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THE STANDING SENATE COMMITTEE ON Fisheries and Oceans

EVIDENCE


OTTAWA, Thursday, April 14, 2005

The Standing Senate Committee on Fisheries and Oceans met this day at 10:45 a.m. to examine and report on issues relating to the federal government’s new and evolving policy framework for managing Canada’s fisheries and oceans.

Senator Gerald J. Comeau (Chairman) in the chair.

[English]

The Chairman: I call the meeting to order. Welcome, everyone.

In October 2004, the Senate gave this committee an order of reference to examine issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans. Much of our deliberations thus far have centred on giving individuals or fishing operations some form of private ownership of fish stocks in the form of individual quotas — IQs — and transferable quotas — ITQs. In Canada, IQs and ITQs have been gradually introduced over time in one fishery after another. They are now in place in over 40 different fisheries and account for over half of the value of landings.

The subject of privatization generates substantial concerns and heated debate. New Zealand is considered by many to be one of the world leaders in fisheries management and a place where economic theories on private fish quotas have been extensively put to the test. The committee planned to travel to New Zealand but was unable to get the necessary funding from the Senate.

We understand that the High Commissioner from New Zealand is quite knowledgeable on the issues of fisheries, having served on their fisheries committee. I understand that he initially approached the issue of ITQs and IQs with grave reservations but now wholeheartedly endorses the concept. We think it will be valuable to hear about it from a country that has put this economic theory to the test.

We are pleased to have before us Mr. Graham Kelly, New Zealand's High Commissioner to Canada since July 2003. Prior to becoming High Commissioner, Mr. Kelly was a member of Parliament from 1987 until 2003 for the New Zealand Labour Party. Among his responsibilities was Labour Party spokesperson on fisheries.

Mr. Kelly is accompanied today by Mr. Andrew Needs, Deputy High Commissioner.

Mr. Kelly, welcome. We are pleased that you will speak to us about how things have worked out in New Zealand in the fisheries industry.

His Excellency Graham Kelly, High Commissioner, New Zealand High Commission: Thank you, Mr. Chairman, and senators. It is nice to be back in this environment.

Andrew Needs, Deputy High Commissioner, who is with me today, has no particular expertise in fisheries other than he likes fish. If we can provide you with any further information following this meeting, either formally or informally, we are willing to do that.

I was put on the committee dealing with fisheries largely as a punishment. I did not know anything about fish other than they live in water. I ended up being the opposition spokesperson on fisheries and was on a steep learning curve.

I came to this issue from a position of ignorance but with an open mind about how the system worked. Having come from the left, in the Labour Party, at the start I opposed the privatization of our fisheries through the introduction of the quota management system two years before I came into Parliament.

I have done a 180-degree turn because it has been like a modern miracle for us, for ecological and conservation reasons alone. It saved some of the fisheries that were under threat prior to the introduction. It has allowed us to exploit the fisheries while maintaining a sustainable environment where protection of the fish stock is the primary reason for being involved.

New Zealand has not had a history of being a fishing nation. We have more water around us than any other country in the world. You fly twelve hours one way and three hours the other to find the next piece of land, or nine hours to the Antarctic. We have relied on agriculture as the basis for any economic activity, except for our indigenous Maori population, who used fish, but only for their own food.

After the Second World War, with the rise of Japan, we gradually saw Japanese fishing vessels in our waters, particularly in the 1960s and 1970s, and some of our fish stocks came under some threat. However, the Japanese could come right into our waters because we were not catching the fish and, under the law of the sea, if you do not catch it, someone else can. This economic activity was going on and we were not part of it.

We had some small fishers, mainly Italians, who worked off the beach or small wharves and caught enough fish for their own fish and chip shops, but that was about it.

Overfishing and the sustainability issue are what drove the New Zealand government to look at what we could do, first, to exploit the asset ourselves and, second, to protect the fisheries. The government decided to introduce the quota management system and commercialize the fish stock. This was the first time it had been done in the world, in 1986, so it was an experiment. They gave the quota to the existing fishers on the basis of catch history. They were given the quotas; they did not pay for them.

When they were given the quotas, they had no idea of their value, but they very quickly increased in value, as they could buy and sell them like second-hand cars, and many of the small fishers sold their quota. This was a supposed windfall that nearly all have subsequently bitterly regretted. It affected the livelihood of small fishing communities because once they had sold the quota, they could not then afford to buy it back because it multiplied in value, and we started to see the aggregation of quota.

At that time, our Maori population comprised about 13 per cent of our total population. The Treaty of Waitangi, signed in 1840 with the British government, guaranteed them their fisheries, forests and lands. That was subsequently ignored and they lost nearly all of them. Under this deal there was separate legislation that guaranteed Maori 20 per cent of the fishery, so that was given in the form of quota. In one case, the government bought a fishery company that represented the 20 per cent and gave it to Maori.

Our Maori have done very well since. They now own 60 per cent of the quota. That has been a success story beyond anything ever imagined.

We introduced ownership of the quota on the basis that no foreigner could own more than 24.9 per cent. We also made sure that the stocks on quota were allocated out to the 200-mile economic zone, which meant no foreigners could come in at all. We had a problem of not enough money, skills, expertise, boats or fishermen to do the job. The New Zealand companies that were allocated the quota made joint-venture arrangements with Japanese, Norwegians and anyone else who could catch fish. They caught the fish on our behalf.

We divided the country up into quota management areas. If you were allocated a quota of a particular species, you had to catch that within the area. We had satellite tracking and observers on the vessels, and if you fished beyond the amount of quota or the area, you were in deep trouble. I will deal with those penalties later because they are severe.

It was either a wet or dry charter, a term the fishing industry uses for whether you employ the crew with the hiring of the vessel. It was often cheaper to employ the crew because quite a large number of them came from countries like the Philippines and other developing countries and the level of their wages was poor. In one case, a Russian crew were getting U.S. $4.50 a day for a 12-hour day. At the start, we built our fishing industry, in part, on the backs of exploited Third World or other labour.

Those vessels sometimes processed the fish, or it was undertaken on shore and the growth and the "New Zealandization" of the industry took some time. The quota management system was introduced in 1986 and the Maori fisheries legislation in 1991 or 1992, so you can see how fast this has grown. Equally, the development of the industry, and the New Zealand ownership of vessels and factories and the use of local crew have also increased. Fishing is now our fifth largest export. Previously, it was nothing — 98 to 99 per cent of all fish is exported. It is a highly successful story.

In the case of our Maori population, we have set up a Waitangi Fisheries Commission to allocate the quota to the tribes. Some tribes have historically lived on the coast and fished, and others inland did not fish at all. What do we do with them? They claimed everyone should get a share of the deep sea fish. That is what has transpired.

Let me deal now with the stakeholders. It might be useful if I hand out a brochure about how our system works. I do not want to go through it in any detail, but you may have some questions about it.

Canadians seem to consult to death so as not to offend each other. In New Zealand we have learned a new trick, which is consultation with the stakeholders. There is a significant amount of consultation with the stakeholders. Probably two-thirds of New Zealand kids fish because everyone in New Zealand lives no more than two hours away from the sea. That is what happens in a long, thin country. We have many rivers and lakes, so people fish them. The stakeholders are commercial, recreational and environmental groups, Maori as well as regional and local government — in your case you can think about provincial government as well — and other agencies that have an interest. You also have to consult with the "greenies" and environmental groups, who drive you to distraction when you are trying to deal with this and are always in your face.

The Ministry of Fisheries oversees this and pulls it all together. The Minister of Fisheries is quite proactive in negotiating the quota for the year.

As this is an ecosystem-based management system, the first requirement is not to accept the proposition from the commercial companies that there is always fish left in the sea. If you take a photo when you are fishing, you cannot see anything. If you are up in a plane and take a photo of sheep or trees, you can see what is there. We have had to develop databases with our scientists to work out the quotas. When the quota is allocated under a particular species each year, it is done on the basis of the total allowable catch. That total allowable catch is an assessment for recreational use and an assessment for commercial use and the total allowable commercial catch is set within that. Then you have to work out how much catch you should have, in case things go wrong.

All these things are being done in the lead-up to October 1, which is the commencement of our fishing season. If you are catching a particular species, you may catch that within the first three days. Then you have 362 days of not catching any more. You do not have the indecent haste that I have observed in Canada, where the boats all rushed off to catch cod, you overfished and the industry collapsed. People can take their time and they can wait for a vessel coming from overseas. Some vessels are specialists in particular species and it does not always pay us to own them. It is better to hire them because there are almost more vessels for charter or hire than fish.

The environmental principles are important because you can never reconcile those with the commercial pressures. There are always arguments. You need a strong-willed Minister of Fisheries who does not cave in to the commercial industry. If he does, you are in real trouble. Our orange roughy fish, for example, which is a deep sea fish, live around the tops of little mountains under the sea. You have to trawl for those without hitting the sides of the undersea mountain. We believe they live for 70 years.

If you make a mistake, you will be dead and buried before you know whether you have rectified the problem. In any event, if you overfish, the chances of any survival rates are minimal. We have learned about those kinds of issues and that has been very useful.

We take a precautionary approach. Everyone who is managing the fishery will fall on the conservative side of the ledger because you do not want to make a mistake. If you make one mistake and get that total allowable commercial catch wrong, you may not have a chance to make another.

I would like to say something about fishing communities in New Zealand. Approximately 4,000 foreign fishing crew come in each year under the joint venture charters.

We have now developed several large New Zealand fishing companies, including Maori fishing companies, employing about 10,000 people in New Zealand. We are processing much more fish onshore but some of the foreign companies that catch the fish will sell it and say it is Japanese. They will claim that. They are doing that with our kiwi fruit in China and putting kiwi labels on it. That is the problem with how you manage that part of the system. Is it Canadian fish or New Zealand fish or someone else's fish?

We have had some problems with low pay. We had a massive amendment when we rewrote the Fisheries Act in 1996. The New Zealand Minimum Wage Act now applies to foreign fishing crews. I think the New Zealand minimum wage is about $9 an hour now, which is about $8.20 in Canadian terms. They all have to get that. We are now not exploiting foreign labour in developing our fisheries.

The second thing I was able to fix is when companies went broke, because joint-venture companies go broke, either the New Zealand owner or the foreign owner, you end up with all of these ships tied up in your ports and the crew are not paid. Where do they go? I introduced a private member's bill just three or four years ago, and they now have to be repatriated to the port from which they left. They have to be paid, and they can claim on the vessel for their wages and so on. That has cleared up one of the messy situations that occurred.

On enforcement, one thing about the fishing companies, as they were, is that they all told lies, or almost all of them. They would say black was blue. They all had to be trained on observing the law and how do you do that. There was the bank of fish. Think of a commercial bank and everyone has money in it. We all have our accounts. If one of you decided to rob it, and we knew because you were taking money out, in this case fish, what would the rest do? You would not hold back. You would not wait to tell a policeman. You would confront the person pretty fast. What we ended up with, and it happened quicker than we ever thought, was the fishing companies would report on each other for overfishing — unashamedly. They were unashamedly robbing the bank. Now they have some self-interest in the bank staying there and everyone having just their share of the account, like a commercial bank, and that is working.

We still have to have fisheries officers on the vessels. We have satellite communication systems attached to all of the vessels, and we know where they are. One company was fishing outside of the quota management area further up the coast. How did we catch them? One person made a call on a cell phone, and it went up to the satellite or wherever and we worked out that they were fishing outside of their area. They all ended up in court. They lost their vessels, quota and factory, because it was all taken away. It did not take long before you wanted to observe the law, even if no one was looking at you.

Those mechanisms have been helpful. The seizure and forfeiture of vessels has been an important element. Under the original law, the vessel, the quota and any other assets, such as trucks or factories, all had to be seized. The Minister of Fisheries had them, and there was no option. Without that, this system would not have worked. You have to be bloody minded and ruthless in how you deal with this when you are starting. That is one of the best lessons that we learned. You just have to do things like this. There were no appeals. I am French Canadian, I am English Canadian, none of that nonsense. You had to make this work right from the word go, and that was a very good way of doing it. It did not matter if you were as good looking as Senator Johnson. Hard luck, you lost everything. There was no compensation for that.

The fines now are up to half a million dollars. We have increased those recently. It is pretty severe. Often, the captain of a foreign vessel, a joint-venture vessel — and the Koreans are good at that — will say they did not know and did not realize or do not speak English. Well, hard luck. They lost their vessel, and the New Zealand partner lost all their quota. In spite of it, some of them will still try it on when they think they can get away with it.

One of the problems within the system is with the commercial pressure to return a dividend to the shareholders and to catch the quota, or you catch fish that you have not been given quota for — the bycatch, they call it. The original legislation said you could not bring into port any fish that was not a part of the quota. We had vessels with maybe two-thirds, maybe half, maybe a third of the catch that they were throwing back over the side. It was washing up on our beaches. People wanted to go for a swim, and there were all these dead fish. That was not very bright. We then devised a system where you had to land the fish, you had to land your bycatch, and we gave a value to that. We paid them to bring it in, not the commercial value, but the "deemed value." The minister deemed the value, and that encouraged people to bring that in. We have avoided that problem happening, and if they accidentally catch fish, if they can buy quota to offset it, that is fine. That is now generally working well, and it was a real problem at the start.

There has been tremendous growth of Maori fishing, Maori ownership and expertise. They have had increased employment, and of course it is nearly all exported, and the skills have been taught to those people, otherwise they would have gone out in a canoe or something. It has just been fabulous. They have employed their own accountants, lawyers and so on. It has run right through the system. It is not just the crew that haul the fish on board.

The exports for New Zealand are not now just fish. We are exporting a fish with peas and beans and carrots, and the fishing companies own the land and are growing the peas and beans and carrots. It is all pre-cooked and sold in New York, and you go and buy it from the supermarket, put it in the microwave for 3.5 minutes and it comes out perfectly. They are doing the same thing for hotel chains, rest homes and hospitals. That has been a bonus. It is being sold on the basis that it is clean and green and fresh, which it is. It is high quality. It is often deep sea fish, which is different for some of the markets in the world.

Unlike the Atlantic, where they have overfished and you go to a port and see them bringing in fish about this size, we are very strict about the size of the fish we catch. In the case of the recreational fishers, there is a handbook that every recreational vessel has to have on board. On every beach, every wharf, there is a measuring device set up with a hole in it for the size of the fish that can you bring in. Whether it is lobster or any other particular species, you can measure the size. There is no excuse for leaving to go home not knowing the size of anything. You cannot say, "Well, I forgot to take my ruler."

Every excuse is used. We had one case with a minister of religion on the shore, dressed in his cassock and looking like Moses, and he had all his congregation of Pacific Islanders there strip mining the beach. They were taking everything that moved. He said it was for the Lord. Well, the Lord did not save him.

They were taking undersized fish. They were all fined, and he was fined the most. You have to be strict, particularly in recreational fishing.

Our new immigrants from Asia are one of our biggest problems, with their lack of understanding of conservation and the environment. We often see them strip mining a beach of periwinkles and having a boil-up. If you are interested in the next generation, you cannot do that. You have to have a method by which the ethnic communities are not favoured. Our indigenous populations will say that it is their right under their treaties. Well, it is not their right. They do have access and fishing rights that others do not, but they cannot take undersized fish and they cannot take more than the allowed catch per day for recreational fishers.

Auckland has a population of 1 million and there is water just a few miles on either side of it. The beaches there have had to be closed to fishing because people will go out in the middle of the night and try to beat the system. Other than that, we have held the line on sustainability issues quite well. As I said, it is one of the success stories.

I will conclude with a story about small communities. I mentioned that when people were first given quota they saw it as a windfall and decided to sell it. When they realized that without it they were not allowed to fish, they started whining to the politicians. The politicians were being told that the awful government was denying them their right to an income. Well, it was, but they had signed it away.

When you start the system, you must ensure that people understand what rights and income they will lose if they sell their quota, because they do not get a second chance unless they have the money to buy it back.

The Chatham Islands are about an hour's flight east of the South Island of New Zealand. This is a windswept place with hardly any trees. Grass grows, but that is all. There were both farmers and fishermen there. When the quota management system came in, they got their share, and it was quite a lot. Most of them, if not all, sold their quota to what they considered to be big companies. They stood looking out of their lounge windows at night at the lights offshore where Aucklanders were taking their fish. There were only 750 people on the island, and 749 of them came to a meeting to tell us how badly they were treated.

Recently, the government created quota for new species and gave it to the county council with the stipulation that they could not sell it. They could lease it but could not sell it. If they did, we would take it back. They got some quota back, which has satisfied some of them to some extent. That is an idea that you could apply on a much wider scale.

The Treaty of Waitangi Fisheries Commission has been leasing quota since 1992 because they could not get agreement among the tribes on how to allocate until last year. In some cases, in the early stages, they gave some of the quota out and some of the tribes sold it. Now they are coming back for a second go. Someone who is now dead who was running the tribe and did not really represent their interests sold it off.

The idea of perpetual leasing is not a bad one. They can still allocate quite easily within the tribes. In the case of the fisheries commission, they have now sorted out who gets what in the deep sea and inshore fisheries and they have allocated half of it. If they want to sell it, that is their choice, but the other half will be leased. Perhaps in 20 or 30 years, when everyone is used to the idea, we will not be seen as patronizing.

However, when you do that sort of thing you will be accused, certainly by indigenous people, of being patronizing. I am unashamedly patronizing, because I have seen the leaders of some of those communities selling that asset. I do not know whether they consulted all their people, but, even if they did, what about the next generation? I feel very strongly about that. You are not here, as politicians, to make decisions that will only have effect until you and the current population die. Legislators have an intergenerational contract. It is your responsibility not to sell your country up the river. I think you can build in certain safeguards and still get the best of the commercial pressure.

I would be very happy to take questions.

The Chairman: Thank you for that excellent briefing.

Senator Mahovlich: Your Excellency, thank you so much for coming.

Do you think your program could work in a country the size of Canada? Sometimes smaller is better. New Zealand is very regulated and I do not know if a country of this size could manage its fishery in the way that you have.

Mr. Kelly: I would not have come here today if I did not think you could do it. It was certainly easier for a smaller country to try this system first, but now the world is copying us. Many other countries have adopted the quota management system that we introduced, and I have not heard one complaint from any of them, and they are all larger than us, although perhaps not as large as you. You should ask that question of them. It would be a good tour for the whole committee to visit those places and make some comparisons.

The fact that you have a large land mass with rivers and lakes is no different from having more sea. We have quota management systems for eels and all sorts of freshwater species.

Although you have challenges with your provincial governments, I see no reason why this system cannot straddle provincial responsibilities.

If you want small-time fishing and not to take any risks, you keep what you have. Do not go into the system, because once you unleash that system and the commercial pressures, it has its own life. If you do not want a commercial industry and you do not want to see some small places close down, then do not do it. However, you could try a modification of our system, but in the end, to try to protect every tinpot town on the coast is impossible if you want an industry. You will not all be here for that much longer and some other group will come in — there are new politicians coming in — and someone will buckle to some pressure, and even if you do not, the commercial pressure will drive some of those communities to sell their quota. It will happen in spite of you or any legislation.

One thing I should say about the legislation is that we have restrictions on ownership. You cannot aggregate more than so many per cent of the particular species.

The Chairman: We have the same thing in Canada, by the way.

Mr. Kelly: Even with that, there are pressures.

The Chairman: It is not allowed. I do not want to interrupt. It is not applied. The restriction is there, but the DFO turns a blind eye to it.

Mr. Kelly: We have restrictions of between 10, 20, 25, 35 per cent and so on. There is always pressure on you to lift the limit, and again you have to have a strong-willed minister or whoever is dealing with this to withstand what people argue. They will argue economic activity or that there will be new technology we can bring in from somewhere or there will be more jobs. They will argue all these things and in the end, once you start caving in like that on the aggregation limits, you are concentrating the power in very few hands.

That will happen with some species anyway, but you do not want it to happen where you will needlessly destroy jobs and communities.

Senator Mahovlich: I have one more question. Has fish farming been introduced to New Zealand?

Mr. Kelly: Yes. We have mussel farming, and I do not know whether that brochure has a photograph of that. I will leave you a document here that shows mussel farming in the fiords or the sounds. There were arguments about runoff from fertilizer or sewage affecting the quality of the mussels. There are some risks in that. If you put those fish farms close to populations, those kinds of risks can increase, but can still happen from farming.

If you go to Britain and drive around the countryside, there are a lot of trees by the road. If you come to New Zealand, you do not see trees by the road. The grass comes right out and we get the last inch that a cow or sheep can eat. We maximize the effect. One downside of that is the runoff when it rains, and we get a lot of rain, with fertilizer going into the waterways, the lakes and rivers and into the sounds. There is a move on to start planting again an area at the side of the road or the side of the river with trees to try to absorb this kind of runoff. That will allow — if we get that right and it will take a few more years — us to have more farming in lakes and sounds.

The fish farming that we have, because it is also under the quota management system, is highly profitable. We are exporting greenshell mussels. They are getting good prices for those.

Senator St. Germain: Thank you, Your Excellency, for appearing this morning. If it was Senator Mahovlich who had the brilliance to invite you he should be complimented as well, because you have given us an excellent overview.

My question relates to the science. How reliable do you think your science is? I believe that our cod fishery was being monitored by our scientists. Is there something special about science in New Zealand? Is it easier to monitor scientifically? You mentioned at the beginning of your delivery that you can take a picture of the sheep and the trees, but you cannot of the fish. Is the science sophisticated enough to ensure that species are not endangered?

Mr. Kelly: We have — touch wood — been okay so far. We came close with the orange roughy species when they miscalculated and then cut the allowable catch for a few years, but for the rest of the stock, because we keep moving it up and down, that means some years, with everyone owning quota, everyone suffers. The government arbitrarily cuts the quota, after all the consultation, and everyone has to catch proportionately less. It has been amazing how quickly the stocks rebuild. Therefore, you will go back to the level you were at and maybe up, and it is a windfall when it goes up.

The short answer is we seem to have got it right so far. The information that our scientists have is available to yours, so there is nothing we are doing that you would not be able to do. We would be very happy to share any information with you.

Senator St. Germain: Basically, you feel that the stringent enforcement really contributes to the fact that your stocks are not endangered by virtue of overfishing?

Mr. Kelly: I do not think you can look at the scientific evidence and the establishment of the quota each year, the levels, without looking at the enforcement.

Senator St. Germain: What size of a bureaucracy do you have for the fisheries? We have often been accused of having more bureaucrats than fish. Obviously, to police as effectively as you seem to have presented this morning would require a considerable number of enforcement officers and a huge bureaucracy to manage that. Have you found a way of doing it with fewer people?

Mr. Kelly: Our exports are $1.3 billion a year and our budget for fisheries is $86 million, but it costs a lot more than that to run the system. Every month, every fisher is sent a bill for user charges. They are essentially paying for the government to do this. I do not know what that bill is, but it is a lot more than $86 million. Therefore, it is almost a hundred per cent user charges. They keep going up and they keep squealing and saying it is unfair and they will go out of business, but they do not. That is the only reason we can do it without a lot of bureaucrats.

We have honorary fisheries officers who patrol our rivers and lakes and coastline, but we do not have as many of those as everyone would like. Often, they take risks in some of those outlying areas, where they will be attacked with a baseball bat or something. That happens.

The fisheries officers who are on the payroll are mainly dealing with the commercial industry; they are observers on vessels, monitoring on the wharves, following up complaints. No one is allowed to purchase fish that a commercial vessel brings in, as we have registered fish receivers. I think you can sell five fish or whatever, but there is a minimal amount you can buy as a vessel comes in. You have to sell to a registered fish receiver, and they are monitored strictly by the fisheries inspectors. All fish sold have to go through that system. Then we have, like you, the GST, so there is a GST trail and that is followed as well.

Again, there are severe fines if you try to cheat the system. While a fish receiver is not put out of business like someone who is catching fish, every now and again someone will end up paying a reasonably hefty fine, and that generally keeps them honest.

Senator St. Germain: You have your Maori people. We have 600 different Aboriginal nations in this country who are vastly different from each other, from the Haida on the West Coast to the Mi'kmaq on the East Coast. Are the Maori basically one community in New Zealand?

Mr. Kelly: They all speak the same language, so they are much more cohesive than is the case here, where they have been separated for centuries.

Could I say this: Since the 1950s, about 90 per cent of them have moved into the suburbs. They have shifted from the rural areas.

Senator St. Germain: And they have land holdings in these suburbs, do they not?

Mr. Kelly: They have two kinds of land holdings. They will own their house in the suburb, and the tribe will communally own land, or fisheries or the forests.

The Chairman: This is one of the areas, Senator St. Germain, that we do want to know more about. It is something I had not really thought of before, that the Maori are quite different from the native people of Canada; they are one group. They are not something like 600 nations.

Mr. Kelly: No. There were seven canoes that came in 740 from Hawaiki, so there are seven tribes. They all held each other's hands to stop them from sinking on the voyage. Once they got to New Zealand, they started fighting and eating each other; so there have been Maori wars ever since then. Now they are learning to get along with each other. They will argue about their allocation of quota for their deep sea or inshore fisheries, but they will not go to war over it.

Senator Johnson: It was interesting when you were talking about the Maori. Your presentation was excellent.

The legend is, of course, that New Zealand was fished out of the sea by the demi-god. Who is the demi-god, Maori?

Mr. Kelly: Maui.

Senator Johnson: That is the Maori legend. I am interested in asking you about the Maori because they were the fishers before anyone else. The settlement that you reached with them, the Treaty of Waitangi, does it still provide that 40 per cent of the fishery is done by the Maori?

Mr. Kelly: Sixty per cent now. They went from nothing to being given 20 per cent of the quota in 1992, to now owning 60 per cent of the total quota. The fishing system was brought in by Parliament in 1986, but the separate piece of legislation to settle the Maori fisheries' claims was enacted in 1992.

Senator Johnson: How many other New Zealanders are employed in fishing?

Mr. Kelly: There are 15,000 all told, of which half would be Maori, I would guess; I do not know the figures but I would think half.

Senator Johnson: That includes the processing industry as well?

Mr. Kelly: Right through, from being on the boards of these companies to being the chief executive, the accountant, the driver, the fisherman, the captain, whatever.

Senator Johnson: Is this an increase since the QMS was introduced in 1986?

Mr. Kelly: Yes. They were doing almost nothing prior to that. Nor was anyone.

Senator Johnson: When did New Zealand all of a sudden tune in?

Mr. Kelly: Wellington Harbour is a bit like San Francisco or Hong Kong. I can remember driving out and looking at Wellington Harbour and counting 30 or 40 Japanese fishing vessels. People realized that there was a commercial opportunity, but the real reason was that we were worried about the sustainability of some of the fish stocks.

Some of these companies coming in had no ethics about the environment. They were raping and pillaging the stock; that is putting it mildly. The closer they got inshore, the more effect that had on the sustainability. That was the major reason behind doing something. Then we came up with the idea of owning it all ourselves through a quota management system.

It was the international law of the sea legislation that gave us the idea, that you are entitled to go within the 200-mile zone and fish as a right; but if the fish is already allocated and sold, you cannot. That was the key to how to work the system out.

Senator Johnson: You have said that your aquaculture industry has been very successful. How sustainable is it versus the sustainability of the wild fishery?

Mr. Kelly: Very.

Senator Johnson: What are you farming besides mussels?

Mr. Kelly: Some salmon. As Mr. Needs just said, it is not allowed to compete with open fisheries. A minority of the fisheries are in this category, 5 or 7 per cent, but that is still a sizable number.

Senator Johnson: Do you expect that to increase?

Mr. Kelly: It will increase, but there are some balancing acts. People who live around the foreshore do not want to see the environment messed up by a lot of platforms and commercial activity. The local government has a part to play in this in terms of allocations, and they are under pressure from people who have nice homes looking out over the bays not to have them messed up by wood platforms with mussel farms under them.

There will not be massive exploitation of our coastline, and that is the reason. It is getting harder and harder to put in more of these fish farms. Because of that, I do not think you will see an explosion in New Zealand.

Senator Johnson: That is very good for the environment in terms of the coastline.

Mr. Kelly: It is.

Senator Johnson: I have one last question about conservation. I am impressed with what you were saying. How are you able to impart the environmental importance of maintaining certain ways in the fishing industry and everything else in New Zealand, particularly given what you said about immigration — that for the people from Asia, the consciousness level is not there?

Mr. Kelly: I will leave you a copy of the act; having argued every line of it in the House, I will not go through it again.

Senator Johnson: You certainly know a lot for someone who once knew nothing about fisheries. You learned the file.

Mr. Kelly: The fisheries legislation talks about the environment. The ministry has a policy emanating from that to achieve sustainable utilization of the fisheries, and it talks about the ecosystem. It is right up there as part of the policy that they have to follow. We have an asset that is not unique, but the clean and green image is pretty important to us. We do not want to mess it up with either over-catching or fouling the water.

We take a precautionary approach, so we will err on the side against exploitation, if in doubt, for a year or two, and then move the total allowable catch up slowly. Therefore, no one would be allowed to push the boundaries, because the policy from which everything else is derived is set in concrete.

Senator Johnson: I certainly wish it was set in concrete in Canada. We have to do that. Thank you so much.

Senator Adams: I come from the Nunavut area that is maybe a little different from New Zealand.

Mr. Kelly: I have been up to your area.

Senator Adams: Your Excellency, is the commercial fishing better than it was before you privatized it? You say you have better regulations for the commercial fishing. Is it much better controlled with quotas, or regulated by the New Zealand government?

Mr. Kelly: You cannot fish commercially without having quota. There is the odd species that is not under the quota management system. There were a few put under the quota management system a few months ago, some crabs it was, something I had never dreamt about. You either have quota or you have a licence to catch so much, and that is it. You cannot go beyond it. To that extent, it is set in concrete.

In the recreational area, the allowable catch is not defined in the legislation, but they are allowed a fair amount. The species that people can catch and the amount they can catch changes each year. If you are catching snapper, a common inshore white fish that people catch off the back of their boats by the tonne, everyone on the boat can catch only 20 a day. That is it. If the stock looks as if it is under pressure, they will reduce the catch the next year and it will be 10 a day or they will cut it out all together. It is very flexible in the sense that you react quickly and again with that precautionary approach.

Senator Adams: It is operated by the private companies, and it is still operated by the New Zealand government.

Mr. Kelly: The government does not catch any fish. It is only private companies and some individuals. My next door neighbour where I live in a suburb on the beach in Wellington is a fisherman and he has quota. He goes out in his little boat with one person helping him. Therefore, we do have a few left who have not sold their quota. However, he will sell, because he is now 50 and he says it is too tough; and his son does not want to fish, so he will sell it to the highest bidder. Who will that be? It will be a big company. That is one fewer small operation.

If you go into this system, you have to know this kind of thing will happen. It is no good going into this and saying we will keep all those small communities and all those small operations in the fishing industry. Once you unleash the economic forces of this, it is out of your control and there is only one end result. It is that people will own as much as they can if they have the money. Therefore, you have to have aggregation limits in your legislation.

Do not have an out. Do not allow people to say because they are green or blue or a man or woman "I am an exception to the rule." You just simply cannot do that.

Senator Adams: Do you have a 12-mile limit for the area or a 200-mile limit?

Mr. Kelly: The 12-mile limit is really irrelevant under the system, because the quota is allocated out to 200 miles.

Senator Adams: You have 10,000 Maori involved. Do you have a business for the New Zealand Aboriginal people? Is it involved with the commercial fishing outside the community?

Mr. Kelly: Probably a little over half of that 10,000 are Maori. They are all involved in the commercial companies, either as part owners or employees.

Senator Adams: Is the quota set by themselves or by the New Zealand government?

Mr. Kelly: The government. If you were to do it yourself, it would be like going to the bank and telling the bank manager, I want my limit to be this, and he has no say in it. You would soon go broke. If everyone set their own quota limits, there would be no fish left in the bank.

Senator Adams: You still have a guarantee of quotas every year?

Mr. Kelly: Every year. In some years, there has been no fish. The quota has been frozen; that happened with inshore lobster. There was a lot of illegal activity and they could not catch enough. Also, it was related to the breeding cycle. I do not know whether it was that the water got warmer or colder, due to El Niño. We do not understand too much about those relationships, but in some of the quota management areas we had an absolute ban on commercial or recreational taking of lobster until the stocks grew back.

They just had to accept that. Now, I do not know how they survived in the meantime. Some of them may not have, but you have to be that ruthless if you want the system to work. The stocks came back in those areas we closed. It took only a couple of years, and they had a lower level of quota but it has gradually come back. Unlike most other things that you grow or manufacture, there is a great capacity to regenerate the stock.

Senator Adams: You mentioned packaging the fish with carrots and beans and peas. Are those manufactured in big vessels or is it done commercially on the mainland?

Mr. Kelly: On the mainland.

The Acting Chairman: I would like to ask a question. First, you are very welcome, Your Excellency.

I will try to focus once more on the social and economic impact on the people in New Zealand.

You have indicated that there was really no management regime until 1986, so I suppose we cannot use that as an example of what the potential impact might be here in Canada with regard to the management of the fishery and the oceans.

This committee is very worried about the impact that the direction our fisheries department is taking will have on coastal communities. Coastal communities have learned over the years to depend upon the goodwill of the ocean for sustainable economic development. I believe that concentrating on making it economically viable turns a blind eye to coastal communities that are heavily dependent on the fishery for economic activity as well as for social aspects.

You may not be able to give me clear information to compare what happened in your country with what is about to happen in Canada. It is already happening in Canada to a certain extent because implementation has already taken place.

You spoke about people on an island who received quota and then sold it to a big company. We are worried about that happening here. If it did happen, it would be a major shift from community-based to corporate structure and would take away from coastal communities the only economy that they know. I see no other alternative for them to generate revenues to maintain the well-being of their communities.

Was it the lack of economic opportunity on that island that caused those people to forget about the long term and make a short-term gain by selling their quotas to a big company?

Mr. Kelly: They have survived for hundreds of years on a mixture of fishing and farming. There were 30 or 40 families involved in fishing, some commercially on a small scale. A few people who sold their quota were near retirement age and wanted to go to the mainland to retire. Others thought they could use the money to put into their land-based farm, to upgrade their tractors or whatever. None of those people were really wealthy, much like some of your smaller communities that I have seen. Nearly all of them were naive. I believe they thought they could survive on land-based farming or that they might somehow get more quota.

They were competing in an environment with lean, mean, large commercial companies who did not give a toss about them. Why should they? They had made a commercial deal in good faith. No one pressured them to do this. They learned a hard lesson.

If you introduce a quota management system, I can guarantee that the same thing will happen. Human nature is human nature. When someone comes along with a big cheque book, people think about putting down new carpet and buying a new car. When the value of the quota increases, as it will for a period when it is traded, they will all be resentful. The first person they will go to see is their member of Parliament. It is all your fault.

One option would be for the government to lease the quota rather than sell it. Our Waitangi Fisheries Commission gave the people the percentage that was rightfully theirs, but it was leased at a dollar a year or whatever. The amount is not important. The problem with that is that the normal commercial pressures in a business environment will not always apply. You may wish to sell your quota for that species and buy into something else, or sell it altogether, or increase the size of your quota. How do you do that if everything is leased?

As I said, there is an inevitable outcome to this process and you have to make your minds up at the start. There is no use bleating halfway down the track that you made a mistake. However, you might make an exception for some communities, as we did for the Chatham Islands when we subsequently gave the county council quota.

If you want the normal flow of investment coming into the industry, with bigger ships, more processing and all those other things, you need infusion of capital. If all of your industry is tied up in just leasing, it will always be small and restricted. You might be able to do it half and half, or one third, two thirds.

The Acting Chairman: Would it be possible to put a lifespan on the licence so that if the owner wants to sell it the government can take control of it? Does that happen in New Zealand?

Mr. Kelly: That does not happen.

The Acting Chairman: If you lose it, you lose it, and that is the end?

Mr. Kelly: If it is taken away under penalty because you have misbehaved, you do not get it back. That is the only way in which you would lose it, unless you sold it.

The Acting Chairman: How long does the quota last?

Mr. Kelly: It is in perpetuity — for ever. A company may buy it or it can be passed on to the next generation. It is like owning a car dealership that you can buy and sell, just like property.

The value of the quota is interesting. It is related not only to the health of the fishery but to the demand internationally. You will be competing against other countries that might have cheaper fish or different species.

Senator Adams: Do the Maori have land claims in New Zealand?

Mr. Kelly: They do.

Senator Adams: Can they fish during any time of the year, like we do? Are the Maori able to come to an agreement with your government to fish in any season for subsistence purposes?

The Acting Chairman: What happens in the case of fishing for their food? You mentioned in your presentation that there are Aboriginal people, like Maori, for example, that can take fish for their own food.

Mr. Kelly: You can fish for yourself, but there is a daily catch limit on the number or the size of the fish. You cannot go out and take all you want for yourself, except our Maori population has special indigenous rights.

The Acting Chairman: That is what he is talking about.

Mr. Kelly: Okay. They are entitled to fish beyond the recreational limit for events like funerals or special celebrations. There will always be some who stretch that definition beyond anything that you would believe. Occasionally, they are caught and they claim their rights under the treaty.

That is not as clear as we would like it to be. It is somewhat fuzzy around the edges. It suited us at the start to be fuzzy, but in the end we have to live with it.

The Acting Chairman: Thank you very much for an excellent presentation. I think this has been an enlightening session for the committee.

Mr. Kelly: It was a pleasure to be here.

The committee adjourned.


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