May 8, 2007 RESOURCE COMMITTEE

Pursuant to Standing Order 68, Keith Hutchings, MHA for

Ferryland, replaces Charlene Johnson, MHA for Trinity-Bay de Verde.

The Committee met at 10:00 a.m. in the House of Assembly.

CHAIR (Mr. Harding): Order, please!

Now that we have the go-ahead to proceed, I would like to welcome you all as

we debate the Estimates of the Department of Innovation, Trade and Rural

Development.

After the Clerk calls the first subhead, the minister may give his opening

remarks, introduce his officials, and then the members of the Committee may

begin questioning.

We have one member in the House of Assembly who is not a member of the

Committee as such, but I have talked with the Speaker and, if it is okay with

the Committee, if the Committee agrees that Ms Michael be permitted to ask

questions, then certainly we can allow that.

Is the Committee in agreement with that?

SOME HON. MEMBERS: Yes.

CHAIR: No problem, okay.

MS MICHAEL: Thank you.

CHAIR: She is not permitted to vote.

MS MICHAEL: No.

CHAIR: First of all, I would like to ask the members of the Committee now

to introduce themselves.

MS JONES: Yvonne Jones, MHA for Cartwright-L'Anse au Clair.

MR. JOYCE: Eddie Joyce, MHA for Bay of Islands.

MS MICHAEL: Lorraine Michael, MHA for Signal Hill-Quidi Vidi.

MR. HUTCHINGS: Keith Hutchings, MHA for Ferryland.

MR. HUNTER: Ray Hunter, MHA for Windsor-Springdale.

MR. BAKER: Jim Baker, MHA for Labrador West.

CHAIR: Harry Harding, MHA for Bonavista North.

I just want to remind the officials of the department, if you are asked to

answer a question or comment, if you would identify yourself before you speak;

because this is being recorded and that is the only way they can find out who is

actually speaking.

Minister Taylor, you may begin.

We will call the first subhead.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01.

Shall that one carry?

Minister Taylor.

MR. TAYLOR: Thank you, Mr. Chair.

Good morning.

I will begin by introducing our officials here today. I have Cathy Duke, our

deputy minister; Rita Malone, ADM, Regional Development; Phil McCarthy, ADM of

Strategic Industries and Business Development; Dennis Hogan, ADM of Innovation,

Research and Advanced Technologies; Paul Morris, Director of Trade and

Investment; Barry Snow, Executive Director of the Ireland Business Partnerships;

Mac Blundon, Manager for Finance and General Operations; Lynn Evans, Director of

Communications.

Mr. Chair, I guess we are going to be dealing with the budget of the Rural

Secretariat this morning as well. I know it is handled under Executive Council,

but that was my understanding from -

MS JONES: Is that right? I didn't realize that.

MR. TAYLOR: Okay.

Well, I suppose nobody can stop you from dealing with it when we discuss it

in Committee of the Whole, but my understanding is that we were going to deal

with it here, similar to the way in which we handle Labrador and Aboriginal

Affairs and what have you.

From the Rural Secretariat we have Barbara Case, who is our Director for

Regional Partnership Development, and Mary Snow, our Manager of Partnership

Administration.

The Department of Innovation, Trade and Rural Development is being allocated

more than $58.5 million in 2007-2008 to allow us to implement our plans for

economic growth and job creation throughout the Province.

I would like to highlight a few of our initiatives for this year. Government

allocated an additional $500,000 for the implementation of a refocused Export

Development Strategy. The funding will be used for: market research and

intelligence, to research target markets and develop market information for

client and industry use; for export readiness, to expand the department's

export readiness assessment services and increase trade-related training

activity with clients and industry groups; for strategic export partnerships, to

establish a new pilot program for government to partner with larger firms who

have existing export market penetration, to help them grow that market or expand

the diversity of products they are selling into that market; for market access,

to support expanded services to clients participating in trade missions and

exhibitions, including access to in-market consulting, matchmaking services, and

exhibit and travel expense support; and for export promotion, to promote the

Province as an exporter of quality goods and services in targeted international

markets.

Budget 2007 allocates $300,000 to develop a Province-wide comprehensive

Research and Development Strategy and the establishment of a provincial Research

and Development Council. The R&D Strategy will focus on the delivery of

R&D funding and increase the level of economic spin-off in the provincial

economy arising from research and development. It will be developed in

collaboration with Memorial University, the College of the North Atlantic and

the private sector. The new R&D Council will be a Crown corporation that

spearheads R&D activities based on priorities in the Research and

Development Strategy.

Last year, government announced two programs as part of its Innovation

Strategy, and we are continuing with those programs. The Commercialization Fund

will receive $3 million. This fund provides financial assistance to private

sector enterprises for the development of innovative and market-ready products

and services, including support for technology transfer activities.

The Innovation Enhancement Program will receive $2 million. This program is

for public sector institutions, not-for-profit groups, community organizations,

and industry associations involved in activities that enhance the innovative

capacity of the Province.

We are continuing the Business and Market Development Program to help

companies market their products and services. We are continuing the Small and

Medium-sized Enterprise Fund to encourage start-up, modernization and expansion

of businesses throughout the Province.

The Regional Sectoral Diversification Fund will also be funded again this

year. The RSDF assists local not-for-profit organizations with their economic

development efforts. We are again providing $1.2 million to Regional Economic

Development Boards to carry out their mandates.

The provincial government will invest $10 million this year for the

installation of a fibre optic telecommunications link which will run from St.

John's to Halifax along two diverse routes to connect the national carries

into mainland Canada. The remaining $5 million will be included in next year's

budget.

Shifting gears a little bit, the Rural Secretariat is working with citizens

and government departments to identify and advance regional and rural policy

priorities that are sustainable, achievable, realistic and affordable. The

provincial government's role is to ensure that policies, regulations and

decisions are informed by rural considerations. The Rural Secretariat supports

this effort by actively engaging and working with citizens through nine regional

councils and a provincial council to build knowledge and awareness of rural

sustainability challenges and opportunities, and to identify and advance

regional policy priorities.

Regional councils are developing broad policy priorities and are engaging

more broadly with citizens in their regions. The Rural Secretariat has been

allocated a budget of $1.85 million to support their efforts. The Rural

Secretariat functions as a central agency within Executive Council, that works

horizontally across departments and is designed to provide advice and long-term

strategies.

The nine regional councils have all met at least nine times to put together a

comprehensive picture of their regions, to identify the strengths that exist,

and to determine where there are gaps in the provision of services. This advice,

their priorities for action, and their initial views on how their regions will

look in 2020, are in the final stages of preparation. Councils and planners in

regions are also talking to a broad range of citizens to share their thinking,

to ask for their advice and input, and to begin to build both awareness of the

work and shared ownership of the task with individuals and groups.

The Rural Secretariat is pulling together various partners to ensure a more

comprehensive process. It is encouraging thinking about development from social,

economic, environmental and cultural points of view so we can attribute a

different thinking to the process of overall development. We see this role as

one of educating citizens to be more comprehensive in their understanding of

current issues and to be more focused in their suggestions. Our meetings are

designed to transmit information to build learning communities. The more

councils know and understand, the more they can contribute and appropriately

challenge the status quo.

The provincial council, which is made up of representatives from the regional

councils - as well as individuals from Broad, education, environmental,

Aboriginal, labour and voluntary sector organizations - has met twice but their

work is directed by that of the regional councils. The role is to work directly

with Cabinet and deputy ministers to ensure that the thinking of council is part

of the overall consideration of the Cabinet decision making.

That is a brief overview, Mr. Chair, of some of the activities and programs

that we have been and will be engaged in.

Thank you for your time, and I look forward to the questions that will come

and, hopefully, we can provide the answers as required.

CHAIR: Thank you, Minister Taylor.

I mentioned to the Clerk about the Rural Secretariat. That comes under

Executive Council but she is telling me that if we deal with it now then it is

done, because we cannot do it again at another meeting.

MR. JOYCE: There is no one prepared to do it now.

CHAIR: So, if you do not want to deal with it now -

MR. TAYLOR: All I can say, Mr. Chair, if we are not going to deal with it

now, then we do not deal with it now and we do not stray off the topic of INTRD,

but if we are going to deal with it now, then fine. All I can say is that I was

asked to deal with it. That is up to the Committee, I guess. I will defer it to

the Committee.

MR. JOYCE: Yes, but no one mentioned it, not that I know.

MS JONES: (Inaudible) with all the other secretariats, we have been

informed if there is going to be a Secretariat Estimates attached to that

department's Estimates.

CHAIR: Is it the wish of the Committee that we deal with it now or pass

it off until -

MS JONES: Will it be rescheduled?

CHAIR: Executive Council, I do not know if they have been done yet or

not.

MR. TAYLOR: Well, from my perspective, we are here to deal with it now.

If we are not going to deal with it now, I guess, I defer to the Chair and the

Committee.

MR. JOYCE: Is this part of Innovation, Trade and Development? It is not.

MR. TAYLOR: No, it is part of Executive Council, but I am the minister

responsible for it.

MR. JOYCE: Yes, but there was no one who mentioned it to us that it was -

I am only here for a little while anyway, so it is fine with me. You are just

causing a fuss.

MR. TAYLOR: No, I am easy on it. I mean, I cannot dictate to the

Committee what you do.

MS JONES: There is no one else to do those Estimates, it is only him, as

the minister. There is no other minister to do those Estimates.

MR. TAYLOR: No, that is right.

CHAIR: Okay, we will leave it now?

MS JONES: So, if you are not prepared to come back, I guess we do not

have a choice.

WITNESS: You have to come back to do (inaudible).

MR. TAYLOR: No, we don't, not on Rural Secretariat because the Rural

Secretariat typically would not be dealt with in Estimates Committee. It is

dealt with in Committee of the Whole as part of Executive Council.

MR. JOYCE: Well, we will have to reschedule. I am not finished. It is

simple.

CHAIR: Is it the wish of the Committee that we leave it for now and deal

with it -

MS JONES: I think we are going to have to gauge it in terms of the time.

CHAIR: Okay, all right.

Well, we will begin now -

MS JONES: We do have to adjourn before 1:30, so if there is enough time

(inaudible).

MR. TAYLOR: The question I asked him is - because what I had planned to

do is, we start off with Rural Secretariat and then we move into INTRD, because

Rural Secretariat is a very small shop, obviously. But, if we are not going to

deal with Rural Secretariat than I need to know so I can let my officials go.

MS JONES: Mr. Chairman, I do not know whose responsibility it is to

inform the Committee of what Estimates are going to be contained within each

department, but it is obvious that we were not informed. We are not prepared to

deal with those Estimates this morning, but also we have to look at the factor

of time. We have to be finished here before 1:15 today.

MR. TAYLOR: Right.

MS JONES: Our primary concern right now is dealing with the Estimates of

Innovation, Trade and Rural Development. I would say that we will continue with

those Estimates. We have already lost twenty-five minutes in terms of waiting to

get started, and if there is enough time I do not have any problem moving into

the Rural Secretariat, if there is enough time. I do not know, at this rate, if

we will have enough time to even finish the Estimates for the department that we

came here to do. I think we are going to have to gauge it.

CHAIR: Okay. Is that acceptable to everyone on the Committee that we do

as Ms Jones just suggested?

Okay, fine.

I think Mr. Joyce is going to begin.

MR. JOYCE: I am going to be very brief, minister. This is just pertaining

to a specific part that I think your department was involved with, when the mill

shut down out in Stephenville, the mill workers. Rita, were you involved with

the arranging of the training for the mill workers out in Stephenville with

Revenue Canada?

MS MALONE: No, I was not. That was under HRLE jurisdiction.

MR. JOYCE: Okay. The reason why I ask is, in the discussions with the

union and some officials from the Department of Education your name popped up,

that you were the one who negotiated a deal with the federal government. The

problem with it is a lot of the workers now have a taxable income of $17,000 for

going to school. They just went into a regular classroom. This is why I just

came down, just to clarify it, and try to track down who actually did the

negotiations with the federal government on this so they can -

MS MALONE: No, I was not involved in the program delivery of the

training. That was the responsibility of HRLE. The deputy minister and I had

recent discussions when this issue of taxable income was raised. My involvement

was around the economic activity and economic projects and initiatives as it

related to the task force.

MR. JOYCE: Okay.

MS MALONE: There was a separate committee, Mr. Joyce, an IAS Committee

under Service Canada, which had officials of the federal and provincial

government, as well as community and union, that dealt with these issues.

MR. JOYCE: Thanks, because they are trying to track down who actually

negotiated the deal and they cannot track anyone down, who actually sat down

with the federal bunch; because, from the workers point of view, they went into

a regular classroom. They could have waited three or four or five months to go

into a regular classroom. It cost them $2,500 to do the course, and now it will

cost them $17,000. They got a bill for $17,000, which is put on as taxable

income because they said they had special training.

So I can rule you out as being a part of that?

MS MALONE: Yes. If I were the culprit, I would admit to being the

culprit.

MR. JOYCE: No, I am just trying to figure it out.

MS MALONE: I do know the issue, Mr. Joyce - I do - and I do know of the

committee makeup, because that committee was made up in the early going, and the

fact that the training did become taxable income, as Service Canada training of

this nature is. I am of the understanding that there was follow-up within the

officials of the Department of Education with Service Canada and the Manager of

Service Canada in the Stephenville office.

MR. JOYCE: Okay.

Thank you very much.

MS MALONE: You're welcome.

MR. JOYCE: Thanks for clearing that up.

Do you know who in the Province was the contact person for this program?

MS MALONE: There were regional managers of HRLE as well as an IAS,

Industrial Adjustment Service, Chair, and that would be Pat Power as the Chair.

MR. JOYCE: Who?

MS MALONE: Pat Power; he was appointed Chair.

For the officials, I can bring forward the names once I get back to my office

and have a discussion.

MR. JOYCE: Okay, please.

Thank you.

MS MALONE: You're welcome.

MR. JOYCE: Thank you, Minister, for that.

The workers asked me to try and track it down.

Thank you, Rita.

MS MALONE: You're welcome.

CHAIR: Ms Jones.

MS JONES: Thank you.

I am going to start with the Estimates Committee.

Before I start, I would just like to have clarification, Mr. Chairman, on the

procedure this morning. Will we go fifteen minutes and then to another member?

Is that how you are doing this?

CHAIR: Could you repeat that, please?

MS JONES: I am wondering about the process this morning. Will I go for

fifteen minutes and then turn it over to Lorraine? Is that the process? How do

you want to conduct this?

CHAIR: We have not been really particular on that; so, if it is agreeable

between you people, you can carry on and complete your line of questioning and

Ms Michael can -

MS MICHAEL: I am quite content to have Yvonne really pursue - because I

really am interested in what is going to go on. I will have some questions, but

I would like to - if you don't pick them up, I have mine. I am quite content

to have you go through, and if I feel like I want to jump in then I can write

you are note. How is that?

MS JONES: Okay.

CHAIR: You can work that out between both of you.

MS JONES: I just wanted clarification. Thank you.

Good morning, Minister, and good morning to your officials, and thank you for

your co-operation this morning.

My first questions are going to be regarding the Estimates to be voted in

section 1.2.01. under Executive Support. I would like to start with the

Salaries. Last year your budgeted $816,100, you spent $704,000. Why the revised

amount? Were there any layoffs, terminations in the department, or anything of

that nature?

MR. TAYLOR: No, we had a vacant ADM, and secretary to the ADM, for a

period of time, and that is basically reflected in the salary adjustments.

MS JONES: What ADM position would that be? What area would they be

responsible for?

MR. TAYLOR: Trade and Investment.

MS JONES: Trade and Investment?

MR. TAYLOR: Yes.

MS JONES: Is that position now filled?

MR. TAYLOR: No.

MS JONES: It is still not filled?

MR. TAYLOR: No, it is not filled; we are recruiting for it right now.

MS JONES: Okay.

The administrative support for that position, has that been filled?

WITNESS: (Inaudible).

MR. TAYLOR: Do you want to speak to that?

MS DUKE: I apologize; I was just getting clarification.

The Executive Director position for the Ireland Business Partnerships was

also vacant for a number of months. When I was in that position previously -

MS JONES: Excuse me, could you repeat that again?

MS DUKE: The Ireland Business Partnerships, the Executive Director

position.

MS JONES: Doesn't that come under a different

section in the Estimates?

Ireland Business Partnerships has its own salary attached to it under the

Estimates. Why would it be included under Executive Support?

MR. TAYLOR: If I could, there was a bit of a trickle down impact here.

Our ADM of Trade and Investment was vacant because he was in an acting position

as deputy minister. Then, we recruited for a deputy minister and the successful

person came from IBP, so the salary adjustment is not reflected here in

Executive Support - you are right in that respect - but there were three

positions that were impacted by one move, essentially: the DM, the ADM and the

Executive Director of IBP.

MS JONES: Okay.

There was a vacant ADM -

MR. TAYLOR: We have since filled two, and the ADM is still not filled. It

is being recruited now.

MS JONES: Okay.

You said there was a secretary in that voting number as well.

MR. TAYLOR: Yes, I did. I was looking for some clarification on that,

okay, because there were some shared services there for secretarial support. The

secretary was utilized on two fronts, so to speak.

MS DUKE: There is a position allocated, a secretarial position, both for

the ADM of Trade and Investment and for the Executive Director of the Ireland

Business Partnerships, and that position was shared for a time so there were

some savings there.

MS JONES: Okay.

So, that position has still not been filled?

MS DUKE: That is correct.

MS JONES: Okay.

This year you voted $892,400. Are you adding more positions to the

department?

MR. TAYLOR: No.

MS JONES: Okay.

Why is it -

MR. TAYLOR: What is happening there, basically, is that we expect, with

the recruitment that is underway right now, we will be back to our full

complement as dictated under the - our full staffing complement. Then there is

an impact on reclassification of Executive Secretaries, which is throughout

government. As well, there is the 3 per cent wage increase. That is essentially

what is happening there on the $892,400 versus the $816,100.

MS JONES: All right. Thank you.

Also under that same heading, 07., Property, Furnishings and Equipment, you

budgeted $1,000 and you spent $11,000. What was that $11,000 spent on?

MR. TAYLOR: We picked up a new photocopier, a computer, and some

furniture for staff.

As you know, if you look at the second floor in the West Block, there is a

great deal of upheaval, you might say, between our department, Tourism, and

Government Services. What we have been trying to do - this is across government

- is reconfigure a number of floors in the Confederation Building. This was

announced in Budget 2006-2007.

As you know - I am sort of talking like the Minister of Transportation and

Works now, because I was there at the time, but - we have a great deal of rental

space throughout the city and a great deal of vacant space within government

buildings. We know that we can move people around and clear up a lot of the

vacant space, so this is sort of, in part, as a result of these movements.

If you look around the department, you can see that not all furniture is up

to the standard that it should be, especially with our staff; it is not as good

as the ministers and MHAs offices.

MS JONES: I can only assume that the work is soon going to be finished.

There are no amounts budgeted for this year.

MR. TAYLOR: Not in our department. I couldn't answer what is going on,

on other floors, in other departments, but ours is pretty well done.

MS JONES: Okay.

MR. TAYLOR: That would have been in Transportation and Works anyway.

MS JONES: Moving to 1.2.02., under line 03., Transportation and

Communications, you spent $55,000 this year; you have increased it to $72,000

this year. Why is that?

MR. TAYLOR: Basically, it is a reallocation of our operating budget from

Professional Services to more accurately reflect our expenditures as a result of

the creation of the information management section. It is basically a movement

of funds from one

section to another section. The money was being spent, and we

are just putting it in the spot where it needs to be put.

MS JONES: Maybe you can tell me about the Professional Services, then,

because you did budget $116,000. You only spent $7,000, and now you are looking

at budgeting $96,000 this year.

Normally, what professional services would you be purchasing that you did not

purchase in the last year, and what is it that you are doing this year that is

driving the cost?

MR. TAYLOR: Why we did not spend it - basically, we hire consultants from

time to time and we did not need to hire consultants for across-departmental

work. Sometimes, as you know, purchased services and professional services are

related to the

section that they are in, and sometimes you require these

services but they are not specific to a

section there; they cover a number of

sections or they are broad policy issues that are more related to the department's

mandate and you have to engage professional services for that. We obviously did

not need to engage consultants to the same extent last year as we thought we

would have to.

Then, if you look at the change to this year, to $96,600, that is essentially

a reallocation - which is tied to the previous question you had - of our

operating budgets to travel and communications, and again related to our

information management section. If you require further -

MS JONES: Under that heading, what kind of professional services would

you be purchasing? Give me an example.

MR. TAYLOR: Can I hand that off to -

MS DUKE: Currently, government is looking at the whole aspect of

information management throughout government. Our Department of Innovation,

Trade and Rural Development has been chosen as the first department to basically

run a pilot whereby we are looking at how we manage information, both

electronically and through other means, in terms of creating efficiency. So

there is a consulting firm which has been hired to provide that advice and to

provide recommendations as to how we can manage it better.

MS JONES: I am not familiar with this information management project that

you are doing. Is this information pertaining to government, and all government

departments, and you guys are heading...? Someone back there is shaking their

head, so I know I am not right.

MS DUKE: OCIO is the lead agency for this particular project, and it has

everything to do from managing -

MS JONES: Could you please tell me - I don't like it when you use

acronyms.

MS DUKE: Oh, I am sorry.

MS JONES: OCIO would be?

MS DUKE: The Office of the Chief Information Officer.

MS JONES: Okay, thank you.

MS DUKE: Basically, to look at the management of information in terms of

the hard copies of reports that are available, duplication within the

department, the way that information travels around the department horizontally

and so on, so it is a matter of improving efficiencies. They will be providing

recommendations to us on how we can do that within our department. Based on the

success there, the model will be used for other departments as well.

MS JONES: All right, thank you. That is a clear explanation.

Under Purchased Services, you have increased your budget this year by

$20,000. Do you want to tell me what services you would be purchasing again

under this section? You already told me what you are using for professional

services: the consultants, the designers, the information technology advice.

MR. TAYLOR: Basically, under Purchased Services there, that would be for

departmental advertising, equipment rentals, repairs to equipment, and just

general service costs.

MS JONES: Okay.

MR. TAYLOR: Obviously, we did not need to spend as much last year. We did

not increase it, actually. We were maintaining our budget at the same level.

Just that last year, we had a lower than anticipated expenditure on that front.

MS JONES: Okay. Thank you.

Under subhead 1.2.03, under 01. Salaries, again. Last year you Budgeted

$437,900, you spent only $197,700. I would like to know why there was such a

decline in Salaries last year? How many positions were vacant, laid off,

whatever the case?

MR. TAYLOR: What happened there, essentially we have two people on loan

from our Policy and Planning

section to other parts of government. You can call

it secondment or whatever you want to call it. Anyway, they are vacant positions

and we are not anticipating filling them this year. They are still there. We

still have access to them, so to speak, but they are working on specific

projects, across government projects.

MS JONES: Those two people who have been seconded, are they from another

provincial government department? Is that what you are telling me?

MR. TAYLOR: No, they are in ours and they are working on other matters.

Still within the provincial government, yes.

MS JONES: Who is paying their salary? I want to know who is paying their

salary? Where does their salary come from?

MS DUKE: As an example, one of the positions is, one of our policy

analysts is working on the provincial development plan. So, that person has been

seconded from our department to work with Dr. House and his group for a period

of time. When that is finished then they will return to our department.

MS JONES: Okay. So, who is paying their salary? You guys are not because

it is not in the Estimates.

MS DUKE: The budget for the provincial development plan, as I understand

it, is through Executive Council. So they would have a budget for the work that

they require for those positions.

MS JONES: Okay. One person has been seconded to the public policy

division of Memorial, you are telling me, University?

MR. TAYLOR: No.

MS DUKE: No, I am sorry. The provincial development plan. I am sorry.

MR. TAYLOR: They are within Executive Council. They are still within

government. They are not out with any agency or what have you. They are still

here in the building, so to speak.

MS JONES: Okay. Your Estimates are actually down by $150,000 or whatever,

right?

MR. TAYLOR: You are talking about Budget to Revised last year?

MS JONES: Yes. Your Estimates are down by $240,000, approximately. You

are saying that you have two people seconded to somewhere else and someone else

is paying their salary. Right?

MR. TAYLOR: Yes.

MS JONES: Is that all that is? Are those two people getting paid $120,000

each?

MS DUKE: The other thing that is happening in that division, the Policy

and Planning Division, is that we do have a number of vacant positions that we

are recruiting for, that will be filled. So that would make up the difference.

MS JONES: Can you tell me what those other vacant positions are, please?

MS DUKE: They would be policy analysts positions and it would be in our

division, which takes care of policy and planning across the department.

MS JONES: Okay. How many of those are vacant?

MS DUKE: There are two positions, I believe.

MS JONES: How long have they been vacant?

MS DUKE: They certainly would have been vacant in this last fiscal year.

The backlog, in terms of filling positions, we have not been able to recruit and

fill them within the last fiscal year.

MS JONES: So you are actively recruiting for those positions right now?

MS DUKE: Yes, that is correct.

MS JONES: This year you voted, minister, to increase your Estimates by

$170,000 or so. I am assuming that those two policy analysts have been included

in that estimate. Are there any other positions included there?

MR. TAYLOR: No, there aren't any new positions. We have not voted to

increase, we have actually voted to decrease and that reflects - I understand

what you are saying. There is an increase over our actual expenditure from last

year, but that reflects an anticipation that we will have those vacant positions

filled, with the exception of the policy analyst who is seconded - I guess is

the appropriate terminology - to work with the provincial development plan,

which would reflect the $437,000 versus $375,000.

MS JONES: This year you are budgeting to spend $15,000 under that

section

for Purchased Services. Can you tell me what services you intend to purchase?

MR. TAYLOR: Well, first of all, that is a reallocation, again, from - if

you look at the changes from Professional Services and Purchased Services, we

have made some adjustments. We are basically trying to more accurately reflect

where our expenditures are, but I will turn it over to Cathy.

MS DUKE: Again, in that particular division, it would be - as the

minister has said - a reallocation from the Professional Services to Purchased

Services, basically - just based on the history of that division in terms of

where the requirements are for the Budget. So, it is a reallocation.

MS JONES: Can you give me an example of a service that you would purchase

under that section?

MS DUKE: That would be purchased services such as printing, equipment,

rental of meeting rooms, that type of thing, for some of the planning sessions

and consultations and so on. Also, that division does utilize part of that

budget for the purchase of statistical information from Stats Canada and so on.

MS JONES: Okay.

I am now going to move to

section 1.2.04.; this is the Ireland Business

Partnerships section. Under Transportation and Communications, first of all,

last year you had budgeted $92,800 and in actuality you spent $35,000. I am

wondering why you didn't spend what you had budgeted. Was there any part of

the initiative that was cancelled, or anything like that?

MS DUKE: This particular aspect of our budget includes both the Ireland

Business Partnerships and the Strategic Partnership Initiative, so the reduction

in Transportation and Communications would be related to vacant positions in

each of those two divisions.

In the Ireland Business Partnerships, for example, we had an Economic

Development Officer position which had been approved in the budget, which was

not filled for the first nine or ten months. Also, as I mentioned earlier, the

Executive Director position was vacant for three months or so during the

transition.

MS JONES: But that is not reflected in your salaries and benefits, the

vacancies in those positions.

MS DUKE: It was from $294,000 down to $222,000.

MS JONES: Okay, $74,000.

One position, though, was only vacant for ten months, you said, was it?

MS DUKE: Yes, that is right.

MR. TAYLOR: On the Strategic Partnership Initiative, there was not quite

as much money spent on travel as would have been anticipated for board meetings

as a result of some of these vacancies.

MS JONES: Your Strategic Partnership meetings, where would they be held

mostly?

MR. TAYLOR: Here in St. John's.

MS JONES: Okay.

I guess most of your Ireland Business Partnerships stuff is done in Ireland?

MS DUKE: Certainly, as you could appreciate, the travel to Ireland

actually can be quite expensive. The travel and communications would include

hosting board meetings; and, of our board members, there are a number who are

from outside St. John's, so we would cover their travel to come to board

meetings. That would be part of it. The other part would be for travel for staff

to Ireland and so on.

MS JONES: Can you table the list of board members for the Ireland

Business Partnerships? Is there a board for the Strategic Partnership as well?

MS DUKE: Yes, we can certainly provide the list of current board members

for the Ireland Business Partnerships. We can provide that to you right away.

With the Strategic Partnership Initiative, the way that it works is that it

is a partnership of the three interest groups, we will say: government, business

and labour. What happens is that each of the three groups will appoint a number

of people to sit on an oversight committee. So it is not really a board as such,

but there is certainly, we will call it, a co-ordinating committee for that

initiative.

MS JONES: Can I ask that you table the list of board members - or

members, I should say - who were part of the -

MS DUKE: Yes, you certainly can. I cannot really name them off the top of

my head right now but we certainly can provide them to you very shortly.

MS JONES: Thank you very much.

Under that same heading, under 05., you talk about Professional Services.

Last year you spent a lot less than you had originally budgeted. This year you

are budgeting up to $144,000. Can you tell me what professional services you

would be purchasing here?

MS DUKE: Sure.

With the Ireland Business Partnerships, the Board of Directors have been

involved with the department in developing a strategic plan for that initiative,

so we would have had some consulting services around that.

Then, following that, based on the priorities that were identified, there

would have been various projects that would have been undertaken to follow

through on those priorities. There may have been various projects, either hiring

consultants directly or through partners in the community, where we would offer

some funding for them to undertake research or certain activities.

MS JONES: What consulting firm do you use for that?

MS DUKE: There is no one specific consulting firm. There is no Agency of

Record, we will say; so, depending on the specific initiative, we would go out

and get proposals from a number of consultants and would award based on the

merits of the proposal.

MS JONES: What firm did you use in the last year?

MS DUKE: For the strategic planning session, we used a consultant here in

St. John's, Jane Helleur and Associates.

MS JONES: Jane who?

MS DUKE: Jane Helleur and Associates.

MS JONES: Jane Helleur?

MS DUKE: Yes.

MS JONES: Okay.

MS DUKE: For a number of the other projects, they would have been

commissioned through an outside party, so we would have offered a contribution

to one of our partners in the community who would have then - you know, if they

were doing a feasability study or a business plan - contracted the consultants,

so they would not have been directly contracted through government.

MS JONES: Okay.

My next questions are on the Grants and Subsidies under the same heading, 10.

Last year you budgeted $388,000, you only awarded $200,000, and this year you

are budgeting $423,000. Can you tell me what the $200,000 was spent on last

year?

MS DUKE: Again, in some instances there would have been professional

services (inaudible) directly. In other cases, where we would have worked with a

community partner, we would have provided a contribution to them to carry out

their projects.

I will give you one example. Under the Ireland Business Partnerships there

was a project called Festival of the Sea, which is a joint project between -

WITNESS: Biannual.

MS DUKE: Yes, biannual.

It is a partnership between Newfoundland and Ireland, so the Ireland Business

Partnerships would have contributed to the planning and marketing and so on of

that event when Newfoundland hosted 100 Irish visitors last year. Now, this year

coming, there will be an event in Ireland. It is that kind of a thing that would

have been considered a grant or a subsidy.

MS JONES: Under that $200,000 that was given out last year, how many

different entities were awarded money?

MS DUKE: Again, this would be a combined budget with the Strategic

Partnership Initiative and the Ireland Business Partnerships.

On the Ireland Business Partnerships there would have perhaps been - and I am

just giving you an estimate - maybe eight to ten projects overall. With the

Strategic Partnership Initiative, I would not be able to tell you exactly the

number of projects. Again, they would have been projects that were determined as

a priority by labour, business and government, that would have been jointly

commissioned from the group.

MS JONES: So there is an application process for those grants and

subsidies?

MS DUKE: No, it is not a set program where you would submit an

application.

As an example, with the Strategic Partnership Initiative, one of the things

that they did last year was to do an assessment of the skills shortage and

labour market information. That is something that then evolved into an

initiative that will continue to be carried by HRLE.

Another example is, the group of three did a major piece of research around

taxation and tax incentives, and ways that we could improve economic development

in the Province, so they would have had a research project and tabled that

report to our department. It is that kind of thing.

MS JONES: Okay.

This year you have increased that amount. Are you anticipating some new

initiatives?

MS DUKE: Yes.

I guess it relates back to - the Ireland Business Partnerships Board of

Directors did undertake the Strategic Plan, and until that was in place there

were not any major initiatives that would have long-term investment. Now that we

have some priorities, we expect there are a number of things that we will be

undertaking.

As well, with the Strategic Partnership Initiative, that oversight committee

has gotten together and determined some new priorities for this year. Based on

that, we anticipate expenditures in a number of areas to see those projects out.

MS JONES: Okay.

Under

section 1.2.05., you budgeted this year $20,000 for Property,

Furnishings and Equipment. Can you tell me what you are buying, and for whom you

are buying it?

MS DUKE: I understand that was block funding for the purchase of a

vehicle that was not required.

MS JONES: Okay.

That explains why you didn't spend the money last year.

MS DUKE: Yes.

MS JONES: Why are you budgeting it this year?

MS DUKE: We do anticipate that vehicle will be required this year.

MS JONES: Where will the vehicle be going? What part of the Province?

Will it be used in St. John's or in one of your regional offices?

MS MALONE: Regional office, Western Region. We have replaced our fleet in

the regions over the last couple of years and this is a vehicle in Western

Region.

MS JONES: Do you guys provide vehicles to your offices like that?

MS MALONE: No, just to the regional office core staff. EDOs who are out

in the field are paid mileage.

MS JONES: Okay.

I guess we will move on to Trade and Investment,

section 2.1.01. Again, there

were some discrepancies in Salaries, what was originally voted and what was the

revised number. Can you tell me the reason for that?

MR. TAYLOR: We had a delay in getting approval through Treasury Board,

basically, for the filling of a couple of new positions that were budgeted, or

announced in last year's budget. As a result, the salary expenditure was down.

Basically what you see, then, in the 2007-2008 estimate is a reflection of an

anticipated full staff complement there, as well as the 3 per cent salary

increase and reclassification, hopefully, on our IDOs, our IDO positions.

MS JONES: Can you tell me how many of those positions were vacant, then,

that did not get filled?

MS DUKE: The vacancies were on the trade side of the Trade and Investment

Division. We had a number of positions: a maternity leave, as an example;

another person who moved out of the Province. What happens in that division is,

there is sort of a domino effect. As people leave, others apply for those

positions and so on.

As I understand it, at any one time we would have had maybe three vacant

positions and they would have been Industrial Development Officer IIs.

MR. MORRIS: That is correct. There were two new positions, as the

minister said, that were approved in 2006-2007 that were not filled this past

year. They were being classified through Treasury Board. The recruitment process

is underway for those right now. There was a maternity leave also and there was

a person who resigned and moved out of the Province. As well, there was one

position on the investment side, a temporary position that wasn't filled

throughout the year.

MS JONES: I guess you are anticipating filling those positions this year?

MR. MORRIS: Yes, we are.

MS DUKE: Yes, we are recruiting for those positions now.

MS JONES: Can you tell me how many staff members work in that section,

Export and Investment Promotion?

MS DUKE: Yes, we can. I am going to ask Paul Morris who is the Director

of the Division just to answer that question for you.

MR. MORRIS: Yes. There are twenty-five positions in the division, both

permanent positions and temporary positions.

MS JONES: Twenty-five?

MR. MORRIS: Twenty-five.

MS JONES: How many of those are temporary?

MR. MORRIS: More than half. More than 50 per cent are temporary. There

are approximately an equal number of positions in the Trade

section of the

division as well as in the Investment section.

MS JONES: I am sorry, I can't hear you.

MR. MORRIS: There are approximately an even number of positions in the

Trade

section as in the Investment section.

MS JONES: Can I get you to repeat that again? Sorry, I couldn't hear

you.

MR. MORRIS: I said, there are approximately an even number of positions

in the Trade

section as there are in the Investment

section of the division.

MS JONES: Okay. But in total there are still twenty-five positions, as I

understand.

MR. MORRIS: Yes, correct.

MS JONES: Thank you.

In that division as well, under Professional Services, you are intending to

spend $475,000 this year. Can you tell me what services you intend to be

purchasing with that?

MR. TAYLOR: I will just start off. Basically what has happened there, you

will see there is a difference from Budget to Revised to this year's

Estimates. The Budget and Revised, I will explain that one first because I know

you are going to ask it. Basically, there was a delay in the signing on the part

of the federal side, not our side, of the International Business Development

agreement. That caused a reduced expenditure in 2006-2007. We anticipate that we

will fully utilize that this year.

As well, in opening comments in the Budget Speech where we announced an

additional $500,000 for our export strategy, $200,000 of that will be parked in

this

section here, in Professional Services.

MS JONES: Okay.

MR. TAYLOR: If you are wondering what it will be spent on, I guess you

can go back to my opening remarks, but Paul can also speak to that if you wanted

further clarification.

MS JONES: Yes, I would like to have more clarification. It is a lot of

money to be spending in Professional Services. I would like to know what it is

going to be spent on and if there are any dedicated consulting firm that you

will be using?

MR. MORRIS: That money is used to undertake two, sort of, separate

activities. One is market research to try to identify new opportunities for our

provincial exports. The second main thrust is to hire consultants, in what we

call in-market consultants. For example, when we undertake trade missions to

various countries, such as Iceland, Greenland, Ireland or to various States in

the U.S., we will retain in-market consultants to help identify opportunities

for those local companies.

One hundred thousand of that $475,000 is also funding that has been approved

under the federal-provincial agreement with the other four Atlantic provinces

and that money is revenue neutral. We do expect to get the $100,000 back from

the federal government from that. So we do retain different consultants to help

identify opportunities.

MS JONES: When you are dealing with in-market consultants for your

travels abroad, do you use local companies or do you use international

companies?

MR. MORRIS: Usually, we use international companies. Where appropriate,

we will partner with local companies but, generally speaking, we rely on the

expertise of consultants in the market place. They know the local markets, they

know the companies in those markets and they can best identify the

opportunities. Sometimes we will have those in-market consultants work with

local consultants in the Province so that the local consultants in the Province

know our companies, the in-market consultants know the companies in the foreign

markets, and they partner and work together.

MS JONES: In the past year, what countries would you guys have been doing

marketing research or engaging in that work in?

MR. MORRIS: In the past year we did work in the United States, in the New

England area in particular, and in Florida through our Team Canada Atlantic

Trade Missions with the other Atlantic provinces. We did the trade mission to

Iceland, we did a couple of trade missions to Ireland, we did two trade missions

to Greenland, and we did a couple of trade missions to Alberta.

MS JONES: Do you guys have any vacancies now? I might be applying for a

job, do some travel.

MR. TAYLOR: We will keep you in mind after October.

MS JONES: That won't be necessary, I don't think.

Under Purchased Services, last year you budgeted $629,000 but obviously you

only spent $274,000. This year again you are budgeting almost $780,000 under

Purchased Services.

Could you give me an explanation as to why you didn't need your spending

budget last year and why it is increased this year?

MR. TAYLOR: The same answer as to the last question. Basically, pretty

well all of the Budget to Revised reductions and the Budget to Estimates

increases are related to the exact same thing. The Revised downward in

2006-2007, pretty well all of them were related to the delay on the federal

government's

part in signing the IBDA. Pretty well all of the increase from

our Budget last year to our Budget Estimates this year is related to that

$500,000 block in the budget for a refocused export development strategy.

MS JONES: Okay.

MR. TAYLOR: So you see how it gets broken out in two or three places.

Well actually it gets broken out in Professional Services, Purchased Services

and in Grants and Subsidies, with $200,000 in Professional Services, $150,000, I

believe it is, in Purchased Services and $150,000 in Grants and Subsidies. I

believe that is the way it goes anyway.

MS JONES: What would be the Purchased Services that you guys would be

using? You explained to me that your Professional Services would deal more with

market research and market consultation. What would you be purchasing outside of

that?

MR. MORRIS: In Purchased Services, we use those funds - for example, when

we take companies to the market, we will fund networking events. When we have

information sessions on market opportunities here in the Province, for example,

we have to rent a room at a hotel and coffee and whatnot. In cases where we do

participate in a trade exhibition, we will pay for the floor space for that

exhibition and pay for the booth for the exhibition as well.

I should also add that $350,000 of that $779,000 actually goes towards the

IBDA that the minister referred to, that pan-Atlantic trade agreement. That

$350,000 will be used to fund projects that are submitted to the management

committee on behalf of proponents in the four Atlantic provinces and it is

actually revenue neutral. We will be receiving funds back from the federal

government to offset those costs.

MS JONES: Over and above the $500,000?

MR. MORRIS: No, it is included in that.

MS JONES: Okay.

MR. MORRIS: The $350,000 is included in the $779,000.

MS JONES: All right.

Under the Grants and Subsidies, this year you are voting to give out

$625,300. Who are eligible for those grants or subsidies and how are they

awarded?

MR. MORRIS: Of that amount, there is money, for example, that is used to

offset the travel costs for companies participating in our trade related

initiatives. For example, last year in 2006-2007 we would have helped about

ninety-four, ninety-five companies that participated in our missions with us.

We also have a program that is about $198,000 to $200,000 for what is called

business networks, and that is to assist groups of companies that are pursuing

export opportunities. There is money also in that vote to make the provincial

contribution to the Atlantic Provinces Economic Council. The department is

providing funds to make a contribution to that organization over the last number

of years.

MS JONES: Just out of curiosity, when you helped those companies

participate in these trade missions, is there a set amount of subsidization they

are eligible for, or is it assessed based on each company and how many

representatives they send or anything like that?

MR. MORRIS: Usually, there is a set amount. For example, for the

assistance that I referred to earlier, those ninety-four, ninety-five companies,

we usually limit to about $2,000 per company. It can go to $2,500, depending -

for example, on a trade mission to the United States, it would be around $1,500

to $2,000. If it is for a trade mission, for example, to Iceland or Ireland

where costs are considerably higher, we will go to $2,500.

MS JONES: Okay.

MR. MORRIS: It is usually based on 50-50, too, by the way.

MS JONES: Okay. Good.

Maybe we can move on to the Business Development sector. Again, there was a

little bit of discrepancy in Salaries there. This year it is increasing. Is that

just because of step increases and reclassifications?

MR. TAYLOR: Basically, yes.

MS JONES: Okay.

Again, under Grants and Subsidies, under that section, there is over $4

million that has been voted for Grants and Subsidies. Last year, you spent $2.9

million. Do you want to tell me what you spent the $2.9 million on, and then

tell me what you are looking at spending the $4.4 million on this year?

MR. TAYLOR: Okay. Well, all of that is related essentially to contact

centres, call centres, what have you. The reduction in 2006-2007 was due to - I

do not know if you would call it a delay or a lower than anticipated employment

with Convergys and ICT. They were below their targets for 2006-2007. If you look

at the Budget estimate for this year, it is just basically a reflection of where

we anticipate their employment levels, based on the wage rebate, so to speak,

program. I do not know if you would call it a program but you know what I am

getting at.

MS JONES: Those call centres, how long are their employment subsidy

programs in place for? Three years, five years, forever?

MR. TAYLOR: Phil just answered. Yes, I think, five years. I do not know

if you heard him.

MS JONES: Five years, is it?

MR. McCARTHY: Five years, yes.

MS JONES: Okay. Some of them must be getting near the end of their five

year subsidization, aren't they?

MR. McCARTHY: Yes, they are. Some of them are over.

MS JONES: Do you want to give me the information on that; which ones, at

what stages they are?

MR. McCARTHY: Convergys in St. John's, the main

part is over; although

there was a clause in their contract if they did an expansion. They got a small

extension, but just for those above a certain number.

ICT in Carbonear, ICT in Corner Brook are over. Their five years are up.

MS JONES: Corner Brook and Carbonear?

MR. McCARTHY: Yes.

MS JONES: What about the one just down here off Torbay Road? I do not

know the name of it. ICT, is it?

MR. McCARTHY: ICT. Yes, they still have a bit of time to go.

MS JONES: Meaning they have three years left, four, five? I don't know

how long. They have been there at least two years, I am sure.

MR. McCARTHY: Bear with me for one second. It is this current fiscal

year.

MS JONES: It is their last year?

MR. McCARTHY: Yes.

MS JONES: For example, in Corner Brook and Carbonear, now that their wage

subsidy program has ended, are they still maintaining the same employment

levels?

MR. McCARTHY: Yes, they are.

MS JONES: Okay, good.

All together, how many people are employed in the call centres in the

Province?

MR. MORRIS: (Inaudible) 5,000.

MS JONES: Now, this is four centres you have given me the numbers on. Are

there more than that?

MR. McCARTHY: Well, the main centres would be Convergys here in St. John's.

They have two locations in St. John's. You have ICT in St. John's. You have

ICT in Corner Brook and Carbonear. You have TeleTech in Mount Pearl, who have

helped us now with locations in Grand Falls and Stephenville and looking at

setting up in Marystown. Then there are a bunch of smaller ones around.

MS JONES: Okay, thank you.

Under

section 3.1.02., the Investment Portfolio Management. Again, under

Grants and Subsidies. Last year you awarded $40,000 in grants. Who was that

awarded to and what for? This year you are budgeting $50,000. I would like to

know what that is going to be used for.

MR. McCARTHY: That is an old program from a number of years ago with

respect to an industry subsidy program for fishermen - I am back a good number

of years - where government capped the interest rate in which fishermen's

loans could be done at. What we pay out in the year depends on where interest

rates are at the commercial banks. The number of clients in that program are

just declining over time now, because the loans are being paid off. We are

actually down to only sixteen accounts left in that now.

MS JONES: Okay. The fisheries loan accounts you are talking about, is it?

MR. McCARTHY: There are some old fisheries loans accounts from back in

the 1990s and we could be back further than that in terms of a government

program, where government capped interest rates.

MS JONES: Are you still collecting money on them or are you just paying

the interest on them?

MR. McCARTHY: The loans that are with the banks, government just

subsidized the interest, or capped interest at certain levels. They are

eventually being paid off.

MS JONES: Okay.

MR. McCARTHY: Last year there were thirty, we are now down to sixteen. So

within another short period of time this should disappear.

MR. TAYLOR: This has nothing to do with us collecting money. It is

basically, they had a loan through the bank and we were subsidizing the interest

rate - for lack of a better way of putting it - from back fifteen, twenty years

ago. So, they are gradually getting paid off. We are down to less than twenty

loans outstanding right now. As a result of that, the level of subsidization, I

guess, is probably a more appropriate term - the interest rate is declining.

MS JONES: Okay.

Just a couple of more questions before I get into my general questions on the

numbers. Under subhead 3.1.03., again, there was less money spent in Salaries

than was budgeted last year. Was that a position that was vacant?

MR. TAYLOR: Yes. It is a position that was vacant and we are anticipating

having it filled this year.

MS JONES: Okay.

Again, going into subhead 3.1.04., the Salaries that was budgeted at $600,000

increased by $121,000 last year. Did you add some new staff to that

section of

your department?

MR. TAYLOR: Basically, we anticipated - when we budgeted $604,600 - that

we would have some vacancy in that. We did not end up having the level of

vacancies that we had anticipated. Also, we had some temporary staff that we had

not anticipated. This year, we are just budgeting, essentially, the same as last

year with our increase, the 3 per cent increase.

MS JONES: Okay.

Still under Business Development, subhead 3.1.05., the Strategic Enterprise

Development Fund -

MR. TAYLOR: Subhead 3.1.05., you say?

MS JONES: Yes. You voted $8 million last year for Loans, Advances and

Investments.

MR. TAYLOR: Yes.

MS JONES: You only spent $50,000 and this year you have voted $8 million

again.

MR. TAYLOR: Yes. Basically, what happened there, as you know, the SME

Fund is a program where $10 million the first year, $8 million was supposed to

go in last year, $6 million - we are supposed to get to a point where we have

$25 million available in this fund. As a result of the less than anticipated

uptake on this fund basically, we did not utilize, obviously, the full and

hardly any of the $8 million, so that fund is there. Last year it sat at $10

million available in loans. We are expecting that we will utilize the $8 million

this year, so we will be at $18 million. The program plan is still to proceed.

We just delayed a year in implementing the remainder of the $8 million but the

plan is to carry on.

MS JONES: Last year you guys had budgeted $8 million for small business

investment in the Province where people could access this money for loans.

MR. TAYLOR: Yes.

MS JONES: There was no take up on it?

MR. TAYLOR: No, I did not say that. There was take up on it. There wasn't

take up on the remainder of the $8 million. There was take-up or uptake, however

you want to put it, on $10 million.

MS JONES: Where is the $10 million?

MR. TAYLOR: The $10 million was voted in last year's Budget.

MS JONES: Yes, but where? Where am I going to find that?

MR. TAYLOR: Go ahead, Phil.

MR. McCARTHY: The $10 million was voted in 2005-2006.

MS JONES: Okay.

MR. McCARTHY: There was less than anticipated take up on that, so that

carried us through last year.

MS JONES: So there was $10 million budgeted in 2005-2006 that obviously

did not all get used in 2005-2006.

MR. McCARTHY: Correct.

MS JONES: So it was carried over into 2006-2007.

MR. McCARTHY: Correct.

MS JONES: Therefore, you did not have to use the $8 million last year.

MR. McCARTHY: Correct.

MS JONES: Really you only used up half the money that you had budgeted

over the last two years in this program.

MR. McCARTHY: Yes.

MS JONES: Ten million of the $18 million.

MR. McCARTHY: Yes.

MS JONES: Why is that?

MR. TAYLOR: Essentially, you would have to ask the business people that.

The fund is there as a loan. We take on, obviously in this fund, higher risk

ventures than the banking community would.

I think part of it is probably that the level of awareness about these funds

was not there initially, and now people are becoming more and more aware of the

SME Fund and the RSDF fund, you know the funds under the Innovation Strategy and

what have you. Whenever you introduce a new program and fund, it takes a period

of time for people - well, number one, it takes a period of time for us to get

the program ready to run, and secondly, for people to become aware of it and to

begin utilizing it. This is essentially, in part, a reflection of that. There

are probably other factors, but of course it would be difficult for us to speak

to the other factors.

MS JONES: So you guys have not really done any full analysis on this,

have you?

MR. TAYLOR: Well we have only had it in place for not twenty-four months

yet. We are only getting to the point now where we can begin to analyze it. In

talking to business groups and what have you, I have suggested to them, look at

our funds and our programs and if you believe that there need to be changes,

then please let us know what the changes should be so that we can try and

incorporate those views into our policies. We have tweaked it somewhat along the

way and for sure there will be further adjustment required.

MS JONES: Are there regional offices doing anything to promote the use of

this program for small businesses?

MR. TAYLOR: Yes. We make the information available through our regional

offices, through RED boards and Chambers of Commerce. We encourage our EDOs and

people who we have with the Rural Secretariat, which I know is separate here, to

meet with the various agencies and organizations in their respective regions and

make that information available to them. We also have some new pamphlets and

what have you, communications material, to raise the level of awareness.

MS JONES: I think there is more they could probably be doing.

MR. TAYLOR: Oh, I am sure.

MS JONES: I look at this and I am absolutely astounded. I represent a

rural district in this Province where small business and medium-sized business

are the drivers of that economy. I do not know how many of those businesses

throughout Labrador would even be broadly familiar with this program other than

those who have contact with the field workers on a daily basis. From the broader

perspective of the department, I have not seen, in Labrador, a presence by that

department for a long time. When I say that, I mean when I am going out to

regional meetings, like for economic development boards or for development

corporations or for businesses and annual events, I have never seen the Regional

Director of your department attend those functions or trade shows, and very

seldom, other than the field workers who are in those areas, do you see anyone

else from the department. I think they need to be out there more, and they need

to be having more of a presence in the different regions of the Province.

I can only speak to a couple of times I have gone into Goose Bay and Labrador

City, because everything in my district is based around those centres. Quite

often there are booths there with the department name on it taking up space but

other than having someone who is at a lower level in the department, probably

who is the main person in terms of a receptionist or a secretary working those

booths, you do not see the Regional Director. You do not often see the Business

Development Manager for Labrador or any of those people working those booths.

They are the people that need to be out there in my opinion. I do not think it

is good enough that they sit in their offices and not travel around. I do not

know when the Regional Director has ever been in my district to have a public

meeting in the last five years that I am aware of. If they were I do not know

anything about it.

MR. TAYLOR: It is good you covered the five-year time span anyway.

MS JONES: Oh, yes. This did not just happen since July 6 when you came

into the department. When you see things like this and know that there are

programs - I have to tell you that the Economic Development Officers who I know

with your department, who work in Labrador in the field, they work tirelessly.

Actually, in my opinion they go beyond the call of what they are expected to do.

I have seen them working day and night at people's kitchen tables helping them

get their businesses off the ground. To me, that is real dedication, but it

should not end with them. I think that there is a hierarchy in your department

that could be doing a hell of a lot more than is being done. I think that needs

to be looked at. When you have results like this across the Province and you do

not have the take up on the businesses, someone has to be responsible. I think

those area managers or regional managers have to be held to accountability more.

I do not know how you do that but there have to be ways I am sure.

MR. TAYLOR: I think we understand that trying to communicate to the

business community and economic development organizations is a little bit of a

challenge. I can only say, from my own perspective, that I have spoken at a

number of Chambers of Commerce and development organizations. If you look back

to last fall, the Newfoundland and Labrador Regional Economic Development

Association, NLREDA as they call it - I hate those acronyms, but anyway - met in

St. Anthony in October or November. I was guest speaker there. I laid out what

our funding programs were at that time. All of those are community people. There

were people there from your district as well as mine, well, throughout the whole

of the Province.

For example, I did a piece back about a month or so ago on the Northern

Peninsula, which covered both your district and mine. I spoke to the Chamber of

Commerce in The Straits area a couple of weeks ago. I cannot disagree with some

of what you are saying. I do not know whether our mid management are around as

much as they could or should be, I cannot speak to that, but whether they are or

they are not, our EDOs have this information. This information is being

communicated. As I observed to some of the organizations that I had an

opportunity to speak to recently, you cannot approve loans and funding to

organizations or companies that you do not get proposals from. That is the other

problem. I know it is a problem and we know it is a problem. I have had this

conversation with the Rural Secretariat, I have had this conversation with ACOA,

I have had this conversation with some of our EDOs and ADMs and DMs and what

have you, and for whatever reason, we have a pile of people in municipalities,

Red Boards, Rural Secretariats, whatever - it is not just our crowd - throughout

Newfoundland and Labrador and we have these programs that we did not have a few

years ago.

The SME fund is here at $18 million now; it was zero two years ago. RSDF is

at $5 million annually; it was zero two years ago. The Innovation Strategy,

there is $5 million associated with that; that was zero two years ago or

actually twelve months it was zero. So, we have put the programs and funding in

place. The challenge is getting people to take the ideas that they have spinning

around in their heads, formulate them on paper and bring them forward to us for

funding in a way that it can be moved forward. We all have an obligation to

communicate that, both you and I. We know it is a problem and we know it is a

challenge and we are attempting to deal with it. That is all I can say. If you

have any observations on how we should do it, we are all ears.

MS JONES: The only point that I want to make is that - and I am sure Jim

would agree with me. He is the Member for Labrador West, and he knows the EDO on

the ground up there very well and I do as well. I know there has been a vacant

position in Labrador West for the past couple of years and to my knowledge it

still has not be filled. Maybe you can give me the status on that and when it is

going to be filled.

The point I want to make is that the EDOs who work in the field work very

hard and they are over tasked in their responsibilities, as far as I am

concerned, and they have little or no supports. What upsets me is when I know

that there is an office full of people in Goose Bay that I never see. I do not

know what they do and I do not know what their jobs are. I know that they have

regional senior positions and they never attend anything in my district that I

am involved with in promoting the role of the department and what their job

should be, and I think that has to change.

Now, whether that will encourage more take up on the programs or not, I do

not know, because I still firmly believe that there is a lack of confidence in

investing in rural areas in this Province and that is why you are seeing only a

60 per cent take up on the program. I cannot say that with great factual

information because I have not done any analysis of it, but just as an

individual who lives in this Province and looks at where the business climate is

throughout Newfoundland and Labrador, I would suggest that the confidence is not

there in a lot of rural areas to have a large take up on this program.

MR. TAYLOR: Well, part of the problem is, and we have experienced it just

recently, that while we do not get a huge - we let lots and lots of letters but

we do not get lots and lots of proposals. The other part of it is that sometimes

people are looking to finance projects that are significantly more than we are

allowed to go. We have a $250,000 cap on SME, $500,000 for the course of two

projects or two components of a project, if you want to put it that way, over

two fiscal years. If somebody has a $1 million project, I have to agree with you

to a point that the confidence in investing in rural Newfoundland and Labrador

or Newfoundland and Labrador - the chartered banking community are difficult to

deal with to say the least and when a project's finances may look good, that

does not necessarily mean that the bank is going to come along.

Part of the problem with that is that the analysis for anything over - what,

Rita, $100,000? If you want to get anything more than a pickup truck in a

business in Newfoundland and Labrador you have to get approval through Halifax.

You don't have that on-the-ground assessment and that on-the-ground knowledge

of the client and the project that is required that some of our people have.

While I know it looks like maybe we are not doing our job - and part of the

problem here with some of these projects is that we can't finance, we can't

flow our $250,000, for example, or up to $250,000, because the complete

financing package is not in place. I guess then it becomes a debate on policy,

whether we should go beyond $250,000 or not and whether government assumes all

of the risk for these riskier, for lack of a better way of putting it, projects,

and leave the chartered banks off the hook altogether.

That is a policy decision that obviously we have not taken thus far. We have

to run the program for a couple of years to see what our experience is so we can

then assess it and determine if there are changes required and what they should

be.

MS JONES: Okay.

MR. TAYLOR: I expect that $8 million versus $50,000 will look

substantially different in twelve months time than it does right now.

MS JONES: I hope so, yes.

MR. TAYLOR: Well, we do too.

MS JONES: Under the Grants and Subsidies, you did Budget and awarded $1

million last year. Can you tell me who those Grants and Subsidies were to, and

if it was by an application process to the department?

MR. TAYLOR: Okay. Who wants to go for that, boys?

MS MALONE: Those are investments by way of market and product development

to SME, small- and medium-sized enterprises throughout the Province, and it is

application driven. The maximum cap is $25,000, Minister, and up to a 50 per

cent contribution to a maximum of $25,000.

MS JONES: So it is $25,000 grants?

MS MALONE: Yes, the maximum, and it is done on a fifty-fifty basis. The

client provides 50 per cent and we provide 50 per cent.

MS JONES: And it is all for marketing, you said?

MS MALONE: It is for marketing, product development, technical

enhancements, computerized technology, financial management, inventory control,

business operations, business principles, with emphasis on growing and expanding

business enterprises.

MR. TAYLOR: For example, if a water bottling plant has a 500 millilitre

bottle and they want to go to a one litre bottle in order to expand their

market, they could apply to us for 50-50 dollars, up to a maximum of $25,000, to

do research on what the appropriate bottle would be, what the appropriate label

would be, to do market testing, to do mall intercept type studies and what have

you, taste tests and that type of thing. Obviously, you do not need a taste test

to go from a 500 millilitre bottle to a one litre bottle, but you know what I am

saying, that is the kind of stuff that this money is utilized for.

MS JONES: Yes. Are there any restrictions in terms of the sectors that

are eligible for that kind of grant or subsidy?

MS MALONE: Generally, there is a broad range of sectors. We do look at

competitive impact and professional services, like accounting firms or legal

firms would not be able to avail of. The only restriction would be: Would this

investment create a negative, competitive impact to a business within that

market area? Generally, manufacturing, tourism related enterprises, outfitting,

value-added wood, fishery, that type of thing, we would support.

MS JONES: Okay.

MS MICHAEL: I would like to ask a question.

MS JONES: Go right ahead.

MS MICHAEL: Just to follow up on that. It has been a question that has

been on my mind, actually, throughout the morning, looking at small and medium

businesses. Is there any restriction on ownership? For example, if a business

were owned by a community co-operative, would they be eligible?

MS MALONE: Co-operatives are very much eligible for those programs.

MS MICHAEL: Okay. Thank you.

MR. TAYLOR: Correct me if I am wrong, but if it was a community owned

co-operative, not-for-profit type organization, they actually have more

flexibility because they can dip into, depending on the project, our Regional

Sectoral Diversification Fund and get an outright grant as opposed to loans

under SME or 50-50 dollars on this. There is much more flexibility there.

MS JONES: Doesn't the federal government have an investment program now

for co-operatives where you could borrow up to $15 million per business

development?

MS MALONE: No, the federal government had delved into a social enterprise

development fund but within a budget ago they have moved away from that. I take

your point on the question. They have moved away from social enterprise.

MR. TAYLOR: (Inaudible) Harper would be supporting it.

MS JONES: The reason I say that is, I was at a dinner a while ago and I

heard Merv Wiseman speak from the Canadian Fur Breeders Association, and he

talked about an investment program that the federal government now has for

co-operatives. It is for co-op enterprises, and they will invest up to - it used

to be $10 million, but it has now been increased to $15 million annually.

MS MALONE: The Federation of Co-ops has a $500,000 investment seed

capital fund, as part of the Federation of Co-ops. I am very familiar with the

co-op development piece. They do have other funds to market co-ops and develop a

capacity around co-ops, but in terms of anything outside that $500,000 for

co-ops, that is all I am familiar with.

MS JONES: You might want to check it out with him, because I am sure I

heard him right, what he was saying, and he said it was a federal program.

Under

section 3.2.01, the Strategic Industries Development, just again some

changes in the salary there. Last year you budgeted $909,000, this year you are

budgeting over $1 million. Is there a new position being added, or is that just

step increases and additional wages?

MR. TAYLOR: Yes, essentially. In 2006-2007, we had a lower than

anticipated temporary staffing requirement, and this year we anticipate a full

staff complement and then we have our 3 per cent step increases and what have

you built in.

MS JONES: Moving over to 4.1.01, I guess this is the budget that provides

for all of the economic development boards in the Province, is it?

MR. TAYLOR: Yes.

MS JONES: Okay.

Obviously you must have an administrative level within your department that

deals with these boards, do you? Is that why they have salaries and benefits? I

am assuming the Grants and Subsidies is what pays for the actual boards, is it?

MR. TAYLOR: Right.

MS JONES: So, when I look at this I see Salaries and Employee Benefits.

Is there a division within your department that just deals with economic

development boards?

MS DUKE: I will ask Rita to add to my comments. Yes, we have a Regional

Economic Development Division and those economic development officers work with

community groups throughout Newfoundland and Labrador. It isn't just with the

Regional Economic Development boards. They would be working with your local

associations, municipal groups, Chambers of Commerce and so on, to foster

economic development initiatives in rural Newfoundland.

MS JONES: Is that an ADM level position?.

MS DUKE: That would come under Rita Malone, our ADM for Regional

Programs.

MR. TAYLOR: Correct me if I am wrong, but those salaries would cover our

EDOs in the various regions.

MS DUKE: Yes, the ADM position would have been covered off earlier in

Executive Support.

MS JONES: Okay.

MS MALONE: It is for a Director and six core analysts at a GS-42 level

and two payroll type officers or account management officers at a GS-40. They

administer beyond the RED boards the co-op development network as well as

business retention and expansion and capacity building on which we deliver

federal funding to groups building capacity and social and economic development.

MS JONES: Where are those positions based out of?

MS MALONE: They are based out of St. John's.

MS JONES: Do they travel?

MS MALONE: Yes indeed. We have a couple of officers working in regions

today as it relates to capacity building or, in some cases, coordinating

business retention and expansion projects in rural areas of the Province.

MS JONES: Under

section 4.3.01, Comprehensive Economic Development, last

year you budgeted $7.4 million you spent $4.3 million, and this year you are

budgeting almost $8.3 million. Can you tell me why the discrepancy? I mean, this

is Grants and Subsidies, I am assuming.

MR. TAYLOR: Yes. Basically, that is our regional and sectoral

diversification fund and the $7.4 million - that is a $5 million fund, and $7.4

million last year was a result of carryover from the year before. Basically, the

funding is committed but because of a lag with ACOA or HRDC or somebody, whoever

the money might be coming from under a partnership arrangement to develop a

project, there have been a lag in the flowing of funds. That is what is

reflected here. We have taken what we had last year, it is already committed and

it is being carried over into this year and will be expended. It is basically a

bookkeeping exercise. It is a $5 million fund, and unlike the $8 million

discussion we had a little while ago this one is being fully utilized. It is

just carryover.

MS JONES: Give me an example of where some of these Grants and Subsidies

would be going.

MR. TAYLOR: The Grenfell dock in Mary's Harbour, for one. We probably

put money in the Point Amour lighthouse, I do not know for sure.

MS JONES: Yes, you did.

MR. TAYLOR: The Mariners' Memorial, a $250,000 piece in Grand Bank,

that is one. The wildlife centre - I cannot even remember what it is called now

- in Roddickton. The salmon

interpretation, the ladder piece there in Hawke's

Bay, would have had some funding. It goes all over the place, but it is for

not-for-profit organizations engaged in some kind of economic development that

reflects the priorities of the region according to the Regional Diversification

Strategy.

We try to keep ourselves around 25 per cent of the project. So, they lever as

much money as possible from whoever they can get it from.

MS JONES: All right, good.

I would like to move on now to

section 5.1.03., the Trans-Gulf Initiative.

This year you are voting to invest $10 million, and, of course, this would be

for the purchase of the fibre optic strands. Can you tell me if there were any

other funds committed to that initiative prior to just $10 million being voted?

MR. TAYLOR: No.

MS JONES: There was no money in last year's Budget?

MR. TAYLOR: No. I was not sure I was understanding you correctly then,

but are you asking me, did we have any funds committed to this project?

MS JONES: Yes. Last year, I seem to think that there was a $5 million

investment put into this Trans-Gulf Initiative.

MR. TAYLOR: No.

MS JONES: Is this the only money that will be spent this year with that

initiative?

MR. TAYLOR: Yes.

MS JONES: Has any of it been advanced yet?

MR. TAYLOR: No, not until the final agreement, not until the bills and

receipts, and what have you, everything is done. So it would be, I would expect,

at least some weeks, if not some months, before any cash flows.

MS JONES: I understand though that the deal has been completed and

finalized with Persona Communications?

MR. TAYLOR: No, that is not correct.

MS JONES: Not correct. The fact that the company has just been sold, how

does that impact upon the deal that was tentatively being negotiated?

MR. TAYLOR: It does not impact at all. I have talked to the CEO of Bragg

Communications, as well as Persona, and nothing has changed on any component of

the project.

MS JONES: What is the projected date for the completion of that project?

MR. TAYLOR: Late this calendar year. Late November or December, roughly

in that time period.

MS JONES: Can you tell me how many strands of fibre that we will be

getting for our investment?

MR. TAYLOR: We will get eight from here to the Southwest Coast and four

from that to Halifax. If we can ever get enough traffic to utilize one, we will

have a lot of communications.

MS JONES: When all of this was being undertaken, there was actually a

report from Electronic Warfare Associates, I believe was the name of the

company, EWA.

MR. TAYLOR: Yes.

MS JONES: Can you tell me who paid for that report or that opinion?

MR. TAYLOR: We did.

MS JONES: Can you tell me how much you paid for it?

MR TAYLOR: I am going to ask Dennis Hogan to speak to that.

MR. HOGAN: I believe the report was in the $100,000 range, but I will

have to check and make sure. We can get that figure to you.

MS JONES: You are telling me that this particular deal is not finalized

with Persona Communications. When do you expect it to be finalized?

MR. TAYLOR: Most of the substantive issues have been dealt with.

Obviously, we cannot finalize a deal until we go back to Cabinet with a full

report. As I indicated previously, there is a fairly comprehensive list of

issues that we must address in the course of finalizing the deal. Once they have

all been dealt with, we will go back to Cabinet so that they can ensure that

everything we were supposed to do has been done as it relates to getting the

appropriate number of strands for our investment deal on maintenance, and what

have you. It is hard to say exactly, but I would expect that before final

signing takes place, I would expect it will be a couple of months.

MS JONES: I am somewhat unclear with the process because I understood

that this was already approved by Cabinet back in November. I think you quoted

the minutes of council at some point in the media.

MR. TAYLOR: It was in November, approved in principle, based on what we

understood to be the deal. Cabinet directed our department, in consultation with

the Department of Justice and Finance, to proceed with negotiations and address

somewhere in the - I cannot remember exactly the number of issues that we had to

address now in the minutes in Cabinet, but I am sure you probably have the

transcript up kicking around on the fifth floor somewhere, what I read out on

Open Line one morning.

MS JONES: Absolutely.

MR. TAYLOR: There are eight or ten items there that we had to address.

Once they were addressed we were to report back to Cabinet. Once we had a

comprehensive agreement, legal agreement that was ready for signature, we had to

come back to Cabinet for final sign off before, I guess, I signed the agreement

with the consortium.

MS JONES: I am surprised to hear that because I never, ever had the

impression that the $15 million that was approved was only approved under

conditions.

MR. TAYLOR: Pardon?

MS JONES: I never had the opinion, and I certainly do not recall hearing

it before, that the $15 million that was approved by government for investment

in this project was contingent only upon another report going to Cabinet for

approval. I just thought -

MR. TAYLOR: That was very clear from the beginning, and on numerous times

in this House it was repeated. I am sure you can pick up copies of Hansard where

I said it. As I said, I said it publicly in a variety of media outlets, that $15

million was approved in November, I guess it was - October or November, I cannot

even remember exactly the date now - but it was approved subject to a

satisfactory legal agreement being realized that addressed the issues that again

I laid out here in the House. I cannot remember all of them right here right

now, but that was always the position and it continues to be.

The $15 million: $10 million is in the budget now and $5 million will be

budgeted next year. Again, as it was said on numerous occasions, the $10 million

this year and the $5 million next year will not move anywhere until the

agreement is finalized and the issues that Cabinet wanted addressed are

addressed.

MS JONES: Minister, you already outlined that there were eight to ten

items that need to be addressed. Do you want to tell me what those are?

MR. TAYLOR: That is what I said. I cannot remember what the MC says now,

I do not have it in front of me obviously, but it was the appropriate number of

strands. When EWA analyzed this in the beginning they suggested that we needed

to get more ownership than was originally contemplated. We have been dealing

with that, and we believe successfully.

There is the issue of unrestricted access for emergency services so that we

can move forward on making sure that if one service provider goes down that our

emergency response network has access to our fibre network, or the fibre network

through other service providers and what have you. Those are the type of things

that we have to address. We have to ensure that our research facilities,

institutions, have access to the network at an appropriate level so that they

are not - as you know right now Memorial University has been constrained in its

ability to access the CANARIE network at an appropriate level, the CA4, CA5

level. They were previously, as I understood it - I know when the report was

done initially they were at CA2, I think it was, and most research facilities

and educational institutions in the country were at a CA4 level and moving

towards a CA5 level. We are supposed to address that. Those are the types of

things we have to ensure are reflected in the final agreement.

We are supposed to ensure that the consortium is a plan satisfactory to

officials, blah, blah, blah. The consortium was held fully liable for any

project cost overruns. The consortium provides government open and unencumbered

assess to the fibre optic infrastructure. Our department is to provide

independent oversight on the build. We are supposed to deal with the Department

of Education, the university and CONA to ensure that the fibre optic

infrastructure will meet their research needs. The Chief Information Officer is

to be consulted to ensure continuity with government's data networks. We have

to deal, obviously, with the Public Tender Act and the Agreement on Internal

Trade for an exemption on that. We have to ensure that our emergency

preparedness needs are accommodated. We have to have a structure to actually own

this, you know, a Crown corporation or some such agency as that, that is owned

by government. We have to do a review, which we are in the early stages of now,

a review of the how we would build a fibre-optic network into and through

Labrador. I believe it was about six months ago that was laid out to everybody

publicly.

MS JONES: But that is not part of the existing deal, is it?

MR. TAYLOR: What?

MS JONES: The fibre-optic network going into Labrador being a separate

investment.

MR. TAYLOR: No, it is not part of the existing deal. I am just telling

you what we are suppose to report back to Cabinet on prior to the final signing

of this and before any cash flows. The fibre optic into Labrador - at the time

when the decision was taken, we were also told that had to be reviewed. But, no,

you are correct, that is not part of the deal right now.

MS JONES: The strands that you talked about going up to the Northern

Peninsula, I understand that is a separate deal as well, a separate investment

initiative.

MR. TAYLOR: It is, but it is not. It not a part of this project, but it

is part of the deliberations towards realizing the final contract between us and

the consortium.

MS JONES: This cable network that will go across the Province, that will

not connect to any communities, it will be just a direct link across the Island?

MR. TAYLOR: What was that?

MS JONES: The fiber optic network that you are investing in, as a

partner, will not connect to any communities?

MR. TAYLOR: In and of itself, as the build right now, no, but as part of

the CDLI initiative, which we dealt with as a government last year. As we said,

this network, government's ownership in this, government's fibre strands in

this, will be utilized as part of a Request for Proposals which will go out

later this year, that will serve as the backbone for government's broadband

needs throughout the Province. What we will be doing later this year is - and we

are trying to get to a point now where we can get ourselves ready to put that

RFP out - we will be asking anybody who is in the telecommunications industry to

manage this fibre link for us, our component of this fibre link, and build out

from that into more communities, so to connect communities that are now not

connected, some of them. We will not be able to do all of it obviously, but to

connect more communities and connect government's offices and agencies, what

have you, throughout the Province in some way, shape or form, using these fibres

as the backbone for it.

This could be best portrayed as the first phase of a very significant build

out of fibre optic capacity in Newfoundland and Labrador and providing greater

access to high speed broadband, what have you, capacity to places that have not

previously had it.

MS JONES: In order to build out to those communities you are talking

about a substantial amount of money. Is that something that the provincial

government is prepared to pay for?

MR. TAYLOR: It costs us roughly $20 million a year right now for our

telecommunications needs. We will be offering some type of long term - probably,

I cannot say we will, we do not have approval from Cabinet yet. But, the RFP

will look for somebody to manage our telecommunications needs in exchange for a

certain sum of money. As part of that, we will be looking to see how much of a

build out of fibre optic capacity we can achieve throughout the Province. We

will have parameters set down around that.

The actual investment will be a private sector investment with government

paying for the services that we currently have and hopefully, the expansion of

services - I mean, right now we do not have access to the type of network

capacity that we require in some parts of the Province, obviously. That will all

be laid out once he - I cannot speak in too concrete a terms of it because we do

not have Cabinet approval on what the RFP will look like yet, but once we do

have that, that will be laid out in a press conference and also in a widely

publicized call for proposals, similar to what was done with the CDLI Initiative

a year-and-a-half, two years ago.

MS JONES: Once this deal is finalized, will it be made available to the

public?

MR. TAYLOR: Pardon?

MS JONES: Once the deal is finalized - you are telling me this morning it

is not finalized yet - once it is, will it be made available to the public?

MR. TAYLOR: The Auditor General is reviewing everything related to this

and the Auditor General's report is always public. So, I guess you can

conclude from that, that it will be public.

MS JONES: In that sense.

Have the Cabinet documents been made available to the Auditor General yet?

Does he have them?

MR. TAYLOR: I could not tell you if he has sat down to look at them yet.

He has been notified that he can have access to them. He was going to, as I

understand it, make arrangements with the Cabinet Secretariate for a time

suitable to him and his staff to review the Cabinet documents. I could not tell

you if that has actually taken place yet or not, but I understood it was going

to be within a very short period of time.

MR. HOGAN: My understanding is similar. The offer has been made and

arrangements are currently underway for AG staff to review the documents, but I

am not aware if that has taken place yet.

MS JONES: Okay.

We know that the Province is investing $15 million. Do you want to tell me

what the breakdown of funding is that is being invested by each of the other

partners in the consortium?

MR. TAYLOR: Pardon?

MS JONES: Do you want to tell me what the amount of the investment is by

each of the other partners in this consortium?

MR. TAYLOR: No. As I told you yesterday in the House and I told you on

any number of other occasions, I cannot remember how many times I have told you

now, but the answer today is the same as the answer was yesterday because -

MS JONES: You are not prepared to tell us what the funding breakdown is?

MR. TAYLOR: Pardon?

MS JONES: You are not prepared to tell us -

MR. TAYLOR: I am not prepared right now, no.

MS JONES: Okay.

MR. TAYLOR: When it is all finalized and concluded, and what have you, it

will probably be made available at that time but right now we are not permitted

to. We are dealing with a couple of publicly traded companies who have their own

reasons for not being prepared to divulge this information right now. Until

everything is finalized, we are not permitted to release that information. We

are not the major contributor to this investment, I can tell you that. There are

others who are investing significantly more.

MS JONES: Maybe then you could tell me why the proposal did not go to

tender in the first place?

MR. TAYLOR: How many times do I have tell you this, Yvonne?

MS JONES: I would just like for you to tell me again.

MR. TAYLOR: Run down the hall and grab it out of Hansard. It is written

down there somewhere. They do not need to write it down again today.

MS JONES: I would like to have it recorded in the Estimates.

MR. TAYLOR: Yes, no problem.

It did not go to tender because it was determined that the only companies who

would conceivably bid on this were already engaged in the consortium. Number

two, the time period required to go to tender was lengthy. Number three, the

cost of preparing a - I do not know if you would call it prospectus or what.

Anyway, all of the documents that would be needed in order to do a public tender

call would have driven us into several hundreds of thousands of dollars, and by

some estimates upwards of $2 million, just to prepare a tender call. Considering

that you would have had to do a great deal of technical and engineering work in

order to prepare a tender call, we would have to look at how to get our fibre

from the shoreline in Cape Breton to Halifax and all the associated regulatory

approval for that. Considering the only one who could come forward outside of

Persona, MTS Allstream and Rogers was the incumbent, Aliant, it was determined,

as a result of advice from a variety of sources including EWA, that it was not

required, it was not needed, and it was only going to cost government more money

in the end.

MS JONES: Has an environmental assessment been carried out on this

project yet?

MR. TAYLOR: I could not tell you. I do not know if it has, but,

obviously, in order for it to proceed it either had to be done or it was

determined that it was not required, because some of the construction has taken

place and the remainder of it will be done within the next several months.

I will turn it over to Dennis again.

MR. HOGAN : It is my understanding that the company has been involved in

environmental assessments in any appropriate clearances or approvals that they

have needed to achieve as part of the project.

MR. TAYLOR: For the most part, the land cable is being strung on poles

that were already stuck or on poles that some other company or whatever had. In

excess of 50 per cent of the poles in the Province are held by Fortis, I would

say anyhow, and there is some kind of rental arrangement that telephone

companies, cables companies and other power companies have to deal with that. Of

course, once you leave the shoreline it is outside provincial jurisdiction and

under federal jurisdiction. It is my understanding that, obviously, they must

have the approvals because the ship is very close to beginning to lay the cable.

I know they are in discussions with the Fishermen's Union to co-ordinate the

movement of the ship through any areas where there might be potential conflicts

with fishing activity.

MS JONES: Dennis, my understanding from you is that there is very little

required in terms of an environmental assessment; that they just had to get

approvals and, I think, clearances was the word you used.

MR. HOGAN: It is my understanding again that the consortium had to go

through Government Services and Lands for appropriate environmental approvals. I

am unaware of the specific details of those approvals but I believe they are

standard for these projects that involve laying of cable and fibre optic cable.

MS JONES: What about for the piece of this project that will occur in the

Province of Nova Scotia? Do you know if they have obtained clearances there or

if they went through all of the necessary process to be able to move ahead with

a project in that province?

MR. HOGAN: Again, I do believe that is the case. I cannot say with

certainty but it is likely that has been done.

MS JONES: Minister, you said some of the work has already been completed

on this project. Do you want to tell me what work that is?

MR. TAYLOR: Certainly, a substantial amount of the planning has been done

for the sub sea component. As I understand it, the arrangements and the

contracting of the ship have been done, I guess. Cable has been ordered. I am

not sure if it is onsite yet or not but the surveying, the seabed mapping, what

have you, all of that has been done and would have had to have been done,

obviously, in order to order the cable.

MS JONES: What about the installation of the lines across the Province,

is that complete?

MR. TAYLOR: No.

MS JONES: Just on the investment piece into technology, you are probably

aware that in Labrador there are still eleven communities that have not been

connected by high speed Internet services. A lot of work has been done on this

by a group called Smart Labrador, which I know you are familiar with. They were

successful in obtaining money through Industry Canada to do most of the other

work. I think the last piece they did on Broadband you guys did invest something

like $5 million into that piece of it. There are still eleven communities not

connected. I am wondering if there is any plan on behalf of your department or

government to invest with a private sector company to ensure that these

connections are done. It seems a little ironic that today government is moving

into discounted deals on Internet services by the government. What I mean by

that is, if you go online and you do any government business you often get a

discount, but for many communities in our Province governments fail to invest in

the infrastructure to bring these communities to a level where they can even

access that service, notwithstanding the fact that they may or may not have a

computer. Even if you have a top of the line computer and you live in Pinware

today or if you live in Black Tickle or if you live in some of these

communities, you are not accessing that service.

I am just wondering what your plans are there. I know there has been a

proposal submitted to your department, or a request for consideration to this,

and I am just wondering where it is.

MR. TAYLOR: Well, I do not know if somebody can speak to the actual

proposal. I am not aware of a proposal. Are you talking about a proposal for a

part of Labrador?

MS JONES: I do not know if it is an in-depth business proposal or maybe a

request for government to look at this.

MR. TAYLOR: I will follow up and that after and just see where it is.

There are many more than eleven communities in the Province that have that same

problem and what we are trying to do, as part of the Trans-Gulf Initiative, tied

with the CDLI initiative and government's broadband initiative, is to expand

the availability of Internet access, broadband, highspeed, what have you, to as

many communities as possible in the Province.

I couldn't speak to whether we will get it into Pinware or Black Tickle

anymore than I can speak to whether we are going to get it into Norris Point or

Trout River, but we will be going forward, as I said, later this year, and not

much later, with a Request for Proposals to significantly build out our fibre

optic - in some cases it will have to be wireless - our fibre optic capacity in

the Province to allow more of our people and our own facilities to avail of

highspeed Internet access.

MS JONES: I guess, then, what I am asking is: If there is a non-solicited

proposal from a private sector investor to provide highspeed Internet access to

those eleven communities in Labrador, is that something the government is

prepared to entertain and invest in?

MR. TAYLOR: Well, I can say that we are prepared to entertain any

proposal. I cannot say if we are prepared to invest, obviously, until the

appropriate analysis is done. We will do our due diligence on any proposal that

comes forward, and if we can see where government and the people are going to

get value for money, whether it is from a provision of services perspective or

an economic development perspective, then we will consider it. If we do not see

where there is value for the money that we are being asked to expend then

obviously we would not.

We have provided money to Smart Labrador in the past, for example. We have

assisted various regional development boards and what have you, zonal boards, in

trying to expand internet capacity in various regions of the Province by using

some money to leverage federal funding from Industry Canada and from service

providers like Aliant, for example. If it looks practical and viable and

provides some value to the people then we will consider it. I would not be able

to give an across the board, open-ended commitment here today obviously.

MS MICHAEL: Subhead 5.1.01 on page 138.

MR. TAYLOR: What was that again?

MS MICHAEL: Page 138.

MR. TAYLOR: Yes.

MS MICHAEL: A number of, I guess, similar questions to what Ms Jones had

asked with regards to some of the other sections. Maybe some of the answers are

the same but I would like some of the details.

First of all, under subhead 5.1.01, again the Salaries, the difference

between the budgeted Salaries in 2006-2007 and the Revised and then going back

up to $639,100, so just an explanation for that.

MR. TAYLOR: We had some vacant positions in that section. Dennis can

speak to that a little more concisely, obviously, as to who they were - not

names, obviously - and why, maybe. We have revised downward our budget estimate

for this year because we anticipate in large part we will be utilizing less

temporary staff then we had to in the past fiscal year as a result of filling

our vacant positions.

I will turn it over to Dennis.

MR. HOGAN: Currently, the branch has five vacancies. One would be our

Manager of Innovation programs, there are two Industry Development Officer II

positions that are currently vacant, an Industry Officer I position and a Clerk

Stenographer position. Two of the positions we were awaiting classification

approval before they could be advertised and recruited. The other three

vacancies happened perhaps midway through the year, and that resulted in the

reduction.

MS MICHAEL: I have a general question, then. I did notice as I went

through the Estimates for this department - of course, I think we have seen it

as we questioned, as Ms Jones did most of the questioning - that there have been

quite a number of places where there were vacancies. We had that dip in the

actual expenditures that are not coming back up again. Is there any kind of a

general answer why that seems to be so prevalent in this department over the

past year? It stands out to me, from other Estimates that I have looked at.

MR. TAYLOR: Well, there are a variety of reasons. There is not any one

reason. There are probably a number of reasons. We have had problems filling EDO

positions in some parts of rural Newfoundland and Labrador. For example, it has

been in the news recently, Port aux Basques - we are into our third competition

in Port aux Basques now. We have two positions vacant there. We are in our third

competition just to try and find one person for there and if we can fill that

one, we will look at the second one. So, we have that challenge in some areas.

We have had new positions approved in last year's Budget. There were a

number of positions for a number of departments approved in last year's

Budget, and just trying to get the classification sorted out at Treasury Board

has been a little bit of a time consuming exercise. That is the best way of

putting it.

As well, we have - we have been trying to, and it is pretty well straightened

out now, I guess - had discussions with the Department of Business on mandate.

Of course, the Department of Business's Budget increased substantially this

year and we have been in a discussion with them on what positions from our

investment branch, for example - because their primary responsibility is inward

investment and foreign business attraction, so to speak, to the Province. Some

of the positions in our department probably have not been filled because we

anticipated those positions being transferred over to the Department of

Business. So, there is that factor as well, and there are probably a number of

others also - maternity leave. Then you have the regular vacancy problems and

challenges that everybody else in government experiences. Ours have been

multiplied by two or three just because of those couple of factors that I just

pointed out.

MS MICHAEL: Just curious, do you think - and I have no idea of the answer

to this, but I am just asking it. Do you think that qualifications are in any

way a factor that come into - for example, with the EDOs, do we have enough

qualified people out there in rural development?

I am thinking back to twenty, twenty-five years ago when we actually had

training going on. We had courses at the university, we had a program in

economic development, et cetera. We did have - I was one of them myself in the

1980s - a lot of us running around the Province with real qualifications in

rural economic development. Are we in the same situation now or do you think

that we have a bit of a dearth of people with actual training in the area?

MR. TAYLOR: I think I am going to turn it over to Rita. She is probably

the best one to give us a bit of an answer on that.

MS MALONE: We have very important positions on the front line, and Ms

Jones related to that, the EDOs. It requires a very strong blend of community as

well as business development. They are good paying jobs. They are GS42s. Of

late, we have been having problems getting that good, strong blend that we have

successfully recruited in the last ten years or so. Of late, the last year or

two, we have had problems. It is not something you want to compromise because

these are one or two officer positions in the environment that are responsible

for doing a lot of work.

There are other opportunities for this level of academics and related

experience outside of government, but we have been successful over the years.

There are, certainly, lots of opportunities within the university system, as

well as the college, to do value-added training if there are some baseline

academics plus experience. But, we are looking at at least five years relative

experience as well as the academics.

MS DUKE: I would just like to add to Rita's response. Our experience,

when we have advertised externally for positions in St. John's, Industrial

Development Officer II, as an example, we will often have sixty or seventy

people who will apply. So, we have not had that same problem in the urban

centres.

I will say though, there has been also a time lag in terms of just the

recruitment selection because of demands on the Public Service Commission. There

is now a reorganization occurring to try to allocate more resources so that we

can fill our vacant positions more readily.

MS MICHAEL: Okay, that is helpful.

You do see a difference between the rural and the urban when you are looking

for the EDOs, for example. It is harder to get people.

MS MALONE: In the larger rural centres it is not as difficult. In

particular areas - younger people want other opportunities, I think, to build

their career. In other areas - in some smaller areas, surprisingly, we have been

able to attract and retain. It differs, too.

MS MICHAEL: Right, yes. Okay, that is helpful. Thank you.

Just moving down then, and maybe similar answers to other sections, but under

05. Professional Services. Again, if you could detail a bit in this area what

would be the Professional Services? We keep moving up from $407,000 up to

$567,000, now up to $682,000. What is it about this, in this division, that the

Professional Services are going up?

MR. TAYLOR: Well, basically, we have been increasing our expenditure

there because we have required more in the way of consulting services for,

number one, the implementation of our innovation strategy and a couple of new

programs associated with that. Also, our marine technology strategy, we have

increased it again this year as a result of that, and also services related to

the Trans-Gulf.

The Revised upward, in 2006-2007, was related to our innovation strategies,

our marine technology strategy and the assessment work that was done by EWA and

Frouin, and what have you, on Trans-Gulf. We have revised it upwards again this

year as a result of the announcement in the Budget Speech and the Throne Speech,

I guess, of our research and development strategy and our new provincial

research council. I am not sure if that is what we are going to call it, but

anyway, that is what I am going to call it for now until somebody comes up with

a better name. So, that is what is happening.

This is a really dynamic - should I say that with everybody else around?

Anyway, this section, obviously, we are primarily focused on advanced

technologies, research and development and what have you. We have not had much

in the way of capacity, especially once you get outside of the ocean technology

cluster here in St. John's. We have not had a whole lot of that capacity here

in the Province. So we are really into a bit of a capacity building exercise and

trying to put ourselves in a spot where we can engage more in research on life

sciences, ocean technology, what have you.

MS MICHAEL: Do you see more permanent positions coming into this division

because of the fact that it is becoming more dynamic?

MR. TAYLOR: Well, I would think yes, but obviously that will be a budget

decision. That will come out of our work this year on the R & D Strategy.

When we establish our research council, I think that will, in large part, inform

our decisions as it relates to this

section going forward.

MS MICHAEL: With regard to Professional Services, you probably do not

have this figure at the top of your head, but I would be interested in knowing

what percentage of the full budget for the department goes to Professional

Services. Would it be possible to get that figure?

MR TAYLOR: You mean across the department?

MS MICHAEL: Right across the department, yes, the percentage of the full

budget.

MR. TAYLOR: (Inaudible).

MS MICHAEL: I love people who work with figures, they always have the

answers because that is the kind of thing they like to do.

MR. TAYLOR: Okay, $1.67 million out of $58.5 million.

MS MICHAEL: Thank you.

MR. TAYLOR: There is a reason why I am not the Minister of Finance. There

are probably numerous reasons, but anyway.

MS MICHAEL: The next one, Purchased Services, again revised down pretty

heavily in last year's Budget. Why was that and why right back up now to

$295,000.

MR. TAYLOR: Basically we announced our Innovation Strategy and programs

associated with that in the last fiscal year. We did not get it moving as fast

as we had hoped, so there was lower and slower than anticipated cash

expenditures from those programs, and we have revised it upwards this year by

$25,000 in order to move forward with our R & D strategy and the

establishment of the R & D council.

MS MICHAEL: What would be the Purchased Services that would relate then

to the Innovation Strategy?

MR. HOGAN: The range of activities toward program development, and once

the programs were developed and launched in August of this year there was also a

requirement for meeting supplies. We did a consultation process across the

Province as well within our own department through our regional offices and the

cost associated with that would fall into that category.

MS MICHAEL: Would that include the transportation related to that

particular

section as well or does that go up under 03? For example, you have

the consultation process and obviously that includes transportation costs. Is

that included in 06 or is that 03?

MR. HOGAN: I believe it is in.03.

MS MICHAEL: Thank you.

MS DUKE: I think, in addition to the travel there would be expenditures

for printing materials, marketing, advertising, rental of meeting rooms, food

and beverage and that kind of thing, for consultations and other activities.

MS MICHAEL: With the Grants and Subsidies, again I am curious. This could

be a part of the thing that the innovation strategy did not get put in place,

the fact that the Revised figure is so low and then coming back up again. I

guess it is the same thing. I see Rita nodding her head.

MR. TAYLOR: It is similar to the other programs like the SME, RSDF and

what have you, just slower getting money flowing out and as a result of that we

have carryover. This is the Innovation Enhancement Program piece, the piece that

funds the not-for-profit sector. That is basically a reflection of that.

MS MICHAEL: Thank you.

Coming down to subhead 5.1.02, again it begs the question - $3 million being

budgeted, only $557,900 being spent and now back up to $4,245,000.

MR. TAYLOR: It is basically the same answer as the previous one. This is

our commercialization program under the Innovation Strategy. We budgeted $3

million because we were late getting moving. We announced it in August, then by

the time we got it moving we did not expend as much in the last fiscal year as

we had thought. The $1.245 million over and above last year is basically

programs and projects that have - correct me if I am wrong, Dennis - been

approved. We have them there and it is a cash flow thing. Actually, out of $3

million there is about $1.8 that we committed in the last fiscal year and $1.2

of it will be flowed in this fiscal year.

MS MICHAEL: I think that is it then because all of the other sections Ms

Jones actually raised all of the points that I had noted myself.

Sorry I had to miss a part of the discussion put something came up.

Thank you very much.

CHAIR: Any further questions?

Ms Jones.

MS JONES: Yes, I do.

My next question, I guess - my colleague, Mr. Joyce, asked a couple of

questions with regards to Stephenville. The task force that you guys set up in

Stephenville, I think it was to focus on rebuilding some new initiatives in the

Bay St. George area after the closure of the Abitibi mill. I am just wondering

what progress has been made on that front, if the task force is still ongoing

and if there have been any jobs created as a result of the initiatives of the

task force. I think there were several committees under that task force as well,

if I recall.

MR. TAYLOR: Yes. I will hand it over to Rita once I make a few general

observations. The task force is still in place. The Community Development

Committee, some changes are being made there.

There has been somewhere in the order of $10 to $11 million in economic

development initiatives that have been funded in the Stephenville, Port au Port,

Bay St. George region of which approximately $3.2 million would have been funded

through us. The absolute number of jobs created, obviously, it is always

somewhere between art and science trying to calculate that, but we have moved

some positions related to telehealth in there. The drug program, administration

of that has been moved into Stephenville. There have been a couple of programs

created and expanded at the College of the North Atlantic which resulted in a

number of positions being created.

I saw the numbers only yesterday, I looked at them actually, but they have

slipped my mind, on the absolute number of positions that we believe have been

created in the area. I will turn it o