March

30,

RESOURCE COMMITTEE

Pursuant to Standing Order 87, Mr. Tom Lush, MHA for

Terra Nova, substitutes for Ms Yvonne Jones, MHA for Cartwright-L'Anse au Clair.

The Committee met at 5:00 p.m. in Room 5083.

CHAIR (Mercer): Order, please!

I am told that the mikes are sensitive, but they are

most sensitive when there is only one person with the mike on at a time. If you

would, after you have finished your questioning of the minister or whomever,

others should have their mikes turned off. I understand that is what we need to

do. The gentleman nods his head. Very well.

The first order of business, if you would, is the

approval of the minutes of the last meeting dealing with the Estimates of the

Department of Forest Resources and Agrifoods. I need a motion to approve.

On motion, minutes adopted as circulated.

This evening we are going to be dealing with the

Estimates from the Department of Industry, Trade and Technology and, as agreed

at our first meeting, all debate will occur under head 1.1.01., which allows the

members the flexibility to ask questions on any aspect of the Budget Estimates

policy or detail as they see fit. All of the discussion will occur under head

1.1.01.

The procedure that we will follow, Minister, is the

same as in previous years. You will be given up to fifteen minutes to make some

opening remarks. I will then turn it over to the Vice-Chair who will then make

his opening remarks and commence a line of questioning. Then we will follow to

Mr. Tom Lush and alternate back and forth until all the questions have been

asked and all of them satisfactorily answered, I am quite sure.

With that in mind, I would ask the Clerk to call the

first head.

CLERK: Subhead 1.1.01.

CHAIR: Thank you.

Minister, I was going to ask you to say introduce your

officials, but we will use the singular. I would ask the officials, when they do

speak, that they identify themselves. The same rule on the mikes applies to your

officials as they would to you and to us.

MS KELLY: I am Sandra Kelly, Minister of Industry,

Trade and Technology. This is my Deputy Minister, Bruce Hollett. My Assistant

Deputy Minister, Keith Healy, has just stepped out of the room for a moment but

he will be right back.

I thought I would just start off by giving a quick

overview of my department from the perspective that it is a fairly small

department with about forty-eight permanent positions and a $18.5 million

budget. I think most everyone would recognize that the mission of my department,

I guess, overall is to facilitate growth and employment and to move forward the

economy of Newfoundland and Labrador through the focused delivery of specific

programs to promote and encourage business investment in the Province, and to

grow and diversify our industries.

The lines of business of the department are around

five different lines of business. The first one being industrial benefits that

would accrue in particular from the development of the Province's natural

resources, and especially around major industrial projects as they would relate

at this time in our history in particular through the offshore, through projects

like Voisey's Bay, the Lower Churchill. I guess the two that come foremost to

mind right now are White Rose and Hebron.

Another line of business, of course, for us is export

development for local businesses in selected markets. We have been doing some

very targeted work in that area, about which I will speak in a little bit more

detail in a moment; investment attraction for opportunities in strategic

sectors; and, of course, we have the corporate development division which was

put in place a little over a year ago to work within the department on that

area; promotion and strategic positioning of the Province as a location of

choice for conducting business profitably. Of course, for us, one of the major

promotional tools that we have in the Province is our EDGE program. I will be

pleased to answer any questions in particular about that program as we get into

the hearings this evening.

The last one is information and advance technology,

industry development and promotion. Of course, through our Success~Works

program, and through our interaction in particular with the Newfoundland and

Labrador Alliance of Technical Industries, or NATI for short, we work very

closely with them and we have had great success. We also have Operation ONLINE

which is government funded but arm's length from government. Mr. Healey sits on

this board as a government representative. They have a five-year mandate at

Operation ONLINE. They are into their fourth year now, I think. They have also

had some great success in particular with the New Graduate Internship Program

that they have put in place for gaining work experience for new IT graduates. Of

course, they have had many other successes as well.

We also, within the department, administer ERA and

CEDA. One of the things I wanted to point out as we have gone through our budget

preparation this year is this. I am sure some of you have noticed that within

our documents the major variances that you will see are from the cost-shared

agreements. One of the reasons for this are projects which were later starting

this year than we anticipated or not proceeding as fast as planned. Also, I

would like to point out that the money from our cost-shared agreements is used

to lever other funds and, of course, this can be quite time consuming, but it is

also one of the best uses of these funds from the ERA and CEDA in that

organizations realize when we are able to contribute from these agreements to

their projects that they can use these funds then to lever funds from other

sectors, whether it be from Venture Capital Corporation funds or the private

sector or other government agencies, or various other means. So one of the

reasons you will see some major variances from our cost-shared agreements is for

that reason.

There are three initiatives that I briefly wanted to

mention to you this evening in my opening remarks. One in particular that we

started last year is the New England strategy. While we continue to assist our

businesses with finding work around the world and getting more and more into

export development, we started to look more at the fact that in this Province

the large businesses like our pulp and paper mills and our fish companies do not

need government assistance as such to be out there looking for export business,

but our small and medium sized businesses do. We, of course, over the years have

assisted them in markets all around the world. It occurred to me shortly after

becoming minister in this department that we probably ought to be more focused

in our efforts so that we were able to help companies help themselves a lot

more. A lot of our small companies cannot afford to be in large markets all

around the world so we decided to really go back in time, in some ways, and to

look at the success that this Province had in the New England market before we

joined Canada. Of course, before we joined Canada the New England area was our

main trading area, but of course when we joined Canada the tariffs went up and

it was more difficult to do business down there. We focused towards the mainland

Canada.

Now with NAFTA, with the difference in the Canadian

and American dollar, with the hot economy down there and really full employment,

we felt that this was a very strategic area for us to be looking in. Last fall I

launched a New England trade strategy which we have been working really hard on.

We have put an ad in the paper asking all businesses who are interested to get

in touch with us and we have been working with more than fifty businesses since

that time. We have done a lot of research on that market and we are now

implementing the strategy.

As a matter of fact, I just got back from Boston

yesterday. We were down there for a major bio-technology conference. We will be

down there with Team Atlantic in May and we have just appointed a staff person

who will work specifically with companies in Newfoundland and Labrador to help

them in that area. We are particularly interested in the IT sector because down

there right now they need a lot of IT help. The companies just cannot find help.

In the past it used to be that Newfoundlanders went down and worked in that

area, but we see this as a real opportunity now to get contracts for our

companies down in that area and bring them back to Newfoundland for our small IT

companies to help them grow and prosper, because we have such a small market

here. I can see some indication already that this is starting to work.

Some of you may be aware that Taiwan has also been an

area that we have focused on and we have had great interest in. This year an

account was put in place in Newfoundland and Labrador of about $7 million

Canadian that the Taiwanese are spending here to look at business opportunities

in Newfoundland and Labrador. We hope that over the upcoming months we will have

some major announcements around some Taiwanese business development. We have had

them express some great interest in various sectors and we believe that over the

upcoming months you will see some very good business partnerships that will

truly help the economy in this Province.

We will continue with other trade initiatives as they

occur and as companies want us to be in other markets with them, especially with

the countries that we have MOUs. One of the most successful partnerships we are

working with right now is the Irish Business Partnership. We have been over

there and they have had a major delegation back here last September, and almost

on a daily basis I have companies in to see me about opportunities that they are

exploring with Irish partnerships.

Another major initiative in our department is the

industrial regional benefit strategy that we are putting in place. What that

boils down to really is looking at major federal government procurement and

making sure that our companies are aware of them and working with our companies

to make sure that they receive some of these benefits. We have had small

aerospace companies here in St. John's for instance, which have worked with

Agusta-Westland in making submarine parts and in making parts consoles for

hovercraft. We have a company out in my own district that are working on the

team Cormorant project for the SAR, the search and rescue helicopters. We hope

to be doing a lot more of that type of work. Within a division in the department

we have focused a few staff on this and we also work very closely with the

office in Ottawa to pursue these opportunities with our businesses more.

That is sort of a quick overview of the department. I

guess I should just say a few brief words about the EDGE program, to say that it

certainly is turning out to be a very good marketing tool and one that I think

is one of the best programs anywhere in North America. Now when we combine that

with our Success~Works IT project that I would be pleased to take questions

about, we are discovering that with that sort of advanced partnership, in

particular site selectors, call centres, small IT companies and that, this is a

very good marketing tool when you combine it with the Success~Works program. We

are starting to see some great interest in the Province now around that program.

We have been getting more and more enquiries. I think you are seeing that

Newfoundland now is being recognized as a place that has a very skilled labour

pool and that the EDGE program certainly is an incentive for businesses to be

looking to this Province. There is a great deal more interest than there used to

be.

I would like to close. I think I am getting close to

my time here. We will proceed on with the hearing.

CHAIR: Thank you, minister.

Mr. Fitzgerald, if you would. Then we will go to Mr.

Lush.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, when the EDGE program was put in place, was

that put in place at that particular time for a set period of time? Was it five

years, ten years?

MS KELLY: No, there was not a set period of time,

although I think the program has been in place now close to five years.

AN HON. MEMBER: (Inaudible).

MS KELLY: Sorry about that. I keep forgetting to

turn on the microphone here. The EDGE program was put in place - we are into our

fifth year now, I think, Mr. Healey?

MR. HEALEY: (Inaudible).

MS KELLY: We are continuing to do evaluation of

the program and to look at refinements to the program, but it is a program that

was not put in place for a specific number of years. I think the program will

have been successful when we have our unemployment rate down I would say to

somewhere between the 5 per cent to 8 per cent area. Then you would evaluate

whether you would need that program or not.

MR. FITZGERALD: Yes. The problem that I have heard

about the EDGE program - and it is a good program, and I think we should do

whatever we can to attract industry here and to try to get people working - is

that it seems like we have left our own local people outside of the

qualifications. Some people are disappointed where you can have a company moving

in and getting to operate in an environment that is tax free within a

municipality and have government pay them $2,000 for each job that was created

and receive land without paying compensation on it.

I think it is something that should be looked at. If

we are going to look at refining it, then why not include Uncle Harry down the

street that can create four or five jobs, or would like to expand his business?

A job is a job no matter who creates the job. It is important. I do not think

that we help our own sometimes. We are quick to help somebody new, but forget

about our own.

The other thing I would like to comment on and ask

about is this. You indicated that you had a representative of your department in

the New England states. Two questions: number one, who is the representative of

your department there?; and number two, is your department actively pursuing a

change in the Marine Mammals Act that would allow the sealing industry in this

Province to expand and generate a lot of economic activity and get into the

great marketplace south of the border?

MS KELLY: I would like to respond by, first of

all, talking about EDGE. Actually, there is one fact that is incorrect that you

have said. The $2,000 per job subsidy has been gone now for several years. That

is no longer a part of the EDGE program. The fact is that we have more local

companies using the EDGE program than we do outside companies coming in. We

strongly encourage local companies. Many companies use the EDGE program to

expand their operations. Actually, that has been one of the most successful

parts of the program, but it is one that I constantly have to, whenever I am out

- for instance, when we were at the Jobs and Growth Consultations we always

managed to have some discussion about it - but in particular if I am talking to

the Board of Trade, or the chambers of commerce throughout the Province, I

always remind them that it was put in place to not only attract business to the

Province, but also to allow our own companies to expand.

I think it is fair to say that we have had more

companies use the program to expand than we have - while it has been quite

successful with new business startups, it has been even more successful for

expansion of local companies, and they use it quite a bit. Of course, it is

noncompetitive from the perspective that you will not be able to get EDGE status

if you are competing with someone across the road. If there is a company already

in place in Newfoundland doing what you are proposing, you are not eligible for

EDGE status. So we do help our own and it has been done very successfully.

The person who is working in my department

specifically on the New England market is Barry Snow. He has been working in the

corporate development division and understands this market very well, and also

has a very good IT background. I think he was the chair of the very successful

SoftWorld 98 that was held here in St. John's several years ago.

As to your question about actively pursuing changes in

the Marine Mammal Protection Act, that certainly is a topic within our trade

division in our department but not one that we have had a great deal of success

with, but one that we feel is time now to start pursing again. It is something

that we keep writing back and forth about and we have a lot of knowledge about,

but until recently we certainly could not see any way to get it changed. There

may be a new interest in this now in that people are starting to tone down their

rhetoric around the sealing industry, and starting to realize that seals are a

part of our whole ecosystem, and that if you allow seals to overpopulate the

oceans we will not have the ocean to be very sustainable in the years to come.

Even some of the very strong environmental groups are starting to recognize

this, so we are starting to approach it from that point of view.

I do not know if my staff have any other comments to

add to that about anything new that has happened recently.

WITNESS: No.

MS KELLY: No.

MR. FITZGERALD: It is work in progress.

How about in the European Common Market where we have

been having a problem getting our fish products, especially shrimp, where there

is a 6 per cent tariff imposed on anything over, I think it is 300,000 pounds? I

am not exactly sure of the figure but I think I am pretty well sure of the 6 per

cent tariff that is on it. Do you people have correspondence back and forth

there to look at trying to get that lifted? That has been a big impediment

within the fishing industry, I understand.

MS KELLY: Actually, we have recently had some very

good success in that market and we are also starting to pursue the shrimp tariff

as it applies in the Chinese market. I just signed off a letter this week about

it; but, in the European market last year when the - I forget the name -

diplomatic forum was held here in St. John's, we took the opportunity to be

meeting with some of the Europeans, especially from the United Nations and the

ones who were working on the various fisheries committees, to talk to them,

because they had felt that the problem was mostly solved but a lot of what was

happening was that our shrimp was arriving at borders in various European

countries and the rules around it were being interpreted differently, depending

on which country you were, so it was causing a great problem.

In my speech there I outlined the difficulty and held

some meetings afterwards about it, and in late December we got word back that in

fact that difficulty has been solved and that now we have a much greater tonnage

that is going in tariff free. I anticipate that most of the problem, if not all

of it, will be solved in the upcoming few months; but I could get you more

detail on that. It is just that the exact amounts are not clear. I do not know

them well from memory.

MR. FITZGERALD: I think we were paying a tariff on

everything going in there up until last year, last spring if I recall, May

probably. Then we were allowed a certain amount tariff free. Once it goes over

that amount then the 6 per cent tariff is slapped on again.

MS KELLY: We were even having trouble with the

tariff free after that. Different countries were interpreting what was cooked,

peeled shrimp and what the value-added was to it, so that part of the problem

has been solved and I understand that the tonnage also has gone up. I would have

to get you the specific information but I know we have made more progress over

the last three to four months than we have managed in years.

MR. FITZGERALD: This is done in relationship to

your federal counterparts in Ottawa and it is a joint venture that you work at

together?

MS KELLY: Yes, it is, exactly.

MR. FITZGERALD: Minister, the Team Cormorant

helicopter place in Gander, factory or business - I do not know what the proper

name is for it - my understanding is that this is a billion dollar company,

quite profitable. Is it that hard to attract business to this Province, that we

have to go and subsidize and provide funding to a company with billion dollar

assets in order to have them operate here in the Province?

MS KELLY: I am not sure that is quite the way to

put it. In this instance it was certainly that we were competing very strongly

with P.E.I. I think most people know that we lost out several years ago when we

competed to get the Pratt & Whitney plant, and we were determined that this time

it is a skill level that we have here in this Province that could be implemented

very successfully, and made the point of really going after getting this

business in competition with some other jurisdictions, P.E.I. being one of them.

It was well-recognized at the time, whenever we are

out there doing this, that is why we need programs like EDGE and various

incentives that, if you are into investment attraction, you have to be able to

compete. If you aren't able to compete then you are going to lose out, whether

it is to a big company or to a small company. When you are out there trying to

attract business, whether it is in call centres or no matter what, you have to

be able to compete with, in particular, the other Atlantic regions but really

with all of North America, whether you are looking at various areas in the U.S.,

other provinces, or even other European jurisdictions we have seen over the last

few months. It is a fact of life, and if you are not going to be able to offer

these incentives you are not going to be able to attract many companies here

because it is getting to be the way the world does business.

MR. FITZGERALD: Okay, Mr. Chairman, I pass.

CHAIR: Thank you, Mr. Fitzgerald.

We will go to Mr. Lush, and from Mr. Lush we will move

on to Mr. French. We weren't sure there for a second, Mr. Lush, whether you were

a witness or not.

MR. LUSH: You can be always sure, Roger, always.

MR. FITZGERALD: I will be with you always.

CHAIR: That sounds like a familiar quote.

MR. FRENCH: Mr. Chairman, I would like to get into

some of the subheads and ask some questions on amounts of money, why they have

been voted and so on. Subhead 1.1.01.03. -

CHAIR: With your concurrence, Mr. Lush.

MS KELLY: I should note that one of my other

officials has arrived, Mr. Mac Blundon.

MR. FRENCH: Subhead 1.1.01.03., under the

Minister's Office, there was an amount voted in 1999 of $90,000. We spent

$116,700, and this year we have gone back to $80,000. Why the increase in

expenditure? And why, this year, have we dropped it back?

MS KELLY: From the perspective of last year,

increased international traffic was - missions, I am sorry, not traffic, was the

purpose behind most of the increased expenditure in this area, in particular to

Ireland, Scotland, Chile and Argentina. We were following through on MOUs, but

also on Chile and Argentina we were doing the follow-up to Team Canada.

This year it is anticipated because we are focusing on

implementing our New England strategy, which is much closer to home, and that we

have done the missions and now the companies are able to go off on their own.

They are not going to need as much intervention with us in particular as it

relates to the Irish partnership and the Scottish partnership. It is anticipated

this year we won't be doing as much international travel and that amount won't

be needed.

MR. FRENCH: Okay.

Again, under Executive Support, further down the page,

1, 2.01.03, Transportation and Communications. In 1999 we spent $133,600 and

this year we have gone back to $84,000. Why the decrease?

MR. HOLLETT: The amount in the variance for the

last fiscal year, the increased amount is partly due - $20,000 of that is due to

relocation funding. We hired Perry Canning in the department last year and had

to relocate him from Labrador West to St. John's, so there is $20,000 in there

in relocation expenses to move his family. As well, a lot of the international

travel that the minister mentioned was executive members on those missions with

her. In addition to that, my responsibilities in the department also include the

Voisey's Bay negotiations. There was extensive travel related to Voisey's Bay

last year. A lot of this we are not anticipating will occur at the same level in

this year, and certainly there will be no relocation expenses planned for this

year.

MR. FRENCH: So it cost us $20,000 to move Perry

Canning from Labrador City up here?

MR. HOLLETT : Yes.

MS KELLY: My assumption would be that that is

about what it would cost to move anyone, in particular when you are moving a

family. The relocation allowance, I'm sure, is no different for this particular

individual. It would all have been done within government policy and regulation,

the same for this individual as for any other individual.

MR. FRENCH: Very good. Under 1.2.02.07, Property,

Furnishings and Equipment, in 1999 we budgeted $16,500 and we spent $55,800.

This year we have gone back to $16,500. Why the difference?

MR. HOLLETT : We have identified savings in other

areas of the department. We have commenced some one-time capital modifications

to the front entranceway of the department. We were doing those. That is about

an additional $39,000 or $40,000 in this fiscal year. That is a one-time

expenditure.

MR. FRENCH: Under Trade and Investment, 2.1.02.03,

Transportation and Communications, we went from $213,000 to $232,300, and this

year we have gone back down to $213,000. Why is that?

MR. HOLLETT: There was increased attendance at a

number of trade shows last year. That is why there is a small increase in the

Transportation and Communications vote for that division.

MR. FRENCH: Who would have went to these trade

shows?

MR. HOLLETT: Typically, the director and managers

of that division, and in some cases industrial developmental officers.

MR. FRENCH: Would there be anybody else from any

other governmental department traveling in your particular department where that

individual's expenses would be charged off to your department?

MR. HOLLETT: On trade shows?

MR. FRENCH: Yes. You know, like - who can I use as

an example? Rick Woodford, the Minister of Works, Services and Transportation. I

am just using him as an example. If he was to go on a trade show with Industry,

Trade and Technology would his expenses be charged off to your department?

MR. HOLLETT: I am not aware of situations where we

have paid for people from other departments to go on trade shows.

MR. FRENCH: Has there ever been a case in

1999-2000 when any other minister of government from the Premier on down would

have traveled with ITT and his or her expenses would have been charged off to

your department?

MR. HOLLETT : In the case of, for example, Team

Canada missions, where the Premier would be in attendance on those, because it

is a First Minister led mission, the Premier would be traveling on that, and the

Department of Industry, Trade and Technology covers the expenses for those

missions, yes.

MR. FRENCH: Under what

section would they be in

here?

MR. HOLLETT: That would be included in the Trade

and Investment division, under Transportation and Communications.

MR. FRENCH: It is not a great deal, but under

2.1.02.04, Supplies, there was $54,800 budgeted and we spent $81,800. This year

we have gone down to $57,800. Why is that?

MR. HOLLETT: I can check for you on that, but I

believe that is as a result of printing of some additional promotional

materials. There were certain, I guess you would say, industry directories we

have. We do not print those every year, but some years they become out of date

and it is necessary to do new materials. That is my understanding of why the

variance was there for last year.

MR. FRENCH: Okay. Can you tell me why in 1999-2000

we budgeted $173,300 under 2.1.02.05, Professional Services, and this year we

have gone to $323,300? What exactly would be covered off under Professional

Services?

MR. HOLLETT: Professional Services are typically

consultancy contracts. In this particular case the increase for the new fiscal

year is for the Provincial Nominee Program which is a new program the department

has to attract immigrants from other countries into the Province for certain

skill sets. Quite often with that, in order to attract and identify appropriate

individuals, it is necessary to hire consultants outside the country to identify

those individuals and pre-screen them for us, to provide us with suitable

applicants. The increase is strictly related to this new program, Provincial

Nominee.

MR. FRENCH: Okay. Under Purchased -

MS KELLY: Could I also add there that in this

particular instance it would be for putting in place the program? Because this

is one of the first ones done in Canada. We wanted to have a program that was

very suited to Newfoundland and Labrador. As the program is implemented now, it

will not be a costly program. We actually will charge a fee, I think a $1,000

processing fee, so that it will be cost neutral to the Province, but we wanted

to ensure that in setting up the program we had all of the appropriate

legalities and everything in place. That is what most of that cost would be.

To get back to one of the other questions that you had

about other people traveling outside of the department, I should note that when

the Premier travels on a Team Canada Mission in that instance I do not travel.

You do not have a duplication of effort there. It is just that it is a First

Ministers led initiative.

MR. FRENCH: Further down under the same heading,

2.1.02, Trade and Investment, there is .10, Grants and Subsidies. In 1999-2000

we budgeted $170,000 but we spent $902,000, and this year we have gone to

$197,500. Can somebody tell me why we went from $170,000 to almost $1 million?

MS KELLY: This is mostly to cover off the ACF

equity fund which is a venture capital fund that the banks - I cannot remember

if it is two or three banks or just one bank but I think it is -

WITNESS: (Inaudible) several.

MS KELLY: Yes, several banks, and if I remember

correctly the Royal Bank and CIBC are certainly involved.

WITNESS: Six.

MS KELLY: Six banks are involved, and each of the

provincial governments, so we have made a commitment that we will put so much

money in every couple of years, I think, depending on the amount of activity and

the numbers of businesses that apply from Newfoundland, and so we have just

recently put a major amount into this. As a matter of fact, I think that amount

was to cover off over more than the past year. This fund now is starting to see

some very good applicants from this Province, and this has been actually one of

the few venture capital funds that we have had and the Province was very anxious

to get involved with it. We are seeing some very good success in ACEF, which is

Atlantic Canada Equity Fund I think.

MR. FRENCH: Would there be any local businesses in

the Province to take advantage of this fund?

MS KELLY: Yes, there have been. I think it is

public knowledge, isn't it, which companies are able to avail of that?

WITNESS: Yes, (inaudible) the ones that have it.

MS KELLY: Yes. Is it NDI?

WITNESS: NDI.

MS KELLY: NDI is one, and we have several now that

are at the final stage, I think, of approval. Are there any others that are

through? I know NDI has been a very successful one.

WITNESS: Instrumar Ltd.

MS KELLY: Instrumar Ltd. also, and I think

Griffith's Guitars have availed of startup funding for the prototype for their

new business, but I think they have also applied and hope that they will get

another major influx of funds for the next stage of their manufacturing

business. I know that there are at least two to three others that are under

review now. So it has been quite successful for our Province.

MR. FRENCH: Okay.

I would like to go to page 149. I am just about

finished. Under Economic Renewal Agreement, again in Transportation and

Communications - because this heading, every year since I have been a Member of

the House of Assembly, always intrigues me. No matter what government, no matter

what department we are doing estimates on, there always seems to be massive,

massive amounts of money spent in Transportation and Communications. In

1999-2000 we budgeted $40,000 and we spent $110,000. What would that money have

been used for?

MS KELLY: My understanding is that most of this,

under this particular section, is to cover the staff or the corporate

development group. I guess investment prospecting is the other subheading it

would come in under.

MR. FRENCH: We would charge some of their expenses

off to this account? Would these be people from your own department, Minister?

MS KELLY: Yes, because the corporate development

group, the funding for that division comes from this agreement.

MR. FRENCH: Okay.

Again in Transportation and Communications, under

Economic Development, 03., there was nothing budgeted in 1999-2000 yet we

managed to spend $73,800, and there was nothing for 2000-2001.

MR. BLUNDON: This is a project-driven agreement.

In the initial instance when we budget for projects under CEDA, we just put

money into main headings. We do not put it into all of the - as you see, like

employee benefits, et cetera. We just put it into certain main groups. As the

year unfolds and funding is expended from the various projects that are

approved, funding will just be put into the various main objects that we need to

run the program.

Seventy-three thousand dollars could be broken down

into a number of - it could be ten, twenty different projects. It is the way it

has been done over the past number of years. You don't know at the beginning of

the year what the amount is going to be; so, whether you budget no money or you

budget twice what you are going to have, you still cannot identify the actual

cost per project.

MR. FRENCH: Minister, under the same heading,

Grants and Subsidies, we budgeted $3,890,000 in 1999-2000 and we only spent

$2,480,500 but in 2000-2001 we anticipate spending $4,026,000. It is a fairly

substantial increase. Can somebody tell me why that is, and who will be the

recipient of the grants and subsidies under that heading?

MS KELLY: In this particular case, this is one of

the things that I mentioned in my opening statements. You are never sure, when

you start off the year, how many groups are going to be able to roll their

projects out as quickly as they think.

As I pointed out many times, some of the money under

these programs are used to lever money from other programs or other venture

capital funds. It often takes longer than the recipients under this agreement

would have anticipated. I think some of the types of thing - as an example, one

of the things here, actually, our ambassador program is run in under this

heading, like the shrimp harvesting initiative, as we were getting into that,

was run under this program. The Scottish MOU, I think, is probably one of the

best examples that I could give you there. As we were implementing that, the

money probably didn't go out as quickly as you would have thought. They were

assigned the money but, of course, until they lever the other amounts and get

the program going they don't access the money because they cannot meet our

criteria until they are up and running. Sometimes the money sits there for

longer than you would have thought. So this year this is what we are

anticipating will be used. We are not sure if these companies or organizations

will be able to access that funding in the time frames that they have indicated

to us. Many times they cannot; sometimes they are right on target.

MR. FRENCH: Could somebody supply me with a list,

from the department, of companies who will avail or who are on your list to

receive some of these grants and subsidies, and exactly what they are receiving

them for? Can somebody send me a list?

Mr. Chairman, if I might, I have one more question

left. It is on Investment Attraction, 3.4.03.01., Salaries. In 1999-2000 we

budgeted $202,000. We only spent $152,400, and in 2000-2001 we are going to

$297,800. Why the increase?

MS KELLY: Some of this was vacant positions in the

department. In particular, we had been allotting money to put towards the New

England strategy. Of course, now we are starting to implement that, so next year

you will see that these positions now have been filled and that is the amount of

money that we will need to implement the programs that we are putting in place.

MR. FRENCH: These new employees, will they be

hired through the Public Service Commission or will they be hired through the

minister's office?

MS KELLY: I think that mostly all of these

positions, some of them are already in place and most of them within - I guess

we have had six positions within the department filled recently. Some of them

were filled within government, people who can apply because the competitions are

all listed. Several have come from outside and were done through the regular

civil service hiring positions. Some have come from within either the department

directly, itself, or from the corporate development division. That is where

Barry Snow came from. Some of them would be on contract. I think Barry Snow is

still on contract with us. We are just moving him from the corporate development

division into this job. I think his contract is there until September, at which

time we will be evaluating to see how we want to continue with that program.

MR. FRENCH: Thank you, Mr. Chairman.

CHAIR: Thank you, Mr. French.

Mr. Lush.

MR. LUSH: No, that is okay. Mr. French preempted

and it completely stymied and stifled and hamstrung my creativity.

MR. FRENCH: Tom, you really amaze me that somebody

could actually stifle you. I didn't think that was possible.

MR. LUSH: I will forego.

CHAIR: Would you?

MR. LUSH: I am all for going.

CHAIR: Well, perhaps we could go to Mr. Wiseman

before we go to Ray.

MR. RALPH WISEMAN: Thank you very much, Mr.

Chairman.

I had not intended to have a lot to say but I was most

interested, actually, in the EDGE program, being the first, I think, political

appointment that was made in the Department of Industry, Trade and Technology

under that particular priority - one of the first facilitators, actually. What a

feeling, a political appointment.

MR. FITZGERALD: That is why we have had problems

with it (inaudible).

MR. RALPH WISEMAN: I know it is a good program. I

am just curious as to: Are we still looking at the number of jobs created and

the number of companies that we have attracted? I know we were at one time

keeping a running list of companies. I might say that the issue had been raised

about local companies, but I can tell you when I was there for a year, actually,

until I decided to get fully involved in politics, all the local companies in

the Province that made representation were certainly viewed and reviewed to see

if anything could be done.

I am also interested, Minister, in - we have heard a

lot about success of the department, and I know they do a good job in terms of

promoting the Province and attracting business. Have you any handle on the

amount of success that we had in terms of jobs - costs might be difficult - but

the overall impact on the economy in the Province? I think that is a pretty

broad question, so I will leave it at that.

MS KELLY: Well, at least one

part I can give you a

fairly definitive answer on. I think we are up very close to having seventy EDGE

companies right now. We have brought in several new ones recently and we still

have a few now where companies are doing some expansion and they want to wait

for their announcements to be done until the expansions are there. I think at

that stage we will be up to seventy companies very shortly.

The number of jobs, I would have to get the details

from the department to submit to you. I guess you could take the seventy and at

least multiply it by ten and you have the very bare minimum of the number of

jobs that would be created, because one of the criteria is that you would have

to create ten jobs, you would have to have ten employees as a minimum to attract

EDGE status. You also have to either generate revenues of $500,000 a year or

invest $300,000 in your start-up company to be eligible for EDGE status.

Overall, it is has been a very good success for us. I

notice that some other provinces now are starting to emulate the program and I

am hearing - when I was away last week in Boston - that they are almost using

some of the exact marketing language and the brochures are almost developed

exactly the same. It is something that we have to constantly keep on top of, but

it has certainly been an incredible marketing tool for us and it always gets you

into the boardroom. When you are trying to attract a company, in particular from

the corporate development group, when they are targeting companies it is very

hard, in many instances, to get into boardrooms of some of these big

corporations, but I find that when we talk about the EDGE program and tell them

we would like to make a presentation on it, it at least gets you into the

boardroom talking to the people you would like to talk to.

Of course, our Success~Works program that I did an

update on in the House of Assembly today through the Ministerial Statement has

certainly been a very successful tool to go along with the EDGE program. In

particular, we are finding now that for trying to attract outward investment it

has been a great tool. We are working with all of the zonal boards to get all of

the information on each zone in the Province. When all twenty zones are done it

will mean that we will have an incredible amount of information to present to,

in particular, site selectors as they are looking at the Province. If you do not

have the information readily accessible and you cannot deliver it within five

minutes to them, or less, you name drops to the bottom of the list.

When we have this particular module of Success~Works

completed - we are working with each of the zones now to do this - we will be

able to tell you exactly where in this Province there is industrial development

land available, at what price, how many acres are available, whether it is

serviced or not. Everything will be at our fingertips, and it will probably be

the best program of its type in all of North America.

The federal government - as we put the information in

now - when they need information, they are not going to their own files to get

it; they are coming to us because it is so readily available and so current.

Also, we will have all of the labor market, education and skill level of people

in each of the economic zones, so this will be an incredible tool to work with

EDGE, when you can go out and see a company and say this is the type of

incentive we can offer to you; but, not only that, whatever they ask for we can

give them the answer in a matter of minutes.

MR. RALPH WISEMAN: You have expanded upon the

program? I remember, when I was there, that we had started, we had identified

all the major communities around the Province, whether they were involved with

EDGE or not, the town councils, community councils, or whatever they might be,

the types of power supply and the whole bit. So, you have expanded upon that

particular program now, so you can plug right into a particular area in the

Province if you have a company that is interested in going into one area. You

can plug right in now into the Internet or the computer and find out what is

available anywhere in the Province of Newfoundland and Labrador.

MS KELLY: That module is being built now. It is

not there completely but we are working with each of the economic zones to put

that in place. We are actually developing a template so that each of the zones

will do it in a similar way, and also the template is being worked so that the

information can be formatted so that it is done, for instance, in kilometers or

miles, pounds or kilograms. It depends on whether it is a European or Canadian

from the mainland who is looking, or if an American is looking. It is all going

to be convertible and I am told it will be one of the first systems in the world

that will be able to respond like that. It is not completely in place now, but

it is certainly something we are working very hard with the zonal boards to get

put in place.

MR. RALPH WISEMAN: On the foreign investment and

the foreign trade missions that we are doing, do we now track the amount of

success we get out of it through various companies that are involved with the

foreign countries?

MS KELLY: We do as much as possible, but like most

business people often times they are very hesitant to tell you the exact value

of the contracts and everything that they are obtaining. We are trying to find a

way to do it so that the companies can feed us the information but not to be

really asking them for information that they do not want to give you.

One of the most important things that we do - we are

doing it now with the New England trade missions, that we are putting in place

in the trade strategy - is that we work with the companies to help get them

export ready, and we go on trade missions and that with them. We help them get

meetings and continue to be able to market their companies afterwards. The most

important thing we tell any company that is looking at foreign travel or any

type of national or international travel is do not be prepared to go with us

once. If you are going to do this, you have to be prepared to do the

follow-through and stay in there for the long term.

That is one of the reasons why the New England area is

so valuable to us; our companies can afford to spend the time necessary. It is

the same language and a market our culture is known in and we have a lot of

familiarity with. We often tell our companies that the most important thing of

any trade mission is to follow through. We are putting in place evaluation tools

now to help us follow through better. We have companies tell us: Yes, I have a

contract, yes, I am shipping bottled water or I am shipping crackers or whatever

down there, but they are not very willing in many instances to tell you the

value of the contracts because it is very competitive information for them. We

are working with them now to put these evaluations tools in place.

MR. RALPH WISEMAN: We would know, though, if they

had an increase in employment, would we?

MS KELLY: That is one of the evaluation tools that

we are putting in place that companies are quite prepared to tell you. They

might not be prepared to tell you: I have a $2 million contract, but they are

willing to say: As a result of this contract, I employed ten more people. So to

us that is probably one of the most important evaluations tools and one that we

are using. That is a good point that I should have brought up.

MR. RALPH WISEMAN: Thank you very much, Mr.

Chairman. That is it for me.

CHAIR: Mr. Hunter.

MR. HUNTER: Thank you, Mr. Chairman.

I think my colleague has pretty well dealt with the

Estimates, with the questions I had in mind. I would like to make a few comments

to the minister and probably ask a question on one of the comments, too.

Minister, I have seen a lot in the past year, not only

in my district but in the general area, of development and technology,

particularly when it comes to companies in the United States, one being the DPSI

- DP Solutions, Inc. - company that came into Grand Falls-Windsor. It has grown

in leaps and bounds. I think the council is pretty worried that if we do not

cater to them in such a matter that we might lose this company, and the town has

been requesting help with government to develop an IT centre. A commitment was

made by the federal minister and also by our local minister, Ms Thistle, in the

District of Grand Falls-Buchans. Lately there has been no response from the

ministers on where the $1.3 million would come from. The town is pretty well

concerned about that and with this business growing as fast as it is growing I

am concerned about it. The people in the town are concerned about it. That would

be the question I am going to ask the minister: Is there any money in your

department that could secure the IT centre so that this company could stay in

the town? I will let you respond to that, and then I will make further comments

on other things.

MS KELLY: I say I know that company very well. I

paid a visit out to the company last year. DPSI is here as a result of SoftWorld

98 really and because we have such a skilled labor force in this area. It has

been very successful and now has about forty jobs.

We have been working very closely with Minister

Thistle, with the mayor and council, and with others in the area, but the main

reason right now that the project hasn't gone forward with the speed that they

would like it to is because the building that they were looking at renovating

has been withdrawn from the market: The Monsignor Finn Building, I think it was.

Now a new proposal is being put together and this time, to keep things moving

along more quickly than they did in the past, what we have put in place is that

I have a staff member who is working with the community in the development of

the new proposal so that we can be evaluating it as we gather the information as

we go along. Before they came into us with a proposal that we hadn't had a staff

member working with them on as they moved along. Now that that facility has been

withdrawn, that was a fairly major setback for them, but I think they sort of

took it all in stride very quickly and they were gone directly back to the

drawing board the next day. I wouldn't be surprised, actually, if the new

proposal didn't come in while I have been gone over the last few days. I know

that last week they were telling me they were within days of putting it

together.

Of course, I cannot tell you whether there is funding

or not until I see what type of proposal they have, and it will have to be

evaluated. I know that they have been working, both with Development and Rural

Renewal, with ACOA, with HRDC and with my department. We were taking a strong

look at it. Right now it is all back to the drawing board. My hope is that

within the next week or so we will have something in. I don't know if the staff

have any new information while I was gone over the last few days.

MR. HOLLETT: Yes, the revised proposal from the

town is in. As the minister has said, we have been actively working with the

town and with DPSI and will continue to do so.

MS KELLY: I should point out also that it is very

gratifying to see a company like this that are so pleased with the skills of our

workforce, but they have also been working very actively with the town in

looking for other, similar companies. They have actually gone on the road with

the economic development people in the Exploits Valley region to the U.S. in

looking at attracting more companies. It is very refreshing to see a company

that is willing to go out and really, in some ways, bring in competition; not

competition so much from the actual business that they are in, but people who

will be employing others in the community. In that way, some would view it as

competition. They feel so strongly about the quality of the help that they have

been given in this Province and how easy it has been to relocate here that they

are willing to help the town in attracting more such companies to that area.

MR. HUNTER: It is certainly an exciting industry,

a new industry for us in Central Newfoundland. I think there is a lot of support

all around for that industry and that company too as well.

Minister, the comments that I would like to make also

pertain to the workforce that we have, particularly in rural Newfoundland. Last

year I met with a company from Texas that was interested in setting up here

basically because of the amount of workforce, young dedicated people who want to

live in rural areas, who don't want to move around on a yearly basis or move

from job to job. They were really excited and really pleased to see that

Newfoundlanders could offer that type of workforce. This company today is set up

in Springdale. I think you are probably familiar with that electronic company. I

was also excited to see the interest from companies from United States coming

here, not looking for money as such, but looking for a dedicated workforce.

Minister, I am a bit worried about that workforce.

Because with the amount of out-migration, these young qualified energetic people

are having to leave and we cannot seem to hang on to them long enough to give

companies like this a chance to come here and take advantage of this workforce

which is quite willing to stay in a small community and settle down. Even though

it is not for big wages it is a living, and they are quite comfortable staying

there and working for these companies coming in.

I am worried about this workforce, this particular

young age group between probably twenty and thirty years old, that are having to

move with young families. I hope that in the new industrial and technology areas

that your department would be recommending to companies when they come in to get

away from the bigger areas, to set up in small communities, no matter whose

district it is in. There are vacant buildings, schools, whatever in small

communities. Some of these companies really do not care if they are in the city

or in a small community. I would like to see your department more or less entice

these companies when they come in to search out these small rural area towns

that would take the pressure off the young people from these small communities

leaving our Province.

It is a lot easier to find a job in big urban areas in

Newfoundland and Labrador. In the big towns it is easier for a young person to

find a job, even though it is low paying, to help them stay in the Province but

in a small community in Newfoundland and Labrador that option is not there for

them. They have no other option but to move to the mainland. Now that these

companies are coming in and they are looking at this workforce resource that we

have, I think if we are not careful we are going to lose a lot of these young

people. Then the companies have no other choice but go into the bigger areas

like Grand Falls-Windsor, St. John's, Gander or whatever, even though they are

welcomed in any area of the Province. It is important that we try to entice them

and encourage them to set up in the smaller communities.

Having said that also, minister, I have had the

pleasure this past fall to introduce some people from North Carolina to some of

the things that are happening here in Newfoundland, particularly with the True

North water bottling plant in South Brook which is in my district. They could

not believe the quality of spring water coming out of that facility in South

Brook. One gentleman in particular worked with a water bottling plant in North

Carolina and he just could not believe the quality of that water coming out

there. With this resource we have in our Province today, it has such potential,

you know, it just excites me, I guess, and excites anybody that has this

resource.

Minister, also with the EDGE program and other goodies

to entice businesses into our Province, I have seen in the past couple of years,

particularly in the Bishop's Falls industrial development area, businesses come

and go that have probably been given the EDGE program and been there for a

couple of years, cannot make it, and leave. Also, some of the businesses that

come there are there for a particular amount of time that they signed agreements

with the government for - whether it be ten years or twelve years or whatever

the agreement was - that were quite profitable, and at the end of their contract

decided: I have my money, I have all these assets here, and now I am going to

leave.

I saw one in particular, Clamar Plastics Ltd., a

plastics factory there, over the years that got a lot of help from government to

set up. A couple of years ago a young person - I can understand an older person

retiring - retired from this business, a very profitable business, selling all

the assets of his company to a company in Nova Scotia. Walking away from the

business with dollars in his pocket, a big facility, a big building, with no

security to the taxpayers of this Province to say to this company: If you are

going to get out you can sell, but the company stays here. You can sell the

company and assets and keep the doors open. I have no problem with that, but I

have a big problem when I see companies living up to the end of the term of

their contract and then walking away with big dollars in their pocket and

probably thirty or forty jobs gone, families uprooted, probably in despair and

having to go bankrupt. I have heard people say that they didn't know. All of a

sudden this company was gone, machinery was coming, taken overnight, gone, and

all these jobs out the door.

There are also other companies. There was Helitactics

Limited, another company in Bishop's Falls, that had the EDGE status. They had a

lot of government dollars. Overnight, out and gone. Hockey stick factories,

sport utility equipment factories out there that come in here with no security.

I would like to see - or probably we do have it already; I don't know - dollars

kept in trust for any companies that qualify and are given a status that if they

don't stay here - not when their term runs out, but stay here - and contribute

to the economy, not walk away or run away from their businesses after their

commitment is made.

Not only that, Minister. With the amount of money that

could be kept in trust it would help the Province to clean up the mess that is

being left behind, or any debts left behind, or any suits or anything that is

going to take place after the companies leave the Province.

Even in this budget, Minister, I have seen great deals

of monies - I am not sure of the amounts - being spent by the government to

clean up the mess in Hope Brook. It just blows my mind to think how we can allow

that to happen in this day and age, where we can't have some type of security,

dollar value security, so that when companies do not keep their commitments when

they are finished with their business, that dollars are there to take care of

any problems that might arise. If they do not arise in a reasonable amount of

time then, sure, give them back their money.

Is there a policy in place - do we really scrutinize a

company and see what the life expectancy of a company is before we give them

EDGE status? Because some companies that have been given EDGE status, and given

dollars by government, their life expectancy runs out before the ten years is

up. Then they are living on borrowed time, probably saying: Okay, we can go for

another year, another two years, and just borrow time from year to year knowing

that this business is not going to survive any longer than ten years. If they

are not going to survive any longer than ten years, why would they be given a

ten year tax break? Why wouldn't it be a two year, so that after the two years

or three years the government could get some return in taxes? Why should we give

a full tax benefit to a company for ten years if they are only going to last

eight, nine or ten? Is there any policy in this program to protect the Province

against this kind of stuff?

MS KELLY: I guess my first comment would be that

we don't plan for failure. When we scrutinize business plans - when anyone sets

up a business, they certainly do not plan to go out of business. If our

assessment of it said to us that this business can only last for two years, or

it can only last for eight years, we would not be subsidizing or helping them.

One of the things that I have to say about EDGE is

that no money is really lost to the government until the company is truly

successful. You are in place, meeting all the criteria, you have employed people

and you have run your business. Then you have to come in at tax remittance time

and give your documents. If your documents do not show that you have spent the

revenues, employed the people, and that you are eligible to not pay taxes, well,

it does not cost the Treasury anything until you are successful.

I think, as to the idea of putting money in trust, one

of the biggest problems - and I don't know if you have ever been in business. I

have been in business in this Province.

MR. HUNTER: Twenty-five years.

MS KELLY: Well, one of the biggest problems is

that, when you are starting up a business, if someone says to you that you have

to put money in trust, you often will not be able to start up the business. When

we were out on the Jobs and Growth consultation meetings, that was one of the

biggest problems that we heard, that people did not have enough venture capital.

If they do not have enough venture capital to start their businesses, they are

surely not going to have enough to put into trust funds.

I think that in this Province many times we look at

business failure as a horrible, terrible thing. While we all think we don't want

to be American, and all the rest of it, you have to look sometimes and realize

that there is nothing the matter with learning, with starting a business. If you

look at the statistics, they show that oftentimes, if you look at the very

successful business people that we have in this country, it was often their

third or fourth business before they were truly successful and able to employ

hundreds of people.

As to the comment about the Hope Brook mine, that was

put in place by another government at another time, but this government has now

put a new mining act in place - I am not sure of the specific name around the

piece of legislation - to ensure that this will never happen again. We are ones

that are putting the money in to make sure that it is cleaned up. We are not

waiting for it to take ten to fifteen years to go through the court system,

because we feel it is too dangerous an environmental problem to sit and wait. We

put the start-up money in the budget this year, a very significant amount, I

think several millions of dollars, to make sure that this environmental mess is

cleaned up. We also have put the legislation in place to ensure that it never

happens again.

I was taking notes here as you were speaking. The

company from Texas that you were referring to, there is certainly no doubt that

we are extremely pleased. I think you are probably aware that they have applied

for EDGE status and that is in the system right now. We continue to talk to the

company about it and, when the time is appropriate, the appropriate

announcements will be made. That has to be done in conjunction with the company

when they are ready for it.

We are particularly pleased that they are setting up

in this rural area . One of the reasons, of course, that they were attracted to

the area was the utilization of a school, previously what we used to call a

vocational school back in the time that one was built.

Your comment about trying to attract business to rural

areas is well taken and is one of the reasons we actually have to take a look

and see if we can put better incentive programs in place for rural areas than we

now have for urban areas, but it is very difficult. If you are able to attract a

company to this Province, we certainly cannot say to them: You have to go to

such and such an area.

We do everything we can to put them to areas where we

know that we have a good, stable workforce, but this is a problem that, when I

was in Ireland on the trade mission, I did a lot of research myself on to see

how they are coping with the problem. The thing that they are saying to us is

that what generally happens is that when companies come and the cities and the

urban areas get full, then they are willing to look at the rural areas. They are

finding now that they are having to do the same thing that we are considering:

putting in place and trying to put good strategies in place to attract them to

rural areas.

That is one of the reasons of the Success~Works

program we are putting place with the zonal boards, to make sure that every

empty fish plant, every empty school, or any defunct business that is out there,

that we make sure we know about them and that we know which of the smaller

communities are willing to be EDGE communities, I call them, and willing to

write off either property or business tax on that.

We always present the rural areas. In particular, if

you have companies that are in the range of fifty to one hundred jobs or less,

we think they are very suited to those areas and we always put them forward

first. We have been trying to learn from other jurisdictions: Is there a better

way for us to be doing it? Everything that we can do to help companies in

particular that go into rural areas succeed, we work very closely with them.

True North is certainly one of the examples of a company we worked very closely

with. They were on Team Atlantic with me last year and we continue to work very

closely with them.

One of the difficulties, I have to point out, and I

must use this opportunity to discuss, is the fact that everyone in this Province

thinks that there should be water royalties for little companies like this. We

don't have a water bottling company in this Province at the moment. There are

very few in Canada that are actually making money, because of the fact that they

are competing with the big companies like Perrier and Evian water that have

marketing budgets that are bigger than the marketing budget for tourism and my

department combined. So, at this time we have to do something about the

expectation that is out there by people calling into Open Line shows and saying:

We got to stick it to these water bottling companies on the royalties. If we do,

they are not even going to get past the start-up stage. We have to look at

putting in place something for when these companies are successful and can pay

royalties, but theirs is a very good example of a prime business opportunity if

we can assist them to help them find markets for their bottled water.

MR. HUNTER: I believe out water today is True

North water, isn't it?

WITNESS: Yes.

MS KELLY: I must have a drink of it.

MR. HUNTER: Oh, you will be pleased. It is good

water.

That is all I was asking, that rural Newfoundland

would be considered because of the out-migration of our young people in rural

Newfoundland. That is the basic reason -

MS KELLY: The out-migration really, to be

truthful, has stopped quite a bit. The numbers are really going down. The other

very good thing about this Province is that when you can attract business to

anywhere in this Province, people are willing to come back and work in it. I

think Point Leamington is a prime example of that. DPSI is one of the better

examples of it. We have had young Newfoundlanders who have moved back to work in

that business. That is one of the very positive things about Newfoundland, and

one of the marketing tools that I use. When I am off marketing this Province and

they say: Will we have stability of employment? Can you offer us the expertise

that we need? I always say to them: If we do not have it in the communities, we

will go and look for it for you, because inevitably we will find someone who is

away and has good experience and is more than willing to move back. We actually

help companies with doing just that.

MR. HUNTER: That is what I wanted to hear.

CHAIR: Thank you, Mr. Hunter.

Percy?

MR. BARRETT: My stomach is telling me not to say

anything.

WITNESS: Well, you should follow good advice.

MR. BARRETT: I just have a couple of comments. It

mostly centers around Bull Arm, because your department is responsible for Bull

Arm. Your department is also responsible for the Offshore Development Fund.

The Bull Arm site itself is administered by an

appointed body, and I guess one of the problems I have, and one of the problems

the local area has, is that we do not have anybody from the immediate area on

the Bull Arm site, board, or whatever it is called. I think there are people

from that area there who should be on that site. Right now, one of the persons

on it is from Gander somewhere and the other person is from -

MS KELLY: Well before I ever arrived.

MR. BARRETT: I think it was Mr. Wes Simms.

WITNESS: I know his brother.

MR. BARRETT: I know his brother, too. There is

another person.

It is a facility that is located there and I think, in

terms of marketing and what have you, sometimes input from the local people is

very important. That is lacking there right now.

The other comment I want to make, because I know that

pretty soon we are going to be into negotiations in terms of the Bull Arm site

and at some point we are going to have to determine whether it is a construction

site or a permanent facility. I think some of the labor difficulties and the

problems we have had there in the past are due to the fact that I think this

time it was slated to be more of a permanent facility in terms of people going

and working there, more like the Marystown Shipyard or National Sea Products in

Arnolds Cove or the Come By Chance Refinery, in that people would come there and

actually settle in the area because they had a sort of permanent job working in

a fabrication site.

I would urge the minister, in future negotiations at

the government level with these companies, to solve some of the problems we have

out there with the present contracts. People want a travel allowance. If it is a

construction site, by all means, and people are going to commute there from all

over the Province, then, yes, label it as a construction site. If it is not

going to be a construction site, then we have to encourage people to settle in

the immediate area.

That brings me to my other concern. We have all those

jobs - and I am not complaining. In that immediate area, I have roughly about

3,000 or 3,300 jobs. Not all of them are permanent jobs - some are seasonal

jobs. Between Whiffen Head, National Sea Products, Bull Arm and the Refinery,

there are roughly 3,500 to 4,000 people that get their livelihood, not counting

the indirect jobs that are created because these facilities are there. We put a

lot of money in that area, in the Bull Arm site, in terms of providing

facilities on the site itself, but as you know now the site is not a confined

site and a lot of the businesses are spreading out into the communities adjacent

to the site. It was only the other day that I drove down through the roads in

Arnold's Cove, and the heavy equipment and the amount of activity going on in

that immediate area - and I am sure Roger has been on the road there at 6:00 a.m

or 7:00 a.m and late in the evening - I mean, it is as busy as Water Street.

MR. FITZGERALD: Not as bad as the roads on Route

MR. BARRETT: No, but you don't have the same

industrial activity. People just do that for pleasure, right?

MR. FITZGERALD: (Inaudible) the reason why.

MR. BARRETT: I don't if there is any money left in

the Offshore Development Fund, but I think we are going to have to look at some

of the infrastructure in and around these communities there, because there are

other businesses ready to move into that immediate area. I know five or six

other businesses that are - and it is mostly spinoff from Bull Arm, Whiffen Head

and the Come By Chance Refinery. As Donovan's Industrial Park gets filled up, as

you say, more and more businesses will move out into the immediate area and it

is more cost effective.

The other thing I want to make a comment on is

Gisborne Lake. It will probably have an advantage over any other bottling plant

or any other thing in Newfoundland because we are right next to the markets of

the New England states and we are also on the sea coast. One of the problems

with the other bottling plants, as we found in the committee that looked at the

royalty scheme, is one of the problems with bottled water from Newfoundland is

the actual transportation. Because a lot of these companies that are formed in

areas have to truck their water -

WITNESS: (Inaudible).

MR. BARRETT: Not ice free, though. Fortune Bay is

ice free and is close. I flew from Toronto the other day and I noticed that we

are very close to the New England market. One of the great assets of Gisborne

Lake of course is it is going to be economically feasible over all the other

areas because it is close to the market. They can come in by container ship and

take a load of bottled water and take it right down to the Eastern Seaboard of

the United States.

These are just a few comments. It is not a question,

these are just some of the concerns that I have around the Bull Arm site.

Hopefully this time next year I will have a different kind of complaint in that

we will have 8,000 people working out there and we will have to put traffic

lights on the Trans-Canada to accommodate them all.

CHAIR: Then we will have to four lane it.

MR. BARRETT: Yes, and then we will have the four

lane it.

MS KELLY: Even though you didn't have a question I

would like to make a comment on several of the points that you brought up.

Actually, my Deputy Minister is the chair of the Bull Arm board and most of the

people who sit on it are government officials, but if I remember correctly,

Susan Hollett is a member of that board who is from Clarenville, or at least was

working in Clarenville and living there. I'm not sure that she still is, to be

truthful, I have not been in contact with her recently, and there is someone

from the area on that board. You know that we have the same objectives that you

have, that this not be a construction site, that it will be a permanent site.

Now our hope is that if we can advance our offshore development projects along

very quickly to the next development stage that will occur. We have been trying

to find some work, working with Brown & Root actually, to try and find some

interim work to keep people in the area, but I think that when people see the

continuity of work there, that is when they are going to chose to live there.

One of the reasons that we as a government sold off

the accommodations - they were only temporary accommodations anyway and they

were not going to last many more years. We totally agree that we want it to be a

permanent work site and not an industrial work site. The other thing I would

wonder is why you would need the Offshore Development Fund to attract businesses

to the area. I think we should have a little bit more discussion about that at

some time.

MR. BARRETT: I am not talking about using the

Offshore Development Fund to attract businesses but what I am saying is, because

of the increased traffic levels, we do not have the road system to be able to

accommodate people. As we did in St. John's, for example, we pumped money into

the Outer Ring Road and we are putting money in the Goulds by-pass to

accommodate the economic activity that is taking place and the traffic jams that

are taking place in St. John's. We are facing the same thing in the Come by

Chance-Arnold's Cove area. We have very narrow roads going into the communities.

As a matter of fact, the heavy equipment that has been going into Whiffen Head

and all the other (inaudible) has torn things up. The roads that were designed

there were designed for small residential vehicular traffic. This time last year

the road into Arnold's Cove was a good road but now the road going into Arnold's

Cove is completely torn up because there is so much heavy equipment.

Take Whiffen Head. Most of the things that came into

Whiffen Head came in by large trucks. There are at least a dozen tractor

trailers leaving the National Sea Products plant every day taking product, and

the product coming in, so between Whiffen Head, the Come by Chance Oil Refinery

and National Sea Products, we do not have the infrastructure there to be able to

accommodate. If there are more businesses coming in that is going to be a factor

and it is going to turn people off. I mean, (inaudible).

MS KELLY: Now I have a better understanding of

what you are talking about.

MR. BARRETT: If you are going to build up an

industrial area -

MS KELLY: Actually, it is a wonderful complaint to

have, isn't it, Mr. Lush?

WITNESS: It is a great problem, Percy, with new

mining companies (inaudible).

WITNESS: You have a great problem.

WITNESS: (Inaudible) big factor in a mining

company not wanting to set up there because of the road conditions.

MS KELLY: These are the types of things that is a

pleasure to start trying to address, actually.

The only other comment that I would like to make from

the Gisborne Lake perspective is that I agree with what you are saying. It is

wonderful that it is next to the market but, you know, almost everything now

from a trucking perspective into the New England market and that is next to the

market, but you are right on the source. One of the things that I think is the

biggest challenge of all is getting the contracts. When you can fill the boats

and you have a ice free port that is when it makes the difference, but getting

the contracts is the biggest challenge that our companies will have right now.

You will have no trouble once any water bottling facility is built in this

Province. You will have no trouble keeping it going and keeping it expanded. We

have lots of water and the ability to get it to market. Our biggest problem is

getting the contracts in the market when you have to compete with huge companies

that are out there in the world right now. If we persist and put in place some

good strategies and work with each other, I am sure that it will happen.

CHAIR: Thank you, minister.

Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

I have a few questions. I promise to keep them short

if the minister will keep her answers just as short. Maybe we can get out of

here.

MS KELLY: I will try.

MR. FITZGERALD: Minister, you talked about the

EDGE program. The EDGE program has been brought up for discussion by several

people here. Did you say that there were seventy businesses presently taking

part in the EDGE program, or is that the number of industries or the number of

businesses that have accessed it right from the very beginning?

MS KELLY: The number is between sixty and seventy

of active EDGE companies right now.

MR. FITZGERALD: How many have taken

part in the

program since its implementation, would you guess?

MS KELLY: I would say probably eighty to ninety, I

suppose. Because there has certainly been some, like Ray has pointed out, that

have failed.

MR. FITZGERALD: Can we get a list of the

businesses that are presently participating in the EDGE program?

MS KELLY: Yes, I think that is a matter of public

record. I think I have actually provided it very recently through a request so

that should not be a difficulty.

MR. FITZGERALD: It is public knowledge?

MS KELLY: Yes.

MR. FITZGERALD: If we could, please.

MS KELLY: Yes.

MR. FITZGERALD: The other question I would like to

have is this. You talked about your involvement and how you are excited about

some of the things that can happen on the Eastern Seaboard. Has the Come by

Chance Oil Refinery ever approached you with the problem of not being able to

sell their gasoline that is produced right here in the Province on the Eastern

Seaboard?

MS KELLY: They haven't directly, but I know that

it is an initiative that we have had to look at. I think there is an issue

before the competition board right now about that very matter, if I remember

correctly, that a decision should be made on it shortly. I would anticipate

after that, if it is not solved to their satisfaction, then we will have to

start looking at the problem with them.

MR. FITZGERALD: It is a problem and it seems to be

very unfair. While we are going down to Argentina, Chile and other places trying

to drum up trade and create new industry, here we are with an oil refinery in

our own Province but we are stifled as to selling oil here in our own country.

That is unheard of.

WITNESS: That is the deal that was signed.

MR. FITZGERALD: Yes, I know it was a deal that was

signed, but is it right, is it fair? That is the thing that needs to be asked.

Minister, it was only a couple of days ago I was

listening to the radio, or I saw it on t.v., or something, and some company in

Stephenville or Port aux Basques, that had been providing some training program

for welders or gotten into some kind of a business here, owed the town of

whatever - Stephenville or Port aux Basques - a bundle of money -

WITNESS: Port aux Basques.

MR. FITZGERALD: Port aux Basques? It sounds like a

business that would have fitted into your plans here. Do they owe you any money?

MS KELLY: No, I don't think so. The business, if I

remember correctly, was one in which there was some training done in

anticipation of a business, and the business was to produce barges on which

there would be generation of electricity on land to India, if I remember

correctly, but the business never, ever got off the ground.

MR. FITZGERALD: It was not something that we

participated in by providing them with funding in order to get them to come to

Port aux Basques and set up business?

MS KELLY: Not to my knowledge. I would have to

check that for you.

MR. FITZGERALD: It came from the Port aux Basques

development fund?

WITNESS: It came from the Port aux Basques

development fund, a fund that was set up when there was a downturn of the

railway. The same as the Bishop Falls thing.

MR. FITZGERALD: So they accessed money through

there.

A couple of headings here in the Estimates where we

have not spent - I have no problem with saving provincial money but I would like

to spend whatever federal money we can get. I notice on page 149, subhead

3.4.01. and subhead 3.4.02., Revenue-Federal, in 3.4.01. there is $254,800

budgeted there and there was $138,800 spent. There is the same thing down below

there. Is that a plan that generates over a two-year, four-year or five-year

period?

MS KELLY: That is correct. Most of them are over a

five-year period. For many of them funding has already been okayed but it is put

out as certain conditions are met. Sometimes it is over a three-year to

four-year period. That is exactly right. This money will not revert to the

federal government or anything. This is a planned strategy, and one that you

wait for proposals to come in. Sometimes when the proposals come in there is

funding on a yearly basis. Sometimes, too, you will fund an organization such as

Newfoundland and Labrador Alliance of Technical Industries and you would agree

over the five-year period that you would give that organization funding of

$50,000 a year for five years to run their operation or to pay part of their

executive director's salary and so on. That is why you would see, in some

instances, the money is allotted on a yearly basis. Of course, if it is a

five-year agreement, you would have to make sure there is money there for the

whole five years. There is usually what they call a clean-up year after that.

MR. FITZGERALD: The debate seems to be heating up

now as far as how we are going to extract oil from the White Rose field, whether

it is going to be by a floating platform or whether it is going to be by a

gravity-base platform. What are your views, or your department's views, on which

way we should go with developing that particular oil field? Surely, God, if we

could go and build a gravity-base structure and start from scratch when we went

and took

part in Hibernia, there must be a way that we could be very competitive

now with the infrastructure that is already existing in Bull Arm in order to

provide such a structure for the White Rose field.

MS KELLY: From that perspective, actually, it is

much too early to say that we have to have development plans and everything in;

but, of course, in preparation for assessing all of this, and working with the

C-NOPB in that, we certainly have to have ourselves very up-to-date. I have been

meeting with Husky and other companies, listening to some of the debate that is

starting in that. We certainly realize the issues around whether it should be a

GBS or an FPSO.

My initial understanding of all of this is that you

need about five trillion cubic feet of gas to make a pipeline to the Province,

to land, and then afterwards probably overland or following the coast down to

the New England area. You need at least five trillion cubic feet to make it

feasible.

At the moment, everybody knows there is a lot of gas

out there. We know there is a lot of it off the Labrador Coast, but right now

the technology is not there to be able to bring it to shore in an affordable

way, and in a safe and effective way. The point will have to be around the

resources and the cost-effectiveness of it, certainly around whether it is

around a GBS or an FPSO. It certainly will be good for Marystown, NEWDOCK and

Bull Arm - the development - especially now with the experience we have gained

with GBS and also with the modules that have been done out at Bull Arm for the

FPSO. I have noticed that all of these companies have been working very actively

with the engineering companies and development companies here.

One of the things we have to do is wait until all of

the information comes in and we are able to properly assess it. It would be very

premature at this stage to say that the Province prefers one over the other.

As you know, as a government, we have been out there

saying that gas development we want sooner rather than later. Of course we are

very hopeful, in particular around this summer's exploration season, that we

will be able to define more gas out there. I know we are somewhere between one

trillion and two trillion cubic feet of gas that has been identified in a clear

way that you could say it is there and it is able to be piped. Other than that,

right now, those are just sort of the facts that I have been putting together

and the studies that I have been reading to try and make sure that as the

information comes in I am all up to speed on it and able to assess it; because,

of course, we want to be very timely in our assessment of it. As Bull Arm winds

down, the FPSO development which is due to come on stream next year, we would

like to - with as little time intervening as possible - be able to move into the

next major production out there, the next major project.

MR. FITZGERALD: How about Marystown? I understand

that they picked up a contract there just a couple of weeks ago that is going to

provide them with eight weeks of work. Is there anything in the long term that

you could see positively happening there? Are there some contracts pending, o

r is it a situation where we will see what happens

tomorrow?

MS KELLY: We have put a joint action committee

together and it has had its first meeting between government, the union, and

management of the company. That was held about three weeks ago, I think. The

management of the company were, just last week, down to the U.S. looking at the

work plan for the rest of this year. We are hoping to hear from them shortly

about any work that the company has itself which it might divert to the

facility. I know that they have several tenders out there which will be closing

shortly, that, if they are competitive enough, they hope to be winning. Then, of

course, the Sedco 714 is in down there right now. I hope they can meet the time

lines.

Usually what will happen, like happened with the Henry

Goodridge when it was in several months ago, often they come in and a lot more

work is needed on them than was originally anticipated. I know that happened

even before the rig got here. They thought originally it would only need a

matter of days work, but already they know there is a significant amount of work

for a large number of people over a short period of time. We are very hopeful,

now that the company has chosen Marystown to do this initial work, that

Marystown will also be doing the follow-up work and will be able to put crews

out on the rig whenever it needs work done while it is servicing our offshore.

CHAIR: Thank you, Mr. Fitzgerald.

Are there any other questions from members of the

Committee?

There being no other questions, I ask for a motion to

approve subheads 1.1.01. to 3.5.01.

On motion, subheads 1.1.01. through 3.5.01., carried.

On motion, Department of Industry, Trade and

Technology, total heads, carried.

CHAIR: Thank you very much.

It is now that hour of the evening when it is time to

adjourn. Minister, we have great appetites so get your credit card out.

On motion, the Committee adjourned.