May 13, 1998

RESOURCE ESTIMATES COMMITTEE

The Committee met at 7:00 p.m.

CHAIR (Canning): Order, please!

Welcome to the Resource Estimates Committee.

Tonight we have the Minister of the Department of Industry, Trade and Technology

and her officials. Before we get started I would like to just have the minutes

of the previous meeting approved.

On motion, minutes adopted as circulated.

CHAIR: Welcome to the Resource Estimates

Committee, Minister. Maybe you would want to take a few moments to introduce

yourself and your officials and we will go through introduction of the Committee

members.

MS FOOTE: Thank you, Mr. Chairman. I have to

say though it is a little disconcerting to be looking across the way and see one

of your members is blushing so much. I am wondering what the member beside him

is up to.

CHAIR: That will be forever taken into account

in the Hansard of this Province and forever put into the historical record, and

say we had blushing Committee members.

MS FOOTE: Thank you. It is an opportunity to be

here to present our estimates to the Committee this evening. With me is my

Deputy Minister, Mr. Max Ruelokke, and the Director of Financial and General

Operations for the department, Mr. Rick Hayward.

The Department of Industry, Trade and Technology

has gone through a transformation since the last Program Review. It is now

focused on three mandates: one certainly being on attracting investment to the

Province; the second one of course is the promoting of export development; and

the third is, of course, industrial benefits. We also have a responsibility for

industrial benefits. I think as you go through the estimates you will see how

each of the estimates factor into all of these three sectors.

I am not going to go into any long

preamble about

what the department does. I think you are all familiar with what the department

does. I leave it to you, Mr. Chair, and to the members of your Committee.

CHAIR: Thank you, Minister. Perhaps Mr. Shelley

would want to start with an opening comment and questions.

MR. SHELLEY: I will start with a question. It

will maybe put it back to the minister to prolong that introduction a bit.

Because before I go into some specifics on the estimates, I would just like for

the minister to tell me about, as far as her department goes, the major

initiatives and the major positives that you see in the coming year. Maybe a

quick review of last year before we go into some specifics on estimates.

MS FOOTE: I think one the keys for us as a

department is the industrial benefits section, and that is to insure that we do

everything possible to maximize the opportunities for Newfoundland and Labrador

that is coming out of all of our development sectors in the Province, but

especially our resource sectors. We have been charged with this. We know what

has transpired with respect to Hibernia, and that was before my time.

Now we have Terra Nova coming on stream, we have

Voisey's Bay coming on stream, we have the Lower Churchill, and all of these

initiatives certainly my department will take a lead on, as the department

responsible for industrial benefits. In fact, my Deputy Minister will be leading

a committee to look at, particularly, the Lower Churchill in terms of industrial

benefits there.

That is a major undertaking for us. Clearly we want

to do as much as we possibly can, within reason, in terms of insuring that the

private sector that is involved in all of these developments recognize it as a

provincial concern. We are insisting that the maximum benefits accrue to this

Province. We obviously have to be careful in terms of the impact that we have

with respect to their position, because obviously if we want companies coming in

here to work with us to develop our resources we have to make it reasonable, but

at the same time insure that we get the maximum benefits out of those

developments. That is certainly a major focus for us.

Export development is really important as well. I

have said it time and time again that in a population of 570,000 people we will

never get rich selling to ourselves. Clearly the onus is on, I think, my

department and other departments of government, but especially this department -

and the Department of Development and Rural Renewal in some sense - to work with

our local companies to insure they are export ready, and to work with them to

help them recognize the opportunities that are out there for them in the world.

This is very much becoming a global economy.

I think if you look at the success stories we have

had in terms of our local companies being able to sell worldwide, then the

benefits that can accrue to this Province, and to our people in terms of jobs,

if they can enhance their export potential they will end up making more product

and thereby employing more people. There are a lot of success stories out there.

I could go on and on in terms of the companies that are doing very well.

Brookfield Dairy Group is one. They are selling

their ice cream now in the SkyDome in Toronto. You have Superior Gloves in Point

Leamington doing very well on an national basis. You have Rex Philpott,

Cottlesville, with his homes, doing very well, selling into the Japanese market,

and now tremendous potential with the German marketplace. He also signed an $80

million contract, $30 million of which was his component for homes in Chili.

There are any number of opportunities out there. A

lot of our companies are doing very well, but some of them in rural Newfoundland

still need to know what is required of them in terms of export development. Some

of them think they are ready and they are not, so I think the onus is on us to

work with them to insure that they are export ready. Because the worst thing

they can do is go on any of these trade missions with us, get out there, commit

themselves, and find out that they cannot meet the demand. We are working very

closely with companies in that vein, and you will see as you go through the

estimates each of the sectors that are involved in that. In fact, we are looking

at doing a little bit of restructuring in the department to insure that we

really do focus more on export readiness and making sure that we are very

focused with our companies.

Attracting investment, whether it is capital or

attracting businesses to the Province, it is a challenge. I will tell you, I

recognize that, and I think particularly it is a challenge to attract companies

to rural Newfoundland, which is of course what we are all about in a great

sense. With what has happened with the collapse of the groundfishery it has left

a lot of our communities out there devastated. Trying to attract companies or

even capital to go into projects in rural Newfoundland is not easy.

One thing is they ask about the infrastructure. Do

they have access to this, to that, to a airport, to a port? What is there in

terms of the labour force? How skilled is the labour force? These are all

questions that we have to answer, and even though we have this wonderful KPMG

study that came out - which is fabulous for our Province, promoting St. John's

as the most cost effective city in which to do business out of forty-two cities

in Europe and North America -, the fact of the matter is that while I say when I

go around - wherever I go, in fact trying to attract business to this Province -

that survey can be applied to any part of this Province, in reality I suppose

that is true with some of the factors that were looked at, but not with all.

We really need to work with our people to get them

to understand that we are never going to see economic growth or economic

activity taking place in every community in this Province. Instead we are

probably looking at growth centres, as it were: so if you are looking in the

Grand Falls-Windsor area, Bishop Falls, those areas, if you are looking at

Corner Brook, if you are looking at Marystown. I could never in my own district

point to Fortune as a major economic centre, it is not going to happen, but

Marystown could very well fill that bill. What it means is that people may have

to drive half an hour to go to work.

These are issues for us in terms of attracting

capital, but we are having success. I will just mention to you my trip to China.

I made reference to this in earlier interviews that there are opportunities

there, particularly in Taiwan. I met with the Premier of Taiwan and clearly he

was encouraging companies in Taiwan to invest in stable economies like Canada.

When you ask him what he knew about Canada, and you ask anyone in China, they

know about Vancouver and Toronto. You immediately say that does not count. Then

I proceeded to tell them about Newfoundland and Labrador. At least if we did

nothing else on such a mission, we created an awareness that there is more to

Canada than Vancouver and Toronto.

We were very fortunate on that trip to be able to

meet with some very good people who have the ability and have the money to

invest in Newfoundland and Labrador. The gentleman who we worked with out of

Toronto who is Taiwanese arranged the meetings for us with the Premier, and with

the Premier's director general and with the owner of the third largest computer

company in the world. These people are planning on coming here. The guy who

arranged those meetings for us in fact will be here next week, and we will be

pursuing with him opportunities in Newfoundland and Labrador as well.

The department has its hands into a lot of areas,

but in terms of a focus, the focus would be the three mandates that I outlined

at the beginning.

MR. SHELLEY: I will go with some of these and

then some specifics.

No doubt there is a lot of potential for things

that are happening. To a small degree, I guess, from a small bit of experience,

I've been travelling quite a bit - not so much on business, but a few times

dealing with business and industry -, I know what you are up against, to a small

extent, as far as attracting people to this little Island out in the middle of

nowhere that people fly over all the time when they are on trade missions back

and forth between North America and elsewhere. They do not even notice we are

here, so they are not just going to land here out of curiosity. We are going to

have to get them to land here.

I have always believed in that philosophy. That is

why I have always encouraged that our government officials always go and get

those people, encourage them to come here. I think that is how it has to work. I

have an old saying of my own: If the ship doesn't come in, then swim out to it.

It happens, that is the way it is. It is not going to come to places like

Newfoundland and Labrador, but we have the resources here and we have to turn

people on.

Because I have done it. I can tell the minister

that I have talked to business people, I had a little experience a couple of

years ago with the Italians, I don't mind saying it. I learned a lot from that

experience. You would not believe how just a bit of conversation with people to

encourage them can get their eyes to open up and to come here. Of course, that

did not work out, but it was for a lot of strange reasons. It could have worked,

it had potential.

Now we are dealing with another big project in my

area, just for an example, with the magnesium and so on. I still have the

attitude that if that fails we will go after something else. That is the way it

happens with business. It is risk, it is time. Some fail and some succeed and so

on.

MS FOOTE: You may land one out of ten.

MR. SHELLEY: Exactly. That's the way it is with

business. You hear the stories all the time. I was listening to Mr. O'Dea give

his speech to the entrepreneur students over here the other day and he has some

good points. This is a man who lived on skid row in Toronto and right now really

owns Second Cup. What a success story that is, and it's a real story.

Opportunities come along if you go after them I

believe, so I encourage that. I have never criticized any government, at any

time, for going out and getting the business and for travelling for those

things. As far as your Iceland trip, China and all of those, they are certainly

things that you needed to do for the Province, and continue to do them as far as

I am concerned.

The one I mentioned to you, and actually I would

like to talk to you extensively on it sometime, because I started to study it

about three to four years ago, is Ireland. As a matter of fact, I did an

interview with Jeff Gilhooly, which he reminded me about a little while ago, the

second year I was elected - that is three to three-and-a-half years ago now -

about Ireland. I started to read about it and what they were doing with their

economy, the changes there in rural Ireland, how it was taking part and how they

were getting the groups together and so on. I think we are very similar to that,

and I think the minister would agree. There are some things that we can do in

Newfoundland that would I suppose be equal to what they are doing in Ireland. So

I am just going to ask you on Ireland itself and what you have been thinking.

Can you just give me your views on what you think Ireland has to offer us on

things to do here?

MS FOOTE: Interestingly enough, Ireland has a

lot I guess from which we can learn. I am sure you have heard that I was

involved in an announcement just a couple of months ago, where in fact NewTel is

involved in providing Ireland with technology. It is a relationship that can

work both ways.

We have been very fortunate through the IDA in

Ireland to really have them share with us their methodology in terms of

attracting companies to Ireland. In fact, they allowed us to send one of our

employees over to spend three weeks in their environment, and really were very

forthcoming in terms of their strategy, and knowing full well we would not be

competing against them. They have been able to attract the headquarters of most

of the major financial houses in the world to Ireland.

One of the things that people keep talking about is

the focus on education and how important that is because we have an educated

workforce, and that is part of the solution. I think that is something we have

to look at here as well. We have to make sure, as they are doing, that we work

with industry to insure that whatever programs we are offering are certainly in

keeping with the types of jobs that will be required for the businesses looking

to come here, or certainly in anticipation of those businesses coming here.

Ireland certainly has done that as well.

Of course, the fact that Ireland gets $300 million

a year from Brussels in which there is no claw back is helpful as well. They are

able to put a lot of money into doing things like building buildings, for

instance, in anticipation of attracting a company to that country. For us that

is a stretch. We do not have the resources to do that. There are some things

they are doing that we can only dream of, but I think we certainly can learn in

terms of methodology. I think we certainly can learn from their approach. We

certainly can gain from their insight into what has worked for them and what has

not worked so we do not end up repeating mistakes that they may have made. They

have been very forthcoming in terms of sharing information with us.

In fact, the Irish business partnerships - which I

think the value in them has been led by the private sector - has really lent

credibility to that particular initiative we have entered into. A lot of things

are happening on that front both from an education perspective but as well from

private sector joint initiatives. I am really pleased with what is happening

there. I think the more we can get the private sector involved as well - I think

that is where the value is.

MR. SHELLEY: Yes. I am going to mention one

particular situation, just to use as an example, but I think it is something we

need to look at here. It probably relates to Ireland; I think I spoke to you

about it before.

Especially in rural Newfoundland areas now, with

vacant fish plants, mine sites and everything else, this particular example I

will give you is the marine centres in this Province which were leased out and

so on. I have a down home example. I have a fellow who has forty or forty-five

people working - more than that, I don't know the numbers now - in Triton and La

Scie, (inaudible) making high speed boats. He is making a deal with this

Icelandic group now. He said I could talk about it here, I asked him about that,

and it's fine. He sees government doing things for internationals that want to

come in - Mr. Lee is an example -, which may be a good thing or whatever. That's

fine, nobody has a problem with that.

When our own local Newfoundland and Labrador people

who are proving themselves - this guy is on the go now for three years, about to

go into a huge contract and triple his capacity, using this marine centre which

was a liability to the Province. It was losing money. Why I related this to

Ireland is because I know in Ireland they not only they give you a vacant

building, but if there is neither one there they will build one for you, and the

only criteria is that you create jobs.

Here is this man, creating forty-five or fifty jobs

- I might be wrong on the number, I am just using an example -, he can go to 120

jobs next year if he gets this thing. He wants that marine centre for a dollar.

He has proven himself, he has a good business plan, he has his market set and

everything else, but of course, he has been told by the government: No, I am

sorry, make a nominal thing. It is worth this much, which is right, but it is

hard to tell that man. I have tried to discuss it with him the other day when he

said: You gave Marystown, a big company there and that, for a dollar, which is

fine. He commends that they are going and so on. I am talking about the

mentality of trying to convince our own Newfoundland business people. Why can't

they get that same break if they have proven themselves? He said: The only

criteria I want government to tell me is: Sir, you keep 120 jobs there and we

will give you that bloody building for $0.50. I told him forget the dollar.

It is something that needs to be addressed,

Minister, I really think it does. I do not know if it is that we are just stuck

with marine centres. Are we stuck on something there? If it is going to be a

consistent policy across the board for Newfoundlanders and Labradorians, there

are lots of good business people in Newfoundland and Labrador that need that

break too. I would just like to hear how you would address that to that

gentleman, or for anybody else in that situation.

MS FOOTE: Clearly there are two departments

involved in development in this Province: one is the Department of Development

and Rural Renewal, and the other is the Department of Industry, Trade and

Technology. Clearly our focus is an international focus. I am out there trying

to recruit companies to come into this Province.

I think where we have drawn the line between the

two departments is that I will bring them in, you work with them. You work with

them to see where they are going to locate, you work with them to see the types

of incentives they require. I do not have that pot of money that is in `D2R2.'

When companies come in looking for a loan, that is the department to which they

apply. The only incentive we have is EDGE, and of course then there is an

independent board that the companies have to go and apply to. That does not

involve any money. What that involves is a tax holiday, as you know. Clearly

there are two departments involved here, and then there is a third department

when you are talking marine centres.

MR. SHELLEY: The Department of Fisheries and

Aquaculture.

MS FOOTE: The Department of Fisheries and

Aquaculture.

MR. SHELLEY: That is where the problem is, from

what I can understand. It is really time to get together on it, I think, and at

least discuss it again. This gentleman is not going to be turned off if he do

not get it for a dollar. He will go and push the money, like he said, but that

does not solve the problem for the next guy who comes along, another

Newfoundlander who is willing to put in millions of dollars which he has, or

whatever it is, and maintain those jobs out in rural Newfoundland. It is the

perfect situation.

MS FOOTE: Is part of the issue that they have

unloaded some marine centres in other locations for a substantial sum of money?

Are they holding that up maybe as an example of what they can get for them?

MR. SHELLEY: I can understand that and being

consistent with it, but at the same time if they made a mistake of selling

those, maybe you will have to go back and negotiate with those people, if they

got jobs in those other marine centres that they might have sold for $100,000 or

$200,000.

MS FOOTE: I do not think they would consider

that a mistake, if they got $100,000 or $200,000 from a centre.

MR. SHELLEY: It is not a mistake as far as the

fiscal point goes, they might have gotten $100,000 or $200,000, but as far as

industry and development goes I think it is a mistake. Because it may have

turned off some other people that might have leaned that way. This guy is a good

example of that. I think it is something that still should be addressed.

Your department, the Department of Development and

Rural Renewal, and the Department of Fisheries and Aquaculture should get

together and say: This is a guy who is going to put 120 people to work. If he

can do that, and he has proved himself for the last two years, what a perfect

time to pat a Newfoundlander on the back and say keep it going.

MS FOOTE: You and I have had this discussion,

as you know, and I think you are raising some valid points.

MR. SHELLEY: I think he just recently got a

letter back saying they would not, but I still think they should be considered

if you put all the questions in there. That is one thing.

Another one is this. They overlap, I think, but

they are still good things to talk about. I have talked about it many times. You

do not hear me as much as Mr. Efford, but I say it as often as I can. The seal

oil industry, and the seal industry as a whole, but especially the seal oil,

because I'm telling you I studied that, the potential for that is incredible. It

is more valuable, this is my quote, than the oil offshore, in the sense that if

it is done right it is hundreds of years. Not in price at the time or current,

but it is a renewable resource. The timing is critical, over the next year; not

a couple of years, but this next year is going to be critical. It is happening

right in my district. It is critical, Minister, and that is all. I will get to a

question on it as far as your department is concerned.

I think it is important that we have to have a good

market development. I think the government can help out with that. Because I am

telling you, what they are producing in Baie Verte now and also in Catalina and

so on is top quality. Mr. Quinlan, who is there, is set on doing not a big

amount this year, just market samples that are perfection. Clean. The plant is

fantastic down there - Mr. Efford has visited - but they still are not into the

market part of it, and I think that is where your department, in China and Korea

and so on, can go out with a good quality product and help develop those

markets, because they are not developed.

MS FOOTE: I think you will be pleased to hear

that in fact we have funded under the Comprehensive Economic Development

Agreement the Seal Development Council. The whole idea is to do just that. It is

to development seal products for exporting. Tina Fagan will be involved with

that council as well.

MR. SHELLEY: Yes, I saw that video.

MS FOOTE: That is one of the initiatives that

has been developed or funded under CEDA. Clearly there is a recognition that

that is a natural resource we really have to take advantage of, and we are

certainly interested in doing that. In fact, the gentleman who has been here the

last little while, even though we are focusing on the garment industry with him

in the first instance, he certainly has expressed an interest in all seal

products, but particularly in seal meat because of the protein value.

A simple thing like taking a beater and cutting it

up including the bone, I mean, we are deboning it. He asks: Why are you deboning

it? You can cut it up into two-pound units, vacuum pack them, and send it over

to the Chinese market. They will just take it and run with it, you know. There

are all kinds of opportunities that we are missing. In fact I had Tina Fagan

meet with Arthur Lee to discuss opportunities in the sealing industry.

MR. SHELLEY: Yes, that is good because what I

am getting at is the end product. It is a real chance for us to do something

right here. Because the way I can envision it and very soon - if not next year,

the year after - is the seal being shot, brought into this site in Baie Verte,

the meat taken and canned there, the hide taken and tanned there, and the oil

taken and capsulized there, without moving off the Peninsula. It is real, you

can do that. As a matter of fact, the product of seal oil they are doing now is

so refined and so pure that if they had the $750,000 for capsulizing they could

do it right there on site. Three-quarters of a million dollars is what it costs

for one of those capsulizers, but if the markets were solid and they knew they

had that, I think that people like Mr. Quinlan and others would move to the next

step, the last end of it.

MS FOOTE: You are right. There are so many

opportunities. This has nothing to do with seal oil or seal products, but I

toured Labatt's the other day, went through the plant downtown. In going through

they were showing me all the different stages. One of the things I noticed on

the floor was there were boxes of crowns. Now I asked: What are crowns? You

know, 60,000 crowns in a box, and these are caps. They import 60 million bottle

caps a year, Labatt's, and they tell me Molson does the same, so you are talking

120 million bottle caps being imported. It does not take a genius, I wouldn't

expect, to make a bottle cap. They were telling me what is required: probably a

piece of machinery, you have to have the raw material, and it cuts out the

bottle cap and requires a liner to go inside.

MR. SHELLEY: Where are they imported from, do

you know?

MS FOOTE: Montreal, other places.

MR. SHELLEY: In Canada.

MS FOOTE: I called Burf Ploughman and said:

Burf, what does it take to get someone here making the bottle caps? One thing

Labatt's told me was that even if it costs a little more to make them here they

would be willing to pay the extra to have them made here. That is an issue I've

suggested to AMEN that they should take up and look into as an opportunity. You

are right. In terms of identifying opportunities there are a lot of them and we

have to be more persistent.

MR. SHELLEY: Two other ones. One is on call

centres. Can you update me on some of those? I have had heard some bad things

about the response that we have received on call centres. Even our language and

stuff being used in call centres, that was a deterrent.

MS FOOTE: Let me tell you that in the call

centres we have in operation now language is not an issue. In fact the Bay - and

you know it is the Bay Portrait Studios - have found, through the work of the

call centres here, that the results have doubled compared to their expectations.

They find that when someone from Newfoundland is on the phone making the call,

their easy manner, the way in which they try and sell the service, and the

response they elicit, is one where even if you did not want to buy they keep a

conversation going to the point where someone says: What was it you were selling

again? Sure, I will have one.

We are finding the response is tremendous, and the

company is finding their sales have doubled through use of the call centre here.

I think what you are referring to was the CIBC call centre. I will tell you that

when the site selectors were looking for a centre to establish that particular

call centre - it was Wadley Donovan out of New Jersey -, they in fact identified

Newfoundland as a number one location. The VP of CIBC was from Nova Scotia. They

came up with every excuse and they did use our accent.

MR. SHELLEY: Are there any more on line now to

come here?

MS FOOTE: It is actually Network Newfoundland

and Labrador that is out there doing this, and that is a partnership between

Newtel and the government. There was an allocation of money given to them to

actually run Network Newfoundland and Labrador. They are the ones that plan the

strategy, get out there and do the marketing, attend the trade shows and the

exhibitions that involve call centres from all over the world, and talk about

our capability in the call centre field. Network Newfoundland and Labrador in

fact take the lead on that initiative.

MR. SHELLEY: My next one is about Mr. Lee.

There is so much going on about it, it is almost like he is on wheels. I came in

here on Monday and I read Saturday's paper because I missed it, and of course

Clarenville was announcing about Mr. Lee. It was funny, because when I was on

the way in on Monday morning, on the front page of The Western Star

Corner Brook was announcing Mr. Lee was going there. I said, I better not pick

up The Nor'Wester home because he is probably going there too.

Actually, I want to know a little bit more about

him and how far advanced is it, or if it is just a thought now? There is no

business plan or anything as far as I know. That is one part of the question.

The second part, because other councils are calling, so I might as well be fair

to them, my own council in Baie Verte has called, and I want to know

(inaudible). They have a small presentation to put in, the same thing. If there

is anything there, or whatever. It is a two-part question.

MS FOOTE: I think it is fair to say that when

there is any suggestion of an opportunity like Mr. Lee presents, that probably

every community in the Province would like to make representation to him.

I met Arthur Lee back in January. I had gotten word

he was looking to expand. He has five plants in Scarborough and he is into

making millions of t-shirts that he exports all over the world, but he is also

into things like Nike. He is doing Nautilus products, Polo, you name it. By the

way, Arthur Lee is a gentleman who paid $400,000 for the McCrae medals.

MR. SHELLEY: For what?

MS FOOTE: McCrae, remember, who wrote In

Flanders Field ? He is the one who paid the $400,000 for those medals and

donated them back to Canada. He paid it because he thought the medals would

probably go out of - it was at an auction. He was afraid they would leave the

Province, so it is an interesting story, which I am sure you do not have time to

hear.

Anyway, my ADM, Keith Healey, Jeff Mercer, the EDGE

facilitator in our department and I went up and met with Arthur. We had heard

that he was looking to expand, but we heard that he was looking to go to Nova

Scotia. We went up and did a presentation. We looked at the KPMG model, we

looked at his financials, and Keith Welland in my department actually worked up

a model for us. We did a presentation to Mr. Lee that showed in fact he would be

better off doing business in Newfoundland than he is now in Scarborough.

He was impressed with what he saw and what he

heard. We proceeded then to set up an opportunity for him to come here. We were

having some discussions with him about exactly what it was he wanted to do. When

Mr. Lee confirmed he had never been to Newfoundland, I said: Then to be fair to

you, the first thing you need to do is to visit the Province. You need to come

and see what we have to offer.

MR. SHELLEY: He has never been to Newfoundland?

MS FOOTE: He had never been to Newfoundland or

Labrador before. I said to him: In fairness to you, I mean, I can be here and I

can tell you all the wonderful things, and I can present a model to you that

shows you how financially you would be better off in Newfoundland and Labrador,

but I think to be fair to you, you need to come visit Newfoundland and Labrador.

He agreed to do that.

Of course, one of the things I talked to him about

was the labour force and the availability of labour, and the fact that if you

look at what happened to Superior Gloves - and I used this as an example when I

spoke to him - they were

an act in Ontario, and when the Newfoundland contingent

of the company left and came back home, Frank Genge was having difficulty

finding people to stay on.

One of the problems that a lot of the companies

have is the productivity level drops with the constant turnover. Just as

Superior Gloves was finding it very difficult, Arthur Lee is now finding it

difficult to hold on to people in his plant. So he is looking where there is a

loyal workforce, where there are hard working people, people who are looking to

go to work, who really would prefer to stay where they are. I think he

recognizes that is the case in Newfoundland.

He came in and we set up an itinerary for him,

knowing first of all that his requirements were for a building that has at least

35,000 square feet. In a building with 35,000 square feet he can, I guess, have

about 100 to 150 employees in that building. Or as Arthur says, if you have more

than that they have to back out and breath and then come back in. That was one

of the requirements. He also said he needed to be near a port, obviously to ship

their product, and then of course he had to look at the transportation costs and

all of these factors.

This was his first visit to Newfoundland and

Labrador, and even though the focus was, and still is for me, on this garment

industry, he has been talking other opportunities, but I mean those are other

opportunities that will be touched on later. As I said to Arthur, the point now

is to focus, if you are interested in coming here, certainly to set up a plant,

a manufacturing facility, and show how successful you can be here. I know you

can be, based on the labour force that is available, based on the fact that you

want to be here and that you can reach your markets easily from here.

We knew, for instance, there was a building in

Argentia, because Silver Linings was another company that was going in there.

Something happened and that fell by the wayside, so that building was there. One

of the issues I think that people are finding with respect to Argentia was the

smelter going there. That is an issue for some companies. There were buildings

at the airport in Gander. With Gander, of course, the airport was there, and it

wasn't near a port. Coming out of that visit, even though Arthur has not

indicated whether or not he will go there, one of the things he certainly looked

at was that he is very much closely aligned with a company in California that

ships their clothing all over the world, and they are looking for a major

distribution centre. There is no reason why that could not happen in Gander.

In addition to all these other things happening

there are other opportunities creeping up, but again I get back to focusing on

the garment industry. He was to look at a building in Deer Lake, and he looked

at buildings in Corner Brook. He went down to Argentia after he came back from

Corner Brook, and he was supposed to look at buildings in St. John's and Mount

Pearl as well. All of these buildings are where we put out feelers to my staff

out there and to others to say: What do you have in the area that is at least

30,000 square feet, and where he will be close to a centre where he could export

his product? Clarenville - and boy, I tell you, I have to take my hat off to

them - they, within a short frame of time, when they called me to find out what

the requirements were, came through with a very comprehensive, very

professionally done proposal. I undertook to make sure that Arthur had a copy of

that. He read it, and being the businessman that he is he was very impressed

with what he read. While he did not have time to go to Clarenville, we suggested

that two members of the chamber of commerce meet with him in here, and they did

that.

There are still communities out there that are

sending in information saying: How can we get a message to Mr. Lee, or how can

we make sure that he is aware of us? I am saying: If you have anything that you

want to go to Mr. Lee, we will make sure he gets it. I mean, this man reads.

Ultimately the decision will be his. Where he locates will be based on his best

case business analysis, now that he is out of town. He looked at the Province,

he likes what he sees, he is very impressed with the hospitality that he

received. There are some transportation issues that he feels need to be

addressed. Apart from that I think he is convinced that he would like to do

business here. If he is going to expand anywhere, he will come into Newfoundland

and Labrador.

I said to him: The point we are at now is we need a

business plan from you. For one thing, I can expect that he will want to apply

for EDGE status, and I said that will be done by an independent board. You will

have to apply, and you have to meet the criteria, but there is no money involved

in that. If you want to access TJF money, for instance. Because clearly, for the

number of people he is going to be looking for - because while we talked one

hundred jobs in the first instance in some central location, I think he

envisions certainly other operations in the vicinity, where people would be

employed to sew where he may in fact provide the sewing equipment and things.

Those are all things that have to be worked out in the business plan. People

will have to be trained, and this is why he may want to access the TJF. I do not

know, I have not seen the business plan. He may want to access ACOA funding. I

do not know, because we do not have the business plan.

He is working with a local consultant in coming up

with a business plan that we expect to have from him in the not too distant

future. This man is anxious to move and needs to have things turned around

quickly, and I have assured him that we will do that. We certainly will, then we

will have to bring some pressure to bear on the federal government, because

obviously ACOA and TJF are federal funding.

MR. SHELLEY: If there is a community that has

something they want to present, there is no big rush, I don't think.

MS FOOTE: I would suggest they should get it

in, yes.

MR. SHELLEY: I am talking about a couple of

weeks is fine, or whatever, not (inaudible), and get it to your department, and

you will get it -

MS FOOTE: That is right. We will make sure that

he gets it.

MR. SHELLEY: A couple of specifics here now.

1.2.02.12, Administrative Support, Information Technology. For 1997-1998 the

budget was $129,600 and you revised it to $455,600. Could you tell us what that

jump was all about? Was that computers? It is not that much in computers, is it?

MS FOOTE: In fact, the allocation, the revised,

was looking at client information system. That is, trying to bring together a

lot of the information I think we require as a tool to do our job, in terms of

having a very updated client information base, and not just through the

Department of Industry, Trade and Technology, but the Department of Finance and

Treasury Board has been involved in this as well.

In fact, we have been involved with the majority of

the departments, it fair to say, in pooling together a really comprehensive

database which we think is important for us to have to do our business. In fact,

to make sure that all departments of government know what we are doing, and

anyone can access it. In fact, I guess it was $300,000 that was spent on that?

MR. RUELOKKE: Yes, $455,600 was a projected

revised amount prior to the year end. When we finally did the tally it turned

out to that we had spent a little under $300,000.

MR. SHELLEY: Three hundred thousand dollars.

That was for this new database (inaudible).

MS FOOTE: Yes.

MR. SHELLEY: In 2.1.01.10, Business Analysis,

Grants and Subsidies, I have just one question there. You had $1.2 million there

and you used $300,000. Now you have budgeted another $700,000 for this year.

What were those -

MS FOOTE: These are EDGE companies.

MR. SHELLEY: That is EDGE, is it?

MS FOOTE: Even though we have dropped up the

$2,000 per job - contrary to what was in The Evening Telegram two days

ago, that has been dropped -, but there are still some companies out there that

would be eligible for it, because they would have come in under the guideline

before it was dropped. We have to allocate an amount of money in the event that

they do in fact meet the criteria and create a number of jobs.

MR. SHELLEY: They have not used that yet. You

are saying that is what happened there. There was $1.2 million budgeted for, but

that is EDGE status.

MS FOOTE: That is cash flow. See, we used the

$300,000, right, so now we are budgeting $700,000.

MR. SHELLEY: That was for the $2,000 wage -

MS FOOTE: Yes.

MR. SHELLEY: That is where it is. I wondered

where it was. That is it right there. In 2.1.02.06, Trade and Investment,

Purchased Services -

MS FOOTE: That is our agency of record.

MR. SHELLEY: Pardon?

MS FOOTE: That is funding for the agency of

record, Bristol Communications.

MR. SHELLEY: That is how much in advertising?

MS FOOTE: Yes, for advertising, and for

services that the agencies would have provided, like the `Think Again' campaign

that was run in The Globe and Mail . Do you remember that one?

MR. SHELLEY: That is all contracted though,

isn't it?

MS FOOTE: Bristol.

MR. SHELLEY: Yes. Is that all contracted, is

that an open contract?

MS FOOTE: Yes. It is an agency of record and we

go to tender for it, right.

MR. SHELLEY: Yes. That is all tendered?

MS FOOTE: Yes.

MR. SHELLEY: In 3.1.01, Technology Development,

I just want this explained, that is all. The .01 under Revenue-Federal for the

offshore there, could you brief me a bit more on what that is spent for?

MS FOOTE: This agreement is cost-shared with

the federal government, it is 75-25, so the $540,600 would have been the federal

contribution.

MR. SHELLEY: That is for getting companies for

acquiring expertise (inaudible), consultants and -

MS FOOTE: Yes. Can you give some examples of

some of the companies?

MR. SHELLEY: More specifics. Some examples,

(inaudible).

MR. RUELOKKE: That is a fund called the

Offshore Technology Transfer Opportunities Programme. That fund was an original

block allocation under the Offshore Development Fund designed to provide funding

subsidies to companies which are entering into joint venture relationships or

other arrangements where they wanted to upgrade the skills of their employees.

I will give you an old example. Marystown Shipyard

entered into an arrangement with Kvaerner Rosenberg to establish Vinland

Industries a number of years ago. They accessed funding under this program to

send some of their welders over to Norway so that they could be trained and

qualified to weld to offshore standards. More recently we have had people

involved in weather forecasting, we have had people involved in the kind of

testing programs, some quality assurance programs, that are currently in use by

a company called OIS Fisher on the Hibernia platform. They received a subsidy

under this program to allow their employees to be upgraded so that instead of

having to have Norwegians come over and do the work for a period of time over

here at Hibernia and then gradually be replaced by Newfoundlanders, these people

did training prior to the project start-up offshore so that they were able to go

employ Newfoundlanders immediately.

MS FOOTE: It is that important component of

technology transfer that we say must happen here in growing the industry.

MR. SHELLEY: Can you update me with what is

happening in Port aux Basques with the project that you have out there?

MS FOOTE: ASIL, is that the one? I think they

in fact had some success in attracting an investor.

MR. SHELLEY: That is what I understood.

MR. RUELOKKE: The involvement we had with them

was back when the original joint venture was formed, and we provided them with

some training assistance. We have not had any direct involvement with them since

that time, and that is quite a while ago. I am not sure what the status is of

the relationship with the Norwegian partner. I believe the prime driver at ASIL

is the local partner, M and M. Most recently they have been pursuing the

opportunity to build some power barges for a project over in India, the Far

East.

MR. SHELLEY: Because I have had some people

calling about work down there, welders and this type of thing, and they said

they kept being put off. They were supposed to start Christmas, now it is

supposed to start in the spring, and I do not know where it is.

MR. RUELOKKE: No, and we are not certain

either. I think they have had some start-up difficulties trying to finalize the

contractual arrangements.

MR. SHELLEY: Who is out there? I guess Mr.

Ramsay from Port aux Basques would know.

MR. RUELOKKE: I can tell you who the prime

contact is. There is a gentleman named John Brake who heads M and M Engineering

here in St. John's. John is also either chairman or president of ASIL, I

believe.

MR. SHELLEY: John who?

MR. RUELOKKE: John Brake.

MR. SHELLEY: Brake.

MR. RUELOKKE: Contact M and M Engineering in

St. John's.

MR. SHELLEY: I will contact him. One last

estimates question and that will be it for me. It is on 3.3.01.01, Industrial

Benefits, under Salaries. You budgeted $523,600, spent $553,700, but the

budgeted estimate for this year is $721,200. Are there new positions?

MS FOOTE: Remember we went through Program

Review, and clearly the focus on industrial benefits was a significant one for

us. Don't forget now we have Voisey's Bay coming on steam and the whole

industrial benefits component of that. Clearly we needed more support, and that

is where the additional salary will come from there.

MR. SHELLEY: So there are new positions, are

there? Okay. That is it for me minister. I might have one at the end but I will

let somebody else have a go.

CHAIR: Thank you, Mr. Shelley. Ms Thistle.

MS THISTLE: Thank you, Mr. Chairman. Those were

interesting questions, Mr. Shelley. Some a little humorous, but very interesting

all the same. We will fill you in on the humorous

part later on.

Minister Foote, your portfolio is a very exciting

one. Most people in the general public when they see the budget of the

Department of Industry, Trade and Technology, they look at it as - it is

definitely a good news portfolio. Some people do not realize that you have to

set the stage for things to happen. They just do not happen automatically, and

setting the stage lots of times takes a great deal of time and effort and money.

I remember when I used to be on the town council and we toyed with the idea of

removing the economic development officer - the salary - and it was a big issue,

but we came to realize that we really could not do without an economic

development officer. Today business does not come at your doorstep, you have to

hustle for it. I think we Newfoundlanders and Labradorians are just now

realizing that.

It was interesting for you to explain to us here in

the Committee meeting how you are trying to attract investment and so on to our

Province. I am particularly interested in the export readiness. I think we

talked about your department now designing a portfolio of business here in this

Province: what they do, what they manufacture, how they do it, and what their

markets might be. Have you collected much of this data, and would you be

encouraging businesses throughout the Province to contribute? Do you have a set

format? How is it done?

MS FOOTE: We work very closely with all of the

industry associations. We have, as I mentioned today, the manufacturers'

association, we have the Newfoundland Association of Technical Industries, we

have NOIA, we have NEIA, and of course we work very closely with all of them. We

are aware of the companies that exist there. We also have a petroleum directory,

so it has a listing of all of the oil companies, the offshore companies.

I suppose what we are doing compliments what the

Department of Development and Rural Renewal are doing as well, but one of the

things we do is try and pull together a list of companies and know the

capabilities that exist within those companies, especially when it comes to

industrial benefits. We want to make sure what companies are out there and what

capabilities they have, so that if they are looking to hire we know what exists,

and we know whether or not they have actually gone after local companies for

that hiring. Because we know what experience there is out there in the Province.

I don't know, Max, if you want to speak to any of

the other directories or anything.

MR. RUELOKKE: We generally break down the

opportunities for export in terms of the export of goods and products and the

export of services.

With respect to the products, we work very closely

with the Alliance of Manufacturers and Exporters Newfoundland in trying to

insure that their member companies, who represent probably in excess of 500

firms around the Province that are involved in manufacturing products, that they

are aware of the kind of constraints they might face in terms of exporting, in

terms of quality control, and the need to have sales relationships with

distributors in different countries and those sorts of things.

We take selected companies who are really export

ready on trade missions, and we have had some really great successes that have

bubbled quietly to the surface in that. One that comes to mind is what used to

be a small company down in Bay Bulls which was producing fish handling

equipment, CNW Welding in Bay Bulls. I am sure it did not escape anybody's

attention in the last little while. There was a vessel in loading the first

shipment of an order of forty-five small patrol vessels that they built for

South America. The only credit for that initiative we will take for it is that

it got started when Terry Crane, the principal of the company, accompanied the

minister of this department on a first trip to South America. The minister's own

mission to Iceland and Ireland, and the mission that the Premier went on with

the rest of Team Canada down in South America, has led to some very impressive

export development opportunities.

It is a big focus for us. I take the point that Mr.

Shelley made in terms of working with local industry. The export development

side of the portfolio that we have is, well, we call it `growing your own'

exercise. We believe that is very, very important, developing to the fullest

extent we can the capabilities of our own companies to meet the demands for both

import substitution and for export developments. It is a very big initiative for

us.

MS FOOTE: I just wanted to say, on the Iceland

trip -

CHAIR: Order, please!

As the officials respond to questions, perhaps for

the sake of Hansard, and those who will have to transcribe the minutes, just

identify yourself.

Madam Minister.

MS FOOTE: Just as another example of how

important - and you alluded to it, Anna - it is that we go out there and

actually sell ourselves and work with the companies, those trade missions -

Mother Hubbard's, for instance. They went to Iceland with us, and Chris Hewitt

of Classic Woodworks went to Iceland with us. Mother Hubbard's was obviously

trying to sell their cupboards because there is such a shortage of trees in

Iceland. What you see is not good quality. For someone like Chris Hewitt, who

went over there and looked at the types of mouldings that are available, he came

away saying what they were producing was actually similar to lobster slats, and

costing five times as much as what he actually sells his very exquisite moulding

for.

He blew them out of the water. He took in a video

of his product and he came away with a major contract. He was able to sell them

these very nice mouldings and rosettes and everything else for one-third the

price of what they were paying for something that was nowhere near the quality.

That's the value of taking someone with you and introducing them to a market and

making sure that they have an opportunity to present themselves. Chris had never

been on a trade mission before, so for him it was a real eye-opener. Now he

knows he can do it. It enabled him to build his confidence to the point where he

is ready to go again.

MS THISTLE: Minister Foote, how would a

business out there in rural Newfoundland or urban Newfoundland actually get to a

trade mission? Do you have a catalogue of companies, and do you contact them, or

can they contact you? How does one go about that?

MS FOOTE: It depends on the focus of the

mission. What I would like to see happening, and what we have been doing, is

certainly prior to a mission identifying opportunities. Rather than opening up

and saying anyone can go, and then taking someone there and there is no

opportunity for them, what we have done in the past is hired a consultant,

someone who is familiar with the area. For instance, Rodrigo Delgado, when we

were going into Chili, and who knows that country very well, was able to

identify so many opportunities there that when the Premier went on that mission,

in fact, Newfoundland signed the most contracts of any other province on that

mission.

We had done our homework. Rodrigo had gone in and

had identified opportunities. He came back to Newfoundland and matched those

opportunities up with companies back here, so that in fact when they went, the

three or four months of homework that had been done resulted in contracts, or

contacts that resulted in contracts at a later date.

What we really like to do is to make sure we have

done our homework, so that we are not just saying to a number of companies: We

are going to Chili, or Iceland, or Scotland, or England, or anywhere, and would

you like to come along? We think it is important to do the research, to do the

homework, so that if a company is going along they are pretty well assured of it

being a profitable venture for them.

MS THISTLE: Minister Foote, would you encourage

companies around the Province to profile their companies and send their profile

to your department for further contact?

MS FOOTE: Certainly. Working with `D2R2' we

know most of the companies that exist anyway. Any new company that is coming on

stream, it would be really valuable for them to let us know what the

capabilities are.

We also encourage chambers of commerce, boards of

trade, anyone out there, to put together proposals for us that tell us as well

what they have in the way of infrastructure in that vicinity, what they have in

the way of skill sets, for instance, what they have that would be an asset to

anyone who is looking to come to do business in Newfoundland and Labrador. This

is why I say the proposal that Clarenville put together, if Arthur Lee never

goes there, it is invaluable to me when I am out there and trying to attract

companies which may say to me: What about this or what about that? If I have a

proposal there that I can share with them it makes all the difference in the

world.

MS THISTLE: Thank you.

MS FOOTE: Thank you.

CHAIR: Thank you. Mr. Osborne.

MR. T. OSBORNE: I have just a couple of quick

questions. Mr. Shelley went through most of the estimates. Minister, your

transportation budget.

MS FOOTE: Mine?

MR. T. OSBORNE: When I look at that compared to

the transportation budget of other departments - I mean, you look at Government

Services and Lands, for example, which has the same transportation budget as

your department. There is nobody that can convince me that the Minister of

Government Services and Lands does as much travel as you do. What I'm asking is,

are you going to the econo-lodges? How are you travelling for that budget?

MS FOOTE: That is the budget, and what can I

say? I am not about to comment on another minister's travel budget.

MR. BARRETT: Do you want me to answer the

question? Why the Government Services and Lands budget is as it is? It is

because Mr. McLean is the regional minister for Labrador, and it is very

expensive to travel in Labrador. There is more to the skidoos and trikes that

you have to go by planes, and a lot of this chartered aircraft that you have to

go and travel around Labrador in. You are taking the wrong department when you

are looking at Government Services and Lands because he is also the regional

minister for Labrador.

WITNESS: Thank you, assistant.

WITNESS: There are no school buses in Labrador.

(Inaudible) Torngat Mountains.

MS FOOTE: I tell you, the last camel ride I had

was not very easy.

CHAIR: Go ahead, Mr. Osborne.

MR. T. OSBORNE: Minister, the consultation

process that your colleague from the Department of Works, Services and

Transportation has done on manufacturing and processing, can you give us an

update as to how those have gone? Can we expect to see some legislation or bills

brought in to amend the procurement act in this sitting of the Legislature?

MS FOOTE: I think, as you would certainly

understand, given your interest in this, there was a great deal of interest in

that process and it was, as you said, led by the Department of Works, Services

and Transportation. There is a draft Cabinet paper that will be going forward,

the timing of which I think is probably within the next couple of weeks, so I

know they have moved on it very quickly and the paper should be in the system.

MR. T. OSBORNE: So hopefully we can see

something in this sitting.

MS FOOTE: I would like to think so.

MR. T. OSBORNE: Any indication of what changes

are going to be suggested?

MS FOOTE: I think I should let the paper go to

Cabinet first.

MR. T. OSBORNE: No hints.

MS FOOTE: None.

MR. T. OSBORNE: That is pretty much it. I think

my colleague has gone through most of the Estimates. Other than the

transportation, there is not much there that we can ask.

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

MR. WOODFORD: I will pass, Mr. Chairman.

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

MR. BARRETT: Okay, it is 8:05 p.m.; we have an

hour and fifty-five minutes.

I guess first starting off I have to compliment the

department, the minister, and particularly Mr. Ruelokke and the other officials

in the department, about the positive feeling that is happening on the Burin

Peninsula, and the great job they did - and Judy and Max. I know Max spent a lot

of time and a lot of hours. To be on the Burin Peninsulas today as compared to a

year ago, the positive type feeling and the beehive of activity that has taken

place is just tremendous. The minister mentioned it in her opening comments, and

I think in response to Mr. Shelley about it being a service centre, we cannot

expect to have industries in every nook and cranny in Newfoundland.

People are leaving my district - were leaving a

year ago - in droves to go to Alberta to look for work. Well, people today are

Harbour East, and Grand Le Pierre, commuting daily to go to Marystown to work in

the shipyard, which is a bit different. It is really turning things around. I

was up there a week or so ago and the whole positive feeling there is just

tremendous. Credit has to go to Max, and people like you, who spent a lot of

time and a lot of energy, and a lot of frustrations. I was opposed to some of

what happened, and there were times it did not look like it was going to go

through. For the hours that the minister and you and the other people in the

department - I think you are to be complimented on a job well done.

In addition to that, I want to come down on the

Isthmus of the Avalon and the beehive of activity that has taken place in my

district and is soon to take place in Bull Arm and the Whiffin Head Transhipment

Terminal. Two years ago there were 6,000 people working at Bull Arm but we did

not even really know they were there. They were out there, tucked away, and the

economic spin-off in terms of the communities was relatively little. There were

some businesses that did get some business from Bull Arm, but where everything

was housed on site there was no economic spin-off whatsoever. I guess we could

probably look back and say that if we did not have the camps on site there might

have been all kinds of other social and economic problems that would have been

caused.

I think the new model of Bull Arm is a much better

one. I think we will feel a much greater effect within the communities. We are

seeing it already with just thirty or forty people out there. As a matter of a

fact, the thirty or forty people out there are probably having more effect right

now than the 6,000 people who were out there before. The model with the Whiffin

Head, the way they did it, the number of people working out there...

I said in the Estimates of the Department of Mines

and Energy the other day, one of the highlights of my being in politics was

about a week ago when I heard that nine well-trained young people from my

district had secured permanent jobs at the Whiffin Head Transhipment Terminal.

These are young people who are building houses and settling in and having

families within those rural communities. It is just a start of the great things

to come. More and more people said it was just a phase of the hiring at Whiffin

Head, but they are committed to hiring people from the local area because they

want people to settle next to the Transhipment Terminal who can be on call in

relatively short notice.

All of these sorts of things are putting a strain

on the communities, and the infrastructure is just not there. We spent a lot of

money in Bull Arm. I do not know if it was a wise move (inaudible) a lot of

things that are there. You have a lot of paved roads, water and sewer, and all

of these sort of things on that site. Up to this point, the Bull Arm site was

using municipal dumps. Some of the areas we are going to have to address pretty

soon. We are going to have to provide some more infrastructure in that area to

accommodate the developments that are taking place, because we do not have the

infrastructure there now to sustain what is going to happen, or what is

happening in the area.

Even the road system there, the road system going

in through Arnold's Cove, and the intersection there, we are going to have to -

that is why I want to get to (inaudible) the Offshore Development Fund. I notice

there is some money there. Are we providing any more money for infrastructure?

It is going to have to come from somewhere. Some government source is going to

have to provide it, and it may not come out of the regular transportation

initiatives but it may have to come out of some area like the Offshore

Development Fund. Is there any money there for that sort of thing any more?

MR. RUELOKKE: All but approximately $8 million

worth of the original $3 million Offshore Development Fund has been allocated

and spent in some of the activities you see here occurring this year. Most of

them will result from prior commitments that are being completed. There was a

proposal that was approved by the Cabinet of the Province and is now resting on

the desk, I believe, of the Natural Resources Canada minister, to reallocate the

$8 million that is available. Unfortunately, of that, there is not an

allocation, I do not believe, that can be used for infrastructure. There is a

significant portion of it that is dedicated to the Marine Institutes for new

facilities on the south side. There is a small industry development fund that

might be available for specific industry-related initiatives, and we are

thinking particularly of some of the new technologies that will be required off

the Coast of Newfoundland and Labrador for floating production and those sorts

of things. It is very unlikely, I believe, that we will find any flexibility to

provide infrastructure funding from the Offshore Development Fund.

MR. BARRETT: Because originally there was money

allocated for a waste disposal system out there, and it was allocated out of the

Offshore Development Fund. I guess that has not been utilized. So that is still

committed, I would say.

MR. RUELOKKE: The Offshore Development Fund

made a contribution of $95 million towards the site development of the Bull Arm

site, and the Hibernia Management and Development Company funded the rest of it

to the tune of about $380 million, of about a $475-million site.

We were not directly involved in the negotiations

with the municipalities in the region, but I do understand that very early on in

the days of the site development it was planned that there would be a solid

waste disposal facility on site, and I think an access road was started just

over the first hill.

What had happened was, I believe there was a

successful negotiation between HMDC and the Town of Southern Harbour that saw

the municipal ice facility in Southern Harbour being used. There has always been

the expectation in the region, in my time at Bull Arm - I spent a considerable

amount of time with the Bull Arm area coordinating committee - that some of that

money which had been set aside for that site would have been made available to

them; but they were never successful in reaching a conclusion with HMDC on that,

so I am uncertain as to whether or not that is a dead issue between HMDC and the

municipalities in the region. The site itself still sits there - the proposed

waste disposal site - and the access road is pushed into it, or nearly into it.

MR. BARRETT: We are looking at the Bull Arm

site not in the next three years; we are looking fifteen or twenty years down

the road. That is why I am saying we may have to rethink some of the

infrastructure and services that need to be provided in that area, because that

is not in any one municipality so the towns are not responsible for the waste

disposal. So the company that is there now is going to have to come up with some

kind of a proposal. They are going to have a lot of solid waste, too, that they

are going to have to get rid of. The dumps there now are getting taxed to the

limit in terms of - pretty soon they are going to be full and there is no place

for the municipalities to dump. So the discussions, I guess, would have to take

place with the new company that is in there. We don't have the responsibility

for it, do we? These agreements do not say anything about that.

MR. RUELOKKE: The lease between the Bull Arm

Site Corporation and PCL requires PCL to take care of all their own servicing

arrangements; and, while it is not specified, it would automatically include

waste disposal. So it would appear to me they have a minimum of two options: one

would be to try and negotiate an arrangement with a municipality similar to that

which HMDC did, or, failing that, to develop their own capability.

MR. BARRETT: We don't have the responsibility

for it. Like I say, in terms of the other infrastructure there, if there is no

money in the Offshore Development Fund, I guess we are going to have to look at

the Roads for Rail Agreement and that sort of stuff because there are incidents

of accidents. You have a lot of tankers and trucks with the refinery, the

Whiffin Head Transhipment Terminal, and the Bull Arm site; and the new Bull Arm

will mean there will be much more traffic leaving the site. So I guess we are

going to have to look at beefing up the infrastructure in that area to

accommodate the excess traffic that is involved.

I don't think I have any other questions.

CHAIR: Thank you, Mr. Barrett.

Mr. Shelley, you had indicated you had a question

or two?

MR. SHELLEY: Just two more left, that is all.

Just for clarification and explanation, really: 2.1.04, Atlantic Investment

Fund. We pretty well know what that was for, but just the way it worked out in

the Budget, there is $722,000 and then nothing has been put in for this year. Is

that where that fund ran out?

MS FOOTE: No, we were obligated, along with the

other Atlantic Provinces, to invest a certain amount of money into this fund. We

are obligated to do it again this year, but we have not been happy with what has

transpired since that fund was set up. Out of the $1.5 million - no, out of the

total amount that was invested by the four Atlantic Provinces - only one

investment was made to date. That was for a project in Fredericton.

We have expressed our frustration with the process

and, in fact, we have asked to have substantial review take place. Max, of

course, sits on the board. We are reviewing the file. Clearly we want to see

something happening and if nothing happens soon, as we have indicated should

happen, we are prepared to withdraw from it. Rather than forward another amount

of money to have it sit in a pot there, we have said: No, we will wait and see

what happens with the money that has already been allocated.

MR. SHELLEY: Okay. What was the basic concept

between - the Atlantic Provinces, from what I understand, has one fund, and that

fund would help in the set-up of any major industry to any of those provinces,

is that right?

MR. RUELOKKE: Minister, if I could just...

MR. SHELLEY: Just an explanation briefly.

MR. RUELOKKE: The Atlantic Investment Fund is a

kind of unique initiative, a joint initiative, between the four Atlantic

Provinces, ACOA, and four of the chartered banks, whereby each of them

contributed a certain amount of money to something called ACF Equity Atlantic,

which is an Atlantic Venture Capital Fund. The purpose of that fund was to make

equity investments in growth industries in the Atlantic region. It got up and

running about fourteen or fifteen months ago, with a small staff.

We have not been very pleased with the results of

the first year, as the minister has said, so we have given them 1998 as, I

guess, a year of trial. If the model does not succeed, then we will have to look

at other options. Perhaps they might include establishing our own Venture

Capital Fund. The concept is a very good concept. You get the banks and

governments sharing in the risk in high growth potential companies, but the

delivery has been somewhat less than we would, as owners and investors, like to

have seen.

We did not feel it was appropriate to pull the rug

from underneath them without giving them, I guess, a rather severe criticism of

their previous year's performance and to set some targets for them for this

year. We are hopeful those targets will be met. We are very hopeful that there

might be a significant investment in a Newfoundland company very shortly, but if

that does not happen then we are quite prepared, I believe, to recommend to

ministers that we would withdraw.

MR. SHELLEY: Just try to go on our own with our

own Venture Capital Fund, that is an option, a possibility?

MR. RUELOKKE: That would certainly be an option

and a possibility.

MR. SHELLEY: It might be a good one.

MS FOOTE: The value, of course, right now is

that the banks are involved in this one, and ACOA is involved in it.

MR. SHELLEY: We are all there. If we could work

it, it could be good. The concept is good.

Okay, one last one, 3.2.02, I just have a few

questions. Under Strategic Investment and Industrial Development there was

nothing budgeted, and all of a sudden there was Transportation and

Communications, $8000; Supplies... It is not a lot, but what happened there? Was

something created there, something new that happened, that you were not planning

on? There was $36,000 for Purchased Services and so on: 03, 04, 05, 06, those

there. There was nothing budgeted for it, as you can see, in 1997-1998, but all

of a sudden... Did something new happen, something created, a new position?

MR. RUELOKKE: One of the final initiatives that

was taken under that program, which expired on March 31, 1998, was to establish

the very first trial of the Ambassador Program. So we re-profiled a little bit

of the money, because originally it had not been intended that we would actually

get involved in the purchase of services or professional services, but it was

decided to try this ambassador approach to see if it would work. It did, in

fact, prove to be successful, of course, and we are continuing it today; but

that was its origin basically.

MR. SHELLEY: That's what that is, the

Ambassador Program? Okay.

Those are all the questions I have, Mr. Chairman.

CHAIR: Are there any other questions from any

members?

Thank you, Minister, for your presentation, and

thank you to your staff. I really appreciate you spending the time to answer

questions and give an overview of your department; but, before I close and call

the motion, I just want to express my own appreciation for the work and activity

in Labrador West. I know that the deputy, Max, and fellows like Byron Hynes, put

in tremendous effort to move along this file on the silica. They have some of

the sample down there now at the smelter and it is some of the purest material

this facility has seen, so things look encouraging. These are private investors.

These are private people in the west who are putting their money down to try to

create opportunity and jobs in the local area. There is no government money, as

I understand it, or very little, if any, involved with this. It is strictly some

people who are trying to really do something positive, and I appreciate all the

effort and time that you have taken to push the file along.

Having said that, I would want to call a motion to

accept, without amendment, all the headings from 1.1.01 through 3.4.02

inclusive.

On motion, subheads 1.1.01 through 3.4.02, carried.

On motion, Department of Industry, Trade and

Technology, total heads, carried.

CHAIR: The next meeting will be next Tuesday

evening, with the Department of Development and Rural Renewal. Thank you very

much for being here.

MS FOOTE: Thank you.

On motion, the Committee adjourned.