May 12, 2004 RESOURCE COMMITTEE

Pursuant to Standing Order 68, Bob Ridgley, MHA for St. John's

North, replaces Kevin O'Brien, MHA for Gander.

The Committee met at 9:00 a.m.

CHAIR (Mr. Harding): Order, please!

(Inaudible) fifteen minutes as well. Following that, then we will give each

member of the Committee an opportunity to speak and ask questions, and they will

have ten minutes each. I would like to ask the Committee members to try to be as

brief as possible, direct the questions to the minister and then she will

respond.

At this point in time I would like to have the Committee members introduce

themselves by name and district. Charlene?

MS JOHNSON: Charlene Johnson, Trinity-Bay de Verde.

MR. RIDGLEY: Bob Ridgley, St. John's North.

MR. HUNTER: Ray Hunter, Windsor-Springdale district.

MS FOOTE: Judy Foote, Grand Bank.

MR. REID: Gerry Reid, Twillingate & Fogo.

CHAIR: Thank you.

We also have Eddie Joyce, who is also a member of the Committee, but I assume

he will probably be along a little bit later. I would also like to introduce

this morning our Table Officer, Elizabeth Murphy.

Now I would like to have the minister of the department introduce her

officials that she has there with her this morning.

MS DUNDERDALE: Thank you, Mr. Chairman, and good morning.

I would like to introduce to my immediate left, Dr. Doug House, who is my

Deputy Minister. To Doug's left, we have Mr. Ken Curtis, who is the Manager of

Financial Operations - Central administration division. To my far right, at the

back, is Lynn Evans. Lynn is my Director of Communications. Immediately behind

me is Donna Kelland, one of my Assistant Deputy Ministers, and Phil McCarthy,

Assistant Deputy Minister.

CHAIR: Thank you, Kathy.

I would just like to remind the members, especially the government officials,

that when you speak if you would state your name. This is being recorded by

Hansard, so it would make it more convenient for the Clerk to do the recordings.

Having said that, now I would ask the Clerk to call the first subhead.

CLERK: 1.1.01

CHAIR: 1.1.01 of the Department of Innovation, Trade and Rural

Development.

Now I would like to ask the minister to proceed with her - she can have up to

fifteen minutes.

MS DUNDERDALE: Thank you, again, Mr. Chairman.

It is my pleasure to be here this morning before the Committee.

Let me start by saying in our first mandate government intends to formulate

and implement smart policies and programs to promote medium and small business

development.

There are many organizations and agencies in this Province who are committed

to building local and regional economies. I have already begun a province-wide

consultation with stakeholders throughout the Province to build partnerships,

identify common priorities and strategies and focus our mutual resources.

Together, we can harness the innovation of our people, create sustainable

industries, attract new investment and capture new markets, thereby creating

employment.

The Department of Innovation, Trade and Rural Development is being allocated

$30.5 million in 2004-2005, to allow it to implement its plans for economic

growth and job creation for the Province.

Medium and small businesses in Newfoundland and Labrador face competitive

problems associated with their size and relative isolation. To help small

business to achieve economies of scale in purchasing supplies and sourcing large

contracts, the department intends to assist small businesses operating in the

same or related activities to raise their competitiveness by grouping together

into business networks. This will allow them to access sources of supply and to

pursue large market opportunities in the Province and abroad.

The department is in the process of establishing a branch of innovation,

research and advanced technologies to focus on high growth opportunities in

information technology, marine technologies, biotechnology, environmental

technologies and defense and aerospace. Through this new branch, the department

will work with the private and public sector partners to develop an innovation

strategy for Newfoundland and Labrador. A special budgetary allocation of

$200,000 has been earmarked for this purpose.

To help provide the infrastructure to make business competitive in rural

Newfoundland and Labrador, $1.2 million is provided in the Budget to assist

community and regional groups to leverage funding for broadband expansion in

support of local, social and economic development. The department will be

implementing some of the concepts previously identified by the department but

which have not been acted upon. This includes working with Aliant to establish a

Near Shore IT Development Initiative to attract new IT work to the Province. The

first meeting of this task force occurred on May 10, 2004. We will be formally

launching this initiative in the next few weeks.

In partnership with Memorial University, we have finalized the criteria for

an industrial research and innovation fund which is designed to encourage

research in clusters of excellence, such as: marine technology, pharmaceutical

research, biotechnology, and the oil and gas industry.

In an effort to continue building partnerships between business, labour and

government, the department will continue to fund the strategic partnership

initiative with $300,000 in operational funding in 2004-2005. An additional

$100,000 will be provided to the initiative to continue their research on the

competitiveness of the provincial economy.

The newly established Rural Secretariat, supported by Budget 2004 allocation

of $1.7 million, will be the focal point for government work with local and

regional partners to build strong and dynamic rural communities and regions. The

Secretariat will promote the well-being of rural Newfoundland and Labrador

through a comprehensive approach aimed at integrating economic, social and

cultural aspects of rural and regional development.

The department will continue to contribute to the core operational funding of

the Province's twenty Regional Economical Development Boards in an amount of

just over $1 million. Despite the federal governments withdrawal from various

federal and provincial agreements, we will nevertheless continue to fund

important initiatives, such as: the Ambassador program and the Canada/

Newfoundland and Labrador Business Service Network. We have also committed $3

million towards the Province's portion of these projects that will be

completed in this fiscal year under the now discontinued CEDA program.

The department is continuing its direct investment in the development of the

Province's small and medium sized businesses through the continued funding of

the Seed Capital Equity and Business Market Development Grant programs. These

programs will be funded at the same level as was budgeted in 2003-2004.

The significant resources being allocated to the Department of Innovation,

Trade and Rural Development reflect government's strong commitment to an

action-oriented economic development agenda.

Thank you, Mr. Chairman.

CHAIR: Thank you, Kathy.

The critic now or the Vice-Chair.

MS FOOTE: Thank you, Mr. Chairman.

Good morning.

I guess the first obvious question that comes to mind is the relationship, or

the distinction between the new Department of Business and the Department of

Innovation, Trade and Rural Development. If I could ask - if you could just give

me some idea of the relationship there between the two and what the distinction

is?

MS DUNDERDALE: The Department of Business and the Department of

Innovation, Trade and Rural Development obviously will work very closely

together. The main thrust at this stage in the game as we develop the new

Department of Business is - the focus of that department will be on business

attraction and investment attraction. That will be the main drive behind that

department.

Our department will continue to do sector development. We will continue with

our trade missions. We will have a particular focus on innovation and developing

those technologies for business development throughout the Province. Our

department will have a specific focus on rural Newfoundland and Labrador.

MS FOOTE: I noticed in the Budget that there is a million dollar

allocation for the Department of Business but there are no breakdowns in terms

of what it will be for. So, I am just wondering, as I look through your headings

here in your department, whether or not you will be undertaking some of the work

for the Department of Business through the employees within the Department of

Innovation, Trade and Rural Development?

MS DUNDERDALE: We have already undertaken while that department is being

developed. For example, we have just undertaken with the federal government -

you would be familiar with the Canada/Newfoundland and Labrador Comprehensive

Economic Development Agreement. There was a sum of money, $850,000, in that fund

last year, of which $75,000 was used to do some work around business attraction.

That was due to fall off of the table on March 31 of this year. We have been

able to convince the federal government to roll over that money for one other

year. Now we are using that money for the development and implementation of a

detailed strategic plan to design and develop a new marketing campaign for

promotion of the Province abroad and to design and develop specific sectoral

campaigns for the strategic sectors being pursued, an in-depth research into

perspective target markets for foreign direct investment and research protocol

model for identifying specific companies which will be approached to consider

expansion into our Province. So while the Department of Business is in the

formation stage, we are already undertaking a number of initiatives in our

department that would support their work when they get fully established.

MS FOOTE: Are there any other areas of overlap there at this point in

time?

MS DUNDERDALE: We see that, potentially, the red tape reduction would

move to the Department of Business once that is established and be refrained

within that department.

MS FOOTE: Is that the only thing that would come out of your department?

MS DUNDERDALE: At this point in time, yes. They already have advertised

now for their chief information officer. The chief information officer will look

specifically at the IT needs of government, the IT business within government,

and ensure that those business opportunities that are there are maximized to the

benefit of businesses in Newfoundland and Labrador. Obviously, with our

innovation strategy and our chief innovation officer, we will work very closely

between those two divisions.

MS FOOTE: You mentioned pursuing opportunities for different sectors of

growth. Can you just elaborate on what sectors? I know what they were when I was

there. I am just wondering if there has been any change, if you have added or

deleted?

MS DUNDERDALE: Well, that is the whole purpose of the study, because this

is a study to identify companies who are looking to expand in target markets

that we have identified around the world that we see we would have a lot in

common with and then looking to our own Province to see how we can meet those

needs. What the drivers are for those companies, how can we meet those needs,

then how can we sell ourselves to them, if they are interested in expanding, to

consider us.

As you know, I am sure there are over 2,000 readily, identifiable investment

and business attraction agencies in the world out there campaigning for business

throughout the world. So, when you go to do that kind of work you have to be

very, very well prepared and have your research completed. If you get ten

minutes of an executive's time you need to be well prepared going in there so

that you can sell this Province and what it is we have to offer. This research

piece will support us in doing that, in identifying the companies that are

looking to expand where we feel that we have what it is they are looking for,

understanding everything we need to know about those companies so that when we

go in our promotion, we can answer all of their questions and really portray the

Province as a place for good investment.

MS FOOTE: I guess my question was more along the lines of whether or not

you have identified sectors for growth, in terms of whether it is agriculture or

forestry, just looking at what we have to offer as a Province and developing and

building on those?

MS DUNDERDALE: Yes, as I referred to in my opening remarks, the advanced

technologies, marine technologies. We see that we have huge opportunities here

in marine technologies. There is great opportunity in aquaculture. Environmental

technology is being advanced; tourism, cultural industries. Already a number of

those -

MS FOOTE: So, you are going to continue to look at those and build on

those?

MS DUNDERDALE: Yes, build on what has already been done.

MS FOOTE: A question, you mentioned the REDBs and your continuing support

of the REDBs. With the Rural Secretariat, I do not quite understand yet. So you

might want to elaborate on that because I really have not seen or heard, in

terms of what that is supposed to do or how it is structured. Do you want to

elaborate on that a little bit for us?

MS DUNDERDALE: Sure.

This government believes that social and economic development are

interdependent and that they must occur at the same time; like in development

and implementation. I certainly feel that there has been tremendous, good work

done under the Strategic Social Plan in terms of putting the social lens on the

needs of the people of Newfoundland and Labrador. The touchstones of inclusion

and capacity building and partnership are certainly ones that we embrace.

It is my understanding, in certainly some of my conversations with members of

the Strategic Social Planning committees, that they were certainly aware and

have evolved to a place that they were trying to bring the regional economic

piece onto the board. They were realizing that they needed that economic voice

at their table too, because you cannot have healthy communities unless you have

good social development and good economic development. One is completely reliant

on the other. So we have to always take a comprehensive view.

In view of that, from that whole concept of the interdependence of social and

economic development comes the whole concept of the Rural Secretariat. What we

will do is build on the work of the SSP. We will include the economic pieces to

those steering committees. Out of representation from the SSP committees, as

well as several at-large organizations that have an expertise in regional and

community economic and social development, will be formed a board, a rural

secretariat working group. The idea is to influence government to have access to

government in policy development and program development and to have influence

right across government at the implementation stages of policy. So that

committee can reflect the rural realities and needs throughout the Province and

effect policy as it is formed and effect programming as it is developed. So they

would have a real voice across government.

We have already begun to - given the touchstone principles that are guiding

us through this of partnership and inclusion and so on. I have already met with

the chairs of the SSP. We are now moving into the planning stages, that we hope

to move forward within the next couple of weeks, to start a series of provincial

forums where we bring the SSP together, as well as other stakeholders in the

community, and talk about how we actually do this work; what this will look

like. We have the broad strokes and the principles of what needs to happen in

the Rural Secretariat. Then we need to sit down in partnership and develop

exactly how that is going to happen.

MS FOOTE: If I am hearing you right, it is essentially the SSP being

expanded on in terms of bringing in an economic focus. What role is there and

what role will there be for the REDBs in that? At the end of the day, do you see

disbanding the REDBs and just going with the Rural Secretariat?

MS DUNDERDALE: No, and one will not necessarily interfere with the other.

I understand, for example, on the West Coast REDBs are already starting to

become members of the SSP. They may very well be on the steering committees. So,

while they have a general piece that they would do in the discussion of economic

and social policy and in forming that whole piece and to say, for example, if

you need this - an example that I use to demonstrate some of what I mean is -

you are familiar with what is happening in Marystown now where we have great

economic development and there are wonderful things happening there in the

shipbuilding industry. In the planning for that development in Marystown we did

not progress it as much as we ought to have done, to say: here are the economic

implications for what is going to happen in the region but we did not deal with

the social implications of what was going to happen. As a result, we have a

housing crisis, for example.

What the Rural Secretariat will do is take a comprehensive view in a region

of those kinds of initiatives and advise government what is necessary to have a

healthy climate for economic development and social development, and that the

two go together. That you cannot look at one in isolation, you must look at both

together. When you look at economic development in Voisey's Bay or the

Marystown Shipyard where you are going to have a big influx of people, for

example, is one example, and what you need to support that and ensure that you

maintain a healthy community. That it is just not one aspect of the community

that is thriving and putting burdens on another piece of the community that we

have not supported and will get in trouble.

So it is that kind of vision and high-level advice that the Rural Secretariat

will provide to government. The REDBs will participate in that but they will

also have their own specific role, as they do now, as a facilitator of economic

development in the region, specifically. You know, that singular focus that they

now have, that will continue also.

MS FOOTE: Will there be a separate SSP -

MS DUNDERDALE: No.

MS FOOTE: - or will the Rural Secretariat, in fact, replace the SSP? Is

there any new funding allocated or is it -

MS DUNDERDALE: Not at this time, because we are in a transitional year.

Community counts, for example, is well established and implemented and the extra

funding that was required there is no longer required. So we see clearly that

the $1.7 million will do what we need to do this year, given it is a

transitional year. We expect that we will be looking for a greater budget

allocation in the next budget to support that work.

MS FOOTE: Are there going to be new people hired with respect to the

Rural Secretariat? Do you see that as -

MS DUNDERDALE: We will maintain the staffing allocations that are now

presently within the Strategic Social Plan.

MS FOOTE: You mentioned the Near Shore Initiative. Of course that was

something we were very excited about, the fact that the private sector came

onboard. I just want you to elaborate on where you are with that. I know you

mentioned that you are going to be rolling it out or -

MS DUNDERDALE: Yes, we have now been able to reach an agreement with

Aliant. The negotiations have come to a stage that we are all able to agree and

move forward. We had the first meeting on May 10. I can refer to my deputy who

attended the meeting.

DR. HOUSE: We had a meeting earlier this week of the initial steering

committee. I think that it is an exciting initiative. I think the great thing

about it is that we have Aliant and x-wave together involved in this, but also

we have the Newfoundland and Labrador Alliance of Technical Industries as also a

partner sitting on the steering committee. In fact, we had our meeting in their

offices. So, there is agreement around the table that we should proceed on this.

A consultant is in the process of being hired to start working on developing a

plan for how we should proceed and an implementation plan. There will be a

formal signing of the agreement in the next little while. As you know, Aliant

are in a strike situation right now, so probably that needs to get resolved

before the formal signing is done, but the initiative is underway. I guess that

is the important thing.

MS FOOTE: NATI has always had concerns, of course, in terms of any IT

initiative. They are comfortable at this point?

DR. HOUSE: The great thing about it is, when I went in and talked to the

current Chair of NATI he was probably the one around the table who was most

excited to see this thing getting underway. The fact that they have really

bought into it, I think, is a bit of a breakthrough.

MS FOOTE: I guess the proof will be in the pudding at the end of the day,

whether or not they are dissatisfied.

DR. HOUSE: Absolutely.

MS FOOTE: The other program within the department that - and Donna would

know this - has always been a matter of concern is the Provincial Nominee

Program. I would like an update on where we are with that. I know it was an

ongoing issue with the federal government. I would like to know where you are

with that.

MS DUNDERDALE: We have just received 400 new units, so we are at the

point now where we are doing something diligent with the Department of Justice,

to make sure that our forms are correct and that we have everything in order. We

will be making an announcement on those and the availability of those, we hope,

by the end of the month.

The original 300 are still moving through the system, they are not all

complete. There was a difference of opinion between the provincial government

and the federal government in terms of the rules and regulations around the PNP

under the old program. They have been somewhat stringent with us in the new one

and some of that is attributed to some of the fallout from the old program. At

this point, we are just letting them progress through the system and letting

them be dealt with by immigration officials in Ottawa. We are just letting them

follow through in due course.

MS FOOTE: What restrictions are being placed on the 400?

MS KELLAND: We have developed a new nomination plan in co-operation with

the federal government, so we will continue to offer placements for skilled

workers depending, of course, on a guaranteed offer of employment from a local

employer and them not being able to source a local person or a Canadian national

for the job. We have continued with our entrepreneur class, which will require

an individual who wants to either establish a new business in the Province or

purchase an existing business, to make a minimum deposit in terms of a minimum

equity investment. We will require them to make a personal visit to the Province

prior to nomination. There are just some additional safeguards, if you like, to

make sure that they are bonafide entrepreneurs.

We are also looking at a process whereby one or two or three partners can

participate in a single business provided that they are active participants in

the business and have an active role as either a director or senior manager.

MS FOOTE: What were you able to get in terms of a percentage of the

nominees being allocated for the entrepreneurial category?

MS KELLAND: We have reached an agreement that there will be no fixed

percentage, that we will take it as the market demands, which was, as you would

be aware, our preference. We were successful in having them allow us to be open,

provided, of course, it was consistent with federal regulations.

MS FOOTE: Will this allow you now to move with associations like the

dairy farmers, for instance, who were so interested in availing of this

particular program?

MS KELLAND: We are continuing those discussions with them. Once we have

the criteria firmly in place - and again, as the minister mentioned, we are

making sure, through Justice, that we have all our things done properly - we

will continue and have a look then at what they are proposing to see if it is

consistent with our nomination plan.

MS FOOTE: Okay.

CHAIR: Excuse me! We have gone beyond our fifteen minutes now.

MS FOOTE: Oh, really?

CHAIR: Yes. You will have plenty of time after anyway.

MS FOOTE: Absolutely. Thank you.

CHAIR: I would just like to move to the government members now, if I

could. Before I do, I would like to welcome another member of the committee,

Eddie Joyce, the Member for Bay of Islands.

If one of the government member representatives now would like to ask a

question or so of the minister, you have up to ten minutes. No questions? We

will carry on and go back to the Opposition members.

MS FOOTE: Thank you. That was quick.

CHAIR: That was quick.

MS FOOTE: The whole Broadband initiative, I think it is a great

initiative for this Province. We are talking to the tune of $15 million. Is that

still what we are talking about here, with $5 million from the feds and $5 from

the Province and Aliant? Aliant is the private sector that is at the table?

MS DUNDERDALE: The Broadband initiative that is referred to in the budget

is the projects that have been approved under BRAND. This $1.1 million will

average out just about $16 million. It is the five groups that were approved

under BRAND, the first round of BRAND, who have not been able to find the

community portion or their portion of what they needed to leverage out that

money. Rather than see that money slide off the table, we have responded to say

that we are going to work with them. Some of them will need the whole piece of

their share of the funding, others will need incremental amounts of that. We are

hopeful, also, that we may be able to have something left over, because there

are four more projects that have been approved under round two.

MS FOOTE: I am talking about the other initiative, the one with the

federal and the provincial partnership.

DR. HOUSE: We are talking about two different initiatives here, so we

need to clarify. One is the Broadband initiative specifically with respect to

education, which is a three way cost-shared.

MS FOOTE: Hopefully, it will not be just education. I would expect that

business would be able to -

DR. HOUSE: Hopefully we can build on that, but it is basically geared

toward the education sector, and the government is continuing to commit $5

million to that initiative.

The second initiative that the minister referred to is what is called the

BRAND initiative and it is basically to help community-based approaches to

expanding Broadband capacity in rural regions. What we have found is that a

number of the communities that were getting federal funding under that program

were having difficulty coming up with the additional amount that they were

required to come up with themselves, and so the government has allocated $1.2

million in addition to the $5 million to support those BRAND initiatives. I hope

that clarifies it.

MS FOOTE: Is the $5 million that was allocated for the Broadband

initiative now being used for the BRAND initiative? Is that what you are telling

me?

MS DUNDERDALE: No, the $5 million has been identified. The first $5

million in Broadband is still there in its entirety specifically for the

program, and then there is an additional $1.2 million for the BRAND. What we are

also doing is working very closely with those two initiatives to see that we

maximize benefits by coming together with that $15 million plus the other total

of between $16 million and $17 million that will be leveraged to see how we can

really coordinate our activities and maximize even more benefits by doing them

together where we can.

MS FOOTE: Has there been $15 million identified, though? I know the

Province had $5 million, the feds had $5 million, and we were looking to the

private sector for another $5 million. Has that been realized?

MS DUNDERDALE: It does not fall under our department so I cannot speak to

that specifically. I know that our $5 million is there, but the Department of

Education is taking the lead.

MS FOOTE: We are working very closely on it because, obviously, it is

such an important initiative that one would hope that at the end of the day not

only the education sector would benefit but business as well and certainly some

of the tourist initiatives.

MS DUNDERDALE: Absolutely. All kinds of community groups would also

benefit from that.

DR HOUSE: The point that you raise, I think, is really important. Just

for your information, we are starting now to begin to work cooperatively with

Industry Canada, ACOA, the university, Aliant, and other user groups to try to

get a provincial kind of a strategy towards where we should be going next in

terms of Broadband, to ensure that this important infrastructure is available as

widely as possible in the Province.

MS FOOTE: I guess I would like to ask some questions in terms of the

budget cuts. Obviously, when you look at where they have been taking place it

has been very much in rural Newfoundland and Labrador. When I look at twenty HRE

offices closing, I think we all have to realize that while they may have been

offices from a social perspective, at the end of the day there are employees who

do make a contribution, they earn a living and they contribute to the bottom

line of these communities. When you are looking at the needs of communities

throughout Newfoundland and Labrador, particularly in rural Newfoundland and

Labrador, and you talk about the SSP and you talk about your Rural Secretariat,

how do you gel what is happening in terms of these layoffs in these communities

that are so vulnerable because there is so little happening in some communities,

if they do not have something going on in the fishery. Try as hard as we might

it is very hard to attract anyone to invest in a place like Grey River or a

place like Point May or a place like Lawn. They look to have these services

available, but also for them it is a contributing factor to the bottom line of

those communities too, to have those offices there.

How are you taking that into account in terms of your strategic social

planning and your Rural Secretariat? How does that play when you look at how you

are going to work with those communities?

MS DUNDERDALE: It is certainly my understanding that the number - just

HRL&E, for example, the job loss there will be actually minimal because even

though the offices are closing they are being absorbed into the regional offices

and other offices throughout the Province. We have a dilemma that we have to

deal with in terms of our fiscal situation. It is extremely important that we

get our fiscal house in order, and that means there is some rationalization that

has to go on, and there are efficiencies that have to be found. It is extremely

difficult to attract investment to a Province where people might not feel that

there investment is secure given the financial situation that the Province finds

itself in.

In terms of economic development -

MS FOOTE: You and I could have that debate until the cows come home but

we will not go there.

MS DUNDERDALE: Yes, but from our perspective it is extremely important to

have our fiscal house in order, because that is the first step to good solid

economic development.

You have to be very mindful - and I appreciate what you are saying about how

any kind of a job loss or relocation impacts, especially in rural Newfoundland,

and that you have to pay particular attention to that. There is a real

sensitivity around that in government and as we approach this work. I guess the

job in our department is to grow the economy and create a climate where jobs can

be created to absorb any kind of fallout from government so that government does

not - government is a provider of services rather than an employer or an

employer of last resort. I mean, the employment mandate is very strong too. I

appreciate that this is a place where people come to work in this Province, but

it should not be our primary source of employment anywhere in the Province,

particularly in rural Newfoundland; that the only job that is available to you

is to work with government. The challenge to us is to grow the economy, you

know, to do things in aquaculture and tourism and cultural industries and with

our industrial milk quota now that is just become available and so on, so that

there is employment in the private sector for people, so that when people

graduate from our universities and our colleges there is work for them other

than government work.

MS FOOTE: I guess my question was more along the lines of: What role does

the SSP play in terms of working with those communities that are going to feel

the impact of these losses?

MS DUNDERDALE: In terms of the SSP, we are still very much in transition.

The SSP is carrying on at this point the traditional work that it did, for

example, under your administration. That has not changed. The planners are

there, they are still working with that. We are on the front end of a transition

from their work as SSP into the Rural Secretariat. When that formation is

complete that Rural Secretariat will be able to reflect on the questions that

you have raised and look at them very specifically in terms of their own regions

and advise government and influence government in terms of policy and programs.

MS FOOTE: I guess one of the issues for me - as I said, you and I can

debate in terms of the financial situation of the Province and what we were able

to accomplish in the fifteen years we were there in terms of growing the

economy. I feel quite comfortable and confident in what we were able to

accomplish, and obviously you have other views.

At the end of the day, I think if you - I really am concerned with what I see

happening in our Province in terms of rural Newfoundland and Labrador, where we

seem to be going back to the whole idea of centralization, with things

continuing to be offered as long as you are along the Trans-Canada Highway and

losing sight of the geography of Newfoundland and Labrador and the fact that we

have 10,000 miles of coastline. We have been trying to survive under very

difficult circumstances and I think doing very well given those circumstances,

not to say that there could not be improvements because there can always be

improvements and I welcome any that you can make. But, I guess I really am

concerned of the way this is going and the fallout that might come into play for

our rural communities. I think we all know that Newfoundland and Labrador is

what it is because of our rural communities. You can find a St. John's

anywhere in the country or in the world. You can find a Corner Brook anywhere in

the country or in the world, but when you come to Trinity or you come to Grand

Bank or you come to wherever that is off the beaten track, then it is a

different kettle of fish as it were, and you really need to have a different

approach and a different focus when dealing with it.

I guess one of the other questions when we were talking about cuts, I am

wondering if there is any idea of bringing back into the fold the group that we

put down in Marystown? Are they going to remain down there or - from the

department?

MS DUNDERDALE: Yes, there is no -

MS FOOTE: Portfolio management.

MS DUNDERDALE: No, that is not where we are. Let me say, first off, that

I agree with your comments on the fabric of who we are as Newfoundlanders and

Labradorians and without rural Newfoundland, to me, we would lose our soul. I am

passionate about rural Newfoundland. I am thoroughly committed to Newfoundland

and Labrador and would certainly not be engaged in any kind of a dismantlement,

but there are new realities that we have to deal with in this Province. First of

all, given our fiscal situation. Second of all, given the demographics that we

now have at work in this Province and what they bode for the future, which is

extremely concerning.

In the concept - again, this goes back to the Rural Secretariat. Perhaps this

will capture for you exactly what it is that we talk about when we talk about

the kind of thinking that we are engaged in in this department now. For example,

on the Burin Peninsula - I will use that because it is a place we are both very

familiar with. The Rural Secretariat, or the steering committee from down there,

what we would ask of them and of the people of the Burin Peninsula - for

example, a significant part of rural Newfoundland - is to come together and say:

Here we are 30,000 people on the Burin Peninsula, what is it that we need on the

Burin Peninsula to sustain ourselves, to create healthy, viable communities?

What do we need in health care? What do we need in education? What do we need in

terms of the economy, whether that is the fishery, shipbuilding, peat

harvesting, aquaculture or whatever? Coming together and using their best

knowledge and experience of the Peninsula and a full and thorough understanding

of their needs and what it is they need to live good, healthy lives, and how, in

fact, they can expand their 30,000 upwards and onwards and then come back to

advise government on what it is we need to do to work with them to create a

climate, economically and socially, that this kind of growth and sustainability

can take place. That is the path we are on.

MS FOOTE: You see, that sounds to me exactly what the REDBs were doing.

Now, some better than others, obviously, because if you look at the twenty

boards you can look at the accomplishments of some, and some of them did much

better than others, but when you consider the stakeholders on the REDBs, they

were from all sectors of society, social and economic. What you are describing

for me, in terms of the Rural Secretariat, is precisely what the REDBs were

meant to do.

MS DUNDERDALE: But their focus was economic development and they were arm's-length

from government. So, in terms of the effect they would have on the internal

policy and program development of government was minimal. What we are trying to

do with the Rural Secretariat is bring that right into government and have it

influenced right out across government so that the Rural Secretariat is there,

it is real, and there is a real relationship between decision making and the

Rural Secretariat and a partnering that is going on there. So government gets

influenced. A REDB has little or no influence on what is happening in education,

health or recreation. It is a much, more comprehensive approach than you would

have seen in the REDB. The REDB is still very specific to economic development

and fostering that.

MS FOOTE: I guess I would be concerned if it became just another level of

bureaucracy in terms of the REDBs, the SSP, the Rural Secretariat. Getting our

act together would be even more difficult?

MS DUNDERDALE: But that is why we are on the front end of this

consultation process. I am in meetings with REDBs and with the SSP. We will

bring all of these groups together. All of those stakeholders will come together

over the next six to eight months. We will have these discussions and from those

discussions the best practices that they have and the best knowledge that they

have, then we will craft how all of us will work together.

We have a lot of resources on the ground. There is an awful lot of

duplication of effort going on in terms of economic development, for example. I

mean municipalities now have Economic Development Officers. We have five regions

with Economic Development Officers. The REDBs had Economic Development Officers.

ACOA has Economic Development Officers. We are down by the head with Economic

Development Officers and yet we have very limited resources. We need to find a

way that we can all come together, work together and make sure that we are

making the best use of the limited resources that we all have and to find a

mechanism which allows us to have a coordinated approach to economic social

development in the Province.

MS FOOTE: I want to move on to Venture Capital because, obviously, that

has been an issue in our Province, I guess, since we have been a Province and

before.

Where are we with the Venture Capital Equity Program?

MS DUNDERDALE: Well, as you know, under your Administration you put out a

call for proposals. We had four responses. We have met with one proponent and

have scheduled meetings with the other three. Hopefully, something solid will

come out of that. That is also going to be something that the Department of

Business is going to be very focused on, identifying Venture Capital funds for

use in the Province and also identifying other forms of capital. Investment, as

you know, is a tremendous challenge for us here in the Province.

MS FOOTE: Were you successful in attracting anyone from a labour sponsor?

MR. McCARTHY: Two of the responses we got to the RFP were from labour

sponsored venture capital groups. We are in the process now of - going to be

meeting them over the next period of time to explore their proposal in detail.

MS FOOTE: What is happening now in terms of the young entrepreneur who is

having difficulty accessing capital? I think of some young people and I think we

always try to encourage young people, in particular, not to go to work for

someone else but to, in fact, start their own business if at all possible and

try to encourage more and more post-secondary - and even children in high

schools to think that way. Are there any additional monies made available in

your budget or is that going to be a part of business, or is there an overlap

there in terms of - where do they go?

MS DUNDERDALE: There is no specific funding made available at this point

in time for them. They would still fall within the general programming of the

department. It is certainly, again, part of the comprehensive view that one

would expect from the Rural Secretariat so that we address all of that;

identifying specific groups that have challenges in terms of accessing capital.

As you know, in the GMO we speak specifically to young people about business

opportunities and so on in the Province, and to support that and expand it.

MS FOOTE: What if someone came to you today? What advice, what direction,

or what help would you be able to provide?

MS DUNDERDALE: Well, in terms of all of the things that were there under

your Administration are still there. We have the small seed capital program

business investment and the advice from all of our regional offices and economic

development officers. All of that is still there and available to them.

MS FOOTE: Okay.

I know that there were some layoffs in your department. Are they reflected in

this budget, in the Estimates?

MS DUNDERDALE: Yes, we had two contractual positions lost. The contracts

came to an end and they were not renewed. We do not have our EDGE facilitators

anymore and that resulted in one layoff.

MS FOOTE: What is happening with EDGE then?

MS DUNDERDALE: The EDGE applications now are being handled by our

Economic Development Officers and that is working very, very well.

MS FOOTE: I know that the Premier has talked about the Irish model and

how that is something which appeals to him. I guess that appeals to all of us

who have not been in a position to want to make things happen, both from an

education perspective and from an economic perspective. I would assume that

relationship is still there and you are cultivating that?

MS DUNDERDALE: Yes, we are. In fact, the Premier and I will be travelling

to Ireland in early July to meet with the Taoiseach to reaffirm our partnership

and renew our MOU with them.

MS FOOTE: Again, I go back to the differentiation between Business and

Innovation, Trade and Rural Development. So both of you are going to that?

MS DUNDERDALE: Yes.

MS FOOTE: Okay.

MS DUNDERDALE: These departments will work very closely together.

MS FOOTE: I know that - of course it was always an issue, the fact that

the feds left the table with respect to Community Economic Development

agreements. That was a serious blow for the Province. I know that we have

allocated money to carry out, and you mentioned the Ambassador Program. Is it

the intention then to continue with those programs?

MS DUNDERDALE: Yes. You will see a reduction in the Budget from the $5

million that was there last year. It is down to $2.2 million. What we have done

is allocate out to the Department of Tourism, Culture and Recreation the portion

that was there. That $2.2 million now more clearly reflects what it is that our

department is doing. So, we are continuing the Ambassador Program, the GMO and

so on.

MS FOOTE: Okay.

Are you reviewing the Ambassador Program? Because I think that was something

which was being suggested when I was there, that those who were more directly

involved were suggesting we should probably look at a different model for it.

MS DUNDERDALE: All our programs are now under renewal, so we will be

looking at all of them. We are in the process of looking at all of them, seeing

which of them are really effective and others that are not, and so on. What do

we need to do to support them more fully, or do we need to let some go and add

others and so on? That is a process that, again, we are on the front-end of and

working through. These should be complete by the end of the year.

MS FOOTE: Did you say it will be another six months or so before

everything is in place with respect to the Rural Secretariat?

MS DUNDERDALE: Our first consultation we are planning for early June. So

we need to move around the Province with that. We are hopeful that we may be

able to do one in Clarenville next month. Then we need to move about the

Province over the summer. In the fall we should be able to bring all of that

together.

MS FOOTE: Okay. That is fine for me for now.

CHAIR: Do you want to take a break?

Any of the government committee members have any questions for the minister?

No questions?

MR. REID: I have one.

CHAIR: We will go to the Opposition members.

Mr. Reid.

MR. REID: Thank you, Mr. Chair.

I only have one general question, I guess. It pertains to the made right here

campaign. It is my understanding you have cancelled that.

MS DUNDERDALE: Excuse me, I did not hear you.

MR. REID: Your made right here campaign. That is gone?

MS DUNDERDALE: "We're doing It. Right Here."

MR. REID: "We're doing it. Right Here." It is gone?

MS DUNDERDALE: Yes, it is.

MR. REID: That is unfortunate. I know that two entrepreneurs in my

district - a young teacher got into building kayaks and did quite well as a

result of the free advertising that he got on that. Another one was Cottle's

Island Lumber that we also used in that ad for a number of years. It has done

well by him as well. It is very unfortunate that you had to take that program

out of your department.

MS DUNDERDALE: I agree. I wish we could have kept it there, but the

fiscal restraint did not allow that to happen.

MR. REID: You do not have an easy job to revitalize rural economies

especially when your government is starting to do that, by cutting jobs in rural

Newfoundland in the public service. I know, representing a very rural district,

that it is going to be very difficult to replace the jobs that your government

just eliminated in the last few weeks and are continuing to eliminate in the

coming months. For example, I just lost the HRE office on Fogo Island and there

is no way that the individuals who were displaced yesterday are going to be able

to commute because of the ferry schedules and things like that, not to mention

that ferry rates have gone up. It is going to be very difficult. Just when the

economy of that district started to pick up in recent years with the opening of

a new fish plant in Twillingate and a new shrimp plant on Fogo Island, it is

going to be very difficult to continue that growth when your government is

cutting services in that area.

That is just a comment. If you want, you can comment on it, if not, I will

just move on to the Estimates.

MS DUNDERDALE: I think we have enormous potential right throughout rural

Newfoundland and Labrador. That is the challenge to us, to grow the economy in

the private sector so there are employment opportunities for people right

throughout the Province. I think there is enormous opportunity and enormous

capacity to be able to do that.

MR. REID: I wish I could agree totally with you. I certainly hope you are

right. Again, I think my colleague mentioned it while I was out - I was

listening to her in the office there. She talked about: It appears that your

development of rural economies is going to be along the Trans Canada Highway.

That certainly appears to be the move in my district with the school boards and

the hospital boards and the other services that are provided by government. They

are moving out of my district, they are going somewhere. That is a rural area,

so it appears that they are going to end up in Gander and Grand Falls.

Since I have been the MHA for nine years, I have tried, and have been

relatively successful, in preventing that from happening in my district.

Unfortunately now that I am sitting in Opposition, that is going to start all

over again. I have grave concerns as to what is going to happen to public

services in my district, and I think that other rural members, even on your

side, are going to have similar problems. I noticed that our Chair yesterday

lost two social services offices in his district, and who knows what is to come

in the health care. I fear for the two hospitals. Well, I do not have the fear

for Fogo Island Hospital anymore, they have already announced they are

eliminating ten beds out of that building before it is even opened. I fear what

is going to happen in Twillingate and New World Island.

Our Chair here today must have a fear of what is going to happen in

Brookfield hospital, because for years, I know, the board in Gander was trying

to swallow up all of these to keep the hospital alive in Gander. Now, with one

major board in Central Newfoundland, we are going to have to fight off not only

Gander, I say, but Grand Falls as well. I fear for our districts in the Central

Region.

As I said to your colleague last night, we are going to take you through,

heading by heading, in your budget estimates. We would like to know what is

happening there. The reason we are doing it is not because of you or your

officials, I happen to know a lot of your officials and have a great deal of

respect for them, but your colleague, the Minister of Finance, made some

statements in here and for awhile he used to make different statements outside

of the House of Assembly, and now he is making statements in the House and

contradicting himself later on. We need to go through word for word here in the

Budget to actually determine whether or not he was being correct in his

statements and not you. We will approach it that way, if you do not mind?

MS DUNDERDALE: Sure.

MR. REID: We can start with heading 1.2.01, Executive Support. It looks

like you have laid some people off there. You have dropped from $1.2 million to

$877,000.

MS DUNDERDALE: Under Salaries? We have dropped -

MR. REID: Three hundred and thirty-two thousand.

MS DUNDERDALE: This is a net reduction due to several factors. First,

there are fewer executive and secretarial positions as a result of departmental

restructuring. Second, funding is allocated for a new position of Chief

Innovation Officer. Third, a Temporary Departmental Coordinator was hired in

this area in 2003-2004 and this position is being maintained for 2004-2005.

Fourth, a Special Projects Coordinator has been reassigned from elsewhere in the

department to this activity, to work on the Red Tape Reduction Task Force.

MR. REID: I am sorry.

MS DUNDERDALE: That is Salaries, 01, under Executive support?

MR. REID: Yes.

MS DUNDERDALE: For 2004-2005?

MR. REID: Okay. Which positions have gone since the revised Budget? That

is what I am asking. The revised Budget for 2003-2004 was $1.2 million, today it

is $877,000, so obviously there were bodies there that are not there today.

MS DUNDERDALE: The difference there is due mainly to severance and unused

leave payments to former executives. As well, a temporary Departmental

Coordinator was hired during the year. That would explain that discrepancy

between the budgeted and the revised.

MR. REID: It is not completely clear to me. You are saying the reason it

was revised is because of that severance?

MS DUNDERDALE: Yes.

MR. REID: That means that some people have left?

MS DUNDERDALE: Yes, we have had an Assistant Deputy Minister and a

director, two executive positions.

MR. REID: Which Assistant Deputy Minister was that, by the way?

MS DUNDERDALE: Larry Guinchard.

MR. REID: Okay.

Down in Transportation - which director? I am sorry.

MS DUNDERDALE: Bill Sterling and Ted Lomond. Ted Lomond was a contract

position.

MR. REID: Even though you have reduced the number of employees there, it

looks like, how come your Transportation and Communications has increased by

$31,000 over the revised budget last year?

MS DUNDERDALE: The budget is increased there to more closely reflect

historic costs of transportation in this area. The funds have been reallocated

to that from Purchased Services.

MR. REID: Yes, but you would assume Transportation and Communications

would go down if you eliminated three positions, but obviously it did not.

DR. HOUSE: The people who were eliminated, as it happened, did not travel

very much so it did not have that much effect. What we are doing is going to

bring it up to what the historical pattern is. There has been some inflation in

the transportation costs, of course, over the years. The reason that the amount

was a little bit less in the revised budget last year is that, with the election

and so on, some of the trade visits did not take place that were expected. It

went down a little bit from the original budget in 2003-2004, but we are trying

to be realistic and put in the amount of money that we really think we are going

to need in 2004-2005.

MR. REID: What type of things do you buy in 06 there, for Purchased

Services?

MR. HOUSE: Sorry?

MR. REID: In 06, Purchased Services, $32,900. What types of things do you

purchase there? What types of services do you purchase under that heading?

MR. CURTIS: That covers things like photocopier rentals for the minister's

office and meeting costs, where the minister hosts meetings of various officials

from across Canada, and entertainment costs incurred by the minister.

MR. REID: Well, the minister has under Purchased Services, $25,000, under

her own budget.

MR. CURTIS: Sorry, I misunderstood your question.

This is for the executive area, where it covers again similar types of

things, entertainment costs incurred by the executive when they go off to trade

missions or host meetings for people having trade missions and trade shows and

the like. It covers the rental of equipment and some minor advertising and

things of that nature.

MR. REID: I know there was an election called halfway through the year,

but you budgeted last year $43,000 and you only spent $7,000. This year you are

gone back up to $32,900.

MS DUNDERDALE: There were a couple of trade missions cancelled also which

accounts for that lower number.

MR. REID: 1.2.02, Administrative Support, Salaries, $135,000 in the

revised budget last year and none this year.

MS DUNDERDALE: This is due to the requirement to provide temporary

assistance in the Information Technology area and the general operations area.

MR. REID: Under Salaries, there is somebody gone there. Obviously there

was a position eliminated, there is no money there.

MS DUNDERDALE: We had not budgeted for summer students in 2004-2005. Any

summer students now that are going to be hired will be funded through vacancy

management.

MR. REID: Are you going to hire any?

MS DUNDERDALE: Yes.

MR. REID: So, originally budgeted last year was $46,000 for summer

students?

MS DUNDERDALE: Yes.

MR. REID: Obviously there were a lot more than that hired. I went to

$133,000, and this year you are not budgeting any.

MS DUNDERDALE: No, the plan is to hire summer students through vacancy

management.

MR. REID: Where is that, though? You say vacancy management, or vacancies

in your management?

MS DUNDERDALE: Yes, vacancies that we have in the department that will

not be filled over the summer on a permanent basis. We will hire students when

we use that funding.

MR. REID: So you have budgeted for these vacant positions, as if they

were filled?

MS DUNDERDALE: Yes.

MR. REID: There is no money within that division for Salaries, under

Administrative Support.

MR. CURTIS: Basically, what the minister is saying is correct. In order

to fund summer students this year, what the department is going to do is use any

savings that will be realized as a result of people leaving during the year, the

normal turnover in staff. If someone accepts a position somewhere else, in

another department, or leaves the department and their position is held vacant

for a few months or weeks or whatever, any savings realized as a result of that,

some of those savings, will be used to fund students to whatever level, I guess,

the department decides.

MR. REID: So, you are assuming and you have budgeted for positions?

MR. CURTIS: At the start of a year we do not know who is going to leave

the department or who is going to move on to other positions, so we budget for

the positions for the full year. There are always people moving in and out, so

there are always delays in filling those positions and that results in some

savings throughout the department.

MS DUNDERDALE: (Inaudible) a number of positions that people are moving

on to other employment elsewhere and so on are vacant but will be filled. There

are savings while we go through the process of advertising and screening new

applicants and so on. The savings that we realize there we will use to pay our

summer students.

MR. REID: It is a strange way of budgeting. You budget for a position and

now you are saying that you are not going to fill the position so that you can

hire summer students. That could cost as much if you go by the revised budget

last year of $133,000.

MS DUNDERDALE: Well, we will not be hiring the number of students that

were hired last year.

MR. CURTIS: I think the minister mentioned, all of that $133,000 was not

spent on summer students. Some of it was used to hire some temporary assistants

in the Information Technology division and in the general operations area to do

some work in the department's registry. Those were temporary, one-time

positions that will not be filled this year. It was up to $130,000, and only

about $50,000 of it was spent on students.

MR. REID: Do you have any non-paid student positions, work-term students?

MS DUNDERDALE: Not right now.

MR. REID: Employee Benefits, what falls under that heading?

MR. CURTIS: Basically, that covers registration fees, like conferences

and seminars. If anybody goes off and does a course it covers their registration

fee. If somebody does, for example, a WordPerfect course or something like that.

If departmental staff are injured at work and there are related workers'

compensation costs, it also covers those costs. The salary of people is covered

through government, but if they have any medical costs or transportation costs

in order to attain medical services (inaudible).

MR. REID: No, transportation is already covered down there. What I find

strange under this heading is this, you do not have any salary dollars. That is

what it says right here. There are no salary dollars for anyone in that position

or positions under Administration Support. Right now there is not a dollar

budgeted for this year. Yet, you are saying you are going to hire summer

students and put them in there. You are saying you are going to have the

positions there this year even though it is not mentioned in your budget. Am I

correct?

MS DUNDERDALE: You are referring to students again?

MR. REID: I am referring to whoever fills the positions where it says:

Salaries, zero dollars. So, you are saying that you are going to hire some

student positions until you - it just does not make sense to me that you have

Employee Benefits of $18,700 and you have no employees. You have Transportation

and Communications for these non-employees to the tune of $62,900 and you have

Supplies for them for $24,000, and Professional Services for these employees for

$25,000 and Purchased Services for these non-employees for $36,000. That seems

to me that $424,000 is being spent on no employees there.

MR. CURTIS: I can understand your confusion on it. What this subhead

captures is a lot of general administrative activities for the department. For

instance, Transportation and Communications, the majority of that money is used

to cover the department's postage costs in their entirety. So the entire

postage cost for the department is charged to this subhead.

Employee Benefits, a large chunk of it relates to workers' compensation

costs that are incurred by staff throughout the department who may be injured at

work. A lot of these expenditures are budgeted in blocks because at the start of

the year we do not know the individual breakdown of it.

MR. REID: Hold on now.

MR. CURTIS: This is common throughout government departments. There is an

Administrative Support subhead where the costs that are spread throughout the

department are budgeted, such as postage and workers' compensation.

The Information Technology amounts, which are the bulk of this subhead,

covers projects that will be undertaken throughout the department (inaudible)

system that will be used by all of the staff in the department.

MR. REID: Yes, but if you look under every other heading - like Policy

and Strategic Planning in the next category there - you have all of these:

employee benefits, transportation and communications, supplies and professional

services. Under every one of your divisions here you have these figures. So how

can you say that this spreads over the entire department when under each of the

individual headings you have figures already in for these?

MR. CURTIS: The basic answer to that is, if you look at say just - to use

your example of Policy and Planning, the Transportation and Communications there

covers the travel costs and the phone costs of that division which are readily

identifiable to that division.

MR. REID: Yes, I understand that.

MR. CURTIS: The Transportation and Communications cost under this

Administrative Support covers things that are not readily assigned to each

division, like postage and some other (inaudible).

MR. REID: For whom though, people in Policy and Planning?

MR. CURTIS: The postage cost of the entire department is located in

Confederation Building. It is the postage cost for everybody located in

Confederation Building, which will include several divisions. It does not

include the regional offices because their costs are also readily identifiable.

MR. REID: Yes, but you have Transportation and Communications under

Policy and Planning for $46,700 and you have Employee Benefits for $4,300 for

Policy and Strategic Planning but yet you have them all up in this

Administrative Support as well. Do you understand what I mean?

MR. CURTIS: I understand what you are saying. Maybe I am not doing a

great job of explaining it.

MR. REID: No, you are not. I am sorry.

Maybe we are arguing about nothing, but to me you are funding it twice.

MR. CURTIS: Let me approach it from a different angle. In areas like

workers' compensation costs, at the start of the year we do not really know

who may be injured at work and what their associated costs are going to be, so

we try and budget a block under this subhead to cover off any potential costs

that may come up. At the start of the year we do not know if somebody is going

to be injured in Policy and Planning or in the Regional Economic Development

Services area or in the Executive, so we put a block in Administrative Support

to try and cover those things off.

The same thing with postage. We do not really know at the start of the year

how much postage costs are going to be, but with postage the government system -

through Works, Services - is not very good at tracking the postage costs by

division, so we budget a block in one area to cover it off.

MR. REID: Why didn't you, for example, take those employees involved

with the Policy and Strategic Planning division and put down employee benefits -

why didn't you inflate the figure for employee benefits under that heading in

case you had a workmen's compensation claim, rather than putting it all up

here in one?

MR. CURTIS: That gets a bit difficult because, as I said, we do not know

which divisions are going to have costs. So it would be sort of a stab in the

dark.

We know, historically, that the department spends $20,000 a year on workmen's

compensation costs but we have no real idea where that should be allocated. As I

said, this is a common practice in all departments, that block funding is put in

Administrative Support subheads to cover these things off that are difficult to

identify up front.

MR. REID: What you are saying is there is $424,900 under Administrative

Support, with the exception maybe of Information Technology, because I do not

think they are listed under the other subheadings. So you have a couple of

hundred thousand dollars parked there for the department for unforeseen

circumstances. Am I correct?

MR. CURTIS: No, I would not say it is parked there to cover unforeseen

circumstances. It is budgeted there because these are areas where it is

difficult to break out the cost by various subheads.

MS FOOTE: That was not a negative. That was just a (inaudible).

MR. REID: It might be standard practice for the non-economist, or

whatever you want to call your financial people over there. When you see zero

salaries under a heading and you have $424,000 worth of expenses, you would

expect someone to ask you a question on it. Right?

MS DUNDERDALE: Yes.

MR. REID:

Whereas if I were doing the books on this and I was realizing

that I might have problems with some sickness in Policy and Planning, then under

Employee Benefits I would have put - instead of $4,300 I would have put $10,000,

rather than sticking it up and parking it. What I mean by parking, is sticking

it up in here in a division where there are no employees.

CHAIR: Excuse me now.

Would it be the wish of the Committee to take a short break or not? How much

longer do you think you might be?

MS FOOTE: It could be all day.

MR. REID: So, all of those - is Professional Services under that heading

the same thing? Transportation and Communications?

MR. CURTIS: Yes, generally these subheads and these budgets are similar

types of things. They are block money where we do not know how to allocate it

properly at the start of the year because we do not know where the expenses are

going to be incurred throughout the department.

MR. REID: Slush fund.

AN HON. MEMBER: (Inaudible).

MR. REID: Well, it depends on what you mean by a slush fund. It just

means that there is a couple of hundred thousand dollars that you can dip into

if you have to send someone off to a conference that you did not budget for in

the other divisions. Would that be the same for Purchased Services?

MR. CURTIS: With Purchased Services, what that covers are the

photocopiers that are staying in Confederation Building which are used by

everybody. It is hard to figure out which division to charge what percentage of

the usage because everybody uses it. So, it is common usage. Again, it one of

these things that is shared across multiple divisions. It is hard to allocate it

to a specific division, because if you have three photocopiers that are used

throughout the year by everybody in the department it is hard to figure out who

used this much paper and who did these many copies. It is easier just to budget

it all in the one place.

MR. REID: Yes, but under each of the other headings you have Purchased

Services for that.

MR. CURTIS: The (inaudible) in the other divisions cover other things

that are considered Purchased Services, like advertising and printing; things

that you can easily say that this much of it relates to this division,

whereas

with a photocopier, as I mentioned, it is hard to tell who used how much of it.

MR. REID: Alright, I will let you out of that one. Let's go on to

1.2.03. Who did you hire under Salaries there?

MS DUNDERDALE: We have made provision for another trade analyst and it

also provides for step increases. We only have one trade analyst in our

department at the moment and we live in fear that something might happen to him

because all the knowledge rests with him.

MR. REID: Step increase for? There is an increase of $100,000 so that -

MS DUNDERDALE: It is a fill-in position and a step increase. It is the

sum total of that cost.

MR. REID: (Inaudible) step increases?

MS DUNDERDALE: Yes, step increases.

MR. REID: The step increase, is that for the individual you have hired or

someone else?

MS DUNDERDALE: No, for everybody.

MR. REID: For everybody in that division?

MR. CURTIS: (Inaudible).

MR. REID: Okay, yes.

I guess the Purchased Services (inaudible). What is that about, do you know?

MS DUNDERDALE: Ken, do you want to speak -

MR. CURTIS: Purchased Services? I am sorry, what was the question about

Purchased Services?

MR. REID: What do you spend $11,000 on in Purchased Services in that

division?

MR. CURTIS: Basically, this covers printing costs, the rental of meeting

rooms, the rental of equipment, the purchase of data from Statistics Canada.

Just general purchase services that might come up during the year, advertising

and things of that nature.

MR. REID: Obviously, you only spent $2,000 there last year, right? I

guess there were another few shows cancelled, was there? It increased from

$2,000 to $11,000.

MR. CURTIS: What tends to happen, you will notice, in a lot of these

areas as you go through the budget there are ups and downs from year to year.

These costs tend to vary from year to year depending on what is happening. Last

year in this activity, they did not have a requirement for certain Purchased

Services, and there was also, towards the end of the year, some curtailment of

expenditures. What the budget figure tries to reflect for 2004-2005 is sort of

the average historical cost in these areas. Even though it was down last fiscal

year, the average cost has been around this amount, so the budget has been

maintained at that level.

MR. REID: Thank you.

Under the next heading, Administrative Support, there was $20,000 spent on

Property, Furnishings and Equipment.

MS DUNDERDALE: Which one?

MR. REID: 1.2.04, Administrative Support

MS DUNDERDALE: Property, furnishings and equipment? Beginning in

2004-2005, the Province decided to budget for the purchase of tangible capital

assets under a separate subhead within each department, and in order to qualify

as a tangible capital asset the purchase must be greater than $15,000.

Basically, what that does is give us greater accountability for our assets. When

we buy things we know what they are and where they are.

MR. REID: Again you have, under Minister's Office, Property,

Furnishings and Equipment for $7,500. Under Executive Support you have $1,000 in

there for Property, Furnishings and Equipment. Under Administrative Support,

which is suppose to cover the whole department - am I right? At least all of the

other headings are supposed to cover the whole department, where you do not

really know who uses it. You have another $19,000 in property and furnishings,

and now you have $20,000 right there.

MR. CURTIS: This particular subhead here is, as the minister indicated,

starting in 2004-2005 the Province - and this is being initiated through the

Comptroller General's Office - in order to more properly record and reflect

what are called capital assets, which are fairly large assets with a value of

$15,000 or greater, has decided to set up a separate subhead in the estimates to

reflect how much is spent on those assets. The amounts under Furnishings and

Equipment, say under the Minister's Office and Administrative Support, are

meant to cover the purchase of smaller items of furniture and equipment, items

that have a purchase price of less than $15,000. If the department went out and

bought, say, a chair for the Minister's Office, or a desk, it would be

budgeted under the Minister's Office, Furnishings and Equipment, but if they

went out and bought a car or a four-wheel drive vehicle for one of its regional

offices, which would be considered a capital asset, those assets are being

reflected under this subhead.

MR. REID: All right. Do you want to take some questions from somebody

else?

CHAIR: I just want to switch to the government members, to see if they

have any questions for the minister.

RAY HUNTER: When the members are relating to specific headings and

subheadings, if you would give the number of the heading, so we would know how

to follow it. It gets a bit confusing when you are all over the place and you

are trying to flick back pages to find the subheadings.

AN HON. MEMBER: (Inaudible).

RAY HUNTER: No, you just skipped it now. I am trying to find it. Maybe

the titles, subheadings and the number.

MR. RIDGLEY: Just on the Property and Furnishings, Mr. Curtis, again. The

ones under each department for lesser amounts than $15,000, would they be

ticketed and tracked as assets?

KEN CURTIS: Yes, they are. Every asset that is purchased by government is

assigned an asset number and recorded in government's inventory. What this new

activity is trying to do is reflect those with a larger purchase price, and they

would be reflected more clearly in government's financial statements and

government's financial records. In 2005, there will a separate line showing

how much government spent on what it considered capital assets. Now, a lot of

those smaller assets are just picked up in the miscellaneous category as

miscellaneous essentials by government.

MR. RIDGLEY: So, are they ticketed and tracked, the smaller ones, say

something for $1,000?

MR. CURTIS: Yes, all of government's purchases are tracked and put into

government's inventory system. Just in terms of the financial statements and

government's financial records, the Comptroller General's Office starting, I

guess, this year now, is going to reflect all of its bigger ticket items as a

separate line in the financial statements. Whatever the total ends up being

across government in capital assets, and the rest, the smaller assets, will be

picked up as sort of a miscellaneous category.

MR. RIDGLEY: So, the smaller ones, $1,000 or $2,000 would be under a bulk

category of -

MR. CURTIS: That is under the other categories of Furniture and

Equipment.

MR. RIDGLEY: And then the bigger ones would be Furnishings and Equipment?

MR. CURTIS: They would be reflected in the financial statements as

capital assets of the Province.

MR. RIDGLEY: Capital assets. Everything is tracked?

MR. CURTIS: Basically, the capital assets tend to have a longer use for

life,

whereas the smaller items are used for life. There is no depreciation of

them because they do not last all that long. These assets will be set up with

depreciation schedules and things like that, so they can be properly amortized

in government's financial statement.

MR. RIDGLEY: Something like $1,000 would not be amortized?

MR. CURTIS: No, because of its insignificant, and its use for life is

usually fairly short.

CHAIR: Does any other government committee member have a question? No.

Okay, we will move back to the Opposition Committee members.

MR. REID: Trade and Investment on page 128, heading 2.1.01.01, Salaries,

it has gone up, obviously. Have you hired someone there?

MS DUNDERDALE: We have not hired anyone, but the anticipated vacancies in

this area are going to be lower than was reflected in the 2003-2004 budget.

MR. REID: Tell me that again, please.

MS DUNDERDALE: First of all, perhaps I should explain the revised budget

for 2003-2004. That number was higher than was budgeted due to the retention of

a temporary position and the payment of severance and annual leave entitlements

to the estate of a deceased employee. That is why the revised budget went up.

The estimates for 2004-2005 are higher because the number of anticipated

vacancies is going to be less than was reflected in the 2003-2004 budget.

MS FOOTE: That means you have positions on paper that were not filled

that are going to be filled?

MS DUNDERDALE: Yes.

MR. REID: That are going to be filled?.

MS DUNDERDALE: Are.

MS FOOTE: What position is that, Donna?

MS KELLAND: We have some industrial development officers there in both

the trade and investment that we had carried vacancies for last year as well as

anticipating a vacancy management factor. We were able to retain a valuable

employee who was due to be laid off because we were running out of funds in

another area. We kept her on by using that sort of vacancy management factor

within the overall budget.

MR. REID: Under Purchased Services, 06, same heading, it has dropped by

$446,000.

MS DUNDERDALE: That is due to the elimination of the "We're doing

it. Right here." campaign.

MR. REID: Terrible!

What other Purchased Services are in there besides that one, though?

Obviously you left some there for $609,000.

MS DUNDERDALE: There are also reduced expenditures on export

development-related advertising.

MR. REID: So, that is what the $609,000 is for, the export advertising?

Under 06, Purchased Services,. you are leaving $609,000 there. What are we

purchasing under that, Donna?

MS KELLAND: That is the investment and trade promotion advertising budget

and that runs us a little over $400,000 annually - I think it is $475,000 this

year - as well as Purchased Services in support of our trade shows and

exhibitions. That would include items when we are on the road in terms of paying

for meeting rooms, paying for exhibition space and that type of thing, for a

number of exhibitions during the year.

MS FOOTE: Professional Services here, that would be the engaging of

consultants?

MS KELLAND: That would be engaging consultants for two purposes. One

would be to do matchmaking for business companies during trade missions. The

other part there is for a Provincial Nominee Program where we would normally

hire a consultant to do background checks on applicants, things like financial

social funds and those types of things. We did not use a lot of that in the last

fiscal year because of the reduction in the number of applicants but we

anticipate now, with the new units, that we will need to have that arrangement

as well.

MR. REID: Investment Prospecting, 2.1.02, Grants and Subsidies, 10, you

budgeted $447,000 last year, you only used $96,000, and it is back to around the

same this year, $446,000. What types of grants and subsidies are these and why

did they drop so much last year?

MS DUNDERDALE: They dropped last year because Network Newfoundland and

Labrador did not require its entire operating budget last year, and the Near

Shore Development IT initiative, that we talked about earlier, was delayed

getting started and that had been budgeted for.

Donna, do you want to speak to that?

MS KELLAND: We budget, annually, $250,000 for Network Newfoundland and

Labrador. Of that, $53,000 is a salary component, as you will see, and the

balance would be for their operating costs. In the previous fiscal year, they

had drawn down more money than they required and we had a balance overrun, so we

did not have to pay them as much in the last fiscal year. Is that clear? Then,

with Near Shore, as the minister said, we have another $250,000.

MR. REID: Strategic Industries Development, 3.1.01.01, the increase in

Salaries from $588,500 budgeted in 2004 to $694,800.

MS KELLAND: This is due to the fact that there will be fewer vacancies in

this area in 2003-2004, and an additional position has been retained to assist

with research and analysis for the Strategic Partnership Initiative.

MS FOOTE: Can I ask, because you are talking about additional positions:

How many additional positions have you hired in your department? Do you have a

number?

MS KELLAND: What we have done here is - there is not a position being

created for the strategic partnership, it is a secondment from another

department. We then absorb the salary component. So it is an individual who has

been assigned to us on a temporary basis and we would then budget for their

salary.

MS FOOTE: How many new employees are there throughout the department? Do

you have a handle on that?

DR. HOUSE: There are a number of positions that are not so much new

positions as they are positions that have not been filled for a few years that

we are hoping that we will be able to fill in the department and which have been

budgeted for. At the moment, we are talking probably about ten or twelve

positions of that type.

MR. REID: How many positions did your department decrease by? You

mentioned three earlier?

DR. HOUSE: Well, there were three that were sort of contractual type

positions, and then there were the three executive level positions that you

mentioned. So, not that many really, although there are a number of other

positions that are vacant that are not being filled. That is the way we were

able to handle a lot of the pressure on our budget for this year. The reason

that you keep them on the books, you know, is that you are hoping that, as the

financial conditions of the Province improve, you will be able to fill some of

those positions. As you know, there is still an official hiring freeze, which

means that even when we do want to fill positions we still have to submit them

and get Treasury Board approval for filling those positions.

MR. REID: You say that as the financial position of the Province improves

you will be able to fill these positions, but you have budgeted for some of

these positions, haven't you?

DR. HOUSE: We have budgeted for some of the positions to be filled.

MR. REID: It sounds like six are gone. How many are coming in do you

figure this year? Did you say eleven or something?

MS DUNDERDALE: The Assistant Deputy Minister can answer that.

DR. HOUSE: We are hoping ten or eleven people might come in, but we

cannot be sure.

MR. REID: For a net of four or five.

DR. HOUSE: Something like that.

MS FOOTE: If you have budgeted for them, then it has nothing to do with

the fiscal position of the Province because, obviously, you have allocated the

money for it, the money is there.

DR. HOUSE: Yes, but I am saying there are additional ones that are still

kept vacant for that reason.

MR. REID: They are not in the budget?

DR. HOUSE: No.

MS FOOTE: I just have a question. As I looked through your Estimates, it

would appear that in terms of what was budgeted for 2003-2004, in a lot of cases

there were fewer dollars spent. Still, when I look at your Estimates for

2004-2005, you have gone back to or greater than the original budget for

2003-2004. I guess my question is: At a time when you are being asked to tighten

your belt and find some fat in the system, were you asked to cut by a percentage

to your department, by 5 per cent or 10 per cent, when going through the budget

exercise?

MS DUNDERDALE: When we first came to government we went to a 10 per cent

reduction.

MS FOOTE: Across the board?

MS DUNDERDALE: We looked across the department and we really curtailed

spending in departments until we had an idea of where we were and how we were

going to move forward.

MS FOOTE: That was prior to the Budget, was it?

MS DUNDERDALE: Yes, prior to the Budget. What you see reflected in the

revised budget of 2003-2004 reflects that curtailing of those months that we

were in government. Plus, there were a number of trade missions, a number of

initiatives that were not - given the down time out of election and transition

into government and so on, all of that is reflected in that 2003-2004 revised

figure. Now that the department is back up to full speed again and we are moving

forward we anticipate that we will need the traditional amount to do that work.

MS FOOTE: It is interesting, though, when I look at Strategic Industries

Development, heading 3.1.01, Grants and Subsidies, the budget for 2003-2004,

$435,500, revised, $220,000 for any number of reasons that you have already

explained, but then we go back and the estimate for 2004-2005 is $336,100. At a

time when so much emphasis is being put on growing the economy, do you want to

elaborate on that, like why you would not have seen fit to- when I look at some

others where I have seen the budgets go up, because of what their deputy said,

inflation, why would that not have been the case for Grants and Subsidies in

this very important heading?

MS DUNDERDALE: It is up substantially from the revised budget in

2003-2004.

MS FOOTE: Yes, but we have already indicated any number of reasons why

those numbers were down in any other area.

MS DUNDERDALE: Yes.

MS FOOTE: But for this particular area.

MS DUNDERDALE: Why it is up?

MS FOOTE: No, why it would not have been higher, in fact.

MS KELLAND: This area is generally related to the Jobs and Growth

Investment Fund which was, as you know, a special initiative fund that the

previous administration had put in place to assist with special initiatives or

projects to kick-start areas of the economy. As time went on that money was

reallocated to special initiatives within the department that government wanted

to proceed with on an ongoing basis. The Red Tape Reduction Initiative was an

example of that. The business attraction, investment attraction piece, was also

another example.

The Red Tape Reduction did not proceed in 2003-04, so there were some savings

there which you will see largely is the difference. That has been restored for

2004-05. The business attraction funding was moved to another area, which is

more consistent with the requirement. There was some amount of unallocated money

under that fund which was offered up as part of program reduction.

MR. REID: Business Development, page 130, heading 3.2.01, Salaries: Like

Judy said, for most of your budget you are trying to stay in line with what was

budgeted from last year and not the revised. In this case your budget for last

year was $499,000 for salaries and it down to $392,000 this year.

MS DUNDERDALE: That is due to the fact that a position in this division

will be funded through federal-provincial agreement for 2004-2005, and there is

also an anticipated vacancy.

MR. REID: Under Grants and Subsidies, what were those grants and

subsidies for, because you look like you have lost $400,000 even out of the

revised?

MS DUNDERDALE: That is due to the elimination of the Community Economic

Development Program.

MR. REID: What did we fund under that?

MS DUNDERDALE: Pardon?

MR. REID: What did you fund under that?

MS DUNDERDALE: The Community Economic Development fund was not a fund

that was advertised, generally, and my understanding is, because the fund was

pretty much depleted when I got there, it was used to fund community-based

initiatives around economic development.

MR. REID: I wish I had known about it.

MS DUNDERDALE: Your colleagues did.

MR. REID: I do not think I got any money out of it, Phil, did I?

MS DUNDERDALE: Yes, your district had a few things out of it.

MR. REID: Did we?

MS DUNDERDALE: Yes.

MR. REID: Under the Comprehensive Economic Development heading 3.2.02,

Salaries have gone up from $627,000 revised to $789,000, but it was budgeted

last year for $332,000.

MS DUNDERDALE: In the revised, 2003-2004, the increase reflects the

allocation of approved funding for CEDA and the post-CEDA fund in order to cover

project related salary costs during the year. That is why it increased in

2003-2004. Based on the experience in 2003-2004, we get the revised figure and

the fact that some of the salaries that previously flowed through the

Canada/Newfoundland and Labrador Labour Market Development Agreement, the LMDA,

will be charged to this activity in 2004-2005, and salary expenditures will

increase in 2004-2005 in comparison with the previous year.

MR. REID: The Professional Services have dropped from $500,000 under that

same heading. What types of professional services did we have under that and why

are we not required to have so many this year?

MS DUNDERDALE: They increased under the revised budget due to the fact

that a greater portion of the post-CEDA block allocation was spent on

professional services. More was spent than was anticipated. When the 2003-2004

budget figures were prepared -

MR. REID: Yes, but what type of professional services are we talking

about?

MR. MCCARTHY: Some of the Professional Services would be some projects

that were done under the Comprehensive Economic Development Agreement.

MR. REID: Would that be engineering fees and things like that?

MR. MCCARTHY: Yes, engineering consultants, economic consultants and

things like that, based on projects.

MR. REID: All right. Under Grants and Subsidies, we have gone down from

$9 million to $7 million to $3 million.

MR. McCARTHY: That is a reflection that the Comprehensive Economic

Development Agreement is winding down.

MR. REID: You are budgeting $3 million, though.

MR. McCARTHY: Yes, there are some projects that will carry into this year

just for final payout.

MR. REID: That is not new money then?

MR. McCARTHY: No, it is not new money.

MR. REID: It is all committed.

MR. McCARTHY: Yes.

MR. REID: Too bad. I thought I might have a go at that.

Under the Canada/Newfoundland Agreement, I guess the reason there is no money

in that is that we have none. There is none there, is there? On page 131,

Business Development (Cont'd).

MR. HOUSE: Subhead 3.2.03?

MR. REID: Yes.

DR. HOUSE: That is over.

MR. REID: That is the money that we had in that post-TAGS agreement?

DR. HOUSE: Yes. That is gone.

MR. REID: Under Comprehensive Economic Development, Professional

Services, this is another one of these this gentleman might want to answer for

me again. It looks like there is a program or a division or something here with

no employees and yet we have Professional Services and Purchased Services and

all of that. What is going on there?

DR. HOUSE: (Inaudible) better off to answer that one.

That is a project under the Comprehensive Economic Development Agreement.

That is actually the wharf in Charlottetown. There are professional fees that

have to be incurred and then the work will be done. That is actually under the

CEDA agreement.

MR. REID: Basically, it is all done outside?

DR. HOUSE: Yes.

MR. REID: Charlottetown, is it?

DR. HOUSE: Yes.

MR. REID: On page 132, Business Incentives, there is a Salaries decrease

there from what was budgeted to what was revised down to $546,000.

MS DUNDERDALE: There were a number of vacant positions in that division

2004-2005. The budget reflects that.

MR. REID: Under Grants and Subsidies, you dropped by $5 million there.

What types of things did we do to Grants and Subsidies in there?

MS DUNDERDALE: We are talking about wage rebates for call centers. The

requirements for call centre wage rebates will be down in 2004-2005 because of

Help Desk Now in Grand Falls and HMC in Gander, because they have reached the

end of their wage rebate contracts.

MR. REID: We were subsidizing those two call centres to the tune of $4

million to $5 million?

MS DUNDERDALE: Yes.

MR. REID: Any word on whether or not they may get new contracts in Grand

Falls or Gander?

MS DUNDERDALE: We are working very closely with the town and with the

EXCITE Centre. We have to be careful, we certainly do not want to do anything to

undermine the company that is presently there, Mr. Fred Riek, we certainly do

not want to do anything to undermine his efforts, but we have offered the full

support and services of our department as well as Network Newfoundland and

Labrador to move in and support and help them find new customers.

MR. REID: Do you foresee this happening in other areas of the Province?

Is there any indication that these companies are not getting the contracts that

they previously had, or is this just an incident in Grand Falls that is sort of

separate from all of the rest of the call centres?

MS DUNDERDALE: I think Grand Falls is set. All of the other call centres

are doing very well right throughout the Province. Grand Falls seems to be the

anomaly. It was set up in a different kind of way, from the beginning.

MR. REID: They do not compete with each for the same contracts, do they?

MS DUNDERDALE: Not that I-

MS KELLAND: No, generally not. We are careful too, when we do look

attracting individual call centres, that they are not direct competitors. That

is why we encourage them to go to different communities, as well.

We are almost to the end here. Let's go down to the next one. You have gone

back to your loans, under the Strategic Industries Development Fund, you have

gone back to what was originally budgeted last year, and down $1 million from

what was actually spent.

MS DUNDERDALE: Yes. These funds were reallocated from savings elsewhere

in the department to cover strategic business investments like Hurley Slate,

Bloomfield Lumber and Griffith's Guitar.

MR. REID: Hurley Slate, is that out in the Clarenville area? Is that up

and running now?

WITNESS: They are in the process of getting back up and running, yes.

MR. REID: Under Salaries in 4.1.01, it looks like you lost a position

there. Is that correct? Or you had some positions there last year that you did

not -

MS DUNDERDALE: The reduction in the 2004-2005 Estimates reflects

anticipated vacancies throughout the department in 2004-2005. The department

plans to manage vacancies in order to achieve salary savings in various areas of

the department. The same thing, the slight decrease you saw in the Revised

Budget 2003-2004 was also due to vacant positions during the year.

MR. REID: I am somewhat confused, because your Deputy said a few minutes

ago that you were anticipating hiring more people but under most of those

headings we have talked about it looks like you are actually losing people.

MS DUNDERDALE: There have been a fair number of vacancies held in the

department for a number of years. Some of those we are still maintaining, some

of those we are trying to fill.

MR. REID: Page 134, 5.1.01.05, Professional Services has gone from $7,000

to $157,000.

MS DUNDERDALE: There is an additional funding of $200,000 there that we

announced in our budget for the development of an innovation strategy in the

Province.

MR. REID: That is going to be -

MS DUNDERDALE: Done.

MR. REID: Outside?

MS DUNDERDALE: No, it is the new Assistant Deputy Minister of Advanced

Technologies who will come into our department. He will lead that development of

that innovation strategy, or she.

MR. REID: Yes, but why would you call it Professional Services?

MS DUNDERDALE: Because some of the pieces of that may need to be

contracted out.

MR. REID: Yes, because if you are coming into the department it would be

under the salary heading, wouldn't it?

DR. HOUSE: I did not get the question.

MR. REID: Your minister said under Professional Services it is talking

about an employee coming into your department.

DR. HOUSE: No. What we are saying is that the ADM for Advanced

Technologies will also act as the leader for developing this innovation strategy

but a lot of the work will be done by professionals that we would hire, and we

would do this in partnership with federal agencies as well. The Professional

Services there would be the pieces of work that is contracted out, but the

leadership would come from the ADM.

MR. REID: I am finished.

That is it for me, Mr. Chairman.

CHAIR: Ms Foote.

MS FOOTE: I would like to get back to some general questions and ask

about the xwave contract and if that is continuing to work?

MS DUNDERDALE: Yes, xwave, they are in compliance with their industrial

benefits agreement, with the exception of about thirty jobs internally.

Otherwise, they are meeting all of their requirements.

MS FOOTE: Were they not supposed to have already been compliant at this

point in time?

MS DUNDERDALE: There is still a question of compliance around the

internal job creation.

DR. HOUSE: What has happened, as you are aware, under the xwave

agreement, is that basically the downturn and the restructuring that has been

required in the IT sector since the renewed agreement was signed has made it

extremely difficult for xwave to be able to meet its employment targets under

that agreement. We are now in discussion with xwave about how to deal with that.

The most straightforward way to deal with it is simply they would have to pay a

penalty. So they can still be in compliance, in a sense, by paying the penalty.

What we are trying to do is to try to think if there are other more

constructive ways in which they would partner with the government to - it is not

settled yet, but possibly develop a little investment fund for the IT sector

that they would contribute to in a partnership role with government to sort of

compensate for the fact that they have not been able to create the number of

jobs that they were hoping to create. It is still in negotiations. We are not

quite sure exactly how that will turn out but we have to recognize that there is

a real problem there. We cannot expect them to create jobs just to have people

sitting on benches with nothing to do. The simplest thing would be to say just

pay the penalty. That would get a little bit of revenue for government but it

would not do much for developing the IT sector. So we are trying to look for

more constructive solutions to that.

MS FOOTE: I guess what the local IT sector would tell you is that, get

out of the contract. Are you still hearing that from NATI?

DR. HOUSE: Yes, we have discussed that with NATI and NATI are not really

saying we should finish off the contract with xwave right now. They are part of

this process of consultation or trying to mutually come up with some kind of an

approach to things that would be to everybody's benefit. That is what we are

working on right now.

MS FOOTE: I cannot recall, is it a year left in that contract?

DR. HOUSE: No, it is more than a year. I am not sure exactly, offhand.

MS DUNDERDALE: Three years.

MS FOOTE: Left?

MS DUNDERDALE: I think so. I am not absolutely sure. I would have to

check it but that is my recall right now, 2007.

MS FOOTE: Okay.

I am also curious about bonding composites in Gander and where that is.

MS DUNDERDALE: They are in full compliance and things are going extremely

well there.

MS FOOTE: They have some new contracts?

MS DUNDERDALE: Yes. My understanding is that things are working very well

there indeed, and they have met all their commitments to government.

MS FOOTE: Again, that is certainly a growth industry for us. It is good

that one is working out.

Do you know something that the minister does not know?

WITNESS: No, nothing.

MS FOOTE: I guess I cannot let this opportunity go without addressing Dr.

House, if I am allowed to do that, Mr. Chair, because it reflects on what I

think is wrong with the approach that I think the government is taking and my

fear for rural Newfoundland. I just want to get it on the record and I guess get

a response to it. That is your comments with respect to the dependency of

Newfoundlanders and Labradorians on EI and job creation monies and sick leave,

and the fact that we feel we have an entitlement to those particular benefits. I

would be very concerned if anyone thought that Newfoundlanders and Labradorians

want to be on EI or want job creation monies or think that sick leave is

anything other than what they use when they are sick. I am really concerned for

rural Newfoundland and Labrador under that kind of cloud, if that is the

leadership that is going to come out of the Department of Innovation, Trade and

Rural Development. By leadership, I think we all know that deputies play an

important role with the minister of a department.

I would just like your response. I do not know if it is true, but I heard

that you have been told not to say that anymore but, at the end of the day, I

would be very concerned if that was being repeated.

DR. HOUSE: I will address your last comment first. No, I have not been

told not to say anything. I think I have been very well treated so far by the

minister and the government in terms of what I can and cannot say.

I guess my answer to what you are saying is that I believe all

Newfoundlanders, in all regions of the Province, in rural parts of the Province

as well as other parts of the Province, are wanting to create viable private

sector businesses, enterprises and meaningful jobs for people in all parts of

the Province. So the emphasis, in terms of our approach to rural development,

has got to be - as the minister mentioned earlier - to help people get mobilized

within the regions to identify the ways in which that can be achieved and to

work out with government what way government can best contribute to that

process. So the emphasis is on active programs to provide long-term, meaningful,

private sector or co-operative sector, or even, in some cases, public sector

employment for people. That is where the focus has to be. That is the message

that I will be supporting the minister in as we travel around the Province and

do these consultations and try to develop these approaches to development.

MS FOOTE: Yes, and that is good. I mean that is the same message that

every minister who has ever been in the department would carry, I think. I

believe that we have a lot to offer and, I think, particularly in rural

Newfoundland and Labrador. I do not think your message is any different than

what we have all been preaching who has ever had the opportunity to lead that

particular department, or its predecessor. I guess I would just be concerned if

there was some kind of feeling or belief that Newfoundlanders and Labradorians

think otherwise. You know, think that they do not need to work or they work long

enough to get EI or they only want job creation money. I guess it was those

comments that really threw me for a loop because my understanding of where you

have always come from is certainly to grow the economy if given the opportunity

to do so.

DR. HOUSE: For sure. The whole emphasis, as far as I am concerned, is how

do we provide the opportunities for people who are dependent on those kinds of

ways, through no fault of their own, to move into more meaningful long-term

employment?

MS FOOTE: I think that is the key: through no fault of their own. As long

as we recognize that and keep it in mind when we are out there looking at what

is happening in rural Newfoundland and Labrador, that we all want it to survive

because it is, in fact, the soul of our Province.

Thank you.

CHAIR: Thank you, Ms Foote.

Before we call for the vote on the subheads, are there any further questions

from any member of the Committee? Mr. Joyce.

MR. JOYCE: I will just be a few minutes. I am going to (inaudible) but we

have a briefing from the Executive Council on funding that is in for the Bay of

Islands for each individual district through the freedom of information. I think

under the Community Economic Development fund there was funding put in last year

for a wharf in upper marina in Summerside. I am sure Phil is familiar with it.

It was told that the funding is still there in place waiting for ACOA to come

onside. Phil, is that funding still there and how much? I think it said $30,000

when I got the information from -

MR. McCARTHY: Summerside marina?

MR. JOYCE: Yes.

MR. McCARTHY: Twenty thousand dollars.

MR. JOYCE: And it is still there waiting for the -

MR. McCARTHY: Yes, that was part of what was carried over.

MR. JOYCE: I will not go through each question but I will ask the

minister if she will take it upon herself, in the next week or so - because I do

not want to waste everybody's time here.

You mentioned that there are ten to twelve new people being hired. Would the

minister take it upon himself to just forward me a copy of what the positions

are and who has been hired? That is one.

DR. HOUSE: Just to clarify, let me say there are no positions that have

been hired so far. These are positions that we have budgeted for and we will be

proposing, through the Treasury Board process, that these positions be filled.

We are hoping that they get filled, obviously, but we do not know whether they

will or not. We can certainly provide you with a list of what they are.

MR. JOYCE: The second thing is, if you can provide me with a list, if

there are any new positions being hired in Corner Brook or if there are any

layoffs in the office in Corner Brook.

The third thing that I would ask - then again, it is no good to go through it

here because it will take too much time. In each subhead there is Professional

Services. If you could give me a breakdown of who has been hired so far and what

funds are for each different subhead ,instead of having to go through it. If you

could give me a breakdown, if there are any Professional Services already hired

or which ones have already been awarded.

The last thing I will ask for is: Subhead 3.2.04, on page 131, the

Professional Services and the Purchased Services. Professional Services is

$100,000, which I am sure are engineering fees or whatever. It is subhead

3.2.04, page 131. I will just ask for a breakdown of what those services are.

MR. McCARTHY: That is all related to the wharf in Charlottetown that is

done under the Canada/Newfoundland and Labrador Comprehensive Economic

Development Agreement.

MR. JOYCE: Yes. If you could just give me a little one paragraph thing on

that.

MR. McCARTHY: No problem at all.

CHAIR: Thank you.

Mr. Reid.

MR. REID: A final couple of questions to Dr. House. In response to a

question that my colleague asked him, he talked about getting people mobile

within a region.

DR. HOUSE: Sorry, I did not say mobile, I said mobilized. It is different

thing.

MR. REID: Okay, mobilized. In these regions that you are talking about,

do you look at it as having centres in these regions that people could become

mobile towards?

DR. HOUSE: No, what we are saying is we want to meet and work with people

in the regions themselves to determine what approach they think is best for

their region as they look to the future in terms of their development. Whether

or not they feel that there should be anymore concentration of services in

certain communities or others or whatever is something that will be determined

in the process. We are not going in with an agenda in terms of whether we should

be centralizing people in certain communities or whatever, no.

MR. REID: It has been my experience that when you are talking regions -

and this has been going on for quite some time. It goes back to what I have been

talking about, moving services from my district into the larger urban areas in

my region, Central Newfoundland. To go back again to what I said, with the

consolidation of the school boards and the health boards in Central

Newfoundland, I see services in that whole Central region going towards either

Gander or Grand Falls and away from the more rural areas of that region. As a

result, you are going to see people move from the more rural areas into those

larger urban areas. Do you see that happening and is that a good thing or a bad

thing in your estimation?

DR. HOUSE: My own personal estimation is that it is not a good thing to

have people moving out of rural parts of the Province. Some of the issues that

you are talking about here are beyond the mandate of our department and

certainly of me, as a Deputy Minister. Our approach is going to be - and you

will see in terms of our own department, we have not concentrated the services

that we are offering in any urban areas, in larger towns, or whatever. It is our

philosophy, if you will, that we want to develop all parts of our Province. Now

it is true, and you will find this internationally, that the jurisdictions in

the world that have the healthiest world development, at the moment, are areas

in which there are also healthy urban or larger town kind of development within

the same region. This is why it makes sense to look at it from the point of view

of regional approach to development as opposed to just urban or just rural or

whatever. We need to look at, you know, the Great Northern Peninsula as a whole

and work with the people on that Peninsula to determine, with them, how they see

the future development in that region of the Province occurring.

CHAIR: No further questioning from the Committee members? Okay. I will

ask the Clerk now for the subheads.

MR. RIDGLEY: Mr. Chairman, a comment on something that was mentioned

earlier in terms of the budget for 2003-2004 and the revised figures for

2003-2004. The reference was made that, in many cases, the Estimates went back

to the original budget and, in fact, of the eighteen subheads that are there,

which we will be voting on now in a minute, in seventeen of the eighteen

subheads the Estimates were less than the original budgeted figures for

2003-2004, and in twelve of the eighteen cases, the Estimates are less than the

revised budgeted figures for 2003-2004. I am not sure that it is a correction of

anything, but I would not want the impression left that the Estimates here have

gone back to the original budgeted figures and equaled or was greater than them.

In fact, in seventeen of the eighteen cases the Estimates are less than the

original budgeted figures.

CHAIR: Thank you, Mr. Ridgley, for that observation.

No further questioning?

I ask the Clerk to call the subheads.

CLERK: Subheads 1.1.01 to 5.1.02 inclusive.

CHAIR: Shall subheads 1.1.01 to 5.1.02 carry?

AN HON. MEMBER: Carried.

CHAIR: Carried.

On motion, subheads 1.1.01 through 5.1.02 carried.

CHAIR: Shall total heads carry?

AN HON. MEMBER: Carried.

CHAIR: Carried.

On motion, total heads carried.

CHAIR: Shall the Estimates for the Department of Innovation, Trade and

Rural Development carry with no amendments?

AN HON. MEMBER: Carried.

On motion, Department of Innovation, Trade and Rural Development, total

heads, carried.

CHAIR: At this point in time, I would like to thank the minister and her

officials for coming here this morning. They are very well prepared, I must say,

and did a commendable job.

MS DUNDERDALE: Thank you.

CHAIR: I would also like to thank the members of the Committee for their

- what I saw last night and continued again this morning - no shortage of

questions.

MR. REID: Very informative, though.

CHAIR: It was really good, I must say. I will comment further after

another four meetings.

I would also like to thank the staff of the House of Assembly for being here

this morning. One reminder, that this evening at 7:00 p.m. we are meeting again

to discuss, debate, the Estimates for the Department of Environment and

Conservation.

I ask for a motion to adjourn.

AN HON. MEMBER: So moved.

WITNESS: Try to get us out of here before 12:00.

CHAIR: Okay, that is a promise.

On motion, the Committee meeting now stands adjourned.