Fisheries Committee on May 11th, 2023

[The Chair, Liberal, Ken McDonald]

I call this meeting to order.

Welcome to meeting number 67 of the House of Commons Standing Committee on Fisheries and Oceans. Pursuant to Standing Order 108(2) and the motion adopted on June 20, 2022, the committee is resuming its study of foreign ownership and corporate concentration of fishing licences and quotas. This meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022.

Before we proceed, I'd like to remind everyone to address all comments through the chair.

I would like to welcome our first panel of witnesses.

Representing Ecotrust Canada, we have Tasha Sutcliffe, senior policy adviser in the fisheries program. Representing the United Fishermen and Allied Workers' Union, we have Kyle Louis, vice-president, and Emily Orr, business agent.

Thank you for taking the time to appear today. Each group will have up to five minutes for an opening statement.

I will invite Ms. Sutcliffe to begin, please.

[Tasha Sutcliffe, Senior Policy Advisor, Fisheries, Ecotrust Canada]

Thank you for having me here today.

I'm currently an independent contractor and I'm here in my role as senior policy adviser for Ecotrust Canada. I also work with Coastal First Nations to support the development of their community-based fisheries, a key aspect of the fisheries resource reconciliation agreement you heard Paul Kariya speak to you about on Monday.

I've spent 27 years supporting fish harvesters and fishing communities, and I believe fisheries as a renewable resource can be well managed for environmental, social, cultural and economic objectives. Licence policy is one of the key things that affect our ability to realize this.

This is my third time testifying on this subject; the first was in early 2019. I want to thank this committee for keeping this topic on the table and continuing to support the people and communities of the coasts, plural.

In preparing for today, I went through licence reports again. I had a moment when I questioned why we have to continue to show the government the evidence of foreign ownership and corporate concentration in B.C. fisheries. We know there's foreign ownership. We know there's corporate concentration. There's been much information shared on this. We've heard of companies that link back to foreign parent companies; global companies that continue, even to this day, to buy up smaller local operators to consolidate and control the supply; cash exchanges from offshore buyers to avoid tax, or worse; licences and off-loading facilities owned by offshore interests, including those linked to groups like the Big Circle Boys of money-laundering fame; full vertical integration of supply chains and cartel-like control of markets with no transparency; and blank cheques at the licence broker to outbid any local operator who tries to buy in.

We've heard this information, and more. We've seen evidence and have been told how dangerous it is for those in the industry to provide details for fear of punitive action.

What is so problematic, though, is that we do not know the full scope of who owns licences and quotas in B.C. or where owners are from, because anyone can buy a licence or quota and anyone can sign an agreement for someone else to operate it, and for any fee. We do not track this information. We do not know the true picture of who is making money from B.C. fishing access. The beneficial ownership survey will not provide us with answers on beneficial ownership, because it did not ask the licence-holder whether they owned the licence. In B.C., the licence-holders often do not own them.

We heard DFO explain the protections against foreign ownership in Atlantic Canada. In B.C., we don't limit processor, foreign or corporate ownership of licences and we haven't even touched the mess of trying to track quota ownership.

What I want to say today is that in my opinion, focusing on the ownership being foreign and corporate isn't actually the heart of the point. I certainly have no interest in fanning anti-Asian or any “anti-” sentiments. What I care about is whether the fishery is working as it should be—benefiting those who are on the deck of the boat and the communities of the coast, rebuilding first nations' access, revitalizing their fishing fleets and supporting societal values for B.C. and Canada. If the current system resulted in these outcomes being achievable for fishermen, first nations and coastal communities, I would not be here fighting for change.

The fact is, however, that under the current regime, it is doing the opposite. Fishing enterprises are failing; good fishing crews are extremely hard to find; skippers have a huge amount of risk and work to secure a viable season if they even can; and new fishermen can't afford to buy into the fishery—new fishermen are rare, period. We are losing our fleets and we are losing the benefits of the fish being pulled out of the water, and it is in large part because we're losing control of access.

The point is the indisputable negative impacts of the current policy. Breaking that down, the landed value of fish is not getting to the fish harvesters, and their fishing enterprises are unstable, lack security and are hard to keep viable.

Why? It is because fish harvesters who run fishing enterprises are increasingly renters of access, not owners. From year to year, they have to take on the risk and cost of fishing with no security of access or price.

Why? It is because fishing licences and quotas are way outside the range of affordability, not just because fish harvesters can't get that kind of capital but also because, even if they did, they will never make enough money through fishing to pay it off in their working lifetime.

Why is it so high? There are many reasons for this. The first one is that we have no fleet separation or owner-operator rules. Anyone can buy a licence.

Why would others buy a licence if the fishing return on investment isn't worth the cost of the licence? It's because they're not solely benefiting from the fishing ROI. If you have deep pockets, are further up the value chain and have access to fish markets, then you can pay more for licences. If you control enough supply, you can control the value chain or, even worse, you have other nefarious activities that make this investment even more lucrative. This situation perpetuates itself, because even those buyers who do not want the huge asset investments in access must buy into the system to stay competitive with these other players.

The lack of oversight and control on who can buy and operate B.C. fishing licences and quota in B.C. are crushing our fleet; it is eliminating viable owner-operators; and it is putting pressure on the smaller land-based operators to consolidate and amass access themselves, at great cost.

[The Chair, Liberal, Ken McDonald]

Okay, Ms. Sutcliffe, I'm going to have to stop there. We've gone a bit over for the five-minute opening statement.

[Tasha Sutcliffe]

Okay.

[The Chair, Liberal, Ken McDonald]

We'll move on now to our next presenter.

I don't know whether it is Mr. Louis or Ms. Orr giving the opening statement for five minutes or less, or whether they're sharing their time.

[Emily Orr, Business Agent, United Fishermen and Allied Workers' Union – Unifor]

Good afternoon. My name is Emily Orr. I'm the business agent for the United Fishermen and Allied Workers' Union.

I'd like to thank the committee for taking this incredibly important study forward. We're very grateful to you for that.

As you know, the Pacific region doesn't have a licence policy to restrict foreign ownership or corporate concentration of fishing access. The resulting situation is that Canadian independent owner-operator fish harvesters are being outbid, outbought and increasingly pushed out of Canada’s west coast fisheries.

The benefits of commercial fishing should flow to those doing the work and taking the risk and to the adjacent coastal communities. Coastal economies are suffering visible economic drain as those benefits instead go increasingly and unchecked to offshore investors.

Reconciliation objectives involving fisheries access are challenged by competition with foreign investment and corporate concentration, and domestic food security is being wilfully overlooked.

The east coast has an owner-operator policy. You'll hear later in the study from Rick Williams, who will provide compelling statistics that compare harvester incomes and industry economics from east to west.

In the delivery of the PIIFCAF policy to the east coast in 2007, fisheries Minister Shea said,

The goal of the PIIFCAF Policy is to strengthen the Owner-Operator and Fleet Separation Policies to ensure that inshore fish harvesters remain independent, and that the benefits of fishing licences flow to the fisher and to Atlantic coastal communities.

DFO's stated objectives of that policy are to:

reaffirm the importance of maintaining an independent and economically viable inshore fleet;

strengthen the application of the Owner-Operator and Fleet Separation policies;

ensure that the benefits of fishing licences flow to the fish harvester and the coastal community; and

assist fish harvesters to retain control of their fishing enterprises.

These are the things that we are seeking for the west coast. The question that has yet to be answered is why an owner-operator policy hasn't been developed also for the west coast.

Earlier this year, the UFAWU launched a parliamentary petition to request the minister to put an immediate stop to any further foreign ownership or beneficial interest in commercial licences and quotas—recommendation two of the FOPO report “Sharing Risks and Benefits”—as no tangible action by DFO with regard to this recommendation has been taken so far.

In 2018, half of the $60 million in licence and quota purchases were by foreign investors. Six licence-holders had more than 50 licences each, and 1.2% of the quota owners held more than 50% of the quota pounds.

DFO has advised that the beneficial ownership survey is the step they've taken in response to calls for policy change and that it's necessary to better understand the scope of the issue of foreign and corporate ownership. The survey was directed to “licence-holders”, not “licence owners”. This slip of semantics should effectively nullify the results of the survey, as the licence-holder and the licence owner are not necessarily the same, which is central to the overall problem.

I’m a second-generation fish harvester who, after 12 years of fishing and learning my way to running the boat myself, could not compete to buy my parent's fishing licence. It ultimately sold to a processor in Vancouver and the boat went to Alaska.

In previous work as a fish coordinator for PICFI's CFE, or commercial fishing enterprise, I was responsible for tendering the licences and quotas for those nations. It was 10 times out of 10 that the companies outbid the independent harvesters. This drove licence lease prices up almost 50% higher.

One of the lifelong harvesters I work with is currently looking to retire and sell his boat and licence. The first offer came on day one, from a company.

Another harvester I work with fishes geoduck, which involves dangerous underwater harvest. He is responsible 100% for the physical risk and 100% for the cost of the vessel operations and the expenses of the crew, yet receives only 22% of the landed value of the catch.

These experiences are not unique. In fact, they have become the norm.

I’m here today on behalf of fish harvesters who still have aspirations to become owner-operators, on behalf of coastal communities who rely on fisheries to stay viable, on behalf of British Columbians concerned about domestic food security and on behalf of Canadians who deserve better management of our common property fisheries resource.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you for that.

We'll now get ready to go to our questions. I will remind committee members that we have a dead stop at 6 p.m.

With the permission of the committee, to balance it out, it's basically 45 minutes for each session. Instead of six minutes, five minutes and two-and-a-half minutes, if we went four minutes for each questioner, that would allow everybody a good chance to get in their questions.

That's if the committee is okay with that. If it's not unanimous, we'll go with the regular six minutes until the time runs out.

[An hon. member]

We'll agree to that.

[The Chair, Liberal, Ken McDonald]

Okay.

Mr. Arnold, you're up first. You have four minutes or less, please.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you, Mr. Chair.

Thank you to the witnesses for bringing this testimony forward.

Ms. Sutcliffe, you mentioned that fishermen can't afford to buy the licences and quota because the returns on investment, basically, are not enough to justify the cost. Can you elaborate a little bit more on that?

[Tasha Sutcliffe]

Yes. I've done quite a bit of analysis, actually, over the last year trying to look at what it would take for a fisherman to invest in a fishing licence and how long it would take them to pay it off with the current prices. I can give you a real example.

In sea cucumber, currently licences are going for $1.5 million. That's doubled since 2015. Most skippers lease and only get $2.25 a pound, but if you are an owner-operator, you get $9.25. If we go with that number, after expenses, the average skipper would make about $40,000 of a boat share. That means it would take them, even if they had all the capital and didn't have any cost of borrowing, at least 36 years to pay off that licence. Chances are that they would never be able to pay it off. I don't know anyone who's going to give a fisherman $1.5 million with no cost of financing.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

You both mentioned that you've tracked some of the recent sales to foreign ownership, yet we've heard some testimony that there's no way of tracking who owns what.

Ms. Sutcliffe, perhaps you could start and then Ms. Orr could elaborate on it a little further: How are you able to determine that it's foreign ownership that's picking up these licences when we aren't clear on how it's tracked?

[Tasha Sutcliffe]

It's a really good question. It sounds like a contradiction. It is extremely hard. The foreign ownership examples that I know of have to do with a whole bunch of digging and research in some cases.

In one of the examples that I mentioned about the connection and that I've testified about before, it's because that person was traced through the B.C. online registry as the single director and shareholder of a company that's investing in B.C. They also were outed in the money-laundering investigation in B.C., so it was easy to track them and know who they were. It's in the public record. In another case, it was just detailed online research based on intel given by someone in the industry. In other cases it's just known. The companies admit it. They know they're foreign-owned.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

You mentioned the same individual with ties to the money-laundering case. Is it your view that laundered money is being used for some of these licences?

[Tasha Sutcliffe]

I've heard from many, many people that this is the case, yes.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Okay. Thank you.

Ms. Orr, do you have any comments on how we're tracking these licences and the sales?

[Emily Orr]

I think Tasha explained it fairly accurately. Beyond that, it's mostly anecdotal. It's stories that you hear from fish harvesters, processors and buyers. It's information that comes sometimes first-hand and sometimes second-hand, but that is the problem: We don't have an actual track of it.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Okay. Thank you.

I guess for both of you, is there an indication that the government funding going into the buyback programs is affecting the licence sale prices at all? How is it affecting them, if it is?

[Emily Orr]

Yes.

[Tasha Sutcliffe]

Yes, it definitely affects them. It's known to have affected them over the years. Buybacks always amp up prices. I think it's taken advantage of by certain individuals on the broker side as well. I think in a lot of cases fishermen do deserve the prices they get in those buybacks, but there's definitely a dynamic that can result in overinflation of prices from government buybacks—definitely.

[The Chair, Liberal, Ken McDonald]

Thank you for that.

Before I go to Mr. Hardie, I will say to the witnesses that if you haven't been able to provide an answer, you can actually email an answer to the clerk and it will be included in the testimony.

We'll go now to Mr. Hardie for four minutes or less, please.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Mr. Chair.

I have some audio problems. I hope you are able to hear me okay.

[The Chair, Liberal, Ken McDonald]

We are able to hear you okay.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Good. Thank you.

For Ms. Orr, at the Fisheries for Communities sessions in Victoria a few months ago we saw a chart that said that of the money coming out of the ocean, the harvesters were realizing about $400 million a year, but that was the gross amount.

Do you have any idea what the net looks like for the average independent harvester out there, who may be having to rent both the licence and the quota?

[Emily Orr]

I can help with some specific examples. For example, in prawn, there have been years when the leases are upwards of $70,000. Before the harvester heads out and goes fishing, they're paying that lease price, paying the licence fees, which are nearly $6,000, and paying for all of their vessel requirements—outfitting the gear, the fuel, everything that is required to undergo the fishing activity. What that harvester lands is going to give you what their profit margin might look like. As somebody who leases the licence, if you're indentured to your fish processing company, if they've provided the loan to purchase or to lease a licence, you are going to be fishing for the price that the buyer is willing to pay you.

The value of fish varies radically among fisheries, and, of course, there are lots of unknowns with what the price is going to be each year for many of the fish species.

It's difficult—