eO SAlMONin 1 NHANCrVtl N1 



yielded aK>ut $1.0 inillK>M. Mc.iiu^hilo, the expemlitures 

 intended ti> be recovered have been mounting, and accu- 

 mulating at conipH>und interest. They sttxid at $115 mil- 

 lion in March of this year, increasing at 10 percent plus 

 new expenditures. So no determined etVort to recover 

 costs has been made, notwithstanding the Cabinet's deci- 

 sion. 



The public hearings have revealed a diversity of opin- 

 ion about recovery ot" enhancement costs. Some question 

 the justification for such a policy. They ptiint out that 

 fishenes agencies throughout the continent build and 

 operate hatcheries or other works to increase fish prtKluc- 

 tion without these activities being constrained by the rev- 

 enues collected tVom fishermen. Many argue that, where 

 habitat rehabilitation is required, those who have dam- 

 aged the habitat should bear most or all of the cost. Oth- 

 ers have suggested that fishermen should not be required 

 to contribute until the increase in fish supply is available 

 to them. And much controversy surrounds how charges 

 should be levied. Nevertheless, many sport and commer- 

 cial fishermen support the principle that those who will 

 benefit directly from resource enhancement should con- 

 tribute to the cost. However, because federal cost recov- 

 ery measures have been so long delayed, enthusiasm for 

 contributing to the cost of Phase I, has diminished since 

 most of the funds have already been mostly expended, 

 and in a way that cannot now be influenced. 



It would be pointless to attribute future revenues to 

 Phase I costs or any other specific past expenditures. The 

 money is spent, the works are in place and the govern- 

 ment has failed, so far, to meet its own fiscal commit- 

 ments. Now we must decide for the future. 



The focus should be, first, on designing a new enhance- 

 ment plan that will generate the maximum benefits in 

 excess of the costs; and second, on recovering costs from 

 those who will benefit from the enhanced resources. But 

 not all projects that yield net returns lend themselves to 

 financial arrangements for capturing enough of the 

 benefits to pay for the projects, and some of the benefits 

 sought through enhancement are broadly social rather 

 than narrowly economic. 



I therefore propose that the federal government's 

 financial provisions for enhancement beyond Phase I be 

 linked directly to the revenues from resource users and to 

 a federal contribution of an amount at least equal to the 

 non recoverable expenditures under Phase I. Therefore — 



12. The federal government should write off its unrecov- 

 ered enhancement costs under Phase I of the program. 

 Providing that suitable projects are available, the fed- 

 eral government should provide funds for enhance- 

 ment during the first term of the renewed agreement 

 not less than the sum of — 



i) Imlf iIk- revenues from sahwator s|M)rtfishing 

 licence fees (e.\|Mvted lo Ik- initially uImhiI $2.0 

 million), 



11) half the revenues from royalties on comnK-rcial 

 salmon landings (initially alMHil $6 million), 



iii) revenues from sales of fish and eggs at enhance- 

 ment facilities (now alxuit $0.6 million), 



iv) an anMHUit equal to the expenditures under the 

 present program that are n<»l intended to be cost 

 recoverable (about $3.2 million on an annual 

 basis). 



The unrecoverable contribution should probably be 

 higher than the average of $3.2 million per year provided 

 for under Phase I, since I suggest no reduction in the 

 kinds of activities that generate most of the social benefits 

 considered to be not cost recoverable (such as commu- 

 nity development and public participation projects, 

 minor projects and fish provided to Indians from 

 enhancement facilities). Moreover that figure was estab- 

 lished in 1977 and by 1984 will be significantly eroded by 

 inflation. In addition, by 1984 and increasingly thereafter 

 the three revenue sources will yield more than the present 

 estimates, and the unrecoverable contribution should at 

 least maintain its relationship — about one-third — to 

 total spending. The federal government's commitments 

 under the new agreement should be based on reasonable 

 estimates of future revenues. 



This suggests an enhancement program during the first 

 term of the new agreement beginning at an annual level 

 of at least $12 million plus the provincial contribution. 

 With the Department assuming the operating costs of 

 completed projects, and the addition of the aquatic 

 inventory program, the total level of activities under both 

 programs may not fall significantly short of the current 

 enhancement efibrt. 



Elsewhere in this report I explain that the economic 

 returns to the fishery can be substantially increased 

 through improved fisheries management and rationalized 

 commercial fleets. If the measures proposed are taken, 

 they will increase revenues for enhancement purposes as 

 well. But in view of past experience the federal Treasury 

 Board ought not to approve expenditures of funds 

 intended to be recovered beyond Phase I until the 

 machinery for recovering them is firmly in place. 



Organization 



Participants in the Commission's hearings criticized 

 the present organization of the enhancement program on 

 several grounds: its separation from the Department's 

 habitat and management arms, the structure of the board 

 and the Salmonid Enhancement Task Group, the scope 

 of their terms of reference and (especially) the relation- 



