May 20, 2008

RESOURCE COMMITTEE - ITRD

The Committee met at approximately 5:30 p.m. in the House of

Assembly.

CHAIR (Mr. Harding): We are about ready to begin.

I want to welcome everybody here as we debate the Estimates of

the Department of Innovation, Trade and Rural Development, and we will begin by

having the Committee members introduce themselves.

MR. BAKER: Jim Baker, Labrador West.

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

MR. HUNTER: Ray Hunter, Grand Falls-Windsor-Green Bay South.

MR. VERGE: Wade Verge, Lewisporte.

MR. PARSONS: Kelvin Parsons, Burgeo & LaPoile.

MR. LOVELESS: Elvis Loveless, an Opposition staff member.

CHAIR: Thanks very much.

The minutes of the last meeting have been circulated, for the

Department of Environment and Conservation, so I will call for a motion now to

adopt the minutes as circulated.

MR. VERGE: So moved.

CHAIR: Moved by Mr. Verge.

Seconded?

MR. PARSONS: Seconded.

CHAIR: Seconded by Mr. Parsons that the minutes, as

circulated, be adopted.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, nay'.

Carried.

On motion, minutes adopted as circulated.

CHAIR: After the Clerk calls the first subhead, the minister

will have up to fifteen minutes to introduce his staff and give an overview of

his department's Estimates for the year. Following that, the critic or

Opposition House Leader will have up to fifteen minutes or, I guess, in this

case now, however long it takes.

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

CLERK (Ms Murphy): Subhead 1.1.01.

CHAIR: Subhead 1.1.01. Shall that one carry?

Minister Taylor.

MR. TAYLOR: Thank you, Mr. Chairman.

I am Trevor Taylor, Minister of Innovation, Trade and Rural

Development, and I will just ask our staff to introduce themselves.

MS DUKE: Cathy Duke, Deputy Minister.

MR. HOGAN: Dennis Hogan, ADM, Innovation.

MS MALONE: Rita Malone, ADM, Regional Development.

MR. MCCARTHY: Phil McCarthy, ADM, Business Development and

Strategic Industries.

MR. BARFOOT: Scott Barfoot, Director of Communications.

MR. SNOW: Barry Snow, Executive Director, Ireland Business

Partnerships.

MR. MORRIS: Paul Morris, Director of Trade.

CHAIR: Thanks very much.

I just want to make the comment that, whenever any of the staff

is called upon to speak, they identify themselves each time.

Go ahead, Sir.

MR. TAYLOR: Thank you, Mr. Chairman.

I won't take fifteen minutes; I won't take very many

minutes. I will just speak very briefly about some of the work that we have been

doing over the course of the past year in our department.

As most people would know, over the course of the past three

years we have introduced our Small and Medium-sized Enterprise Fund to assist

businesses in the private sector, through a lending program, to facilitate the

development of the small business community.

We have introduced our Regional/Sectoral Diversification Fund to

assist the not-for-profit sector, I guess, is probably the best way to define

it, and community-based organizations in developing infrastructure and projects

and programs to help foster, in particular, economic development in rural areas.

That is a $5 million fund annually, and we have introduced programs under our

Innovation Strategy totalling $5 million annually to assist people who are

involved with research and development and commercialization of innovative

initiatives bring them to the marketplace.

Just in this past Budget, which will be the first time, we have

seen now, and I guess it may come up throughout the night, a little over $4

million was allocated in this year's Budget for the Ocean Technology Strategy,

or ocean technology sector Polaris project to move forward our ocean industries.

I guess, in total, we have moved from a position four years ago

where we had approximately $2 million or $2.5 million that could be

characterized, I guess, as economic development funding, to a spot where right

now we are probably, when you include funding under the innovation side, the

Regional/Sectoral Diversification Fund, SME, we are probably approaching

somewhere in the order of $25 million to $30 million available to the business

and economic development and research community of Newfoundland and Labrador

through our department.

That, I guess, is the nub of what our department is about. We

focus very much on trying to help regions and sectors grow and diversify; hence

the name, Innovation, Trade and Rural Development. We have done a fair bit over

the past twelve to eighteen months to ramp up our trade division.

Many of the variances that you will see in our budget to revised

last year and our projected for this year is as a result of just that: because

we are so early in many of these programs and these initiatives, some of the

staffing, some of the expenditures that we had anticipated are a little slower

coming on, but invariably you can see that over the course of time, if you look

back over the course of the last two to three years, where a program is

introduced, we are usually lower than anticipated on our uptake. As we move into

the second year of the program, the second phase, what have you, we usually find

that the uptake has improved and, in many cases, gets fully subscribed.

I am not going to talk any further than that. I don't think

the critic or the Opposition House Leader needs me to ramble on much about the

department. He is very familiar with what we are about, and this is about

looking at our Estimates as opposed to long speeches, political rhetoric.

Thank you, Mr. Chairman.

CHAIR: Thank you very much, Sir.

Mr. Parsons.

MR. PARSONS: Thank you, Minister.

I have a number of questions throughout. Some are line-by-line

items; others are more of a generic nature that will require some explanation

sort of thing. Albeit it might seem petty to some people, given that we are

dealing with a departmental budget of $54 million-and-something, that I ask some

minute details on some issues; but, like they say, the devil is in the details.

Pardon me sometimes if my question might seem a little bit small, given the

overall complexity of the department, but this will be our only opportunity to

ask these questions.

As the minister full knows, in the House of Assembly it is

called Question Period not answer period, so this is our opportunity in

Estimates, once a year, when we get to actually ask some questions and see if

the minister and his staff actually have the answers or not. So bear with me if

some of my questions seem to be pointed, but that is the whole purpose: to try

and get some information that we normally would not have an opportunity to get.

First of all, looking at page 135 of the Estimates, starting

with the Minister's Office, 1.1.01., I wonder if you could give me the

breakout on what portion there under Transportation and Communications, $40,000

for last year, what portion was for transportation and what portion was for

communications?

Up front I realize, before we go through, I am going to have a

lot of questions, Mr. Chairman, of that nature - like, can you give me the

breakouts of such-and-such? - so there may be more detail required than what is

here. In which case, rather than delay things, what most people do is, they give

an undertaking that they will provide us with the information in due course and

that way we do not keep everybody tied up for hours on end.

MR. TAYLOR: In all honesty, I really could not tell you what

the breakout is. I suspect that most of it in Transportation and Communications

would be - I suspect that most of it would be transportation, but I really

could not say.

MR. PARSONS: Okay.

Could you provide us with a breakout of the Transportation and

Communications?

MR. TAYLOR: Sure, not a problem, you can most certainly have

it.

MR. PARSONS: Also, under the transportation that takes in

travel, could you give us a list of the various trips that were undertaken by

the minister's office for that money last year?

MR. TAYLOR: I am sure that is not a problem.

MR. PARSONS: Thank you.

MR. TAYLOR: I think The Telegram probably already has

it, but you can certainly have the same.

MR. PARSONS: They do not share their FOI requests with us.

Under 1.2.01., Executive Support, I notice the full salary

application was not spent, so I take it there were some positions that remained

vacant?

MR. TAYLOR: Yes, last year we had a vacant assistant deputy

minister position for most of the year, and the secretary to the ADM also was

vacant because we have two ADMs sharing the one secretarial position since we

moved our ADM on the rural side out to Corner Brook. So, it was felt that there

was not a need for that position and it has been shared since then.

MR. PARSONS: Under 1.2.02., Administrative Support, the

salary budget was overspent there. Was there any particular reason for that?

MR. TAYLOR: Under 1.2.02.?

MR. PARSONS: Yes, Administrative Support.

MR. TAYLOR: Okay, on the next page?

MR. PARSONS: Yes, page 136.

MR. TAYLOR: That is basically, as I recall, a move of

positions as a result of a change in organizational structure. The increase in

the salary there was because a salary was brought in, but it was taken from

somewhere else if I am not mistaken.

MR. PARSONS: Under Transportation and Communications, it

looks like a fairly substantial overrun there, $22,900 up to $52,900.

MR. TAYLOR: Pardon?

MR. PARSONS: Under the same heading.

MR. TAYLOR: Which line are you on now, Kelvin, I am sorry?

MR. PARSONS: I am on 1.2.02., Administrative Support,

03.Transportation and Communications.

MR. TAYLOR: Yes.

MR. PARSONS: Excuse me; I gave you the wrong numbers there.

There was an overrun there on Transportation and Communications. Is there any

particular reason for that one?

MR. TAYLOR: Additional postage costs, if you can imagine.

MR. PARSONS: Under the same heading, I notice Professional

Services, you had allotted $96,600 but you did not spend any. Is there any

particular reason for that?

MR. TAYLOR: We anticipated expending a fair bit of money on

some consultant services but we did not need to engage in the level that we

thought we would under this head. Any consulting work that we had done would

have been against another subhead or head. It was all there anyway, somewhere in

Professional Services, but we just did not need to expend this money.

MR. PARSONS: Moving right along there, 1.2.03., Policy and

Strategic Planning, 01. Salaries, you were down in what you had allocated last

year from $375,000 to $347,000; yet, you have ramped it up by $125,000 this

year.

MR. TAYLOR: We ran a period of time where we had a couple of

vacant positions of our staff partway through the year. This year, the Salaries

at $477,400 reflect that the full complement of staff that is associated with

that division has, for the first time in a period of time, been staffed.

MR. PARSONS: You had $375,000 there last year so, even above

what you had last year, you are still up to $100,000.

MR. TAYLOR: Yes.

MR. PARSONS: Do you anticipate more employees than you ever

had?

MR. TAYLOR: No, it is just our complement. There has been no

change in the number of people in that division; it is just that

MR. PARSONS: I am sort of lost here.

MR. TAYLOR: - there were step increases, wage increase, and

a full staff complement being in place for the first time in some time; there is

no additional staff.

MR. PARSONS: Maybe I am missing something here. When you did

up your budget last year, then, for $375,200 you must have anticipated,

obviously, what your staffing needs were for that year and you pegged it at

$375,000.

MR. TAYLOR: Right.

MR. PARSONS: Did you know when you put it at $375,000 that

you were not going to be fully staffed for that fiscal year 2007-2008?

MR. TAYLOR: Not that I am aware of. I could not give you the

minute detail of it but we budget for our complement of people, and the downward

revised reflects that we did not have the full complement for the full year.

This year we know we have the positions all filled now, and based on that we

know that this is how much it is going to cost us for the year. Unless somebody

resigns or whatever -

MR. PARSONS: That is where I am lost then, Minister, because

I can see where you budgeted $375,200, thinking this was going to be our staff

complement -

MR. TAYLOR: Yes.

MR. PARSONS: You did not use it, for whatever reason, not

filled completely and you were down to $347,000, but notwithstanding that, you

have still tacked on an additional $100,000 for the forthcoming year for

staffing positions, which indicates to me that you must have hired somebody new.

MR. TAYLOR: No, it is a staff complement associated with

that division.

MR. PARSONS: So you are telling me that -

MR. TAYLOR: We have hired new people. Yes, we have hired

people, but they are the positions that were there that had not been filled.

That is it.

MR. PARSONS: The dollar value that you had there for that

year, $375,000 would have been for a certain number of bodies. If you kept the

same bodies in place, the same number of bodies in place that you had included

there for $375,000, surely you would not be looking at $100,000 difference this

year without any additional positions.

MR. TAYLOR: The only thing I can say, because we are

obviously not able to resolve it right here, unless somebody can give me an

answer as to why, I suspect - I can only get the information and bring it back

to you - that there may have been, I do not know, there was a person or persons

who was on secondment or something like that and we knew the position was going

to be vacant so we would not use it. Outside of that, if you are trying to see

where we added a position or something like that, we have not added any

positions. If there was a planned vacancy maybe, because of a secondment or

something like that, that may be the factor.

MR. PARSONS: That I can understand.

MR. TAYLOR: Yes, but beyond that - I thought you were trying

to see if we were adding positions to the division and that is not the case.

MR. PARSONS: No, I am just trying to figure out the logic.

Based on $375,000, I would have thought you had given that figure in your

estimates last year for X amount of positions. You spent less than that, which

is understandable, but now you have it cranked up by $100,000. So I am just

wondering, either you knew when you came up with $375,000 that you were not

going to fill certain positions and you used $375,000 and now you know you are

going to fill them. It is not exactly clear to me.

MS MALONE: (Inaudible).

MR. TAYLOR: Do you want to hear her say that?

MR. PARSONS: Yes, I could not -

MR. TAYLOR: Yes, Rita.

MS MALONE: Mr. Parsons, that is accurate, in terms of two

years ago we did not have a full staff complement in the policy unit but this

year we are moving forward with a full staff complement, which is six, which

includes two managers, a director and an analyst. So, we are talking about two

analysts' positions there, Mr. Parsons.

MR. PARSONS: Thank you.

Moving right along, page 137, 1.2.04., it looks like there are

just some minor adjustments there. You had allotted $294,000, you actually spent

$205,000 but you are back up -

MR. TAYLOR: Yes, basically the same as the previous one,

vacant positions that we figure we are staffing again. There was a temporary

vacant position, as well, that we are anticipating some savings for in this

fiscal year.

MR. PARSONS: Under that same heading, 10. Grants and

Subsidies. Can we get a list of who would receive these grants and subsidies?

MR. TAYLOR: Yes, that is not a problem. That is a

combination of Strategic Partnership and Irish Business Partnership, the funding

that is allocated there, the grants that are provided there. Mostly it would go

to, for example, Festival of the Sea, various initiatives to community-based

groups and what have you.

MR. PARSONS: Are they done on an application basis or is

there a particular application your department has that one should complete if

they are looking for that kind of grant or subsidy?

MR. TAYLOR: Yes, you can go ahead.

MS DUKE: For both the Ireland Business Partnerships and the

Strategic Partnership Initiative, generally initiatives are undertaken as part

of the Strategic Plan for the particular program.

With the Ireland Business Partnerships, there would be priority

set around business development, education research and cultural industries so

that there may be projects that are identified by communities or by

organizations, or there may be others where we would seek partners to carry out

certain activities.

With the Strategic Partnership Initiative, there would be a

strategic plan and, based on that, there would be projects undertaken, whether

it was labour market review, review of taxation policies, competitiveness.

So, in some cases up here under Professional Services, you might

have consulting work done but in other cases you would engage with partners in

the community and would provide funds to have some of that research done.

MR. PARSONS: So if I had someone in my district, for

example, who had an idea, is there anywhere in your department that they can

come to just to shop the idea to see what you do have to give to them?

MR. TAYLOR: I would suggest that if there was somebody in

the community who had an idea, regardless of what the program was, that they

approach the Economic Development Officer in the region.

MR. PARSONS: And they ought to be able to tell them?

MR. TAYLOR: They should, yes. They may not be able to tell

them right away, but they should contact somebody within the department.

MR. PARSONS: On page 138, Export and Investment Promotion.

Again, can we get a breakout - this is under item 2.1.01., Export and Investment

Promotion, item 03. Can we get a breakout of what was Transportation, what was

Communication, for the $211,000 spent last year, and who it was spent on?

MR. TAYLOR: Sure, yes.

Can we give any idea on that right now?

OFFICIAL: (Inaudible).

MR. TAYLOR: We can speak a little bit to it right now if you

want, but we will give you the numbers anyway.

MR. PARSONS: Yes, sure.

MR. MORRIS: In terms of the budget last year, of the

$238,200, there was $13,000 allocated for freight related to exhibitions and so

on. There was $22,000 for communications, and $203,200 for travel related to the

division's business.

MR. PARSONS: And you can give us the breakout on who

actually received that?

MR. MORRIS: Yes, we can.

MR. PARSONS: Under Professional Services there, item 05 -

almost a half a million - what would be included in that again?

MR. MORRIS: That would be fees that we pay for - usually for

consultants to help with in-market matchmaking for the trade missions that we

undertake.

For example, if we undertake a trade mission to New England, to

Ireland, to Iceland and so on, we would retain the services of a consultant to

work with our local companies to identify good matches for them in the

marketplace. So that would have covered a variety of consultants to do that for

us.

We also retained a consultant to help with our export strategy

and our marketing strategy this year as well.

MR. PARSONS: Can we get a comprehensive list of how that

money was spent there in Professional Services?

MR. MORRIS: Yes, certainly.

MR. PARSONS: Is that money done, or are those contracts let

by way of RFPs or public tendering?

MR. MORRIS: Yes, they are.

MR. PARSONS: Okay.

MR. MORRIS: Any contract over $50,000 or estimated to be

over $50,000, we go public with it. That means advertising in the local print

media, as well as on the Government Purchasing Agency's site. Any contracts

that we estimate to be under $50,000, we always get three quotes for.

MR. PARSONS: Moving to 06, Purchased Services: I notice you

had originally allotted $746,000 and you spent $250,000. Any reason why you didn't

spend what you had anticipated?

MR. TAYLOR: That is a fairly straightforward one there, Mr.

Parsons. That is basically fewer than anticipated trade shows as part of the

International Business Development Agreement, the Canada/Atlantic Provinces

Agreement. We anticipate that we will be participating in a higher number of

trade shows this year, but for whatever reason last year we were down a little

bit.

MR. MORRIS: Of that Purchased Services there, there is

actually $300,000 of that that is allocated towards the Pan-Atlantic Trade

Agreement, which is agreement amongst the four Atlantic Provinces and the

proposals that are submitted by proponents throughout Atlantic Canada, and we

cash flow those projects. There was less than anticipated last year.

Also, because of our missions, as I said, under Professional

Services we are doing less exhibitions over the last year or so that we used to

in the past. We are spending more money now in terms of our trade missions,

which means hiring consultants to do the in-market work for us, as opposed to

actually just renting floor space.

MR. PARSONS: I notice under 10 you anticipated $625,000 and

actually gave out $325,000. I am wondering again if you could provide us with

the list of groups or individuals who received that money last year.

MR. MORRIS: That amount consists of a number of types of

grants. Some of it is related to commitments that we have with the Atlantic

Provinces Economic Council that we contribute each year. Some of it is related

to our commitments to the Agreement on Internal Trade. We make a contribution to

the Internal Trade Secretariat. Some of it is related to our business networks

program, as well as our travel assistance that we provide to companies

participating on our missions.

MR. PARSONS: I notice 01, Revenue Federal, you had

anticipated $500,000 from the feds and only got $60,000.

MR. MORRIS: Yes. That revenue is directly related to the

Pan-Atlantic Trade Agreement. It is supposed to be revenue neutral. There is

$500,000 spread throughout Purchased Services and Professional Services, to cash

flow those agreements in anticipation of getting the revenue back from the

Last year, for example, there weren't as many as the minister

said. There weren't as many projects that actually were submitted for funding.

That was one reason the revenue was less.

The second reason is that some of the projects that were

approved in the 2007-2008 fiscal year either did not transpire or they did but

we will not be receiving the money back from ACOA until this fiscal year, so it

is a cash flow issue.

MR. PARSONS: Moving on to Business Development on page 139,

again the Grants and Subsidies is fairly substantial. You had anticipated $4.4

million and spent $3 million.

MR. TAYLOR: As I recall, that is related to call centres,

and the operation of call centres, the wage subsidy that we provide. Of course,

as you know, that would be an EDGE and what have you, and would all be

performance based, so you take a guess at what the anticipated employment levels

would be, the level of activity, the number of call centres operating and what

have you, and then you pay it out based on what the actual performance was.

Obviously, we did not have quite the uptake that we had anticipated, so that is

basically what happened there.

MR. PARSONS: Can we get a list of, again, who you paid what

to, what companies?

MR. TAYLOR: Can we do that? I am sure we can, can we?

OFFICIAL: (Inaudible).

MR. TAYLOR: Okay, yes.

MR. PARSONS: Okay.

MR. TAYLOR: From a proprietary perspective, I didn't know

if there were any legal agreements or whatever.

MR. PARSONS: Rather than again take time, you can just

provide the list; it is not an issue.

MR. TAYLOR: Provided we are not encroaching on anybody

legally, you can have whatever you want.

MR. PARSONS: Given that you mentioned call centres, the one

in Carbonear, I understand, there was media talk about recently, a while ago,

that they were shutting down. Is that, in fact, correct, they have closed?

MR. TAYLOR: They indicated to us that they were planning on

closing due to, they were changing their business. The call centre in Carbonear

was a call-out centre as opposed to a call-in centre, and that is not where

their business was heading and not where the call centre business was that

was not where the call centre business was heading for them, and they were going

to close.

MR. PARSONS: How many employees were impacted by that?

MR. McCARTHY: Around 150 employees.

MR. PARSONS: Did the company do anything to benefit these

employees, severance packages or anything of that nature?

MR. McCARTHY: I am not sure, but I do know the company from

St. John's was going to go out there and meet with the employees, and see who

was willing to work from St. John's and work through the St. John's office.

MR. PARSONS: You mean another company?

MR. McCARTHY: No, ICT has an operation in St. John's, they

have one in Carbonear, and they also have one in Corner Brook.

MR. PARSONS: Okay.

They are only closing the Carbonear branch but it is the same

company.

MR. McCARTHY: Yes, that is correct.

MR. PARSONS: Other than that - an offer of employment in

some other locality - did they look after the workers? There are provisions

under the Labour Standards Act, for example, and things. Did they comply with

all of those requirements?

MR. TAYLOR: As far as we know. I have not been made aware of

any problems as it relates to their obligations under the Labour Standards Act.

MR. PARSONS: Just refresh my memory, if you could; how many

different companies in what locations right now in the Province are we, as a

government, currently involved with?

MR. McCARTHY: Currently with agreements?

MR. PARSONS: Yes.

MR. McCARTHY: We have Convergys in St. John's, we have

TeleTech in St. John's, we have Tacamor in Placentia, we have Helpdesk now in

Marystown and Stephenville, and we have Quorum in St. John's. Those are the

ones we have agreements with. There are others we had agreements with, but the

agreements have expired; like ICT, all of their agreements have expired.

MR. PARSONS: Okay.

Regarding the Carbonear one, at the time of closure

MR. McCARTHY: Their agreement had expired.

MR. PARSONS: Their agreement had expired. There was no

obligation on government to

MR. McCARTHY: Their agreement expired by a couple of years.

MR. PARSONS: Okay, thank you.

Again, under the same page, 139, subhead 3.1.02., Investment

Portfolio Management, the nature of the Grants and Subsidies there.

MR. TAYLOR: That is related to the interest subsidization

piece under the old Fisheries Loan Board going back decades, I guess, probably.

MR. McCARTHY: Yes, it is.

MR. TAYLOR: Go ahead, Phil.

MR. McCARTHY: There are fourteen accounts left. That is an

old program from way back when, when government capped the interest rates of

loans that were provided through banks. There are fourteen accounts still left

on the books that we keep the interest to prime plus one. If it goes above that,

then we have to pick some of them up. There are fourteen accounts left. This is

back from the 1980s.

MR. PARSONS: Do the boats still exist, or this is just the

accounts?

MR. McCARTHY: No, no, the loans are being paid off. The

loans are being paid off, because a couple of years ago this was up to around

thirty and there are fourteen left now.

MR. PARSONS: Okay.

Before we move on, I would like to go back, before I forget it,

to the Business Analysis piece again. I notice it talks about: Appropriations

provide for the research, development, co-ordination, administration and

monitoring of business and industry financial assistance programs in support of

the department's overall mandate.

Going back to the Auditor General's report, he had some fairly

strong language that certainly from a monitoring point of view of some of the

government's programs it was not up to snuff. Where are we now with what

suggestions the Auditor General made, or what should be done? Has there been any

improvement in the monitoring process?

MR. TAYLOR: We believe that the monitoring process for our

programs is an ongoing, evolving process. You identify problems and issues,

whether internally or through the Auditor General's process, and we try to

make adjustments all the time. We have introduced manuals, and updated policy

manuals for our staff and for the Business Investment Corporation, the EDGE

board and what have you, so that everybody understands what their roles and

responsibilities are and to make the system as accountable and as responsible as

possible.

We took the Auditor General's report and we are moving forward

with dealing with the recommendations that the Auditor General made.

MR. PARSONS: Page 140, 3.1.03., Canada/Newfoundland and

Labrador Business Service Network, it is not a huge chunk of money but does this

network give me an overview of what that network does.

MR. McCARTHY: This is an arrangement between us and the

federal government. We pay 38 per cent of the cost, the federal government pays

52 per cent of the cost. There is a Business Service Centre right across Canada,

in all the provinces, and we have an office here in St. John's and we have a

bunch of network sites - thirty-eight sites, actually - all around the Province.

We provide people with basic information about how to start a business, to help

them through some of the red tape, some of the stuff like that. We have a

library there in terms of where people can go, sector studies and sector

profiles. People in any part of the Province, there is a mail-out book program

where, if they want a book, we will mail it out to anywhere in the Province. We

provide things like new people trying to start off, guest services where people

can come in and talk to a solicitor or an accountant that they provide free of

charge to help some new clients that are looking. That is basically where it is.

MR. PARSONS: When you say thirty-eight sites throughout the

Province, obviously that is Web sites, I guess?

MR. McCARTHY: No, no, there are actual locations with a

computer terminal, and we are involved with partners. It could be REDBs, it

could be a CBDC, it could be a town council, or it could be a number of people.

MS MALONE: There is about $8,000 to $10,000 worth of

material as well as the computer site. There is one in Port Aux Basques, as an

example. Trade journals and interactive business planning, those materials are

refreshed and made current on a regular basis.

MR. PARSONS: Could be get a list of those sites throughout

the Province?

MR. McCARTHY: Absolutely.

MS MALONE: Yes.

MR. PARSONS: 3.1.04, Strategic Communications and

Promotions. Does the Getting the Message Out program still exist?

MR. TAYLOR: Yes, and the Ambassador Program. Both would be

captured here, right?

MS MALONE: Yes.

MR. PARSONS: I notice under 06 there, the Purchased

Services, you pretty well spent what you had there last year, $435,000. Can we

get a break down of what that was spent on?

MR. TAYLOR: Sure.

MR. PARSONS: Thank you.

On page 141, Strategic Enterprise

MR. TAYLOR: On what one did you say, Kelvin?

MR. PARSONS: Page 141.

MR. TAYLOR: Okay.

MR. PARSONS: - 3.1.05, Strategic Enterprise Development:

what kind of stuff is under that? You had $9.25 million and spent $1 million.

MR. TAYLOR: That is one that looks a lot different than it

actually is. That is where the Small and Medium-sized Enterprise Fund is. We had

anticipated adding $9 million to the pot there this past year. Because of the

uptake in the business community it is application driven of course

because people were not applying for the funding in the way that we had

anticipated that they would, we did not take the $8 million additional dollars

and put it into this fund. It is administered through the Business Investment

Corporation. The money was not needed. There is actually $13 million $13

million?

OFFICIAL: Yes.

MR. TAYLOR: There is $13 million in this fund right now. It

is due to people repaying their loans, which we had hoped was going to happen.

The fund is performing very well. The revenue coming, for lack of a better way

of putting it, or the repayments that are coming in, as well as the funds that

were available, enable us to pretty well it was set up to be a revolving

fund and it is very much becoming so. So, we did not need to draw down that $8

million.

This year we anticipate that we will want an additional $3

million. With the way the fund has been performing, with the number of

applications that are coming in, we expect that we will need another $3 million

in order to be able to handle all of the applications that would come in.

MR. PARSONS: Can we get a breakdown as well on the Grants

and Subsidies, that $1 million that was spent last year?

MR. TAYLOR: We would have announced all of that publicly

anyway, right?

OFFICIAL: (Inaudible).

MR. TAYLOR: So, that is no problem. It would have been

announced, I would imagine, most of it, but we can certainly provide you with it

anyway.

MR. PARSONS: Thank you.

MS MALONE: There are probably sixty or seventy individual

applications that would have made up the $1 million.

MR. PARSONS: Yes.

Just so I understand how the accountants have this set up here

too: looking at that full section, 3.1.05, it indicates that you had estimated

$9,250,000 last year and spent $1 million. This year you are estimating $3

million. You end up coming down to the bottom of the pie there to $16,661,800. I

take it that is your reference to the fact that you have $13 million still left

in the pot?

MR. TAYLOR: Go ahead, Phil.

MR. McCARTHY: The total of $16 million is you are adding up

from 3.1.01 to 3.1.05. That is all Business Development.

MR. PARSONS: I got you. That is all under heading 3.

MR. McCARTHY: Yes. The SME was set up with a revolving fund

so there is money in the bank that is available for investment. That, plus the

money that is here, is what gives you your $13 million.

MR. PARSONS: Where is it shown to?

MR. McCARTHY: It would show up in the books of the Business

Investment Corporation which would show up then in the Public Accounts, because

the Auditor General does the books of the Business Investment Corporation and it

is included in the Public Accounts.

OFFICIAL: On the balance sheet, it shows up as an asset

(inaudible)

MR. McCARTHY: Included on the balance sheet.

MR. PARSONS: Not here in the Estimates?

MS McCARTHY: No. That is correct.

MR. PARSONS: Strategic Industries Development: provide for

research, development, coordination, administration and monitoring of policies,

programs, initiatives and projects to support strategic growth and

diversification opportunities within the Province's business community.

Can you give me some examples of that at work?

MR. McCARTHY: There are a bunch of sectors that division is

looking at in trying to advance. One would be manufacturing, and under

manufacturing we focused on boatbuilding, we focused on building products and

metal fabrication. We are also looking at agrifoods, nutraceuticals, working on

stuff with cranberries, and also craft, gift and the apparel industry. That

supports going to various shows and doing some studies and stuff like that in

partnership with the federal government and industry.

MR. PARSONS: Moving on to page 142, Regional Economic

Development Services, 4.1.01, under the Transportation and Communications

heading, $77,000 last year, spent $58,900 and gone up to $247,200. What is the

reason for the dramatic increase?

MR. TAYLOR: That primarily is related to new initiatives

under the Poverty Reduction Strategy. That is where the $100,000 for the

Community Capacity Building piece that was announced in the Budget Speech, and

the $70,000 for Bridging the Gap program. Both of those would be captured am

I reading that right? Am I telling the truth here now? That is where that would

be captured.

MR. PARSONS: What is the logic of having money with the

Poverty Reduction Strategy over in ITRD?

MR. TAYLOR: Well, the Poverty Reduction Strategy is a

cross-departmental approach and every department has been asked to look at their

programs and had been asked to look at their program by the Ministerial

Committee for the Poverty Reduction Strategy, and asked if there was anything

that their department could administer that could assist in Poverty Reduction.

Community Capacity Building was one that was identified by our department -

Bridging the Gap between post-secondary education, for example, or education

generally - when you take somebody who has been on social assistance or whatever

but found themselves living in poverty and managed to go to school and pick up

the necessary education skills to return to the workplace, in many cases it was

found that these people had difficultly in moving from the institute, the place

of schooling, into the workforce, whether that is as an employee or

self-employed. So, the Bridging the Gap piece was identified. Our office has

worked with community-based organizations on initiatives similar to this in the

past so it was felt that this was one thing that we could do.

Again, on Community Capacity Building, of course, as you would

know from the department's involvement in RED Boards and development

associations and what have you over the years, we are fairly well positioned to

assist, especially in the demographic environment that we have right now, to

assist people in trying to build capacity back into the communities and what

have you. Those were two initiatives that were identified and it seemed the

logical place to have them administered was through our department, from our

regional perspective.

We have worked with the Bonavista-Trinity-Random Island area on

this bridging the gap piece before, as a pilot project. That is the logic.

MR. PARSONS: I notice under the same heading I get lost,

frankly, when we start talking these fancy words like Community Capacity

Building, strategic and that kind of stuff. I just assume that it would make

common, rationale, logical sense that Poverty Reduction, albeit it might be

cross-departmental, the funding associated with it might be in one place. Yet,

we see not only

MR. TAYLOR: I understand that, but part of the Poverty

Reduction Strategy would be deciding that in the Department of Education we

would pay for there Estimates are being discussed tonight, as I understand

it. Part of Poverty Reduction is making sure that everybody has access to free

school books, because if you are living in poverty it is difficult to buy $100

or $150 or $200 worth of school books for your Grade 11 student in September.

That was an initiative under the Poverty Reduction Strategy. It is an Education

initiative.

MR. PARSONS: I am assuming, if you are putting money from

this pot into REDBs, for example, as part of the Poverty Reduction Strategy

MR. TAYLOR: No, it is not going into RED Boards, but go on.

MR. PARSONS: I thought you just said as part of the

Community Capacity Building you put it into REDBs.

MR. TAYLOR: What I said was, because we work with zonal

boards and because we work with development associations, or the department has

a history of doing this type of work, it was felt that this initiative was best

led and administered by our department and our people. It is not going into RED

Boards or whatever.

MR. PARSONS: Under 05, there seems like a fairly substantial

increase in Professional Services and Purchased Services compared to this year.

Any particular reason for that?

MR. TAYLOR: That is again related to what I just finished

talking about actually. That is related to the Capacity Building Program, the

implementation of that this year.

MR. PARSONS: Is there anything you can point to, concretely,

to help me out here?

Going back again to that Transportation and Communications, we

have $100,000 for the Poverty Reduction Strategy tucked away in there. I just

cannot relate the Poverty Reduction Strategy to the Transportation and

Communications, and now you are saying it is also spread out amongst these two.

MS MALONE: The Capacity Building Program for not-for-profit,

community-based regional economic groups. What we did with this additional

Capacity Building Program is include a broader client group. So, you are talking

about women who want to perform an after school program in Dunfield Park, as an

example, in Corner Brook.

You are talking about, in some cases professional services, yes,

in order to have people come about and learn and work together on a common

thinking approach. In more often cases than not, you are talking about giving

people the means to get together. In the same way as we had capacity building

for our mainstream economic clients, like for zone boards or other groups, we

have to have some funding in order to be able to bring people and groups

together to approach goals. While they may not be totally related to jobs, a lot

of them are.

Part of the problem we have had is the federal government,

through LMDA, have stepped away from this, both for our economic clients as well

as our social clients. What we are trying to do in the Capacity Building is

reintroduce micro lending, which is small business supports funding, and to both

client groups, with emphasis on these three new programs under transportation,

program implementation; $5,000 loans for micro lending for people who are in a

lower income, or no income, who want to establish maybe home-based businesses

and the like. So, it is kind of a three-prong approach.

So, you will see three additional healthy allocations based on

those programs, as well as having to replace what the federal government have

walked away from over two years ago.

MR. PARSONS: Thank you.

Under

section 10., Grants and Subsidies, you spent $1.4 million

last year, anticipating $1.6 million. Can we get a breakout as well on those

grants and subsidies from last year?

MR. TAYLOR: Sure. I would imagine most of that would be

related to our contribution to the Red Board piece?

OFFICIAL: Yes, Mr. Minister.

MR. TAYLOR: Most of the funding that you see there in Grants

and Subsidies will be related to our contribution to the RED Board piece. If I

am not mistaken, the rest of it is Stephenville taskforce and the increase this

year would be related to so, the $1.4 million is our contribution to RED

Boards and $100,000 to Stephenville taskforce. The increase this year would

reflect the $270,000, the poverty reduction initiative component; $270,000 for

micro lending and $80,000 for Bridging the Gap.

MR. PARSONS: On page 143, under subhead 4.2.01., Business

and Economic Development, under the Purchased Services piece there, $694,000.

What would that entail?

MR. TAYLOR: That would be primarily related to our business

retention expansion program.

MS MALONE: (Inaudible) services for our properties out in

the field; property rental.

MR. TAYLOR: The offices that our Economic Development

Officers would be in - our head office in Corner Brook, for example, in the

Millbrook Mall, and our office in Gander and so on and so forth.

MR. PARSONS: Okay, to rent space and so on.

MR. TAYLOR: Yes.

MR. PARSONS: Moving on down there, 4.3.01., Comprehensive

Economic Development, $9.6 million for this year and $5.6 million for last year.

Can we get a breakdown as well as to what grants and subsidies were given to

whom under that section?

MR. TAYLOR: Sure.

MR. PARSONS: Again, any particular reason why we were down

almost $3 million there?

MS MALONE: No, it is a cash flow issue. We have letters of

offer in place and, quite typically, they may go over two construction years or

two fiscal years. So, it is a matter of cash flow.

In actual fact, $5.6 million is our baseline budget but we

frequently have to have carryovers because of projects going over their fiscal

year. So, in actual fact, we will do well to be able to keep within $9.6 million

next year, because there is tremendous uptake. This is the regional

diversification fund that the minister referenced in the early part of his

discussion for community groups, RED Boards, municipalities to engage in

economic infrastructure, planning, special events, you name it.

MR. PARSONS: I did ask about getting the list for that, didn't

MS MALONE: Yes, you did.

MR. PARSONS: Page 144, Advanced Technologies and Industrial

Research, under 05., Professional Services. What kind of professional services

would we be talking about? Secondly, we have a very substantial increase there,

almost $2 million for this year.

MR. TAYLOR: Well, that would be the area where, for example,

if we had to engage a company or body to determine how we should implement our

fibre optic piece. If we had to do something on broadband, if we wanted to

understand how best to deal with our ocean technology sector, that is where that

would be captured.

The reason for the substantial increase this year is because we

have an additional $1.5 million to deal with our Ocean Technology Strategy, and

that is basically do you want to speak to any more detail?

MR. HOGAN: Just to expand upon the minister's point.

There are a range of initiatives under Professional Services. The primary reason

for the increase this year, as the minister indicated, relates to an allocation

of funding for the upcoming Ocean Technology Strategy. There are two specific

programs under that allocation. One called the Polaris program, which is an

ocean observing and marine weather prediction program, and the other one is the

Northwest Atlantic Ocean Observing System project. Those two projects are being

put in place to help stimulate the further development of the local ocean

technology cluster and the range of companies and institutions that we have

operating in that area. Some of the allocation goes toward the review of the

government broadband initiative, as well as some youth innovation programming we

are doing under the Innovation Strategy.

MR. PARSONS: Thank you.

Under the Grants and Subsidies piece there; again, you had

anticipated $2.4 million last year, spent $800,000, but jumped back up to $4.4

million this year. What is involved there?

MR. TAYLOR: This would be again related to the Innovation

Strategy, to the two pots of funds

Correct me if I am wrong, now, Dennis, but the two pots of

funds, for lack of a better way of putting it, that add up to $5 million, our

Innovation Enhancement Program would be captured in this part, and the

commercialization piece would be captured in 5.1.02., $2 million and $3 million

in each one.

Last year was really the first year that the program was on the

go. We did not have as much participation, as much uptake as we had anticipated.

We have seen that each time we have introduced a program in a department,

whether it was our SME, the Regional/Sectoral Diversification Fund or what have

you.

The Innovation Enhancement Program, some of that, of course, we

try to utilize that fund in a way and in a manner that we get some leverage out

of it. We try to get $3 or $4 or $5 for each dollar that we put in. So, as a

result of that, anybody who is looking for a couple of hundred thousand dollars,

for example, from us, we would hope that is part of maybe a million dollar

project and they are looking for a couple of hundred thousand dollars from some

university, or they are looking for $150,000 from NRCan or NRC or ACOA through

the Atlantic Innovation Fund or whatever. It takes some time for people, clients

or proponents, or whatever you want to call them, to pull this all together, and

as a result we have not had the uptake. Of course, our program is new so people

are just becoming really aware of it and it is working its way through.

The increase again this year, the $1.5 million -

OFFICIAL: (Inaudible).

MR. TAYLOR: Yes, splitting out the $4.1 million that we have

for the ocean technology sector, the Polaris project and the Northwest Atlantic

Ocean Observing System that Dennis spoke about previously. So, part of it - $1.5

million, roughly, of it - is captured right here in this Grants and Subsidies

section. Another $1.5 million of it, roughly, is captured in the Professional

Services piece. The other $1 million is on the next page under Ocean Technology

Initiatives.

MR. PARSONS: Moving on down there to 5.1.02., I am just

trying to understand how this would work. It comes under the heading of

Innovation, Research and Advanced Technologies, and you have it split out into

two groups, Advanced Technologies and Industrial Research, and then you have it

broken out into other Commercialization Initiatives.

MR. TAYLOR: Yes.

MR. PARSONS: I think whatever is under Commercialization

Initiatives are not Advanced Technologies and are not ocean related.

MR. TAYLOR: I am sure I am not doing a very good job of

explaining myself, so I apologize. The first

section is really the institutional

side, where the research takes place. If, for example, a university, in

conjunction with the private sector or on its own, wanted to conduct research on

an idea, this is where they would come to obtain funding to move that research

forward.

If that research resulted in a product that had potentially some

commercial merit then they, in conjunction with the private sector, or the

private sector on its own, could come to subhead 5.1.02., to try and obtain

funding to commercialize that product. Fair enough?

MR. HOGAN: A final point on that as well, that is the

capital account for investments that government is making, our department is

making, into these generally small to mid-sized technology firms or start-up

firms. A lot of that is based on research that does come from the public

institutions or from the quasi-public sector. It is broken out similarly now for

programming we have under development right now for ocean technology, so there

is another capital account for ocean technology as well.

MR. PARSONS: It seems that you had budgeted a certain amount

last year but the word uptake keeps coming up, that you did not get what you

anticipated in terms of uptake. Yet, there have been some substantial increases

in the amounts budgeted this year. What is happening to make you think that we

are going to have more uptake this year?

MR. TAYLOR: First of all, the two funds that I spoke about

where we did not get the uptake, there has been no increase in funding for those

programs so they have stayed constant. Where the increase has come from is the

funding for the ocean sector, for lack of a better way of putting it; and, as I

said, the Polaris project, the Northwest Atlantic Ocean Observing System, that

is where the new funding is. It is not unrelated but it is sector-specific; put

it that way.

MR. PARSONS: I am just wondering -

MR. TAYLOR: I am not trying to be evasive, now.

MR. PARSONS: No, I appreciate that. I am just trying to get

my head around, too, how it works.

OFFICIAL: (Inaudible).

MR. TAYLOR: The other thing, I was just reminded that some

of this is actually oversubscribed in this year. Some of this is a reflection of

cash flow, so it is not really a true you know how accountants do stuff, so

it is not really the way it is.

MR. HOGAN: It does take a considerable amount of time to do

the project evaluations from the time we get an initial application, and in this

case a lot of that work will carry over into the following year. We could have

an approval in one year, but the actual funding for the applicant would not flow

until the subsequent fiscal year, or the next fiscal year, and it is relating to

cash flow as well.

Given the nature of technology evaluation and the

commercialization program itself, it often is a time-consuming process because

you do have to get technical advice, there is quite an extensive evaluation that

goes into those programs, and that accounts for the variation in the cash flow.

MR. TAYLOR: I want to point out that, from an uptake

perspective, really the only place where we have been challenged on uptake, or

performance has been substantially less than anticipated, was on SME, on our

Small and Medium-sized Enterprise Fund. That is fair to say.

Our Regional/Sectoral Diversification Fund was slow in the first

year, but we anticipated that, and then it carried on fairly well to the point

where it is basically oversubscribed. On the innovation side, our two funds

there are performing well. Slow in the first year, right?

OFFICIAL: Particularly in innovation enhancement.

Commercialization is (inaudible).

MR. TAYLOR: But, it is coming along fairly well now.

MR. PARSONS: Just again educate me here.

The two projects that you mentioned, the ocean related projects,

Northern you had names on them. I take it they have been approved - or do

you anticipate their approval? I am just wondering how it works.

MR. TAYLOR: Inasmuch as you can say they are approved. I

mean, they are approved in that the government has approved them conceptually.

What we want to do is work with the institutions and the private sector, and the

federal government and whomever the oil industries, the fishing industry,

what have you to begin the implementation of these programs.

MR. PARSONS: I am just thinking about the proponent who

comes forward looking for money to do a project. If you have not done all of the

dot the i's and cross the t's evaluation piece, and yet you have to do a

budget, so if you pop it into your budget - obviously you have to if you

anticipate that you might get clearance. You need the money there to go ahead

with it. That must send them a good message. For all intents and purposes, they

are approved provided they dot the i's and cross the t's.

MR. TAYLOR: Given a case in point, SmartBay, for example,

SmartBay is there, it is moving along, it is in its infancy. I think everybody

recognizes

MR. PARSONS: What is SmartBay?

MR. TAYLOR: SmartBay, Placentia Bay. It is a sea state and

weather condition observation and forecasting system, but it is very basic right

now. I do not mean to take anything away from anybody who is involved with it,

but it is very much a basic system right now. For example, if you went up to the

Marine Institute now you could walk in and there would be a big computer screen

and you could observe. You can go on your own computer, for that matter. When

you go back to your office you can type in SmartBay.ca and you will see what

tankers are moving in and out of Placentia Bay right now. You can get the sea

state at the pilot station. You can find out what the sea state and wind

condition is at the anchorage off Arnold's Cove. You can know what the wind

direction is off the mouth of the bay and what the sea state is there. I might

be going a little bit far here. I am not sure how far it goes out, but there are

three buoys.

We and the Department of Fisheries and Aquaculture last year, I

think the two of us were involved in providing funding for some I will call them

sensors, that were placed in the water in Placentia Bay to collect data on

conductivity, temperature and what have you that could be used for aquaculture

site development. What we are trying to do there, or what people are trying to

do there is, for one thing, prevent an oil spill and allow all of the people who

are using Placentia Bay to know what everybody else is doing in real time, but

also to collect the information that will be required for God forbid!

disaster response in Placentia Bay. What I am talking about now is what we would

like to see it be able to do.

When we were at the Marine Institute with the Premier, a bunch

of us, back a couple of months ago, when we sat down the computer monitor was

going and we could actually see the tanker Mattea circling off Placentia

Bay where previously the tanker would have had to go into the pilot station to

find out if, you know, it was too rough for the pilot to come aboard. They

already knew based on what was being observed at the buoy at the pilot station,

that the pilot could not be taken aboard, so they circled off.

That is what this money is for, to help expand that technology,

develop that technology, expand our ocean observation here in Newfoundland and

Labrador, but also that would then enable our companies and our institutions to

be in a spot where at some point in the future maybe we could export the

expertise and the technology so that we could sell our - what do you call it?

-intellectual property.

MR. PARSONS: Are there any guidelines as to- it is called

Loans, Advances and Investments, I take it, in terms of equity states. Are there

any prescribed guidelines that the department uses; like, this looks good so we

want an equity stake in this? What kind of guidelines would you use?

MR. TAYLOR: As it relates to this Ocean Technology strategy

sector?

MR. PARSONS: Yes.

MR. TAYLOR: We are just developing the Ocean Technology

strategy. Part of the funding here is to assist us in developing that piece of

work. The answer is no, to the question. We do not have that. A big part of the

work that we have to do in the next twelve months and that some of this funding

will be used for, will be to move that forward so we know how we should position

ourselves and what we should invest in and what have you. That will be something

where you know the University, the Marine Institute, IOT, the private sector,

will be engaged in helping us determine what we should do there.

MR. PARSONS: I would think certain proponents are going to

come to you and there are going to be some fantastic ideas. Like you say, we are

prepared to get involved but we would like to have a cut of this pie down at the

end of the road too.

MR. TAYLOR: Yes. A large part of that, from that

perspective, will be determined - I know we are not to talk about it here

tonight because I think it was dealt with in Executive Council. That is where

the research council rests and the R & D focus primarily rests in the

Executive Council right now. I do not want to get off on that tangent, but there

was an RFP last week put out, basically by us but from Glenn James in the

Research Council, and that is primarily what that will do, is determine how we

should move forward with research. If we put money into something how do we

ensure that we get some protection of that intellectual property? If we are

funding the research and somebody has a great idea and they turn it into

something, what do the taxpayers of Newfoundland and Labrador get in return for

that initial investment? That is what that exercise is supposed to do.

MR. HOGAN: I just want to add a couple of points there as

well.

Just going back to our commercialization program, we do have

well-established guidelines and policies as we do for the other programs. The

new programs that the minister referenced will be modeled after those, but we

will take into account the specific nature of the ocean technology sector and

what its specific requirements are.

Coming back to the other point about the Polaris Program and the

Northwest Atlantic Ocean Observing System, these things do tend to have

elaborate names. The Polaris Program is envisioned as a series of RFPs, up to

five or maybe six, that we would let over a period of time to help develop

specific technologies.

For example, one would indeed relate to the SmartBay project,

which the minister referred to, in taking it from a technology demonstration

project, really to help further accelerate the commercial technology development

aspect of the project.

Right now, there are four, if not five, companies that are

partnered in that, all demonstrating their technologies to feed into this

real-time data feed which the minister referenced. They stand to benefit from

this. We will also issue additional RFPs related to different technologies that

all tie into ocean observing, such as unmanned aerial vehicle technology, or

UAVs. That could have implications for various parts of the Province.

We are going to do some marine weather forecasting technology

development under the program, and that will be through this series of RFPs.

MR. PARSONS: Thank you.

Page 145, the Trans-Gulf Initiative, I take it that is the fibre

optic piece.

MR. TAYLOR: Yes, that would be it.

MR. PARSONS: So that is the last instalment, is it?

MR. TAYLOR: That is the last instalment, yes.

MR. PARSONS: How is the project going? The reason I ask that

is, one of my colleagues asked me, actually, to ask the question, because there

was supposed to be I better get this straight here now it was supposed

to include certain connections to government offices and so on?

MR. TAYLOR: Yes.

MR. PARSONS: I believe there was actually a list put out of

where they would hook up and so on. I am just wondering where we sit with that

right now.

MR. TAYLOR: Well, the Trans-Gulf Initiative has been

completed. It was completed probably about October last year, somewhere around

there, November. The anticipated completion date was around December, but it got

finished a little earlier than that. As you can see, we are still in the process

of paying off our share of the construction.

We released a Request for Proposals back in December - early

December or mid-December - asking for proposals from the private sector to

operate the system. By the system, we mean it is a system throughout

Newfoundland and Labrador with connections to 219 communities with a government

presence in them, I should say, and we have had four or five - the deadline for

responses was back about what, a month ago?

OFFICIAL: March 31.

MR. TAYLOR: March 31, a little over a month ago, six weeks

ago.

The process of evaluating those proposals is ongoing right now,

and I would anticipate in three or four months' time we will probably have a

fair idea, I don't know. Anyway, some time over the course of the next six

months.

MR. PARSONS: That is to hook up to these 200-and-some-odd

communities?

MR. TAYLOR: Yes, that is correct.

Now that will not happen, obviously, within the next six months,

but the determination as to how and who - who the carrier is going to be, who is

going to manage the system, who is going to be responsible for it, that will be

determined over that time period. Then, in some cases, there will need to be

construction because there is probably a need to put in maybe fibre in some

places. In other places maybe it is just as simple as connecting a node to the

fibre that is already in existence. In some cases there may be a requirement for

some wireless connectivity, but that will be determined over the next while.

MR. PARSONS: The cost of all those connections to those

communities - the 200-and-some-odd - that is not part of the $15 million?

MR. TAYLOR: No.

MR. PARSONS: That was just a construction cost issue.

MR. TAYLOR: That was construction. That was our share of the

link to get from here to Halifax. Out of that, as you would have heard me say

before, as a result of that we also have fibre going up most of the Northern

Peninsula.

MR. PARSONS: Any idea, even ballpark at this point, what it

is going to cost to hook these places up?

MR. TAYLOR: Well, the way that the RFP is constructed, we

are spending roughly $20 million a year right now on telecommunications, in one

type or another, and what we are trying to do here is, for lack of a better way

of putting it, cause the private sector to provide the connectivity in exchange

for that business that we are currently doing. So, as opposed to us actually

paying to have fibre strung somewhere, they would do it in exchange for ten

years of access to government's Internet and telephone contracts so to speak.

Hopefully, as a result of that, in a place, for example, like

Norris Point - I don't know if that is one of them, but I will say Norris

Point anyway because I know there isn't broadband in Norris Point; my niece

reminds me all the time - there is a hospital there, so part of the RFP would be

that whoever wins it, whoever gets it, would have to provide the infrastructure

required for that hospital to have broadband, and whatever other government

facility is there.

My guess is all that is required there is a $250,000 node,

because the fibre is already there, I think, so they put the node there to

service government. So that piece of infrastructure is paid for, so to speak.

Then, that enables them - because there is not a business case, or they say

there is not a business case, in some of these communities to spend that type of

money for the low number of customers that you have; you would never recover

your investment. They would then, we would hope, apply to the CRTC for the right

to offer Internet services, broadband services, to the general public in that

area. As a result of us doing our business this way, the general public would

benefit from it as well.

MR. PARSONS: On the $15 million for the fibre optics, what

process is in place, or was in place, to verify the expenditures, that they are

justified? Somebody said it is a $15 million price tag for our share. How is

that verified?

MR. TAYLOR: Well, we engaged EWA, and what were the other

company names? EWA was the primary one, anyway, the primary consultant. We

engaged people who were recognized as being leaders in the field in fibre optics

and communications, and asked them to provide us with an assessment of the value

of the asset and whether the projected cost of construction was realistic based

on similar projects in other jurisdictions. They evaluated ours against the

Magdalen Islands project and a couple of more.

I can tell you this: I just back from San Diego, not very long

ago, on a trade mission, and in order to connect around San Diego Bay, which is

about the size of Halifax Harbour and the Bedford Basin, the admiral of the

navy, the rear admiral responsible for the Pacific Fleet, because they need it,

suggested that is was going to cost somewhere in the order of $10 million to

connect to San Diego Bay. We, for our $15 million, got to Halifax.

We engaged people who are leaders in the field, who have no

involvement with the private sector, who do work for governments and agencies

and maintain independence. That is how it was done.

MR. PARSONS: Mr. Chairman, I do not know if any members of

the Committee have any questions.

CHAIR: Any further questions from the Committee?

MR. PARSONS: I don't want to hog the floor.

MR. TAYLOR: They had better not.

MR. PARSONS: I find it strange that nobody has a question,

other than myself. Just from an educational point of view, I would have thought.

Could somebody tell me and, again, this is only a personal

hang-up - going back and flipping through your Estimates, and the headings in

your Estimates, and this is a very generic question, there is Policy and

Strategic Planning, Strategic Initiatives, Strategic Communications and

Promotions, Strategic Enterprise Development Fund, Strategic Industries

Development, very important work to the Department of ITRD. How come everything

is so strategic? What do you mean when you use that word all the time? A lot of

people have asked me: How come everything is strategic with that crowd?

MR. TAYLOR: I suspect that some of those headings are

probably the same as they were when you were there as minister, like Strategic

Industries.

MR. PARSONS: Yes, and I didn't know the answer. I didn't

know then and I don't know now.

MR. TAYLOR: Well, Strategic Industries, I guess we can look

at that and say: What is strategic? What are the industries from an economic

development perspective?

Obviously, the pulp and paper industry would not fall in that

because the pulp and paper industry is pretty well fully subscribed in the

Province, so you identify opportunities for growth. What are the industries that

fall into that category?

The cranberry sector certainly appears to have great opportunity

for growth. That fits in there. The craft sector falls in there, apparel. If you

look at - what is the name of that company that is making coats out of

Hollywood? AbbyShot.

MR. PARSONS: What is the rural regeneration plan?

MR. TAYLOR: Comprehensive Regional Diversification Strategy

was released three years ago. At least the way we - in consultation with the

community, so to speak - saw it is written in that, where we looked at the

various regions of the Province and identified their strengths and weaknesses.

It is against that backdrop, whether people agree or not, that we made the

strategic investments that we made on the Connaigre Peninsula, and it is against

that backdrop in aquaculture that we are continuing to look at the Connaigre

Peninsula to try and determine what is the next phase of investment that needs

to be made down there from, for example, a bio-security perspective and from an

infrastructure perspective in wharfage and what have you.

I am not going to get into it right now, telling you what was in

it because that will take all night and we would not get off the Connaigre

Peninsula, probably.

MR. PARSONS: Do you keep a list of businesses, for example -

and we talk about revitalizing or the plan for rural Newfoundland. What is the

plan? Is there any detailed document that you can put your fingers on and say

that is the plan?

MR. TAYLOR: I just said there is the Comprehensive Regional

Diversification Strategy that was developed and released three years ago. That

is the backdrop against which we try - sometimes you deviate somewhat, but that

is the backdrop against which we try and make our decisions and investments.

MR. PARSONS: Is there any list of businesses maintained in

rural Newfoundland, a comprehensive list of businesses that have started in

rural Newfoundland in recent years as a result of -

MR. TAYLOR: Well, there is neither one on my desk.

MR. PARSONS: Any plans or anything? I see someone

MS MALONE: We are constantly drilling down and looking at

those community development opportunities that will link to SME. That is one of

the kinds of cores of the diversification strategy. So we constantly keep an

update on SMEs that have spawned off community or regional diversification

opportunities. The minister used a really good example in terms of the Connaigre

Peninsula. While a lot of our investment has been in infrastructure, obviously

it has been in support of the SME build out that comes with it.

MR. PARSONS: Again, I am in a general phase here now. Why is

the Rural Secretariat under the Executive Council as opposed to ITRD? Your shop

seems to have everything related to or most of the programs and so on that would

relate to rural development, rural initiatives and so on, but yet the Rural

Secretariat is not in your shop. I just wonder the rationale for that?

MR. TAYLOR: Again, I guess it is like the Poverty Reduction

Strategy, there is more to rural development or rural sustainability than just

economic development. Although it is an integral part of it, you can have as

much economic development as you like if you forget that you need a hospital or

a school out there. As a result, the Rural Secretariat is to advise - its role,

and this is where people have it, in my view, screwed up, the critics of the

Rural Secretariat. They are just focusing on the economic side and there is a

lot more to it than that.

The role of the Rural Secretariat, the regional councils, is to

provide advice. To look at their region and provide advice on what needs to be

done in that region to ensure that it has a future. Some of that advice might

mean that - one aspect of that might be how you deal with schooling and bussing

and what have you, in a particular area. Another aspect of that might be how you

deal with ferry configuration; another might be how you deal with roads. It is

not just about finding $200,000 to put into the next widget factory. That is

where people are missing the point of the Rural Secretariat. So, as a result of

that - it is like Intergovernmental Affairs. Where would you put

Intergovernmental Affairs? Well, you put it in Cabinet Secretariat. It is a

secretariat and it is a secretariat because it is across departments.

MR. PARSONS: Thank you.

I have no further questions.

CHAIR: Does anyone else have any questions?

Shall 1.1.01 carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 1.1.01 carried.

CHAIR: Call the remaining subheads.

CLERK: 1.2.01 to 5.1.04 inclusive.

CHAIR: Shall 1.2.01 to 5.1.04 inclusive carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, 1.2.01 through 5.1.04 carried.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

Shall I report the Estimates for 2008-2009 for the Department of

Innovation, Trade and Rural Development carried without amendment?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, Department of Innovation, Trade and Rural

Development, total heads, carried.

CHAIR: I thank Minister Taylor and his officials, the House

of Assembly staff and committee. This is our last meeting, so I guess I will be

reporting to the House tomorrow.

It is in order now for a motion to adjourn.

MR. BAKER: So moved.

CHAIR: Moved by Mr. Baker that the meeting adjourn. So this

meeting is now adjourned.

On motion, Committee adjourned.