Introduction
The fundamental challenges that our province continues to confront mean that as a government we need to think creatively, to recognize our strengths and our weaknesses, and to accept that there are times when we need to do things differently. By introducing stability into unstable industries, by thinking regionally, and by building strong areas across our great province, we can help maintain the best of what our rural way of life has to offer.

If we are to revitalize rural Newfoundland and Labrador, we must move forward on the basis of a stable fishing industry. On February 4^th 2004, the provincial government released and endorsed the Dunne Commission�s Report on Fish Processing Licensing Policy. Over the course of the past year, we have developed new policies, changed legislation, and implemented new regulations on the road to restructuring the fishery of Newfoundland and Labrador. We have hired new inspectors and are improving our quality assurance programming. Just last week, we announced the details of an arms-length Fish Processing Licensing Board, and announced the details of our new fish processing policy framework. This pragmatic decision-making has been guided by the Dunne Report�s objectives of creating stability, sustainability, and better employment opportunities for industry participants.

In doing so, we have attempted to bring some order to a disorderly industry � and have attempted to address difficult issues that have been neglected for too long. Some of the decisions along the way have been unconventional, and many have been controversial. This is the nature of our fishing industry. However, if we are to restructure and revitalize the industry, the conventional way of doing business will not work. This has brought us to where we are today.

Today, I will address three issues, and clearly outline government�s intentions as it relates to each.

Shrimp
First, I will explain our approach to this year�s shrimp fishery. In 2004, with the benefit of several exhaustive studies including the Vardy Report, the Dunne Report, and the Gregory/ Broderick Report, government made changes to the management and operations of the shrimp sector. I need not rehash the cut and thrust of last Spring; suffice it to say that changes were made. For the first time ever, our fishing industry harvested, processed, and marketed 144 million pounds of shrimp � the Total Allowable Catch.

While there is still room for substantial improvement in the shrimp sector, the 2004 approach enabled us to have a successful fishery despite very difficult market conditions. Upon completion of the season, I required the industry to conduct a review of the 2004 approach. This review was completed by Burke Consulting, and I understand that discussions between the industry and the union are proceeding to address identified problems and to improve the system.

Today, I am announcing a rollover of the 2004 Gregory/Broderick model for the 2005 shrimp fishery, including the raw material shares assigned to each processing operation. This model has proven its value in 2004, and I look forward to further improvements this year.

Crab Industry � Instability
Second, the government is very concerned about the situation in the crab sector. Each year, we face bickering between harvesters and processors as they attempt to negotiate prices. At best, this results in a delayed opening to the fishery and leaves many fish plant workers in a precarious position. At worst, it results in industry shutdowns, with plant workers (and government) caught in the middle. These industry-made situations have destroyed untold millions of pounds of crab due to the season getting delayed into the soft shell period. This instability is damaging our fishery, and it must stop.

One year ago today, the Canadian dollar was valued at 74 cents U.S. We were expecting a strong U.S. market, along with significant Japanese demand. We were almost void of inventory, and the prognosis on TAC was stable in 3K and 3L, with some reductions expected in 2J and 3PS.

This week, the Canadian dollar is trading at 81 cents U.S. All other things being equal, compared to 2002, these exchange rates represent a loss of approximately $70 to $80 million dollars to our province�s crab industry. But we also have a soft US market that has Alaskan crab running approximately 50 cents a pound lower than in the market this time last year. I am told we are currently carrying some 10 million pounds or more of crab in inventory. And we are facing the possibility of the federal government reducing quotas in some areas, with stricter soft shell protocols probably leading to earlier closures throughout all areas.

We believe that this situation will add additional volatility and instability to an already volatile and unstable industry. While the crab industry has faced each of these issues at one time or another in the past, it has never faced all of them at once. In an industry that has been plagued with instability, this combination of challenges could be devastating. It is imperative that the 2005 season open on time. It is essential that we avoid the disruptions of 1997 and 2003. And it is critical that we avoid a race to the bottom in the marketplace.

For those who might suggest that our concern is overstated, I can confirm that government has been contacted by, and had discussions with, the banking community. They have expressed concerns to us about the status of some enterprises. We understand that some companies are experiencing financial stress.

Should the worst case scenario play out, the impact of a collapse in the crab fishery would be immediate, intensely painful, and far-reaching. While we believe rationalization is necessary, we believe it is essential to rural and regional stability that rationalization be properly managed, not uncontrolled.

For these reasons, government has over the past number of weeks given serious consideration to how we might best stabilize the situation, manage the 2005 crab season, and set the course for an orderly rationalization of the industry. The fishing industry needs a stable platform from which to move forward. We cannot plan for the next 5 to 10 years if we cannot see our way through the next 5 to 10 months.

Crab Industry � RMS
As a government, we are limited in what we can do. We cannot force crab harvesters to fish. We cannot force seafood producers to process. And the province does not control the quantity of fish that is available to catch in our waters. However, we do exercise jurisdiction over the processing sector.

Throughout this renewal process, we have been monitoring market conditions for the crab fishery, and have contemplated the need to implement one of the Dunne Commission�s more controversial recommendations. We now believe that, faced with the convergence of the facts I have just outlined, it is our responsibility to follow through on this objective advice and act to protect the public interest.

Having reviewed the alternatives, and after assessing the implications of failing to act, we have decided that the best way to proceed is with a 2-year pilot project for Raw Material Sharing in crab. This concept is highly controversial among some harvesters, as Eric Dunne recorded in his Report. However, the Dunne Commission advised that this is the only viable way to solve some of the operational instability in the industry. We agree.

An arbitrator will be appointed by government to establish the actual sharing arrangement. Strong, dynamic regions are the key to the success of our rural communities. The arbitrator will share the production firstly along regional lines. The province will be divided into regions, and not less than 75% of the crab quota available in an area will be processed in that area. This is consistent with government�s policy on regional balance. It also represents a first step forward addressing the historic imbalance between quotas and production in certain areas of the province.

The arbitrator will consider the purchases and processing performance of specific operations over recent years. No operation shall have as its 2005 share less than 90% of its previous three year average. This is consistent with government�s policy on historical dependence.

During the pilot project, there will be no permanent transfers. This provides government, industry, unions and communities with time to develop a shared approach for rationalization and adjustment. This is consistent with the provincial government�s policy of planned rationalization.

When we endorsed the Dunne Report in principle last year, I stated that we would follow the recommendation that a pilot project in raw material sharing must address any substantive and reasonable objections from plant workers and harvesters. It would have to ensure a fair price for harvesters. We would not consider any proposal that failed to deal with that issue.

As part of the model announced today, processors will be required to disclose actual market sales invoices to an independent auditing firm. These will be used in calculating the price-to-market formula. From now on, the price to crab fishermen will be based on what is actually received in the market, not what is expected or reported from the market.

Processors and the union have used a variation of this price setting system in lump roe price negotiations for a number of years with great success. This requirement for disclosure of sales invoices represents a huge step forward and is consistent with government�s accountability policy. Additionally, there will be changes to the Fishing Industry Collective Bargaining Act to facilitate a more orderly process for price negotiations for all species. Included will be a dispute resolution mechanism to be used when the parties cannot agree. We believe that this represents a monumental step forward in ensuring openness, transparency, and accountability in price-setting. We also expect fish processors and harvesters to address very important non-price issues in the course of pricing negotiations. These must be dealt with, in a manner that is fair, and equitable. Since I became the minister of fisheries and aquaculture in November 2003, I have listened to the concerns of harvesters about these types of issues. It is my intention, over the coming days, to consult further with harvesters to hear their concerns and consider their advice on the measures they deem necessary to protect their interests.

Last February, I also said that for an RMS system to work, we would have to protect against excessive corporate concentration by processors. Government has heard concerns on the possible implications of increasing corporate concentration in the fish processing sector. As a result, there will be no permanent transfer of shares. This system will cap concentration at its current level for a period of at least two years. A pilot project provides us the opportunity to develop guidelines around concentration of ownership. Government should not, whether by design or default, allow the ownership of our fishing industry to be consolidated into the hands of a few. Through consultation with industry stakeholders, we will develop an approach that balances the need for consolidation and the public desire for limits on control.

We are also committed to implementing a strict monitoring and enforcement program. We will monitor in-season activity on a daily basis, and will deal very firmly with any organizations not following this system. Companies who violate the rules will face not only significant financial penalties, but also a harsh reduction in the amount of raw material they are allowed to purchase the following year. This reduction in their next year�s cap will be calculated at an amount significantly greater than the amount by which they exceed their limit.

With the passing of new legislation last fall, as Minister I have a greater authority to extend and remove privileges to fish processing licence holders. Let there be no mistake. I as Minister, and we as a government, will deal harshly with those who do not play by the rules.

This cap system is a stabilizing measure. Fish processing companies will be able to better plan their business operations because they will be able to make projections based on a predictable supply of raw material. Improved quality should ensue because crab will be processed near to where it is caught and landed. Perhaps most importantly, fish plant workers will be able to better plan their lives because of the stability that this introduces.

I have already noted that the Dunne Report called a Raw Material Sharing system the only serious way to "solve some of the operational instability in the industry." In the Commission�s words, this system is needed to help address the "extreme and irrational competitive activity that eventually threatens the overall economic base of the industry."

This pilot project for the crab fishery fits within our new fish processing policy framework and the Licensing Board, and allows us to learn from the last year�s success of the sharing system in the shrimp fishery. Our model is generally consistent with the one recommended in the Dunne Report. It is guided by the principles of fairness, equity, inclusiveness, regional balance, and adjacency. It also responds to the public demand for us to demonstrate leadership in an effort to strengthen our fishery and rural economies. This requires difficult decisions to be made, and we will not abdicate our responsibility to make them..

St. Anthony Court Case
Third, I am here today to announce government�s response to the St. Anthony Seafoods crab licence case. It should be clear that this issue is a separate matter from the Dunne Report�s recommendations, and is related to legal proceedings against the province.

In 1998, a former Minister of Fisheries and Aquaculture promised, in writing, a crab licence to the operators of the fish plant at St. Anthony. While I will not get into all the details at this time, suffice it to say that the licence never did get issued, with a later Minister of Fisheries flatly refusing to issue the licence in 2002.

As a result of that refusal, St. Anthony Seafoods took the government to court over the matter. At trial, St. Anthony�s claim against government was dismissed. St. Anthony Seafoods appealed the decision to the Supreme Court of Newfoundland and Labrador Court of Appeal. In October 2004, the Court of Appeal delivered a unanimous decision. The Court found that former Minister Gerry Reid�s refusal was "patently unreasonable" since he had not properly considered all the facts. They set aside his decision, referred the matter of damages back to the trial judge, and ordered the present Minister (me) to reconsider the matter of the licence.

While I understand that a commitment was made to St. Anthony, the Court of Appeal confirmed that, as the current Minister, I am under no obligation to honor that commitment. The Fish Inspection Act provides the Minister with a great deal of discretion in these matters. However, as the Court of Appeal said, such discretion must be exercised in a reasonable manner.

And that is where the former Minister failed in 2002 when he made an inconsistent decision. Had he applied his discretion consistently, evenhandedly, and in a fair manner, one of two things would have happened: either St. Anthony would have received a crab licence when Twillingate received a shrimp licence, or St. Anthony and Twillingate would both have received nothing. By issuing the shrimp licence to Twillingate, the "crab for shrimp" trading arrangement between these two companies was disrupted. This left St. Anthony Seafoods as the only shrimp processor without a crab licence. It also left them with no means to recoup their shrimp raw material loss to Twillingate.

This issue pre-dates the Fish Processing Licensing Board. Had the Board existed in 1998, or 2002, we would not have seen former Ministers exercise their discretion in such an unchecked manner. The St. Anthony Seafoods court case is unique, because months before I announced the establishment of the Board, the Court of Appeal had already directed me as Minister to make a decision. It would be unfair to defer my Ministerial responsibility to the Board. The Court directed me to reconsider the decision, and I will take responsibility for the outcome.

I believe that the issue must be considered as though we were back in 2002. Evenhandedness and fair-mindedness means that you cannot make chalk out of one, and cheese out of the other, as the saying goes. Since it would be inappropriate to remove Twillingate�s shrimp licence, the only logical and reasonable conclusion is that St. Anthony should receive the crab licence that the provincial government promised in writing in 1998. I am therefore announcing that government is in the final stages of negotiating an arrangement with St. Anthony Seafoods Limited Partnership, which would result in a crab processing licence being issued to St. Anthony.

Closing
They say that those who do not learn from the lessons of history are doomed to make the same mistakes. We must use common sense planning, make responsible decisions, and take action to avoid a repeat of the past.

Our conviction in the need for this raw material sharing system is about fairness, employment stability, and regional balance. We realize that this system is not what processors have said that they need. We accept that some harvesters may have been satisfied with the status quo. We recognize that some communities have the crab fishery to thank for their economic revival.

But together we face a difficult future. The alternative to this regulated pilot system is an uncontrolled free-market rationalization of the fishery � one that would devastate some of our rural communities. We ask everyone for their understanding, and to support this initiative as one that is fair, equitable, and in the interest of a stronger fishery and a stronger rural Newfoundland and Labrador.

The provincial government bears a responsibility to encourage a prosperous fishery that provides strong, stable incomes to workers, and conditions for healthy regions throughout the province. We are faced with the calamitous forces of a stronger Canadian dollar, excess inventory, depressed market prices, processing overcapacity, and the prospects of a quota cut. It would be irresponsible and incomprehensible for us to sit idly by, and fail to act in the public interest.