June 1, 1993

RESOURCE ESTIMATES

COMMITTEE

The Committee met at 9:00 a.m. in the House of

Assembly.

MR. CHAIRMAN (Dumaresque): Order, please!

First of all, since I am a replacement for the

Chair, Mr. Penny from Lewisporte, for proper procedure we need a motion to

confirm my position here today according to the Clerk, so if I could get a

motion to that effect.

MR. SHELLEY: I so move.

Pursuant to Standing Order 87, Mr. Danny Dumaresque,

M.H.A. (Eagle River) substitutes for Mr. Melvin Penney, M.H.A. (Lewisporte).

MR. CHAIRMAN: Thank you very much.

First of all, I would like to welcome the minister

and his staff to the Estimates Committee of the Department of Fisheries this

morning, and I would like to start off by introducing the members of the

estimates Committee. On my immediate right is the Vice-Chair, Mr. Woodford, the

MHA for Humber Valley; Dr. Hulan, the Member for St. George's; Mr. Tulk, the

Member for Fogo; Mr. Whelan, the Member for Harbour Main and to my right, Mr.

Matthews, the Fisheries critic and the Member for Grand Bank and Mr. Shelly, the

Member for Baie Verte - White Bay.

The procedure we will follow this morning is fairly

routine. We will start off by asking the minister to make a statement, for which

he has fifteen minutes but I am sure if it is a little shorter or longer, the

Committee would understand. Following his statement, the Vice-Chair has fifteen

minutes to question and then we would throw it open to all members of the

Committee and probably go from one side to the other, if that is the wish of the

Committee. It is a relaxed atmosphere and I intend to try and make sure we get

all the questions required and I am sure we will also get all the answers; so

without further ado, I would like to call on the Minister of Fisheries for his

opening statement.

MR. CARTER: Thank you, Mr. Chairman and members

of the Committee. I am pleased today to present to this Committee the budget

estimates for the Department of Fisheries, for the fiscal year 1993-1994. While

we are in a period of restraint I feel that the level of total expenditures for

my department in 1993 and 1994 continues to demonstrate the commitment of this

government to our most important resource sector.

Gross expenditures in '93 and '94 are projected at

$30.4 million. Revenues, both current and capital will total $8 million,

consisting of $3 million to the federal/provincial cost-shared programs; $3.7

million to Fisheries Loan Board repayments and $1.3 million from other

provincial sources. My department will, in total, spend $22.8 million on current

account and $7.6 million on capital account in this fiscal year. Our previous

year's estimates called for expenditures of $29.2 million on current account and

$14.3 million dollars on capital account.

As indicated above, my department will spend $13.2

million less in 1993-94 than in the previous year; some $6.7 million dollars of

that amount follows from the expiry of the 1992-93 Canada-Newfoundland Inshore

Fisheries Development Agreement and, an anticipated reduction in expenditure

under the Canada- Newfoundland Corporation Agreement on salmon enhancement and

conservation.

Capital funding under fisheries loans and

assistance decreased by $4.5 million as a result of a reduced requirement for

loan and bounty funding due to a general downturn in the availability of ground

fish.

I wish to take this opportunity to touch briefly on

the document: Changing Tides, a consultative document on the fishery of the

fundamentally alter the management and allocation of the fishery resources. The

fishery is fundamental to the economy and the way of life in this Province.

Economic activity generated by the fishing industry provides incomes to

individuals; it provides vessel payments and commercial spending by fishermen

and plant workers. Throughout the past ten to fifteen years, there has been

considerable adjustments or change if you wish, in the species of fish

harvested, the manner in which fish are handled and processed and the variety of

fish products offered for sale on international markets. The common thread

throughout has been the skilful adjustment of the fishing community to the

opportunities available to it.

The closure of the northern cod fishery on July 2,

1992, while an event of enormous proportions and ramifications represented the

culmination of things gone wrong with respect to the management of that

resource. The consequences of the moratorium are being addressed through

northern cod adjustment recovery program and similar programs. The factors which

led to its imposition, and adjustments which must be made to ensure such an

event never happens again, must be understood and acted upon.

Two truths can be stated with certainty, these are,

one; only rebuilt fish stocks will provide security for the long term and, two;

the fishery of the future will not mirror the fishery of the past. Changing

tides and a consultive document on the fishery of the future encompasses

thirty-nine proposals for a policy framework. The principal objective of this

policy framework is to build a viable fishery that is regionally balanced, one

that is stable and competitive in the absence of government subsidies, and one

in which highly skilled plant workers and fishermen can earn an adequate income

without dependence on income maintenance payments.

Achieving this objective will require that

rebuilding and conservation of the resource be pursued as a priority goal in the

short term and that rebuilt stocks be managed on a sustainable yield basis in

order to provide greater assurances of industry and community stability.

Changing Tides proposes change in the stewardship of our fish resource. It calls

for increased decision making by those who participate in the industry. Joint

fisheries management, synonymous with effective management, is the only method

by which the aspirations of those in areas of harvesting and processing can

receive full and fair hearing in a process which has as its first requirement

the application of sound fisheries management principles. Effective resource

management is the key to building a sustainable fishery. Public meetings have

been scheduled to obtain the views of as many people as possible on the

documents thirty-nine proposals for a policy framework.

On May 10, the federal Minister of Fisheries and

Oceans introduced Bill C-129 in the Parliament of Canada. That bill, Mr.

Chairman, calls for the establishment of an Atlantic Fisheries Board which has

as its primary function the allocation of fish resources throughout Atlantic

Canada. This approach to managing the fishery is unacceptable and I thank all

members of this Committee for their support in passing the resolution calling

immediately.

The regional services branch has allocated $7.9

million in support of the development, maintenance and utilization of fisheries

infrastructure. These include; marine service centres, fishermen's community

stages, fish processing and handling facilities, fisheries access roads and the

operation of the Northern Labrador fish plants. Funding is also provided for the

administration costs for the regional services division in Labrador. A

relatively major activity in the branch is the administration of twenty-five

marine service centres throughout the Province. In the past the operations were

exclusive to government, however, in recent years we have embarked upon an

initiative to involve private sector and community groups. The initial results

are positive and in conjunction with the fishermen's groups in respective areas,

we intend to further pursue this in the future. In addition we have been

successful in controlling operational costs which are reflected in very few

increases in fees to fishermen who utilize these centres.

In 1992-93 the centres provided approximately 1200

vessel haul-out and launches, 250 emergency or service lifts and accommodated a

winter storage of over 700 vessels.

In 1992-1993 we introduced a marine service centre

assistance program in consideration of the fisheries crisis. This was a

Province-wide program whereby eligible fishermen were provided with haul-out,

storage and launching assistance. A total of 650 vessel owners received

assistance and it is planned to extend this program into the 1993-1994 fiscal

year.

My department is continuing efforts to divest

government owned fish plants. Presently a total of ten remain leased as compared

to over thirty active government owned facilities in 1990. An exception to this

activity are the plants in Northern Labrador where the department continues to

operate the Nain plant and the Torngat Co-operative receives a subsidy to

operate the Makkovik plant. Our development goals in that regard are to transfer

the Nain operation to a community based company and to reduce the subsidy

payment. Except for the northern plants we remain committed to the private

ownership of all plants within the fishing industry.

The department is continuing with a capital works

program. A budget of $1.6 million will fund various projects, including

upgrading of existing marine service centres, community stages, slipways, and

refrigerated facilities. Our capital budget also includes support to community

groups, which in 1992-1993 provided assistance to over eighty community

sponsored projects. Mr. Chairman, this is a significant ongoing increase in

community input into fisheries infrastructure. My department intends to foster

and assist this community involvement.

The department will also continue to coordinate the

fisheries component of the Coastal Labrador Development Agreement. This

federal-provincial agreement, signed in July of 1989, calls for expenditures of

$7 million over the 1990-1994 period. In 1993-1994 approximately $1.9 million

will be spent on current and capital account under the Coastal Labrador

Development Agreement.

Fisheries and Aquaculture Development branch is the

second major operational branch of my department. The branch is composed of

three divisions, harvesting operations, processing operations and marketing

services. The branch will spend $5.6 million in 1993-1994 consisting of $3.3

million on current account and $2.3 on capital account. The harvesting division

is responsible for the development activities related to aquaculture and

resource development. In addition, the division administers Newfoundland

aquaculture legislation, which provides the legal framework for the industry.

Extensive field activities are undertaken to provide annual inspections of

licensed sites as required under the act. The major emphasis in the current year

will focus on: increasing and strengthening the salmonoid production worth

approximately $1 million last year in Bay d'Espoir; increase mussel production;

and stimulate the farming of scallops. The primary focus of harvesting

initiatives will be to broaden the resource base through development of less

traditional species, principally skate, urchin and scallop.

Capital expenditure of $2,276,000 is provided in

respect of financing and insurance cost of four middle distance vessels built at

Marystown in the 1987-1990 period.

The processing operations division will provide a

contribution of $325,000 to the Ramea fish plant to provide for the processing

of foreign fish caught, as the Ramea plant is ineligible for assistance under

the Northern Cod Adjustment and Recovery Program. Other program funding will be

spent on other facets of the processing industry, including seal meats and

by-products.

I will clue up in about two or three minutes, Mr.

Chairman.

The Marketing Services division will provide

marketing support for industry, primarily in order to market underutilized

resources, value-added, and aquaculture products, and to explore new marketing

opportunities. The division will continue to provide market research and

intelligence and would also provide core funding for the newly-established

Newfoundland Seafood Market Council.

An additional $500,000 has been allocated to the

Fisheries and Aquaculture Development branch in anticipation of a new ERDA

agreement being signed. Guidelines are currently being developed through

discussions with appropriate federal agencies. The Strategic Economic Plan also

provides for initial block funding of $575,000 in support of fisheries

initiatives, primarily related to development opportunities, details of which

are presently being finalized.

The Policy Planning branch of my department will

have estimated expenditures in 1993-1994 of $5.9 million. This branch provides

ongoing policy and program planning within the context of government's broad

fisheries management and fisheries development objectives. During the coming

year the branch will continue to focus significant attention on resource

difficulties facing the industry, on stock rebuilding, and fisheries

revitalization.

In particular, the branch will be developing a new

fisheries policy framework which would evolve as a result of the Changing Tide

public meetings, and will also be undertaking further initiatives aimed at

achieving joint management of the Newfoundland and Labrador fishery.

The branch is also responsible for field services

activities, co-ordinating the activities of six regional field offices. In

addition, the branch undertakes the fisheries science and resource analysis

activities of the department. The branch will deliver the Province's share of

the Atlantic Salmon Agreement, amounting to $11.7 million over two years, of

which $4.1 million of that amount will be spent in the 1993-1994 estimates, the

second and final year of the agreement.

The Canada-Newfoundland Inshore Fisheries

Development Agreement is also co-ordinated by the policy planning branch. Some

$1 million will be spent under this program in 1993-1994. The Fisheries Loan

Board is projecting expenditures in 1993-1994 of $9.3 million in support of the

Province's inshore fleet. Expenditures will be directed towards interest subsidy

payments under the Bank Loan Guarantee program, loans under the Board's direct

loan fund, and assistance under its bounty programs.

My department's response to the Northern cod

moratorium included interest forgiveness programs for both direct loans and loan

guarantee program clients of the Board. Loan guarantee program clients are

anticipated to receive approximately $3 million interest forgiveness assistance

for 1992. Interest charges and the same assistance is provided to loan guarantee

program clients in 1993. The Board's direct loan clients are expected to receive

approximately $600,000 interest forgiveness assistance in each of the 1992-1993

years.

Mr. Chairman, the fishing industry is experiencing

difficulties of unprecedented proportions. Clearly, these difficulties will

require greater integration of federal and provincial policies if we are to

emerge with a stronger fishery in the future. Resource considerations are the

underlying reason for the present crisis in the industry, and the overriding

priority for recovery of the industry must be the rebuilding of key groundfish

stocks.

I welcome any questions you may have on my

department's 1993-1994 estimates. Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Minister. First of

all, while some of the members know your staff, maybe you could introduce them

for the new members of the Committee.

MR. CARTER: On my far right is Mr. Harold

Murphy, Assistant Deputy Minister; Mr. David Vardy, Deputy Minister; Mr. Les

Dean, Assistant Deputy Minister; Mr. Gordon Kane, Managing Director of the

Fisheries Loan Board; and Mr. Reg. Kingsley, Assistant Deputy Minister, as well.

MR. CHAIRMAN: At this point, I would like to go

to the Vice-Chair, Mr. Woodford. He has fifteen minutes or he may refer them,

for his time, to the fisheries critic - it is up to him.

For members' information and for the purposes of

Hansard, whoever is speaking, would you please identify yourself so we can make

sure that is recorded properly.

Mr. Woodford.

MR. WOODFORD: I will yield to Mr. Matthews, Mr.

Chairman.

MR. TULK: Mr. Chairman, I would like

clarification on a point of order.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: Is the Member for Grand Bank signed

on as a member of this Committee?

MR. CHAIRMAN: He is not a voting member of the

Committee, but he certainly is -

MR. TULK: Well, I would just like to go on

record as saying that while - and I have seen this happen in a couple of

committees - while I have no objection at all to deferring to the member, the

voting members of this Committee should have the right to speak in advance of

the people who are not voting members and there is a mechanism for people who

get put in as voting members to replace somebody else. I would like that to go

on the record.

MR. CHAIRMAN: Yes, the member is quite right.

MR. TULK: Because this can become too informal;

if they want to, people could be just walking in and out and throwing attacks at

ministers, and all the rest can get up and leave. I have seen it happen before

and I don't want it to happen to the Committees again, but in this case, I

agree.

MR. CHAIRMAN: Okay.

MR. WOODFORD: To that point, Mr. Chairman, on

the other hand, I can speak for fifteen minutes, so it doesn't matter, I am

still an Opposition member and there is no difference. Regardless of who is

speaking, the time is still there, you are not going to lose that, so I just

want to make it quite clear that I have fifteen minutes to speak, whether I

yield or not. I will make sure of that.

MR. TULK: With respect to the rules of the

Legislature, you cannot just walk in and say I am going to defer to this one or

that one

and cut out voting members of the Committee.

MR. CHAIRMAN: No. Mr. Tulk, it is not the

intention of the Chair, I am sure, nor the Committee, to exclude voting members

of the Committee, and certainly, if some member wanted to persist and ask the

questions now, then certainly, they have the right, under parliamentary

procedure, to do that. We thought, it being the nature of the committees thus

far, that if the Vice-Chair, who is a member of the Opposition, wanted to

provide an opportunity to his fisheries critic, then that would have to have

leave of the Committee, I guess.

MR. TULK: Mr. Chairman, that is the point I

want to make - speaking by leave only.

MR. CHAIRMAN: Very well.

MR. W. MATTHEWS: Mr. Chairman, I would like to

have some clarification on the format. I have some time to just question the

minister - is that what I understand?

MR. CHAIRMAN: Well, you have fifteen minutes to

respond to the minister.

MR. W. MATTHEWS: To use as I see fit?

MR. CHAIRMAN: I guess you may make a speech or

you can ask questions, as you see fit.

MR. W. MATTHEWS: I think I will just pursue,

with your permission and that of the committee, a few questions for the

minister, realizing that perhaps the general underlying concern in the Province

for the state of the fish stocks, of course, has brought on a couple of things,

one of them being the NCARP, or the moratorium package, as it is referred to.

I would say, the time when that moratorium will be

lifted is anyone's guess; from all evidence or from all signals, it certainly

won't be within the next twelve months. I am just wondering if the minister or

his officials have received any indication from the federal Department of

Fisheries as to whether there has been any improvement whatsoever in fish

stocks. I know there is no way they can guess when the moratorium may be lifted;

personally, I think we are talking years, but I am just wondering, has there

been any information exchange or flow from DFO to your department, Mr. Minister,

indicating whether there has been any improvement whatsoever in fish stocks?

MR. CARTER: I am not aware of any. I don't know

if my officials are - if so, they can speak up, but I am not aware of any

information coming from DFO to that effect. I understand there are a lot of

tests going on, and surveys, but I am not aware of any good news coming from the

department to the effect that the stocks are rebuilding to any significant

degree.

MR. W. MATTHEWS: I am just wondering - what do

you hope to accomplish from the public meetings that you are starting tonight?

What is your aim? I know that we all have concerns about the Atlantic agency

that is proposed by Mr. Crosbie and there has been significant concern expressed

about the processing sector, the number of plants, processing capability or

capacity in the Province. Really, what are you hoping to accomplish from your

series of public meetings?

MR. CARTER: Well, the Green Paper, or

discussion paper, Changing Tides, is the result of a lot of effort from

officials of the Department of Fisheries, and in it we have outlined thirty-nine

options - proposals for the fisheries of the future. Any such document, given

the fact that the fisheries of the future will have a major input on the future

of Newfoundland, certainly rural Newfoundland and, in fact, all of Newfoundland

directly and indirectly, then we believe that the stakeholders and the people

out there in rural areas must have an opportunity to have input into the final

decision having to do with the fisheries of the future. Tonight, we are having

our first meeting in Bonavista, a public meeting, which all who want to may

attend, and we will be soliciting their views on the proposal, on the Green

Paper. I think it is a necessary function. I think that the people who have

probably the most to lose by what is going to be happening over the next few

years, mainly the stakeholders, themselves, should have the opportunity to have

some input, hear what we have to say, question us as to what our thoughts are on

the fisheries of the future and explain some of the options that we have

outlined in the paper. So, I think it is going to be a very useful exercise and,

in fact, I am looking forward to it very much.

MR. W. MATTHEWS: Do you have a time frame in

mind where, say, you would conclude this process?

MR. CARTER: Well, if the House of Assembly were

not open we could probably establish a series of meetings and almost name the

day when the final meeting will be held. As you know, I suppose, like most

members, my first responsibilities are to the Legislature; while it is sitting,

as a minister, I have to be there. So, we are going to try to work the meetings

in, in a way where it won't interfere, to any great extent, with my ability to

attend House sessions.

For example, this afternoon I am hoping to attend

Question Period and then leave immediately for Bonavista. Tomorrow we will be in

Marystown, so tomorrow I will be out of the House and back on Thursday. Next

week we will be planning two or three more meetings, hopefully meetings where I

can be in the House until Question Period, then leave and go to the meeting

following it. So it is difficult for that reason, Mr. Chairman, to put a time

frame on the meetings but I am hoping that within a month or maybe less we will

have had our twelve or fourteen meetings around the Province and then resulting

from the meetings there will be a White Paper developed in which we will outline

the Province's official policy on the fishery of the future evolving from the

Green Paper and the discussions resulting therefrom.

MR. W. MATTHEWS: Do you really expect, at the

end of this process, that you are going to be able to zero in on the number of

fish plants that will be open in the Province or that have some potential in the

Province? Is that part of it or how do you see that coming out of the maze?

MR. CARTER: No, I don't think that is going to

be possible and for a very simple reason. If we had the information that we

would need to make that kind of an assessment, yes, then it wouldn't be too

difficult; but, at this point in time, going back to your first question, we

haven't, and I don't suppose anybody, short of the Man above, has any idea as to

what is going to happen in terms of the fishing industry in this Province, here

in Atlantic Canada, over the next number of years. For that reason, it is

extremely difficult for us, as a department, or for anybody, the federal or

provincial department, to be able to accurately project what is going to happen

in this Province, say, five years from now. We can make certain assumptions

based on the very best information available but, as we all know, I am sure,

these are guesstimates probably more than anything else. And we have no choice

in the matter because right now we don't have any indication whatsoever as to

when the moratorium will be lifted. We have no idea what the total allowable

catch will be once it is lifted. We all know that officially it is supposed to

cease, I believe in June, 1994. The federal Minister of Fisheries and Oceans has

repeatedly stated, almost without qualification, that there will be a fishery in

Well, as the hon. member said, Mr. Chairman, I have

serious reservations whether that is going to be possible. If there is one thing

we don't want in this Province, in Atlantic Canada, in the fishing industry, it

is a premature re-opening of the fishery, because we are dealing with a very

delicate situation here. If we, for whatever reason, whether it be economic,

social or political, re-open the fishery before it is ready to be re-opened,

then I am afraid the result could be catastrophic. It could have far-reaching

implications on the ability of the fish stock to rebuild itself and for the

industry to get back to becoming a viable industry. I am hoping, I guess, that

doesn't happen.

MR. W. MATTHEWS: Thank you. Mr. Minister, I

would like to pursue something I tried to pursue yesterday in the House of

Assembly but, of course, with Question Period and the Speaker, you don't get

enough time to pursue it.

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: Pardon?

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: I was asking about a plan for

the processing sector, which has been talked about for the last number of

months. I guess the concern I have about it is that processing is a provincial

responsibility. When a decision has to be made whether or not to continue with

compensation benefits, moratorium benefits, in another year or so, if there is

not a plan forwarded to the Federal Government on the processing end of it all,

my concern is for the fish plant workers. That is what I was trying to get at

yesterday. and as I said, I didn't have enough time to develop it and so on.

I was just wondering: Do you or your officials have

any concerns that when a decision has to be made whether to continue with

further assistance - we all hope a decision to continue with it will be made -

that there may be some implications here for fish plant workers who work in the

processing sector? Perhaps I am being a little too concerned - but I don't think

we can be - or suspicious. I am just wondering perhaps if this continuous call

over the last while for a plan on the processing sector might not be a signal

that unless something is done, or a plan submitted to the Federal Government,

there may be some serious implications for fish plant workers who are now being

funded under that program, since processing is a provincial responsibility. That

is what I was trying to get at yesterday. I am just wondering if you or your

officials have thought about that, or if you are concerned about it.

MR. CARTER: Yes, Mr. Chairman, we have thought

about it and we are concerned about it. There is one thing we should not lose

sight of. I know that sometimes we all are inclined to say things for one reason

or another; but there is one very important point that we shouldn't miss here

this morning, or ever in this Province, as long as this moratorium lasts, that

is, that the responsibility for what happened rests with the Federal Government.

Now, I have been criticized in the past and accused

of maybe trying to pass off responsibility to the federal - but that's a fact.

There isn't anybody around this table or, indeed, in Newfoundland, who

understands both jurisdictions, who can deny the fact that almost every single

problem that we are experiencing today in this Province in terms of the fishing

industry, certainly in terms of the Northern cod moratorium, were caused by

virtue, by and large, of mismanagement on the part of Federal Governments -

plural, `governments'- not just the Mulroney Government, but previous

governments. I am not suggesting that all of these problems started with John

Crosbie or Brian Mulroney, they go back a long period, a good number of years.

That is one very important point we should not lose sight of, and therefore, we

should not, knowingly or otherwise, give the federal politicians and bureaucrats

an opportunity to get off the hook, as it were. They have that responsibility

and, in fact, they have recognized it; to their credit, they have recognized

their responsibility and NCARP and the billion dollars that will flow therefrom,

is self-evident; it is an indication of the fact that they have recognized their

responsibility, and I think we are treading on pretty thin ice, when we attempt

to try, for whatever reason, to divert responsibility from where it really

belongs on to the Provincial Government, for a number of reasons.

First of all, more importantly, it is their

responsibility. Mismanagement, poor management, call it what you want, on the

part of Federal Governments of the past - they have ignored our warnings, they

have ignored our requests - I can recall ever since 1989, we have repeatedly,

consistently objected to the TACs they were setting; we are on public record as

saying that, that taxes are too high, that we are living dangerously, they have

ignored by and large the Harris panel recommendation to that effect and others

and now we are paying a price for it. And I think we have to unite in this

Province and make sure that those responsible, accept their responsibility and

continue to accept their responsibility and come to the rescue.

Now, you talk about the processing sector. Yes, the

Province does license plants, but I have never known of a fish plant to go out

on the Grand Bank and overfish or catch fish. We licensed plants on the basis of

the total allowable catches that were established by the Federal Government.

Unfortunately, the advice they got, or the way they interpreted their advice,

has caused a lot of problems. Consequently, we now have too much processing

capacity in the Province and this goes back a number of years, to the time when

federal scientists were projecting allowable catches that were totally

unrealistic, as we found out later. I remember back in the 1970s, when they were

projecting, once the 200-mile limit was in place, an operation where we would

have a total allowable catch of 300,000 or 400,000 metric tons.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, and the Province, of course, a

province like Newfoundland where, the economy is so dependent on the fishery,

did what the government of the day thought was the right thing to do and geared

up for this new fishery that was promised, only to find out, years later that,

somewhere, somebody made a few bad calculations and the total allowable catch

did not materialize as envisaged. The result is now that we have too much

capacity and we have to find ways and means of reducing the plant capacity in

the Province. I suppose in Newfoundland today, our plants are operating at what,

less than 20 per cent?

AN HON. MEMBER: 17 per cent.

MR. CARTER: Seventeen per cent. Can you imagine

any business, whether it is a service station, a fish plant or a supermarket,

operating at 17 per cent of its actual operating capability? You know, it is

just unbelievable. And is it any wonder that the fishing industry is struggling

and bordering on bankruptcy three parts of its time? So we have to find ways of

decreasing the plant capacity, but that has to be done in a certain way, too. I

don't think the Province has the right, nor does any group have the right to

assume the role of God, to put the finger on certain communities. What criteria

would you use, for example? Who is to say that the plant in community A shall

remain open and the plant in community B shall close, and decisions of that

nature - having the effect of more than likely determining the future of a

region or a community of the Province.

The Province is not going to take on that role, nor

should we. Yesterday we met with FANL and we had quite a lengthy discussion on

this whole question of how we should approach downsizing within the processing

sector. There are talks ongoing with FANL. Some of their proposals have not been

acceptable to the Province, but eventually it will settle back and work itself

out. It is going to be a long-drawn-out process. It is not one that you can

rush. If we start rushing and coming up with grandiose schemes as to how we are

going to do this and that, it is a recipe for disaster, I think. We have to take

it in a rational way and see what happens. I know I have taken longer than I

should have to answer that question, Mr. Chairman.

AN HON. MEMBER: Crazy.

MR. CARTER: Pardon?

AN HON. MEMBER: Crazy.

MR. CARTER: Yes, I am sure it is.

AN HON. MEMBER: You will educate the Member for

Grand Bank.

MR. CARTER: The Member for Grand Bank has done

his homework.

AN HON. MEMBER: Has he?

MR. CARTER: Yes.

MR. W. MATTHEWS: Am I out of time? I don't want

to abuse my leave.

MR. CHAIRMAN: Yes, the Clerk said you had more

time, so we will go under her direction.

Now we would like to refer to -

MR. W. MATTHEWS: Could I have leave just to -

MR. CHAIRMAN: Okay.

MR. W. MATTHEWS: I just want to say to the

minister, I follow very closely what he is saying and, for the most part, it

makes a lot of sense, but I guess - I mean, most of the plants are closed now.

It is not a matter of - they are closed. Perhaps a better way of asking the

question is: How do you see - hopefully the stocks will regenerate in a few

years. Is there not going to be some plan needed then to decide what plants are

reactivated, how they come on stream? Otherwise, we are going to be in this mess

for years, if a percentage of the regenerated stocks are spread throughout all

those plants in the Province. Do you know what I am saying? If the plants are

operating now, as the deputy minister said, at 17 per cent, and as the stocks

regenerate and more fish come ashore you bring them all up to say, 25 per cent,

that is still not going to make them viable.

How do you deal with that situation? Say, in five

years, if the stocks have regenerated, the total allowable catch is increased

somewhat, more fish come to our ports, how do you plan, as a Provincial

Government in charge of the processing sector, to deal with that situation so

that at least the plants that come on stream have a chance of being viable and

maintain some degree of employment in those communities? How do you deal with

that?

MR. CARTER: Well, let's take a look, Mr.

Chairman, at some of the factors that have led to the problem we are now

encountering with respect to, namely, overcapacity: Government-guaranteed loans

propping up plants that were inefficient, not productive, plants that probably

should never have existed in the first place.

Natural forces, we believe, will eventually

dictate. The government will be withdrawing, in most cases - I am not suggesting

that never again will the Province undertake to guarantee a loan for a fish

company, but I can tell you one thing, that the days when any fish plant owner

can walk into the minister's office and get a loan guarantee are over, that is

history. That will never happen again to the extent that it has in the past -

propping up inefficient operations, plants that do not have access to adequate

raw material, undercapitalized. Again, we have found ourselves in a position

where a lot of the plants that we have around the Province - and by the way, I

should remind the member that not all of the fish processing plants are closed.

There are still a lot of plants in operation and doing extremely well, they are

alive and well. Granted, they are not processing any Northern cod, but I guess,

like the old saying, necessity is the mother of invention.

What is happening, probably one of the good things

that is going to come out of this crisis, is the fact that we Newfoundlanders,

in order to survive, which is a strong force, of course, are now finding ways of

making better use of what we have, becoming more involved in secondary

processing.

I attended a dinner last night that we hosted for a

group of Japanese people, magazine writers and chefs, very well known in their

own country, in that field. We had with us also, half a dozen or four or five

Newfoundland fish processors. We were encouraged to hear some of the things that

were being said there and how plants are getting involved in secondary

processing in the production of shishamo, that is, the female caplin that has

caught on in Japan, which represents an export market of probably anywhere from

$50 million to $70 million for this Province.

So, a lot of things are happening. It is not all

bad news out there, a lot of good things are happening. Secondary processing,

underutilized species development, for example, is another important thing.

Newfoundlanders are finding ways and means of coping, and the strong will

survive.

I have to call the Premier's office immediately, I

wonder could I be excused for about two minutes, Mr. Chairman? I don't know if

you want to ask, Mr. Vardy or -

MR. CHAIRMAN: We will take a break now and come

back and start off with the Member for Fogo, probably, if you are ready. Do you

want to start off when we come back?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Okay, we will come back and start

off with the Member for St. George's.

Recess

MR. CHAIRMAN: I will call the meeting back to

order. At this point I would like to give another member ten minutes or so to

follow up, and continue, whoever is ready.

Mr. Tulk.

MR. TULK: Mr. Chairman, I would like for the

Minister of Fisheries to comment on two points. One of them is the middle

distance fleet. I understand he inherited that thing. I would like for him to

comment on what the status of those boats is now, five or six of them. I think

they cost the Province well over $20 million, was it, some years ago?

AN HON. MEMBER: (Inaudible).

MR. TULK: Yes, approximately $20 million some

years ago. I would like for him to comment on it. As I said, I know he inherited

it; it was the brainchild of a former minister. He was warned, in no uncertain

terms, against it, but he went ahead with it, and it cost the Province $20

million. I wonder is that going to be a profitable venture and just where are

those boats right now?

MR. CARTER: Well, it has turned out that the whole

venture, as you call it, is not at all profitable. In fact, it is quite the

opposite. The four vessels that we now own - we have one leased, and the amount

we are able to get by way of lease payment doesn't even come close to servicing

what it costs, servicing the loan - the mortgage.

MR. TULK: Servicing the debt.

MR. CARTER: It makes no contribution whatever to

the servicing of the debt on the vessel.

MR. TULK: Could we get some figures on it? Because

it is definitely new to me.

MR. CARTER: I think we have figures here

somewhere. These vessels - it is very unfortunate because they are probably the

best technology that is available right now in the fishing industry and because

the quotas were eliminated, back a few years ago - it is costing the Province

every year, in terms of lease payments and insurance, $2,276,000.

MR. TULK: That is the net cost?

MR. CARTER: That is the net cost of the vessels,

yes, servicing the loans and the insurance.

MR. TULK: From whom are we leasing the boats?

MR. CARTER: These vessels were built by the

government, leased through an arrangement with two companies; the Pitney Bowes

Company and RoyNat which is an offshoot of the Royal Bank. The boats are

obviously overpriced, they cost far more than they should have cost, the result

being that even if we were to sell those boats now, the payout on the mortgage

would be far in excess of what we can hope to get for the vessels.

MR. TULK: Can we sell them?

MR. CARTER: We can sell them, yes, at a much lower

price, I suppose, but given the fact that there is so much money owed on the

boats, by virtue of their excessive cost, we can't afford to sell them at a

loss, really. We are trying our best to find ways of utilizing the vessels to

the point where they will come at least close to paying their way. To date, that

has not been possible. In fact, as I said, it is quite the opposite.

Eventually, we will have to sell them, I expect. We

have tried to deploy them in certain other fisheries but it doesn't seem to work

out. We have had some enquiries from certain countries which have shown some

interest in leasing the vessels, but again, the arrangements that are being

offered are not substantial, certainly not adequate to make it worth our while.

I guess, to answer Mr. Tulk's question, Mr. Chairman,

the whole middle distance vessel program is not working out at all. In fact, it

is imposing a severe burden on the Province, not because there is anything wrong

with the vessels, or with the people manning the vessels, but the fact of the

matter is, there is no resource there. If we had - you might recall years ago,

before the moratorium, there was a middle distance quota and that enabled the

vessels to be viable. With that quota now removed, the vessels are just not

viable. I personally cannot see us getting a quota for those vessels in the

foreseeable future. If the fishery is re-opened, when the moratorium comes off,

and a very limited total allowable catch is established, I question very much

whether we will be able to succeed in getting a quota for those vessels,

certainly at the outset.

MR. TULK: Mr. Chairman, just one more question.

The minister, I think, will remember this. Some years ago, the then Minister of

Fisheries, Mr. Rideout, and the future premier, were pushing the concept, and it

was our thought, I believe, that where those people were going to fish, those

110s or 100-foot boats, whatever they were, could very well be fished by 65-foot

boats, maybe 85-foot, at the top. It is debatable whether there ever should have

been a boat built and a quota for it. And he is right, when the quotas come

back, if they do come back, then I suspect they will go to the 65-foot to

85-foot boats to fish the same areas that the 110s were fishing. I don't believe

those boats are ever economically viable - that is just a personal opinion of

mine, and I believe the minister might share that view. As I said, he is stuck

with it at this point and has to do something about it. The truth of the matter

is, that venture is costing the Province an arm and a leg, $2 million that could

very well be put into some other sector of the industry and do very well.

Let me ask him one other question - a question, I

think, that is of concern to all of us. I don't know whether he can answer it or

not. I don't know if anybody can answer it. The real question that bothers all

of us is: How bad is that 2J-3KL Northern cod stock? I know certain little

projections are given to us, but what is the feeling of people around his

department and around the federal department? Just how bad is that stock?

MR. CARTER: The only advice we have to rely on, of

course - we don't have any scientific capability within the Province in terms of

being able to do an accurate assessment of the condition of the stock. The

advice we are getting, the information we are getting from the people who do

have that expertise, is that the stocks are in very serious trouble.

MR. TULK: Are they getting worse now, even at this

point?

MR. CARTER: I don't know if they are getting

worse, but they are not showing any signs of improvement, Correct me if I am

wrong, fellows, this is what I am hearing and I suspect you are hearing the same

thing. They do not appear to be improving - they are going the other way, we

have heard.

MR. TULK: Still going the other way, aren't they?

MR. CARTER: Yes, for whatever reason - nobody

seems to know why.

MR. WHELAN: What is that assumption based on?

MR. CHAIRMAN: Would the member please identify

himself.

MR. WHELAN: Don Whelan, Harbour Main.

MR. CARTER: Maybe Mr. Vardy would like to

interject.

MR. VARDY: I would just like to comment with

regard to the Northern cod stock. The scientists have indicated that you need to

have a spawning biomass of seven-years-of-age and older fish of 1.2 million

metric tons, for a healthy stock. The spawning biomass has been steadily

declining over the years, from the 1970s and the 1980s, and now it is estimated

to be in the order of 70,000 metric tons.

MR. TULK: As compared to 1 million -

MR. VARDY: As compared with 1.2 million, which is

needed.

MR. TULK: Oh, for heavens sake!

MR. VARDY: Now, the actual stock back in 1962 was

a little over 2 million tons for the spawning biomass; we are now down to 70,000

tons, so it will virtually disappear. The spawners, large fish in that stock,

have virtually disappeared and that estimate of 70,000 metric tons came out in

June of last year. There was a conference several months ago, where a number of

fishery scientists from around the world were brought together by DFO, to review

the cause of what has happened out there and there were a number of conjectures

and hypotheses put forward. One of them is the question of cold water, but some

people believe that the major problem is environmental conditions. A great many

icebergs are carving from Greenland in the Labrador current, and cold water

arising from the greenhouse effect is bringing those icebergs down, cooling off

the water.

MR. TULK: What is happening as a result of that,

Mr. Vardy? I am just trying to get information.

MR. VARDY: That is cooling off the water and

creating a problem in terms of survival. A lot of fish, apparently, are dying as

a result of that. And the environment in terms of the larvae, I mean, the water

is so cold, it is very difficult for the larvae to grow and that means that

recoupment in the fishery is a real problem for the future. But the really big

problem out there now with the spawning biomass is that the large fish have been

taken or they have died; they are not out there, and we are down to the very

precarious level of 70,000 tons, which is unprecedented. We do not have on

record, any time in our history, when the spawning biomass for Northern cod was

down to that level.

MR. TULK: Mr. Chairman, I am going to make two

points or ask a question, I am not sure at this point, but it is a concern,

because I believe, to be quite frank, and there are a number of fishermen around

this Province who believe - and, Mr. Minister, you would know one of them, Tony

Noble, who put the proposition to me about three weeks ago, that really, this

fish has not been caught, it just disappeared into some other part of the ocean.

Now, whether there is any sense in that or not, I don't know. Don't shake your

head, Les, I have heard scientists talk about it.

AN HON. MEMBER: (Inaudible).

MR. TULK: It is thought that really, this fish,

the Northern cod stock, has not been caught, that it has probably disappeared

into some other part of the ocean. That is the belief he has. Now, I don't know

whether there is anything to that or not, but as I was saying, I would not shake

my head at anything, because I can remember being told in 1986, by scientists

and all the rest of them, that there was lots of fish out there, that there

always would be, and that there would be, I believe, 350,000 metric tons of

Northern cod, this year, for them to catch, which is not the case.

My question is for the minister, and if he wants to he

can defer to his officials: Are we talking about a stock that is basically

extinct and are we still fishing that spawning ground? I mean, if we are looking

at a 70,000 metric tons spawning biomass, as opposed to 1.3 million, it seems to

me, there is nothing left, is what you are saying.

MR. CARTER: David.

MR. VARDY: Clearly, 70,000 is an estimate.

MR. TULK: Yes, so is 1.3.

MR. VARDY: Well, so is 1.3, but I would be a lot

more comfortable with 1.3. There have been some Northern cod tagged in the

Bering Sea; that doesn't suggest there has been a widespread migration of fish

from the Bering Sea, but based on that, some people have inferred that the fish

have dispersed all over the world, which is highly unlikely.

MR. TULK: I think it is highly unlikely, too.

MR. VARDY: I think it is highly unlikely. The fact

of the matter is, survey vessels have covered an incredibly wide area and they

have just not been able to find those fish. Now, in terms of the question about

whether we are still fishing for Northern cod, the answer is no. We are not

fishing for Northern cod, we are not fishing spawning concentrations, but there

is still an effort out there.

MR. TULK: That is what I mean. I am sorry about

that, I didn't mean we, as Canadians.

MR. VARDY: No, but there are over 100 vessels

fishing; some of them are reputed to be fishing species other than Northern cod,

but we really don't know what they are fishing. There are 100 boats fishing

today as we speak, with 4,000 fishermen on those boats. They have landed a lot

of fish so far this year, much of it being turbot, but there is no question that

a lot of cod is being taken, as well. The members of NAFO have agreed not to

take Northern cod and to accept the Northern cod moratorium. However, several

months ago, there were Spanish vessels fishing Northern cod and we understand

that the EC surveillance vessels moved in and stopped them, but in the meantime,

they did take a substantial amount of Northern cod before they were stopped.

Apart from NAFO, there are a number of countries, non-NAFO members, who are

still fishing for Northern cod.

MR. TULK: Out on the banks?

MR. VARDY: No, they are fishing further south on

the Nose. They are fishing mostly on the Nose. They can't fish on the Hamilton

Bank now because that is inside the 200-mile limit and they are not allowed in

there. I think, one thing we have been able to do is, we have been able to keep

vessels from coming in over the line, by and large. The big problem we have is

what is going on outside the 200-mile limit. There is still a major effort going

on right now, as we speak, and that could lead to the extinction of the Northern

cod.

MR. CHAIRMAN: Thank you, Mr. Vardy. I would like

to refer now to the Member for Baie Verte - White Bay.

MR. SHELLEY: Thank you, Mr. Chairman. I have a few

questions and a few comments, I guess, in general; some are specific and some

are more general.

I would like to start off with one on the interest

payments to the Loan Board. All, or most of these, I guess, are directly related

to the Loan Board. Are there any considerations - I really don't know, that is

why I am asking - to loans outside the Loan Board, especially the smaller ones?

During the election and since then I have had a lot of calls on this type of

thing, of people who are receiving the NCARP with small loans they have had

with, for example, a plant. A fisherman had a $5,000 loan with a plant. Are any

considerations being given to those people for interest forgiveness on those

types of loans?

MR. CARTER: I guess, the answer to your question,

Mr. Chairman, is no. First of all, we have no idea how many of those loans are

out there. We asked the Fishermen's Union, quite some time ago, to document the

number of loans and the circumstances. We, as a department, have no way of

knowing how many such loans are out there and the circumstances surrounding the

loans. It would be extremely difficult for us to take on that job, I'm afraid.

We are now providing interest subsidies and write-offs

for direct loans, loans that are made directly by the Fisheries Loan Board, and

for those loans that are guaranteed through the bank, under the bank guarantee

program. But, in answer to your question, no, we are not contemplating taking

any kind of action to assist people who have loans outside of the Fisheries Loan

Board.

MR. SHELLEY: Okay, that will help me answer a lot

of questions, because I didn't know it and I was being asked by - I guess there

are many people who don't know that.

I will just comment now, as quickly as I can. The

Committee you are talking about starts meeting in Bonavista tonight. I just want

to say, I hope that one of the terms of reference, I guess, or guidelines of the

Committee or whoever decides which plants are going to stay open and which are

going to close - one of the criteria should, I think, say where in the Province

these plants are to be located, how they are to be spread out.

I wouldn't like to see fourteen plants - the

geographical question - open in one area and one in another. I think that should

be one of the considerations or guidelines or terms of reference - I don't know

how you want to put it - when this Committee starts deciding. Because sooner or

later they are going to have to start deciding which plants open up.

Also, I am concerned, well, in my district, anyway,

about the plants that haven't been upgraded in years, that have old equipment

and things like that in them, that that won't be a deterrent to that plant being

decided - I know it is going to come down to dealing in a business sense with

the company saying: We are going to shut down this plant down here because the

equipment is outdated. But I also hope that won't be the final judgement,

because a plant hasn't been upgraded over the years, that that will only be a

small factor when we finally decide which plants will stay open.

I wonder if you have any comment with respect to

plants that are not upgraded now, that that won't be a major factor in deciding

which plants stay open.

MR. CARTER: It seems to me, in recent years there

has been a lot of activity on the part of existing plants to upgrade themselves,

and to upgrade to the point where they can facilitate production of other

species. For example, in the crab industry, there has been a lot of activity in

recent months with plants gearing up for meeting the market demands for a

different product, for example.

Again you are talking about something that is strictly

within the ambit of the private sector. You talk about whether we have a plan or

not. The question is not whether the department has a plan. The Green Paper that

we are now about to take around the Province for consultation gives a number of

options for a plan for the fisheries of the future. So, it is not a question of

whether the government has a plan, the question, of course, is: Should the

government be put in a position of deciding on which plants and which

communities will perish and which should live? I don't believe, quite frankly,

that is our role. I think natural forces, in the long run, will dictate which

plants survive and which plants go under. Again, in the absence of any

definitive knowledge on the extent to which the stock is rebuilding and where it

will be four or five years from now, it is extremely difficult for anybody,

including government, to be able to make a determination as to which plants are

going to survive under these circumstances - it is virtually impossible, quite

frankly.

MR. SHELLEY: Yes. Well, I guess my point in all of

it is that I am hoping it doesn't lie solely with the private sector, that they

decide which plants stay open because of their equipment in certain places, how

they upgrade it or the convenience of the private sector or the business people

to decide which plants for convenience sake, to stay in one area, as opposed to

another. I think there has to be a combination there of the government and the

private sector so that they come to an agreement on - you know, there have to be

guidelines from you and also guidelines from them as far as the business goes.

MR. CARTER: Well, I can only repeat what I said a

moment ago, that it seems to me, if we are going to have the kind of fishery we

want, that is not almost totally dependent on government assistance in one form

or another, and fishermen who are able to survive without government assistance,

then we are going to have to let the private sector make some decisions, I

think. If government tries to impose itself on the private sector, we know what

happens and we are now seeing the results of it, frankly.

MR. SHELLEY: Well, I agree with that but I

certainly don't want to see - I think rural Newfoundland would be at a

disadvantage if they were to take the majority of control of that. I mean, if

some guy who owns seven or eight plants, decides to put them all in one area

where it is convenient to him, instead of consideration being given to a smaller

plant in another area - that is just the point I want to make, there has to be

some control there. I know that the private sector, in running a business, has

to be controlled by their own business. I agree with you in the natural way it

will go but there have to be some guidelines so that it is not just the private

sector making these decisions. I just hope that our government is in control of

what is happening, that is all, that it is not just totally left to the private

sector.

Anyway, that was just a comment, more or less; really,

I just want to - I guess it will be the last one, basically just an update on

aquaculture, where it is going and what the plans are, in the near future, for

aquaculture. What is the potential? Really, I guess, I am looking for the good

news on that because I have heard quite a bit about it and I just want an update

on it, basically.

MR. CARTER: I can ask Mr. Kingsley to comment on

that if you don't mind, Mr. Chairman.

MR. CHAIRMAN: That is fine. Mr. Kingsley.

MR. KINGSLEY: Well, the most immediate prospects

for success in the aquaculture industry would be related to mussels and the

Atlantic salmon, steelhead trout and, to some extent, scallops, as the minister

mentioned in his

preamble. In the meantime, there is variety of research

initiatives being undertaken with other species of fish like Arctic chard,

wolffish, halibut and so on.

The most recent statistics that we have, indicate that

in 1992 we produced 1,250 pounds of mussels and approximately 100 pounds of

salmon and steelhead trout. All of the growers now are in an expansion mode. We

are providing some assistance to stimulate the production of mussels and the

growers in Bay d'Espoir are now on an expansion track that will see them produce

about 1,000 tons of product over the next three or four years. In Bay d'Espoir,

we feel, realistically, there is room for production of about 10,000 tons of

product, being about the level of production now in New Brunswick, which

provides a $100 million industry. So, we are very optimistic about the outlook

for aquaculture in general, and the most immediate prospects, as I mentioned,

are with mussels, some monads and scallops.

MR. SHELLEY: How much money, provincially, is

being put into aquaculture, this year, anyway? I didn't read anything in the

report there.

MR. KINGSLEY: Well, the Budget indicates, I think

the figure was, in provincial funds, about $250,000. In the meantime, we have

just come off a cost-shared program with the Federal Government, the NIFDA

program, which put about $5 million in research initiatives in the industry over

the last five years, and we are in the process of preparing a proposal for

another cost-shared agreement with the Federal Government. There may not be any

cash flow in that program this year but we would expect that something would be

put in place to cover another five-year planning period.

In addition to the provincial funds, which I have just

mentioned, there is also some provision under the Strategic Economic Plan for

support to the aquaculture industry. We would expect something in the order of

another $150,000 - $200,000 to be available from that source this year.

MR. SHELLEY: I am very interested in that

particular part of it and I know some people who are involved in it. I would

like to get a written update on projects that are ongoing now and also those

that have been proposed for this coming year, if I could, somewhere along the

way.

MR. KINGSLEY: Yes, Mr. Chairman, we would have

that. I don't have it with me at the moment but we certainly will be able to

follow up and provide a listing, as requested.

MR. SHELLEY: Okay, thank you very much.

MR. CHAIRMAN: We will now go to the Member for St.

George's, Mr. Hulan.

DR. HULAN: I want to make a comment first, since

some of my colleagues are continuously being blamed for making an error in

estimating the cod stocks. I can't but in a humorous way think about the fact

that years ago, we were trained to use a slide rule and not a calculator. You

know what happens to a calculator when the batteries start to go - if you don't

notice it, it gives you erroneous results. So, I hope that isn't the simple

explanation. I am sure it is not.

I was certainly glad to hear you, Mr. Minister,

comment on the fact that as far as inefficient operations are concerned that the

inefficient will go by the wayside. I think you are going in the right direction

there; certainly, that has been recommended to the agri-food industry of this

Province, as well. I commend you on that stance.

I am very concerned about the biomass, which I am

hearing Mr Vardy tell us is in such a serious condition today - 70,000 metric

tons, I guess it was, and that leads me into my real question, Mr. Minister. I

am indeed pleased to see such attention being given to aquaculture. As you heard

the other day in the House, in my maiden address, I spent some time on

aquaculture. The question I have is: Cod larvae, for instance, the survival rate

in the wild, from larvae to adult is around 5 - 8 per cent, somewhere in that

region. What plans are there for your department to use the science of

aquaculture to improve the survival of cod larvae? Are there plans there? That

is number one.

Number two, I have a real problem, when I read the

information in the aquaculture area, with the reduction in dollars going into

aquaculture - the reduction in dollars compared to other years - and I draw your

attention to the one area where it was identified for research; it was virtually

decimated. Yes, here we are: "Appropriations provide for the management,

research and development of aquaculture in the Province" - item 3.1.04 on page

114, and the reduction is sizable from $190,000, that was the revised budget for

1992-1993, to $133,000. "Grants and Subsidies" - wiped out altogether. I don't

know what Grants and Subsidies mean but, there was $100,000 in there, wiped out

completely, there is zero in there now.

I really want to draw the Committee's attention to

this because, to me, aquaculture can do so much for the problems we have in the

fish industry, and although I see great attention to aquaculture, I am concerned

about the reduction in the dollars. If I go up above in the other area in the

same category, Fisheries and Aquaculture Development, I see a reduction from

$575,000 in 3.1.03, to $256,000. Maybe I am reading it incorrectly. I am reading

it as sizable numbers of dollars being removed from aquaculture commitment.

MR. CARTER: With respect to the first question,

Mr. Chairman, "Grants and Subsidies" under subhead 3.1.04, as I mentioned in my

opening remarks,there is some block funding provided to the Strategic Economic

group and also, as I mentioned as well, in my opening remarks, the NIFDA

agreement has now terminated and that is why there is no amount under that

heading. We are anticipating funding will be provided under the block funding

arrangement provided to the Strategic Economic planning group. Reg, do you have

any further comment you want to make on that?

MR. KINGSLEY: Yes, well, as the minister

indicated, we are anticipating that there will be additional funding available

under the Strategic Economic Plan. I mentioned earlier the figure of $175,000 to

- well, $150,000 to $200,000, which, if you look at both 3.1.04 which I think

was the first question related to the budget, the expenditure this year is

$156,000 under 3.1.04, so if, in addition to that, we have funding of $175,000,

in fact, then, the provincial funding - strictly provincial funding - in

1993-1994 would be in excess of the revised budgets for 1992-1993.

Aquaculture - ERDA, 3.1.05 - there has been a

reduction there because the agreement has expired; there is $60,000 provided

there as a wrap-up to that five-year agreement, but as I indicated, as well, we

are in the process of developing a proposal and we are hopeful that we will have

another cost-shared agreement put in place, albeit that there may not be any

cash flow in the present fiscal year under any revised or new cost-shared

agreements.

DR. HULAN: Mr. Minister, say, the agreement that

Mr. Kingsley is speaking about comes through, what proportion of that agreement

will actually, in dollars, be put into research? Because that is where it is

going to pay off - it is going to be through research. I can go back to the

agri-food industry across North America and the areas of the industry that are

surviving extremely well in Canada and the United States are the areas where

they put significant dollars into good research. How much would be actually into

basic and applied research?

MR. KINGSLEY: Mr. Chairman, well, we agree that

the emphasis should be on research, that has always been our philosophy, I

guess, in the Department of Fisheries. Most of the funding we get from year to

year is for pilot scale work and in support of research at the University and

to be the subject of negotiations with the federal agencies. So, it would be

impossible to answer that question definitively at this point in time until we

get those details finalized, but I believe it is fair to say that there is an

interest by both the Federal and Provincial Governments in supporting research

initiatives that will lead to development of the industry.

DR. HULAN: Okay, you have basically answered my

question. You people are manning the ship, so to speak, and I am hearing you say

that you are interested in making sure that a sizeable component will be in the

area of research?

MR. KINGSLEY: Yes.

DR. HULAN: I am satisfied with that.

MR. CARTER: Mr. Chairman, I wonder if Mr. Vardy

may address Dr. Hulan's comments on cod farming?

MR. VARDY: I would like to just respond a little,

at greater length, to Dr. Hulan's comments. In the Province's Strategic Economic

Plan, of course, aquaculture is identified as one of fifteen major growth

opportunities and we realize it has considerable potential. Mr. Kingsley has

already made reference to mussels and salmon and we believe that Bay d'Espoir

has tremendous opportunity. Somebody recently said that the aquaculture growth

potential in Bay d'Espoir is greater than the Bay of Fundy and the Bay of Fundy

is already producing $100 million worth of farmed fish.

The question that was raised with me was with regard

to the raising of cod. As you know, back in 1896, Adolph Nielsen in Dildo

started a hatchery which lasted for several years. Unfortunately, that

particular project died, and we are now looking at similar types of cod

enhancement. We had a study done by a number of professors at Memorial

University in the Ocean Science Centre and they have recommended that we start a

pilot project. We are putting together a team now to see whether we can get a

pilot project started which would involve, essentially, enhancement of some of

the bay stocks, possibly Trinity Bay. We are looking at building on some of the

work that is being done there by Dr. Wroblewski. He was in the Chair of

Fisheries Oceanography at Memorial. We are very keen on exploring that

opportunity in terms of hatcheries, because virtually every other species is

enhanced. Particularly, when an environmental problem occurs, it seems logical

that one should respond by some kind of an enhancement action, so we are giving

a lot of attention to that. The other general comment I would make is that the

aquaculture industry is, of course, very much a new industry. It is an infant

industry and it requires a lot of nurture. And everywhere else in the world

where aquaculture has become successful, it has received funding, particularly

in terms of research. That is true in New Brunswick, in British Columbia, in

Chile and Norway, and I think it is true here. We certainly want to put a lot of

emphasis on research with regard to aquaculture.

The University has a big role to play. One of the

things we have been doing over the last few years has been to fund work being

done at the Ocean Science Centre on scallop. When we get a new agreement we are

hoping to be able to continue that work, to continue the core funding to the

Ocean Science Centre. Because we have a scallop industry here that is growing,

that has a lot of potential, and we think that the next step now is a hatchery.

The University has given us a lot of help so far in developing the genetic

strains of scallop that are most likely to succeed in Newfoundland and we want

to continue that work.

I think, Mr. Chairman, the point is, we certainly feel

that research is a key component of the aquaculture industry, and, indeed,

without it, the industry could never succeed. Thank you.

MR. CHAIRMAN: Thank you.

DR. HULAN: Thank you, Mr. Chairman. I really

should have had him in sometimes to defend the University, you know, because

that was fantastic. I should get that on tape. Thank you very much.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. Mr.

Minister, some months ago, and I believe the time is either up now or very close

to being up, you introduced a freeze on further processing licenses, or the

transfer of processing licenses in the Province. Is that about to change or are

you going to extend it? What are your plans?

MR. CARTER: Yes, we did announce it, and we are

going to continue the freeze until the discussion is completed on our discussion

paper, and then we will see where we are going from there. In answer to your

question, the freeze that was in place has been extended.

MR. WOODFORD: Have there been any new licenses

issued or transferred since that particular freeze came on?

MR. CARTER: For groundfish or for -

MR. WOODFORD: For anything - groundfish or any

other species.

MR. CARTER: No new licenses have been issued. I am

not aware of any groundfish licenses having been transferred. Reg, that is your

division. Are you aware of any?

MR. KINGSLEY: No, Minister, I am not aware of any

new licenses. There may have been some retail processing licenses which had been

conditionally approved before the freeze was announced and, of course,

"conditionally approved" would have meant that the licence basically was

approved but the individual would have had to put a facility in place and have

it inspected and registered and so on. There may have been one, two or three of

those that were issued after the announcement of the freeze.

There have been no transfers, to my knowledge or to my

recollection. There were two facilities on the West Coast in which there was a

consolidation of facilities at St. George's and Stephenville. One or two of the

miscellaneous licenses that were held at Stephenville have now been consolidated

with the operation in St. George's. That was in the context of a general

reduction in capacity. The groundfish licenses of both facilities disappeared

and so on. Only in that context have there been any licenses transferred, to my

knowledge.

MR. WOODFORD: So, no new licenses have been issued

and none transferred, is that right?

MR. KINGSLEY: That is correct.

MR. WOODFORD: Sop's Arm Fisheries: There was a

request in for the transfer of a processing license from Sop's Arm Fisheries to

a company. I am not at liberty to name the company. The minister knows the

company I am talking about, and his officials also know. My understanding, from

talking to the minister a couple of times on it, and from other officials, is

that if there was a case to be made they would review the process, and, if at

all possible, especially when you are talking about underutilized species, maybe

there might be some accommodation for something like that.

This particular company had a request in for the

transfer of that particular license, mainly to deal with underutilized species

and to do some groundfish, because they wanted to ship it or transport it down

there and have the groundfish go through that plant, as well, along with the

pelagic that they are used to doing. Is there any particular explanation why

that wasn't followed up on or there was no firm decision made on it?

MR. CARTER: That is a case where they wanted an

extension of an existing license, isn't it? (Inaudible).

MR. WOODFORD: Yes, just to transfer that license

to them.

MR. CARTER: Transfer that license from one plant

to another.

MR. WOODFORD: No, Sop's Arm Fisheries had the

license. It is issued in the name of Sop's Arm Fisheries, or Jake Mullins.

MR. CARTER: That was an inactive license.

MR. WOODFORD: Yes.

MR. CARTER: That license has not been operational

now for quite some time.

MR. WOODFORD: Yes, in 1989.

MR. CARTER: We do have a policy, of course, that

once a license is inactive for a given period, two years, unless there are

extenuating circumstances, then the licence is automatically cancelled. I

suspect that is what happened in that case. The Sop's Arm - I presume that was a

redundant licence, it was inactive for a period of two years at least?

MR. KINGSLEY: Yes, Minister, that is correct. It

is one of the licenses that is caught up in the freeze that you raised earlier.

MR. WOODFORD: Yes. Well, that is what I'm talking

about, in the freeze. But you would think, or I would think, I mean, when I

looked at it first, I realized that the freeze was on. I realized that there

should be no exceptions with regard to a transfer or a new license. When I

looked at their proposal and we are always talking about - you and your

officials, and we all are as a whole - talking about trying to do different

things, especially when it comes to underutilized species, they were talking

about skate, gray sole, flounder and so on there, and I couldn't understand why

some accommodation wasn't made for that.

MR. KINGSLEY: Actually, I'm unaware of any

proposal from the applicants for the use of underutilized species at Sop's Arm.

The question, I guess, that was put to us was as to whether or not the

groundfish license was available, and the response, of course, was that the

groundfish license has been frozen.

MR. WOODFORD: This proposal was faxed in. I had a

copy of it on the day and I spoke to the minister on the same day that it came

in. He was going to talk to his officials at that time. This company has been

talking to the department - to whom, I don't know. There must be some breakdown,

because this particular company is well-established and they were dealing with

underutilized species. It wasn't taking away from anybody else, it was something

new, and they wanted to go in there and do it.

I would ask the minister if he would probably talk to

his officials and have them look at that. Because there is no government money

involved, absolutely none, it is a lease from - FBDB owns the plant now. They

were going to lease the plant from FBDB, and there was absolutely no government

funding asked to go into it. I would appreciate very much if your department

would take another look at that and see if it is at all possible to try to have

something done, to rejuvenate that particular plant.

MR. CARTER: This was for underutilized -

MR. WOODFORD: Yes. They are all mentioned. They

are all in the proposal that was sent in. If the proposal is not there now, I

can certainly accommodate the minister and his officials in providing the same

copy of that proposal, but you got a copy the same day that I got one.

MR. CARTER: Well, the policy of the department,

rather than reinstate an inactive license for example, is to direct that

activity to an existing plant and that is already in operation. Now, that is not

the case here; Sop's Arm has been closed up - it was Jake Mullins' plant, wasn't

it?

MR. WOODFORD: Yes.

MR. CARTER: It has been closed for quite some

time, as you know.

MR. WOODFORD: Since 1989.

MR. CARTER: Yes, 1989, so it is beyond the

two-year period when, if a plant is inactive for two years, or a license, then

the license automatically is cancelled and rather than renew a license to

reactivate that plant, it would make a lot more sense to direct that activity to

an existing plant - it might help that plant, for example, to survive - rather

than start an entirely new entity.

MR. WOODFORD: We are always talking about the

viability of plants and the viability of the fishery and so on, but in this

case, the question is, that other plants may not be viable; i.e. transportation,

maintenance, renovations. This plant is ready - you can pretty well walk into

it, and he can operate on a lease basis with FBDB. So the viability of the

plant, a particular license and a particular area should be taken into

consideration. I mean, if the plant is viable, for instance, in Sop's Arm and

not viable, for instance, in Bonne Bay, why give the license to Bonne Bay? that

is my question.

MR. CARTER: Well, you know, going back to the

reason why it was closed in the first place, that was because it wasn't viable.

I assume, if there were any opportunity or any potential there at all, Mullins

would have recognized it and would have kept the plant operating.

MR. WOODFORD: Well, I don't know if that holds

water, Mr. Minister, because I can understand if I were talking strictly about

groundfish; that is mainly what went through there, groundfish and pelagics,

caplin and so on, but no underutilized species went through the plant in Sop's

Arm, and we are talking about something new; and I can understand what you are

saying, you are right, you are dead on about what happened in 1989, but when we

are talking about this particular proposal, I think it is like night and day.

MR. CARTER: What species are you talking about?

MR. WOODFORD: Grey sole, skate, flounder - it was

all on the proposal, and you know the company. I will mention it to you after, I

can't say it publicly, because I don't think the company would want that, but

you do have the proposal.

MR. CARTER: You were talking about grey sole; grey

sole is not deemed to be an underutilized species.

MR. WOODFORD: But they wanted to make sure that it

went through that plant - it was not going through.

AN HON. MEMBER: Flounder is not.

MR. CARTER: No, flounder is certainly not.

MR. WOODFORD: No, flounder is not, but the skate

and the other - well, I had a copy of it there and we went down through it. You

thought there might be some chance for it to go through at that time. I spoke to

you in the House of Assembly about it.

MR. CARTER: I don't know what I said at the time

but, certainly, I don't think I conveyed the impression that it was almost an

automatic approval.

MR. WOODFORD: No, no, but you would have a look at

it.

MR. CARTER: I probably said it would have to be

referred to the Committee and let them have a look at it, which is what would

normally happen in a case like this.

MR. WOODFORD: Yes. What rate of collection does

the Fisheries Loan Board have?

MR. CARTER: Maybe Mr. Kane will answer that

question.

MR. WOODFORD: What percentage?

MR. KANE: It depends on what period you are

talking about. Are you talking about the present?

MR. WOODFORD: Historically, the last two or three

years, the last three years.

MR. KANE: The last two years, the -

MR. WOODFORD: As compared - for instance, before

the moratorium, what was the rate of collection as compared to now?

MR. KANE: You would have to look at the historical

activity of collections at the board. The board started in 1949 and it was not

until 1986-1987 that it started to have a proactive collection activity. It has

been a bit of a catch-up situation that involves writing off of accounts that

are not repayable, as well as collecting accounts to demonstrate that they can

repay. There is obviously a considerable allowance for doubtful accounts built

up because of the past inactivity of collections. So we are obviously not

collecting the amounts that are due each year, but we are making headway on the

use of proactive avenues such as, just counselling accounts or trying to

rehabilitate accounts. Where that can't be done we have to seek a remedy to

resolve the account either through repossession, legal action or write-off,

depending on whether they have the ability or inability but it is done. It is

very important to realize that you can't look at them all together, they are

done on an individual basis. The incomes of each are looked at in assessing

whether the fishermen have the ability to pay and if they don't, then there can

be a partial settlement of the account. If it is deemed that they have the

ability to address the whole account, they are expected to do so, but if there

is inability to repay, then there is also an avenue to go through Treasury Board

to seek write-off of the account.

MR. WOODFORD: What would be the total write-off

value this year? Do you have that figure?

MR. KANE: What is the write-off?

MR. WOODFORD: You do it each year. I assume you do

so many write-offs each year.

MR. KANE: Yes we do. We have just come up with a -

in 1992 we were developing write-off guidelines that were acceptable to Treasury

Board and there was approximately $3.5 million identified for write-off. The

guidelines have just been put in place over the past three or four months and we

are now funnelling those through Treasury Board for their authorization. So, in

the past two years, you could say that there has been approximately $3.5 million

that the Fisheries Loan Board executive board has approved. The approval of

Treasury Board is now being obtained but there was a slight delay because of the

- internal audit got involved in actually endorsing guidelines that we had

prepared.

MR. WOODFORD: So, it is about a $3.5 million

write-off for this year, if it goes through.

MR. KANE: There is going to be - well, as soon as

Treasury Board -we just received $1 million of that $3.5 million approved to

write off. There is another $2.5 million that will be going through in the next

two months.

MR. CHAIRMAN: There is at least one member of the

Committee who hasn't had a chance to ask anything yet. Would you want to do that

Mr. Whelan?

MR. WHELAN: Yes, I was wondering was there any

research done into the possibility of pressure being put on the boatbuilding

industry after the moratorium was lifted.

MR. CARTER: In what way?

MR. WHELAN: For example, a lot of the boats that

have been hauled up may have been marginal as far as seaworthiness is concerned

and a few years out of the water may be enough to do the trick on them. Apart

from that, if there is a new fishery, maybe different types of boats may be

needed. As a result, there may be, as I said, a strain put on the boatbuilding

industry with the possibility of a lot of fishermen going outside the Province

to buy their boats.

MR. CARTER: As you might know, Mr. Chairman, under

the NCARP program there is a provision for maintenance, a maintenance allowance,

provided you meet certain criteria. I presume that is to enable fishermen to

help defray the cost of mothballing their vessels and keeping them in good

shape. In our department, we are putting more emphasis, in the Loan Board now,

on the upgrading of existing vessels rather than the building of new vessels,

which it wouldn't make sense at this point in time to encourage by way of

bounties or subsidies or whatever - the building of new boats.

So, we are putting more emphasis on upgrading existing

vessels, for example, fiberglassing. We are providing assistance in cases where

certain criteria are met. Old boats are being fiberglassed, which will have the

effect of extending their life span almost - nobody seems to know yet how long.

MR. WHELAN: Whether they are upgraded or

fiberglassed or rebuilt, it would affect the boatbuilding industry. Most likely

they would bring them to a shipyard to do it.

MR. CARTER: Yes, and there is no doubt about it,

it is no secret, the boatbuilding industry is going through some pretty rough

times because of the moratorium and the absence of new vessels being built. A

lot of the upgrading work will be done on marine service centre lots by the

owners themselves, or they will probably employ people to work with them -

certainly, they won't go to a shipyard.

A lot of activity is now starting to build up in terms

of fiberglassing with a great many private sector people getting involved. In

fact, in some cases, where it has been possible, we have facilitated the

establishment of fiberglassing operations right on our marine service centre

lots. There is a lot of activity going on in rural Newfoundland now - people

upgrading boats, improving them.

MR. WHELAN: The wooden boatbuilding industry in

Newfoundland is a traditional and an historic industry. Where do you see it

going? Has it disappeared altogether? Is there any future for it?

MR. CARTER: I don't think it will disappear but a

lot of changes are taking place in the boatbuilding industry. There is a lot of

emphasis now on fiberglass and steel vessels. The shipyard in Glovertown is, I

think, concentrating almost entirely on the building of steel vessels. They are

still operating I think, aren't they - Davis Yard in Glovertown?

AN HON. MEMBER: Yes, Mr. Chairman. Very few

fishermen now are requesting wooden vessels of any size. I mean, generally boats

thirty-five feet and up are either fiberglass or steel. In fact, I think there

is in the Province now probably only one wooden yard that has any activity.

While those skills are still there, the fact is that most fishermen now are

looking for alternate materials for their boats.

MR. WHELAN: What is the status of the boatbuilding

yards today? Are there any boats on chocks today? Are there any boats under

construction?

AN HON. MEMBER: At the Loan Board there are very

few. Obviously, the boatbuilding yards have very little activity on the go right

now. That there is anything different in these times would just be false

thinking.

AN HON. MEMBER: I don't believe there was a new

vessel approved by the board in the last twelve months. I stand to be corrected

on that. But if so, there would be no more than one or two. I couldn't say what

was actually at the yards at the moment. The only steel yard that maintained any

level of activity was at Glovertown. I really couldn't say if they have anything

out there at the moment, but, quite frankly, I doubt they have. There are no

boats being built - that is the reality.

MR. WHELAN: The new fishery, apparently, will have

quite a few less fishermen than the fishery presently has, or did have, before

the moratorium. How drastic a cut will there be in the number of fishermen?

MR. CARTER: Again, that is an imponderable, I

suppose. That, to some extent, will depend on the extent to which the fish

stocks rebuild. At this point in time we all know there are too many fishermen,

I suppose, chasing - as the old saying goes, chasing too few fish. Again, the

survival rate will depend, to a large extent, on the extent to which the stocks

rebuild.

In our Green Paper, my deputy just reminded me, we

have made certain projections based on the best advice we can get, and it does,

in fact, project a very substantial reduction in the number of fishermen in the

Province over the next few years.

MR. WHELAN: Will that be brought about by a

process of buying out licenses?

MR. CARTER: The Federal Government, as you know,

have a number of initiatives under way - seeking early retirement of fishermen,

buying out licenses. We have the PWAP - is that what they call it? - PWAP, Plant

Worker Adjustment Program, that now provides pensions, under certain

circumstances, for fishermen fifty-five years of age and older. I don't know

precisely how many fishermen are taking advantage of that program. Are you

aware, David?

MR. VARDY: Somewhere between 600 and 700 up to

now.

MR. CARTER: Yes, not very many.

MR. TULK: Take advantage of what?

MR. VARDY: Of the early retirement.

MR. TULK: Six or seven hundred?

MR. VARDY: About 600 or 700 fishermen. There are

potentially 1,000 who could, but there hasn't been a full take up as yet.

MR. CARTER: No. Then, of course, there is the

license buy-back, and attrition would naturally remove some people from the

fishery.

MR. WHELAN: Thank you.

MR. CHAIRMAN: Mr. Tulk, you wanted to ask some

questions?

MR. TULK: Yes, Mr. Chairman, if I could come back

to that question of the stocks. Again, because I realize it is detailed, the

minister might want a few minutes to finish his answer. To come back to that

question of the stocks: It is obvious that there is a moratorium on and that

there is very little effort in catching 2J-3KL or the Northern cod stock, as it

was coined by a former Premier. The question is: Just how much pressure is that

putting on other stocks, such as flounder, turbot, and any other species that

you might think of? and what kind of pressure? Just what kind of shape are those

stocks in, as well?

While it is all very well for us to talk about a new

fishery, we must, at some point, have a product to process and a product to

catch and so on. Just what is happening? Again, I realize it is out of your

domain. It is not something that you control. You have very little to say about

who catches what and what harvesting licenses are issued and so on. But it has

to be a concern for you, it has to be a concern for all of us, just what is

happening to those other stocks.

I hear, for example, that the turbot stock is getting

used up, that the next crisis will be in some of those other stocks, that we

will have nothing left unless we can cut back the effort by offshore boats, by

foreign boats, and so on. Just where are we going? Are we taking everything out

of the ocean? I mean, we know we have the technology, or we think we have the

technology to catch every last fish out there. Are we, in fact, doing it? What

has happened to our caplin stocks? Are we fishing caplin when, indeed, perhaps

we shouldn't? I mean, I hear talk again this year of `maybe there will be, maybe

there won't be, a caplin fishery.' What is happening with that? Are we tearing

the heck out of that? Just what is happening? Are we fishing ourselves into

extinction here?

I realize, again, as I said, Mr. Minister, it is not a

question for you but it a concern of mine. Because, if there is no fishery in

this Province, somebody will be looking for - if we keep doing what we are

doing, as I see it, places like the communities that I represent, as a member of

the House, in ten to fifteen years will have no reason to exist. I am just

wondering what is happening to those other stocks.

MR. CARTER: I am going to ask Mr. Dean to

elaborate, but I will say that you are right, there has been a lot of stock, a

lot of (inaudible).

MR. TULK: You represent the same kind of place.

MR. CARTER: Yes, of course. There was a time when

the Twillingate plant, for example, operated on the basis of turbot. Today,

there isn't enough turbot landed in Twillingate to make a good meal for a

family.

MR. TULK: Catsup brewis.

MR. CARTER: That's right. But there is a lot of

pressure, especially on turbot. Even the federal people will admit that there

are some problems. On caplin, too, of course, we all know there is some

pressure, but again from the Province's point of view, we can only rely on the

advice of the scientists. We will be guided by them. We have consistently said,

if the scientists say the stocks are such that they can stand a fishery, then

fine, we will go along with that, but if there is any suspicion that it can't,

then do what needs to be done.

MR. TULK: Let me take, for example, this spring -

and if I could, just to add to it before Mr. Dean starts. You will recall, a

number of fishermen this year were in contact with somebody in the department, I

don't who it was, about a number of fishing boats, sixty-five footers, tied up

at the waterfront again this year trying to get into 3O to fish turbot.

AN HON. MEMBER: What is 3O? (Inaudible).

MR. TULK: No, 3O, in this particular case, to fish

turbot. They got out there eventually, and the initial reports that I am getting

back is that even though there was supposed to be all kinds out there - if there

was any fish left, that is where it was supposed to be, out there in 3N and 3O.

They got nothing; basically, they got very little fish, and the question

remains: Are we not fishing ourselves right out of extinction? This is a

question that somebody has to answer and I know you have no authority to do it,

but, Mr. Dean?

MR. DEAN: The hon. member is correct in his

observation that, in fact, with the moratorium, there appears to be a

significant increase in effort towards the other species that are commercially

attractive. For example, in the case of lump roe, there has been a dramatic

escalation in the level of effort and the number of nets deployed in that

fishery this year. But, in the wake of the moratorium, one species that certain

vessels directed effort towards, was turbot and, of course, turbot is not a new

fishery. In the long line of fishery in this Province, in the 1960s and 1970s

and in the early 1980s, it expanded, not on the basis of the cod fishery as much

as the turbot fishery. But essentially, the inshore turbot grounds have become

barren wastelands.

MR. TULK: Another stock gone.

MR. DEAN: And turbot is a species that moves from

inshore waters to deeper waters, so if you are going to search out the last

surviving spawning concentrations of turbot in deep water, whether the

foreigners do it or the Canadian fleets do it, either the middle distance or

otherwise, don't expect any recovery of inshore stocks or concentrations, if

that fishing pressure takes place.

MR. TULK: But we did that last year, did we not?

MR. DEAN: Well, it was done to some degree, and I

think the concern that was expressed last year, Mr. Chairman, was that there

appeared to be excessive effort in terms of numbers of nets deployed, a

significant number of nets lost, and one could conclude, probably, that there

needs to be more discipline in how that deep water fishery is conducted if, in

fact, it should be conducted. So the general conclusion that you can draw is, in

fact, that the turbot resource is probably headed in much the same direction as

some of the other species, whether it is Gulf cod, or 3Ps cod, or Northern cod.

The level of effort, of course, will depend on the

circumstances of each individual fisherman in certain areas. For example, in the

case of the deep water turbot fishery, there wasn't a large number of vessels

involved, probably in the order of fifteen or twenty, some of them from Fogo

Island, for example, and some from the Avalon, but I guess, in terms of when

times get desperate, fishermen will try to compensate for a reduction in one

species by increasing effort towards others.

Now, in the case of the caplin fishery, I think it is

fair to say that the camp is divided in this Province as to whether or not there

should be a caplin fishery. If one were to read the minutes, for example, of the

management committee meeting held about a month ago, certainly, based on

consensus, and on the basis of the scientific evidence that was produced, you

would have concluded that most of the participants were opposed to any fishery.

But, given the nature of the scientific evidence that was produced, in fact,

there was no solid argument against a permanent closure of the caplin fishery.

It was in that context that the management plan

announced yesterday did provide for a harvest somewhere in the order of, I

think, 47,000 tons, which is down from about 59,000 or 60,000 tons last year.

But, certainly, there is a lot of concern about the caplin stocks, as well.

Again, a lot of the uncertainty relates to the nature of the scientific advice

that we are getting, very, very inconclusive scientific advice, much the same

type of advice now being received on caplin that was received on Northern cod

three or four years ago. I think we should learn from that, if anything.

MR. TULK: Mr. Chairman, could I just pursue one

more question with the gentleman? It is along the same line.

The crab fishery: There is a great deal of effort

being expended, along my coast, anyway, compared to what there was in the crab

fishery. Again, I am only asking you for information that has obviously been

filtered to you from the Federal Government. But there is a great deal of effort

being put into the crab fishery. Is that another one?

MR. DEAN: Mr. Chairman, in the case of the crab

fishery, of course, there are three controls on the fishery - number one is the

number of fishermen that are licensed; number two, the number of crab pots that

fishermen can deploy in any given area; and thirdly, but more significantly, of

course, is the total allowable catch, itself. So, whether there are 15,000

fishermen fishing or 5,000 fishermen fishing, the fishery closes once the quota

is reached.

MR. TULK: But is the quota too high?

MR. DEAN: So, there is a quota. Now, the question

as to whether or not the quota is at a reasonable level is another question,

because clearly, the crab resource has shown significant fluctuations over the

last ten years. In other words, the level of catch, for example, the quota this

year, is significantly lower than it was, let's say, in the early 1980s, for

example. There is some evidence throughout Atlantic Canada, by the way, in the

wake of the depletion of the groundfish resources, that, in fact, there is an

increase in certain other species on which groundfish would normally feed. We

are seeing it, for example, in the case of shrimp in the Gulf and, to some

degree, as well, crab in the Gulf. Now, the evidence would suggest a wide

distribution of crab in Newfoundland waters all the way up to Labrador. Of

course, as the Chairman is aware, a new fishery is being developed in that area,

but I don't have the same degree of concern, given the present quota levels,

over the depletion of the crab resource, as I do over, let's say, 4RS, 3Pn cod

or 3Ps cod or 2J+3KL cod, caplin or turbot.

MR. TULK: Well, caplin, I have some concern over.

MR. CHAIRMAN: Okay. Mr. Woodford has a couple of

questions and then we will go back to Mr. Hulan.

MR. WOODFORD: Mr. Minister, there have been some

reports and estimates, especially - the latest one I saw is from the Atlantic

Provinces Economic Council. They have made some estimates in which they foresee

closure of half of the approximately 170 plants in the Province. Could you

comment on that? Is that realistic? or would you not want to comment on it?

MR. CARTER: I don't know if you would want to

start crystal ball-gazing. I don't know on what they base that. I have heard the

same reports, of course, but I am not sure it is based on any concrete

information that they have. As I said at the outset, obviously, there is going

to be a reduction in the number of plants, probably a large number of plants,

over the next few years. It is obvious. We are learning the hard way, I guess,

that you can't successfully operate a fish plant any more than you can any other

kind of a business enterprise, operating at 17, 18 or 20 per cent of the

operating capacity of that entity, and it has caused all kinds of problems. So,

there will have to be, in the fishery of the future, fewer plants, fewer

fishermen, and no doubt there will be more secondary processing, value-added,

taking place in the various plants. New species will be developed and markets

will be found for new product - we are already seeing it, by the way, in caplin.

There was mention made earlier about a reception last

night for some Japanese people visiting the Province and about shishamo, which

is a labour-intensive industry, or a product that generates a lot of employment

in Japan, in fact, probably in the thousands.

There are companies now, in Newfoundland, getting into

that production. In fact, one of the people, last night, said: Maybe the time

will come when most of the caplin that we export to Japan will be exported in

finished form, rather than in frozen block form. There lies a lot of potential.

That's labour-intensive. I have seen video tapes of factories in Japan, for

example, that are producing shishamo - am I pronouncing it correctly? - female

caplin. It is a sea of faces there and mounds of caplin. If you can visualize

20,000 or 25,000 tons of caplin, each having to be handled individually two or

three times. In my own district, last year, for example, I believe 500 tons of

caplin were processed into Shishamo. It provided a lot of employment. I predict

that within a very short span of time, a lot of the market needs, the Japanese

market for shishamo, will be filled by Newfoundlanders and processed here in

Newfoundland. It is one of the bright spots.

Now, again, we are talking about caplin and, as Mr.

Dean pointed out, there are some very serious questions being raised about the

caplin stocks. That is the reason why, I guess, it is all the more important

that we allow nothing to happen now, certainly to things over which we have

control - which is very limited, I know, in terms of setting the TAC. In fact,

we have no control over that. It would be a catastrophe if anything happened to

the caplin stocks now that we are on the verge of a breakthrough with respect to

the secondary processing of them.

MR. WOODFORD: You mentioned earlier about the

Sop's Arm plant which you referred to, I think, as an inactive license, or an

inactive -

MR. CARTER: That plant closed in 1989. Jake

Mullins was the operator. They folded in 1989 and, as a result, once a license

is inactive for two years or longer, unless extenuating circumstances dictate

otherwise - for example, if a company made a substantial investment in a plant

over the past four or five years, then there would be some questions raised as

to if, in fact, we should cancel the license.

Certainly, in the case of Sop's Arm there were no such

extenuating circumstances. The license was withdrawn and that is where it stands

now. We would be very hesitant to renew that license and to reactivate that

plant in the present circumstance. If there are underutilized fish that can be

processed, then it seems to me that it would make all kinds of sense to direct

that to an existing plant that is struggling to survive, that is already

operating, of which we have many cases.

Maybe Mr. Kingsley would speak, if you don't mind, Mr.

Chairman, and if Rick doesn't mind, to the number of inactive plants that we

have in the Province, and licenses. Do you want to take that?

MR. WOODFORD: One more question before he

comments: Has this always been a policy of the Provincial Department of

Fisheries, or is this something new within the last while?

MR. CARTER: It is not new, and again, it hasn't

been a long-standing policy of the department. The cancellation of redundant

licenses is a policy that was adopted, what? a year, two years ago? When does

that policy date back to?

MR. CHAIRMAN: Mr. Kingsley.

MR. KINGSLEY: Mr. Chairman, the policy, I guess,

has been on the books for several years. There have been licenses cancelled over

the years. For example, there was a crab license cancelled seven or eight years

ago. In 1990, I believe it was, we reviewed all of the inactive licenses that

were on our books and we called them all into question. We cleaned up many of

the inactive licenses then, in 1990, but there were many, as the minister

mentioned, who had invested. If they could demonstrate to the department that

they had made an investment in the facility on the strength of the license, then

we reconsidered it, and many of them were reissued.

In general terms, it has been the policy for several

years that at least the license is called into question after a period of

inactivity. In October, there was a public announcement by the minister that all

of the inactive licenses we then had would be frozen and that we would no longer

consider the transfer of licenses. Because usually a transfer involved the

activation of an inactive license. There were seventeen or eighteen licenses

captured in that freeze. Sop's Arm was one of them.

MR. WOODFORD: Did the actual release say

"inactive"? I have my doubts as to whether that release said "inactive

licenses." Anyway, that can be checked. What I see here, then, if that is a

policy of the Department of Fisheries, that all inactive licenses be cancelled,

withdrawn, you are doing indirectly what you don't have to do directly by

closing any plants in the Province.

MR. CARTER: No, but surely, Mr. Chairman, if I can

interject, if a plant is closed, for whatever reason - and usually there is a

good reason for it, the main reason, of course, being lack of raw material, or

maybe lack of the necessary working capital to keep it going, surely then we

can't just leave those licenses there and at any given time in the future allow

those plants to become active again - to reactivate those plants. That, it seems

to me, would defeat the whole purpose of what we are trying to do.

MR. WOODFORD: But what I am saying is true,

though. If there are 170 plants there now, you don't have to go out and say, we

will pick here, pick there, because if they are closed now they are just going

to be done. If their license is withdrawn the plant is closed automatically.

MR. CARTER: Yes, but the government didn't close

the plant in the first place, the plant closed for a variety of reasons, maybe -

MR. WOODFORD: No, no, I didn't say the government

MR. CARTER: - plus the fact, a license to process

fish is not a right of anybody, it is a privilege that is granted on behalf of

the people of the Province by the government, and with that license and that

privilege, go certain responsibilities. Surely, if a person has a license given

to him on behalf of the people, he has an obligation to use it or lose it. He

can't hope to sit on it forever.

MR. WOODFORD: That's right.

MR. CARTER: And that is what we are doing. In

cases where a plant has been dormant, inactive, for a couple of years, or

longer, and unless there are special circumstances, then that license becomes

history, it is cancelled. That is the only way we can do it.

MR. WOODFORD: Would the announcement of the

moratorium be classified as a special circumstance by the department? Because,

if not, those plants are going to be the same as the Sop's Arm plant - it is

only a matter of time. If the moratorium stays on for another couple of years,

which is, I guess, very probable now, all those plants are going to be in the

same situation as the Sop's Arm plant - that's the point I'm getting at.

MR. CARTER: In cases where plants are forced to

close by virtue of the moratorium, that would constitute special circumstances.

But let me tell you, Mr. Chairman, the Sop's Arm operation was run by certainly

one of the most capable plant operators in the Province, a man by the name of

Jake Mullins, who had years and years of experience working with - I believe at

one time, going back to Bonavista Cold Storage, and with other major companies.

And I am satisfied that if Mullins couldn't make a go of the Sop's Arm plant, I

tell you now, it's - he didn't walk away from that plant because he wanted to.

He walked away from it because obviously, for a variety of reasons, it wasn't a

viable operation. That being the case, then how can we justify allowing the

license to stay there? Like Mr. Kingsley said, (inaudible).

MR. WOODFORD: Well, I won't comment on that.

MR. CARTER: Pardon?

MR. WOODFORD: I won't comment on that particular

part of it. Has the minister or his department had any calls or concerns with

regard to ice conditions so far this year anywhere in the Province?

MR. CARTER: No, I haven't. Unless my staff - I

haven't had any.

MR. WOODFORD: I have had some calls. I know it

isn't your responsibility or anything, but where the UI finished in May and some

of the fishermen are on NCARP, they can automatically take that, but the people

finished with their UI have nothing. And Jackson's Arm, Sop's Arm and Hampden

are blocked in now with ice.

MR. CARTER: I must confess, Mr. Chairman, this is

probably the first year in the past number of years that I haven't received a

whole slew of calls on that subject, but to date I have not received any calls.

MR. WOODFORD: It seems that is the only area that

is blocked right in, all White Bay, and they can't put out their lump nets,

nothing, so I am just wondering if -

MR. CHAIRMAN: The Labrador Straits, for the last

few days, has been blocked in and probably (inaudible).

MR. CARTER: I expect a lot of the people are on

NCARP payments and the ice doesn't bother them.

MR. WOODFORD: No, well, that is the problem, when

you have some who are not, and that is what I am running into, especially in the

Jackson's Arm area where the plant has been taken off the list.

MR. CARTER: They might be directing their calls

where they should, I guess, to the federal people.

MR. WOODFORD: Yes, I realize that, but I am just

wondering if the department has had this problem with any other areas of the

Province. Has anybody else had the problem?

MR. CHAIRMAN: Dr. Hulan.

DR. HULAN: Mr. Minister, (inaudible), Mr. Dean's.

I would like to go back to the question on the caplin stocks. It scares me when

I hear that we could be going the same way as the Northern cod as far as caplin

is concerned, and I am sure everyone around the tables here feel the same way. I

am amused at the fact that science, by sheer nature, is for precision, it is

precise, and we know that a gross error was made with regard to the Northern cod

stocks. How is this being treated by the international scientific authority on

the ocean and the seas - the comment being made now that the caplin stocks are

not in jeopardy, and yet there is the feeling that they are? What is the

response internationally on that?

MR. DEAN: The management of caplin stocks, of

course, within Canadian waters is undertaken by Canadian scientists, so there

are no international scientists involved in that context.

DR. HULAN: Well, that worries me even more. I

would have thought there would be dialogue between scientists in Norway and the

Canadians.

MR. DEAN: But that is a different issue, Mr.

Chairman. You are correct, there is ongoing dialogue between Canadian, Icelandic

and Norwegian scientists. In fact, when we were in Iceland the year before last,

we met an individual who had spent close to a year working with Fisheries and

Oceans here in St. John's, so there is a lot of information exchange and

interaction between the scientists from Canada, Norway and Iceland.

It is not a case of saying that the caplin are going

the way of the Northern cod, I wouldn't be as definitive as that. The point I

was trying to make is that there is a lot of uncertainty in terms of the

scientific advice as to what is the actual state, let say, of the 2J+3K caplin

stock, you know, the 3O, whatever the case might be - that is the point I was

trying to make.

MR. CHAIRMAN: Mr. Tulk, you have another question?

MR. TULK: Mr. Chairman, I have another question -

again, I guess, a detailed one - for Mr. Kane, with respect to his collection

efforts and the establishment of ability to pay. The question is: Do you have a

set of guidelines or regulations that you use when you try to establish ability

to pay and, if so, what are they? Given the freeze that is now on groundfish

licences, and the moratorium and so on that are on the go - and that is the

biggest mess that ever you saw in your life, this freeze on groundfish licences

by DFO, federal Department of Fisheries. I don't know what is their criterion;

we tried to establish it in the past couple of weeks, but we are not able to do

it. Are there any cases where you are saying to fishermen: Alright, given the

fact we know that you are on the NCARP program, that you have a boat which maybe

you launched in 1991, the Fisheries Loan Board gave you the money for it, and

obviously, your income has now been substantially cut in terms of your operation

- are there any cases where you are saying to them: alright, we will also freeze

your payments? In other words, we won't force you to make payment over the next

little while because we realize you don't have it. In the meantime, if the

fishery makes a comeback, you will be allowed to keep that boat and start using

it when the fish moratorium is lifted. Do you understand the question? My point

is made rather clumsily.

MR. KANE: I understand - there are three questions

there, basically.

MR. TULK: There are probably several.

MR. KANE: Yes. First of all, the established

guidelines -

MR. TULK: I know I should be going through the

minister, but I am sure he doesn't mind.

MR. KANE: (Inaudible). Mr. Chairman, first of all,

the established guidelines for collections. Again, they are done on an

individual basis.

MR. TULK: Pardon me?

MR. KANE: They are based on an individual review

of each borrower's circumstances. Somebody could be receiving NCARP but his

total income, which would include NCARP, would be assessed to determine whether

the person has the ability to pay. If he does, he could be receiving NCARP as

part of his total income and he would be expected to make some partial payments

towards his debt.

Depending on his attitude towards his debt - that is a

factor that comes into play. If a person, for example, on the positive side,

just received a loan in 1991, and made reasonable payments in 1991, and then the

Northern cod moratorium came into place, there are a number of things to help

him. There is an interest forgiveness program. Secondly, based on a review of

his income during the moratorium, the Board can be flexible with regard to

principal payments. There is an ability to defer principal payments, or a

portion of the principal payment, and get partial payment of the principal.

On the other side, if a person has a loan since 1983,

or 1985 or 1986, he hasn't made any payments, it is in arrears and then he is

using the excuse of the Northern cod moratorium for not making further payments,

obviously, the executive board would look at him in a different light.

Again, it is an individual review. There are

circumstances where fishermen are receiving the minimum under NCARP, since they

have other family income. They could be, during the moratorium period, working

at fishing crab.

MR. TULK: The wife could be a teacher?

MR. KANE: That is the next thing I was going to

say - or a nurse. It could be a family income that would give the borrower the

ability to partially or fully pay. So, again, it's an individual assessment,

looking at his intent to repay in the past and his ability to pay now. The Board

has a number of ways to help, as I mentioned. There is a principal deferment -

the principal portion of his loan can be deferred. But the main thing is intent.

The Board is very flexible. The last thing we want to do is build up a big

inventory of repossessed boats.

MR. TULK: It is hard to say what you're going to

do, isn't it?

MR. KANE: It is important that the borrower

demonstrate the intent to pay. There may be a $5,000 a year payment on the loan,

but if that person can set up monthly payments of $100 or $150 during the

moratorium period to defray expenses, all of a sudden, at the end of - hopefully

the end of the moratorium, he will have less responsibilities to the Board. It

is important that borrowers demonstrate an intent based on their ability to pay.

MR. TULK: Could you just answer yes or no. Do you

have a set of written guidelines for this, or is it just on an individual basis?

Mr. Minister.

MR KANE: It -

MR. TULK: Well, go ahead. He is busy, and I

realize that. This is the last question I have.

MR. KANE: There are a number of things. We have

guidelines for the write-off of accounts. There is a poverty income level.

MR. TULK: If I could, very quickly, because the

minister, I understand, has to leave. Do you have a set amount that you say a

family has to have to live on? Over and above that, then, you should be able to

pay something on this loan.

MR. KANE: That is the poverty income level. That

is true.

MR. TULK: The poverty income level is what you are

using.

MR. KANE: Yes.

MR. TULK: Okay.

MR. KANE: As a guideline.

MR. TULK: Okay. I have no further questions.

MR. CHAIRMAN: Thank you.

Our final question is from Mr. Woodford.

MR. WOODFORD: On 3.2.02, to the Minister or one of

his officials, under Operations, page 116 of the Estimates - 3.2.02.10 Grants

and Subsidies, there was $333,000 budgeted last year but $813,000 was spent and

now it is back to $425,000 for this year. Why would there be a big variation

there of almost $500,000?

MR. CARTER: Last year, $510,000 transferred from

the Atlantic Salmon Management agreement was used to subsidize the sealing

industry. There were subsidies provided to the sealing industry - a one shot

deal.

MR. WOODFORD: That is why this is revised.

MR. CARTER: This year that subsidy does not exist.

So, that accounts for the drastic change in the reduction in the Grants and

Subsidies.

MR. WOODFORD: In 3.3.03, under Market Development

- ERDA, I would take it that the bottom line on that - the Total: Marketing is

$520,000 for this year - that is because the agreement has expired, has it, the

inshore NIFDA?

MR. CARTER: I am sorry, I didn't get that.

MR. WOODFORD: Page 118 - 3.3.03.

MR. CARTER: Yes, okay. The termination of the

NIFDA, that is what caused it there, as well.

MR. WOODFORD: Yes. Do you foresee an agreement in

the near future?

MR. CARTER: We are hoping. The Province has done

its homework, I guess, pending federal approval. Yes, we are hoping for another

agreement. That is one of our top priorities, by the way.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Well, NIFTA covers a whole wide range

of things, as you know.

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

The minister has a meeting at 12:00 noon, so if you wish, we can move the

ado