May 7, 1991

RESOURCE ESTIMATES - DEPT. OF FISHERIES (UNEDITED)

The Committee met at 9:40 a.m.

MR. CHAIRMAN: Order, please!

I would like to welcome you to the Estimates

Committee for the Department of Fisheries. At this time I would like to extend a

welcome to the Minister and his officials.

Before we begin, I would like to introduce the

Members of the Committee: Mr. Woodford, the member for Humber Valley who is the

Vice-Chair of the Committee; Mr. Langdon, the Member for Fortune -Hermitage; Mr.

Hewlett, the Member for Green Bay; and Mr. Noel, the Member for Pleasantville.

We have two guests this morning, Mr. Dumaresque, the Member for Eagle River, and

Mr. Matthews, the Member for Grand Bank.

Our format, just for our own purposes, is pretty

simple. We will begin with an opening statement from the Minister. We have, over

the past while, allowed ten minutes for each side to ask questions and to

expedite matters. By leave from all the Committee Members in the last hour we

have tended to stay a little more with the Members of the Opposition and allow

them to go from ten to twenty minutes to clear up some matters and hopefully

deal with the issues that may be at hand. As opposed to having to delay the

Minister for yet another meeting, hopefully we can clear up those matters today.

Again I make note that that is by leave, and if we do not have consensus of our

Committee for that we will stay with the normal ten- minute time slot.

I would like to point out to all of the advisors

who are here with the Minister this morning that all questions being asked of

the department are to the Minister, and all questions will come back through the

Minister. By that I mean the Minister can certainly ask any of his officials to

deal with a matter that he wishes them to speak for, but just a reminder to the

Committee Members that the questions are to the Minister, and by leave from him

his officials may give the answer if he so wishes.

I would also like to remind all people here this

morning who will be either asking questions or answering them for the sake of

Hansard I would like for you to identify yourselves. It will not be necessary, I

think, for the Minister, I think his voice will be more than recognized, and for

most of the Members, I think it would be the same situation. But particularly

the officials, should you be answering, please identify yourselves before you

deal with any question that may be posed to you.

With that we will begin. I will turn to the

Vice-Chair, and if he wishes to open we will do that, if not we will relinquish

to one of the other Members.

MR. WOODFORD: Mr. Chairman, are we going to

give the Minister an opportunity to give an opening statement?

MR. CHAIRMAN: I am sorry, I apologize. Mr.

Minister.

MR. CARTER: I want to introduce the officials

from the Department of Fisheries here this morning. To my far right is Assistant

Deputy Minister, Harold Murphy; Assistant Deputy Minister, Leslie Dean; Mr.

Brian Bursey, Chairman of the Fisheries Loan Board; Mr. David Vardy, Deputy

Minister of Fisheries; Garland Mouland, Administrative Officer; and Mr. Frank

Pinhorn, Director of Processing. That pretty well takes care of the officials.

I have a short statement which I will read into the

record, if you wish.

I am pleased today to present to this Committee the

Budget Estimates of the Department of Fisheries for the fiscal year 1991-92.

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

expenditures from my department in 1991 and 1992 continues to demonstrate the

commitment of this Government to our most important resource sector.

Gross expenditures in 1991-92 are projected at

$40,778,100, and related revenues both current and capital will total

$15,316,900 consisting of $6,500,900 through Federal-Provincial cost-shared

programmes, and $5,500,000 through Fisheries Loan Board repayments and

$3,316,000 from other provincial revenue, and that expenditure in the years

1991-1992, both capital and current will amount to an estimated $25,461,200. My

department will in total, spend $23.8 million on current account and $17 million

on capital account in this fiscal year. I would like to take a moment to place

the fishing industry in perspective.

The fishing industry is the largest goods producing

employer in Newfoundland and Labrador, producing approximately 18 per cent of

gross domestic product in the goods producing sector in 1989. It provided

employment for approximately 30,000 people, who depend directly on the fishing

industry for employment for all or part of the year, including 17,000 plant

workers at peak and approximately 13,000 full-time fishermen.

Ground fish landings on average make up 68 per cent

of total sea fish landings, and cod is the most important of the ground fish

species. The total landings of cod decreased from 296,000 tons in 1988 to

236,000 tons in 1990, a decrease of some 60,000 tons or 20 per cent.

The value of these landings decreased from $136

million to $130 million, a decrease of $6 million, or 4 per cent. Increases in

the final selling price of cod products have helped maintain the relative

incomes of fishermen; in the three year period, 1988 to 1990, the total sea fish

landings in Newfoundland and Labrador decreased from 534,000 tons to 475,000

tons, a decrease of 59,000 metric tons.

The 60,000 ton decrease in total landings is due

entirely to reduction in ground fish allocations. The value of commercial sea

fish landings decreased by $18 million over the same period to an estimated

level of $258 million in 1990. This data is summarized in Appendix 1, which is

attached.

In the context of offshore-inshore landings, ground

fish landings by the offshore sector decreased from 208,000 tons to 138,000

tons, a decrease of 70,000 tons. Ground fish landings by the inshore sector

increased from 175,000 tons to 186,000 tons, an increase of 10,000 tons over the

1988 to 1990 period.

Each 1,000 ton reduction in ground fish landings by

the offshore sector equates with the loss of 23 person years of employment.

Quota reductions have therefore resulted in the loss of 1,600 person years of

employment in the offshore industry, while Federal-Provincial adjustment

programmes have been put in place, the economic loss and financial hardship is

particularly acute to those most directly affected.

The level of reduction represents an economic loss

to the industry and to the Province of $124 million. The present difficulty

stems from the fact that certain key ground fish stocks, adjacent to this

Province and historically fished by Newfoundland and Labrador fishermen, are no

longer able to sustain catch rates any where near those achieved in the past.

The cornerstone of the Newfoundland fishery is the

2J, 3KL or northern cod stock. The importance of this stock to Newfoundland and

Labrador, Mr. Chairman, lies in the fact that in 1990 it provided approximately

74 per cent of total cod landings. In addition 60 per cent of all registered

fishermen and registered fishing vessels, 63 per cent of our population and 61

per cent of our communities, are located adjacent to the northern cod resource.

Similarly, the ability of the western Newfoundland

gulf cod stocks to provide an adequate level of income to industry participants

has greatly diminished since 1988. We have estimated, Mr. Chairman, the

potential growth in major ground fish stocks which could be available to the

Newfoundland and Labrador industry by the year 2000, using CAFSAC and other

scientific data, we believe an additional 70,000 tons of traditional groundfish

could be available annually to the industry by the end of the current decade.

Such an increase would create an additional 1,200 person years of annual

sustainable employment in the processing sector. If this potential is to be

realized there must be fundamental changes in fisheries management.

The first involves a cessation of foreign

overfishing outside the Canadian economic zone, particularly on the Nose and

Tail of the Grand Banks. In 1990 the European community took 97,000 tons of

groundfish against a NAFO quota of 15,377 tons. Catches of this magnitude defy

all principles of conservation and negate the benefits to Canadian fishermen of

stock rebuilding.

Secondly, there must be a reaffirmation by the

Federal Government of the fundamental and long established principles of

resource allocation. Criteria for the 1991 Groundfish Development Programme are

totally inconsistent with the priorities assigned this programme in 1990 and

ignore completely the requirements of communities in which plants have either

closed or require additional (Inaudible). Some 87 per cent of groundfish in this

programme comes from stocks in the Newfoundland region upon which Newfoundland

inshore and offshore sectors have had a traditional dependence.

The Province will continue in 1991 to seek a

greater voice in fisheries' management. The economic development of this

Province is so closely tied to the fishing industry that Provincial

participation in fisheries' management is critical. In 1990 my Department began

the process of developing a fisheries' policy framework for the coming decade. I

am pleased to report that the White Paper is nearing completion.

I am also pleased to indicate that despite

budgetary constraints nine new positions will be filled in my Department. Two of

these positions will provide for the creation of a Labrador division, which will

include a number of existing staff having specific responsibility for that area

of the Province. We will strengthen our biological capability with the addition

of a senior resource biologist. Remaining positions will be filled in the areas

of aquaculture, resource utilization, product development and marketing. I wish

to emphasize that all four of these areas have met with outstanding success in

The success of the industry depends in large

measure on it's ability to compete on two fronts: price and quality. Our

groundfish products must compete with the much cheaper and abundant Alaskan

pollack and fish exports of developing countries. I look forward to working with

the new Minister of Fisheries and Oceans, Mr. Crosbie, with the objective of

resolving many of the issues which prevent the full realization of the benefits

from a dynamic fishing industry.

Specific Budget activity: The above framework

briefly highlights the significance of the industry, the effect of reduced

resource availability, and areas in which measures of success have been achieved

as the 1991 season unfolds. Some $12.4 million of expenditures are allocated

under the heading of Facility Services. Of this total $5.4 million will provide

for the ongoing administration, operation and maintenance of all shore based

infrastructure. These include: twenty-five marine service centres; fish

processing facilities; regional ice making facilities; community stages; baited

trawl units; and related facilities. In total the Department has an inventory of

300 fishery related facilities.

Specific reference should be made to the Marine

Service Centre Programme which can be considered one of the most successful

industry support initiatives administered by my Department. There are presently

twenty-five marine service centres in operation, four of which were completed in

the last fiscal year. Additional lifting capabilities have been added at

Fortune, Fermeuse, Hodge's Cove and Makkovik. The capability at Port Saunders

has been increased from seventy to 200 hundred tonnes, the largest such capacity

lift in Canada. These extra capacity lifts are strategically located to service

the fleet of larger inshore fishing vessels, approximately 1400 vessels use the

facilities annually. I intend to pursue our policy of divestiture very

aggressively in 1991 - 1992 with the objective of moving facilities with

commercial potential into the private sector. Under my department's divestiture

programme some twelve fish handling facilities have been sold to the private

sector. We continue to retain ownership of forty-three such facilities. Leases

entered into in 1991 - 1992 will be for a one-year period only.

The Department administers 215 structures used

directly by fishermen as community stages, gear sheds, slipways, and baited

trawl holding facilities. Fishermen directly use and coordinate their use of

these facilities while my Department retains responsibility for maintenance and

repair.

The heading also includes an expenditure of $1.1

million for the operation of processing plants at Nain and Davis Inlet, and a

contribution towards the operating loss of the Makkovik Fish Plant operated by

the Torngat Co-operative. These three facilities employ 200 processing workers

in season, the principal source of onshore employment in Northern Labrador. The

new processing plant in Nain opened in 1990 - 1991 at a capital cost of $2.5

million. The Makkovik Plant is also being modernized under the ERDA Agreement at

a cost of $4.7 million and will open this coming season.

The 1991 - 1992 Estimates for my Department project

expenditures under ERDA, which is the Inshore Fisheries Development Agreement of

$9.2 million. This will be the fourth year of the five-year development

agreement. My Department proposes to spend $4.6 million capital on fisheries

infrastructure under the ERDA Agreement of which $2.5 million will accrue as

revenue representing the federal contribution. These initiatives are listed in

Appendix II which is attached. My Department also proposes to spend $1.4 million

on infrastructure under its regular capital programmes which will include

various projects under its Marine Service Centre and Fishermen Facilities

programmes. Also, included will be funding for special assistance grants on

access roads.

The capital programme includes funding for

upgrading and construction of new fisheries access roads and the provision of

small top-up grants for materials to assist fisheries related capital projects.

The Department will spend $600,000 under the Labrador Development Agreement for

the design and construction of ice-making facilities, off-loading facilities,

containerization and palletisation facilities, water systems and plant upgrading

in areas from Cape Charles to Smokey.

The second major operational branch of my

Department is Industry Support Services. This Branch will spend $9.6 million in

1991 - 1992 which is an increase of approximately $0.6 million over the previous

year. Under the harvesting sector of this Branch activities include aquaculture,

resource assessment, experimental fishing, experimental fishing gear, vessel

design and operation and initiatives associated with ongoing fleet development.

Funding in the amount of $1.6 million is provided towards the provision of

technical and financial assistance to aquaculture development in the Province.

Expenditures will be made towards research,

development and the provision of technical and financial support to all areas of

aquaculture. In addition to promoting the development of a viable aquaculture

industry, Newfoundland's Aquaculture Legislation serves as a model for other

Canadian provinces. Expenditures of $1.4 million will be made under the

harvesting component related to resource assessment, fishing vessel design and

developments, which includes quality enhancement initiatives related to

harvesting, on board handling and storage, cost of operational effectiveness of

fishing vessels and demonstrations in use of various types of fishing gear.

Gross expenditures of $3 million will be spent by

the processing sector of this branch. Activities are directed towards improving

processing technology, expanding upon our in-plant quality control procedures

and providing technical support and assistance directed towards the development

of secondary and value added fish products. It is my intention to introduce

before the House an updated Fish Inspection Act at the earliest opportunity.

Expenditures in the area of marketing will total $1.3 million in 1991-92. While

gains have been made with respect to product identification, we still require a

more cohesive approach to the established marketplace and an increased presence

in new and developing markets.

The Policy Planning Services Branch will have

estimated expenditures in 1991-92 of $3.8 million. This branch provides ongoing

policy and programme planning within the context of Government's broad

development objectives for the fisheries sector. The Planning Services Division

is also responsible for the co-ordination of all projects and programmes

associated with the Inshore Fisheries Development Agreement. Some $9.2 million

will be spent under this programme in 1991-92. The department will also

co-ordinate the implementation of the Coastal Labrador Development Agreement.

This Federal-Provincial agreement, signed in July of 1989, calls for

expenditures of $7 million over the 1990-94 period. The fisheries component of

the agreement will (1) provide infrastructure where necessary in coastal

Labrador; (2) fund initiatives in the harvesting and processing sectors

promoting diversification and improved incomes from fishing and fish processing

activity; and (3) training to upgrade skills of fishermen and plant workers.

Some $1.8 million has been allocated in the 1991-92 fiscal year under this

cost-shared agreement.

The field services division operates seven major

field regions, and maintains a number of field offices throughout the Province.

The division in most instances provides first line contact with fishermen and

fishermen representatives. The Fisheries Loan Board is projecting an expenditure

in 1991-92 of $13.3 million in support of the Province's inshore fleet. The

expenditures will be directed toward interest subsidy payments under the Bank

Loan Guarantee Programme, loans under the board's Direct Loan Fund, and

assistance under all three bounty programmes.

Mr. Chairman, in conclusion, the fishing industry

faces severe resource constraints over the foreseeable future, and performance

will be impaired by quota and catch reductions. In the interim, a course must be

charted which minimizes the impact of quota reductions, and achieves our

objectives with respect to resource management which will result in the

rebuilding of a strong and resilient industry.

My department will continue to develop policies and

programmes through which these objectives can be achieved for the overall

benefit of our provincial economy and the fishing industry at large. I welcome

any questions which you may have on my department's 1991-92 estimates. Thank you

very much.

MR. CHAIRMAN: Thank you very much, Mr.

Minister.

Mr. Hewlett.

MR. HEWLETT: Mr. Chairman, I would like sort of

a general re-action from the Minister: I have a major FPI plant at Triton, in my

district, and a little while ago the former Minister of Fisheries, Mr. Valcourt,

announced what you might refer to I suppose as a more gradual phase down of

northern cod quotas, so in one regard the 300 workers at the Triton plant, sort

of breathe a collective sigh of relief and I did, as their Member.

But at the same time, Mr. Bartlett, who is the

Vice-President of NIFA, from my district, sort of took exception to my breathing

a sigh of relief with 300 other workers; does the Minister have a feel, with the

new Minister coming on, that there will be relatively modest quota reductions as

outlined over a three year period by Mr. Valcourt, is that still on and can the

workers at Triton continue to breathe a sigh of relief, so to speak?

MR. CARTER: I cannot speak for the Minister of

Fisheries and Oceans, but I can only surmise that on the basis of what the

Minister said last year when that management plan was announced by his

predecessor; I do not anticipate any changes frankly in the TACs that were

announced last year by the previous Minister, and I think that amounts to about

a 5,000 ton reduction over the next three years.

My Assistant Deputy reminds me that there may very

well be new scientific evidence come to light that would change that, but

certainly from the Province's point of view, we do not anticipate that there

will be any increase in the TACs next year, and in fact, as we see it, we expect

there will be a continuation of the previous Minister's policy in that regard.

MR. HEWLETT: I have heard some commentary on

the fact that relatively new scientific data would tend to indicate that maybe

more gradual phasedown of the quota under Mr. Valcourt might not be in keeping

with the latest scientific findings, which of course, breathes a degree of 'I

told you so' into the inshore sector and causes a degree of deep concern in an

area where you have a large plant depending on offshore northern cod. Have you

had any indications that the three year programme as announced by Mr. Valcourt,

might have to be amended downward, based on new scientific data?

MR. CARTER: No, we are not aware of any new

scientific advice that would alter things to any great extent, so I guess in

answer to your question, we cannot, at the present time, foresee any

circumstance or set of circumstances that might alter things. We are not aware

of any new advice that would have that effect.

MR. HEWLETT: One more question, Mr. Chairman,

and this is relatively specific. You mentioned you have monies in your budget,

capital monies for fishery facilities. I have an inshore fishing community that

depends entirely on the inshore fishery, that is Beachside. They have a

community stage that is used basically as a buying station by Connors Brothers.

The stage is, I guess, on its last legs quite

literally, because the legs are rotting out from under it. I know they have

written the Department before looking for some sort of assistance, maybe in

concert with top up money or whatever, with some sort of Federal programme. Is

there anything in the works for the Beachside community stage? Because it is

virtually on the verge of collapse, so to speak. Is there anything in your

Department this year? That is a specific question, I know.

MR. CARTER: First of all that stage does not

belong to the Province, as I understand, that is Federally owned I expect, is

it?

MR. HEWLETT: Well, the Province did build an

access road out to it because it sort of needed a fifty-foot causeway. It was

built off the beach.

MR. CARTER: Yes. I am not able now at this

particular point in time to make a commitment. That is a specific project you

had in mind there, but certainly my advice is to have the fishermen's committee

make representation to the Department. If there is anything that we can do

within the guidelines under which we operate then we will certainly consider it.

But I cannot at this time give any firm undertaking that we will do what needs

to be done there.

MR. HEWLETT: Okay. So obviously it is not one

that has been on the tip of your tongue for the last few weeks or whatever.

Okay, that is fair enough. That is it for me right now, Mr. Chairman, I would

hand off to someone else.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Langdon.

MR. LANGDON: The Minister was saying earlier

that there is to be some fundamental changes in fish management. Last year, if I

have the totals correct, you were saying that it was probably 97,000 metric tons

of fish taken on the Nose and Tail of the Grand Banks

whereas the quota was

15,000. What hope do we have in the foreseeable future to be able to tell Spain

and Portugal that basically: we do not want you to do this. I know the Federal

Government is doing it in a diplomatic way but there comes a point when there is

nothing else there. Eventually it is taking bread off the table. What is the

latest that the Federal Government has been able to do to try to change this

around in conjunction with your own Department?

MR. CARTER: I can tell you at the outset I

guess, Mr. Langdon, that the Province is certainly not satisfied with the

progress that has been made to date in remedying that problem. It is a very

serious problem. Probably one of the most serious problems facing the eastern

Canadian-Newfoundland fishing industry today. We are not at all happy with what

has transpired to date.

Now, we recognize too that it is not a simple

matter to correct. We have an advisory council, a fifteen or sixteen man

council, that was appointed first when I became Minister to act in an advisory

capacity to the Department of Fisheries and to the Minister. They have been

addressing that problem now for quite some time. In fact they have had several

meetings on it, and they have put together a report and a set of recommendations

to me, and to the Department, on how we should maybe go about prodding or at

least trying to generate more activity from the Federal Government. You must

bear in mind that the Province does not have any authority on its own to take

any direct action dealing with that problem. It is a Federal responsibility to

manage that resource and to do what needs to be done to bring some order out

there.

But that is a matter that has been under active

consideration by my Department and my advisory council. At our last meeting it

was decided that we should give Mr. Crosbie a chance to see what he could do. It

would not be fair now for us to start making demands on what should or should

not be done. We want to give him a chance. We believe that maybe with a new

Minister, and a man who obviously has a better understanding of the problem and

maybe a better feeling for it, hopefully he will achieve more success than any

of his predecessors. So we are going to see what Mr. Crosbie can do. We will

assist him in any way possible to that end.

Of course I suppose if nothing happens over a

period then we will have to look at what other options are available. But I

guess to make a short answer to your question, we are looking to the new

Minister now to maybe take a more aggressive approach and hopefully achieve more

success than his predecessor. We want to help him do that and we will do all we

can to that end.

MR. LANGDON: No doubt the people who fished the

Nose and Tail of the Grand Banks have probably devastated the fish there, but

probably as well we have not been vigilant enough in protecting the stock that

is fished by our own people.

It is my understanding, and I have talked to a

number of people in the area, people who fish on deep-sea trawlers, that there

are times when the fish net is pulled up when as much as 50%, 60% or 70% of what

is caught is discarded and just thrown back into the ocean. These people tell us

that this is probably a bigger hindrance to the growth of the resource than even

the actions of the foreign people themselves.

We live in a technological age and with all the

advantages that are possible through technology certainly we should be able to

devise some plan not to waste that particular resource. Maybe a boat quota where

they would be able to bring it in for fish meal or anything, but to just leave

it on the ocean adrift, in my opinion, is not the best way to look after the

resource. So, what are we doing in a sense to addressed that?

MR. CARTER: Well, we don't like the idea of

seeing fish dumped either and we understand there is a lot of it being dumped.

What we have been saying is that you want almost a total observer coverage, even

on the 65 foot vessels and under, to see what is going on. We have heard of

cases where a lot of small fish is being dumped because it is not worth their

while to bring it in and it takes away from their quota, their allocation, and

for that reason, I suppose, probably it would be more beneficial for them to

dump it than to bring it in. That is wrong. Unless and until we find or develop

the necessary technology whereby we can prevent or avoid catching small fish,

then it seems to me that we should be utilizing it, because there is a market,

by the way, for undersized fish. It is not the sort of thing you would want to

encourage the harvesting of, but when it is being harvested and unavoidably

harvested, then I think we have a responsibility to ensure that it is put to

good use. That can only be done if there is full observer coverage on the

vessels.

The problem, of course, I guess in the main, is

with the otter trawlers. It seems to me that the Federal Government is going to

have to give some thought to putting observers on all those vessels. Then and

only then will we be sure that at least the fish will be used. That will not

correct the problem of mesh size. Mesh sizes are under review in 1992 and

hopefully there will be something done to change the mesh sizes whereby this

small fish will not be caught. I suppose, that is the ultimate solution to the

problem, avoid catching. Again, I guess that is going to be time consuming and

costly but something has to be done and all the reports that we get including

the Aidan Maloney Report for example indicates that - in Aidan's report I think

he mentions something about gear size, didn't he, and new technology and new

gear sizes are necessary to ensure that small fish is not caught. Certainly, we

should not allow people to deliberately set out to catch small fish. There are

cases I am told where in some areas they use liners in their nets, it will have

the effect, of course, of trapping small fish but naturally that should not be

allowed under any circumstance.

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: Could you speak a bit about the

tariff situation and the international markets? To what extent is the

Newfoundland industry being hurt by tariffs these days? I gather it is improving

with the United States, but I presume it is still a large factor. Is it as much

of a factor with other countries?

MR. CARTER: The big problem with tariffs, of

course, at the present time is Europe, the European community. Tariffs are high.

MR. NOEL: They are high enough to essentially

put the market off limits for our -

MR. CARTER: Yes, pretty well. Now in the U.S.,

of course, under the Free Trade Agreement, the tariffs are reducing, decreasing.

In fact I believe they are now down to six per cent from ten per cent, and over

the next two or three years will continue to decline until they are wiped out

altogether.

We were in Boston to the Boston Sea Food Show a

month or so ago and we visited the FPI plant in Danvers, Massachusetts, where

they put out a pretty wide range of finished product. Using fish, by the way,

that is shipped into Danvers in a raw state from Newfoundland and processed up

there. It sort of makes one wonder sometimes if it is necessary, when you see

300 people gainfully employed earning good wages processing fish that is caught

in Mr. Matthew's district and others, being carted off to Boston for processing.

Of course, the problem was tariffs, but that is

correcting itself now and it seems to me that over the next few years there will

be very little justification for allowing that to happen or for encouraging that

to happen. In fact there are products being marketed now by FPI, finished

products, that are in fact processed in the plant in Burin. They pay the tariff,

whatever it is, six or something per cent, and they can get it into the U.S. and

compete. I guess that must be the aim of FPI, eventually as the tariffs decrease

to do more of their secondary processing in their vastly underutilized plant in

Burin, and that plant in Burin, I am told, is operating at less than fifty per

cent capacity. So there is a lot of opportunity there for expansion and to get

into several new products.

MR. NOEL: But tariffs are not too bad a problem

when it comes to exporting to the United States today, and the situation is

going to get better. Are there other trade obstacles to exporting to the United

States aside from tariffs?

MR. CARTER: I am not aware of there being any

other impediments to shipping finished product into the U.S. Lobster, of course,

is a different situation, as you know, because of the size restriction. The

Americans have now placed a certain minimum size restriction on lobsters going

into the U.S. market, and that is having an affect of about twenty per cent on

our harvested lobsters. Approximately twenty per cent of Canadian harvested

lobsters now will not qualify to get into the U.S. market, and other markets

have to be found for that twenty per cent. Lobster is posing a problem for that

reason. As far as the other products, I am not aware of there being any

impediments that would keep Newfoundland products out of the U.S. today.

In Burin, by the way, they have managed to get

around the tariff problem in some areas where they produce a product for the

microwave trade, I suppose, where it is embellished with a few little things

whereby it would qualify as not being a finished product - uncooked. Fish with

little embellishments on it would not qualify as a finished product, but I think

the prospects are good as the Free Trade Agreement continues to trigger a place

that will, I believe, increase our activity in that respect over the next few

years.

MR. NOEL: So it is fair to say that the Free

Trade arrangement appears to have been positive for our fishing industry -

MR. CARTER: Yes, I would think. Yes.

MR. NOEL: - without reservation, pretty well.

MR. CARTER: Like I said, the tariffs have gone

from ten down to six per cent already.

It is not all gravy by the way. There is a lot of

competition in the United States marketplace. For example the Alaskan pollack is

a fish that is somewhat similar to our traditional groundfish, the cod, and that

is making some inroads now into the American marketplace. Currently it is being

produced at a much lower price than cod and that is causing some problem. But

all-in-all the market appears to be good, it is a very strong market. Last year

it was good and there is every indication that it will continue to be strong.

MR. NOEL: Does our manufacturing industry

appear to be pretty competitive? You know, as we eliminate the artificial

barriers to trade the competition is going to become more of a factor. Do we

look well prepared to compete with other sources for business in the United

States? Are there any indications there are problems in the efficiency of our

manufacturing industry that need to be dealt with?

MR. CARTER: Yes. I think it is fair to say the

more efficient fish companies in Newfoundland are competitive. We have FPI, of

course, and we have a number of smaller companies, Janes and Sons in Hants

Harbour, Quinlan's and Beothuck Fisheries, these are all solid companies with a

good track record, and given a chance I think most of them can hold their own

anywhere.

I think in Newfoundland there is a mind-set that we

have to deal with, in that I sort of get the impression, and this does not apply

to all companies, but a lot of them have found themselves a pretty comfortable

niche. I am not sure the will is there to branch out and become more adventurous

in terms of secondary processing. But that is changing. They can get their fish

and put it up in blocks, they can ship it into the United States marketplace in

a raw state and make a good dollar on it. So, I guess the question they ask

themselves is: why should we take on additional problems and expense if there is

no need of it? But that is changing because there is hardly a day passes when we

do not hear of a company now that is expressing some interest in secondary

processing. I think in time the message will be through to them that there is a

dollar to be made there and a lot of possibilities exist.

MR. NOEL: There is not much basis for optimism

about gaining improved access to the European market, is there? No force is

developing there or no pressure is developing there that may be to our

advantage?

MR. CARTER: In the short-term there does not

appear to be too many prospects for any improvement in that situation.

MR. NOEL: What about the Asian markets and

things like that? Are tariffs a problem there, or markets outside of the United

States and Europe, potential markets? Is there much potential?

MR. CARTER: Tariffs are not as big a problem in

Asia as they are in Europe, for example. But you are dealing with a different

clientele, I guess, in Asia. For example, Newfoundland has now over the past few

years developed a pretty lucrative caplin fishery where 30,000 metric tonnes of

female caplin end up in the Japanese marketplace.

MR. NOEL: Is that a tariff-free market?

MR. CARTER: Yes, that is tariff-free.

There is a smaller market for caplin in Taiwan, a

3,000, 4,000, or 5,000 metric tonne allocation but we are told that is

developing and hopefully at some point in time it will be a broader market.

There are all kinds of things happening today,

especially in Southeast Asia. Hardly a week passes when we do not have

representation from some major companies in those countries looking for

opportunities to invest money in the fishery. No later than last week I had

dinner with a group that has a very serious interest in fish meal for example.

They are endeavouring to buy or set up new fish meal plants here in the

Province.

Getting back to the Japanese market: it is

interesting to note by the way that unlike Newfoundland Japan does not have an

unemployment problem. In fact, there is a labour shortage in Japan, and the

processing of the 30,000 metric tons of caplin that we ship in to Japan yearly

is extremely labour intensive. If you can visualize, every single caplin in that

30,000 tons - and that I suppose is in the hundreds of millions of caplin -

having to be treated, handled and skiverred up on a rack individually and

processed that way.

We are trying to encourage people in the private

sector now to look into the possibility of processing that caplin in this

Province. Now I am not here this morning going to tell you that that is going to

happen tomorrow morning. But I can only tell you that there are some

possibilities there. In fact there is one company, Greens, I think, out in

Winterton that is now engaged in the processing of caplin the way the Japanese

process it. I think they are catering more to the local market or the market in

Canada, the Japanese community in Canada, although I do believe some of that is

being shipped into Japan, isn't it?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Pardon? On a trial basis.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. There is another company that

is also looking at the possibility of curing that caplin here. Now if we can

ever achieve that - and given the fact that in Japan the jobs that it creates

does not mean a thing to the Japanese because they have full employment.

MR. NOEL: But practically everything that goes

there now is unprocessed.

MR. CARTER: Everything that goes there is

unprocessed, it is frozen female caplin. There is a very simple procedure

followed in the curing of those caplin that can be done in Newfoundland, no

trouble at all.

MR. NOEL: Now what is the obstacle to it? How

come that has not been done to some extent?

MR. CHAIRMAN: The last question, Mr. Noel.

MR. CARTER: Obstacle? I am not too familiar

with the ins and outs of the Japanese market but I think you will find in the

Japanese marketplace there are a couple of middle people, middlemen, importers

in the supermarkets and that sort of thing. I do not know what problems it would

create in the marketplace in that regard, but from what I have been told there

are no insurmountable problems there. If we can ever achieve that objective then

the number of jobs that it would generate is just mind-boggling almost.

AN HON. MEMBER: (Inaudible).

MR. CARTER: My Deputy reminds me that a lower

Canadian dollar would be very helpful. The dollar of course is now relatively

high. So a reduction in the value of the dollar would be a big plus for us.

MR. CHAIRMAN: Thank you, Mr. Minister, thank

you Mr. Noel.

Mr. Matthews, by leave of the Committee. Or are you

an official Member this morning?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Okay. Then I understand by leave

from your colleagues they will relinquish their time to you. Carry on.

MR. MATTHEWS: Thank you very much. Just a few

questions. Just following on the secondary processing avenue as taken up by the

Member for Pleasantville. I guess it would be fair to say that in the secondary

processing form as it is done at Burin, that we really cannot look forward to

any other facilities in the Province doing the same type of secondary

processing, I suppose, over the next number of years, anyway. Would that be a

fair statement, looking at Burin probably being utilized now at about 40 per

cent? Would that be fair? Because there has been so much talk over the years

about secondary processing of this form and higher value products. From my own

observation it would seem that until Burin gets up to 90 per cent or 95 per

cent, if that is possible, that we will not see another facility such as that in

the Province. Would that be a fair observation or would I be wrong?

MR. CARTER: I think that is probably a fair

assessment of it, but there are opportunities, of course, in cold packing

products.

MR. MATTHEWS: Oh yes.

MR. CARTER: You know, we have a lot of that

going on, but that does not require any big infrastructure or big facility. But

certainly, I suppose from FPI's point of view, who are the owners of the Burin

plant, I guess their ultimate aim would be to fully utilize their Burin facility

before they would start looking elsewhere for secondary processing, but there

are a number of smaller things happening.

I had the privilege of having lunch out to P. Janes

and Sons in Hant's Harbour last fall, and Ed served up samples of the products

that he is putting out, and I was absolutely flabbergasted. I did not realize

that there were so many products being put out by that relatively small local

firm, and I mean good products as well. So there is a lot of that going on in

the Province, and I expect as time goes on, as it becomes harder maybe to make

it on the shipping of raw fish by virtue of a reduction in quotas, as a means to

survive, I think a lot of our companies will have to seek out ways of getting

more involved in secondary processing underutilized fish as a means of

surviving.

MR. MATTHEWS: Is it realistic in your opinion,

or that of your officials, that Burin will reach ninety-plus per cent production

of secondary processed fish in the form that they are doing it, as you referred

to it, the microwave -

MR. CARTER: Yes, within a certain time frame I

can see Burin at some point in time becoming fully utilized, and again the U.S.

tariffs will have a major role to play in that because we saw products being

served us in Danvers, Massachusetts that were done in the Massachusetts plant.

You know there is no reason at all why they could not be done in the Burin

plant. The only reason, of course, is that six or eight per cent tariff, but

from a technical point of view they are doing nothing in Danvers that they

cannot do in Burin.

MR. MATTHEWS: In your presentation - I am

sorry, are you finished?

MR. CARTER: Burin is as technologically

advanced if not more so than the plant in Danvers.

MR. MATTHEWS: In the presentation you made, did

I hear you correctly when you said that there were, I think, landings of 534,000

tons? Is that correct? I tried to follow your figures as you went through your

presentation - perhaps it was between 1988-90 that you made reference to 534,000

tons?

MR. CARTER: Yes the landed value in 1988 was

533,729 tons. In 1990 it was 474,659 tons.

MR. MATTHEWS: I am wondering, would you be able

to give us a rough breakdown by species of those landings?

MR. CARTER: Yes. For example, in 1988 we had

296,340 tons of cod fish. In 1990 we had 236,350 tons. The total pelagics for

those years, 1988, 117,520 tons, and in 1990 there were 107,643 tons. Shellfish:

the total landings in shell fish for those two years, 1988 we had roughly 33,000

tons and in 1990 we had 10,000 tons more, 43,000 tons. Most of the big

reduction, of course, was in cod.

MR. MATTHEWS: Yes. What was the difference in

the pelagics in 1988 and 1990?

MR. CARTER: Pelagics were 117,520 in 1988 and

roughly 10,000 tons less in 1990, 107,520 tons.

MR. MATTHEWS: Why would that be? I mean it

would seem that with the reduction in the groundfish allocation and landings and

so on that you would expect an increase. Now the shellfish has gone up by some

10,000, but in the pelagics, what would be the explanation for that being 10,000

tons less?

MR. CARTER: Less caplin. Most of that is

accounted for by caplin landings. There were less caplin landings in 1990 than

in 1988.

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: There is a 70,000 metric ton drop

in the offshore landings as well and a 10,000 ton increase in the inshore

landings in those periods.

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: It is interesting to note by the

way gentlemen that in 1990 we had one of the best cod trap fisheries on the

northeast coast in many years. It was a huge success.

MR. MATTHEWS: In 1990.

MR. CARTER: 1990, yes, last year. We had a glut

situation for example in St. John's and Flat Rock and fish were caught in 1990

in bays where there has been no fish caught for years, parts of Trinity Bay.

MR. MATTHEWS: Well last year if I recall what

you said in your presentation as well it was 186,000 tons inshore caught. Was

that right? You say there was an increase of 10,000 tons. You made an reference

to 175,000, gone up to 186,000.

MR. CARTER: As you know there were some drastic

reductions on landings on the west coast of the Province and of course in

Labrador last year.

MR. MATTHEWS: But overall it seems -

MR. CARTER: It compensated - yes.

MR. MATTHEWS: - overall we came, what? -

closest to catching the inshore allowance than we have for years.

MR. CARTER: We took the full inshore allowance,

yes.

MR. MATTHEWS: Yes. So it is kind of hard to tie

it into what my colleague from Green Bay was saying about his situation and the

inshore versus offshore and the concerns. That kind of makes you wonder out loud

that for the first year in a number of years they caught, I think it was 185,000

tons or 186,000 tons. When you talk about scientific evidence and data that you

referred to, and there may be some adjustment with a total allowable catch

dependent upon additional scientific evidence and so on, you know that sort of -

it is positive. Why would you think that last year that much would be caught?

What would be the explanation for that? Looking at the stocks being on a

decline, if there is more offshore than you would think there would be less

coming inshore which is the usual argument that is put forward. Why would that

amount be up that high?

MR. CARTER: I do not know. It appears that last

year there was a very healthy migration of fish from the offshore to the

inshore. I guess that is not much of an answer I know but not being a scientist

I cannot come up with much better at the present time. That was the main reason

I am told for the increase in the inshore landings last year. You might remember

in the summer of 1989 we had a glut situation in Labrador. I recall visiting

Black Tickle, in July month I guess, the Premier and I went down there and there

were fish going everywhere. Vessels lined up waiting to unload. Last year the

fishery in Black Tickle was a dismal failure. So it is a job to predict where it

is going to happen. The offshore people did not catch their quota for example in

2J.

MR. MATTHEWS: Too small? Was that the reason

for that?

AN HON. MEMBER: Couldn't find them.

MR. MATTHEWS: We are talking about the

different stocks around us and so on, the southwest part -

MR. CARTER: Pardon?

MR. MATTHEWS: In discussion about the state of

the cod stocks and so on as referenced by the Leader of the Opposition - whether

it was last week or a couple of weeks ago about that - the stock that seems to

be in the greatest difficulty is the gulf fishery, or the north and southwest

coast fishery. It seems - and you met with Mr. Crosbie yesterday, as we did

yesterday morning, and we had a chance to discuss that situation with him and it

would seem there are going to have to be some very serious drastic decisions

made pertaining to that particular fishery. Have you given any particular advice

to the Federal Government on that? There are those that advocate a complete

shutdown. I suppose again as was said in the House last week or two weeks ago,

we are the masters of our own destiny when it comes to that fishery, we cannot

blame that on Spain and Portugal as we can with the Nose and Tail of the Grand

Banks as referenced by the Member for Fortune - Hermitage. Whatever damage is

done there we, we being Newfoundlanders and Labradorians or Canadians or the

Federal or the Provincial Government, have caused the damage. I was just

wondering: have you made any specific recommendations to the Federal Minister or

the Federal Government pertaining to that gulf stock, what action should be

taken there? Should it be a complete shutdown, or what?

MR. CARTER: There has not been a meeting, I

suppose, between the Federal Minister and ourselves in the last two years where

problems in the gulf area have not come up for considerable discussions. I agree

with you there are some very serious problems. For example, the fixed gear

effort dropped from 50,000 metric tonnes down to a 5,000 metric tonne harvest. I

think it is obvious that in the Gulf area there is going to have to be a

reduction in the TAC if we are going to give the stocks a chance to rebuild. It

will require almost, I think, 100 per cent observer coverage, because we have

heard stories of liners being used and other things being done that certainly

have a detrimental affect on the stocks and their chances of rebuilding, and a

complete review of the whole fishery over there. I suppose, eventually by

attrition or otherwise a reduction in effort. It might well be that if there is

going to be a reduction in effort there will have to be a suitable compensation

package put together to offset earnings lost as a result of that reduction. I am

talking here, I guess, mainly about the otter trawl fleet, the fixed gear

fishermen are not causing the problem, it is the larger boats that come down the

coast and fish. I think there are about 108 altogether. It is difficult to tell

a man who has $1 million invested in a boat that he is not going to be allowed

to fish there, but there is going to have to be some kind of a compensation

package, I guess. I suppose attrition will take care of some of it. Certainly,

we cannot allow that fishery to expand while the stocks are like they are.

MR. CHAIRMAN: Thank you, Mr. Matthews, Mr.

Minister.

Mr. Dumaresque.

MR. DUMARESQUE: My thanks to the Committee for

allowing me leave to ask a couple of questions.

Mr. Minister, I guess as we all know the resource

problem in the northern cod is a critical one. In the quest for new fish, I

wonder has the Province been able to establish its position on the Canada -

France boundary dispute? That particular dispute is due to be arbitrated at the

end of the year or early in 1992. As everyone knows there are some 31,000 tonnes

of fish on that table for redistribution, and more particularly from my point of

view, there are some 11,000 tons of cod and turbot in 2GH and 2J+3KL. In our

quest to get, in our case 7,000 tonnes of fish, whether it be cod or turbot, I

wonder is the Province going to be stating a position on how that fish is to be

reallocated after the arbitration decision is made. Indeed, it is my

interpretation that the result of that arbitration will be only a boundary

settlement not a fish allocation segment to the decision, is that correct?

MR. CARTER: Given the fact, Danny, that that

matter is now subject to arbitration, I am not sure that I should, quite

frankly, have too much to say about it. I guess it is almost like having

something before the courts, it is not wise to comment on it. We all recognize

the problem of course and the need to do something about it, but I would not

care to comment too widely on it for that reason, that it is now a subject of

arbitration.

MR. DUMARESQUE: Okay.

On the basic principles then, you alluded to the

fact in your opening statement that by the end of the decade you expect to have

some 70,000 tonnes of new fish available. Has the Province established the

principles upon which this new fish should be allocated?

MR. CARTER: Well, I guess the principles that

are well established and we have been espousing almost on a regular basis, those

of adjacency, community dependency, economic efficiency and quality, of course.

MR. DUMARESQUE: Okay, a final question, you

also alluded to it earlier. Is the total allowable catch of northern cod caught

each year? If not, has there been any options looked at, as it is under the

development plan of the Groundfish Management Plan, where they have review dates

put in place so that if in fact the TAC is not caught it can be reallocated? So,

the first question is: Is the TAC of northern cod caught each year? If not, what

happens to that fish, does it just die on the paper?

MR. CARTER: Not a quota, but the inshore

allowance this year as you know is 190,000 tonnes. In 1990 the entire inshore

allowance was taken but other years it was not taken, but we are certainly not

going to suggest that any of that inshore allowance left in the water be

transferred to the offshore because the fact that it is not taken speaks for

itself. It means that the fish is just not there to be had. It would not make

any sense as far as we are concerned to encourage that any left in the water be

reallocated to the offshore sector.

MR. DUMARESQUE: I was thinking more

particularly of the reverse, the offshore, if these allocations are not caught

does anything happen to them? - because under the development plan of the

under-utilized species, they have review dates in place that if the allocations

that are made to the different companies are not caught by a certain time then

they can be reallocated to the next in line sort of thing.

MR. CARTER: Well, the offshore allocation is

always taken by the way, the offshore quota.

MR. DUMARESQUE: That was my question. Last year

I think the 2J quota for some of the offshore companies, I am not sure if it was

taken, but that was basically what I was wondering about.

One final question on the salmon management plan. I

know last year for the first time it was brought in under a quota system for

most parts of the Province and in Labrador except for the northern area and it

certainly did not meet with much approval, in Labrador in particular, and now we

are on the brink of seeing the new plan again this year. I wonder has the

Province made any representations to the Federal Government on that plan?

MR. CARTER: Yes. In fact no later than

yesterday we had a discussion with the Minister on the salmon management plan.

Again I cannot speak for the Minister - that is his prerogative, he has to make

a statement on that - but it seems to me that we are not going to have time this

year to make any drastic changes in the salmon management plan, certainly not

along the lines that is being talked about now in some circles. Namely that

there be a reduction in the commercial salmon fishery in most areas, or indeed

the abolition almost of the commercial fishery probably in all but in Labrador.

I think the Minister agrees that the time is just

not available now to make any such changes, so I expect what he will be doing is

maintaining the status quo this year, allowing things to continue this year as

in previous years, with a view to taking what time we have between now and next

year to work out with the various groups some kind of a management plan. The

position we have taken on the salmon is that if a moratorium on the commercial

harvest is deemed to be necessary then there must be an appropriate compensation

package put together for the fishermen affected. Every i must be dotted

before there is anything agreed to because you are dealing with lives and the

livelihood of a lot of people. Salmon makes a big contribution to the earned

income of a lot of Newfoundland fishermen, more in your area and in White Bay

than probably in some other areas, but certainly it is not something that can be

taken lightly. We would want to be sure that all of the groups - the union and

the fishermen and everybody else - had an opportunity to have some input into

any such plan. Only then would we support the abolition of the commercial

fishery, only after we are satisfied that everybody else is satisfied.

MR. DUMARESQUE: Thank you.

MR. CARTER: Stocks have to be rebuilt, there is

no doubt about that, and I guess it will take some drastic measures in order for

us to do that.

MR. CHAIRMAN: Thank you, Mr. Minister, thank

you Mr. Dumaresque. I think now we will take a short break and we will come back

at five minutes after the hour, and we will pick it up and go on from there.

Recess

MR. CHAIRMAN: Order, please!

I would like to welcome the Committee back in session.

Before going to our Vice-Chair for his questions I would like to ask a Member of

the Committee if they would move the minutes of the Resource Estimates Committee

of May 2 1991, which was the Department of Development.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Mr. Woodford.

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

overfishing has been mentioned here again this morning. It is always a

contentious issue, Mr. Minister. You mentioned the fact that you have an

advisory committee set up to advise the Federal Government on what measures they

should take with regard to foreign overfishing. There is always criticism of

foreign overfishing and how it should be handled. How would you as a Minister

and your Administration - what are some of the conditions or solutions that you

recommend for dealing with this problem?

MR. CARTER: I want to make a correction in the

preamble to your question, Mr. Chairman, in that the advisory council to which I

referred earlier is a council that is put in place to advise the Province, the

Provincial Minister of Fisheries. That council does not have any direct

connection with the Federal Department of Fisheries and Oceans. They meet on a

regular basis, and there are matters referred to that council. I should point

out, by the way, that members of that council represent pretty well all the

sectors of the fishing community. We have men like Vic Young, for example, Bruce

Chapman, Gus Etchegary, and we have several really successful fishermen, inshore

fishermen. We have trawlermen on it, Richard Cashin is a member of that council,

and people from the university and from the fisheries college. I find it to be a

very worthwhile endeavour to have the cream of the fishing industry in

Newfoundland at our disposal. We referred the matter of overfishing to them a

couple of months ago and asked the council to give us some consideration. They

struck a sub-committee of their group and they met with us and the Premier on a

couple of occasions and discussed the whole problem. But the question you are

asking, I presume, is what would we do about it

MR. WOODFORD: Yes, what is your position with

regards to foreign overfishing?

MR. CARTER: I guess the easy way out would be to

say that we would unilaterally declare jurisdiction over the entire slopes and

edge of the continental shelf. That would be the easy way to address that

question, but we are told from everybody who is in the know that that would not

work. It would be difficult to enforce that kind of an action. We have been

saying all along that probably the most effective - short of doing that, and

there are reasons why that cannot be done, obviously. I am not alone here so I

cannot go into too many details, but the best legal advice we get is to the

effect that it would be difficult to get the kind of consensus that is necessary

amongst the coastal states of the world to make that kind of an action stick.

What we have been saying all along is that the Prime

Minister himself should become more involved in the process. We recognize that

the Federal Government has done a lot. They have had delegations go to Europe

and they have had public relations campaigns, and a year and a half ago or so

they appointed a special ambassador, Mr. Allan Beasley, who is now retired, by

the way, and they have had all kinds of special initiatives undertaken by the

Federal Government including our Minister, Mr. Crosbie, but none of it appears

to have worked because the problem is getting worse and not better. We have been

saying that maybe the time has come for the Prime Minister himself to get more

involved and to intercede with his counterparts around the world and try to get

some sanity out there. It seems to us that if the Prime Minister were to do that

and to talk to the heads of state in the other countries and the U.S., of

course, and Great Britain and West Germany and others, that that might have the

desired result.

Focusing attention on the problem, the advisory

council, I cannot this morning go into all the details of their recommendations,

I do not have them here in front of me, but they had a sizeable list of

recommendations as to what, in their view should be done to focus attention on

the problem first of all, and then hopefully get the desired results. There is

no easy solution to it, but certainly we are not satisfied with what has

happened to date.

MR. WOODFORD: So you are saying there is no easy

solution to it and everybody seems to agree with that, but at the same time you

are saying that the Prime Minister should get involved. Is there any other

consensus by other countries involved? Am I missing something in saying that

there is almost an impossibility to come to some unilateral decision?

MR. CARTER: I think the tactic that has been used

by the Federal Government is to work through the diplomatic channel that is open

to us and to try to bring about the resolution to the problem that way. But

there is a United Nations meeting, and it has been called for that purpose, a

conference sometime this summer where that problem will be addressed, and maybe

that is where Canada will have an opportunity to make a strong plea to the

member nations to take some action to head off what is happening out there. But

Canada so far, has chosen to go the diplomatic way, and like I said, they did

appoint a special ambassador two years ago, but all that seems to have been for

nothing.

Now there have been talks of economic sanctions, for

example, and there are upsides and downsides to going that route as well because

where does that end? If you start imposing sanctions on them it will be tit for

tat, and there are no guarantees that that will work. But it certainly appears

that all the action that has been taken to date, like the closing of the port et

cetera, has not worked either, so there are going to have to be some new

initiatives taken, and I think the Prime Minister is going to have to step in

there and deal with his counterparts and try to get something done.

MR. WOODFORD: Last year P. Janes and Sons made an

offer to try to get that (inaudible) machine that was on Bell Island. I forget

the name of the company there on Bell Island that had it at that time under

lease from your department.

AN HON. MEMBER: Pinnacle Seafoods.

MR. WOODFORD: Yes, Pinnacle Seafoods. That

eventually went to a company in Port de Grave. They have, if I am not mistaken,

a quota of approximately 600 tons of herring, and yet P. Janes and Sons, with

the quota for the White Bay area something like 5,000 tons with 4,700 tons left

in the water. Why was the decision made at that time for that to go to Port de

Grave for the filleting of herring, or was it put there for something else?

MR. CARTER: Yes, that is the machine that was

brought in in conjunction with the operator of the small plant on Bell Island.

He had the machine over there for I guess a year and it did not work out. We

repossessed the machine, we took possession of it. Then we called proposals for

it and I am told that the proposals were not that good, were they? We did not

get a good proposal anyway to buy the machine. The machine I think is worth over

$200,000 -

MR. WOODFORD: Two hundred and twenty-five thousand

dollars.

MR. CARTER: Two hundred and twenty-five thousand

dollars. The offers that we got were ridiculously low and we could not justify

selling it even to the highest bidder. Then we decided to lease it out on a

short term basis to Alec Moore's company in Port de Grave. That lease has

expired. I think it ran up to December, Harold, wasn't it, last December? It was

a very short term. What is the status of that machine now? Is that -?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. We are now in the process of

calling for proposals again, working with the company. There has been nothing

done on it yet. There has been no response yet. Has it been advertised?

AN HON. MEMBER: Yes.

MR. CARTER: Yes, we have advertised it and there

will be a decision soon I guess as to what we will do with it. I visited the

plant by the way you are talking about in Jackson's Arm last year.

I was hopeful at the time, and I said as much to the

operator there, that something could be worked out but the offers that we got

for the plant were so low that we could not possibly justify selling it at those

prices.

MR. WOODFORD: I can understand you not justifying

a sale but my question was: how could you justify putting it in an area where

there was only a quota of 600 tons versus a quota for 5,000, and to deal

specifically with herring? And the second part of my question is: that machine

has been used for filleting of small cod, undersized cod. Is there any truth to

that?

MR. CARTER: Our initial objective is to sell the

machine. We do not want to be the owners of fish filleting machines, we want to

sell it, get a decent price for it and be done with it. We did not want to enter

into any long term lease with anybody. In fact the shorter the lease the better

because while the thing was under lease then that would preclude us from selling

it. Therein was the reason for entering into a short lease with the company in

Port de Grave. It was only a short lease, a three month lease I think. That

lease has expired and now it is being offered again.

MR. WOODFORD: Is it up for proposals again now,

for sale?

MR. CARTER: Yes. You should tell your people in

Jackson's Arm as we will if we -

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, alright, I have to make a

correction. The lease expired with Moore Fish at the end of December. Then we

called for proposals again to sell the machine. The proposals that came in were

not satisfactory so we extended the lease with the fish company in Port de Grave

for an additional three months. So I presume that will expire on the last of

March or thereabouts. The end of August. Alright. So the lease will expire at

the end of August. Then we will have to start the process again of trying to

find a buyer for it, or maybe by that time we will have decided to go for a

longer term lease. Certainly we wanted to sell the machine first.

MR. WOODFORD: I am wondering if at that time, Mr.

Minister, you could take into consideration the problems encountered in White

Bay now. The crab plant closed there last year and now we have Sop's Arm fishery

gone in Sop's Arm, and it does not look like there are going to be any buyers

there. FBDB put it up on auction Thursday; nobody went even a cent over 244.5,

their opening bid, and it looks like the whole sector down there now is pretty

well gone except for the other plant in Jackson's Arm, so I would like for you

and your officials to take that into consideration. I cannot speak for P. Janes

and Son's, but if they make a proposal again, look at the whole White Bay sector

because it is very vital.

MR. CARTER: I can only tell you that there is a

lot of interest shown in that machine. A lot of companies expressed an interest

in it, but none of them were willing to pay even close to the price that we

would have to get to justify its sale. We will take that into consideration when

the time comes.

MR. WOODFORD: I do not know if it is too early or

not, but what about the prices for caplin this year? Is there anything new

established in that particular -

MR. CARTER: The negotiations, of course, for the

price of caplin have not started yet, that is usually an eleventh hour type

effort as you know. So we are not sure. I cannot say with any certainty what the

price will be, but we are lead to believe that the price this year will be maybe

close to what it was last year. That is the fairest statement, I guess. We have

no reason to believe that it will be much less than last year. The quantity

might be down a few tons. Last year I believe it was thirty-something thousand.

This year it may be down to 25,000, we are not sure yet. These negotiations will

be starting soon. I guess they are ongoing now. In Japan now, as a matter of

fact, there is a delegation of people from the private sector starting the

process, and you know, it usually ends up one minute before midnight before

there is an agreement.

MR. WOODFORD: Yes, that is the usual process. I

heard that there was a delegation in Japan looking into that right now, and I

just wondered if you had anything new on it and was this a turn for the better

trying to get something in place before the eleventh hour?

MR. CARTER: One of our Assistant Deputy Ministers

is in Japan with the delegation and he is coming back on Friday. He will be

giving us a thorough briefing then on the market outlook and the situation, so

at that time maybe I will be able to have more information on it.

MR. WOODFORD: You mentioned the fact that the

quantity will be down this year to possibly 25,000 tons.

MR. CARTER: That is not a certainty; we think it

might. On the basis of the information we have, it seems to indicate that maybe

the volume will be slightly less than last year.

MR. WOODFORD: What about the Norwegians coming

back into it this year.

MR. CARTER: Yes.

MR. WOODFORD: Will it have any affect on -

MR. CARTER: They are getting into it, but their

caplin, I understand, is smaller isn't it?

AN HON. MEMBER: Yes.

MR. CARTER: It is not as attractive for the

Japanese market. They do not have the quantities that the Japanese are looking

for. They will be a factor, no doubt, and we cannot ignore them. But it appears

that Canadian caplin are the size the Japanese like, and we have dealt with them

successfully now for the past number of years, but the Norwegian caplin cannot

be ignored either. We just cannot sit back and rest on our oars.

MR. WOODFORD: You mentioned earlier that all the

processing of the 30,000 tons last year was done in Japan.

MR. CARTER: Thirty in Japan, and five in Taiwan.

MR. WOODFORD: And five in Taiwan. The fact that

there is a small Newfoundland company now looking at the same thing and possibly

doing the same thing as the Japanese do. Why is it, I wonder, we are so labour

intensive? You know, why is it taking so long for someone in this Province to do

it, or do the Japanese want that? Do they want to process here? That is the

question.

MR. CARTER: Well, there does not appear to be too

many obstacles. Like I said earlier, they do not need the labour in Japan. There

are probably arrangements in Japan between the importers and the super markets

and others that might very well be affected if, in fact, the product goes in in

a finished state. I guess that would probably cut out some of the middle people

there, and I guess that has to be a consideration from where they sit. But you

ask why has it not been done to date?

MR. WOODFORD: Yes.

MR. CARTER: I do not know. I guess it is part of

the mind set that we have allowed ourselves to get into, the comfortable pew

syndrome where quick money, a guy now can - I had a processor in my office last

week and he said, 'look, we will get so many tons of caplin, we will get them in

and get them out and we will make ourselves a good dollar, but why in the hell

should we worry about final processing, the cost and the risk that will involve

and everything else? I expect that is probably a reason. Of course in terms of

the finished product there will be a tariff barrier as well. There are no

tariffs on the raw material going in. But when the finished product goes in that

will trigger a tariff. Now I do not know how much it is. Does anybody here know

if it is prohibitive or -?

MR. WOODFORD: That is what I was wondering. There

must be some reason for it and maybe that is the reason.

MR. CARTER: Fifteen to twenty per cent. But I have

had discussions with some of the processors who have told me that will not be a

big impediment, they can get around that. They will have to pay the tariff but

they can probably pay it and still make a dollar.

MR. WOODFORD: Because I mean that is (Inaudible).

MR. CARTER: I do not want to convey the impression

that all this is going to happen tomorrow, that tomorrow Newfoundland will

become the caplin production capital of the world. That is not going to happen

overnight. But I am saying there is potential there and we are now exploring

that potential and talking to the various people in the industry, encouraging

them to get involved in it. I think given time that we can start doing it that

way. If we do then it will be a Klondike for Newfoundland because it is probably

the most labour intensive industry that Newfoundland will see.

MR. CHAIRMAN: Thank you, Mr. Woodford.

MR. CARTER: I was shown a video tape two weeks ago

made in a Japanese factory where this is being done and there is nothing at all

being done there that we cannot do over here, nothing at all. It is a pretty

simple operation.

MR. HEWLETT: Excuse me for the interruption. Do

they take the eggs out of the caplin?

MR. CARTER: No, no.

MR. HEWLETT: They don't.

MR. CARTER: But what I did see, Alvin was a

factory, you could see nothing but people dressed in white and hairnets on.

Everybody going to it, piles of caplin, each caplin individually taken and

skiverred on a rack. It is highly labour intensive. It is not backbreaking

labour either, it is something that the ladies can do as well, you know.

MR. CHAIRMAN: Thank you, Mr. Woodford, Mr.

Minister.

Just a reminder that now that we are into our - well I

guess we consider that final hour, the Government Members in this particular

Committee have by leave allowed the Opposition Members, instead of going the ten

minutes, to try to ensure that we can clue up for the day, pretty well a twenty

minute run or a little better than ten minutes if required so that we can get

the dialogue back and forth. I just want to point out that it is by leave and if

one of the Government Members decided they want to pick up and carry on then as

long as each of the participants realize that that is the format that we are

under.

I would also like to point out at this time before we

go on to the next individual that we are really here to discuss the estimates.

Although we always allow pretty freewheeling discussion I just want to remind

all of us that somewhere between now and 12:30 p.m. we would like to deal with

the actual estimates themselves and the numbers from 1.1.01 right on through. So

I just remind all of us of that, that we may want to get to that this morning as

well.

By leave we will go to Mr. Matthews. The only reason I

say "by leave" of course, is none of the other Members wish to speak at this

point in time and you are more than welcome to participate, and so by leave we

will go back to Mr. Matthews.

MR. MATTHEWS: Thank you very much, Mr. Chairman. I

appreciate the leave given by Members of the Committee. Just a few things

flowing out of the Minister's presentation that I did not get a chance to cover

in my initial questioning and remarks. I believe you mentioned that there were

twelve plants divested - will you be able to inform us where these plants are

located? How much Government received from the sale of those plants? And the

monies received for the sale of those plants, would that money be shown anywhere

in the estimates?

MR. CARTER: Do you have a list there, Harold?

Okay. There is a plant in Trout River that was sold I presume to J.W. Hiscock

and Sons. Do you want the sale price and all that, Bill?

MR. MATTHEWS: Sure, yes, please.

MR. CARTER: The selling price for that plant was

$50,400. Rocky Harbour plant, sold to Harbour Seafoods Limited, in October of

19(Inaudible) for $18,500. The plant in Witless Bay sold to Shamut Fisheries

Limited - and that is a plant by the way that they bought; you know the plant I

am sure - they bought it for the grand sum of one dollar. That is all it is

worth, because they took it down right from the footings and rebuilt the plant.

So it had no value.

Cook's Harbour, sold to Fisheries Products

International in 1990 for $68,000. The St. Bride's plant was sold to Supreme

Seafoods Limited, January of this year, for $28,000. Sandy Cove sold to White's

Fisheries Limited -

AN HON. MEMBER: Who? White?

MR. CARTER: White's Fisheries, $54,500. That was

sold by the receiver, I think. Wasn't there a receiver appointed on that one?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Musgrave Harbour, Beothuck Fisheries

bought that for $100,000 in January 1991. We just concluded the sale of the

barge in Smokey, Labrador 1, to Canship Limited for $33,000. We have just sold

the small feeder plant in Bridgeport to Conpac Seafood Limited for $50,000. We

have sold the plants in Black Tickle and Williams Harbour to H.B. Dawe Limited

as a package deal for $151,000. That was a tender call. Woody Point, there is a

plant there we sold to 3 T's Company, whoever they are, in April of 1991 for

$40,000.

MR. MATTHEWS: How much?

MR. CARTER: Forty thousand dollars. That is it.

That is part of our programme of divesting ourselves of these properties.

MR. MATTHEWS: Twillingate, is that sold now?

MR. CARTER: That was last year.

MR. MATTHEWS: Was that sold last year?

MR. CARTER: No, we did not sell it, the

Newfoundland and Labrador Development Corporation sold that to Conpac Seafoods.

That plant did not belong to the Province.

MR. MATTHEWS: Right. Would you know offhand what

it was sold for, Mr. Minister?

MR. CARTER: Four hundred thousand seems to ring a

bell but do not hold me to that. I can find out and let you know. But again,

tenders were called, that plant was advertised for the required time and the

Conpac people were the only - about $450,000.

MR. MATTHEWS: In your recommendation this year to

the Atlantic Groundfish - AGAC, I suppose we would call it - I believe you went

and recommended a total allowable catch of I think it was - if my memory serves

me correctly - between 170,000 and 185,000? I believe, if my memory serves me

correctly, that you recommended a total allowable -

MR. CARTER: One hundred and seventy to 185,000, I

think.

MR. MATTHEWS: As well, at the same time - and of

course we know what the TAC was set at and that it will decrease over the next

three years - the Province was calling for a reinstatement of the Scandinavian

long-liner allocation and the resource short-plant programme. At the time, and

shortly thereafter, I wondered both privately and publicly, based upon your

recommendation for the total allowable catch, where do you foresee being able to

access fish to reinstate the Scandinavian long-liner allocation and the resource

short-plant programme when in essence you are recommending a total allowable

catch lower than what we saw the Federal Government set.

MR. CARTER: That is a good question.

There are a number of non-Newfoundland user groups

given access to allocations, that in our view have no entitlement to them. We

saw a case the other day where a company known as the Osprey Company chartered

the Polar Storm, because their vessel sank, and went out and harvested 610

tonnes of groundfish, brought it into Harbour Grace with a view to repackaging

it and then transhipping it to a foreign country for processing. We interceded

and let it be know that we were not prepared to allow them to issue a permit for

the fish to leave the Province. Shortly thereafter they came back and told us

that being so then they would undertake to have the fish processed in a Canadian

plant, in fact they named the plant, I think it was some place up in New

Brunswick, a co-op plant. Under the reciprocal arrangement that we have with the

other provinces we could not legitimately, I guess, withhold a permit to allow

them to do that because it is often the case where fish landed in some other

Canadian province is trucked or brought into this Province for processing, so

that is sort of a reciprocal arrangement that we have.

Anyway, we found out after the fact that that company

lied to us. They took the fish in trucks to North Sydney somewhere, Mulgrave,

and immediately put it aboard a ship and took it to Greenland for processing. I

wrote the Minister in Ottawa and objected to what had happened and suggested

maybe Canada should follow suit with Newfoundland and bring in laws that would

prohibit the shipment of raw fish out of Canada, such a law as we have in

Newfoundland.

Now, the Minister, Mr. Valcourt, came back with all

kinds of excuses and he tried to rationalize what happened. But there are a

number of companies that have access to fish that in our view have no legitimate

right to it. In fact last year there were something like 40 million pounds of

northern cod taken out of the waters adjacent to our shores and taken back to

Nova Scotia. If you look through the management plan of the Federal Government

it is not difficult to identify several other companies that have, in some cases

rather small allocations granted, but allocations of fish. Our position is that

surely the resource short-plant programme and the Scandinavian long-liner

programme have a greater right to that fish than some of these companies. That

is the source from which we would have seen the fish come to accommodate the two

programmes that were abolished.

Using the principles of adjacency, which Canada at

least gives lip service to, and community dependency, there is every reason why

we should have had that fish as opposed to these non-Newfoundland companies who,

at least in our view, have no right to it.

We were not looking for large tonnages. In fact, very

modest tonnages would have kept both programmes alive, but now both of them are

gone.

MR. MATTHEWS: In your presentation as well, Mr.

Minister, you made reference to Marine Service Centres. Looking through the

Estimates, I see there is a decrease there. Last year in the revised budget

there was -

MR. CHAIRMAN: Mr. Matthews, I wonder, out of

courtesy for other people who are trying to keep up with you, could you identify

the page and the item number so that it would be easier for people to follow.

MR. MATTHEWS: Sure, Mr. Chairman. Page 112,

sub-head 2.2.03 under Marine Service Centres. There was $833,000 voted there

last year and $519,000 this year. Is that because some of the centres have been

completed or what would the reason be for that because I believe in your

presentation you said there were twenty-five Marine Service Centres existing in

the Province at present?

MR. CARTER: No, these were major improvements

undertaken to a number of service centres the Province funded on its own, and

that accounts for that. It is a one shot deal; a one shot arrangement.

MR. MATTHEWS: As well we see, looking at the

Fisheries Loan Board, I took notes which goes back to the last page in the

department there, page 120. Looking at the Fisheries Loan Board, I believe

overall you are down $5 million - yes, it is $10,759,000 revised last year to

$7,783,700 this year. My own thoughts on it were that in this time of difficulty

and so on, that the budget for the Department of Fisheries and certain sub-heads

would have been increased. In analyzing the budget and the estimates you see

that there is about $3 million left there, but in overall departmental budget

there is $5 million, but $3 million less to the loan board. How can you account

for that? Could some of your officials explain why that is? Is it that people

are getting out, that there are less fishermen looking for loans or what would

be the reason?

MR. CARTER: Well certainly there is a smaller

demand, given the state of the industry, especially on the west coast. It is

ludicrous to consider increasing, for example, the fleet on the west coast of

the Province where you have already over capacity, and so the demand on the

board is down. Interest rates have dropped, as you know, in the past few months,

thereby reducing the amount of subsidy that we will need to pay in cases where

we are paying that subsidy on interest. For example, on direct bank loans the

Province subsidizes the interest as three percentage points below the prime

rate, and in the case of direct loans there would be a smaller interest payment

as well because of the reduction in interest rates.

The main factor is the reduction in the demand of

larger vessels. I guess in these circumstances that is the way it should be. It

does not make sense now with the stocks declining to encourage fishermen to get

too far in debt building vessels for which there is no fish. Plus the fact there

has been a substantial influx of new boats into the fishery during the past

three years.

MR. MATTHEWS: Is the loan board able to provide

assistance to all fishermen, I mean legitimate, good applicants, not fishermen

who are in arrears or have problems. With that amount of funding this year -

MR. CARTER: A couple of things have happened. We

have changed our policy slightly in terms of the direct bank loan. Previously

loans in excess of $50,000 were directed to the banks, loans that were

subsequently guaranteed by the Province of course, that meant that the Province

did not have to have that money on hand to fund that loan.

We are proposing that there be a slight change in that

approach, a change that might very well - in fact, we know we will see a

reduction in the amount of money that we will need to fund the number of

applications that come in; so there are a number of little things that we are

doing over the next few months to accommodate what we had to do, but I should

tell you that 80 per cent of the people who apply for loans are approved and

that is not a bad -

MR. MATTHEWS: People who apply?

MR. CARTER: 80 per cent.

MR. MATTHEWS: So 15 per cent fall into the bad

risk category or -

MR. CARTER: I do not know what the ratio is. Maybe

Brian would know that, but 80 per cent are approved while the others are poor

risk or just do not measure up.

MR. MATTHEWS: But anyone who is legitimate and a

good risk can get funded, is that what you are saying?

MR. CARTER: Yes, and will continue to get funded.

MR. MATTHEWS: Oh yes, but I just wondered with the

reduction in the amount from last year if we were going to see people with good

applications that would not be funded.

You mentioned the change, Mr. Minister, has that

change been made public or is that something -

MR. CARTER: No, not yet, it is not final; it has

not finally gone through the system.

MR. MATTHEWS: When do you expect that to happen?

MR. CARTER: Oh, I would think, soon. I would

expect within days or a week or so anyway. I might note too, by the way, that in

the reduction in both our capital and current account expenditures this year, a

major part of that is accounted for by virtue of the fact that capital projects

under the NIFTA agreement have now been completed and thereby -

We are in the fourth year of the agreement and that

accounts for the very substantial reduction in our capital account-current

account estimates.

MR. MATTHEWS: You mentioned as well in your

presentation about the top-up money or grants, small grants or special

assistance and a lot of that went for fishermen's committees around the

Province; a lot of times to top up federal funding and so on. What has happened

to that amount of funding, was there a decrease in that too as well, this year?

I know in my own case, and I am sure other Members

find that, that bit of top-up money which committees can access from the

Province sometimes, makes a difference in getting enough materials to be able to

properly carry out funding access to the Federal Government and so on, but what

is the difference in that particular - I understand that there is a decrease in

that amount of money as well?

MR. CARTER: We are budgeting this year the same

amount we budgeted for last year.

MR. MATTHEWS: How much is it?

MR. CARTER: $200,000.

MR. MATTHEWS: Community projects, is that the one?

MR. CARTER: Community projects, yes. Last year we

budgeted for $200,000, this year we are budgeting for $200,000.

MR. MATTHEWS: Yes, but it was revised upwards last

year because you spent $440,000?

MR. CARTER: We did that; we had to provide

$240,000 to the Port aux Basques plant to get it in operation, working with the

community futures people I think, and the Town of Port aux Basques and others;

so we provided some infrastructure for them, $240,000, to be exact, but again,

that was a one shot deal, but to answer your question, the budget this year for

that small programme, is the same as it was last year and I suppose the previous

years.

MR. MATTHEWS: Just one final question, Mr.

Chairman. Look at the same page and your construction of fishing facilities

where there is again a decrease of $3.3 million. What would be the reason for

that? Subhead 2.2.09 at the bottom. The total construction of fishing facilities

is down $3 million overall.

MR. CARTER: That is the ERDA Federal-Provincial

cost shared agreement. Marine service centres would account for that reduction.

MR. MATTHEWS: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Matthews and thank

you Mr. Minister.

Mr. Noel.

MR. NOEL: It seems to me there is a lot more

activity down in St. John's harbour with the off-loading of fish these days. You

see these people who have these lift operations and that sort of thing. I wonder

what the Department thinks about that and if there is anything that can be done

to improve how things are done there, or if it is regarded as operating properly

- just your views generally?

MR. CARTER: You will be interested in knowing, Mr.

Chairman, that the Member now represents in part, I suppose, what has become the

biggest inshore fishing port probably in Canada, certainly in Newfoundland.

MR. NOEL: I wish I did represent it.

MR. CARTER: Well, you have a part of it I presume.

The Gut would be your -

MR. NOEL: That is St. John's East.

MR. CARTER: There is a lot of activity down there

and it is sort of encouraging to see it. There are a lot of plans being made,

mostly by the private sector working with the public sector in providing

off-loading. For example, no later than last week I met with a gentleman who is

very much involved in the off-loading activity in the Harbour. He has some

thoughts about providing boxing, for example, the boxing of fish in plastic

boxes. I cannot give you too many details on that yet because it is a private

initiative and it is far from concluded, but there is a lot of good stuff

happening. It is becoming a major tourist attraction.

MR. NOEL: It is very interesting, and when you go

down there it is good to see all the activity.

MR. CARTER: Absolutely.

MR. NOEL: Sometimes it seem to get a bit crowded.

MR. CARTER: Then, of course, we have the boat

basin on the other side of the harbour now. The Federal Government is putting a

boat basin over there and I am told there is some increased activity on the

Southside of the Harbour now. In fact the chap who came in to see me last week

complained that there is not enough space on the Southside of the harbour to

accommodate what they are trying to do and he is encouraging boats to land their

fish on the other side. There are a lot of good things happening. There is a lot

of emphasis being put on quality and a lot of emphasis is being put on the

boxing of fish. For instance the Scandinavian type long liners that we have,

have probably the best technology in Canada for boats of their size. In their

case they use gill nets and the fish are boxed, iced and gutted and not touched

by human hands after it goes into the boxes. It is taken directly to the plant

and left in the box until it is ready to be put on the processing line. That is

the coming thing now for off-loading fish, for handling it. Most big long liners

now are designed with a view to accommodating this kind of boxing because it

does require a certain configuration in the hole of the vessel to be able to

maximize its capacity, so there are a lot of good things happening there.

MR. CHAIRMAN: Thank you. Mr. Minister, are we

ready for the question?

MR. WINSOR: Mr. Chairman.

MR. CHAIRMAN: Mr. Winsor.

MR. WINSOR: With respect to marine service

centres, has the Province ever commissioned a study to look at where they are

needed? I am sure Mr. Murphy is quite familiar with the situation in Musgrave

Harbour, perhaps one of the busiest fishing towns on the northeast coast. I

realize that there is a bit of a problem in that the Federal Government has to

put in place another finger pier so that it can accommodate a travel lift, but

there is certainly a great concern in that community over the need for a travel

lift there. Has there been any kind of a study done to look at where the need is

greatest now for marine service centres?

MR. CARTER: Yes. We just completed now a very

comprehensive study done by Coastal Consultants, I think they call themselves,

and it is a good study. They looked at the harbour and areas to which you

referred - Musgrave Harbour, I guess you are talking about.

Don't forget there are three major facilities in

pretty close proximity to Musgrave Harbour. Namely, Wesleyville, Fogo and

Triton. And Twillingate of course, Durrells. It would be difficult right now to

justify putting in another centre. In fact this report recommends that we not

build any more marine service centres at this point in time. Sort of consolidate

and maybe improve the ones that we have, identify those that can be looked upon

as a regional facility, and by putting in bigger lifts and that sort of thing.

But I have talked to the people in Musgrave Harbour two or three times and I

have told them that I do not see any opportunity in the foreseeable future that

there will be a service centre out in Musgrave. But that is not to say that at

some point in time down the road they will not get one. But certainly right now

it would be difficult to justify. Given the fact too, by the way, that this

programme is over and done with now, isn't it? In terms of the ERDA programme

the funds have all been exhausted and -

MR. WINSOR: So if the Federal Government was to

put in the next finger pier that is needed then they still would not be able to

avail of a travel lift?

MR. CARTER: Not under this agreement, no. Now I do

not know how big a hardship is imposed on the people in Musgrave Harbour -

MR. WINSOR: If you check the marine service

centres that are in the area - the ones at Fogo and Wesleyville, which are the

two nearest ones - then there is no way possible that they could accommodate the

number of boats that are in Musgrave Harbour, and they revert to using the

old-fashioned slipways and wait till high tides and a front-end loader type

thing.

MR. CARTER: We are going to be expanding the

service centre for example in Wesleyville, we are going to be spending $1

million on that. La Scie, that would not be a factor, I suppose, would it?

MR. WINSOR: That is too far away.

MR. CARTER: But the marine service centre in

Durrell last year had a bigger lift installed.

MR. WINSOR: But I am talking about the actual

space say, for winter storage. Aren't most of these existing places practically

maximized to the fullest?

MR. CARTER: I guess to be frank with you, Mr.

Member, is that from where we sit and on the basis of the report that we just

received there are other places in the Province that are probably in a much

greater need of such a facility than Musgrave Harbour. I say that with great

respect. There are a lot of places that do not have access to these facilities

as do the people of Musgrave Harbour. It would be difficult right now to commit

ourselves to putting one there until the other needs are met.

MR. WINSOR: The second one is - someone has

referred to caplin already. Last year the Province gave some consideration to

imposing some regulations with respect to the trucking of caplin, distance, that

type of thing. Are there any plans in place this year to restrict the amount of

trucking involved in the caplin industry?

MR. CARTER: No, I do not think so. I am not aware

of there being any. I know last year there was some talk about restricting them.

There was some talk of restricting the distances that we would allow caplin to

be trucked. But I think now with the equipment that they have - tanks and all

that - it is not difficult to move caplin, and the quality does not seem to

suffer. So, I guess, the short answer to your question is that we do not have

any such plans at this point in time.

MR. WINSOR: I understand in Notre Dame Bay this

year, Notre Dame Bay meaning from Cape Freels all the way down past Green Bay I

think, there is some consideration to splitting the Bay into three zones for

fixed gear. Has you Department had any input to it, made any recommendations in

view of what had happened last year with the southern part of the Bay unable to

fish for caplin until the northern

section was open?

MR. CARTER: We are not aware of any final decision

being taken on that yet. We know there have been requests from a number of

places to do that, but we are not aware of there being any final decision yet

being made on it.

MR. WINSOR: It is my understanding from talking to

the federal people that next week on the 13th, whenever the 13th is, they are

going to be meeting and they have pretty well split the Bay into three distinct

zones for fixed gear and allocated quotas to each section, are you not aware of

that?

MR. CARTER: No, that is the meeting of the Caplin

Advisory Committee. Our Department is represented on that committee and that is

one of the things that will be discussed and maybe dealt with at that meeting

next week, it is called the Caplin Advisory Committee. It is a committee that is

chaired, I presume, and initiated by the Federal Department of Fisheries and

Oceans on which we have a representative. So that will be the subject of some

discussion next week.

MR. WINSOR: The final question I have is with

respect to guaranteed loans, I know the Province has now extended the one to the

Fogo Island Co-op for a number of months, what exactly is the Province's

position on guaranteed loans to fish plant now?

MR. CARTER: I guess I can sum it up Sam in a

couple of words, more discipline. We are trying to get more discipline now into

the processing sector and maybe to some extent stop propping up companies that

appear to be going nowhere. We have had that done in the past, of course, only

to find out at the end of the day that the companies have gone under and

Government has been left holding the bag with a loan guarantee on its hands. So

any legitimate request from a legitimate company that appears to have some hopes

of survival, their application is given very sympathetic consideration. But if

it is a hopeless situation, and I guess I can liken it to my own District when

Oceana were the operators of the Twillingate Fish Plant and when they came to us

for help, through no fault of their own that company showed absolutely no

prospect of survival or potential to survive, the end result being that we had

to say no to them. We have done that before in other cases and in most cases as

it turned out it was a good decision.

It is not fair to the other companies. We have had

complaints from the Fred Woodman's of the world and others that they are not

playing on a level playing field and if we start propping up companies it is not

fair to them. So, we will be very selective.

MR. CHAIRMAN: Thank you, Mr. Minister and Mr.

Winsor.

My colleague, Mr. Woodford.

MR. WOODFORD: Do you have another one Mr.

Matthews?

MR. MATTHEWS: Yes, just a short one.

MR. WOODFORD: Okay.

MR. MATTHEWS: Mr. Minister, through you to Mr.

Murphy. I had a discussion with Mr. Murphy some time ago about the operation of

the Fortune Marine Service Centre, that time you were trying to tie together

some arrangement, I believe, with the Harbour Authority down there, has that

materialized?

MR. CARTER: Yes, that is done.

MR. MATTHEWS: It is done.

MR. CARTER: We are in the process now of

finalizing the deal with the new Harbour Authority to manage the plants, I do

not know how much longer it will take to finish off the deal, the deal should be

completed by the last of the month.

MR. MATTHEWS: So the question then is, the revenue

from the users of the facility will go to the Harbour Authority, is that what

will happen, and the expenses paid?

MR. CARTER: Yes.

MR. MATTHEWS: So is the centre then expected to be

self-sustaining? Is that the objective, or will there be assistance from

Governments too?

MR. CARTER: The hope is that they will be

self-sustaining, but if there are any shortfalls then I think the deal is that

we will have to look at coming up with the necessary funds to offset any

shortfall. But we are hoping that by doing it this way, these service centres

can become self-sufficient, and I should add, by the way, that the rates they

are going to be charging will be consistent with the rates that are being

charged now. That is correct, so there will not be any great increase in rates.

MR. MATTHEWS: Thank you. Another question that

perhaps one of your officials can help with: last year there was some scallop

processing that took place in Fortune, by permit, a permit to process scallops.

FPI had, I think, leased part of the building and then another group went in

there. I understand that will not be going ahead this year. I am wondering if

you could explain why the change or what the department's rationale would be for

not re-issuing the permit in Fortune? Would you or one of your officials know?

MR. CARTER: For scallops?

MR. MATTHEWS: Yes. There are some small forty-five

footers that were fishing scallop last year bringing it in to Fortune for

processing. I was told last week that that permit will not be re-issued for this

season. Is that correct?

MR. CARTER: Well you are aware of what is pending

in Grand Bank.

MR. MATTHEWS: Oh yes, of course.

MR. CARTER: I am sure we both hope that that is

going to materialize, and I guess there is just not enough scallop out there to

accommodate everybody who might want to go after them. If we start issuing

licences to some of the smaller operators then that will certainly diminish the

chances of the Clearwater operation getting in.

MR. MATTHEWS: Well basically what was happening

here is like you said, three or four small boats, forty-five footers or so, have

been scallop fishing for the last couple of years and were landing at Fortune. I

do not think they will still be permitted to fish regardless of what happens

with the Clearwater proposal in Grand Bank. I just found out this weekend that

the Fortune operation will not exist this year. They said that the department

would not re-issue or allow the permit, and I was just wondering what the reason

for it is because that would not influence the Clearwater proposal in Grand Bank

whatsoever because there are only three or four small boats that are going to

fish anyway. I was just wondering what the reason is for that.

MR. CARTER: You say these boats were operating

under a licence from FPI was it - the processing.

MR. MATTHEWS: The company was processing, is that

what you are saying? They were selling the product to FPI, I know that.

MR. CARTER: They were operating - Bungy wasn't it?

MR. MATTHEWS: No, Parsons.

MR. CARTER: Yes, they were doing it under the

auspices of FPI, using their licence, and the way the situation is shaping up

now I do not think it would be too wise to allow that sort of an operation to

continue, given the interest that has been shown in scallop and Clearwater's

involvement up there. And there is a chap Fen Bungy as well working in Grand

Bank.

MR. MATTHEWS: Grand Bank, yes.

MR. CARTER: What has happened to his operation?

MR. MATTHEWS: He hopes to go again this year.

MR. CARTER: To continue.

MR. MATTHEWS: He hopes to continue this year.

Another local issue that I believe I have mentioned to the Minister before that

I sort of gather has been brought to your attention particularly by the council

of St. Lawrence, about Fishery Products International and their activities along

that

section of the Burin Peninsula. They are operating the Lord's Cove plant

this year and seem to be very aggressive in pursuing inshore fish. I wonder what

your reaction is to that? Because it is going to have it seems - while it is

going to be very good for Lord's Cove, which pleases me, there could be some

fallout as a consequence for places like St. Lawrence. I am wondering what is

your reaction to that, or how are you going to handle that situation? Because I

understand the representation has been made from the council and so on.

MR. CARTER: You know what has happened in Lawn, of

course.

MR. MATTHEWS: Yes.

MR. CARTER: The plant in Lawn is now being leased

to P. Janes and Sons. Ideally, probably, that plant should have gone to the

company that is operating the St. Lawrence plant. But for reasons that I will

not go into here that arrangement could not materialize. We have been given an

assurance from FPI that some of the charges that have been made by the council

in St. Lawrence and others, are just not true. Now in Red Harbour a situation

evolved where FPI was asked by the fishermen of Red Harbour to buy their fish.

Again for some reason of which I am not aware, they were not prepared to

continue selling their fish to their former buyer. The FPI company was actually

asked to come in to buy their fish. That is the only place that I am told that

that kind of a situation will go ahead this year. That was the basis of our

talks with (Inaudible).

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, well we understand that FPI for

example will be looking at other sites to set up buying stations. Now they are

in the business of buying fish but not just on the Burin Peninsula either. It is

a difficult thing to handle, because how do you tell a fisherman he is not

allowed to sell his fish to a Newfoundland company? Especially if that company

may be paying a little more for the fish or giving a better service?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Pardon?

AN HON. MEMBER: (Inaudible).

MR. CARTER: It is good for the fisherman so how do

we put a -

MR. MATTHEWS: I can appreciate that, Mr. Minister.

MR. CARTER: It is not very desirable. I can see

the plant in Twillingate district for example suffering if FPI - or indeed any

company - goes down there and starts paying a better price for the fish. But you

cannot stop it. That is the way the system works.

MR. MATTHEWS: Yes, I know. It is just that the

history of the whole situation down there where up to a few short years ago it

seemed the inshore fish was more of a nuisance to the Lake group and Fishery

Products International. Now that the squeeze is on for resource it is a little

bit... "ironic" is the word to use. But it is just concern from I guess the

communities and the plant workers in some of those communities that if - like in

the St. Lawrence situation for sure - if they lose any resource then I do not

know if the operation there will have any future. That is the reason why I asked

the question. I thank you for your answers. Thank you, Mr. Chairman and Members

of the Committee.

MR. CARTER: I should mention too, Bill, that the

lease on the Lord's Cove property went to FPI because nobody else expressed an

interest in it. Ideally I suppose maybe that plant should have gone to the

operator of the plant in St. Lawrence as well. But we can not dictate it, we can

only -

MR. MATTHEWS: Oh certainly. I appreciate that.

Thank you.

MR. CHAIRMAN: Thank you Mr. Minister, thank you

Mr. Matthews.

Mr. Woodford, are we ready for the question?

MR. WOODFORD: No, Mr. Chairman, not yet. Just a

couple of short questions anyway. Mr. Minister, as you know it was in 1988 the

marine centre was started at Jackson's Arm. Every since that there has been no

funding allocated for it. Could you give me the real reason why there was no

funding allocated for that over the last three years?

MR. CARTER: I remember that there was a start made

on it and I believe $500,000 was -

MR. WOODFORD: No, there was only $160,000 -

MR. CARTER: - allocated. No, I mean it was

allocated and then it was taken out of the budget, I think. Some groundwork was

done.

MR. WOODFORD: Yes.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. There was a hold put on the

construction of any other centres other than the ones that the Federal

Government had an involvement in. The one that you are talking about now would

not have been a Federal-Provincial project, it would have been purely a

Provincial initiative. For that reason - and there have been others too, I

suspect - where there has been a hold put on them for that reason.

MR. WOODFORD: My understanding is that in the

1989-1990 budget, there were two or three other marine centres started around

the Province; I will have to go back and take a look at it but I thought I had

some names (inaudible).

MR. CARTER: Well, there were, there was one

started in Fermeuse-

MR. WOODFORD: No, it was strictly provincial

money.

MR. CARTER: I beg your pardon? No, no, there is no

such -

MR. WOODFORD: None started in the last three

years, is that what you are saying?

MR. CARTER: No.

MR. WOODFORD: Marine Service Centres, unless it

was Federal-Provincial.

MR. CARTER: One was started in Fermeuse and Hodges

Cove and where else, Fortune, was it? Makkovic; these were all federally funded.

MR. WOODFORD: Okay. What about the report, Coastal

Consultants report? Did they bring in any other areas, did they recommend

anything?

MR. CARTER: No, they are not recommending any more

new construction of marine service centres, not for the time being any how. We

are suggestion we consolidate and identify centres that could be looked upon as

regional centres; that is the basis of their recommendation.

MR. WOODFORD: In the White Bay area, they have to

travel such long distances; in fact some have to come here and the rest have to

go to Englee, in order to get a place to do up their boats even if -

MR. CARTER: The size of the lift is not

sufficient?

MR. WOODFORD: There is no lift; even if they had a

lift - I do not know if the Minister or the Department would entertain something

like that because there are lifts around apparently.

MR. CARTER: How many boats are there in the bottom

of White Bay?

MR. WOODFORD: I do not know exactly how many are

there, but I know they travel long distances to get some service.

MR. CARTER: I understand there is only a very

small number of boats there; it is hardly enough to warrant a $3 million or $4

million service centre.

MR. WOODFORD: Well, I do not want to get into any

debate over it, but we certainly were not looking at a $3 million or $4 million

service centre; I mean, my understanding was $600,000 or $700,000 over a three

or four year period and it would have been done.

MR. CARTER: It is a costly proposition you know;

you have to build a wharf which costs a lot of money and then you have the lift

itself, and I am told these lifts cost over $200,000 -

AN HON. MEMBER: $600,000.

MR. CARTER: -$600,000 just for the lift itself, a

small one; you get into a bigger lift and you are over a million dollars, the

200 ton lift that we are putting up in Port de Choix cost over a million

dollars.

MR. WOODFORD: My understanding was that there were

some lifts around; as for instance, Port de Choix was one of the places

mentioned that there was a fifty ton lift which could have been obtained at a

cheaper price.

MR. CARTER: I do not know what has happened to

that lift; I know the one in Twillingate was sold. Most of these smaller lifts

have been sold when they come out, sold or put in somewhere else.

MR. WOODFORD: So in other words it is dead; that

is the bottom line is it, that that particular project is dead?

MR. CARTER: The bottom line, Mr. Chairman, for the

present I would say does not look good, but that is not to say that at some

point in time, down the road, when circumstances change and money becomes

available, we will take a new look at that area and maybe consider putting a

lift there.

MR. WOODFORD: There was one figure there on page

116 of your Estimates, 3.1.08, Inshore Fishery Support, what is that figure for

this year? There was nothing there last year and now $1,100,000, is that a

Federal -

MR. CARTER: Yes. That was a special programme, you

might recall, made available to the inshore fishermen on the southwest coast,

interest free loans, fixed gear fishermen, and that was a programme that was

approved by the previous Administration. We implemented part of that programme

and these loans - that was a $3 million programme, and payment, even thought

they are interest free loans, by virtue of the bad fishery up there for the past

couple of years, we have had to defer payment of those loans and I would expect

we will have to continue for a while to defer their repayment. We have not done

anything extraordinary to collect them because the people just do not have the

means to repay that loan at the present time.

That $1.1 million that you see there is based on the

assumption that maybe a good fishery will see some of those loans repaid. But up

until now there has been no repayment of those loans.

Bearing in mind that the surveys conducted by our

Department indicate that the small boat fixed-gear fisherman in that area last

year for example earned less than $5,000 of their income from the fishery, and

that speaks for itself. It would be awfully difficult to collect any of that

money under those circumstances.

MR. CHAIRMAN: Are we ready for the question?

On motion, subheads 1.1.01 through to 1.1.04, carried.

On motion, Department of Fisheries, total head,

carried.

MR. CHAIRMAN: I would like to thank the Minister

and his officials for their appearance before the Committee this morning and

also for the frank and open way that the questions asked were handled.

I thank the Committee also. It was a pleasure to have

the Fisheries critic with us this morning as well as some other MHAs who are

obviously concerned and interested with respect to the Department of Fisheries

and how the fisheries affect their own Districts.

Mr. Woodford.

MR. WOODFORD: I was wondering if the Minister

could get me a copy of his opening statement this morning, please?

MR. CHAIRMAN: Under normal circumstances each

Committee member would receive a copy of the opening statement, so if they are

available. They are available now? Good.

MR. CARTER: I would like to thank the Committee

for the very civilized manner in which they received us this morning. I

appreciate that very much. I can tell them now that if they need any additional

information on any matter pertaining to our Department, I will be happy to

provide it to them. A telephone call or a visit to the office, and my officials

will be more than happy to cooperate with them and facilitate them, so I want

them to know that.

MR. CHAIRMAN: Thank you, Mr. Minister.

I would like to thank the media for their kind

attention this morning, as well Miss Elizabeth Murphy, our Clerk, and as well

the Pages.

The meeting now stands adjourned.