PACC Committee Report

INTRODUCTION
OBSERVATIONS AND RECOMMENDATIONS
CONCLUSION

Pursuant to Standing order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

The Standing Committee on Public Accounts has considered Chapter 4 of the April 1999 Report of the Auditor General of Canada (Fisheries and Oceans --- Managing Atlantic shellfish in a Sustainable Manner) and the Committee has agreed to report the following:

The shellfish fishery is a major component of Atlantic Canada's fisheries. In 1997, for example, the landed value of all shellfish in Atlantic Canada was $920 million, or 81% of the value of all fish landed in the region. The ongoing health and economic viability of this resource is of particular importance in light of the collapse of the region's groundfish stocks in the early 1990s.

Due to the importance of the shellfish fishery and the need to manage this resource wisely, the Committee decided to review the results of an the Auditor General’s audit of the Fisheries and Oceans Canada's management of the lobster, scallop, snow crab and shrimp fisheries in Atlantic Canada. Accordingly, the Committee met on 13 May 1999 with Mr. Denis Desautels, FCA, Auditor General of Canada, and Mr. John O'Brien, Principal, Audit Operations Branch of the Office of the Auditor General. Mr. Larry Murray, Associate Deputy Minister, Mr. Jacques Robichaud, Director General, Resource Management Directorate, and Mr. Howard Powles, acting Director, Fisheries Research Branch, represented Fisheries and Oceans Canada (the Department).

Mr. Desautels summarized the results of the audit in his opening remarks. He began by outlining the similarities between the findings of this audit and those of an audit of the Department's management of the Atlantic groundfish fishery that was reported in October 1997. In both instances problems stemmed from similar causes. The Auditor General pointed to the need to clarify fisheries legislation, create a national fisheries policy, establish measurable indicators and performance expectations, improve fisheries management planning, improve catch monitoring and enforcement,; and to deal with the problem of overcapacity in an effective manner in order to properly manage the shellfish fishery. He then outlined some of the problems surrounding the management of the Atlantic shellfish resource in the absence of fulfillment of these requirements. (1535, 1540)

Mr. Larry Murray responded on behalf of the Department. Rather than addressing the audit observations and recommendations directly, however, he chose to emphasize the way in which the Department is changing its approach to fisheries management in general. His remarks can be summed up easily: resource conservation is the Department's overriding objective, one that all departmental decisions and activities must support. He stated, toward the end of his comments, that the Department has either agreed to take action on the Auditor General's recommendations, or already has initiatives underway to do so. (1540, 1545)

The Committee is pleased to see that the Department is responding positively to the audit. Nevertheless, the Committee has a number of concerns that it believes that the Department must address with concrete actions taken on an urgent basis.

Principal among the Committee's concerns is the absence of a sustainable fisheries framework that would establish clear objectives for fisheries management and serve to guide decision making over the long term. In the absence of such a framework, the logic and the rules supporting decisions are unclear to both departmental managers and industry stakeholders. It is also unclear to Parliament, industry stakeholders, and Canadian taxpayers what the Department is trying to achieve through its management of the fisheries.

Confusion over what the Department is trying to achieve through its management of the shellfish fishery underscores the need for a sustainable fisheries framework. The Department states that its goal is "conservation", yet as the Auditor General points out, it has not specified what it means by this term nor does it, in most instances, have ways of determining whether this goal has been achieved. (4.46, 4.47) Furthermore, decisions taken by the Department have economic and social implications, a factor acknowledged by Mr. Murray. (1605, 1650) It is not clear, however, whether the Department is willing to accept responsibility for outcomes in these areas, even though the audit found examples of decisions in the shellfish fisheries directed towards the achievement of economic and social outcomes. (4.23 – 4.27, Exhibit 4.3). In response to a question from the Committee, Mr. Murray testified that:

It is difficult in the context of a department [of] our size to know exactly what we've said when, which confirms the need for us to be clearer and to have a policy framework so it is clearer to everyone that when we're talking about outcomes. I believe … that we're not running HRDC [Human Resources Development Canada]. We are running an organization that is there to manage the fish and to ensure that the industry remains viable in the future for as many human beings as possible. Obviously the decisions the Minister takes every day have a social impact, but the driving factor [is] … is to ensure that there's a viable fishery and a way of life for those people who are in the industry. (1610)

The lack of a clear policy framework may also explain some shortcomings in the accountability documents (annual Reports on Plans and Priorities and departmental Performance Reports) that are presented to tabled in Parliament by Fisheries and Oceans Canada. For example, there are no references made to overall economic objectives when the Department discusses its expected results for fisheries management. In addition, although Mr. Murray testified that social factors are taken into account when the Department reaches conservation decisions, this is not reflected in reports to Parliament. (4.21 – 4.22) From the Committee's perspective, this hinders Parliament's ability to hold the Department accountable for the social and economic outcomes generated by its conduct management of the fisheries.

Mr. Murray signaled the Department's agreement that a better policy framework is required. He informed the Committee that the Department has recently established a Working Group to reform Atlantic Fisheries Policy and to clarify its management policies. Mr. Murray stated that the Working Group's mandate is to create a cohesive and consistent policy framework to allow the establishment of biological reference points and more comprehensive rules for taking conservation-related decisions. (1545) He also agreed to provide the Committee with a copy of the Group's mandate and structure. (1620)

These are welcome initiatives. The Committee observes, however, that in 1997 the Department made a commitment to establish a consolidated policy framework related to sustaining the fisheries resource base in response to recommendations made by the Auditor General. Yet two years later, the Auditor General informed this Committee that the Department "has not yet developed a fisheries management framework that considers all aspects of sustainability." (1535) Furthermore, although Mr. Murray agreed that it is "quite urgent" for the Working Group to finish its work (1620), he did not provide a target date for completion of a policy framework.

The Committee agrees with the observation made by the Auditor General that "part of the reason for the continuing problems … rests with the existing framework for fisheries management," (1535) and accordingly recommends:

RECOMMENDATION 1:

That Fisheries and Oceans Canada establish a target deadlines for the completion and implementation of a cohesive and consistent sustainable fisheries management framework. Thiese deadlines must take full account of the urgent need for this framework.

Furthermore, the Committee recommends:

RECOMMENDATION 2:

That Fisheries and Oceans Canada ensure that the framework:

• Clearly defines measurable conservation objectives, specifying the indicators that will be used to assess their achievement;
• Establishes expected results for economic objectives;
• Recognizes that social factors play a key role in ensuring the long-term sustainability of the fisheries; and
• Provides guidance on how the Department is to achieve an appropriate balance between biological, economic, and social factors when it makes fisheries management decisions.

The Committee was interested to note that to a growing extent the Department is engaging in co-management practices with industry stakeholders. In principle, the Committee supports this approach which enables a sharing of decision-making power, responsibility, and risk between the Department and stakeholders. The Committee believes that this approach should also apply to the development of the policy framework and therefore recommends:

RECOMMENDATION 3:

That Fisheries and Oceans Canada consult with industry stakeholders on a regular basis in the process of developing a sustainable fisheries framework.

Since elements of this framework may require legislative change and indeed be strengthened by it, the Committee recommends:

RECOMMENDATION 4:

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

Because it is vital that Parliament be able to hold the Department to account for the outcomes that result from its fisheries management decisions, the Committee also recommends:

RECOMMENDATION 5:

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. These Committee expects that these revisions must will be in place by the end of fiscal year 2000 - 2001.

In his Report and testimony before the Committee, the Auditor General raised the problem of harvesting capacity in the Atlantic shellfish industry. While the Department has been taking steps to reduce capacity in the groundfish sector (4.34), it has put in place incentives to increase capacity in the shellfish industry (4.35). The Auditor General warns that the new and enlarged vessels that have resulted "have a large potential harvesting capacity, which could readily be redirected to harvest groundfish" thus offsetting previous reduction efforts in that area. (4.36) The Committee believes that more needs to be known about capacity and therefore recommends:

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 subject of capacity will be addressed in the Department’s subsequent Performance Reports, beginning with the report for the period ending 31 March 2000.

One of the leading concerns expressed by Committee Members involved the scientific capacity required by the Department in order to make sound resource management decisions. In his rReport, the Auditor General provided examples of weaknesses in the information available to support resource use decisions; some of these weaknesses involved the quality of scientific information. (4.52)

Mr. Murray informed the Committee that the Department will be spending $6.5 million over the next year to hire 82 new scientists (1625), despite a Committee Member's concern about announced budgetary reductions in this area of the Department's operations. Mr. Murray also stated that the Department is involved in a government-wide science and technology initiative. (1710)

For his part, the Auditor General testified that although he was not able to provide a definitive conclusion about the Department's scientific capacity, he was left with the impression that "the resources on that side have been reduced substantially, and therefore the Department might have lost some capacity." (1555)

The Committee firmly believes that the Department must have sufficient scientific information in order to manage the resource in a sound, cost-effective manner. It therefore recommends:

RECOMMENDATION 7:

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 31 March 31 2000. Within three months, the Department should subsequently table an action plan addressing the study’s recommendations.

The Committee takes note of the Auditor General’s concerns regarding the Department’s monitoring, control and surveillance activities, or MCS. The audit found that there was a lack of co-ordination in planning MCS (4.66), and that there were other problems with dockside monitoring (4.69), at-sea observers (4.72 – 4.77), aerial surveillance (4.80), and enforcement. (4.80 – 4.84). Although Mr. Murray indicated the Department’s agreement with all of the audit recommendations, there were none that were specific to MCS. The Committee believes that this aspect of the Department’s work is essential to a well-managed fishery and therefore recommends:

RECOMMENDATION 8:

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.

The Committee is deeply concerned about certain arrangements between the Department and third parties, as reported in paragraphs 4.101 to 4.104 of the Auditor General's Report. In one instance, a fee for access totaling $5 million in 1997, and $2 million in 1998, was imposed by the Department in a manner, according to the Auditor General, that may not have been contemplated in legislation. (4.101) In the other instance, the Auditor General reports that the Department was using a specified purpose account to reimburse its own departmental expenditures without proper authority and in a manner that does not conform to Treasury Board policy. (4.103, 4.104) These concerns were elaborated on in testimony given before the Committee. (1615, 1625)

Mr. Murray testified that the Department had looked into the concerns raised by the Auditor General. Although Fisheries and Oceans concluded that its actions were "legitimate and appropriate," Mr. Murray testified that the Department believes that the Auditor General's concerns were correct and that adjustments have been made as a consequence. (1615)

The Committee considers these matters to be quite serious and requires absolute assurance from the Department that it will conduct further activities of this sort in conformity with existing legislation and Treasury Board policies. The Committee fully appreciates the Department’s efforts to make adjustments in response to the Auditor General’s concerns and therefore recommends:

RECOMMENDATION 9:

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 301 September 1999.

Proper management of fisheries resources must be based on a framework that produces consistent, logical decisions. Such a framework must clearly define and balance the goals that are to be achieved and set forth the rules that are to be followed. In the absence of an appropriate framework, the kind of inconsistent, ad hoc decision making uncovered by the audit is bound to occur. Indeed, it is almost inconceivable that a resource that is of such importance to the economy and people of Atlantic Canada and the country as a whole would be managed without such a framework.

Two years ago, in response to a series of audits conducted by the Auditor General centered on the management of Atlantic Canada's groundfish fisheries, Fisheries and Oceans Canada made a commitment to establish a sustainable fisheries framework. Now, a subsequent audit of the Department's management of Atlantic shellfish stocks has revealed problems that parallel those in its conduct of the groundfish industry --- problems that might have been minimized or eliminated had a sustainable fisheries framework been in place. While there are no indications of an imminent collapse of the shellfish fishery (as happened with groundfish stocks), there are no guarantees of sustainability without careful co-ordination and planning.

It is therefore imperative that Fisheries and Oceans Canada assign urgent priority to the creation and implementation of a sustainable fisheries framework in order to ensure the long-term viability of the shellfish, and other, fisheries. A sincere and determined effort to implement the Auditor General's recommendations along with those suggested by this Committee will help the Department succeed in this effort.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this Report.

A copy of the relevant Minutes of Proceedings (Meeting No. 63) is tabled.

Respectfully submitted,