[Recorded by Electronic Apparatus]

Thursday, March 28, 1996

.0906

[English]

The Chairman: Order.

We welcome the representatives from the Chamber of Shipping of British Columbia: Captain Ron Cartwright, president, and Don Downing, president of the Coal Association of Canada.

Captain Ron Cartwright (President, Chamber of Shipping of British Columbia): Thank you, Mr. Chairman and members of the committee.

We appreciate very much the opportunity to brief the committee on our views and concerns regarding the Canadian Coast Guard marine service fee.

First I would like to give a very brief overview of the position from the west coast, and following that I would like, with your permission, to give Don Downing the opportunity to elaborate on a major cargo shipper's perspective.

The Chairman: We'll have about an hour, and whether you want to use it in presenting your briefs or in answering questions is up to you. So if you want to go through your briefs as quickly as possible, then we can go to questions.

Capt Cartwright: I think you'll find our briefs are very short, so we'll have ample time for questions.

I circulated to the clerk a package that has most of the information around which I'm going to talk today.

If I could just introduce the Chamber of Shipping, which is the organization that pays my salary, the organization represents the international deep-sea sector serving the marine transportation needs of the entire region of western Canada.

I will also speak on behalf of the Western Marine Community. This is an informal coalition of all participants in the region's maritime activities. A list of WMC's members is attached to the material that was circulated. From this you will see that the coalition embraces all sectors: commercial deep-sea, domestic, commercial fishing, as well as recreational boaters. In addition, the major shippers of commercial cargoes, the ports, and terminals serving the industry are all represented. So we tried to devise a true community.

The community came together as a constructive response to the Canadian Coast Guard's plans to recover a portion of its costs of providing services to the maritime community. It started its initial phase around 18 months ago.

The basic premise from which WMC's philosophy evolved was that a cost-recovery program must, by definition, provide for accountability. It was a natural progression from the above to the concept that a program should be service specific. In view of the unique scope and levels of services in the different regions across Canada, obviously equity can be achieved only if this logic is extended to be region specific. The above two criteria form WMC's philosophical platform.

The concept of true cost recovery is supported by all the parties in the community. It was therefore a short step to an agreement within the community to devise an equitable distribution of regional costs. The realities of maintaining Canadian west coast competitiveness, where incremental differences are critical, forestalls any possibility of support for a concept of cross-subsidy to other commercial sectors.

The community has sought to resolve the issue of cost recovery in partnership with the coast guard and utilizing the resources of three vehicles; namely, a steering group, a fee structure committee, and the Pacific Marine Review Panel, which is charged with the operational interaction with the regional coast guard. That's the body that has in fact been active for around 18 months.

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The outcome of all this is the proposals that are part of the package dated February 12 and March 20. These proposals are to self-manage the cost-recovery program in order to optimize costs and provide ongoing accountability. The proposal translates to a mutual agreement between the community and the coast guard on a revenue target, together with the proposed fee structure. Enforcement remains a coast guard obligation.

The WMC has, subsequently to putting forward the proposals, achieved a consensus on the distribution of the regional cost obligation. By that I mean a consensus on how and what proportion of the bottom-line requirement from the region is split between the various sectors. Commercial shipping is around 70%, and that includes the international cruise vessels; 15% is to the domestic, mainly tug and barge, operation; and the balance is between ferries and the smaller vessels within the commercial sector.

Most significantly, the fee structure committee has, after intensive research and dialogue, identified an equitable formula for the marine service fee. The community proposes a vessel-based marine service fee, since the vessel is unquestionably the beneficiary of coast guard services. We prefer beneficiary to user, because user is often involuntary, rather than a valued service.

Cargo, on the other hand, is at arm's length to the services. A cargo-based charge was rejected for this reason, as well as because of the inherent inequities and administrative complexities in administering such a concept.

On the basis of the two press releases from the coast guard, the western marine community is currently proceeding with its preparations to implement its proposal expeditiously. In this respect, we would point out that to delay past the April 1, 1996 fiscal year is particularly onerous on the international deep-sea sector, responsible for the 70%, since the passing of every day decreases the population from which to draw the revenue and by doing so creates an inequitable burden on the remaining callers.

The Chairman: Mr. Downing, please.

Mr. Don Downing (President, Coal Association of Canada): Thank you, Mr. Chairman. I'm grateful for the opportunity to present a brief to the committee today. I appear as a representative of a major exporting industry and as a member of the western marine community.

Canada's coal industry is an important part of the national economy and a key contributor to export earnings. In 1995 coal production was estimated at 74 million tonnes and exports were approximately 34 million tonnes. There are 13 export mines in Alberta and British Columbia and one in Nova Scotia. The value of these exports in 1995 exceeded $2 billion. Canada also imports approximately 8 million tonnes annually for the electricity and steel industries in Ontario and New Brunswick. The exports and imports are essentially all made via the marine transportation mode.

Canada's export coal industry has become a successful player in a global marketplace despite our comparative geographic disadvantages. Our main competition in coal markets abroad is the producers in Australia, Indonesia, and South Africa. The inland rail distance in Canada is typically 1,200 kilometres, versus the 300 to 500 kilometres in these other countries. In addition, our mines are located in mountainous terrain and operators face extreme weather conditions not faced by our competitors. Despite these disadvantages, Canadian coal exporters have retained a significant share of world coal trade.

With the emphasis the international coal market places on cost, the committee will not be surprised that our industry has taken a deep interest in the new marine service fee proposed by the Canadian Coast Guard. We have not been pleased with the process followed by the coast guard in introducing the marine service fee. We feel important principles have been lacking from the process. The total annual fee to be collected was established arbitrarily, for example. The annual fees are related to coast guard costs and not to value received by users. We're told there is no possibility the fee will go down in the future even if coast guard costs are reduced or services eliminated.

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It's been our feeling from the outset that the service fee should be developed as a user-pay scheme, with the party closest to the service paying the fee. In this way the best determination of value could be made and the strongest emphasis on coast guard cost provided by the payers themselves.

We also understand, however, that a detailed user-pay system would take a lot of time to develop and be a complex endeavour in its own right, and therefore have supported the approach that best approximates true user-pay. A regional approach based on a regional share of coast guard costs works in the direction of user-pay.

We therefore actively support the western marine industry approach to implementing the fee. The western industry has the broad support of shippers, service-providers and carriers on the west coast. We particularly appreciate the aspect of the approach that calls for self-management of the fee system on the coast. This element of the west coast approach will have significant pay-off in the future by lowering administrative expenses and keeping the payer and the service provision as close as possible.

The regional approach has the best potential to keep pressure on the coast guard and its costs in the longer term by focusing the buying power of all the users. This focus has the best potential to drive improvement to the navigational aids system and to influence investment decisions in the future as well.

Although there is widespread agreement that some of the activities of the coast guard support the commercial sector, the Canadian Coast Guard was not established as a commercial enterprise. Therefore, determining the extent to which the organization serves a commercial purpose is very difficult. And it's unfortunate that any government has begun to introduce fees by starting with the marine service fee.

Our industry is similar to other exporting industries in that the coal exporters are price-takers in international markets and costs mean everything. The coast guard is proposing to establish fees solely based on its cost that have no relationship whatsoever to value received. This coast guard cost-based approach is a threat to any exporting industry.

The western marine industry proposal to establish a fee based on the cost of coast guard navigational aids within the region and to self-manage the fee is the best method of salvaging something useful from the marine service fee scheme.

In the future the coast guard proposes to escalate the total fee level and to introduce cost recovery for ice-breaking. It is imperative that the future growth of the fee target be strictly managed to ensure value for money and also to ensure that those who do not require a service like ice-breaking do not pay. To force payment for services not received will be to construct a cross-subsidizing payment system that will create new economic problems for the future and distort competition.

This brings me back to my starting point regarding Canadian competitiveness. Imagine our reaction if western coal exporters facing Australian producers in the marketplace have to deal with new charges like ice-breaking or cross-subsidy of other industries. It's inconceivable that a case can be made for a situation like that, and we cannot support any such national approach.

The western region is willing to pay its way and to assist in the development of a world-leading transportation system for the future.

Thank you very much.

The Chairman: Thank you very much. We'll go to questions this morning with Mr. Scott leading off.

Mr. Scott (Skeena): Thank you very much for your presentation this morning. Basically what we're hearing from you is very similar to what we've heard from other people making presentations over the last two or three days.

I'd like to ask you how you feel about a moratorium on this process for a period of time to allow the coast guard to come up with a rational approach to how they're going to implement this cost recovery plan, in line with your concerns about ensuring that you're only going to be receiving services you actually need and that you're only going to be paying for services you actually receive and require. How would you feel about that?

Mr. Downing: I'll answer part of that and ask Ron to complete the answer.

The moratorium serves the interests of shippers and shipping on the west coast if it delays the beginning of the payment. Nobody is expressing a strong willingness to pay anything in advance of when it's really necessary.

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But we would not want to use the moratorium period to do more than just study the impacts of these fees, in integration with all the other fees that are being established. We feel we now have a general agreement with the coast guard that supports a regional approach, and we would not want to lose that agreement if a moratorium were put in place.

Mr. Scott: So provided you were able to retain that regional approach to cost recovery, you would feel a moratorium until such time as the coast guard got its ducks lined up would be the right way to go, then.

Mr. Downing: Yes. We wouldn't want to start with an absolutely clean sheet of paper, if you like, because a lot of work has now been done to develop a regional infrastructure on the west coast.

Capt Cartwright: That's right. I think the consensus we've achieved has been built up and evolved through a set of known criteria and conditions we've been working toward and to secure the structure and to put in place what we have today. To our minds it would be a retrograde step simply to go back to a clean slate and open up the whole thing. It would be a waste of resources and the time and effort people have dedicated to date.

Mr. Scott: Just one more question. When it comes to the coal industry, I have some knowledge - not a great deal - of the coal industry in western Canada. It seems to me from my experience the coal industry operates on very thin margins, and indeed sometimes the margins are non-existent, if I can believe the press reports I've read over the last ten years. Could you speak to that a little and tell us what you're looking at in terms of margins, what kind of an effect this might have in a broad sense? I know you wouldn't be able to get too detailed on it.

Mr. Downing: Coal would represent a group a relatively low-value bulk commodities. The best selling price for a tonne of coal on the west coast would be about $65 Canadian a tonne. We pay almost $30 a tonne in rail freight to begin with. If you look at the mining costs as well as rail costs and port loading charges, I think one can imagine you're not left with very much. In the early 1990s in the province of British Columbia we had three bankruptcies, for example, that would reflect the kind of conditions the industry has gone through in the early part of this decade.

I would say through cost management and by benefiting from some modest price increases the industry is back into a profitable period. But it's a very delicate balance between cost and selling prices for the Canadian exporter, mainly because of the long inland shipping distances we face. We think taking on extra costs is something we have to be very concerned about in the future.

I think you could say that's true of all bulk exporters. If you go down to the east coast, significant volumes of gypsum, for example, would go out of the province of Nova Scotia. The selling price of gypsum is only about $6 a tonne. You can't absorb very many charges on that. There's a whole suite of lower-valued bulk commodities that would be very sensitive to these types of new charges.

Mr. Scott: I have just one more question. Would you support the idea of privatization in some areas where the coast guard is currently providing a service or where services are required by the shipping industry, to try to keep the costs as low as possible?

Mr. Downing: Directionally, we support that. Ron is really the marine expert, so I'll let him answer that question.

Capt Cartwright: I think we've made that very clear too. The question of the level of service, the scope of service, in the longer term should be a decision that's made on the basis of economic logic rather than on the fact that historically it has been provided by the coast guard.

The Chairman: Mr. Bernier.

[Translation]

Mr. Bernier (Gaspé): I would like to thank the witnesses. They have allowed me to gain greater insight into the Canadian West Coast. I must confess that I have not yet had an opportunity to go to this part of Canada.

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What other costs could the Coast Guard transfer to you? Perhaps I did not hear all of Mr. Scott's question, but does your sector have to call on the Coast Guard for icebreaking and dredging services? You are aware that we are in the process of discussing the cost of aids to navigation.

This week, industry recommended that we declare a moratorium so that we can determine the impact of this cost transfer. Are there any other foreseeable costs associated with the West Coast?

[English]

Capt Cartwright: Dredging is the only one of those two. As for ice-breaking, we've made it very clear that there is no ice on the west coast, other than in the glasses here.

Dredging is really only of concern to the Fraser River. So it's very true that we have a unique region with other demands for coast guard services that differ from elsewhere.

We have a very long coastline, of course. There are certainly hazards along the coastline, so the need for navigational aids and other elements of services provided presently by the coast guard are certainly needed. But ice and dredging is rather marginal.

But there are concerns about the incremental effects of other costs coming onto the industry. Our competition is with the U.S. ports, rather than with the rest of Canada. That's where our sensitivity lies.

[Translation]

Mr. Bernier: Are you familiar with the proposed schedule of rates? Do you know what impact this schedule has on the various industries on Canada's West Coast? Are you able to determine how this schedule of rates will impact on your main competitor, the American West Coast? Is this something that is already known? Will there be any other socioeconomic repercussions?

[English]

Capt Cartwright: Yes. In fact, there was a very recent undertaking by the Vancouver Gateway Council, rather than the whole of the Pacific coast. They conducted a competitiveness study only last year, which was presented to many politicians here in Ottawa.

The margin of competitiveness, for instance, I think would be illustrated by a container line that we've just succeeded in attracting to Vancouver, which is the Hanjin container line from Korea. The margin of gain over the U.S. on that one was around $2 a box. So that's a very small margin. In fact it is a currency factor that creates the beneficial situation rather than anything else. Our costs and taxes are much higher than those in the U.S.

[Translation]

Mr. Bernier: So, if I've understood you correctly, despite the higher rates, you have managed to remain competitive.

[English]

Capt Cartwright: Marginally, because of the currency.

[Translation]

Mr. Bernier: So this is artificial. If we were to base ourselves on absolutes, or if Canada ever became lily white again in the eyes of the world and if our exchange rates were to balance themselves out, we could very well lose this type of contract.

[English]

Capt Cartwright: Yes. We are not happily embracing extra costs. We are trying to work with them in a constructive way so as to minimize the impact. This is where we feel we can do it. Cost reduction goes hand in hand with cost recovery in our mind, and that's a fundamental part of our philosophy.

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[Translation]

Mr. Bernier: I have two brief final questions.

Could more fat be cut away or costs further reduced in the Coast Guard? Are you hoping to eliminate certain services for which the Coast Guard is still billing you?

[English]

Capt Cartwright: That's a decision we would rather come to through a refinement of our process with the local structure. The marine panel that I mentioned is actively dialoguing with the regional coast guard, and that's a very mutually beneficial dialogue.

We are together looking at projects, the introduction of new technology, the way the technology is introduced, the way services are delivered, the future configuration - all with an eye to optimizing costs and delivery.

[Translation]

Mr. Bernier: I would like to make a short comment. I know that all of the witnesses here have a good relationship with the Coast Guard. I agree with you that we must respect the individuals who sit in front of us.

However, do not let yourselves be embarrassed even if there are representatives from the Coast Guard here in this room. If necessary, we will protect you, but do not be afraid to say anything that you wish to say about the Coast Guard.

Perhaps we are being somewhat naive, but we have heard primarily from big business. Somewhere in the documents, it is said that costs will be shared by all users, including the fishermen.

What cost will be transferred to the fishermen? There is a suggestion that each boat be charged a small amount. How many boats are we talking about?

We have before us representatives from big business and industry; however, Mr. Chairman, we should go down another level and hear from all the other users.

Can someone inform me about this?

[English]

Capt Cartwright: If I could just clarify, we view the community as being two communities. We can't look in isolation at services that are delivered only to commercial shipping, because there are few of them.

Services are delivered to a community, and that includes the commercial, the fishing, and the recreational sectors. By the way, the recreational sector is substantial in B.C.; I think it is 400,000 boats. We are talking here about a cost-recovery program that is selected for the commercial element.

We have the other sectors participating and sitting in on all our work, including our fee structure and marine panel. They are fully part of the community.

We appreciate at this time that they are subject to a rather different approach, a different formula that was already in progress before the merger of the coast guard and DFO. So they are not part of this initial cost-recovery program that's designed for the commercial sector.

In the future we want to be able to dialogue from the knowledge and strength of having all community perspectives built in. It is pointless to say to the coast guard that we think these particular aids are redundant for commercial shipping. That might take them off the table in so far as a cost consideration is concerned, but it doesn't really address the longer-term question of how we should tailor navigational services for an entire community.

The Chairman: So what you're saying is that the fishermen or pleasure craft operators are being brought in by the community of their own free will; they're not being -

Capt Cartwright: Coerced.

The Chairman: - coerced. It's part of your regional approach to the matter.

Capt Cartwright: Exactly.

The Chairman: Mr. Dhaliwal.

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[Translation]

Mr. Bernier: I had not finished, Mr. Chairman. May I continue questioning the witness? This is very important.

[English]

The Chairman: We'll come back to you.

[Translation]

Mr. Bernier: But that was very interesting.

[English]

The Chairman: Mr. Dhaliwal.

Mr. Dhaliwal (Vancouver South): Thank you very much, Mr. Chairman. We're always interested in the questions Mr. Bernier has over there, so I'm sure we'll have an opportunity to get back to him.

First of all let me welcome you, Ron and Don. It's good to see you again. I know you've done a lot of work on this. I've had the opportunity to meet with you on a number of occasions on these marine fees. Let me congratulate you on the excellent work you've done.

I also look at the list of groups you represent. Obviously you have a very large group of members representing many interests, including fishing vessels, the coal industry and other exporters, shippers and everyone else. You represent a very large group with varied interests.

I know when we met before one of your major concerns was to have a regional pricing for the west coast. I know it is a very important issue for the west coast that there are regional prices for the marine services charged. Let me congratulate you on making sure you've articulated that. That's now built into the new formula.

From reading your brief, I see you're satisfied with the final outcome after the consultation process and everything else. Am I correct in assuming you're satisfied with the final outcome? As a businessman, I wouldn't be satisfied with having a tax. I'd rather not have it. But if there's going to be a tax there, you seem to be happy with what we have.

Capt Cartwright: Yes. We recognize the inevitability of cost recovery. Our emphasis is that it should be true cost recovery. We have to start somewhere. We can vacillate forever.

I don't want to be misinterpreted here. I'm not calling for a fee to be imposed any sooner than is absolutely necessary, but at the same time, we have worked towards a particular timeframe and this is the maturity we have at this point.

Mr. Dhaliwal: In your brief you basically say you're ready to go and that April 1 is a deadline you're prepared to implement. You would like to see us go ahead rather than delay it. If we delay it for another two or three months, you will only have six months to collect it as opposed to the longer period, so you'd actually be collecting a lot more over a shorter period of time, which would be a burden for your members. Is that correct?

Capt Cartwright: That's exactly right, yes. We have said that June 1, in our minds, is an absolute deadline for us. We would have to look at a pro rata situation after that.

Mr. Dhaliwal: I understand some of your other concerns in terms of greater accountability.

For any businessman, when you get a cost you cannot control it always concerns you, because it becomes a fixed cost and you really can't deal with it. If technology changes and the cost of providing the service goes down, you would like to see some adjustments at some time in the future so this isn't a permanent item on your expenditure side that can never be changed. With technology changes, if there's a reduction of costs, you would like to see that changed. Is that not correct?

Capt Cartwright: Yes, and that's why it's important that we have a regional structure.

Mr. Dhaliwal: Also, if commercializing, or as the honourable member calls it, privatizing, could be done to reduce costs, you would also like the coast guard to investigate those other options.

Capt Cartwright: Yes.

Mr. Dhaliwal: It's fairly clear to me the direction you want us to go for the west coast. I congratulate you on coming forward and working closely with the coast guard and the politicians to make them aware of some of these concerns.

I know you're in a very competitive situation with shipping, and any time you can reduce costs it's very important, particularly having ports south of us and very close.

We're very much aware of the cost and competitive factors. We'll try to work with you to see if we can continue. I very much agree with you on the accountability factor and also in terms of reducing it. We shouldn't put this fee in and walk away from it saying that's it forever. We should be revisiting those fees, as businessmen do, and ask if there are ways we can reduce them, not leave them there permanently.

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I hope members of the coast guard are here and they will take note of those concerns. I very much agree we should continue to focus on those issues.

Thank you very much for coming forward.

The Chairman: Any further questions?

Mr. Scott: In line with what Mr. Dhaliwal was saying, Mr. Cartwright.... He asked you if you were prepared to go ahead at this time based on the regional concept the coast guard has most recently adopted. I think I heard you saying if you have to go now, you are prepared to live with that regime, and you would prefer to go now rather than three months from now if the $20 million target the coast guard has said it wants to achieve this fiscal year has to be achieved in this fiscal year. But we've had others ask us for a moratorium until such time as a fee schedule can be agreed to, because there are other areas of the country where a fee schedule is not as close, from the point of view of shippers, as it is with you. Furthermore, they want to have an opportunity to have a socio-economic impact analysis done. They want to ensure the coast guard takes a look at its own operations to ensure any inefficiencies - and what we're hearing is there's a great deal of inefficiency right now - can be addressed before these fees are implemented.

I just ask you, on the heels of what Mr. Dhaliwal said.... You're prepared to go at this time, but you're also saying, in response to my earlier question, that if a one-year moratorium were agreed to, where no fees were collected for this fiscal year, and provided the regional approach were endorsed and kept as part of the entire strategy, you would feel it would be more prudent and businesslike to adopt a moratorium so the other concerns of yourself and other shippers could be addressed, concerns about cost, identifying services that aren't required, and so on. Would that be fair?

Capt Cartwright: Yes. I could hardly endorse an invitation to put more costs on an industry that's already facing a very strong competitive environment. But I would not argue for an exercise of cleaning the plate and starting all over again. That would be a sad commentary on the work and effort that have been put in. That was answered very clearly by Don earlier on.

Mr. Scott: So what you're getting at is you wouldn't want to see the regional concept abandoned now as the result of a moratorium, but given that it wouldn't be abandoned, you would prefer to see the moratorium in place.

Capt Cartwright: That's a very leading question. Yes.

Mr. Scott: I just didn't want the impression to be left with the committee, Mr. Dhaliwal, that the shippers on the west coast were embracing an immediate payment to coast guard before these other issues were addressed. These are issues the Chamber of Shipping of B.C. has brought up, and others who have presented to the committee have too. I just didn't want anybody to be left with the impression that these people had their chequebooks out and were all ready to send us money.

Mr. Dhaliwal: I don't think I or anybody else would assume they want to pay us right way and would love this tax of $20 million.

The Chairman: Mr. Rocheleau.

[Translation]

Mr. Rocheleau (Trois-Rivières): I want to broach a complicated topic, but it may prove to be very important. My question pertains to the way that you calculate rates in the West. We understand that you are not in favour of a national rate system, from coast to coast, and that you prefer to set your own rates.

Could you explain to us how you calculate your rates?

[English]

Capt Cartwright: There are two stages to our approach, on the assumption of a bottom-line requirement for a revenue target in the western region.

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The first step we have taken is to decide on an equitable split between the various sectors within commercial shipping; i.e., the cargo carriers, the cruise vessels, the domestic shipping, the ferries, and the smaller commercial craft.

We then looked at various ways of constructing a formula that would be harmonized and simple to administer. Again, administrative costs are coming on top of cost recovery. So we want to minimize that, bearing in mind that the principle is the charge to a ship rather than to cargo.

So our basic concept is a flat fee that is scaled according to the different classes of vessel and an escalator that takes into account a vessel's size through a levy on the gross registered tonnage. That builds equity into the system.

[Translation]

Mr. Rocheleau: Someone from the East told me that for the same cargo, based on gross registered tonnage, the cost in the West was $3,700, whereas if you agreed to a national rate system for the same cargo, the cost based on tonnage would be $1,400. I would like to know what you think of that: $3,700 using your method of calculation as compared to $1,400 according to what the marine transport resource person told me.

[English]

Capt Cartwright: I'm surprised, because that's not the case.

I don't have a copy of that in front of me right now, and that varies according to vessel size, but I believe a 17,000-tonne Freedom class vessel is around $900. A cruise vessel of 40,000 tonnes is $2,400 per voyage.

We've also introduced a cap of twelve voyages.

It becomes a little bit more complicated if we look at a nine-month collection period, rather than a twelve-month one. Those figures go up, and in doing so the voyage cap comes down from twelve to nine. But on the twelve-month basis the figures are certainly not the ones you've mentioned.

We are convinced. We've looked at every permutation of cargo - national, regional - and we are comfortable with what we have.

Mr. Wells (South Shore): Of the $20 million that's due to be collected this year, what would the west coast share be?

Capt Cartwright: It would be 22%. That's the ratio of the west coast costs to the national figure.

Mr. Wells: Is that $4,400,000? Is my mathematics right?

Capt Cartwright: Yes, plus administration and contingency for environmentally friendly vessels, the so-called green fees.

Mr. Wells: In your opinion, does the coast guard provide $4.4 million worth of value with the services it provides?

Capt Cartwright: I'd like to answer you by putting it in a different light.

Could they be delivered more cheaply? Yes, I think they could, and that's what we're implying with the structure we are looking at.

Mr. Wells: We agree with that, but we're not dealing with full cost recovery here. This is only a portion. My understanding is that it is $181 million if you take in ice-breaking and maybe $90 million if you take out ice-breaking. My figures are probably off by a few million dollars, but am I correct in thinking that $20 million is not meant to be full cost recovery?

Capt Cartwright: Exactly, yes.

Mr. Wells: So we're looking at stages one, two, three, four - $20 million this year and more in years to come. But for this year, if we take just the $4.4 million for this year, would you be getting $4.4 million worth of services from the coast guard?

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Capt Cartwright: Again, that's a very leading question. But I would say -

Mr. Wells: Yes or no?

Mr. Downing: It's not a yes-or-no question.

Capt Cartwright: Exactly. It's not a yes-or-no question.

I think we have to agree there is a value in the services the coast guard delivers, otherwise we wouldn't be addressing this in this way. We feel that value we are getting is not really quantifiable at this point, but we accept that something like $21 million is spent on the west coast on navigational aids, and therefore the proportion we're being asked to pay must represent some value within that range, unless the inefficiency is so gross we couldn't contemplate it.

I guess that's our strategy: to say here we have a first step. The first year is understood to be a period of review, generally to gain experience and to look to the future on how we go forward. For that interim period we have a structure. We do intend to look more closely than we have been doing even at this point at how services are delivered, the value of the services, and whether those services can be streamlined or delivered in a different manner.

Mr. Downing: I'd like to add to that.

Because of the rather diverse nature of the users, the question is not easily answered. People familiar with the Vancouver area will know Canada's largest coal terminal, south of the city, an independent, stand-alone, modern coal terminal at Roberts Bank. Some of the modern colliers that come in are the largest vessels that come into Canada, up to 200,000 dead-weight tonners, and they barely touch the Canadian transportation infrastructure in coming across the Pacific. They come into Roberts Bank, they load up in two days, and then they leave. Compare that with the cruise vessels that go up and down the Inside Passage, the full extent of the coast. The value of a coast guard navigational aid would vary between those two users.

At the moment all we have to work with in trying to determine value is what it costs the coast guard; and there is no marketplace where the service provider's costs are the best indicator of value. We can't sell coal that way. It's the marketplace that tells us the value of our product.

So the question becomes how, on a go-forward basis, can we best work to determine the value of coast guard services to the users? That's one reason why you establish a full community of users at the outset: five years from now we'll know much better what the value of coast guard services is to each group of users, including the fishermen and recreational users, even if they're not paying a fee now.

The Chairman: Mr. Bernier.

[Translation]

Mr. Bernier: I'm surprised to learn that a sword of Damocles is hanging over the head of the fishermen and the recreational boaters.

It seems to me that you are quite close to the Coast Guard. I have the impression that you are part of the steering committee, which is advocating regional administration. I am also in favour of decentralisation in Canada.

If I am not mistaken, the Coast Guard indicated that the costs associated with aids to navigation, icebreaking and dredging were about $342 million and that it intended to recover about a third of this amount from big business.

Does that mean that you represent about one third of the traffic?

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Should I take that to mean that the second third is composed of recreational boaters and that the fishermen form the final third? Should I conclude - because you are in favour of the principle of user-pay and decentralisation - that you expect, over the next five years, that the Coast Guard will be billing them as they are going to be billing you? Do you think that this is what lies ahead?

[English]

Mr. Downing: I'll offer an answer.

Capt Cartwright: Go ahead.

Mr. Downing: It's our impression that the coast guard worked backward in establishing the fee. They started with targets of $20 million, $40 million, $40 million and $60 million per year for the first four years and then worked backward in terms of how much they spend on navigational aids and ice-breaking, how much is going to be allocated to commercial fishing and what percentage of those other allocations these other numbers represent.

In our opinion it's not the appropriate way to develop the targets, but our objective on the west coast is not to develop fees for other sectors in the coming years. It's really to develop in more detail what the appropriate service level is for the commercial sector and what the value of those services should be so that you could develop a fee based on what's required by the commercial sector and what the value of the service is.

You need all the players at the table to determine who's using the services. Whether the fishermen or recreational users pay a fee or what they pay would be for other people to decide at a later time. All we're concerned about is that the commercial sector pays only for the things that really support commerce and pays only for the value received.

Do you want to add to that?

Capt Cartwright: Yes. As far as the recreational boaters are concerned they are aware that there will be a fee levied on them for coast guard services. Again, there is some expression from them that the rationale for their participation in the community is that they see the community might ultimately play a role in dialogue with the coast guard and with the recreational boaters on how the cost-recovery program might be implemented for the recreational sector.

There are overlaps. These sectors' lines are grey in some respects. There are craft that are both recreational and commercial, so there is reason just from the point of view of equity for the different sectors to be close to each other so that we can harmonize.

[Translation]

Mr. Bernier: You say that you have the support of the recreational and commercial sectors, namely the fishermen and the recreational boaters. They are supporting the work that you are doing. Are they sitting on the task forces of the Marine Advisory Board to determine the level of services used by big business in comparison to those used by fishermen and recreational boaters? Are they currently participating in this process?

[English]

Capt Cartwright: Absolutely. On the west coast they participate in all the committees I've mentioned in my paper. Furthermore there is at least one representative from the fishing industry who participates in the MAB. Recreational boaters also participate in MAB.

The Chairman: This is your last question.

Mr. Bernier: So it will be long.

The Chairman: It'll be short.

[Translation]

Mr. Bernier: You said that you preferred regional billing because you were not interested in subsidizing people living in the East or in central Canada. Looking at things from this perspective, who is currently subsidizing recreational boaters and fishermen? You are and we are. If I follow your logic, you will ask that they too be billed.

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If this is the case, are you not afraid that at one point it will cost less for a fisherman to navigate on the Gaspé Coast because he requires fewer navigational aids, our coastline being different from yours? Indeed, five years from now you may find yourself being blamed for the very thing that you object to in others today, explaining the need for an impact study as requested by both industry and ourselves.

[English]

The Chairman: That's good.

Capt Cartwright: The fishing industry, certainly on the west coast, is subject to cost recovery under a different hat, and that's the access fees for the fishing. They're very heavily recovered at this point in time; I believe it is $50 million from the industry. I'm not sure how that's distributed on a regional basis.

Mr. Wells: Most of it is on the east coast.

Capt Cartwright: Oh. It is?

Mr. Wells: Yes.

Capt Cartwright: We are well aware, and we're not out as one sector to go against another. That's the whole reason for the community. We have to be aware of each other.

As far as the recreational concern goes, there is a program under way. There will be operator licence fees. Discussions are going on between the coast guard and the provincial governments, and we're aware of those too.

In the end, the level of activity or involvement of the western community I'm now speaking for will depend on how events will unfold. But we certainly have the forum for discussion among us so that we are aware as a community of what aids are out there and what is required. So we can build our strategy for a future that will be of benefit for all of us. It might seem a little bit utopian, but that's the way we're going.

The Chairman: Thank you very much. I thank both of you for coming and giving us the western perspective. I hope that you enjoyed your evening in Ottawa last night.

As you see, our committee is just full of questions. That's why we couldn't hear you last night: because we just can't stop asking our witnesses questions. We're trying to do a good job.

Capt Cartwright: Thank you for the opportunity.

Mr. Bernier: Maybe we could reinvite them.

The Chairman: We'll reinvite everybody. Everybody wants to come back.

A voice: Mr. Wells, you are right. The east coast is subsidizing the fees of west coast fishermen. Is that what you said?

Mr. Wells: We pay more money. It is actually $43 million, not $50 million. More is paid on the east coast than on the west coast.

Mr. Scott: Simply because there are many more boats.

Mr. Wells: I'm not saying anything except that those are the numbers.

Mr. Bernier: Do you see a new way to pay for the fishing and for the utilization of the navigation aids? So there are two costs hidden behind the fees in the fisheries. Maybe we will have to listen to something else on that.

Mr. Wells: Licence fees aren't being paid in your area; they're being paid in my area. Don't worry about it. I'm subsidizing you - again.

Mr. Bernier: But I agree on that. Why will you have to...?

The Chairman: We'll invite the witnesses from the department to come forward.

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From the Department of Fisheries and Oceans we have Mike Turner, the acting commissioner of the Canadian Coast Guard. I really didn't think we wanted to get into the coast guard again in this particular session, but here Mr. Turner is, and I imagine he'll get some questions.

Maybe you can introduce your colleagues, Mr. Turner, and we'll begin with your presentations.

Mr. Mike Turner (Acting Assistant Deputy Minister, Marine Services, and Acting Commissioner, Canadian Coast Guard, Department of Fisheries and Oceans): If I may, sir, I'll let them introduce themselves and very briefly give a quick sentence or two about their principal functions in the department. That way the committee will have an appreciation of who is at the table with me.

Of course I'm here to speak to any of the issues or concerns about the coast guard services within the Department of Fisheries and Oceans. I understand the principal interest is our services in eastern Canada.

Mr. David Bevan (Director General, Conservation and Protection Directorate, Department of Fisheries and Oceans): I'm the acting assistant deputy minister of fisheries management.

[Translation]

Mr. Jacque Robichaud (Director General, Resource Management Directorate, Department of Fisheries and Oceans): My name is Jacque Robichaud and I am the Director General of Resource Management.

Mr. Jean-Eudes Haché (Senior Advisor, Resource Management Directorate, Department of Fisheries and Oceans): My name is Jean-Eudes Haché and I am Senior Advisor for Resource Management. I am here specifically to answer questions about seal hunting, if indeed there are any questions.

[English]

The Chairman: I'm just going to say at this time that even though the emphasis this morning will be on the Atlantic, we want to have a special day on the Pacific at a later date, as soon as we come back after Easter. We have some special problems in the Pacific. We would like to spend a few hours in that regard.

Mr. Turner, are you prepared to begin?

Mr. Turner: I'm sorry, I have no opening statement to offer. I understand the committee is interested in a general information exchange, questions and answers on a number of topics involving eastern Canada, so we're really here to respond to any issues or questions you may raise about the coast guard services. However, I believe David has some comments to make on the fisheries side.

Mr. Bevan: We have some very brief comments. I just wanted to mention that over the last several years DFO has found itself committed to a new standard for conservation. We've had to take a precautionary approach to conservation and manage the fisheries from a point of view in which conservation must come first. This means making changes to ensure the commercial viability of the fishing industry. There's been a consensus that we need a smaller industry, more self-reliant, more viable, one which provides good incomes to small and large fishing enterprises and ensures we can conserve the resource for future generations.

Last fall the Minister of Fisheries and Oceans outlined six principles for the fisheries of the future: conservation comes first; industry capacity must be balanced with resource capacity; the fishery must be prosecuted by professionals; access to the resource must be through multi-licence enterprises, although we recognize the reality of certain specialized fleets; government and industry must operate in partnership, with legally binding contracts signed by both parties, if possible; and aboriginal rights must be respected.

Work continues on a number of fronts to bring about this vision of the fishery of the future. We are continuing our efforts to refocus DFO's core mandate to be consistent with the merger of the old Department of Fisheries and the Canadian Coast Guard.

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We expect to see in the future the passage of the new Fisheries Act and the Canada Oceans Act, both of which will provide the legislative basis for the fishery of the future. The department is presently holding further information sessions to explain the Fisheries Act and what it will do to modernize DFO's fisheries management authorities, partnering, sanction tribunals, order powers, etc.

The department is now pursuing a more integrated approach to the development and production of fisheries management plans, focusing on conservation objectives as our primary priority and involving input from all clients and provinces. The integrated fish management plans will improve program delivery through strength in management, communications and accountability.

We continue to move forward on a new Atlantic licensing policy while bearing in mind the views of industry and provinces. The policy review will strengthen conservation, reduce capacity and provide prosperity and security for fishermen and communities. We are pursuing a new relationship with the fishing industry based on partnership.

Thank you, Mr. Chairman.

The Chairman: Thank you.

Mr. Robichaud.

Mr. Robichaud: Mr. Bevan covered it with the opening statement.

The Chairman: Okay. Are there any other statements from the witnesses before we start questioning?

[Translation]

Mr. Bernier: Does Mr. Jean-Eudes Haché have something to say? He was distracted by our clerk.

How much time do we have for the four witnesses this morning?

[English]

The Chairman: We have an hour and a half.

[Translation]

Mr. Bernier: Mr. Turner, you are the Assistant Deputy Minister and the Acting Commissioner of the Coast Guard. Given the discussion that I have just had with the witnesses from the West Coast, could you tell me whether the Coast Guard intends to transfer part of the costs associated with navigational aids, icebreaking and dredging to recreational boaters and fishermen over the next five years?

Mr. Turner: No, sir, that is not the case.

[English]

The situation we have here is that each sector we support will be and is being asked to provide partial support for the department's bottom line, if I can put it that way, but the mechanisms are different. Therefore, in the case of the commercial marine industries sector, we have been directed to move to this marine services fee of which you have been hearing of late.

In the case of fishers, the department has a significantly increased licence fee and a new licensing policy that ties the fee to earnings the fishermen have made, as you are already aware.

In the case of pleasure boaters, we are discussing with pleasure boaters across the country and with the recreational boating industry, which is a multi-billion dollar industry in this country, the imposition of a new licence fee system for all recreational boats.

In each case, the sector, if I can use that phrase, will be contributing towards the overall costs of the department, but not necessarily by the same mechanisms. The mechanisms are really tailored to the situation, in other words.

[Translation]

Mr. Bernier: Following along the same train of thought, could you confirm whether or not recreational boaters and commercial fishermen are currently active in each of the committees that must establish the portion used by commercial navigators?

[English]

Mr. Turner: Yes, sir, that is the case. We encourage active participation by each of our client groups. We have a number of different consultative mechanisms.

I must really nod and pay tribute to the west coast group we've just heard from, who have been actively working to bring together the overall marine community to deal with a number of coast guard service issues as one united group. This we certainly support and encourage. We're prepared to facilitate this in any way we can.

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In other parts of the country, we have been encouraging that kind of approach as well in trying to get the communities to come together for consultations with us on a number of topics. We have a long-standing mechanism called the Canadian Marine Advisory Council, which we have used effectively for years. Of course the structure of the marine advisory boards will change from time to time. We are encouraging, within each region, the establishment of a similar board or committee to provide direct input from all users - yes, recreational boaters and fishers - to our services.

[Translation]

Mr. Bernier: You have indicated that the Coast Guard has no plans to charge the fishermen in order to cover the cost of navigational aids. According to the mandate that you were given by the Department of Finance, you must rationalize your expenditures and recover this money from the owners of large vessels. This is your mandate; however, you do not have a crystal ball. You cannot tell me what things will be like five years from now. Have I understood you correctly?

[English]

Mr. Turner: That's correct, sir. I could not give you assurances as to what government policy will be in five years. It would be inappropriate for me to even attempt to do so.

From the point of view of the fishers, as I said, the department is already recovering substantially toward the cost of the department services overall without distinguishing whether that's a licensing service, monitoring surveillance service, or aid-to-navigation service. There is a substantial fee now in place, as you're aware.

[Translation]

Mr. Bernier: Crab fishermen are going to tell us that since they fish during a one-month period only they should not have to contribute, to the same extent, to the cost of navigational aids.

My question is for Mr. Bevan or Mr. Robichaud. My question pertains to the proposed rationalization plan or the bill that we had before the holidays.

I believe that there were some fishery management partnership agreements struck, that a few committees are currently involved in some studies and that one committee in particular is closer to the finish line than the others. Are the partnership agreements between the fishermen and the government about to be signed?

Mr. Robichaud: At the round table in Montreal, which was held this time last year, the department proposed a partnership approach which, essentially, involved sharing in decision making, results, benefits and costs.

Some 13 pilot projects were identified to begin this co-management approach. Current legislation does not allow partnership agreements binding both parties. We have to instead establish one-year co-management agreements. These are the restrictions that we have to live with at the present time.

There is a series of agreements on 13 projects, including such things as the beluga of the Western Arctic, the crab in zones 12 and 19 or the sea urchins in Grand Manan. Discussions are now underway about deep-sea prawns.

Will the agreements be signed shortly? We hope so. Moreover, one of the projects pertaining to zone 12 was presented to the zone 12 crab advisory committee last Thursday or Friday, where it was discussed. We must bear in mind a co-management agreement or a partnership agreement is plausible only if the department approves the integrated management plan.

Mr. Bernier: The co-management agreement is therefore subject to the departmental management plan. I also believe that industry imposed certain conditions on the management plan, namely that in order to agree to a certain level of fishing, it required certain guarantees.

Mr. Robichaud: The current users are going to sit down with the department and try to define the parameters.

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As for the management plan process, it is essential that all of the stakeholders - provinces, producers, flotillas and other interests - have an opportunity to view the various proposals, whether they deal with a co-management agreement between participants or any other suggestion about the use of the resource. Let's suppose that somebody had x percentage of the resource and wanted to enter into a co-management agreement before he was entitled to enter into a partnership agreement. It is only at this point that a co-management agreement with such a group can be approved.

Mr. Bernier: A one-year co-management agreement is different from a partnership agreement. You referred to cost-benefit exchanges between the two parties. With the co-management agreement, are you going to go so far as to ask industry to pay for a portion of the cost this year, as would be provided for in the case of a partnership agreement?

No benefit is carved in stone. Why would it be in their interest to sign? Will they receive part of the bill this year without getting any of the benefits that they hope to receive?

Mr. Robichaud: In the case of a partnership agreement, the idea is to have an agreement that spans a few years in order to achieve some stability over a certain length of time. A co-management agreement is valid for one year.

As for the benefits, in certain sectors of the industry, some aspects change from day to day. For instance, people set up to fish a certain species find themselves in a situation where they cannot harvest this fish. They would like to obtain certain other elements, such as things pertaining to research, additional cruises, etc.

Industry is prepared to cover the cost of these types of things. There is for example dockside monitoring. Obviously, the department will be keeping certain powers. It will never delegate its resource conservation powers. However, it is also hoping that partners will co-operate to conserve the resource and meet the objectives.

[English]

The Chairman: Mr. Scott.

Mr. Scott: Thank you, Mr. Chairman. It's unfortunate that we only have an hour and a half, because I know that we all have many questions and we could probably spend a couple of days here. I'll try to keep this round as brief as possible.

I have a number of questions. The first one is with respect to your opening comments,Mr. Turner, in which you made some connection between the conservation of the resource, sustainable harvest, and fleet size. I think we all agreed that this is the case.

When TAGS was announced, part of the $1.9 billion envelope - if my memory serves me right, it's $300 million - was set aside for a vessel buy-back, a licence buy-back, or a combination thereof, I suppose. It was for licences only. There was an objective of reducing the fleet capacity in Atlantic Canada by 50%.

The latest information I had was that there were 252 licences retired last fall, I believe, at a cost of $30 million. Then we also heard evidence last fall from the people at Human Resources that TAGS was running significantly over budget on the income support side and money was being taken away from the buy-back program.

Can you give us an update as to what the buy-back program has achieved in terms of the number of licences retired, the capacity reduction achieved to date, and the money expended?

Mr. Turner: Just for the record, sir, Mr. Bevan made the comments. He will respond to them.

Mr. Scott: I'm sorry.

Mr. Bevan: Unfortunately, we don't have that information with us. We will undertake to forward it to the committee as soon as possible. The individuals responsible for the TAGS program aren't with us today, but we can certainly respond to that question in writing.

Mr. Scott: Okay. My next question has to do.... You talked about aboriginal rights. Having spent a considerable amount of time in Atlantic Canada over the last few months, there was a great deal of concern expressed to me by people there about commercial allocations of the resource being made now.

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What is the guideline you are working towards that defines for you what aboriginal rights are, and how are you proceeding now with allocations? I'm hearing concerns that new allocations are exclusionary, that they are basically directed towards the aboriginal community alone and not being given to others. Can you give us some background on what you're doing there?

Mr. Bevan: Our primary guideline there, of course, is the Sparrow decision and our obligation to work with aboriginal communities in establishing the requirements for food, social, and ceremonial purposes. We've been doing that for the last number of years in establishing agreements with the individual bands that would give them an allocation of fish of various types for those purposes. We work out the fishing plan with them accordingly, in order to ensure that conservation objectives are met. That's the primary guideline we've been following.

Mr. Scott: I'm hearing from people, particularly in Nova Scotia, and also in Prince Edward Island, that commercial allocations are being made. The Sparrow case is not silent on this. Sparrow recognizes the aboriginal right to harvest fish for food and ceremonial purposes, as you pointed out. A concern is being expressed to me by people in that region that the department is going significantly beyond this in commercial allocations. Can you give us an idea of the veracity of those comments?

Mr. Robichaud: In certain fisheries, such as crab in Cape Breton, there has been allocation to communautés of licences, on the agreement of the user within the communauté.

Last summer, as there was temporary allocation in crab, for the season only, some allocations were given to communautés around Gaspé and in the New Brunswick area for the season only.

Mr. Scott: For commercial purposes?

Mr. Robichaud: For commercial benefit, as for the other users who were involved. Those are the ones that come to mind.

Mr. Scott: Another question I have for you is on licensing fees. I've talked to a number of fishermen, particularly in Nova Scotia and New Brunswick, but also in Prince Edward Island and, to a much lesser extent, in Newfoundland, because for the most part the fishery in Newfoundland of course is not very robust at present.

A real concern was expressed to me. For example, I talked to a scallop fisherman in Southwest Nova who said that, in the fleet of boats he was running, his licence fees were going to end up eating a significant part of his net profit at the end of the year.

A lot of concern was expressed that the licensing fees were applied in the wrong way; in other words, they were applied on the anticipated gross revenues of a particular sector, whether it was a boat or an industry or whatever, but were not considered to be applied to net. Have you any comments on that?

Mr. Robichaud: The processes of the fees that were announced prior to Christmas follow the series of evaluation studies in consultation. There were, as well, some 30 individual presentations to review the fees. There were adjustments in 22 areas. There are still some concerns about exactly what was presented, gross versus net.

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What the minister undertook, and it was part of the announcement as well, is to set up a committee of DFO and representatives of the fishing community to look at how the fees should be formulated and so on for next year. However, this year they would be as presented. This committee, I hear, should be set up some time in April.

Mr. Scott: I have a couple of other questions. These are questions I've had in my mind for some time.

How many employees does DFO have in Atlantic Canada? More specifically, how many employees would you have in Nova Scotia?

Mr. Bevan: In which -

Mr. Scott: Field and administrative.

Mr. Bevan: For fish management or in general?

Mr. Scott: For your total operations; in general.

Mr. Bevan: So that includes science, coast guard, etc.?

Mr. Scott: No, not coast guard. I'm talking about DFO without the coast guard in there.

Mr. Bevan: DFO without coast guard and without science, but including the stock management side of it.

Mr. Scott: Yes.

Mr. Bevan: It would be about 1,300, in 1995-96 figures. They're subject to quite a change, as you can appreciate, given the program review targets.

We could undertake to give you a more specific and accurate number.

Mr. Scott: I would really appreciate that - and a breakdown between administrative and field, if you have such designations. I'm assuming you do.

Mr. Bevan: You'd be looking, then, at who's in regional offices versus who's in area offices.

Mr. Scott: Yes.

Mr. Bevan: I have one other question for now. I have a whole bunch, but....

Mr. Scott: There's a great deal of concern in Ontario right now about the sea lamprey control program. I don't know if you're prepared to speak to that or not today, but the concern is that DFO is reducing its financial commitments to the program. There's some concern about international agreements we have with the United States and about what the impact of this will be on the fishery, because sea lamprey, I understand, are a predator or a real nuisance in terms of the fish stocks in the Great Lakes. Can you talk about this?

Mr. Bevan: Again, that's unfortunately something that's the responsibility of the science group. We don't have someone who's familiar with that information, but we can indeed get that information to you as well.

Mr. Scott: Okay. I will follow up on my question on the number of employees in Atlantic Canada. How many employees would DFO have in Ottawa?

Mr. Bevan: Again, I presume that's the old DFO you're -

Mr. Scott: The old DFO, without coast guard.

Mr. Bevan: That's again in a fairly dramatic state of change. Large reductions are taking place. If we look at 1995-96, it's about 500. But again, that's subject to some fairly dramatic reductions over the course of the next two years.

The Chairman: Mrs. Payne.

Mrs. Payne (St. John's West): I know you said you didn't have the information on the licence buy-backs right now. I want to ask just a general question. I know the second round has taken place and you're now into the evaluations there. Do you know, at this point, or do you have some general idea, whether there will be a third round?

Mr. Robichaud: Not to my knowledge. I'm not aware of a third round.

Mrs. Payne: Is it your feeling, then, that in the second round you've received enough interest to accomplish the goals you've set out?

Mr. Robichaud: It's being evaluated at this time, so we have no data at this time, or at least I don't, and the representative for that sector is not present. It's attached to TAGS in the program.

Mrs. Payne: The Sentinel fishing program - is that a subject someone can talk to me on?

Mr. Bevan: Science.

Mr. Robichaud: Science.

Mrs. Payne: The seal fishery?

Mr. Bevan: We have someone here.

Mrs. Payne: Can you just give me some briefing as to the status of the seal fishery and what will be happening this current year?

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Mr. Haché: The sealing activities have been going on now for quite a number of weeks, both off Newfoundland and in the Gulf of St. Lawrence.

I should say that so far the conditions are quite good, and therefore the number of seals that have been harvested so far is substantially higher than at the same time last year. I think it's in the order of 35,000 seals or perhaps a bit higher than that, compared to perhaps 8,000 or 9,000 at this time last year. The numbers are, as I say, increasing both off Newfoundland and in the Gulf of St. Lawrence.

From a marketing point of view, I understand from representatives of the industry that the conditions are also excellent and that markets for all seal products - pelts, meat, oil, fat, etc. - are quite good.

Mrs. Payne: Thank you very much. That was going to be my question also, and you answered it. The market is there for the total animal.

As to the crab fishery, has the plan for the upcoming year been finalized for that as well?

Mr. Robichaud: No. We are in the process of consultation. The gulf consultations were held last Thursday and Friday. There are various other consultations on the regional zone. There are discussions in Newfoundland. The various plans should be finalized within the next few weeks, because usually, depending on the area, the fishery starts around the third week of April.

Mrs. Payne: Thank you, Mr. Chairman.

The Chairman: Just to follow up, would you anticipate a crab draw this year - an extra draw like there was last year?

Mr. Robichaud: For temporary licences like last year?

The Chairman: Yes.

Mr. Robichaud: A decision has not been taken on that, Mr. Chairman.

The Chairman: Does the science support an allocation of...?

Mr. Robichaud: The science at this time indicates a drop of 20% in the mid-shore crab zone, and the scientific advice for the inshore zone is being finalized and will be part of the consultation in the week to come. But there's a drop in the mid-shore zone of 20% and further decline anticipated.

Mrs. Payne: Mr. Chairman, could I ask just one more brief question, please? I want to ask about the capelin fishery.

Is there any decision at this point as to whether or not there will be a capelin fishery on the east coast?

Mr. Robichaud: As you know, the capelin was limited by the count, which automatically means the size of the capelin. Because the fish were rather small last year in the count, there was not per se a fishery. Because the count is also a conservation measure that allows so many to get to the right size, this approach will be used again this year. An early indication was that we were waiting for a final.... Capelin science advice is always a bit later, and we are waiting for that to adjust.

Mrs. Payne: Do we have any knowledge of the markets at this point? Are they good?

Mr. Robichaud: The industry wanted an early indication about the possibility of a fishery way prior to Christmas, exactly because there was good potential for market.

Mrs. Payne: Thank you, Mr. Chair.

The Chairman: Mr. Rocheleau for ten minutes.

[Translation]

Mr. Rocheleau: I have a question for the deputy minister about aids to navigation and icebreakers. Do you have any data that would give us a clear understanding about the Coast Guard's equipment on a region-by-region basis? I would like some statistics about lighthouses, buoys and the number of employees per region. Do you have such data readily available now?

[English]

Mr. Turner: Yes, sir, I can tell you how many employees there are in each coast guard region. We can provide you with data on the number of aids to navigation in each region, the number of vessels in each region and so on. In fact, as I recall, sir, several months ago we provided you with a package that I believe was entitled ``Service Standards'', which outlines all of the information concerned, including a breakdown by region for each program concerning the assets in each area.

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If you are interested in the overall totals of how many people are currently in the coast guard in each region, I can provide that right now. In this coming year it will be roughly 700 in Newfoundland, just over 1,000 in the Maritimes, almost 900 in the Laurentian region, about 800 in the central and Arctic regions, which includes the Great Lakes as well as the Arctic, and just over 800 in the western or Pacific region.

If there is something more specific, sir, with regard to the number of aids to navigation or a type of aid to navigation, we can provide that.

[Translation]

Mr. Rocheleau: Yes, yes.

[English]

Mr. Turner: Are you looking for a breakdown by region of what types of buoys there are?

[Translation]

Mr. Rocheleau: Yes, per region and please include the rates that the Coast Guard wants to charge for these three regions, the Atlantic, the Centre, namely, Quebec and Ontario, and the Pacific.

[English]

Mr. Turner: Are you looking for the amount of money spent in each of those principal areas in the east in navigation activities that is in turn leading to the particular tariff level?

[Translation]

Mr. Rocheleau: The fees, yes, that's right.

[English]

Mr. Turner: That's readily available, sir. Some years ago in each region we went through an accounting exercise to establish who the principal users of each and every aid to navigation are and we have allocated the costs of the program in accordance with the usage made of the aids to navigation, plus of course the costs of ice-breaking and other functions or services we provide.

That is the basis for the main cost allocation to the commercial shipping sector in turn in each region, after which we have deleted on ``a policy basis'', if I may, certain functions and activities that are felt by the department and ministers to be in the public interest for public policy purposes, as opposed to support for commercial activities.

That is how the overall figure of $183 million was established. It represents the costs of services attributable to and used by the commercial shipping sector across Canada and which would be a reasonable amount of money to allocate to or attribute to the commercial function. That's how it was established. I can certainly provide that breakdown by region if you don't already have that in other documents. We will dig it out and provide it.

The Chairman: Thank you.

[Translation]

Mr. Rocheleau: I have a second question with respect to icebreakers.

Do you have any data about the number of icebreakers per region in Canada?

[English]

Mr. Turner: Yes. Of course we have data on the number of ice-breakers in each region. We can also tell you the number of hours they spent on virtually every ship they escorted in virtually every area of the gulf in eastern Canada and how many minutes or hours were spent in each kind of activity. We have a tracking system, which we refer to as IODIS, the ice information operational data system. That information is in fact the basis of the discussions currently under way with the user-led committee we are working with to consider the best methodology for recovery of a portion of our ice-breaking costs.

I should point out, sir, that there is a somewhat widely held misconception as to how many ice-breakers we have. A gentleman recently approached us suggesting that we could reduce our fleet of 22 ice-breakers by 10, which rather surprised us, because we weren't aware we had 22 ice-breakers. We have some confusion on that point from time to time because there are a number of major ships that are built as ice-breakers and that's what we usually think of as our ice-breakers, our primary units. There is a second group of ships that are multi-mission design, which are used for ice-breaking in the wintertime, for buoy work about eight months of the year and for search and rescue a good part of the time. They do a number of different jobs. There's a third group of ships that aren't really capable of being used for ice-breaking, but they have some ice-strengthening for their own protection when they're in waters that have some ice in early or late season.

The principal ice-breakers we have fall into what we call our type 1200 or 1300 category. The multi-mission ships, which are capable of being used for ice-breaking in support of shipping, are our type 1100s and type 1050s. I'll provide you with a list by region of those vessels and their names.

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Of course, that is currently under review as part of the fleet mix study we have undertaken as part of our integration of the coast guard and DFO fleets under the coast guard banner, which will involve a significant reduction in the overall number of ships.

In the ice-breaking context, we're also working with the committee in eastern Canada to determine how that might best be done without impacting on the levels of service that are now provided to owners.

[Translation]

Mr. Rocheleau: I would simply like to point out to you that the individual who is advocating the elimination of 10 icebreakers is an old sailor, today the director general of the Port of Trois-Rivières, who no doubt knows what he's talking about. He also must be able to distinguish between a buoy placer and an icebreaker. I understand that there are slight differences, but it must not be so complicated as all that to agree about what constitutes an icebreaker and what does not.

You went from Transport to Fisheries and Oceans. Do you think that it makes sense that, in certain urgent circumstances, the Coast Guard's big icebreakers have to come from Halifax to break up the ice jams in the St. Lawrence River, when I was told that, historically, they used to come from Sept-Îles? Do you want to maintain the status quo on that?

[English]

Mr. Turner: Maintaining the status quo is definitely not the order of the day, sir. We are undergoing very rapid change in every area of our operations.

Specifically in regard to ice-breaking in the gulf, for many years we have operated the ice-breaking operations there in support of all commercial shipping coming through Canadian waters as one zone, stretching from 66 west right through Cabot Strait, and encompassing all of the waters of the gulf.

We have assigned and home-ported certain vessels in certain areas, but they are mobile resources. For example, to raise your point about Halifax, people often ask about ice-breakers being based in Halifax, because there isn't any ice being broken there. You're absolutely right, but the ice-breakers are not deployed in Halifax for their operation. They move into the gulf during the wintertime. When the going gets tough up the river, they sometimes move up into the river. Then in the summertime they're used in the Arctic. So the assets are mobile.

One could argue equally, for example, that the ice-breakers in Halifax should be based up in Quebec City, because that would be closer to where the ice is in the river. That is true, but it would not be closer to where the ice work is in the Gulf of St. Lawrence, which is their major work area in the winter, and it would not be closer to where the ice-breaking work is in the Arctic in the summertime. Conversely, it would be slightly more efficient, one could argue, to move the ice-breakers in Quebec City down to St. John's, and put them in Newfoundland -

Mrs. Payne: Absolutely.

Mr. Turner: - because they'd be slightly closer to the ice in the Arctic in the summertime.

The fact is that we have the asset mix stationed in different spots so as to be available for use in one overall, integrated system. In fact, one of the things we are currently examining in the Gulf ofSt. Lawrence is how we may improve the efficiency of our ice-breaker operations and the efficiency of coordination among the different sectors, because they are considered to be mobile assets.

If I could give a small example of that, almost every spring we move a major ice-breaker from Quebec City right up through the river into the seaway system and into the Great Lakes and use it in the Detroit-St. Clair River as part of the opening of the shipping and navigation, to help the ice break-up at that time of year. Every winter, if the going gets rough in March in the lower gulf, around the Cabot Strait - and I must say that we've had an extremely easy year this time - we usually move a ship down from the Quebec or the Matane area to assist in that area. Conversely, at certain times of the winter we move ships up from the gulf into the river to assist. These are mobile assets and we manage them as such to get the maximum productivity out of them.

Mr. Scott: My questions this time are going to be directed toward the seal hunt.

Mr. Haché, my understanding is that the Department of Fisheries and Oceans, the Government of Canada, currently is subsidizing, and for some time has subsidized, the sealing industry. Can you give us an idea of the extent to which that has been going on, where the subsidies go and what they're used for?

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Mr. Haché: The subsidy that currently exists for the sealing industry is 20¢ a pound for the meat of the animal. That was instituted last year, the current fiscal year, which ends at the end of this week. It is focused specifically on that part of the animal because the markets for the pelt, traditionally the main purpose of the seal harvest, are generally very good.

On the other hand, markets for the meat are just in the development process so the 20¢ a pound subsidy is given to help two things. First, it is to encourage the sealers to bring the whole animal ashore and to use the whole animal as opposed to just the pelt. Second, the subsidy is to help them develop new products and new markets for that part of the animal.

Mr. Scott: Is the subsidy going directly to the people who are actually harvesting the seals?

Mr. Haché: That is correct.

Mr. Scott: It's not going to anybody else. It's not going to associations or.... It's going to the people who are actually bringing the carcass back.

Mr. Haché: It is paid to the sealers. Every sealer knows there is a 20¢ a pound subsidy. It goes to the sealer through the buyer of the meat because the meat has to be brought ashore through a plant, through a buyer. The money is upon receipt and upon auditing of receipts is paid through that channel.

Mr. Scott: Okay. Is there any other subsidy provided in relation to sealing other than the one you have just told me about?

Mr. Haché: There isn't from the federal government. I say that because some provinces have added a small subsidy.

Mr. Scott: Okay. But with respect to the federal government that is the only subsidy.

Maybe you can help me with this. We've got information that in the developing markets, as you put it, for the seal meat.... And I understand there is real potential there. As a matter of fact, maybe there is more than potential. I'm informed that there have been a number of inquiries from several companies in the far east. My information is that about a dozen or more have wanted to purchase high quality processed seal meat for sale in restaurants and that there's been a problem obtaining inspection certificates to export those carcasses from Canada. Can you give us an idea of what the background is on that? Is there a problem getting export permits for the seal meat right now?

Mr. Haché: There is no problem in obtaining the appropriate permits as far as we are concerned. In fact, I do know, sir, that as you suggest there are exports taking place now to countries like Japan and China, for instance. Perhaps I can mention that last week a delegation from the Magdalen Islands came back from Japan with some rather encouraging prospects there.

What may be referred to here are some specific questions of process. I'm guessing here. I apologize because I don't have the full background for the question you are raising. South Korea has some specific standards or questions with regard to inspection. This may be in relation to the question raised. I don't know.

Mr. Scott: My information is that the people who are looking to import this are looking for an inspection certificate that says a Canadian authority has approved this meat for sale and gives some sort of stamp of approval or inspection showing that it meets certain criteria. But the problem, as I understand it, is that it's DFO that's actually issuing the inspection certificates, and DFO considers seals to be a fish. So the inspection certificate you're issuing is actually a fish inspection certification. But what is required on the other side is a meat inspection certification, because this is actually a mammal, not a fish. Does that make more sense?

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Mr. Haché: Well, maybe that is the case. Not being an inspection expert, I certainly will endeavour to find more detailed information, but I strongly suspect that you are correct, sir, in your point. That may relate to the point I was making earlier about certain countries requiring specific types of inspection certificates - i.e., ones related to meat as opposed to fish. This may be part of the issue here.

Mr. Scott: I think you would agree with this, from any reasonable point of view. Say you were from a country in the Far East. You had a company there and were looking at buying seal meat for importing to use for human consumption. You would want an inspection certificate related to what the seal actually was, which is a mammal, not a fish.

It seems to me that, according to a fair bit of input we've had, there are opportunities going by the board right now in terms of marketing seal meat because of this bureaucratic conundrum we have in Canada whereby DFO is actually managing the seal harvest. It's actually responsible for seals yet considers them to be a fish, whereas the purchaser at the other end considers them to be a mammal and wants a meat inspection certificate, not a fish inspection certificate.

Mr. Haché: I am not aware of any such missed opportunity because of that, but, as I said, I will certainly be happy to look into that particular aspect of the issue and provide a more detailed answer.

Mr. Scott: I will leave my business card with you. I would really appreciate an answer. We'd really like to know the veracity.

Mr. Bernier: You want to get a stamp, too.

Mr. Scott: Yes, I need to be inspected.

Some hon. members: Oh, oh.

Mr. Scott: I would like to ask that you do forward that. It is a concern that's been raised.

I think the committee and many people certainly in eastern Canada recognize that seals are a real problem in terms of the fishery and in terms of their present population. If there's a market in which seals can be harvested and there's an economic benefit or gain for Canada and for people on the east coast, then we should be looking at taking every opportunity for that.

Thank you, Mr. Chairman.

The Chairman: Thank you. Mr. Culbert and Mr. Dhaliwal.

Mr. Culbert (Carleton - Charlotte): Good morning, gentlemen. It's good to have you here.

Specifically, I am going to keep my questions in the area of navigational aids as they reflect on the fishery and our fishing communities in the boats. That's the part they play. Since we are going through these current hearings, I want to make certain that I am correct in my mind in every aspect of consideration.

First, from your perspective, could it be said that there are a certain number of navigational aids that are required as safety measures, while others might be considered as optional, as the need requires, from area to area, from the perspective of the fishing fleet and the fishing communities?

Mr. Turner: From our perspective, the principal purpose for putting in the aids to navigation is safety-related. We have an aids system design methodology that we developed that's intended to allow planning officers working with a local community to figure out the best mix of different types of aids to navigation, be they buoys, small marks or lights on shore, foghorns or whatever, so as to provide safe access to a particular harbour, to allow safe navigation along a stretch of coastline for a certain percentage at a time, depending upon local weather conditions.

That aids-to-navigation system or design methodology is tied into what we call our levels-of-service standards. In fact, as far as we know, we are one of the few countries if not the only country in the world that has such a standard and a design approach laid down.

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Mr. Culbert: Is there a similar type of requirement or a need for the safety aspect from the perspective of the fishing communities as would be the case with the commercial ships that are transporting through an area?

Mr. Turner: The situations are really very different. This is one of the challenges we face in the coast guard.

Our conventional aids-to-navigation system may well be used one hour by a 50,000-tonne container ship, the next hour by a 55-foot-long liner, and the next hour by a 20-foot pleasure craft, depending upon the area of operation. One of the difficulties we've always faced is in trying to design a system that is going to meet the needs of all mariners. Of necessity, that usually means meeting the needs of the mariner who has the least capability on board.

However, one of the things that really distinguishes the large commercial operators from the smaller operators, such as fishers or recreational boaters, in the past at least, has been the preponderance of on-board technical aids for the larger vessels, including LORAN-C and nowadays a move toward satellite navigation in global positioning systems.

That tendency is now moving down through the system, so to speak, so that you now have many fishers who are also fitting their vessels with modern aids to navigation or what we call the long-range aids, which are the electronic aids and receivers. Even pleasure craft operators are doing so.

We've been doing some work with all three of those communities - if I could call it that - to see how we may move the entire aids-to-navigation system into the 21st century with more and more reliance on the technical aids, which is the electronic system, such as the global positioning system, in which we in the coast guard are now investing $7 million to install what is called a differential correction system across the country.

The combination of these differential correction systems and the global positioning system receivers will allow major commercial vessels to position their ship within an accuracy of roughly 10 meters to 12 meters, depending upon where they are. However, the same system, perhaps without the add-on cost of the differential correction, would allow a fisher, for example, to position his vessel within 100 metres, or a recreational boater could have a 100-metre accuracy.

We are expecting - we're working closely with the industries on this - to be able to reduce significantly the number of conventional aids to navigation over the next five to six years as a result of the increasing move toward these new technologies.

Mr. Culbert: The point I'm getting at is the point of how we balance that with user pay, fairness and equity, whether it is the fishing communities or the commercial ships that are using the navigational aids. It's how you arrive at that magic point in time.

However, in an area such as mine, for example, in New Brunswick, we certainly don't require ice-breaking services at port of Bayside or throughout my fishing communities and their wharves. So the aids are the things we have to consider as a cost factor as they exist for safety or regulatory requirements.

For example, as you would know, the buoys and the surrounding bell mechanisms that are out there are removed from the salt water. I don't know if it's done yearly, but they're periodically sandblasted or sanded and repainted. They are replaced back in the proper location. Of course in the meantime there are, I suppose, the additional ones they have to work with. When they take one out, they replace it with one and redo it, and so on.

Currently, would it be fair to say that through all of these scenarios, in one sense, the word is that there's no direct cost recovery?

Mr. Turner: At the present time, that's quite correct. It is precisely why we're now discussing the marine services fee as a methodology of obtaining at least a partial cost recovery for some of the services that are used by commercial shipping.

However, while I have the floor, I should just take a moment to mention that the methodology of servicing aids to navigation - you outlined these briefly - of taking them out of the water each year, sandblasting them, painting them and so on, is also something that's rapidly changing. We are working on, in fact, a buoy system that will survive in the water without maintenance for a five-year period. We think we're very close to having that now.

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Mr. Culbert: So that would substantially reduce the cost, whether it's for the commercial shipper, the taxpayer or whoever.

Mr. Turner: That's right.

Mr. Culbert: That's the point I was coming from. Currently, until these fees are initiated, it would be safe to say the taxpayer is paying for those.

Mr. Turner: The taxpayer has been paying the total cost of all of our aids to navigation systems and services throughout history since we in this country began putting aids to navigation in the water or on the shore, and that goes right back to the Louisbourg lights, sir.

This is the first attempt to recover any of the costs for the navigation services - lights, buoys and so on - that the cost guard has provided. Perhaps I shouldn't use the phrase ``first attempt''. This is the first fee. There was an attempt several years ago to introduce such a fee, which was not accepted at the time, and ministers decided not to proceed.

If the marine services fee is implemented as is presently proposed, this will be the first fee that collects any portion whatsoever of any of the costs of the public aids to navigation system.

Mr. Culbert: From the information you have and from your expertise, the initial one would be what percentage of that estimated total cost to the taxpayer currently?

Mr. Turner: The actual amount we're proposing to recover for all of our services of $60 million from commercial shipping amounts to roughly 7% of our total costs for the entire coast guard for all services for everybody. What we've done, sir, is look at that total and look at what services are used by the commercial shipping sector, and they amount in total costing terms to roughly $360 million.

Then we said, from a public policy point of view, there are some services that ministers and the government have decided we should not even consider a suitable candidate for cost recovery, so that $360 million has in turn been reduced by a number of things, such as a policy decision not to recover for search and rescue, a policy decision not to recover for certain Arctic services and a policy decision not to recover for flood control. It's gone from $360 million down to roughly $182 million in total costs for the commercial sector.

In a similar way, one could run through the same kind of exercise for fishers or for recreational boating and say, of the total proportion of the coast guard's costs, here's the portion that is used by those particular client groups and here's the discount, if one wants to use that term, for certain public good activities the coast guard does, which really shouldn't be considered for cost recovery. Then you're left with that same number for recovery.

Mr. Culbert: Is it your impression that the newly established licence fees - or at least, from the minister's most recent comments, those that are established for this current year - would include those costs, or their share of those costs, I should say?

Mr. Turner: That's a little more complex to answer.

The fees that have been established for fishers really are coming to the department, and the department has one bottom line. So whatever dollar is not brought in as a result of, for example, licence fees not meeting their target has to come out of some other sector of the department, such as the coast guard. And vice-versa: fees that we do not succeed in bringing in, for example, from the commercial industry would have to come from other sectors of the department, such as fishing or science.

It all comes to the bottom line, the same part of the department. When we came into the department and integrated or merged the coast guard with the Department of Fisheries and Oceans, we were in a situation where we, as a result of the policy decisions taken while we were still part of Transport, were looking to begin cost recovery for the commercial aspects. We came into a department that was already well engaged in cost recovery for certain services provided to fishers.

The view is that since both of those activities contributed to the same bottom line of the department, there was not much sense in trying to split down more finely, so to speak, the licence fees provided from fishers to see which part of those might contribute to which particular activities inside the overall larger department.

On the recreational boating side, as I said, we are moving towards a fee for a recreational boat licence as well.

Mr. Culbert: I'd like to address two final things.

Number one, I think you said approximately 7% was the total area of recovery you were looking at. Can you tell me how that compares to the overall reduction of the expenditure side of that budget through program review?

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Mr. Turner: Through the program review process, our reductions already committed to total roughly $133 million, which of course is significantly more than the amount we're proposing for cost recovery at the present time.

The additional ``strategic initiatives'', as we've called them, that we have under way in terms of cost reduction and modernization of aids to navigation, for example, will add significantly to that over the years. Our anticipation is that by the end of roughly another five-year period the total reduction on parliamentary appropriations will be somewhere in the neighbourhood of $180 million to $200 million.

Now of course the result of that when compared to the amount we are raising is that it is significantly greater. Just in what is already committed, the $60 million fee at its maximum, the fee that is being discussed by the commercial shipping industry, is significantly less than what is already committed in terms of the reductions to the coast guard through the program review.

Mr. Culbert: Finally, when you or officials that work with you in your department are looking for expertise when you're reviewing fishing policy or when you're looking at implementing new types of policy, what type of weight do you give to the input received from the fishing organizations and the fishing communities and from the fishers themselves as their input comes up through those two bodies?

Mr. Turner: In the development, design and maintenance of our coast guard services, including aids to navigation, ice-breaking, and search and rescue in particular, a great deal of weight is given. We have a great deal of local level contact throughout the country with local groups of fishers in every area where they're active.

I'm sure Mr. Bevan can comment on the fish management side of the equation for the department. I know there are very similar and detailed processes there.

Mr. Bevan: There is obviously an extensive consultative process in the development of the integrated fish management plans. That would continue, and as those plans are in fact developed we would also like to move into partnership with the interested segments of the industry. It would not be a consultative process then. It would be a joint management process. Obviously they would have a lot more input into how the management for their particular fishery is developed and what kinds of activities we would be involved in. If they're partners, they will have a great deal of say.

Mr. Culbert: You do believe that the expertise is in the fishing communities. Those people who have been out on a fishing boat for 50 years, while sometimes they may be known for exaggerating a little bit, have a tremendous amount of expertise. That's what I found, and I have to admit that I depend tremendously on that expertise right in the fishing community. I guess I want to be assured that all of the officials of DFO are listening to that and observing that. I know it's difficult because sometimes it comes from different perspectives, but with the fishing organizations that we have today in our communities, hopefully consensus can be reached.

Mr. Bevan: Yes. Our objective right from the science point of view with sentinel fisheries through to the development of the integrated management plans is to seek consultation with the various users and groups. Eventually we would like to move into partnerships with them and turn over those management functions best done by the fishing groups themselves to the associations or to the representatives of the particular fleet sectors.

The Chairman: Mr. Dhaliwal.

Mr. Dhaliwal: I have a number of questions.

I'll start with Mr. Bevan. First, as you know, Mr. Bevan, on the west coast there's a roundtable set up to determine how we're going to reduce the capacity. I'd like you to give us an update in terms of what sort of budget you have allocated, where we are in that process of trying to substantially reduce the capacities on the west coast, and how much money is available, if you can respond in terms of the budget. That's my first question.

Second, in terms of the Canadian aquaculture strategy announced by former Minister Tobin, I'm wondering if that strategy is still maintaining the priority we wanted it to and is still taking the same thrust that the main purpose of that aquaculture strategy did when it was announced. I understand there have been some cuts in that program, and I would like to know what's happening.

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I know there's a project in B.C. with northern marine farms that I thought we were committed to but then it got cancelled. Frankly, I've had a tremendous amount of problems getting information from DFO and trying to resolve that situation. I've been very frustrated in trying to deal with DFO on that issue, particularly when we thought the aquaculture strategy was going to be an important area. I'm not sure if it still has the same importance as it did when the policy was announced.

My third question is also in terms of TAGS. As you know, we had a $1.9 billion-budget for the TAGS program. I'm wondering if we're still on track on that budget, because many times we've heard we have not surpassed the $1.9 billion. I'd like to know if we're still on budget with the TAGS program.

Mr. Turner, you heard a number of speakers. Perhaps in very short form you can tell us how you came to a final formula, because I know a number of formulas were looked at, and what sort of consultative process you went through.

We also heard a number of concerns in terms of accountability, reducing costs of new technology and commercialization of some of these services. I very much agree with some of the points articulated here. Can you assure the committee that those will be taken into account when re-looking at the fees, regular or not, rather than just having the fee and saying it's sort of a permanent situation that we cannot look at when there's all sorts of technology out there that may help to reduce the cost?

I know there are many questions there, Mr. Chairman, but I think they need to be answered.

Mr. Robichaud: As far as the Pacific roundtable goes, there was a recommendation for a 30% to 50% reduction of capacity. The minister very shortly should be making the necessary announcement on the issue. I don't have the exact detail of the various measures. There was an issue about the capacity and the reduction and how they should be addressed, and as well on management measures, such as area licensing, single licence and so on. All twenty recommendations should be addressed very shortly.

Mr. Dhaliwal: Does that mean there's no budget established yet to reduce the capacity for the west coast?

Mr. Robichaud: Again, it's being discussed at this time. I don't have the exact figure. The minister should be informing on the issue shortly.

As to aquaculture, indeed there's a strategy of aquaculture. It was announced about a year ago. I believe the element you're referring to is a group that would want to acquire some juvenile or small fish out of a commercial fishery.

The department is committed to these exercises when it is a joint venture with science that will further knowledge and that type of thing. After the necessary knowledge is acquired, it becomes a business endeavour. To the group, it's like a quantity of fish; they have to somehow acquire it from the present user because the fishery is fully subscribed.

So there are two elements. One, it's a part of science to acquire an amount of fish for furthering knowledge and growth. It's an important element of aquaculture. However, when this is fully known, the second element is the group in question must acquire the quantity of fish necessary to further develop aquaculture and commercialize it.

On the $1.9 million in TAGS, we don't have the representative to discuss it today, so I cannot answer that question.

Mr. Dhaliwal: I don't want to use the committee's time on aquaculture, but maybe you can just answer shortly. Is there a reduction in the budget for aquaculture, and how much of a reduction has there been in the budget of the aquaculture strategy since it was announced?

Mr. Bevan: Obviously a number of funding questions have to be addressed by the department. We are considering how to address those, and aquaculture is a potential area that will have to be looked at with respect to reductions.

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We have taken no decisions, however, at this point. We can't say whether or not we would be proposing to go ahead with reductions to aquaculture or not, but it is subject to review, as are all other areas of our activities.

Mr. Dhaliwal: Perhaps you'd keep me and other interested committee members notified of where we're headed on the aquacultural industry. It's of particular interest to me. I thought we were going to make it a priority, but from the information I'm getting, I understand that it's not taking the priority it originally was meant to have when the policy was announced. There was a lot of fanfare and interest by a lot of groups, but now we've reverted back and it has not really been given the priority it should have had. I'm very much concerned.

Mr. Turner: On the coast guard side of your question, I certainly welcome the opportunity to take note of a few of the things we do have under way in these areas.

I think it's only natural, if I may say so, that the groups coming before you that are concerned about the impact of a new fee would have, of necessity and human nature both, made their best case for how it will affect them and how the big, bad, inefficient government is imposing this on them. Perhaps in some cases, though, they don't always tell you the other side of the story in the sense of what they're doing with us to help us reduce costs and provide just the services they want.

For example, Mr. Cartwright appeared this morning and told you about his general satisfaction with the working environment and the approach we have on the west coast. He did not, unfortunately, have time to tell you about the joint projects we have under way with respect to the automation of identification for ships coming into and operating in Canada to lower our cost of traffic management.

The gentlemen who have been here speaking to you about the St. Lawrence River system perhaps have not had time to get into the details of the joint work we're doing with them to move to high-precision navigation systems, on-board electronic charts, which allow us to substantially reduce the number of aids to navigation, and therefore the costs. We're trying to do this in direct partnership with the people who use these services and who are also being asked to pay for a share of them.

The statement was made this morning that there was concern about the fact that the cost recovery amount was set arbitrarily. We have freely acknowledged that it was a government policy decision that the commercial sector should begin to pay at least a portion of the costs, and the figure was set before we went into these discussions.

We have, on the other hand, said to them that we have an opportunity here to work together closely to help reduce our overall costs to bring the services into line with just what you feel you need in order to cap the potential for any increases in the fee by bringing down our costs as much as possible. We have continued, and we will continue, to work closely with them in this regard.

In the area of ice-breaking, for example, I mentioned earlier the fact of the committee we have struck, which is chaired by industry and which is looking at ice-breaking in the St. Lawrence and gulf area, which is the river and eastern Canada generally.

We have certainly seen very clear evidence of the notion that any discussion or thought of user fees or cost recovery has a tremendous impact on disciplining demand. For many years we had a situation in which users of our services generally, including the commercial shipping sector, would be looking for improvements in the services we provide. They would be looking for a faster response time for ice-breakers in winter and improvements in the aids to navigation in the St. Lawrence or in the Great Lakes shipping channels. That is now starting to turn around. It may only be a 7% cost recovery, but it is having a very strong impact on the user communities and the clientele we work with in realizing that these services all have substantial costs and they have to work with the government to help us keep those costs down as much as possible.

The Chairman: Mr. Turner, I don't think we have time this morning for rebuttal.

Mr. Turner: No, sir, I know that.

The Chairman: Maybe as the hearings go on, we will have a rebuttal. We would like this morning to continue with other questions.

Mr. Bernier.

[Translation]

Mr. Bernier: We don't have much time left, Mr. Chairman, and I want to ensure that Mr. Wells has some time. All right?

The Chairman: All right.

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Mr. Bernier: I'm entitled to two questions. The second question is for Mr. Bevan and will deal with protection. But I would first of all like to finish with a question about the cost of permits.

What does the cost of the permits cover? Are these user-pay costs or is this an invitation to reduce the deficit? The gentleman from the Coast Guard told us that that could cover such and such a thing.

What is the real mandate that Mr. Tobin gave before his departure? I understood that this was based on fishermen's income and that this was therefore a quota or type of royalty that the State expected from the fishermen. If they fish a species that is a bit more lucrative, they are going to have to pay a bit more. It had nothing to do with other costs.

Can one of you three answer the question?

Mr. Robichaud: The rate level is based on a percentage of gross income. We have not increased the cost of certain permits for less lucrative fish. The revenue is sent to the Consolidated Revenue Fund and is part of an overall contribution made up of both cutbacks and revenue increases that the department must provide to the Consolidated Revenue Fund.

Mr. Bernier: Mr. Robichaud, what does that cover exactly? It pertains to fishing permits; therefore, it is for the management of the fisheries. It has nothing to do with the fishermen's rights to travel in the Gulf and to use the buoys.

Mr. Robichaud: No, they are entitled to fish the resources in the Gulf, in the Atlantic or in the Pacific.

Mr. Bernier: Given your answer, I've every reason to fear that the fishermen will not be immune from any charges that the Coast Guard may levy to cover its services.

Mr. Robichaud: That is a question for the Coast Guard.

Mr. Bernier: In other words, you are telling me that, according to the way you view the mandate given to you at the time by the Minister of Fisheries and Oceans, it was to cover the fisheries' portion.

Mr. Robichaud: That's right. It's a question of paying a fair price to have access to the resource.

Mr. Bernier: Mr. Bevan, you are the Director General of conservation and protection, but you can call upon others to help you. My question is rather specific. If you cannot answer it today, I want you to make sure that you write it down.

This week, in Victoria, I know that there was a meeting of people involved in marine observation. Last summer, it appears that some changes were made to the marine observation contracts.

I would remind the chairman that this is an issue we examined last spring. There was a problem with marine observation. We even asked the appointed deputy minister to appear before us, however I do not remember the name of the gentleman. It was Mr. Rawson or Mr. Rowat.

Another deputy minister had been appointed at the time and he had appeared before us. It seems to me that the marine observation problem has not yet been resolved. However, some changes were made to the marine observation contracts.

The change that I want to draw your attention to pertains to the exclusive rights clause. The information I have comes from the Seafarer's International Union of Canada.

People used to have to sign contracts with observers from the region where they had obtained their permits, regardless of where they were going to land, whereas now a shipowner can deal with two or even three observers depending on where the resource will be landed.

I must tell you that I find this tendentious. I find that not enough control is being given to Fisheries and Oceans Canada, which cannot ensure that everything is being properly monitored. I would like to understand what lead to this clause being changed.

Would it be possible to go back to the way things were done before? Is my question clear enough? Are you aware of the problem, Mr. Bevan?

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[English]

Mr. Bevan: Yes. I'm familiar with the situation. We modified the RFP this fiscal year to try to encourage or to develop a situation where we could have more cost recovery and more devolution of costs to fishing vessels. We wanted to reduce the actual cost per sea day for the vessels and to do that DFO set up the RFP so that we would cover the administrative costs and the vessels would be required to cover only the actual sea day costs. That would reduce the vessel cost and also make it more equitable across the regions.

The other aspect we introduced was that while maintaining exclusivity we wanted to reduce the travel costs, etc., that would have to be borne by the fishing industry by having the observer come from the region from which the vessel would sail. So for foreign vessels it's the region in which the foreign vessel is licensed if it's getting access to underutilized species, etc., but for domestic vessels the port from which they sail would dictate which observer company they deal with. Again, it's to try to encourage more cost recovery over the course of the next few years, reducing the cost per sea day to the fishing industry, and having DFO cover the administrative costs.

The Chairman: Thank you.

[Translation]

Mr. Bernier: Mr. Chairman, I have a supplementary question; the answer was not complete. Who is paying for travel costs? Is it the shipowner of Fisheries and Oceans Canada? According to the answer that I have been given, there are no savings to be made by changing observers two or three times. On the contrary, according to what I've been told, the shipowners have to pay more because of the greater travel costs. The company has to pay when it causes two or three men to travel.

As for the ``days at sea'' savings, the difference is not significant enough. I would ask you to reexamine this matter. First of all, do we still have enough time to take a second look at it? Could you tell me whether this item is on the agenda in Victoria?

[English]

Mr. Bevan: The actual topic being discussed in Victoria relates to the fact that there's going to be a substantial increase in the number of sea days utilized on the west coast due to some changes in the groundfish management plan. There need to be modifications to the contract.

But there is another aspect. We are looking at the introduction of standards of four observer companies and are entering into negotiations or discussions with the companies, the fishing industry and the unions, etc., where we would look at the possibility of introducing recognized standards for companies supplying these services. We could then allow the fishing industry to select the appropriate service at the least cost, if that's acceptable following discussions with the fishing industry, the observer companies, the unions and all of the stakeholders.

That's what's being contemplated as a possibility. It's being looked at, but there are no decisions to be taken at this time. It is being looked at as far as the possibility of moving ahead in that direction. Is it feasible? If so, what would the impacts be? Is that something that would be acceptable to the parties involved?

There are two aspects. The primary one is the fact that the introduction of changes in the fish management regime for groundfish on the west coast requires a substantive increase in the number of observer sea days to be utilized. The second is the introduction of the concept of introducing standards for observer companies to meet and then allowing discussion of whether or not we would have a different type of contract in the future.

The Chairman: Mr. Wells.

Mr. Wells: Mr. Bevan, when you introduced yourself, I didn't get your title. It's so long.

Mr. Bevan: I'm acting assistant deputy minister. My substantive title is director general, conservation protection.

Mr. Wells: Thank you.

.1135

Many of the concerns I've been addressing over the last number of months were addressed at the Dartmouth and Halifax meetings a couple of weeks ago. Mr. Robichaud was there during those sessions. I'm not going to revisit those issues, or at least not the main ones.

I will say for the record that I am happy with the way the core fishery criteria were addressed. After many months of trying to get someone to listen, it's finally happened. I would hate to think that in future we'd have to go to those lengths to get attention again when we have an issue that is clearly bad policy, but I'll leave that.

On the question of fees, some questions came up earlier about the regional breakdown. Can someone tell me the amount that's actually been collected in licensing fees? The original fee was $50 million. I think it's been reduced to around $43 million. Can someone give me the new number?

Mr. Bevan: We'll have to get that answer back to you. We don't have that information with us right now.

Mr. Wells: Okay. When you get that - and I think it's in the range of $43 million, not $50 million - would you give me the breakdown between east and west coast, and on the east coast, would you give me the breakdown by province, and by province, would you break it down per region?

I recognize there were changes made in 22 of the 30 recommendations, but I've raised concerns about the economic impact of these fees and about the cumulative impact of these fees, and I still haven't had responses to those questions. So I ask that the answers to the questions I addressed previously to the department on those issues be provided to me and the committee.

I'd like details on any economic impact studies that have been done by the private sector, and that's over and above the Gardner Pinfold one; we know about that. I'd like any type of economic impact study that may have been done in addition to that, both on the licence fees themselves and on the cumulative impact when you take into account other fees that are being assessed to the industry.

I don't expect answers on those today, although I've been waiting for some of those answers for some months now and I would expect I will get them soon.

The issue I want to pursue is on the licence buy-back. I recognize again that maybe you don't have all the answers on this issue, but if you don't, I'd ask that you come back with them. I'm asking for the rationale.

Mr. Scott, when you asked the question, I don't think you got the answer on the amount of money that was spent and the number of licences that were bought back. That information is available. I won't get into it now, but I think you will find and I think the point you were trying to make is that we spent a lot of money and didn't buy very many licences back.

What's happening is because we bought out the top licences, we're now having the inactive licences basically just going into the fishery to fill in the gap that was left.

Instead of buying out the inactive low-level licences, where you could have bought out almost everything that was inactive for probably the same amount of money, you've chosen or someone has chosen to buy out the top-level licences, really not reducing, in my opinion, very much capacity, because you're not buying the vessels. That's why the difference between licence and vessel was so important; the vessels then could be taken over by somebody else. They could take an inactive licence and put it into the fishery and not reduce capacity.

I want to know the rationale for the approach that was taken on round one and whether or not that approach is going to be taken on round two, or whether or not we're going to start looking at, as was recommended by some of the fishermen on the TAGS group, buying out the inactive low-level licences so they don't simply go and fill in the spot taken up by the high-liners.

I don't expect an answer to that today, but the third question I want an answer to, and not only on the aboriginal question Mr. Scott asked.

Mr. Robichaud, in your answer you talked about crab generally. You thought that might have been all, but we need to know exactly how many commercial licences were in fact given to aboriginal fishers. I don't disagree with that policy, but I think we need to know. We have to have on the record the exact number, not just how many you think there are. We need to know exactly how many have been given. I'm talking about the Atlantic now, obviously - commercial.

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Mr. Robichaud: Mr. Chairman, this will have to be researched and provided. I don't have the exact number.

Mr. Wells: Surely somebody who is looking after the aboriginal fishery can tell us how many commercial licences have been allocated to the aboriginal fishery in the Atlantic.

Mr. Bevan: Do you mean as commercial licences or as a means of providing fish?

Mr. Wells: Maybe I'm not referring to an aboriginal who is a commercial fisherman in an ordinary sense, but to one who has been given a commercial licence under the aboriginal fisheries strategy, based on your interpretation of what the Sparrow decision says you should be doing as far as bringing aboriginals into the commercial fishery.

Mr. Bevan: Okay.

Mr. Robichaud: Those licences are given to the communautés. I would have to give you the exact number throughout the Atlantic.

Mr. Wells: Mr. Chairman, there are many issues. I don't leave these issues to get answers for these meetings, but I think we should have those on the record.

Many of the other issues are being dealt with on a regular basis. We know about the mediation processes now taking place. I'm not going to ask questions about those. Those are ongoing. We can keep on top of those without taking the time of the committee.

The Chairman: Thank you. Mr. Scott.

Mr. Scott: Yes, Mr. Chairman. I would just like to underline for the witnesses that I would also very much like to have the information Mr. Wells is seeking.

Mr. Wells: I'm asking for the committee, Mr. Scott, not just for me.

Mr. Scott: I wasn't clear on that. I would very much like to have that information.

I'm going to pursue the seal hunt a little bit more and I'd like to come back to this gentleman and ask him, over and above.... I assume the 20¢-per-pound subsidy going to the sealers right now is going through DFO.

A witness: That is correct.

Mr. Scott: Okay. Are you aware of loans or grants or subsidies that go through any of the other federal departments, through ACOA, for example?

Mr. Haché: There certainly could be some from ACOA or perhaps from the Department of Industry. Some of the companies involved could get some financial assistance from those other departments. That's quite possible.

Mr. Scott: Okay. I have a question and I don't think you're going to be able to answer me today, but again, as we discussed earlier, if you could provide this information for the committee and for me it would be very much appreciated.

We've been given a story about a company called Terra Nova Fisheries Limited. It's alleged that this company has received loans and/or grants and/or subsidies from ACOA and/or other federal departments. I don't know exactly what the total amounts would be, but they're significant. In the course of doing business the company sent a million pounds of seal meat to China and had the meat spoil on the dock because they could not obtain what is called a ``post-mortem certificate''.

I don't know very much about the certificates that are required in order to export and import and so on. The information we have is that a million pounds of seal meat spoiled as a result of the inability of the seller to provide the required certificates to the purchaser. This concerns me a great deal.

I guess this is what I'm trying to get at: Do we have artificial hurdles in place as a result of differences between bureaucracies, between Agriculture Canada and Department of Fisheries and Oceans, that are somehow hampering the efforts of people to deal with the opportunities out there in sealing? That's really the nuts and bolts of what I'm trying to get at.

Mr. Haché: Okay.

Mr. Bevan: Perhaps I can respond to that.

The trade in meat has been governed by an inspection regime that's been in place for a number of years, related to post-mortem inspection and inspection of the carcasses on a carcass-by-carcass basis, both pre- and post-mortem and in the context of the meat-processing operation. That has been established over a number of years, whereby each shipment would be required to be accompanied by a certificate signed by a veterinarian indicating what the condition of the animal was before death, after death and during processing.

.1145

Obviously, that kind of inspection regime doesn't fit very well for a seal hunt. The difficulty we have with respect to Fisheries and Oceans is that they have been doing the inspection process under the fish inspection regime, which is much more tuned into the kinds of conditions you find in the harvest and processing of a wild animal. However, the certificates required in some foreign countries are going to be based on the traditional inspection regimes for farm-raised animals under the Agriculture Canada types of scenarios, which is where we're running into these difficulties. We can issue a fish inspection certificate, but what the veterinarians were maybe requesting in foreign countries is something that is more in tune with the traditional inspection regimes that would be used for inspecting beef, etc.

It's going to take some work to try to overcome those difficulties. Again, I think they'd be looking at.... Post-mortem inspection is one that would take place in a slaughterhouse; it's not something you can easily duplicate in a seal hunt.

Mr. Scott: I think you would agree with me that a fish inspection certificate is not going to be sufficient for the kinds of markets we as Canadians, or the people involved in the industry, are trying to penetrate.

I think you would also agree with me that there are other examples in Canada in which wildlife is harvested and sold as a commercial product without the example you used, which is a slaughterhouse situation whereby individual animals can be inspected post-mortem and prior to slaughter.

The question I have then is if it works for the caribou hunt, for example, then why can't it work for the seal hunt? Why are we caught up in this bureaucratic tangle that is preventing the sealing industry from taking advantage of opportunities?

Mr. Bevan: The difficulty was with the foreign countries accepting the meat. They wanted a particular type of certificate based on the traditional inspection programs for standard beef, etc. That has a specific meaning for Agriculture Canada and for fish inspection individuals, and they cannot duplicate it under the circumstances of the seal hunt. So to overcome those problems it will take some work with Agriculture Canada and the country that wishes to import the product.

Mr. Scott: I wonder if you are telling me this. For example, with the caribou hunt that takes place now, the meat is sold commercially. Is there not the same standard for that meat that there would be, for example, for Canadian cattle, pork, or chicken?

Mr. Bevan: I can't speak for Agriculture Canada on that one. I'm not sure of the arrangements they've made for the export of that product, if it is indeed exported. I can't say how they've overcome it.

But we'd have to work with Agriculture Canada to try to deal with the particular export opportunities for seal meat.

Mr. Scott: Is it happening? I don't know. I'm not sure of the veracity of the information we have. But here's the thrust of my question. If it is happening for caribou, then the logical question is why can't it happen for seals? There's virtually no difference in the way they are harvested.

Mr. Bevan: I'm unable to.... I don't know the specifics. We'll have to get at the specifics in those cases.

Mr. Scott: It seems to me that a part of the problem is.... I understand this is a significant problem, because there are people in the industry who have made serious efforts to try to sell this product. They're running into this as a roadblock, because they've got a willing purchaser at the other end, and they've agreed on prices that are reasonable for both parties, but the purchaser can't import and get the necessary certificates they require.

On the other side, it appears that there is a problem, in that in Canada seals are considered fish rather than mammals, so there is a different standard by which Canadian authorities and regulations govern their harvest and sale. If that's the problem, then obviously there has to be a way to address that so that the people in the sealing industry can take advantage of the opportunities that are out there.

.1150

Mr. Bevan: If we can get specific information, then we can try to deal with them specifically and come up with solutions if it's possible.

Mr. Scott: There's one other question I would ask, but I don't think it's information you can give me today. I would really like to know what the estimated seal populations are right now. I realize it's just an estimation. I think grey seals and harp seals make up the two big populations in Atlantic Canada.

Mr. Robichaud: Yes.

Mr. Haché: I can give you the latest estimate we had in 1994, which put the harp seal population at 4.8 million. This, by the way, is double what it was in 1980.

Mr. Scott: When was the moratorium imposed?

Mr. Haché: There was never a moratorium as such. What happened in 1987 was that the large-vessel hunt was discontinued, as was the hunt for the whitecoats, the young seals. But some sealing activity did continue throughout those years at a much reduced level.

Mr. Scott: What's the grey seal population now?

Mr. Haché: As for the grey seal population, again, the numbers are from two years ago. They were at 150,000. One can estimate that they would be at least 175,000 now.

Mr. Scott: I have something to ask about the west coast, if we're talking about seals. There's also a great deal of concern on the west coast that the seal populations there have increased dramatically since the hunt for seals was discontinued. I think that took place in the 1960s, if I'm not mistaken. Do you have any numbers for the seal populations on the west coast?

Mr. Haché: No. Unfortunately, I don't have any numbers for the west coast populations with me, but I think I could get those for you.

The Chairman: Before we conclude with Mr. Bernier, I would like to ask Mr. Bevan orMr. Turner about the amalgamation of the coast guard and DFO fleets, as far as protection is concerned.

I'm getting some reaction now from fishermen who believe they're losing their DFO protection vessels, which are sometimes not replaced by anything. A lot of the DFO vessels are going to be tied up. Particularly the lobster people are fearful that the protection they think is required is not going to be there this year. Has any progress been made on the integration of the two fleets? If so -

Mr. Turner: There's significant progress, but there are really two questions inherent in what you said.

From the point of view of putting the fleets together, we are quite a long way down that road. However, it's important to keep in mind that the fleets are there to provide support to specific programs or carry out specific programs. There are, of course, reductions in a number of the various programs of all sectors of the department, which will result in a lower requirement for fleet time or fleet units.

We are endeavouring to pick and retain the most efficient and effective of the fleet units at the end of the day, of course. But there are both policy changes in the way in which certain programs are going to be carried out and levels of service changes brought about by various issues, including budget reductions and program review, which will be taken into account and will in turn result in a smaller overall fleet.

I would suggest that Mr. Bevan could speak specifically to the question about surveillance, enforcement and fleet requirements in that context.

Mr. Bevan: What we've done with the conservation protection program is to look at the best use of available resources. We've taken a look at the various mix of surveillance techniques that we have available. We have observers, air surveillance, dockside monitors, sea days from crewed vessels, program vessels that can be operated in the near shore by fishery officers, and land investigations.

When looking at that mix, we've endeavoured to come up with the most efficient mix. In some cases, that may mean there may be less of a reliance on crewed vessels and more of a reliance on a number of other surveillance techniques.

.1155

We're in the process of upgrading our air surveillance capacity with respect to a number of new technologies employed there. We have the ability to better integrate the information coming from the various sources, whether it's land-based investigations, observers, dockside monitors, air surveillance or satellite transponders where they're in use.

In so doing, we may be or are intending to reduce the number of vessels in certain areas, but that would not be done without considering what other alternatives would be in place to ensure that surveillance was available and to ensure that conservation objectives were being met.

The Chairman: So no final decisions have been made yet on the east coast?

Mr. Bevan: No. We're still moving forward with a package. A number of proposals have been put forward, but again that has to be integrated into the fleet mix and the study. Nothing as yet has been announced.

The Chairman: Are fishing groups or associations having any input into these decisions or discussions?

Mr. Bevan: The proposals we have thus far are being handled by looking at what's the most appropriate mix from the internal perspective. We have not yet had the chance to discuss them publicly.

The Chairman: But you will consult the groups affected before you announce anything?

Mr. Bevan: We will be looking at it in the context of the integrated fish management plans, as we mentioned earlier. What we would like to do there is say here's the kind of fish management plan that would be proposed for lobster fishing, for example, and ask what kinds of enforcement strategies would be appropriate for that, looking at the available mix of resources. That's where we would get the focus on the debate for how we would go about enforcing the various fisheries.

At that point, if it's felt that vessels are more important than air surveillance, we would have to take that into consideration in looking at the right mix.

The Chairman: Mr. Bernier.

[Translation]

Mr. Bernier: I do not dare ask you, Mr. Chairman, how you are viewing our questions this morning, but I know you will have an opportunity to respond this spring.

I still have two witnesses I wish to question. My first question is for Mr. Robichaud. While he's looking for the information, I will ask Mr. Haché my other question. It pertains to seals.

Mr. Robichaud, could you tell me, from your documents, which management plans have been adopted for this year? I'm thinking, more specifically, of the plans pertaining to crab and shrimp fishing. If these plans have not yet been completed, when will they be, or at any rate, when will they be ready for the people in the Gulf?

You realize that the weather is very fine, that people are excited and that, as Easter is almost here, they are going to want to know when they can go out to sea.

I would ask you to prepare this data, unless it has already been done.

Mr. Robichaud: This has already been done.

One of these management plans has been announced and it pertains to the groundfish in the Gulf and the Atlantic sector. Various fleets are in the process of developing harvest conservation plans.

As for shrimp and crab fishing, as I said, the announcements are going to be made over the next two weeks.

Mr. Bernier: But you know that there will be a great deal of pressure once the weather is good. I hope that all of these reports are currently sitting on Mr. Mifflin's desk and that all that is missing is his signature.

Mr. Robichaud: I would like to remind you that in order for a fishing season to get underway on April 1, such as shrimp fishing, it is possible to advance an allotment to allow the fishing to begin anyway since we know that there will be so much tonnage per permit.

Mr. Bernier: Does this apply to crab as well?

Mr. Robichaud: Normally, I believe that crab fishing begins in mid-April.

Mr. Bernier: It has already begun then.

Mr. Robichaud: There was perhaps one year where it began at the end of the first week in April, but the plan will be available in mid-April.

[English]

The Chairman: What is the policy of the government? Is it sharing the resource or sharing the wealth, say on the crab side?

.1200

Mr. Robichaud: Prior to everything it is the conservation of the resource. That's the number one mandate.

The Chairman: Let's say the resource is there.

Mr. Robichaud: After that it's to look at the existing participation and at the sharing within that participation.

As to crab in the last two years, I believe it was the only fishery where the department decided to take a certain quantity and share it so that the funds from both the harvesting and the selling of the product could be used for structuring projects. But that's the only fishery I know of where that approach has been taken.

The Chairman: And that policy decision is not made yet for the next year.

Mr. Robichaud: No, and it was explained and stressed to everyone who had a licence that it was for the season only, that temporary licence.

The Chairman: That's right.

Mrs. Payne: Are you giving us some bad news now?

The Chairman: I don't think so.

Mr. Robichaud: Every year for two years now it has been reiterated that it was for the one year. In 1994 it was one year and in 1995 it was one year.

The Chairman: Yvan still has a question.

[Translation]

Mr. Bernier: I had a question for Mr. Haché; but you have broached the issue of wealth redistribution, Mr. Chairman. There is a problem which, in my mind, does not appear to have been resolved yet, at least not in Quebec, and I have heard only very vague accounts as far as the other provinces are concerned.

What about the redistribution of monetary wealth resulting from last year's crab surplus? Let's call a spade a spade. In Quebec the Alliance had to manage the fishing of 2,000 or 1,000 tons of crab which was to be fished by its members or by contract fishermen.

They paid these people, but they made a profit. These profits do not appear to have been redistributed amongst the industry. What is happening? Could we see, Mr. Robichaud, the agreement signed between Fisheries and Oceans Canada and the Alliance? Certain conditions have to be met in order to obtain a fishing permit for these 1,000 tons. Why wasn't the money redistributed? Wasn't the contract signed? People are starting to raise a hue and cry in many regions of Quebec. We are about to begin a new fishing season and nothing has been resolved.

Mr. Robichaud: As for the objective of the crab fishery management plan, last year, in zone 12 and certain other coastal zones, when a supplementary quota was given to groups or to associations, they had to submit a harvest plan, which was done. Secondly, the group receiving the quota had to ensure that the profits were redistributed as broadly as possible. It was up to each of these groups and not up to the department to see that this was done. The department is responsible for managing the resource after its distribution.

Mr. Bernier: Consequently, their contract did not contain any clauses indicating how they were to redistribute the money. In other words, if the Alliance decides not to redistribute the money, it can do this.

And what about the fishermen who feel that they have been wronged, do they have any recourse at this stage? That is my question.

Mr. Robichaud: As you may know, the groups are monitoring the Alliance and another group of fishermen from Prince Edward Island very closely to ensure that this money is distributed.

Nevertheless, there are various expectations, and the group must try to comply with these expectations to the extent possible.

Mr. Bernier: At this moment there is no agreement. What are they going to do?

Mr. Robichaud: If I've understood correctly, the various groups in this sector are continuing to hold discussions.

Mr. Bernier: My final question is for Mr. Haché. It pertains to seals.

.1205

[English]

The Chairman: Mrs. Payne would like to have a question. I'm not sure if it's on the same topic or not.

Mrs. Payne: No, it's not on the same topic.

The Chairman: Okay, finish.

[Translation]

Mr. Bernier: I have two other questions about seals, Mr. Haché.

First of all, during a steering committee meeting, I had asked that we be told about what impact the Greenpeace movement had in England when we announced an increase in seal quotas. In England, a group of ecologists had mobilized and tried to exert pressures on the marketing of Canadian Pacific salmon. I would like to know what occurred in that regard.

Secondly, is the movement to repress Canadian products still very active and what has Canada's High Commissioner to England done to put a damper on it? There are even some British MPs who have given their support to this movement, apparently.

If they haven't understood yet, I would like Fisheries and Oceans Canada and the Standing Committee on Fisheries and Oceans to organize a delegation to go over there because, at some point, we'll have to explain what's going on to those people.

Is there anyone within Fisheries and Oceans Canada thinking about how we could market our seals? Let's hire an expert, if need be. I'd call it the Marketing Task Force.

When you know where you're going, you set up a logistics plan. We know full well that to penetrate such a market, you have to respond to such conditions. The question is whether the department intends to invest money in that and not only for killing the animals. It's fine to support whoever is going to capture the animal, but you're no further ahead if once the animal is out of the water, you can't sell it. I'd like to know if Fisheries and Oceans Canada has any money left for marketing.

Mr. Haché: To answer the first question, it's true that the animal defence groups Mr. Bernier has mentioned, and IFAW is one of them, mounted a very vigorous publicity campaign in Great Britain against the seal hunt. To try to attain their objective, they campaigned to discourage the big grocery chains from selling Canadian fishery products, mainly canned salmon from British Columbia.

That first stage of their campaign, that went on last summer and fall, does not seem to have been successful because according to the information we have, sales were not affected.

The second stage was to aim the publicity at the consumers to try and discourage them from buying those products. There again, according to the information we have, and we're more specifically in touch with the British Columbia Salmon Marketing Council, the campaign does not seem to have had any substantial impact on sales.

You allude to the activities undertaken by Canada's High Commissioner to Great Britain. I must point out the excellent work he and his staff have accomplished. They have been very active in this whole affair trying to counter the misleading publicity put out by those organizations. It would seem that so far, the campaign has not borne fruit and that sales have not been substantially affected.

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Your second question concerned marketing. As I pointed out before, we do now have a subsidy for the animal's meat.

Mr. Bernier: But that's just for catching it.

Mr. Haché: For its capture, but the people buying that meat are beneficiaries. I should add that in Newfoundland, to the 20 cents paid by the federal government to the fishermen, the province adds 10 cents a pound for processing that meat and, this year, five more cents a pound were added. So that's 35 cents a pound to help the hunter, the processor and the development of new products.

Mr. Bernier: If I follow you, the federal government is giving 20 cents a pound for the catch and provinces are helping with the marketing. I think Quebec is doing something like that.

Mr. Haché: Exactly. This 10 cents a pound subsidy, and I think it's the same thing for Quebec, is to help with the processing and development of new products with a view to marketing.

If that subsidy is for the meat and not for the rest of the animal, it's because the seal pelt market is very good right now. It doesn't need any subsidies to continue its development. The big companies, especially Carino, a Norwegian company, are ready to buy all the seal pelts we can offer because markets seem very good in that area.

[English]

The Chairman: Thank you, Mr. Haché.

I know Mr. Robichaud wants to answer a question on Irish moss that I gave him three weeks ago, but I will with conclude Mrs. Payne.

Do you remember I gave you the note?

Mrs. Payne, go ahead.

Mrs. Payne: Thank you, Mr. Chairman.

In three sentences or fewer, can you tell me what species are still on what you consider the underutilized species list and why?

Mr. Robichaud: The species we call underutilized, or sometimes not fully exploited, are usually items such as the Stimson surf clam, which we find in the gulf and out in the Atlantic. Sea urchin and the like are generally in that. Most of the fisheries, such as shrimp, lobster and so on, are all pretty well utilized.

Mrs. Payne: When I ask this question, I'm thinking more in terms of fish, such as flatfish or groundfish.

Mr. Robichaud: The only one that comes to mind is we have a program to assist allocation of turbot to various coastal residents in the extreme north between Greenland and the Northwest Territories. There is zero turbot there. It is allocated and then they use various approaches to harvest it.

The other one I can think of is silver hake, of which a certain quantity can be....

Mrs. Payne: That's basically the point of my question. Why is silver hake still on the underutilized species list?

Mr. Robichaud: It's not per se underutilized, because the quantity is being harvested. The fact is it's the processing that is taking time to evolve. At this time there's a requirement that a certain percentage be landed and processed in Canadian plants. The fish itself has to be processed fairly rapidly because it deteriorates and stuff like that. So far we've moved towards ensuring that gradually a greater amount is landed in Canadian plants for processing, but there's still some way to go.

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Mrs. Payne: Is there a likelihood that species will be taken off the underutilized list or not? Is there still a large quantity of it that is left to be utilized by other countries?

Mr. Robichaud: Allocations are not per se given to foreign countries. They're given to Canadian groups and are harvested in cooperation with other countries.

Mrs. Payne: Okay. Thank you.

The Chairman: Thank you very much.

I know you have to come back to the committee with a lot of questions. Do we have to make a list of those?

The Clerk of the Committee: No, they're listed.

The Chairman: So they're listed, you know what they are and we can expect an answer.

Thank you all for coming this morning. You've been very helpful. We'll probably have you back in the not too distant future. Thank you very much.

The meeting is adjourned.

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