April 26,

RESOURCE COMMITTEE

Pursuant to Standing Order 68, Paul Davis, MHA for Topsail, replaces Ray

Hunter, MHA for Grand Falls-Windsor-Green Bay South.

The Committee met at 9:15.a.m. in the House of Assembly.

CHAIR (Harding): Good morning, everyone.

We have connected, it seems like. I would like to take the opportunity to

welcome you all to our first Resource Committee meeting in which we will be

debating the Estimates for the Department of Innovation, Trade and Rural

Development, the Newfoundland and Labrador Research & Development Corporation,

and the Rural Secretariat.

We will begin by the Committee members introducing themselves. After that,

the observers may introduce themselves.

So we will begin.

MR. VERGE: Thank you, Mr. Chair.

Wade Verge, Member for Lewisporte district.

MR. DALLEY: Derrick Dalley, Member for The Isles of Notre Dame.

MR. BAKER: Jim Baker, MHA for Labrador West.

MR. DAVIS: Paul Davis, Member for Topsail district.

MS MICHAEL: Lorraine Michael, Member for Signal Hill-Quidi Vidi.

MR. DEAN: Marshall Dean, Member for The Straits & White Bay North.

CHAIR: If we could have the names of the observers now.

MR. MORGAN: My name is Ivan Morgan, Researcher with the NDP caucus.

MR. LONO: Simon Lono, Researcher with the Office of the Official

Opposition.

MR. WOODMAN: Ron Woodman, Legislative Assistant with the NDP office.

MR. POLLARD: Kevin Pollard, MHA for Baie Verte-Springdale, observer.

CHAIR: Thank you very much.

We will begin the debate after the Clerk calls the first subhead. At that

time, I will recognize the minister who may take up to fifteen minutes to

introduce the officials in his department and agencies and then sort of give an

overview of his department's Estimates for this year.

Following that, the first speaker will have fifteen minutes, or up to fifteen

minutes, and then we will alternate back and forth as the need arises. Everyone

should have ample time to ask whatever questions they want.

I will ask the Clerk now to call the first subhead.

CLERK: 1.1.01.

CHAIR: 1.1.01. Shall that carry?

Minister.

MR. SKINNER: Thank you very much, Mr. Chair.

My name is Shawn Skinner, Minister of Innovation, Trade and Rural

Development. I have a number of officials here with me this morning. I will, in

a second, ask them to introduce themselves, but it is my understanding, in

consultation with the members opposite, that we will start with the Rural

Secretariat, then do the Research & Development Corporation, and then do the

departmental Estimates.

After we introduce ourselves, I will say very brief comments about the Rural

Secretariat, then I will turn it back over to members opposite who may wish to

ask about the Estimates for the Rural Secretariat.

So I will ask staff, starting with my deputy to the left, to introduce

themselves, please.

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

Development.

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

Development.

MR. McCARTHY: Phil McCarthy, Assistant Deputy Minister, Strategic

Industries and Business Development.

MR. HUDSON: Geoff Hudson, Chief Financial Officer, Research & Development

Corporation.

MS QUINLAN: Krista Quinlan, Research & Development Corporation, Executive

for Corporate Development.

MR. CARTER: Ken Carter, Director of Partnership, Research and Analysis

with the Rural Secretariat.

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

MS VAUGHAN: Linda Vaughan, Director of Financial and General Operations

in Executive Council.

MS HOOPER: Diane Hooper, Executive Director for Ireland Business

Partnerships.

MR. BARFOOT: Scott Barfoot, Director of Communications, Innovation, Trade

and Rural Development.

MR. JONES: Scott Jones, Director of Financial Operations, Innovation,

Trade and Rural Development.

MR. MORRIS: Paul Morris, Assistant Deputy Minister (Acting), Innovation

Branch.

MS HEARN: Judith Hearn, Assistant Deputy Minister, Trade and Export

Development.

MR. SKINNER: Thank you very much.

I will just speak to the Rural Secretariat very briefly, as I indicated, and

then turn it over to members opposite for any questions they may have, and we

will do our best to try and answer them.

For this year, the Rural Secretariat has been allocated a budget of $1.77

million for fiscal year 2010-2011. The Rural Secretariat supports nine

citizen-based regional councils, and one stakeholder and/or interest-based

provincial council. There are ten regional offices, each staffed with a regional

planner. The Secretariat also employs six provincial office staff based here in

Confederation Building.

With that, Mr. Chair, I will conclude my remarks and turn it over to members

opposite.

CHAIR: Thank you, Minister, I just want to make the point that before any

of the departmental officials respond, it is important that you give your name

because it is being recorded for Hansard down in the Media Centre.

For the benefit of the members who may not know, Rural Secretariat Estimates,

you will find them on page 21 in the Budget.

So, who is going to begin?

Mr. Dean.

MR. DEAN: Yes, thank you.

The first question I would like to ask: Is the Rural Secretariat still under

the Executive Council? I am just wondering why it would not be under INTRD

instead of the Executive Council, any particular reason?

MR. SKINNER: I do not have a definitive reason why it is not under INTRD,

Mr. Dean, other than to say that it is my understanding that initially the Rural

Secretariat was created under the Executive Council office. We were delegated

responsibility and authority for it. The assistant deputy minister in the

department reports to his deputy minister would be the Clerk of the Executive

Council, and as well, reports in to me. That is the administrative structure

that has been outlined, and that is the one that we have been following.

MR. DEAN: Okay.

I know I was involved in it when it was set up, I believe. I am not sure how

many years ago that was now, probably six or seven years. Is it that long that

it started?

Can you give us an example of the role of the Rural Secretariat and how it is

working, especially at the regional level and throughout the Province?

MR. SKINNER: Sure. The example I will use, I guess, will be one

from your own district in terms of the regional pilot project that we are using,

which I am sure you are familiar with. We have constituted a pilot project on

the Northern Peninsula where we have interested community-based stakeholders

sitting on our regional council. They are providing advice and advice documents

to government based upon consultations that they have within their region.

We have engaged, initially, a number of departments to try to work in with

the regional councils to impact government policy-making. Those departments are:

Innovation, Trade and Rural Development; Municipal Affairs; Tourism, Culture and

Recreation; and Transportation - that is the fourth one, which is the one I

could not think of.

I will ask maybe Mr. Gilbert to give you a little bit more detail, but we

have had a number of meetings with the departmental officials and with the

regional pilot members on the Northern Peninsula to look at some of the policy

decisions that government is making relative to how we expend funds in that

area. We have gone up and presented to them how we think things should unfold in

terms of roadwork, for instance, we will talk about the roads that we have

prioritized within the Department of Transportation and Works. We will share

that with the pilot group and we will ask for their input as to what they feel

about the priorities that have been established by the department.

That has occurred with, I believe, all the departments to date and we have

received feedback. In some cases there have been some changes made to the list

and in some cases there have not been. It has been done really based upon a

collaborative approach. It is a way, we believe, of engaging the citizenship

into the governance of the area and the region in which they live.

That on a high level is what we have been doing. If I could take a minute

just maybe to ask Mr. Gilbert who has been involved much more directly than I

have to give you a little bit more on that. That might help explain what it is

that I have been talking about.

MR. GILBERT: Sure. Thank you.

The regional collaboration pilot on the Northern Peninsula, in our Rural

Secretariat shop, we consider that one of our special initiatives. We have a

host of other things we do too, but the best way to describe it I think - and

the minister done an excellent job - is it is a pilot, it is an experiment and

it actually is pushing the envelope on exploring possible regional collaborative

governance models.

So, it is a true partnership. Government did not have all the I's dotted and

T's crossed in terms of the model when it went into the room full of

stakeholders and it was a negotiation with regional stakeholders: How can we

best get the ideas, views, opinions, advice from the region into policy and

decision making? It is only one year old, so it is new. In that year there have

been four deputies on the ground at meetings in Plum Point or other venues in

the region. There have been six or seven or eight assistant deputy ministers,

numerous directors.

What we have done is we have managed to bring high level officials to the

table to explain how decisions are made now inside the edifice called government

and asking citizens and stakeholders, collectively, to think regionally and to

try to help the government make better decisions. We have had input submitted to

all four participating departments to date, and it is a work in progress.

MR. DEAN: Okay. Thank you.

In terms of input, I guess, at the Cabinet decision level in particular, does

the Rural Secretariat have involvement there or is it involved in, I guess not

every Cabinet decision obviously, but kind of percentage-wise, or how much

involvement is there in this feedback - how much does it affect, I guess, the

decisions of Cabinet?

MR. SKINNER: Well, ideally the Rural Secretariat will have commentary on

all papers that come before Cabinet. We try to ensure that any departments that

are bringing forward Cabinet papers that the Rural Secretariat is given an

opportunity to review those and to provide what we refer to as the rural lens to

that paper.

It is an information process in terms of providing further information to

Cabinet. So, in terms of how much impact it has on Cabinet decision making, if I

were to use those words, it really is dependent upon how Cabinet views the

information that is being presented to it, but we try, as a Rural Secretariat,

to make sure that we provide as much information as possible on the papers that

are going forward so that Cabinet has a full spectrum of information available

to it when it makes its decisions.

MR. DEAN: Okay.

I am thinking of a decision that was recently made, obviously, in our

district, minister. I think the Rural Secretariat and the idea of regional

collaboration is a great idea and the rural lens and so on. I do not see that it

had any input or involvement at all in this recent decision on the air ambulance

movement out of the district. So, I guess I will just ask the question: Was

there any collaboration; was there any participation in the study, in the

exercise kind of thing, from the Rural Secretariat level?

MR. SKINNER: To my knowledge, the Rural Secretariat was not aware of or

commented upon the decision related to the air ambulance study, but for

certainty I will refer to Mr. Gilbert and just ask if he could answer that as

well.

MR. DEAN: Thank you.

MR. GILBERT: Thank you.

Just to set the stage here, we need to separate the Rural Secretariat and

what it does, ergo the staff, the officials and the regional councils of the

Rural Secretariat which are the volunteers that sit on these councils, one of

which is in MHA Dean's area. Each does something different. The rural lens, each

department is required within its own rules to complete a rural lens and the

Rural Secretariat's job is to review the paper and answer the question: Did the

department do an adequate job of completing the rural lens? It is almost like a

bit of a traffic cop, if you will, but we do not see all papers. There are all

kinds of papers that do not come to us. It does not mean they did not do a rural

lens. There are exemptions; there are regular legislative papers that we do not

see. We did not see a paper dealing with the air ambulance decision from the

bureaucracy side, from the official side.

From the regional council side, the general premise of the regional councils

- there are nine of them and a provincial council - is to send in advice and

ideas into government. No list; anything they want to send in they can send in.

No one from the regional council area of the Northern Peninsula submitted

anything on the air ambulance issue. To my knowledge, they were not directly

asked about that issue either, but that is not to say that all councils are

asked about every decision because that would be impossible for Cabinet to deal

with every council on every issue.

The regional council input, or advice giving process, supplements all the

other data sources that Cabinet would have, and when Cabinet feels it has enough

information to make decisions it does so. In this case, I know that the regional

council was not engaged in this particular decision.

MR. DEAN: Okay. Thank you.

Does the Rural Secretariat have a role in the approving of funding in rural

development projects?

MR. SKINNER: Does it have a role in approving funding for rural

development projects?

MR.DEAN: Yes.

MR. SKINNER: No. The Rural Secretariat does not, that would be - when you

say rural development projects, I am assuming you are meaning things like the

RSDF fund that would come through the department?

MR. DEAN: Yes.

MR. SKINNER: In terms of approving, they may have commentary on a project

that might be submitted in terms of saying here would be the economic benefits

of that project et cetera, et cetera, but again, it would be information. That

would be their role, but in terms of decision making I would have to say no.

MR. DEAN: Okay, yes. So you are just providing information, basically.

MR. SKINNER: Yes.

MR. DEAN: Okay.

Does the Rural Secretariat have a monitoring role to kind of measure the

effects of government policies in rural Newfoundland?

MR. SKINNER: My answer to that would be that the measurement of the

effectiveness of policies is something that I think we are striving to get to.

We want to be able to do that kind of activity. I would suggest to you today

that we are not there. I would suggest to you that it may be ad hoc, it may be

more commentary based than it would be quantifiable or qualitative based. It is

something I think we would like to see, but no, I do not think we are there yet.

We have talked within the department and within the Rural Secretariat about

evaluation frameworks, measurements and the kinds of things we would measure to

determine effectiveness, but that is a work in progress right now, Mr. Dean. It

is not something that we have finalized by any stretch of the imagination. We

are very early in that process but it something we feel we need to get to.

MR. DEAN: Okay.

Just an observation and you can comment on it or whatever. I do not know if

the Rural Secretariat is very well known out at ground level so to speak, or

whatever. Do you have a comment on that as to whether that is where it needs to

be or is there a way to make it more, I guess, visible to the general populous

or whatever?

MR. SKINNER: Your comment is well taken. I would share that with you to a

certain extent. I would say to you that in the eighteen months or so that I have

been minister of this department I think the awareness level of the Rural

Secretariat has increased or has gotten better, but I would certainly say to you

that it entered, when it was created, a very crowded space. There were RED

Boards, there were economic development groups, and there were chambers of

commerce. There were a whole bunch of people occupying an economic development

space that the Rural Secretariat itself entered into. So, I guess it had to sort

of fight for its own little piece of turf out there. There was some concern

about was it going to maybe dislodge or take the place of, or replace some of

those entities that I mentioned. There was some concern around that.

I think, from my perspective, that we have helped people understand what we

see the role of the Rural Secretariat as being, and it is working with all of

those groups. It is trying to make people more conscious of regional

development, regional services and regional priorities, and thinking the

regional think so to speak. I think that we have gotten better at promoting it

but we need to do it a bit better and we need to restructure it a little bit in

terms of I will refer to the council some of the membership on the councils.

We have had some people who have really hung in there and we have had some

people who have dropped off. We are currently looking at replacing some people.

We would like to see more youth engaged and that kind of thing.

From my perspective, I would share your commentary that it may not be as

well-known but we are trying to do better at that. Again, if I could, I would

ask Mr. Gilbert - because we have had many conversations about this if you are

okay with it, if he could add some commentary as well.

MR. DEAN: Yes. Sure.

MR. GILBERT: Thank you.

Yes, indeed, we are trying to become well-known, better known but known for

something and not just known for being there. What we have done over the last

year - now some of you may recall, in last year's Estimates we talked about

embarking on a new suite of activities because we finally had some supplementary

resources to do some work on the ground, and we have done a lot.

Our basic approach has been let's become known for being an entity that does

good work on the ground rather than just promote ourselves, we will do that,

too. We have endless examples, too many to give you here today, but we have

examples in all regions now of the Rural Secretariat staff working on fresh new

projects. These are not economic development projects; they are collaborative

initiatives doing community-based research, engaging citizens on important

policy questions and issues, forums. We are out there, we are doing things. We

need to do more.

One of our challenges has been not so much becoming known, it has been to

become unknown for the things that people assumed we were. There was a lot of

confusion about what we were. Even today, we get blamed on Open Line for things

that have nothing to do with us because people are confusing us with INTRD. They

are confusing the councils with the staff. So we have some sorting out to do and

we have made some headway but there is more work to be done.

I am pleased to tell you that I think that the work of the staff the staff

are operating with more vigour and passion than they have ever worked with

before because they have real things on the ground to do now. It has been a

positive year.

MR. DEAN: I had an inquiry just probably a week or so ago from one of my

constituents who had expressed an interest in being involved in the Rural

Secretariat. Can you tell me how a person gets involved? Are they appointed? Do

they apply? What is the process?

MR. SKINNER: I will let Mr. Gilbert tell you that. I have a general idea

but I just want to make sure he gives you all the details.

MR. DEAN: Okay.

MR. GILBERT: The regional councils and the provincial councils, as I

understand it, are category three appointed boards. So, at the end of the day,

it is Cabinet that determines who will actually sit on these councils. There

have been numerous approaches. In the very early days there was a call for

people interested through newspaper ads and people sent in their names.

I think two or three years in, before my time, just before I arrived, they

asked council members to submit names but they were not the only names

submitted. MHAs were asked for names. Basically, there is a constant

never-ending process of collecting names of people who could sit on these

councils. Now people move away, people get tired, people drop off, people do not

attend even though they are still - so there is natural transition or attrition

on these boards. Over time - you could almost imagine it is like a community

council. Over time, eventually everybody will probably be on one of these

councils.

Currently, the process we are working on now is that names are being brought

in and whenever we have names of possible people to be considered for a council

seat we pass them through to the minister who then puts them into the system for

appointed boards. When that process plays out, as it will, new members are

appointed.

MR. DEAN: What is the term of that appointment?

MR. GILBERT: They have been two years, initially, but then because - in

the early days, all of a sudden you would have entire councils running out of

time at two years, so they extended them. Typically what happens is that there

is a two-year term and then there is an extension offered. That is, if I could

say, that is sort of the tradition that has unfolded in a short period of time.

So, some of them have been there four or five years.

MR. DEAN: Okay.

Just one last question about the budget and little if any change to it: Is

there any particular reason, just kind of where it is at?

MR. SKINNER: Your question is, because of no change?

MR. DEAN: Yes.

MR. SKINNER: Okay. Well, last year we had an extra $100,000 that was

given to the Rural Secretariat for some of the work that Mr. Gilbert referred

to, that was being done on the ground and we felt that was good work that was

done. We continued that again this year. The rest of the money, basically, is

just status quo in terms of following on with what we have done. We felt that

the Rural Secretariat had sort of found its legs a little bit last year and was

starting to do some good work, and we wanted to give it another year to continue

to do that. There was no particular request or need identified for any increase

or decrease in funding. We just wanted to make sure that the money we had for

the councils to do that bit of work on the ground was still there and we ensured

that they had that.

MR. DEAN: Yes. So, it has kind of developed to where we want it to be, I

guess, or expect it to be sort of thing?

MR. SKINNER: At this point; although I will say to you, it is still a

review process in terms of myself and Mr. Gilbert in particular, looking at some

of the work that is being done and trying to find better ways of doing it;

meeting with our regional planners to make sure that we understand their needs,

they understand where we think the Rural Secretariat should be going. So, I

would not want to give you the impression that it is just status quo in terms of

nothing happening. It is status quo in the sense that we felt we got to a place

last year that we were happy with and we wanted to make sure that we at least

started from there, and we will see where it goes this year.

MR. DEAN: Okay.

Thank you.

MR. SKINNER: Thank you.

CHAIR: Thank you, Mr. Dean.

Ms Michael.

MS MICHAEL: Thank you very much, Mr. Chair.

I guess I am going to be continuing with the same types of questions but

trying to get greater clarification.

When Mr. Gilbert talked about the work that you did start this year on the

ground, I sort of referred back to some of the practical things that he

mentioned last year in Estimates with regard to hoping to do regional forums, to

have dialogue sessions with shareholders groups, citizens throughout this

region, that kind of thing. Is that the kind of thing you are talking about and

can you give us an idea of the breadth of the meetings you were able to have?

MR. SKINNER: The short answer, Ms Michael, is yes. In terms of some of

the detail, I will just refer to Mr. Gilbert and let him give you that directly,

if you are okay with that.

MS MICHAEL: Yes, I am.

MR. GILBERT: I will try and be shorter than I was last year. I have been

getting some ribbing about that.

The first thing we did with that last year, once we received this modest

infusion, but appropriate infusion of resources, was to challenge all of our

staff in each region to come up with one community-based research project, for

example, bring partners together to explore collaboratively at least one

research question related to rural sustainability that you feel needs some

regional level data. They all did that, and some are on their second and third

projects. For every region we have at least nine or ten community-based research

projects.

They were also challenged to adopt, or push, or cede, or convene, if you

will, one collaboration brokering challenge. In other words, where are there

people, groups, entities, stakeholders, that could be working more effectively

together and are not, where could you intervene? Can you adopt that as some sort

of an informal project? They all did. We have nine of those.

We also challenged each of our staff to adopt one citizen engagement

initiative. Push the envelope, use different techniques, approaches, beyond

meetings. Use forums - some of them are using electronic voting in meetings with

these electronic voting keypads. Try and push the envelope to try and capture

the voices of citizens on particular policy issues that could inform advice.

So, you can see that there are about thirty things happening now. What is

interesting about that $100,000 is that many of the things that got initiated,

because we all of a sudden realized we had a few dollars to work with, did not

cost any money at all. Other partners bellied up to the bar with their own

resources. So we managed to leverage all kinds of activity because of the

premise that we now have some resources to work with, which has been quite

amazing. I would suspect we have well over $100,000 worth of projects.

A couple of examples; the people on the Cape Shore felt that the various

communities and stakeholders on the Cape Shore where not communicating very

well. We worked with them to design a collaborative community radio project. So

for a week on the Cape Shore all the communities came together, the RED boards

were there, the college was there, the towns were there, the mayors were there,

and we had a week's dialogue on the radio, mixed in with culture and song and

dance, whatever, discussing the future of the Cape Shore and how people should

work more effectively together. There is an example of a nano project.

From a community-based research project, there are a whole host of things

happening. Just last weekend my colleague, Ken Carter, was in Central - I

believe Gander - where they were presenting the results of the research

initiative looking at: Why have so many strategic planning exercises begat so

little? There have been seven or eight strategic planning exercises convened or

paid for by various government departments over the years, federal, provincial,

municipal, and yet they are all sitting on shelves. Why is that? They studied

that. They went in there and they looked at that and they came up with some very

interesting findings. Collaborative again, ACOA was in the room, provincial

people were in the room. So, trying to get a handle on local issues through some

research, there is an example.

From a citizen engagement point of view, I will give you one example.

Recently, we brought together all nine of our councils - representatives of,

those willing - on a live Web cast video conference polling experiment where we

polled - we basically deliberated through nine sites across the Province where

everybody was voting on various, or agreeing or disagreeing on various themes to

try and gauge the pulse of what do all of these super volunteers actually think

about the particular issue of the day? The issue we were working on was: What is

the role of the citizen in government policy? So, we talked about that.

We have lots of experiments going on. Our staff are being trained. I suspect

that our staff now are the most highly trained, perhaps anywhere in the country,

and soon will be accredited as partnership brokers. We have engaged a firm in

the UK to help us with that. We have been to Washington, D.C. and worked with

America Speaks to try and glean from them the most cutting edge citizen

engagement tools and technologies that we can find. So, with a small amount of

resources, lots of examples again, most people are wondering why we are not

bringing money to start development projects, but that is the cross we have to

bear. People confuse us with other departments. They do not fully understand the

citizen engagement role or the collaboration brokering role, but we are working

in that environment regardless.

MS MICHAEL: Thank you.

I think I can understand their confusion. I guess what I would like to know

is, practically speaking, in terms of - because of the fact that you are

responsible for promoting sustainable development, both economically and

socially, how does the information that you are gathering through the research

projects go out into the broader area? I know that there is a different role for

those under the business and economic development services, however, you do

have, the department, INTRD and you are not the department, I understand that

does have forty-eight economic development officers out there, I understand.

According to the Estimates, the salaries, there are forty-eight economic

development officers. How does the work that you are doing, and the information

that you are gathering, impact the policies that are happening inside of INTRD

and impact the direction in which the work of those economic officers goes?

MR. SKINNER: In terms of the information, that would be gathered by the

Rural Secretariat. In terms of information that may be submitted by regional

councils, those papers would come in. If they are, in fact, formal papers and

we do get formal papers - they would come into the Rural Secretariat office to

Mr. Gilbert's office, and they would be distributed to any departments that are

impacted or mentioned or referred to for review and commentary. There is a

formal process in place that Mr. Gilbert's staff would track those advice

documents, we would call them, and ensure that commentary and reply was given

back.

So, people feed into government, make comments or give advice related to, it

might be transportation issues, education issues, municipal affairs, whatever it

may be, INTRD. Those documents would be distributed out to those departments so

that they could read and comment upon them, effect any change that they may see

within themselves that would need to be effected, and also responded to so that

the people who submitted them were also given some response to understand that

their commentary had been read and responded to.

Again, I will ask Mr. Gilbert if he might want to elaborate in more detail on

that, but there is a process and there is a feedback mechanism that is in place.

I will just ask Bruce to give you a little bit more detail on that.

MR. GILBERT: Okay, thank you.

That is exactly right. When councils submit advice documents, sometimes it is

just a letter. It is not a big elaborate document. Sometimes it has taken a year

and it is a fifty-page document. So, an advice document could be many things.

When it comes into us or the minister, we immediately jump on it and track it

and make sure that an appropriate response be given in a timely manner to the

councils. That is tricky because some of the papers refer to seven or eight

departments, or five or six departments, and it is advice that is coming to

departments that they have not requested. They are like: What are we going to do

with this? So, it is a bit of a challenge but it is working so far.

All departments have responded. Sometimes they send an ADM or a DM, or a

director out to meet with the group that wrote the document to seek clarity.

What we see happening is a bit of a relationship starts building and acrimony

reduces. People start having intelligent discussions and it opens the door for

other things. We have seen that with the talk about a community schools approach

in the Clarenville area. There have been various people from education out there

talking with the local people.

Now, sometimes over the last year - I may have mentioned it last year in

Estimates, but departments are actually realizing that these councils are out

there as a resource and that they could go to them with more specific department

driven questions. When that happens, it is an easy answer: How does the advice

get into the department? The department has gone looking for advice or input on

a particular thing and they walk away with it. So we see that, almost the

flipside. One is like council driven advice coming in and the other is

departments going out looking for advice.

The challenge for us now, the third thing is: What are we going to do with

the research products when we bring a group of people together, governments,

non-profits, town councils? Well, in a way, it is not Rural Secretariat advice

at that stage. We are convening a process to create new information, and it is

owned by all the players in that room. So if the RED Boards are participating,

they have the document. If INTRD is participating, they have the document. So,

in a way, when we do those collaborate projects each player at the table is

walking away with whatever they can take away from the process and infusing

their own work, using it to some people are using it to lobby government in

other ways, other people are using it to change things inside.

There are, I guess, three distinct ways that advice is making a difference.

Again, it is very difficult to separate cause and effect to prove that any

advice document made a change. That would be a challenge in and of itself but we

are trying to understand how our work is making a difference.

MS MICHAEL: Thank you.

I understand clearly what you are saying about the collaborative research

projects and the ownership of the material. I am wondering though, Mr. Minister,

if the results of those research projects would also be open? For example, if I

wanted a copy of the results of one of the research projects, would that also be

open to me to get? I think it would be very helpful to know what is coming into

the Secretariat with regard to the research that is being done.

MR. SKINNER: Any of the advice documents that we refer to, as far as I am

concerned, are public documents. So if any of those you would want, then I would

have no difficulty in releasing those. As far as I am concerned, they are in the

public domain anyway. They came from the public.

MS MICHAEL: Right.

MR. SKINNER: They may be synthesized or formatted or put together, but

the basic premise and the basic information comes from the engagement we have

had with the community stakeholders. So I would consider that to be available

for one and all.

MS MICHAEL: Because of the fact that we obviously do not know when a

research project is happening necessarily if it is happening in a district

where a party has an MHA, well then, obviously they are probably going to know,

but where I am only one MHA and none of that is going to be going on necessarily

in my district, but as leader of the party it is important information. I will

not know what to ask to receive because I will not know something is happening.

Could it be said, as a matter of practice, that when an advice document comes in

that it automatically gets sent out, for example, to my office?

MR. SKINNER: I guess the undertaking I will take for you is that I will

go back and look at the information streams that we have. The short answer would

be yes; I will try and accommodate you on that. I would like to just check to

see if we have, as a department, any obligations is the word I will use - to

some of the partners in terms of the information that we are receiving from them

and what we are doing with that information.

Generally speaking, I will undertake to go back and work with Mr. Gilbert and

his staff to see what we are able to provide in terms of getting that to you and

when we can get it to you; whether we can give it to you right away, whether we

would have to have sign-off from the parties affected. There may be some

details, but generally speaking, I will try and accommodate that.

MS MICHAEL: Right. One of the reasons I bring it up is, in particular,

not too long ago actually, I had a member of a council say to me that she was

actually quite excited by the paper that they had come up with and wanted to

know if I had seen it. I said: well, no, we do not receive them. She said: well,

I really would like you to see this because I think there is really exciting

stuff in it and I will get a copy to you. I am happy to take the copy from her

but I think we do not need to do it that way. I think I should be able to

receive it.

MR. SKINNER: I am generally in agreement with you on that. I think they

are public documents; they are coming from a public process. As long as we have

no legal obligations or any potential liabilities there, then I would be okay

with that. We will review that issue and I will follow up with you on that.

MS MICHAEL: Okay, because it is important for all kinds of reasons to

have the information. For example, when Mr. Gilbert talked about the project

that they did up the Shore, I have to say that it brought back great memories of

what some of us did back in 1982 on Bell Island. Then it was MUN extension,

social action commission and rural development where we had four days of

community television and did exactly the same thing that resulted in a lot of

projects on Bell Island; the museum, for example, people starting B&B's, the

bakery, everything.

As I have said a number of times publicly, we do not have to reinvent the

wheel here. There are models out there. It is really good to know because

practically speaking too, I do not want to be standing in the House and

hammering the government negatively on something that I do not see them doing if

you are starting to do things that are exactly what I am asking for.

MR. SKINNER: Yes, fair enough.

MS MICHAEL: Because, to put it bluntly, in my response to the Budget last

week this is the kind of thing I am asking for. So, it is important for me to

know if something is starting to happen.

MR. SKINNER: Yes, and we will try and accommodate on that.

MS MICHAEL: That will be really helpful.

I think maybe all of my questions then have been covered from Mr. Dean and

myself.

Yes, thank you very much on the Rural Secretariat.

CHAIR: Okay, any further questions from the committee with respect to the

Rural Secretariat?

Okay. I guess we will move now to the Resource and Development Corporation or

MR. SKINNER: I understood that the members opposite might want to take a

break.

MS MICHAEL: If I can just give a report, they are just starting to gather

for the demonstration. I do not know if Mr. Marshall wants to stay. We have not

received word to go out yet in other words.

CHAIR: Okay.

MR. SKINNER: Okay.

MR. DEAN: Sit here for a minute. There he is.

CHAIR: Okay.

We will vote on these Estimates now for the Rural Secretariat.

Shall 2.6.01 carry?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, subhead 2.6.01 carried.

CHAIR: Shall the total carry for the Rural Secretariat?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Rural Secretariat, total heads, carried.

CHAIR: Shall I report the Estimates for the Rural Secretariat carried

without amendment?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Estimates for the Rural Secretariat carried without amendment.

CHAIR: We have moved now to the Research & Development Corporation.

Minister Skinner, do you have a few comments to make on that at the beginning?

MR. SKINNER: Well, again, Mr. Chair, I do have staff here with me and I

will basically defer to the members opposite. I have a statement that I could

read into the record, but I am not going to take our time with that, in the

interests of members opposite having maybe to take a little recess, I will leave

as much time as possible for them to ask questions. So I will just immediately

turn to members opposite.

CHAIR: Thank you, sir.

I just want to, for the record, Mr. Kelvin Parsons has arrived at the meeting

now.

So who would like to begin the questioning on the Research & Development

Corporation?

MR. DEAN: (Inaudible) for a little while, and that is not really what I

had prepared to speak to, so is it possible for us to go to a different piece?

MR. SKINNER: Sure. That would be fine with us, yes.

MR. DEAN: Thank you.

MR. SKINNER: Whatever you want to start with, Kelvin, we will go with

that.

CHAIR: Mr. Parsons.

MR. KELVIN PARSONS: Thank you.

I had agreed to sit in for Mr. Dean because there is a protest or whatever

taking place with his constituents on the front steps. So, rather than delay

things, I thought I would sit in for him until he got back, but it was not the

R&D piece that I was prepared to ask questions about, it was another

section if

that is okay.

MR. SKINNER: No, that is fine.

MR. KELVIN PARSONS: The first area I was going to look at was the

Immigrant Investor Fund.

MR. SKINNER: Yes.

CHAIR: We are dealing with the Research & Development Corporation.

M. SKINNER: No. I think Mr. Parsons, if I could, has indicated that he

wants to go to the Department of Innovation, Trade and Rural Development. You

are not now questioning the Research & Development Corporation?

MR. KELVIN PARSONS: No.

MR. SKINNER: Mr. Chair, he indicated that he would rather move to the

department first and ask some questions about the department, and now he is

going to direct a question regarding the Immigrant Investor Fund within the

department. We are prepared to entertain that.

CHAIR: Okay. Do you want to go right through the department then because

I think -

MR. KELVIN PARSONS: Yes, I just have a couple of areas actually that I

was going to cover off while Mr. Dean was outside, then he was going to come

back and resume wherever it was you people had left off.

CHAIR: Okay. Well if we want to do that, that is

MR. SKINNER: I am okay with that, so if Mr. Parsons wants to start there,

that is fine.

MR. KELVIN PARSONS: Whatever topics I discuss he, of course, will not be,

I understand, regurgitating that. He will hopefully be satisfied with it.

CHAIR: Okay.

MR. KELVIN PARSONS: My questions, Mr. Chairman, are related to

MS MICHAEL: (Inaudible)

section in the budget so that I can not just

the question, but the

section in the budget, please.

MR. SKINNER: No, I do not think you will find it reflected in the budget,

Ms Michael -

MS MICHAEL: Okay, good enough.

MR. SKINNER: - in terms of an actual line item.

MR. KELVIN PARSONS: The Immigrant Investor Fund, as I understand it, is a

fund that is overseen by your department

MR. SKINNER: Correct.

MR. KELVIN PARSONS: - but not necessarily a line item in your budget. I

ask it in the context of the Auditor General's findings where he talked about

the Newfoundland and Labrador Immigrant Investor Fund Limited, which was

incorporated in April 2005. He addressed the fact that we have been getting

these contributions from the federal government for some years and up to the

time when he had filed his latest report that there were, in fact, no

investments.

It was an investment fund from which no investments had ever been made and he

raised some questions about if the existence and the purpose of the existence of

this fund was to have money from the feds and so on, and contributors, that we

could use for economic development purposes or whatever, how come it had not

been used.

I am just wondering if the minister could direct some comments in that regard

- more of a generic nature as opposed to throwing around dollars and cents. I am

just more concerned about his comments as to why this fund has not been utilized

since its inception.

MR. SKINNER: There are monies received, basically, on a monthly basis

from the federal government passed on to the provinces for use through the

Immigrant Investor Fund, and that fund has a number of parameters around which

the projects that one may wish to do can be entertained.

We have brought forward a number of projects. Some of them did not fit the

parameters and therefore were not eligible for it. Some of them that we brought

forward, it was deemed by government that we had enough of our own funds,

basically. We were in a position that it was less expensive for us to use our

own funds to do that rather than using the funds of Immigrant Investor Fund

which have to be paid back. Government has to pay those back over a period of

time.

That fund, basically, there is a 7 per cent administration fee being used on

it, so we have done an analysis in some cases of the Province either using money

it has on hand or accessing money from banks and it has been deemed to be less

expensive or more budgetary-wise, I guess, if I could use that term, to use the

money we have on hand as opposed to dipping into the Immigrant Investor Fund.

MR. KELVIN PARSONS: If this fund has existed since April 2005, surely, if

there is a problem with eligibility requirements or criteria, or it is more, as

you say, prudent to use bank funds as opposed to fund funds, why has something

not been done about it? Why do we need five years to figure that out and get it

changed?

MR. SKINNER: There have been discussions with the federal government. It

is my understanding - and I may have to go to officials for some detail on this

- that there are some changes either being proposed or may have already been

enacted on the amounts on the fund. There have been discussions with the federal

government on that.

I will look to Mr. McCarthy, if I could, to maybe just give us a little bit

of detail on that, but there have been discussions around potential changes to

the requirements of the fund.

MR. McCARTHY: One of the key points with respect to the fund is it has to

be repaid to the federal government in five years. Really, this is only borrowed

money. It has to be repaid to the federal government five years after you

receive it. We have to start repaying money to the federal government in May of

this year. So, anything you do or any projects you use it for, you have to bear

that in mind.

There have been some discussions with the federal government. Newfoundland is

not the only Province that has not utilized their money. Part of the problem is

the repayment terms. There have been some discussions in the last couple of

months with the federal government about ways and means of trying to help the

provinces utilize the funds better.

MR. KELVIN PARSONS: I understand that there was $176 million provided so

far.

MR. McCARTHY: That is the ball park, yes.

MR. KELVIN PARSONS: Yes.

Can you give us a bit more detail? We are five years in. We decide that the

program is not working for us for whatever reasons. Maybe you could tell us why

it did not work? Why are we sitting on $176 million? We did not use it for any

purpose whatsoever. We are going to pay more interest, for example, 7 per cent,

versus what you were getting in a bank for your own interest. I believe the

Auditor General said we would end up with a $5 million shortfall if you had to

pay it back last November.

I am just wondering, you talk about prudency, if something is not working

were there any discussions with the feds to say: Look, albeit our good

intentions, yours and ours, we are into a situation where we cannot use for

whatever reasons, and I would like you to tell me the reasons why you have not

been able to use it. Not only that, we are going to pay through the nose because

we just have it sitting in a bank account.

MR. SKINNER: Number one; there are sufficient funds available in the fund

to be able to meet the repayment terms. The Auditor General's comments were

about a point in time, but in terms of the overall fund, it is my understanding

that we have sufficient funds available to repay the monies that we have

received. The fund has been earning interest for the last number of years five

years that we have had it -and there has been sufficient interest generated in

that fund so that we will be able to meet the repayment terms. There was no

deficit in the fund.

There have been projects that we looked at doing with the Immigrant Investor

Fund, but as I said earlier it was deemed to be more feasible or more prudent,

for a variety of reasons, for us to use our own facilities, our own monies that

we had on hand, to be able to do that.

In terms of the discussions with the federal government, as I have indicated

there have been discussions back and forth and there potentially will be changes

made and more flexible terms offered to the provinces to be able to use those

funds. Again, in terms of any specifics about it, I would refer to officials to

provide more detail to you on that.

MR. KELVIN PARSONS: Have there been any discussions with the feds to say

7 per cent might have been a reasonable figure back when you started the fund

in 2005, but bank interest rates have been down 2 per cent or 2.5 per cent for

some time. Albeit you might have enough money in the fund to repay the money

that you have; that is true because you have not spent anything of what you

have. If you have 179, you still have it in your bank account because you have

not used it. That does not take away from the fact that the Auditor General, I

believe, made a correct statement in saying: Notwithstanding the principle

itself, which you got all of, you are going to end up in a net loss position if

you do not do something on the interest rate piece because you simply have to

pay back 7 per cent and you have not been making that on your investment.

My question is: Has there been any discussions between your department and

the feds to say, look, the circumstances we thought existed did not exist, can

we change that? So, at least the Province does not end up out of money,

out-of-pocket. Everybody was well-intentioned here. Yes, we will give you back

your money or else change the criteria so we can continue to go ahead and use

it. How do you see it happening? Are we just going to give them back the money

and say: Thank you, we have all fooled around now for five years and we have not

been able to use it? There is 176 million bucks kicking around that hopefully we

can use somewhere in our economy. What is the plan?

MR. SKINNER: The fact that the money is there does not necessarily mean

that we have to use it. I do not see anything particularly wrong if we are not

using it, as long as we have other available sources of funds to do the projects

that we wish to do. To date, that has been the case. We have been able to

provide sufficient funding for the projects we wanted to do from other sources.

So that money is still there and at some point if we need it, it is there to be

used. From my perspective, there is nothing wrong with not using it if we have

other more prudent ways of providing the funding we need for the projects that

we wish to do.

There have been discussions with the federal government. There are changes,

either very shortly coming, if not already enacted - and I will look to

officials to tell me about the timing of that. There have been discussions

between the feds and the provinces and there are some changes. I would ask that

the officials maybe give you some detail on that.

MR. McCARTHY: Phil McCarthy.

I am not sure about the timing because we are waiting for the federal

government, but there have been discussions with the federal government about

the 7 per cent. The 7 per cent is an administration fee charged by the federal

government. There have been discussions between the provinces and the federal

government about that level.

MR. KELVIN PARSONS: About that level, you mean to reduce it, eliminate

it?

MR. McCARTHY: To try to reduce it, yes.

MR. KELVIN PARSONS: On the discussions regarding the criteria, could you

give me some idea what was the problem with the criteria or the eligibility

criteria such that you could not use the funding?

MR. McCARTHY: The biggest problem with the eligibility criteria is the

five-year payback.

MR. KELVIN PARSONS: How so? Explain it to me. I am not an accountant.

MR. McCARTHY: The money you get has to be repaid to the federal

government within five years. So if you use that for a long-term project that

goes past five years, the Province has to budget that out of its own money down

the road. When the Province entered this - the same as all other provinces - the

Minister of Finance had to sign a guarantee guaranteeing the federal government

that the money would be repaid within five years. So, what we get this month we

have to repay five years now down the road.

MR. KELVIN PARSONS: I believe we actually changed or amended the Loan

Guarantee Act here in the House to accommodate that back in May of last year,

did we? That was tied in with the Investor Immigrant Fund.

MR. McCARTHY: It could be. That would be the Minister of Finance.

MR. SKINNER: I am not sure, Mr. Parsons. Off the top of my head, I am not

sure.

MR. KELVIN PARSONS: It just seems that there is an issue here. We have

been taking money for five years from somebody, we have known for all that time

that it is five-year money, therefore no good for long-term projects. We know

that by keeping it in our banks we are losing, ultimately, because it costs us 7

per cent to have it, not using it and only getting 2 per cent or 3 per cent back

in interest from chartered banks. Why have we been in that position? Why would

you take it? Why did you not just say: Look, guys, this is a no-brainer? We are

losing money with this program. Why do we not just say: Whoa, until we change

the rules, we do not want your money?

MR. SKINNER: As a point of clarification and I will ask the officials;

I do not know if they have the exact dollar amounts there we are not losing

money. There are sufficient funds available in the Immigrant Investor Fund to

pay back the monies that have been received by the Province. I do not know,

Phil, if you have those numbers there in front of you?

MR. McCARTHY: I do not have the exact numbers, but for a period of time,

if you look at 7 per cent, it is about 1.46 per cent a year. For the first

several years we were in the program, we were actually, in interest, making more

than that, so we were banking some money. The Auditor General said that if you

discontinue, stop the program today, and had to pay it all back today, you would

be short. The money we got last month, we do not have to pay it back for another

four years, eleven months. So, we can earn interest on that before we have to

pay it back.

MR. KELVIN PARSONS: So how long will the program continue? The fact that

you have to use the money or pay it back in five years so the money you got in

December 2009, you have to have paid back by December 2014?

MR. McCARTHY: Correct.

MR. SKINNER: If I could, just as a point of clarification, as I

understood the question asked, it was money we received in December 2009 has to

be paid back by December 2014. The answer to that is we would start making

payments back in December.

MR. McCARTHY: No. We get money each month; we have to pay that back in

the month five years hence.

MR. SKINNER: Payments five years hence. Not that it is paid back in five

years.

MR. KELVIN PARSONS: Okay. So when December 2014 comes, you received, on

December 1, 2009, a million dollars. Five years out, on December 1, 2014, do you

have to give them back the million dollars plus the 7 per cent, or do you have

to start back the repayments of that $1 million at 7 per cent?

MR. McCARTHY: What we get is, instead of a million dollars, we get 93 per

cent. The feds keep their 7 per cent. So in five years out, we have to pay it

back that month. It is not starting to pay it back, we have to pay it back that

month.

MR. KELVIN PARSONS: That month? That you have to pay them back the full

whack that you got five years previous, less the 7 per cent administration fee?

MR. McCARTHY: Correct.

MR. KELVIN PARSONS: So it is not a payment thing. You have to have that

money in your pocket in five years time and give them all back?

MR. McCARTHY: Yes.

MR. KELVIN PARSONS: How is it then because when you are talking

economic development, my understanding is the program works such that the

immigrants put this money into the fund. There is a cost to the immigrant here,

as I understand it. If someone, for example, in China wants to come to Canada,

an attraction to bring them here would have been: Look, we will give you your

visa or your landed immigrant status or whatever, you invest in this program, we

are going to use your money to go to some less economically viable place in the

country, try to encourage you to go there to invest in those areas, and

hopefully it is a win-win for everybody. We have a new business because you came

here with more people employed and we used your money to do it.

Is that how the program is supposed to work?

MR. McCARTHY: Yes.

MR. KELVIN PARSONS: So, aside from the money piece now and the

administrative costs, how many immigrants have any immigrants come to this

Province and started a business? According to the Auditor General, there was no

money used.

I am assuming if there was no money used - is there a tie on what I am saying

between the immigrant who comes in and the person who uses the money?

MR. McCARTHY: No.

MR. SKINNER: The money is received by the federal government from

immigrants who are coming from other countries in the world and that goes into

the federal coffers. Then the federal government distributes that to the

provinces based upon a per capita and some formula that they use. The immigrant

is accepted into the country by the federal government and that immigrant can go

anywhere in the country he or she wishes. They do not necessarily come to

Newfoundland and Labrador where some of their money or all of their money may

have come. There is no connection to the immigrant coming to the province in

which the money is sent or deposited by the federal government.

MR. KELVIN PARSONS: That was my understanding as well, but I was not

certain about it.

What are the linkages here between this fund and you had certain monies as

Industry, Trade versus the Department of Business. I think there was reference

in the AG report as well, and you alluded to it this morning, that we would not

need to use our money if a person who wants to start a business can get money

from the government through another department.

So what linkages - how do you keep each other informed, for example? If I am

starting a business in this Province and I said: Okay, what pots of money does

the government have? How do I get into the pots? I go off, I check it out, and I

say: You have so much money there, and the Minister of Business has so much

money over in his pot. Are there any lines between your two departments to make

sure that everybody knows who is knocking on what doors?

MR. SKINNER: Yes.

MR. KELVIN PARSONS: Explain that process to me, how it works now?

MR. SKINNER: Yes, the short answer to that, Mr. Parsons is yes, and it

would not be just between the Department of INTRD and the Department of

Business. That would overlap potentially Natural Resources, the Department of

Finance; there would be a myriad of departments that potentially would be

involved.

In terms of how that process may work, if an individual makes contact with

let us assume their first point of contact is with INTRD. They deal with it

might be our office here in Confederation Building; it might be one of our

regional offices. An economic development officer within the department would

end up discussing or speaking with that individual who is looking to start a

business.

If it is something that they want to bring in from outside, if it is

something new that they bringing in, we would automatically engage with the

Department of Business as an inward investor. Bring them to the table for

discussions and determine whether it was best held and discussed by the

Department of Business or whether it was best held and discussed by the

Department of INTRD.

Our officials at the ministerial, deputy and other levels - for instance, I

meet with the Minister of Business, with my deputy and his deputy once a month

usually. We will get together once a month to have a chat about things like this

in terms of investment that may be coming in. There is stuff happening on a

daily basis with other officials in the department that are crossing over in

determining how best to handle a potential business start up. Whether one

department or the other, or whether both may be able to feed into that.

Those things are happening because of the fact that we recognize that it is

not necessarily black and white and that we need to be aware of what each other

are doing. We also have - and maybe I will ask the deputy in terms of some of

the interdepartmental committee that we have, that you have officials who sit

around the table, aside from the ministers doing it, who will look at investment

that people are looking to make into the Province and how best we may be able to

help facilitate that with them.

MR. MEADE: Brent Meade.

Apart from the day-to-day interaction with Department of Business, or the

Department of Finance, or Natural Resources, or other departments, there are two

ways we are formally engaged in government.

All of the economic development departments meet on a regular basis in terms

of looking at our programs and services, how we can keep them in sync with each

other, how we maximize the funding that is available to them. That is a process

that has been underway now for a couple of years. So, we have been doing that.

The Provincial Investment Attraction Strategy, which would be under the lead

of the Department of Business, is a way to co-ordinate the efforts amongst all

government departments on inward investment opportunities. So, that is two

examples of where there is interdepartmental collaboration on economic

development. I think it is suffice to say and I am confident in saying that

there is strong co-ordination happening right now between the economic

development departments.

MR. KELVIN PARSONS: A little bit off the topic here, but an outside

observer might get confused sometimes. The issue of the boot factory out in

Harbour Grace and the investment - it is confusing sometimes because we are told

under the programming that ITRD deals with funding of business proposals in the

Province as opposed to the Department of Business, which is based upon bringing

businesses from outside the Province. Yet, in that case, we have a case of - I

guess sometimes it was a crossover because the boot company was here; yet, they

made a funding decision on that particular plant and it came from the Department

of Business as I understand it. Why did the money funnel through Business as

opposed to ITRD in that case?

MR. SKINNER: The answer to that is that - you are quite correct - the

initial operation was here; Terra Nova Shoes was here. They were purchased by a

Canadian company as I understand it, Kodiak, which in turn were purchased by an

American company - or at least this operational part of it was, I do not know

all the corporate details called Williamson-Dickie, I believe is the name of

the company out of the United States.

While the indigenous company was here and the manufacturing facility was

here, there was a consolidation of operations whereby a facility that was opened

in Ontario merged some of their work into the operation here. So that was seen

to be the inward investment that was made in the facility here and that is why

Business was involved in providing the funding for that, or being a part of the

funding for that.

If I could, just to look to staff, if anything I said there was a little bit

inaccurate or needed clarification, feel free to

OFFICIAL: No, that is correct.

MR. SKINNER: That is my understanding.

OFFICIAL: (Inaudible) inward investment by the Department of Business.

MR. KELVIN PARSONS: So there was no involvement from your department in

that particular initiative?

MR. SKINNER: No. To be clear, we had a lot of involvement; I would not

want to leave you with the impression that we did not have any involvement. I am

just detailing for you the flow of funds came from Business because it was

deemed to be an inward investment, but we were very tightly tied to that file in

terms of some of the analysis that went on, in terms of some of the financial

overview, in terms of some of the economic spinoffs and why the Department of

Business should be involved in that.

We have a financial review piece that we do that maybe I will ask the

Assistant Deputy, Ms Malone, if she might want to speak to in terms of how we

would have been tied to that file, which would be indicative of every other file

that the Department of Business or any other department would be involved in. We

are very tightly aligned with those.

MS MALONE: Yes, we have a detailed analysis process where we go through

and the minister is quite correct whether it be an aquaculture loan with the

Department of Fisheries and Aquaculture or the Natural Resource loan or

investment through the Forestry Industry Diversification Fund. It is a

comprehensive assessment whether you are talking $50,000 or $500,000, which

encompasses management, the marketing, financial abilities to repay debt, the

security, the performance and desirability of economic impact, both direct and

indirect.

MR. KELVIN PARSONS: Back to the CIC guidelines again, the investment

fund, the Auditor General seems to have been particularly concerned about the

guidelines would allow the funds to be used to finance capital projects in areas

such as health and education, which could have, according to the guidelines,

have positively impacted the economy of the Province and so on, but yet it was

not done.

Can you give us some idea - he talks about there were discussions regarding

the university and the regional health authorities as to how some of this

funding might have been used. Without getting into any, obviously, privacy

issues or whatever, what type of discussions unfolded that obviously never came

to fruition according to him?

MR. SKINNER: I would have to look to Phil for that.

MR. McCARTHY: I do know that the board, the immigrant investor board, met

with various departments, various deputy ministers. They did meet the Deputy

Minister of Health. They did meet with people from Education. At that time, what

they were looking for was some projects. You have some projects out there that

you think may fall under this, can you give us a list so we take a list of

projects that may fit under this program and bring it forward? They also talked

to it was not just those two departments, Transportation and Fisheries were

also involved, and the Department of Business, to try to get a feel for some

types of projects that could be out there.

MR. KELVIN PARSONS: Obviously, nothing ever came of it, I guess. There

were no projects in those health fields or in those memorial fields that fit the

guidelines as they were.

MR. McCARTHY: At the end of the day, it is a government decision on

whether they want to proceed, and if they do proceed, whether this is the

appropriate source of funds given it has to be paid back.

MR. KELVIN PARSONS: Okay. That is where I am headed with this.

Was it a decision of we do not think MUN, for example, projects that they

have come to inquire about, fits this program, or was it a case of yes, it fits

but we can do it better somewhere else? Can we get some idea of - because he

almost leaves it as if Memorial, albeit could use this funding. It would be a

great thing, it did not happen. I am just curious as to: Did it not happen for

legitimate reasons? Because I would think there is a host of things that MUN

could come up with that you might be able to use some funding for. What is it

that made it not usable here?

MR. SKINNER: I would suggest to you, Mr. Parsons, that the decision was

made that the source of funds would be better, from government's perspective,

coming from another pot as opposed to that pot. Under our regular infrastructure

monies we would have funded and provided the resources necessary to do whatever

would have come up on that list as opposed to going to the Immigrant Investor

Fund.

MR. KELVIN PARSONS: So in terms of go-forward, Mr. McCarthy probably, you

said you have had these discussions. Where do you see it headed now in terms of

timelines and the guidelines? Is there a problem with the guidelines, problem

with the administration fee? How do you see us as a Province maximizing this

fund better than we have been doing? It is basically money there that we have

not been using. How do you see us maximizing the use of this fund?

MR. McCARTHY: Well, the use of the funds is up to government, in terms

that they look at it - the Department of Finance looks at it, this is borrowed

money and has to be paid back. So we look at it from that perspective.

There have been discussions with the federal government; this is not just

Newfoundland. It is all the provinces that are involved in this that have had

discussions with the federal government. I would not be able to make a guess on

when the federal government may move on some of this stuff. Sometimes they move

quickly, sometimes they do not move so quickly. The timing is in their control,

not in ours. The board is looking at ways and means of what they may be able to

do now, given the low interest rates, in trying to do something to mitigate the

fact now that interest rates are less than one-fifth of 7 per cent. There are

also discussions with the feds about having the 7 per cent lowered to another

number.

MR. KELVIN PARSONS: This board that you referred to, what is the

composition of the board?

MR. McCARTHY: The composition of the board is civil servants from INTRD

and Finance.

MR. KELVIN PARSONS: Are there any laypersons on the board?

MR. McCARTHY: No, there is not.

MR. KELVIN PARSONS: Okay.

I have no further questions on that particular area. If I could, again, jump

all over the place here.

Probably one of my favourite topics, I guess the fibre optic piece has been

kicking around for some time. Minister, maybe just for the record again, if you

could go back and as a little overview, tell us the current status of the

project right now.

MR. SKINNER: The current status of the Broadband Initiative of government

is that we recently pulled back from trying to own and manage our own network

due to the cost escalation that we saw as we were reviewing the project and

analyzing the project, and having negotiations with private companies on how we

were going to achieve that. That number escalated from $200 million to over $500

million over a period of time.

We are now re-evaluating how we are going to provide high-speed Internet

services to all of the government buildings, facilities, agencies, boards, et

cetera but we will do that now in potentially a public-private partnership in

some ways. We will negotiate with suppliers of services to see - as opposed to

government 100 per cent owning and managing its own network - if there are

operational efficiencies that we can achieve and economic development

opportunities that might be able to be derived by us looking to partner in some

areas with some of the private enterprises, because they already have a presence

and have an infrastructure base in some areas of the Province that we wish to

expand upon.

MR. KELVIN PARSONS: Again, if I have the facts screwed up here, by all

means, correct me. My understanding initially of this was this was seen as a

great opportunity. We put $15 million into a private enterprise. That enterprise

was going to develop. The technology in the Province we would get so many

strands and use them for our purposes and so on; connectivity was going to be

all over the place. There were figures bandied around, the Premier in Question

Period one day said something to the tune of $400 million that is going to be

saved just in government services alone once we put this plan in place.

What is your understanding of what happened to the corporate bodies that were

involved in that? We made our initial investment to Persona and so on. Are any

of the same players around these days or did that all just disappear after the

investment was made?

MR. SKINNER: I am not quite sure what you mean by

MR. KELVIN PARSONS: Well, I understand we put our money into the process

through Persona, and Persona was in a partnership with some other mainland

companies, a company out of Manitoba I do believe and another one.

MR. SKINNER: Okay.

MR. KELVIN PARSONS: Anyway, my understanding is that soon after we put

our money in the company was flipped. Persona, who was the receiver of the

government process, our $15 million went into this initiative but the company

got flipped in the marketplace shortly after.

Has Persona been involved in this proposal long? Is that correct information

that I have, that Persona was never involved in this after a short term?

MR. SKINNER: It is my understanding that the $15 million investment that

government made back in 2007, I think it was, was as you indicated in your

earlier comments, to own a certain number of strands in a fibre optic line. I am

going from memory here, but I believe there are twenty-four strands and I think

it was six strands that we would have owned and had access to in that fibre

optic line.

In terms of the corporate entities that were involved, and what has happened

with those corporate entities, I have no particular knowledge of that. So, I am

really not sure what happened. I do not know if any of the staff may be able to

I was not directly involved in those negotiations. I am not sure who the

parties were.

MR. MEADE: Brent Meade, Deputy Minister.

If I understand the question, Mr. Parsons, is you are asking what has

happened with those companies that bought into the trans-gulf. Well, they have

expanded. The flip you are referring to is Persona being taken over by EastLink.

We had MTS Allstream and we have Rogers. What we have seen since that time is an

expansion of service throughout Newfoundland and Labrador by those companies. We

have seen more products and services, better pricing, which has all been evident

by the trans-gulf investment.

I think there are two stories here: one is the trans-gulf investment in order

to try and facilitate stronger private sector involvement and expansion in the

provision of broadband and other telecommunication services in Newfoundland and

Labrador, and we have seen great enhancement of that with the trans-gulf line.

The second issue, then, is us having access to six lines on that as part of GBI,

and the minister has given you the update on where we are with GBI.

In terms of those companies, the same companies are at the table with the

exception, obviously, of Persona being taken over by EastLink, but we have seen

them expand their services throughout Newfoundland and Labrador with the

trans-gulf line.

MR. KELVIN PARSONS: How long have we had access to these six lines?

MR. MEADE: From the time that we would have built the trans-gulf, since

MR. KELVIN PARSONS: Okay. Have we been using it?

MR. MEADE: No, they are not lit yet.

MR. KELVIN PARSONS: Okay, that is what I am getting at. My understanding

is you have so many lines on this fibre optic cable, in my simplistic terms of

seeing this. We have not used any of these six lines since we made the

investment. We were out with RFPs trying to find some way to get someone

involved so that we could use these six lines to tie, for example, our social

service offices, our courthouses, our police stations and whatever, all together

to improve the communications compatibilities in the Province from a high-speed

point of view. We have been several years and we have not been able to do that.

Why haven't we been able to find someone? What is the problem? Why have we gone

from $200 million to $500 million?

MR. SKINNER: No pun intended; that is the million dollar question.

MR. KELVIN PARSONS: Yes, and in particular, why these companies that we

were they are the guys who got us involved in this in the first place and we

own six strands of their cable. Were they potential partners? If so, why are

they not involved with us? If they are making all of these great strides as

private companies, as alluded to by Mr. Meade, could there not have been

something worked out in the last three or fours years to make it work for us and

them?

MR. SKINNER: No, and the short answer is, that was what we had hoped

would happen. There was an RFP issued, as you indicated. There were multiple

responses to that RFP. There was a significant evaluation process that had to

occur. There was a split award of the RFP and there were negotiations entered

into. That negotiation process one of the preferred bidders, if I could use

that term, or one of the people that we awarded the split award to, voluntarily

walked away from the table. They just felt that they could not meet the

objectives that they had indicated in their response to the RFP that they could

fulfil. They felt they could not fulfil those obligations, so they walked away

from the table and sort of left a bit of a void there. At the same time,

concurrently, there were negotiations going on with the other part of the split

award and the cost creep on that made it prohibitive for government to move

forward.

The potential was there to conclude a deal but the overriding factor was the

cost of doing that, and we just felt that it was cost prohibitive. We felt that

is was better to stand down, come back and learn from the lessons of the RFP,

talk to the partners who had bid and try to come up with a new approach. That is

the process that we are currently involved in, trying to determine a different

approach to achieve the same objective that we had before.

MR. KELVIN PARSONS: What led to the cost overruns? We have a $500 million

problem as opposed to the $200 million we anticipated. What went so terribly

wrong? We had all of this great insight and foresight when we were putting in

$15 million to get these fibres but obviously something happened.

MR. SKINNER: Yes.

MR. KELVIN PARSONS: What was it? What drove the cost beyond the payout

here?

MR. SKINNER: Yes. Well, I am going to now give you my layman's

interpretation of it because I am not an IT specialist or an IT engineer. I will

do my best to give you some high level overview and then I will look to staff

who may be able to fill in some gaps and may be able to provide a bit more

detail.

The short answer, as I understand it, is that back when the RFP process was

initiated there was a general understanding that there were hundreds of

locations that we wanted to provide high-speed Internet to. Those locations were

generally identified in terms of being government offices and government

facilities. There was an assessment done of where services currently existed,

where lines were currently run and where lines were not run. There were ballpark

assumptions made as to how far away you are from the nearest point of

attachments, whether that is one kilometre or ten kilometres or fifty

kilometres. How much of a high-speed line would you have to run if you wanted to

get down to the end of that road? What kind of infrastructure, in terms of

repeater stations and electronic gadgets, would you need at the end of a pole or

at the end of a building? How much would you need in terms of could you go

over land, did you have to go under land? All of these very detailed questions

were posed at the beginning and best guesstimates were made as to how much of

that kind of thing would be needed.

As the process unfolded, and the preferred bidders started to drill down on

some of that and more finite numbers came into it, the normal cost creep of an

eighteen to twenty-four month process occurred, in terms of the cost of services

going up, the cost of labour going up, the cost of product going up, et cetera,

et cetera, all of that happened naturally. So there was some of that natural

creep, and then some of the guesstimates that were made were determined that

when we drilled down into it and they got a little more fine-tuned there was

more cost creep in terms of that as well. That, in a general sense, is what

happened.

In terms of specifics to that, people who were involved in the actual project

might be able to provide you with more detail on that. I am looking to Paul in

particular, Mr. Morris, our Acting ADM, if he might be able to provide you with

more detail.

MR. MORRIS: When the project was initially started and discussions

started being initially held, the initial figure that was out there of

approximately $200 million to $250 million to do the project was actually based

on government's communications costs at that time, at that point in time, around

2005. The project was anticipated and the desire was to have the project to be

cost neutral over the life of the project, over ten years. So, when government

looked at its communications costs, we were spending approximately $20 million a

year at that time; when we looked at it over a ten-year period that would be

approximately $200 million. That is where that initial figure came from.

When we included Labrador into the project, and the cost of crossing The

Straits, the estimate at that time would be that it would cost $100 million to

do Labrador and $20 million to cross over The Straits. So when we started

developing the RFP process, we were estimating around $320 million, in that

ballpark. When the RFPs came in they were slightly more than that, and that is

what led to the start of the negotiations.

When we started negotiating, we started negotiating with two companies. One

of those companies, actually, was part of the trans-gulf deal at the time. It is

now Eastlink, because of the change in ownership. When the negotiations

proceeded there was a cost escalation factor, as the minister said quite

rightly. There was more engineering work being done, there was more detailed

work being done, and that is what led to the ultimate cost that was deemed to be

too high.

MR. KELVIN PARSONS: This started back in 2005, when you did these

original estimates. We are, obviously, five years in. Have we been paying any

rental or anything on that fibre optics since we paid the $15 million or are

they just sitting there unlit, not being used?

MR. SKINNER: They are just sitting there unlit at this point.

MR. KELVIN PARSONS: What kind of ownership is it? Do we own these

absolutely for all time? As long as they are on that cable we own them, whether

we get our house in order 2015 or 2020, we can go back at any time and use them?

MR. SKINNER: That is my understanding, yes.

MR. KELVIN PARSONS: Given the technologies, is there any concern that

what we bought and paid for in 2005 will not be usable by us when and if you

come up with some kind of proposal?

MR. SKINNER: Not to my understanding, Mr. Parsons.

MR. KELVIN PARSONS: Any technical -

MR. SKINNER: I will ask Mr. Morris to respond, if I could.

MR. MORRIS: With respect to the actual fibre, no, there is no limit.

There is no limit at all on that. The limitation comes into play with the

electronics that are put in place afterwards. So, to date, there has been no

electronics installed. When the electronics are installed there is generally

about a five-year renewal process there. That is the big

part in the planning

process, is to do the design work so that the appropriate electronics are put in

place.

MR. KELVIN PARSONS: Okay. How much have we spent so far in trying to get

this to work, other than the initial investment? What does it cost for all these

RFPs we have been doing, the time involved, engineering that we have done?

Somebody has been paying for this stuff. What is a ballpark?

MR. MORRIS: The work that was undertaken to develop the RFP, had to

evaluate the RFP and to get us to the point where we are today, we have spent

approximately $1.1 million.

MR. KELVIN PARSONS: What percentage right now of connectivity is there

amongst government agencies, shall we say? Is there any at all? When you talk

about health care facilities, government offices in Corner Brook, Grand

Falls-Windsor or wherever, what percentage - we had hoped to get 100 per cent

connectivity, I call it, with high speed if this process had worked. I take it

we are still at zero right now?

MR. SKINNER: All of those agencies that you just referred to are

connected to the Internet and have connectivity. In terms of how much of that

would be high speed, how much of that would be other levels, I do not know at

this point. I do not know if Mr. Morris would be able to estimate that. If not,

that might be something we would have to undertake to provide to you. I do no

know if anyone else would have it but I do not have it. They are all connected.

I guess the level of connection would be the question. I do not have that

information.

CHAIR: Mr. Morris.

MR. MORRIS: We do not have that information here right now but we can

endeavour to get it.

MR. KELVIN PARSONS: I guess what I am getting at here, in a nutshell, is

we had hoped to have this high-speed process. We are no further ahead now than

we were back in 2005. As a result of this investment we are no further ahead

today, as we speak, than when we made the $15 million payout; a fair statement?

MR. SKINNER: No, I would disagree with that statement.

MR. KELVIN PARSONS: Okay, tell me where I am off base on that statement.

MR. SKINNER: We are further ahead in the sense that we do have now a

redundant line so that if the original line that we had went down, as it had in

the past and we were left without service to the Province, we would now have a

redundant line that would provide us with service. That investment has provided

more competition into our marketplace here in the Province. We have had more

service providers providing different levels of services. So at a local

community level you are now not just tied to one cable station or one Internet

provider. There are, in some cases, multiples. You have competition in the

marketplace, so rates have reduced.

We have been told by commercial operators that their rates have been reduced

because of the competition in the marketplace. So there have been benefits

accrued from the time we made the initial investment to today. In terms of

maximizing the investment, which is what our ultimate goal is, we have not yet

maximized that, but that is why we are working towards the connectivity of all

government offices in terms of the broadband initiative. That was what the RFP

was intended to accomplish and we know where we are today with that.

MR. KELVIN PARSONS: How far along are we or maybe that is corporate,

sensitive information, but in terms of the overall strand when you talk about

how other private industry, for example, are more competitive now and people in

the communities get better rates and so on. What portion of the cable is

maximized at the present time? We know we have our six strands, but of the other

eighteen strands, for example, what is the capacity on them right now? Are they

maxed out?

MR. SKINNER: I think the deputy might have some information, so I will

ask him to provide that to you.

MR. MEADE: Yes, and Paul Morris can certainly correct me or add to this.

Some little fibre is still dark from the companies, but it is suffice to say,

and you are right, without releasing corporate information, there are

substantial expansion plans from a couple of carriers in the works right now for

this year. We know from two partners in particular, who own fibre on the

trans-gulf line that they are in the midst of rolling out substantial expansion

throughout Newfoundland and Labrador.

MR. KELVIN PARSONS: Our unlit six fibres, where do you see this going

now? We are off the rails in terms of what we had hoped to do. Where do you see

this, minister, going in terms of - what are our options that we have to use

that?

MR. SKINNER: We are still on the rails; I do not think we are off the

rails. We had a path that we had planned on going down. Upon venturing down that

path a certain way we determined that it was not in the best interest of the

taxpayers of the Province to continue down that road. So we basically backed up

a little bit and are now re-evaluating a different direction in partnership, as

I indicated, in some cases with service providers to be able to provide the

levels of service and maximize those six strands that are in that fibre optic

line. The objective is still the same. The goal is still the same. The way in

which we are going to get there has to be re-evaluated. We are currently

undertaking that evaluation and hope to, in the very near future, be able to

determine what our new plan will be to achieve those objectives.

MR. KELVIN PARSONS: That is where I was hoping to get some response to.

Maybe Mr. Morris, being technical or whatever, can tell us. Looking at it from

what you are telling me, we started out with this, we were going to have six

fibres, and we were going to tie a bunch of people together with high speed. We

know that the cost jumped from $200 million to $500 million. It is off the

rails. As far as I am concerned, if you start a project five years ago and we

have come to the determination that we cannot do what we wanted to do, it is off

the rails. Now, we might have to put it back on the rails, and it may well go

back on the rails, but right now, as we speak, we have gotten zero. Other than

the benefits you talked about in competition, in terms of the government

providing high-speed services to government offices in this Province, we are no

further ahead now than where we were in 2005.

When I asked you about future options if we have already determined, for

example, that even the people who own the other eighteen fibres do not want to

partner with us on this, obviously - they were your preferred bidders and

nothing happened there after five years with them. How do you see this ever

working? If the very people who own the other eighteen fibres cannot get any

economies of scale to do it with us, where do you see us going to find some

other third party? Is that unreasonable on my part to assume that?

I would think it is easier for the EastLinks of the world to say: We will

partner with you because we own the rest of it. If we have to put electronics in

place, for example, as Mr. Morris alluded to, or we have to go out and maintain

this, it is easier for me to go out, as an Eastlink, to look after your six in a

partnership with you as it is when I go out and look after my eighteen. So, if

that has fallen apart, what reasonable alternatives do you see there, other than

saying we are going to seek to partner with someone? I am at a loss to figure

out who might be other partners. If there were, they would have been in with us

already.

MR. SKINNER: Your basic premise is the one that I think is leading you to

a wrong assumption, if I could say that to you. It is not that we cannot partner

with the EastLinks or any of the other partners; it is that the original plan

was that government would own and manage its own network. So there was no

partnering considered. That is the very distinct point that I think you need to

understand.

We were going it alone on the original RFP and it was deemed to be too

expensive to do that. These preferred bidders, and others who were not preferred

bidders I will say this to you as well are interested in partnering. That is

the opportunity that they see for themselves and we see for us. Now that they

know government is not proceeding on its own to build and manage its own

network, they do see opportunities to partner and are very interested in

partnering with government. That is a part of the re-evaluation of the approach

we are going to take as we move forward, that we are currently undertaking right

now. We will determine which areas partnering opportunities may exist, which

areas government would be better off going it alone, and the companies will help

us in terms of deciding some of those. Those are the kinds of discussions that

need to be had and need to be undertaken to allow us to map out our new plan.

MR. KELVIN PARSONS: Maybe if you can take me back then, or someone can:

Why did we think in the first place that we could go it alone? We have had that

experience now, we have learnt. With hindsight we can look back and say no

matter what we thought five years ago, we could not pull this off by ourselves.

What made us think back then that we could go it alone?

I would have thought back then if there are three people who have an

investment source, who have the technology, they are the people who are going to

own eighteen of the twenty-four. Why would I not have thought from day one that

it is a better shot with those than going it alone? That is what I cannot

understand. Why did we think that in the first place?

MR. SKINNER: It is my understanding that

MR. KELVIN PARSONS: What were the reasons for wanting to go it alone?

Other than thinking we could do it, what was the cost factor, what were the

benefits, the return on this thing for us to go it alone?

MR. SKINNER: Well, it is my understanding that at the time that the

decision was made to go it alone, it was deemed to be as Mr. Morris indicated

in his earlier comments; we were paying some $20 million to $25 million per year

to rent services. That would be something, if we continued in that mode that

would continue on forever. We would always be a renter and we would always be at

the whim of the marketplace in terms of how much we will pay to be a renter of

services.

That $200 million to $250 million ten-year cost, if you extrapolated that out

many tens of years later, would obviously be a much greater number. There was an

analysis done as to what we felt it would cost to be able to provide the

services ourselves, to own and manage the operations ourselves. That was deemed

to be cost effective over an approximately ten-year period when the initial

evaluation occurred.

The reason why we felt it was better to go it alone was because we felt that

after around a ten-year period we would have paid back the initial investment,

assuming the cost had remained as we expected them to be. Government then would

be in a position where it would not be a renter, it would be an owner of its own

assets, paying for the capital would have already occurred and potentially there

would be opportunities maybe to provide opportunity for private individuals,

private companies, corporate entities who may want to use some of the six

strands if we had any surplus available to us. That was the initial thought way

back when.

MR. KELVIN PARSONS: Would it be fair to say then until such time as we

decide what is the option, what options are available and until that process is

negotiated and put in place, we are not going to be any better off when it comes

to government offices being high-speed than we were in 2005? If that takes

another five years to work that out, that is how long it is going to have to

take.

MR. SKINNER: In terms of not being any better off, we are as well off

today as we were five years ago. We will be as well off next year because we are

still a renter of services. Whatever technology is out there and whatever level

of services is out there, we will have that level of service. It will be no

better, no worse. The better part of it comes when government has its own fibre

lit up and we are using our own fibre and connecting our own offices and we are

paying back the capital investment that we have made.

MR. KELVIN PARSONS: Has there been any change in the thought process

regarding who could ultimately hook on to the cable? I know I had issues in my

district, for example, people say to bring the cable across the Gulf, you power

it up in Rose Blanche, and it hits the shore in Burgeo and gets powered up and

down the coast and powered up again. I had everybody in Burgeo screaming saying:

When are we going to hook on?

My understanding was, of course, that was never the government's intention to

allow individuals to hook on; it was intended to be government offices and

agencies and so on. Has there been any thought given to possibly being able to

utilize it, or is it ever capable of being utilized to provide services to

individuals?

MR. SKINNER: The intention of government originally - and it is still the

intention today - is to provide services to our own facilities. By providing

services to our own facilities, communities that are currently underserviced or

unserviced would have an opportunity, through the private carriers that are out

there, to be able to hook on. We would allow the private carriers to tap into

the government infrastructure to provide residential services to the communities

that are under or unserviced. That was the intent originally, that is still the

intent today.

MR. KELVIN PARSONS: Who actually manages the cable right now in

government? How does it work, physically? Is it just sitting there in this line?

It is not lit, so it does not cost anybody anything to look after it or it is

just it is that simple.

MR. SKINNER: That is basically how it is, as I understand it. I do not

know if

OFFICIAL: Basically.

MR. KELVIN PARSONS: There is no cost there. We are not using it. We

cannot use it. It is nobody's job to look after it every day sort of thing. It

is just there.

MR. SKINNER: We know it is there and at some point we will get to it.

MR. KELVIN PARSONS: That is all the questions I have at this point. Maybe

Ms Michael

CHAIR: Ms Michael.

MS MICHAEL: Yes, thank you.

I have to sort of get my head back into this after an hour of being outside,

but I do have questions. Just give me one second to make sure I am totally

organized here.

I do not think I am going to do line by line at the moment. I have some

broader questions and I will relate them to the sections in the budget.

CHAIR: Are you going to ask questions now about the department itself?

MS MICHAEL: I am going to stay within the department because that is

where we are. I do have questions about the other, but I think we might as well

wait and do that together.

MR. SKINNER: Sure.

MS MICHAEL: I will stay in the department until we move into the research

body.

CHAIR: I just mentioned that because we did say at the beginning that we

did have officials here from this agency and we deal with that at the beginning

so that those people could move on rather than sit through all of this.

MR. SKINNER: We are okay.

CHAIR: That is okay?

MR. SKINNER: We can go through the department. That is fine.

CHAIR: Okay, perfect.

MS MICHAEL: I am happy to do that, but the Liberals might want to ask a

question so it seems we might as well stay together.

CHAIR: Okay.

MS MICHAEL: Thank you. I will just do this then.

The first one then, 1.2.04., we are dealing with the Strategic Initiatives,

Strategic Partnership, and the Ireland Business Partnerships.

I am just wondering, Minister, about a couple of things. I will ask this

first and then put a general question. Under Professional Services, the money

has gone down from the Budget to the Revised to the Estimates. I just want to

get a sense of what is happening there. What would be the professional services

that we are dropping or were they a one-time related professional service, et

cetera?

MR. SKINNER: In terms of specifics on that, Ms Michael, I will refer to

the Director of the Ireland Business Partnerships, and I will ask her to provide

you with some details on that. I just know that generally the level of services

required is less, but in terms of specifics I do not have that at my fingertips.

So I will ask Ms Hooper to provide you with that information.

MS MICHAEL: Great.

MS HOOPER: As you know, this covers both the Ireland Business

Partnerships and the Strategic Partnership Initiative.

As far as Ireland Business Partnerships goes we essentially rightsized the

budget. We determined that we would require less money in our professional

services budget for next year based on the money that we had been spending.

As it relates to the Strategic Partnership, they have allocated a certain

amount of money for the new committees that they have established. Those

committees are still working through their work plans so they did not use the

amount of professional services that had initially been estimated, but they do

expect to use that in the coming year.

MS MICHAEL: I wonder, minister, could we have a bit of a breakdown of the

work that is actually being covered by the Strategic Partnership?

MR. SKINNER: Before I answer that, if I could, there is just one other

piece of information I wanted to provide to you on professional services. There

was a direction or a directive given from Finance at the start of the budgetary

process last fall that all professional services should be zero based. There was

no sort of, we used fifty last year, we are going to use fifty next year. You

had to start with zero dollars and build it up to what you expected to use.

When Ms Hooper refers to rightsizing it that is basically what happened. In

every category of professional services, that approach was taken. It was zeroed

out and we just built it up based upon the activity we thought that would happen

in there through the coming year.

MS MICHAEL: Okay. Great, thank you.

MR. SKINNER: In terms of the Strategic Partnership and some of the

activity, I will ask my deputy if I could, who sits on that committee maybe to

provide you with some information. If you have any other questions, we will try

to answer them.

MR. MEADE: I am understanding, Ms Michael, supporting information later

is fine, or would you like an overview now?

MS MICHAEL: Maybe a really brief overview now and then the details you

could send later if that is all right.

MR. MEADE: Okay. The Strategic Partnership, as you know it is a

partnership between government, labour and business.

MS MICHAEL: That is right.

MR. MEADE: They have five active subcommittees right now in a number of

areas: employment relations, labour relations, population, transportation,

communications, and innovation. These are active subcommittees that are doing

work with the tripartite membership on those committees. That is actively

pursuing.

Dr. Doug House is the independent chair of the Strategic Partnership.

MS MICHAEL: Yes.

MR. MEADE: They are conducting a number of research initiatives through

the subcommittees. The Strategic Partnership through its three organizations:

government, Innovation, Trade and Rural Development is lead department there,

but also the Business Coalition and the Federation of Labour are also conducting

research.

We are doing a lot of work with the Harris Centre, a lot of work with

Memorial University in a number of research areas. They had their first

symposium last fall which was a major symposium that occurred here in St. John's

bringing together the three partners.

Out of that, it really did kick-start the process really well in terms of,

particularly the engagement of government departments. One of the big challenges

we have had as a department, to be quite frank with you, is to try to get other

departments in government to understand the tremendous resource that the

Strategic Partnership is in the development of public policy.

We have seen accelerated activity there where government departments are

bringing issues to the partnership to discuss them, to get their input into it

as we develop public policy. That is in a nutshell a list of things, but we can

provide to you a report, a list of activities, particularly research projects we

have done and whatnot in the past year.

MS MICHAEL: That would be great, Mr. Meade, if we could have that. Maybe,

Minister, then to add to that maybe a list of the grants and subsidies that have

been covered by the budget over the past year.

MR. SKINNER: Sure. We will do that, yes.

MS MICHAEL: Great. Thank you very much.

I have another question with regard to the Strategic Enterprise Development

Fund. I guess it is really a general question that I have. Again, could we just

have an overview of how the Strategic Enterprise Development Fund is used?

Going back some time, the Auditor General had issues at one point with the

fund and with issues of repayment of money. I guess I would just like an

overview of what is happening at the moment, how repayment happens and how you

make sure it happens.

MR. SKINNER: That particular line item would be our Business and Market

Development Program. I am going to look to staff to give you some detail as to

what is being expended and spent with that.

MS MICHAEL: I am looking at line 3.1.05., there is $1 million that is

consistently kept there for that, so I would like some detail on that.

McCARTHY: (Inaudible) program and that is a non-repayable program where

we provide businesses with up to $25,000 matching to explore new business and

new marketing ideas.

MS MICHAEL: Looking at the line item, you had a budget of $1 million last

year, revised to $1 million and it is being continued. So am I to assume that

all $1 million last year was spent? If we could have, again, an itemized list of

that.

Was that money always non-repayable under that?

McCARTHY: The Business and Market Development Program was, yes.

MS MICHAEL: Okay. Thank you very much.

MR. SKINNER: If I could, we just wanted to make one point of

clarification. I will ask the deputy to do that for you, Ms Michael.

MR. MEADE: Ms Michael, you will notice under the description of Strategic

Enterprise Development it refers to the Business Investment Corporation.

MS MICHAEL: Yes.

MR. MEADE: Just so you understand, we did not have to put money into the

BIC last year nor do we have to put money into it this year, but that is a

revolving loan equity program that we have. So there is a BIC board, a Small and

Medium-sized Enterprise program, SME program, that provides loans and equity.

That does not show on our Estimates because that has gone out; that is sitting

now and it is revolving with the BIC board. Under this, we would also be

thinking of, as a department, our support to businesses in that way.

MS MICHAEL: If I could ask a further question then because that is what I

wanted to get at: How is the repayment of money monitored? Is it clearly stated

how that happens or -

MR. MEADE: Oh, yes.

MS MICHAEL: - does it change with every loan or what are the details on

that?

MR. MEADE: Maybe Rita could speak to that.

MS MALONE: We have our development officers who have a portfolio, so not

only are they responsible for providing investments, it could be to a loan or

equity. They are also responsible for the ordinary monitoring and collections of

their portfolio. The portfolio is monitored on a monthly basis or more often if

a client falls in arrears or, in fact, falls deeply in arrears and has to go

into receivership. Beyond that, as the management team and through the BIC, we

have regular reporting on the performance of that portfolio.

I am pleased to say that our portfolio, in terms of our new program regime

that we put in place since 2005, is performing very well. That consists of term

loans as well as equity investments.

MS MICHAEL: Okay. Thank you very much.

Just a question with regard to the Canada/Newfoundland and Labrador Business

Service Network, 3.1.03. in the lines. I guess I would like to know I

understand that this money supports the network with more than thirty locations

in the Province and I understand its role. I would imagine that you do keep a

list of the people, the businesses that you have been involved with, that you

give advice to over the year, et cetera. Could we have some idea of that? If you

do have that information on paper which I am sure you do it would be good to

have that information as well.

MR. McCARTHY: Phil McCarthy.

We have that information. I do not have it with me, but we do know how many

came in - mail, fax, walk-ins, all like that. We can get you that information.

MS MICHAEL: Right, so it happens on every level I would imagine.

MR. McCARTHY: (Inaudible).

MS MICHAEL: How many staff is involved with maintaining that network?

MR. McCARTHY: This is federal and provincial. There are five provincial

and I am going to guess at the federal, it is around nine or ten.

MS MICHAEL: Right.

Are they located outside of the so, they are located in offices?

MR. McCARTHY: No, all of these staff is located in St. John's. The ones

outside were in partnership with a whole pile of different groups, some could be

INTRD offices, some could be municipalities and there are other economic

development groups, REDBs, groups like that.

MS MICHAEL: Okay. Thank you.

I look forward to getting that information as well.

Because I have started the way I have, I have to go through papers to get to

where I want to be. I am looking at the Regional Economic Development Services,

and what struck me here everything else is pretty straightforward, except

looking at Transportation and Communications under 4.1.01.03, there is quite a

difference between what was budgeted last year and what is ultimately the

estimate for this year. It is a difference of $136,000, I think. What happened

along there that made that drop from the Budget of 2009-2010 down to this year?

MR. SKINNER: I will give you the high level answer, Ms Michael, as I

understand it and I will leave the door open for staff to jump in and supplement

my response to you.

Within Transportation and Communications, there was $130,000 of grant and

subsidy money from the Poverty Reduction Strategy. Now, I cannot explain to you

how it ended up in Transportation and Communications, but that is where it ended

up. This year we took it out and we moved it down into Grants and Subsidies. So,

if anyone can explain why it was there last year, I will ask them to do it. I

cannot, but that is where it ended up. The $130,000 just got shifted from that

category number 03. down to 10.

MS MICHAEL: Okay.

MR. SKINNER: If anyone can help with that Ms Malone.

MS MALONE: The Transportation and Communications vote is for staff but

last year when we received three new programs under the Poverty Reduction as

part of the overall strategy, the transportation component of that was put into

the staff vote as opposed to being put down in the grants piece. Those types of

programs were to pay for travel for community citizens to engage and take

capacity building type courses or to engage in micro lending or various capacity

building programs we have for underprivileged marginalized people. So it was

incorrectly posted in Transportation, it should have been down in Grants.

MS MICHAEL: Well, with it moved down to Grants and I will ask for a

list of the Grants and Subsidies under this line item I would visibly be able

to see that a certain amount of money, the $130,000, I would be able to find out

exactly where it all went to poverty reduction?

MS MALONE: Yes.

MS MICHAEL: Yes, okay. Well, I would be really interested in having that

information, and with a smile on my face, the minister will understand why I

want that information.

The other thing I want to question then is under the Grants and Subsidies

there is $43 million extra occurred between the Budget of 2009-2010 and the

revision and then we are back to the original again. What happened in the

revision? What is that about?

MR. SKINNER: That, Ms Michael, in a nutshell, was the Central region and

the closure of the Abitibi Bowater mill. That was the severance and other

entitlements; severance, the pensions for the widows, the sick benefits. All of

that stuff was how much is the amount right now?

OFFICIAL: $43 million.

MR. SKINNER: Was spent.

MS MICHAEL: Well, that fits it because the $43 million extra - that is

what it is. It was $43 million on the button.

Is that all the money that now will have to be spent in that category or is

there more money to go out?

MR. SKINNER: No, there would be a little bit more. My understanding is,

correct me if I am wrong, but there are some of the pension and other

entitlements which will require future payments and

OFFICIAL: That is included.

MR. SKINNER: Okay, that has been included. I just wanted to be it is

included already in trust.

MS MICHAEL: Okay.

MR. SKINNER: That money has been allocated in trust but payments will

occur on a go-forward basis but the money has already been budgeted here. There

will be no more expenditures from a line item perspective, but there will be

payouts from the trust.

MS MICHAEL: Right, the total is the $43 million.

MR. SKINNER: Yes.

MS MICHAEL: Okay. Thank you.

I figured that was it, but you have to get the answer.

There are a number of places, and I do not know if I need to go through each

one. Maybe we could take it for granted that wherever there are Grants and

Subsides that we could get a list of all Grants and Subsidies with the heading,

of course, of where they are coming from rather than my going through every line

and saying I want that list of Grants and Subsidies and go through everyone. All

the various Grants and Subsides would be very helpful, to receive those.

MR. SKINNER: As a point of clarification, Ms Michael, are you requesting

the Grants and Subsidies that were dispersed in 2009-2010 or are you requesting

a list of those that we see dispersing in 2010-2011?

MS MICHAEL: I guess I would like both, that would be helpful. The ones

from last year, obviously, you have.

MR. SKINNER: Yes.

MS MICHAEL: If you are anticipating new ones that look like they are

definitely happening, that would be good to have as well.

MR. SKINNER: Okay. That will be provided. The caveat I will say to you is

we will be very specific on the 2009-2010 information.

MS MICHAEL: Absolutely.

MR. SKINNER: We will have to be a little bit broader, a little bit more

general on the 2010-2011 information.

MS MICHAEL: That is understandable. Okay.

You obviously have projections, so it is the projections that I would be

interested in having the details of.

MR. SKINNER: Yes, fair enough.

MS MICHAEL: Thank you very much.

I do not know if Mr. Dean wants to start asking some questions.

CHAIR: First, I will ask the other members if they have any other

questions. No.

Mr. Dean.

MR. DEAN: Thank you.

When you go away you have to come back and try to get your mind back around

it again and figure out where things went since you left.

I have a question around the Grants and Subsidies as well, just to start,

under 3.1.01. Business Analysis, " research, development, coordination" and so

on of the financial programs. We have $2.5 million Revised in this year and we

are going to go to $4.9 million in the Estimates for next year, is that right?

Can you provide some detail around that as to what we anticipate to do

differently?

MR. SKINNER: Yes, I will give you a general explanation for that. The

number was down from $3.2 million to $2.5 million because of our subsidies

program that we have with the contact centres, the call centres, and certain

employment targets and wage subsidies that will be paid. So, because that

industry did not perform as well as we had expected or budgeted them to, there

was less of that kind of money being paid out.

The reason why it increases in the coming year is because of the

environmental issue we have at the Marystown Shipyard in terms of the shed and

the lead paint. There is a budgeted amount of $2.5 million to look after that

liability, and that would come out of that. That is an environmental liability

that we have in Marystown with the Kiewit facility.

MR. DEAN: Okay, good.

Then on the Research & Development Corporation as well, something is changing

again from last year to this year. We had a Budget of $24 million, did not do

that, and we are back up to $25 million again in our Estimates for 2010-2011.

MR. SKINNER: Just for clarification, Mr. Dean, are you referring now to

line items in the Research & Development Corporation Estimates?

MR. DEAN: Yes, sorry. I am jumping around a bit.

CHAIR: Yes. While you were out we decided we would do the departmental

Estimates now and go back to that after.

MR. DEAN: Okay, not a problem.

MR. SKINNER: If that works for you, if you are okay with that.

MR. DEAN: That is fine. No, we will leave it. That is no problem.

Just a couple of general questions, I guess, about temporary contracts in the

department. Can you give us an idea of how many, the thirteen week or less,

contracts in the department that we would have gone through or done in the past

fiscal year?

MR. SKINNER: I will have to defer to staff. I do not have a number. I

know we go through them periodically but I do not have a specific number at my

fingertips. Can anyone help? The deputy will have a shot at it.

MR. MEADE: Mr. Dean, I guess the thing is, if the question is: What are

the positions in the department that are temporary? That is a different question

than how many people would be thirteen-week temporary assignments or contractual

in the department.

The Department of Innovation, Trade and Rural Development has about 25 per

cent of its workforce in temporary positions. We have a staff complement of

around 180. It fluctuates, obviously, but it is anywhere from 170 to 180,

sometimes up to 200; 25 per cent of them would be in temporary positions, but

many of those positions are long-standing temporary positions. We are not unique

as a department in that, by the way. There are other departments in the same

position.

In terms of positions that would be contractual, or what I would define as a

true temporary, we could count them, I think, on one hand. We could count them

on one hand. We normally only use those for very particular initiatives or

pressure points that we have in the department. For example, right now we would

have people in the department who have been seconded from other departments and

we would have contractual people in the depa