PACC Committee Report

BACKGROUND

The Department of Fisheries and Oceans (DFO) was among several federal departments highlighted in the April volume of the 1999 Auditor General’s report.

Senior DFO officials appeared before the Standing Committee on Public Accounts on May 13, 1999 as part of its hearings on Chapter 4 of the April report, Fisheries and Oceans – Managing Shellfish in a Sustainable Manner. In the Committee’s report, tabled in the House of Commons on June 2, 1999, members noted that they were pleased that DFO had acted upon the Auditor General’s (AG) Report or was planning to take action, but noted the following concerns:

• an absence of a sustainable fisheries framework that would establish clear objectives for fisheries management and guide long-term management;
• "shortcomings" in the accountability documents tabled annually in Parliament, in particular, the lack of reference to economic and social objectives for its fisheries management initiatives; and
• the Department had not yet acted upon recommendations made in 1997 for the development of a "fisheries management framework that considers all aspects of sustainability".

The following nine recommendations were based on these concerns.

That the Department give careful consideration to giving the appropriate legislative recognition to the principles that the framework is meant to implement.

Government Response

Recommendations 1 through 4 are closely interconnected and will be addressed together.

A comprehensive multi-year review of the Department’s Atlantic fisheries policy is currently under way to develop a consistent and cohesive policy framework for the management of Canada’s East Coast fish stocks. The policy framework will:

• consolidate the objectives currently being pursued by the Department;

• clarify direction where there are conflicting goals; and

• commit to principles which will guide fisheries management direction in the long term.

The review will be conducted in two phases. In the first phase, which began in early 1999, the focus has been on creating a long-term vision and setting objectives. An important component of this first phase has been a series of public discussions in key centres across Atlantic Canada, Quebec and Nunavut. Participants have included fisheries workers, aquaculturists, recreational fishers, Aboriginal groups, environmentalists, community leaders, the general public and DFO staff. The sessions have been well attended and participants have expressed broad support for both the policy review and the process it will follow.

In November, the Department is planning to circulate a discussion document which will be used to guide further public consultations planned for late 1999. It is expected that the first phase of the policy review will be complete by the spring of 2000. The second phase of the review, scheduled to begin in mid-2000, will focus on implementation of the framework, including any required revisions to the legislation.

The Government notes that the Committee has called for a number of items to be clarified as part of the policy framework, including:

• measurable conservation objectives, specifying the indicators that will be used to assess their achievement;

• establishing expected results for economic objectives;
• recognizing that social factors play a key role in ensuring the long-term sustainability of the fisheries; and

• providing guidance on how the Department is to achieve an appropriate balance between biological, economic and social factors when it makes fisheries management decisions.

The Government appreciates the input the Committee has provided and will consider all of these elements as part of the exercise of building a consistent and cohesive policy framework. However, some of the elements the Committee has highlighted are items the Department may consider in the second phase of the policy review exercise which is expected to begin in mid-2000.

Some examples of issues which may be addressed in the second phase of the policy review include changes to governance structures to establish a more transparent decision-making process with greater industry involvement and accountability, as well as changes to the process of allocating access to the resource. Other issues may include establishing performance measures for conservation on a species by species or an area by area basis.

That Fisheries and Oceans Canada revise its annual Report on Plans and Priorities and its Departmental Performance Reports to reflect the biological, economic and social expectations and outcomes of its fisheries management decisions and activities. The Committee expects that these revisions must/will be in place by the end of fiscal year 2000 – 2001.

Government Response

Conservation and environmental protection is the Department’s first priority. The Department acknowledges however that there are social and economic factors associated with its fisheries management decisions.

Overall performance measurement in the fishery is complex and challenging given that DFO manages more than 300 fish stocks and produces about 180 integrated fisheries management plans each year. Nevertheless, the Department is actively working towards broadening its reports to Parliament on the biological, economic and social results of its fisheries management decisions and activities.

The Department is proceeding with efforts to improve the information provided to Parliament. These efforts involve the development of a performance measurement framework to assess the Department’s performance in managing the resource. In addition, the Department is considering the investments required to establish an information management system to support improved resource management processes and performance reporting.

Moreover, the Atlantic fisheries policy review now under way is designed to result in a consistent and cohesive policy framework. In consultation with stakeholders, including provinces and territories, the development of performance measures is an important part of the review process. As stated previously, the first phase of the review is expected to be completed by the spring of 2000 while the second phase is scheduled to begin in mid-2000.

Consequently, it will be possible to provide enhanced reporting to Parliament by 2000-2001, as the Committee recommended; however, a full report on all aspects of biological, economic and social expectations and outcomes of its fisheries management decisions and activities may not be possible until after the completion of the policy review.

Recommendation 6

That Fisheries and Oceans Canada conduct a thorough study of the harvesting capacity in the Atlantic fisheries, placing an emphasis on clarifying what the Department means by capacity and on determining trends in this area. The Committee expects that the results of this study will be reported to it by 30 September 1999 and that the subjects of capacity will be addressed in the Department’s subsequent Performance Reports, beginning with the report for the period ending 31 March 2000.

Government Response

Fishing capacity is a very complex issue. While physical measurements, such as the size of the vessel, its length, its holding capacity or its gross registered tonnage are considered, it is also necessary to consider gear type and quantity, the number of days at sea, engine power, technology, length of season, number of licences held, the fishery management regime in place and the abundance of the stock.

One can consider capacity from an economic perspective, that is, the production that is made from inputs that are employed in an economically efficient manner, or conversely, the amount of labour and capital required to be deployed in a fishery that will yield a reasonable income.

While a formal study has not been undertaken, as the Committee recommended, much has been done to address the capacity issue in recent years. There exists a range of federal government programs and initiatives that have assisted in overall fishing fleet reduction. These include the Atlantic Fisheries Adjustment Program (AFAP), Quebec Federal Fisheries Development Program (QFFDP), the Atlantic Groundfish Adjustment Program (AGAP), the Northern Cod Adjustment and Recovery Program (NCARP), The Atlantic Groundfish Strategy (TAGS), and the current Canadian Fisheries Adjustment and Restructuring (CFAR) program. During the 1986-1996 period, there was also an Atlantic commercial salmon licence buy-back program and a Pacific Salmon Revitalization Strategy (PSRS), in 1995-96.

Between 1986 and 1996, the number of fishing vessels in Canada decreased from more than 36,000 to less than 29,000, a reduction of 20 per cent. In addition, the number of registered fishers in Canada decreased from about 80,000 to 64,000 in the same period, a reduction of 28 per cent. Under the Atlantic commercial salmon licence buyback program, 97 per cent of all licences were retired (about 430) in the three Maritime provinces and 94 per cent of licences were retired in Newfoundland and Labrador (about 2800).

Because fisheries resources fluctuate, it is not possible to adjust fleet capacity to match the resource level immediately. Further, it is inherently difficult to predict resource levels from season to season, or even over longer time frames. For this reason the Department has generally opted to control fishing effort, such as number of days at sea, length of fishing season, gear size, etc., in addition to addressing fishing capacity. Past efforts, both in Canada and other countries, have shown that restricting capacity alone has not been very effective in managing fisheries.

It is also important to note that fishing capacity is not only a domestic concern but an international one. In March 1999, the United Nations Food and Agriculture Organization (FAO) Council of

Ministers approved an International Plan of Action (IPOA) for the management of fishing capacity. Canada was an active participant in the negotiation of the IPOA which deals with the issues of capacity, flags of convenience, vessel registry and government subsidies.

The immediate objective of the IPOA is for states and regional fisheries organizations to achieve world wide efficient, equitable and transparent management of fishing capacity, preferably by 2003 and no later than 2005. Canada has pledged to be among the first nations to complete its plan of action.

To achieve this goal, DFO has established an internal working group, representing all regions of Canada. Industry representatives and provincial officials will be kept apprised of developments. Deliverables include:

• a list of priority fisheries for which to measure capacity by the fall of 1999. (The FAO suggests the migratory, straddling and transboundary stocks should be a priority but the working group will also look at fisheries of significant economic value and those that may have known conservation risks.)

• a preliminary assessment of fishing capacity according to the methodology that will have been agreed to at the Mexico Technical Meeting on the Measurement of Fishing Capacity, by the end of 2000.

• implementing the Canadian component of an international vessel registry by the end of 2000.

• documenting fishery resource levels by the end of 2000.

• developing a process whereby capacity can be measured systematically for Canadian fisheries by the end of 2001.

• consulting with industry and provinces during 2001 on results, adequate capacity levels and options for an action plan, as appropriate.

• developing plans to manage surplus capacity, if needed, by the end of 2002.

A federal-provincial task group has been established under the auspices of the Canadian Council of Fisheries and Aquaculture Ministers to ensure that provinces and territories are involved in this work from the outset.

The Department will provide a status report on these initiatives in its Departmental Performance Report beginning in March 2000.

Nonetheless, DFO fully recognizes the need to monitor harvesting capacity to assess whether the Canadian fleet is generally in equilibrium with the long term sustainability of fish resources. The Department will also work with the FAO to achieve meaningful and methodologically sound indicators that can be tracked over time, and to explore what measures may need to be considered that would help restore a balance.

That Fisheries and Oceans Canada arrange to have an independent, objective assessment conducted of its scientific capacity and table this study along with its conclusions and recommendations in Parliament no later than March 31, 2000. Within three months, the Department should subsequently table an action plan addressing the study’s recommendations.

Government Response

The Department agrees with the Committee’s recommendation and will put in place a review of science capacity, utilizing an external, independent body which will be engaged to conduct the review and produce a report. The terms of reference for the review will include an overview of science capacity in other countries which have significant fisheries. The primary focus will be on the key science required to support the legislated mandate of the Department as well as the conservation of aquatic resources and the oceans.

Science capacity in DFO will also be examined from the perspective of answering key questions related to environmental concerns and requirements necessary for the sustainable development of Canada’s aquaculture in harmony with the natural environment.

Given the scope of this task, it will likely not be possible to complete the study in the time specified by the Committee, although every effort will be made to fast track the process.

That Fisheries and Oceans Canada table an action plan with the House of Commons Standing Committee on Public Accounts detailing how it will resolve problems identified by the Auditor General of Canada in its monitoring, control surveillance, and enforcement activities. This action plan should be submitted to the Committee no later than 30 September 1999.

Government Response

The Government recognizes the problems identified by the Auditor General with respect to monitoring, control and surveillance (MCS) and is addressing them. The following is an outline of a new, integrated approach that DFO has developed and the plans the Department has to implement it.

This new approach to MCS, which is based on principles of risk management, parallels trends in effective fisheries management in other countries and will strengthen the compliance aspects of the Department’s Integrated Fisheries Management Planning (IFMP) process. It is expected that the approach will take three to five years to implement.

The Government acknowledges that there are gaps in surveillance and enforcement in some fisheries. As in other jurisdictions, there are limits to the effectiveness of individual surveillance and enforcement tools which include at-sea observers, dockside monitoring, inshore and offshore patrol vessels, air surveillance, and land patrols by Fishery Officers. The key to improving regulatory compliance lies in determining the most efficient and effective mix of surveillance tools on a fishery by fishery basis. Also important is a shift in the onus to demonstrate compliance from government only, to a shared responsibility and accountability with industry. Such a shift is evidenced in almost all areas of regulatory and law enforcement. It is widely recognized that there are significant limits to the traditional "cat and mouse" approach to law enforcement in the areas of fisheries management.

The Auditor General has suggested that there is a lack of co-ordination in planning for use of MCS tools and that certain fisheries management plans fail to address particular compliance problems. In its response to the Auditor General, DFO committed to address surveillance and enforcement gaps in individual fishing plans as part of the integrated fisheries management planning (IFMP) process. The IFMP framework, by which fishing plans are developed in consultation with the fishing industry, is a sound, although not yet fully implemented, process. Efforts are being made to strengthen the compliance aspects of fishing plans in order to ensure that the surveillance measures are enforceable and appropriate to the compliance issues present in those fisheries. Industry co-operation is necessary, along with government surveillance and enforcement, to ensure the sustainable harvest of stocks. A cadre of resource managers and Fishery Officers is being trained to deliver on this commitment.

With regard to the MCS system as a whole, improvements can be made to overall planning and co-ordination to make better use of existing data systems for more effective and efficient deployment of MCS tools and to extend coverage of licenced as well as unlicenced fishing (poaching). A key element of the new MCS approach is the development of fully integrated data management systems which will enable DFO to take advantage of available information about a fishery from a wide variety of systems, including biological information and catch and compliance history. This information will facilitate the development, in consultation with the industry, of fishing plans that include the most appropriate mix of MCS tools for that particular fishery and ensure that conservation targets are met.

Further, the Department will continue to research and test new surveillance technologies, such as satellite surveillance mechanisms, in consultation with the fishing industry to broaden the range of MCS tools and improve cost-effectiveness. Over time, compliance protocols will be struck with the industry for as many commercial fisheries as possible to allow for a rationalization of effort and a focus on high-risk, licensed fisheries and broader coverage of poaching.

The Department is aware that at-sea observer data is not always used for the management of some fisheries. The new, integrated approach to MCS will address this concern. With the further development of integrated data systems, such information will be used more extensively and systematically in the management of the fishery on a "real time" basis, along with other sources of surveillance and compliance information.

With respect to the lack of a systematic basis for establishing coverage targets for at-sea observers, the Department is undertaking studies to assess the validity of "indexing" as well as other means of determining appropriate coverage levels. As industry is required to pay for observer coverage, in whole or in part, observer coverage is subject to consultation as part of the IFMP process. The Department is fully committed to extending at-sea observer coverage, where appropriate, while continuing to assess the cost effectiveness of other at-sea surveillance mechanisms in consultation with the industry.

Where problems of compliance persist and the industry is reluctant to address them, investigatory tools, such as forensic audits, will be undertaken by the Department to deal with illegal activity, particularly for fisheries experiencing conservation threats.

Gaps in at-sea enforcement capability observed by the Auditor General will be addressed by a more strategic use of patrol vessels. Large patrol vessels are very expensive to own and operate and so must be used judiciously. The Department will continue to use them to respond to specific enforcement problems identified through surveillance methods and for international requirements. In the context of the integrated MCS approach, they will be operated in a "reactive" manner whereas in the past they were often used for routine monitoring and surveillance which can now be accomplished by other, more cost- effective and efficient means.

The Auditor General raised concerns with DFO’s dockside monitoring program (DMP) initially in 1997. Subsequently, the Department revised the DMP regulations to improve the accuracy, timeliness and integrity of fish landing information. The regulations require that the dockside monitoring companies be independent of the fishing entities they monitor and that there are no conflicts of interest. An additional requirement for a quality system will ensure accurate and timely records of landings. These quality systems will be audited regularly by the Canadian General Standards Board to ensure a high standard of delivery of dockside monitoring services. To attest to the accuracy of the landings information, fishers are now required to sign weigh-out documents. DFO Fishery Officers will also conduct regular checks at landing sites to ensure compliance with these requirements.

In summary, modernization of DFO’s MCS system involves a more strategic and integrated approach to traditional fisheries surveillance and enforcement. This approach is consistent with the Department’s ongoing efforts to implement IFMPs based on principles of risk management and use of the "precautionary" approach for domestic fisheries to which Canada is committed under the United Nations Fisheries Agreement. The new, integrated approach will be implemented on a pilot basis for a selected number of fisheries during the 2000/2001 fishing season following consultation with the fishing industry. The pilot projects will be evaluated and deficiencies addressed before applying them to additional fisheries.

That Fisheries and Oceans Canada table a report with the House of Commons Standing Committee on Public Accounts outlining the measures it has implemented to ensure that its use of specified purpose accounts and financial arrangements with third parties adhere faithfully to legislative and policy requirements. This report must/should be presented to the Committee no later than 30 September 1999.

Government Response

The Department and industry, through co-management agreements, identified areas of mutual concern and interest on which to work collectively. Under the agreements, both parties receive benefits from their collaboration and share in the costs of the activities undertaken.

The fishing industry’s contribution can be both in-kind and financial; the financial component is placed in a Specified Purpose Account (SPA). While there is no requirement to make a financial contribution, the industry sometimes chooses to do so as part of its contribution to the joint project/activity. The expenses that are covered by these funds have been predetermined in the agreement between the parties and are accounted for individually.

The Department acknowledges that it was not operating strictly within the Treasury Board policy on SPAs which indicates that "money received from outside parties for the purpose of cost sharing or joint project agreements must never be used to reimburse departmental expenditures; funds must be received in advance and expenditures shall be charged directly to the account".

Nevertheless, it is the Department’s position that it has followed the spirit of the policy. Salary costs are incurred after the SPA funds are on deposit. However, the government pay system does not have the flexibility to permit project costs to be charged directly to the SPA. Therefore, salary cost must be charged to the departmental appropriation and then transferred by journal voucher to the SPA.