April 11, 2006 RESOURCE COMMITTEE

Pursuant to Standing Order 68, Ross Wiseman, MHA for the

District of Trinity North replaces Kevin O'Brien, MHA for the District of

Gander.

The Committee met at 7:00 p.m. in Room 5083.

CHAIR (Mr. Harding): Order, please!

[Technical difficulties].

MR. HUNTER: Ray Hunter, MHA for Windsor-Springdale.

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

MR. WISEMAN: Ross Wiseman, MHA for Trinity North.

[Technical difficulties]

MR. RIDEOUT: Thank you, Mr. Chairman.

Over here is Brian Meaney, Assistant Deputy Minister of Aquaculture; David

Lewis, Assistant Deputy Minister of Fisheries; Sean Dutton, Acting Deputy

Minister of Aboriginal Affairs; Alastair O'Rielly, the newly appointed Deputy

Minister of Fisheries and Aquaculture; Lori Lee Oates, our Director of

Communications.

CHAIR: For the purposes of recording that (inaudible) turn the mike on

and turn it off when they are finished. For the information of the officials

from the department, if you are asked to speak, before you do, that you have to

identify yourself each time.

So, the normal procedure, we ask the minister (inaudible). He may have up to

fifteen minutes if he wishes to review briefly the Estimates of his department.

After that, then the members may ask any questions they may have.

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

CLERK: 1.1.01.

CHAIR: 1.1.01.

Minister Rideout.

MR. RIDEOUT: Thank you, Mr. Chairman, and committee members.

As I said in the House today, I am battling a bit of a sore throat. So if I

sound a bit off, I have to keep something in my mouth. I apologize for that but

we will do the best we can.

I am pleased to be here this evening to discussion the Estimates, obviously,

of the Department of Fisheries and Aquaculture with the Committee, and also the

Estimates for Aboriginal Affairs.

The last time I was with the Department of Fisheries, it was just the

Department of Fisheries. Of course, now aquaculture is a significant part of the

Department of Fisheries and Aquaculture and has played an increasingly

significant role in the fishery in our Province.

On the Aboriginal side, we have engaged in consultations with Aboriginal

leaders and Aboriginal women and we have heard concerns about the social and the

cultural economic and environmental needs of their communities. In Budget 2006,

we made a number of commitments to address many of the concerns of Aboriginal

people in our Province.

I want to take a few moments as well to talk about Fisheries and Aquaculture,

and I will come back to Aboriginal Affairs before I clue up.

We strongly support the development of the Province's aquaculture sector. I

believe if there is any doubt about that it should be evident in Budget 2006.

Our government is committed to the rural parts of our Province and we have no

intention of not supporting it. The fishery is a critical component of rural

economics in our Province and because of our commitment to the rural areas,

there is a significant emphasis in Budget 2006 on the development of our fishing

industry.

The sustainability and the viability of the aquaculture sector has been

clearly demonstrated in Newfoundland and Labrador. I have also said many times

that we have enough processing capacity in our Province to process four to five

times the total world crab landings. This is clearly not a sustainable situation

with a resource that is also in decline. Our Province therefore desperately

needs significantly more raw material to sustain those fish processing

facilities. Perhaps the best opportunity to provide an increased raw material

supply to those facilities lies in the aquaculture sector.

Furthermore, about 90 per cent of our Province's aquaculture potential

still remains untapped. As well, the Province is home to some of the last

remaining aquaculture development sites in North America. Most every other part

of North America, certainly on the East Coast, and the West Coast, too, for that

matter, have just filled up.

I was in New Brunswick a couple of weeks ago and there is hardly anything in

terms of a virgin site left in New Brunswick,

whereas we have the potential for

many tremendous new sites in all parts of the Province. So, therefore, there is

an incredible opportunity represented by aquaculture development for a future of

this Province.

There is no doubt, St. Alban's success story illustrates the true potential

of aquaculture in our Province and bodes well for other rural areas of

Newfoundland and Labrador. It is difficult to adequately convey how much

potential aquaculture development holds for the Province. It is the best kept

secret in our Province and represents one of the most promising opportunities

for rural Newfoundland and Labrador. Our Province has the capacity, as I said,

to become the largest producer of aquaculture products in Canada.

There are significant employment opportunities associated with aquaculture

development. In other jurisdictions each job on a fish farm provides an

additional four to five jobs in aquaculture: processing, supply and service

sectors. Aquaculture is a key part of our strategy in stabilizing areas of the

Province that are currently facing difficult circumstances in the fishery. We

believe it has the potential to become the flagship growth sector in

Newfoundland and Labrador.

Budget 2006 invests an additional $4.2 million in aquaculture, more than

doubling last year's expenditures. This will enable the aquaculture sector to

expand at a quicker pace. Government will invest $3.5 million this year to

create a new three-year $10 million Aquaculture Capital Investment Program to

grow the aquaculture sector through the attraction of new private sector

investment and expansion of existing aquaculture operations. The program is

designed to boost industry production and create new employment opportunities

and will add, approximately, 150 full-time equivalent jobs to the industry

within the next two years.

Budget 2006 also allocates $330,000 for aquaculture industry support, which

will double the support for the evaluation and adoption of new technology and

continued support for marketing and human resource development. The funding will

also ensure industry continues to have a strong voice by promoting support for

the industry association. A further $30,000 in new funding has been allocated to

increase the level of support in investment prospecting.

An additional $500,000 in Budget 2006 to take the next step to commercialize

cod aquaculture through the creation of a commercial scale cod demonstration

farm. We really believe that the next real breakthrough in aquaculture is going

to be with cod. Government will seek the participation of industry and

additional financial support from the federal government for this development.

Another aspect of the department's responsibilities, which have received

much attention as of late, is the Province's sealing industry. Budget 2006

also includes funding to address the annual animal rights campaigns against our

seal hunt.

The seal fishery recorded another strong year in 2005 with a market value

approaching $40 million and a landed value of approximately $15.7 million. About

90 per cent of the quota was filled by Newfoundland and Labrador harvesters with

about 290,000 seals taken last year.

The Government of Newfoundland and Labrador will continue to support our

sealing industry. It is an important industry based on a humane harvest and an

environmentally sustainable management plan. The future of the seal hunt is

clearly a priority for the government. It puts income in the hands of people in

rural Newfoundland and Labrador during a critical time of the year. It is a time

when they are preparing for the fishery and they need the dollars to invest to

prepare for the coming fishing season. We are keenly aware of the importance of

this sector to our rural economy.

We also believe that it is critical to counteract the misinformation and the

myths that are perpetrated every year at an international level by certain

animal rights groups. That is why in Budget 2006 government will develop and

implement, at $100,000, a sealing industry campaign. The objective of the

campaign is to counteract the misinformation presented about this very important

industry. This is particularly important since animal rights groups have been

calling for a boycott of our Province's seafood products. We are at a point

where the price of many seafood products is low on the global scale. Globally

renown seafood consultant, John Sackton, said earlier this year that issues of

price can be overcome with increased marketing.

While our department has been active participants in the Boston Seafood Show

and some other international shows every year, our government will become even

more active in our marketing activities. The department will invest $100,000

this year to enhance the promotion of the Province's seafood products and

develop a broader range of international market opportunities through our

increased participation in international trade exhibitions. This program will be

increased by $100,000, bringing the total value of the program for this year to

$300,000.

Our department is also committed to the development and the diversification

of our fishing industry. We work in partnership with the Marine Institute, the

Canadian Centre for Fishery Innovation, industry participants and other

government departments. This work focuses on identifying harvesting, processing

and marketing development opportunities, especially for emerging and

underutilized species, such as hagfish and sea cucumbers.

In Budget 2006, an additional $250,000 has been allocated for fisheries

development and diversification, activities that will assist us in leading these

goals. These funds will be used to undertake exploratory resource surveys,

examine and introduce new fishing and processing technologies and undertake

product line to address seafood trade and market barriers, such as the 20 per

cent EU tariff on cooked and peeled shrimp.

Government will contribute $300,000 a year, for a five-year program, to

implement the Canada-Newfoundland Strategy for the Recovery and Management of

Cod Stocks in Newfoundland and Labrador. This initiative will be a partnership

between governments, MUN and the provincial fishing industry.

The department also assists the fishing industry during this challenging time

by reducing its processing licensing fees and cancelling the fee increases that

were planned for this year and beyond. This will save the industry $750,000 in

2006 alone.

As well, the Province, led by the Department of Fisheries and Aquaculture,

will be implementing a new approach to coastal and oceans management. In

response to the opportunities and challenges facing the Province's coasts and

oceans, the Province will be investing $135,000 in this emerging area of

importance. The aim is to work with other provincial and federal departments to

increase the Province's capacity for coastal and ocean's management and to

prepare an oceans strategy and a policy framework. It will also enable the

Action Plan.

The gross expenditure allocation for the Department of Fisheries and

Aquaculture for 2006-2007 will be $15.6 million. This compares with a gross

expenditure of $10.4 million in last year's Budget. Our net expenditures for

the current fiscal year will be approximately $13.8 million. The department

continues to provide efficient and effective services throughout the Province

while, at the same time, focusing on growth and development of the fishing and

aquaculture sectors.

I know that you are aware that I also have responsibility for Aboriginal

Affairs, and I would like to mention some of that.

Over $1.3 million has been allocated to fulfill provincial obligations for

the implementation of the Labrador Inuit Land Claims Agreement, such as a land

use planning, surveys and the establishment of co-management teams.

Suicide and Fetal Alcohol Spectrum Disorder, also known as FASD, are two

issues that the government takes very seriously. The government continues to

make addressing these issues a top priority in our overall goal of improving the

quality of life for Aboriginal people.

Government is supporting a suicide prevention initiative that will involve

research and training programs for Aboriginal communities experiencing a high

level of suicides at a cost of $120,000 over the next two years. Discussions

have taken place with Health Canada and we continue to encourage them to match

this investment by us.

Government appreciates the working relationships that we have developed with

all Aboriginal groups. We envision a society where relationships are built on

equality and respect.

Mr. Chairman, we are committed to a program of innovation and development

within the fishing and aquaculture industries. I look forward to implementing

our new and expanded initiatives that are contained in this year's Budget so

that we can ensure that the fishing and aquaculture industries remain important

contributors to our Province. I also look forward to implementing budget

initiatives for Aboriginal Affairs for the benefit of all the Aboriginal people

of Newfoundland and Labrador.

Mr. Chairman, that is our opening remarks. We will go from there, however you

want to proceed.

CHAIR: Thank you, minister.

Mr. Reid.

MR. REID: Thank you, Mr. Chairman.

(Inaudible) the Committee for Aboriginal Affairs (inaudible) in Labrador

today, so I guess any questions that we might have (inaudible) ask you privately

or in the House.

MR. RIDEOUT: Sure.

MR. REID: I am sorry about that.

Anyway, I am not going to keep you long tonight, minister.

I do not know if you remember what the budget was when you left the

Department of Fisheries, but you must see quite a difference in it. I know the

loan board was under that portfolio at the time.

MR. RIDEOUT: Advisory Board.

MR. REID: Yes.

MR. RIDEOUT: I think it was in the area, when I was there last, of $40

million or $50 million.

MR. REID: Yes, that is what I was going to say.

MR. RIDEOUT: And 300 or 400 employees.

MR. REID: Yes. It has gone down a lot since then. I remember coming in

with Carter in 1989 and I think it was around $50 million at that time.

MR. RIDEOUT: Yes.

MR. REID: I think there were, how many people at the loan board? Probably

forty or fifty at that alone.

MR. RIDEOUT: There is a big difference, you are right.

MR. REID: We had a lot more money from the federal government, too, in

cost-shared programs at that time. Unfortunately, they do not see fit to do any

of those. NIFDA was one, I think, at the time.

MR. RIDEOUT: That's right, and we had an infrastructure program, too,

when I left. I do not know if that was finished up when you came in or not, but

still we are doing a lot of marine service centres and that kind of thing.

MR. REID: How come we cannot get any more of those deals from the federal

government? Did they just can them all or what?

MR. RIDEOUT: I cannot answer the question for the past few years. I do

not know - Dave, are there tests that we didn't try or the feds would not do

any one-offs or what?

MR. LEWIS: My understanding is the federal government decided to go a

different route. They sort of moved away from cost-shared agreements. The

Province, a number of times, made proposals or explored the opportunity but

there just wasn't one there in the last recent years.

MR. REID: Thank you.

I will just go through a few of these here. Under 1.2.02, General

Administration, Property and Furnishings, last year budgeted $36,000 and spent

$261,000.

MR. RIDEOUT: Which one are you at, Gerry?

MR. REID: 1.2.02, Administration -

MR. RIDEOUT: 1.2.02, okay. Property and Furnishings last year was

$36,000. This year it is $261,000. That is replacement for eight new vehicles

for the department.

MR. REID: You needed them.

MR. RIDEOUT: We wanted to get something sensible to drive around in out

in the field.

MR. REID: 1.3.01, Policy and Planning.

MR. RIDEOUT: 1.3.01. Which one are you interested in?

MR. REID: You are budgeting $589,000 for Salaries, an increase of

$213,000 from last year's budget.

MR. RIDEOUT: We got a couple of new initiatives. One is that I have been

able to get $50,000 added to the budget to hire summer student help around the

Province, and that is a new initiative. I think we only had $8,000 or $10,000 in

previous years. So, we have significantly increased that.

Fisheries adjustment, $70,000 in there for that.

MR. REID: What is that, fisheries adjustment?

MR. RIDEOUT: I will come back to that, Gerry. We are also hiring a trade

analyst. So these are the areas.

Fisheries adjustment, do you want to speak to that?

MR. O'RIELLY: The fisheries adjustment initiative is from the Fisheries

and Aquaculture's portion of an initiative involving three departments that

will focus on dealing with what we anticipate to be the adverse effects of

markets and resource circumstances in the industry over the past number of years

and trying to assist in some of these programs. It deals with the human resource

issue of short-term measures. Others are looking at longer term structural

changes and things that we did to accommodate people from a human resource point

of view.

From the department, it has to do with looking at what we do with respect to

licensing policies and plans and what the shape of the industry is going to look

like downstream because we do anticipate really significant impacts from the

current environment from a resource and a market perspective, and we are going

to work with other departments, I guess, in terms of looking at alternatives and

diversification and so on.

MR. RIDEOUT: The other departments that have funding for this initiative,

I think, is Municipal Affairs and INTRD?

MR. O'RIELLY: Yes, that is correct.

MR. RIDEOUT: So, they each have a line in their budget to participate in

this.

MR. REID: 1.3.01.05, Professional Services. Last year you budgeted

$50,000 but you spent $82,000, and this year you are increasing it to $180,000.

What kind of professional services do you get for that?

MR. RIDEOUT: Last year there was a requirement for some professional

services on the RMS side. I think accountants and -

MR. LEWIS: Cashin.

MR. RIDEOUT: - then the Cashin report and that kind of thing. What are we

proposing this year?

Oh, yes, we are involved in a tariff and a trade strategy that we are

intending to spend some more money on. As I said earlier in my opening remarks,

we are going to get engaged, hopefully more heavily and hopefully with some

success on the EU side, and the 20 per cent tariff on shrimp and also a more

aggressive marketing strategy in terms of attending more of the exhibitions, the

seafood shows and that kind of thing. That is where some of that will go.

MR. REID: You talk about the tariff and stuff. I know that the U.S. was

talking about countervail for a number of years on shrimp, especially those out

on the west coast of the U.S. Did that issue raise itself lately about dumping?

MR. RIDEOUT: I do not know about the west coast, but I do not think it

has in this case -

MR. REID: No, I am talking about Oregon. I think that is where the

biggest complaint was coming from.

MR. RIDEOUT: Oregon, yes.

MR. REID: Is that still an issue?

MR. O'RIELLY: No, it is not an issue at the moment. It has not been an

issue in the past couple of years. That kind of arose as part of an omnibus

response in the United States to downturns in the market and really driven by

the Gulf shrimp industry and the crowd in Oregon were kind of tagging along, as

it were, in terms of raising allegations of countervail and anti-dumping. That

has subsided and it does not appear to be an imminent threat at the moment.

Although, I think we are very mindful of the fact that the American industry has

become rather protectionist and any measures on our part to do something that

would be perceived to be against trade law would certainly draw some fire from

the U.S.

Most of the issue really has to do with the EU tariffs. As you well know, the

shrimp tariff but it is also applicable to groundfish and a number of other

species as well.

MR. REID: We hear lots of talk coming out of the federal government about

that tariff and their willingness to do something about it. I know that Martin

apparently raised the issue a few times when he was overseas. Do you see any

movement on that at all?

MR. RIDEOUT: Actually, there was a time last year when they thought they

had a deal, if I recall correctly. I do not know if it was Denmark now. Somebody

scuttled it anyway, but they had a substantial agreement among all the European

Union, fisheries players, and then something went astray and went off the rails

and it got scuttled. I think there is a way to do it and I think the way to do

it is through pressure in the shrimp industry on the royal agreement. We are

going to be trying to ratchet that up over the next few months and hopefully it

will have some success. I mean, we cannot guarantee it but they are still a

fairly big player and if they were on side we think that you could probably make

some progress.

MR. REID: Are they still involved in that plant up in Jackson's Arm?

MR O'RIELLY: No, they are not.

MR. REID: That plant that FPI has, when we were talking about that. Did

they buy that, because they said they were going to put Canadian fish through

that plant?

MR. RIDEOUT: Which one is that?

MR. REID: The one that they bought in Britain.

MR. RIDEOUT: In Britain.

MR. REID: Were they talking about using that for shrimp, where we could

bring in unprocessed shrimp and -

MR. RIDEOUT: You can go ahead Alastair, but that is not my understanding.

They were going to bring in the fresh packed shrimp and then it was going to be

reprocessed into portions for the individual retail market. That was my

understanding, but you can add to that if you wish.

MR. O'RIELLY: Thank you, minister.

The seafood company is primarily driven as a marketing initiative by the

company rather than a reprocessing activity. That company does some processing,

contract processing and so on, but they are not into the cooked and peeled

practice for business. So, it really was not going to displace any activity

here. The intent was, and I suppose still is, is to have a better conduit to the

United Kingdom market, which for cooked and peeled shrimp is roughly 40 per cent

of the total world market for that particular product form. The thinking was

that this would help strengthen the opportunity for Canadian shrimp by having a

Canadian owned and controlled conduit as opposed to a place to process shrimp

inside the -

MR. REID: So it would be more for marketing than anything else.

MR. O'RIELLY: Exactly.

MR. REID: Because I was thinking, by simply buying a plant in the EU we

could get more shrimp into the EU, I mean that would have been done long ago. So

that would not work.

Also, I think in one of the releases that the company put out at the time

they mentioned scallops. That must be Risley's own, is it?

MR. RIDEOUT: They have scallops on the Scotian shelf, yes.

MR. O'RIELLY: They do, yes.

MR. REID: Would they go in there for processing rather than here?

MR. O'RIELLY: No, most of that product is done now on these vessels at

sea and it is already processed. It already has the (inaudible) the meat is

extracted.

MR. REID: Under 2.1.01, your budget under Salaries has increased by

$94,000 this year. Are you increasing the number of employees or employee?

MR. RIDEOUT: There are two partial vacancies, field reps, that we are

proposing to fill. Is that correct?

MR. O'RIELLY: Yes.

MR. REID: You did not have that budgeted for last year. So they were not

there last year?

MR. O'RIELLY: No.

MR. REID: Because it is increased by $94,900 this year.

MR. LEWIS: The budget for last year was actually $1,969,000. The revised

- what we actually spent was $1,901,000 and the reason there was the savings

there of $68,000 was because of these two positions that were vacant for part of

the year, but those two positions will be staffed this year. So the budget is up

around $30,000 from last year, from $1,969,000 up to $1,996,000, and the

increase is accounted for by a small salary increase which is being applied to

all employees in 2006-2007.

MR. RIDEOUT: Three percent?

MR. LEWIS: Yes.

MR. REID: When does that kick in?

MR. RIDEOUT: The 3 per cent?

MR. REID: Yes.

MR. RIDEOUT: It depends. I think some are April 1 and some others are

July 1.

MR. LEWIS: The bargaining unit is April 1 and management is July.

MR. REID: Under Grants and Subsidies, you have increased it this year by

$100,000. Is that the grants to fishermen's communities?

MR. RIDEOUT: Yes, for slipways, small wharves and that kind of stuff.

MR. REID: Did Trevor spend all that himself last year or what?

MR. RIDEOUT: It all got spent, I guess.

MR. REID: You are still receiving applications?

MR. RIDEOUT: Yes.

MR. REID: A good program, minister, by the way. It is too bad you don't

have a few hundred more to put in there.

MR. RIDEOUT: Yes. It is a good program, I agree. It helps leverage a lot

of other money too from - like ACOA or whatever. Sometimes companies themselves

participate and so on.

MR. REID: 2.2.01.05.

MR. RIDEOUT: 2.2.01.05, Professional Services?

MR. REID: Yes. You spend $70,000 last year.

MR. RIDEOUT: Yes. We had $117,000, spent $70,000 and proposing $192,400

this year.

MR. REID: It is $122,400, is it? That is what we have.

MR. RIDEOUT: Basically, Mr. Chairman, it is the funding initiatives that

we are proposing to take in seals and further fisheries development initiatives.

That is what it is earmarked for.

MR. REID: Did you give any grant this year to the Sealers Association?

MR. RIDEOUT: I don't think so. Did we?

OFFICIAL: I think so.

MR. RIDEOUT: Did we? Okay. I (inaudible) too quick there.

They have run into tough times, too. I don't think they can get their

members to pay many fees either.

MR. REID: There used to be a time, I think, when there was at least

$50,000, maybe $100,000, going in from the Province and the federal government.

MR. RIDEOUT: That is right.

We provided a grant of $10,000 last year to them.

Are we proposing to do the same this year?

OFFICIAL: They have not asked yet.

MR. REID: Tell Frank this one. Is Frank still the Chair of that? Yes?

Under Purchased Services, your budget is increasing by $309,000 to $809,000.

MR. RIDEOUT: Again, it is fisheries development, seals and trade shows.

That is where the increased funding is earmarked for.

MR. REID: When you talk about seals, is that where the $100,000 is going

in there?

MR. RIDEOUT: No, there is $100,000 for some kind of communications

strategy that I referred to in my opening remarks, but this is product

development and that kind of stuff.

MR. REID: Okay.

Then, under Grants and Subsidies, an increase of $63,000.

MR. RIDEOUT: There is an extra $60,000 added on this year for fisheries

development.

MR. REID: There is no money any more from the federal government, right?

MR. RIDEOUT: Sometimes, some of this money can lever some in terms of

ACOA or something like that. Generally speaking you are right, yes.

MR. REID: Last year, under Revenue - Federal, you had sixty -

MR. RIDEOUT: Was that the cod strategy, the $60,000 paid?

MR. LEWIS: The $60,000 was some federal funds that were contributed to

offset costs of the exhibition in Brussels.

MR. RIDEOUT: Oh, I see.

MR. REID: The what, Mike?

MR. LEWIS: The European Seafood Show in Brussels. The federal government,

through ACOA, put some money into that. We had an Atlantic-Canadian booth there.

We contributed some funds, together with the other three Atlantic Provinces, and

the feds kicked in $60,000. That was why the revenue was shown there. It flowed

through our accounts.

MR. REID: Under the Revenue there in 2.2.02.02., you are budgeting

$400,000 less this year.

MR. RIDEOUT: That is the licensing, where we cancelled licence fees and

the RMS fees and that kind of stuff.

MR. REID: How much did that RMS cost processors last year, what was

billed out? Do you know?

MR. RIDEOUT: They were paying, what was it, an extra thirty-five a ton?

MR. LEWIS: The total cost of the implementation of the RMS, what was

passed on to processors, was about $80,000 to $100,000.

MR. REID: Each or overall?

MR. LEWIS: No, overall.

That was returned to them, as well as the surcharges were reduced in light

of, you know, the decline in crab and shrimp markets and so on. So, government

decided to reduce the fees by $400,000 this year, and there was also a planned

increase in fees this year of $350,000 and that was eliminated as well. So, the

total savings to the industry, compared to what was in last year's forecast,

was $750,000.

MR. REID: So, you have reduced the fees -

MR. RIDEOUT: And did not proceed with the planned increases. So, the

combination of reduction and not going ahead with the planned increases is the

accumulative effect of $750,000.

MR. REID: When did you bring in those increased fees, or did I do that?

MR. RIDEOUT: I believe you did it. I am only kidding. No, I think - well,

the RMS stuff came in last year and the other stuff, I think, emanated out of

the Dunne report.

MR. JOYCE: The fees went up last year, before you became minister.

MR. RIDEOUT: Yes, it went up, some on account of the RMS and then some as

a result of the recommendations in the Dunne report.

MR. REID: Well, I mean, to take $750,000 out of -

MR. LEWIS: The total cost of implementing the Dunne recommendations was

approximately $1,250,000 so the fees went up in 2005 by that amount and that

included all of the Dunne recommendations: the RMS, the Fish Processing

Licensing Board, a new division of compliance and enforcement, additional

inspection staff, and a whole variety of recommendations which Dunne had made in

a report that government dealt with in 2004.

The reductions here now, part of those is to take back out was put in for RMS,

given that the RMS has been shelved. Also, in recognition of where the industry

is, there was a decision to reduce some of the surcharges.

MR. JOYCE: Just a question on the RMS. Did they return the money to the

processors, did you say $80,000, that paid for the RMS last year?

MR. LEWIS: Yes, the total amounts invoiced to processors this year is

$400,000 less than what was invoiced last year.

MR. REID: They are not paying it back, what they paid? They are just -

MR. JOYCE: Like, I am saying, when the RMS was brought in last year, it

was supposed to be charged off to the processors themselves, the cost of the RMS

system.

MR. LEWIS: Well, that is partly true. In terms of the administration of

the RMS that is true, the processors paid for that, but there were funds in our

department's budget for the establishments of the shares. Dave Alcock was

retained to go and to actually establish all of the shares for a review of the

RMS which, in fact, was the Cashin report. That was all budgeted within our

department and that was a part of the funds that came under the Dunne report.

So, now that RMS is not continuing, those funds have been removed from the

department's budget and returned to the industry.

MR. JOYCE: I understand that, but last year my understanding is that the

RMS system that they had in, they had some accountant in here, Walter Milley or

something, Walter P. Milley, or -

MR. RIDEOUT: They had an accounting firm in there. Dave can speak to

that.

MR. JOYCE: They had an accounting firm that oversaw the RMS, and each

company had to pay so much into the RMS?

MR. LEWIS: That is correct.

MR. JOYCE: Did those companies get reimbursed that?

MR. LEWIS: No, the companies were not reimbursed that because the RMS

actually ran last year so that went to offset the administrative costs of

running it in 2005-2006.

MR. RIDEOUT: We took it out this year because there is no RMS program.

MR. REID: What you are saying is that, if you were a processor, you would

have anticipated prior to the budget an increase in fees to the tune of

$350,000.

MR. RIDEOUT: Yes.

MR. REID: Not only is that not happening, but every processor should see

a reduction in his fees to the tune of $400,000.

MR. RIDEOUT: Yes. An accumulative effect of $750,000, because we did not

go ahead with the planned increases for this year.

MR. REID: How much will you now be taking in on licence fees?

MR. LEWIS: One million seven hundred and seven thousand dollars is what

is in the budget for this year.

MR. REID: One million -

MR. LEWIS: Seven hundred and seven thousand dollars.

MR. JOYCE: How much did the RMS cost last year, what they paid Walter

Milley?

MR. LEWIS: I can't remember off -

MR. JOYCE: That is fine, just get back to us. That is no problem.

MR. REID: Roughly?

MR. LEWIS: Maybe $100,000, in that neighbourhood.

MR. REID: What did the Cashin report cost?

MR. LEWIS: The Cashin report was less than $100,000, I believe.

MR. REID: Under Compliance - are you all right with that, Eddy?

MR. JOYCE: Yes.

MR. REID: Under Compliance and Enforcement, 2.2.03.01., last year you

budgeted $361,000 and you spent $224,000. What did you do, lay off some

inspectors or never hired some?

MR. RIDEOUT: No, it was a delay in recruitment. Some of them did not get

hired until -

MR. LEWIS: This is a new division, so it was just getting up and running

last year. By the time all of the bodies were recruited to the division, part of

the year had passed. The total salary expenditure did not happen in 2005-2006

because it was a new division.

MR. REID: What new division? Tell us something about that, will you?

MR. LEWIS: About?

MR. REID: The new division.

OFFICIAL: Compliance and enforcement.

MR. LEWIS: Yes, there is a division of compliance and enforcement. One of

the recommendations that Dunne made was that the functions of enforcement and

the functions of licensing should be separated. Previously, the division of

licensing and quality assurance was responsible for - the proactive piece of

assisting people in the industry to improve quality was responsible for

licensing and it was also sort of the policing aspect of that function. Dunne

recommended that should be split up, that there should be a separate function to

deal with the enforcement of the regulations. He also recommended that function

be beefed up. The result of that was the establishment of a new division of

compliance and enforcement, and that division has a director, secretarial staff,

and it has three auditors, a case management officer and an inspections co-ordinator

position. Two of those positions existed in the department previously and they

were transferred into the new division. The remaining positions were new

positions that were created as a result of the Dunne recommendation.

MR. REID: Who is the director?

MR. LEWIS: The director, currently we have an acting director, Milly

Meaney.

MR. JOYCE: The inspectors that are out in the field, mainly through crab,

I guess, how are they selected?

MR. LEWIS: They are selected through the Public Service recruitment

process. The jobs are posted. It is based on merit. There is a formal interview

process that looks at knowledge, ability and personal suitability. The positions

are staffed in that manner, in the same way that all Public Service positions

are staffed.

MR. REID: How many of those do you have now? (Inaudible).

MR. LEWIS: We have approximately twenty fisheries field representatives

who, as a part of their function, do inspection work, and we have roughly twenty

seasonal fishery inspection officers who come on around this time of the year

and they are on for six months.

MR. REID: Most of those people have been around for awhile?

MR. LEWIS: There were ten additional positions that were approved coming

out of the Dunne report, so those people are really into their second year now.

Some of the seasonal inspectors have been around as long as six years, and the

fisheries field reps, some of those have been around for twenty years or more.

MR. RIDEOUT: When I was there last, some of them are still in the system.

MR. JOYCE: Each one of those positions go through the Public Service

Commission?

MR. RIDEOUT: Yes. I guess the department has somebody on the committee,

the appropriate ADM or whatever, along with the Public Service person, and they

make recommendations that, I think, end up finally with the deputy minister for

a final decision.

MR. REID: Under Grants and Subsidies, under heading 3.1.01.

MR. RIDEOUT: Under 3.1.01., yes.

MR. REID: Under 10.

MR. RIDEOUT: Under 10.

This is the cod farming aquaculture development initiative. That is where the

extra money is going from there. It was $210,000 last year; we are budgeting

$830,000 this year. We are hoping to partner with a private sector party in

terms of the commercialization of a cod demonstration farm. I would assume we

will call for proposals or expressions of interest or some public way of doing

it, and we are hoping that the federal government will become part of this

initiative as well. We have a farm, as you know, on the South Coast now that has

how much fish in it, Brian?

MR. MEANEY: One hundred and thirty thousand.

MR. RIDEOUT: We need to get a lot more fish in so that you can establish

the appropriate grow-out periods, the feed costs, and all that kind of stuff,

and hopefully interest private sector investment.

MR. REID: That 130,000, Brian, are they the ones that were down at the

Logy Bay place at one time?

MR. MEANEY: Yes, those are done under the Atlantic Innovation Fund

project for cod research at Memorial.

MR. REID: So you actually have a grow-out down at -

MR. MEANEY: There are three different year classes out there now. The

total number of fish over three years is 130,000.

MR. REID: Whatever happened to the hatchery in Bay Roberts?

MR. RIDEOUT: As I understand it - I have been briefed on it - there is a

fallout between some of the investors and there is still another $1 million or

so required to complete it, as I understand. As a result of this initiative we

are expecting that there will be a requirement for that hatchery to be finished,

and perhaps over time others developed, but I think the first thing that has to

be worked out is the tension, for want of a better word, between the present

investors to see if we can't move it along.

MR. REID: I know we had arranged with the federal government, through

CEDA, I think, (inaudible) the Economic Development Corporation for $1 million

at one time. Tobin was up there in industry.

MR. RIDEOUT: Was it ACOA or CEDA?

MR. MEANEY: CEDA.

MR. RIDEOUT: CEDA put their money in.

MR. REID: Did they put their money in?

MR. RIDEOUT: Yes.

MR. REID: Did the governments take any lien on that?

MR. RIDEOUT: Brian, you can answer that if you know the answer.

MR. MEANEY: There is an agreement with the Newfoundland Aquaculture

Industry Association which are actually - that is where a lot of the government

money was actually funded in through the association with the two private

partners. So, there is an agreement with the association.

MR. REID: I thought there was more like four in it when they first went

up (inaudible).

MR. MEANEY: Well, there are two groups. There are a number of investors

in under each umbrella group, but there are basically two private sector

investors operating under the umbrella.

MR. REID: Yes. I think it was Dobbin and Janes and Woodman's and Green's.

They got the $1 million. It was funnelled into that facility, I would assume.

MR. RIDEOUT: They invested money, as well, as I understand it, too.

MR. MEANEY: Yes, nearly another $2 million gone into it besides.

MR. REID: It is out there now closed because you cannot get along.

MR. RIDEOUT: But it does have value. I think as the cod aquaculture

program expands, there is going to be no question, that it is going to have to

be moved along.

MR. REID: That's unfortunate.

MR. JOYCE: Can I just jump in?

MR. REID: Yes.

MR. JOYCE: Just for information more than anything. There was a Derek

Parsons out in Goose Arm and he had a mussel farm, which is probably its third

or fourth year - I don't know if Alastair is aware of it. It is small, but

they were looking for some funds to go into the road. It is a forestry access

road but it is torn up a bit. Is there any funding in the department to help

with that? They are only looking at $1,000 a year to replace culverts. Is there

any form of applications within the department?

MR. RIDEOUT: We have a program in the aquaculture division to assist. I

do not know if they applied or not.

MR. JOYCE: No, they haven't applied, no. All I am asking now is -

MR. RIDEOUT: Well, we would certainly be prepared to look at it. I mean,

we do have assistance programs for that kind of thing. Now, if the road is owned

by forestry, I do not know if we would run into problems there, but we would

certainly be prepared to look at it.

MR. JOYCE: The small grants that they give fishermen's groups, how can

we get our hands on - because sometimes they just put in a letter, that there is

no need for an application. Is there a formal application?

MR. RIDEOUT: I do not believe there is a formal application. It is just a

letter of request that mostly comes into the minister's office. We send it out

to our field reps and they do an assessment to see if there is any fisheries

activity related to it and, obviously, if there is nobody landing at the

facility or something like that, you would not put fisheries money into it. But

MR. JOYCE: I am just thinking about Lark Harbour. Between York Harbour

and Lark Harbour there are millions of pounds.

MR. RIDEOUT: Yes. As long as there is some fishery activity there, then

we support it.

MR. JOYCE: Okay. How about this one for the aquaculture, for the road,

just a letter or is there a formal application?

MR. RIDEOUT: Just write us a letter, I would suggest.

MR. JOYCE: Okay. Thank you.

MR. REID: I used to think there was a form. That is the reason I am

smiling.

MR. RIDEOUT: Perhaps there was, I do not know.

MR. REID: I am sort of thinking now that it came from the Twillingate-New

World Island Development Association because they had one, I think, especially

made up for them.

MR. RIDEOUT: Oh, did they?

MR. REID: Yes.

MR. MEANEY: Just to clarify, we do have a form.

MR. REID: Yes, that's what I'm talking about.

MR. MEANEY: What happens is, if somebody is interested in seeking a

grant, then our field staff - a person fills out an application, the field staff

go out and do an evaluation and they make some recommendations as to: Is this an

area where there is significant fishing activity? How important is it to the

local fishery? - and that kind of thing. The minister, of course, takes those

things into account in deciding which ones (inaudible).

MR. RIDEOUT: It is not a complicated process.

MR. JOYCE: Is there any chance I can get a couple of those applications

tomorrow?

MR. MEANEY: Yes, I guess we should be able to get them at the office for

you.

MR. JOYCE: Because I am heading back Thursday. I could just drop them off

to the (inaudible).

MR. MEANEY: You can get them at the regional office anyway in Corner

Brook.

MR. RIDEOUT: Or you can fax over a couple to him tomorrow morning.

MR. MEANEY: Yes.

MR. JOYCE: If you do not mind.

MR. RIDEOUT: No, he will do that.

MR. JOYCE: I can bring them back and just drop them off.

MR. RIDEOUT: I did not even know we had an office in Corner Brook until I

was out there Christmas wandering around the Millbrook Mall and I see this big

sign, Department of Fisheries and Aquaculture.

MR. REID: That is pretty good because I was there for two-and-a-half

years and I didn't know we had one.

MR. RIDEOUT: People have said: What are we doing with a fisheries office

in Corner Brook?

MR. JOYCE: I always say that people do not realize that in the Bay of

Islands there are three fish plants.

MR. RIDEOUT: That is true.

MR. REID: There are a lot of successful ones, too.

MR. RIDEOUT: Yes, very successful.

MR. JOYCE: And a lot of employment. You take Bill Barry -

MR. RIDEOUT: Bill and Allen's.

MR. JOYCE: - all of his head operations are right there in Corner Brook,

right in the Bay of Islands area, and Cox's Cove. They employ 300 or 400

people a year, Allen's 300 or 400 people, and the Curling plant. They are

expanding at the Curling plant.

MR. REID: And they are open longer than most plants.

MR. RIDEOUT: Yes, they are open a substantial amount of time.

MR. REID: To get back to that cod demonstration farm. What are you going

to put some fish in there so that people can go out and look at how it is done?

MR. RIDEOUT: No, no. We are going to increase the amount of cod in it,

different year classes.

MR. REID: So, that is the 160,000 that are already out there, is it?

MR. RIDEOUT: Yes, but we are going to increase the number of fish and

different year classes so that - you want to be able to demonstrate that this is

a viable industry.

Right now, for example, in New Brunswick, Cooke has - I believe it is 500,000

fish?

OFFICIAL: This year they will.

MR. RIDEOUT: This year they will have 500,000 cod of different year

classes in their farm. That is getting pretty close, I would think, to

demonstrating - Brian, you can speak to this - but getting pretty close to

demonstrating - I mean, you have to get your feed costs down. Cod, I understand

- and I am no expert on it - are not fed necessarily on the same cycle as

salmon; the amounts you feed them and they feed differently. There is a whole

bunch of stuff you have to demonstrate and take the kinks out of.

By the way, the fellow who is running the cod aquaculture project for Cooke

in New Brunswick is a fellow Powell from the Northern Peninsula. I met him when

I was up there last week. He is excited. I mean, he thinks they have the

breakthrough. Now, if Cooke comes in here - I think they would be very

interested in moving their cod aquaculture initiative into Newfoundland and

Labrador. They are coming, it is just a matter of: When do they get here? So,

that is what is entailed in the program.

MR. REID: Is the cost for feed more for cod or salmon, Brian?

MR. RIDEOUT: Go ahead Brian.

MR. MEANEY: The cost is essentially the same on a per ton basis.

MR. REID: Do they eat more?

MR. MEANEY: That is one of the objective to find out. There are really

two objectives with the farm. One is to scale it up to near commercial

quantities and allow you to do two things, look at what the commercial scale

implications are. If you recall, when we did scallop we had to take it from the

lab to the ocean. Well, this is taking it from the small number of fish we have

there now, or three year classes, and stocking two year classes of 500,000 fish

each and being able to monitor that on a commercial basis to see what the issues

are, but also to generate the financials that you can present to people and say:

Here is a sound investment to make and (inaudible) aquaculture.

MR. REID: I would like to ask you some more questions on that now in a

few minutes. Maybe I will do it now. Are we doing any scallop aquaculture now?

MR. RIDEOUT: Go ahead, Brian.

MR. MEANEY: No, the scallop aquaculture project was closed in 1999. We

concluded, at that point, that it was not economically viable with the system

and the species we had here.

MR. REID: What about in the mussels, have we increased production?

MR. MEANEY: Mussel production has increased about 30 per cent over last

year. We have new farms expanding, particularly on the Northeast Coast, and more

people looking at the South Coast area.

MR. REID: How many tons are we doing now?

MR. MEANEY: In mussels, in total, a little over 3,000 tons compared to

about 2,000 in 2004.

MR. REID: It seems like we cannot get it up much higher than that.

MR. MEANEY: We are seeing a greater increase now. We have a number of

very large farms. There are about a dozen larger farms operating now. Most of

them are hitting in excess of one million pounds and there are some processors

involved with them as well. There is a very good farm to market initiative work

as a core group of larger growers and that is expanding the industry now.

MR. REID: Is Green's still into that?

MR. MEANEY: Yes.

MR. RIDEOUT: Brian, while you were on vacation we had a group of

entrepreneurs come in to talk about flying mussels fresh to Europe out of St.

John's on the Air Canada flight, or Gander if they were going to do charters.

So that is actively being pursued as well. The fresh market in Europe, as the

Leader of the Opposition probably knows, is a booming market. There are a couple

of aircraft today, as I understand it, going out of Iceland with nothing only

fresh product and the more we get into aquaculture - farmed salmon, trout,

mussels - then that is probably, very likely, where you are going to have a big

concentration, and flying it in is the way to do it.

MR. REID: I am always amazed at how we cannot really get aquaculture

going in this Province to the degree that they have elsewhere.

MR. RIDEOUT: There should be no reason why we can't.

MR. REID: No.

MR. RIDEOUT: It has taken a lot of time, but I think we might be on the

verge of a breakthrough right now. I mean, Barry - how much fish does Barry have

in the ocean down there now?

MR. MEANEY: Just a little over a million fish in each year class.

MR. RIDEOUT: Yes, and he is planning to put in another million or so this

year. I mean, that is going to be a big operation. There are 130 people working

almost fifty-two weeks a year in St. Alban's doing nothing else only

processing farmed fish.

Cooke is planning to put in, if they start this year, 2.5 million fish. I

mean, the two of those together, you will be pretty much on the verge of

requiring the feed plant here and that kind of stuff here. So, if you can get up

to those numbers, then you are going to see a lot of the other services relocate

and develop here because, you know, the base for the feed is fish offal, which

Barry produces in his pelagics. There are a whole host of things that could

happen here to kick-start the industry and it is all in rural Newfoundland.

MR. REID: I always thought - I know when I was minister, and worked here

prior to that, we always had a lineup of Chinese coming in and looking at fish

offal. What they found is that we never had enough quantity of it here to make

any substantial facility worthwhile. Where is Barry going to get all this offal?

MR. RIDEOUT: Well, right now there is a lot dumped. You could buy offal

but Barry is pretty heavy into pelagics, as you know, over on the West Coast. I

think he has some kind of an arrangement now with Suregain where he ships some

offal to them and he gets a reduction in the price of feed because of that,

right.

MR. REID: I don't know - maybe you can correct me if I am wrong. I don't

know if there is enough offal in the Province, as it stands, if he (inaudible).

MR. RIDEOUT: Brian?

MR. MEANEY: No, certainly not for the projections we see for industry

growth, but it certainly does provide an outlet for this excess product and to

put it into something useful and bring it back into the Province for his feed,

or manufactured here in the Province.

MR. REID: He would need a lot more than he got.

MR. MEANEY: Yes.

MR. REID: Then, I suppose, how much he could reduce his cost by doing it.

If you factor in the cost of bringing it in or getting it from other areas of

the Province, it would probably be prohibitive.

MR. RIDEOUT: That is the biggest, single cost in aquaculture, is food.

Alastair, did you want to add something?

MR. O'RIELLY: Yes, the feed costs are what drives at business. Well

over half the cost is feed alone. But the real challenge, or one of the big

challenges, I think - to go to your question about why we have not done better

in the past - is trying to contain that cost. Reliance upon producers on the

mainland was a factor. Not being in a strong financial position - so you are at

the mercy - was a huge factor and being too small in terms of economies of scale

was another contributing factor.

One of the advantages that Mr. Barry brings to it, I guess, his corporate

size is such that he is not relying on them for money, which helps. He also has

the relationship, as the minister referred to, in terms of being able to provide

some of the raw material supply as well to these companies, which gives him some

further leverage. If these developments - again, as the minister referred to, is

if Cooke and others take off, we may finally get through an economies of scale

that will help bring the cost down.

One other option - again, as Mr. Meaney pointed out - is a question of how

much raw material we have to supply a feed operation. Another option that is

being considered is purchasing in large volume and shipping in bulk with

shipping vessels rather than small container units. That, in itself, can

dramatically reduce costs as well. An accumulative effect of all that can bring

us into a very strong competitive position with New Brunswick.

MR. REID: We were talking about that in1993, I think, or 1994. Bud Hulan

was the Minister of Fisheries and Agriculture at the time.

MR. RIDEOUT: Agriculture?

MR. REID: Yes.

MR. RIDEOUT: Oh, is that right? I didn't know that had been done. I

would have been in law school.

MR. REID: They are experiencing the same problem in agriculture as they

are in aquaculture here in the Province. We are shipping in - I do not know how

many pounds of feed you need to produce a pound of chicken. It would be probably

cheaper to ship in chicken from the Southern States than it would be to ship in

the food to feed them here. He talked, at that time, about bringing in the

ingredients in bulk and setting up some kind of a plant in the Argentia area to

mix it all. That is what he was talking about, bringing it in in boat loads and

then mix it all here, because - well, I guess it is coming in a bag now, isn't

it, on a transport truck. You would certainly cut your costs, but I think at

that time, and it probably still is so, that you probably would not need those

qualities to feed the fish that we have.

MR. RIDEOUT: That's right.

MR. REID: Minister, to get back to aquaculture, and I applaud you for

pushing it. I have been watching it now since 1989 and to me we have put a lot

of money into Bay D'Espoir. When I say we, I mean both levels of government.

Just when you think you have it cracked, it cracks itself. If you were to take

the subsidies out of what has gone into that area and when you visit every

aquaculture, as I did with Brian, not just in North America but on the European

Continent, the Faeroe Islands and Iceland. You go to the Faeroe Islands and what

do they have? A population of 23,000 or 40,000 people. They have 80,000 sheep

there, about two sheep for every person, but every single cove has a farm, you

know, and they are run by individuals. They have their little cage out in front

of their house. Boy, I don't understand why we can't do it here.

One of the reasons, up until Barry went in there, is there was no wild fish

producer or processor who wanted to get into it because there was no quick buck

in it, to watch it grow. I don't know how you are going to crack that.

MR. RIDEOUT: Well, I think we are getting there. I mean, Barry is a big

asset to the industry, there is no question. People who are in it, whether they

like Barry or do not, will say that. He brings a lot of strength to the

industry, and Cooke will bring even more.

We were in St. George, is it?

OFFICIAL: St. George.

MR. RIDEOUT: St. George, New Brunswick, where Cooke are, and, you know,

when they had the tainted tuna scandal, that is the area of New Brunswick that

was devastated. Fish plants closed all over the place up there because of the

tuna thing.

Well, Cooke Aquaculture is employing 1,100 people up there in that industry

today. I mean, it is booming; housing developments all based on farmed fish.

Now, whether they can sustain it and keep it up because of their lack of space,

and they run into some disease problems and that, too, but, I mean, we certainly

have the natural advantages here. We have very little space occupied. We can

have as much space as the experts determine between farms, for disease reasons

and all that kind of stuff.

I agree with you. It has been slow, and there has been a lot of money put

into it, but I really do believe that we are going to get there this time.

MR. REID: Yes, and while I welcome Barry in there, I mean, he is still

going in with a loan guarantee.

MR. RIDEOUT: Yes, he uses the Loan Guarantee Program for feed, and that

was one of the disadvantages that our farmers had vis- B -vis

New Brunswick, for example, because New Brunswick has had that program for a

number of years. On the other hand, now, Cooke is big enough, financially stable

enough, so they tell us, that the Loan Guarantee Program would not be of any

assistance to them, really. They have their own (inaudible).

MR. REID: They won't need a loan guarantee?

MR. RIDEOUT: That is what they are saying.

MR. REID: I don't see why they wouldn't, when everyone else gets them

for aquaculture in the Province.

MR. RIDEOUT: Well, I mean, I am sure they would qualify if they applied,

but they tell us it has no advantage to them. They have a significant line of

credit from, I think, five major banks and they do not need it. That is what

they say.

MR. REID: Well, in my experience with loan guarantees over the years,

whether they need them or not, they use them.

MR. RIDEOUT: Well, the fish companies used them.

MR. REID: I think that probably Cooke's are coming in here a bit green,

if they are coming in and saying that they do not want a loan guarantee, because

they do not know our track record of collecting on loan guarantees, so why

wouldn't you take the free money?

Anyway, it is unfortunate that it has to happen that way because it could be

a far larger industry (inaudible). With the competitive marketplace and stuff we

could be doing a helluva lot more. We have been talking about this now since, I

don't know. Bay d'Espoir was on the go when you were -

MR. RIDEOUT: I introduced the Aquaculture Act when I was minister

previously.

MR. REID: That is what, twenty-one years?

MR. RIDEOUT: I left in 1989, so it is that long ago.

MR. REID: When you hear of it increasing by 1,000 tons over twenty years,

it is not a lot of fish, whether it be mussels or salmon or whatnot, and I still

do not understand why we cannot do it. It is unfortunate, but I guess necessity

is the mother of invention.

Anyway, we will move on, I guess. That last one, the Aquaculture Capital

Investment Fund -

MR. RIDEOUT: That is the new program. It is a three year program

totalling $10 million, and we are making available $3.5 million this fiscal

year.

If industry takes it up, you are looking at a $7 million program. It is

matching equity from industry and ourselves, so it is substantial, there is no

question about it. It is the kind of program that the aquaculture industry and

Verbiski and Chislett were talking about at one point last year, totally

dedicated to the growth of the aquaculture industry. We developed a set of

guidelines and policy initiative around this and we have decided to put the

money up, as a Province, and try to attract investors.

MR. REID: I think Trevor had a Loan Guarantee Program there.

MR. RIDEOUT: He did, yes. We still have that.

MR. REID: Barry is the first one to qualify for it, is he?

MR. RIDEOUT: I think he was. Isn't that correct, Brian?

MR . MEANEY: Yes.

MR. REID: How much was in there prior to this year? You are putting three

point five -

MR. RIDEOUT: In this fund there was none.

MR. REID: So this is a new -

MR. RIDEOUT: This is a brand new aquaculture -

MR. REID: You said $10 million, so you are talking -

MR. RIDEOUT: Over three years.

MR. REID: You have to match it dollar for dollar is what you are saying?

MR. RIDEOUT: Yes, or you have to match it dollar for dollar to qualify. I

think we have minimum guidelines like what - $200,000 or $250,000? Do you want

to explain a bit about the program, Brian?

MR. MEANEY: The program is available to both the fin fish and the

shellfish sector, so if you are a salmon or a steelhead grower, or a mussel

grower. The objective is to work on the capital side of the industry as opposed

to the working capital. The objective is to drive production as quickly as

possible; so, if you want to get more production you need more cages, you need

more boats, you need nets, anchors, barges, et cetera. The program is designed

to match, on a dollar-for-dollar basis, as an equity investment into the company

for the purchase of capital assets to increase production to the Province.

There are two thresholds, because there is a different strategy for the

mussels versus salmon. On a mussel sector the minimum investment is $100,000,

and on the salmonid side it would be $250,000.

MR. REID: Does this have to be a new investment by the company or can

they use the existing?

MR. MEANEY: It is a new investment by the company. For example, we see

the mussel sector and you talk about the muscle sector looking to buy barges; a

barge now is about $400,000 just for a harvest, so this type of program can help

them finance that. This would be incremental, as well, to any other programs

that might be out there on the federal side; for example, ACOA financing.

MR. REID: All right.

On that seal campaign, Minister, $100,000, it is not going to get us a lot.

MR. RIDEOUT: No, but we are anticipating that the feds are going to join

with us on it, so we put in a notional amount so that we could be there. I agree

with you, $100,000 -

MR. REID: Even if the feds matched it, what is his name, the Beatle? he

probably spent that much on helicopters when he was here.

MR. RIDEOUT: You are probably right. We are under no illusions.

I think the other thing, too, is that we have to be very strategic and

careful how we go about any kind of a plan. You remember years ago, I am sure,

Walter Carter, Frank Moores and others, their heart was in the right place.

MR. REID: It didn't work.

MR. RIDEOUT: It didn't work, exactly. We do not want to draw too much

negative attention to it but, at the same time, some of those myths are thirty

years old and you might want to try some strategy of answering them.

MR. REID: I was always told by the Sealers Association and fishermen

that, most people, unless you have to, say as little as possible.

MR. RIDEOUT: Yes.

MR. REID: Because it is a difficult one to win. You are not going to

convince a vegetarian that it is proper to kill any animal. I think there is a

helluva lot of attention drawn to it this year.

MR. RIDEOUT: You know, I think Costco might be an example of, perhaps you

can make some progress. They were obviously under pressure, or some of their

U.S. people were under pressure, by some of those animal rights groups and so

on. They look at their sales and say, well, the St. John's store is the only

place selling them. They only sell $15,000 a year. What is the point of all the

heartache for that? It is like I said to them, it was not the point of the

heartache; it was timing. Your timing could not have been worse, right in the

middle of the McCartney's of this world and all the rest of them.

Of course, they got one heckuva backlash more than they expected from their

Newfoundland members, so they were pleased that we came and told them the other

side of the story and, of course, now the capsules are back.

I think strategically, perhaps, you can make some progress, but I agree with

you; you have to be extremely careful.

MR. REID: I listened to an interesting piece on the radio the other

morning. Who was the fella who was arguing that Costco did this because of the

seals? Was it Watson?

OFFICIAL: (Inaudible).

MR. RIDEOUT: The Sea Shepherd Society, yes.

MR. REID: The Sea Shepherd Society, yes.

One of the CBC people said: Boy, it is strange about Newfoundlanders. Paul

Watson has been saying stuff about us in the seal fishery for the last

twenty-five years and no one in Newfoundland believed him. All of a sudden, he

says that Costco is pulling them off the shelves to support them and everyone in

the Province believes him.

It is a bit funny, but I don't know, Minister. It is a difficult one to

beat unless - you really have to get into it; and, if you do, $100,000 is not

going to do much to that crowd. In fact, they would welcome it, I would say.

MR. RIDEOUT: Probably.

MR. REID: My advice there is to be careful, because I had a fella the

other day call me from Fogo Island. He said: Let's face it, Gerry, we shoot

our seals, but when I get that seal lined up in the crosshair of my scope, when

I pull that trigger, it is not a pretty sight. They will admit that themselves.

MR. RIDEOUT: I mean, those of us who hunt big game with a high-powered

rifle, I am a big game hunter but, you know, if it was in December and there was

snow down it is certainly not pretty - you know, we hunt from time to time - but

it is a humane kill. I mean, those sealers are crack shots, let me tell you.

MR. REID: Well, we had a fella in - not to dwell on it - Joe Batt's

Arm, who was in the Gulf War, or over that way, and he got a medal from the U.S.

for the longest kill.

MR. RIDEOUT: Is that right?

MR. REID: I don't think I am exaggerating; I think it was six

kilometres.

MR. RIDEOUT: He must have had some scope on her, Gerry.

MR. REID: I am serious. They gave him a medal, actually. The U.S. Armed

Forces gave him a medal. It is a strange feeling, though, when you are standing

at the folk festival on the field, having a beer, on a hot summer's night, and

you are talking and this fella is standing next to you; because I had that

opportunity and I was thinking, gee, he can kill you from six miles.

MR. RIDEOUT: Yes, it is not a good feeling.

MR. REID: It is not a good feeling, but they have quite the shots.

Anyway, Eddy, do you have any more on that?

MR. JOYCE: No.

MR. REID: Because I would just like to ask you a couple of questions on

the crab dates. I don't know if I asked you the wrong way or not the other day

in the House but we did not seem to be on the same page, because it is a problem

in my district. I wasn't suggesting that we would go beyond the date if there

was soft shell.

MR. RIDEOUT: If there isn't, and there is quota still left in the

water, the season should continue. That is our position.

MR. REID: There was a fellow on there a while ago from, I think, the West

Coast, who made the point very clearly, that if the boys got their quota for

50,000 or 60,000 or 160,000 pounds of crab and there is no soft shell at the end

of May, you are not doing any damage to the stock by taking the quota that they

tell you that scientifically you should be allowed to take.

MR. RIDEOUT: We have had that discussion with DFO, and I think that is

where it will go.

I think what has happened in the past, they ran into trouble closing down.

They have to close down by grids or something, one grid at a time, and by the

time they get to all the grids there is a helluva lot of soft shell crab

destroyed, so this was one of their ways around it; but, having said all of

that, if there is no soft shell and there is quota left, there is no reason why

they should not be allowed to continue fishing.

MR. REID: In fact, last year and the year before, more particularly the

year before, fishermen in Twillingate were telling me to go back to St. John's

and tell DFO to close her long before DFO thought about doing it, saying that

their livelihood depended on it.

MR. RIDEOUT: Of course. It does nothing for the resource and it does

nothing for the value of it in the marketplace.

MR. REID: The other one now is a hypothetical question. What do you think

Stephen Harper is going to say to early retirement tomorrow? I hope it is more

than he gave in his response to the letter to the Premier.

MR. RIDEOUT: I do not know. We are engaged with Minister Hearn on it, and

his office is co-ordinating other departments up there in terms of moving the

file forward. Whether the Premier is going to attempt to engage Harper on it, or

whether he says anything, something or very little, I really do not know.

It is a big piece of any restructuring of the fishery, no question about

that.

MR. REID: I do not know if the feds are going to have the appetite for

it. I know, when they did it before, they gave every indication that would be

the last. The only reason they did it was they accepted responsibility for the

collapse of the cod stocks.

MR. RIDEOUT: It is not going to be an easy sell.

MR. REID: It certainly will not be on crab, because there are no

foreigners fishing it.

MR. RIDEOUT: That is right.

MR. REID: We are going to need it.

MR. RIDEOUT: Oh, yes.

MR. REID: I know your predecessor, when he was the critic, talked a lot

about the loan board, and doing something with the loan board. Is any of that

under consideration?

MR. RIDEOUT: As you know, that is in INTRD right now and I have had

discussions at the economic policy level, the committee level of Cabinet, with

Minister Dunderdale about expanding the Loan Guarantee Program because the caps

are caps that were set, I don't know, probably back in 1980s, but they were

set a nice time ago. The cost of a vessel is now, obviously, significantly more

than what it was back in those days.

The other thing that I have been interested in is getting the amortization

period for those fibreglass boats to be basically the same as any boat. I think

they amortize them on a wooden boat

schedule right now, and that is unfair.

We are engaged in discussions with the banks. The banks are interested. I

think we can do it by regulation if we have an agreement. We are engaged in

discussion, but it has been led by INTRD with participation from us.

MR. REID: I think the banks might have more boats on their hands at the

end of this season than they want.

MR. RIDEOUT: It is maybe not a good time to engage the banks.

MR. REID: I had a fellow call me the other day. He knows what kind of a

season he is going to have just based on his quota cuts and price cuts. They are

already talking, in my area, about some kind of an assistance program for

harvesters. (Inaudible) going to get nailed.

The numbers that I used, one fellow was up to around $257,000 gross a couple

of years ago. He is going to go down to about $60,000 to $70,000 this year

because they have gotten hit twice with two 20 per cent cuts, some of them more

in my district. The price has gone from $2.40 the year before, or two years ago,

to $1.05 this year. It is unbelievable. I just cannot imagine any of us sitting

around the table here and someone saying to us that you are going to be making

$250,000 this year and then two years from now you are going to be down to

$60,000 or $70,000, and we wouldn't be out there yelling either.

I seriously believe that there is going to have to be - I cannot even suggest

what kind of a program, because if you talk about helping people with interest

on their loans, I think they did that once before, didn't they?

MR. RIDEOUT: I think we did it when we had the loan board.

MR. REID: There were a lot of complaints after that by fishermen who did

not owe any loans; they got their loans paid off and they got nothing.

MR. RIDEOUT: The other part we have to be awful careful, and you put your

finger on it earlier this evening, is any hostility in the U.S. in terms of what

is seen to be a subsidy, as legitimate as it might be. Crab is big in Alaska,

and we have to be awful careful.

MR. REID: If I am not mistaken, Alastair, when you were over at FANL, if

the U.S. had gone ahead with that countervail suit against us, I think they had

a pretty good case at that time. A lot of it was based on politicians who like

to brag about what they are doing.

MR. RIDEOUT: Yes, it comes back to bite you.

MR. REID: When you go out and announce - I think at the time it was

Efford and Tobin up in Cartwright talking about this is only possible, opening

this plant here today, because the government put in all this money putting in

the waterline to the plant and all of this stuff. That is all they wanted to

hear in the States. They were looking at that as a direct subsidy to the shrimp

fishery. You have to be careful, even though you might want to go out one of

these days and take some credit for putting some money into the industry. You

have to be careful with it. It is bad enough out there now. We do not need stuff

like that.

MR. RIDEOUT: That is right.

MR. REID: That is it.

Wally will take up what he needs -

MR. RIDEOUT: We are not going to do anything with Aboriginal, then? If

Wally needs any information on it, he will talk to me directly, will he, or

question me in the House or whatever?

MR. REID: Yes.

MR. RIDEOUT: The Labrador side of it is done anyway.

CHAIR: Labrador Affairs has been done. We did that.

MR. REID: There is a question now, I suppose. What are you doing about

the - no, I will ask the minister responsible.

MR. RIDEOUT: Sorry to have you sitting here all night with nothing to do.

OFFICIAL: It was very interesting.

CHAIR: Thank you very much.

We will vote on the subheads now. I ask the Clerk to call the remaining

subheads first.

MR. RIDEOUT: Before we finish, I should thank the Committee for their

benevolence.

MR. REID: We are outnumbered or we would vote the dollar for you.

MR. RIDEOUT: I was in the House when we did that to Ed Maynard.

MR. REID: You were around then? You were not a part of that, were you?

MR. RIDEOUT: Yes, I was.

MR. REID: You were part of the vote?

MR. RIDEOUT: I was part of the vote. I was in the Opposition then and

Peckford had to turn around and appoint him President of Treasury Board so we

could get paid for the rest of the year.

CHAIR: We will have the Clerk now call the remaining subheads.

CLERK: Subhead 1.1.01. to 3.1.02.

CHAIR: Subhead 1.1.01. to 3.1.02. inclusive.

Do these subheads carry?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion. subheads 1.1.01. through 3.1.02. carried.

CHAIR: Shall the total carry?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Department of Fisheries and Aquaculture, total heads, carried.

CHAIR: Shall I report the Estimates of the Department of Fisheries and

Aquaculture for 2006-2007 carried without amendment?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Estimates of the Department of Fisheries and Aquaculture carried

without amendment.

MR. JOYCE: Mr. Chairman, and Labrador Affairs.

CHAIR: Yes, we will go back now to that. That is on page 53.

I ask the Clerk to call the subhead now.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01.

Minister, do you have any comment to make on that, other than what you did

first?

MR. RIDEOUT: I made my opening comments on Aboriginal Affairs in my

opening statement.

CHAIR: No questions?

Subhead 1.1.01., the Department of Labrador and Aboriginal Affairs.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, subhead 1.1.01. carried.

CLERK: Subhead 1.2.01.

CHAIR: Subhead 1.2.01.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, subhead 1.2.01 carried.

CLERK: Subhead 2.1.01.

CHAIR: Subhead 2.1.01.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, subhead 2.1.01. carried.

CLERK: Subhead 2.1.03.

CHAIR: Subhead 2.1.03.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, subhead 2.1.03. carried.

CLERK: Total heads.

CHAIR: Shall the total carry?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Department of Labrador and Aboriginal Affairs, total heads,

carried.

CHAIR: Shall I report that the Estimates for the Department of Labrador

and Aboriginal Affairs carry without amendment?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, Estimates for the Department of Labrador and Aboriginal Affairs

carried without amendment.

CHAIR: That concludes -

MR. REID: Before you conclude, I would just like to say to the minister

that you have had very much of a positive effect on our Chair, because the other

night when we were in Estimates on Industry, when my question strayed a little

bit from the headings, our Chair told the minister and myself that he would not

entertain questions like that. Thank you for that.

MR. RIDEOUT: That is what you were talking about in the House today, is

it?

CHAIR: It all pertained to the Estimates tonight so there was no problem,

as long as you stick to that.

Anyway, I would like to thank the minister and his officials for coming here

this evening and reviewing his Estimates, the members of the Committee, Members

of the House of Assembly staff, and the media.

We have to adopt the minutes of our meeting held this morning. A motion to

adopt these meetings?

MR. HUNTER: So moved.

CHAIR: Moved by Mr. Hunter, seconded by Ms Johnson, that the minutes, as

circulated, of the Department of Natural Resources be adopted.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, minutes adopted as circulated.

CHAIR: The next meeting of the Committee will be tomorrow morning at 9:00

o'clock for the Department of Environment and Conservation, and tomorrow

evening concludes with Tourism, Culture and Recreation at 7:00 o'clock. Both

of these will be in the House.

MR. REID: I think, Mr. Chair, that is scheduled now for around 5:00 o'clock.

CHAIR: For tomorrow afternoon?

MR. REID: Yes.

CHAIR: Oh, okay.

A motion to adjourn?

MS JOHNSON: So moved.

CHAIR: Moved by Ms Johnson.

This meeting is now adjourned.

On motion, the Committee adjourned.