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April 25,

RESOURCE COMMITTEE

Pursuant to Standing Order 68, Christopher Mitchelmore, MHA for The Straits

White Bay North, substitutes for Lorraine Michael, MHA for Signal Hill Quidi

Vidi.

The Committee met at 9:00 a.m. in the Assembly Chamber.

CHAIR (Brazil): Ladies and gentlemen, I want to welcome everybody to the

Budget Estimates review hearing for the Department of Innovation, Business and

Rural Development.

Before I do our introductions, I am going to ask for a motion to adopt the

minutes from the Department of Tourism, Culture and Recreation meeting of April

23, 2013.

Moved by the Member for Fortune Bay Cape La Hune; seconded by the Member

for The Straits White Bay North.

All those in favour, signify by saying aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

Motion carried.

On motion, minutes adopted as circulated.

CHAIR: We would like to welcome the Committee back, the Clerk's Table,

the minister and his staff.

We will do the formal part by asking the Committee and their staff members to

introduce themselves and then I will ask the minister and he can get his staff

to introduce themselves.

I will note, too, obviously, the notice from the Broadcast Centre will be on

the minister but if the minister passes the question to a staff member, that the

staff member identifies themselves as they answer the question, please, so they

can be recorded.

We will start introductions with Mr. Bennett.

MR. BENNETT: Jim Bennett, Member of the House of Assembly for the St.

Barbe District.

MS PLOUGHMAN: Kim Ploughman, with the Liberal Opposition Office.

MR. MITCHELMORE: Christopher Mitchelmore, MHA for The Straits White Bay

North.

MR. MORGAN: Ivan Morgan, NDP Caucus Office.

MR. POLLARD: Kevin Pollard, MHA, Baie Verte Springdale District.

MR. CROSS: Eli Cross, MHA, Bonavista North.

Mr. Chair, if I could intervene, just to cover us, I would like to nominate

the current member from the Opposition as sitting as the Vice-Chair, in case

something would happen to you before the meeting ends today.

CHAIR: No problem.

Do I have a seconder for that?

MS PERRY: Seconded.

CHAIR: The hon. the Member for Fortune Bay Cape La Hune.

All those in favour of Mr. Bennett as serving as Vice-Chair, signify by

saying aye'

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

Mr. Bennett is Vice-Chair.

MS PERRY: Tracey Perry, Fortune Bay Cape La Hune.

CHAIR: Minister.

MR. HUTCHINGS: Thank you, Mr. Chair.

What I will do now is just go through and ask my staff to introduce

themselves.

CHAIR: Okay.

MR. MEADE: Brent Meade, Deputy Minister of Innovation, Business and Rural

Development.

MS MALONE: Rita Malone, Assistant Deputy Minister, Regional and Business

Development.

MR. GENGE: Daryl Genge, Assistant Deputy Minister of Trade and

Investment.

MS MACLEAN: Heather MacLean, Director of Communications.

MR. DAWE: Barry Dawe, Assistant Deputy Minister, Ocean Technology.

MR. PLOUGHMAN: Mark Ploughman, Assistant Deputy Minister, Innovation and

Strategic Industries.

MR. JANES: Glenn Janes, CEO, Research & Development Corporation.

MR. ROCKWOOD: Gerald Rockwood, CFO of Research & Development Corporation.

MS HANRAHAN: Denise Hanrahan, Departmental Controller.

MR. GUEST: Kevin Guest, Minister Hutchings' EA.

CHAIR: I would like to thank the minister and his staff for the

introductions.

What I will note, too, is that on request of the minister, and I agreed to

it, we will start with the Research & Development Corporation. It is a small

section, with some staff here, if that is fine with the Committee members?

AN HON. MEMBER: (Inaudible).

CHAIR: No problem. Perfect.

I will outline again for those Committee members who may not be aware, the

process I will use is I will give twelve to fifteen minutes, unless you are

close to the end of a subhead, and then we will stay to that point but we will

go back and forth to keep the continuity going.

I will call for the start of subhead 7.1.01.

I am going to go with Mr. Bennett. You can start, please.

MR. BENNETT: It is common that the ministers sometimes like to make a

statement at the beginning. I am certainly open to that. If you want to do an

overview I am content to jump in, but if you want

CHAIR: Sure. Mr. Minister, if you would like to do a little two-minute

synopsis (inaudible) you are with the budget.

MR. HUTCHINGS: No, I am ready to go. If you want to jump in and get

started, that is fine with me.

MR. BENNETT: Sure.

Actually, what I would like to ask are more general questions about the

department generally to get a broader picture.

MR. HUTCHINGS: Okay.

MR. BENNETT: If I could ask the minister: If we look at Innovation,

Business and Rural Development, approximately what proportion of the department

would you say is for each?

MR. HUTCHINGS: Are we talking about the Research & Development

Corporation?

MR. BENNETT: It is a diverse department, but the department generally. It

says Innovation, Business and Rural Development. I am interested to know: How

much would you see as being innovation? How much would you see as being rural

development? How much would you see as being business?

MR. HUTCHINGS: It is just, I would say, very balanced in terms of the

overall approach, whether it is human resource directed or it is budget

directed, a very balanced approach.

MR. BENNETT: Somewhere in the order of one-third each or one-quarter

each?

MR. HUTCHINGS: I would think it is fair. Is there anything further from

you, Brent?

MR. MEADE: I would think, hon. member I do not have the exact

breakdown, but if you look at the lines of business in the department, the staff

allocation and resources, it would be fairly balanced. The regional development,

rural development component, would have a larger staff complement because of the

regional reach of the department. We have twenty-two offices.

Of our department now we have approximately 177 employees. Almost ninety of

them would be throughout rural Newfoundland and Labrador. We would have more

staff resources allocated to the regional development mandate. Other aspects of

it, whether it is our programming components, our other ways that we support

business development, it would be fairly balanced.

MR. BENNETT: The problem or difficulty that I have in being limited - if

I am limited, and I do not think that I am - to what we find on page 11.16 is

that this is just a total. We do not have any breakdown.

To just be limited to ask questions on it, I am not sure how we would do

that. Would we get spreadsheets from the department to identify what was each

grant, what was each subsidy? I do not understand that to be the intent of

Estimates.

MR. HUTCHINGS: Are you asking for a list of those grants and subsidies?

MR. BENNETT: No, you have asked that we deal with the Research &

Development Corporation first; however, how does that interact you are asking

us to deal with the final number instead of dealing with the components. If we

deal with the final number that means we have to go back to the beginning and

try to pick off every little one, which I think anybody can do the math, anybody

can do the accounting.

Is it a good use of everybody's time just to talk about the Research &

Development Corporation and say this is the page that you have? You have an $87

million budget, and ten to twelve lines. There is no detail. My preference is to

ask generally about the department and all of the other areas that the

department works in.

MR. HUTCHINGS: Well, any of the line items there for Estimates, you are

free to ask in regard to any information related to that budget. We are going to

try and answer those questions for you, but the RDC is a Crown Corporation. It

is guided under a specific piece of legislation. As an entity, it reports to me.

That is why we are here in Estimates. Again, if you have questions on any of

that we will try our best to answer them.

MR. BENNETT: So what does it do?

MR. HUTCHINGS: The RDC?

MR. BENNETT: Yes.

MR. HUTCHINGS: RDC was basically started by this government to look at

driving research and development in the Province, and in doing that, looking at

leveraging through the industry and business community, research and

development. Most jurisdictions that have done this recognize there needs to be

a link between industry, certainly the sectors in terms of driving specific

research and development. As well, it is connected to academia. We have done a

number of projects with industry and the various post-secondary institutions

here in the Province.

Ultimately, at the end of the day, it is about building the industries we

have and about diversification and sustainability in regard to new technology,

the incubation of new ideas and bringing them forward in various sectors of our

economy. The oil and gas sector, the fishery. Other industries continue to grow.

Certainly, Norway has a great model in terms of research and development and

what they do. We have a board of directors that is certainly very diverse, and

various attributes in terms of specialities. So we use that and that expertise

to drive, as I said, research and development here in the Province to build a

broader base from an economic point of view, through industries as we continue

to grow our Province.

MR. BENNETT: Minister, does the Research & Development Corporation work

on specific projects?

MR. HUTCHINGS: It would be application based, and it would be based on

call for proposals. Yes, it would be specific projects.

MR. BENNETT: Does that mean the corporation provides funds to others to

do R&D, or does it do the R&D itself?

MR. HUTCHINGS: Just before I go to the CEO here, what we would do is

enter into our contract arrangements with that applicant and funds would flow at

various stages of that as research and development is done. There would be

milestones. Those milestones will be hit, and funds will be allocated based on

those milestones, but it would be partnerships.

As an example, I remember we did the research chair at Memorial with Statoil.

I think Statoil contributed $1 million. The RDC did $1 million, as well as

Memorial made the contribution. Collectively, if my memory serves me correctly,

that was about accessing and maximizing oil in a particular oil reserve, or

reservoir, and how we would maximize output of that. That was about that

technology.

This approach, too, is about applied research. It is about identifying

research in a particular industry. Then that could be immediately applied. In

this particular case, it would mean additional extraction of oil.

CHAIR: Excuse me, sorry. Do you have a BlackBerry, iPad, or something

there? There is something with your microphone.

MR. HUTCHINGS: Okay, I will turn it off.

CHAIR: Leave it under the table just to see. The Broadcast Centre is

having some real problems with your mike.

MR. HUTCHINGS: Okay, I will shut it off.

CHAIR: Speak a little bit into it; they have the light on there now, to

see if it is

MR. HUTCHINGS: Okay.

CHAIR: If I do not get a phone call, I am assuming you are good. If not,

you will have to share with the deputy minister.

MR. HUTCHINGS: Okay. Where were we?

OFFICIAL: You were giving an example of Statoil.

MR. HUTCHINGS: Yes, okay, Statoil. That is just as an example of one

project in collaboration with industry, academia, and with the Research &

Development Corporation.

As CEO, Glenn, I do not know if you have anything to add to that in terms of

the role of the RDC.

MR. JANES: Yes, what the minister said is accurate. What we do is we fund

and provide funding to third parties. In some cases the applicant is academia;

in some cases it is business. They are working on a defined and specific project

that has a clearly defined plan and milestones, as was mentioned.

There is a strong focus on seeing that there is a tie through and an

application driving this towards an outcome where it is going to have an

economic impact, either near term or longer term, no matter what the project is.

MR. BENNETT: Can you say how many projects are active right now?

MR. JANES: We have done, in the past three years, 370 projects. Because

most of them are multi-year projects, many of those, a larger percentage are

still active. I think we finished in the neighbourhood of just less than 100,

but many of them are multi-year projects. Given our relatively short history,

many of those are ongoing, but in the upcoming year you will see, as years go

by, probably a third to a quarter of those close every year.

MR. BENNETT: Are you able to provide a list of the projects that have

been completed, that you just referred to and the ones that are ongoing?

MR. JANES: Yes, we are able to provide a list, but I would also point out

to you, all of them are publicly disclosed. Once they have been released and

have been contracted, they are actually announced and that information is

typically available on our Web site.

MR. BENNETT: However, if they are announced, that does not necessarily

mean you know when they are completed and what stage of completion they may be

at.

MR. JANES: Okay. Yes, that is correct. That can be provided as well, but

I would say as well that the larger projects when they are completed, it is also

acknowledged publicly that they are completed. Things like some of the

infrastructure buildings, like the Ocean Science Centre or some of the ones for

the Centre for Arctic Resource Development will actually be publicly

acknowledged when they are finished.

MR. BENNETT: What would be a typical did you say a contractor would do

this work?

MR. JANES: No. There would be a contract in place to hold people to

account for the work they are going to do and to disburse funds against it. The

applicant would be a business or academia. The business is looking to do

something to further improve their business and their competitiveness by

undertaking R&D. Normally, they are doing it themselves. Occasionally, they can

bring in a contractor to help them do that work.

In the case of an academic institution or post-secondary institution, it is

their own staff, who are members of the academic institution, who have a

specific project that they want to do and are applicant to do it and they are

the performer of the research.

MR. BENNETT: Do you have a running, for want of a better word I will say

a spreadsheet, or a total of the ones that you refer to a number of

300-and-some in the last three years or so. Is that readily accessible that you

can print it off and provide it?

MR. JANES: It is, yes.

MR. BENNETT: Does there come a time when something has started and then

it does not go so well, or it does not get finished?

MR. JANES: Yes, that happens. There are a small percentage of cases, but

we have had cases that milestones have not been met; or, willingly, the project

proponent have come forward and said: We had a plan that had, for argument sake,

five steps but we realize when we get to step two or step three it is not going

to work. So there is no point in continuing for us to spend our money, and for

you to continue putting more money into this. We have had select cases of that

happening, but that I think is just good project management.

MR. BENNETT: If a proponent applies for funds under a project such as

this, does government have any recourse if the work is not done?

MR. JANES: We do have a contract with each and every applicant that has

in it recourse in case of misappropriation of funds or failure to meet deadlines

and milestones. There is recourse there. The specifics would be dependent on the

individual applicant and the contract. Each and every project has a contract,

has expectations that a client is held to.

MR. BENNETT: Mr. Chair, I may have used up my time; I am not sure where I

am.

CHAIR: No, you still have four minutes.

MR. BENNETT: Oh, okay.

How many are active right now that are not yet completed?

MR. JANES: I do not have the exact number here with me. I can certainly

get it for you. I would say in the neighbourhood of 300.

MR. BENNETT: Are you able to give us some sort of a sense of how many of

these may be fisheries related?

MR. JANES: Yes, we can. Again, I would not want to do it here in haste

but we can certainly with the information we have, we can go through and

prepare information, along those lines.

MR. BENNETT: How many people work at the R&D Corporation?

MR. JANES: At present there are thirty-six, if I am correct.

MR. BENNETT: Generally what do they do, starting with yourself?

MR. JANES: I am the CEO. I am responsible for all facets of the

organization and its operations. I am accountable to our owner, which is

government, through our board of directors, which is appointed by government.

Everything within the organization would fall below that and below me. I am

responsible for all the functions of the organization.

In regard to the balance of the staff, the majority of our staff are engaged

directly with client interaction. They are project or what we call account

managers. They work with a client who has come in with a proposal. They assist

the client with a proposal, if they have to. Importantly, they vet the proposal

and determine whether or not it meets the mandate of the organization and what

the merits of it are. They do an assessment, in short, on the proposal. The

balance of our staff does that and come to a view of whether or not this is a

project we should support or not. That is the majority of the staff.

Because every project is divided into milestones and you have to hit a

milestone to get a payment, the complementary part of that as well is the

financial staff who have to track every project, where it is, how it is

progressing, and disbursed payments based on milestones. You may have several

hundred clients but that means you have thousands of payments to be able to

track and monitor.

Then we have several other people who carry and cover basic functions within

the organizations, be they HR, communications, or IT, basic functions that are

needed to make any entity run and function; because we are responsible as an

organization and as a Crown corporation for all of those aspects of the

organizations as well, to make it function.

MR. BENNETT: How many of these I will call them clients are in the

public sector, and how many are in the private sector? Are you able to provide

some sort of a breakdown by sector, subsector, in the private sector,

businesses, what they do

MR. JANES: Certainly.

MR. BENNETT: whether it is forestry or fisheries, or agriculture or

tourism or whatever?

MR. JANES: Absolutely.

MR. BENNETT: Presumably, you may well have this at your fingertips?

MR. JANES: It is easy for me to prepare it and give it to you that way.

Coming in this morning, I am aware that questions could be asked along any

lines. We certainly have the information from top to bottom; it is just a matter

of preparing it along the lines required by the questions that are asked.

MR. BENNETT: Do you have in your database, or where you are working from

can you see what would be the geographic overlay in the Province, where the

funds are going geographically?

MR. JANES: We know where every project is occurring; yes, we do.

For instance, for our business projects, by dollars, over a third of those

are off the Avalon and throughout the Province. When it comes to the academic

side, a greater proportion of those would be seen within the Avalon, for the

sheer reason that Memorial University is housed primarily in St. John's. So

given that client and the volume they do, the balance of the expenditure that we

make with them actually occurs in the Avalon Region.

MR. BENNETT: Subject to getting the information from the CEO, we would

have no more questions on R&D (inaudible) except to look at the stats it seems

to me like they are well organized, and he insisted the minister is right.

CHAIR: That can be a dialog between you and the minister at a later date,

once the information is shared.

Thank you, Mr. Bennett.

Mr. Mitchelmore.

MR. MITCHELMORE: Under the Research & Development Corporation, basically

the only line item that I see is under the Grants and Subsidies. Last year there

was $23,786,700 appropriated, and that seems to be what was spent, as well, even

what was budgeted. Were there applications that were rejected because of lack of

funding? Because it seems like everything that was provided was spent.

MR. HUTCHINGS: Before I go to the CEO, the method of dispersing the

funds, as you indicate, is a grants-based process, because any particular

project or application could flow over up to five years. So, as a Crown

corporation and as a grant-based organization, monies would flow from one fiscal

year to the next to allow allocation for those funded projects that are multiple

years.

Glenn, I will just turn it over to you, if there is anything further.

MR. JANES: If I am clear, we have subscribed all the funds that have been

provided to us. There have been projects we have declined. Simply put, given the

resources we have, we always select the best projects.

MR. MITCHELMORE: So of the $22 million, because there are less funds

going to Research & Development Corporation this year, how much of that is

already pre-committed based on your multi-year planning? You would know

basically that you have maybe $10 million or $15 million already pre-committed

for this year based on your agreements. What percentage of that is already

committed?

MR. JANES: I do not have the exact figure. We have pre-committed a small

percentage of that at the moment because we are conservative. In saying that,

the monies we have been provided with previously have been fully committed, and

perhaps a little more so, but we strike a balance.

If we are given resources on one hand, we make sure we hold them and we have

them to discharge and cover off any responsibilities or commitments and

contracts we have. We will now approach this current year in the same manner, in

taking the resources we have and judiciously allocating them against what we

think are worthy projects.

MR. MITCHELMORE: I would certainly like a list of the funds that are

already committed based on your ongoing projects.

You said you have thirty-six employees at RDC, yet there is no allocation. We

have no idea as to what the cost is to these employees. This is through separate

record keeping. How do you operate and pay for your actual staff, facilities,

and operations?

MR. HUTCHINGS: All operations are paid through the funding through the

provincial government, the grant we provide every year for budgetary purposes.

That grant is allocated here. All operations at the RDC would operate out of

that funding that we allocate.

MR. MITCHELMORE: So how much funding is actually available for research

and development activities? What is actually used for the thirty-six staff and

the facilities and operations, I guess, is what I am asking?

MR. HUTCHINGS: I think out of $22 million, it is about $17 million or $18

million. Glenn, do you want to go through that?

MR. JANES: Yes, I can.

For the upcoming year, we are expecting $17.7 million as what is forecasted

in our budget to flow out directly into the companies or into the other

performers of R&D. Our operational piece will be salaries and benefits of

approximately $4 million; purchased services are slightly less than $2 million;

professional services, approximately $800,000; and there is an amortization of

assets of $250,000 or $260,000, approximately.

MR. MITCHELMORE: Okay. Those numbers, I guess, to me do not add up to the

grant and subsidy that is provided of $22 million. That is much more than $24

million that has been noted.

Is it possible to get, or be provided audited financial statements from the

Research & Development Corporation from last year?

MR. JANES: Yes. There are quarterly statements prepared and annual

audited financial statements prepared and filed.

MR. MITCHELMORE: Okay.

AN HON. MEMBER: (Inaudible).

MR. JANES: That is correct. Our auditor is the Auditor General, which

means in this case they are our routine auditor. They audit our statements each

and every year. An Auditor General obviously performs more than one function,

but in this case they are our routine auditor.

MR. MITCHELMORE: Okay.

Were there any employees cut at RDC in this year's Budget?

MR. HUTCHINGS: Yes, there was. There was reduction in expenditures

related to salary and benefits of $474,500.

MR. MITCHELMORE: How many positions does that equate to?

MR. HUTCHINGS: How many positions was that, Glenn?

MR. JANES: That affected five full-time positions and seven positions in

total.

MR. MITCHELMORE: Were there any vacancies?

MR. JANES: No, there were not.

MR. MITCHELMORE: What were those positions?

MR. JANES: They were across a number of different areas. One was in

budgeting and finance side, one was a communications position, one was an

administrative position, one was a policy evaluation position, and off the top

of my head I am thinking what the fifth one is.

MR. MITCHELMORE: Is it possible to get the HR records for the Research &

Development Corporation since its inception as to staffing levels, their

positions, and where they are today?

MR. JANES: Yes.

MR. MITCHELMORE: Okay.

This Crown Corporation - and looking at how it has put into play it has a

board of directors. How many of the board of directors actually sit from your

department of IBRD, and who makes up this board?

MR. HUTCHINGS: Glenn, do you want to take us through that composition?

MR. JANES: Yes. We have two non-voting members on the board. Myself, I

would be one of them, and the ADM at the Department of Innovation judged to hold

the portfolio of Innovation. That is how it is cast in our legislation. Then,

the remainder of our board is appointed by the government, Lieutenant-Governor

appointments.

Our Chair is Jacqueline Sheppard, former Executive Vice-President in Talisman

Energy, originally a Newfoundlander. Our Vice-Chair is Alan Brown, who was a

retired executive from the oil and gas industry. He had been in the Province

working in Hibernia most recently before retiring and was the Executive

Vice-President of Suncor Energy in the Province and Atlantic Canada.

Other members of our board include: the CEO of the Saskatchewan Research

Council, Brian Veitch, who is an eminent researcher at Memorial University;

Terry-Lynn Young, who is a genetics researcher at Memorial University; and Hege

Rogno, who is a VP of Statoil in Norway. I think I have covered all the board

members.

MR. MITCHELMORE: Are there any vacancies on the board?

MR. JANES: Our legislation provides up to a maximum number of board

members. We are not at our maximum but we do have a sufficient number to conduct

our business and carry quorum. This has been deemed to be an appropriate number

of board members for our current functioning.

MR. MITCHELMORE: Okay.

Is there a minimum amount of research and development funding that you will

provide, and is there a cap on the maximum amount in which you would provide any

individual application?

MR. JANES: The minimum and maximums are determined by the programs. We

have twelve programs. Each program is publicly outlined and is provided a

minimum and maximum with that program. In rare and exceptional cases someone can

apply. I am thinking this is three or four cases possibly we have had to date,

that their request for an amount outside what is in that program that would

require a decision of the board and to review and sanction that.

MR. MITCHELMORE: Are there sectors of the economy which you will not fund

as research and development?

MR. JANES: No, there are not sectors that we will not fund.

MR. MITCHELMORE: Okay.

MR. JANES: Provided there is a demonstrable case, there is an economic

impact that is always a requirement of anything we fund.

MR. MITCHELMORE: You look at economic impact in terms of competition or

MR. JANES: We look at it in terms of where it will position the Province.

MR. MITCHELMORE: Okay.

MR. JANES: If it is an academic, is this technology relevant to this

Province? Does it align with the interests of the Province and where is it

likely to take us?

If you are a business, it is: How does this business assist the Province? How

does it take it forward, the business itself and the Province? How is it going

to further the competitiveness of this business, be that improved productivity,

new products or services, or other measures along those lines?

MR. MITCHELMORE: Have you received any applications on the fishery that

was approved last year?

MR. JANES: Sorry, if I could just be clear on your question: Have we

received any applications on fisheries that ?

MR. MITCHELMORE: Were there any applications for the fishery sector last

year, in last year's budget?

MR. JANES: Yes, there were.

MR. MITCHELMORE: What about the forest sector?

MR. JANES: Yes, there were.

MR. MITCHELMORE: What about mining?

MR. JANES: Yes.

MR. MITCHELMORE: Green energies?

MR. JANES: Yes.

MR. MITCHELMORE: I would like to have a breakdown, as my colleague, Mr.

Bennett, had made reference to, of where the funds are actually going. The

projects, the sector, and the dollar value and the status of what they are. I

think just for accountability and transparency, I would like to have that from

the inception of when the Research & Development Corporation was started until

it is right now, because we need to get best value when we are looking at

research and development. Can that be provided?

MR. JANES: Yes.

MR. MITCHELMORE: Okay.

There are things that were mentioned, like the centre for arctic research,

and others. Does the corporation invest in capital infrastructure or is it

solely just under R&D work?

MR. JANES: We do invest in infrastructure where there is a pressing need

and a demonstrated case. The one that you are referencing here, the Centre for

Arctic Resource Development, it was a compelling case that this was an area of

promise for the Province. The entity, the applicant, C-CORE, has a proven track

record and had a very strong business case. This business case included not only

matching funds from industry to complete the infrastructure, but in excess, I

believe, of $5 million to support a five-year program of research.

In that case, that was a project that we put $4 million in to fund the

infrastructure, but with our two partners, the Hibernia and Terra Nova projects,

it was a $16.5 million project in total. That included funds from them to help

us and complement our effort to build the infrastructure, but also to fund the

research. In our opinion, that was a very strong project.

The answer to your question is, when there is a good compelling case like

that, that the infrastructure is warranted and is seen as an enabling piece that

will clearly lead on to good, applied research that will have an economic

impact, we think that is a role we should play, and it is when we do.

MR. MITCHELMORE: Last year you would have expended about, say around $17

million in grants or through research and development projects, based on what

your previous budget was and what was provided in Grants and Subsidies. How much

was actually levered from the industry last year?

MR. JANES: I do not have the exact figure for last year, but I can break

it out. In aggregate over the past number of years we have invested $69 million,

we have leveraged close to $170 million, and we have gotten, I believe, around

$50 million or so. I can get you the exact numbers, if you want, directly from

industry.

MR. MITCHELMORE: Are there cases where you holdover funds, like they just

sit almost like in your bank account and they are held for next year in terms of

funds? They are committed, but they are not actually expended.

MR. HUTCHINGS: (Inaudible) is that, as I said, if it flows over two,

three, four, or five years, those dollars, the commitment is made and as the CEO

has indicated based on the milestone those monies would flow based over the

terms of the contract for how many years it is.

MR. MITCHELMORE: Okay.

I guess there is a specific contract, but if you go outside and allow a third

party to do the research, how is this set up for the billable hours and ensuring

accountability, that we are getting best value for our tax dollars put forward,

and that the proponent as well is doing its share? Are these applications

audited? Do you have an auditor on staff who would be conducting audits for

compliance?

MR. HUTCHINGS: Glenn, can you speak to that?

MR. JANES: We have a financial team who judge progress against every

payment. As I say, for every project there is a contract, and within every

contract there is a milestone. So it would say you have to accomplish this to

receive this payment. The account manager deals with the client and asks for

proof that the milestone has been met. Once the account manager is satisfied

that the milestone has been met, they refer it to our financial team who check

to make sure that milestone has actually been achieved before they will disperse

payment.

I think an earlier part of your question was about billable hours or things

of that nature, or the client and their commitment. Actually, it is a

precondition in the contract, whenever we sign a contract with a client, what

the other sources of cash are and at what point they must flow into the project.

That is also judged before we disperse the payment.

If, for instance, a client is required to pay 50 per cent of the total

project cost, that 50 per cent is allocated against line items in the project.

They could be infrastructure, they could be personnel, or they could be contract

services. Unless they are meeting their obligations on their behalf of that as

well, we will not be contributing our half. If you wanted to call it, I think

your term was audit, that is part of our checking and process and protocol

before we would disperse a payment.

CHAIR: Mr. Mitchelmore, if you are close to concluding that, fine, I will

let you go a few more minutes. If you are going to take a bit more time, because

of your time limit, I will go back to Mr. Bennett to start on another section.

MR. MITCHELMORE: I have a few more questions, certainly.

CHAIR: Okay.

MR. MITCHELMORE: If Mr. Bennett has more questions on R&D Corporation or

wants to go somewhere else, I have certainly a few more that I want to ask.

Fifteen minutes is certainly not sufficient to get all the answers with the

Research & Development Corporation.

CHAIR: Okay, then I will go to Mr. Bennett. He can go to any

section

there.

MR. BENNETT: For Mr. Janes; you mentioned with this R&D that the

corporation funds or supports, is this information proprietary?

MR. HUTCHINGS: In regard to applications?

MR. BENNETT: No, the results. Well, applications clearly, the whole

process, is this stuff that really would look at some of the businesses being

I suppose for want of a better word intellectual property or trade secrets?

MR. HUTCHINGS: There would be some issues certainly in terms of

proprietary information.

Glenn, do you want to speak to that?

MR. JANES: Absolutely, intellectual properties are an important element

here to what we do and are part of the reason why we are set up the way we are.

In any project that we do, intellectual property is addressed through the

contract and how it is dealt with.

There is always the ability to tell publicly, in general terms, where the

funds are going. Occasionally there are instances where a company is taking work

where there will be no point in putting the money into the company. For

instance, if it were your company and you were paying money, which we would

require you to do, into a project and as a condition of us putting money into

your company you would have to disclose everything that you are doing, then you

have just given a complete free option to your competitors for all the money

that you are spending.

So there has to be provisions in there to allow a company to protect

intellectual property it developed so that it can actually benefit from them,

from the intellectual property, which is exactly what we want them to do because

we want an economic impact.

MR. BENNETT: This information

MR. JANES: I hasten to add as well in some instances we take a role where

we would try to be an enabler of intellectual property and we would work at an

earlier stage, which would be seen as pre-competitive by several companies where

they would work together and share doing that pre-competitive work, and they

would benefit from all having access to the intellectual property.

Again, I guess my point is it depends on the individual case.

MR. BENNETT: Will this be important this proprietary information would

be used generally by our Province?

MR. JANES: Every project that we would assess and evaluate, we would look

for the business cases of how this is going to benefit the Province. If, through

any aspect of this, we see that there is a high risk, that this will not benefit

the Province, we are going to ask a question to see can that be addressed. If it

can, then we want it addressed; if not, then it will not be a project we would

do.

Intellectual property will be one of those aspects, but there would be many

others as well. Ultimately, our goal and our mandate is to see an economic

benefit and return to this Province, and we always use that lens across all

aspects of our assessment.

MR. BENNETT: You have mentioned the Chair of the Corporation is Jackie

Sheppard, and I understand she is a member of the Board of Emera. Do you not see

the possibility of a conflict here, where someone who is the member of a board

of a corporation in another Province who is the Chair of our R&D Corporation,

that gives us some potential exposure to conflict of interest?

MR. HUTCHINGS: Not at all. There are conflict of interest guidelines with

any corporation or any board of directors. Certainly we expect board of

directors to adhere to those, whatever boards they sit on. I have deal with

Jackie in the past, since my role as responsible for RDC. She is certainly very

competent. So, no, we do not see a conflict.

MR. BENNETT: If, for example, we were trying to make a business case for

natural gas use in this Province as opposed to Muskrat Falls, wouldn't Ms

Sheppard be in a conflict of interest if Emera is a partner on the Nova Scotia

side, yet she is the Chair of the board here, which potentially could put here

squarely in the middle of a conflict?

MR. HUTCHINGS: Well, in any instance where there would be appearance of

conflict, it would be incumbent on that individual to remove themselves from

those discussions so they would not be part of it, like any board of directors

anybody would sit on.

People who are involved in boards of directors, most of them have very

diverse backgrounds and diverse involvements, so at any time there could be

appearance of a possible conflict. Again, that goes to the governance and the

structure of the board and what is outlined in regard to conflict of interest

guidelines. In any case, any individual, if there was an appearance of conflict,

would remove themselves.

MR. BENNETT: Are you saying there is no appearance, there is no conflict,

or there are no guidelines?

MR. HUTCHINGS: There is no conflict.

MR. BENNETT: How can it be that a Director of Emera can be Chair of our

R&D Corporation? Nova Scotia is a different province; Emera is a different

corporation. Wouldn't they be competing directly as Nova Scotians with us?

MR. HUTCHINGS: We are talking about a Research & Development Corporation

as has been articulated and discussed in terms of what the mandate of the

Research & Development Corporation is: to drive research and development in the

Province in a vast array of sectors based on a very informed and knowledgeable

board, driving various industries with a commercial opportunity and benefits for

the Province. For that, you need a select and diverse group of people. We

believe we have them. As I said, we do not see any conflict.

MR. BENNETT: Wouldn't it be safer to protect our proprietary information

in this Province to have a Chair from this Province; or is there nobody

available, qualified, who is a resident in this Province?

MR. HUTCHINGS: Ms Sheppard is originally from this Province; she has a

diverse background.

MR. BENNETT: I understand; I read her file.

MR. HUTCHINGS: We are looking at very competent, good people. Again, I do

not know if you are questioning the integrity of Ms Sheppard; but, as I said,

looking at her experience, knowledge and certainly how she has performed as

Chair, interactions I have had, we are quite pleased with her work and we see no

issue.

MR. BENNETT: Was there a search made to determine if there was anybody

competent to perform this position as Chair who is a resident in this Province?

MR. HUTCHINGS: We always do a search. Because you select one person or

two people, there could be fifty out there who have the same competency level,

but everybody cannot serve on the board. You go through a process and refine it,

and then you come to your selection. I am sure there are others who are just as

competent; but again you select and you move forward with those people. You look

at how they perform and if they perform well, you continue to support them and

recognize the good work they are doing.

MR. BENNETT: Was there a vetting process at the beginning when she was

appointed Chair?

MR. HUTCHINGS: I was not in this position at that time, so I can

certainly go back and look at it and provide you the information in regard to

the process at that time.

MR. BENNETT: Are you able to provide any information, whatever was the

call presumably, there was some sort of advertising, or corporate search, or

whatever was the process that arrived at this Chair who is not a resident of

this Province and who is a director of a corporation in another Province,

potentially in competition with us, ends up as Chair of our Research &

Development Corporation?

MR. HUTCHINGS: I will get Glenn to speak to this in terms of the

composition and expertise and whether they are residents of the Province or not.

There are criteria that are outlined in terms of what the board selection would

look like Glenn, in terms of residents?

MR. JANES: Yes, there is actually a requirement in our legislation that

makes sure that we have a balance of skills and abilities on our board. For

instance, it stipulates that so many people must be active researchers so they

must understand the subject matter.

It also stipulates that a percentage of our board members need to come from

outside the Province. We need to be aware of the markets that we are trying to

attract or sell into, so there is a diverse set of skills stipulated in our

legislation so that we get a balanced board that can deliver what needs to be

done on behalf of the organization. It also requires that there is somebody from

a post-secondary institution within the Province on the board.

MR. BENNETT: What is the period of the appointment as the Chair?

MR. HUTCHINGS: Four years. Is that correct, Glenn?

MR. JANES: Appointments to our board can be made for any number of years,

at the view of government. The maximum consecutive years any single board member

can serve on our board is six.

MR. BENNETT: Who appoints the Chair?

MR. HUTCHINGS: That is government.

MR. BENNETT: On the advice of the minister?

MR. HUTCHINGS: Pardon me?

MR. BENNETT: On the advice of the minister?

MR. HUTCHINGS: Yes.

MR. BENNETT: Okay, thank you. I have no more questions.

CHAIR: Okay, thank you Mr. Bennett.

Mr. Mitchelmore.

MR. MITCHELMORE: Just with the Research & Development Corporation, I am

wondering if it is all direct funds going out the door. Are there any instances

where you generate revenue for your corporation to help pay for your thirty-six

staff and operations? Or is it just a direct grant out the door?

MR. HUTCHINGS: Glenn?

MR. JANES: At this juncture, it is money out to support others.

MR. MITCHELMORE: Okay.

Do you have a holdback when you do a contract? You are saying that you do

things in multiple stages. Is there a report or is there something at the end

where there is a 10 per cent minimum holdback?

MR. JANES: Yes, there is, correct. Even at project completion, which I

presume you mean, there is a holdback. We need information, as well as the

client, about how the entire project has proceeded and concluded. There is a

holdback before we disperse the final payment because we want that information

first.

MR. MITCHELMORE: Are there instances where after a project is complete,

is there a follow-up to see if there has been success, especially with the

commercialization of certain technologies? Is it something that the R&D

Corporation has done to promote some of the people who it has helped and helped

these companies generate further revenues?

MR. JANES: Absolutely. I would refer earlier that the vast majority of

our projects are still in progress. For every project that is finished to date,

we have surveyed. As recently as two weeks ago, we have prepared an aggregate

report, albeit in small numbers of forty-odd projects, because that is what we

have I think in that neighbourhood complete at the moment, to what that

information tells us, and what leading indicators that tells us about what is

working and how effectively it is working.

MR. MITCHELMORE: How many applicants have you had to date that have not

been in compliance, that have not met your agreements?

MR. JANES: I do not have the number at hand. The number is small, but in

each case we have either been able to rectify the compliance or we have

terminated the project.

MR. MITCHELMORE: In instances where you terminated the project, were you

able to recoup funds?

MR. JANES: We have never been in an instance where we have had to recover

funds. We have been in instances where we say okay, you have gotten as far as

this milestone, you cannot compelling convince us that you are going to be able

to reach the next one, so we choose to discontinue.

It is our structure to safeguard against that. So, we are unlikely to end up

in a situation where we are going to be trying to recover large sums of money,

because we only dispense in smaller portions.

MR. MITCHELMORE: Okay.

Has the Auditor General ever audited your particular contracts and the status

of applications? I know that they

MR. JANES: Absolutely. The Auditor General has reviewed all our

financials, has reviewed our contracts, our statements, every part of our

organization all our processes, procedures, internal controls, be they

financial, be they evaluation projects, or be they human resources.

MR. MITCHELMORE: Has funding ever been expensed to community groups or

non-profits or smaller rural entities?

MR. JANES: We have dispensed to non-profits and they are available

applicants for some of ours. There are a smaller number of those within the

Province, because they would have to be non-profits who have a credible R&D

capability or ability to get access to the expertise to deliver the R&D, but we

have done non-profits. I cannot say from memory whether there has been a

community group. I cannot recall one of them, if I am to be honest at the

moment.

MR. MITCHELMORE: Would you say that the bulk of your applicants in

research and development dollars are going out in non-renewable resource

entities like oil and gas and mining?

MR. JANES: Yes, a significant and probably a percentage of ours are going

out into non-renewable resources because they reflect the industries that are in

the Province at the moment and that are flourishing, and for which there is

activity and a demand for support.

MR. MITCHELMORE: What are you doing to market the RDC to entities across

Newfoundland and Labrador to make them aware of your twelve programs I think you

had mentioned? Are there marketing dollars expended to let people know that you

are available? Do you meet with industry associations and things like that? What

about new start-ups?

MR. JANES: Okay, so there are a number of things in there. New start-ups,

I will start with first. We have a relationship with the Genesis Centre and

group; we meet with them on a regular basis at least quarterly, but the

informal communications are more frequent, and we have a number of clients

through that base.

We have reached out across the Province. We have marketing campaigns that

identify what we can do and how we do it. Very effectively, we have our staff go

to the regions and spend time there, and meet with individual clients. For

example, one of the ways to do it, we have been to many of the campuses of the

College of the North Atlantic; because, being an applied facility that is

teaching trades and applied skills, they have clients who come to them from the

business community, saying: We have needs; can you help us?

That has been an avenue where we have been able to identify and market

ourselves and our services, and have had success.

I can tell you, there are numerous different ways that we reach out to find

the clients. We have even been through an exercise to identify who we think all

the companies are in this Province who performs R&D.

MR. MITCHELMORE: Is there public consultation with RDC to go into

communities and regions to let them know that you are there, that you do have

funds available, and that maybe these community groups or in the past,

Regional Economic Development Boards, Chambers of Commerce would be able to

have some input to advance research and development in regions to create a more

balance? Because I would imagine that the majority of your applicants are within

the Northeast Avalon right now.

MR. HUTCHINGS: Balance in regard to marketing and making RDCs aware, in

all regions of our Province, is also advocated by IBRD staff and the EDOs we

have on the ground in regions of the Province.

We use them, as well, in terms of interactions they have. Whether it is for

new start-ups, whether it is for businesses that are currently operating, if

they are looking at expansion and would need some research and development work.

There is significant capacity on the ground in terms of those folks, in terms of

making them aware of the Research & Development Corporation. The twelve programs

they have and how they could connect with them, even as a small business or as a

significant sector, or whether we would work with a sector industry.

Those folks on the ground are certainly well aware of the RDC opportunities

that exist and what programs are there to assess various entities out on the

ground in rural Newfoundland and Labrador.

MR. MITCHELMORE: I certainly appreciate that comment and recognize that

the EDOs are there. I am just thinking there would be something that may be

limiting some of these smaller entities from tapping RDC funds because research

and development is certainly something that is critically needed, especially in

rural regions to advance our economy.

There must be something, whether it is through red tape or whether it is

through the filing of an application. There must be something in your process

that needs to be looked at to try and improve how funds are regionally balanced

to help grow rural economies as well.

MR. HUTCHINGS: Yes. I think I would comment that employers that exist

today we look at innovation, and we look at developing new technology and

expanding. It is a new entity in some regard and it is a new approach.

You are right in some respects, I mean it is marketing. Even a realization by

that employer that maybe they are not aware of the opportunities that could

exist with new technology, new opportunities, whether it is enhancing their

current business and size, or whether it may be an export opportunity. They

often may not be aware of it, but, yes, I can certainly agree with some of the

things you are saying.

There is an opportunity there. We are working to grow that out and make

employers aware of the opportunities that may exist, whether it is RDC, whether

it is opportunities in business programs through IBRD.

MR. MITCHELMORE: I think there are incredible opportunities.

If I could be provided with a list of grants and subsidies and the

information that I requested previously, I really do not have any further

questions with the Research & Development Corporation. I thank Mr. Janes and

yourself, Minister, for answering all of these questions relating to the

corporation.

MR. HUTCHINGS: Okay, thank you.

CHAIR: Thank you, Mr. Mitchelmore.

What I will ask then is a motion to adopt the heading 7.1.01.

Motioned by the Member for Fortune Bay Cape La Hune; seconded by the Member

for Bonavista North.

All in favour signify by saying Aye'

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

The heading is carried.

On motion, subhead 7.1.01 carried.

CHAIR: Now we will go back, if we could, to subhead 1.1.01 Minister's

Office.

MR. HUTCHINGS: Mr. Chair, if I could take a minute. I just want to thank

my staff from the Research & Development Corporation.

CHAIR: Sure.

MR. HUTCHINGS: I want to thank them for their participation today. If we

could take a minute they will

CHAIR: They will move out? Okay.

Thank you for your participation.

As I said, we will move into heading 1.1.01. I will go back to you Mr.

Bennett to start on that heading, please.

I will mention too, around 10:30 or so, depending on the flow of the

questions, we will take a five or ten minute break for people to stretch their

legs and go to the washroom.

Mr. Bennett, the floor is yours.

MR. BENNETT: Minister, if we were looking at 1.1.01, what does this

cover? I know it says Salaries, Minister's Office. How many people are involved?

MR. HUTCHINGS: That would be myself and my executive assistant, and I do

believe ministerial assistant, my assistant. Would that be it?

OFFICIAL: It is the minister, the EA, the CA, and the secretary.

MR. HUTCHINGS: The secretary; that is the one I missed.

MR. BENNETT: Minister, if I want to ask questions, for example, regarding

the Business Attraction Fund, Office of Public Engagement, and all sorts of

other areas your department deals with, is it better to go by component of

whatever this figure is or wait until we get to wherever it may show up in the

Budget?

MR. HUTCHINGS: It may be better to wait until we get to the actual

section. Is that what your question is?

MR. BENNETT: Yes.

MR. HUTCHINGS: Yes, and then maybe we will have the numbers in front of

us and we can

MR. BENNETT: I have no questions on this section. I would rather wait

until we get to the meat of it because obviously, this is pretty straightforward

to me.

MR. HUTCHINGS: Okay.

CHAIR: That is all you are talking, Mr. Bennett, on

section 1.1.01?

MR. BENNETT: Yes.

CHAIR: Right up to Executive Support Services, that whole section?

MR. BENNETT: Yes. Now, that top part there, I do not see a point in

asking questions there when they may be better dealt with later. We cannot

divide the minister up into four or five parts and say how much of your time is

this and how much of your time is this. The exercise is not really very

meaningful. I accept that it takes a certain amount of money to run his office

and I would like to get to the meat of it, which is further on.

CHAIR: Fair enough. Well, you can go on to

section 2. We just started

one. You can go on to

section 2 and I will go back to Mr. Mitchelmore. Any

questions he has on heading 1, he can ask those. Then we can move from there.

MR. BENNETT: In 1.2.01, Salaries, which is under 01, how many people does

that involve?

MR. HUTCHINGS: The deputies, the ADMs, and their secretaries, I do

believe.

MR. BENNETT: So how many people is that?

MR. HUTCHINGS: You can go ahead, yes.

MR. MEADE: It is the deputy minister; there would be four assistant

deputy ministers; there would be two assistant deputy minister's secretaries;

and a deputy minister secretary.

MR. BENNETT: The four ADMs, if you have only two ADM secretaries, does

that mean they are supported through another area? Obviously, they need support

services.

MR. MEADE: One ADM secretary supports two ADMs. We have moved over time

to that model. Many departments have, actually, hon. member, moved to that.

MR. BENNETT: When you come to Transportation and Communications, I am not

complaining that the budget was precise and that you were right on the dollar,

but how did you manage to do that, $98,400 and $98,400?

MR. MEADE: These are projected numbers, right. The revised number is

asked of departments in February for the Estimates process, to project what you

think you will spend. We basically projected that we would fully expend.

MR. BENNETT: Okay. Last year is the same as this year, no change?

MR. MEADE: Yes. We maintain the same Transportation and Communications

budget.

MR. BENNETT: What does that cover generally? Is it air travel, is it

vehicles, or is it phones?

MR. MEADE: Transportation and Communications would cover the

communications would be telecommunications, the use of BlackBerries, cellphones,

things like that, but it would predominately be travel. It would be. We could

certainly provide you a breakdown based on last year's if you so wish at some

point.

MR. BENNETT: No, I do not really

MR. MEADE: It would be travel, air travel, road travel, per diems and

things like that. Anything associated with travel would be there and anything

associated with telecommunications.

MR. BENNETT: Yes. Where I see that salaries are lower by $80,000, $90,000

or so, does that mean you lost someone year over year?

MR. MEADE: From last year's budget to this year's budget, we are down one

assistant deputy minister. Last year's budget would have accounted for an

Assistant Deputy Minister of Business Analysis. That position became vacant over

the year and now through reorganization the department will not be filled. We

have gone from five assistant deputy ministers to four.

MR. BENNETT: Is that work that is no longer needed, or is it work that

someone else is doing or ?

MR. MEADE: No, we have reorganized the responsibilities of the assistant

deputy ministers to still cover that. The divisions that would have been

responsible to that individual are still in the department et cetera, but it

would just have been reorganization of responsibilities.

MR. BENNETT: Okay.

Mr. Chair, I have no more questions on this section.

CHAIR: Okay, perfect.

Mr. Mitchelmore, we can go back to subsection (1).

MR. MITCHELMORE: Okay. With the Minister's Office, I know the minister

had made commentary with the salaries, I am just questioning that in last year's

budget there was $311,400 budgeted and now there is only $240,800. He has made

reference to the current positions but did not acknowledge the Parliamentary

Secretary position. Is that accounted for in this $240,800? Because it seems

like somebody certainly had a significant cut in pay if that is to go there as

well.

MR. HUTCHINGS: The Parliamentary Secretary position was moved to the

Office of Public Engagement. So that budget there was reduced reflective of that

change.

MR. MITCHELMORE: Okay. The Parliamentary Secretary is just under Public

Engagement itself

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: - and does not reflect the overall department of IBRD in

roles and responsibilities.

MR. HUTCHINGS: No. The OP reports to me as minister, so yes.

MR. MITCHELMORE: Last year under Purchased Services there was $20,000

that was not spent. What was anticipated under Purchased Services that would

make up that shortfall? Did something not get bought?

MR. HUTCHINGS: Just general, I guess, administration. What we projected,

there was not a need for that in regard to operations.

Brent, do you have anything further to that?

MR. MEADE: No, it is a simple case of where we, through expenditure

management, decided not to expend as much money.

As you can see for 2013-2014, there has been a rightsizing of the budget.

MR. MITCHELMORE: Okay.

MR. HUTCHINGS: Like I said expenditure management. In terms of last year

going through, in terms of operating as a department, we knew, based on some

projections, where we were going to be financially. There was, obviously, an

effort by all ministers to look at their departments on where expenditures were

and if we could reduce expenditures, that we would do that.

MR. MITCHELMORE: Overall, in a minister's office, that does not seem if

you add back the Parliamentary Secretary salary of $28,000 you would be up more

than what the revised amount was previously, overall, despite some other

reductions.

I do want to ask: How many employees are currently under your department?

MR. HUTCHINGS: Right now, 177.

MR. MITCHELMORE: One hundred and seventy-seven. How many people were in

your department last year?

MR. HUTCHINGS: Two hundred and two.

MR. MITCHELMORE: Two hundred and two. That is just the core department

you are talking about in terms of numbers?

MR. HUTCHINGS: IBRD.

MR. MITCHELMORE: Does this include the Office of Public Engagement?

MR. HUTCHINGS: No.

MR. MITCHELMORE: It does not include the volunteer non-profit

secretariat?

MR. HUTCHINGS: No. The Office of Public Engagement is a separate entity,

separate from what we are talking about here. To my understanding, that is going

to be discussed under Executive Council.

MR. MITCHELMORE: And the Rural Secretariat?

MR. HUTCHINGS: Yes, that would be under the OP.

MR. MITCHELMORE: That would be under

MR. HUTCHINGS: Just for clarity, the Office of Public Engagement now has

a Voluntary and Non-Profit Sector, the Office of Youth Engagement, the Rural

Secretariat, the ATIPP Office, and Strategic Business Partnership. Those five

entities now exist under OP and our budget for this fiscal year under the Office

of Public Engagement.

MR. MITCHELMORE: That is going to be debated through Executive Council?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Can you tell me how many positions were lost?

MR. HUTCHINGS: Where is that?

MR. MITCHELMORE: In all of those departments, in the Office of Public

Engagement.

MR. HUTCHINGS: I think it is best left to Executive Council. I am not

going to get in

MR. MITCHELMORE: Okay. How many vacancies were in your office before

these cutbacks?

MR. HUTCHINGS: Do you want to go ahead and speak to that?

MR. MEADE: Just to be clear, I remember you asking how many vacancies

were in the department or how many vacancies did we eliminate funding for?

MR. MITCHELMORE: Okay, both. How many vacancies were in the department,

and how many did you how many positions were vacant last year?

MR. MEADE: At any given time there are various numbers on that. I do not

remember. It depends on people moving. It could be any number of circumstances.

At any given time in a department, you could have in our department anywhere

from five to ten vacant positions.

To the question of, what vacant positions did we eliminate? The answer was

eight.

MR. MITCHELMORE: How many contractual employees did you eliminate?

MR. MEADE: There were two. In this Budget there were two.

MR. MITCHELMORE: How many contractual employees did not have their

contracts renewed who were temporary?

MR. MEADE: How many contractual employees had their contracts renewed?

MR. MITCHELMORE: Did not have their contracts renewed.

MR. MEADE: There were none. The two I speak of were the two who were not

renewed.

MR. MITCHELMORE: Okay. How many temporary employees or non-permanent

staff were in last year's Budget there would have been people whose contracts

would have expired on March 31. How many of those people did not have contracts

renewed? There must have been more than two people.

MR. HUTCHINGS: No, I do not think.

MR. MEADE: No, that would be it.

MR. MITCHELMORE: Okay. In your General Administration here you noted how

many positions and that the $132,100 in difference is basically an assistant

deputy minister position?

MR. MEADE: That is correct.

MR. MITCHELMORE: How many positions were there and are still currently

there? Is it seven?

MR. MEADE: I previously said those. It is a deputy minister, four

assistant deputy ministers, two assistant deputy ministers' secretaries, and I

believe that is it.

MR. MITCHELMORE: Okay.

MR. MEADE: Deputy minister's secretary.

MR. MITCHELMORE: Under the

section 1.2.02, there is a revenue line under

the revised amount of $61,400. Can you explain where this revenue had to come

from?

MR. MEADE: That revenue is actually posted in error. We have been

informed by our controller's office it was posted in error.

MR. MITCHELMORE: Okay.

MR. MEADE: The only place, Mr. Mitchelmore, where there is revenue in the

department normally is in trade and export because of the International Business

Development Agreement. When you look at that

section you will see that there is

revenue reported there. That is in 2.1.01, you will see revenue posted there.

Any other places here this was an error. We questioned this when we seen the

Estimates. It was posted in error.

MR. MITCHELMORE: Okay. Did you find out as to why this error came about?

Was it just a clerical error or was it

MR. MEADE: It appears to have been a clerical error in the completion of

the budget process, yes.

MR. MITCHELMORE: Okay.

Under your Policy and Strategic Planning, the salaries have dropped. Was

there a position lost? It is

section 1.2.03.

MR. MEADE: No, there were no positions eliminated in Policy and Planning.

You will see that the revised number and the budget are fairly close. That is

because last year there had been a position budgeted for, for an individual who

was on leave, and they did not return. That position has been kept vacant. This

is the staff complement for Policy and Planning.

MR. MITCHELMORE: What was that position?

MR. MEADE: It was a manager's position in Policy and Planning.

MR. MITCHELMORE: Who makes up the complement of the Policy and Strategic

Planning division now? It does not seem like there is a large contingent of

people with these salaries.

MR. MEADE: There is a director, there are two managers. There are four

policy analysts.

MR. MITCHELMORE: Is it possible to get job descriptions for people who

work and what their roles are under the Policy and Strategic Planning?

MR. HUTCHINGS: Sure.

MR. MEADE: Sure.

MR. MITCHELMORE: Okay.

Professional Services, we are seeing that it dropped significantly. You had

budgeted $135,000 in 2012-2013. Was there something that maybe some of these

people were looking to hire outside consultants to do work and it did not get

done? It is not going to get done in this year's budget based on the amount of

money that is allocated. Can there be an explanation for what the Professional

Services in 2012-2013 was for, what strategy or what type of initiative?

MR. HUTCHINGS: Part of that was due to our overall review for reduction

measures. As well, I understand and Brent, you can speak to this. There was a

research project that was originally budgeted for but it was not undertaken.

MR. MEADE: The $135,000 in last year's budget was a result, actually, of

the merger of the policy shop in the former Department of Business and the

former ITRD. When we posted last year's budget it was a result of that.

When we went through the year, as the minister has said, we did make

decisions about deferring some research projects. This year, in the budget

process, we have right sized the budget to what we feel would be an ongoing

requirement of approximately $50,000.

MR. MITCHELMORE: What type of initiatives would this department be

looking at for strategic planning to meet the department's mandate in this

coming year?

MR. MEADE: Within this division we would look at things like we would

do sector analysis. We may do some surveying. We may work with some external

partners on some client surveys, things like that. It would be that type of

material. It varies from year to year. It depends on what our needs are.

Some research would actually be done in the lines of business but in this

division, the Policy and Planning, which is a corporate service of the

department, we would fund things that would be broader, like the examples I have

given you.

MR. MITCHELMORE: Line 10 is Grants and Subsidies. There is $75,000

allocated to give away to someone. Last year, there was none allocated. Who is

going to get this $75,000 grant?

MR. HUTCHINGS: Do you want to speak to that?

MR. MEADE: Yes. This is a result of where we moved the Strategic

Partnership from IBRD into the Office of Public Engagement. There was some grant

funding they were providing to a number of initiatives at Memorial University.

When Strategic Partnership was moved to the Office of Public Engagement, it was

felt that those grant elements, those projects that we were supporting would be

now better aligned within IBRD in the Policy and Planning division.

They are very particular to some projects we are supporting at the Economics

department at Memorial University, but also some projects that we support

through the Harris Centre.

MR. MITCHELMORE: The Office of Public Engagement has Strategic

Partnership, but does it not have funds to deal with these things? Are you

taking away their grant money?

MR. HUTCHINGS: No, when we go through OPE we can show that the Strategic

Partnership does have funding there available to it as well.

MR. MITCHELMORE: Okay.

Under the Strategic Initiatives, I guess this is showing the cancellation of

the program and moving it to the Office of Public Engagement. Is that the case?

MR. MEADE: It shows two things. It shows the move into the Strategic

Partnership, and it also shows where we have taken the Ireland Business

Partnerships and integrated into Trade and Investment.

MR. MITCHELMORE: Okay. Last year it seems like what was available was not

readily expensed. Can I have a list of grants and subsidies as to who was

provided the $77,000? How much of this actually went to Ireland Business

Partnerships?

MR. MEADE: All of that amount would have gone to IBP-related activity,

and we can certainly give you a list of those who received it.

MR. MITCHELMORE: Okay. There is no dedicated employee it seems, to these

types of initiatives. So I guess there are a number of employees with IBRD that

are

MR. MEADE: We have a number of employees who do work with Ireland. In

fact, we also have a trade officer still dedicated to the Ireland market.

MR. MITCHELMORE: Okay.

Now, there were no Professional Services, no Purchased Services. With the

movement of this program to trade now, do we have any anticipation that the

commitment to Ireland Business Partnerships is being pulled back?

MR. HUTCHINGS: No, not at all. As Brent had indicated, the synergies in

terms of our trade division and in terms of activities, we wanted to integrate

that activity. Whether it is through trade shows or various projects we have at

Ireland, we are still certainly connected. We still see opportunities there. We

just see this is a cleaner, tighter fit in terms of the operations overall

through IBRD and working with Ireland.

MR. MITCHELMORE: Would the staff for the Office of Public Engagement be

the same people who would still be dealing with the trade through Strategic

Partnership, or are they separate people? If they are, then it seems like a

duplication of service.

MR. HUTCHINGS: No. Do you want to just describe what trade is?

MR. MEADE: Yes. In Strategic Initiatives, just so we are clear, there

would have been two functions that would have been voted under that. One would

have been the Strategic Partnership. That has been now moved, and its associated

salaries and all of that have been moved to the Office of Public Engagement.

The other element that was budgeted for here was work with Ireland Business

Partnerships. It is that element that stays within IBRD, but is now integrated

into the Trade and Investment branch.

MR. MITCHELMORE: Okay.

CHAIR: Mr. Mitchelmore, just one inquiry. Are you getting close to

finalizing that? If you need a few more minutes, I will; if not, I will go back

to Mr. Bennett.

MR. MITCHELMORE: No, I am getting to the end. It is just 1.2.05 there.

CHAIR: Okay, go ahead.

MR. MITCHELMORE: The only thing left, really, is Property, Furnishings

and Equipment. I do not really have a question on that. I think the deputy

minister has explained some of the transition.

I did have one question around the overall cost of renaming the department

Innovation, Business and Rural Development from Innovation, Trade and Rural

Development. All new business cards would have had to have been, all new

promotional materials, all of these types of things when the department was

collapsed and business and trade are very synonymous; I am just wondering what

the cost was associated with that name change.

MR. HUTCHINGS: I cannot quantify that for you. I can certainly see if we

can get some information to you in regard to that.

Brent.

MR. MEADE: Honourable member, we can certainly try to find it would

have been limited to those things, letterhead and business cards, really,

because everything else we would do, of course, would be virtual, whether it was

web pages or anything like that. So it would only be, I would suggest to you,

any costs associated with print material.

I will say this to you, though, that any collateral material we had, any

promotional material that was brought together from the Department of Business

and that the former INTRD had, we continued to use that until exhausted supply.

We have also made conscious decisions where even signage, we would not replace.

You will still find Innovation, Trade and Rural Development signs in many places

because we feel we will let the life of that sign fulfill itself before we would

replace.

So we did make those conscious decisions around it, but there would have been

some costs associated with business cards and print material. I would think it

is small, but we can certainly see if we can that number for you.

MR. MITCHELMORE: Okay, thank you.

CHAIR: Thank you, Mr. Mitchelmore.

Okay, what I will ask now is to adopt the heading 1.1.01 to 1.2.05.

Motioned by the Member for Bonavista North; seconded by the Member for

Fortune Bay Cape La Hune.

All those in favour, signify by saying aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

That heading is adopted.

On motion, subheads 1.1.01 through 1.2.05 carried.

CHAIR: Mr. Bennett, I will go back to you and in the next twelve or

thirteen minutes we will take a ten-minute break.

You can move to

section three, I believe.

MR. BENNETT: Subhead 2.1.01?

CHAIR: Yes.

MR. BENNETT: Minister, in line 10 in that

section it says Grants and

Subsidies.

MR. HUTCHINGS: Yes.

MR. BENNETT: Last year $625,000 was budgeted, $565,000 expended, this

year it is for $1,737,300. What do you anticipate that to be for? Do you already

have that earmarked, or is it for some program you expect to be drawn down at

some point? What is it?

MR. HUTCHINGS: We moved the Aerospace and Defence Fund into that line

item, which is $1.5 million, and the other grants were $237,300. That would be

that total of about $1.7 million that would be transferred into that line item.

MR. BENNETT: When you say Aerospace and Defence Fund, what is that? What

does it do?

MR. HUTCHINGS: Do you want to speak to that?

MR. MEADE: The Aerospace and Defence Fund was a fund that was created

under the Department of Business to support the aerospace and defence sector. In

particular, to look at whether there were infrastructure needs or particular

business needs with some of the aerospace and defence firms that would better

position them for export and foreign direct investment opportunities.

The fund was originally voted under Investment Attraction and we moved it up.

This year the fund is in its final year. The fund is fully encumbered. There are

projects that have been approved that will utilize the full $1.5 million for the

coming year.

MR. BENNETT: Are there companies here in the Province that is actually

doing this development work right now?

MR. MEADE: Yes.

MR. BENNETT: Are they secret initiatives or general initiatives? What

sort of stuff are they doing? It sounds exotic for here to be doing aerospace

and defence, yet it is not very much money if it is aerospace and defence.

MR. MEADE: Yes. The aerospace and defence sector maybe we could ask

Mark to speak to this as well, Minister would be a sector that is actually

quite vibrant here. Albeit it is fairly small in comparison to other

jurisdictions, there will be also be and I think we need to note that there

are aerospace and defence companies that also cross into other sectors. There

would be companies that would be into ocean tech space that would also be using

that ocean technology or their technology in aerospace or defence application.

There are quite a number of companies here that do it. Provincial Airlines is

a significant aerospace and defence company. They are doing retrofit of planes

out there and things like that. That would be one example of a company here that

is in the aerospace and defence sector. There would be many others as well that

we could outline.

It is a sector that is a priority sector for the department. We do work with

a number of companies in the sector. It is not only this fund, but our general

programming of the department has worked with this sector for quite a number of

years. We have people who are, in fact, sector specialists in this area and work

within the Province with the community but also across Atlantic Canada with

other provinces around trying to support the sector.

MR. BENNETT: For how long have we supported this type of initiative in

the Province?

MR. HUTCHINGS: I think it is about four years.

MR. MEADE: This fund in particular yes, it is about four years.

MR. BENNETT: Is most of the money going to salaries, or researchers, or

for other people? Or is it for hardware types of things?

MR. MEADE: No, it would be for projects where companies may have some

capital expenditure requirements, so some of it was in for infrastructure. Some

of it would have been used, for example, we use the aerospace and defence fund

to establish the training program through Lufthansa at the College of the North

Atlantic in Gander. That would have been a number of different eligible

activities there. There may have been capital expenditures, but also curriculum

development expenses and things like that.

So it would not be necessarily tied to any particular it would be any

number of those things, Mr. Bennett. It could be some salaries, it could be

professional services, but it also would be infrastructure and other things.

MR. BENNETT: What sort of potential do you see in this area, say, in the

next three, five or seven years? Where are we going with it?

MR. HUTCHINGS: The sector has seen growth. Provincial Airlines is

certainly a good example in terms of their initiatives and what they have done.

They did some work with United Arab Emirates over the past number of years in

terms of outfitting surveillance planes; that was all done here in Newfoundland

and Labrador significant contracts. So we see growth.

The players we had overall were small, but the players we do have has done

some significant work in the industry, so we certainly see further growth and we

certainly see an opportunity to support it. I think it is important that we

continue to support it.

MR. BENNETT: Is there the potential to attract others that are not

operating here right now, to bring them in?

MR. HUTCHINGS: I think so, yes. It is like any industry, I guess, you try

and develop a core base or a significant footprint so people see that you are in

the business and you are a player. I think with that then comes some attraction.

Yes, I do agree with you, there could be opportunities.

MR. BENNETT: Is this something that would maybe engage the Business

Attraction Fund?

MR. HUTCHINGS: Once again, it is an issue of the particular offer, what

someone coming into the Province would have in mind. The Business Attraction

Fund we hear from a lot of companies from time to time, but we do an analysis

of what the benefit is to the Province and what they are expecting from us, as a

government, in terms of inputs of public funds and those types of things. In

regard to that fund, if it is inward investment we will certainly look at the

opportunities.

MR. BENNETT: Are we making a concerted effort to go get some of these? I

am all for business. In the case of business, more is better.

MR. HUTCHINGS: Yes.

MR. BENNETT: I feel we need to have a whole lot more in this Province

which would be ongoing and renewable to take up some of our non-renewable

dollars. Where are we looking? Is it toward some of the bigger players like

Brazil or Quebec - Quebec is pretty protectionist with Bombardier - or is it

Europe?

MR. HUTCHINGS: Well, I guess Quebec with Bombardier in terms of some work

that has been done here; I certainly looked there. Europe, as well as our trade;

and our folks, in terms of investment, when they travel and we go to the various

aerospace and defence international shows and those types of things, expos, we

have a presence there and are in the market. At that point we are advising of

what we have here, and look to, as you say in terms of attraction, what we have,

the environment we have, and look to build on the industry we have here now.

Again, we are out there. We are in the market and looking at what we can

bring to the Province. All our strategy, and you hit it, is that we have a lot

of our royalties now coming from our non-renewable resources. We are looking to

branch out, obviously, in my department, in all the different divisions, to grow

our economy, diversify and make it sustainable. We want to use some of those

funds to diversify and make it sustainable.

When you look at the ICT sector, we are up to $1.6 billion. We talk about

ocean tech, talk about this area, and aquaculture on the South Coast. We want to

branch out and do different things. The folks we have internationally who are

working, that is what they are trying to do.

Yes, I agree with your analysis in terms of expanding out business and

attracting to the Province. I do not have anything else.

MR. BENNETT: In conjunction with this particular area, like aerospace and

defence, are we also pursuing opportunities that would be northern or Arctic

because of the challenges that are faced? We seem to be well situated here in

Goose Bay, with Labrador, maybe that is an area that we have some protection.

MR. HUTCHINGS: Yes, that is an excellent point. As you may know, last

year we did the Arctic Opportunities symposium and initiative. We met at six

locations or four?

OFFICIAL: Four.

MR. HUTCHINGS: Four, yes, and I think that goes to your point. In terms

of surveillance and prevention and what they do now, obviously, they do a lot of

that type of work. We have activities in the Arctic and we are strategically

positioned.

Look at activities going off on Greenland in terms of exploration, now moving

into production in the oil and gas sector. A lot of that is serviced through

Aberdeen now, in Scotland, but if you look at our adjacency to that for an

example, we are much closer.

Then as you look, as you said, further to the Arctic in terms of what we are

exploration, and other issues and everything that comes with that, whether it is

emergency response or whether it is providing services, I mean there is a huge

opportunity there.

When we had our symposium around the Province we used to meet with

stakeholders, business, to try and identify further opportunities in how we grow

that out. That could be things like infrastructure in particular ports. It could

be any means of supports; but, yes, I agree there are huge opportunities. We

have identified that. That is one of our main agendas we have as we move

forward.

MR. BENNETT: Line 05, Professional Services, $500,000 is budgeted.

Approximately half of what was budgeted last year was used. What types of

professional services are they? Is it consulting, accounting, legal? Do you have

an idea, because it is a significant amount?

MR. MEADE: Professional Services under Trade and Export will relate to us

hiring in-market consultants. It would relate to us doing particular market

analysis. Some of this, as well, is done with our Atlantic colleagues through

the International Business Development Agreement.

We may take the lead, for example, on behalf of Atlantic Canada to do an

analysis around particular elements of the Brazil market. We would pay for it.

That is why you see revenue, by the way, as well in this activity. That would be

generally what it would be, in-market consultants, particular expertise on

particular sectors, very particular market intelligence that we would be wanting

to purchase.

MR. BENNETT: Does IBRD engage in or see its role in marketing any of our

seafood products?

MR. MEADE: Not directly. The Department of Fisheries does have that

responsibility, but I would suggest to you that through our trade missions and

through any other work that we do, we do work with fisheries related companies.

Fish marketing is a direct responsibility of the Department of Fisheries and

Aquaculture.

MR. BENNETT: There is no synergy there, no cross over?

MR. MEADE: No. I would suggest to you, there is. Again, through our trade

missions and things like that, they would be participating with us. When we are

in market this is the reality of it we are not promoting just particular

companies, we are promoting Newfoundland and Labrador.

MR. BENNETT: You may want to take that break now.

CHAIR: Okay. Mr. Bennett, I appreciate that. We will take our break and

then we will come back and start with Mr. Mitchelmore again.

Recess

CHAIR: Mr. Mitchelmore, I will give you the opportunity now to go to your

next heading.

MR. MITCHELMORE: Okay.

Under the Trade and Investment

section - and this

section of the Estimates seems to take in quite a number of

initiatives from the department - previously,

section 2.1.02, Investment

Attraction, those funds were allocated, I believe, for the Air Access Strategy.

Some of it was appropriated. There is nothing there right now for Salaries,

Employee Benefits, Transportation and Communications, et cetera.

That is 2.1.02, Investment Attraction, which originally had $2.5 million

spent out of well, overall, almost $3 million of a $4 million budget expended.

MR. HUTCHINGS: The Air Access Strategy, that expired last fiscal year. On

a go-forward basis, if there are opportunities that come up, we would still look

at it in terms of the opportunities that previously existed under that actual

program. That program was set for four years, and with a specific sunset date,

and it did sunset last fiscal year.

MR. MITCHELMORE: The strategic plan says that it goes until 2014. So

there are no funds allocated and the initiative has been cut?

MR. HUTCHINGS: Do you want to speak to that?

MR. MEADE: Sure. The strategy yes, you are correct, member. The

strategy is for a longer period of time. The programming was for a finite period

of time. It did sunset last year. It is the view of the department that any of

the initiatives that could come forward, either from airport authorities or from

airlines that would have a strong business case, we can accommodate in our

existing programs.

MR. MITCHELMORE: What has this strategy done to improve air access and

airports itself? I do believe they were not actively recruiting airlines to try

and get additional airlines coming into the industry. This was more about

standardizing airports and services such as that.

MR. HUTCHINGS: Two things; one was assistance with the airport structure,

and as well was flight attraction. We have seen some uptake on that in Gander to

Halifax; I think it was Gander to Labrador. These flights are indicative of an

economy and the activities in that economy.

In terms of driving economic activity, transportation is key, and this

initiative did support that. Now we are at a point in our economy here in

terms of flight activity in the industry, the economy is very robust.

As the deputy minister said, on a go-forward basis if there are actual

business cases for future flights we will certainly look at them. Ones that we

would look at would be even outside the Province from very strategic locations.

We will look at them on a go-forward basis under existing programs.

MR. MITCHELMORE: Will an annual report be posted of their success or

failures throughout the strategy?

MR. HUTCHINGS: We have not contemplated it but we can certainly do

something in regard to Brent, have we?

MR. MEADE: No, the strategy has not warranted, at this point, annual

reports. As with any strategy, as it nears its completion we would have an

evaluation around that.

MR. MITCHELMORE: Okay.

The

section we are debating right now, in terms of the estimates and

expenditures or on traded investment and the minister has just referenced the

importance of transportation. Is there any initiative through your department to

look at developing an advanced transportation strategy?

MR. HUTCHINGS: Through our department?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: I am not sure what you mean, from an economic development

perspective with Transportation and Works?

MR. MITCHELMORE: In order to facilitate trade or any type of export

activity, there would need to be a means of transportation, whether it is

looking at air access, looking at port development, water, looking at road

development. I would think the Department of Innovation, Business and Rural

Development through trade and export would be looking at advanced

transportation, as well as a telecommunications strategy to really advance

Newfoundland and Labrador and to actually be a competitor.

We are working with partners like Iceland, Greenland, and the New England

States, but if we really do not have a strategy for advanced telecommunications

and transportation, then we are going to be continuously looking at getting

small piecemeal work, subcontracts here and there and miss the big

opportunities. I am wondering if through any of the department, whether it is

through Policy and Strategic initiatives, if they are actually looking at an

overall strategy on these things.

MR. HUTCHINGS: Yes, as I indicated before or if I did not

communications and transportation is key, as we all know, to economic

development, whether here in the Province or outside.

In terms of infrastructure, the Atlantic Gateway initiative of the federal

government, we partnered with them. We have seen commitments to upgrades that

are beginning with the airport in St. John's, which is so critical. We have also

seen upgrades completed in Gander.

As well, we look at port development. You would be familiar with our

investment in St. Anthony in terms of large containers and the importance of

those in terms of toing and froing into export markets. All of that, yes, is a

priority of ours.

Our communications; well in terms of high-speed Internet and those

initiatives that we have put forward, both of those components, communications

and transportation are significant to us. As a department we look to drive those

and, as well, partner with those other departments within government to work

with them. We have had, I do not need to tell you, tremendous investments in

terms of roads and infrastructure. We continually have work to do. To

acknowledge from what you said, it is key to continued growth, those two

elements that you describe.

MR. MITCHELMORE: I went to Iceland this past September and I had the

opportunity to actually meet with Eimskip. They do containerized shipping out of

St. Anthony. They have been able to do the international shipping to connect

Iceland and then go into Greenland.

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: It is quite significant. They recognize the partnership

and the international trade opportunities that exist. When you are looking at

port development and doing strategic port development, that is incredible

because it is reaping benefits.

MR. HUTCHINGS: I have had discussions with Eimskip as well, actually, in

terms of their operations and possibilities that exist.

MR. MITCHELMORE: I want to ask: Does the Division of Trade Policy and

Logistics still exist within your department?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Okay. That division is responsible for reviewing and

analyzing ongoing provincial, national, and international trade and logistical

policies that impact the competitiveness of provincial businesses operating. Is

there any type of report that reflects their work?

MR. HUTCHINGS: Daryl, do you want to speak to that?

MR. GENGE: We would not necessarily have a specific report that talks

about the work of the Trade Policy division. A lot of our trade logistics

activities are fully integrated with our trade and investment team. That work is

spread across the team.

On the Trade Policy side, we deal primarily with trade negotiations, trade

agreements, internal trade agreements, and the current international trade

agreements.

MR. MITCHELMORE: It would be that office that would be responsible for

the comprehensive Canadian European trade agreement?

MR. GENGE: That is correct, yes.

MR. MITCHELMORE: I guess I will ask the negotiation documents show that

the EU is demanding protection of patents that would increase the cost of our

prescription drugs in Canada by close to $3 billion. This would certainly

balloon our health care costs.

We have seen the Health Minister talk about the unsustainability' of our

health care spending nearly 40 per cent of the budget, the most per capita

and looking at facilitating things like privatizing our drinking water, waste

water management, and challenged by local policies. How is that going to impact

things like the Muskrat Falls development, looking at these types of

initiatives?

We have not seen anything from the Department of Innovation, Business and

Rural Development forthcoming on this. There has been nothing revealed to the

public or to our provincial parliamentarians to look at studying the details.

Will this come to the table, come to the Legislature to debate or will the

department be more forthcoming with information?

MR. HUTCHINGS: This is an agreement between the negotiators here of

Canada and the EU. We have participated for some time now with the federal

government, or chief negotiator in terms of what issues are important to the

Province of Newfoundland and Labrador. Many you have just described were

important to us.

In regard to patents and those sorts of things, the Minister of Health

brought in a very progressive generic drug policy last year, which reduced

costs. We do not foresee doing anything or agreeing to any agreement that would

negatively affect some of the progress we have had in terms of cost. As we all

know, future health care costs is a huge concern for us all and how we deal with

that. We would not want to participate in anything that would negate some of the

opportunities and progress we have made on that.

In regard to what is in the public domain, you referenced an agreement. There

is lots of information that has been leaked out, some of it accurate and some of

it not. In terms of what may or may not be in an agreement, there is no

agreement to date. There has been extensive dialogue back and forth. My

officials in this division have been fully engaged. They have done a good job in

terms of representing where we are.

In terms of engagement in Newfoundland and Labrador, I have met with numerous

sectors from this Province and associations that have expressed to me, some with

a desire to see things in the agreement, others with what they did not desire to

see in the agreement. I have met with individuals. I have had letters. I have

had e-mails.

My understanding is any agreement would go before the House of Commons to be

approved there, and to be discussed and debated by the elected officials. If you

have particular concerns in regard to the agreement or where we need to be, I

would be happy to listen to them. Again, to date there is no agreement. There

are still discussions ongoing.

We have always said a priority for us, certainly, in any agreement was

related to fish and getting access to a large European market for our seafood

lines. We are still adamant in that regard and we will see where it takes us

over the next weeks and months.

MR. MITCHELMORE: I am certainly aware of tariffs, the ATQs and things

like that, but one of the concerns with trying to get access to the European

market is also the removal of the minimum processing, which could see our

product shipped and processed in countries that have lower wage, European

countries like Romania and Bulgaria. That would be a significant concern for

loss of employment.

As well, you did mention the brand, the generics, and certainly we approve of

looking at progressive policies when it comes to generic drugs. If the brand

life is extended, then these drugs are not going to be generic for a much longer

time, so it is going to have added health care cost.

Is there a willingness or ability on your department to offer myself a

briefing on CETA negotiations or provide some detail beyond just the fish piece

that the Province has been negotiating?

MR. HUTCHINGS: Well, you say the fish piece. There are a number of issues

on the table. It is not just fish. I just alluded to that as a priority of what

would be important us, but there is a whole range of things. Depending on where

you are in the country, obviously, you have priorities in terms of what you

would or would not like to see.

Again, we are not getting in a situation where we are negotiating with the

EU. We hold what is dear to us. Where we may want to have some movement, we are

not going to put that in the public domain because we just think it is a

negotiation back and forth between us.

We can talk to the high level issues in terms of what is being discussed.

There are moving parts in all of this, in terms of other jurisdictions and other

provinces, where they stand today and where they may stand tomorrow.

As a government, all we can say is we are going to hold dear what we think is

important to the Province. Something that we think does not meet the best

interest of our Province or industries or health care, in terms of where we need

to go, we are not going to participate or be part of it.

MR. MITCHELMORE: Okay.

CHAIR: Mr. Michelmore, are you almost complete in that heading?

MR. MITCHELMORE: I have another question under the division, Trade Policy

logistics. If I could just ask that one question, then certainly Mr. Bennett

could continue.

CHAIR: Okay, fair enough.

Mr. Bennett, are you okay with that?

MR. MITCHELMORE: I do have other questions as well.

I just wanted to know about the Atlantic Gateway. What is the status with

that, being that it is getting to the end? There were three projects, I believe,

the department had undertaken.

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Are they complete, and is there further work?

MR. HUTCHINGS: The Gander project is complete.

MR. MITCHELMORE: Okay.

MR. HUTCHINGS: The St. John's project, there is some engineering work

being done in regard to getting that moving forward. SmartBay, I think, has been

completed or is ongoing?

OFFICIAL: It is almost completed.

MR. HUTCHINGS: It is almost completed. That one is ongoing.

MR. MITCHELMORE: Okay.

MR. HUTCHINGS: I met a while back with the minister responsible for

Atlantic Gateway, Minister Ashfield, in Ottawa. We talked about, as Mr. Bennett

had indicated yesterday, in terms of Arctic opportunities. We made him aware of

our strategy in terms of Arctic opportunities, and Atlantic Gateway funds or

anything that we can connect to and drive what we are trying to do in terms of

building Arctic opportunities, and had a discussion.

I also talked about with him, too if there is any slippage in terms of

the funding, what we could access in that regard. So, that is the status on

that.

MR. MITCHELMORE: Thank you.

CHAIR: Thank you, Mr. Mitchelmore.

Mr. Bennett.

MR. BENNETT: Under 2.1.02, one side has no numbers any more. I think that

means it has been moved to another area.

MR. HUTCHINGS: Yes, that would be moved up to Trade and Export

Development. So, 2.1.02 would be moved up to 2.1.01. Is that correct?

OFFICIAL: Yes.

MR. BENNETT: I am sorry. Where did it go?

MR. MEADE: Anything under Investment Attraction, and Trade and Export

have now been fully integrated.

MR. BENNETT: Okay.

MR. MEADE: Henceforth, Trade and Export Development will be the activity

covering all of that.

MR. BENNETT: Okay. If we go over to the other page, 2.1.04, Business

Attraction Fund, it is budgeted $15 million. Last year, we used $1.947 million.

Minister, do we have a strategy in place in the Province, or would you

contemplate a strategy whereby we would identify business opportunities here in

the Province that others might want to take advantage of and we would take the

step of marrying the two?

For example, let's take anything in a business opportunity from, maybe fish

waste, which Bob Verge says is up to $500 million waiting to be developed, which

we are just discarding, to maybe the bakeapples we see being developed in

Southern Labrador to pellets, or whatever it is. Does the government

contemplate, or would you consider having like a catalogue of opportunities in

this Province?

With entrepreneurs ready to go but they do not have something, they do not

have markets, they do not have capital, they do not have whatever to actually

match them up with people in other countries, maybe India, maybe Taiwan, whereby

we could identify the opportunities here and literally be the matchmaker so we

can get the economy going with foreign entrepreneurs and local entrepreneurs. To

joint venture them to run this fund so we use all that is allocated and create

employment.

MR. HUTCHINGS: Yes, it is an interesting point you make. Through our

trade investments, and prior to what we had, we are a little bit more focused

now. I will let Daryl speak to that in a second.

In terms of what you described, and looking at an inventory of what we have

here in regard to particular industries that may need inward investment, and

also opportunities in regard to buildings or infrastructure we have here, the

adjacency of that infrastructure and what opportunities that could open based on

where it is in the Province and those types of things, that intelligence of

information. When our folks go out and sell Newfoundland and Labrador, whether

it is at expos or looking at foreign investment, we do some of what you talk

about in terms of selling those assets and opportunities we have, and try and

link up those opportunities with foreign investment.

We talk about this fund as business attraction. This is a fund that deals

with opportunities that could exist and how we could assist, but business

attraction is much broader in terms of our government and what we do. We see

business attraction that is happening, but it may not come out of this fund. We

see it in the fishery in terms of the South Coast aquaculture. We have seen it

in our natural resources. We see it in our mining sector in Labrador, where we

see Chinese investment coming into the Province and investing in various sectors

and opportunities.

You can look at this and say, well this was not all used, but you have to put

a broader lens on if you are talking about direct foreign investment. If I have

my numbers correct, I think since 2010 direct foreign investment in the Province

has almost hit $3.5 billion in additional foreign investment. We are seeing

significant direct foreign investment in the Province.

What we are seeing, which is important, is we are seeing investment take

Chinese investment, I think it is in iron ore. Obviously, they need that

commodity. What you are seeing now is you are seeing investment from outside

that is tied directly to a need for a commodity, which integrates the whole

process. It gives us sustainability; obviously, there is no one in between. The

investor needs a commodity. They are investing in a local company here in the

Province. Once that commodity is ready it goes to that market, so that our

business continuum is there. I think that is so important.

Daryl, do you have anything to add?

MR. GENGE: Yes, I think it is important to look at our approach going

forward is a fully integrated model, as the minister explained. When we go into

new markets our trade and our investment teams will be working collectively

together to look at opportunities for existing businesses here in the Province,

look at business opportunities where the capital is not available here in the

Province to actually take advantage of those opportunities and to develop new

industries.

We are looking at markets where there is significant interest in both

bringing new product into those markets but, as well, investors in those markets

looking at coming into Canada. We are looking at places like China, like Brazil.

We will continue to be in existing markets like the Northeast US, Europe

although Europe is a little stagnant right now and other high-growth markets

around the world.

To answer your question, that is part of our new model. We are actually

actively looking for both trade and investment opportunities collectively in

markets and to take advantage of opportunities here in the Province. Our trade

team is actively working throughout the Province looking at with both existing

entrepreneurs but as well in areas where we have gaps and we need to fill those

gaps.

MR. BENNETT: Minister, as part of the Business Attraction Fund, is there

a consideration, or would you consider using some of that fund or a comparable

fund to actually go and scout out business people and bring them here at our

cost for three or four or five days and actually tour the Province for business

opportunities? Because when you are on the other side of the world in India,

China, Japan, or wherever, we are not really that well known.

Canada is very well known, but investment goes to the bigger provinces. They

go there first. Would you consider, or have you considered, or is there a plan

in place whereby we would scout out for entrepreneurs?

India, for example, supposedly has more millionaires than we have people in

and they are going great guns in other areas. As part of our Business Attraction

Fund to actually go find them if they want to come here, you would be able to

demonstrate if they have any wealth or not. They could come and tour the

Province and then they would see the natural applications. Would you consider

that as part of the Business Attraction Fund?

MR. HUTCHINGS: Yes, it is an interesting concept. We do some reverse

trade shows and bring folks in, as you say.

You talked about very wealthy from the Chinese community, I have met with a

couple of very wealthy Chinese investors who have come through various means and

wanted to meet. We have had discussions and they have come forward. They looked

at investments in the oil and gas sector, mining, and even outside of that, in

the fishery and other industries. So, we are seeing some of what you described,

but it is a good suggestion. It is something we can look at as we move forward

in terms of identifying.

I know the other year we had the mission, the ambassadors were here. That was

something that we did with them. We took them to various facilities and showed

them the type of industries we have. Some of them were very eager about

investment. They were connected to entrepreneurs and people in their countries.

What we did is we hooked them up with Daryl and his group and made that

connection.

In a roundabout way, that is what we did, what you just described. We hooked

up entrepreneurs in other countries who had wealth, investors who wanted to look

at, as you said, Canada. Since they were here we exposed them to Newfoundland

and Labrador and what we had. We are continuing that dialog and have lines of

communication open with them, much like you described.

MR. BENNETT: Minister, do we work with the federal government through our

embassies and foreign affairs to help market this Province? Because Canada is

not only very well known, it is very highly regarded

MR. HUTCHINGS: Yes.

MR. BENNETT: and if we are piggy-backing on Canada, we should be able

to do much better with a much bigger critical mass than we have. Do we do that?

MR. HUTCHINGS: Yes, we do. We engage with the embassy in terms of

promotion if we are in other countries, as well. I have had discussions with a

number of Canadian ambassadors in various jurisdictions. I met with them in

terms of how we can promote and what we can do, describing, as you have said, in

terms of accessing capital in other countries.

MR. BENNETT: What about provincial sponsorship of entrepreneurs who want

to move to Canada, they want to move lock, stock and barrel their families to

set up or buy a business here? Are we engaged at all in immigration in a

hands-on way of people who would come here because they want to live here, and

we want them here because they will contribute to our society?

MR. MEADE: We do not have a particular program. There is a provincial

nominee program but we would obviously work with the federal government and with

the immigration office in the provincial government around how we could work

together in recruitment of immigrants to Canada, and to Newfoundland and

Labrador in specific, not only to meet our business needs but also to meet some

of our labour market needs.

We work very closely with Advanced Education and Skills on the immigration

file but we are also engaged as an economic development department, as a

business development department, with the federal government and immigration as

well. You may be very well aware that the federal government is moving towards

much more of an employer based, much more of a business based approach to its

immigration policy. As a department, that obviously would be aligned with that.

From an economic development perspective, we have been engaged in those

conversations.

The lead department for immigration in the Province is Advanced Education and

Skills, but we do work closely with them on that.

MR. BENNETT: Do we work with immigrant communities that are already here?

You take a restaurant, like India Gate has been here for more than twenty years.

Many people are here only in small numbers from other nations. Do we showcase

people who are already here, who may have contacts where they have come from who

may be interested in relocating?

MR. HUTCHINGS: Yes, we do. Where there is interest shown from a foreign

investor we try to highlight the ethnic background of what we have here to try

and match it up. That is always important too, as you know, to have that

connection.

Rita, do you want to speak, too?

MS MALONE: It is interesting what you raise. We have had opportunities to

explore joint ventures with Sri Lanka on the West Coast, because there are a

number of positions and people from Sri Lanka. We have built good relationships

with contacts they have, and they hand over to us, as a department, engaged in

business activity. We have had success, and we work with AES on that as well.

Another area is in Gander, Labrador West, as well as back on the West Coast,

a Philippian community in the Corner Brook region. We have been able to make

some good business linkages and therefore attract other cultures or individuals

within those communities.

MR. BENNETT: Minister, is there any ongoing discussion, or is it

considered that the Business department of IBRD would work with other

departments of government to make this Province a more business friendly place

to operate?

That is not to say we may not, but I am not sure that we are with our

business climate. Whether that integrates not only Red Tape Reduction but

reduction in taxes for small business, maybe labour relations which might, in

some people's view, including me, is in badly need of updating so we do not have

people go on strikes for months on end. Is there any consideration to putting

together a formula whereby if you think business and you think coming to this

Province as opposed to any other province?

MR. HUTCHINGS: Yes, that is an ongoing process all the time. Based on

some of the investments and some of the people who we are hearing from, I think

it is fair to say people are excited about the business environment here and

about coming here, whether it is nationally or internationally.

To your point, yes, we are always evaluating that business environment,

whether it is taxation, whether it is incentives, your labour climate, all of

those things. You want sustainability in your labour climate, no doubt, and the

perception that there will be stability. I think we have done fairly well with

that in creating the environment but we always have interaction with other

departments. I hear from various industries, sectors, boards of trade always in

recognizing where we are, but also suggesting new ways or new means that we

change some public policy to make it more inviting for the business environment.

We have come a long way. I think we have a good environment now but,

certainly, there is more we can do. We always work with other departments to see

how we can improve on our business environment.

CHAIR: Thank you.

Okay, Mr. Bennett, I am going back to Mr. Mitchelmore. I just want to make

people aware that we are down to forty minutes. We are only allotted until

12:00. I do not know what the time frame will allow us later on if we have to

reconvene. It may or may not be possible. I do ask, if there are pertinent

things you want to get to, please proceed.

MR. MITCHELMORE: Thank you, Mr. Chair.

I am sure we could make additional time allocated to have our questions

answered. I have a number of questions and I certainly want to get to them all.

When it comes to the Trade and Investment, and I need some clarification from

the minister. You stated that

section 2.1.01 and 2.1.02 have been collapsed and

combined. Basically, what that means is $6.8 million previously has now become

$4.3 million. That seems quite a significant cut.

How many jobs were actually lost in this

section of Investment Attraction,

and Trade and Export Development?

MR. MEADE: There were two Economic Development Officer positions

eliminated. There was a vacant Clerk position eliminated. There was, as well,

throughout the year, three contractual positions that were not renewed. They

occurred at various points throughout last fiscal year.

MR. MITCHELMORE: Okay. There were contractual positions that were not

renewed. I had previously asked about the department and I believe you had

stated there were only two positions.

MR. MEADE: Yes, but you had asked at the end of March. You had asked what

positions were not renewed at the end of March. These positions were not renewed

at various points through last year. In fact, I think three of them were during

the summer of 2012.

MR. MITCHELMORE: Okay. Can I have information as to the positions

throughout the year that are no longer there, whether they are full-time,

part-time, contractual, seasonal, to know what actually happened and the

positions, by position and their role? It would be nice to see what the current

department is made up of and how these programs are collapsed so I can help my

constituents when they ask questions, to know which area they need to go to have

these discussions. So that can be provided?

MR. MEADE: Yes.

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Okay.

You had explained the Grants and Subsidies under that

section as being around

defence, is that correct? That is part of the defence strategy, number 10 under

Grants and Subsidies, this $1.7 million?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Okay. What was the previous $565,000 spent on?

MR. MEADE: The budget of $625,000 and then the revised expenditure of

$565,000 would have been programming related to business networks, international

trade assistance, which is travel assistance, and it would also be some other

miscellaneous grants. We provide some support to APEC and certain things like

that. So it would be comprised of that.

Some of those things, the Business Networks and International Trade

Assistance, are now actually moved to another part of the department under the

Business Development program. So there are some ins and outs here, hon. members,

in what I am saying, but the $1.737 million now includes $1.5 million in

Aerospace and Defence Fund and $237,000 in miscellaneous grants.

MR. MITCHELMORE: Can I have a list of what your programs were offered,

like Business Networks, International Trade, and all of the others in the

department as to what their funding was last year and what it is this year?

MR. MEADE: Yes.

MR. MITCHELMORE: Were the business networks cut in terms of funding?

MR. MEADE: No, what happened is that we consolidated, as you may be

aware, over twenty programs into two umbrella funds.

MR. MITCHELMORE: Okay.

When it comes to 2.1.03 under Marketing and Enterprise Outreach, there is a

significant drop when it comes to the Purchased Services. Was there something

that was not done that was planned? It is $259,500, the revision, as to what was

estimated to be spent, but over $640,000 allocated.

MR. HUTCHINGS: I do believe there was a marketing strategy that was

indicated and that was budgeted for. That was delayed and was not completed.

Then in terms of just overall reduction, I think there was $200,000 reduced just

based on expenditure management.

MR. MITCHELMORE: Are you available as the minister to provide a progress

report on the Marketing, Enterprise and Outreach Division on how they are doing

to promote your programs and activities locally and internationally in marketing

and supports? There is nothing available online as to what this department has

been doing.

MR. HUTCHINGS: Yes, we can provide that.

MR. MITCHELMORE: Okay.

In that, would that have any information on the strategic partnerships with

the Southeastern US, New England, Iceland, and Ireland?

MR. HUTCHINGS: Yes, we can provide information in terms of what that is.

MR. MITCHELMORE: Okay.

The Business Attraction Fund, this lucrative fund of $15 million that has

spent only $1,947,000; that is Loans, Advances and Investments. You alluded that

some of these expenditures would be for trade shows?

MR. HUTCHINGS: No.

MR. MITCHELMORE: So the $1.9 million, can I have details on who was lent

these funds?

MR. HUTCHINGS: Yes, those would have been funds, agreements reached with

companies coming to the Province. That is what would have been dispersed to

those companies in the current fiscal year.

MR. MITCHELMORE: How do you do your lending in terms of these companies

in terms of providing loans, making sure that there is security