May 19, 1992

RESOURCE ESTIMATES COMMITTEE (DEVELOPMENT)

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

Assembly.

MR. CHAIRMAN (Langdon): Order, please!

Before the introduction of the minister and his

staff, I would like to have someone move that the Minutes of the May 12th

Estimates be adopted.

On motion, minutes adopted as circulated.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Those were the ones on Forestry.

We would like to welcome the minister and his

officials to the Estimates Committee. First of all, I would like to introduce

the Members of the House of Assembly here. My name is Oliver Langdon, I am

Chair; the Vice-Chair is Rick Woodford, the Member for Humber Valley; Alvin

Hewlett, the Member for Green Bay; Neil Windsor, the Member for Mount Pearl; Bob

Aylward, the Member for Kilbride; Danny Dumaresque, the Member for Eagle River

and Jim Walsh, the Member for Mount Scio - Bell Island. Now, I ask the minister

to introduce his officials for us.

MR. FUREY: Thank you, Mr. Chairman. It is nice

to be here at the Estimates Committee yet again. On my left is the Deputy

Minister of Development, Mr. Clyde Granter; behind me is the Assistant Deputy

Minister of Tourism, Mr. Sid Blundon; just at Sid's right is Mr. David Butler,

the Director of Financial Administration - that's what it is called, isn't it?

MR. BUTLER: Something like that.

MR. FUREY: Something like that. On my far right

is Mr. Sam Kean, who is with the Economic Recovery Commission; and on his left

is Patrick Kennedy, who is Vice-President at Enterprise Newfoundland and

Labrador and Chief Financial Officer.

We are happy to be here tonight, Mr. Chairman, to

answer any questions and we have all night.

MR. CHAIRMAN: Okay, thank you, Mr. Minister.

Before we ask you to lead off with your opening

remarks or whatever, just to remind your officials, if and when they do speak to

identify themselves for the record. Thank you. Mr. Minister.

MR. FUREY: Mr. Chairman, I don't have any

opening remarks; I will just confine it to questions. I had some opening remarks

last year and I went on a bit too long, so I decided this year that most people

have had an opportunity to look at the Department of Development's budget, it is

pretty straightforward stuff, and I am just prepared to answer questions -

unless you want me to make a speech, I would be happy to make a speech if you

like.

MR. CHAIRMAN: Do you want to lead off, Mr.

Hewlett, or whomever? Okay, Mr. Windsor.

MR. WINDSOR: Mr. Chairman, I will just quickly

go through a few things I had highlighted here in the Estimates. The first one

that jumps at me is under the Minister's Salary - we have to try to get off the

Minister's Salary tonight, if we can - Transportation and Communications,

$115,000, budgeted $75,000 last year and gone to $90,000 this year. Is the

minister trying to catch up to his predecessor?

MR. FUREY: No. I think, Mr. Windsor, it is

budgeted $115,000 this year, isn't it?

MR. WINDSOR: $75,000 last year, $115,000 this

year.

MR. FUREY: Let me tell you how that occurred.

In the 1990 Estimates, if you go back that far, you will see that I had $100,000

budgeted for Transportation and Communications. I actually spent $75,000 in that

full year. When I went back for the $100,000 again - I guess I was new on the

block - they gave me $75,000. I spent $90,000 which was still $10,000 short of

what I had expected to spend. In that intervening time, when Enterprise

Newfoundland came on board, there were a lot of demands from that corporation on

my time to travel around the Province and to do certain functions particularly

as it relates to rural development most especially, and I didn't have a budget

at Enterprise and had to draw from the minister's budget here. That is why you

see an overrun. But you asked, am I trying to catch up to my predecessors, would

you like to hear about them?

MR. WINDSOR: I know well.

MR. FUREY: I just happen to have them here.

MR. R. AYLWARD: We did it sure, we don't need

to hear.

MR. FUREY: Okay, but that is how that happened,

Mr. Windsor.

MR. WINDSOR: Technology Transfer Opportunities

- Offshore Fund, 2.1.04 - $3.3 million for this year. Can you tell us which

project that would be?

MR. FUREY: Used as a (inaudible) of the

Offshore Fund.

MR. WINDSOR: And is it still going ahead?

MR. FUREY: We are going through a different

book from the one you are going through, so forgive us if we are a bit slow.

MR. WINDSOR: I am going through the Budget.

MR. FUREY: Do you mind if the deputy explains?

Because it is all the same and I will be repeating what he says.

MR. WINDSOR: No, no.

MR. FUREY: Go ahead.

MR. GRANTER: That relates, Mr. Windsor, to a

program funded under the Offshore Development Fund whereby we support

Newfoundland companies to acquire training, technology and quality assurance

programming and so on, related to offshore activities, primarily.

MR. WINDSOR: Yes, I am aware of that. My

question really was, and I'm afraid you didn't catch it, Do we still expect to

spend that in view of the present slowdown in Hibernia?

MR. GRANTER: A lot of that is money that was

committed in this current year and will be flowed as this year proceeds. We

still anticipate spending, this year, as well.

MR. WINDSOR: Of course.

MR. FUREY: And, in fact, if I could just add to

that.

MR. WINDSOR: Excuse me a second. Jack, can you

get these things turned on? It is not on?

MR. FUREY: Notwithstanding the commitments that

were made that are carried over, there are a number of requests under that

program that are currently being looked at by government; one of them is a

pretty significant training program for Marystown, which was in line with the

Kvaerner sale. Now, you know what happened with that, Mr. Windsor, so that is

kind of up in the air now and it is a question of whether the government will

proceed on its own to send people to Norway to this company for further

training. But, yes, portions of that are committed and it will be spent as far

as we can tell; I mean, there are enough requests for it, for sure.

MR. WINDSOR: Okay, tying that in with Marystown

Shipyard: I see Grants and Subsidies here under Capital, 2.1.06 - $11.243

million for Marystown Shipyard; that is under the Offshore Fund again and I

assume that is the completion of Cow Head, this year. Subsequent to that, under

Current Account, Subsidy of $1.3 million or $1, 350,000; that is the estimated

subsidy this year on the debt, and obviously, Marystown are not going to be able

to carry it themselves.

MR: GRANTER: That is interest (inaudible).

MR. FUREY: The interest, yes. It is hard for us

to follow because we are going from different books. I am sorry. Yes, that is

exactly as you just said, it is the estimates to fund the interest costs

relating to the shipyard's year-ending, March 31st, 1993, this fiscal year, and

it is also a payout of a portion of the debt in line with the sale. You will

recall there was something like $31 million or $32 million on the books. We paid

out a portion of that last year, we were getting ready to pay out the balance

this year, to pass the company, lock, stock and barrel to Kvaerner with a zero

balance sheet, but that debt still sits there, the balance of what we didn't pay

in the payout.

MR. WINDSOR: I don't think that would be in

here though, would it, it would be under NIDC, I would think, Clyde?

MR. GRANTER: No.

MR. WINDSOR: It is not? It is a special grant?

MR. GRANTER: No. The Marystown debt is held by

Marystown, and the $1.350, 000, is the anticipated interest charges for this

coming year, but it is essentially a government-guaranteed debt through the

Department of Finance.

MR. FUREY: The balance that (inaudible), some

$14.5 - $15 million?

MR. GRANTER: Something like that, yes.

MR. WINDSOR: I want to get into the Labrador

Stores, an issue that we will be looking at in Public Accounts - that we have

looked at and will be looking at again. I just note that there is a cost there

of about $5 million to operate those stores. Maybe the minister would like to

take this opportunity just to deal with that. We realize they are not commercial

stores. Is the government now considering disposing of those stores? If so, does

the government anticipate an ongoing subsidy to find someone to own and operate

those stores on behalf of government and, are there other ways and means of

reducing this cost?

MR. FUREY: That is a very good question, Mr.

Windsor. The Labrador stores total budget was down this year, I think, by about

$400,000 or $500,000 in savings.

MR. GRANTER: Six hundred thousand.

MR. FUREY: Six hundred thousand. You know that

we put together a divestiture team and a study was done, a fairly comprehensive

study, that was released to the public of Labrador, particularly, some six or

eight months ago. It was done by Deloitte & Touche, and in it they set out

certain objectives and possibilities, one of those is the co-operative model,

one is to go fully private sector, another is to roll them into a Crown

corporation and another is the status quo. I think there are one or two others.

The model that is being looked at is a kind of

community-owned co-operative system, whereby the communities would have input

and, in order to do that, they have to do considerable travel and consulting

with the local groups, with the LIA, for example, the Labrador Inuit

Association, with the co-operative movement of Newfoundland to see whether or

not that model can fit in Labrador. It is not our intention to abandon the

stores and it is certainly not our intention to sell them willy-nilly to the

first bidder and hope that everything goes well.

As you know, from being Minister of Development, it

is a very unique part of the Province and it is a tough part of the Province to

service and very difficult to get foodstuffs into that region, particularly

during the winter season, but we have taken the recommendations from this report

and implemented the ones that can be implemented immediately, for example,

changing the times when fresh fruits, vegetables, milk and those kinds of

foodstuffs can be brought into those stores. So we have made considerable

strides there but I would think it will be another twelve to fourteen months

before we can reach a point where we can say: Okay, this is the best model, this

is what our consultations have shown, now, let us incrementally and slowly

divest ourselves of the stores.

It is our goal to do that because we think it

should be in the private sector in some form or other; governments are not good

shopkeepers. You will recall, for example, we cannot even take advantage of good

sales and stuff because our hands are tied and we are bound by the Public Tender

Act, so by the time we get through the red tape and the paper work it is almost

impossible to avail of those kinds of bargains to get them in there. That is

just one little problem.

MR. WINDSOR: Well, there are other problems

with it, too, and we will get into them, this is not the time, but you mentioned

shipping fruits and vegetables in, in winter. You fly those in and you don't

have a lot of choice.

MR. FUREY: That's right.

MR. WINDSOR: But we have been looking at some

of the invoices and only a portion of what is flown in is fruit and vegetables,

and we need to have a look at some of the other things that are being flown in.

But that is for another time, I won't pursue it now. The minister might want to

have a look at it. Some stuff that is flown from one store to the other, and the

accounting of that, is extremely weak from what we have seen so far.

MR. FUREY: It is a very difficult problem and

we are doing our darnedest to try to clean it up and to bring some organization

to bear on it. We are making some strides slowly but surely.

MR. WINDSOR: You still can't tell us when you

show us an invoice for flying in, what was flown in, or that it actually got

there. Anyway, as I said, PAC will deal with that.

MR. FUREY: Well, you will see the invoices at

your Committee.

MR. WINDSOR: We have them?

MR. FUREY: Yes.

MR. WINDSOR: Thank you.

I wanted to point out here, you are looking at $4.8

million and this is not an industrial development thing, obviously, it is a

social thing to keep those stores operating. In the two subheads immediately

before that, Business Support and Technology Development Services, these are two

programs that the minister has to help business. The total for those is less

than a million dollars - the total program for Business Support and Technology

Development is less than a million dollars, yet we are putting $5 million into

keeping five stores going in Coastal Labrador, just to try to put it in

perspective here. That is not to say we could do away with those stores without

replacing them with another mechanism, but those two programs are woefully

inadequate, as are many programs, unfortunately, in this particular department.

I wanted to ask you about the Newfoundland and

Labrador Science Council. Funding has been reduced and I assume the answer you

are going to give me is a straightforward budgetary decision.

MR. FUREY: Yes, that is the answer I would give

you and it would be dishonest for me to say anything other than that. I mean, we

had $300,000 and it was dropped to $250,000, was it?

AN HON. MEMBER: Two hundred and seventy-four

thousand dollars.

MR. WINDSOR: Two hundred and forty-three

thousand dollars is the present amount from $300,000 - $274,000 actually spent

last year. So you lost $25,000, $30,000.

MR. FUREY: Yes, against what they actually

spent, that's right. But again, the decision is a tough one, because you have to

weigh what the value is. I happen to think it is a very valuable thing. They

have done some interesting projects in the schools, particularly, and they are

starting to bring a whole new business sense to science and the possibilities in

the business world. But then, federally, we see the axe fall on the Science

Council of Canada in the last Budget, so we thought we should hang in there for

another little while and see what happens.

MR. WINDSOR: Immediately after that we see

Instrumar - Research and Development - Offshore Fund, $900,000, $225,000 of

which is the net cost to the Province. There is $242,000 for all the Science

Council and $225,000 for Instrumar. What would that project be, that special

block of funds?

MR. FUREY: I think that is the flow meter,

phase two. Did you do phase one when you were there? That is phase two, and it

is from the Offshore Development Fund project.

MR. WINDSOR: (Inaudible).

MR. FUREY: This one is cost-shared with the

Alberta Research Council. I don't know if you are aware of that.

MR. WINDSOR: I was just again comparing and

trying to put in perspective. We're putting $225,000 worth of provincial money

into developing a flow meter and $243,000 into all other science research

projects.

MR. FUREY: Yes, but in fairness, the Science

Council, as you know, is made up of a group of volunteers, too. These people,

from various walks of life, give a lot of time, energy and commitment. Teachers,

nurses, lawyers, businesspeople - people who are concerned about science and

technology, and they are a pretty good group of people. They bring to bear on it

a lot of volunteer energy, time and commitment.

Now, in that particular case, where we put that

money in for the flow meter, all the people around us and the best advice we can

get is that this is a good project and that, if it did take off, it would mean

jobs for Newfoundlanders producing this in Newfoundland. That is what they tell

me. So we have a decision. We're in there for phase one; should we carry it on?

The answer was yes. The Alberta Research Council agreed, the federal government

agreed, and the Province - we had to come to the party, too.

MR. WINDSOR: Crown Agencies - Recoveries,

$750,000 this year. What are these for?

MR. FUREY: That's the dividend from

Newfoundland Hardwoods.

MR. WINDSOR: C-Core Centrifuge Facility.

MR. FUREY: Which, by the way, Mr. Windsor, you

would be interested in knowing, we're looking at, as well, in terms of

divesting, if at all possible.

MR. WINDSOR: That will be divesting what you

have left.

MR. FUREY: Oh, I know.

MR. WINDSOR: Most of that burnt down,

unfortunately.

MR. FUREY: That's right. But you know the

problem out there, it's not just asphalt, it's the creosote timber side of the

operation too, which - the dividends may be higher, is what I'm saying to you,

if it were structured in a different way.

MR. WINDSOR: A word of caution to the minister.

If you divest yourself of the asphalt, then you'll have private enterprise with

a monopoly of asphalt supply in this Province.

MR. FUREY: It is a big question and we're

looking at it.

MR. WINDSOR: It may be wise for government to

keep it, for that reason.

MR. FUREY: Sure.

MR. WINDSOR: I think that's the more important

side. C-Core - Mr. Chairman, I'm sort of monopolizing. I can go on for another

while. I'm okay for another few minutes?

MR. CHAIRMAN: Two or three.

MR. WALSH: (Inaudible) once, anyway.

MR. WINDSOR: Thank you. There won't be much

left when I'm finished.

MR. WALSH: What I meant was, if not you, it

would be one of us, so carry on. I'd like to see the two ministers (inaudible).

MR. WINDSOR: I am a non-member of the

Committee, that's been (inaudible).

MR. FUREY: Wait till he hears my questions.

MR. WALSH: What I like is halfway through the

night when you guys start praising each other, so I am just going to -

MR. WINDSOR: C-Core Centrifuge Facility. I

quite confess that I hadn't heard much about that. Can we, just as a matter of

information - it's under the Offshore Fund, $3 million. What exactly is it and

what do we propose to accomplish by this?

MR. FUREY: That's a good question. It is for

the construction of the $3.5 million building to contain the C-Core Centrifuge

Facility. The total project cost is $6.2 million for the building and equipment,

to be shared between the Offshore Development Fund and the federal Technology

Outreach program. Three million dollars is expected to flow in this year, with

the remaining $500,000 in 1993-1994. Now, if you're asking me technically what a

centrifuge facility is and how it is going to be wonderful for the Province, I

will have to defer to the deputy, to be honest.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Now, you go ahead and tell him all

about that.

AN HON. MEMBER: Mr. Greening (inaudible).

SOME HON. MEMBERS: Hear, hear!

MR. GRANTER: I'm not sure that Mr. Greening

could answer this one, actually.

A centrifuge, as I understand it, is a piece of

equipment that enables engineers and scientists to simulate, in a very short

period of time, what various forces and so on can do to structures, and

therefore, it is a very useful device in providing a consulting service to the

oil industry, to the civil engineering industry and so on. C-core put forward a

proposal to the federal government under their technology outreach program and

the federal government accepted that proposal, approved it, is providing funding

for the equipment, and the Province, through the Offshore Development Fund, is

providing the funding for the building.

MR. WINDSOR: I'm not a lot wiser, but it sounds

good!

Enterprise Development, Operations - $32 million: I

assume the bulk of that flows through Enterprise Newfoundland. Is that where

funding is for Enterprise Newfoundland, or part of it? Newfoundland Stock

Savings Plan - I see no funding. Obviously, it is a decision of government to

eliminate that program, which I think is a mistake. Would the minister like to

expand as to why government chose to eliminate the Stock Savings Plan program?

MR. FUREY: I think I gave a pretty good

explanation last year. I don't have a similar explanation this year except to

say that it was debated. You had to look at all the programs to see what the

merits were and that one fell through.

MR. WINDSOR: The big merit of that one was

keeping Newfoundland investment in Newfoundland. I think we estimated $400

million a year flowing out of Newfoundland being invested in pension plans,

insurance companies, investment companies, and all the rest of it. The

opportunity here was to keep some money in Newfoundland to allow Newfoundlanders

to invest. I think it is a great mistake, but there it is. I am a little biased,

since I introduced the program six or seven years ago.

Economic Recovery Commission: Perhaps you or your

vice-president could tell us a little bit about the success of Enterprise

Newfoundland? The Economic Recovery Commission ties into it, I suppose. When can

we expect this great economic recovery plan that we have heard about for the

last three-and-a-half years?

MR. FUREY: Are you talking about the strategic

economic plan? I think the Premier announced just recently in Corner Brook that

it should be made public in the next month or so. I have seen it myself and I

think some of the stuff in there is very impressive. You know that consultations

were held with the public to see how they felt about various sectors of the

economy, so there is some interesting and innovative stuff. Some stuff is pretty

bold, I think. I am not sure it will all work. The whole Economic Recovery

Commission, when it was set up, had a mandate for some six to ten years, as I

recall. Their budgetary requirement, I think, in the first year, was $3 million

and they spent less than $1 million.

MR. KEAN: It was $1.62 million.

MR. FUREY: Yes, and in the second year it was

$2.5 and you spent $2.1. Anyway, my point is that each year it has never come up

to the full budget. I can tell you that they are just about ready to release

what they believe are eleven or twelve very good studies on opportunities for

growth, manufacturing, information technologies, environmental technologies - a

whole range of them. And these, as I understand it, Sam, set out in study form

what you have discovered in our economy are the voids that could be filled and

an action plan to go about filling them. Is that correct?

MR. KEAN: Yes, that is correct. Actually, it

identifies the strengths and weaknesses associated with the various eleven

sector strategies in the hope that we can identify for government some very

specific and tangible recommendations to be able to stimulate those particular

sectors of the industry.

MR. FUREY: With respect to Enterprise

Newfoundland, we are continuing along. They asked for $46 million this year in

capital. We have held the line again this year to $24 million. The Budget

reflects $14 million but there will be a pre-commitment, once that is used up,

of $10 million. I brought along tonight for Mr. Aylward - and Mr. Windsor, you

will be interested in this - the 1991 calendar year of all companies that have

been helped, how they have been helped, how much they have been helped, and what

the consequences of that help have been.

I had quite a debate with people in the corporation

on whether it is the right thing to do to release all these 400 companies for

the public. I am not so concerned about members of the House of Assembly, but

sometimes the media can take a company and really disabuse it of its rightful

place by saying x, y and z which may appear to be accurate in perception but, in

reality, may have logical and good reasons that a thirty second clip can't quite

explore fully. So I have brought along these companies and would be most happy

to share them with you tonight.

Mr. Aylward is running away just as I get ready to

table them - he had asked me in the House. May I ask the Clerk to bring these

across to you, please?

MR. WINDSOR: The other side of that argument,

though, is if these companies have been assisted by government, competitors have

a right to know.

MR. FUREY: Absolutely, and the reason I am

tabling it is because I think we owe it to the people to show it. My concern is

not with the politicians, people who regularly engage in granting loans, but in

terms of how the media can play that sometimes.

I put an attachment there, Mr. Windsor, for you,

because there is a loan there on page one, If you would just look at it for a

minute, the second last one, the Economic Recovery Commission. If you look at

page one, page two is the mirror of each page. So you will see on page two, the

Economic Recovery Commission - $226,612. What that was - during transition, the

ERC made certain loans to companies, which I have attached for you on a separate

handout. That is just a payback, isn't it, Sam, to ENL?

MR. KEAN: Yes.

MR. FUREY: I put an explanatory note there

because I didn't want you to think that Enterprise Newfoundland was loaning

money to the Economic Recovery Commission. That was just a transitory thing and

it is attached for your review. Alvin, would you like a copy of this?

MR. HEWLETT: (Inaudible).

MR. FUREY: I have one other that I had promised

to Mr. Aylward, but I suppose you fellows can have it. Here you go, Elizabeth.

Maybe you could give it to them.

That accounts, basically, Mr. Windsor, for the full

calendar year of 1991 and it shows you the 400 companies, where they are, which

districts they are in, how much money we spent. It doesn't actually give you

what it leveraged out from the private banks or ACOA because I didn't feel that

we really have a right to say that, you know. All we have a right to say is

company X in St. Barbe received a $20,000 loan. It was a term loan and was three

points below prime over five years or whatever. But that gives you a full and

comprehensive list of one years operations for Enterprise and how it performed.

Just to come back to Enterprise, the only increase

in spending that I can see is when we first set up the Eastern office - and we

had a temporary vice-president, Gail Percy, who did a magnificent job for us -

we didn't really staff up that office properly. So there are four or five new

positions which will be advertised publicly, for loans officers and that kind of

thing, to help out there. That is the only new expenditure on the operational

side. On the capital side it will be $24 million again as we projected last

year, and we are holding the line this year although they requested $46 million.

Forty-six million, Pat?

MR. KENNEDY: Yes.

MR. FUREY: I can give you the details, Mr.

Windsor, if you would like the operational breakdown.

MR. WINDSOR: There is almost too much

information there to start to digest right now. We will have a look at those and

we will have other opportunities to question the details of some of them.

MR. FUREY: With respect to the Recovery

Commission, you raised them, as well. Their budget this year would be $2.2

million. The government's original intention in 1989 was to give them $3 million

a year for six to ten years, or something like that. They came in well under in

1989-90, again in 1990-91 well under, 1991-92 I think they were $2.4 million,

this year they are $2.2 million.

MR. WINDSOR: (Inaudible) ask you more about

that. I just want to move on into tourism. Marketing agreements, $1.5 million

this year. This is the result of the new Federal-Provincial Agreement, most of

that is federal -

MR. FUREY: Yes. That is the Atlantic Agreement

I think you are looking at, $1.5 million?

MR. WINDSOR: That is the new Federal-Provincial

Agreement.

MR. FUREY: I see. I am just trying to figure

out where you are now, tourism - marketing.

MR. WINDSOR: 3.1.02.

MR. FUREY: Yes, that is the Tourism Agreement,

I am sorry, that is the $20 million agreement, Mr. Windsor.

MR. WINDSOR: May we just go back to economic

planning, where we have -

MR. FUREY: Go back where?

MR. WINDSOR: Economic Planning Recovery

Commission and Enterprise Newfoundland. We have $2.2 million for the Economic

Recovery Commission and in Executive Council we have $3.1 million for the

Economic Strategic Planning Committee, and on page twenty-four, we have Advisory

Council on the Economy, $411,000, so that is $6 million for economic plan. Would

you like to tell us what each one is supposed to be?

MR. FUREY: The three systems were very simple.

The Economic Planning Group is a group of senior deputy ministers. I think

Energy is involved, Forestry, my own department, Dr. House, the Premier's Chief

of Staff, there is a number of people involved in that and they had to do

considerable research - you are saying the $3 million expenditure this year -

MR. WINDSOR: $3.1 is in the Budget for economic

strategic planning.

MR. FUREY: For this year?

MR. WINDSOR: Yes.

MR. FUREY: When the action plan comes out, some

of the initiatives are going to have a price tag attached to them. That is

exactly what that is for and I cannot get into the detail until the document is

released, but, you know, there will be something there perhaps for tourism that

requires an expenditure of $100,000 this year; something for forestry that

requires an expenditure immediately, but I cannot get into the details because

you know, it should be released in the House first and hopefully that will be

done shortly.

There used to be, as you know, The Economic Council

of Newfoundland and The Economic Advisory Council to the Economic Recovery

Commission; we folded those together. Paul Bugden, you will know as a

researcher, chopped that down and reduced having two boards, now there is one

board led by Harold Lundrigan and they advise the Government generally on the

state of the economy and the Economic Recovery Commission on what kinds of

directions they should be taking. That is their budget, so the first one was for

initiatives coming out of this action plan, the second one is ACE and the

Economic Recovery Commission itself of course, it's mandate is to stir up small

business and medium sized businesses and to try to induce and attract new

investment into the Province. I can give you a breakdown of how their budget

looks for this year.

MR. WINDSOR: So the Economic Strategic Planning

Committee money is primarily project oriented?

MR. FUREY: Yes, and their work is pretty well

finished, I guess. You sit on that Clyde, so it is pretty well finished, the

document is now being printed and we hope to table it very soon.

MR. WINDSOR: So the Committee is primarily

bureaucrats, then?

MR. FUREY: Yes.

MR. WINDSOR: Mr. Chairman, I am going to pass

now, I have monopolized the questioning long enough-

MR. FUREY: Did I answer your questions on the

tourism marketing? There were two agreements, Mr. Windsor, one is one we are

involved with Atlantic Canada called the Coast of Difference and that is a $10

million agreement over four years, cost-shared, seventy-thirty and our pro rata

share then breaks out from the 30 per cent amongst the Atlantic Provinces. In

fact we have a bus cruising through the New England States in New York now,

Coast of Difference Bus and they are meeting magazine writers and that kind of

thing.

MR. WINDSOR: Where did I hear that before?

MR. FUREY: It is called Road Kill 92. Anyway,

that is one thing and then the tourism historic resources agreement, money is

going to start flowing this year for specified projects like the Bird Sanctuary

at Cape St. Mary's, Old St. John's, a whole number of projects; the Boyd's Cove,

Beothic

Interpretation Centre; nothing for the great district of St. Barbe but

money for everywhere else.

MR. WINDSOR: Most of your funding programs now

are through Enterprise Newfoundland?

MR. FUREY: Yes, agreements you mean?

MR. WINDSOR: With the exception of the tourism

agreement and a couple of technology agreements - you really do not have any

program funding.

MR. FUREY: We do. We have the Ocean Industries

Agreement, that $12 million, and there is another agreement I should mention to

you that is in the works now which we are hoping to have signed within a couple

of weeks. It is a major strategic investment agreement for small, medium, and

large businesses. That will be funded directly through the Department of

Development.

MR. WINDSOR: How does it fit in with Enterprise

Newfoundland?

MR. FUREY: Their particular one is the Rural

Development Agreement and that flows through Enterprise. The Innu and Innuit

Agreements through our vice-president in Labrador. The comprehensive Labrador

agreement sits in Labrador and is directly administered and flowed through Goose

Bay. The ACOA enterprise network, the electronic highway of patching people in

instantly to information, flows through Enterprise Newfoundland. The Strategic

Investment Agreement is a fairly significant agreement. I do not want to talk

too much about it in fairness to Mr. Crosbie because he ought to have the right

to talk about it as well, but it is more global, going into the global

marketplace to talk about Newfoundland and get businesses out there beating the

drum to come in, and joint ventures and arrangements and that sort of thing. I

think there has to be a pool of cash there for that. You mentioned that yourself

last year, the fact that that is important. Everybody thinks taking trips is

wonderful stuff, I tell you, but I have learned my lesson. It is not as much fun

as people think it is.

AN HON. MEMBER: (Inaudible)

MR. FUREY: Exactly.

Anyway that is the Strategic Investment Agreement.

Thank you.

MR. WOODFORD: The minister last year alluded to

the Hong Kong office he set up in the business immigration program. He said at

that time there were some good prospects for the Province. Has anything come out

of these meetings or anything come out of that particular program?

MR. FUREY: We came in under budget actually. We

had set aside $450,000. In the first year, I think, we spent just over $100,000

because it was a partial year and last year in the full year I think we came in

under $120,000. Was it $120,000 less, David?

MR. BUTLER: Yes.

MR. FUREY: We saved $120,000 because our

arrangements at the high commission were forecast too high essentially. This is

the second full year. We summoned Mr. Collings back from Hong Kong and asked him

to speak to the Board of Trade and the various Chambers of Commerce and Rotary

Groups across the Province. He had a successful two week tour and it was an

opportunity for an exchange. I think we have had fifty-five business people in

through the office from Newfoundland who made advance contacts using the office

to open doors to various businesses throughout Hong Kong. It is hard for me to

give a list to quantify. We have only been up and running really for a full

year, if you do not count the partial year which was just to get established,

get secretaries hired, phones in, paper and clips, and get known. This young

fellow has done a pretty good job and I give him full marks. At the end of this

year, or coming toward the end of this fiscal year, perhaps in January or

February of next year, we have to sit down and do an analysis to determine

whether it is worth continuing, because as you know in 1997, and preparations

are underway now, the whole island of Hong Kong reverts to the communist

government of China when the British - Sino Treaty expires in June 1997, but the

real action they tell us in terms of the money play is in Taiwan.

There are literally billions of dollars looking for

investment in North America. Lots of people have been burned in Taiwan by bad

deals in North America. The reputation of our little Province is very good but

it is tough. You are in there elbowing with Ontario, the fifty states, and these

other large companies that are seeking investment. We intend to send him in

there more this coming year because there seems to be a greater pool of capital

there looking for places to invest. We have had success with companies going in

there and we have also had companies coming this way as a direct result of his

representation. In fact I met with a company from China just a couple of weeks

ago. Our people in trade and investment are meeting with a group from Korea next

week dealing with underutilized species and the production of Surimi. Coming

with it are a significant number of jobs, if it can be pulled off, if everything

falls in place properly. But it is hard for me to give you a list and say: here

is the list of A,B,C,D - I can only tell you that the letters I get from our

local companies and the phone calls that I get and the business men with whom I

deal, are very thankful that they had this landing point, somebody to meet them,

somebody to take them around, somebody to show them who is who, who the

government people are, who the business people are, where the investment is and

I think that is important in that area, but we will analyze it over the next

number of months and see its worth.

MR. WOODFORD: The highway signage problem that

we have had over the years, last year we spent a bit of time on that particular

program and especially when we were talking about the new signage policy. That

was supposed to be instituted last spring and it seems as if it never got off

the ground. Is there any truth to that?

MR. FUREY: No. It got off the ground and we

laid out the policy fairly clearly and we consulted closely with the industry,

particularly Hospitality Newfoundland, but what happened was, like most plans,

they sometimes get led astray because certain people in certain sectors get

their noses out of joint, that: hey, you did not treat us right or I am not

treated fairly or there may be a legitimate case of somebody who just really

slips through the cracks, so what we did is, we asked the Member for Mount Scio

- Bell Island, a number of officials from Transportation and Municipal Affairs

and my own Department, to form themselves into a committee to travel to

strategic places in the Province to hear representations by people.

For example, Mr. Woodford, there is a fellow in

Corner Brook who has the Lakeland Motel; now when he built that the road went

right by his motel. It was not his fault that the road was altered.

MR. WOODFORD: In Pasadena.

MR. FUREY: Yes, Pasadena. It was not his fault

that the road was altered some years later, therefore depriving him of the

opportunity to advertise, so he had to put a sign out on the main road to tell

people where he was. So you know, do you let legitimate cases like that fall

through the cracks or do you deal with them?

Now the public hearings were held a number of

months ago and I understand they have just completed the report, it is sitting

on my ADM's desk, offering options such as Grandfather Clauses and that kind of

thing and we hope to revive it over the next number of weeks and make a

statement on it.

MR. WOODFORD: Do you foresee that particular

program, regardless of what it is, or that particular policy being instituted

this summer?

MR. FUREY: It may be difficult. I am not sure.

I cannot quite answer that question.

MR. BLUNDON: In terms of whether we are going

to institute something, what has happened, government put a moratorium on taking

down signs and until such time as a new policy is fully implemented, there is

relaxation of the highest order. As I understand it there are about 150 to 200

signs that have gone up illegally since government placed this moratorium and to

ensure some consistency on the highways there will have to be a decision made

that there will be a number of signs that will have to come down. That will come

about as we define what it is that is going to be legally permitted, but at this

point in time since last November, nothing has come down.

MR. WOODFORD: So you figure you will have that

policy in the summer?

MR. FUREY: No, I am not quite sure that we will

have it ready. We will wait until the Fall but I do have the document and the

committee's report, it is now being assessed by the department, then it will

come to my desk. I will take it to Cabinet, we will make decisions on it, and

you know how the bureaucracy works or how Cabinet works from your days in

Cabinet.

MR. HEWLETT: You are talking about a billboard

jungle for this summer, senseless.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Yes, I mentioned that. It well may

be, Mr. Hewlett, a billboard jungle for the summer but the billboard jungle will

bloody well come down in the Fall. We set this policy in place as we tried to do

and we received certain complaints from only certain sectors. The industry asked

us to go out and have hearings to make sure we could try to mitigate those

particular circumstances and we did; in fairness, we did. But you just cannot go

in with a sledgehammer and hit people over the head, no more than you can have

people going around with chain saws cutting signs down all over the place, I

mean that is too foolish to talk about.

What we're trying to do is bring a sense of

discipline to the industry and to the highways and that kind of thing, and

safety is pre-eminent of course in any policy. So we hope to have that before

the Cabinet in the next three weeks or so and then make a decision. But I

wouldn't see us implementing it this summer. I would see it probably coming this

fall. Mr. Walsh sat on the Committee. I don't know if you want him to speak to

it at all. He's the guy who got us in trouble in this.

MR. WOODFORD: Yes, well, you'd probably still

have trouble if it's brought in the summer, that's for sure. Because the way

times are now -

MR. FUREY: I can tell you that it won't be. So

not to worry.

MR. WOODFORD: As long as they don't go around

with power saws again, like you say, and start chopping $1,700 and $1,800 signs

again.

MR. FUREY: We won't, but I mean, you never know

what Hogan is going to do.

MR. WOODFORD: No, you didn't, but the

Department of Transportation did. To be honest with you, you can come up with

all the policies you like. Until we change some of the attitudes of the people

in some of those departments, we can bring in all the sign policies we like.

There will be active chain saws around the intersections anyway, because they'll

find a few to cut down and cause a problem, I can assure you. But at least it's

good to know that it's going to be left alone, at least this summer. It's bad

enough out there to try to drag people in to buy something, let alone watching

all night long seeing whether the Department of Transportation is going to come

and cut their signs down.

The Bonne Bay ferry: something dear to the

minister's heart. Now to be honest with you I've questioned Enterprise

Newfoundland with regards to this. I want to make you aware of that. I have

found - as far as I'm concerned - people to be upfront and honest with me on it.

The only thing I didn't get, and I heard after the fact, was that the Bonne Bay

Development Association has gone through the Rural Development Council.

MR. FUREY: It's in the process now.

MR. WOODFORD: In the process. But whether it's

for the funnelling of monies from Enterprise Newfoundland through the Rural

Development Council to fund it for the summer or - how is it?

MR. FUREY: Let me just explain. The Bonne Bay

ferry you know was taken off by the previous government in I think May of 1985,

just after the last election. They took a decision that the $100,000 subsidy per

year was no longer justified and I certainly wasn't in a position to quarrel

with the previous government on that, because I hadn't seen the books or the

numbers, and I still haven't. So the ferry basically was taken off.

We argued at the time that it was a tourism draw to

the park. We argued that Parks Canada had a moral responsibility to ensure that

in some small measure or some small way they participated in ensuring that a

ferry stay there. They have never, ever participated. They've helped in not one

single way. A private sector individual from Bonne Bay decided to purchase a

boat, and in the dying days of the last government the previous minister, Mr.

Doyle, made a commitment that the large boat would have sufficient docking space

on either side of the tickle so that the twenty-six passenger boat would be

looked after.

We as a new government sent it to Justice for a

legal opinion. It was their learned opinion that the government previously bound

the new government to building these docks. We spent some $800,000 of capital

dollars correcting these docks, measuring them properly, so that they could

receive the new ferry without any damage and making it as safe as possible.

The young fellow who bought the boat put some

private sector capital in there - I think $60,000 or maybe $70,000 -, had a stab

at it, ran into some trouble, borrowed some money from Enterprise Newfoundland.

I think he is in there to the tune of $168,000 with accrued interest. ACOA I

believe gave him some $50,000 or $60,000. The west coast business centre gave

him $40,000. He did, in all fairness to him, run into some problems when he was

transporting the vessel from its purchase point in Ontario to Newfoundland. He

ran into some troubles and he nearly lost the vessel in a storm. The people who

insured it went out of business. So he was stuck with the damages that he had to

pay for out of pocket with no opportunity to recoup it from the insurance

company that went bankrupt during or just after that storm. So it was a really

bad piece of luck for him.

He came down and he made a go of it, using the

Enterprise money, the ACOA money, and the various government monies, and the bit

of revenue that he could generate from transporting vehicles back and forth from

Norris Point and Woody Point. But it just wasn't paying for itself. So he

notified me by letter two months or so ago that he just couldn't make a go of

it. It was almost impossible for him. Because to service the debt and to try to

draw a living from it, the two just didn't match.

I found that pretty distressing but I wrote him

back and told him that I admired his guts and his will to try to do this and to

make it happen. I told him that the government could in no way involve itself in

a subsidy, because to do a subsidy for that pretty little place would mean that

we'd have to do it in Mr. Hewlett's district and every other district, and we'd

better be prepared to do it for everybody if we're prepared to do it for one. We

all have pretty parts of the island that we represent, and some of them have

little ferries that run between certain points.

So essentially what happened is the vessel went

into receivership because the loan was called by Enterprise Corporation on the

west coast. Mr. Tizzard called the loan to protect our position. We're first in

line with $168,000 in outstanding debt. So we're first in line. Behind us I

think is the West Venture Centre, or West Business Venture Centre. Enterprise

doesn't have the capital to run it so it's up on the blocks as we speak for

sale. We've restricted the area that it can be sold in because we'd really like

to keep it there if there is any hope at all to run this ferry between Norris

Point and Woody Point.

Essentially what happened is we've contacted the

development association, and they've asked us: do you mind if we put in for a

grant under the Rural Development Agreement to see if we can get operation

dollars as a development association to run the boat for the next year or two?

Perhaps then, at some given point in time, some private sector person can ease

their way into it. Perhaps Mr. Lang himself, back into taking over the boat,

relieved of that debt. So that's where it stands as we sit tonight.

It's a difficult one, because it's a very lovely

tourism attraction, one that I support 100 per cent, one that the government is

on record as supporting in terms of tourism. It's not an essential service.

We've done so by putting our money where our mouth is to the tune of $1.16

million. But I think there comes a time when you have to wonder whether you

should put any more money into something.

MR. WOODFORD: Would that be the figure it would

cost for the summer to run that, $100,000, or are they talking about along with

the few revenues as well to keep going?

MR. FUREY: That's right. There has to be some

upgrading and some minor repairs and that kind of thing. You have to bond it,

insure it. It's a very expensive operation.

MR. WOODFORD: They're only going to keep it

about two months, is it? Two and a half months?

MR. FUREY: If the development association gets

it they'd like to see it go for three months, depending upon capacity. If there

are enough tourists - don't forget, 110,000 people went through Gros Morne last

year with foreign license plates. That's a lot of bodies. If they can make a go

of it, surely it'd be great. That's where it stands, Mr. Woodford, and believe

you me, if there is any way of making it work I'd love to make it work. But I

can't in good conscience pour 100 per cent provincial dollars into it. We've put

a lot of money in there.

MR. WOODFORD: This would be federal-provincial

money now if they accessed it.

MR. FUREY: Under the Rural Development, the

Community Development fund as you know is a $2 million annual fund. That would

cost the Province $30,000 on a $100,000.

MR. WOODFORD: What would be eligible under that

Community Development fund?

MR. FUREY: Any development association's

project of any kind can apply. For example, we have development associations

applying now to build new buildings to house their offices and that kind of

thing. We have Credit Unions applying. Co-op movement, the Credit Union, and the

rural development movement are the only ones that can apply to that fund. Am I

correct on that, Sam?

MR. KEAN: And any other kind of community

economic development group which doesn't fit under the auspices of (Inaudible).

MR. FUREY: One of those, yes.

MR. KEAN: But there are a few, there's only a

few of them.

MR. FUREY: There are a few that fall between

the cracks. But I appreciate you asking that question. It's a question that's

near and dear to my heart. But there's just no magic money tree that -

MR. WOODFORD: No, no, I knew the background of

it. But the one I didn't know was the actual application - now I was told about

it but it was not guaranteed so I was -

MR. FUREY: It was made by the Bonne Bay

Development Association.

MR. WOODFORD: Yes through the Rural Development

Council and they are waiting now for an answer on that -

MR. FUREY: That is right, and I hope they are

successful but I do not know what the answer is. It is a big boat, it is a big

vessel to service; it is a small run as you know yourself, it is eight minutes

across, and it can handle thirty cars or more. It is a big vessel, you need a

lot of revenue to make this one happen.

MR. HEWLETT: Further to that point, having

availed of that particular service. I know the gentleman concerned who operated

it and having availed of it as a tourist myself, one wonders if not one of the

major problems, in light of the numbers of people going through Gros Morne being

an international attraction and so on, where does the marketing end of your

governmental services come into this? I would think that if people were steered,

so to speak, in the direction of such an attraction as they are, for instance

the boat tour into Western Brook Pond Gorge, that area; the volume of traffic

would increase significantly and I am just wondering where a development of that

sort, which as a transportation initiative is not viable, but how would it avail

of funding for promotion?

MR. FUREY: The thing was shut down for five

years and now you have to try to recover then all that lost time, especially in

the local environment, because people just don't go over there locally because

they think of it being shut down, and therefore the south end of Bonne Bay is a

dead end. Now the locals catch on pretty quick.

The problem is, it would take a lot of money to

market the thing properly. He had some very good ideas. It wasn't just going to

be a shuttle service. But it was also going to go out to the mouth of Bonne Bay,

at the head of Rocky Harbour there, have parties on the boat, and meals and

snacks and drinks and that kind of thing. Really, some fabulous ideas to

generate revenue. But it requires a considerable amount of revenue because it's

such a large boat to make it operate efficiently and profitability. It requires

a lot of people of course to work the vessel.

You know, we helped him - he himself is a very

aggressive young fellow and a good young fellow. He worked hard putting up signs

and getting leaflets out. He got into our travel guide magazine. We helped every

way we can. But we can't as a government just exclusively market one property or

one person. We have to do it for everybody. I think that if he managed to hang

in there and build his market share over four or five years, if he had the

revenue to do it, he'd have a very successful operation. I think he would.

MR. HEWLETT: It's a matter of starting on a

shoestring and running out of rope.

MR. FUREY: Yes, and the amount of time that he

has to operate. That's the problem.

MR. WOODFORD: It's the times, you know,

everything's down a bit.

MR. FUREY: That's true.

MR. HEWLETT: Just a technical question, Mr.

Chairman. In the salary estimates of the Department under the minister's office

there are two - apart from permanent employees - subheads: temporary and other

employees, and overtime and other earnings. I'm told from chatting with people

who sat on other estimates committees that one of these particular subheads

covers the ministerial vehicle allowance. I'm wondering which one, number one;

and number two, temporary employees in the minister's office, what sort of

category or what sort of activity - is this student employment? Most departments

in their ministerial budgets do not have the word "temporary". Overtime, yes.

But little or no I think, apart from a couple of other departments, Municipal

Affairs I think, and Social Services, have temporary listings in the minister's

office.

MR. FUREY: You'll notice too that mine is

probably the least expensive of all departments in terms of temporary. That

person was brought on I think two years ago to help - this is a huge Department,

Mr. Hewlett, and a very difficult one. We get requests from all over the place

all the time, and it's just impossible to keep up with them. In fact, if I

thought I could get away with it I'd have three or four more temporary people.

Because the pressures put on the office are really considerable.

You see, people use us as the court of last appeal

on all the Enterprise stuff; whenever they have complaints about the Economic

Recovery Commission; whenever they have complaints about me as minister, et

cetera. It all comes to us and it comes in a huge flood of mail. They say some

good stuff occasionally too. But I'm just talking about in terms of dealing with

the complaints.

I think we paid this little girl $21,000 or

something, $19,000? She started at $18,000 or $19,000 two years ago. She's at

$21,000 now and does a terrific job for us.

MR. HEWLETT: So essentially this is the -

MR. FUREY: I tell you, she was the former

secretary to Mr. Barrett's executive assistant.

MR. HEWLETT: Okay. Essentially the temporary

angle here covers the salary.

MR. FUREY: Is that right? That was her job,

wasn't it? Yes. She was the former secretary to Mr. Barrett when he was the

Minister of Development.

MR. HEWLETT: So it covers the salary of an

individual, per se.

MR. FUREY: Yes.

MR. HEWLETT: Ah, so the -

MR. FUREY: My vehicle is in Transportation and

Communications under my subhead there.

MR. HEWLETT: Transportation and Communications.

MR. FUREY: So you chop $10,000 out of that and

you have $105,000 for Transportation and Communications. I think that's where it

is. Is that where it is?

MR. HEWLETT: Well, in the salary details book

that they list overtime and other earnings. I'm told that's where other

ministers list their cars. In which case why twenty, does that include for

instance (inaudible).

MR. FUREY: That is right. You see the twenty

there, overtime and other earnings?

MR. HEWLETT: Yes.

MR. FUREY: The twenty, ten of that comes right

out for the car and then of course- no, it is not ten, is it ten -

AN HON. MEMBER: Eight.

MR. FUREY: - eight, eight comes out. Jeez, I

was just wondering if I had been ripped off that time. Eight comes out. $12,000

is there for overtime.

MR. HEWLETT: Very good. Mr. Chairman, my

colleague from Labrador was called away to another committee tonight as is often

the case and asked me to ask the minister, with regard to the rules of needing a

guide and what not, vis vis 600 metres from a waterway and the distinction

between using a guide and/or an outfitting service, which of course would entail

much more input into the local economy. I was wondering if you would make a

comment on that because he was of the opinion that quite possibly you could see

some celebrity or millionaire of some sort, from away, in the hands of a

part-time guide, end up drowning, giving the local industry a bad name; there

being no liability insurance, etcetera, etcetera, etcetera;

whereas -

MR. FUREY: Mr. Hewlett, you know why these

rules were changed, don't you?

MR. HEWLETT: No.

MR. FUREY: We were receiving tremendous

complaints on the Island portion and on the Labrador portion, from outfitters

and from local Newfoundlanders and Labradorians. In the case of Labrador,

Americans were coming in and becoming middlemen, taking their own fuel, their

own planes, their own camps, their own food, their own liquor, you name it, they

were bringing it in, they were simply purchasing licences as they arrived and

this was taking tremendous revenues from the outfitters particularly of Labrador

MR. HEWLETT: Yes, yes -

MR. FUREY: -so we changed that rule. On the

Island portion, what we were finding was, quite frankly the Nova Scotians were

the biggest offenders. I saw them myself three years ago, in behind Hawke's Bay

with canneries, canning trout, they were bringing their own gas, their own

tents, they were leaving nothing in the Newfoundland economy, so we decided to

put our foot down in Labrador and those middlemen outfitters and we have just

about wiped them out, and it has not hurt the business one bit. In fact the

government has received commendation from the outfitting industry on that move.

And on the Island portion, what we have done is, we have enhanced employment

opportunities for people to become guides, that is not to say that I have not

gotten some saucy letters from people who are used to coming in here and taking

as they see fit. Those days are over. We are policing the rivers, we are trying

to add opportunities to the economy and we are enhancing employment by creating

jobs for guides.

MR. HEWLETT: I think you took my question from

the wrong end round, Mr. Minister, because I was asking on behalf of a colleague

and I think his point of view was: are the rules as they are, sufficiently

strict insofar as promoting local outfitting companies versus a miner for

instance, doing part-time guiding and doing a slip-shod job and so on, so forth,

and putting minimal input into the local economy?

MR. FUREY: There is no question that we need to

upgrade our guiding skills, if that is what you mean, and we are working on that

in the Labrador College now with a new program that has been very successful and

there is no question, Mr. Hewlett, we should beef up those skills and

professionalize ourselves because it is a very sophisticated audience that we

are dealing with, make no bones about it. But I think we are on the right track

in both those areas. I am not quite following your question, so I do not mean to

sound coy but -

MR. HEWLETT: No, no. Well I am asking someone

else's question here so, (inaudible).

MR. FUREY: Did Garfield write that?

MR. HEWLETT: Another question I was asked to

ask, with regard to

Labrador West, that is the position of ENL and its

support or lack thereof right now for a graphite development in that particular

area.

MR. FUREY: The assistant deputy just pointed

out too, and I meant to say it when I chatted on the outfitters, in Labrador you

can only go there through an outfitter. So I'm sure he knows that. Sorry.

Graphite, you were saying?

MR. HEWLETT: Yes. I was asked to ask the status

of ENL support for a proposed graphite operation in Labrador West.

MR. FUREY: That's a specific question. I'd have

to take it under advisement. I don't have every single project before me, but I

can certainly check that out for you, or for him, and report to you through the

House. You have before you of course all the companies that are helped in

Labrador. They're set out there. What was it called again? I'll just

double-check.

MR. HEWLETT: Graphite is the material

concerned. I presume it's the development of -

MR. FUREY: Has it been to the board yet?

MR. DUMARESQUE: It has not even been applied

for very long. If it has it's certainly been only recently.

MR. FUREY: It hasn't come to the board yet, Mr.

Kennedy tells me.

MR. HEWLETT: I see. No, I was asked to ask the

status of where this development and/or proposed development stood.

MR. FUREY: Its Labrador West is it, Mr.

Hewlett?

MR. HEWLETT: Yes. Graphite mine, I do believe.

There is, as I understand it -

MR. FUREY: No, it hasn't come to the board yet.

MR. HEWLETT: Hasn't come to the board yet.

MR. FUREY: Should be there soon I guess, is it?

(Inaudible) considering it?

AN HON. MEMBER: (Inaudible).

MR. FUREY: Yes, and I'll report to the House.

MR. HEWLETT: One other question I should ask on

behalf of my colleague, a question that's been near and dear to his heart in

debate in this Assembly with regard to Labrador West in particular and

hydro-electric power, and that's the role of using hydro-electric power as an

economic development instrument. I was just wondering if you might want to make

a comment on that.

MR. FUREY: Of course a portion of that power

would be used, I think, to induce companies to come here and set up, much like

Quebec is doing now, although I notice that they're in a bit of trouble on that

in some of the states. Because they're saying that it's unfair and an improper

trade practise. However, that's their problem. You're asking would some of the

power - presumably you're asking from the Lower Churchill be used -

MR. HEWLETT: I believe there is also recall

power unused at the moment from the Upper Churchill. Are there any initiatives

under way to use that particular power? Because as I understand it, it goes back

to Quebec if it's left unused by us.

MR. FUREY: Not at this time, no.

MR. HEWLETT: That's it for right now, Mr.

Chairman, thank you.

MR. CHAIRMAN: Mr. Windsor.

MR. WINDSOR: Thank you, Mr. Chairman. I want to

go back over this information the minister provided of loans and grants from

Enterprise Newfoundland and Labrador. I was always under the impression - and I

realize rural development is slightly different, rural development program is

slightly different - but every other program we had, funding was never made

available to companies that were in competition with others. Such as retail

stores or something of that nature. Now as I go through this -

MR. FUREY: We try our best not to do that.

There are certain extenuating circumstances of established companies that for

one reason or another may require some help and working capital or whatever,

yes. But we don't try to establish new companies right across the street from

one that's already there and successful.

MR. WINDSOR: In rural areas is that different?

MR. FUREY: No, we try to be consistent. With

emphasis on "try".

MR. WINDSOR: As I go down through this list,

I'll just read off some. I have to read the names out, unfortunately.

MR. FUREY: Sure, yes, go ahead.

MR. WINDSOR: Beothuk Data Systems, debt

retirement and working capital. That's a computer company here in St. John's.

That's not rural development either.

MR. FUREY: Yes, that's true. This isn't

structured just for rural development.

MR. WINDSOR: The point I was making, I know

that in rural development we do take a more lenient view toward that sort of

thing. Coleray Maritime established freight forwarding operations.

MR. FUREY: I'm sorry, could you say that again?

MR. WINDSOR: Coleray Maritime Limited in Mount

Pearl. It is another trucking company. There are twenty of them in there now.

Duckworth Development Group Limited -

MR. FUREY: Coleray Maritime?

MR. WINDSOR: Yes.

MR. FUREY: They had a small enterprise loan of

$38,500.

MR. WINDSOR: Yes.

MR. FUREY: Just let me see what it is for, Mr.

Windsor. Hang on. To establish a freight forwarding operation. Now I could get

you the full reasons for it if you want them.

MR. WINDSOR: Well obviously that is in

competition with twenty other freight forwarding operations.

MR. FUREY: I don't have the reasons for each

company at hand tonight. I only brought the general approval list.

MR. WINDSOR: I am not here to point fingers at

any one of these companies. You may well have good answers and that is why I

hesitate to list the names. The Duckworth Development Group, working capital, I

mean who are Duckworth Development Group and what are they developing that the

province needs to put money into. Maybe it is worthwhile. I don't know.

MR. FUREY: Again I would have to dig out the

answers to all of those. In fact there is a document being prepared for me, I

think, Patrick, on every company. I am releasing this sort of prematurely

because Mr. Aylward asked for it in the House the other day and I didn't want to

delay it. They gave it to me this morning and I said I would release it tonight.

I don't have the background information, but they are preparing it for me.

MR. WINDSOR: Let me list a few more.

MR. FUREY: Sure, yes.

MR. WINDSOR: (Inaudible) fashions in Whitbourne

- expand ladies clothing operation.

MR. FUREY: What is it called?

MR. WINDSOR: (Inaudible) fashions in Whitbourne

- expand ladies clothing retail business. Generator exchange, which we are all

familiar with - working capital to maintain operation, they have since gone

bankrupt. Henry's One Hour Photo - establish a photofinishing operation. I mean

this is retail type competition stuff that I didn't think we ever funded. High

Tech Builders - expand masonry business, St. John's. Industrial Concepts -

conduct marketing study for the provincial Department of Forestry and

Agriculture. Kid's Closet Limited, Bay Roberts - established a children's

clothing store. Lazy Bank Productions - forming to produce a thirty minute

documentary. There may be some cultural or artistic benefit to that one, I don't

know. Media Marketing Associates, St. John's - retire bank debt. Is this the

kind of thing that we are supposed to be funding? These just leave me cold.

Pike's Riverside Garage - to reconstruct premises after a fire.

MR. FUREY: And they may leave you cold, but the

reality is that every single small or medium sized business, person or company

that wants to come to Enterprise will have a clear and open hearing on any

proposal that they wish to bring forward. Mr. Windsor, I should point out a lot

of these companies that come to us have already been successful across the

street at ACOA and they need extra help or bridge financing or short-term

capital.

MR. WINDSOR: Why would we fund a garage to be

replaced after a fire?

MR. FUREY: Which one are you looking at?

MR. WINDSOR: Pike's Riverside Garage Limited in

St. Catherine's - to reconstruct the premises after a fire.

MR. FUREY: Mr. Windsor, I don't know but I can

speculate that it may have been a very successful business. The guy didn't have

insurance and wanted to get his business back up and running. I don't know, but

I will find out for you.

MR. WINDSOR: (Inaudible) that sounds great, but

is that the purpose for these funds? I have always been under the impression

that we don't fund a guy to compete with a guy across the street. We don't get

into retail operations at all. It is always resource based, crafts, arts,

tourism.

MR. FUREY: I understand that. All I am saying

to you is that we make every effort not to put money where there is a competing

force or where there is no market capacity to expand. Every single business -

every single business has an opportunity to approach Enterprise Newfoundland,

every single business. It doesn't matter what it is. If it is scuba diving or

trying to get to Mars we will look at every single proposal.

MR. WINDSOR: I appreciate your looking at them,

but I am amazed at your approving them.

Establishing a chicken and rib franchise in Gander?

MR. FUREY: Yes, but don't be amazed because you

don't know the background of these, and I don't have them to respond.

MR. WINDSOR: I know, but I would like to find

out.

MR. FUREY: I will certainly do that.

MR. WINDSOR: Quite honestly I am amazed. A

chicken and rib franchise in Gander.

MR. FUREY: How many jobs is it creating?

MR. WINDSOR: I don't know, but how many jobs

has it eliminated down the street? An equal number?

MR. FUREY: I do not know if that's true.

MR. WINDSOR: That is the whole point of this

policy.

MR. WALSH: But is it bridge financing? If you

could name one there that I know there is bridge financing between ACOA funding

and trying to deal with the banks along the way. There is one you mentioned and

it was in my own district, I met the gentleman, he needed bridge financing

between -

MR. WINDSOR: It is a conventional loan of

$100,000 to establish a chicken and rib company.

MR. FUREY: I do not have the details on that

for you.

MR. WINDSOR: I realize that.

MR. FUREY: If you would like to give me a list

of those in which you are most interested, I would be most happy to provide

them.

MR. WINDSOR: Beauty Salon in St. Catherine's; a

retail store in Cavendish and modernize an asphalt plant. Now that one really

gets me.

MR. FUREY: Don't look at me stupefied. If you

think these are good, you should look through some of your friends at ACOA and

see what is being done.

MR. WINDSOR: Oh yes, but that does not make it

right.

MR. FUREY: And these may not be alright but I

can tell you a lot of what is here is very good.

MR. WINDSOR: How about money to add a lounge to

a motel? It says: to increase overall viability. But still, we just funded a

lounge.

MR. FUREY: Boy, am I glad I brought this list

for you to peruse.

MR. WINDSOR: So am I!

MR. FUREY: You'd have nothing to do.

MR. WINDSOR: I'm coming through them, alright?

AN HON. MEMBER: (Inaudible).

MR. FUREY: Much of it is. I don't have the

background documents. I wish I did.

MR. WINDSOR: Cosy Corner Lounge - to retire

debt and provide working capital. Adam's Transport, another transport company.

Weather Wicker Limited - funding to maintain operations. The Sound - establish

an audio and video and related supply store in Lewisporte.

MR. DUMARESQUE: Point of order, Mr. Chairman.

MR. WINDSOR: Hardly an area that you can say:

these are services that are not available anywhere else.

MR. DUMARESQUE: Just a point of order, Mr.

Chairman. As we're going through these I'm just noticing that obviously the

minister has indicated that he has brought the information here, that to the

best of his ability is giving you names and numbers and so forth, and he has

indicated that he certainly would follow up with descriptions. I'm not sure what

the point would be of just going through all of these companies, without the

proper assessment, I'm sure that they were all made with quite legitimate

background. So I just want to make that known if in fact we're going to keep on

going. Because I'm sure the minister can't be expected to detail every proposal

and substantiate every proposal.

MR. CHAIRMAN: Your point is well made, Mr.

Dumaresque. It has been duly noted by Mr. Windsor that there are many things in

there that need to have added explanation. The minister has agreed to provide

that to him. All the background information is being provided on every one of

the businesses. So therefore in that sense we can probably tidy this up.

MR. FUREY: Mr. Chairman, just if I can add to

that. Have you dismissed the point of order?

MR. CHAIRMAN: It's a point of clarification

more than anything, I suppose.

MR. FUREY: If I can just add to it. I suppose

Enterprise could have done what other operations do. For example, Federal

Business Development Bank, they don't make any of this public. ACOA doesn't make

any of this public.

AN HON. MEMBER: (Inaudible).

MR. FUREY: No, they don't. They don't give an

annual list of every company, how they were helped, the amounts, et cetera.

MR. WINDSOR: They issue a press release of

every grant -

MR. FUREY: They issue a press release.

MR. WINDSOR: - giving the details.

MR. FUREY: Wrong. They don't give an annual

review as I'm giving you, and spelling it out this way.

MR. WINDSOR: Be that as it may, I thank the

minister for giving us the information but that doesn't preclude him from having

to answer the questions.

MR. FUREY: No, the hon. Member for Mount Pearl

now is not being fair. Because he is being selective, and I'm surprised he's

being selective in his choice of language. I committed to any company or any

loan that you'd like background information on. I don't have it all here

tonight.

MR. WINDSOR: I realize that, I accept that.

MR. FUREY: I'd be glad to give it to you. For

example, if you would like to know why we put $200,000 into Sunnyland Juice in

Mount Pearl, I'll be glad to tell you.

MR. WINDSOR: No, I can see that, that's a

manufacturing operation. That fits in the policy. What I'm trying to get at here

is a policy.

MR. FUREY: Right.

MR. WINDSOR: I realize you can't answer

questions.

MR. FUREY: If you'd like to know why, in the

ten, twelve or fifteen companies listed here from Mount Pearl, why we put over

$1 million into those companies, I'd be glad to tell it to you.

MR. WINDSOR: There are some there that I would

like to have the answers for.

MR. FUREY: Okay. There are some there you

obviously disagree with that we shouldn't have done in Mount Pearl.

MR. WINDSOR: Perhaps so. I don't know. I don't

have the information either. Alright?

MR. FUREY: Ah hah. So let me get it for you.

MR. WINDSOR: But I am saying that I looked at

these and I have highlighted the ones that would lead me to be concerned. I'm

asking the minister, what is the policy? I appreciate that he's agreed that he

will give us some detailed information on each one of them.

MR. FUREY: Absolutely.

MR. WINDSOR: Okay?

MR. FUREY: Whichever one you'd like to put down

(Inaudible).

MR. WINDSOR: But I want to find the policy

here.

MR. DUMARESQUE: The policy is a simple policy.

MR. WINDSOR: Let the minister answer for

policy. What is the policy? Are we now providing funding for retail operations,

chicken-and-rib operations, video stores, beauty salons? Is that the policy?

MR. FUREY: Mr. Windsor, there was a company in

my own little district of St. Barbe, in Rocky Harbour, turned down for crafts.

They were turned down rightly because down the street on one end of town there

was a craft store; up the street on the other end of town there was a craft

store. Both were operating at maybe 40 per cent or 50 per cent capacity and both

were put there with private money. So, should I or Enterprise Newfoundland have

put money into yet another craft store which would have been under used and

would not have sold its goods? Obviously not; each one is taken on its own

merit.

Now I wish ACOA would abide by that, and I do not

mean to lash out at ACOA but I have seen some really strange things happen over

there that really bothered me. It bothers me when somebody in my district put

all of his life's family savings into a trailer park and two miles up the road,

ACOA gives somebody $250,000 to start a new one -

MR. WINDSOR: I agree.

MR. FUREY: - and he is working - So all I am

saying is, we have instructed Enterprise Newfoundland within all of the programs

they have, whether it is equity, term loans, interim financing, all of that, to

look at it, deal with each one on its own merit, have the board independent of

politicians deal with them, and to bear in mind that we are not out there to

create jobs only to dismiss jobs further down the street, as you rightly point

out and when you look at these cold for the first time tonight, some of them

look unusual and they stupefy you. I only ask you to bear in mind that we are

not hiding anything, we are being very public with ever dollar that we have

spent, we have asked every company to sign a waiver and they all know that they

could come under scrutiny, you cannot be any more up front and honest than that,

and any background notes or materials you require on any company, we will

provide them.

MR. WINDSOR: (Inaudible). They may well be

numerous and there are numerous applications that were refused and rightly

refused because it is simply going to put somebody else out of business; the

point I am simply making is that a large number of these appear to be in the

category that they should have been refused and you know, when we get the

information we will see whether or not they are. Some of them are established

operations that ran into financial problems and if you are providing some

interim financing, some bridge financing, doing some re-financing to maintain

existing jobs, even though they are in competition with others, and you know,

the one I look at is Coleray Maritime, that is not to establish it as to

maintain it and that may well be justified; perhaps the board can justify that

to us but there are some here, chicken and rib operations, new, in the middle of

Gander? If that was on the Coast of Labrador, where there is not a place to eat

for 400 miles I could see some justification that you are providing a tourist

service and for the travelling public generally, same as a Bed and Breakfast, I

do not have a problem with that; I do not have a problem with hotels, I always

understood we had problems funding lounges. You know, this one says, a lounge to

try to improve the overall viability of a motel, and one can probably see that

there is a rationale there, you either give them the funding for the lounge or

the whole operation goes; you know the lounge probably should have been built in

the first place.

MR. FUREY: Mr. Windsor, I do not mean to sound

defensive on the whole thing either and -

MR. WINDSOR: The asphalt plants leave me cold.

MR. FUREY: - but please accept that I do not

think these are all perfect, either -

MR. WINDSOR: I am sure they are not.

MR. FUREY: - but I make them public

(inaudible).

MR. WINDSOR: To be honest with you, if I had

seen three or four like that I might not have even brought it up, but there are

so many here that seem to be very obviously questionable that I had to bring it

up and I would like to see some of the answers.

MR. FUREY: (Inaudible) and I commit to

providing the for you.

MR. WINDSOR: Thank you, Mr. Chairman.

MR. CHAIRMAN: (Inaudible) ten minute break for

coffee, then we will come back, that is what normally we have been doing after

an hour and a half.

Recess

MR. CHAIRMAN: Order, please!

MR. FUREY: Mr. Chairman, just for the record, Mr.

Hewlett was kind enough to give his copy of those companies to the media, so

maybe we can organize the clerk to make copies for the House -

MR. CHAIRMAN: It has already been done.

Mr. Windsor has indicated, I believe that he has

finished his line of questioning, okay, so we will ask, Mr. Hewlett, if he will

MR. HEWLETT: Yes. A general line of questioning

with regard to the handout that the minister just gave us, Mr. Chairman.

The minister referred to, on a number of occasions

such and such a thing was up before the board, what is 'the board'?

MR. FUREY: I am sorry?

MR. HEWLETT: 'The board'?

MR. FUREY: Oh, there are two boards actually.

There is a Transaction Board made up of -

AN HON. MEMBER: (Inaudible) three boards.

MR. FUREY: There are three boards; well I will let

the Vice-President just explain it to you.

MR. KENNEDY: The board authority for the

corporation is broken into three tiers. Any application for funding $100,000 or

less, is approved by the authority of the regional vice-president, and there is

a regional authorization committee which is an internal committee and the

chairperson of that is usually the vice-president and the directors of the

regions. They deal with applications of $100,000 or less.

For applications between $100,000 and $500,000, there

is a Corporate Transactions Committee in the corporate office of St. John's, and

the chairperson of that committee is the President and CEO, Mr. Jim Janes, and

then there are the voting members of the board, would be two members from the

Economic Recovery Commission and also our Vice-President of Enterprise Services,

Mr. Bruce Saunders. Any funding application greater than half a million dollars

but less than $1 million, is dealt with by the full board of directors and that

consists of the Chairperson, Dr. Doug House and the voting members would be the

President and CEO of Enterprise; the four Economic Recovery Commissioners; the

Deputy Minister of Development and the Deputy Minister of Finance. That is the

board structure.

MR. FUREY: Anything over $1 million goes directly

into Cabinet for a full Cabinet review.

MR. HEWLETT: Okay. But I guess it would be fair to

say, Mr. Minister, that the people making the decisions at the regional level,

at the $100,000 level or the $500,000 level, are... how should I phrase this?

People who could be construed to be political appointees of the administration,

versus career civil servants. Is that a fair statement?

MR. FUREY: It's a fair statement that it could be

perceived that way. But we've taken the position, and we've abided by it, to

have hands off. That's not to say that members can't make representations to

ministers, or indeed directly to the corporation, as many members have done,

including yourself. But no, there seems to be a fair sense of balance there and

we've appointed somebody who previous governments have appointed.

For example, the vice-presidents who are in the

corporation, Mr. Saunders and Mr. Kennedy, worked for NLDC and the previous

government. They have quite a say in operations over there. Mr. Janes is

independent of any political affiliation as far as I can tell. He was appointed

by way of a public call for rsums and that kind of thing. Dr. House was

appointed of course by us. Basically, he wrote the report for the previous

government that appointed him. We feel he's done a good job in the past and he's

doing a good job now.

If you want to ask me: is there a perception that it

could be perceived that way, the answer is yes. But if you look at the break out

of all those companies we just talked about there's no one district that seems

to be doing better than any other district. There seems to be quite a good

cross-section from all districts as I see it.

MR. KENNEDY: Mr. Minister?

MR. FUREY: Yes, please do.

MR. KENNEDY: With respect to the procedures and

policies that are followed by the corporation, we've developed internally a

fairly detailed procedures manual that is followed. The protocols for how these

regional authorization committees must conduct themselves are consistently

applied throughout the corporation. As well (Inaudible) corporate transactions

committee and in fact the board.

We also have an internal audit function in place. The

internal auditor reports directly to the president and it is his job to travel

throughout the regions at least twice a year to review the transactional nature

of the regions for compliance to our procedures. In addition, we are scrutinized

in the same capacity by the Auditor General's department. In fact, the Auditor

General is currently in the corporation reviewing the compliance function of our

transactional business, independent of our independent auditors.

MR. HEWLETT: One final point, Mr. Chairman. The

minister wouldn't have us believe that it's not possible for a minister of X to

call the Minister of Development and say: my campaign chairman in the last

election has a perfectly legitimate business proposition put before the board in

central Newfoundland for $200,000, and I'd appreciate it if it received

"scrutiny," and just leave it at that. Surely that is not inconceivable.

MR. FUREY: That's conceivable.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. FUREY: I should, Mr. Chairman, if you don't

mind, just take a second. I just got a break out of the way the loans fall out

in terms of the various categories, if you wanted to jot them down. Twenty-nine

per cent of the loans for that particular year you have in front of you were

small enterprise; 47 per cent were conventional loans; 20 per cent were equity;

and 4 per cent were venture capital.

The Venture Capital Program is being looked at now and

there may be some alterations to it, I should tell you. It is being looked at

now; I am not sure that seven years interest freeze may be too generous and the

amounts, the levels may be too generous, we may chop them back a bit. It is

being looked at now, is it not?

AN HON. MEMBER: Yes.

MR. WOODFORD: Did you say 20 per cent equity and

20 per cent Venture Capital?

MR. FUREY: No. 20 per cent equity, 4 per cent

Venture Capital, 47 per cent conventional and 29 per cent small enterprise. Am I

getting those figures just about right?

MR. KENNEDY: That is correct, Mr. Minister. Those

figures represent the amount of dollars that have been invested in terms of the

breakdown by number of applications, the majority of our activity has been in

small enterprise loans; 66 per cent of our business is in small enterprise

loans.

MR. FUREY: Sorry. That is right, that is the

amount of money, the $25 million how it breaks out percentage wise, but if you

want the percentage of how they break out in terms of the actual applications,

66 per cent are small enterprise applications; 25 per cent are conventional, 7

per cent are equity, 2 per cent are venture capital.

MR. WOODFORD: I asked the minister, I think it was

last year on this one and I just cannot recall the answers, so I will ask it

again; with -

MR. FUREY: You hope I will recall them.

MR. WOODFORD: - the interest charged on those

loans, they vary from what, a minimum to what maximum?

MR. KENNEDY: The small enterprise loans are

charged based upon the bank prime and the corporation using the Royal Bank of

Canada bank prime as being its benchmark and we set the rate at prime minus 3

per cent and the current right now is 5 per cent on those loans, reviewed every

quarter.

MR. FUREY: That is the old Rural Development loan

(inaudible).

MR. KENNEDY: The old Rural Development loans.

MR. WOODFORD: 3 per cent, there would be no prime,

yes.

MR. KENNEDY: Yes, and they are fixed for a maximum

of five years. The conventional loans are prime, which is currently standing at

8 per cent plus 2 per cent so the rates are at 10 per cent right now for the

conventional loans. The equity investments take the form of usually preferred

shares in the company and the dividend rate is set at the bank prime plus 2.5

per cent, so it is 10.5 per cent and that is the current rate right now.

MR. WOODFORD: How could there be a small business

loan (inaudible) interest pay back of 16.7 per cent?

MR. FUREY: Say that again, sorry?

MR. WOODFORD: There is one here for my district. I

have not seen the paper but he has told me and I -

MR. FUREY: Did he borrow when interest rates were

high?

MR. WOODFORD: Now, that could be.

MR. KENNEDY: We reviewed the interest rates of the

entire portfolio back in January of this year and, a lot of these rates that

were extremely high would have perhaps been around when the Development Savings

Bond Program was in force, but in any event, we made it a policy at the board

that there would be no interest rate greater than 12 per cent based upon the

review of the portfolio and the 12 per cent rate was established when the

interest rate on the previously funded Development Savings Bond Program

investments were set last September and the rate this year was set at - I am

quoting from memory, I think it was at 9 per cent, but the 3 per cent spread

which is what the board had adopted as its policy under the old bond program, we

dropped every loan back to a maximum of 12 per cent, so there should be no loan

on our books greater than 12 per cent right now.

MR. WOODFORD: Since January?

MR. KENNEDY: Yes sir, that is correct.

MR. WOODFORD: I will check that one out tomorrow

because that was-

MR. KENNEDY: It would be effective January 1st.

MR. FUREY: Yes. In other words those guys with

16.75 would have dropped down, is that correct?

MR. KENNEDY: Yes, sir.

MR. WOODFORD: Why do you use the Royal Bank

benchmark, do you just pluck it out of the air or what?

MR. KENNEDY: The Royal Bank is the corporation's

conventional banker and we follow the money markets each week, and basically, as

the rates change every quarter because of volatility of the rates, we just

simply chose the Royal Bank as being the benchmark. The prime rate, as charged

by conventional lenders is pretty well uniform across the board in any event, so

that is the reason.

MR. WOODFORD: What is your maximum now in the

stacking process, is it $60,000, the stacking process with ACOA? You had what is

called a stacking process with ACOA up to $60,000 or is that -

MR. FUREY: ACOA has a stacking program, we do not.

MR. KENNEDY: No, there is no stacking program -

ACOA has a stacking program, we do not. We will not get involved with, say, an

equity loan or an equity investment and then lever that to get conventional

dollars beside, for example. We won't do that. We would look at the project as

being a strict - one of the instruments, one of the investments that we would

use, whether it be a term loan or a venture capital loan or an equity

investment. But we -

MR. FUREY: Conversely, ACOA only allows you to

stack to a certain limit, from Enterprise or from any other funding agencies

that are governmental. But we don't have a stacking limit, as far as I know.

MR. WOODFORD: We don't have but ACOA does. That's

why - because some of the applications to Enterprise Newfoundland, you can use

the same application with ACOA.

MR. KENNEDY: That's correct.

MR. WOODFORD: That's where I'm getting tangled up,

with regards to them stacking.

MR. FUREY: That's why they go to ACOA first and

then come to us.

MR. WOODFORD: You'll have that too. Enterprise

Newfoundland can sometimes be taken off the hook with regards to loans by going

to ACOA first. I'm sure -

MR. FUREY: True, but once they get the ACOA

funding - a gentleman in my office today got a really good project under way,

$250,000. The way ACOA operates, of course, is you spend first and then they

redeem it. You were with me at the meeting, weren't you? You were with me this

morning at the meeting. Anyway, go back to sleep.

It was $100,000 bridge financing he needed from

Enterprise Newfoundland in order to start getting this thing under way. We are

looking at trying to help him out in that regard.

MR. WOODFORD: Would Enterprise Newfoundland be

considering more equity financing? Because that seems to be - I know that was

one of the recommendations under the report from Employment and Unemployment.

More equity.

MR. FUREY: Yes, it's increased, hasn't it, over

the years. We're up to, what, $5 million this year of our total outlet?

MR. KENNEDY: The amount of equity investments by

the corporation for the current fiscal year is about $5.04 million. You're quite

right, sir, in the fact that the corporation is looking at equity as being a

desirable way to lever up more conventional money. By going in in an unsecured

position it enables the company to approach the conventional lender and get

financing that the company wouldn't ordinarily be able to avail of. So the

corporation is moving - is looking more and more to the equity as being a

desirable investment instrument.

MR. WOODFORD: What would be the percentage - I

don't know, maybe it's too early in ENL's mandate to I suppose look at

foreclosures. But I'm sure you've had some. What percentage of the total loan

base on an annual basis would be foreclosures, and what percentage would be bad

loans? Or would it be too early in your mandate to tell that?

MR. KENNEDY: At this point it would be relatively

early to be able to predict with any degree of accuracy what those numbers would

be. The corporation has been in existence now for fifteen months. The percentage

of allowance for doubtful accounts and the amounts to be recommended for

write-offs is a document that is currently being prepared for the consideration

of the board of directors. The preliminary indication for the activity of

Enterprise corporation is that those numbers should be fairly low. But it is

going to take a couple of years for some of these particular investment

activities to mature to a point where we will be able to get some what we call

very accurate figures on those.

MR. WOODFORD: Anybody else have any questions? If

not, I could go ahead.

AN HON. MEMBER: Go ahead (Inaudible).

MR. WOODFORD: No? Getting back to the estimates

themselves. Page 85, 3.1.03, Promotion Services, 3.1.03.10. Last year there was

nothing budgeted and nothing spent, nothing revised. There are $90,000 there

this year under Grants and Subsidies. What would that be for?

MR. FUREY: That particular amount is put there for

seed capital for the 1997 Cabot Corporation, for the 500th anniversary. We hope

to design and have signed in mid- or late-summer a special anniversary agreement

which will allow this corporation to proceed to promote Newfoundland in the next

five years. Because we see it as a major celebration. We needed to put that seed

capital there because it will leverage out some ACOA funding and allow this

corporation to get up and running while we're negotiating the final parts of

that agreement.

MR. WOODFORD: Where would - or would it come under

marketing- for instance, the strawberry festival come under, under value(???)

development association? What heading would that be under?

MR. FUREY: Heading?

MR. WOODFORD: Yes.

MR. FUREY: I don't know if it would come under any

heading. You mean in terms of grants we give them?

MR. WOODFORD: Yes. Would it be under 3.1.03, would

it be under 3.1.02., Marketing?

MR. FUREY: 3.1.02.

MR. WOODFORD: 3.1.02?

MR. FUREY: Yes. Under the tourism agreement there

is a component there, Mr. Woodford, called Festivals and Special Events and

under there I think we give out up to a maximum of $1,000, is it, Sid?

MR. BLUNDON: (Inaudible).

MR. FUREY: Five hundred dollars for local and

regional festivals.

MR. WOODFORD: Personally, I think that is too low

you know for - there was some talk last year -

MR. FUREY: There are so many new festivals

cropping up, that is the problem and everybody wants a little grant.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Do you want him to speak to that just

briefly?

MR. WOODFORD: - yes, because last year we talked

about, what was that?

MR. FUREY: It was $30,000 budgeted last year or

the previous year and given out in grants of $1,000 or something? The demand is

just unbelievable. It is not just festivals, Mr. Woodford, I mean, I have one on

my desk for the Craig Miller Avenue Homecoming or whatever it is; everybody and

his dog has this homecoming or special event or special party, you know,

something exciting is happening in their little corner of the Province and they

want some seed capital to get some stamps and mail outs and all kinds of things

you know, but let me just ask the assistant deputy to explain the Festivals and

Events component of that agreement.

MR. BLUNDON: Basically, there are two phases in

that particular program. There is one million dollars under the

Federal/Provincial Agreement for festivals and special events. One program

includes what we call local and regional festivals and that is basically the

$500 grant. There are a number that have considerable potential to become

national and international in scope, and under the guidelines, they can come in

and access up to $25,000, $30,000, $40,000, $50,000, depending on their

particular plans and as part of the application process for the $500, we have

programs albeit, limited to approximately a quarter million dollars a year in

total.

MR. WOODFORD: Why, under 3.1.02 (10), there was

nothing budgeted last year, although you revised it to $187,000 and now, up to

$300,000, what is -

MR. BLUNDON: What happened last year, as you

recall the agreement was only signed I think in May or June, and there were no

detailed plans on how that money was going to be spent. As we got throughout the

year and items were identified, they did come up with a revised balance of

$187,000, now exactly what the details are on $187,000, I have to be honest I

really do not know, but we can certainly get it to you. The particular

activities covered is to provide grants for projects approved by the managing

committee including festivals and events, business service and planning and

regional sectorial support, so it is the three components that are included

under that grant and subsidies account.

MR. WOODFORD: Based on the information pertaining

to festivals, the festivals around the Province, as the minister said, probably

only take $25,000 or $30,000 and -

MR. BLUNDON: Well actually, we anticipate we are

going to get about seventy-five or eighty particular requests; by the time you

take festivals, events, special come home years and what have you, we anticipate

that is going to take about $30,000 or $40,000 and I would suggest, because last

year was the initial period, of that $187,000 I would suggest that very few

dollars of that was actually for festivals and events. Basically we were telling

everybody last year that the criteria will not even develop and approve by the

management committee, so I have to assume that any monies spent under that

particular program would have been for business service and planning and

regional sectorial support. Again, that is a revised budget, it may not reflect

what was actually spent.

MR. WOODFORD: No, but on the other hand, where I

was trying to make a comparison, I mean it is one thing not to have anything

budgeted and another thing to spend $190,000, but then again, there are $300,000

budgeted for this year and that is my question. There must be something -

MR. BLUNDON: Well what has happened is that, as

the programs evolve and criteria have developed and the information getting out

to those who are applicable to the agreement, we anticipate numerous

applications and what we are actually seeing in the last four or five months, is

that applications are coming in fast and furious and we fully expect the

$300,000 to be utilized this year. Again, that particular program is application

driven.

MR. WOODFORD: There would have to be a large

increase in applications to drive it -

MR. BLUNDON: Again, it may not be just the $500

amount. I know for example the Grenfell celebrations - they came in and they

received funding approval for $60,000 as a major celebration. I know we have the

one in St. John's that just got recent approval for $25,000. So it all depends

on the specific nature of the application. So like I say, $500 is small on a

regional basis, with very little information, they're entitled to their $500.

For those who want to come in and put together a program for an amount

substantially in excess of $500, if they qualify for national and international,

in scope - and the strawberry festival is an obvious one that we've talked about

for a number of years - I know we have our staff out there now trying to work

with those people to see if in fact we can develop an application that will

address the national scope of what's already being done.

MR. WOODFORD: Yes. I'm not criticizing the amount

as such but I find it hard to I suppose comprehend, when you get one festival

come in, say the Grenfell centennial, give them $60,000, and you have a festival

down your way, you have them out my way, the strawberry festival, which have

been struggling for years, and bringing in lots of dollars. In fact, I guess you

probably have the figures on for instance what the strawberry festival brings in

during the ten days or two weeks. It's astronomical.

MR. BLUNDON: Very substantial.

MR. WOODFORD: And you just give them $500 -

MR. BLUNDON: But that's because that is all that

they have - in fact, I'm not sure what they have actually made application for.

But if they want to come in and apply for the $500 grant, they're eligible for

it. If they want to come in and apply for the bigger program, and recognize the

criteria that have been approved by the management committee, they're also

eligible for that as well. So it's all dictated by the applications that are

received.

MR. FUREY: Some of those are under special

anniversary (Inaudible), Mr. Woodford. The Grenfell one for example is a special

year-long celebration anniversary. You have to put fair dollars into that to

promote it and enhance it. It's a one-time deal. The strawberry festival is

recurring every year. You're right, we should probably put more dollars into it.

If I had my druthers we would. We need to professionalize more of these

festivals too.

MR. WOODFORD: They've formed a corporation there

now so that may -

MR. FUREY: May make a big difference.

MR. WOODFORD: Make a big difference with regards

to -

MR. FUREY: Because they'll be able to leverage

other monies out, see, from ACOA.

MR. WOODFORD: As far as I'm concerned, on what

they have now, the sort of marketing job that they're doing, what would they do

for instance if they had $5,000 or $10,000? They are spending their own money

now. A thousand dollars probably they would get from the Department of Tourism,

or $500, plus $3,000 or $4,000 of their own, what would you do if they had

$10,000 or $15,000? They might bring in a lot more. You know, it begs that

question.

MR. BLUNDON: Exactly. That's what we're promoting.

MR. WOODFORD: When I look at those figures here,

I'm still not satisfied to be honest with you, on that particular answer on that

particular Grants and Subsidies. I think there's something not jiving there with

regards to the amounts that are given to festivals. In any case, if there's

anything new on it you can -

MR. FUREY: Which one?

MR. WOODFORD: On the $300,000 this year for Grants

and Subsidies.

MR. FUREY: 3.1.02.10.

MR. WOODFORD: On that 3.1.02.05, same category.

Nothing last year, $50,000 revised, and then $600,000 for next year. What would

that be, under Professional Services?

MR. FUREY: Where are we again? I'm sorry. Number

what?

MR. WOODFORD: 3.1.02.05.

MR. FUREY: Fifty thousand dollars and $600,000

this year?

MR. WOODFORD: Yes.

MR. FUREY: That $600,000 sits there as -

MR. WOODFORD: It's federal.

MR. FUREY: Pardon?

MR. WOODFORD: It's federal, federal dollars.

MR. FUREY: Federal-provincial. We've selected

three areas of the Province - I think I'm getting this right - for theme touring

routes. Whereby we would have special designed kiosks at the beginning and end

of each of these areas and professional sign development and design through

them. I think the areas, Mr. Woodford, are: the Viking Trail, would have

$200,000 to complement the new chalet expansion at Deer Lake; the other one I

think is the Burin Peninsula? Is that right?

AN HON. MEMBER: Yes.

MR. FUREY: Discovery Centre or Discovery Trail?

SOME HON. MEMBERS: (Inaudible).

MR. FUREY: Discovery Trail is Bonavista. Is that

one of them? Anyway, there are three areas of the Province. I just forget what

the areas are now. But they're $200,000 each, and it's under the historic

resources and tourism agreement.

MR. WOODFORD: Okay. 3.2.01 (05), Professional

Services. We budgeted $70,000 last year, we spent $30,000 and back to $70,000

again this year. What would be involved in that particular evaluation? 3.2.01

(05), Professional Services under Planning and Evaluation, that is current.

MR. FUREY: Professional Services, you are saying?

MR. WOODFORD: Yes.

MR. FUREY: That is the Comprehensive Labrador

Agreement, tourism initiatives that are under way this year as part of that

agreement cost-shared 70/30. We can give you a list of them if you want.

MR. WOODFORD: No, but the only thing about that

is, there is nothing there under the cost-shared for federal/provincial in that

particular heading.

MR. FUREY: Am I in the wrong one, 6.3.2.02?

MR. WOODFORD: No. 3.2.01 (05).

MR. FUREY: Oh, okay. There was $175,000 last year

AN HON. MEMBER: No, no.

AN HON. MEMBER: $70,000, $30,000 and now again

$70,000.

MR. FUREY: What are we looking at here boys, I

must have the wrong list.

MR. WOODFORD: The same thing budgeted it's just

that we spent $30,000 last year.

MR. FUREY: There are a number of studies around

the Province that have not been completed that are going to be completed using

that money and that is pretty simple; one of them I think, Mr. Woodford, is the

Festival Coast in Bay St. George, that area. There are other areas of the

Province which are trying to develop themselves into themed areas that require

funding to do proper studies. There are other things carried under there too,

exit surveys and studies we do (inaudible) and patterns and stuff.

MR. WOODFORD: Has anybody else any questions?

AN HON. MEMBER: You go ahead.

MR. WOODFORD: Industry Services, under Tourism

Development, 3.3.01 (10).

MR. FUREY: 3.3.01 (10)?

MR. WOODFORD: It is pretty well dead on; last

year's figure was revised but this year it is up, what would be involved there?

MR. FUREY: This is going to help us to assist in

the running of twelve local information chalets. These are small grants we give

them to help operate, located at St. George's, Gander, Corner Brook, Marystown,

Springdale, Dunville, Grand Falls, St. John's, Labrador West, Goose Bay, Goobies

and Hawke's Bay. Basically it is a direct grant to the twelve operating

associations. The grants are to be utilized to subsidize the expenditures for

seasonal employees, chalet operations and repairs, that is $60,000; funds of

$30,000 will be used as the provincial government's contribution to the

continued operation of the Signal Hill Tattoo; and the operating subsidy for

Marble Mountain is covered under there as well for a total of $225,000. Marble

Mountain's operating subsidy has increased this year to $135,000. They have a

marketing specialist hired on now, the thing is becoming so big they need an

executive director full-time, Kevin St. George just cannot carry it from a

volunteer prospective.

MR. WOODFORD: Yes. Right next to that, 3.3.02,

Tourism Facilities: would the Deer Lake chalet be included in that?

MR. FUREY: The Northern Peninsula chalet you mean?

MR. WOODFORD: Yes the Northern Peninsula chalet.

MR. FUREY: Yes. To expand the Deer Lake

Information Chalet, there is $245,000 that is under way now, as you know we hope

to get that open soon and the Argentia Chalet for $535,000, with Argentia being

a major gateway.

MR. WOODFORD: Your travel generators for Marble

Mountains is budgeted at $3,600,000 and spent $1,600,000, what would be the

reason the other monies were not expended?

MR. BLUNDON: Basically, we put the budget together

last year. We included $3 million in 1991-92 that was covered under the

federal/provincial tourism agreement, and the federal government were

responsible for $1.5 million and us $1.5 million. Initially it was thought that

we would spend the $3 million and the federal government would reimburse us the

$1.5 million. As they got through the process it was determined that they were

going to fund it directly themselves, so their $1.5 million they spent

themselves and they didn't reimburse us at all. So basically ours is a net

amount.

MR. WOODFORD: Then the $750,000 in there for this

year under Grants and Subsidies, what would that be for? Just strictly towards

the development itself or some programs that have already been announced?

MR. BLUNDON: No, that is still part of the

3,600.000. Last year we only spent $2,850,000 associated with the transmission

line removal, and the $750,000 is the carry over to 1992-93.

MR. WOODFORD: Did they call for proposals in the

second phase for Marble Mountain? They were supposed to call for proposals.

MR. FUREY: There has been requests. What do we

call them: Expressions of interest?

MR. BLUNDON: Expressions of interest, yes.

MR. FUREY: Expressions of interest for the base

development.

MR. WOODFORD: Yes, condos and -

MR. FUREY: Yes, there has been a number of

possibilities put forward, but we are looking at Housing perhaps doing the

infrastructure development at the base first, and those talks are under way with

Housing now.

MR. WOODFORD: Yes, they went and looked at it and

surveyed -

MR. FUREY: We have had some interesting proposals

from people, but when you pare them down I think about three of them are

serious, three developers who have serious proposals on the table.

MR. WOODFORD: Do you expect anything to proceed

this year because they had to go ahead I think with a new lodge and probably the

infrastructure with regards to Newfoundland and Labrador Housing. Do you expect

them to proceed this year?

MR. FUREY: Well we are into the talks with Housing

now. We hope to have some kind of conclusive thing from them in the next month

or so. Until we know what it is they are prepared to do and participate in, and

what their numbers look like, it is hard for us to say. But nobody is coming

into the base of the mountain for future development until that infrastructure

is in place.

MR. WOODFORD: There will be a water system in the

whole (inaudible).

MR. FUREY: That is right.

MR. WOODFORD: Is there anybody else with anything?

MR. FUREY: We may proceed this year with a new ski

lodge though. I have had discussions with Mr. Crosbie and ACOA and the province

may cost-share a new ski lodge between the two lifts. Leave the bar where it is

but put a proper ski lodge there.

MR. WOODFORD: I want to touch on the beer dispute

and where the minister and the government now stand with regards to the new

developments, especially the last couple of weeks.

MR. FUREY: You know our position basically. I

don't know if many Newfoundlanders know but we drank twelve million dozen beer

here last year. That is a lot of beer. And we are trying our best to comply with

the GATT ruling which had four particular offences outlined against Canada. We

have basically come forward on three of those.

One of our bones of contention is the point of access

problem that the US particularly and mainland Canada want removed. We have

consistently said that it is our right and our jurisdiction to regulate how beer

is sold and where it is sold. We continue to stand by that. We have made the

case to the minister federally. The four hold out provinces were Manitoba, New

Brunswick, Nova Scotia and Newfoundland, and I think amongst all of us we

represent less than 8 per cent of the market, with Newfoundland maybe being

about 2 per cent. We have put it in writing, we have stated it at

federal/provincial meetings with the minister, if we keep our head low and

comply with three of the four, I think we will be alright.

When I use the word foreign beer it is not foreign

from other countries, I am quite concerned about foreign beer that is not

produced domestically for our own marketplace. In other words if we stripped

down that last requirement, what is to stop the major breweries from just

producing en masse in the Ontario marketplace and just trans shipping into this

marketplace, cutting their overhead, cutting their costs, displacing the jobs

and upping their profits. There is nothing that prevents them from doing that

with the exception in my view of that ability to regulate a point of sale, and

that is what we intend to hang on to, and we intend to be tough about it - as

tough as we can be about it - and I think we will be alright; it is my feeling

that we will be alright.

MR. WOODFORD: I commend you for your stand. There

is no question of the government's stand on it, because I just wish some other

people in your caucus would do the same thing with regard to other commodities,

but how safe would your position be, especially with the Province's position on

interprovincial trade barriers? There is going to come a time when this is going

to have to be addressed.

MR. FUREY: That is right. The position on the

interprovincial trade barriers, the Atlantic agreement particularly, also has a

clause in there for regional development. For example, if the Lower Churchill

were to take off tomorrow we are not going to have the open tendering that is

required under these new rules, under a special project. All we are saying is

that because we are in a recession, because Newfoundland when we go in we go in

deeper than anybody else; we are always the last out; we are always the toughest

hit; what is happening in the fishery; what is happening in the paper industry;

what is happening in the Hibernia situation; when you put all of those together,

we cannot handle too many more body blows. All we are saying to the federal

government is: if you have a plan for us for these displaced workers and

high-paying workers and the ripple out jobs that go along with it indirectly, if

you have a plan for us, we are all ears; but we have not seen a plan

(inaudible).

I would love to make room for the U.S., and I would

love to make room for the Ontario breweries, but at this critical point in time

in our economy we cannot accede to that fourth point of access for anybody in

any part of our marketplace, and we have been consistent on that one. It is

tough because, as you say, the perception is that it could be contrary to our

policy to strip down barriers, and we want to move in that direction; but where

we are large consumers of this product, and where we produce it locally, and

where labour relations are not bad, and where the jobs are high-paying and we

ourselves are the ultimate end user, and where there is no litter stream because

it is mostly bottles and returnable bottles, we had to do something to protect

it, and we have looked upon that as a special case.

MR. WOODFORD: I notice a bit of a contrast, a

contradiction, but I have to go right back to: Why did you change, or why did

the government change, or the Department of Finance in consultation with you

people, change the trout licence fee for nonresident anglers? What was the real

reason for that?

MR. FUREY: Sorry - change what?

MR. WOODFORD: The trout licence fee?

MR. FUREY: Finance you are -

MR. WOODFORD: The Department of Finance, yes.

MR. FUREY: Increase the fee you mean?

MR. WOODFORD: They abolished it.

MR. FUREY: In that series of fees you mean?

MR. WOODFORD: Yes, for nonresident. Last year you

touted it here in the same estimates that it was going to do the opposite, make

sure that they control them and they have a licence.

MR. FUREY: On the guides and the rules you mean?

MR. WOODFORD: Yes, because for nonresident anglers

now -

MR. FUREY: I guess Finance took a whole look right

across the whole spectrum of licences, whether it was birth certificates or

whatever, and decided to eliminate as many nuisance licences as they could.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: They never consulted your

department?

MR. FUREY: You cannot trust that crowd in Finance.

AN HON. MEMBER: (Inaudible).

MR. FUREY: You were the Finance minister.

MR. WINDSOR: I find that incredible. One of the

biggest problems we have in Labrador, as the minister knows, is trying to

control people flying in from Quebec and fishing in Labrador waters. If there is

no licence required you do not even have a right to go ask them now if they have

a licence. You have less control now than you had before. I am not worried about

the five dollar fee or the twenty-five dollar fee; that is peanuts. Now you have

no control over nonresident fishing, and Labrador is where you will have a

serious problem, and you already had it. At least you had something you could do

about it, even though you did not have any money to enforce it.

AN HON. MEMBER: (Inaudible) control in Labrador.

MR. FUREY: That is one

interpretation anyway.

MR. WOODFORD: I just wondered if they did consult

with you because I was lead to believe, because of comments on it, that you were

not consulted on it.

MR. FUREY: We offered up all kinds of licences,

Mr. Woodford. I told them to take every licence and get rid of it, in Tourism

and Development. All they asked for us was: Give us your licences; which one are

aggravations? Didn't we send over a whole bunch of licences?

It says here, get rid of them all. The tourist

establishment licenses - gone.

MR. WOODFORD: Oh yes, I agree with that. But I

don't think -

MR. FUREY: You want us to bring that back next

year, is what you're saying.

MR. WOODFORD: The non-resident is what I'm talking

about, the non-resident. I think they have it increased from 400 metres to 800

metres from the highway. I think so, for a non-resident angler. That's on

unscheduled rivers. On a scheduled river it doesn't matter, you still have to

have a license.

MR. FUREY: Yes.

MR. WOODFORD: I don't know how the old program

worked, but I understand from you people last year that it was working fairly

well and it would stop a lot of this, people going in and raping our resources,

especially non-resident anglers. Now they don't have to have a license. But

anyway, that's about it.

MR. FUREY: I think we were talking in the context

of guides and outfitters are what we were saying, and they still require those.

MR. WOODFORD: Yes, they're still required, yes. I

have no other questions.

MR. WALSH: Mr. Chairman, if there are no other

questions I'll move the estimates for the Department of Development, items

1.1.01 through 3.3.03, inclusive.

On motion, Department of Development, total heads,

carried.

MR. CHAIRMAN: Before we go I'd like to thank the

minister and his officials for coming in and being forthright in the answers

that you gave to the questions from the Committee. They were thorough. I also

would like to thank the Committee members for their questioning, the way it was

done, and the orderly manner and so on. I would also like to thank Elizabeth,

the recorder, and the Page for coming along. This now finishes our estimates

from the Resource group. So thank you again, Mr. Minister.

The Committee adjourned.