May 30, 1996

RESOURCE ESTIMATES

COMMITTEE

Pursuant to Standing Order 87, William Ramsay,

M.H.A., Burgeo & LaPoile substitutes for Robert Mercer, M.H.A., Humber East; and

Anthony Sparrow, M.H.A., Placentia & St. Mary's substitutes for Anna Thistle,

M.H.A., Grand Falls - Buchans.

The Committee met at 7:00 p.m. in the House of

Assembly.

CHAIR (Mr. Canning): Order, please!

Welcome, Minister. Before we begin, we will just

say that the way we have decided to go is to give fifteen minutes opening

statement to you and fifteen minutes of rebuttal by Mr. Shelley, then questions

and answers are ten minutes each.

Before we do that, though, we should deal with the

Minutes of the last Resource Committee meeting of May 28. I think the Minutes

have been circulated.

On motion, Minutes adopted as circulated.

CHAIR: Minister, perhaps first, you would like

to start by introducing your delegation and then we will take a few minutes to

introduce the members of the Committee.

MR. FUREY: Thank you, Mr. Chairman.

On my right is Mr. Sid Blundon, the Assistant

Deputy Minister of Industry and Trade and the Acting Deputy for the next week or

two.

On my left is David Butler, the Director of Finance

and Administration.

CHAIR: Thank you.

Rick, do you want to start and just introduce

yourselves?

MR. WOODFORD: Rick Woodford, MHA for Humber

Valley.

MR. SPARROW: Anthony Sparrow, MHA for Placentia

and St. Mary's.

MR. RAMSAY: Bill Ramsay, MHA for Burgeo and

LaPoile.

MR. SHELLEY: Paul Shelley, MHA for Baie Verte.

MR. FITZGERALD: Roger Fitzgerald, MHA for

Bonavista South.

MR. WALSH: Jim Walsh, MHA for Conception Bay

East and Bell Island, here as a guest and the White Knight, in case the minister

needs the help, but I doubt if he will.

CHAIR: I am Perry Canning, MHA for Labrador

West.

Well, Minister we will get on with it - the floor

is yours.

MR. FUREY: Thank you, Mr. Chairman.

I don't have an opening statement except to say

that the budget has been tabled for a number of weeks now; my particular budget

has $28 million. You take the related revenue off it and you are down to $20

million, it is less than 1 per cent of the entire Budget for the Province which

is $3.4 billion, and I am open for questions.

CHAIR: I should say that as each of your

delegates speak, he should identify himself for Hansard purposes.

Mr. Shelley.

MR. SHELLEY: Thank you very much, Mr. Chairman.

CHAIR: One second now, we should call the first

heading as the Clerk -

CLERK (Ms Murphy): 1.1.01

CHAIR: 1.1.01, okay, fine.

MR. SHELLEY: Thank you very much, Mr. Chairman.

I say to the minister, first of all, as I have said

to every other minister who was up the last week or so, that I am on call and

may have to leave at any moment; I don't feel like saying that anymore because

it hasn't happened, but who knows? A week-and-a-half has passed now. Anyway, I

have a few questions.

Just looking through the estimates again - I

glanced over them a couple of days ago and most things have dropped in the

minister's department anyway. Of course, there has been a big changeover with

the things that have left your department, not a big changeover but things have

changed in your department. I will start with a couple of things. First of all,

I would like to mention the EDGE legislation and, of course, the concept of EDGE

and so on. I have been on record as saying it anyway, that it is a good thing,

the concept of EDGE and anything we can do to attract and let people know in big

industries outside of not only Newfoundland but outside of Canada, that we are

open for business and that we are business-friendly and so on.

Of course, the comment is always made, and I think

I have said to the minister before, that that is great for those companies who

invest that amount of money but, more attractions I think, in line with the

smaller business. I think the minister heard those criticisms before, not just

the government but Newfoundland in general, that our small businesses of two and

three people in a business as small as that, but smaller than an investment of

$500,000 is it, for the EDGE criteria as a minimum?

MR. FUREY: Three hundred thousand dollars.

MR. SHELLEY: Three hundred thousand dollars,

but you know, the incentive is good for business outside the Province and

outside the country to invest. But, of course, our own small business,

especially pertaining to young entrepreneurs - and I have talked about this

before. But regarding capital and expertise, certainly, very young people who

have small, simple ideas find that they get locked up behind brick walls and

bureaucracy and they soon get turned off. So we need to put things in place for

those people. I know the minister and other members here get the young person, a

student fresh out of college or whatever, who wants to work for himself and

start a business on his own, and he gets turned off very quickly. So, I mean,

the incentives for these people still have to be looked at; I know there are

things being experimented with now, but other avenues for them to look to also.

The EDGE legislation again, as it pertains to

mining, I know the people in my area have taken advantage, shall we say, of the

EDGE legislation, and others have not. When it comes to mining, maybe I will

start with a question on that in general I guess and ask the minister just to

comment on when it comes to mining and the size of the mine, and one mine

getting EDGE status. Could you just make some comments on that to start.

MR. FUREY: Mr. Chairman, I want to apologize

for my dress here tonight. I caught a flight from the Great Northern Peninsula

and because of the fog and weather in St. John's it was difficult and we were

late arriving so I didn't have time to properly dress. Secondly, I would like to

congratulate the member and I am not sure if this is his first time being a

father, but I had that experience two years ago at the tender age of forty-one.

It was quite an experience.

The EDGE legislation. It is a good piece of

legislation. It is a piece of legislation that has had unanimous support from

the House when it was tabled. We left the thresholds of $300,000 and ten jobs at

those levels because that is what we discovered in consultation around the

Province and amongst business men and women, that these would be reasonable

thresholds. But we also put an adjective in there, quite consciously. We put the

adjective `potential' which sits just before `$300,000' and `potential' sits

just before `ten jobs'. So what we are saying to people is, you may not create

the ten jobs immediately and you may not have the $300,000 of capital investment

immediately, but you must show that you have the potential to do it. And it is

on that basis that each is judged on its own merit.

With respect to the legislation, it is just a

little over a year old. There are thirty-three companies registered in the

Province to date. Thirty-seven municipalities have signed on in mirror or in

corresponding legislation. Of those thirty-three companies there are 300 brand

new full-time jobs, real jobs created so far, but there is the potential to

bring it up to 1,000 within the next four to six months. We think we will

achieve that potential of the 1,000 new jobs.

The investment so far is around $67.8 million, is

what comes to mind, and that may be up slightly. But here is what is interesting

about that investment: 85 per cent of the $67.5 million is from the private

sector. I think that is a remarkable achievement because most of the time you

get them drawing on the ACOAs and the FDBDs and the ENLs and those kinds of

things and they marry it to private sector capital which they formulate at

around 20 per cent or 30 per cent usually.

In this case the EDGE legislation foregoing the

taxes and giving the companies a break in the early formative years of the

company has allowed them to put up front cash in to the tune of 85 per cent of

that total investment. And, I think, that is pretty remarkable.

With respect to minerals and mining, we struggled

with that one, and I have to tell you, we are struggling with tourism as well.

Where do you say yes and where do you say no? Of course, the competitive clause

section 31-4 of the Act is invoked automatically where there is competition that

causes somebody to lose jobs or lose investment by virtue of a tax concession by

the government. So the board independently reviewing each EDGE application on

its own merit, has to look and ensure that clause is not breached, the

competition clause. They have been diligent and very careful about that. We have

had one series of complaints, and I am happy to tell you about that at some

point in the future, if you would like to talk about it. It was a judgment call.

But with respect to the mines and the minerals, we

were happy to announce one in your district just recently which will create

about ninety jobs, I think, over the life of it, and trigger about $16 million

in private capital investment. The company that came to us said, `Look, we

really need EDGE. And why do we need EDGE? Because we are going to the capital

markets to try to borrow this money to flow it through, to kick-start this

particular project.' EDGE is not there for every mine, and EDGE is not there for

every mineral development or every mining company. Each one was looked at on its

own merit. The business case was studied. We looked at the foregone revenues by

way of tax concessions that the government would provide. We look at the

economic impacts. We looked at where it was, what the unemployment rates were,

the social impacts. We looked at the job creation, we looked at the private

sector investment, and we looked at the volumes in the mine.

Now, if tomorrow or the next day they discovered at

Nugget Pond that there were large or huge volumes of gold beyond their wildest

dreams, like the nickel pouring off Voisey's Bay, and we all of a sudden said:

This is different, well naturally, we would have to call the companies back and

say: Look, we gave you EDGE under these parameters and under these

circumstances. And they know that. We signed those contracts fully with our eyes

open.

Roycefield Resources was another one, the antimony

mine at Bishop's Falls. We don't think that would be started for another five or

six years. Should we deprive 120 Newfoundlanders and Labradorians to take an

income, to get jobs in Central Newfoundland? You see, what is happening with

that market, antimony is a soft white substance and it is used as a fire

retardant. The largest volumes of that particular mineral are found in central

China. China has just slapped an import tax of 26 per cent on all antimony

because they want to hold those reserves to themselves to create economic

development within their own borders. When that surtax and tariff went on and

those walls went up, the rest of the world looked around to see where they could

find antimony, and they found a very large deposit near Bishop's Falls. What

they needed from us is, again, to go to the capital markets to raise, I think,

Sid, the amount was about -

MR. BLUNDON: Twenty point five million.

MR. FUREY: Twenty and-a-half million dollars of

private sector money that will flow through there. But again, it is a limited

mine. It is rich, it is concentrated, the volumes are there for about a ten-year

period. We think the tax trade-off was worthwhile to create those jobs, get that

investment. Plus on the construction side, you are going to see temporary jobs,

and lots of them, building the necessary infrastructure around these mines. So

it is on a case-by-case basis. If the economics change or the volumes change in

each mineral deposit, or something extraordinary happens that was outside the

parameters of the agreements that we have struck, then obviously, we will sit

back down at the table.

MR. SHELLEY: That's it for mining. Thank you.

Still on EDGE, I know there is another group - I

can't even remember the name of it exactly now, but the sealing industry that is

near Fleur de Lys is interested in the same type of thing. They have applied for

EDGE. I don't know what the status of that is or where it is or how soon they

could expect an answer on that. Because it is very important not just - well,

for the sealing industry as a whole, because I think that could be the pilot

project that could expose us (inaudible).

MR. FUREY: Yes, I agree. I don't have an exact

- my recollection is that the EDGE board met last week. They have approved six

new companies. Those will go to Cabinet I presume next Thursday. But there is a

list of about seventeen in the line that are being looked at and studied now,

and the board will examine them.

MR. SHELLEY: Six were approved at the last

meeting? Could I find out through the minister who they were, who were approved?

MR. FUREY: I would like to tell my Cabinet

colleagues first.

MR. SHELLEY: Oh yes, but I -

MR. FUREY: And get - because -

MR. SHELLEY: I know the line, but those six

that were put up for proposal (inaudible) come through the Cabinet, of course.

MR. FUREY: Yes, and I don't think the sealing

one was on it. I don't recall one on sealing.

MR. SHELLEY: I just wanted to know if they were

in that area.

MR. FUREY: I will certainly take a note of it,

if you would like, and let you know.

MR. SHELLEY: When is the next EDGE committee?

MR. FUREY: It meets as applications come in and

the board is required to meet. I think they are going to have a series of

meetings in the next few weeks because there are about seventeen applications,

as I understand it, that are in the line-up now for examination. We will approve

about six, I guess.

WITNESS: There are five on the next Cabinet -

MR. FUREY: Five on the next Cabinet meeting. I

don't think the seal tannery is there. Seal tannery, is that what you said?

MR. SHELLEY: Seal - yes. Natsiq, I think they

are.

MR. FUREY: Oh yes, I remember that company.

Yes, they are - N-A-T-S-I-Q or -

MR. SHELLEY: Something like that.

MR. FUREY: Yes, it is a really funny name.

MR. SHELLEY: They have changed it a couple of

times.

MR. FUREY: Yes, I saw that company. They are on

the list somewhere in the -

MR. SHELLEY: On the long list, but they are not

on the most recent one, are they?

MR. FUREY: Not in the most recent one, no.

MR. SHELLEY: Okay. A couple of other questions,

then. First of all, with the Atlantic Investment Fund, 2.1.04, on page 164,

there is almost $1 million in Atlantic Investment. That is venture capital. How

is this money going to be accessed?

MR. FUREY: This venture capital fund comes

about because the four premiers a year-and-a-half ago beat up on the banks and

said: You aren't doing enough in Atlantic Canada. The banks said: You make a

proposal to us, and we would be quite prepared to look at venture capital by way

of equity in the companies. This is a $30 million fund that on a pro ratio basis

each province puts up its share. Newfoundland's share is $2.4 million. That

$956,000 that sits in that subhead is our first flow of that share. It is flowed

over a three-year period. That is our first upfront cost.

The way it works is that the partners are the

partner puts $10 million into a pot. The $10 million breakout for the four

Atlantic Provinces is where you will get the number $2.4 million from

Newfoundland, and that $956,000 sits in the subhead as our first flow in it.

How it will work is we have structured a board of

directors and appointed them. Ms Barbara Fong, who is president of Instrumar,

and is very much involved in high technology, which is a sector this government

has targeted, she will sit on the board from Newfoundland; and somebody you

would probably be familiar with, Mr. Danny Williams, has been appointed as well.

You would be familiar with him for other reasons, I'm sure. We thought that he

brings a great deal of intelligence and a lot of knowledge about fibre optics

and coaxial cable and high technology and satellite technology. He is very well

versed in that. We wanted him or somebody in that kind of business who is doing

those kinds of deals to sit at the table as well.

The way it works is if a businessman or woman has a

good business case and requires some equity, and there have been members who

have provided me - some of them are sitting here tonight - with applications to

put into this fund, the way it would work, I say to the hon. member, is that the

application would flow in. The board members, two from the Atlantic Provinces

each - two from P.E.I., two from New Brunswick, two from Nova Scotia, two from

judgement of these applications and look at the business case based on banking

principles. We are guaranteed as a province as a minimum to flow back into

Newfoundland our $2.4 million, as is P.E.I. and its pro rated shared, as is New

Brunswick, as is Nova Scotia.

MR. SHELLEY: That was my next question, yes.

MR. FUREY: No, that is a guarantee, that is a

minimum guarantee. The challenge for Newfoundland companies is to use our $2.4

million from the banks. That is the challenge for us. I think we are going to do

okay. There are some fabulous applications coming forward. The board will meet,

I think quarterly, Sid, isn't it, and sit in judgement of those applications.

But we are guaranteed to at least get back the principal amount that we have put

in the pot, which is $2.4 million.

MR. SHELLEY: What is the Province doing to

encourage these Newfoundland-based firms to access?

MR. FUREY: I'm speaking to many chambers and

boards. I spoke last night in Port au Choix to the newly-formed Chamber of

Commerce, and I spoke about that fund and the business immigration fund. Because

if you add $30 million to the $35 million for the business immigration fund,

this fall some time there is $65 million worth of floating venture capital out

there that any company can take advantage of. But I can't beat people over the

head or twist their arms or shove them before the board. I can only say: This is

available, establish your case, do it on banking principles and proper business

principles, and we will certainly stand in there for you as the Newfoundland

Government through our board members.

MR. SHELLEY: That is one of the avenues you are

using, of course, speaking engagements and so on.

MR. FUREY: I would expect all members should be

promoting this, too.

MR. SHELLEY: Sure.

MR. FUREY: I will have a promotional package

which should be developed in the next week or two, I would say.

MR. SHELLEY: I was going to ask if there was

anything in print.

MR. FUREY: Yes, there will be. There isn't

right now, but there should be very shortly.

MR. SHELLEY: With Research and Development -

Offshore Fund, this has increased quite a bit. Provincial funding jumps from

$90,000 to $300,000 - this is on page 166 - and the federal funding has jumped

from $210,000 to $900,000. Can you just elaborate on what the actual funding is

for there?

MR. FUREY: I'm sorry, which subhead are you in

now?

MR. SHELLEY: Page 166. I just made notes on it.

MR. FUREY: Page 165, you mean? Technology

Transfer Opportunities - Offshore Fund?

MR. SHELLEY: It is the Research and Development

- Offshore Fund.

WITNESS: 3.1.05.

MR. FUREY: I'm sorry, okay. What is it you are

asking me?

MR. SHELLEY: It is quite a jump, of course, the

Research and Development - Offshore Fund, from $90,000 to $300,000, and then

federally it is from $210,000 to $900,000.

MR. FUREY: This research and development block

fund comes out of the $300 million offshore fund that was put in place back when

Premier Peckford negotiated with Prime Minister Mulroney the Atlantic Accord,

which triggered the Hibernia development. A portion of that was set aside for

research and development. It is there for companies that can access it. We flow

the money as it is required.

There are applications in the system from companies

that I just mentioned, like Instrumar, C-Core, and some of the institutes around

the Province that want to take advantage of it. Usually with the private sector

it is 50-50. It is from that fund, for example, that Instrumar developed its

high technology clean ice wing detection system which is computerized technology

that will be in most airplanes around the world. They can change the aviation

laws, in fact, a Newfoundland technology. C-Core comes out of that, Oceans

Limited, Instrumar and other companies. So what it is, is actually cash flowing

money that is 75 per cent federal, as I recall, and 25 per cent provincial, and

we flow it as is required and it is in an account when we require it and use it.

MR. SHELLEY: I will just ask one more and then

I will pass it on to somebody else. I think I have used fifteen minutes; I have

not kept track of the time. On page 170, I always ask this question because

there has never been any information on it in the last few meetings we have had

- of course, it is the Economic Renewal Agreement.

MR. FUREY: Yes.

MR. SHELLEY: There is that much money. I would

like a little bit more, not detailed, but some specifics on it.

MR. FUREY: Yes, that whole piece there, and

perhaps rather than get into a long of discussion, what I should do is send you

a package on the ONLINE Task Force, ONLINE is an acronym for Opportunities in

Newfoundland and Labrador In The New Economy. If you spell out ONLINE that is

what you spell it out to be. That was a board that was struck and mandated given

180 days to look at how can we best achieve growth in the high tech and

information technology sector. We struck a board that was made up of public

senior civil servants and many people from the private sector. David, as I

recall there are about fourteen people on that board?

MR. BUTLER: Yes.

MR. FUREY: People from the hospital side who

are involved in information technologies. People from, well you pick it,

Newfoundland Telephone, Cable, we had a whole range of people. What they did was

put in place, after a great deal of consultation, a Strategic Economic Plan that

develops a pathway for growth for the information technology sector. You know,

that by the turn of the century, four short years away, the information

technology sector will be worth three trillion dollars. If we didn't have our

home work done and we didn't have a foundation and a pathway and a strategic

plan that outlines specific action items, we could hardly get a crumb. What this

tries to achieve is a slither of the three trillion, one slither would have one

awfully good economic impact on this Province.

But it is broken out in a whole range of areas, I

will l say to the member, human resources development, hardware technology

upgrade, software development, a whole range of issues. But what is interesting

is the community came together in a public private partner agreement and in

public private partner co-operation and they developed a plan. They spelled it

out. They have specific action items. They have specific targets. By the way, it

is about $17 million that we will spend over four years in this sector and will

trigger $5 for every one public dollar.

MR. SHELLEY: Well, since we got on to ONLINE,

on page 167, since we are discussing it now, Salaries increased - 3.1.06 - but

the Professional Services decreased - quite substantially, too. Could you tell

me -

MR. FUREY: Say that again.

MR. SHELLEY: Was there a person hired there?

MR. FUREY: Say again. Which one is it?

MR. SHELLEY: 3.1.06 - Operation ONLINE.

Salaries increased.

MR. FUREY: Salaries decreased. They went from

$315,000 in the budgeted 1995-96 down to $87,000. And we are estimating -

MR. SHELLEY: No, Salaries increased.

MR. FUREY: Yes, but if you look at what we

budgeted in 1995-96, we budgeted $315,000. We spent $87,000. We are projecting

or estimating $125,000 this year for an overall global decrease from $315,000 to

$125,000. Do you follow me?

MR. SHELLEY: Go back again, in 3.1.06.

MR. FUREY: Yes, I am with you.

MR. SHELLEY: Operation ONLINE - 01 - Salaries -

in the estimates for 1996-1997 it increased from what was spent last year from

$87,000 to $125,000.

MR. FUREY: Right.

MR. SHELLEY: Answer that along with in

Professional Services, it decreased from $206,400 to $25,000.

MR. FUREY: I will be happy to.

The Budget was $315,000 for a secretariat which was

a public- private partnership. We didn't spend all of that on the secretariat,

we didn't need to spend it; we spent $87,000. Now we are moving into the

implementation of this and we are going to require extra people to help us

implement it in a public-private partnership.

When you look at Professional Services and you saw

$206,400, we budgeted $25,000 but it jumped $206,400; we hired what we consider

some of the world's best people in the IT sector to help us craft the strategy,

so we had to pay for that. So it was a contracted position and the company just

slips my mind right now but it will come to me in a second.

MR. SHELLEY: So the $315,000 that was budgeted

in Salaries was for the secretariat and you didn't use it, you only used

$87,000.

MR. FUREY: That's right.

MR. SHELLEY: But now, you are going to need an

extra - one person?

MR. FUREY: I am not sure. There are two from

the private sector and two from the public sector (inaudible).

MR. SHELLEY: $38,000, isn't it?

MR. FUREY: Two from the private sector which is

paid for by the private sector.

WITNESS: (Inaudible).

MR. FUREY: Which one?

WITNESS: (Inaudible).

MR. FUREY: NewTel Enterprises, Frank Davis, who

is a Senior Vice-President has been seconded into the on-line secretariat. He

will be paid for by the private sector. Now, we have to meet our agreement,

which is 50-50, so we have to staff up some people there, too. But I will say to

the member, this is about implementation now. We have the report, we have used

all of the best minds in the Province that we could assemble who are involved in

information technology. We reached outside in Purchased Services, they did,

contracted a group who are experts in the IT sector, who came to Newfoundland,

held public hearings all around the Province, as I recall, and helped marshall

the forces of this plan together into Operation On-line, so you will see that

the Purchased Services have decreased substantially. But we are going to take

this plan now and try to implement it and that is why you are seeing a slight

increase in the actual expenditure over last year, but in the global budget, a

significant decrease.

MR. SHELLEY: Okay. I am going to yield to

somebody else who may have some questions (inaudible).

CHAIR: Thank you, Mr. Shelley. Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

Under your Atlantic Investment Fund, Minister, what

exactly is meant by strategic sectors? What would be the criteria there?

The money will flow to projects and strategic

sectors.

MR. FUREY: Yes. The idea was that it would be

available and open to all companies excepting retail operations and real estate.

So, in other words, if somebody is going to try to put in a project to sell

socks, we are not interested in funding your cash flow or your line of credit to

sell socks. Nor are we interested, Mr. Woodford, in somebody just purchasing

land and using our money and flipping it and making money. When I say real

estate, if somebody has a development project that is part and parcel, that it

requires real estate - I think, Mr. Walsh you and I talked about some of this

the other day, that would be very acceptable. But the two areas that we caution

are: real estate in the pure sense of real estate and retail, in terms of just

providing cash flow for companies. We are not interested in that.

Strategically, this Province would like to see the

investment fund flow in three areas; it can flow in many other areas but we are

quite interested and intrigued by high technology, information technology which

is what Mr. Shelley and I just talked about. We are quite intrigued and excited

about tourism projects and there are many out there that can fit this, and

thirdly, aquaculture. We are behind the eight-ball in aquaculture but we should

be moving at the speed of light to regain lost ground.

MR. WOODFORD: If a firm came under this, would

there be any restrictions if they had access to other funding, I mean other

government programs, or would that be ruled out completely?

MR. FUREY: No. Anything and everything will be

accepted by this board and looked at. If somebody, for example, wants to come in

here and build small computer-enhanced memory requirement boards for computers

and they have say, a million dollars and they can leverage half-a-million from

ENL and half-a-million from FBDB, but they aren't quite there and they require

further equity investments, they can marry those two in their application of

business case and send it forward.

MR. WOODFORD: I know it is early in the mandate

of this particular fund, but is there any indication that there would be sort of

a preference from any one province that would give someone sort of an in, other

than they would in another province? I know that is a question that -

MR. FUREY: No, it is a good question. I tell

you, look, we are always paranoid about the other Atlantic Provinces, and with

good reasons. When you see some of the decisions that were made in the past by

governments of all political stripes - I mean, putting the fisheries

headquarters for Western Newfoundland in Moncton? Give me a break, you know.

Putting the headquarters of Marine Atlantic in New Brunswick. It is just the

heights of stupidity, and there is no other word for it. Yes, there is a certain

paranoia there, but we have two very bright minds at the table in the forms of

Danny Williams and Barbara Fong, who I believe is a chartered accountant.

WITNESS: (Inaudible).

MR. FUREY: But she has an accountancy

background, too, her brother told me the other day. She is very good, very

sharp.

MR. SHELLEY: Barbara Frum or Deborah Frum?

MR. FUREY: Barbara Fong, F-O-N-G - not Frum.

We are going to be diligent at the table. But this

is why there is a clause in the agreement that captures our investment. Our

investment must come home, $2.4 million. The trick for us is to use the $2.4

million and to get out with good solid business cases and business applications

to leverage off the other $10 million from the banks and the other $10 million

from the Federal Government.

MR. WOODFORD: Under 3.2.02, page 168, the

Strategic Investment and Industrial Development fund. As explained there, it is

self-explanatory, for "new business development and/or modernization of existing

firms in strategic industries...." The strategic industries referenced there,

would they be much the same as what they were in the Atlantic Investment Fund,

or would there be others involved there?

MR. FUREY: Would you mind just repeating the

last part of that?

MR. WOODFORD: Under that fund, I said it is

self-explanatory, for "development and/or modernization of existing firms in

strategic industries...." I just mentioned the strategic sectors that were

involved in the Atlantic Investment Fund. Would there be any difference in this

or would they be a little bit more involved?

MR. FUREY: No, it is very similar. What this

was, as you will recall, was a five-year agreement that Mr. Crosbie and I signed

five years ago. In fact, the last part of the cash flow will go out through this

budget. There is about $500,000 left, and you are the co-chair with the federal

people, and they just approved the last $500,000. This went right across a whole

range of companies. Manufacturers were big winners here. It went right across

every sector, just about. I can table a list of every company and the kinds of

grants that were made. Some of them are outstanding and some of them have done

terrific work.

But no, when we said Strategic Industrial

Investment and Development agreement, strategic to Newfoundland, what is

strategic to Newfoundland. We used the Strategic Economic Plan in many ways to

guide us on how to spend that money.

MR. WOODFORD: That is okay, Mr. Chairman, for

now. Go to someone else. Just one second, Mr. Chairman. I just wanted to mention

something to the minister. Did he hear anything as of late - I just heard a

rumour the other day, and I don't know, it might be public knowledge, but I

haven't seen anything on it - about Air Canada moving their reservation system

to Moncton, Fredericton, or somewhere like that? Because I heard a little sketch

that there was a possibility that some of it might come to Newfoundland. Did you

ever hear anything about that?

MR. FUREY: I've heard something about it and

I've tried to talk to my colleague, the Minister of Works, Services and

Transportation, but as you probably know, she is Winnipeg in her capacity as the

Minister responsible for the Status of Women. There is a note on my desk to

speak to her about it. I've heard sketches and some talk about that as well,

yes.

MR. WOODFORD: Because there are quite a few

jobs involved. In fact, I think if they moved Halifax, I think Moncton, and one

other, then there would be some 500 jobs involved.

MR. FUREY: Yes.

MR. WOODFORD: I just heard a little rumour -

MR. FUREY: In terms of the reservation systems

and stuff.

MR. WOODFORD: Yes, the reservation system.

MR. FUREY: That folds into the whole call

centre concept. You would probably be aware that Newfoundland has another

public-private partnership called Network Newfoundland -

MR. WOODFORD: Yes.

MR. FUREY: - where we put up fifty cents and

they put up fifty cents, to the tune of $500,000 per year, and we are, using

that strategy, chasing some call centres. In fact, I will be opening a new call

centre next week, the first in the Province, which is at Newtel, which has 100

jobs, and it is a first-class state-of-the-art facility here. We are also

chasing about twenty-two prospects that we have identified, and we have narrowed

down four that are involving the Premier and myself, and I have had a number of

dinner engagements with a number of American companies right here in St. John's.

And I think we are going to pull off a few of these. And as we get them going -

MR. WOODFORD: That is a benefit, something like

this.

MR. FUREY: Absolutely. But we have to prove

ourselves. We have to show that (

a) we have the technology, and there is no

doubt that we do; (

b) that we have the skills to pull this off and: (

c) we have

to get some live ones in here and operating and point to them.

MR. WOODFORD: Thank you, Mr. Chairman.

CHAIR: Thank you, Mr. Woodford.

Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, just looking through the Estimates here

on Industry, Trade and Technology - Transportation and Communications - I think

your department is probably one of the very few that transportation and

communications is cut down less than half in a lot of those headings from what

it used to be or what it was last year, quite a difference. Are you the only one

travelling in the department these days?

MR. FUREY: I think in the overall Ministerial

Offices there was about a 20 per cent or 21 per cent cut. They were sensitive to

the Minister of Industry, Trade and Technology because the very nature of the

job actually causes you to be out there selling the Province and seeking

investment. I think if you look you will see it was budgeted at $111,000 last

year, we spent $106,000. This is considerably lower than in the past, I might

add. In the past, I can think of say, ten years ago, my predecessor spending

easily $180,000 a year, but these are 1996 dollars and I am limited to $90,000.

But I would argue you should triple my budget, that

you should never see me in the House. And my critic should be the loneliest

person like the Magtag salesman, just sitting there asking: Where is Furey?

MR. FITZGERALD: I agree with what you are

saying.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Quite seriously, that is my job. It

is not Chuck Furey's job, it is the Minister of Industry whoever happens to have

the honour and privilege of occupying that position. So would you then agree

tonight to tell the Cabinet to double my budget?

MR. FITZGERALD: I am not arguing against that

because I know what you are saying is true. I don't think that anybody should

stand and knock somebody for being out trying to sell Newfoundland and Labrador

and create some economic activity here when you see what is happening in most of

the areas of our Province. But it just seems strange that a lot of the

transportation and communications is quite a bit lower.

MR. FUREY: Than a lot of other departments, you

mean?

MR. FITZGERALD: No, even in the particular

headings here from what was revised last year to what is in the estimates this

year. In some cases there is a great saving there. Marketing is a big one which

is still up there, but look at the there under 3.1.01 for instance, it went from

$124,800 to $35,900. And there are many more of them there.

MR. FUREY: Right throughout the department, you

mean?

MR. FITZGERALD: That reflects, yes.

MR. FUREY: Well, the whole department, I should

say to you, Mr. Fitzgerald, was caught up in the broad brush cuts where

everybody took big hits, in Communication, in Supplies, in Transportation and

Purchased Services, every department took those. You will see that ripple right

through every department. I guess what I was trying to say is we tried to

protect the travel budgets even though we were relegated to the back of the bus,

and some would argue that is not smart either. But, I mean, that is for another

place to argue. But we tried to protect the transportation budgets because we

have to move on a minute's notice sometimes in this department. I had to send a

senior officer to Toronto this morning, because we got a really good lead on a

very good company, and we think we have a real crack at it. So sometimes we have

to react on a minute's notice.

I would predict to you that that $90,000 - I hope I

am wrong, but I would predict to you here tonight for next year's estimates you

will be saying you went over your budget and I will say: Yes, and I told you

that last year.

MR. FITZGERALD: Sure. There is nothing wrong

with that.

Minister, did you ever hear or did you ever find

out what ever happened to that big investor who was here a couple of years ago

from - the mysterious lad from the United States who made seventeen trips here

to invest in almost owning the Bonavista Peninsula? Did you ever find out what

he was all about or what he was up to?

MR. FUREY: You know, we do due diligence and we

do checks and intelligence checks and sometimes we deal with police forces

around the world and other agencies. I tell you, we couldn't find anything on

this particular person. You are quite right, he swept in and out of town. He

talked a great story. He had connections to the President of the United States,

and on and on. You recall some of the things he said to you and me. He was going

to make a massive expenditure, take over Farm Products, create a chicken

industry to supply half of Europe, and on it went - converting fish plants. He

just fizzled into the night. Thankfully, neither the government nor any of the

taxpayers put any money on the table for anything that he did.

MR. FITZGERALD: I think he left a few bills

behind in some of the consulting offices around town and that sort of thing.

MR. FUREY: He may well have, Mr. Fitzgerald,

but I wouldn't know that. I'm just saying -

MR. FITZGERALD: He certainly talked a good

talk.

MR. FUREY: He certainly asked us to cover some

things for him in terms of transportation and feasibilities, and we consistently

said no. Consistently said no. But if he left some bills behind, that is

unfortunate, and I feel -

MR. SHELLEY: Something like Christina.

MR. FUREY: Yes. But no, I haven't heard from

him since. Have you talked to him at all?

MR. FITZGERALD: No. One of the lawyers actually

called me and asked me if I would try to contact him because he was trying to

get hold of him. Naturally, because of the confidentiality between him and his

client, he wasn't going to discuss - but it wasn't hard to read between the

lines why he was trying to get hold of him. But I tell you, he had some big

ideas, and he knew the industry, what he was talking about. I don't say that

because I knew it, but I went so far as to talk to people in the industry and

direct some questions so that I could talk intelligently to him and find out

what it was, and to see if I could find out if he was for real or not. And he

knew the answers.

MR. FUREY: I tell you, you are quite right, and

we did the same thing. We had some people quietly sit in on meetings who were

just introduced by their name but who knew that industry inside-out and they sat

there and listened to him, and they said: This man knows what he is talking

about. He knows chickens, he knows the markets, he knows the integrated and

vertical industry inside-out. On that basis you couldn't argue with him. His

lawyers were quite excited, he was quite excited.

I tell you one thing that I did, and it sort of -

this was early in the game and it sent some fire alarms off in my head. He said

to Mr. Baker and me one day: Look, I would really like to take you down to -

where was it he was quoting from, the plant -

MR. FITZGERALD: I was supposed to go, too. The

private jet was supposed to pick me up at the airport.

MR. FUREY: That is the story I was going to

tell you. What was the name of it? Was it in Arkansas?

MR. FITZGERALD: Somewhere (inaudible).

MR. FUREY: Somewhere where they are up to their

necks in chickens, anyway.

MR. FITZGERALD: Yes, I can't remember where it

was.

MR. FUREY: So anyway, he called -

MR. FITZGERALD: He was shipping out of West

Virginia. That was the port from which he was shipping his product over to the

Eastern Seaboard.

MR. FUREY: That is right. Anyway, I decided to

call his bluff. I said: Well, we would be happy to come down and look at this

facility with you. I said: In fact, I will bring the Minister of Finance who is

quite interested in the privatization of Farm Products and we will both go. He

was supposed to have a corporate jet. He insisted that we not go commercial. He

insisted that we land at some air force base belonging to the government, he

would make all the arrangements and the corporate jet would pick us up and blah

blah blah. I said: Okay, give me the time and date. He gave me the time and

date. And I think six hours before we were supposed to go it all got cancelled

mysteriously. Then I said to myself - this is early in the game - I said: The

guy doesn't want me to fly commercial. I think his reasoning was he didn't want

to tip off -

MR. FITZGERALD: His competitors.

MR. FUREY: - the poultry producers of America,

his competitors. Because they would run to the market, et cetera. He was talking

about converting National Sea to a slaughterhouse for beef for Europe. I guess

he was ahead of his time on the mad cow disease over there. But I've gone way

off track. Your question was: Have I heard from him since? No, I haven't.

MR. FITZGERALD: I figured there was something

happening when he told me that he had bought all the newsprint in New York City

and he had just come from out in Carbonear then. He had bought M. A. Powell and

that was where he was going to bring it in all in there and (inaudible) get into

packaging material. I said: Gee, there is something not right here. Anyway, it

was an interesting story. I put on about ten pounds sitting in the backs of

restaurants in some dim lit area, always with his back to the wall and no lights

on, listening to him.

MR. FUREY: Yes, but you know, he was quite a

talker, this guy, quite a mover.

MR. FITZGERALD: He was a fellow about six foot

eight or seven feet tall, 365 pounds, and not an ounce of fat on him. Isn't that

right?

MR. FUREY: Yes.

MR. FITZGERALD: So when he pointed a finger at

you and told you to be quiet, you were quiet.

MR. FUREY: That's right.

MR. FITZGERALD: Minister, getting back to why

we are here. A few days or a week ago there was great concern when the

Newfoundland Dockyard wasn't allowed to bid on work by the Coast Guard, the

Henry Larson . There is some indication as well that there will be work done

on the Sir Humphrey Gilbert and, I think, the frigate Iroquois . Is

the dockyard going to be able to compete and bid on this work or is this going

to be a situation again where -

MR. FUREY: You know, my public statements on

that. I think it is outrageous and I continue to hold that position. I should

tell you, I finally tracked down the Minister for Transportation for Canada

yesterday at 11:30, and we talked at length on the telephone about the two

problems, one being the withdrawal of the bid of the Larson and the other about

future bids. I contended and I still contend that if you are going to have on

one track serious negotiations about an employee takeover, and do it in good

faith, you have to, on the other track, sustain life in the place and keep the

place operating as a going concern, otherwise the transfer into a locked

facility and to try to re-start it and chase markets and keep the thing

functioning would be just totally detrimental to keeping life there and keeping

a future there.

Yes, we had a very serious chat, and I said to him

that it is my belief on behalf of the Province that they should take the

handcuffs off, and allow the Yard to function and prepare bids and stay in the

marketplace so long as this goes forward. His argument back to me was - there

were two arguments he put back, first, that it was to close in December 1995.

The then Minister of Fisheries, the current Premier now asked for a reprieve and

a period of time to set and train negotiations with the workers to see if there

was a possibility for an employee takeover. So Anderson, who happened to have

been Doug Young at that time, gave a three-month extension to take it to April.

There was not enough progress - or not enough information is the best way to

categorize it - for either the facilitator, Mr. Baker, or for the management, or

for union to see the big picture and to see whether or not there was a prospect

here for takeover. So the then Minister of Transportation, the current one, gave

an additional three-month extension, which would carry it to the end of June.

So his point was twofold: `Number one, I have given

two extensions and I don't see anything serious put on the table that shows me

that there is an earnest willingness to talk seriously about a take-over.'

`Number two,' he said, `I am not prepared to let

the dockyard drag on, drag on, drag on. There has to be a drop dead date,

otherwise, we will stop talking and we might as well close it, because that is

our original decision. And he said, my drop dead date is June 30, and I stick to

that.'

He said, `So, in that context, we cannot allow

bidding for long-range vessel repair or construction.' I understand that point

of view and I acknowledge it. We are struggling ourselves with the provincial

shipyard at Marystown. I understand where he is coming from. But I said to him:

`It is very difficult for morale, for the management for the workforce for your

facilitator, for everybody involved, to carry on serious negotiations if in fact

you have handcuffed the place. This was yesterday, and I suggested to him that

he should give very serious consideration to allowing the Yard to continue to

bid. He said, that he would get back to me within twenty-four hours. I just

stepped off a plane. My other Assistant Deputy, Mr. Spracklin, has been dealing

with this issue and I am sure he will brief me in the morning. So I do not know

what his response back was. If I were a betting person, and there was a time

that I was, but I am not anymore, I would say that he is not going to take the

handcuffs off. That is the tone of the conversation basically that we had. But I

will not prejudge that until I see the report.

MR. FITZGERALD: Is Winston Baker's work

finished now as it relates to the negotiations?

MR. FUREY: No, a steering committee has just

completed the parameters and outlines of a business case for takeover, on which

Mr. Baker now has to report back to Ottawa. That is where Baker is essentially

now in the process. I have to tell you, he has done a good job. So have the

unions. But I guess where Ottawa is coming from, Mr. Fitzgerald, is, they want

to know: Are you serious, employees, about taking this over? And if you are,

tell us and we will find a way to try to get down to the nuts and bolts in

negotiations and get this deal done. That is where Anderson, I detected, was

coming from.

MR. FITZGERALD: Minister, on page 171: 4.1.01,

Marystown Shipyard Subsidy. Speaking of Marystown, there was $3,300,000 budgeted

last year, $3,720,000 spent. This year there is $5 million there. Is that an

indication of government's plan (inaudible) -

MR. FUREY: What page are you on, I'm sorry?

MR. FITZGERALD: Page 171.

MR. FUREY: Are you on the actual estimate

pages? Yes.

MR. FITZGERALD: Yes. Page 171, 4.1.01,

Commercial Crown Corporation Operations.

MR. FUREY: I don't have a page 171 but I will

address it anyway. They gave me just a xerox.

MR. FITZGERALD: There is $5 million there.

MR. FUREY: I will address it, that is fine.

MR. FITZGERALD: Is that an indication of

government's commitment to continue funding Marystown this year?

MR. FUREY: No, it isn't. What that reflects is,

the accumulated debt to date is around sixty-two point something million

dollars. That additional dollar value reflects the overruns and increased line

on the operating credit, and we have to pay - the way it works is the Yard as an

arm's length corporation has a line of credit. Government has to sanction it

because the taxpayers pay for it, but that sits on their balance sheet. What

sits on our balance sheet is the cost of the interest on that debt, and that

debt has risen substantially, and therefore, the interest payments

correspondingly have increased substantially.

There is nothing in the budget, no new money in the

budget, to cover any increased line to have this Yard function for another year.

That will depend upon the discussions that are occurring with management, the

unions, the board and the committee of ministers put in place by Cabinet. I tell

you, it is a difficult task because it requires radical surgery, radical

restructuring, radical changes of attitude, and radical co-operation by

everybody to make this thing work. This is its last chance ever, if Cabinet

approves the money, and it will only approve it based upon the plan that is

coming forward from the management in consultation with the unions and the

board. We haven't made that decision yet.

MR. FITZGERALD: When you talk of Marystown

Shipyard you also talk of the Cow Head facility. It goes hand in hand.

MR. FUREY: Yes, it is all wrapped into one.

MR. FITZGERALD: Minister, what is the future of

that yard, number one. I guess number two is: When do you see government stop

providing funding to it?

MR. FUREY: The business case that is being

presented to government now talks about a one-time additional infusion of $5

million. That is what government has to make its decision on. The business case

that has been presented by the board of directors who are business men and women

who function in the real world with real bottom lines in real businesses, we

gave them a two-year mandate to take it to a break-even at the earliest

opportunity. The business case that they put forward talks about a bid on a

vessel we have in now which is a DND vessel, which is about a $45 million boat.

We don't know if we have won that. We will know that in a week or so. The

business case talks about work spilling off Terra Nova into the Yard. The

business case talks about finding other work around the world.

The real balance and question for the government

is: Do we write another cheque for $5 million on top of the debt that has

already accumulated, to give life to this business case, because these real

business men and women say this can work if you do a, b, c, d, e, f, g, h, i, j,

k, which I can't spell out for you right now because Cabinet hasn't approved it.

Look, I really do believe that it has a future, but when I use the word radical,

that adjective, I mean it in the strongest possible sense. It can only work if

there is a radical change of attitude, a radical restructuring of the way things

were done and will be done in the future, and a radical series of co-operation

by everybody who believes there is an opportunity to do this. Because the only

way it is really going to work is if it is privatized. Governments are hopeless

at conducting business. They have no business in business.

MR. FITZGERALD: Minister, Come by Chance -

since they have solved their labour problems out there, you haven't heard a

squeak from them. They seem to be operating, the fire is going, the smoke is

coming out of the stacks. They appear to be doing okay.

MR. FUREY: Yes.

MR. FITZGERALD: Is there any possibility of

some of the things that were talked about in the beginning happening out there.

I think of the petrochemical plants and I think of an expansion on the refinery.

It seems to be doing very well.

MR. FUREY: It is doing very well. I should tell

you that they have attracted some other interest from the Far East that are

looking at it. That is about all I can you right now. The company may be in a

position to say more about that soon. But I think the real trick, and this is

why the government - and I was delighted that your party took the same position.

The real trick about creating a downstream industry is to use the wealth that

will come off our offshore. And you can only use that wealth if you can bring it

ashore. The original thinking was that would be transported either by a third

tanker right into the market place, Portland, perhaps, in the New England area,

or that it would be placed in storage containers, and it looked, in all

likelihood, that that would go to Nova Scotia in the original go-around. The

government and the people of the Province took a strong exception to that. And,

I think, it was the right thing to do, because if we ever surrendered that

resource to another territory, that would be where all future frontier oil would

gather. And it is at that gathering place, the importance of the transhipment is

not so much the construction jobs, they are important. It is not so much the

$150 million of investment. That is important. The real magic in it is getting

it ashore, hopefully close to our refinery, and I tell you, the spinoff

possibilities are enormous. We are already looking at one, a major, a major

investor from Taiwan - am I supposed to be saying this?

AN HON. MEMBER: (Inaudible).

MR. FUREY: Okay.

- is looking at a dewaxing plant, because as the

oil comes up from the Grand Banks, you know, it is hot beyond belief, but it is

also covered in a film of wax, and to transport that oil, you have to heat these

ships, otherwise it congeals almost like that funny disease that clogs your

arteries. The point is, we already have people looking now at setting up a

dewaxing plant, which would never be possible if you did not have the

transhipment site. So if you can get that oil ashore, dewax and clean it, start

refining it, you have all of a sudden created a major industry around your

refinery where investment will then start looking at downstream industries,

plastics and other things.

MR. FITZGERALD: Yes, with the wharf or the

jetty that they have there, it would make sense if you are going to use that

type of facility for off-loading rather than -

MR. FUREY: Absolutely.

MR. FITZGERALD: I know you don't have to come

and land at a wharf today you can do it anywhere.

MR. FUREY: Absolutely. And Bunker crude, as you

know, is -

MR. FITZGERALD: But it would save a lot of

money, plus you are right in the grounds of the refinery.

MR. FUREY: And Bunker crude is coming now from

the Middle East - Nigeria.

MR. FITZGERALD: All you need is a tank farm.

MR. FUREY: That is what a transhipment terminal

is. But it attracts investment because it has the resource captive, and that is

why you need to do that.

MR. FITZGERALD: I just have another couple of

questions, and then that will be it for me for tonight. Minister, in your

travels and in your efforts to create economic activity and to have businesses

located here - is there anybody interested in any of our vacant fish plants

around the Island? Is there anybody out who is around looking or something to

create a little bit of hope?

MR. FUREY: Yes, there are. But there is no one

company or group of companies that is a panacea for these empty plants. There

are on an individual basis. You saw what happened in Piccadilly, the plastics

manufacturer went in there and it burned and everybody is rebuilding it, and

that is going to be okay. That was an abandoned fish plant. Down in your own

district, you know, that there are companies looking at, I think, it is the

Charleston plant? The UFCW group, would that be Charleston?

MR. FITZGERALD: No, it is the -

MR. FUREY: Mifflin.

MR. FITZGERALD: It is the Charleston plant

where this fellow, David Lee -

MR. FUREY: No, no. I want to talk to you about

that some other time, not at these estimates. What I am talking about is the

fellow who - you remember the group that had the jam operation.

MR. FITZGERALD: Okay. Yes.

MR. FUREY: And they are going to market it -

MR. FITZGERALD: They are going to market it

down in Mifflin's plant in Catalina.

MR. FUREY: Well, they are set to come to us to

talk about EDGE. They are going to create lots of jobs. They are going to fill

up that plant. They are also going to create jobs out in the fields. You know,

we link them with Loblaws, the Weston Food Chain. They are going to take their

products into their supermarkets. The union is going to invest its money into

it, the UFCW funding. I think that is a really good project. You have been on

top of that, too.

MR. FITZGERALD: Yes, the only thing about that

one is, now that the Federal Government is kind of reneging or is a little bit

slow in financing the other phase in getting the grounds ready and having the

actual site work done, they are asking people for (inaudible) -

MR. FUREY: Well, you and I are going to have to

start kicking their ass up there in Ottawa, that's all, because we don't have

the luxury -

MR. FITZGERALD: People (inaudible) calls and it

seems to be very frustrating because I am always getting this answer: `Another

week, another week', but a lot of the people who have gone through phase one are

now about to go somewhere else to try to find employment because they feel that

it is just another story (inaudible).

MR. FUREY: Yes, just another bureaucratic

nightmare, and I think that is one of the biggest problems in this country. We

have a swamp of regulations that we need to drain as citizens to allow

businesses to conduct business in their country. It is shocking what has grown

up over the years and the nightmare and strangulation that is happening is

unparalleled anywhere that I have seen; but look, that one is a good one and

that's a fish plant. I have another company looking at the Great Northern

Peninsula; there is an invention up there that is going to - look, I just saw it

today and I couldn't believe it. It is called a Komatik Utility Trailer, the guy

has actually invented a two-person boat that converts to a sleigh, a trailer, a

camper.

MR. FITZGERALD: Perfect for Newfoundland

weather.

MR. FUREY: Yes, but not just Newfoundland; in a

lot of those European countries they want this because of their small cars,

small roads et cetera. It is unbelievable, the opportunity there. He wants to

manufacture this in a fish plant. We are going to turn him on and take him down

to meet the President of L. L. Bean and some of these major industrial and

business catalogues in the U.S. There is a great opportunity there. But there is

no one person, Mr. Fitzgerald, who has come up to me and said: Have I got an

answer to all your fish plants.

MR. FITZGERALD: No, but even if we can get one.

MR. FUREY: Yes, if we can pick them off one at

a time, which is the strategy we are trying to use.

MR. WOODFORD: (Inaudible).

MR. FUREY: Yes, that's right.

MR. FITZGERALD: Minister, Bull Arm: What is

going to happen when the ground base, the gravity structure pulls out to bay?

MR. FUREY: Bull Arm will revert to the Crown.

MR. OSBORNE: Newfoundland or Canadian?

MR. FUREY: The Government of Newfoundland. It

will revert to us. We have put up, as you know, one-third of the cost for Bull

Arm and the private sector has put up the balance. It is basically a $400

million facility which will revert to us once the gravity-based system and the

top sides are mated, are actually at the site, 300 kilometres southwest of St.

John's and are actually pumping oil, and I think they have to pump 3 million

barrels.

The trigger clause is 3 million barrels. When 3

million barrels are actually produced, it legally reverts to the Crown for one

dollar, but we have put in place, Mr. Fitzgerald the Bull Arm site divestiture

corporation, because a lot of these assets, whether they are vehicles or pieces

of equipment, as they become redundant they depreciate at an incredible speed,

so we put in place with the agreement of the oil companies, Chevron, Mobil and

Petro-Canada and Murphy Oil, a divestiture team so that as vehicles and other

things become available, we can divest of them quickly and will roll back the

profits into the Bull Arm site corporation to use in our marketing worldwide,

and I think that is a smart thing to do.

We are out there marketing; we are looking at

opportunities with Terra Nova and there is a number of other ones I am not at

liberty to talk about because if I start talking about them, you know what the

media does with them; they jump all over the companies, beat the living crap out

of them and drive them out of Newfoundland, particularly the public media.

WITNESS: (Inaudible).

MR. FUREY: Yes, I know all about it and I can't

mention it.

MR. FITZGERALD: Okay, that's it, Minister.

WITNESS: (Inaudible).

MR. FUREY: But it is true; it is true.

MR. WOODFORD: (Inaudible) we would be a `have'

province (inaudible).

WITNESS: It would certainly be the thing to tip

the balance.

CHAIR: Are you finished, Mr. Fitzgerald? Mr.

Sparrow? Mr. Osborne?

MR. OSBORNE: Thank you.

The hon. minister lives in my district; he is -

MR. FUREY: He is my member, you guys, so be

nice to him.

MR. OSBORNE: He and the Premier have both

picked a district where they know the member can get something done for them.

Just a couple of questions. I guess, the first

question: What role does the ITT department have in the Voisey's Bay mining

development?

MR. FUREY: That's a good question. You know, we

have a

section in our department called Industrial Benefits. It really came

about because we set up in the previous government - Premier Peckford and the

previous government had the foresight to set up what was called an Offshore

Industrial Benefits Division focused just on the offshore. We have since then

widened the mandate to look at industrial benefits and economic impacts of

projects on the Province. Our role will be to start - and we are just about

getting there now - to prepare to fund a major, major study on Voisey's Bay, not

just the economic impacts, but what are the industrial benefits and downstream

industries that we should be chasing and maximizing. Because we have put the

companies on notice, we have, I have, the members from Labrador have, certainly

that every benefit should come to the Province. We would be delighted if the

benefits went to Labrador but we have to wait for the economic models and a

whole range of other issues, impacts that have to be looked at to see whether in

fact they could go to Labrador first. I think that was debated yesterday and

approved. But that is our role.

Our role is to look at, as we did with Hibernia,

what are the industrial benefits? What are the opportunities that will fall out

of that? What kinds of companies can we start getting excited in the Province

about it? How can we build joint ventures worldwide to transfer technology in so

that we can be the best in the world at that? Voisey's Bay is essentially a

comprehensive major study of all the industrial benefits and economic impacts on

the Province and that's our role.

MR. OSBORNE: Now, again with the Terra Nova,

what is the ITT department doing to prepare for Terra Nova and subsequent

offshore development?

MR. FUREY: Exactly the same thing. We have

produced for Hibernia, for example, a catalogue of production opportunities. I

would ask you to get your hands on it. It is a good catalogue in terms of

Hibernia. It's not just the jobs that are going to happen with Hibernia as we

construct the GBS. It is true that 46 per cent of the expenditures of $5 billion

occurred here and it is true that 5,500 Newfoundlanders and Labradorians got

jobs here, but there are also benefits beyond the construction. We have

twenty-two years of pumping oil at a speed of 125,000 barrels per day for the

next twenty-two years, which will spin out, in services and requirements, $11

billion. Eleven billions of dollars will come into this economy through

services, through tug boats, food and all the services required out there and

the jobs.

Terra Nova is the same thing, we have structured it

- Terra Nova is a little different in this way, that it is mostly - well, it is

all private sector driven. There are no requirements - unlike Hibernia, which

was the first and frontier industry, there are no requirements for the

Government of Newfoundland and Labrador to put cash in. So we really cannot nail

them down on industrial benefits essentially because of that and secondly,

because the mode of production is completely different from the first one. This

will obviously be floating production technology. Now, by virtue of it being off

our coast, a lot of benefits will accrue because of geography and because of our

learning experience off Hibernia, but we have to be prepared to look at the

industrial benefits and we are. That's our job as well, in that regard.

MR. OSBORNE: Thank you. The Newfoundland

Dockyard - there was some media coverage a week to ten days ago maybe about the

synchrolift. The synchrolift has been paid off for quite some time. The

Newfoundland Government was not informed of this and as a result, had continued

to pay the interest payments. Where are we now with that?

MR. FUREY: Well, I think the Minister of

Finance spoke to that issue, because he is the one who has intervened in court

to ensure that Newfoundland's position is protected. I don't think there is any

doubt in legal terms that we have provided that loan and that loan was fully

expected to be repaid. We have not made much of a fuss on it other than to

protect our legitimate and legal position before the courts and I think that's a

correct action on the Minister of Finance's part. But we don't see that loan as

something that we want to just chase and put back in our treasury. We want to

look at it in terms of how we can be helpful for the future of the Yard.

I've been on the record a number of times as saying

that this government is quite prepared to look at that, and any other creative

ways, particularly if there is an employee takeover. We want to give it every

possible rightful chance to chase the market and do very well for itself. In

that context we would look at that as well. But the legality, this was a legal

move by the Minister of Finance on the advice of Justice to step in and protect

our position.

MR. OSBORNE: Other than this, does Marine

Atlantic owe us any money?

MR. FUREY: No.

MR. OSBORNE: There is a division within ITT to

collect funds from, I guess, Crown corporations. Last year we were supposed to

have collected $250,000, I think, from Newfoundland Hardwoods.

MR. FUREY: Oh yes, through privatization.

MR. OSBORNE: Yes. That money was not collected.

I was just wondering why it was not collected.

MR. FUREY: It was not collected?

WITNESS: (Inaudible).

MR. OSBORNE: Yes. Crown Agency - Recoveries.

MR. FUREY: Sorry, what are you reading from,

Mr. Osborne?

MR. OSBORNE: Just some notes. Page -

WITNESS: Page 171.

MR. OSBORNE: Yes, page 171 -

MR. FUREY: Of the estimates?

MR. OSBORNE: - 4.1.02.

MR. FUREY: I don't have (inaudible). They gave

me every page but 171. What does it say, David?

WITNESS: (Inaudible).

MR. FUREY: Oh, yes, of course. What that is -

that sat there when the government owned the Crown, it would return a dividend

to us each year of $250,000. But we have since privatized Newfoundland Hardwoods

by breaking it in two. The asphalt side has been sold off to a group in New

Brunswick, I think. Irving's, yes. The treated timber pole project was sold off

to a company in Quebec. One has been given EDGE status because it has increased

its jobs and investment to treated timber. The Irving one is on its own.

That normal dividend came in by way of a cheque to

Consolidated Revenue as a dividend pouring off the profits that came from

Hardwoods. Since we have sold it there are no dividends because we took the

capital cash of about $7 million? Yes, total buy-out of $7 million. That's what

that is.

WITNESS: (Inaudible).

MR. FUREY: Yes.

MR. OSBORNE: I guess that would lead to another

insignificant question. You say they produce treated poles, I guess for -

MR. FUREY: Treated timber.

MR. OSBORNE: Treated timber.

MR. FUREY: Poles, timber, they have a whole

range of products.

MR. OSBORNE: For Newfoundland Hydro and that

type of -

MR. FUREY: Yes.

MR. OSBORNE: Are they being produced now in the

Province, those poles, or are we buying those from outside?

MR. FUREY: They could well be buying them from

outside but they were being produced at a very heavy subsidized rate when the

Crown owned it. We have since sold it to Wood Preservation Inc. of Quebec. They

have converted the part-time jobs to full-time jobs. They have made, I think, a

significant investment, over $1 million in it.

WITNESS: They are going to be doing that over

the next number of months.

MR. FUREY: The next number of months. They are

going to be producing treated timber, treated poles, treated wood, and they are

going to be exporting it. Are they producing it this minute, today? I don't know

but I can check on that for you.

MR. OSBORNE: No, that is fair enough. NAFTA: Is

the minister aware of any problems with NAFTA as regards Newfoundland and

Labrador, or companies in Newfoundland and Labrador?

MR. FUREY: No, I'm not aware of any problems.

MR. OSBORNE: Okay.

MR. FUREY: We are a big exporter. We export 75

per cent of that which we produce: Fish, timber, minerals, ore. It is mostly

crossing the border now with heavily reduced tariffs under the NAFTA protection.

MR. OSBORNE: I've received some information

from your department on, I guess, a co-development with NewTel on the

information highway and new technologies with regard to that. I think Memorial

University is somewhat involved in that as well. What role does this new

technology play in the one-stop shopping centres the government is setting up?

MR. FUREY: I don't think any of the government

service centres are on line yet. The thinking is to bring them on line so that

people can actually conduct business right from their homes, computer to

computer. When the government services centres were conceived and put in place

it was a consolidation of various government departments and making permitting

and applications and stuff put under one roof and decentralized.

I think the thinking is to get them on line over

time when we can afford it. We couldn't do it because the technology just wasn't

there. The fibre-optics and the redundant system have only been in place

completed since this month, I think?

WITNESS: (Inaudible).

MR. FUREY: Yes. The one-line system was

completed last year but you have to have a redundant backup system so that you

are dealing in real time, and that was only completed this year, so the fibre

optics and the fibre-optic penetration is right across the Province. I think

Nesbitt Burns or Wood Gundy or one of them came out with a report recently

saying Newfoundland has the highest penetration of fibre optics per capita

anywhere in the country.

MR. OSBORNE: I have read that. Actually, we

have the highest quality fibre optics in North America, apparently.

MR. FUREY: Yes. The fibre optic, the fibre

itself is really a tunnel through which light goes and using binary numbers, it

is modulation of light which creates information which is received and then

translated.

MR. OSBORNE: Okay, when are these one-stop

shopping centres projected to be set up?

MR. FUREY: They are set up, but when will they

be brought on-line and heavily computerized and personalized like that? When we

get the money. Remember, government has to spend to do that but we are in a

period of difficulty and restraint so - I would love to do it; it would be a

priority, but it is just a -

MR. OSBORNE: What type of employment figures do

you think that would generate?

MR. FUREY: Well, I don't know that it would

generate any employment per se directly in the public service; it certainly

would be helpful to businesses because they are cutting down on time, travel,

phone bills and a whole bunch of other stuff if they can go to their terminal,

connect in and get a business permit and, boom, it is done.

MR. OSBORNE: So in that regard, do you think it

would create a decline in employment?

MR. FUREY: No, I don't think so. I think it

would be more helpful to business because it makes it more efficient, therefore

it allows more profit which allows it more room to re-invest and grow.

MR. OSBORNE: Just a couple of other questions.

The Argentia Base: How are things progressing on

the Argentia Base as far as bringing - and I guess, Mr. Sparrow is here so - I

wasn't expecting him tonight; however, I am surprised you didn't ask the

question.

MR. SPARROW: No, I (inaudible).

MR. FUREY: Maybe we should let Mr. Sparrow

address this.

CHAIR: He does have a question, if you want to

yield.

MR. SPARROW: Well, at any rate, I am delighted

to be here tonight, I am replacing Anna Thistle, she had some other commitments

and fortunately for me, I sit next to her in the House and when I heard she was

unavailable I was delighted to attend, but mostly, I wanted to pick up on

anything that the department had been doing.

I think, hon. colleagues in the Opposition should

make a recommendation to boost this Budget because, in all the decline in the

Province's economy, this is the one department that is meeting people

internationally and bringing to this Province - and I personally think we should

be putting a few more dollars in there and maybe, our friends will use their

influence and do that; but I do have a few questions. I didn't want to be too

parochial and talk about the Argentia area myself, but I do have a question for

the minister; something I have heard quite a few times -

MR. OSBORNE: I will allow him leave.

MR. SPARROW: Okay. I am still -

MR. FUREY: He was hoping you would talk about

Argentia, that is why he passed the mike to you, to tell us all the good

stories.

MR. SPARROW: Oh, okay, to answer your question?

You want me to answer the question for the minister?

MR. OSBORNE: Yes.

MR. SPARROW: Okay. Well now, the minister has

had -

WITNESS: (Inaudible).

MR. SPARROW: I will save my question for later.

What is happening in Argentia? Before my time, Empress Mushrooms had started

down there and are doing quite well; they are into production and you know,

everyone here has tasted -

WITNESS: (Inaudible).

MR. SPARROW: - the fruits of their labour. Yes.

Super, but they are magic mushrooms, they are going to transform Argentia. From

a dead-end base, they will revitalize it and bring it to life. Down there now,

the minister has brought in a couple of firms from overseas who are very

interested in export markets and hopefully - I haven't the authority to probably

mention who they are or whatever but it has great promise there.

Also down there, there is a cannery about to open

in the next month or two, and that is started by a local entrepreneur, the same

as Mr. Hickey from Whitbourne. This guy is a good friend of mine. His name is

Dan Meade, and has a partner, Terry Bishop. These two guys leave no stone

unturned to get some business moving down there and will have probably twenty

employees, I guess, when they go into production.

Another big advantage with having these businesses

down there, particularly with Empress Mushrooms, they have had a class in the

Trades College all winter teaching people, twenty-five students, what there is

to know about growing and cultivating mushrooms and compost, et cetera, and

providing a nutrient for the mushrooms because they apparently use up quite a

lot. So it must be a pretty healthy food. But, at any rate, those are two of the

businesses down there. Argentia Freezers moved in there seven or eight years ago

and they are now the largest private sector employer in my district. They employ

ninety people at this point. They bring in ships from all over, Norway - the

Scandinavian countries. There is also, let me see...What else is down there?

That's three. Oh, my, I don't want to forget anybody. EIMSKIP is there, and they

bring and trade to Europe and the United States and they are also a great

vehicle for anybody else who wants to trade because they are always advertising

for anybody who wants to participate in sending finished goods from Newfoundland

and finished goods to be imported to Newfoundland from the States or Montreal.

So it is a pretty good open shipping lane. And Marine Atlantic is there. I am

not really happy with Marine Atlantic. They have a great state-of-the-art

facility, and they are only using it for a short period of time. So I hope they

will use that a little better, promote the place a little better.

There is an awful lot of real estate down there.

The minister will have his hands full and his deputies will have their hands

full trying to get people in for those places. They have sold off all of the

assets that the United States had there, as the minister mentioned, assets that

deteriorate quickly - vehicles, equipment. They have sold every asset there with

the exception of a couple of buildings, but it makes it a lot less (inaudible),

supervise and take possession of, and they have received $1,020,000, I think,

from the net sale of assets which is presently held in a fund to help any

businesses which may come in there.

The Argentia Management Authority was set up when

the base closed down. They are doing a very good job as well, co-operating with

the minister's department, trying to bring in industry. They have a $5 million

development fund which I think is advanced in increments of $1 million per year,

give or take a few dollars. I don't know the state of that but I am sure they

have some of that spent.

But overall, they have, it just started yesterday

or the day before, an effort out to let the world know what is happening with

Argentia, vis--vis, the Voisey's Bay smelter or whatever. But that will all

come clear in the next little while.

So I have nothing else to say.

CHAIR: It is abundantly clear to this Chair

that the Member has a great handle on that particular part of his riding.

Mr. Osborne.

MR. OSBORNE: Just a couple more questions and I

will let you off the hook for tonight.

MR. FUREY: Did you like that answer that I just

gave?

MR. OSBORNE: The Special Initiatives - Offshore

Fund: there is some extra funding in that fund this year. I am just wondering

what that extra funding is for?

MR. FUREY: Which subhead are you under?

MR. OSBORNE: I am sorry, it is page 166. I have

all the notes here. Okay, it is the Special Initiatives - Offshore Fund, 3.1.04.

MR. FUREY: Okay. Yes. That is a fund that is

75/25 again. We have set aside funding there for a number of initiatives. One of

them is C-Core, the Centre for Cold Ocean Research and Engineering here in St.

John's. Another that comes to mind is that we have set aside some money for

marketing the Bull Arm site, which we talked about earlier. It is one thing to

have a good catalogue of inventory and a super video and marketing materials,

but you have to get out on the world stage and chase opportunities. There is

money in there for that. Ultimate East Data Communication, there is some money

in there. That money is for some research work on communication satellite

technology that they are doing. Oceans Engineering, the Centre of Excellence

Program, the Centres of Excellence that are here in St. John's, we have some

money in there for marketing as well.

MR. OSBORNE: Okay. I notice that the funding

from the Province has increased and from Ottawa has decreased under that

section. Would you know why Ottawa has given less to this particular heading?

MR. FUREY: I don't see what you are saying. If

you look at that heading, Special Initiatives, you will see Professional

Services $300,000, Grants and Subsidies $1.3 million for a total of $1.6

million. Correct?

MR. OSBORNE: No, under 3.1.04 -

MR. FUREY: Yes, the amount to be voted total is

$1.6 million. Ottawa is putting in $1.25 million.

MR. OSBORNE: Yes, but last year they put in

$1.387 million.

MR. FUREY: It is slightly less, cash flow is

all it is. It is just a cash flow, slightly less because of the demands on the

fund. Sometimes the demands are higher, sometimes lower. It is still an absolute

pot that can't be touched. It just flows at different levels.

MR. OSBORNE: Okay. Page 169, Industrial

Infrastructure - Offshore Fund?

MR. FUREY: Yes, I am with you.

MR. OSBORNE: Okay, $75,000 in provincial money

and $225,000 in federal money was budgeted last year but was not spent. Why was

that not spent?

MR. FUREY: This is out at the Hibernia site, as

I recall, `... detailed engineering is the supports at major Hibernia

construction sites in the Province...'. There was a certain block of fund that

was set aside for that. There was no take-up on it this year. It wasn't put

there to be spent. It was put there to be spent if required.

MR. OSBORNE: Okay, so it just was not required.

MR. FUREY: It was not required.

MR. OSBORNE: Okay, and this year there is only

$12,500 in provincial money and $37,500 in federal money. What is that budgeted

for this year?

MR. FUREY: The same thing, if required.

MR. OSBORNE: If required, okay. That's all of

my questions, thank you.

MR. FUREY: It is there on an `as needed' basis.

MR. OSBORNE: Okay.

CHAIR: Thank you, Mr. Osborne.

Mr. Ramsay.

MR. RAMSAY: Just one thing, I note with regret

the closing of incubator mall facilities in Port aux Basques and Pasadena over

this past year - Port aux Basques, anyway, Pasadena I am not to sure. It is just

one that I wanted to note on the record. I know that there is a divesture of it

planned and there has been some interest expressed. Just maybe if you could

comment on that and secondly, something else that I want to get into afterwards

just quickly.

MR. FUREY: My only comment is, when I was the

minister it was open for the seven years I was there. I am not the minister

responsible for that anymore. How is that for a cop-out?

No, look, the reality is that the incubator malls

meant well, the concept was pretty good, the capital dollars were put in, there

was no interest, no debt. They attracted, for the most part, fly-by-nighters. If

you want to know the truth about it, they attracted, for the most part,

fly-by-nighters. People who went in there and took refuge under that roof for

free rent, came in with ACOA grants and every other grant in their arse-pocket

and when the money ran out they ran out the back door. Now, that's the truth of

the matter about the incubator malls. What we have to do and the challenge for

us is to divest of them to the private sector, to real people in the real world

with real risk capital who have some good ideas that can perhaps make it. Now

that's the truth. I can't sit here and tell you there has been any smashing

sterling success stories that keep rolling out of the incubator malls because I

can't think of one. Is that about right, Mr. Woodford? You would have more

knowledge about that.

MR. WOODFORD: Yes.

MR. RAMSAY: Just in some of the overall focus

of the department, as you mentioned in the area of telecommunications. I know

there have been some very strong expressions of interest from companies over the

past year or so with EDGE being brought in, some projects that you have been

working on that are very well thought out and, of course, I am not sure of any

that you can really mention because some of these companies apply - things don't

go well or their corporate plans change and they don't proceed. But I just

wonder, you did mention the idea of the possibility of 1,000 jobs. I think that

is probably holding back a little bit, based on some of the interesting and very

viable large corporations that are interested in using Newfoundland and the

double fibre-optic network with the redundant back-up and so on. The overall

effort that is being made between yourselves in partnership with NISL and the

telephone company itself in this area, do you feel fully confident that it will

reap benefits soon? Do you think that we will be able to - I know you've said

this, but I think that it is important to emphasize, because I think our future

is in the private sector. I'm wondering how confident you feel at us being able

to stand up and say: Yes, we have managed to stimulate the private sector to

create these jobs that we have had to cut out of the public sector.

MR. FUREY: Yes. Just to clarify a point that I

talked about in terms of the 1,000 jobs. There are thirty-three companies that

have the potential to create 1,000 or more jobs based on the EDGE status they

are given. How many have they created to date? For various reasons - and I'm not

talking about construction jobs or repair jobs or renovations of buildings -

MR. RAMSAY: The long term.

MR. FUREY: - I'm talking about direct company

jobs. There are 300 men and women working in full-time jobs in EDGE companies

today. There will be 1,000, I predict, by the end of six months. Mr. Ramsay,

that is outside of the other companies that are lining up, that are talking to

us. Let me tell you something interesting. Some of the EDGE companies have

brought other investors to the table, and I'm thinking of - maybe I shouldn't

say that because the deal is a ways off. But it is significant.

You mentioned high technology. Look at AbbaCom

Logic, investors from the United States and Vancouver, British Columbia. They

came to Newfoundland because geography - you know McLuhan's phrase, the world is

a global village now. With the technology that we have it has shrunk. It doesn't

matter where you live because we can go to satellite technology. A trillion

dollars a day changes hands at the speed of light. A trillion dollars a day,

through banking machines and other things, changes hands every single waking

day.

We aren't limited or hamstrung by geography as we

were in the past because in the past we were trying to move bulky products. The

products in the new third wave era are products of the mind, they are

knowledge-based, they are things we think about and information we gather that

we can fire off at the speed of light through digitized technology and satellite

technology.

AbbaCom Logic came here, these two investors. They

set up downtown on Blackmarsh Road. They are building enhanced memory capability

for computer boards. They came here under EDGE. Their minimum required capital

investment was $300,000. They are over $1 million now. Their minimum jobs were

ten. They have hired thirty-one young people out of the University. Their first

year of sales will be $50 million into the U.S. and by August they will be at

sixty employees, and hope to double by next year. They have given us a fabulous

lead on another major corporation. EDGE did that.

MR. RAMSAY: Excellent.

MR. FUREY: Let me just speak about Newfoundland

Information Solutions for a second. That is a spin-off of the old NLCS, the

computer technology company which we privatized, and everybody in the House at

the time agreed it was a good idea. They have more than met their commitments to

spin out sub-contracts to the small IT sector in the Province. They have more

than met their commitments on the job side. I'm sad to tell you that the

president told me they have thirty-four jobs they can't even fill within the

country because people aren't trained for them. They have to look outside the

country. Something like twenty of our workers over there are in California

retraining at Anderson's Consulting firm in California.

So they have met all their targets. Not only that,

they are now being recognized as the largest information technology company east

of Montreal. They are producing fabulous new products. Have you see the CD-ROMS

and technology they are producing for the Department of Tourism, Culture and

Recreation? Outstanding stuff. They are developing new ideas over there in their

laboratories and their research and development, some of which they have told me

about, but for obvious reasons I can't speak about. Look, it is just really

exciting what is happening over there. They have expanded the building, they are

growing at leaps and bounds, exporting the knowledge that Newfoundlanders are

taking from the universities and technical schools who are going to work for

them. They are exporting our brain power around the country and around the

world.

You can only tip your hat to that. That is a

dynamic company. Keep an eye on it. It is going to grow at an incredible pace.

MR. RAMSAY: Mr. Minister, one final, little

comment, and I guess it points towards public investment in industrial

infrastructure. Over the years we have had projects such as Marystown Shipyard,

the Labrador Linerboard Mill in Stephenville and many others that have reaped

benefits to us, regardless of their somewhat jaded history as far as further

public investment in them is concerned.

It would be interesting to know - and I know this

is probably not available, but maybe, even a comment on it by you - the amount

of money that has come back to the taxpayers from people being employed both at

the Marystown Shipyard, through the eventual success of the Labrador Linerboard

and Come By Chance, all of these things now which are employing people

regardless of the fact that we have put a huge amount of capital investment in

there, the tax dollars that have come back into the tax coffers for the people

of the Province, must certainly equate with and possibly far exceed the original

public investments, even in Marystown, so I think if we talk about $65 million

public investment of capital in Marystown, there has probably been in excess of

$65 million worth of personal income tax, retail sales tax flowed back into the

Province throughout that period of time and likewise with the others. So I think

that by investing our money in infrastructure like that, eventually we do reap

some rewards of going beyond and being a net economic benefit to the people of

the Province.

MR. FUREY: Yes.

MR. RAMSAY: Any comment on that, because -

MR. FUREY: Yes. My comment would simply be

this, that historically, governments have gone where the private sector wouldn't

dare to go, if I could use a Star Trek analogy, and they go out and they do

that. They build the infrastructure, they create the opportunities, they service

a demand where people won't normally go; but as it becomes acceptable,

government's real role is to back out then, and to allow the private sector to

step in.

public corporations like Marystown Shipyard is a valid one. There is no doubt

that there is a boomerang effect back to the Treasury. The issue is not in

putting money into Marystown or Crown corporations, the issue is putting it in

there efficiently, and driving it as though it were a business so that it

operates using business principles, so that you are not wasting taxpayers' money

and that is where the mind-set starts taking over whether it is Linerboard or

Marystown; ask the government, the government has an unending Treasury. Well,

those days are long gone - over, so it either runs on business principles or it

closes.

MR. RAMSAY: I agree. We all know we want to get

out of these businesses but the thing is, maybe the bad story of it costing us a

lot, maybe it ends up being awash after it is all over anyway, if you look at

the amount that has been returned, back to the Treasury out of the -

MR. FUREY: Well, I wish that was true but I

don't think that is true because, if that were true, let us open up the Treasury

and put shipyards in every part of the Province.

MR. RAMSAY: I know. We would be spending

everywhere. That's all I have.

CHAIR: Thank you, Mr. Ramsay.

MR. FUREY: The logic and the premise is

inescapable. It is like saying that because man is a biped, fifty men are a

centipede. Did you have a question?

MR. SPARROW: Yes, Sir.

I have heard about it over the past ten or twelve

years that there was a possibility of a free trade zone somewhere in

Newfoundland but it has never materialized -

MR. FUREY: Argentia.

MR. SPARROW: Well, I didn't want to mention

Argentia again - but it has never materialized. They sort of spring up all over

the United States in quite a few locations but we can't seem to get one on the

East Coast of Canada; is it a federal problem?

MR. FUREY: Yes, it very much is. The foreign

trade zone concept is something that we brought to the table eight years ago and

it's a foreign trade zone is how they are commonly known around the world.

Canada is perhaps the only G-7 country that does not have a foreign trade zone.

There are something in the order of 300 worldwide. I think Russia is another one

that doesn't - The former Soviet Union, now whether these broken out countries

that have fallen out of the former U.S.S.R. have them now I don't know, but as a

country they didn't.

They are fabulous for economic development because

what you can do is draw in companies to this sort of bonded warehouse zone where

products can be brought in, mixed, matched, added to, value-added, they don't

attract taxes and tariffs of any kind; when they are exported back out to the

end users is when they attract taxes. That is the beauty of a foreign trade

zone.

I've put forward the proposal that the whole of the

position, of course, was: We can't do for one province that which we aren't

prepared to do for everybody else. Because we are all in this equally. Nobody

has special status, nobody is distinct, nobody has special rights above

everybody else.

In fact, if you look at some of these foreign trade

zones and why they came about, they came about just after the Depression in the

U.S. Roosevelt came out with his so-called plan for reviving the economy and New

Jersey was one of the first ones to set up. They attracted components of

products from around the world and they stored them without attracting taxes,

which created jobs. Within the boundaries of that foreign trade zone they

assembled, put together, value-added, and didn't attract taxes. It is only when

they left those zones that they attracted taxes. In Mexico, along the

Texas-Mexico border you will find what are called maquiladoras. In these

maquiladoras they have absolutely total tax-free status, but they go a step

further. They couldn't care less about the environment or anything else.

Whatever you want to do in there, get at it and create jobs. Now, there is

something wrong with that.

We made the proposition as a province to the

country to create a foreign trade zone in Newfoundland. They said: We can't give

it to the whole Province, because if we do that we have to do it for this one,

that one and the other one. We said: Well, look at zones within the Province. In

particular, we told them to look at Gander, because of our international airport

reputation which we could build on, and look at Argentia and Stephenville. Three

areas: Shipping lanes, shipping lines and airports.

We gave them a formula that would say: You can give

this to everybody in the country so you aren't treating anybody differently. You

use basically four or five economic indicators to measure against the national

average: unemployment, GDP, growth rate, population, those kinds of things. Put

those in a column and measure it against the national average, and anybody who

falls below 60 per cent, you can have a foreign trade zone as an economic

development tool. We think we could have attracted a lot of industry into those

zones where it is totally tax-free, federal, provincial, all of that stuff.

They wouldn't buy into it. They would not give to

Newfoundland that economic development tool. They started to tell us: It is

playing with the tax act, Revenue Canada would have to amend their laws, et

cetera. Utter nonsense and garbage and bureaucratic tripe, to be honest about

it. If they wanted to help us, don't give us equalization and transfers, give us

the tools to build our economy, and here is a fabulous tool.

MR. SPARROW: Well, Mr. Minister, I am -

MR. FUREY: But they said no, successive

governments of all political stripes.

MR. SPARROW: I was reading just last week that

in Tijuana, Mexico, which is right next to the U.S. border, that I believe it

was Lucky Goldstar, but I stand to be corrected, one of the Korean

conglomerates, their investment in the last eighteen months was $800 million.

MR. FUREY: Yes, I saw that.

MR. SPARROW: It is quite a sizeable investment,

if we could ever pick up something like that.

MR. FUREY: But if you could invest $800 million

in a zone that wouldn't attract any taxes whatsoever until your product was

moving out into the economy, you would really think about investing there,

wouldn't you?

MR. SPARROW: Thank you, sir.

CHAIR: Thank you, Mr. Sparrow. (Inaudible) -

MR. FUREY: May I make one last point on that?

We are still pursuing that. It is still very much at the top of our agenda but

it is an uphill battle - and it is an uphill battle because the governments of

Canada successively have said: We can't give to one part of the nation that

which we do not give to another, even though they give special status on

immigration policy to Quebec.

CHAIR: Mr. Shelley.

MR. SHELLEY: I have just a couple of other

questions. I suggest we forego the break as we did last night so that we can

finish a bit early. I'm sure the minister and his officials won't mind that -

MR. FUREY: I'm available all night.

MR. SHELLEY: - and save the best questions for

the House. First of all, on behalf of my former colleague, Nick Careen, I still

would like a comment on the American base in Argentia and what you see in the

near future anyway, and what some alternatives might be down there. I think it

is fair to ask that.

MR. FUREY: I don't know if you were here when

Mr. Sparrow commented on it, but he listed a whole series of projects. I think

there is still the Argentia economic development fund. I know that you have done

a prospectus on the assets out there and there is quite a fabulous piece of

literature that has been done by - I forget the company's name now, but it will

come to me in a second.

We have been steering companies through EDGE into

there. He mentioned Empress. Empress is a small mushroom company. You have tried

their products. They are first rate. They have twenty-five or twenty-eight

employees now. They are growing by leaps and bounds, pardon the pun. They are

exporting to the Maritimes and I think they just have a fabulous opportunity.

EIMSKIP comes through there, you have the cold storage freezers out there. I

think one of the biggest drawbacks, Mr. Shelley, with respect to Argentia is the

environmental clean-up. That Is one of the things that we really have to work on

now.

MR. WOODFORD: (Inaudible).

MR. SHELLEY: Pardon? Yes, I will now in a

second.

MR. SPARROW: Excuse me, could I just add

something to what you just said?

MR. FUREY: Yes, please do.

MR. SPARROW: Environment Canada did an

assessment and basically gave Argentia a pretty good bill of health. The Federal

Government also committed to - if a company wanted to move in on any

section of

the naval base, the north side or the south side, which was the most recently

vacated place, that if a particular area was picked up, for example, if a

company needed a parcel of land, an area of ten acres, that the Federal

Government, rather than see that project shelved, would go in there, and even if

negotiations with the U.S. Government are not completed, they will unilaterally

clean up - call tenders, I assume, and foot the bill for a clean-up on that site

so that that business is not precluded from entering the naval base and

contributing to the Province's economy. So the Federal Government will clean it

up, even though the environmental problem has not been resolved between Canada

and the United States. There is no impediment to a company moving in there.

MR. FUREY: They will provide indemnification to

any business.

MR. SPARROW: Yes.

CHAIR: Thank you, Mr. Sparrow.

MR. SHELLEY: This is just a matter of

curiosity, on page 166, the Science and Technology Advisory Council, it is down

to $30,000 now but there are mergers talked about with ACE and Stack and the

different groups; then you have the advisory council on the economy; then you

have RTEE, Round Table on Environment and so on. These groups, where are they

going with these? How beneficial are they?

MR. FUREY: Do you remember in the Budget the

minister referred to twenty boards and agencies being consolidated?

MR. SHELLEY: Yes.

MR. FUREY: We folded up the ERC, we will be

folding up the Science and Technology Advisory Council and we will be folding up

the Round Table on the Environment and the Economy. What we have decided to do

is put one very strong group together, the Advisory Council on the Economy and

Technology. We will draw from those boards the best and brightest who are

willing to serve on a volunteer basis and they will advise the Premier. So we

are rolling all of them into one. We will seek advice from people, who to a

point - we are going to be very sensitive to those people who sat on the Round

Table on the Environment and the Economy and those people who sat on the Science

and Technology Advisory Council; but they will all report to the Premier now. It

will be one council and it will be basically driven off advising us on the

economy.

MR. SHELLEY: That's one thing that I agree

with, what you are going to do with that because there is so much of that going

on and you really wonder what all of these groups are doing all the time.

Page 168, one last question, on Strategic

Investment and Industrial Development. Now, Salaries, of course, I have to ask

that, from $109,000 down to $28,000. You mentioned that earlier?

MR. FUREY: Yes, I mentioned it earlier. This

agreement is concluding. It is a five-year agreement. So what you are seeing

here in these numbers is basically a cash flow of commitments from last year.

The balance that actually sits in the agreement now of the $45 million is just

under $500,000 and the board met this morning and committed to that $500,000.

MR. SHELLEY: Okay, so my question is - and this

is because I heard you mention it earlier - did you lay off people and rehire

them for the last year to clue up?

MR. FUREY: No, these people were the

administrative side of the agreement.

MR. SHELLEY: Yes, so what I am asking you - it

went down, obviously, it went down to $28,000, that is in salaries and then it

jumped up again to $109,000. So were the people laid off and rehired to clue up

what was going on with the agreement and so on? It's just a bit peculiar.

MR. FUREY: I am going to ask the chairman of

the agreement just to report on that because he has the details.

MR. SHELLEY: I just don't get the gist of it.

MR. BLUNDON: What we have here with the other

SIID agreement, the double `i' SIID -

WITNESS: `Sid's agreement.'

MR. BLUNDON: `Sid's agreement,' yes. You will

note that, as the minister said, most of this has to do with cash flow. In the

past we have always had a notional amount that allowed us to look after the

total administration of this particular agreement. What has really happened in

the past is that the Province has used its internal resources to administer its

part of the agreement. As you can see in the revised for 1995-1996, the only

amount that you see here in terms of salaries is a couple of students and stuff

that we had helping the administrators. In the 1996-1997 budget, again it is

just a notional amount. I would be very surprised if next year you didn't see a

revised similar to 1995-1996.

MR. SHELLEY: Like I said, at the beginning in

my opening remarks, Minister - I'm about to clue up here - although your overall

budget went up $1.3 million, as Roger mentioned earlier, there was a lot of

salaries and transportation was down in some other heads. Overall, it was an

increase of $1.3 million.

The last question, then, to clue up with the EDGE

again. There are five that just went through the committee, seventeen more lined

up. There is no particular

schedule -

MR. FUREY: When I say there are seventeen,

there may be thirty in the hopper but there are seventeen being assessed now,

yes.

MR. SHELLEY: But there is no particular

schedule. You don't meet every second week. It just depends on the numbers that

you have.

MR. FUREY: What happens is an application comes

in. They ask for a facilitator most of the time. They present a business case

which we have to analyze, we have to go through all that. Once those analyses

are done, Mr. Shelley, they are stacked up, and when you have four or five ready

to go they call the board together.

MR. SHELLEY: There is nothing confidential

about finding who has plans in there. So any time you want to get an update or

see where it is, basically - I mean, this group called me, and I don't have a

lot to do with them (inaudible) -

MR. FUREY: No, and I tell you, I made a note.

The assistant acting deputy here tonight made a note of that and I will find out

where it is in the system for you. Natsiq, is it?

MR. SHELLEY: Yes, it is something like that. It

changed twice.

MR. FUREY: You made a note of that,

(inaudible)? I will check on it for you, don't worry about that.

MR. SHELLEY: Okay. Those are all the questions

we have.

MR. FUREY: Do you know where they are from?

MR. SHELLEY: That is a question in itself. I

think there is a combination of people involved with that company, including the

Mtis, from what I understand, somebody from Ontario, and I think somebody in

France has some investments in it, too.

MR. FUREY: Okay, I got you. I will check on it

for you.

CHAIR: Thank you, Mr. Shelley. Are there any

further questions?

Thank you very much. I would just like to clue up

here now. I should say, from what I've heard about the EDGE legislation,

Minister, is the facilitator is one of the biggest benefits that companies see

flowing from that particular legislation. I would like to -

MR. FUREY: May I make a point on that?

CHAIR: Sure.

MR. FUREY: That is singly the most common

comment we get back from companies: Thanks for the tax breaks, but thank God for

the facilitator. Now, that speaks volumes, not just about how good these people

are at doing their jobs, but it speaks volumes that we have to hire a

facilitator in government to take people through government. You have to shake

your head. There is something wrong. The system is arsed-up, upside down, when

you have to hire a facilitator -

AN HON. MEMBER: (Inaudible).

MR. FUREY: No, but when you think about it now,

seriously, when you think about it.

- if you have real money to invest and you have to

hire somebody in government to navigate government.

MR. FITZGERALD: Minister, I've always said that

in order to start a business here in Newfoundland, the first thing you have to

do is to be unemployed in order to have the time to be able to go through the

bureaucracy.

CHAIR: When I made that comment I didn't want

to stimulate another debate here tonight.

MR. FUREY: Somebody else made a similar comment

to me about the bureaucracy, how to start a small business in Newfoundland?

Start a big one and wait.

CHAIR: Minister, I want to say for all who are

present and all who will read the record that this is an exceptional department.

It accounts for about .9 per cent of the total expenditure of the whole of the

government, but it is very important. It has skilled stewardship. This is the

department that looks at the information highway, the information technology,

new opportunities, new investment. Your job, Minister, seems to be sell, sell,

sell, developing relationships, partnerships between our people and our

resources, leveraging and getting private sector investment and providing new

jobs and new opportunity with technology and building, I think, a much better

and brighter society. So we all appreciate the work that you and your department

does.

I would now call upon the Clerk to call the

headings.

MADAM CLERK: Inclusively?

CHAIR: Inclusively.

MADAM CLERK: 1.1.01 through 4.2.02.

On motion, headings 1.1.0l through 4.2.02

inclusive, carried.

On motion, Department of Industry, Trade and

Technology, total Head, carried.

On motion, the Committee adjourned.