May 11, 2004 RESOURCE COMMITTEE

Pursuant to Standing Order 68, Yvonne Jones, MHA for

Cartwright-L'Anse au Clair, replaces Eddie Joyce, MHA for Bay of Islands.

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

MR. HARDING: Order, please!

Good evening everyone. I would like to, first of all, welcome everyone here

this evening. Our first chore, I guess, is to officially elect the Chairman.

That is the responsibility of the Clerk.

CLERK: Is there a nomination for Chairman?

MR. O'BRIEN: I nominate Harry Harding.

MS JONES: Seconded.

On motion of Mr. O'Brien, seconded by Ms Jones, Mr. Harding is elected

Chair.

CHAIR (Harding): Thank you.

The next issue, I guess, is the Vice-Chair. I call for nominations now for

Vice-Chair.

Moved by Yvonne, seconded by Kevin O'Brien, that Gerry Reid be Vice-Chair

of the Committee.

On motion of Ms Jones, seconded by Mr. O'Brien, Mr. Reid is elected

Vice-Chair.

CHAIR: Welcome, Mr. Vice-Chair.

The members of the Committee, I guess the next thing is for them to be

introduced. I would like for each member to state his name and the district that

he represents. Probably, we can start with Kevin on the far end.

MR. O'BRIEN: Kevin O'Brien, MHA for the District of Gander.

MS JOHNSON: Charlene Johnson, MHA for the District of Trinity-Bay de

Verde.

MR. HUNTER: Ray Hunter, MHA for the District of Windsor-Springdale.

MS FOOTE: Judy Foote, MHA for the District of Grand Bank.

MS JONES: Yvonne Jones, MHA for the District of Cartwright-L'Anse au

Clair.

MR. REID: Gerry Reid, MHA for the District of Twillingate & Fogo.

CHAIR: Harry Harding, MHA for the District of Bonavista North, Chairman.

The next step is to outline a few of the procedures for this evening. The

normal process has been for the minister to speak first. There is a time limit

that they try to stick to, that is fifteen minutes. Then the critic, or the

Vice-Chair, would have fifteen minutes on the member's side. Following that

then each member could have up to ten minutes to speak and ask questions of the

minister. It is my understanding that the questions are to be asked only of the

minister and not of the departmental officials, that he can direct questions

himself to any of his officials for answers.

How long we are going to be here tonight, I guess that is up to the members,

I imagine. They say it is normally three hours, or up to three hours, but

whether we go beyond that, I guess, depends on how many questions are asked and

how long the answers take and things like that.

At this point in time I would like to welcome the Minister of Fisheries and

Aquaculture, the hon. Trevor Taylor. I would like to ask Trevor now to introduce

his officials and their titles.

MR. TAYLOR: Thank you, Mr. Chairman.

On my right is Mike Samson, Deputy Minister of Fisheries and Aquaculture. On

my left is Dave Lewis, Assistant Deputy Minister of Fisheries. Mike Warren, who

is the Executive Director of Policy and Planning with the Department of

Fisheries and Aquaculture. Up on my far left is Alex Marland, Director of

Communications with the department. Shawn Robinson is behind me, he is the

Director of Aquaculture Development. Up over my right shoulder is Sean Dutton,

he is the Assistant Deputy Minister of Labrador and Aboriginal Affairs. I guess

we will get into the Labrador and Aboriginal Affairs side of it after we

conclude Fisheries and Aquaculture, if that is okay with everybody.

CHAIR: Thank you very much.

I would also like to welcome Elizabeth Murphy who is acting as our Clerk

tonight, and the other officials here, welcome.

The proceedings - as members who have been here before are quite aware of -

are recorded by Hansard, so it would be appreciated if you would identify

yourself before you speak. The mike will be on as well. That will make it a lot

easier for the recorder.

Now, I guess, we are about ready to proceed. I would like to call on the

minister first to make his opening statements.

MR. TAYLOR: Thank you, Mr. Chairman.

I do not think I will take the full fifteen minutes, but I would like to say

I am pleased to present to the Resource Committee the Budget Estimates of the

Department of Fisheries and Aquaculture for 2004-05.

I will just run over a little bit of a high level, since I think everybody

here is fairly knowledgeable of the department, considering there are two former

ministers here. I will not need to go into any great detail I don't think, but

the Department of Fisheries and Aquaculture is responsible for promoting the

harvesting, processing and marketing sectors of the fishing and aquaculture

industries and for providing input into fisheries and aquaculture science

management.

The department's scope of activities is at the local, provincial, national

and international level. The six main activities of the department are:

licencing of fish processing operations, buyers and aquaculture facilities;

fishing industry and aquaculture development and diversification; quality

assurance, inspection and enforcement; infrastructure support; policy

development and planning; communications, advocacy and information services.

Some of the key strategic objectives for the department are: to balance the

processing capacity with resource availability - which I am sure everybody can

appreciate is a challenge; maximizing the value of fisheries and aquaculture

resources on a sustainable basis - which is indeed another challenge; improving

the production of premium quality seafood products; supporting strategic

community-based fisheries infrastructure; safeguarding the Province's access

to and allocation of fish resources; pursuing co-operation with the federal

government on bilateral and multilateral fisheries management issues; promoting

fish stock recovery and conservation, and industry professionalization.

The Newfoundland and Labrador industry, in 2003, had a value in fish landings

of approximately $560 million with a total production value exceeding $1

billion. Approximately 301,000 tons of sea fish - sea fish, what other kind of

fish are there, says you? - of fish were landed compared with 580,000 tons prior

to the moratorium of 1992. According to a labour force survey, the total annual

average employment in the fishing industry was 15,200 individuals, a 6 per cent

decrease from 2002. This was for the 2003 season.

Peak employment decreased to 25,000 in 2003. That was a reflection of lower

employment levels in the processing sector, primarily related to decreased

landings in the shrimp industry and reductions in quotas in the crab sector.

Annual average employment in the processing sector decreased to 6,400 person

years, down from 7,900 person years in 2002. The annual average harvesting

employment increased 6 per cent to 8,800 individuals. The increased availability

of palagics - primarily mackerel, caplin and herring, combined with increased

shrimp, yellow-tailed flounder and turbot landings - contributed to higher

harvesting employment.

The groundfish sector registered further declines in 2003 with landings

falling to 57,473 tons, due primarily to the closures of the 2J+3KL and the

4Rs+3Pn cod fisheries. Despite the decrease in landings, the landed value grows

from $63 million to $66 million in 2003, due largely to strong prices for

turbot. Shellfish was, again, the dominant force in the fishery in 2003,

representing 83 per cent of total landed value, with snow crab and shrimp

continuing to be the dominant species. Landings increased 10 per cent to 173,915

tons, with a 13 per cent increase in landed value to $465 million in 2003.

Despite a slight drop in snow crab landings to 58,351 tons, due to minor quota

reductions, the landed value increased to $277 million from about $220 million

in 2002. The increase in landed value was a reflection of more favourable market

prices for crab, and we anticipate that will be the case again this year.

Shrimp landings increased to 87,040 tons in 2003, due to increased

allocations. The landed value of shrimp in 2003 was approximately $141 million,

down slightly from 2002 due to a higher Canadian dollar, resulting in a lower

price to fish harvesters.

Seal pelt markets remained strong in 2003. Again, we anticipate that in 2004,

based on our experience this spring. The total harvest decreased slightly to

289,000 seals in 2003 from 310,000 in 2002. Prices declined in 2003 from $60 per

pelt to $45 per pelt on average. The market value of the seal fishery in 2003

exceeded $40 million.

Fisheries development remained a priority for the department in 2003. A range

of projects were undertaken by the department in association with industry

partners. This work was coordinated by the regional offices throughout the

Province and focused on resource surveys, fishing gear development, vessel

design and the quality.

In Aquaculture; the aquaculture sector recorded another strong year in 2003

with total production exceeding 3,900 tons, down from 4,663 tons in 2002. The

export value of approximately $16 million was down from $20.5 million in 2002.

The lower volume and value were a reflection of lower market prices for mussels,

increased competition from Chili and a strong Canadian dollar. The focus

continued on Atlantic salmon, steelhead trout, blue mussels and Atlantic cod.

The federal-provincial aquaculture sector development program funded several

companies in extension services, aquaculture health services, investment

prospecting, technology transfer and human resource development. This program

concluded in March, 2004.

Blue mussel production decreased from 1,700 tons in 2002 to approximately

1,300 tons in 2003. Overall production value of the salmonoid sector declined

from $15 million in 2002 to $13 million in 2003, primarily due to the smaller

steelhead size preferred by the market. The number of fish harvested remained on

par with 2002 and the value per ton increased by 4 per cent. The salmonoid

sector achieved a production value of 2,603 tons in 2003.

Cod grow out production was hampered in 2003 by the sector's dependence on

federal-set quotas for starting stock, mainly the cod grow out program. Activity

was limited to the South Coast of the Province in NAFO area 3PS. Egg to plate

cod development moved forward with continued work on the commercial hatchery in

Bay Roberts in 2004. The Ocean Sciences Centre produced 150,000 juvenile cod

which were stocked in the sea cages at a site in Fortune Bay. The first egg to

plate cultured cod were harvested from Hermitage Bay in 2003. Market tests were

completed and the initial response has been very positive. The Department of

Fisheries and Aquaculture continues to provide assistance in the industry in the

form of infrastructure grants and services. That is throughout the whole

industry.

On special assistance grants; the department assists community-based

organizations with the repair and maintenance of fisheries infrastructure

through its special assistance grants program. These grants are essential for

many communities to complete necessary infrastructure work that would not

otherwise be done without the department's help. In recognizing the value of

this infrastructure, the department's 2004-05 budget for the program will be

$200,000. The department also provides support to the industry through its

operation of fifty-two baited trawl holding facilities. The current budget

provides for an ongoing annual expenditure of $100,000 to upgrade and replace

chilling equipment in a number of these facilities.

I will skip along, I am not going to go through all of this. I will just hit

on a couple of highlights here, things that have been very much in the news

recently.

The Fish Processing Policy Review, otherwise known as the Dunne report, was

commissioned in 2003 to conduct a policy review of the Province's management

of the fish processing sector. We released the final report of this commission

on February 4, 2004. The recommendations of the Dunne report were designed to

achieve four policy objectives: to provide the regulatory conditions for a

stable and competitive processing sector to exist with minimal public support -

these are objectives that were recommended by the Dunne report - to ensure

employment levels that provide adequate incomes; to promote cooperation in the

industry that enhances product quality and optimizes total returns from

processing available fish resources; and to seek a degree of balance between

regional resource availability and regional processing capacity so that viable

fish processing activities contribute positively to rural economic conditions. I

suppose that would fall very much in line with the stated objective of this

government and previous governments on adjacency.

The Dunne report recommends the development of a new policy framework in 2004

to be more open and transparent in an attempt to eliminate latent capacity in

the industry and make processing plants more accountable to government. The

Commissioner recommended this framework include: the establishment of an arm's-length

fish processing licensing board; the creation of a formal industry government

policy advisory committee; the elimination of inactive and cancelled processing

licenses, the adoption of a species licensing system linked to resource

thresholds; the establishment of criteria for new licenses and license

transfers; a requirement for processors to submit annual processing plans; and

an annual requirement to report corporate shareholders in fish processing

companies.

The development of a pilot project for sharing a raw material by the

processing sector was also recommended by the Dunne report; the continuation and

strengthening of the quality assurance program was another recommendation; a

review and revision of the department's legislative and regulatory framework

as set out in the Fish Inspection Act and its regulations; increasing the

requirement for crab processing development enforcement program; monitor crab

exports and implement a ticketing system for enforcement purposes was captured

in that piece, by way of example. That is something that we have committed to

and are pursuing. I think that the legislation related to that will be brought

forward, hopefully. Our plan, anyway, is to bring that forward in the fall

sitting of the House.

A new policy framework, including the licensing board, will be implemented in

2004. In response to the quality recommendations, the department will be

expanding its inspection enforcement capabilities through the hiring of ten

additional seasonal inspectors in 2004. In addition, a new division called

Enforcement and Compliance will be created to ensure consistent and effective

delivery of the quality assurance program. All costs associated with this

initiative will be recovered through proposed increases in licence fees and

production surcharges.

On the initiatives and challenges, I guess, for 2004-05, this fiscal year, we

will continue our efforts to achieve more valuable and sustainable fishing and

aquaculture industries. Some of the initiatives and challenges we will address

are - in fisheries development we have identified an allocation of $450,000 to

build on the fishing industry development and diversification. The fishing

industry supports the continuation of the department's lead role in fisheries

development and we are working with industry to identify the best development

opportunities.

In Aquaculture: The provision of aquaculture extension services for the

industry will be a priority for 2004. Key areas are fish health, environmental

monitoring, site selection and programs to increase innovation and human

resource development. The department will invest $550,000 in these activities in

2004-05. In 2003, the aquaculture branch adopted a strategic approach to

attracting capital investment in the Province. An investment prospecting package

and a geographic information system were developed to highlight the considerable

potential in this Province. These tools were used to raise the profile of our

industry in Norway and in other parts of Canada. This effort has attracted the

attention of salmon companies in these countries and some of these have concrete

plans to establish here. One of the major challenges in 2004 will be assisting

these companies with site selection and licensing and access to financing and

investment.

Cod egg to plate aquaculture will continue to develop in 2004. A small number

of juveniles will be produced at the Ocean Sciences Center and stocked in sea

cages to continue improving the growing techniques. The key challenge will be to

work with industry partners to identify financing avenues and options for

full-scale commercial development.

The gross expenditure allocation for the Department of Fisheries and

Aquaculture for 2004-2005 is $10.4 million. This compares with the gross

expenditure of $9.6 million in 2003-2004. Our net expenditures for the current

fiscal year will approximate $8.2 million.

In conclusion, Mr. Chairman, as everybody can appreciate, our industry faces

some major structural challenges. I think that was acknowledged by the previous

administration in their commissioning of Mr. Eric Dunne to have a look at

sectors of our industry that are involved with the wild harvest. We are

attempting to move on those recommendations. I think everybody would recognize

that we need to make some fundamental changes in the way our industry is run in

this Province, and that is going to require a great deal of co-operation between

government and the various participants in the industry, both in the processing

sector and the harvesting sector. That has not been very easy to facilitate

considering that there is a great deal of bad blood, for lack of better way of

putting it, between the various parties. However, we are remaining focused on

moving that agenda forward, and I think that we have made some, maybe, baby

steps in that direction.

Over the past six to seven months we believe that we have laid the ground

work for a restructured industry. We have facilitated, in the past couple of

weeks, an arrangement between harvesters and processors to settle price on crab

and we have made, I guess, what would be considered a fairly radical departure

from what we have normally done in the Province in the form of price setting

with our decision to go down the road of an auction, a hail-at-sea electronic

auction for shrimp. We believe that will allow people to make the decisions that

they need related to their fishing operations, both in the harvesting and

processing sector, and will reward people for increasing quality, for fishing at

appropriate times, and for landing at close proximity to the processing

facilities, which have always been a challenge for the various parts of the

industry to address in the previous price setting regime.

On that note, I think I will wrap it up there. I am sure there will be a

number of questions related to some of our policies and the Estimates. I do not

try to fool anybody that I can answer all of the questions, not by a long shot,

but I think between us all here we will manage.

Thank you.

CHAIR: Thank you very much, sir.

I guess the normal procedure is to take a head in the Budget, deal with that

one, and then move on to the next one. That has been the normal practice, I

think. If it is acceptable to everyone to follow that procedure, then we will go

that way.

I will ask the Vice-Chair now - he probably observed that the minister had

more than fifteen minutes, so you are certainly entitled to your twenty minutes

or so as well.

It is the understanding that after the members all ask questions, that you

can keep going around until you are finished asking questions. There will be

plenty of time, but we try to keep it structured somewhat. We will have the

Opposition first, followed by a government member, and alternate like that.

Mr. Reid.

MR. REID: Thank you, Mr. Chairman.

A quick question to start with: What did you say the gross expenditure was

this year compared to last year?

MR. TAYLOR: Ten point four million, I believe it is, $10.4 million versus

$9.6 million last year.

MR. REID: Mr. Chairman, I am going to speak about some general issues

first.

CLERK: I have just called subhead 1.1.01.

CHAIR: The Clerk has just reminded me that we have called subhead 1.1.01.

MR. REID: Okay, we will do that, subhead 1.1.01. Anything to get her

started.

CHAIR: Go ahead, sir.

That will not come out of time either.

MR. REID: Thank you.

We have lots of time, I think, anyway, Mr. Chairman, don't we?

To get started on the general issues about the Dunne report and some of the

problems that the minister talked about that they are experiencing in 2004, I

want to talk about plant quotas. I do not know what Eric Dunne called them,

sharing arrangements or something or another, but the plant quotas or production

quotas.

The minister is on record as saying that there will be no cod quotas for this

year. How does the minister feel about plant quotas himself?

MR. TAYLOR: How do I feel about them? I think that we all have to make a

decision on what type of an arrangement we want for the fishery. What I feel, I

suppose, is really not important, but I will say that I have no fundamental

objection to plant production quotas. I am prepared to engage in a discussion

with all sectors of the industry on the establishment of it, if that is the

route that they would like to go. However, my stated preference, from the

beginning - you will probably remember when you were the minister that I did, on

a number of occasions, advocate for an auction system. I am open to either of

those scenarios. I think that if we are going to have collective bargaining and

it is going to work, whereby people can negotiate the prices for fish, then we

cannot have a negotiation for fish and, in effect, an auction on the head of the

wharf afterwards. We have to make up our mind which way we want to go, is what I

would say.

I do not believe that we should entertain plant production quotas at all if

we are not going to have some very serious discussions on the conditions under

which those would be implemented and the conditions under which that arrangement

would carry on, such as we have to have, I guess - issues related to corporate

concentration would have to be addressed, issues related to competitive impacts

would have to be addressed, and issues related to full disclosure for everybody

in the industry on cost of production, market value, and so on, would have to be

addressed so that there could be a fair and equitable negotiation for prices.

Those are just some that I throw out there, but there are a significant number

of issues that would be have to be addressed before we would be prepared to go

down that road. However, as I said, I am not fundamentally opposed to it, but

there are a lot of questions that would have to be answered before we would go

there.

MR. REID: So, we do not have production quotas for crab this year, right?

MR. TAYLOR: No, we do not.

MR. REID: The reason I am raising that, and I have not raised it in

Question Period even though I have meant to, is because it is sort of difficult

in exchange of debate in Question Period, especially when the Speaker is telling

you to sit down and stop.

There is a serious issue that is occurring in my district, as we speak, and I

am sure that you are probably aware of it in other districts in the Province. In

fact, I heard a bit about it on the broadcast this afternoon. I caught the tail

end of an interview with Derek Rowe concerning what I would consider to be,

somewhat, production quotas or an illegal activity that is going on out in the

fishery today, as we speak.

Let me give you an example. Last Wednesday and Thursday, fourteen fishermen

from the Twillingate area called me, and last year they changed plants and

offered their crab for sale to another processor who was not from my district.

He promised them premiums at the end of the year, bonuses, but they did not get

them. These same fishermen, this year, heard that this individual might be in

some financial trouble and therefore decided they wanted to try and sell their

crab elsewhere. Well, they offered their crab to other plants, not only in the

area but around the Province, and they were told: I am sorry, we cannot buy your

crab. To me, that is not an open and free market.

I am also of the understanding that each of these plants - I do not know if

it is all of the plants in the Province but a number of them - have contributed

a certain amount of money to a pot and that if any one of those processors, who

are involved in this, breaks ranks and buys crab from someone that he did not

buy from last year, then the money in the pot would be used to put him out of

business. Now, this is very similar to what you and your leader were talking

about two years when you called in the competition bureau. I know I was the

minister at the time and I certainly was not aware, at that time, that it was as

blatant as it is today in the Province.

I had another call this afternoon, the same thing, just after I left the

House of Assembly, from another individual in another area of my district. He

said that he did not want to sell to the processor that he sold to last year. He

contacted four or five today and he was told: No, cannot buy your crab. Not, do

not want to or anything else: Cannot buy your crab.

Derek Rowe was asked a question on the Fisheries Broadcast this afternoon

about this and he said: It is certainly not our corporate policy to interfere in

stuff like this. But, when asked the question directly - I do not know if any of

you fellows heard him - when asked the question directly, so your plants are

open to buy crab from any fisherman who wants to come forward, his answer, I do

believe, was, you should not have asked me that question, and he did not answer

it. I know that FPI were contacted by a number of these fishermen in my

district, and they were told: No, we cannot buy your crab. He did, in fact, make

a call to someone above him who made that decision for him.

To me, and maybe you can give us a comment and maybe you can suggest what

needs to be done, but to me if that is not a cartel and that is not some kind of

subversive activity that is going on out there, I do not know what it is. It

certainly was not as blatant - and these individuals worked with me in the

department, when I was there two years ago - it was not that blatant at that

time. To me, today, they have production quotas, because if you cannot sell your

fish to anybody else and they are not buying it, then there is something

happening out there. They have production quotas today by another name.

Certainly, when you have to go to an individual who promised you one thing last

year and did not pay up, and now you are forced to sell to him this year even

though you feel that you may not get your money, I think there is something

drastically wrong with the system.

If you have any comments or any suggestions you can offer to the fishermen in

my district and others around the Province, on how to deal with this - because

these are small boat fishermen, they only have 12,000 pounds, I think. Like I

said to them, are you going to get paid up front? He said: Well, we get paid at

the end of the week. He said: I might have all my crab got in a week. I might

lose my whole season if this fellow does not pay me, yet I am forced to sell to

him because no one else will buy my crab.

If that is the case, then I would say to you, Mr. Minister, that you either

issue licences for whoever wants to buy the crab or we open the doors. God

forbid, I am not suggesting that we allow crab to go out of this Province, but I

still do not believe that individuals should suffer and take the chance on

losing their income for this year because they cannot sell their product to

someone else.

MR. TAYLOR: Well, I did not hear the broadcast. I can say that I have

received calls similar to that, suggestions that maybe somebody might be having

financial difficulties or whatever. I do not know. I cannot speculate on

financial-

MR. REID: That is the reason I did not mention his name, because it is

hearsay right now.

MR. TAYLOR: That is fair enough and I will not get into it either. I can

only say, from our prospective and from my prospective, we were clear right from

the beginning, that we were not - the people here, as you said, who you have

worked with, heard me, from the first time I met with the processing sector back

before Christmas, that we were not going to get plant production quotas, that we

were not going down the road of plant production quotas in crab in 2004.

Whatever about engaging in a discussion on it for implementation at some future

date, whether or not we would do that, is another issue. We would not be

implementing or endorsing plant production quotas in crab in 2004. We have not

done that. That was the stumbling block back about three weeks ago when we

initially sent a mediator in to talk with the union and the processors. It went

nowhere. I came out and again, I believe, I wrote a letter to the parties at

that time and said: I do not know why you are hung up on this because it is not

going to happen. I said publically again that it was not going to happen,

consistent with what I said right on through. If the industry has some

arrangement it is unbeknownst to us. That is all I can say on that. It is not

endorsed by us nor condoned by us.

As for the issues related to The Competition Bureau, you are right, it was

actually just about three years ago, now, not two years, since we brought the

issue related to collusion or potential collusion in the industry to The

Competition Bureau. As far as we know that investigation is still ongoing. We

met with some people in the processing sector as late as last week and I again

said to them: Boys, you know, I do not want to see the fishery shut down this

year. I do not want to see it shut down by you and I do not want to see it shut

down by harvesters, so don't anybody screw up along the way here. I guess if

anybody is doing this, then they are potentially playing with fire. Beyond that

I really cannot speculate on what they might be doing or might not be doing.

MR. REID: The problem I have is that they are doing it, or at least that

is what a group of individuals are telling me, and obviously there are some

telling you, as you admitted. I do not think that we can turn a blind eye to it.

I think you need to say something, at least, to these individuals, that if they

continue then do not permit a free and open market. There have to be some

ramifications for them, because I cannot see for one minute how this could be

actually legal. As for The Competition Bureau, I have never heard anything from

the individuals and I do not know if we ever will.

Again, I think it is far more serious today than it was three years ago, when

you asked to bring them in here, because there are lots of examples of this

happening. At least at that time there was a far amount of competition still

going on in the industry. It was not such that a fisherman was tied to a plant,

like he is today. I am not aware of any fishermen who have tried to move to

another plant and could not do it. In fact, I had another individual from my

district who sold his crab and his shrimp to the Labrador shrimp company last

year. He is from my district and he fishes off your hometown up there somewhere,

up near St. Anthony, and he is going to land his crab and his shrimp to the

Labrador shrimp company in Labrador. He was leaving from my district and he was

going to put into Twillingate, at the marine centre, and ice up for when he

headed north, and then after he landed his crab in Labrador he would be iced up

at the plant, obviously. He was told, according to him, that the individual who

owns the marine service centre could not supply him with ice because of the

threat by other processors that if this individual was going to sell back into

Labrador this summer, then do not ice him up because if you do I will not buy

any more ice of you this year and we will not have our boats that we control

hauled up on the slipway. Those are serious allegations, Mr. Minister, and I

think that they warrant, very quickly, some type of an investigation into it, at

least a warning shot fired across their bows, supposing you go on Open Line and

do it, saying, if it continues then obviously something is going to have to be

done about it.

If this so-called cartel exists in the crab fishery, today, I cannot see, for

the life of me, how your auction system for shrimp will work. If these fellows

are colluding right now on crab and not raiding each other's fishery, then how

do you expect fair and open competition under an auction system, when these same

fellows are sitting around a table like we are saying: Now, I am not taking your

fish and you are not taking mine. What benefit is there to these individuals

when you open the shrimp fishery later in the summer to offer higher prices. If

logic prevails, what they will do is they will sit around the table like this

and they will drive their price down to fishermen, rather than up. That is what

I sense is happening out there right now. If they are doing what they are doing

in crab, I cannot see how an auction system is going to work in shrimp. I would

like to see an auction system work in shrimp and in all species, as it does in

some other countries, because in a fair and open marketplace, fishermen will get

the best price if the market so demands the product. When you have a closed shop

of only a select few people that can own plant licences, then I cannot see the

auction system working, especially if they are colluding with each other, which

seems to be the case today.

MR. TAYLOR: All I can say is that we have committed to both sides because

there was a concern, I guess, on two sides: one, from the union about the

possibility of collusion: and two, from the processors about the possibility of

uncontrolled predatory pricing - I think that is the way Eric Dunne referred to

it - which we saw last year. We did commit to monitoring the crab fishery this

year to ascertain what is going on with it. You know, is anybody trying to shake

anybody down. We are in the process of having that monitoring system put in

place, pretty much as we speak. We committed to it last week as a part of the

deal that got the crab fishery going, got a price settled. I can only say to you

right now that we will follow up on this and try to ascertain as to what is

going on.

As for the auction, I guess, this is sort of indicative of the problems that

we have with trying to, first of all, set a price in an industry that is really

not very well controlled or regulated. You know, that is not a reflection on

anybody necessarily. As I said in the beginning, and you have heard me say lots

of times, we have to make a decision on whether we are going to have an open

shop, where the government, in essence, gets out of licencing altogether and

anybody who meets Canadian Food Inspection Agency guidelines can establish a

fish processing facility, and we sell things through an auction or some similar

arrangement; or we have a closed shop where the processing capacity is more

closely aligned with resource availability and we negotiate prices. The

unfortunate thing about it is that here in the Province now we have sort of a

combination of all and it is not working. It is not easy to get out of it, and

it presents a whole set of challenges for everybody involved, government,

harvesters and processors. That is what we are trying to work our way through

right now. That is all I can say.

As for the auction, I firmly believe that it can work, as I believe you do,

but the concerns that you have identified there are ones that we share and we

will be following up on it and trying to make sure it does not present a

problem, but we cannot guarantee against it, I suppose.

MR. REID: I do not envy you your position, believe me, I was in it, and

the decisions are not easy ones. In fact, they are impossible at times. The

problem I have is that I have shrimp plants and crab plants in my district, and

my district is built entirely on the fishery, like my colleagues here and a lot

of us here in the House of Assembly, and I do not like to see small boat

fisherman, especially, getting screwed. This year, at least the ones who called

me in the past week, are getting screwed and they could get screwed royally, to

put it bluntly, and I think something needs to be done about it.

As for the auction system, if there is actual proof out there that there is a

cartel - I do not like using the word, because I have never had proof, and I am

on record as saying that, I never had the proof to suggest that there is one. I

find more out there today than I did when I sat in your position. Maybe they

were reluctant to call me, like they are calling me now. That is a dangerous

situation. I hope that I do not have to sit here, or stand across the floor from

you in October or November when the House opens again, and say that fourteen

fisherman in my district who I told you about in May month did not get paid for

their crab this year, yet they were forced to sell to that processor against

their will or not sell it at all.

I think something has to be done. As you indicated, you are hearing those

reports from elsewhere. I would just like for someone to go tomorrow and take

Mr. Rowe up on what he almost said in his broadcast this afternoon about: Oh no,

we do not do those things, it is not a corporate decision. Well, I would like to

see FPI buy the crab from the fourteen individuals in my district tomorrow, if

it is not a corporate decision. Maybe that is what I should do, phone him

myself, maybe, tomorrow and tell him I have fourteen crab fishermen who want to

sell their product to him, and see what he says to that. I think something needs

to be done. Again, if there is a cartel in the crab fishery, I pity those poor

shrimp fishermen, especially in the Gulf this year, those who have nothing else

only shrimp.

I have a question for you: Under this auction system, do you have to sell to

the highest bidder? Do you have to!

MR. TAYLOR: I did not think that was what you were going to ask me, that

is the reason I nodded. I thought you were just going to ask: Do you have to

sell through an auction? You do. As for the details, the exact details around

whether a boat will have to - initially, that was what we had envisaged. Let's

put it that way. It would have been somewhat blind, I guess, for lack of a

better way of putting it, so that the harvester would not know who the processor

was that he or she was selling to. There was a reason for that. We thought that

would give us the best opportunity to guard against that wonderful word,

collusion. Right? It a person had to be notified what the highest bid was, and

had to sell to that company, then there was no opportunity for side deals to be

made outside of the auction, so to speak. Because of the time constraints that

we are operating under now, I cannot say with certainly if that is how this is

going to proceed this year.

MR. REID: We all know that plants own a certain number of boats, so what

you are saying is these plant owners out there today, who normally ice up their

boats and give them their shrimp bags, obviously they will not be doing that.

MR. TAYLOR: With the discussions that we had this past winter on it, that

can be accommodated easily within the auction, with a requirement that if you

buy the load of shrimp you are responsible for icing and provisioning, so to

speak, the boat again before it sails. If Notre Dame, for example, bought a load

of shrimp from whoever, once the shrimp was unloaded they would be required to

re-ice that boat at the appropriate level determined by the skipper and replace

the number of bags that were taken off. Conceivably, a fisherman could be

responsible for his initial load of ice and initial complement of bags but

thereafter the buyer would be responsible.

MR. REID: I cannot, though, imagine, for the life of me, some of the

larger companies allowing the boats that they so-call own to be selling their

shrimp to another company simply because that company outbid them. I just cannot

see that. I have dealt with these individuals long enough to know it is not in

their logic, it is not in them to do it, to work that way.

MR. TAYLOR: They will have to if it is a conditional licence that they

buy and sell through the auction.

MR. REID: Yes, I know they have to do it, but I still cannot see them. I

think what you will see is one price if that is the case. There will be no price

offered above a set price that they are going to sit behind closed doors and

negotiate amongst themselves. I cannot see processor A, who owns fifteen shrimp

boats, allowing that shrimp to go to processor B who owns no shrimp boats, while

he is footing the bill, probably at the bank or whatnot, for that vessel, and

the skipper is only hired on by him to run that vessel simply because he holds a

licence.

The other question I want to ask you about concerns my own district again.

The Fogo Island Co-op is owned by the fishermen and the plant workers of Fogo

Island. They own that. Most of the fishermen on Fogo Island have shares in the

Co-op, and what they are saying is, under an auction system there is a good

possibility that they might not be able to sell to their own plant even if they

were willing to cut a deal with their own plant to sell them for, say, sixty

cents a pound when someone might offer them sixty-two cents. They might rather

land their shrimp in their own plant because they own it themselves and their

wives and sisters and brothers work there. I do not know how that is going to

work for that particular company.

That is why I asked, do they have to sell to the highest bidder, because I am

convinced that a number of fishermen on Fogo Island will sell their shrimp to

the Fogo Island Co-op regardless of what they are offered over and above, if

someone outbids the Co-op on a load of fish, because they have been dealing with

them for the thirty or thirty-five years that they have been open. We have a

real problem if they go to the Co-op and the Co-op ices them up and gives them

their bags and on their way in they radio in to a blind desk, as you say, and

someone is told, land in Old Perlican.

MR. TAYLOR: First of all, Gerry, there are a couple of things. Like I

said, the final decisions on those details have yet to be determined. I met with

representatives from the Fogo Island Co-op earlier this winter when we discussed

this initially, so we are aware of their concerns. I guess we will try to

accommodate as many people's concerns as we can but we have to be careful that

we do not water down the wine so much that it is no good.

I can tell you this, what we have done, once I announced that we were

pursuing an auction last week, we wrote both sides and asked their input, their

suggestions, on what they would like to see in an auction. We indicated that we

wanted to have that response by today. That is not to say that we will be able

to use everything that both sides say, because you would expect that, just like

anything else, they probably cannot agree on much of it anyway. We will be

looking at that.

The other thing that I say, right from the beginning and still now, is that

in an auction the boat owner, the skipper, will have to indicate a port

preference and processors will bid based on port preference. If a boat

identifies Seldom and Twillingate as port preferences then the bids will come

back according to that and there will be no scenario under which a fisherman

would be ordered to Old Perlican, as an example. It will be in the fishermen's

court to determine where he or she wants to land.

MR. REID: Okay, so you cannot tell them that: You have to land there?

MR. TAYLOR: Right. You know, if a person says, I am prepared to land in

Seldom or Old Perlican, and is a Fogo fisherman, and the bid comes in highest at

Old Perlican, then obviously he would go to Old Perlican.

MR. REID: Then someone in Old Perlican could still say: Okay, we will

still buy your shrimp if you want to land it in Seldom. Right? So, you can still

buy it -

MR. TAYLOR: Oh, yes, but the competitive advantage obviously will be with

the Fogo Island Co-op because it is coming over their wharf as opposed to going

on a truck to be hauled 400 kilometers or whatever it is.

MR. REID: I mean, they have hauled shrimp to Port au Choix from there

before, and vice versa.

MR. TAYLOR: Oh, absolutely!

MR. REID: I don't see that stopping them.

A final question, before I pass it along. I was not always keen on

legislation when I was in your job, but is this all legislatively legal?

Seriously, have you looked at it?

MR. TAYLOR: Yes, we have looked at it.

MR. REID: Because to me, we live in a free society, and what you are

telling me is that if someone offers me a half cent a pound for my shrimp

elsewhere I am legally obligated to sell it to that individual even though I

might not want to. If I have a car and I want to sell it to my brother for

$1,000 and you offer me $1,001, you are probably not going to get my car. My

brother is going to get it because I want to do it for him for a different

reason. What you are saying to me now is that, that would not be possible. I am

not too sure that is even legal, because in a free society like we are supposed

to live in, how can you dictate that you must sell to this individual? Have you

looked at that in legislation?

MR. TAYLOR: Yes, we have, and -

MR. REID: I hope you did it better than your Minister of Justice did the

other day when we were talking about the strike thing, when he said that he

looked at it himself and that was sufficient.

MR. TAYLOR: I do not consider it sufficient for me to look at it. There

are issues related to that, we understand that. We can regulate, in the form of

conditional licence, the buying of it. I suppose you could argue that we cannot

regulate the harvester, but we can regulate the buyer. There will be a

requirement, not on that part of it, but there will be a requirement for us to

amend the legislation, the Fishing Industry Collective Bargaining Act, to bring

the auction clause back into existence. You might recall in 2002, the clause

that applied to an auction was removed from the legislation at that time. We

will have to reintroduce that, but that would have to be reintroduced no matter

what form an auction took, whether it was voluntary or compulsory or whatever.

MR. REID: That has to come in this spring, then. That has to come in

before the shrimp fishery starts.

MR. TAYLOR: Well, it has got to come in, depending on how the various

sides co-operate. I guess it is like everything, we can have it done by the time

we need it.

MR. REID: Legally, if the fishermen from Fogo Island wanted to start

shrimp fishing today-

MR. TAYLOR: They can go on now.

MR. REID: - and land their shrimp to whomever they please -

MR. TAYLOR: Absolutely.

MR. REID: Until this legislation comes in, they can sell to whomever they

like.

MR. TAYLOR: Yes.

MR. REID: They are not legally bound now by the auction system?

MR. TAYLOR: No. I mean, right now we have asked that everybody engage in

the shrimp fishery under the old rules, so to speak.. If a fisherman out in Joe

Batt's Arm wants to fish today for shrimp for Fogo Island Co-Op , he or she is

free to do it under the prices that were arbitrated a couple of weeks or a month

ago. We have asked for input from the parties on how we would implement an

auction, again. We asked for that this winter and we got some, but I do not

think anybody was in the frame of mind to give us a whole lot of positive

suggestions, at that time. I think the frame of mind might have changed a bit.

I guess, Gerry, the issue, from our perspective, is, do we allow this thing

to tie up for another month, which I think is what we were staring down, or do

we attempt to move it by announcing an auction. By announcing an auction, I

think we have seen movement, anyway, that boats are on the water now. I am not

going to suggest to you, I am not naive enough to try to suggest to you, that

this is going to work without some significant hiccups along the way. You know,

as well as I do, that since 1998 there has not been, to my knowledge, a season

with some hiccups in the shrimp fishery.

MR. REID: Definitely, but I cannot see how an auction is going to help

the system right now when we have processors out there saying they cannot pay

any more for shrimp and fishermen saying that they cannot fish for what they are

offering them. I do not know how an auction system is going to solve that

problem.

MR. TAYLOR: It will allow individuals who think that they can make money

either harvesting or processing to make that decision on their own. There are

fellows, you know as well as I do, there are people with boats and people with

plants, who can make money when some people with boats and some people with

plants will lose a pile of money. That is the same thing in all business. There

will be people who will be able to adjust to this, very quickly, and their

fishing patterns and their buying practices will make them better off under this

then they probably ever were. That is not hard considering shrimp has not been a

real prosperous business anyway. There are people who will adjust their fishing

patterns and will do well under this, and there are those who, if they do not

adjust their fishing patterns, will not last, unfortunately.

CHAIR: Thank you, Mr. Taylor.

We are dealing with subhead 1.1.01. Nevertheless, the items raised by the

member are certainly important and need to be dealt with.

I would like to move now to one of the government members. I would like to

ask the members if we could confine our questions to the subhead that we are

dealing with so that we can try and get through this. If you would like to go

back to this again, as we go through the resource policy part, then certainly

you are free to do so.

The hon. the Member for Windsor-Springdale.

MR. HUNTER: Mr. Chairman, I would just like to make a few comments. I

guess it is more with respect to letting the minister's officials know where I

stand and what my district is. I would just like to say that the fishery is a

very important part of my district. I do have five boat building facilities in

my district. Seventy per cent of the mussel production in the Province is done

in my district. We do have a major crab processing plant in Triton. It is an

area in my district that probably has been doing well over the last number of

years, but I would just like for the officials to know that we still need

policies put in place and legislation that will protect, not only the future in

my district, but all of the districts of the members in this House too. The

minister knows because he is quite familiar with my district. He basically spent

a lot of time there in his youth. For the officials, I would just like to say

that it is the aquaculture part that makes my district an important part of the

fishery, not only on the Green Bay side but also in Grand Falls-Windsor. Believe

it or not, we have fishermen in Grand Falls-Windsor. We do have an aquaculture

department office in Grand Falls-Windsor.

It is very important to me that we do a great job in developing policies

involved to address the problems in the fishery. I understand that it is not an

easy thing to do with the state of the fishery that we do have. Collusion does

bother me and plant quotas do bother me. I am not an expert in the fishery by

any means, but from comments that I get from people in my district, it is

certainly a very important issue. The Member for Twillingate & Fogo referred

to collusion, and it is an important issue. I think your department, Minister,

is going to have to make sure that everybody gets a fair chance in this

industry, not only the harvesters but the processors too.

I might have a question or two when we get into the Estimates, but I would

like to pass it on, Mr. Chairman.

CHAIR: Thank you, Sir.

Ms Jones.

MS JONES: Thank you very much, Mr. Chairman.

I have some questions. Just to pick up where Gerry left off, with regard to

the auction system in shrimp, last year there was a situation on the Northern

Peninsula, in the minister's district and in the St. Barbe district, where

shrimp fishermen felt that the price was definitely not adequate for them to

continue into a commercial fishery in the species. I am just wondering if he

thinks the auction is going to be helpful in fixing that problem at all,

because, as I understand it from my colleague's questions and your own

answers, there is some concern about competition being very limited out there. I

am just wondering what his view of it will be in terms of how that problem gets

sorted out on the Northern Peninsula.

MR. TAYLOR: I cannot, and I guess nobody could, guarantee, no matter what

approach we took, that given the current market situation and the situation with

the Canadian dollar we could see a price higher than we saw last year. Nobody

can guarantee that.

We announced in February that we were going to pursue an auction. We were

convinced to pull that off in favour of a different approach, which was in

essence plant production quotas and a negotiated price. We all know what that

resulted in, a price lower than last year. No, we cannot guarantee that that is

going to resolve the situation with the Gulf shrimp fleet nor any other shrimp

fleet. The only thing that we can hope to do in this is facilitate a process

whereby people can make their individual decisions as to whether they fish or do

not fish, and the processor does not process, within the confines of a very

serious problem in shrimp markets worldwide.

The problems with shrimp markets have gotten increasingly worse over the past

number of years. Issues like the tariff that has been imposed on white shrimp

being produced in China has not helped the situation. There is a vast amount of

industrial shrimp coming off offshore freezer trawlers, factory freezer

trawlers. It has not helped the situation. The Canadian dollar valuation has not

helped the situation. The market for shrimp this year is worse than the market

for shrimp was last year, and the only way we can hope to struggle along with

our industry is to try and be as efficient as we can and as quality conscious as

we can. We believe, or I believe, anyway, that an auction represents the best

opportunity for rewarding quality and rewarding efficiency.

As I said, people will react differently to an auction. Some fishermen will

do better than they did in previous years as a result of it, assuming that it is

truly open, independent and competitive, and some people will do worse. There

are fishermen, still, who do not focus on quality and there are people who are

not as efficient as they might otherwise be and those people will have a

difficult time if they do not adjust, but they can adjust.

As I said, no matter what we do this year, barring a subsidy - and we cannot

have that - but there is nothing that we can do, barring a subsidy, that will

quarantee an increase in the price to fishermen.

MS JONES: Okay. You answered my second question too, on the subsidy.

When you looked at the auction system - we have heard a lot of debate, I

guess, publicly by harvesters but we have not heard a whole lot by processors.

Has there been a buy in by the processing companies to the auction system in

shrimp?

MR. TAYLOR: I would not go as far as to suggest there is a buy in. I

would not go as far as to suggest there is a buy in by anybody other than me.

Well, that is not entirely true. There are a number of processors who are, I

will not say eager, but willing participants, simply because they do have

markets that they want to supply and need to supply. If they do not get the

supply that they need, they risk being delisted by the people who they sell to,

their major markets. I think, in spite of the fact that we only have thirteen

plants and eight companies, I guess, that the potential is there to have a fair

degree of competition for the product. I do believe that the potential is there

to have a better price paid to fishermen than we have seen in the negotiations.

As you can appreciate, as the Member for Twillingate Fogo said, there are

processors who have control one way or another over a significant number of

boats, and obviously they would not be as willing a participant in an auction, a

compulsory auction, as somebody who does not have control over a substantial

number of boats.

MS JONES: There is only one shrimp processing plant in Labrador. Have

they signed on as part of the auction system, or will they we exempt from that

process?

MR. TAYLOR: I cannot say that anybody has signed on. I can tell you that

the discussions from earlier this winter - honest, I have not, since we said

that we were going to go down the road of an auction this time, to my knowledge,

unless I did it while I was asleep, talked to anybody in the processing sector

or the harvesting sector. We wrote both sides and asked for their input, but we

await that, I guess. Discussions with the shrimp company, back in February, and

March, their reaction initially was consistent with everybody else's. They did

not know what to think of it, but as time went on they were more open to the

concept than probably most others in the industry. They were certainly a lot

more open to it than they were to going down the road to plant reduction quotas.

MS JONES: As of right now, then, the Labrador plant will be a part of the

auction system?

MR. TAYLOR: Yes.

MS JONES: Okay.

You are expecting to have that system finalized and in place for this fishing

season. Is that my understanding?

MR. TAYLOR: By the first of June, we anticipate. I will not say the first

day of June, but by late May early June. Let's put it that way. If I say June

1, you will beat me up on June 1 if we do not have it in place.

MS JONES: I am just wondering, because you said you had to make changes

to the legislation in order to do it.

MR. TAYLOR: Well, changes to the legislation would be required if there

was no co-operation. It would absolutely be required if there was no

co-operation. If there is co-operation, it would not necessarily be required.

MS JONES: From the industry?

MR. TAYLOR: Yes.

MR. REID: You would need co-operation from all the industry, wouldn't

you?

MR. TAYLOR: I guess. I cannot answer that. It is better for me not to

answer that, but I would say that most things in the industry operate on

consensus or majority. I am not suggesting that we could get a majority on this,

I do not think we can get a majority on anything. I am not sure if we can get a

majority of people to agree that today is Tuesday.

MS JONES: In your opening comments you talked about a monitoring system

for crab. Do you want to tell me a little bit about that and what you are

proposing to do?

MR. TAYLOR: We indicated, by way of letter to both sides in the

concluding hours, I guess, of the crab negotiations last week, or the

arbitration or the mediation or whatever you want to call it, that we would

monitor on a biweekly basis. On a biweekly basis we would want reports from the

processing sector, from the various plants as to - an enhanced version, I

suppose, of what was there before when it comes to actual buy, who they bought

from, when they bought, prices paid, and prices offered, to try and track, I

guess, movement of price, movement of material, and movement of boats, to try

and guard against some of the stuff that was brought up here earlier tonight.

MS JONES: The processors themselves will do this and submit it to the

department?

MR. TAYLOR: Yes, and both sides are aware of this monitoring. I am going

to turn it over to the deputy for a second because he was more closely engaged

in that.

MR. SAMSON: The way it transpired is, it was a collective agreement or

schedule to a collective agreement signed between the FFAW and ASP on behalf of

the crab processors, which set out the

schedule of prices for the year, market

adjustment formulas and those sort of things. Appended to that was a Memorandum

of Understanding between FFAW and the processors, that set out the broad

parameters of this monitoring program requiring, basically, as the minister has

indicated, by-weekly reporting, on a transaction by transaction basis, of who

bought what, when, from whom, and at what price, essentially. The department was

not signatory, the minister was not signatory, to that MOU, but the minister did

acknowledge that MOU in a letter which went to both FFAW and ASP, and has

subsequently issued a condition of license to processors requiring that they

report these matters or these transactions to the minister on a bi-weekly basis.

On a go forward basis, what will happen is that will be inputted into a

database, and essentially serves a couple of purposes, I guess. One, is that it

will provide us with a source for the industry, generally, harvesters,

processors and the government, with a source of information and data that we

have not had access to before. Previously, we required, and will still be

requiring this year, crab purchases and crab production to be reported daily

throughout the season, certainly as the two previous ministers would be aware.

This will provide information around price and who is dealing with what vessels

and that sort of thing.

MS JONES: It will come directly to the department?

MR. SAMSON: It will come directly to the department.

MS JONES: Okay.

Just for the record, could you tell us what ASP is and who are members?

MR. SAMSON: The ASP is the Association of Seafood Producers. It is the

successor organization, I guess, to the Fisheries Association of Newfoundland

and Labrador which made itself defunct in the fall of 2003, for want of a better

way of putting it. It is the Association of Seafood Producers. They represent, I

think, twenty-seven crab companies, and then there are a number - the balance of

the thirty-odd who are actually active are outside, but I believe at this point

are signed onto at least the price side of it.

MR. JONES: Okay.

MR. SAMSON: The monitoring program and the requirements to report, that

is a conditional license which has been imposed on all crab producers equally,

whether they are members of ASP or not.

MS JONES: Okay. Even if they are not in ASP they are still bound by this

new requirement to submit -

MR. SAMSON: To report. Absolutely!

MS JONES: Okay. Was there any decision to put monitors in the crab plants

this season by the department?

MR. TAYLOR: No. The decision made by us, as a follow-up to the Dunne

report, has been to hire an additional ten quality assurance inspectors. There

will be an increased focus, I guess, on what is happening in production

facilities to try to get a better handle on pack out and those type of things,

but there is no decision to station fishery inspectors in fish processing

facilities. There will probably be some increased activity around processing

facilities but there will not be a twenty-four seven, for lack of a better way

of putting it, presence there.

MS JONES: In the MOU or the understanding that was reached between the

union and the plants was there any reference made to the types of packaged

product that would come out of the plant or any minimum requirement for

production?

MR. TAYLOR: No.

MS JONES: No.

The reports that will submitted to the department now, will they replace your

original request, or announcement of a while ago to ask for some kind of plan,

or does the Dunn Report ask for some kind of plan?

MR. TAYLOR: No, that is a separate matter and will not be implemented

this year, but will be operational for 2005.

MS JONES: Okay, and that would be-

MR. TAYLOR: That is the production plan you are talking about.

MS JONES: Production plan, okay.

Mr. Chairman, I am just going to pass it along to someone else for a few

minutes. I have some more questions, so I will get to them after.

CHAIR: Okay. Thank you very much.

Move to the government members now, if you have questions.

Again, I would like to confine this to 1.1.01, Minister's Office expenses.

The hon. the Member for Trinity-Bay de Verde.

MS JOHNSON: Mr. Chairman, in my district there are about five or six fish

plants and certainly a lot of people rely on those for their livelihood. Being a

new member and certainly not having a huge wealth of knowledge in the fisheries

industry, and certainly of the terminology - I have received phone calls from

the district regarding programs, policies, and what not, and I must say I still

do not have a huge wealth of knowledge, but I will say that the minister has

been very helpful. As those calls came in I would get in contact with him and he

sat down with me on a number of occasions and tried to give it to me in laymen's

terms. I just want to say I appreciate that. He has answered all my questions

along the way, so therefore I do not have any at this time.

MR. TAYLOR: Now, boy! I have to get a special assistance grant out there.

WITNESS: ( Inaudible)

MR. TAYLOR: You want to call into Open Line tomorrow morning?

WITNESS: (Inaudible).

CHAIR: We have moved to Ms Foote.

MS FOOTE: Thank you, Mr. Chairman.

It is always nice when a minister gets support like that. I remember being on

that side and it was always nice to have colleagues on this side not asking

questions.

My district is Grand Bank, and I am sure all of you who are familiar with

that district would know that, I guess, as much as any other district in the

Province, Grand Bank certainly has a history in the fishery. We have four fish

plants there but I think every community in my district, and I think there are

seventeen of them, have fisher committees, so I am always bombarded with

questions and fisherpeople looking for support. Of course, in Grand Bank we have

the only surf clam operation in the Province. It is very successful and

hopefully it will remain that way. I know my colleague has questions on the

Dunne report, because I do have some serious reservations about the implication

of that, particularly for one-species plants.

Having said that, my two colleagues who have already spoken, both former

fisheries ministers - I can tell you, having a substantial fishery presence in a

district, you do not want to be the Minister of Fisheries. It is one role that I

never ever wanted. I empathize with you, just from the representation that I get

from my constituents with respect to fisheries issues. I do know that my

colleagues intend on asking a lot of general questions of you, pertaining to the

fisheries.

The one issue for me, I suppose, and it is based on the amount of

representation that I do get throughout my district in terms of support for

initiatives or for different fisher committees, initiatives that are planned or

new initiatives, whether in aquaculture or other species. As I look through the

Estimates here and I look at the various headings, in all but one of the

headings with respect to Grants and Subsidies, whether I am looking at Resource

Policy and Development where, of course, the focus is on planning and

coordinating of resource development initiatives in the harvesting sector, or if

I look at Administration and Support Services, where the Grants and Subsidies

would look at the maintenance and repair of all Government-owned marine

facilities in the Province, or if I look over at Processing and Marketing - of

course, the Grants and Subsidies there have to do with providing financial

assistance and market support to the fishing industry, with particular emphasis

on underutilized species, aquaculture products and value-added production. I am

a bit concerned that, as I look at all of these headings and look at that

particular line, in all cases you see a substantial reduction in the amount

allocated for grants and subsidies.

I have to ask, given that the fishery is so important to this Province, at a

time when we are trying to grow the economy and looking at the fishery as one

area where we really should be focusing our attention, what contributed to that

particular decision? Would that not have been an area where we would have, in

fact, increased or at least maintained the amount that was there last year? If

you look in the revised Budget, in all cases the amount of money allocated was

spent. I have to ask, what contributed to that decision, given that it is of

such importance to the Province?

MR. TAYLOR: A couple of things, I guess. I will just deal with it

generally, I suppose, first anyway. If you want specifics, then I will get into

specifics. I guess our view is that the types of grants and subsidies we have

been providing - we have had a look at where that money is going and how best to

use the money that is available to the department.

On resource development, you know, we still maintain funding for new

fisheries development. We had budgeted $450,000 for that. We have budgeted

$550,000 for the aquaculture side. You know, when it comes to new species

development in the wild fisheries side, when it comes to supporting our

aquaculture industry in marketing, human resource development, investment

prospecting, and those type of things, we have maintained that and made a

significant contribution towards that end. Where we have decided to cut back,

for example, in grants and subsidies is on the special assistance grants, which

were small, like $3,000 grants to fisheries committees around the Province, to

assist them in maintaining some of their infrastructure. It was a difficult call

to make, but we had to make the call to reduce that by $150,000. We have still

maintained $200,000 there. I think, out of recognition, from my perspective

anyway, that the fishery and how it is being run and its placement around the

Province is evolving, we just have to focus, I suppose, on making sure that we

put the available money where it is best utilized on that one.

On the processing and marketing reduction, for example, as I recall that one

is related to - anyway I will not get into that. The sealing industry, the

Canadian Sealers Association, for example, did receive $50,000 in funding from

the department previously, and that is cut, for lack of a better way of putting

it. I asked myself, and we asked ourselves as a government, if we should be

supporting industry associations when we have an industry that is worth probably

more than it has ever been worth, and when we have no commitment from the

industry to support their own industry association. When the previous ministers

indicated to the Canadian Sealers Association that funding would be contingent

upon them raising money through pelt levies and through funding from the federal

agencies, neither of that happened, so then we were the only ones left on the

hook in an industry that is worth over $40 million. There wasn't any way that

we could provide enough to maintain the operation anyway.

Those were the kind of decisions that we made. We tried to look at it from a

strategic perspective, maintain grants and subsidies where we could and where we

should, but recognizing that there were some places we probably should not,

anymore, be providing grants and subsidies, and maintaining as much of our

budget as possible for new opportunity development, I guess, for lack of a

better way of putting it, opportunity development in aquaculture and opportunity

development on the wild fishery side in new species identification and what have

you.

MS FOOTE: Are you suggesting that the money that you have saved in those

particular areas you have reinvested in other areas?

MR. TAYLOR: I am not suggesting that but I suppose one could draw that

conclusion. We did move from a gross expenditure of $9.6 million to $10.4. A lot

of that is related to the implementation of the Dunne report, or certain

recommendations, I should say, of the Dunne report, but as you can appreciate

there are decisions made to cut spending in some areas in order to invest in

other areas. It was easier, from my perspective, to reduce our grants and

subsidies in certain areas than it was to compromise our ability to do new

species fisheries development and aquaculture development.

MS FOOTE: On the Grants and Subsidies, under Administration and Support

Services, the one, of course, that would be talking about maintenance and repair

of different marine facilities in the Province, just a general question on that.

I notice that it went from $350,000 down to $200,000.

MR. TAYLOR: Yes.

MS FOOTE: Is there, in fact, $200,000 there or is there any carry-over

from last year? I am being told that there is some carryover and that, in fact,

is about $150,000 in reality.

MR. TAYLOR: Pardon?

MS FOOTE: I am being told that there is some carry-over from last year's

request and that, in fact, would be about $155,000 now instead of $200,000.

MR. TAYLOR: The $200,000 is there, but -

MS FOOTE: I am just wondering: Can you entertain $200,000 worth of new

initiatives this year or do you have a carry-over of about $50,000 from previous

years?

MR. LEWIS: Yes, there is a carry-over. Every year there is a carry-over.

What happens is that part way through the year some of the projects that are

approved slip and they always go into the next year. Therefore, yes, there is a

carry-over that will limit the amount that we can allocate out early in the

year, but as we proceed through the year we will be able to pick up the rest. We

have always been able to spend the full amount of the budget.

MS FOOTE: Absolutely. Dave, do you know how much the carry-over is?

MR. LEWIS: I do not know exactly, but $50,000 is probably a pretty good

estimate. Somewhere between $40,000 or $50,000, I would say.

MS FOOTE: I will pass, Mr. Chair, on to-

MR. TAYLOR: I did not understand the question.

MS FOOTE: That is okay. It is going to be a long night.

CHAIR: Thank you, Ms Foote.

We will go to Mr. O'Brien now, and after that we will probably break for

ten minutes or so.

MR. O'BRIEN: I guess, being from the District of Gander I am a minority

here tonight in that I do not have any fish plants and I do not have any

longliners in Gander, unless you were to include the riverboats out in Glenwood

on the Gander River. I do come from Ferryland up on the Southern Shore, so I

have, I guess, some knowledge of the fishery. I can also speak about the fishery

as it evolves and the challenges that are there, how it affects a district such

as mine in urban Newfoundland, indirectly, in that most of the monies that are

derived from the fishery, be it the fisherpeople themselves or from the

processing employees, the bulk of it is usually spent in a district like my own.

When there is a downturn in that industry, we can see it instantly within the

private sector and the retail sector. One that shows it very, very quickly is in

car sales and in recreational vehicles. We have seen that already this year in

Gander, and it has been a concern of my own and a concern of the people of the

district.

I do commend the minister and the department on their direction and the

challenges that they have faced in the last three to four months or so,

especially. I will be keeping an eye on it. I have quite an interest in the

department itself with regards to my own district, in what I just spoke about. I

have been asking the minister some questions and learning about the industry

itself, because he has a vast background in the industry, not only from a

governmental position but also from a job position in the past. I look forward

to it.

The only other comment I would have is that, Charlene actually leaned over

and spoke to me and said: God, this is refreshing as compared to the House of

Assembly. We do not understand, being new members, how the House of Assembly is

so rowdy and Gerry is always told to sit down and all that kind of thing, and

here everybody is so cordial and everything. I am quite pleased with this

tonight.

That is all I have to say, Mr. Chairman.

CHAIR: Thank you, Sir.

We will take a short break now and come back at 8:50 p.m., in ten minutes

time.

Recess

CHAIR: Order, please!

We will reconvene now and start questioning again. I would like to welcome

Mr. Anderson. He is the critic for Labrador Affairs. It was decided that we

would deal with Labrador Affairs tonight. If you wish, you may start this round.

MR. ANDERSEN: Mr. Chair, the first question I want to ask is on the

fishery, subhead 2.1.02, Labrador Fish Plants, but before I speak I want to do

the same as some other people did, give a very brief background.

Minister, years ago the provincial government built a fishing village on the

North Coast of Labrador in Smokey. It was built for the Newfoundland fishermen.

I am not prejudice, I am not against it, but they built wharves, storage sheds,

fishing sheds, a wharf to accommodate boats, while the people in Rigolet - by

they way, they also hooked up running water - could not get 5 cents from the

government of the day for water and sewer nor 5 cents to drive a nail into a

stage head. They built a fish plant in Makkovik. It was put there for one

purpose and that was to accommodate fisher people from the Island.

Minister, in the mid and late 1980s, I can remember that we had as many as

forty to sixty longliners from the Island of Newfoundlander, many from your

riding, that were up there fishing at the cod because the cod had failed on

parts of the Island. A few years later the cod fishery failed. It failed in my

riding first. While the federal government was responsible for the TAGS program

- they implemented the program for TAGS, NCARP and so on - where every person in

this Province was entitled to monies based on the catches, I do believe, in 1992

and1993, in 1992 and1993 there was not one cod fish to be caught in my riding,

and because of that the people in my riding never got one cent, not one copper,

for TAGS or anything else.

Now, I want to question, I guess, as to why your government, at this stage of

the game, would drop the $100,000 subsidy? Basically that is used, as it says

right here, to subsidize certain fish buying. One of the very, very (inaudible)

fisheries we have is the scallop fishery. It is a very short season, and because

of the small fishery that it is, it is not viable for people to go up there and

buy their own boats. What they do is they work a deal with captains on

longliners from Southern Labrador and from Newfoundland to go down there, and

because of the long run back and forth, Torngat had to find some way to make the

price of their scallop and other species competitive, and this is one way that

they did it. I can guarantee you that by phasing out this subsidy you are going

to put the fish plants on the North Coast of Labrador at a big disadvantage.

While $100,000 may not seem much when we talk of a billion dollar industry

today, it did provide a level of comfort to Torngat Fisheries and, I guess, they

could offer a competitive price for scallops. They also used that subsidy to

collect the char that was caught up North, as far as 180 miles north of Nain.

Taking away this subsidy is going to put the fish plants run by Torngat

Fisheries at a big disadvantage. It is pretty difficult to understand as to why,

at this stage of the day, your government would do that. It is very difficult to

understand, at this stage of the day, as to why your government would not

continue the subsidy.

Minister, I am sure you are aware of the fish plants that the government owns

on the North Coast of Labrador. Torngat Fisheries has done quite well with the

upkeep of the fish plants, many times, you know, doing things. Maybe the

approach now would be that we will come after you, say that these are your

plants, that we want them made safe, we want them upgraded the way they should

be, and at the end of the day I think it will cost a lot more than $100,000.

Again, I would ask you and your government, very, very seriously: Would you

consider continuing this $100,000 a year subsidy to Torngat Fisheries? If not,

it is going to put them at a big disadvantage. That, Minister, could mean the

difference between people up there getting their EI or not, because in these

small isolated communities we only have a very short season. If Torngat cannot

find a way to make the price of scallop up there competitive so that the boats

will come up - if the longliners from your area and the South Coast of Labrador

do not come up, then we have no way of bringing the scallop to the plants in

Northern Labrador. Again, that will mean that these people will not get their

hours to qualify for EI. I ask again, for you and your government to reconsider

this.

MR. TAYLOR: Wally, I guess I understand, and I will not comment on your

initial commentary, I will just deal with the decision on the $100,000. My

understanding is that this subsidy was, at one time, as high as $800,000 and it

has gradually been reduced over the years to the point where it was previous to

this year, at $100,000. My understanding is that in 2001, there was $50,000

drawn down on this subsidy, in 2002, $50,000, and in 2003, the $100,000 was used

for repairs on the plant in Nain. While I can see where the subsidy might have

been important in past years, it appears to us that it is less important to

Torngat Fisheries at this point than it ever was in its history, and for the

past three years has either only partially been utilized or was utilized for

plant repairs, as you said, on plants that the provincial government owns,

namely the one in Nain. We think that Torngat Fisheries have gotten themselves

to a point - I mean, a subsidy is used to assist an operation that is either

marginally profitable or a losing venture, to keep them going, and Torngat has,

through their management over the past number of years, been able to get

themselves in a position where they are in pretty good financial shape, or at

least it appears that way to us. As a result, we made the decision to eliminate

the subsidy. I think it really speaks well for the management of Torngat

Fisheries, that they have been able to get themselves to that point where they

no longer need subsidization in order to continue. We are confident that, if

past experience holds out, they will continue along that line and the subsidy

will not be required.

The Government of Newfoundland and Labrador had many subsidies in place over

the years for fish plants throughout the Province, and this was, basically, the

final one. We have taken the decision to eliminate it. It is based on what we

believe is a viable operation there right now. They do have access to

significant resources, financial resources, in their offshore shrimp allocation.

They are not radically different from the Labrador Fishermen's Union Shrimp

Company Limited in that respect, and we no longer subsidize the shrimp company

nor any other operation in the Province. I guess, if problems arise with Torngat

Fisheries we will deal with those problems as they arise. Right now, it is a

viable operation and a viable business, and we are confident that, given the

experience of the last three years anyway, they will be able to carry on without

this.

MR. ANDERSEN: Minister, there is some truth to what you say, but I

certainly do not buy into all of it, because I think for some of it you have

been misinformed.

As a matter of fact, it was not $800,000 in subsidies years ago, it was in

the millions. Yes, we did bring it down, but the reason why it is more crucial

today to have this in place for the char fishery and the scallop fishery is that

- what you have to remember is that I was responsible for getting the Nain

Banker for Torngat Fisheries for a summer which came with a crab license.

Even though they turned the Nain Banker back over to the provincial

government, that eventually sold it to the Labrador Shrimp Company, the crab

license stayed.

Minister, it is the make and break on our crab, and, as we speak, Torngat is

holding meeting after meeting, because as you know the federal government just

cut back almost 50 per cent of their crab. All you have to do is look at the

amount of crab that is allotted to the North Coast of Labrador. They needed a

minimum of a 70 per cent catch of their allowable catch to break even. Last year

they came to about 72 per cent of their allowable catch and now they have a 50

per cent cut.

Again, I am sure I will be back with Torngat in the very near future, and

over the summer, because our culture and nature, I guess, dictate as to what

your take is from the fishery. I can say to you again, the reason why they were

able to bring down the subsidy was because of the crab and the crab alone, and

now they have a 50 per cent cut. Again, I think some sole searching needs to be

done by you and your department..

The shrimp licence for Makkovik: right now the only thing I can say about

that, Yvonne, is that we do not have enough of a shrimp allowable catch for our

inshore fishermen to make any plant viable; none whatsoever. That was a rule

that the federal government made. Anyway, I will leave that there, and I am sure

that I will be back.

I am going to take just a few minutes to go to Labrador and Aboriginal

Affairs, page 53. The first question I want to ask is on subhead 1.1.01.01.

Salaries have gone down to $62,900 from - I guess I was a good minister last

year, I did not spend all of the money there. We spent $179,500. Can you tell me

the difference? Obviously, there are positions gone.

MR. TAYLOR: What was that?

MR. ANDERSEN: Page 53, subhead 1.1.01, under Salaries.

MR. TAYLOR: Yes.

MR. ANDERSEN: I am asking you who is gone.

MR. TAYLOR: On that, Wally, the reason for the reduction in the salary

is, my salary as a minister is charged to the Department of Fisheries and

Aquaculture as opposed to the Department of Labrador and Aboriginal Affairs. So,

that salary line reflects the compensation for the Parliamentary Secretary and

Assistant as opposed to the full complement that would be normally associated

with the Minister's Office. Likewise, Minister Rideout's salary is charged

to the Department of Transportation and Works as opposed to Labrador and

Aboriginal Affairs.

MR. ANDERSEN: If you take your salary out - and we do not have to

disclose here today what your salary is - and if you are going to take out

Minister Rideout's salary, and if you are going to take out -

MR. TAYLOR: No, no, we only take out one.

MR. ANDERSEN: Okay.

MR. TAYLOR: It is backfilled by a portion of the Parliamentary Secretary's.

The MHA's salary still comes out of the House of Assembly budget. The

Parliamentary Secretary piece comes out of this budget, and then -

MR. ANDERSEN: That would be $22,000?

MR. TAYLOR: - the Assistance's position is charged to the department

here as well. I am right in saying that, am I?

MR. ANDERSEN: What assistant?

MR. DUTTON: Mr. Hickey has an assistant in Happy Valley Goose Bay.

MR. TAYLOR: A Constituency Assistant, his assistant.

MR. DUTTON: The Parliamentary Secretary has an assistant in Happy Valley

Goose Bay.

MR. ANDERSEN: He only has what we have here. I am entitled to a worker,

Yvonne is entitled to a worker, Ray Hunter is entitled to a -

MR. DUTTON: That is all he has.

MR. ANDERSEN: Mr. Hickey has chosen to have his one in Goose Bay. That

comes out of the House of Assembly, it will not come out of your salary's

roster.

MR. DUTTON: In the last fiscal year, that salary was charged to the House

of Assembly, and this year that salary is being charged to our department under

Minister's Office. It is the same individual. There is only one staff person.

MS JONES: Under the IEC, that cannot happen. He has to have a second

person for it to be a second salary.

MR. DUTTON: He only has one staff person, and that person is charged

under here as Assistant to the Parliamentary Secretary.

MS JONES: So, he has no one here in St. John's, no secretary?

MR. DUTTON: That is correct.

MR. REID: He is not supposed to be there. Every MHA in the House of

Assembly is entitled to one political staff member, and it should not be coming

out of any departmental budget. It is supposed to be coming out of the House of

Assembly.

MR. DUTTON: That position is classified as an Assistant to the

Parliamentary Secretary and he has no staff person under the other -

WITNESS: (Inaudible)

MR. DUTTON: Yes, there is only one position.

MR. TAYLOR: The only thing I can tell you on that is, we will follow up

on it and provide-

MR. ANDERSEN: All we are saying here, really, is that there is no one

begrudging him his worker, but the fact is that through IEC and through the

House we are all entitled to a worker. Even though John is the Parliamentary

Secretary, he has chosen to have his person in Goose Bay. That is his right, but

that should not be charged to the minister's salary. That should be charged to

the House of Assembly.

MR. TAYLOR: I cannot speak to that, because I am not sure.

MS JONES: This $62,900, that is what you are talking about, right?

MR. TAYLOR: I assume that is what he is talking about, anyway. That is

what I am talking about.

MS JONES: That is just one person?

MR. TAYLOR: That is the combination of the two.

MR. DUTTON: It is to cover the salary and Labrador allowance for his

assistant and also for the Parliamentary Secretary salary which is on top of the

MHA salary which is charged to the House of Assembly. I think it is a little

more than that.

MR. ANDERSEN: We will go on to 1.2.01, Executive Support. Again you have

come down from $419,800 to $342,600. Can you explain the difference, as to what

positions are gone?

MR. TAYLOR: That is, Wally, as a result, as I am sure you are aware, of

the elimination of the ADM's position, and there was one vacant secretarial

position also.

MR. ANDERSEN: Executive Support. What other jobs fall under that

category?

MR. TAYLOR: The Deputy Minister, the Assistant Deputy Minister and the

secretaries associated with that. The Deputy Minister, the Assistant Deputy

Minister, and the secretaries associated with the executive also fall into that

category.

MR. ANDERSEN: By the way, too, Trevor we have no problem if Sean wants to

answer the question.

MR. TAYLOR: I do not either.

MR. ANDERSEN: Employee Benefits, $500 down from $4,000

MR. TAYLOR: Do you want to answer that, sir?

MR. DUTTON: In last year's budget, there was an allocation for $500 and

it is the same amount budgeted. Last year there was more spent then anticipated

due to additional fees for conference attendance, things like the Voisey's Bay

and Beyond Conference and other similar types of events.

MR. ANDERSEN: Under Transportation and Communications, the good old

minister last year spent $75,000. Now, as you just indicated, with the number of

staff gone, why would there be an increase in Transportation and Communications

over last year?

MR. TAYLOR: There is not an increase over last year, there is a reduction

from last year. There is a reduction in the budgeted this year from last year

because we anticipate less travel. Obviously, there was not as much travel last

year. As you said, you were probably a little more of a frugal minister. Much of

my travel and Minister Rideout's travel, we are in dual positions so it would

not necessarily all have to be charged against Labrador Affairs. When I went to-

AN HON. MEMBER: That is for your staff, not for yourselves.

MR. TAYLOR: Yes, sorry.

Well, there is less staff also, so there are less travel demands.

MR. ANDERSEN: That is my point. Last year, the revised was $75,000, and

in your estimates for 2004/05 you have gone to $90,000. My question is: Where an

ADM is gone, who used to travel, and some other staff, then shouldn't there be

a decrease?

MR. TAYLOR: Maybe there will. Just because we have $90,000 there, that

does not necessarily mean that we have to spend $90,000. You had $100,000 when

you brought in your budget last year of which $75,000 was spent by your staff

and our staff afterwards. It is $90,000 now, but maybe we will come in at

$65,000 when we go over this next year. This is just a budget. It is a reduction

that reflects what we believe to be the reality, but only time will tell how

much of it we will spend.

MR. ANDERSEN: Okay. As you said, you have the ADMs gone and the whole

staff from Goose Bay is gone, so again the amount of $90,000 seems high.

We will move along. Labrador and Aboriginal Affairs - well, we will leave the

Aboriginal portion to Mr. Rideout later on. Transportation and Works and

Labrador and Aboriginal Affairs are providing the administration for the

program, but the funding for it is coming out of Transportation and Works.

MS JONES: Do you have one staff person dedicated to administering that

program?

MR. TAYLOR: Yes.

MS JONES: You do?

MR. TAYLOR: Yes.

MS JONES: Where is that person based?

MR. TAYLOR: Happy Valley-Goose Bay. Michelle Wood.

MS JONES: The next question is with regard to the trail grants. There is

a program that was in place - maybe I should save that for Works, Services and

Transportation too. I do not think that is in yours.

MR. TAYLOR: No, that is right.

MS JONES: I have some questions with regard to, I guess, the team of

officials and politicians, I guess, within government, who are dealing with the

national defense issues at Goose Bay. I understand there is a group who are

looking at developing a strategy for maintaining the base in Goose Bay as a

centre for NATO training for the long-term. Is there money within the Department

of Labrador Affairs to manage that file or is the money coming from another

department?

MR. TAYLOR: I cannot say that there is any identified amount of money

that is allotted for work on the 5 Wing file. The resources of the various

departments are being used as required, I guess, for lack of a better way of

putting it. Labrador and Aboriginal Affairs have resources dedicated to this,

Intergovernmental Affairs have a significant commitment to this file, ITRD has a

role. Is there a specific pot allocated for it? No, but there are significant

resources in, probably, three departments as well as the Premier's office who

are working on this.

MS JONES: The trip that the Premier and the Member for Lake Melville

would be on right now to Berlin, dealing with issues around 5 Wing, that money

would not come out of the Department of Labrador Affairs. It would come out of

where?

MR. TAYLOR: In all honesty, I cannot answer that question. The Premier's

office is the lead on this. Do not hold me to this. Probably the best thing is

for me, if you want me to, to get an answer and provide it to you later on that.

The Premier's office is engaged in this, so one would expect that some of it

will be covered from the Premier's office. Given that the Parliamentary

Secretary is involved in the trip, then one would assume that his travel would

be charged against Labrador and Aboriginal Affairs, but I cannot give you an

honest unequivocal answer to that right now.

MS JONES: That is acceptable.

Also, there was a motion put forward in the House of Assembly by the Member

for Lake Melville, passed unanimously and supported by the government, that

there would be an all- party committee established to look at 5 Wing Goose Bay

and to promote it as a base for NATO training. Can you update me as to where

that is, when the committee is going to be appointed, how the committee is going

to be funded, and what involvement they will have in any future meetings or

activity that will be around the base issue?

MR. TAYLOR: As you can appreciate, that Private Member's Motion was

about two weeks ago, as I recall, maybe two or three weeks ago, so all the

details around how that is going to be engaged have not yet been worked out. We

have had some discussions with officials and some politicians on how all of us,

in our various capacities, are going to go forward on this strategy. The

all-party committee will be struck in the not-too-distant future, and the

decisions related to the funding of that, I guess, will be determined once we

know what the roll of the all-party committee will be, how much involvement it

is going to have, how much travel is going to be associated with it, and what

have you.

That is, for lack of a better way of putting it, a bit of work in progress

right now. We have gone a fair ways down the road towards finalizing our

strategy, our go-forward strategy on 5 Wing Goose Bay. We are moving on that all

the time, but how that is going to engage the all-party committee will become

clearer in the near future.

MS JONES: Back in the fall, the Public Utilities Board held hearings

based on a proposal put forward by Hydro to increase rates in Labrador,

primarily in the Labrador West area and on the South and South Coasts. Did you

make any representation to the Public Utilities Board hearings on behalf of the

people in Labrador, to ask them not to increase those rates?

MR. TAYLOR: No.

MS JONES: Will you put forward, to your government, the option of

freezing the rates in Labrador, especially on the North and South coasts, at the

current levels until there is a longer term solution to the energy problems up

there?

MR. TAYLOR: All I can tell you right now is that tomorrow there will be a

meeting between myself, Minister Byrne and others, on the issue of electricity

rates in Labrador.

MS JONES: In Labrador West, I think that is.

MR. TAYLOR: Yes, you are right.

We will be involved in that meeting. Where we go from there, we will see

after tomorrow. I cannot say yes or no to that question right now.

MS JONES: Because we did put forward, to the Public Utilities Board and

to Newfoundland and Labrador Hydro, an option that would see the diesel rates

frozen in the Province at the levels that they are. In the last two applications

by Hydro, we were successful in not having rates increased. This time, however,

they have made a decision to increase them. Right now the people in those areas

pay the highest rate for electricity of anywhere in the Province and now they

are going to pay even a higher rate based on this recent increase. I can only

urge you to take forward to your government the need to, at this time, do

something to stabilize those particular rates at the levels they are until there

is a longer term solution found.

The Minister of Mines and Energy indicated in the House a couple of days ago

that there was an energy plan being put in place for the Province. Will that

plan involve long-term strategy for diesel customers in Labrador and will there

be significant consultation in Labrador around that plan?

MR. TAYLOR: Far be it from me to speak for the Minister of Mines and

Energy, or Natural Resources I should say. All I can tell you is that the plan,

as he said in the House here yesterday I believe it was, the work to develop an

energy plan will be fairly broad in scope and will look at issues related to

hydro power, wind power and others - well, natural gas was one of the other ones

that he has talked about - with the objective being to eliminate our dependance

on diesel generated power. How that fits in within the various parts of the

Province that may have a few options, I suppose, outside of diesel power,

remains to be seen. I think that it might be better if you put that question to

the Minister of Natural Resources.

MS JONES: As the Minister for Labrador Affairs, are you consulted by all

departments on initiatives that are relative to Labrador?

MR. TAYLOR: Yes.

MS JONES: You are? Okay.

Were you consulted with regard to the Labrador Marine Services before a final

decision was taken?

MR. TAYLOR: As you know it was a Cabinet decision, so every minister

would have been consulted.

MS JONES: Outside of Cabinet, were you asked to put forward any

particular view, perspective, or submission, based on your input from people in

Labrador?

MR. TAYLOR: I am not sure that I understand the question.

MS JONES: When it gets to Cabinet usually it is a recommended solution by

the minister or the department. Were you consulted prior to Cabinet, as to what

your view or opinion was on how marine services should be conducted in Labrador?

MR. TAYLOR: Yes.

MS JONES: You were?

MR. TAYLOR: Yes.

MS JONES: Obviously you support the fact that the Labrador Ferry Service

will now operate from the port of Lewisporte, and will be done so at an

additional cost of $1.7 million to the Labrador Fund. How do you justify that

unnecessary expenditure to the people of Labrador?

MR. TAYLOR: Well, the number is not $1.7 million, the cost to the

Labrador Transportation Initiative Fund is not $1.7 million.

MS JONES: Would you like to give me the breakdown of the full cost then?

MR. TAYLOR: I do not have the numbers in front of me right now, but again

the Minister of Transportation and Works will be in front of the committees

sometime next week, as I recall, and he will be more prepared to have the

figures in front of him to answer those questions. With the provision of certain

government services, there is always a balancing act, for lack of a better way

of putting it, and there are a substantial number of people in Labrador who

wanted a reconfigured ferry service, and we have responded to that.

MS JONES: I met with the town of Happy Valley-Goose Bay, the town of

Labrador City, the Chambers of Commerce in Central Labrador, Western Labrador,

Southern Labrador, and the Labrador Straits. I have discussed it with the

Labrador North Transportation Committee, and I have met with all the Economic

Development Boards in Labrador, all of which supported maintaining passenger

services in Goose Bay and Cartwright, and not at Lewisporte, and also supported

the position that there be no additional monies spent out of the Labrador

Transportation Fund.

Minister, would you like to justify to me what groups you consulted with in

Labrador that supported Lewisporte as an option?

MR. TAYLOR: We had representation from individuals and from organizations

in Labrador who suggested that they would like to see an option. I cannot

provide you with it right now, but if you listen to the response out of Labrador

to the decision that was taken, I think that the response has been generally a

positive one for the most part. The Member for Labrador West certainly supported

the decision and the Member for Lake Melville supported the decision. As for

these organizations, some of them were vocally opposed to it for quite a period

of time, prior to the decision and around the decision, but others have decided

to oppose it just recently. Whether their opposition was there before I would

not be able to say, but it was not apparent anyway.

MS JONES: I have named probably about fifteen groups in Labrador that I

have had discussions with, face to face, with the exception of one which was not

a face-to-face meeting, and none of them indicated to me any support for

Lewisporte, although you are saying that you did have representation. Would I be

able to ask you to table the representation that you have so that I may have

copies of it, please?

MR. TAYLOR: You can ask, but I am not sure I can provide it. I will have

to see, that is all I can say right now.

MS JONES: Okay.

Are you one of the trustees, I should say, to the Labrador Transportation

Initiative Fund? Are you one of the ministers that makes decisions on how that

money gets spent and then signs off on it?

MR. TAYLOR: Yes. We are on the board, I guess you could call it.

MS JONES: It is my understanding, then, that the ministers of the fund,

and you would be one of those people, have rejected the idea of building a road

into the community of Williams Harbour at a cost of approximately $5 million. My

understanding is that all the engineering work was completed, the environmental

assessment was completed, and that the road was due to be tendered this year.

Would you like to explain to me why you have denied the construction of that

road and rejected it?

MR. TAYLOR: Basically, we came down to a cost item and it did not appear

to be a viable option at this time, anyway.

MS JONES: The Labrador Transportation Initiative Fund is a fund that is

designed specifically for transportation in Labrador. Minister, how do you

justify using money from that fund to subsidize a ferry service in Lewisporte,

yet deny people of Labrador roads?

MR. TAYLOR: First of all, the fund, as you said, is for transportation. I

do not know that it is transportation in Labrador. It is transportation for

Labrador people, that is what the fund is for, and the decision is to provide

people within Labrador an opportunity to decide on which route they want to

travel. That is the basis for the decision.

MS JONES: It is my understanding that last year that fund grew. The

interest accumulated on it was $4.5 million, which was almost enough interest

alone to build the road into Williams Harbour. I guess I would ask you now to

reconsider your decision and to use the money to connect another community in

Labrador by road as opposed to wasting it on subsidizing jobs and an unnecessary

ferry service in Lewisporte. I think that if you came to Labrador and sat at the

same table with the leaders, as I have, you would get an entirely different

message than you are getting from the Member for Lake Melville and the Member

for Labrador West. They have yet to provide to me the groups they have consulted

with and where they have gotten their support, other than from individuals on

the street who would like to have a choice in how they travel. Other than that I

have not seen any of those individuals or anyone in your government substantiate

where the support came from, out of Labrador, to put this marine service back in

Lewisporte. It did not come from the leadership in Labrador, and I think if you

came and met with them you would find that out. I ask you to reconsider your

decision on the Williams Harbour road.

My other questions are around the Voisey's Bay monitoring. Wally did touch

on it. This is a big issue in Labrador. Actually, one of the biggest proponents

of it was your colleague, the Member for Lake Melville, when he was the Mayor of

Happy Valley-Goose Bay. At that time, he said that he did not want a Voisey's

Bay monitor that would be in any way affiliated with government, that it should

be an arm's-length person, that they should be independent of government in

order to monitor the project. I would like to know from you, minister, what

discussions you have had with regard to a Voisey's Bay monitor? How do you see

this position playing out in Labrador and when do you think we can have the

position in place?

MR. TAYLOR: I cannot tell you exactly when we can expect to have the

position in place. We had hoped to have a new position created. I guess I can

say we had hoped to have it done by now, but it is not done. I have had a number

of discussions with Minister Byrne on that matter. An assessment of what is

needed has been done and there have been discussions between various officials,

ministers, and the parties involved with monitoring Voisey's Bay Nickel, for

lack of a better way of putting it. We hope to have a position in place in the

not too distant future that will be, hopefully, more than a monitor and

something that we would like to see. I can only tell you what we would like to

see, but whether we are able to achieve it or not - obviously, as you know, the

agreement, the adjacency principle, is something that was committed to by Voisey's

Bay Nickel in the Impacts and Benefits Agreement, as I recall, not in a

contractual arrangement between Voisey's Bay Nickel and the Government of

Newfoundland and Labrador. That presents a set of challenges, but we,

nevertheless, hope that we can have something like a compliance officer who

ideally would be independent. That decision and an announcement on that is

something that we hope Minister Byrne will be able to make in the not too

distant future.

MS JONES: We are getting into the end of May and soon into June and most

of the hiring for Voisey's Bay will be completed, in my estimation, within the

next thirty days. If we are going to have a monitor there, to try to monitor who

is being hired and who is filling those jobs, I think it is getting a little

late for that right now, and I am somewhat worried by that.

You made a commitment in Labrador, your government did during the election,

that there would be a mining office established in Labrador West. Is that

proceeding at all?

MR. TAYLOR: Again, I think you should ask Minister Byrne that. To my

knowledge, there has not been any change in government's view on having a

senior official stationed in Labrador West, but exactly how that will be done,

when that will be done, and who that will be, is somewhat, I guess, like the

Premier's office in Happy Valley-Goose Bay, something that we hope to get to

in the not too distant future.

MS JONES: We have had a problem in Labrador for quite a while, I guess,

with regard to the recruitment and retention of allied health professionals,

nurses and teachers primarily. There was a program in place for recruitment and

retention bonus that applied to the South Coast and the North Coast regions of

Labrador. Is that bonus in effect and does it still apply to the same groups?

MR. TAYLOR: There has not been any change that I am aware of.

MS JONES: So the bonuses will still be provided to everyone from Lodge

Bay to Nain? Is that my understanding?

MR. TAYLOR: All I can tell you is, there has not been any change that I

am aware of.

MR. DUTTON: Whichever communities were covered previously are still

covered and it is the same amount of money, as far as I am aware.

MS JONES: Previous to the last budget, I think they were all covered,

teachers, nurses, and social workers.

Just a couple of more questions. I was surprised to learn that the Labrador

Travel Subsidy for the High School Athletic Association Federation programs has

been cut for Labrador. Do you want to tell me a little bit about why that has

been done?

MR. TAYLOR: I would like to, but I cannot give you an answer to that,

Yvonne. I can get you an answer, but I cannot give you one right now.

MS JONES: Because I have some real concerns about this program. Prior to

1996, kids in Labrador were unable to compete in high school sports because

there was no subsidy program. Actually, we shared a program with the Northern

Peninsula, with your district, that was $5,000 a year at that time. Since then,

we have increased that program for my district and part of your district to over

$50,000 a year. Now, I understand, that there has been a cut in the program. I

do not know if the cuts apply directly to my area or if they are to the Labrador

West and Lake Melville areas or to the North Coast, but there is a fund that is

administered just for Labrador for high school students to get out to sports

meets, and they are entitled to go to two mandatory meets a year. My guess is,

with the cut in funding either some of the mandatory sports are going to be

removed or one of the areas of Labrador will not have their kids traveling to

sports meets in the future. I would like to have an answer to it and find out

where the cut is being applied.

MR. TAYLOR: I can followup on it and provide you with something on it

tomorrow. That is probably the best way to deal with that.

MS JONES: Okay.

My next question is with regard to the auditorium in Goose Bay for the

school. It is my understanding that there is $300,000 approved by the federal

government for this auditorium. I am wondering if you guys have been having any

discussions with the feds, and do you intend on putting any money into doing

that project in the next twelve to twenty-four months? I guess that is my

question.

MR. TAYLOR: To the first part of the question, we have not had any recent

discussions with the feds on that funding, on the $300,000. To the second part

of the question, do we hope to do something with it in the next twelve to

twenty-four months, the answer to that is yes.

MS JONES: Because I am not sure how the federal funding works, but I was

under the understanding that there was a time limit on using the funding.

MR. TAYLOR: Yes. It was implied that there was a time limit, but we are

thinking that if we commit our share and if we can see fit to go forward with

this, if we are going to commit to $2.5 million, then Mr. O'Brien should be

able to scrounge up the remainder, since they did commit to it initially.

MS JONES: In the last Budget you guys cancelled a school in my district

for L'Anse au Loup. As the Minister of Labrador Affairs, have you had any

discussions with the Minister of Education on that? Have you been approached by

any groups in that area with regard to plans and what will happen in the future

with that school?

MR. TAYLOR: Yes, and yes. We have had discussions on it. What will happen

to the school, obviously, first of all the board will have to - as you know -

make that decision and/or recommendations to recognize the sensitivity around

it. It is the school that I went to, so I am well aware of the situation there.

Given the enrollment and the enrollment projections at this time, it was not

something that we could see funding. The decision as to what happens in the

short to medium and/or long-term is a separate decision that will have to be

taken in consultation with the board.

MS JONES: Are you aware if there has been any costing done on what it

would cost to bus the kids from that community to another school?

MR. TAYLOR: No, I am not aware that there has been any. I do not believe

there has been any costing done on that.

MS JONES: The Minister of Transportation announced that they were not

going to clear eighty-three kilometres of road in my district. They were not

going to snow clear it. There is too much snow there apparently.

I guess my question is: Is there any long-term plan that you have been

engaged in as the Minister for Labrador to deal with that

section of road? Last

year there was a tender call to put in a winter road system in two sections as a

pilot project to see if it would work, because the problem is in the rock cuts.

The problem is not anywhere else. It is an area that when you get into bad

weather you cannot do anything there. If you end up with a storm for three days,

you have a storm for three days, you just have to stay out of it. But, when the

storm has cleared the problem areas are always in the rock cuts. No doubt, it is

a problem that occurred with the engineering or the design of the road. I guess

my question is: Is there any plan to deal with this in the short-term or is

government just satisfied to say we will not clear the road in that area for the

next seven years?

MR. TAYLOR: To the last part of the question, no. It is not a matter of

government being satisfied to say we are not going to clear it for the next

seven years. The decision - again, I think probably you should bring this, and I

am sure you will, bring this question up with the minister. But we recognize

that this issue has to be addressed and that we cannot have a road closed for a

substantial period, a year indefinitely. Suggestions, such as winter roads

around the cuts, or widening of the cuts - somebody even suggested that tunnels

be built over the cuts, similar to on the Upper North Shore of Quebec, might be

options. All I can tell you at this point is that there - Is there a plan to

deal with this? No. Is there an intent to develop a plan to deal with this? The

answer is yes.

MS JONES: Will that be this year?

MR. TAYLOR: What do you mean?

MS JONES: This construction year, will there be anything done there this

construction year?

MR. TAYLOR: Not to my knowledge.

MS JONES: Okay.

The study on the Strait of Bell Isle tunnel, is that being funded through

your Department of Labrador Affairs?

MR. TAYLOR: My understanding it is out of Transportation. The provincial

share is out of the Department of Transportation.

MS JONES: What do you hope to accomplish in the short term by doing a

study on the tunnel?

MR. TAYLOR: Try to determine if we are all foolish or not, for lack of a

better way of putting it.

MS JONES: I can answer that for you.

MR. TAYLOR: Yes, but you are short-sighted.

MS JONES: You think so, do you? Go ahead, answer the question.

MR. TAYLOR: In all seriousness, it is to determine whether or not this is

a viable option for the longer term. Nobody expects that there is going to be a

tunnel built across the Strait of Bell Isle within the next five years. What

this is about is determining whether or not this is something in the long term

that makes sense for the Province of Newfoundland and Labrador, recognizing that

there will, at some point in the not to distant future, be a completed road

across Labrador and a completed road along the Lower North Shore of Quebec. When

those two things occur there will be significant traffic that is not now moving

in either of those places. Given those two realities, when they become

realities, would a tunnel make sense?

Suggestions by some people that you are building a tunnel to a dead-end road

- obviously, nobody would want to build a tunnel to a dead-end road. We

recognize that the only way a tunnel would ever make sense is if both of those

pieces of road were completed. I guess that is the basis for the evaluation of a

tunnel. If you are going to talk about something of such a size as that, a

project of such a size as that, then you do not start talking about it two years

before you are going to do it. The P.E.I. bridge was talked about twenty years

before it was completed.

MS JONES: I was going to say, I have lived in Labrador for thirty-five

years and from the time I can remember this has been talked about for quite a

long time.

MR. TAYLOR: But it was not talked about in the context of what it is

being talked about now.

MS JONES: Well, it was started at one point.

MR. TAYLOR: It was talked about before, in the 1970s, as a -

MS JONES: It was started in the 1970s.

MR. TAYLOR: - place to haul cables through in order to run hydro electric

power from Churchill Falls to the Island. That was the sole reason for its

attempt back in the 1970s.

MS JONES: Yes, you are right. It has been started and there is a long

history of this in Labrador.

Just on the financial part again. The money is not coming out of the Labrador

Transportation Fund, is that my understanding for this study