Resource Committee — Department of Industry — 23 April 1997

1997-04-23

Newfoundland and Labrador — Committees

April 23, 1997

RESOURCE ESTIMATES COMMITTEE

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

Assembly.

CHAIR (Mr. P. Canning): Welcome to the first

Resource Committee meeting of this particular budget process. We have tonight

the Minister responsible for Industry, Trade and Technology, the hon. Charles

Furey and his staff. We have the members of the House forming the Committee.

Maybe we will just go through the members, starting with the Member for Humber

Valley. Can you identify yourselves for the record?

MR. WOODFORD: Rick Woodford, MHA, Humber

Valley.

MS THISTLE: Anna Thistle, MHA, Grand Falls -

Buchans.

MR. OLDFORD: Doug Oldford, Trinity North.

MR. E. BYRNE: Ed Byrne, Kilbride.

MR. FITZGERALD: Roger Fitzgerald, Bonavista

South.

CHAIR: Thank you very much. Minister, perhaps

you can introduce your staff and have a short opening statement.

MR. FUREY: Thank you, Mr. Chairman.

I am Chuck Furey, Minister of Industry, Trade and

Technology. On my immediate right is Max Ruelokke, the Deputy Minister of this

department. To his right is Keith Healey, the Assistant Deputy Minister, who has

just taken up those new duties in the last couple of weeks. On my left is Rick

Hayward, Director of Financial and General Operations. He covers three

departments since we amalgamated administrative responsibilities. He covers off

Tourism, Culture and Recreation; Industry, Trade and Technology; and Environment

and Labour.

Mr. Chairman, I do not have a short statement. I

think we should just go right to questions. Our estimates are fairly

straightforward. If there are questions, I would be happy to entertain them.

CHAIR: Thank you, Minister. Well, that is what

we will do. We will go straight to questions. Perhaps Mr. Byrne might want to

open up, or Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

On page 143, Minister, it shows Salaries there

under 1.2.01, Executive Support, $646,900 down to $436,800. Is this a situation

where positions were eliminated to reduce salaries by $210,000, 32 per cent? If

it was, which positions were eliminated, and could you indicate the salary

levels of those positions?

MR. FUREY: What page are you on there, Mr.

Fitzgerald?

MR. FITZGERALD: Page 143.

MR. FUREY: Can I just open by saying that the

department is under program review and that is part of the general overall

reductions. Our department took a 30 per cent reduction. It is all about - as

the Premier and the Minister of Finance have said over and over - making

choices, and we moved to protect the health care budget and other budgets. So

every department was asked to look and to cut as close as possible. With respect

to my own department, in that particular subhead, you are looking at the removal

two ADMs. There used to be three ADMs in my department, an ADM for economic

analysis, an ADM for trade and development and an ADM for technology

development. We decided to remove that layer of management and go with basically

five directors. We wanted more flexibility, more accountability and quick

decision-making.

MR. FITZGERALD: So you are saying there were

three positions eliminated there under the one heading.

MR. FUREY: Yes, and there is now one ADM. And

when I say that is eliminated, it is all the support staff that goes with it.

MR. FITZGERALD: Okay. You do not feel that, in

any way, the reduction of staff will have any impact upon the department's

ability to plan or establish or evaluate policy objectives for the department?

MR. FUREY: No, we basically said: we are going

to reinvent the department. We decided that we would look at the basic core

responsibilities and focus on them more. The areas that we chose to focus on are

marketing, technology development, investment prospecting, trade and exports and

industrial benefits, particularly as it relates to petroleum industry and the

mining industry. But the other thing we decided to do was to start building

teams across the divisions. Instead of just categorizing people and

pigeon-holing them into various categories, we said: we are going to take down

those walls and start building teams across the division; that is how we have

mandated the restructured department and we think it is going to work very, very

well. It will be more accountable, more flexible, and we are going to count more

on the private sector to do an awful lot more. Where we reduced the public

sector by thirty per cent, we are going to ask the private sector to start

paying for things like trade shows, cost recovery and exhibits and those kinds

of things.

MR. FITZGERALD: Under 1.1.01, the first

heading, Minister's Office, there is another reduction there from $188,300 to

$169,900, a reduction of $19,000. That is probably not a salary. What is that

reduction? Is it a reduction in the minister's salary or it is a -

MR. FUREY: It is tax time, I wish. Basically, I

think, that reflects a reduction in overtime costs. In other words, there are a

lot of people working in my office for whom one time there was a fair budget

there for overtime and those kinds of things. A lot of it now has moved off to

time in lieu, rather than a cash payment.

MR. FITZGERALD: On page on 144, Policy and

Strategic Planning, 1.2.02. Here, again, we have a difference in salaries from

$107,600 to $196,000. Why have salaries increased here by $88,400?

MR. FUREY: I am just going to ask the deputy to

refer to that because he is - we are getting right down into the divisions and

he will speak to it.

CHAIR: If I could, as you speak, just identify

yourself for the record.

MR. RUELOKKE: The budget for salaries for the

Policy and Strategic Planning Division of 1996-1997, was $145,000. There was a

director, an officer and a secretary associated with that. There was a vacancy

during part of the year - one of the people was transferred out to another

division, so that resulted in a savings in that division. We added another

person as a part of the reorganization following program review, so we have

really added one person from 1996-1997 to 1997-1998 and the budget estimate

reflects those positions being filled for the entire year.

MR. FITZGERALD: So that is at a salary of

approximately $51,000?

MR. RUELOKKE: That is correct.

MR. FITZGERALD: Coming on down to Grants and

Subsidies, you notice a reduction of $20,000 in the 1996-1997 budget and the

estimates is for $9,000 this year. Which Grants and Subsidies have been

eliminated here in this particular heading?

MR. FUREY: Which one was eliminated, you are

asking?

MR. FITZGERALD: Yes.

MR. FUREY: As you know, when the internal trade

agreements were under way, each of the provinces contributed a portion to those

negotiations. They have since concluded all eighteen chapters with the exception

of two, the

chapter dealing with the so-called MASH or MUSH sector, on which we

are getting very close to signing off. The other one was the energy

chapter and

it is one that Newfoundland had quite an interest in with respect to wheeling

rights across Quebec territory. So, you will see that that budget has declined,

Mr. Fitzgerald, because basically that agreement is completed.

MR. FITZGERALD: Just going to Salaries again,

on page 145 at the heading 2.1.01, Business Services: How many positions were

lost to reduce the salaries here by $90,700?

MR. FUREY: As I told you, there were twenty-six

positions and some temporary adding up to about thirty positions in total. I can

dig through the background detail and give you the specifics on those, but the

overall department had a decline of about thirty-one positions, of which

twenty-six were full-time, the rest part-time. So, each of these subheadings as

you go through will reflect that.

MR. FITZGERALD: Coming on down the line to item

10, Grants and Subsidies: in 1996-1997, we see the Grants and Subsidies at

$450,000; I think it was about $550,000 and it was revised to $450,000, this

year it is $1,250,000. What new grants and subsidies are implemented here?

MR. FUREY: Basically, that has two components,

the first one is the agency of record that we have hired, Bristol Communications

which has helped us with our advertising campaign. Perhaps you have seen it, the

`Think Again Campaign' in the Globe and Mail , which was designed to cast

a better image of the Province from the outside looking in. That takes up a fair

portion of that, but we also had to budget a fixed amount which we knew would be

fluid and flexible for the EDGE Program. The EDGE Program, as you know,

contemplated $2,000 per job, so the balance of that would be taking up in terms

of the EDGE Program, we expect, a bigger pay-out this year. Under the EDGE

legislation, each job created we would guarantee a $2,000 grant -

MR. FITZGERALD: Per job.

MR. FUREY: That is right - which is the

equivalent of what we would have collected in personal income tax, which we

rolled back to the company in the first year to allow them to use it as a grant

to get people up on the learning curve in these industries.

MR. FITZGERALD: So this is tied in with the

EDGE program?

MR. FUREY: That is exactly right, yes.

MR. FITZGERALD: Under the amount to be voted

next, coming on down to Revenue - Provincial, it shows $45,000 there in the

1997-1998 Budget. What would be the source of that revenue, Minister?

MR. FUREY: This would, I think, reflect the

trade shows and what industry, I guess, would pay towards those trade shows.

Prior to last year, whenever we had these trade shows the Province would always

pick up the costs for manning the booths, setting up the exhibitions, dealing

with the literature, those kinds of things. We never ever had a fee that we

charged back against industry for these. Last year we started a small fee. This

year it will increase. What we are saying is we want to recover some of those

costs. We will still pick up about 80 per cent of each of the trade shows and

their costs. That is not the cost, now, for business men or women going out to

export their products. This is the cost of the Province setting up their

exhibitions, putting their literature in place, and staffing these booths. They

will make a small contribution towards that.

MR. FITZGERALD: I have had a real problem with

some of the thinking, I suppose, behind the EDGE program. It is always the

situation where I felt we did not treat our own people as fairly as we treated

other people, or new people moving in, whereby somebody would be encouraged to

start a new business and create a new job, when many of our own businessmen here

in this Province were doing exactly that but got no recognition from government

whatsoever. Have you had any thoughts about changing that and recognizing all

new job creations by letting them either take

part in the EDGE program, or at

least providing them with a subsidy of $2,000 for the jobs they create?

MR. FUREY: Yes. Two points on that. The first

one is that 45 per cent of the companies that are approved under EDGE are local

Newfoundland companies. So they are companies in which businessmen have come up

with new ideas and set up new companies, or companies that currently exist that

are expanding. So, clearly, nearly half of them are from here.

The second point is that we decided that under this

Budget review, after the pay-outs are completed this year, there will be no more

$2,000 per job grants from the Province. We have asked them to look at the EDGE

program and reinvent it. One of the areas we are looking at is the so-called

jobs training fund which is mostly funded by the Federal Government, as you

know. Now, that is available to all companies anyway.

Basically, what is left on the table for companies

that are setting up under EDGE are relief of the payroll tax for a ten-year

period, relief of corporate income tax for a ten-year period, Crown lands which

we would make available for a dollar, an EDGE facilitator to guide and navigate

them through permits and any obstacles in the bureaucracy. Because as you know,

with the Harmonized Sales Tax, with the GST merging with the PST, there is a tax

input credit that goes to all businesses anyway. So it is a level playing field

in that sense in terms of taxation, and we have removed the $2,000 job grant,

and that is available to any company under the JTF.

We are working hard to try to reinvent that

program. It has been fairly successful. We have about fifty-seven companies.

There is projected to be over $250 million invested over the next two years. It

will create upwards of 3,000 jobs. There is an element of success to it. But we

have to refocus on it and rethink it because of the Harmonized Sales Tax and the

removal of the $2,000 grant per job.

MR. FITZGERALD: It would be nice to see our own

local people being encouraged to hire more people and to receive some benefits,

at least, on an equal footing with other people who move in here and create new

jobs.

Minister, you have done a lot of travelling and

spent a lot of money. Are you happy with the amount of success you have had? Can

you tell us how many jobs you feel you have attracted to this Province, or how

many industries you have attracted to this Province, since you have been in the

portfolio? It is a pretty broad question, but -

MR. FUREY: Yes, it is a pretty broad question,

a very difficult one. I remember, when I sat over there from 1985-1989, asking

the same questions of my predecessor, Mr. Barrett, incidentally, whose travel

budgets were double mine, whose entertainment budgets were triple mine, etc.,

but that is not the issue.

MR. FITZGERALD: I do not think anybody here

would argue about your travel budgets or question you on your pettiness or

anything like that. That is not the intent.

MR. FUREY: No, and I do not mean it that way. I

just mean that it is very costly to go out and travel the world. It is extremely

difficult, you are competing in an international environment, you are competing

with all of the states in the United States of America that have various

programs that are out competing, you are competing against all of the other

provinces - it is very difficult.

We have had some success stories. You know some of

them because we have given EDGE status - the antimony mine in Central

Newfoundland, the Baie Verte gold mine. I met with some people - Mr. Shelley

probably told you about this: we are pretty close to a deal on this tannery

which will create another 100 jobs on the Baie Verte Peninsula.

There are a number of call centres we have been

chasing, one which is very significant and we are very close to winning it. I

cannot say a whole lot more about it, but we have been short-listed on a list of

nine and we are down to two, and it is fairly substantial.

We have attracted a number of IT companies here,

Abbacom Logic, for example, which is in the business of tracking devised for

marine animals that exports right out of here now. Abbacom Logic, which has

hired fifty graduates out of our University, is a company that is involved in

the enhancement of memory boards.

There is a silica group that Mr. Canning has been

working very diligently on, called Globe International, that is taking samples

out of Labrador. I believe it is a $100 million project we are talking about,

that we have met with, and those samples are now being tested in the United

States. There is another company that I met with three weeks ago and I visited

with, that is looking at a lime project on the Port au Port Peninsula, which

would provide sixty jobs - I am confident that that will come true - of which

thirty-five per cent of their requirements will go into Voisey's Bay and the

other sixty-five per cent will go into the New England States. I just met with a

major sports sweater manufacturing facility that is look to set up in Argentia,

140 jobs. I met with the shareholders for two days in Toronto the other day, and

that looks very promising.

So, there is a whole range of companies; I can get

into a long litany of companies that I have met with that are very promising,

but I can equally sit here and tell you of thousands that I met, where we were

unsuccessful.

MR. FITZGERALD: Minister, what will I tell

someone from my district who worked in, I suppose, the flagship plant of the FPI

operations, that once employed 1200 people, and now has had the windows boarded

up for the past five years, with very little hope of ever getting back to go to

work in that particular area in the fishery? The whole area is devastated.

People are leaving there by the dozens and that is not any stretch of numbers.

Has there been anything or do you know of anything -

MR. FUREY: You are referring to Port Union?

MR. FITZGERALD: I am referring to Port Union -

MR. FUREY: It is funny that you should refer to

Port Union, because in my Toronto meetings on this sweater manufacturing

facility, I contacted Mr. Young and asked for the details and space requirements

and stuff for that plant, because this company wanted to look at an alternate

site, as well.

This is a very exciting company. It has some

terrific investors, they have good contracts in hand, mostly going into the New

York garment industry and I have recommended Argentia and the Port Union area.

But it is very difficult, you are quite right.

There are a lot of abandon fish plants, there is a lot of property lying around

that could be picked up very cheaply. It is not easy to direct investments in

there. I get this question all the time on the North West Coast. My own riding

runs from Rocky Harbour in the South all the way to Flowers Cove in the North

and it is a necklace of forty-eight communities, all depending on the fishery.

Many of the plants are abandoned, a lot of them will be closed, and I am

constantly asked about it. So, it is not peculiar to your area, although I am

sensitive to your area, and it is an area that came to mind when I spoke with

this company. I highly recommended it to them. That is basically what I have to

do as a salesman, because that is my job, to try to sell. It is to pass on this

information.

I understand Mr. Young has had a number of faxes

from the company since, but I think there is some good news coming down the pipe

for you, as well, with the announcement today of this $100 million shrimp

industry. It looks very promising for the Bonavista plant which has been idle

and boarded up. It will create a significant number of jobs in your area, and

that is good news.

MR. FITZGERALD: Minister, there is a group in

that particular area known as Cabot Resources which has been operating through

funding through HRD. The sad part about it is, if we put those people in those

positions, we give them office space, and we give them some money to operate a

telephone and a fax machine, and that is it, you know from your travels and from

the experiences you have had that it is very hard to attract people to your area

- new industry, or to solve your problems - by sitting in a small office down in

Port Union or Catalina. We have to think much bigger than that, and allow those

people room to travel, and go and search out companies and prospective investors

to come and look at what we have to offer, and possibly provide our people with

some work. That is something that I would like for you to take under

consideration. I know it has probably been brought to your attention before, but

I can assure you that as long as we continue to expect those people to be able

to solve our problems with such a limited amount of funding, it will never

happen, as hard as they might try.

MR. FUREY: One of the things I would comment

on, with respect to your comments, Mr. Fitzgerald - and I am not sure what your

economic zone is because I have been out of the rural picture for awhile now,

but in my own area, which is Zone 7, they just completed a terrific strategic

economic plan where they travelled the coast, met with the communities,

highlighted the areas of forestry, aquaculture, secondary processing in the

fishery, tourism, and a number of other areas, and that strategic plan has a

series of action items. I am meeting with them, in fact, tomorrow night on this

issue, and they are seeking federal/provincial dollars to go out and market

themselves, now that they have a good plan in place, and they have some very

good ideas about it. They are taking local products, by the way, to trade shows

for the first time ever.

There is a fellow in Port au Choix who has

developed a product called a Komatik. It turns into a sled for carrying wood, a

boat, a tent, a camper. It is just a phenomenal piece of equipment, and he is

meeting the likes of L.L. Bean, and those kinds of people, but he is getting out

there and marketing it. We have given him a few dollars to go to some of these

trade shows, and I know Mr. Byrne has had some of his constituents - and he

might want to talk about this after - use the MAPD program to go out and take

products and show them off around the world and open up new markets, because if

we open up new markets we can start selling these kinds of things.

You are quite right. It is not just government; it

is not Chuck Furey; it is not the Department of Industry. It is all of us,

particularly the people who live in the communities and who know the strengths

best. But the issue, Mr. Fitzgerald, is to catalogue them, identify them, put

them on paper, and get out and market them. I quite agree with you.

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

Thank you, Mr. Chairman.

CHAIR: Mr. Byrne.

MR. E. BYRNE: Good evening, Minister.

Gentlemen, how are you?

I was noticing in some of the responses to

questions by my colleague here, you talked about reorganizing and reinventing

the Department of Industry, Trade and Technology to focus in on fundamentals, I

think is the word that you used, and one of them was industrial benefits

specifically relating to mining and oil and gas, I believe you said.

MR. FUREY: Yes.

MR. E. BYRNE: Could you elaborate on that a

little bit for me?

MR. FUREY: The predecessor of the Department of

Industry, Trade and Technology used to be called the Department of Development,

and there was a division in there known as the Offshore Benefits Division at

that time - we have now changed it to Industrial Benefits to widen its mandate -

but at that time it's job, Mr. Byrne, was to go out with our local companies to

seek out trade shows that were meaningful so that our companies could be in a

position to engage in joint ventures and strategic alliances, because we knew we

could not do it all alone on the oil front.

As a consequence of that, and as a consequence of

these trade shows and some of the developments that have come from the

department, we have seen over 150 new joint ventures and strategic alliances

over the last ten years. Now a great deal of credit for that does not go to me

or to my department per se. It goes, I think, to the former government that had

a vision of creating that. I give Mr. Peckford and his group full marks in that

regard, because they recognized early that we could not send company x out with

zero experience in the petro-chemical or the petroleum industry. We had no

experience, so we had to go out and find people who had experience, join with

them and build bridges back into the economy so that we could transfer the

technology across those bridges back into our companies. As a result, you will

see from the Hibernia project, literally 46 per cent of all the expenditures,

which was close to $3 billion spent here, was spent in local companies winning

contracts on their own merit.

We thought that was important in that it was a

success story for Hibernia. We have widened it now for Terra Nova. We have just

catalogued a whole range of opportunities for some of our local companies. NOIA,

as you know, sprung up out of that, the Newfoundland Offshore Industries

Association, which is a collection of those companies that have been successful.

We have widened it now further to Voisey's Bay, and the department is now in the

midst - and that particular division known as the Industrial Benefits Division

is in the midst - of cataloguing a whole range of opportunities from the time

the people go in to extract the ore until it is taken out, until it is refined

and smelted and has a final product. We are looking at downstream industries

beyond that as well, but the studies under way now will be fairly comprehensive

and we will hold a series of seminars across the Province so businesses can see

what the opportunities are, but I think it has been very successful. Mac, you

have been involved in this as a director and as an ADM and now as DM; I think

you would probably agree with that.

MR. RUELOKKE: Yes, I would, Minister.

MR. FUREY: Does that sort of touch on what you

were asking, Mr. Byrne?

MR. E. BYRNE: Yes, it begins to touch on it.

Again, it may be somewhat ignorant on my part but

forgive me if it is; what role, outside of that, does your department play with

the ongoing offshore oil and gas industry, because it is still a very young

industry in the Province which really has not emerged upon the scene at all. And

outside of the Hibernia project, which is an agreement that is essentially, in

terms of the construction phase of the GBS, complete, for all intents and

purposes, in terms of procuring and assuring significant benefits, industrial

and otherwise to the Province, what role does your department play in that?

MR. FUREY: We were not just involved in the

construction side of getting companies up-and-ready.

MR. E. BYRNE: Oh, I understand that. You are

involved in much more than that. I am honing in on specifics.

MR. FUREY: I should mention this. The

department also, about a year-and-a-half ago, released a catalogue of

opportunities for the production side. Production, as you know, starts in

December and I think it will be roughly 150,000 barrels a day and will go for

about twenty years. We catalogued a whole range of opportunities, because over

the life of that project, which some people say is eighteen years and some

people say is twenty years, personally I believe it is going to be far greater

than that, and I think the volumes are going to prove out to be far larger, but

that is a personal point of view, not a government point of view, there is a

whole catalogue of opportunities during production. We think there will be about

$8 billion spent over that twenty-year period. We wanted to position our

companies not just to chase construction jobs and servicing of the construction,

but to chase the servicing of the production, and you are seeing that we will

service. Look at Harvey's Offshore, for example, the supply base, right on your

own neck of the woods down there in St. John's. You will see that literally

millions of dollars is being spent down there to service these offshore rigs.

Boats will come and go. Supplies will have to go on; the helicopter contract,

which led to a major capital expansion at the airport, ferrying working to and

from the rig 300 kilometres southwest of St. John's.

Mr. Byrne, there are a whole range of opportunities

that my department, with this very small division, who are a very talented group

of men and women I have to tell you, are ferreting out and making, facilitating,

these opportunities with companies. That is the role. Our role, really, is to

identify and to facilitate and help the companies go chase and capture these

contracts.

MR. E. BYRNE: I wonder if the Clerk could move

back a bit because I can hardly see the minister. I am sorry about that.

If that is your role, what is the department doing

now in terms of identifying, facilitating, enhancing, local companies to take

advantage of the Terra Nova project, in terms of every aspect of it? Because

there is a legitimate concern, I think, that has been raised in a number of

areas in terms of: What are the significant industrial benefits, major

contracts, that we have seen lost in the past with respect to Hibernia, in terms

of the Cow Head facility, and other things like that, that a great deal of the

work may go out.

In the agreement between the Province on the one

hand and Petro Canada on the other hand, it says e bidders with facilities in

the Province that can complete or do work, the agreement only allows or only

stipulates that Petro-Canada, maybe I can read it just to a little bit clearer,

Minister, I will read it. `Where Newfoundland and Labrador fabrication assembly

and outfitting capabilities exist and are qualified by project proponents to be

capable of undertaking the project activity, the project proponents will request

potential bidders in the Province to bid the work using Newfoundland and

Labrador local and addition to bidding other locations'. So, there is no

guarantee that we have the facilities between the Province on the one hand and

Petro-Canada developer on the other hand, that where fabrication opportunities

exist, all that is in the agreement is that it guarantees that local companies

will be allowed to bid.

So, what is the Department of Industry, Trade and

Technology doing to facilitate and to ensure that that fabrication work actually

starts here and not to be built or constructed, as is the case, and I am sure

the deputy minister who has been involved in this industry is as aware as

anybody in the Province, to ensure that that is not build in Europe or in the

United Kingdom where some are suggesting that it is going to be built now?

MR. FUREY: Well, you know how that agreement

was structured and it is different than the Hibernia agreement.

MR. E. BYRNE: I know, I understand that.

MR. FUREY: The Hibernia agreement, the way it

was structured was, we set about to capture the industrial benefits and to

squeeze on the industrial benefits as much as we could. Now, there was a price

tag for that, $2 billion in loan guarantees from Ottawa, which I feel confident

will be paid back, since significant tax concessions by the Province and a whole

range of other issues. So, the trade-off was, we will ensure industrial benefits

on the one hand and we will trade-off royalties on the other.

MR. E. BYRNE: But we did not get entirely the

industrial benefits that we thought we were going to get from that project

either, but we did well. I am not saying, but we did not - some of the larger

thing in terms of - but anyway that is not the issue now.

MR. FUREY: I think you are thinking about

Marystown and some others, but again Mr. Byrne, that is - you are at the whim of

the market place in that regard because our bid with respect to Marystown on the

MOF, if that is what you are talking about, the Mechanical Outfitting Project,

which is why we built -

MR. E. BYRNE: That is an example, that is not

the question I am asking in terms -

MR. FUREY: I know what you are asking. In terms

of Terra Nova, the thinking was to take more on royalties, less on industrial

benefits as a framework agreement. Our royalties structure is much better, as

you are aware, with respect to Terra Nova, but even with Terra Nova we will get

about $1.5 million person hours of work on Terra Nova and there is another

million out there that we have to chase.

Now, I think a significant milestone was reached

the other day in that the buildings trades council have come to a very good

agreement with the so called Grand Banks Alliance, which just changed their name

to the Terra Nova Alliance. Having that agreement in place, with the state of

the art facility at Bull Arm, puts us in an extremely competitive position. I am

not worried that we are not going to get work, in fact, I feel very confident.

I also feel confident that some of the topsides

modules will be fabricated at Marystown. We have had a very good success story

at Marystown, it has been a turn around like nobody ever dreamed of in the last

fourteen months. You have been following those stories that the unions have come

to the table, the management has come to the table, we have reopened agreements,

we have restructures packages, we have made ourselves that most competitive, I

think, shipyard and repair facility east of Montreal including Quebec, and that

is why we are winning contracts in the Gulf of Mexico, with AMFELS and others,

an $8 million contract, a $400,000 extension, another $4 million two weeks ago,

$6 million beyond that. We are now primed to win the tug contract on the

Transhipment terminal. We are one of the two bidders being considered and I feel

confident that we will win it.

So, we have made ourselves competitive, Mr. Byrne,

and that is the best that we can do to create a competitive environment because

the actual agreement calls for a full and fair opportunity.

Now, with respect to the monohull, we cannot build

that in the Province anyway, if they go for a new build. That will be build in

Japan or Korea or one of the British shipyards, but the hull itself will come in

and the real work and the integrate work and the man hours and the construction

and the experience and the technology transfer is in building all of those

topsides that go onto that monohull.

MR. E. BYRNE: That is the question then. So, in

terms of what is the department doing, or government, or through you as minister

MR. FUREY: Right.

MR. E. BYRNE: - to ensure -

MR. FUREY: I (inaudible) -

MR. E. BYRNE: - that where that fabrication

sort of opportunity and ability exists industrially in the Province... Because

there is no guarantees within the project for the reasons you are outlined, that

you have a chosen a route to take it more on the royalty regime as opposed to on

the industrial benefits side. To ensure that we are competitive, because the

agreement talks about being globally competitive as a province, what are we

doing to ensure that we have the edge, so to speak, to ensure that whatever

contracts we can bid on that we in fact do, and win?

MR. FUREY: Right. My answer to you was you have

seen the first of its kind labour agreement in all of North America that was

announced last week that I think puts us in a very competitive position. Bull

Arm, as you know, the site itself reverts to the Province within the first 3

million barrels of oil, which is probably sometime mid next year. We will make

that site available. It is ours. It reverts to us for one dollar. There are no

capital intensive costs that have to be absorbed by anybody. There is a

fantastic labour agreement regime put in place that is far less onerous than the

Hibernia one.

I think the answer to your question simply is that

we make ourselves competitive. We have done everything in our power to do that.

At Marystown I feel confident, I feel very confident, that we are going to win

significant chunks of work on Terra Nova because we are competitive. We can bid

and we can win and we can make money. Bull Arm is the same thing.

With respect to spin-offs for other companies,

smaller and mid-size companies, we are nurturing them as well. We have met with

a great many companies over the past year pointing out the smaller subcontracts

they can chase. We continue to go to these trade shows. There is an important

one in a week or so which I will be speaking at, an international conference in

Houston. I think we have fifty companies going to that, Max? Fifty companies

going to that. I will be meeting with the Terra Nova alliance while I'm down

there as well and continuing to pressure them that: Look, we want as much

benefit to go to Newfoundland, and holding them tight to the best efforts

agreement.

We all know in law that best efforts means very

little when you appear before judges. But really and truly Mr. Byrne, if

companies are going to operate here - and Petro Canada is a significant

shareholder in Hibernia, and the operator of Terra Nova, and it has other fields

out there that it is exploring and that it is a partner in, it has to live with

us as well. The next agreement we are going to be carefully monitoring and

watching it.

The broad brush answer to your question is to make

ourselves competitive. Create a competitive environment where we can bid, win

and make money. No good to bid and win and lose money. Because the Province owns

those sites.

MR. E. BYRNE: Fair enough. I guess I will

rephrase it. Do you think government has put enough emphasis on ongoing research

and development in terms of dedicating an office or individuals or a certain

thrust of government that would maintain, operate, so to speak, or look at

ongoing opportunities within the oil and gas industry? Because it is an industry

that you know moves extremely fast. It changes daily, weekly, monthly.

Is the Province doing enough in that regard to

continually monitor that to ensure that advantages that are happening around the

world, in terms of what we have to offer as an emerging player in that industry,

are we doing enough to take advantage of that? Or - and I'm not trying to be

flippant either, it is an important question - are opportunities passing us by

that we don't even know of yet? Or that have passed us by because we haven't

singled out that specific thrust in that industry?

MR. FUREY: No, you make a good point. You are

never going to capture it all -

MR. E. BYRNE: No.

MR. FUREY: - but you are quite right. That is

the importance that I place on these trade shows. In fact, in Houston next week

- it is called the Offshore Technology Conference, the OTC. All the new and

modern technologies that come into play, or have come into play, or will come

into play in the next year or so, will be assembled and presented at the show.

MR. E. BYRNE: I'm aware of the Conference, I've

seen the (inaudible).

MR. FUREY: Yes. They filled the entire

Astrodome. That is why it is important for our companies to go down and see what

kinds of new technologies are being - for example, in sub-sea technology. It is

changing all the time, like flexible pipes and a whole range of other things.

Horizontal drilling was a new technology. The ROVs, which David Squires and the

diving department - he got involved with SubSea out of New Orleans, which

transported new technology, new equipment, and new know-how into the Province.

Not only did he, Mr. Byrne, import it into the

Province, but he became so good at it that he exported it back to where he came

from, and had something like twelve of our divers there for a year in the Gulf

of Mexico. Was it twelve or fourteen of our divers, Max? So we are watching for

it all the time, and our department is watching for it all the time, and that is

the importance of these trade shows and exhibits.

MR. E. BYRNE: In terms of getting out there.

MR. FUREY: Yes, getting out there, to see it,

touch it, feel it, and examine it, and do joint ventures wherever you can.

Because a lot of times our companies are small and they are undercapitalized.

That is why we put in place -

MR. E. BYRNE: Agreed. That is why I asked the

question in terms on one hand in getting out there, but having the information

as current as it may be to provide those companies - you say fifty are going to

the one in Houston - with the most up-to-date latest information in terms of

giving them the tools, the equipment, necessary to not only survive, but thrive

in that environment. (Inaudible) are we doing that enough?

MR. FUREY: Yes. One of the points I was going

to make is that a lot of these companies are undercapitalized, and that is why

we set aside under the Offshore Development Fund a so-called offshore technology

transfer fund. Companies can access that on a grantable basis so long as the

technology is brought here, stays here, and creates jobs. Many companies have

accessed that. Max pointed out to me that it was our department and that small

division that created a paper on floating production systems three years ago,

pointing out the new technologies not only to our own companies, but to Terra

Nova and to the consortium.

So yes, they are staying ahead of the game, and we

have some very bright minds over there and good people in Fred Murrin and

Valerie Hillier and Colin Dyer and these people who are engineers and

technicians and who have been around this game a long time. But are there some

that pass by us and blow past us? No question, there are. But these companies

are in the business of making money. I know you have talked to many of them, and

they have done very well coming out of these trade shows because they have

joined and made strategic alliances with the right partners.

MR. E. BYRNE: Is your department still

involved, directly or indirectly, in terms of the ongoing privatization

initiatives of government?

MR. FUREY: No.

MR. E. BYRNE: I don't think you play the same

role as a department as you used to. I could be wrong, but...

MR. FUREY: No, you are quite right. We used to

do the privatizations because under the old former Department of Development

there were a lot of Crowns that sat with me. For example, Newfoundland Hardwoods

was reporting to me. We privatized that very successfully. Newfoundland and

Labrador Stores reported to me; we privatized those stores as well, very

successfully. There were other things that were reported to me as well.

Marystown, for example. I hope to privatize that. The picture has turned around,

it is looking very bright and positive, and we are getting some very interesting

nibbles.

That is why privatization was focused on my

department. As we started to feed these Crowns back out into the private sector,

there was nothing really left except in an advisory capacity, and we were very

much advisors in the privatization of Newfoundland and Labrador Computer

Services Limited. The file has now been moved to Finance, because as you will

notice in the Estimates the so-called project and analysis division, which was

my -

MR. E. BYRNE: (Inaudible).

MR. FUREY: - has all shifted to Finance with

their economists, so you have a bigger group which looks at the larger picture,

not just project by project.

MR. E. BYRNE: More of a general question.

Compared to last year's budget, I guess on page 141 in the Program Funding

Summary, gross expenditures I think will increase by about $7 million, $8

million, up to $36,846,200, from $28,888,600 the year before, an increase of

about 25 per cent, 26 per cent, 27 per cent, whatever.

MR. FUREY: They reflect the federal-provincial

agreements (inaudible).

MR. E. BYRNE: Yes. Again, why such an increase?

I'm not complaining about it, by the way.

MR. FUREY: No.

MR. E. BYRNE: Why such an increase, and where

has that increase in revenue been directed to reflect, I guess, the new

direction the department is taking?

MR. FUREY: There are two issues there, Mr.

Byrne. The increase is reflective of a federal-provincial agreement that we

signed, the so-called Economic Renewal Agreement, which carved out $30 million

for my department, which is used for information technology and as you know, we

did a major study. I highly recommend it to you, on information technology

called: Operation Online. The Operation Online had a series -

MR. E. BYRNE: You sent it to me.

MR. FUREY: That is right, you probably read it,

- series of recommendations, well they needed some money to give life to those

recommendations and Operation Online is proceeding straight ahead going gang

busters, they are doing a good job.

MR. E. BYRNE: So, basically the increase was as

a result of that.

MR. FUREY: That is part one. Part two, we also

had to float in there some cash flow for a new agreement we are about to sign

You remember the old ERDA's, they were call Economic Regional Development

Agreement? This will supplant that and it will be cost -shared seventy - thirty

between ACOA and the Government of Newfoundland and Labrador and about $35

million of that will sit in my department for the very things, Mr. Fitzgerald

just talked about, getting out there and marketing, getting out there and

getting our products exported, market and product development, business

initiative, those kinds of things. I can give you the details, if you are

interested. That is why the substantial increases.

MR. E. BYRNE: In the 1996-97 estimates,

section

2.1.02, I believe it is page 163, if I am not mistaken, I will just double check

that myself, 161.

MR. FUREY: 2.1.02, page 145.

MR. E. BYRNE: Page 145, sorry, contained

appropriations for the Strategic Supplier Development Fund, right on the same -

MR. FUREY: Oh, you are on the year before are

you?

MR. E. BYRNE: Year before, yes, `96-97. Let me

get it here now.

MR. FUREY: Does anybody have the year before?

MR. E. BYRNE: Yes, 2.1.02, in the year before

`96-97, contained appropriations for the Strategic Supplier Development Fund,

approximately $350,000 and it appears, in terms of this years estimates, that

that heading is not contained whatsoever. Have these appropriations been

eliminated altogether or are they included in a different heading? If they are

contained under a different heading, which ones?

MR. FUREY: On the old one, are you on page 165?

MR. E. BYRNE: Page 163, 2.1.02, in the last

years 1996-97 estimates.

MR. FUREY: That was a separate division.

MR. E. BYRNE: Is that gone altogether?

MR. FUREY: Yes, it has been rolled into

Industrial Benefits and what we did there was reverse trade shows and those

kinds of things, to get suppliers in the Province, to get in the doors of Light

& Power, Abitibi Corporation, Iron Ore Company of Canada those kinds of things,

to see what they were buying around the world, that we could supply at

competitive rates.

MR. E. BYRNE: So, it was a redirection of

funding?

MR. FUREY: Yes, it has been a cut, but we have

moved it over under Industrial Benefits because we see supplier development as

an Industrial Benefit program.

MR. E. BYRNE: Fair enough. That is all I have

for now.

CHAIR: Ms Thistle.

MS THISTLE: Thank you, Mr. Chairman.

Mr. Minister, I note that one bright spot in our

economy for sure is in the manufacturing sector and I believe that it is the

forth year in a row that we have seen significant growth in that sector and I

think we are now up to about $1.6 billion in exports.

Coming from my district, I can see that and I can

confirm it. You mentioned the Antinmony Mine close to my district, in fact I see

the direct and indirect benefits from that mine in my district and I too

recognize the importance of the export business now that is in Buchans and the

contract that was landed by Steel Corp. with the Bowing contract. We are now

making use of a skilled labour workforce in Buchans and if things are happening

in a remote location like Buchans, we are going into high tech and it confirms

what your department is doing.

I would like for you to tell me, what is your

forecast for this coming year, in the way of exports from our Province and do

you expect a growth similar to what we experienced in the pervious four years or

do you see us taking off in leaps and bounds?

MR. FUREY: I think your question is very

timely. If you look at the record of the manufacturing sector you will see

growth over the last eight years - significant growth.

One of the things we have been very lucky about,

Ms. Thistle, this year, is that a Newfoundlander has actually sat as President

of the National Manufacturers' Association, which is now called the

Manufacturing and Export Association or Alliance of Canada, Lorne James, and he

has been a terrific salesman right across the country, and he has fed back a lot

of investment opportunities to us. But you are quite right when you point out

Steel Corp, who exported to Ireland and other parts of the world and are now

joined in with a giant, Boeing, but just up the street from you is High Point

Industries. High Point Industries called my department a couple of weeks ago

because there was a significant oil spill off the coast of Uruguay that I

visited on a South America mission that I led, and because we had contacts down

there we joined that company to them and they just won a significant contract

down there to help that clean-up using the peat, oclansorb I think they call it,

but here in St. John's let me tell you about another success story.

Brookfield Ice Cream, everybody thinks of it as

great ice cream that is produced for the domestic market. Ten years ago, 100 per

cent of their production was sold domestically. Today, 32 per cent of it is

exported. Did you know that the ice cream at the SkyDome at the Blue Jays games

comes off LeMarchant Road? And they sell it at a premium price. So we are

exporting.

Let me tell you something else. They are just about

to enter a joint venture with a group in Iceland. Can you believe that? Do you

know that they sent three tractor trailer loads from Newfoundland, using the

back-haul rates, and made a significant profit, to British Columbia last year?

So we cannot think of the world as a large world out there that is distant and

hard to get to. It is not any more. It is a shrunken globe. There are very good

economies of scale. There are good reasons to export. People are crying out for

quality products, and they are prepared to pay premium prices, and we do that.

Harbour Grace is another success story. They did a

contract with the U.S. Navy to build these insular boots for the Navy Seals,

they are called, and they are exporting into Europe with the Wild Sider, a very

good success story.

The mattress factory in Carbonear, Restwell, it is

fantastic what they are doing. So, yes, there are all kinds of success stories.

Genesis Organic, that also deals in peat, which uses it for growing flowers in

gardens, just landed a contract with Loblaws and they are going out as a

President's Choice product this year right across Canada in all of the

supermarkets. So there are a lot of success stories and they are primarily

focused around manufacturing, and I see tremendous growth ahead of us.

MS THISTLE: Mr. Minister, it sounds very

exciting and we have confirmed that from all parts of the Province. The only

criticism I would have is the fact that we are not getting our message out

enough. The young people in our schools today are not hearing it often enough.

What does your department have in the way of getting our message out?

MR. FUREY: My department is more responsible

for getting the message out outside of the Province to the rest of the world,

but I can tell you, and I am happy to tell you, that the Minister of Development

and Rural Renewal is about to launch a program, and she has consulted with our

department on getting the message out on success stories around the Province,

which you will start to see being profiled on television and in the newspapers

and the school systems in the next month or so, I think.

MS THISTLE: Good news.

MR. FUREY: Very good stories that people ought

to hear about. The problem is that the media have become so jaded and cynical,

particularly the public media, but we cannot criticize because we have a self

interest and a vested interest from their perspective. But you talk about

privatization; I know what I would privatize if I were in charge of it.

MS THISTLE: Thank you.

CHAIR: Mr. Woodford.

MR. WOODFORD: Minister, I would just like to

make a comment on your earlier comments with regard to Brookfield. You talk

about spin-off, and you mentioned the fact that you are sending the product now

into Iceland. I remember some years ago that Iceland - you used to always refer

to it, in fact sent many an agricultural delegation off to Iceland because they

were one of the countries with very little agricultural production, but yet they

were self-sufficient in dairy products. They were one of the countries

self-sufficient in dairy products - although they had very little agricultural

base, land - and nobody could understand why. There is a bit of irony in it now,

when you see a company right here in this Province, selling its product into

Iceland and the product that they use, the resource and the ingredients coming

from - you talk about spin-off - coming from the agricultural industry in this

Province; because most of Brookfield's producers are right here on the East

Coast of the Province and the more markets that those people get, whether it is

Brookfield or Central Dairies or whoever, that, in turn, increases production,

goes right on back to the land, to the farmer in this Province and the

agriculture in this Province with regard to making sure that that product is

there. Now, granted, they are tied in with other places outside the Province, I

realize that, but they do take everything produced in this Province first, which

is a plus.

Under 2.1.04, page 146, Atlantic Investment Fund:

When that was first announced I was a bit sceptical of it because of the fact

that it was tied in with chartered banks, and I think there was some reason, I

should have some scepticism there dealing with the history of chartered banks in

this country when dealing with small business. How successful has that been or

has there been any activity at all there yet under that venture capital fund?

MR. FUREY: It has just really gotten under way;

they named a new president about six months ago. All the provinces and ACOA and

the banks have signed off on the agreements. The board is in place now.

Newfoundland has two representatives on that board, a lady by the name of

Barbara Fong, who is a businesswoman, and a businessman by the name of Danny

Williams, who are two excellent people. We wanted somebody involved in

technology and Mr. Williams met that mark. That fund is a $30 million revolving

fund, $10 million from the banks, $10 million from ACOA, $10 million split pro

rata amongst the four provinces.

It really has not addressed many applications yet,

Max, unless I am unaware of them. They were here a couple of weeks ago to look

at a number of companies that were getting ready to submit business plans from

our Province, but we are guaranteed a base rate of our $2.8 million over the

life of it. So, we are guaranteed a return for the Province on our money, but

the challenge for us is to put forward business propositions where we can

leverage out some of that bank money and some of that ACOA money. But they are

going to be tough because they are using basic bank principals, there are no

giveaways or no freebies and they are very careful of risk, but they looking

primarily at the high-tech sector.

MR. WOODFORD: I forget the name of it, I think

it is called the Government Administration Venture Fund, the so-called Hong Kong

Fund: There has been some talk of that lately and it seems to be fairly

exciting. I believe the last news reports I saw showed that there was

approximately $14 million raised and you are trying to raise $35 million this

year. What is the status of that particular fund now as of today?

MR. FUREY: We just had a report from our agents

in Hong Kong, the Hong Kong-Shanghai Bank and they have been operating

throughout South East Asia, mostly in Korea, Hong Kong and Taiwan. To date, we

have about $16 million committed, and they are very encouraged. The Federal

Government has just extended the deadline that you can use to fill up that fund

- it was July 1, so there was a lot of pressure on us, but they moved it forward

to January 1, 1998.

We feel confident, Mr. Woodford, that we will fill

that up and we will use it for public private infrastructure. What that allows

us, of course, is $35 million interest free for five years.

MR. WOODFORD: What is the minimum they put in?

Is it $250,000 or $500,000?

MR. FUREY: Two hundred and fifty thousand

dollars per investor.

MR. WOODFORD: And they get their money back -

MR. FUREY: They get their money back in five

years at a 2 per cent rate and we cannot explicitly guarantee it, but putting

the seal of the Province behind it implicitly guarantees it and that helps sell

the fund. Because we were wandering into a market that had a pretty black eye

from the private sector, I do not mind saying. There were a lot of charlatans

and shysters out there creaming off high percentages off these funds, then

investing them in terrible projects. But the government has said: Here is what

we are going to do; it is going to be (inaudible) infrastructure. We are going

to involve the private sector, but we, the banks, and the government, will have

sign-off on all of the project.

MR. WOODFORD: You mentioned in an answer to -

MR. FUREY: Incidentally, I should say to you

that we are going to launch a couple of more of those, too. That is good cheap

money for a long period of time that we do not have to worry about. We carve out

30 per cent of it, put it in escrow, and reinvest it in the economy to grow it

so that we can start paying it back after five years.

MR. WOODFORD: You mentioned earlier, in an

answer to Mr. Fitzgerald, or maybe it was Mr. Byrne, regarding the EDGE program,

about the $2,000 per employee subsidy under the EDGE program, and you also

mentioned what I refer to as the transitional jobs fund - there might be another

name on it, jobs transitional fund or whatever - administered under HRD, I

believe.

MR. FUREY: Yes.

MR. WOODFORD: By the way, I think that

transitional jobs fund is an excellent fund. I know a lot of experiences in my

area in which businesses have taken advantage of it, and been very successful so

far. Can a businessperson access that particular fund in conjunction with the

EDGE program?

MR. FUREY: Yes.

MR. WOODFORD: Can there be a crossover there?

MR. FUREY: Yes. The problem is that we are

going to back out of our $2,000-per-job grants. We are backing out because we

know that there is a pool of capital over the next four years of $45 million,

mostly paid for by the Federal Government. There is no limitation on the jobs

transition fund. It can go up to $10,000, $20,000, if it is a real job, a

meaningful job -

AN HON. MEMBER: Higher.

MR. FUREY: Yes.

whereas we are restricted under this legislation

to $2,000. Two thousand dollars at 100 per cent provincial dollars does not look

so good up against an unlimited amount per job where the majority of it comes

from the Federal Government. So we are going to use that program to supplement

the EDGE. In fact, we have a number of proposals on the table before us now

where the jobs transition fund, with the EDGE, are going to make this

sustainable and put us in a competitive position. Some of them are call centres,

for example. We have some exciting proposals on the table that I hope we can

talk more about in a little while.

MR. WOODFORD: Yes, I am sure, because I have

seen a couple of exciting proposals in my area. In fact, there is one about to

go now. My understanding is that there is an application in under the EDGE

program, and there was some question with regard to the involvement of this

transitional job fund. I can see now where there should not be any problems

there. Because this was approved, absolutely no problem, through ACOA, through

HRD, through all - in fact, hardly any questions asked. It is mainly for export,

so -

MR. FUREY: Yes, no problem.

MR. WOODFORD: In fact, I have a call in today

to your department on that, to someone over there. You mentioned earlier -

someone referred to, or maybe it was you - about the Marystown Shipyard and the

success story, the turnaround in that one. Looking at some figures here under

3.3.03 with regards to Grants and Subsidies, in the Budget in 1997 there was $5

million, but the revised one is at $3.5 million. I notice now in this year,

1997-1998, there is $3,750,000. Would that be the last of the subsidies, or only

what is required for this year?

MR. FUREY: That sits there as a subsidy, but if

you look at the last year's Budget you will see that the subsidy was $5 million.

That $5 million is reflective of the interest on the debt, the cumulative debt

throughout the years on the Yard. The reduction you are seeing this year down to

$3.75 million is reflective of the great free-fall in interest rates.

MR. WOODFORD: Yes. So that $5 million -

MR FUREY: See, we -

MR. WOODFORD: What is reflected? Is the

reflection 1997-1998, or the reflection in what was said, is that why that was

revised in 1997?

MR. FUREY: Yes.

MR. WOODFORD: Just that interest rate gave you

that much flexibility.

MR. FUREY: Yes. You see, that is a debt we are

carrying, which is a fixed debt, but the interest rate is floating. So if it was

$5 million because the interest rate on average over that year was reflected in

that bottom line; but as the interest rates went into free fall, those were the

savings.

MR. WOODFORD: Substantial. I will pass to some

other member.

CHAIR: Thank you, Mr. Woodford.

Is there a member who would wish to raise another

issue?

Mr. Fitzgerald.

MR. FITZGERALD: Thank you.

I have just a few more questions. Page 146,

Minister, 2.1.03.05, Professional Services, reduced by $180,000. Tell me what

has been done away with there.

MR. FUREY: As part of the cuts, we reduced our

consulting services with respect to - we had a number of consultants whom we

used around the world for prospecting and feeding us back investment

opportunities. We basically decided to terminate those contracts and not carry

them forward.

MR. FITZGERALD: But then you go over on page

147, 3.1.02, Special Initiatives - Offshore Fund, and you see another reduction

there of $300,000 to $130,000. It is exactly the same thing, I guess, is it?

MR. FUREY: Yes.

MR. FITZGERALD: How about the Grants and

Subsidies above that, from $300,000 to $1,144,000? What new grants and subsidies

are included there?

MR. FUREY: Where is it you are looking?

MR. FITZGERALD: 3.1.01.10. Three hundred

thousand dollars in 1996-1997; 1997-1998, $1,144,000.

MR. FUREY: I am going to ask the Deputy

Minister, if you do not mind, to respond to that because he sits on the

Technology Transfer Opportunities fund board. I think it is a carry-over, is it

not?

MR. RUELOKKE: That is a training fund that

local companies can avail of to train their employees to take advantage of new

opportunities. What we saw happening in 1996-1997 was really a tail-off of

training related to the Hibernia project. The $1,144,000 for 1997-1998 reflects

a continued tail-off of that. There are about four or five projects that are

ongoing and will be finished up in the very near future. We anticipate that

there will be some considerable take-up as a result of opportunities from Terra

Nova for different technologies which will require different training. That is

why we anticipate and forecast that increase for 1997-1998 in that particular

heading.

MR. FITZGERALD: You are talking about upgrading

in trades, or new training?

MR. RUELOKKE: It is an application-driven

process, so as a company identifies a new opportunity for itself - let us just

take an example. In terms of the assembly, installation and integration of

sub-sea wellheads, there has been none of that done in the Province in the past.

We have not had to. But all the thirty-two wells that will be used to produce

the Terra Nova field will be produced sub-sea. There may well be a company or

companies that want to train employees in the advanced hydraulics and

electronics required to perform that kind of work. So we are anticipating that

sort of demand.

MR. FITZGERALD: There has been a tremendous

reduction in grants and subsidies right through the whole Industry, Trade and

Technology budget there. You do not see that having any effect whatsoever on

development and (inaudible) people?

MR. FUREY: When we looked at it we knew we were

going to take a 30 per cent hit over the next three years. One of the areas

where we took the hit was on the provincial dollar, but we are looking for

federal-provincial agreements to take up that slack. For example, the Market and

Product Development Program, which was very successful, a $350,000 program, is

wiped out. But I know that there is a new Economic Regional Development

Agreement coming, and we have carved out a portion of that - I think close to $1

million, Max - so that we can use that to help companies get out and market

their products. In other words, it is the same program, but it is not 100 per

cent provincial, it is only 30 per cent provincial, yet with more money. So

while you see -

MR. FITZGERALD: (Inaudible) 70 per cent

(inaudible).

MR. FUREY: Yes. While you see a reduction in

grants and subsidies on the one hand, it is on the provincial side, but we are

hoping to recover it under federal-provincial agreements which will cost us

less.

MR. FITZGERALD: So, in all likelihood, they

will not disappear, it is just that our funding part of it (inaudible).

MR. FUREY: That is right.

MR. FITZGERALD: Minister, have you had a chance

to look at the proposal of this TACKE wind power company that is looking at

producing power in - well, they have looked at three sites, two in my district

and one out in Grates Cove. I think they have made a proposal to Hydro, and

Hydro said: Come back with one site. They are looking at producing fifteen

kilowatts of power -

MR. FUREY: Fifteen megawatts.

MR. FITZGERALD: Fifteen megawatts, I am sorry,

of power from each station, for forty-five megawatts. What are your thoughts or

your department's thoughts on this particular project?

MR. FUREY: I think it is very interesting

technology. In fact, we had a company - he says that these wind turbines should

be put right here in the House.

MR. FITZGERALD: I mentioned that the day they

did the proposal, but they said they do not think (inaudible).

MR. FUREY: Mr. Fitzgerald, I should tell you -

you asked earlier about success stories. The Heiley Henderson group in Hong

Kong, that I met two years ago, are in the business of constructing these wind

towers. We had them here a year ago and, in fact, Metal World, I think - was it,

Max? - built the prototype for the new development right here in St. John's.

They built two or three and there is a great opportunity for more. But, to your

question, I am not sure. I do not know enough about that kind of technology. We

do know that there is certainty in hydro technology because we have a history of

proving it, and there are a number of hydro projects that are being put forward,

one in my own district, the Torrent River project. There is another one on the

West Coast. There are some on the South Coast. There are thermal-generated

projects that are being put forward. The issue for that is, is it

environmentally acceptable?

On the wind power, the question for me becomes not

can you generate forty-five megawatts; you can, but can you do it consistently

and is it reliable? Those are the issues, I guess, that have to be addressed by

the professionals, because you cannot have forty-five megawatts pouring into the

grid for a smelter or refinery or whatever for two weeks and then all of a

sudden there is no wind for three days.

MR. FITZGERALD: No, it would have to be tied in

with other more reliable sources; there is no doubt about that. It is a very

interesting -

MR. FUREY: It is very interesting. I do not

have the competence to speak technically, but those are the questions that would

give rise to that technology.

MR. FITZGERALD: Very interesting.

MR. FUREY: I am not sure there would be many

jobs associated with it.

MR. FITZGERALD: There are not, no. I watched

your proposal and it was very interesting. It is not new technology. It is very

common in places like Texas, Switzerland, Sweden, and those places.

MR. FUREY: This is in your district they would

be set up, is it?

MR. FITZGERALD: They were looking at three

sites. Two of them were in my district.

MR. FUREY: You want to be known as the new Don

Quixote, do you?

MR. FITZGERALD: Well, it would be nice to bring

some people down here to even look at something different.

Minister, just to end on a note, and I guess it

will go back to what I had said earlier about allowing people an opportunity to

go and look for industry, or look for other potential possibilities to be moved

into your district, or moved anywhere in rural Newfoundland and Labrador to

provide employment opportunities. Ms Thistle spoke about what happened in

Buchans, and that is a prime example. You get fellows like Shawn Power and Ivan

- do you know his last name?

AN HON. MEMBER: (Inaudible).

MR. FITZGERALD: Anyway, I have seen him, and

those fellows would be an asset to your department, to go out and talk with

people. I have listened to them both and they can tell the story of what they

did in their particular town, and how they went and took the problem on

themselves. They got tired of coming and knocking on government's doors and

looking for hand-outs. As a result, like you said, there are some success

stories here. It is certainly very encouraging, and I think they could teach a

lot of us some lessons, but they were given some money as well. They were

allowed to have a budget whereby they could travel and look for things, and get

out of Buchans to try to bring back some possibilities.

The last and final question, Minister, a couple of

months ago you did some advertising and put your name on some commodity. I am

wondering if it was a success. How well did it sell?

MR. E. BYRNE: What was the increase in the

market?

MR. FUREY: You know what that was - they asked

me for a letter of -

MR. FITZGERALD: I asked everybody over here and

nobody could remember.

MR. FUREY: They asked me for a letter of

endorsement because they wanted to sell this iceberg ice overseas. I gave them

the letter and it ended up on the package, that is what happened. I do not know

what the success rate was, but I can certainly find out for you.

MR. FITZGERALD: Thank you.

CHAIR: Are there any other question?

I will ask the Clerk to call the subheads.

On motion, subheads 1.1.01 through 3.4.02, carried.

On motion, Department of Industry, Trade and

Technology, total heads, carried.

CHAIR: Can I ask a motion to adjourn?

Thank you very much for attending.

On motion, Committee adjourned.

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1997-04-23
Type	committee
Volume / chapter	committees_standingcommittees_resource_ga43session2_1997-04-23_rc-itt_.htm
Language	en
Format	html
Source	PROVINCIAL
Identifier	2f04b41a0c8e4890168fd314bfa04eb9dfb6f401

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