Mr. Speaker, I am pleased to rise today to discuss Bill C-45. This is a very ambitious bill designed to replace the current Fisheries Act, which has undergone some changes but is more than 136 years old. There is general agreement that the current legislation is flawed and must be amended. However, there are problems associated with amending this sort of legislation.
People in the fishing industry will often say that they do not like the legislation as it stands, but that they can survive nonetheless. They have an industry and are getting by. If this legislation is replaced, it must be replaced with a better bill that will improve the fishery for families, fishers and coastal communities.
This bill contains several provisions to that end, but it also has some weaknesses. I am finding resistance and fear in the fishing communities in my riding and elsewhere. People are asking me to vote against this bill. I think this is unfortunate, because with a few amendments, the bill could be very good for the fishing industry and could bring stability.
But the government is refusing to make those amendments. We are being asked to adopt the bill at second reading in order to introduce the necessary amendments, but we know that they will not be in order. They would be now, but they will not be after second reading, in committee. I think this is unfortunate.
Now, the minister controls the wording of the bill. I believe he should hold consultations on the bill's wording in coastal communities, in fishing communities, with the groups concerned, and make amendments. They are not major amendments. The bill the minister is introducing does not have to be rejected. With minor changes, it would be an excellent bill.
The minister could do that. According to the motion introduced by the Liberal fisheries critic, the minister could make the amendments that have been introduced. I therefore encourage him to do so.
However, what we have here and what we are going to discuss is the bill in its current form. Again, I do not think this is a bad deal. I think it has some weaknesses. I participated, as many others did, in the Atlantic fisheries policy review, a wide-ranging session of consultations with the industry, communities and the provinces, and we came to the acceptance of a document. We accepted the proposals of the review and I see pretty well all of them within this bill.
As for where I have problems with the bill, I am going to talk about two areas. Other colleagues will talk about other areas. I am going to talk about two areas that are problematic. They are not easy to resolve. Now that he has the text of the act, I would encourage the minister to consult, based on the text he received from the communities, on the modifications that would improve that act and that he consider bringing them forward to Parliament, as the committee will not be able to do it at second reading.
One problem is the question of licence ownership. It has been stated by the courts in decisions that a licence is not a property. It is a permit. It is not property. That is understood. It has been understood in jurisprudence. However, in the evolution of our fisheries it has become an asset. It has value. It is often the pension plan of the family participating in that fishery. When the family leaves the fishery, it transfers the right to exercise that licence for a consideration of capital, of money, and that forms the pension plan for that family.
Now the proposed act states directly that the licence is not transferrable. The minister has said in the media, and he probably will say it again in the House, that his intent is that it continue as it was in the past and that people be permitted to transfer or sell their interest, to sell their right to apply for that annual permit. I believe he is sincere in that desire.
What worries me is what a judge will say in 5, 15 or 20 years when he is presented with a case wherein people are objecting to a transfer of a licence. He will be presented with a case and with an act which specifically states that the licence is not transferrable. If an organization, a petitioner to the court, wants a licence to cease existing on the retirement of a fisherman because it thinks cute little crabs should be swimming around the bottom of the ocean forever and should not be harvested, what then would a judge say in that instance? I believe there is some work to be done there.
The other area that I want to discuss is the question of the tribunals. Currently in the act if there is an offence or allegations of an offence under the act, the choice of the department is to charge the fisherman or fisher person or company and take them to court. It is a long, arduous and expensive process that clogs Canadian courts. This proposed act wants to bring back the way it was a while back and which had been successfully challenged in court, that is, the administrative sanctions. It would bring them back in the form of a tribunal, so that rather than going to court, sanctions could be imposed by the department with agreement of the offender or after a trial before the tribunal.
That is all good. I think that is excellent. What is lacking is a method of appeal. I hear concerns in fishing communities that the people on these tribunals are going to be named by the government of the day and are going to be political hacks. I do not have a problem with the government of the day naming the people on the tribunal. As a government is replaced, people will be named by the new government.
What I am concerned about is that the people on the tribunal have the ability and ethical values to do their job properly, that is, that they are able to do it and that they do it properly. The only way we can ensure that is if their decisions can be appealed to a higher instance. If their decisions cannot be appealed, then they stand, whether the decisions are good or bad. Rather than properly exercising their judicial or quasi-judicial responsibilities, their master remains the person who appointed them, the minister. As long as they make the minister and the deputy minister happy, they will continue to be reappointed. I believe there should be an appeal process. It would ensure that their job is done with integrity and transparency.
I want to return to the licensing and give an example of a good principle poorly applied and its negative impact. I want to give an example of the ministerial order given by the minister a few weeks ago with respect to trust agreements.
Trust agreements exist in my part of the world in two areas. They exist in the groundfish industry and the lobster industry.
The minister has stated that it is his intention to legitimize the existing process and permit vertical integration within the groundfish industry. I applaud him for that. That is the direction I was suggesting. It is the direction in which we have been going. I think that is excellent.
In the lobster industry there are 1,000 licences in Digby County, Yarmouth County, Shelburne County and in part of my colleague's riding across the way, South Shore, in St. Margaret's.
Twenty or 30 years ago the cost of getting involved in that industry would have been $20,000 to $100,000. A young person who wanted to enter that fishery would use the old backing system. He would see a lobster broker or buyer and the lobster buyer would sign at the bank or lend the young person $15,000 or $20,000. The young person would have to find another $10,000 and then he would be in. By a gentleman's agreement the harvester would sell his product to that buyer. That buyer would have security of supply. The young person starting in the industry would have a reasonable source of capital. Over time, times were very good in that industry.
The Marshall decision created the government buying lobster licences and other licences which quickly inflated the prices. All of a sudden, with the combination of the Marshall decision implementation and the economic benefits of that industry, licences hit $200,000, $300,000, $400,000, $500,000, $600,000 up to $800,000. The vessel and the gear would cost another $300,000 to $600,000.
The gentleman's agreement did not work any more. The person who was going to shell out or guarantee up to $1 million had to have some security. He needed two things. As a broker he needed security of supply; he needed lobster. He was not going to spend hundreds of thousands or millions of dollars marketing lobster if he could not be guaranteed supply. The other thing is he needed to be sure that if he lent $1 million to somebody that he would get it back.
The lawyers worked behind the scenes and they found ways around the policy and they came to the trust agreement. DFO policy continues to state that the licence must be held by an individual. They did the beneficial use or trust agreements. They were able to integrate in that way. In the beginning it worked fine, but with time there was movement by a few companies toward accumulation of a disproportionate share of the licences. It put fear in the community that no longer would it be an independently held industry contributing its maximum to the economy, creating riches for a lot of people.
There is another type of trust agreement. Of 1,000 licences my estimation would be that there are a couple of hundred in corporate trusts and probably 300 in individual and family trusts.
A lobster fisherman wants to turn over his assets to his son or daughter but it is $1 million and that is his pension plan. He is worried because he has to protect himself in case it does not work out, so he creates a trust and he turns the shares over bit by bit to the second generation and gets his pension. As people retire, a father or mother might want to buy licences in the market for two or three of their children. They will create trusts for those purposes. Those are not seen in the community as being dangerous. They are not seen as undermining the independence of the industry.
The minister, based on the good principle that the independence of the fishery has to be protected, said that only the banks would be able to mortgage and that within seven years all the other corporate trusts would have to be dissolved. The principle is good but what happened with the implementation of that is that the other 300 what I call reasonable trusts got caught in that trap. The average fisherman who was preparing to retire saw his licence value decrease from $600,000 to $300,000 overnight. About $600 million disappeared in capital value of fishing families, people preparing for retirement, in western Nova Scotia.
I have written to the minister asking him to reconsider. I understand there is a question of extending the sellout period or the dissolving period of those trusts to 17 years.
I would ask the minister to go further. I would ask him to look at the underlying causes that created those trusts. How do we change our policies in a way that would promote reasonable economic development of the fishery and maintain as much as possible the independent nature of the fishery? There are four points that I continually raise.
The first is the elimination of the capital gains tax. I congratulate the government for having done that. The government went further with this year's budget than it did with last year's budget and it came to what was in our Liberal policy platform. That was the responsible action to take and I thank the government for doing that.
The second point is access to capital. For an independent fishery to exist, the individual has to be able to compete with anybody else who would be trying to integrate into that fishery.
I should point out that what scares me under the tribunal system is the tribunal could decide who could and could not be a fisherman. That is risky. A fisherman should be a person who can acquire a licence or be entrusted with a licence and leave the wharf. It should be decided like that. It should evolve naturally and normally as it always has. A fisherman needs access to capital. He needs to be able to compete for it.
Then there is the brokerage sector. The brokerage sector, or the lobster buyers as we know them, need security of supply. They need to know they will be able to buy lobster in the future. They should have a reasonable way of competing with everybody else who is trying to do the same. That maximizes the value of lobster. It maximizes the revenue to the fisherman. It maximizes the return to the country and to the community.
I suggest that the licences be under a financial instrument. Because a licence is not property, it is difficult to call it a mortgage so I call it a financial instrument. We should let the banks enter into a financial instrument, or whatever the proper term would be, with the fisherman, so if he does not make repayment, the bank can get the licence, force its sale, and recover that way. The courts have found that to be okay and it is under appeal now.
I would suggest that we go further and let lobster buyers and the marketing industry get into those types of instruments. Then they would not have to do a trust. It would also cost them a lot less money. They would have more financial security as long as the person whose name the licence is in could buy out of the obligation in a reasonable manner as a person would on a mortgage on any other business or real property. That would help a lot.
Families or lobster fishermen should be permitted to create companies and put their licences under companies. Partnerships should be permitted. However, holding more than one lobster licence within a corporation or any individual or corporate entity having shares or interests in more than one of these corporations should not be permitted. Any one of those corporations or any fisherman should not be permitted to have licences in more than one lobster fishery area. We see that now in areas where they do very well. Fishermen use the capital to compete with larger vessels in other fisheries in their off season. That has a huge risk.
Existing trusts could be grandfathered. They should not be stale dated. If ever the fisherman sold his assets of the company holding the trusts, he could not sell those trusts with them. The fisherman could not sell one company to another. Any time those licences were moved, they would have to go under the new rules. I think that the market would level off.
People holding 20 or 30 licences in trust would have $20 million or $30 million tied up and they could not use that asset at the bank. They could not because of their trust agreements, their counter-policy with the department; with the signature on an order, the minister could dissolve the licence so it would have no value at the bank. The person could not use it to negotiate working capital in his corporation, but if the person sold the licences to the captains, if he got a financial instrument with the captains who owned the licences now, with an agreement that they sell their lobster to him at market value, they could buy out the person anytime, but the person would have a reasonable security of supply. The person could go to the bank freed up of the $20 million or $30 million obligation and as he negotiated his working capital, he could tell the bank what he expected in the amount of product he would be selling on the market in the next five years based on those things. Suddenly that business plan makes sense.
That broker has the ability to market Canadian product in the Japanese, oriental and European markets. The independence of the fishery is maintained and there is competition to buy that product from the fisherman maximizing in value.
Those four points, and there can be variations, would take away the underlying circumstances that have forced these trusts. These trusts were not some diabolical plan of people to take over the lobster fishery. If we talked to the people who are the beneficial owners of these trust agreements, they would tell us that they are not efficient at harvesting. The captains would tell us that it is not the most efficient way. The most efficient way is for the captain to own and operate his vessel. He will take care of things. He will fish when the conditions are right. He will take decisions that are appropriate for the safety of his crew and he will bring in the product.
People get involved in these trusts to have that security of supply. Lobster brokers need one thing. They need lobster. That is what they do very well.
As a young man growing up in Comeauville and fishing in the spring, I remember when there were two buyers who would come to Comeauville wharf. Essentially they were selling to two brokers in the U.S. The buyers would buy the lobster at the cheapest price possible. The price would be fixed in the spring and fixed in the fall and they would sell the lobster at a quarter a pound profit on the American market. The broker would make whatever money there was in marketing it on the American side and our fishermen lived in poverty.
Twenty or 30 years ago there started to be competition on the brokerage side. All of a sudden people were paying 15¢ to 20¢ more per pound. There were large fluctuations during the season. Fishermen themselves were brokering, developing lobster holding ponds and the lobster fishermen have done very well. They have very good family revenues. Their children are being well educated. They are contributing greatly to the economy. It is important that we protect that.
I hope the minister will give my reflections some consideration in protecting the retirement assets of these families as they approach the time to leave the fishery, as well as protecting the future of the fishery and the economy of western Nova Scotia.