Fisheries Committee on May 1st, 2007

[David Bevan]

We made a commitment to try to divide the quotas in the gulf among the various fleets. We want to do that because of the ability then of the fleets to manage the quotas they have, to maximize value. We haven't gone to the minister yet with any recommendations. We are looking at doing that shortly.

The key areas outstanding are in the southern gulf and 4Vn is included, but 4T, 4Vn, where we have quotas that are still competitively fished, and that makes it very difficult to manage. It also makes it impossible for fleets to manage their own activities to maximize the value. We had poor quality landed because we had a fishery opened with gillnets on feedy fish in August, and it's very difficult to process into a reasonable product.

I can't speak specifically about the 4Vn's share, but we are looking at something that is to be locked in for a period of time so that people--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Fifteen years?

[David Bevan]

I'm not sure about 15 yet. That hasn't come to the minister either, or through us. A share usually is something that is established and not subject to review except as specified. For example, in the tuna we had share for a number of years, etc., but whether it's 15 or not remains to be seen.

[The Chair, Conservative, Gerald Keddy]

Thank you very much.

Mr. Blais.

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

Thank you, Mr. Chairman. I would now like to broach another issue, and that is science. I'll give you a brief preamble and then I would like to hear what the department's priorities are and discuss financial aspects.

It is becoming more and more apparent that climate change is affecting aquatic resources. We don't know what shape these climate changes will take. I was listening to a program recently where they were talking about the deviation and quasi-disappearance of the Gulf stream. Ice is melting. I imagine that for scientists this is a terrible puzzle that requires coming up with scenarios that are relatively reliable and that will allow us to forecast what is going to happen to our resources.

I would simply like to understand what your perception is of a situation that is becoming more and more problematic and that, based on the evidence, will become a topic of discussion over the next few years that will be just as important as small craft harbours.

[Larry Murray]

Quite honestly, that is an excellent question. Our budgetary response clearly shows that this is a top priority for our minister. We are also attempting to take a more ecosystemic approach in the scientific sector and even in the ocean sector. Next year, the government will be investing $150 million in the International Polar Year. So I think your question certainly raises a key issue.

I'll ask Wendy to say a few words.

[Dr. Wendy Watson-Wright]

Thank you for your question, Mr. Blais. You are quite right—climate change is one of the most important priorities for Canada and the world. The department has actually been studying climate change for quite a long time. Increasingly, we are trying to carry out research projects about the impact of climate change on the resources, on the fish and on the oceans. This year, as the deputy minister said, we will have specific ecosystemic science projects including the effects of climate change on the resource. Of course, projects like this take time, but we are trying to do more and more in this area.

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

What is the main problem you face in your efforts to better understand what will happen and to make some projections about the resource? There are periods of glaciation and periods of global warming as well. I imagine this happened in the past. There were marine resources in the past as well, and they evolved, and so on. What is your major problem with respect to all these matters?

I am wondering whether the future will be better in some marine areas and worse in others. Will we see catastrophic events in some areas and improvements in others? What will happen to the resource? There are all types of questions, but ultimately, very few answers. How will it all unravel?

[Dr. Wendy Watson-Wright]

You are quite right when you say that there are all sorts of questions. We are trying to answer a number of types of questions. Oceanographers, biologists, and chemists have been called upon to provide answers to a range of questions. There is not a single priority or problem in the context of ecosystems. We must try to obtain all kinds of information and to carry out sensible projects, but projects that are specific enough to deal with certain focused issues. This scope of this issue is extremely broad.

We could come back to the committee to discuss a number of projects and have a longer discussion about climate change and the role played by the oceans in climate change.

[Larry Murray]

Mr. Chairman, there is another aspect of interest to our department. Our responsibility is not confined to understanding what is going on, but also to see how we should be adapting to these changes. This is a very broad issue: how should we be responding to this change in the case of small harbours, the fishery, the Coast Guard, and so on. These are matters of genuine interest to our department.

[The Chair, Conservative, Gerald Keddy]

I appreciate that, and I thank all of our witnesses for appearing today.

I do have a final question, and it's fairly complicated. I'm certain the department hasn't thought it through, but I do want your opinions on it. I've spoken to the minister about it, so you may have had a heads-up on this question of the owner-operator policy.

No one is questioning that we want independent fishermen to own their rigs, and we understand that the trust will be shut down, but the lobster fishery in LFA 34 and LFA 33, both of which are represented in my riding, is going to be unfairly hit compared to other fisheries. In all other fisheries you're allowing fishermen to combine enterprises. Newfoundland is treated differently than Nova Scotia; different sectors in Nova Scotia are treated differently than the lobster sector.

I want to put this scenario out. I don't think it has been considered. I'm going to make a guess, and since you folks have no way of knowing, my guess is as good as yours in this case.

In LFA 34 there are at least 300 licences held in trust in the lobster fishery. In LFA 33 there are at least 100 licences in trust. I'm being very conservative in my estimates. Due to DFO rules and regulations and the Marshall decision in particular, in that fishery the cost of that licence in LFA 34 and LFA 33 has more than doubled in the last 10 years.

I know individuals who have bought licences for $900,000 and $1.2 million. But let's say that's on the high end of the scale. Let's say the average licences are worth $800,000. You have 300 licences held in trust, which is $240 million in that fishery. By this act, you've just devalued those licences by half. They're on the market today for $400,000 to $500,000. You're taking $120 million out of the fishery, which is struggling anyway, in the riding I represent, and in West Nova, the riding that Mr. Thibault represents. In LFA 33, the majority of which I represent, there's $25 million tied up in licences, and that has been devalued by half.

Now, if you take another 300 or 200 or 150 licences of fishermen who have been waiting to retire because we're bringing in capital gains legislation, you put into that mix another $170 million in the industry and you devalue that by half. That's a lot of money. That's nearly half a billion dollars that the industry has been devalued in South Shore--St. Margaret's and West Nova areas of Nova Scotia.

We don't have time to debate all the parameters here. Somehow or another, if you're going to treat this sector differently--and I'm not disagreeing with the owner-operator policy at all--there needs to be dollars put in place for fishermen to buy one another out. In this seven-year period we have flooded the market with licences. There are licences waiting to be sold, and there are another 400 minimum that are going to hit the marketplace, but there are not 600 fishermen with the financing to take them over.

Whether the period of time needs to be twenty years instead of seven years or it needs to be a fisheries loan board with real dollars to advance, I don't know, but I think we have a problem.

[Larry Murray]

Thanks, Mr. Chair.

I'll start off and then ask David to say a few words.

Certainly this is an area the committee might like us to come back and talk about, the whole range of announcements. The minister is open to propositions from other fleets around combining and all that kind of stuff. He hasn't closed the door on that at all.

I would also say that the $750,000 capital gains thing is $180,000 or so in the pockets of folks who are wanting to get out of the fishery. In terms of the access to capital, a combination of the capital gains and the changes that are in place we believe will give banks a greater sense of confidence in the industry. That would also have been part of the reason we would argue for Bill C-45, or some version of it. There are elements there that could bring longer-term reassurance to fishermen and bankers and others.

Having said that, it is a challenging scenario. To the extent that it was possible, I think the minister, in a very difficult area, which this committee has been talking to successive ministers about, came up with a solution that tried to walk the fine line between flexibility and moving forward for the majority of the industry.

[David Bevan]

We did actually have some discussions around this kind of issue and the influence on prices. I think what we saw around the Marshall decision was a very small entry of the government into the market. It set off a process where the escalation in inflation and prices was enormous, and we were not in that market at that point. When they went into $1 million for a lobster licence, we were not there.

Having said that, I agree that there is a real potential impact on people's wealth here. What I think we need to do is get into more conversations with the fleets involved and find out if they are interested in any kind of combining process. If so, what would it look like and so on and so forth.

The other issue that will be coming out is the FRCC report. They're going to presumably have some suggestions and recommendations for change, and I think we have to start looking at all of that in these areas to determine if there's a way forward that can provide compromise and where some of these folks can more openly, on the table, deal with these things.

Some people have five, six, seven, or eight licences, and that's going to be an issue. That wasn't what was intended and that's not where we want to be in terms of independent operators. So we'll have to have lots more discussion on these issues.

[Larry Murray]

If I could say on the loan guarantee thing in terms of access to capital, in the Newfoundland case the provincial government, which has a program on the basis of all the changes, is quite comfortable extending that program for the new policies. We're engaged in discussions with other provinces. I don't know actually where Nova Scotia is at on that, but there may be something there as well.

[The Chair, Conservative, Gerald Keddy]

I appreciate that, Mr. Murray.

I realize this is a subject that is fairly complicated, and the committee has in many instances discussed the owner-operator principle and I think basically supports that principle. But we have a particular situation that's occurred in a single part of this industry, which is a very profitable part of the industry, and the access to capital to put all these licences in poor fishermen's hands.... I don't see it. It's simply not there. I think that somehow or another we have to adhere to the policy that the minister has set out. But I'm not sure that the way forward is there, without causing major disruption in the industry. It needs to be raised. It's not a matter of going against policy. It's a matter of finding a way to make it work.

Right now, I can assure you that in the short term it's really not going to work. People who had planned to retire are now suddenly looking at licences that five years ago they paid $700,000, $800,000, $900,000 for, and it isn't there in the marketplace today to sell them. So to find fishermen, poor fishers, to fulfil those 500 or 600 licences, it's going to be a challenge. I do think it needs to be looked at again.

With that, I thank you. We have gone over time here.

I thank our members for coming today. It was a productive discussion.

The meeting is adjourned.