*4 V IKWIIVVOKK lOK COMMIRllAl I It LNSINli 



At present, annual licence tecs are the only direct 

 st)urce ol guvernnient revenue generated Ironi coniiner- 

 cial fishenes. A licence lee is an appropriate way to real- 

 ize some of the value o\' a privilege ti> use public 

 resources. It is alsi> the simplest way tor the government 

 to recover for the public some of the "economic rents" in 

 the fisheries and to help defray administrative costs. Hut 

 the government should not rely exclusively t)n licence 

 fees. Differences in flat rate fees among species and 

 among gear types are bound to be arbitrary and will not 

 accurately reflect the values of various species over time. 

 Thus, they will fail to ensure that the charges "are con- 

 sistent with the value of the resources recovered" as the 

 Commission's terms of reference suggest they should. 

 And flat rates are inequitable because they tend to put 

 the heaviest burden on those who catch the fewest fish. 

 So licence fees should at least be supplemented by other 

 charges that reflect more accurately the value of the 

 resources used. 



In recent years recurrent discussions have occurred 

 and recommendations have been made regarding levies 

 on the catch, or royalties, as a means of generating reve- 

 nue from the fisheries. The Minister's advisory committee 

 on salmon fleet development advised in 1973 that — 



. . . since a licence fee based on vessel tormage 

 does not adequately reflect catching ability or 

 the use of the resource, the Committee recom- 

 mends that required revenues for fleet ration- 

 alization be raised primarily through pay- 

 ments based on actual landings.^ 



In 1978 a special advisor to the Department of Fisher- 

 ies and Oceans recommended a royalty for the Pacific 

 fisheries to discourage further investment in fishing 

 capacity." In April 1980, in the Speech from the Throne, 

 the government pledged itself to new revenue arrange- 

 ments for the fisheries. More recently, in October 1980, 

 special advisors to the Minister of Fisheries and Oceans 

 recommended royalties on salmon, and the Minister 

 announced his intention to implement that recommenda- 

 tion in 1982 if circumstances were suitable. A landings 

 fee has also been considered as a means of recovering the 

 cost of the Salmonid Enhancement Program. Such levies 

 have already been introduced in the neighbouring fisher- 

 ies of Washington State and Alaska. 



My Preliminary Report last year urged the government 

 to introduce royalties without further delay, and recom- 

 mended specific rates and other details. Early this year 

 the Minister again announced his intention to implement 

 royalties on salmon for the 1982 season, but at the time of 

 writing this report with the fishing season half over, the 

 enabling legislation has still not been introduced into 

 Parliament. 



Some participants in my public hearings and meetings 

 opposed royalties on grounds that public revenues are 

 raised through the tax system. But the tax .system is a 

 general method of exacting a contribution to government 

 costs trom all personal and business income, irrespective 

 of any raw material u.sed to produce it. Business enter- 

 prises that do not rely on public resources still pay their 

 share of taxes, so taxes cannot be viewed as the price paid 

 tor access to public resources. 



In order to return to the public a share of the value of 

 public resources used by private parties, a royalty must 

 be levied. Such charges are customary in Canada for tim- 

 ber, furs, minerals, oil and gas, and there is no obvious 

 reason to exempt highly valuable fish. If royalties were 

 coupled with fleet reduction and (for .some species) stock 

 enhancement, they would, in the end, improve the earn- 

 ings of vesselowners and fishermen. Indeed, without 

 additional charges, these programs will bestow windfall 

 gains on the industry and would prompt additional 

 fishing capacity. 



Finally, although depressed fish prices now plague 

 some sectors of the industry, experience suggests that 

 wide cyclical swings in prices and earnings can be 

 expected. Certainly, the prosperous salmon and roe- 

 herring markets of the mid and late 1970s could have 

 supported significant royalties even though the capacity 

 of those fleets was excessive. The rapidly escalating val- 

 ues of vessel licences over that era is testimony to this 

 conclusion. 



Despite the misgivings of some, many fishermen, ves- 

 selowners and processors accept the need to raise public 

 revenue from the fisheries and recognize royalties on 

 landings as the most appropriate means. They are clearly 

 the most direct and equitable means of charging for the 

 use of fish resources, and they ensure that payments to 

 the government are related consistently to resource use, 

 as the Commission's terms of reference suggest they 

 should. I therefore make the following recommendations: 



29. E^ch year, holders of quota licences and mariculture 

 leases should be required to pay royalties on their 

 authorized catch at the rates for each species set out in 

 Table 8-1. These charges should be payable whether 

 or not a quota licensee actually catches his entitle- 

 ment, in recognition of the resources reserved for each 

 licensee. 



30. Royalties should be applied to all future landings of 

 salmon and roe-herring at the rates set out in Table 8- 

 1. These charges should be collected from those who 

 buy fish from fishemien. 



The proposed royalties are intended to apply to the 

 round weight of salmon landed. A simple fraction of the 

 landed weight should be added for dressed fish to 

 approximate the round weight equivalent. 



