LICENSING AND FLEET DEVELOPMENT POLICY 77 



Who should be the recipients of these gains is a 

 separate question. But on this matter, too, my terms of 

 reference provide guidance; after allowing "fair and rea- 

 sonable returns to commercial fishing enterprises" the 

 surplus should accrue to the Crown. In formulating my 

 proposals, I have interpreted this to mean that the man- 

 power engaged in the fisheries should receive incomes, on 

 average taking one year with another, comparable to 

 those of workers with similar skills in other industries in 

 western Canada, and that those who invest capital should 

 earn a rate of return comparable to that in other indus- 

 tries of comparable riskiness. Returns greater than that 

 constitute resource rents and should be captured by the 

 government through levies that are "consistent with the 

 value of resources recovered . . . ." 



Hitherto, no surplus has been generated for the Crown 

 to collect because of the excessive costs of fishing. Instead 

 of the substantial surpluses that well-organized fisheries 

 could yield, public revenues have been well below the 

 cost of management and administration, so the direct 

 return to the people of Canada has been negative. 



Furthermore, the returns to fishermen and vesselown- 

 ers have usually been modest and highly unstable. The 

 historical pattern has been one of temporary prosperity 

 during favourable conditions, inducing new investments 

 in fishing power, which in turn aggravates the financial 

 pressure on the fleet during the subsequent downturns. 



FAQNG THE CHALLENGE 



While this report is being written the Pacific fisheries 

 are suffering serious depression. This condition is aggra- 

 vated by a variety of short-run and external influences 

 relating to markets, interest rates, fuel prices and so on. 

 But it is important to recognize the more fundamental 

 problem: that the fishing industry will always be in a 

 precarious economic condition if the potentially substan- 

 tial margin between its revenues and costs is allowed to 

 be swallowed up in wasteful expansion of fishing capacity 

 and higher costs. The greatest single challenge in reor- 

 ganizing the policy framework for the commercial fisher- 

 ies is to stop this treadmill of overcapacity, and further to 

 reduce the present excess capacity, so that fishermen can 

 receive reasonable returns and the people of Canada can 

 begin to realize some of the substantial surplus that the 

 fisheries are capable of yielding with a better fleet struc- 

 ture. 



Governments, having issued too many fishing privi- 

 leges for efficient utilization of the resource, have often 

 responded with measures that aggravate the problem. To 

 protect stocks, they have applied restrictions on gear, and 

 fishing time and areas in order to control fishing effort, 

 with the result that the fisheries are now among the most 

 highly regulated industries. Regardless of the effective- 



ness of these restrictions in protecting the stocks, they do 

 nothing to control expansion of the ffeet; instead, they 

 accommodate excess capacity. Furthermore, subsidies 

 have been introduced to improve fishermen's earnings 

 and to assist fishermen with investments in new or 

 improved vessels. Obviously, this kind of financial sup- 

 port, whatever its other social effects, tends to lower the 

 cost of, and thus enhance the returns from, fishing. 

 Hence, it fuels the expansion of redundant fishing capac- 

 ity. 



Governmental support for ailing fishing industries has 

 sometimes been justified on grounds of protecting 

 employment opportunities or social development. I have 

 already pointed out that fisheries policy must be sensitive 

 to social needs, and later I recommend measures to miti- 

 gate dislocation as the fisheries are rationalized. But gov- 

 ernments should be dissuaded from attempts to generate 

 employment in overcrowded fisheries. 



To the extent that there are more fishermen 

 than the industry can reasonably suppxjrt, 

 more processing facilities, more shore-based 

 and water-bom jobs than are justifiable from 

 a pure economic standpoint, then the indus- 

 tr\' must be considered as one in which gov- 

 ernment regulation and policy is imposing a 

 special social tax.'' 



In contrast to almost any other make-work measures, 

 more fishermen cannot generate more product or service; 

 indeed, to the extent that another fisherman catches fish, 

 he simply reduces the production of others. 



Later, I point to a need for more effort in managing 

 fish and to opportunities for enhancing and cultunng 

 stocks. These are the sectors of the fisheries where more 

 labour and capital can be productive. Hitherto, we have 

 spent far too much on catching fish and too little on 

 managing and producing them. 



Submissions at my public hearings reveal a widespread 

 recognition of the need for governments to put behind 

 them the traditional open-access regime of the fisheries. 

 But there remains a disturbing dissenting opinion; some 

 fishermen insist that the government should fix the total 

 catch and nothing else, leaving "free market forces" to 

 sort out the eflficient from the inefficient fishermen. 

 According to this view, to attempt more than this would 

 be to interfere with the free enterprise system as it applies 

 to fishing. 



This position contains a fundamental misunderstand- 

 ing. The free enterprise system depends on someone hav- 

 ing control over all of the factors of production, including 

 natural resources, and ensuring that they are used in the 

 most profitable way. Common-property resources have 

 no place in the market system of economic organization; 



