May 2,

RESOURCE COMMITTEE

Pursuant to Standing Order 68, Christopher Mitchelmore, MHA for The Straits

White Bay North, substitutes for Lorraine Michael, MHA for Signal Hill Quidi

Vidi.

The Committee met at 9:00 a.m. in the Assembly Chamber.

CHAIR (Brazil): We are ready to start the Resource Committee's meeting to

review Fisheries and Aquaculture. Before I do that, there are two pieces of

housekeeping that we need to do. One is to acknowledge that Mr. Mitchelmore will

be replacing Ms Michael for today's meeting, and that has been approved by the

Clerk's Office.

Also, we selected a Vice-Chair at the last meeting, but the person who was

chosen as Vice-Chair was just a fill-in, as part of the process, so we have to

go back now and select a Vice-Chair who is a permanent member.

Do I have a nominee for Vice-Chair?

MR. CROSS: I nominate Mr. Bennett.

CHAIR: Mr. Bennett.

Are there any other nominees for Vice-Chair?

This is a third call for nominees for Vice-Chair.

If no other, Jim Bennett is Vice-Chair of the Resource Committee.

MR. CROSS: He is a permanent member.

CHAIR: He is a permanent member, so you will stay as the permanent

MS PERRY: Do you need a seconder?

CHAIR: No, not necessarily for that, not for Vice-Chair.

I want to thank everybody for coming as we review the Estimates. First what I

will do is start off by asking the Committee if they can introduce themselves,

then we will go to the minister and get the minister to ask his staff to

introduce themselves.

As part of the process, I just want to explain Mr. Minister has been

through it, but some of his staff may not have been. If you are asked to respond

to a question, could you please state your name also because it is being

recorded in Hansard? You will see your light come on and then you know it is

being recorded appropriately.

Okay, I ask the Committee to introduce themselves.

MR. RUSSELL: Keith Russell, the Member for Lake Melville.

MS PERRY: Tracey Perry, the Member for Fortune Bay Cape La Hune.

MR. CROSS: Eli Cross, Bonavista North.

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

CHAIR: Also, any staff, if you want to.

MS PLOUGHMAN: Kim Ploughman, Researcher, Official Opposition.

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

North.

MR. MORGAN: Ivan Morgan, Researcher, NDP Caucus.

CHAIR: Mr. Minister.

MR. KING: Good morning.

Darin King, Minister of Fisheries and Aquaculture, and Member for the

District of Grand Bank.

MR. O'RIELLY: Alastair O'Rielly, Deputy Minister, Department of Fisheries

and Aquaculture.

MR. WARREN: Good morning.

Mike Warren, ADM, Policy and Planning.

MR. ROBINSON: Shawn Robinson, ADM, Fisheries.

MR. MEANEY: Brian Meaney, ADM, Aquaculture.

MR. POWER: Bradley Power, Director of Communications.

CHAIR: Thank you.

I will just outline the process a little bit because we have some new members

sitting on the Resource Committee. The process will be: I will give the minister

fifteen minutes to do an interlude as to his Estimates, if he needs that much.

Then we will go back and there is ten minutes each, as a response from each of

the Opposition parties. Then we will

get into the questioning of things. I would like to stick to the headings as

much as possible.

I will be giving fifteen minutes sort of start-up time. If there is a minute

or two or three needed to complete a certain heading for that individual, I do

ask that you notify me so we can move it on. I do like to go back and forth so

it keeps the momentum going and it eliminates the monotony of the same

discussions going forward.

The plan is to conclude by 12:00 o'clock. If need be and we have to adjourn

and reconvene, we will do that. If we need extra time to go, we will assess that

and see if it is workable at the time.

Mr. Minister, I turn it over to you now.

MR. KING: Good morning to my colleagues

CHAIR: Sorry.

I need to call the first heading, please.

CLERK (Ms Murphy): Subhead 1.1.01.

CHAIR: Mr. Minister.

MR. KING: Thank you.

Good morning to both my colleagues opposite and members of the Committee. It

is a great opportunity to be here this morning and share a few thoughts and

answer your questions.

Certainly, fisheries continues to be a significant priority for our

government, as you have all heard me say many times in this House and in public.

We are certainly going through very challenging and interesting times in the

industry, to say the least. As we are all aware the recent announcement of plant

closures, with potentially more forthcoming, has created challenges that we have

to try to address with respect to displaced plant workers. Some of whom will

have the opportunity to retrain; others, unfortunately, may not be able to take

that route.

We are certainly going to focus and be there to support, as best we can, as

we go through a transitioning industry, if you will, from what we would have

been used to and enjoyed perhaps fifteen or twenty years ago where there were a

significant number of plants operating in the Province and a significant number

of people employed in fish processing.

There are many great opportunities in the Province for the fishery as well,

as we go through a transition. We are seeing great opportunities in the crab and

shrimp market, in particular. Notwithstanding one particular part of the

Province, so far this year the crab season has gone extremely well. There are

great opportunities for those who want to stay in the industry and make a

living.

We are focused on making strategic investments from this department. We will

continue to advocate and support the sealing industry as a vital part of the

industry for the Province of Newfoundland and Labrador. We recognize not only

the historical relevance of sealing, but also the importance it has in the lives

of the harvesters, their families, and the communities in which they reside.

We will continue at every opportunity we can to advocate for a stronger seal

hunt; one that has a greater role and a greater presence in the industry, and

one where we are able to harvest more of the quota and access more markets and

increase the opportunities for those who are in the industry.

We will also continue to support industry, as we transition, through our

FTNOP: Fisheries Technology and New Opportunities Program. There have been a

significant number of very, very positive projects that we have supported in the

industry in the past number of years; projects that have provided an opportunity

to research and to explore ideas, and opportunities to make changes in the

industry and in processing plants, in particular, that result in better product,

a higher quality of seafood product in the end. As a result, all of you would

recognize, the higher the quality of the seafood product, the greater the return

there is for the Province as a whole and for those involved in the industry.

We are in a very interesting place because of geography. From the time we

land product in Newfoundland and Labrador, we are at a very strategic

disadvantage in many respects because of transportation. While some wish not to

acknowledge that, when we talk pricing and the variables that affect pricing,

the reality is that seafood landed on the South Coast, in my district for

example, is a good forty-eight hours behind that landed in Nova Scotia when you

factor in the time it leaves the wharf, trucked across the Province, line up for

the ferry, get across the gulf on the ferry and into the market.

We are told by everyone in the industry, who is involved in pricing product,

that it affects the bottom price that we can get for the product when there are

two products side by side, one of which is two days older than the other.

There are a number of challenges we have geographically. Therefore, to

understate what I said a few moments ago, it is important in this industry that

we strive to have as high a quality of seafood product as we possibly can coming

out of the Province. It is also important that we continue to work towards

marketing our product as closely as we can under one umbrella as a Newfoundland

seafood product. That is why we are working towards implementation of the MOU

recommendations on developing a marketing council for the Province. That will

come following the introduction of one or more marketing consortiums.

We are working on proposals now, very active proposals that we hope in the

not-too-distant future to be able to make an announcement about, that will see

partners in the industry come together for the first time ever to look at

marketing seafood product under one umbrella. There are tremendous opportunities

there.

The process we have accepted as outlined and endorsed by the industry for the

marketing aspect of the MOU is that we would bring all of our partners together

across the Province, which we have done several times in the last several

months, to seek their input on how to move forward. We have done that. We have

listened.

We are moving towards developing a consortium. From that we would develop a

provincial seafood marketing council. It will be, for this year and beyond, a

significant priority for the Department of Fisheries and Aquaculture to move

that initiative forward. We believe that is one of the most significant

initiatives we can pursue that will help enrich what we can bring back from the

seafood industry for Newfoundland and Labrador.

Mr. Chair, I am not going to use my full time speaking. I am certain my

colleagues opposite will have lots of questions. I will have an opportunity to

provide remarks in answers to some of those questions.

I will conclude there, and thank everyone for being here.

CHAIR: Thank you, Mr. Minister.

Mr. Bennett.

MR. BENNETT: What we call now the seafood industry, which I suppose

traditionally we have always called the fishery, is in my view the most

important industry in our Province. That may seem like an overstatement based on

oil revenues, forestry, mining and other areas. However, the reason I think the

seafood industry is the most important industry is because it has the potential

to benefit the greatest number of people in the Province who are geographically

diverse and who will have limited opportunities to participate in the economy

unless they move.

It is an excellent resource and an industry for what some would call social

engineering. There has been criticism of that, but in fact if we agree seafood

is a common property resource, then why shouldn't the people and not just the

people of Newfoundland and Labrador, but the people of Canada be the ones who

benefit most from that common property resource?

The earth now has 7 billion people and food is going to be a challenge in the

coming years, as will other inputs, but food is something that people simply

cannot go without. We are positioned in the North Atlantic in a huge fishing

ground and we have an opportunity to access the wealth from the sea for the most

people. Traditionally, the people have not benefited the most, at least in my

view, because they have been concentrated in too few hands. Historically, that

has been the case, and maybe of necessity due to lack of refrigeration. I am

speaking of the old fishery days. Today, there is a greater opportunity for more

people to participate than there would have been previously.

One of the challenges I see that we are dealing with in the fishery is a

mindset, and the mindset is in a lot of people that the fishery is over. It is

on its last legs and it is not doing well. Part of the problem that has caused

that, is we have had so much resource, we had such an abundant resource that we

have only ever needed to catch it and sell it, and cure it for a period of time.

We could then export it to various parts of the world. Coming into Confederation

this was a phenomenal seafood exporter. When we merged with Canada seafood

became less important. Nevertheless, DFO tells us that seafood is Canada's

greatest food export. Not beef, not wheat, but seafood. We have a phenomenal

opportunity.

A lot of our entrepreneurs and a lot of what I will call our business

community in this Province are tied up in the fishing industry, and more in the

catching. If you look at somebody who would go and borrow $500,000 or a million

or more dollars and invest in a vessel and fight with the climate and buyers,

unions, geography, and run an enterprise and then the climate permits only part

of a year, some people would call that person crazy. Maybe they would be right,

but I would call that person an entrepreneur. If this were a culture where we

had manufacturing or other similar opportunities and a person taking that much

capital and invested it in some sort of a manufacturing facility, and ran that

plant for seven days a week, had one, two or even three shifts, the amount of

wealth that would generate would be phenomenal.

Our entrepreneurs have been on the water. Consequently, other entrepreneurial

opportunities have not been developed. I think they can be developed today in

the seafood industry, in not just primary, but secondary, tertiary processing so

that we can extract every dollar of value from every pound of seafood that comes

ashore for our people to maximize our benefit. I believe we need a plan and a

focus which says that. When we have demonstrated we can do that, more people

will be interested in entering the fishery and more younger people. It is not

just an age issue.

When I hear of the aging plant worker, then I look at the demography of the

Province. The average age is around forty-two or forty-three. Somewhere in the

order of 100,000 people are under twenty and around 50,000 are over sixty-five.

The average age of a worker is probably fifty or so. If a plant worker is five

or six years older than that, then I think we can embrace that in the next five

or ten years because these people are committed and they have the skills. We

probably have a five or ten-year window at best to restore and recover the

fishery for us and for our communities. To me, that is my principal focus in the

fishery.

I am pleased to be here and have an opportunity to review the plans with the

minister, the financial side of the package for the coming year.

Thank you.

CHAIR: Thank you, Mr. Bennett.

Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Chair.

I could speak for quite a while on the fishery but I will not do so. In my

own opinion, I do think there are models for change, certainly when it comes to

partnerships and co-operatives. Hopefully, the government, as they move forward,

will adapt some of these models and we will see that in the budget.

I would like to get into some of the line items actually, if I could. Under

1.1.01 the Minister's Office there, when it comes to Salaries, we see the

revised amount was $250,000, there was $85,600 not spent. Could you explain

that?

MR. KING: Sure.

The Fisheries department used to have a Parliamentary Secretary position

which no longer exists, and there was a vacancy in the office for a period of

time.

MR. MITCHELMORE: Okay.

There were no other staff changes?

MR. KING: No.

MR. MITCHELMORE: Okay.

Under Executive Support, line 1.2.01, Transportation and Communications, we

see that $38,300 was not spent. What allocated for these cost savings?

MR. KING: Predominantly it would be related to less international travel

than we normally would have done. Mr. Chair, for the benefit of all members, you

are going to find in a number of my explanations throughout here as a result of

it being an election year there are a number of expenditures than we might

normally have incurred as a result of that. This one here in particular would

have resulted from less international travel.

We budget for a certain amount of what we call planned and expected travel.

We also budget for other travel that may arise depending on what circumstances

prevail. In this particular case, we did not use the full amount.

MR. MITCHELMORE: Could you explain which actual international events were

attended or could you provide a list to us as to what happened last year?

MR. KING: Pardon?

MR. MITCHELMORE: Could you provide a list of the international events

attended by your staff?

MR. KING: Yes, sure.

MR. MITCHELMORE: Under Administrative Support, line 1.2.02, under line

item 05, Professional Services, there was no money allocated in the budget there

but $291,300 was actually under the revised amount. Can the minister explain

what these professional services were for?

MR. KING: Sure.

This

section deals predominantly with infrastructure wharves in particular.

The entire budget typically gets dropped in

section 1.2.02.07, Property,

Furnishings and Equipment. As the money is expended, it is moved to the

appropriate category.

In this particular category, $291,300 was moved. That would have had to do

with engineering design and consulting fees with respect to aquaculture wharves,

as well as work on the former Transport Canada wharves that we had

responsibility for.

MR. MITCHELMORE: Okay.

Under Purchased Services as well, under the same line item, we certainly see

that it has gone from $716,300 under the budgeted amount, quite the increase, to

$1,388,100. That is a bit of a variance there. Could you explain?

MR. KING: Sure.

It was money transferred again from the same category, Property, Furnishings

and Equipment. It was spent on the wharves in Hermitage and Pool's Cove,

engineering and design work for a wharf in Milltown, design work for a wharf in

Harbour Breton, and upgrades to the St. Alban's wharf.

MR. MITCHELMORE: This is primarily for aquaculture?

MR. KING: All of these that I just mentioned are.

MR. MITCHELMORE: Okay.

Under Property, Furnishings and Equipment there is a big variance in this

year's estimate from what was actually budgeted in 2011-2012, $9.5 million, and

only $715,800 was actually spent. What is anticipated for the coming year?

MR. KING: The anticipated amount is the estimate, $6.22 million.

MR. MITCHELMORE: Yes, but what is going to actually be spent? Where is

the allocation for property? Because there was $9.6 million allocated last year,

what work did not actually get done?

MR. KING: All the work that we budgeted for was done. The $6.2 million is

for new projects.

MR. MITCHELMORE: The $9.6 million that was budgeted, only $715,000 was

actually spent.

MR. KING: No, that is not correct. I just explained that to you in the

two previous subheads.

MR. MITCHELMORE: Okay.

MR. KING: The $9.5 million, Property, Furnishings and Equipment, was a

total amount. Some of that money was moved around in Purchased Services and

Professional Services in previous categories.

The $6.2 million, the same thing will happen. It will be moved into different

categories as the money is expended. That money is allocated for the tender for

the Harbour Breton wharf that was just announced probably a week or so ago,

there is an amount of money there as well for an extension to the Pool's Cove

wharf, and there is further money for design work on the Milltown wharf.

MR. MITCHELMORE: With all these expenditures into aquaculture, in the

Budget statement it had listed that of the $20 million-something that the

Province has allocated there has been over $400 million in private investment.

Can you explain some of this private investment as to how we are getting such

great return?

MR. KING: Sure.

If you look at the companies that are operating on the South Coast in Pool's

Cove, the ones that were in Belleoram, Milltown, and St. Alban's, we are

investing money there not only in wharves, we are investing money through our

Capital Equity Program. In most cases, what we put in is a small percentage of

the total project worth.

If we invest, for example, in a fish plant in Hermitage, our investment is

very small compared to what the company brings to the table to complete the

project. Our Capital Equity Program is leveraging further money from the private

sector, which in turn creates not only the capital investment, it then creates

the employment that occurs as a result of that investment. It has been

acknowledged by Department of Finance officials that this particular program is

actually probably the most effective program in government for the dollar for

dollar that we are able to leverage as a result of our investment in the

industry.

MR. MITCHELMORE: Is the salaries and the workforce calculated into that

$400 million

MR. KING: Absolutely. Every dollar that results from our investment is

calculated in. So if there is nothing happening in Hermitage today and I will

just pick Hermitage, and what I said is not the case if we invest $2 million

and the company invests $18 million to build a plant and they create 150 jobs

and salaries at $30,000 a piece, all of that in any economic model for any

government will be factored in when you calculate the benefits of the

investment.

MR. MITCHELMORE: It is jobs created, maintained, annualized year after

year.

MR. KING: Spin-off benefits, that is correct.

MR. MITCHELMORE: With that program is the Equity Program partnered with

other government departments such as IBRD to secure other investments from these

companies?

MR. KING: Not normally. Normally our Equity Program is direct between us

and the proponents.

MR. MITCHELMORE: Okay.

Under

section 1.3.01, Planning and Administration, line 05, Professional

Services, last year's budget had $100,000; $80,000 was the revised amount. This

year I am wondering as to what this was spent for and why there is no estimate

for anything in the coming year? You do not anticipate using professional

services under this policy department?

MR. KING: This particular category, the $100,000 that we budgeted was a

one-time amount that we put in there from the previous year, a number of

initiatives that we wanted to pursue, and obviously we did not spend $20,000 of

that which is less than anticipated costs that we would have had for consulting

fees.

MR. MITCHELMORE: Can you explain what those initiatives were for?

MR. KING: I do not have a list here, but we can provide it. If you want

it we can provide it, but we are talking $1,000 and $2,000 projects, $3,000

projects. Is that the kind of detail you would like?

MR. MITCHELMORE: I am just wondering what the variety was because if they

are $1,000 and $2,000 it is quite different than if it is just one project for

$80,000 and one (inaudible)

MR. KING: Any of those, Mr. Mitchelmore, any of the professional services

typically deal with the engagement of consultants and fees associated with that.

That could be anything from seeking advice on issues to writing reports on

topics of interest. There is a whole range in our department. If you would like

it, we can provide it, but it is a fair amount of operational information. It is

up to you.

MR. MITCHELMORE: Okay.

The Purchased Services also under this amount, under last year's budget there

was $145,000. Only $50,000 was purchased. Was there something not done under

this line item?

MR. KING: Purchased Services in all particular categories relate to the

same things. It deals with office equipment repairs, photocopier repairs, lease

of copiers, and conference rooms if we have meetings off-site. We support those

kinds of things. It is hard to judge from year to year.

We have an annualized amount in that particular category. You are going to

see this over and over. There are times when we exceed the budget; there are

times when we come in under. It depends on what activities are occurring. In the

year, for example, when we did the MOU it is likely you would find a lot of

those budgets were exceeded because we had more activity. There are other times

when it is decreased.

The $145,000 is an annualized amount we used. We often move money between

categories. There is no particular reason why we did not expend that. It is just

that the money was not required for those activities beyond what we spent.

MR. MITCHELMORE: Okay.

Under Sustainable Fisheries Resources and Oceans Policy, line 1.3.02.10

Grants and Subsidies, the budget had allocated $4.1 million and $4.25 million

was expended. Can either this be explained or can we have a list of what the

grants and subsidies were for?

MR. KING: That budget was for fisheries research and science activities.

The $150,000 above the budgeted amount was re-profiled and transferred in from

another budget head.

MR. MITCHELMORE: Okay.

With this year, you are anticipating to spend double that? Is this additional

research as well?

MR. KING: The extra amount budgeted this year; the two significant

amounts would be $3.75 million for the Centre for Fisheries Ecosystems Research,

CFER, and a little over $1 million toward the Lobster Sustainability program

that we announced.

MR. MITCHELMORE: Okay.

MR. KING: A partnership with the federal government and the FFAW.

MR. MITCHELMORE: Back to my question: Can I have a list of the $4.25

million under the Grants and Subsidies from your department?

MR. KING: Sure.

MR. MITCHELMORE: Thanks.

Under Fishing Industry Renewal Strategy, there are a number of things here

MR. KING: May I ask which line item, please?

MR. MITCHELMORE: Line 1.4.01, which is 05 for the Professional Services.

I am just wondering why there was budgeted $30,000 and there is no amount under

the revision. Was there something that was not done that is being carried

forward this year?

MR. KING: There was an allocation there, we had hoped to do an evaluation

of our FTNOP, Fisheries, Technology and New Opportunities Program, and we did

not do it. The money lapsed and we re-budgeted for this year. We hope to get the

project done this year.

MR. MITCHELMORE: Is that a re-evaluation then to look at additional

funding potentially for the FTNOP?

MR. KING: There is always an opportunity to look for new funding but

predominantly it is to look at whether the program is succeeding and achieving

the objectives we set out to achieve or not.

MR. MITCHELMORE: Under Purchased Services as well, there was $17,000

budgeted, $4,500 that was spent. The same type of question, what was actually

purchased?

MR. KING: Again, my answer is very similar to the question you asked in

the previous head. This

section would have to do with the rental of meeting

spaces, those kinds of things. We did not do our evaluation of FTNOP. As a

result of that, some of the costs that would have been associated with that

would be down.

MR. MITCHELMORE: Grants and Subsidies, under this heading of 1.4.01.10,

had $875,000 listed and only $258,000 spent. What type of things fall under

these grants and subsidies?

MR. KING: Can you repeat the last part? I am sorry about that.

MR. MITCHELMORE: The $258,000 under the revised amount of line item

1.4.01.10 Grants and Subsidies, it was budgeted at $875,000 and $258,000 was

spent. What was it spent on?

MR. KING: That has to do with our plant closure program, wage subsidies

and supports.

MR. MITCHELMORE: Okay.

Only $258,000, this is for the worker adjustment program, the fisheries

program?

MR. KING: Yes.

MR. MITCHELMORE: Okay.

You are anticipating this amount will grow quite significantly in the coming

year that there will be a number of displaced workers with $2.375 million under

this line item in the budget?

MR. KING: We are aware today that there are two plants closed in Port

Union and Marystown. So we budget accordingly.

MR. MITCHELMORE: Are there any other items that would fall under that

amount or is that specifically for wage adjustment programs?

MR. KING: Worker adjustment, employment supports, anything related to a

plant closure.

MR. MITCHELMORE: Okay.

CHAIR: Thank you, Mr. Mitchelmore.

We are going to go to Mr. Bennett now.

MR. BENNETT: Minister, I am probably more interested in the broad strokes

of where you see the department going, not to say that all the nuts and bolts

and the dollars and cents are not really important because they are. You have

said we are growing the fishing industry undaunted by challenges, and that is a

good thing because there are some challenges. What do you see as the greatest

challenge?

MR. KING: One of the greatest challenges we face is the mindset of people

who believe that the industry we had thirty years ago is the industry we have

today, in my view. The fishing industry has changed significantly. We are no

longer in an era where we can have fish plants in every port, I believe, and

sustain workforces of 150 and 200.

I think of the days, when I was growing up in Fortune we had 380 workers, in

Grand Bank we had 300, in Marystown there was 1,200, in Burin there was 350. The

industry has changed significantly, not the least of which of course is impacted

by the declining cod stocks and the moratorium, which, as you would know, the

cod fish in those days was a significant input into the industry.

A significant challenge from a political perspective is helping people

understand that the industry has changed, and that the days we lived in

twenty-five and thirty years ago are no more. Having said that, from an

operational perspective I highlighted a few moments ago, one of the

significant challenges we have to acknowledge is our geography and the role we

play in a global seafood marketplace.

The fact is that while the fishing industry and I agree with your comments

by the way, that it is one of, if not the most important industry in

Newfoundland and Labrador, no question, but in the world stage we are a very,

very small player. As a result of that, we do not have the same kinds of

leverages and controls that we might think we have.

We have to ensure that we are in a market where our product is of the highest

quality and that we are keeping our product competitive in the price market in

particular, because if we cannot market our product and sell our product then

the industry is of no value to us. That is a significant challenge, but

transitioning from the mindset of the past to focusing on the opportunities for

the future I think is a huge challenge.

We are moving through an area where we are experiencing some of that. The

Marystown fish plant and the changes in Port Union are significant shifts in the

Province because they are two, I think, of the largest plants that we have ever

had in terms of workforce. That is a challenge for us.

We have all heard the public debate around the possibility of further

exemptions for fish processing companies in Newfoundland and Labrador. There are

some very strong views that we not provide any of those exports at all. As a

matter of fact, the very strong view is to leave the fish in the water. We are

currently doing that.

The question is where is the giveaway? Is the giveaway when you try and

export to adapt and take advantage of a market that exists, and therefore a

certain amount of processing in our Province and onshore jobs, and using money

from exports to supplement that, or do you do what we are doing today? As a

result of that decision, today we have plants closed. There is no work happening

in Fortune, there is none in Marystown, and there is none in Port Union. I do

not believe that is the answer. I believe we have to find a solution that

maximizes all of the species for Newfoundland and Labrador. That is going to

require some people's shift in thinking.

The other challenge as a result of some of the comments that I have made, I

believe, is people coming to a realization in the industry in general. That

while it might be an idealistic view that we can catch and process, then

secondary process and value add to all the products that come out of the water

here and I would like to see that happen you have to factor in one

significant issue. What is going to be the cost to the consumer if we do that? I

do not think there is any question that we can take yellowtail fish and process

it here, secondary process it here and do a good job with it. We could build

cars in this Province too, but can we compete with the GM auto plant out of

Ontario?

It is not about whether we can do it here. It is about whether we can market

the product when it is done. I believe that some in the Province, some of our

strongest opponents and I do not mean political opponents, I mean public

airwaves opponents. I do not necessarily believe that they are fully focused on

the big picture. I think they are stuck in a mindset that we will do nothing but

bring the industry down versus help the industry thrive.

If we cannot grow the fishing industry so that the people who participate,

whether you are a plant worker, or a harvester, or a processor, if we cannot

grow the industry so that these people make money, make good livings and provide

for their families, and are happy doing what they are doing, then the industry

will not survive. I do not believe the conditions we have seen in the last five

years are necessarily conducive to making that industry work. I think we have to

move forward and we have to seek out new opportunities.

MR. BENNETT: Minister, on that note, actually on two of those notes, I

accept that we cannot afford the labour cost to process everything. It is simply

a rule of economics. I accept that. However, if we also accept that seafood is a

common property resource and if we export unprocessed, it seems to mean the

people who own the product are getting nothing from it. We hear the

no-more-giveaways mantra, which also makes sense both politically and

economically.

Why should the person on the street who has just as much entitlement to an

equity position in that fish whether it is yellowtail, shrimp, or whatever it

is, you or me or all of us together. Do you see a time when, in the case of

unprocessed exports, the Province will put into place a royalty regime?

If there is no royalty regime of some kind then the incentive will always be

there for the catcher or the exporter to maximize profits by shipping to, let's

say, a lower labour regime like China with little to nothing for the people

except a few catching jobs or a few handling jobs. Do you see a time when your

department might entertain putting into place a royalty for anything that must

be exported, and then those funds reinvested back into the industry?

MR. KING: I am not sure, to be frank with you, if you will ever see that.

One of the challenges is that we do not have the authority to do that, first of

all. The fishery, unlike the oil and the forestry, the quotas belongs to the

federal government. Forestry is a given because it is on land. In the oil

industry there are boundaries and

definitions that give the Province rights to

the oil. The fishery is not like that. The quotas are allocated by the federal

government and they have the ultimate authority to do that.

I have explored that, Mr. Bennett, to be honest with you. I have explored

that and many other options. The conclusion we are provided with by any number

of experts in the field is that the Province does not have a right to impose a

royalty regime on a resource that does not belong to the Province. The

allocations, if you just picked yellowtail as an example, since I mentioned it,

those companies who have a quota of yellowtail in the Province received that

quota from the federal government.

The only authority we have, jurisdictionally in the Province, is once the

product is landed in Newfoundland and Labrador on land, we impose minimum

processing requirements. If the product is not landed here, we have no authority

or right to impose a royalty regime. If your question is, do I agree with you?

Yes. If your question is, will I pursue it? Yes.

The first question you asked, do I ever see it happening? I do not know.

Because I am advised by those who assess the constitution and assess everything

else, that unless the federal government agrees there is no way we can ever do

it and legally make it happen. That is about as honest as I can be.

MR. BENNETT: Yes. I can see how a catcher, a big harvester who is also a

processor would be motivated to land in another provincial jurisdiction where

there was no royalty and we charge a royalty. We would only hurt ourselves by

doing that. It is not like a tree, it is on land. It is not like minerals.

Last April 25, Prime Minister Harper, in response to the Premier, made

certain I will not say commitments, because on reading the letter closely he

expressed what he considered to be the view of the Conservative Party of Canada,

which is now the government. He says it is the view that may not be seen

necessarily as an election promise, but he said things like: We share your view

that provinces must be given a formal role in the management of the fisheries.

He says a re-elected Conservative government would move forward with legislation

in the next Parliament to give the provinces a formal role in the management of

the fisheries.

As you know, I have written to you and asked you about the possibility that

at least the five eastern provinces and the federal government could or should

get together on marketing. Can you tell me if you think there is a possibility

here in what looks like Prime Minister Harper's commitment that provinces will

have a formal role, that the provinces of Canada could have a sub-constitutional

agreement with the federal government that we could basically put into place

some sort of a mechanism whereby we could charge royalties or at least to level

the playing field?

It seems like the commitment is there. The feds, in spite of all the things

we like to discredit DFO for, they do have an active interest in the fishery for

sure. Do you see any possibilities there?

MR. KING: I think a possibility exists. I think it is going to take a

fair degree of talking and discussion. I have had discussions with the federal

minister on any number of issues like that, that are on the peripheral of what

you are advocating for.

I am hopeful that maybe, through the process of policy review that we are

looking at now, there might come some opportunities to do something like that.

It is very difficult to say because, as I said, we are trying to read into the

commitments of the Prime Minister's letter and my discussions. I certainly did

not see anything concrete. I do think there may be opportunities. I think that

is a fair point.

One of the challenges we face around the other Atlantic Provinces in coming

together the marketing is not a bad idea, there is no question about that. One

of the challenges with the other Atlantic Provinces though, for us, is that they

would like to dig into more than marketing. They would like to have more access

to, what we call our historical resource, Newfoundland and Labrador. It has

always been a contentious issue. At meetings not long ago it got raised.

They believe the resources we have access to in Newfoundland and Labrador

ought to be shared around more equitably than they are. In other words, we ought

not to have control like we do of the quotas that we currently do, and Nova

Scotia harvesters, for example, ought to be able to access more of that quota.

There has been a big lobby for the federal minister and the government to remove

some of the quotas that are currently allocated to Newfoundland companies and

move it to other non-Newfoundland and Labrador companies.

There is always a balance when we engage in discussions about sharing and

partnership with the Atlantic Provinces and the fishing industry. If we open

door A on this side, we might have to be prepared to open door B on the other

side.

CHAIR: Okay, Mr. Bennett. I would like to go back to Mr. Mitchelmore

there.

Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Chair.

I would like to ask the minister, in the past his department has not

supported the allocation decisions of the Northern shrimp based solely on the

last in, first out and has made representation to the federal Minister of

Fisheries. The strategic plan notes that the feds will review the policy based

on this approach and the position taken by his department. What is the position

taken by the department?

MR. KING: The most recent position that we have taken is that we do not

support last in, first out.

MR. MITCHELMORE: Okay.

The department worked throughout the planning period for reductions in

tariffs and non-trade barriers communicating its position with the federal

government. Efforts were continued to keeping the EU autonomous tariff rate

quota of 20,000 tons with no tariff on the cooked, peeled shrimp. How much of

that is actually exported to Europe from this Province?

MR. KING: Alastair is going to provide an answer there.

Just let me say there is a bit of a grey area there. That is why I am

chatting with him, because some of what you ask crosses over into the trade

talks and IBRD. I am just being very cautious that I am not the spokesperson for

that.

MR. MITCHELMORE: Okay.

MR. O'RIELLY: Mr. Mitchelmore, I think the question you are asking is

about the ATRQ. The ATRQ, of course, is an autonomous tariff reduced quota is

what it stands for. The amount that is in ATRQ for shrimp, which is really

important to us, is 20,000 tons.

For the last number of years that full quota has been used, and has been used

primarily by Canadian firms, and primarily by Newfoundland-based firms. This is

the last year for that ATRQ. So there is some question about what is going to

happen with it in the future.

That is really wrapped into the minister's comment about IBRD's involvement

now as the Province's representative in the Canada-EU trade negotiations which

are ongoing. The question about what we will have for the future kind of rests

with how those negotiations are going. I hope that answers your question.

MR. MITCHELMORE: Okay.

The same ATRQ had 10,000 tons, with no tariff for flatfish as well, which

included the yellowtail. I am just wondering, if that ATRQ included was that a

processed or an unprocessed form when it was shipped?

MR. O'RIELLY: Yes, thank you.

Most of the ATRQs require an opportunity for further processing within the

EU. It is not really duty free. You can have duty-free access at zero but you

still have to have further processing. In the case of yellowtail or flatfish, or

in the case of shrimp, in order to achieve that reduced tariff you have to have

the processing done within Europe, which really dramatically diminishes the

benefit.

MR. MITCHELMORE: Right.

MR. O'RIELLY: The activity is captured over there. Plus, because of that,

we ship everything in bulk then. You do not have the opportunity for branding

and for doing more effective marketing under that circumstance.

MR. MITCHELMORE: Thank you for that.

On March 17, 2011, the provincial government announced it would take a more

active role in the Canadian European Union negotiations towards the

Comprehensive Economic and Trade Agreement, CETA, which the minister had alluded

to. What is the role that your department has played to date?

MR. KING: Our department is a secondary player in that file. That is

being led by Minister Hutchings, Innovation, Business and Rural Development.

MR. MITCHELMORE: Okay.

Have you had any discussion, any letters, anything that has been written, a

position that you have taken from the fishery? Obviously, these CETA

negotiations will have an impact to the fishery here in the Province.

MR. KING: You need to direct that question to Minister Hutchings. We do

not break down the position of the Province into various departments. He is the

lead minister for that.

MR. MITCHELMORE: Okay, I will ask Mr. Hutchings on future CETA questions.

With respect to the World Trade action through CCFAM, deputy ministers'

committee on seals, I am just wondering where this currently stands with the

argument on the ban? Has there been any movement on that? Could you just provide

an update?

MR. O'RIELLY: That action is ongoing. We think we are probably about

halfway through the process. At the moment there is an issue of selection of the

review panel that will look at the case. It is a rather painstakingly slow

process, but we have been, of course, advocating the federal government

continuing to intensify their efforts, which they have. We are at least another

year away from an outcome, but we are optimistic. We are actively involved with

the federal government through the committee as to the various procedures and

status of that action.

MR. MITCHELMORE: Okay, thank you.

The seafood processing policy renewal framework stresses there are going to

be more rigorous policies related to the issuance of new licences, retention of

existing licences, more restrictive transfer policy, more stringent policy on

cancellation, and clearer policy on the limited circumstances under which the

Province will consider intervening when a plant closes.

Can you outline what kind of budget and staff is being provided to make sure

these measures are put into play? Can we have an outline as to how this is

actually being worked into the department and how it is being enforced?

MR. KING: Are you referring to a report from the industry or are you

asking me a question about our own licensing division? I am not clear where you

are coming from in the

preamble.

MR. MITCHELMORE: Yes, that is what I am asking about, your licensing

division and the restrictions you are putting into play to basically make sure

that the policies are being abided by, by processors, specifically, in the

Province.

MR. KING: There is a line item in here that outlines everything you have

asked for. The licensing division is highlighted, the amount of allocation that

we put forward. The salaries and support are all highlighted here.

Mike, do you know which line? Just have a look and see if you can find it.

Bear with me, Mr. Chair, that is here in the Estimates, the information you are

asking for.

CHAIR: Sure.

MR. KING: Line 2.2.02, Licensing and Quality Assurance is the division.

MR. MITCHELMORE: Right. My question would be then, what is the clear

policy when a plant closes? Because it says there would be circumstances under

which the Province will consider intervening when a plant closes.

Is this just eluding to the taskforce or work, fisheries adjustment program

or are there other measures the department has when a plant closes that it would

take? I guess this would fall more under enforcement.

MR. KING: You are asking for how we will react when a plant I am not

sure, you are talking around a little bit. You are asking how we will respond

when a plant closes, is that your question?

MR. MITCHELMORE: I am asking: What type of measures does your department

have to intervene if a plant closes?

MR. KING: For workers, I assume?

MR. MITCHELMORE: Not specifically, no, but you can certainly explain what

would happen for workers as well.

MR. KING: If a fish plant closes, we have a fish plant worker adjustment

program. Through that program we provide one opportunity for project work, one

round for each worker where we provide wages, hours of work and weeks of work

that would get them to qualify for Employment Insurance in the federal system

and thereby get a years employment.

We also have off-shoot range of supports there, including wage subsidies that

we will provide to try and entice other employers to hire on displaced workers.

We will provide retraining funding through the Department of Advanced Education

and Skills for those who opt to get out of the industry and move forward in a

different direction. We will provide supports through the Department of

Innovation, Business and Rural Development to support the community in its

adjustment measures and seek out opportunities for economic development.

There are other things that can occur. Typically what happens, there is a

ministerial committee that is formed, made up of six or eight or so of myself

and colleagues. We typically engage with the local communities affected, a

community or communities affected. In addition to the things we have talked

about, it is very likely the community will come with ideas and suggestions that

we will try and assist them with.

It is not all carved in a neat little package where you can say open the box

and here it is. Every community is different. What we would do in Marystown may

be very different than Port Union or than what we did in Fortune when it closed

five or six-or-so years ago. Those are the broad strokes of what we offer.

MR. MITCHELMORE: What I would like to get at is what type of under the

Compliance and Enforcement piece, do you have auditors or do you have people who

go in and assess the plants and assess the quality for maintenance to make sure

that they are living up to certain standards?

MR. KING: That is not part of the adjustment program?

MR. MITCHELMORE: No, this would be under Compliance and Enforcement,

2.2.03. Does your department have enforcement or an audit that you would go into

the processing facilities to make sure that they are up to standard for various

aspects of ?

MR. KING: Yes, we do.

MR. MITCHELMORE: How many staff members do you have?

MR. O'RIELLY: There are thirty-three inspection positions. That includes

supervisors. I am not exactly sure of the number of auditors. Four?

OFFICIAL: Three.

MR. O'RIELLY: Three auditing staff.

MR. MITCHELMORE: Okay.

How often is a plant assessed for maintenance and repairs and cited with

different concerns?

MR. KING: Just to be clear, you are crossing boundaries here. Our role is

not to monitor maintenance and repair of private facilities. Our role is on the

fish side, to making sure that the standards we expect in the Province are

applied. It is not the role of government to go out and monitor whether they are

doing proper maintenance and repair of buildings. Ours is on the fish side.

On the safety side, there would be another division in government that will

be responsible for Occupational Health and Safety. That is not our role either.

MR. MITCHELMORE: Okay.

The recent closure of labs here in the capital city where seafood has been

tested in the past, will that have an impact on seafood, the quality assurance

that has taken place here in Newfoundland and Labrador?

MR. KING: Any closure of a lab will have an impact on the business we do,

but if your question is: Is it going to allow for reduced quality or inferior

quality? No, we will continue to carry out our work and ensure that the things

we need to do get done.

MR. MITCHELMORE: Okay.

A seafood marketing council is something you have talked about, and has been

noted in the past that there will be $3 million promised. Then under the MOU,

they were saying that the work would continue in 2011-2012 fiscal year.

We are in 2012-2013 fiscal year, and I would like to ask the minister to

outline the role of a marketing council, when we can anticipate that it would be

set-up. What is the vision for this versus using a generic provincial marketing

campaign? Because you talk about needing to get all the players together and

that has not been successful in the past.

MR. KING: The role of the marketing council would be to provide some

broad, high-level direction in the Province, first of all, on how we can better

collaborate and co-operate coming out of the Province. Also, there will be an

opportunity for the council to dig into other world markets and seek out

opportunities where we might be able to move our product.

The piece that everyone has to be mindful of is the Department of Fisheries

and Aquaculture is a support and enforcement entity for the industry. We do not

run the industry. The industry is made up of many private businesses, no

different than if you look at the Department of Natural Resources, or Mines and

Energy if you would.

Government does not tell Hebron or Chevron, or any of those companies what to

do. They are external entities and businesses to government. Departments will

provide regulations and supports, and things like that. We are no different.

My point is on the marketing initiative you have to be mindful that we cannot

impose a marketing consortium in the Province. We have no authority or ability

to do that. What we are attempting to do from the MOU process is to offer our

support by co-ordinating efforts and providing some financial resources to move

the initiative forward. If and until the industry decides they want our support

and they want to buy in, we cannot force them to buy in.

To your question specifically, I cannot give you a date on when all of this

will be concluded. We are working very hard. We have had any number of meetings

in the short time that I have been the minister of this department with

industry stakeholders to try and convince them of the merits of combined

marketing efforts for the Province, and the value of a consortium where we do

not have thirty or forty different entities trying to market crab, albeit in

very small quantities. If we can bring it all together under one umbrella and we

have one entity marketing crab for the Province, it gives us a better

opportunity to control the flow of crab into the marketplace. It gives us a

better opportunity thereby to leverage a higher price, which in turn results in

benefits to the harvesters as well as the processors.

We cannot mandate that. They have to be agreeable to participating in that

process. It is very difficult to give you a timeline. We would have hoped to

have had that up and running quicker than now, but we have not been successful

in convincing the industry partners and participants of the benefits of it.

As we speak today, though, we are working through what I think is going to be

a very positive initiative. We have some significant partners who have come to

the table now and indicated an interest in working with us on marketing. I

believe that if we can move this particular initiative forward, and I say if

because until we get it working there is always a chance it will not, but if we

get this one to succeed I believe you are going to see many other players in the

Province want to be a part of this. Because I think they are going to see the

benefits of coming in with the larger group and having the power of the bulk of

the product, if you will, going into the marketplace, allowing us to negotiate

better prices for our product.

MR. MITCHELMORE: I certainly thank you for sharing

CHAIR: Excuse me, Mr. Mitchelmore, I want to move back to Mr. Bennett

now.

MR. MITCHELMORE: Sure.

MR. BENNETT: I have to say that I am encouraged by the last part of your

answer to the last question, because I agree with you pretty much across the

board in that respect. If I do not agree with you in some part of it, I do not

know what it is yet. I understand fully you cannot mandate this, you can

encourage and support and maybe even coerce or whatever, but the participants

need to know or need to believe that it is a good deal and it works for them. If

that is what you are doing, then that will be a great thing. I accept that they

are very diverse because they compete with each other.

Let's say over the next five years I think your department says there is

between 100 and 115 or so plants right now in the Province.

MR. KING: Yes.

MR. BENNETT: I accept with your earlier commentary that the day of the

big plant is done. If we could drag together enough product to make Marystown

fly, halleluiah! That might be all the yellowtail, it might be all the American

plaice, it might be all the groundfish we could find, and show that it could

work.

I understand that there is a huge building there and overhead considerations.

A distributed plant force in the smaller plants would seem to be the best

solution for the small communities, and even some of the medium-sized

communities. If we had the big plants, we would not have the workforce today

anyway.

Where would you get 1,000 people in Trepassey to go work in a fish plant, or

any of the others that have closed? They are just not there thirty or forty

maybe, or twenty-five maybe.

How many plants do you see being in existence and operating in the Province

in five years? Have you thought of it?

MR. KING: That is a tough question to answer, to be honest with you. I

could guesstimate, and I hesitate doing that for fear that you will use it

against me at another time. I think realistically, if you are using the figure

of 100, we are likely going to see 20 per cent of those phase out over a period

of time.

From where I sit on the plants, Mr. Bennett, number one, and I think you

acknowledged this as well, the days of the big plants are gone. There is a whole

host of reasons, including overhead, lack of material, cost, and that sort of

thing. Those days are probably gone and we are seeing that in our public debate

today vis--vis Marystown and Port Union.

There are also going to be challenges in some parts of the Province, and one

of your colleagues is going through the circumstance now, where the amount of

product available in a particular area is such that it is just not feasible for

a company to go in there. There are going to be some other plants like that will

close.

I do believe there are still going to be opportunities for good, strong

seasonal plants in communities. I can think of any number of examples of that

where they are doing great work with crab and/or shrimp, and they work for a

defined period of time, but they have a good workforce who is dedicated to the

plant, committed to the lifestyle, and happy with how things are going. Those

kinds of plants are going to survive.

The model I believe is ideal is the multi-species plant where you are doing a

variety of product over different fishing seasons. Eventually I would like to

see fifty-two weeks a year. That might be a bit of a stretch, but certainly

plants that can operate for thirty-five to forty weeks a year. I will give you a

couple of examples, and certainly I know you are very interested in this. I

invite you to at some point in time to visit some of these.

St. Lawrence in my district is not operating for thirty-five weeks, but they

have been very creative. It is a crab plant predominantly. Several years ago we

diversified into whelk and a few mussels. Last year we put a canary operation in

there. A canary operation in itself

MR. BENNETT: Kippers?

MR. KING: It is not kippers.

MR. BENNETT: It could be.

MR. KING: It is actually salt fish.

MR. BENNETT: I am getting a price on the cans of between one and two

cents per million. I will table that one day.

MR. KING: Yes, do that, please.

The cannery, in itself, as they tell me at least, there is no business there

for them to run a canning plant in St. Lawrence, but the cannery operation they

are doing has provided ten or a dozen jobs for eight or ten weeks a year. When

you factor in the jobs and the weeks, what they have actually done is taken

their workforce and they probably got another four weeks for every worker in the

plant to extend beyond what they are doing. My point being, it is the

diversification through multi-species.

The other one that I mentioned yesterday, when I was having a bit of fun with

you in the House on the kippers, but in all seriousness is Allen's Fishery. I do

not know if they would want me to say it because sometimes they want to stay

below the radar, but it is worth you visiting in the Bay of Islands. As I

recollect, they purchase lobster but they are doing pelagics, they are doing

crab, they are doing mussels and some value-added product there. It is an

amazing piece of work.

MR. BENNETT: I know Richard. They are really good seafood entrepreneurs.

MR. KING: Yes, they are indeed.

What is amazing about it, for anybody who is really interested, I think there

is a model there. You are not going to see it everywhere, but I think there are

opportunities to take what they are doing and look at doing it in other parts of

the Province. Because any one of the species they do in and of itself is not

going to produce a year's work, but by adding one on top of the other what they

are doing is extending the weeks the plant is open and the opportunities for

employment.

I think if we can strive to get more opportunities to do that that is where

the opportunity to entice more people would be. I think you would agree with

this that if you are going to entice young people into the fishery, they are not

looking for ten weeks a year any more at $10 an hour. You will get, I think,

some to come in if you provide a half decent wage and assure them that there is

going to be at least close to a degree of year-long employment, whether that is

thirty, thirty-two or thirty-five weeks, I do not know, I cannot really define

it. I do not think you are going to get them for ten weeks a year any more. I

really do not think that is going to happen. So the plants in communities where

that is all they are offering, I think that is where you are going to see a

struggle to survive in the long term.

MR. BENNETT: I have noticed in the Canadian seafood industry, for want of

a better term, that Canada imports a lot of seafood. We export a lot, but we

also import a lot, and it seems like the imports of Canadian seafood have kept

on going up over the last ten or fifteen years. I am wondering if your

department has made inquiries or looked to doing some marketing within Canada.

MR. KING: I will just ask Alastair to make a comment on the import piece

in particular.

MR. O'RIELLY: Some of the products are quite diverse and they are not

available here or produced in Canada. Warm water shrimp for instance is a huge

seller. Most people do not know when they are buying shrimp that they are

actually buying shrimp that is produced in freshwater, mostly in Asia. That is a

huge item in Canada.

The ones that are shown on the rings and so on, they are convenient to eat

but they are not North American produced. They have some advantages that the

consumer likes. Price is a significant factor, and size, in the case of shrimp.

There are other finished products as well, a lot of canned product that comes

out of Asia, a low-cost product.

MR. BENNETT: A lot of the small, canned product comes from Europe and it

is expensive. People are buying it in Ontario.

MR. O'RIELLY: Yes, of course, and there are caviars and things that are

also somewhat unique to Europe, and also hitting some of the ethnic markets or

niche markets.

MR. BENNETT: Mackerel and smoked mussels and all these.

MR. O'RIELLY: The question, the market opportunity, as you know most of

Newfoundland's production is export markets. These markets tend to offer better

opportunities, better price positions than to the best of Canadian markets.

Canada, as is North America as a whole, is a very modest consumer, low

consumer of seafood. Per capita consumption is hovering around fifteen or

sixteen pounds, around seven kilos. It has been that way for decades, which is a

fraction of what is consumed in Europe. Maybe about one-third of the consumption

level in Europe and 10 per cent of what is consumed in Japan. We are not seafood

eaters in Canada and North America, so the markets tend not to be attracted by

our producers.

MR. BENNETT: Have we looked to following the expatriate Newfoundlanders?

I always marvel when I read a newspaper story and it says such and such a

person, a former Newfoundlander. I do not think you can get to be a former

Newfoundland without dying. It does not matter where you go, you take it with

you or Labradorian, and we are two distinct crowds in one.

You can be a former Ontarian, Albertan or whatever; you cannot be a former

Newfoundlander and Labradorian because it is part of us. There would seem to be

marketing opportunities in places like Fort McMurray where they would recognize

our product and walk in and say well I am going to have some capelin, or I am

going to have some whatever. Are we pursuing those markets? Are local

entrepreneurs doing that?

MR. O'RIELLY: There are a number of companies that are actually supplying

some of those products to places like Fort McMurray, but it is very small-scale

stuff, of course, because it is relatively small volumes and speciality items.

There are several smaller producers who are doing that. We have fourteen or

fifteen companies that are licensed to sell at the retail level in the Province

as well. So that is another way in which the product is being sold locally in

the Newfoundland and Labrador market. I guess some of the smaller processing

firms do target these kinds of niche markets such as you are referring to.

MR. BENNETT: Minister, the Harper government committed to working with

all provinces including Newfoundland and Labrador and I mentioned this

earlier, this is during the last election in May. What specifically have they

done over the past year in working with you to advance our fishery?

MR. KING: It is probably better to ask Mr. Harper that. I am kidding.

MR. BENNETT: Someone may, but it might not be me. Someone may ask him

that in Ottawa if he is no coming through on a promise to this Province.

MR. KING: We have had positive engagement from the federal government

thus far, notwithstanding the search and rescue issue. I am going to park that

one and I am assuming, for the moment, that is not what you are referring to

MR. BENNETT: I am interested in the fish and seafood.

MR. KING: We have had positive discussions with the federal minister, in

my tenure. I came in, in November I guess, so there was six or eight months

ahead of me when the federal government was sworn in. We have had positive

discussions on any range of issues, including the whole modernization process

that is currently underway and the impacts that that could have on Newfoundland

and Labrador. Both positive and negative depending on which piece of the policy

you focus on.

We have been very clear in expressing our views on some pieces of that, that

we obviously strongly support, and we have been clear in the Legislature on

that, but the minister has been, in my view, very receptive to our commentary

and our views around the fishery for the future and where we would like to see

it go. It certainly has been very supportive of trying to assist us in any

number of initiatives that we are focused on. The sealing, in particular, is one

that we have been engaged, through the federal minister and the Prime Minister,

with the country, in advocating to try to get the markets open and certainly

been very respectful of our position and, I believe, very forceful in defending

Newfoundland and Labrador in that discussion.

Do you want to jump in and add a little, maybe?

MR. O'RIELLY: We have been working closely with the federal government on

the aquaculture file as well, especially on regulatory matters. There have been

a number of initiatives related to aquatic health, to veterinarian services, and

so on where there has been good co-operation and collaboration with DFO.

As the minister noted earlier on the trade file as well, we are playing the

supportive role as he described in our department. DFO are also involved at that

level as well. There is a good collaborative effort on that. At a working level

it is still a good relationship and we are finding there is an open engagement.

The challenges we always seem to face is: Is there enough money to do the

kinds of things we would like to do? There are lots of issues we could cite that

we wish we would have had more federal expenditures on any element of what we

are doing.

MR. BENNETT: Is there anything right now on the table? You do not have to

say what it is because it might be sensitive discussions or whatever. Is there

actually a timetable that we are moving forward on some issues with and that you

expect to get resolved in sixty days, ninety days, or before the end of the

year? Are things happening or are they just drifting?

MR. KING: The short answer is yes. There are a number of significant

files. They are not all sensitive. The sealing one is one I have talked to you

about before. That is obviously one we are working on from a variety of

perspectives, not just the challenge to the trade into Europe. There are a

couple of other pieces we are working on as well and we are hopeful we will see

some success in that. There are a couple of other files we are working on and

hopeful we will see some success over the next few months, maybe.

MR. BENNETT: Do you see on the marketing side merit to us marketing not

as a Newfoundland and Labrador label but under a Canadian label for all Canadian

seafood? I do not care if they put a Mountie on it, a beaver, or a maple leaf.

Canada is bigger and it would give us better volumes that we would be able to

market under with the assurance of the Canadian Food Inspection Agency. Canada

has a great international reputation.

Do you see a role there or a potential for us there?

MR. KING: Alastair is going to offer you some commentary first.

MR. O'RIELLY: You make an interesting observation. There is a lot of

discussion around the industry as to the Canadian brand and whether or not

Canada has a better image and is better known in the international marketplace

because we are, of course, selling to the world, as I mentioned earlier. It is

easier to seek an identity as the Canadian brand than by each province.

What has been happening over the last few years is that there has been a

co-ordinated or collaborative effort in the marketing initiatives that we carry

out, for instance, at major trade shows. Usually, that involves activity between

federal departments which include DFO and also Agriculture and Agri-Food Canada

which has a marketing budget, so they participate as well. They co-ordinate with

the various provinces and so when we participate at a trade show, such as the

one in Boston or the one that was held last week in Brussels, all parties are

there together in the same areas and then, of course, co-operating is a joint

effort.

The issue, I think, down the road, in terms of whether or not the industry

will embrace collaborative marketing efforts, I think that remains to be seen.

As the minister mentioned in terms of market council and other initiatives, we

are hoping to do more on the Newfoundland side.

I know that in the Maritimes they have really been struggling with trying to

bring together a collaborative marketing effort on lobster, for instance, but

there are provincial jurisdictions, different industry groups, and they have had

great difficulty trying to put that into some sort of a consistent and

significant marketing effort.

I think it just illustrates the type of challenges that exist across the

provinces in terms of species and in jurisdictions, and in terms of market

interests in terms of need of opportunity to bring this together. I think it

remains to be seen, but we are hopeful that we are going to be able to launch

forward with the market council and over time that will sort of demonstrate and

spearhead efforts to do more marketing and bring other parties to the table

depending on our success. That is the hope and aspersions, anyway.

CHAIR: Mr. Bennett, I am going to suggest we take a thirteen-minute break

for people to stretch their legs and go to the washroom. Everybody is good with

that?

Okay, we will reconvene at 10:40 a.m.

Recess

CHAIR: Welcome back.

We will to go Mr. Mitchelmore to start again.

MR. MITCHELMORE: Thank you, Mr. Chair.

There has certainly been a lot of worry about the federal government

abandoning the Fleet Separation Policy and I know the minister has made a

statement on that here in the House of Assembly. I am just wondering if there

has been any further correspondence, an update with the federal government on

where things are, and if he can tell us what the federal government is planning,

if he has had any discussion.

MR. KING: I cannot tell you what they are planning, that would be looking

into a crystal ball. The information I have, Mr. Mitchelmore, is the federal

government, as a result of their consultations, will produce a document, what we

heard, or some kind of a title therein similar to that, and they are going to

share that back with us and look for further feedback on what they heard before

they make any decisions.

We have had any number of meetings and representation with them. We have not

really gotten into the nuts and bolts of a number of the items because, in my

view, there are lots of things that could change, that can make this industry

better.

I make that statement based on significant amount of discussion and

consultation I have had with the FFAW and independent members of the FFAW over

the last three months. There is no question that many harvesters feel

overregulated and policied' to death. They feel it limits their ability to have

a successful enterprise or to build upon a successful enterprise that will

improve their incomes for them and their crew members.

There are certainly a lot of things we can look at trying to change and

adjust to make life better. We have not gotten into a lot of those specifics. We

did have discussion around the fleet separation owner-operator. As I have said

well, I have certainly said it to this Legislature, but I am not sure if I said

to you directly, maybe Mr. Bennett we have been very clear around that policy,

that our position stands, that we support it, and that we think it is important

to Newfoundland and Labrador.

What we have said to the minister, though, is: I am prepared to look at some

changes to any number of policies if I see there is a benefit for people in the

Province. When I say if I see, obviously I mean through consultation with

harvesters and those who would be affected. If there are changes we can make to

improve the industry we are prepared to support them. From a process

perspective, I am given assurances by the minister, in the company of my deputy

for sure, that there is not going to be any action taken until that document

comes back to us and we have a chance to have further input.

MR. MITCHELMORE: China has no import-export tax for fish that is being

shipped there for reprocessing, whether it is a whole fish or a head un-gutted.

These are certainly protectionist measures by this country.

Is there anything being done by this department pressing the federal

government on these types of trade barriers to see if Canada would be looking at

implementing different changes to its trade policy with China?

MR. KING: As in asking the federal government to advocate that China

impose tariffs?

MR. MITCHELMORE: I am just asking if your department is looking at this

measure by China, a very serious matter that is causing a lot of raw material

basically to be processed elsewhere.

MR. KING: Our department looks at all of those countries, the ones that

have tariffs and that do not have tariffs, very seriously. It is a fair stretch

to think I am not suggesting you do that the Department of Fisheries and

Aquaculture in Newfoundland can change the tariff agreement that China has on

imports and exports. I have not had any discussions on that.

Alastair, are you aware of any international discussions?

MR. O'RIELLY: There are lots of discussions about Canada engaging in

future trade arrangements, especially in Asia. There are recent discussions

about a Pacific initiative that there have been some comments on, which would

obviously be the vehicle or the mechanism within which you would begin to raise

those issues. On that particular one, I do not recall there is anything because

it is difficult to find a way to attack that issue.

Effectively China is not charging any tariffs on raw material that they can

further process which is sort of common practice. Exactly as we mentioned

earlier with shrimp with the EU, that is exactly what they are doing. They are

saying we will give you a tariff break if we can process the product. It really

necessitates some sort of a bilateral negotiation or trade agreement. Maybe this

Pacific initiative might be the forum for doing that.

MR. MITCHELMORE: Okay.

I want to get back to the Seafood Marketing Council that is proposed. I would

just like to ask: Are there funds allocated in this year's budget earmarked to

the set-up? If the minister could look at explaining what the structure would be

like. I may have missed the line item specifically.

MR. KING: Yes, there are funds allocated, we are just looking for the

line item in the Estimates for you.

The

section for the Estimates is 2.2.01.10, Grants and Subsidies. There is a

budget amount there of $4.1 million.

MR. MITCHELMORE: Would all of that be allocated for the Seafood Market

Council or just some of the amount?

MR. KING: Mr. Chair, $3.4 million of that is allocated towards not only

the council but the marketing initiatives that we have announced as part of the

MOU, so there are the sales consortia as well.

MR. MITCHELMORE: Okay.

Other departments, like the Department of Tourism has a provincial tourism

strategy, provincial ads that have been very award winning. The fishery has been

a mainstay and has been the industry of Newfoundland and Labrador since the

beginning of time basically.

Why isn't the government, your department, looking at a provincial strategy

that is very generic and brand seafood, the way of life and our living, and

really promote how important the industry is to the Province, not necessarily

looking at individualized products that companies have in addition to this type

of council?

MR. KING: Are you referring to promoting the fishing industry or are you

talking about promoting the product?

MR. MITCHELMORE: The overall fishing industry. It may include some parts

of the product. It may include some of the restaurants, the dining, the

different product that would be there but promoting Newfoundlanders and

Labradorians dealing in the industry, and also with various parts of seafood

product but not necessarily specific branded items that a seafood marketing

consortia would deal with.

It may be a way to promote the lifestyle of how important the fishery is to

us and encourage a greater uptake of fish being ate throughout the Province,

through people who are coming inside and not only people who live here as well.

MR. KING: That is certainly an item that could be considered as part of

the marketing council's role. Our marketing efforts typically are based on

industry advice.

To date, the industry has not identified promoting fishing and the fishing

industry in Newfoundland and Labrador as a priority. What they have identified

to us as priority is to invest in promoting Newfoundland and Labrador seafood

product in markets where they are actually purchasing the product to try and

enhance our opportunity to sell product. Our efforts are on the marketing side.

Provincially, I guess what we have done, we have marketing items that we

distribute to promote fishery but the bulk of our budget has been into trade

shows and significant events. Like the Boston Seafood Show, the seafood show in

China, Brussels, and things like that, where we have an opportunity to tap into

a very huge market that might be interested in buying our product.

It has not been identified by the industry. As I said, most of our advice we

take from the industry as to where the strategic priorities are. The notion of

expending money on television ads and provincial campaign has not been

identified as a priority. The priority they have identified to us is targeting

markets where there is actually an opportunity to sell our product.

MR. MITCHELMORE: Okay.

Thank you, Minister.

Under 2.2.03 Compliance and Enforcement, 06 Purchased Services, last year's

budget was $15,000 and it was revised to $12,000 but this year's estimates are

for $45,000, triple last year's budget. That is a big increase. What is planned

under Purchased Services for Compliance and Enforcement?

MR. KING: We intend to invest in new inspection equipment for crab

monitoring.

MR. MITCHELMORE: Okay. That is certainly an important investment with the

concern of crab asthma and things like that.

I would like to ask about the licensing that has been provided to processors.

I understand there is a two-year limit where a company has to do a minimum

amount of processing. There are incidences where this has not happened, where

people have gone more than the two-year period.

I am wondering if the compliance department, if there are regular audits to

ensure there is actually processing happening at facilities and not at other

facilities and being shipped. I just ask what the process is there.

MR. KING: We have inspectors in the field who do regular inspections of

processing facilities and monitor the product that is processed there on an

annualized basis. All of the license holders in the Province, their list of

production or lack of is assessed.

Ultimately, it is the decision of the minister to cancel a licence. It is all

tracked, and at the end of day if a licence gets flagged as being inactive for

two years it is cancelled. That is our policy; subject, obviously, to appeal. If

there are extraordinary circumstances, and sometimes there are, then the

minister of the day may very well not cancel the licence.

The short answer is all of that is tracked. The amount of processing is

monitored and logged. The decision to cancel or renew licences is based purely

on the facts of the case.

MR. MITCHELMORE: Have you cancelled licences in the coming year?

MR. KING: Yes.

MR. MITCHELMORE: Is it possible to be provided a list of cancelled

licences?

MR. KING: Yes, sure. I do not have it here but I can provide them. There

are four or five, I think, we cancelled this year.

MR. MITCHELMORE: Okay.

I would like to ask about the mussel strategy from the annual report in

2010-2011. There has not been anything written since 2008. I am just wondering

is there anywhere in these Estimates an allocation to really brand and grow an

actual mussel strategy? Will we see a mussel strategy from your department on

the aquaculture piece?

MR. MEANEY: We have a number of initiatives working with the mussel

industry. There are a number of challenges, as the minister alluded to, not the

least of which is the distance from market for Newfoundland into the Boston

states which is the primary market. Our product is two days older when it hits

those markets and that puts us at a market disadvantage.

We have funding under our aquaculture sustainability and development program

to assist mussel producers and processers to be innovative in technology and

being able to put the absolute best mussel into the marketplace as quickly as

possible. In addition, we work with the other branches of the department,

particularly in Marketing, to ensure we get the optimum market for mussels,

optimum price, look at new products, including value-added, frozen mussels,

mussels in vacuum packs, and mussels in modified atmospheric packaging.

There have been quite a number of initiatives that have been underway with

the mussel sector to help them move that forward.

MR. MITCHELMORE: Okay. Thank you for that.

I did want to ask under, I think it falls under the Aquaculture Development

and Management section, 3.1.01. Under Salaries there, there was over $1 million

budgeted and $875,900 was the revised amount. Was there a position there that

was not filled in that situation, or two positions?

MR. KING: Two positions, a marine finfish aquaculturist and a financial

analyst.

MR. MITCHELMORE: Okay.

You do have on staff, then, a bio-security auditor? As well, are the two

veterinarians and the laboratory technicians still on staff there?

MR. KING: Yes.

MR. MITCHELMORE: Okay, great.

Certainly, bio-security is a big concern that we see in aquaculture for sure.

MR. KING: I think you would find upon investigation that Newfoundland and

Labrador is probably doing more for bio-security than most other jurisdictions.

MR. MITCHELMORE: Right.

In the current situation, Cooke Aquaculture in Nova Scotia are undergoing

what could end up being very catastrophic when there are viruses and things like

that there. This type of investment for bio-security in doing the auditing and

making sure it is safe, because there is a lot of investment obviously here in

the Province in aquaculture, so protecting that is certainly important. It is

nice to see that those investments are being made.

MR. KING: It is not lost on people that the investment we have made in

the aquatic health facility in St. Alban's is a big part of that. To emphasize

and to illustrate our commitment to bio-security and fish health is why we put

that facility there and why we stock it with very high-quality people.

Although, I have to admit, I think there is lots of co-operation in the

industry. Certainly, I think it is fair to say the standards we have and the

expectations we have around fish health are as high as or higher than anywhere

else. We share your view on that. We want to grow the industry but we want to

grow it right. We do not want to make mistakes that are going to be potentially

catastrophic.

MR. MITCHELMORE: Great.

CHAIR: Mr. Mitchelmore, I am going to move back to Mr. Bennett.

MR. MITCHELMORE: Thank you.

CHAIR: Mr. Bennett.

MR. BENNETT: Minister, in the cancellation of processing licences, I

understand if it is two years of non-use it is cancelled. Sometimes, as I am

sure you would appreciate, there might be good reasons why no processing takes

place.

Do you think at some point you might consider, if someone does not process

for a year that they would be allowed on a year-by-year basis to explain why

they did not do any this year? Instead of all of a sudden they have let it lapse

and now they have a big problem to get it back.

Moose-hunting licences have the same system whereby you can get in the draw

but not get in the draw. I did it last year. There was an election coming up.

You fill out your cheque and say: Put me in but I do not want a licence. You

basically have excluded yourself.

As you know, there is a small processor looking to get back a pelagic licence

that we have spoken about very briefly. The issue may have been shortage of

product or it was not worthwhile to do it. It was seen to be fairer to the

processor and maybe to the department if at the end of any given year they file

a report and say: This is why we did not process. Then you would have the option

to say, well, you have a pass for that year; instead of letting it go for a

couple of years and then coming back and saying you are lapsed and now you have

to apply and maybe appeal to get it back. Would that be a better system?

MR. KING: I had not thought about the change to the system. We have

applied a fair degree of latitude in accepting explanations from processers for

non-processing and extending licences beyond the two-year period. Our policy,

which is widely known in the industry, is two years of inactivity.

I can only speak since I have been here, but in most cases that I have dealt

with, if there is a year of inactivity they tend to make representation and say:

For the record, here is why we did not do anything and here is the case. The

ones that I have been engaged in cancelling are typically just let go by the

processors and the community.

MR. BENNETT: Okay.

MR. KING: In most cases, where there is some sense that they want to

maintain it or there is an opportunity, they have made representation upfront.

We will do our best to support the processors and the communities.

Our interest in the policy is removing licences that are just not being used

or are sitting dormant and of no value or use to anyone. Likewise, in terms of

new licences, obviously not wanting to put new licences in to glut the system

and go back to some of what we had years ago with too many plants, too many

licences, and nobody is really making ends meet.

MR. BENNETT: I agree with that, actually.

MR. KING: For a simple answer to your question: Yes, we certainly would

work with people and give consideration to the reasons presented.

MR. BENNETT: The $3.4 million more or less that is to be allocated or set

aside, or budgeted for the new seafood marketing council, is this imminent? Is

this something you are going to cut a ribbon on tomorrow or the next day and you

do not want us all to know yet, or is it something you are just working on and

it is going to be sometime in the summer?

This sounds like really good news. As the minister, presumably you will

announce it. How close is it?

MR. KING: No, it is not imminent.

MR. BENNETT: That is too bad.

MR. KING: I am not trying to scoop you or anything. It is not imminent

but the consortia idea I talked to you about, that is moving forward. I cannot

say whether it is going to operate this year. Perhaps not, but hopefully in the

not-too-distant future we may be in a position to be able to talk publicly about

what that is going to look like down the road.

There is a process you have to go through. Now that we have engaged companies

and we are working with them, obviously we are talking about a business

arrangement. I am sure you can appreciate; there are all kinds of pieces on

their end that they have to work through to get this to work.

At the same time, it would certainly be my objective that the marketing

council is going to come together over the next maybe this is unrealistic, I

do not know because I have not consulted four to six months, for sure. I want

to get the council in place, and get it active and moving.

MR. BENNETT: In the broad strokes or broad picture, as minister, how do

you see that? You must have an idea of what you would like to deliver for that

kind of money, 10 per cent of your last year's budget. It could be money very

well spent.

What are your thoughts on what that is going to get us? Is it going to be a

Cadillac or a Ford, or a pick-up truck?

MR. KING: The vision we are striving toward is that marketing council is

going to give significant leadership to the industry with support from us on

opening up new marketing opportunities worldwide to increase the value we get

back for our seafood product. That is the ultimate goal in all of this, to get

the maximum value back for the Province. I see that the marketing council will

play a significant role in that.

We do not though, to be honest with you, have a defined plan as to exactly

what that will look like and how it will operate. Again, the plan was, as per

the MOU, that we would work with the industry along a process timeline and they

would provide input from an expertise perspective on what that ought to look

like. We have not really defined what the council has to look like.

In the broader strokes, Mr. Bennett, by engaging industry experts as part of

that council there is a significant role, I believe, in changing the face of the

seafood industry when it comes to marketing outside the Province and tapping

into new markets, and partnering with other organizations.

MR. BENNETT: What sorts of input or role will very small plants play,

very small operators? I have a concern that we have a handful of very large

operators and they really dominate the industry in the Province. Then there are

maybe eighty or 100 small ones.

In this council, do you see the small plants, like the people who are

represented by SPNL and others, having a membership role or a lobby role, or a

participant role?

There are eight of these plants in my district and two of them are owned by

what I will call big players. They are both shrimp. Others are owned by much

smaller players. One or two are not even very active.

MR. KING: On the marketing council side, it would be our view that we

would engage all industry stakeholders, large and small. It is not just the

large companies, if you want to use that term. It would obviously factor in the

small operations like you are describing as well. They would have a voice at the

table.

Probably the more significant piece that would be of interest to you on that

issue would be the marketing consortium. That is probably where I see a

significant benefit for the small plants.

The challenge we have at this point is getting our first group up and

running. Our first marketing consortium, a group of plants and processors up and

running to demonstrate to others what you can achieve by coming together. I am

sure I have met with lots of them, as I am sure you have that there is some

fear and trepidation amongst some of the smaller players about what this all

means and whether they get swallowed up in the process.

From my perspective, I see the opposite happening. I see tremendous benefit

for a small operator. If you have a consortium of ten fairly significant players

in the crab industry and this is all hypothetical, but I will just try to

illustrate to you and let's say they have 50 per cent of the crab in the

Province, they are coming together under one consortium to market that crab

product outside of Newfoundland and Labrador; if you are a very small player in

the industry and you can throw your product in with them, then you are going to

actually access the benefits that will come from having 50 per cent or 52 per

cent of the product from Newfoundland, which allows the consortium to negotiate

a higher price back for the product because they have a higher volume to work

with and they can control the flow of the product into the markets outside of

Newfoundland and Labrador.

I actually see that there is going to be tremendous benefit for the smaller

operators to be a part of a consortium by getting greater value for their

product. What happens today, typically, is a lot of these smaller operators are

living and I say this loosely some from hand to mouth, so to speak. If

somebody comes in and makes them an offer of $2 a pound and they sell it, if

tomorrow the guy comes and says I can only give you a $1.80 they have to sell it

then too, because they have to move the product.

The idea of the consortium is that the product will be banked and it can be

released into the market as the consortium dictates. If the price goes down,

they can slow down the release of the product into the market. If the price goes

up, they can speed it up. That is very simplified terms now, but my point being,

no matter how small you are if you become a part of that consortium, you are

able to leverage the same price for your product as the larger members are.

MR. BENNETT: How would you see quality control being handled in a

consortium like that, CFIA standard or somebody else?

MR. KING: It would not change from what we currently do. Do you want to

add anything specific to that?

MR. BENNETT: It might be a bad batch going with everybody else's and then

you have a big problem.

MR. O'RIELLY: Yes, the quality issue there is a regulatory issue and

that is the one referring to in the Canadian Food Inspection Agency and it is

also quality standards that the Province applies in our inspection programs.

The real opportunity with the concept the minister is talking about, and your

question on quality, would go to whether or not these sales consortia, as they

are established, what product specs and standards are they going to adhere to.

There are two elements of that which are important. One is the level that you

are going to target in terms of your product specifications, and then, perhaps

even more important as to the specification, is the consistency with which you

deliver that.

The expectation is that if these sales consortia proceed as envisaged, they

will establish those standards. In all likelihood they will be considerably

higher than the basic CFIA standard, which is really make sure that the food is

safe to eat, that is all. It will be something higher than that, but, most

importantly, it will help ensure a very consistent quality to the marketplace.

Hence, a better reputation, a better price point and so on.

MR. BENNETT: Is this foreseen with a single label? Is this like the ASMI

or the Norwegian model? Is this like a singular label for all of them?

MR. KING: The vision that we shared through the MOU process is that if we

could achieve one label for the Province it would be ideal, but I think it was

recognized that there may be challenges around getting everyone to agree at the

same time to come together. We are working on the notion that there may be

multiple consortiums in the Province.

MR. BENNETT: For the species or something of that nature.

MR. KING: Yes, typically you would work on a group that are selling

lobster, or crab, or shrimp, or something like that. Lobster and crab has been

the focus, as recommended by the MOU, so at this point in time those are the two

species that we are focused on. All of those who market under one consortium

would have one label. If you have, using my hypothetical example, ten companies

with 40 per cent of the crab for the Province or whatever magical number, then

those ten companies will market under one label their product.

MR. BENNETT: Okay.

MR. KING: Crab and shrimp, sorry. Did I say lobster? Crab and shrimp are

the two that we are focused on.

MR. BENNETT: That makes better sense. Lobster is a fish all by itself.

The document or the follow-up information that Mr. Mitchelmore is requesting,

do I need to ask for that separately or will it automatically come to me?

Whatever you give him, are you going to give to me?

MR. KING: Oh, yes.

MR. BENNETT: Okay.

Earlier you indicated, with some of the equity funding, or investment capital

funding - or I am not certain what it was; I do not think it was equity that

you are not actually dependent upon or partnered with IBRD, which I see as a

good thing because it reserves more autonomy in DFA.

Even that being the case, would there be cases where an individual who wants

to put forth an undertaking, that they want to fund for whatever, would DFA fund

a proponent at the same time as IBRD would, albeit for other things, one might

be for inventory, the other one might be for equipment? Could that happen? Or,

if DFA was involved, then IBRD would not be, or vice versa?

MR. KING: It is possible I just conversed with Alastair there.

Typically there would be a conversation between departments though, government

MR. BENNETT: Mr. O'Rielly knows who I am asking about.

MR. KING: Okay, I do not.

MR. BENNETT: You probably do not, but he definitely knows.

MR. KING: Typically there is sharing of information across departments.

It depends on the nature of the project. To be clear the Capital Equity Program

I am talking about is aquaculture.

MR. BENNETT: Yes, okay.

MR. KING: It is a fund that we introduced a couple of years ago to

support the aquaculture industry. It is a zero-based budget, which Mr.

Mitchelmore asked about a while ago why the difference last year and this year

and so on.

We make a case in the Budget process for certain specific projects. I think

this year it was $6.1 million, next year it could be $2 million or it could be

$200 million. Project proponents come to us through that program, and then the

department will do an assessment and determine what we think are good projects.

We will then make representation as part of the Budget process.

It is not a case that we have I will say $5 million every year to allocate,

it is zero based and we make the case through the Budget process. It is targeted

to aquaculture development.

MR. BENNETT: Is there any pool of funds or the possibility for anything

but aquaculture?

MR. KING: The only other program of any significance that we have that

might focus on what you are talking about, if I could read into you a little

bit, would be our Fisheries Technology and New Opportunities Program; FTNOP we

call it. There was some slippage in that one this year because again that one is

all industry driven. We have a budget, we accept applications, and we do

assessments. There is a whole range of things that can be considered there

within specific criteria. Included in that could be capital equipment and things

like that for processing facilities.

MR. BENNETT: Okay.

I would like to ask you a little bit about the cod recovery or if it is a

recovery or non-recovery. The reading that I have done indicates that it is now

the most important species by value in both Iceland and Norway is cod. They have

hit around a 20 per cent threshold or thereabouts. They had a bad time of it

back, more or less, when we did.

Mr. King, have you reviewed any of the Icelandic or Norwegian scientific

literature to learn about their recovery to see what we could be doing? I know

it is a DFO issue primarily.

MR. O'RIELLY: We are aware, of course, of the status of the stocks in

Iceland and Norway and looked at what their success has been, which is

absolutely phenomenal in the case of Norway. The cod quota this year is just

north of 700,000 metric tons. Understanding how that stock has recovered so well

is pretty elusive. I do not think they fully understand it either, but we are

aware of what science says and the health of the stock, and the recruitment

processes and so on.

A lot of that work and what is happening elsewhere will certainly input into

the CFER initiative, which is the Centre for Fisheries Ecosystems Research at

Memorial University, which the department funds. Scientists there which, of

course, you may know are headed up by Dr. George Rose. He and his team will be

looking very carefully at what happens in other jurisdictions and what the

models are.

The whole purpose of the CFER initiative is to look at new and innovative

ways of addressing science and of finding new scientific methodologies and

approaches to stock assessment and to resource assessment overall.

MR. BENNETT: Is DFO actively doing anything in cod research? Not you

guys, but DFO, to see where we are?

They may not have all been dragging, although that is the popular wisdom, is

that we have caught them all. I have read other reports that say it may have had

as much to do with water temperatures. There may have been ecological issues as

well that we have not been paying attention to.

MR. O'RIELLY: The science that DFO is doing is very consistent with what

they have done over decades really in terms of the annual survey that is carried

out, the stock assessment survey. That is the main tool they use. There are a

bunch of others in terms of looking at areas of habitat and recruitment,

juvenile production and so on.

DFO really does not have any greater insight to what has happened with the

resource. There is a question of ecological effects, temperature, regime shifts,

and changes and so on. All of these are theorized but I do not think anyone has

been able to pull this together and show in any definitive way what the effects

have been of levels of fishing effort, predator-prey relationships, especially

as it relates to seals and environmental shifts.

Certainly, we are seeing in the last couple of years significant changes in

temperature regimes, in the north in particular, that seem to be more conducive

to cod recovery. So there is some hope on that side. It is a mixed bag though

because what tends to be good for groundfish, and particularly cod, tends not to

be good for crab and shrimp.

CHAIR: Thank you, Mr. Bennett.

I would like to move to Mr. Mitchelmore.

I would like to suggest too, I am going to go back and forth one more time to

each, fifteen minutes. Then we will have eight to nine minutes to conclude and

do our motions to adopt the Estimates, if that is fine.

MR. BENNETT: What time limit today? I anticipated making more progress on

the items that I have. That is not to say that this is a bad thing because it

has been very informative across the board. If we had another morning available

that would be really helpful.

CHAIR: That will have to be the call of the committee to decide on what

is normally the protocol. It is up to the committee to decide. Okay, as we go

through it we will see how far we can get. We can review that.

Would the minister and his officials be available?

MR. KING: It would be difficult to get another morning, I would think. If

Mr. Bennett's interest is pursuing similar discussion

CHAIR: Can that be done at a private meeting?

MR. KING: Yes, no difficulty with that. It appears you are not as focused

on line by line as you are bigger issues. We can certainly do that, find some

time for that if is appealing. Finding a morning is challenging for me because

of my other duties in Cabinet and committees and so on.

CHAIR: Plus, all the officials too, getting everybody together.

MR. KING: Yes.

CHAIR: Mr. Bennett, would that suffice? We can arrange something.

MR. BENNETT: Line item matters are important to this year and this Budget

debate and so on. To me, the big picture of where we are in the fishery and the

opportunity to interact, share ideas and find out where we have similarities

more so than dissimilarities is much more valuable than trying to figure out how

much is budgeted for this and how much was spent for that. This sort of

interaction takes more time.

CHAIR: Mr. Mitchelmore, if I could just ask for your input into

MR. MITCHELMORE: Thank you.

I will focus in on the line items here of

CHAIR: Yes, but I would like to ask also your view on that. I do not

think it is available here in the agenda to be able to, down the road, convene

another meeting of the committee.

MR. MITCHELMORE: I will certainly try and get through

CHAIR: If there is additional information that the minister's staff might

be able to work out a sidebar down the road, would that be convenient?

MR. MITCHELMORE: I would be okay to meet again. I will certainly try and

get through my line items if possible within the time. Pending further

discussion as to how everyone wants to go, I would continue to have further

fishery discussions on the broader issues.

Right now, is it okay for me to go into my line items?

CHAIR: Go right to the line items, please.

MR. MITCHELMORE: Thank you, Mr. Chair.

Line 2.2.01 Seafood Marketing and Support Services, 10 Grants and Subsidies;

you had already explained, but I just want to ask for a list of the $200,000 of

what was actually spent on the marketing initiatives last year, if that could be

provided.

MR. KING: Okay.

MR. MITCHELMORE: Is that okay?

MR. KING: Yes.

MR. MITCHELMORE: I go back to it is under Compliance and Enforcement,

2.2.01. I just want to ask, what is the frequency of department audits for fish

buyers and processors? Is there a clear set up, a structure of funds allocated

to do the audits on a regular basis? Is it a yearly audit?

This is for the safety and what we had talked about earlier. Is there a

specific time frame for your department to audit these facilities?

MR. KING: Line 2.2.01, is it?

MR. MITCHELMORE: Line 2.2.03 Compliance and Enforcement.

MR. KING: Line 03?

MR. MITCHELMORE: Oh, sorry about that.

MR. KING: Line 03?

MR. MITCHELMORE: Yes, it is 03 Compliance and Enforcement. I would

imagine it would fall under the Salaries and probably Purchased Services if so.

MR. KING: Shawn is going to speak to that for you.

MR. MITCHELMORE: Okay, great.

MR. ROBINSON: The audits of facilities are scheduled on a regular basis.

We have three auditors, as was mentioned earlier, and they look at the

processing operations. They have a

schedule worked out where they do them on a

rotating basis.

At the same time, if there is we talked earlier about production

information that companies would provide. If production information comes into

us that the department wants to take a closer look at, the auditors can also be

deployed to look at specific production information that the company provides.

MR. MITCHELMORE: There is currently no set up for an auditor to go into a

facility on a regular basis. There are processors and buyers across the Province

that may not have been physically met with and their facilities.

MR. ROBINSON: No, sorry if I was unclear.

We do have a regular

schedule of auditing. We look at all the processors in

the Province and we do them on a regular basis. As I said, we have three

auditors, they are scheduled. We look at how many processing operations we have,

and they are done on an annual basis or a semi-annual basis.

MR. MITCHELMORE: Okay.

I would like to move on to 2.2.04 Fisheries Innovation and Development. I

think this may have been answered by the minister.

MR. ROBINSON: Excuse me. Sorry, if I could just jump in?

MR. MITCHELMORE: Sure.

MR. ROBINSON: Perhaps it would be an idea to define the inspection

process versus the auditing process. We have a number of inspectors, as was said

earlier, over thirty that everyday are in processing operations and are looking

at how companies are doing their work, what they are processing, the quality, et

cetera.

Separate from that, we have an auditing team that looks at the annualized

production of a company. They will go in and look at, what did they do over the

year period? As I said, they do that on a regular basis. Plus, they have the

ability to go in and do some kind of investigative auditing if we see an issue.

MR. MITCHELMORE: I may not have been clear in my questioning. I was

focusing mainly on the auditing piece and I thank you for that clarification.

The Fisheries Innovation and Development, 2.2.04, Grants and Subsidies, I

guess the decline then we see the budget and the revised amount is a drop. Is

that to confirm that there was less funding used under the Fisheries Technology

and New Opportunities Program?

OFFICIAL: Yes.

MR. MITCHELMORE: Okay.

Can we have a list as well of that? They are printed on-line but not for the

past year. They are not there for 2011. They are there for 2010.

MR. KING: You want a list of just the companies and the amount?

MR. MITCHELMORE: Yes.

MR. KING: No problem.

MR. MITCHELMORE: Under the Aquaculture Development and Management,

3.1.01, I would just like some clarification. What is being used for these

Professional Services? Are these consultants that are being hired, under 05,

Professional Services? That is the $232,800.

MR. KING: Line 05?

MR. MITCHELMORE: Line 05, under Aquaculture Development and Management,

$232,800. Is that to hire a consultant? That is the Estimates for this year.

MR. KING: The budget head for that one is for hiring consultants. It is

for using contractors and using labs as we require them, external to our own

facilities. It also relates to special projects that we may be engaged in with

respect to data collection and analysis in the aquaculture industry, any work we

need to do around infrastructure development or industry development issues. It

could include, at some points in time, site cleanup, water sample analysis or

other scientific consultations on technical issues.

MR. MITCHELMORE: Okay.

In that same

section under the Grants and Subsidies there, there was budgeted

$1.5 million and it was revised to $330,000. Was something not done in this

case, under the Grants and Subsidies? What program did the allocation have that

did not get utilized?

MR. KING: Yes, there was $1.25 million that we had initially budgeted for

a project to construct a meal plant and the proponent has since not followed

through with it.

MR. MITCHELMORE: Is that the cod demonstration plant no, that is a

separate issue.

MR. KING: Separate.

MR. MITCHELMORE: Under the Aquaculture Capital Equity Investment

3.1.02.08, Loans, Advances and Investments under your equity fund, previously

you had looked at investing $8 million and this year it is only $6.5 million in

the equity fund. Is this an indication or is there any reasoning behind why you

would allocate less money for an industry that is getting so much private equity

back?

MR. KING: This is the one I referenced for Mr. Bennett a few moments ago.

This is the one that is a zero-based budget.

MR. MITCHELMORE: Okay.

MR. KING: We make a case through the Budget process annually. It is all

based on applications that we receive from the industry.

MR. MITCHELMORE: It is possible that it could be increased more than $6.5

million?

MR. KING: Well, the $6.5 million is the only allocation we have for this

year. It is based on the applications that we have in the system for this year.

Unfortunately at this point, I cannot share with you what they are because we

are working through a process.

MR. MITCHELMORE: Okay.

MR. KING: We budget a notional amount based on two things: based on

applications we have that we feel are solid; but also there is also a notional

amount there for consideration of new applications that may come in which may

give us the opportunity to fund over a couple of year period. The $6.5 million

this year as I said a few moments ago, next year it could be down to $1.5

million or it could be up to $10.5 million.

MR. MITCHELMORE: Okay.

MR. KING: It is based on specific projects that we have for consideration

right now.

MR. MITCHELMORE: Right. Those are the applications put in advance. Okay,

I understand that now. Thank you.

MR. KING: Yes.

MR. MITCHELMORE: Last year there was $150,000 allocated in the budget to

remove old fish structures and different buildings. Is that still because I

have not seen it in the budget or these Estimates, I may have missed it. Is this

program still available or has it lapsed? It is for cleanup and different

things, small amounts I believe of $3,000 were allocated.

MR. KING: There is no amount in the budget for this year. That was not an

ongoing line item.

MR. MITCHELMORE: Okay.

MR. KING: It is an amount that we allocated and it is DFA facilities and

structures; it is not others.

MR. MITCHELMORE: Okay.

MR. KING: It is our own properties. We had targeted a number of

properties that we felt we needed to do work with. That amount was in last

year's budget specifically for those that have been targeted.

MR. MITCHELMORE: Right.

There has been quite an increase in natural disasters such as storm surges

and things like that. That has had an impact on fishers and their sheds and

outer buildings and things like that that has been damaged. Some of them have

chosen not to rebuild. Would there be some consideration for a partial funded

program to remove old structures under Department of Fisheries and Aquaculture?

MR. KING: I have not given any consideration to it. A primary

consideration for any government, whether it is us or someone else would be that

if you looked at enacting that kind of a program, the minute you take on

responsibility for cleanup you take on responsibility for liability of the

property. It is not a road that we have travelled, and I do not foresee us doing

it at this point in time.

MR. MITCHELMORE: Right. I am aware of that.

What investments are being made into the safety and the professionalization

for harvesters? There were some funds allocated previously, and I did not see it

this year in the Budget for the certification board.

MR. KING: Mike, do you want to speak to it?

MR. WARREN: We are continuing with our safety initiative that was

identified in the Fishing Industry Renewal Strategy. We were working with the

Workplace Health, Safety and Compensation Commission, and so we are making some

progress that we hope will build to make some announcement soon.

MR. MITCHELMORE: That is great to hear that.

One other thing I wanted to get back to was the certification of fish

species. There have been several initiatives undertaken by the department where

there has been great certification. Are there any initiatives being undertaken

to do further certification of fish species in the upcoming year?

MR. O'RIELLY: Yes, there are some discussions amongst members, various

processors in particular who are interested in pursuing this. Mostly Marine

Stewardship Council certification but there is other initiatives as well. We are

doing some work with the aquaculture sector as well for this purpose,

particularly in mussels. So we are receptive to that, and we are finding that it

is a way to add value and differentiated product for the Province.

MR. MITCHELMORE: Would the Fisheries Technologies and New Opportunities

Program have funds allocated as an incentive or partially fund either harvesters

or processors to use more energy efficient technologies, whether it would be

equipment, motors, or with their facilities? Does that fall under the program?

MR. KING: Yes, it would. Under the program, there is no particular amount

of money allocated for specific types of projects; it is a global pot. We work

with those in the industry who have ideas that might fit the criteria that

certainly would fit the criteria.

MR. MITCHELMORE: Okay, that is great.

Is there any movement, because there is a lot of biomass from fish plants and

things like that, such as things like shrimp shells that are just being dumped

and not being utilized, which could be an energy source or could be used for

other things. Is this being pursued through outside investment, or should I

direct this maybe to the Department of Innovation, Business and Rural

Development as an initiative? Is this something that your department is

exploring?

MR. O'RIELLY: There are a number of initiatives that the department has

supported, but other departments, such as IBRD, or federal departments and so on

have also considered. We have done a fair bit of work in that area with the

Marine Institute over time and there are a couple of significant projects that

have been undertaken or are in place within the Province right now to more fully

utilize waste by-products from seafood production.

MR. MITCHELMORE: Okay, that is great.

I guess I alluded to I would like to just ask what the status of the cod

demonstration plant is. I may have missed that; the $1 million provincial

investment in Cooke Aquaculture. It was supposed to be completed operations for

September 2012. Is that moving forward?

MR. MEANEY: We entered into the process with Cooke to evaluate cod

aquaculture. Over the course of the last three years we have come collectively

to the position that the economics of growing cod in cages or in tanks simply

does not meet the market prices. So, the bottom line is that we have cut the

program short by a year, and that has resulted in lessened cost to us and to the

company as well.

It is in its very last stages. The first fish will be going to harvest and

evaluation for measurements and weights and that sort of information over the

next six to twelve months, but the project is essentially wound down. The

science and information will be retained, and if market prices improve it may be

able to be looked at in the future.

Currently throughout the world Norway, in particular, was spending huge

amounts of money, time, and energy. There were over forty companies involved in

cod farming. There is one company left in operation right now, and it is in

pretty rough shape. So, the economics were simply not there to allow cod

aquaculture to continue in the marketplace.

MR. MITCHELMORE: Okay, thank you.

After attending the Home from the Sea Campaign, it announced that