May 5, 1997

RESOURCE ESTIMATES COMMITTEE

The Committee met at 7:00 p.m.

CHAIR (P. Canning): Order, please!

This meeting is convened to consider the Estimates

for the Department of Development and Rural Renewal.

We shall begin with the introduction of the members

of the Committee.

I am Perry Canning, Chairman of this Committee, and

MHA for Labrador West.

MR. SHELLEY: Paul Shelley, Vice-Chairman, MHA

for Baie Verte.

MR. MERCER: Bob Mercer, MHA for Humber East.

MS THISTLE: Anna Thistle, MHA for Grand Falls -

Buchans.

MR. WOODFORD: Rick Woodford, MHA for Humber

Valley.

MR. OSBORNE: Tom Osborne, MHA for St. John's

South.

CHAIR: Minister, perhaps you can introduce your

officials.

MS FOOTE: Okay.

To my far right is Sam Kean, Assistant Deputy

Minister with the department; John Scott, Deputy Minister; Bruce Saunders, an

ADM with the department; and Ken Curtis who is - what is your official title,

Ken?

MR. CURTIS: Budget Officer.

MS FOOTE: Budget Officer with the department.

CHAIR: Thank you very much.

Welcome to the committee hearing. We will start out

with an opening statement from the minister, if you wish, and then we will begin

the debate. But before we do that, we have a few odds and ends to fix up.

First of all, do members have available the Minutes

of the Resource Committee meeting held this morning? If they are in order, I

would accept a motion to accept the Minutes.

On motion, Minutes adopted as circulated.

CHAIR: Okay, Minister, the floor is yours.

Welcome.

MS FOOTE: Thank you for the opportunity to be

here.

Most of you would be familiar, all of you would be

familiar, I expect, with what has been happening in the Department of

Development and Rural Renewal. Clearly, as you know, this was a new department

instituted by this Administration.

While a lot of departments have gone through

program reviews that have lasted maybe three months, I guess it is fair to say,

and certainly my staff would agree, that we have been going through program

review for a year. When you institute a new department and bring together

several entities, it is always difficult to get a handle on what all of the

entities have been doing and how best to carry on that line of work. So we had

to, in fact, bring together four very different operations and try to make some

sense out of them, and try to create efficiencies where we could, and come up

with a department that really was able to focus on regional economic

development, whether or not that was small or medium-sized business, employment

programs, craft services - you name it and we tried to do it.

We were not that long in existence, I suppose, when

the program review process came into play and then we found ourselves again

having to look at a budget that was going to mean that we had clearly some

objectives that we needed to achieve but we had to do it within the restraints

available to us.

WITNESS: Speaking of restraints -

MS FOOTE: But we did that, and I suppose a lot

of people look at development and rural renewal and the primary focus seems to

be on the regional economic development boards. Yes, that is a main focus for us

as a department. Because, clearly, what we are looking at is trying to work with

a lot of volunteers throughout Newfoundland and Labrador, to put in place

strategic economic plans for each of the twenty economic zones. That has been a

time-consuming process and, like a lot of people, we hear comments that this

seems to be taking a long time.

I, too, in the initial stages, thought that this

was taking a bit too long so we decided - I decided, as minister of the

department -that we really should try to get the strategic economic plans in

place and we put a deadline in place, and I was pleased to see that we met that

deadline for eighteen of the twenty economic zones in terms of having the

permanent boards in place.

We are dealing with volunteers, and when you are

dealing with volunteers and you are talking to the volunteers and expecting them

to identify the strengths and the weaknesses, then we have to give them the time

it takes to do that. Having said that, we have worked very closely with them, my

staff have, to make sure development has taken place while the planning process

has taken place at the same time.

I am happy where we are in terms of the Regional

Economic Development Boards. We are working very closely with all of the

volunteers and with the staff. We have eighteen of the boards in place. We have

the southern Avalon. Initially, that was one zone, could not agree and wanted to

be split. We agreed to the split. Having done that, even though we are working

very closely with them, we have not been putting a lot of pressure on them to

move along. They will do it at their own pace.

The point is, these are volunteers, these are the

people who live in these regions. They know what is best for them, and they are

the ones who are bringing strategic economic plans in place. We are working very

closely with them, offering the types of business support they need, the

planning supports they need. That is one aspect of what we are doing in the

department.

There are a number of other things that are

happening, and one, of course, is the Small Enterprise Development that is a

part of our department as well. The emphasis here, of course, is on providing

business information, counselling, and mentoring services. The business

financing is focused away from generic business support and directed to

strategic gaps and opportunities. What we are trying to do with the limited

funding we have is really look at the growth agenda for the Province and focus

on those industries where we know there is potential for growth, such as

aquaculture, agrifoods, information technology, tourism, and the dimension stone

industry, areas where we are really trying hard to diversify the economy.

In fact, with the Enterprise Development Fund for

this past year, we assisted 128 companies. What we are finding is that these are

indeed difficult times for a lot of companies, particularly in rural

Newfoundland and Labrador. While we assisted 128 companies, that does not

necessarily mean it was for loans. Clearly, we recognized the need in these

difficult times to focus on after-care, to really work with these companies to

make sure they do not go under in these difficult times, to work with them to

restructure their loans. That has been a fair bit of our focus as well. Business

counselling and mentoring is really important in this portfolio, because if you

look at a lot of the companies throughout rural Newfoundland and Labrador - we

have 6,800 clients on our books. We have a portfolio of about $140 million. We

have quite a portfolio to manage, and thousands of clients that we work with.

After-care is really important again for the number of jobs that have been

created as a result of the assistance government has given.

We also spent a lot of time this past year

negotiating a federal-provincial Labour Market Development Agreement, which all

of you now know is being administered through the new Department of Human

Resources and Employment. It took a considerable amount of time to establish a

co-design and co-management approach, while maintaining federal delivery. That

is about $386 million over three years. We were the first to put in place an

agreement of that sort where you saw the co-design and co-management. We got the

Federal Government to agree to it, and we are very pleased with that. We do not

get to administer it, but that is fine, too, because part of the agreement we

have struck with Human Resources and Employment is that in terms of the

employment programs the focus will continue to be one where we will work with

the growth industries to ensure that our employment programs take that into

account.

So we have been working very hard as a department.

We have identified some strategic business development - certainly, the

Newfoundland and Labrador Film Development Corporation, which was established;

the St. Pierre trade initiative, that has great momentum going, and, I think,

great potential; secondary food processing and the food processor alliance,

fostered, which we are working very hard on, and we should have an announcement

on that shortly; and, of course, the commercial craft industry. We see an

enormous potential there for growth in that particular area, and we are looking

at working with the Newfoundland and Labrador Craft Development Association, and

all of the craft producers, along those lines.

There has been a lot happening. We have a number of

IAS adjustment services committees in place, eight, in fact. We have the

sectoral committees - one in the construction industry, an IAS committee looking

at the construction industry. We have another looking at the tourism-hospitality

industry, another looking at the Newfoundland Association of Technical

Industries, and another at the cultural industry. Then, on the community basis,

we have an IAS on the Connaigre Peninsula, we have one on Bell Island, one in

Burgeo, and one in White Bay - Central.

That is just to give you an overview of what we

have been attempting to do in this first year of our operations.

CHAIR: Thank you very much, that was very

informative. I might remind the officials that if you make some comments

throughout the evening, do give your name at the beginning so that Hansard can

properly correspond your comments to your given name.

I ask the Clerk to call the first heading so that

we can initiate debate.

CLERK: 1.1.01.

CHAIR: Tom, perhaps you might want to start -

or Paul. Paul, you are the co-chair, and seeing you are a ranking official here

MR. SHELLEY: Okay, I will start with a couple

of opening remarks, and then I have just a few questions - not many. I guess,

further questions will follow later on in the year and in the House and so on,

as the minister knows, but it is an interesting portfolio to watch, because of,

very simply, the words `Rural Renewal'. It is no secret what I said last year -

I have been saying it for three or four years, and not only the Opposition say

it, but a lot of people - my belief is that Newfoundland goes the way rural

Newfoundland goes. I do not believe in the other way around. I also believe in

studying such places as Ireland, that they have really put a lot of focus back

in the rural parts of Ireland and it has worked and so on.

I do not like using all the time either the excuse

of: the downturn of the fishery. I know it is a major portion and is the major

backbone to the economy and so on but, as you say, when you use the word

`diversification', that is what we have to really look at and I guess that

really your prime objective as rural renewal is to look at diversification. If

the fishery is not there, then there has to be something else. So I guess that

is your goal.

Really, the whole plan and using volunteers in the

area to come up with ideas that they think would work, is the premise for the

proper procedure, really. I mean, I agree with that and I know, by the way, you

have some very good volunteers working in a lot of these groups. I know in my

area there are some fantastic people who put in a lot of time, so you have that

combination of using volunteers and people at the grass roots to help.

I certainly also believe that if we are to get

anywhere in this Province, people have to see some hope and it has to be soon.

It is really tough now - I mean, it is not a spiel that we do in the House - it

is, I know, because every weekend I go home to my rural district of thirty-three

- I have one that is very rural, so does Mr. Percy Barrett and I can think of

some more really rural. I do not mean even the size of Baie Verte and LaScie, I

mean small like 300 and 200 people; that is the real rural that is really

hurting and need some answers and need to see a sign of hope. Like I said: I

don't think you can go anywhere with business or inspire anybody to go into a

new business unless they have a little bit of hope to begin with, but, if they

do have hope, I find young people and people who have worked in the fishing

industry and so on, they go on, after their dreams, to try to get something

started. So that is just a little opening remark on rural Newfoundland.

As far as all the boards go, they are in place,

they have done a lot of good work and I guess what we have to see now is if the

plan will be executed. That will be next year. Really, this is just your year of

getting organized, and I can understand that; that is why there have not been a

lot of questions asked in the House because in all fairness, I mean, there is

really not a lot to be asked. The groundwork is being laid but over the next

year, there will be more questions and, of course, that is when your real

challenge will be coming as a department and as a portfolio.

I will just go with a couple of very specific

questions on numbers and at the end of it ask some more questions on things like

telecentres and small enterprise departments and so on.

We will start with some headings. The very first

one, very quickly on page 89, 1.2.01, Executive Support, I see a change there.

Which positions were eliminated to reduce this amount of salary, at the top

there?

MS FOOTE: We had one ADM position and one

secretarial position. We started out and when the department was formed there

were five ADM positions and now we have three; we have had four, one that was

not filled, and then, of course, we had four, and then we did away with one and

one secretarial position.

MR. SHELLEY: Okay. Some of these I know of but

I want to just clarify and confirm. On the second page, 1.2.02, Policy Research

and Strategic Planning. There will be an increase in salaries there. Can you

clarify that?

MS FOOTE: Yes. Initially, the position of

Director and Senior Planning Officer were partially funded under the SRDA

agreement, the Strategic Regional Diversification Agreement during 96/97. Now,

we pick up the cost of that.

MR. SHELLEY: Okay. Just very quickly, down on

No. 12, Information Technology; what is that $5,100. I am curious, what is that

for?

MS FOOTE: We are going to replace some

computers.

MR. SHELLEY: Computers?

MS FOOTE: Yes.

MR. SHELLEY: We are up to page 92, 2.1.03,

under the Comprehensive Labrador Agreement Initiatives?

MS FOOTE: Yes.

MR. SHELLEY: Very quickly, before I go down to

the last one there; in Transportation, you have decreased by $9,800. What have

you done there? Why the decrease in Transportation and Communications (03)?

MS FOOTE: Labrador -I do not - John?

MR. SCOTT: It is just a general streamlining of

some of our accounts in respect of operations. Labrador, a Comprehensive

Development Agreement is in its last year, in 1997-1998, so things are starting

to gear down a touch in terms of staff support and in auxiliary support services

that are required.

MR. SHELLEY: You did not lose anything

significant, $9,000, so I was just wondering what kind of Transportation or

Communications you were taking out. Okay then, well, the bigger question, of

course. I know something about it but I would like you to elaborate on it.

Under 2.1.03.10, for the Grants and Subsidies,

obviously that is significant, that is $2 million. Can you just talk about that?

MS FOOTE: The $3.5 million represents a cash

flow available under the final year of this agreement.

MR. SHELLEY: So that is the total for the final

year of the agreement.

MS FOOTE: Yes.

MR. SHELLEY: Last year it was budgeted at

$1,751,000 and you spent -

MS FOOTE: Yes, and it came out to $1.5 million.

It was just a decreased cash flow requirement.

MR. SHELLEY: That is the end now of that

agreement, right?

MS FOOTE: Yes.

MR. SHELLEY: The $3.5 million. For the Inuit

Agreement, everything there is off the table now, right?

MS FOOTE: Yes, there was a one-year extension.

MR. SHELLEY: Now, that is where that is

terminated.

MS FOOTE: Yes.

MR. SHELLEY: Is that right?

MS FOOTE: Well, the funding - yes, it is one

year. It terminates next - this is the last year. It was extended for one year.

MR. SHELLEY: Okay. Come on down again, 2.1.06,

Economic Renewal Agreement - Planning. Just one question on that. The $600,000

for Professional Services, what is that for? What kind of professional services?

MS FOOTE: We have a number of (inaudible).

MR. SHELLEY: That is under the Economic Renewal

Agreement - Planning, right.

MS FOOTE: We have the St. Pierre and Miquelon

trade initiative - anything that are doing of new types of initiatives. For

instance, the St. Pierre-Miquelon trade initiative, we would be budgeting

$60,000 for that. A transportation study that is being undertaken under the ERA,

that would be $100,000. Outsourcing in the small motorized equipment market,

$60,000, and so on. I can read them all out to you if you want.

MR. SHELLEY: No, no.

MS FOOTE: Seaweed background paper. These are

the types of -

MR. SHELLEY: These are the types of things

here.

MS FOOTE: Yes. Some types of consulting

services.

MR. SHELLEY: Okay. On the specifics I am just

going to hold back. Tom can ask some more on that. I want to go through and let

Tom ask a couple of more specific questions. We have some notes made on them.

About telecentres. I am just going to make a

comment about it first, and then I will ask you again. Because, you know, I have

asked you a few times now, and it is for, I guess, home reasons, really.

MS FOOTE: I know.

MR. SHELLEY: Because there is one there - for

the simple reason, and I will be honest with you, that I have seen it work. I

have been in there and I have sent people there. I had a young person call me

who had this idea, and he cannot travel to St. John's. You know, an

eighteen-year-old, nineteen-year-old, they go in there. Yvonne Bradbury-Wiseman

has done a fantastic job there, bringing in people, explaining things to them,

and it really works. I do not know how to get that point across. I know you

believe it, too, but I am really afraid that with reorganizing, or whichever way

you want to rephrase that, it is not going to be the same effect. It should be

done in more parts of the Province.

I have always believed, instead of spreading out

something and having very little use in a lot of things, at least right now

these are working where they are. My suggestion, of course, if I could ever

suggest anything, would be to keep adding some of these as we go throughout, and

keep these up to scratch, what they are now. Instead of watering down. That is

my analogy of it.

Really, they have worked. I have seen people there.

I have sent them. In my three-and-a-half years, I have really had a lot of

support from them. They are like home, you know. Somebody from Brent's Cove can

go up - I say: Go in and see Yvonne, help you with your business plan and so on.

It is really something practical that works. The technology of it, of course,

they went around the world with it with a punch of a button. They were amazed

and they got excited about it. I know people who have gone on to do things in

business through that. I really support them, and I would just like to get your

comments again on them, about the restructuring.

MS FOOTE: I could not agree with you more,

Paul, and I have said this to you in the House, that particularly for rural

Newfoundland and Labrador, I mean, the importance of having access to this type

of technology is imperative for people who live outside the urban areas.

The cost of those five telecentres was $1.5 million

on an annual basis. Clearly, there were people in certain pockets of the

Province who were benefiting from the five telecentres. What we are trying to

do, especially with the creation of twenty economic zones, is to be able to

offer a semblance of this type of service throughout Newfoundland and Labrador

in all twenty economic zones. Clearly, we do not have the financial resources to

offer a telecentre of the type we have now in the five regions in all twenty

economic zones, so how do we do it?

What we are trying to do, in light of what we have

had to do with our budget, is we are trying to make the best of what we have,

and we think we can offer a really good service. We are looking at partnering

with the Federal Government and with the Public Libraries Board. The Public

Libraries Board, right now I think is in twenty-seven areas of the Province with

internet access and we are looking at seventy-two such sites. We are looking at

partnering with the feds whether it is with HRD, ACOA, the BDCs in what we call

a Canada-Newfoundland Business Service Centre. We are looking at that people can

access - if they go to the Public Libraries Board, the internet access is there.

They can go in on-line and access whatever information they want. If it is a

business counselling type of service, that will be available to them through the

Canada-Newfoundland Business Service Centre.

I know what you are saying in terms of the

individuals involved. I find in a lot of cases that - as opposed to the service

- a lot of times people go to bat for the particular individual because of the

expertise that individual has, and because in most cases that is probably the

value, in the person that is there and the hands on. What we are trying to do,

in fact, is work with our federal colleagues and our counterparts here to see if

we cannot utilize our work with the individuals that are there now to provide

this type of service but not necessarily in the five existing telecentres. We

are trying to do the best we can with what we have, recognizing that what we

have is very valuable but that it is only available in five centres. If we had

the financial resources to offer that same type of telecentre in all twenty

economic zones, I would go for it, but we do not have it.

MR. SHELLEY: Well, very quickly, I would say

with the amount of money that was spent in TAGS training and so on, we could

take another 1.5 real fast and have another seven of these around the Province,

and whatever.

MS FOOTE: Yes, I could not agree with you more.

MR. SHELLEY: We have to talk to those people. I

know it all comes down to dollars and cents and spreading it around and there

must be tough choices to be made, but I still say again that the ones that are

there are working. You do not fix something that is not broken. Meanwhile, with

the dollars you had, you had to do something. Anyway, I hope it turns out for

the better so that we do not see that you (inaudible) and lost.

MS FOOTE: No, and I appreciate that. The one

thing we will be doing, once these are put in place it is not like this is it

and there is nothing else. We will continue to evaluate. We will continue to

improve. We will do what needs to be done to make sure that the services being

provided is a service that the people need.

MR. SHELLEY: Yes, okay. I just wanted to make

that comment again. I will let Tom ask a few specifics there and I have a couple

for afterwards.

MR. OSBORNE: Under the Regional Economic

Development Services, page 94, the 1996-1997 Budget for Professional Services

was over budget by almost $107,000 under the revised Budget. What would account

for that?

AN HON. MEMBER: Where are you, Paul?

MR. SHELLEY: 2.1.07

Section 5.

MS FOOTE: Okay, John, do you want to speak to

that?

MR. SCOTT: There are a number of capital

projects budgeted for throughout Labrador. This would have included water and

sewer projects historically, schools, the interpretative centre and the like. In

order to deal with a number of design problems and get everything in order there

was additional requirement for professional consulting services, engineering

services and the like to take some remedial action and get those facilities in

proper order, and that is what this effectively represents in part. As well,

going into the last year of the Comprehensive Labrador Agreement, always in the

last year of an agreement, towards the last eighteen months of a five- or

six-year agreement of this nature, there is a need to re-profile monies from

time to time. So there was some money re-profiled to deal with some professional

services requirements in that regard as well.

MR. OSBORNE: Okay. Now, in 1997-1998 it is down

to $111,500. It is down much less, maybe 40 per cent there this year as compared

to what it was last year?

MS FOOTE: Yes, 1996-1997 was the final year of

this component of the agreement.

MR. OSBORNE: Okay, so that is the -

MS FOOTE: It is just carry-over projects, that

is all.

MR. OSBORNE: Okay. The Property, Furnishings

and Equipment: Is it because it is the last year, there is no budget allotted

for?

MS FOOTE: Yes.

MR. OSBORNE: Okay. Now, a question I asked Mr.

Efford in the Committee this morning: I asked a question on the Fort Amherst

boat basin and he said that there was no money provincially under Fisheries for

that. I wonder, provincially under Development and Rural Renewal would there be

any grants or subsidies available there? They are looking to expand the boat

basin. The north side of St. John's harbour, as of this year, will no longer

allow small- and medium-sized fishing vessels to dock and they are going to have

to dock on the south side. There is simply not enough wharfage there and they

have to increase the size of the boat basin, finger piers and that type of

thing. Is there anything available as far as funding is concerned, under

Development?

MS FOOTE: Not for grants or subsidies. The only

funding we have available would be funding under the Small Enterprise

Development Fund, and that has been restructured as far as fisheries loans and

farm loans go, where the focus is strictly on seed and development- type money

and not maintenance money. We found that, in fact, the BDCs are coming to the

table when it comes to fisheries loans in terms of maintenance type of funding,

but I will ask (inaudible) to speak to that.

MR. OSBORNE: That is actually set up as a small

business, I would say, with the boat basin itself as opposed to being operated

by fishermen.

MS FOOTE: Okay.

MR. OSBORNE: It is set up as a small business

where they, I guess, lease wharfage space and that type of thing.

MS FOOTE: So they are looking for some capital

funding?

MR. OSBORNE: Yes.

MS FOOTE: Okay.

There is a Transitional Jobs Fund which was

negotiated with the Federal Government, as you know. That is a three-year fund,

about $48 million over three years, and that will cover training costs for

people they want to hire as well - their capital costs built into that - so that

is a possibility. It is a business.

MR. OSBORNE: Okay. So that is through your

department transitional -

MS FOOTE: TJF now is through Human Resources

and Employment, but my staff would be involved in assessing applications from a

business perspective.

MR. OSBORNE: Okay.

MS FOOTE: So we can sort of look into that for

you, if you want to pursue that under TJF.

MR. OSBORNE: Okay.

MS FOOTE: There are applications available. Do

we have them in our offices now in the field or are they all through Human

Resources and Employment?

WITNESS: We still have them.

MS FOOTE: We still have them? Okay.

MR. OSBORNE: Okay.

Under your Strategic Enterprise Development Fund,

3.1.02, you are over budget for the 1996-1997 year by $10 million. That is under

Loans, Advances and Investments. I am just wondering -

MS FOOTE: Where are we?

MR. OSBORNE:

Section 8, under 3.1.02.

MS FOOTE: Oh, I am sorry. Okay, this one here.

That is a special $10 million one-time payment that

was provided to the fund in 1996-1997, and that is basically for strategic

development opportunities. For instance, if the tannery has to come through

looking for $600,000, that is where we would take it from; or if there are call

centres out there, that we are trying to attract a call centre, it would come

out of that money.

MR. OSBORNE: Okay, something new.

MS FOOTE: Something new, something that is

going to require a substantial infusion of money.

MR. OSBORNE: That is only for new business

entities?

MS FOOTE: Yes, something again going back to

diversifying the economy.

MR. OSBORNE: Okay.

Now, with that in mind, and knowing the importance

of those types of grants and subsidies, while there was $10 million extra put in

there last year, over last year's budget allotment of $8.1 million, it is down

now to $7 million. Why would there be a reduction in that?

MR. SCOTT: (Inaudible).

MS FOOTE: You can speak to it, John.

MR. SCOTT: Okay.

The manner in which the $10 million was invested in

a Strategic Enterprise Development Fund was a one-time investment late in the

fiscal year. That money, while it was placed into the 1996-1997 Estimates, is a

revolving account in our department through which we administer our Strategic

Enterprise Development Fund. We have a pot of money which we turn over, in terms

of advancing monies out in terms of loans or equity or guarantees. Our $10

million investment shows up in last year's budget, but it is still in the pool

of capital available for reinvestment. So the monies that we had at the start of

this fiscal year were actually $17 million, but $7 million is being requested

from the Legislature to vote in new money to be added to that pool.

We have, from (inaudible) -

MR. OSBORNE: Maybe I should clarify my

question. Before the $10 million was put in, your budget allotment was $8.1

million -

MR. SCOTT: Correct.

MR. OSBORNE: -

whereas this year it is only $7

million. I am wondering why the $1.1 million reduction.

MR. SCOTT: Oh, I can answer that as well,

because part of the new resources that are allocated in every year's budget is

comprised of two components. One is carry forward components. For example, if

something was approved last year on March 1 but the monies did not actually flow

in total until after April 1, that is a carry-over commitment from a project

that was approved the year before. Then, of course, there are monies for new

projects that are approved during the fiscal year. We always make an estimate in

terms of how much we need on the carry-over, and in the last two years what we

have been doing is getting an increase to our pool of about $5 million.

There was $5 million available in 1996-1997 for new

initiatives, and there is $5 million available in 1997-1998 for new initiatives.

In the previous fiscal year there was about $3.1 million in carry-overs; this

year it is about $2 million. So the level of new investment into the fund is the

same, and the difference in the budget amount, for voting purposes, is accounted

for by the various fluctuations over time with carry-overs.

MR. OSBORNE:

Section 3.2.04 Newfoundland And

Labrador Film Development Corporation: I am just wondering why - I guess that

was just set up and that is why there are no Budget allotments for last year,

okay.

MS FOOTE: Yes. That is a new initiative this

year.

MR. OSBORNE: That is the initiative that I

guess everybody heard announced back three or four months ago. How is that

working?

MS FOOTE: We have the corporation in place, as

you know; we have Danny Williams chairing it. John is on the board as well, and

they have now to hire. I do not know, John, if you want to speak to that? They

will be looking at hiring an executive director, someone who is familiar with

the industry, someone who can court the industry and try to attract films here.

One of those that we are hoping for and working hard to attract, of course, is

Shipping News , and we have some sense that we will get a component of it

but obviously not all of it, because they are looking at a $35 million

initiative and we are just not set up in this Province yet to be able to deal

with anything of that magnitude. We do not have the resources, we do not have

the talent to the extent that you would need for that size of a venture but, we

are hoping to be able to attract maybe even $5 million of it, if we can, which

will be a coup for us if we could do that, at least, to get that one, first, big

film. So we are hoping that it is going to be Shipping News .

MR. OSBORNE: Now, while this is a new fund and

a new initiative by your department and $475,000, almost half-a-million dollars,

that is good to see but, what I am wondering I guess, based on our geography and

the landscape and that type of thing, you would suspect that if the proper

investment were put in, a much higher investment even, that it would come back

in returns. I know B.C. right now is doing phenomenally well in the film

industry.

MS FOOTE: Yes, they are doing really well.

MR. OSBORNE: Even Nova Scotia now is doing

quite well. So I am wondering, you know, in this particular part of your

department, should we be looking at putting a larger investment even, in there?

MS FOOTE: Well, you know, that was part of the

reason for my trip to Los Angeles when we went that time, and we had a

discussion with the industry and all the advice we got was clearly that we

should be starting small. I mean, you could be putting all your eggs in one

basket or you could be you know, building a sound stage, but you are never going

to attract the types of films you want, to the extent that you want, until you

have the talent and the technical expertise here. So, clearly this has been done

in consultation with the local film industry as well, that this is the way to

go, and we are learning from the mistakes of other provinces that have just

rushed in, you know, and spent a lot of money. But, again, the point here is

that we are able to leverage a lot of money as well externally and from other

sources, and this is based on the best advice we could get that this is the way

to go.

MR. OSBORNE: Okay. That Grants and Subsidies

money, what exactly will that be spent on?

MS FOOTE: This is salaries and operations only.

MR. SCOTT: Operations, marketing support.

MR. SHELLEY: Not full-time positions though,

just -

MS FOOTE: It could be full-time - well, it

would be for the executive director but this is only marketing and operations

money; this is not infrastructure money, so this does not include any type of

money for building a sound stage or anything like that.

MR. OSBORNE: Okay. So if we were to attract -

MS FOOTE: We would have to look at our

Strategic Enterprise Development fund.

MR. OSBORNE: Okay. And, I mean, is there

sufficient money there? I know, like half-a-million dollars in the film industry

is only a drop in the bucket. So, is there sufficient capital available if we

are to attract a major -

MS FOOTE: We are comfortable with what we have

there. We have done a lot of research on this and we think that starting off

small is the best way to go. And we have to attract that one major film. What is

it, John - about 15 per cent is the incentive you usually offer?

MR. SCOTT: (Inaudible).

MS FOOTE: That is what the industry is telling

us.

MR. OSBORNE: So now, I mean, we have a

fantastic opportunity here if we can develop that industry.

MS FOOTE: Yes, you are absolutely right.

MR. SCOTT: What we are trying to do here is to

provide the groundwork in a core operating entity that will show leadership.

There are pots of money available in the Federal Government, through

federal-provincial initiatives and our own Strategic Investment Fund so this is

more of a directional, marketing thrust as an organization and into source

financing to act on specific initiatives on specific projects from other

sources, established sources and otherwise.

MR. OSBORNE: Okay. Thank you.

CHAIR: Thank you, Tom.

Rick, did you have some questions?

MR. WOODFORD: No, thank you, Mr. Chairman.

CHAIR: Anna Thistle.

MS THISTLE: All I would like to say is that

from my perspective it has been an exhilarating experience as well, this new

department. It has been an onerous task, I know, organizing and getting it

ready, but from my economic zone twelve, we are up and running and we have our

plan in place. Everybody is on side in what we want to do. Things are happening.

We saw that ourselves with the announcement from Steelcore, the Boeing contract,

and there are a couple of more now on the move. It is working, but it has taken

a while to get everything, the footwork, in place and so on. I would like to

compliment the minister on the task that has been - behind her, I will say, and

she has that accomplished. Good wishes and good luck in implementing the plan

now.

MS FOOTE: Thank you, Anna.

MS THISTLE: Thank you.

CHAIR: Thank you, Anna.

Bob Mercer.

MR. MERCER: Yes, just one question. When the

RED boards were first established, great emphasis was placed upon their

negotiating contracts with your department to provide dollars for support,

administrative staff, and so on - the idea being, I suppose, that each zone

would be somewhat different, each zone would require a different amount of

support staff, and so on and so forth. I understand now they are into another

set of negotiations.

MS FOOTE: Phase two.

MR. MERCER: How are those proceeding, and how

is the allocation of the funding proceeding on that?

MS FOOTE: It is going very well. In fact, in a

conference call this morning on the West Coast three of the boards have

negotiated their phase two contracts. It has worked out very well in terms of

negotiating. I met with all of the executive directors and all of the chairs of

the boards in Grand Falls - Windsor about three weeks or a month ago and

explained to them then where we were in terms of the amount of funding we had

left for the phase two contracts for the budgeting. I explained to them, and got

a good reaction in the room, we were looking at about $3 million left under SRDA

for administrative type of funding for the boards.

The boards are not to be the implementers of the

strategic economic plans. Clearly, they have a co-ordinating role. Their jobs

would be to see that things happen. They will have the staff in place to work

with the various groups and organizations that will identify projects, or that

they will look to to make sure they carry out the projects that the boards have

identified. For instance, tourism associations, municipalities, the private

sector, the rural development associations, those are the organizations that

will be implementing the plans that have been identified through the strategic

economic planning process. They are negotiating now the funding for the phase

two contract.

MR. MERCER: One of the concerns that I had

initially when the RED boards came into being was the de-emphasis on the

administrative funding for the development associations. We did provide

administrative dollars for the RED boards but not for the development

associations, which, in my looking at things, I see the RED boards as being a

planning, strategic type of a role. If there were to be a role for the

development association, it would actually be in the implementation. If they do

not progress, then your implementation might lag behind. Have you been able to

do any kind of assessment, in the year or two since we have been into this new

mode, as to how the development associations are now surviving, or reacting,

staying on a par? Where are we?

MS FOOTE: I guess there were fifty-six

development associations altogether throughout the Province. Some of them have

fallen by the wayside, there is no doubt about that, but you usually find it is

in areas where there are other organizations, where there are tourism

organizations or other heritage society organizations. In those areas where

there are only the rural development associations, a lot of those, in fact, in

the past have either had rental property, or they have had businesses

established, that they have had a steady income, so they have not suffered.

The other thing, of course, if you look at all the

projects funded under the Strategic Regional Diversification Agreement, a lot of

them have been rural development associations, and clearly built into the

project funding has been some administrative funding as well. Most of them are

alive and well, but again, a lot of them - in fact, I think the second largest

representation on the regional economic development boards is made up of rural

development associations. They are having a key role to play in the planning.

MR. MERCER: Thank you.

CHAIR: Thank you, Bob.

Are there any further questions or comments? Paul?

MR. SHELLEY: I have just one point and then one

question, that is all.

Development associations - I do not know if they

are well. They are still there somewhere in part, but I will commend those

associations for the work they have done, because I know I have worked closely

with them in the last couple of years. They were at the grass roots level, and

that was one of the pluses of those development associations, so they have done

some good work over the years.

I have just one question, and Tom already touched

on it. This is my last question, anyway, and it is for specific reasons, of

course. You mentioned already the tannery. But 3.1.01, the Strategic Enterprise

Development Fund: As you said, that money was rolled over and moved around so

that went from $8 million up to $18 million last year when it was revised. This

year it is $7 million. Now, is that what is in the budget for this year, $7

million?

MS FOOTE: No.

MR. SHELLEY: I was under the understanding that

it was more.

MS FOOTE: Well, the $10 million -

MR. SHELLEY: Ten million.

MS FOOTE: Yes, plus, right?

MR. SHELLEY: Plus.

MS FOOTE: Yes.

MR. SHELLEY: Okay.

MS FOOTE: So you are talking $17 million.

MR. SHELLEY: So there are applications for

that? Is that the way that works, too?

MS FOOTE: Well, this is business development,

so it is like any enterprise development fund. Anyone who is looking to start a

business, or seek development funding money, it would come out of that.

Again, if we are looking to attract a strategic

business here - if we are looking at a call centre, for instance, and we have

identified a business that we want to attract here, to any part of Newfoundland

and Labrador - we would look to that strategic investment fund for that as well.

MR. SHELLEY: Has any of that money been called

for yet, or is that still in the pot that is all there?

MS FOOTE: It is still there.

WITNESS: (Inaudible).

MS FOOTE: Gone? It is still there. It is about

MR. SHELLEY: Very little committed yet.

MS FOOTE: Very little.

MR. SHELLEY: Okay.

CHAIR: Is that it, Paul?

WITNESS: (Inaudible).

MS FOOTE: Of the total $17 million - Bruce has

some figures here -there is only $612,000 gone.

MR. SHELLEY: Oh, so there is potential there.

MS FOOTE: Oh, yes.

MR. SHELLEY: That is all I need to know.

Thank you. That is all for me.

MS FOOTE: There goes the tannery.

MR. OSBORNE: I just have one question. Under

that fund, you may be familiar with the Fort Amherst project, myself and Mike

Clair, and there was a chap from your department; I cannot remember his name

offhand. Actually, we are planning another meeting now for maybe within the next

week to ten days and there has been a group in St. John's, one of the charitable

organizations, prepared to head it up and put I think about $10,000 seed money

into the project.

MS FOOTE: Yes.

MR. OSBORNE: Would this project qualify under

that particular fund?

MS FOOTE: If it is a not-for-profit

organization, under SRDA is a possibility, or TJF. Those would be the two we

would look to for that type of initiative.

MR. OSBORNE: I am not sure if it is going to be

a not-for-profit. I think what they may actually try to do is - you are familiar

with the project itself, I guess.

MS FOOTE: Yes.

MR. OSBORNE: I think what they may try to do is

actually set it up as a tourist attraction, where -

MS FOOTE: They can make money on it, yes. There

is nothing wrong with that.

MR. OSBORNE: Would it qualify under that if it

is a profitable set-up, or would it have to go -

MS FOOTE: Yes, by a not-for-profit

organization.

WITNESS: Under TJF.

MS FOOTE: Under TJF.

MR. OSBORNE: Okay.

MS FOOTE: What is the organization? Did you say

there is an organization looking to sponsor it? Who is it?

MR. OSBORNE: Well, I guess I am safe enough to

say, because Minister Kelly is already aware. The St. John's East Rotary Club

are going to take it and -

MS FOOTE: Okay.

MR. OSBORNE: We have a meeting with them next

week, and I believe they are going to put $10,000 seed money in there to start

it. We have to get another meeting now with Mike Clair and Rotary and so on, and

actually get the board put in place, but that is to start with architectural

drawings and so on, to try to determine how they are going to refurbish the

site.

MS FOOTE: Okay.

MR. OSBORNE: And once Rotary get it

up-and-running and it is actually under way, then they will turn it back to the

community and it will be the community's basically, unless somebody is prepared

to take it over as a profitable entity. But as it sits right now, the City of

St. John's does not yet have clear title. The Federal Government are the process

of deeding the site to the City of St. John's, and the City of St. John's is

actually willing to lease it to an entity for $1 a year if they are prepared to

keep it up and do whatever maintenance and so on is required. So it does have

the potential to be a profitable enterprise, I would suspect, or, well, a

for-profit - whether they actually turn a profit, but a for-profit - enterprise.

It is up-and-running now. As far as I am concerned, the process is under way,

whereas seven or eight months ago when we initially spoke on it, it was just an

idea I had, and we are actually to the point now where Rotary is prepared to

take it over.

MS FOOTE: Good.

Well, certainly, let us look to TJF. One thing to

bear in mind with TJF is that it is federal dollars and it is really important

to have the MP on side, because they obviously have a say as well.

MR. OSBORNE: Well, that is probably in limbo.

MS FOOTE: We will not talk about that.

MR. OSBORNE: At the moment.

MS FOOTE: Until June 2.

MR. OSBORNE: Alright. What I probably should do

is give you a call and one of your officials can sit in on the meeting within

the next week or so and -

MS FOOTE: Well, just call the office and we

will have someone sit in on it.

MR. OSBORNE: Super.

MS FOOTE: Okay.

CHAIR: Well, thank you.

Are there any further comments or questions?

MR. WOODFORD: Mr. Chairman, I would like to

move the adoption of heads 1.1.01 through 3.2.04 inclusive, without amendment,

and I would also like to move the adoption of the totals.

On motion, subheads 1.1.01 through 3.2.04, carried.

On motion, Department of Development and Rural

Renewal, total heads, carried.

CHAIR: Well, Minister, before we conclude

tonight's hearing I just want to say how much I appreciate the work of your

department. The fact of the matter is that if anybody has been omnipresent in

the Province this year past, it has been you and your department.

You have a huge challenge ahead, and we give you

our best wishes. We appreciate, in fact, that we have had a few minutes together

this afternoon to have a chat over a glass of pop and sundry.

Anyway, I could not help thinking, as well, as we

were talking about the filming business, that we might have some opportunity for

a western film. Who knows? There seems to be a certain amount of hidden talent.

MR. SHELLEY: Inaudible).

MS FOOTE: This sounds like a lot of envy, Paul,

of what must have been a good time.

CHAIR: I ask for the motion to adjourn.

The Committee will reconvene for Forest Resources

and Agrifoods on Wednesday, May 7, at 7:00 p.m., in the House.

On motion, Committee adjourned.