Proceedings of the Standing Senate Committee on
Fisheries

Issue 13 - Evidence, October 29, 1998


OTTAWA, Thursday, October 29, 1998

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

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

[English]

The Chairman: I will call the meeting to order.

We will continue with the question of privatization and quota licensing in Canada's fisheries. We have with us, from Iceland, Mr. Arthur Bogason, the chair of the National Association of Small Boat Owners.

Iceland's National Association of Small Boat Owners, formed by Mr. Bogason in 1985, rose to prominence largely in response to the introduction of the individual transferable quotas (ITQ) system. The association has worked to ensure an adequate share of the allowable catch for its members.

Mr. Bogason has also proposed the creation of an international north Atlantic fishermen's alliance to ensure the priority rights of coastal fishermen in communities. Last year he was the keynote speaker at a one-day symposium organized by St. Mary's University and the Ecology Action Centre. Sponsored by many groups, the symposium focused on fisheries management options. His message about not making fish stocks private property received much attention in the media.

Welcome to our committee, Mr. Bogason. We look forward to hearing your testimony and having an exchange of information this morning. Do you have any opening comments?

Mr. Arthur Bogason, Chairman, National Association of Small Boat Owners, Iceland: Yes. First of all, I should like to thank you for this opportunity to express my views and opinions on fishery matters. I am the chairman of the National Association of Small Boat Owners in Iceland. We define small boats as boats smaller than 10 tonnes or approximately 35 feet. I have been a fisherman for most of my life, not only on small boats but also on trawlers, seiners and so on.

I have here a transparency showing a typical small boat with a typical day's catch these days. This is a six-tonne boat with a catch of more than six tonnes.

In Iceland we have approximately 1,300 small boats which annually catch approximately 25 per cent of cod, our most important species. The total export value of their annual catch is approximately $180 million Canadian, creating approximately 1,600 full-time jobs at sea alone.

The association I represent was established in 1985 in direct connection with the enactment of the quota system. There is no doubt that if the small owners had not stood up for their rights, the system would have wiped them out in a jiffy. With the enactment of the quota system, the time for big companies has arrived in Iceland. My association has been, and still is, out front criticizing the quota system. That does not mean that the whole small boat sector is outside the system, but we keep up our firm resistance.

As you know, Iceland lies in the Atlantic Ocean, between Greenland and Norway, close to the Arctic circle. It is 100,000 square kilometres in size and the population is only 270,000 people. Iceland is a harsh country to live in and our national spirit is marked by that in many ways. In order to show you how harsh it is, I have a photo here showing a boat coming in from a day's fishing. There is nothing happening. There is not an accident taking place. My guess is the crew is downstairs arguing about the quota system.

Iceland has fought 10 wars, cod wars, to be exact, and it has been victorious. We even defeated the British and the Germans. The first cod war took place in 1415 and ended in 1425. All together, Icelanders have fought for 65 years in cod wars. The last war ended in 1976, when we moved our fishing limits out to 200 miles.

Today Iceland is a wealthy nation. Most of our continental shelf is within the 200 miles, the home grounds of our main fish stocks. In 1997, approximately 49 per cent of our total foreign exchange income, 73 per cent of the merchandise exports, and 14 per cent of the gross domestic production came from the fishery.

Only 5.5 per cent of the workforce depends on the fishery and 11 per cent of the workforce is directly involved in the fishing industry. Our annual catch is over 1.5 million tonnes, worth approximately $2.5 billion Canadian. For years, we have ranked among the 10 to 15 biggest fishing nations in the world.

If any country needs an efficient fishery management system, it is Iceland. In many other countries, certain coastal areas depend just as much on the fishery for their livelihoods. However, in Canada, fishery is not one of the backbones of the economy. Canada would survive even if it closed down all of its fishery industry. Iceland would not.

Since the 200-mile war in 1976, we have had our experiences. After we won the last cod war and drove the foreign trawlers out of our waters, we simply built our own instead. The fleet that we blamed all our misfortune on and nicknamed the "vacuum cleaners" was replaced in record time, only with much more powerful ships.

Experiments to eliminate the constant effort capacity were all in vain. Finally, in 1984, we enacted the fishery management system. I should like to talk about this system and express my views, as well as my opinions on some alternatives.

A little detour is in order, however. The world that we live in gets more and more complex by the minute. The changes that constantly take place are faster than most of us can cope with. Modern times are often called the information age and surely the flow of information has become so enormous that we can only grasp a fraction of it. This information explosion has inflated the problem that was big enough already. What are the origins of the information and whom and what are we to trust?

In my country, and in others, there is mutual interest in science and politics. Most of the higher educational institutions, along with the biggest and most important laboratories, are funded by the government.

In perspective politicians are losing -- or should I say signing away -- their independence into the hands of scientists and specialists.

Today the Icelandic fishery management system runs within a very complex body of laws, usually referred to as the ITQ system. This system is the brainchild of various specialists, including economists, biologists, lawyers, political scientists and so on. For a decade and a half, these specialists have played with the milk and honey of my nation.

It is my opinion that the Icelandic ITQ system is based on wrong biology, wrong economy, and wrongful jurisprudence. It brings death for a society. To my mind it brings death for the fish stocks as well.

A philosopher once wrote that one of the dangers science must beware of is being too political. I would add that one of the dangers societies must beware of is becoming too scientific. Everything goes according to changes and changes are vital for living and prosperous knowledge.

In Iceland, politicians prefer to get advice from super-advisers and in that sense they create them in order to minimize their own trouble of decision-making and responsibility. The advisers fancy to be super-advisers and the power they suddenly have creates another phenomenon. They no longer talk in the power of logical reasoning, but in the power of power itself. Living and prosperous knowledge suffers. The knowledge of individuals, especially those outside the institutions, is ignored and every measure is taken to shut them out.

I trust that you have some knowledge on the Icelandic management system. Icelandic officials have managed to make it world famous, and, at home, reports rain from foreign institutions and media, praising the system as one the world should enact en masse.

These reports rely on information that is produced, selected, forwarded and, in most cases, interpreted by the creators of the system. In Iceland, we have a saying that our exaltation comes from outside, which means that no one is esteemed with fairness at home. I challenge everyone to be neutral when conducting their investigation. I challenge everyone not to be just believers when they get information, no matter from whom, and to use their judgement.

I have made my own investigation. Whether you would do it the same way or not is your business. However, if you picked up the late May issue of the Icelandic Business News and read the editorial, you would read that:

The outcome of the Marine Research Institute is one more confirmation on how great the fishery management system is. The ITQ system has developed stronger fish stocks, and the freedom of transferring quotas has above other issues created a more efficient fishery than before.

Later it says:

Our success in managing the fisheries and our sensible exploitation of the marine resources is more and more being noticed in the international field.

If you had been at the United Nations on September 25, you could have heard our Minister of Foreign Affairs saying that:

The fishing stocks in the Exclusive Economic Zone around Iceland have been steadily growing since the implementation of a system of individual transferable fishing quotas in order to achieve both desired economic objectives and to protect our resources.

These quotations are just an example; there are many more. The reason for statements of this kind is that the marine institute proposed that the cod quota would be increased this fishing year by approximately 14.7 per cent from 218,000 tonnes. For your information, since 1947, the cod fishery has produced less than that only three times, and all cases were after the enactment of the ITQ system.

The average catch for the last 22 years is 310,000 tonnes. A previous report from the institute states that the maximum yield from the cod stock is 450,000 tonnes.

In the quotations, there are references to "stronger fish stocks" and "steadily growing stocks". I ask the honourable senators to look at the latest report from the marine institute entitled "State of Marine Stocks in Icelandic Waters 1997-98, Prospects for the Quota Year 1998-99".

I have a transparency that shows the cod stock since 1955 and another that shows the status of the cod stock today.

As you can see, since 1968, Greenland halibut catches have never been smaller. If this goes on, I believe that halibut is on its way to the endangered species list. This is the lump fish that is sneaking around here. However, it is not within the ITQ system. It is controlled with other systems and it does not look much different. I will go to this later on.

I have another transparency that shows the status of cod, saithe, Greenland halibut, and haddock. These transparencies are from this latest report. I humbly ask, do these statistics confirm the quotations I read? To me, the only thing the statistics confirm is that the opinions abroad are shaped by the very people who created and favour the system. What can be expected when foreign institutions and media pick up this information and, in most cases, do not care to dig any deeper? I have nicknamed this the "carousel of lies".

The main objectives of the quota system are supposed to be building up fish stocks, securing employment, securing residency, and maintaining the marine resources as common property.

Let us look at the first objective, building up fish stocks. I will start with the cod stock. We have been bragging all over the world about cod. I told you about next year's proposal and the average catch since 1976. However, I wish to add that the state of the fishing stock has often been worse, as a matter of fact, 12 times since 1976. Sadly enough, 11 of those years are after 1984 when we started the system.

Turning to haddock, this year's proposal of 35,000 tonnes is a 22 per cent decrease from last year and will be the smallest since 1947. The average catch for the last 22 years is more than 51,000 tonnes. Since 1976, the stock has only been smaller for two years, in 1986 and 1997.

The saithe catch since 1976 has been 62,000 tonnes. The proposal for this year is 30,000 tonnes and that will be the smallest saithe fishery since 1946. Excluding the years of World War II, it will be the smallest saithe fishery since 1924. Since 1976, the stock has been smaller than today only three times, in 1995, 1996 and 1997.

Since 1976, the average catch for Greenland halibut is a bit less than 28,000 tonnes. This year's proposal is 10,000 tonnes. The fishery will be the smallest since 1967, with the exception of 1976, the year that we expanded to 200 miles. The state of the stock is such that it has probably never been smaller in history.

Finally, the proposal for red fish is 65,000 tonnes this year. The average catch for the last 22 years was 87,000 tonnes. It has been less only three times since 1950. The catch per hour has been less for six years, from 1991 to 1996, ironically all of them after the enactment of the so-called clean ITQ system in Iceland.

The state of other stocks within the system, as well as stocks outside, is similar. In my opinion, comparing the state of stocks outside the system to the ones inside is very unfair. The system sets the fleet on those species but, interestingly enough, most of them are no worse off than the rest of them.

I will mention the state of our main pelagic species, capelin and herring, which are both inside the ITQ system.Capelin is in very good condition, but linking it to the system is another story. As an example, I doubt that the increased water temperatures around Iceland can be linked to the system. Herring has been treated with intensive care for 30 years. It was to be the model to prove the efficiency of fish protection. On television news last night, it was reported that fisherman are not finding any herring. Why? My guess is that no one knows.

Why is this happening? An ITQ system encourages fishermen to select from the stocks. The more the quotas are limited, the more they will select. Our cod stock is like a cake with many layers. Selecting from a cake is not considered good manners. The cream is scraped off -- in this case the spawning stock -- and some might dig in here and there in search of the goodies. We can tolerate this at a child's party, but should we tolerate it with regard to fish stock?

At a recent conference in one of the Scandinavian countries, the question was raised whether or not Icelandic fishermen discharged fish. A representative of the Icelandic Marine Institute stood up and said that there is no discharge within the Icelandic ITQ system. He left people speechless because, only a few days before, it was reported on the news that a survey done by the marine institute showed that every fifth lobster was thrown overboard on Icelandic fishing grounds.

I have a picture taken aboard a shrimp trawler. The fisherman caught 12 to 15 tonnes of cod and discharged it because he did not have a quota for cod.

It is my opinion, the cod stock should be fished by taking a slice of both small fish and big fish. In other words, destroy as little as possible the structure of the layers that has taken nature centuries to evolve and create. The other way, it is seriously disturbed, weakening the strong end of the stock. As a fisherman, this makes perfect logic to me. I must admit that in my fishing days I have never felt bad about killing the small fish along with the big fish. It was a part of my day's catch.

The great paradox is that, the more the quotas are cut, the more pressure there is on the most vital part of the stock, the part that the stock depends on for its own survival.

The second point was that the system should secure employment. The total workforce within the fishing industry in 1984 was approximately 16,000 people. In 1995, it was down to 13,300, approximately 2,700 less jobs. That does not sound like a significant decrease in Canadian terms, but you must realize that we have a population of only one quarter of a million.

The third point was that the system should secure residency. This transparency I am showing you now is directly related to the last one. It shows the movement of people from the small coastal communities and rural areas to the capital city and its surroundings. Many small coastal communities are fighting for theirs lives, depending on the small boat fleet for their existence. All of the 2,700 jobs which I mentioned are lost in the small coastal communities. Part of the graph shows people moving to the capital city, while another part shows what moves through the capital city. It is very clear what is happening.

The fourth point is a significant one. The issue of common properties is a worldwide concern. The exploitation of marine resources has also become a worldwide concern. The Icelandic legislation for the ITQ system states that the exploitable marine resources on Icelandic fishing grounds are the public property of the Icelandic nation.

This is a terrible joke. An ITQ system can only be a system of privatization. It lies in the name itself. "Individual" is not an indication of a common property that is transferable. How can an individual transfer, lease or sell something that does not belong to him alone?

The legislation also states that allocations of fishing rights, according to these laws, do not create proprietary rights or irrevocable custodianship of fishing rights for single parties. In Iceland, the quotas are used for mortgages. Their values are included in the annual financial statements of companies and shares on the stock markets are assessed according to the quotas.

The economists of modern times are specialists in this matter. Their theory is that, by privatizing the marine resources, the quotas will eventually be in the hands of the ones best skilled to take care of these businesses. How can a fish stock be privatized?

Let us take the Icelandic cod stock, as an example. Today, the Icelandic fleet within the ITQ system consists of approximately 700 boats and ships that exploit the cod stock. How is it possible, under such circumstances, to crystallize this responsibility within each and every operator?

As I have described, it works exactly the other way around. Limited quotas mean selection. Transferable quotas mean distraction and derangement, both regarding the exploitation of the stocks as well as human factors of settlement. In addition to this, it is a great abuse toward the public to see the government hand out quotas, worth billions of dollars, to individuals who turn around and sell them to the highest bidder.

Economists need to incorporate moral philosophy into their studies. When they claim that their sole guide is objectivity and that they only seek scientific truth as revealed by facts, then I say beware.

In this context, I should like to show you some transparencies that might be of interest.

A few years ago, my association asked the Fisheries Research Institute at the University of Iceland to calculate the operation results of the small boat sector in the same manner that the Bureau of Statistics had done for years in the various sectors, but always excluding the small boat sector.

If the theories of economics held water, it is obvious that the quotas would start to flow in the direction of small boats. The net profit for the small boat sector was 8.4 per cent that year, while the net profits of the fishing trawlers were 3.7 per cent. The question arises whether the quotas start to flow in the direction of the small boat sector. In 1983, we had one fishing trawler on our grounds. In 1996, there were 73 of them. In 1983, there were 890 small boats. That number grew to 1,980 in 1991 and to 1,300 two years ago. You can see that the quotas are not flowing in the direction of the small boat sector.

I have a transparency that shows the main engine capacity, ranging from 1980 to 1997, in kilowatts. The system was imposed to eliminate effort capacity just as well. This is the limitation from 33,000 kilowatts in 1980 to over 114,000 kilowatts in 1997, when half the trawler fleet was decreasing. These are gross tonnes for the same period. In 1980, there were close to 14,000 gross tonnes, but in 1997 there were more than 43,000 gross tonnes.

On January 1, 1991, the government incorporated 1,043 small boats into the ITQ system. Only 44 months later, the big companies bought approximately 700 of those boats and moved their quotas to their off-shore ships. They also used their renewal rights to enlarge these very same ships. To top it off, these same companies have used the freedom of transferring quotas to annually lease these very same quotas to the small boats that did not sell out. Finally, they operated their ships in high seas, outside the 200 miles where they could fish freely.

You now see what has been happening to a number of quota holders. The small operators are the red sector, and the big operators are the blue sector. The small operators decreased from 950 in 1991, down to 550 the last fishing year. The giants have been buying quotas. In 1984, they had a little less than 28 per cent of the quota, but in 1994 they were up to almost 50 per cent. In 1991, the five biggest quota holders had 12 per cent of the total quota, but two fishing years ago it was close to 21 per cent.

It is of no surprise that the Icelandic Fishing Vessel Association, representing the trawlers and the big companies, recently launched a $1 million ad campaign to try to sell the system to the public. Each and every one of the ads are research material.

By now, there is little doubt in your mind regarding my opinion on the ITQ system. However, as much as I dislike how the system is enforced in my country, I also dislike generalizations.

My firm belief is that we Icelanders have made enormous mistakes in our fisheries management, the biggest being the incorporation of all sectors into the same system. It is also my firm belief that we have overlooked one of the main factors in exploiting our marine resources, namely, how we fish is just as important as how much we fish.

It would be unfair to state that nothing has been done right. The limitation of licences that we enforce is, in my opinion, sensible, and so are protection areas where only fixed gears can be used. Many of the regulations regarding the fishing gears come directly from the fishermen and, in most cases, are effective in serving their purpose.

In my opinion, there is little question that most fisheries should be managed with effort controls. I say most fisheries, because even though I oppose ITQs as imposed in Iceland, I am not ready to say that such a system cannot work elsewhere in certain fisheries. I simply do not have enough knowledge to exclude the possibility. I have given it a great deal of thought. It would be sensible to use a mixed system: an effort control for the fixed gears, the small boat sector and the coastal fleet, and an ITQ system for the mobile gears and the offshore sector. ITQs do have the tendency to decrease the number of ships, so why not use the system to decrease the number of the very ships, the main reason for all the riots around the fisheries?

However, as always, there is a catch to this: The question of common properties arises.

The effort controls that I think would be appropriate to use are the following:

The first one is the days at sea, where the fishermen can choose, without any hindrance, when he goes fishing. Being a fisherman for most of my life, I find it preferable to bring ashore everything I catch, if I am allowed to fish a certain number of days, rather than a certain number of fish. One of the biggest advantages would be that the data from the fishery would be more accurate.

The second control is gear restrictions, whether the usage of fixed gears is encouraged and even rewarded.

The third is fishing zones being created, taking boat size and gear types into account. In Iceland, the idea of an exclusive zone for the small boat sector and the coastal fleet, for example, 30 miles around the island, has often been mentioned by fishermen.

The fourth is limited number of licences. In other words, when renewing a boat or a ship, the same tonnage must be removed from the fleet.

There are more points, but I think these four are the most important ones.

If one concludes that the present speaker assumes that, by taking these measures all the problems of fisheries would be solved, then I can assure you that I have much more faith in the fishermen than to even dream about that.

The very nature of being a true fisherman does not include being under the influence or ordinance of others. When regulations in a total paradox with his basic instincts are forced upon him and his fundamental ethics, we are off track. The inevitable happens. He starts to seek ways around the regulations, and the demoralization of fishermen has begun.

This point illustrates the necessity of incorporating the fishermen into the decision making in the fishery management. Many of the best ideas come directly from the fishermen themselves, and it is far likelier that they will respect rules and regulations that originally come from themselves than from the bureaucrats.

This point also illustrates the necessity of incorporating the knowledge and experience of fishermen when it comes to estimating the state of fish stocks. To my mind, the fishermen are the ones that are the most knowledgeable about the state of fish stocks. Scientists and fishermen need close cooperation in this respect.

For years, I have said this over and over again, and I will say it one more time: When dealing with fishery management, we must weigh what problems we are solving and what problems we are creating. Bearing this in mind is our obligation and challenge.

In all my struggles through the years, one factor has overshadowed all the others, and it has sometimes been my sheet anchor -- the human factor within the fishery.

Our approach to fishing needs to maintain the human element. The sooner we include that factor into all our decision making in the fisheries, the closer we are to the goal we are trying to reach.

The Chairman: I heard that you were a good communicator and now I can see that the compliments were well justified.

If possible, perhaps the committee clerk could contact you to get the graphs and the transparencies that you used.

I would ask committee members if we may have the brief which was just presented form part of the record of the committee?

Some Hon. Senators: Agreed.

The Chairman: It is agreed.

Senator Butts: Mr. Bogason, can I assume that you are opposed to any privatizing of the fishery?

Mr. Bogason: Yes. The fishery is a very complex matter but I suppose I am opposed, yes.

Senator Butts: Are there any members of your association who have an ITQ?

Mr. Bogason: Yes. Of our 1,300 boat fleet, there are approximately 300 within the ITQ system. Approximately 400 boats are within the IQ system. The rest of them are within the "days-at-sea" system. If I was required to explain all the regulations around the small boat system, we would need another meeting. They are very complex.

Senator Butts: Does it matter to your membership that you are not on their side?

Mr. Bogason: I am on their side. In that respect I must pick up a line from Mr. Ghandi, who said, "There go my people. I am their leader and I must follow them."

In that sense, I applied for more shares for that part of the sector. They are well aware of my opinion on the ITQ system. As a matter of fact, my opposition to the system means that they have had more quotas.

I am not talking about them giving us more to shut us up, but in a way it works that we have had bigger shares. You are in politics; you understand.

Senator Butts: Was your group consulted in 1984 when this system came into being?

Mr. Bogason: No, absolutely not. That was one of the main factors why it was possible to establish this organization. Many people in Iceland find it rather peculiar that small-boat fishermen organized as well as they did back in 1985. They were simply forced to do that. I was the tool that they used to create the organization.

Senator Butts: These charts that you have which serve to prove your point, are they available to anyone who wants to know about them?

Mr. Bogason: I am happy to send a copy of all my documents to you, and more than these.

Senator Butts: Are they available to all the people in your land?

Mr. Bogason: Yes, all Icelanders has access. The report on which I made transparencies is a public report available from the Marine Research Institute.

Senator Butts: Why is there not more opposition then?

Mr. Bogason: There is a great deal of opposition but that is not well publicized. I believe your next witness, Mr. Hannibalsson, agrees.

Senator Butts: Is it correct that when the boat moves, the quota goes with that boat?

Mr. Bogason: Yes. This is one of the things which we have criticized the most. For example, when quota from a small boat, which has always done long line fishing in fjords, is sold to an offshore trawler, that trawler will then go fishing 100 miles from the coast. The argument we hear is this: We bought the quota from a boat that was fishing inside the fjord so we wish to remain inside the fjord and fish.

Senator Butts: Is that is the reason for the decline of many coastal communities?

Mr. Bogason: That is part of the reason.

Senator Butts: Are there many of these coastal communities that have been deserted?

Mr. Bogason: I do not believe any of them have been completely deserted, but many are heading that way. In several of the small coastal communities, especially along the west coast, there are only a few small boats that are still allowed to go fishing.

Today, we are facing regulations which mean that those small coastal communities cannot survive. We are now attempting to work this out with the government, however, I do not know how it will end.

Senator Robertson: Mr. Bogason, your comments this morning have been very helpful. You said that your small fishing boat owners were not consulted in the beginning years when the government introduced the ITQ system. Is it true that they were more or less ignored?

Mr. Bogason: That is correct, yes.

Senator Robertson: With the intervention of your organization, which now better represents the small boat owners, is the government giving the small boat owners any more recognition? Are they being more helpful?

Mr. Bogason: The founding of the organization has done much for the small boat owners. In 1984, we were not consulted. As I showed you on one of the transparencies, the number of small boats was 890. These 890 boats were allowed to fish less than 9,000 tonnes of groundfish by the regulations that the minister of fisheries then issued.

Last year, the small boat sector of 1,300 boats fished 70,000 tonnes of groundfish. The total allowable catch was lower last year than it was in 1984 when we were only allowed to fish 9,000 tonnes. This was a direct result of the founding of our small boat organization.

Fishermen in Canada need to organize, especially in Nova Scotia.

Senator Robertson: More than Nova Scotia, yes.

Mr. Bogason: Yes, I know that.

Senator Robertson: Does the quota system for the small boats differ in size from the larger boats, or is the development of it basically the same?

Mr. Bogason: We have three systems within the small boat sector. We have the ITQ system, which is exactly the same system as the trawlers. Then we have an IQ system, which is separated from the ITQ system. There are no transfers allowed from small boats to bigger ships, however, we are allowed to transfer annually from the ITQ system to the IQ system. This is for the protection of the small boat sector. The tendency is always to sell out the small guys to the big guys. That goes for everything.

The days-at-sea sector is outside both these systems. They can fish freely for a certain number of days. The IQ fleet and the days-at-sea fleet are only permitted to use hook and line.

Senator Robertson: We have learned that in New Zealand no formal system exists to evaluate the benefits and the costs of the ITQ system. Commentators' views are basically founded on their perceptions, rather than on the findings of a hard evaluation. Do you know if a good, reliable system exists to evaluate the benefits and the costs of ITQs or other methods of fishing?

Mr. Bogason: I would suggest that you should ask Mr. Hannibalsson about this. He is the right person to answer that question.

Speaking of the New Zealand system, did you ask the people from New Zealand what is happening with orange roughy?

Senator Robertson: Yes. It is a disaster.

Mr. Bogason: It is a disaster. That is because they put it on the ITQ system. I believe you have a species in Canada called abalone.

Senator Robertson: Yes.

Mr. Bogason: That was the first fish Canada put on an ITQ system and it has disappeared.

Senator Robertson: Let us assume for a moment that the stock is down. The small boats are reduced and the larger vessels generally are not. They still go out and fish. From a conservation standpoint, who does the most damage? Why do they not reduce the size of the larger vessels and let the smaller boats in the villages continue with their lifestyle? In our country at least it never seems to work that way when you are looking at a reduction.

I would say the big vacuum cleaners do the most damage to the stocks.

Mr. Bogason: I believe we should look into how we fish instead of how much we fish and we should use fixed gear. As much as we can, we should use smaller boats that do not go far from the coast. They bring in the best raw material that you can eat for your lunch or dinner.

The big offshore ships usually end up in a rape-and-run fishery, as did the Icelandic trawler fleet. The big ships were up in Northern Norway but, because they need so many tonnes in order to operate, they always seem to end up somewhere else.

As a matter of fact, I have one transparency here which shows how many tonnes of fish is required by each sector. The freezing trawlers need to catch 123 tonnes for each person abroad to justify their operation. For the fisheries trawler you need 208 tonnes for each person on board. For boats the size of 50 to 110-plus tonnes, you need 47 tonnes. For the small boats, you need 27 tonnes.

Is it wise to put such pressure on this industry? They need so much fish in order to operate.

Senator Robertson: That is a very telling graph, Mr. Chairman.

Mr. Bogason: I will send you all these graphs.

Senator Adams: This is very interesting. Do you have a system like we do in Canada where the government gives money to people who can no longer fish? This year, we have had problems with the salmon fishery in B.C. The minister will give millions of dollars to those people who are not able to fish. How does the system work in your organization?

Mr. Bogason: Within my organization there are no subsidizes or any pipelines between the state treasury and the fishermen. We once had a fund to buy out the ships of fishermen who wished to quit. For years this fund worked. Mostly it bought out the midshore sector and small boats. I believe it bought out only two or three trawlers. This system decreased the fleet in number, but the capacity increased. It has not worked.

I know you have a buyback plan in Canada. You should really give yourselves time to think it over before you enact such a plan. It will not work the way you would like to see it work. We have had a similar experience here.

Senator Adams: The big trawlers and the fish plants do their own canning and freezing. Have you had to cut out people along the coast of Iceland, people who work in the canneries and fish plants?

Mr. Bogason: We have very few canneries in Iceland, so it is hardly worth mentioning.

I did not quite get your question.

Senator Adams: The last few years we have been closing all our fish plants that were built by the government and now people have no jobs.

Mr. Bogason: Are you referring to a buyback regarding the fish plants?

Senator Adams: Yes.

Mr. Bogason: Within this fund, they also could buy back some fish plants. In fact, four or five were bought back. However, it did not work. After they bought the facilities, they were never supposed to be used for fish processing again. That does not work, either. They find ways to use them.

Senator Adams: Is your government promoting fish farming of any kind to the fishermen of Iceland?

Mr. Bogason: We have some salmon farming and we are doing experiments regarding halibut. We are doing some in cooperation with Canada in that respect. There is little fish farming in Iceland, mainly due to how harsh the circumstances are here. Sometimes the caves, or whatever, are not there the morning after they are set up.

The Chairman: We have one last question. Mr. Claude Emery will ask this question.

Mr. Claude Emery, Political and Social Affairs Division, Library of Parliament: Last year, you proposed the creation of an international North Atlantic Fishermen's Alliance. Was your proposal successful?

Mr. Bogason: My guess is that we will fund this organization within six months. The main reason for this being postponed is that in the meantime we established a world organization. You have heard about that, have you?

The Chairman: Yes. Mr. Bogason, I indicated to some friends from Nova Scotia last week that you would be here this week as one of our witnesses. They asked me to pass on their best regards to you. I know that you have friends in New Brunswick, Newfoundland and other areas in Canada as well. They think highly of you.

Thank you for giving us some of your valuable time. Your participation will be useful for us in the important and valuable study that we have been doing for some time. I invite you to read our report once it is tabled in Parliament in early December. I invite you to visit our Web site and have a look. We will be sending you a copy as well.

Our clerk will be in contact with you to get copies of your overhead transparencies.

Our next witness this morning is Mr. Olafur Hannibalsson, a journalist and political commentator who has served as Deputy Member of Parliament in Iceland. He is the author of the article entitled, "The Dark Side of the Quota System," which appeared in the journal of the North Institute of Regional Policy and Research. It has been distributed to members of the Senate committee in both official languages.

Mr. Hannibalsson, we thank you for appearing here this morning and providing your time and contribution to our study on the question of quota licensing in Canada. Welcome. If you have opening comments, we will hear them first and then go on to questions.

Mr. Olafur Hannibalsson, Journalist, Political Commentator and Deputy MP in Iceland: I wish to begin by reminding you of a saying by our greatest statesman, who once remarked that there are three kinds of lies in this world: Lies, dam lies and statistics! When you are asked about the superiority of the Icelandic fishing management system, you will definitely be confronted with all three kinds of lies.

I have been attempting to cut through this thicket of lies in the article with which you are now probably familiar. Before we go into that, however, please allow me this opening comment.

I believe it is useful to remind ourselves why we are, at this point in time, talking about the fisheries management system. Overfishing has aroused great concern around the world in recent years. The conditions in the sea have not changed greatly. The outward conditions are hardly to blame. The problem, therefore, must be that the fishing fleet is far too big. Consequently, its destructive power far exceeds the sustainability of the fish stocks.

We find ourselves in the same position as the Cold War warriors who were faced with an arsenal of nuclear weapons which could destroy the world many times over, though once would have been enough. The real task, therefore, is not to ration fish but to reduce the fleet, or the catching power of the fleet, to match the sustainability of the fish stocks. That is how we went about fishing for ages -- both in Iceland and since Cabot found Newfoundland in 1497.

There is a great debate going on about whether it is possible to destroy an entire fish stock in any given area. I believe you would agree with me that evidence shows that it is possible. Currently, the debates often make a distinction between commercial extinction and actual and final extinction. For the term "commercial extinction" to have any meaning, you would first need to get rid of all and every subsidy in any form to the fishery, to the proposing industry and to the shipping industry everywhere in the world. Otherwise, there is no pressure from the markets to stop fishing and immediately grant losses when companies start to lose on their operations. Therefore, our task is that of downsizing the national fleets to a level of ecologically sound size.

The population engaged in fishing would need to accept that it is not necessary to have a fleet ready which could fish the highest catch of every fish stock whenever there is a natural upswing in the quotas. If we can downsize the fleet to a tolerable level, there is no longer any need for a complicated management system and nature would carry on as usual.

The intention of the Icelandic system is to carry us towards that goal by placing pressure on their market, but we must keep in mind that most of the laws of the market are to a great extent manmade. I will refer to that later.

Nothing can actually take the hard choices away from the politicians. I can understand their willingness to get rid of the necessity to take those decisions themselves, however, I believe they have choices. The hard choices will be there and they must be followed by politicians, not by any invisible hands of the market.

I completely agree with Mr. Bogason, your previous witness, that it should be an integral part of both the sciences around fishing, and on any management system, not only what to fish according to the biological evidence, but how to fish, with what sorts of boats and with what sorts of gear.

Since you are familiar with my article, I do not feel I should get into reading it here.

The Chairman: It has been some time since members of the committee have read your article, "The Dark Side of Quota System," so perhaps you could highlight some of the more pertinent parts.

Mr. Hannibalsson: First, I will start with the beginning of the problem. As you know, Iceland succeeded in extending its fisheries limits to 200 miles in 1975. It was only then that we had a sound basis for coherent and comprehensive fisheries management. The foreign fleet went away, mostly British and German trawlers, as well as Ethiopian trawlers. At about this time the Icelandic monitoring ships published its first of many reports. From that, it could be inferred that the size of the fleet should be kept within limits. Therefore, the decision was made, or maybe not made, because it evolved that having replaced the foreign exploiters we have started overexploiting the fishing grounds ourselves.

Just recently, we started to rebuild our trawler fleet into so-called stern trawlers, which are more effective than the old saithe trawlers. The state subsidized every ship in various ways. Thus, it was very easy to acquire a new ship. Before we knew it, we had a fleet with a catching capacity -- or what I would like to call sometimes, when it exceeds its limits, destructive capacity -- outsizing the foreign fleet that we have just chased.

I admit there was an attempt by some politicians to limit the size of the fleet at that time. However, labour was forced to give in, because of public opinion and the vessel owners, so as to entrust a modern trawler to every little channel in the country. Before we knew it the capacity of the total fleet was doubled.

There has always been great debate about trawlers in Iceland, just as there has been elsewhere in the world. We believe that the trawlers, by drawing their gear after them, gradually destroyed the bottom life and changed entirely the bottom of the sea. There have been many discussions about whether this gear should be allowed to be used to such an extent as has been the case.

Now, with all the new technology, the trawlers can drag behind them huge trawls. In the last few years, they have even gone so far as to level the big areas at the bottom of the sea. They also use huge hoppers which they drag behind to level the bottom before they start passing over with their gear.

One part of the problem is the tremendous increase in the trawler fleet at the cost of the inshore boats and the small boats. The quota system did not come into full shape in anyone's mind. It was gradually introduced. Originally, it was planned as a temporary measure to avoid the imminent collapse of the cod stocks especially.

Mr. Bogason has amply demonstrated to you that all these measures which came one after another were a reaction to an imminent disaster. There was no overall strategy which is or should be a necessary basis for an efficient management system.

Since 1990, after the quotas became transferable, with the exception of the small boats that have this common pool which they fish from, the fight has been getting tougher. The authorities, and the vessel owners, have become more adamant in defending this system tooth and nail because there is so much money to be made.

Making all the quotas saleable has meant that people are now leaving the industry with 10, 20, 30, 40 or maybe 50 million Canadian dollars, therefore, it is very understandable that this system is defended tooth and nail by the vessel owners, who really got what can be called a state subsidy. It can be considered a subsidy when you take what had been under common ownership of the nation and make it a monopoly of very few individuals who happened to be operating in the three years, 1981 to 1984, and who can go and sell it whenever they wish.

There is at least one man who has pointed out what is likely to happen when all the quotas that the state gave away originally have been sold, and all the original owners or their offspring who have inherited the quotas go out of the industry, which probably will happen in 20 or 30 years. When they sell their share, then there is a price on every fishing vessel in Icelandic waters. This will demand tremendous finance because there will also be very few companies who are issued shares for the quota catching of the fish. The shareholders will not be able to get compensation which they would expect from the money they have put into this. The belief is that the most likely result is that the shareholders will lose money when the price of the shares go down and we will be back to the old system of economical management, which has always taken the benefits of the fishery as the first point, and we will be back to the period of evaluation which we had before. If I remember correctly, between 1970 and 1993 we had 13 evaluations to give the fisheries a sound basis to work on, but it usually lasted only one or two years. The people of Iceland will then actually need to buy back all the fish quotas that had originally been given to the vessel owners, at which time the vessel owners will be out and probably with such a great deal of money that they will not spend it within the country. The authorities were hoping to protect the fish stocks but they were particularly caught by instituting this system.

What Mr. Bogason has demonstrated was supposed to happen with the fishing fleet, that it would be drastically reduced, has not happened. There can be several reasons for that. Three years ago, one of the researchers at the Marine Research Institute wrote an article in which he stated his opinion that there was a 50 per cent chance of a Newfoundland-like collapse of the Icelandic cod stock within the next three years. That prediction has not proved to be right. The fleet has been increasing in tonnage, in engine power, in electronic equipment, and in foreign permits. Over the last 20 years, the foreign debt has increased from some 70 billion Icelandic kronur to over 120 billion, and the annual income on the whole fleet is approximately 70 billion to 80 billion. With all this investment, the financial institutions are demanding increased activity of the fleet so that they are able to meet their financial obligations.

We must also remember that the cod stock fell, during the years 1980 to 1983, from between 450,000 and 500,000 tonnes, down in the next decade to 150,000 allowable catch. The fleet actually is tailored to fish for 500,000 tonnes of cod and the vessel owners are expecting that this will happen in the near future. I do not have much faith in this system but I believe they will be borne out right.

There is an agreement in Iceland that the tools used by smaller boats, particularly the line and hook, are ecologically sound and there is no great discussion about that. This is, of course, the group that is being extinguished in the quota system, and more and more of the fishing permits are gathering in the hands of large fishing corporations which only employ trawlers in the fleet. I believe at the present time 25 of the biggest companies in Iceland are in control of at least 50 per cent of the quotas. However, there are many ambiguities in this because many of them also own subsidiary companies and they transfer quotas among them. This practice makes it look as though they are dealing with independent companies whereas, in reality, they are all within the same group of companies. In some cases they even move some of the ships temporarily out of the country into the service of companies which Icelandic companies own abroad.

What is happening on the shore? The livelihood of the fishing communities along the shore depends entirely on the fish being landed and processed there. Now, for the first time in history, the right to fish is attached to specific vessels. If a vessel is sold from a community, it either loses its livelihood or must purchase another vessel with fishing rights, thereby perhaps depriving another community of the right to fish. The communities have been at the mercy of the individual quota owners, which has proven to be a serious financial burden for many communities that have found themselves forced to interfere when a local ship owner has sold his vessel.

Another result of the quotas is that there has been an accumulation of factory trawlers which can process the fish at sea. This in turn may affect the work that we have in the processing factories on land, and force the workers there, who are mainly women, into unemployment.

We can add to this that those factory trawlers are not competing on equal grounds. It is no coincidence that the fishing plants have actually been moving out to sea after the ITQ system was implemented.

You will be told by authorities here that there are no state services to anyone in the fisheries or the fishing industry. All seamen have, for the last 20 or 30 years, had a tax exemption of approximately half of their income being exempted from tax. That has been pointed out by economists, of course, as maybe not a direct but an indirect state subsidy.

The most important point here is that the factory trawler has a completely different access to the catchable quota. It is actually counted backwards. There is a formula with the Icelandic local authorities where the figures are coming out of the trawlers, then you calculate how many fish has actually gone into that figure.

It is a curious coincidence that for 15 years no factory trawler has come in with anything like second-rate fish or anything that is not of perfect quality. This obviously means that everything that is not of superior quality gets thrown overboard. There is actually much more fishing than is calculated from the final profits taken in. Fishers throw away everything that is not of the highest price at the moment. They calculate from that the size of the stocks. If you say, for example, 50,000 tonnes are thrown overboard from Icelandic vessels, the effect in the calculations of the Marine Research Institute will be four-fold, but the stock will be underestimated 200,000 tonnes, or 50,000 tonnes will get thrown overboard.

That may be why the Marine Research Institute and the fishers have not been in agreement for the last two or three years. The fishermen have been saying that the sea is now full of cod, which we should fish before it gets into hard times and goes away. The Marine Research Institute has said that this is just a sensory error. People tend to believe that because there is plenty of fish at a particular time it is part of an abundance, whereas it could be the total amount of the fish.

I wish to stress my point that the factory trawlers are given a superior edge in competition to all other vessels in the country because of the views concerning them. We know that when you have strict rules about economic activity there will be a great tendency to go above the rules and expand them. The reaction of the authorities then is to usually have them reduced, which has always been the case in Iceland, and I will go so far as to say that they are now turning the fisheries into criminal activity.

Senator Robertson: You have been most helpful in highlighting your document, but I worry about the lack of time for questions.

The Chairman: We may be running into a time problem fairly soon. We are on a tight schedule once we get past an hour. I do know some of our senators have questions so I wonder if we could stop at this point and go on to questions. Would that be agreeable, sir?

Mr. Hannibalsson: Yes, that would be completely agreeable with me.

The Chairman: With that in mind, I note at the beginning of your presentation that you had indicated that Newfoundland was found by Cabot in 1497. I believe you were being too modest on behalf of your Scandinavian ancestors and yourselves. There is evidence that the Scandinavians found Newfoundland long before 1497 and I understand they have actually found some vessels in Newfoundland which proves this fact.

Mr. Hannibalsson: My point was that the fishing grounds off Newfoundland had been discovered by Cabot and his crew.

Senator Butts: May I ask you a personal question, just to get it straight in my own mind: Are you a journalist at the same time as you are a deputy MP?

Mr. Hannibalsson: No, I have not been working on journalism for seven or eight years now. I have been doing some commentary on the radio. As far as being a deputy MP, which is not a very strenuous job, I work in that capacity once a year for five weeks.

Senator Butts: In view of all you have said, and especially in view of the solution you propose, you seem to indicate that the biggest part of the problem is the size of the fleet. Is that correct?

Mr. Hannibalsson: The size and the capacity of the fleets.

Senator Butts: Is the fleet owned by the Icelandic people? Are the crews from Iceland or are they mostly foreign?

Mr. Hannibalsson: No, the crews are now entirely Icelandic. For the last 25 years there have been good incomes on the fishing fleets so there has been no difficulty in manning the fleet with Icelanders.

Senator Butts: Who owns the fleet?

Mr. Hannibalsson: The ownership is completely Icelandic and we exclude foreigners from owning anything within our 200-mile limit; fish processing plants and boats.

Senator Butts: That is why I find your alternative, the last paragraph of your article, is very political. I was wondering how politically feasible it would be, for example, if you reduce the size of the fleet. By doing so you are putting more Icelandic people, who may be on the crew or owners of the boat, out of work, right?

Mr. Hannibalsson: It all depends on how you reduce the size of the fleet. I believe the destructive side of the fleet is the factory trawler side. I would acknowledge that we should have a few factory trawlers working the outer part of the 200-mile limit. Otherwise we should stress the hook and line, the long line and the netting, to go away from the tracking gear to other types of boats and gear.

I am not aware of how many tonnes are needed behind every seaman in the operation of a different type of ship. I am not so sure that you would reduce the workforce on the fleet even if you changed your emphasis and went away from the factory ships before they do too much damage.

Senator Butts: You do say that the access would be free and that there would be competition among the vessels.

Mr. Hannibalsson: I say that access would be free when the fleet is downsized to the level of 30 or 40 years ago; a time when the fleet did not reduce the stocks. From the 1920s to the 1950s, we had a fairly even distribution of much bigger catches than we are taking today with ten times the size of fleet. We are wasting efficiency on the fish.

Senator Butts: In this free competition, are you assuming that these competitors will be self-regulating?

Mr. Hannibalsson: No, I am not making that assumption. We must have control over the fleet, and we must also have control over how the fleet is composed.

Senator Butts: Will it not revert back to some of the problems that the ITQs were intended to solve?

Mr. Hannibalsson: No, I do not believe that will be the result. The only way to have free competition in fisheries is if it is scientifically proven that the fleet has reduced to a size that the fish stocks can sustain.

Senator Robertson: In your paper, "Dark Side of the Quota System", you write that following the introduction of the fishing quotas, they have been hotly debated ever since. Has the nature of the debate changed since the period when the quotas were first introduced? Has experience changed the tone of the debate?

I will give you an example. This week we heard from a witness in New Zealand who was fully supportive of the ITQs when they were first introduced, but today feels that the quota system has not delivered what it promised. Is that a fair comment regarding the experience in New Zealand? Have you consistently opposed the system in Iceland? Maybe you could take us through that evolution again.

Mr. Hannibalsson: Are you asking my personal opinion through the years?

Senator Robertson: I am asking for your evaluation of the people involved in the fishery. Did they like it at first and did they change their minds?

Mr. Hannibalsson: I believe it really changed when it became a saleable entity and when people were leaving with hundreds of millions in Icelandic currency. Some companies that were bankrupt at the time were taken over by other companies who bought the plants, equipment and boats to obtain the quota. They would sell their boats with little quotas or no quotas.

You can imagine a village of 3,000 people where a man has been fishing for 30 or 40 years, started with a small boat of 30 or 40 tonnes, ended up with a boat of 1,500 tonnes costing $2 million to $3 million Canadian, and then this ship is too big for the quota system. Even if there are 6,000 tonnes of quota, it is not enough to operate the ship. A different operator in another part of the country with the 6,000 tonnes is promised that nothing will change. A year later that ship is fishing in Germany because it can operate under the subsidy system of the EEC. It could not operate on Icelandic territory because the ship was too costly.

Since 1991, the debate has been turning towards the injustices of the system. People in the villages are seeing with their own eyes when a man, who had been living in the community for 30, 40 years and been a pillar in the community, all of a sudden gives away something to which they feel they have contributed.Why should he be able to sell a quota which hundreds of people have been contributing to under different systems?

Senator Robertson: Since you have served in Parliament and you are a commentator, I am interested in hearing your political analysis of the quota system. There is a significant amount of politics in the fishery in Canada. Has this debate divided the country between the economic elite and the rest?

Another political question I should like to know is does the issue define political parties? If it defines political parties, how will it impact your next parliamentary elections in 1999? Is it a big enough issue?

Mr. Hannibalsson: The trouble with the whole thing is that the political system has been unable to solve these questions because every party in Iceland is divided on the issue. No party has been able to put up a platform exclusively with these issues so that the electorate in Iceland could take a stand for or against the system.

It is in muddy waters. However, the experts have been operating. The powerful financial institutions in the country have been very positive about this system.

Under the old system, they could only take securities in ships, which very often could be of little value. Now, even if it is not explicitly allowed in law, they are taking security in the quota that belongs to the ship.

NAFO, I believe it was, wished to reduce the size of the fleet, the number of ships, so they made a rule that there should be only so many ships. Iceland protested and preferred to introduce quotas instead. Why is that? That is because the banks chose to take security in the vessel owner's fishing rights outside Icelandic jurisdiction as well inside.

There are powerful people in the country and the financial institutions. The vessel owners are very active and wealthy at the moment. They are contributing to all the parties that wish to open their coffers to collect money.

Senator Robertson: As you know, sir, we have had to suspend the cod fishery on the east coast of our country. Have you ever had to suspend a species fishery?

Mr. Hannibalsson: Yes.

Senator Robertson: Which one?

Mr. Hannibalsson: We put a moratorium on herring in 1972. We, the Norwegians and the Russians had over-fished the herring fishery such that it was practically extinct. We depleted the herring in 1967 and TACs were put on after that. In 1972, we imposed a moratorium.

The Icelandic herring stock was reduced to next to nothing. It was 15 years later, I believe, when we were allowed to catch it again. Now it is up to roughly 100,000 tonnes.

Senator Robertson: Have you had trouble with foreign fishing vessels entering your territory?

Mr. Hannibalsson: Not since the extension to 200 miles.

Senator Adams: You talked about fleets dumping groundfish. Do you have observers that watch the fishing fleets at your 200-mile limit?

Mr. Hannibalsson: Do you mean official observers on the ships?

Senator Adams: Yes. We have observers from our Department of Fisheries and Oceans to keep track of how much is being caught and how much is being dumped. Do you have a similar system?

Mr. Hannibalsson: We do not have a great number of monitors that go out to sea. They do so once in a while. In addition to what I mentioned about the factory trawlers, they have also observed some small boats throwing a great deal away. Some of the big owners, especially those operating outside our 200-mile limit, are renting their quotas to smaller boat owners who do not have enough quota. The price of a quota can be 70 to 90 kronurs per kilogram swimming in the sea. The fishermen fishing under these conditions, granted the right to fish for 90 kronur, will not take aboard anything that will not bring him 130 to 150 kronur. It is as simple as that.

One leading economist has admitted that up to 15 per cent of the catch may be thrown away. I believe it is much more.

Senator Adams: Are small fishermen allowed to sell quota to the big trawlers?

Mr. Hannibalsson: Yes, some are. About 300 of the small boats are permitted to sell their quotas to anyone. Some of them have been doing so and then coming back into the system on another basis. There are many loopholes. People can play a game with the authorities.

The Chairman: Was it a government official who estimated the discard rate at 15 per cent? Could you name the person?

Mr. Hannibalsson: It was a university professor who has been a leading economist.

The Chairman: Was that Dr. Arnason?

Mr. Hannibalsson: Yes.

Senator Cook: Being a Newfoundlander, of particular interest to me is your article on paralyzed communities, because we are seeing that in great numbers. On my island, "out-migration" and "out-rooted peoples" are words that are commonly heard these days.

For me, it is people first and then profit. How do you see us sustaining the viability of our fishing communities? Where do we begin?

Mr. Hannibalsson: Having a fishing system with small boats, where they are fishing from a pool with a total allowable catch decided for the species or a number of species, means that the villages on the shore can enjoy their position on the shore. They can compete amongst themselves. Nothing big happens. No catastrophe happens. Even if an owner sells his ship, he does not leave the town without the right to go out fishing.

We must be able to revert to some sort of system of that kind before too long, because I know several villages are actually now without quota. They have been forced to sell their bigger ships with the quotas but are now sustained on buying Russian fish and freezing it on these small boats. That is what is happening in my district in several villages. No village has been entirely emptied so far.

There is also another way of viewing this. Many economists say this is just a natural evolution and that mobility of labour has always been tremendous in Iceland. That is how we built the villages in the first place. However, in the early years it was different because people did not build expensive houses and, as poor people, they could move more often, and faster.

Senator Cook: That brings me to my next question. How important to your country is the sustainability and viability of your small communities?

Mr. Hannibalsson: That is debatable. I happen to be of the opinion that it is invaluable, and I would not wish to see an Iceland with 250,000 inhabitants just in the main city. That is one of the reasons, aside from the ecological ones, that I am against the factory trawlers, because they can be operated from anywhere. In fact, trawlers can be managed from Newfoundland to fish in Iceland, or from some country with an even friendlier climate, such as in the Caribbean, or anywhere else you would wish to live.

Those who believe in laws of the market do not stop to think that most of the laws of the market are laws that we have made ourselves, as I tried to demonstrate with the factory trawlers. It has been said that we should not put any restrictions on the owners of the vessels, they should just respond to the market conditions and move from place to place, and if it is better to operate all the trawlers from Reykjavik, or from Cyprus or Italy, they should be able to do it. That is the market philosophy today.

The Chairman: Before I wrap up, I do have a question very similar to Senator Cook's.

In Canada, we have government programs at the present time to provide assistance for people to move out of our coastal communities so they can move to the more prosperous regions of Canada, sometimes possibly becoming the urban poor of those more prosperous regions. Do you have something similar in Iceland whereby you provide money to move people out of your coastal communities into your more prosperous regions?

Mr. Hannibalsson: No, there is no subsidy of that kind. We have been going systematically all the way along, putting money into regions that are depopulating, where the population is moving away. In most cases, we have learned that it is not because of lack of money that they are moving away. There are different reasons, some of which I have mentioned.

I can take another example. Most of the leading people in Iceland believe that governments should not interfere with individuals by helping them, sabotaging them, or so on. When there is a natural catastrophe or disaster, like happened in two villages in the west fjords two years ago, then the entire nation unites in rebuilding, although many people politely suggested that the residents should move away from such a dangerous place.

The Chairman: Many of our coastal communities in Canada, both on the East Coast and the West Coast, have a mixed economy. I do not know if it is similar in Iceland. For example, we might have farming, fishing, tourism, some other natural resources, and some light industry. The problem that arises is that if one of the links in the many diverse parts of the economy is removed, the whole chain may fall apart. In other words, while it may not be the mainstay of the local community, removing a ship or a small fishing fleet that once landed the fish in this community breaks the link and it devastates the community. The government therefore must come in and provide subsidies through unemployment insurance, through moving people away, or trying to subsidize a new industry.

Some people question whether it is appropriate for the government to give ITQs to those fishermen so they can start moving outside the community. Some people are proposing that the quota be attached to the community rather than being allowed to be sold around the various regions.

Is something similar being considered in Iceland, or would this not be possible with your current system?

Mr. Hannibalsson: This was proposed actually at the beginning of the quota system, and many parties agreed to that. The experts refused to consider this as a solution because they said it builds an inefficiency into the system.

If we attach the quota to a place then, no matter how bad the fishery operation is in that place, they will always retain their quota and they will always find some new manager to operate from there. It takes the competition out of the game. The competition and the transferability of the quotas is intended to reduce the fleet and increase its efficiency.

This has been considered by all the political parties but none of them has really taken up the idea nationally. Many local politicians also claim that the quota should be attached to a special village, or to a larger region or something like that, or that at least part of it should always be attached to a village. The experts say that would really take the life out of the system. Then we are really settling for status quo. That is what they said.

The Chairman: Mr. Hannibalsson, on behalf of committee members, thank you for appearing before us.

Committee members, is it agreed that the paper presented by Mr. Hannibalsson should form part of the record of the proceedings of the committee?

Some Hon. Senators: Agreed.

The committee adjourned.