Fisheries Committee on May 3rd, 2007

[The Vice-Chair, Bloc, Raynald Blais]

I would like to start by apologizing for the fact that the parliamentary secretary, Mr. Randy Kamp, cannot be here today. He asked me to tell our witnesses that he had to be in his riding today on an urgent matter.

We have two groups of witnesses today, and each one has 10 minutes to make its presentation. Then we will go to questions and answers.

Please begin, Mr. MacDonald.

[Ron MacDonald, Executive Director, Canadian Sablefish Association; Chair, Canadian Fisheries Working Group]

Thank you very much, Mr. Chair.

Mr. Chair, I have been at these tables many times in the past, but this is the first time I've been at this end of the table, not the other end. I hope that some of my transgressions with earlier witnesses are not going to be visited on me today.

So that being said and done, I would very much like to thank the committee for allowing our groups to appear today to address them, and to request their assistance on an urgent basis on some issues that are affecting the fisheries on all coasts of Canada.

I wear two hats here today: one is as the executive director of the Canadian Sablefish Association, and I'll speak to that in a moment. The other is as sort of the coordinator of the Canadian Fisheries Working Group.

The Canadian Fisheries Working Group is an ad hoc group of fishermen's organizations from across Canada—both coasts—who have come together over concern about the implications of a lack of policy by the federal government after the Larocque decision of June 23 of last year.

With me today, representing some of those interests, is Robert Haché from the Acadian Crab Association, as well as Phil Eidsvik from the Area E Salmon Gillnetters Association, and Geoff Gould from the Area A Crab Association in British Columbia. I also am very pleased to have somebody I work closely with who will be making her own presentation, and that is Christina Burridge. She will be speaking more about her group in a few moments.

The reason we're here, members of the committee and Mr. Chair, is that something important and maybe momentous happened on June 23 of last year. Over the year, there's been a long-standing and expansive process by the Department of Fisheries and Oceans to try to augment its budgets through the use of fish; that is, using an allocation of fish to pay for departmental activity. That practice has always been highly controversial, and I was actually a member of the government that probably started that practice many years ago.

We were cutting budgets and trying to eliminate deficits, so we started to reduce budgets in areas like fisheries management and fisheries science. We tried to find a way, without getting it directly from the A-base budget, to fund these necessary activities. So we turned to fish. Although in the beginning it was a small amount of fish to pay for a small amount of science that could not be covered, over the years it has gradually grown to significant dollars in fisheries, in most of the fisheries across Canada.

Indeed, the department has become quite adept at turning fish into money, which raises a number of concerns that I don't think we should be addressing here today. However, one concern relates to whether or not the practice is in accordance with the Financial Administration Act or is properly reported to Parliament. But most important for today is the Larocque decision, which clearly said that the use of the allocation of fish to cover departmental expenditures was outside of the jurisdiction of the minister. The question is whether the minister continued to do it after that court decision.

Most importantly, once the June 23 decision came down and clearly indicated that the department could no longer use an allocation of fish to pay for things like science and management, there was stunning silence from the department. We didn't hear anything from the department other than that it was business as usual. We knew from the court decision that it would be illegal from that point on to use an allocation of fish to pay for departmental activities. We also knew that it was illegal to coerce or to cajole fisheries organizations to have them use the fish, turn it into cash, and then give it to the government to be used to augment resources.

So most of our fishing organizations tried to get some policy from the government. We asked the department at the time, “What do we do? We need in-service surveys. We need surveys for stock assessment so that we can have a sustainable economic yield in our fisheries. What are you going to do?”

From June until today, the department has been silent. The department has told us it's business as usual. We have joint project agreements, which are important for the co-management of the fishery, some of which—as is the case in my fishery in sablefish—have expired. I sat down with the department and I said, “What do we do? We don't know who has to pay for what. Are you going to pay for the science?” And the department once again said, “We don't have a policy.” Well, the policy has started to come together, and it's a policy that is fraught with chaos, difficulty, and trepidation for those of us who have to live with it.

What we do know from the government, from the department, is that they've done an assessment, and they say that the value of quota, which had been used to pay for things like science and some management in the department, is probably at around $28 million or $30 million annually. My sector alone paid over $2 million last year, $1 million of which was an allocation of our quota to pay for science—which we believe is the proper responsibility of the Government of Canada.

We know that the government itself, the department, says it's about $30 million, but the appropriation in the budget, the number that comes up in the budget, is less than $11 million. That means that only one-third of the science, which was being done at a base level last year, pre-Larocque, will be able to be done with an appropriation from Parliament. This means that two-thirds of the base science that the department had determined in the past was required—the minimum required to economically and sustainably manage these fisheries—will be paid for.

That leaves a giant, gaping hole. It means that the department is going to have to pick who wins and who loses, without any framework of how you allocate that very diminished resource.

Will it be done by who's got the prettiest fish? Will it be done by who's got the best relationship with the DFO official? Will it be done based on need? Or will it be done with a degree of equity, parity, and transparency?

We've asked these questions. Stunning silence has been the response.

We're here today to speak to you—and we're really pleased that you've seen us—about the value of science, about the importance of Parliament appropriating the proper amount of money so that the fiduciary and legal responsibility of the government is fulfilled in managing this public resource. We are appealing to you to go back to your colleagues in Parliament, to the department and to Treasury Board, and to try to influence cabinet to give a full appropriation from Parliament to cover the value of the quota that had been used in previous years to cover things like science and management.

We are telling you that in the absence of a full appropriation, there will be chaos somewhere. I don't know where. I don't know which fleet. I don't know if it's going to be on the east coast or the west coast. But I do know something will suffer.

We're being told by DFO that they can't do it now, so if we want to do it, go ahead. Sablefish is an example. We do a yearly survey. That yearly survey works for us to try to assess the health of the stock and it tells us what our TAC can be. The department comes back and says this to us: We can no longer fund that by quota; and by the way, we really think we need to do this only once every three years; and by the way, if we only do it every three years, what you're going to get is a very conservative estimate of the size of the biomass; and by the way, that means a lower TAC.

A lower TAC means less money to fishermen, fishing communities, processors, and other people who work in the fishery, but it also means tens of millions of dollars less for the Government of Canada in foregone tax revenue. At every level we need this addressed. If you don't like the fact that we need an expenditure, you need to look at the return for the government and the people of Canada that a vibrant fishery on all coasts will bring.

We're here today to tell you our stories. We're here today to tell you that what we need is support from this committee for a full appropriation from Parliament. It's probably going to be anywhere from $20 million to $30 million to cover that in this year while the department effectively gets its act together and comes up with a policy and a process to deal with the fisheries on all coasts of Canada; to determine what is an appropriate level of science and who should fund it; and to come up with a framework that is transparent and fair, that has parity as its centrepiece.

That is why we're here, and I want to thank you for allowing us to come here.

We'll be splitting our time at the table, Mr. Chairman, with a few other people.

I'd like to turn it over to Christina Burridge now so that she can introduce her group and give her comments.

[Christina Burridge, Executive Director, B.C. Seafood Alliance]

Good morning, Monsieur Blais and committee members. Thank you very much for inviting us here.

I'm here for the B.C. Seafood Alliance. I have with me Mike Featherstone, who is the vice-president of the alliance. He's also the president of the Pacific Urchin Harvesters Association, and he's the co-owner of Ocean Master Foods, which is a value-added processing plant in the lower mainland.

I also have Chris Cue. Chris is the senior director of fishing operations for the Canadian Fishing Company, the largest seafood company in B.C., also a significant licence-holder. He's the elected seine representative for areas A and B salmon, and he's the elected seine representative for the Herring Industry Advisory Board. He's also involved in groundfish and halibut.

So between us, you have representatives of most of the fisheries on the west coast. I hope you'll give my colleagues a chance to speak very briefly to the issues in their fisheries.

The B.C. Seafood Alliance is an umbrella organization. Our 17 members represent 90% of commercially harvested seafood in B.C. That's about $750 million in sales annually.

We believe that sustainability and profitability can and should go hand in hand. We advocate for effective, efficient fisheries management that allows our products to be competitive in both the local and the global seafood marketplace. And I should tell you that this is a world where a chum salmon harvested in northern Japan, filleted in China, and sent to Vancouver sells for less than that of a fillet from one our own fish.

In order to be competitive in this world, capture fisheries, which by their nature are uncertain, need stable, ongoing access and we need a predictable, regulatory regime. Without this, harvesters and processors cannot invest to meet the needs of the marketplace and will be unable to attract new entrants to the fishery. In our view, this stability must be founded upon solid science and research, because these are fundamental to the future health, stability, and economic viability of the industry.

In January 2007 we wrote to the Minister of Fisheries and Oceans expressing dismay over the lack of information from DFO on how it intended to deal with the implications of the Larocque and APPFA decisions, both in the short term and in the long term. We reminded the minister that we had a conference on co-management in 2002 and that one of the recommendations coming out of that, agreed to by DFO, was that DFO should clarify the governing policies and legalities of co-management funding mechanisms and provide clear direction to managers in the field about their use.

As a result of arbitrary practices on the east coast, we now have a situation on the west coast in which the formal policy of encouraging co-management of fisheries between representative commercial fishing organizations and DFO through various avenues, including using the proceeds from a specified allocation of fish to fund so-called “incremental” research and management activities, has been overturned.

I think you need to understand that this allocation is not free fish; it was agreed to by fishermen that it would be taken out of the commercial TAC. We wouldn't call it the perfect policy—that's why we made those comments in 2002—but it was based on a cooperative approach and it did work reasonably well for most of the last decade.

In our January letter we asked the minister to instruct the department to cover the costs of ensuring that fisheries could operate normally in 2007 while developing a new approach in conjunction with industry that would conform to the law of the land, would be fair to users of the resource, would be achievable over the long term, and would deliver the benefits that Canadians expect and deserve.

This hasn't happened. Instead, what we've had so far this year is a series of last-minute, ad hoc decisions that are patently inconsistent, unfair, and unsustainable. They are decisions that have pitted fishery against fishery, and they've strained everyone's working relationship with the department. This could hardly be otherwise. We understand that the Pacific region estimates the use-of-fish expenditures last year, 2006, at a minimum of $10 million, possibly as high as $15 million. This year they have $3.5 million to contribute to those activities.

The court decisions have put the west coast industry into turmoil. DFO hasn't been able to provide any indication of how it intends to cope or what mechanisms are available to us. We've been told that we might not hear about the new policy framework until July. Well, by then most of our fisheries are either complete or fully under way. Simply from the gap, we find it hard to believe that the policy could be anything but inconsistent and unfair.

Actually, we agree with DFO: DFO does not have the tools or the resources to manage fisheries effectively in the 21st century. I think we would disagree with DFO that Bill C-45 is an acceptable way to provide them, but that's another topic altogether.

I think it's really important that you understand that funding for science and research is already inadequate, even before the court decisions, but the demands on science are only going to grow. There's the Species at Risk Act; there's the trend in fisheries management to ecosystem-based management; and last of all, there's the market demand for independent third-party verification of sustainable management, which will require significant additional resources.

I want to take a quick look at four west coast fisheries. I'll start with roe herring. That fishery contributed in the past about $4 million a year to science and research through agreed-upon voluntary forfeit of catch and was used primarily for a roe quality testing program and for stock assessment. At the last minute—our fishery opened in March—DFO provided $900,000 in funding for both activities, though not all that $900,000 went directly to the two activities previously funded.

We need the roe testing program because it's the only way we can maintain our reputation as the top supplier of roe to Japan, and that's our only market. This year the roe testing program was barely adequate, and the stock assessment was inadequate. Next year we're told that DFO will be unable to fund the roe testing program, and stock assessment will only be partially funded.

Without these two activities, the multi-million-dollar investment funded jointly by Agriculture and Agri-Food Canada's CAFI program and industry to reposition Canadian roe in a dramatically changing marketplace will be jeopardized. The fishery in recent years has been worth somewhere between $50 million and $100 million, so it's a quite significant fishery that's at risk here. We have 1,550 licence-holders, and that makes DFO's suggestion that this should be funded through voluntary contributions impractical and legally unenforceable.

Since the chairman is telling me that I'm running out of time, I'll very quickly mention hook-and-line dogfish. This is a fishery that has been losing its market, its only market, in the European Union because of attempts by European conservation groups to protect European dogfish. It has to have Marine Stewardship Council certification. In order to do that, it needs a stock assessment, and that's $375,000, which DFO doesn't have, for the first year, and $70,000 after that.

On area A crab, I think Geoff Gould is going to speak to that later. Again we have a situation where the fishery is not able to deliver its full potential because of the shortfall in commitments to fund soft-shell crab sampling.

Very quickly, on salmon, we've had test fishing in place for decades. For the last 20 years or more, it has been paid for through use of fish. The Larocque decision means that cannot be done. We already saw curtailment in test fisheries and harvests last year. We don't know how it will work this year. And as one other example, we have $500,000 that was raised last year through use of fish, and for enhancement and remedial work on Cultus Lake sockeye. That work is essential to increasing the harvest level on late-run sockeye. That money is sitting in the bank. It cannot be used.

[The Vice-Chair, Bloc, Raynald Blais]

Unfortunately, I have to tell you that time goes by very quickly. However, you will have an opportunity to pursue your points during the question period. Thank you for your presentation. The idea is to give members of Parliament a bit more time to ask questions. At the same time, you may certainly come back to the topics that you were unable to cover in the time you had.

I would also ask for my colleagues' cooperation. I am sure you will be most cooperative today.

We will begin with Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

It's good to see you back, Ronnie. You didn't lose any of the gift.

Welcome to everybody else. Glad to have you here.

There are always major problems, but we'll try to assist, if we can, and put the proper recommendations to government. Hopefully they will heed them.

As a result of the court decision, they're now reviewing the existing practice and the collaborative agreements. You've addressed that pretty well. I don't think you're too agreeable to these agreements in the first place. You haven't had much involvement with DFO over the last few months either. But do you have any thoughts on the status of the review? Have you been consulted? Do you know how many of these agreements have been entered into across the country?

[Ron MacDonald]

Thank you, Mr. MacAulay.

Some of them are in limbo. These are basically funding mechanisms for co-management and co-funding of activities. It is very difficult for associations to go forward when there's a complete lack of clarity about what is the responsibility of the federal government for funding, what is the responsibility of industry, and what's nobody's responsibility.

So in the absence of policy, my fishery has had to do a short-term, interim, much-stripped-down agreement just to allow our independent science to have access to departmental data. We've refused to pay for anything when it deals with science or surveys, because we think it's the responsibility of the government to respond to the court decision, and they haven't responded.

The person who can probably tell you more about some of the impacts due to lack of certainty is Geoff Gould. His fishery was the first one on the west coast that was impacted. They needed funding because they had an opening and it didn't happen.

[Lawrence MacAulay, Liberal, Cardigan, PE]

But before you do that I would like to put this in the mix. I understand there's some concern about Bill C-45. Ms. Burridge indicated that perhaps this wasn't part of it, but indeed it is. Do you feel that paying for a review and programs with fish is actually a tax on the fish and the fishing industry itself?

[Ron MacDonald]

My view is that fish is a public resource. The fishers pay for it through a licence fee. So it's almost like a tax on a tax on a tax. To take the resource and use it to pay for science or management effectively reduces the amount of catch that each licence-holder has available to them.

If you take it by way of cash or potential catch, it's still taking it away. So fish have been used for quite a while. I would argue quite strenuously that legislators need to sit back and find out what is indeed the legal and constitutional responsibility of the Government of Canada to fund a viable fishery.

Phil Eidsvik here can speak to that. In the terms of union with the Province of British Columbia, the federal crown indicated it would—What are the words, Phil?

[Phil Eidsvik, Director, Salmon Gillnetters Association, Area E; Member, Canadian Fisheries Working Group]

The words are “Canada will assume and defray the following charges—Protection and Encouragement of Fisheries”.

[Ron MacDonald]

So B.C. may be a little different, but constitutionally we believe the federal government has the responsibility to cover all those costs.

[Lawrence MacAulay, Liberal, Cardigan, PE]

But my concern is that this will accelerate and continue to grow larger. More fish and fish funds will go into research, and in fact it makes less cost for the federal government. We started this, but it doesn't mean that things have to remain the same. We want to make sure this doesn't continue and take more out of the fishery.

[Ron MacDonald]

It's been a slippery slope. In every year since this co-management began, there has been more and more squeezed out of the fisheries. When somebody comes and tells you that they're basically the judge, jury, and executioner—they're the ones who issue your licence, put the restrictions on your licence, and monitor you to see if you're actually in compliance with the regulations—and they say, “Ron, I think you guys should give us another 20% towards science. What do you think?”, what do you think is the likely answer?

We're at the point now that last year, on a $30 million fishery, my industry paid $2.35 million in so-called voluntary payments to cover what I believe is more appropriately paid by the Crown through an appropriation by Parliament.

[Lawrence MacAulay, Liberal, Cardigan, PE]

And you have some fear that if you didn't volunteer the $2-point-something million, there could be some difficulty on the other end?

[Ron MacDonald]

Post-Larocque, when they cannot now take fish and use fish, they've indicated to us that unless we find a way to fund the science, there will only be a stock assessment done every three years and that they'll take a conservative approach to the size of the biomass, which will lead to a much-reduced TAC during that period.

I don't know the legal definition of blackmail, but it's rather close to that, I think.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I think Ms. Burridge has indicated that the roe testing program would be in jeopardy. I come from the east coast, and we certainly fish herring too.

I don't know the value of this fishery, but I imagine it's a very high-value fishery. What do you think will happen if they test only every two or three years?

[Christina Burridge]

If we're talking about the roe herring fishery this year, because the TAC was down, and because of the market and the strength of the Canadian dollar, it will be the lowest-value fishery ever. But in the last five years it has been as high as $80 million in wholesale value.

We get that high wholesale value because of the roe testing quality program, which means that we can harvest the largest and the best roe for the Japanese market. Without it, we'd simply become a commodity producer having to compete with everyone else. Without the stock assessment, we'll be stuck with ever-lower harvests. We'll end up as a low-volume commodity harvester, so we won't see the value.

If I may talk very briefly about your other question—

[Lawrence MacAulay, Liberal, Cardigan, PE]

You mentioned fishers against fishers. I'd like you to touch on that too, more elaborately.

[Christina Burridge]

What's happened is that some fisheries have got money and other fisheries have got none. For instance, at the same time—and we raised these issues in our January letter to the minister—the roe herring fishery got $900,000, while the area A crab fishery got none.

It is very difficult to coordinate relationships when inevitably some groups are winners and some are losers.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Also, you've indicated something that's of interest to our area on the east coast, the dogfish fishery. I understand it's a very new fishery. Most of your market is in Britain, I think, or Europe at least.

[Christina Burridge]

It's in Britain and Germany, mainly.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I'd like you to expand on what the value is now and what you think the value could be.

[Christina Burridge]

It's a small but important fishery, because it delivers benefits to coastal communities. It's a hook-and-line fishery. It harvests 5,000 or 6,000 tonnes, worth about $9 million. Its only markets are the U.K. and Germany. Germany and the U.K. are unwilling to buy that fish, because it does not have Marine Stewardship Council certification, which is now pretty much becoming a requirement in northern European markets.

This is what I mean when I say that demands on science are going to grow. We've done a pre-assessment under the Marine Stewardship Council on dogfish, and that assessment concluded that the fishery was certifiable if DFO made some changes to its science. Fundamentally, the single thing that's most needed is a stock assessment. We haven't had one in 19 years. I think you've had one more recently on the east coast.

We went to DFO and aksed how much it would cost. They said it would cost $375,000 the first year and $70,000 in maintenance thereafter and that they don't have the money.

[Lawrence MacAulay, Liberal, Cardigan, PE]

It's $70,000 versus—What did you say the cost was, again?

[Christina Burridge]

It's $375,000 for the initial stock assessment and $70,000 for—

[Lawrence MacAulay, Liberal, Cardigan, PE]

How much is the value of the fishery?