May 13, 2008

RESOURCE COMMITTEE

The Committee met at 5:30 p.m. in the Executive Dining Room, West Block.

CHAIR (Mr. Harding): Order, please!

I guess we are ready to begin. First of all, I would like to welcome you as

we debate the Estimates for the Department of Natural Resources.

We will follow the same procedure as we have done with other meetings, that

after the Clerk calls the first subhead the minister will have up to fifteen

minutes to introduce her officials and to give an overview of her department's

estimates for the coming year. After that, the critic or the Leader - in this

case now the Leader of the Opposition - will have up to fifteen minutes. Then,

we will alternate with the other members on the Committee if they want, up to

ten minutes each.

I would also like to remind the officials with the department that if you are

asked to speak by the minister, to respond to a question or whatever, if you

would identify yourself each time so that Hansard can record the proceedings.

The first thing we will do is adopt the minutes of the previous meeting. I

will ask for a motion now for adoption of these minutes.

MR. BAKER: So do.

CHAIR: Moved by Mr. Baker, seconded by Mr. Verge that the minutes of the

previous meeting, the Department of Business, the minutes as circulated be

adopted.

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, minutes adopted as circulated.

CHAIR: I will ask, first of all, the Committee members to identify

themselves and the district for which they represent.

MR. BAKER: Jim Baker, Labrador West.

MR. HUNTER: Ray Hunter, Grand Falls-Windsor-Green Bay South.

MR. DALLEY: Derrick Dalley, The Isles of Notre Dame.

MR. VERGE: Wade Verge, Lewisporte.

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

CHAIR: And the other people in attendance, could you identify yourselves?

MS CAMPBELL: Lori Ann Campbell, researcher.

MR. LONO: Simon Lono, researcher with the Opposition Office.

CHAIR: Thank you very much.

I will ask the Clerk now to call the first subhead.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01.

Shall that subhead carry?

I will ask the minister now to introduce her officials.

MS DUNDERDALE: Thank you, Mr. Chair.

I am going to begin by having my staff introduce themselves and give their

positions. I will start on my right and have the Energy and Mines Branch

introduce themselves first.

MR. KIELEY: Chris Kieley, Deputy Minister of Natural Resources, Mines and

Energy.

MR. WARDLE: Dick Wardle, ADM, Mines.

MR. TOBIN: Pierre Tobin, Associate Deputy Minister of Energy.

MR. BOWN: Charles Bown, Assistant Deputy Minister of Energy Policy.

MS DUNDERDALE: Now from my Forestry and Agrifoods Agency, beginning with

the CEO.

MR. MOORES: Len Moores, CEO, Forestry and Agrifoods Agency.

MR. DEERING: Keith Deering, Assistant Deputy Minister, Forestry Services

Branch.

MR. WHALEN: Jeff Whalen, ADM, Agrifoods.

MS DUNDERDALE: With me also, I have my Communications Director, Tracy

Barron.

MR. IVIMEY: Philip Ivimey, Director of Finance and General Operations.

MS DUNDERDALE: Thank you very much, Mr. Chair, and thank you to everyone

for being here to discuss our Budget Estimates.

I will begin by providing you with an overview of the Budget items as they

relate to the Department of Natural Resources and the investments we are making

in these resource industries over the coming year.

Each of the four sectors under my department are in different stages of

evolution and that is why it is so important to be strategic with our programs

in support of these sectors.

We are all aware of the downturn in the forest and pulp and paper industry

and the impact that this has had on forest industry workers and related

businesses in this Province. We are addressing the challenges faced by this

sector by providing major new funding to restructure the industry.

We have a total Budget this year of $49.3 million, an increase of about $10

million from last year.

We have initiatives to assist the forest industry to diversify and compete in

the new global economy. This is in addition to the year over year support we

provide to the industry to maintain essential supports, such as silviculture

programming and forest access roads.

I will not get into the specific details of the $14 million I have already

announced for initiatives to be undertaken this year, that I announced two weeks

ago, because this has all been in the public domain, but I will say that of the

$14 million, $4 million is being transferred from the Community Development

Trust, which is a federal government program.

Continuing investments reflected in this year's Budget include an increase

of $1 million for silviculture activities for the third year in a row, bringing

the total annual budget to $10.4 million. We have also maintained the Resource

Roads budget at $4.2 million and we are spending $350,000 to renovate the

forestry office in Roddickton.

Given the success of our enforcement efforts in protecting our woodland

caribou herds this winter, we are also continuing our dedicated funding of

$69,300 for increased helicopter patrols of the Quebec-Labrador border.

While the forest industry is in a period of transition, the agriculture and

agrifoods industry in this Province is growing steadily every year. Our

initiatives in this industry reflect the growth opportunities that have been

identified in this sector.

Investments in the development of new crops, improved soil conditions, land

availability and research and development are assisting farmers in overcoming

the unique challenges involved in working in this industry in this Province. In

the area of new crops, the rapidly developing cranberry industry is getting

$2.95 million this year to provide for new plant propagation, site development

and specialized equipment.

We are also providing the Agrifoods Development branch with $1 million for

research and development activities focusing on the development of new and

improved crops, such as livestock production systems.

The new $5.4 million Aleutian Disease Management Program will help mink

farmers to manage the disease through animal replacement, carcass disposal,

disinfection and bio-security enhancement assistance. This funding program has

been very well received by the industry.

Our $10 million Farm Loans Guarantee Program will help farmers to access

capital from financial institutions to grow their operations and become more

competitive. It can be used for land development to assist new entrance to the

industry and to develop the perennial crop sectors.

We are also investing $2.3 million in the Land Development program again this

year.

We also have significant funding this year for new positions for the branch,

as well as for positions and services that were previously funded under the

federal-provincial cost-shared agriculture policy framework. Basically, we are

spending $618,000 to enable a larger portion of APF funding to be directly

available to farmers.

In recognition of the growth of the sector, we are spending another $556,000

to support human resource staffing to ensure the effective management of new and

expanded programs.

We are also continuing the $4 million investment in the Agriculture and

Agrifoods Development Fund to assist in the development, diversification and

expansion of large scale agricultural projects. This is the program that

assisted in the development of new egg grading facilities, the expansion by

Brookfield into a premium ice cream line and the establishment of a cheese

processing facility at Central Dairies.

Some of the smaller budgetary items include $130,000 to construct a new

garage at the provincial agriculture building to store veterinary emergency

vehicles and another $292,000 to upgrade the fleet of vehicles used by the

Agrifoods Development Branch staff.

We have also earmarked $2.6 million for our 40 per cent share of the Growing

Forward Continuity Agreement. This is the transition agreement between APF and

the new five-year cost-shared agreement between the Province and the federal

government.

In the Mines Branch we are focusing on increasing the Province's mineral

sector competitiveness through improving our knowledge of the mineral resource

base and improving service delivery. We have had an average of one new mine a

year for the last four years and we have seen record breaking levels of mineral

exploration and shipments. To maintain this growth we are providing $1 million

this year for new geological mapping of which $800,000 is going to projects in

Labrador.

We are continuing our record level funding of $2.5 million for the third

consecutive year for the Mineral Incentive Program, and through the Office of

the Chief Information Officer we will be spending $500,000 over two years to

develop and launch a new on-line system to speed up the approval of mineral

exploration plants. We believe these initiatives are helping the Province to

successfully compete for global mineral investment. In fact, exploration

expenditures in 2007 reached an all-time high of $138 million.

Funding for Energy Branch reflects our long-term vision for the Province's

energy resources as outlined in our Energy Plan. The $12 million allocated in

last year's Budget for the implementation of the Energy Plan has been carried

over and will be spent this year instead. This is a result of the timing of the

Energy Plan release followed by the general election. The time remaining did not

permit the money to be spent in the fiscal year ending March 31,2008, so we are

simply carrying it over. Instead of $35 million over the three-year period

starting from 2007-2008 to 2009-2010 we will spend the money over the three-year

period extending to 2010-2011.

In addition to the $12 million carried over from last year we have an

additional $1 million for the Petroleum Exploration Enhancement Program bringing

the total to be spent implementing the energy plan this year to $13 million.

Initiatives that are being funded this year include energy efficiency

programs, the collection of geoscience information and planning for major

projects on the horizon.

Our investment this year of $215 million in the Province's Energy

Corporation was already announced. This covers the 2008 financing requirements

for Hebron, White Rose and the Lower Churchill project. We are also providing

Newfoundland and Labrador Hydro with a $100 million equity investment. Hydro is

not a strong and viable company from a balance sheet point of view. We compared

it to other utilities across the country, and this pay down of debt puts the

company in a stronger financial position. This is consistent with our plan to

have the company less dependent on the provincial government for its financial

requirements.

We are also spending a significant amount of money this year to prepare the

Bull Arm Site for the major resource projects on the horizon.

In addition to the $1.2 million annual operating grant to the corporation we

are investing another $2.75 million on maintenance, upgrades and establishment

of a new management structure and essential expertise. The new staff will

include several senior engineering and technical professionals to advice and

manage the facilities as these major projects come on-stream, and they will be

in addition to the current basic caretaker staff. This is a transition period

for the site as we prepare for its optimal use during construction of these

projects, and we want to ensure that we have the best structure and people

possible. I cannot get into a whole lot more detail at this point, but I will

provide additional information as we move forward with positioning the site for

the future.

In terms of other investments we are spending $500,000 for professional

services to expedite royalty audits. This ensures the Province is getting the

appropriate benefit from our resource projects. We are also tripling the size of

the CNLOPB core storage facility by partnering 50-50 with the federal

government. Our share for this year is $400,000.

We are also contributing $4.5 million to Hydro's Ramea Wind Hydrogen Power

Generation Demonstration project. The objective of this project is to combine

new renewable energy with conventional power to supply Ramea and other remote

locations in the Province. If successful this could be an option down the road

for our isolated diesel communities.

These are some of the highlights of our department's budget this year. We

are really pleased with the investment we are able to make in these resource

sectors and we are here to answer any specific questions you might have on any

of these issues.

Thank you, Mr. Chair.

CHAIR: Thank you, very much, Minister Dunderdale.

Ms Jones.

MS JONES: Thank you, Mr. Chairman.

I certainly thank the minister for her opening comments.

I would like to say, Minister, if my questions are somewhat repetitive to

your presentation I do apologize because it is oftentimes hard to match what you

are saying with the actual Estimates, while you are going through it. If you

could be somewhat tolerant that that will happen I would appreciate it.

MS DUNDERDALE: No problem. I am happy to provide you with whatever

information you require.

MS JONES: Okay.

I am going to start with the Estimates under heading 1.2.01. That would be

the executive support staff within your department. Last year the salaries were

vastly overspent in that particular department versus what was actually budgeted

for. I am wondering if you could provide me with an explanation as to what the

reasoning for that was.

MS DUNDERDALE: The variance was due to salary continuum pay, severance

and vacation pay for former deputy ministers in the amount of $270,000,

severance and vacation pay for retired ADM of Royalties and Benefits, $125,000,

and as well, salary expenditure for a commercial advisor which is $100,000.

MS JONES: What is a commercial advisor? What would their job be?

MS DUNDERDALE: It is in terms of our negotiations around Hebron and White

Rose.

MS JONES: That was a salary position, not a contract, was it?

OFFICIAL: A salary position under a contract, yes.

MS JONES: The people who took their leave last year, what positions in

your department would that have been, for severance and -

MS DUNDERDALE: The Deputy, Bruce Saunders, and the ADM,

OFFICIAL: The ADM of Royalties and Benefits, Brian Condon.

MS DUNDERDALE: - Brian Condon, both retired.

MS JONES: I guess that would explain why the Employee Benefits, although

they were projected at very low numbers - I wonder why the Employee Benefits are

projected so low under that estimate when there is a high salary. Usually they

fall within line. Is that budgeted for somewhere else? For example, in your own

office where you would be spending about $280,000, there is $1,700 budgeted for

benefits, but in this department where you are spending nearly $1.7 million

there is only $3,700 budgeted. I am just wondering where that line item would

come from to pay that.

MS DUNDERDALE: My note tells me that in terms of that heading most of

that Employee Benefits include registration fees for seminars and conferences,

ministers' conferences, oil and gas symposium and so on. That is what that

heading covers off. So in terms of where some of the meetings more meetings

were attended and some of the meetings were further away, for example, in BC,

than we anticipated. You do not always know where your FPTs are going to be.

That is the heading where we pay our registration fees and support employees to

attend those conferences.

MS JONES: Under Transportation and Communications you overspent by nearly

$100,000. I was wondering what that was for; something that you did not budget

for in particular.

MS DUNDERDALE: Well, a number of things; Hebron negotiations for one

thing, because they take place outside the Province as well as within the

Province. There were several ministers' conferences, a ministers' conference

in B.C. as well as a symposium in Halifax. As you know, my Forestry and

Agrifoods Agency is located in Corner Brook which requires a lot of travel by my

senior executive, especially in terms of the things that we have had to deal

with in the last year, so that is the (inaudible). Every time they come it is a

costly exercise, because face-to-face meetings are required and as a result of

having the agency situated out there, there are more travel costs associated

with that as well.

MS JONES: You did not maintain the revised expenditure though, it is down

again this year. It went up to $326,000 as you say because of Hebron meetings

outside the Province and Forestry people on the West Coast coming back and

forth, but there is no revision for it this year.

MS DUNDERDALE: No, and we are going to try and live within our budget

this year.

MS JONES: Under Purchased Services, under the same heading, again another

situation where the budget increased under revisions by $10,000: can you tell me

what additional services were purchased that were not budgeted for?

MS DUNDERDALE: Well, my note tells me that we had an increased

requirement for purchased services such as printing, advertising, promotion,

facility room rentals, paper shredding services, photocopier rentals and other

miscellaneous purchased services.

MS JONES: Was that related to any particular file or aspect of your

department?

MS DUNDERDALE: Not that I am aware of. I think it was generally across

the department.

MS JONES: The Property, Furnishings and Equipment, what does that

include? Can you explain what

MS DUNDERDALE: The bulk of that is for a new photocopier for the

executive office and we had some furnishings and equipment. We had a couple of

new boardrooms in the building, so that was furniture and equipment for those.

MS JONES: We will move on to the next heading, 1.2.02, Administrative

Support.

This concerns financial and operational activities of the Department of

Natural Resources and Fisheries and Aquaculture. Can you explain why it would

include Fisheries and Aquaculture? Is there one financial expenditure under

administration for those two departments?

MR. KIELEY: Yes, the one financial operations group services both the

Department of Natural Resources and the Fisheries and Aquaculture Department.

MS JONES: Okay.

Therefore, the cost is all incurred within your department, is it? It would

not appear in the Fisheries and Aquaculture expenditures, would it?

MR. KIELEY: No, it is voted within this particular piece but the services

are provided to the two departments.

MS JONES: All right.

Maybe you could explain to me why you under spent, actually, by $200,000 in

Salaries last year.

MS DUNDERDALE: Vacant positions.

MS JONES: Vacancies?

MS DUNDERDALE: Yes.

MS JONES: Were they in your department or in Fisheries and Aquaculture?

MS DUNDERDALE: You will have to speak it, I think.

MR. KIELEY: They would be in the financial and operations group that

service both departments, so within that financial operations group that is

headed by

MS JONES: They had vacancies.

MR. KIELEY: They would have vacancies, yes.

MS JONES: Okay, but they are hoping to recruit some people by the looks

of it. They have their estimates back up.

MR. KIELEY: Yes, they are. They are going through the process now in

terms of trying to recruit. Last year, they just had some turnover which

resulted in the salary savings.

MS JONES: Okay.

In that group, what kind of purchased services would they have? They spent

$33,000. What kind of things do they go outside for?

MR. IVIMEY: The same types of expenditures fall under that, the same

thing as executive support: rental of photocopier equipment, if there were

rentals of facilities or rooms for holding meetings, paper shredding services,

or any rental or general purchased services of that nature.

MS JONES: Okay, thank you.

CHAIR: I would like to remind the officials to identify yourself each

time that you speak.

MS JONES: Also, under Administrative Support, 1.2.03., last year there

was $109,500 spent in Professional Services. It was not budgeted for. I am

wondering what the service was that you required under that heading.

MS DUNDERDALE: The revised variances are due to engineering design

expenditures related to the construction and renovation for our buildings in

Winterland and Pynn's Brook for forestry.

MS JONES: The Purchased Services, that was revised as well, not budgeted

for but incurred.

MS DUNDERDALE: Again, the same thing.

MS JONES: Okay.

Property, Furnishings and Equipment, you did budget for $2.8 million and you

spent almost $1.8 million. Can you tell me what you did with that money, and why

it did not meet your projected expenditure last year?

MS DUNDERDALE: Because the buildings in Winterland and Pynn's Brook,

that was for equipping those buildings and those buildings were not finished.

MS JONES: Okay.

The full amount that you have budgeted this year, is that all for that one

project, the $4.5 million?

MS DUNDERDALE: No, we have Forestry and Agrifoods vehicles included in

that amount, the Pynn's Brook building construction-renovation, the Roddickton

building construction, the Lewisporte building construction and the Winterland

building construction, the Animal Health vehicle garage, vehicles for

agriculture, the Production and Marketing and Land Resource Stewardship

Division, the silviculture seed extraction building construction, and that is

all included in that $4,529,000.

MS JONES: Okay.

The work that you are doing in Roddickton and Lewisporte, that would be new

work this year, is it renovation work, or?

MS DUNDERDALE: It is new building

MS JONES: New buildings?

MS DUNDERDALE: In Roddickton and Lewisporte -

MS JONES: Okay.

MS DUNDERDALE: - and Winterland, three new buildings.

MS JONES: Okay.

The one in Pynn's Brook is a renovation, is it, or expansion or something?

MS DUNDERDALE: It is a new building.

MS JONES: Oh, a new building, too.

MS DUNDERDALE: Yes, they all need to be replaced. The animal health

vehicle garage is also a new building. We need to be able to secure the

emergency vehicles so that the veterinarians - they have drugs and so on in

them, and they are left in the open, so we need to be able to secure them.

MS JONES: Where is that base, that building?

MR. WHALEN: Brookfield Road, St. John's.

MS JONES: Okay, St. John's.

While you are giving out new buildings, Minister, I think I might put a plug

in for my own district.

Actually, it was only a couple of weeks ago that I was in to Port Hope

Simpson and I think they are telling me that they are going to have to house

somewhere between twelve and fifteen employees in that building over the summer,

which, as you know, I do not know the exact dimensions, but it cannot be any

more than twenty by thirty if it is actually that big. I don't know; Keith may

know this better than I do. Certainly, in just having a general discussion in

terms of some new staff that were being hired up there, and some jobs that are

posted, it is a legitimate concern because there are confined spaces for them to

do their work, and right now I think not only are they doing most of the

conservation and protection work in the district but they are also providing a

great deal of the fire safety work over the summer as well.

I do not know where it is on your radar right now, but maybe you might want

to give some consideration to that. I am sure I am probably one of the last to

be bringing this to your attention, I am sure your officials have done so long

before now, but I do not know if it is something that you have considered or

not.

MS DUNDERDALE: It is in the mix.

MS JONES: Over the summer, though, will there be some provisions made for

additional space for the workers there, or will they all be expected to work out

of this two-office building, because I think that is what it is, two offices?

MR. DEERING: Most of the staff working out of that particular office, as

you are probably aware, spend most of their time in the field. Unfortunately -

and they have done a great job over the years in trying to accommodate

themselves in that small space - at this point, our plan for this summer is for

them to utilize the existing space, including the garage outside, the best way

they can.

Our sense is that most of that staff are going to be spending a vast majority

of their time in the field this summer.

MS JONES: You don't see it as a concern right now, do you?

MR. DEERING: It was raised to us, I guess, by some of the stakeholders in

Port Hope Simpson over the last several weeks, actually. It is the first time, I

guess, that it has been put on our radar as a concern for the staff themselves,

but suffice it to say, given that it is a concern that now has been raised by

the stakeholders, we will quite likely put it on our priority list for future

planning.

MS JONES: Thank you.

I will go to

section 2.1.01., which is Administration and Program Planning.

It has a fair chunk of your budget, Minister.

MS DUNDERDALE: Yes.

MS JONES: I will start with the Salaries, I guess. You spent less than

you budgeted last year. I am wondering if that was because of vacancies that

were not filled, or some other reason.

MS DUNDERDALE: Yes, vacancies.

MS JONES: What positions were vacant?

MR. DEERING: We had ten new positions approved in last year's budget

and, as a result of various delays in getting those positions filled,

specifically the Director of the Ecosystems Sustainability Division and our

Industry Analyst with our Forest Engineering and Industry Services Sections - we

had delays in getting those positions filled.

MS JONES: This year the budget was increased for that department by

nearly $285,000. Is that more new positions that are being created?

MR. MOORES: That additional funding is - when we had the ten positions

Keith just mentioned, that is partial funding because they gave us some time to

staff up, so we have 100 per cent funding this year for those ten new positions

and two new positions this year.

MS JONES: Okay.

So, if you were to hire the ten positions that were allocated last year, it

would cost this amount of money in addition to what you already have.

MR. MOORES: Plus two new positions this year.

MS JONES: Okay.

What are the two new ones this year?

MR. MOORES: The new one is a provincial fire training officer and a

resource analyst.

MS JONES: The Director of Ecosystems Management that you talked about,

that was not filled, where is that position going to be placed?

MR. DEERING: That is the Director of Ecosystems Sustainability, and that

is at our headquarters in Corner Brook.

MS JONES: Okay.

The ten new positions from last year, what were they? Were they conservation

management positions or were they something else?

MR. DEERING: In my memory, we had about four conservation officers that

were staffed. I cannot recall -

MS JONES: Take your time. I am not putting you on the spot; I am just

wondering.

MR. DEERING: Again, we had two industry analyst positions, which we had a

delay in getting those filled. The Director of Ecosystems Sustainability was

another one. We had a regional planner in Gander and a senior planner in

headquarters as well.

MS JONES: Okay, thank you.

Also under the same headings, 02., Employee Benefits did increase.

MS DUNDERDALE: Higher than anticipated workplace health and safety

compensation expenditures.

MS JONES: Okay.

You have to meet the regulations, hey?

MS DUNDERDALE: That is it.

MS JONES: Your budget for Transportation and Communications was under

spent. Was there something in particular that you budgeted for, that did not

happen?

MS DUNDERDALE: They vary. That is for the forest ecosystem management

operations, and they vary from year to year, so it is hard to really pin down

the exact amount you are going to use.

MS JONES: Okay.

Under Professional Services there was actually quite an increase, probably by

$450,000 more spent than was budgeted. What would that be attributed to?

MS DUNDERDALE: Well, the biggest chunk of it is for the forest sector

strategy study. As you recall, we did the study in Labrador and we just have the

draft report now for the forest sector study on the Island part of the Province.

As well, we just had, in the last month, a pilot forest fair in Corner Brook,

which is something we want to expand right across the Province but we piloted

the project there. We are finding that the level of understanding around the

forest industry in the Province, and the importance of it to the Province, is

really dismal in the general population so we really need to address that and

heighten awareness around this sector, so that is an important piece of work

that we are doing.

As well, we had Crime Stoppers' payments for poachers, and other

miscellaneous consulting and professional service expenditures. Also in that

heading are some expenditures related to the comprehensive research program for

sustainable forest management, and expenditures for Metis agreements in the

Labrador Innu Association charged to professional services in error. We have

some funding available to us to engage both of those organizations in our

forestry planning and it was charged out to that heading rather than the

appropriate heading, and we will come across that shortly, no doubt.

MS JONES: That was the Metis and the Innu, you say?

MS DUNDERDALE: The Labrador Innu Association.

MS JONES: That was for them to participate

MS DUNDERDALE: We contract them to work with us in our forest management

planning, in our forest management plans.

MS JONES: Okay.

The forest sector strategy study, what is that? Can you tell me what that is?

MS DUNDERDALE: Well, as I said in my opening remarks, the forestry sector

is under tremendous pressure. We have had our troubles with the pulp and paper

industry, as you know, which -

MS JONES: Is this the Halifax Global?

MS DUNDERDALE: Yes.

MS JONES: Okay. I did not realize that is what it was called.

MS DUNDERDALE: That is what it is, yes.

We completed the one in Labrador and we have had an RFP on that piece, but

decisions have not been taken yet with regard to the awarding of the RFP because

we are trying to see what is happening in terms of land use in Labrador,

particularly as it relates to land claims and so on, and we have the draft - I

think we have the draft report on the Island study.

OFFICIAL: Yes.

MS JONES: The RFP in Labrador, that was for a specific project, was it

not?

MS DUNDERDALE: It came out of the recommendation out of the forest study

for Labrador.

MS JONES: And that was, gosh, well over a year ago now was it, that RFP?

MS DUNDERDALE: Yes, we had requests for proposals - it was over last

winter?

OFFICIAL: Yes.

MS DUNDERDALE: Yes.

MS JONES: Okay, and will there be a decision on that any time in the near

future, or

MS DUNDERDALE: There are issues for us while we are undergoing land

claims, in terms of where we have the right to assign wood for harvesting. So

that is complicating - given the fact that there are active discussions going on

with regard to land claims, it is complicating the decision making to some

degree.

MS JONES: What claims would you be referring to?

MS DUNDERDALE: The Innu land claim. The quantum of land that is going to

be determined for settlement for the Innu, we need to know where their lands are

going to be. We cannot assign rights to somebody that is probably going to be

within their land claims area and so on. So in determining where the Crown will

ultimately have rights to the wood is something that we need to determine before

we give permits.

MS JONES: Yes. How long will that be?

MS DUNDERDALE: I do not know. I am not involved in negotiations on land

claims and even if I was, I am not sure I could give you the answer.

MS JONES: Yes, I know about the reserved status piece, but I am not sure

how that I did not think there was land ownership agreements. I guess there

are land access or resource sector agreements or something, are there?

MS DUNDERDALE: Absolutely, and there are precedents set when you give

permits and all of these kinds of things. So, we need to be prudent in how we do

this. Even though these things are renewed on an annual basis, once you give

them, they are kind of hard to get back; even though they are given on an annual

basis.

MS JONES: Now, the Forest Sector Strategic Study for the Island, that is

completed, isn't it?

MS DUNDERDALE: We have a draft, but we do not have the final report.

MS JONES: Okay. How long have you had that?

MS DUNDERDALE: How long have we had the draft report?

MR. DEERING: The latest draft - which is not the final at this point. We

still have to have a final meeting with the consultant to outline some last

changes before the penultimate draft, but we have had this current draft about

three weeks at this point.

MS JONES: Did you have this prior to the decisions around Roddickton?

MS DUNDERDALE: What decisions around Roddickton?

MS JONES: The pelleting plant.

MS DUNDERDALE: We have not made a decision with regard to the pelleting

plant in Roddickton.

MS JONES: I could have sworn I read that on the front page of The

Northern Pen .

MS DUNDERDALE: Yes, I am not sure what happened there. I think the paper

may have gotten out ahead of itself. We have several proposals well advanced

within the system for pellet plant development within the Province and if there

is going to be a pellet plant on the Northern Peninsula, or even on the West

Coast, it is very likely going to be in Roddickton, but we are certainly not in

a position at this point in time to make the announcement, which was on the

front page of The Independent this week, I think, or last week.

MS JONES: Actually, they called me last week for a comment but I declined

because I did not have the information.

MS DUNDERDALE: Yes, I think -

MS JONES: I guess there was a reason I did not have the information.

MS DUNDERDALE: - enthusiasm got ahead of people, but there is a great

opportunity for pellet development here in the Province and, as I say, we have

several proposals in the system and they are well progressed.

MS JONES: That is from the Island as well as Labrador?

MS DUNDERDALE: The pellet production piece, the only piece involving

pellet comes out of the Happy Valley-Goose Bay piece that we talked about in the

RFP beforehand. We are not in a position yet to determine whether or not a

pellet operation would be successful outside of Happy Valley-Goose Bay in terms

of that proposal.

MS JONES: Okay. Well, that certainly helps me understand this a little

bit more. When would you expect to have a final report from Halifax Global on

this?

MR. DEERING: I suspect, pending our final analysis on the consultants

concurrence with our views on the issues, I suspect we would probably have a

final report within thirty days of that meeting.

MS JONES: The other question I have is around purchased services. You

under spent $1.3 million less than you budgeted. I am just wondering what was

budgeted for that you did not purchase at the end of the day, if you could give

me an explanation?

MS DUNDERDALE: Under Operations and Implementation?

MS JONES: No, the same heading, 2.1.01., Administration and Program

Planning.

MS DUNDERDALE: Okay.

Estimates were down due to allocation of $10,000 to grants for Canadian

Council of Forest Ministers for a study on the forest tree species adaptation

and their vulnerability to climate change. We had a revised variance due to

additional funding.

No that can't be -

MS JONES: No, under the Purchased Services.

OFFICIAL: Purchased Services, the inventory program.

MS DUNDERDALE: My note says that we had additional funding in 2007-2008

for enhanced inventory program but it was not fully expended, and funding for

the Comprehensive Research Program for Sustainable Forest Management was not

fully expended. All related expenditures incurred for the research program were

charged to Professional Services rather than to Purchased Services.

MS JONES: So that was looking at wood inventories and stuff like that?

MR MOORES: Yes, of the inventory work, really what happened is that the

inventory program did not accomplish all its spending because they did not get

all the aerial photographs done for District 19 in the Goose Bay area, Southern

Goose Bay. That was because of weather. Weather conditions did not permit the

flying to get the aerial photographs completed last year.

MS JONES: Were there any other areas that were being photographed for

inventory besides Area 19?

MR. MOORES: In the Province?

MS JONES: Yes.

MR. MOORES: Yes, there are areas on the Island. I am pretty sure they are

in the Eastern Region, Districts 4 and 5, in around Gander.

MS JONES: Okay. Were they any others in Labrador?

MR. MOORES: Not that I am aware of. No, we were focusing on the Goose Bay

area.

MS JONES: Okay.

What is the Comprehensive Research Program, just out of curiosity?

MR. DEERING: That was a new program that the branch had undertaken last

year and would have been led by our director of ecosystems sustainability, which

is partly the reason why this money did not get fully expended last year,

because of the delay in staffing that position.

This year we had undertaken research for erioderma pedicellatum on the Avalon

Peninsula, which is a rare endangered lichen, which is sort of -

MS DUNDERDALE: That has forestry shut down on the Avalon Peninsula.

MR. DEERING: Yes. Again, our director of ecosystems sustainability

position will be staffed fairly soon, and that particular Budget will be fully

expended on various other research projects outside of erioderma this year.

MS JONES: How long has the industry been shut down on the Avalon

Peninsula because of that?

MS DUNDERDALE: Well, in terms of when these endangered flora are found,

there is considerable work then required by our department to have mitigation

plans in place that are acceptable to the Department of Environment and

Conservation to allow us to go in there and harvest.

In terms of the Avalon and the erioderma lichen, as well as several other

lichen now that have been discovered here, we just have not been able to work

out a mitigation plan that makes going in there to harvest wood a sensible

financial investment for harvesters in terms of how they have to keep certain

distances from trees, and you have to wind in and out, because they are all over

the place. They are sporadic and they are not found anywhere else in the world.

We have a very strong lobby here in terms of (inaudible) and outside the

Province, that put considerable effort into ensuring that these lichen are

protected. These protected species can provide real challenges for us from time

to time.

MS JONES: I would think so, when you have a case like that.

Was there much commercial activity in that?

MS DUNDERDALE: Not a great deal.

MS JONES: No?

MS DUNDERDALE: But in terms of certainly one operator, we have spent

enormous amounts of time this last year trying to find a way for that company to

proceed. Unfortunately, we really have not been able to do it, to develop a

mitigation plan that is acceptable for the protection of the

lichen and which would make financial sense for him to continue to invest in

that business.

Of course, there are challenges that we have right across the Province in

terms of flora and fauna, and view plains and watersheds. They are real

challenges for us in the resource sector in how we deal with all of that and

protect the environment, protect all of those other values, but at the same

time, it lasts for the development of our resources. It is a big challenge and

we spend a lot of time on it in the department.

MS JONES: This year you are going to spend $3.2 million again to do

something, is that inventory projects and so on as well?

MR. MOORES: Yes, we will carry over to next year. We have to complete our

photography because our next stage in doing

interpretation and the mapping will

be - we have to meet that requirement. We will finish off the photography for

District 19, weather pending, obviously.

MS JONES: Once that work is done, does that give you - I guess it is for

planning purposes in terms of determining what allocations can be utilized and

stuff, is it?

MR. MOORES: That is correct.

MS JONES: Okay. How long does that usually take? I have no idea, so I ask

you that.

MS DUNDERDALE: It is rotating. We constantly have to be upgrading our

inventory. So, you move about the Province. You rotate the different areas that

you are studying at different times. So, rotation is -

MR. MOORES: We are at a ten-year cycle now, but in any particular

district from the time an aerial photography is flown until you have your maps

that people could use, it is about eighteen months to two years, that timeframe.

MS JONES: Okay. For example, you used Area 19 in terms of when you gave

me a response. If you would finish that work this summer it would probably be

next year before we would see new inventory numbers on that area. Is that

basically how it would work?

MR. MOORES: We would have a new inventory in terms of a new harvest

level. We have a

schedule on when we do our new harvest levels, and I think it

is another couple of years before we start that process again, but by the end of

next year I would hope that we would have a new inventory, an updated inventory,

of the resource in Labrador.

MS DUNDERDALE: What it does, actually, is always ensure that we are on

top of what it is we have in terms of resource, and we determine our schedules

then as to how we are going to harvest that, what we are going to harvest where.

MS JONES: Yes.

Are areas twenty and twenty-one done, do you know, or?

MR. DEERING: We had a contract in 2007 for new photography for District

21. The specific area was between Port Hope Simpson and south to well south

of Mary's Harbour, actually. So we had photography flown in 2007 and a

contract this past winter to have the photographs interpreted and we hope to

have a new inventory and new mapping for that particular area this summer.

MS JONES: Okay.

What about area twenty?

MR. DEERING: We have not flown any new area in District 20 in the late

years. We do have it on our priority list to fly for this summer.

MS JONES: Okay.

Under the Property, Furnishings and Equipment, you spent $87,000 last year.

What did you purchase or buy? I am still under 2.101.

MS DUNDERDALE: The $87,600; additional expenditures were required for

property, furnishings and equipment for the forest ecosystem management

operations. That is an amount, again, that varies from year to year depending on

what is going on in that program.

MS JONES: This year you more than doubled the budget for it. I am just

wondering what you are going to use that for.

MR. MOORES: That money allocation, Property, Furnishings and Equipment, I

know an inventory crew last year purchased new data loggers for entering their

data. Instead of putting it on paper sheets, they enter it actually into small,

hand-held computers, and when they come back to the office they can just

download the information directly into a computer system. We have GPS units

purchased as well from last year.

MS JONES: The Grants and Subsidies, last year you spent $2.5 million.

What would that have been used for?

MS DUNDERDALE: Access road money for the pulp and paper companies. That

was assistance to the companies, which we have been trying to do. There are also

expenditures there related to the Metis agreement and the Labrador Innu

Association which was charged to professional services in error. That is what I

referred to earlier.

MS JONES: Okay.

Can you give me the breakdown of the road money that was spent, you said, for

the pulp and paper companies? How much would have been spent on Abitibi-used

roads, and Krueger-used roads?

MS DUNDERDALE: We can provide all of that to you. That is no problem.

MS JONES: Okay.

MS DUNDERDALE: Actually, I can give you a full breakdown of the

assistance that we have provided to the two companies for the last year.

Including their power purchase agreements we have provided about $40 million

assistance to the two pulp and paper industries in 2006-2007.

MS JONES: I guess we will see that as we go along in the energy

estimates, will we?

MS DUNDERDALE: No, because that is part of it here, but we can provide to

you the whole breakdown of that, how much money and where, and what program it

was paid out, because it was in silviculture, roads access, any number of

headings where we you know, we did not give them direct money. We worked

within the programs. So it is about $12 million each. Then, they both have power

purchase agreements, which puts at least another $8 million or more into their

pockets as well.

MS JONES: Okay.

I would appreciate getting a breakdown of that.

MS DUNDERDALE: Yes, no problem, you can have that.

MS JONES: This year you are going to budget $14.6 million, a lot of

money, under Grants and Subsidies.

MS DUNDERDALE: Yes.

MS JONES: I am just wondering if you could give me an explanation now of

how that breaks out.

MS DUNDERDALE: That is the $14 million program that I announced two weeks

ago in advance of the Budget, and there are a number of initiatives under that

program. There is money in there for a pilot program that we are cost-sharing

with Corner Brook Pulp and Paper to take fibre from the Northern Peninsula to

use it in a pilot project as an energy source through a company in Deer Lake and

to the mill in Corner Brook through Eastwood Lumber.

When Corner Brook Pulp and Paper shut down number four machine, the most

significant impact of that was felt on the Northern Peninsula, and the people

who were directly affected were harvesters, as well as some truckers and so on,

and we have been working very hard to find constructive ways to lessen the

impact or deal with the impact of the closure of the machine on that area. In

working with Corner Brook Pulp and Paper, this has certainly provided a solution

that is very effective and it is real in terms of this is something that will be

very helpful to Corner Brook Pulp and Paper and also provides a market for

harvesters on the Northern Peninsula. That is part of the program.

MS JONES: How much money would you be putting into this?

MS DUNDERDALE: That is cost shared. I think we are putting in about $1

million each.

MS JONES: Meaning you and the company?

MS DUNDERDALE: And the company, Corner Brook Pulp and Paper, is putting

in $1 million.

There is also a significant piece of money there to work with integrated

sawmillers in the Province to do mill diagnostics, to go in and have a look at

their operations and make sure that they are as lean and as efficient as they

need to be, or ought to be, and that they have the appropriate infrastructure to

develop new materials for the market; because another piece of this program is,

for a number of years, government and other agencies or organizations have been

doing market studies in Canada and around the world around wood supply or wood

products, and we have had lots of information come back over the years about

markets in Nunavut, markets in Greenland, Iceland, and markets in Ireland,

Iceland, and now England; however, there has not really been any concentrated or

focused effort on translating that market information into something tangible

that can be used by people involved in the industry.

So a big part of this program is updating all of that market information and

putting together a secretariat that will work with the industry to be able to

work with the integrated sawmillers in the development of the new projects but

also in terms of the marketing; that they will work with them, to go to those

markets, to understand those markets, to ensure that they are export ready and

work with them until they are able to come home with a contract in their hand.

They need that kind of sustained support, to provide that kind of sustained

support, to make sure that their operations have the capacity to do what needs

to get done in terms of what the market requires, so they understand what the

market requires, that they have the ability to produce what the market requires,

and then somebody to work with them in terms of securing contracts from those

markets. That is another sustained piece.

In terms of pellet production, we do not have the fibre capacity in this

Province to penetrate a worldwide market while we have two pulp and paper

companies operating in the Province. We just do not have enough fibre to be able

to penetrate, for example, the wood pellet market in Europe, which is the most

vibrant market and the most demanding market at the moment.

The economies of scale just are not there, but we do have enough fibre in

this Province to sustain a domestic market, so we have been doing some pieces of

work on that. As I said, we have two proposals at least in our system in terms

of pellet plants, development of a pellet plant, and those things are being

advanced and they are looking very, very positive. The second piece of it is

that we are going to work under our Energy Plan to develop that, to help develop

that domestic market within the Province. So, for example, we are offering a 25

per cent subsidy on the purchase of wood pellet stoves which, in the face of

rising costs of oil heat and in electricity in cases where we are still using

Holyrood, that this will provide considerable savings.

A conversion to wood pellet will provide considerable savings to homeowners

here in the Province. Our information tells us that you can recover your cost of

the wood pellet stove and whatever is required to install it within three to

four years of installation, if not before. Then you have a much reduced cost

from then on.

We are working on both fronts. Environmentally, that also works for us

because we have a number of sawmillers operating in the Province and we do not

have a use for their waste product, and that will now go into pellet production.

It is green on a number of fronts, so it fits well under our Energy Plan. It

is a renewable resource, so it also fits there. The plan addresses all of those

elements. The $14 million addresses all of and we have not developed a

criterion around all of that yet, and so on, and we are in the process of doing

it, but I must say it has been very well received by the industry.

MS JONES: Okay.

On the secretariat for the marketing piece, how far along are you with that?

When will we see something on that?

MS DUNDERDALE: We brought this proposal forward in budget, and it was

approved in budget, and we will now start our implementation process. We have

just started, since we got our approvals.

MS JONES: Okay, so that will be it (inaudible).

MS DUNDERDALE: (Inaudible) out over the next year.

MS JONES: In terms of the rebate program on the purchases of pellet

stoves and stuff, when will that come into effect?

MS DUNDERDALE: Charles?

That is under our Energy Plan.

MR. BOWN: That is a program that we are currently developing the terms

for, right now.

MS JONES: Okay.

MS DUNDERDALE: We are going to try and move ahead with this as quickly as

we can so people can start to access the program.

MS JONES: Okay.

Just one last question under that heading and it has to do with the revenue

that you collected from the federal government.

You projected that you were going to get

MS DUNDERDALE: Four million dollars. It is a $14 million program; $10

million is coming from the Province, and $4 million is coming from the Community

Trust program, and that is a program that the federal government announced last

year in response generally it was driven by the pressure that was on the

pulp and paper industry through the country, although the federal government

applied it to manufacturing industries across the board, so it is not specific

to. So we have an allocation, the Province has an allocation, of $23 million

over three years out of that program. So we are allocating, of the money that is

available to us

MS JONES: This year.

MS DUNDERDALE: I think it is $12 million, is it?

OFFICIAL: Eight million.

MS DUNDERDALE: Eight million this year, we are allocating $4 million of

that to this program.

MS JONES: Okay.

The other $4 million will be in the energy estimates?

MS DUNDERDALE: We have not allocated the other four as yet, because you

have to apply. There are criteria set down, but we know that in terms of what we

are proposing underneath this program

MS JONES: You will get this amount.

MS DUNDERDALE: - we can access at least $4 million for this program.

There are criteria set down by the federal government that we have to apply

under, so it is not money we can just take and allocate.

MS JONES: Just out of curiosity: Last year you budgeted for $130,000 from

the federal government that you did not get. What was that supposed to be for?

Under Federal Revenue, 2.1.01.

MS DUNDERDALE: I will be able to tell you in one second now. The revised

variance is due to a one-time revenue payment for a federal-provincial inventory

project from 2006-2007 that was left in the budget in error in 2007-2008, and

the revenue was removed in 2008-2009.

MS JONES: Okay.

MS DUNDERDALE: I just wanted to also say to you, on the forestry program,

before we move on, because I know this would be of particular interest to you:

in terms of that program, too, we are also looking at infrastructure to help the

industry. I cannot get into the detail of it but we are looking at

infrastructure that can help the industry grow in Southern Labrador.

MS JONES: Well, it is certainly desperately needed. It might be the

catalyst you need to get some things moving.

MS DUNDERDALE: Yes.

MS JONES: Under 2.1.02 we will move on now to this

section of the

Forest Management estimates just a quick question on the salaries, because

it did increase this year by $176,000. Is that a new position that is being

created?

MS DUNDERDALE: Yes, they were positions approved in 2008, so it was

additional salary funding. That is why the salary went up $66,000, and we did

not get 100 per cent funding in 2008-2009 because of staffing delays.

MS JONES: I am sorry. I did not understand what you just said.

MS DUNDERDALE: Alright, so yes.

MR. MOORES: These are some of the additional positions we received last

year in the field. Again, the budget allocation for last year was nine months of

atonement position to give you time to do the staffing requirement. This year's

budget is a bit more because it gives the full twelve month funding for the

position.

MS JONES: Oh, okay.

MR. MOORES: We also have additional dollars for this year for, I guess,

what we are calling a stand-by duty officer system. Our conservation officers

work all times of the day, seven days a week, so they have been now equipped

with access to satellite phones and will have someone on standby twenty-four

hours a day. When they go out in the field at two in the morning or at three in

the morning or whenever it is, they report in that they are gone somewhere,

wherever they are going to do their work. So, now we can track them. They have

to report back when they get back. It is a safety measure

MS DUNDERDALE: It is a safety measure for our conservation officers who

often work alone when they are out after hours. You know, there is nobody back

in an office to know if they have come back on their scheduled time and so on,

so for their safety we need to be able to know where they are and check in on

them on a regular basis to make sure they are safe.

MS JONES: That makes sense.

Under the same heading, Transportation and Communications, you budgeted over

$1 million last year but you only spent $845,000.

MS DUNDERDALE: All for the same reasons. Everything just about under that

heading.

MS JONES: You had savings there of $188,000.

MS DUNDERDALE: Under Transportation?

MS JONES: And Communications, 2.1.02.03. Last year you spent $188,000

less than you budgeted.

MS DUNDERDALE: Yes, for the same reason, in terms of the staffing fees,

nine months instead of twelve. Everything under that heading is affected by the

fact that we have gone from nine months to twelve.

MR. MOORES: In that whole area, I think the deviations are the whole

budget is usually operational and internal transfers so in the one that you are

referring to in Transportation and Communications, there are some internal

transfers in terms of funding which was removed for snowmobiles and ATVs and was

transferred somewhere else, into Administration and Program Planning. That is

why it was reduced. We just moved the funding somewhere else to pay for our ATVs

and snow machines.

MS JONES: But you increased the budget back to the

MR. MOORES: The original amount for this year.

MS JONES: Yes.

MR. MOORES: Yes, that is correct.

MS JONES: Are you buying snowmobiles under that heading this year or

using it for something else?

MR. MOORES: It would be for something else. No, we would not be buying

snowmobiles out of that money this year. In terms of that subhead, if we did, if

we required additional money for snow machines, we would move it into the

appropriate subhead, Property and Furnishings.

MS JONES: Okay, so you are projecting to spend more in transportation

this year?

MR. MOORES: Yes.

MS JONES: Increased staff. Under Supplies you spent $1.2 million, a

little over that. What would you have used that for? It was $360,000 over what

you originally budgeted. It is the same heading, 2.1.02

MR. MOORES: That is office supplies related to day-to-day office

equipment, cartridges and fax machines and photocopiers and the purchasing of

steel culverts and material and aggregate for road grading. In this particular

unit they required some additional funding and that is why you see that number

up. It is back for the proposed estimate for this year, to be back to the

original amount as that amount fluctuates from year to year.

MS JONES: Every year you are spending $5,300 in professional services.

What service is that for?

MR. MOORES: That is specific services, funds required for forensic

scientific services to examine blood, hair and meat samples for identification,

and DNA for court purposes.

MS JONES: Under Purchased Services, last year you overspent by $340,000.

Could you tell me, first of all, what you would have purchased under that

heading and what the increase was that you did not budget for?

MR. MOORES: Under that subhead we covered our vehicle repairs,

maintenance to our equipment, vehicle and machinery rentals, maintenance of our

photocopier equipment and also contracting out services for snow clearing our

access roads.

MS JONES: What came up last year that cost you an extra $340,000?

MR. MOORES: That would be snow clearing. We had a good, snowy year.

MS JONES: Expecting milder temperatures this year?

MR. MOORES: Climate change.

MS JONES: You are taking care of it another way. Under the Property,

Furnishings and Equipment, it was down last year over what you would have

projected, but anything

MS DUNDERDALE: He is taking the snowmobiles and the ATVs out of there -

MS JONES: That is where that went, is it?

MS DUNDERDALE: - and putting them in the more appropriate

MS JONES: That takes care of that.

We will move on to 2.1.03. The budget for Salaries under this heading

obviously was overspent by almost $500,000. I am just wondering if there were

any particular positions created there or what that money was used for?

MS DUNDERDALE: Seasonal employees were kept on longer to complete

projects to the year end.

MS JONES: That would have been employees that were relative to the

silviculture program directly?

MS DUNDERDALE: Yes.

MS JONES: This year your budget numbers are down, so they will not be

kept on this year or is there another change within that heading?

MS DUNDERDALE: I will let Len speak to it, because we have a number of

initiatives around silviculture.

MR. MOORES: Last year, I guess, due to weather in the fall we had to

extend some of our programs to get our work done, so as a result there was an

additional cost. We are estimating this year that the weather will co-operate

more and we will do it within budget.

MS DUNDERDALE: We are optimists in this department.

MS JONES: I would say. That is $1 million less so far you are going to

need if the weather co-operates.

Transportation and Communications, again, was up as well in the revised

numbers. It was up about $65,000.

MR. MOORES: That is Transportation and Communications on helicopter

contract time, courier charges, freight charges and basic communication costs,

as well as fixed-wing aircraft for doing some of our work.

MS JONES: You budgeted lower this year. You went back to your

MR. MOORES: We are staying with the original amount of the budget which

is $136,000. Hopefully we will stay within that. We should be able to. That is

our plan.

MS JONES: Why was your budget for Supplies overspent by $400,000 last

year?

MR. MOORES: Supplies relates to a whole gamut of issues, probably the

main one being machinery - probably the major one of them would be oil and gas.

All our oil and gas for our field operations come under there. For our

helicopter time, we pay for the fuel for choppers and that has gone up

dramatically in the past year. We probably had some additional costs there. We

also purchased day-to-day field equipment for our operations. Our field

equipment operations have larger programs and we have additional charges there.

MS JONES: You went back to your original budget this year and I do not

think the price of oil and gas went down.

MR. MOORES: No, and that is something that is happening. When we did our

budget estimates that was a while back. Hopefully, we will just see and if we

need to, it could end up, as you say, possibly being higher.

MS JONES: The $6.8 million that you are going to spend in that department

on Purchased Services, what would you be purchasing there, what services?

MS DUNDERDALE: (Inaudible) silviculture.

MR. MOORES: Primarily, it is our silviculture agreements for the forest

industry for about $3.6 million. That is our component to that. Plus, our own

planting and (inaudible) contracts make up that amount to Purchased Services in

the department.

MS DUNDERDALE: Plus there is funding in there too for the construction of

our seed extraction building.

MS JONES: Okay.

MS DUNDERDALE: It is all related to silviculture.

MS JONES: Last year you were down by $1.6 million. Was there any

particular part of the program you did not do, any silviculture work that you

did not get done?

MR. MOORES: Again, because of bad weather in the fall, some our thinning

projects and planting projects were not completed. We will pick them up again

this year.

MS JONES: Right in under that you only budgeted $1,500 for Property,

Furnishing and Equipment but you spent $310,000. Can you account for that for

me, please?

MR. MOORES: One hundred thousand dollars of that again was for snow

machines and ATVs and some design work for the seed extraction plant that we are

building this year.

MS JONES: Can you tell me some of the work you are doing in silviculture

this year around the Province, what locations and so on?

MR. MOORES: I guess our planting program is pretty well Province-wide.

There is planting in the Clarenville area, right across Central Newfoundland and

Western Newfoundland, the Corner Brook area and up the Northern Peninsula.

There is planting planned in the Goose Bay area for sure, I think, and the

same thing with our thinner. Thinning is probably more focused in Western

Newfoundland and Central Newfoundland; Central Newfoundland being Gander, the

Grand Falls area.

For road construction, we probably have about 100 kilometres of new

construction planned and about forty kilometres of reconstruction road planning.

MS JONES: Okay. Well, we will get into that now in just a second, but

before I do, you collected $10,000 last year in provincial revenue under that

part of the budget. What would people have paid the department for there? Was

there a fee there, or

MR. MOORES: Tree seedlings; the sale of tree seedlings.

MS JONES: Well, sales were good, $1,000 to $10,000.

Okay. Under the roads

section actually, I was going to get you to just

outline for me what some of the roadwork was that you are going to be doing in

the Province this year. You said you were going to look at 100 kilometres of

construction. Can you tell me what areas of the Province that will be done in

and how much will be done in those areas?

MR. MOORES: I can tell the areas, how much - we would have to get back to

you on the specifics of the amount in each area. Usually in the Clarenville area

there is road construction done, in Lewisporte, Gambo area, and up in the

Roddickton area is another major area. As you know, on the South Coast - there

is usually some road construction as well done in Labrador, in the Goose Bay

area. The specific amounts, we can get that; the actual length of road we can

get to you.

MS JONES: Okay, I would appreciate that. Actually, that is my only

question under that one. It is pretty standard there, isn't it?

Under the Insect Control Program, my only question is with regard to the fact

that your revised budget is down by $143,000. I am just wondering if that was a

vacant position or some other reason. I see the numbers went up again this year

to the original budgeted amount.

That would be 2.2.01., under Insect Control, the salary portion.

MR. MOORES: Our anticipated costs were less. I think the program was a

bit smaller last year than what we had planned, so we had some savings in terms

of helicopter time and personnel time.

MS JONES: Okay. Again, the Transportation and Communications budget was

down by

MS DUNDERDALE: All down for the same reason.

MR. MOORES: Yes, the same reason.

MS JONES: The same reason, okay. You did not require any professional

services at all last year? You had budgeted for some. Was it anything in

particular or just an amount that you put in the budget in case you need it?

MR. MOORES: It was not required last year. Usually professional services

deal with some of our contracts and sometimes we do our licence - getting a

licence are required to do some specific research projects. Our licence last

year, obviously, did not require us to do very specific research projects that

we would be assigned because we have an allocated amount there that they

assigned (inaudible) specific work to be done when we receive our licence, that

we have funding to contract that work out.

MS JONES: Okay. The revenue was down to what you had projected.

MS DUNDERDALE: We sprayed more on Crown lands than we did on company

lands.

MS JONES: Oh, okay.

Under Fire Suppression and Communications, 2.2.02.; again, the salaries were

down here by $140,000. Was there someone off or a position vacant?

MR. DEERING: We had a lower than average year, over all the Province last

year, for fires and, in particular, in the Western region; and overtime

expenditures and all that were down.

MS JONES: Okay, all right.

The Purchased Services budget there was over spent by $121,000, nearly

$122,000. What was purchased under that heading?

MR. MOORES: Under Purchased Services there was maintenance on our seven

radio towers and some building repairs to some of our patrol offices and

garages, and servicing to our hose drying system.

MS JONES: Okay. Also under that

section there is a Grants and Subsidies

head. You had budgeted $30,400 but you did not spend any of it. This year you

budgeted again. What would be a grant or a subsidy under that particular

heading?

MR. MOORES: This is a grant they usually give to the Canadian Interagency

Forest Fire Centre that coordinates the sharing of forest fire equipment across

the country. What we are seeing is the grant was incorrectly charged to a

different activity. The grant was actually paid but it is the grant we have with

the rest of the provinces in sharing fire equipment.

MS JONES: Okay, and you paid out of that

section this year?

MR. MOORES: Yes, that is correct.

MS JONES: Okay. Under provincial revenue, you did not budget to collect

any but you collected $216,000. What would that have been for?

MS DUNDERDALE: From National Defence for the recovery of forest fire

expenditures.

MS JONES: Okay. It is not something you can really budget for, for this

year, is it?

MS DUNDERDALE: No.

MS JONES: In the

section 3.3.01. the Land Resource Stewardship -

Administration portion of that. The salaries increased by $353,000 in that

division. I am wondering if you can tell me how many positions were created and

what those positions would have been.

MS DUNDERDALE: Part of the estimates are up due to overtime, but we have

also had a situation for the last twenty-odd years, ending in 2003, where a

number of positions have been charged off to APF, the federal-provincial

program, when, in fact, they were the responsibility of the provincial

government. We are trying to address that problem, as I talked about in my

opening remarks, where we get those people back more appropriately in the

estimates of the department, thereby bringing up more money to go into the hands

of farmers.

MS JONES: That might have been, basically, a transfer of positions more

so than new positions being created?

MS DUNDERDALE: Yes, there are a lot of positions being charged off to APF.

MS JONES: Okay.

The budget for Purchased Services here, what would you be purchasing there?

What kind of services would that be?

MR. WHALEN: It would be repairs, rentals and maintenance of vehicles,

laboratory equipment, inshore repairs and maintenance, soil land use maps,

reports and printing, cartographic equipment, map files and air photo files.

MS JONES: Okay.

Under

section 3.1.03., Land Development; under Purchased Services there, what

would you be purchasing under that heading?

MS DUNDERDALE: Farm access roads, under Purchased Services, and -

MS JONES: Private access roads, did you say?

MS DUNDERDALE: No, farm access roads.

MS JONES: Oh, farm access roads. Okay.

MS DUNDERDALE: There is also land acquisition in the ADA in St. John's.

They are lower because under that heading we do our land consolidation program,

and because we have had a review of the agricultural zone in St. John's

ongoing over the last year, there have been fewer purchases while that review is

ongoing.

MS JONES: Is that finished now?

MS DUNDERDALE: Pretty much. We should have the final report within the

next month or so.

MS JONES: Okay. Again, under Property, Furnishings and Equipment you are

budgeting $1.8 million this year. What will that be used for?

MS DUNDERDALE: That is land consolidation. That is purchasing land. We

are trying very hard to maintain, as you know, agricultural land we have in the

Province. People sometimes make offers of private land to us because they cannot

do residential development, they are not able to farm any more and so on, so

they will come, as you know, and make a proposal to government. So, we have a

fund where we can purchase that land and put it in the provincial land bank. We

can lease out then to farmers who want to work that piece of property.

MS JONES: You do not sell that land do you? It is all done on lease

agreements, is it?

MS DUNDERDALE: Yes. We do not grant land or sell land anymore; everything

is done on lease now.

MS JONES: Okay. Normally, what would a lease be? Is it like, fifty year

or 100 year leases or something?

MS DUNDERDALE: Fifty years.

MS JONES: Okay.

MS DUNDERDALE: People forget sometimes. People ask us if they can will

their lease.

MS JONES: Yes. Is there provision for that though, all the same?

MS DUNDERDALE: No.

MS JONES: No, there isn't, but there are renewal clauses, I guess, are

there?

MS DUNDERDALE: Yes.

MS JONES: First options on renewals and things like that.

MS DUNDERDALE: That is right, and if the family is going to continue to

work a farm. All of those things are taken into consideration, but you cannot

pass it on in your will.

MS JONES: No.

We are going to move now to the Production and Market Development aspect of

the Agrifoods. Again, on the Salaries piece, there was an increase of $137,000.

MS DUNDERDALE: Yes, it is that whole APF piece now that you will find -

as we go through the Agrifoods piece, you will find those salaries are off

because there are about eleven positions that we are transferring this year, and

some overtime included in that as well.

We do a lot of agricultural fairs in the summer and fall and so on, and a lot

of that work takes place in the evenings and weekends.

MS JONES: Yes, Okay. I will keep note of that as I go through the

Agrifoods headings.

Under the same

section 07., Property, Furnishings and Equipment, this year

you have budgeted almost $727,000, which is $724,000 or something more than last

year. Can you tell me what you are going to use that money for? What it will be

used for?

MS DUNDERDALE: A good piece of the additional funding is related to the

Cranberry Development Program, and that is a big initiative we have. As you

know, we addressed our cranberry strategy last year. That is a piece of R &

D that has gone on in the Province that we are really proud of. We have great

potential here for cranberry development and we have a lot of the big players,

not only in the country, internationally, who are taking a great deal of

interest in what is happening in cranberry development here in the Province, but

we have a very solid strategy and a vision for how we want that to happen, which

is cultivation of our own vines. We are not interested in people bringing in

their vines from outside of the Province, so we will propagate the vines here in

the Province; plus, we will do some peat development to get ready for cranberry

production here in the Province.

MS JONES: How many farms now are into cranberry production in the

Province?

MS DUNDERDALE: Four on the West Coast and down on the Burin Peninsula.

Deadman's Bay is one; that is ours in Deadman's Bay.

MR. WHALEN: One in Stephenville, one in Stephenville Crossing, Deadman's

Bay and Terra Nova.

MS DUNDERDALE: One in Frenchman's Cove.

MR. WHALEN: The one in Deadman's Bay is a research site.

MS JONES: Okay.

The money that was budgeted this year, is that also to contribute to new

operations or to sustain the ones that are there?

MS DUNDERDALE: This is in terms of propagation of our vine, which is very

specific to this Province: disease resistant, has a very high yield, higher than

most places, other places in the country and so on, so it is very particular,

very hardy and very strong. When people come here to involve themselves in it,

when people get involved in cranberry production here, we want them to use

vines, so we are going to propagate the vines, self-propagate the vines. We need

money to do that.

As well, we need to start to prepare some of the bogs for development, for

people, new entrants, to come in then and use, so we will have a good piece of

the development done, because that has to undergo environmental assessment, all

of those kinds of things, so we will start to get tracks of land ready for

development here in the Province.

MS JONES: You said the one in Devon is ours. What do you mean by that?

MS DUNDERDALE: We have our experimental farm. We do quite a bit of work.

MS JONES: So, it is owned by the Province?

MS DUNDERDALE: Yes, and it is all associated with the research and

development we are doing, and our success here, and there is other work that we

are doing in Wooddale around different plants. Jeff can speak more fully to it,

but in terms of blueberries and partridgeberries and sea buckthorn and so on, we

are really buoyed by the success of the cranberry because people thought that

was not something that we could do here. Not only can we do it, we can do it

better than most places in North America. It shows where R&D really works

for us, so we have upped our budget with regard to that.

MS JONES: Under the Grants and Subsidies section, what would the $7.9

million be used for? It is obviously new money. Is that relative to the

cranberry project?

MS DUNDERDALE: It is additional funding for the School Milk Program -

another $50,000 for them - there is $5.4 million for the Aleutian Disease

Management Program for the mink producers, and further funding for the Cranberry

Development Program, $2.3 million.

MS JONES: Can you tell me how the Aleutian Disease investment is going to

work, what that money is going to be used for?

MS DUNDERDALE: It would be a $150,000 grant to successful applicants to

be used, first of all, for biosecurity, if they have had Aleutian, to clean up

their site, equipment and so on, to build fences to stop mink from getting out

as well as stop other mink from getting in wild mink from getting in - and

replacement of diseased stock.

Again (inaudible).

MS JONES: Is there a cap on the replacement of stock?

MS DUNDERDALE: No, $150,000.

MS JONES: Oh, it is everything?

MS DUNDERDALE: Yes.

MS JONES: Okay.

Is that a cost-shared grant?

MS DUNDERDALE: No.

MS JONES: Was any of the money in that alignment for anything else, other

than that?

MS DUNDERDALE: The $5.4 million for the mink program, are you saying,

under that heading?

MS JONES: Yes, but under that heading were there some kind of provincial

guidelines or provincial program for monitoring or anything of this disease

going to be put in place?

MS DUNDERDALE: We will continue to provide blood testing and also money

for an Aleutian Disease specialist, really.

Everywhere where mink are farmed in the world they have Aleutian Disease, and

the disease is managed. We do not have an expertise within the existing farmers

or here in the Province with regard to Aleutian Disease, so part of the funding

of this $5.4 million is to provide that expertise to the industry.

MS JONES: Okay, so that is a new position?

MS DUNDERDALE: Because it has to be managed. It has to be managed, now

that it is here.

MS JONES: Yes.

MS DUNDERDALE: Some of our wild mink now are testing, and we really do

not know where the Aleutian Disease came from. We really do not know, and there

are all kinds of theories about that.

In terms of the first strain that affected the farmers that we are most

familiar with is a disease that is not known anywhere else in the world, so it

is not anywhere else unless it mutated. One suspects that it probably was not

brought here, and it would be very hard to it would be impossible to bring

it here legally, certainly, because in terms of the mink have to be tested

before they come here and they have to be in quarantine before they come here.

They have to be tested before they come here, and when they come here they have

to go in quarantine again and have to be tested before they are released. So it

certainly was not brought in legally. Now, whether it came in on equipment or

whether it already existed here we are not able to determine.

There were mink operations here on the Island part of the Province fifty

years ago, and there is certainly anecdotal information to say that Aleutian

Disease probably affected those farms and a lot of those mink got out and about.

So, while we claimed to have an Aleutian Disease-free Province, that claim

may not have been entirely correct, but we cannot prove it one way or the other.

We do know now, though, that Aleutian Disease is in the wild population.

MS JONES: Obviously, an issue for me here is how this disease can get

into the Province, for one thing, if it is tested and quarantined and tested,

and all of this stuff.

Maybe my first question should be: Was there a review process taken by your

department after this disease was discovered in the Province to ensure that all

of these processes were followed and that all of the compliances were being met?

MS DUNDERDALE: Absolutely.

MS JONES: It was.

MS DUNDERDALE: Yes.

MS JONES: I guess more of a district issue for me, as you would know, is

the fact that there was a transfer of stock from Island farms to Labrador farms,

and this was new-based operations. We certainly have no reason to suspect that

they would have contracted that disease once they were in Labrador, so they had

to have contracted it before that.

I am just wondering if there are any new provisions or guidelines that are

now going to be put in place to ensure the internal transfer of stock within the

Province.

MS DUNDERDALE: We are working very closely with the fur industry on that.

In terms of the final transfers in terms of the general animal industry here in

the Province, the industry had been quite clear in terms that they did not want

those kinds of regulations.

We had regulations in terms of the bringing in of stock into the Province,

and making sure that they were disease free, but in terms of how farmers did

transactions, and do transactions, not only with mink but in terms of cattle,

pigs, chicken, none of those are regulated on terms of they are farm-to-farm

business, and never have been, and are not, and the industry did not want us

involved at that level.

MS JONES: Okay.

MS DUNDERDALE: So, it really is a buyer-beware industry in terms of how

they want the industry to be regulated.

We have been fully engaged with the fur committee, and working with them on

regular basis on this piece now. A decision has not been taken yet in terms of

whether or not we will regulate that activity, but we are working very closely

with them in determining how we ought to do this business in a better way, and

to provide those kinds of safeguards; or, if they absolutely wish, as an

industry, to continue in that kind of a way, then it certainly is buyer beware.

You have to be very careful what you are doing.

There was certainly no reason for anybody in the Province to suspect, at that

time, that Aleutian Disease was here, because we had stringent testing in terms

of bringing in of the mink. None of the wild mink - although it was not a large

sample that had been tested up to that point showed any Aleutian disease. We

had tested some of them. Now, we did not test a whole great big lot, but we had

tested some and there was no sign. So, we were making the claim that we were an

Aleutian Disease-free Province without a large sampling, but on the information

we had.

MS JONES: Right now the disease is in the Province, and we know what the

impact of that is.

MS DUNDERDALE: Yes.

MS JONES: Is there more support from the fur breeders to look at some

kinds of policies or testing policies around the transfer of stock than there

was in the past? I am just going in my sense of it, from discussions I have had

with them. I kind of sensed that there was some receptiveness to doing something

along those lines, and maybe I misinterpreted that.

MR. WHALEN: Industry would prefer, in our meetings with industry, to

self-regulate. Like I say, in the event that does not work, then we would have

to look at, for instance, our legislation to see what we could put in place to

make sure that the spread of Aleutian Disease is taken care of, but industry,

themselves, would prefer to basically self-regulate.

MS JONES: So they are still not asking that there be a regulated process

around this?

MS DUNDERDALE: No.

MS JONES: Okay.

MS DUNDERDALE: No, and we have been fully engaged with them. We meet with

them and Dr. Whitney meets with them on a regular basis, so we are taking a lot

of information and have a lot of discussion with the fur industry around this

issue.

MS JONES: How many farms were impacted by this disease this year?

MS DUNDERDALE: Nineteen? Ten of nineteen.

OFFICIAL: Ten of twenty-seven.

MS DUNDERDALE: Ten of twenty-seven.

MS JONES: Okay.

What is the revenue that you collect there? I know you only collected $25,000

last year, but this year you are looking at collecting $454,700. Is that some

new fee or something?

MS DUNDERDALE: That is our cranberries, the sale of our cranberry vines

to producers.

MS JONES: Okay.

I am going to move to the agrifoods business development. Before I do, Mr.

Chairman, if you would not mind, could I be excused for five minutes? Is that a

problem, Minister?

MS DUNDERDALE: No, not at all.

MS JONES: Okay, thank you.

CHAIR: I was about to ask for that anyway.

MS DUNDERDALE: So we are going to have a five-minute break; that is good.

CHAIR: We will take a five minute break now.

Recess

CHAIR (Mr. Harding): Okay. I think we can reconvene. There has been word

that there is some food ordered or something for our next break. So we will see

when that comes and take it from there.

I do not know if any of the other Committee members have a question or not.

We will carry on then, Ms Jones.

OFFICIAL: The only question I had, Mr. Chair, was (inaudible).

CHAIR: Yes, you can go ahead now.

MS JONES: Under the Agricultural Business Development - Administration,

the administration portion, I guess, 3.3.01.; again, the salary piece, would

that have to do with the agriculture framework program? Is that more positions

being transferred over, or are we into a different

section right now for that?

MS DUNDERDALE: (Inaudible) salaries?

MS JONES: Yes, only because there was an increase, minister, of $211,000

or something.

MS DUNDERDALE: They are to cover salary shortfalls and overtime; overtime

associated with our agricultural fairs instead of our agricultural affairs.

MS JONES: Okay. Also under that section, under Professional Services you

spent $27,000 last year that you did not necessarily budget for. What would that

have been used for?

MS DUNDERDALE: They are consultation sessions we did with Growing

Forward, the federal-provincial program. We are negotiating a new agreement and

there were consultation pieces associated with that.

MS JONES: Under Purchased Services again, you did

overspend just a little, but what was the $105,000 used for? What was purchased

with that?

MR. WHALEN: Purchased Services covered off vehicle

repairs, maintenance, as well as printing services and expenses associated with

meetings, training and seminars.

MS JONES: Okay. Also, Allowances and Assistance, you have

been budgeting $20,000 a year, what is that for? What are the allowances being

given for, or what kind of assistance would you be purchasing with it?

MR. WHALEN: That covers off areas such as allowance

assistance for the delivery of various producer seminars.

MS JONES: I am sorry, delivery of -

MR. WHALEN: Producer seminars.

MS DUNDERDALE: Producer seminars.

MS JONES: Okay.

MR. WHALEN: It includes travel and exchange for

farmers as well.

MS JONES: That would be in the Province, I guess, those

seminars, would they?

MR. WHALEN: That is correct.

MS JONES: Okay.

The grants and subsidies that you give out there, what is

that used for? Who gets those grants or subsidies?

MR. WHALEN: Several organizations. It goes to support the

provincial farm organizations, the Provincial 4-H Council, the Federation of

Agriculture.

It covers off, as well, agricultural fairs and exhibitions;

as well as other support for agricultural organizations and undertakings, as

well as the Fruit and Vegetable Storage Program.

MS JONES: Okay. What revenue do you collect there? What

source of revenue is that? You collected $36,800 last year. You are projecting

to collect a lot less this year.

MS DUNDERDALE: That comes from the agrifoods and the

agriculture and flower show. Last year it was held in Corner Brook - or is being

held in Corner Brook in 2008, where it was held in Mount Pearl this year. So

there was greater revenue from Mount Pearl, obviously, because of population

base. It would be less in Corner Brook for the same reason.

MS JONES: So, that is what people would pay to have a booth there or

something like that, or a sponsorship or something, is it?

MS DUNDERDALE: Yes.

MS JONES: Under 3.3.02, the revenue received from the federal government

was a little bit less. I guess I am just wondering what revenue that is anyway.

What do you receive from them?

MS DUNDERDALE: Sixty per cent of the administration. The federal

government reimburses the Province for 60 per cent of the administration and

government premium costs of the production and livestock insurance program.

MS JONES: I guess you are projecting that that is going to go up this

year, the cost of the insurance? Is that due to premiums or is it due to more

animals? I am not sure.

MR. WHALEN: It is basically due to more participation by the producers,

more producers being involved in the program.

MS DUNDERDALE: Purchasing more animals.

MS JONES: 3.3.03, under the Grants and Subsidies, what kind of grants and

subsidies would you give out there? Who gets this money, for example? This is

obviously the partnership with the federal government, is it, the agriculture

MR. WHALEN: That is the provincial Agrifoods Assistance Program. It is a

provincial government program. It deals with, basically, various projects

throughout the Province. It covers off areas like land, construction facilities

and equipment purchases. It covers off land issues with regard to the community

pastures and fencing projects. In 2007-2008 we had 265 applications, 173

completed projects, which expended $1.8 million of the $2 million dollars.

MS DUNDERDALE: That is our program. That is not a cost-shared program.

MS JONES: How come you were projecting to get almost $900,000 out of the

federal government but you did not get it?

MS DUNDERDALE: The savings from that line is number 05, right?

OFFICIAL: 02.

MS DUNDERDALE: 02 is savings from the Greencover Canada and the National

Water Supply Expansion Program. Both of those were 100 per cent (inaudible)

funded.

MS JONES: The $10,000 that you are expecting to get this year from the

federal government, what is that for?

MS DUNDERDALE: That is down due to the removal of revenue associated with

Greencover Canada, the same programs. We have to do an audit of the Greencover

program, which is again 100 per cent funded by the federal government. The

$10,000 there is to do the audit to that program.

MS JONES: Okay.

Under 3.3.04, Grants and Subsidies, you did budget a lot of money under that

section last year, $6.8 million. There was $4.6 million of it that was not

spent. I guess I am just wondering what you did spend the $2 million on and why

you projected to spend such an amount. Obviously it was overestimated?

MS DUNDERDALE: Not so much overestimated in terms of there is a long

process in terms of the application because there are a number of other agencies

involved, and part of the due diligence for funding under this program includes

environmental assessments. Municipalities have to be involved, and so it takes a

fair amount of time to move the application forward from beginning to end. We

are reviewing that whole application process and trying to speed things up, but

it is hard to hurry an environmental assessment where it is required.

MS JONES: Do you have many applications under the program?

MS DUNDERDALE: Before we get there, for example, new mink farms is a good

example of what would come under funding for this. It certainly would explain,

this year, some of the unspent funding. We experienced with a couple of our

farms last year some serious issues around odour and flies and complaints from

nearby residents. As you know, this is a new industry getting started in the

Province. It holds great potential here in the Province, especially in Labrador,

as you know, particularly in your area, and it was extremely important to us

that we get these issues dealt with and we get these problems under control and

dealt with in an effective way. So, we put a moratorium on new mink development

until we try to work through some of these issues.

We have done that now, so there are a number of applications going forward.

We had a lot of them on hold, particularly mink farm development, until we

resolved some of those issues that really could set the industry back if there

was a great human cry out of certain areas of the Province about the

establishment of mink farms.

MS JONES: What other things would fit under this? I am just trying to

think well, the feed kitchens, I guess. Would that fit under this program to

support the fur industry?

MS DUNDERDALE: Yes.

MS JONES: What about things like - I do not know - berry production and

peat moss production? I am just trying to get a better understanding of what is

an eligible

MR. WHALEN: The fund was established to encourage development,

diversification and expansion of large scale agriculture projects, whether it be

feed kitchens that are established or mink production that is established. So,

large scale investments of projects that are ongoing, businesses already set-up

and running, for instance. The two that we funded so far are Central Dairies

with a cheese plant, as well as Newfoundland Eggs to help with their grading

station.

MS JONES: To help their what? I am sorry I did not get it.

MR. WHALEN: Their egg grading station.

MS JONES: Okay.

Just getting back to my original question now. Are there many applications

under that program? I know there is a long process, as the minister said, but I

am wondering what the intentional take-up might be.

MS DUNDERDALE: It is very good actually.

MR. WHALEN: We have six large projects right now that are ongoing.

MS JONES: That is in the application process, is it?

MS DUNDERDALE: Applications being progressed through the system now.

MS JONES: Your Budget Estimates that you voted for this year, would that

be adequate amounts of money, for example, if you were to look at six of these

projects?

MR. WHALEN: That is correct.

MS JONES: So, there is still room for more take-up in the program even if

you were to do all of those?

MR. WHALEN: Yes.

MS JONES: How are those programs promoted? Are they done through Industry

Trade, or are they done directly through your program, your department? How does

that work?

MR. WHALEN: They are done through the department but as well they are

also on the website, the provincial website, and as well, like I say, through

various agricultural staff throughout the Province.

MS DUNDERDALE: We do a lot of promotion around this program because it is

an opportunity to do value-added here in the Province. We have our own specialty

cheeses now being developed right here in the Province, we have premium ice

cream and we have upgraded our grading facilities for eggs. There are a lot of

good things happening around this program and developing some new jobs, but

certainly around, for example, the ice cream and the cheeses. It saves farmers a

tremendous amount of money because the industrial milk quota can be used here in

the Province and they do not have to ship their milk out of the Province for

secondary process. The industrial milk now is being used within the Province

instead of being exported out for yogurt or cheese or ice cream on the mainland

because we were not able to do value-added here in the Province.

MS JONES: I am just assuming now, based on the fact that you told me

there were two projects funded, that between the two of those they would have

received the $2.2 million dollars last year?

MR. WHALEN: That is correct.

MS JONES: What is the cost-shared breakdown with the private sector on

this initiative?

MR. WHALEN: It varies depending we prefer to have more industry

involvement. The higher the percentage of industry put in, the more favourable

the application looks, so we prefer to have a higher input from industry. It

certainly would not be less.

MS DUNDERDALE: It is more than we put in, but it varies.

MS JONES: Okay.

MS DUNDERDALE: They certainly bring more to the table than we do in terms

of investment.

MS JONES: Under the Agricultural Policy Framework Agreement - how many

years was this agreement, by the way? I forget again. I think I asked you that

last year, too.

MR. WHALEN: Five years.

MS DUNDERDALE: Five years, and we are in the process of negotiating the

next five years. Actually, we are in transitional funding now because we have

not completed the agreement.

MS JONES: The five years is expired now?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We have great challenges with our federal government

around this piece, because in terms of scale this Province is pretty much in a

league of its own. The only ones who come anywhere close to us at all would be

the Northwest Territories, and so we always have to look for some kind of an

exception to get our funding up, so that we can grow this industry. There is not

always a great understanding of that by our federal partners. It tends to be

quite a struggle for us, in terms of our FPT meetings are always a bit of a

challenge.

MS JONES: Now, I understood that a lot of the salaried positions that

would have normally been paid out of this heading, you said they are now being

incurred by the Province under different headings.

MS DUNDERDALE: Well, we are doing a transition for any number of years.

We understand in terms of cutbacks, times were tight and so on. A lot of

salaries were shifted over to APF that really ought not have been there. We are

gradually trying to take them back where they appropriately need to be.

MS JONES: Yes, but I understand from your earlier comments that there are

something like eleven positions

MS DUNDERDALE: Eleven positions.

MS JONES: that would be transferred back, but the salary estimates

are maintained at last year's budgeted amounts. Are there going to be new

positions hired here?

MS DUNDERDALE: Jeff? I don't think so. There are no new salary

positions?

MR. WHALEN: No, there are no new positions underneath this heading,

Policy Framework.

MS JONES: Now I am a little bit confused, because while I went through

all these headings were there were salary differentials, the explanation given

to me was the transfer of positions from the Agricultural Policy Framework.

MS DUNDERDALE: And that has been true up to this heading.

MS JONES: But it is not reflected here.

MS DUNDERDALE: No, in this program, and it would not be for all programs.

As an explanation for a lot of the variances that you would see in salaries,

that is where the variances come from. There is no variance in this program,

because we are not adding anybody in this program.

MS JONES: No, but you are moving people out, are you not?

MS DUNDERDALE: No, not in this program.

MS JONES: You are not?

MS DUNDERDALE: No.

MS JONES: Well I really misunderstood, because I thought this was the

program that positions were being funded under.

MS DUNDERDALE: In terms of all the information you have received up to

this point, that has been correct. This is the first program where we are not

shifting people out.

MS JONES: Okay, so all the levels will be maintained here. There was some

differential in salary last year, however.

MS DUNDERDALE: Yes.

MS JONES: Not a lot, though; probably only about $30,000 or $40,000.

MS DUNDERDALE: That is associated with the Green Cover Canada and the

national water supply expansion programs as well.

MS JONES: Under the Purchased Services here, you overspent $220,000. What

would you have purchased that you did not budget for here?

MS DUNDERDALE: Are we into the agricultural -

MS JONES: Policy Framework, yes, 3.3.05, under Purchased Services. There

was $220,000 spent over and above what was originally budgeted. I am just

wondering what that would have been for, what services?

MR. WHALEN: Purchased Services underneath the APF covers off contracting

of services for approved project activities, such as the agriculture awareness

advertising, development and production of program materials, printing,

applications, brochures, vehicle repairs and maintenance, equipment rentals,

meeting facilities for industry consultations. That fluctuates from year to

year.

MS JONES: Who do you use to do your public relations work there, the

brochures and the printing and those things that you talked about, advertising

design? What company would you contract to for that work?

MR. WHALEN: We did contract out for a company to do some of the media and

television ads we had. I cannot recall who the company was, but there was a RFP

that went out for that.

MS JONES: You just told me you spent $520,000 in that work this year. Did

it all go to one company? Was it one contract to one company? Was it a number of

contracts?

MR. WHALEN: It would have been one main contract but all the money would

not have gone to that one contract. There would have been several things

in-house.

MS JONES: Can you find out what company it was, that you contracted out

to?

MS DUNDERDALE: Yes, we can. We did a request for proposals. You probably

would have seen the ads on television all last year.

MS JONES: Yes, I did see the ads, but I am asking who the company was

that did it.

MS DUNDERDALE: Yes, and we will get you that information.

MS JONES: Yes, okay.

MR. WHALEN: I think it was Dory, Dory Advertising.

MS DUNDERDALE: Dory Advertising.

MS JONES: Dory Advertising.

MS DUNDERDALE: Yes.

MS JONES: Okay. Also under that same

section there was an increase in the

amount of Professional Services that you purchased by $55,000. What were the

extra services that you needed?

MR. WHALEN: That would have covered off things like the fees for program

audits and evaluation of the program.

MS JONES: It was just higher fees, or was it an audit that you did not

anticipate having to have done that you had to get done after?

MR. WHALEN: We do several audits per year. It depends on the federal

requirement, whether we do one, two, or three audits. Sometimes we have to do

extra audits, internal and federal audits.

MS JONES: Okay. The extra cost of $55,000, would that have been for an

audit that you were not anticipating having to do?

MS DUNDERDALE: We did not anticipate we would have to do. We do not know

if we are going to have to do one, or three, or four. So, again, it is hard to

budget.

MS JONES: To budget for it, okay.

Under Grants and Subsidies, under this heading; obviously, you spent $600,000

less than you had budgeted for. I am just wondering what those grants and

subsidies would be? Who would be eligible for them and what they would be

eligible to be spent at?

MR. WHALEN: Grants and Subsidies underneath this program basically would

be farmers and agricultural organizations for various activities that would be

covered underneath the science and innovation, renewal, environment, food safety

and food quality programs, and all those activities would be approved by an

implementation committee.

It would also include the provincial share of the national business risk

management programs, such as NISA and CASE, which is program driven risk

management for producers. So it covers off a whole aspect, or gamut of anything

that a producer basically would apply for.

MS JONES: This year the grants were down $610,000 under that program. Is

that because there is not a big take up or demand was not there? What would have

contributed to that?

MR. WHALEN: Several, I guess, issues would arise. It has to do with,

basically, poor weather conditions, land not being - in the case of land

development, if a producer applied for funding for land development - this year

we had a really early winter. It started in November, when the snow started - he

would not get his project finished. There would be funds coming back in, so it

would not be spent. Areas of - well, that is one case. There are other cases

where producers, at the end of the year, could not get their share of the 50 per

cent to cover off the project, so they would just drop the project.

MS JONES: Okay. This agreement is administered through a committee or a

board or something, is it?

MR. WHALEN: It is through a committee.

MS JONES: Okay. Is that kind of like arm's-length from the provincial

government or - how does that work?

MR. WHALEN: The committee is an implementation committee which is made up

of a federal representative, a provincial representative - government person -

and industry.

MS JONES: Okay. The industry representation, is that appointed by the

provincial government, federal government, elected - I don't know - how are

they decided?

MR. WHALEN: It is basically accepted by both provincial and federal

governments, the representatives would be, and they take their feedback from an

industry advisory committee, which is made up of producers, mostly producers,

with one provincial and one federal representative. So, there are two

committees.

MS JONES: Okay. What are the terms for those individuals who sit on the

board? Are they there for a couple of years, five years, the life of the

agreement, or -

MR. WHALEN: Currently, the individuals that sat on the board were for the

term of the APF. So they all expired as of March 31 this year.

MS JONES: Okay. Where are their offices located? Where are their staff

based to?

MR. WHALEN: Staff for?

MS JONES: For this program, the salaries that are paid out. There is $1.7

million paid out to staffing here. Where would those people be based?

MR. WHALEN: They would be all based out of headquarters in Corner Brook.

MS JONES: In Corner Brook?

MR. WHALEN: Yes.

MS JONES: Okay. So this program is really run out of Corner Brook and

they are in the same office.

MS DUNDERDALE: That is administered and managed, and the application

process is dealt with by the committees and all the work is done by staff in the

department.

MS JONES: So, really this committee decides who gets this grant money and

who does not get it, and you guys just sign off on it, do you? There is a

sign-off process I am sure, somewhere, by someone.

MR. WHALEN: Yes, that is correct. It goes through the implementation

committee first, who signs off on the project. Depending on how much that

project was valued at, it may then bump up to a management committee level,

which is one federal and one provincial person to look at the overall project.

MS JONES: The people who get grants under this program, is that

published? The people who receive monies here, is that published information

like it is, for example, in Industry Trade or ACOA programs, things like that?

MR. WHALEN: I do not think it is published but it is available to the

public, because all these funds - it is one of the requirements, federally and

provincially, is to have all these projects available to the general public.

MS JONES: Yes. How would they get it, though? How would the public find

out? If there was $20 million spent in the last five years, how would they be

able to determine who received that money? Of course, there was that much for

sure.

MS DUNDERDALE: They would have to make a request to the department for

that information. We certainly would not have any issue with making that

information available in a more public way, at all.

MS JONES: Yes, okay.

Just out of curiosity, the industry people who sit on that board, are they

eligible to receive grants for their businesses?

MR. WHALEN: Are we talking about the industry advisory committee who

gives advice to the implementation committee?

MS DUNDERDALE: The implementation committee, the people who make the

decisions.

MS JONES: Yes, the one that has -

MR. WHALEN: The industry advisory rep who sits on that board, if an

application came forward and there was a conflict of interest he would have to

step out of the room.

MS JONES: There are only two, I think you said, is there?

MR. WHALEN: There are three individuals, a provincial staff, federal

staff and one industry rep.

MS JONES: One industry rep. So if there is any proposal that directly

impacts that individual's business, then the decision is made by the

provincial and the federal government representative?

MS DUNDERDALE: Yes.

MS JONES: Okay. Who is the industry rep?

MR. WHALEN: Up to March 31 it was the president of the federation, which

is Merv Wiseman.

MS JONES: Is he still there then, or has he now been removed, or -

MR. WHALEN: As of March 31, all these board members were basically

removed because their term was up.

MS JONES: No new board has yet been appointed?

MR. WHALEN: That is correct.

MS JONES: Okay. Now, would you be the provincial representative on this

board?

MR. WHALEN: No, I am not.

MS JONES: Can you tell me who it is?

MR. WHALEN: It is the director of our business, Cindy MacDonald.

MS JONES: I am sorry; I did not get the name.

MR. WHALEN: Cynthia MacDonald.

MS JONES: Okay, and who is the federal representative?

MR. WHALEN: Brian Goldsworthy.

MS JONES: Brian, did you say?

MR. WHALEN: Brian Goldsworthy.

MS JONES: Where is he based to?

MR. WHALEN: St. John's.

MS JONES: In what department or branch of the federal government?

MR. WHALEN: Agriculture and Agri-food Canada.

MS JONES: Okay.

Under

section 3.4.01, Grants and Subsidies: What kind of grants and subsidies

are these that are provided?

MS DUNDERDALE: SPCA.

MS JONES: Okay. All of them, is it minister, goes to the SPCA?

MS DUNDERDALE: Yes, $50,000 to the St. John's SPCA. We actually thought

last year there would be a greater disbursement. We allocated that to the St.

John's SPCA for use right across the Province. However, we found that most of

it was done in St. John's, and they do accept animals from all over the

Province.

This year, we increased the funding to - not to St. John's SPCA but to

provide funding, $5,000 funding to all the other SPCAs (inaudible) there are six

of them, obviously.

MS JONES: That is a good gesture.

MS DUNDERDALE: Yes, they do good work.

MS JONES: Again, the salaries were down in this department last year. I

am wondering if there were some vacancies or if there was another reason that it

got -

MS DUNDERDALE: No, not on this one either. We had a variance due to late

recruitment and vacancies in the division.

MS JONES: What positions would that be? Were there some new positions

created?

MR. WHALEN: It would have been existing positions, veterinary services as

well as the manager of animal health as well.

MS DUNDERDALE: We had a new vet position open last year that we were

trying to fill. We were late filling that position.

MS JONES: Okay.

MS DUNDERDALE: It takes two weeks for somebody to leave working for

government; it takes six months to get somebody back.

MS JONES: I hear it takes about twelve to get a nurse, so I would say you

are doing good.

I just wanted to look at the Professional Services under this heading as

well. You budgeted $31,200 and you spent a little more than that. What kind of

professional services would you be contracting there?

MS DUNDERDALE: It is all around the Aleutian Disease, additional funding

for the blood testing and so on for the mink industry.

MS JONES: Okay.

Of course, the amount you budgeted this year will be used for the same thing,

will it?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We are absorbing all of that cost in support of the

industry.

MS JONES: In the Purchased Services, what would the extra $55,000 or

$56,000 have been for under Purchased Services?

MS DUNDERDALE: Again, some of that is associated with the Aleutian

Disease testing, as well as increased expenditures for vehicle repairs and

rentals.

MS JONES: Okay.

The purchases of property, furnishings and equipment, this year you are

budgeting $100,000 more than you spent last year.

MS DUNDERDALE: Yes.

MS JONES: I am just wondering what equipment or furnishings that would be

for.

MS DUNDERDALE: It is general equipment, but as part of that there is an

X-ray machine and an ultrasound machine and so on; that is all associated with

our veterinarians.

MS JONES: Okay.

How many veterinarians do you have in the Province?

MR. WHALEN: Seven.

MS JONES: Where are they all based?

MR. WHALEN: They are based throughout the Province, in our regional

offices.

MS JONES: Can you tell me where they are, like what offices they are in?

MR. WHALEN: You are looking at Brookfield Road, St. John's, Carbonear,

Clarenville, Pynn's Brook, and that is it.

MS JONES: Okay, so some offices have more than one.

MS DUNDERDALE: That is determined by the volume of the work and where the

heaviest concentration, for example, of the dairy industry would be, or chickens

or whatever.

MS JONES: Okay.

All right, we are almost through the Agrifoods. Wade will soon be able to

come back.

Now, the Research and Development here obviously, according to this, would be

a new project, a new initiative, that you are taking on.

MS DUNDERDALE: (Inaudible) crops, livestock. The cranberry development

came out of that, what we are doing with blueberries, partridgeberries, sea

buckthorn, but it is also livestock management and best practices and so on. So,

it is basically everything that we can do to support the growth of the industry

and support best practices within the industry.

MS JONES: I do not see any staff or salaries attached to it, so I guess

it will just be a program that will be encouraged by existing staff and so on.

MS DUNDERDALE: In a place like Wooddale, for example, that is already

staffed. So, it is money to support the programs and research projects and so on

that they are doing.

MS JONES: Okay.

These things would have been done in the past, then; they are probably just

broken out under a specific heading right now, is it?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We are trying to put more resources there because we

really need to - there are all kinds of things happening in R&D, for

example, in terms of we were able to encourage the growth of corn in the

Province because of R&D and the new greenhouse covering almost that you

could put over corn that really speeds up its growth and protects it from cold

weather. People thought that we never could grow that crop here in the Province,

and we are having enormous success with that now because of the R&D that was

done.

Everything that we have done shows us that an investment in this area is a

really good investment for the Province and for the industry, so we keep

expanding the program because it is very important; it pays great dividends for

us.

MS JONES: Okay.

I just have a couple of general questions before we move on to that.

MS DUNDERDALE: Then we could have a break, because the pizza is here.

MS JONES: Okay.

MS DUNDERDALE: We can finish up this before we go to Mines, and we can

have maybe a ten minute break?

MS JONES: Okay.

Well, I just have a couple left under Forestry and Agrifoods.

MS DUNDERDALE: That is fine.

I am suggesting, Mr. Chair, that we finish up this heading, and before we

move into Mines we have a ten minute break.

CHAIR: Yes.

MS JONES: Perfect.

With the Abitibi operations in Grand Falls, what is happening there now? I

mean, there were some layoffs in management. They were looking at where there

might be some adjustments made in the unionized workers side of it. Can you give

me an update on where that is now, and what has been happening?

MS DUNDERDALE: I spoke to Abitibi last week and they have just about

finished - thought not completely, but they have just about finished - their

Phase 2 review, and what they were able to tell me in terms of that, they

certainly believe now that they have the right mix of assets to go forward as a

company so there will be no closure of the mill in Grand Falls, which is a very

good story.

They are continuing their internal review in terms of the operations of the

mill, so from where they were in terms of their position last week there are not

going to be any layoffs at this time, but I would not certainly take that as any

promise that there will not be layoffs in the future.

We are in a position where we pretty much have to wait and see what their

internal review results in. We are status quo for the moment and everyone can

breathe around the piece that they are going to maintain the mill in Grand

Falls, but whether or not there are going to be further layoffs there is

certainly an expectation that there would be. I have to be quite honest with

that. They have not told me that there is going to be, but they are taking a

very strong look at their operations there, so there very well may be layoffs

coming out of their own internal review.

MS JONES: The internal review, I guess, is the aspect where they are

looking at they have to achieve a certain amount of savings, is it not?

MS DUNDERDALE: In my understanding it is not so much savings; they have

to trim their losses, stop their losses.

MS JONES: It has to be a more efficient operation.

MS DUNDERDALE: They think they can run a more efficient operation than

they are doing at the moment, so they are looking to see how that can happen.

MS JONES: Did they give you any time frame around when the internal

review might be completed?

MS DUNDERDALE: No.

MS JONES: Okay.

It will be in this current year, I would imagine.

MS DUNDERDALE: In the second quarter, I would imagine.

MS JONES: Okay.

What about the number four paper machine at the Kruger mill in Corner Brook?

Is there any intention of reopening that machine, or reactivating?

MS DUNDERDALE: Not under the present circumstances there isn't. There

is an excess capacity worldwide for paper production. Paper prices have risen as

a result of the takeout of capacity, and that is good news for the industry;

however, they are not terribly hopeful of maintaining that in the long run, that

there has to be more capacity to come out of the industry.

In terms of my meetings with Corner Brook Pulp and Paper and Kruger, and Mr.

Kruger in particular, he is certainly committed to that operation in Corner

Brook Pulp and Paper and to the Province, and if there comes an opportunity for

him to restart number four then I do not think he is going to need a great deal

of encouragement to do it, but there are certainly no plans for that at the

moment, given the state of the industry.

MS JONES: One of the issues that seem to keep coming up is with regard to

the fact of not buying as much fibre on the Northern Peninsula, and I know you

talked about the other agreement for wood fuel and so on. I guess right now it

is our understanding that they are importing wood from other provinces in

Atlantic Canada.

MS DUNDERDALE: When they closed down number four machine, they stopped

taking offshore wood. That was the first place they went to protect workers here

in this Province and maintain the workforce here in the Province.

For example, there has been some discussion around the nineteen harvesters

that may not be rehired this season, and they are particularly attributing it to

the fact that number four was shut down, and the explanation from the company is

saying that is not so. When we closed down number four, the very first thing

that we did was stop purchasing offshore wood - but it certainly had an impact

on the Northern Peninsula. The pilot program that we a