FISH Committee Meeting

STANDING COMMITTEE ON FISHERIES AND OCEANS

COMITÉ PERMANENT DES PÊCHES ET DES OCÉANS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 27, 1999

• 0915

[English]

The Chairman (Mr. Charles Hubbard (Miramichi, Lib.)): We will begin then, pursuant to Standing Order 108(2). I was waiting for the official opposition to arrive. I know that people do have other meetings and are late. But with the Auditor General being here today, the official opposition are always a very important part of this type of meeting.

Before we begin with the Auditor General, Mr. Desautels, I would like to just mention a couple of points. First of all, the planned meeting for Thursday with the only member of the Pacific Salmon Commission who did consent to appear before the committee, Mr. Chapple, is questionable in terms of his being ready for videoconferencing. He would prefer not to come alone. Apparently, this man has just had a pacemaker put in to deal with trouble with his heart. He talked with me yesterday by phone and said that he would rather not appear before a committee as the only member from that commission. Mr. Cummins had suggested that all members who were appointed to the Pacific Salmon Commission by the minister should appear before this committee. I'm wondering what your direction to the chair would be in terms of having only him when he's reluctant to appear alone.

Peter.

Mr. Peter Stoffer (Sackville—Musquodoboit Valley—Eastern Shore, NDP): If that is indeed the case, then I would suggest he take a breather and relax, and at another time we can reconvene that meeting.

The Chairman: Are there any objections to that answer?

Mr. Wayne Easter (Malpeque, Lib.): Mr. Chairman, the request was from the official opposition, and they have been continually missing meetings. If they're not here to present their arguments as to why he should be here, then too bad. To be honest, I'm getting pretty fed up with the official opposition never, never, never being here.

The Chairman: Secondly, in terms of our work with the environment committee with regard to aquaculture, we've met more or less a blank wall. They are extremely busy, and the chairman advised me that he had difficulty getting members to volunteer to take part in that joint committee work. It's getting late in the year. Does anyone have concerns or suggestions on how we might approach that? Peter, again.

Mr. Peter Stoffer: I realize that it is late and summer is coming on, but perhaps they could rethink their position, and maybe we'll be able to reconvene the joint committee in September. Aquaculture is on the rise, and there is an awful lot of concern, especially in Atlantic Canada and western Canada, about the pros and cons of it. I think it would be helpful to both committees to have that joint effort.

The Chairman: Carmen.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Mr. Chair and colleagues, I don't see why we need to have a joint committee. I think that area merits the work we were going to do with or without the participation of the environment committee. I don't see why we couldn't just strike a subcommittee of this committee and get on with it. They were only going to provide, I think, two representatives. If that committee has to be cajoled into it, I say cut them loose and let's get on with the job.

The Chairman: Carmen, I had asked if you would be the chair if we did appoint a subcommittee, and I see that you've been aggressive in terms of trying to get something moving there. I know you have a great interest in it.

Peter, would you and Paul favour striking a subcommittee? I know, Paul, that you're replacing your good friend, Yvan, here, but he was very much interested in aquaculture in terms of the Gaspé area of Quebec.

A subcommittee would consist of maybe as many as five members from our group, probably three Liberals and two members from the opposition. Yves Bastien has been appointed aquaculture commissioner.

Paul, I see you're being briefed by your aide there.

Would you agree, Peter?

Mr. Peter Stoffer: If nobody from the environment committee is prepared or willing to come on board, I'd be more than happy to work with Carmen on that.

• 0920

The Chairman: I was just discussing this with our clerk. With the official opposition not being here, it's somewhat difficult to strike a committee. But perhaps you could take under advisement that on Tuesday of next week we will strike a committee to look into this.

Carmen, if you would continue with the idea of being chair of that group, perhaps you could discuss this with the members and see who would be most interested in working on aquaculture.

Mr. Carmen Provenzano: I'll do that.

The Chairman: Paul.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): It's important that we turn the floor over to the Auditor General as soon as possible, but we want some assurances that aquaculture will be discussed, before environmental standards are changed. Whether this subject is examined by the sub-committee or the main committee, we want some assurances that as we proceed to consider this theme, the focus will be on the fishery, before we consider amending environmental regulations, so that we're not forced to play catch up later.

[English]

The Chairman: Thanks, Paul.

Our original concern was in terms of that environmental act we were working on.

This morning we'd like to welcome the Auditor General and his staff. I've worked with the Auditor General before. He has always done an excellent job, and I've been very supportive of his work. This time he has three chapters that deal with matters our committee and DFO have been concerned with over the past few years.

Mr. Desautels, we want to welcome you to our committee this morning. Perhaps you could introduce your staff and explain briefly their responsibilities. I see that you do have a presentation. I know that committee members will have a good number of questions to ask in terms of your report. Welcome to our committee.

Mr. L. Denis Desautels (Auditor General of Canada): Thank you very much, Mr. Chairman, for this opportunity to present the results of our work, namely, chapter 4 in our recent report on the Atlantic shellfish and the two chapters in the same report on the Atlantic groundfish strategy.

I have with me at the table Assistant Auditor General David Rattray. David is responsible for the work we do at HRDC. Therefore, he's responsible for the audits we carried out of the TAGS program. Also with me is John O'Brien. John is a principal in our Halifax office and is responsible for the work we do on DFO in the Atlantic region. He's the main author of chapter 4, which you're all interested in.

In chapter 4, which is entitled “Managing Atlantic Shellfish in a Sustainable Manner”, we raise serious concerns about the way Fisheries and Oceans manages the lobster, scallop, snow crab, and shrimp fisheries in Atlantic Canada. In 1997 the landed value of all shellfish was $920 million, or 81% of the value of all fish landed in Atlantic Canada.

On October 21, 1997, I appeared before this committee to discuss problems associated with the department's management of the groundfish fisheries, many of which were not operating at that time. Atlantic Canada shellfish fisheries are operating and for the most part are lucrative.

However, there are many similarities between the issues reported in chapter 4 and those previously raised with this committee on the management of the groundfish fisheries. For example, in 1997 we raised concerns about the need to clarify fisheries' objectives in legislation, the absence of a national fisheries policy, and the need to establish measurable indicators and performance expectations. In addition we reported on the need to improve fisheries management practices, such as scientific stock assessments, fisheries management planning, catch monitoring, and enforcement. Lastly, we reported that attempts to address the overcapacity problem in the groundfish fishery had been largely unsuccessful.

• 0925

In the current audit, we found again that the department had not yet developed a fisheries management framework that considers all aspects of sustainability. We provide examples of decisions that demonstrate the need for a sustainable fisheries framework. Further, we found weaknesses in fisheries management practices in the shellfish fisheries. Finally, we raised concerns about the implementation of co-management, a form of power-sharing with stakeholders.

Now, should Canadians be concerned about the problems we found in the management of the shellfish fisheries? After all, as I've already said, these fisheries are lucrative; therefore, the full impact of the problems is not obvious. In our view, as we reported in 1997 on the groundfish fisheries, these concerns are significant and must be addressed to ensure the shellfish fisheries are managed in a sustainable manner. We believe part of the reason for the continuing problems we noted rest with the existing framework for fisheries management.

It's not clear what the department is trying to achieve through its management of the shellfish fisheries. The department has informed Parliament that its objective is conservation of the fishery resource and that it also has an economic objective for which, however, no expected results have been specified. The department has informed the Standing Committee on Public Accounts that it does not have the responsibility or the resources for managing social and economic outcomes. We have provided examples of decisions in the shellfish fisheries that are directed toward achieving such outcomes. Indeed, most fisheries decisions we examined were heavily influenced by social and economic factors. We're not saying this is wrong, but rather that there is an inconsistency between the department's official position and its actual decisions.

[Translation]

Mr. Chairman, our report also includes case studies that point to decisions that do not appear to be consistent with the department's Fishery of the Future strategy - achieving economically viable fisheries.

We discuss the problem of controlling harvesting capacity and provide examples of growth in the industry's harvesting capacity. This growth has occurred at a time when the government has expended considerable effort and funds to reduce overall capacity.

Even within its acknowledged core mandate, the department has not set out clearly what it means by "conservation" of the fisheries resource - the primary stated purpose of the fisheries management function.

It is difficult to see how we can move forward with cost- effective management of sustainable fisheries if the department does not first set out what it is trying to achieve from the fisheries.

Sustainable fisheries require the balancing of interdependent biological, social and economic factors with a long-term perspective. Decisions made on an ad hoc and inconsistent basis rather than as part of an overall framework are not acceptable if we want to ensure sustainability, not only of the stocks but also of the people and communities that depend on them.

We also found that the department's fisheries management practices need further improvement to ensure the sustainability of the resource. Problems we identified include: the absence of clear and measurable "conservation" objectives for individual fisheries; weaknesses in information needed to decide the use of the resource; gaps in the monitoring, control and surveillance of fishing activities; and co-management arrangements that are largely cost- sharing arrangements and involve little sharing of decision making.

We believe that it is important for the department to address these concerns by developing an overall framework for sustainable fisheries and improving fisheries management practices.

Now allow me to turn to Chapter 7, which presents the findings of an audit in response to a request that this committee made following the tabling of our chapters on the Atlantic groundfish strategy. The Internal Audit Bureau of Human Resources Development Canada had planned an audit of grants and contributions provided by the department. Therefore, we agreed that the department would conduct the audit, and we would monitor and review its work. Expenditures on grants and contributions represent about $150 million of the $1.9 billion allocated to The Atlantic Groundfish Strategy.

• 0930

We are quite concerned about the findings of this audit. They clearly indicate a lack of diligence in assessing proposals and signing agreements, as well as a lack of monitoring. In most cases, the auditors could not determine how the selection criteria had been applied and why projects had been recommended or selected. Several proposals did not state objectives that were related to TAGS.

Many agreements did not have clear objectives for the projects or did not clearly indicate that they targeted TAGS participants. More than half of the agreements were signed after the projects' start dates.

Few projects were monitored. Expenditures were reimbursed even when claims had been submitted without supporting documentation. At the time of the audit, most projects had been completed for more than two years, as funds for the labour adjustment measures were curtailed in 1996. However, nearly half of the files examined showed no evidence of the required closeout procedures.

[English]

These weaknesses could be a reflection of the circumstances that prevailed when TAGS was implemented. The possibility remains that new agreements may be entered into under the current fishery restructuring and adjustment measures.

In chapter 8, we present our follow-up of the recommendations of our October 1997 report, chapter 16, on the Atlantic groundfish strategy. We made six recommendations in 1997. In general, we are satisfied with the actions taken to address them.

The government had better information when it planned these new measures. The eligibility criteria are clear, logical, and applicable. The accountability framework established for the measures corrects the shortcomings we had identified in TAGS. Responsibilities of the organizations involved are clearly defined, and formal coordination mechanisms have been established.

I think it's too early to assess whether all aspects of the new fishery restructuring and adjustment measures will work. In our opinion, efforts so far to avoid the uncertainty that surrounded TAGS have been satisfactory.

To conclude, Mr. Chairman, we understand fisheries management issues are both sensitive and complex. We do hope we have provided a useful contribution to your committee's deliberations on these matters. We believe the development and implementation of a new fisheries policy is an important aspect of a sustainable fisheries framework. Furthermore, as we indicated in October 1997, we believe there is a need to clarify fisheries objectives in legislation as part of the development of an overall fisheries policy.

Thank you, Mr. Chairman. My colleagues and I will be happy to answer the committee's questions.

The Chairman: Thank you, Mr. Desautels.

Paul, I did give you a few minutes' warning, but we want to welcome you to the committee. Normally it's the Reform for ten minutes, followed by the Bloc for five minutes, so I will give you that five. The floor is yours.

[Translation]

Mr. Paul Crête: Thank you, Mr. Chairman. To reassure you, I'd like you to know that I worked for four years in the Gaspé region with the Quebec government's fisheries branch, so I do have some core knowledge of this issue.

Thank you for your presentation, Mr. Desautels. It's very interesting that you led off with a comment about the current management of the shellfish fishery and the repercussions of some of the problems identified, particularly since we know what the consequences of similar management approaches have been for other fisheries. Therefore, it's not difficult to predict what the future holds in store if the department fails to take action in this sector.

You also stated that in October 1997, you made some similar recommendations. Are we to understand by this that nothing has really changed, that the department is still managing the fishery in the same way, meaning that it is still largely improvising? You also referred to the department's objectives framework and to the unclear meaning of the word "conservation". You express some concern that if steps are not taken quickly to remedy the situation, one option being legislative amendments, we could be facing a catastrophic situation with respect to shellfish exports, as was the case with the groundfish fishery. Aside from the recommendations you've already made in your report, what other steps to you feel could be taken to rectify the problem?

• 0935

Mr. Denis Desautels: Mr. Chairman, in 1997, I felt the department generally agreed with our observations and findings. We were even fairly confident that it would implement a clearer management framework and that it would even bring in legislative changes.

However, we have noted very little progress on this front. On the heels of our audit, the department is again saying that it agrees with our findings. In a press release issued last week, the Minister expressed support for many of our findings, particularly with respect to surveillance. Therefore, I really do hope that if we truly are in agreement this time, then the situation will be addressed and major changes introduced.

Mr. Paul Crête: As you see it, the minister is prepared to back your recommendation calling for legislative changes and clearer objectives. Even if no legislative amendments were made, at least he would bring in clearer economic and conservation objectives in his business plan.

Mr. Denis Desautels: I can't tell you whether the minister himself agrees or disagrees with our findings, although I would hope the former is true.

Mr. Paul Crête: In your opinion, is it critically important that he opt for this course of action?

Mr. Denis Desautels: Overall, the department seems to agree with our findings, although of course it's up to the minister to decide on a response. I admit that the minister is facing a very difficult task and has some decisions to make, even while he's facing tremendous pressures from various parties. I think it would be to his advantage to make decisions on the basis of a management framework similar to the one we are recommending.

Mr. Paul Crête: Is there an urgent need to act? If no action is taken in the next year, do we run the risk of being confronted two or three years down the road with the same kind of catastrophic situation we had in the groundfish fishery?

Mr. Denis Desautels: Mr. Chairman, we're not trying to predict the future of these fisheries. That would be irresponsible of us. However, we are concerned about some of the management problems we observed and we don't feel that these should be allowed to drag on indefinitely. The situation needs to be addressed fairly quickly.

Mr. Paul Crête: In point 18 of your opening statement, you talk about "weaknesses in information needed to decide the use of the resource". Are you talking about the quality of the information, or the quantity? Could you clarify this observation?

Mr. Denis Desautels: I'll let Mr. O'Brien answer that question.

Mr. Paul Crête: Thank you.

[English]

Mr. John O'Brien (Principal, Audit Operations, Office of the Auditor General of Canada.): Thank you.

Mr. Chairman, in the chapter in our report we refer to a number of different issues, a number of different concerns, about information. For example, we point to the lobster fishery, where there's a long-standing concern about the level of scientific knowledge, the level of information available for the department to know whether its conservation measures are working. We clearly acknowledge that the department is moving forward on these issues and trying to deal with them, but there still are, as we point out in the chapter, a number of concerns in that area.

We also point to areas in decisions made on the northern shrimp and the snow crab, where the department didn't follow its own internal processes, producing a formal stock status report with a peer-reviewed assessment. So there are a number of issues in our report where we point to lack of information, or a need to improve the information, to make those kinds of decisions.

I think the other thing we have to acknowledge is you're never going to have absolute certainty. This is a business where information is tough to come by, it's expensive to come by, and there's always going to be uncertainty.

[Translation]

Mr. Paul Crête: You also talked about co-management arrangements with fishers organizations. You expressed concern about the imposition of a fee for access to allocations and about participation in the solidary fund. Could you further clarify the nature of the problem and tell us what prompted you to make this observation?

• 0940

[English]

Mr. John O'Brien: Mr. Chairman, there are a couple of issues we're concerned about.

In terms of the solidarity fund, we haven't concluded that these fees are illegal or can't be imposed, but we do have concerns we would like to bring to the attention of Parliament and to this committee, in that the funds were to be established at arm's length, to be independent of government, and yet when we look at the actual management of these funds we can see government officials involved in collecting the fees, ensuring the fees get into the solidarity funds, and sitting on the boards of directors on the expenditure of those funds.

So clearly, again, from our perspective, it comes back to the issue of the management framework. What is the department trying to achieve? What are its responsibilities?

In the area of co-management, again, co-management is a form of power-sharing. It gets stakeholders involved. We believe this represents an excellent idea, a plan for the future, but again we have concerns in terms of the way it's been implemented. We noted instances where fees are being charged for the management for research, and yet the department in some instances is charging full costs. In other instances it's charging only incremental costs. So again, there's a need to clarify how it's going to implement this, what it's going to charge people, how the stakeholders are going to be involved, and how the people who are involved in co-management are going to be held accountable for the implementation of the co-management agreements.

So it comes back to the issues the Auditor General has referred to in terms of having the framework, the legislation, and the policies in place to implement these very good ideas to help manage the fishery into the future.

The Chairman: Thanks, Paul.

I move now to the other side of the room and Claude Drouin.

[Translation]

Mr. Claude Drouin (Beauce, Lib.): Mr. Desautels, gentlemen, thank you for your presentation.

I'd like to talk about Chapter 7 of your report in which you refer to an agreement made with Human Resources Development Canada. Could you explain to us the terms of this agreement and give us a breakdown of expenditures in the form of grants and contributions.

[English]

Mr. David Rattray (Assistant Auditor General, Audit Operations Branch, Office of the Auditor General of Canada): Mr. Chairman, if I understand the question, it deals with the $150 million in the grants and contributions portion of the support that's involved with the TAGS program.

Basically there are a number of measures that were involved in terms of doing the TAGS support under readjustment and labour adjustment measures. There's an exhibit 7.1 in chapter 7 that outlines the basic distribution between the number of measures and the types of measures and whether they are considered to be grants or contributions. There was initially a significantly larger amount of money set aside for grants and contributions under the various measures, but because of the take-up on the income support side of the TAGS program there were two transfers of money away from the active labour adjustment measures. The balance of this is about $148 million, divided between grants and contributions.

I'm not sure if I've—

[Translation]

Mr. Claude Drouin: We're familiar with your audit activities aimed at ensuring that funds are well spent. Was this agreement concluded right at the outset to ensure ongoing surveillance and the best possible program, from a monitoring and cost-efficient standpoint, or on the contrary, was the audit done only after the work had been completed?

Mr. Denis Desautels: Mr. Chairman, in terms of our audit operations and involvement in this, we intervened once the funds had been spent. As I mentioned in my presentation, your committee was concerned about how these funds had been spent and we decided to audit the largest amount allocated in the form of income support. In 1997, we did not audit contributions made for job creation, retraining and so forth.

• 0945

This review was conducted only after the funds had been spent, and we worked in conjunction with Human Resources Development Canada's own team of auditors.

Mr. Claude Drouin: According to the terms of the agreement, you would intervene only once the program had been implemented and the funds distributed.

Mr. Denis Desautels: Correct.

Mr. Claude Drouin: In future, couldn't the auditor be involved in the process from the very beginning to ensure that the money is wisely spent?

Mr. Denis Desautels: That's a very legitimate question, Mr. Chairman. We try as often as possible to conduct our operations as early as possible, rather than after a program is completed. Unfortunately, because of our limited resources, this isn't always feasible.

In this instance, we focused our efforts on another program component, namely income support, which represented the largest expenditure. We were fairly quick to report our findings.

As you can see, after we presented our report, the department was able to make the necessary adjustments when designing its new program, which we discuss in Chapter 8.

Therefore, we try to intervene early, rather than later, in the process. However, this isn't always possible.

Mr. Claude Drouin: Thank you, Mr. Chairman.

[English]

Mr. David Rattray: Mr. Chairman, if I could add to that answer the Auditor General gave, we work very closely with the audit and evaluation people at Human Resources Development Canada, and they have a major piece of work going now with respect to grants and contributions. They plan to look at the labour adjustment measures in particular starting this fall. We will be working closely with them in terms of the concentration they will be doing on the TAGS extension grants and contributions.

The Chairman: Coming back then, Peter.

Mr. Peter Stoffer: Thank you, Mr. Chairman, and thank you to the Auditor General and his staff for raising the red flag in terms of what I would consider a cautionary note to everyone concerned, especially on the east coast, when it comes to fishery-related matters on the shellfish. We certainly don't want to see a sequel to what I call “cod one”, which happened in the early nineties to the tune of billions of dollars to the Canadian taxpayer.

But one thing I found missing in this report, and maybe you can clarify as to why, is that since the merger of DFO with the coast guard, I've noticed myself and people inside have said that the merger hasn't gone all that well. In fact, there have been power plays within management. It seems to be that—I may be wrong when I say this, and you may clarify—the management of DFO has more or less been influenced by the management of the coast guard. Thus we see concerns and problems we have when it comes to managing fisheries resources.

I was wondering if you can elaborate on that comment a bit, please, or why your department didn't look at that angle of the merger and what it did to affect fisheries management policies.

The Chairman: Peter, with this we have specific topics, and I know... Maybe the Auditor General would be willing to comment, but certainly it's outside of the subject matter we're looking at this morning. In fairness, I'm not sure he would be willing to approach that management under these chapters.

Mr. Desautels.

Mr. Denis Desautels: Thank you, Mr. Chairman. A quick response would be that we did not consider this issue when we were looking at the particular fishery we examine now. But we do plan down the road to look at the coast guard in its new home, in its new department. So this is something we'll look at within the next 18 months.

Mr. Peter Stoffer: Thank you.

Thank you, Mr. Chairman.

I've noticed again the department saying one thing and having an objective for one thing and something else happening. You mentioned the harvesting capacity and DFO spending millions of dollars to reduce the capacity, especially when it comes to groundfish. Yet on the shellfish you indicate on many occasions that the harvesting capacity has actually increased. I'm asking why. Did the department give you any answers as to why they're allowing that to happen, when they have told us, since the minister was appointed fisheries and oceans minister: conservation, conservation, conservation. Yet everything the department does... For instance, ignoring observer advice, which you mention on page 4-24, where you say “some observer information that had been collected specifically to address key conservation concerns” was ignored. You mentioned on page 4-10 that the department recommended keeping closed an area for snow crab fishing, area 12, but the minister ignored that advice.

• 0950

You also state something I knew very well but which always scares the hell out of me, and that is that the minister has extensive powers.

The reason I'm asking this question is the fact that in 1997 the then minister, Mr. Mifflin, was given advice by the NAFO Scientific Council, was given advice by the Nunavut Wildlife Branch, was given advice by the FRCC, and was given advice by his own deputy minister, Pat Chamut, and he ignored all of that advice and opened up the turbot fishery two months prior to an election.

It seems fairly obvious that a lot of this management policy is based on political agendas and not on conservation methods, and I wondered if you could comment on that. The evidence is quite clear. I've said, and I know I'm raising a red flag on the east coast, that if DFO doesn't change its ways fairly quickly, we could have a collapse of some aspects of the shellfish industry.

Mr. John O'Brien: Mr. Chairman, I'll try to answer that question. I think the heart of the matter comes back to what we're trying to say in the first part of this chapter, which is that it's important for the department to come up with policies that recognize the interdependence of conservation, of economic viability, and of the social dimensions, the social context within which it operates. Clearly, there has to be a balance, and clearly it's not a one-dimensional issue.

In terms specifically of the why issue of the harvesting capacity, I don't have an answer to that question. The only answer I can give is it's a new fishery. It was coming up quickly, and one of the requirements the department had in that particular instance was that the licence-holder had to use his or her own vessel. So in fact we see an instance here where in our view there is a certain degree of contradiction between the issue of maintaining harvesting capacity, controlling harvesting capacity, and the increases.

The only answer I can give, Mr. Chairman, other than this, is that I think it's a good question for the committee to place to the department.

The Chairman: Peter, in your questioning, are you referring to a particular species or is it a general question you raise?

Mr. Peter Stoffer: He is more or less indicating on the crab and the shrimp, especially the extra capacity on the shrimp harvesting—

The Chairman: The northern shrimp.

Mr. Peter Stoffer: —and basing it not on long-term biological or scientific evidence. It says here that they have no responsibility for social outcomes of their decisions, yet it appears everything they do is based on social decisions, either through political pressure or whatever.

The reason for my questioning is we've been told by this committee, by the department, that everything is going to be conservation, conservation, conservation, based on sound scientific and biological evidence, when the Auditor General has produced a report that says no, they contradict that. That could appear to be for political reasons. Who is pushing the minister's buttons or the department's buttons in order to get allocations of quota? We'll have to ask the department that.

Thank you, Mr. Chair.

The Chairman: John, would you have any comments on the northern shrimp, on the licences that are there?

Mr. John O'Brien: Mr. Chairman, the concern we have is the relationship to the long-term prospect for the stock versus putting in new capacity and versus the capital investment.

The information we have that the department has provided to us is that this stock is basically going to blossom and then diminish. The concern then becomes what happens to the people and to the investments that have been made to harvest this capacity? You have a fairly short period of time when the stock is going to last, but the investment is going to be there for a long period of time. So it's the question of how the department goes about managing these things and coming up looking for the long term, looking at what happens in the long term. Those are the concerns we have.

The Chairman: Moving on to Mr. Easter.

Mr. Wayne Easter: Mr. Chairman, I have some specific questions, but I do want to deal with this particular issue here.

In your response, John, you're saying what happens to the investments, but is it not true about the increased allocation of shrimp that those are temporary quotas? It has been made known to the business community and those who have those temporary quotas that they are temporary quotas. They can be taken away in the future should the resource dictate it. In fact, there are some fishing zones where that has happened.

• 0955

I don't think the Government of Canada should be targeted as being responsible for the problem of the investment. They know that full well before they go in, do they not?

Mr. John O'Brien: We're looking for the department to clearly state what it is and what it isn't responsible for. When it's encouraging people to use their own vessels and go into the fishery, clearly there is a concern that the department and the government are having an influence on decision-making.

Yes, they are to be temporary allocations, but I guess that still begs the question of what happens in the long term and what is the government's responsibility, because clearly there is some responsibility for social and economic outcomes. Clearly they're making decisions that influence the lives of people. I guess we're really asking that it be clearly defined where that ends.

Mr. Wayne Easter: I imagine you've seen some of the criticism of the AG's report from Mike Belliveau, Earle McCurdy, and others speaking in the press. They've been fairly critical of your report. As one member on this side, I certainly welcome the report. I think things can always be done better.

My overall general question is, in terms of management of the resource, are you seeing some improvement from previous audits in terms of the management of the resource?

Second, on this area of conservation, in listening to what Mr. Stoffer and you are saying, there seems to be the impression left that the decisions are made by DFO and the minister for social and economic purposes. But if you really look at how the decisions are made—and you can agree or disagree with me—overall, the total allowable catch, for whatever species, is made on an allocation decision on the TAC for the total species. That is strictly based on conservation and the best scientific and biological data available, from our perspective. We'll grant that information is not maybe what we'd like to see, but it's the best that's available at this time.

So the allocation, in terms of the total allowable catch, is based on conservation measures. Step two then becomes, how do you allocate that? The department and the minister take into consideration the social and economic factors. Those on the other side here would be the first to criticize us if we didn't allocate shrimp, etc., to some of their communities. You can't have it both ways.

So is it not true that conservation is the main decision-making reason, in terms of TAC, and after that you get into the social aspects? I just want to clear this up.

Mr. John O'Brien: Maybe I can go to the first question first, in terms of improvements. Yes, we can point to some specific improvements we mention in the chapter. There are improvements in the dockside monitoring program—new regulations came into force to register dockside monitors. We've seen a bit of improvement in terms of the audits the department does. Clearly, we point to improvements in enforcement with 69 new or planned near-shore patrol vessels. We understand that new enforcement officers are being hired. So yes, we can point to a number of different areas where there are improvements in those management practices.

However, we also think the area where it still needs improvement—I guess this goes to Mr. Easter's second question—is the whole issue of making those broad decisions in the framework that exists. Clearly, conservation has to come first. The stock has to be there to ensure long-term sustainability, to ensure the dependence.

• 1000

We can certainly point to areas where we have concerns about the level of information that was available to make some of these decisions. We point, for example, to the lack of a formal stock status report in a couple of the decisions that were made.

In the lobster fishery, it becomes a real issue in terms of the level of information versus issues related to increased capacity. Vessels are getting bigger and stronger. Global positioning allows the fishers to target exactly where they will go. Also, the FRCC report recommended that the department address certain concerns, and there's a long way to go to address those.

In terms of the second question, most of the decisions we can point to are based on conservation first. The issue then becomes, once you make those decisions, what other factors come into play, in terms of allocating the resource? Who gets the resource and how much do they get? Those kinds of issues are very important. We're continuously trying to come back to making the rules of the game clear. That's really what we're trying to push in the first part of this report.

Mr. Wayne Easter: You mentioned in your report—and I'm really concerned about this particular statement; it's 4.63. It's a concern the member for Labrador has brought forward a number of times. You state here that there are concerns about the likelihood that large quantities of small, low-priced shrimp would be dumped at sea by this sector.

This was raised with the committee last year. We went to the department a number of times on this issue of high-grading shrimp. We were told very clearly there was no evidence to indicate that was happening. You mention it in here. Is what's mentioned in here based on hearsay? Is it based on rumours around the fishing ports, or is it based on actual evidence? If that is happening, it ought not to be.

Mr. John O'Brien: In that particular situation, I believe the concerns were actually raised by the scientists responsible for the assessment of those stocks. The only other answer I can give is that we note in the 1999 plan for this fishery that the minister has announced new measures to deal specifically with these concerns, in terms of increasing observer coverage and using indexation to compare observed and non-observed behaviour.

We can see that the department has taken these concerns seriously and is moving to address them. So I think that's a positive thing.

The Chairman: Thank you, Mr. O'Brien.

Mr. Matthews.

Mr. Bill Matthews (Burin—St. George's, PC): Thank you, Mr. Chairman.

I'd like to thank the Auditor General's officials for coming. I find the report and the discussion this morning most interesting.

I'd just like to go to your comments about northern shrimp and the explosion in the resource and the indications from the department that the resource will be at this level temporarily and then it will drop. Is that because of the increased harvesting capacity, or is it because of a natural cycle that will happen with northern shrimp? Have you looked into that? Is that why the department is raising the flag that this may be short term or temporary? Is it because of what naturally happens to shrimp or the harvesting capacity?

Mr. John O'Brien: My understanding is this is part of the natural cycle. This is a blossom and there will be a high level of natural mortality—

Mr. Bill Matthews: As in any other species.

Mr. John O'Brien: Yes.

Mr. Bill Matthews: We have to remember here that the department finds itself in a very difficult position. Do you let the fish stay in the water and die a natural death, or do you allow harvesters to take them to shore to be processed and create employment and economic wealth? That is sometimes what enters into the equation, and I think we lose sight of that.

You talk about social and economic factors and say the department should be concerned about conservation. What would you really like to see? Someone has to make a decision on the total allowable catch for whatever species. Of course, that then dictates how much is caught, taken ashore, and processed.

Are you really saying the department should strictly deal with the conservation of fish in the water; we should keep them there and let them grow to whatever unlimited amounts and someone else should decide? What are you really saying here? I'm somewhat confused.

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Mr. Denis Desautels: In this case, we're not suggesting that at all. What we're essentially saying in our report is that there seems to be a contradiction between some of the statements made by the department in the past on precisely those issues and what happens in practice. We're suggesting that there be clarification of all that and that a management framework for these fisheries be put in place that balances off the various elements we're talking about between conservation, a viable fishery, and the social objectives.

So they have to be recognized, and they have to be reflected in the management framework that the department could refer to in making its decisions, and down the road, I believe people will understand why the decisions were made the way they were made. People will understand or see whether the decisions made are consistent or whether they seem to contradict each other. What we're looking for is greater transparency in the management of this very important resource through a well-understood management framework.

Mr. Bill Matthews: Thank you.

You simply talk about weakness in information. Have you looked at how we can strengthen that information flow?

Is it because the department's research and science budgets have been cut drastically over the last number of years? Is that what has caused the weakness in information? Is that what you're basically talking about, weakness in information on which to make sound resource management decisions?

I'm concerned about that. We've gone through a crisis in the groundfish industry, and you're now raising a flag on our shellfish industry. I think it's time that budget should be beefed up to give us stronger information on which to make decisions.

Have you determined that? Is that part of the problem?

Mr. John O'Brien: It's difficult for us to give an answer to that question, but I think we can clearly point to the consequence, which is if you don't have good information or if your information is limited, one of the things you then have to do or should be doing is making more conservative decisions.

It limits your ability to make decisions, which Mr. Matthews has referred to, to take the fish out of the water and harvest it and create jobs. So the lack of information or the limits in information force more caution in decision-making, the so-called precautionary approach.

There's clearly a balance there between the amount of information that you have, that the department has, and its ability to make decisions.

Mr. Denis Desautels: I think it's important that the department be seen as being the most credible source of information on these issues, and it has to have the capability to do that. One of the things we seem to note is that there are many other experts out there coming up with contradictory assessments, and I think it's important for everybody that the department itself should be seen as a prime source of credible information. So to the extent that it can be beefed up, that would be a good thing.

Mr. Bill Matthews: My final question is on TAGS, or the Atlantic groundfish strategy. I think it's in paragraph 7.37 that you say some agreements did not contain complete information or included ineligible costs, and then you go on to say expense claims were not supported by documentation, and so on. You've determined that, so what action would be taken after that determination? Is that just ignored and we get your report that there were things included that were ineligible and then expense claims?

What kind of documentation were you looking for, say, with the expense claims? Could you answer that for me as well?

Mr. David Rattray: What we were basically looking for was prima facie evidence that expenses had been paid, that there were in fact invoices, and that they were eligible under the various measures that were used. So it was simply looking at the file for a submission to be reimbursed for expenditures, supported by appropriate evidence to back up the claim.

What we did find in many cases was that there was no evidence there whatsoever to support the cheques that went out for reimbursement. The consequence of that is that the department, in its response to our chapter, which is found after paragraph 7.43, says they're trying to take follow-up action on a number of cases to address matters such as these. The difficulty is that some of the people have left. The businesses are no longer there, so there will be a fair amount of difficulty in recoveries. But they are trying, wherever possible, to go after instances where payments were made without appropriate documentation to substantiate the charges.

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Mr. Bill Matthews: So it's fairly widespread?

Mr. David Rattray: If you look in the chapter here, there's a considerable amount of this type of activity. There is a table illustrating where some of this is found. It's exhibit 7.3, near the beginning of the chapter, and you can see the percentage of cases we found.

The Chairman: Thanks, Bill.

Back to the government side. Lou? Nancy?

Okay, Paul then. I'll get back to Wayne later.

[Translation]

Mr. Paul Crête: I'd like to focus for a moment on your recommendations and tie them to point 18 where you note the absence of conservation objectives, weaknesses in information, gaps in monitoring and co-management arrangements that aren't working very well. Are you not in fact telling us, through your recommendations, that we need to seriously consider this matter and bring in some legislative amendments to restore proper decision making and to ensure that all players are legitimately involved in managing the resource?

Shouldn't we be asking the provinces, either working on their own or jointly, to ensure the proper exploitation of this resource? Does the federal government prefer to maintain its jurisdiction over this area? What steps do you recommend we take to prevent a recurrence of the situation we now have where everyone is busy blaming someone else and no one is willing to assume responsibility? We saw first hand what happened to the groundfish fishery. If in five years' time, your fears were borne out, then it could be argued that lawmakers failed to do their job.

Mr. Denis Desautels: Mr. Chairman, we're not suggesting in our report that the federal and provincial governments share responsibility for decision making. However, it's important to clarify the decision-making process by implementing a management framework that could serve as a kind of reference point.

That being said, what should this framework look like? It should have many components, including adequate scientific data and conservation and sustainability objectives for the industry, as well as social objectives. As far as these three components go, I think the department needs to set clearer objectives for each fishery and each region. That's why we are recommending the development of an overall framework. I've identified several points that could be central to the decision-making process.

I'm now going to ask Mr. O'Brien to tell us a little more about the commitment of people in this sector, about the consultation process involving fishery stakeholders and about just how much of a say they should have in everything that goes on.

[English]

Mr. John O'Brien: The department has clearly indicated that it wishes to move forward in the area of co-management and power-sharing with the industry in a number of these areas.

Clearly, one of the things that we think has to be looked at for the future for sustainable management is to have the stakeholders involved and to make sure they have a vested interest, that they participate in the decision-making, and they see the future for themselves. We can see the department moving toward that.

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The concerns we have are in terms of the mechanisms the department has available to it to implement that approach, as we highlight in the chapter.

[Translation]

Mr. Paul Crête: Can this framework be developed without bringing in legislative amendments to spell out clearly DFO's responsibility and ultimately that of other departments? In your opinion, do we need legislative changes to ensure that the department's employees are clearly aware of departmental objectives and that their actions are consistent with the department's position?

I don't think that the department's biologists or other staff members for that matter are presently acting outside the law. They're complying with the legislation. Therefore, can these changes be made without amending the legislation or is legislative change a prerequisite to attaining the stated objectives?

[English]

Mr. John O'Brien: I think, Mr. Chairman, in the first instance we would look toward having this policy framework pulled together, as the department suggests. Ultimately one of the things that is going to make it work is to incorporate the principles and the objectives and the legislation. That's our view. In the long term, it needs to be firm and it needs to be supported by legislation. But in the first instance, the policy, the debate, the discussion as to where this framework is going and how these principles are to evolve must take place. Then the legislation, I think, follows to incorporate it.

The Chairman: Thanks, Paul.

[Translation]

Mr. Paul Crête: I have one last question. How much time does the government have to take appropriate action to avoid a recurrence of an unacceptable situation? One year, two years or six months?

[English]

Mr. John O'Brien: Mr. Chairman, that's a very difficult question to answer. Clearly, at this point the fisheries are healthy, for the most part. They're doing quite well. The concerns we have are a longer-term perspective. But yes, in our view, the sooner that action is taken to prevent problems from occurring, the better. So in terms of trying to put an actual timeframe on it of a year, two years, I don't think we can do that. But I guess the position we take is that while things are going well, it is a good time to deal with some of these underlying problems.

The Chairman: We will move then to Mr. Easter again.

Mr. Bailey, will we have you on next, or would you like to follow?

Mr. Roy Bailey (Souris—Moose Mountain, Ref.): I'll wait a bit.

The Chairman: Your party has a turn. But anyway I will wait until I see you wanting to ask.

Mr. Roy Bailey: I'm getting ready.

The Chairman: Okay, thank you then. It's always good to have a prairie farmer involved with fisheries.

Mr. Wayne Easter: Well, they do some fishing in some sloughs out there, Mr. Chairman.

On this co-management, John, it's something we've talked about a fair bit around the committee. How should the resource be managed in the future? In fact, the committee itself wanted to go to Iceland, Norway, and look at management practices there to be able to make some recommendations to DFO. But we were denied doing that by the Reform Party.

But in this area you talk about co-management and the idea of power sharing. We will get a fair bit of criticism on co-management from communities and fisheries who do not happen to be in that, say the snow crab. The co-management approach the way it's currently designed... There's a concern that there's the possibility of cutting a deal; some bureaucrat somewhere within DFO who has the responsibility cutting a deal with a small group of however many fishermen. That system is not at all transparent enough in terms of protecting the interests of the community as a whole. Did you find any of that criticism out there? What are your thoughts on that matter?

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Mr. John O'Brien: Mr. Chairman, I'm trying to think of the co-management arrangements we looked at.

The concerns we had with the co-management arrangements we had were in part that it was more cost-sharing, as opposed to power-sharing, and so there were inconsistencies in the approach. I think this goes back partly to the question that the department needs again to step back and clearly define and implement what it's trying to achieve with the co-management. I think it goes back even higher up, to the issues of a framework, of the balancing of these social and economic considerations and getting up front, getting the rules clearly established.

I think also, if we look a little bit at the solidarity funds, and they're not exactly co-management but they are related a bit to power-sharing, clearly we had concerns in there about the very issue of openness and transparency, about the issue of the department stating that it's operating at arm's length with these funding arrangements, with these funds, and at the same time it was clearly involved in decisions to manage them. So I think that is a real concern, and again I think it comes back to the issue we're trying to raise of getting these rules out on the table and making it clear what's to be achieved.

Mr. Wayne Easter: I believe it was Mr. Desautels who mentioned earlier that DFO has to be seen, and I quote, “as the prime source of credible information”. I would agree with you on that point, but the question is, how do we get there?

We had hearings here, last week I believe it was, on seals, and we're depending on the scientific community to give us the credible information. They were all over the map—science on one side, science on the other.

I have a constituent in my riding who is a fisherman organization leader, and this is what he had to say... You know, as we try to move ahead, we have problems establishing the relationship with the community, given the experience of the past, as we move to the new management of the future. He said that because DFO is cutting left and right, they're downloading financial and organization responsibilities onto fishermen, and calling for co-management while still making all the decisions.

That's his point of view. I don't believe that to be true. I think DFO is trying to work together in a fairly flexible way toward co-management. But how do we get from A to Z, from your point of view, given what you've heard out there? How do we be that prime source of credible information?

I think they're trying. I think they recognize the problems of the past. We are making steps. What's your experience there in what you've seen?

Mr. John O'Brien: Mr. Chairman, I think certainly the concerns Mr. Easter raises are pretty much a consistent theme we have heard. There does seem to be a bit of a lack—more than a bit; there is a lack of trust between the department and a number of its stakeholders.

I think we would argue, coming back again, that part of what has to happen here is this... We talk about this framework, but it's getting the rules out clearly, clearly establishing what the conservation measures are to be achieved, clearly establishing what the department means by economic viability in the fisheries, and then clearly establishing within that the social dimensions, the social objectives it's trying to achieve. Then once it establishes those, living by those rules and coming back to Parliament, to this committee, and being held accountable for implementing those kinds of things. Those are the kinds of things we're looking for into the future. I think that can be dealt with.

We talked to a lot of people in the industry. We talked to a lot of people in the department. People in the department are under a lot of pressure. It's a very difficult job, we recognize that. It's tough. They're under immense pressures.

Mr. Denis Desautels: Mr. Chairman, if I may, I will expand on the issue a little bit.

The challenge this department faces with the scientific capability is not unique to this department. We have observed that across the federal government there was a loss during downsizing of about 5,000 people with scientific backgrounds, and we lost people at both ends of the age distribution—some young, promising people, and those older, more experienced people.

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The community has to refresh its ranks. The figures that have been mentioned are that over the next five years they have to recruit something like 3,000 new scientists. This is for a variety of departments—not just DFO, but Environment, Health, and so on.

I think what would be useful for these departments and maybe for this department in particular is to really have an objective assessment of where they're at in terms of their scientific capability. The issue has been raised so many times, and I think it would be quite useful for someone to come up with a good handle on that. You know, what have they lost? Where are they weak? And what would they need to do to regain the prominence they should have?

The Chairman: Peter.

Mr. Peter Stoffer: Thank you again, Mr. Chair.

Coming from Atlantic Canada, I guess we're very concerned about the long-term effect of decisions that are made today when it comes to the fishery. Prior to our meeting you, we met some representatives from the Atlantic Veterinary College on the subject of lobsters and what they're doing to study the effect of lobsters and lobster growth and the biological aspects of it.

In your report you mentioned that in 1995 the science branch set aside $1.1 million over three years, about $335,000 a year, to study lobster and lobster research, yet lobster itself represents about a $400 million industry to Atlantic Canada, you know. At the end of your paragraph 4.20, in the third column, it says that because of the recruitment, the lack of funds and re-assignment of personnel away from this very lucrative industry...

Throughout your entire report I get this underlying theme that what DFO is doing is not to benefit Atlantic Canada in the long term. And I've got to get back to the fact that it's based on political decisions. You mentioned the TAGS money. We heard from fishermen and people in communities up in Newfoundland that anybody who would ask for the TAGS money who had sort of a political influence—the local mayor of a town, the professor at the university, or the head of the union—would be able to access those funds, and you've verified that with the fact that there was no accounting for it.

I've always said that basically what they did was they put all this money into a bank account, gave specific people a PIN number, and when the money ran out, they realized they had a problem.

I guess my concern is—you said some positive things about DFO, and I'd like to believe them, and the Auditor General is absolutely right that DFO has to be the main point for confidence and also for information when it comes to management of the fisheries. Right now, speaking on behalf of a lot of fishermen probably in the last couple of days, they don't have that confidence in it. As Mr. O'Brien said, there's an awful lot of pressure within the department to do the job under really reduced funds and allocation of resources.

In your opinion now as an Atlantic Canadian, Mr. O'Brien—I'm going to put you on the spot—do you think the environment is right, that if we don't put more money and more people and more resources and pay more attention to this very sensitive resource, that it could go the way of the cod in 1992?

Mr. John O'Brien: Mr. Chairman, I think as the Auditor General has said, that's an impossible question for us to answer.

Mr. Peter Stoffer: That's why I asked it.

Mr. John O'Brien: These stocks, for the most part right now, are healthy.

Mr. Peter Stoffer: What?

Mr. John O'Brien: We do see underlying concerns. There are underlying management problems, as Mr. Stoffer has indicated. We are concerned in the lobster fishery about the limited scientific information. And obviously in the lobster fishery there's a lot of controversy going on right now in terms of the consequences of conservation measures. Part of that has to be linked back to the lack of knowledge. It's difficult for departmental scientists to definitively prove that these conservation measures are absolutely necessary. There's limited information.

So when you get the limited information and the department tries to push conservation measures, tries to be precautionary, it's hard for them to prove, it's impossible for them to prove right now, but they have concerns and they're trying to push these measures forward.

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In regard to the long-term consequences, we cannot sit here and say there will be a collapse of the fishery. It's not something we are capable of saying today.

Mr. Peter Stoffer: The reason I asked that question about the lobsters is that just recently DFO has allowed two corporations to set 2,000 traps off the coast of the eastern shore, off my specific riding. A lot of inshore fishermen and other people are asking what the hell they're doing. This is an experimental thing—is it 2,000 traps? Some people are saying they're fishing all month.

Mr. Wayne Easter: It should be noted that that's to find out what's going on.

Mr. Peter Stoffer: Two thousands hauls!

Mr. Wayne Easter: That's to get better information.

Mr. Peter Stoffer: Two thousand hauls by two corporations leads the inshore people to believe that DFO is favouring the corporate policy again and ignoring the inshorers' resource.

Again, I just want to thank you for this report and for raising a red flag. Hopefully we won't have to be here three years from now saying they told us so. So thank you very much.

The Chairman: Thanks, Peter. I'll go now to Mr. Bailey.

Mr. Roy Bailey: Thank you, Mr. Chairman. Just for the information of my colleagues, this is not the first time I've been on the fisheries committee; it's the third time. So I'm not totally new. I'm going to be, much to the surprise of my colleagues, very apolitical in my comment and question.

I have a similar situation going on where I come from in Saskatchewan, right in the heart of the wheat-growing area, so I'm answering lots of phone calls at the present time. We're dealing with the primary industry of fishing, and I'm also dealing with a primary industry. They have different ways of coping with this situation.

I want to pass out a comment to the honourable gentlemen. As a person who is far removed from the fisheries, I hear all kinds of conflicting reports, such as what my honourable colleague Mr. Easter raised. We hear from the DFO. We hear from environmental groups. We hear from the scientists. We do indeed hear from the fishermen. And those are only a few. So we have all kinds of conflicting reports about how we're going to save the fisheries. It goes on and on.

Now the question is... I have the same thing: how are we going to save primary agriculture? We have different opinions there too, so that part is not new.

But I noticed that number 16 on page 3 of the report is, I think, where I'm coming from. It says:

It is difficult to see how we can move forward with cost-effective management of sustainable fisheries if the Department does not first set out what it is trying to achieve from the fisheries.

Now this is not to damn the department, but the department can achieve sustainability of the fisheries only if it has a multitude of cooperation coming in from the other bodies. It seems to me as an observer, and I may be wrong, that it doesn't get that type of cooperation as a primary industry. We get all kinds of conflicting reports.

The question then is this. Do we hurt the objectives of the DFO through the national media, etc., with the multi-interest groups? How does this department pull together these diverse groups so this department can move ahead in their attempt to really establish a sustainable fishery? With all these conflicting groups right now, I think all it does is hinder by many years that goal from becoming a reality. That's just a comment.

Mr. Denis Desautels: Mr. Chairman, I will attempt to react to that. Maybe Mr. O'Brien can help me as well.

I said earlier that I do sympathize with the minister. In this area, the minister is given a lot of authority to make decisions. He makes the final call. He receives all of this diverse information from different groups, and in the middle of all that, he has to make wise decisions.

What we're suggesting is that certain things could help the minister to a large extent in the making of those decisions. We feel, for instance, that if there were this proper framework reconciling the various objectives, clarifying the objectives, you would see some rallying around or at least some start of consensus around where we're trying to go. So I think the more transparent and clear the framework is, the more you have some hope of getting the various stakeholders to agree on where we ought to be going.

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As we said earlier, the other thing that would help the minister in all of this would be scientific data that would be hard to challenge by every other stakeholder around Atlantic Canada. I think if you had those two elements, the proper framework, setting out clearly the objectives and how we balance things, backed up with solid scientific data, you might be able to get... you'll never get consensus, but at least you'd have the start of people agreeing around certain principles.

Mr. Roy Bailey: I just want to point out that I recognize the difficulty of the DFO in attempting regulations because of the isolation, the topography, and the geography. Sometimes people where I come from don't understand why these regulations can't be carried out. The fact is it's different from agriculture. The crop doesn't move from here to here. When the minister does come down with a regulatory statute or a list of regulations, do we have enough people, in your opinion, to enforce them properly? Could you answer that question?

Mr. John O'Brien: It's a very difficult question to answer. In our chapter, we do note that there are a number of gaps in what we call monitoring, control, and surveillance in terms of the department's ability to enforce a number of the regulations. It is very difficult. The trouble is the more regulation you put into place, the more difficult it is to manage. The more you set up individual zones or separate different fleets for various reasons... Those have to be enforced. It takes more and more resources. We come back again to the issue of trying to balance all these issues, and clearly the responsibility that resides within the department versus the industry for ensuring conservation measures and ensuring the rules are being followed...

The Chairman: Thank you.

I will now move on to Nancy.

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): Thank you.

On page 411, in point 4.28, you talk about how policies governing the fisheries are not always clear. Examples of the factors used include fishers' adjacency to the resource. Would you find that the definition of that is sometimes not the same, depending on which stock and which allocation? One of the complaints I hear in my area a lot is about their adjacency to northern shrimp and that they don't always get the right allocation, as far as they're concerned, when it is distributed by the department.

Mr. John O'Brien: Mr. Chairman, I don't want to comment on specific decisions, but clearly that's one of the issues that, when we talk about the framework or whatever, is defining what these terms really mean in principle—what adjacency means, and who is and who isn't adjacent. It's an issue of equity and making sure the rules are clear to all participants regarding who is or is not adjacent. So yes, that's one of the issues that we believe has to be addressed.

Mrs. Nancy Karetak-Lindell: I have a follow-up to that. When you also talk about the historical attachment to the stock and the provincial historical share, do you have a suggestion on which one of those three would be used as a basis for a decision? Or is that again one of those areas that you can't put into exact blocks and say that this is a formula you're always going to use?

I understand that in management decisions there always has to be a human element, and what I'm hearing, from an auditor's point of view... Having worked in accounting, I know you always want everything to be able to fit into these nice boxes that you can put away with a title.

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So I'm trying to get the feeling of how much you allow accounting procedures to make a decision.

Mr. John O'Brien: Well, Mr. Chairman, I'm not sure we're actually talking about accounting procedures or precision. We recognize that this is a difficult area. There are people involved, and it has real implications in terms of the way the decisions are made.

Again, what we're suggesting is that the rules of the game have to be a little bit clearer, and those words have to be more clearly defined in terms of what they mean and what the implications are for people as the decisions are being made. That's really the point we're trying to get at here, I believe.

The Chairman: Gentlemen, with the lobster in particular, we have seen the ability to catch lobster being increased with the move away from the traditional two-and-a-half-foot trap to the new steel wire-mesh traps that are four feet in length and have greater catching capacity.

Does the Auditor General have any recommendations... Certain fishermen feel that licences that were developed on the basis of 375 or 250 or whatever traps should be reduced as a result of the new trap size that has been introduced in Atlantic Canada in the last 8 to 10 years. We hear fishermen talking that way. Have you considered the trap size as a factor in the intensity of the lobster catches?

Mr. John O'Brien: Yes, Mr. Chairman.

To go back to the issue of capacity, it's often hard to define exactly what capacity means. People often think of it as being more boats, but it's not just more boats, it's more efficient equipment. In the lobster fishery it's the traps, as you mentioned, Mr. Chairman. It's having a global positioning system so that you can take your boat and put it right where you want it to go, so that you have more efficient harvesting. So the capacity is clearly on the upswing. The ability to catch more lobster is clearly on the upswing.

What we relate that back to in our chapter of the report is the issue of knowing whether these increases in catch are related to the productive capacity of the resource, whether the resource is going up, or whether they're related to improved efficiency, improved methods of harvesting. The department believes both factors are at play here. Clearly there is a need to get better information, which the department acknowledges, I believe, and to deal with those issues.

In terms of looking at the issue of reducing the trap size or the number of traps that can be fished per licence, no, we didn't look at that specifically. Again, in the lobster fishery we tended to focus more on the concerns of having knowledge versus this issue of the increased capacity you refer to.

The Chairman: Bill, was it you who had a question too?

Mr. Bill Matthews: Yes, I have a couple of short questions, Mr. Chairman.

First of all, in your report you say that observers' reports were not used effectively. I think you made that statement. I'm just wondering what you base that on and how that could be. Could you comment on that?

The other thing is in the chapter on the Bay of Fundy scallop fishery—I think it's page 4-19—you're saying that the department is still allowing harvesting in a nursery area, even though—I think the paragraph says it was in 1996—departmental scientists believed that scallops produced by this brood stock would replenish the inshore scallop beds, and so on.

So it seems there was a desire to not fish this area, but still we continued to fish it. Did the department give reasons for that? It seems pretty blatant. It looks as if we haven't really learned our lesson from the groundfish stocks again, when we caught cod that had congregated to spawn, and we did all those other things. It seems we're still continuing this kind of process in other species. I wonder if you could comment on both those items.

Mr. John O'Brien: Mr. Chairman, in the first instance, on the observers, the concerns that we raise are, first of all, when you have an observer on board a vessel, unless you do something with the data, all you're finding out, all you're observing is the behaviour of that vessel. And of course there's only a certain amount of coverage; industry pays for this and no one can afford 100% coverage. So one of the issues relates to comparing information from an observed vessel versus an unobserved vessel to get an idea of whether the behaviours are the same or whether in fact having an observer on board is changing behaviour to determine whether there are things like high-grading at sea. We noted in many of the fisheries this wasn't being done. That's one of the issues. The level of coverage varies from fleet to fleet. Then we noted one instance where there were rules in place that to be based on observer coverage, the fishery was to be shut down, and that didn't seem to happen based upon some of the information.

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So those are the kinds of issues we see with the observers. I think we're encouraged by the northern shrimp announcement, and the department has announced their intent to use indexation as a tool in using observers effectively. So we're encouraged by that.

On the second issue of the Bay of Fundy scallop fishery, the inshore fishery, I don't know what else I can add, other than that we are quite concerned about what transpired there in 1996 and 1997. The brood stock area wasn't fished in 1998, so I guess that's a positive thing, but this is one fishery that isn't particularly healthy at this point. It is a concern in terms of the department's ability to enforce and monitor and implement conservation measures.

Mr. Bill Matthews: Thank you, Mr. Chairman.

The Chairman: Thank you. Are there other questions?

We'd certainly like to thank you for coming this morning. In terms of responsibility here, you talk about co-management, and it seems that in many places they expect the department to do everything. I believe the fishery people have to, in terms of co-management, in terms of anything that happens with the fish, show greater degrees of responsibility for what's happening. Your three chapters certainly bring some very important matters to our attention.

Mr. Desautels, I was also very shocked this morning to hear you say that we lost about 5,000 scientists. This to me is a very great matter of concern, because any country, or any business or any organization, that has downsized its scientific community extensively is certainly placing itself in great jeopardy. And I know DFO is probably only one of those; we have Health and other departments as well.

I think as a political group here, no matter what party we're with, we have to draw sharp attention to that fact. If we don't pay attention to our scientific community and try to enhance it, develop it, encourage it, and listen to it, we're going to have serious problems in this country.

We certainly appreciated, John, your coming from the Atlantic. And David's been here a number of times before—with the public accounts with HRD. As I said to him this morning, he has about half the expenditures of this government before his eyes. So it is a very important role.

Mr. Desautels, I see you have your hand up. Would you like to make a final comment before we conclude this morning?

Mr. Denis Desautels: First of all, I'd like to thank the committee for the opportunity to discuss these chapters with you. Certainly there are certain themes we've been trying to emphasize, namely the framework, and I know you're probably tired of hearing about that. But I do believe as well in the importance of the sound scientific data and the need at this stage to do a fairly objective assessment of the capability of the department in that area. I think it would be a useful contribution. I can reassure the committee that we will be revisiting these issues in about two years, as is our practice. So hopefully when we do this follow-up we will be able to report good progress. Likewise, we will be watching the $760 million that's being spent on the successor to the tax program, and we have some reports to bring to the House on that issue as well down the road.

Thank you, Mr. Chair.

The Chairman: Thank you. Our clerk has given me a note here. He said you should audit the seals because we've heard so many different...

Voices: Oh, oh!

The Chairman: Thank you for coming this morning. The meeting is adjourned.