Fisheries Committee on Oct. 17th, 2006

[The Chair, Conservative, Gerald Keddy]

I call our meeting to order, pursuant to Standing Order 108(2), to study the minister's priorities.

I'd like to welcome Minister Hearn to committee. It's nice to have you back, Mr. Hearn.

I'd also like to welcome Larry Murray, Deputy Minister; Lucie McClung, Senior Associate Deputy Minister; George Da Pont, Commissioner of the Canadian Coast Guard; and David Bevan, Assistant Deputy Minister in fisheries and aquaculture management.

I know that our committee is anxious to have a chance to ask questions, so I'd ask our witnesses to go ahead. I don't know if the minister has a prepared statement.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

I have a point of order, Mr. Chair.

[The Chair, Conservative, Gerald Keddy]

I recognize, Mr. Stoffer, that you gave a notice of motion at the last meeting, and we said we would deal with it at this meeting.

We have agreed to put it off--Mr. Stoffer has agreed to put it off--until Thursday, or perhaps we could deal with it at the end of this session. I would ask members to stay just briefly, because we need to discuss travel during the week prior to break week.

Minister.

[Loyola Hearn, Conservative, Minister of Fisheries and Oceans]

Thank you very much, Mr. Chair. It's certainly a pleasure to be back.

I came in and almost automatically headed for the chair up where Roger is. I spent about five years sitting in that area, and I have to say they were five very enjoyable years, with a lot of the people who are at the table.

One of the things I think we all could pride ourselves in as a committee generally is that for five years we delved into some pretty heavy issues in fisheries; we had major successes, with just about all of our reports being unanimous—maybe a couple of times there were added opinions, but they were generally unanimous; and we had great camaraderie around the table. Many of the things that have been done and many of the things we're doing are the result of what happened around this very table.

So again, it's great to be back, and it's great to see that a lot of the people who contributed so much are still at the table.

Mr. Chair, I have a couple of things. I will read an opening statement for the record, but I apologize for my voice. Like many, I'm getting over a weekend flu. It's funny how we always get our flus on the weekend.

Mr. Chair, members of the committee, thank you and good morning. It's a pleasure to be here.

As the chair said, I'm accompanied by Deputy Minister Larry Murray; the senior associate deputy minister, Lucie McClung; David Bevan, the assistant deputy minister of fisheries and aquaculture management; and George Da Pont, Commissioner of the Canadian Coast Guard.

For those of you who don't know, just recently Mr. Da Pont, who was acting commissioner, has been appointed the Commissioner of the Canadian Coast Guard. We're very pleased to have George there.

I'd like to start by thanking the committee for its continued dedication to the proper management of Canada's precious fisheries and oceans. I know first-hand the passion that members bring to their important work. I'm not going to take too much of your time away from questions and answers—I'm sure you have lots of them—but I will take a few minutes to briefly outline some of the things we've accomplished since February. I'd like you to note that when we talk about what we have done, what we are doing, and what we will do, it all had to be done and planned within a short period.

As I've said before, I believe my job is to sustainably manage our public fish and oceans resources on behalf of Canadians, for the maximum benefit to Canadians. I don't own the fish, nor does my department or the government as a whole. As Canadians, we all own this common property resource.

I am working closely with the provinces and territories to facilitate a collaborative approach to fisheries and oceans management. Last week, we had a series of productive intergovernmental meetings in Yellowknife to discuss, among other things, how to put the elements in place for coastal communities and all Canadians to enjoy the ultimate sustainable value from these publicly owned resources.

When I arrived at DFO, the department was facing significant funding pressures that, if allowed to persist, would affect delivery of our programs and services to Canadians. Working with Treasury Board and my departmental officials, we secured a permanent budget increase of $99 million to help address a chronic financial shortfall.

This budget increase allowed Canada's new government to invest $45 million more this year to help keep the coast guard operational and ready to serve. We are moving forward with modernization of the coast guard's aging fleet through a multi-year renewal plan. That plan will see ten new vessels added to our fleet over the next five years.

We hiked the science budget by $13.5 million this year, as part of our commitment to increase spending in this area. This does not include capital expenditures. For example, in May I was pleased to announce our investment of just under $9 million to upgrade primary research facilities at the Northwest Atlantic Fisheries Centre in St. John's. We put an additional $11 million from this year's budget increase into maintaining and improving harbour facilities through our small craft harbours program. This money is crucial for many coastal communities and their economies.

Earlier this year we also improved our habitat protection and enforcement capacity on the west coast. We devoted $2.4 million to increasing the number of fisheries officers in the Pacific region, from 162 to 176, and added 12 new habitat monitor positions.

Having these habitat monitor positions has enabled more of our enforcement people to do the work for which they were sent there in the beginning. This will assist our conservation and protection officers on the Fraser and in Pacific coastal areas. It will also help us monitor development projects occurring in and around our waters to ensure compliance with habitat protection provisions of the Fisheries Act.

Of course, challenges remain, but these additional funds are helping us to shore up operations across key areas of the department to better meet the needs of Canadians.

We were also pleased to work with our colleagues in the finance and revenue departments on a long-awaited capital gains tax exemption of up to $500,000 on the sale of fishing enterprises. We went even further than our previously stated commitment and granted a complete exemption from paying capital gains tax, no matter what the amount, when the sale took place between family members.

We've made substantial progress in our fight against overfishing. In late September, the Northwest Atlantic Fisheries Organization agreed to major changes in how it deals with illegal fishing, at its annual general meeting. Thanks to Canada's hard work and leadership, along with the collaborative efforts of NAFO members, the organization made significant reform to its monitoring, control, and surveillance measures. These included immediate port inspections for misrepresented catches, tougher sanctions for rule breakers, and real-time reporting of catches from vessels without 100% on-board observer coverage.

We also made major progress on limiting the objection procedure, so that nations must enter a dispute resolution process rather than fishing a unilateral quota.

NAFO is now closer than ever to following Canada's sustainable management practices. The organization agreed to a more precautionary, ecosystem-based approach to fisheries management, an approach based on science, but taking into account fish habitat and marine sensitive areas.

I'm proud of these achievements and will continue to work with NAFO and the international community as long as cooperation brings results, towards our goal to end overfishing.

I'd like to turn for a moment to an issue that's getting much attention and concern right now; that's bottom trawling. Canada, like many other responsible fishing nations, does not see a blanket moratorium as the way forward. What we do stand for is ensuring there is responsible fishing taking place on the high seas and in our own waters.

Canada has carefully considered the issues surrounding the impact of fishing on vulnerable marine ecosystems. I have come to the conclusion that real solutions must be practical, enforceable, and fair. A blanket ban is none of these. I will be pleased to speak about the significant actions Canada has taken to protect our marine environment. These will include our current work to reduce the impact of fishing activity through increased research and development.

Where do I go from here in our Fisheries and Oceans agenda? For starters, I'm hoping to modernize the legislative framework for fisheries and move forward with Canada's ocean action plan. We'll continue to renew our science program. We'll streamline and improve the effectiveness of our habitat management program.

Realizing the full potential of Canada's aquaculture sector is also among our goals. I heard my provincial and territorial counterparts in Yellowknife saying how eager they are to move forward with an aquaculture framework agreement. I'll continue to work on this initiative with them.

Also, we'll work with our provinces, territories, first nations, industry, and other stakeholders to renew fisheries, with more emphasis on integration and better management from water to table. We're actively building with our counterparts on the success of the premiers' summit on fishing industry renewal in Newfoundland and Labrador this past May. Our shared goal is to create a sustainable industry that is economically viable and internationally competitive. That goal is shared by all my provincial and territorial counterparts and I suspect by everybody at this table as well.

By the way, I should add to this that besides the summit in Newfoundland, we had one in the Maritimes—in P.E.I., involving the maritime provinces—and now Quebec is setting one up for November.

A couple of items in particular will be among our upcoming priorities.

I recognize that changes to the Fisheries Act are needed. A renewed Fisheries Act could provide the legal basis for collaborative management of the fishery and greater stability and predictability in fishery access and allocation. It could also be a chance to usher in better accountability by enshrining principles of conservation and the science-based ecosystem approach to the fisheries management.

We'll also be turning more attention in the near term to the Fraser River salmon. Sockeye returns showed improvement this year, but the sharp declines of previous years are something that government has committed to look into. Our goal is to re-establish viable salmon stocks and prevent, to the best of our abilities, similar sudden downturns in the future. We'll have more to say about this soon.

I look forward to your input and suggestions as we continue to map our strategies for more viable fisheries and healthier oceans.

I would be pleased to take your questions.

[The Chair, Conservative, Gerald Keddy]

Thank you, Minister Hearn.

Once again, I appreciate your coming in today, and I appreciate your keeping your comments to the 10-minute mark, exactly.

We'll go to our first questioner. Mr. Matthews, you have 10 minutes.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Thank you very much, Mr. Chairman.

I won't use up all 10 minutes. I want to share with some of my colleagues.

Minister, welcome to committee. It's good to have you back, and it's nice to see your officials with you. I'm sure there have been times in the last few months when you wished you were still on this side of the committee.

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

It was a lot more fun.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

I realize that.

I have a couple of things. You referenced a number of items that the committee has spent significant time on--research in science, small craft harbours, coast guard, and so on. How do you respond to reports of the last week, where we saw numbers ranging from a $97.5 million to a $150 million reduction in your departmental estimates over the next two fiscal years, say, ending in 2009, and to speculation that there are going to be more than 200 positions lost, and so on? How do you respond to those statements?

If it's anywhere close to that, if there are any cuts at all, the committee will be very concerned. But if it's that drastic, I think it would be disastrous for fisheries management and the resource throughout the country.

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

Thank you very much, Mr. Matthews.

I think if everything was that drastic, I wouldn't be here. Certainly there is no basis at all for these allegations.

What we're talking about is an amount in the September 2006 report on plans and priorities, which is a forecast based on the information available at that time. As you go through your budget, you're looking ahead to the following year. You have certain amounts of moneys for the key programs, etc. What is not factored in are programs that will sunset, deductions that are made, or programs that are changed to new programs. You heard me mention earlier that because of a change in priorities, and to enhance some of the areas such as science and protection, we added significant money--in fact, $99 million, which is greater than the amount for this coming year and the years ahead. That's permanent funding.

When the estimates come down, you will find that our budget will not be cut at all. The true figures will be on the table at that time.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Thank you very much.

I have a couple of other things, Mr. Chairman.

With respect to fish allocations and quotas to companies and so on, you're very familiar with the situation in Newfoundland and Labrador with Fishery Products International shutting down two of its groundfish operations. Contract negotiations are ongoing between the company and a number of employees. Some 35 million to 40 million pounds of groundfish have not been harvested for roughly 18 months. What's your take on that?

You referenced in your opening remarks that it's not your department's fish, but that it's a common property resource, and it belongs to the people. Do you have any timeframe in mind for when you will deal with this issue for the benefit of the people in those coastal communities who have traditionally relied upon harvesting and processing of that resource?

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

That certainly is a pretty good question and a pretty important issue to the south coast of Newfoundland in particular.

You and I and everybody else know what has happened there, what the people have gone through with the closing of Harbour Breton. With the effect, you can come right down the coast. You have Gaultois, Ramea, Burgeo, the whole works, but just in recent years or months Harbour Breton, Fortune, and Marystown. What has complicated the decision-making on that is the fact that the company, the province, and the union have been involved in a three-way discussion or power play to try to find solutions for the future of that area.

Fishery Products, who held the quotas that you're talking about, closed Harbour Breton. It is now being taken over by Bill Barry with the approval of the community. Fortune is perhaps closed; that is a question that is still up in the air. Marystown was the plant that was supposed to provide a lot of employment, use a lot of that resource, and for whatever reason--certainly for reasons that are to be settled among the three parties--we are not party to that at all. I have stayed away from it up to now simply because negotiations were going ahead between the union and the company in particular, and we can't forget the complication of the Fishery Products International Limited Act, which throws another little complication into the whole mix. You're well aware of that.

There are a couple of chunks of that fish now being talked about. One chunk is to go to Gaultois, an issue you've raised yourself and have been involved in, and I'll talk about some of it going to Harbour Breton. It's something that has been negotiated, with the union being involved. It is not a deliberate interference with negotiations. That's what makes it touchy.

However, you're so right when you say there is still a fair amount of product in the water and there are people looking for work. That is not as clear-cut as it seems, if you're going to keep it in the area, because Harbour Breton is not yet up and running. Fortune is in limbo and Marystown is shut because of a dispute. So there are concerns from the people in the area. They don't want to see the fish going out of that area. They want it to provide work somewhere in the general vicinity, and the situation with the actual plants onshore complicates it.

Is it time to start having a hard look at that? Yes, it is, and I think we're getting to the point where changes are going to have to be made, one way or another. I've said it before and I'll say it again. We have to be reasonable. We have to give people every right to negotiate without pressures or interference. However, there comes a time when the greater good has to be looked at, and if something practical can be done to help a greater number of people, then we have a responsibility there also, and we don't mind fulfilling our role when it comes to being able to do it without, as I say, interference in legal processes.

[The Chair, Conservative, Gerald Keddy]

Thank you, Minister.

There are about eight minutes left.

Mr. Byrne.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Minister, welcome, and distinguished executives. Welcome back to the table, Loyola.

I want to follow up on the plans and priorities, the estimates for DFO. You had mentioned that most of this is actually sunset funding. It's fixed-duration programming that is scheduled to come to an end.

Would you be able to provide the committee either today or perhaps as a follow-up from officials in writing exactly what those sunset programs are, what the impact will be in terms of positions and activities within the Department of Fisheries and Oceans?

I think we can agree that it's roughly $100 million to $150 million in sunset programming. Could you verify that this is actually a correct statement, and if so, what is the intention of the department in terms of replacing it or whether that is going to be the case?

If it is going to lapse within this fiscal year and the intent is to replace it with a successor program, the obvious assumption that the department is making is that they'll apply to supplementary estimates for the funding, which of course is a bit of a contradiction in that if you're intending to proceed with a follow-up program, a successor program, and you haven't built it into the fiscal framework for this particular year, if you're intending to use the supplementary estimates to do it, then you should be able to spell out to this committee at this point in time exactly what it is you're intending, if that is the stated intention of the department.

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

There are a couple of things, and I'll have the deputy provide some clear facts for you on it. But as I said before, the amount you're talking about is a general estimate, without the plans and procedures in the new program that's been put in place.

On the specific figures themselves, deputy, you might want to clarify them. If we don't have all the figures here, we could certainly provide them to the department, with the assurance that our budget will not be cut. Our budget will be as great next year as it is this year--more so if within the overall framework we can achieve some extra money. We did pick up an extra $99 million that will be factored in here.

In relation to jobs, we also have challenges in science, protection, etc. We won't be looking for cuts in jobs. If we can do it, we'll be looking for more positions to do some of the work that has to be done.

Larry.

[Larry Murray, Deputy Minister, Department of Fisheries and Oceans]

Certainly we can provide the information in writing. We're assuming that the $97.5 million comes out of the RPP. I don't know where the $100 million to $150 million comes from. We've done that on the basis that the numbers in the RPP add up to $99.1 million, with the $20 million reduction—

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I'm sorry, what is the RPP?

[Larry Murray]

It's the report on plans and priorities.

It would be useful to the department if we knew the basis of the $97 million, or the $100 million to $150 million. We're just speculating, based on doing a comparison, that the numbers that are talked about were in the report on plans and priorities that was released in September, as the minister said. We did get a solid $99 million increase in our A-base. We can provide information about the sunset programs, and there is work under way on some of those programs to continue them. But it would probably be better to provide that to the committee on paper.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

If I'm reading you correctly, you're saying there are sunset programs that will basically lapse within this fiscal year, prior to March 31, 2007, and there are not yet specific concrete plans or fiscal arrangements to have them replaced.

[Larry Murray]

If I can use an example of Marshall plan funding, that is an example of the program, but there are indeed plans under way to continue that funding until the INAC treaty process cuts in. So there is work under way to address a number of these programs, including for example--if it is the RPP, which is close to the $97 million number--the $5 million expenditure reduction. There are other examples like that, but we could provide the committee with something on paper to address that.

[The Chair, Conservative, Gerald Keddy]

We'd appreciate it if you could get that information back to the committee.

Mr. Blais.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you, Mr. Chairman.

Good day, Minister, ladies and gentlemen.

I'm sure you can easily guess what I would first like to discuss with you. The Small Craft Harbours Program is coming to an end in 2006-2007. A total of $20 million in additional funding was allocated to this program over the last five years. That's the first thing I want to discuss with you. We already talked about this program, but that was a world ago, at another time.

I'm curious as to your take on the situation. Financially speaking, what are your plans for small craft harbours?

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

Merci, Mr. Blais. Thank you very much for that question. I'm not surprised that it was your first question, having sat with you on the committee. It certainly is near and dear to your heart, and representing an area like you represent, again I'm not surprised.

In my first term here, when I had a large rural area, which was taken away with the boundary change, I had the same problem. In fact, if you want to dig back to where the $20 million came from, it came as a result of a report from this committee that enunciated clearly to the government at the time the dire straits in relation to small crafts harbours. If you want to know who introduced that topic to the committee, I did, so I'm well aware of the issue. I'm well aware of its importance.

When the committee did that report--it was the first day, actually, that I was on the committee, in September 2001, and shortly after that we had our hearings, and the report was tabled a year or so after that--the evidence that was presented to the committee spelled out clearly that to bring the wharves that are solely owned by the fisheries up to par would take $400 million. At the same time, we were told that 21% or 23%--I'm not sure which--of the wharves were actually unsafe to use. That hasn't changed a tremendous amount. When I say solely owned, these are wharves that were built and are owned by small crafts harbours situated in what we call core harbours. They are now maintained, or run, in most cases by harbour authorities.

To add to that, we have around the country a number of other wharves that are used and have been used by fishermen, built maybe with some help from small crafts harbours--usually they provide the materials. Transport might have been involved in some. A lot of them were built with funding through programs like the Canada works program, in many areas. It was all government money--and we've said that before publicly--regardless of who owned them. Some of them were well constructed; some of them were sort of put together, for whatever reason. Many of these are also in pretty hard shape now, and in some areas these are the only wharves people have and they depend on them, so that complicates the issue even further.

Recognizing the fact that we are in trouble trying to maintain what we have and upgrade where we can, there are a number of initiatives under way. Number one, we added again this year an extra $11 million from the permanent funding we got. So we have added $11 million that will be there into the future each year. Is that going to fill the gap? No, it's not. So it's our intention again, as we go through the budgetary process, to put wharves, hopefully, in a different light to show the importance of them and to try to get to where we were and even increase that.

On top of that, we have a change in the fishery out there. We're seeing people go from small boats to big boats in many areas. I myself know a couple of harbours that were very active small boat operations. Now the few people who are left have gone to bigger boats, and because they have bigger boats, they can no longer use the harbour. They've had to move to a harbour a little bit farther away. We're seeing--and hopefully we'll talk a little more about this before the morning is over--a major coming together of everybody involved in industry, and I'm talking about the so-called summit meetings in Prince Edward Island and Newfoundland and now, next month actually, in Quebec. We're looking, in the industry generally, at how we can move forward and how we can consolidate.

Part of that will be on land as well as on the sea. We're talking about people wanting to get out of the fishery, about making it easier for people to come together in a buddy-up system, or for industry buy-outs, whatever the case might be. The same thing has to happen on land, as has been admitted by the ministers and, in some cases, the premiers.

That is going to put a somewhat different face on the area. You're probably going to see areas of interest--communities of interest, as somebody termed them--where, to make sure the area is alive, we can concentrate our resources and make sure we can keep some plants going and going for a longer period of time, that we catch our resource at the right time, that we catch it properly, and we have to have the proper landing and handling facilities.

All of this will mean a refocusing. Will it mean less money? Probably not. Will it mean better service? Probably so. It might mean fewer wharves will be needed, but you can't tell that to somebody who's 20 miles and over and has a small boat.

So basically, to answer the question, yes, we're aware of the funding. We've already added some, and we'll be going after as much as we can, to try to do as much as we can where it makes sense to spend our money.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

I tried to find some positive points in your answer, in so far as funding is concerned, but I was unsuccessful. Perhaps you can help me. I know that this is a concern of yours, and of industry officials as well.

To begin with, we already know that $20 million isn't enough. Financial requirements, pegged at $400 million in 2005, now top $470 million. The situation has worsened, despite the additional funds allocated for small craft harbour repairs and maintenance. It's clear that the initial request for $400 million wasn't so far-fetched after all.

Can you tell me if one of your department's priorities is to allocate additional funding for small craft harbours as of next year?

[Loyola Hearn, Conservative, St. John's South—Mount Pearl, NL]

Well, there are so many priorities--and I'm certainly not trying to duck the question in any way, shape, or form, because I, like you, am well aware of the situation and well aware of those affected by it.

We talked about fish plants and investment, and coming together and building the industry. Well, in order for a fisherman to fish he has to have a wharf. You can't fish if you don't have a wharf to fish from, and we have to make sure that's factored in.

We also have to be well aware, as others are, of the changing dynamics in the fishery, and everything is a challenge. There are a lot of priorities in the fishery. What we can say is, yes, we've already recognized the need to put more money in. We already have all the new money that we got, the $11 million, as I mentioned--which, by the way, was on top of the $20 million this past year. When the $20 million leaves, there is a gap to fill. Will we be trying to make sure we don't fall behind? Yes, we will.

Can we use help? The $20 million, the $100 million, would not have been there except for the work of the committee and those interested in the fishery. You have a number of other departments looking for dollars, as are the different sectors of my own department, all looking for a share of the pie. So the more help we get in making our argument....

If I'm the only one saying there's a problem with wharves across the country, well, it's pretty easy to dismiss. If people are showing that the fishery needs an investment--this is the lifeblood of many communities in our country--then that makes the job a lot easier. It doesn't matter what political stripe you are. All of us can do that.

I don't mind the pressure on me. What we always need is help when we have to put pressure for the final dollars.

[The Chair, Conservative, Gerald Keddy]

Thank you, Mr. Hearn.