Resource Committee — Department of Industry, Trade and Technology — 19 April 1994

1994-04-19

Newfoundland and Labrador — Committees

April 19, 1994

RESOURCE ESTIMATES

COMMITTEE

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

Assembly.

MR. CHAIRMAN (Penney): Order, please!

Ladies and gentlemen, welcome to the first meeting

of the Resource Estimates Committee for 1994. Tonight we will be reviewing the

estimates of the Department of Industry, Trade and Technology.

I would first introduce to you the members of the

committee. My name is Melvin Penney. I am the Member for Lewisporte, and I will

be chairing the meetings this year. On my left is Mr. Rick Woodford, the Member

for Humber Valley, who will be the vice-chair. We have with us as well, sitting

as regular members of the committee, Mr. Beaton Tulk, the Member for Fogo; Mr.

Paul Shelley, the Member for Baie Verte - White Bay; and Mr. Ed Byrne, the

Member for Kilbride.

Filling in tonight we have Mr. Lloyd Matthews, the

Member for St. John's North, who is filling in for the Member for St. George's,

and Mr. Gerald Smith, the Member for Port au Port, who is filling in tonight for

the Member for Harbour Main. As well we have, sitting in with the committee

members, Mr. Alvin Hewlett, the Member for Green Bay. Welcome, Mr. Hewlett.

I welcome the minister and his officials, and the

members of the committee, to this meeting tonight. I will explain, for the

benefit of those of you who have not attended an estimates meeting before, this

basically is an extension of the House of Assembly except that it's a much more

relaxed atmosphere. There is no dress code that we experience in the House of

Assembly. Members, or dignitaries, or the minister or officials can remove his

or her jacket.

Of course, as we're used to in the House of

Assembly, members are referred to only by the district that they represent. That

does not apply here tonight as well. We will refer to members by their name.

We'll be in a position later on, if anybody wishes, to ask the Page to bring a

coffee into the House; you'll be able to request that as well.

The procedure that we'll be following is similar to

what we've done in previous years. We will allow the minister of the department

twenty minutes to give an opening statement. At the end of that time the

vice-chair, who sits to my left, will be given twenty minutes to reply. If he

wishes, he can pass that task to one of the other members that he designates to

so do.

Once we have finished that forty minute period,

then we will go into a question and answer period for ten minutes per member,

and it will be done very similar to the manner in which we do it at Question

Period. Rather than allow the member ten minutes to ask a lengthy question that

consists of twenty or thirty smaller questions, we will make the questions short

and to the point, and request that the minister would give his answers

accordingly. I would remind the minister that he can, at any time, ask his

officials to answer for him, but if he does that their answers must be concerned

with fact and not policy.

I would request that if any of the minister's

officials were to speak here tonight, remember that this is being recorded by

Hansard, and Hansard is not quite as familiar with your voices as it would be

with ours, so would you please first identify yourself and, secondly, lean into

the microphone on the desk. We're used to speaking from a standing position, so

tonight you're going to be speaking from a sitting position, so we ask you to

lean into the microphones.

One other individual that I overlooked when I was

introducing the people here tonight is our table officer, Elizabeth Murphy.

That about says everything that needs to be said

prior to getting this thing officially started. I will now ask the minister, the

hon. Chuck Furey, if he would introduce his officials. Once he has introduced

his officials he can begin his twenty minute statement.

Mr. Minister.

MR. FUREY: Thank you very much, Mr. Chairman.

I would like to thank the committee for arranging

to have Industry, Trade and Technology as the first department before you. I

know the arrangements were made to allow me to leave the country late next week.

I thank you also, Mr. Chairman and Mr. Vice-Chairman, for allowing me to appear

tomorrow in my capacity as Acting Minister of Tourism and Culture.

Mr. Chairman, I don't have an opening statement, I

think I'll forego the opening statement. I'll introduce my officials and we'll

get right to the questions, if anybody has any questions. On my right is Peter

Kennedy, the Deputy Minister of Industry, Trade and Technology. I see them

smiling in the background. They're delighted with that. Phil Wall is on his

right, he's the new President of Enterprise Newfoundland and Labrador. On my

left is Cathy Duke who's the Executive Director of the Economic Recovery

Commission; behind her, Dorothy French who's the Chief Executive Officer of ERC;

behind me is David Butler who is the Financial Officer for Industry, Trade and

Technology; Randy Snelgrove who's come along to keep him out of trouble and

Patrick Kennedy who's the Financial Officer for Enterprise Newfoundland and

Labrador. I thank the officials for coming tonight on such a short notice. I

didn't expect such a crew. I thought it would just be the deputy and one or two

others. So we're here to answer any questions. It's an $80 million budget with

related revenues of $40 million.

MR. CHAIRMAN: Thank you, Mr. Minister. That's

the ministers twenty minute opening statement. I will now allow Mr. Woodford

twenty minutes, unless he were to designate somebody instead.

MR. WOODFORD: My first comment, Mr. Chairman,

is what nine-and-a-half years can do for you, a little over nine years.

First of all I'd like to ask a few questions to the

minister and/or his officials, whichever, I'm sure he can answer them himself.

First of all about the Rural Development Councils, I know earlier this year the

minister made a statement in the House or maybe it was in response to a speech.

I think it was in response to some questions asked by certain members and maybe

myself pertaining to the Rural Development Councils in the Province. I

understand now there's an extension to the agreement for this year. When will

that end? Will that end as of next March or will it end before the end of this

year, this calendar year?

MR. FUREY: Do you want me to make some notes or

shall I answer?

MR. WOODFORD: Yes, go ahead.

MR. FUREY: Okay. The extension was put in place

to carry us for a six month period and essentially what we did was collapse down

the project funding into administrative funding. That was enough to cover off, I

think $18,000 per Rural Development Association which is half of their operating

grant. We made provision under the new SRDA which is the Strategic Rural

Diversification Agreement which is a $38.7 million agreement which sits there to

give effect and life to the actions as set out in the Strategic Economic Plan.

We made provision to take out the balance of the required six months should it

be required because what we were trying to do was give time for the

federal-provincial task force to get up and running, to set out its terms of

reference and to consult widely across the Province using the Rural Development

Council, the Federation of Municipalities, the Community Futures people, the

federal-provincial people at ACOA and Enterprise Newfoundland and Labrador DRC.

So there is provision within the five year agreement which would have expired

March 31 this year. What we did was, we froze the project funding, rolled it

forward for six months and we left provision under the SRDA to carry it for a

further six if that's required.

MR. WOODFORD: If it's required. What would be

the status of that particular committee now or task force? Is it set up?

MR. FUREY: Yes, it's set up. Dr. Doug House

will chair from the Provinces side, Gordon Slade who is the senior federal

bureaucrat in the Province will co-chair from the federal side. As far as I

know, and correct me if I'm wrong, CEIC will have somebody on that federally.

Industry, Trade and Technology -

MS. DUKE: Actually I think the federal

membership is as the minister said; Gordon Slade, Max Street from ACOA as well

and Rick Fifield from Human Resource Development, yes.

MR. FUREY: Okay, so it's that industry. On the

provincial side, as far as I know, it's Dr. House, Richard Fuchs from ENL and

Sam Kane from ERC. Now also the Federation of Municipalities is putting forward

a name to sit on this task force and I believe the rural development council has

already put forward two names that we've accepted. It was my intention to

appoint a provincial politician, I wanted to appoint the Member for Port au Port

who brings a great wealth of experience in that field and to seek from the

federal people a federal politician but the feds were not agreeable to that. I

did not want to politicize it in the big `P' sense but to bring some small `p'

grassroots politics into the system, but that was not acceptable to them and we

did not want to delay the work of the task force.

AN HON. MEMBER: (Inaudible)

MR. FUREY: They offered two names, Woodrow

Mullett who was the former president, the just currently retired president, and

- I can get you the name. It's no problem.

MR. WOODFORD: What about the Federation of

Municipalities? Did they put forward a name yet?

MR. FUREY: I do not think they have as yet. I

would be most happy to table the full task force tomorrow.

MR. WOODFORD: But the Federation of

Municipalities are represented on the task force?

MR. FUREY: Absolutely, because there has been a

lot of co-operation amongst both orders, and Community Futures as well.

MR. WOODFORD: Well, that is CEIC really. They

did not determine it but that is who it operates under anyway.

Ms. DUKE: Certainly the funding is through

(Inaudible)

MR. FUREY: I say CEIC but they call it HRD now,

don't they?

MR. WOODFORD: Yes.

What would be the terms of reference with that

particular task force?

MR. FUREY: Well, they are going to put together

the specific terms of reference very soon, but the broadbrushed approach we have

given them is to look at the plethora of agencies that have grown up around the

Province over the last number of years. Now, my own personal preference would be

to look at every single federal/ provincial agency. Some would argue there are

over 180 of these that have an administrative budget of $50 to $70 million,

depending upon who you talk to.

What we are going to do is do it in steps. Step one

for this task force is to look at rural development associations, and community

futures groups from the federal/provincial side and see how we can form them

into seventeen economic zones in line with the Strategic Economic Plan. We kept

it very general for them to set their own terms of reference, but the idea is to

collapse down into the seventeen zones for efficiency, better management,

accountability, and that kind of thing.

MR. WOODFORD: So, the bottom line with regards

to rural development councils in the Province is they have enough funding to

carry them through for the next six months, and if the task force report has not

reported by then, then there is room there and there will be an accommodation

made to sustain them for the following six months. They are good for the next

year, really.

MR. FUREY: Correct.

MR. WOODFORD: With regards to ENL. I do not

mean to jump around to almost the complete opposite, but how did this year fare

with last year with regards to loans and small businesses?

MR. LUSH: In what sense? In how many loans did

we put out?

MR. WOODFORD: Yes, to put it simply, how many

loans did you put out this year through ENL?

MR. FUREY: This past fiscal year?

MR. WOODFORD: The past fiscal year.

MR. PATRICK KENNEDY: This past fiscal year

there were 288 loans for a total of $18.2 million.

MR. FUREY: Is that actual or committed?

MR. PATRICK KENNEDY: That is committed.

MR. WOODFORD: I understand ENL operates through

term, conventional, or small business. Am I right?

MR. PATRICK KENNEDY: That is correct, yes.

MR. WOODFORD: What would be the breakdown of

those particular loans?

MR. PATRICK KENNEDY: In small enterprise loans,

a loan defined as $100,000 or less, there was $2.5 million. In conventional

loans which would be anything from $100,000 to $1 million in total, there was

$9.9 million, and in direct equity investments in companies there was $2.6

million. We had $362,000 in venture capital financing. In interim funding, or

bridge financing in terms of ACOA grants, or just money that would be done in

short-term was $1.9 million. In the special sawmill assistance program which was

a carry-over from the former RAND there was $348,000. In our company development

and our young entrepreneur program there was $134,000 and we have one loan

guarantee of $600,000, that's the breakdown.

MR. FUREY: I will tell hon. members too that

the board, the President and the Board of ENL just took a decision to put an

uniform rate of interest rate in place, right across the Province, you know, in

each region depending upon the so-called RACs, the Regional Authorization

Committees, it is a levelled interest now, it is prime plus 2 for everybody as

of April 1st. That's a floating rate but once you -

MR. WOODFORD: Including your small business

loan?

MR. FUREY: The whole works, yes.

MR. WOODFORD: The whole works, and your

conventional?

MR. FUREY: Every loan is prime plus 2, from now

on. We were finding different levels in different regions and there was an

unfairness basis we built in the system because some were, in some regions given

the low rates, others weren't, so we had to equalize -

MR. WOODFORD: I know the West Coast is fairly

high with regards to a conventional loan and -

MR. FUREY: Low interest loans there too.

MR. WOODFORD: Yes. Well that's the other thing

I want to mention because when you say that there is a uniform rate -

MR. FUREY: As of April 1st.

MR. WOODFORD: - as of April 1st of two

percentage points above prime, the small business loan always operated at three

percentage points below prime, but then again, prime as of a month ago was

fairly low in any case so you can almost get a loan for nothing, and I can

understand why you would put a small increase on a small business loan because

as I said, what is prime there of one point is a little above 5 per cent.

MR. FUREY: You have some great success stories

in your region with ENL loans.

MR. WOODFORD: Yes, we have and -

MR. FUREY: A few losers too but mostly

successful.

MR. WOODFORD: Well you have them -

MR. FUREY: A few properties reverting to the

Crown.

MR. WOODFORD: Yes. There are a few more to come

by the way, but in any case as I recall, because it is an area where, I think a

lot of attention should be paid, especially now with the economic times we live

in and in relation to that, I would like to mention that sawmill assistance

program; that was one of the best programs that I had, as I had six months with

RAND in administering that particular portfolio and it was one of the best

things that I have seen. I know in my area, I can't speak for other areas of the

Province but I can certainly speak for my area regarding that because I mean,

you have people working all winter providing saw logs to operators, and then

they can saw it and sell it in the summer time and pay it back in the fall of

the year.

MR. FUREY: That's a great program.

MR. WOODFORD: It's an excellent program in my

understanding, and by the way, what is the record of that particular program

with regard to pay back, is there much default?

MR. PATRICK KENNEDY: The way the program works

is that once a loan is given to a particular individual or company, if they

don't repay it they don't qualify for the following year. That is the general

rule so the success of the program is basically predicated on the basis that the

company which receives the money must repay otherwise they don't qualify for the

following year. This year we had twenty companies or twenty individuals coming

forward looking for the funding under that program on a Province-wide basis.

MR. WOODFORD: What about the record for last

year?

MR. PATRICK KENNEDY: There was $348,000 this

past year; last year was around $440 so any company that did not repay or did

not fully meet its obligation in terms of recouping the money because, primarily

it is for working capital, they don't qualify the following year.

MR. WOODFORD: Yes, but I would say you are

going to see a bigger increase than that this year because of the situation with

paper mills and so on, and then you have extra access roads and operators will

be able to take advantage of more of the sawmill business than they would have

previous to this year. What would be the overall repayment record of all

Enterprise Newfoundland and Labrador loans, term (inaudible)?

MR. PATRICK KENNEDY: For 1993-1994, the total

pay back to government was $9.98 million in total, principle and interest. The

total outset in portfolio was in the order of $105 million.

MR. FUREY: I can tell though, in fairness, Pat,

didn't we just write off $8.7 million?

MR. PATRICK KENNEDY: $9.6 million, Mr.

Minister.

MR. FUREY: $9.6 million and if my memory serves

me correctly, 97 per cent of that came from NLDC and RAND?

MR. PATRICK KENNEDY: That's correct, Minister,

yes.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: Well, that's the question I was

getting to.

MR. FUREY: RDAs, wasn't it, rural development

loans.

MR. WOODFORD: Rural development, yes.

MR. FUREY: Yes, these were back in the

seventies, early eighties, mid-eighties, up to eighty-five, was it?

MR. PATRICK KENNEDY: Yes, eighty-five,

eighty-six; that's correct.

MR. WOODFORD: What would it be since

eighty-five?

MR. FUREY: Well, they're still out there as

doubtful accounts, but we haven't written them off yet, but it's substantial.

AN HON. MEMBER: At March 31, 1993, the

allowance for (inaudible) was $37.1 million.

MR. FUREY: On the total picture -

AN HON. MEMBER: On the total portfolio.

MR. FUREY: - of NLDC, the rural development

loans, and the new ENL?

AN HON. MEMBER: Yes.

MR. FUREY: About thirty what?

MR. KENNEDY: $37.1 million, or about 44 per

cent of the total portfolio.

MR. FUREY: Okay, now break that out and NLDC,

the old world development loans and ENL.

MR. PATRICK KENNEDY: Okay, the ENL loans would

have represented about $11 million of that figure, of the $37.1 million. NLDC

was about $19 million, and the balance was RDA, rural development authority.

MR. FUREY: Allowance for doubtful accounts.

MR. PATRICK KENNEDY: Allowance for doubtful

accounts. That's potential for write-off, yes.

MR. WOODFORD: But even that -

MR. FUREY: That's not bad in high risk loans.

MR. WOODFORD: No, well that's what I'm saying -

high risk loans, because the banks today, it was bad enough before, but today

they have absolutely no social conscience whatsoever - none. Whatever chance a

small business person has, and if the viability is there and if the proper

projections are made and the proper estimates are made, and the work is done on

the application, because a lot of people have a good idea in their head, and

they can really carry it out, but they just can't put it down on paper, and I

think that they do get some help. I know with the office on the West Coast they

do get some help with their applications as well, so that's a good thing. So you

can't really look at the percentage of default. It depends then on the breakdown

of everybody is treated alike, not chalk made of one and cheese of the other.

I think my twenty minutes is up. I don't want to

hog the time, or take anybody else's time, so pass it along to someone else, Mr.

Chairman.

MR. CHAIRMAN: Thank you, Mr. Woodford.

Mr. Matthews, do you wish to take your spot now?

MR. L. MATTHEWS: In the department, Industry,

Trade and Technology, I guess whatever focus and emphasis the department has

with respect to small business and small business sector is done through

Enterprise Newfoundland and Labrador. Is that a fair statement?

MR. FUREY: Yes, most of the business help for

small and medium-sized businesses is channelled through Enterprise Newfoundland

and Labrador, although there are some programs that continue to sit in the

department. One is called MAPD, which is market and product development, and

that's not restricted to any size of business; it's to help any business get out

and market and produce results out on the world market for their products, or to

do market intelligence and research.

The other one is the SIID agreement, of course, the

$42 million agreement, which is to help industries of all size get out there and

export their services and that kind of thing.

MR. L. MATTHEWS: I don't see, looking through

the department's estimates, under the headings, that sort of thing, any emphasis

on the small business sector other than through ENL. I guess that's where any

help you have, any emphasis you put on small businesses, goes through that

agency.

In looking at the overall budget of the department,

perhaps you could comment for me, because I am new to looking at the estimates

of this department, the projected budget last year was $56 million and change.

It was revised down to $44 million and change, and this year it comes in at

about $45 million, which is almost dead on with the revised figures for last

year.

MR. FUREY: What page are you looking at there?

MR. L. MATTHEWS: Well, that's the last page,

page 149, the total. There were some major adjustments from the budget to the

revised figures, and I've identified some areas where these adjustments took

place, but could you comment on what happened there?

MR. FUREY: Most of the drop is in Bull Arm -

costs have fallen off the table. They're one-time shot costs where the province

as you know put up roughly 30 per cent. I can get you the exact. Do you want the

exact?

MR. L. MATTHEWS: I was just saying that last

year the Budget called for $56 million. That is what was voted, I guess, in the

estimates and it came in at $44 million. This year you are in at $45 million, so

you are saying that the changes and the drop mainly in the total global

departmental budget relates to changes in the situation at Bull Arm?

MR. PETER KENNEDY: Most of the explanation for

that particular observation is found on Page 141, the last set of numbers on

that page, which is the Province's contribution to the Hibernia GBS site. This

is a contribution made from the offshore development fund which is cost shared

75/25 by the federal and provincial governments. The cash flow on the project,

because the cost of that particular set of facilities is higher than originally

budgeted, our cash flow effectively slowed down on the thing and we did not have

a legal requirement under the agreements to flow that particular money, which

would, naturally then, just flow into the new fiscal year. That is an $18

million difference and I think that accounts for a large part of it.

MR. L. MATTHEWS: Where is that?

MR. FUREY: On Page 141, Subhead 2.2.03,

Section

10, grants and subsidies. See the $18 million on the right column. That was

budgeted last year. It was not taken off, it fell off.

MR. L. MATTHEWS: Okay.

The Province is no longer involved, I guess, in

Vinland Industries?

MR. FUREY: We are involved in Vinland

Industries. Vinland Industries was a joint venture between Kvaerner Rosenberg

and the Province through Marystown Shipyard. It remains an active company but

the Kvaerner half of the company have withdrawn so it is 100 per cent owned by

the Province now. We had to maintain the company for pre-qualification reasons

so that we could continue to bid. Kvaerner is providing limited services now.

MR. L. MATTHEWS: There is nothing in this

year's estimates relating to the training program so I guess there is no

activity ongoing there?

MR. FUREY: Just what you see there, a small

amount of capital dollars to finish that facility. That's all. Which I am happy

to tell you is up and running. I think we have about $153 million worth of work

on the books there now, on both facilities.

MR. L. MATTHEWS: Thank you, Mr. Chairman. I

have no further questions.

MR. CHAIRMAN: Thank you, Mr. Matthews.

Mr. Byrne.

MR. E. BYRNE: Mr. Minister, I will try to be as

brief as you did in your opening statement.

MR. FUREY: Well, in that case, in conclusion -

MR. E. BYRNE: In conclusion I would like to say

thank you now.

I have some questions, I guess, certainly dealing

with the Economic Recovery Commission. I am not sure if it's your department or

not that answers for policies developed by the commission or if your department

just handles the financial administration.

MR. FUREY: We handle the financial

administration for purposes of the Budget. It sits in our department to flow the

cash and to account for it.

MR. E. BYRNE: Would questions then be more

appropriately asked of the Minister of Employment and Labour?

MR. FUREY: No. Under the Economic Recovery

Commission Act it reports directly to the Premier, unless you ask questions of

the Executive Council in the House of Assembly to the Premier or the President

of Treasury Board. I do not mind answering. I will attempt to answer and we have

support staff here. Please, feel free, ask anything you would like to ask.

MR. E. BYRNE: Grants and subsidies $2,191,300,

what are the heads or subheads of where that money is allocated, and what is it

allocated for?

MR. FUREY: That is $2.1 million?

MR. E. BYRNE: Yes.

MR. FUREY: It is not listed in there spelled

out, but I would be happy to spell it out for you. Salaries and benefits are

$1,060,000, personnel costs carried with that are $9000, travel is $87,000. I

notice you guys are way down from years ago. Premises for renting $157,000.

Miscellaneous; I imagine that is your phone bills, faxes, and administrative,

$162,000. The total operating of personnel would be $1.5 million and I'm

rounding that off for you. There's a

section called economic initiatives;

$500,000, professional services; $35,000. Economic initiatives can be everything

from the new school program that you've launched, on entrepreneurship, the

ambassadors program, there's a whole range of them. I'd be happy to go through

them for you. So the total budget would be $2,011,300 directly to the Economic

Recovery Commission and under the Strategic Economic Plan there is $180,000

added for the educational strategy and a number of other projects that you have

ongoing which brings you up to the $2.19 million.

MR. E. BYRNE: What are some of the economic

initiatives being worked upon, developed -

MR. FUREY: The Conservation Corp for example

was one of the initiatives that came out of there.

MR. E. BYRNE: For initiatives that are

presently being worked on. Would that necessarily be in the public mind for a

variety of reasons but could be discussed here?

MR. FUREY: Sure. Yes, some of these are not

made public yet because they're still under consideration.

One of the issues is privatization. That's an

interesting subject these days but the Economic Recovery Commission is helping

us with a planned approach to privatization of certain areas. I know that they

were very involved for example in Farm Products, helping to look at how we can

regenerate that into a new industry should we move on what has to be done down

there in that old premises in the old building.

They've just developed a strategy on job creation

that they're just getting ready to present to government. They've been working

for some time on a recreational fisheries paper, discussion paper, which has

some interesting things in there on how to maximize benefits from the outside.

They've come forward with a small business policy, they're looking at a labour

sponsored venture capital program, they're looking at the whole concept of

community bonds for the government, labour employer advisory council, the income

supplementation, community relations, innovations in rural planning and

development was there, they're looking at - in fact the task force that we've

just appointed them to is perhaps the biggest project that they'll do this year.

The apprenticeship program is another one they're looking at. They've just

developed a booklet for all of the schools to be going around the Province

called, At The Crossroads to raise awareness about the new economy.

They've started a school visits program where they've hired university students

to go into the classrooms across the Province to let young people in the schools

know that profit's not a dirty word, business is okay and entrepreneurship is a

good thing and a noble thing to strive for.

They're doing some work on the health industry

sector which is a major growth sector. They did their strategy on the eleven new

growth sectors that were released, including Adventure Tourism in a whole other

area. They organized the international peat conference in Corner Brook this past

year. It looks like there's going to be some interesting projects fall out of

that with Genesis Organic, the Stanton Group and a number of others that are

looking to invest both here at home and to export the product. I know Genesis

has a container load in Saudi Arabia now?

AN HON. MEMBER: Yes.

MR. FUREY: They're looking at the information

industries, they helped with the privatization of NLCS, which we started. They

have a business prospects initiative that they're working in concert with our

department. We've launched a ministerial prospecting initiative where we're

targeting companies around the world using the marine environment as our

launching point and all of the centres of excellence that we have here to sell

and draw on new activities. In fact in our department, Peter, we've isolated

down roughly about 100 companies that we're going to target now?

MR. KENNEDY: 125.

MR. FUREY: One hundred and twenty-five

companies worldwide that we think would have an interest in investing here and

we're going to use the local business community, the department, the Premier and

myself to try to lure some of them in here. Some work was done on that in Boston

in the last number of weeks. I was there and visited four particular companies

and there's some interesting prospects. The conservation corp I mentioned and

there is a range of others; I would be happy to put them all together for you

and send them to you.

MR. E. BYRNE: I certainly wouldn't mind.

MR. FUREY: We will do that.

MR. E. BYRNE: With regard to the Income

Supplementation Program, that initiative I understand cost somewhere in the

vicinity of $600,000 to $700,000. If I am off base, please correct me or -

AN HON. MEMBER: $600,000

MR. E. BYRNE: Pardon me?

MR. FUREY: No, you are not off.

MS. DUKE: $600,000.

MR. E. BYRNE: $600,000? Again, I am not sure if

this is the appropriate place to ask or the right committee but I will ask it.

What is the status of that initiative launched by ERC, in terms of the

federal/provincial discussion that is taking place not only about social

programs, but the Income Supplementation Program as it specifically deals with

this Province?

MR. FUREY: I am not sure that I am the right

one to answer that question to be fair to you. It may be better addressed by the

Minister of Employment and Labour Relations because once the document was borne,

it was passed to that department to carry, but I do know from my informal

discussions with Dr. House, that he is still involved on the policy side, and

has had a number of meetings in Ottawa with the Human Resources Development

assistant deputy minister, to iron out some of the questions that Ottawa had

with respect to the intent of the document; and also to trade intelligence and

ideas on how it can be improved, so I know that he reported back to the Minister

of Employment and Labour Relations.

MR. E. BYRNE: I will leave that for the

Minister of Employment and Labour Relations. In terms of the privatization

initiatives or the concept of privatization and what industries may be

privatized or may not be privatized in this Province that ERC has been working

on or intends to work on, other than farm products and other than NLCS, has ERC

done any work in advising government on the privatization of other industries in

this Province?

MR. FUREY: Well, I do know they were very much

involved a long time ago too, and they have done a lot of work for and research

on Newfoundland Farm Products in particular, and I do know that one of the

commissioners, I believe it was Adele Poynter, was very much involved and tuned

in with the department on the information sector side with NLCS. As to the other

ones, I think they are looking generally at other operations that government is

currently involved in, to see in fact, if there is some interest out there in

the private sector and they are not doing this in isolation, they are doing it

in concert with various departments.

In the case of my own department, there is a number

of Crowns that report to me. Marystown Shipyard, we came within a whisker,

nearly a year-and-a-half ago of selling that but we are still very much

interested in divesting that particular shipyard if we can. Newfoundland

Hardwoods as well, we are looking at divesting that but we want to do it right

and we want to do it with minimum job loss and in fact, where there may be an

opportunity to enhance jobs. I can't think of any other thing; they may have

done some work in housing, a small amount of work - Newfoundland and Labrador

Housing?

MS. DUKE: I guess the other aspect of the

privatization which the commission has been looking at is, I guess you can go

with the large Crown corporations which you might want to privatize, but there

are many other things that are currently being done in government that could

probably be done more effectively and more cheaply in the private sector, so we

are looking at the whole aspect of out-sourcing and contracting out specific

services, so the paper that is going forward to government which ERC was

involved in drafting, is basically recommending approach to privatization which

tackles it at a number of different levels.

MR. E. BYRNE: Are you in a position to discuss

or to lay on the table here, any of the proposals or departments or resources or

things that you may be advising government on in terms of contracting out other

services outside of the large Crown corporations?

Certainly, if I am reading you correctly, there are

other departments within government, smaller services, I guess a collection of

privatizing certain government bureaucracy and services that we can save

additional funding; are you in a position to talk about any of those? Would

government mail service be an option for example, or would - Oh I will just use

that one as an example now, is that something that is being looked at?

MS. DUKE: At this point, really, the approach

that we are recommending to government is one based on experiences in other

jurisdictions and so on, but we really haven't gotten to that point yet of

actually recommending specific services or specific divisions or so on. Right

now, I guess, government is basically reviewing that approach and we'll have to

make some decisions on how it will want to tackle the whole issue.

MR. E. BYRNE: Can you see yourselves at some

point in the near future, or within the next year or year-and-a-half, at what

point you will be ready to advise government on these matters based upon your

research and collection of what's happening in other jurisdictions?

MS. DUKE: Well I guess, as the minister said

earlier, the work that the commission is doing is in concert with other

government departments, but certainly there will be a point where a major review

will be done and recommendations will be put forward, but I can't really give

you any time lines on that.

MR. E. BYRNE: Okay, fair enough.

MR. CHAIRMAN: Order, please!

Mr. Byrne, your ten-minute time period is up. We'll

get back to you again.

The Chair has been somewhat lenient over the last

few minutes. I would remind all members of the committee that they are not,

under any circumstances, ever to ask a question of anybody but the minister. It

would be entirely up to the minister to ask somebody else to reply.

Mr. Smith.

MR. SMITH: Just a couple of things. Obviously I

came into this process rather late, so I've been trying to catch up. I'm looking

through the two areas that I had noted. My colleague to my left and the

gentleman behind me have already referenced, but I would like to just spend a

couple of minutes, if I could, on page 146, 3.2.03, Enterprise Newfoundland and

Labrador again. There are just a couple of things related to that.

First of all, in terms of the budgeted amount for

ENL that was showing a significant reduction from last year in the bottom line

amount, and I am just wondering if you could just elaborate a little on that.

What does that reflect?

MR. FUREY: All questions are coming to me, and

I will delegate an official to answer.

MR. CHAIRMAN: Sure; there's no problem with

that.

MR. FUREY: Maybe we'll give the new president

his first shot at it.

MR. CHAIRMAN: We'll ask the officials, though,

to remember to identify themselves.

MR. WALL: That's reflective of a reduction in

demand, basically. Both Enterprise Newfoundland and Labrador and ACOA have

noticed, in the last year or so, a significant reduction in demand for financial

assistance from industry in the Province. That's basically where it's coming

from.

We, in the past year, noticed that, and therefore

the government, in consultation with the corporation, determined that there was

a reduction warranted on the basis of a lack of demand from meeting with small

business, for financial assistance.

We don't anticipate, despite the reduction, from

our experience in the last couple of years, that there will be any shortfall of

financial assistance available to business. As I said at the beginning, the same

thing has happened with the federal program which is mostly utilized by small

business in the Province, which is ACOA. They've indicated as well that there is

a significant reduction in the demand.

The amount, by the way, that's shown there would

not necessarily as well be the amount that flows. I think Mr. Kennedy mentioned

earlier that there was $18 million approved for one of the programs last year.

Some of that money is approved and will flow this year - in other words,

programs that were approved before the end of March - and I believe that, tell

me if I'm wrong, I think there's $7 million left over from - yes, there is;

there's $7 million that was approved up to March 31, 1994, which will flow this

year as well. So there will be more money flowing than is indicated here, or

available for flowing, because in addition to that seven there are fourteen or

fifteen of the twenty-one which can flow in new money, but I still indicate to

you that there is a reduction in demand from small business for financial

assistance.

AN HON. MEMBER: (Inaudible).

MR. FUREY: The general government policy still

holds true, though, that at any one time in the year ENL is authorized to commit

- not to flow, but to commit - up to $24 million.

MR. SMITH: Very specifically, at the present

time the total personnel employed by ENL, and the total payroll figure for -

AN HON. MEMBER: (Inaudible).

MR. PATRICK KENNEDY: As of April 1, 1984 there

were 159 permanent staff, and the total payroll burden, including benefits, is

$8.1 million.

AN HON. MEMBER: (Inaudible).

MR. PATRICK KENNEDY: Yes, I do, Minister.

AN HON. MEMBER: (Inaudible).

MR. PATRICK KENNEDY: Yes.

The corporation is comprised of five regions, and

within the corporate office, within the St. John's office, we have three

divisions. The three divisions in the corporate office are comprised of the

executive, which is the office of the president and support staff, corporate

services, of which I am the vice-president, and we have a rural and development

services group. Then we have five regions, the avalon region in Clarenville, in

Gander, Corner Brook, and in Goose Bay, Labrador with satellite offices feeding

into it.

The total salary breakdown per division and region

in the office of the president is $238,000. In corporate services there is $1.04

million. In rural and development services it's $734,000. In the Avalon region

it's $1.7 million - these are round numbers. In Clarenville it's $600,000. In

central region it's $981,000. In Corner Brook or western region it's $890,000,

and in Labrador it's $767,000. That's the total gross salaries. Now there are

benefits on top of that. The benefits would be unemployment insurance and so on.

That would bring it up to the $8.1 million.

MR. SMITH: Thank you.

How long has ENL now been in existence?

MR. PATRICK KENNEDY: The amalgamation of the

Newfoundland and Labrador Development Corporation and certain divisions of the

former Department of Development took place on January 1, 1990.

MR. SMITH: As part of the process, and I can

recall when it was being set up - it's now a little better than three years -

built into this has there been an ongoing evaluation process? As a person who

has worked out in the community as a volunteer, the biggest criticism that I've

heard of ENL is that to begin with, when the corporation was set up, we probably

didn't realize the full benefits that we could have from ENL, and the fact that

government felt obligated for whatever reasons to work with a lot of the people

who were present within the system, so it wasn't really constructed; you just

referenced it you said amalgamated, rather than setting up a new corporation.

There were certainly a lot of people I know from the old Department of Rural

Development, and a lot of these people have ended up in certainly positions that

are quite different from the responsibilities they were doing earlier, and the

criticism has been, rightly or wrongly, that some of these people have been

placed in positions where they are finding themselves a little out of their

depth.

Now the question that I have with regard to that,

has there been an ongoing evaluation process in terms of, we have a corporation

here now, it's a little over three years old, and if not maybe it's something

that certainly the new president coming in, I would assume that to him that

would be a major responsibility to take on. I would suggest an internal review.

When I say evaluation, you have to be very careful

as well, and to you, Mr. Minister, I guess ultimately the responsibility would

be there because obviously it would be difficult to evaluate the new president

because he's the new kid on the block and he's obviously going to be evaluated

anyway, but from there on down it would seem to me, because when I'm saying

evaluation it doesn't necessarily mean down in the satellite offices, a single

person working in the office in Stephenville. I'm talking about the total

corporation, at the different steps, so my questions again are: Has this been

ongoing, and if it has not been ongoing, are there plans to engage in some sort

of an internal review, possibly using some outside sources?

MR. FUREY: I'll just respond quickly and then

I'll pass it to the new president. There is an ongoing evaluation as you call

it, we're constantly reviewing the corporation. In fact there's a serious review

underway now with the president and the new board. You're quite right, when we

first structured this new corporation there were a lot of growing pains for a

lot of people. It wasn't and isn't a perfect corporation but as I recall

Patrick, there were a lot of training dollars spent to bring people up to speed

and to bring them in line with the new jobs that they were presented with and

lots of people didn't feel comfortable in the beginning. I sense that there's a

great deal of relief and comfort out there now.

Let me tell you the best evaluation that anybody

could give of any corporation to see whether in fact it's working or not.

Statistics Canada just released, a little while ago, a report that covers

1990-93, a three year period of areas of business growth in the country. When

they say business growth they mean new businesses that had been sustained over

that three year period and were continuously operating as they took this survey

and it employs anywhere from five to fifty. If you look at that, Newfoundland in

the Atlantic Region led the way and had a 20 per cent growth, from 14,500

businesses to 17,451 businesses and anywhere from five employees to fifty

employees. New Brunswick in the same category, same criteria, grew by 10 per

cent. Everybody raves about New Brunswick and its growth and stuff. Nova Scotia

by 7 per cent, PEI by less than 1 per cent and the country as a whole by 8 per

cent. So I think the policies of ENL and the fact that it was decentralized, the

fact that it was made user friendly, client friendly and the fact that people

could walk in and not have to wait for decisions from inside the overpass, as

was done for many, many years, I think that's starting to take hold. I think

it's starting to show positive results. It's not the cure-all for an economy

that's been brutally beaten but it certainly is helping. I don't know if you

want to add to the review, Mr. Wall?

MR. WALL: I don't have much to add to that,

minister other than to say that it is one of the priorities that I have. I've

recognized some of the comments that you've mentioned before, I've heard them

before and it is something that I intend to follow up on in terms of ensuring

that there is adequate training for the officials at ENL. I'm very sensitive to

it and I know the executive and the board as well are very sensitive to that

issue. We will continue to attempt to upgrade the skills of all the staff at ENL

to a point where they are beyond reproach and until we reach that level, which

may never be, until we reach that level there's always going to be room for

improvement. Just to echo the minister's comments, it's an ongoing process which

seems to be showing results in the last few years.

MR. SMITH: Thank you. That's it for me, Mr.

Chairman.

MR. CHAIRMAN: For the benefit of Hansard the

last speaker was Mr. Wall. Yes, that's right, the last speaker before Mr. Smith.

Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

A couple relating directly in the estimates, the

first for basic clarifications I guess and then I have a few general questions

but on Page 143, 3.1.02, Technology Transfer Opportunities-Offshore Fund, I mean

basically when you look at the heading and read it - I just want clarification

that if you're going to require expertise to participate in the development of

the Province's offshore petroleum resources and in the numbers that show at the

bottom then - well it's a two part question I guess - I want to sort of get an

explanation of that particular heading, does that mean the training and that

type of thing that goes into that - just an explanation of that heading. Then

the second part of the question is the explanation of the $625,000 that was

budgeted and then $162,000 that was spent and of course it's estimated this year

for $400,000.

MR. FUREY: Yes. That comes under the

Canada/Newfoundland Offshore Fund that was negotiated by the previous

government. I think there was some $300 million, a portion of that was blocked

off for technology opportunities, transfer of technology opportunities, OTTOP

program it is called, and in essence it was used by companies to go and work

with other companies around the world or bring those companies in here. A good

example would be fifty-five welders from the Marystown Shipyard for example, who

went overseas and trained -

MR. SHELLEY: Okay. That's what I was wondering.

MR. FUREY: - eight months at the Kvaerner

Rosenberg Shipyard. I have some other examples here. The MNC Group Inc., we

funded $163,000 to bring ten employees up to speed on the QA/QC; AMI Offshore

Inc.; Metal World, Terra Nova Marine; these are all local Newfoundland

companies.

MR. SHELLEY: That's the point I was getting at,

to bring Newfoundland people into training so that they would be upgraded.

MR. FUREY: So they would be upgraded into a

real situation with respect to offshore, whether it was actually constructing or

doing work, and they in turn take those skills and transport them back here, or

conversely, bringing people over and picking up the cost over here as we did,

for example on some management matters at Marystown.

MR. SHELLEY: Okay.

MR. FUREY: You asked about the $625,000?

MR. SHELLEY: Yes.

MR. FUREY: There was a small take up last year

I guess of $162,000 that's why it is down. In previous years there was a large

take up at Hibernia -

MR. SHELLEY: So you expect to spend $400,000

this year then?

MR. FUREY: We budgeted it there because it sits

in the global offshore fund and we took out that chunk; if we need more we can

get more, if we need less we leave it there and roll it forward.

MR. SHELLEY: That is why I asked the question

because if it is for the training of Newfoundland people in that particular

industry, then I would rather see you spend it.

MR. FUREY: But we can only spend it if

companies come -

MR. SHELLEY: If they come and ask for it to be

spent; okay, fair enough.

MR. FUREY: For example, if they come from Baie

Verte and want $400,000 -

MR. SHELLEY: I am sure you will give it to

them.

MR. FUREY: - (inaudible).

MR. SHELLEY: I am coming to that. The second

question directly from the Estimates again is on page 144, 3.1.06, Research And

Development-Offshore Fund. Again, just for clarification on the heading, it cost

you -

MR. FUREY: Which heading?

MR. SHELLEY: Provide for marine petroleum

research; and is it the same thing, waiting for companies to come to you; it was

$410,000 budgeted and only $25,000 spent?

MR. FUREY: Yes. In previous years, and again,

it is from the offshore development fund. In previous years there was a high

take-up. We decided this year to ask the Science and Technology Advisory Council

to government to look at the criteria that was being used in the past, because

one of our fears was, we were pumping considerable chunks of money into research

and development and once it reached the commercialization bridge, where you took

this technology across the bridge into the marketplace, there was no way to

guarantee that Newfoundlanders, having spent considerable sums of money, could

protect this for our own job marketplace; and there were other problems too,

because sometimes it was entered into with a joint venture.

I can think right now of one company in particular

that had a beautiful piece of technology, we put a lot of money into it and as

it moved forward, they were contemplating building these structures in Britain

and in Asia and in South America and only advertising the head office out of

Newfoundland. Now, is that fair to Newfoundland technology? We didn't think so,

so we asked them to review and confine and restrict as much as is possible to do

so, so that a benefit would be retained here, and that is why last year there

was a small take up because we were reviewing that criteria.

MR. SHELLEY: That's good because I was just

wondering why the money wasn't used and that's a reason.

MR. FUREY: It was a good question.

MR. SHELLEY: To get away from that for a minute

now. When I knew I would be meeting you tonight and your department - the small

business loans and I ask the minister - but I would also ask Mr. Kennedy, who

hit on it earlier - just to go through very quickly, not the sums that were used

up but the different loans as you break down starting with $100,000 and less and

then it went to conventional - could you just go down through that again, just

very quickly. I mean I can understand the $100,000 and less, than the

conventional. I want to just note what that takes in and so on.

MR. FUREY: The amounts you mean?

MR. SHELLEY: No, not the - I know what the

amounts are but -

MR. FUREY: What kinds of things you mean?

MR. SHELLEY: Conventional, what comes under

that and what comes under the next ones up, I didn't catch them as you were

saying them so I just wanted you -

MR. FUREY: It crosses over all sectors of the

economy.

MR. SHELLEY: Sure, I know that.

MR. FUREY: You are just wondering what kind of

things fall in conventional or what falls into small business?

MR. PATRICK KENNEDY: The small enterprise loan

program is loans of $100,000 or less, and as the minister rightly pointed out,

it can be any business or enterprise that qualifies under the corporation's

mandate for financing. The fact of qualifying for small enterprise is dedicated

to the size of the loan itself.

There were 100 loans given under the small

enterprise loan's program this year for a total of $2.458 million. That is the

exact figure. In conventional loans, which are loans greater than $100,000,

there were 110 loans and the total was $9.946 million. In direct equity there

were twelve equity investments.

MR. SHELLEY: Could you repeat that again? I did

not hear.

MR. PATRICK KENNEDY: In direct equity there

were twelve equity investments totalling $2.6 million. There were four venture

capital loans totalling $362,000.

MR. SHELLEY: Can you tell me who those were?

MR. PATRICK KENNEDY: I do not have that

available now but I can get it for you, if you wish.

In interim funding or bridge financing, it could be

in terms of working capital or an ACOA grant, that type of loan, there were

twenty-eight for a total of $1.846 million. There were twenty loans given under

the special sawmill assistance program and that totalled $348,000. There were

thirteen loans given under the company development or young entrepreneur program

totalling $134,000, and there was one loan guarantee in the amount of $600,000.

The total was 288 deals or loans totalling $18.3 million. That's commitments.

MR. SHELLEY: And the last one, $143,000 under

the young entrepreneur program?

MR. PATRICK KENNEDY: Company development we

call it. They would be primarily used for things such as doing feasibility

studies, management reviews, or stabilization type of reviews for companies that

are clients of the corporation.

MR. SHELLEY: The next question relates to small

business again. I talked to the minister before about this. I know you are

making progress, as was mentioned before, but to keep it simplistic I had two

more calls today from some people. With the fishery the way it is these days I

think we are all encouraging more people to think up ideas and to try them. As

the old saying goes, `Any man who says he never had a chance, never took a

chance.' We always encourage these people to do these type things.

Today two more people at least say the same thing:

well, I started this four months ago and I got caught up in so much red tape

that I just gave up on it, but I am going to try it again now, so as I keep

saying the same argument is there, Mr. Minister.

MR. FUREY: I would be glad to intervene with

the federal government for those people if you want me to.

MR. SHELLEY: There are those problems, but the

point I am getting at is in the future, I guess, as we move on, any initiatives

that you have to educate people on moving forward on small business, anything

within your department that is going to help people get there quicker, the

one-stop shop type of thing, are there any ideas coming in the near future for

that?

MR. FUREY: We really have tried to simplify

things with ENL. Some years ago we made an offer, in fact I made it to Mr.

Crosbie when he was the minister responsible for ACOA, that we collapse ENL and

ACOA into one-stop shopping in the five regions in the satellite offices. Now,

there was some difficulty at the time because everybody wants to get credit for

this, and credit for that, and that kind of thing, so there were problems at

that time.

We have tried our best to simplify ENL. We are in

the process now of doing the same with lands, permitting, and that kind of

thing, and you will see an announcement on that shortly. Also, in terms of

regulation we have moved toward zero base regulation and by June of this year we

hope to have in place a commission whose task it will be to eliminate all of the

rules and regulations that have grown up and become a monstrous obstacle to

business over the years.

MR. SHELLEY: There will be a commission?

MR. FUREY: Absolutely, and this will be

announced by the Premier hopefully in June - if not June, then July with

certainty - and its task will have a twelve month race to the clock and

zero-based regulations stripping down all of the - you wouldn't believe some of

the regulations that are still on the books. It is just ridiculous. Now, we want

to be sensitive to the labour laws, sensitive to the environmental laws, but we

want to get on with removing obstacle to business.

In the case of the two examples that you're

thinking of, I would be happy to take them under my wing and run with them, if

they make sense and if (inaudible).

MR. SHELLEY: Sure, that's fair enough. That's

really getting caught up.

Now you mentioned earlier about the seventeen

economic zones and, of course, we talked about them a lot. It's the same

question, I know, in a way, that the other people have asked, but they were

ahead of me, so...

As we look, I guess, down the road a little ways to

Community Futures, development associations, business development corporations

within these regions, within these economic zones that you're talking about, how

do you see them develop? Are they going to continue? What do you see? Is there

going to be a merger there of groups?

MR. FUREY: Well, what we're trying to do is

target, redirect some administrative funding. A lot of money is being lost in

administration. Now I'm partly to blame for that. Some of it is locked up in

satellite offices of ENL. Some of it is locked up in FAP offices in the same

communities. Some of it is locked up in women's enterprise bureaus in the same

little communities. Some of it is locked up in Community Futures, business

development centres, and on and on and on the list goes. The problem is, these

have grown up over the years because there has been a reaction to a problem by

piling money into the circumstance and into the problem. Frankly, it hasn't

worked; it really has not worked. We really have done ourselves a disservice

creating these small entities that are out there, and I think their hearts are

in the right place. I think they really want to strive for economic development

and opportunity, but when you have five, six, seven or eight or, in the case of

my own district, eleven separate organizations running toward the same goal in

different directions, it just really makes you shake your head, and it's time

for us to circle the wagons, to collapse it down, to build in a strategic plan

into each of these zones. I see each of these seventeen zones creating their own

strategic economic plan that will complement the Province's global umbrella

plan.

In my own district, area seven, I see their

strategic plan capitalizing on the World Heritage Centre site at Gros Morne

National Park and the tablelands. I see them capitalizing on tourism, bed and

breakfasts, country inns, boat tours, and those kinds of things where there's

terrific opportunity for growth, but it has to be developed in concert with

local people. Everybody, the stakeholders who live and will live there for a

long, long, time, have to participate in that, but they have to set out specific

action items, and if they come to government for funding and advice and expert

help through our agencies, they have to show and be accountable and say: In year

one in our plan here's what we've achieved, and here are the benefits.

I think that makes eminent sense, and I think we've

got to move towards that.

MR. SHELLEY: Well, I certainly agree with you

on that, and that's why I brought it up, because I don't care how much you say;

you've still got the average citizen who walks into a building out in my

district and he doesn't know if he's talking to Community Futures, if he's

talking to development corporation, if he's talking to the development

association, and they've been living there for years and don't know it, so they

don't know where anybody is going. That was why I brought up the question.

MR. FUREY: It's a good question. I'm glad you

support it, and I know the Member for Humber Valley echoed those sentiments in a

speech here in the House as well, and it's not about dismantling or saying that

people haven't worked hard. It's about restructuring for the future and -

MR. SHELLEY: Funnelling into the same direction

is the basic idea of it, I guess, and not wasting the time.

MR. CHAIRMAN: Order, please!

I have to remind the member that his time is up.

We'll get back to you again.

MR. SHELLEY: Okay. Thank you.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: If he's not finished, Mr. Chairman,

I've only got one basic question for the minister.

MR. CHAIRMAN: Okay, we'll get back to you. Mr.

Tulk.

MR. TULK: I've only got one question for the

minister, and that is in relation to the downsizing, I guess, and the attempt to

make economic development in the Province more efficient and more effective and

trying to create seventeen economic zones and presumably a great deal more

autonomy perhaps than an economic zone might have now, but yet bring all the

people together. Has the minister had any thought on whether - what kind of

budgetary powers the seventeen economic zones would have for themselves? To whom

would they be responsible? Does the minister have any thoughts on that himself

or, is he going to leave it up to the commission to tell him what he should do,

the task force or whatever you want to call it?

MR. FUREY: They are going to come with some

recommendations but ultimately it is going to be both orders of government that

will have to (inaudible).

MR. TULK: I find, quite frankly, Minister, I

don't know whether I can name them all or not, the people who are involved in

economic development in this Province, groups such as the ERC, there is the

Advisory Council on the Economy, there is the Department of Development and so

on, and I am just wondering if the minister is going to put all this together in

one group or is planning on it, that's a good idea, nothing wrong with it, but

what kind of budgetary power do those people have? Will they still have to come

over to Phil Wall and say: Phil, could I approve this project for my area, or

will they have some budgetary power to do that themselves? I know that people in

the ENL office can do up to $100,000 on that level, Phil, or will they have

greater powers where you give them a budget every year and say: use that,

justify it and then we will give you some more?

MR. FUREY: In your earlier comment about ACE

and ERC and all those kinds of things, the Throne Speech talks about a

restructuring of government and that's underway, we are not just going to

restructure the regions without looking inside our own backyard and perhaps

doing some restructuring there, but that's out of my hands, that's for the First

Minister to decide; but with respect to the -

MR. TULK: But you must have some ideas on them?

MR. FUREY: I do and I presented them and he

certainly knows where I am coming from in that regard; but with respect to the

regions I would see - and I don't want to prejudge it, this is the work of the

task force and it depends upon the energy and the excitement that these regions

can create. I would see rural development and municipalities, business men and

women becoming involved in this; it is not just going to be an exclusive

development association, it's not going to be just an exclusive Community

Futures group. It's not going to be a businessman or woman operating in

isolation. We are trying to bring the communities together to become

stakeholders, to examine their surroundings, to generate their own strategic

economic plan based on the vision of how they see rural life continuing and it's

based mostly on rural life.

How can we survive together? What is our action

plan, and yes, government will be there to fund action plans but we will also be

there to seek accountability and much more accountability than we seek now,

rather than just dropping money in areas helter-skelter, federally and

provincially, and having everybody run in different directions and come back

next year for their allotment. There has to be some discipline and efficiency

and focus brought to the management of the seventeen economic zones and that's

what we are trying to do.

Will they have autonomy? There is a number of

programs we are looking at now: community bond programs, adventure capital

programs and others that perhaps can fit into it but let's not prejudge what the

structure will be but let's let it grow and evolve from the grass roots of it.

MR. TULK: Mr. Chairman, if I could, just one

MR. WOODFORD: $100,000?

MR. FUREY: We're moving towards that.

MR. WOODFORD: Yes, because last year the minister

mentioned they were looking at the possibility of putting in a $150,000 limit

instead of $100,000.

AN HON. MEMBER: That's right, but that has not

been implemented, though, Mr. Woodford.

MR. WOODFORD: So you're still looking at that?

AN HON. MEMBER: Yes.

MR. WOODFORD: Under some of the headings there -

MR. FUREY: I think, Mr. Woodford, one of the

reasons why we didn't move on it is because the Auditor General asked us to

clean up on collections and that kind of thing. We wanted to make sure we had

our systems in place before we elevated the amount.

AN HON. MEMBER: That's right.

MR. WOODFORD: Under Trade and Investment, Business

Analysis, 2.1.01, subhead 10, Grants and Subsidies, last year in the budget

there was only $30,000 but it was revised to $130,000. This year it's back to

$30,000 again. What came up, or what exactly did that involve?

MR. FUREY: Okay, that particular Grants and

Subsidies, Mr. Woodford, was a one-time grant to the Y Enterprise Centre of

$100,000.

MR. WOODFORD: The Y Enterprise Centre.

MR. FUREY: Yes. So it went from $30,000 to

$130,000 back to $30,000. It was a one-time grant.

MR. WOODFORD: Under 2.1.03, under Salaries, there

was $110,000 budgeted last year but you only spent $48,200 for salaries. Was

there any reason why that particular...

MR. FUREY: Wasn't that the first year of the SIID

agreement, and we were going to hire on new officers to handle applications and

such?

AN HON. MEMBER: (Inaudible).

MR. FUREY: It was the first year of the SIID

agreement, and we weren't geared up to spend that. We're preparing to hire new

officers now to handle applications and that kind of thing under the SIID

agreement.

MR. WOODFORD: So that's where it will come this

year?

MR. FUREY: Yes.

MR. WOODFORD: Because there's another $110,000 put

in there for that.

MR. FUREY: Right.

MR. WOODFORD: Under Transportation and

Communications it's probably the same thing, then, I guess. That's his

explanation is it?

MR. FUREY: Where is that?

MR. WOODFORD: Still 2.1.03 -

MR. FUREY: Yes.

MR. WOODFORD: Subsection 03. There was $29,000 and

then it was revised to $54,000.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Yes, okay, that's what that is.

Mr. Woodford, we did a fairly comprehensive study on

Hibernia vis--vis the production stage when it kicks in in 1997 so that we can

prepare businesses to take benefits from the actual production phase and not

just the construction phase. A portion of that sits there for travel related to

conducting that study which came out of the SIID agreement.

MR. FUREY: (Inaudible).

MR. WOODFORD: What about subsection 05,

Professional Services; budgeted $150,000, spent $80,000, and now budgeted

$150,000 for this year?

MR. FUREY: It's all related to the SIID agreement,

Mr. Woodford, and I think that may be, if I'm not mistaken, isn't that the IT

study?

AN HON. MEMBER: (Inaudible).

MR. FUREY: This all has to do with the SIID

agreement. I can get you the particulars if you want.

AN HON. MEMBER: (Inaudible).

MR. FUREY: The deputy points out too, Mr.

Woodford, this is the first year that the agreement started to kick in. The

numbers would have been down in the beginning years of the setting up, the

numbers will be inflated. In fact next year if you look at the estimates they

may be over what we project here, in each of those categories.

MR. WOODFORD: Yes, go ahead.

MR. CHAIRMAN: Thank you, Mr. Woodford. Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairperson. I'd just

like to return to the Economic Recovery Commission and some of the questions or

thoughts that were on before. The minister indicated in some of the answers to

the questions I asked earlier and some of the things the Economic Recovery

Commission were involved with, one of the things you indicated was that they

were either in the process, have developed or are about to develop a pretty

comprehensive job creation plan. Would you be able to elaborate on components of

that plan? What does it involve, what stage it's at, is it something that is

going to be announced by government in the near future? Those sorts of things.

MR. FUREY: I'm going to ask Cathy Duke the

Executive Director of ERC to deal with that specifically because she's been

involved in it.

MS. DUKE: I guess the best way to describe the job

creation proposal or package that the ERC has put together is that it's really a

sister program to the income security program. There's a basic recognition that

for some time in the future we are going to have to continue with some job

creation because the private sector just isn't prepared at this time to be able

to pick up the number of jobs that are required. What we need to do is to

channel the monies into programs that will stimulate economic development so

that they are things that are not basically moving rocks from one end of the

beach to the other. It may be things involving infrastructure that will

contribute to particular areas of the Province; specific types of training

programs and I guess the conservation corp, as mentioned earlier, that kind of

thing where there's some job experience and training but that basically it does

contribute to the development in some aspect of the economic development

process. So it's still very preliminary. The commission has completed its work

but now it basically has to be presented to other levels within government. So

it isn't something that's ready to be released yet because it hasn't really been

approved by the appropriate authorities within government.

MR. E. BYRNE: Minister, the job creation plan, as

Ms. Duke has said, is linked to the Income Supplementation Program. In view of

the fact that it has received such a lukewarm sort of welcome from the federal

government in terms of its strategy for its own reform of the social safety net

and social programs, is the ERC still going to proceed in terms of its study as

it relates to the Income Supplementation Program and job creation initiatives in

line? Is there an ongoing consultation process with the federal Department of

Human Resources, Development and Labour on the Income Supplementation Program?

Can we look forward to that or aspects of that program being implemented in the

near future? I know that the Minister of Employment and Labour Relations talked

about a possible educational supplement being developed by the federal

government. It just seems to me that there's almost a redundancy taking place

within the Economic Recovery Commission in terms of reforming the social safety

net or recommendations to reform the social safety net and what the federal

government is doing - I mean are both levels talking at all or what's happening

there?

MS. DUKE: No, in fact there is no redundancy

there. The Income Supplementation Program which was put forward to the federal

government is still very much under consideration. I think that the reporting

recently in the media has been inaccurate based on sources which were not

reliable. There is in fact a technical committee, a federal-provincial technical

committee which has been working on the program. There are eight to ten people

who have been assigned full time in Ottawa to work with us. We have people from

the commission and the Minister for Employment and Labour Relations will be able

to give you more details but certainly people from his department as well and

Ottawa has committed significant funding to looking at it. Basically, the

Province put forward the proposal to the federal government requesting that

Newfoundland be treated as a pilot and the federal government proceed

(inaudible).

While they aren't prepared to move forward at this

time on the pilot, what they're saying basically is that they want to look at

the revision of social programming across the country, but they are prepared to

work with us and to further refine that proposal, and to look at other

implications, things like the implications for taxation and so on, and they're

willing to commit their own resources and financial resources as well - human

and financial - to work with us, and they're hoping that by September of this

year they will have reached a point where they will be able to make

recommendations for something across the country.

They are very interested in an education supplement,

and want us to continue to work with them and perhaps to do a separate pilot

related to an education supplement, but certainly the whole aspect of job

creation is something that would be very much a partner for that kind of

program. It doesn't contradict it, really, in any way.

MR. E. BYRNE: I didn't mean to leave the

impression that a job creation program would conflict with the ISP program. I

guess I'll save the majority of the comments dealing with that program for the

Minister of Employment and Labour Relations.

Minister, you also mentioned in some of the answers

that you provided to some of the questions that I asked that you and your

department officials have identified some 125 companies worldwide that would

have a possible interest in coming to this Province, setting up shop in this

Province, hopefully creating work and employment in the Province. You also

indicated that yourself and the Premier would be travelling to visit with these

companies on an ongoing basis. Some of that work began in Boston. Could you

elaborate on that? Are these companies serious companies? How interested are

they? What types of things are they interested in in this Province, and where

to?

MR. FUREY: It took a long time to develop this,

but we developed it in concert with all other departments, a trademark called

`The Right Place For Business', and it lays out, in a lure brochure, the centres

of excellence, the kinds of things available in the Province, and it's going to

be used in all of the embassies around the world and in this ministerial

prospecting initiative.

We've isolated 125 companies. I don't think it would

be appropriate right now to name them, or who they are, but we feel, through our

contacts around the world -

MR. E. BYRNE: Could you name what areas they may

be interested in?

MR. FUREY: Yes, certainly.

MR. E. BYRNE: Broadly, without naming companies. I

wouldn't want to jeopardize that.

MR. FUREY: No, no problem. In fact, the four that

I met with in Boston are involved in marine technology, hi-tech new

instrumentation. They're looking at our marine simulator, for example, as a

great opportunity; one company is. Another one is looking at a product that they

would like to come up here and develop in Newfoundland dealing with aquaculture.

Another one has underwater sound technology that they're trying to develop, and

they recognize that there are some scientists in this Province that are world

leaders in that area. So we looked at a number of areas.

The natural resources area is one column of companies

that we're looking at. We've had some measure of success with the Swiss company

that's looking to come in and set up a lamination factory in Roddickton on the

Great Northern Peninsula, which will be taking the resources, value adding, and

shipping them into Europe. They'll provide the capital, they'll provide the

training, they'll provide the markets, we'll provide the product.

There's a whole range of companies, but what we've

done is used our intelligence and networking system to isolate down from the

hundreds of companies, some of them very large, information technologies, for

example. What's happening in Ireland, which is very similar to Newfoundland,

they've built an infrastructure there where they can do just about anything

worldwide, and they're starting to become a financial centre in Dublin, so

there's some information technology companies looking to come here as well.

Also, we've got some young companies here that we're

trying to match up as well, and draw in new technology information and know-how

in capital. In a couple of weeks time the consulate in Boston will be bringing

up a number of venture capitalists, who are bringing pools of cash to the

Province, to meet some of these companies to see whether they're worth investing

in, so it is things like that happening. The 125 companies we have targeted, now

we set about putting out feelers to those companies, we determine the level of

interest, Mr. Byrne, and if there is a degree of interest then we start knocking

on doors and we are quite prepared at the Ministerial and Premier's levels to

get in there and roll our sleeves up too.

MR. E. BYRNE: Are any of those companies involved

in secondary processing of any nature whether it be of what remains of our

fishery, and in any of our resource sectors?

MR. FUREY: Yes. Some of them are keen on

aquaculture development; many are interested in lumber, the lumber stocks that

we have been following; stocks lately which I have not been doing up until a

year ago. The lumber stocks have just gone off the map and intend to hold there

for quite a period of time -

AN HON. MEMBER: (Inaudible).

MR. FUREY: Yes, if you have any money, put it in

lumber and leave it there. There are some mining companies looking at some

opportunities; the Baie Verte Peninsula is an example and some of them have been

in to see me, but it is not passively waiting for someone to come either in the

old economy or the new economy to exploit the resources. We are taking an active

role in going out and targeting these things.

The other thing I should say to you is that Cathy Duke

and Dr. House and Susan Sherk set up a session in Toronto that I attended a

little while ago, where we tapped into expatriate Newfoundland businessmen and

women, who are very successful on the mainland, who are running very successful

companies, and we had a morning and a breakfast and an afternoon session and I

spoke to them about Newfoundland and asked them to start presenting some of the

positive things that are happening, not just this nonsense that you see in the

Globe and Mail with seal penises and all that other nonsense and crap

that we get blasted about in the national newspapers, but to start presenting

the good news stories that are happening, some terrific news stories happening

in the small and medium sized sector, and these people, most of them signed on

as ambassadors to help us draw out opportunities and feed into our network and

system through Industry, Trade and Technology so that's a very hopeful and

positive sign, but it is a broad range of companies.

I don't know if you want to add anything to that,

Peter? I know I can't speak specifically about the companies because, how can

you target a company and start doing all kinds of work on it when it is out

there publicly? But it crosses everything through the old and new economy but

mostly new economy companies.

MR. CHAIRMAN: Order, please!

Your time is up, Mr. Byrne. We will get back to you if

you desire.

MR. E. BYRNE: Well there is always Question

Period, isn't there?

MR. CHAIRMAN: That's right, there is always

Question Period.

MR. E. BYRNE: I appreciate that.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: I will follow up from something that Ed

was asking and that is: there has been a great deal of energy I guess put into

trying to develop through the ERC and through your own department and through

the (inaudible) development and push us into a new economy, the IT economy I

guess primarily.

There has been a great deal said about the fact that

if we don't leave our traditional economic activities - not leave them, if we

don't start doing other things other than our traditional economic activities,

indeed our unemployment rate will remain where it is and perhaps go even higher.

Where do we hope to be in terms of employment in the new information, the new

technology and the new economy that the minister was talking about, in relation

to the rest of our traditional economies?

I know it is a very iffy question but it is also very

important in terms of what Ed said there and what we have been saying all night,

that if we are going to see 18,000 to 20,000 people taken out of the

Newfoundland fishery, that means that unless we can find some other economic

activity in this Province, our unemployment rate is going to be looking probably

something like 30 per cent by my estimates.

MR. FUREY: Yes.

MR. TULK: So what role does the minister see that

playing in terms of employment in this Province?

MR. FUREY: I see the old economy, the old economy

being the resource based economy, still being a very important part of the

economy of this Province. The new economy is not just restricted to high

technology or information industries as well. The non-resourced based

manufacturing, 6000 people take their jobs in this Province from non-resource

based manufacturing.

MR. TULK: Personified by those two things.

MR. FUREY: But if you think about it companies as

old as Brookfield Ice Cream are looking to export. They have the domestic market

so why would they not look at the export market using the backhaul rates on

empty trucks that are bringing products in from Ontario? They sent seventeen

tractor trailer loads of ice cream out last year and that was a considerable

piece of profit.

AN HON. MEMBER: (inaudible)

MR. FUREY: There was some other stuff, those

Longtreats I used to call them as a kid. I do not know what they are called now.

AN HON. MEMBER: Ice cream sandwich.

MR. FUREY: Anyway, those ended up in the Skydome

at the Blue Jays games. I do not eat them anymore. Mr. Tulk, seriously, EDM

Consultants, a little engineering and design firm from the district of the

Member for Humber Valley, they leveraged a few dollars out of the SIID

agreements, joint ventured with a small firm in Jamaica and just landed a $12

million contract to redevelop the entire Kingston airport out of Deer Lake, so

it is not just the new economy in terms of high tech and information industries,

it is taking what is in the old economy and not being afraid to step out on the

world stage and say: Hey, I'm pretty good at this, too. A $12 million contract

to a little firm in Deer Lake, that is big stuff. That is stuff to be really

proud of.

Pro Dive a little diving firm here in St. John's,

located in Mount Pearl, in fact, went down to New Orleans two years ago at the

oil show and did a joint venture with one of the world's largest remote

underwater diving firms Sub Sea. The idea was to get them to joint venture with

Pro Dive and come back and take advantage of the great Hibernia project and

transfer technology back here. When they came here and saw how good Pro Dive was

they immediately gave them a contract in the Gulf of Mexico for $1 million with

ten Newfoundlanders diving down there and working at that. So, it is getting out

on the world stage and drawing back new money into this, what I called a

recycled economy, you are just recycling money here unless you break open into

new marketplaces.

Claymore Plastics out of Bishop Falls, a little firm

that I visited two months ago, they just doubled up their shift. They do

injection moulded bottles for the dairy industry and they have 100 per cent of

the domestic market. They just competed for a tender in New Brunswick a month

ago and won it. They will supply for the next two years two million containers

to North Humberland Dairies in New Brunswick. That is new money coming into the

economy. That little company incidentally works 365 days a year, flat out

twenty-four hours a day. That is good stuff.

Hipoint Industries out of Bishop Falls exporting to

Brazil, a major contract. Their product sits in the fire trucks of the Metro

Toronto Fire Department because it cleans up gasoline very quickly. It is called

oclansorb. It uses a peat based product to soak up quickly oil spills and stuff.

MR. TULK: It is very good stuff.

MR. FUREY: Genesis Organic out of Corner Brook,

Rick you would know about this, they sent a container load of peat out to Saudi

Arabia where they are worried about the encroachment of the desert and they are

trying to figure out ways to stop the encroachment of the desert to taking up

all the irrigable and fertile land that is left.

Newfoundland is all over the map and our companies are

starting to get out there acting globally capturing contracts, bringing back new

money, and expanding the economy. We cannot just think insularly that this is

the only economy we can operate under. We are very good at what we do.

Ultimateast is exporting new marine technology to the South China Sea. Cora just

landed a contract in the South Pacific for $8 million.

There are golden examples of Newfoundland companies

daring to step out, and I think that is part and parcel of it. The old economy

will chug along but we have to give incentive and new energy to get our people

out there to operate in the new economy as well.

MR. TULK: Mr. Chairman, I would just like to say

to the minister, we should chide him a bit for not bringing the good news more

out into the open, I mean, the most we hear these days in terms of the economy

in this Province is bad news, and here he has sat down and has lectured me for

five minutes on the good news that he has in his department, yet I never hear

him in this Legislature stand up and -

AN HON. MEMBER: They don't take advantage of

Ministerial Statements.

MR. TULK: Even Ministerial Statements saying the

good stuff I would encourage the minister - but for one time I am going to agree

with the Member for Green Bay, for God's sake - I will encourage the minister to

stand up and do some of those things in the Legislature and let us know what's

going on but, he deserves to be

chided a bit for -

MR. FUREY: Thank you for (inaudible).

MR. TULK: - for hiding his candle under a bush.

You should do it Minister, you should do it more often.

MR. CHAIRMAN: I am sure the minister will act

accordingly, Mr. Tulk, and -

MR. TULK: Thank you.

MR. CHAIRMAN: - will consider that to be good

advice. Are you finished, Mr. Tulk?

MR. TULK: Yes, I am.

MR. CHAIRMAN: Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

Just a couple of other things as quickly as possible.

You mentioned about the lumber stocks a few minutes

ago, and I have been following that a little bit too because it is interesting

for my area as well, and I will try to run it all together with the lamination

plant. I would like to get an update status on that, where it is, if you could,

I can start with that and then run into other things.

MR. FUREY: Yes. Their consultant, Mr. Ron Dawe,

has done what I would consider a terrific job, he really has done a superb job

with this company. It is a consorti

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1994-04-19
Type	committee
Volume / chapter	committees standingcommittees resource ga42session2 1994-04-19 rc-itt
Language	en
Format	htm
Source	PROVINCIAL
Identifier	79981cf8226dc7c1e7b32f940fa9a1d6009626d4

Source file is stored in the law ingest library (htm).