EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 25, 1995

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[English]

The Chairman: Order.

Mr. Baker (Gander - Grand Falls): I have a point of order.

The Chairman: Before we do the point of order, I want to welcome Mr. Steckle, who is replacing Harry Verran. You have big shoes to fill there. You'll have to learn all about those fishermen and those fish plant workers and all that stuff, but you're in good company on both sides. They can fill you in on that before the end of the day. I'm sure you'll find today's presentation pretty interesting.

I want to welcome everybody back. We have some officials from the Department of Fisheries and Oceans as well as from Human Resources Development. We're going to be dealing with an update on the TAGS program. I understand we're going to go first on the Fisheries and Oceans side. The presentation is on the screen; unfortunately, it's not in English and French. Then we'll be going over to the HRD presentation, on two screens; one will be English and one will be French. Maybe we can get into some questions after that.

The second thing before I go to the point of order is that immediately following this meeting I want to convene with the committee, as a committee, to firm up the travel plans to the west coast. That will take us only about 15 minutes, if everybody could stay after the meeting.

Mr. Baker, you have a point of order.

Mr. Baker: Mr. Chairman, a couple of things are happening that the committee should investigate on an urgent basis, one of them being the calling of tenders for observer contracts for the next five years. The union involved, which I think is the Teamsters' Union, has analysed the report from the standing committee. They are claiming that Fisheries and Oceans and Supply and Services and Treasury Board have totally ignored the recommendations of this standing committee in the calling of those tenders. I think the matter is of such urgency because of the recent agreement between Canada and the European Union, which, Mr. Chairman and committee members, I remind you we have not seen at all. In fact, I don't think any member of Parliament has seen this agreement or has had time to examine it.

I would further suggest that the committee request a meeting as well to examine the European Union-Canada agreement concerning turbot. I understand that the European Union in Brussels is handing out copies of this agreement. If we're unsuccessful in getting a copy from the Canadian government, I'm sure the European Union would be pleased to give us a copy.

The Chairman: Do you have Ms Bonino's number handy? We'll give her a call.

Mr. Baker: I have no comment on that.

Some hon. members: Oh, oh.

Mr. Baker: On the observer contracts, Mr. Chairman, as you recall, we spent a lot of time on this issue, many days, and had many representations, many witnesses. If in fact Supply and Services through that tender call has done what the union claims it has done, then I would consider it to be a serious affront to members of Parliament and an affront to the findings of this standing committee.

I would therefore suggest, Mr. Chairman, that we find a way of calling witnesses immediately, before this tender call is concluded, to examine exactly what the Government of Canada has done.

The Chairman: Mr. Baker, I'm glad you raised that. Can we put that on our agenda for immediately after we hear our witnesses, and we can have some discussion on it at that point in time.

With respect to the agreement with the European Union, we could probably immediately seek some assurance from the department as quickly as possible, which means probably today. If the document is being distributed in Europe, then it certainly must be available here. So we can have a look at it as committee members - it should be a public document - and decide at that point in time if we wish to hold some hearings with respect to the implications of that deal.

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We have with us today from the Department of Fisheries and Oceans, Karl Laubstein, Director General, Industry Renewal. I guess you are going to go through the talking points. We also have Wayne Follett, Director of Program Coordination, who's in charge of the high-tech graphics. We've had both gentlemen here before and I want to welcome them to the committee.

Following that, we will have Raylene Johnson, Ministerial Liaison Officer, Atlantic Groundfish Strategy from HRD, and Mr. Marcel Nouvet, Director General, Atlantic Groundfish Strategy.

I welcome you to the meeting. I think it's the first time you've been here. We keep going through the directors of these programs at these committees. I don't know why. I hope you will be on for a longer period than some of the others have been.

We will start with Karl.

Mr. Karl Laubstein (Director General, Industry Renewal, Department of Fisheries and Oceans): Thank you, Mr. Chairman.

As I was here the last time, I am full of anxiety, because December 15 is still giving me nightmares. So I hope we'll be able to provide you with better information today.

The Chairman: Karl, one of the members said us too.

Mr. Laubstein: Incidentally, it is Ron Gélinas who is going to give the presentation. It is a geographic information system. We finished it only late last week, so I apologize because it is only in English. It will be in French in about a day or two and we will provide you with hard copies of both of them.

The purpose of this presentation is really quite simple. It is to provide a background, the larger context, for the TAGS program, and perhaps to remind people about what the big issues are and why we have the program. Second, it is to give you a good feeling. You can do it best in a visual sense of seeing the regional impact. Third, we will touch just briefly on one element of TAGS, the element that is mainly under DFO's administration, which is the capacity reduction, the industry adjustment component. If you will permit me, Mr. Gélinas will lead you through.

Mr. Ron Gélinas (GIS Applications Coordinator, Department of Fisheries and Oceans): As Karl indicated, we've assembled a series of slides, which we thought would provide a good background piece or a good backdrop to the situation. We'll eventually focus on the caseload or the constituents of TAGS, and finally summarize basically on one particular component, the capacity reduction achieving adjustment in the Atlantic fishery, of course, the objective of TAGS, beginning with the setting. I want eventually to come to focus on some of the challenges that we currently have before us, given that some of the basic assumptions, have changed quite dramatically in recent times.

Beginning with the geographic setting which you are all familiar with but just to put it in the right context, the right mind-set, the northwest Atlantic and the 12-nautical mile territorial sea or legal jurisdiction prior to 1977.... Of course, in 1977, with the extension of jurisdiction, a new mind-set emerged in the northwest Atlantic. There was renewed optimism that we had this expanded access that we would be able to manage and control. There was the increased investment in the offshore component, the modernization of the fishery, all of which led to a fairly major expectation that we would have increased economic stability. In other words, we would be in control of our own fisheries resources and this would lead to more stability.

Just by way of support, you can see here the investment in Atlantic harvesting capacity just prior to the extension and following the extension of jurisdiction.

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Shifting to actual resources, looking at shellfish and pelagics, there are generally fairly consistent or stable trends with a minor increase in both. Of course you experience peaks and troughs in the normal market driven type of cycles.

Generally speaking, groundfish was reasonably consistent in terms of landings until the late 1980s when there was a gradual decline. Then there was a precipitous collapse which occurred in the early 1990s. There was a very dramatic decrease in the number of landings.

Perhaps to demonstrate by way of what is probably the most commonly referred to or the one that might be typical of the groundfish collapse with northern cod, we've broken it down here into the inshore versus the offshore component.

On the inshore, there are peaks and troughs that characterize an inshore fishery. Basically this is a fishery where you wait for the fish to come to you. Of course you get good years or bad years based on environmental conditions, a whole series of factors.

Offshore, following the extension of jurisdiction, there was a gradual increase to the point where in the late 1980s and early 1990s it began to collapse, basically completely down to zero, or through the moratorium.

This is just the same: it is the decrease in total allowable catches, as well as landings for the northern cod.

If we look at this chronologically and spatially, it began in June 1992, with the northern cod moratorium, the 2J3KL cod. The expectation at that time was that this was a minor blip that probably within two years, or maybe a few additional years, would lead to a recovery and we could have a commercial cod fishery again. However, by the end of 1992 and early 1993, an additional five groundfish stocks were closed.

Moving to 1994, we add roughly an additional 8 to 10 stocks, and by 1995 we have 25 groundfish stocks that are closed in the northwest Atlantic.

It's virtually impossible to fish in any division in the northwest Atlantic without fishing in an area where there's at least one groundfish moratorium in place.

In terms of the program or institutional response to the recent rash of closures, we have the Atlantic fisheries adjustment program, which was introduced in 1990 for a five-year period. There was $548 million for plant worker retirement, stock recovery, and science and economic diversification.

Following this, in 1992, with the introduction of the northern cod moratorium in June, the northern cod adjustment recovery program provided $845 million for income support, early retirement and training initiatives.

Finally, the Atlantic groundfish adjustment program provided an additional $191 million for training, job development and adjustment. It was also expanded in 1993.

That brings us to the current initiative, the Atlantic groundfish strategy. It's a five-year program, Atlantic-wide, started in May 1994. There is $1.9 billion dedicated, really to try to reduce groundfish dependence in the northwest Atlantic. It is basically striving to move toward the fishery of the future, one that is sustainable and economically viable.

There are basically four main components of the Atlantic groundfish strategy. There's a labour adjustment component, which is active programming designed to help people adjust to new opportunities outside the fishery. There's the income support, which is basically based on an attachment to the fishery. There's the industry adjustment, in which there are two main initiatives in terms of achieving capacity reduction, the licence retirement and early retirement. Finally, there are the economic development initiatives through ACOA and the Quebec version of ACOA.

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Shifting to a profile of the TAGS population, those that are on TAGS or that met the criteria, we have broken it down by groundfish stock areas and those that are aged under and over 50. Basically, you see that for Labrador, east coast Newfoundland, you are looking at about 6,500 that are part of TAGS, and the breakdown roughly around the average is approximately 77% under 50 years of age and 22% to 23% over 50 years.

If we just walk through, you can see that by far the largest number of constituents are from Newfoundland. This portion includes south coast Newfoundland as well as the eastern Scotian shelf. You have the northern gulf, of which a portion is constituents from Newfoundland as well, and the north shore.

If we shift to plant workers, we see a very similar breakdown. The numbers are in fact a little higher in terms of being under 50 years of age. You will notice the dark and light shades. The lighter shade represents females and the darker shade males. Again, there is a very similar trend in terms of the spatial distribution and breakdown of the TAGS caseload.

Mr. Baker: There are more females than males.

Mr. Gélinas: This is true for plant workers, yes. In terms of the total caseload, of course when the program was introduced the forecast was 30,000. The caseload approved as of March 7 is about 38,500, so there was a fairly substantial increase in the forecast. Again, looking at the spatial distribution, it is pretty much what we saw earlier, although this is looking at it basically by province, not by the stock areas.

Mr. Baker: Could we have these figures and the information distributed to the committee?

The Chairman: Is there a hard copy of this, by any chance?

Mr. Gélinas: We'll be providing you with a hard copy by the end of the day or early tomorrow.

The Chairman: This is an important point for us. You're telling us that you forecast a caseload of 30,000, and as of March 7 you approved 38,480. How many are still in process?

Mr. Laubstein: I think we will let Mr. Nouvet explain this, because Ron isn't involved in the program. I think about 2,000 are still being processed.

Mr. Marcel Nouvet (Director General, The Atlantic Groundfish Strategy, Department of Human Resources Canada): There was a late search at the end of March that increased the figures.

The Chairman: Is everybody finished with that?

Mr. Wells (South Shore): How many were rejected? Do you have those numbers?

Mr. Laubstein: We have the numbers, yes.

Mr. Wells: There must have been in excess of 12,000 rejected, 12,000 to 15,000.

Mr. Laubstein: About 52,000 people have applied. Once we come to the discussion, I can give you the figures on that.

Mr. Wells: How many of those are under appeal? That's the follow-up question. I don't need to know that at this moment, but if we could have that to complete it....

Mr. Laubstein: You will have all the figures by the end of the morning.

Mr. Gélinas: The current challenge is the budget of $1.9 billion. Because of the increased caseload there is a current overrun of $385 million, which we have to eliminate.

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The Chairman: This is on all components?

Mr. Gélinas: Yes, that's the total.

The Chairman: Do you want to go back there for a second?

Mr. Baker: You said we have to eliminate. What was the elimination?

Mr. Gélinas: Where is it going to come from?

Mr. Baker: Yes. Your exact words were that -

Mrs. Payne (St. John's West): You mean you have to find the money, I gather.

Mr. Laubstein: No. I think you have to ask me or Marcel Nouvet. That's why we have the review. Our upper limit is $1.9 billion. That's quite clear. This is part of the process that's going on, why you make changes in the existing budget.

Mr. Wells: These are projected numbers to the end of -

Mr. Laubstein: This is the program the way it was planned at the beginning and all components would be funded. According to the higher caseload, you would need $385 million more than you projected over the five-year period, but the $1.9 billion we have been given is the absolute ceiling. So it's not a projected budget; it's just that if one had more money, one would need an additional $385 million.

Mr. Baker: So the witness is saying.... If you rewound the tape, you would hear exactly what he said. He said $385 million has to be eliminated. So perhaps we can get to that later when the bosses give their presentation.

Mr. Gélinas: All of this must be taken in the context of new information that has come to light, bearing in mind the TAGS objectives and the temporal window of a strategy for five years. With the new information that has become available, if we look at the stock area or the recovery of the stock areas, the timeframe has changed very dramatically. For example, for Labrador, east coast Newfoundland, it is not expected that there will be a commercial fishery of groundfish, namely cod, for at least 14 years. This is the best estimate the scientists have come up with and in fact this is an optimistic assessment.

The Chairman: The language is really important here for us, because we've gone through this before and I've dealt with the scientists before. I want to make sure I know what you're saying. Are you saying that it is anticipated that there will be a stock recovery in 14 years? Or are you telling us that it is anticipated that there cannot be stock recovery until at least 14 years? Those are two very different things.

Mr. Laubstein: I'm not a scientist either, but I can tell you why the scientists give us this 14-year figure.

Given current research and the data we have, given the size of the biomass and the age distribution of the animal and the average lifetime of about 15 to 20 years, and it takes about seven years to mature, scientists estimate that if no change is coming - and there might be changes in the environment - it would take up to 14 years before we would have a fishable biomass.

The Chairman: This is really important, because any time I've talked to the scientists you have to be very careful that you're hearing what they're telling you.

Are you telling us that if the decline in the stock that we've seen on the previous graphs stops today and a recovery takes place it will be 14 years before there's a commercial fishery? Or have they factored in the fact that we're still going straight downhill? Are they assuming, as the basic assumption, that the decline will stop today and it will take 14 years for the biomass to get to such a state that it's back in a commercial fishery? Or has that been taken into consideration? I ask this because they are two very different things.

A year and a half ago when we first started dealing with this, we were told that the recovery most likely could not take place before the year 2000. Now we're way beyond that.

Am I clear in my question, Karl?

Mr. Laubstein: You're clear.

The Chairman: Are you assuming that the decline will stop?

Mr. Laubstein: Yes, you're clear, Mr. Chairman. Once again, I'm an economist, not a scientist. I had that same problem with the task force on incomes and adjustments to understand it. As I understand it now, and I cannot talk for the scientists, based on -

The Chairman: Where is somebody who can talk for the scientists? It's rather germane to what we're talking about here. We're talking about the integrity of the program.

Mr. Baker: I think it exempts the sexual habits of codfish and flatfish.

The Chairman: Yes, we know. A hands-on approach to that.

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Mr. Baker: The most recent information is that, whereas it normally took a codfish off Newfoundland seven years to reach sexual maturity, it now takes it 11. It takes a flatfish 13 years to reach sexual maturity. So it stands to reason that it would take 13 years to reproduce small flat fish and 11 years to reproduce codfish. That stands to reason unless we can find some way of encouraging more sexual maturity.

The Chairman: That's based on the assumption that the decline will stop today and recovery will start tomorrow.

Mr. Baker: No, it's on the assumption that the fish will be sexually active and will reproduce after that period of time.

The Chairman: And that there will be some to be sexually active and reproduce. That's the second assumption.

Mr. Baker: Exactly.

Mr. Laubstein: This is as much as a scientist can tell us today. Incidentally, they still think the cod gets sexually mature at seven years, but I will check with them.

Mr. Baker: They appear to be smaller now. They are not eating.

Mr. Laubstein: You are quite right, Mr. Baker. We know how to judge the age of a given species such as cod. You use the earbone; it's like the rings on a tree. We've had fairly good information over the last 15 years. If you compare the same age group, let's say a four-year-old cod in 1980 on the west coast of Newfoundland, on average it weighs 50% less. This would be like humans all weighing, at a certain age, 50% less.

This of course lends credence to the hypothesis that quite apart from overfishing, there are environmental changes at work which, I am afraid to say, the scientists don't fully understand yet.

Mr. Baker: I am sure Karl will bear me out on this. There's quite a difference between the reproduction of fish off Newfoundland and that down in Nova Scotia. The further south you go, the faster they reproduce.

Mr. Laubstein: Yes, and that in itself might have something to do with the environmental changes.

Mr. Baker: Or the more sexually active they are down in Nova Scotia.

The Chairman: Particularly on the south shore of Nova Scotia.

Mr. Baker: Yes. Dartmouth.

The Chairman: We are seeing if we can get somebody from the department who can explain some of the science over here before we leave today. I think our clerk has just asked the departmental assistant to see if we can get somebody over here. Sorry about that.

Mr. Gélinas: That's fine. I can tell you precisely what we were told by the scientists. Given the data we now have of what we have there and making assumptions - and this comes back to your question - my understanding was that on the assumption of natural mortality that we've seen in the past, the basic assumptions they make in their models, with what we have now, we would be looking at a 14-year recovery. Therefore, I do not believe it factors in the possibility of continued declines through excessive mortality through environmental changes or any of those factors.

The Chairman: Minimum figures.

Mr. Gélinas: That's right. That's my understanding.

We see the range the scientists have identified from 14: six years in the northern gulf; five years on the south coast Newfoundland; eastern Scotian shelf, Southwest Nova, Bay of Fundy, four years; southern gulf, three years.

Ironically, it appears that those who have the longest to wait are also those who are the most dependent on groundfish. So there appears to be a quite good or positive correlation. In fact, if you look at it in terms of a percentage of their total fish production, what proportion they relied on groundfish, again, we can see the very heavy dependence.

In terms of some of the challenges, also, if we look at the TAGS caseload, in terms of education as one possible indicator, roughly we're looking at over 70% of the caseload not having a secondary or high school education. All of these things have to be factored in in terms of the objectives of the program, and of course the emerging information or knowledge we're gaining.

Remember the four components: labour adjustment, income support, industry adjustment, economic development. I would just like to say a couple of words and show a few slides on the industry adjustment portion, which is really dealing with capacity reduction, mainly through two main initiatives, licence and early retirement.

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Basically, the focus is on the inshore sector. We're looking at licence and early retirement. Similarly, there are also initiatives through licensing reform and other measures that factor in to help achieve the target.

They're voluntary programs. We are looking at a balanced reduction throughout the various gear sectors, the various fisheries.

The Chairman: When we get into that, can somebody tell me how you can achieve that in a voluntary program, if you are seeking a balance when we get down to it.

Mr. Laubstein: We'll try to answer that.

Mr. Gélinas: In terms of eligibility for specifically the licence retirement, a series of criteria were defined, which the candidates had to be able to meet in order to be eligible. These include holders of groundfish licences, that they are heads of a fishing enterprise and that they have a certain amount of attachment and income related to the fishery.

In terms of the bottom line, what does this translate to in numbers? Basically, 6,120 met those criteria. Of those 6,120, we are targeting to retire 2,000.

[Translation]

Mr. Bernier (Gaspé): You talk about 6,000 people to be retired, among the various provinces. In the tables you showed earlier, the assessed period of time necessary to come back to a fishable stock is of 14 years. The question which bothers me is to know from when those years are counted. Is it from 1995?

Mr. Gélinas: Yes.

Mr. Bernier: We are talking about individuals which could retire at the age of 50. In the figures that you are going to present us, do you take into account the fact that the men or women who are 35 today will be 50 in 15 years? So we could put them also into retirement. What would be the percentages? Is there a 15 years gap to fill?

Mr. Gélinas: Yes.

Mr. Bernier: What will we do with those people during the 15 years where they will not work? After 15 years of inactivity, it will not be easy to start again with a capacity not of 35 years but of 50 years. I am afraid that the present figures do not have any meaning.

Mr. Gélinas: That is part of the problem. This year's data which indicate that stocks will take much more time to rebuild from a commercial point of view, changed the fundamental assumptions on which this five-year program is based.

Mr. Bernier: Right. But you did not take that into account in the figures you showed us.

Mr. Gélinas: No, because the program is a five-year one.

Mr. Bernier: According to your presentations, there may be 75% of the people who would be less than 50-year old. But if we figure out in your earlier table how many people are now 35-year old or more, would there be twice or three times as much who should retire automatically?

Mr. Gélinas: I do not know the figure, but you are right.

[English]

The 14 years for the northeast coast is not necessarily cast in stone. This is the latest scientific advice.

Second, just because the groundfishery, in particular cod, might take 14 years to recover, other fisheries are going on. These fishermen are not all totally idle. When we talked previously about the figures, you asked how many had been approved across Atlantic Canada. That figure is 38,000, but 25,000 are actually only drawing tax benefits. Obviously some people are still fishing. There are still other species. While the northeast coast is most affected, activity is still going on.

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The Chairman: I would like to get into this question. In your groundfish licence retirement program, the majority of harvesting effort that has been affected is in Newfoundland. That's where 80% of this program's reduction impact is being felt. If you've got 4,400 individuals, which is the bulk, what is the percentage of people from Newfoundland who have qualified for TAGS? How many qualified for TAGS who were affected by the downturn? It's about 70% or 80% of the whole bunch, isn't it? How high would it be?

Mr. Laubstein: The number of Newfoundland approvals qualified for TAGS is 27,000, or about 71%, which is 10,000 fishermen and 17,000 plant workers.

The Chairman: So about 70% of the total are in the area that can't recover, by the best scientific evidence, for at least 14 years -

Mr. Laubstein: They are around the island. If you will remember, the west coast and the south coast -

The Chairman: It is 12 to 14 years. So we have a five-year program; 70% of the people that are in the five-year program are in a fishery that by the scientists' best guestimate - this is the most optimistic one - will be 12 to 14 years before recovery.

Mr. Gélinas: You see, it's 14 years for the east coast, Labrador, but there are also constituents from Newfoundland in the northern gulf as well as the south coast.

Mr. Baker: Yes, but the chairman is talking about only that section of Newfoundland -

Mr. Gélinas: Yes.

Mr. Baker: You see his point.

Mr. Gélinas: Yes.

The Chairman: When we look at the dollars and where the program is going with the best scientific evidence, you go from not a great story to a bad story to a disaster if you project this thing out, because you're dealing with people. If you start dealing with the core fishery folks, there's no core fishery for 14 years. So here we are adjusting people out of the fishery with a huge adjustment program that is already about 30% or 40% over budget. It's all being focused on getting people out of the fishery and on the fact that there would be a core fishery at the end of the program. For 70% of them there will be no core fishery for at least 14 years and no program.

Mr. Baker: It's a good point, fascinating. So that should affect the policy decisions that are made now, and who you are going to eliminate.

The Chairman: I hate to hold everybody up, but on the last chart, where you were talking about the licence retirement, has somebody made the decision somewhere as to which region gets which part of that reduced target of 2,000? Has that all been decided?

Mr. Laubstein: No. Because they are voluntary programs, we would assume.... That has not been decided, no.

The Chairman: But wouldn't you think that you should target nearly all of your reduction target and the dollars for that into the area where there will be no recovery for 12 to 14 years?

Mr. Laubstein: Right off the bat, of course, most of it is targeted to that area, and based on the -

The Chairman: That's what I just asked you. You've got a reduction target overall of 2,000, and 6,120 are eligible for the retirement. Given the new data, in the Newfoundland region they can't fish for 12 to 14 years. So why wouldn't you say that we had better adjust our reduction target and focus straight in on Newfoundland on those fishermen? Has that been done?

Mr. Laubstein: Seventy-five percent of the funds are targeted for that area.

The Chairman: That's not what I asked. Seventy percent of the people affected are in that area, but we just found out that that area is the one that is not going to recover. It'll be a miracle if it recovers before 14 years. With that new major piece of data, have you retargeted the percentages to try to get more people out of that fishery? There's no core fishery there for 14 years, at a minimum.

There's no core fishery there. We're doing adjustments and leaving people for a core fishery that will not exist, that can't exist, by the scientific data. There's no core fishery there.

Mr. Laubstein: This is, incidentally, not the latest scientific data; this is data that has been around for a number of months. Once the scientists come, perhaps they can follow up on that.

The Chairman: Let's assume that it won't get any worse when they come; it probably will because of the collapse, but that's a question I'm not going to belabour. I would like to get into it, because I think there has to be a massive redirection of the components into the areas that we now know are not going to recover.

Mr. Gélinas: For the licence retirement initiative, the reverse auction model has been selected.

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Those who meet the eligibility criteria submit bids for groundfish licence retirement and there are very clear conditions. To take advantage of the licence retirement initiative, you must surrender the personal fishing registration and groundfish licence; you must dispose of all other licences within two years; and you must relinquish your entitlement to TAGS. Therefore the net cost of the program, of course, will be influenced by the fact that you're removing them from TAGS.

Mrs. Payne: Has the deadline now passed for at least the first round of retirement licences?

Mr. Laubstein: Yes. On March 31.

Mrs. Payne: How many licences have been retired up to this point?

Mr. Laubstein: None.

Mrs. Payne: How many applications, how many bids have come in?

Mr. Laubstein: There are 2,000.

Mrs. Payne: What is the status of those? What information do you have?

Mr. Laubstein: The harvesting adjustment boards are assessing all the applications. They all came in like a tender process. They're opening them. The distribution was almost in proportion to the caseload across Atlantic Canada.

Mr. Gélinas: Finally, the last slide deals with the early retirement initiative. We mentioned that we are targeting about 2,000 of the 6,120 for the licence retirement. We've estimated that 400 fishers between 55 and 64 would be targeted for the early retirement.

The cost for this program is cost shared between the federal and provincial governments. It's a 70-30 split.

Mr. Baker: Is that all provinces?

Mr. Wells: If it's a 70-30 split, are all provinces participating to the extent of 30%?

Mr. Laubstein: At this stage it looks as though four provinces might be participating, certainly Newfoundland, and I think also Nova Scotia and P.E.I. New Brunswick has expressed no intention to participate because it has the job program. We are still making good progress in Quebec. I would expect four out of five provinces to participate.

The Chairman: What were the initial numbers we received when we got our first, second and third briefings?

They used to give us a chart telling us how many people it was anticipated in each year would take advantage of each program.

I thought there were a lot more than 400 people who we thought were going to be taken out with early retirement. I might be wrong. I don't have the figures here. I thought it was a lot higher.

Mrs. Payne: I think you are correct.

The Chairman: Do you know what we initially -

Mr. Laubstein: I wasn't here at that time. I wasn't part of it, so I don't know. Of course the number is a function of the age profile.

From what we have looked at, the age distribution in the different provinces, and based on the take-up, that is about the number we expect to get out. These are just fishermen. These are not plant workers, because a separate program is being planned by HRD, and there are larger numbers among the plant workers.

While we think 400, there will be a formula for how much you get monthly and whatever. Some of the people in that age category also have licences and you can't stack, you have both. I would expect that for fishermen with a groundfish licence it would be to their advantage, if they are even in that age, to take licence retirement rather than early retirement.

Mr. Gélinas: That's it, Mr. Chairman.

Basically, the last point dealing with conditions for the early retirement, as with the licence retirement, is that they must surrender their personal fishing registration and groundfish licences and dispose of all other licences within two years.

That's it by way of background.

Mr. Wells: When you say dispose of, does that mean they can sell them to others within two years?

Mr. Laubstein: Yes, in your region, but subject to the licensing policy in each region.

Mr. Wells: Mr. Chairman, I would like to get a copy, or at least some confirmation that all provinces have in fact signed an agreement on that 70-30 arrangement.

Mr. Laubstein: So far, nobody has signed. We have draft agreements.

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The provinces did sign, for example, on the PWAP, the plant workers adjustment program. We had one with Nova Scotia. We met just a week ago with Nova Scotia's deputy minister and we have a draft agreement. They will go through their process and we'll go through ours. We are now preparing a Treasury Board submission to that effect.

The Chairman: So, Karl, who's going to tell us about the plant workers adjustment program? Are we getting that from the HRD officials?

Mr. Laubstein: Yes.

The Chairman: I think we'll go right over to the next presentation, because the two of them sort of mix together. Then we'll have everybody sitting around the table and it will be easier to hit the target.

[Translation]

Mr. Bernier: Can we ask them questions right away?

[English]

The Chairman: It's up to the committee. I would like to get the rest of this so that we'll have a whole picture. Then we'll have all the officials there, because I think some of the areas overlap here and I would rather have both presentations. Then we can ask them all to sit there and we'll ask the questions.

Mr. Bernier: I will wait.

The Chairman: As well, I think somebody is coming over from the Department of Fisheries and Oceans who is with science.

Now we are going to go straight to the HRD officials.

Mr. Nouvet: I would like to introduce Paul Touesnard, who is with us from HRDC. As a matter of fact, when we get into the numbers, I might draw on Paul's expertise, because he has been with the program right from the start and he is in fact the numbers person.

The Chairman: Gee, we should get him to give the whole presentation then.

Mrs. Payne: I was thinking we should reverse the screens here.

The Chairman: Would you like to join the Liberals, Mr. Bernier?

Mr. Bernier: No way.

[Translation]

Mr. Nouvet: We have the slides in hard copy.

[English]

What I would like to do is take 15 to 20 minutes, assuming there are no questions. Perhaps it'll take a bit longer to get through this presentation. It is based on the Price Waterhouse operational review that was done on the TAGS program, basically six months after its implementation. The Price Waterhouse review is now serving as a foundation for the operational plan, which we have developed and which is being implemented in the regions as we speak.

In terms of the presentation outline, you have it before you. We will quickly go over the TAGS objectives. That has already been done to some extent by our colleagues from DFO: the operational results; the challenges, which are many; the operational review recommendations by Price Waterhouse; the potential solutions; the current priorities; and the conclusions.

.1030

The TAGS objective is to help fishers and plant workers directly affected by the east coast groundfish crisis to adjust to the situation, which of course has worsened since the start of the program.

I won't go over the key elements except to stop on the last bullet, which is simply a reflection of the reality that TAGS involves many partners. There are many participants and stakeholders. The clients, my own department, HRDC, DFO, ACOA, FORD-Q, the unions, the provinces, the communities, and elected officials, including MPs, have a role to play in making this thing work.

In terms of the operational results we have received many more applications than expected, close to 53,000. We have approved some 40,000 applications against initial expected approvals of 26,500. We have 25,500 beneficiaries at any time in the system against the expected number of 16,000.

Roughly 25,000 people have gone through counselling against the expected number of 26,500. That can be explained by virtue of being swamped with the 40% oversubscription. The emphasis was put on processing claims prior to getting people into counselling.

In terms of the active programming, there have been delays there too. That's reflected in the Price Waterhouse report and reflected, no doubt, in your own experiences.

We have 15,000 in active programming right now versus an expected number of 18,000. Those include 11,700 who are in some sort of training at this stage.

Regarding green projects, the number here is overstated. This presentation was prepared two months ago. It has been revised but that number has not been revised. We have 74 green projects approved involving 950 clients. The differences are projects that are in the mill but are still under negotiation.

The Chairman: So 73 rather than 203 -

Mr. Nouvet: It's 74. The number of clients remains the same.

In active programming during the last fiscal year we spent $43 million versus an initial forecast of $135 million. So that alone illustrates the fact that there have been delays in active programming.

In terms of the challenges as reflected in the Price Waterhouse operational review, the first challenge identifies the cost overrun. With a 44% client oversubscription you end up with a potential deficit that is 44% greater than the amount that was allotted in the first place.

The Chairman: Is the dollar figure attached to that the same dollar figure as Fisheries and Oceans gave us? What's 44% of $1.9 billion? It's more than the $300-odd million that Fisheries told us.

Mr. Dhaliwal (Vancouver South): It's $850 million.

The Chairman: Is it $850 million? There, we've got a good mathematician.

Mr. Nouvet: You're probably right in terms of calculating the number, but the actual figure is around $784 million.

Given the oversubscription we have, as early as January we took steps with our own people in the field to target the active programming interventions to people who are 50 years old and under and who are relying solely on TAGS.

The Chairman: We have a problem here with numbers. We just saw a presentation in which Fisheries and Oceans told us that it is currently projected that an overexpenditure of $385 million will result from the program. You're telling us $784 million.

Mr. Nouvet: The deficit number of $385 million is right given the adjustment that has been made earlier. The adjustment was to target active programming.

At the beginning we were targeting active programming toward basically all TAGS participants. Now we are targeting active programming to people who are 50 years old and under and whose sole source of income is TAGS.

.1035

The Chairman: So by the change in the direction of active programming you've cut $400 million out of active programming.

Mr. Nouvet: That's right. The active programming budget initially was $490 million. When you took into account the number of clients you actually ended up with and projected forward based on your initial estimates, then, instead of $490 million, we would have needed $700 million to do the job in active programming, the job we had set out to do when we went into TAGS. So we capped the active programming at $350 million, down from the $490 million, which was obtained from Treasury Board and from Cabinet when this thing was put in, and down from the $700 million, which you would need to do the job you had set out to do in the first place. Thus we end up now with $385 million that we have to work with.

The Chairman: It's as clear as mud.

Mr. Nouvet: If it's not clear -

The Chairman: There is a big difference; $490 million is a lot. I guess what we are going to try to figure out is just how we reconcile that and what it means with respect to the delivery of active programming to clientele. But we'll let you go through your presentation now.

Mr. Nouvet: The first major challenge that Price Waterhouse identifies is a cost overrun and that something has to be done with it in order to live within the budget.

The second challenge is, of course, the deepening fishery crisis, the fact that the recovery in some areas is going to take as long as 14 years.

There are attitudinal issues that are very difficult to overcome. Some are among the clients who are in a denial stage from the perspective that many hope that the fishery is going to come back and that they will be able to make a living out of it, or if the fishery is not coming back, then at least that some income support program will be available to them until the fish come back.

There are low growth and high unemployment in many areas. There are low literacy rates, to which the DFO representative alluded. There are lifestyle barriers that make it hard for people to contemplate leaving the area where they live to go to other parts of Canada where there might be other jobs. It would be very difficult to replicate the lifestyle that they have had until recently.

The Price Waterhouse report pointed out that there are delays in economic development initiatives, capacity reduction and active programming.

There were problems with communication in terms of coordination between the national headquarters, the regions and the CECs. We had major systems issues in terms of the systems support that must be provided to the frontline staff dealing with the clients and to the regional and national headquarters in terms of managing the program.

The 50% adjustment objective was a question mark in the Price Waterhouse report given the large client oversubscription.

I have added two bullets in terms of the challenges that they did not mention. One was the appeal process, which was perceived as being biased against the applicants. The other challenge, three and a half months ago, was of course the issue raised in this committee, which is around the whole extenuating circumstance provision associated with the terms and conditions and how good a job we had done of informing all the clients of the possibility of invoking extenuating circumstances.

Very quickly, the recommendations that Price Waterhouse made were to modify the options, to increase emphasis on adjustment out of the groundfish fishery.

The second recommendation they made was to get on with identifying core workers or change the program and the program design.

.1040

Their third recommendation was to resolve the budget situation, to reprofile the operating funds, to clarify policies and options that were correctly perceived to put barriers and disincentives to adjustment.

They recommended that CECs in outreach centres develop and follow detailed action plans.

They recommended that something be done to ensure that counsellors understand their roles, the goals to achieve within TAGS.

Finally, they recommended that we strengthen the coordination.

They recommended that we establish a comprehensive financial forecast. That was discussed at the last meeting you had on TAGS.

They recommended that we have a consistent set of performance results oriented measures, that we evaluate all TAGS counsellors on a regular basis and establish a comprehensive system strategy.

They recommended that we promote the effectiveness and use of the community opportunity program, that we focus the program on clients aged 50 and over and ensure that training provided to people is meaningful by considering the job opportunities and the reasonableness of investing in the clients as a measure leading the clients to other jobs.

They recommended that green be linked to community economic development, and they also made the point that until the core fishery was clearly identified we should not invest in it.

The Chairman: When you talk about until the core fishery is clearly identified we should not invest in it, have we defined the core fishery?

Mr. Nouvet: I think we are part of the way there. A lot of progress has been made, as I understand it, on the letters informing the heads of enterprises, I guess the ship captains in layperson language, whether or not they meet the SEC have been issued in most provinces.

In terms of the heads of enterprises, yes, they should know who is core and who is not.

The Chairman: Here's my problem. You were here when the fisheries department did the other presentation. I thought that when we started this whole process about a year and a half ago we were looking at a core fishery as those who would be left in the fisheries to fish actively after the program expired.

We're now sitting back and seeing up on the northeast Newfoundland coast that there is no recovery, which means no core fishery, for a minimum of 14 years.

Do we now define core fishery as whoever we think should be left if the stock ever recovers? If we get into not investing in the core fishery until it is identified, somebody has to help me as to the new definition of a core fishery. I always thought it was what was going to be left, what harvesting capacity would be able to be sustained after five or seven years, somewhere in that area.

If the scientists are telling us that there's not going to be a core fishery up there for 14 years, minimum, that there's no fish, does that mean we wouldn't make any investments with respect to those types of programs in that area? How do we do that?

Mr. Nouvet: It doesn't mean that completely but when we look at the shrinking funds, when we look at the $350 million cap, when we look at the worsening crisis and the role that we have to play in adjusting people out of the groundfishery, we think the investment has to be made toward the people who are clearly not going to be part of that fishery in future, and it has to go to them on a priority basis.

The Chairman: Yes, but there's a problem with the definition. Karl, could you help us with this for a second?

One of HRD's operational review recommendations is that until the core fishery is identified, there should be no investment in the core fishery through programs. What is the department's new definition of core fishery, and how does that impact on the 72% of individuals affected by the groundfish collapse up in northeastern Newfoundland, where we've heard that there's not going to be a recovery for 14 years?

I always thought we dealt with whoever is going to be there to prosecute the stock after the program was done. We were assuming way back that there would be fish there to catch a lot sooner.

What is the definition of the core fishery for up there in northeastern Newfoundland?

.1045

Mr. Laubstein: We don't have a definition for the core fishery of northeastern Newfoundland. We have a definition of what we consider - this is a special eligibility criterion - heads of active enterprises with a certain attachment to the fishery, and we have a number of years, and with minimum revenues from the fishery.

Here, in this program, we are focusing only on the groundfish sector. In Newfoundland, we have identified a total of 6,000 people who meet this criterion. There are 4,400 who are to a large extent dependent on groundfish. There are another 1,000 who meet the criteria, but it comes from another fishery. They also have a groundfish licence. There are an additional 600 who have no groundfish licence, but they also meet the SEC criteria.

So in the entire universe in Newfoundland, if you talk just about Newfoundland, there are 600 core fishermen - if you want to use the term - who meet the definition of special eligibility criteria. Among those, 4,400 are reliant on groundfish. They meet both the SEC criteria and the criteria to be on TAGS. They don't have to be on TAGS. About 60% of the 4,400 are on the northeast coast of Newfoundland. We have identified 2,730. That's the sort of crisis area.

I see that Dr. Doubleday is here. Once you ask him about the 14 years....

On the first round of bidding under the people who want to retire from the fishery through licence retirement, we have received about 900 bids from that particular area. If they are judged by the boards to be reasonable bids and if they make recommendations, that would mean one-third of the 2,700.

The Chairman: The rest would have available to them these other investments through programs, because they would be deemed to be part of the core fishery. Right?

Mr. Laubstein: Right.

The Chairman: This would be even though scientifically there's probably no likelihood that they will ever be able to fish, at least for the next 10 to 15 years, in that fishery?

Mr. Laubstein: A lot of them are active in other fisheries for times of the year, in crab, in -

The Chairman: But it's not nearly as diversified up there, Karl, as it is down on the Scotia shelf and in places like that.

Mr. Laubstein: Perhaps my colleague here, Wayne Follett, can explain it. We have there too, quite an active crab fishery on the northeast coast.

The Chairman: If you guys from HRD don't mind, we're just trying to figure what the core fishery is, because I've never been able to figure out how they figure it out. Has anybody been able to figure it out?

Mr. Wayne Follett (Director, Program Coordination and Economics Branch (Newfoundland Region), Department of Fisheries and Oceans): The core fishery defined under TAGS is defined according to the special criteria that Karl has talked about.

In terms of whether all those core fishermen are entirely groundfish dependent, they're not. In Newfoundland right now we have 9,000 of our TAGS fishermen on fishermen's UI. So this demonstrates that they did have a fishery last year and were able to qualify for fishermen's UI. Approximately two-thirds of those would be on the northeast coast, so we do have 6,000 fishermen on the northeast coast of Newfoundland who are currently on fishermen's UI.

Therefore, when Karl speaks to the 2,700 core fishermen on the northeast coast, 900 of which are looking to retire their licences, the remainder may well be into diversified fisheries such as the crab and shrimp fisheries. They may have access to lobster and scallops, and they are pursuing other species as fisheries.

I think the issue as to whether the core fishery, as we've identified it, all those individuals, will transcend the transition period between now and the stock recovery is a separate issue. The definition of a core fisherman is a definition as applied Atlantic-wide. It's applied across Newfoundland and consistently applied to the northeast coast.

If you look at the uptake under licence retirement, you'll see that the numbers applying to retire on the northeast coast are high relative to the rest of the Atlantic. So the groundfish-dependent people there are probably coming forth for retirement.

.1050

Mr. Dhaliwal: Let me follow up on the chair's question, perhaps to clarify this. When the TAGS program originally came into effect, certain assumptions were made. Some of the assumptions were based on a recovery of the cod stock. I guess the very question the chair is asking is, if the original assumption was that there would be a recovery of the stock in seven years and now it has moved to 14 years, obviously you have to change the strategy in terms of what is a core fishery.

If you want to reduce the capacity by 50% over time, it has to be changed based on the assumption of when there will be a recovery of the cod stock and also take into consideration the regions. If the timeframe required for recovery is longer in certain areas, then obviously you have to adjust your strategy.

How have you adjusted the original strategy with the new information that has been provided by the scientists in terms of the overall strategy? First of all, in order to have a sustainable fishery, are you still going to reduce the capacity by the same amounts as you were originally?

I believe a 50% reduction in capacity was the objective and to create a sustainable fishery. Are those the assumptions that you are still working from?

Also, if the northeast is affected the most in terms of the longest period for recovery of the cod, how is that effected in your strategy in terms of what was originally established?

I think that's what the chair is trying to get through. Under these new circumstances that the scientists have provided us, how have you adjusted the TAGS program to reflect this new reality?

Mr. Laubstein: I would like my colleague, Bill Doubleday, to join us when we talk about scientific advice. I can answer all the other questions, because I don't think the scientific advice is that new or that definitive. We'll see.

To come back to your question, Mr. Dhaliwal, the target, the 50% that was announced and taken as a global objective, this doesn't mean 50% everywhere, but 50% to the groundfish sector in Atlantic Canada. That is still the target, but the target is for the groundfish sector. As we showed in one of the slides in our presentation, when you're talking about the groundfish sector, there are both an inshore sector and an offshore sector. The offshore has traditionally taken 50% of the groundfish and has 50% of the harvesting capacity.

Considerable rationalization downsizing in the groundfish sector has already taken place. I would think about a quarter of the total capacity has been reduced over the last four years because the two largest players in the offshore, which is 50% of the harvesting capacity, are Fishery Products International in St. John's and National Sea Products. They have downsized their fleets by at least a half. I can get you the figures.

So rationalization, capacity reduction in the offshore - and Mr. Baker can tell you this from his backyard, particularly as far as the processing is concerned - has already taken place to a considerable extent.

As far as the inshore sector is concerned - and here we are talking about the ones who traditionally have occupied 50% of the field, although that's where you have 90% of the people - the program of licence retirement and early retirement is one way of trying to make a contribution toward this 50% capacity reduction but as was pointed out, that in itself isn't enough. Other measures through licensing reform, for which there will be consultation with the industry this year, have to be taken if we are to move toward a 50% goal.

The 50% goal, incidentally, is a sort of longstanding goal that people have proposed. The first one who proposed it was Kirby in 1983-84. At that time our groundfish stock was at an all time high, and even then it was said we have 50% more capacity than is required to have a commercially sustainable fishery. Later the task force on incomes and adjustment repeated that 50%.

So, yes, we are still using that target.

The Chairman: He asked the question better than I did, and now I want to clarify his question, which was a clarification of mine.

The point is that when somebody sat down, a set of assumptions were made with respect to the state of the fishery in three, five, seven, ten years and that set of assumptions led to a plan.

.1055

That plan said once we get through this crisis with the assumptions that were there, we have to see a 50% reduction. But one of those assumptions was that the groundfishery would start a recovery in five to seven years.

Also, my understanding was it was assumed - because I can think back to hearings that we had - that type of natural shrinkage of harvesting capacity in the offshore fleet would take place. It has taken place. But that was one of your basic assumptions anyway, so that's not a bonus here. That was an assumption and that's now come true. But the assumption that hasn't come true is that the stock would recover in five to seven years.

So the question that Harb has asked is now that there is not a fishery to have a core fishery defined for in five to seven years, have we adjusted what we think should be a harvesting capacity reduction in those areas? Because there are no fish there. So we can say that in five years' time we'd like to see a 50% reduction or 70% - up in that area. The basic assumption was assuming there would be fish for the remaining fleet to catch in five to seven years. If there are no fish to catch, have we adjusted our targets on capacity reduction?

Mr. Laubstein: No, because they are driven by the budget envelope and it would require more money.

The Chairman: But we're preparing for a fleet that will not have fish to catch. This is crazy. We are defining a core fishery for a fleet that will not have fish to catch in some of those sectors. This is lunacy.

We have a $1.9 billion program, though, to try to.... It's not just welfare; that is why we have active programming and stuff. We're trying to reduce the fishery so that in five years we have a sustainable fishery. If some factors have changed, why are we still assuming that in five years there is going to be a fishery in some sectors and that there will be fish to catch in that fishery? I guess that is as basic as it gets. If your end assumptions are no longer going to...if you can't reach those goals because the targets have changed, have we sat down and fundamentally said there's a new reality here. Do we have to look at this again?

Mr. Laubstein: There is no limit on the number of people who can apply. It will ultimately be driven, right now the capacity reduction thing, through licensing and early retirement, which is driven by the budget constraints. Have we made an adjustment to that? No.

The Chairman: Forgive me. We have been off for two weeks. I must be really bad at trying to get this point across.

The point is, when this plan came together it assumed certain things. It assumed that certain stocks would recover in certain periods of time. When they did, in order to maintain those stocks at a healthy level in five years, here is the level of harvesting capacity that you would have to have. If it was more than that, the fishery wouldn't recover or it couldn't continue its recovery.

Now we know from the scientific evidence that it's not likely that we're going to have that type of recovery in five years. It could take in some areas as long as 14 years, maybe double the time of what we initially thought.

Given that, what are we preparing for? Why wouldn't we then go back in and say that given the fact there isn't going to be any fish there for 14 years, our definition of what the core fishery should be in that area has to change? We are still assuming the basic assumptions are that we reduced the harvesting capacity to this. The fish is stocked that will be there in five years' time. So we'll reduce it to 50%, but if there are no fish to catch, you still have way too much harvesting capacity in that sector. So we haven't gone back to those basics.

Mr. Laubstein: Mr. Chairman, we have a five-year program. Obviously, we'll have to continue after those five years.

The Chairman: And no fish until 14 years.

Mr. Laubstein: This program....

The Chairman: Karl, the program is preparing for a harvesting capacity program that there would be fish in five years. There are no fish. The fish have gone for 14 years out there. And we're asking: Have we gone back now with the new data and dealt with that reality and tried to have everything that falls out of our policy recognize that there's no fish in some of those areas for as long as 14 years that can be commercially harvested?

If we haven't, this is crazy. We're spending a lot of money preparing for something that we know is not going to be a reality. We know that the budgetary restrictions are there and all that stuff. We just don't want to spend all the money. In five years' time we'll say: ``We've done it, boys. No fish. Not our problem''. And we will have a fleet that's there, and boy, we've got them well trained and everything else, but there's no fish and we always anticipated there would be no fish for it.

Mrs. Payne: Also, Mr. Chairman, will the moratorium still stay in place for that period of time?

.1100

Mr. Follett: Mr. Chairman, the five-year program is in place. On capacity reduction, we offer a licence and early retirement option for fishermen. As Karl stated earlier, there is no limit on the number of people who can submit a bid to retire from the fishery.

About adjusting the strategy, although the recovery is 14 years, and I am not convinced that we projected a five-year recovery for northern cod because we have a five-year TAGS program. It was a five-year horizon for a program. There is no need to adjust that licence retirement program because all the groundfish fishermen on the northeast coast who want to can bid to retire their licence.

The Chairman: That's not the point, though. The point is when you define a core fishery, you are defining it for a fishery at some point in the future. This time it was five to seven years. So you have defined a core fishery expecting a stock to replenish, to recover. The stock is not recovering.

Mr. Follett: As we mentioned earlier, Mr. Chairman, the core fishery is defined based on a historic attachment to the fishery.

The Chairman: I understand that.

Mr. Follett: It defines those fishermen who are not marginal.

The Chairman: How did we ever arrive at 50%? Did we throw a dart at the wall? We did it because we had information that said if the stocks recover, this is what we think is the sustainable harvesting capacity. Stocks aren't recovering when we thought....

I'm not going to try any more. I can't get through this.

Mrs. Payne: Mr. Chairman, may I ask another question?

The Chairman: Go ahead.

Mrs. Payne: Mr. Follett, you said that there's no limit to the number of licences that could be retired, but the deadline has now passed. Are we assuming now there's going to be another round?

Mr. Follett: Yes, the deadline of March 31 was for the first round of bidding. All fishermen were given more than two months' notice to offer to retire their licence to bid.

Mrs. Payne: Which wasn't very much notice, by the way.

Mr. Follett: After the first round is concluded, there will be a subsequent round. Fishermen will again be given the option to offer their licence for retirement.

Mrs. Payne: This is a voluntary program. You've received 2,000 licences. My feeling is if it is a voluntary program, in fact there would be no reason why you would not accept the licences you have received. Am I correct there? In other words, if it's a voluntary program, these licences you have received should be accepted out of hand.

Mr. Follett: Subject to the review and assessment of the Harvesting Adjustment Board, they have to determine if the bids we have received for those licences are reasonable bids.

Mrs. Payne: Reasonable terms of the...?

Mr. Follett: The dollar value.

Mrs. Payne: The dollar value. Have you some figure in mind as to the value placed on these licences?

Mr. Follett: The value of a licence would vary depending on the fleet sector in which the licence resides.

Mrs. Payne: But you can't go to one person and say his licence is worth $150,000, and say to the person next door that his is not.

Mr. Follett: It is a competitive bidding process, a tendering process. All individuals have tendered an amount for their licence.

Mrs. Payne: So it's not really voluntary.

Mr. Follett: It is voluntary in that they are not being forced to bid. The board's responsibility now will be to evaluate those bids, one against the other, to determine what's value for money.

Mrs. Payne: When will that determination be made?

Mr. Laubstein: Excuse me, Mrs. Payne, this is done by the board. It is not done by the department. I would assume they are doing it this month. This is why they were set up outside the departments. The Harvesting Adjustment Board in Newfoundland under Richard Cashin is working on it. I would assume it would make its recommendations some time early next month.

Mr. Chairman, if I may, the question you raised - and I still would appreciate it if we could hear from Bill Doubleday on whether it actually is 14 years - have you adjusted the program? As you will recall from our last meeting, we are in the process of reviewing the entire program, and we haven't yet reported to the cabinet committee that we'll have the same discussion.

The point you raised, have you or should you adjust, that's one of the issues there too. People have said if it actually turns out to be a true 14 years, perhaps the TAGS program, the way it is now, was the criterion. It is an Atlantic-wide program, the same criteria everywhere. This might then lend itself to say perhaps the northeast coast of Newfoundland should be run differently if that is exactly the case. That's one of the issues which will be addressed.

.1105

The Chairman: What I was getting at is that things have changed. We all know the dollars are finite and there has to be, I would think, a reallocation of the resource, given the fact that some areas are going to be affected much longer and much more severely than others.

Mr. Baker: Mr. Chairman, let me clarify one thing that Mr. Follett said, that a great many of these people on TAGS, or a percentage of them, are collecting unemployment insurance. I want to set the record straight with the committee report that, yes that is true, but there is a reason for that. The unemployment insurance they are collecting is very, very low. In fact, it is extremely low.

They are sharing the existing resource. They are selling buckets of salted herring to pick up the extra stamps. The reason for it is that if you don't collect your unemployment insurance for a year, you then become a new entrant into the unemployment insurance scheme for the following year. That means you then will require a minimum of 20 insurable weeks to collect unemployment insurance at any point in the future.

I just wanted to set the record straight. It's not that there's this great resource of fish out there and that's why people are on unemployment insurance. They are on unemployment insurance because they want to try to protect themselves for the future. All those people who went on TAGS, who took the word of the government and went on TAGS, are now doomed because they will all be new entrants whenever they go back fishing. On the northeast coast and up in that area where there's ice, they will never get 20 weeks ever again, to collect unemployment insurance. The government has made sure of that in the legislation.

The witness just said the criteria for TAGS are the same everywhere, and the other witness talked about historical attachment to the fishery. As you know, Mr. Chairman, it's not exactly correct, is it? There are a couple of areas in eastern Canada where there is a historical attachment in the criteria, but the criteria in fact differ quite substantially, depending on the area of the east coast we're referring to.

We won't ask which areas of the east coast have the better criteria. We'll just leave it at that and go on to the presentation before us.

[Translation]

Mr. Bernier: I will try to be brief. I will try to ask again your question, Mr. Chairman, and that asked by Mr. Dhaliwal, because what is going on here is very important.

Why are we asking you again the same question, Mr. Laubstein? We can read in the last sentence written on the board there:

[English]

Until core fishery is identified, do not invest in it.

[Translation]

Those who say that they are not going to invest in the labour available in our areas are people from Employment and Immigration and from HRD. You say somewhere in the documents, people from HRD or DFO: ``Members of Parliament have also a role to play in all this.'' We are meeting people in our areas and what are we doing? The document says: ``Until core fishing is identified...'' Who can identify the fisheries for the future? You and your scientists. As long as this has not been solved, we will not know who can go to sea.

In the case of the northeast coast of Newfoundland, when we are talking of a minimum of 14 years, that means a lot of things. When we are talking about redirecting customers who are 50 years of age and over towards retirement, in the case of the northeast coast of Newfoundland, for HRD, that might even mean sending people 35 years of age in the same box. That means a lot of money.

But what is worse in all this, is that we are going to create a gap between two generations of men and women. Maybe only the children of those people will be able to go fishing one day, but they have to know that. What are they going to do in the meantime? For the time being, we are just parking them there.

.1110

I will not tell you my definition of TAGS in French. I will say it later on, outside this room because it is not so great. This program has been in place for two years now and I think nothing has changed. Because money is the sinews of war and we are going to be lacking money, and we keep beating about the bush. I would like us to be able to say it.

Mr. Chairman, if people here cannot identify it, maybe for political reasons, somebody will have to do it all the same. What I understand this morning, is that you, who are part of goverment, seem to be as frustrated as I am. I really look forward to meeting Mr. Tobin on the matter. I wonder whether he will have more answers than us, but we really have a problem here. We are beating about the bush without trying to solve the problem. Each time we ask the question, we are told that the program is a five-year program.

[English]

Mr. Laubstein: Mr. Chairman, I'd like to try to answer. I hope I have all the points.

The core fishery, as far as the TAGS program is concerned -

The Chairman: Karl, I think we may be able to help with your answer.

The core fishery you can define as this or that, or whatever you want. What we're trying to get at - and Mr. Bernier hit it again - is we say the core fishery is what should survive and is sustainable after the end of the program. So you can define the core fishery as anybody who meets this criterion. Then you have a capacity reduction program to arrive at a goal of sustainability with that core that's left. So we understand the definition for program applicability purposes.

I think what we're talking about is if you have a core fishery by definition, we want to know what is sustainable, and if it's only 10% of the harvesting capacity, why don't we have a program that will try to attain a 90% reduction in some of those areas? Am I right?

When I think of core, I think of what's left and what is sustainable. Because you can leave it, but if it isn't sustainable, somebody else is going to have to look after them.

I think that's not so much in the definition for the program, but it's a definition for what is actually sustainable and through a reduction program.

Mr. Laubstein: To go back to TAGS, the core as it was identified was done on the advice of fishermen's groups through the Canadian Council of Professional Fish Harvesters. Those are the criteria that were endorsed by them.

As far as the core is concerned for the fishery as a whole, our minister has gone twice to the Canadian Council of Professional Fish Harvesters, who this weekend, incidentally, had their constitutional convention in Charlottetown, where there were a lot of representatives from Quebec. They were supposed to come up with what the industry thinks is the best definition of a core before the department imposed anything.

There are three initiatives that deal with the core. First there's the TAGS program for TAGS purposes, where we use these definitions for voluntary programs. Second, these same criteria already came from fishermen's groups who are using these criteria now to come up with a definition of a professional fisherman and a new system of certification. Third, a process of licensing policy consultation is going to go on over the next three or four months in order to address this as well. That's about it as far as the core fishery is concerned.

The Chairman: Okay. Before we go back to your presentation, you guys are getting off easy. We're sticking with the fish guys today.

Who do we have here? We have Mr. Bill Doubleday. Thanks for coming over, Bill. You were probably in the middle of doing something much more important than talking to us but we had some questions just dealing with the recovery. I think it's important we settle it, because we have the HRD people stuck at this: until the core fishery is identified, do not invest in it.

They just heard some of our discussion about our definition of core is what is left that is sustainable. We were saddened to see some of the recent evidence would suggest that in some places, such as the northeast coast of Newfoundland, the scientific data would indicate that the stock is not recovering and probably will not recover to a sustainable yield position for as long as 14 years.

Can you give us a bit on the science here, Bill?

.1115

Dr. William G. Doubleday (Director General, Fisheries and Oceans Sciences Directorate, Department of Fisheries and Oceans): Thank you, Mr. Chairman.

Perhaps it would be useful to go back a little in time to the period when the moratorium was first put in place. We've been monitoring the northern cod stock for many years, and our most reliable measure of that stock is our research vessel survey, which is quite extensive.

We take about 400 sets each year in the fall when the northern cod have moved offshore. This allows us to monitor the overall abundance and also the strength of the various year classes.

Our 1991 survey dropped very sharply from the previous year. The drop was particularly noticeable for the larger, mature fish. The assessment of the stock declined by about 500,000 tonnes between those two years. This was quite unexpected.

However, at that point there were still two age classes of young fish that were showing up quite strongly in our surveys. These are the ones that were spawned in 1986 and 1987. For several years, 1989, 1990 and 1991, we got large catches of these two-year classes, 1986 and 1987, in our research survey. It was anticipated that a moratorium would allow these fish to grow and mature and build up the stock fairly quickly.

What happened after that was quite unexpected. During the moratorium our survey continued to decline and in percentage terms the decline was greater each year. Between 1990 and 1991 the overall survey index dropped by about one-half. Between 1991 and 1992 it dropped by a further two-thirds. Between 1992 and 1993 it dropped by three-quarters. Between 1993 and 1994, the most recent survey, it dropped by a further 80%. So by the time all these year-to-year declines were taken into account, the survey was down something on the order of 1% of what it was in 1990.

Mr. Baker: It was down to 1% of what it was?

Dr. Doubleday: That's right. It was about 1% of what it had been.

This means the young fish that we were picking up in our surveys in 1989, 1990, and 1991 were all gone, essentially. There were very, very few left. This means that recovery of the northern cod stock will depend on year classes that have not yet spawned. These are fish that haven't been hatched yet. They're not alive yet.

We're not in a position to say when recovery will occur, only to say there is no sign of recovery now. The stock has continued to decline as far as we can measure with our research vessel survey. It's at such a low level now that we anticipate it will take more than one generation for recovery to occur.

Northern cod normally spawn when they're about seven years of age. So 14 years is essentially two generations for the northern cod. That would be a period in which one year class would grow up and mature and spawn and then produce a second generation.

That's not a prediction. It's not a forecast. It's just an indication that recovery will be slow for northern cod. We can't forecast, we can't predict, and indeed we have to see an end to the decline before the recovery can really set in.

The Chairman: You haven't seen that? The data would not suggest the end of the decline has been reached even though there are hardly any fish left?

Dr. Doubleday: The most recent survey, which was completed last December, was lower than the year before. The surveys are so low now that it's hard to distinguish between them, but it was lower again in the fall of last year.

.1120

The Chairman: When you go out for a survey to try to assess the health and the size of the stock, how do you do this? How many fish are you catching? Are you catching any when you're doing the survey?

Dr. Doubleday: The survey is carried out with two research vessels, two large research trawlers. We divide up the offshore area - it doesn't come right into the coast. We divide this area into strata and then we fish within every one of these strata so our survey is spread out over a very large area, essentially from Hamilton Bank halfway down the Grand Banks.

In the 1980s we would quite often catch about a tonne of fish in half an hour's fishing. In the most recent survey I think the biggest catch was about five kilograms, maybe a bit less. It wasn't enough to feed the crew.

Mrs. Payne: Mr. Chairman, is there still a by-catch of cod on the northeast coast and the east coast?

Dr. Doubleday: We've had some reports or observations of cod in lobster traps or capelin traps.

I should qualify what I say about our survey, in that the survey takes place offshore and not all the cod in northeast Newfoundland move offshore. There are small components that stay inshore, in the bays, year round over winter, but historically they are a small component of the overall fishery. It's the offshore component that has provided the vast majority of the northern cod catches for hundreds of years.

Mr. Baker: By offshore you mean 12 miles, is that correct?

Dr. Doubleday: Our survey starts at the 50-fathom line, which is not 12 miles. In some cases it's quite close to shore and in some places it is further out.

Mr. Baker: Fifty fathoms is nothing. You can get that inside the bays sometimes, but the offshore, you don't want to create the impression that the surveys are done only way out there in the offshore. They are done at what you call 50 fathoms and more, which is fairly inshore.

You say, Dr. Doubleday, that the northern codfish still spawns after seven years?

Dr. Doubleday: There have been some signs of earlier maturation. There have been a few cod which have turned up in a survey that appear to be mature at age five. We are not in a normal situation any more but normally, northern cod matures around age seven. They don't all mature at once. You get a few maturing at age six, then more at age seven, and some at age eight.

Mr. Baker: The latest information, Dr. Doubleday, which I read from you, said the codfish had got thinner and that it actually took them 11 years to spawn. It's in the library.

Dr. Doubleday: The cod generally, including northern cod, are not growing as well as they did, say, 10 years ago. They are considerably smaller at the same age. I am not aware of any statement from us that they are maturing at age 11. That comes as a big surprise.

Mr. Baker: I'll have to send it over to you, Dr. Doubleday. I have it in my office.

The figure of 14 years, which you are giving because you need two generations for the codfish to respond is a fairly conservative figure. You certainly wouldn't project that it will recover in 10 years, or 8 years, or 7 years, because you said it requires more than one generation: one generation to grow, and that same generation to reproduce, to produce another generation.

.1125

Dr. Doubleday: We're not in a position to say when recovery will take place, only that it will not be soon.

Mr. Baker: Doesn't the reproduction of flatfish, groundfish, take longer?

Dr. Doubleday: Most of the flatfish mature in about eight or nine years. It's comparable. It's not much different.

Mr. Baker: What about turbot? Is it the same thing?

Dr. Doubleday: For turbot it is around age nine, normally.

Mr. Baker: Does it take longer with the colder water? With colder water cod take longer.

Dr. Doubleday: Yes, it certainly does for cod.

Mr. Baker: Do you have any opinion concerning if codfish are thinner, then they obviously aren't eating as much as they normally eat. Is that correct?

Dr. Doubleday: I think that's a fair conclusion.

Mr. Baker: Is there some branch in Fisheries that would have looked at that in 1991 when the moratorium was put on cod, also to put a moratorium on the main food supply of the cod? Was that considered at all, given that in 1991 we gave away 100,000 tonnes of capelin inside 200 miles to the Russians? Was there any logic? Was there any coordinated approach in Fisheries and Oceans that looked at the total picture? Even right now I notice we're giving some additional squid quotas to the 11 foreign nations on the Nova Scotia coast, and codfish love to eat squid.

There appears to be a lack of balance there as far as -

Dr. Doubleday: There was no consideration of a moratorium on capelin in 1991.

Mr. Baker: Would you have recommended that?

Dr. Doubleday: I did not recommend it at the time.

Mr. Baker: You did not recommend a moratorium at the time?

Mrs. Payne: Have you changed your mind?

Mr. Baker: No, he means the other way.

Mrs. Payne: Yes, I know.

Dr. Doubleday: The capelin fishery has generally been quite modest in relation to the size of the capelin resource. In fact, my recollection, although it's not completely clear at this point in time, is that the foreign capelin fishery was not successful in 1991. It was terminated, I believe, in October, with only a small catch, if any, being taken. The foreign allocation was not made again in 1992. I'm not absolutely certain of that, Mr. Chairman, but -

Mr. Baker: Yes, you are absolutely right. You have your times right and your dates right. You are absolutely correct. The quotas were given; you're right.

Dr. Doubleday: But the catches were not taken.

Mr. Baker: That's right. The catches were up in 1990.

I want to ask you one further question. Have you come to any conclusion as a scientist about the effect of having draggers on spawning grounds of cod affecting the reproduction of cod? Have you come to a conclusion that if you disturb codfish in the four-week period in which they are supposed to be spawning it will dramatically affect their spawning effort, or do codfish, from the scientific evidence you have, just ignore those draggers and go ahead with their sexual activity and no response?

Dr. Doubleday: We have carried out some studies of the effect of dragging and trawling on the bottom and on spawning. First of all, I'd like to make it clear that although cod are demersal fish, their eggs actually rise in the water column. They don't rest on the bottom. The eggs are not physically affected.

Mr. Baker: They actually carry out the act on the top, don't they?

Dr. Doubleday: They carry out the act in the water column.

Mr. Baker: At the top of the cycle.

Dr. Doubleday: We haven't found any convincing evidence that trawling is significantly affecting the spawning of cod.

.1130

Mr. Baker: How do you explain that? When you say you have no evidence, does that mean what you're saying is you would have to examine a dragger pulling through an area for five years, shut down the fishery there for five years, and then go back to dragging again? Is that what you're saying?

Dr. Doubleday: I'm not familiar with the fine details of the experiment, but I believe it was primarily an observation of trawling in pre-spawning aggregations, where we followed the trawl with video cameras to see whether the fish school re-formed and whether the behaviour was noticeably abnormal after some passage of time.

The Chairman: Mr. Wells.

Mr. Wells: I'd like to move from Newfoundland to Nova Scotia for a minute, and go down to 4X, where there is warmer water and, I believe, some codfish. The chart we saw earlier indicated a four-year recovery period in that area. Can you explain the state of the stock in the 4X area and how you see the recovery?

Dr. Doubleday: I believe 4X cod is now at the lowest level we've seen. The recent year classes entering that fishery have all been quite weak. The cod in division 4X is more dynamic than it is in the areas further to the north and the east. They grow faster, they reach larger size, and they tend to mature earlier. So they have the potential to recover faster than the more northerly cod populations.

I can't say anything really specific about this figure of four years. Of course, the cod fishery remains open. It's at a lower level than it has been historically, but it does remain open.

Mr. Wells: So you don't know where the four-year projection on the chart came from, then? You probably haven't even seen the chart we were shown earlier.

Dr. Doubleday: I have the chart in front of me but I hadn't seen it before this morning.

Mr. Wells: Is that the one that has the four years, three years, six years, fourteen years? You don't know what the four years means then on that chart?

Dr. Doubleday: No, I don't.

Mr. Wells: Do you know who prepared the chart?

Dr. Doubleday: No, I don't.

Mr. Wells: It would be nice if we could get that information. If we cannot get it from the scientists, maybe there is somebody else.

The Chairman: Since we're all interested in the science, Mr. Wells, perhaps we can find a block of time in the next few days and get a full presentation of scientific data, with the proper individuals from the department, and find out exactly why, because the TAGS program and Fisheries and HRD are making all of the assumptions on this program based on what they're getting from the scientific data.

We want to make really sure. If there are some contradictory opinions with the science we'd like to hear it as a committee. Or if the science is uniform in its recommendations we'd like to hear that. We'd also like to know if the scientists had their druthers, what they would be telling us to do at this point, with respect to possible recovery of the stocks.

Harb.

Mr. Dhaliwal: On the graph you have, the northeast part of Newfoundland is a 14-year recovery. Let me just go back. Can you tell us what the predictions were when the TAGS program came in? Was it a much more optimistic prediction? We're hearing five to seven years. Is this a substantial change from what was being told to Fisheries by the scientists three years ago or two years ago?

Dr. Doubleday: When the moratorium was introduced in 1992, there were these two relatively strong year classes of young fish in our surveys, which we anticipated would grow and mature under the benefit of a moratorium.

.1135

The following year's survey showed reduced numbers for those two-year classes, but they were still present. We were, shall we say, less optimistic. But at that point there was still the potential for these two-year classes to contribute quite substantially to the spawning population during the mid-1990s. The year after that, it became very evident that these fish which had been appearing quite strongly in our surveys were no longer being caught in significant numbers.

Mr. Dhaliwal: So originally you were quite optimistic.

Dr. Doubleday: I think, looking back from today, you could say it was optimism.

Mr. Dhaliwal: Would you say 14 years for cod recovery in that area on your map was optimistic or pessimistic? It could be 20 years, 25 years?

Dr. Doubleday: I really can't say. If you look at the events of the last 30 years, we had a very large fishery for northern cod during the 1960s. It declined sharply into the mid-1970s. When we extended fisheries jurisdiction, it bounced back quickly, but it never really recovered to the level of the 1960s.

After this period of moratorium, I am confident at some point the stock will recover, but to what level and when, I cannot say.

Mr. Dhaliwal: In other words, all the conditions would have to be right to have a recovery in 14 years. Is that what that prediction says?

Dr. Doubleday: Fourteen years is about as quickly as you might expect it to be reasonably possible.

Mr. Dhaliwal: The other question follows up on my colleague George Baker's questions about managing our stocks not in isolation or by species, but by managing our ecosystem. I would hope one of the changes we've done is that we're managing more by ecosystem rather than by individual species or in isolation. If the scientists felt there was a food problem for the cod, would it not be taken into consideration when we give TAGS for capelin or other fish species, if it was felt this will take away food from the cod, then it would be considered because hopefully we are not managing any longer on a single species basis or in isolation, but managing the ecosystem as a whole?

Dr. Doubleday: After 1991 the quotas for capelin have been set very low and the catches have been lower. I think typically the catch has been of the order of about 10,000 or 20,000 tonnes in that area. Capelin catches have been quite small.

Mr. Dhaliwal: The fact that the fish are thinner and underweight you don't think is a result of less food available for the cod.

Dr. Doubleday: I think it is a factor, yes, but I am not certain it's the only factor. We've had a systematic cooling of the northwest Atlantic over the last 10 years and the physiological processes of a cod slow down as the water gets colder. This may very well be a factor as well.

The Chairman: Mrs. Payne.

Mrs. Payne: If we are going to have the scientists back another day soon, I think I would like to leave my question until then, because it will take at least an hour to deal with what I want to ask.

The Chairman: You can ask yours over lunch.

Mrs. Payne: We haven't even touched on the effect of seals and that sort of thing.

Mr. Baker: Mr. Chairman, on a point of order with Dr. Doubleday. When he was referring to trawlers, what he was referring to was the DFO word. For the fishermen, it is actually a dragger, dragging something, because a trawl doesn't move. We call them trawlers, or DFO calls them trawlers, FFTs and so on, but it is actually draggers. The fishermen of Nova Scotia get very angry whenever we call a trawler a dragger or a dragger a trawler.

The Chairman: Do you want to continue?

Mr. Nouvet: I'll try to go quickly through the solutions that are on the way in order to resolve it and to address the recommendations in the Price Waterhouse report.

.1140

Before I start doing that I want to say when I was asked to take this job over four months ago - and it was an offer I couldn't resist - I read the Price Waterhouse report before accepting it. I really wondered why they had picked me to do it. The report itself is very stark. When you go through the list of recommendations we have gone through, that's as stark a report as I've seen in my career in government. All this is to say that this remains a tremendous challenge.

If you read Price Waterhouse, they also accept and reflect the fact that the oversubscription is one of the key reasons why we have had so many problems getting this program up to speed. They talk about the heroic efforts of frontline staff in trying to deliver this program. They recognized that after a year we have done some of the things very well, although we're lagging in many areas, including active programming. One of the key areas in which we have done a rather good job is at least developing an income support system, putting it into place, and having a network also to be able to handle the clients.

In devising the solutions we're doing two things. We have talked about the attitudinal challenge the clients present to us. There's an attitudinal challenge we have inside the organization as well. First is we want common sense to prevail in how we deliver TAGS rather than policies and procedures. Second, we want staff to have a results orientation. For us, the result in terms of adjusting is taking measures whatever they may be as long as you're convinced as a frontline staff that the measure is going to lead to the successful adjustment of someone or to the creation of a permanent job.

We have modified the options to increase the emphasis on adjustment by loosening the exit policy. Before clients who went on self-employment assistance or mobility would really face that choice. The moment they decided to go on that, we said to them they were now off TAGS and on that option.

What we have done instead is if we're going to invest in clients in order to do things that are going to lead to adjustment. We also leave the door open to come back, if for some reason, despite their best judgment and ours, the measure they have undertaken does not bear fruit. That, we think, will make it easier. It was a barrier and a disincentive for clients to go on these things. That will make it easier for them to make those choices.

The Chairman: What you're doing is encouraging them to take some chances and risk, but the risk is if you go and you try and you fail, you're cut off.

Mr. Nouvet: It's almost like a child leaving home and you say the door is always open if you want to come back, I mean as long as this program is there.

We are in the process of reviewing how we can enlarge the definition of green projects. Green projects were very focused on the environment. We are in the process of reviewing with the minister's office and the minister whether we can expand the definition of green to focus first and foremost on the creation of permanent jobs that of course have no detrimental effect on the environment. The priority has to be on whether, at the end of that project, there will be permanent jobs, be they full-time jobs or seasonal jobs. If that question has a yes, then it's the major criterion that must be met and on to the proposal that we're making.

We have loosened the active policy so common sense should prevail. We had a lot of questions from the field and from certain places at headquarters which wanted us to have a very complicated policy for defining ``active''. For example, if you have somebody who is on a career opportunity program but decides to do something else, do you cut him off TAGS and so forth? We have just loosened that and said to frontline staff they are the best judge of whether or not a client is interested in developing an action plan in pursuing it.

We also said if they ever get to a situation - and we expect those to be the minority, based on past experience - where a client is not interested in developing or following an active plan, then they can suspend benefits. They should reinstate that client when they're satisfied the client is back in an initiative that's going to lead out to adjustment.

We have priorized the clients since January. We are now focusing clearly on the people who are 50 and under and solely dependent on TAGS. When we look at the oversubscription, we look at the lack of funding, we say they are the first ones who need the assistance. So we're focusing on them.

.1145

That doesn't mean that if a 72-year-old client comes forward who is applying as has occurred in the past - in our opinion that's based on labour market information and the job offer for him at the end of the line - we're not going to invest in that client. If it makes sense to invest in that client, then we will deal with him or her, and he or she becomes part of the targeted clientele.

The main focus for counsellors right now is 50 and under who are solely dependent on TAGS. If we ever get to deal with that whole mass of clients, then we can perhaps address the other ones.

We have made professionalization secondary, again because of the oversubscription and the emphasis on adjusting people out of the fishery, especially given the worsening forecast for the recovery of the fishery. Again, that doesn't mean we're not going to do some professionalization. We are going to do some, but clearly it's a secondary objective, whereas when we got into this strategy it was an equal objective.

We have made it easier for people to follow university studies. A lot of times those who were lucky enough to have finished high school and were going on to university found obstacles in their way. They might be daycare or some extra funding needed for books. We have loosened that up so these barriers are not there any more.

It's a judgment call of the frontline staff as to whether or not there is a valid case to invest just a little bit more in the clients.

We're looking at whether or not to enhance mobility, because for a while we thought the mobility program was perhaps too lean to attract clients. We have done a survey of clients. The response we get from them suggests that the mobility program met their needs and they didn't have any additional needs beyond what the mobility program offered them.

We're now in the process of completing a survey of clients who declined mobility. We want to find out why they declined mobility and whether it was something in the program that made them decline it.

We have extended self-employment to seasonal work in recognition that in some areas seasonal work is all there is. Before self-employment assistance used to be extended only to full-time permanent jobs. We're ready to invest in people who are developing or creating opportunities for themselves in areas other than full-time jobs.

The second recommendation in the Price Waterhouse report is something we have talked about. I don't think I need to go further into it.

Price Waterhouse asked us to resolve the budget situation. We have been looking at that situation since December and November of last year. As you know, one component has been adjusted. It is the active programming component. We now have a cap on it of $350 million.

They recommended we reprofile the operating funds not used in the previous year and that of course is under way.

The clarifying policy and options really refers to the first bullet you have on the slide.

There was a need for CECs and outreach centres to develop and follow detailed plans while that is being put into place and as soon as the policy rethink is over, CECs and outreach centres will have fully developed operation plans. In the meantime the frontline staff are clearly targeting the clients meant to be targeted.

On the point of ensuring that counsellors understand roles and goals and have the required skills and tools, that goes back to item A, telling counsellors who the priority clients are. It also gives the objectives of this strategy, which is to adjust as many people as possible out of the groundfishery sector and to provide them with the tool, the computerized support system, to help them track and work with clients. That's in place right now.

In terms of strengthening coordination, the report reflects that there were a lot of inconsistencies in the way the program was applied from region to region. So the coordination has been strengthened tremendously. We have quarterly meetings of coordinators; we have weekly conference calls with them where we discuss current issues; and we have a framework for sharing best practices and identifying the emerging issues.

The comprehensive financial forecast is done. We've talked about what the cost overrun would be and we have a good handle on all that. Really, the picture has remained essentially unchanged in the past three months.

Price Waterhouse recognized that we didn't have a consistent set of performance measures. I think we were getting ready to have a set of performance measures that would focus more on the processes as opposed to the results: how many people in training, how many people in green projects, how many people in university, how many people on mobility. In and of itself, that doesn't tell you that what we have done was in the strategy.

.1150

I think the funds we got for active programming were given for one purpose, which is to adjust people out of the groundfish fishery. There is only one performance indicator for this program as far as we in HRDC are concerned, and that's the percentage and the number of clients we have successfully adjusted out.

The rest is nice to know. It's important in order to manage the program, but how many people we've put in training and how many we are putting into green projects is not a result. I think that in six or nine months we should be able to come forward and say here's how many we have adjusted out and here's how many we plan to adjust out over the next six months, twelve months, eighteen months.

TAGS counsellors will be evaluated on a regular basis, based on the new performance indicator, a percentage of people adjusted out. We have a comprehensive system strategy. It is in place and is in the process of being implemented. That really means that we consulted with the users' frontline staff at regional headquarters and developed something that was a strategy as opposed to a piecemeal approach in dealing with systems problems.

We have clarified the active requirement in relation to COP. The report also recommended that we focus COP on clients 50 years of age and older, but we don't see the point for that. The career opportunity program is a valid activity for anyone who doesn't have anything better to do in order to adjust out of the groundfish fishery.

The Chairman: Just on the clarification, you say that you clarified the active requirement in relation to COP. What do you mean by that? How did you clarify it?

Mr. Nouvet: We had a lot of inquiries from the field wanting to know what to do in a situation where somebody refused to go on a career opportunity program for various reasons. We have said that common sense should prevail. First, we have very few people on the career opportunity program, but if for some reason for example, an individual who's engaged in the career opportunity program suddenly ceases to do that, we feel that person shouldn't be removed from TAGS solely because they have left the career opportunity program. We have to look at why they have done so.

Of course, we have claimants who are on parallel tracks. They are work-UI, so they might be collecting unemployment insurance. Under the unemployment insurance legislation, theoretically you can challenge someone who is doing volunteer work, because while they are doing volunteer work, career opportunity, they are not available for work and looking for work. So, under the traditional approach in unemployment insurance, these people would have been cut off. We've said there's not much point - we are the same department - in cutting someone off unemployment insurance in order then to turn around and start paying them TAGS benefits.

We worked with Unemployment Insurance to agree that TAGS UI clients who are also TAGS beneficiaries and who are doing volunteer work should be left alone because it is part of the departmental strategy.

It is really trying to have common-sense solutions to things. It is a good question, one that many people ask: training for what? The track record is not sterling and it is a valid question. We feel we are under the gun, certainly as we move into the next 12 months to show we can achieve something with the active programming dollars we have for us.

Part of the cultural change we are effecting in our department is to tell that counsellor up front, who is advising the person on whether or not to go on training, to make a decision. Is that training, based on the labour market information you have before you, based on the client's skills and knowledge, going to be sufficient in order to lead that client toward adjustment and to adjust him out of the groundfish fishery? If the answer is no, then you don't have a good business case. You should first priorize your efforts on people, because that's got to be the priority that you are going to be adjusting out.

I think the question of training for what is a reflection of the fact that in some cases we've done training that has led to nothing. We are telling people they have to think about the type of training they are going to invest in and they have to decide whether or not it makes sense before they make that decision.

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We talked about linking green to community economic development. I have talked about that. We have yet to fully brief our minister on the change we are trying to bring about. We think that's the way we are heading, but the final decision hasn't yet been made.

Basically, we think one of the reasons that green has been undermined - there has been more than one reason that green hasn't worked in the first year, and I'm sure we'll get back to that - has been the focus on ecology, that it was brand new to people, that it was viewed often as a solution made in central Canada.

We have moved away from that to something that basically says the number one criterion has got to be whether this project is going to create permanent jobs. They could be full time or seasonal, but at the end of the day are there going to be permanent jobs there, direct jobs, and hopefully some indirect jobs as well?

I won't speak about the core fishery.

Mr. Laubstein: I would like to speak about it. I want to put on the record that this is incorrect. For tax purposes, the core fishery has been identified. I'm willing to tell every member of this committee where they are, who they are, their addresses. Everybody has them. We have them. The harvesting adjustment boards will have them. This is based on an operational review by Price Waterhouse, who did their work before Christmas.

A lot of things are happening. You might argue with the definition, or 2J, 3KL, but the core fishery, for tax purposes, has been identified. I'm frankly surprised by this do not invest in it. I don't know. My department certainly wouldn't take such a position and say do not invest in the fishery. We know the fishery needs investment. So I think the statement is incorrect.

[Translation]

Mr. Bernier: If Mr. Laubstein states that the core fishery has been identified - it seems to me that the three of us had to go at it earlier to ask the question - I still have not got an answer to my question. Have you understood what the core fishery is, Mr. Chairman? I have not. If that work was done before the Holidays, there must be some kind of record that a garden variety MP like myself should manage to understand, but here, I do not understand. Still, I do understand that we should not invest in that as long as the work is not done, but I do not understand Mr. Laubstein's reaction.

[English]

Mr. Laubstein: My minister issued a pamphlet earlier this year, in January, on the licence retirement program, which sets out quite clearly the special eligibility criteria. I have said for tax purposes the core fishery has been identified as those meeting the special eligibility criteria. On that basis we have identified 6,120 people, groundfish licence holders dependent on the groundfish, which are Newfoundland, Scotia-Fundy, Gulf, Quebec. Not only are all defined, but we have identified them by name. We have a list of the names and the harvesting adjustment boards are now reviewing the submissions. These are the people who are maybe staying in the fishery or who want to avail themselves of the voluntary licence retirement program. It is for tax purposes.

In Newfoundland there are about 15,000 licence holders. Every one has received a letter by mail. We have sent by mail to all the people involved 20,000 booklets that tell about the criteria. We already have appeals about it. So one may disagree with the definition of the core fishery, which, as I told you, Mr. Chairman, was based on the recommendation of the Canadian Council of Professional Fish Harvesters. It has been identified for those purposes.

The Chairman: Look, we're dealing with apples and oranges here. The questions that have been asked I think are clear from our side, and I think your answers have been equally clear. I think we're talking about two different things. You're talking about eligibility and we're talking about what's remaining and they're two different things.

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You're basically saying you've defined who is eligible to be classified as a fisher for program purposes, but don't forget that the intent of the whole program, the $1.9 billion, is to adjust people out so you have a core fishery that is sustainable.

What you are talking about are all the people who are eligible to go through those processes, to arrive at a sustainable core fishery. You're talking about all those who are eligible. And, we're saying, okay, you can tell us who is eligible, but you're not telling us who will remain.

The whole premise of this program has been to reduce the harvesting capacity, or to reduce the core fishery by 50%. We're asking, with the new data that's in, is that a wise strategy? Should it be 70% or 80%? Each one of the dollars, we've been told by HRD, all these charts and everything we got from Fisheries, is based on the premise that all these people are eligible to eventually become the core. That's all they are, they are eligible, and we use all these adjustment programs and somehow you slice it and you dice it, and at the end of the day you have a smaller bundle that you then call the core.

So then you take the big apple. The core's in there somewhere. You say it's an apple, so it's eligible to have a core in the middle. You spin it all around. At the end of the day you've got something smaller.

That's the whole debate today. It has not been who's eligible to eventually become core; it is what are you defining, post-program, as to what the sustainable core fishery is. I think all your programs have to go toward that conclusion. You're telling us who's eligible.

Mr. Laubstein: It's not only who's eligible but who's also core. We have a core of groundfish that -

The Chairman: And there's 50% too many of them, right?

Mr. Laubstein: Through this program there are 6,120 people, or fishing enterprises, because these are fishing enterprises, of which we target a reduction of 2,000. That will be one-third. In order to get it to half, as my colleague said, this has to come through other measures.

With the money that's available we think we can target only about 2,000. But these are not 2,000 people. The average vessel has a skipper and there will be a crew of two to three. So we're really targeting 5,000 people through this program.

You're eligible to either avail yourself of this program or stay. By definition, under TAGS it has now been accepted that those people who meet special eligibility criteria can stay on TAGS for the full five years because they are assumed to be members of the future core fishery.

You're quite right, Mr. MacDonald, that might not be enough. But, it has been identified that there are 6,120 licence holders who may either stay or avail themselves to withdraw.

The Chairman: Okay. Do you want to conclude? You've got half a page and maybe we'll get out of here.

Mr. Nouvet: The appeals process has been changed so that the final decisions on TAGS appeals are no longer made by HRDC officials. They will be made by an independent review panel. Those panels will be in place within the next couple of weeks. They have a workload awaiting them, as I understand it, of about 1,600 to 1,700 cases.

The extenuating circumstances issue was raised at the December meeting of this committee. We have issued letters to all TAGS clients whose applications were rejected. The letter reminded them that extenuating circumstances could be invoked in dealing with their applications and explained what those extenuating circumstances were.

Mrs. Payne: I have a real problem with that. We sat with you two months ago and were told at that time that within two weeks the appeals would be taken care of.

At that time I had 50 people who had their appeals in there since December 31, who were in the process of losing their home, losing everything, who didn't have lights, telephones or anything else. These people are expected to keep in contact with St. John's. These same people are still on that list, 50 people, since December 31, and you're telling me it's going to be another two months.

Mr. Nouvet: Which list?

Mrs. Payne: A list that was sent to your office, the appeals process. Are we now going to be looking at another two months for that?

Mr. Nouvet: No, the independent review panel will start hearing the cases in two weeks.

Mrs. Payne: But how long is it going to take to get through those 50 cases? You were talking about 1,700 cases.

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Mr. Nouvet: That's right.

Mrs. Payne: How fast is this going to happen? If you're sitting with no bread on the table, that's a long time.

Mr. Nouvet: I don't know where the 50 appeals you are referring to are. Are they at level one? Are they at level two?

Mrs. Payne: My office has been in contact with your office and we can't seem to get to first base. I left messages. I thank Raylene Johnson for coming over yesterday to deal with the green project, but we haven't got to first base on the TAGS program.

Mr. Nouvet: Respectfully, I don't have a list of 50 names from your office and nobody has followed up with me on it.

Mrs. Payne: They have been sent there. I don't know where they went.

The Chairman: Perhaps you should exchange them again at the end of the meeting, if you can.

Mr. Nouvet: We'll come and pick them up.

Mrs. Payne: The ultimate question right now is, am I going to be hearing from those people two months from now asking where their appeal is?

Mr. Nouvet: If the list is in your office, we'll pick it up this afternoon and we'll get back to you within a week.

The Chairman: Are we all through? Any other questions? I have a question on ACOA.

When this whole adjustment program was initially announced, I thought there was a component of community economic development that was supposed to be looked after by the Atlantic Canada Opportunities Agency. I thought that the component was about $50 million. When we had a green project - and everybody at that front table knows the difficulty we had in getting it through, but it is through - the final hurdle was the fact that ACOA did not have any money available to support a green project whose stated goal was community economic development and hopefully a project that's going to see 60 to 70 seasonal or year-round jobs created. These are not part-time jobs.

I didn't think it was the role of HRD to take on through their programming dollars community economic development. I thought clearly that was the role of ACOA, but when I went to ACOA, after four months of going through the process, or three months over at HRD, we went to ACOA and it said it has no money. Then we ran back and asked HRD where the money was to support the community economic development proposal that's been put in under green. HRD said we had to go somewhere else because they don't have those dollars.

What the heck happened to ACOA, who is a key component, but I can't find any money with them? Do they have any money that you are aware of? Have they abandoned the community economic development role? Are you guys going to pick it up? If so, do you get the moneys they should have had?

Mr. Nouvet: I can't really speak for ACOA, but I know their submission to release the funds, the $50 million you are talking about, which they will invest jointly with FORD-Q, has not yet been heard by Treasury Board. As a matter of fact, the whole matter is pending the outcome of the TAGS rethink that we're engaged in now in order to make sure that we can live within the $1.9 billion envelope.

The Chairman: I ask because we had to go at this project, which is employing probably 58 to 60 people and is a community economic development program. We've taken advantage of green and other programs, but there was a requirement either to get money under fat, the old fat program, to support that initiative. You've got to have money for bricks and mortar if that's part of your program, but you guys don't have it. There are no CRF dollars per se available for that.

The sponsor put that whole project together expecting that the program, as announced, would be there, which meant ACOA was there to partner with $50 million. We were stunned when we found out that ACOA had no money. We then had to go and rework the entire proposal - it took another month to six weeks - and then try to access funding under the Action Program, which is not really where it should be.

What's the problem? When did this program start, about a year and a half ago? So it's a year and a half into the program and ACOA has not put its submission in yet to support these types of initiatives. Is that basically the bottom line?

Mr. Nouvet: I think their submission is ready, but it has not been heard. That's my information.

The Chairman: It's a year and a half after the rest of the program components were announced.

Mr. Nouvet: Yes.

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Mrs. Payne: Along the same lines, you mentioned that the money for the green projects will be coming out of the $1.9 billion. I haven't had one program approved in my riding yet and I dare say that my riding probably has the greatest number of people affected by the moratorium.

Mr. Nouvet: Yes.

Mrs. Payne: I talked to Ms Johnson yesterday about this.

Is there now a possibility that there won't be enough money to cover projects in that $1.9 billion?

Mr. Nouvet: No, there is money planned for green next year, this fiscal year.

Mrs. Payne: How much money are we looking at? I'm talking about this year.

The Chairman: ACOA doesn't have any money. It is supposed to have $50 million to support all these programs. So you go to ACOA and ACOA sends a sponsor back to HRD, and HRD says it doesn't have the money because it doesn't have it; it's never been in its budget. So you work up a big project for green, and everybody wonders why there's no uptake on green. There's no money to support it. ACOA has now put in its submission to support the green projects.

Mr. Nouvet: Newfoundland is planning in this fiscal year to approve... They have in total for the five regions...

Mrs. Payne: We have seven ridings and five regions. Are you talking about the new zones in Newfoundland when you say five regions?

Mr. Nouvet: I'm talking about the five provinces.

Mr. Paul Touesnard (Policy Analyst, The Atlantic Groundfish Strategy, Department of Human Resources Development): We are talking about approximately $25 million for green projects.

Mrs. Payne: That's $25 million for all of Newfoundland?

Mr. Touesnard: No, it's for all of the Atlantic.

Mrs. Payne: And for Newfoundland?

Mr. Touesnard: We don't have it broken down yet. It should be two-thirds of that.

Mr. Baker: Mr. Chairman, I have just one question in conclusion. We learned today that the budget of $1.9 billion has been overrun, if things keep going the way they are, by $385 million. Has it been determined yet where the $385 million will come from in cuts from the existing program?

Mr. Nouvet: No.

Mr. Baker: When will that decision be made?

Mr. Nouvet: We expect in May.

Mr. Laubstein: If I may add to that, when the program was announced ministers were required, by the end of the first year, which will be on May 15, to come back with a comprehensive review and to say whether changes should be made in any or all of the components. That decision by the ministers is still outstanding. That means all components, including, incidentally, the capacity reduction component that we have. Therefore, I have to sort of correct my colleague here when he said there will be a second round. Ministers will decide, based on the information that was given to them, how all the components of the $1.9 billion have performed and how they want it to be adjusted for the future.

Mr. Baker: What you are saying is that you are now looking to cut $385 million and you're awaiting the decision of the ministers as to where that cut in the amount of $385 million will come from.

Mr. Laubstein: This is $385 million, of course, over the five-year period.

Mr. Baker: So the ministers are now making a decision as to what's going to be cut from this program to save that $385 million. They've got to cut it because it's $385 million over budget.

Mr. Laubstein: If things proceed as they are projected right now. The deficit will always be a moving target because people go on and people go off. Things might still happen. This is a projected deficit for the remainder of the four years.

Mr. Baker: That's what I said. You're now looking for how the $385 million is going to be cut from the existing program.

Mr. Laubstein: Mr. Baker, the word cut, it might be a reallocation.

Mr. Baker: A reallocation, is that what you call it?

The Chairman: George, I think it's clear today that the whole program has to be repriorized as well, given new data. It's nobody's fault. The fish aren't there.

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If we could put the fish back in the water I guess we would. But it's clear, to me anyway, that there has to be a process of some input as well to get that priorization done again if dollars are to be cut so they're not cut on the backs of those who can least afford to have it taken.

Mr. Baker: Who made the decision that you can't overspend $385 million?

The Chairman: I guess it was the Minister of Finance.

Mr. Laubstein: Nothing has been overspent yet. The first year there was a -

Mr. Baker: I didn't say it was.

Mr. Laubstein: - $15 million surplus.

Mr. Baker: I know.

Mr. Laubstein: It's over the entire program.

The Chairman: It's because nobody can get any projects. You couldn't get the green projects through because ACOA couldn't support them.

Mr. Laubstein: Yes, certain components of the program.

Mr. Baker: Who's saying they can't overspend $385 million?

Mr. Laubstein: That's our direction we received from the Treasury Board, and I assume that has to do with our fiscal framework.

Mr. Baker: So you've received that. There's no doubt about it, you can't overspend $385 million.

Mr. Laubstein: I'm just an official. I have received my cards. If I were a politician, I might answer differently.

Mr. Baker: You sound like a pretty good politician.

Mrs. Payne: Mr. Laubstein, I think the reality we are looking at here - and this has already been addressed somewhat by the chair and others - is we have a large fishing community in Newfoundland, Nova Scotia, Quebec and other areas. We are now looking at a 14-year period when these people will have absolutely nothing to do, nowhere to turn and no visible means of support. I think right now we're going to have to start looking at the very serious reality that something is going to have to be done over the next 14 years to look after these people. That's the bottom line.

The Chairman: Also, just to frame in the magnitude of the continued decline of stocks, what we heard, Mr. Baker, was that in actual fact, without the adjustments that have been done, the projections would have been of a $784-million overexpenditure, and that in effect adjustments have been done on the active criteria by HRD to ensure that was reduced to $490 million, and then further, the projected expenditure for that whole program was reduced by another $140 million because of decisions already taken.

Mr. Baker: It has to go through an additional $385 million cut.

Mr. Nouvet: If I can add, there are two components that are creating the projected cost overrun. One is the active programming, because we have more clients now in need of active programming because of the oversubscription. The second one, of course, is the income support. We have more people receiving income support than expected. So these are the two components of the program that are creating the $700 million figure you referred to.

The Chairman: You have made some adjustments in the active component already.

Mr. Nouvet: That's right.

The Chairman: How much has that saved you? It saved you a lot.

Mr. Nouvet: It saved $350 million.

The Chairman: So you've made changes to the active for $350 million. The other component is income support and there's been no change on that.

Mr. Nouvet: That's right.

The Chairman: I think we've got the message.

Mr. Wells: We talked about a second go around initially and then we backtracked on that for licence retirement. I'm not really sure where that stands. As far as applications for TAGS are concerned, am I correct in thinking that the deadline was March 31?

Mr. Laubstein: Yes, for the licence retirement.

Mr. Wells: And for eligibility, the straight TAGS program? Is there going to be a second go around for people on that?

Mr. Laubstein: This is what I tried to answer before. That will await the outcome of the cabinet decision or the minister's decision on the future of the program, because all components might be subject to further adjustment. Right now, to date, there has been one round, which closed on March 31. We received slightly more than 2,000 applications. I have only the numbers, because, as I said, the applications go to the boards - these are not DFO officials - and they are looking at them now.

I also would like you to know that the way the applications have gone to all the boards, the board members, who are not from the department but are from the private sector, only get numbers for the bids. The bids are numbered. So we don't know who the individuals are.

Mr. Wells: On a housekeeping matter, Mr. Chairman, I'm wondering if we ever received a copy of the brochure that was in print or being prepared the last time we talked about....

The Chairman: Are you talking about the new brochure?

Mr. Wells: Yes.

The Chairman: I think we did.

Mr. Laubstein: We sent it to all MPs, but we have more here.

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Mr. Wells: I don't have that. I'd like to get a copy of that.

Mr. Laubstein: We printed 20,000.

Mr. Wells: It's probably in my office.

Mrs. Payne: This application and another document went with this as well.

Mr. Wells: That's for licence retirement.

Mrs. Payne: Yes. Is that what you're talking about?

Mr. Wells: No, I'm talking about the new TAGS brochure that was -

Mr. Laubstein: Oh, that's a different one.

Ms Raylene Johnson (Ministerial Liaison Officer, The Atlantic Groundfish Strategy, Department of Human Resources Development): Mr. Chairman, they were sent over for the committee.

[Translation]

Mr. Bernier: It seems somebody is drawing our conclusions.

To help me better understand the change that is taking place, I would like to receive from the two departments in question an accounting document stating exactly how much we have spent.

We all remember the announcement of the spending of $1.9 billion; that was to be spread over five years. We are almost two years into the program and we realize that we need $385 million more.

I would like to get a document explaining what are the present expenses so we can see, from what was forecast, what has been committed so far and what will be needed. During the next phase, in May, they will explain how we are going to get this amount of $385 million. I would think that after the publication of the reports by Fisheries and Oceans, we will be better informed and better prepared for the future.

I would like to get, as soon as possible, the documents where the decisions which have been taken this morning can be found. I really would like to see them. There are some people who are waiting for answers on that. We do not seem to be getting anywhere.

As to my last question, I do not know if I should address it to Mr. Laubstein or to the other gentleman: what are the relations with the provinces at the present time? At the federal level, we tend to reduce the number of operators in the fisheries but I note that the provinces will have to deal with the other 50%, that is the people who will have lost their jobs. What are at this time our relations with the provinces?

I would even go a bit farther, because we expected to see some more fund transfer towards ACOA and FORD. What are the relations with the provinces as far as economic development is concerned? A number of people will be in a no man's land, that is not defined.

Somebody will be responsible for these people once they will be out of your budgets. I would like to know who will be responsible, because some people say that we, the Members of Parliament, are key factors in that. We would have to talk to some other people, because they will still be our federal citizens even though they will not be included anymore in your budgets. I therefore ask where is the third phase? Thank you.

Mr. Laubstein: I think, Mr. Bernier, you can have the answer about the core by tomorrow.

As for the interaction with the provincial governments, we have had - and I'll let my colleague from HRD talk about it - a series of meetings with each government.

I myself briefed the Quebec government a few months ago. We went over the criteria; I gave them the list; and we talked about the money that might be involved, because they know the budget. So, as far as the capacity reduction component is concerned, the Quebec government has been informed of that, as have the other provincial governments in Atlantic Canada.

We of course have been repeatedly meeting with the provinces on the early retirement program for fishermen and how the $385 million is going to be met. I assume we will get direction from our ministers on how they are going to deal with it.

What have we spent in 1994 and 1995? I don't see any reason why we couldn't provide you with exactly what we have spent on the different components.

The Chairman: Do you both agree? Could you please provide them to the clerk, and he will distribute the information.

Mr. Baker: I wanted to bring up the observer -

The Chairman: Well, no, that's...

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I have one very last question. It deals with the processing sector. This program was meant to reduce capacity and participation, in both harvesting and processing. On the harvesting side, we're seeing more people making application and that attempts are being made to address some real operational problems. What about on the other side? That is a provincial responsibility.

We set out to also reduce - I think 50% was the figure we used - the capacity in the processing. Where are we in this? I know that in the province of Nova Scotia they wanted none of it.

Mr. Laubstein: On capacity reduction in the processing sector, one thing you should realize when we are talking about TAGS, the entire $1.9 billion, is that two out of every three are plant workers. The program to a large extent is geared toward plant workers. Two-thirds of all, whether they are approved, they have applied, they get income or whatever, are plant workers. So we are in the processing sector.

Where are we with the provinces on capacity reduction in the processing sector? As you recall - and we discussed it two meetings ago - there was a process last year to set up industrial renewal boards, which would deal with capacity reduction on both harvesting and processing. We didn't get anywhere.

Right now, the only province that is trying to also deal with the processing sector is Newfoundland, but no money has been allocated for that purpose. Simply, the Newfoundland government would like, in due course, these boards that have been established also to give them advice on policy regarding capacity reduction in the processing sector. Otherwise, there is no other initiative.

The Chairman: So are you telling me, regarding the goal stated at the outset of the program, which was to reduce not just harvesting but also processing capacity, that the second part is basically not attainable at this point in time because the provincial governments have not agreed?

Mr. Laubstein: Right.

The Chairman: So on 50% of the stated goal, which is outside of our jurisdiction, we've not had willing partners with the provinces.

Mr. Laubstein: To some extent, that's two-thirds of the problem.

The Chairman: It may be two-thirds of the problem, but we had two objectives, and they were to reduce capacity in both those sectors. One sector basically told us they were not interested.

What are we doing with respect to the early retirement program for plant workers? Where are we on that? We talked a little bit about a lot of agreements being in place. Why would we bother if they're not getting rid of their capacity? All these programs are meant to try to reduce capacity. We've got the vessel retirement program, the licence retirement program. We've got all of those adjustment programs to get people out of the business so capacity will go down. Why then would we still be in the business of spending money to adjust the people out when the capacity is not moving at all with the processing sector?

Mr. Nouvet: The early retirement program is on hold as part of the rethink of TAGS that we are doing, and the May decisions we are leading up to as well, but negotiations have been ongoing with the provinces. All that shows, and all the discussion here, is that the stage hasn't been set as perfectly as we had hoped to set it when we set out on TAGS.

The provinces have not in fact taken on the responsibility for helping determine which plants will stay open and which will close. That makes it difficult to overcome the attitudinal barriers of clients, who, as long as the plant has a chance of remaining open, will have the tendency to think that at least there's hope they might be able to get a job when that plant reopens.

So the whole issue of TAGS and the attitude problem we have with clients is exacerbated by these other factors that are impeding progress.

The Chairman: How many people have we anticipated -

Mr. Nouvet: To answer your question, at the end of the day, if we can adjust people out through early retirement, we are still meeting one of the objectives of the program, which is to get some people to accept the fact that they will not work in that sector any longer.

The Chairman: However, if that is done by itself, you are simply reducing participation; you are not reducing capacity. The capacity is still there.

Mr. Nouvet: Right.

The Chairman: How many people did you project would be on that program?

Mr. Nouvet: Twelve hundred.

The Chairman: Twelve hundred would be on early retirement.

Mr. Nouvet: That's right.

The Chairman: How many did we project? Did we figure that out?

Mr. Laubstein: Four hundred.

The Chairman: But that's how many you are projecting now? Initially, how many did you project would be taking early retirement from the fishery, from harvesting?

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Mr. Laubstein: Initially we thought we might do it at 50 and over; now we are doing it at 55 to 65, because we didn't get agreement with the provinces. So initially it was something like 1,200 or 1,100. By cutting out the first five years, it's down to about 400.

The Chairman: So we went from an initial projection of 1,200 to about 400 because of the change, and over on the other side, on HRD, we thought it would be 1,200 and at this point there's a rethink for a whole variety of reasons.

Mr. Nouvet: It's still at 1,200 for us.

Mrs. Payne: There's one point I want to make with regard to green programs. We're kind of defeating our own purpose in some ways, because we are allowing fish processing operations to apply for green programs, and really the only intent they have when they do this is to try to prolong their operation, to keep their operation going. Now, I don't think we should allow these processing operations to die a terrible death. If we're going to get them out of the processing business, then let's get them out.

However, using green projects to continue in operation is not the way to do it. I notice from a list I received that there are four fish plants within a 20- or 25-mile area that have applied for green projects for no other purpose than to keep them operating. I think it's something you should be looking at very carefully.

The Chairman: Karl, has this change in criteria from 50 to 55 been announced? This is the first I think I've heard of it. This is for the early retirement, because of the lack of agreement with the provinces.

Mr. Laubstein: That booklet on groundfish licence retirement already says 55.

The Chairman: Are there any other questions for the witnesses? If not, I want to thank them for showing up today.

You've certainly got your work cut out for you, there's no question about that. If anyone was sharp with their questions, it's simply because we're trying to help here. We're not trying to hinder. There's a big task ahead. Lots of people are being impacted upon by this downturn, which just doesn't seem to want to give up. It still wants to keep getting smaller and smaller.

We wish you the best in the next couple of weeks as you advise your ministers and your departments as to how we take a finite resource, unless Paul Martin allows.... Maybe Mr. Baker can see Paul at lunch today and see if we can get that overexpenditure. It's a tough job, and you're going to need the wisdom of Solomon to figure out what's going on in this one, I'll tell you.

I want to thank you for showing up. If you could get the documents that were requested to the clerk, and the clerk could redistribute them, it would be appreciated.

Mr. Laubstein: Mr. Chairman, about the scientists, do you want me to arrange a meeting this week?

The Chairman: I think the thing we should do, Karl, is to raise it as soon as we break up this meeting. We're going to go into an in camera business session and deal with a number of issues.

Thank you.