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May 6,

RESOURCE COMMITTEE

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

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

Vidi.

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

CHAIR (Brazil): If we are ready to start, Minister, and everybody, I

would like to welcome everybody to the Estimates for Fisheries and Aquaculture.

Let's first start by welcoming the Committee, the minister and his officials.

I will first start by asking the Committee if they would introduce themselves.

MR. BENNETT: Jim Bennett, MHA for St. Barbe, Opposition Fisheries critic.

MS PLOUGHMAN: Good morning. Kim Ploughman, Liberal Opposition Office.

MR. MITCHELMORE: Christopher Mitchelmore, NDP, Fisheries and Aquaculture

critic.

MR. MORGAN: Ivan Morgan, NDP caucus.

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

MR. CROSS: Eli Cross, MHA for Bonavista North. I move now that Mr.

Bennett would resume the Vice-Chair role.

CHAIR: Okay.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

Motion carried.

Mr. Bennett is the Vice-Chair.

MR. RUSSELL: Keith Russell, MHA for Lake Melville.

CHAIR: Minister.

MR. DALLEY: Derrick Dalley, MHA for The Isles of Notre Dame, and Minister

of Fisheries and Aquaculture.

CHAIR: Your officials, please.

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

Innovation, Business and Rural Development, and former Deputy Minister of

Fisheries and Aquaculture.

MS WISEMAN: Wanda Wiseman, Director of Planning Services with the

Department of Fisheries and Aquaculture.

MR. LEWIS: David Lewis, Deputy Minister of Fisheries and Aquaculture, as

of last week.

MR. WARREN: Good morning. Mike Warren, ADM, Policy and Planning.

MR. IVIMEY: Philip Ivimey, Departmental Controller, Fisheries and

Aquaculture.

MR. ROBINSON: Good morning. Shawn Robinson, Assistant Deputy Minister of

Fisheries.

DR. WHELAN: Daryl Whelan, Director of Aquatic Animal Health, Fisheries

and Aquaculture.

MR. HYNES: Darrell Hynes, the Minister's Executive Assistant.

MR. CARD: Jason Card, Director of Communications.

CHAIR: Welcome to the Minister and his officials.

Before we start, a bit of housekeeping. Could I have a motion to adopt the

Estimates minutes for the Resource Committee, Department of Natural Resources,

held April 30?

Moved by the Member for Lake Melville.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed?

Motion carried.

On motion, minutes adopted as circulated.

CHAIR: Before we get in I just want to note, if we could, to each of the

speakers. Once the minister speaks, if he wants to turn to one of his officials,

identify who you are so that the Broadcast Centre can record who it is and turn

your light on. Have a look to make sure that your light is on first to do that.

Also, what we will do, I will keep to the trend of twelve to fifteen minutes

per member to speak. If they are on a train of thought and they are getting

close to something, I will ask them to continue and finish that one train of

thought or we will move it back to somebody else. I will not need the clock.

Also, what we will do is, I am going to call that we start with Estimates

heading 1.1.01.

Motion? Lake Melville - that we start at that heading.

Mr. Minister, I will give you a few minutes if you want to do a brief

synopsis of the department's Estimates.

MR. DALLEY: Thanks, Mr. Chair.

I want just a few minutes. I certainly want to welcome everyone and look

forward to the opportunity to have a discussion about the fisheries and

aquaculture for the Province and looking at the items in this year's Budget.

From our perspective, fisheries and aquaculture remains a very significant

and prominent industry in this Province. We have some-20,000 people involved in

the industry, and we have had significant success with the industry as well. It

is still successful in many fronts.

As we all know, those obviously representing the rural areas where people are

engaged in the fishery or in discussions with fishery, there are significant

challenges in our fishery, both here at home and abroad. An aging workforce,

plant closures, labour challenges, these are some of the issues, as well as

resource challenges and marketing. Uncertainty and competition all adds a

flavour to fisheries and aquaculture each and every year.

We have a very resilient and strong group of people involved in this

industry. They are very committed, both at the government level but certainly in

the industry itself. I think that attributes to the success that we have had in

the fishing industry.

I do want to make a brief comment about this year's budget. If we look at our

Atlantic Provinces, we are still very significant relative to the Atlantic

Provinces and their investment. We are still ahead of the other provinces. What

stands out this year and I would like to comment on this upfront is that our

actual budget from 2012-2013 was $49.7 million. This year it is appearing as

$32.9 million.

That jumps out as a significant reduction, but in actual fact the time

limited and demand-driven projects were due to expire this year. That would not

be an expenditure measure. The actual expenditure measures in this year's budget

total $3.4 million. The rest of it was due to expire. A planned reduction as

well as a result of, as I said, some of the projects and investments that were

being made had expired.

We will get into the $3.4 million and where the expenditure measures were

achieved. As well, in terms of salary, because it is always an important issue,

we have seen a reduction this year of thirty-two positions in Fisheries and

Aquaculture. Of those, twenty-one were vacant, and some had been vacant for some

time.

There are actually eleven positions and people directly impacted. It is

probably the most difficult part of the budget, I know for us, throughout

government and through our department. Any time you are involved with layoffs

and people impacted with their positions, it is probably the most challenging

part. We had eleven people impacted as a result of the expenditure measures that

we went through in our department.

I think that highlights some of the more significant pieces of our budget

this year. With the budget we do have, I have to say we have a strong suite of

programs that is meeting industry needs in many different areas in terms of

marketing, investment, research, technology, and different programs. I will say

I am pleased with the programs we do have and I do believe it is meeting the

industry needs. Throughout this Budget exercise, we have not received any

complaints from industry at all. I think they understand that there are

expenditure measures that had to be achieved, but at the same time the suite of

programs that we have to offer and to be able to address industry needs continue

to work with industry.

As I have said many times, Mr. Chair, and in closing, it is not just

government that runs the fishing industry. It is a partnership, and we enjoy

good working relationships overall. The federal government plays a key role in

our fishery as well and certainly jointly in working with both the FFAW and the

seafood producers of the Province. Collectively, we have a strong industry. We

have a good Budget to support the industry and I am looking forward to a good

year.

CHAIR: Thank you, Minister.

Mr. Bennett, we are going to start with you with the subheading 1.1.01.

MR. BENNETT: Minister, good morning.

I would like to first of all welcome Mr. Lewis. I have not seen him for some

time, but he has been with the department many years. I thought we were going to

be graced with two deputy ministers today; or maybe Mr. O'Rielly's transfer was

greatly exaggerated. In any event he is with IBRD, so we will still be

discussing matters.

Minister, in the very first line, it says Salaries, it has gone from

$335,000, last year you used $255,000, and this year it is a little bit less at

$249,000. Who does that cover?

MR. DALLEY: Sorry, can you ask the question again?

MR. BENNETT: The Salaries under the first line, last year $335,600 was

budgeted. It was revised downward at $255,200 and this year it is $249,000. Who

does that cover?

MR. DALLEY: There was an allocation there in that line for a

Parliamentary Secretary in Fisheries and Aquaculture. We have not used that

position, so we have taken it out. So there is the reduction.

MR. BENNETT: So there are still as many people working under this

category this year as last year?

MR. DALLEY: Yes.

Actually, I am going to wait for the Chair.

MR. BENNETT: I must be (inaudible) deputy chair.

MR. DALLEY: It is a bit distracting, actually.

MR. BENNETT: Yes.

In the interest of time, I have no more questions on this section, so I would

go to Mr. Mitchelmore.

MR. DALLEY: Maybe we should wait for the Chair and see if he can address

that distraction.

MR. BENNETT: (inaudible) and have this matter go on to Mr. Mitchelmore

because I do not have many questions on these first

CHAIR: Okay, fair enough, if you want to do that.

Mr. Mitchelmore.

MR. BENNETT: (Inaudible).

CHAIR: Yes, then we can move to the other headings once they are

completed. Fair enough. Thank you, Mr. Bennett.

MR. MITCHELMORE: You had said that the reduction of thirty-two positions

and twenty-one were vacant. Can we have a list of the twenty-one vacant

positions that were terminated and the eleven positions that were also reduced,

as to what their roles and responsibilities were?

MR. DALLEY: Sure.

MR. MITCHELMORE: With your current staff that you have in the Minister's

Office and even overall, I guess, are there people who have received reduced

hours?

MR. DALLEY: In my staff? No.

MR. MITCHELMORE: Not in your ministerial office. So in terms of the

salary line, then, you had mentioned there was a Parliamentary Secretary which

would have been about $28,000. There must have been another position allocated

of about $50,000 in Budget 2012-2013 to make up the $335,600 that was not hired.

MR. DALLEY: My understanding is that this position has been around there

for some time. I know some years ago there was a Parliamentary Secretary for the

department. This year, when we went through the expenditure management exercise

we noticed that, in terms of funding to that particular section, it had the

Parliamentary Secretary still on the books, so we took that off. Outside of

that, there were no other positions that we took off in terms of whether there

was opportunity for some vacant positions or temporary funding. Maybe over the

years, but other than that

MR. MITCHELMORE: So the variance of about $6,400 would allocate the

change in deputy minister positions and their salary bands?

MR. DALLEY: In terms of Salaries?

MR. MITCHELMORE: Yes, last year the revised amount was $255,200 and this

year it is $249,800. So in order for that to happen, you switched your deputy

minister's in this department and you have hired no new staff, so somebody would

have had to have taken a pay cut of about $5,400, based on your Estimates.

MR. DALLEY: There may have been a step involved, in terms of a step

category or maybe one of the secretary positions in terms of the pay for those,

but outside of that there is very little.

MR. MITCHELMORE: In terms of an increase?

MR. DALLEY: Yes. There are no increases in terms of salaries. Nobody got

a raise other than unless they are on a step, in which they would automatically

receive the step. In terms of the actual breakdown, do we have the $6,000? Maybe

we could refer back.

MR. IVIMEY: I know that you mentioned you were talking about the deputy

minister positions. I am not too sure. The deputy minister positions would be

underneath the subhead 1.2.01, Executive Support. Under the Minister's Office,

subhead 1.1.01, the only positions that are in there underneath that funding

would be the minister, the EA, Departmental Secretary to Minister, and the

Secretary to Minister.

The small variance that you might see there, like I believe you were speaking

to, about less than $5,000 from the $255,000 and $249,000, that can occur just

like the minister referred to in terms of step costs or scale where the

individual position or the person in the position falls on that step or scale.

Some of those positions have changed from last year to this year. That just may

be indicative of who the person is and where they fall in on the scale. The only

position, as the minister referred to, that was eliminated from that particular

subhead would be that Parliamentary Secretary position.

MR. MITCHELMORE: Okay, thank you.

I do not have any further questions on this category.

CHAIR: Okay.

Mr. Bennett, I will go back to you for the first sections.

MR. BENNETT: Minister, in the second category, which says Executive

Support, last year $992,600 was budgeted but $1,078,300 was spent. Does that

mean there was an additional person hired? Why was it higher?

MR. DALLEY: Sorry, I am having trouble hearing, Mr. Bennett.

The increases and what you are seeing from last year's Budget to the revised

is primarily due to salary payments, severances, and vacation with retirements

of two ADM secretaries. Also, there was a temporary employee assigned to the

Communications Division. That would attribute to the increase.

MR. BENNETT: There was no additional person hired?

MR. DALLEY: No, there was a temporary in Communications. Outside of that,

the bulk of this is about payments, severance, and vacation of two ADM

secretaries who retired.

MR. BENNETT: Did they elect early retirement or were they downsized? What

happened?

MR. DALLEY: That is a good question.

MR. O'RIELLY: No, both of the individuals retired earlier in the year. As

a result, they are due certain severance payments and so on, which impacted the

budget expenditures.

MR. BENNETT: At the beginning of the year when Estimates were previously

made, did the department know that these people were going to take early

retirement, or were they shuffled out? Why was this not anticipated, $80,000? It

is 8 per cent or 9 per cent of the budget.

MR. DALLEY: In both cases it was not known in advance that these

decisions were going to be taken by the individuals as to their retirement

plans.

MR. BENNETT: Okay.

This year the Salaries budget is $754,000, which is probably 30 per cent less

than what was the actual last year. Does that mean there are fewer people this

year?

MR. DALLEY: Yes.

MR. BENNETT: How many fewer?

MR. DALLEY: Two.

MR. BENNETT: What were their roles?

MR. DALLEY: There were two ADM positions taken out. One was vacant, the

other one through reorganization restructuring. There were two ADM positions

taken out.

MR. BENNETT: Okay. The ADM that was taken out not the position, but the

individual is that person reassigned to another department or is that person

just gone?

MR. DALLEY: Gone.

MR. BENNETT: I have no more questions on this section.

CHAIR: Okay. Mr. Mitchelmore, we will flick back and forth until this

section is done, if that is fine.

MR. MITCHELMORE: (Inaudible).

CHAIR: Yes, it gets out of hand, fair enough.

MR. DALLEY: That is good.

CHAIR: Mr. Mitchelmore, under 1.2.01.

MR. MITCHELMORE: I do not really have any further questions on 1.2.01.

Mr. Bennett asked about the positions in terms of the salaries. So I would be

okay with going back to Mr. Bennett.

CHAIR: Okay, you can go to 1.2.02. Mr. Mitchelmore, you can go to that

section.

MR. MITCHELMORE: In 1.2.02, under Administrative Support, there was no

money budgeted last year for Professional or Purchased Services, but under the

Revised amount there was millions actually spent in line item 05 and 06. Can you

give me an explanation, Minister, on this?

MR. DALLEY: Sure. What happened in this particular section, if you

notice, under Property, Furnishings and Equipment there was $6.2 million. This

allocation is primarily for the aquaculture wharves, and through a process and

working with the industry, this money is put aside or budgeted for pending work

that has to go through a process, design and so on.

We put it there for management purposes. Then we are able to take it from one

category and move it and right-size it as we go through. Because through the

different consulting and engineering work, tendering work, the pace of the work

as well, all of that will contribute to making it more difficult to define the

exact amount. So we put the amount into the Property, Furnishings and Equipment

and we move it from there. Hence, you see why some categories were not budgeted;

yet in the Revised, you notice the money has been reallocated in the numbers.

MR. MITCHELMORE: Was this work actually done in 2012-2013?

MR. DALLEY: Yes.

MR. MITCHELMORE: What was the $3.5 million actually spent on? What

particular wharves?

MR. DALLEY: There were two wharves for Harbour Breton and Pool's Cove.

MR. MITCHELMORE: Okay.

MR. DALLEY: The allocation was there to complete it but due to some of

the weather conditions and some of the delays, the money did not all get spent

on those two wharves, but it has been re-budgeted for 2013-2014.

MR. MITCHELMORE: That is what I was going to ask. It seems like there was

a re-announcement of funds in this year's budget. I was down in Pool's Cove and

saw the biosecure wharf last year, and in Harbour Breton.

This would have implications then on the overall budget, looking at that

there was $4.2 million allocated. Originally, there was $6.2 million allocated

but only $4.2 million actually got spent, and this year there is $8.6 million

allocated. Are these for the additional wharves that

MR. DALLEY: Yes, the increase there of approximately $2 million is as a

result of the carryover for Harbour Breton and Pool's Cove. The other allocation

there is anticipation working with industry, that potential for some more work.

MR. MITCHELMORE: The $6.4 million, is it specifically for wharves, or is

it money that would go towards the processing facility in Hermitage for Gray

Aqua?

MR. DALLEY: No, it would be specific for wharf work, inflow, outflow, and

biosecurity nature.

MR. MITCHELMORE: Okay. Are there funds allocated under this

section

around the biosecurity? I find this very interesting that these funds are

allocated here and not in the Aquaculture

section of the Estimates. Why would it

be here?

MR. DALLEY: Let me get Alastair to answer, please.

MR. IVIMEY: Those expenditures would be budgeted underneath that

subcategory because that is the subhead for capital expenditures. Appropriations

in that category are for construction or alternation of tangible capital assets

within the department.

That is tangible capital assets within the whole department, so whether that

is Fisheries or Aquaculture, and it is a capital subhead. That is why those

funds would be budgeted under that area as opposed to specifically under

Aquaculture.

MR. MITCHELMORE: You have 25 per cent of the Fisheries and Aquaculture

budget allocated for biosecure wharves in Aquaculture. That is a significant cut

to the Department of Fisheries and Aquaculture from last year compared to where

funds were allocated. Some programs must have been severely gutted in your

department.

MR. DALLEY: ( Inaudible) allocated last year. So next year it is $8.6

million allocated in anticipation of, hopefully, more work.

MR. MITCHELMORE: Last year you only spent $4 million. So you are more

than doubling up what was spent last year in this type of investment and your

budget has also been cut significantly as to what was allocated. Seeing where

you are right now, $8.6 million of a $32 million budget, that is quite

significant. Twenty-five per cent of every dollar you are spending is going to

be in this wharfing infrastructure.

MR. DALLEY: Yes, the carryover of the $8.6 million, there is $2 million

for Harbour Breton and Pool's Cove in which construction, as you have indicated,

is well underway. So that has to be finished, as well as the potential for more

work. That is the reason for the allocation. As for the expenditure reduction,

it is $3.4 million overall.

MR. MITCHELMORE: Right, but if you are increasing in terms of other types

of investment, such as these wharves, then there would have to be cutbacks

elsewhere.

Was there an analysis done on this investment in these biosecure wharves as

to what the return is going to be to the overall economy?

MR. DALLEY: In the wharves, specifically?

MR. MITCHELMORE: Yes.

MR. DALLEY: In terms of the aquaculture industry and where it has grown,

we have 1,000 people working in the industry. We have seen an increase in the

value of the industry, and it is projected to continue up to almost $380 million

by 2017.

As a part of, I guess the overall growth of the industry, and I know you have

often asked questions from the Opposition side with reference to biosecurity,

fish health and so on. Fundamental to the growth, from our perspective, has been

a cautious best practice approach where we have certainly addressed a number of

key points.

Biosecurity and fish health is probably key to the growth of the industry and

I think what people of the Province would like to see in terms of the

management. Our investments of inflow and outflow wharves, and specifically

around fish health, surveillance and monitoring, of which this is a key part, we

feel that the investment has obviously been very strong. We have invested $20

million-odd, $24 million or $25 million in the equity program. We have leveraged

over $400 million. The return to the economy has been significant, and we

believe that there is great potential to continue to grow this industry.

MR. MITCHELMORE: I could not agree with you more, Minister, actually, and

I think this is a great investment in infrastructure and how it helps also

create the biosecurity but also helps differentiate from the wild capture

fishery as well so that it reduces the interference that is there.

It is a wise investment. It certainly helps build a stronger economy in the

Coast of Bays region. I am not asking the questions in an Opposition form to not

put the wharfing infrastructure there; I am big supporter of seeing that type of

investment there

MR. DALLEY: I appreciate that.

MR. MITCHELMORE: and encourage it, actually, because it has turned the

economy around significantly.

I do not have any further questions when it comes to

section 1.2.02; Mr.

Bennett may have some questions.

CHAIR: Okay.

Mr. Bennett, do you have any questions on that section?

MR. BENNETT: Yes.

Minister, last year the $6,220,000 was in one line item and then the revised

gave us three different lines. Is that a break out of the same money, or is it

something different?

MR. DALLEY: No, that is the same money, but as I indicated, it is all in

line 07 until we go through a process and working through the tendering process.

In Professional Services you would see engineering and design and consulting

fees. Then in 06, Purchased Services, you would actually see the construction.

MR. BENNETT: Why is it Purchased Services one of your staff said

tangible capital assets go there but this is called services; why isn't it

called equipment?

MR. DALLEY: Sorry?

MR. BENNETT: Under line 06, it says Purchased Services and the next

category says Property, Furnishings and Equipment, so Purchased Services does

not sound like a capital asset to me.

MR. DALLEY: Do you want to explain that?

MR. IVIMEY: All of the expenditures that are spent underneath this

subhead would be considered a capital expenditure whether it would be a

professional service, a purchased service, or a piece of property, furnishings

and equipment. It is just to correctly break out the expenditures as you are

going through the construction design and engineering phases, the expenditures

had to be broken out into those correct subheads.

MR. BENNETT: Okay. What exactly did the people of the Province get for

$3,525,000 under Purchased Services?

MR. DALLEY: A wharf in Harbour Breton and a wharf in Pool's Cove.

MR. BENNETT: Two hard assets?

MR. DALLEY: Yes.

MR. BENNETT: Nothing but the two hard assets? What was then acquired

under Property, Furnishings and Equipment, $619,100?

MR. DALLEY: That was additional expenditures for wharf design and

construction. The Professional Services would be the initial part. Then as we

went through construction as well, there were some additional costs for wharf

design and consultation.

MR. BENNETT: Now I am probably more confused. Are you talking about 05,

Professional Services $138,000?

MR. DALLEY: Yes.

MR. BENNETT: Does that include all the engineering and design?

MR. DALLEY: Apparently not. There is a

section there as well of $619,000

as a follow-up that would also involve some wharf design, and consultation as

well. I do not know if Phil can explain why there are two separate headings.

MR. IVIMEY: The expenditures would dictate the nature of the expenditures

themselves. Professional Services would be if we engaged a particular design or

firm and we had an expenditure directly related to, say, a piece of design work

that they did.

Under Purchased Services if we had a contract where we contracted for a

construction company to actually physically come in, supply the materials and

build a piece of the wharf, that would be considered a purchased service because

we paid the company for their services to come in and build that particular

piece of the wharf.

Under Property, Furnishings and Equipment, the types of expenditures you

would normally see under there would be if government itself directly purchased

the equipment or the furnishings that would go towards that capital asset. For

example, if you were building a building we would engage in a contract with a

firm to construct the building. Then the physical assets for the building

ourselves, we will purchase, such as the furniture, the equipment that would go

into the building.

Depending on the nature of the expenditure, it would fall out within those

different subheads. The exact break out of those expenditures we do not have

here with us now, but that would be the overriding nature of how those would be

broken out.

MR. BENNETT: Can you provide the exact break out of that? I presume there

is an accounting package somewhere that lists all this stuff? Are you able to

provide that?

MR. DALLEY: The actual break out where that was spent?

MR. BENNETT: Yes.

MR. DALLEY: Yes, we can do that, pending any commercially sensitive

information. For the most part, we should be able to provide that.

MR. BENNETT: Has the department put together a set of preliminary

Estimates to know what we will get for the $8.6 million?

MR. DALLEY: Yes.

MR. BENNETT: What will it look like next year when we see it broken out?

MR. DALLEY: Of that $8.6 million, we know $2 million will finish the

Harbour Breton and Pool's Cove facilities. Beyond that, there has been no

announcement, but there is certainly consideration of other projects.

MR. BENNETT: So the $2 million will pick up from the amount that ran

under budget by around $2 million last year?

MR. DALLEY: Yes.

MR. BENNETT: It is just a continuation?

MR. DALLEY: Yes.

MR. BENNETT: There is an allocation of a further $6 million, more or less

the same as last year, and it has not yet been decided what that will be used

for?

MR. DALLEY: Well, I do not know if it is not decided, but there has

certainly been no announcement on what that will be used for. There is still

some ongoing work and some ongoing consultation with industry as well.

MR. BENNETT: So are there RFPs that have come to the department that

would account for that further $6 million or so?

MR. DALLEY: No.

MR. BENNETT: At what level would that be? Is it at the preliminary

discussion level or somewhere before RFP?

MR. DALLEY: Well, no, it is not based on any tenders as such. We have a

history now of some wharves and some idea of costs. Based on that and based on

discussions with industry whether we go forward with other wharves, there is a

budget allocated for this year.

MR. BENNETT: Are these industry players all related to aquaculture?

MR. DALLEY: Yes.

MR. BENNETT: Is it related all to finfish aquaculture or shellfish

aquaculture?

MR. DALLEY: Again, there has been no announcement as to what we intend to

do with this, other than some early work and some discussion with industry, but

I would suspect more primarily finfish.

MR. BENNETT: How many industry players is the department working with

respecting finfish aquaculture?

MR. DALLEY: We have three significant players

Gray's, Cooke, and Northern Harvest , and there are a

couple in trout as well.

MR. BENNETT: I have no more questions on this section.

CHAIR: Okay.

We will go to the next section, Mr. Mitchelmore, 1.3.01.

MR. MITCHELMORE: I just wanted to make a comment around the last

section

that in the Budget it says that $4 million is going to the Milltown wharf, and

$2 million for the two wharves that the minister had mentioned, to fix. So there

would be approximately $2.6 million left for potential other wharf or other

infrastructure developments. Is that correct? Because the Budget specifically

states Milltown.

MR. DALLEY: Pardon?

MR. MITCHELMORE: The Budget actually says $4 million for Milltown.

MR. DALLEY: Yes, again, in discussion with industry and the work and

where it is appropriate and what is the best place to do this work, it is still

somewhat ongoing; but obviously Milltown is a key consideration.

MR. MITCHELMORE: Okay.

In 1.3.01, the Salaries were allocated last year at $756,500 and they were

revised at $874,000. Is this because there were people who left and severance

was paid out? Because there is an $117,500 increase. Were there retirements?

That is under Policy and Planning Services.

MR. DALLEY: No, there would be some temporary staff hired to do some work

in a number of areas in terms of organizational review, transparency and

accountability work, as well as some research done during the year.

MR. MITCHELMORE: These people were hired to do the core mandate review of

your department?

MR. DALLEY: No, not the core mandate, just some other work that needed to

get done.

MR. MITCHELMORE: What type of work did they do?

MR. DALLEY: Organizational review work, some work around transparency and

accountability, as well as co-ordination of various research analyses during the

year.

MR. MITCHELMORE: Is any of their research available online or available

to us as members?

MR. DALLEY: It is mostly internal work that would advise some of the

decisions and processes that we are following and some of the requests that

would come in at various times to the department.

MR. MITCHELMORE: What type of things do they find around accountability

that there were some problems? Were there things that were highlighted?

MR. DALLEY: I do not think it was about problems; I think it was about

getting work done and may be a small part of some of the temporary staff work

that was done. When you do get requests, as you know, it is important that we

get the information. Sometimes the requests are extensive and we may not have

some of the information directly, as well as some research that needs to be done

as well.

MR. MITCHELMORE: Why would you have temporary staff do this type of

analysis and not core staff in your policy and administrative division? Do these

people not have the expertise?

MR. DALLEY: The temporary people would be more support. I mean, the

senior staff would guide, direct and manage the work; but sometimes, depending

on the nature of what is involved or how much work is involved, it is an

opportunity for some extra work and extra research.

MR. MITCHELMORE: Where did the funds allocated for your departmental core

mandate review fall, for the funds allocated?

MR. DALLEY: Was it core mandate review?

MR. MITCHELMORE: For your department.

MR. DALLEY: Alastair.

MR. O'RIELLY: Is the question was there a specific allocation for core

mandate?

MR. MITCHELMORE: Yes, there would have had to have been specific

allocation of fund or staff. Who did the core mandate review within your

department?

MR. O'RIELLY: It was not anybody specific. It was distributed amongst all

the senior executives, senior management of the department, and it was an effort

I guess, in terms of core mandate analysis, to review each and every activity of

the department and explore where there were opportunities for improved

efficiencies and so on. The support staff in this context were people who

provided some additional support to the department executive.

MR. MITCHELMORE: Where there directions given as to how much was needed

to be cut by the department?

MR. O'RIELLY: The initial core mandate analysis piece asked each

department to review all activities and determine where there were

opportunities, seek ideas from staff, seek ideas from industry, and to explore

what were the opportunities for improved operating efficiency.

MR. MITCHELMORE: Will the minister provide a copy of the departmental

analysis that saved efficiencies, to my office?

MR. O'RIELLY: Each of those items are reflected really in the budget

decisions of the department. Where there was cost savings achieved, are

reflective of the things that were explored and what the changes were made.

MR. MITCHELMORE: Was there a report done, though, and completed, and can

it be made available?

MR. O'RIELLY: No, there was no report, as such, on the overall thing.

Each item was explored and then the budgetary decisions, there were

recommendations made to the minister as to where cuts could be achieved or might

be considered, and then decisions were taken pursuant to that.

MR. MITCHELMORE: Were all these recommendations made in person? They were

not written?

MR. O'RIELLY: No, they were all made in person, in recommendations to the

minister based on each of the items that we reviewed. There was no comprehensive

report done on core mandate analysis in that sense.

MR. MITCHELMORE: In terms of doing an analysis on the department, there

was nothing in writing as to saving money and all the recommendations were made

verbally to the minister is what you are saying?

MR. O'RIELLY: No. There were a number of items explored and there was

research done as to what opportunities may exist for effecting savings and these

were discussed at the management level, at the executive level, then finally

were considered as to their inclusion into the budget submission for the

department.

MR. DALLEY: If I could just comment, Mr. Chair.

CHAIR: Sure, go ahead.

MR. DALLEY: Just a comment on the budget process and what feeds the

budget process. From my perspective, I did not wait for a report from everybody,

to sit down and read the report and decide where we are going. It is done face

to face, where you sit down and analyze, discuss, talk, and look at numbers.

Obviously the work that staff has done heavily feeds into this budget process,

but I can tell you it was done primarily face to face.

MR. MITCHELMORE: Okay.

How often, as minister, have you met with the Minister of Fisheries to

discuss fishery policies in our department?

MR. DALLEY: Minister Ashfield?

MR. MITCHELMORE: Any Minister of Fisheries, federally.

MR. DALLEY: There is only one.

MR. MITCHELMORE: For a period of time there was Minister Shea.

MR. DALLEY: Sorry, I met with Minister Ashfield twice and I met with

Minister Shea as well while she was acting.

MR. MITCHELMORE: What did you discuss?

MR. DALLEY: I do not have the agenda here, but I know at the time we had

a discussion about, if I recall, some of the agenda items. The resource issues

in 2J, 3K was an important discussion. We had a discussion about the sealing

industry. We had a discussion about search and rescue.

We would have had a discussion about some of the regulatory changes that we

are hearing from industry as well around the flexibility and management of

harvesting opportunities, some discussion around allocation of resources, cod

and so on. Those are the ones I recall; there might have been a few more on the

list. The West Coast issue as well in terms of the halibut issue, I did have a

discussion with the minister on that as well.

MR. MITCHELMORE: Are there regular meetings with the federal Minister of

Fisheries? Do you have regularly scheduled meetings?

MR. DALLEY: No.

MR. MITCHELMORE: Okay.

MR. DALLEY: I will say from my perspective and dealing with Minister

Ashfield, I think he is very supportive of Newfoundland and Labrador in general

and our fishery. He has been accessible for us at any time. We have had some

conversations over the phone or with his staff or whatever might be the case. I

find him to be very supportive and understanding of the industry in Newfoundland

and Labrador.

MR. MITCHELMORE: That is very positive to hear, Minister. It is important

to have that type of relationship.

Can you explain the $160,000 loss of salaries? Obviously they were positions

lost here or they were retirements under the Salaries section.

MR. DALLEY: Yes, there were three positions. One was a permanent position

and two were vacant. As well, we re-profiled an admin support position to

planning and marketing. That would account for that reduction in Salaries.

MR. MITCHELMORE: Yes. It is just that the vacancies would not have been

money that would have been spent, so there was one position and an admin person

that account for $160,000?

MR. DALLEY: In terms of the vacancies, what happens in vacancies in

salary positions, that allows you, in terms of temporary staff as well the

allocation of the vacancy is still there in the budget, so it allows you to

re-work some of funding. It might be with students, it could be temporary staff,

or it could be things that you need to get done. That gives you some flexibility

with your salary dollars.

MR. MITCHELMORE: Yes, I am clear on that, for sure.

I just have a question around your Grants and Subsidies under this

section of

$63,000 this year. Who is getting this funding? What is it for?

MR. DALLEY: This $63,000 is a part of the $100,000 that we put into seal

communication strategy, the sealing industry and supporting overall. What we

have done this year is re-profiled it to this particular division from

Innovation and Development.

MR. MITCHELMORE: Okay.

When it comes to revenue, last year, provincial revenue, it says that there

was $36,500. What accounts for this jump? Because this year, like last year,

what is budgeted is $2,000. I am wondering how the planning and administrative

division is generating revenue.

MR. DALLEY: That particular revenue item came from the cost for the

Deloitte report of the Marystown financial review, and OCI paid for the report.

MR. MITCHELMORE: Was that the total cost of the report?

MR. DALLEY: Yes, it was.

MR. MITCHELMORE: I do not have any further questions under 1.3.01.

If Mr. Bennett would like to

CHAIR: Okay, Mr. Mitchelmore, I will to Mr. Bennett on that section.

MR. BENNETT: I have no questions on this section.

CHAIR: Okay.

We will go to 1.3.02.

MR. BENNETT: Minister, line item 10, under that category, says Grants and

Subsidies. Last year there was $8.6 million budgeted and $8.1 million used. This

year it is down to $2.4 million. What is that all about?

MR. DALLEY: This is in reference to some of the one-time funding in

projects ending and moving through the different phases of our programs. Last

year, to give you some idea of what was allocated in that $8.6 million, the

lobster sustainability program had $4.1 million, and that is the retirement

program.

Whereas, this year, we are into the final year, so a lot of the money

of the $9.1 million from our side has been already paid out, so we are nearing

the end of the program. This year there is only like $1.4 million allocated.

There was a reduction, but it was a planned reduction from $4.1 million down to

$1.4 million because of the way the program went. That is one line item.

Another one is the Canadian Fisheries Ecosystems Research and the research

that George Rose is doing. It has been ongoing for a number of years. There was

a five-year commitment. Last year there was $3.75 million. Again, in terms of

the program and the funding and the way it has gone, this year it is $1.575

million; hence, the significant reduction this year. It was not a cut; it was

planned as the project would unfold.

As well here we have coastal and oceans management, $150,000 was allocated,

and that stayed the same for this year. As well as fisheries science, there was

$600,000 allocated in 2012-2013 towards fisheries science, some cod recovery

work, but mostly science and research.

MR. BENNETT: When you refer to the work being done by George Rose, the

five years, is that the Celtic Explorer ?

MR. DALLEY: Yes.

MR. BENNETT: Will that be continued?

MR. DALLEY: We are hoping to. Right now, we are nearing the fourth year?

OFFICIAL: Yes.

MR. DALLEY: We are into the fourth year. This year, the Celtic

Explorer is out right now. Of the five years, there was three years in which

we allocated funding for the vessel. That has been done; hence, the reduction.

Our hope is that we will be able to continue with CFER and the work that George

Rose is doing.

MR. BENNETT: Is there any reporting in place for that to report back to

see what the results are on an annual basis or some other basis?

MR. DALLEY: Mr. Rose gives us updates. There is no complete report yet,

but we do get updates. I think each year, in the RAP session, the work that Mr.

Rose is doing helps support the discussion with the industry and supports the

work of DFO, and I guess ultimately they make decisions on allocations and

trends and so on. At this point, there is no report.

MR. BENNETT: What species specifically is he doing research on?

MR. DALLEY: There are a number of species, but it is mostly cod work.

MR. BENNETT: Is he providing ongoing feedback to your department as he

learns things, like on a seasonal basis?

MR. DALLEY: We do get some information as to what they are doing. What I

might suggest, when this year's research is done, it might be worthwhile, I

would certainly be able to arrange some sort of briefing or information session

where you could get to see the tremendous work that they are doing and the

results so far of what they have been able to find. I have to say, they are

doing tremendous work. It is very revealing and very important to our industry.

If you are interested, maybe we could arrange some sort of information session,

once they are done this year.

MR. BENNETT: Is it contemplated in his terms of reference that there will

be a final report, that he will deliver a final written report to the

department?

MR. DALLEY: I will get Alastair to speak to that.

MR. O'RIELLY: I guess there will be some sort of a report prepared if the

thing terminates, but hopefully that will not happen. Hopefully it can be

continued.

As the minister said, this is the fourth year and it is the third year of the

survey work. What George Rose has been doing is submitting the information to

DFO as part of their normal processes. There is also a process where there is an

industry advisory group that is chaired by Dr. Art May. They meet periodically.

During the course of those meetings Dr. Rose and his other scientists outline

what they are doing, what their research plans and so on are, and then validate

that in terms of consultations and feedback from industry. The industry

participants on that by the way include people primarily from the harvesting

sector, but I think there is also interest from processing as well.

MR. BENNETT: Even though you said you hope that it will continue and

there would not be a report to conclude it, will there be a report provided that

would justify its continuation?

MR. O'RIELLY: I think on that point it is now at a stage where having

completed the second year of the survey and then now the third one, as the

minister said which is ongoing, one expects that at the end of this there will

be enough information compiled to allow some sort of an analysis or assessment

of how much this work has added to the knowledge base of the Province, of the

industry, and of DFO.

MR. BENNETT: One of the concerns that I have, and I think it is a common

concern, is in fisheries above all we tend to have more reports than anything

else. As a matter of fact, somebody supplied me with two full shopping bags more

than a year ago. They stack up almost two feet high of reports from

Confederation forward.

A lot of the information appeared to be useful at the time; it may not have

been acted on. It may have been useful at the time, but by the time it got

around to being reported back it may not have been relevant or no longer timely.

I have no doubt that he is doing good work, and hopefully good enough that it

might continue, but not knowing what it is or what we are doing with it gives me

concern. Will this be another fisheries study or fisheries report that we do not

get much out of, as taxpayers?

MR. DALLEY: Your point is well taken. We always see reports and wonder

what happens to them and so on, but in this particular case the information is

up to date that he is providing.

Being a part of the annual session with DFO and with industry and having

industry directly involved, the information is getting out there today. So that

is current and accurate. How that will fuel decisions and certainly in terms of

the RAP sessions and so on to support DFO and to support the industry in some of

the decisions they have to make but it is important it stay current, I agree

with you. Hopefully, each year as they do more work and find new science, they

will continue to help feed some of the decisions that need to be made.

MR. BENNETT: Do you anticipate that this research that the Province is

paying for will be used or could be used relatively soon in some sort of a cod

fishery recovery strategy, maybe jointly with the feds?

MR. DALLEY: Yes, I think it is already being used in a number of ways in

terms of again, I think you probably need to see some of the work that is

being done and some of the science, and the high level of information that Dr.

Rose is finding. I think it is already being used to help in terms of decisions

around allocations. We do not have the cod allocations for this year, but in

terms of information DFO would have to consider, the work of George Rose would

certainly be a part of it.

MR. BENNETT: What position is the Department of Fisheries and Aquaculture

in today to be able to take these scientific findings and push them forward in

marketing in order to be able to get back into a smaller scale but higher end

cod fishery, if any? Are we there, or do you see us ever getting there?

Instead of going out with draggers and catching all the fish as soon as we

are able to, moving back in with the smaller quotas that we see now and the

seventy-odd groundfish plants that are out there so we could identify target

markets and move forward.

MR. DALLEY: No doubt, the work of, whether it is DFO or CFER or industry

itself, obviously fuels our fishing industry, and cod no different. Specific to

markets, we are always seeing some of that activity right now with Icewater in

terms of specialized markets. What the reality is, I think industry is well

aware.

The marketing challenges for cod right now are extremely difficult. There is

1.5 million tons of cod in the world; 1.7 million tons of the world supply in

cod. We have seen a shift in markets over time. There is much anticipation and

hope that market demand will increase in the future, as will our cod supply, I

guess. Right now, those challenges exist.

What we are finding in terms of trends, our biomass, and what we anticipate

for the future in terms of a cod fishery, all of that will tie into future

market opportunities. Right now companies like Icewater, who is probably one of

our strongest players in the markets, they are recognizing as well some of the

higher quality, smaller amounts, because the reality is, it is highly

competitive out there.

MR. BENNETT: Under this sustainable fishery and this is where I would

look at it are we at a point yet where any of our suppliers can produce a

product that goes straight into the supermarket showcase somewhere in the world?

MR. DALLEY: I will get Alastair to answer that.

MR. O'RIELLY: I think it depends on how one interprets final product

consumption. A lot of the products that are now produced, the shellfish products

are ready to eat products and ready for consumers consumption. In the case of

the shrimp sector, which is primarily in Europe, in the last few years virtually

90 per cent of the sales have been into the European market. It has not really

been possible to enter that market with branded products because of tariffs and

other restrictions, which one hopes will be removed soon.

In the case of crab products, they are sold either into the US market or into

the Japanese market in the food service sector, primarily. There are some retail

packs done which offer the opportunity for branding and small packages usually

less then two kg, but primarily it is in the food service sector where they are

sold in larger packages and made available to restaurants and other

institutional users in that form.

MR. BENNETT: I was not thinking much of shellfish, although for sure that

is important. I was thinking of white fish, like cod. That someone would walk

along by a supermarket in Boston or wherever and see right in that showcase

something and just take it out, take it home and stick it in the microwave. If

it is Cod au Gratin or whatever, and we have absolutely maximized the amount of

processing that we could get out of it. Are we there with any processor yet?

MR. O'RIELLY: I would say in the case of cod or other white flesh

species, that is not where the industry has been heading in recent years and it

is because of changes in supply and demand for products globally.

What is happening in most of our white flesh products, as the minister

mentioned with Icewater, they are doing a brand of product. They are doing it

into the European market, into a high-end, high-quality fillet or portions. That

is where the maximum value is. Similarly in turbot, the best opportunity for

that is in a whole or near-whole form for the Asian market.

The issues of doing secondary processing and value-added products of that

type, they require really, really inexpensive raw material, which we really do

not have. The price points are such that it is just not viable to pursue those

markets at this point in time. It is not likely it will be in the foreseeable

future either for those types of products.

Where the real opportunity will probably emerge is being able to do high-end,

high-quality products sold to more exclusive customers in world markets, which

is where Icewater has moved and where other companies are looking to expand.

MR. BENNETT: Okay.

CHAIR: Mr. Bennett, do you have much on that section?

MR. BENNETT: Yes, a little bit. I could defer to Mr. Mitchelmore and come

back.

CHAIR: Okay. I will go back to Mr. Mitchelmore and see where he goes with

it and then back to you, Mr. Bennett.

MR. MITCHELMORE: Okay. Minister, would you be able to provide us with a

list of the grants and subsidies of the people who are receiving the allocation

this year and what was provided last year? I know you gave some explanation, but

would it be possible to have a

MR. DALLEY: Sure, we can give you a break down.

MR. MITCHELMORE: That would be great.

I have a question around this

section which involves the coastal and oceans

policy with the federal government. Is there a reason why there is no revenue

from the federal government listed in this section? Are we not receiving any

type of funds from the feds?

MR. DALLEY: No.

MR. MITCHELMORE: Is the federal government doing their own research in

terms of ocean and coastal policy and we are doing our own research? Why

wouldn't we look at doing cross jurisdictional, combine our money to further

these initiatives?

MR. DALLEY: Like you are seeing in the science research as well, we

complement what is happening with DFO and their work. Certainly in terms of the

coastal oceans and management, we complement the work that is being done on the

federal side. We are aware of what they are doing, and they are aware of what we

are doing with our own provincial initiative.

MR. MITCHELMORE: Yes, your initiative, you finalized the Coastal and

Ocean Management Strategy, I believe, some time in 2012, and you have an

objective in your strategic plan. By March 31, 2013, we "will have the

implementation of action items and continued policy development to further

advance the coastal and ocean management strategy", and this will continue into

Have you achieved any of these action items to date? Can we have a list of

what has been achieved and what is still in progress?

MR. DALLEY: The number of action items, I guess that is some of the

objectives of what we are trying to achieve in terms of healthy marine

environments, a social, cultural and economic stability, the education side,

coastal land use as well, looking at the climate change impacts, and other

coastal and marine infrastructure that may have other positive or negative

impact. So through all of that and achieving our objectives we have outsourced a

lot of the funding to a lot of groups that are engaged in the whole education

process and coastal management awareness.

We could provide you with a list of where that funding went.

MR. MITCHELMORE: That would be great.

Mr. George Rose has been doing a lot of research, and you were talking about

the research that was done. It was reported that they were finding a resurgence

of cod in his actual research, but then we see conflicting reports recently in

the media saying that cod may never recover.

What is your opinion on this and is our research showing that cod is

rebounding going to supersede this negative perception that is out there in the

media?

MR. DALLEY: Certainly from our perspective, the work that Dr. George Rose

has been doing, supported with the other science from DFO, and in terms of

anecdotal feedback, as we would all know, from our own fishermen, we believe and

the science supports a positive trend toward cod recovery. I think it has been

noted, and certainly a consensus, we are nowhere near the biomass that we used

to be historical levels.

What is encouraging is that we are seeing a positive trend toward cod

recovery, and Dr. George Rowe's work is certainly supportive of that, but it is

not to indicate that we are ready to throw it all open to a full scale

commercial fishery and a fishery that certainly would be sustainable. I think

that is what is key to all of us involved in the industry. This time around we

have to obviously measure decisions that are being made and what impact it will

particularly have on the sustainability of the resource.

MR. MITCHELMORE: Is your department advocating for even a marginal

increase for the inshore cod quotas or are you just advocating for the status

quo?

MR. DALLEY: We are certainly exploring that and taking a look at all of

the information that has come through. What we would like to see is a decision

that would reflect the current science and the current assessment of the stock.

We would not want to see a decrease if it is not necessary and we would not want

to see a significant increase where we would challenge the sustainability of the

resource; but if all information would indicate that the current stock

assessment would be able to be managed with an increase, then we would support

it.

MR. MITCHELMORE: Is accurate information available, though, to actually

base research decisions from fishers' catch and their logbooks for the very

small inshore, as to how things are actually accounted for? It seems like there

is a real discrepancy as to how information is being supplied to the federal

government.

MR. DALLEY: Alastair.

MR. O'RIELLY: You are right about the discrepancy, I think, in terms of

what people see on the water versus on occasion what scientists have seen in

their resource surveys. The information is collected and collated, and it is

input into the Regional Advisory Process, the RAP, for assessing of stocks.

There is also considerable debate and discussion about: What does it mean? Why

are there differences?

In the last number of years, what harvesters have been seeing in near-shore

areas is significant improvements in the abundance of cod and the conditioning.

Offshore surveys were not showing that, but in the last year in particular Dr.

Rose's survey has shown a greater presence of stocks of cod in more traditional

areas, like what he terms the Bonavista corridor, a traditional fishing area.

That is encouraging.

The other thing that he has noted is a much larger size cod than the DFO

survey had shown. So that is an area of debate between DFO science and Dr. Rose.

Hopefully the work this year will help reconcile those different views.

The issue with reconciling where harvesters see, and scientists, I think, is

going to require further debate and discussion. Hopefully, that process that is

involved now, the RAP with DFO and the industry advisory process with Dr. Rose's

group in CFER, will help reconcile those differences and help people to have a

better understanding of what the resource potential is, what is sustainable, and

what is realistic in terms of recovery patterns and exploitation rates.

MR. MITCHELMORE: Thank you, Alastair, for that.

Certainly, from fishers I have talked to, they are seeing larger cod. I have

seen it even with the food fishery. I am not saying that it is exponential, the

increases, but it seems from the people I have spoken to, along with Dr. George

Rose's research, there may be a means to marginally increase quotas for the

inshore fishers. They have such a small quota as it is right now.

I do want to make a comment around the minister's district. Can you update us

on the cod potting pilot project, that initiative, because that is something

that would have been around sustainable fisheries and good resource ocean

practices? Is that still continuing?

MR. DALLEY: The only feedback that I did get on that directed from the

people using the pots was very positive in terms of quality. The other side of

that is it has been available and there has been no uptake outside of that

particular project.

MR. MITCHELMORE: Okay.

MR. DALLEY: It has certainly been positive on a small scale to be able to

supply specific restaurants, but beyond that there has been no uptake.

MR. MITCHELMORE: I would just think of the food revolution and how things

are happening here in the larger urban centres and a number of places. Tourists

and residents, they want fresh fish and they want the highest quality of fish

they can get. Cod potting is one of the measures where they can certainly get

that high quality, and the fisher can get a high return. It seems like a win-win

solution but it is a small scale. There is only a certain size of the market

that can be served.

Is this available if there are individual fishers who wanted to go through

this process, or would it be a long, daunting process to get permits and to go

through your department to actually fish in that way?

MR. DALLEY: I do not think it would be a long, daunting process. There

would be a process here, of course, but it is available. We can work with anyone

who is interested. It is ongoing in terms of those who were initially involved.

You are right, the quality is there, but it is small scale. At the same time,

the harvesters and those involved would have to be the proponents who want to

move forward with it.

MR. MITCHELMORE: I do not have any more specific questions on the

sustainable fishery. Should I go on to the next

section now, Mr. Brazil?

CHAIR: Sure.

You have seven minutes left on your time.

MR. MITCHELMORE: Under 1.4.01, Coordination and Support Services, the

Salaries jumped from $264,800 to $311,200; it is $46,400. Was this also some

temporary staff hired in the process, or were these retirements and severances

paid?

MR. DALLEY: No, this was due to additional positions that were added to

Municipal Affairs to assist in a program delivery of Workforce Adjustment.

MR. MITCHELMORE: Okay. How many positions were added, a couple of

positions?

MR. DALLEY: One position.

MR. MITCHELMORE: Okay. This year the allocation for the Salaries is

$205,000. I would imagine that position has been lost and maybe an additional

position or more. Can you give us a breakdown as to how many positions?

MR. DALLEY: I guess the temporary position, but certainly there was

another permanent position taken out of there as well.

MR. MITCHELMORE: What was that position?

MR. DALLEY: It was the Director of Fishing Industry Renewal.

MR. MITCHELMORE: Okay. The Professional Services last year allocated

$30,000 but no money was spent. Is there a reason for that?

MR. DALLEY: Yes, the money was allocated to do a review of the Fishing

Industry Renewal and Adjustment Program but that was deferred and was not done,

and we are hoping to do it this year.

MR. MITCHELMORE: What will this actual review entail? Is this similar to

what the fishing MOU was originally intended to do? Is there a

MR. DALLEY: Well, it is not like the MOU process, I guess, but the

Fishing Industry Renewal was in 2007. There were a number of elements to the

strategy in terms of processing policy, fish auctions, different research and

development around FITNOP, occupational health and safety initiatives, the loan

guarantee.

There are a suite of elements of that strategy we would like to assess and

see. It has been since 2007, and by many accounts it has been successful. There

is some that have not, and we would just like to do a review to see in terms of

where we can strengthen some of these programs or, in fact, maybe something else

has developed as a result of these programs. A review would be timely.

MR. MITCHELMORE: Okay, that sounds good.

You had mentioned fish auctions as part of the original review. I had visited

Iceland and their fish markets. How they do the real-time auction based system,

and how anybody can basically bid on a person's catch that is coming to shore.

Then they have trucks set up to purchase specific product. It gets shipped to a

facility to be processed. It is almost like just in time, almost like how

Wal-Mart delivers its product so that it is always there on the shelf.

It seems like something interesting to further explore. There is no risk to

the harvester of not getting paid because the money is always available, it is

real-time capital. We see that in a number of small communities sometimes where

fishers do not get paid for their product. That could be a means to eliminate

that.

I just wanted to ask you, Minister, around the Grants and Subsidies section,

last year you had budgeted $2.375 million and you actually spent much more than

that. I imagine this is for the Fisheries Adjustment Program, for the plants

that were shut down in Burin and Marystown and a number of other places Port

Union across the Province. Is that the case?

MR. DALLEY: Yes, it is.

MR. MITCHELMORE: How many people were actually served under this program?

Do you have a list?

MR. DALLEY: Last year, approximately 347.

MR. MITCHELMORE: Three hundred and forty-seven people availed of the

program?

MR. DALLEY: Yes.

MR. MITCHELMORE: Do you know how many plant workers were actually

displaced so that a number of them would have found work elsewhere?

MR. DALLEY: I do not have an exact number as to how many were displaced,

other than the ones who were actually served by the program.

MR. MITCHELMORE: It seems like there were

MR. DALLEY: We could probably get those.

MR. MITCHELMORE: That would be great, because it seems like there were

high numbers of people who were working at these facilities. If 347 people were

the only ones who availed of it, I wonder if they were able to find work

elsewhere, or if there were barriers for them to even get on the program?

MR. DALLEY: We are not aware of the barriers, as such, because the

criteria are fairly straightforward. I think your point, and if I could raise

it, we had some recent plant closures as well in a number of communities. We are

finding a lot of these displaced workers as a result of the closures, are

picking up employment elsewhere.

MR. MITCHELMORE: Okay.

MR. DALLEY: It is a positive in that sense. Unfortunate for those,

obviously, who did not have the opportunity to pick up more employment, but we

are finding and I guess last year with the closures, a number of people would

have gotten employment or opted to do something else. This year we are seeing so

far with the plant closures, as a result, most people are finding work

elsewhere.

MR. MITCHELMORE: I know even in my own district, a Town like Englee,

there are workers who have travelled to Bay de Verde this year to go to work,

more than 1,000 kilometres away from their home for employment.

MR. DALLEY: Yes.

MR. MITCHELMORE: It is positive to see the Conche plant operating so well

and hiring a number of people, too.

This year you are anticipating there will be much less need for this program.

You are not anticipating a number of other plant closures, or if you are, you

are anticipating that they will be able to find work elsewhere. Is that the

case?

MR. DALLEY: Well, a combination, I guess. Certainly, the results we have

seen as a result of recent closures would suggest that there will be less of a

demand on the funding that is required.

Obviously, as I have indicated, we do not close plants. Where we can,

obviously, within the industry, working with industry to hear what is happening

and so on, there was some concern about the La Scie plant. I understand that is

going to be operational this year, as well. Outside of that, at the moment we do

not have any on the horizon.

CHAIR: Mr. Mitchelmore, are you almost finished that section?

MR. MITCHELMORE: I have a few more questions but I am more than happy to

go back to Mr. Bennett.

CHAIR: Okay, I will go back to Mr. Bennett then, to keep the train of

thought going.

Mr. Bennett.

MR. BENNETT: On that section, I do not actually have any questions, but I

would ask it looks like it comes up a little later on. If I go there now it

kind of becomes disjointed. It is more under Seafood Marketing and Support

Services. If Mr. Michelmore wants to come up to that area and ask all the

questions he wants up to then, I will not have much until we get to the next

page.

CHAIR: Okay. We can go that route.

Mr. Mitchelmore, you can complete yours and then we will adopt that section.

MR. MITCHELMORE: Okay, I just have a couple of more questions around this

program for these workers.

The displaced workers in regions like Port Union, for example, these programs

are meant to be just a one-time, one-year program. That is correct, right?

MR. DALLEY: Yes, it is a transition program.

MR. MITCHELMORE: In communities that are I guess there are still

workers who are displaced. Is there a taskforce, or has there been things to

help create new economic opportunities in places like Port Union?

I have not seen that happen in my own district. Like in Englee, there has

certainly been the support put in for the workers but for transitioning the

community to create new economic opportunities, we do not see that role

happening from the Department of Fisheries and Aquaculture.

MR. DALLEY: In terms of transitioning to new economies, Innovation,

Business and Rural Development would be the lead within government. Through this

whole process, in terms of not only helping transition workers but I guess

making communities, and leaders of the communities, and people involved in this

closure, aware of a suite of programs that is offered through government, should

they have some ideas and suggestions and opportunities, I guess it is not our

role to go in and force the economies in certain situations, but to be able to

let them know that we are there to provide support. There are opportunities

within our suite of programs that we would work with them very closely.

If there have not been things happening it is probably because there has not

been a lot come our way to work with. In terms of the whole transition piece,

the workers being the key, and then whatever services we can provide to them to

help them adjust and to find out in terms of labour market opportunities that

might exist and then beyond that, supporting the economies of the region.

MR. MITCHELMORE: Yes, certainly, communication is a two-way street. You

need to have the proposals coming forward and that dialogue to make things

happen. I have always found your department has been more than receptive of

listening to ideas and at least directing and working in the right direction.

I just have one other question pertaining to this Grants and Subsidies

section. There is no revenue put forward here from companies that had plant

workers. Do they not help out and assist in transition sometimes? A company like

Ocean Choice International that would have programming in place or things like

that where they would be contributing? I believe they were topping up money

previously in announcements and things like that, but I do not see any revenue

recorded.

MR. DALLEY: A couple of things with that, in most cases they are not

required to, depending on the nature and the business relationship and so on.

Some companies may come forward to support but they are not required to. There

were a couple of situations where FPI was involved, the companies were involved,

and government was involved in the setting up and the licensing and so on. There

were some conditions attached to it.

In OCI's case, they were not required to, particularly with Marystown

workers. As a result of the agreement that we put in place, we are able to add

that as a condition of licensing to be able to support the Marystown workers and

Port Union.

The other side of that, I would suspect that if there was revenue it would

probably show in Municipal Affairs.

MR. MITCHELMORE: Okay, thank you.

I do not have any further questions on that section.

CHAIR: Okay, Mr. Mitchelmore.

What we will do is I will ask for a motion to adopt subheadings 1.1.01 to

1.4.01.

The Member for Fortune Bay Cape La Hune.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

CHAIR: Opposed.

Motion carried.

On motion, subheads 1.1.01 through 1.4.01 carried.

CHAIR: That subhead is done.

Mr. Bennett, I am going to go back to you and give you some extra time before

we click back to Mr. Mitchelmore.

MR. BENNETT: Okay, thank you.

CHAIR: Under 2.1.01, starting there.

MR. BENNETT: In the first category, I do not have any questions in

Administration and Support Services. I am quite a bit more interested in the

next section, Seafood Marketing and Support Services.

Minister, under subhead 10, Grants and Subsidies, what was contemplated in

last year's budget, the $4.1 million that was not done, or did not happen?

MR. DALLEY: Where are you?

MR. BENNETT: Right near the bottom, 2.2.01, Seafood Marketing and Support

Services, line 10.

MR. DALLEY: Okay, 2.2?

MR. BENNETT: Yes, Seafood Marketing and Support Services.

MR. DALLEY: The primary funding in that particular section, Seafood

Marketing, was around the sales consortia marketing council. It was a commitment

made as a result of the MOU process and working with industry on a three-year

trial basis, as a pilot. That money was allocated to work with industry, should

industry decide they want to move in the direction of a seafood marketing

council, I guess predicated by sales consortia as well.

MR. BENNETT: When you say industry, who exactly do you mean, companies,

union?

MR. DALLEY: Companies.

MR. BENNETT: Which companies?

MR. DALLEY: All companies.

MR. BENNETT: So, $450,000 was actually used?

MR. DALLEY: Yes.

MR. BENNETT: What happened there?

MR. DALLEY: That funding would primarily be used by the Province in terms

of local promotion, trade shows, support for MSC certification, and traceability

issues, primarily, would come from the department in supporting the industry.

MR. BENNETT: This year $2.6 million is estimated. What would that we used

for?

MR. DALLEY: We are hoping it is going to be used to support sales

consortia. There is a group showing some interest and we have been working back

and forth. I will say that the uptake has been slow but there is still some

interest. We are hoping this year they will come forward with a final proposal

that will be able to move us in this direction.

MR. BENNETT: There are local entrepreneurs who complain fairly strongly

that they are unable to get government support for product development and

marketing.

For example, nearly a year ago a small seafood operator, a small plant

operator showed me his premises, and if he were able to be properly situated he

likely could have a Costco order. He is within an hour and a half from St.

John's. He gave me a large bag of fish balls as big as a meatball, with the

centre cheddar cheese, for me to try an example of his product.

One of his complaints is he was not able to get proper inventory financing

because that way, he could not do enough product to be able to penetrate the

Costco market, even though they had discussions. That product is still a good

product. As a matter of fact, I know it is a good product because I put it in

the freezer part of the refrigerator in the Opposition offices last year, ate

some, and this year it is still good. It is still a good product. It is easy to

prepare. You can microwave it, it is just done. This may be something that needs

to be dealt with in IBRD, as well as DFA.

What is available for our entrepreneurs to be able to develop the Canadian

seafood market?

MR. DALLEY: We support marketing and marketing initiatives, obviously, on

a large scale, industry wide.

Specifically, I do not know if this person has sent in a proposal to our

department or whether there has been something sent to Innovation, Business and

Rural Development Department. I would have to see the proposal in terms of what

they are proposing, but we do provide support to help marketing. It is obviously

on a smaller scale if we are dealing with one processor.

Industry wide is the direction that we want to try and encourage industry,

and encourage some help for the smaller processors who we hear from time and

time are certainly challenged with marketing and the cost of marketing. We would

have to see a proposal. If there is someone out there who needs some help, then

we would have to have a look and see if there is some way to do that.

MR. BENNETT: One of the refrains I hear from your department, and maybe

from yourself recently, is that we are so small and the market is so huge. If we

are so small and the market is so huge, which I agree: Why are we not

specializing in smaller communities with more speciality items? It is done in

other places but we seem to want to deal with the big player, with the big

amounts, and we just do not stack up.

MR. DALLEY: Based on my experience in Brussels, we are not big. We have

260,000 tons of seafood in a world supply of 150 million tons. We are small by

every account, but we do have very good work going on in marketing. I think our

companies have done a very good job, but we believe there is more value.

Certainly in hearing from industry, working with industry, and the challenges,

particularly for the smaller processors who do not necessarily have the

expertise or the financial means to invest in the marketing, some of our larger

companies have expertise in marketing and have a presence globally. I have

certainly seen that in Brussels and compliment them on their efforts.

We are still small. Regardless of what we do, we are small. Our shrimp in

particular is a significant product for the European markets. In terms of the

smaller communities, are you talking about domestically or internationally?

MR. BENNETT: I meant, why are we not tackling our own domestic market

with our own small seafood processors? Recently, and it has been ongoing, the

government called for the MOU for a large marketing initiative and the big

players do not need this and they do not want it. Barry has all they can deal

with. OCI has all they can deal with. Quinlan has all they can deal with. They

do not need the help and they do not want the smaller players to be their

competitors. In my view, they want to push down the small players.

The small processor was absolutely hammered in the cod moratorium. The small

processor got nothing,

whereas the plant workers were fine and the fishermen

were fine. The big players did not need it, so they used that opportunity, or

downturn, to push little players out of the market, and we still see it. There

are, as you said yourself, seventy-two ground fish licences in the Province when

I made inquiries about cod.

I am wondering, why are we not working with the small players? I think it

needs an IBRD input, not just DFA. It does not seem to be happening. Yet we have

all these funds allocated for Seafood Marketing and Support Services, but the

smaller players in the small communities that we say we want to keep alive

cannot access it.

MR. DALLEY: I am going to get Alastair just to comment on the marketing

side.

MR. O'RIELLY: Thank you.

There is no constraint in terms of people seeking funding to do marketing

initiatives of a small scale. Within the Department of Fisheries and

Aquaculture, there are programs available that people can readily avail of with

significant financial support; 60 per cent of the cost up to $100,000, for

instance, on an individual project. We really have not seen much demand from

small processors to market locally.

We had worked with people at the Restaurant Association and with local chefs,

and had done seafood promotions when there are events of one kind or another

with small donations and so on to spur local demand. Most of the smaller

processors are still producing products that are destined for export markets.

Just to go back to your comment on the sales consortia idea and the marketing

council concept, the idea there was that some of the smaller firms would also

find partnerships and alliances with the larger firms, market in a co-operative

or collective fashion, and therefore get the benefit of having larger, better

economies to scale and so on. As you noted, and as the minister mentioned, we

are still hoping that these things will move forward.

On your specific question, I think in small firms, we have fifteen companies

in the Province that are licensed as retail establishments that do small-scale

seafood production. They buy directly from harvesters and market and distribute

their products throughout the Province. It is a limited market, a limited

opportunity, and it appears as though the business interest to go beyond that

has not been manifested yet, but I do not think it is due to an absence of

programs or access to capital for doing those kinds of initiatives. It is that

they really have not demonstrated much in the way of interest for that.

MR. BENNETT: Mr. O'Rielly, in direct contradiction to what you are

saying, there is a small meat shop in Hawke's Bay that has been trying for the

past year to get a licence to be able to pay from fishermen to be able to sell.

He has been shut down cold and the response has been to go to a processor, buy

your fish, and then bring it over.

I operate a tourist industry myself; we cannot buy fresh product to sell to

tourists. You cannot get it. There is something in this Province which says you

have to catch it all and make it EI eligible, or you have to catch it all for

the big player. The people who could maximize the value, but in small

quantities, are literally shut out of the market, and I am wondering, why is

that? I see Seafood Marketing and Support Services, but the people who want to

market seafood locally are not supported. I do not think you can direct me to a

single company that is doing that right now and is supported.

MR. O'RIELLY: Yes, there is a restriction; you are right about that in

terms of the number of retail licences. These were introduced in 1991 just prior

to the moratorium. Then the following year there was a freeze placed on the

number of retail licences and they still exist at the fifteen that were

initially established. Those fifteen are authorized to buy directly and, of

course, all the others that are licensed as primary processors are also

similarly authorized. There is a large number, as you might expect, of firms

throughout the Province that market seafood products and either source from

those fifteen or from the primary producers.

There are issues related to economic viability for small plants that

contribute to that policy, and that has been the case in the past. There are

also issues related to quality and seafood safety in terms of how the product is

handled and distributed, but you are correct in as much as there are people who

have raised the issue in the past about whether or not they should be able to

buy directly. It is a debate that oscillates from time to time with respect to

different buyers.

We have, for instance, retail shops in the Province, some of whom have said

they really do not want the right to be able to buy direct; they want the

comfort of going to primary processors and being confident that the product has

been promptly processed through a CFIA plant. They can attest then to the safety

of the product and to the quality thereof.

It is a public policy debate that oscillates back and forth as to whether or

not harvesters should be selling directly to retailers. That policy has been in

place now as it has been for some time. It is reviewed from time to time and it

still holds.

MR. BENNETT: In contradiction to what you say about the food safety

issue, if they have already been licensed by one arm of the Province to produce

sausages, they have been licensed to cut beef, to cut pork, and to cut moose,

yet they cannot take fish. They cannot buy fish and they cannot access it. It

seems like the natural commodity of this Province, number one for tourists,

should be fresh fish. It is the one product they cannot get. Yet, we say we have

this much money for Seafood Marketing and Support Services, but we are not doing

it for ourselves.

Fifty cents a pound for whatever the cod is or seventy cents a pound,

whatever it is, and someone will pay $3.50 or $4.00 for fresh filets, or more,

and cook them in their cabin when they are here vacationing. I do not get that.

I do not see it.

MR. DALLEY: As was alluded, it is a debate. It has been ongoing for some

time in terms of public policy as to a number of issues related to that, whether

it is capacity, quality, or whatever might be the case, and obviously varying

opinions. I will say, as I have indicated in the House, we are currently looking

at that policy as well. I know it has been raised in terms of the cod and to be

able to sell on the wharf. We are currently looking at that as well.

At this point there is no decision on it. Your points are taken, but there is

more to it than just allowing, like we saw in the 1990s, to throw out licences

at will and to allow whoever to set up shop, because there are other issues

related to that. As we are seeing, a number of well-established, longstanding

processors with small-scale processing plants in this Province have closed, so

the economic viability is an issue as well. Albeit there may be one small

location, or two, that may benefit from this, ultimately we have to consider

those, and we are. We are looking at them over the next few weeks.

It has been ongoing for some time to feed into the debate as to whether, as

you propose, or in terms of being able to purchase cod in particular from a

fisherman on the wharf. So far the policy would indicate that is not the

direction that we have gone in.

MR. BENNETT: On another note, if we are really talking about maximizing

the value for Newfoundland and Labrador through DFA, through our seafood

marketing and support services I can go to British Columbia and buy a licence,

get on a boat with somebody, even a fourteen-foot aluminium boat and I can go

deep-sea fishing for salmon. I can go to Florida or almost any other State on

vacation, walk along and see what they are fishing, go to a bait shop and say

what are they fishing for, buy a licence, and I can go fishing. We cannot do

that here.

Do you see a day where DFA would ever collaborate with DFO so that people

could do that? So the sports fishing person can say you can go to the river

and catch trout, you can go to the river and catch salmon, you cannot go catch a

tomcod or a conner.

MR. DALLEY: I am not sure what you are asking?

MR. BENNETT: Do you see a time when DFA will ever work with DFO so that

we can actually get a licence to catch something in the ocean other than the

food fishery, just for tourists?

MR. DALLEY: Just a couple of points to what you raised. Obviously it is a

DFO decision around commercial harvesting. There are allocations; there are

people who have significant investments who want to try to survive in this

industry. With some of the resource challenges, it is not easy.

There is a whole side and discussion on the commercial side, the commercial

harvester. On the other side if you historically look at us and maybe some of

the other regions, we have minimum processing requirements in this Province.

They are there for a reason that we believe in and firmly support them.

Historically, we have had processing plants where plant workers we have

over 9,000 plant workers right now who rely on that resource to come to the

plant for processing. How far we stray from that and what direction we go in, in

terms of maximum value for a resource, where do we achieve that? Do we achieve

that on the processing side for the plant workers of which is important to so

many of our rural communities?

All of that has been considered into the long-standing minimum processing

requirements and the allocations with DFO. Will it down the road get to where

you are suggesting that we should go in terms of providing whether it is a

tourist an opportunity to come in and fish at will, or whether it is a

Newfoundlander and Labradorian who can go out and fish at will? At this point,

we are not there.

MR. BENNETT: Minister, I do not see how selling a licence to a kid who is

staying at a B&B to go catch some smelts off the wharf, which you cannot do or

you will break the law there is no commercial value whatsoever to the

Province, yet there is a high commercial value to tourism to people to be able

to do this, and we prevent it.

It is not a matter of impacting anybody's commercial fishery. If you read a

State of Florida fishing licence, you are not allow to catch blue fish, you are

not allowed to catch this one, you can have three of these, two of these, four

of whatever whiting or whatever and we do not do that. So we are missing a

complete opportunity, a tourist experience that someone could just go and take

their spinning rod and catch a few smelt.

MR. DALLEY: We certainly have a prominent tourism industry in the

Province, there is no question. We do not get a lot of demand that I am aware

of, and certainly when I was Minister of Tourism, of tourists who come here who

want to fish. So in terms of the demand and the economic value of that, I would

have to see some information on that. At this point, we are certainly not aware

of the big demand.

Ultimately, I think the question you are asking me, in terms of the resource

and availability, DFO has to make a decision on the allocation of those

resources. They consult, obviously, with the industry and with the science and

all of that information, but it is a commercial fishery that we focus on and

support over 20,000 people in this Province.

Your question as to whether DFO will allow tourists to come in and fish in

this Province, we would work with DFO and have discussions, but ultimately it is

a DFO decision.

CHAIR: Mr. Bennett, I am going to go to Mr. Mitchelmore now; I gave you

some extra time on that one.

Mr. Mitchelmore, under that section.

MR. MITCHELMORE: I wanted to ask some questions on 2.1.01, the

Administration and Support Services, which had $2.679 million allocated in

staffing for 2012-2013, and that has been now, in the Estimates this year,

$2,191,100. That is a significant drop of $488,000 from last year. I am asking:

Can the minister account for positions lost there?

MR. DALLEY: There were eleven positions taken out of that section. One

position was filled, and the other ten were vacant.

MR. MITCHELMORE: These were regionally placed?

MR. DALLEY: Yes.

MR. MITCHELMORE: So, where were these positions located? Were there

positions in Labrador, positions on the West Coast, or positions in Central?

MR. DALLEY: All over the place, actually.

MR. MITCHELMORE: Can we have a breakdown of where these positions were

lost from?

MR. DALLEY: Sure, we can provide you with that.

MR. MITCHELMORE: Under Purchased Services in that same section, the

budget accounted for $261,600; you spent $339,100. That is a fairly big increase

of $77,000 and a little bit. What did you buy?

MR. DALLEY: That significant increase there is due to office lease

increases as well as under this

section in terms of the department's fleet of

vehicles. Repair, as well, was extensive this year. Between vehicle repairs and

office lease increases would account for that increase.

MR. MITCHELMORE: How many vehicles does the department have?

MR. DALLEY: I am not sure. We will get the number for you.

MR. MITCHELMORE: In terms of your lease increase, what was the lease last

year and what is it this year? What is the rate?

MR. DALLEY: I do not have that information, but we could probably provide

that.

MR. MITCHELMORE: How long have you signed this new lease for?

MR. DALLEY: Do someone have some information on this?

MR. MITCHELMORE: Is it a five-year lease?

CHAIR: I think we are looking for okay, the light is on. You can go

ahead.

MR. ROBINSON: I am sorry. I did not hear the question. Could you ask

again?

MR. MITCHELMORE: How long is the new lease contract?

MR. ROBINSON: Which lease, sorry?

MR. MITCHELMORE: The one the minister had referenced that had an

increase. I guess it would be a lease to your building.

MR. ROBINSON: Yes, the increases in that category or the extra

expenditures due to leases would have been increases in a number of areas. There

are a number of offices across the Province that we have and, like leases

everywhere, the cost of leasing has been increasing consistently year over year.

As they come up for a lease, we typically see additional cost being required.

MR. MITCHELMORE: Do you go out and look to retender in some cases if the

lease increases are high? You might get better value in some communities. You

just renew the lease, I guess. You do not go through the tendering act?

MR. ROBINSON: Yes, we work with accommodation services within our

government organization. They take care of leasing for us. They go through a

process of tendering what is required in terms of accommodations and then

working through the bids that we get to find the accommodations that we need.

MR. MITCHELMORE: I would like to have a list of all the government

offices in your department and the lease arrangements you have, and some

documentation showing you went through the Public Tender Act and that it was

complied with, if that is possible.

In terms of revenue, you estimated you were going to get $44,500 and you only

received $12,000. Why did you not get the amount of revenue you were looking at?

MR. DALLEY: The budgeted revenue and the difference; basically, we have a

number of marine service centres, like the bait sheds and depots around the

Province, and a number of these closed up this year. As a result, as well as

less revenue, I guess that is what is showing.

MR. MITCHELMORE: Okay.

Your employees who work seasonally are under this category as well, in

regional offices who would be on the wharfs when fishers are offloading and

things like that, or do they fit in some other category for compliance?

MR. DALLEY: They are in this category.

MR. MITCHELMORE: Okay.

MR. DALLEY: The inspectors.

MR. MITCHELMORE: The inspectors, yes. There were a number of vacancies,

so there are fewer inspectors now. The salaries have also been reduced. Are

these people, who are inspectors, working less than what they were previously?

MR. DALLEY: No. The reduction of what we are seeing here in terms of

inspectors, you have to consider, there was a time when we had a lot more plants

in this Province. We are down to less than 100 operational plants right now. So,

there are significantly fewer plants to inspect. As a result, in terms of

consideration of that, we saw an opportunity were we could certainly reduce in

terms of inspectors.

MR. MITCHELMORE: The length of time these were seasonal employees

previously. I am just wondering, what is their current status? Are they gone

from nine months to six months or four months?

MR. DALLEY: It varies, depending on where in the Province, in terms of

the volume of work and what is happening. There have been some changes in the

amount of seasonal time but it varies throughout the department. It was not

across the board.

MR. MITCHELMORE: Were just plants in consideration or was it looked at,

the fishing activity of boats and vessels that would also be coming to wharf

docking?

MR. DALLEY: No, it would be overall activity.

MR. MITCHELMORE: Okay.

MR. DALLEY: Yes.

MR. MITCHELMORE: I would like to move on to the Seafood Marketing and

Support Services, which Mr. Bennett had talked about in detail. There was a lot

of interesting commentary as to where we can potentially move forward on some

small scale, and a number of good ideas.

I want to ask about the Salaries here seeing that they have dropped from last

year in what was budgeted to $260,900. That is basically the decrease in

Salaries. How many positions were lost in the Seafood Marketing and Support

Services and what were those positions?

MR. DALLEY: There were four positions lost, and we transferred a clerk

position to the Innovation and Development Division.

MR. MITCHELMORE: What were the positions?

MR. DALLEY: The positions were: a Clerk Typist III, a Refrigeration

Specialist, a Market Development Officer, and a Fishery Resource Planning

Supervisor. Three of the positions were vacant.

MR. MITCHELMORE: Okay. Who is actually left in this department to do the

Seafood Marketing and Support Services? What are the current positions? Is there

a director or manager?

MR. DALLEY: There are three development officers and one director

MR. MITCHELMORE: Okay.

MR. DALLEY: - who obviously report to an ADM, as well.

MR. MITCHELMORE: Okay, great. You had explained the $4 million in last

year's budget. This year's budget is $2.6 million as to what you have estimated

in terms of Grants and Subsidies.

Can you provide us with a break down to our office as to what the subsidies

were actually spent on last year, the $450,000?

MR. DALLEY: What the $450,000 was spent on?

MR. MITCHELMORE: Yes.

MR. DALLEY: Yes, we can provide you the break down. As I alluded to, it

is mostly local promotion, supporting Hospitality Newfoundland and Labrador,

supporting restaurants, promoting our products here at home in different venues

and events that take place, as well as trade shows, some MSC certification, and

traceability issues. We can provide you that.

MR. MITCHELMORE: The certification falls under the marketing piece as

well, the MSC certification, or would that fall under another section,

licensing, compliance, things like that?

MR. DALLEY: Somewhat here as well, because of the importance of the MSC

certification with the marketing and the demand from the consumer and so on, but

certainly as well under FTNOP, Fisheries Technology and New Opportunities

Program.

MR. MITCHELMORE: Okay.

MR. DALLEY: We have been able to fund some of the MSC initiatives out of

that as well.

MR. MITCHELMORE: How do we rank? You said that we have 65 per cent, or

nearly 65 per cent of our species MSC certified. How do we rank with the rest of

other fishing jurisdictions when it comes to certification? Are we middle of the

pack, bottom, near the top? It seems 65 per cent can be quite low right now.

MR. DALLEY: A couple of points I want to make on that. The actual number

of sixty-five, I guess, from our perspective is probably low. In further

analysis with the department in terms of what has been eco-certified and where

we are heading in terms of initiative at the various stages of different

products, we are closer to 80 per cent, 82 per cent. That is significant. It is

quite positive. I would say it is certainly up there with many jurisdictions and

leading many more.

I think the reality as well, and I certainly reference my trip to Brussels,

the MSC label, the consumer, particularly in the European market, are very, very

important. It is one of the first things they look at on their labels, on all

their packaging actually. I went to the supermarkets and saw the packaging with

the MSC labels on it, and talked to some of the customers, talked to some of the

people working there. I think it just highlighted for us the importance of the

MSC certification. We are moving in that direction.

Our crab was recently awarded MSC certification. I think we are number 200 in

the world. Other countries, obviously, are fully engaged as well.

MR. MITCHELMORE: In terms of packaging, when that happens your department

would assist industry. Is that the intent with marketing sales and seafood

consortia, like some of the larger or smaller processors, to help them package

their product to have that certification label on it?

Would there be funds allocated around that or are you just trying to promote

provincially that Newfoundland and Labrador snow crab is now MSC certified? Will

be there ads or any type of promotion on the provincial government Web site or

through the Association of Seafood Producers? What is actually going to happen?

MR. DALLEY: I think you will find everyone who is marketing their

products again, the market is driven by the industry would use the MSC label

as part of their marketing. Our support, I guess, is to support on the ground

initial work that is required to get the MSC certification and the cost

associated with that. From there, of course, obviously being able to promote our

own industry as MSC certified in various aspects of our industry, but certainly

be able to support companies out there that are promoting their own products and

to be able to say it is MSC certified.

MR. MITCHELMORE: You said in the House of Assembly that the Department of

Fisheries and Aquaculture offered $11 million for a sales consortia and a new

marketing council. This was money that offered but was never spent, correct?

MR. DALLEY: Correct.

MR. MITCHELMORE: What is the status of a sales consortia and a new

marketing council? Is that going to move forward or is it just an axed decision

because the industry does not really want it or a number of players in the

industry (inaudible)

MR. DALLEY: This all came out of the MOU process and extensive discussion

in various areas of the MOU, of how we could enhance value and recognize the

global competition that is out there for seafood products and looking at our

limited resource and a number of other factors.

One of the things that came out was to maybe look at a new model. The

Norwegian Seafood Export Council has a very similar model, which we mirrored in

the MOU to bring forward to industry. Through that, we allocated there are a

number of issues, I guess, in terms of the sales consortia that we would bring

large- and small-scale processors together to be able to address some of the

market challenges that they have and how we can enhance the value of our

product.

Beyond that then, once the sales consortia was established, whether it be

two, three or four, whatever was necessary in the Province, to look at a

marketing council similar to the Norwegian model. I met with the head of the

Norwegian Seafood Export Council when I was in Brussels and had a good

conversation. They currently have funded about $80 million which comes from a

levy to industry, so industry actually pays this money to the marketing council.

In our case, what we have offered, not only did we offer funding to support

the start-up of sales consortia that would lead into the marketing council, we

offered to fund that over a three-year pilot period; and also added, to address

one of the challenges with the industry, is the issue of inventory financing. So

we offered $80 million to support the inventory financing, recognizing that our

role and initiative and support was to recognize these challenges and see how

government could help get this off the ground.

Talking to the Norwegian people, their industry is totally funding that, so

what we are seeing right now, that even with government funding, we are not able

to get the industry to move in that direction. Sales consortia, there has been

some discussion with them, there has been back and forth with some work on a

proposal. We do not have the final proposal yet. We are hopeful that we are

going to get that proposal, but at this point we do not.

CHAIR: Mr. Mitchelmore, I think I need to go back to Mr. Bennett there

now.

MR. BENNETT: You mentioned the Norwegian Seafood Export Council, have you

also looked at the model of the Alaska Seafood Market Institute?

MR. DALLEY: Yes, we did.

MR. BENNETT: We are subnational, and Norway is a nation. Alaska is

subnational and also trades in NAFTA. Is there an application for us as a

business model to be pursuing what the Alaskans are doing, not the part that

they are shipping to China, but they are actually going right straight into the

Continental USA markets?

MR. DALLEY: The Alaskan model: One of the things that probably stand out

the most is in Alaska there are four processors; there are four companies.

MR. BENNETT: Right.

MR. DALLEY: There are four companies in crab, for example, and we have

twenty-four. So, in terms of their model, understand it is 50 per cent

industry-funded, 50 per cent government-funded; but in terms of the scale and

looking at what we have in our Province and the model that could work, it was

generally felt that the Norwegian model would probably be the best approach.

MR. BENNETT: What are we doing to maximize the benefit offer by being

part of NAFTA?

MR. DALLEY: Go ahead, Alastair.

MR. O'RIELLY: Well, NAFTA, of course, has been in place for quite some

time. There are no restrictions in terms of access to the US market. At the time

it was implemented, it certainly benefited the groundfish sector back throughout

the late 1980s and in the original agreement when the tariffs were removed from

the sector. Right now, there is unfettered access to the US market.

What has happened over time, particularly in the last number of years, is

there has been a huge amount of diversification in the industry. The American

market was about 82 per cent of our total sales, and now it is down to in the

high thirties. So, it is a dramatic reduction in sales to the US market, a

significant increase in Asian sales over that period of time, because the

markets are actually more attractive.

I think the benefit, at the time, was significant; but, since then, the

combination of increased demand in Asia and the adverse effects of the

strengthening of the Canadian dollar have caused industry to move away from the

US market to a very significant degree.

MR. BENNETT: Minister, some of the areas that we seem not to be pursuing

within seafood marketing within Canada Canada imports an awful lot of seafood,

and Canada now is a very ethnically diverse nation, more so than this Province

is. Many of these communities have speciality items. For example, the Caribbeans

and south Europeans are really big into salt cod bacalhau and we seem not to

be doing any of this stuff. If you can find it in an Ontario store, it will cost

you, for sure, more than steak.

So, I do not see us doing that. Are we doing that, or is there a possibility

for some small players to do that, to access the Canadian market?

MR. DALLEY: I would suspect there is always opportunity for domestic

sales. We are largely an export nation in terms of value as well. There is every

opportunity for our marketing companies, our processing companies to focus on

domestic sales and domestic markets.

Our programs are there to try to support promotion. We do promote locally. We

promote at the trade shows in terms of enhancing the products of Newfoundland

and Labrador. There is every opportunity for our companies to market

domestically as well.

MR. BENNETT: Our companies, the big players, have no interest in doing

that. They can ship to a low wage jurisdiction and a low environmental concern,

a low environmental regulation jurisdiction like China and have it reshipped

back here. Then Canadians import salt cod and pay top dollar for it. How is it

that it can be sent out and come back for less money and presumably a good

quality and we are not accessing that market ourselves?

MR. DALLEY: I think some of our smaller shops are probably accessing some

of that market, like in Alberta, Fort McMurray and places like that. I have

heard of some accessing those markets, so the opportunity is there.

It has to be a business decision, these people are privately owned and there

are private investments. They are looking for every opportunity to market their

product to maximize the value. If they see that there is an opportunity to

market I know some of the mussel growers are very active in trying to market

our mussel products in the Province. They are recognizing the opportunity for

domestic markets and US markets. Obviously they are aggressive looking to see

what they can do. We have seen some improvements in the mussel industry as a

result.

MR. BENNETT: Does DFA provide any sort of supports, or would you

contemplate providing supports for our small players to sell, say, to fish shops

in Toronto's Chinatown. There are all kinds of fish from all over the world, but

I do not see any from here.

MR. DALLEY: A specific program, maybe not. There are opportunities in our

grants and subsidies program where if there are new opportunities, whether it is

through FTNOP or other programs, if someone has a proposal they can certainly

send it in to us and see where we can support them. Our goal is to maximize the

value of our fishery. If that enables our small processors to hire more people

to get more value, then obviously we will try to find a way to support them.

MR. BENNETT: Minister, at an announcement we were both at just a few

weeks ago, a prominent fisheries research commentator, Bob Verge, said we are

missing around a half billion dollars in not utilizing our fish waste. I do not

know if you agree with that number or not, but he seems to be as well informed

as most people. What is DFA doing to identify opportunities for marketing and

support services for what we throw away?

MR. DALLEY: There have been a number of interests, I guess, in terms of

our waste products, particularly from the Asian community, and how something can

be developed to enhance the value of the process. We have had some discussions

and will continue to have some discussions around opportunities to maximize the

value of our waste.

It is not government's role or the department's role to go out and market for

companies. Companies do that. We support them with initiatives and programs.

Anyone who comes forward with some business ideas, I would also suggest that

they be talking with Innovation, Business and Rural Development as well around

business development ideas. That would come more from the business side, more

with the IBRD department.

In terms of whether it is the technology or the opportunities that we might

be able to support or some of the research that we may be able to support around

these kinds of initiatives, we have some programs available to be able to

support industry. In this particular case, what you are referencing, to look at

the waste and how we can maximize the value of the resource.

MR. BENNETT: Mr. Chair, I do not have any more marketing-related

questions.

CHAIR: Okay. If you want to go on to the other program, you still have

nearly eight minutes left in your time.

MR. BENNETT: Minister, under Licensing and Quality Assurance, what

exactly does DFA do?

MR. DALLEY: The development and implementation of policies and regulation

that is related to fish buyers and processing licences, the administration of

the licensing system and the data base, provide administrative support and

remuneration for the Fish Processing Licensing Board, and certainly the

maintenance and delivery of the Quality Assurance Program.

MR. BENNETT: Does this section, Licensing and Quality Assurance, also

deal with aquaculture or just the wild fishery?

MR. DALLEY: Just the wild fishery.

MR. BENNETT: The next category down, Compliance and Enforcement, is that

just the wild fishery?

MR. DALLEY: It is mostly wild fishery, but there is some aquaculture

inspection as well.

MR. BENNETT: So, Compliance and Enforcement, there are some aquaculture

inspections under that category?

MR. DALLEY: Yes.

MR. BENNETT: The Auditor General reported to the Speaker, reported to the

House on April 24, two weeks ago, an update of the Auditor General's report of

2008. It says, page 21 of the report that was provided to the House a couple of

weeks ago, that under Aquaculture Inspections, of the eleven that were noted,

six were fully implemented, four were partially implemented, and one was not

implemented at all.

Can you tell us what is not implemented five years after the Auditor General

said it should be implemented?

MR. DALLEY: I do not have the item, so I cannot know what specific item

it was.

MR. BENNETT: I made a few extra copies, if that helps you.

To your knowledge, are there any areas of aquaculture inspection that were

not done?

MR. DALLEY: Not to my knowledge. That is not to say it is not done, but

not to my knowledge.

MR. BENNETT: The Auditor General report specifies differently from 2008.

I am really interested to know. We have a budget here to do this type of

inspection, yet five years after the fact the AG says it is not done. What are

we doing with the budget if we are not doing it, or are we just ignoring the AG?

What are we doing with it?

MR. DALLEY: Well, I think you indicated that six were already in place

and four are ongoing, so there is only item that is outstanding. If I knew what

that item was, we may be able to provide some commentary. We just do not have it

in front of us today.

MR. BENNETT: Okay.

What types of inspections would these be? What is being inspected?

MR. DALLEY: Maybe if I could ask Dr. Whelan.

DR. WHELAN: The site inspections that happen come from the inspection

officers. There are actually two that are allocated to that service. They go

down to all the marine cage sites that are there. They have a set number

scheduled to visit. They go through, they check out where they are located, they

check out the hectarage that is used, they look at the activities that are

ongoing on those sites, and they conduct a

section report for each of those.

As I said earlier, I am not sure what the one out of the eleven was. If we

get that, we can answer that later.

MR. BENNETT: Okay.

Now, the Auditor General also said the department should "develop a code of

practice for the aquaculture of shellfish" five years ago and it was not

implemented. Can you tell me if there is any intention to implement a code of

practice for aquaculture of shell fish?

DR. WHELAN: The two things you should keep in mind, and it was explained

to the Auditor at that point, was that codes of practice come from industry

themselves, so they generate those. When you talk about other things that are

legislative or regulatory in an environment, they change. There was no code of

practice developed within that time from the industry, but within some of the

management plans we are discussing, those issues that would be under a code of

practice are actually enveloped in there.

MR. BENNETT: Now, the Auditor General also said the department should

"update Department policy to assist inspectors in determining whether

deficiencies or hazards exist at aquaculture sites." This was not implemented.

DR. WHELAN: Is that the one out of eleven?

MR. BENNETT: I am not certain. It simply says not implemented. "Details

of Recommendations, by Year, contained in our 2007 through 2010 Annual Reports",

not implemented.

MR. DALLEY: Would that be one of the eleven?

MR. BENNETT: I cannot tell you because this goes on and on.

MR. DALLEY: You referenced there were six that were implemented, four are

ongoing, and one is not. Is that one of the ones that are ongoing and we are not

there yet, or is that one of the ones that are ?

MR. BENNETT: You are the minister. I cannot answer for your department.

MR. DALLEY: I am the minister, but you are asking the question. I just

wonder if you could clarify it, please.

MR. BENNETT: The Auditor General says under Fisheries and Aquaculture,

Aquaculture Development, and this was going back to the Auditor General's report

in 2008, but is an update to two weeks ago. Up to April 24, 2013, this was not

done. He said, "The Department should update Department policy to assist

inspectors in determining whether deficiencies or hazards exist at aquaculture

sites."

Do you disagree? Do you not agree? Why is it not done?

MR. DALLEY: I will get Dr. Whelan to discuss the amount of work that is

being done around hazards, concerns around biosecurity initiatives, and so on in

aquaculture.

DR. WHELAN: When you discuss hazards, they are usually talking about

navigational and marine hazards that are going around those sites. What happens

when the inspectors go out there is they do a site-by-site inspection. They

understand all the navigation gear and they look for practices that are

occurring there. When those occur, there are also health inspections that are

done on each of those sites during the run of a year, so I am not sure what the

hazards that would not be addressed are exactly being discussed there. The

marine hazards that you are talking about are things that if you had ropes that

are loose, if you had some moorings that are actually not in the right place,

all those deficiencies have to be corrected.

MR. BENNETT: Actually, you said marine hazards; I did not.

DR. WHELAN: Okay.

MR. BENNETT: It did not say marine hazards.

DR. WHELAN: Okay.

MR. BENNETT: It says the department should "update Department policy to

assist inspectors in determining whether deficiencies or hazards exist at

aquaculture sites." It is a policy directive to determine if there are

deficiencies or hazards. Up to two weeks ago, it was not implemented.

DR. WHELAN: I would have to look at it specifically, but in general terms

that is exactly the duties of those inspectors when they go to those sites.

CHAIR: Mr. Bennett, I can give you another minutes and then I need to go

to Mr. Mitchelmore to stay within the time frame.

MR. BENNETT: Sure.

He also said the department should "continue with its efforts to develop and

implement a new Inspections, Licensing and Registration System". Up to two weeks

ago that was not done.

MR. DALLEY: Yes, that is ongoing. That piece of work is ongoing. We are

hoping to get there soon. We have accepted that recommendation and have been

working on it. We may look at the whole licensing scheme across government, not

only aquaculture but wild fishery as well.

MR. BENNETT: Minister, can you advise how many abandoned unlicensed sites

there are right now?

MR. DALLEY: Abandoned unlicensed sites?

MR. BENNETT: Yes. Does thirty-five or forty sound right?

MR. DALLEY: We do have some, but I do not have the number. We can

certainly get the number for you.

MR. BENNETT: Is there any plan for them? Will the department go and take

them out or order somebody to do it?

MR. DALLEY: We are working with industry on it go ahead.

MR. O'RIELLY: I can comment on that in the sense that a couple of years

back we allocated some monies for the cleanup of some of those sites, and

evaluated different methods and so on of doing it. We engaged industry to

participate in that.

The challenge was and is how to reach back and deal with the company or the

individual who was involved. In all the cases I am familiar with they have long

since given up the business and had not properly cleaned up the site before they

left it. There was no particular mechanism to hold them to account for doing

that.

As a result, we have introduced a new requirement of the industry where they

will now be required to put in place an insurance scheme or a bonding regime to

cover off those eventualities going forward. Then the other issue is that over

time hopefully there can be sufficient resources found from time to time to

clean up any of the sites that have not yet been addressed.

MR. BENNETT: When an operator leaves, goes bankrupt, or whatever and does

not clean up, does the department consider it the department's responsibility to

clean it up?

MR. O'RIELLY: Going forward, that is the point in terms of ensuring that

the industry is accountable for that. The regime that will be put in place will

likely be a collective one that the industry can cost share among themselves

with respect to, as I said, bonding or insurance to cover off those costs.

It will be an industry responsibility going forward. The ones that are at

play here, I am almost certain that they are all mussel sites, very small

operations, and what happened is that the gear was left in the water and not

properly disposed of.

MR. BENNETT: Does DFO also play a role in this?

MR. O'RIELLY: Only inasmuch as if there is a hazard of some kind

associated with it. The placement is that they have not participated financially

in cleanup, no.

CHAIR: Mr. Bennett, we will go to Mr. Mitchelmore.

I want to note, too, we are getting close to time and I know a number of the

Committee members have to leave at 12:00 p.m. I do not know if it will allow

with the Estimates time frame to have a reconvening. I ask if there is a

pertinent question that you get to it, please.

MR. MITCHELMORE: The

section 02, Revenue Provincial, under Seafood

Marketing and Support Services, $45,000, would you please explain that?

MR. DA