Financing the transition (sustainable fisheries)

The fishery is an emblematic tale of how the failure to invest in prevention (in this case assuring sustainable harvest in the fishery) and the siloed structures of government budgeting resulted in substantial amounts of avoidable government expenditure.  In other words, by failing to prevent stock collapse, in part because funds haven't been properly allocated to develop good monitoring systems, integrated fishery management plans, and equitable access to fish, governments end up paying enormous sums in compensatory payments or lose tax revenue.  However, many of these payments come from non-DFO department budgets so the feedback mechanisms do not necessarily reveal the importance of prevention investments.

For example, the closure of the cod fishery cost governments millions of dollars.  According to Heritage Newfoundland, some 30,000 fishers and plant workers were laid off in Newfoundland and Labrador, about 12% of the labour force.  Some later found work in the shellfish sector, but the transition was not immediate.  Governments established financial aid, retirement and license buyback and retraining programs to mitigate the negative impacts.  It also resulted in significant tax revenue losses relative to earlier periods, at least until the shellfish industry grew substantially.

The Northern Cod Adjustment and Rehabilitation Program (NCARP) provided weekly payments to out-of-work fishers and plant workers based on their average seasonal unemployment insurance earnings between 1989 and 1991. Those receiving benefits enrolled in retraining programs for other employment or accepted early retirement packages. Approximately 28,000 people received income support benefits under the program. The projected costs were $920 million, with $587 million coming from the DFO budget (Auditor General, 1993), and some coming from Human Resources Canada. The program that followed immediately, The Atlantic Groundfish Strategy (TAGS), which extended coverage to the entire Atlantic region and more groundfish, ran from 1994-98, and cost $1.9 billion. There were also significant questions raised about the effectiveness of the programs (Heritage Newfoundland).  And since 1998, many fish sector workers may have drawn more Employment Insurance than they might have had the groundfish sector been more robust.  According to Heritage Newfoundland, the average fisher and fish plant worker was still drawing $10,000 annually in EI payments in 2001.

The DFO budget in 89-90 before the closure of the cod fishery was about $US80 million  for stock assessment, management, enforcement and administration in the region (Shrank and Skoda, 2001).   A three fold increase in expenditure on these functions would still not match what the compensation budget ended up being, let alone including in the analysis the lost revenue experienced  by the provinces and  local municipalities associated with the demise of economic activity and  infrastructure and out-migration from the region.  Nor does it include costs to the health care and worker health and safety systems related to stress and ill health associated with unemployment or engagement in unsafe work activities driven by financial desperation.

The collapse of the Northern Cod fishery is obviously the most dramatic example of this government failure, but similar stories can be seen in other fishing sectors, albeit to a lesser extent.  But all these stories are a result of deficiencies in  stock assessments and fishery management, and inadequate budgets are parts of these failures.