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Proceedings of the Standing Senate Committee on
Fisheries and Oceans

Issue 4 - Evidence, April 1, 2003

OTTAWA, Tuesday, April 1, 2003

The Standing Senate Committee on Fisheries and Oceans met this day at 7:03 p.m. to examine and report from time to time upon the matters relating to straddling stocks and to fish habitat.

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


The Chairman: Good evening, and welcome. Tonight, we will be concentrating more on straddling stocks, but please, gentlemen, do not let that limit what you might want to say to us. I am sure you will want to stray into other areas, and I will not be the one to stop you.

Our panel tonight consists of Mr. Siegel, who is no stranger to this committee, Mr. McLellan and Mr. Broderick.

Please proceed, Mr. Siegel.

Mr. Sandy Siegel, Executive Secretary, Maritime Fishermen's Union: Tonight, we wish to focus on a key element within the Atlantic fisheries policy review, AFPR, that is ongoing at the Department of Fisheries and Oceans. The element we wish to focus on is the separation of fleet and owner-operator policies that have been in place since the mid- 1970s in the Atlantic fishery. It actually became an Atlantic policy in 1989. Before that, there were regional policies in various regions.

Owner-operator and fleet separation policies are crucial to the future of our fishermen, our organizations and, we believe, the future of coastal fishing communities in Atlantic Canada. We were here to discuss this issue several years ago. The Atlantic fisheries policy review has been ongoing for a number of years. We presented to you previously. We have attended various external advisory board meetings of this policy review. You have received documents from us on this.

In the time we have to present, I should like to present the policy itself, including its background, its definition and some of the problems that have arisen from the mid- to late 1970s until now with its implementation.

Mr. McLellan will deal with the specific policy review process — where it started and where it sits currently. Our understanding is that the department has sent the policy to the minister and that we are looking at possible implementation in fairly short order.

Following that, Mr. Broderick will discuss the implications of the owner-operator and fleet separation policies being eroded or undermined as a result of the implementation of a new Atlantic fisheries policy. There will be serious consequences for our fishermen and our communities in coastal Atlantic Canada if these twin policies are not maintained and strengthened.

Senator Cochrane: Are you dealing with the inshore people?

Mr. Siegel: The fleet separation and owner-operator policies apply to vessels under 65 feet.

In terms of giving you a background definition and defining the problems we are facing, I will refer to a well-written and concise document from the Canadian Council of Professional Fish Harvesters. All our organizations belong to the council, and on May 31 they presented an analysis on their recommendations concerning the Atlantic fisheries policy review.

This document maintains that the issue of owner-operator and fleet separation is a central policy issue in the future of the Atlantic fishery. It is not small.

How does one construct an economically, ecologically and socially sustainable fishery? The Canadian Council of Professional Fish Harvesters believes that the best way of ensuring a sustainable fishery is by building access rights around owner-operator fleets. There is a very sound policy foundation for the owner-operator approach in our current policy and the erosion of this foundation is, in the council's opinion, the key public policy issue facing the Atlantic fishery.

The owner-operator and fleet separation policies are the two main pillars of our existing Atlantic fisheries policy. They were established by policy-makers to ensure the sustainable use of fisheries resources before sustainability became part of the management vocabulary.

Under the fleet separation policy, the first aspect is that the government guaranteed that, in fisheries restricted to boats less than 65 feet, the fishing fleet would be kept separate from fish processing operations. In other words, fish processors would not be allowed to own fishing licences or establish vertically integrated operations by acquiring vessels and licences in these fisheries.

These policies came in over 25 years ago. However, we will give a little bit of flavour of the history. In the late 1970s, policies and policy changes were often announced by press release. We have here a press release from February 10, 1978, for immediate release.

Would-be purchasers of fishing vessels given warning

Ottawa — Fisheries Minister Roméo LeBlanc today warned prospective buyers of fishing vessels to check first with his Department as to whether or not a licence would be issued for any vessel they propose to purchase, irrespective of whether it is presently licensed to another owner.


``I have made it clear in recent statements that the policy of my Department is to encourage the ownership of fishing boats by individuals or fishing enterprises rather than by processing companies'' Mr. LeBlanc added. ``In view of this, any attempt by a company to increase the size of its existing fleet would certainly be resisted.''

The news releases continues:

In a speech at Yarmouth, N.S. recently, Mr. LeBlanc proposed that in future, efforts should be made to separate the fishing fleet from the processing companies in Atlantic Canada. He added that there was clear evidence, from Canadian experience and elsewhere, that creating a truly independent fleet should improve the efficiency of vessel operations, make it easier to match overall catching and processing capacity, raise fish prices and fishermen's incomes, increase the fishermen's bargaining power, create a healthier balance of forces in the industry and invigorate fleet development by the fishermen.

The movement of vessels from fishermen ownership to company ownership would not be in keeping with these objectives of an independently owned fleet.

That news release was dated February 10, 1978.

The fleet separation policy was intended to keep traditional inshore and midshore fleets firmly in the hands of independent owner-operators and ensure that the benefits of their fisheries, lobster, crab, scallops, groundfish, herring, et cetera, would be shared broadly up and down the coast.

Over the years, harvester organizations in Atlantic Canada also lobbied successfully for additional protection for independent fish harvesters by having ``owner-operator'' clauses added to licensing policy — that is, that fishing licences could only be owned by individuals who owned and operated fishing vessels for their livelihood. In other words, the Atlantic fisheries policy for the under-65-foot fleet sectors determined that fishing licences would only be issued to fishermen.

With these two policy instruments, policy-makers put clear limits on the movement of corporate capital into traditional inshore and midshore fisheries. They did this so that the fishing industry would contribute optimally to the regional economy and to the economic viability and self-reliance of fishery dependent communities.

The framers of our existing policy were both wise and prescient.

Through the fleet separation policy, they guaranteed that the economic and social benefits of the fishery would be as widely distributed as possible in fishing communities all along the coast. By giving priority access to owner-operators, policy-makers also made, as we will argue below, a strong commitment to conservation. The most obvious benefit of the owner-operator approach is its efficiency in distributing the economic benefits of the fishery amongst participants and across the Atlantic region.

Chart 1 in my presentation material shows how the fleet separation policy has led to a roughly 75/25 split of the landed value between the owner-operator fleets under 65 feet and the licences held by corporations, over 65 feet. The fleet separation policy was meant to ensure that the more than $900 million, as of 1998 I believe, in landed value harvested by the under-65-foot fleet is kept in the hands of owner-operators and the coastal communities where they live and maintain their fishing enterprises.

The fleet separation and owner-operator policies are first and foremost allocation policies to ensure the distribution of fisheries wealth and to avoid corporate and geographic concentration. By allocating resource access to thousands of individually owned and operated fishing enterprises, the policies generate a multiplier effect in job creation and localized investment that would be the envy of any regional economic development planner.

The next point in the presentation is the erosion of the Atlantic owner-operator and fleet separation policies through legal loopholes. This is where the problem begins to be identified.

However, all is not well with the fleet separation and owner-operator policies. It is common knowledge in fishing communities throughout Atlantic Canada that fish processors and other investors are brazenly circumventing the fleet separation and owner-operator policies through legal loopholes in the fisheries regulations.

These legal loopholes allow speculators, including companies and non-harvesters, to buy up licences and quotas through legal arrangements that circumvent the owner-operator policy. Through a series of decisions, these arrangements have been upheld by the courts, opening the door to these speculators gaining effective control over owner-operator licences. The legal aspects of licence transfer are quite complex.

Section 16 of the general regulations explicitly states that fishing licences, referred to as documents, are non- transferable, and that licence renewal is not guaranteed:

16.(1) A document is the property of the Crown and is not transferable.

(2) The issuance of a document of any type to any person does not imply or confer any future right or privilege for that person to be issued a document of the same type or any other type.

Although the general regulations are explicit that fishing licences are not transferable, the Commercial Fisheries Licensing Policy for Eastern Canada, 1996, allows for transfers to occur for ``replacement licences,'' as spelled out in the following excerpt from the policy:

16. Change of Licence Holder.

(1) Current legislation provides that licences are not transferable. However, the Minister in ``his absolute discretion'' may for administrative efficiency prescribe in policy those conditions or requirements under which he will issue a licence to a new licence holder as a ``replacement'' for an existing licence being relinquished. These prescribed conditions or requirements are specified in this document.

(2) Subject to subsection (5), a replacement licence may be issued upon request by the current licence holder to an eligible fisher recommended by the current licence holder.

Although transferring a fishing licence is illegal according to the legislation, it happens all the time through the ``replacement licence'' provisions of the licensing policy. This has been a common practice within the industry and is accepted as a given by the DFO and fish harvesters. Over the years, the courts have validated these transfers for replacement licences by interpreting them as replacements, in line with fisheries policy.

Normally, this would not be a problem because the policy states that the replacement licence can only be issued to an ``eligible fisher.'' However, the courts have gone a step further and upheld the legality of contracts between fish harvesters and corporations that give the corporation control over the licences. This is done by contracts that separate the ``legal title'' from what is known as the ``beneficial use of a licence.''

A typical transfer transaction occurs as follows. An eligible fish harvester wishes to acquire a licence and approaches a fish processor for the financing. The processor agrees to finance the purchase on the condition that a trust agreement is drawn up between the two parties whereby they agree that the fish harvester will legally transfer to the processor the ``beneficial interest'' in the fishing licence.

What is this ``beneficial interest''?

The person in whose name the licence is issued has legal title to the privilege of holding the licence, even though the person does not own it. That person also has the right to use the licence. The ``beneficial interest'' is essentially this right to use the licence — that is, to fish under it. Ownership of the licence lies with the federal Crown at all times. These trust agreements are essentially contracts that allow the use and the title of the licence to be separated. The beneficial interest transfers to the processor, or any other investor, but legal title remains with the fish harvester. In this way, the trust agreement transaction is not illegal, in strict legal terms, because the legal title has not been transferred, only the use. However, in reality, the use is everything. Whoever controls the use of the licence controls the money that can be made from the licence through fishing.

Under such trust agreements — that is, that legal title in the licence remains with the fish harvester — the fish harvester can be legally bound, at the request of the processor, to ask DFO to issue a replacement licence to an eligible person designated by the processor.

With the trust agreements validated by the courts in a long line of case law — and we have a separate document that outlines that — transferring the beneficial interest of a licence has become a very simple procedure. The ease with which such transfers occur between and among individuals and corporations without any restrictions effectively undermines the intent of the owner-operator and fleet separation policies, because de facto control over fishing licences can end up under the legal control of vertically integrated corporate interests.

According to a legal opinion received by the council, this loophole could be eliminated quite easily by including in the general regulations of the Fisheries Act provisions specifically stating that the legal interest of the holder of a fishing licence and the related beneficial interest of the fishing licence are inseparable. The legal loophole would be eliminated if these provisions stated explicitly that when licence financing transactions occur between fish harvesters and corporations, control over the beneficial interest remains with the licence holder.

The council's concerns about the erosion of the owner-operator and fleet separation policies should not be a surprise to the Department of Fisheries. Since its founding, the council has called on the federal government to firmly establish owner-operator and fleet separation policies on both coasts as the cornerstone for the long-term social and economic development of Canadian fisheries.

Again, we refer to our 1996 policy document, ``Creating New Wealth from the Sea.'' The second principle stated:

The fishing must be left to independent professional fish harvesters.

Ownership of fishing licences and vessels must be kept separate from ownership of processing plants to ensure that wealth from the sea is shared as broadly as possible. Access to licenses, quotas and fisheries support programs must be reserved for independent owner-operators who meet professional standards developed and agreed upon by fellow fish harvesters. The current loopholes which encourage companies to buy up licences through under-the-table deals and the policies which allow fishing licences to be owned and traded by non-fishers must be eliminated.

The council is deeply disturbed that there is no mention of either the fleet separation or owner-operator policies in the department's discussion document, in the Atlantic fisheries policy review, despite the fact that the department has been aware of our concerns for several years. Indeed, when we talk about the finished draft that we saw in November, the same was the case. No mention of fleet separation was in the document.

The council's concerns about the erosion of the owner-operator and fleet separation policies were explicitly raised with the AFPR by the president of the council at the external advisory board meeting in June 2000 and again in November 2002. Moreover, these issues were the main subjects of discussion at the council's February 2000 general assembly, which was attended by senior DFO officials responsible for the Atlantic fisheries policy review. The council's concerns were also made known in a written brief to the Standing Senate Committee on Fisheries and Oceans on April 11, 2000. This cannot have gone unnoticed by the Department of Fisheries.

The total absence of any reference to either the fleet separation or owner-operator policies in the completed draft of the Atlantic fisheries policy review is especially disturbing given the department's policy in the Pacific fisheries, which has just completed a policy review. It is not clear how the department intends to bring the two policy processes together as the basis for a broad national fisheries management policy.

It is clear, however, that the Atlantic and Pacific fisheries have gone in opposite directions when it comes to allowing corporate capital and, particularly, processor capital to control fishing licences. Fishermen in Atlantic Canada have seen what the department has allowed to happen to the owner-operator fishery in B.C, and they do not like it.

Our message for the Atlantic fisheries policy review is clear and categorical: The fleet separation and owner- operator policies are cornerstones of Canadian public policy for the Atlantic fisheries and the key building blocks for the economically diversified and socially sustainable future of our coastal communities. The new Atlantic fisheries policy that emerges from the AFPR process must be free of any ambiguity in this regard.

Mr. Rory McLellan, General Manager, P.E.I. Fishermen's Association: Our organizations are all members of the external advisory board of the Atlantic fisheries policy review. We represent the interests of fish-harvester controlled fleets in both the inshore and midshore sectors in all five Atlantic provinces.

On November 27-28, 2002, the external advisory board met in Halifax. We were presented with a draft of the new policy framework. This has profoundly shaken our confidence in this process.

That is not to say that it is all bad. There is much in the AFPR document that is innovative and challenging in terms of the industry assuming more responsibility for fisheries management and decision making. This is the basis of professionalization. It is the reason that we have all joined together in the Canadian council to promote this novel idea.

For the most part, this general direction was clearly articulated in the initial AFPR discussion document that framed the consultation process. There were no surprises there. However, the treatment of the owner-operator and fleet separation policies in the draft policy framework in large part contradicted the dominant emphasis of industry input to the AFPR process.

I want to point out there were many organizations besides ours that were members of this external advisory board. Even people who disagreed with us all said that they wanted the fabric of Atlantic Canada in terms of fishermen owning their boats to remain the same.

Despite the overwhelming weight of stakeholder concern about the erosion of the fleet separation policy and a need to plug the legal loopholes that allow the processors and other investors to circumvent the policy, the draft framework document was completely silent on this question. Equally disturbing was the fact that, under the guise of responding to legitimate owner-operator requests for some flexibility in how the owner-operator policy is applied, the document proposes only an opting-out mechanism that would allow for entire fleets to remove themselves from the fleet separation policy. This is already happening in the Gulf of the St. Lawrence, where the herring fleet and some crab fleets are now changing hands through trust agreements under the table.

The mechanism put forward on page 25 shaping the owner-operator policy and commercial fisheries, and that is available in the Atlantic fisheries policy review document, which is available to you, is tailored to the needs of processor interests who, over the years, have used legal loopholes to gain control over the fishing licences in the fleets of less than 65 feet. This is particularly so in Scotia Fundy where some key fleets in the 45-to-65 class are now largely under processor control. The captains in these fleets are licence holders in name only, as processors and other investors have used trust agreements to gain legal control over their licences. The phenomenon is now spreading rapidly throughout Atlantic Canada.

Instead of strengthening the owner-operator and fleet separation policies, the text in the draft policy framework would seriously weaken it by providing a quick-exit mechanism for those interests that have already been using loopholes to undermine the policies. It would also open the door and encourage others to follow the same process.

Processors and other investors would continue to build a parallel system of licence ownership in a fleet or portion of a fleet once they have the majority control. The nominal licence holders, now their de facto employees, could vote to remove themselves from the policy.

It is not important, I might add, to control a particular fishery; it is not necessary to own all of the licences. You only need to own a small portion of them to have effective control over the fleet, control the price, conditions of landing, and so on.

In the November draft policy framework, the failure to mention the fleet separation policy at all and the particular wording of the owner-operator provisions run directly counter to most stakeholder input in the public consultation process. The great majority of industry participants from fleet sectors in all regions and in all provinces call for the strengthening of owner-operator and fleet separation policies. The counterarguments were from a limited number of processor lobbies and some academics.

The other issues, besides fleet separation and the Atlantic fisheries policy review's proposed policy framework, are the concerns of our organizations and members. For example, under the new proposed policy framework, a multitude of new resource users and interests are recognized and given a role in the policy process. Nowhere in the document are commercial fisheries or commercial fish harvesters recognized as having a priority claim to the fishery.

Moreover, the document introduces the principle of best use of resources to guide the minister's discretion over allocation of quotas between sectors, meaning recreational, commercial, and so on. We do not need to look far. If you look at what used to be the Atlantic Canada commercial salmon fishery, there is no commercial aspect to it whatsoever. The fishermen are kicked out.

The issues were clearly raised in the external advisory board meeting and we expected the changes would be made in the next draft framework document. We learned today there is no next draft framework. The policy is complete; the next thing we will get is the policy announcement from the minister. This is serious and it is supposed to happen before Easter, which is soon.

The fleet separation issue, however, is of immediate concern to our organizations and to all independent fish harvesters. The November text of the draft framework undermined a major element of public policy designed to keep the fishery in Canadian hands and maintain an owner-operator controlled harvesting sector, without the undue concentration of controls in the hands of corporations and outside investors. If the minister follows this direction, he will be seen by our organizations and the fish harvesters we represent as catering to a small minority of investor interests in the fishery, who are going against the clearly expressed will of the vast majority of fish harvesters of the Atlantic region and across the country.

The minister would be acting against the public interest in having the benefits of the fishery widely shared across communities and individuals throughout the Atlantic region. By allowing fleets to opt out of the fleet separation policy, the minister will surrender his responsibility for allocations to the market. These consequences could be far- reaching. Under current international trade agreements, the principle of national treatment for foreign investors is well entrenched. Once the Government of Canada allows the fishing licenses and the quotas to be owned and traded by Canadian corporations, it must allow foreign corporations the same privilege. The recent American position regarding the public auctioning of timber rights in the softwood lumber dispute with Canada is an indication of where we could end up with the fishery without solid policy instruments like the fleet separation policy.

What is at stake is different from the early days; it is now shellfish, which are the most valuable resource in Atlantic Canada. Vessels under 65 feet, which are subject to the fleet separation and owner-operator policy, currently harvest the vast majority of shellfish. Given the trends in groundfish, it is no surprise that processors and other investors would want to control these shellfish licences and their quotas.

Mr. Bill Broderick, President, Inshore Council, Fish, Food and Allied Workers Union/CAW (Newfoundland): Our union made a presentation to the Atlantic Fisheries Policy Review. I will read a couple of paragraphs from that before I go on.

On the issue of owner-operator fleet separation, we said at the time:

We believe the Canadian Council of Professional Fish Harvesters has rightly put its finger on the owner/ operator issue and the related fleet separation policy as being critical to the future of fisheries policy in Atlantic Canada. We support the recommendations made in this regard by the Canadian Council and lament the deterioration of the independent fish harvesting operation in British Columbia where non-fishing investors lease licences and quotas to working fishermen who have been marginalized by the lack of proper legislative and regulatory protection for the individual fishing enterprise.

A fishing licence is a licence to fish and should not be handed out to people who have no intention of fishing and no background in fishing.

Fish harvesters in Atlantic Canada are not prepared to sit back and see the people who do the hard work on the fishing boats displaced and marginalized by wheeler-dealers. Fishing rights are a heritage of coastal communities, not a commodity to be peddled on Bay Street like Nortel shares.

The peddling of fishing quotas that is presently taking place in areas such as 3Ps and 4RS3Pn makes a mockery of fisheries management. It is repugnant that a brand new entrant to 4RS3Pn (the Northern Gulf of St. Lawrence) picked up quotas totalling 700,000 pounds while traditional fixed gear licence holders who have fished the area for a lifetime have to scrape by on a scant fraction of this amount. As long as one new entrant gets as much fish as 100 long-established resident enterprises, fisheries management in this country will be in disrepute.

I wanted to read that little section.

In Newfoundland, we probably escaped this scourge for longer than most. We are farthest away and poorest off, we say. Since the groundfish moratorium in 1992, this issue of more and more company control of quotas and licenses has been creeping up on us.

How that happened was simply the economics of the day. Our fisheries and inshore boats under 65 feet were basically in groundfish prior to 1992. We had a little bit of crab close to shore. Since 1992, we have expanded our area of fishing and moved more and more vessels into crab and shrimp. Those are the main ones today. Groundfish is still at very low levels.

With these new fisheries and the move further offshore came the need for larger and more modern vessels. Where could the money come from to purchase these vessels? There had been, prior to 1992, a fisheries loan board, which, when the groundfish crashed in 1992, sent the provincial fisheries department into a tailspin as a result of outstanding loans. Since that time, there has been little money given out by the provincial department. There is some money under the guaranteed loan program through the chartered banks; however, that has not worked out well. It has been easier for fishermen to turn to fish companies for financing.

Some of the companies have not required people to sign trust agreements. They have signed regular lending agreements. As well, if someone wanted to get out of an agreement — if they could get financing from someone else — they could easily get out of it. With some of the companies, people signed agreements not realizing what they had signed: They had unknowingly agreed not to make a change in who they would sell their crab or shrimp to the following year.

This has developed more and more. At first, it was just the purchase of vessels. Now, as the age of our fishing population increases, people want to retire from the industry and are selling their enterprises. Those are now being purchased. Prior to 1992, licences had no value. You could pick up a groundfish licence for $20 from the department, and that could get you some other species licence. Now, licenses are being sold for hundreds of thousands of dollars.

The money to finance these is also coming from the companies, which creates all kinds of problems in that it erodes the bargaining power of the fishermen. If a number of the fishing population are tied to buyers, they have no ability to negotiate. As a result, the price stays lower than it normally would, and the money stays in the hands of the processors as opposed to the fishermen, crew members and families in small communities. There is such a concentration of ownership with some of the companies in Newfoundland, and this is now extending throughout the Maritimes.

Mr. McLellan just talked about the possibility of the ownership of those licences moving out of Canada. Two years ago, some of you may recall, there was a major effort with Fishery Products International, a large publicly traded company in Newfoundland, because of share restrictions. There is legislation in place to prevent that from happening with FPI; however, with respect to any of our other companies that could become publicly traded should they choose to, many of our boat licenses could become controlled by outside interests very quickly.

There is a movement, so to speak, in Newfoundland away from the local communities. There are groups of large vessels in certain communities. More and more, licences that were held by fishers in outlying and coastal communities are being bought up by large companies and moved to larger centres. Even though the skipper on the boat may come from one of the smaller communities, the crewmembers are drawn from the larger centres; they are not being selected from the outlying areas, where they would have come from before. This adds further to the erosion of those small communities. Much of that has happened during the last number of years.

Senator Cook: My questions will be directed to Mr. Siegel. If I understand you, correctly, you talked about a policy review that is underway and said that the loopholes are under the regulations in section 15. Is that correct? They are not in the act.

Mr. Siegel: The loopholes are in the policy, and I read the policy to you.

Senator Cook: The policy under review is silent on the things that you addressed as loopholes. Is that correct? Are the loopholes still there?

Mr. Siegel: Yes, and not only are the loopholes still there and not addressed in the policy, but also there are specific attempts to write in the new policy areas of flexibility where fleets can actually opt right out of the policy altogether. It is a building-block process. There are now specific fleets, such the under-65-feet groundfish fleet in Southwest Nova Scotia, that have been concentrated with the buying and selling of individual quota. About 350 licences entered that program in the late 1980s and now six people control 70 vessels.

That fleet is part of the lobby group, which now has the licences, through the loopholes, which would like to opt out entirely. They want the option to be able to opt out entirely from the owner-operator policy. They could then be free to own the licences outright. There is a loophole, and if the loophole is closed there is something to lose. It is a legal loophole, not secure in legal interpretation. The Atlantic fisheries policy is proposing that such fleets could come before DFO and say that there are a majority of them in this fleet who no longer want to be bound by owner-operator and fleet separation, that, just like the processors, they want to own the licences outright, as companies.

Senator Cook: If I understand you correctly, what started out as a legal loophole is now being given legitimacy with an opting-out clause under the present review.

Mr. Siegel: Yes.

Senator Cook: What is the solution?

Mr. Siegel: We have been tackling this on different levels, and I can mention some. We are pressuring very hard to change the regulations. We want them to close the policy loophole in the regulation. In other words, an item in policy that is allowing this separation in the courts over dividing the licence between title and use should be closed. In regulation, it clearly states that you cannot do that. Therefore, regulatory change would be required.

We have been asking DFO, as part of this Atlantic policy review, to enter into a review process with us to figure out the best way to do that in regulations. That is one option, and we call it ``strengthening the policy.'' We do not want flexibility for people opting out, but we want to figure out how to close the loophole legally in the regulations. That is our political direction with the department.

Another option would include the courts. A number of court cases are underway. As a result of transfers that were taking place, involving trust agreements, the Province of New Brunswick urged DFO to get involved in the gulf. The province asked DFO to enforce its fleet separation owner-operator policy. These people should be on the boats; the trust agreements are getting around the owner-operator. The gulf DFO actually enforced the policy, which caused a problem in the trust agreement between the buyer and the seller. The seller wanted to back out because DFO said that the seller had to be on the boat. The buyer became upset with the seller because the seller would not sell. Into court they went. Eventually it was settled.

My point is that there is one case in court currently. We have decided, as a fishing organization, to ask for standing with the court in this case. We have applied for legal counsel on this. We are not interested in who wins or loses, in this particular case, because we do not care. However, we are interested in going before the court to argue, on behalf of fishing communities, why these two policies are so important to the future of thousands of people.

The court can basically see the importance of the policy and on that basis have it on the court record as part of the proceedings. Hopefully, that will be important for the case. More generally, it will be important for the legal process that is happening around these trust agreements.

There is a legal option that we are taking as well as the political one to pressure the department, to strengthen the policy, not make it more flexible.

Mr. McLellan: This is a recent phenomenon, one that has taken place over the past 10 years or so, but it has become more pronounced in the last five years. We did not see this in 1978 or through the 1980s because the then Minister of Fisheries, Roméo LeBlanc said, ``It is policy to support Atlantic Canada. It is my policy to promote the owner- operator policy. It is my policy to keep these communities going. This is my vision, and my officials will stop you.'' If a minister were to say that now, you might see this thing slow down or stop as quickly as it started.

Senator Cook: One way or another, we will make sure that every last fisherman disappears. That is what I am hearing.

Suppose that I am an owner-operator and fish harvester, and I have saved enough money to buy a plant. Can I buy a plant?

Mr. McLellan: The argument is always made that fishermen should catch fish and plants should process fish; in other words, plants should not fish and fishermen should not process. Those who believe this with argue it with fervour and conviction. They are to be admired, I suppose.

It would come down to the beneficial use of both. On Prince Edward Island, as Senator Hubley will know, about half of the fish sold are sold to co-ops that exist for the benefit of the community. That could be interpreted as fishermen processors. They are processors, because no one could go to those communities. They used to be poor without a place to sell the fish. It became part of the culture to own a co-op.

There is a difference between something that is done for community benefit and an individual who would control licences for a multinational corporation or a foreign investor. There is at least an ethical, if not a legal, difference between the two.

The distinction becomes vague in many cases, particularly in Southwest Nova where there are family operations. Whether there is mutual benefit is not always clear. It is tough to determine, at times.

Senator Cook: It depends on circumstance. I am from a Newfoundland outport, so I know about fishing and about the life of a fisherman.

How do you see this committee helping you with this, given that it is a time-sensitive issues? I believe you said April, and our report is scheduled for June. How do you see us helping you with this particular problem?

Mr. Siegel: In a sense, I could ask you that. You know better the powers and prerogatives of this committee. We put our case in front of you. We certainly need some kind of support.

Do you have the power to call the department before you on this? Do you have the power to call the minister before you on this? We are not sure.

It is not Easter yet. There has not been an adequate public review of this policy, outside of the department. The process for that has not existed. We went before House committee on fisheries. We slipped in regarding other issues. We were there before Christmas. That was the only time, I believe, that this issue was raised. We are waiting to return. The policy may be in place before we get the chance.

If you can apply pressure, even in terms of public discussion, opening up for discussion the issues we are putting before you in any further way, we would welcome it. That is why we are here.

Senator Cochrane: I want to follow up on what you said Mr. Siegel. How involved are your members in the management process?

Mr. Siegel: In what sense do you mean?

Senator Cochrane: DFO is doing everything. It seems, from what I understand, that you have very little involvement in any decision making as to what might come out of all this.

Mr. Siegel: In terms of the policy review, I have to agree with you. We have not controlled it. We have not been involved in it any more than we are telling you. However, we are very much involved in other areas of the fishery.

There was broad consultation with inshore fishermen and their organizations across Atlantic Canada. They just did not pay attention to what we said. They consulted us, but ignored us.

In terms of this policy, you are right. We cannot seem to get their attention in terms of the importance of these issues.

Regarding the management of the fishery, which the policy actually requires, we find that our organizations are more and more involved in taking this kind of role, whether it is in developing new species of scallops or dealing with the problems in lobster habitat. We are involved in the future of the fishery with our fishermen, including the decline of lobster resources and using crab quotas to build funds to be able to buy licenses so we can have a decent living for the fishermen that are left.

Our organizations are more drawn in to having a role in the future of our fishermen, as the department would like. At the same time, they are undermining the policies that allow for the continuing existence of our fishing communities and our fishermen. It does not make sense. There are contradictions in the government approach.

Senator Cochrane: How many fishermen are on these 65-footers?

Mr. Siegel: In Atlantic Canada, there is something like 8,000 individual fishing enterprises of boats under 65 feet..

Mr. Broderick: In Newfoundland, we have 4,000. Overall, it is 8,000.

Mr. Siegel: In the maritime provinces, there are only a few hundred family farms left. That is where to talk about primary production and the increase in corporate concentration. In Atlantic Canada and in the Maritimes, the independent fishing family enterprise is the backbone of hundreds of communities. It is real.

Independent fishers can be wiped out. If you look to the Pacific coast, it can be wiped out. We are not talking in the abstract. Pay attention to what happened in Pacific Canada, because it did not have fleet separation. Their fishery is for the most part corporate controlled today with the lease system in operation there. Anyone can invest in fishing leases.

You ask what the fishermen will do if this happens? They will work for companies. They will still be around. They may not be in those hundreds of communities. They may be in 20 of them.

When we were speaking with Senator Comeau before Christmas, we mentioned that this concentration means that companies hire people and put the boats where it makes sense from a company perspective. If you are too far away, too bloody bad.

When I worked with the MFU in southwest Nova Scotia, there was a thriving groundfish, under 45-, under 65-foot fleet, in Clare and Digby. With the concentration that has taken place in the last 10 years, as Senator Comeau has said, no groundfish fleet exists in Clare today. It is concentrated down in Pubnico or it is up in the Digby Neck, because that is where the people who own the quota and have the licences want it. It is extremely dangerous what is going on, and it is going on at a level that most people are missing. We are not missing it.

Senator Cochrane: One would think that DFO and the people who are making all these decisions would look at the Pacific coast and learn from what has gone wrong. You learn from experiences. You learn from doing the wrong thing.

Mr. Siegel: You would think so. They seem to be having some urge to recreate it. It is frustrating.

The Chairman: I might suggest you start reading the writings of Leslie Burke, to see where we are all going.

Senator Hubley: It is great to have an islander onboard tonight. It does not happen very often. It gets lonely up here sometimes. It is nice to see you all, but a special welcome to Rory McLellan.

We are talking about 8,000 fishermen. What percentage of those already have been affected by the loophole that we were discussing this evening, in your estimation?

Mr. McLellan: Most trust agreements are secretive by their nature. I am told there is a harbour on Prince Edward Island that has 40 vessels and five owners. I will not identify it now because it will go in Hansard, but I will identify it to you later. I would say the virus is alive and well and is spreading. No one could answer the question because nobody knows who is holding trust agreements. By their nature, they are quiet.

Senator Hubley: Is there is a breakdown in communication between the fishermen and your organization, or do the fishermen want to be independent?

Mr. Siegel: That is a good question, and you are right. There are two social forces — or probably more — operating that drive this process. With the fishermen, one of them is that the cost of fishing assets is increasing dramatically.

The second thing is that fishermen are getting older. In the Maritimes, more than half of them are older than 45. In 1987-88, there were more under 24 than there were over 45. In 2000, there were three times more over 45 than under 24. The baby boomers are getting older, and it is costing more and more to get in.

Those kinds of forces drive a need for money. The processors are more than willing, because they need access to the resource. In particular, they need access to the shellfish resource because that is what is making the money, not groundfish.

It is a meeting of interests that are not helping our communities because we are not, as yet, responding. As organizations, we need to find ways that young people can get into the fishery without having to go to the processor. We need to find ways to help the fishermen who are retiring to get out with retirement funds. We need to facilitate the renewal of our communities. If not, we will not renew them; they will be bought out by other interests.

Government is not helping us here. By opening these loopholes, it is opening the door to undermining whatever continuity we need that keeps the control within the communities over the next generation. That is a whole other issue.

Senator Hubley: When you are talking about 40 vessels, it is the beneficial interest in the licence. The fishermen still owns it but the company has acquired the beneficial interest in that licence. What happens to the fisherman if he wants to pass on his licence or sell it?

Mr. McLellan: The saddest thing of all — and I have seen it in my own community — is that we are cutting out a generation of young people who might have, in another age, aspired to become fishermen. There is no place for them when the price of licences gets high. When very rich people, through their access to crab or access to money, can come into the small communities and compete against an older fisherman's son — the older fisherman wants to retire and he is faced with selling his licence to his son for $25,000 or $30,000 or to a corporation or rich person for $250,000 — it becomes a real problem.

One of the things we did not mention tonight is that we are — the three of us, and our colleagues across the country — involved in a professionalization and certification program. Through that program, we are promoting the fishing industry as a profession, promoting it as a career young people would aspire to and one that offers a good income. Fishing is the basis of Atlantic Canada. There is a future in fishing, and it can go ahead. With your help, if we can solve this owner-operator thing, we can have a great future. We are all confident that it is not over yet.

Senator Hubley: I have a more specific question about the mussel industry in Prince Edward Island. Just to backtrack for a minute, did you do a commercial where a young man talked about being a professional, not necessarily a fisherperson?

Mr. McLellan: Now we know one person who saw it. Yes, we did. We ran them during the Stanley Cup playoffs, and thank you for mentioning that. It is something that we all believe in very strongly. The fishing industry has contributed to this country since the time of Jacques Cartier. We cannot forget that. We have to help it through the rough spots and make it a place for our young people into 2050.

Senator Hubley: Going back to the mussel industry, it seemed to me there was an opportunity, and it appeared to attract a lot of new young fishermen. I do not know if that is right or wrong, but is the same situation applying there? It looks as if we have young men involved in fishing, but they may not have total control of the benefits of their licence.

Mr. McLellan: The mussel industry is about 50/50. On Prince Edward Island, about 50 per cent of the people who harvest mussels are entrepreneurs, owner-operators, if you will, and about 50 per cent are companies established for that purpose. It has always been that way. We do not see a big shift there. We do not see a problem there because it was created that way and has been maintained that way, so it is different from the traditional fishery.

Mr. Siegel: In terms of what happens to the person holding the title, the fisherman that is holding title, he is bought, basically. It is like Esau and the mess of pottage. Once he has sold it, he is finished. The fisherman has only a titular role. The company does not even have to use that person on the boat. Through the contract, the company can force the titular head to go to DFO and have someone else named that the company wants to run the boat. Basically, for money, they are eliminated from real involvement.

In Atlantic Canada, there are approximately 35,000 fishermen. Over 95 per cent of those fishermen are in vessels under 65 feet.

Senator Adams: We have a new Nunavut government, since the land claim in Nunavut Territory. I am trying to help set up some of the future for turbot fishing in the Arctic. How would you create it?

We want to coordinate with an organization. Since beginning land claims, people have organizations set up in the community. To me, instead of organizations, a person who gets into the business of fishing can have more control. Some of the organizations are funded by CCRA, for example. Some people now want to get into some kind of commercial fishing organization. My answer to that is, ``Not you guys; it should be people from the community.'' If you are with an organization, at least you have a salary coming in 12 months a year, but you do not care if you catch a fish or not. If you are the owner of a 65-footer, at least you have to pay your loan and catch your fish. That is how it is with the people around the Baffin area, between the turbot and the shrimp fishing.

I should like to know a little more background as to which way is the best. DFO said over 8,000 metric tons are caught up there for every year in Baffin Strait and the surrounding area. They call it OA and OB, that area up in the Arctic. Maybe my question might be kind of wrong related to what you guys are doing. Right now, we have a new MLA, but he does not have much background. He has only been in for five years. Politics makes him work for the people's economy.

There are 30,000 fishermen. Every community has a little bit of benefit, just like you guys are saying. I call it a coalition that is set up now, with an organization collecting royalties from the government. They gave out quotas in the community. The community had a little bit of money from the corporation to cover those quotas.

What I am looking now are those 8,000 metric tons. Maybe someone owns 60-footers or 45-footers and, from there, they can use it to set up the business.

In the beginning, how did you set up your organizations?

Mr. Siegel: The organization I belong to, the MFU, started 26 years ago. It took about three years to set up and it was set up around specific problems that were occurring in the fishery. We work in New Brunswick now with First Nations people who are coming into the fishery under Marshall, including Big Cove, which is the second-biggest First Nation in Atlantic Canada, and Burnt Church, which is also quite large.\

When you were speaking, there was something that struck me about the snow crab fishery in Big Cove. They have over 50 lobster inshore licences so far through Marshall, which is a fairly big fleet. They are fishing out of Richibucto, New Brunswick. Up until then, they had a larger midshore boat and they were fishing their snow crab quota, which is like the fisheries are you talking about. The community would put people on the boat and the revenue would come back to the community, so that it would be spread around. The chief and council would do what they needed to do with it, which is a good thing.

However, the 40 boats of inshore fishermen in the band that were fishing lobster came to the chief and council and said, ``We want to be able to have a fishery that will sustain us and our families all year, so we need you to give some of the snow crab to each of us, so we can go out and fish it to add to our yearly income as commercial fishermen''. What the Big Cove chief and council did was keep some for the community boat, so that they would have the revenue. They then divided it up, giving five tons each to the small boats. We put mentors from our organizations on the back of their boats, to help them learn to fish snow crab. They went out last year and they fished their snow crab. They had their five tons and that helped them earn enough income to get them through the year.

That was an example, where Big Cove chief and council had to deal with the community interest in the fish and the fishermen's new interest. There are all these fishermen saying, ``I can go out and make a living, so I want it.'' The chief and council are trying to balance the community and the new fishing sector. They needed help. They got it from our organization and, in the end, it worked.

Today, they are back negotiating with government for more snow crab for this year. There are ways in your communities and traditions and history in ours that we can share and there is a way to sort those problems out in a positive way.

Mr. Broderick: Similarly, in Newfoundland, our organization has been around 32 years or something like that. It was started on the west coast, over in Senator Cochrane's neck of the woods. Again, it was started over specific issues in the fishery there. It evolved over time. Ninety-five per cent of the people we represent are fishermen and plant workers; however, the fishermen are supposedly independent harvesters. Forget the discussion we are having about the owner-operator for the moment.

To get back to your question, the area where there is involvement similar to yours is in Labrador. Around the same time that our union was formed, we had the first moratorium, although it was not called that, in Labrador. Traditionally, all the northeast coast of Newfoundland fished the coast of Labrador for cod. In the late 1960s and early 1970s, that pretty much disappeared from that area. The people there were having a real struggle.

It was probably 1978 when the first shrimp were given out to the offshore companies. I am not sure of your area, but I know there was some given to some in the North. However, I know that on the south coast of Labrador, two of those shrimp licences were given to what is called the Labrador Fishermen's Union Shrimp Company and one or one-and-a- half to another group up in northern Labrador, the Torngat Co-op. Those licences allow fishing by offshore boats that are manned by people from that region. That way, they have local fishermen on the boats. The shrimp is not landed and processed, because it is industrial shrimp, I guess we call it. It allowed the Labrador Fishermen's Union Shrimp Company to use the royalties from that to build an infrastructure on the coast. They have, I think, three or maybe four plants in the south that are processing snow crab and other species.

There is the problem we talked about earlier with the licences that would not be happening in that area. Most of those fishermen would be able to go to the shrimp company because it is, basically, their own company. The fishermen are the shareholders of the company. They may have been able to do good work on that coast, but now I would suggest that it could be a ghost area if it were not for the formation of that company. They have done everything there, including setting up a bank. The Eagle River Credit Union is the only banking institution up there. That was initiated by the Labrador Fishermen's Union Shrimp Company. That has been a shining light in what would have been a difficult area to sustain.

It is a pity that we have not been able to do more of that. We see private companies coming in that have no interest in the communities. Their interest is in becoming millionaires off the resource that we have. There are so many areas in the Northern Peninsula that are desperate.

Their efforts have set an example. They have been able to help people obtain experimental licences and to even subsidize the prices when they are trying to bring them into market. It has been helpful, and I suggest that some of that is happening in your area, as well.

Senator Adams: They are only looking at the bottom line. The fishermen cannot be the plant owner at the same time. They would prefer to go to sea and catch the fish to sell to a plant owner. I am looking for that kind of information. It has been more than 10 years of DFO issuing experimental licences for Nunavut in the Arctic.

They are realizing that the fishing is better up there around Baffin Island near the tip of the mouth, where we had about three or four communities. There are people right along the coast and they have no boats. They could get into the business if they had the equipment.

I talked to a large corporation down east. I have been telling the government for the last five years in writing but I never received a response. The people of Nunavut want a partnership — and the same for seal hunting. They are going north to look for more seals.

The government wonders where the money will come from. Last year, I asked the Minister of Fisheries when he came North whether DFO had any money to help the people get equipment. I hope one day in the future it will be better for the people up there. There are 13-and 14-year olds up there with families and no income. Right now, we are losing between $15 million to $20 million per year for the turbot because we do not have the equipment.

Thank you for your information. We have a little something in common right now in that people buy the quotas and they are selling them to large corporations. That is the only way to make money.

The Chairman: In the last comment of Senator Adams, there is the issue of buying licences, let us say. You made a point, Mr. Broderick, that if we were to keep this up, eventually the fishery would no longer be in Canadian hands. I listened carefully to that comment.

Would it be possible, if enough licences were bought by companies, for them to go on the stock exchange, as you suggested. Would it follow, then, that foreigners could buy the majority of those stocks? In effect, under this concentration of licences, foreigners could buy up our Canadian quotas. In other words, the fishery would be in foreign hands. Is that possible?

Mr. Broderick: The case with Fishery Products International, FPI, which has major quotas from the Government of Canada, mainly in the offshore, is that an Icelandic company is now owner of 15 per cent of its shares. According to the provincial legislation, the quotas cannot be transferred out but that is because that company was set up under provincial legislation.

The Chairman: Let us take Clearwater, for example.

Mr. Broderick: If you look at all of the other companies in Newfoundland today, you will see that FPI is not one of the major buyers of the inshore quotas because they have been mainly into groundfish. They are more into it now but some of the companies that focus on crab and shrimp have major ownership. One of those could become publicly traded tomorrow, if they so desired. Someone outside Canada could very well invest in them and, bingo, the company would be gone.

The Chairman: Technically, that could be done. For example, Portugal and Spain could get together, buy out a large number of Canadian companies, or create some kind of a major company, meld the stocks, and we would have a double whammy hitting us in the face. Could that conceivably happen?

Mr. Broderick: Once there is such a concentration of ownership, anything is possible.

The Chairman: This committee has been on the record in the past in respect of the issue of concentration. We have been forceful on the matter but it is still there. I do not think we have ever had a proper response from the department or from the minister on this. If I recall, we had wanted a public discussion to be held prior to the de facto implementation of corporate concentration.

I was listening to some of the members' questions tonight and it reminded me so much of recent criticisms of how the government has handled another controversy — gun registration. Many were concerned not about the benefits of what was being proposed under the gun registration but about the fact that things have happened without parliamentarians knowing about them. In other words, this was being done without parliamentarians being aware.

Concerning the matter of a fleet separation policy, parliamentarians were told that it was on the books. As far as I know, we were told that it was on the books as a policy. You are telling us that for quite some time now, there has been no fleet separation policy because of a loophole that was allowed to be established under the policy. Therefore, we are in the situation where parliamentarians are again being kept in the dark. We are being told that what is on the books is fine, but in practice it is irrelevant. In other words, fleet separation is not there. Am I right?

Mr. Siegel: Yes.

Mr. McLellan: Yes.

The Chairman: Given that this is a policy, it can change at almost at any moment, I assume. The minister could implement a change of this policy tonight. Should there not be a regulation, or, even better, a law that says there is separation of fleet?

Mr. McLellan: It is a great idea. What can we do to support this?

The Chairman: I am glad that I thought of it.

I heard you when you said that there must be flexibility in how it is applied. However, to be consistent, if there is to be a fleet separation policy, it has to work both ways.

I also heard what you said about cooperatives and so forth. However, if you would deny processing plants from owning fishing licenses, and you would limit processors from owning licenses, you must consider the other way around. You would have to limit fishermen from owning or establishing processing plants. It has to work both ways. That is important.

I have not heard this group venture too far on that subject, other than to say that there must be flexibility.

Mr. McLellan: We all want the same thing. We all want the overall good for Canadians. When we look at problems like this, we must look at an individual case and say, ``What is the overall good of this community and of these fishermen?'' Sometimes, it is collective action among a group of fishermen that get together for the purposes of marketing their product, because there is no alternative. Sometimes, it is an individual who became rich through the fishery who buys out a plant and uses it to expand for his own good. It is not good for the community.

If there had to be an absolute, and we had to pick one absolute, the absolute that we would want to see is that fishermen would fish and processors would process. There is a grey area on the processing side. It has become necessary for fishermen to do that in some instances.

Mr. Siegel: As an inshore organization, I am not sure that the MFU would have difficulty with what you are saying. When you get deeper into the issue, it is not so simple. Some would say that there is a difference, over and above this, if one cannot do it then the other can.

Co-ops exist for that reason. Certain community efforts are there for a reason. They usually have to do with increasing a price, getting a market and keeping control in the community, whereas corporations are interested in depressing the price to get the product as cheaply as possible and taking control out of the community.

You do not have a strong argument if it comes down to the importance of owner-operator and separation of fleet over and against what you are asking. It is not so simple an issue in terms of the history of the coastal communities.

The Chairman: I understand that there are ramifications. However, to make things simple, it is hard to propose an argument whereby it would be fine for a fisherman to establish a processing plant and buy licences. On the other hand, it is not acceptable for a processor to start fishing vessels.

Mr. Siegel: I would agree with the way you have phrased it. In terms of the history and realities of communities and what they are facing, under certain conditions and in certain contexts for the communal good, banding together to be able to sell a product becomes essential to the survival of the community. The history of the co-op movement in the fishery is an example of that.

The Chairman: I have an Internet discussion paper in which there are examples of possible rule changes regarding the size of vessels. Item 5 says the government would propose the removal of any restrictions on vessel size in a fleet provided that any new vessel is only used in IQ fisheries. Remember, the department calls them IQ, rather than ITQ . It sounds better.

Beyond fleet separation, what is the position of your group on opening the rules on size of vessels?

Mr. McLellan: I am not sure that we have a position as a group because we have never really discussed it. Individually, we have all looked at the issue of this restriction. We feel on Prince Edward Island that fishermen should be free to 45 feet, given that some consideration is given to limit effort in other ways.

We would not want to see a groundfishery opening, for example, and the harvesting capability double. That would be irresponsible. There would have to be other measures. However, we believe that there are a myriad of other measures that could be taken to restrict vessel size. That could increase danger. People are fishing far from shore. If they have to do it for some bonehead legal requirement, it would put a 16-foot boat in a 60-foot sea. That is not a good situation.

The Chairman: You are talking about those not in an ITQ fleet. However, the government is proposing an ITQ fleet whereby you could keep buying up the licences. The government is saying that as you amass the licences you must get rid of the old vessels and buy a 125-foot vessel.

Mr. McLellan: Buy yourself an ITQ at the same time, which is a vertical integration.

Mr. Siegel: We would not agree with that. This vessel replacement policy seems to be the complement document to the AFPR document, because they coincide in terms of their intent. Make everything smaller by concentration and then basically you can do what you want.

We are no more enamoured with that concept than we are with the Atlantic fishery policy. That would be my organization's position because it is the same old dog-and-pony show. It is dangerous.

Senator Cook: I have been preoccupied as with this all-party committee that the Newfoundland legislature set up in December to look at the possible closure of the cod stocks. I realize that I am talking about another issue that is not your agenda for tonight; however, it is part and parcel of the bigger thing.

When the groundfish and cod industries collapsed in the 1990s in Newfoundland, our entire culture fell with it. Ten years later, we are faced with the possible closure by the DFO within the next several weeks of the last lot of groundfish.

I am looking here and I do not like what is coming together in my head. Fishermen of 10 years ago who made a decent living on groundfish and cod needed to turn to another species to make a living. They were not given an opportunity before, say, a corporation came in and made a living instead of him. There is a dollar to be made on lobster, shrimp, crab and other species, where we see a complete collapse of cod. How do you react to that?

Maybe I am not making myself clear. Here is a fisherman who has fished cod all his life. It collapses. In order to survive, he needs to change to other species. It costs money. Someone sees an opportunity, a good chance to make good on the back of that man before he can get going. That is the thing that bothers me.

With this all-party thing and our possible closure, what do you see as the next step? Or am I out in left field?

Mr. Broderick: Just a quick point: Cod, for 500 years, was our history. However, it was not lucrative. No one really wanted it; but crab and shrimp — that is money, that is gold. Therefore, everyone wants in on the action here.

Senator Cook: Before that, the professional fisherman could look to see where he could make a decent living. Having fished traditionally for cod, now he does not have an opportunity. That is what bothers me about the whole thing. I understand that if there are no fish we cannot catch them. I am not that foolish. However, it seems that the fisherman is being denied an opportunity to turn to other species while we look at what is no more, and that is the collapse of the cod fishery.

Mr. Siegel: I should like to respond to that. When I hear you speaking, I think of intergenerational transfer. More and more, we are talking about young people who cannot fish the cod, who need to fish something else, so there are no more fishermen. It raises a couple of things. One is an alternative to corporations, who are sitting there with the money ready to get control. We need alternatives to ensure that fishing and fishing licenses stay in our communities.

As organizations, we are beginning to turn in that direction. In other countries, there are other options. There are loan boards that are able to lend money for licenses. They cannot now in Canada — or they do not. There are venture capital funds. There are licence banks. There are retirement funds for fishermen. In the world, there are all kinds of different ways to provide alternatives, rather than corporate investment, to be able to renew your fishery.

We are telling you that if we go with corporate investment, with the loopholes in the policy, we are dead meat. It will be owned by people in Boston eventually. Where are we? As organizations, as government, we need to generate alternatives. We need to say, ``It is being done in Norway, France, Iceland and the Shetland Islands, so where is Canada?'' Where is our government helping us with the issue of intergenerational transfer, with the future of our fishery and communities to build on Roméo LeBlanc?

We have respect for what he did. Rather than dismantling it, we need alternatives. We are beginning to look for those. We are pushing DFO to set up its own intergenerational transfer committee. We can see it coming. It is like a train coming down the tunnel. Where are they?

These are the areas we all need to go in. We need to take hold of our future and we need to recreate it. That is on our shoulders. We cannot just blame the minister and the Department of Fisheries. We can blame them, but we will have to move them and we intend to.

Senator Cook: Access to the resource and the ability to harvest the resource — there is no infrastructure there from the fishermen's point of view. It costs money to change and fish something else — change costs money. I do not want to hold on to something like the cod fishery that has been there for 500 years. If it is gone, give it a decent burial. There must be something more if we are going to maintain the dignity of the fisherman who wants nothing more than to make a decent living for his family.

It seems to me that, before you can move to that point, there is someone, a corporation with a pocket of money, ready to grab the next step — and that is the opportunity for the fisherman to be flexible. That is my preoccupation here. How do you get around it? I am grateful you said what you did about intergenerational transfer.

Mr. Siegel: Special investigative committees are part of what I know the Senate to be about since I have grown up in this country. Perhaps the Fisheries Committee might be interested in a special committee or investigation into this very issue, and into intergenerational transfer in the Atlantic fishery. It is not a small issue.

Senator Cook: There were 19 recommendations in the all-party report. One of them was the creation of a prime minister's task force to look at the whole issue. Perhaps that mandate could be broadened to take in more than the cod. How would you react to that?

Mr. Siegel: It is a great idea. Now it is crab and shrimp and lobster that are there to replace the cod.

The Chairman: I will be making a speech tomorrow on the all-party recommendations and I will raise this question of the intergenerational transfer. I think it is an excellent point and I will do it.

Senator Cochrane: Should we go back to the fisher's loan board?

Mr. McLellan: The loan boards in each provincial jurisdiction were different. I am not sure if the Newfoundland fishermen should go back to the Newfoundland fishermen's loan board. I can tell you that on Prince Edward Island, there is a provincial loan board that has been largely ineffective. It will only loan in very exceptional circumstances.

That being said, there needs to be some institution, which fishermen can go to and have faith in, that will invest in the enterprise of a young man — without fear of having his licences and his income owned by somebody else — giving him the freedom to conduct his affairs as he sees fit. Such an institution needs to exist. It might be a provincial loan board, or a national loan organization, or a fishermen-run loan organization generated through the capital of resources that could be allocated to that fund. Mr. Siegel is looking at a very dynamic system like that right now, which would allow for that. These are exciting ideas.

Should we go back to the old way of doing things? I do not think the old way served us that well. We should think of a new way.


Senator Cook: There should be a national infrastructure.

Mr. Broderick: With the provincial loan board, except for small loans, the money was coming from the chartered banks. Prior to 1992, that was, again, really small loans. Since 1992, however, there have been major loans. What is happening here is that the corporations also controlled the banks.

I have to tell you a little story about a friend of mine who basically owed some money to his company. He was doing fairly well and he decided to get the money from the bank and pay it off.

My friend went to the bank he had been dealing with for 20 years. Six weeks later, they told him that they would not give him the money. They decided that he could not swing it. My friend thought that he could or he would not have gone. He went across the street to the bank he had not been dealing with for 20 years. He got the money and he paid off his company. He did not get the money from his bank because it was dealing with the company. That is why we he did not get the money. That is why people now go to the provincial loans board. They first go to the bank where they are asked if someone from the company will co-sign. If the answer is, yes, then they will have the money. Basically, the money is coming from the company. That is happening.

Senator Cochrane: My concern is about cod. We know that it was in abundance years ago, so much so that the boats were coming in loaded with codfish. I have been on the Northern Peninsula and I have seen the shrimp boats coming in absolutely loaded with shrimp. Are we going to be hit down the road with the same kind of situation that happened with our cod? I am worried about the shrimp and crab resource. Could you respond to that?

Mr. Broderick: I do not know what will happen with the crab. All stocks are different and they are managed differently. There is an argument widely made that crab and shrimp are now thriving in our waters because cod are not. The environmental conditions are such that they exist in large numbers. Perhaps if the conditions were to revert, then they may not be there. I cannot talk about the shrimp because I have not been in that fishery so I do not know.

The crab is there, and if you do not take it, it will die. If you manage it properly then you will not destroy it — for example, if you do not take the females. There are many things you do not in the crab fishery that you do with the cod. Therefore, you do not have the chance to destroy it; but you can overfish it. We manage it differently than other countries. Some countries pulse fish. When it is there, they fish it and then they wait for it to come back and fish it again. We do not do that. We manage it on a yearly basis.

Could we possibly foresee a time when the crab will be gone? I think we could see that time. We have seen crab go down before when we did not have the same amount of effort that we have today. We have expanded our area tremendously since 1992. We are fishing five or six times the area for crab now than we were back in the early 1990s. That is why we are fishing much more of it. The potential exists, even if we never fished one pound of crab or shrimp, for it to go down still, as was the case with cod. I am not suggesting that we did not overfish cod because we did. However, it could happen with environmental changes and with predators. We could find ourselves in difficulty.

The Chairman: Thank you, gentlemen, for your excellent presentations.

We have heard your message; it came across loud and clear. The owner-operator is a common sense phrase that, when looked at closely, makes sense in our Atlantic communities. It would have made sense to the West Coast communities and inland waters, as well.

I know that you have made this request to us and to the House of Commons before. After discussing this with my colleagues on the Steering Committee, we may take a closer look at the issue. We share a great number of your concerns, such as intergenerational transfers and corporate concentration. We want to help you cope with the necessary changes for our coastal communities.

The committee adjourned.