Fisheries Committee on May 8th, 2023

[The Chair, Liberal, Ken McDonald]

Good morning. Welcome to our Fisheries and Oceans committee meeting.

I call this meeting to order.

Welcome to meeting number 66 of the House of Commons Standing Committee on Fisheries and Oceans.

The meeting is taking place in a hybrid format pursuant to the House order of June 23, 2022. We will begin today's meeting in public to hear witness testimony for our new study of foreign ownership and corporation concentration of fishing licences and quota. Afterwards, we will switch to in camera to discuss committee business for the last hour of the meeting.

As a reminder to all, please address your comments through the chair. Screenshots and taking photos of your screen are not permitted.

In accordance with the committee's routine motion concerning connection tests for witnesses, I am informing the committee that all witnesses have completed the required connection tests in advance of the meeting.

Pursuant to Standing Order 108(2) and the motion adopted on January 20, 2022, the committee is beginning its study of foreign ownership and corporate concentration of fishing licences and quota.

I would like to welcome our first panel of witnesses.

From the Department of Fisheries and Oceans, we have Neil Davis, regional director, fisheries management branch, Pacific region, by video conference; Maryse Lemire, regional director, fisheries management, by video conference; and Doug Wentzell, regional director general, Maritimes region, also by video conference. Here in person we have Jennifer Mooney, director, national licensing operations; and Mark Waddell, director general, fisheries policy.

I thank you for taking the time to appear today.

You have five minutes for your opening statement, please.

[Mark Waddell, Director General, Fisheries Policy, Department of Fisheries and Oceans]

Good morning, Mr. Chair and committee members.

I would like to begin by acknowledging that the land on which we gather is the traditional unceded territory of the Algonquin Anishinabe people.

I would also like to acknowledge the tragic loss of life this past weekend of two harvesters in New Brunswick and extend my condolences to all parties.

My colleagues and I appreciate the opportunity to appear before this committee on behalf of Fisheries and Oceans Canada regarding your study of foreign ownership and corporate concentration of fishing licences and quota. We would like to take this opportunity to thank the committee for its ongoing work to address these important issues. We'll be pleased to address any questions you may have.

Fisheries and Oceans Canada is committed to supporting the minister’s socio-economic, cultural and conservation objectives with regard to the commercial fisheries, and to working on strategic improvements in managing this public resource on behalf of Canadians.

The issue of foreign ownership of Canadian fisheries access was highlighted as part of this committee’s 2019 report, “West Coast Fisheries: Sharing Risks and Benefits”. The government response to this report affirmed that the committee’s recommendations were aligned with several ongoing government priorities and acknowledged the challenges faced by independent harvesters in Pacific commercial fisheries.

The department’s foreign ownership restrictions on commercial fisheries access are established through its licensing policies and guide the minister’s discretionary authority to issue licences.

In Atlantic Canada, DFO's licensing policies explicitly require that the fisheries resources remain available to Canadians.

In Atlantic midshore and offshore fisheries, corporations that hold licences are required by current policy to be at least 51% Canadian owned. This requirement has been in place for over 35 years. It was instituted to ensure that effective control of commercial access is retained by Canadian companies, while still allowing for investment in emerging fisheries or fisheries lacking capital.

In Atlantic inshore fisheries, the department regulates who can hold inshore commercial fishing licences via the inshore regulations, which require licence-holders to be independent owner-operators who meet regional residency requirements.

In the Pacific region, fisheries management and licensing policies are built around conservation objectives. The licensing system that governs most Pacific fisheries allows licence-holders to exchange fisheries access, which further promotes the economic viability of fishing operations and limits stress on stocks. The intent of Pacific commercial licensing policies is to facilitate responsible management and conservation of fisheries resources.

In Pacific fisheries, DFO employs both party-based and vessel-based fishing licences.

For party-based fisheries, the department requires that all corporations that are issued licences be registered in Canada. The department does not have a policy on the citizenship of individuals who apply for Pacific licences.

In Pacific vessel-based fisheries, licences are instead issued directly to vessels, which must already be registered with Transport Canada. Transport Canada requires that all registered vessels be owned by either a Canadian resident or corporation, or a foreign-registered corporation with a Canadian subsidiary or representative entity. Transport Canada does not restrict the foreign ownership of a Canadian-registered fishing vessel.

In July 2020, following the release of the government response, DFO launched a review of its existing foreign ownership policies. The department concluded that it lacked the information required to effectively assess the concerns put forth by this committee’s report. It sought to fill missing data gaps while still addressing urgent concerns where possible.

In February 2021, the minister approved a measure to increase scrutiny of potential foreign investments in the Atlantic midshore, offshore, and exempted fleet commercial fisheries. The revised measure applies the existing foreign ownership limit to the full corporate structure for all future licence applicants as well as existing licence-holders that wish to acquire additional access.

The department also began work with federal forensic accounting experts to develop a mandatory survey that would identify who is benefiting from commercial fishing licences and quota and incorporate input from key stakeholders.

This survey sought information on the identification, citizenship and/or country of registration for all direct and indirect owners of commercial licences. The survey also sought broad information on the licence-holder’s debts, ongoing fishing agreements and executive-level employees. Ultimately, the survey will identify the beneficial owners—the individual people who directly or indirectly control fisheries access.

Over 2,500 commercial licence-holders from Pacific party-based and vessel-based fisheries, as well as Atlantic midshore, offshore, exempted fleet and elver fisheries were required to complete the survey.

The survey’s overall response rate is 80% across the implicated licence-holders from all three coasts. The 83% of Atlantic enterprises that completed a survey account for a combined total of 90% of Atlantic midshore, offshore and exempted fleet commercial licences. Similarly, the 79% of Pacific enterprises that completed the survey account for a combined total of 88% of the implicated Pacific commercial licences.

The data collected from the survey were delivered to federal forensic accounting experts for analysis in December, and aggregated results will be publicly released this spring.

The department will then engage stakeholders to discuss the findings and evaluate whether policy solutions are warranted. As the committee can expect, careful consideration of the impacts of potential policy solutions are required before changes can be introduced.

To conclude, the department is committed to better understanding the challenges facing commercial access holders. DFO's decision to enhance the application of foreign ownership restrictions in Atlantic fisheries, combined with the launch of the beneficial ownership survey, should be a signal that the department takes the input of this committee very seriously.

I thank you for your attention and would be pleased to answer your questions.

[The Chair, Liberal, Ken McDonald]

Thank you for that.

We'll now go to our first round of questioning. Before I go to Mr. Small, though, I will remind members to try to be brief and identify who you want to answer your question. We have three hours of committee business today. We will be tight on time. We have to be finished by two o'clock. We all have to be somewhere else.

Again, be generous with your time, and we'll get through it.

I'll go to Mr. Small now for six minutes or less.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair.

On behalf of the FOPO committee members, I'd like to extend my condolences to the families of the lobster fishermen who were lost at sea. It's a tragedy. People tied to the marine industry know it all too well.

Mr. Chair, my first question is for Ms. Mooney.

Ms. Mooney, have you heard talk of supply agreements between harvesters and processors in the Newfoundland and Labrador fishery?

[Jennifer Mooney, Director, National Licensing Operations, Department of Fisheries and Oceans]

In terms of the concerns of the inshore fishery in particular, yes, I have heard those concerns.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Are these agreements legal under the recent DFO policy?

[Jennifer Mooney]

If we're talking about the inshore fishery, harvesters have a number of ways to access loan agreements through registered or non-registered financial institutions. In some cases, yes, harvesters can access loan agreements from processors, for example.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

For Ms. Mooney again, do you think that the owner-operator policy is being compromised, in a roundabout way, by supply agreements?

[Jennifer Mooney]

I think the supply agreements are in place for harvesters to access loans and to exercise fishing. What is really important to note here is that those harvesters have to be independent core harvesters. They have to be in charge of their business decisions on and off the water.

One really important point to also note is that being in charge of those business decisions means they are making financial decisions for their business.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

In talking with harvesters, and wanting harvesters to come to this committee and testify, we found there was a great fear. We couldn't source harvesters who wanted to talk about these types of things, even in in camera meetings where they wouldn't be identified. The fear was so great that it would get back to the processing sector that witness A, B, C or D was Mr. Smith.

Why do you think there is that fear among people to actually give meaningful testimony to this committee?

[Jennifer Mooney]

I can't speculate as to why that would be the case. I can say that we have information hotlines through which harvesters, if there are concerns, can report that information anonymously to the department. That is not my role. That is a role for conservation and protection at DFO, which has a role for enforcement.

What I can also say, very quickly, is that we spot-check and review every time there is a request for a licence-holder to reissue their licence, a transfer. We review the eligibility of that licence-holder against the inshore regulations—both the current and the prospective licence-holder.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

I'll go again to Ms. Mooney, Mr. Chair.

Royal Greenland, the largest seafood company in the North Atlantic, can own 49% of every company in eastern Canada, basically. If a company like Royal Greenland made such large purchases and investments in the Atlantic fishery—if they bought 49% in all of those companies, and some of them own offshore quotas—don't you think that would constitute major foreign ownership? Do you think that's good policy?

[Jennifer Mooney]

Perhaps my colleague has more to add here. What I would say with respect to Royal Greenland and that transaction is that it was made under provincial jurisdiction.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

For example, Ms. Mooney, if there are offshore quotas attached to some of those companies, and/or community quotas, while Greenland is buying directly into quotas that are owned, and they own 49% of that asset....

[Jennifer Mooney]

I would add here that all offshore and midshore licences and quotas respect the requirements of the foreign ownership.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Chair, again, this question is on licensing, for Ms. Mooney.

Last year, when the capelin fishery was about to start, it basically closed down. Some buyers wanted to have a capelin fishery; some didn't. I understand that the buyers, the processors, had some control, some power in terms of whether, in fact, that fishery would open up or not, but the quotas were held by the harvesters.

That's a form of corporate control in the fishery, when two-thirds of the processors don't want a fishery to open. Do you think that's corporate control?

[Jennifer Mooney]

Again, here I wouldn't speculate. Perhaps I would turn this to my colleagues in case they have anything further to add there.

[Mark Waddell]

If I may, Mr. Chair, at least with regard to the previous line of inquiry, the department undertook that beneficial ownership survey in an effort to determine the extent of potential foreign ownership within Canada's fisheries. While that body of work continues to reside with our friends and accounting colleagues at PSPC, we have preliminary results for Atlantic Canada. I can say that, based on the survey findings, 98% of Canadian offshore, midshore and exempted fleet licences are held by Canadian individuals or Canadian corporations. Fewer than 2% are held by foreign entities.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Small.

We'll now go to Mr. Cormier for six minutes or less, please.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

Thank you, Mr. Chair.

I, too, would like to offer my deepest condolences to the families of the two fishermen who lost their lives this weekend off Miscou in my riding. It was a difficult weekend. I assure these families that the entire population of Acadie-Bathurst, as well as all Canadians, support them in this ordeal.

Ms. Mooney, you said that fishermen need to have full control over their business decisions and make sure that everything is within the law when dealing with a company. What do you mean by this idea of full control of their decisions? Give me some concrete examples, please.

[Jennifer Mooney]

Yes, certainly. In terms of their business decisions on the water, as examples, they would be things such as hiring their crew and designating their sub-operators. In terms of decisions off the water, it would be determining, if they enter into any loan agreements, who those would be with. They are realizing the benefits of that licence, so it is key that they are the direct beneficiaries of that licence.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

If a company, for example a factory, helps people get a licence or a down payment, they will be somewhat connected to the company or have obligations to it. In that case, how could these people be in full control of their business decisions?

[Jennifer Mooney]

I would say that the important work our regional licensing office staff do is looking to make sure, for example, if licence-holders are entering into loan agreements with non-registered financial institutions in particular, that their loan agreements are being paid down. The whole idea here is that licence-holders have flexibilities in terms of being able to access financing, but they are not beholden to those broader interests over the long term.

As a final point, I'll emphasize that corporations cannot hold inshore licences in this country. They are held by individuals directly.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

I would like to get a few more clarifications, before I get to my next question.

We hear a lot about the Royal Greenland company, which is becoming more and more present in our areas. Of course, we want to keep Canadian fisheries in this country, but certainly there is foreign investment and there will continue to be.

Given its increased presence, don't you think Royal Greenland is creating a monopoly? This company is owned by the Greenland government, from which it receives public funds. Don't their operations in Canada represent unfair competition, in a way, compared to what our own plants or fisheries businesses can do in our region?

[Jennifer Mooney]

Perhaps this is a more appropriate question to pass to my colleagues.