Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue No. 45 - Evidence - May 9, 2019
OTTAWA, Thursday, May 9, 2019
The Standing Senate Committee on Fisheries and Oceans, to which was referred Bill C-68, An Act to amend the Fisheries Act and other Acts in consequence, met this day at 8:04 a.m. to give consideration to the bill.
Senator Fabian Manning (Chair) in the chair.
[English]
The Chair: Good morning. My name is Fabian Manning. I’m a senator from Newfoundland and Labrador. I am pleased to chair this committee. Before I give the floor to our witnesses, I would like to invite the senators of the committee to introduce themselves.
Senator McInnis: Thomas McInnis, Nova Scotia.
Senator Wells: David Wells, Newfoundland and Labrador.
[Translation]
Senator Poirier: Rose-May Poirier from New Brunswick.
[English]
Senator Christmas: Dan Christmas, Nova Scotia.
Senator Francis: Brian Francis, P.E.I.
Senator Busson: Bev Busson, British Columbia.
Senator Gold: Marc Gold, Quebec.
The Chair: Thank you.
This morning the committee is continuing its study of Bill C-68, An Act to amend the Fisheries Act and other Acts in consequence. We are pleased with our panel this morning. I would ask the panel to introduce themselves.
Melanie Sonnenberg, President, Canadian Independent Fish Harvesters’ Federation: Good morning. I live on Grand Manan Island in the Bay of Fundy. It’s a small fishing community in New Brunswick.
Ian MacPherson, Executive Director, P.E.I. Fishermen’s Association Ltd, Canadian Independent Fish Harvesters’ Federation: Good morning. I’m here to assist Melanie this morning.
Paul Lansbergen, President, Fisheries Council of Canada: Hello. My organization is based in Ottawa.
The Chair: I want to thank you all for joining us this morning. Please go ahead with your opening remarks, Ms. Sonnenberg.
Ms. Sonnenberg: Thank you for the opportunity to speak with you today on behalf of the Canadian Independent Fish Harvesters’ Federation. Our member organizations represent more than 14,000 independent owner-operator enterprises that harvest most of Canada’s lobster, crab, wild salmon, shrimp and groundfish. Together, we produce over $3 billion in landed value, generating over $5 million in exports. With 30,000 crew workers, independent owner-operator fleets comprise the largest private sector source of employment in many coastal regions.
A list of our federation member organization is appended to the document we circulated earlier.
The Chair: Excuse me, Ms. Sonnenberg. The translators need you to slow down a little bit. It happens to me, too.
Ms. Sonnenberg: I knew that was going to happen. I’m always anxious to get to the questions.
Fishing has always been hard work in a challenging environment, and harvesters have not always earned good incomes. But over many years, harvester organizations have worked diligently to conserve and protect our fish stocks, to improve safety practices and put in place a co-management system that gives harvesters a strong voice in decision-making and a stake in the overall success of our industry.
In the Atlantic region, control over rights to harvest adjacent fish stocks remains largely in the hands of independent community-based small businesses. As a direct result, the decade-long surge in global demand for our seafood products has brought solid middle-class incomes and a new sense of optimism to our communities. We still face challenges to manage our fisheries sustainably and to renew an aging labour force, but we do so with a knowledge that our industry now has a bright future.
In British Columbia, DFO licensing policies allow a high proportion of fishing access rights to be owned by retired fish harvesters, fish processing companies and outside investors. This unregulated, open market has driven up prices for fishing licences and quotas, making them unaffordable for active fishermen. Just to stay in business, many enterprise owners now pay up to 80 per cent of their gross fishing income revenues to lease licences and quota.
The federation was founded in 2012 to press for policies that protect independent harvesters in coastal communities in all the fishing regions of Canada. For Atlantic Canada, the focus has been on defending and strengthening three policies that have been essential to the sustainability of independent owner-operator enterprises.
Number one, the fleet separation policy, in place since 1979, prohibits fish processors and other non-harvester interests from owning or controlling fishing licences in inshore and midshore fleets.
Number two, the owner-operator policy in 1989 requires licence-holders in these fleets to be onboard the vessels that fish their licences.
Number three, the preserving of the independence of the inshore fleet in Canada’s Atlantic fisheries, a policy often referred to as PIIFCAF, was put into effect in 2007 specifically to eliminate violations of the owner-operator and fleet separation policies.
All three have been under constant attack. The corporate sector has pushed aggressively for policy changes to allow greater vertical integration, and companies and other investors have used controlling agreements to take effective ownership of licences and quotas. Companies have also pursued court challenges to the minister’s authority to enforce owner-operator and fleet separation.
To further entrench these policies and resolve any legal ambiguity, the federation has urged successive federal DFO ministers to embed them in Canada’s Fisheries Act and its regulations.
We therefore strongly support Bill C-68 and are grateful to Minister LeBlanc and Minister Wilkinson for the responsiveness to industry concerns and aspirations. Bill C-68 has many elements that our members support, but we will focus on proposed section 2.5 of the bill, giving the minister clear authority to give consideration to social, economic and cultural factors, and the preservation or promotion of the independence of licence holders in commercial inshore fisheries in fisheries management decision-making. We strongly welcome this language and also subsection 43(1) of the act affirming the minister’s authority to make regulations respecting the proper management and control of the sea coast and inland fisheries, including for social, economic or cultural purposes.
Once Bill C-68 is passed, these provisions will clearly establish in law the minister’s authority to enforce the owner-operator and fleet separation policies and to develop parallel protections for pacific region fleets so that coastal and Indigenous communities in British Columbia can reap the benefits from ocean resources that we increasingly see in Atlantic Canada.
With regard to the latter issue, we know this committee has heard arguments from the corporate sector that the licencing system in B.C. is too entrenched and complex to be changed, that the omelette cannot be unscrambled. We do not accept that view. There are fair and practical steps to be taken to rebuild owner-operator fleets. Consider, for example, the following testimony given to the House of Commons committee by Jonathan Hunter, a successful B.C. fish harvester: We need to move back to more of an owner operator or as our Alaska counterpart says, boots on the deck method of fishing.
How do we institute this change in methodology? I suggest a few things. Firstly, stop any new armchair fishermen from acquiring new quota. Secondly, if a fisher has not actively participated in their prospective fishery after three years, and this number could be debated, they will start to lose a percentage of that quota each year and it will be given back to the total allowable catch for the active fisher to share. Alaska can enforce boots on the deck and there is no reason Canada can’t do the same. This is just one of several workable approaches that fish harvesters have identified.
We were pleased to see this view reflected in the House of Commons Standing Committee on Fisheries and Oceans report West Coast Fisheries: Sharing Risks and Benefits tabled earlier this week. We are confident that the minister and industry stakeholders will work together to come up with fair and workable strategies to rebuild owner-operator fleets and reverse the very negative socioeconomic trends we are now seeing in B.C. fisheries.
We urge the Senate committee to convey a strong and clear message to the Minister of DFO that immediate steps should be taken, in full collaboration with industry stakeholders, to implement the recommendations in the report made by the Standing Committee on Fisheries and Oceans regarding this report. These recommendations will provide owner-operator and fleet separation protections appropriate to pacific region fishing fleets.
Lastly, time is of the essence. The current Parliament is rapidly running short of time to complete its legislative agenda and Bill C-68 could die on the Order Paper. After our many years now of struggle to get the owner-operator and fleet separation policies into legislation and regulations this, for us, would be a huge setback and a blow to the sustainability of our independent community-based industry. Thank you again for the opportunity to appear today.
The Chair: Thank you, Ms. Sonnenberg.
Mr. Lansbergen: Thank you for the invitation to testify today. I apologize for not being there. As I said at the outset I’m based in Ottawa, but this week I’m in Brussels for a global seafood expo.
Bill C-68 represents a significant modification to the Fisheries Act and will have long-standing implications for the sector and for the health of our oceans and fish resources. Before I get into my specific comments, I would like to spend a few minutes to provide some context on the council, the sector and the policy reality in which we currently operate. The Fisheries Council of Canada, as you may recall from when I testified before the committee in February on Bill C-55, is the national voice for Canada’s commercial fisheries. Our member companies are processors and they are small, medium and larger sized companies, with Indigenous enterprises that harvest fish in Canada’s three coasts.
It is also worth emphasizing that most of our industry operates in rural and remote coastal communities and fisheries are the beating economic heart of those communities. Fisheries legislation and regulation must set a clear policy signal that supports conservation but also investments in those communities that have economies centred on fisheries. Doing so will set the conditions that allow remote communities to flourish.
Before I get into my other remarks, I would like to point out that Canada is a global leader in sustainable fisheries management. We have two thirds of our wild seafood production certified by the Marine Stewardship Council. This contrasts sharply with only 14 per cent of the world’s fisheries being certified. We support 80,000 direct jobs, mainly in coastal and rural communities, and it accounts for $7 billion in exports to over 130 countries. The larger export markets are the U.S., China, Europe and Japan. The council is looking towards advantages created by recent free trade agreements, such as CETA, and maintaining our strong relationships with our customers around the world, which is critical to our success.
Growing global demand for protein, including fish and seafood, points to more growth in Asian markets and elsewhere. In addition to the trade opportunities, we have opportunities to realize more value from what we harvest today. A 2017 study has indicated that the sector is annually missing out on $600 million of additional revenue. And these growth opportunities are important context for my remarks today. The most significant policy issue facing the sector is a concern of stability access to the fishing resource. Taking away long‑standing licences and quotas does not respect past investments, has eroded the sector’s confidence to invest and could undermine conservation efforts. This is not an issue for just one part of the sector. There are two reasons for this. The concern is widespread and the supply chain is highly interdependent. For example, fish harvesters rely on their local processor to purchase their catch in order to bring their products to market.
With growth opportunities, as I mentioned a moment ago, we need to accelerate investment to extract more value from what we harvest and process. Much of this will only be realized by investments in new technology and practices. This and other growth opportunities will not be achieved in the absence of a clear and stable policy framework. Unfortunately, this is currently lacking in Canadian fisheries. This concern also creates a lens through which we view Bill C-68 and the pending regulations that the new authority is provided by the bill. And given the enabling nature of the bill, the council reserves judgment on the bill pending development of some 15 regulations that are authorized by the bill. Those will take up three years or more to be completed.
I would like to highlight three key messages. Our submission goes into more details and provides commentary on the regulatory provisions. I hope you have received that submission.
FCC would like a better reference to the “use of fisheries” as part of the purpose of the act in proposed section 2.1. As part of the consultations in 2017 we submitted the following:
“Sustainable use” has been the primary applied principle of the Fisheries Act since its inception, and this primacy must be maintained/strengthened in any revised Act; care must be taken that the introduction/drafting of any additional principles/purposes etc not diminish this primacy.
It is not clear that this has been achieved in Bill C-68. The first element of the proposed purpose in subsection 2.1(a), “the proper management and control of fisheries,” is quite broad and case law is clear that the minister can make decisions based on a wide range of considerations. The use of fisheries is missing in the current wording of the bill.
FCC submits for consideration an amendment to the purpose clause that would make explicit the sustainable use of fisheries as a primary purpose of the act as follows:
Replace section 2.1 in clause 3 with:
Purpose of Act
2.1 The purpose of this Act is to:
(a) ensure the sustainable use of fisheries; and
(b) provide a framework for
(i) the proper management and control of fisheries; and
(ii) the conservation and protection of fish habitat, including by preventing pollution.
This is in our submission. We have essentially inserted a new part (a) and moved the rest down.
Moving to Indigenous participation and co-management, Bill C-68 provides significant new authorities relating to Indigenous participation in and co-management of fisheries. Co‑management agreements are authorized by the new section 4.1 if provisions are deemed equivalent to provisions in the act.
However, there currently is no legal test for equivalency in this context. Moreover, both the act and bill fail to set any considerations that the minister or Governor-in-Council must or may consider when determining equivalency. This applies in terms of the equivalency in provision, and administration or enforcement.
Of particular concern is the potential for different management regimes across different fisheries, which could potentially negatively impact the sustainability of our fisheries resources. According to the Ahousaht et al case in B.C., bilateral negotiations of what the fishing right means in practice are unacceptable. DFO does not represent the interests of other stakeholders, such as commercial or recreational fisheries, and these interests must be included.
FCC believes there needs to be a clearer process for involvement of other impacted stakeholders in co-management negotiations and a process in place to avoid a patchwork approach to management of a resource that could undermine overall sustainability.
In the same case, the Crown justified that it is willing to use the Allocation Transfer program, or ATP, and the Pacific Integrated Commercial Fisheries Initiative, PICFI, to increase Indigenous participation in fisheries. Moreover, Madam Justice Humphries stated:
Canada takes the position that access under PICFI and ATP is relevant to the access provided under the right, in particular because reconciliation is achieved through voluntary relinquishment of licences by commercial fishers. It is not necessary and is unhelpful to the principles of reconciliation to move to involuntary relinquishment of licences by the commercial sector.
Unfortunately, this is not the approach that was taken in the surf clam fishery. A lack of clear criteria and policy has created a climate of uncertainty and instability in fisheries management. The FCC strongly believes the government needs to adhere to a willing buyer/willing seller policy as it has done historically.
My third message relates to many regulations authorized by the bill. Open and transparent consultations are critical to the successful regulatory development exercise. Consultations on three regulatory instruments under the bill have been held so far, with a dozen more to go. The FCC looks to how these regulatory provisions can contribute to greater stability of access and thereby instill confidence to invest and support conservation.
At the same time, the FCC cautions on the government’s ability to anticipate how the sector will evolve over time. Quite frankly, I don’t think anyone can. Smart regulations will provide flexibility to accommodate the ongoing evolution of the sector. The FCC hopes this legislation and its subsequent regulations will provide a clear and stable policy framework that will facilitate and enable the fisheries sector to be prosperous long into the future. We look forward to continuing the dialogue with the government and parliamentarians on the details of the bill and subsequent regulations.
With that, I welcome any questions.
The Chair: Thank you, Mr. Lansbergen, for your opening remarks. We’ll go to our first questions now, starting with our deputy chair.
Senator Gold: Thank you, witnesses, for being here. I have two questions, one for Ms. Sonnenberg and one for Mr. Lansbergen.
Ms. Sonnenberg, you have expressed in the past and here today the importance of enshrining in the law, not merely policy, the owner-operator and fleet separation policies. We heard from a government witness that these are going to be put into regulations as part of this process. We had a number of witnesses from industry last month who, at least, expressed their view that they were comfortable with this direction and with the fact that the government gave us assurance that these would be put into the regulations. They noted there is funding. The devil is in the details in terms of implementation.
I wonder if you could comment. Are you satisfied with the direction the bill is taking to put these policies into regulations?
Ms. Sonnenberg: I have been in the fishery, working for my local association, since 1981. It’s been a preoccupation for industry since I started as a very young individual, which has now changed over the course of time. Since I entered, it has been something we have been looking for.
This is a huge step for us to have come to this moment in time. It’s quite historical. If the bill passes, the industry will be extremely grateful to everybody that participated, because we need it. We need that extra bit of teeth in the legislation that provides us the ability to strengthen the owner-operator position.
It’s very clear for us. This federation came together on this item. It’s the only thing the group does. We want to make sure this is enshrined in law and that we have a future that we can count on for our independent owner-operators.
I hope that answers the question.
Senator Gold: It certainly does. Thank you very much.
Mr. Lansbergen, it’s nice to see you again. You have mentioned how important it is that the sector has stable access to fishing resources and the importance of providing flexibility in legislation for the industry to adapt to the changing circumstances, many of which are very positive in terms of the growth of demand. This is a two-part question. First, can you just comment generally on whether you think Bill C-68 is a step in the right direction on these issues? Second, you mentioned the importance of regulations, and you are keeping your powder dry until you see those. Although that’s outside of the scope of our work here, do you have any comments on the direction you think the regulations should go? That would help us understand your points of view, and it may even find its way into an observation in our report. I would like to hear from you on these issues.
Mr. Lansbergen: The good thing about the bill is that it’s enabling and not prescriptive. The bad thing about the bill is that it’s enabling and not proscriptive. All the rules will be in the regulations. We don’t know what those are yet. It’s hard to say if the bill is good or bad. It’s kind of neutral.
I’ll give you an example: the independence of the inshore fishermen. On the consultations, DFO has stayed very true and consistent with the existing policy —
The Chair: One moment, please, Mr. MacPherson. Because of the quality, the interpreter is having a tough job keeping up. You may be a bit slow on interpretation or you may not get any at all. We are having a little problem with technical things, Mr. MacPherson, but continue on. To the interpreters, please try your best and don’t stress out about it.
Mr. Lansbergen: On the inshore fisherman, DFO is staying true to the existing policy. That is a positive thing. My big caution is, as I said in my remarks, that the government, or anyone for that matter, may not know how the sector is going to evolve over time. One thing we know is that we have a labour challenge and an aging workforce, so the transferability of licences from one generation to the next or to allow self‑fractionalization are very important considerations for the government as it develops these new regulations.
When you put something like that into regulation, if you don’t get it right, it takes longer to correct. Rather than a policy that could be changed in perhaps a year, regulations would take three to five years, or many more. I know DFO is currently working on a number of regulatory amendments. Those have been seven or 10 years in the making. What happens if they make a mistake or don’t anticipate appropriately?
Senator Gold: I normally don’t try to set up contradictions that may or may not exist between witnesses.
In light of the importance you attach to regulations, might I invite you just to comment on that last point? Do you share the same concerns? Is there a smaller sector of disagreement, or do I misinterpret the two testimonies?
Ms. Sonnenberg: I’ll go back to the comment about the department staying true to the existing policy. It has been very difficult for them. I’ve worked with them for decades as the policy has evolved. It has been difficult for them to enforce it. They have told that to us time and time again as an industry. The need for the reform and the regulation is going to be a good thing. But that complements Bill C-68. That’s how we view this. If the bill passes as it is, and the regulations — the department understands what the needs are. No regulation is perfect. I’m sure Paul would agree with that. There are always unintended consequences. The department’s working very hard to try and find that balance with the stakeholders.
For us, it continues to be a priority. We’re here today to emphasize that.
Senator Wells: Thank you to our guests for being here.
Mr. Lansbergen, I have a question for you regarding the inclusion in Bill C-68 for social, economic and cultural purposes. One of the things that gives me hope is that decisions within the fishery are based on science. I see the creeping in — and maybe we’ve seen it for many years — of social engineering in quotas and allocation licencing decisions.
What concern do you have that Bill C-68 strengthens an aspect of social engineering in the fishery?
Mr. Lansbergen: There’s certainly potential for that. The bill authorizes the minister to write regulations, but it doesn’t necessarily force his hand on how to consider or interpret those social, economic and ceremonial. The potential is there. I share your concern. We very much want the fisheries management to be based on science, because that will ensure that our fisheries are sustainable for eternity. If we fail, we are only jeopardizing our future viability and prosperity.
Senator Wells: Thank you for that. The other comment I would have is regarding allocations. There is a policy in place that resides historical attachment and adjacency when giving allocations. You’ll recall a great controversy about 15 years ago when Prince Edward Island was given an offshore shrimp allocation. There was no historical attachment nor adjacency in that decision. What’s your comment on allocations and that aspect of social engineering?
Mr. Lansbergen: It’s a challenge for me to comment specifically on allocations of individual fisheries. That typically puts my members pitting one against the other. As Melanie will probably appreciate, everyone in this sector wants a larger slice of the pie. I tend to focus on growing the pie and let everyone else worry about the size of their own slices.
Senator Wells: That’s a great answer. You should be a diplomat. Thank you very much for that.
I have a question for Ms. Sonnenberg and possibly Mr. MacPherson.
With respect to PIIFCAF and the key elements of PIIFCAF being fleet separation and owner-operator, we know it’s in policy. Senator Gold noted that. There is stability and benefits from that policy for harvesters, less so for processors. Why is it important that this be enshrined in law, versus a policy which appears to be working?
Ms. Sonnenberg: It’s important because it’s not working. I come from a community in the Bay of Fundy and the policy has been ineffectual. We have people who are under the pretense of fishing, their fishing licences, pretending that they own them. There are people behind the scenes that do own them. That is totally in opposition to the policy. The policy is not working.
We’ve seen an increase in that sort of behaviour amongst the industry. What we see from it is a change in the economy in communities as a result. That’s what puts us in dire straits as this continues to go on, and there do not seem to be any checks and balances. It is hurting our communities and we can see that. We have to go to B.C. to look at what the outcomes will be when it’s consolidated in the hands of a few, as opposed to the distribution of the wealth among many.
It changes the dynamics in our small coastal communities. The most important thing is how our communities survive on these dollars. If there is any change to that, it does interrupt things. I can tell you in my own community. I can see it easily. I have a separate business from the fishery. If the fishery is doing well, I’m doing well. If the fishery is not doing well, I don’t. If the money is not being put back into the community, it’s in the hands of corporate interests and not at all in our community.
Senator Wells: Mr. MacPherson, did you want to add something?
Mr. MacPherson: No, I’ll add something later.
Senator Wells: Do you see the rationale behind processors that invest and support vessel upgrades, gear upgrades, for harvesters, do you see the requirement that they have to get something in return, and that be stability of raw material which in our language, in the fishery, is a controlling interest? Do you see the upside of that?
Ms. Sonnenberg: Since time began in the fishery, processors and buyers have provided opportunities to borrow money. As long as it’s borrowing money, that’s it. There’s some agreement while you owe somebody money, you are going to bring your product to them, that’s understood in the industry. What is not acceptable is that there is a false front to this by putting someone out in a position operating vessels that really aren’t theirs, but pretending they are.
It’s a complicated web. The issue for us is that the people who say they are licence holders are not. And the people who are really owning and operating these behind the scenes have full control over these individuals. That has never been the intent of the owner-operator policy.
Mr. Lansbergen: I’m agreeing with Melanie. What I was telling DFO in the consultations is that they should differentiate between the positive arrangements that can occur between processors and harvesters, much like you described in the first scenario Melanie described, from the not-so-good arguments that may exist, which is the latter scenario that Melanie talked about.
I make the analogy of contract farming where a company will support a farmer in return for securing supply of product, but it doesn’t control the farmer in terms of what he does with his farm. Any arrangement that tries to control what a fisherman does with his licence, that’s against the existing policy and presumably will be against the upcoming regulations. That’s not the same as just providing some financial support so that the supply chain works well together because we don’t do that often enough to begin with.
Mr. MacPherson: I just wanted to make a comment. We’ve heard several times this morning the word “stability.” I think it’s really important to understand that both sides of the supply chain need that stability. We’re starting to see record investment also from the harvesting sector. Investment by the processing sectors has been probably a little more ongoing. Boat shops are backed up three to five years with orders.
A lot of those boats are half a million dollars and up.
I think we’re at a historic time where both sides of the industry are making record investments. They want stability. We want a future. We want a future working together. There’s a real drive for both sides of the sector to make sure that we get regulations that work for industry but also support the things we’re advocating here today.
Senator Wells: One final question. It’s on fleet separation, which is a policy that says, essentially, processors should not own licences.
What about the circumstances in which harvesters own processing operations, like in co-ops. I know we have co-ops in Newfoundland and in other parts of the country. Do you see an inherent unfairness in that situation?
Ms. Sonnenberg: You’re asking all the tough questions. It’s something we have to talk about more. We have just started to open that dialogue. It allows fishermen flexibility as they go forward. People on Paul’s side have raised their eyebrows at this. I think there has to be a coming-to-the-table to flesh it out and decide how to move forward with this, but it has raised some questions.
It’s a fair one. I don’t really have a good answer for you today, because we’re just starting to delve into this ourselves about where that puts us as an industry. I think for fishermen who have perhaps not had fair treatment at the wharf when they bring product in, it has provided them an outlet to make a better return on their investment.
Having said that, I think we have some work to do.
Senator Wells: Thank you.
Senator Francis: Mr. MacPherson, could you give the committee an idea of the importance of Bill C-68 to the P.E.I. fisheries?
Mr. MacPherson: A lot of people don’t know, but the contribution of the fisheries to the GDP of Prince Edward Island is the highest in Canada. We’re talking about a significant industry. With a population of 140,000 people, and only about 40,000 of those in what you would call an urban centre, we’re all about coastal communities. The fisheries are very critical, in the processing sector and the boats that supply the plants are critical. They provide jobs. They put many students through university in some of the communities. It’s significant. It’s the lifeblood.
One thing I’m really noticing now that we’re going through this generational change is that people want to be fishing. They don’t want to go out of province for other jobs. There’s a real drive with the younger people to make fishing their career. That’s what they love; that’s what they want to be doing. They’re a huge value to their communities from volunteering or whatever and staying in those communities. We need to keep that going.
I know a particular success story. We’ve got a very good working relationship with our First Nations, and that’s a growing industry there. We’re seeing a lot of successes.
I can’t overemphasize how important the fishery is to Prince Edward Island.
Senator Francis: Thank you.
Senator Poirier: Thank you all for being here. A lot of my questions have been addressed to a certain point. I’m just going to add on a little bit extra to each one.
First, I’m going to go back to the discussion we just had a few minutes ago on one of the questions my colleague Senator Wells had talked about: The problem where it looks like some people own the licence, but in reality, they don’t own the licence; somebody else owns it. Can you please clarify, as far as you’re concerned, will Bill C-68 fix that?
Ms. Sonnenberg: That’s the intent.
Senator Poirier: Great. That’s what I wanted to hear.
Second, you talked a lot about the PIIFCAF policy on the West Coast and the issues that are there. In your opinion, with the wording of Bill C-68 as it is now, can we reverse the situation for the West Coast? At the same time, are we doing enough to protect the coastal communities in Atlantic Canada?
Ms. Sonnenberg: I’ll take the B.C. part first.
Senator Poirier: Okay.
Ms. Sonnenberg: It is a huge situation out there. It will take time. It will take the industry to come together and find solutions that are a made-in-B.C. answer to what’s going on and to reverse some of the erosion of the ownership in that fishery. I don’t think it’s impossible. I never think that’s actually a word. I think anything is possible if you put the right people at the table and work through it. There are a lot of players who will have to come to the table and find ways forward.
There have been some positive solutions that could be used. I have great faith in the industry in British Columbia that they will find those solutions, but it will take time. There’s no doubt about that.
As far as the Atlantic situation goes, if this bill were to come into force, it will allow us to strengthen the policy, our harvesters’ position and to ensure that our coastal communities, which is what this is about for all of us. The protection of those communities — so people can live and work there — provide a sustainable source of seafood.
One of the things we don’t talk about much is the security around the seafood products we’re bringing in; that Canada has a very valued product. We know the people bringing that product to shore, and we can look at that as something to be — as we go along and see more issues around the food security. Something we really need to bring out more, all of us in the industry, is that we have this product, and we can have a source for ourselves, if need be. It is safe, secure, and we know exactly who handled it and where it came from.
Senator Poirier: Thank you.
For my next question, I would like to have an opinion on it from both of our witnesses, Mr. Lansbergen and Ms. Sonnenberg. It goes back a bit to the questions that were asked earlier on the regulations. I had questions for the minister awhile back. It was not clear from his answers exactly what I was looking for.
Have your associations been consulted on the language used for the licensing in the bill? Can you comment on what your expectations would be in the regulations — what you would like to see? I’m asking both our witnesses.
Ms. Sonnenberg: We have been consulted. It started with a broad-base public consultation. The federation was part of that last summer and fall, and we have continued to dialogue with the department on the formation of it.
Because of the nature of regulations, you don’t get to see the wording, of course, until it gets to the Gazette, from an overarching point of view, we’ve made submissions to the department about what we would hope to see and some clarity around certain situations, like the ownership of and how licences are issued and so on.
Yes, the department has given us their ear and that we have been able to plug into that as it goes along. The proof will always be in the pudding, when it gets to the Gazette, and we will be able to see what the drafters have actually interpreted from what they’ve heard from all the various stakeholders that weighed in when those consultations were had publicly.
Senator Poirier: It seems the timeline is not clear in the regulations. Did they give you an indication of the timeline?
Ms. Sonnenberg: My understanding is, and this is from a meeting this week, that the regulations could potentially be in the Gazette by mid- to late June.
Senator Poirier: Could our witness from P.E.I. respond?
Mr. Lansbergen: Yes. My perspectives on the regulations and the consultations are much like Melanie’s. DFO has had pre‑consultations, where they’ve come up with consultation and discussion papers. They’ve reached out to stakeholders for those discussions. We’re pleased that those are happening. That helps because when they come out at an early stage, it gives us signals of where they are wanting to go and it helps us prepare for when they get to Canada Gazette Part I, which is the first stage of the draft regulations, where we see the actual language.
It’s important for us to be able to provide some comments on that.
It can be a complex step going from a consultation or a discussion paper, which are typically in slide decks, to go from that to real regulatory text. There could be some nuances that need to be strongly considered.
That’s an important step. But the whole process is important and having open, transparent consultations is very important. We’re pleased with what we’ve seen for the most part so far and hope that continues. We will participate throughout the process.
Senator Poirier: Thank you. I have some closing comments, if you allow, Mr. Chair.
The comments that you made about the changes depending on the fishing out there and economics in our community, I totally agree with you. I’m from a coastal area of New Brunswick, where fishing is a good portion of the economic development in our areas. That is a comment that I hear a lot. I just wanted to put that on record.
Senator Busson: Being from British Columbia and hearing the negative dichotomy about the way the fishery in British Columbia is, there are so many negative effects compared to how the fishery runs on the East Coast. I was interested in your quote from Jonathan Hunter, a B.C. fisher, about the fact that he believes you can unscramble the egg.
You made some comments in answer to another question. I’m wondering, being on the ground and experiencing this yourself and being part of that whole industry, from an East Coast perspective, do you believe that it’s possible to reverse the trend in British Columbia? Because it seems to me there are two issues. Number one, you want to halt the progress of that march to that fishery on the East Coast; and number two, wind back the clock or put a focus more on fleet separation on the B.C. coast. I’m wondering if you think that is a possibility and how long that might take if people’s quotas were defined.
As a second part of that question, I’m wondering if it’s as much of an enforcement issue as it is a policy issue.
Ms. Sonnenberg: To speak to the part of the unscrambling of the omelette, if you will. Unscrambling an omelette is hard, but you can always stop cooking it. I think that’s the first place to start.
I have had the privilege of working with folks in B.C. since I took this role as president of the federation. It has been a privilege. They’ve allowed me to come into their lives to see the difficulties that they face and the challenges that go on each and every day there, which makes me appreciate the East Coast fishery. I’ve recognized more and more the importance of how we operate and the importance of keeping it that way.
I wouldn’t be here if I didn’t believe that they could not change their future. They’re dedicated, hard-working individuals who have a passion for their industry just like on the East Coast. I think left to them to sort it out, they will, with some help from everybody.
I wouldn’t be here if I didn’t believe that couldn’t happen. I wouldn’t have made these comments today. We have, as a federation, invested in trying to raise the awareness on the British Columbia coastline. I think we’ve played a small part in that and I hope we can continue to support them out there as they start this process.
Can you remind me of your second part?
Senator Busson: You made a point as if it was almost common, but there are licence holders that aren’t licence holders. You said that as if it was a common thing.
Ms. Sonnenberg: It is more and more.
Senator Busson: Is that an enforcement issue or is it more complicated than that?
Ms. Sonnenberg: It’s complicated. There has been an erosion of the policy in certain regions, and I must make this clear. It’s not in every region in the east. There are some regions that it has been allowed to happen more than others, and some of it is enforcement. Folks will tell you that you can’t enforce a policy, but you can insist that they comply, and that perhaps has not gone on. That is the crux of the issue with the PIIFCAF policy, as opposed to a legislation with some regulatory wording that backs it up and clears up what the intent is.
I think it changes the playing field for us in the industry and there’s more clarity for people in the department, in terms of how to go about unscrambling the omelette and making sure that we are respecting the intent.
Senator Busson: Great. Thank you very much.
Mr. Lansbergen: I want to make some comments regarding the B.C. approach to licencing and the House committee’s report that just came out. I get quite concerned about the assumption or the conclusion that the problems on the B.C. coast and the B.C. fishery will be solved by changing the industrial structure of the industry. I think it’s much more complicated than who owns what licences and who actually does the fishing.
The processing sector, we live in the same communities that the harvesters do. We invest. We contribute to the economy. It’s not like one is doing more than the other. It’s a symbiotic relationship. I think some of the challenges on the B.C. coast relate to the size of the fisheries and some of the restrictions that occur there. The pie might not be big enough to be viable for everybody.
I think with the study that the House committee, they may have missed some of that. I would be happy to share a very good technical brief by the B.C. Seafood Alliance that covered some of the true economics of the industry on that side of the country. I think that would be very helpful.
Senator Christmas: Thank you for appearing.
Mr. Lansbergen, in your opening remarks, you mentioned that one of the council’s biggest concerns was the stability of access. Then you had mentioned this number of $600 million and that there was some loss of access, a taking away of access. Could you elaborate what you meant in those remarks?
Mr. Lansbergen: The first is the loss of access. With the Arctic surf clam industry, the government took away 25 per cent quota and did not compensate the incumbent. The incumbent company had just invested $150 million to refurbish a processing plant, refurbish a vessel and buy a new vessel. Without that quota, all three of those were partially surplus capacity. What do you do as a company? They were quite concerned about what they do with those investments. Everyone else in the sector was concerned about who is next. What is the next fishery where the licence or the quota will be taken away without compensation and should they make the next investment?
That surf clam quota has since been reversed and given back to the incumbent for two years. There’s a new process that’s supposed to be coming down the pipe but we don’t know exactly when. The government has not given any indication that they will follow a willing buyer or seller model or any other type of compensation to the incumbent. That’s the biggest issue.
We have Indigenous enterprises that don’t want to see anyone lose access without compensation. That’s a primary belief and principle I think everybody would agree with.
Sorry, what was the second part of your question?
Senator Christmas: It fits quite nicely with your answer. My second question was about the Indigenous participation in the fishery, especially on the Atlantic coast. I think what you’re referring to was your concern of moving away from a voluntary entry of Indigenous fishers to an involuntary entry. As you’re well aware on the Atlantic coast, in the last 20 years, because of the entry of the Indigenous fishery, it has been based on that model of willing buyer and willing seller. The value of fishing licences on the East Coast has dramatically increased because of that model.
Part of the frustration now is that you have small owners who have difficulty buying licences and getting into the industry. Of course, the other one I’m very well aware of is that we have Mi’kmaq communities all through the Atlantic Coast who have been involved in the fishery for the last 20 years. And because of their entry into the fishery, they are now having great difficulty buying licences and quotas.
I noticed your members include both non-Indigenous and Indigenous businesses. My question is this: If we move away from the willing buyer/willing seller model, would that give small owners and Indigenous communities better access into the fishery?
Mr. Lansbergen: The price or the value of the licence and the quota is a very important part of the question. I think that’s what’s driven the government’s approach with the surf clams. We have to find a way to crack that nut and figure out the most efficient way for increasing Indigenous participation, regardless of the cost. But just saying, “Well, I don’t want to pay too much” and therefore not compensating the incumbent is not the right answer.
I don’t have a simple solution or recommendation on that aspect, but we have to agree to work through it. With a willing buyer/willing seller model, I think there are ways to do that, and the government has historical experience.
I just remembered your other question. In my opening remarks, I mentioned there was a study that we’re missing out on $600 million of annual revenue. That relates to maximizing the value of what we currently harvest. Are we processing it to get the best margin? Are we fully utilizing the fish?
Here in Brussels, I was meeting with some Icelandic companies. Iceland is typically held up as a country that has done very well in advancing new technologies to fully utilize the fish, whether it be the skin as bandages for burn patients, fish oil for health supplements, or cutting the loins and the rest of the meat of the fish for maximum value. We need to do a better job on that. That’s not going to happen if we don’t invest in new technologies. We need a stable and clear framework to be able to do that.
Senator Christmas: Just going back to the surf clam fishery, as you know, the Indigenous partners in the upcoming deal on surf clams has all 13 First Nations from Nova Scotia and one First Nation from Newfoundland as partners in that deal. If we were still operating on the willing buyer/willing seller model, I don’t think those 14 First Nations would get access into this Arctic surf clam fishery. Do you agree?
Mr. Lansbergen: The incumbent has since made an announcement that they’ve come to an arrangement with a number of First Nations, as you just described. Where there is a will, there is a way.
Our biggest challenge, and the main principle we have been putting forward, is that, whatever happens, an involuntary relinquishment doesn’t work. The government has said that in court. You have to compensate the incumbent and find a way to make that a voluntary relinquishment. As for the rest of the details, we’ll have to work on them.
Senator Christmas: Thank you.
I have a question for Ms. Sonnenberg. First, I have to thank you for your very strong support of the fleet separation policy, the owner operator and PIIFCAF. Your comments on that are noted. We thank you for that support.
I know Senators Wells and Poirier had asked you questions on this, but I want to pursue it one last time. As you know, Bill C-68 is attempting to close the loopholes or the workarounds to these policies by entrenching in law these policies as part of a new package of regulations. In your remarks you mentioned that one of those problems this bill is trying to address is the reality of controlling agreements. For the record, can you describe that problem? How is that undermining these policies and how, I hope, at least, Bill C-68 will close that loophole?
Ms. Sonnenberg: One of the very quick answers is that the cost of a licence, because of who is able to buy — willing buyer/willing seller — one of the preoccupations of the federation has been for youth to get into the fishery. The demographics of the ownership right now are quite high, and there are a lot of grey‑haired folks in the industry. In the last little bit, we have seen improvement there, but because of the cost of licensing, if you have people who are in a corporate-style world, they can outbid us every time — every single time. That has been a stumbling block to the youth who are trying to get in. They can’t compete. That’s one very difficult problem that we have to overcome. This would hopefully stabilize that by arresting backroom business in the controlling agreements.
The idea about how the wealth on the vessel is shared as a true owner operating the vessel and how the crew is paid out is quite different than if you have somebody over here in a corporation and then you have your storefront over there, and everybody on that boat is being paid a wage. That’s what it boils down to. The distribution of wealth looks different. Then, from that distribution, it’s different again how that goes out into the community if you have a true owner operator and how they support their community.
All of those things, by enshrining this in law — and I want to thank you for sponsoring this here. We are extremely grateful to have gotten this opportunity today to come and say how important it is for us. But this is what we have needed all along. Since Roméo LeBlanc introduced owner-operator fleet separation, in the beginning, it started out that the policy was respected. Then as the erosion started — and it started to quickly erode — it became clear that something needed to be done.
This should help the situation on the ground.
Senator Christmas: Thank you.
Mr. MacPherson: Thank you. I wanted to add a quick comment. We were fortunate enough to catch the news conference the other day where the West Coast report was released. A very troubling comment was made, I forget by which member of Parliament. They were very concerned that, in certain cases, they had asked about the ownership of the licences, and it was very difficult to get that information. That’s a great concern to all of us as Canadians. It’s a food security issue. Senator Busson, you are right: It could be an enforcement issue.
If it’s not that clear, we have been working with DFO the last few years to make suggestions on how they can maybe find out who is abusing the system. It’s better than it was but it still has a long way to go. That was of great concern to us. I’m sure it is to everyone in this room.
Senator McInnis: Most of the topics I wanted to discuss have been covered. I should know the answer to this, but I just want you to clarify for me. The transfer of a licence has to be approved by DFO. Presumably, they have a registry of who owns what. If they wanted to enforce the policy, then they censor a transfer. It’s relatively simple, is it not, for them to do that?
Ms. Sonnenberg: It could be.
Senator McInnis: It should be. If it’s a property, most provinces have registries. If they have a registry and a licence is being transferred from one individual harvester in some rural community to a corporate entity, they can simply stop it.
Ms. Sonnenberg: I think the word that we are looking for here is “scrutiny.” I cannot speak for the department. I will tell you that recently I was involved in helping a friend of mine do a transfer. He was terminally ill. I don’t participate much in this in my office, but it gave me an opportunity to experience it first‑hand.
It was a legitimate transfer. I knew it was going to a younger harvester, he was an owner-operator and independent. I could see how it would be easy for the department, without any real serious investigation into the transfer, to be hoodwinked. That’s what we have been, as an industry, begging for all along and what brings us here today. There are some stumbling blocks for them, and it has been challenging.
If there was a more robust system within the department, some of it could be stopped — not all of it, but certainly some of it could. The word is scrutiny; there needs to be more of it and there is not.
Senator McInnis: Okay. In your presentation you talk about boots on deck and stopping any new armchair fishermen from acquiring licences. Let me give you an example. I want your opinion on this.
We had a witness come here and tell us that he and his sons had a family business, had a boat built, had a licence and so on. The father now is what you would call an armchair; he is the gentleman who watches and maps and follows and charts where the boat goes, but he is at home. The six or seven family members are on the vessel. Now, of course, under this new policy he will have to be on the boat. That will put a person off the boat.
Transferring title to this vessel, of course, is costly, because he has to pay tax and so on, or the sons. What do you say in a situation like that? Should that be permitted? Should he be allowed to be at home acquiring the supplies, managing the vessel, all this type of thing?
Ms. Sonnenberg: I think it’s rather lofty of me to be the one to weigh in on this, but I understand that in that particular circumstance, he is doing that within the policies that exist today. It would be considered above board. I think those are things where we as an industry recognize the value of family, and what has kept our communities going is that intergenerational transfer.
When a father decides to transfer over to his son, there comes a time when he is comfortable. We have heard a lot from our own membership about when the time comes and they realize that a son or daughter can step up in the wheelhouse and be that person and take the responsibility of that licence, but it has to happen at some point. I guess that’s the fundamental question that has to be worked out on the side.
The bill itself strengthens owner-operator; there is no doubt about that. I don’t know this gentleman’s circumstance, why he is not on the boat, but there are opportunities through medical policies and so on that can be accommodated while they sort out the financial arrangements to ensure that everybody can make the transfer in a way that’s acceptable tax-wise. As the value moves up, a legitimate question industry has is how to protect themselves from that.
Senator McInnis: It’s very expensive for the children to take over. At the time, the value was probably $1 million. Now it’s something like $5 million or $6 million. I agree; this is the livelihood of many rural communities and we have to protect that.
Ms. Sonnenberg: We have been working with accountants about how to do successful succession planning in the industry as the value increases. We have heard a lot from accountants in the last six to 10 months about this very matter. There certainly are ways to go about it that can lessen that tax burden and help people do it efficiently.
Senator McInnis: Thank you.
Senator Wells: I want to go back to the question Senator McInnis mentioned about the person who was essentially managing, from shore, the operations that have included his family and are part of what I’d call a responsible transfer to the next generation. Rather than trying to treat it on an ad hoc basis under policy, it would clarify the rules if there was something in the legislation that could address that, like a shore captain status or something like that?
Ms. Sonnenberg: I think if we start to have that discussion today about this particular bill, it will become so complicated given the timelines we have that it could potentially derail the bill. I’ll be very honest about this, Senator Wells. It is a discussion that would delay what is going on here today through until the end of the session. That would be my concern about it.
I think there are ways to do this. People are doing it all the time. I have had the opportunity and the privilege of talking to lots of individuals who are in that exact position. They are working through it. There are accountants that are much smarter than I who are helping folks make that transition. And keeping that family is paramount to the discussion. How are these families operating? I wouldn’t like to see us get bogged down on that today. I think there are solutions to those problems going forward. Some of that can be dealt with in the regulation when it gets to Gazette I.
Senator Wells: Thank you.
The Chair: Thank you to our witnesses. You are the last in a long line of witnesses we have had before us on Bill C-68. We hope to begin our clause-by-clause next week. We thank you for your interest but also for your experience and great commentary on the questions that have been asked by our senators.
Senators, we are going to go in camera and have a discussion on where we go from here.
(The committee continued in camera.)