Fisheries Committee on May 30th, 2006

[The Chair, Conservative, Gerald Keddy]

Good morning, gentlemen.

Pursuant to Standing Order 108(2), we are studying small craft harbours.

I'd certainly like to recognize our witnesses here this morning: Cal Hegge, acting assistant deputy minister, human resources and corporate services; Robert Bergeron, director general, small craft harbours directorate; and Bill Goulding, regional director, small craft harbours, Newfoundland and Labrador region.

Welcome, gentlemen. I would ask you to bring your presentation to our committee, and then we'll open the floor to questions. You have ten minutes, if that works for you. I'm sure you can say it all in ten minutes.

[Cal Hegge, Acting Assistant Deputy Minister, Human Resources and Corporate Services, Department of Fisheries and Oceans]

Yes, I'll respect the timeframe, Mr. Chair.

Thank you very much. It's a pleasure for me and my colleagues to be here this morning to talk about what we think is a very successful program, albeit an underfunded one, and I think that will become clear through my presentation.

We will do our best to address any of your questions. If there are any detailed ones we don't have immediate answers to, we'll be certain to get back to the committee as quickly as possible.

I believe a deck has been circulated to the committee members, and I will go through it fairly quickly. I'm not going to read word for word but will try to hit some of the highlights as I go through.

Obviously we're here to talk about the interests of this committee, and particularly the management of core harbours and the divestiture program, which I think is an aspect of the program of interest to the committee as well.

On slide 3 we talk about some of the key milestones around the program, going back to its beginning in 1977. The small craft harbours, as you're aware, provide multi-purpose infrastructure to hundreds of communities right across the country. It has its statutory base in the Fishing and Recreational Harbours Act. In 1987 the harbour authority concept was approved, and I'll come back to that a bit later on.

If you move into the 1990s, particularly with respect to program review, decisions focused the program on core fishing harbours and at the same time directed the divestiture of recreational and non-core harbours.

On slide 4 we have a summary of the current inventory. You often hear the department speak of approximately 750 core fishing harbours. Those are the core activities our budget essentially supports, and we have roughly 347 non-core fishing harbours, 182 of which are recreational harbours. These are all to be divested, and an additional 108 harbours are virtually in the final stages of divestiture.

The second bullet on that slide refers to the harbour authorities. There are over 500 harbour authorities; they do their work with the aid of 5,000 volunteers and approximately 100 hired staff.

Moving on to program funding, we have a breakdown of our budget, which is somewhat in excess of $86 million. You'll note that 82% of that is essentially directed to harbour maintenance.

A study the committee is well aware of, going back to 2001, indicated that actually $106 million was required to maintain and repair facilities, compared to the $71 million we have currently available for the maintenance of harbours.

It will get a little bit worse with the cessation of $20 million that has been an ongoing program. That money will expire on December 31, 2007, which will exacerbate the funding pressures of this particular program.

A bit of good news, however, is reflected in the last bullet on this page, in that we are anticipating some additional funding. I must highlight that subject to Treasury Board approval, some additional funding of approximately $11 million this year will go into the small craft harbours program.

On slide 6 we talk about the harbour authorities, which are volunteer-based, independent corporations. The harbour authorities are expected to raise revenue where they can to offset operations and minor maintenance. Any major maintenance remains the responsibility of the department. They have raised about $11 million in fees, and this does contribute to their particular harbours.

On slide 7, continuing with the harbour authorities, the fees could be raised in accordance with prevailing market rates. On the other hand, because of the state of the harbours, it's very difficult to raise fees until we can improve their condition.

The harbour authorities are relatively small and volunteer-dependent, with very little turnover. They're a very dedicated group of people, but they are suffering some fatigue, and they need additional attention.

With respect to divestitures--I'm on slide 8 now--as I mentioned earlier, we have been directed to divest the recreational and inactive or low-activity fishing harbours. Basically these are transferred at a fairly nominal value with the understanding that the transferee will maintain the harbour or at least keep it open to the public for a five-year period.

Since 1994-95, when the decision was made to divest ourselves of the harbours, we have divested, at a cost of $61 million, 663 recreational and 382 inactive or low-activity fishing harbours. Most of these harbours have been transferred to local municipalities or not-for-profit community organizations.

We still have an inventory outstanding. Our estimate of the cost to divest ourselves of those 347 harbours I mentioned earlier is roughly $82 million. At the moment, because of other budget pressures, we can only devote roughly $1.5 million to harbour divestitures.

That, Mr. Chair, completes the quick summary of the presentation. We'll be pleased to answer any questions the committee may have.

[The Chair, Conservative, Gerald Keddy]

Thank you, Mr. Hegge. That's an excellent presentation. It was brief and to the point--everything we like to see.

The first questioner for the opposition is Mr. Cuzner.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I think I'll split with Bill.

To the two gentlemen, thanks very much for the presentation.

I found there's a continuum of success with the individual harbour authorities. Some have been able to embrace it and really run with the harbour authorities, while others have their own particular challenges. Can we go back in, on divested harbours? Are there opportunities to help with aspects of authority operation--i.e., governance--and is there any kind of training? Sometimes we get the deal done with the divested harbours and then we let these people loose; some of these divested harbours still have commercial viability, but they're struggling to make it on their own.

Let me ask two questions past that. Some of these divested harbours continue to have a fair amount of commercial activity. Is there any possibility that a fund may be developed, or an envelope of money allocated, to go back and look at divested harbours that continue to be commercially viable? That's the first question.

Again, I think the broad swipes of this program have been very well managed and have been done well, but I can think of one in particular in my riding that may cause DFO to look back and see that it has taken out of service a harbour that, while not essential, would still be a key harbour. It's on a very exposed section of the coastline. It is L'Archeveque Harbour, as a matter of fact, on the east side of Cape Breton; it may have been an error cutting that one loose. Is there a process whereby we may be able to go back and reassess, to see if we can get engaged in a harbour that's been divested already?

So those are the two questions: first, is there an envelope of money for divested harbours? Second, is there a process through which a divested harbour might become operational again? I'll let those two questions go.

[Cal Hegge]

Thank you, Mr. Cuzner. I would just make a couple of general comments and ask Mr. Bergeron to respond in more detail.

As you may be aware, we do have an excellent relationship with the harbour authorities. We meet with them on a regular basis. In that way, we provide to them a bit of a training opportunity. We've also recently been able to provide them with some insurance coverage; I know that was a major irritant, and has been outstanding for some time.

[A voice]

Is that cost sharing?

[Cal Hegge]

No; I think we're basically funding that from departmental resources.

With respect to the fund, as you saw from the funding presentation, this is a cash-starved program, if I can put it bluntly, so there isn't any kind of fund available to perhaps look at divested harbours that may still have commercial viability--although, at the same time, we're trying to promote more synergy with local industry and municipalities to try to increase the economic value of divested harbours, so in that regard there may be some potential in the future.

[Robert Bergeron, Director General, Small Craft Harbours, Department of Fisheries and Oceans]

As you know, our policy is that once a harbour has been divested, we stop providing a support unit to that harbour. This is a policy. In the last several months we've been looking at the situation and we are aware that there are several active commercial fishing communities across the country where we're not providing support at the moment, and this is a concern, of course, for the program because we're providing support elsewhere and not at those sites.

So we are thinking of maybe doing something about this, but for the time being the policy has not changed; the policy is that we don't provide support to a divested harbour. The rationale for this policy is that we don't have enough funding to support our own facility, so if we were to start diverting some funding towards these harbours that were divested some years ago, this would add some pressure on an insufficient budget. That is the situation.

We are also aware that there have been some requests that the training we provide now to harbour authorities should be also provided to these other communities where a harbour has been divested. I know, for instance, that in your area, the Coastal Communities Network, in its latest report, has come up with this recommendation that maybe the training we're providing to our own harbour authority could be extended to these other communities. This is definitely something we are examining at the moment, but no decision has been taken with respect to that.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I think that would prove very worth while.

Let me go back. The fishing industry and where the harvesters have to go to harvest the stock is fluid. A lot of the times they'll go farther offshore. It changes. The industry changes. Is there enough latitude in the program so that you can go back and assess?

We've seen an increase in commercial viability in one particular harbour, and again, I think if they had to do it over again, they would not have divested this particular harbour because it's on an elongated stretch of coast and it's a safe harbour.

Is there latitude to go back? Has it been done before, where you've gone back and re-engaged a harbour? Do you know a case of that?

[Cal Hegge]

No.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Is there latitude in the program to go back and look at that again? Not really?

[Cal Hegge]

Well, I would only go back to what we said earlier in terms of available funding. When you have over 20% of the core fishing harbours that aren't maintained to a certain standard, in our judgment that's where the attention needs to be focused.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Thank you.

[The Chair, Conservative, Gerald Keddy]

Thank you.

Mr. Matthews.

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

Thank you, Mr. Chairman.

Thank you for coming, gentlemen.

I have an observation or two first. In my riding in Newfoundland and Labrador, we've made some significant gains in the last few years through small craft harbours, even though we realize that funding is inadequate. The big worry that I have, along with other members of the committee, is this $20 million that we've scheduled for five years. I guess it's due to lapse at the end of this fiscal year. That money has been insufficient, but if that lapses and we don't get it replaced or increased, then we're going to have real problems. I give you that observation.

Looking at a public accounts schedule, going from fiscal year 2003-04 up to the present fiscal year, in 2003-04 your operating budget was $62.8 million and your capital was $34.1 million, and going to this fiscal year, what's projected is $78 million in operating and $22.5 million in capital. Why has your operating budget gone up by about $16 million and your capital decreased by about $12 million? That's what this public accounts chart shows me. I'm wondering if you could comment on that first.

I realize that we're pushed for time. Looking at a chart of the number of fishing and recreational harbours by region in Newfoundland, we're showing one recreational harbour. That seems very low. I'm wondering if you can answer why there's only one recreational harbour in Newfoundland and Labrador, and where it is, and how it became the only recreational harbour that we have, if this chart is correct.

[Cal Hegge]

Let me try to address your earlier question on the funding.

I believe, if we look at the capital, first of all, we lost $42 million of program integrity funding, part of which was dedicated to small craft harbours. As I mentioned in the presentation this morning, we are cautiously optimistic, subject again to Treasury Board approval, that we're going to get additional capital, which will put the small craft harbours program back up to where it was in the period you referred to.

I need to confirm this with Robert, but I think the increase in the operating was largely attributable to the $20 million IRP fund we receive, which is due to sunset, as I said, this year.

In summary, all things being equal, the capital should go back up to where it was this year. The operating has increased because of the IRP funding, which is due to sunset, so the operating will take a dip next year as things currently stand. I think that's the difference in the give and take of the funding.

With respect to your question, Mr. Matthews, on the recreational harbour in Newfoundland, perhaps Robert or Bill could speak to that.

[Bill Goulding, Regional Director, Small Craft Harbours, Newfoundland and Labrador Region, Department of Fisheries and Oceans]

Thank you.

Before I get into that, I would just make a comment about the O and M and capital. Keep in mind that's major capital. That's, generally speaking, for projects over $1 million. I think most of you would be aware that we can do a lot of things up to $1 million. So even though it's operating, it's all in vote 1 and it's minor capital, so there's a fair bit of room in having a solid level of operating resources.

The one recreational harbour in Newfoundland is Long Pond, Manuels. Small Craft Harbours has been in control of the water lot in the inner pond of Long Pond Manuels where some of the major leasehold interests would be--for example, the Royal Newfoundland Yacht Club and a number of property owners adjacent to the water lot that Small Craft Harbours leases to.

So basically we're in a land administration function there. If we could come to an agreement with the province, we would like to see them assume that role. But we've never been able to get to the point where they would accept that as being their responsibility.

That's the only deemed recreational harbour in Newfoundland and Labrador. As you know, there are a lot of incidental recreational uses at fishing harbours, but the important thing is that they're primarily classed as fishing harbours.

[The Chair, Conservative, Gerald Keddy]

Mr. Blais, for seven minutes.

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

Thank you very much.

I would like to raise another issue. Do you believe that the Small Craft Harbours Branch has control of the situation or has lost it?

Figures show that, when we started to increase the budget by 20 million dollars per year for five years -- period that expire next year -- what was supposed to cost 400 million dollars ends up costing today close to 500 million dollars. I believe that the Branch has lost control of the situation and I would like to know if you share that view.

[Cal Hegge]

Thank you, Mr. Blais.

First of all, I have to say that the program is underfunded. You are right. However, it is well managed. We are trying to do our best with the money we have. I would not say that we have lost control of the situation -- those are your words -- but that it is obvious that we are underfunded. We have had discussions with the minister to try and find some solutions to this problem. I cannot promise anything today but the minister is aware of the problem and of our need for additional resources.

We believe that we have just enough money to manage the program and to answer the most urgent situations. It is true that we need more money and that is what we try to explain to the committee each time we appear.

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

I still say that you have lost control of the situation. Indeed, that is what you yourself are saying, in so many words, when you say that 20% of the core harbors are not properly maintained because of a lack of money. What is that if not a loss of control of the situation? By the way, how many dollars does this 20% represent?

[Cal Hegge]

From our studies, we believe that we need more than 35 million dollars per year in order to carry out all the repairs. And, obviously, the situation will worsen year after year if we have a deficit of 20 million dollars.

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

Would I be mistaken to say that, without a massive injection of dollars to allow you to maintain and repair wharves and core harbours -- and there are some that may not be core to you but are so for their communities -- if we do not immediately correct the situation at a cost of about 500 million dollars, according to the estimates, the amount will increase constantly in future years because the deterioration of the structures will accelerate? When you don't maintain your house for a year or two, that may be acceptable but, if you don't do it during 20 years, it will deteriorate very quickly.

[Cal Hegge]

Generally speaking, I agree with you. I will ask Robert to add to my answer. We may be in agreement but we have already developed plans to correct the situation. We have received the support of the minister. This does not mean that we will get all the money that we need, but we are looking at strategies to solve the problem.

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

Could we say that one of the strategies might be for a committee to help you by putting more pressure on the minister and on the department? Would that be useful?