April 27, 1994

RESOURCE ESTIMATES COMMITTEE

Pursuant to Standing Order 87, Danny Dumaresque,

M.H.A. (Eagle River) substitutes for Bud Hulan, M.H.A. (St. George's).

The Committee met at 7:00 p.m. in the House of

Assembly.

MR. CHAIRMAN (Penney): Order, please!

I welcome you to the fourth meeting of the Resource

Estimates Committee. Tonight we will be reviewing the estimates of the

Department of Fisheries. I welcome Minister Carter and his officials.

First I will introduce the members of the

Committee. My name is Melvin Penney, I'm the Member for Lewisporte and the

Chairman of the Resource Committee. To my immediate left is Mr. Rick Woodford,

the Member for Humber Valley, who is the vice-chairman of the Committee. Seated

at the members' seats to my left are: Mr. Beaton Tulk, the Member for Fogo: Mr.

Ed Byrne, the Member for Kilbride: Mr. Paul Shelley, the Member for Baie Verte -

White Bay: and Mr. Don Whelan, the Member for Harbour Main. I would like to

recognize as well Mr. Bill Matthews, the Member for Grand Bank, who is welcome

to sit in and participate in everything other than voting procedures and the

moving of a motion, in accordance with the Standing Orders of the House of

Assembly.

For those of you who are not familiar with the

procedures, the Estimates Committee is an extension of the House of Assembly.

The role of the Chairman is basically the role of the Speaker of the House, to

maintain decorum and order. The one big difference is that the atmosphere is

considerably relaxed. We are not restricted to the dress code that we have to

adhere to in the House of Assembly. You are at liberty to remove your jackets.

We are not restricted to referring to hon. members by the name of the districts

that they represent. The members may be referred to by their name. If you wish,

you may bring into the Chamber a cup of coffee or tea and our Page will be happy

to accommodate you in that request.

The procedure that we have been following at this

Committee for as long as I've been the Chairman of it - I believe this is the

third year - is that we will accord to the minister twenty minutes to make an

opening statement, and then we will accord to the vice-chairman twenty minutes

to make a statement as well. Then we will go into questions from members for ten

minutes' duration each. What we have asked is that members not take the ten

minutes to make a speech and request that the minister reply, but that he use

the ten minutes to ask questions and the minister respond and it be back and

forth, similar to what we do in question period in the House of Assembly.

I would remind members of the Committee that they

are permitted to question only the minister. If the minister decides to have his

officials reply to the questions that is his right, but they can answer on fact.

They can not reply in any way with reference to policy of the department.

The other thing I would mention to you is this is

being recorded by Hansard. Where Hansard is familiar with the voices of all hon.

members in this Chamber and are not familiar with the voices of the officials, I

would ask that as you speak you first would identify yourself by name, and that

secondly you lean into the microphones to speak, because they are designed to

accommodate a member speaking from a standing position. Of course, you will be

speaking tonight from a sitting position. I ask you to identify yourself first

and then lean into the microphone.

Having said that, Mr. Minister, if you would be so

kind as to introduce your officials. Once you have done that, proceed

immediately into your opening statement.

MR. CARTER: Thank you very much, Mr. Chairman.

On my far right is Assistant Deputy Minister Harold Murphy. Next to him,

Assistant Deputy Minister Reg Kingsley; Deputy Minister David Vardy, Assistant

Deputy Minister and Chairman of the Fisheries Loan Board, Mr. Leslie Dean.

To Chairman, and members of the Committee - may I

start my statement?

MR. CHAIRMAN: Yes, Mr. Minister.

MR. CARTER: I am pleased today to present to

this Committee the budget estimates of the Department of Fisheries for the

fiscal year 1994-1995. Despite the fiscal realities facing the Province in 1994,

I feel that the level of total expenditures for my department in 1994-'95

continues to demonstrate the commitment of this government to our most important

resource sector. Gross expenditures in 1994-'95 are projected at $25 million.

Revenues, both current and capital, will total $7.6 million, consisting of $1.2

million through the fisheries component of the federal-provincial comprehensive

Labrador development agreement, $3.5 million through Fisheries Loan Board

repayments, and $2.9 million from other provincial sources.

My department will, in total, spend $18.4 million

on current account, and $6.6 million on capital account in this fiscal year. Our

previous year's estimates called for expenditures of $22.8 million on current

account and $7.6 million on capital account. As indicated above, my department

will spend $25 million in 1994-'95, a reduction of $5.4 million from the

previous year. The principal decreases include $4.1 million related to the

expiry of the Atlantic Salmon licence buy back program, $2.6 million related to

interest subsidy requirements in the Fisheries Loan Board, and $1 million based

on reduced direct loan requirements in the Fisheries Loan Board.

The principal increases in budgeted estimates

include approximately $1.9 million to continue turbot fishery development off

Northern Labrador, $300 million to provide for a fisheries research chair at

Memorial University, and $1 million for the Province's share of the co-operation

agreement for salmon enhancement and conservation.

I wish to take this opportunity to touch briefly on

recent events in the Newfoundland and Labrador fishery, and the Province's

perspective on the fishery of the future. The fishery is fundamental to the

economy and way of life in this Province. Economic activity generated by the

fishing industry provides incomes to individuals. It provides vessel payments

and commercial spending by fishermen and plant workers.

Despite the considerable challenges which have

faced and will continue to face the industry, principally due to the decline of

critically important groundfish stocks, the industry in 1993 still achieved

landings valued at approximately $175 million, and produced fish products for

the market value in the order of $400 million.

While these figures represent a major reduction in

the peak landed value of $287 million, a market value of $800 million in 1988,

it nevertheless indicates that the fishery is still a major contributor to the

Newfoundland and Labrador economy.

My department believes that we are now experiencing

the trough in terms of the economic contribution of the fishery, and that based

on the continuation of more conservative management practices as the federal

government, the fishery will start rebuilding over the next decade. The Province

and the federal government agree that the fishery can no longer be expected to

sustain all those who have come to rely on it, often due to lack of

alternatives, if fishermen and plant workers in the future are to become more

self-reliant and achieve reasonable levels of earned income; however, in the

interim there will be an enormous need to support individuals who have been

affected by the industry turndown as they strive to maintain their place in the

fishery or move on to other opportunities.

The federal government has been working

co-operatively with the Province over the past several months to develop

specific support and adjustment programs under The Atlantic Groundfish Strategy,

TAGS. In the recently tabled federal budget, this strategy has been allocated

$1.9 billion over five years. In the coming weeks the Province will be

considering how best to compliment federal programs to ensure that all affected

individuals are treated fairly and with respect as they consider their future

options, and to attempt to provide realistic alternatives for those who are

displaced.

I would like now to briefly discuss the 1994-95

estimates as they relate to the four branches of my department. The regional

services branch has allocated $9.2 million in support of the maintenance and

utilization of over 200 fisheries facilities, the capital works program, the

operation of the Northern Labrador plants, and the administration of the

regional services division in Labrador.

The operation of twenty-five marine service centres

throughout the Province remains a major activity in this branch, and those

within the program in recent years include leasing the centres to private

operators and community based organizations. At the present time five marine

service centres located in Fermeuse, Port de Grave, Bonne Bay, Cartwright, and

Bonavista are under commercial operation, and the centre in Fortune is run by

the local harbour authority.

The results of this type of operation are proving

satisfactory to the local communities, fishermen, and the department in terms of

the services provided and cost effectiveness. We will continue where feasible to

make such facilities available to private operators, and to develop and provide

marine service centres to fisheries and other marine industries.

In 1993-94 the centres conducted approximately 2400

vessel haul out and launches, 240 emergency or service lifts, and accommodated

winter storage of 800 vessels. In consideration of the moratorium on various

groundfish fisheries we intend to continue assistance to fishermen for vessel

haul out, storage, and landing at the centres. In 1993-94 600 vessel owners

received assistance for a total value of $750,000.

Since 1990 my department has implemented a

fishplant divesture program which resulted in the sale of twenty-five plants,

seven of which were de-licensed and transferred to community based operations

for use outside the processing sector. One other floating facility was also

de-licensed and sold to a private company for other purposes. Currently the

Province has ownership of twenty-three plants. Eight of these plants are

presently vacant and inoperative, fourteen are under various lease purchase and

operating agreements with private companies. In addition the plant in Nain has

been operated directly by government for a number of years and efforts are now

underway to acquire a private operator for the plant in 1994 and the future.

The department is continuing with a capital works

program which mainly involves upgrading or replacing distant facilities. A

budget of $1 million will fund various projects at marine service centres,

fishermen's community stages, and slipways. An important development in 1993-94

has been a direct contribution by community groups and a private operator to

these projects in the form of labour and financial input.

The department plans to further such partnership

arrangements in the future which includes a policy for the transfer of ownership

of fisheries public facilities to community based groups such as fishermen's

committees as may be feasible. A previous policy required that the department

owned facilities before any significant repair or upgrading assistance was

provided.

Under our current policy the communities are

provided the opportunity to own and control these facilities and the provincial

government can continue to provide maintenance, upgrading, and other forms of

development support as may be appropriate. In 1993-'94, a total of eleven

facilities were transferred to local fishermen's committees and area development

associations. Other communities and their organizations are interested in this

approach and we will continue with this direction in the future. It provides for

greater opportunities for involvement and control within the community. Each

year the capital program provides grants to approximately eighty

community-sponsored projects mainly for the purchase of material to maintain

community-owned fisheries facilities.

The department also administers the fisheries

component of the Federal/Provincial Comprehensive Labrador Development Agreement

signed in July of 1989, which calls for expenditures of $7 million over the

1990-1996 period. In 1994-'95, approximately $1.56 million will be appropriated

to current and capital accounts under this agreement; the fisheries and

aquaculture development branch is the second major operational branch in my

department. The branch is composed of four divisions: Harvesting Operations,

Processing Operations, Marketing Services and Technical Services. The branch

will spend $5.7 million in 1994-'95 consisting of $3.4 million on current

account and $2.3 million on capital account.

The branch administers Newfoundland's aquaculture

legislation which provides the legal framework for the development of the

industry. Major emphasis in the current year will focus on increasing and

strengthening salmonoid production worth approximately $1.2 million last year in

Bay d'Espoir; increasing mussel production and stimulating the farming of

scallops. Extensive field activities are undertaken to provide extension

services as well as inspections of licensed sites.

Primary focus of harvesting initiatives will be to

broaden the resource base through the development of less traditional species

such as skate, urchin and scallop, to promote access by the inshore fleet to

fleet to shrimp on the Northeast Coast, and to demonstrate improved handling and

storage for pelagic species. Capital expenditure of approximately $2.3 million

is provided with respect to financing and insurance costs and four

middle-distance vessels built at Marystown during the 1987-'90 period. The

department is currently involved in a process to divest itself of these vessels.

The branch will provide financial and technical support to industry to promote

value added processing and the utilization of underutilized species especially

seal and other fishery by-products.

There is also a strong focus towards technological

innovations to enable Newfoundland and Labrador processors to operate on a

competitive basis. The funding also provides for the administration of the Fish

Inspection Act. The branch will provide marketing support for industry,

primarily in order to market underutilized resources and value added and

aquaculture products and to explore new marketing opportunities. It will

continue to provide market research and intelligence and will also continue to

provide corps funding in the newly established Newfoundland Seafood Market

Council.

The Fisheries and Aquaculture Development Branch

have been allocated $500,000 to fund the new corporation agreement for fishing

industry development. Guidelines for a program implementation have yet to be

established pending the formation of the federal/provincial management committee

which will be responsible for the administration of the agreement. However, the

thrust of the agreement is to diversify the resource and product base of the

industry through the development of underutilized resources, the utilization of

by-products and value added processing activities.

Technical support to the Fisheries Loan Board is

provided through the technical services division of the branch which also

co-ordinates the administration and the rebuilding of the repair bounty program.

Applications to the Fisheries Loan Board for loan assistance are technically

assessed by this division which also conducts inspections on vessel

constructions and repairs undertaken by fishermen with financing from the

Fisheries Loan Board.

The policy planning branch will have estimated

expenditures in 1994-1995 of $3.1 million. This branch provides ongoing policy

and program planning within the context of government's broad fisheries

management and fisheries development objectives. During the coming year the

branch will continue to focus significant attention on resource difficulties

facing the industry, stock rebuilding, and fisheries revitalization. In

particular the branch will be finalizing a new fisheries policy white paper

which is being developed based on the Changing Tides public meetings and

industry consultation. The branch is also responsible for field services

activities, coordinating the activities of six regional field offices. In

addition, the branch undertakes the fisheries science and resource analysis

activities of the department, including representation on the federal

government's fisheries research conservation council.

The branch also manages the Province's role in the

day-to-day operation and administration of the cooperation agreement for salmon

enhancement and conservation, a five-year cost-shared agreement valued at $20.57

million which will expire on March 31 1997. The Province's expenditure during

1994-1995 will be $1.2 million. The policy planning branch will also undertake

program development and coordinate the administration of the cooperation

agreement for fishing industry development. Under this $8.57 million five-year

cost-shared agreement which was signed in late 1993-1994 the Province will spend

$550,000 during 1994-1995.

The Fisheries Loan Board is projecting gross

expenditures in 1994-1995 of $5.2 million in support of the Province's inshore

fleet. Expenditures will be directed toward interest subsidy payments for the

existing loan guarantee program portfolio, loans under the Board's direct loan

program, and assistance under its rebuilding and repairing bounty program.

My department's response to the 1992 northern cod

moratorium and the subsequent Province-wide closure of the cod fishery consisted

of interest forgiveness programs for both direct loans and loan guarantee

program clients, and a loan write-off program for retiring fishermen. In

1992-1993 the interest forgiveness program and early retirement program provided

assistance to 900 clients of the Board at a cost of approximately $6 million.

The 1994-1995 projected expenditure consists of a further $1.3 million for 1994

interest forgiveness assistance for loan guarantee program clients.

The Board's direct loan and loan guarantee program

portfolios consist of 5,700 loans with a total value of approximately $110

million. The Fisheries Loan Board will continue to collect loan repayments from

direct loan program clients who have the ability to repay. The Board will also

continue to work closely with chartered banks concerning the loan guarantee

program loans in order to minimize claims under the government's loan guarantee.

In response to the recently announced federal programs under the Atlantic

Groundfish Strategy known as TAGS it is anticipated that a significant number of

the Board's direct loan and loan guarantee program clients will be retiring from

the fishing industry. My officials will be considering the options to address

the outstanding loans of these fishermen.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Minister. The

Chair would like to first recognize the Member for Eagle River, Mr. Danny

Dumaresque, who is here tonight replacing Dr. Bud Hulan, the Member for St.

George's.

SOME HON. MEMBERS: (Inaudible).

MR. CHAIRMAN: In case members didn't recognize

him, it is the hon. member right behind you and to your left.

I would also like to welcome the media here

tonight. We have representatives from CBC and from The Evening Telegram .

It is nice to see that the media is here with us for our proceedings.

Before I turn it over to Mr. Woodford, I would ask

for a motion to adopt the minutes as circulated. That is the minutes of the last

estimates committee meeting of April 27 dealing with the estimates of the

Department of Mines and Energy.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

Mr. Minister, in the release that Mr. Tobin made

the other day in consultation with the Province and so on. Under the eligibility

criteria there for fish plant workers and fishers, it says it is based on

substantial historical dependence on the groundfish industry. Could the minister

clarify for me what both levels of government consider substantial?

MR. CARTER: I do not have a copy of the

minister's release here.

MR. WOODFORD: What is the meaning of

substantial?

MR. CARTER: I am assuming that means people

with a substantial attachment to the -

MR. WOODFORD: Yes.

MR. CARTER: - processing sector and fishermen

of course. I expect the details of that will have to be worked out later along

with a lot of other details on the ministers announced program but obviously it

applies to people with a substantial attachment to the fishery, both in the

harvesting and processing sectors.

MR. WOODFORD: Yes, that is why I asked the

question because if the minister has any reason to believe that - because under

the old NCARP program, as the minister knows, in order for fishermen or plant

workers, especially plant workers to be eligible, the plant had to have a 10 per

cent through-put -

MR. CARTER: Yes.

MR. WOODFORD: - of fish, of groundfish.

MR. CARTER: Yes, Northern Cod.

MR. WOODFORD: Northern Cod, yes. That is what

struck my eye when I read the statement and so on - when it said: substantial

historical attachment to the fishery where they are not saying a 10 per cent

through-put, they are not saying 20 per cent, they are not saying 30 per cent

and that worries me and concerns me, and I hear that it is 25 per cent. I think

it was said in the House, what is it, 3,000 - that would eliminate some 2,500 to

3,000 people off it then but there are a lot of plants around that will not make

the 25 per cent. So I mean it is obvious from that particular statement that -

and as the minister just stated, it is not clarified for him yet let alone have

other -

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: Yes, that's right. Yes, if there

is anything over, if there are plants over 25 per cent but -

MR. CHAIRMAN: Order, please!

MR. CARTER: I am assuming from the minister's

statement that people who are currently covered under the old program, we will

call it, will also be covered under the new program until the details are worked

out.

MR. WOODFORD: Until December.

MR. CARTER: Yes, and people with a substantial

attachment of course to the fishery will be covered and those who have somewhat

less attachment to it, then they are going to have problems obviously.

MR. WOODFORD: So it is obvious that a lot of

those people will be off it as of the end of December because everybody on it

now will get it to the end of December.

MR. CARTER: It is estimated 3,000 people will

be removed from the program on December 31. These are people with a minimal

attachment to the fishery. After that, my understanding of it is that there will

be nobody, except for those people who will be taken out initially, the

estimated 3,000, after that everybody else in the program will get a minimum of

two years' coverage, and in the case of core fishermen, people qualifying, and

then plant workers, the core people, they will be in for a five-year period.

There will be nobody getting less than two years.

MR. WOODFORD: Nobody getting less than two -

MR. CARTER: Except the initial drop-outs on

December 31.

MR. WOODFORD: Those are the people who won't

meet the 25 per cent requirement.

MR. CARTER: Yes.

MR. WOODFORD: Under the wage subsidy program

whereby employers will be given an incentive, more or less be subsidized, if

they hire a plant worker or fisherman or whatever, does the minister see any

problems with that? Because I can foresee some real serious problems with it.

For instance, our unemployment rate now will be 19

per cent to 20 per cent. Take for instance that the NCARP people today are not

included in that unemployment rate, and our unemployment is 19 per cent, 20 per

cent. Can you imagine if 6,000 or 7,000 people all of a sudden, or in some of

the figures they mention, some 10,000 people who come off that program in the

next couple of years, and they for instance - 50 per cent of them - went into

work with employers and so on. Because it is obvious if any employer is going to

hire four or five people and they are going to pay them $2,000 a month for

instance, and someone is going to give them a subsidy of $1,200 or $1,500, well,

it is only natural, human nature being what it is, they are going to hire the

individual who is going to subsidize them. Wouldn't this be a real concern for

the Province?

MR. CARTER: The Province shares your concern

very much so, Mr. Chairman. We have so indicated to the federal government. We

have some concerns as well with respect to that, some serious concerns.

MR. WOODFORD: Yes, but I mean, very serious.

They could really pop the unemployment rate. Because it is obvious that if you

take those people -

MR. CARTER: That is right.

MR. WOODFORD: - someone else is left out.

MR. CARTER: Yes, we see problems there too and

hopefully they will be addressed by the federal authorities and remedied,

corrected.

MR. WOODFORD: The minister mentioned in his

statement - I was following what you were reading but I hadn't had the one in

front of me - about de-licensing some plants and so on. I think the figure of

seven was mentioned. One floating. Does the minister consider a plant that is an

inactive plant? Would you consider that now a license that is, we will say,

invalid and so on? Because it is not transferrable.

MR. CARTER: A plant on which there is a license

that has been inactive two years prior to the moratorium date will

automatically, unless there are extenuating circumstances to the contrary, be

retrieved by the government.

MR. WOODFORD: Okay. The licence will be -

MR. CARTER: In that regard, since 1990 we have

retrieved a number of licenses.

AN HON. MEMBER: Government plants.

MR. CARTER: These are government plants here,

by the way, and if you want me to I can just go through this for you again.

MR. WOODFORD: Yes, okay.

MR. CARTER: Since 1990 my department has

implemented a fish plant divestiture program which resulted in the sale of

twenty-five plants, seven of which were de-licensed and transferred to

community-based operations for use outside of the processing sector. One

floating facility was also de-licensed - that was the old Labrador barge I

think, and sold to a private company. The Province still has ownership of

twenty-three plants and eight of these plants are presently vacant and

inoperative. Fourteen are under various lease-purchase arrangements and

operating agreements with private companies. There have been a number of plants

decommissioned since this moratorium started.

MR. WOODFORD: The reason I asked you that, as

you know, the old Sop's Arm plant in (inaudible) -

MR. CARTER: Sop's Arm is one of them, I think.

Sop's Arm is one of the plants that is being decommissioned, isn't it?

MR. WOODFORD: (Inaudible).

MR. CARTER: Hasn't it?

MR. WOODFORD: No, I don't think they are among

the seven. This was my question.

MR. CARTER: I can give the Committee, if you

wish, the names of the seven. These are plants from which the licenses have been

withdrawn, Newtown, Smokey, The barge, a plant in Campbellton, St. Julien's,

Blue Cove, and Piccadilly. These are government owned plants, government owned

facilities that have been decommissioned.

MR. WOODFORD: So plants such as the Sop's Arm

fisheries plant are not considered taken back or anything like that? It is not

transferable, it is frozen, and it cannot be transferred.

MR. CARTER: That plant has been de-licensed,

the Sop's Arm plant.

MR. WOODFORD: Okay. That is the question.

MR. CARTER: That is gone because it was

inoperative for more than two years.

MR. WOODFORD: That is right. An individual has

just bought that, as you know, through FBDB.

MR. CARTER: Somebody from the West Coast,

Allans I think, 3T or something.

MR. WOODFORD: As the minister knows, in my

area, White Bay South, we always had a fair amount of groundfish going through

the Old Sop's Arm plant and that is the reason why the plant was open for years,

because of groundfish really. The Jackson's Arm plant relied primarily on

pelagic and so on, and they had a very successful fishery over the years in

crab, caplin, mackerel, herring, and so on. They have some real good markets for

herring, for instance. They had some last year and have some better ones this

year, good markets for mackerel and so on, but last year we had some complaints,

and I was just talking to management the other day -

MR. CARTER: That is the Janes plant, is it?

MR. WOODFORD: Yes, in Jackson's Arm, about how

small the herring were, the size and so on. They are out there now getting ready

for this year and the same thing I would think is going to happen to the

mackerel fishery because it seems right now there are more people going into

that than were ever at it before. We had an example of that last year with the

crab. Does the minister have any concerns there? I am sure he has been

approached by some of the plant owners with regards to this particular problem?

MR. CARTER: That is second year class herring

getting into the fishery and that accounts for the smallness of them. You

mentioned small herring.

MR. WOODFORD: That is right but they do not

consider it second year, they are talking about consistency. It is a concern

they have right now, and they have some nice markets for herring. P. Janes has

some lovely markets for herring and some real good markets for mackerel as well.

The crab fishery is another concern because, as you

know, I think there were 150 pots or supplementary licenses?

MR. CARTER: Yes, there has been some

realignment of the number of pots.

MR. WOODFORD: Last year there was a good crab

fishery and they got some good prices. This year the price is agreed on for the

crab fishery. They have some real concerns in that area and that is a plant

primarily depending on, like I said, mostly pelagics and so on, and if

management has a concern and some of the fishermen there have a concern then I

say there must be concern by the department. Whether it is a grave one or not I

do not know.

MR. CARTER: Is Janes operating there now?

MR. WOODFORD: He has just gone back in again

now for the summer, but they are putting in a new (inaudible) machine there now

for the mackerel and so on as well.

MR. CARTER: Is he doing his crab there now?

Will he be doing crab there this year?

MR. WOODFORD: They ship most of it out to

Hant's Harbour. They take it in through there. It is a small operation and they

ship most of it out to Hant's Harbour.

Mr. Chairman, I have one other question and then I

will pass it along to the other fellows. Have fishermen lost their boats and so

on to the banks, or has the loan board foreclosed on them so far since the

moratorium was announced?

MR. CARTER: There have been some in the normal

course of events. I cannot provide you with the number but if you wish I can get

the number for you.

MR. WOODFORD: The banks there for awhile were

getting a little -

MR. CARTER: The banks have taken some actions,

I understand, not a big number. Considering the number of loans that are out,

the size of the loans and the problems, that whole portfolio is in a reasonably

healthy condition. There are some loans where the payments of principle interest

are in arrears but by and large I think it is fair to say that most of the loans

in that bank loan guarantee program are in reasonably good shape, the majority

of them.

The reason of course is obvious, most of the boat

owners have multiple licensing, especially crab, and for that reason they are

able to maintain their loans. There have been no recent repossessions under the

bank loan guarantee program. The department is working with the banks. In fact

the Premier and I met with the bankers association some time ago, had a long

chat with them, pointed out some of the problems and they appeared to be

somewhat sympathetic but things are not, given what is happening in the

industry, it is not as bad as it is pictured to be probably in some quarters. My

deputy here reminds me that I should not give the impression that everything is

hunky-dory, it is not. There are some loans that have serious problems and Bill

has one up in his own district, a chap came in to see me a few days ago. He has

been in, yes and there are people who have problems but the vast majority of

them do not have a problem.

MR. WOODFORD: This is another example of the

pressure being put on the other part of the industry though because like you

said, those people have multiple licenses and so on, especially those who have a

majority of their income from the groundfish operation. Now we are gone into

other species.

MR. CARTER: I get the impression that the

clients, the bank loan guarantee clients, are acting in a very responsible way

with the banks and are building up a reasonably good rapport with the banks. Now

there are some who are not and that is unfortunate because sometimes a bit of

honey attracts a lot more bees than vinegar. If a person plays the game, keeps

returning phone calls and cooperates with the banks, sometimes that can pay off

but it is a big problem, no doubt about that.

MR. WOODFORD: Thank you, Mr. Chairman.

MR. CHAIRMAN: Okay, Mr. Woodford. Mr.

Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

Mr. Minister, I just have a few questions. From

what you are saying and I guess generally what is happening in Labrador but the

first thing I was interested in is the middle distance vessels. Exactly, how

many are there now? Are there still four or how many are there? You mentioned in

your note that you were going to divest of them and I was wondering what - I

know there was a public call but is there now going to be another and would the

department be open to a proposal from a cooperative or some other group who

might want to access on the utilized species using one of those, either on an

ownership basis or on a leased basis?

MR. CARTER: These vessels are costing the

Province a lot of money and their initial cost of course far exceeded what the

true cost was when they were built, $22 million for four boats, $22 million for

four vessels. I submit to you, that had there been competitive bidding without

the need for a subsidiary, as was the case in Marystown, those boats would have

probably cost a little more than half that much. So the end result being that we

have four very costly boats on our hands. Now I should tell you that the

Province's first ambition is to sell all of them because the way the fishery is

now and with the prospects of the ground-fishery, the cod fishery coming back

soon being very dismal, it is going to be difficult for those boats to maintain

themselves. When they started out some years ago they did have a middle-distance

boat quota, and that quota kept shrinking until eventually it disappeared. Those

boats have not made any money since.

AN HON. MEMBER: (Inaudible)?

MR. CARTER: I'm not sure, but again, given

their cost, and the cost of servicing the money - you see, both of them are

financed under some kind of a special arrangement with ROYNAT Leasing and Pitney

Bowes. They put up the money to buy those vessels. Our first aim is to sell

them. I can tell you that, without going into any details, the sale of two of

them is now being negotiated and looks reasonably promising. I don't want to go

into any details on that because the deal is by no means closed yet and I don't

want to say anything that might upset the apple cart.

The other two are up for sale. We would much prefer

to sell them than to lease them. Because we found that in leasing them we can't

possibly generate enough revenue from the lease to pay the cost of keeping them

in the water when it comes to insurance, maintenance, annual refits and so on.

It is not a money making game. In fact, it is a money losing game. Last year we

had those vessels leased and I don't know to what extent it contributed to their

general upkeep, but I know that there was still a very sizeable amount of money

spent by government by way of a subsidy on the operational cost, upkeep.

I guess, Danny, to answer your question, we would

prefer to sell them. They are getting older and with the prospects of the

groundfishery not coming back until three or four or five years' time it is not

worth our while to keep them. I tell you now, my Assistant Deputy, Les, reminds

me we are not going to give them away. In fact, we've had several offers -

MR. DUMARESQUE: Not like FPI.

MR. CARTER: - from far away countries and

nearby countries. They've not even come close to compensating government for

what they cost. In fact, it is pretty well impossible to get that anyway.

MR. DUMARESQUE: You touched on one point there

that I would just like to pursue a bit. I've heard it sometime before. I know

you weren't there as a minister - we weren't here even as the government - when

the original contract was put in place to build these vessels. You say they were

leased from Pitney Bowes or something. Do we own these vessels or is it at the

end of the day still Pitney Bowes that owns these vessels?

MR. CARTER: These are operated through two

different companies, I think, is it?

AN HON. MEMBER: Four (inaudible).

MR. CARTER: Four different companies. NEWCO. I,

NEWCO. II, NEWCO. III and NEWCO. IV. These companies arranged financing from

Pitney Bowes - they own two. NEWCO. I and II, I believe, probably got their

financing from Pitney Bowes, and NEWCO. III and IV from ROYNAT, the Royal Bank.

The government, by the way, has guaranteed the loans. Even though the loans are

in the name of the NEWCO. I, II, III and IV companies the Newfoundland

government is on the guarantee. There would be a considerable payout - for

example, if we were to sell those boats tonight, we will have to liquidate the

outstanding balance on each of them, and that is considerable.

MR. DUMARESQUE: But if we were to keep them and

continue making the payments, how long would it be before we would own them? Or

is there -

MR. CARTER: I don't know what the amortization

period is. It must be twenty years.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Twelve years, another twelve years,

at about $2 million a year.

MR. DUMARESQUE: A sizeable investment. I wanted

to touch on -

MR. CARTER: I will just tell you, Danny, that

we have advertised extensively, internationally, nationally and locally to try

to attract buyers. We get all kinds of offers, some of which you wouldn't even

bother to give a second thought to, you know. Weird offers, some of them. In

fact almost every day - not every day, but certainly on a frequent basis - we

get offers from people who want to lease them and bring them to the Azores or to

Russia or to Argentina and Lord knows where else; but they are good vessels and

it is unfortunate that it turned out this way.

MR. DUMARESQUE: Okay. On the Labrador fishery,

as you know, we have had some good successes with the crab resource securing

Cartwright and Mary's Harbour like they have not been secured in some twenty

years, for the last two years in Cartwright and I think the last three in Mary's

Harbour, and we also have an operation, at least in the

section stage in St.

Louis, and we would hope that the company there will be able to get that

facility that is owned by the federal government right now, and to be able to

put more investment in it; they have put $400,000 in it so far, but we would

hope they would get access to that building and invest more money to create even

more jobs in that community.

Last year, we lost some 40 per cent of the

supplementary crab quota through boats coming from other parts of the Island,

and we are concerned about that obviously, because the quota is only to the

level where it can sustain these three operations and if that happens, everybody

loses. There is very little crab there, in relative terms, towards the overall

quotas and if that quota continues to be taken over by outside vessels, there is

no doubt that we will have these plants operate for less than ten or twelve

weeks now, and it is going to be very difficult to get even twelve weeks out of

them even if we use every last crab that is there.

I know for the first time ever, you put a directive

in place last year and supported by the union, and I think even requested by the

union, because of the fact that we do not have any highways in that area of

Labrador and we cannot possibly truck in resource from somewhere else, and it is

the same thing for the turbot, so I am just wondering if you could indicate

whether you have been able to keep that directive or regulation or whatever the

terminology used in that respect, and if you have been able to get any

co-operation from the federal government and be able to make sure that that

small resource is kept there for the benefit of the people on the coast of

Labrador and that we do -

MR. CARTER: Danny, the Province last year, did

everything within our power as you know, to keep the crab in Labrador. We could

not order the boats where they landed because boats are licensed by the federal

government as you know. We could not do anything while the crab was on the water

in a vessel, but we did issue a directive as you know, ordering that once the

crab is landed in Labrador that it must remain in Labrador and be processed in a

Labrador plant. Now that caused quite a stir as you know, because a lot of the

Island plant owners, in fact I believe one particular company had a vessel under

charter, it was either on the way to Labrador as a collector or a boat ready to

go to Labrador and that caused that company - it is supposed to have lost quite

a lot of money because of our actions there but we did hold it on and kept that

directive in place.

We are in the process now of consulting with the

industry again; we will be making a decision on that very shortly because we

have to, of course, for obvious reasons. We have a similar problem with the

turbot. Last year as you know, we had quite a kerfuffle in Nain for example,

when the ships landed turbot, the fishermen in Nain and the fish plant owners

refused to allow it to leave Nain, so again, we issued a directive that any fish

landed in Labrador would have to remain in Labrador for processing.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Unless there was a surplus. Any

turbot surplus to the needs of the Labrador plants, then had to be released and

allowed to go wherever the owner wanted to take it, but again, that caused quite

a stir last year. We had Newfoundland owned vessels, one the John Cabot for

example, fished up there and it raised quite a stir in the news media charging

that we were interfering and preventing him from getting top price for his

turbot. Again, that policy is under review. We are trying to find ways of

facilitating the problem that Labrador is having, yet without being too

restrictive on the Island plant owners and fishermen, but we will have to find a

way to certainly do all we can to make sure that crab landed in Labrador, and

turbot, stays there. Again, we are working that out, talking to the industry and

the union, and within a very short number of days we should have a firm policy

on that, but it's a real problem. I think you understand the implications of

doing it.

MR. DUMARESQUE: Oh yes.

MR. CHAIRMAN: Mr. Dumaresque, your time is up.

We will get back to you later. Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairman. Thank

you, Minister. I think it is the first committee that I have come to that there

has been a prepared statement. It adds, I think, to the value of the discussion

and the credibility of discussion; however, I would like to refer to a comment

you made last week in the Globe and Mail - that is where I first read it

- dealing with compensation for fish processors in the Province. The comment, I

think - and correct me if I am wrong, and if I am please elaborate on what you

actually said, but - it dealt with the fact that the Province has no intention

of either pushing the federal government, or the Province itself, of looking at

compensation for million dollar fish processors who have made big money from the

fishery already. Would that be a correct summation of what was indicated there?

MR. CARTER: Even though it's in the Globe

and Mail , I think that's reasonably correct.

MR. E. BYRNE: Fair enough.

Minister, surely there are processors out there who

have not relied on either provincial loan guarantees or the federal government

in any way, shape or form, who do not fall in that category of million dollar

processors, who have been as tragically hit by the cod moratorium today as any

fish plant worker or fisherman or fisher woman. Have any representations been

made to you or your officials dealing with compensation by the fish processors?

If so, can you update myself on what your response has been to that group so

far?

MR. CARTER: I guess a better way you could have

put it is, does a day pass in our lives when there isn't representation made for

compensation in one form or another?

The position the Province has taken is that the

Province does not support the proposition that we should be using taxpayers

dollars to prop up, or bail out, or buy out - call it what you want - fish

plants, most of which, by the way, are idle, some of which were put there with a

lot of government money in the first place. You must remember that -

MR. E. BYRNE: I am not referring to the ones

who were put there with government money, and neither am I referring to prop up

or buy out. What I am referring to are private sector initiatives, people in the

private sector who have gone out on a limb themselves, invested their own monies

in building up plants and trying to secure licences and in keeping people

working in rural Newfoundland, who have not had the ear of the Province, or not

even been given the time of day in terms of what will happen to them. Some of

these people will be left holding the bag more significantly than any fish plant

worker or fisherman, and that's the processor that I am talking about. I am not

referring to those who have been propped up with government money or loan

guarantees. I am talking about the individuals who have gone out on a limb

themselves privately and invested heavily through their own financing and

through the banks, that will find themselves in a dreadful situation, and are in

a dreadful situation right now.

MR. CARTER: Most representations that come to

us, Mr. Byrne, come through FANL, and FANL has come up with a rather unique idea

as to how to address the problem. Some time ago they proposed setting up an

organization called the Phoenix organization, 'rising from the ashes,' phoenix.

They were led to believe by the former Minister of Fisheries and Oceans, and I

think he did it with tongue in cheek, that if the Province would participate in

a program that the federal government would. They were looking for an amount of

$50 million. That is what they were estimating it would cost.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. Crosbie led them to believe

that he would probably be interested in entertaining a request for 70 per cent

of that amount, $35 million, providing the Province would come up with the

balance, the other $15 million. Phoenix Organization, or FANL, came to us and

said: Guarantee a loan for us at the bank for $15 million. We will increase our

licensing fees over the years, the proceeds from which we will use to liquidate

the bank loan. We will then go out and identify plants that in our view have no

future, and on a willing buyer-willing seller basis we will try and down size

the fishery.

The Province didn't go along with that for a number

of reasons. One, of course, we found out - in fact, we knew all along - that the

federal government was not serious. While John Crosbie would be here, like I

said, tongue in cheek, telling FANL what he would be willing to do, his senior

officials were telling my senior officials in Ottawa or St. John's that it

wasn't on. I think that John was playing a bit of politics, to be quite frank,

knowing full well that the Province would not be prepared to go along with that

kind of an arrangement, and I guess tried to put us on the spot.

Let's not lose sight of the fact, by the way, that

the dilemma in which these small fish plants find themselves is precisely the

same dilemma that fishing vessel owners find themselves, and fishermen. Namely,

a problem caused in the main by the federal government. The fact that they have

accepted responsibility for 25,000, 26,000 fishermen in terms of compensation,

that speaks for itself, that they have acknowledged responsibility. A case could

be made for them to assist plant owners because they have just as much

responsibility to assist a plant owner in my view as they would to assist a

vessel owner.

You might say that the Province licensed plants,

but I've never known of a fish plant which is on the Grand Banks and catch fish.

We licence plants. Plants are licensed by the Province on the basis of

projections made by the federal government. In the 1970s for example when the

200-mile limit was imposed the federal government then, with a great deal of

fanfare and flurry, said that within a very short number of years we would have

fish coming out of our ears. Newfoundland in those days had to face up to

certain things. Because under the Law of the Sea, as you probably know, if the

coastal state doesn't use the fish it can lose it. Which is, any fish surplus to

your own needs you must lose it to a foreign country.

Newfoundland geared up for this great onslaught of

fish that was about to fall on us in the harvesting and processing sectors only

to find out at the end of the day that the scientists were wrong, that we didn't

have this great new rebuilt fishery. The end result being of course that we

ended up with far too many fish plants and far too many vessels. If there is a

surplus of capacity in the processing sector it is not because the Province

issued licenses. It is because the federal government built up the hopes and

aspirations of the people who in turn - and encouraged by the Province, very

much so.

Now we find that we have far too many plants.

MR. E. BYRNE: Minister, the Free Trade

Agreement, trends under the Free Trade Agreement demonstrate that a shift

towards value added products could increase the value of exports into the United

States and thus create the level of earnings for those people involved in

primary resource industries, such as the fishery. Do you or your department have

any long term projections or plans in terms of increasing the level of value

added products in the fishing industry? If so, where are we headed with that and

what are we doing to develop those markets in the United States?

MR. CARTER: That is a good question. There are

a lot of things happening and as you know under the Free Trade Agreement the

tariffs on imported fish into the US is dropping.

MR. E. BYRNE: Yes, and will continue to drop.

MR. CARTER: It is down to about 6 per cent. It

was up, I believe, to twenty at one time.

MR. E. BYRNE: Yes, a little higher.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Some, yes, it is gradually

dropping. There are markets in the US for a finished product but some of the big

markets for value added, would be in Asia. For example, caplin, Newfoundland

exports female caplin anywhere from twelve to fifteen - one year I think about

25,000 metric tons of female caplin, in frozen block form, were exported to

Japan, for which by the way, the fish plants received a good price. In fact,

that is what kept the industry alive I suppose for the past couple of years.

There are people in the Province now who are

contemplating getting involved in the secondary processing of caplin, known as

shishomo in Japan. It appears that there is a shortage of labour in Japan,

certainly the type of labourer who would spend all day picking up caplin one at

a time and skew them along on some kind of a piece of wire. So it is not the

most attractive job and apparently they are finding it difficult to attract the

kind of people to it. So some companies are looking at the prospect of doing

that here in Newfoundland. In fact there is one company in my own district,

Breakwater Fisheries are doing it and I can tell you now that if we can get that

moving - that is a labour intensive industry. If you can visualize a mound of

20,000 tons of caplin, bigger than this building, each having to be picked up

individually by hand and moved by hand about three times; taken up, put on a

piece of wire, put up, taken off the wire, put in a little box in a certain way.

You know it is very, very labour intensive and that is one area where there are

some great possibilities, I believe, for labour intensive secondary processing.

There are other things too of course happening in Asia.

The seal industry right now is - this year we have

seen a rebirth of the seal fishery and my friend from Baie Verte is the

beneficiary of this new reborn seal fishery. Cosmos Ho or Dr. Ho, one of the

joint partners in that deal, has 12,000 seal carcasses going into Korea, vacuum

packed. That is the first time ever I suppose that that quantity left the

country for human consumption.

MR. E. BYRNE: Into Korea?

MR. CARTER: Into Korea.

They found markets for oil. This year they are

going to be refining the oil here in Newfoundland, in a raw state, shipping it

to China where it is going to be given the final refinement and then put in

capsules and sent out into the marketplace. Those capsules will contain some

very important medicinal properties. (Inaudible) I think it is called, that is

good for people with cholesterol.

MR. CHAIRMAN: Order, please!

I recognize that the minister could go on and on

and on -

MR. CARTER: Oh, I did not realize, I'm sorry.

MR. CHAIRMAN: - answering that question. No,

the hon. members time is up, we will get back to you though. Mr. Tulk.

MR. TULK: Thank you, Mr. Chairman. I don't know

why you are interrupting the minister, he was getting into some very good things

with what can happen in the sealing industry and there are a great many other

things that can be done.

I want to pursue something with the minister,

purely from an information point of view. First of all let me start off by

congratulating his deputy minister for starting to bring this to the floor at

least for discussion and that is - the best way I can put it - the breeding and

the possible seeding of the area called 2J-3KL with fish. I think it is

something that we have to explore because I'm afraid - I happen to believe,

unless we have a Barents Sea phenomena happening and the fish have moved and may

come back, that that stock has probably reached the place where it is not going

to rejuvenate on its own. I happen to believe that. If it is not moved somewhere

and will come back again, perhaps when water temperatures change or whatever

caused the codfish to leave and come, whatever that is, I believe that species

is extinct.

Perhaps the minister would like for his Deputy

Minister to speak on this, because it is a technical question. I read the

article in today's Telegram , Mr. Minister, but what are the known

possibilities, and how much scientific research and development is still needed,

how much scientific research is done? Do we have the scientific knowledge in

this Province that is required to carry on what I consider in my mind might be a

very massive undertaking, if we were to carry on such a project?

I'm just asking for the minister to give us - and

if he wants to, to go to the Deputy Minister, but I think he has some thoughts

about this - to give us some idea as to what is involved there, and where the

Province hopes to head on this whole issue of breeding fish, breeding of cod.

Mr. Chairman, that is my first question. If I've got time I will ask some others

later.

MR. CARTER: I'm going to need to ask my Deputy

Minister to -

MR. TULK: It is a technical question.

MR. CARTER: - (inaudible) detail but I can -

let me clarify something that Mr. Byrne asked with respect to the Province's

position on buy-out.

MR. TULK: Buy-out.

MR. CARTER: Buy-out of plants.

MR. TULK: You may not have to.

MR. CARTER: There is nothing written in stone,

I suppose. While the Province has maintained that position now since Day 1 that

we would not participate in a buy-out program I don't want to give the

impression tonight that the door is closed.

MR. TULK: No.

MR. CARTER: Again, I don't want to give the

impression -

MR. TULK: That the door is open.

MR. CARTER: - that the door is open.

MR. TULK: Yes.

MR. CARTER: But I'm only telling you that there

are very intensive discussions going on now with all of the stakeholders in the

fishery, and the federal government and the Province, and we are going to be

looking at all areas of activity within the fishery and responsibility. Like I

said, while the door might not be completely closed that matter is being

discussed. I don't know what will come of it. I doubt very much if there would

be any drastic change in our position.

Getting back to what Beaton said, yes, I believe

there are a lot of very interesting possibilities in cod aquaculture under a

number of headings. Under catch and release enhancement, for example; under a

program of depositing the fertilized spawn in the areas where it must be

deposited. There are only certain places you can deposit it. You can't just take

a bucket of spawn and -

MR. TULK: Throw it overboard.

MR. CARTER: - throw it - right - over the wharf

because nothing will come of it. You must find the baskets, I think they call

it. It has great possibilities. I think the sooner we get on with it - I think

Mother Nature needs a hand right now, because the spawning biomass is so low

that if we don't help Mother Nature it might be very well be that we might not

see fish come back. I hope I'm wrong.

MR. TULK: I do too.

MR. CARTER: I would like for David to elaborate

on that if you don't mind.

MR. VARDY: Mr. Chairman. The spawning biomass

for northern cod is presently 1 per cent of what it was thirty years ago. It is

down to 15,000 to 20,000 tons. That is the spawning fish which are seven years

of age and older. Most of that fish is in the southern part of the zone. There

is very little fish left in 2J or 3K. As a result of that we as a department

took some initiatives earlier this year and brought together a group of

scientists in this community to look at what the options were, and you have to

realize that we have, in Newfoundland, a large corps of scientists, marine

scientists. We have 20 per cent of the expertise in fisheries science in Canada,

and we brought together these people and looked at what could be done,

recognizing that back in the 1890's Adolph Nielsen started out a major program

in 1889 of hatchery development that went on for close to seven years, and they

actually bred one billion eggs and deposited those -

AN HON. MEMBER: (Inaudible).

MR. VARDY: One billion eggs over a period of

six years, and those eggs were deposited in the area around Dildo. It was very

difficult to determine the impact of that at the time, but all of this was

brought about because the failure in the fisheries took place at that time and a

fisheries commission was appointed, and the fisheries commission brought in Mr.

Nielsen and they started this hatchery. Now what they did at that time was to

have a hatchery which was put together for the purpose of breeding small fish -

these were fry, cod fry - and these were released into the wild, so we looked at

in that context of revisiting that in order to enhance what nature has done.

The scientists felt that rather than releasing the

fry that it might be preferable to release the fish at the larval stage,

basically the fertilized eggs with the yokes attached, just after the eggs were

basically fertilized, so that was one approach identified by scientists that we

would like to proceed with on a pilot project basis.

The other approach which scientists felt was more

prospective was the idea of actually holding cod in captivity and feeding them

with caplin for a period of six to eight months and then releasing them into the

wild. One of the things that has been learned is that the fecundity, the

fertility, of these fish has been greatly increased when they are kept in the

net pens, to the point where their fecundity is increased by 100 to 150 per

cent, so that opens up the prospect of a major program of catching and feeding

and release which could do a lot of good to enhance our wild stocks, and we have

reached the point now where we have been talking with scientists and with the

federal government about pilot projects.

We have had some meetings with the fishermen's

union. The fishermen's union are very nervous - the fishermen themselves rather,

I should say, are very nervous about any kind of experimentation. They have a

lot of concern about science. They feel that science has really not served them

well, and they are very nervous about giving the green light to any kind of an

enterprise of this sort, but we are at the stage now where we really need to do

some pilot projects if we are going to develop the fundamental science that

needs to be developed if we are going to move forward on this front.

One of the biggest difficulties with regard to the

egg production facility is the selection of the best time in which to put the

fish out into the wild, and also the selection of the best location, because

these fish won't breed anywhere. The eggs will not incubate in just any

location. They have to be in the right - what the scientists call - basket, and

that basically involves a mass of water, a large basket of water, that is

usually warmer than the surrounding water mass, and also these tend to occur in

what they call gyres, and these gyres are spirals of water which suck up the

nutrients from the bottom and then enrich the water mass so you have a warmer,

more nutrient enriched area. So what we have to do is find where they are, how

you can identify where those gyres are located, so we can actually put the fish,

put the eggs, into those locations. So that is the kind of research that is

needed.

Hatchery technology per se is fairly well

developed. We were doing that back in the 1890's, so there is room for work to

be done. We are at the stage now where we have costed out a pilot project which

would cost about $5 million to $6 million to do and that is relatively modest

when you consider the possible benefits of avoiding the total collapse and

extinction of that species, but we are at the stage as well where it is

extremely important for fishermen to be involved and to participate in the

project and to be a part of it, and we are at the stage now where the fishermen

are really just getting to understand and to learn what this is all about, so as

I said, there is a concern about science, because to a certain extent, science

is now in disrepute.

People feel that science has failed them, therefore

there is a lot of scepticism about doing any of these projects. The real risk of

doing pilot projects is probably very small, but people tend to think that the

introduction of diseases could actually bring about an even worse situation but

the reality is that the downside is really not that great. The biggest risk of

all is the risk of the total collapse of the stock and obviously that is what we

want to avoid.

MR. TULK: Mr. Chairman, could I just ask one

more question? I don't know what time it is, but it is on this issue and I don't

mean this in a partisan sense in any way.

I maintain that the federal government is

responsible, the central government, never mind the federal government because

that is Liberal or PC or whatever, but that the central government is

responsible for what has happened; it was their management schemes that caused

it and as Walter said just now, if you do not harvest it you cannot process it,

so don't try to lay the blame here in terms of processing licenses, because in

the final analysis the people will tell you how much fish you can catch, we will

tell you where you are going to process fish or not, so I maintain that it is

their problem.

Has anybody sat down and said: alright, if we were

to carry on the kind of scientific projects that we need to carry on over the

next two years to prove whether this is a viable option on this kind of work, it

is a viable option to replenish that stock, has there been any thought put into

this and any numbers put on paper as to what the cost would be and perhaps what

we should be saying to the federal government on what it is going to cost you to

replace this stock. Has there been anything done with that?

MR.VARDY: Mr. Chairman, Minister Carter has

written to Minister Tobin and asked for the federal government to become fully

involved in this project and Mr. Tobin has indicated that he would like to

appoint the Newfoundland Director General as the co-chairman of a steering

committee, to work with me to further develop this whole project and I should

say as well, that there are scientists in the federal government who have done

some work on this and it is the work that they have done which has been very

helpful, and in addition to the work done by people who are at our university,

which enabled us to get to this point now where we do in fact have a budget for

a pilot project and the budget for the hatchery component is in the order of $3

million and the component for the grow-out release is also in the same order of

$3 million. You are looking at a total of $6 million to do the pilot projects

over the next three to four years.

MR. TULK: The next three to four years?

MR. VARDY: The next three to four years but

that does not include - that does not cover the kind of - if the pilot project

were to be successful than a large scale effort would then be needed in order to

carry this out on a scale sufficiently large enough to have an impact on the

wild stocks. Then what you would probably do would be to may be mount a number

of hatchery projects, probably converting fish plants around the Province into

hatcheries and that could be in the tens of millions of dollars but we have not

cost that out as to what a full scale operation would be because I don't think

you can cost it out until you have reached the point at which you have done the

pilot project.

MR. CHAIRMAN: Your time is up. Mr. Matthews.

MR. W. MATTHEWS: Thank you very much, Mr.

Chairman.

I would just like to refer the minister to page 3

of his statement, just to begin. I have a number of questions I would like to

ask and I realize that I'm under a time constraint here and I don't want to

abuse my privileges. The minister on page 3 referenced that the federal

government has been working cooperatively with the Province in the past several

months and so on with reference to the Atlantic Groundfish Strategy, TAGS. Then

he goes on to say: in the coming weeks the Province will be considering how best

to compliment federal programs to ensure that all affected individuals are

treated fairly and with respect - to consider future options. What do you mean

there by complimenting the federal programs? Are you looking at - in what ways -

I mean financial, borrow, planning - what do you mean specifically by that?

MR. CARTER: One of the advantages in this

program as opposed to the previous program, and without being unkind to our old

and dear departed friend John Crosbie, is that there appears to be a greater

willingness on the part of the new minister to consult. Now I suppose in

fairness he has probably had more time in that NCARP-I was sort of sprung on us.

The roof sort of fell in -

AN HON. MEMBER: (Inaudible) sprung.

MR. CARTER: Not sprung, did I say sprung? God

help me.

MR. W. MATTHEWS: Stop cursing, stop cursing.

MR. CARTER: This has been a long day.

No, NCARP, it sort of was dropped on us and

consequently there was not much time to do anything. Fortunately NCARP-II or

TAGS, as it is called, there has been a bit more time and the minister is

prepared to undertake a long period of consultation if it is necessary. We are

going to be working with the federal government looking at all the programs. For

example, Fisheries Loan Board interest write-offs, that is one of the things

that we are talking about. The program that we have now was initiated by the

Province for two years, the first two years of the initial moratorium, the

Northern Cod moratorium but obviously now we have a five year moratorium.

Therefore, we are going to be looking at how we can help.

MR. W. MATTHEWS: So are you saying that - I am

not trying to put words in your mouth - are you trying to say that you are

looking at things like the Loan Board to try and help with harvesting reduction?

Is that what I'm reading into what you are saying? That you will compliment the

federal effort to reduce the harvesting capacity by up to 50 per cent, is that

what you are saying basically?

MR. CARTER: Let me give you an example. In the

TAGS program there is a component to do with early retirement. Vessel license

buy-backs for example, we are going to have to take a look at that and see to

what extent the Province can assist in that respect. For example, if a fisherman

decides to take retirement and is left owing money to the Fisheries Loan Board

he is not likely to accept retirement if it means the proceeds from his

retirement federal government funding has to be used to pay off a Fisheries Loan

Board loan. That is not going to encourage many fishermen to take early

retirement, is it?

MR. W. MATTHEWS: True.

MR. CARTER: I don't know what we are going to

do yet, quite frankly. The policy has not been firmed up. But we are looking at

that, and I expect the feds will look to us for some kind of assistance in that

respect, okay? I would expect that. I'm not saying tonight we are going to -

MR. W. MATTHEWS: No.

MR. CARTER: I will do what I can, that's -

MR. W. MATTHEWS: I thank the minister for that

answer.

MR. CARTER: My Deputy Minister informs me we

are already involved in an early retirement program, by the way.

MR. W. MATTHEWS: Oh yes.

MR. CARTER: Age fifty-five. It is costing the

Province $30 million. In fact, the northern cod moratorium cost the Province

probably - well, $50 million altogether. Fifty million dollars provincial

funding has been used to facilitate some of the problems in the fishery.

MR. W. MATTHEWS: I thank the minister for that

compliment. I just wondered in what ways that was being considered or what ways

the Province could, and that makes sense, I say to the minister.

With the proposed fishing industry renewal boards

and again with the mandate that they have been given by Mr. Tobin of a minimum

reduction of 50 per cent, you were talking about harvesting licences just a

minute ago. We now have people with processing license whose plants no doubt

will be coming out of the system. Are you going to facilitate plant closures by

cancellation of processing licenses? Is that the way the Province envisages

being involved in that effort, or how do you see that going about?

MR. CARTER: A moment ago I qualified something

I said when I said to Mr. Byrne about - I probably conveyed the impression that

the Province - it is written in stone where we sit in terms of a buy-out. I did

qualify it later by saying that things might happen, where the door might be

slightly ajar, where there might be some possibility of provincial involvement.

Very slight.

In the Cashin task force report Mr. Cashin

recommends that there be a fisheries renewal board established but with a very

short lifespan. A board that would be only concerned with decommissioning plants

or buying back plants. The Province is not prepared to take

part in that kind of

a board and for a very good reason. We believe that the board's mandate should

be broadened and that more emphasis be put on renewal as opposed to down sizing.

I don't know what is going to come of it yet. You raised it in the House today,

I think, Bill, or yesterday, and indicated that -

MR. W. MATTHEWS: Two or three occasions now

(inaudible).

MR. CARTER: - the federal minister sort of made

up his mind on it. I have no reason to believe that. The Premier has talked to

the minister and he has written the minister. I have more reason to believe that

the federal minister will see things our way than I have to believe that he will

not see things our way.

We've been after joint management now for four

years, five years, and we've had all kinds of problems with it. We view this

renewal board as maybe a foot in the door in terms of joint management,

providing they will expand the mandate as the Province has asked them to. In

that renewal board the federal government will be required, from where we sit,

to vest in that board certain rights pursuant to some well defined public policy

objectives. For example, on licensing in the harvesting sector. We will do

likewise in the processing sector. The government will define the public policy

that will be followed, the objectives. The board will be there at arm's length

to carry it out. So there can be no charges of political collusion or anything

else, as is often the case. Until this government took office, of course.

I don't know what will happen but that board will

play a very major

part in the fishery of the future, if and when it is in place.

We've been talking about it now for quite some time and I'm hoping the federal

government - because it is essential almost that both governments play a

part in

that board, because otherwise the way it is now the left hand never knows what

the right hand is doing. You have one branch of government 2,000 miles away

responsible for vessel licensing and quotas, and you have another government

here in the Province responsible for processing, so really the two should go

together so there can be a more co-operative approach to it, and I suspect that

is why we are in some of the trouble we are in now where there has been too

little consultation and dialogue between two governments.

MR. W. MATTHEWS: I appreciate the minister's

optimism as to what the Province might get from Mr. Tobin. I think the issue of

joint management, from listening to Mr. Tobin the other night, is over. I don't

think you are going to make any progress whatsoever. Whether you are going to

expand the mandate of the fishing industry renewal boards is still up for

question, obviously. We won't know that yet. If Mr. Tobin expands the mandate

then obviously the Province will participate, but the Premier said if he doesn't

he won't participate.

Mr. Tobin has really given the renewal board a

twelve-month time frame to get its work done, from what I read into what he said

and what is written. If the Province doesn't participate in the fishing industry

renewal boards to reduce processing capacity by 50 per cent, would the Province

then keep the same time frame? Would you hopefully have your decisions made

about what plants stay in the system and come out, say within about twelve

months? Because whether or not you go with the industry renewal board or not

there has to be some co-ordination between the harvesting reduction and the

processing reduction. How do you see that unfolding? Would you then have a time

frame of about twelve months, so your time frame is about the same as Mr.

Tobin's with the harvesting reduction?

MR. CARTER: I should point out, by the way,

that a renewal board need not necessarily be an instrument of joint management.

Joint planning, I guess, is probably a better way of putting it, certainly as a

start. The Province will then look at other options. If the federal government

should turn thumbs down on what we are suggesting, the Province is not going to

give up on it. We have to look at other options.

As to the other part of your question, whether or

not within twelve months we will have decided what plants will remain open, I

don't think so. As I have said to you before, that is a lot easier said than

done.

MR. W. MATTHEWS: So are you saying that it is

unrealistic for Mr. Tobin to put that time frame, or include it in the mandate

of the industry renewal board?

MR. CARTER: I don't want to say it is

unrealistic. I am only saying that the Province doesn't look at that board as

one that will self destruct at any time. We want that board to be a permanent

arrangement.

MR. W. MATTHEWS: We can understand that.

MR. CARTER: Maybe Mr. Tobin thinks he can do it

in twelve months.

MR. W. MATTHEWS: So you are saying that if you

don't participate in the fishing industry renewal boards there is no way you

will have a decision in twelve months, if you have to do it alone.

MR. CARTER: I doubt very much if we are going

to be able to provide you or anybody else with a list of plants that are going

to be closed. The fact of the matter is that every plant in Newfoundland that

depends on groundfish for its survival is closed - every single one of them -

MR. W. MATTHEWS: While you decide what won't

reopen.

MR. CARTER: And will remain closed, more than

likely, for the next five years or longer, if they are depending solely on

groundfish.

MR. W. MATTHEWS: Let me ask you this, then: How

do you propose maintaining whatever percentage or numbers of processing plants

for a five or ten year period? How do you decide which ones - if you are going

to mothball you will mothball them - which ones will you keep ready to reopen in

case our stocks regenerate? How will you do that?

MR. CARTER: Look, it's as difficult now to

project what fish will be in the water in the year 2000 as it is to predict what

the annual rainfall will be in the year 2000. It is virtually impossible. Our

people make projections as to what might happen, based on the best scientific

information they have, but these are only projections, so I am sure you

understand, Bill, just how serious it is, and how complex, and how difficult it

is -

MR. W. MATTHEWS: I do.

MR. CARTER: How difficult it is to get a handle

on precisely what is going to happen in the year 2000.

We had the moratorium in 1991 for two years, and it

was said then by Mr. Crosbie that come hell or high water the Northern Cod

fishery would reopen in May of 1994. We all know what happened; 1994 came and

the groundfishery is still not open. In fact, according to the scientists the

biomass is decreasing rather than increasing as one would expect. So it is a

very, very inexact science and we are seeing it every day.

You mentioned about closures. It is not a question

of what plants are going to close. Every single plant today in Newfoundland that

depends on the fishery is closed.

MR. W. MATTHEWS: Pretty much, not all of them.

MR. CARTER: It is a case of what plants we are

going to reopen or will be able to reopen, and if a person is in a community

where there is a plant depending on Northern cod and it is closed - we are

getting it almost every day: why don't you tell us what you are going to do with

our plant?

MR. W. MATTHEWS: Yes, it is a big concern.

MR. CARTER: If a person living in a community

where there is a Northern cod plant, if that person is going to sit around for

the next five or six or seven or eight years and wait for a plant that might

never reopen, we have no guarantee what plant may never reopen really, unless we

know what stocks are coming back, what can we do about it?

MR. W. MATTHEWS: I realize it is very complex,

Minister, but all I am saying is, if you decide which plants are going to reopen

or, none of them are going to reopen, in essence you are deciding that the

others will not reopen. That is my point. You mentioned that -

MR. CARTER: I should point out too that most of

the decisions as to what plants will reopen will be made by the operators at the

time, and again will be determined largely by the extent to which the stock

rebuilds.

MR. W. MATTHEWS: What affect, if we look at

Fishery Products International, still trying a plant reduction -

AN HON. MEMBER: Fishery Products International

is right.

MR. W. MATTHEWS: Yes, Fishery Products

International for sure, more than ever but, are they going to be left - and

based on what you just said I guess, you sort of pre-empted my next question. I

mean, they will totally decide, which they have done all along, what plants but

they have always consulted with government, what plants remain open, which to

close; I mean Fortune is operating now doing a bit of Russian cod and so on.

If the goal or objective is realistic to get the

processing capacity down to about 50 per cent, which must have come from

somewhere, I am sure Brian Tobin did not make it up, and obviously you have

agreed that there has been considerable consultation by your statement tonight

between the Province and the federal government on all of this stuff. Would five

or six of their plants equal a lot of processing capacity?

I think we all realize that some of those big

plants have one hell of a lot of capacity, more than has been utilized I guess,

in the last number of years but they can put a lot of fish through those plants

at Marystown, Fortune and at Catalina whatever is open and so on, so how do you

see that factoring into the capacity reduction, because, I suppose if you took

all of FPI plants and they could reopen them, they would probably equate to 50

per cent of the processing capacity in the Province, which will mean that the

rest then, if that goal were made, would be closed, or if you wiped out all of

FPI, the large plants would say: they are not going to open anymore, then you

probably could, if the stocks rebuild, keep most of the smaller plants open,

because 50 per cent of capacity reduction, as I said a number of times, does not

mean that of 200 plants, there will be 100 staying opened, so it depends on what

way it falls out. So what are you feelings on that, because if Fishery Products

International were successful enough to access right now, enough Russian cod,

which is not part of the problem because they are not utilizing our own stocks

which are depleted, but you know, they can operate what they want, so how does

that get into the equation? How do you see that playing out?

MR. CARTER: First of all I should tell you that

17 per cent of their capacity has been taken -

MR. W. MATTHEWS: How much?

MR. CARTER: Seventeen per cent, so far.

MR. W. MATTHEWS: Seventeen per cent?

MR. CARTER: Seventeen.

MR. W. MATTHEWS: Of FPI's capacity?

MR. CARTER: No, that is the industry capacity.

MR. W. MATTHEWS: Yes, as what?

MR. CARTER: I don't know. FPI is probably the

major share of that. FPI would account for the major part of that 17 per cent.

MR. W. MATTHEWS: Of the production, you mean?

MR. CARTER: Of the production.

MR. W. MATTHEWS: To date?

MR. CARTER: Yes. There will be other public

policy issues that will play a role in determining for example, what plants will

remain open. The need for regional balance for example; we certainly do not want

to end up at the end of the day with all of the processing plants on the Avalon

Peninsula or on the Burin Peninsula, or on the Bonavista Peninsula so there is

going to have to be well-defined public policy objectives that is going to

determine to some extent, by whatever means, precisely how the fishery can be

structured based on a regional balance as opposed to having them concentrated

all in the one area.

MR. W. MATTHEWS: May I just make a comment,

because obviously, Minister, from what you are telling me now and what has

transpired here in this House over the last number of months, really, is that

you have changed your position on that because for a number of months, you

consistently said that the market forces would decide. So I sort of sense from

you now - and by the way, I compliment you if you have changed because I think

that is the way it should be. I have advocated that any number of times publicly

and here, that I am pleased to see that because I think there has to be a

regional presence and a regional -

MR. CARTER: In what way have we changed our

position, would you mind telling me?

MR. W. MATTHEWS: Sorry?

MR. CARTER: In what way have we changed our

position?

MR. W. MATTHEWS: Well because if you let the

market forces decide, the market forces are not going to consider a regional

balance or a regional presence, that is my point.

MR. CARTER: No, we have always, Bill, we have -

MR. DUMARESQUE: (Inaudible).

MR. W. MATTHEWS: Who didn't say it? You might

not have said it. I don't know what you said but I questioned the minister and I

can get Hansard for you time after time after time and the minister has said

publicly - I am not here to get in a spat with the minister Danny - I mean I

compliment the minister because there is a definite change to what has been said

publicly and in this House by the minister and the Premier from what the

minister said tonight and I'm glad of that. I am not here to have a spat with

the minister. I compliment him, I compliment the minister.

MR. CHAIRMAN: Order, please!

MR. CARTER: There is going to have to be some

allowance for regional balance you know.

MR. W. MATTHEWS: I agree and I commend you for

that.

MR. CHAIRMAN: Order, please!

Before the minister replies I must remind Mr.

Matthews that the Chair has been very lenient in giving him -

MR. W. MATTHEWS: And I appreciate that.

MR. CHAIRMAN: - additional time beyond his

allocation in recognition of the fact that he had to go and the reason he gave

me privately as to why he had to go - the Chair has been very flexible.

Mr. Minister.

MR. CARTER: I want to make it clear, Mr.

Chairman, especially Bill's point that we have never - we have always said that

regional balance must be a factor and I just gave an example of why it should

be. Do you want to end up with all the processing capacity concentrated on the

Avalon Peninsula or on the Burin Peninsula? So as much as we would like to see

the market forces call all the shots it might well be that there would have to

be some regulatory intervention by way of public policy to ensure that there is

a regional balance. Do you agree?

MR. W. MATTHEWS: I agree with that. I have to

tell you that perhaps something happened to my hearing and other things but it

is the first time that I heard you say it, minister - not saying you have not

said it before.

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: Yes, well I can only tell you.

MR. CARTER: Regional balance is very important.

MR. W. MATTHEWS: Oh my God, my substitute has

just arrived. Thank you, Mr. Minister. Thank you very much by the way, Mr.

Chairman, to you and the committee for your leniency and your understanding.

MR. CHAIRMAN: Mr. Whelan.

MR. WHELAN: Mr. Minister, I was reading here

that since 1990 there have been seven plants, which were formerly government

owned plants, that have been de-licensed. Are any privately owned plants being

de-licensed now on the Avalon Peninsula? If there are, which plants are they?

MR. CARTER: Publicly owned plants?

MR. WHELAN: No, privately owned.

MR. CARTER: Privately owned plants on the

Avalon Peninsula? I cannot give you a complete list tonight, Don, but I can get

it for you. For example, two of the real big ones, St. John's and Trepassey,

these two plants are out of the system, out to stay.

MR. WHELAN: No these were closed and they have

been de-licensed but they have been de-licensed for a number of years now,

haven't they?

MR. CARTER: They were de-licensed in 1990.

MR. WHELAN: But I'm talking about this year.

MR. CARTER: Yes, there have been a number of

smaller plants too that, by virtue of the two year idleness, have fallen under

that as well.

MR. WHELAN: When you say two year idleness, two

years idle with regard to not being open and not being in production?

MR. CARTER: No, any plant that has been idle

for a two year period or longer, prior to the Northern Cod Moratorium, unless

there are extenuating circumstances that plant would automatically lose its

license. We have enforced that rigidly and in so doing, we have removed quite a

few plants from the system. Now mind you some of them were small plants.

AN HON. MEMBER: (Inaudible).

MR. CARTER: That is part of the 17 per cent

that I mentioned a moment ago.

MR. WHELAN: Just to get it straight, the plant

must have been shut down altogether for two years?

MR. CARTER: Yes, no fish put through it.

MR. WHELAN: You don't have a number as to how

many that is this past six months?

MR. CARTER: Altogether about twenty-six.

Twenty-six altogether, is it?

AN HON. MEMBER: We don't have the numbers.

MR. CARTER: I don't have the numbers. I will

get the numbers for you.

MR. WHELAN: Have there been any plants closed

that have been in production this past two years?

MR. CARTER: Any closed, what?

MR. WHELAN: That have been producing over the

past number of years.

MR. CARTER: No, I don't know of any plants that

closed -

MR. WHELAN: I will be a little bit more

specific. I just received notice today that the plant in Harbour Main received a

notification that they will not be relicensed this year.

MR. CARTER: We had hundreds of licences out

there for all species, herring, mackerel, shell fish, you name it. All of those

that were inactive for a two-year period, we notified the owners that they would

be cancelled. Again, I will list the words `extenuating circumstances'. Two

weeks ago there were probably 100 letters that went out to a number of fish

plants, in some cases two or three to the one plant, cancelling dormant

licences.

AN HON. MEMBER: (Inaudible) individual species.

MR. CARTER: Individual species, for example

herring and mackerel. There are an awful lot of licences out for herring and

mackerel in plants that never put through a herring or a mackerel. So we are

trying to clean up the act. We are trying to rationalize the fishery, find out

where we are, and get clear of some of the licences that aren't being used.

MR. WHELAN: Okay, so I am given to understand

that the plant in Harbour Main hasn't been de-licensed. It is just that fact

that if they haven't been processing a particular species, the licence for that

species has been cancelled. Is that what I understand from that?

MR. CARTER: That is Gorman's, is it?

MR. WHELAN: Yes.

MR. CARTER: If there is a species that they

haven't processed in two years, then that licence will be withdrawn.

MR. WHELAN: Another question, with regard to

the importation -

MR. CARTER: We haven't decommissioned the

plant. The plant is still a plant, but that particular licence has been

retrieved.

MR. WHELAN: When you say `that particular

licence' -

MR. CARTER: Whatever it was, it might have been

MR. WHELAN: The species that he hasn't been

processing for a period of two years.

MR. CARTER: Yes.

MR. WHELAN: Okay. There are certain companies

in the Province that have been importing cod and processing it and sending it on

to markets. How extensive an operation is that here in the Province?

MR. CARTER: Oh, it's becoming more extensive.

As we talk tonight there is a plant in Arnold's Cove, for example. I would

suggest probably it is operating tonight. This year we are expecting there would

be probably as much as 12,000 or 15,000 tons of Barents Sea cod coming into the

Province for processing. There are a number of companies doing it, and they are

doing it reasonably successfully. Fishery Products International in Fortune, I

believe Bill Barry did some in Port aux Basques. I think there has been some

done in the plant in Triton. In Bay Bulls the O'Brien's are doing quite a lot of

it. Derek Green is doing it in Winterton.

AN HON. MEMBER: Arnold's Cove.

MR. CARTER: I visited the plant in Arnold's

Cove and I got a real eye opener there, I must say, because I had visions of

this fish coming in all the way from Russia not being of very good quality, but

my officials and I went to Arnold's Cove a few months ago and went through the

plant, and I can tell you now that what I saw coming off that assembly line,

individually frozen, was as good as anything I have ever seen. That night the

owner of the plant, Bruce Wareham, invited us to supper and his wife served us

that cod. I am telling you, I have never tasted codfish any better.

AN HON. MEMBER: (Inaudible).

MR. CARTER: I have never tasted fish any

better. It was delicious; so there is potential there. Nova Scotians are doing

it quite extensively, probably as much or more than we are, and Newfoundland

entrepreneurs are looking at it, without subsidy by the way. There are no

subsidies being paid. In fact, to their credit, they have suggested to us that

we shouldn't be talking subsidies because once you do that you know what

happens. So those who are at it are doing it on their own, making a dollar at

it, and doing a darn good job. The fish will be a credit to Newfoundland in the

marketplace. That was one of our concerns, by the way, that fish going into the

marketplace with a Newfoundland label on it in our view should be as good or

better than anything else going in there.

MR. WOODFORD: (Inaudible)?

MR. CARTER: Yes. It is a good product and it

has a lot of potential. Do you realize the total allowable catch this year in

the Barents Sea is 700,000 metric tons?

AN HON. MEMBER: (Inaudible).

MR. CARTER: It went down to zero at one time.

MR. WHELAN: I understand that they've been

without cod over there for so long that they've lost the taste for it and the

market for cod is not as great as it used to be, and the price obviously is down

so they're getting - from what I understand they're getting it for a good price.

I wonder if this probably may not be the salvation to some of the problems that

we're having with plant closures and that type of thing. Maybe some of them

could possibly be salvaged through the importation of cod as opposed to the

actual harvesting of it here in the Province. What are your views on that?

MR. CARTER: The key to it, by the way, my

Deputy Minister reminds me, is efficiency. In Arnold's Cove they've come up with

something that is quite unique in Newfoundland. They've introduced a new system

there. It is widely used in Japan. Self-directed work teams. It is working

extremely well. It has kept the cost down to the point where it is economically

viable to process that fish.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. It is a good system and I

expect more Newfoundland companies are going to have to take a look at it if

they want to survive. I don't know if you fellows realize it or not but do any

of you know just to what extent the Newfoundland fishery contributes to the

world consumption of fish? How much of it do you think is caught in

Newfoundland? Far less now than a half of 1 per cent. Even in the best of times

it was only half of 1 per cent of the total consumption of fish. Some of us

thought that fish, we were the originators of it, it all started here, we

invented it. But less than half of 1 per cent of the total world production

comes out of Newfoundland. I went to the Balkan seafood show a few weeks ago.

When you go up there you realize just how insignificant we are as a fish

producing country. In fact, I don't think I saw any cod there at all from any

country. Some of the species that you see are unheard of here. I'm not taking

away from the importance of the Newfoundland fishery but certainly in the

overall global picture the world is going on notwithstanding the moratorium.

MR. WHELAN: The cod that they are bringing in

up in Arnold's Cove, is that already processed or (inaudible)?

MR. CARTER: No. Gutted, head on.

MR. WHELAN: Okay. There was something else that

I wanted to mention with regard to the fishery fleet. Most of it has been out of

the water now for two years. There will be another five-year moratorium that

will be seven years. I'm sure many of the boats were at least ten years old when

they were taken out of the water. Even if they are able to be used when they go

back it will only be a year or two before they will have to be replaced. Has

there been any thought put into the replacement of a lot of these vessels?

MR. CARTER: What we've done, Don, we are now

putting more emphasis on providing funding for fishermen to upgrade their boats.

For example, fibre-glassing. We have a program now where we can assist them to

fibreglass their boats. By doing that of course you are extending the life

almost indefinitely. I don't think anybody knows really just how long fibreglass

is good for. We are encouraging that now for fishermen to upgrade their boats

and to fibreglass them.

Most of the vessels, by the way, even though we

have a groundfish moratorium, the vast majority of the vessels are still active

in one capacity or another. Lump roe, caplin, crab, any number of things.

For example there is a whole new scallop fishery

developing on the Grand Banks and showing a lot of promise. We have issued a

number of temporary developmental licenses to six or seven companies to

facilitate that fishery and it is showing a lot of promise and a lot of the

boats, of course, are going to be used in that fishery. The price is good and

the scallops are good.

MR. SHELLEY: What boats are they using for that

fishery? There was a big boat up in Grand Bank a few years ago.

MR. CARTER: Fifty-five or sixty-five foot

long-liners.

MR. WHELAN: With regard to aquaculture, what

potential does that have on this coast and the north east coast? What areas

would be prime areas for aquaculture? What potential is there for aquaculture?

MR. CARTER: The world consumption of food is

now 100,000.000 tons and they are projecting that by the year 2000 it will be

probably 150,000,000 tons, in that order, and it is being projected by the

experts that the vast majority of that increase will be coming from aquaculture.

China, for example, a country of 1.2 billion people, 20 per cent of their fish

consumption comes from fish farms.

Aquaculture in my view is one of the real bright

stars on the horizon. It is the sort of thing where you have to crawl before you

can walk. You have to take it easy. You cannot rush it. We saw a few years ago

where in the Bay d'Espoir area - I do not know if it was a case of rushing it or

what happened, but the end result was they lost their entire stock at

considerable cost, and darn near wiped themselves out in the process.

Aquaculture is something that has to build slowly

and if you try to rush it too fast you are inclined to make mistakes and they

can be costly, but certainly in Newfoundland there is a great potential. Char,

for example, steel head trout, salmon, mussels, scallop, all of these are being

very actively pursued now. On the North East Coast mussels are becoming big. We

have sixty-eight mussel licensees out there that have the potential of producing

5000 tons of mussels. From what I am told the market is good. In fact in certain

areas the demand almost exceeds the supply, does it now?

AN HON. MEMBER: In certain areas.

MR. CARTER: There are a lot of good things

happening but we are getting bogged down with some of the more negative things,

as is always the case, of course, but there are some good things happening out

there, especially in aquaculture.

MR. CHAIRMAN: Mr. Whelan, your time is up and

we have to go to another member of the committee. We will get back to you if you

wish.

Mr. Shelley.

AN HON. MEMBER: Are we going to take a break?

MR. CHAIRMAN: It was not my intention because

unless other members have a lot of questions I anticipate we will be out of here

soon. If it is the wish of the committee to take a break we will certainly do

so.

Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

While we are on this subject because it is one of

the questions I have further down, but first I want to refer to one page in the

estimates, Page 113, just for clarification more than anything. I think I know

but I just want to ask anyway. On Page 113, 4.3.02 Atlantic Salmon Management

Agreement.

MR. CARTER: Page 114?

MR. SHELLEY: Page 113,

Section 4.3.02, Atlantic

Salmon Management Agreement. That is the Canada/Newfoundland Atlantic Salmon

Management Agreement, right? The Budget for last year was $5,854,700. What was

the reason for the decrease?

MR. CARTER: Because of the two year program.

MR. SHELLEY: That is where it dropped off

there, right?

MR. CARTER: The two year program, yes.

MR. SHELLEY: I was not sure. Now, right across

on the next page, Page 112, the reason for the increase in Salmonid Enhancement?

MR. CARTER: That is a new agreement, a separate

agreement, by the way.

MR. SHELLEY: (Inaudible).

MR. CARTER: One by the way is a buy-out and the

other one is an enhancement.

MR. SHELLEY: It is 70/30 cost shared, is it?

MR. CARTER: The one on page 112 is salmon

enhancement you see.

MR. SHELLEY: Anyway, I just wanted it

clarified, that's all. With the aquaculture as you have just finished speaking a

little bit about, what areas of the Province now is most concentration with

aquaculture as it relates to cod planning? I think there is some in my area and

off the Northeast Coast but where is the biggest concentration, is it on the

Northeast Coast?

MR. CARTER: Trinity Bay appears to be one of

the prime spots for it and I guess there is no coincidence that the father of

aquaculture in Newfoundland, Nielsen, one hundred years ago, chose Trinity Bay,

Dildo as his site -

AN HON. MEMBER: (Inaudible).

MR. CARTER: It was from Trinity Bay and he

tells me that there is nothing unusual about that, aquaculture is the sort of

thing that can happen anywhere; in my own district for example, without any

prompting from me, there has been a lot of activity in aquaculture, and

certainly, if we are going to get involved in it in enhancement, then I can see

a lot of activity in most of the bays including Placentia Bay.

MR. SHELLEY: Yes, and in my district actually

there are some sites. I would just as soon jump around here a little bit now and

try to get in the questions, it seems like we run out of time all the time. This

one is more specific but I thought that I should ask you to get it out of the

way now, and it is local and that is the crab plant in Fleur de Lys. I have not

spoken to you about it since but I think I should bring it up, I was asked to

ask that -

MR. CARTER: You have seals you are doing there.

MR. SHELLEY: Yes, and I am going to continue

with the seals which is a positive thing as you said and I am glad for that but,

Minister, I would just remind you that last year we met with a contingent of

people who came in from Fleur de Lys, and I know that there were lots of

intricacies about this particular situation and of course, at that time we said

that we could not go into detail about it and I don't expect to go into it now,

but we did tell these people, or you and the Premier did tell those people at

that time, that we would investigate it in detail and see exactly what happened

in Fleur de Lys in that isolated situation, because it certainly got complicated

for a little while there and of course, this spring, I probably will ask it in

the House again I can tell you now. But as you said at the time when we met, you

would get to the bottom of exactly what happened at the crab plant in Fleur de

Lys, and at this point, we have not received any report or any response back so,

I wonder if you want to respond to it now or would -

MR. CARTER: There has been a lot of

investigation going on with respect to the crab plant in Englee, we have not

just ignored it. You came to us and your people whenever it was last two years

ago and we wanted to get to the bottom of it because it would take all night to

go into all the gory details of what happened, but certainly, the investigations

that we have conducted certainly did not show any wrongdoing or anything on the

part of any of our officials. It was a matter that was started by the previous

government as you know, when, two days before this government took office on May

3, 1989, two days before that happened, the then minister and deputy minister

transferred or issued licenses (inaudible) -

MR. SHELLEY: Issued new licenses, yes.

MR. CARTER: Pardon?

MR. SHELLEY: Issued new license.

MR. CARTER: - issued a new license. First they

were going to transfer the one from Fleur de Lys but then they decided to issue

a new license; they issued along with it, four other licenses two days before we

took office.

MR. SHELLEY: Two days?

MR. CARTER: Three days before we took office -

MR. SHELLEY: I have no problem with it.

MR. CARTER: - after the election, three days or

two days before we were sworn in, it came to light that there were issued four

licenses. One to St. Lawrence that was never activated; one to Old Perlican, one

to Indian Bay -

AN HON. MEMBER: - and one to... (inaudible)?

Where was the other one?

MR. SHELLEY: Gander?

MR. CARTER: What?

SOME HON. MEMBERS: (Inaudible).

MR. SHELLEY: But minister -

MR. CARTER: Grand Falls, Buchans.

MR. SHELLEY: I -

MR. CARTER: It was unfortunate, Paul, very

unfortunate -

MR. SHELLEY: Yes.

MR. CARTER: - and a lot of people were hurt.

MR. SHELLEY: Minister, I say to you in all

sincerity, I didn't bring it up to get into the detail.

MR. CARTER: No, I know.

MR. SHELLEY: I investigated quite a bit and to

be honest with you, and to be quite frank, I don't really give a damn whose

problem it was in the previous or whatever. The bottom line is that the people

in Fleur de Lys are the ones who suffered out of it, as far as I'm concerned. I

still think it was handled wrong, not just by your government and previous, or

whatever mistakes were made in the past. To watch those trucks roll those crab

out of there last summer after Fleur de Lys being the haven of productivity down

there the year before, it was just something that would just turn you. The

simple bottom line is, I wanted to get to the bottom of the story. Right or

wrong, whether Fleur de Lys ever gets one or not, I would still like to get to

the bottom line of exactly what happened here and what injustice if any was

done.

MR. CARTER: I guess what you are saying now,

more than anything else, points out the need for an independent, arm's length

board like (inaudible).

MR. SHELLEY: Sure, and I agree with that too.

MR. CARTER: When that board is appointed then

that matter, I presume, along with a lot of other applications, will be referred

to the board, and again, based on well defined public policy objectives, it will

deal with it. That is the only way around it. Twillingate, my own district -

MR. SHELLEY: I know, I realize that.

MR. CARTER: - (inaudible) licence.

MR. SHELLEY: I knew that too, yes.

MR. CARTER: La Scie had a crab licence.

MR. SHELLEY: Yes. They lost theirs for I think

a straight reason.

MR. CARTER: For being inactive.

MR. SHELLEY: They didn't use it. Two years.

That is fine. Fleur de Lys was a little bit different.

MR. CARTER: Yes, and the process was followed

to the letter by the way there, I might tell you.

MR. SHELLEY: Yes I know, and I know it well.

That is why I don't even bring that up. But the Fleur de Lys one -

MR. CARTER: Twillingate wants a licence. I

can't give them one. Every time I go to Twillingate they remind me about the

fact that they had a licence.

MR. SHELLEY: Yes, I know, and we talked about

that. I have no problem with that. I have no problem with Fleur de Lys not

getting one as long as it was handled properly.

MR. CARTER: Quite frankly, I would welcome the

opportunity to pass that one, it is not a matter of -

MR. SHELLEY: Yes.

MR. CARTER: - reneging on my responsibilities,

but I tell you, it is awfully difficult to administer licensing policy in this

Province where there is so much interference, and some of it political

interference.

MR. SHELLEY: Yes. I can appreciate that. It

happened in this case, obviously.

MR. CARTER: Every single community that has

crab landed on the wharf wants a crab plant.

MR. SHELLEY: The bottom line is I would like to

get to the bottom line and find out what happened, and whoever is at fault, and

if at the end of the day Fleur de Lys still doesn't deserve a licence or should

have never had one or whatever, well that is fine. It is just too open now. It

hasn't been settled, as far as I'm concerned.

To change sides again now, because I know there is

only a couple of minutes left. The deal with seal, seal licences. Especially

now, I guess, in my district as you know they are pretty active out there now.

Just to keep this simplistic, I guess, and I know it is in the jurisdiction of

the federal government, but right now when fishermen catch seals in their nets -

can fishermen apply to have a seal licence for domestic, for personal, use, for

killing seals now? Is that right?

MR. CARTER: First of all, seal licences are

issued by the federal government.

MR. SHELLEY: Yes, I know that.

MR. CARTER: I'm under the understanding any

fisherman who has a groundfish licence automatically qualifies for a sealing

licence.

MR. SHELLEY: Okay, I thought so.

MR. CARTER: We've had to tighten up on the

buyers' licences, and for obvious reasons. If there is one thing we don't want

it is everybody out there and his brother buying seals just for the organ, for

example.

MR. SHELLEY: I will just ask the minister's

opinion on this then, realizing it is federal jurisdiction. What about a person

who does not have a fishing licence just to buy a domestic licence, shall we

say, to kill one or two, a bag limit of two seals for personal use? We've got

them coming up in the bay and going into the salmon river after seals. Of course

the story is all over the Island, as everywhere. I just don't see why any person

who wants a seal - not that I'm not saying every Newfoundlander is going to go

out and want to take a seal anyway - but anybody who wants a seal, and it is in

the bay, and if they can't go out and take one or two seals for personal

consumption, I really don't see the logic or common sense in that whatsoever.

I think it's something that should be brought to

the federal minister.

MR. CARTER: Well, it has been brought to the

federal minister, and Beaton you were there. We were given to understand that

any Newfoundlander is allowed to get a licence to kill up to five seals.

MR. TULK: For personal use.

MR. CARTER: For personal use.

MR. SHELLEY: Is that out now?

MR. CARTER: I don't know.

MR. SHELLEY: Not as far as I know. As far as I

know, you have to have a fishing licence right now.

MR. CARTER: We were told that.

MR. SHELLEY: Well, Minister, if that is correct

MR. CHAIRMAN: What the minister has referred

to, I believe hon. members will recall that that was stated at our caucus

meeting just as the minister said it. By the time that got down on paper to the

fisheries offices it said that right would be accorded to retired fishermen

only.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: That's the way it has been

(inaudible).

MR. SHELLEY: I don't think anybody here would

disagree with that.

MR. CARTER: Just imagine the benefit. Say if

there were 50,000 Newfoundlanders out there who applied for a licence and got

five seals each, that is 250,000 animals taken out of -

MR. SHELLEY: That would be great. So I am sure

everybody concurs with the idea, so -

AN HON. MEMBER: (Inaudible).

MR. SHELLEY: So where is it now?

MR. CARTER: I think we are going to have to -

MR. SHELLEY: Well I would ask the minister to,

if he would, follow up on that. It is something that if you could come out and

tell Newfoundlanders that they can go and take those five seals you would be

supplying the seals for the man who likes to eat it, for one thing, and for his

family in hard times as it is. At the same time you would be taking the bloody

seals out of the water, where the less the better.

MR. CARTER: That's right.

MR. SHELLEY: So it only makes common sense to

everybody, so I would ask the minister if he would pursue that with the federal

minister.

MR. CARTER: We will pursue it.

MR. SHELLEY: As a matter of fact I will, and

everybody else I guess, lobby and write and do whatever they can, to hopefully

use some common sense and deal with that matter.

MR. CHAIRMAN: Mr. Shelley, your time is up. We

will get back to you in a moment, if you wish.

MR. SHELLEY: Thank you very much.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: I have a lot of questions here, but I

won't get into them all because we are getting near to the time when - to tell

you the truth, I am sick of being here.

Mr. Chairman, I would just like to ask the minister

to outline for us the nature of the expenditure on salmon enhancement. There was

some question from somebody about the way that money was being spent - I read it

somewhere - the way money was being allocated or something, not suggesting

anything crooked was going on, or illegal was going on, but there was some

question as to whether most of the money was ending up putting in physical

facilities that would enhance salmon spawning or whatever. Was that really the

case, and has that been cleared up?

The other thing is: Is there enough money now

allocated to take care of all of the physical things that need to be done for

salmon enhancement to be at an acceptable level, or are we going to need more

money after four or five years?

MR. CARTER: I will let Les handle that.

MR. TULK: That is all I am going to ask, Mr.

Chairman.

MR. DEAN: Mr. Tulk, the five year salmon

enhancement agreement is managed on a co-chair basis by the federal government

and the provincial government, and the Department of Fisheries for the Province

is the lead agency, and the Department of Fisheries and Oceans is the lead

agency for the federal government. I represent the Province as the co-chair for

the agreement, and Eric Dunne represents the federal government for the

co-chair, which is the normal process that is followed in implementing all of

these cost-shared agreements.

I think the issue that you are referring to, your

initial concern was about the way in which the funding was allocated. I think

you may be referring to a statement by Mr. Tom Humphries last fall who indicated

that most of the money, or 20 per cent or 40 per cent of the money, went towards

administration.

MR. TULK: Yes.

MR. DEAN: That is not the case. Approximately 8

per cent of the agreement funding is for administration. What he was mixing up

was the pure administration funding associated with the agreement with the

program elements of the agreement that are delivered by either the Province or

the federal government, so that is the issue there.

In terms of whether or not there is adequate

funding, in fact the committee met this morning to discuss this year's

expenditure profile, and it is quite clear that the level of applications this

year relevant to the cash flow that is available, far exceeds the cash flow

availability, which was the case last year as well. That is more so with one or

two elements of the agreement. For example, salmon, the enhancement component,

because there are five separate components associated with the agreement; one is

enforcement, habitant improvement, enhancement but generally for some components

of the agreement the demand exceeds the amount of money that is available. Next

year because of the cash flow structure associated with the agreement - this is

the third year - in the final two years of the agreement that is when most of

the money will be available.

MR. TULK: Will it be adequate then?

MR. DEAN: I doubt very much if it will take

care of all of the demand. It was a $20.2 million agreement.

MR. WOODFORD: (Inaudible).

MR. DEAN: I just forget the exact amount that

we expended last year but our share of the agreement is 30 per cent. I think in

terms of the cash flow, we averaged our total commitments over five years almost

on an even basis.

MR. CHAIRMAN: Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairman.

Just a couple of other questions, minister. In

terms of the revoking of licenses which processors have not used for a two year

period, I got a call today from a processor I never met before, I just happened

to take the call and he said that he received a letter from the Provincial

Department of Fisheries indicating that his license to process squid had been

revoked because he had not processed in two years. He said to me, it is kind of

impossible to process squid when there was none around for the last two years.

How could he utilize or use his license to process squid when there was none

around to process? He raised it to me and not having a great knowledge of the

department, certainly I felt that probably tonight would be a legitimate time to

answer the question or pose the question to see what - if that is the case with

squid, are there also other licenses being revoked for other species as well

where there have not been an available supply to be processed over the last two

years? Mr. Whelan was referring to a similar situation, I don't know if it is

exactly the same, where a license had been revoked. So I pose that question to

you, why would the department revoke a license for a processor where he has not

been able to process that species for the last two years?

MR. CARTER: There is no problem, if and when

the need arises - the last big squid fishery in Newfoundland was back in 1979 -

'78 was it? - and there has not been -

MR. E. BYRNE: Much of one since.

MR. CARTER: - a real good fishery since. If and

when the squid come back, as is the case with herring, mackerel or whatever -

you know we are not in the business of closing people down. They can apply and

tell us what they want to do, then we will reissue that license. We will reissue

a license to them if and when the need arises. We are following certain

procedures. We are not going to leave them on the books indefinitely. I mean we

have licenses now coming out of our ears in there, most of which are dormant and

we want to get clear of them. That is not to say that if that person decides to

get back into the squid fishery or herring fishery later on, that he will be

denied a license. That will not be the case.

MR. E. BYRNE: Could the possibility exist, with

the license gone now, that he would have to reapply and the possibility exists

that he would not be granted the application, is that correct?

MR. CARTER: He has to reapply anyway. A license

is only issued for one year anyhow and if he has a license he has to keep

reapplying for it. The license just does not automatically be sent out, they

have to be reapplied for. So you just have to reapply when your time comes. You

can understand the need to clean up the act, I'm sure.

MR. E. BYRNE: Oh, no qu