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Proceedings of the Standing Senate Committee on

Issue 10 - Evidence - June 11, 1998

OTTAWA, Thursday, June 11, 1998

The Standing Senate Committee on Fisheries met this day at 8:30 a.m. to consider the questions of privatization and quota licensing in Canada's fisheries.

Senator Gerald J. Comeau (Chairman) in the Chair.

The Chairman: I call the meeting to order. Professor Lane, our witness, is the Vice-Dean and Associate Dean of Research of the Faculty of Administration at the University of Ottawa. Among his professional activities, Dr. Lane is a member and peer reviewer of the Department of Fisheries and Oceans Pelagic Subcommittee, and has served as chairman of the Study Group on the Performance of Individual Transferable Quota Systems of the International Council for the Exploration of the Sea, ICES. He has recently co-authored, with Professor Grafton, who appeared before this committee in March 1997, an article to appear in Canadian Public Policy entitled "Canadian Fisheries Policy: Challenges and Choices".

Professor Lane, welcome. Please proceed.

Professor Daniel E. Lane, Faculty of Administration, University of Ottawa: The current discussion on issues related to privatization in quota licensing in Canada's fisheries presents a daunting task to the Senate committee. The review, assessment and determination of the advantages and disadvantages of quota licensing will, in the end, be answerable only in very specific context. The importance of this issue, however, lies in the characteristic of quota as property. Property rights engender responsibility in the owner. In turn, responsibility evokes increased involvement and participation by owners in the decisions that affect the property health.

To stimulate responsibility within the Canadian fisheries system is the greatest challenge that we have. To do so means that our paternalistic approach to the management of our fisheries must change. This requires radical adjustment in the institutional arrangements and the legislative decision-making power of DFO and its minister. The single most important benefit of privatization and quotas of any kind in fisheries is the responsibility that it internalizes in the owner and what is owned.

This simple fact will compel change in the way we operate our management structures and will lead to further changes from the bottom up -- changes that would not be expected to occur otherwise. In summary, my position then is not privatization and quotas for their own sake but a variety of property rights systems for the larger change they will invoke in moving us from this outdated, confrontational and concentrated regulatory regime to a more distributed, participatory and integrated management system.

The committee's 1993 report on the Atlantic commercial inshore fishery noted the inshore sector's lack of access to the fisheries management decision-making process and called for further investigation into the overall management of the ground fishery. The report also noted the need to foster better communication and to encourage the participation of fishermen in resource assessment and decision-making.

Similarly, in your 1995 report, "The Atlantic Groundfish Fishery: Its Future", the committee repeated its recommendation "to develop ways to communicate policy", to "promote participation by fishermen" and to have "fishermen play a greater role in decision making through a genuine and effective comanagement and partnership with government$" It also recommended that the fishery "should be delegated more power to regulate itself".

The committee's current study and objectives to review the literature, identify theoretical advantages and drawbacks, assess the social, economic and biological effects, determine suitability and present the possible benefits or disadvantages of quotas provide yet another forum for the continued discussion on the water problems and issues in the Atlantic fisheries.

Literature on quota licensing is expanding. For example, the work of the Fisheries Committee of the OECD and the 1997 publication "Towards Sustainable Fisheries" is one example. ICES' two separate year-long studies on the management performance of ITQ systems, which I was fortunate to have chaired, is another example. Both these studies treat the Senate committee's objectives in a broader international context, while including Canadian fisheries in the Atlantic and Pacific as key case studies.

The committee has heard from many key international and national figures -- managers, academics, scientists, economists, fishermen, and community representatives -- throughout its deliberations since February 1997. Much of this testimony has been anecdotal, with reports on specific fisheries or more specific cases and instances used as evidence from positions taken.

What appears obvious from the testimonies is that making general pronouncements on quota systems is problematic. There is no clear-cut response to evaluating feedback about net benefits and costs of this management alternative. I compare the experience of the committee to my own and that of others who have looked at these same questions on evaluating these net benefits. The only response one can make in the end is that "it depends". It depends on the fishery, the industry, the stocks, the socio-economic circumstances, the markets; it also depends on the unit of measurement of quota, on how the performance of management is measured and measurable, on the definition of suitability of quotas, on what data are available, and so on. We must conclude then that there is no definitive response to questions of evaluation on this issue. They depend. However, there is significance in the idea of property rights and the context of fisheries taken as a whole.

As a "property right", a quota permits a degree of ownership over the harvesting activity that empowers the owner of the quota. By virtue of this ownership, the holder of the quota, first, manages the use of the quota in a discretionary manner, second, may exercise rights to transfer the quota to another party, and, third, reaps the benefits of the quota use.

This broad characteristic of a quota applies to all wide-ranging applications of quotas that exist, and these are many. Examples of restrictive IQs, with no transferability, predate currently popular transferability in quotas. Similarly, community quota systems and effort quota systems have also been implemented around the world.

The notion and the characteristic of property remains in all of these examples of quotas. The notion of property right also enables us to describe these systems in terms of the ownership idea. Characteristics of property rights are described very succinctly by Professor Tony Scott in "Taking Ownership: Property rights and fishery management on the Atlantic coast", which presents four tangible characteristics of a property right. They are: exclusivity, the right to use and manage a resource without outside interference; duration, the length of time the owner of the quota may exercise ownership powers to manage, transfer, and use the resource; security, the strength of the entitlement of the quota; and transferability, the extent to which the entitlement can be disposed of.

The recent comprehensive empirical evaluation of fisheries management systems among OECD members concluded that successful management is enhanced by the active participation of the fishing industry in policy-setting and by the transfer of management responsibilities to the industry. Scott reiterates this same point in his evaluation of the importance of property rights for the future of fisheries management. He argues that increased exclusivity will result in increased involvement and participation by the industry in cooperative and responsible decision- and policy-making. At the same time, the role of government agencies as paternalistic protectors of the resource will need to change to a more protective -- of the property rights <#0107> role in support of enhanced industry self-regulation.

Quotas are only one element of the whole management system, and to understand the role that they play, we need to look at the whole system.

Peter Larkin, the esteemed biologist from the West Coast, described two broad categories of approaches to managing fisheries -- the ichthyocentric approach, or fish conservation first, and the anthropocentric approach, harvesting for human socio-economic considerations. Larkin described the Canadian fisheries management system as leaning more toward the ichthyocentric side. He characterized the Canadian approach as essentially paternalistic, with the federal government acting as a father figure responsible for ensuring long-term viability of the resource and cautious and attentive to "all the biological bogeymen that scientists may generate from their speculations".

He summarized his remarks, by saying:

The approach must be anthropocentric. It is a contradiction in terms to speak of biological objectives of fishery management. Much more logical is to speak of biological constraints to management. The real questions are: what should be the biological constraints and what should be the social objectives? The answers are: whatever is necessary to preserve future biological options until we know more biology and, whatever seems appropriate to society at the time.

Larkin's approach has important implications for appropriate institutional arrangements in support of fisheries management. In the paternalistic system, the power of the minister leads to a centralized, top-down and aggregated view of the fisheries system. We have not been well served by this system.

At a previous Senate committee meeting, Senator Stewart made the following remark:

My impression is that the Minister of Fisheries within his jurisdiction has more power than any other minister of the Crown... He has all these species. It is an industry. He is running a socioeconomic system. By reason of the way that the department evolved, I wonder if some of the ministers were ever fully seized of what a tremendously big responsibility has been imposed on them... but I am saying that the department has not had a chance to perform the job which we think it ought to have performed, because the task was never properly defined.

What the Senator described is a rich and complex system. As a professor of decision theory, problem solving and system science, what strikes me is that, despite recognizing these issues, we have never taken the opportunity in the management of our fisheries to integrate our science, enforcement, policy planning, the industry, socio-economic elements, and community into our decision-making processes. Instead, what we do is chop up our problems into disciplinary pieces, analyze them and pass them along to the minister without ever putting the pieces back together again as a whole. Supposedly, ministers, in their wisdom and power, are left to figure this out for themselves.

It is informative to view the organizational structure of today's DFO in the context of how it treats interdisciplinary problems in the fisheries system. What we see is an unbalanced organizational arrangement that separates the fishery system and all its components into disciplinary pieces -- science distinct from enforcement, distinct from planning, et cetera. Each component is singularly responsible for a narrow aspect of the system, and disconnected.

In his recent presentation before this committee, the Chairman of the Fisheries Resource Conservation Council made this statement: "There must be a change of attitude." What Fred Woodman was referring to can be gleaned from his preceding remarks to that statement. He said:

-- we must build a system that works for everybody. The solutions will not be found here in Ottawa; they do not rest in Moncton or in Halifax or in St. John's. They rest with those who are involved in the fishery.

What we have then, as Senator Stewart noted, is a system, a system that, as Fred Woodman noted, is made up of many participants and factions. To deal with this system requires that all components and participants become engaged in the management process.

Your committee has already declared itself in identifying this issue. Your report recommendations in 1993 and 1995 underline the need for more participation of fishermen in resource assessment and decision-making. This is a theme that many others, including myself, have expounded upon in published literature, in public conferences, and in internal DFO working group meetings over an extended period of time. It is not new.

I anticipate that your 1998 report on the current issue will not hesitate to make a similar type of recommendation. For my part, I ask myself why we have not been able to make more progress in this regard, which I consider to be fundamental to making progress toward the fishery of the future.

The existing separation of the role of science in fisheries from all other decision-making considerations within DFO has been counterproductive to good fisheries management. Increased separation in the form of an independent fisheries science body would only further drive a wedge between scientists, social scientists, administrators and the fishing industry, all of whom are stakeholders and have a potential contribution to make in improving the management of our resources.

I suggest a fundamentally alternative idea: integrate fisheries science with all other elements of DFO under one simple objective, namely, to provide timely advice to support decision-making by participating, professional fishermen who are responsible for their actions. In this, I reiterate a recurring theme of the committee -- to increase the participation of fishermen in the decision-making process moving toward fisheries co-management.

As a major proponent of co-management, Jentoft understands the term to mean "government agencies and fishermen, through cooperative organizations, sharing responsibility for management functions". More specifically, he says that "fishermen's organizations are granted authority by law to enforce regulations on member fishermen".

Since 1993, the FRCC has been tasked with improving the participation and access to decision-making for fishermen. My experience with fisheries in the Atlantic, and my short experience to date on the council, show that industry and fisheries representatives are conservative with regard to setting TACs below recommended and previously mandated fishing mortality levels set by science for example. There are plenty of cases we all know of, as evidence presented previously to this committee and others has indicated, where fishermen, given the opportunity, have acted in a responsible way. In order to ensure that this continues, we must not simply condone the concept of co-management; we must embrace it and prepare the institutional ground in order to support that approach.

Jentoft also tells us, with regard to management arrangements and institutional structures in Canada, that we typically have a "consultative management arrangement" system. He says:

Such arrangements usually involve an advisory board --

-- such as the FRCC, for example --

-- in which representatives of the fishing industry are consulted by the government before regulations are introduced. In contrast, co-management means that fishermen's organizations not only have a say in the decision-making process, but also have the authority to make and implement decisions on their own.

The FRCC provides a model for increasing participation, however, it does not have legislative authority. The Australian Fisheries Management Authority, on the other hand, provides an example towards what I believe the FRCC may aspire. The major objective of AFMA is expressed in the Australian government policy statement highlights as follows:

The structure of a statutory authority would enable the Government to effect its responsibilities in a flexible, open and less bureaucratic way. It would also allow greater community and industry participation in determining appropriate management programs for Commonwealth fisheries than has been the case in the past.

To this end, and in conjunction with new legislation initiated in Australia, AFMA established what are called Management Advisory Committees, MACs, for each major fishery, by fishery, not by species, as the focal point for joint management and industry participation in fisheries management decision-making. The MACs advise and make recommendations to the board regarding monitoring and enforcement, management regulations, operational implementation and allowable catch limits. The MACs are also involved in setting research priorities for science and coordinating the stock assessment process.

AFMA, in this way, has embodied the characteristics of successful co-management and has permitted the direct participation of the fishing industry in decision-making. I think this is an example that the Senate committee would find very interesting in terms of its reference to the Canadian scene.

I see the successful Canadian fishery of the future as one that is characterized by the following:

(1) Fewer fishery participants acting as accredited professionals in harvesting and processing under property rights regimes of all kinds;

(2) A participative, accountable management structure with decision-making authority and responsibility legislated in the hands of organized fishery industry representatives;

(3) A regulatory institution, a DFO, that acts in support of the decision-making process and together with the industry throughout the operations of the fishery, which means a scale of operation to the level of the fishery and whose functions are cost recoverable; and

(4) Clearly defined and public strategic targets, as part of this fishery of the future, which look at stock conservation and socio-economic viability -- set targets in regard to those -- and which tolerate significant periodic fluctuations, just as we do in the business cycle in all other sectors and without having stability as a pre-set goal.

I argue for a renewed form of institutional arrangement for the management of commercial fisheries as a necessary condition to support co-managed fisheries that are characterized by alternative forms of property rights. I must admit, however, to being somewhat pessimistic that this will happen soon. The current thrust of the government, as indicated by the wording of the new Fisheries Act -- which part and parcel is a consideration of this committee -- points clearly to the continuation of the central power of the minister as "ultimate authority". I believe there is a danger here that any real partnership and shared responsibility will be muted.

Canada's reaction to our difficulties with stock collapses in the North Atlantic -- about which we all are well aware -- has resulted in further attempts to increase paternal responsibility over the oceans as a whole. We have the Oceans Act of Canada, which extends Canada's management responsibility to the whole ocean ecosystem, and now we have, as of Monday, a brand new Assistant Deputy Minister -- former ADM of Science -- responsible for oceans. This deputy minister is a scientist and will continue in his current role as ADM of Science, as well. The management aspect of oceans is implied as an extension of science.

In spite of our best intentions and substantial scientific energies, we will never understand the marine ecosystem enlarged to the point of the oceans to any point that will effect measurable differences in management decision-making. We simply cannot manage the ecosystem. Rather, we must concentrate our controllable elements in this complex and rich system with emphasis on the "man" in management, an attempt to manage responsibly with the participation of all in this system.

Senator Robichaud: I must go, but I appreciate your presentation. It will help me in making up my mind as to how to look at the whole system.

Senator Stewart: As I have listened to the evidence given before this committee, and particularly to the questions asked, I have formed the judgment that the very idea of property rights has tended to scare people away. I have implied in my questioning that the conferring of a licence is already introducing the concept of a property right, particularly when that licence can be sold for thousands and thousands of dollars. Am I correct that it is your view that we ought not to allow the bogeyman of property rights to scare us away, that we ought to set that aside?

Mr. Lane: The notion of property rights is one of the reasons I believe that they have scared people off in terms of talking about quotas, and so on. People have a narrow view on what a quota system may mean to them. There is a conception that a quota system is an industrial, forced-concentration view of fisheries that will cause irreparable damage to the fishery as a whole.

There are cases where serious consolidation has occurred under ITQs -- which is not necessarily bad, particularly in this day and age where the fisheries are so overcapitalized. The point to be made is that quotas and quota systems come in all colors and stripes.

For example, the quota system that exists in Alaska is a system that goes by the nomenclature of IFQs and CDQs -- individual fleet quotas and community development quotas. That particular system is actually a socio-economic realization of quotas. It allows for a large majority of property-right-based participation in the industry, as a community-type system that others have spoken about. In the same breath that they may disavow the ideas of ITQs as an industrial-based system with a feared consolidation, they speak glowingly of community systems.

We must make sure, when we talk about quotas, that we identify what these units are. It depends on what we mean when we evaluate and look at a quota. They may be applicable in many different ways. It is not correct to prejudice the way we think about them as the way they will eventually be applied. We must be careful how we do that, and there will be difficulties there in applying these things; there have been in the past, but they have also worked.

Senator Stewart: You spoke of overcapitalization of the fisheries. Can you give us your explanation as to why the overcapitalization has taken place. If we could eliminate the causes of the overcapitalization, then the overcapitalization itself might disappear over time.

Mr. Lane: If we put it in the context of the Canadian situation, certainly what has happened since 1977 and the extended jurisdiction has meant that there has been an enormous growth in capitalization in our fisheries, particularly from inshore to the offshore base. That has been condoned and subsidized by all levels of government.

At the time, it was the right thing to do, no question about it. In retrospect, with the current stock situation, we were not able to control it effectively. It is certainly the case that we have problems in terms of managing our jurisdictional difference, vis-à-vis provinces who manage the processing end of fisheries and the federal government who looks after the harvesting end of things. Until we coordinate that better, we will open ourselves up to these kinds of problems -- subsidizations that occur across the board.

How we could have stopped that at the time relates back to this notion of how we have managed our fisheries. I take exception to a lot of the current debate that suggests that "we should have known". We should have known that cod would collapse in 2J 3KL. We knew it was coming. There were memos and articles that were written way back that told us this would happen. These were not consensus positions, but they did represent a particular view. I stand by the processes that we have used in the past, peer review and so on, that have legitimized what has occurred.

If we had been able to allow voices and participation to occur throughout that whole period of various aspects of the fishery -- and I am thinking in particular about your report in 1993 on the inshore -- maybe there would have been a way to address those concerns better at the time. I do not think it would have changed the situation we are in now, frankly, but it is an element that was missing.

Senator Stewart: In your additional presentation, you referred to "the industry". I believe this was shorthand, but it may be revealing shorthand.

Let me tell you something that I have heard from fishermen. If a fisherman has had a good year, he must decide what to do with his net earnings. He could pay taxes at the full rate; he could do what is done in industry, namely, increase capitalization -- for example, get himself a new boat or new electronic gear, things that can be written off as costs.

Is the notion that the fishery is an industry comparable to a paint factory or an automobile factory? Has that notion led us in our tax policy to apply the same approach with the result that our tax system is actually encouraging overcapitalization?

Mr. Lane: The fishery must be considered to be an industry. We only fish to improve our situation, our incomes -- value-added. We do not fish for sustainability as a food fishery. So therefore, the notion of fishing as a living requires us to view it as an industry. That extends from the largest vertically integrated company down to the individual operator.

You have correctly identified problems that we have had with our system of encouraging investment where investment may not have been appropriate. In a system where we were competing in a race for fish, albeit a limited-entry system with open fishing, that kind of process will lead to overfishing and, as a result, overcapitalization.

In a system where there are property rights of some sort -- and again I hesitate to proclaim what that means specifically because it can mean many different things -- there will be incentive to invest and to improve efficiency as there would be in the ownership of a paint factory by an individual who is interested in selling paint. The difference in the case of renewable resources is that there is this overriding limit that does not go away. It is still there as a total allowable catch, as a decision that is made in conjunction with all the participants as to what that ought to be.

In terms of capping the issue of investment, we would do so if we were allowing that capitalization to operate within a context of an owned property. It would be in the interest of the individual investor to improve his own lot and to invest accordingly, not to race against all others competing for the same pool.

Senator Stewart: I doubt that any of the fishermen would actually choose to send Mr. Martin a big cheque. A fisher would probably buy a better sounder instead and thus be able to locate fish better. In fact, the boat may almost be a yacht by the time he is finished. The scenario I am describing may not be as relevant nowadays because the boats are at the point where they are in some instances almost yachts, but look at what happened in South West Nova eight or ten years ago. There was a limit on the length of the boat so they built them wider and deeper. They put more equipment in them. They made them virtually deep sea trawlers. It was all encouraged by the tax system.

Mr. Lane: As well as the regulation system.

Senator Stewart: When this committee met with fisheries people some years ago, they could only see along one axis, namely the length of the boat, and that was the way the fishing capacity was measured. You could not see its width.

Senator Perrault: In the committee, we have discussed at length the harvesting of our fisheries resources and the sharing of those resources. We have discussed the merits of property rights and the most effective methods of fish harvesting. We have discussed quotas. However, on more than one occasion, authorities in the fisheries have almost portrayed a doomsday scenario. They have said that it is one thing to discuss the ways that fish might be harvested and brought in and provide salaries and incomes for the fishermen, but the oceans of the world are warming; the world is in some serious trouble.

I am from the West Coast. There is a three-degree increase in water temperature. The mackerel are swimming up and devastating the salmon stocks. If there is very little stock left to be shared, then we are not dealing with the fundamental problem that is out there. I do not know whether it is possible to solve the basic problem that appears to be out there. Do you have any comments on that?

Mr. Lane: I do not think that we will be able to do anything in this committee or elsewhere to resolve that kind of a problem.

Senator Perrault: It is a world difficulty; correct?

Mr. Lane: It is. We must be careful not to jump to conclusions vis-à-vis these issues. We have had trends similar to El Ni<#00F1>o in the past. They have resulted in mackerel coming in to sweep through the salmon stocks. It has happened before, and it will continue to happen. It is impossible to say whether or not this is the beginning of the end.

Your point about the warming trends is counterbalanced by examples from elsewhere that there are cooling trends.

Senator Perrault: In certain parts of the world, waters are cooling?

The Chairman: The Grand Banks, I think.

Mr. Lane: I do not have any answers to that, and unfortunately this makes an important point: that is, I do not think we will ever be able to understand these kinds of processes.

Senator Perrault: We must cope with the environment as it exists only.

Mr. Lane: We cannot manage these processes; to believe we can is a mistake.

Senator Perrault: You suggested that there are various ways that the harvesting should be approached, that there is more than one method and that it depends on the type of fisheries; is that correct?

Mr. Lane: Yes. Our notion of quotas comes with the preconceived idea of what they are in examples taken elsewhere. The best view of that in my mind is what is happening in the United States right now with the National Academy of Science report and investigation on the quotas. In 1996, the reauthorization of the Magnuson Act called for a moratorium on quotas and at the same time established this body to go out and look at quotas to see if they were doing anything of benefit for --

Senator Perrault: -- that may be appropriate in some circumstances but perhaps not all circumstances.

Mr. Lane: They may be appropriate in ways that depend on the situation <#0107> to go back to my earlier remarks -- however, we must be very careful in understanding what that situation is.

It would be a mistake to say, and for this committee to say, as well, that quotas are "the thing". It is inappropriate to say, "This is a mandated policy and we believe DFO should go out and apply quotas across the board." We have done that in the past in our policies in the fisheries, and these policies have not paid close attention to the local situations. Within each one of those situations, an understanding of it will lead us to situations that tell us how this will work. The idea of "property" in quotas is important.

If we look at South West Nova for example, the dragger fleet were totally against quotas in the late 1980s and early 1990s. Since those quotas have come in, their views have changed completely.

Senator Perrault: There is no simplistic approach then. Every fishery must be finessed according to its requirements. Meanwhile, I hope they find a way to harvest mackerel to make it a demand fish.

Senator Butts: Property rights imply a degree of ownership, correct? You also stated that having property rights would entail responsibility. Could you tell me if the use of property rights has engendered any responsibility on the part of, for example, National Sea? Does history prove any of this out?

Mr. Lane: Yes, I believe it has. In particular, the system that includes property rights allows the opportunity for fishermen to become involved -- similar to a domino effect. That is why my view is an encouragement of this type of system.

For example, the Scotia-Fundy herring fishery has been, throughout history, an innovative fishery. In 1976, the Bay of Fundy project began one of the first commercially applied quota systems in the world. Since that time, this fishery has been under individual vessel quotas, as a system of managing that fishery.

In 1995, the Department of Fisheries, pushed by scientific information that there were difficulties with the stock -- that must be put in the whole context of South West Nova and the Atlantic, in particular, where groundfish stocks were deeply and still are under a lot of pressure. The herring fishery was not touched by this; in fact, herring stocks through that period were quite good.

In1994, where there was a low larval abundance index, there was major panic in the industry. The industry, together with the Department of Fisheries, established what was known as an in-season working group whereby, on a weekly basis, the fishermen, the scientists, and the managers met and spoke about what they saw in the fishery. This fishery is a geographically and temporally defined fishery over the course of the season.

The very first major fishery that occurs throughout the season in herring is in Scots Bay, at the head of the Bay of Fundy, in the Minas Basin. Every year, the fishermen take about 5,000 to 10,000 tonnes of herring out of that fishery. In 1995, after this scare, and as a result of the inshore working group, the fishermen decided that they would survey Scots Bay on their own. They sent approximately five to eight vessels up there and did transects in a line straight down the bay. They covered the whole bay. They came back and reported to their counterparts in science and management. Industry decided not to fish there that year. There were not enough fish to go around. They said, "If we fish there, we are in danger of fishing it out."

The Department of Fisheries' initial reaction was that they did not know how to handle the situation; they had always fished there. There was grinding and gnashing of teeth, until finally industry insisted that DFO write a variance that said that we, DFO, will not open Scots Bay fishery this year, and eventually DFO did that. To me, that was a responsibility that involved both the idea of the quota and the property rights -- it was their fish. They had something to say at the appropriate time during the course of the season. That was fundamental.

In 1996, there was plenty of fish in Scots Bay, and they fished about 10,000 tonnes. It was a victory for the industry that they were able to make that decision. That process has spread elsewhere around Scotia-Fundy. They have identified further problems. They have identified new elements of the stock further out off the Scotian Shelf. There are many other examples where this has been shown, including Scotia Fundy and the dragger fleet.

Senator Butts: It is probably an ideal example. I wonder how prevalent or prominent it is. We have heard so much about high-grading and by-catches and all other things that are being done -- everything but trying to conserve the industry. I guess I just have a pessimistic turn on your sense of responsibility.

Mr. Lane: That kind of an issue is one that we can manage. It is a different question to say, "What do we do about El Ni<#00F1>o?" When we are dealing with people that are carrying out this activity, the actual participants in the fishery, then we have ways and means of managing that. We may not have applied them very well, but I believe that we can do it.

I will cite another Australian example -- the recent inauguration of a visual monitoring system. They require all their vessels to be under a 24-hour visual system -- in the sense of GPS monitoring -- where they are, what they are doing, what fisheries they have. This is being done now. So, the possibility that over high-grading, and so on, may occur can be viewed that way, and we can have a better handle on it by trying to manage that aspect.

Senator Butts: So it is a little better than a dream.

Mr. Lane: I believe so.

Senator Butts: That leads into your notion of co-management. The word "co-management" means that DFO and large corporations work it out. I hope there is a place in your co-management for the inshore groups for example.

Mr. Lane: I am not too sure what you mean by that. You have heard testimony from Tony Charles who told you about Sambro as a co-management exercise. Shelburne is another example. There are scales and applications of these approaches that are applicable, which I believe can be developed and worked out. There is also a place for large-scale, vertically integrated systems like FPI and National Sea. They must be part of the system as well, and significantly. I know from their activities on the Fisheries Resource Conservation Council that they are engaged.

Senator Butts: It may be that the biggest problem facing that kind of an idea would be how do we get all the inshore groups to agree with the various unions and the organizations and the species? There are probably more problems among the whole group than there are further up the line.

Mr. Lane: We often talk in a romantic way about our fisheries activities, culturally and socially. Fisheries in Atlantic Canada, as well as elsewhere, is probably among the most organized, well connected, united groups that we have.

Blocks form, and this presents problems. How do we deal with the individual blocks?

Senator Butts: That is the problem.

Mr. Lane: The positive side is that these organizations do exist and they do have representatives who speak in a timely and appropriate fashion for their membership. That is where the benefits may be. If they can collect and act in a united way, it may be a benefit. We have never been able to do that before; we have never tried.

Senator Butts: Oh, yes, we have been trying; we have been trying with various unions, but no go yet. However, we will pick up on your dream.

Mr. Lane: The idea would be to give them the responsibility. It is one thing for them to present. They must be given the responsibility. They are organized groups.

The Chairman: You are talking about the fundamental question that this committee is looking at <#0107> that is, how to deal with some of these questions. It is the basic question of the communities that are impacted by the decisions that, as government, we are making today. We need to have an equilibrium between what DFO defines as an efficient fishery -- DFO has still not given us a definition of "efficient"; I have a news release here where the department again uses the word "efficiency". The equilibrium must be between the efficient industry and the needs of communities, the social, cultural, economic community. There seems to be no attempt to arrive at some kind of an equilibrium between the two.

DFO seems to be saying that they have made a decision <#0107> namely, we have decided that we need an efficient industry. One of the ways to do that is to go the privatization route. Damn the torpedoes, batten the hatches, this is the way we are headed. This does not include the community. You are seeing that resistance in many communities.

While we do have a great number of representatives of fishermen in committees, and so on, I have not heard many witnesses say that they have representatives of the communities, people who are impacted by decisions that the government is now making. There are very few people who say that it will impact the communities, the school teachers, the cab drivers, and so on. This is where DFO is missing out on having this work a little better.

We have heard much testimony from witnesses who have said that one of the downsides of the current Canadian ITQ system is the lack of property rights, the lack of knowing whether they are true property rights or not. Lately, we have seen DFO announcements calling it permanent individual transferable quotas. "Permanent" was never used in the past. What does permanent mean? Does it eventually mean that it becomes a property right which is regulated by the provinces? Property rights as a provincial jurisdiction is one of the questions that we have wanted to get an answer to. Does the word "permanent" make it that much more of a property right?

This news release also says that DFO will now reduce its restrictions on boat size. Given that these fisheries are now under an ITQ, there is no need to have a limit on boat size. Therefore, will we now let the boats become somewhat like National Sea -- enterprise allocations, bigger boats, since they own the quota. That brings us to the question of concentration. If you do allow bigger boats, then how big do we allow them? Do we put on any kind of restriction? Why should we, if they are property rights that are allowed to be concentrated in fewer hands? At what point do we say that they cannot be traded on the stock exchange in Toronto? Where do we put the brakes on? Where does the community fit in all of this, the community that has relied for hundreds of years on that fish? DFO is saying "damn the torpedoes", on the one hand; and on the other hand, the communities are saying, "What about us?"

Mr. Lane: DFO cannot mandate efficiency, as much as they might like to imagine that that is what the fishery should look like. We all would like that. You must allow it to happen and leave it to the individual elements of the fishery, large and small companies, to carry out those tasks themselves. In any sense, DFO really is not in the business of measuring efficiency.

The notion of quotas as property rights and the permanence of those quotas is an important issue. Now we are getting into the details of the specific characteristics of the quota itself and the property value. I, along with my colleague at the St. Andrews biological stations, wrote a paper on the herring fishery in which we argued that in the 1983 ten-year management plan, which ended in 1992, there was clearly stated information provided in that plan and to the fishermen that it was a 10-year plan -- obviously, by the name of the plan -- and that in 10 years they would start all over again, look again at the allocations and see how this experiment has gone. That was a 10-year quota. This was pushed by the Kirby report, which suggested that this was exactly what this herring fishery should do. They moved the gulf fisheries out of Scotia-Fundy and they left that quota-based fishery for the Scotia-Fundy region, approximately 40 vessels at the time.

The Kirby report also anticipated that, as a result of this quota system and because of the overcapitalization, there would only be 20 or 25 vessels in the fishery after 10 years. However, having said to the fishermen at the beginning of the plan that this quota fishery, as a transferable fishery, will be looked at in 10 years time, everybody stood fast. There was great happiness in the initial year of the quota system because five or six vessels dropped out of the system. Why did they drop out? Some were destroyed by fire. Some left the fishery because they had not fished for 10 years anyway. It was a phony advantage that occurred there. So in the end, because of the lack of permanence, rationalization did not occur.

Now since that time, we have had a rollover of the 10-year plan and no specified date on this. The renegotiation of the quotas had taken place, but unsuccessfully, so everybody still held fast. However, since that time, there has been a general feeling that this is the way it will be from now on. We have actually dropped vessels out of the system, partly because of stock effects and market effects as well, I must add, but there is some rationalization occurring there. That had to do -- and our argument in this paper I mentioned to you -- with the fact that the permanence was not defined. As a property right, that is an element that Scott talks about in terms of the duration of that and the value attributed to that quota.

With regard to idea of reducing capital and the changes in the vessels, these things occurred during a period when we did not have quotas. Under quotas, if we eliminate completely the capital restrictions, we do not change in any way, shape or form the amount of fish that those vessels catch. Therefore, it is in your interest, as a fisherman with a vessel like that, to catch those fish in the most efficient way possible. You cannot catch more. You can argue about misreporting and dumping, but you cannot catch more than your quota. Would it not be in your interest to catch it the best, most efficient way possible? So these kinds of capital issues would theoretically disappear. That is what we have seen in many cases.

The Chairman: Thank you very much for appearing before us today.

Honourable senators, our next witness, Mr. Poetschke, is the Senior Negotiator of the Northern Political Development Directorate of the Department of Indian and Northern Affairs. He is appearing before us today as an individual, not as a representative of that department. He has held a number of positions including that of consultant to the Kirby Task Force on Atlantic Fisheries, and manager of Community Economic Development with the Cashin Task Force on Income and Adjustment in the Atlantic Fisheries.

Dr. Poetschke received his Ph.D. in Sociology and Public Administration at Carleton University in 1997. His career objective, as stated on his curriculum vitae, is to make a difference. That is a wonderful career objective and we should probably all adopt similar career missions.

Mr. Thomas Poetschke, Senior Negotiator, Northern Political Development Directorate, Indian and Northern Affairs Canada: A study like the one I have done is of no real consequence until you communicate the results. This is an opportunity. It is the ideal forum in which to say what I have found.

I am appearing here today as a private citizen, not as a former employee of the Department of Fisheries and Oceans, nor as an employee of the Department of Indian and Northern Affairs. I am a private citizen who spent a good bit of time in Ph.D. work developing empirical indicators of the nature of the DFO organization and the nature of the organization that fishers and officers and managers in certain parts of the fishery would like to see.

The Achilles heel of the issue you are facing -- that is, privatization and quota management -- is its enforceability. Ultimately, it depends on the willing compliance of people in the industry. If you do not have that, you are lost. From an enforcement perspective, it is too difficult a situation logistically to control. Perfect enforcement in that context is an absolute impossibility; therefore, it requires some other kind of enforcement.

I asked fishers, officers and their managers about two matters. The first was the characteristics of the current organization. There were approximately 80 major questions designed to get a picture of what that organization offers. The second matter, also approached with 80 or so questions, was what kind of organization they would like to see. I asked what kind of an organization would engender their voluntary commitment.

I looked at the fisheries and at the various studies which stated that non-compliance had actually become the norm. It was the rare fisher who was not cheating. In a situation where non-compliance is the norm, there is regulatory chaos.

Obviously, if everybody is cheating, it cannot be because they are all evil, greedy, malicious people. There has to be some relationship between the organization that administers the fisheries and the reaction of the lower participants in the fisheries to that organization. That is why it was important to find out about the nature of this organization.

I am sure you have heard a number of people say that this is an awful organization. I am not here to put the organization down or to build it up. I am here to provide answers based on objective criteria to any questions you might have about its nature. I would also be happy to answer any questions you might have on what kind of organization fishers, officers and managers would like to see.

This is a coercive organization. Its nature is to use force as the means to solve problems. However force is defined, whether through the imposition of laws or regulations on fishers, that is its modus operandi. It is exactly the wrong animal for the job that is required, which is somehow to persuade people to agree with and accept the rules. Not surprisingly, what emerged from all of the data I collected was an organization that is normative in sociological terms. It is a representative organization where consensus is the basis. Persuasion, debate, dialogue, involvement and participation are the means used to forge that consensus, and they engender a very strong moral commitment among the organization's participants. It is not a calculative commitment like one would find in an economic organization. It is not alienation, which is the kind of commitment found in coercive organizations. It is a strong commitment to the organization which becomes the members' organization.

My study suggested that it is not ownership of the commons that is required; rather, it is ownership of the means of regulating the commons that is required. If people set the rules, then they become their rules; and, by and large, most people obey their own norms.

Senator Stewart: You were not here when Dr. Lane quoted me, although not as an authority, on the history of the department. I did not do anything like the kind of research that you have done. I got the impression 35 years ago when I was in the House of Commons that the Department of Fisheries, as it was then, was sailing in seas for which it had not been built. The department previously had been concerned with a certain amount of regulation, opening the lobster season in certain places on April 9 or May 1 and closing it, and it had quite a strong science element.

However, over the years, as the fishery became more complicated and, in some branches, more productive, the department was not able to change to perform an appropriate role. Some of this had to do with the personnel in the department. Some of it also had to do with the kind of persons who were appointed as ministers. I got the impression that the Minister of Fisheries within his area has more power than any other minister of the Crown. Certainly more than the Minister of Agriculture. He has more regulatory authority. Yet very rarely did I feel that there were ministers who were competent to perform the enormous task which was before them.

This is a caricature. How far wrong am I in my apology, as it were, for the department? It is an apology because I am saying that it is now expected to perform a role for which it was not initially cast.

Mr. Poetschke: The Minister of Fisheries and Oceans has an enormous amount of power in the Fisheries Act. It is considered by many to be one of the strongest pieces of legislation that there is.

I could not agree more with your point in respect to the minister not being able to grapple with the complexity of the issues. The minister cannot possibly be on top of all of the issues, particularly when there is an immense regulatory framework which is so complicated that even the officers cannot figure it out and there are so many different gear-type groups scattered over an enormous terrain.

That was exactly the point that Max Weber belaboured. His anxiety, which, I understand, led to a nervous breakdown, was over how one could keep the fair organization of bureaucracy and have politicians who made decisions without having the bureaucracy become much more informed than the minister. Consequently, bureaucracies are run by bureaucrats, not by ministers.

Weber's solution was for ministers to back off from solving local political conflicts and to delegate the authority down to the level where those local political conflicts can be solved by communities of people who have the local expertise and knowledge to make the most effective decisions. They probably will not make good decisions all of the time. However, Weber argued that the politicians should back off and steer the state strategically.

Senator Stewart: You speak of communities of people and we have heard about community quotas and some of the problems that the administration of community quotas would entail. I will raise a point on jurisdiction.

Certain aspects of the fisheries come under federal jurisdiction. However, long before the fish reach the market, the provincial jurisdiction intervenes. We were told earlier this morning that the federal government contributed to the problem of overcapitalization and we were told that provincial governments contributed to the problem of overcapitalization. From your analysis of the present situation, is there a federal-provincial jurisdiction problem? Would there be a federal-provincial jurisdiction problem in the kind of approach which you think would be desirable?

Mr. Poetschke: First, we need an organization that has the credibility of the people, then the technical problems can be solved. I see federal-provincial jurisdiction as a technical problem. It would be a problem that the people in that organization would solve. Again, they are the ones who face the rewards and the punishments for designing systems that do not work. It is they who have the most to lose and the most to gain from sorting out jurisdictions. That is how I would approach it: first, design an organization with attributes that everyone can accept, and then have those people solve the problem.

Senator Stewart: You speak of an organization. Would this organization be a legal entity? Could it do business? If so, from what level of government would it get its incorporation?

Mr. Poetschke: I am having a problem communicating to you the concept of organization that I have in mind. Probably the most efficient use of everyone's time is to turn to page 12 of the handout I provided.

Table 9 lists the internal characteristics and sub-characteristics of an organization. The following dimensions will be found in the left hand column: the spheres of consensus that are required to make an organization work; the typical communication mechanisms that it has; the way it recruits people to work in it; the socialization strategy, or the way an organization promotes a stable sense of what it is all about among the people that work in it; the scope the organization has over people's lives; the pervasiveness of the organization in their lives; the nature of the work and its relation to the amount of bureaucracy; and, finally, the functions of its rules. These organizational characteristics can vary enormously.

For example, in the watch-coercive type of organization, there may be absolutely no spheres of consensus; that is, consensus does not have to be obtained, because if the members of the organization do not do what they are told, down comes the hammer. On the other hand, in a legalistic-utilitarian organization, which is the direction in which a lot of the privatization discussions are headed, all that is necessary in the way of consensus is for everyone to agree on the procedures and policies that they will implement. They also need to agree on the definition of the facts.

In a service-oriented and community-based normative organization, there must be consensus in all six spheres. If there is not, there will be big problems. If nobody agrees on the definition of reality, which is pretty much the case in a lot of fisheries issues, how can the organization operate?

The goals are the maximization of the resource and, at the same time, the preservation of that resource for future generations of Canadians. If there is no agreement on these goals, how can it work?

The communication mechanisms in the current organization are such that half the time the officers do not have the information they need to do the job. The rules are changed out from under them. They go out to try to enforce the rules but they do not realize that the fishers are the ones who have the information. The officers try to charge or arrest the fishers, who just laugh and say, "Phone Halifax because the rules have changed."

The communication mechanisms needed are the kind found in the service-oriented and community-based normative organization. Everybody should have the information they need because everybody should be involved in making the decisions. This is the kind of organization that the officers, managers and fishers I spoke to said they would like to see.

Senator Butts: I like your hypotheses. I do not know where to go after that. Non-compliance has become the norm. There may be some compliance in good times, but in hard times there is close to rebellion. Look at how many times ministers' offices on the East Coast have been occupied. We have not heard the end of the current talk about salmon, either.

On page 14 of your presentation you state that the only way to get compliance is to appeal to the ultimate values of people and to their way of life. When you speak of this in terms of community, will we end up with thousands of different kinds of organizations depending on the community to which we apply this organization? That is my difficulty.

Mr. Poetschke: In 1984, I did a study of the number of communities that existed in Atlantic Canada and published it in the Canadian Journal of Regional Science. Then there were about 1,500 communities. Subsequently, while working for the Task Force on Incomes and Adjustment in the Atlantic Fishery, we began to realize that things had changed dramatically. Communities were no longer those tiny villages. The patterns of economic, social and political interaction at the local level produced, in effect, community groupings that were sometimes as large as a county.

When I was doing this study locally, we came up with three regions within Shelburne County that would effectively be communities of interaction based on the common pursuit of the fisheries, the technology of the gear that was used, and so on. There were maybe two or three communities in Yarmouth County.

Given the logic of the fisheries, there will be problems when it comes to drawing boundaries; obviously, there will be overlapping boundaries. The fisheries are complex. It is not a perfect world, but the communities begin to be obvious at the grass-roots level when they are not so obvious from a theoretical level.

Senator Butts: Would you give each one of these communities its own quota and let the members of the community run with it? Would you let them go and forget about Ottawa?

Mr. Poetschke: No, I do not think so. Ottawa needs to be involved. There needs to be a regulatory authority, and it must be an authority that gains the confidence of the people it regulates. However difficult that is, they need to be part of the plan.

Senator Butts: Much less a part than they are today.

Mr. Poetschke: I do not know that it is even much less. If everyone is working well together, it can be even more. If the department would unleash some of the enforcement managers I talked to, and let them do the work they want to do, they would do fantastic jobs and they would have the support of the communities. Now they cannot. What is needed is a different organization.

Senator Butts: Must they be in that community to understand the community?

Mr. Poetschke: Absolutely.

Senator Butts: They must be there, not sitting up here?

Mr. Poetschke: Yes.

Senator Butts: I understand you had something to do with the Cashin task force. Is that fair?

Mr. Poetschke: Yes.

Senator Butts: Were you part of the piece in the Cashin study that goes very close to talking about a guaranteed annual income?

Mr. Poetschke: No, I was not.

Senator Butts: Okay, you are off the hook.

Senator Cook: Your paper is a wonderful thing if we could bring about the new tomorrow. I hear words like alienation, then I hear wonderful words like partners and consensus. Then when I try to measure it inside my head, I have a feeling there are too many pieces in the loop. There is just too much there to manage it. I hear you say that we are up here and we are subversive and we need to come up. In your conclusions you say that the organization operates without lower-participant consent. Ideally, we are here to look at the harvesters of the resource. Do you see the loop ever getting sorted out with all of the participants being able to participate by consensus?

Mr. Poetschke: It is an enormous problem. You agree with me, since you just said it is so complex. I do not think there is much choice.

I am so excited about this subject because we are talking about finding ways to regulate the appetites, needs and wants of individuals with tremendous abilities and potential who want to expand that potential. This regulation must be done in such as way that it is in the interest of everyone. That is the fundamental issue.

Look at the planet. Look at what is happening. If we do not find solutions to these kinds of problems, a hundred years from now you will have to go inside your house to stop your skin from burning. It is a bit of an exaggeration, but it is the direction that we are moving. The fisheries are a microcosm of that. We are trying to find ways to get people to voluntarily restrain themselves, but at the same time to be competitive, aggressive and innovative. It is a really tough question.

We have had 2,000 years of the top-down, command-control, hierarchical structure. We need about 200 years of community-based work. That is how long it will take to solve this problem.

Senator Cook: Where would you begin, as a matter of interest? What would be your first priority to bring this about?

Mr. Poetschke:I would completely gut and rebuild the consultative mechanisms.

The Chairman: There have been many confrontations between the DFO and the industry. One situation was particularly confrontational. The DFO, seeing that things were quite bad and that the press was reporting on it, called a meeting, set the agenda, determined who would be invited to the meeting, not only by organization but by person, set the seating, and determined the coffee breaks.

I am not targeting individuals. The industry people asked those in charge of the DFO if they could determine or by consensus arrive at a third-party or neutral chairman for the meeting who would be acceptable to both the DFO and the industry. The DFO declined, rather than jump on the opportunity and say, "Maybe there is something to this, maybe we should look at it and discuss the concept of a neutral chairman". I bring this up as an anecdote only. It does not add anything other than the fact that it fits in well with what you have described as a model.

Given the organization that they have, could the DFO have chosen a neutral chairman?

Mr. Poetschke: What you described is what I found time and again. When I was doing my research, I sat in on meetings where exactly that occurred. Everyone that I talked to, whether fisher or officer or enforcement manager, said exactly the same thing, that this is the way it is done. None of them liked it.

What would happen if someone at some level in the organization in a regional office decided to be flexible? They would not be in good graces anymore.

The Chairman: The model is there. You are saying that the problem is not the people themselves, but the structure of the organization.

Mr. Poetschke: In general, that is the case. There are individuals who are very comfortable in that kind of organization, but there are many others who are not comfortable.

The Chairman: It would attract people who would be comfortable with that form of organization.

Mr. Poetschke: By logical extension, it would attract them to the top.

The Chairman: You evaluated the regulatory department, the DFO, and the way it is structured. You noted that you had evaluated the fishers' organizations as well. Do I understand that correctly?

Mr. Poetschke: It was not so much an evaluation of the organization, it was an attempt to find out what kind of organization exists. After that, I wanted to determine what, according to the people who are the lower participants in the industry, would be a better organization.

I was very careful about who I chose to speak with and approach. I wanted to speak with a fisher leader. That person could be a leader by position as head of one of the fishers' organizations, or by reputation because everybody in the community referred to that person as the one they talk to when difficult issues arise, or by virtue of being the most financially successful of all the fishers in the community. That is how I chose the people I talked to.

The Chairman:They were not only fishers.

Mr. Poetschke: I actually interviewed about 60 non-fisher community members. Of about 160 respondents, 80 were fisher leaders and another 60 were officers and managers.

Senator Stewart: You seem familiar with the various fisheries in Atlantic Canada. I wonder if asking a question concerning two or three of these fisheries might help to identify the kinds of problems that you would like to see solved. I am thinking particularly of Northumberland Strait and the lobster fishery there. My impression is that that fishery works pretty well. Does that conform to your view?

Mr. Poetschke: I wish I understood the fisheries. The real experts in this study are the fishers that I talked to and the officers and managers. I do not know the Northumberland Strait lobster fishery. I do know a little bit about the Southwest Nova Scotia Shelburne lobster fishery, but I would be on weak ground to try to make a comment.

Senator Stewart: I was hoping to mention the lobster fishery in particular in the Northumberland Strait and then the herring fishery in that area and the snow crab fishery in the lower Gulf to see what the different problems were. However, if the witness feels that he prefers to stay away from that kind of question, that is fine.

Mr. Poetschke: I am sorry. I am really not qualified to answer those questions.

Senator Stewart: One of the merits of the individual transferable quota system that we have heard described is that it leads to a rationalization of the particular fishery and that seems to mean a reduction of the number of boats and an improvement in the quality of the boats and certainly in the way the fish are handled on board the boats.

In the approach to the fisheries that you are recommending, is there much emphasis on the need for rationalization?

Mr. Poetschke: The answer to your question is that fishers and resource managers develop as they start to build a better system. However, I challenge your assumption or the assumption of those who would argue that the imposition of ITQs necessarily leads to a rationalization of the fishery. It is an economic argument, and they can pull out all kinds of curves to show the results. However, it is a limited argument because it assumes that people are rational. One of the problems, especially when one considers the chaos that has reigned in many fisheries, is that the fisheries are irrational. People are rebelling, which is, in a way, irrational, although from another point of view it is the rational expression of a grievance.

If you limit your horizon to the assumption of rational man, as economics unfortunately is forced to do, you stop people from thinking about other possible ways to solve this problem. Maybe an enforcement committee at our community level could be set up where we discuss the major enforcement challenges of whatever kind of fishery we have and we work together to figure out ways to pressure socially those who do not obey into obeying because it is our system. Those are the kinds of things that likely would result in a very effective, and probably efficient, fishery.

Senator Stewart: A lot of fishers hold up National Sea Products Limited or Fisheries Products International as villains, particularly for the ground fisheries. We were told 10 years ago or thereabouts in this committee that some of the draggers were wasting a lot of fish because the onshore plants were highly rationalized. Skippers were told almost to the hour when they were to hail the wharf because that was the time when the plant would be ready to receive them. Fishers were also told what the ideal fish size was so they abandoned the ones that were too big for the cutter and threw over the small ones.

Is that a description of the bad old days or does that still go on? Do you know anything about the efficacy of the observer program?

Mr. Poetschke: I do not think those are the bad old days. I heard from skippers of draggers that they do not fish to a shopping list; they take whatever they can get. They told me they do not waste anything. They deliver it all, but it does not all go in the quota, of course. It is all done illegally.

The high-grading that takes place is a feature, and a weakness, of ITQ systems around the world. Short of imposing the death penalty for fishing, which is a little ridiculous, or attaching electronic beacons to each individual and monitoring them like a police state, it is impossible to force people to obey these rules. If they obey the rules at all, it will be through a willingness on their part to do so.

As for the observer program, if I were to make a comment on that I would be stepping outside the bounds of this study and stepping into the role of an enforcement official, and I cannot do that.

Senator Stewart: Have you heard anything about the efficacy of the dockside monitoring program?

Mr. Poetschke: Yes, I have. There were mixed views on dockside monitoring. I cannot remember the details. My study took place both on Newfoundland's West Coast, the northern part of the Northern Peninsula, and in South West Nova. There were discussions about dockside monitoring, but I really cannot remember the details.

Senator Perrault: This is a unique and refreshing paper that you have brought to us. It is an aspect of the question that had not been developed to this extent. I am intrigued by the statement on page 14:

The only goals that could possibly generate the intensity of commitment necessary for fishers voluntarily to restrain themselves from cheating is the appeal to their ultimate values regarding their "way of life", "local community values", "community", and the "maintenance of viable fisheries for future generations of fishers and their families".

This would require us summoning up a nobility of spirit which has not been in evidence at all times in all sections of fisheries in Canada. Given the economic pressures that are on many fishing families to try to find a source of income, do you think they will not exceed the guideline because they are thinking of the ethical considerations in this industry? I wonder if we are expecting too much. What do you think?

Mr. Poetschke: I asked officers and fishers if they ever went out to communities to try to convince people that sticking with the rules was a good idea because it was in their long-term economic interests. They said they very rarely did. There are almost no resources devoted to such an undertaking, although most of them said that occasionally it did take place. I then asked the fishers, and they said they have never heard of such a thing happening. I asked them if they thought it was a good idea, and they said, "Do it. It is a terrific idea." That is one of the kinds of actions that can be taken to make a difference.

As for fishers being on the fringe of losing their business and therefore being required to cheat, the temptation is always there. Except for those who are really facing the crunch, we are probably talking about marginal fishers. Marginal fishers do not catch that much in the way of fish. It does not matter if they cheat.

Senator Perrault: We have had a variety of opinions with regard to the ITQ concept. There are powerful temptations out there to cheat and high-grade; are there not? You referred to that earlier in your testimony.

Mr. Poetschke: Absolutely.

Senator Perrault: There are temptations to throw back certain species and to place the emphasis on others.

Mr. Poetschke: That is true. I heard from a number of fishers that they are absolutely disgusted at their own behaviour which they felt they had to do. Again, given the logic of the fisheries and the way they are currently managed, people get away with cheating and are supported in that behaviour. At least, that is how the fishers and officers see it. That is how the department sees it. Cheating becomes a rational activity, and if you remove that, then it is a different ball game. Then the question becomes one of morale. In whose long-term interest is it that these rules should be obeyed?

Senator Perrault: There is an educational challenge out there.

Mr. Poetschke: Absolutely. It is a huge one.

Senator Perrault: You say on page 10 that politicians are not exempt from that wide ranging survey:

This requires politicians to stay out of the enforcement activities, since their interference would introduce an inequality into the system. However, officers do not consider the implications of a biased economic system or their own enforcement actions on its behalf, for the pace of illegal activities that occur.

In what way would you be critical of political interference?

Mr. Poetschke: I am not the one being critical of political interference.

Senator Perrault: What has led you to that statement? Have there been notable examples of political interference?

Mr. Poetschke: Absolutely. I have called it a watch-coercive type of enforcement system because in that kind of system, political interference is widespread.

Senator Perrault: What form does it take? I am not being confrontational. I am seeking information.

Mr. Poetschke: Well, for example, officers would have a certain tuna quota. A fisher comes into the district office and says, "That tuna quota is too low" and wants it bigger. The fisher makes a phone call, then sure enough the phone rings 10 minutes later and the quota is increased. It is widespread.

Senator Stewart:This is the bluefin tuna, is it?

Mr. Poetschke: I do not want to identify the fishery.

Senator Perrault: That is disturbing information. It is important that the committee know of this. Are there any examples of fishing nations, perhaps Japan, where this kind of appeal to the highest standards of ethical and moral conduct has been effective? Are they adopting approaches different from ours that lead to higher ethical conduct?

Mr. Poetschke: With respect to fisheries, I do not know. In general, ethical conduct is widespread. In Japan, for example, if someone drops a wallet on the street, somebody passing by will pick it up and take it to the local police. They will not even look to see whether there is any money in it. The honesty and integrity of the community system is phenomenal.

Senator Perrault: Does that extend to the fishing community?

Mr. Poetschke: I am not sure.

Police forces in this country and in the United States used to be watch systems. Then they became legalistic systems with the uniform, the cars, and the officer separate from the community. The objective was law enforcement and the law was applied equally; if a person was wrong, the person was charged. They antagonized everybody, which increased the crime rates. People were very uncomfortable. There was a crisis.

Next they moved to community-based types of enforcement.

Senator Perrault: They returned to the beat type of policing.

Mr. Poetschke: Officers got out of their cars, started talking to people and developed solutions together with people in the community. They developed committees where people from all walks of life in the community participate in developing policy for the enforcement organization. That is all around us, but not in the fisheries, except if one talks to the people in Newfoundland. They related immediately to the community-based notion of fisheries. They called it neighbourhood watch.

Senator Perrault: There are communities in Canada now adopting neighbourhood watch programs.

Senator Cook: I would like to pick up on Senator Perrault's opening statement. Being a Newfoundlander, I know firsthand of the Newfoundlanders' experience of the collapse of the northern cod fishery and the imposition of the horrific tags program. People needed something, but not that or the way that it was administered. They have come through the fire and the configuration; they are ready. If someone would only listen instead of imposing more of the same on them, I think that that corner of the world would be better served. There is wisdom and the experience of what happened. They are not blaming anybody; they just want an opportunity to fix it. They cannot fix it because they are being told what they need to do because this has happened. They are being told "Go and get retrained and go do this and that." There was no opportunity after that piece was over.

There is a realization, and Newfoundlanders are ready for an opportunity to risk, because there is wisdom in the individual. They know they may have to go to Fort McMurray, or wherever. There was no consensus in that program. I realize that something had to be done quickly for people. If there is one lesson that we could learn, that is the one.

Mr. Poetschke: I would agree with you.

The Chairman: We had Mr. Rennie appear before us from New Zealand. He explained what has happened in New Zealand where the fisheries are almost completely privatized now. The right to fish is freely traded and sold and used as a capital to make loans or to borrow money to buy somebody else's quota or what have you. They are even looking at the concept of selling the right to fish to foreigners. Inevitably, it is a kind of continuum from a common property to a fully privatized property-based ownership.

One of the downsides that Mr. Rennie mentioned as a result of this was that the property becomes something to which a value is attached, and, as with any other investment, one expects a return on the investment. If one needs to borrow the money, one must have a fairly good return on a yearly basis.

As a result, the value of some of these stocks has gone up. When people borrow money, they need to get a good return on it, otherwise they move their investments elsewhere. As opposed to promoting a long-term view of the fishery, which is claimed as one of the major benefits of an ITQ system where people have more of a long-term stake in it, this is creating is a very short-term view of the industry because people want that return on investment. Most people do not get into investments for a very long time. They want the investment to look good on a yearly basis.

Did you get the feeling from fishers that they might be concerned that over the long haul this might happen in Canada? If we do continue the route to privatization, would it place all that much more pressure on the stocks to be fished much more quickly on a yearly basis?

Mr. Poetschke: What I heard from fixed-gear fishers was that if ITQs were imposed, and that is the term they used, the fishery would be owned by two or three people who would fish it for economic reasons. In an economic organization, that is the sort of thing that happens. The commitment is to a return on investment. It is perfectly understandable.

However, in a normative organization where the goal is, not return on investment, but the preservation and pursuit of a way of life that has been going on for 300 years, there is a different attitude. It does not mean that in that normative situation there will not be those who take a return-on-investment attitude, but it will be up to the community to figure out how to deal with that.

The Chairman: Thank you very much, doctor. We appreciate the testimony you have provided us with today.

The committee adjourned.