Thank you, Mr. Chairman.
I appear today as research director for the Canadian Council of Professional Fish Harvesters, the national human resources sector council for the fish harvesting industry across Canada. Our primary focus is labour force renewal.
We have submitted to committee staff a recent report on the serious demographic challenges now facing the industry. The report provides compelling evidence of industry dysfunction and policy failure in the Pacific region: failing harvester incomes, severe labour supply challenges and poor economic returns relative to comparable fisheries in Atlantic Canada and Alaska.
It seems clear from testimony before this committee that something needs to be done to mitigate the unfair distribution of economic benefits in the B.C. fishery and to put the industry on a stronger growth track. Representatives from the corporate sector have acknowledged the need for some moderation in quota leasing costs, but have argued strongly against a more substantial shift in B.C. They make three basic assertions: one, aside from the leasing cost issue, the B.C. industry is performing optimally, or “it ain't broke, so don't fix it”; two, vertical integration and open market access in fishing rights are essential for managing overcapacity and building a competitive industry; and three, the B.C. fishery is too complex to withstand a major policy shift without risk to everyone.
There is insufficient time here to debate the first point, but by any standard measure of success—employment, incomes, export earnings—the B.C. industry is not on the growth path we see in other regions. Some of this evidence is appended to the testimony I've provided.
On the second point, the case for vertical integration is weak in the fishery. In theory, corporate ownership of licences provides secure access to raw materials that should spur investment in harvesting and processing technology, R and D and market development. If the theory worked in reality, we would be seeing company fleets of new high-tech fishing vessels, with well-paid and well-trained crews, and much more value-added processing in B.C. Instead, we find companies offloading financial risk onto independent harvesters, moving processing operations offshore, and leasing out their licences rather than fishing them. Ironically, we see much more positive investment and innovation trends in the Atlantic, where vertical integration is constrained.
Lastly, the argument that the B.C. industry is too complex to risk a major policy shift is, frankly, specious. The Atlantic fishery has many more fleet sectors, four DFO regions and five provincial jurisdictions, and it has weathered many large-scale transitions: the 1990s groundfish collapse, shifts to quota management in many fisheries, rapid expansion of indigenous access, and extensive capacity reduction—phenomena we have seen in B.C., but on a much larger scale. Yet, stock conservation and industry growth outcomes have improved dramatically since the 1990s in the Atlantic. We believe this is precisely because the owner-operator and fleet separation policies have given everyone—harvesters, processors, communities and governments—a stake in advancing the industry. We've submitted a separate paper just on this topic.
Put quite simply, all fisheries are complex, but that is not a reason to avoid changes if policies and industry structures are not meeting sustainable growth objectives. The relative success of the Atlantic fishery, we believe, is built on three policy foundations: owner-operator, fleet separation and adjacency. Could such foundations be developed in B.C.? These are decisions to be made by stakeholders in B.C., but experience in other jurisdictions provides options and guidance on process.
First, the almost universal experience has been that large-scale changes in fisheries policy require harvester leadership, engagement and buy-in. In B.C., steps would need to be taken to strengthen organizations representing active harvesters and to expand their role in advisory committees.
Second, an important first step would be for the minister to establish a time frame with sufficient runway for licences to change hands through more or less normal market processes or transactions. The best operational example, of course, is PIIFCAF, which established a hard stop at seven years, after which all licences had to be in the hands of active owner-operators. This was planned to provide sufficient time for most holders of trust agreements to divest them without severe financial losses.
Third, a licence exchange board could be established to buy and sell licences at prices regulated according to fair market value within an owner-operator fleet separation context. This model exists in Europe. It could be established under federal or provincial legislation, as a federal-provincial partnership, as an independent Crown corporation or as a non-profit. Sellers could receive a one-time payment or pension income with tax advantages through annuities. New entrants could lease, lease to own, or purchase with the board holding a mortgage.
Fourth, reverse auction processes have been used in some jurisdictions to implement licence transfers without stoking price inflation. Over 10% of lobster licences in gulf New Brunswick were retired over five or six years when the Maritime Fishermen's Union invited owner-operators to submit bids on their selling prices and then accepted the lowest bids.
Fifth, to buy licences from companies and investors, new entrant harvesters will need access to affordable capital. Fisheries loan boards, loan guarantee programs and other financial services provide such access. The fisheries loan boards in Nova Scotia and New Brunswick recently changed their policies to provide loans for licences and quota, as well as vessels, and they have special programs for young new entrants. The Canadian Farm Loan Board provides generous grants, affordable credit, and business management training for young people to acquire farms and equipment. Local government agencies and industry organizations in Maine, Alaska, Iceland and Norway make small quotas or lobster trap allotments available at no cost to get young people started in fisheries.
Sixth, there are a number of social enterprise models in operation in different jurisdictions. Non-profit licence banks, controlled by harvesters and/or community boards, purchase access rights in the open market and make them available at affordable lease rates to active harvesters and new entrants. Co-operatives, owned by active harvesters, could purchase quota to share among members at affordable costs. First nations communities collectively own licences and quota, and they train and equip individual harvesters to become vessel operators.
A transition strategy for B.C. should be determined by B.C. industry stakeholders. The main point is that there are lots of working models to learn from and adapt. Bill C-68 will soon provide the DFO minister with the legislative scope to initiate a significant shift in Pacific region policy.
We strongly encourage this committee to recommend to the minister the development of owner-operator, fleet separation, and adjacency policies appropriate to British Columbia fleets and fisheries.
Thank you.