HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Ms. Diana Whalen (Chairman)

Dr. John Hamm

Mr. Mark Parent

Mr. Gary Hines

Mr. Howard Epstein

Mr. Charles Parker

Ms. Marilyn More

Mr. Wayne Gaudet

Mr. Harold Theriault

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Mr. Gordon MacLeod,

Councillor, C.B. Regional Municipality

Ms. Jackie Evans

Representative for Unionized Employees

Mr. John Whalley,

Economic Development Officer, CBRM

HALIFAX, THURSDAY, APRIL 20, 2006

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

MR. CHAIRMAN (Mr. Mark Parent): I would like to welcome you to our meeting and in our regular fashion, the MLAs will introduce themselves and then I will call upon our guests. So we'll start on my left.

[The committee members introduced themselves.]

MR. CHAIRMAN: When we set up this meeting, we had invited both employees and management here, but we decided, if you remember, that if the management couldn't come, we would still go ahead with the employees. I have a note here that the management representative can't attend the meeting today for various reasons. They're busy elsewhere. Also they don't feel it is appropriate in the middle of labour negotiations to attend this meeting, but they'll be happy to meet with us after those negotiations are through. So that is the note we have from management. We're happy to have a representative from the employees' union and also Councillor Gordon MacLeod, and there is a third person who I don't have my list, but if you could introduce yourselves and then I think Mr. MacLeod, you're the one who will be starting the presentation.

MR. GORDON MACLEOD: Yes, thank you very much, Mr. Chairman, for your kind remarks. I want to, first of all, thank yourself and Ms. Darlene Henry, for all the work that she has put into arranging this particular meeting. Once again, Darlene, many thanks to you for your efforts. On my left is Jackie Evans, who is the president of the seafood workers' union at the Clearwater plant in North Sydney, and on my right is John Whalley, the Economic Development Officer for the Cape Breton Regional Municipality.

Our presentation will be brief today. Jackie will be elaborating on the acquisition of licences, and she will also be here to answer any questions, as John or myself will be. Our presentation, which you have a copy of, is entitled: Clam Processing in North Sydney, An Industry in Jeopardy.

Fish processing has been at the heart of the economic life of North Sydney, throughout the history of the community. The changes that are taking place in the fish processing sector provide an example of a valuable, valuable natural resource that is being harvested and processed in a manner that ensures Nova Scotians are not principal beneficiaries of our own resources. We believe this to be contrary to both the public interest and to Nova Scotia's stated objectives in the area of fisheries and coastal resource management.

In the brief history of the clam industry, the offshore surf clam fishery began on the Scotian Shelf in 1986. The last integrated management plan developed by the Department of Fisheries and Oceans dates back to the year 1998. The initial total allowable catch was set at 30,000 tons for the Banquereau Bank and 15,000 tons for the rest of the Scotian Shelf. There was in the initial years, no offshore clam fishery off the coast of Newfoundland.

In 1988 value-added offshore processing began at Alder Point in Cape Breton. In the 1990 management plan, the Department of Fisheries of Oceans designated two regions for the offshore clam fisheries, the Maritimes and Newfoundland and Labrador. This plan allocated equal shares of the total allowable catch for each of the two fishing banks, the Banquereau Bank and Grand Bank, to each of the four licence holders. By 1995 there were three licences, two of which were owned by Clearwater and one by Seabay Clam - National Sea Products. The three licensed vessels land products at separate plants for processing with the Atlantic Pursuit providing product for the Clearwater plant in North Sydney. The other processing facilities are in Newfoundland and Labrador. Then you have a picture of the position of the Banquereau Bank and the Grand Bank fishing grounds. The Banquereau Bank, as you see, is in the eastern part of Nova Scotia and right off Cape Breton and, as you see, anything that's caught there would have to go through or go by Cape Breton to go to Newfoundland and Labrador.

As of 1998, the offshore clam industry employed - and this is by DFO estimates - a total of 600 fishermen and plant workers in Nova Scotia and Newfoundland and Labrador on a year-round basis. The product is known as hokkigai in Japan, and the Japanese market has a strong preference for the Banquereau Bank clams, which are larger and of higher quality than the Grand Bank clams. The Arctic surf clam is a large clam with a purple colour in the foot and mantle that turns red when cooked. The clams are harvested using hydraulic dredging. As of 1998, DFO has yet to define a scientifically-based total allowable catch of the species.

Now the current condition. Clearwater, through acquisition of other licences, now owns 100 per cent of the current quota for Arctic surf clams in the Maritimes and Newfoundland and Labrador regions. Jackie, afterwards, will explain the history of the acquisition of these licences. The total allowable catch has just recently, in the last couple of days, been reduced to 24,000 tons for the Banquereau Bank and 20,000 tons for the Grand Bank. None of the processing of the Banquereau Bank clam is done in Clearwater's North Sydney plant. The North Sydney plant has been reduced to approximately 25 unionized employees working one shift in a canning operation. The Grand Bank plant in Newfoundland and Labrador has two full shifts of workers and is processing Banquereau Bank clams while the prime cut processing has been allocated to a facility in China.

North Sydney's competitive position. The North Sydney plant is closer to the highest quality clam beds in the Banquereau Banks and closer to distribution centres. Clams processed in Newfoundland and Labrador from the Banquereau have to be transported past North Sydney going to the plant to be processed and returning to go to market. Although the Grand Bank plant in Newfoundland and Labrador has received more capital investment in recent years, workers in North Sydney are younger and have better measurable productivity rates, for example, their prime cut trays packed per hour. Employees in North Sydney have a more flexible contract and receive lower hourly wages than Newfoundland and Labrador employees, and despite these advantages, employment in clam processing in North Sydney has declined by more than 80 per cent during the past decade, while traditional work has been transferred to Newfoundland and Labrador by Clearwater.

In Clearwater's position, "We have been and continue to be a very profitable company." That's an excerpt from the current newsletter that has just been put out, and it's made by Mr. Colin MacDonald, chief executive officer, and it's on Page 1 of Clearwater's current newsletter.

Clearwater operates the largest fleet of factory freezer vessels in Canada. They operate 11 vessels. Clam sales account for approximately 16 per cent of Clearwater's net sales in 2005.

The underlying seafood business is healthy; through our quota ownership, we continue to have unparalleled access to a tremendous resource, and there is growing international demand for premium seafood. This is an excerpt from Clearwater's 2005 annual report.

The decline in the clam fishery in 2005 was anticipated because of an extended refit to one vessel and due to a disruption in sales to China. Clearwater's net earnings in 2005 were $21 million on total sales of $315 million. Throughout 2006, we will continue to move forward on several initiatives aimed at re-establishing clams as one of

Clearwater's most significant growth drivers. That's another excerpt from Clearwater's 2005 annual report. During the past five years, Clearwater has invested more than $184 million in its fleet, licences, and onshore processing facilities. Approximately 12 per cent of the total was allocated to the onshore processing facilities.

Clearwater's perspective on its fishing licences. The net book value of Clearwater's licences in December 2005 was approximately $103 million. Clearwater believes the terms of these licences to be indefinite, as they have nominal annual renewal fees, there's a low risk of non-renewal, and the underlying species are healthy. In other words, Clearwater has a perpetual monopoly of the allowable harvest of Arctic surf clams and the associated bycatch in the Banquereau Bank and in the Grand Banks.

[9:15 a.m.]

A look at Nova Scotia's role. DFO allocates fishing licences, Nova Scotia regulates the fish processing sector. Nova Scotia's valuable natural resource, in this case the offshore clams, are being exported without processing in this province. This is contrary to the stated purpose of the Fisheries and Coastal Resources Act. To quote that Act, ". . . optimize harvesting and processing segments of the fishing and aquaculture industries for the betterment of coastal communities and the Province as a whole." Coastal communities cannot be sustainable if our natural resources are controlled by monopolies that achieve their power with the protection of government.

Now what have we done to date. Well, we have tried to bring attention to this issue by speaking with our local political representatives, municipal, federal and provincial. We have written letters and requested our political representatives to write letters on our behalf. We're seeking a meeting with the federal Fisheries and Oceans Minister, the Nova Scotia Minister of Fisheries and Aquaculture, and Clearwater representatives. To date, we have received no response to our request for a meeting of all the stakeholders. Local MLAs, Speaker of the House Cecil Clarke and Gerald Sampson, have been most helpful to us in our efforts. They have presented this issue through both a petition and a resolution introduced in the Nova Scotia Legislature.

Our request. Here is what we're looking for as a group. In the longer term, Nova Scotia has to define what role it will take in the fishing industry. If no action is forthcoming, our experience suggests processing employment will continue to be lost, Nova Scotia's resources will be transferred to other jurisdictions and to other countries, and coastal communities across the province will lose their reason for being.

In the short term, we request the committee to call upon the Minister of Fisheries and Aquaculture in Nova Scotia, as well as the federal Minister of Fisheries and Oceans, to meet with us and representatives of Clearwater. After all, the offshore clam industry

started in Nova Scotia and this is our resource. Thank you very much, gentlemen, for listening.

MR. CHAIRMAN: Thank you, Councillor MacLeod, for your presentation. Our normal practice now is to go to questions from the MLAs. So we'll move to that. Was there something you wanted to add, Ms. Evans, or will that come out in the questioning?

MS. JACKIE EVANS: I'll try to answer questions, that's what I'm here for, yes.

MR. CHAIRMAN: Thank you very much. We'll go to questions now. Do we have anyone who wants to ask questions? We'll go to Mr. Christie, the member for Bedford.

MR. PETER CHRISTIE: Ms. Evans, I'm wondering, can you clarify the licence issue for us? It was mentioned in the comments about the licences and the issues, perhaps you can clarify those for us and that would formulate some additional questions.

MS. EVANS: Okay. In 1990, there were four licence holders, and by 1995 there were only three. Nova Scotia Clam Company was one of the four, and they went bankrupt. Then there were three licenced holders and Clearwater obtained one of the licences from a Newfoundland and Labrador company, and once they had that quota, they then needed a plant to process the product in.

MR. CHRISTIE: Can I stop you there? Did Clearwater own that company in Newfoundland and Labrador they acquired the licence from?

MS. EVANS: No. So they obtained the plant through the TAGS program in the year the moratorium came on the fishery. There was TAGS money available to the Grand Bank plant in the Town of Grand Bank, Newfoundland and Labrador. That town decided to invest their TAGS money back into their plant to renovate it to be able to process clams with the idea that they would sell the plant to Clearwater for $1 and, in return, Clearwater would process the clam that was harvested off Nova Scotia in that plant in Newfoundland and Labrador.

Clearwater agreed to this because their goal was to acquire as much of the quota as possible. They succeeded in doing that, and a few years later the third licence was up for grabs, because National Sea opted to get out of the industry. So there, Clearwater had a chance to have a monopoly, which was their goal.

The federal minister at the time figured the provinces would be concerned about one company owning a monopoly on this fishery, so the Province of Newfoundland and Labrador stated they would be okay with Clearwater owning the monopoly as long as they processed the other portion of the quota in Newfoundland and Labrador. So the

minister at the time had no problem with that and Newfoundland and Labrador was happy with having 66 per cent of a quota that was off of Nova Scotia. Millions of dollars worth of product, they had a market at the time in Japan, and North Sydney was after going through all the ups and downs, trying to develop packaging and grading - we went through all the beginnings of a company and, as anybody knows, when you start out, it's difficult. They lose money hand over fist in the beginning, and North Sydney went through all that. By the time Newfoundland and Labrador entered, all Clearwater had to do was transfer all the knowledge to that plant, so they didn't experience all the losses that we had to incur as a plant. The company itself assumed all the expenses.

Now with Newfoundland and Labrador having 66 per cent of the quota, and processing 66 per cent of it in Newfoundland and Labrador, we were left with 33 per cent in North Sydney. Then, a few years later, Clearwater decided they were going to go public and sell off stock, and that's what they did. In the meantime, they went through a transition where John Risley stepped down as president of the board, and Colin MacDonald came on the scene. That's when our problems really began to come to light. Colin MacDonald believed that with the problems they were facing in China and the cost of the dollar rising that it certainly meant a little bit of a loss for them, because their business is exporting. He figured he could offset that by running one facility instead of two.

We were always told, and believed - we're not business people, we're only labourers, we don't have the business mind, but even we could see that it's going to cost the company more money to process in Newfoundland and Labrador. They would never close our plant in North Sydney. Even though they have 66 per cent, we didn't think we had anything to worry about when it came to downsizing or one plant getting the axe. So we didn't have any concerns that we thought were anything to worry about.

When Colin MacDonald came on the scene and decided that one plant was going, it turned out to be us. We still can't believe it, and we still can't believe why there are not more people outraged about it. Coming up here today, I'm starting to think that we might be able to turn things around. We might be able to get our quota back if the Nova Scotia Government will go after the federal minister and insist that at least he sit down and hear our concerns, and talk with us and Clearwater, and I'm sure that with the support of this committee we will be able to get what we deserve. I hope I answered your question; I started to ramble.

MR. CHRISTIE: Oh, you did. I just wasn't clear - Councillor MacLeod mentioned about the request of the committee to have a meeting with the Ministers of Fisheries, federally and provincially. Is the main goal to keep the 33.3 per cent quota? Is that your main initiative during the meetings?

MS. EVANS: At least. That quota was attached to the pursuit, and for 18 years we processed every lick of that product in our plant, between Alder Point and North Sydney - Alder Point moved to North Sydney. Now, with that share of the quota, if we got the whole works of it, the 33 per cent of Banquereau, that's a lot more than we've been getting over the years.

MR. CHRISTIE: Just what kind of capacity would 33 per cent do to the plant? Would it put it at 100 per cent, 50 per cent, what?

MS. EVANS: Well, we lost 40 workers when we lost our share of the quota. So we expect to get those 40 workers back when we get our quota. Also, Clearwater has in their possession a licence for quota for the quahog and that is in Nova Scotia waters as well. One of the reasons they were lucky enough to purchase this licence was because the other interested bodies backed down from the applications because Clearwater assured them they would process the quahog in the North Sydney plant. So that would be another added benefit to us, but if we don't have our 33 per cent from Banquereau Bank, I cannot see Clearwater processing the quahog in our plant.

MR. CHRISTIE: The last thing I guess I wasn't clear on, in terms of the quota and in terms of the licences that Clearwater holds now, are there restrictions on these in any way, shape or form?

MS. EVANS: The original licence said they had to process on land. Over the years things have changed because when they first started out, they were looking for a market in the United States. That didn't happen because the texture of our clam wasn't comparable to the clam they had in the States, and it just didn't work for them. So then they had to look for another market.

They found one in Japan, but this meant adjusting the equipment on the boat because the Japanese market requires a certain texture for their sushi bars. It is a different market over there. They had to change all the equipment on the boat, or probably use new vessels because the freezer vessels were different from the original vessels they used in the first years of the program. The original licence did say they had to process on land in Cape Breton, but now they're saying they can process wherever they want and we just don't believe that to be. They are doing whatever they want, nobody is getting in their way, but we're hoping you people will change that.

[9:30 a.m.]

MR. CHAIRMAN: Thank you very much. We may come back to Mr. Christie in round two.

Mr. Sampson.

MR. GERALD SAMPSON: I will begin by thanking my colleague, Diana Whalen, for sitting out and allowing me to sit in, as I'm not a member of this committee, but it's in my hometown area and I respect the fact that she would allow me to do that.

Jackie, I have a meeting with the Minister of Fisheries and Aquaculture coming up next Wednesday. It's concerning the meeting that we had on the grey seals, but I will ask the minister, if he would allow me to utilize that time, to allow you to come to that meeting and explain your case also. Or I will request an additional meeting with him. I'll let you know what comes out of that meeting next Wednesday, if he will entertain my explanation of the grey seal and then I will give the rest of the meeting to yourself to explain that, or whether he will arrange an additional meeting for you to explain the situation. I really believe that what has been said here this morning explains it to everybody who is listening here.

What I am intending to do, Mr. Chairman - and I will wait until others have spoken - I would like to let you know that I intend to make a motion through a letter to the province, to begin at the provincial level, requesting what the province feels is the responsibility of the government to maintain control over our natural resources. Newfoundland and Labrador is being very effective in what they're doing and I believe we have to bring this to the forefront. We have a new Minister of Fisheries and Aquaculture in the province and with his support, if he will go along with that and emphasize the fact that they are Nova Scotia resources and should remain here, then we can use that. If the response is what we're looking for, we can then send a letter to the federal minister with a copy of the letter from the provincial minister showing our support down here for maintaining control of our natural resources in Nova Scotia. There's not much more that I can add.

MR. CHAIRMAN: You'll be making that motion at the end of the questioning?

MR. GERALD SAMPSON: I'll wait until others have spoken, Mr. Chairman, and that's what I intend to do at the end. Other than that, I know business is business, but I truly feel that we have to step up to the plate, because I believe Clearwater has a moral and a financial responsibility to maintain the plant in North Sydney. With that, I'll thank the chairman and listen to what others have to say.

MR. CHAIRMAN: Thank you very much, we'll come back to you for that motion at the end of the questioning.

MR. FRANK CORBETT: Thank you, Mr. Chairman. Jackie, Gordon, John, good to see you folks. Like Mr. Sampson, I'm not a regular member of this committee and I was grateful to get the opportunity to sit in on today's meeting.

A quick question to you, Jackie. Back in 1994, I believe, when an international agreement was signed around fishing and processing - I think it was called an international trade agreement - in particular, Chapter 11, Newfoundland and Labrador, within the terms of Canada, got in the point that any processing caught, or any product caught by vessels 65 feet or less would be processed in Newfoundland and Labrador. Do you know any reason why Nova Scotia at that time didn't jump in and say me too? Why did we exclude ourselves from that perspective of processing, that we would process what was caught in our waters?

MS. EVANS: I don't. I don't know why.

MR. CORBETT: Gordon? John? Let me jump in before you answer. It's probably not a fair question to ask you because you weren't at the table, nor was I, that's why I kind of am asking, but do you think had that been in there too, would that have been to Nova Scotia's betterment or would it have worked against Nova Scotia?

MR. MACLEOD: If it had been in there it certainly would have worked to Nova Scotia's betterment. I was manager of the Marine Atlantic terminal in North Sydney for 17 years and I watched truckloads and truckloads of fish going to Newfoundland and Labrador to be processed. I never in all my years, and I had 42 years there, saw any fish ever coming from Newfoundland and Labrador to be processed on the mainland. They're very dogmatic about that, and I think Nova Scotia should be just as dogmatic about it. The fish caught in our waters should be processed in our province. It's our resource, and there's no way it should be going to Newfoundland and Labrador, or going to China, or going anywhere else, it should be processed here to provide work for Nova Scotians.

MR. JOHN WHALLEY: The other point that I would add, Frank, is the fact if you look at the entire history of this particular industry, in some years 100 per cent of the total quota came out of the Banquereau Bank. Jackie talks about a third of the total quota being allocated to the plant. In fact, Nova Scotia's share of this fishery is consistently at least 50 per cent, and in many years it's much higher than that. How Newfoundland and Labrador is able to process - again, as Jackie mentioned, the fish is going by North Sydney twice, both to the processing and back to market. It simply doesn't make any sense, other than the agreement Jackie has alluded to between Clearwater and the government and Grand Bank Development Corporation, is really kind of at the heart of this industry.

MS. EVANS: I'm guessing that those fishing vessels you're talking about had to be a certain size, they would process in Newfoundland and Labrador. The freezer vessels are quite larger, so those restrictions wouldn't qualify for those vessels, although they're still landing there and processing there.

MR. CORBETT: Thanks, Jackie. John, I'm going to call you an economic development expert, and I say that with some degree of certainty because I know your work. We now see Clearwater with a severe reduction in the workforce in North Sydney and a lockout in Glace Bay. Can you tell me from your perspective what that does to CBRM as it relates to the economy and obviously having people participating in the workforce? Has CBRM looked at that, or you, as development officer, looked at that?

MR. WHALLEY: We haven't done an evaluation. There was a good report done by Michael Gardner of Gardner Pinfold for the Clam Advisory Committee in 2002 and in that report he talks about the impact in both North Sydney and Grand Bank. I think the estimate at that time was something like $15 million in wages across the two communities. So that's very important.

The irony of all this is that this is an industry in which North Sydney, coastal communities, have a natural competitive and comparative advantage. The federal and provincial governments are spending millions in the famous, or infamous, Cape Breton Castings case, $30 million to create an artificial industry to employ less than 80 people, and then on the other hand they're ignoring the natural industries with a natural competitive advantage which is fish processing and essentially allowing companies to do whatever they want with this public resource, as we interpret it.

MR. CORBETT: Good, and I know you're chomping there, my question is to you and you can either answer my question or answer the one you want to answer, but the question I guess is similar to what I asked John. You're the local councillor. You are many times referred to by people in the election business as the people at ground zero. You feel the impact of these changes in the economy first. The workers come to you first. You see them most often. As someone who has literally worked on the North Sydney docks for years before your retirement, can you give me what the basic closure of that plant has meant to North Sydney?

MR. MACLEOD: Well, Frank, it's devastating to the community. The loss of wages in the community is tremendous and, not only that, the future looks terrible, too. In the latest newsletter that Clearwater put out they list their fish plants in Nova Scotia and they exclude the two in Cape Breton. They've got the employees locked out in Glace Bay and I'm sure Dave Wilson is concerned about this as well, as we all are in CBRM. These people, the doors are locked on them, they're locked out, they won't even talk to them and in their latest newsletter they don't even include those two plants as part of the Clearwater family.

So, clearly, they don't want the plant in Glace Bay to operate. They don't want the plant in North Sydney to operate. It's a very lucrative business. They're catching the product on Banquereau Bank. They're taking it by their fish plant operation in North Sydney and they're processing it down on the east coast of Newfoundland and Labrador,

bringing the traffic back to go to Halifax or to be shipped out by containers to a Japanese market. So the impact economically in our area is devastating, Frank, and you and Dave both know that.

We've had great help, Gerald Sampson is with us on this as well. He's very close to the people and to the issues that we have and so is Cecil Clarke. We work together on this in our area to try to achieve some sort of success, to try to achieve some exposure to a committee such as this that's province-wide, that hears our problem, and is prepared to do something to help us, but to answer your question, the economic impact of that on our community is terrible.

MR. CHAIRMAN: Mr. Epstein.

MR. HOWARD EPSTEIN: I have a number of things. What was the maximum number of jobs that the North Sydney plant ever had - Jackie, can you tell us that?

MS. EVANS: Well, when Clearwater took over the plant in Alder Point, at the time I think it was owned by UMF, United Maritime Fisheries, we had a night shift and a day shift processing groundfish at the time and there were over 300 people.

MR. EPSTEIN: That's with the two plants.

MS. EVANS: No, one plant, two shifts.

MR. EPSTEIN: One plant, two shifts, okay.

MS. EVANS: That was a groundfish operation at the time when they took it over, with their intentions to change it into clam.

MR. EPSTEIN: Yes, okay, after it switched to clams, is that when you went to one shift?

MS. EVANS: Yes, we went to one shift, and we had over 200 employees.

MR. EPSTEIN: So there were still 200 with one shift?

MS. EVANS: Yes.

MR. EPSTEIN: And now you're down to 25?

MS. EVANS: Yes.

MR. EPSTEIN: Okay, and when was that, when did you go down to 25?

MS. EVANS: In October they laid off 40 people from 97 on our union list - that left 54 on the list, but there are only jobs in the cannery for 23 people.

MR. EPSTEIN: Okay, I follow that, thank you. Is it still your view that the company, Clearwater, is determined to close that plant?

MS. EVANS: Oh, yes.

MR. EPSTEIN: The reason I ask is you mentioned specifically quahog as something that might be available as another product that might go through, but that was speculation on your part - so you don't know where it's going?

MS. EVANS: Well, if they can take it wherever they want, which they are doing - they've already done it - they took our share of the Arctic surf clams to Newfoundland and Labrador.

MR. EPSTEIN: Yes.

MS. EVANS: Now, the quahog, they were granted that licence. One reason that other companies backed off was because Clearwater stated they would process in the North Sydney plant, but whether they do what they say they're going to do is another thing, and I know they will not process the quahog in our plant if that's all we have because the plant is too big, it's too expensive to operate and have, you know, a net at the end of the day.

MR. EPSTEIN: Okay. One of the other points I wanted to explore was why you think Clearwater chose to emphasize Newfoundland and Labrador as a processing base. The answer was suggested earlier that it was because of TAGS money that went into the establishment of the Newfoundland and Labrador plant for them. So one thing I wonder is was there any time limit associated with that? When Clearwater was in receipt of money that got them into that plant in the first place, was there a time limit, that is that they agreed to operate that plant for a limited number of years, or was it forever?

MS. EVANS: Forever. Forever.

[9:45 a.m.]

MR. EPSTEIN: I find that hard to imagine, that a company could make an obligation that is going to run a plant forever. You can't run a plant forever.

MS. EVANS: Well, they did. As long as they're processing clam, and as long as they're harvesting the quota that they received from the second licence that they obtained, they would have to process it in that plant. As soon as Clearwater decides that

they're going to close down that plant, then the quota reverts back to the plant. Clearwater doesn't have it any more, and they don't want to give that up - they don't like competition.

MR. EPSTEIN: In the years since this has been problematic for you folks in North Sydney, did you take the opportunity to meet with the federal Fisheries Minister? For a number of years Nova Scotia had the federal Fisheries Minister here. As a Member of Parliament here, it was the federal Fisheries Minister. So did this get discussed with the federal Fisheries Minister, Mr. Regan?

MS. EVANS: Yes, we had written Mr. Regan a number of letters, but we didn't have any chance to get to meet with him personally.

MR. EPSTEIN: No face-to-face meetings?

MS. EVANS: No.

MR. EPSTEIN: Has any position ever been taken by Mr. Regan?

MS. EVANS: Well, I must say I spoke to him one-on-one at a rally in Sydney that he came down for when the Prime Minister at the time, Prime Minister Paul Martin, was in Sydney to announce something or other. So Geoff Regan came down for that announcement and we were there with CBC and Marine Atlantic. We were trying to get a word with the Prime Minister, but that didn't happen. I stopped Geoff Regan on his way into the meeting and I asked him what he thought about our concerns with the North Sydney plant and what Clearwater was intending to do. He didn't have any concerns. He said that the problem with the clam. Probably the fact that we have all the scallops, makes up for our loss of the clam. That's how I interpreted his reaction. The fact of the matter was that Clearwater had been forced to sell off some of their scallop quota because you're not allowed to own any more than 50 per cent of any quota. Those are DFO regulations. So they were forced to sell off some of their scallop quota but, yet, they could do what they want with the clams.

MR. WHALLEY: Can I perhaps just expand on that a little. In a news release dated October 21, 2005, Minister Regan was quoted as saying that Clearwater's obligations on where to land or process its catch represent business decisions that are within the exclusive purview of the company. So he clearly indicated that he saw no role for the Department of Fisheries and Oceans.

MR. EPSTEIN: Has that been the consistent attitude of the federal Department of Fisheries and Oceans with respect to the East Coast?

MR. WHALLEY: I don't know if it has been the consistent attitude, it certainly has been in this particular case.

MR. EPSTEIN: Can I ask about the reduction in quota? I think, Mr. MacLeod, you mentioned that the TAC, total allowable catch, had just been reduced from 30,000 tons to 24,000 tons.

MR. MACLEOD: John could probably answer that. He discovered that on the Internet just a day or so ago.

MR. WHALLEY: There have been a number of surveys conducted by DFO in conjunction with Clearwater. Clearwater has never caught the total allowable catch in the Grand Banks and Banquereau. The initial allowable catch was set at 30,000 metric tonnes. It was reduced, I think, in the late 1990s, early 2000 period. One of the problems is that the management plan, which is available through Fisheries and Oceans, is dated 1998. Presumably, there's a more recent management plan, but that's not publicly available.

There is a clam advisory committee which sits and discusses this issue, but as a result of new surveys which were conducted in the late 1990s, the allowable catch in the Banquereau Bank was reduced from 30,000 metric tonnes to 24,000 metric tonnes. What you see in the catches is that there are fairly wide variations in catch. There appears to be five- or six-year cycles for each of the Banks and there are quite wide swings in terms of the actual catch by the industry, and the scientists are actually concerned about, at least in this paper, the sustainability of the fishery.

MR. EPSTEIN: So it wasn't that the TAC was reduced to 24,000 in the last few days, you just discovered that in the last few days.

MR. WHALLEY: That's exactly it.

MR. EPSTEIN: Perhaps it went back several years.

MR. WHALLEY: That's exactly it.

MR. EPSTEIN: Okay. That's fine, thanks a lot.

MR. CHAIRMAN: Thank you very much, Mr. Epstein. We will turn to Mr. Wilson.

MR. DAVID WILSON (Glace Bay): Thank you, Mr. Chairman. Jackie, Gordon, and John, I have to tell you it's a pleasure to see you here. I, too, am not a regular

member of this committee. I came here because they couldn't find anybody else. No, I'm only kidding. (Laughter)

MS. EVANS: You better be kidding.

MR. DAVID WILSON (Glace Bay): I'm kidding. I'm kidding. I came here because, as Gordon said, I'm not concerned, I'm worried to death about the situation in Glace Bay. It mirrors your situation, I think. Ironically, I had a meeting, myself and the local MP, Rodger Cuzner, met yesterday with Mr. Derrick Rowe, the Chief Executive Officer for Clearwater - came away from that meeting a little bit frustrated, a tinge of anger. The purpose of the meeting was to try to get things moving at least in terms of talking again in Glace Bay.

There are two fish plants in Glace Bay. One is currently closed, and one is on lockout. So neither are operating. The fishing industry, the processing industry in Glace Bay is on the verge of extinction right now. It's as simple as that. When you come to a committee like this and you ask us, as you stated in your brief, in the short term, at least a request for the Fisheries Ministers, both provincial and federal, to at least sit down and meet with you, I think it's a reasonable request to make of this committee.

I have no doubt that this committee, at the end of the day, is going to say let's do that. I think it's absolutely ridiculous, to date, that the federal and provincial Fisheries Ministers have not even responded to your request for a meeting. I think perhaps our request should be a little bit stronger than, could you please meet with the representatives from Clearwater in North Sydney. We'll deal with that during the motion.

I have a couple of questions, and I have a couple more comments that I want to make because of the situation and because of the seriousness of the situation back home. There are not a lot of people who want to get involved in processing fish in this province. There aren't. We've had a fish plant closed in Glace Bay for some months now. There aren't a lot of people out there looking to buy that. So I'm interested in you telling us, as a province, what could we do to make the industry more attractive, keeping in mind - I think we all know that quotas right now, the situation that's set up right now, are a federal responsibility. There's not much the province can do about that right now under the current structure.

As a legislative committee, our job, as I see it anyway, is to report back to the Legislature with ideas that would spur economic development - in this case, fish processing - and how we could put Nova Scotians to work. There are going to be, in this particular case, in my riding, at least 300 people who are going to be out of work if those two fish plants never operate again, full- and part-time. There's a smattering from other ridings, most of them live in Glace Bay and eject into an economy in Glace Bay salaries

that are desperately needed. We don't have a lot of corporate set-ups in Glace Bay. Two fish plants would be two of the biggest industries that we would have in Glace Bay.

Gordon, I appreciate the involvement of CBRM Council here, because it's necessary in order to spur economic growth back home. I'm sure John has many a testimony of how hard it is to try to get economic development going in Cape Breton. Tell us what you would expect of us as a committee that we could take back to the Legislature that would make it different in terms of fish processing in this province?

Here's the message I've heard from the workers at Highland Fisheries in Glace Bay - those quotas belong to the community, those quotas don't belong to a company, they don't belong to a government, they don't belong to anybody else except the people in the community. If things change, and they do - as you know, there aren't as many fish processing plants in Nova Scotia as there once were - when things change, that economic insurance is still there for the community, that you can still find someone to operate that plant, because you have what you require, which is a quota. Have I given you enough ammunition? Jackie, or Gordon, or John, whomever wants to answer.

MS. EVANS: Can I take a turn? In my opinion, I say that if you can't process your quota that belongs to the community, if you can't process it here, leave it in the water until someday when things turn around and we can afford to process again. The companies, the processing plants, you're saying you can't sell them, the government isn't interested in investing in them or Glace Bay wouldn't have closed down. So there must be some reason why they feel they can't compare with the competition, I guess, in China, because they can process over there and send it back here, and all that shipping doesn't cost near as much as it does to process here compared to China. That's the story we're getting from this free trade thing.

So if we can't get out of the free trade, my opinion is, leave the fish in the water, and then all the fish brokers who are out there making millions by selling it to China, buying it off the fishermen and selling it to China, they're making millions of dollars and putting the average person out of a job, who are making $25,000 to $30,000 a year if they're lucky, but spending every cent of it in their grocery stores and at the gas pumps and trying to raise their kids. That's the fish. The clam is another story. The clam is our resource and there are people out there who want to buy it and we can process it.

MR. DAVID WILSON (Glace Bay): So what you're saying is what's needed then - I'm not putting words in your mouth, I'm sure you'll tell me if I am - is that they - the provincial government, the federal government - have to take a look at the ownership structure right now and re-examine that ownership structure and put in place the rights, on behalf of Nova Scotians, Canadians, whatever the case may be, to see the fisheries, whether or not it's going to benefit the people in this province - that's not there right now, is that what you're saying?

MS. EVANS: I'm saying we have to work together - the fishermen, the processors and the buyers. Apparently the buyers just want what's cheaper in the grocery store - right from groundfish I'm talking. The processors are now mostly in China because they can process it cheaper, but the fish, the resources in our waters, if we can't get jobs from it, we should be able to work at our own resource.

MR. WHALLEY: The classic difference here, the clam that is being caught off Nova Scotia is being transported to rural Newfoundland and Labrador for processing and it's coming back past North Sydney, Nova Scotia, transported to market. The Newfoundland and Labrador plant is not more efficient, it's not more cost-effective, it is however a plant that has a quota tied to the plant. The company is then forced to process because of that agreement. North Sydney has no such protection.

MR. DAVID WILSON (Glace Bay): So this province should have rules and regulations in place to make sure that doesn't happen, is that what you're saying?

MR. WHALLEY: This province, in terms of this policy, is not as strong as Newfoundland and Labrador, and I think that has been the problem here.

MR. MACLEOD: If I could add to that, Dave, Newfoundland and Labrador has been extremely successful in not only fisheries, but when they built the Hibernia platform, they built it in Bay Bulls in Newfoundland and Labrador. When they built it, they only employed Newfoundlanders and Labradorians, and every product that went into that had to be bought from a Newfoundland and Labrador company or it wasn't done. The only time you had a worker from outside Newfoundland and Labrador was if it were something they couldn't achieve or couldn't hire in Newfoundland and Labrador, and that was one segment.

In the fishing industry, it's a rule, they must process it in Newfoundland and Labrador, they cannot process it anywhere else; whereas in Nova Scotia we are not as good at that, we have our resources being taken out of our waters and transported to Newfoundland and Labrador to be processed. I've seen it time and time again, truckloads of it, shiploads of it, going to Newfoundland and Labrador to be processed, and it should be processed here.

We should be as aggressive in ensuring our natural resources are processed here, making jobs for Nova Scotians in Glace Bay and in North Sydney and in Louisbourg, and in other seaport communities where the fish are right off our coast. They're catching it there and they're taking it someplace else, and that's wrong. As a province, we have to get more aggressive in ensuring those quotas are tied to the communities that own them.

[10:00 a.m.]

MR. DAVID WILSON (Glace Bay): I think the current federal Fisheries Minister is a Newfoundlander, is he not? So when you have your meeting, he should know exactly what's going on in Newfoundland and Labrador and it shouldn't be any problem - I would think that the Conservative federal minister would be able to help you out there. When you get your meeting with the Progressive Conservative provincial Fisheries Minister, the two of them should put their heads together and should solve this problem.

MR. MACLEOD: All we're asking for is what he has in his own province. He has this in his province, ensure that it happens in other provinces. All we're looking for is fair treatment.

MR. DAVID WILSON (Glace Bay): For what's fair, just to be fair, right?

MR. MACLEOD: Another thing I want to emphasize is the productivity of the workers in Glace Bay and in Louisbourg and in North Sydney in these plants. The productivity has never been in question and the calibre of the workers has never been in question. It's just a company that has a monopoly on a product that's making money and wants to make more money.

MR. DAVID WILSON (Glace Bay): Just in closing, I picked up an advertisement, Mr. Chairman, off the Web yesterday, where there was an advertisement for 40 fish processing jobs advertised at a plant in Louisbourg. They were looking for 40 workers. When I saw it, the first thing that occurred to my mind was probably that 40 people from either North Sydney or Glace Bay are going to get those jobs, because you have to work in order to make a living and so on and so forth, and you're locked out. In this case, I know I've had workers from Glace Bay approach me because of the fact that they can't draw EI, or whatever the case may be, they're becoming very worried right now about, never mind having a job, where the next meal comes from, is what they're worried about. The situation is at that point right now.

Again, I want to thank you for appearing before the committee. I especially want to thank Gordon for holding things in check, because I've seen the fiery oration of Mr. MacLeod before and I think he is holding it in check right now. So I'm waiting for it to break out. Thank you, Mr. Chairman.

MR. MACLEOD: I'll be all right, Dave.

MR. CHAIRMAN: Thank you very much. Mr. Parker.

MR. CHARLES PARKER: Thank you, Mr. Chairman. Again, I thank you folks for coming, it certainly has been informative to get a first- hand perspective on what is

going on in your communities. It is certainly very sad, isn't it, what is happening, the loss of jobs and hurt to your local economy. A number of people out of work and I'm sure some people leaving the Island, maybe going to Alberta or wherever, they're forced to - as it was just mentioned, you have to make a living.

Really, what I guess is even more sad, is the whole idea of this public resource that belongs to you and I and everybody in this room and all Nova Scotians, is a capital loss. It is going out of our communities and it is going into the hands of just one corporation, in this case. As has been mentioned, these things going out of our communities - and I guess there is a parallel you see in other natural resource industries like forestry and mining. For example, gypsum leaves our province and it is manufactured somewhere else and then it comes back here as wallboard or whatever.

How have we gotten to this point? What governments have allowed this to happen, I guess, in the past? We have, I think it was mentioned, an indefinite licence? Can you tell us how Clearwater has gotten to that point? Past governments that have allowed this to happen, but how are we at that point. It is forever and ever, is it?

MS. EVANS: Well, yes, there's nobody, I guess, blocking them.

MR. PARKER: Okay, but it has been a policy of past federal governments, and then, I guess, with the complicity of provincial governments that have allowed this to happen. So that means that this one corporation for the next eons of time will always have that particular clam licence does it?

MR. WHALLEY: That is a quote from their annual report. That is not our opinion, that is Clearwater saying that, that their view is that this is an indefinite quota.

MR. PARKER: Do they pay an annual fee for that?

MR. WHALLEY: They pay it, but again, as you see in the presentation, they view it as a nominal fee; they view the cost as being nominal.

MR. PARKER: They pay a nominal amount and, from that, they are forever and ever able to make millions of dollars off the natural resource that belongs to all of us, to the public?

MR. MACLEOD: There is a very low risk of it not being renewed. The species are very healthy. It is not something that is deteriorating. It is very healthy. So they have an indefinite monopoly on what is taking place. They seem to have a free hand to process it wherever they want.

MR. PARKER: Jackie had mentioned earlier that one time it had to be processed in Cape Breton. Was that written in law somewhere? If so, how did it get away from that? How is it no longer having to be processed in Cape Breton? Was a unilateral decision made by the company, or was it DFO that said you no longer have to comply by that law?

MR. MACLEOD: It was tied to the size of the vessel, and they got a bigger vessel. There was a way they saw around it, and then they captured that way around it, or maybe they just did it using the bulldozer method, just do it, and then defend their actions if somebody raised a red flag.

MR. PARKER: It was mentioned earlier about the importance, or the moral right I guess, that fish caught in our waters should be processed here. I think over the years there has been talk of a community quota, where the fish belong to the community where the boats are based, and I believe that has been done in some of the fisheries over the years - Canso at one time, I think, had a community quota for some species - but in many ways that seems like a solution to the problem, doesn't it?

MR. MACLEOD: It sure does, yes.

MR. PARKER: If you have a quota tied to a community, or a community quota, then that's where it has to be processed - by that community. That's a DFO policy again, but it's on certain species that they do that, but not on clams apparently.

MR. WHALLEY: It's very unusual for one company, for any species, to have 100 per cent of the quota. This is really against the operating principles of DFO obviously, they do not normally allocate 100 per cent of a quota to one company.

MR. PARKER: I think you had mentioned that before, John, about the 50 per cent maximum in the scallop fishery. So if it can happen in the scallop fishery, why can't it happen in the clam industry?

MR. WHALLEY: Good question.

MR. PARKER: And, again, that's a DFO policy, I guess, that they're allowing to happen.

MS. EVANS: Which is why we need a meeting. All these questions have to be answered.

MR. PARKER: Well, when the resolution comes along, I would certainly support the idea of pressing to get a meeting with the federal minister.

MR. DAVID WILSON (Glace Bay): And don't forget the provincial.

MR. PARKER: Indeed.

MS. EVANS: And Clearwater.

MR. PARKER: It was mentioned earlier, too, about processing being done in China. Can you give us any indication of the amount of processing of Cape Breton clams is going to China?

MS. EVANS: Right now there's nothing being processed in our plant, and all Newfoundland and Labrador is doing is the cold room because the prime cut is being processed in China.

MR. PARKER: What do you mean by prime cut? I'm not quite sure.

MS. EVANS: It's another production line from the same product. It's like a value-added product because we have to do extra work to it. Our plant in North Sydney did an excellent job with the prime cut operation but, in October, when they laid off 40 people on account of the transfer of the marine operation to Newfoundland and Labrador, out of those 40 were the people doing prime cut as well because they transferred the prime cut to Newfoundland and Labrador with the cold room, but at the end of the year they told us the prime cut would be phased out of Newfoundland and Labrador and be gone to China.

MR. PARKER: So is there processing right now in China, do you know?

MS. EVANS: Oh, yes. Clearwater has their own plant over there.

MR. PARKER: And what percentage of the clams that are harvested off Newfoundland and Labrador, and Nova Scotia, do you think are being processed in China?

MS. EVANS: The exact number I don't know. DFO should know.

MR. PARKER: So between China and Grand Bank is where it's all being processed as far as you know?

MS. EVANS: Yes, everything from Banquereau.

MR. PARKER: And if I were to go to the grocery store right now and buy a little can of surf clams, is there any indication on that if it's processed in China or if it's processed in Canada?

MS. EVANS: A can would be here in North Sydney, we process that.

MR. PARKER: Or Newfoundland and Labrador, would it?

MS. EVANS: No, not in Newfoundland and Labrador, we have the cannery in North Sydney.

MR. PARKER: So if I go to Superstore and buy a can of surf clams, you think it has been processed here in North Sydney?

MS. EVANS: Yes.

MR. MACLEOD: That's the only part of it that's being processed here.

MR. PARKER: I see.

MS. EVANS: It's a by-product, it's not part of our quota from Banquereau Bank - the product in that can is just cockle and the secondary, I guess, grading of the "hokkigai",

the tongue, from Banquereau Bank. So that would be like the bees and the seeds that aren't good for the pack.

MR. PARKER: Of lesser quality?

MS. EVANS: Yes.

MR. PARKER: Okay, I guess those are all my questions, Mr. Chairman.

MR. CHAIRMAN: Thank you very much.

We'll turn to Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Mr. Chairman, and thank you for your presentation. I don't know just where to start here. I won't be long, but you could go back 400 years or you could go back - we'll go back 10 years. Ten years ago I sat in a hotel in Dartmouth, in a convention room, with all the DFO officials of Canada for 10 days. I don't know whether the province was there then, I don't believe it was, but there were a lot of us fishermen wondering what DFO was up to and what was going to happen to us. Their plan was, we privatize the fishery, we give it to the hands of individuals, if someone owns something, they will take better care of it. That was their thought and they would not sway from it, and they haven't swayed from that to this day. They gave the responsibility of the Department of Fisheries over to individuals to control the fishery of this coast, of this country. It was called privatization.

That is our problem. Clearwater owns that fishery lock, stock and barrel. We told them then, 10 years ago pretty near to the date of March, 1996, this fishery could end up in the hands of not a few individuals, but of one individual, and that one individual may not even be in this country. I'm predicting that within five years China will own the fishery of this country. How in the hell are you going to stop that?

The Department of Fisheries could stop it if they wanted to go back to the table and get the papers back out, all the privatization they did, and turn this around. We fought for 10 years, I fought for five years for our fishermen down in western Nova Scotia, they're all gone now. We had 20-some fish plants down there, we have two left. I'm not sure who owns them. It's happening, it's going to happen, it's going to continue to happen unless it can be stopped. How do you stop something that has been privatized? They privatized the fishery into the hands of a lot, there were a lot of us, a lot of us little individuals owned a little cup of fish at the time, but we all had to sell out because it wasn't enough to fish. Now the bigger cups are being sold, and the bigger cups, and it's coming into the hands of two or three, and I think it's going to come into the hands of one.

This 50 per cent quota you're talking about that can't be owned, I think that's hogwash. I think that one person, and maybe not in this country, is going to own this fishery. We predicted it 10 years ago when this was set up.

[10:15 a.m.]

MS. EVANS: I hope you're wrong.

MR. THERIAULT: How do we stop it? How do you think we can stop that?

MS. EVANS: Well, we all have to work together, every community.

MR. THERIAULT: We said this 10 years ago.

MS. EVANS: Well, we have to do it now, not say it anymore. We have to do it, by getting the Ministers of Fisheries, federal and provincial, and Clearwater, and the fishermen too, everybody has to come together.

MR. THERIAULT: Do you know how we can own it? We can own it by the amount of money we put into it. The amount of money, the biggest amount of money will own the fishery. That's the way it's set up right now.

One more question, and that's all I have to say, but that's the problem, that's where we're at. Mr. MacLeod, you said Newfoundland and Labrador can't ship its fish to China. Approximately a month ago in the news, Newfoundland and Labrador did ship

fish to China, and they are going to take the Newfoundland and Labrador government to court over it.

MS. EVANS: Yes, they are. Hats off to them.

MR. THERIAULT: I don't know if that's a question, but I think it's a fact.

MR. MACLEOD: I think it's one of the first times that has ever happened, and there will be consequences for that. I've worked with Newfoundland and Labrador people all my life and they're very parochial when it comes to their resource. I think our resources should be regulated as well. It's time to look again at privatizing something that's devastating to all these communities and to an industry. I think it is time to re-look at those things and focus on what has taken place and turn the thing around. I think that we have to be doing things like that.

MR. WHALLEY: The language in the offshore accord Act, with respect to oil and natural gas reserves, is that Nova Scotia should be the principal beneficiary of its own resources and that should, we believe, apply to all of our natural resources - all of the offshore natural resources of Nova Scotia.

MR. THERIAULT: We said that 10 years ago.

MR. WHALLEY: But we don't have an accord on the fishery that protects Nova Scotia's fishing reserves, in the way that we have an accord that protects the oil and gas reserves. So we're not treated in the same manner.

MS. EVANS: Can we get an accord?

MR. DAVID WILSON (Glace Bay): Not here today.

MR. MACLEOD: We can take the first steps toward doing that though, Dave.

MR. THERIAULT: But I believe it is legislated in Newfoundland and Labrador that that resource stay there, but privatization is going to be going against that legislation, since the privatization has come into effect by the federal government. So it's going to be an interesting thing to watch.

MR. MACLEOD: Interesting to say the least.

MS. EVANS: I remember when Stephen Harper was trying to get Prime Minister, and he did a little interview with somebody out of P.E.I., and her concerns were jobs, and she asked him how he thought the future looked for the Maritimes, and he said that he believed that the whole Atlantic Region needs to start emphasizing their resources. He

said that himself. So if we're expected to take care of ourselves - because we always get called the people with their hands out, down this way, when it comes to Ontario and Alberta - we should be able to use our own resources to do it, and stop them from taking them from us. Either that or keep shelling out.

MR. THERIAULT: I couldn't agree with you more. Thank you.

MR. CHAIRMAN: Thank you very much. Mr. Hines.

MR. GARY HINES: Thank you, Mr. Chairman. In your opening statements, Mr. MacLeod, you brought to our attention that the Fisheries and Coastal Resources Act states, ". . . optimize the harvesting and processing segments of the fishing and aquacultural industries for the betterment of coastal communities and the Province as a whole . . ." Is that a piece of the Act that is legally binding, or is that a mission statement?

MR. MACLEOD: John can answer that. That's right out of the Act.

MR. WHALLEY: Yes, it's more the objective of the Act; whether it's legally binding, none of us are lawyers. It's the intent of the Act, obviously.

MR. HINES: I believe that it was Ms. Evans who said that the licence at one time initially required the processing be done on land in Cape Breton. Is there anything binding in those licences, or have those licences been changed in wording that has taken away any legal binding?

MS. EVANS: We have tried to get the information Act to get us this original licence. That takes awhile, so we're still waiting for that. Other than that, the fact that they had to process on land, they chartered those boats from the U.S., because they thought they were going to have a market in the U.S. Then when that didn't happen, they had to refocus on a market in Asia and that market required the utmost freshness and whatnot. This is what we were told. So that meant processing at sea, and then the secondary processing came to us in Cape Breton. When they changed this from the freezer vessel and the original processing everything on land, the government then insisted that they process the secondary processing on land.

MR. HINES: The reason I asked that question is because, maybe there are no lawyers in the room, but ultimately there will be lawyers in the room and I'm wondering if there's a basis in whether it be the mission statement or the Act as well as in the wording of the licensing that gives a foundation for the governments to come together and create the legislation that's necessary to protect the industry. Ultimately, it will be a battle of lawyers in determining the go-forward, but there has to be the political will there, I agree with you on that.

I think your comments regarding Stephen Harper's approach to industry and growth in Atlantic Canada, if you look back in the records, I believe that you'll find the accord we now have with the oil was initially supported by him as a leader, as opposed to the Party in power, the other Party and he was the leader on that. Maybe there will be the political will there if we can get to the table. From my perspective, I think we have to work with you to see that happens.

The quahog industry - what is the tonnage quota for the quahog industry, how big is it? Is there a defined tonnage?

MS. EVANS: I don't know. We didn't even start to harvest it yet, so I'm just not familiar. I know they hold the licence for the quota, but that's all I know.

MR. HINES: If they've made a commitment to do the processing in a Cape Breton plant, you're not sure whether the volume would be there to sustain the plant without that?

MS. EVANS: No, I figure they could catch it within four months. Probably not a big quota.

MR. HINES: Thank you.

MR. CHAIRMAN: We'll now go to round two. Mr. Sampson.

MR. GERALD SAMPSON: There seems to be a definite trend here and I believe that Cape Breton is a small island and the loss of any jobs affects us all, whether you're in Louisbourg or down in Petit-de-Grat or down in Washabuck Peninsula. There's no steel left in Cape Breton, China is buying every bit of scrap steel that can be shipped right now and scrap steel right now is at the highest price it has ever been. There are no coal mines in Cape Breton, we're importing coal. I was shocked to hear the other day when we had the meeting on the seal fishery that in order to supply the codfish market it's being purchased from Russia. We're surrounded with all these resources and apparently our codfish has so many worms in it that we have to import it from Russia.

So what we better do is focus on the present right now and deal with the future. What I'd like to see, as Mr. Theriault said, it's going to be a hard-fought battle if somebody has control over something to try to wrest it away from them.

That's why I would like to make the motion that we send a letter requesting from the province the responsibility the province has to maintain control over our natural resources, if there is any will to do that, if there's any legal aspect to do that. If there is not the responsibility, then let's create the responsibility because on May 4^th the Nova Scotia Legislature is going to sit. I have a meeting next Wednesday from 4:00 p.m. to

5:00 p.m. with the present Minister of Fisheries and Aquaculture, Honourable Ron Chisholm. Through that hour I will request, Jackie, that you could probably use the last half-hour and if there's not enough time, maybe he will consent to creating another meeting. I'll let you know on that.

The letter to the province will be of the intention that further down the road when that letter is created and we get a response from the province, then a future letter will go off to the federal minister accompanied by the letter of response from the provincial minister and we'll start the action to see where we stand. We have to start somewhere, so this will be an initial start to move forward. I have copies here that I brought for the people present this morning, our seafood exports worldwide by the province and the different species. I will give that to them for their information.

Nova Scotia's exports alone in 2004 were $1,087,664,000 - big bucks, big companies, big involvement, big control, a big loss to us little people in the province. The Newfoundlanders and Labradorians are doing something right, and I don't think we need to reinvent the wheel - all we've got to do is copy what they're doing and mould it, if the will is there and if the possibility exists that we can change that. So, Mr. Chairman, what I would like to do is make that motion.

MR. CHAIRMAN: Could I ask, Mr. Sampson, if we could finish the second round of questions first and then I'll come back to you?

MR. GERALD SAMPSON: Absolutely, I'll retract until you finish the second round.

MR. CHAIRMAN: There may be some more questions. If not, then we'll entertain the motion, but I just want to check.

Mr. Corbett.

MR. CORBETT: Thank you, Mr. Chairman. Jackie, in the 2004 annual report from Clearwater they talk about mid-06, mid this year, bringing on a new vessel and, indeed, in their report they show that the main harvesting area will be in the Grand Bank area, not Banquereau. Do you know if this will have any effect on their onshore processing in Newfoundland and Labrador, or is it their thinking to replace what they would take off Grand Bank with the Banquereau Bank supply?

MR. WHALLEY: The history of this fishery shows major swings over a five-, six- year period between Banquereau and Grand Bank. So if Banquereau is very heavily fished the company withdraws and moves to Grand Bank for a period of years, allowing recovery. I think the clams need several years to recover, but over the entire cycle of this fishery from the late 1980s through to the current time, Banquereau has been at least 50

per cent of the total harvest - and, no, it doesn't, the swings, whether the majority was caught in Banquereau or Grand Bank, it has all been funneled into the Grand Bank plant. So this move to Grand Bank will be temporary; they'll come back to Banquereau, but still the processing will all be done in Grand Bank.

MR. CORBETT: I think their claim in their report, obviously, is a scale of efficiency with the new technology on the boat and the FAS. So you would just see this as a hopscotch, if you will - once they have taken what they see as a manageable quota or manageable amount from Grand Bank, then they will retreat back to Banquereau and keep kind of ping-ponging back and forth with the resource?

[10:30 a.m.]

MR. WHALLEY: Yes, if you look at the actual harvest in the Banquereau Bank, it would go from a high of 20,000 metric tonnes in one year to a couple hundred metric tonnes in a year. It's that violent - the swing - and then all the effort shifts to the other bank, and that's the way they've been harvesting the resource.

MR. CORBETT: But the resource isn't a flat resource either, so to speak, and again, to quote their 2004 report, the CEO, Mr. MacDonald, "Clams will be one of Clearwater's most significant growth drivers . . ." at 32 per cent. So I mean it's not like it's a resource that's going downward and, clearly - I dare say this too publicly - they seem to be well managing as much as being able to grow the resource, but it shows not doing much to grow the workforce around that resource though.

MR. WHALLEY: No, that's right, and in the Pinfold report of 2002 I think the estimate was something in the order, the revenue from this particular fishery, of $40 million to $50 million annually. So it's a very lucrative fishery.

MR. CORBETT: Was there ever, Jackie, in discussions with your employer that the North Sydney plant was not making money?

MS. EVANS: No. When Clearwater got the third licence, I think, the third boat, we expected half of that harvest to be processed in our plant. We were all excited when they got this monopoly, and we thought as long as Clearwater is making money, we'll have jobs. You know, I don't care who gets rich - but then the third boat came into the picture and we didn't see any of the Banquereau Bank quota and now we don't have either boat, the three of them are over there.

MR. CORBETT: So what happened in North Sydney - these are my words, not yours - it was greed, not need that you guys are without work.

MS. EVANS: Exactly.

MR. CORBETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Are there any further questions before I entertain the motion from Mr. Sampson? Okay, Mr. Sampson, if you would make your motion, I think Mr. Parker indicated he wanted to second. Are you going to second the motion?

MR. PARKER: Well, we'll see what the motion is.

MR. GERALD SAMPSON: Under the direction of my learned colleague, Mr. Wilson, given the gravity of the situation and for clarity's sake, I make the motion that this committee call for an immediate meeting with the provincial Minister of Fisheries and Aquaculture, the federal Minister of Fisheries and Oceans, and the representation that is here this morning at this meeting, rather than me trying to share a meeting next week, to start the process immediately - let's go right straight to the top. Let's see if we can have a meeting with both ministers and you people here this morning and see if we can have that arranged. That's what the motion will be.

MR. PARKER: Okay, Mr. Chairman, I can second that.

MR. CHAIRMAN: Moved by Mr. Sampson, seconded by Mr. Parker. Discussion on the motion? Mr. Christie.

MR. CHRISTIE: Mr. Chairman, I was just wondering, I don't argue with the motion but the motion doesn't indicate anybody who is to take the lead on that. Is it the chairman of this committee who is going to follow up and try to force the meeting? Are you asking the provincial minister to try to force the meeting? You just said to request a meeting. Could we rephrase it to ask the provincial minister to negotiate a meeting? I think the motion should have some sense of action in there, who is to take the action, and that's my only suggestion.

MR. GERALD SAMPSON: Thank you very much, Peter. I'll amend the motion to read that we ask the provincial Minister of Fisheries and Aquaculture to request an immediate meeting with the federal Minister of Fisheries and Oceans, and include the representation here at this meeting this morning. I so move.

MR. CHAIRMAN: It's a friendly amendment. Are you agreed, Mr. Parker?

MR. PARKER: Yes.

MR. CHAIRMAN: Further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried unanimously, and the records will show that.

Usually we give a few minutes for closing statements. If you would like to take a few minutes to make some closing statements, the floor is yours now.

MR. MACLEOD: Thank you very much, Mr. Chairman. On behalf of the committee here, I certainly want to thank the committee for meeting with us today. I want to publicly thank the Speaker of the House, Cecil Clarke, Gerald Sampson, Dave Wilson and Frank Corbett for their help on this situation that is going to have such an adverse economic impact in the CBRM. I really appreciate all Parties, all levels of the government, getting together here to help solve this problem. I appreciate it very much. I'm a great believer in the fact that much can be accomplished by working together to solve problems, all levels of government, and I think that we represent the same taxpayer and the same constituent.

Again, I want to thank you on behalf of everyone here. What a pleasure it was for us to be here and we thank you so much for the action you've taken and for listening to us, and we really appreciate it. Thank you very much.

MR. CHAIRMAN: Thank you very much, Mr. MacLeod and Ms. Evans, for your presentation. Thank you very much, Mr. Whalley. We appreciate your presentation, appreciate you taking the time to come and speak to us about this important matter.

The next meeting of the committee is May 2^nd. We're looking at moving from the fishery to agriculture, Pork Nova Scotia. If there is no further business, I will entertain a motion for adjournment.

MR. DAVID WILSON (Glace Bay): So moved.

MR. CHAIRMAN: The committee is adjourned.

[The committee adjourned at 10:37 a.m.]