EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, June 12, 1996

.1541

[English]

The Chairman: Before we go to our witnesses on licensing policy, we have a problem with tomorrow's session on the update on TAGS.

Everybody knows there's a problem with TAGS, with cost overruns. It's been in the newspapers. The problem is that witnesses can come, but because the situation is in cabinet and the cabinet has not decided what the policy is going to be, the departmental officials cannot give any answers on the situation. I think we'd be wasting our time here. We could ask all the questions we wanted, but no answers would be forthcoming because of the legal situation. Departmental officials cannot comment until government has made a decision. I throw that out for your discussion and input.

Mr. Culbert (Carleton - Charlotte): Mr. Chair, it would be rather redundant for us to have a meeting. I'm sure we could all be busy at hundreds of other things if no answers can be given to the questions on the program that would be in members' minds. At this time it would be rather redundant for us to have a meeting, would it not?

The Chairman: It would seem so to me.

Mr. Culbert: Therefore I move that the meeting be taken off our agenda at this point and tabled until such time as the information comes out of cabinet. We could then reschedule at a later date if necessary.

The Chairman: So you're recommending that we postpone.

Mr. Culbert: I certainly would recommend that.

The Chairman: Is there any discussion on the motion?

[Translation]

Mr. Canuel.

Mr. Canuel (Matapédia-Matane): I totally support the motion.

[English]

Motion agreed to

The Chairman: We have consent, so we will postpone the hearing on TAGS until such time as the cabinet decides what the new policy will be.

Okay, to the business -

Mr. Verran (South West Nova): Pardon me, Chairman. I know I had an opportunity to speak on the motion and didn't, but isn't it kind of backwards? Shouldn't we try to have some input before cabinet makes a decision rather than waiting until they tell us what it's going to be, and then we sit down and argue about it and we won't have any say in it because they've already made their decision?

The Chairman: We could sit down as a committee without witnesses and make recommendations, but since we don't know the exact problems... It's in the paper that there have been overruns. There have been a number of -

Mr. Wells (South Shore): More than we know, so we just read the paper to find out what's going on.

The Chairman: At this level, at this time we can't be...at least that's the parliamentary advice I've been given.

Cheryl, do you know if Mr. Rideout is coming?

Ms Cheryl Fraser (Assistant Deputy Minister, Policy, Department of Fisheries and Oceans): He is here. He was just called for another call. He'll be right back to the table.

Mr. Wells: Mr. Chairman, on a point of order, can I get clarification of the agenda today? What are the topics we're going to cover?

I've seen that. It's just the licensing fees, right?

The Clerk of the Committee: And inspection.

Mr. Wells: My notice didn't say inspection. Could I see the one you have?

The Chairman: Mr. Rideout for inspection fees, and Ms Fraser for...

Mr. Wells: It says licensing fees. So inspection fees will be a topic?

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The Chairman: That's why we have Mr. Rideout here.

Mr. Wells: I just needed to know he was here so that... I wanted him to be on the agenda. Thank you.

The Chairman: Cheryl Fraser, would you like to make an opening statement?

Ms Fraser: From a departmental point of view, I first would like to indicate to the committee that Dick Hodgson is here from the coast guard. He is the director general of program planning in the coast guard and is prepared to speak on any link to the marine services fee if the committee so desires. It was our understanding that the committee wished to hear from the department on cost recovery in general, so that's why we're represented on all three fronts.

The only thing I wish to note is that cost recovery for the department and our fees in general stem from the 1995 federal budget, which took far-reaching action for the government to reduce spending and reshape the role of government in the country.

I will deal with the licence fee issues, as the chair noted. The licence fee issues or the access fee issues are in relation to access to a public resource managed at public expense. Dave Rideout will speak to the inspection fees. I can go through the broader cost recovery issues for the department if there's a will. I'll leave that to the committee.

The Chairman: We will begin questioning now. Is Mr. Wells prepared to ask a question?

Mr. Wells: Just for clarification, we're initially going to be talking about licensing fees. I assume we would be talking about the $50 million figure in the budgetary statement. Is that the number?

Ms Fraser: That's the number.

Mr. Wells: I want to ask you about the process for how that number was arrived at. I can't believe it showed up in the budget document as a surprise to people at Fisheries. I would think there would have been some input from your department to the Treasury Board and to the Minister of Finance to advise him that this is the amount DFO felt it could recover from the industry. Can you explain to me the process that was followed to arrive at that number?

Ms Fraser: The government-wide program review process was announced in the 1994 budget. It was to ensure that the government's diminished resources are directed to the highest-priority requirements and to those areas where the federal government is best placed to deliver services.

Under the program review process, ministers were responsible for reviewing their own portfolios and providing their views on the federal government's future roles and responsibilities. Coupled with that for this department was a request upon the minister from his cabinet colleagues to consider the public resource he was managing, and to consider the value of access to that public resource and whether or not Canadians were receiving benefits for the privileged few receiving access to that public resource.

The programs and activities through the program review process were reviewed in the department over the summer of 1994, looking at whether or not the continued DFO programs would serve the public interest, were the necessity of government, were an appropriate federal role; and they looked at the appropriate scope for public sector and private sector partnership and cost sharing, the scope for increased efficiency and affordability. After all those tests were reviewed, there was a decision to look at fees for access to the public resource in the range of $50 million.

I should remind the committee that DFO, in performing these program review tests, was required to bring those tests and have that discussion through cabinet, and it was endorsed through the 1995 federal budget. Also, there was an external advisory committee with representatives of all client groups - I shouldn't say all, but the primary client groups the department deals with. The advice of those individuals went into the final position that was brought forward from the department to the centre.

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The federal budget, however, was the final decision-making process, and, as you can appreciate, I have no idea of the discussion that went on in that committee. Suffice it to say that the department was directed to attract $50 million through a combination of access to the fishery resource and through inspection.

Mr. Wells: Can you give us a breakdown of how that $50 million was initially broken down? I understand it has since been reduced to $43 million.

Ms Fraser: That's correct. Initially it was basically set as a target of $50 million for cost recovery on the fishery side of the DFO budget. In late February 1995 I understand the department started to contract it with consultants who started looking at appropriate fees in relation to access. That's where the numbers eventually sifted out.

Mr. Wells: So they came up with the $50 million before they looked at what an appropriate fee would be or what the industry could afford.

Ms Fraser: I wouldn't say that. The $50 million, in general, was based on looking at what fisheries management costs.

I have to refer back to some of the earlier documents produced prior to the 1995-96 budget. The $50 million essentially equated to around 3% of the value of production from the fishery and it equated to slightly under 18% of what it cost to manage the fishery. That was seen at the time, and it still is being seen, as a relatively low return for the public investment in managing a public resource.

The Chairman: Excuse me, is this 18% what each individual fisherman would basically contribute?

Ms Fraser: The 18% is what the total of the licence fees represents compared to the value of the fishery. It's 18% of what the management costs are in the fishery.

So the bottom line is that this $50 million was seen to be less than 3% of the overall value of the fishery. It seemed to be quite a reasonable level and not onerous on the individual when it was put forward.

As you indicated, that number was actually downwardly revised following consultations with the industry. I believe it now stands at around $40.5 million, because we have also taken a reduction on the west coast since the introduction of the Pacific salmon revitalization plan.

Mr. Wells: You were beginning to talk about private studies that were done. I assume the purpose of the studies... And you said ``studies''. I only know of one study, but if there's more than one I would like to know about it. I understand that study was done to determine the impact on the fishery. Perhaps you could tell me who did the study or studies. What were the purposes of the studies?

Ms Fraser: There were three studies conducted. The first study was conducted on the Atlantic fishery by Gardner Pinfold Consulting. It was released prior to my time in this area of the department, but I believe it was released in April 1995. It looked at the impact of the proposed fee increases on the Atlantic coast.

There were also two studies on the west coast. One study, completed by ARA Consulting, was for the Pacific salmon recreational fishery. I can't remember the name of the group that did the Pacific commercial fishery, but there was such a study done.

I believe those may have been available previously to this committee.

Mr. Wells: I've read the Gardner Pinfold report. I haven't read the west coast reports. Can you tell me what the mandate of Gardner Pinfold was?

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Ms Fraser: His mandate was to assess the impact of proposed fee increases on all the east coast industry, inshore and offshore, and all fisheries.

Mr. Wells: Could you tell us what his conclusions were?

Ms Fraser: Without referring back to the study, I can't in detail tell you the conclusions. But he did point out certain areas of our proposal that needed refinement. It was based on the advice he collected from his numerous consultations and through his meetings with representatives of the major fishing industry organizations. This provided the background for the fee structure that was eventually agreed upon and the amendments that were made.

Mr. Wells: I don't know if I should dispute that here. I would suggest that the reasons for the changes had nothing to do with what Gardner Pinfold said, because our discussions after Gardner Pinfold made no impression until somewhat later in the process when other concerns were raised. But that's maybe an issue for debate that won't serve any purpose.

What impact, in particular, was Gardner Pinfold looking at? Was he looking at the impact of the increased licensing fees or the cumulative impact of all fee increases on the fishing industry?

Ms Fraser: He was looking at the increase in licence fees.

Mr. Wells: So he did no impact studies on other fees.

Ms Fraser: Not to my knowledge.

Mr. Wells: What percentage of the $50 million did the licence fees represent?

Ms Fraser: First of all, to set the stage, there was $9.3 million in licence fees already being collected on an annual basis. New commercial fees were to generate an additional $31.2 million in 1996-97 - this is after modification - bringing the total commercial fee revenues to $40.5 million.

The $31.2 million new fee revenues break down as follows: $20 million for the Atlantic;$10.9 million for the Pacific. However, due to the concerns in the salmon industry this year and the fact that the salmon industry is being restructured on the west coast, the fees are being phased in over a two-year period on the west coast, with only $8.6 million of the $10.9 million coming in from the Pacific in 1996-97. In other words, the final decision on the table in December when the revenue targets were announced was $31.2 million.

Following response to the west coast salmon industry and the revitalization in the state of the stocks for this year, their fee has been reduced for 1996-97 and will increase to the full amount in 1997-98.

Mr. Wells: Can you give me a breakdown of the $20 million? Which sectors will be paying the $20 million in the Atlantic?

Ms Fraser: Of the $20 million on the Atlantic, competitive licences make up $7.9 million;IQ and EA fisheries, individual quota and enterprise allocation fees, were $12.4 million.

.1600

Mr. Wells: I don't want to lose the time I'm going to have with Mr. Rideout later, but where do the inspection fees fit into the equation of the $50 million? Are they part of the $50 million?

Ms Fraser: Yes, they are part of the $50 million.

Mr. Wells: Okay. You just gave me $20 million from the Atlantic based on access fees only.

Ms Fraser: That's right.

Mr. Wells: So in addition to the access fees, what else is there? Can you give me the total? These numbers aren't adding up for me, I'm sorry. I'm missing something here.

The $50 million was reduced to $40.5 million.

Ms Fraser: To $40.3 million.

Mr. Wells: It was $40.3 million, was it?

Ms Fraser: I'm sorry, $40.5 million.

Mr. Wells: Okay, $40.5 million. And of that, $31.2 million is new?

Ms Fraser: That's right.

Mr. Wells: So what you've just given me is the new portion of the $31.2 million?

Ms Fraser: The new portion, that's correct. I can give you the old portion, if you'd like.

Mr. Wells: Yes, please.

Ms Fraser: In the old portion competitive licences made up $2 million; individual quota enterprise allocation fees were $400,000.

Mr. Wells: My numbers still don't add up, I'm sorry. I'm trying to find out the breakdown of the $40.5 million. It was originally $50 million -

Ms Fraser: That's right.

Mr. Wells: - and now it's down to $40.5 million. I need to know who is paying the$40.5 million. I want you to break the $40.5 million between east and west coast, and then I want you to break it down between the access fees, the inspection fees, and whatever other types of fees may be included in that.

Ms Fraser: Okay. First off, there's only the inspection and the licence fees included in the$50 million.

Mr. Wells: Okay.

Ms Fraser: On the licence fee side, total revenues are $40.5 million.

Mr. Wells: That's just licence.

Ms Fraser: Licence fees.

Mr. Wells: So on top of the $40.5 million, we have inspection fees.

Ms Fraser: That's right.

Mr. Wells: That's why my equation is not adding up - and that's $4.8 million, am I correct?

Mr. David Rideout (Director General, Inspection Directorate, Department of Fisheries and Oceans): That's correct.

Mr. Wells: So we're back up now to $45 million.

Mr. Rideout: Of the $4.8 million, $4 million is new. We were collecting $800,000 since 1986 on the import program.

Mr. Wells: Yes.

The Chairman: Derek, we should come back to you.

Mr. Wells: Yes, that's fine. I'm just trying to get the arithmetic. To me, it still hasn't added up, but we're getting closer.

The Chairman: Mr. Canuel.

[Translation]

Mr. Canuel: It seems that 96 Quebec licenses might be bought back by the federal government to allow those license-holders to do something else. I was told it is very slow and barely working. I've phoned a few officials. Some are waiting for the license buy-back to find another job. Some have started up a business and are waiting for it. I was told it should be settled by June 15 and this morning I was told it would not be settled by then because the procedures are very lengthy. Some people in my riding have been waiting for this for a long time. They want to sign offers to buy businesses, but they can't because they don't know if their license is going to be bought back soon. They want confirmation. For some, the date has already gone by while others are waiting till next Friday because I told them it would be June 15. What's happening with all this?

[English]

Ms Fraser: The matter you referred to is part of the total Atlantic groundfish package, the TAGS program. It would have been a subject of discussion tomorrow morning if we were able to have information available. The future of the groundfish licence retirement program, round two, is part of that cabinet discussion on TAGS. It's part of the entire package. So we're not in a position to be able to discuss it. We do not have any direction from cabinet.

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[Translation]

Mr. Canuel: There certainly must be someone at fault. I'm being sent off on wild goose chases and people are calling me all the time. Maybe I should shake the Minister's tree a bit to wake him up. I'm not speaking personally here, but in Quebec there are 96 license holders ready to do something else and waiting for a change in policy. They'd like to see some licenses withdrawn.

That's what they're asking for and they're not even asking for immediate compensation. They don't care whether they're paid six months down the road or later. They just want confirmation of the buy-back and compensation aspect. It's urgent for them and you're hesitating! I'm speaking up for those workers, for those SMBs and I don't know where to turn because no one seems to know exactly what is going on.

Now, I have another question on registration which, I think, concerns you.

[English]

The Chairman: Isn't the program ongoing? If people want to exit the fishery, can't they do it now? There's no suspension of that program, is there?

Ms Fraser: There's nothing stopping individuals at any time from exiting the fishery, but the licence retirement program was part of the TAGS program. Round two was announced by the previous minister, Minister Tobin, in December 1995.

The Chairman: Right.

Ms Fraser: The harvesting adjustment boards have made their recommendations, and we're now awaiting direction on the entire TAGS budget.

The Chairman: So there's nothing happening at all right now with that.

Ms Fraser: No. It's one of the elements of TAGS.

The Chairman: Okay.

[Translation]

Mr. Canuel: Where will the guidelines come from? When are they going to come?

[English]

Ms Fraser: I have no idea.

[Translation]

Mr. Canuel: Is the registration of small craft and pedal boats still in the cards? There are thousands of people who have small craft they use for recreation and you're trying to get money from them. That would be no problem if you could use those small craft all year round for recreation or sports fishing, but unfortunately summer only lasts a few days down home, in the Gaspé. Why do you want to charge a registration fee for those small craft if not simply to get more money?

The other day, I heard the Minister say it was for safety reasons. It's not because you pay $5 that you're going to be any more safe. I don't think so. And it's not because you pay $20 that you're going to be even safer. Are people going to be less negligent if their row boat is registered? You have all kinds of old cars on the road that have no problems at all until the day they get a flat tire. You can have all the insurance you want, accidents happen anyway. So don't talk to me about safety. I think you're just interested in the money and you're going to tick everybody off. Do you have any opinion on this?

[English]

Ms Fraser: I'm going to refer your question to my colleague from the Canadian Coast Guard.

Mr. J.R.F. Hodgson (Director General, Program Planning, Canadian Coast Guard): Thank you, Cheryl. The recreational boating program is made up of four parts, of which the licence initiative is only one. There's the initiative to improve proficiency. There's also an increasing volunteer and community involvement. Third and more importantly, there are initiatives to improve various services, including enforcement aids to navigation and search and rescue. This initiative is a package of some initiatives of which the licensing system is only one. We are introducing a program whereby owners of vessels will contribute a fee ranging from $10 to $25 or $30, but accompanying that will be training programs, improved search and rescue, and aids to navigation when required.

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[Translation]

Mr. Canuel: I wonder why everybody wants to tell everybody else what to do. Go to bed at9 p.m. and get up at 6 a.m. tomorrow morning! People want to condition others, supposedly for their own good. Of course, it's for their own good because it's so dangerous to take out a rowboat to go around the lake! We already know we have to wear lifejackets and that we have to have lifesavers in the boat and all kinds of other stuff. That's normal.

But I'll never accept having money taken from people under false pretences. I'm telling you that because you still haven't convinced me that you're not just interested in the money. I don't think it makes any sense. You can impose all kinds of things on people but at some point, they're going to be totally fed up. In the Gaspé and elsewhere, relatively poor families are fed up with having to register firearms, rowboats, pedal boats and maybe even water pistols pretty soon because they'll be considered dangerous! There's no end to it. You know where it starts, but you'll never know where it ends.

I think we'd be better off appealing to people's common sense and sense of responsibility because it seems to me people can show responsibility for themselves. Of course, accidents will always happen. Stepping out the door here, you can miss a step and break your foot. If you're going to put a tax on each step you climb, it's going to cost an arm and a leg!

I denounce this policy, not in my own personal name, but in the name of the Bloc Québécois and especially in the name of our compatriots who think like me that it makes no sense. Thank you.

[English]

Mr. Hodgson: Yes. The decision - an initiative that is being pursued solely by the coast guard - has come out of quite comprehensive discussions and consultations both with the recreational boating community and with the various provincial governments, and there is really quite wide support and acceptance of -

[Translation]

Mr. Canuel: Who agrees? Does the Quebec government agree with you?

[English]

Mr. Hodgson: I am not sure of the position of the Government of Quebec, but I certainly haven't been made aware that it is opposing it.

[Translation]

Mr. Canuel: They'll make their position known.

[English]

Mrs. Wayne (Saint John): I'm not sure who I should direct my question to. I want to know whether there has been any delay in the opening of the 1996 ground fishery and whether there has been a resolution among the fishermen and the government on how the quotas are going to be shared.

The Chairman: We're talking about licensing fees - cost recovery.

Mrs. Wayne: I can't go with this one?

The Chairman: If they want to answer it, fine, but these are not the witnesses we would have here if that were the question.

Mrs. Wayne: You're talking about the increase that you have with regard to inspection and licence fees, and you're referring to $40.5 million that you wish to accumulate through this process. You're saying that with the old inspection it was $800,000 that you had collected, and it's now$4.8 million you expect to collect. Is that correct?

Mr. Rideout: In terms of inspection, yes: $2.4 million from the domestic industry and$2,4 million from imports.

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Mrs. Wayne: When it comes to the licence, you expect to get $7.9 million from competitive licence, and it was $2 million before. Is that correct?

Ms Fraser: That's correct.

Mrs. Wayne: The people who were fishing before, are all of them going to be fishing again or allowed to get licences?

Ms Fraser: The licence policy has not been connected to the access fee. In other words, no changes in the licensing policy have been brought about by the access fee implementation.

Mrs. Wayne: As long as they can all afford to pay?

Ms Fraser: That's right.

Mrs. Wayne: Thank you.

The Chairman: Harold.

Mr. Culbert: Thank you, Mr. Chairman.

Ms Fraser, I believe you stated that the value of the licensing fees equates to approximately 18% of the cost of operating the fishery.

Ms Fraser: That's right.

Mr. Culbert: When we had meetings back in early March, I believe there was a commitment by the minister to review that process of licensing fees - both the structure and the actual fees - prior to next year's licensing fees being established. Is that process still ongoing?

Ms Fraser: Yes. With the chair's permission, I'd like to speak about that issue.

The minister did make a commitment in December, followed by a second commitment shortly after the southwest Nova Scotia incident earlier this year, that we would be working with the industry, both offshore and inshore, and various representations across the Atlantic and in B.C., to further refine the access fee and licensing system. The industry in some parts of the country was quite interested in having DFO look at the gross revenue versus net revenue issue, and seeing if we couldn't find a fee that could be based on net revenue for the future. Also, other portions of the industry were pushing very hard for us to move to a royalty or a landing-based fee structure. In other words, fishers would pay a fee based on what they landed rather than an up-front fee.

We have put out formal invitations to the fishing industry, including various sectors in the industry - the offshore sector, the Harvesters' Council, and the west coast commercial fishing group, CFIC. We are still waiting for some proposed nominations of individuals. Unfortunately, the industry required internal discussions and they won't be able to get back to us with their position on how they would like to move forward, and who, until around the end of June.

The department's intention is still to refine the system and move forward. We're ready to do it, but we're waiting for the industry reps to come forward with their proposed names. We expect that to occur within days.

Mr. Culbert: Ms Fraser, would that go down as far as the local fishing associations, or does the request just go to people like the Harvesters' Council and so on?

Ms Fraser: What we've done is twofold. First, we went to the Harvesters' Council. You may recall that the original announcement of the licence fees mentioned the Harvesters' Council being involved in the study. We recognized that others than the Harvesters' Council needed to be involved, so the audience has been expanded. We've gone to our regional directors general and asked them who they feel should be involved from their region. We're looking for a fairly small representative working group. So not everyone can be at the table, but it would be someone who represents the interests of the various Atlantic fisheries. Once that report or group comes forward with some recommendations, we would take it back through a consultative process to all those who actually pay fees through the normal system, or an augmented system to the normal system.

Mr. Culbert: From the department's point of view, do you think that if proposals come forward that equate to similar dollars, that makes much more sense from the point of view of industry that there is a perception of acceptance of that?

Ms Fraser: Yes, there's no doubt about it. If the industry can put on the table, or even recommend an area that we should study and come back to them, or bring others into the argument, an area that can further refine the fees so that it's fairer from the industry's point of view, and that we can attain the same level of revenue, the other caveat being that we can be assured we won't start a black market or a misreporting system by doing it, because we wouldn't want to put one fisher against another, then we are prepared to do it.

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In fact some very innovative approaches have been raised, including a third party running a landing-based fee system. That's been raised by some fishers on the west coast. So there is a lot of interest in moving forward on some revitalized system. We're prepared to do it and we have a team that's been dedicated to that exercise.

Mr. Culbert: That's great to hear, because the perception out there in the fishing communities and the local fishing associations is that consultation is great, but they don't want to be part of consultation if the department has already made up its mind about what they're going to do and how they're going to do it, and then come and consult to get you to agree to something they've already made up their minds about. I don't think my fishing association wants any part of that, and I want to be assured that I can assure them that their input to this situation will be valued and will be considered.

Ms Fraser: There are actually two areas for input into this process. One is through the working group structure I mentioned and whatever comes out of that working group. The second is through our federal Fisheries Act amendments that we hope to re-table this fall. That's where, should a landing-based fee structure be something the industry wants to consider, we would look to this committee for advice under that rubric as you move through the Fisheries Act when it comes forward.

Mr. Culbert: Do I have some time?

The Chairman: I don't see anybody else.

Mr. Culbert: Maybe I can get over to -

The Chairman: If somebody is interested, just raise your hand.

Mr. Wells: We have until how long, Mr. Chairman?

The Chairman: Until five o'clock.

Mr. Wells: Is that all?

Mr. Culbert: Maybe I could address a question or two to Mr. Rideout on inspection fees.

As you know, the initial letters that went out to the processing plants outlined the proposed inspection fees that were established. As you would also know, those criteria seemed to be the same whether it was a processing plant with three employees or one with 500 or 1,000 employees. The size of the plant or the volume of processing carried on in the plant didn't make any difference.

I had understood and been assured by the department that the whole inspection fee structure was under review and reconsideration, and it was felt that a new and fairer proposal would come forward. Where are we in that process? What new considerations are being given?

Mr. Rideout: First, let me apologize for being tardy in getting here. When I got in the cab, one part of my pants decided to get in and the other part decided to stay outside. Consequently I made a quick detour to a seamstress, who was quite accommodating. Seeing my state, she understood that I couldn't appear here the way I was. I think I can say quite literally that inspection is running in a thread-bare state.

Having said that, you're correct. We got three key issues out of the Canada Gazette notice and the communiqué we issued to the plants and importers. One was the big plant and little plant issue, which I've talked to this committee about before, as well as the certificate issue. For some certificate users the fees were going to be quite exorbitant. The other was the big importer and little importer issue in terms of the cost per lot per shipment.

We looked at all of the letters that came in. I personally called some of the people who had written to us and talked to them about some of their proposals and concerns, and we developed a series of options. While I can't give you specific details on the options because no decision has yet been taken, I can tell you that one option we've been looking at is a flat fee for facilities of a particular size, the smaller facilities. I don't have any real points to raise in terms of what that size is, but it's to try to address the big plant and small plant issue and to get a significant percentage of the smaller plants into that bracket.

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We're looking at an option that would cap the annual fee for certificates. In other words, there would be an inspection fee for certificates, but there would be a maximum amount paid per calendar year. We're also looking at a cap on import fees per shipment. So those are some of the options we've been looking at, but there's been no decision yet and we're still looking at the whole regime we've put forward.

I don't know whether that addresses your question, but I think it does. We're looking at an option that says let's have a flat fee that is lower than what we were talking about in terms of the proposal. It would be for the smaller processor.

Mr. Culbert: What is the current or projected processing certificate or licence year?

Mr. Rideout: It depends on the time of inspection. It's generally one year from the time of inspection.

Mr. Culbert: So it varies from plant to plant.

Mr. Rideout: Yes, it would vary from plant to plant - it could vary, anyway.

Mr. Culbert: What is happening in those plants that their year has come up or is coming up now while we're in this process of review?

Mr. Rideout: For the plants whose year is coming up, we're waiting to see what the decision will be. We're hopeful the decision will come at a time that will permit us to get into the re-registration and the cost recovery regime for that.

Mr. Culbert: Okay, so we're not charging based on the old criteria, and we're not charging them based on the new criteria, we're just extending it until -

Mr. Rideout: As of today there are no charges for plant registration fees.

Mr. Culbert: Okay.

Mr. Rideout: There never have been. This is a new proposal. So when we go to register the plant, part of that application for registration will be remuneration for the fees that will have to be charged for that plant, depending on what decision is taken on what the fee would be.

The Chairman: Are you aiming for August?

Mr. Rideout: In some plants the registrations run out at the end of July, so -

The Chairman: When do you expect to know what the rates will be for all plants, both small and large? Do you have any idea when...?

Mr. Rideout: I hope we will know before we need to register those plants that will be coming due on August 1.

The Chairman: I hope so too.

Mr. Culbert: I have one more question, Mr. Chairman.

Although it's not your area of responsibility, and it certainly affects the processing plant, in addition to any fees that DFO developed and ultimately charged, there is also a provincial fee to processing plants that is based on the various species they actually process or ship. In my home province of New Brunswick, the consideration for the revamping of debt for separate fees for each species being shipped or packed at that processing plant - or value added at that processing plant - there's a substantial fee for that. When you couple those with our proposed fee, it is pretty substantial.

I'm concerned that it will make small processing plants with four or ten or twelve employees - they're small businesses from my perspective, and we're trying to do everything we can to encourage small business. Coupling those two results in a substantial cost that affects the bottom line and viability of that business, and that concerns me a great deal. When these fees and certificates are being established, do you consider what the provinces ultimately charge? Is there some way we can avoid duplication by having one or the other body do it, but not both, and have one fee?

.1630

Mr. Rideout: That might be something that will occur in the future with the establishment of the new food inspection agency. But I really can't comment, other than that, except to say that we've taken a look at our proposal and we've been evaluating some options. Hopefully, one of the options will make it less burdensome to the smaller operators. However, we are committed to raising$4.8 million for the overall program. As I explained the last time, from fiscal year 1991-92 to fiscal year 1997-98, the cost to the taxpayers of the fish inspection service will have been reduced from$33 million to $19 million. Of that reduction, $4.8 million is the cost recovery projection figure.

Mr. Culbert: I realize that and support it. I don't think the taxpayer should have to pay 100% of it. They should be paying a fair share. All I want to ensure is that it is fair.

Finally, I want to be sure that what you're saying is that there is no consultation with or input from the provincial departments on their licensing fee or processing fee structures for value added being given consideration during this development stage from DFO.

Mr. Rideout: I know that we had invited the provinces, as part of our consultations, but as for specific meetings with the provinces trying to marry up the two, no, I don't believe there was any discussion on it.

Mr. Culbert: Okay. Thank you.

The Chairman: Mr. Wells.

Mr. Wells: I want to ask one or two questions on the licensing fee, and then I want to go toMr. Rideout.

Ms Fraser, was the $50 million in addition to what was already charged, or was the $50 million meant to represent the total amount collected?

Ms Fraser: It was the total amount collected.

Mr. Wells: I don't want to waste any more of my question time, but will you try to get for me the numbers? My numbers still add up to $45 million.

Ms Fraser: I'll leave the numbers with the clerk.

Mr. Wells: Thank you. I'm sure I can get it through written submission.

Mr. Rideout, welcome back. I noted that our last meeting and the subsequent activity generated quite a number of letters to you. I also know that you've been in touch with certain people in the industry with respect to setting up consultations. I understand that you're going to start those on June 20. Is that still the date on which you're going to be meeting with industry?

Mr. Rideout: Yes. In fact, today I'm meeting with directors of inspection from across Canada. We're trying to finalize a consultation process.

I have some consultations established in the maritime region. The first consultation will be in Yarmouth on June 20 at Rodd's Grand Hotel at 2 p.m. The second will be the next day, June 21, in Halifax, at the Ramada Inn on Brownlow Avenue at 1 p.m. The next will be on June 27 in Charlottetown at the Travelodge Hotel, starting at 1 p.m. The next will be on June 28 in Port Hawkesbury at 11:30 a.m. at the Skye Travelodge.

I also have meetings for which I can't give you the confirmed location and time, but they will be on June 16 in the Miramichi area, I expect, in Newcastle, and on June 17 in Blacks Harbour. I'm hoping to establish something in British Columbia for July 5, and I'm looking at what I can do in Newfoundland sometime after that, possibly in August. As well, I want to meet with the importers in Toronto. And I'm looking to arrange something with the processors in Quebec, again sometime in July or August.

Mr. Wells: I understand you've circulated an agenda.

Mr. Rideout: Yes, the regional people had done that. I put cost recovery as one of the issues. As you know, we're committed to a one-year review of the cost recovery initiative on the fish inspection fees. I'd like to begin the process and to talk to industry about that process so that we can get as comprehensive and thorough a review as possible over that one-year period.

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Mrs. Wayne: On a point of clarification, was that the 16th and 17th of June?

Mr. Rideout: I'm sorry, of July.

Mrs. Wayne: Thank you.

Mr. Wells: On the agenda, I note that you list cost recovery as a topic. Is QMP re-engineering part of your agenda?

Mr. Rideout: Yes.

Mr. Wells: The single food inspection agency?

Mr. Rideout: Yes.

Mr. Wells: The impact of branch budget cuts?

Mr. Rideout: Yes.

Mr. Wells: Can the agenda be added to? If the attendees wish to bring up other topics, will you be receptive to them?

Mr. Rideout: Yes. I think there will be some local issues that people will want to speak to. They may have some problems or concerns or need clarification on issues, and I'm open to discussing any and all aspects of the fish inspection program in those areas.

Mr. Wells: Will you be discussing cost accountability, cost control, and the core mandate of your department? Do you see those as topics to be discussed at this stage?

Mr. Rideout: Again, I think that's something that would come into the process. I'm not sure that I could provide all the answers in the time given for that sort of thing, but I think I would certainly be open to looking at the process.

Mr. Wells: Are these legitimate topics that you feel could be discussed during this process?

Mr. Rideout: In this process, yes.

Mr. Wells: About the $4.8 million you say you must collect this year, do you have any mandate to increase it next year or do you see it at $4.8 million and staying there? What are your long-term obligations, as far as cost recovery is concerned?

Mr. Rideout: As I understand it, this is part of our program one review cuts. It's part of the overall aspect of that initiative.

We are, quite frankly, gearing up for moving from the Department of Fisheries and Oceans into a single food inspection agency. The initiatives that will come through that agency are unknown because the agency hasn't of course been established yet.

From my perspective, I won't be part of the DFO process in about eight months. What the chief executive officer of the agency, or however the agency is structured, determines they are going to do vis-à-vis budget and cost recovery is an unknown to me right now. I really can't respond to the question.

Mr. Wells: So what you're doing now will be for the next eight-month period. You will remain with DFO and then go to the single -

Mr. Rideout: What I'm saying is that what we're doing now will be part of our process for the continuing future, into the agency.

Mr. Wells: Right.

Mr. Rideout: As for what happens in the agency, I can't say, because it's -

Mr. Wells: Will you be moving to the single food inspection agency?

Mr. Rideout: Yes.

Mr. Wells: Okay, so you'll be part of that. Presumably you will still be involved in the fish end of it.

Mr. Rideout: I hope so. I certainly want to be.

Mr. Wells: Okay. Is the health standard used in the U.S. the HACCP? How do you pronounce that?

Mr. Rideout: The acronym is pronounced ``ha-cep''. It's becoming world renowned - hazard analysis and critical control point.

Mr. Wells: I should learn to pronounce it, shouldn't I?

Mr. Rideout: HACCP?

Mr. Wells: I might need to use it.

Mr. Rideout: Quite frankly, from my perspective I think you should learn to pronounce QMP, because Canada is a world leader in the quality management program, which is HACCP-based. We're in the process of re-engineering it to make it fully HACCP-based, as well as to take into consideration the market and quality aspects of our industry.

One thing that has become come clear to me in this job over the last two months is that we are basically on the cutting edge in the world, in this work. I'm very proud of what our inspectors have been able to accomplish.

Mr. Verran: It may be too much.

Mr. Rideout: No, sir. I think in fact it's making it a lot easier for our industry to access markets. When you've got the European Community saying yes, your products can flow pretty much free into the community because of the recognition of the Canadian quality management program, that's a pretty significant contribution to the marketing aspects of the industry. Some 80% of our fish is exported.

.1640

Mr. Wells: One of the comments I get from the industry continually is they feel their quality controls, through the QMP, which you're familiar with... As you said, it's state of the art. They do a very good job. I think they feel very much that they do most of the work and that when your department comes in there's very little for you to do because they already have a very high standard in place. Would you agree with that assessment?

Mr. Rideout: As I said, the cost to taxpayers will be reduced from $33 million to $19 million. Part of this is the efficiencies that have been gained through the quality management program, QMP.

The last time I was here it was my view that you have the policy-setting function, which is important in terms of what your standards are and how you're going to implement those standards, you have the operational component, which is the actual implementation of standards, and then you have the audit function.

We in fish inspection now see our strong focus as being that audit and policy-setting function. The operations is the industry. That's what the QMP is about. The industry does its own quality control. When our inspectors go into the plant they go in to audit the quality control system. Let's say 10, 15, or 20 years ago, they would have gone in and been the daily quality control for the fish plant.

The efficiencies that have come through quality management have put the onus on the plant, and, yes, they do that work. The implementation of the audit function has been a key component of that for us. We're not as visible in the plant because of it. But when we are in the plant the work is very concentrated on how the QMP is being implemented by that plant.

The Chairman: Derek, Mrs. Wayne would like to get in.

Mr. Wells: Can I ask one last question on this, and I might have some more later?

The Chairman: You sure can.

Mr. Wells: Would it be fair to say that one of the objectives of your inspection branch now is to generate revenue?

Mr. Rideout: Not in the sense of as a key activity. The primary -

Mr. Wells: It will be generating revenue.

Mr. Rideout: It will be generating revenue, right, but that's not its modus operandi. It's there to provide a reasonable assurance that fish and fish products that are produced in Canadian fish plants and the products that are imported into Canada meet or exceed all safety and quality standards.

Mr. Wells: So do you have any concern that there may be some incentive to lower a plant rating to say satisfactory from excellent or good? It would require more inspections and it would generate more revenue.

Mr. Rideout: No, it's just the opposite for me. I want to see more plants rated as excellent. The only way we're going to maintain our international stature is to ensure that we're not running borderline types of operations. One of the key messages I want to bring out in the consultations, outside of the discussion on cost recovery, is that you can't risk running borderline operations. That's possibly going to compromise your international market.

Mr. Wells: Let's hope you're correct that the ratings increase, which means you'll likely then have a budget shortfall.

Mr. Rideout: That could very well happen.

Mr. Wells: So what will you do then? Will you increase the fees to collect that money?

Mr. Rideout: I'm not sure what I'll do then. I'll have to assess it at the time.

Mr. Wells: You can understand the concern of the industry, because if they do get excellent ratings that means your revenues are going to fall. If you have to raise a certain amount of money, one way you can be assured of that money is to reduce an excellent rating to a good or satisfactory rating, requiring more inspections and increasing your revenues.

Mr. Rideout: But in terms of the amount of money we want to collect domestically, we'll be collecting that from the plant registration fees regardless of how they're rated. We'll be collecting that from the the issuance of certificates. It's not a case of saying that if you are running a borderline facility that you're going to have higher fees. If you fail, then you have to pay a fee to get re-registered.

I don't see that as a major part of the overall cost recovery initiative. We're going to be trying to work with plants to ensure they don't fail, because too many failures begin to undermine our system in terms of the reputation we've developed. It's important that we try to have as many excellent plants as possible.

.1645

Mrs. Wayne: I've heard a great deal about the plants. What I want to know about is the individual small fisherman and his licence. They were the ones who came to us. There was a major concern about the increase in their licence fees, some of which were increased by 400%. They were telling us they would not be able to continue to fish and to feed their families. What I want to know is whether there has been a cutback in the number of those small fishermen who will no longer be able to fish in 1996 and 1997 because of the increase in the licence fee.

Ms Fraser: Maybe I could go back and refresh the memory of the committee on what formula was used to develop the licence fees to begin with. For competitive fisheries, for a landed value less than $1,000, the $30 fee would remain. That also included groundfish, except in areas in Nova Scotia where groundfish was still open, and that went up to $100 under the next heading.

For fisheries with an average landed value per licence per year between $1,000 and $25,000, the fee is $100. For fisheries with average landed values per licence between $25,000 and $100,000, the fee is $100 plus 3% of anything over $25,000. For fisheries with an average landed value of licence of more than $100,000 annually, the fee would be $2,350 plus 5% of anything above $100,000.

Based on that - just let me refresh my memory here - 80% of all licence holders are paying less than $500 for their fees in the Atlantic. So it's in those highly lucrative fisheries, such as lobster, crab, scallops, where individuals are paying the higher fees.

We have not had a case, to my knowledge, where an individual has come in and refused to pay the fee based on not being able to. In most cases the smaller fisherman is paying either $30 or $100, depending on what industry they are in on the east coast.

So to my knowledge, it has not been an issue. Just to clarify for the committee, it represents about 1% to 2% of what we understand to be net on average. These are average numbers. There will always be special cases.

Mrs. Wayne: I have one other question, with regard to eel fishing. My understanding is that there has been one licence allotted for eel fishing in our area. The brother of the person who has received that licence is an inspector.

I've had people in my office just this week, Madam. These other fishermen who want to do eel fishing - which is done at night - have been told that if they pursue it any further, he is going to see that they lose their other fishing licence. He has a very strong conflict, because it's his brother who has the eel fishing business. I would like to know if this has been brought to your attention.

Ms Fraser: I'm unaware of it.

Mrs. Wayne: Then I will give you all the particulars, and I would ask you, please, to look into it.

Ms Fraser: I'll take it back. I'd be pleased to do that.

The Chairman: I'd like to ask some questions on marine fees, but our man from Labrador is anxious to question, so go ahead.

Mr. O'Brien (Labrador): I'm concerned about the TAGS people who are still licence holders - small-boat people, primarily. Can you tell me what the status is right now relative to licence fees? There was some question that Fisheries and Oceans was moving to a fee structure that would practically make it impossible for these people to be able to pay their fees. In other words, there was a view from Labrador and others that this might be a way of forcing the people to give back their licence because they simply couldn't afford to pay it, and in that way Fisheries and Oceans would be totally off the hook in terms of buy-back programs. It bothers me a lot. Is that the focus of what's happening here?

.1650

Ms Fraser: No. I'd be pleased to answer that. I'd like to answer it from two points: one from a Labrador perspective on fees in general and the second from the groundfish perspective.

When we did the consultations in the fall, it was very clear that, with the majority of the TAGS recipients being in Newfoundland and the outlook of the fishery being quite bleak, it was impossible to even contemplate any licence fee increases for people who do not have a fishery that's open. So for an individual to maintain his current standing of holding a licence, his fee that has been there since 1979 continues at $30. There's no change.

However, there was one issue that arose in Labrador during the licence fee consultation that was unfortunately a very contentious issue. That was concerning the salmon fishery. The issue there was that when we applied the formula with the first publication of the regulations - the pre-publication - the licence fee came out to be $100 for those salmon fishermen under the original formula, and that's based on landed value. Following consultations with the industry, that fee was dropped back to $30.

A voice: They were dropped straight across the board.

Mr. O'Brien: They were, except for one thing, which relates to my next point. The shrimp licences - the famous 1970s shrimp licences in Atlantic Canada... The fees for shrimp... It's $125,000 for a licence.

Ms Fraser: It's on a tonnage basis. It's based on the IQ - individual quota - held by the company.

Mr. O'Brien: It's roughly $125,000.

Ms Fraser: It's $75 per tonne. So in some cases it's $160,000, in other cases it's $200,000, and in other cases it's $100,000. So it's in that range.

Mr. O'Brien: So that's standard. I know it was last year as well, right?

Ms Fraser: There's no change there. In fact, I'll comment on northern shrimp for just a minute. Before going to final print, we had pre-published a proposed amount of $66.50 per tonne. It was a lower amount, and we had a considerable number of requests from the inshore industry to up the offshore industry. In particular, the Gulf of St. Lawrence fisheries wanted to see the northern shrimp fisheries pay a bit more based on the quality of the catch and based on the fact that they did have a competitive fishery in area zero that they weren't being charged for.

So the decision of the day was $75 a tonne, and we have agreed with the northern shrimp operators to continue discussions and potentially move to a land-based fee structure for that organization based on the working group work that will be done.

Mr. O'Brien: What are the procedures for crab fishing?

Ms Fraser: Crab is an interesting one. Crab was based on the... I have to admit that I haven't refreshed my memory on the crab side of it, so bear with me for a minute. Crab is very complicated. There were two areas, if I remember correctly, in the Gulf of St. Lawrence, in which we've calculated the fees. In the original proposal, all crab fees were to be standard at $132 per tonne. It was clear through the second round of consultations that this $132 per tonne was not maintainable on the northeast coast of Newfoundland and in area 13, Labrador. So that fee was reduced in recognition of the fact that this is a lower value fishery than the Gulf of St. Lawrence fishery.

.1655

There was a set fee for the Gulf of St. Lawrence for an Atlantic-wide fee at $132, if I remember correctly, at that time. We've since had some consultations with the industry, and this is a case where the industry has come back to us and asked us for some amendments. They've asked us to not pool the Gulf of St. Lawrence but to charge on specific areas. So some fees have gone down to $129 a tonne and some have gone to $134, just to make it fairer between locales, rather than keep it... In other words, the Gulf of St. Lawrence and the Newfoundland fishery had slightly different fees, in recognition of the difference in landed value.

Mr. O'Brien: Okay. When we talk about landed value, tonnage and landed value are two different things?

Ms Fraser: Yes.

Mr. O'Brien: Last year, for instance, a tonne of crab fetched $250 in Cartwright, Labrador. This year they're talking 83¢ to 97¢ right now, and by maintaining the $100, $130 a tonne you can see what the problem is. Fisheries and Oceans are not coming across and accommodating the fishermen on raising the numbers of pots from 300 to 500, which is the sensible thing to do if they had their heads around it properly. I'm not being nasty; I've just been pushing this one so long and so hard that I want to put it in perspective. The point I'm trying to make is that the industry change in terms of the value is not being reflected in the policy.

Ms Fraser: In actual fact it is, if I may. There was a commitment made to the industry that should there be a significant change in the fishery - and this would be something that would be discussed during the normal consultation process for the development of the management plan for the fishery - that would put the fee out of whack with what the reality of the day is for the fishery, we would make that amendment.

Mr. O'Brien: So we run into a dollar a pound, which it looks as if we may right now, starting next week or this week. Nova Scotia's getting two dollars a pound. That seems to be the rationale I'm looking at, a long way away versus the shorter distance. So rationally speaking, if we have $130 a tonne for Nova Scotia crab, $130 a tonne at two dollars a pound, $130 at a dollar a pound, are you telling me you're going to deal with that right now, or are you going to wait some time later on in the year?

Ms Fraser: On crab, first of all, remember Newfoundland is different from the rest of the area. It is $58.50 for Newfoundland. It's automatically half of the Gulf of St. Lawrence to start with.

The second thing is if a fishery changes by 25% we kick in an automatic review. Through the consultation process we would automatically review the fee. Remember that under all circumstances the fees were set for a three-year period to give industry a planning horizon when they were initially announced.

Mr. O'Brien: When was it started?

Ms Fraser: It was started this year. So 1998 was when the cycle would be up for review for the 1999 fishery, but should there be changes in that period -

Mr. O'Brien: So regardless of the price of crab this year, the price remains?

Ms Fraser: No, I didn't say that. What I said was that in Newfoundland and Labrador it's already half of what it is elsewhere, just based on the fishery to begin with.

The second issue is that the crab fees were based on 1990-93 data, not recent data, so in fact you'll probably find that they're quite a bit lower than if they were based on 1994-95.

Mr. O'Brien: Right.

Ms Fraser: The fee would be considerably higher if we'd used last year and the year before. So if we were to apply the rule you may not see any change just based on the years that were chosen to calculate the fee, and that's in most cases, but recognizing that if the fishery does go down it will be subject to a review.

Mr. O'Brien: Can I make one last little complaint, Mr. Chair? I don't know if this fits here right now, but I'm going to try to push it anyway, Mr. Chairman, and that's the question of pots.

.1700

You're in policy; I'm at a loss when I get told by people in your department that if it's offshore you can go to 500 pots but because it's inshore - it's 130 miles offshore, I might add, but is called inshore - 130 miles off Mary's Harbour, Labrador, that's considered inshore, you are only allowed 300 pots. I'm at a loss as to how you find your rationale.

Ms Fraser: We'll take the question back for you.

Mr. O'Brien: Please, would you.

Ms Fraser: Sure.

Mr. O'Brien: I've been fighting it for the last two months and if I might get an answer I'd appreciate it.

The Chairman: Mr. Verran.

Mr. Verran: Thank you, Chairman Joe.

Cheryl, when do you contemplate you and the minister or you yourself coming and meeting with the area 34 lobster fishermen?

Ms Fraser: I spoke with Tim Surette yesterday. In fact, for those of you who don't know, Tim was in Ottawa. He received the public service award of excellence for a rescue in the north.

Mr. Verran: Not in Newfoundland, though.

Ms Fraser: Tim was in yesterday to receive his award from Minister Massé. When I was speaking with Tim it looked as though he'll be calling a meeting of the lobster group either the last week in June or the first week in July. We're just trying to tee up the dates now. So that's when I'll be down.

Mr. Verran: And you're coming down at that time?

Ms Fraser: I'm coming down at that time.

Mr. Verran: Have you any indication from the minister if he's going to accompany you?

Ms Fraser: No, I haven't.

Mr. Verran: Cheryl, you talk about the consultations, and there's always consultation with different sectors, but so often we - I say we, and I'm sure Joe would agree with me - hear from people in different sectors that they're not consulted. You say you've contacted the regional directors - and of course there's only one in our area - and he will be contacting certain sectors, but it appears to be the same people, a certain chosen few people, who they go to all the time. Many others are still left in a vacuum and don't know what's going on.

It seems to be that these people are selected because they have a kind of working agreement that things are going to be okay if they get these certain people consistently all the time. That's just not right, it's not fair, and it's certainly one of the things that keeps the theory out there that DFO can't be trusted.

Ms Fraser: May I respond to that?

Mr. Verran: Sure. I would like to hear more.

Ms Fraser: There are two points. The first one is, as you know, that sitting in the ivory tower in Ottawa sometimes it's very hard to choose the appropriate people who would be part of a working group. In this case, we're trying to keep it extremely small largely for efficiency so we can get out to the industry in early September.

I can tell you that whoever the region recommends and whoever in the end is chosen for our working group, their work will not become policy until it's adequately consulted around the country, both east and west, because it's both issues. So apart from that I would hope we're going to have very adequate consultations on the next steps.

I'm not eager to open this again, believe me, after what we went through last fall. If we can fine-tune it and if we can make it better - and it might be that there'll be certain fisheries that will want different things - we're open to looking at that as well.

If there are options that we can consider safe for northern shrimp that aren't applicable in the competitive groundfish fishery in South West Nova, fine, we'll look at it, but whatever happens there will be consultation and it will be open.

Mr. Verran: There's a strong view out there that it's the Cashin committee that's conferred with all the time and that they have the full say pretty well in what happens in our area. That's not a good perception.

Ms Fraser: Okay, point noted.

Mr. O'Brien: He tells me he makes more money than I make, too.

Mr. Verran: One other thing: would you be kind enough to give me an official notice when you're going to visit, when those meetings will take place in Yarmouth especially?

Ms Fraser: Sure, we'll be pleased to do that.

Mr. Verran: I'm sure Barry and I would be interested. The other thing is that it is guaranteed when you go to our area you will find lobster fishermen, not many, who will tell you that they can't afford to pay approximately $2,000 but they are going to go fishing and that this is crazy. So just be aware of it.

Ms Fraser: Okay.

.1705

Mr. Wells: Mr. Chairman, I want to go back to Mr. Rideout, if I may, to follow up on some of the questions asked the first time.

I still have some very serious concerns about what I consider to be a double fee for the person who will import. A salt fish dealer, for example, imports fish from Norway or wherever, it's inspected, and he pays a fee at that stage. Am I correct?

Mr. Rideout: He has to pay an import fee. If it's coming in for processing the fee is reduced.

Mr. Wells: But then he processes it. Under the quality management program, they follow it through the process and then before he can send it out again he pays another inspection fee.

Mr. Rideout: He pays a fee only if the importing country requires a certificate.

Mr. Wells: If you're going to be inspecting it when it's going out, what's the requirement to inspect it coming in? It's the same fish going out and it's the end product that's important, is it not?

Mr. Rideout: There's a whole series of things that fall into place when fish is imported. One is that the importer has to advise us of imports. There's a significant tracking system. We have to look at where the fish is being imported from, the history of that fish. That kicks in a system that will tell us whether or not that particular fish needs to be inspected. The costs are related to those inspections but also to the whole system that protects the import program of the department.

Mr. Wells: If it's coming into a QMP plant, do they not have controls in place that you can be satisfied with to reject fish that's not up to standard?

Mr. Rideout: We have that for fish coming from another QMP plant within Canada. On imports it's clearly the mandate of the fish inspection directorate of the Department of Fisheries and Oceans to inspect that fish or to ensure that it meets the minimum standards for health, safety and quality.

Mr. Wells: I understand those are the regulations, but does that make any sense to you when a few days later you're going to inspect it again?

Mr. Rideout: In terms of what I know about the import program, I think it makes eminent sense. I can go into some detail with you after this meeting if you want. There are a significant number of imports into Canada, and we've found that the inspections we've done on imports have identified issues that show the significance of having government intervention at that point. It's consistent with what we do across the board for all imported food products.

Mr. Wells: Are these problems that you're referring to that are identified by the QMP in place in the plant? Or are they identified by your inspectors?

Mr. Rideout: Well, that's my point. When an import is coming in we actually have a computer program called an INIM program, which identifies where the product has come from, what the history is. I don't know exactly how many import points there are across this country, but I'd suggest it's close to 100 if not more. It tells the last time there was an import from that particular producer, whether the import was a fail or not, what kinds of problems we had with the product, what kinds of things the inspectors should look for. It's a very sophisticated system. It's not linked to the quality management program. It's a stand-alone system and should be stand-alone.

We have product coming from countries all over the world. In this particular business, not necessarily the fish business but the import business, we have some excellent importers in Canada, but there are those who will buy a product that may have been rejected in another country and try to get it into Canada. This is to benefit from the Canadian name that is on the product or associated with the product. We have this quite sophisticated system in place to protect the integrity of the import program and to ensure that consumers or those producers who are getting the fish are not getting something that isn't appropriate for entry into Canada. We don't feel that's something we can hand off to the industry.

.1710

Mr. Wells: If I have time for a question after Mr. Culbert, I would like to ask one more.

Mr. Culbert: I don't know about the particular incident Mrs. Wayne mentioned, but further to that, Cheryl, when it comes to salt-water elvers or eels that come into our fresh waterways, my understanding is that it's an experimental permit and not a licence at this point.

To follow up on that, it seems highly unfair, to be honest with you, that it's gone on and continues to go on as an experimental permit, which is very limited. It limits not the quantity but the number and quality of the people in it, limits it to a select few who can make big bucks. It doesn't seem fair to the others who would be fishermen if there was a licence and they could get one. I think it's something for your consideration to review that, at least for next year. There should be some consideration of a minimum number of licences that could be extended in a region to put some fairness to it.

Ms Fraser: We'll do that. The committee may also be aware that we have an over-abundance of eels in the Great Lakes that we'd like to get rid of.

Mr. Culbert: Maybe we can do a trade-off or something.

The Chairman: Maybe we could ship them over to the Chinese. We ship our other elvers over.

Ms Fraser: We can't find a market.

Mr. Culbert: You can't find a buyer for those freshwater ones. They're a little different, I understand.

The Chairman: Mr. Rideout.

Mr. Rideout: I'm sorry, I was a bit erroneous in my response to Mr. Wells' question. We are in the process of developing a quality management program for importers. I feel very strongly about protecting the integrity of that program, but we are looking at how we can work with importers to implement some of the good aspects of the quality management program into the import program. My suspicion is that this will have a much more pronounced effect on the larger importers than on what I suspect are the smaller importers Mr. Wells was referring to.

So I just wanted to clarify that we will be coming forward with a proposal. We're hoping a communiqué can go out shortly to explain to importers and processors this quality management program for importers. I apologize for that earlier.

The Chairman: Did you conclude your answer to Mr. Culbert's question?

Ms Fraser: Yes.

The Chairman: I'd like to ask a question. Could I ask a question?

Mr. Wells: Mr. Chairman, we'll allow you to ask a question if you'll allow me to have two quick ones when you're finished, even if the bells are ringing.

The Chairman: Agreed.

I'd like to ask Mr. Hodgson about marine fees, how it's going, if there are any glitches. I've been asked questions about the gazetting, what financial or legal authority you have now. Is it the Oceans Act or is it -

Mr. Hodgson: It's the Financial Administration Act.

The Chairman: Could you clarify those types of things and give us an update on the fees?

Mr. Hodgson: The program came into effect on June 1 and is activated in all three areas. We actually had a Marine Advisory Board meeting today. In fact, it may still be going on. The west coast representative brought a replica of the first invoice, which was filed with, I think, Holland America Line. The bills are going out and the money is coming in. That will be tracked and we will be keeping the Marine Advisory Board and you advised of how it is unfolding.

The economic impact study is now launched. The consultants are Hickling, in collaboration with Booz-Allen and Hamilton. They were at the meeting today with the Marine Advisory Board and described the process they were going to go through. There was generally quite a high level of comfort as to how it would unfold. It's in four phases. They're expecting to be completed in mid-October, so that is launched and under way.

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The various meetings are being set up across the country through the regional marine advisory boards to meet with the consultants and to ensure that all those who have concerns about the possibility of impact are able to meet with the consultants and alert them to areas of particular sensitivity.

The Chairman: Is that just on shipping, or is it on dredging and ice-breaking too?

Mr. Hodgson: It's being jointly overseen by Transport and Fisheries and Oceans and covers a broad range - in fact sort of seven aspects - including the seaway, the port privatization or the port commercialization program, dredging, and ice-breaking. Well, ice-breaking and navigational aids are part of the marine services fee. Pilotage also is included in that. So the full range of initiatives that are being pursued by both of those departments is being included in the impact analysis.

The Chairman: Is there any detrimental effect on companies yet - on shipping companies? Have any gone out of business yet?

Mr. Hodgson: None have gone out of business yet, and I think there's a reasonable degree of confidence that this isn't going to... The amount at this stage is sufficiently modest that we're not expecting a dramatic impact. There are one or two anomalies that have been brought to the attention... They are not show-stoppers, but ones that are noted and are being examined to ensure that we rectify them in due course.

The Chairman: Thank you very much.

Mr. Wells: Mr. Rideout, I have just a few more questions, if I might. I appreciate your going down to do these consultations, and I think many of the questions I'm raising today will come up over the next number of weeks, as you would expect. I'm sure you've heard some of these before.

There's a real expectation, based on your performance to date, that you're listening to them. I think you've raised the expectation within the industry that you are in fact going to listen to what they have to say. I think you're on the right foot with the industry. I'll just put that kind of pressure on you before you go down.

Do you feel that you would be prepared, or your inspection branch would be prepared, to seriously consider proposals to re-engineer the delivery of inspection services, even if those proposals might result in staff reductions or in the loss of turf, so to speak, or the DFO inspection service?

I'll go to the next question. Well, I'll let you answer that. I have another one.

Mr. Rideout: I guess my response is that it's exactly what re-engineering and QMP is about - not necessarily staff reduction. We're not into protection of turf. We're into ensuring that we can deliver the very best fish inspection system. We'll take on all ideas, and I hope industry will be open to hearing some of our ideas as well in terms of how we'd like to do some things.

Mr. Wells: Will the industry's ability to bear additional costs be considered as you re-engineer the present QMP?

Mr. Rideout: Yes. In fact, one of the key problems that we see with the QMP program from the point of view of industry is the paper burden that is put on the industry. We're looking at ways in which we can reduce and in some areas eliminate that paper burden. We're also looking at working to see how we can develop the right kinds of computer programs that might assist those members of the industry that are set up for that to facilitate the process even more.

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Mr. Wells: To Ms Fraser, are the recently discussed fees for recreational boaters in your mandate as well?

Ms Fraser: No, they're in coast guard.

Mr. Wells: Are you able to answer specifically on the criteria for these recreational boater fees and the rationale behind them? Are they part of the $50 million? I'm assuming from what you said that they are not.

Mr. Hodgson: No, they're not.

Mr. Wells: How much do you expect to collect from the recreational boating community?

Mr. Hodgson: We're aiming to collect $14 million, which constitutes whatever proportion it is of the estimated $110 million spent on recreational boating each year by the coast guard.

Mr. Wells: What are the criteria? In other words, if I have a canoe am I paying? If I am, how much?

Mr. Hodgson: No, it's anything powered by 10 horsepower and above.

Mr. Wells: And the rationale for these fees?

Mr. Hodgson: The rationale is that $110 million is spent on recreational boating. It's in line with the government's policy that those who use the system should contribute to the cost. It is paralleled, as I was explaining earlier, by other initiatives intended to ensure boater proficiency and to improve search and rescue and enforcement services. It's a more rigorous approach to the management of recreational boating, coupled with a move to have users contribute as opposed to the taxpayer.

The Chairman: Have you exhausted yourself yet?

Mr. Wells: No, I have some more. It's just our time.

The Chairman: Keep going.

Mr. Wells: This is more of a technical question for Mr. Rideout. I don't have the new regulations in front of me, but I have some notes from the new regulations so I hope I have the information right.

Mr. Rideout: The proposed regulations?

Mr. Wells: I have a note here that says that section 6.4 of the new regulations imposes a $50 fee for each shipment of fresh fish. What regulation would that be from?

Mr. Rideout: I believe that's the Canada Gazette notice.

Mr. Wells: That's right; that's exactly where it's from. Do you have copies of those with you?

Mr. Rideout: I have my own copy here. I can give you this.

Mr. Wells: No, I have it back in my office. I just didn't bring it. I had made a note on it and didn't bring the source of my note.

Mr. Rideout: Did you want my copy?

Mr. Wells: No, I just wanted to ask you a question about it. That's the same item we spoke about last time, is it not, when we talked about every shipment being inspected? Is that the same issue?

Mr. Rideout: If you're talking about imports, we found that some small importers expressed concern that while we were saying we would charge a fee per lot within a shipment, in a shipment they may have 10 or 15 different lots - 100 pounds of this, 500 pounds of that, whatever. The big importer could have a shipment 10, 20, 30, 40 times the size but only one item and one lot. So their fee was $50, whereas the small importer would be charged a fee that could be, in the examples, up to $1,500 or $2,000. That's why I was saying that one of the proposals we are considering is putting a cap on the lot fee per shipment.

Mr. Wells: Do you know how many shipments of fresh fish were imported into Canada last year?

Mr. Rideout: No, I don't have that figure.

Mr. Wells: Do you have in the calculations of your $4.8 million how much you will be collecting from this $50 fee?

Mr. Rideout: If you can bear with me a minute... I don't know if I have that broken out.

Mr. Wells: Maybe while you're looking I can ask you if you've projected how much of that $4.8 million you'll be collecting from the registration fee.

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Mr. Rideout: From the registration fees we estimate we'll be collecting somewhere between $1.5 million and $1.8 million, but probably it will work out to around $1.7 million.

Mr. Wells: How many facilities is that based on?

Mr. Rideout: It's based on 900.

Mr. Wells: That is somewhat less than the number registered now.

Mr. Rideout: Yes. I might have gone through this the last time, but some processors have several registrations. They hold them because they feel they may want to do that in the future, and they don't recognize that they don't have to get registered for it every year. They can just get registered for it when they need it. We feel that some of those registrations will actually stop.

As you recall, there is in the Canada Gazette proposal a $500 fee for low-risk and a $1,000 fee for high-risk registration. If somebody is registered for a high-risk registration and realizes they're not going to be doing that process over the year, then they would presumably not pay the $1,000.

Mr. Wells: Would you provide me with the basis of your calculation to show how you're raising the $4.8 million?

Mr. Rideout: Yes.

Mr. Wells: There has to be a breakdown, I'm sure, of how much you're going to collect from inspection fees, how much you're going to collect from each area of your fee structure, and the basis of that calculation.

Mr. Rideout: For the whole of the $4.8 million? Do you want me to provide that through the committee chair or to you personally?

The Chairman: To the clerk.

Mr. Rideout: Very good.

Mr. Culbert: I had one little incident and I met with the chap last week and was going to send it over to your office. The chap had worked out a deal, believe it or not, to ship sand to New York to the construction industry for various concrete components and so on. I guess it's the case that in the state of New York they've run out of quality sand. They have been working to find these deposits of sand, which they found and loaded them on a barge. He was telling me that with the new fee structure, since it's a very low-value item, it really hits the profitability. Is there anything we can do in those situations? Fees are fees, I know, and are established for everybody, but is there any flexibility?

Mr. Hodgson: The intention has been that a certain degree of flexibility is accommodated in the proposed fee structure. As I have said, to the degree that commercial difficulties come to light they are being noted for adjustment, as long as they can be defended in terms of a general application across all users.

Undoubtedly that sort of activity will come under scrutiny in the study just being launched. He may want to get in touch with the consultants or the regional management advisory board to explain his problem and have it taken into account in the report that will be filed in October.

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Mr. Culbert: So when we send it into your office it will be forwarded to the consultant.

Mr. Hodgson: We will do that.

Mr. Culbert: You will make it available.

Mr. Hodgson: Yes.

Mr. Culbert: Okay. I have all the information. It's going in. As a matter of fact, his covering letter was faxed to me today.

Mr. Hodgson: We can look at it.

Mr. Culbert: Great. Thank you.

The Chairman: I want to thank you three very much. It's been a very informative afternoon.

Is this your first time, Cheryl, since your promotion?

Ms Fraser: This time around, I guess.

The Chairman: We look forward to seeing you again. Thank you all again.

This meeting is adjourned.

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