May

15, 2012

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): I would like to welcome everybody as we review the

Estimates for the Department of Innovation, Business and Rural Development.

I would like to first welcome the minister and his staff. I will give the

minister an opportunity to say a few words, if you want to do an introduction in

a minute, and have his staff introduce themselves.

I do want to reiterate, and I have been saying as we go through: staff, if

you are answering a question, please identify yourself. Hansard is doing a

recording, and it is harder for them to pick up who spoke.

I would like to start by welcoming the Committee again and ask if they would

introduce themselves.

MR. RUSSELL: Keith Russell, MHA for Lake Melville.

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

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

MR. BENNETT: Jim Bennett, MHA, St. Barbe.

MR. LONO: Simon Lono, Opposition Office.

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

North.

MR. SMITH: Daniel Smith, researcher with the NDP Office.

MR. MURPHY: George Murphy, MHA for St. John's East.

CHAIR: I appreciate that.

We want to start a little bit differently because this department takes in

some other entities that are back and forth in the Estimates book. We are

requesting that we start with the Rural Secretariat, which is on page 2.11 under

Executive Council. There is a

section there that the minister is responsible

for. We could do that and then move on to the Research and Development

Corporation, which is 7.1.01, one small line, and then back to the executive

office.

The process, for those who are not aware, what I will do is after the

minister gives a quick introduction we will go to the Opposition, and we will go

fifteen minute intervals back and forth. If you are close to finishing a

section, or there are a couple of last questions, I will give you leave on that.

Then I would appreciate the courtesy of going back and forth as you ask

questions to the minister.

I do ask, if you are having problems hearing, that you put in your ear sets.

That would expedite what we are doing and makes things clear.

Mr. Minister, the floor is yours.

MR. HUTCHINGS: Thank you, Mr. Chair.

Good morning, everybody.

MR. BENNETT: Mr. Chair?

CHAIR: I am sorry?

MR. BENNETT: Mr. Chair, I would like to register an objection to the

structure of where we ask questions. In some of these areas I have no interest

in asking questions whatsoever, and other areas I do have an interest in asking

questions. We may get to the end of the day when I have had to waste too much

time on areas that I have no interest and then leave areas that I have an

interest.

So, in fairness to people trying to get meaningful information from the

minister, I would like to be able to ask questions on the areas that my

researchers and I have identified as being important.

CHAIR: Okay, fair enough. Again, you can just say you have no questions

on the Rural Secretariat if it is not one of interest and then we can move to

the Opposition.

MR. BENNETT: By directing to the page, if I do not have any interest in a

particular page, then by the time we have wasted the three hours, we get to the

end and then I have an interest in another area, we have used up all the time.

We have already learned that government is not about to extend the time when we

run out of time, because I learned that in Fisheries.

CHAIR: So noted, but I will start with the

section of the Rural

Secretariat.

Mr. Minister.

MR. HUTCHINGS: Thank you, Mr. Chair.

Good morning, everybody. I welcome the Committee, the Committee members, and

certainly my staff. I have no opening statement. What I will do is, I will go to

my left and my staff can introduce themselves. Then I will be happy to get right

into questions.

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

Development.

MS MALONE: Rita Malone, Assistant Deputy Minister, Regional Economic

Development.

MR. AU: Peter Au, Assistant Deputy Minister, IBRD.

MS TRICKETT: Wanda Trickett, Departmental Controller, Executive Council.

MR. JONES: Scott Jones, Departmental Comptroller, IBRD.

MR. GILBERT: Bruce Gilbert, Assistant Deputy Minister, Rural Secretariat.

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

MS EVANS: Beverley Evans, Chief Financial Officer, Research and

Development Corporation.

MS HAYES: Robyn Hayes, Manager of Finance, Budgeting and General

Operations for the Executive Council.

MR. BARFOOT: Scott Barfoot, Communications Direct, Innovation, Business

and Rural Development.

CHAIR: Thank you, everybody.

Mr. Bennett, you are given the opportunity to have any questions on the Rural

Secretariat or, if not, then under Executive Council. You can ask any questions

here.

MR. BENNETT: Do you mean do I have any questions on page 2.11?

CHAIR: Exactly, yes.

MR. BENNETT: I have no questions on page 2.11.

CHAIR: Okay, perfect.

MR. BENNETT: I understand this will be done in the House as well.

CHAIR: No.

MR. BENNETT: My understanding is this will be done in the House.

CHAIR: I do not think this will. Once this is passed now, it stays as is

under Executive Council.

MR. BENNETT: It will be raised in the House, because government has been

shutting

MR. HUTCHINGS: The Executive Council does most of the House of Assembly

under Executive Council.

MR. BENNETT: Under Executive Council.

MR. HUTCHINGS: That is my understanding.

CHAIR: Okay, Mr. Bennett, proceed.

MR. BENNETT: Mr. Chair, you have directed me to ask questions on page

2.11, and I have no questions on page 2.11. Where does that leave me? There are

a few numbers and a few lines.

CHAIR: Okay, you can move right into whatever you like.

MR. HUTCHINGS: We are going to stick with the Rural Secretariat first,

are we?

CHAIR: Yes, the Rural Secretariat, which is the next section.

MR. HUTCHINGS: Are there any other questions from the Committee on the

Rural Secretariat?

CHAIR: I can go to the Third Party.

Mr. Mitchelmore.

MR. MITCHELMORE: I am fairly familiar with the Rural Secretariat and its

regional planners, especially in my district and the work that they do and the

advice documents.

I have some questions pertaining to the line item 2.6.01.03 under

Transportation and Communications. I am just wondering if we could get a list

maybe of what the travel breakdowns are, the budgets for each of the planners.

MR. HUTCHINGS: For each council or each planner?

MR. MITCHELMORE: Yes, each council and each planner because some of the

districts are quite large.

MR. HUTCHINGS: Yes, sure that is not a problem. We will make note. Yes,

we will get that for you.

MR. MITCHELMORE: One of the other concerns I have is when I was in

Labrador attending the Combined Councils and there was a presentation by the

Rural Secretariat. There were a number of people in the room who had no idea

what the Rural Secretariat was and what it did.

I recognize that Labrador is a vast geographical space for one planner. I

ask, is there consideration for additional resources for Labrador with the Rural

Secretariat? What is being done to further promote what the actual Rural

Secretariat does across the Province?

MR. HUTCHINGS: We do not have any immediate plans in terms of expansion.

We always listen, Mr. Mitchelmore, to the public in terms of in how we proceed.

I have been here now approximately six months but all departments or all the

programs there, we have been doing a review and looking at them. I have, in

terms of what we are accomplishing, if there are any shortfalls there and what

we may need to do differently.

The Rural Secretariat plays a pivotal role, from a dialogue perspective on

the ground with the general public. A number of advice documents obviously come

forward. The Secretariat facilitates a number of citizen engagements. We can

certainly speak to those if you wish, in terms of some of the very successful

ones we have had recently and have continued to have, but in terms of promoting,

yes, sure. We continue to promote.

We have some great volunteers, over 100 on the ground from various areas in

terms of communities and regions. We value very much their advice. There are

other things we can do to advise people of what it is they do and the important

role they play in government. We will continue to do that.

MR. MITCHELMORE: Absolutely. I am quite familiar with some of the things,

like the regional collaboration and networking project. One of the downfalls of

doing that though, is there are limitations with the technologies that are in

play, and that is something that will need to be looked at.

I do not really have any further questions on the Rural Secretariat and its

role. I am familiar with it and there does not seem to be anything abnormal in

the line items.

CHAIR: Thank you, Mr. Mitchelmore.

As we move forward, can I have a motion to adopt 2.6.01 Rural Secretariat?

MS PERRY: So moved.

CHAIR: Motion made by the Member for Fortune Bay Cape La Hune.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Motion carried.

On motion, subhead 2.6.01 carried.

CHAIR: Okay.

We would like to move into the Research and Development Corporation, which is

page 11.16. It is the last page in the department's Estimates of Innovation,

Business and Rural Development.

Mr. Bennett, I will go back to you on that one. Do you have any questions

here?

Once we complete that, we will go right back to the beginning of the

department's estimates under Executive and Support Services.

MR. BENNETT: Mr. Minister, what does the Research and Development

Corporation do?

MR. HUTCHINGS: Basically, looking at nationally and internationally, in

terms of the importance of research and development, what most countries and

regions have done, is they have recognized, obviously, the importance of

research and development.

As a government, in 2008, we recognized that. We believed we needed an entity

to drive research and development in the Province of Newfoundland and Labrador.

We strengthened our focus, quantity and quality and relevance of research and

development in Newfoundland and Labrador, and what the importance it is for

today and for generations in the future, and overall sustainability. Looking at

investing from our non-renewable resources today, that we have sustainability in

areas like research and development in the future and what it means for our

overall economic development.

So, from that point of view, it is the engine that drives research and

development in Newfoundland and Labrador. It collaborates with industry,

certainly academia, so we get that focus on research and development which we

believe is so important in our Province.

MR. BENNETT: Does it do research and development in oil and gas?

MR. HUTCHINGS: It will partner with the oil and gas industry, yes.

MR. BENNETT: What research, if any, are you aware that is done in

researching natural gas?

MR. HUTCHINGS: Particular research that has been approved in the area of

natural gas?

MR. BENNETT: Any that has been completed.

MR. HUTCHINGS: That has been completed?

MR. BENNETT: Yes.

MR. HUTCHINGS: I will revert to Glenn.

MR. JANES: We have done a lot of work with the oil and gas industry. We

have done over $20 million in over forty projects. Most of them given that we

have slightly more than a two-year operating history are still in progress. So

the majority of our projects are not completed.

In oil and gas, we have worked on things when it comes to considering

things like recovery, we look at recovery of both oil and gas, and we look at

issues that would impact both of those in this Province. Namely things like ice

infested environments, which would have to be overcome for the existing

facilities that we have in place producing oil, but would also be a challenge

for gas.

Other technologies that would be important as well would be: How do you put

down pipelines to get at those resources? So, we are looking at an issue such as

trenching, which is burying pipelines to make them safe in the environment they

operate in.

MR. BENNETT: How much research has been done on bringing gas ashore?

MR. JANES: In bringing gas ashore?

MR. BENNETT: Yes. Not oil, just gas.

MR. JANES: We have not done specific projects focused solely on gas. We

have looked at recovery of both oil and gas from known reservoirs to make sure

that we can get access to it. This is technology driven versus market studies.

MR. BENNETT: You say there has been no research done whatsoever in

bringing natural gas ashore?

MR. JANES: No, I did not say that.

MR. BENNETT: Okay.

MR. JANES: I said we are looking at both oil and gas in our environment.

MR. BENNETT: You are saying oil and gas, I am asking about gas. I know

the difference between oil and gas.

MR. JANES: Okay. The gas that we have located in this Province is

offshore. Many of the same challenges to recover the gas are the same challenges

that are there to recover the oil. So, I am trying to identify some of the

common themes, or technical challenges that will have to be overcome for both.

With these resources offshore under the ocean, several hundred kilometres

offshore, we have to figure out how we access those resources. So namely, how we

drill a hole in the ground that hits either oil or gas. Then we have to say how

we optimize and get those out of that reservoir, and then how do we overcome the

technical challenges to make that happen and also to get it to shore. The issues

that we looked at are ones that are future looking. We have supported projects

that are future looking for this Province to tackle the issues so that there is

further development.

So, the developments that you see in place now, Hibernia and Terra Nova, have

done different things to see that you could recover, in the first instance, oil

when you have icebergs drifting by or you are in a harsh environment. We are

looking at what is required to get some of the other resources out there that

includes gas back to market, but we are looking at longer-term horizons. You

are looking at five to ten-plus years as to what technical challenges need to be

overcome to do that.

For instance, we know there is gas off Labrador. It is proven. The challenge

there is nobody knows the best way to get that safely from the offshore

environment that it is in back to shore to be able to contemplate doing anything

with that as an industry; but that day, we are confident, will come. We will

have to work on the technological challenges from our perspective to make sure

it happens, as others will have to work on the market challenges to see that

potential.

MR. BENNETT: How much research has been done to date that is gas

specific?

MR. JANES: I would not be able to give you that number off the top of my

head. I would venture to say though that a large portion of the $20 million that

we have done in projects, all have an aspect of what is the potential for gas.

Because the commonality between the two we are looking, usually, at both

simultaneously.

We have also done things that look at non-conventional gas. We have sponsored

with C-CORE, that now has a Centre for Artic Resource Development, and a gas

hydrates workshop and brought some experts into the Province to do that. That is

an unconventional form of gas we are looking at that has future potential, both

for Newfoundland and other places.

MR. BENNETT: Do the existing wells have any gas or just oil?

MR. JANES: I hasten to add, I am not an expert in oil and gas. I would

not want to purport to be, but my understanding is many oil wells have a mixture

of gas as well. Many times it is some of the gas that is used to recover the

existing oil that is in the well, but when you get a field it is the

preponderance of what you find. Is the majority of what you found in the field

oil or is it gas, and which one does it make economic sense to recover and how?

In some instances, it is possible to do both.

MR. BENNETT: Do you know how much gas the existing wells have available?

MR. JANES: No, I would not be an appropriate expert to answer that

question.

MR. BENNETT: Does anybody know, to your knowledge?

MR. JANES: I would expect that others have estimates or opinions

OFFICIAL: (Inaudible) Natural Resources from that perspective.

MR. BENNETT: How much research has been done on bringing that gas ashore?

MR. JANES: Could you clarify the question, bringing which gas ashore?

MR. BENNETT: Any gas that is in existing wells.

MR. JANES: Well, all of the technologies we have looked at, by and large,

could contemplate: What are the technical challenges that have to be overcome to

recover gas that are known?

MR. BENNETT: Has the Research and Development Corporation done any

studies specific to bringing gas ashore?

MR. JANES: No, we look at technological challenges. Insofar as we would

do studies, they would be technologically oriented as opposed to market

oriented. I want to clarify that studies we do, would only be engineering

studies or something of that nature which would identify the technological

barriers that have be overcome.

When you are looking at broader studies that take a holistic view, that would

not be our remit. That is not what we do. We focus specifically on the

technological challenges.

MR. BENNETT: The Research and Development Corporation is a separate,

stand-alone corporation from government?

MR. HUTCHINGS: Yes, it is.

MR. BENNETT: Who runs the Research and Development Corporation?

MR. HUTCHINGS: The Research and Development Corporation has its own

legislation. It is governed by a board of directors. In particular, annually it

is audited by the Auditor General. It reports to myself as minister twice a

year. That is the basic structure in terms of how it operates and who it reports

to.

MR. BENNETT: Who are the directors now?

MR. HUTCHINGS: The board of directors?

MR. BENNETT: Yes.

MR. HUTCHINGS: We can certainly get a list of those and provide that to

you.

MR. BENNETT: How are they selected?

MR. HUTCHINGS: They are selected through Cabinet.

MR. BENNETT: Who makes the final approval as to the directors?

MR. HUTCHINGS: It is approved by the Lieutenant-Governor in Council.

MR. BENNETT: How often does the board of directors meet?

MR. HUTCHINGS: How often do they meet?

MR. BENNETT: Yes.

MR. HUTCHINGS: I will revert to you, Glenn.

MR. JANES: The board of directors meet at a minimum on a quarterly basis,

and then from there as required.

MR. BENNETT: Does it have a chairman?

MR. JANES: Yes, it does.

MR. BENNETT: Who is the chair?

MR. JANES: Jackie Sheppard.

MR. BENNETT: Who is Jackie Sheppard?

MR. HUTCHINGS: Go ahead, Glenn.

MR. JANES: Jackie Sheppard is a former Newfoundlander. The first female

Rhodes Scholar from Newfoundland and Labrador, and until recently, before she

retired, was a Senior Executive, Vice-President of Talisman Energy out of

Calgary.

MR. BENNETT: Are you aware that she is also a director of Emera?

MR. HUTCHINGS: Yes.

MR. BENNETT: Do you not see any conflict of interest, if the Chair of the

Research and Development Corporation is also a director of Emera, when Emera is

involved in Muskrat Falls Development, and the Research and Development is doing

no research whatsoever on natural gas, which would be in competition to Muskrat

Falls?

MR. HUTCHINGS: This is technology driven, and any appetite, I guess, or

any applications under the suite of programs under R&D, anybody out there is

able to apply for those Research and Development grants and programs that are

listed under the Research and Development Corporation.

Are you suggesting that someone has been denied application?

MR. BENNETT: Was Ms Sheppard vetted for conflicts?

MR. HUTCHINGS: I guess all board members are vetted for conflicts

originally when they are approved for their appointments.

MR. BENNETT: Was this potential conflict disclosed?

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

MR. JANES: Conflict of interest is dealt with on a quarterly basis at

every board meeting. We have informed directors who are highly capable and

competent in their area, but we recognize to be able to get the people to serve

on our board who are informed about the subject matters that we work in, they

could potentially be in a conflict. That is brought up at every board meeting.

Decisions that have been made where there is any potential conflicts, they

have been excused from any decision-making process. That has been documented and

noted.

MR. BENNETT: Are there minutes of board meetings?

MR. JANES: There are.

MR. BENNETT: Are they available?

MR. JANES: They are public and available if requested.

MR. BENNETT: Could you provide me with the minutes of the board for the

last two years?

MR. JANES: We can.

MR. BENNETT: I have no more questions on the Research and Development

Corporation.

CHAIR: Okay, Mr. Bennett. I appreciate that.

I will go to Mr. Mitchelmore, and then we can come back to you, Mr. Bennett.

Mr. Mitchelmore, on the Research and Development Corporation.

MR. MITCHELMORE: Thank you.

I would just like to note, the Research and Development Corporation produces

an annual report which would list the details of salaries, staff and positions.

That is made public?

MR. JANES: We produce an annual report that gives a breakdown of our

operating expenses, as well as the disbursements we make, the programs we

provide and the funding we support. We do not breakdown individual salary line

by line because that would identify the particular individual, but we do give

information as to what is expended on salaries.

I would also like to add at this point, that for the $19 million

approximately that we approve annually for program support, each and every

project is announced and released publicly. So, it can be provided to you. Even

looking on our Web site, sometimes with a slight lag, all projects are announced

and identified, including the amount of money associated with them.

MR. MITCHELMORE: Okay.

I am wondering if I could get a list of under the only line really is

Grants and Subsidies. Can I get a list of all the funds that were dispersed for

last year, the $25,220,500?

Also, for the Chair to ask if anything that is provided to Mr. Bennett, like

the minutes, if I could also have a copy as well.

CHAIR: Okay, no problem, noted.

MR. MITCHELMORE: I am wondering, the projects that were stated, it said

they are technical studies. Are they 100 per cent paid for by the Research and

Development Corporation or are they cost-shared?

MR. HUTCHINGS: Glenn?

MR. JANES: Typically we work with partners, and the majority of ours are

cost-shared. Over time we have done in the past couple of years a little more

than $50 million in commitments, but we have partnered for over $100 million

with others. It depends on a project by project basis.

In some cases we are a minority in a small percentage of a larger project, in

others taking the lion's share. In other cases we would be the major funder and

supporter. It varies on a project by project basis, I guess is my answer.

Because of what we want, which is collaboration, co-ordination, and bringing

other players to the table, we typically look for their engagement both in terms

of their time but also in terms of their money.

MR. MITCHELMORE: Okay.

MR. JANES: Especially when we are working with industry, we expect to see

industry come to the table and be able to contribute towards the cost of any

project, because we think that they should have sufficient commitment to what is

being undertaken as well.

MR. MITCHELMORE: Do you have in-house researchers or are you hiring

consultants? What is the process?

MR. JANES: Predominantly for our program side of the business we have

account managers who deal with the programs, co-ordinate the activities to put

together a project, and then have it taken through an evaluation process. As

such, we do not have a staff of research performers. We support and source the

other people to do it. That gives us the flexibility to look at and go in

different areas.

When we do get in programs that are deeply focused or technically specific

and I will highlight one, geoscience for example, that is a very specific area

we are drawing a focus on we would retain an expert who has that knowledge in

geoscience. Typically, we would put them on contract for the period of time that

we need to administer and deliver that program.

MR. MITCHELMORE: What percentage of the research is done in Newfoundland

and Labrador?

MR. JANES: Minister?

MR. HUTCHINGS: Yes (inaudible).

MR. JANES: I do not have a hard number but it is easy to say that it is

well north of 90 per cent. I would hasten to say probably more than 95 per cent.

MR. MITCHELMORE: Okay.

MR. JANES: The vast majority of it is done here. There are instances

where there are specialists' expertise, or knowledge, or facilities where it

does not warrant replicating simply for the sake of one result or one test, but

there is no question that the vast percentage is done within the Province.

MR. MITCHELMORE: Is Memorial University and the College of the North

Atlantic a player in this type of research and development that is taking place?

Are they a partner, or would they be somebody who has taken on some lead roles

in these research cases?

MR. JANES: We certainly partner strongly with Memorial University, and we

have a growing and strong relationship with CNA as well, in that we identify

some areas where we think the Province can benefit, where the economy is in need

of expertise to be developed. Of course, the university plays a role in many of

those projects because they have developed the expertise, have the professionals

who can be applied, who can work with industry in some instances, but also can

work on projects that will develop the next generation of students and talent

that we need in particular areas.

MR. MITCHELMORE: Will the breakdown of funds highlight what amounts have

gone to the educational entities in the Province?

MR. JANES: Yes.

MR. MITCHELMORE: Okay.

I would just like to ask, is there any percentage of these grants and

subsidies that are going to the very rural areas of the Province to do research

and development on a technical nature for diversification in sectors where there

would be places of under 5,000 people? Have there been any projects undertaken?

MR. HUTCHINGS: Well, just to speak in a general sense, research and

development has no boundaries. What we are trying to do here is build that

capacity, and that, as I said, knows no boundaries.

Glenn, do you want to speak to a specific area?

MR. JANES: Obviously, we do the work where it makes the best sense to do

the work, but we have done projects in rural regions, and certainly done them in

communities with less than 5,000 people, which I think was your question. A lot

of times it is the problem that needs to be solved in that particular area or

region, or it is the best place to do the field study or work. We certainly have

done work and projects in the rural regions.

MR. MITCHELMORE: Okay.

I do not think I have any further questions for the Research and Development

Corporation.

CHAIR: Okay. Thank you, Mr. Mitchelmore.

Well, if there are no further questions on that, I will ask for a motion to

adopt 7.1.01.

The Member for Lake Melville makes the motion.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Motion carried.

On motion, subhead 7.1.01 carried.

CHAIR: We can now move back to

section 1.1.01 under Executive and Support

Services.

I will go to Mr. Bennett, and we can start from there.

MR. BENNETT: What is the number again?

CHAIR:

Section 1.1.01 Minister's Office, Executive and Support Services.

MR. CROSS: Page 11.3.

CHAIR: Yes, 11.3.

MR. BENNETT: Mr. Chair, is it just this page?

CHAIR: No, you can go from there to wherever you want to go. That is the

subheading that we start on. You can jump back and forth at your leisure. I do

ask if you could stick to it because we want to adopt various headings as part

of the process.

You will get an opportunity to speak to that heading, then Mr. Mitchelmore,

and then if there are any follow-up questions. If not, then we pass that heading

and move on to the next one. You may have no questions on the first three or

four headings, and go directly to whichever one you do.

MR. BENNETT: Minister, on page 11.3 there is a line 1.2.01 Executive

Support, Professional Services. Last year $41,000 was budgeted and $29,700 was

spent. This year there is nothing budgeted.

MR. HUTCHINGS: That was related to consolidation of INTRD and the former

Department of Business. There was only one cost required as you move forward, so

there was no reason to reinstate it.

MR. BENNETT: On page 11.4 under 1.2.03 Policy and Strategic Planning.

MR. HUTCHINGS: What was that again, Mr. Bennett?

MR. BENNETT: Page 11.4, heading 1.2.03 Policy and Strategic Planning.

Last year under line 05 there was $70,800 budgeted for Professional Services and

only $5,000 spent, and this year there is $135,000 budgeted. What is that for?

MR. MEADE: This is also a result of the merger and the creation of the

new department. The $70,800 that would have been in 2011-2012, would have been

actually in the Department of Business's vote. The $135,000 is a forecast

adjustment as part of the merger that is now in Policy and Strategic Planning

related to professional services for a number of different functions that we

would do in the department.

MR. BENNETT: Can I get a list of those professional services last year

and this year?

MR. HUTCHINGS: Sure, that is not a problem.

MR. BENNETT: Similarly, on heading 1.2.04 on the next page, also under

05, can I get a list of those also?

MR. HUTCHINGS: Yes.

Mr. Chair, we can provide a list of all professional services if it would

MR. BENNETT: Okay, that would be ideal.

CHAIR: I assume the request is okay.

MR. BENNETT: Yes.

CHAIR: Note it for both parties.

MR. HUTCHINGS: Sure, yes.

MR. BENNETT: I have no more questions on this section.

CHAIR: Are you finished on that section?

MR. BENNETT: I am finished.

CHAIR: Okay, Mr. Mitchelmore, under Executive and Support Services.

MR. MITCHELMORE: Okay.

Under 1.1.01, the Minister's Office, Salaries had dropped from $580,600 in

the budget, and it was revised to $459,900. I am wondering what accounted for

this decrease in salary, and if you could explain that?

MR. HUTCHINGS: The $580,000 would reflect INTRD and Business salaries.

The 2012-2013 Estimate would be reflective of a consolidation of those two

departments. Obviously, you have a reduction in a minister, executive assistant,

and those other positions.

MR. MITCHELMORE: Okay. Were there any other positions eliminated?

MR. HUTCHINGS: In the overall consolidation?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: From a structural point of view, we had one deputy

minister position. There were two other positions, I believe, were directors,

and they were incorporated into the new department.

MR. MITCHELMORE: Okay.

Transportation and Communications under the same line there, it was $146,000.

I guess because of consolidation you are saving $86,800. Is that

MR. HUTCHINGS: Yes, correct.

MR. MITCHELMORE: Were there some campaigns or advertising that was

undertaken for the $146,800 in the budget with $72,400 spent that are not

going to be taking place right now?

MR. HUTCHINGS: That is under

MR. MITCHELMORE: Under Transportation and Communications.

MR. HUTCHINGS: Transportation and Communications?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: That would be for, overall related to expenditures of the

Minister's office through Transportation and Communications. It just was not

used, less travel. Travel that was thought would take place did not take place,

that type of thing.

MR. MITCHELMORE: Okay.

Going down to General Administration, under 1.2.01 Executive Support,

subsection 01 Salaries, we are seeing the same thing. There has been a decline

of $300,000-plus from last year's Budget. Several positions seem to may have

been lost in the consolidation. Is that correct?

MR. HUTCHINGS: Yes, that is correct. It reflects less executive positions

because of the consolidation of the two departments.

MR. MITCHELMORE: Can we have a list of the number of people who are

employed under the Executive Support from 2011-2012, and what is the staffing

levels this year by position?

MR. HUTCHINGS: In the Executive level?

MR. MITCHELMORE: In the Executive Support and the Minister's Office.

MR. HUTCHINGS: Sure, yes.

MR. MITCHELMORE: We are seeing, as well, that Transportation and

Communications has also declined by $32,600. I guess with less staff you are

expecting to have less travel.

MR. HUTCHINGS: Yes, exactly.

MR. MITCHELMORE: Are there other initiatives being undertaken to cut down

on the travel costs through your department, through the Executive Support

branch?

MR. HUTCHINGS: We went through the budget. We went through a zero-based

budgeting process for travel and basically rebuilt all of our budgets,

recognizing based on history and where we project we need to go over the next

fiscal year and what the requirements may be and rebuilt that budget.

I am personally very cognisant of transportation. We are stewards of the

public's money. We review programs and we continue to do that. I have been just

here six months, but continue to look at programs and how we meet and what the

requirements are for travel. So, yes, we are always very cognisant of

transportation costs.

MR. MITCHELMORE: Okay.

The same thing under 1.2.03 Policy and Strategic Planning, Salaries had

dropped from what was revised at $833,200 down to $596,500. I am wondering how

many less positions are in your department now?

MR. HUTCHINGS: My deputy minister will take that.

MR. MEADE: This is an example of where there would have been some

redundancy between the two departments when they would have merged. There was a

director's position that would have been redundant. That individual was actually

accommodated elsewhere in the system.

There were three other positions; one where the individual moved on. It was a

temporary position, so that would no longer be budgeted for. There is a position

that was once in Policy and Strategic Planning that is now reflected in the

Ocean Technology division, which is later in the Estimates. There was another

position that was in Policy and Planning of the Department of Business that is

reflected in Administrative Support, in the activity above. That is why you will

note the activity above has an increase in salary, because there was a position

moved from Policy and Planning into there.

MR. MITCHELMORE: Okay. So there was some shuffling.

MR. MEADE: Yes, there was.

MR. MITCHELMORE: Are there fewer planners under the Policy and Strategic

Planning office then there was previously?

MR. MEADE: No. In fact, the net result leads to two positions being added

to the overall department, in Policy and Planning.

MR. MITCHELMORE: In the overall department, but under this specific

section there would be fewer planners at the Executive Support level?

MR. MEADE: If you look at the former INTRD as the base because that

would have been the larger policy shop and look at the merger, the net result

is that that policy shop or policy division has two additional staff.

MR. MITCHELMORE: Okay, great.

That would be all of my questions for this

section up to 1.2.03. Should I go

further in the

section or do we want to just maybe vote on that?

CHAIR: Well, if you could go up to 1.2.06 under Executive and Support

Services to finish that off.

MR. MITCHELMORE: Okay.

Under 1.2.04 Strategic Initiatives, Grants and Subsidies, the budget had

$423,000 and there was $300,000 actually spent. Could maybe I get a list of the

initiatives?

MR. HUTCHINGS: Yes, we can do that. We can provide you with it.

MR. MITCHELMORE: I am just wondering, the budget has now gone back to

$423,000, is what it was last year. Is there something it was expecting to do

that did not get done, as to why it is anticipating it is going to spend

$423,000?

MR. HUTCHINGS: That was specifically related to the Ireland Business

Partnership, and things happening in Ireland. What we anticipated did not reach

the level that we thought it would. We are hopeful in this fiscal year. I had a

discussion with the Ambassador to Ireland a little while back, things are

picking up in Ireland. We do believe the activity will pick up as well as we

move forward.

MR. MITCHELMORE: Since the Ireland Business Partnership has been around

since 1997, are there plans to do further trade missions in the upcoming year to

Ireland?

MR. HUTCHINGS: Yes, there is.

MR. MITCHELMORE: Okay.

Are there any specific projects or a delegation that you are focusing on when

you go to Ireland?

MR. HUTCHINGS: Obviously, ocean technology is an important one. There are

synergies there. From my colleague, AES in terms of labour supply, I know that

is a discussion we are having as well. It is not directly tied well, it is

directly tied to economic development but it would fall under AES. There are

some good discussions there. I have had a discussion with an official in Ireland

in regard to what the capacity may be there for that. There will be a number of

initiatives we will be looking at in the upcoming year.

MR. MITCHELMORE: Okay. I think I am satisfied with the questions under

those sections right now.

CHAIR: Okay, Mr. Mitchelmore.

Okay, Mr. Bennett, go ahead.

MR. BENNETT: Minister, I understand you have five assistant deputy

ministers, is that correct?

MR. HUTCHINGS: Yes, there are five. There is one vacant at the moment.

MR. BENNETT: Okay. Who are they and what do they do?

MR. HUTCHINGS: Do you want to go through them?

MR MEADE: There are five branches in Innovation, Business and Rural

Development. There is a branch of Regional Development. The ADM would be

responsible for leading teams and oversees regional offices. We have

approximately ninety staff who go throughout Newfoundland and Labrador, five

regional offices, nineteen satellite offices. They would be overseeing the

delivery of our programs and services and business support throughout

Newfoundland and Labrador, as well as the

Canada Business Newfoundland Centre.

We have a branch known as Innovation and Strategic Industries. The ADM would

lead that branch in how we look at particular sectors in Newfoundland and

Labrador under innovation, things like: ICT, life sciences, aerospace and

defence, environmental technologies. Strategic industries would include things

like: manufacturing, food and beverage, support agrifoods, et cetera. They would

be looking at how we develop sectors, and also as well look at things like

supplier developments, supply chain development throughout Newfoundland and

Labrador.

We have a branch known as Trade and Investment. The assistant deputy minister

would lead that branch in overseeing our trade export activity, but also our

investment attraction activities. That would be the main functions that would

fall under there.

There is a branch known as Business Analysis. That is essentially our group

that does the core financial analysis and support, account management around our

major files in conjunction with the Regional Development branch. They would be,

as well, supporting the Business Investment Corporation and other agencies and

vehicles we have for small and medium enterprise development in Newfoundland and

Labrador. As well, it would be responsible for managing some of our Corporate

Services functions, such as Information Management.

We also have a branch of Ocean Technology. This is a newly created branch. It

was a branch that was part of the platform of the government when they were

elected in October. The branch was structured. It would have been spun out of,

in some respects, but will certainly be enhanced and strengthened of the

Innovation branch.

At one time where Ocean Tech was one of the sectors under Innovation, it now

will have its own branch and focus. We see that as being critical, given the

strategic importance of the Ocean Tech sector, the competitive advantage we have

in that sector. So, the Ocean Tech branch will drive our work in that sector

with industry.

MR. BENNETT: Minister, in addition to the Director of Communications, I

see five directors. Is that correct that your department has five directors?

MR. HUTCHINGS: The number of directors in the department, is that the

question?

MR. BENNETT: Yes.

MR. HUTCHINGS: The question from the hon. member is how many directors

are in the department, overall?

MR. BENNETT: Yes.

MR. HUTCHINGS: I believe the number may be somewhere around seventeen or

eighteen. I can get that exact listing for you.

MR. BENNETT: Of directors?

MR. HUTCHINGS: Yes.

OFFICIAL: That would be the regional directors.

MR. HUTCHINGS: It would be regional directors, directors in the regions,

there would be directors of particular divisions, but we can get a full listing

of directors.

MR. BENNETT: I am counting seven managers as well. You have managers as

well as directors?

MR. HUTCHINGS: Yes.

MR. BENNETT: How many managers are there?

MR. HUTCHINGS: There are, I believe, between five and seven managers.

Again, the hon. member, I would have to go back and get the exact number.

MR. BENNETT: Could you provide that information, please?

MR. HUTCHINGS: Yes.

MR. BENNETT: I have no more questions.

CHAIR: Mr. Bennett, are you good on that section?

MR. BENNETT: Yes.

CHAIR: Okay.

Can I have a motion to adopt headings Executive and Support Services, 1.1.01

to 1.2.06?

MR. CROSS: So moved.

CHAIR: So moved by the Member for Bonavista North.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

Motion carried.

On motion, subheads 1.1.01 through 1.2.06 carried.

CHAIR: We can move now into the Trade and Investment section. I am going

to go back to Mr. Mitchelmore and we will start in

section 2.1.01, or any

section in that area you would like to speak to.

MR. MITCHELMORE: Okay.

Under 2.1.01 Trade and Export Development, subsection 01, we see that the

revised amount from last year is a bit lower. I am just wondering if there has

been a loss of positions.

MR. HUTCHINGS: That is 01 Salaries?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: No. The revised for 2011-2012 was related to additional

work required, positions required for CETA, the Comprehensive Economic and Trade

Agreement.

MR. MITCHELMORE: Okay.

Is the work still happening on that agreement, CETA?

MR. HUTCHINGS: Yes, indeed.

MR. MITCHELMORE: Is the focus that your department is taking on CETA

around tariff allocation?

MR. HUTCHINGS: There are a number of issues, obviously. There are, I

think, twenty-one chapters that have been looked at in the agreement.

As I mentioned in the House of Assembly just awhile back in Questions,

tariffs is a significant issue for Newfoundland and Labrador in terms of access

to the European market. The opportunities that exist for all of Newfoundland and

Labrador business or harvesters are tremendous. So it is certainly a priority

for us.

MR. MITCHELMORE: Right now, the current trade agreements with the

Department of Fisheries and Aquaculture to sell to Europe for cooked and peeled

shrimp and things like that are just being used, sold in boxes, and being

packaged as sandwiches as somebody else's product. Is there a push by your

department to brand and be able to sell on a free-trade basis versus a resale?

MR. HUTCHINGS: We want free trades. Obviously, it would be our first

priority that we could sell into the market as we want to sell into the market,

or our producers could.

MR. MITCHELMORE: How active is your department in that, since there have

been ten rounds of negotiations on CETA right now? Have you been an active

player since the beginning?

MR. HUTCHINGS: We have been an active player. We were observer status up

to, I believe, April of last year. Our officials are fully engaged. We have a

dedicated staff. They are in constant contact with Canadian lead negotiators.

They attend various get-togethers with the Canadian negotiators, as well as

their counterparts throughout the country in terms of various areas of interest

that are collectively important.

As well, a couple of months ago I met my colleagues from the provinces and

territories, and met with Minister Fast to get an update on the lead negotiators

in Ottawa on CETA. At that time, I had an opportunity to indicate what the

importance was for Newfoundland and Labrador in CETA that would be supported by

our Province, as well as update on other trade initiatives for the federal

government.

MR. MITCHELMORE: How much funds are allocated for the CETA negotiations

in this year's budget and how much was allocated in last year's budget?

MR. HUTCHINGS: Specifically related to CETA?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: I will leave that to Brent.

MR. MEADE: There is approximately $200,000, $250,000 that is allocated

for the support of CETA.

MR. MITCHELMORE: Is it possible to get a

summary or some reports on the

activities of what has been going on with the CETA negotiations that would not

be breaching any type of confidentiality with negotiations?

MR. MEADE: Certainly.

MR. HUTCHINGS: Yes, we can provide that information.

MR. MITCHELMORE: Okay, great.

Under the same section, 2.1.01 Trade and Export Development, the Professional

Services. I know we would get a list, but I am wondering: What was not done in

the budget? It was estimated that over $200,000 more would be spent in last

year's budget.

MR. MEADE: Under Professional Services, a lot of the activity that would

come out of that line item in the department is a result of our participation in

the International Business Development Agreement in Atlantic Canada. That is why

you see revenue at the bottom for federal, because we participate in an

International Business Development Agreement with the four Atlantic Provinces

and ACOCA.

MR. MITCHELMORE: Okay.

MR. MEADE: What happens is there are certain projects a province takes

the lead on through the agreement. That activity varies from year to year;

therefore, the number of projects we had taken the lead on last year on behalf

of Atlantic Canada will have been less than what we would have had budgeted.

That being said, you will see where we did make a small adjustment this year in

trying to move to rightsizing that budget as we move forward.

MR. MITCHELMORE: Okay.

ACOCA is promoting an Atlantic Gateway, how active of a role is the

Department of IBRD playing in this facilitation of the Atlantic Gateway? What

projects or investments are we pursuing to solidify ourselves as a greater

player in this process?

MR. MEADE: We have been actively involved in Atlantic Gateway. There are

two key components around Atlantic Gateway. There are actual infrastructure

projects that have been funded through Atlantic Gateway, projects such as Smart

Bay and the St. John's Airport category three system. These are examples of

projects that would have been funded through Atlantic Gateway.

The second part of Atlantic Gateway is more of a strategic approach to how we

promote Atlantic Canada in the movement of goods and services throughout

Atlantic Canada but into other markets. It is a gateway into the North America

market but also is a gateway back into the European market or Asian markets in

terms of raising awareness and promotion of how we could take the existing

infrastructure we have in Atlantic Canada and work together to promote that in

an international context for the movement of goods and services and trade.

MR. MITCHELMORE: Is there a push to develop further port facilities based

on the Atlantic Gateway?

MR. MEADE: There continues to be a push around how we can support

infrastructure, including port development, yes.

MR. MITCHELMORE: Can I get a list of initiatives undertaken through these

negotiations of the Atlantic Gateway?

MR. MEADE: Yes, we can provide that.

MR. MITCHELMORE: Okay, great.

Under

section 2.1.02 Investment Attraction, I see here that basically from

the budget in 2011-2012 to where the salaries are today, they have been cut

drastically. Is there an explanation for this from the minister?

MR. HUTCHINGS: That reflects the reorganization of department allocation

of salary within the full department.

MR. MITCHELMORE: How many positions were lost there?

MR. HUTCHINGS: There were no positions lost there, but there was

reallocation based on the positions.

MR. MITCHELMORE: Okay. There were no positions lost, but the loss of

where they were in the budget last year is over $200,000 in the difference.

MR. HUTCHINGS: I should say there was savings in some vacancies and

delayed recruitment related to the former Department of Business. That would

have reflected some of the decrease as well.

MR. MITCHELMORE: There are still some positions that are not filled?

MR. HUTCHINGS: Are they filled?

MR. MEADE: This is another example of where when we merged the

departments it is not as clear as people just moved into one division and we

move forward. There were eight positions that were in that $925,000. Four of

those positions are now reflected in other areas of the department.

MR. MITCHELMORE: Okay.

MR. MEADE: The $415,000 which is the vote for 2012-2013 is based upon the

premise that the Investment Attraction will now have four positions in it.

Again, the other four are integrated in other parts of the department: one went

to Strategic Industries; one went to Trade; one went to Marketing. Okay, so that

is an example of where

MR. MITCHELMORE: Okay, that is fair, thank you.

Under the Air Access Strategy, the budget this year had allocated additional

monies and there were monies last year for it. I am wondering, if possible, I

could be provided with an update as to how often this committee is meeting and

how they are meeting their initiatives as the initial report had stated and if

they are getting any type of performance assessment based on advancing air

passenger traffic in the Province.

MR. HUTCHINGS: Yes, we are continuing to pursue it. I think we have had

three or four programs that have been identified and funded, in terms of

increase in travel obviously driven by some of the economic activity we are

having in the Province. The board meets

OFFICIAL: At least twice a year.

MR. HUTCHINGS: At least twice a year, and gives advice and direction on

how we are doing with air access and what more we could be doing in terms of

success. We have had some success in terms of additional routes related to that

program,

MR. MITCHELMORE: Okay.

For my own personal interest, I am wondering why the St. Anthony Airport was

excluded as part of the Air Access Strategy, or were they offered an invitation

to be a part of it?

MR. HUTCHINGS: My understanding is the St. Anthony Airport is still under

the federal government.

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: We deal with the airport authorities. I believe there are

five, and that is who the program was set up to deal with, I guess. Do you want

to speak to that, Brent?

MR. MEADE: Essentially, there are two airports in Newfoundland and

Labrador that are still owned by Transport Canada: one is Wabush, and the other

one is St. Anthony. Therefore, they are still federal entities. As the minister

notes, the program was created to support those that had airport authorities

running them, where they have been devolved and airport authorities are running

the respective airports.

MR. MITCHELMORE: I do not have the report in front of me and I may be

corrected, but I have to ask the question: Stephenville Airport is that still

run by an airport authority because it is part there and it had taken private

ownership, didn't it?

MR. HUTCHINGS: No.

MR. MITCHELMORE: Okay, thank you for that.

The Province's aerospace and defence industry, there was funds allocated this

year, but it was cut basically in half of what last year's amount was budgeted

for. I am wondering why the decline in aerospace investment for a growing

industry.

MR. HUTCHINGS: When we looked at consolidation of the two departments, I

guess it was my mandate to look at current programs and budgets, as you would

do. In reflecting on that and looking at prior expenditures in prior years, we

recognized that the fund was not being fully accessed, so just to bring

expenditures in line with what the traditional expenditures had been in prior

years, the budget was adjusted to reflect that. We think that will meet the

needs going forward.

MR. MITCHELMORE: Under that section, 10, Grants and Subsidies, is it

possible to get a list of where the funds were spent for the $2,776,600?

MR. HUTCHINGS: Sure, yes.

MR. MITCHELMORE: Okay, great.

I have a question around export in New England as well, the investment. Can

we get an update of how much was exported to the New England states into that

market in 2011? The Web site only reflects up to 2009. I am wondering if that

data can be made available to us.

MR. HUTCHINGS: Sure, we can get that for you.

MR. MITCHELMORE: Okay.

I certainly have more questions on this section, but maybe I will pass it

over to Mr. Bennett to have an opportunity.

CHAIR: Mr. Mitchelmore, I appreciate that.

Mr. Bennett.

MR. BENNETT: Minister, under Investment Attraction it looks like there

are two categories listed and the first one says "Appropriations provide for the

promotion of the competitive advantages of the Province in target markets for

the purpose of attracting national and foreign investment to match the strengths

of key industries of the Provincial economy."

Is that correct?

MR. HUTCHINGS: Yes.

MR. BENNETT: What results did we get last year?

MR. HUTCHINGS: In terms of expenditures?

MR. BENNETT: No, in terms of results. We can see the expenditures from

the budget. What did we get for the money?

MR. HUTCHINGS: From foreign investment, we continue to pursue foreign

investment in our Province. It is challenging, I will admit that, in terms of

attracting large corporations to the region. We continue to pursue it. We feel

it is important. We have seen some indications of footprint companies not moving

in the bigger context but getting a footprint here based on economic activity

and what is happening here in the Province. We still believe it is important.

I will say to you: We are certainly looking at our program to date, what

sectors we are identifying, what regions we are pursuing, and if we need to

adjust that. We are reviewing the program.

MR. BENNETT: Minister, is there any single, concrete example of anything

we deemed under that heading, just the results?

MR. HUTCHINGS: Well, we see the investments we have had in the Province

from attraction that we have over the past number of years, those companies.

Again, it is an ongoing issue.

We have someone like St. Lawrence Fluorspar. Those mining rights were held by

a Canadian company. They partnered with a French company. Through that, the St.

Lawrence Fluorspar Mines will reopen. We have invested $17 million. It is a $100

million project. Obviously that is an example of direct foreign investment. We

had a resource and an industry that was being sought after. We were able to put

that together and make a substantial investment. Certainly on that region of the

Burin Peninsula, what that is going to mean is very positive for the future.

Those are the types of things that come along and when they come along we

need to be ready to engage and access. I will say to you, even from my short

duration of six months, we see some requests, but a lot of times when you do the

business analysis and look at due diligence the risk for the Province is quite

significant. Oftentimes we refuse it and do not engage.

MR. BENNETT: Minister, you referred to St. Lawrence Fluorspar Mines. I

understand the department, or at least the Province, made a $17 million

repayable contribution.

Is that correct?

MR. HUTCHINGS: Yes.

MR. BENNETT: What does repayable mean? Is it a loan? What does it mean?

MR. HUTCHINGS: It is a loan based on targets. Do you want to go into more

detail? Yes, a loan.

MR. BENNETT: Is there a repayment schedule?

MR. HUTCHINGS: Yes, there is. Peter?

MR. AU: Yes, sir, it is interest attached to the latter $7 million now.

We had $10 million. The first $10 million is non-interest bearing. That was a

long-standing commitment we made to the company when fluorspar prices were way

below what the market price is today. The company came back looking for $17

million because the costs had escalated because of inflation for building the

wharf. We have attached interest to the latter $7 million.

MR. BENNETT: Do I understand that there was already $10 million

outstanding to this company?

MR. AU: No, it was commitment there to build the wharf up to $10 million.

MR. BENNETT: The $10 million, this will be repaid to the Province?

MR. AU: It will be fully repaid, yes.

MR. BENNETT: When will it be repaid?

MR. AU: It will be repaid starting the second year that the company is in

full operation.

MR. BENNETT: Has the company started operations yet?

MR. AU: No sir, they are going to build the wharf and they have to

reactivate the mine. The first projected full production of the mine will be in

2014. They will have the first shipment in 2014.

MR. BENNETT: Is this loan secured?

MR. AU: The loan is fully secured by the wharf and also by the buildings

that surround it. Also, we have a 50 per cent interest in the partnership of

fluorspar with Arkema, their financial partner. That 50 per cent financial

interest, based on the company's balance sheet as of this year, is worth $40

million.

MR. BENNETT: Minister, under Investment Attraction the second sentence

says "Appropriations also provide for supporting the implementation of the Air

Access Strategy and the growth of the Province's Aerospace and Defence industry

and Oil and Gas industry by facilitating opportunities to build capacity,

enhance competitiveness and expand its export markets."

Can you point us to any tangible results in the last year?

MR. HUTCHINGS: Yes, we can give you a list of aerospace and defence

programs that have been approved to date. Do you want to speak to the oil and

gas, Brent?

MR. MEADE: We can certainly provide a list of companies that were

supported under those funds to the hon. member. I do not know if you would like

examples now or we can

MR. BENNETT: If a list can be provided, I would be happy enough with

that, as long as it is relatively soon.

MR. HUTCHINGS: Yes, we can provide the list.

MR. BENNETT: Within a matter of days or so.

Minister, last year under Grants and Subsidies, $10,700,000 was budgeted, but

only $2,776,600 was actually used. That is nearly $7 million less than was

budgeted. Why is there such a difference between the budgeted and the actual?

What happened or did not happen, actually?

MR. HUTCHINGS: Well, again, it gets to the issue of the funds and what

was budgeted for and, as I said, some of these were adjusted based on the review

we did in terms of what has been historically used in terms of these funds.

We continue to pursue and we have had some success in terms of these

programs. Others did not have full uptake. So, in rebalancing our budget we

looked at getting rid of some of the dropped balances we had, but we continue to

pursue them and certainly see them as important initiatives. Again, as we move

forward if there are things we need to do differently I have been engaged with

the business community and certainly various stakeholders to meet the needs that

are out there. If we need to redefine the programs, we will certainly do that as

well.

MR. BENNETT: Minister, this year's budget is $3 million which is more

than a 70 per cent reduction from last year's budget. Does that mean the focus

has changed in 2012 than it was in 2011?

MR. HUTCHINGS: Which line is that, Mr. Bennett?

MR. BENNETT: Line 10, Grants and Subsidies. This year the budget is for

$3 million.

MR. HUTCHINGS: I do not think the focus has changed. Again, when we

looked at our budgets and our history over the past three years in terms of what

we had used, we certainly wanted to reflect that in our budget, but the focus

has not changed. We believe that will meet the needs based on past performance.

MR. BENNETT: Okay, thank you.

I have no more questions in this section.

CHAIR: Mr. Mitchelmore, I will go back you. You may ask any other

questions you may have on that section.

MR. MITCHELMORE: Okay, sure.

Under

section 2.1.03, Marketing and Enterprise Outreach, we have seen that

Salaries are being increased by over $200,000. That is a big increase from the

previous two combined budgets that would have been separate from previous

departments. I am wondering what type of specialists or what type of plans the

government has, in terms of these positions.

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

MR. MEADE: In terms of the merger of the two departments, there was only

one position that would have come over from the former Department of Business

that would have been integrated or assimilated into the Marketing Enterprise

Outreach Division, which was a division under the former INTRD. The brand

development component of the Department of Business is gone to Executive

Council, and their focus would be overall branding of the Province of

Newfoundland and Labrador.

What our focus is here is to do two things: to promote the programs and

services of the department, to promote Newfoundland and Labrador in our export

markets and in our opportunities around foreign and direct investment so, how

do we support our lines of business in the activities they do? The second thing

is actually within this division we actually also deliver some programs, most

notably the Getting the Message Out program, which is our youth program that

goes into schools to try, as part of our objective of building the culture of

entrepreneurship, out talking about the good things that are happening in

Newfoundland and Labrador, and the opportunities for people to become part of

the business community.

MR. MITCHELMORE: Thank you.

MR. MEADE: So that is basically it. The other thing, the reason why the

Salaries would have gone up is that it is also part of the reorganization. There

were actually a couple of positions that would have been at one time in trade

and export that would be moved into this division as we restructure.

MR. MITCHELMORE: I am familiar with the Getting the Message Out program.

I have been a former intern, myself, with your department. I am wondering, it

seems the focus of that program has also shifted, not only to include

entrepreneurship but also to focus on skilled trades, to focus on all of the

opportunities that exist within the Province.

MR. MEADE: Yes, you are right.

MR. MITCHELMORE: I am wondering if there are other marketing and

enterprise outreach activities that are being undertaken that would fall under

this category, because the description is very vague here.

MR. MEADE: You are correct in that, that it is a very vague description,

but I guess that is one of the opportunities we have now within the department.

We will be embarking on developing a marketing strategy for the department, how

we can do more in raising awareness promotion through our lines of business.

We see this division as very much a shared service that supports all of the

other lines of business in the department. As well, we are, in fact, continuing

to redesign and redefine getting the message out. This year we have actually

introduced some new approaches and changes; some of which you have noted.

MR. MITCHELMORE: The Business Retention and Expansion program would

that fall under this entity here, or is this dealt with later in the Estimates?

MR. MEADE: No, Business Retention and Expansion would be reflected from a

staffing perspective in a later activity. It is reflected under the Regional

Development activity.

MR. MITCHELMORE: I will save my questions for that when I get there.

I would like to ask about the International Trade Assistance Program that is

being provided: What is the uptake in that program?

MR. HUTCHINGS: It is very good. It has been significant. We get a lot of

uptake from various companies in terms of various markets. It is very positive

and there is very good feedback in terms of assisting getting into various

markets and making contacts. Overall it has been very good.

MR. MITCHELMORE: Would the department be able to provide a

summary of

some of these engaged activities, just to highlight a few?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: I am wondering, as well, with the TradeWaves

magazine that is on-line. It is a very good tool that is regularly sent. I am

just wondering though: As to being the Department of Innovation, Business and

Rural Development what initiatives are being undertaken to ensure that all

people have access to TradeWaves ? Not everybody has access to electronic

media.

MR. HUTCHINGS: We do publications of that and send it out as we can,

certainly to our regional offices. Our staff promotes it and puts it out where

they can to try to reach as many people as we can with that.

MR. MITCHELMORE: The opportunities in Panama how is that going? There

is a

section on the Web site that talks about opportunities in Panama. I am just

wondering if the department is making investment or looking at trying to do

business in Central America.

MR. MEADE: Panama is an interesting market for us. It is one we have been

into now for about three years, and we are actually seeing success with our

companies. We are seeing some of our companies that provide ICT support getting

activity down there and others that support through ICT or other types of

services industries such as the construction industry and whatnot.

Panama's economy is quite strong right now. There is a fair bit of activity.

We are seeing some success with our companies down there.

MR. MITCHELMORE: Yes, I would think there would be an excellent

opportunity to do prefab homes and things like that, not only in Central and

South America, but also in the North as well. I am sure there are some people

who are pursuing that.

Back to the line items here, 2.1.03, under the Professional Services: Is

there a reason why only $5,000 was spent on Professional Services last year?

Obviously there were plans to do a lot more outreach.

MR. HUTCHINGS: In particular that was related to a Web design. That

contract was cancelled so that work was not done.

MR. MITCHELMORE: What type of Web design, just a redesign of your own

page or for a particular program?

MR. MEADE: No, we were actually looking at a redesign around our

ambassador program and things like that. We are actually in the process now of

rethinking the best approach for us to target the expatriate market. That is

essentially where we are. We were thinking that we would pursue a Web-based

approach around that program, but with the merger of the department we are going

through a bit of a rethink right now, to be honest, on how we approach that.

MR. MITCHELMORE: The line item in the Estimates is the same as what last

year was. Are there still plans to do this Web site, or what initiatives are in

the works?

MR. MEADE: Professional services may change from a year-to-year basis of

how we utilize that. I would suggest to you that we have moved off the idea of

doing something Webbed on the ambassador program. The utilization of

professional services in 2012-2013 would be for other things that would support

our marketing agenda.

MR. MITCHELMORE: Okay.

You do not have anything right now planned?

MR. MEADE: We do have some ideas of how we would spend that money, yes.

MR. MITCHELMORE: Okay.

Is there anything you can share with us?

MR. MEADE: Again, we are thinking about, as a department, how we can

strengthen our support to our lines of business. For example, right now, we are

in the middle of doing an ocean tech marketing piece, looking at the competitive

advantage of our ocean technology sector in Newfoundland and Labrador, how we

best sell that, how we best promote that. That is a piece of work, for example,

that we are in the middle of now, trying to do a positioning, trying to evaluate

a proposition around it, and how we would then develop a marketing plan or

tactical plan of how we can better promote the ocean tech sector. It would be

one example of where we are utilizing the funding from this branch.

MR. MITCHELMORE: That is great.

When we define the ocean tech sector you are also including the oil and gas

sector in ocean technology, correct?

MR. MEADE: I think that is a fair comment to make. The definition of

ocean tech crosses many. It crosses oil and gas. It crosses aerospace and

defence. It crosses many other sectors. The ocean tech sector is applying its

products and services in many different resource sectors.

MR. MITCHELMORE: Would that include things such as Nalcor with subsea

cables, things like that? Would that also be included under ocean technology?

MR. MEADE: I think the ocean technology definition could be as broad to

include some of those things, yes.

MR. MITCHELMORE: Okay.

Under 2.1.04, Business Attraction Fund, line 08, Loans, Advances and

Investments, it is budgeted $25 million but only $366,800 spent. I would like to

be able to get a list of what the money was actually invested in. I am just

wondering why so little money has been invested from this fund. Is there a

marketing plan to try to utilize and pool attraction for an investment?

MR. HUTCHINGS: Yes, the first part of your question that is what was

expended obviously in the last fiscal year. Looking at my role in looking at the

budgets from these programs that came over some of them from the Department of

Business was to right size them looking at what the usage has been over the

past couple of years, and we have done that.

In terms of moving forward, we believe there are synergies between the old

Department of INTRD and Business in terms of staffing, on the trade side and

business attraction when we go into markets and we are focused on where we are

going, and attracting business and using the Business Attraction Fund. We are

kind of refocusing in terms of what we are doing.

MR. MITCHELMORE: Are you undertaking trade missions for the department to

kind of sell this type of Business Attraction Fund?

MR. HUTCHINGS: We do trade missions now and you have hit on what I

referred to in terms of synergies that now exist between the consolidations of

the two departments. We are in those trade markets. We also have an opportunity

to sell and make those aware of our Business Attraction Fund and what

opportunities might exist here.

We are also looking at partnering with other groups and agencies that are out

there that are in the international market, how we can use their expertise and

intelligence to make the world aware of what we have, what the opportunities are

in the Province, and how we can seize on those opportunities.

MR. MITCHELMORE: What was the marketing budget for this Business

Attraction Fund?

MR. HUTCHINGS: The marketing budget?

MR. MITCHELMORE: For 2011-2012.

MR. MEADE: We would have to go back and see clearly delineate what it

would have been for the Business Attraction Fund. Under the former Department of

Business

MR. MITCHELMORE: Yes.

MR. MEADE: the brand development division would have been doing two

things. They would have been developing a strategy around promoting Newfoundland

and Labrador as a Province. They also would have been supporting the lines of

business, including the investment attraction team in its efforts. We could try

to get that delineated, exactly what would have been spent on that.

MR. MITCHELMORE: I would like to know if there was any print material, or

any advertising being done, any foreign advertising being done around these

programs that the government has, or if there was no advertising or very little

done for such small uptake despite a significant amount of foreign investment

taking place in Newfoundland and Labrador. I am wondering if the criteria are

too stringent. Has there been an adjustment to any type of criteria under this

program?

MR. HUTCHINGS: Not at this time. Again, I revert to prior comments I

made; we would certainly like to see more expenditure, but then there is a due

diligence component. I could tell you, we get inquires and discussions on

various business plans. In some cases, it is not where we want to go as the

Province. In terms of the risk, it is just way too high.

Again, I take your point. It is about marketing it and letting people know it

exists. When we are in markets anywhere, through the new Department of IBRD,

that we market it and we certainly let people know it exists and try to build

those partnerships to attract that business.

MR. MITCHELMORE: Thank you for that, Minister.

Just a point of clarification, I guess: Can you differentiate between the

Investment Attraction Fund does that include local businesses that can also

avail of it? What is the difference between the Investment Attraction Fund and

the Business Attraction Fund? Is there any actual difference?

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

MR. MEADE: The Business Attraction Fund would be utilized where there is,

in the financial structure of the deal, foreign direct investment. There has to

be offshore money coming into the Province as part of the deal. It could be into

an indigenous company, but there has to be a foreign direct investment

component. That is when we would utilize the Business Attraction Fund. That is

the only fund that we have in the department that has that requirement. Any

other funds in the department are quite open in terms of its utilization for

SMEs?

MR. MITCHELMORE: This is where you would be looking at maybe expat,

reaching out to them for the Attraction Fund, maybe looking at embassies and

their networks that they have. I am just wondering if any of this work has been

done previously in the Department of Business and would like to see how it was

active and if some proof can be provided to me.

Now with the Business Attraction Fund, is this a joint venture? Can this be

joint ventured? Can it be

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Do they have to have complete control of the entity or

can it be 50-50 with foreign investment?

MR. HUTCHINGS: It could be joint ventures, yes. That would be part of the

negotiations in terms of discussions that we would do with the company coming

forward.

MR. MITCHELMORE: Can the foreign investment have a minority share and tap

into the Business Attraction Fund?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: They can? What is the minimum amount of foreign

investment that is required on a project to tap into this fund?

MR. HUTCHINGS: That would be negotiable I would think. If you want to

speak to that

MS MALONE: Yes, certainly it is negotiable in terms of the overall deal,

but there is a requirement that there is significant investment from outside of

government in order to pull these deals together.

MR. MITCHELMORE: Okay.

I think I just have one more question on this section, if it fits in the

section, and that is about the ExportAdvantage Internship Program. I am

wondering if that is still continuing.

MR. MEADE: No, we will not be continuing ExportAdvantage Internship

Program this year. We have determined there are others who are in that space. In

particular, ACOA has a program. We also have been supporting and contributing to

a program through the Newfoundland and Labrador Association of Technical

Industries, NATI. They also do it. We felt that, given NATI is having an

internship program and that ACOA was also, we were duplicating a service in the

marketplace.

MR. MITCHELMORE: ACOA has made significant cutbacks. Is the department

going to be filling some of those cuts when it comes to Innovation, Business and

Rural Development and what that investment means to Atlantic Canadian provinces?

MR. HUTCHINGS: We have since the Budget been made aware even prior to

the Budget that the federal government is looking at ACOA and various

initiatives they fund in Atlantic Canada. Since the Budget, we are waiting to

see what the finale of that will be. There are various programs we have which

are partially funded, as you know, by the federal government. We are waiting for

final determination on what will mean in terms of the programs we are getting

out of. We have some preliminary word on that.

From a provincial perspective, as the Premier has said, we do not have the

capacity to backfill all the time when the federal government decides they are

getting out of funding various programs. Having said that, from an economic

development point of view, overall in our department we are confident we have a

suite of programs and we have good capacity on the ground throughout the

Province in terms of staff. There may be synergies with other groups that are

out there, maybe other federal groups, as we move forward.

With or without the federal government, we are pursuing innovation and

business in rural Newfoundland and Labrador and will continue to do that. Any

finality in terms of what our response would be to federal cuts will be

finalized over the next little while.

MR. MITCHELMORE: How does the Newfoundland and Labrador Immigrant

Investor Fund fit into this mapping here of foreign investment? Can you explain

that to me, Minister?

MR. HUTCHINGS: The Immigrant Investor Fund we have an agreement with

the federal government in terms of us receiving funds. I think this may be the

sixth year. We have holdings now of about $252 million that we can use on

various infrastructure projects. That has to be paid back beginning after five

years. We have started to pay it back. There is a fee. I think it was originally

7 per cent on the first agreement and 5 per cent now. To date, we have explored

some possible usage for that, yet we have not identified an actual project that

we would disburse funds from that. I think it is about $256 million that is

there in that account right now.

MR. MITCHELMORE: So that is available for investment into any particular

MR. HUTCHINGS: Infrastructure project, yes. Whatever we deem we could use

it for, partner with recognizing that that money needs to be paid back.

MR. MITCHELMORE: Okay.

You could deal with something like in Winnipeg where they have IRCOM, where

they have a housing infrastructure where they have different ethnic groups and

cultures living in an apartment building, paying various rents, and really

adding to the social fabric of communities. That is something that this fund

could actually undertake?

MR. HUTCHINGS: I guess anything, really, that wanted to come forward

could be considered under the fund.

MR. MITCHELMORE: It would have to be led by an individual to tap into

this fund, or is this something that the Province, your department, grants?

MR. HUTCHINGS: It would be generated by the provincial department, in

terms of what project would be pursued.

MR. MITCHELMORE: Okay.

I think that is all the questions that I have right now under this specific

section. I do not know if Mr. Bennett has more there?

MR. BENNETT: Mr. Chair, I need to ask for a point of clarification. If I

ask questions now for a minute, and then we conclude and we vote, do you go back

to Mr. Mitchelmore, or do I continue with the ten minutes?

CHAIR: No, you can continue.

MR. BENNETT: Is it ten minutes and ten minutes?

CHAIR: Yes.

MR. BENNETT: Okay.

Minister, under Business Development is that the right section?

CHAIR: No. So, you are good under Trade and Investment? I just want to

adopt that

section and then I will go right to you, Mr. Bennett, under Business

Development.

MR. BENNETT: Okay, yes.

CHAIR: Can I have a motion to adopt subsections 2.1.01 to 2.1.04, Trade

and Investment?

Moved by the Member for Fortune Bay Cape La Hune.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

AN HON. MEMBER: Nay.

CHAIR: Motion carried.

On motion, subheads 2.1.01 through 2.1.04 carried.

CHAIR: We can now move to Business Development.

Mr. Bennett, the floor is yours.

MR. BENNETT: Under Business Development, Grants and Subsidies, 2011-2012,

$1,257,000 was budgeted and $2,230,000 was actually spent or advanced. Minister,

can you explain why this

section was $1 million over budget last year?

MR. HUTCHINGS: That was related to the funding requirements we have for

contact centres. Usually disbursements are at the end of the year related to

them reaching certain employment levels. Last year, that particular fiscal year

was significant in terms of the call centre and the employment that they had.

Therefore, we overshot what we had estimated what that would be. Therefore, to

meet their employment levels, the budget increased to pay the wage subsidy to

the call centres.

MR. BENNETT: When you say the call centres, what are you referring to?

Whose call centres?

MR. HUTCHINGS: We can probably provide you a list in the Province that we

have entered into in terms of attraction to the Province. It is a subsidy

program over how many years, Peter?

MR. AU: Over five years.

MR. HUTCHINGS: Over five years.

MR. BENNETT: How is the subsidy calculated?

MR. HUTCHINGS: Peter, do you want to go through that?

MR. AU: I am sorry, sir. May I have your question again, please?

MR. BENNETT: Yes, I understand this is a grant or a subsidy for a call

centre?

MR. AU: Yes, sir.

MR. BENNETT: How many call centres?

MR. AU: The call centres, we are dwindling down now to only a few for

this fiscal year. We have call centres all across the Province. What is

remaining now, for this fiscal year, are all in rural areas. They could be in

Corner Brook, Marystown, Grand Falls, Gander, or Carbonear. There is one main

company, Fusion BPO, that takes up most of the companies now.

MR. BENNETT: Who is the company?

MR. AU: Fusion BPO.

MR. BENNETT: Is that a Newfoundland and Labrador company?

MR. AU: No, that is outside of the Province. Most of the call centres,

sir, with the exception of one, Tacamor, is a Newfoundland company, the rest of

them are all from outside the Province.

MR. BENNETT: Okay. Are these from outside of Canada?

MR. AU: Some are, yes. Some have a head office outside of Canada; some of

them are US.

MR. BENNETT: How many people are employed at the call centres?

MR. AU: Last year, 2011-2012 there were over 1,000. We are projecting it

down to about 500 now for this fiscal year. Some of the contracts are expiring

because they are five-year contracts.

MR. BENNETT: I am sorry?

MR. AU: They are five-year contracts.

MR. BENNETT: Is it a grant or a subsidy?

MR. AU: They are non-repayable grants and subsidies. They vary from 8 per

cent to 12 per cent of payroll. It all depends on where they are located.

MR. BENNETT: How much in payroll?

MR. AU: It is 8 per cent to 12 per cent.

MR. BENNETT: You said it depends on where they are located, so where

would 8 per cent apply?

MR. AU: Eight per cent would apply in St. John's and the Avalon area. The

12 per cent would apply in the rural area.

MR. BENNETT: So 12 per cent outside of St. John's?

MR. AU: Outside of St. John's, yes, sir.

MR. BENNETT: In Corner Brook?

MR. AU: In Corner Brook, yes. Some of these are not hard and fast because

we set a range of 10 per cent or 12 per cent. It all depends on negotiation. We

set a target of employment numbers for them and they have to reach their minimum

employment number before the subsidy cuts in.

MR. BENNETT: Are there any other funds provided for call centres other

than the wage subsidy?

MR. AU: No, sir.

MR. BENNETT: Do you know how much the employees are paid at the call

centre?

MR. AU: The employees are usually paid higher than minimum wage because

the jobs are apparently very stressful and the turnover is high. They usually

pay around $16.

MR. BENNETT: Do they start at minimum?

MR. AU: They are a little bit higher than minimum because of competition

and the labour market right now.

MR. BENNETT: Are there any Newfoundland and Labrador-owned call centres?

MR. AU: There is one in Placentia and one in Carbonear.

MR. BENNETT: How many people do they employ?

MR. AU: There are about fifty in total.

MR. BENNETT: Can I get a list of the companies that have call centres and

where they are headquartered?

MR. AU: Yes, sir.

MR. BENNETT: I see this year that it is down to $520,000, which is

approximately a quarter of last year's actual. Why is it so low this year?

MR. HUTCHINGS: (Inaudible) as Peter indicated, the contract is five years

in terms of what is predicted. Some of those contracts are winding up, so that

is predicted on what the wage subsidy would be paid in the next fiscal year.

MR. BENNETT: Of the ones where the contract is winding up, that is the

contract for the subsidies, correct?

MR. HUTCHINGS: That is correct, yes.

MR. BENNETT: Are they staying in the Province or are they leaving?

MR. HUTCHINGS: Well, we would hope they would stay in the Province in

terms of carrying on the business. It is investment we see as important. We have

certainly invested in them and the people of Newfoundland and Labrador have

invested in them. We would hope they would stay.

MR. BENNETT: Has any of them that received subsidies closed down and left

the Province?

MR. HUTCHINGS: To date, Peter.

MR. AU: Not that we are aware of, but all of them have come back,

basically, looking for an extension of the subsidies because the business model

of the call centres have changed a lot, sir. The exchange rate of the

Canadian-US dollar and also the minimum wage has gone up in the Province and it

has squeezed their profit margin down, their bottom line, so that they have come

back to the Province looking for an extension of it. We are looking at a program

that will continue it.

MR. BENNETT: I see.

MR. HUTCHINGS: We are looking it now in terms of go forward. I mean,

there are challenges here with this in terms of depending on the market they are

in, the competitive nature of that market and should we support them just in

more regional areas where they are required and there is not a high labour

demand, as opposed to where we do it. We are going through that process now in

terms of how we move forward.

MR. BENNETT: Why is it necessary to provide a subsidy for a call centre

to operate here?

MR. HUTCHINGS: Originally, I guess it is business attraction. It is

getting those companies to come here to provide employment and to attract

industry. That was certainly originally to get them to come here.

MR. BENNETT: Were these existing call centre companies to set up shop

here?

MR. HUTCHINGS: They may have had the services elsewhere, so attracting

call centres, as you know over the past number of years, has been pretty

predominant across the country in terms of getting call centres to come. We were

engaged with that as well.

MR. BENNETT: The Newfoundland and Labrador headquarter call centres, did

they already have call centres operating, or did they set up new businesses?

MR. HUTCHINGS: I think some are new and some may be an extension of other

facilities they had elsewhere, but we can certainly give you at list of that and

make you aware.

MR. BENNETT: If a business wanted to set up a call centre here, in

addition to the wage subsidy, would the department be in a position to be able

to provide any other sort of financial incentives for local businesses?

MR. HUTCHINGS: We would look at the components of what the offer would be

and what the deal would be. Any time anybody would come forward with a project

in terms of investment in our Province, our department is willing to sit and

hear what the proposal would be. At the end of the day, I would not say aye or

nay to a what-if question. I would say to somebody: Please come and see us.

MR. BENNETT: At this point, you have no reason to believe that any of the

out-of-province owned call centres will close up shop and leave.

MR. HUTCHINGS: This Province?

MR. BENNETT: Yes.

MR. HUTCHINGS: Could you just repeat that, just to make sure I

understand?

MR. BENNETT: You have no reason to believe that any of the

out-of-province owned the foreign ones, whether they are Nova Scotia or New

York or wherever - that they will close and leave.

MR. HUTCHINGS: I do not know, Mr. Bennett; I cannot confirm that. I mean,

that is a business choice they would make in their business model. As Peter has

indicated, we are in discussions with them in terms of if contracts expired what

role we may play leading forward. We are in that process right now.

MR. BENNETT: If they should decide to leave, would there be any

opportunity for locally owned businesses to pick up that business opportunity?

MR. HUTCHINGS: Certainly if a local business came forward with some plan,

we would look at that certainly.

MR. BENNETT: Under 3.1.02, Investment Portfolio Management, line 10,

Grants and Subsidies, last year $25,000 was budgeted but only $4,000 was used.

MR. HUTCHINGS: That would be related to the interest subsidy payments

under the old Fisheries Interest Subsidy Program. Fewer loans were outstanding,

so there was lower interest rates as the loans are wrote off, or are taken care

of, or taken out of the portfolio.

MR. BENNETT: Do I understand this is actually amounts that were written

off?

MR. HUTCHINGS: No, this would be to pay on the interest of the lower

interest subsidy payments. There is a formula in terms of when the loan was

actually taken, prime I do know, Peter, if you would like to explain it. Go

ahead.

MR AU: Way back, this program was terminated seventeen years ago in 1995.

You may recall back in the 1980s when interest rates where in the double digits,

some fishers have negotiated into loans where the interest rates were quite

high. Government came in with a Fisheries Interest Subsidy Program that would

subsidize the high interest rate and the fishers would end up paying the lower

of one of two interest rates and the government would pick up the difference. As

those loans worked down, they were paid off. Right now we have twenty-four loans

left. That is why it was down to $4,000.

MR. BENNETT: If we are down to twenty-four loans and last year was $4,000

why are we budgeting $25,000 this year?

MR. AU: Sir, we kept $25,000 there, the same as last year, because we do

not know which way the interest rate would go. There was some indication of

inflation or whatever. If interest rates go up, our obligation to cover the

difference would go up also.

MR. BENNETT: You guarantee an interest rate maximum that the person

holding the loan has is that correct?

MR. AU: No, we guarantee the fishers would pay the lower of one of two.

One is the current prime rate plus 1 per cent, or what the fishers have

negotiated. If the current prime rate has gone up the fisher will let's say

the current prime rate is 3 per cent plus 1 is 4 per cent, so the fisher would

pay 4 per cent. If he or she has negotiated a loan, which was 10 per cent, we

will cover the 6 per cent.

MR. BENNETT: Is this Bank of Canada prime you are referring to?

MR. AU: Bank of Canada prime rate, yes, sir.

MR. BENNETT: Do you agree that there is no forecasting on the interest

rates increase this year from the Bank of Canada?

MR. AU: Not with the last couple of Bank of Canada announcements, no.

MR. BENNETT: Wouldn't it make more sense if the amount used last year

would be the amount budgeted for this year?

MR. AU: It could be, yes, but like I said, there is a forecast in the US

of inflation but it never happened. At some point in time, a couple of years

ago, they even talked about deflation. We are at the whim of the market, I

guess, when it comes to the interest rate.

MR. BENNETT: The forecast from Mark Carney is well out into 2013 and no

increases.

MR. HUTCHINGS: We made a department call on that and we will live with

it.

CHAIR: Are you finished on that section?

MR. BENNETT: Actually, the next page under Loans, Advances and

Investments, last year the department budgeted $500,000 and used $200,000. This

year, it is budgeting $2 million. Can you tell me what is going on here? What

does this money do?

MR. HUTCHINGS: This is related to the disbursements related to Fluorspar.

Do you want to take him through that?

MR. MEADE: It is quite straightforward. The $200,000 under the revised is

what would have been dispersed to Canada Fluorspar's part of the loan deal, the

$2 million is what is budgeted in 2012-2013 and the remainder, approximately $15

million $14.8 million would be budgeted in 2013-2014.

MR. BENNETT: This is just a matter of when it is drawn down?

MR. MEADE: Yes.

MR. BENNETT: It is part of the $17 million commitment and as it is

required, you are satisfied, and then you advance the money.

MR. MEADE: That is exactly right.

MR. BENNETT: Just like an ordinary business, basically.

I have no more questions on this section.

CHAIR: Thank you, Mr. Bennett.

I will go to Mr. Mitchelmore under that section.

MR. MITCHELMORE: I have a question under 3.1.01.03, Transportation and

Communications. In 2011-2012 only $22,400 was spent. It seems like there is

going to be a significant amount of either travel or increased communications

$40,000.

Is there any type of marketing campaign being put into play? Is it expected

there is going to be a significant amount of travel to compensate for this

Estimate increase?

MR. HUTCHINGS: The revised budget figure we just did not reach the

anticipated travel and communications we thought. There were whole meetings and

other activities going on with the amalgamation of the two departments.

In regard to the Estimate for 2012-2013, it is reflective of continued

activity and with the reorganization of the department and additional travel to

support our programs.

MR. MITCHELMORE: Under 10, Grants and Subsidies, is it possible to get a

list as well on that?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: I am curious: You have entered into a five-year

agreement with some of these call centres and you have given them a wage subsidy

each year?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: You will possibly extend those wage subsidies beyond the

five-year period?

MR. HUTCHINGS: We are looking at that now.

MR. MITCHELMORE: Is the wage subsidy the typical 60-40 split that would

be offered through Advanced Education and Skills, or does your department have

its own fund as to how it administers the business?

MR. HUTCHINGS: No, we would have our own formula in negotiation with the

call centre.

MR. MITCHELMORE: Is this just for call centres or can it be applied to

other business entities?

MR. HUTCHINGS: I do not think we have used it for other business

entities, no. It was an incentive for call centres. Basically, it is part of the

whole incentive package and a lot of jurisdictions use it to get them to come to

their region.

MR. MITCHELMORE: The call centre, where they are foreign-owned, would

they have been able to tap into the Business Attraction Fund that we talked

about earlier?

MR. HUTCHINGS: Well, they could have, and I guess you make an important

point in terms of, when people look and say you are not doing any foreign

investments, in actual fact foreign investment shows up. While it may not come

from something like one of the business lines or former business lines, we see

business of foreign investment through other lines as identified here.

MR. MITCHELMORE: Is red tape one of the reasons why people are not using

the Business Attraction Fund?

MR. HUTCHINGS: Red tape?

MR. MITCHELMORE: Yes. A significant amount of delays and the process, the

restrictions of being able to access the fund, because it seems like other funds

that your department has are being utilized.

MR. HUTCHINGS: I do not think so, Mr. Mitchelmore. As an overview of

integrating the two departments, we are looking at all of that. We want to

streamline, consolidate, and make it easy. We want the storefront to look

smaller. If we have someone coming forward we will do the stuff behind the

scenes, but we just want to engage and bring them in. If they have something to

offer we are willing to sit down with them, but I do not know. I do not know if

it is red tape but we are looking at all of that.

MR. MITCHELMORE: Can you clarify what the difference is for the Strategic

Enterprise Development Fund, that portfolio that is being managed, versus the

other type of investment funds that you have? What is the specific

differentiation or the benefit of tapping into a Strategic Enterprise

Development Fund? From your Web site it seems like almost every category from

craft, to agrifoods, to whatever would qualify.

MR. HUTCHINGS: Do you mean 3.1.02 Investment Portfolio Management?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: My understanding is that is the collections management

function that exists in Marystown for all defunct accounts that are managed

there.

MR. MITCHELMORE: Okay.

MR. HUTCHINGS: The Enterprise Newfoundland and Labrador fund, I think the

old accounts under the old Fisheries Loan Board.

MR. MITCHELMORE: Okay.

MR. HUTCHINGS: That would be the function of 3.1.02, if I am correct,

Peter?

MR. AU: That is correct.

MR. HUTCHINGS: Okay.

MR. MITCHELMORE: How many defunct accounts does the department have?

MR. HUTCHINGS: In that Portfolio Management?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: Peter, would you like to speak to that about 300?

MR. AU: (Inaudible).

MR. HUTCHINGS: About 300.

MR. MITCHELMORE: How many of those is Fisheries Loan Board or are they

all fisheries loans?

MR. HUTCHINGS: No, there would be a disbursement based on Peter, maybe

you could speak to that?

MR. AU: Yes. They are made up of three former organizations: the

Fisheries Loan Board, the Farm Credit Corporation, and Enterprise Newfoundland

and Labrador.

MR. MITCHELMORE: Okay.

Is it possible to get a list of the 300 defunct companies and the amounts

that (inaudible)?

MR. AU: Sure, yes.

They are not defunct as much as for instance, in the Fisheries Loan Board

we gave a loan for a fisher to buy an outboard motor probably thirty years ago.

We are still trying to collect some of that. We set a grade on each account,

one, two, three, four level and so on. We can certainly give you a list of that,

sir.

MR. MITCHELMORE: Okay.

Are there new uptakes under the Fishery Loan Guarantee Program or is that

something that is not promoted through your department?

MR. HUTCHINGS: Yes, it is. We have had uptake on that. All I can say

about that one is stay tuned. We may have more information on that in the near

future.

MR. MITCHELMORE: Okay.

I do not have any other specific questions. I think they will be covered off

later in the estimates when we get into the programming piece and the field

offices and things like that. I am willing to move forward, Mr. Brazil.

CHAIR: Thank you, Mr. Mitchelmore.

I will ask for a motion the Member for Lake Melville to accept headings

under Business Development, sections 3.1.01 to 3.1.03

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Motion carried.

On motion, subheads 3.1.01 through 3.1.03 carried.

CHAIR: Mr. Mitchelmore, I am going to stay with you for the next eight or

ten minutes.

MR. MITCHELMORE: Okay.

Under 4.1.01, I am curious about the Professional Services as to what was

spent last year under the $330,700. Are there some specific initiatives that

were undertaken?

MR. HUTCHINGS: That was specific for planning in relation to GBI and RBI,

especially RBI in terms of we had a call for proposals last year in preparation

for that.

MR. MITCHELMORE: Okay.

Purchased Services were budgeted for almost $6 million and only $1.2 million

was spent. What was that spent on?

MR. HUTCHINGS: That is 06 Purchased Services?

MR. MITCHELMORE: Yes.

MR. HUTCHINGS: That was related to the reduction of funding for RBI

provided in 2011-2012 and that was returned to base funding. Is that correct?

OFFICIAL: (Inaudible).

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: What do you mean a reduction of funding?

MR. HUTCHINGS: Do you want to take that Brent?

MR. MEADE: What we did here is the reason there is a disparity in the

$5.7 million down to $1.1 million is that when we got into the Rural Broadband

Initiative, in order for us to properly enter into the contracts with the

Internet service providers we needed to post it under Grants and Subsidies. So

there was a movement. That is why you will see Grants and Subsidies have gone up

substantially, and you will see that the others would have gone down.

MR. MITCHELMORE: Okay.

The $6.75 million under Grants and Subsidies there is for Rural Broadband

Initiative and the Government Broadband Initiative?

MR. MEADE: Exactly.

MR. MITCHELMORE: Okay.

Government had allocated almost $8 million, does that include those two

figures totalled together, Purchased Services and Grants and Subsidies, or did

all the money that was supposed to be allocated for these two initiatives not

get spent?

MR. HUTCHINGS: There is $2 million that would flow into the next fiscal

year and that would be included in actually, $4 million. In number 10 Grants

and Subsidies, $5.7 million, there would be $2 million in there that would flow

from the commitments made last year with the RBI project, and $2 million that is

currently in the budget for this year for possible RBI.

MR. MITCHELMORE: So that is not really new money that was announced in

the budget?

MR. HUTCHINGS: There is $4 million in there, $2 million is new; $2

million would be monies that had to flow on this current fiscal year.

MR. MITCHELMORE: Okay.

So, you are stating that $6.75 million was actually spent on Rural Broadband

Initiative and Government Broadband Initiative last year.

MR. MEADE: It would also include the spending that would be under our

innovation programming which is about $1.75 million or $1.8 million.

MR. MITCHELMORE: Okay.

Can I get a detailed list of these Grants and Subsidies?

MR. MEADE: Yes.

MR. HUTCHINGS: (Inaudible) tech utilization of those programs that were

included, as well.

MR. MITCHELMORE: Okay, as well as a detailed list of the Purchased

Services.

MR. HUTCHINGS: Okay.

MR. MITCHELMORE: It looks like, in this year's budget, we are seeing

quite a decrease in Purchased Services. I guess the planning has been done for

the RBI, GBI, and that those guidelines and process does not need to go through

that purchasing process again. Is that what is allocating for the difference?

MR. HUTCHINGS: Originally, in last year's budget there was $8 million

allocated. That would have been what reflected that, right, the original in

2011-2012 what was in the budget for then that was reallocated for the last

fiscal year into Grants and Subsidies so it could be dispersed out to the

successful proponents of the RBI. Then that would be the base budget for

Purchased Services for this coming year.

MR. MITCHELMORE: I am interested in the GBI. Do all government offices

have access to the Government Broadband Initiative or are there missing links?

MR. HUTCHINGS: No.

MR. MITCHELMORE: They do not all have it. What areas do not have access?

MR. MEADE: If I understand your question, hon. member, I assume you are

asking: Do all government offices have access to broadband?

MR. MITCHELMORE: Yes.

MR. MEADE: Throughout Newfoundland and Labrador the answer would be, no.

MR. MITCHELMORE: Right.

MR. MEADE: There is a large majority of them that do have access because

they would be located in areas where broadband is readily available; but, for

example, Transportation and Works would have depots that would not have access.

There would be other examples that we could give.

MR. MITCHELMORE: So, with the money that was spent, what is the coverage

of the Government Broadband Initiative and that is only focusing on broadband.

I would like a list of all government offices that have broadband, with the

depots, and the ones that do not have access, if that could be made available.

As well, are there any schools or municipal government buildings or other

entities that are Crown corporations or affiliates of government that do not

have access to the Government Broadband Initiative?

MR. MEADE: Yes, we can provide that list. The term we use, hon. members,

is government-legislated agencies, so any government-legislated agencies that

are out there you have given a couple of examples of those we can provide

you lists of who has access and who does not right now.

MR. MITCHELMORE: Okay.

MR. MEADE: Everybody does have some form of access, we should be clear

the definition we use under broadband is high-speed Internet access.

MR. MITCHELMORE: Is that the one point five megabit?

MR. MEADE: Yes. So, what we will be able to show you is all areas have

some type of access, but it would vary. So, what we can show you is the type of

access (inaudible).

MR. MITCHELMORE: So you will break it down by the type of access as to

who has cable or DSL speed up to five megabits per second or greater, and those

who fall under. Okay, that would be very helpful. Could you do the same for the

Rural Broadband Initiative, the communities that actually have access and those

who do not, and broken down by the megabits?

MR. HUTCHINGS: Yes, we can get you some information on that.

MR. MITCHELMORE: I certainly would like a detailed listing on that.

The Broadband Initiative is covered under fibre and cellular access as well.

Many of the companies I have spoke to are doing fibre as well with their towers

and the technology, and they are not linking each other up. Is there any

initiative or planning that you are undertaking in the next fiscal year to look

at cellular and how that can be bridged?

MR. HUTCHINGS: Yes, we made a commitment last year in our Blue Book two

distinct ones: one related to continuing over the next four years to increase

high speed; and the second one was that cellular coverage to look at dealing

with the private service providers and see if there is a possibility to engage

in a strategy in terms of improving telecommunications, and specifically

cellphone coverage.

I have engaged in that and started speaking to service providers here in the

Province. The challenge we have, quite clearly, is that we are talking enormous

costs. We have various regions of the Province where there is no cellphone

infrastructure and tremendous build-out. Various providers I speak to, you are

looking at anywhere from half a million dollars to put up a decent tower. Then

you have the maintenance of that tower, you have fees associated with it, you

have the lifespan of that tower.

There are a number of issues with it, but we are willing to discuss with

those service providers what possibilities exist and is there new technology or

things we can do differently. From my understanding, I do not know it quite

well, where there is fibre optic I think you can do a build back for towers. So

it is also important if there is high speed in areas as well from that

perspective of building out from it.

We are engaged in that discussion. As well, as a government, it is one budget

we have and we try to prioritize to meet the needs in all of the Province,

certainly in rural. It is something we are having discussions on. We will

continue to pursue it.

MR. MITCHELMORE: Thank you for that, Minister.

Under 4.1.02, Commercialization Initiatives, can you explain why there is

nothing in the Estimates for line 06, Purchased Services, as well as 08, Loans,

Advances and Investments?

MR. HUTCHINGS: That was a part of streamlining and what we are doing from

a departmental point of view in terms of consolidating programs. I talked about

being clean and trying to, quite frankly, reduce the number of visible programs,

yet amalgamate them where there are synergies. That would be in under the SME

Fund, under our business program, Small and Medium-sized Enterprise Fund.

MR. MITCHELMORE: That would have been reallocated under the Small and

Medium-sized Enterprise Fund.

MR. HUTCHINGS: Yes, it would be looked after under the SME Fund in the

future.

MR. MITCHELMORE: Is that for the Loans, Advances and Investments?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: That would not include the Purchased Services?

MR. HUTCHINGS: That would have been related strictly to RBI last year,

the Purchased Services.

MR. MITCHELMORE: So the $2.4 million would have been for RBI, but it did

not get spent on RBI there. Did it get reallocated to the

section under Grants

and Subsidies?

MR. HUTCHINGS: Yes, correct.

MR. MITCHELMORE: Okay.

Would it also be possible under the RBI to get the details of the contracts

that were awarded for the last number of years, highlighting over $27 million

invested by government and the community reach and the levered funds? Is it

possible to release the contracts?

MR. HUTCHINGS: We would have to look at that. I am not sure whether there

are proprietary issues in terms of the contracts that were signed, but we will

certainly take a look for you and see what we can do.

MR. MITCHELMORE: If there is any information that can be shared on that,

I would certainly like to have a note as to where the communities are being

served, what the planning was, and the amount of the contract.

MR. HUTCHINGS: Okay.

MR. MITCHELMORE: I do not need all the specific details if that cannot be

provided, but certainly as much as is readily available that would not be

proprietary.

MR. HUTCHINGS: Okay.

MR. MITCHELMORE: I just have a couple of more questions under 4.2.01,

Salaries. I am wondering if a position is being added, or is that just regular

salary increases for the $1,051,000.

MR. HUTCHINGS: I think that is related to one additional position that

came over and related to the merger from the Department of Business.

MR. MITCHELMORE: Okay.

Could we get an organizational chart of what the departments looked like

previously and what they look like now to show the transition period?

MR. HUTCHINGS: Sure.

MR. MITCHELMORE: I think that would clarify and help me greatly as we

move forward.

The only other question I have is under that same section, line 10, Grants

and Subsidies. I am wondering what the $112,000 was spent for. It is exactly

what was budgeted. I am wondering: What was covered under that?

MR. HUTCHINGS: The Labrador Craft Marketing Agency.

MR. MITCHELMORE: What are they doing?

MR. HUTCHINGS: The overall craft development of the industry, working

with those involved in the industry in terms of products, market, and those

types of things.

MR. MITCHELMORE: Would this also be eligible to craft co-operatives that

wanted to get started and things like that?

MR. HUTCHINGS: Yes.

MR. MITCHELMORE: Is there a

section of the Estimates where we talk about

co-operatives later on? I do not see it clearly. It probably is listed a little

bit later, so I will save my question then.

MR. HUTCHINGS: In Regional Economic Development I guess we could, under

that section.

MR. MITCHELMORE: I am fine with the questions here. We can certainly move

to Mr. Bennett.

CHAIR: Thank you, Mr. Mitchelmore.

Mr. Bennett.

MR. BENNETT: This is under

section 4.

CHAIR: Innovation and Strategic Industries Development.

MR. BENNETT: How many staff work in this particular part of the

department?

MR. HUTCHINGS: In Innovation?

MR. BENNETT: Yes.

MR. HUTCHINGS: We would have to get you the exact number and can provide

that to you.

MR. BENNETT: Can you provide staffing for the entire department?

MR. HUTCHINGS: By division?

MR. BENNETT: Yes, please.

MR. HUTCHINGS: Sure.

MR. BENNETT: Mr. Chair, I have no further questions on this section.

CHAIR: I am going to ask then if we can adopt sections 4.1.01 to 4.2.01.

MR. CROSS: So moved.

CHAIR: Moved by the Member for Bonavista North.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

AN HON. MEMBER: Nay.

CHAIR: Motion carried.

On motion, subheads 4.1.01 through 4.2.01 carried.

CHAIR: Mr. Bennett, you can move right into Regional Development.

MR. BENNETT: Minister, I understand this department has economic

development officers?

MR. HUTCHINGS: Yes.

MR. BENNETT: How many are there?

MR. HUTCHINGS: Sixteen.

MR. BENNETT: How many?

MR. HUTCHINGS: Sorry?

MS MALONE: We have about sixty on the frontline, and a total complement

of around eighty-two.

MR. BENNETT: Of economic development officers?

MS MALONE: Yes.

MR. BENNETT: Where are they?

MR. HUTCHINGS: There are some here in the department and dispersed around

various regions of the Province.

MR. BENNETT: Can I get a list of where they are?

MR. HUTCHINGS: Sure.

MR. BENNETT: Under Grants and Subsidies which is 5.3.01, last year

$8,794,000 was budgeted and $10,794,000 was spent. Where did the $2 million go,

the difference?

MR. HUTCHINGS: That was for a number of projects that we funded. We can

get a list for you of those that exceeded the $8,794,000 that was budgeted.

MR. BENNETT: The additional projects came out to exactly $2 million more?

MR. HUTCHINGS: Yes, it would be over and above. Yes, additional funding

for projects. I think one of them was St. Anthony wharf, if I remember

correctly, our partnership with ACOA in terms of doing investments in St.

Anthony in that good project up there. There are a couple of more, but I can get

you the list.

MR. BENNETT: Okay, thank you.

I suppose you would not know which ones were the over budget ones because

they all (inaudible)

MR. HUTCHINGS: Yes, I would not want to say what they were, so I will get

you a total list.

MR. BENNETT: Okay.

This year you have budgeted less money, $6,050,000. Why is that?

MR. HUTCHINGS: Brent, do you want to speak to that?

MR. MEADE: This Comprehensive Economic Development activity includes

essentially the core program of Regional Sectoral Diversification Fund, RSDF as

we refer to, is reflected here. The $6 million would include $4.8 million for

RSDF. The remainder of this year has also been allocated for a project that we

are doing as part of the Atlantic Gateway with SmartBay.

This number, if you went back to look at previous Estimates, you will see the

number is up and down. The reason last year the number would have been higher is

because of one-off projects that we would have done that have a finite life. In

particular projects like Shorefast, the St. Anthony wharf that the minister has

referenced, and others. It would be large projects that would cause the number

to move up or down in a given year.

This year, other than SmartBay, we do not have any large one-off projects

that we needed to fund.

MR. BENNETT: How long, on average, does it take for a project like this

to come to your attention until it is funded?

MR. HUTCHINGS: Can you say it again, please?

MR. BENNETT: How long, on average, does it take for a project like this

to come to your attention or application to be made until it is funded? What is

the normal time range?

MR. HUTCHINGS: That could vary depending on what additional information

is required. Sometimes someone could come forward with an idea and a concept

paper. Then you get into the actual application, we do our business analysis

and, obviously, financial data is required in terms of the stability of the

company, all those types of things, then you get into negotiating.

I do not know, Rita, if you can the timeline.

MS MALONE: There is quite correct. Larger projects take longer, and

usually there are a lot more partnerships involved. In the main, we do keep a

very active review on where proposals are with respect to all of our funding. So

we do have a fairly nimble turnaround on straightforward funds. If all the

information is there, it could be thirty days. Larger files with larger players

take longer, but we do try to strive for able turnaround.

MR. BENNETT: Is there any type of applicant that is generally targeted or

is it a broad spectrum?

MS MALONE: This is the community-based applicant. In your area, it could

be a development association. It could be the Hawke's Bay

interpretation centre,

or it could be a municipality. So, it is active in community economic

development.

MR. BENNETT: So, generally the focus would be for non-profits?

MS MALONE: Yes, very much the community-based organizations.

MR. BENNETT: Okay.

If a non-profit organization like a development association had a business

idea that would be to operate something for profit, would that still work under

this particular category?

MS MALONE: Oftentimes we look for that spinoff, yes, as being really

meritorious. So, if we can build the infrastructure that creates an engaged

enterprise, then we can support that.

MR. BENNETT: Okay, thank you.

I have no more questions on this section.

CHAIR: I will go to Mr. Mitchelmore and then I will come back to you for

the Regional Development, Mr. Bennett.

Mr. Mitchelmore, under the Regional Development heading there.

MR. MITCHELMORE: Okay.

Section 5.1.01, Regional Economic Development, it talks about support for

Regional Economic Development Boards and other community economic development

organizations. I am aware that currently the RED Boards are funded 25 per cent

by IBRD under performance-based management and the other 75 per cent is funded

through ACOA.

Should ACOA make cutbacks? Is the department prepared to make up the

shortfalls in this program?

MR. HUTCHINGS: Not at this time. We would not be definitive on that. As I

said before, we are waiting for final response from ACOA in terms of what any

transition is going to look like from their perspective. Once we have that, we

have done some preliminary work, we will articulate then how we move forward

from where we are today.

MR. MITCHELMORE: What type of timeline are we looking at for this,

Minister?

MR. HUTCHINGS: We expect to hear back from the federal government I would

say within the next two weeks, so shortly after that. We want to make sure

whatever direction we go in we clearly articulate that and all those communities

groups and people on the ground are well aware. We will have a definitive

direction on where we will go.

MR. MITCHELMORE: Thank you for that.

Under line 10, under Regional Economic Development, you have a little over $2

million allocated under Grants and Subsidies. Is this allocated for any specific

project in last year's budget? What was budgeted and what was revised was spent,

and it is the same amount this year. Is it a consistent line item?

MR. HUTCHINGS: I think so, yes. This would include the $1.2 million that

is currently there for Regional Economic Development. Our portion is 25 per cent

that we now currently pay in co-operative development, community development,

youth, entrepreneurship, and some of those programs.

MR. MITCHELMORE