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Proceedings of the Standing Senate Committee on
Fisheries

Issue 7 - Evidence


OTTAWA, Tuesday, April 11, 2000

The Standing Senate Committee on Fisheries met this day at 7:15 p.m. to examine matters relating to the fishing industry.

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

[English]

The Chairman: This is our witnesses' first time appearing before the committee. We have been looking forward to their presentation. Please proceed.

Mr. Earle McCurdy, President, Fish, Food and Allied Workers: We appreciate the opportunity to participate tonight.

I should like to compliment the committee on your report, "Privatization and Quota Licensing in Canada's Fisheries." That was an extremely useful document to place in the public domain, and very timely. There has been an unseemly rush towards embracing ideological concepts instead of taking a pragmatic approach to dealing with the problems in the industry. We believe that that report was quite useful and timely. We are pleased to see you address these issues in a significant way.

The issue that brings us here is the owner-operator fleet in the Canadian fishery and the significant jeopardy that we believe that whole concept finds itself in. In this country, the fishery has developed along owner-operator lines in a kind of a loose equivalent to a family farm. They tend to be family enterprises with usually anywhere from two or six or seven or at most eight people engaged in the enterprise; in most cases there are four or fewer. That has been the cornerstone of the development of the Canadian fishery. In fact, public policy, certainly Department of Fisheries and Oceans policy, speaks to an owner-operator concept, but a number of developments have put that whole concept on very thin ice. We want to focus on some issues in that regard tonight.

There are two aspects to the problem associated with the owner-operator principle. One is a legal loophole, which if not addressed will ultimately lead to substantial control by fish processors in the harvesting sector and a breakdown of what is presently called fleet separation policy for vessels under 65 feet. Under DFO policy, there should be a separation between the processing sector and the harvesting sector. The owners of the big fish plants are not supposed to also own vessels in the under-65-foot fleet, which is by far the bulk of the numbers of boats in the country.

The second aspect is the demographics of the fishery and the fact that a substantial percentage of the current generation of licence holders will retire in the next 10 to 15 years with the passing of the baby boomers. That poses an additional problem.

In the case of the West Coast and British Columbia, the lack of a firm fleet separation policy has given the corporate sector a much larger share of the harvesting capacity than is the case on the East Coast. We are concerned about two things: first, that the situation on the West Coast will deteriorate further; and second, that the problems of the West Coast will end up becoming the reality on the East Coast. We had planned and hoped to have someone from B.C. as part of our group, but at the last minute he was unable to join us tonight.

Can we turn that around and ensure that the owner-operator fishing enterprises really are the driving force of our future fishery? At the moment, policy is dangerously adrift in terms of protecting that sector. We are hoping that we will be able to encourage the committee to begin examining measures to see what can be done to reverse the trend towards corporate control over the fisheries.

The fisheries are governed essentially by the Fisheries Act, the general regulations and some specific regional or provincial regulations. They give broad powers to the minister, including, among other things, his absolute discretion to issue or authorize to be issued licences for the fishery and the power to prescribe fees, which the various ministers have proved more than capable of doing, cancel licences and so on and so forth. Built right into the regulations is a provision that the licence holder, the person or persons who fish under the licence, must operate the licence. It does not use the term "owner-operator" but effectively it is an owner-operator policy on paper. That is reflected in both the Fisheries Act and the general regulations, although there are some exceptions in the more specific regulations. It is the combination of the interpretation of the regulations in the act and a loophole that has come up that really jeopardizes the owner-operator approach.

In Eastern Canada, when the fisheries jurisdiction was extended to 200 nautical miles, in 1977, it led to a pretty ambitious expansion of corporate fishing and processing capacity. In response to concerns about that corporate concentration, fleet separation was developed to try to separate the harvesting from the processing.

The real loophole that has come up and really come to light in fairly recent times has shown that these regulations are not airtight. They allow for processing companies or other non-harvesters to have control over licences. Stockbrokers, dentists, lawyers, the butcher, the baker, the candlestick maker, even senators, although I am not aware of examples of that, could presumably have control over licences.

Senator Robichaud: I would take a crab licence anytime.

Mr. McCurdy: You might not be as interested in Newfoundland in a few days' time when the announcement of this year's management plan comes out.

In any event, what is happening is complicated. Technically, the licence is owned by the Crown, not by the individual harvester. However, for all practical purposes, it is treated as if it were held by the individual. In fact, he can designate someone to whom it will be transferred. What has happened to undermine the system is that some decisions by the courts have separated the legal title to a licence from the beneficial use of the licence. The beneficial use really says who can fish it. Courts have split a hair between the person in whose name the licence is issued and who can call the shots on how it is used and fished.

In many cases, for lack of an alternative, fishermen have got financing from processing companies, with whom they enter into so-called "trust agreements." That is an ironic title because what characterizes a relationship between processors and fishermen tends to be mistrust. The trust agreement says that, in return for providing the financing, the processor can gain beneficial use of the licence. If, for example, a fisherman wants eventually to leave and to sell his licence, then the processor can dictate to whom that licence is sold; or, if the fisherman defaults on his mortgage, the processor gains control over the subsequent use of that licence. That really, through a back door, has broken down a policy that was established through the front door and that generally left the fishing to the fishermen and the processing to the processors. That is in jeopardy. Under these agreements, the courts have held that the harvester can be legally bound at the request of the processor to issue a replacement licence to a person designated by the processor. Ultimately, then, the processor can control it and say, "I want that licence issued to my brother, or me, or somebody else."

Now we have received legal opinion that that loophole could be eliminated fairly readily by including in the general regulations of the Fisheries Act provisions specifically stating that the legal interest and the related beneficial interest of the fishing licence are inseparable. We understand that a regulation to that effect would plug that particular loophole.

In the case of British Columbia, the situation has deteriorated considerably. At a recent national conference, people from the Atlantic expressed the real dread that we would end up being like the Pacific in a short period of time. It was clear from the discussions that were held that that was ultimately where we would end up.

The fishery in British Columbia has quite a checkered history, but the owner-operator principle was never enshrined in B.C. to the extent that it was in the Atlantic. Starting with the Davis plan under Jack Davis back in the late 1960s, there was a plan in place that really ended up incorporating a larger level of corporate control over licensing. It is not only corporate control, but control by a non-owner operator, so that a very large portion of the return from the fishery is now going to people who never get their hands wet or dirt, who simply control the piece of paper, which technically is owned by the Crown, that they then charge large sums for.

There was a short-lived owner-operator policy for the B.C. herring roe fishery back in the 1970s, but it lasted only a short period of time before the department dropped it. They have generally cited enforcement as the reason they cannot implement it. Quite frankly, we have trouble gagging that down as a valid explanation.

What has come into vogue in British Columbia has been a form of leasing of the licences to a reprehensible degree. There is a group of dentists in Thunder Bay and a group of lawyers in Calgary who have licences for things like black cod and halibut fisheries in British Columbia. Those people have never fished in their lives. They bought those licences the way you buy futures in pork bellies on Bay Street or shares in Bre-Ex or something like that, and then they leased them. Although fishing the licence is a privilege granted by the Crown, they have leased that privilege to the actual working fisherman.

A large percentage of the value of the fishery has been gobbled up in the leasing cost. In 1994, for instance, a survey of fishermen in the salmon fishery in B.C. found that, based on the going rate for licences, something like $38 million was paid out in lease payments for the privilege or for the opportunity to fish the piece of paper that was granted by the Crown and held by a stockbroker in Vancouver or a lawyer in Calgary. That was over half the value of the fishery that year.

Based on current values, it is estimated that lease costs will take nearly 70 per cent of the landed value out of the salmon fishery in British Columbia. That has had a particularly negative impact on crew members. At one time they were co-adventurers who fished for their share of the catch and took their chances on the proceeds, but now the tendency is for them to get very low wages because so much of the value of the resource is taken away by the absentee landlords who control the piece of paper that gives people the right to fish. A very high percentage is coming out, and that has been a significant problem in British Columbia.

There was one notable challenge to the marginalization of owner-operator fleets in British Columbia, and that was called "The Fisherman's Report: A Commission of Inquiry into Licensing and Related Policies of the Department of Fisheries and Oceans." That inquiry was conducted by a fish processor named Don Cruickshank. In his report he made recommendations on how to manage the fishery of the future. It was a very practical, non-ideological approach to try to find something that would work, and it was extremely well accepted by fishermen. Unfortunately, the approach followed by DFO policy was quite different. We believe the report still has a lot of merit and should be revisited, probably with some adjustment to reflect the current realities in that fishery.

The other problem I want to touch on is the issue of the baby boom fishermen or what is sometimes referred to as the demographic bubble. Records clearly show that the majority of the people in the fishery are from the baby boom generation. That was studied in considerable detail by the Gulf region of DFO, and it was found that in 1988 half of the fish harvesters registered with the department in that region were 46 years old or older. If that is a reflection of the national situation, it would suggest that in the next 10 to 15 years somewhere in the order of 35 per cent of the people in the fishery will be retiring.

The real issue is the intergenerational transfer of the fishing licences. The view of most fish harvester organizations back in the 1960s and 1970s was that the licence should be granted to the individual to fish and that if he or she left the fishery, the licence would revert to the Crown and would be reissued to someone else who met the criteria. A waiting list might be developed, for example, and you would wait to get to the top of that list. That was the kind of approach generally favoured by fishermen's organizations, but the policy that developed allowed these licences, in effect, to be sold. People would get out of the fishery and would sell their licences. Technically it was a little different because the licences are held by the Crown, but they really sold the opportunity to use the licences.

Those things go for very handsome figures, so the next generation of licence holders will take on a very heavy debt. Some of those licences go for $100,000 or $200,000 or $300,000. It is sort of looked at by the existing licence holders as being their pension plan, but for the future licence holders it represents a major cost that has to be amortized. Most people cannot get their hands on that money because of the technicalities of who owns the licences. Banks do not recognize licences as collateral because they are owned by the Crown. Therefore, sources of financing are limited, and what we anticipate seeing in all sectors of the country -- and it is already largely established in B.C. -- is money people who are not fishermen, and particularly processing companies, getting more and more control over the fishery by providing the financing and then dictating who gains the beneficial use of the licences.

Ultimately, what will happen is that the price paid for those licences will continually be bid up to the point where all that remains beyond the amortization burden will be a bare wage, and that is all. Any profitability will be eaten up in the bidding. In fact, a study done by the Gulf region of DFO shows that, even using conservative assumptions, the amortized carrying cost of the debt for the new generation will eliminate any prospect of profit for that generation from the fishery.

That is serious stuff. That really poses a major problem, particularly for the next generation of owner-operators. It is a combination really of the loophole, the owner-operator policy, plus the cost of intergenerational transfers that really calls into question whether or not the owner-operator enterprise, the family business type of fishing enterprise that we have known for generations, is really on its last generation. I do not think that that is being an alarmist; it is a reflection that there really is a genuine threat that that will be the case.

However, there are alternatives. We do not have to sit back and resign ourselves to that. In Nova Scotia, the provincial loan board is looking at the idea of expanding its mandate to finance licence and quota transfers. There are some potential prospects of that being a useful way of dealing with it. In effect, they are using licences as collateral against vessel loans, which is not being done by the banks.

Another big problem is the capital gains bite. Even if a fisherman wants to pass on his enterprise to a son or daughter, there is a tremendous hit on capital gains with the value that that enterprise has been given. Therefore, because the capital gains bite is so sharp, the incentive is to lease the right rather than to sell the licence and enterprise. Again, that trickles down. There could be a lot of people well beyond retirement age who continue to hold a licence and lease it to somebody else rather than get out and sell the licence because the capital gains hit would be so heavy. That is an added problem.

The closest analogy to a fishing enterprise in our economy is the farming enterprise. You are looking at farmer production of food. In both cases, at least in some aspects of it, you are looking at quotas. There are quotas for fish and there are quotas for eggs and milk and so on. We believe that the approach that is in place for farming would be most appropriate in the fishing sector. It would certainly allow a more orderly transition to the next generation. At the moment, it looks as though the capital gains tax will add approximately 40 per cent to the cost of licence transfers to a new generation. That is a heavy burden in conjunction with the other problems I have just described. It adds to the threat against the continued existence of a dynamic and independent owner-operator fleet.

What do we do? Clearly some changes are needed to present laws and regulations that govern our fisheries management. This committee can play an important role in alerting government to the urgency of the situation, because this is basically a sleeper issue that has had little or no public exposure. We would urge the committee to identify the future of the owner-operator fleet in Canada's fishery as a priority public policy consideration and suggest that you undertake a significant study under the full gamut of measures needed to make sure that these fleets remain a cornerstone of our fisheries. We would certainly be glad to work in conjunction with any researchers or others doing work on behalf of the committee towards that end.

We need to find regulatory legislative approaches to ensure that the independent owner-operator fleet remains the economic and social cornerstone of our fishing communities. We would also urge you to examine the recommendations of the Cruickshank report and seek guidance from fisheries and fishermen's organizations in B.C. on how the goals of that report might be adapted to the current reality. Finally, we would ask you to examine in depth the public policy considerations related to the intergenerational transfer of licences and to explore different ways, including some new approaches to capital gains exemptions, to allow for an orderly transition to the next generation.

The Chairman: Thank you very much for your presentation. You made the statement that this is serious stuff. I agree with you. You have pointed out some extremely serious issues about which this committee will want to dialogue further with you. As usual, you are very articulate in the way you present them.

Senator Robichaud: This is very serious business. You stated that this situation is mostly happening on the West Coast, is that right?

Mr. McCurdy: It is already at a seriously advanced stage on the West Coast. The concern on the East Coast is that we have started down that road and, unless the loopholes are plugged and unless there is some concrete policy development to address the problem, it is only a matter of time till the East Coast is as bad as or worse than the West Coast. That is an inevitable direction unless the problems are addressed.

Senator Robichaud: I agree with you, if it is done on the other coast. However, it is not done to a great extent on the East Coast, is it? Do you have any examples of certain licences that are being managed that way?

Mr. McCurdy: There is always some genius who will figure out a way to get around anything or undermine anything. People, particularly processors who are financing enterprises, have hit upon the idea, discovered by some lawyer or someone who found a loophole, that you can separate the beneficial use from the legal title. That is now catching on. It is becoming contagious. As that happens, over time you see a much greater control by the processors. It is a fairly recent development on the East Coast but it has some history out West. We thought we were protected by policy, and I think the policy-makers intended to protect the Atlantic fishery from that kind of development. However, the exploitation of that loophole has started the process of erosion, which I believe is an inevitable outcome unless it is addressed. It has reared its ugly head recently in the Atlantic, but it is catching on and growing and will continue to grow unless specific action is taken to arrest it.

Senator Robichaud: You stress that those who have the permits should be the fishermen, those who fish out on the sea. That was the case at least for a while on the East Coast. A while back no one could hold a licence if he was not directly fishing. At one time licence categories changed. There were bona fide fishermen who earned most of their revenues from fishing, and there were others who were given a certain time; they could not sell or renew their licences.

When the crab fishery was opened and the quota was provided to the inshore fishermen, is it not true that in some cases the practice was for those who were lucky at the draw to stand at their kitchen table and sell their quota? Is that not just about the same situation?

Mr. Mike Belliveau, Executive Secretary, Maritime Fishermen's Union: You are getting tough on this one. We cannot get into the details of that, but the quota in that case was a temporary quota allocated to the Maritime Fishermen's Union. Our objective was to disperse it 11,000 pounds per fisherman. The Department of Fisheries and Oceans restricted us to the number of boats we could have on the water, so for the draw everybody had in their 11,000 pounds of quota, but then they had to group by four to form one unit for the purposes of fishing in order to limit the number of boats on the water. That was generated from them, not from what we were promoting.

In the end, as you know because you live in the area, there were people who sat on the shore and did not participate in their foursome -- one of the captains, for example. However, our rule was that they were all supposed to be fishing. You only do so much in a given year. That was a temporary plan, and I do not think there was any real or large compromise in the owner-operator principle, because the only people who qualified for the draw were the bona fide, full-time owner-operator fishermen.

Senator Robichaud: I am not saying that it was not done properly; I am just bringing to your attention that it is hard to say that those people should not do it, but if you are on that side you can do it. That is how I look at it.

Mr. Belliveau: In terms of the East Coast, our experience with this owner-operator business opening up wide is really mainly in Southwest Nova Scotia so far. The report that the Senate committee put out on this subject clearly indicates that they know the problem. They know the issues.

When you get into an individual quota owner type of arrangement there are all kinds of those legal title beneficiaries. As you know, most groundfish quota is tied up by three or four companies in Southwest Nova Scotia. In the end, the real impact is not only on the owner-operator captain, but on the crew members. They lose their jobs and their wages go down.

Senator Robichaud: I can understand that.

Mr. Belliveau: It is well advanced in Eastern Canada and in the Scotia Fundy region.

Senator Robichaud: Does that mean that if I wanted to buy a lobster licence and lease it to somebody else and if I wanted to go to court to separate what you were eluding to, Mr. McCurdy, I could do it?

Mr. McCurdy: Technically speaking, other than people who were grandfathered in with a right to designate an operator -- and only a relatively small number had that right -- you are supposed to operate your own vessel. However, there are people who spend all their waking hours trying to figure out a way to dipsy-doodle around those rules, and some of them are pretty creative.

The problem that Mr. Belliveau described that originated in Southwest Nova has spread to Newfoundland, and we are seeing a fair number of those so-called trust agreements that really nail down the fishermen. The individual harvester does not have the freedom to decide where he goes to sell his catch, for example, and if he ever falls into arrears on his payments and forfeits control, then that is a one way street. We are seeing quite a bit of erosion on that.

Senator Robichaud: You mentioned that licences are the property of the Crown. Around home, fishermen have more or less sold their licences and that is seen as their retirement fund. You say we should move away from that, but that is how it was sold to the fishermen. They were told, "This is your retirement fund; you can sell your licence."

Mr. McCurdy: That is an extremely difficult issue because the business of selling licences has been in place for a number of years now. The fishermen's groups opposed the idea of allowing the selling back in the 1970s and 1980s, but now that it has been in place for some time, the guy who paid handsomely to buy will not be too pleased about not being allowed to sell, and the guy who has it and has been banking on it as a retirement income will not be pleased either.

We understand from the Canadian Federation of Agriculture that that was the reason for the special exemption under capital gains for farmers. There was no pension plan in that sector, so that was seen as a way to unofficially give them something to build a pension on. This is quite an analogous situation. That same provision could provide here. It is a bit of a one way street. Once you head down that road for a period of years, it is very difficult to reverse.

The extra burden of capital gains drives up the bidding because the seller wants enough to cover his capital gains problem and have a decent retirement income. Presumably, then, if the capital gains burden were not so heavy, that would mitigate the problem.

Senator Robichaud: You would have a hard time convincing the people who are waiting to sell their lobster licences for the aboriginal fishery that it should go that way because they are counting on making a lot of dough.

Mr. McCurdy: That is a one way road; once you head down it for a period of time, it is extremely difficult to reverse.

Senator Robertson: I should like to move on to something else for the moment, but if I have time I will come back to the question of the temporary licences. Mr. McCurdy mentioned something about Nova Scotia developing an alternate plan for financing. What is that? What are they trying to do?

Mr. Belliveau: The provincial government had a loan board that basically loaned against your vessel. Now, according to the latest I have heard, they are prepared to look at loaning to fishermen to buy a licence. Even in inshore fisheries, your licence might be worth more than your vessel. Now they are looking at schemes where they are prepared to double your financing. Not only that, but I understand that they are looking at much longer terms for the amortization of a licence, like 20 years. If it works, our fishermen in Nova Scotia tell us that it is a really progressive move. I am surprised that it is. I do not know whether it is in place yet, but I take their word for it at the moment. I have not examined it in detail.

Senator Robertson: Is the provincial government in New Brunswick doing anything about this?

Mr. Belliveau: No.

Senator Robertson: Have you made a representation to the minister there?

Mr. Belliveau: We have not, as yet. The only thing I could say about the provincial government in New Brunswick is that their loan board has a terrific record of financing the high capital operations and a much different kind of record when it comes to the normal insurable like we have. Up to now, we have not had many problems with the loan board. You will see that in the aboriginal program. It is very disconcerting in some ways that the offers being made by the Government of Canada to New Brunswick fishermen are much lower than the offers they are making in some other places for comparable situations. That is not something we can get into big time here.

Senator Robertson: Why are they doing that?

Mr. Belliveau: So far, the value of licences has not skyrocketed in our area like it has in other areas. We are more homogenous. There are 1,300 owner-operators in the inshore fleet in New Brunswick and they are a far more homogeneous group than in other fisheries. We have not yet met the inflated prices for licences and so on, but that is part of Mr. McCurdy's message. We will see it. Guys like me are extremely nervous about what is coming down the pipe year after year in terms of intergenerational transfers. That is what will really pose the problem for us. Prices will go up. Even now in New Brunswick, with the kind of prices they are paying for licences, you can not really make it. What will happen in five years' time? Whose head will they blow off? Probably the NFU, before they get at you people and at the Government of Canada.

The pressure is going to build and build. Young people are coming into the fishery. They do not have the spirit that people coming in 20 years or 30 years ago did. There was a community spirit then, a collective spirit. Now the young people are so burdened with what they have taken on in order to come into this thing, they will do anything to stay in. The senator knows very well what I am talking about.

[Translation]

Mr. Daniel P. Bernier, Executive Director (Ottawa), Canadian Council of Professional Fish Harvesters: At our last general assembly held in Montreal, we decided to set up a task force to examine different issues associated with the inter-generational transfer of fishing licenses. Among other things, we looked into the possibility of the Fisheries Loans Board expanding its mandate.

There are 350 fishing communities in Atlantic Canada and a total of 50 fishing communities on the coast of British Columbia. In the southern part of the gulf, in Atlantic Canada alone, over $350 million, which represents the value of current licenses, will be transferred over the next 15 years.

In order to protect the interests of owner-operators or to foster the continued existence of owner-operator fleets, the Council would like to see mechanisms in place to ensure the inter-generational transfer of enterprises. This is a challenge that we must confront. We would like either the Senate or a Senate committee to consider ways of facilitating this initiative.

[English]

Senator Robertson: Thank you. That is helpful. If I understand correctly from reading your brief, you would like this committee to launch a study into those problems, right?

Mr. Bernier: Yes.

Senator Robertson: We know that the DFO minister has launched a review of the Atlantic fisheries policy to develop a new policy framework and a broad vision. Do you know if that review will be of any use to you with your particular problem? Some would say that you are asking the Fisheries Committee to repeat perhaps or to start an exercise that DFO is into now. Have you concluded that the DFO review would simply not deal with your issues?

Mr. McCurdy: You have hit on a really important question. I am pleased that you raise it. I neglected to mention policy review. It depends on whether the department, in their review, will go out and feel around for what views there are, test the wind, in other words, and go with that or whether they will substantively shape direction, listen to people and then have some kind of vision or some kind of concept and plan as to how they will go forward.

They will hear that we went through this in 1995 at a round table when Mr. Tobin was the minister. The view of the corporate sector then through the Fisheries Council of Canada was to eliminate the owner-operator concept as having any particular sanctity in policy by virtue of taking out the fleet separation rule. One of their clear recommendations was to eliminate fleet separation.

Another recommendation was to move to individual transferable quotas, which is the issue you tackled and tackled well in your previous report. That view will undoubtedly be firmly espoused by that particular sector in front of this Atlantic policy review. I do not know whether we will see a continuation of existing policies other than where there is an overall consensus to change. If that is the approach, we will not see that issue dealt with in advance. If they decide to listen to everybody and then come forward with something fairly bold like creating a systematic, overall, comprehensive policy, then maybe one of two things will happen: either this will be addressed in a favourable way or the owner-operator will really be history. I do not know whether this will be a systematic and comprehensive new policy coming forth or a pasting together of everything there is now and trying to make changes only where there is a consensus to do so.

Mr. Belliveau: For the review they are doing, they have set up an external advisory committee that includes most of the industry. I am on it, for example, as is Mr. McCurdy. At the first meeting of the advisory committee, I was the only one in the room who raised the owner-operator problems, concept, principles and so on. There were 30 or 35 people from the industry in the room. That suggests to me that maybe that is not the number one thing on their minds, and maybe it will not be on their minds if there are only a couple of us who are capable of raising it. You have your own priorities, but at the heart of the fishery in Atlantic Canada, this is it. They can have all of the reviews of Atlantic policy and so on that they want, but if they do not tackle this head on, then you people or somebody had better do it.

Mr. McCurdy: In my own defence, I missed that meeting.

The Chairman: That was going to be a supplementary question.

Senator Furey: In your earlier comments you alluded to a practical problem with this licensing issue. That is, a licence holder cannot approach a bank, because banks place little or no value on the licence in terms of mortgaging or loans or security or equity. On the other hand, you have processors who know full well the value and they are prepared to do almost anything. Now, if we create a legal remedy for this situation -- and a legal remedy could be created by amending legislation or passing regulations or whatever -- we are not really solving the practical problem because there is still a licence holder. Where does he go? Are we into an era of provincial loan boards? What does that licence holder do practically? How does he obtain his financing?

Mr. McCurdy: I cannot speak for other provinces. Certainly in ours, the provincial loan board has become virtually defunct. There is a serious role for the provincial government to rehabilitate that whole idea. Even before access to the beneficial use of the licence came to light and became a common practice, the processors financed vessels. They continue to do so. Not all processors require that beneficial use. It is not uniform. In my view, they will continue to finance vessels in order to get a supply of raw material. They will continue to play a role there, with or without that beneficial use. The beneficial use of licences is nice if they can get it; they would like to have it and to have that degree of control and will probably fight to hang on to it. However, if they did not have it, I believe they would still be involved, and I think that has been demonstrated by their past behaviour.

Senator Furey: You honestly believe that if you create a legal remedy it will fix itself?

Mr. McCurdy: I do not underestimate the ingenuity of people to get around laws and regulations. No doubt whatever remedy is brought forward, there will probably a need for phase two because somebody will figure out a way to manoeuvre around the regulations. I think that that would address the immediate problem. If further problems arose, we would have to size them up. It is an endless road, trying to manoeuvre around people's ingenuity on these things.

Mr. Bernier: The ingenuity is very difficult to avoid. That is the beauty of it. If the act and the regulations are in line with the owner-operator principle and the fleet separation principle and policy itself, it sends a very strong message. That is exactly what did not happen in British Columbia. This message was not sent. That is why this year over 75 per cent of the landing value of the herring fishery will go towards leases instead of going to the coastal communities in British Columbia. It will go to the armchair fishermen or "slipper skippers" as we call them. They will gain from that income.

One clear example, which you raised last week, Mr. Chairman, was evident at the conference on property rights last fall in Australia. I came face to face with a gentleman I knew from British Columbia. His identification tag said he was from Western Australia. I asked him why, and he said that he had married someone from Western Australia and was now living there. He has a black cod licence access, with 48 licences, 18 fishermen on his boat, and an average yearly landing of $750,000. He is just sitting back and banking it all. That is what is happening these days.

When DFO was promoting the ITQs and the privatization of the fisheries, they used the example of New Zealand over and over. Now, even New Zealand is looking into the owner-operator problem because Singapore owns a large group of their licences or the access to their fishery. That means that the value of the Australian fishery is not going to the people of that country. If we do not want just to sell off our rights to the fishery, we need to address this problem.

Mr. Belliveau: You know Brian Géroux and you know the group he represents in the fishery. He was at that external advisory committee meeting. Normally we are at complete loggerheads with respect to fisheries policy, but when I raised this issue he actually made an intervention that was almost supportive.

Senator Robichaud: Almost?

Mr. Belliveau: He was very concerned with the things Mr. Bernier is raising. We may not agree on the ITQs, but he too is starting to worry about losing control of the fishery to outside capital interests. He is one of the architects of the privatization scheme in terms of Nova Scotia groundfish. You should question him on that.

The Chairman: I will be asking questions for sure.

Senator Watt: My question is not based on what you have highlighted as the problem area that needs to be resolved. Does your group have anything to do with the dialoguing or dealing with the people up in the Arctic, Nunavut, Nunavik and Northern Labrador? I notice that in your objective you deal with the territories and so on. Even Nunavik, for example, is part of the province of Quebec in terms of the various fishing activities. It is very different from the South to the North. I am wondering whether you have anything to do with the people in the Arctic along the line of your responsibility as a group.

Mr. McCurdy: We do not have any member organizations at the moment, although we are open to it and we are hoping that that will happen. It is kind of a fledgling organization. In the last couple of years, a group from Manitoba in the fresh water fishery has come on board. We are hoping to gradually expand to all the different types of fisheries in the country. It sort of originated with the traditional owner-operator type fisheries on the Atlantic and Pacific. We hope to and are open to, but at the moment we have not had any applications of membership from the North.

Mr. Bernier: We have had discussions with representatives from Nunavik in the North. They said that in their own process for the moment it was not the proper time to move on, but we still keep them informed of what we are doing, and whenever they want to pass on information they do. We also share information with the Nunavik representative in Montreal to Makivik.

Senator Watt: I see from reading your materials carefully that you are not really touching upon international waters. You are dealing only with the internal waters. When I say international waters, I am talking about various of our activities in the North that touch upon international waters, such as shrimp fishing and things of that nature. I am wondering whether your organization also deals with the international concerns. The problems you highlighted concerning the licence owner who does not necessarily have control because of the outside interests could have an influence on what is happening in the international community.

Mr. McCurdy: Of the member organizations of the Canadian Council, the organization I represent in Newfoundland in fact has the greatest involvement in international issues. We have been involved quite extensively. For example, I serve as the Canadian commissioner on the Northwest Atlantic Fisheries Organization, NAFO, which governs fishery stocks that are outside our 200-mile limit. We have this unfortunate fluke of geography on the East Coast that our continental shelf goes beyond 200 miles, which of course causes untold grief, so the union I represent has extensive dealings on those issues. Members of the Canadian Council fish primarily closer to land, closer than 200 miles, so the international issues are not major factors for most of the organizations that make up the Canadian Council. We have had some dealings with those issues, but not a great deal.

Senator Watt: Do you see in the distant future that this organization might become involved in the international activities?

Mr. Belliveau: For this presentation we have focused on the owner-operator problems, so we are thinking in terms of Canada. In terms of the Canadian Council of Professional Fish Harvesters, it is a part of our activities. We are joint sponsors of this new world form of fish harvesters and fish workers. We had a first founding meeting in Delhi two years ago and we will be meeting in Britanny, France. It is an exciting worldwide initiative. South America, West Africa, Southeast Asia, and South India will all have representation, as will many European countries. We are in touch with the fishermen's organizations or the fish worker organizations, and in that kind of form we are distinct from some of those high level international meetings. Most have a common interest and much to talk about. By and large, the pre-occupations of owner-operators and inshore fishermen are worldwide. In fact, in most of the countries we are dealing with it is a life-or-death situation. The inshore fishermen are mostly from the indigenous population and the offshore fishery is all controlled by European fleets or Soviet Union fleets or Japanese fleets or Korean fleets. We are involved internationally that way, but thinking in terms of this particular owner-operator principle, we were thrown off by your question.

Mr. McCurdy: You had to rehabilitate my inadequate answer.

Senator Mahovlich: You mentioned Don Cruickshank. He made his report back in 1991. What happened there? Was he not too convincing or did we not listen to him?

Mr. McCurdy: His report had a strong buy-in from the fishermen's organizations in British Columbia. It really dealt with British Columbia fishery, not the Atlantic at all. For some reason, in terms of its administration of policy in the Pacific, the Department of Fisheries and Oceans never bought into owner-operator concept. I do not understand it why there was that difference. At least in the policy documents in the Atlantic, they attempted to defend and protect that principle, and the slippages have been through loopholes or some erosion. However, in B.C. they never had that same approach. I do not know if the corporate sector was stronger there or what it was.

Senator Mahovlich: We just returned from the West Coast. There is a lot of talk about owner-operators. There seemed to be a great interest, particularly in the smaller communities where they are really hurting. They have lost their fishing character. The little villages and the small communities are gathering together and forming associations and are beginning to talk about owner-operator kind of fishing, so Mr. Cruickshank is coming back.

Mr. McCurdy: His ideas are making a comeback. We recently had a national conference in the great fishing community of Montreal with people from across the country.

Senator Mahovlich: We should have done Timmins.

Mr. McCurdy: Maybe next time. That was a very strong concern of the B.C. people. They have seen not just some slippage, as we have seen so far on the Atlantic side, but tremendous erosion and they are worried that unless something dramatic is done fairly quickly the whole idea of the fishing community, the fishing village with the people, the independent enterprises, will go the way of the do-do bird and they will have the equivalent to absentee landlords running farms in PEI. You have hit the nail on the head in the sense that that is a very strong concern out there.

We had not given that issue much attention previously. It was an eye opener for us to be exposed to the experience of B.C. and to hear firsthand what was happening to their communities because of the direction of policy in that area. That has given rise to the whole national debate. This paper we are using here is new research that I became exposed to for the first time only a month and a half ago when we had our conference in Montreal. This is a new issue in terms of the detailed exposure we are trying to give it.

The Chairman: I appreciate you bringing up the fact that that was raised when we were in British Columbia.

What is the difference between a professional fish harvester and a non-professional fish harvester?

Mr. McCurdy: The first thing we had to do was come up with a name. In the old days they used to talk about fishermen. These days that is not totally inclusive. What are the options? One that is in common vogue in academic and government circles was fisher. It was brought to our attention that the fisher was a member of the weasel family. We did not think the Canadian Council of Professional Weasels was good. We decided on fish harvesters.

The professionalization program is in various stages in different parts of the country. In Newfoundland, there is a board recognized under provincial legislation that actually does the registering of fish harvesters in that province. That is recognized by DFO and recognized in provincial legislation. There are various programs underway in the different regions in the country. Professionalization is about a recognition of all the ingredients that are in fishing because to fish for a living you must be a navigator, a fisherman, a business person, a mechanic. You cannot stop miles from land to have your boat serviced. You must fix it yourself. There is a whole array of skills required. It is all about a recognition of that and about training and about fishermen taking control of their own destiny as an occupational group. Professionalization was the terminology we hit upon to describe that process.

Mr. Belliveau: We had a hard time with professionalization when we first heard about it. In our experience, usually professional fishermen were identified with just a few who had some kind of a privileged sector and separated themselves from everybody else. I remember that at the time the professionalization idea came in I thought of George Bernard Shaw, who said that professionalization is a conspiracy against the laity. That is how we, the Maritime Fishermen's Union, looked at this. We already had a licensing system; we called it the bona fide licensing policy. We gradually came to an understanding that professionalization and bona fide were basically the same thing, so maybe now I have to look at bona fide as a conspiracy against the laity as well. In a way I suppose it is. The whole idea of professionalization is that the fishermen should be the ones fishing and running the harvesting end of it and the processors should do their job of processing and the marketers should do the marketing work. That sounds so simple, but we are getting it mixed up more and more.

The Chairman: I am pleased that you did not call yourself the Canadian Council of Professional Weasels.

You refer in your presentation to the fleet separation policy of the under-65-footers. Under the fleet separation policy, a plant cannot buy a fishing vessel -- which is what the fleet separation policy is all about. On the other hand, a vessel owner could buy a plant. Can you explain to me why it is acceptable for a plant owner not to buy a vessel, but the reverse is acceptable, or if you support it? Actually, the Department of Fisheries and Oceans instituted this. I have never been able to understand why it is acceptable one way but not the other.

Mr. McCurdy: Of 10,000 fishing members, I am aware of only two or three who have become involved in operating a plant. To me, it does not make sense. Either you have fleet separation, where the processors process and the fishermen fish, or you mix it all together. We favour separation, which would suggest that if an individual who is a fisher wants to move into the processing sector, he or she should get out of the fishing business and move over into the other business. It does not make sense to mix and match. I would have thought that the processors would have objected to that, but perhaps they felt it might undermine their position under the fleet separation policy as a whole.

It does not happen very often; nevertheless, it is not something that we support. I think it happens on a bigger scale in Nova Scotia.

Mr. Belliveau: In terms of fleet separation, our interpretation of the policy is that the person who holds the licence must fish it. Therefore, if that policy is enforced, there would not be time to do both. You cannot be a plant manager and fish your licence.

I know there are exceptions to that, but perhaps we are not even worried about that. The more radical position on this is that if a licence to fish lobster has been issued to a fisher, then he fishes. The lobster fishery has been the strongest of all the fisheries on this principle. Even in Southwest Nova Scotia, by and large, the holder of the licence -- and we are aware that there are still ownership problems -- is obligated to fish that licence, or it does not get fished.

The lobster fishery has turned out to be one of the most stable fisheries in the whole country -- and that has not happened by accident. It is partly because of the grace of nature, but it is also because of the policies that are in place.

The Chairman: It is my understanding that in the lobster fishery some absentee owners are start to buy into it. This is just anecdotal; we would have to look under some more rocks for this.

Mr. Belliveau: You will not have to look far. It is happening, but it is not widespread. As long as you make the fisher fish the licence, it will not become the dominant form of behaviour.

Senator Cook: This is a very disturbing report. I understand policy, regulations, owner-operator. I want to take to you page 18 of your report, the paragraph where you say, "there is a dangerous public policy vacuum." I would like you to elaborate on that, and tell the committee what you understand the solution to be.

Thirdly, there is a dangerous public policy vacuum when it comes to recognising and protecting the invaluable economic, social and cultural the contribution...

To me, that is the most disturbing paragraph in this report.

Mr. McCurdy: That is, in a sense, a summary of what goes before. Policy in fisheries has developed higgledy-piggledy. For all I know, it is like that in all sectors of the economy. In the fisheries, the exceptions outnumber the rules. There are many inconsistent bits and pieces. Half of it is historical accident. Unless the loopholes are plugged, unless the issue of the debt burden on future generations is plugged, and unless there is a vision as to moving forward, then the idea of the independent family enterprise is really in jeopardy in the long haul.

If licences are sold to the highest bidder, that will drive out any profitability. What little profit there is will go in the first round, and what little is left after the first round will certainly go in the next round. If someone always bids up the price, then it will become the equivalent of getting farm hands to get out a fish it.

Senator Cook: Who is in charge? Who will do this?

Mr. McCurdy: Money will talk. There is a lucrative black cod fishery in B.C., and some Calgary lawyers and, I believe, a group of dentists in Thunder Bay hold licences to fish black cod. Those licences were bartered like futures in pork bellies or BCE shares. Whoever buys at the right time and sells at the right time calls the shots. In terms of who calls the shots on policy, that is the Minister of Fisheries and Oceans.

Senator Robertson: When I first received your documentation, I realized that I did not know much about the Canadian Council of Professional Fish Harvesters. I have talked with people since. Many of them seem to think that it is too late for the independent fishing enterprise, for the working fisherman. It is almost as if industrial trends and government inaction have served to pass by the small family fishing enterprise.

I know that you are a relatively new organization, but I have heard that your group is rather fragmented. What do you say to those negative people? You are obviously optimistic because you are here and are seeking our help in trying to do something to reverse this trend. What is your optimism based on? Are you hearing the same negativism? Are you as fragmented as some people say you are? How many fishing-related organizations do not support what you are trying to do, or are there any?

Mr. McCurdy: Anyone who has lived in Newfoundland since 1950 must be an optimist.

It is a highly fragmented industry in a lot of ways. The differences between the provinces are very interesting. Our organization is the largest fishermen's organization in the country. It is the main player. In Nova Scotia, there are 63 or 69 groups purporting to represent fishermen, some with as few as three or five members, other with several hundred members. Some of them are bona fide operations, having constitutions that have been in place for a few years. In other groups, whoever jumps up and speaks the loudest today is the spokesman; in may be someone else tomorrow.

We try to provide a forum to bring those people from different backgrounds together. At our national conferences, it is amazing to see how much interest there is among practising fishermen to meet their colleagues from across the country and to witness the similarities among the groups, in terms of issues and direction, and so on.

In my opinion, it is not a hopeless cause to try to turn around this issue on the owner-operator. We are relatively early on in terms of the diagnosis in Atlantic Canada and our ability to take remedial action. The challenger is greater in B.C., but if the will is there, it can be done. We need real leadership in this city in terms of recognizing this problem and giving it the attention it needs to be fixed.

For one to stay in the fishery for a long time, an optimistic outlook is a key aspect. Even after the worst year, fishermen believe that next year will be better. That is the way they tend to face it.

Mr. Belliveau: This relates somewhat to the earlier question about the public policy vacuum. Since the 1992-93 cod moratorium, we have been smarting under an image projected from the national media, the central Canada media, that the fishery is a romantic notion from the past, that it is not productive, that it is all in collapse.

Three or four years ago, I sat beside a well-known national public commentator who lives in the Maritimes. This was on an airplane. He asked me what I did for a living. When I told him, he asked me how anybody could have a job in the fishery, given what has happened? This is a person who should know better. The Atlantic fishery and the inshore fishery in the Maritimes alone is more productive in some ways than it ever has been. On the harvesting end, we are sustaining, in this inshore multi-species type of fishing, with lobster as the cornerstone, something like 25,000 inshore fishermen on that one species, that one fishery, alone. This does not include the plant workers, the ancillary workers, and so on. The council is trying to redress that image in the Canadian mind.

I say this with some anger: I do not think people understand their country anymore. They do not understand what is occurring in rural Atlantic Canada. We could spend all night talking about a policy vacuum, because there is one, in terms of rural Atlantic Canada.

Mr. McCurdy: If you look at some of the well-intentioned attempts at economic development in the Atlantic region -- for example, DREE, ACOA, and other similar manifestations of public policy -- some have worked, others have not. Maintaining vibrant economic development in the Atlantic region is a challenge that has defied governments and policy makers for generations.

One constant that has contributed very significantly in that regard is the fishery. It has allowed us to populate the coastline. It has provided a basis for economic activity. It adds $3 billion annually to Canada's balance of trade.

Many people think of Newfoundland as being a basket case; much ado is made about the transfer payments. Our balance of trade with Canada exceeds the transfer payments. What we pay for goods produced in Canada and sold in Newfoundland, minus what Canada pays for goods made in Newfoundland and sold in the rest of Canada, exceeds the transfer payments. The fishery in Newfoundland alone contributes about $1 billion to our balance of trade.

As you know, bad news travels faster than good news. A lot of good things have happened in the past few years, but it is not widely recognized.

Senator Robertson: On the subject of licences, there are many types, from exploratory, permanent, and temporary. There may be other types, I do not know. Senator Robichaud has expressed constant concern about the inshore crab licences ever since he has sat on this committee with me. I know where he is coming from. In Newfoundland, there are 3,200 temporary crab licences, each with a 1,500-pound catch limitation put into effect by Minister Mifflin. Is there a negative impact on those licences? Will those licences be lost, or will they remain independent licences?

Mr. McCurdy: The smaller vessels would probably be the last ones to go because they have a lesser economic value and are more marginal in nature. Since you raised it, I fully supported Minister Mifflin's policy at the time to grant those. Those people had a long history in the fishery. The collapse of the cod played a significant role in the ascendancy of the crab because cod is a predator of young crab. When cod dropped off, in great numbers, that, in combination with other factors, natural factors, created an environment for a bloom in the crab fishery. It is only fair and reasonable that those who suffered from the loss of the cod should derive some benefit from the ascendancy of the crab.

Senator Robertson: I do not quarrel with granting the licences. However, will those fishers keep them? They will not eventually be gobbled up by processors, will they?

Mr. McCurdy: Most likely, they will be gobbled up by seals. Right now, the peril they face is that they are extremely marginal and they have a very limited resource base. Those resources are under serious threat from the seal population. It is a calamity in the making in my view. We have a seal population triple what it was over the last 50 years, and that must be addressed. However, it is not the subject of today's meeting. The threat is not the takeover of those licences by dentists in Thunder Bay so much as a kind of benign neglect, making them so marginal as not to have much of a basis for surviving.

Senator Furey: I just want to thank the witnesses for attending here today. I apologize, but I must leave to get to another meeting. I am very interested in the subject matter, but out of necessity I must leave. Thank you very much.

Senator Robichaud: Funny that you should talk about the black cod fishery on the West Coast. When we prepared our report, the executive director of the association was sitting right where you are now; prior to that, however, he was working for the Department of Fisheries and Oceans and looking at the black cod. This was a calamity really, but it is behind us now.

[Translation]

Senator Robichaud: On the subject of fleet separation, the President mentioned earlier that fish processors should not be allowed to own fishing licenses. Should we not endeavour as well to ensure that fish harvesters do not become the owners of fish processing plants? If we look at New Brunswick's snow crab fishery, if I am not mistaken, the industry is now firmly controlled by large fishing enterprises. Should we not be making the effort as well to prevent fish harvesters from becoming owners of fish processing enterprises?

[English]

Mr. Belliveau: What I said earlier would apply. There are only 80 crabbers in New Brunswick compared to 1,300 bona fide operations. They have a stranglehold and a monopoly on a particular resource, which, in my judgment, is not acceptable.

Senator Robichaud: In my judgment, too.

Mr. Belliveau: In terms of the crabbers, we would be happy to see implementation of the simple principle, that if you are issued a crab licence you have to fish it, because they are not fishing anymore, senator. A few of them are -- I do not want to get caught saying that 80 crabbers are not fishing anymore. However, key crab licence holders are no longer on the water. Put them on the water; in that way, they will not be so quick to be involved in the other plants and operations. That will not solve the whole problem, mind you.

The Fisheries Council of Canada uses this false argument, and they always use it as an argument against the owner-operator principle. They ask: Why can't we own licences if some fishermen can own plants? My answer to them is: If you want to own a licence, go out and fish. I would say the same thing to the fishermen, if it came to that, but that is not the issue.

In Newfoundland, there are only a handful of them. It is a red herring -- no pun intended.

The Chairman: However, they still use it.

[Translation]

Mr. Bernier: If the legislation and regulations were clear, situations like these would never arise. Fish harvesters have rather remarkable imaginations. If there is some way of circumventing the regulations, they manage to do so to survive. Survival is the issue. They are caught in a certain situation and you can find examples like this on the lower North Shore. In the absence of clear rules that everyone abides by, both sides are guilty of not going by the book -- fish processors as well as fish harvesters.

There is a clear fleet separation policy in place. If this policy was upheld and applied, we would not encounter situations like the ones we are witnessing in the Acadian peninsula in southwestern Nova Scotia, much less the ones we are seeing on the BC coast.

As we speak, Mr. Patterson from the corporate sector owns over 50 per cent of fishing rights in British Columbia. That is the reality of the situation. Increasingly, the interests of fishing communities that depend on the fishery for their livelihood are being undermined as a result of the erosion of these communities' economic base.

Our message to you today is that a way must be found to stem the problem affecting the east coast fishery. Legislation must be enacted and all loopholes in the legislation and regulations closed. Furthermore, a clear policy must be formulated for the future development of our fishing communities on both coasts.

Senator Robichaud: Getting back to what Mike was saying about license renewals, if fish harvesters were required to go out and actively fish, a lobster fishermen who had not fished at all during the previous year and who applied to renew his license would be turned down. Is that correct? He would not be issued a license if it could be shown that he had not operated his own vessel.

[English]

Mr. Belliveau: Under our policy, to get his licence back, he can fish it the next year, but nobody else can fish it in his absence.

Senator Robichaud: He would have the question put to him: Why were you not on the water the year before?

Mr. Belliveau: If he was not on the water the year before, he must have been sick, because there is no other --

Senator Robichaud: If he had not been sick, he would not receive his licence back, would he?

Mr. Belliveau: I am say that he would get his licence back.

Senator Robichaud: If he was sick, yes.

Mr. Belliveau: That is the just the way the licensing policy is. He is not obligated to fish it, but nobody else can fish it.

Senator Robichaud: Which is not the same for crab.

Mr. Belliveau: Exactly. That is what I am saying.

Senator Robichaud: That is the point I am trying to make here.

Mr. Bernier: The black cod is the same problem.

[Translation]

Senator Robichaud: Pardon me?

Mr. Bernier: Or black cod.

[English]

Some 18 of the 48 licence holders are fishing. Therefore, 30 of them are armchair fishermen.

[Translation]

Senator Robichaud: It is truly terrible. I agree that everything should be done to prevent the spread of this practice. If it were to spread to our communities, they would suffer dearly.

You are urging us to turn our immediate attention to formal policy considerations. You talk about allowing a capital gains exemption on the disposition of fishing property and about the establishment of a national fish harvesters' pension plan.

Should it not be up to your associations to institute this kind of pension plan rather than wait for the government to act on this front? It could take some time to see results.

[English]

Mr. McCurdy: There is no question. I think all the organizations will love to be in a position to do it. It is a question of economics and the numbers. A large number of participants have marginal access. That makes it difficult. There really are some very serious issues, in terms of fairness, in terms of access to the resource. The crab fishery in Newfoundland, for example, the quota ranges from 8,000 or 10,000 pounds to 300,000 pounds. That is quite a difference.

Every organization in the country would love to have that. Some have different types of programs available. A lot of people have so much money invested in their enterprise that they see the proceeds from the sale of that as being the source of funds. Our ability to do it would only come from raising money from our members to put into the fund for that purpose. They sink so much into their enterprise, it does not leave a lot for other things. I hope the day will come when we have that. It is a tall order.

Senator Johnson: I am curious to know how you are funded. I believe you began in 1995 with a grant from the Department of Human Resource Development. Is that still the major source of your funding of your organization? What is your future in terms of your funding?

Mr. McCurdy: We are established as a sector council under the HRDC sector council program. For example, we are in the process of a sector profile; as such, we have developed occupational standards. If anyone has an insomnia problem, I would highly recommend they do a sector profile. It details all the tests and so on that people do. We have been working on that.

We have started on the road to self-sufficiency. In Newfoundland, there is a board that does the registration, and up to 10 per cent of that fee is forwarded to the national organization. That is subject ultimately to other groups coming on side. In fact, we had a meeting with DFO today to pursue the idea of advancing self-registration by the occupational groups in different regions. That is in various stages of development across the country. Ultimately, we hope that 10 per cent of the registration fees of the numbers of fish harvesters that there are in the country will be sufficient to fund a small secretariat like we have now. That is our long-term plan. We have to get over a few humps to get there, but we are in the early stages of arriving there. The HRDC funding is coming to an end.

Senator Johnson: When does it end?

Mr. Bernier: Technically, this is the last year of the core funding.

Mr. McCurdy: We are now into the last year of the core funding.

Senator Johnson: Have you applied for more?

Mr. Bernier: Not yet, but we will let you know.

Senator Johnson: Do you plan to? I am wondering how you will keep the organization. Do you have interim-funding plans that will keep you operating, so that you can continue your work?

Mr. Bernier: The sector councils approach started in the early 1990s, under Minister Valcourt. When Minister Axworthy arrived, the funding of the sector council was continued and renewed. There are 28 sector councils, which are partnerships between industry and HRDC to establish standards, et cetera, for the different industries. As we speak, every sector council is finds itself in the same situation -- that is, having to address its self-sufficiency problem. We have a clear way of addressing our core funding problem, and that is via the registration of professional fishermen.

Once the certification boards are established in the various regions or provinces, then, in the best of all words, 10 per cent of the registration will be passed on to the national organization for the process of interprovincial mobility, in establishing and keeping the national standards and national activities, and co-ordinating national activities.

Mr. Belliveau: This is a fairly sensitive area for us. For the record, I wish to clarify that council is a federation of independent fishermen organizations. For example, the Maritime Fishermen's Union is not reliant on this funding -- zero reliance on that kind of funding. It is when we come together at a national level, with the Newfoundland union, the B.C. union, that there are costs that none of the organizations are in a position to pick up. That is why we have the start-up money from HRDC. The plan is to become self-financing through the organizations and through the development of certification boards.

Senator Johnson: Will other organizations be joining you?

Mr. Belliveau: We have most of the big ones, the Prince Edward Island Fishermen's Association, the Quebec Alliance of Professional Fishermen, the B.C. union, the Newfoundland union, the Pacific Gillnetters Association, and so on, your Manitoba group.

Mr. Bernier: Native Brotherhood of British Columbia, the Lake Manitoba Commercial Fishermen's Association.

Senator Johnson: Does the Lake Manitoba association include the Lake Winnipeg crowd?

Mr. Bernier: That is another group.

Senator Johnson: So the David Olson here is not from Lake Winnipeg, he is from Lake Manitoba?

Mr. Bernier: Yes.

Senator Johnson: So you will be going to Lake Winnipeg, too?

Mr. Bernier: If they don't send all the water to the United States!

Senator Perry Poirier: Since it is known that so many fishing licences are owned by armchair fishermen and that the bona fide fisherman is almost forced to stay inshore -- he cannot hand down his gear to the son or daughter -- can the authorities do anything about this? Can anything be done about that?

Mr. McCurdy: There are possible remedies. Plugging that legal loophole that threatens the continuation of the owner-operator situation is one thing. That is a fairly straightforward one. As well, more flexibility and more appropriate regulations on capital gains provisions will go a long way.

Fundamentally, it is a matter of sitting down with the various policymakers in government, and others, to come up with options that are consistent with public policy generally. The problem is not insurmountable. However, it will be a lot more difficult to address in two or three years time than it is today. The passage of time will heighten the problem.

Mr. Belliveau: Senator, with respect to the area you come from, our paper here offers some technical solutions. There are a couple of hard questions that policymakers nationally will have to address. Part of it has to deal with the reallocation of resources.

If the resources are inordinately distributed to specialized groups, then it will eventually push out the fishermen on western Prince Edward Island. We have to plan for the future. The recovery of the cod stocks in the southern Gulf of St. Lawrence is possible. They are now seeing two-year-olds and three-year-olds in that stock. In another four years, the cod has an excellent chance of recovering. What we are saying is that, as it recovers, it should revert to where it started, that is with this bona fide inshore fishery.

There are a few areas like that, where there are still optimistic signs for resource recoveries and resource enhancements. We went through this with this committee -- you were there, senator -- in terms of scallop enhancement. Some of that will be enough to offset the rising cost of entry. This is not a doomsday scenario. However, there are some hard choices, but I am not sure people will make them.

The Chairman: On behalf of the committee, I wish to say that we have enjoyed the presentations tonight and the accompanying dialogue. Your suggestions and recommendation are taken very seriously.

I do want to mention that even though Marc Alain has been very quiet tonight it does not mean that we have not seen him. We are very pleased to welcome him to the committee.

We wish the council well, and we look forward to having you here again in the future.

Mr. McCurdy: We certainly appreciate your work on the previous report. I realized, when you mentioned Mr. Alain's name, that I left uncorrected the suggestion that I wrote the brief. Mr. Alain was the principal author of that brief; my contribution was reading the summary. It is a good piece of research; it identified a public policy issue that we must look at.

I certainly appreciate the opportunity to have attended here. I look forward to future opportunities.

Mr. Belliveau: It is quite an honour to be here with a former student colleague of mine, Senator Mahovlich. We both went to the same school. He was older than me, however.

The Chairman: I would ask honourable senators to please remain behind. We have some future business to deal with.

I would like a motion to have these items included in the exhibits. These are materials that were submitted to us during our West Coast visit. I distributed these materials earlier in the evening.

May I have a motion to include these materials as exhibits?

Senator Robertson: I so move, Mr. Chairman.

The Chairman: Thank you.

The committee continued in camera.