – United Fishermen and Allied Workers’ Union, Brief Submitted to the Committee, November 2004

 

In the past, the problem was “too many fishermen chasing too few fish.”  Today, with market values for quota and licences at unprecedented levels, the problem could become “too much money chasing too few fish.” – Ecotrust Canada and Ecotrust, Catch-22:  Conservation, Communities and the Privatization of B.C. Fisheries, November 2004

 

Continually, DFO scriptwriters frame their arguments around good “economics” for fishermen and “conservation” when facilitating the forced removal of small-scale fishermen. – Nuu-chah-nulth First Nations, Brief Submitted to the Committee, 10 March 2005

 

The issue of rationalization is on the agenda. … There are a number of solutions on this table about how to proceed with community approaches to viability.  It is real for us. – Sandy Siegel, Executive-Secretary, Maritime Fishermen’s Union, Committee Proceedings, 24 February 2005

 

Sure, there are people who want a reorganization — the fat cats that were created on the way up.  The fat cats, in my estimation, are the people who got the licences, stacked them up under DFO policy, and are now in a position that they want to keep other fishers out. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

On both coasts, the last opportunity fishers had to leave the industry with government assistance was the Canadian Fisheries Adjustment and Restructuring program of 1998.  In future, the federal government does not plan to offer any new licence retirement programs (“buyouts”).  As far as DFO is concerned, past licence retirement programs were ineffective in reducing excess fishing capacity; the licence holders removed from the fishery were those with relatively little capacity.  DFO’s current approach to fisheries is working towards promoting an industry that is self-reliant, sustainable and economically viable, without special government assistance.([33])  Between 1990 and 2000, the number of fishers on both coasts declined from 81,473 to 56,427; over the same period, the number of fishing vessels was reduced from 35,135 to 23,819.([34])

            With respect to the Pacific fisheries, the Minister indicated in February 2005 that, although most fisheries were performing very well, the salmon sector was experiencing a continuing decline in both numbers of returning fish and value.([35])  The Pearse-McRae Joint Task Group similarly concluded that most fisheries were performing well, but that the salmon fishery was in a precarious state.  New management strategies were therefore required to provide an environment in which the industry could develop to its potential.  Pearse and McRae detected “a pervasive sense of apprehension and anxiety out on the fishing grounds.”  They felt the time was right for bold action, that is to say, the introduction of property rights to reinvigorate not only the salmon fishery, but all fisheries in the province, and recommended a limited number of long-term (25-year) ITQs.

The Minister also informed the Committee in February 2005 that Atlantic cod remained at historic low levels, and there were signs of decline in key fisheries.  With regard to possible future licence buy-backs or other large-scale interventions in the fishery, the Policy Framework for Atlantic fisheries clearly states that those measures are completed.  Given that “a number of fleets are still too large given the available resource,” these fleets will “need to be able to develop mechanisms to adapt their overall harvesting capacity to maintain sustainable resource levels over the long term.”  What is suggested is that fleets can now “propose voluntary self-adjustment mechanisms, such as ITQs, allowing enterprises to combine/partner by pooling their quota share (or licences or gear), or the issuance of licences and quotas through a fleet planning board.”

The Minister also indicated that ITQs might be appropriate for some species and sectors, but not for others; the DFO therefore had to consider them “on a case-by-case basis.”([36])  Given the socio-economic diversity of Canada’s fisheries, officials told us that:  the Department was looking at ways to enable groups of fishers to make their own choices; they did not necessarily “want a cookie-cutter approach, a one-size-fits-all approach”; and it was “not for the Government of Canada to dictate to a group of people, whether it is a First Nations group or commercial fishermen, how they should proceed.”([37])

In this regard, DFO policy on the Atlantic Coast requires support by a clear majority (two-thirds) of licence holders before a fishery is allowed to switch over to IQ management;([38]) but no such official policy exists for the Pacific fishery.  In that region, the Committee heard evidence that:  senior DFO staff who had designed IQ programs were now working for and lobbying on behalf of the beneficiaries; DFO had employed consultants who had in the past produced the reports or studies the Department needed to justify particular policies; and, since the 1990s, DFO had largely abandoned its policy of taking into account the socio-economic consequences of its decisions.  On these and other matters, the United Fishermen and Allied Workers’ Union called for a judicial inquiry into commercial licensing and management policies in the region, with power to compel testimony under oath.  Anything less would result in “the same old thing” – “lots of stories but very few facts.”([39])

According to economic theory, the most important justification of individual catch quotas is the increase in economic efficiency they afford to individual fishing operations.  Barring market imperfections, profit orientation and cost-consciousness result in the most efficient way of harvesting fish.  Under an IQ system, capital investment to purchase more equipment in order to increase fishing power is largely unnecessary, since vessel owners have a guaranteed share of the catch and may fish throughout the entire season in the most economical way.  When quotas are made transferable (as in the case of ITQs), they become very powerful management devices for reducing fishing effort and capacity in a given fleet.([40])  Operators who believe their quota is too small to make a profit may buy or lease quotas from others, or sell their shares and leave the fishery rather than continue fishing.  Those who find it uneconomic and leave, and those who retire, receive a financial return for their investment, at no cost to government (or the taxpayer), in terms of government licence retirement or buy-back programs.  The inevitable outcome of rationalization is the consolidation of fleets (i.e., fewer fishers and fishing boats) at no cost to government.  Some witnesses raised the spectre of large corporations eventually controlling much of the fishery through this process (unless government intervenes).

Proponents of IQs suggest that people fish more responsibly when they “own” the resource; when a renewable resource belongs to all, there is no incentive to preserve it.  The belief is that the “common property” nature of fishery resources is the major impediment to proper management, and the assignment of property rights in the form of IQs, especially ITQs, is the only solution.  That assumption was, however, challenged by Dr. Parzival Copes, who explained to the Committee that, because marine fish stocks and their ecosystems are by their very nature indivisible common property,([41]) ITQs may have many negative impacts on fishing productivity and fisheries conservation (Exhibit 1).  Although ITQs offer a significant short-term advantage in fishing capacity rationalization, from an economic standpoint they “are vulnerable to collective harvesting inefficiencies that may constrain overall industry productivity.”([42])  Many things can go wrong with ITQs.  Indeed, witnesses noted that in order for ITQs to function effectively, they require high‑quality, scientific stock assessments and a complete and accurate census of landings (i.e., monitoring and recording of catches at ports).

 

Exhibit 1

 

Negative Impacts of ITQs on Fishing Productivity and Conservation of Fish Stocks

Sources of the Impacts (see Appendix 5):

1. Management Requirements
    

• Relatively inflexible TACs
• Near-irreversible system commitments
• Bycatch dumping or bycatch enlargement
• Single-species incompatibility with ecosystem management

 

2. System-Induced Behaviour

• Quota busting
• High-grading
• Price dumping
• Ratcheting of quotas
• Discount-driven stock depletion
• Data fouling

Source:   Parzival Copes, Brief Submitted to the Standing Senate Committee on Fisheries and Oceans, 17 February 2005.

 

A particularly damaging feature of quota licences is the powerful incentive they offer to fishers to discard low-value and undersized fish (which count against the individual quota) for higher-valued fish, especially if individual quotas are too small to be economically viable for individual operators.  The practice is known as “highgrading” and is especially likely where fishers have gone into debt to buy expensive quotas from other fishers in the expectation of a reasonable return on their investment.  In the Atlantic fisheries, highgrading – a kind of strip-mining of the ocean – became entrenched and tacitly accepted as the way of doing business.  The Committee was first made aware of this destructive and wasteful practice in the Atlantic groundfish fisheries during the mid-1980s.([43])  Although the highgrading of fish also takes place in competitive fisheries, the “personalized benefit” of discarding is considered to be less because the incentive is for fishers to land as much as they can catch.

Others serious shortcomings of individual catch quotas stem from the fact that there is no argument in their favour in terms of improving “social equity.”  A purely economic analysis of IQs does not take into account their effects on the distribution of incomes.  In this regard, fairly apportioning initial individual allocations within a fleet can be very problematic because, in Canada and elsewhere, they are usually based on fishers’ “catch histories” – the amount of fish caught in previous years.  The aim is to reward those who have been active and demonstrated an attachment to the fishery.  However, historical catch records may be unjust, flawed or inaccurate for a number of reasons.([44])

Initial allocations of quota bestow considerable wealth to the select few first‑generation quota-holders since the allocations are “gifted” out freely at the outset, which amounts to a giveaway or “windfall.”  ITQ systems transform fishing licences into tradeable ownership of specific quantities of fish (quotas).  Predictably, quota recipients are usually staunch supporters of their fishing “rights,” once in place.  For subsequent generations of aspiring small-scale fishers who could have previously expected to save enough to buy a boat and become an owner-operator, the high prices for quota become a financial barrier to entering the fishery.  New entrants who do buy quota go into debt, which must then be paid for from the harvest.  Some may be able to lease quota from “armchair fishermen” or “slipper skippers,” individuals who profit from the fishery without working themselves.  In theory, ITQs are supposed to reduce overall fishing costs and overcapacity in a fishing fleet; in practice, the total amount of financial capital invested in a fleet increases because of rising prices for quotas.

The passing out of ITQs invariably provides a mechanism whereby those who are able to afford it, such as corporations and wealthy investors, can buy up ever‑larger shares of a fishery.  Quota holders may sell to others who then move their base of operations to other locations (e.g., concentrate their operations in larger centres).  Such geographic redistributions displace fishery workers, creating havoc in communities whose economy had relied on commercial fishing and fishery-related spin-offs.  Quota windfalls may also cause divisions within communities between quota “haves” and “have-nots.”([45])  With fewer private individuals able to afford access to the fishery, “privatization” becomes in effect “corporatization.”  While restrictions may be placed on the maximum amount of quota holdings to prevent “undue accumulation,” who really controls a given quota is an entirely different matter.([46])

Other policy issues arise.  For instance, should the considerable wealth often created by quota licences be somehow limited?  Should it be shared in some way with other fishers?  Should it be returned to the federal government as “resource rent” in exchange for the granting of the exclusive harvesting privilege?

 

3. Trends in the Atlantic Inshore Sector
    

They told us they wanted a more open and transparent system, and a greater role in the decisions being made about their industry. – The Hon. Geoff Regan, Minister of Fisheries and Oceans, Speaking Notes, Stabilization of East Coast Management Plan Sharing Arrangements, 10 March 2005

 

The inshore had been parceled out in the previous policy, yet it rises again from the ashes.  Why?  Because no longer are the finfish eating the little baby lobsters and the crabs and the shrimp … – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

We are appearing before you and we hope that you will understand the importance of these issues for our regions, not only for the Gaspé, but for all of the communities that border on the Gulf of the St. Lawrence.  That represents five provinces.  That is all we have left.  Please save a little for us. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

We just finished a sector study …, an analysis of the fishing industry as up to date as you will get in Canada.  One of the main points it puts forward is that our inshore coastal communities are in desperate trouble. – Sandy Siegel, Executive-Secretary, Maritime Fishermen’s Union, Committee Proceedings, 24 February 2005

 

As might be anticipated, an economic policy focussed exclusively on market solutions, resulted in substantial costs from damage to the conservation and social dimensions of Canadian fisheries.  Consider the results in the Atlantic fisheries. – Parzival Copes, Some Critical Considerations for Policy and Management in Canada’s Atlantic Fisheries, 31 May 2001

 

After 1977, when Canada extended fisheries jurisdiction to 200 nautical miles (from the previous 12 miles), a boom was anticipated.  Banks provided loans to fishers and processors to expand their operations.  Government subsidies were handed out for the purchase of new vessels, the expansion of existing fish plants and the building of new ones.  The planned gradual displacement of the foreign industrial fishing fleet was seen to provide a particularly good opportunity to expand Canada’s own offshore (trawler) fleet for groundfish, then the major species that was fished on the Atlantic Coast.([47])  Prior to the imposition of moratoria on fishing, three vertically integrated offshore companies were allocated more than half of the available groundfish; the remainder was reserved for the inshore sector, which was also given almost exclusive access to lobster, crab, and scallops – species much less valuable then than they are today.  In order to promote “economic efficiency” and allow “more orderly” harvesting, the system of IQs called “Enterprise Allocations” for offshore groundfish had been put in place in the early 1980s.([48])

In less than a decade of extensive use of EAs, Canada’s Atlantic groundfish stocks experienced a massive and multiple collapse, one of worst environmental disasters of the modern era – referred to at the time as a disaster of biblical proportions.  No one knows for sure the reason(s) why they collapsed; there has never been an official inquiry into the matter.([49])  When moratoria on fishing were first announced, people believed them to be temporary – 5 to 10 years – after which time they thought they would go back to fishing as they had for the previous 500 years.  For some 1,300 communities in the Atlantic region,([50]) the social and economic impacts of the resource calamity were disastrous:  over 40,000 people lost their jobs in what was the country’s largest single layoff.  Between 1992 and 2001, the federal government spent $3.9 billion in adjustment and development assistance, including licence retirement programs to reduce the number of fishers in the industry.  Approximately 3,700 Atlantic groundfish licences were purchased under three separate programs.([51])

Thousands of Atlantic Canadians in hundreds of communities still feel the impact.  In Newfoundland and Labrador, the population has decreased by 8% (about 46,000 people) since 1992-1993, with many young people from rural areas having to leave home to seek work elsewhere in Canada.([52])  Unlike most of the country, the majority of the population in the Atlantic region is rural, and approximately 25% of Atlantic Canadians live in small fishing communities.  In Newfoundland and Labrador, the percentage is even higher (54%).([53])

The March 2004 Policy Framework states that its intent is to provide “the foundation for more self-reliant Atlantic fisheries that are able to contribute to the well-being of coastal communities and to survive downturns without government assistance and with only a normal business failure rate.” Those were the objectives the Task Force on Atlantic Fisheries had identified as priorities over two decades ago, in 1982, and that have influenced policy in the region ever since.  The Framework also envisions the creation of “circumstances for resource users to be more self-reliant, economically viable and self-sustaining on a long-term basis.”  In creating such conditions, in future, DFO “will clarify what its role should be in supporting viable coastal communities” and “provide resource users with a greater role in shaping social and economic objectives.”  With regard to the well-being of coastal communities, this is said to be “a collective responsibility which cannot rest exclusively on the actions” of the Department.  Whereas in the past “many people in coastal communities looked to fisheries to solve wider social and economic problems,” the Framework affirms that “it is generally accepted that there are simply not enough resources to fill ever-increasing needs for jobs, incomes and new allocations of fish.”

In the course of our meetings, DFO indicated that it did not have a clear policy with respect to fisheries employment, nor was it seeking to develop such a policy.  The Department also stated that Fishermen’s Employment Insurance had resulted in more participation in the fishery than would otherwise be the case,([54]) a statement that a later witness vigorously challenged:

The economistic thinking in DFO is out of date.  For a long time, those of us who live in Atlantic Canada have been insulted by the idea put forward repeatedly by DFO that we have a social welfare fishery.  I was shocked the other day to hear [one official] say to this Committee that UIC is still a major issue in the fishery.  Does he know what is going on?  Lobster fishermen make $50,000 in a few weeks.  Crab fishermen can make $100,000 in ten days.  They are not worried about their UIC.  That is not what the issues are all about.  You cannot go through the old social issues any more.  That argument is dead.  We have a new fishery in Atlantic Canada. ‑ Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

Contrary to popular belief, the 1990s were a period of growth in the economic value of Atlantic fisheries.  The ecological irony of the collapse is that groundfish, such as cod, are natural predators of shellfish, such as crab and lobster, so that commercial fishing for shellfish expanded rapidly to become the dominant fisheries in the region.  New records were set in terms of the total landed value of catches, and production patterns in processing changed accordingly.  In 2003, four major Atlantic shellfish species (lobster, snow crab, shrimp and sea scallop) accounted for over 83% of the total value of total catches.  Inshore, small vessel fleets, which represent 98% of the harvesting employment, landed approximately 75% of the total Atlantic harvest (worth approximately $1.8 billion in 2003, or almost 84% of the Canadian total of $2.2 billion).

That said, the testimony painted an uncertain future for Atlantic Canadians in fishery-dependent coastal areas.  For example, preliminary results of a recent study conducted by the Canadian Council of Professional Fish Harvesters show that, even if fish stocks remain stable or even improve, the economic and demographic trends in the Atlantic region seriously threaten the survival of community-based fisheries in the region.  As well, the study indicates that:  DFO budget cuts and downloading are altering fleet viability thresholds and creating mistrust of the Department; prices of fishing licences have dramatically increased; the labour force is rapidly aging; recruitment of new entrants to the industry is slow; and shortages of skilled and committed workers will increasingly become a constraint for fishing enterprises.  The loss of young people from rural areas is another major worry.([55])

 

4. Trust Agreements in the Atlantic Fishery
    

Stabilizing access and allocation is a crucial first step.  I would argue that this is what industry wants done first. – The Hon. Geoff Regan, Minister of Fisheries and Oceans, Committee Proceedings, 8 February 2005

 

There is total undermining of public policy and we have been tilting at this windmill for five years now.  It is starting to get on our nerves. … We need changes and we need them now. – Earle McCurdy, President, Canadian Council of Professional Fish Harvesters;  President, Fish, Food and Allied Workers, Committee Proceedings, 24 February 2005

 

You must understand that fishing is a way of life for us.  It has a cultural dimension. … We are extremely attached to our regions.  If the government does not ensure that these two principles are maintained … we will witness an unraveling of our regions’ social fabric. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

This is a serious problem, how we are going to get the next generation into the fishery. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

The time frame for solutions is now, and the window of opportunity is closing. ‑ Sandy Siegel, Executive-Secretary, Maritime Fishermen’s Union, Committee Proceedings, 24 February 2005

In 1979, the federal government put in place a policy framework that contained two elements.  The first element, the “fleet separation policy,” prevented the issuance of new fishing licences to corporations, including processing companies, for vessels of less than 65 feet.([56])  This “protective wall” between the offshore and inshore sectors was erected in response to concerns in Atlantic Canada about corporate concentration of fishing licences and to foster greater competition amongst fish buyers for inshore fishery products.  The second element, the “owner-operator policy,” established that inshore licences could be fished only by their owners, personally, to ensure that the economic benefits derived from fishing stayed in the hands of those who fished (i.e., captains, crew members).

Not surprisingly, the growth in the value of the inshore’s catch (worth about $1.4 billion, with lobster and snow crab representing three-quarters of that total)([57]) did not go unnoticed by fish processors, successful inshore coastal fishers, and investors from outside the fishery.  The Committee heard that inshore licences have become increasingly subject to what are referred to as “trust agreements” – private contracts that bind the parties that sign them and often direct the use of the licence (“the beneficial interest”) by corporations or other third parties in contravention of the owner-operator and fleet separation policies.  As such, these “legal subterfuges” or “under-the-table” arrangements allow the control of licences and quotas by the back door and undermine public policy.  They siphon income out of the pockets of working fishers, while non-fishers profit from fishing activity but bear no risk of injury from fishing.  Because trust agreements are private contracts, the Committee was informed by DFO that the Department does not monitor or register them.

Access to capital was said to be what drives trust agreements:  because fishing licences are, in legal terms, temporary and non-transferable, financial institutions will not lend money on their value.([58])  In response to widespread concerns, DFO released in December 2003 a discussion paper entitled Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries to form the basis of a separate AFPR public consultation, which involved seven public meetings in January 2004.([59])  Spokespersons of harvester organizations strongly opposed trust agreements and wanted to do away with them.  They drew our attention to the fact that:  DFO’s 2001 discussion paper was silent on such agreements; the December 2003 discussion document recognized that they clearly violate public policy, but it included a list of questions asking how to allow for more “flexibility”; and the new Policy Framework now states that the Department is intent on preventing their use.([60])  The Committee heard there was near-unanimous support amongst fish harvesters for strengthening the owner-operator and fleet separation policies.  The Minister, for his part, also voiced his strong support for such measures to the Committee, but he added that views on the matter were mixed.  The Department has yet to announce how it intends to follow through on its commitment.

The issue has been a major concern of the Canadian Council of Professional Fish Harvesters and its member organizations since its Second General Assembly held in January 2000.  Council members believe its resolution will be a turning point for inshore fisheries and the coastal communities they support:  the result will either be a strengthening of the inshore, or the beginning of the end.  The following statement sums up much of the underlying theme:

What is happening is that the Department is signaling there is a problem here, but they are not doing anything about [it].  Trust agreements are being written as fast as possible because they know what is coming.  Larger and larger parts of the resource are being centralized and concentrated.  Even as we move to some kind of action from the Department of Fisheries and Oceans, which is not happening yet, the ground is disappearing under our feet. – Sandy Siegel, Maritime Fishermen’s Union, Committee Proceedings, 24 February 2005

While regulations could be amended to specifically state that the “legal interest” of the holder of a fishing licence and the related “beneficial interest” of the licence are inseparable, this would not help solve the financial problems faced by new entrants, especially young people interested in a fishing career.  The issue was said to have urgency:  a great intergenerational transfer is expected to take place over the next 10 years as the majority of licence holders retire (the average age of enterprise heads is 48).  In many if not most fisheries, licences are worth in the hundreds of thousands of dollars; in some cases, millions.  Trust agreements are believed to have become more prevalent in the lobster sector because of the dramatic increases in prices.  In Zone 34, for example, licences reportedly sell for as much as $850,000, up from about $300,000 in 1999.([61])

 

5. Urbanization of the Fishery Resource in British Columbia
    

The Pearse and McRae response was to create ITQs … You would have fewer vessels, therefore, you would have more fishing opportunities. – David Bevan, DFO, Assistant Deputy Minister, Fisheries and Aquaculture Management, Committee Proceedings, 4 November 2004

 

DFO’s solutions created as many economic, social and ecological problems as they solved. – Ecotrust and Ecotrust Canada, Catch-22:  Conservation, Communities and the Privatization of B.C. Fisheries, November 2004

 

“Catch-22” … is a brilliant report that responds in kind and in detail to the positions advanced by Professor Pearse. – Dr. Daniel MacInnes, Department of Sociology, St. Francis Xavier University, Committee Proceedings, 10 February 2005

 

The resource privatization model that the Canadian government is seeking to implement comes from New Zealand where a number of communities have suffered from this privatization.  In fact, we have the same model in western Canada, and the people there can tell you how this has affected their communities. – O’Neil Cloutier, Director, Alliance des pêcheurs professionnels du Québec, Committee Proceedings, 24 February 2005

 

DFO is moving forward with its agenda to privatize fisheries with little thought to the impact this will have on those who rely on fishing and related industries for a living. – Garth Mirau, Vice-President, United Fishermen and Allied Workers’ Union, Letter to the Committee, 15 March 2005

 

In the Pacific fishery, where 16% of Canada’s fisheries production originates ($368 million) and where many communities are substantially involved in fishing,([62]) there are no owner-operator or fleet separation policies protecting the status of independent small boat fishers and their communities. 

With regard to the wild salmon fishery, a number of factors contribute to threaten its viability, including habitat losses and ocean conditions, depressed prices due to increased farmed production, and stock depletions due to overharvesting.  In 1986, the Auditor General of Canada found that catching capability had increased dramatically through the upgrading of vessels and technological improvements, even though the number of fishing boats had declined to 4,400 from 6,600 over the previous 15-year period.([63])  A decade later, in 1996, the federal Pacific Salmon Revitalization Strategy, known as the Mifflin Plan, brought in various major licensing policy reforms to restructure and rationalize the sector.([64])  By 1997, some 6,500 jobs had been lost; by 2000, the fleet had been cut by 54%.  Witnesses stressed that, instead of increasing the economic viability of coastal communities, the Mifflin Plan had the opposite effect – whether intended or not – of further marginalizing them.

The Committee heard testimony that years of federal policies had shifted fishing licences out of rural and Aboriginal coastal communities, the result being that few now see economic benefits from the fishery resources adjacent to their shores.  Witnesses spoke about frustration, despair and the depopulation of communities.  On the West Coast of Vancouver Island, where once there had been a number of community fishers involved in commercial fishing, this is no longer the case.  Committee members learned that whereas there had been well over 200 licensed vessels operated by Nuu-chah-nulth in the 1950s, there are now 16 vessels remaining in communities where unemployment rates vary from 70% to 90%.([65])

Table 1 

B.C. Rural Communities With the Largest Loss of Commercial Fishing Licences, 1994-2002