27 April 1999
L. Denis Desautels, FCA
Auditor General Of Canada
Thank you, Mr. Chairman, for this opportunity to present the results of our chapter, Managing Atlantic Shellfish in a Sustainable Manner, and our two chapters on The Atlantic Groundfish Strategy (TAGS).
Joining me at the table today are Assistant Auditor General David Rattray and John O’Brien, Principal from our Halifax office.
In Chapter 4, Managing Atlantic Fishery in a Sustainable Manner, we raise serious concerns about the way Fisheries and Oceans manages the lobster, scallop, snow crab and shrimp fisheries in Atlantic Canada. In 1997, the landed value of all shellfish was $920 million, or 81 percent of the value of all fish landed in Atlantic Canada.
On 21 October 1997, I appeared before this Committee to discuss problems associated with the Department’s management of the groundfish fisheries, many of which were not operating at that time. Atlantic Canada’s shellfish fisheries are operating and, for the most part are lucrative. However, there are many similarities between the issues reported in Chapter 4 and those previously raised with this Committee on the management of the groundfish fisheries.
For example, in 1997 we raised concerns about the need to clarify fisheries objectives in legislation, the absence of a national fisheries policy, and the need to establish measurable indicators and performance expectations.
In addition, we reported on the need to improve fisheries management practices such as scientific stock assessments, fisheries management planning, catch monitoring and enforcement. Last, we reported that attempts to address the overcapacity problem in the groundfish fishery had been largely unsuccessful.
In the current audit, we found again that the Department has not yet developed a fisheries management framework that considers all aspects of sustainability. We provide examples of decisions that demonstrate the need for a sustainable fisheries framework.
Further, we found weaknesses in fisheries management practices in the shellfish fisheries. Finally, we raise concerns about the implementation of co-management, a form of power sharing with stakeholders.
Should Canadians be concerned about the problems that we found in the management of the shellfish fisheries? After all, as I have already said, these fisheries are lucrative; therefore, the full impact of the problems is not obvious. In our view, as we reported in 1997 on the groundfish fisheries, these concerns are significant and must be addressed to ensure that the shellfish fisheries are managed in a sustainable manner.
We believe that part of the reason for the continuing problems we noted rests with the existing framework for fisheries management.
It is not clear what the Department is trying to achieve through its management of the shellfish fisheries. The Department has informed Parliament that its objective is "conservation" of the fishery resource and that it also has an economic objective, for which, however, no expected results have been specified.
The Department has informed the Standing Committee on Public Accounts that it does not have the responsibility or the resources for managing social and economic outcomes. We have provided examples of decisions in the shellfish fisheries that are directed towards achieving such outcomes. Indeed, most fisheries decisions that we examined were heavily influenced by social and economic factors. We are not saying that this is wrong but rather that there is an inconsistency between the Department’s official position and its actual decisions.
Our report also includes case studies that point to decisions that do not appear to be consistent with the Department’s Fishery of the Future strategy - achieving economically viable fisheries.
We discuss the problem of controlling harvesting capacity and provide examples of growth in the industry’s harvesting capacity. This growth has occurred at a time when the government has expended considerable effort and funds to reduce overall capacity.
Even within its acknowledged core mandate, the Department has not set out clearly what it means by "conservation" of the fisheries resource - the primary stated purpose of the fisheries management function.
It is difficult to see how we can move forward with cost-effective management of sustainable fisheries if the Department does not first set out what it is trying to achieve from the fisheries.
Sustainable fisheries require the balancing of interdependent biological, social and economic factors with a long-term perspective. Decisions made on an ad hoc and inconsistent basis rather than as part of an overall framework are not acceptable if we want to ensure sustainability, not only of the stocks but also of the people and communities that depend on them.
We also found that the Department’s fisheries management practices need further improvement to ensure the sustainability of the resource. Problems we identified include:
We believe that it is important for the Department to address these concerns by developing an overall framework for sustainable fisheries and improving fisheries management practices.
Now allow me to turn to Chapter 7, which presents the findings of an audit in response to a request that this Committee made following the tabling of our chapters on the Atlantic groundfish fishery. The Internal Audit Bureau of Human Resources Development Canada had planned an audit of grants and contributions provided by the Department. Therefore, we agreed that the Department would conduct the audit, and we would monitor and review its work. Expenditures on grants and contributions represent about $150 million of the $1.9 billion allocated to The Atlantic Groundfish Strategy.
We are quite concerned about the findings of this audit. They clearly indicate a lack of diligence in assessing proposals and signing agreements, as well as a lack of monitoring. In most cases, the auditors could not determine how the selection criteria had been applied and why projects had been recommended or selected. Several proposals did not state objectives that were related to TAGS.
Many agreements did not have clear objectives for the projects or did not clearly indicate that they targeted TAGS participants. More than half of the agreements were signed after the projects’ start dates.
Few projects were monitored. Expenditures were reimbursed even when claims had been submitted without supporting documentation. At the time of the audit, most projects had been completed for more than two years, as funds for the labour adjustment measures were curtailed in 1996. However, nearly half of the files examined showed no evidence of the required closeout procedures.
These weaknesses could be a reflection of the circumstances that prevailed when TAGS was implemented. The possibility remains that new agreements may be entered into under the current fishery restructuring and adjustment measures.
In Chapter 8 we present our follow-up on the recommendations of our October 1997 Report Chapter 16 on The Atlantic Groundfish Strategy. We made six recommendations in 1997 and, in general, we are satisfied with the actions taken to address them.
The government had better information when it planned the new measures. The eligibility criteria are clear, logical and applicable. The accountability framework established for the measures corrects the shortcomings we had identified in TAGS: responsibilities of the organizations involved are clearly defined and formal co-ordination mechanisms have been established.
It is too early to assess whether all aspects of the new fishery restructuring and adjustment measures will work. In our opinion, efforts so far to avoid the uncertainty that surrounded TAGS have been satisfactory.
To conclude, Mr. Chairman, we understand that fisheries management issues are both sensitive and complex. We hope that we have provided a useful contribution to your Committee’s deliberations on these matters.
We believe that the development and implementation of a new fisheries policy is an important aspect of a sustainable fisheries framework. Furthermore, as we indicated in October 1997, we believe that there is a need to clarify fisheries objectives in legislation as part of the development of an overall fisheries policy.
Thank you, Mr. Chairman. We would be happy to address any questions you may have.