Pursuant to Standing Order 68, John Dinn, MHA for Kilbride, replaces Paul Davis, MHA for Topsail, and Vaughn Granter, MHA for Humber West, replaces Jim Baker, MHA for Labrador West.

The Committee met at 5:30 p.m. in the Assembly Chamber.

MR. VERGE: Okay, can I have your attention, ladies and gentlemen. I want to welcome you to this meeting where we will be reviewing the Estimates for the Department of Natural Resources. The first order of the day is we need to elect a chairperson for this Committee.

MR. BRAZIL: I nominate Wade Verge.

MR. VERGE: I will call on the Clerk to conduct that nomination.

Thank you, though, for your eagerness.

MR. BRAZIL: Overzealous.

CLERK (Ms Murphy): Are there any nominations for Chair?

MR. BRAZIL: Wade Verge.

CLERK: Mr. Brazil.

Seconded by?

MR. HUNTER: Seconded.

CLERK: Mr. Hunter.

All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CLERK: Contra-minded?

Carried.

CHAIR (Verge): Okay, thank you.

Now we need to elect the Vice-Chair of the Committee. Are there any nominations for the position of Vice-Chair?

MS JONES: Kelvin Parsons.

CHAIR: Kelvin Parsons has been nominated.

Seconded by?

MR. GRANTER: Seconded.

CHAIR: Vaughn Granter.

Thank you.

All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

Carried.

CLERK: 1.1.01.

CHAIR: I call subhead 1.1.01.

I recognize the Minister of Natural Resources.

MR. SKINNER: Thank you very much.

Just by way of procedure, we did submit a layout of all the people sitting. I am assuming whoever is in TV land is able to look after all of that. Okay, thank you.

I have a few opening remarks. It was going to be my intention, by way of introduction, to have a few opening remarks before we get into the details, if that is okay?

CHAIR: I was thinking, Minister, you have fifteen minutes, technically, for opening remarks and to introduce your staff and whatever else you want to say, but you do not have to use the fifteen minutes. The first speaker over here has fifteen minutes as well, but if it is in agreement with people we will guide the time and try to be fair and go back and forth as needed, if that is in agreement with everybody.

OFFICIAL: (Inaudible).

MR. SKINNER: Fair enough. Thank you, and the same to you.

I think I should, just by way of introduction, even though we have sort of done it, I think I will do it for everybody in the room. I will ask everybody here on my side if they would just introduce themselves by name and by position so that members opposite will be able to understand who is here sitting with me and what their function is within the department. As we get into the Estimates, I will be calling upon some of these people for specific responses that I may need.

My name is Shawn Skinner, Minister of Natural Resources, and I will start here on my left.

MR. MOORES: Len Moores, the CEO for the Forestry and Agrifoods Agency.

MS MACDONALD: Cindy MacDonald, I am Director of Agriculture Business Development.

MR. LIVERMAN: Dave Liverman, Assistant Deputy Minister of Mines.

MR. BOWN: Charles Bown, Associate Deputy Minister, Energy.

MR. WARDLE: Richard Wardle, Acting Deputy Minister of Mines and Energy.

MR. IVIMEY: Philip Ivimey, Departmental Comptroller.

MS MACLEAN: Heather MacLean, Director of Communications.

MS HUMPHRIES: Denise Humphries, Executive Assistant to Minister Skinner.

MR. SKINNER: Okay, thank you very much.

What I would like to do is just a general overview of the main budget items for the four branches of the department which are the Forestry, Agrifoods, Mines and Energy branches.

CHAIR: Mr. Skinner, can I interrupt you for one second?

MR. SKINNER: You can, Sir.

CHAIR: I was in error. I really should have asked the rest of the Committee members to introduce themselves as well, if that is okay?

MR. SKINNER: Absolutely.

MR. BRAZIL: David Brazil, MHA, Conception Bay East & Bell Island.

MR. MALLAM: Hi, my name is Andrew Mallam. I am a researcher with the Opposition Office.

MR. GRANTER: Vaughn Granter, MHA, Humber West.

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

MR. DINN: John Dinn, MHA, Kilbride.

MS JONES: Yvonne Jones, MHA, Cartwright-L'Anse au Clair.

MR. WESTCOTT: Craig Westcott, Director of Communications, Opposition Office.

MR. MILES: Peter Miles, researcher of the Opposition Office.

MS MICHAEL: Lorraine Michael, MHA, Signal Hill-Quidi Vidi.

MR. MORGAN: Ivan Morgan, researcher, NDP Office.

MR. SKINNER: Thank you very much.

As I indicated, I will sort of just have a couple of brief remarks on the four divisions within the department and then after that whatever questions there are we would be more than happy to try and answer them to the best of our ability.

I will start off with Forestry. The forest industry in this Province has been significantly affected by the changes in the global economy. In particular, the pulp and paper and the lumber industries have been negatively impacted over the past several years. Our response to this downturn has been to work with our forestry entrepreneurs to improve their facilities and to build upon the strengths of the sawmilling and value-added industry.

Through our Forestry Industry Diversification Fund, $4.2 million will be invested into two of our larger integrated sawmills which will help with product quality, product capacity and product efficiency. In today's marketplace, it is also pivotal to invest in research to explore new, innovative opportunities for this sector. An investment of $1.1 million will support a new forest research and innovation fund to strengthen the research capacity in the Province to open new avenues for future advancement of the forest industry in Newfoundland and Labrador.

In the Agriculture division, food security is an important issue for the people of our Province. Newfoundland and Labrador is vulnerable to world events given that we import approximately 90 per cent of the food that we consume. Strengthening our local food production is paramount. In consultation with the agrifoods industry, we have developed a five-year action plan for the agriculture and agrifoods industry to build upon our current capacity. We will be investing $250,000 in 2011-2012 to begin implementing this action plan. Investments this year will be focused on new entrants; $150,000 will be used to develop programs to attract new entrants into the industry and $100,000 will be invested to implement a legal survey assistance program for new entrants.

We believe that food safety is crucial for the agriculture and agrifoods industry; $500,000 will support the purchase of new equipment for the Province's Animal Health Laboratory. This will provide greater food safety and milk quality testing capabilities. These investments into the agriculture and agrifoods industry will support increased industry food production and safety, resulting in improved food security for the people of Newfoundland and Labrador.

The provincial mining industry is a significant contributor to the economy with valuable employment opportunities for the people of our Province. The mining industry is growing in the Province with mineral shipments predicted to hit an all-time high and two new mines expected to open in 2011-2012, the Labrador Iron Mines and Rambler Mines and Metals. Funding of $1.2 million will support geoscience mapping and maintenance of the collection of geoscience data that will benefit the Province's mineral exploration sector, particularly in Labrador and rural areas.

Budget 2010 identified funds to implement dam repairs at the former Buchans mine. Budget 2011 confirms this work by providing funds for the inspection and repair of four dam sites to ensure their long-term stability and safety. These include Whalesback dam near Springdale, Rambler near Baie Verte, Gull Bridge near South Brook, and Daniel's Harbour. Five hundred and ten thousand dollars is allocated to address issues at these sites, as well as to continue inspection and maintenance at all such dams. The work required will ensure these dams remain in good condition and support containing mines tailings in the future.

Geoscience mapping and an up-to-date geoscience database are important components to provide a competitive environment for mineral exploration. The Geological Survey Division is considered one of the top providers of public geoscience in North America with a long and successful history of supporting mineral exploration. Budget 2008 identified $1 million a year for a three-year period for additional geoscience mapping. This program was very successful in achieving its outcomes, particularly in Labrador, and in stimulating mineral exploration. A permanent addition of $1.2 million is now identified to sustain this geoscience activity, especially in Labrador and rural areas.

The provincial Energy Plan was released in 2007 and identified an initial $35 million for specific initiatives, such as geoscience data acquisition, energy efficiency and conservation, and energy innovation. All of the 107 commitments are either underway or completed. Some of the significant initiatives include: the Energy Innovation Roadmap, initiatives under the Offshore Geoscience Data Program, initiatives under the Petroleum Exploration Enhancement Program and the major projects capacity study. The department has been provided $13.5 million in funding to continue these programs which includes $3.1 million for the EnerGuide program.

Budget 2011 will provide $348 million to Nalcor Energy for investments to facilitate participation in oil and gas and other energy projects including the Lower Churchill. Climate change is having and will continue to have a major impact on our coasts and which affect communities and infrastructure in coastal areas vulnerable to flooding and coastal erosion. Through Budget 2011, $100,000 has been allocated for a project to map vulnerable coastal areas, identifying areas at risk and developing a better understanding of erosion rates. The project will identify areas where development could be restricted or mitigation required before development occurs, thereby reducing the cost incurred by the Province of expensive mitigation and rehab in the future.

We remain committed to enacting the best standards possible in regard to offshore helicopter safety and support of all the recommendations of Commissioner Robert Wells of the Offshore Helicopter Safety Enquiry. Safety in our oil and gas industry is paramount, and the recommendation of Commission Wells provide for enhanced measures to protect the workers who travel offshore. We look forward to the co-operation of those involved in the industry, including both levels of government, the regulator and operators, and most importantly the workers as steps are taken to implement these recommendations. We have provided additional funding to the C-NLOPB of $1.4 million to increase its existing operating capacity and to specifically fund the implementation of recommendations from the Phase I report.

In late 2009, CF(L)Co requested that Hydro-Quebec renegotiate the 1969 power contract to establish a fair and equitable return for both CF(L)Co and Hydro-Quebec When Hydro-Quebec did not respond to this request CF(L)Co launched a legal proceeding against Hydro-Quebec. The legal proceeding was launched on the basis that the pricing terms of the 1969 contract are inconsistent with the obligation imposed by the law of Quebec - which is the Quebec Civil Code - to act in good faith in all legal relationships, including the ongoing performance of contracts.

This court challenge is entirely different than previous court challenges that have ruled against the Province of Newfoundland and Labrador. A number of steps have occurred since legal proceedings began in early 2010 and Hydro-Quebec is scheduled to file its defence by the end of April, 2011. According to the agreed timetable, the case should be ready for trial by the fall of 2013. As per our agreement with CF(L)Co to fund the legal cost of this challenge, $653,000 is provided for the CF(L)Co trust which has been established to oversee the distribution of funds.

These are just some of the items included in Budget 2010 for the Department of Natural Resources and I look forward to addressing any questions that members' opposite my have.

Thank you, Mr. Chair.

CHAIR: Ms Jones, would you like to go first?

MS JONES: Thank you, Mr. Chairman.

I certainly want to thank the minister for his brief overview and to thank your officials for being here this evening to address our questions as well.

I am going to start right at the Estimates, section 1.2.01.01 under Executive Support for the department. The salary budget from last year was overspent by $800,000. Can you provide for me an explanation of what that money was used for and why it was necessary to overspend?

MR. SKINNER: Yes, Ms Jones, the amount, specifically the $777,900 - is that the amount you are referring to?

MS JONES: Section 1.2.01.01., you had budgeted a little over $2 million and you spent $2.8 million.

MR. SKINNER: Yes, okay. Thank you.

There were payouts to employees during the year; there were overtime payouts to some former employees who left; there was some severance, some vacation pay. Those would be the broad categories. If you require more specific information, I will look to officials to see if they may be able to help right now and, if not, we will certainly endeavour to provide you with more specific amounts, but I can tell you in terms of a general - the headings that I just gave you in terms of severance, vacation, people leaving and so on, is what was the cause of that.

MS JONES: Okay. There were no additional staffing measures here?

MR. SKINNER: No, and I will just look for clarification.

Philip?

MR. IVIMEY: No.

MR. SKINNER: Just to be sure. No, there was not.

MS JONES: Okay.

How many employees would have left the department last year?

MR. SKINNER: I will have to ask Phil, if I could, Mr. Ivimey, to answer that. I do not have that particular specific number.

MR. IVIMEY: In the Executive Support area there would have been approximately four employees who would have retired or left the department during the year.

MS JONES: Okay. Those positions, have they been replaced to date?

MR. IVIMEY: Yes, one of those positions has been replaced. Actually, the majority of those positions, I think, with the exception of one, have been replaced.

MS JONES: Okay. Are you working on replacing that position, and can you tell me what it is?

MR. BOWN: That position is a Commercial Advisor, and that remains vacant. It is a Solicitor IV position.

CHAIR: Can I please, just as a reminder to everybody too, this is being recorded in Hansard and when anybody speaks from the Minister's officials just watch the little light on the front, and when it comes on that means your mike is on and it is being picked up.

MS JONES: I am just wondering what a commercial advisor is in you department? What is it they do, and how many positions are there like that?

MR. SKINNER: Again, I will ask Mr. Bown to give you that detail.

MR. BOWN: That position was used during the period of time that we were concluding commercial negotiations with respect to Hebron and White Rose, the expansion, and Hibernia South. That was our position, was responsible for leading the provincial negotiating team on helping Nalcor with its equity interests, and also negotiating benefits and royalties.

MS JONES: Okay. Is there a need to fill the position now that those particular deals have been resolved? I am just wondering on a go-forward basis what the intention is?

MR. BOWN: For the moment, we have not indicated a specific need, but the position is there for us to fill should we acquire it.

MS JONES: Are there other commercial advisors within the department?

MR. BOWN: The department has a lot of expertise in economics, financial and technical, in engineering and geoscience as well, that would fill out the body of a negotiating team. So, no, we would not require anybody else.

MS JONES: Okay.

Also under the estimates in that section, 03 Transportation and Communications, again, you overspent about $100,000 than what you budgeted; however, you went back to the original estimates this year. Can you tell me what the extra cost was associated with there? Is there a specific campaign that you did within this category of the department or something?

MR. SKINNER: No, those extra costs basically were a number of FPT meetings that were scheduled throughout the year that we ended up having to attend as staff. Also, as you are aware, we have our Forestry and Agrifoods executive staff based in Corner Brook. They would have been into St. John's at various times throughout the year. There was excess travel costs associated with the staff coming in from Corner Brook.

MS JONES: Okay. I notice you did not budget for that incremental cost this year in your budget. Is there any reason? You do not expect them to come in this year, or they are not allowed in? What is the story?

MR. SKINNER: No, it is just that I have a Monday morning meeting that I schedule with the executive, teleconference. They do come in from time to time, but I am a believer in using the telephone and teleconferencing where possible. We have been trying that and we will see how it goes.

MS JONES: Okay. Thank you.

Under section 2.1.01 Administration and Program Planning, we have seen a huge rise in Employee Benefits in that section. In fact, you had budgeted $61,800, you actually spent $239,000. Can you give me an explanation for that?

MR. SKINNER: I will give you a general overview, and again I will look to my staff if they can fill in maybe a little bit more detail to help with the explanation. It is my understanding that full amount of variance is because of increased Workplace Health and Safety payments that were higher than were anticipated when the budget was originally done. That is the understanding I have of the increased amount.

I do not know if Mr. Ivimey might be able to help us with why that was higher than anticipated.

MR. IVIMEY: Yes, that is correct, Minister.

The variance was primarily due to higher than anticipated Workplace Health and Safety compensation payments through the year which tend to vary from year to year, depending on the services of the employees who are often availing of the Workplace Health, Safety and Compensation program. That can vary year to year and it just so happened this year that the variance was higher than anticipated, but it is anticipated for the following year to be at the budgeted level of approximately $60,000.

MS JONES: These are people who are off work for some reason? Is that what you are talking about?

MR. IVIMEY: Yes, correct. That would be people who are off on long-term disability and who are availing of Workplace Health and Safety compensation.

MS JONES: A lot of them were temporary according to this. You are not budgeting for it this year.

MR. IVIMEY: Like I say, it all depends on the length of time. It varies per employee, depending on what form of long-term disability or what program they may be availing of underneath the Workplace Health, Safety and Compensation program. They may not have the same medical claims; they may not have the same benefits that would be paid out to them next year as they are currently being paid out this year.

MS JONES: Okay. That number is subject to change in most budgets, I guess is it?

MR. IVIMEY: Yes, that is correct.

MS JONES: Okay. Under 06, the same heading, Purchased Services; obviously, you budgeted about $8.7 million and you end up spending over $13 million. Can you tell me what that was for?

MR. SKINNER: It is related to Corner Brook Pulp and Paper and the buy back of timber rights. Originally, there was a payment to Corner Brook Pulp and Paper that was budgeted for the Budget year 2011-2012 but actually got paid out in the Budget year 2010-2011. That would be the bulk of that.

MS JONES: Okay. When you say the bulk, how much are we talking about? How much did you spend to buy back the timber rights?

MR. SKINNER: The total amount for timber rights was $12 million and, as I said, $6 million was advanced into an earlier year then was originally anticipated. It would have been paid next year and we just paid it in this year; I guess is what I am trying to say.

MS JONES: Okay. What did we get for that?

MR. SKINNER: We got a lot of rights to the land back, with a lot of trees on it.

I will ask Mr. Moores to give you a little bit more detail than that.

MS JONES: Yes.

MR. MOORES: It involved around 400,000, maybe 440,000 hectares of land that was returned; I guess their ownership right was returned to the Crown, the Corner Brook Pulp and Paper licence to (inaudible) Crown ownership. Associated with that is the volume of wood that was on that land base as well.

MS JONES: There was 440,000 hectares of land that returned to the Crown for this $12 million in price. Why was it necessary to buy that back?

MR. MOORES: I think in terms of trying to restructure our own industry, and trying to have more control and access to the resource as we try and restructure an industry was important, especially where we took a significant portion of that land base over in Central Newfoundland for our sawmill sector, which we are hoping will continue to have a demand for the resources on the East Coast.

MS JONES: Okay. You felt it was necessary in order to restructure the forest industry appropriately so that the government could have more ownership over timber rights?

MR. MOORES: Well, we thought that would be one piece of that support to the sector in terms of having additional fibre availability for the Crown to allocate to the sawmill sector.

MS JONES: Yes, it is a lot of money. How did you determine what the market value on that was? Who determined that?

MR. MOORES: The way we determined it, there was an evaluation done in 1994-1995 when a similar exercise was completed with Corner Brook Pulp and Paper on some different land base. The value of the land base at that time was pro-rated up to current dollars. That is how the value was determined.

MS JONES: Okay. Is the land being used now? What is the intended use for the timber that is there? I know you talked about the Central Newfoundland mill, but it is my understanding they are not accessing any of that wood yet. What is it being used for today? Is it being used at all?

MR. MOORES: Oh, yes. A lot of that land base, most of it is being allocated out now to current operators in the East Coast of the Province. The only portion I am aware that is not allocated out at this time would be that timber resource on the Northern Peninsula that we purchased back as well, behind Hawke's Bay.

MS JONES: Okay. Commercial operators on the East Coast, you are saying?

MR. MOORES: Yes.

MS JONES: Okay.

Corner Brook Pulp and Paper no longer has this property. Do they have any property that was formerly owned by Abitibi? Did they obtain any of those properties?

MR. MOORES: No, not that I am aware of.

MS JONES: Okay.

Still under that particular section, the Transportation and Communications cost, I overlooked it. You budgeted $828,000, obviously you spent much more than that. I am just wondering again what the contributing factor was there?

MR. SKINNER: Again, the department undertook some forced inventory surveys and some forced mapping exercises. Those exercises involved the use of helicopter time. That would be more money because of the fact we needed more helicopter time, would be the main reason.

Again, I will look to Mr. Moores to see if he has any further detail he can provide on that. Basically, it is us doing the forced mapping and forced inventory exercise and using the helicopter time.

MS JONES: Okay.

Still on that section, again, Professional Services increased from $330,000 to $520,000. Can you tell me what professional services you would have been purchasing there?

MR. SKINNER: Those costs would have been related to work done with National Forest Week and there was a forest fair and a model forest that would have been a part of that expenditure. There was also some work done with the marketing of the Forest Industry Diversification program. There were originally some grants under the Forest Industry Diversification program but, ultimately, those grants were paid out under this particular category Professional Services, not under grants.

MS JONES: Okay.

Still under that section, because all of the estimates here have gone up of course; Property, Furnishings and Equipment, again, you budgeted $57,200 and you spent $441,200. Can you tell me what was purchased there?

MR. SKINNER: The majority of that would have been for purchasing equipment, basically to be used by our field staff. Equipment like snowmobiles, ATVs, trailers to take those pieces of equipment around, boats and motors, in terms of some of the enforcement work that would have been done. That would be where that money would have been spent.

MS JONES: Were there tenders called for all of that?

MR. SKINNER: I will have to refer to Mr. Moores for specifics on that. I will ask him to answer.

MR. MOORES: For all those vehicle purchases of boats or trucks or whatever, ATVs, all that would go under a tender process.

MS JONES: Okay. That was like a one-time purchase for the Department of Forestry was it?

MR. MOORES: Yes.

MS JONES: Okay.

Maybe you can tell me how the forestry department and the inland waters piece are tying together here. Government has talked about the inland waters piece and having enforcement officers and so on. How does that gel with the forest enforcement piece of it with forestry officers?

MR. SKINNER: Our officers are out doing enforcement work, as you have indicated, in terms of forestry enforcement and the inland waters enforcement part of it. It became a part of the duties they picked up as a part of extra duties that they were given. It has gone well. There has been success in terms of the work they have done. From a public perspective, we have received positive feedback in terms of recognizing that we value the inland waters and that we are trying to ensure they are protected. From that perspective, it works well.

MS JONES: Yes. How many new positions were added for inland waters?

MR. SKINNER: I will refer to Mr. Moores, if I could, for specifics. For clarification I guess, when you are asking how many new, do you mean when the program initially started?

MS JONES: Yes.

MR. SKINNER: Okay, so when the program initially started.

MR. MOORES: In 2004.

MS JONES: Yes.

MR. MOORES: In 2004, the first year, there were no new positions; it was all done within the department. Then there were seasonal positions created to do the program because the program transferred to the Department of Justice. I would think they are up because that was with the Department of Justice. Somewhere between twenty-eight and thirty-three, thirty-four seasonal positions were established to deliver that seasonal program.

MS JONES: Right now, where is that program? Is it in the department of forestry and wildlife or is it in the Department of Justice?

MR. SKINNER: The program is currently with the Department of Justice.

MS JONES: It is currently with the Department of Justice, okay. Some of the people who worked in forestry were rolled over into those jobs were they, those enforcement jobs, or were they not?

MR. SKINNER: Some of them would have been, yes.

MS JONES: Okay. Because I was told a while ago that – and maybe you can explain this to me – some of these forest officers were going to lose some designation because of the inland waters program and they were going to be reclassified or re-categorized or something of that nature. Are you guys aware of – well you would be aware of it, it would be your department.

MR. MOORES: No, I am not aware of it.

MR. SKINNER: No, I am not aware of it, unless you have some specific knowledge of something I am not aware of, but no. My response to that is no. There is no change, certainly nothing we have initiated in terms of any re-designation or loss of designation. I do not know if you mean job designation or professional designation but nothing like that, that I am aware of, no.

MS JONES: Okay.

No, I think what they were referring to is responsibilities of enforcement officers or some of the responsibilities that enforcement officers had would be removed as a result of this program with regard to inland waters. They would be basically, strictly doing forestry work as opposed to doing wildlife duties as well.

MR. SKINNER: The answer to that would be yes. In terms of the actual duties, the forestry personnel will now be doing strictly forestry enforcement duties, yes. The wildlife officers who are now in Justice will be doing the inland fish enforcement and whatever other duties Justice would apply to them, but our forestry officers would only be doing now forestry enforcement, yes.

MS JONES: When is that full designation going to take place, or what is the plan for that?

MR. SKINNER: The transition that is occurring is actually happening as we speak. We have been working on that for some time. Since I have become minister it certainly has been something that I have been involved with. That transition is occurring as we speak. It is in process, basically.

MS JONES: How many forestry employees will be displaced or rolled over into the wildlife aspect of it?

MR. SKINNER: There is no displacement of people in terms of anyone losing a job, if you mean displacement in that regard. If you mean in terms of people moving from one division within government to another, thirty-seven I think is the number; thirty-seven people.

MS JONES: Okay.

CHAIR: Ms Jones, maybe I could get some direction from some other Committee members. You have been asking questions for a little over twenty minutes. I do not know if we want to have some other members asking questions and come back to you again in a while.

MS JONES: It does not matter to me; whatever you want to do is fine.

CHAIR: Ms Michael.

MS MICHAEL: Thank you.

I would like to ask a further question to the discussion you were just having. What are the implications of what has happened, the restructuring that has happened with the movement of thirty-seven to Justice and the loss of conservation officers per se?

MR. SKINNER: The staff who are remaining in forestry will now do the forestry duties, which is what we were doing before. The staff complement is basically the same complement who were doing that work before. The thirty-seven positions that are being transferred over to Justice basically are the number of people who were absorbed into forestry when the initial division was created in 1996. It is felt that the duties these people will now be performing are more appropriately represented by them being a part of Justice and doing that enforcement piece than to be a part of forestry. That is why the split was made. They will join other people in Justice who are doing enforcement work.

MS MICHAEL: You do not see anything with regard to wildlife work, jobs around wildlife that is being lost because of those thirty-seven moving? You are saying the work for them is not changing. The work is the same; they are just doing it out of a different department.

MR. SKINNER: Yes, we do not see any loss of function or loss of scope of work in that regard. As a part of the transitioning exercise, we looked at things like that and we feel we are adequately staffed. The duties that are now being assigned to the forestry individuals are adequate to do what they need to do, and the people who have moved to Justice will now be able to do the work that is required there.

MS MICHAEL: I have been told there is just one person now, the whole way across Southern Labrador from Cartwright all the way to Quebec, covering that area with regard to wildlife conservation, and you consider that adequate. My understanding is that has not always been the situation.

MR. SKINNER: I cannot speak specifically to that particular zone from personal knowledge, so I will ask Mr. Moores maybe if he can help us with some of that. Again, I do not know the specific layout of every zone and how many people are in each zone, so I will defer that to Mr. Moores.

MR. MOORES: Just to be clear, you are saying there is only one person in Southern Labrador for the wildlife enforcement piece?

MS MICHAEL: Yes, right.

MR. MOORES: That is not the way I understand it for Southern Labrador. I know they had a group of officers assigned to Cartwright that would cover - I am only assuming in the Justice structure that they will be covering the scope of Southern Labrador based out of their Cartwright office.

MS MICHAEL: Right. The information I have received - and maybe I have received the same information that Yvonne has, but the information I have received is from somebody working inside. That is what I am being told, and that there were forty seasonal officers who relied on seasonal work who are now gone.

MR. MOORES: How many seasonal?

MS MICHAEL: Forty.

MR. MOORES: No, that is not to my understanding from speaking to the Department of Justice.

MS MICHAEL: Could we have some clarification on that?

MR. MOORES: Yes, that would be Justice.

MS MICHAEL: Okay. I do not mean right now, but if you could get that for us so that we can get the rights of this.

MR. SKINNER: I will inquire to the Minister of Justice because it is now a Justice function. I do not want to leave you with the impression we are doing that, but I will inquire with the Minister of Justice about that and we will make sure we provide that information to you.

I will say for the record, that it is certainly not our understanding.

MS MICHAEL: Okay. Thank you.

I am going to do some line items also. I would like to come back to 1.2.03. Administrative Support under Capital: "Appropriations provide for the purchase and construction/alteration of tangible capital assets." The budget line last year was $2,610,000 and it actually went up to $33 million was the revised. What was that about?

MR. SKINNER: That increase, Ms Michael, was specifically related to the negotiation and compensation arrangement with Enel related to Star Lake and Abitibi.

MS MICHAEL: Okay.

MR. SKINNER: That was $32.8 million, I believe.

MS MICHAEL: Thank you.

We are still seeing fallout from Abitibi.

All right then; let's come to 2.1.03 Silviculture Development, under subheading 03 Transportation and Communications, there is a big variance there. Can we have an explanation for that variance, please?

MR. SKINNER: Some of the silviculture projects that were anticipated to start did not commence, and some of them that we did commence actually came in under budget. That is the general answer. We tendered some of these and the tenders were less than we expected them to be.

MS MICHAEL: No, I was looking at 03 Transportation and Communications. Would that be the reason? You went down further, I think.

MR. SKINNER: I am sorry, yes.

MS MICHAEL: You went down to Purchased Services. I think you did.

MR. SKINNER: I did, yes.

MS MICHAEL: Well, you can continue with the Purchased Services and then go back up to 03.

MR. SKINNER: I did go to the wrong heading but I will ask Mr. Moores to just –

MR. MOORES: The additional cost was for additional contract helicopter time and fixed-wing aircraft time for verification of areas that were treated, in helping out with the mapping of those areas to confirm the areas were actually treated.

MS MICHAEL: Great. Thank you.

Then 06; I interrupted you then, because you were explaining that.

MR. SKINNER: Again, my apologies for the wrong heading I looked at there.

MS MICHAEL: That is okay.

MR. SKINNER: Some of it was, as I indicated, work that we did not get commenced. Some of it that we did commence, the tenders came in less than we expected they would be, so that is why the variance was there.

MS MICHAEL: Okay.

Then, under 07, there is a major variance there, because only $1,500 was budgeted, but it was $1,072,500 spent – under 07, Property, Furnishings and Equipment.

MR. SKINNER: Some of it was equipment purchase, but I will ask Mr. Moores to give you more detail on that. I do know there was some equipment purchased there.

MR. MOORES: There were some vehicles purchased for the nursery, but the majority of that funding was for maintenance, getting roads up to standard so we can access the areas, because silviculture treated areas are usually treated maybe ten, fifteen years after an area is sometimes actually accessed. So we had to purchase culverts and grading material and bridges to re-access the areas.

MS MICHAEL: Was this a surprise to you? Because obviously it was not planned for, but that would seem, to me, to be something that you would be doing long-term planning about.

MR. MOORES: I can check, but I would think it is variable, and the areas they went into this particular year seemed to have a higher cost than other years.

MS MICHAEL: Okay.

How are things going with the whole program? Are you adding to the amount of land that has to be re-seeded, or does it depend on things beyond your control, the industries that are using the land?

MR. MOORES: Well, obviously, for our planting and thinning programs, they are usually areas that had been harvested –

MS MICHAEL: Yes.

MR. MOORES: – initially by the forest industry, and we are averaging around 5,500 hectares a year to be planted, which translates to about 13 million, or 13.5 million seedlings a year, about 1,000 or 1,100 hectares every year being thinned. So that is the basis for the silviculture program.

Since we started we have 113,000 hectares planted and 150,000 hectares thinned in the Province, in our management program.

MS MICHAEL: Okay; and you are satisfied with it?

MR. MOORES: Oh, yes. In this program - you do not see the details - there is a lot of survey work that goes on every year with staff and students, to all the areas that are harvested, to make sure they meet our regeneration standards. Then we do an evaluation of what treatments we would put on, and deal with those areas then.

MS MICHAEL: Okay, thank you.

Down to 2.1.04.03 Transportation and Communications, only $5,000 budgeted but $30,000 the revised figure.

MR. SKINNER: That particular increase has to do with: there was some road inspection work that we had to do. There were some emergency bridge repairs that were done in there under transportation. As well, there was a little bit of employee travel that brought us over the budgeted amount.

MS MICHAEL: Okay.

Obviously you can see the $5,000 the norm, so some of the stuff that happened was not the norm.

The next one would be Supplies, only budgeted $5,000 but $150,000 is the revised.

MR. SKINNER: Again, the vast majority of that, Ms Michael, was related to bridges, roads and culverts, and mostly related to Hurricane Igor. The specifics I do not know, and maybe Mr. Moores might be able to help you a bit more with it, but generally that is what the damage was; it was one-time unexpected.

MS MICHAEL: I forgot about Igor. Yes, that would have affected your budgets as well.

Under Property, Furnishing and Equipment, subhead 07, $1,000 budgeted but $201,000, so $200,000 extra spent.

MR. SKINNER: Again, given the damage to the roads, we went out and bought a road grader, a piece of heavy equipment, basically, so that we could do the work ourselves. It was cheaper to do it that way, so we purchased a grader. I guess it is called a road grader; I think that is the name of it.

MS MICHAEL: Okay, thank you.

That was smart, actually. You are right; it is cheaper to do that than to subcontract that out.

That is enough for me, for the moment; you can go back.

CHAIR: Do any other members of the Committee have any questions?

Okay, we will go back to you, Ms Jones. I am just estimating about twenty minutes to go back and forth, but if you are finishing up a category or something and you want a bit of extra time just let me know.

MS JONES: Whatever you think, Mr. Chair, that is fine with me.

CHAIR: Okay.

MS JONES: I am very co-operative this evening.

Just on the resource roads again: where was it that you bought the grader for? What area of the Province? I am sorry; I just walked in, on the end of it, and raised a question.

MR. SKINNER: I do not specifically know that it was bought for any particular area, so much as it was bought to repair a bunch of damaged roads related to Hurricane Igor.

MS JONES: Okay.

MR. SKINNER: I will ask the officials if they can answer that for you.

MR. MOORES: I think most of it would be on - when I say east, it is probably Badger East, because that is where the largest part of our Crown operations are. So I assume that would be where they would have designated it, and put the grader.

MS JONES: Okay.

I am just going to go back and finish the section I was on, 2.1.01, Grants and Subsides. Under that particular section you had budgeted $1.7 million and you spent $10.7 million, or a little more, actually. Can you tell me what all of that grant and subsidy was for?

MR. SKINNER: Yes, there was a payment made to Corner Brook Pulp and Paper again. There was a payment of $10 million made to Corner Brook Pulp and Paper as a grant, and that was part of a two-year financial commitment that government had committed to Corner Brook Pulp and Paper.

MS JONES: Okay.

So, in addition to the $12 million to buy back the timber rights, you also made a grant to them of $10 million. Was that consecutively for two years, three years – the grant?

MR. SKINNER: The total was $10 million.

MS JONES: Okay.

MR. SKINNER: So that would have been incremental to the $12 million that we referred to earlier.

MS JONES: Okay. So, you paid it all out in this year's budget?

MR. SKINNER: Yes, that is correct.

MS JONES: Okay.

Incidentally, what would the other grants and subsidies be under that category in that department?

MR. SKINNER: I will ask Mr. Moores, if he would, just to give you an overview of some of those.

MS JONES: Sure.

MR. MOORES: A series of grants for some work at the national level of the Canadian Council of Forestry Ministers, we pay a grant; we are a corporate member of the Canadian Institute of Forestry, so we pay a grant; Junior Forest Wardens; the Lumber Producers Association is a major grant; Foreign Tech, which is a national research organization that we are part of, we pay a grant for that; to Atlantic Wood, which is an Atlantic organization that does, I guess, a think tank on marketing of forest products, and we pay a grant there as well.

MS JONES: Okay, thank you. That will conclude that section.

I also want to go back to section 1.2.03. The Leader of the NDP asked a question about it in terms of the $33 million that was paid out for Star Lake's assets, and the other settlements that were announced there last week. Can you tell us where the negotiations are with Fortis? Obviously, there is no money budgeted here for that piece of it, so if you can give us an update on where you think it is, or where it is going.

MR. SKINNER: We are currently in negotiations with Fortis, obviously. The negotiations, from reports to me, are friendly, and appear to be moving along; there does not appear to be any particularly dispute. Enel was particularly interested in concluding their arrangement as quickly as they could. When I became minister, they very quickly contacted me and said: Look, we want to bring this to a head. It has been on the go for a couple of years, and we would like to get this settled.

So, we concentrated our efforts on them. Fortis understood that we were going to concentrate our efforts on them, because they wanted to get concluded, and when we did we would turn our attention back to Fortis. That is what we have done, and we are moving along.

I am reluctant to give you any particular timeline, simply because I am not in control of it, I guess; we are not in control of it. It has to be something we agree to, but the principles that were applied to the Enel settlement are being applied as we move forward with Fortis, but they are progressing well, from my perspective.

MS JONES: Okay.

I am just wondering, how long will it take before we actually recover the expropriation cost of Enel, and what was the other group?

MR. SKINNER: Fortis?

MS JONES: Sun Life.

MR. SKINNER: Oh, Sun Life, okay. Sorry, yes.

I do not have that information in terms of being able to give you – you mean a period of time in terms of months, years or whatever? I assume that is what you are asking, when you ask how long. I do not have that information; I am not able to give you that information.

MS JONES: Obviously the recovery would be based on power sales, right? Is there any estimation? I am just trying to get a handle around, we paid out all this money, when do we get a return on it?

MR. SKINNER: Well, we paid out the money for the assets, and we paid out the money based upon contracts that they had in terms of power purchase agreements. There was money paid out based upon money that they, themselves, had paid out as interest payments and so on since the expropriation occurred. There was money related to – they operated the asset for a period of time, so there were various categories that were used, or items that were used, in determining the value of that payment that we made, that $32.8 million, so it came from a number of areas; but in terms of when we will see the return of that, as I have said, I have not projected that timeline or time frame.

MS JONES: How much of it was actually for the asset as opposed to all of the other things you just categorized?

MR. SKINNER: I am just hesitating because I do not have the information off the top of my head, but there would have been the things that I just outlined for you in terms of some of the power agreements, some of the interest they had paid, the operational costs, they would have come off – if I were to try and give you a number now – the $32.8 million, but I am not sure how much all of that would be. I can endeavour to find that out for you, but I am reluctant to give you a guess. I do not want to guess.

MS JONES: I would like to get a breakdown, just so I know what the asset is costing as opposed to all of the other pieces that go along with it.

MR. SKINNER: Yes, okay.

MS JONES: Who would have done the legal work on that for the government?

MR. SKINNER: Again, I will look for direction but there was legal expertise within Nalcor. They would have had a staff solicitor. There was legal expertise within the department, within government, and - nobody else? That was it?

OFFICIAL: (Inaudible).

MS JONES: Okay.

Section 2.1.02, still under Administration and Program Planning, Operations and Implementation, I am just wondering what the increased cost, the small amount of money in Employee Benefits, was for last year.

MR. SKINNER: I am not 100 per cent sure, Ms Jones. I am going to have to look for some assistance on that one.

MS JONES: Okay.

MR. MOORES: Are you referring to the $3,900, the revised?

MS JONES: Yes.

MR. MOORES: That is additional costs for fees, seminars and conferences that staff would have participated in over the year.

MS JONES: Okay.

Also in that same section, Supplies increased by $300,000. What was that for?

MR. SKINNER: Ms Jones, the majority of that would have been for the fuel associated with vehicles that are used by staff during field work, as well as some field equipment that was required for operations by the staff.

MS JONES: Okay.

Also under that section 06 Purchased Services, there was over a $350,000 more spent than was budgeted. Can you explain to me what that was for?

MR. SKINNER: Again, the majority of that, the bulk of that, would have been for vehicle repairs and maintenance, including snow machines, winter vehicles, as well as regular vehicles. There was also some money for rental of storage facilities as well.

MS JONES: Okay, thank you.

Under the Forest Industry Diversification Program - you spoke to that in your opening remarks - you were talking about investments that you are making into integrated sawmills in the Province. Can you tell me what those two mills are, and what kind of investments these are?

MR. SKINNER: The two of them are Burton's Cove Logging, and there was an investment there of $2 million; and there was an investment in Cottles Island Lumber of $2 million as well.

MR. MOORES: $2.2 million.

MR. SKINNER: $2.2 million.

MS JONES: Can you tell me what they are going to be using that money for, in their businesses?

MR. SKINNER: In the general sense it is being used for allowing them to diversify some of the product that they offer, and to increase their capacity, but in terms of specific line items, I will ask Mr. Moores maybe if he could just give you a little overview of what they will be doing.

MS JONES: This is grant money, right, or is it loans?

MR. SKINNER: This is loan money in this particular case.

MS JONES: Okay. Both of them are loans?

MR. SKINNER: Yes.

MS JONES: Okay.

MR. MOORES: Burton's Cove Logging are adding a new HewSaw which gives them more efficiency in their sawing, better recovery. Again, what they call a log sorting system so they can sort their logs by size to get a better recovery when they are sawing. It is important for them as new – they do not have a kiln but a kiln for drying their lumber because kiln-dried lumber obviously opens up many more markets for Burton's Cove Logging than they have today with just selling green lumber.

For Cottles Island Lumber, they are improving as well. Their drying capacity with a kiln line that is a new kiln which is on wheels, so they can roll their product in and out and get more efficiency and have the kiln closed longer instead of open and it saves on heat costs. They are adding a new value-added line based on log siding. Right now they are going to add a line where they can actually stain the log siding. They feel they can increase their market share with a stained product for log siding as opposed to just the bare wood siding.

MS JONES: Okay.

Last year you spent $4,800 as well. Can you tell me where that was spent, for the loan itself? You budgeted $6,500 but you spent $4,800.

MR. SKINNER: Are you referring to line item 2.1.05.08?

MS JONES: Yes.

MR. SKINNER: Okay. The difference in the budget amount and the revised amount, which is what I understand you are asking me about, the $6.5 million to $4.8 million?

MS JONES: No, I am asking where it was spent, the $4.8 million.

MR. SKINNER: Oh, in terms of where it was spent?

MS JONES: Yes.

MR. SKINNER: Okay.

MS JONES: Million, sorry. Craig just reminded me it is millions, not thousands.

MR. SKINNER: Yes. No, that is why I was a bit – but I understood you.

MS JONES: $4.8 million, sorry. That is what happens after twelve hours.

MR. MOORES: The majority of that funding was with Holson Forest Products.

MS JONES: Okay.

MR. MOORES: That is the one in Roddickton for the start of redevelopment of their sawmill and their pellet plant, and their kiln as well. Some of that money was also for part of the Burton's Cove Logging project. We have just described some of it; it is crossing over two fiscal years.

MS JONES: Okay. Again, that was all loans last year?

MR. MOORES: It was all loans, yes.

MS JONES: Yes. What is the interest rate on the repayment of those loans?

MR. MOORES: Zero.

MR. SKINNER: Zero.

MS JONES: Okay, there is no interest. So it is different than the small business loans program which is, I think, prime plus 3 per cent right now in the department of industry, for example.

MR. SKINNER: I am not sure what the interest rate is but in this particular case there is no interest.

MS JONES: No interest.

MR. SKINNER: No.

MS JONES: Okay. I am in the wrong the business, obviously.

Insect Control, again, just looking at this section, Transportation and Communalisations is up. It is something that we are noticing, actually, in most of the headings throughout the department. Again, I will ask you what it is contributing to.

MR. SKINNER: That particular line item, we had to expand the control program in the Goose Bay area due to an infestation of budworm. I would assume that involved flights, airplane time and all that kind of thing. I do not know if it would be classified as an outbreak or just a greater infestation but more budworm than was anticipated and so more insect control.

MS JONES: Can you also explain to me why you spent $500,000 more in materials, as well, or Supplies in that department?

MR. SKINNER: That would be the product in terms of the insect control product, the deterrent that we are using, and again, aircraft time that would be used there.

MS JONES: I was just looking at the bottom line figures in the Forest Management budget. If you look at what you budgeted last year and what you actually spent, I think you are looking at a difference of about $8.5 million more last year than was budgeted. I am just wondering about that, because that is something like 25 per cent over what you would normally budget in the department. I am looking at this and I am saying: okay, you are budgeting at a lower rate again this year. What are the prospects that you are going to live within that budget and within that means this year as opposed to going over by another $8 million or 25 per cent of the budget?

MR. SKINNER: The answer on that, Ms Jones, would be the overage that we saw last year would have been basically one-time costs. Those costs, for the most part, would have been related to the Kruger payments that were made, the Corner Brook Pulp and Paper payments.

MS JONES: Yes.

MR. SKINNER: That is why we would have been over there and why we would not be budgeting again this year for that amount of money.

MS JONES: Okay, so there are no payments left to be made on those particular aspects. The only outstanding piece under that section would be if there is a settlement with Fortis, which is not budgeted for, right?

MR. SKINNER: Correct.

MS JONES: Yes, okay.

Under the Fire Suppression and Communications section, under Employee Benefits there was $40,000 budgeted but you did not spend any. You did not give your employees any benefits last year, or what was the case?

MR. SKINNER: There were a number of seminars and conferences and training sessions for fire staff that were budgeted for, and I am not sure why there was none spent. I would have to ask officials to help me with that. Maybe it is –

MR. MOORES: I think a big reason for that is last year we joined the Northeast Pact, which is a fire group for Eastern Canada and the Northeastern States. By joining that particular organization, the benefit to us was a lot of the training that they were providing would be consistent right across the Eastern Seaboard then. By joining the organization, all the training that they provided is free of charge. Some of those fees that we used to have are not there. You saw in some of the other budgets when we did our conferencing and membership fees, we drew down in other parts of the budget for the remainder.

MS JONES: Okay.

Under that section Grants and Subsidies, what kind of grants and subsidies are they?

MR. SKINNER: Basically, it consists of two grants. One is to the Canadian Interagency Forest Fire Centre, which is a co-ordination agency for forest fire support amongst its member agencies. The other one is the one that Mr. Moores already mentioned in terms of the Northeast Compact or the Northeastern Forest Fire Protection Commission, the new one that we joined this year. They would be the two groups.

MS JONES: How much are the fees to join those groups?

MR. SKINNER: The first one, the Canadian Interagency Forest Fire Centre, is $24,900 and the Northeastern Forest Fire Protection Commission is $5,500.

MS JONES: What do you get for being a member at $25,000 a year? What kind of services do they provide to your department or to the Province?

MR. SKINNER: Again, I will ask Mr. Moores to give you more detail, but basically it is, in some ways, I guess, almost like an insurance that you buy in the sense that, should you have forest fires where you require the services of outside agencies, this group would be the group that would allow you to co-ordinate to bring other resources in that you needed, and they would have the contact and the connection to be able to pull these resources in quickly and help you co-ordinate a provincial response to a disaster that is happening here vis-à-vis a forest fire, and bring in outside resources if we felt we could not control it ourselves. That is what it does.

MS JONES: Good. Thank you for the explanation.

CHAIR: Ms Jones, if you are finished with that particular section, it might be a good place to pause for a while and turn it over to Ms Michael.

MS JONES: Sure. I have more forestry questions, but I will wait and you can come back to me.

Thank you.

CHAIR: Okay, you can go ahead and finish off your questions on forestry.

MS JONES: Okay, thank you.

I have some questions around Abitibi, of course, and one of them is the type of environmental cleanup or containment that might have been done there so far. Can you give me some explanation around that?

MR. SKINNER: We have not done anything in terms of Abitibi at this point. (Inaudible) but there has been nothing done by us.

OFFICIAL: No.

MR. SKINNER: I just wanted to be sure -

MS JONES: I am referring to Abitibi Grand Falls, just to be clear.

MR. SKINNER: Yes.

OFFICIAL: (Inaudible).

MR. SKINNER: What is that?

OFFICIAL: (Inaudible).

MR. SKINNER: Yes, fair enough. I was just conversing to make sure I understood.

The site itself is being managed now by the Department of Transportation and Works. To my knowledge, there has been no site cleanup done, or any environmental cleanup done. We have obviously, as a Province, laid claim against Abitibi for those environmental liabilities that we believe are remaining. I am not aware that any cleanup has occurred, but I will defer to the Department of Transportation and Works, as to whether or not they may have done anything, but not to my knowledge.

MS JONES: Okay.

In terms of the security and stuff that is in place at the mill there right now, does that fall under Works, Services and Transportation as well?

MR. SKINNER: Yes, it does.

MS JONES: Okay. So you would not be able to tell me how much money has been spent in security costs so far, would you?

MR. SKINNER: I do not know, no.

MS JONES: Okay.

Back some time ago the Premier, in her former capacity as minister, announced that they were investigating potential operators for this mill. Of course, one of the potential operators that were named, obviously, did not pan out at the time. What is the status of this now? What has been happening?

MR. SKINNER: The current status is that we had, as you are aware, Expressions of Interest done. I will go back a little bit, and I am going from memory here, so if I am off on my numbers jump in. In the initial expression, I believe, there were nine that came in – nine Expressions of Interest. None of those, based upon the information that was received, were deemed to be suitable.

There was a second call for expressions done, of which there were three that came in. Three of those were evaluated. Just to make a long story shorter, one of those three sort of made it through the process and we are in discussions with them. They asked for some extra time to prepare some more information to submit to government, and that time that they asked for was March 31 of this year – March 31 just past. That information has been received; it is being reviewed by staff, and I am in the process of scheduling a Ministerial Task Force meeting to basically update the Ministerial Task Force Committee on that.

MS JONES: Do you want to give us any details of what kind of an operation this could look like? What it is they are proposing?

MR. SKINNER: I am not prepared to, at this point, until I have an opportunity to discuss it with the task force, no. I would be more than happy to share it with you after that.

MS JONES: Yes. What is the time frame around that? Now that you have received everything, what is the time frame for government to make a decision on whether they will accept this proponent or not?

MR. SKINNER: There is no formal time frame that we have put on the process, nor am I aware that the proponent has put any particular time frame on us, but we have made a commitment that we would meet as a task force and, as I have indicated, I am trying to schedule that for the next couple of weeks. I have not gotten a confirmation yet, but I am trying to do it in a timely manner. We will then present to the Ministerial Task Force and take direction then, from them, as to what we should do next.

MS JONES: Okay.

After Abitibi shut down, obviously they used to provide grants to the local communities like Grand Falls-Windsor, Botwood, Bishop Falls, Buchans, I think, and some of the others, and I know that government picked up those grants for a period of time. Now, I understand, this is the last year for that grant program. Where is that in the Estimates, or where does it come from; what department?

MR. SKINNER: The period of time was three years on a declining basis; and, if I recollect, that money is paid from Municipal Affairs?

OFFICIAL: Yes.

MR. SKINNER: Yes, Municipal Affairs.

MS JONES: Okay. So, now that it is set to expire, is there any other form of compensation that the government has looked at for these towns, or is this the weaning off period so it is done now?

MR. SKINNER: From my perspective, speaking as Chair of the Task Force, I was asked by the towns to assist with a transition period for them. At the time that I spoke with the towns, we decided on a three-year period that mirrored, basically, what was done in Stephenville. So, as far as I am concerned, we have concluded our arrangement with them. Whether or not they will approach other agencies, other departments of government or whatever, but from the task force perspective I feel that our obligation has been met, and I have not engaged any further discussions with any of the towns on that.

MS JONES: Okay.

Just one question on Abitibi Stephenville, and that is the environmental cleanup cost at that particular mill. What was the total bill on that? Is that all finished now?

MR. SKINNER: I do not have that information. I do not know if anyone can help me with that. I will have to endeavour to see if I can find some more information for you, Ms Jones. I do not have any information on that with me.

MS JONES: Okay. Thank you.

I have just a couple of questions on Labrador. We are aware that there was a proposal call for forestry development in Labrador. We are also aware that there was a proposal submitted by the Innu Nation.

I am just wondering what the status of that proposal is, and if there were any other proposals, and where government is going in terms of direction for a forest industry in Labrador right now.

MR. SKINNER: Just for clarity, there was no proposal submitted by the Innu Nation to government.

MS JONES: Oh, sorry, the Innu Development Corporation.

MR. SKINNER: No, not even the Innu Development Corporation. I just want to point that out.

MS JONES: Okay, thank you.

MR. SKINNER: The proposal that we received – there was a proposal, you are quite correct – Atlantic Fibre was the company name. It is my understanding that they may have had some discussions, or negotiations with some Innu partners, but I am not sure of the formal arrangement there. The actual proposal that we received came from Atlantic Fibre. We were in discussions with them, and reviewing that proposal, and very recently they came back and told us they were withdrawing from the process – they being Atlantic Fibre.

MS JONES: Okay.

MR. SKINNER: So, they have withdrawn from the process. We have engaged with them, in terms of trying to see if we can find some other way to work with them, but they sort of self-withdrew from the process.

MS JONES: Was that the only proposal from Labrador?

MR. SKINNER: There was also another proposal in a different area; they were in two different areas, if I am not….

OFFICIAL: (Inaudible).

MR. SKINNER: Okay, there was a second proposal from Pennecon Limited, and the Atlantic Fibre proposal initially was deemed to have more value, for lack of a better word, more value in Labrador. That is why we were in discussions with them. They have now withdrawn, and so, again, we have gone back to Pennecon to see if we might be able to engage with them.

MS JONES: Okay.

Is there a harvesting plan in place right now for Central Labrador?

MR. SKINNER: I will ask Mr. Moores to speak to that for you.

MR. MOORES: Yes, there is; there is a five-year harvesting plan in place for Central Labrador.

MS JONES: Okay. Is there any harvesting going on there now?

MR. MOORES: As you are probably aware, just on a very small scale. There is no large-scale commercial harvesting going on.

MS JONES: That would be the only activity in forestry in Labrador right now, or is there still something going on in Postville?

MR. MOORES: I am not aware there is anything – I think Postville is still down.

MS JONES: Yes.

MR. MOORES: So it would only be in Central Labrador, or on the Coast of Southern Labrador – the same scale, just some small operations.

MS JONES: Yes, very small –

MR. MOORES: Very small.

MS JONES: – what is going on in my district, I can tell you that, very small, yes.

MR. SKINNER: If you have any ideas, we would be happy to hear them.

MS JONES: Thank you, I appreciate that. If you have money, we have ideas.

MR. SKINNER: If you have good ideas, we have money.

MS JONES: The Natural Resources office in Labrador West is currently being staffed on a part-time basis, I have been told. I am just wondering what the department's plan is for future staffing of that office, and future positions in that area of Labrador.

MR MOORES: Labrador West, I guess with the changes we have one full-time person in the office now.

MS JONES: In the forestry piece?

MR. MOORES: On the forestry side.

MS JONES: Okay, so there is a full-time person there.

MR. MOORES: Yes.

MS JONES: Last year, when we were doing the Estimates, you talked about the fact that the department had hired a consultant from Quebec to do a marketing strategy for the sawmilling industry. Can you tell me if this report was ever completed, or if it has ever been released to the public, or where it is?

MR. SKINNER: In terms of the strategy, there was a report done by a Quebec firm that was completed and received by government. We have discussed that with the sawmillers, and we have given the sawmillers a copy of that proposal and asked them to use the information contained in that study that was done, and come back to us with more detail in terms of where they see the industry going, and how we may be able to support them as an industry.

MS JONES: Okay. So the study is done; it has not been made public but it is being used by vested interest, is it?

MR. SKINNER: By those involved in the sawmilling industry in the Province, yes. We have asked them to review the study and use the information in there - there are various options and scenarios and things presented there - and we have asked them to consider all of that and come back to us with their sort of recommendations, I guess, as to where they see the industry going.

MS JONES: How much did we pay for that study?

MR. MOORES: Somewhere between $150,000 and $200,000, I believe.

MS JONES: Okay.

I still have some questions around the conservation officer piece. I know we raised it already. I know that Lorraine has raised it as well, but I am still not comfortable with it because what I am getting is a different story than what I am getting here. The two things are not jiving for me.

First of all, I will just tell you, I am being told that three-quarters of the conservation officers in the Province are going to be stripped of their side arms, to start with. I am being told that they would have no other responsibilities, other than strictly related to forestry, which mostly includes, these days, issuing permits for cutting wood, and things like that, because there is so little forest activity going on in some regions of the Province.

I am also being told that we are going to go from about 140 conservation officers down to about forty in the Province. I really need to get some comfort level in what the plan is by government; because, I am telling you, today there is a fear with conservation officers out there, and I have heard from several in the last week. So, it is obviously making its rounds between different offices in the Province, and I have not been able to get the real story of what is happening.

It seems really ironic that there would be so many people expressing that concern to us if there is nothing to it. If there is not going to be anybody lose their jobs, if nobody is going to lose their responsibilities or their fire arms, or their enforcement duties, if we are not going to go and drop 100 conservation officers in forestry in our system, why are these employees feeling that kind of anxiety? Why are they questioning that?

MR. SKINNER: I will say to you, there are no plans to drop 100 conservation officers. There are no plans to displace people from the positions they are in. There is changing of personnel from the Department of Natural Resources to the Department of Justice to take on enforcement duties that are deemed to be better done by the Department of Justice personnel.

The only one thing you did mention which I will say yes, is happening, is that the forestry officers who were issued fire arms when they were doing all of the inland fisheries enforcement will not now be using side arms, will not now be carrying side arms, but the individuals who are transferring over to Justice, who will be performing that duty, will be having side arms. The forestry officers, as I understood, did not have them originally anyway, but were given them when they took on these other duties that are now being transferred to Justice.

That is all I can tell you at this point. What you are hearing, and who is telling that to you, I cannot speak to where it is coming from, but it is certainly not what we are doing and it is not what we discussed in the transition of the personnel from one department to another. If anything, I would argue with you that we have upped the resource in terms of there is more money going into it. It is not a thing where we are trying to downgrade or degrade a level of service. It is meant to more appropriately place the service where we feel it can be better managed from in terms of the Justice department.

That is it. I do not know, maybe I will ask Mr. Moores just to give you more of an overview.

MS JONES: Is it true that you are looking at having about thirty-seven officers left in forestry in the Province?

MR. MOORES: Eighty-one.

MR. SKINNER: No, thirty-seven are transferring; eighty-one are still in.

MS JONES: Okay, so eighty-one are still in.

MR. SKINNER: Yes.

MS JONES: You are telling me that there are not going to be any jobs lost, all of these people are going to be looked after?

MR. MOORES: There are no layoffs within all the permanent employees. The only place where –

MS JONES: There are like forty seasonal workers or something.

MR. MOORES: Seasonal workers, my understanding from Justice - because we looked at it, you would have to confirm with the Department of Justice - is that their seasonal employees will not be impacted. That is the last I heard from them.

On the Forestry side, there are fourteen seasonal employees who will not be called back as a result of the specialization enforcement.

MS JONES: Okay. You are saying fourteen, we are being told about forty. So there is a big difference.

MR. MOORES: What I would say to you, someone has probably - if I am to guess, it is a combination of the seasonals with the inland fish program and the call backs on forestry. Probably if you combined those two numbers you would get pretty close, I would think, to forty.

MS JONES: What you are telling me is of that estimated forty, the ones who are seasonal with inland waters will maintain their jobs?

MR. MOORES: That is the last I heard this week from the Department of Justice.

MS JONES: The ones who were seasonal with the department of forestry will lose their jobs?

MR. MOORES: They will not be called back. They will go into the regular seniority for call backs for silviculture, for the roads program and spray program, but it will not be for the field of work they were doing before.

MS JONES: How many workers are we talking about, all together permanent workers?

MR. MOORES: On conservation officers?

MS JONES: Yes.

MR. MOORES: In just forestry or forest –

MS JONES: You said all the permanent workers would be looked after. How many are there?

MR. MOORES: Well I guess between – there are thirty-seven positions gone to Justice and there are eighty-one left over in Forestry, so none of them are losing their jobs out of this.

MS JONES: So, about 128?

MR. MOORES: Yes, and over in the inland fishing program now, they had five positions in their headquarters for the transition and they are all still in place. In our legislation and compliance division on the Forestry side, there is no loss in their positions.

MS JONES: The thirty-seven who are going to inland waters, have they already been selected?

MR. MOORES: Yes, and notified.

MS JONES: Okay.

One other issue that I received from conservation officers in the Province has to do with the protocols of conservation officers. When they are asked to assist in a lot of areas around the Province, the conservation officer might be the only official officer of capacity in a community, and lots of times they are asked to go out and participate in things like rescue operations, if someone gets lost or things of this nature. I am being told the protocols around their jobs have changed and they are no longer allowed to do that, and that is not considered to be part of their duties.

MR. MOORES: Not that I am aware of. The only change in duties was that the wildlife enforcement act and regulations and part of the enforcement of the wilderness reserves act related to wildlife would be transferred over to Justice, but there is no other change in duties.

MS JONES: What is the current protocol for a conservation officer, for example, if they come across an individual who acquires assistance and it is in a wilderness area? Do they have the ability to respond or are they directed to contact the RCMP or the nearest RCMP station? What is the protocol around that right now for those officers?

MR. MOORES: I would have to check. I am not sure what the exact protocol is if they found a person who needed medical attention, I am assuming. What I have heard is most of the time they support getting them medical attention if that was required, in that particular example.

MS JONES: Yes. I would like to know the answer to that because that is one of the issues that have come to my attention in the last few weeks as well, and it has to do with some specific incidences that happened in the Province. I would like to get a better understanding of what the protocols are around their particular jobs.

Just a couple of more questions; you guys are still responsible for the George River caribou herd are you? Do you have anything to do with that anymore?

MR. MOORES: No. We were responsible for the enforcement piece but that is now with the Department of Justice.

MS JONES: It is now transferred to the Department of Justice?

MR. MOORES: The enforcement piece would be, yes. It is wildlife enforcement.

MS JONES: Okay.

That would be it for me on Forestry. Well there is the agrifoods, I am sure.

CHAIR: Thank you, Ms Jones.

I will now go to Ms Michael for some questions.

MS MICHAEL: Thank you.

Before I go into line items; just a couple of more in the Forestry area, simple ones. I am just curious about the wood pellet rebate program; do you have feedback on that? Is it going better this year, the past year? Has it been going well?

MR. SKINNER: The program, Ms Michael, was a three-year program that just ended in March. I think it was 528 people who availed of the program in that three-year period. The program has not been continued into the future.

MS MICHAEL: Was there an evaluation done to see if it might be good to continue it or did you just decide it was a three-year program and that was it?

MR. SKINNER: There was no formal evaluation done. We are reviewing it, I guess is the way I would put it to you. We are currently reviewing it to determine whether or not we should look at doing it but I think it would be fair to say the sense was that there was not a great take up and maybe we needed to look at doing something different. We have put it on pause for a year and we are going to have a look to see can we do something to ensure there is more take up.

MS MICHAEL: Right, okay.

Do you have any sense of why the take up was so low, or not as great as you might have thought?

MR. SKINNER: I am not going to speculate. I am new to the department but I will ask maybe Mr. Moores if he might. He bought one, by the way, so he knows a lot about them.

MS MICHAEL: Okay, that would be helpful.

MR. MOORES: I think it is just knowledge and getting new technology into the Province and people to understand what the technology is like and what it means. I always tell people I probably helped sell more stoves than the stores have, because they see it and they see the technology and how it works. Some of the feedback we have had over time - one thing people look at, number one, it requires electricity all the time because there is a blower and an auger on it.

MS MICHAEL: Right, yes.

MR. MOORES: Some people find that a downside. Usually people buying the pellet stoves - not all, but a majority - are people who do not have any wood heat source. So, if you have a wood stove already in your home, and you are buying your wood or you are cutting your wood for your stove, I am aware of some, but most people do not convert to wood pellets; and we are heavily into a society that burns wood in rural Newfoundland and Labrador. So, the recruitment in the wood heat industry has been with new people. That has been the reasoning for the uptake.

MS MICHAEL: Okay, that makes sense.

Two years ago, in Estimates, the minister of the day told the Committee – we were talking about the whole thing of the diversification around pulpwood. I am just wondering, where are things with that, and the uses of pulpwood and diversification?

MR. MOORES: You heard me mention earlier about the HewSaw?

MS MICHAEL: Yes.

MR. MOORES: Sexton Lumber has put a HewSaw in, and Burton's Cove Logging in Hampden is putting a HewSaw in now. That is one of the things we can do, because it permits you to saw a smaller stick of wood, that before would have gone for pulpwood, but now we can get a 2x3 out of it.

MS MICHAEL: Right.

MR. MOORES: So, that is one of the things we have tried to do to reduce the reliance on pulpwood for the newsprint industry.

MS MICHAEL: Right.

You said some other things about what they were doing that are related to that; I can think back now to what you said, in terms of the staining and stuff.

MR. MOORES: That is right.

MS MICHAEL: Very good. I remember last year that was hinted at, but now it is actually being done. Thank you.

Okay, I have some line items, then; I will just go back to the lines again and see where we are. It is under Land Resource, Large Scale Land Development. Under 3.1.03, which is the Large Scale Land Development, which was a contract, I think, between the government and the Dairy Farmers of Newfoundland and Labrador Association to clear land, there is no money in the line now for this coming year, so I take it this has just ended, has it?

MR. SKINNER: No.

MS MICHAEL: No.

MR. SKINNER: What actually happened was, it was a program that we were looking to have the federal government assist with, as a cost-shared provincial-federal.

MS MICHAEL: Right.

MR. SKINNER: The application that we brought forth for large scale land development to the federal government was not approved, basically.

MS MICHAEL: That is too bad.

MR. SKINNER: They did not approve it, so we could not move forward with it.

MS MICHAEL: That is a shame. What reason did they give?

MR. MOORES: Just from the federal position, it just did not meet the objectives of where they feel they are with agriculture in the country. I guess for most of the country, land development, or getting land into agricultural production, they feel that has already been done, and they do not see it as a priority for funding; but it is important for us, as you know.

MS MICHAEL: This is it; it is very important here.

MR. SKINNER: I did attend, Ms Michael, one federal-provincial-territorial meeting, as Minister of Natural Resources, and that was one of the points that I made to the federal government: that, although we may be a little bit different than the rest of the country in that regard, and it may be insignificant in terms of the overall picture, it is very significant for us to be able - in terms of our food security, food safety and so on - to be able to make more land available. With the Growing Forward program we are trying to do that. I mentioned some of that in my opening remarks, but at that particular time the federal government was not open to the idea. We have engaged in a debate with them, and I intend to continue that at the meetings that I will attend. We see it as being very much a priority.

MS MICHAEL: If we are really going to be concerned about self-sufficiency in food security, it is a really important point, so I am glad to know - so, you are continuing on with this; you are not giving up?

MR. SKINNER: Absolutely. It is a priority for us, and we have not given up on it.

MS MICHAEL: That is great. I am glad to hear that.

Under 3.2.01, and I am looking at subsection 10, could you describe for me what the Grants and Subsidies are in this area, please? There has been quite a change. Last year it was $1.4 million, then down to $600,000, but this year up to $1.7 million. It looks like you have some expectations for this year, if you have put it up from last year.

MR. SKINNER: I will give you a little overview, and then if Cindy sort of wants to add to what I have, by all means I will get her to jump in.

This was related for the most part, I believe, to the cranberry industry development, and there were some delays in getting projects started. There were some weather condition type of things that we could not control; therefore, the expenditure was less than we thought it would have been in the past year, but in the coming year we see that as being an area that we can do more in. So, we budgeted more money anticipating that we will be able to get more work done.

Maybe, Cindy, if you could add to it, I would ask that you add to that.

MS MACDONALD: Most of the cranberry development is occurring in the Grand Falls area, and there was federal money from ACOA for cranberry development, so they utilized that program last year. That is why there was a lower uptake on our program. That program did end, at the end of March, so that is why we are now projecting to have more expenditures for 2011-2012.

MS MICHAEL: Okay.

Are there new growers coming in?

MS MACDONALD: Yes, there are.

MS MICHAEL: That is good. So you are satisfied with how things are going, then, obviously.

I was going to ask about the cranberry industry. I do not have to now, do I, because that is it.

MR. SKINNER: If you get a chance, if you are going through Grand Falls, the Wooddale Nursery, I took a run out there before I actually was minister. I just happened to be in the area and popped in and looked at some of the work they are doing there. It is absolutely fascinating, some of the berries and stuff, and what their plans are. I think it is going to be very much an industry of the future.

MS MICHAEL: How labour intensive is it? How high is the employment factor?

MS MACDONALD: There is quite a bit of employment on the construction phase of the cranberry bogs. There is a lot of work in actually creating the berms, and creating the irrigation systems to flood the bogs. When it comes to the actual operating of the cranberry bogs, most of it is at the harvesting time. Then, if they get into processing, that is where there will be more employment as well.

MS MICHAEL: Has this new industry - because it is a really new industry for us - I am assuming there have been environmental assessments done in the areas where the farms have been created?

MR. SKINNER: Yes. That would have been a part of the normal process to establish, yes.

MS MICHAEL: Right.

In general, what is the impact if we continue with this industry with regard to our bogs and the ecology around our natural bogs?

MR. SKINNER: I will ask Cindy to help with that.

MS MACDONALD: Before you can get a permit to start a cranberry farm, you actually do have to go through an environmental assessment process. The Department of Environment would release you, then, as to whether you met the conditions of their permitting. As well, the department is undertaking a study this year, actually, to look at the impacts of farming cranberries in peat bogs.

MS MICHAEL: Okay, your department?

MS MACDONALD: Yes.

MS MICHAEL: Okay. Well, that is good. Is Environment involved with that, or you are just doing it on your own initiative, or will you be reporting to them?

MS MACDONALD: I am not sure, but I know it is happening through the Land Resource Stewardship Division.

MS MICHAEL: Okay, great. We will keep our eye on that, because I would like to have a sense of that. Thank you.

That was 3.2.01. Under 3.3.01, Professional Services, that is subsection 05, you budgeted $18,000, revised down to $5,000, but this year it is $168,000. What is happening in that area?

MR. SKINNER: The decrease, first of all, from $18,000 down to $5,000 was basically just less anticipated services than we thought we would need throughout the year. The increase actually is the fact that we are now implementing the new entrants program as a part of Our Farms, Our Future, the Growing Forward Program. That was a just a Budget announcement. There is $150,000 that has been budgeted there, for that portion of it.

MS MICHAEL: Could you describe that a bit more, with regard to the new entrants?

MR. SKINNER: Yes, I am happy to do it.

MS MICHAEL: Okay, great.

MR. SKINNER: I will ask Cindy, by the way, sorry.

MS MACDONALD: The $150,000 is going towards the design and development of new entrants initiatives. That could include mentoring programs, scholarship programs or agricultural career days. As you are probably aware, there are fewer people getting into farming now, so we are trying to create an awareness, through agriculture career days and through scholarships, to get more youth into agriculture. As well, for those new entrants getting into agriculture, it is important that they are mentored by an existing producer, so we are looking at developing a mentoring program, and looking at mentoring programs across Canada and in other jurisdictions to see what works there, and trying to introduce that in this Province.

MS MICHAEL: Now, this really shows my ignorance because I really - with regard to how things are developing in the Province, is the College of the North Atlantic involved in this? What is the kind of training that is going on? Is it just on the job and working with mentors, or are there programs that people who want to get into the industry can do?

MS MACDONALD: There is not an agricultural university in Newfoundland. Most people looking for a degree in agrology would go to the University of Guelph, in Ontario, or go to the Nova Scotia Agricultural College in Turo, Nova Scotia. The department does put off lots of conferences and training courses for producers; and, as well, the College of the North Atlantic also do training on a demand basis. I believe they just recently announced some cranberry training, actually, going on the first week of May in Grand Falls.

MS MICHAEL: The money for new entrants, is any of that money earmarked to help with people's education if they needed assistance?

MS MACDONALD: Well, the $150,000 share, that is the first stage, the design and development of what the programs are going to look like.

MS MICHAEL: Okay.

Obviously, it is costly to be going outside the Province. I know these are great universities, Guelph and Nova Scotia in particular, but it is still costly for people to have to do that; so that is a bit of a deterrent, I think, for getting into it.

MR. SKINNER: The money that we will spend, the $150,000, will help us to identify some of those barriers and some of those things that would hold people back from being able to either enter or advance in the industry, so we will come up with a strategy based upon some of that work.

MS MICHAEL: I would assume that you are probably consulting with people in the industry now, and the association.

MS MACDONALD: Yes, we will be working with the Young Farmers of Newfoundland and Labrador, as well as the Newfoundland and Labrador Federation of Agriculture.

MS MICHAEL: Great. Thank you. It is all exciting to hear, actually.

MR. SKINNER: That is good.

MS MICHAEL: Under 3.3.04. "Appropriations provide for incentives to stimulate and attract large scale investments in agriculture.…" The budget last year was $2.9 million, you spent $2 million, and this year it is up to $3.2 million. Is that related to the other, or is this - well, it would be different because this is not new entrants, obviously.

MR. SKINNER: No.

MS MICHAEL: This is investment.

MR. SKINNER: Some of these projects, because of the size and scope of the projects, could not get finalized - and maybe even completed, I am not sure – and completed as well in the one budget year, so something that we had thought we could get done in a year did not get done, so that would be part of the reason why there would be the decrease.

In terms of the increase, I would have to ask officials, if they would, to help me and you with why the increase there. I do not know if there are new projects in line; I am not sure.

MS MICHAEL: That is what I am wondering.

MR. SKINNER: Maybe Cindy?

MS MACDONALD: The increase of $320,000 in 2011-2012 that is a re-profiling from some of the large scale land development piece; the federal program that did not get approved. It is allocating that back to the development fund.

MS MICHAEL: Okay.

I wonder, under both 3.3.03 and 3.3.04, could we have lists of what the different initiatives are, that are funded under the Grants and Subsidies on both of those?

MR. SKINNER: We will get that information.

MS MICHAEL: Thank you very much.

Under 3.3.05 Growing Forward Framework – I still am fascinated by that name, by the way, every since the first time I heard it - again, under the Grants and Subsidies you under spent, but still going back to the same amount this year. The same two questions, I guess; the under spending probably is because you just did not get as many applications as you expected.

MR. SKINNER: No, just for clarity, it was not the lack of applications; it was more of not being able to complete the project in the fiscal year.

MS MICHAEL: Okay.

MR. SKINNER: There were lots of applications, but it was more of a timing issue.

MS MACDONALD: (Inaudible).

MR. SKINNER: Okay, we will go to Cindy.

MS MACDONALD: The Growing Forward Program was fully committed last year, and as program and project savings are identified we recommit the program funding right up until March, actually, but those last few projects they may not go ahead because if someone had to fabricate equipment or something they could not get in by the end of March. That is why there is about $600,000 that was not spent.

MS MICHAEL: Once again, could we have a list there of the projects under Grants and Subsidies?

MR. SKINNER: Yes, we will provide that as well.

MS MICHAEL: Okay, thank you.

Under 3.4.01, which is Animal Health, the Administration and Support Services, there are quite a number of variances there: one in Salaries 01; in Transportation and Communications; in Purchased Services; and in Property, Furnishings and Equipment; if I could just have explanations of the various variances.

MR. SKINNER: Salaries is less because of maternity leave, positions that were vacated and not filled, and people who we may have brought in were brought in because they were new at a lower step than somebody who would have been there a longer period of time, so what I would consider to be sort of normal kinds of things, nothing that I would consider to be strange or odd there.

Purchased Services, I believe you mentioned.

MS MICHAEL: Transportation and Communications.

MR. SKINNER: Transportation and Communications. That one is basically just simply a matter of less than anticipated travel. It is as simple as that. We budgeted for it, but we did not need to do as much; therefore, it was not used up.

MS MICHAEL: Purchased Services

MR. SKINNER: Purchased Services; that has to do with – I asked this question in my briefing and I hope I pronounce the word right - is it equine?

OFFICIAL: Yes.

MR. SKINNER: It is equine. Okay, I was not sure.

We, being the Province, now provide all services related to the equine industry as opposed to purchasing. In the past, we would have purchased some of those services; now we provide them ourselves. That is why you will see an increase there, in those; but, because we do it there would have been an increase in vehicle expenses because we are going out to the places to do the work that needs to be done.

Just by way of maybe helping us understand in terms of the kind of services, if you want to, Cindy, what do we do?

MS MACDONALD: The Animal Health Division would basically provide veterinary services to the livestock industry in the Province; or, if you have a sick animal, the vets will go out and treat it.

MS MICHAEL: Great.

How many vets do you have in the department?

MS MACDONALD: I think there are approximately eight vets in the Province.

MS MICHAEL: Some of them are obviously located closer to where they work; they just do not all travel in from one spot.

MS MACDONALD: Yes.

MS MICHAEL: Thank you.

What would the Grants and Subsidies be about there? Who would be getting them, and for what reason?

MR. SKINNER: It is just the one grant, and the grant is actually to the SPCA in the amount of $110,000.

MS MICHAEL: Okay.

Last year, for some reason, you had an extra $5,000 in there.

MR. SKINNER: Maybe they needed an extra $5,000 and we gave it to them. I do not know if you can explain that, Cindy; I am not sure.

MS MACDONALD: The $5,000 last year was a grant provided to MUN in support of the Canadian Society of Mirobiologists Conference they hosted.

MS MICHAEL: Okay, so it was not to the SPCA.

MR. SKINNER: (Inaudible).

MS MICHAEL: Nice try.

MR. SKINNER: So, I shouldn't guess.

MS MICHAEL: No, that is right; guessing gets us in trouble all of the time. I try not to do it.

MR. SKINNER: It was only $5,000 so I didn't mind taking a shot at it.

MS MICHAEL: I will just finish off the agrifoods area with my questions. Yvonne might want to go over some of the –

Under 3.5.01, the Research and Development, under Professional Services it has gone up quite significantly, $1.48 million more this year from last year's budget. What is that about?

MR. SKINNER: I will turn that over to Cindy. Can you explain that?

MS MACDONALD: This is one of the projects, the programs that we got cost-shared with the federal government, so they actually are putting in additional funding to us.

MS MICHAEL: I see that, the $1.5 million.

MS MACDONALD: Yes.

We have $1 million into the program, and the federal government is putting in $1.5 million. That money was put mostly into Professional Services to do the research projects for us, analytical, whether it is expertise that we would bring in.

MS MICHAEL: Right, okay. I did not notice that, the federal revenue.

Under Purchased Services, last year you had budgeted $1.7 million but only spent $120,000. Of course, this year is more in line with $120,000. Were you anticipating something last year under Purchased Services?

MS MACDONALD: Yes, I think that was related to - we had anticipated getting that $1.5 million federally last year.

MS MICHAEL: Okay.

MS MACDONALD: The agreement did not get signed off until March 2011, so it will be spent in 2011-2012.

MS MICHAEL: Okay, thanks.

Under 07 Property, Furnishings and Equipment, there is an extra $120,000 spent over the budget. It must have been something you did not expect.

MS MACDONALD: Well, with research projects it is hard to determine in advance of a year what exactly the projects are you will be funding. For property and furnishings, it was for equipment that we use, like in the research trials with things like seeders and planters, so if they are doing research like a new crop variety, sweet potato trials, corn silage.

MS MICHAEL: Right.

Okay, those are all the questions I have in the agriculture and agrifoods area.

CHAIR: Okay, Mr. John Dinn, do you have a question?

MR. DINN: I am listening to the agricultural part of it very intently because I have a big interest in it. I am glad to see that –

CHAIR: Mr. Dinn, your mike is not on.

MR. DINN: Okay. I thought I might have eaten it when I had a bit of cheese there.

Anyway, I was saying that I am very interested in agriculture, as some of you know. I am glad to see that you have some money put in for new entrants. I talk to farmers very often, and farmers are indicating that it is difficult to get people involved in farming, because today farming is not an easy life.

I was just going to suggest, I do not know if it is the right place to do it or not, but I always thought that a place to start to get people interested in agriculture would be in school. Years ago, when I taught school – and, Lorraine, I think you can verify this - there was a Grade 9 Geography which had a chapter always on agriculture, another one on forestry and stuff like that.

At the time when I was teaching that, I used to grow stuff in the classroom and develop interest. I think that we need to probably start down in the junior high with at least, say, a chapter on agriculture; and probably even later on you could even expand it a bit further. I do not know if any of you are doing anything like that, are you? Cindy, do you have any inclination to do something like that?

MS MACDONALD: Actually, under our Growing Forward program, we are funding a project with the Federation of Agriculture to do an agriculture-in-the-classroom project.

MR. DINN: Perfect.

MS MACDONALD: And that is exactly what they are doing; they are trying to bring agriculture to the youth, to give them an awareness of where their food comes from, an appreciation for agriculture, and even try to promote agriculture as a career.

MR. DINN: That is a good place, a good place to do it.

Also, I am glad to see that you have the five-year action plan, Minister. That is what we have been talking about all along. That is to get us more along in the food security side of it, I think, and that is good. That is really good.

One other comment or question, or what you want to call it, the Land Consolidation Program, I saw this as a very, very productive way to get agricultural land back into the system. Years ago, when they brought in the land freeze in the Kilbride and Goulds area especially, it caused a lot of anxiety. I think at the time, if the governments who did it at the time – I do not know who did – if they had to have $1 million or $1.5 million at the time, you could have bought Goulds and Kilbride. Today, I see the Land Consolidation Program as being a very worthwhile program over the years, and it did a great job, because you do not hear near the complaints anymore from people who have agricultural land, because they have an option. I assume you have money also in this program again this year, don't you?

MS MACDONALD: Yes.

MR. DINN: That is perfect.

Anyway, that is all I wanted to say. I am glad to see us moving forward on agriculture, because I am concerned, and I think we are all concerned, about food security, especially when we look at what has happened in Japan, and what could happen if transportation to this Island stops. We have to get after the feds to ante up, I think, and let them know the position that we are in.

Thank you.

CHAIR: Okay.

We will go back to Ms Jones, I assume.

MS JONES: Thank you, Mr. Chair.

I just have a few questions, and hopefully I will not be repetitive in terms of what my colleagues have already asked. First of all, on the Limestone Sales, section 3.1.02, are all of our limestone sales being made in the Province now, or are we bringing it in from outside the Province?

MR. SKINNER: It is all in-Province, yes.

MS JONES: Okay. It is still coming off the West Coast of Newfoundland?

MR. SKINNER: Yes.

MS JONES: Okay.

Under section 3.1.03, the Large Scale Land Development, obviously this program looks like it has ended - I am just assuming that - so I would just like to get some clarification.

MR. SKINNER: It did not actually end. We made an application to the federal government under a federal cost-shared program, and the federal government did not approve it. So the program never happened, basically.

MS JONES: Yes.

MR. SKINNER: Although we still believe that large-scale land development is an important area for us. You may have been out of the room when I spoke to Ms Michael about it, but we are pursing that and we are going to continue to pursue that with the federal government and look for monies to be able to do some large scale-land development to increase the acreage that we have for use.

MS JONES: Okay. When you are talking about large-scale land development, what are we talking about in terms of land size, the number of acres of property? How does that usually work? What defines large scale, I guess is what I am looking for?

MR. SKINNER: I will ask Ms Cindy to define large for you.

MS MACDONALD: I think the intent of this program was that as a government we would actually go out and identify acreages of land that was suitable for agriculture. It could be like 1,000 acres, it could be 500 acres. We would actually go out and clear that. Then we would do through a call for proposals, applicants could then apply to farm that land.

One of the disadvantages, if you are trying to get into faming now, is that you would have to go through and obtain an agricultural lease; you would have to clear the land. There is a time lag between when you actually get that land into production and you are getting farm revenue. In most provinces you can go out and buy cleared land already. There are lots of farms for sale; whereas here, we are just starting out with land clearing. So the intent would have been to clear larger acreages of land.

MS JONES: Okay. You would lease that back to the individuals?

MS MACDONALD: Correct.

MS JONES: Okay.

In terms of land development - and I obviously do not know as much about farming as what Mr. Dinn knows behind me, I can tell you that. In terms of the acquisition of land, how is that working in the Province? Are you acquiring huge amounts of property that can be used for agricultural purposes, and is there a take up on that?

Oh, I am sorry, section 3.1.04. I am not necessarily concerned about the numbers. I am just concerned about how the program is working and what the take up is on it and stuff like that.

MS MACDONALD: The uptake is actually quite strong. There has been about 2,800 acres to date that has been purchased since the program came into effect. My understanding, there is probably about 600 acres at the moment that is under consideration that people have offered up to sell that land back to government. That is granted land that was either farmed at one time and no longer farming. Where we have such a small land base, that is the land we would certainly want to buy back for farmers to use.

MS JONES: Okay. How many farms, commercially operated agriculture farms do we have in the Province?

MS MACDONALD: It is about 500 farms.

MS JONES: About 500. Most of the excess land that is being made available, I do not know if it is excess or not but whatever you have that you are making available, where is most of this farmland based in the Province?

MS MACDONALD: The land that is currently being farmed?

MS JONES: Well, you talked about 2,800 acres that you let out and you said there is another 600 acres that is being offered up that you could use. Where is most of that? Is it the West Coast of Newfoundland or the Avalon Peninsula?

MS MACDONALD: Mostly on the Avalon.

MS JONES: On the Avalon, okay.

The marketing piece of this, can you explain to me how it works, the government management marketing piece of the agriculture industry? Because, as you know, one of the things the fishing industry has been asking for a long time in this Province is a marketing format, a marketing agency in terms of their product and how it works. Can you give me an idea of how this works in the agriculture industry? How we set it up, how we invest in it, and what it is we do as a government in terms of being able to put these products out there?

MS MACDONALD: Depending upon the commodity, some of the commodities are supply managed, like milk, chicken and eggs. They have their own marketing boards that market on behalf of them. Other commodities, if you look at vegetables, if you look at beef, for instance, they would have industry associations. As government, we do have marketing specialists on staff. We also have funding through our programs like Growing Forward, where individual producers can get funding for marketing plans, but, as well, industry groups can get funding for marketing.

One of the projects we are funding under Growing Forward with the Federation of Agriculture is the agriculture awareness program. I do not know if you remember, in the past we used to have these TV ads promoting locally grown product.

MS JONES: Yes.

MS MACDONALD: They are looking at developing a new campaign ad this year. They will be both print and TV media ad to promote buy local product.

MS JONES: Yes. Where is that budgeted for in here, the ad campaigns and stuff?

MS MACDONALD: Pardon?

MS JONES: Where is it budgeted in here? Is it 3.2.01?

MS MACDONALD: There is funding under 3.2.01, under Salaries, there would be marketing staff there. They would also have funding, for instance, under Professional Services and Purchased Services if they are doing marketing campaigns.

As well, under the Growing Forward program, which is 3.3.05, under that section under Grants, that is where we are giving funding to the federation to undertake some of the marketing initiatives they are doing. As well, the department just recently, if you look at our Web site, just came out with a listing of farm markets across the Province. So, it is kind of advertising. I think there are about fifty of them there, actually, showing what products they have, when they are available, and what their hours of operation are.

MS JONES: Okay.

Who has the contract to do the marketing work for Agrifoods? What firm does that, what company?

MS MACDONALD: Well, our work is internal, but the Federation of Agriculture, the project they are doing, I do not believe they have anyone contracted yet.

MS JONES: Who did all your ads that were on TV and stuff like that? You do not do that in-house, I am sure.

MS MACDONALD: No, no, we did not do that. I am thinking it was M5 Advertising, but I am guessing, it was a few years ago.

MS JONES: Okay. You are looking at doing some new ones this year, but you have not contracted the work yet?

MS MACDONALD: Yes, that project is through the Federation of Agriculture. They have a steering committee set up and meeting with the different industry groups as to what kind of messaging they would like to have. They have to get that work done first.

MS JONES: Okay.

I guess a lot of the grant money that you see – I know Lorraine did ask for a breakdown of the Grants and Subsidies there, but a lot of that, I would assume, is going to the Milk Marketing Board, the Chicken Marketing Board, and the Egg Marketing Board. Is that where those kinds of grants are going?

MS MACDONALD: The grants would go to associations, but mainly they are going to individual producers.

MS JONES: Okay, under section 3.2.01 Production and Market Development.

MS MACDONALD: Oh, sorry, the Grants under 3.2.01?

MS JONES: Yes.

MS MACDONALD: Those grants, actually, are mostly the funding for the School Milk Program and for the cranberry program.

MS JONES: Okay.

In terms of the cranberry program, how much has the Province invested to date into the cranberry farms piece, the development of that industry?

MR. SKINNER: I am not going to guess. I tried guessing at $5,000 and I was wrong. I know it is a lot more than $5,000, so we will get the number for you.

MS JONES: Okay, great. Thank you.

What has been the return so far in the cranberry industry in terms of - what have we created in terms of jobs and farms and all the rest of it? Where are we in that?

MS MACDONALD: We are at, actually, the very early stages. We had four pilot sites that were established, but the recent investment, those farms are just getting started, so on average they have perhaps about twenty acres of cranberry land developed, but it will take a couple years before they actually get a crop off that land. Most of them, I think, are now looking to expand between the fifty to sixty acre farm size. Most of them are just within the first two to three years of development; there are in the very early stages.

MS JONES: Okay.

So, to get a cranberry farm developed, off the ground and producing, you are looking at a span of four or five years.

MS MACDONALD: Yes.

MS JONES: Okay.

The four pilot sites that have been selected, where are they?

MS MACDONALD: There is one operated by the department in Deadman's Bay, there is one out by Stephenville Crossing, one by Stephenville, and there is one in Terra Nova Park.

MS JONES: They let you put one in the park.

MS MACDONALD: Pardon?

MS JONES: They let you put one in the park.

OFFICIAL: (Inaudible).

MS JONES: There are not all operated by the department, though, are they? Are some of them by the private sector?

MS MACDONALD: The one in Deadman's Bay is operated by the department, but the other ones are owned by individual producers.

MS JONES: Okay.

These producers - are they existing farmers in the Province or are they new people coming in?

MS MACDONALD: Some were existing producers. We had one that was a sod producer, we had a new entry getting in who was previously a dairy farmer, who just sold his dairy quota and is now getting into cranberries, but the majority of them would be new to farming.

MS JONES: Okay.

Under the Growing Forward framework, is this where the new initiatives are that were announced in the Budget? Would they come under that?

While you are looking for that, my staff were just asking me a question about spraying blueberries in the Province. Are we spraying blueberries?

MS MACDONALD: That I cannot answer; I do not know that.

MS JONES: Okay.

MS MACDONALD: Not that I am aware of, but that is outside my field of expertise.

MS JONES: I am just asking because of the organic piece right now. That seems to be the highest quality marketable product that you can put out there, and that is what a lot of people are looking for. I am just wondering if we spray blueberries, or if we spray any of our crops for that matter.

MS MACDONALD: Government certainly does not spray. Government is certainly not spraying the wild blueberry crop, if that is your question. Producers who have their own cultivated fields of blueberries, they would be applying different herbicides and pesticides.

MS JONES: Okay.

MS MACDONALD: No, government is not spraying any wild blueberry crops.

MS JONES: There is no regulation around it in terms of what private operators do, is there?

MS MACDONALD: Actually, you have to have a pesticide applicator course to actually purchase and apply pesticides in the Province, so it is regulated; and you have to take a course and pass an exam.

MS JONES: Okay, but there is nothing that says you cannot spray your crop in this Province, right?

MS MACDONALD: No.

MS JONES: Okay.

The other question is: The initiatives in the Budget that you announced under Our Farms, Our Food, Our Future, where is that budgeted for, in the Estimates?

MR. SKINNER: That would be under section 3.3.01, under Professional Services, and also 3.1.04; that would be under Purchased Services.

MS JONES: Okay, 3.3.01.05, and the other one you said? I am sorry.

MR. SKINNER: 3.1.04 under 06 Purchased Services.

MS JONES: Can you explain to me, those particular grants, are they for commercial developers or family-based farm operations, or both?

MR. SKINNER: Just for clarity, when you say grants, what do you mean by grants?

MS JONES: You are talking about having – okay, maybe it is not grants; maybe it is loans, I do not know. You are talking about $150,000 for the development of new entrant initiatives, and $100,000 to assist new entrants with legal land survey costs and so on; and, you are talking about the five-year Agriculture and Agrifoods Action Plan. Maybe I am making the wrong assumption, but I am assuming that the whole purpose of this is to try and get people to start producing more on their own in the Province.

MR. SKINNER: Yes, not just for people to start producing more on their own, but also to have more new people get into the farm industry, to attract people to it as a career path.

MS JONES: Okay, that is my question. Is it just for a commercial-based operation, or is it also any grant program; for example, if families want to start developing their own farmland and growing their own vegetables for their own consumption, and all that kind of stuff?

MR. SKINNER: Okay, I think I understand what you are asking me now. It is what I would classify as commercial, not for personal use. In other words, there would not be any money available for me to do a little farm, to look after my own personal needs, if that is what you mean.

MS JONES: Yes, so not for family-based farming.

MR. SKINNER: No.

MS JONES: Okay.

How do you access the money? How do you access it, if you want to get into this? Is there an application process? What are the criteria? How does all of that work?

MS MACDONALD: The funding for the new entrants initiative, that is actually for the design and development work, so it is not actually individuals applying for funding. It would be for us to engage industry, as well to look at the different mentoring programs that are available across Canada, across the US, across Europe, and design a mentoring program that would be suitable for Newfoundland.

MS JONES: Oh, so you are not giving out any money to anyone at all?

MS MACDONALD: Not under that $150,000, no. This is the design work.

MS JONES: Okay.

It includes $150,000 for the development of new entrants' initiatives, and $100,000 to assist new entrants with legal and land survey costs.

MR. SKINNER: The $150,000 is for us to - it is a five-year program, so we are using the $150,000 to do some consultation with some of the groups, and do some research across the country to determine the kinds of programs we would bring in and develop to attract people into the industry. The $100,000 that we referred to in 3.1.04 would be for people who are new entrants into the farming industry, that we would help them, I would assume it would be offsetting; I do not know if it would pay 100 per cent of their cost.

OFFICIAL: (Inaudible).

MR. SKINNER: It pays 75 per cent of the cost of land surveys.

MS JONES: When you read it, if I was out there today looking to be a farmer and I read that, it sounds like I can actually apply for money as a new entrant, to get into the business, but I see what you are saying.

MR. SKINNER: Just for clarity, you still could as a new entrant. If you were out there wanting to do that, there would be programs available for you but not just from that particular pot, I guess, is the distinction we are making.

MS JONES: Okay.

CHAIR: I wonder if I might take some direction from the members of the Committee. We have been sitting for two-and-a-half hours and looking at the Estimates. There are a couple of other areas, I am sure, that we will really get into some questions that might take quite a bit more time; so, if members like, maybe we could take a five-minute recess.

MS JONES: Mr. Chairman, if I could just finish up the agrifoods section, I am just going to be a few more minutes, so when we come back we can start on a different section?

CHAIR: Okay, that will be fine, Ms Jones.

MS JONES: Thank you.

One of the things I was going to ask about is with the mink farms, and the issue around the Leutians disease, is it? I am trying to remember the proper name for it.

MR. SKINNER: I think it is Aleutian disease.

MS JONES: Aleutian disease. It was an issue a few years ago, and I know there was a program that government did put in place that they were going to help offset some of the expenditure that these farms had incurred. Where is that in these Estimates? Is that program finished, or –

MR. SKINNER: Cindy?

MS MACDONALD: Yes, there was a program called the Aleutian Disease Management Program, and that program has now ended.

MS JONES: Okay.

Were there any lawsuits against the government as a result of that disease in farms in the Province? There wasn't, was there? I just remember the media, going back to then, and there was one issue with one farmer, I know, and I was just wondering if they ever filed any charges.

MS MACDONALD: No, I am not aware of any lawsuits.

MS JONES: Okay.

I think that is about it for my questions on that section.

CHAIR: Maybe I will go to Ms Michael first.

Are you finished with the agriculture?

MS MICHAEL: I am finished with agriculture.

CHAIR: Okay.

My suggestion is - it is 8:03 p.m. now - that we return at 8:10 p.m. to resume. Is that good with everybody?

OFFICIAL: (Inaudible).

CHAIR: Okay, 8:15 p.m. is good.

CHAIR (Verge): Ladies and gentlemen, we can resume now as soon as we are ready, please.

There are more questions on the Department of Natural Resources, I do believe.

MS JONES: Actually, I am ready to move into section 4.1.01 if it is good.

CHAIR: Okay. We are going to section 4.1, page 166 in your Estimates book.

Ms Jones.

MS JONES: Thank you, Mr. Chairman.

Under section 4.1.01.05 Professional Services, this year you are budgeting, obviously, $100,000 more in that particular section. Can you tell us what that is intended to be used for?

MR. SKINNER: That particular money was a budget announcement we made on the coastal erosion monitoring program. So $100,000 of that money will go towards the coastal erosion monitoring program.

MS JONES: Okay. That is the program you talked about earlier in your opening remarks, was it?

MR. SKINNER: Correct.

MS JONES: Okay, and what is it you are planning on doing? You doing a survey of some areas around the Province that –

MR. SKINNER: Yes. The short answer is yes to that, we are.

I will ask Mr. Liverman to just give you some details on what we are going to be doing with that.

MS JONES: Okay, sure.

MR. LIVERMAN: Yes, this is building on what we have been doing for ten to fifteen years for this, to get a better idea of the actual rights of erosion of the coasts. We are going to pick areas which we know to be vulnerable and to carefully map them to get a better idea of potential impacts of climate change in the future.

MS JONES: Okay.

Things like flooding, for example, and hurricanes, things like we have been experiencing in the Province in the last few years.

MR. LIVERMAN: Yes, they certainly have an impact. It is really the coastal cliffs which are not made out of rock are very vulnerable to wearing back with the action of the wind and the waves on them.

MS JONES: Okay.

Under Purchased Services, again under that same heading, you spent a little more than you had originally intended. Can you tell me, first of all, what kind of services you would be purchasing under that heading for example?

MR. LIVERMAN: Promotional activities, printing, publications, et cetera.

MS JONES: Okay.

Again, under Property, Furnishings and Equipment, this year you are budgeting $315,000. What is that going to be used for?

MR. SKINNER: I will ask Mr. Liverman if he would…

MR. LIVERMAN: The increase there is due to us budgeting to replace outdated and obsolete, and analytical equipment in our geochemical laboratory.

MS JONES: Okay.

It is nice, like Christmas now, to get some real good equipment to do your work.

Again, the Grants and Subsidies under this particular heading, what would that be used for?

MR. LIVERMAN: That is used to provide a grant towards the annual mineral resources review meeting which is held in conjunction with the Canadian Institute of Mining and Metallurgy Newfoundland branch.

MS JONES: How come it has gone down this year?

MR. LIVERMAN: Basically, they are doing very well and they do not need the degree of subsidy that we have given them in the past.

MS JONES: Good.

Under Mineral Lands; of course, I have a couple of questions there as well. Under Supplies, you did not spend what you had budgeted for. Was there something in particular you were looking at doing last year that you did not get to do?

MR. LIVERMAN: No, not really. It was just lower than anticipated expenses for supplies associated with field inspections.

MS JONES: Okay.

Again, under that heading, Property, Furnishings and Equipment, you spent much more obviously than you had budgeted for. Can you tell me what that was spent on?

MR. SKINNER: That one, Ms Jones, relates specifically to a board we have in place called the Mineral Rights Adjudication Board. There were a number of hearings that needed to be held due to grievances filed under the Mineral Act. That cost would be related to bringing that board together.

MS JONES: What kind of grievances would be filed under the Mineral Act, just out of curiosity?

MR. SKINNER: Okay. Dave?

MR. LIVERMAN: It is generally disputes over mineral properties. If the holder of a particular mineral property has a dispute, either with the department or with another holder, then they can appeal to the Mineral Rights Adjudication Board.

MS JONES: Okay.

I have some general questions as well under that particular section. I was wondering if you could give us an update on what is happening with the Long Harbour project, for example.

MR. SKINNER: The Long Harbour project being Vale, you mean?

MS JONES: Yes, sorry.

MR. SKINNER: Okay, all right. I will just give you my own sense of it, because I did go out and visit the site and what is happening out there. There is a fair bit of construction activity that is taking place out there. We do have an agreement with them for a particular date that they will be up and running. We are monitoring their progress. For the most part, they are on schedule to meet the date of February 13 –

MS JONES: 2013, yes.

MR. SKINNER: 2013, yes; February 13. It appears that things are progressing along well out there. If you had any particular questions we would do our best to answer them, but generally speaking, it is moving along as was anticipated and scheduled.

MS JONES: Just out of curiosity, how much money is the government collecting now, for example, in royalties and business tax directly related to the Voisey's Bay nickel deposit?

MR. SKINNER: That information we would not have; it would be more a finance related question, so I would have to direct you to them. I do not have that information.

MR. WARDLE: I believe that information would be confidential.

MR. SKINNER: The deputy indicates that he believes that may be confidential information. Again, I think that would be something better answered by Finance, because they would be the ones who would collect that information.

MS JONES: Why would it be confidential?

MR. SKINNER: I do not know if it is, so I am suggesting that Finance would be able to give you the specifics of it. It is not in our area of responsibility. It is something that Finance would be responsible for collecting and auditing and checking on, and I guess it would be up to them.

MS JONES: You guys would not have a breakdown, then, of what any of the mining sectors are contributing to the Province in terms of royalties and taxes and so on.

MR. SKINNER: The short answer to your question is: we would be able to give you sector-specific information, but in terms of particular companies - your first question I understood to be related directly to Vale, so we would not be able to give you that. Not that we wound not; we cannot. We do not have it. It is not a matter of I would not give it to you; I do not have it to give to you. Finance would be the holders of that information, but we would have it from a sector perspective.

MS JONES: Okay.

Can you give me the overall amount, what we are collecting right now in the mining industry from royalties and business tax?

MR. SKINNER: I will ask the deputy if he might be able to -

MR. WARDLE: I am guessing it is $200 million to $300 million, but we would really have to get back to you on that. We do not collect those statistics.

MR. SKINNER: I only guess with $5,000; he is guessing way bigger.

MS JONES: What is the schedule for the Voisey's Bay mine to go underground? Is there a schedule around that, at this particular stage?

MR. SKINNER: The short answer, Ms Jones, is no, there is no scheduled date for that. As I understand it, it is something that the company is looking at, reviewing and exploring, but there has been no firm commitment made to that as yet.

MS JONES: Can you tell me what the projected time frame is, that is remaining in Duck Pond Mine?

MR. SKINNER: I will ask the deputy if he might be able to answer that.

MR. WARDLE: I believe they have about three to four years of mine life left, approximately. That is assuming that they do not make any further discoveries, or go to mining of satellite ore bodies.

MS JONES: So they have that option, do they?

MR. WARDLE: Essentially.

MS JONES: Okay.

I just have some questions around the power issues for mines in Labrador. For example, the Iron Ore Company of Canada, we know that they are up for renewal, in terms of their power agreements, in 2014. I am just wondering if you have started the negotiations on that, at this stage, and what you are looking at in terms of an electrical rate for the mining industry in Labrador. Are you looking at a set rate? Are you still looking at individual negotiations with these particular mining operators?

MR. SKINNER: The first part of your question in terms of, are we in negotiations with them, the answer to that would be no, at this point we are not. We are currently doing some work on an industrial rate for Labrador, and that is working its way through our system that we have, in terms of eventually being considered by Cabinet, but that work is not yet finished.

MS JONES: So you are looking at more of an across-the-board rate?

MR. SKINNER: We are looking at a number of options, and there has not been any particular decision made yet on that. We realize that we have to review the rates, which is what we are doing, and there are a number of possible scenarios that will, I would assume, eventually be considered by Cabinet and some direction will be received on that. So, we are putting that information together for Cabinet consideration.

MS JONES: What is the rate that IOC pays right now?

MR. SKINNER: I am just trying to figure out what the exact figure was, but it is the same rate as Hydro- Quebec, which is 0.25.

Ms Jones, just by way of information, you asked a question earlier about the mining tax royalties that we collected.

MS JONES: Yes.

MR. SKINNER: We have been able to determine that last year it would have been – rough numbers – $225,406,000. We estimate it this year to be $348,970,000.

MS JONES: The additional taxes, I guess, are from the new mines that are coming on stream.

MR. SKINNER: Through new mines.

MR. WARDLE: (Inaudible).

MR. SKINNER: Go ahead.

MR. WARDLE: A large part of the increase would be due to the rise in metal prices, particularly for iron ore.

MS JONES: Okay.

What about the new mines that are coming on stream?

MR. WARDLE: Well, they are not in production yet. The next mine to come into production would be Labrador Iron Mines, so it will be a while before we realize taxes from that. Mines generally pay off the capital costs before they start paying a mining tax, so it will be a while before we see the full value of those new mines.

MS JONES: Okay.

Speaking of Labrador Iron Mines, where are they getting their power for their mining operation?

MR. SKINNER: The power right now would come from some diesel generation and from the Menihek station. I do not know the split on that, but they would be the two sources.

MS JONES: Menihek is what, fifteen megawatts?

MR. SKINNER: Eighteen.

MS JONES: Eighteen megawatts. How much is the power from Menihek? How much would they be charged for power coming from Menihek? I think the rate is set differently on that, is it not?

MR. SKINNER: Just give me one second, please.

MS JONES: Yes, no problem.

MR. SKINNER: Okay, Ms Jones, just in response to your question, the company would be in discussion right now with Hydro in terms of the rate, so we are not privy to that rate at this point.

MS JONES: Okay.

So, there has not been any rate set that you are aware of?

MR. SKINNER: No.

MS JONES: Now, it is my understanding that New Millennium will also be getting some power from the Menihek site, or will Labrador Iron Mines be using all of that power?

MR. SKINNER: Again, I cannot give you a specific answer to that because that is something that again is still in discussion, and the distribution or the amount of power that will come from Menihek has not yet been determined, and to whom it will go. So, that is something that is still being discussed and ultimately, I guess, Hydro will make a determination on that.

MS JONES: Okay, so those things have not been decided. I know, for example, that Labrador Iron Mines are going to use about twenty megawatts of power, I think, for their operations, or somewhere in that vicinity. Is that right?

MR. SKINNER: Our understanding is it would be less than that.

MS JONES: Less than that?

MR. SKINNER: Yes.

MS JONES: Okay.

How much would New Millennium use for their smaller operation that they are building now?

MR. SKINNER: We think maybe the number you mentioned earlier, the twenty, we think you may have them reversed.

MS JONES: Okay.

MR. SKINNER: We think the higher number would be for them as opposed to -

MS JONES: New Millennium.

MR. SKINNER: Yes - to what you just said a second ago.

MS JONES: Okay.

When are those decisions going to be made on where Menihek power is going and who is going to get it, and stuff like that? These mines, like Labrador Iron Mines, haven't they already started production or ready to start production?

MR. SKINNER: I will ask the deputy just to give you some detail on that.

MR. WARDLE: Both mines will install diesel sets that are capable of providing all the power that they need, because that will be their backup power, because the amount of hydro, obviously, would not be enough to supply both mines, to (inaudible) New Millennium on a year-round basis. So, the diesel capacity will be there, but it is yet to be decided how the hydro power will be allocated, and at what price.

MS JONES: There is no power they can accessed out of Quebec, is there, across the boarder there in Schefferville anywhere, in that area?

MR. SKINNER: The answer would be no.

MS JONES: Okay.

Is Schefferville still on Menihek power? It is, is it?

MR. SKINNER: Yes.

MS JONES: Okay.

So they are using so much of that eighteen megawatts.

MR. SKINNER: Yes, we estimate it to be about eight megawatts.

MS JONES: They are using about eight. How much are they paying for that power?

MR. SKINNER: Approximately three cents.

MS JONES: Okay.

That deal has been in place for quite a long time, hasn't it, or is that a recent one? That was negotiated after we took back the power, wasn't it?

MR. SKINNER: We think 2007.

MS JONES: Okay.

In terms of Vale Inco, have there been any negotiations with them around what their power needs are going to be, for example, or providing an alternate power arrangement for them? Right now, they are running all of their mining operation on diesel generation as well.

MR. SKINNER: I understood you to ask: Has there been negotiation? I would answer no to that. Has there been discussion? I think the answer would be, yes, there has been general discussion, but I certainly would not classify it as negotiations, no.

From my perspective they have not made firm enough decisions to really enter into any negotiation. There have been discussions about what if we do this, what if we do that, we may do this, and they are sort of looking at their options, but there have been no decisions made by them, and those decisions would impact whether or not there had been negotiations.

MS JONES: Okay.

So nothing has really happened, I guess, on that front in terms of looking at what alternate power arrangements might be made for the company.

MR. SKINNER: To be fair, I would not want to leave you with the impression that nothing has happened. There have certainly been some discussions around it, but I would not want to lead you to believe that we are into heavy negotiation either.

MS JONES: How much power does Vale Inco use right now? I know they are generating their own, but what are they using, about twenty or twenty-five megawatts of power? I have no idea; I am just guessing now.

MR. SKINNER: Again, we estimate it to be about fifteen megawatts.

MS JONES: Okay.

If they were to go underground, what would be their requirement there?

MR. SKINNER: We would not be able to tell with any certainty on that at this point.

.

MS JONES: You would not know how much power they would need if they went underground?

MR. SKINNER: Well, my sense is we do not have enough information from them as to what it is they would be doing, in terms of what they would need. We have not advanced far enough along, I guess, to be able to make those determinations. The deputy has indicated to me that it depends on the type of underground mine that they would have. In terms of the infrastructure they would need to support would be dependent upon the kind of mine that they would use.

MS JONES: My staff just passed me a note telling me that they thought the Menihek contract was signed with Schefferville in 2005 and that it was not publicly announced until 2007. Can someone clarify that for us?

MR. SKINNER: We will have to check for you, Ms Jones. It is a bit before my time and a bit before the time of the two executive I have here with me. In fairness, we will find out and we will provide you with that information.

MS JONES: Okay, thanks.

Has there been any costing done on a transmission line into Northern Labrador?

MR. SKINNER: When you say Northern Labrador, do you have any particular –

MS JONES: Into Voisey's Bay.

MR. SKINNER: Into Voisey's Bay itself?

My response to you on that, Ms Jones, is that I am not able to reveal to you any discussions that have occurred related to that at this point.

MS JONES: Okay, so you cannot tell me if you have costed – I never asked you the figures; I asked you if you guys have done any work on costing a line between Lake Melville into Voisey's Bay.

MR. SKINNER: For clarity, I want to just ask my officials a question.

The information would be very preliminary information that would have been done by Hydro and not anything that we would have done. That is the answer that I would give to you.

MS JONES: Okay.

I guess the same question would apply to Southern Labrador: Has there been any costing done on bringing transmission capacity to Southern Labrador, to the Labrador Straits?

MR. SKINNER: Again, there has been work done but it has been what we would refer to as a desktop study, or a very general study.

MS JONES: Okay.

MR. SKINNER: I guess the point I am making is that we do not have any detail level work at this point.

MS JONES: Just a question around the exploration in mining that is taking place in Southern Labrador right now. There are a lot of rumours out there, of course; there always are when a mining company comes to town and starts hooking rocks around. Can you tell me the status of what some of those exploration projects are right now, if they are actually turning up anything in terms of substantial mineral or not?

MR. SKINNER: I will ask Mr. Liverman to give you some of that information.

MR. LIVERMAN: Well, we cannot comment on the details of what they have found. It is generally a public record what the companies have chosen to make public. There has certainly been a lot of activity in Southern Labrador with the emphasis on rare earths and metals, and there have been some fairly frequent press releases from the companies there, but it would not be our place to comment on those in detail.

MR. SKINNER: You will have to get your stock tips elsewhere.

MS JONES: What is that?

MR. SKINNER: You will have to get your stock tips elsewhere.

CHAIR: Ms Jones, you have been questioning now for about thirty minutes, so maybe we should go to some other Committee members for awhile –

MS JONES: Okay, sure, I will let someone else go.

CHAIR: – and see if they have some more questions.

MS JONES: Yes, of course, go right ahead.

CHAIR: Ms Michael.

MS MICHAEL: Thank you.

I will just go back to the Estimates pages now, to 4.1.03 Mineral Development. I am interested in subsection 05, Professional Services, last year budgeted at $2.8 million, $3.6 million spent, and this year down to $1 million, more or less. Could I just have some explanation of what is entailed there in the professional services in that line?

MR. SKINNER: Yes.

That, for the most part, would have been related to the Buchans mine rehab project. I am going to assume it came in under price, under what we had projected it to be in terms of the tender. In terms of next year's amount, as you probably are aware, we put in some money for orphaned and abandoned mines in the Budget. So that would be a fair chunk of why the increase for this year we are currently in, to do work in the four orphaned and abandoned mine areas that I identified in my opening remarks.

MS MICHAEL: It looks to me, though, that if it is the Buchans mine rehab work, they spent more than what was budgeted, not less. So it did not come in under, because it was $2.8 million budgeted.

MR. SKINNER: Oh, I am sorry, yes. That is correct. We had actually budgeted –

OFFICIAL: (Inaudible).

MR. SKINNER: There was a little bit of an accounting exercise that occurred, so I will ask the deputy to try to explain that to you, rather than me do it for you.

MR. WARDLE: For the Buchans project you really have to look at Purchased Services and Professional Services combined, because the project really involved both of those areas. So we saved quite a bit of money on Purchased Services because the actual cost of the project was only about $3.3 million as opposed to the $5 million that was budgeted. We had to transfer more money than we expected into Professional Services, so that is why Professional Services went up.

MS MICHAEL: All right, that is good. Thank you.

So I do not need to ask you about the next one, then. That work is completed, if I remember correctly, is it?

MR. WARDLE: It is completed, (inaudible) barring some hydro seeding. By the time the project was completed late last fall, it was too late to do hydro seeding, so that is delayed until this spring.

MS MICHAEL: Right; I remember that now being said at the time. Thank you.

I think the rest is straightforward. Under Grants and Subsidies, it is a constant figure there. What does that cover?

MR. SKINNER: That amount, Ms Michael, is what we refer to as the Mineral Incentive Program. Do you want to just give a little overview? I will ask the deputy just to give a little overview for you.

MS MICHAEL: Thank you.

MR. WARDLE: Yes, it is a program for dispersing grants primarily to junior exploration companies, but also to prospectors and to people interested in developing natural stone projects.

MS MICHAEL: Okay, thank you.

Before going on to the next section, I was wondering, can you give us an update on the situation with regard to the status of the fluorspar mine in St. Lawrence?

MR. WARDLE: Yes. They are released from environmental assessment, as you might know. Their next stage, I believe, is final feasibility, so they have to complete some more design work on the project so they have to raise capital. Markets still look pretty good. We hope that it will be successful but, of course, in this business you can never tell.

MS MICHAEL: That is right, yes. Okay. Thank you.

Those are all of my questions under mining. I do not want to go into energy, in case Ms Jones has more questions under mining. I will wait for the energy stuff.

CHAIR: Okay, that is fair.

We will go back to Ms Jones.

MS JONES: Thank you, Lorraine.

I am just wondering what the status is, or if you can give us an update, on the dispute around the Mary March property in Central Newfoundland. I know it has been in and out of the courts. I am just wondering, I guess, if there have been issues resolved around A.N.D. and the land issues there, or where it is, basically.

MR. SKINNER: Your assessment is correct; it has been in and out of courts. It is currently in court. We are still awaiting the decision on the last appeal that was made. It is in limbo, as it has been for the last ten years or so. It is tied up.

MS JONES: Okay, so it is still not looking like it is going to be resolved any time soon, is it?

I guess we are asking because it is an area in which there is potential for mining development, and it has been on hold for a long time in the Province, right? I am not sure if I really understand what all the issues are around it, and I do not claim to, but I am just wondering, is it something that could be resolved, that government foresees resolving in the near future, so that we can start moving forward with that mining operation.

MR. SKINNER: In fairness, Ms Jones, I would say to you that when this issue was brought to my attention is when I became minister. It is one that I felt had certainly taken up a lot of time and obviously a lot of people's money, I am assuming. I do not know that for a fact, but I would assume so, if they have been back and forth in court for ten years. Somebody is paying some bills somewhere.

I have undertaken to review the situation and see if there is some way we may be able to find a compromise or a resolution to this process, but I am not at a point yet in my review where I can give you anything definitive on that, other than to say I am reviewing the situation. I receive correspondence from the parties affected on a regular basis outlining the history of all of this, and it is obvious that people are frustrated. If there is some way we can, as I said, come to a compromise or a resolution to this, if there is something I can do in my role as a minister, then I would certainly look into that. That is basically what I am doing; I am reviewing the file to see if there is something we may be able to do to help bring a resolution or a compromise to it.

MS JONES: Okay.

I know you just talked about Buchans there, but can you give us an update on the environmental clean up at Rambler Mine and the asbestos mine in Baie Verte?

MR. SKINNER: Just because of some of the technical issues, I will defer to the Deputy and maybe ask him just to give you a little overview of that.

MR. LIVERMAN: If I understood your question correctly, it was: What is the current status of the Baie Verte Rambler rehabilitation project?

MS JONES: Yes.

MR. LIVERMAN: The project is $10 million over three years. It came in quite a bit under that. I think it cost about $7 million in the end due to lower than expected contractual costs. It was aimed at really remediating the immediate safety hazards, which for the most part consisted of abandoned mining infrastructure and the mine. It was not designed to remediate all of the environmental problems at those two sites. That program is finished, bar some air quality monitoring which will be going on for the rest of the year I believe. That is air quality monitoring testing for the possibility of asbestos blow off from the tailings ponds.

MS JONES: Okay. There is still some mining going on there in that area in terms of one of the older sections of the Rambler mine isn't it?

MR. LIVERMAN: That is correct, yes. Anaconda has a small gold mine called the Pine Cove Gold Mine.

MS JONES: Yes.

MR. LIVERMAN: Rambler Metals and Mining are presently constructing an underground mine which will reopen the old Ming Mine which is one of the Rambler mines that last operated in the 1980s. They are hoping to have that in production later this year.

MS JONES: Good.

Another question with regard to Labrador's mining, and that is around Aurora Energy - not Aurora now, Paladin mines bought out the deposits there. I am just wondering what the status of that is, if the Nunatsiavut Government have made any decisions around whether they are going to move forward with that or not at this stage?

MR. SKINNER: The short answer is, as far as we understand it, the Nunatsiavut Government has not made any final determination and the moratorium is still in effect. That is where it is at the moment.

MS JONES: I guess that would be another one of the mines in Labrador that I would have to ask the question: Has there been any consideration in terms of how you are going to meet the power needs for that mine as well?

MR. SKINNER: I have met with officials from the company and they have indicated to me that they have looked at it, but they have not shared anything with us at this point.

MS JONES: Okay.

I just have a question that was passed to me; it is to deal with the environmental issues at Long Harbour. I do not know if they have all been resolved or not around the phosphorous operation that was there.

MR. SKINNER: There were some issues when they started the remediation, as you are probably aware of, and they had to do some further investigation. The company is doing that. At this point, we are not aware that they finished that work or finished their investigation.

MS JONES: Okay, but there is nothing that would affect the Long Harbour piece from moving forward?

MR. SKINNER: No. That is a separate piece of land, a separate issue.

MS JONES: Okay.

I think that is all my questions on the mining section.

CHAIR: Okay. I assume that we will be moving to the energy sector.

Ms Michael, would you like to start that section?

MS MICHAEL: Thank you, I will go ahead.

Starting right with the first section 5.1.01, looking at Professional Services subsection 05. There was $237,000 overspent from the budgeted item last year. Could we have an explanation of that, please?

MR. SKINNER: That amount, Ms Michael, is related to the work being done by Captain Turner and his report. That is where the money for Captain Turner's work is.

MS MICHAEL: That would not have been budgeted for?

MR. SKINNER: Correct.

MS MICHAEL: Right. Is it too early to tell, will there be much more in that do you expect?

MR. SKINNER: I think that is it, isn't it? No, I think that is it.

MS MICHAEL: Okay, because he has given his report.

MR. SKINNER: He has.

MS MICHAEL: May I ask then: Is that report in your hands, in your department?

MR. SKINNER: It is.

MS MICHAEL: When can we expect to get it, may I ask?

MR. SKINNER: You can, and I was hoping to have it out this week but something called the Budget got in the way. I decided not to release it while the Budget was released just from an optics perspective. I will tell you, I am going to release it next week.

MS MICHAEL: Okay. Thank you very much.

The next subsection 10. Grants and Subsidies; again, a lot of variance between the budget, the revision and the Estimates, so could we have an explanation of that line?

MR. SKINNER: I will just say to you generally that it is related to CF(L)Co, but I honestly would have to defer to staff and whoever may feel they can answer that. Mr. Bown is going to jump in and answer that for us.

MS MICHAEL: Okay.

MR. BOWN: The bulk of that is related to the CF(L)Co trust which was not budgeted for last year, and as the minister referred to in his opening remarks, which was budgeted for this year. There were costs associated with legal fees for that last year.

Also, in the Budget last year the $1.5 million, $1.6 million for the Northern Strategic Plan electricity subsidy, it was transferred from the Department of Finance to the Natural Resources budget. That is why you see the significant variances there.

MS MICHAEL: Can you explain that to me, what you just said? The money was transferred in, and it came in under Grants and Subsidies?

MR. BOWN: Yes.

MS MICHAEL: Then what happens to it?

MR. BOWN: That gets disbursed for the subsidy to maintain electricity rates on the Coast of Labrador at the Island rate.

MS MICHAEL: Okay, thank you.

Coming down to 5.1.04 Royalties and Benefits, once again some variance under Professional Services - not a lot, but some - $1 million; $760,000; then up to $983,000. What was being covered under that line - being and is?

MR. SKINNER: The variances there were related to delays in getting contracts in place, which affected the amount of planned work, and there was not a lot of extra capacity, I guess, within the department to be able to do some of that. In this particular case there were some savings realized on that.

MS MICHAEL: What would be the types of contracts that would come in under that?

MR. SKINNER: I will ask Charles, Mr. Bown, if he can answer that.

MR. BOWN: That relates to the contract services for royalty auditing.

MS MICHAEL: Okay; that would be a biggie.

MR. BOWN: Yes.

MS MICHAEL: How are things going with the royalties and the collection?

MR. SKINNER: There was a backlog, as you are aware. We have now fully staffed, I believe we have eight, if I remember correctly, eight auditors that we have hired. There are recruitment and retention issues, but we are fortunate now that we are fully staffed. We are catching up on our work, and I think we are two years –

MR. BOWN: (Inaudible).

MR. SKINNER: Go ahead, Mr. Bown.

MR. BOWN: The intent is we have a three year program to be completely caught up.

MR. SKINNER: We have made some significant progress in that, and with the full complement that we have, as was indicated, we do anticipate catching up within the three year time frame.

MS MICHAEL: When did that time frame begin?

MR. SKINNER: That would have started about a year ago; it took about a year. That is, again, assuming we keep the complement. Again, the expertise and the level of skill that these people have, we get raided.

MS MICHAEL: Yes, I can understand. There is an old saying: It takes money to make money - even when it comes to collecting your royalties.

Thank you. That is a good explanation.

Under subsection 10, Grants and Subsidies, what is going on there? It used to be $1 million and now it is down to $25,000.

MR. SKINNER: That amount, quite simply - if simply is the right word - is related to the Bull Arm Corporation. We used to give a grant of $1 million; now that has been transferred to Nalcor, and Nalcor is responsible for it, so they would be responsible for that.

MS MICHAEL: Okay.

If you wanted more information about that, you would have to go to Nalcor's annual report, I would imagine?

MR. SKINNER: Yes.

MS MICHAEL: Okay, thank you.

I think that is all I have to ask at the moment. I may have some after Ms. Jones asks some of hers.

CHAIR: Okay.

We will go to Ms. Jones, if there are no other members of the Committee…

Ms Jones.

MS JONES: Okay.

First of all, on the Turner report, how much is Captain Turner being paid to do that report?

MR. SKINNER: The total cost of the study was $422,000 but that involved some other professional services that were, I guess, contracted by Captain Turner in terms of some of the research that was done, and some of the analysis that was done.

MS JONES: Yes.

MR. SKINNER: The total cost was $422,000. Specific to your question of how much was Captain Turner paid, I do not have that right here with me. We can certainly find that out for you, but the total project was $422,000.

MS JONES: Okay, thank you.

Just getting back to the Grants and Subsidies piece again under section 5.1.01, you said part of it was paid out to CF(L)Co trust. Can you tell me what this trust is? I am not sure if this is the lawsuit with the Régie board. I just want some clarification around it.

MR. SKINNER: Sure. I will ask Mr. Bown to give you the detail on it.

MR. BOWN: I will just refer back to the case that CF(L)Co itself has brought against Hydro-Quebec regarding the power contract. What they have done is brought forward a good faith action, and that follows Quebec's civil law, which states that if, over the life of a contract, the terms and conditions of the contract do not apply to the current world events then the holder of the contract, the parties, have an obligation, if asked, to renegotiate that contract.

CF(L)Co asked Hydro-Quebec to renegotiate that contract. Hydro-Quebec refused, and CF(L)Co has brought forward a case in Quebec court under the good faith provision of Quebec civil law.

CF(L)Co has requested that the Government of Newfoundland and Labrador cover the legal fees; so, the way that money is transferred, or made available to CF(L)Co, is through the trust. CF(L)Co advises the trust of what the legal fees or costs are, and the trust, in turn, makes that payment to CF(L)Co.

MS JONES: How much did we pay out last year for that?

MR. BOWN: It was $3 million.

MS JONES: How much are we looking at paying out this year?

MR. BOWN: The number for this year is $653,000.

MS JONES: Who is the legal firm that is handling this?

MR. BOWN: I do not have the name at the tip of my tongue. I have one of the names, but, as with any legal firm, it has a number of names attached to it.

MS JONES: Can you provide them for me?

MR. BOWN: Sure.

MS JONES: What is the status of this lawsuit right now?

MR. BOWN: It is our understanding that the case will be heard in 2013.

MS JONES: Is CF(L)Co paying any money toward this, or we are paying all of the cost, are we?

MR. BOWN: We are paying all of the legal costs.

MS JONES: Okay.

MR. BOWN: Again, CF(L)Co does not have a great deal of free cash available to it.

MS JONES: Okay, and that is coming out of Grants and Subsidies under 5.1.01.10, right? So that $3 million paid out last year would have come out of the $4.6 million that was spent?

MR. BOWN: Correct.

MS JONES: Okay.

I am to understand the other $1.5 million was spent, you said, in energy subsidies? Was that what you told Lorraine?

MR. BOWN: Yes.

MS JONES: Okay.

Was that energy subsidies for residential diesel customers in Labrador?

MR. BOWN: Correct. That was the Northern Strategic and Energy Plan commitment.

MS JONES: Okay, so it is normally about $1.5 million a year, is it?

MR. BOWN: It depends on the actual usage of the customers on the coast; so, if their usage goes up then obviously the amount of subsidy increases as well, so it is variable.

MS JONES: Okay.

So, this year, in the $2.6 million that you have budgeted, it would include a portion for that subsidy program along with the $653,000 for CF(L)Co trust; and that would be the only thing that is included in that figure, is it?

MR. BOWN: No. In 2007 there was a rate deferral subsidy for customers on the Coast of Labrador as well that amounts to $400,000.

MS JONES: What is a rate deferral subsidy?

MR. BOWN: There have been a number of - I guess governments announce this each year. In 2007 there was an anticipated rate increase for customers on the Coast of Labrador, and that was deferred. Government paid a subsidy to Newfoundland and Labrador Hydro to defer that rate increase.

MS JONES: Okay, I remember that; right before the election.

What about the commercial diesel rates on the Coast of Labrador, is there any intention by government to address that cost? Because it is the highest cost being paid in the Province today for commercial power.

MR. SKINNER: No, the answer is no.

MS JONES: Okay. There is no intention to address that at all.

Did government, just out of curiosity, ever cost out in terms of what the subsidy would be if they did that?

MR. SKINNER: For commercial customers?

MS JONES: Yes, on the North and South Coast of Labrador.

MR. BOWN: No, that has not been cost out. The commitment in the Energy Plan is that would be looked at on sanction of the Lower Churchill Project.

MS JONES: What do you consider sanction, because you are letting contracts already on the project? How do you define sanction in that context? A very legitimate question, I mean –

MR. SKINNER: No, I am not suggesting your question is not legitimate. Do not misinterpret my chuckling. I will ask Mr. Bown to answer that for you.

MR. BOWN: Sanction would be defined, if you were at a particular point in the decision making of a project where you had your certainty of your permits and financing and markets. That has not occurred yet. The environmental assessment is not completed and the major permits are not ready to be issued for the project. That is consistent with any project, whether it be in energy or mining or whatever.

MS JONES: Okay. I have so many questions here; I am not sure where to go, to tell you the truth.

I am going to move into the petroleum section because I would like to deal with the oil and gas piece and get some of that out of the way before I get into a lot of the energy initiatives and the amounts of money that are being spent there, if that is okay? Okay.

First of all, under the C-NLOPB, I am just wondering if you have decided how you are going to fill the vacancy on C-NLOPB, the position of vice-president I think it was.

MR. SKINNER: You are referring to the board position?

MS JONES: Yes.

MR. SKINNER: The question is, have we decided –

MS JONES: Yes, have you decided how you are going to fill it and have you put forward any other recommendations?

MR. SKINNER: In terms of how, the how has not changed.

MS JONES: Okay.

MR. SKINNER: It is a recommendation that we will ask the federal government to concur with. That has not changed.

In terms of have we brought forward any other name or names? The answer to that question is no.

MS JONES: Okay.

There was a recommendation in the Wells inquiry that recommended safety be a separate board from the C-NLOPB. What is the status of that, and what are the time frames around establishing that particular board and separating it from the environmental responsibilities of the C-NLOPB?

MR. SKINNER: As you are aware, we have accepted the recommendation of Commissioner Wells. We have contacted the federal government and indicated we support that recommendation, Recommendation 29. We have asked the federal government if they support it. We have not received any reply to that; I just want to be sure. We have not seen anything official from the federal government on that. We have engaged with them at my level, as well as at the official level, and indicated to them that this is something we would like to move forward with quickly from our perspective and we have asked the federal government to do that. At the moment, given that there is an election, it is going to hang until the election is over and then we will re-engage with the federal government.

MS JONES: Yes. Are they receptive to doing this? Have they given consent to do it?

MR. SKINNER: They have not indicated their consent or otherwise. We did, as I indicated to you, indicate to them that we were supportive and we asked them to engage with us on that recommendation. They have not officially replied, up until the point where the election was called. I do not expect we will hear anything during the election, it will be afterwards. The intention, from my perspective, as soon as the election is over is to engage again.

MS JONES: Okay.

What has been done to improve the incident reporting by the C-NLOPB? This has been a consistent problem, unfortunately. Is there anything in place so that they start improving how they report incidents of oil spills and so on in the Province?

MR. SKINNER: Yes. Again, I am speaking from three or four or five months of experience as minister, and you are correct, there have been a couple of occasions where things have not been reported satisfactorily, from my perspective. There was a protocol in place that allowed for some interpretation from the C-NLOPB's perspective in terms of reporting. I believe the term used was significant spills, significant occurrences. Significant was not really defined; it was left open to interpretation.

In the meeting that my officials had with the officials at C-NLOPB, and in the meeting that I had with Mr. Ruelokke we agreed, jointly, that we would now – we, being the department and government – would be informed of all incidents that occurred out there. So that has happened in the last two-and-half weeks or so. I am not sure of the exact date, but in the last couple of weeks.

MS JONES: Okay.

I have some questions around the Parsons Pond project. I do not know how much of the information that you would know, I expect you will know everything. How much money was spent all together on that project, by the Province and by Nalcor, in terms of the drilling program? That would include the purchasing of equity shares in the mining companies along with the other costs.

MR. SKINNER: The drilling program itself was $23 million, and the equity issue that you refer to was not an actual purchase as much as it was a sharing of costs. So by paying our share of the cost, we gained the equity in it.

MS JONES: How much do we own?

MR. SKINNER: Sixty-seven percent.

MS JONES: I know originally when they started that project, they announced they were going to drill three holes there, they only drilled two. At what point did they make the decision not to drill the third hole?

MR. SKINNER: My understanding is that when they drilled the second hole, the geology, for lack of a better word - and again, I will defer to officials for a more appropriate explanation. The geology they encountered, the results they encountered indicated because the two holes were here and the third one was in the middle, they did not feel it was beneficial or necessary to drill the third hole based upon the results that they had achieved. It would have been after the second hole was drilled that they would have made that decision.

MS JONES: The roads and everything would have all been built by that time, was it? Because they constructed roads to the drill sites, right?

MR. SKINNER: Correct.

MS JONES: That would have all been completed before they decided to not proceed with the third hole?

MR. SKINNER: Yes.

MS JONES: What are the future plans for that site right now? What is the status of it? Is it just done, closed?

MR. SKINNER: Well, the drill program did succeed in the sense that there was gas found. So there has to be a determination of what, if anything will be done relative to that.

In terms of the road network, I am not sure. Are we going to decommission it?

MR. BOWN: With respect to the two wells, because they encountered hydrocarbons, under the Petroleum and Natural Gas Act, it gives them the ability to file a development plan, which they have done, which allows them to hold onto those properties for evaluation.

With respect to the roads, the one that will not be used, which is on the third well, will be decommissioned as per permits that have been issues by the Department of Environment.

MS JONES: How many kilometres of road were actually constructed here?

MR. SKINNER: I do not know the answer. I apologize, I do not know that. We will find that out for you.

MS JONES: Okay. Thank you.

You are telling me you are going to decommission the road to the third well site is it, or are you going to decommission all of the road?

MR. SKINNER: No, at this point the intention would be to decommission the road to the third well site. Depending, I guess, on the determination as to what to do vis-à-vis the development plan and the hydrocarbons that were found, determine then whether or not there was any further work that needed to be done.

MS JONES: Okay.

A couple of questions on the Old Harry agreement as well: What is government's position on that boundary? Because I have never really seen it to be clear in terms of the media clips. I am just wondering what government's position is at this stage?

MR. SKINNER: Government's position is that there is no established boundary line and that a boundary should be established using the same protocol or process that was used to establish the boundary line between Newfoundland and Labrador and Nova Scotia. There was a process in place to do that, but to engage that process the federal government and Quebec needed to have their own accord, which they have now done, as you are aware. We can now institute, I will call it, the dispute resolution process and engage the principles of maritime law, as we did with Nova Scotia, to have that panel establish a boundary line.

MS JONES: Has Quebec ever indicated where they think the boundary should be?

MR. SKINNER: Yes.

MS JONES: Yes. All of it I suppose, is it? I am just wondering.

MR. SKINNER: I think it is referred to commonly as the 1964 line.

Just by way of clarification, the accord between the federal government and Quebec also has co-ordinates for a line which would line up with, or be common with the 1964 line as well. They are specifically outlined in that accord.

MS JONES: Why would they outline that in that particular accord?

MR. SKINNER: I guess you would have to ask them that. I was not sitting there. I cannot answer that for you.

MS JONES: That is not a precedented practice, is it? That was not the case when we were doing the deal with Nova Scotia.

MR. SKINNER: I would be speculating if I answered it, so I am not going to speculate as to why they did it. I do not know why. I do not know what the rationale was. I was not there, I was not a part of it, and we were not a part of it. It was an agreement between two other parties.

MS JONES: Have there been any talks between our government and the Government of Quebec around these borders, the offshore border on that particular deal?

MR. SKINNER: Not on my time. I am just looking to see if anything – no.

MS JONES: There has not been. There has not been any talks with the federal government, obviously, either is what I am understanding. Okay.

I would expect we are going to argue against the boundary co-ordinates that were incorporated into the deal between the federal government and the Province of Quebec.

MR. SKINNER: We will trigger the dispute resolution process, yes.

MS JONES: What is that process? How does that work?

MR. SKINNER: I will just ask Mr. Bown to outline that for you in more detail.

MR. BOWN: In a similar fashion as was completed with the boundary of Nova Scotia, a tribunal will be established, a three-person tribunal. Both parties will argue before a tribunal on the appropriate methodology for setting the boundary. Again, within the Quebec-Canada court it has clearly outlined the methodology for how that boundary is to set in the international maritime boundary delimitation principles.

MS JONES: I am finding it hard to put my head around the fact that - I understood there was an accord between the federal government and the Province of Quebec around this reserve. I understood from you minister and your government that that was the necessary process in order for us to start any negotiation around what the boundary would be. Now I understand there were parameters set in that accord by the federal government. I am just wondering why that would happen without us being at the table? Why were we not asked, why were we not engaged, why were we not consulted in any way, because it does impact us?

MR. SKINNER: Again, not being a party to the accord, I cannot speak as to what happened at the table when the accord was agreed to and the co-ordinates were determined. What we wanted was an accord, because an accord would allow us to engage the dispute resolution process and Quebec and Canada would have to have some co-ordinates that they would deem to be the boundary line. That would be something we would then be able to dispute. I guess that is where we are today.

MS JONES: When the accord was done between the federal government and Nova Scotia on the Sable project, I guess it was what instigated that, was it? Were there any parameters around boundaries set then in that accord?

MR. SKINNER: I would have to look to officials, I am not 100 per cent sure of that.

MR. BOWN: There was a line set for Nova Scotia, which we subsequently triggered the same dispute resolution provisions in. It included a number of points on that line that we disputed; which, at the time, looked like the sixty-four line, a few of those points. We disputed those points and that was overturned. The tribunal settled in our favour.

MS JONES: Okay.

Just before I move on to the oil projects that are ongoing in the Province, where do we go from here now in terms of the Old Harry dispute? What is the process? I know what you are saying, that we have to file a case with the dispute or order, whatever it was. Is that our next step? Have we started that process or have we engaged the legal minds to do that?

MR. BOWN: That will be our intention to do that in due course. Obviously, we have to complete our own legal assessment and prepare our own arguments for that, so when we are ready that will be done.

MS JONES: How long do you see that process? I know you do not have a crystal ball, I am just wondering how -

MR. BOWN: No, no. Actually, my point of reference was going to be the Nova Scotia case and for the moment I am drawing a blank on how long that one actually took.

MS JONES: I do not blame you. At this hour I am drawing a few blanks myself.

MR. BOWN: I cannot recall, but it would be a year or two. It is not 5,000 but I would not want to guess.

MS JONES: Okay.

MR. SKINNER: (Inaudible) they are all afraid to guess now.

MS JONES: Yes.

Just a couple of questions on the Hebron project; ExxonMobil was supposed to file its development plan with the C-NLOPB in 2009 and then I think it was with revised until 2010. We still have not seen it signed off. I am just wondering what the status of that is.

MR. SKINNER: It will be done tomorrow.

MS JONES: Oh, timing is good.

MR. SKINNER: You have inside sources don't you?

MS JONES: No, not at all, and if I did I would not tell you.

One of the issues I think was around the gender equity plan. I am assuming this has been sorted out now? Okay. What is the timeline – sorry.

MR. SKINNER: Just for clarification, they will submit their plan. We have engaged with them in advance and explained to them what we expect of them. They have gone away and done the work, and have completed their plan and will now submit that plan and we will review that. I would not want to say to you it has been worked out. We will review what they are submitting to make sure we are happy with it, but we have had input into what it is they ultimately have filed and we hope they have incorporated our thoughts and processes and our requests into that plan. We will review the plan first before I say to you, yes, it is settled.

MS JONES: Okay.

What is the timeline for first oil right now around the Hebron project?

MR. SKINNER: 2017.

MS JONES: It is still on target. Okay.

OFFICIAL: Just after we get out of this meeting.

MS JONES: If we see first oil in 2017, what is the payback date on that project? What are you looking at?

MR. SKINNER: There are a lot of variables that would go into answering that; the price of oil, the amount of oil that is taken out, and the cost that they submit relative to being charged back.

MS JONES: Estimates, ten years, fifteen?

MR. SKINNER: I guessed once already, I am not doing it again, no. I do not know.

MS JONES: I am sure there is a prediction. There would have to be in a project that big, but anyway.

What are some of the economic spinoffs that the Province is going to see as a result of the Hebron project in the next few years?

MR. SKINNER: Some of the obvious ones; obviously there are going to be construction projects related to that, there are going to be supply and service industries, there will be capacity building I would suggest to you within the Province. There will be some of the gender pieces that you mentioned. I would hope they would be leaders in that. Royalties, super royalties, is that what you are looking at?

MS JONES: No, I am looking at the more immediate stuff that we will see over the next couple of years.

MR. SKINNER: Between now and when they have oil you mean?

MS JONES: Yes.

MR. SKINNER: That would mainly be the construction side of things.

MS JONES: Yes. I guess I am asking, have we peaked there yet or have we peaked in any of that, or are we just starting it? Where are we? That is what I am looking for.

MR. SKINNER: Mr. Bown, I will ask you to -

MR. BOWN: Project construction should start next year and we will see, obviously a lot of activity is going to take place at the Bull Arm site including construction of the GBS and topsides components; then the assembly of the topsides commissioning and then the assembly of the topsides to the GBS. There is going to be a significant amount of work that is going to take place at Bull Arm. Then you are going to have the indirect fabrication, and supply and service that is going to take place around that, around the rest of the Island and within Labrador as well, hopefully.

MS JONES: In terms of the 4.9 per cent share that we bought into the project, does that give us a seat at the table now or does it not?

MR. BOWN: Yes, it does. We are 4.9 per cent owner in the project.

MS JONES: Yes. Do we have a seat at the partners table, at the stakeholder table?

MR. BOWN: Absolutely, we do.

MS JONES: Okay.

How much have we spent to date between the government and Nalcor in terms of our investment in the project and our share of the capital construction cost?

MR. BOWN: The project capital cost really have not wrapped up yet, so it would only be our acquisition cost.

MS JONES: Okay. What is that?

MR. BOWN: It escapes me - $110 million.

MS JONES: I guess I am getting tired because –

MR. BOWN: $110 million.

MS JONES: Okay, $110 million.

My staff were just reminding me, when I was asking you if you had a seat at the table, I should have been asking you if you have a vote at the table? They are more awake than I am right now.

MR. BOWN: Yes, we do. We are part of the management committee of the project, as we are of the other two projects that we have equity interests as well.

MS JONES: Okay, because I just remembered the debate at the time was around a 5 per cent buy in into the project and I knew we bought in at 4.9 per cent but we received the same benefits, right?

MR. BOWN: Absolutely.

MS JONES: Okay.

When you started the Hebron project, I think at the time you were estimating there would be something like $20 billion in royalties that would come back to the Province. I know you could not give me an estimate on payout because you did not know the price of oil but you could announce what you thought the royalties were going to be without knowing the answer to that. It is pretty ironic, but anyway.

I guess my question would be: Are we still expected to achieve royalties at that rate or is there anything in terms of project costs that would contribute to that changing, either increasing or decreasing?

MR. SKINNER: The short answer would be we would expect that same rate, if not higher, given the way that oil is increasing, if oil is continuing to increase. We do not anticipate any negative change in that; if anything, hopefully, positive change.

MS JONES: Okay.

On Hibernia, can you tell me what the projected production will be from Hibernia this year in terms of barrels of oil?

MR. SKINNER: I do not have that in front of me, but if you can just give us a second we might be able to tell you.

MS JONES: Yes, no problem. Take your time, we have lots of time.

MR. SKINNER: I am having a chart prepared for myself that I will share with you maybe, and you can –

MS JONES: It would be nice to do that so that we can actually see where the production is and where the levels are going.

MR. BOWN: Approximately, between 100 and 110 million barrels. I am reading off the chart here.

MS JONES: Okay. That is for this year, right?

MR. BOWN: Yes.

MS JONES: How does that compare to last year, for example?

MR. BOWN: It will be down.

MS JONES: That would be down by a lot, right? What did we produce last year?

MR. BOWN: Yes. I will qualify that by saying production from Hibernia South is expected to start soon, so we will see production go back up again as those wells are drilled.

MS JONES: Yes. Okay, I was going to get to that in a minute. Can you tell me what the differential is between last year and this year in terms of the production at Hibernia?

MR. BOWN: It is about 10 million barrels; 10 to 15 million barrels. Again, I am reading off the chart.

MS JONES: Okay.

CHAIR: This might be a good time to see if some other members have some questions. There are no other questions from anybody else.

Okay, Ms Jones, carry on.

MS JONES: Thank you.

My next question is around the Hibernia South expansion project. Can you give me the timelines around that particular project, where we are with it in the development phase?

MR. BOWN: One well, one producer, and one injector completed. They are actually drilling wells into a new section of field right now.

MS JONES: Okay. So it is one well and one injector.

MR. BOWN: Yes, and they are drilling more wells now.

MS JONES: What are the timelines for that to go into production, for example?

MR. BOWN: Those are long distance wells. Obviously, it is a function of how successful they are in drilling those, but I expect it will be later this year. It takes an extreme amount of time to drill those; those are in excess of seven, eight kilometre wells.

MS JONES: Can you give me an update on the White Rose expansion as well?

MR. BOWN: Production started from the expansion in May of last year, May 2010.

MS JONES: How much have we spent on that project in terms of what we have invested as a government in Nalcor Energy?

MR. SKINNER: We do not have that information here at our fingertips but we will provide that to you.

MS JONES: Okay.

What I would like to know is what we spent to date as our share, including the construction cost, all right?

MR. SKINNER: Yes.

MS JONES: Yes, okay.

On North Amethyst, what are the production levels on that particular oil project?

MR. BOWN: Production in 2010 was 19.4 million barrels. Actually, I am reading from The Economy -

MS JONES: Okay.

MR. BOWN: - which has all the data that you are asking for here.

MS JONES: Oh, excellent. Thank you.

Just one last question on Hibernia and that is: What is the end date for production? When are we expecting to run out on that well?

MR. BOWN: The experience to date with Hibernia, if you recall in the development plan I believe we started at 666 million barrels and we are at approximately 1.3 million barrels now. The end life of Hibernia has continued to be pushed out. As technology improves and as the geology and reservoir characteristics of the different areas of the field become better known, actually they are able to continue to extend production. That is their focus as they go forward, is to continue to get more and more out of that field. As for an end date, I could not give you an accurate date on that.

MS JONES: You must be projecting something despite the fact that it is getting pushed out, I am sure. You are building mines and you are starting oil developments, and you are projecting the life of those, so I am sure you can give me a fair idea.

MR. BOWN: I do not have that number here tonight.

MS JONES: Okay.

The Chair is gone but that pretty well concludes my questions on the oil and gas section.

CHAIR: The Chair is here.

MS JONES: Okay.

I do not know if Lorraine had any other questions on the oil and gas piece.

MS MICHAEL: No. I did have some extra ones but you have asked them, so I will not repeat them.

CHAIR: Okay.

Are there any other questions?

MS JONES: Yes, I have questions on the Energy sector now, if we are ready to move into that.

CHAIR: Do you want to lead off, or Ms Michael, would you like to lead off?

MS MICHAEL: No, I did ask my questions in the (inaudible) section.

MS JONES: Under section 5.1.05. Energy Initiatives, obviously section 10, Grants and Subsidies. Can you give me, first of all, some reason why you budgeted $13.4 million last year; you spent $7 million of that amount? Can you tell me what you had targeted the other monies for that did not get spent?

MR. SKINNER: I will ask Mr. Bown to give you the detail on that, Ms Jones.

MS JONES: Okay.

MR. BOWN: There are two reasons for that. One is the uptake in the EnerGuide program, which is our energy efficiency program, was less than we had anticipated. The reason for that would be that the federal EnerGuide program was cancelled last year, and that affected the number of people who wanted to participate in that program. Also, the remainder is associated with Energy Plan funding that did not get broken out last year.

MS JONES: What was it intended for, what parts of the Energy Plan, or what was it supposed to do? We are talking $4 million, almost $4.5 million.

MR. BOWN: The large part of that was a geoscience program. That is the more expensive of the items that we had planned for which did not get concluded at the end of the year. That is one that we are going to roll forward early this year.

MS JONES: Okay. So $4.5 million did not get spent because of the less take up on the EnerGuide program and some work around the geoscience program. All of it would have been targeted for those two initiatives?

MR. BOWN: Correct.

MS JONES: This year you are budgeting nearly $12 million. Can you tell me what you intend to use that money for?

MR. BOWN: Sure. We have two geoscience programs: the Petroleum Exploration Enhancement Program, which is focused on increasing the amount of oil exploration or petroleum exploration on the West Coast; we have the Oil and Gas Data Program, which is designed to increase the level of geoscience in the Province generally, more focused toward the offshore. Also, our energy efficiency program was rolled into that allocation as well.

In addition to that - sorry, I would not want to exclude - the $2.5 million that we allocated for the Phase II of the alternative energy study for Coastal Labrador communities is included in that amount as well.

MS JONES: Okay.

The $348 million you have targeted under section 5.1.06, you are saying it is used to facilitate participation in oil and gas activities and other energy projects. Can you give me the breakdown of that $348 million?

MR. BOWN: A portion of that is for oil and gas activities, but the majority of it will be focused specifically on Muskrat Falls.

MS JONES: Yes. Can you give me the breakdown, please?

MR. BOWN: It is about 75:25.

MS JONES: You have no round numbers over there?

MR. BOWN: I did not bring the round number with me.

MS JONES: Okay.

I have a number of questions around the Muskrat Falls project. I also have a number of questions around the court decision that is ongoing. I guess we can start getting into them but I would like to advise you Minister, and the Committee, that I have at least a good hour of questioning. Just so you are aware of it because I know it is getting late in the evening. It is up to you if you want to continue or if you want to reschedule, I am pretty easy.

CHAIR: No. From my understanding, Ms Jones, from the scheduling that we have for Estimates, everything is pretty tight. We did already reschedule this meeting too tonight so you could have extra time to ask any questions from the morning session to the evening session.

As Committee Chair, I am certainly prepared to stay here as long as you need and I assume the other members of the Committee are as well.

MS JONES: Okay. Good.

Just for clarification, I did not ask for it to be rescheduled so I could have more time. I asked for it because we could not be prepared by 9:00 o'clock this morning with the Budget coming down late yesterday afternoon, because it was a huge department. I just want to clarify that.

First of all, my questions around Muskrat Falls; originally, 14.3 cents a kilowatt hour was stated to be the cost of Muskrat Falls power when it comes on-line in 2017. Recently, the Premier stated that the 14.3 cents will be the cost of electricity in 2015, before Muskrat Falls. I am asking for an explanation in the change and how that 14.3 cents will break down?

MR. SKINNER: The 14.3 cents that was referred to is the number that relates to Muskrat Falls in 2017. You made some reference to 2015, so I am really not sure what that was.

MS JONES: There was a statement that the power rates are going to increase anyway. We are going to be at 14.3 cents by 2015. I would like to get a breakdown of what that price is, how we are going to get there by 2015?

MR. SKINNER: Okay.

The Muskrat Falls power is 14.3 cent power in 2017, and the projection that we have done is that power rates are increasing 4 per cent to 6 per cent annually. We have projected them to be 14.3 cents by 2017. Again, I cannot reference the 2015 for you. It is not something that I have indicated. You have indicated the Premier has made that statement but I am not sure where she made that, if she made that or in what context it was made. My reference point is 2017 and 14.3 cents.

MS JONES: The Premier also stated in a question that I asked her in the House of Assembly one day with regard to Muskrat Falls power that she did not expect to see 60 per cent of Muskrat power leave the Province. That was in response to capacity on the transmission lines and whether the capacity existed through the Maritimes to be able to handle that kind of power and also on the Maritime Link.

If that was the case, that would mean probably only 40 per cent of the power would go to the Maritimes. We know already that half of that has been allocated to Emera Energy. That would leave us probably with about 150 megawatts of power to sell. I am just wondering where that power is going to be sold? Are there any deals being negotiated? Do we know what markets it is destined for? Do we have a customer for any of that power outside of Newfoundlanders and Labradorians right now?

MR. SKINNER: That power will be sold on the spot market and it will be sold at the price that will be determined at that time by the market conditions.

MS JONES: What are you forecasting as revenues from the sale of excess power?

MR. SKINNER: I cannot give you the dollar figure. I cannot give it to you off the top of my head but again, I will provide that information to you. There is a calculation that we would do but I cannot recall it right at the moment.

MS JONES: Okay.

We have had a number of discussions around what is driving the demand load in the Province. We are in a situation where we have had two pulp and paper mills close; we have not had a take up on that power. Our population base has not changed in the Province. We have things like our processing facilities in the fishery that are open less than they used to be and operating less than they used to be. We actually have a number of them that are closing down, which have been a consumer of energy on the Island as well.

I guess we are trying to get our head around where the demand is actually coming from right now. When we met with Nalcor, they did not give us anything new in terms of where the demand was coming from other than they said they had information that was provided by the Department of Finance and government that indicated demand capacity. Are you able to give us an idea of where the government is projecting this demand to come from for energy?

MR. SKINNER: The demand is coming from normal growth in the consumer population that we have, in terms of some of the electric demand that electric customers have. The current statistics on the new housing construction is indicating some 86 per cent of houses today are being constructed with electricity as the main heat source. That has been factored in. There is information from the projections that have been done by Nalcor in terms of normal electricity growth that we have seen and have projected into the future that would indicate the demand is going to increase.

The other piece, just by way of adding to that in terms of an industrial base, would be obviously what is happening in Long Harbour with Vale coming on.

MS JONES: Okay. We understood there was already available power for Long Harbour. When Long Harbour was announced as a project, there was already an energy plan worked out to support that particular development.

MR. SKINNER: It is increasing demand.

MS JONES: What is the cost right now of power, for example, coming out of Bay d'Espoir? What is the cost of producing power out of Bay d'Espoir and the cost of producing power out of Holyrood today? What is the price per kilowatt hour?

MR. SKINNER: I will ask Mr. Bown if he has that information there.

MR. BOWN: The price at Holyrood today would about $150 or $155 a megawatt hour, 15.5 cents based on oil price. The number at Bay d'Espoir obviously is much lower. The facility has been around for some time, so I could not give you an actual cost for the facility itself.

MS JONES: Will Bay d'Espoir power be sold outside of the Province when this Muskrat Falls deal comes on stream?

MR. SKINNER: The electricity being generated will be put into the electrical grid for service to the Island portion of the Province and any surplus that we have, relative to our needs, will be sold, as I indicated earlier, into the other Atlantic Provinces or the Northeastern US market.

I would have to look to Mr. Bown to see if we can track specifically each kilowatt hour as to where it is going, but the intention is that we will supply our own needs and then we will export the surplus needs that we have.

MS JONES: Are we going to put Bay d'Espoir power on the Maritime Link? Are we going to be selling that power outside of the Province? If we are going to bring down Muskrat Falls power to the Island, we are bringing down more than we need to replace Holyrood. So, that means we are going to have excess power outside of what we are going to produce out of Holyrood, we are going to have excess power out of Bay d'Espoir as well, if it is all going into the one grid.

MR. SKINNER: Again, the answer to your question from my perspective, any excess power that we have in the system will be used for export purposes. As our demand increases here, we will use that. We would expect that the supply of excess power over time would decrease and our projections are showing that we will have less excess power as we move into the future.

MS JONES: When we asked about Labrador coming onto the Island grid, because once you build a transmission capacity from Labrador to the Avalon Peninsula it is a one-grid system, I am just wondering is there some protection there for people in Labrador that they will not fall under the one transmission grid rate because to do that their rates would increase drastically. Does the utility company, right now under our system, don't they have the ability to go to the Public Utilities Board and make that case or is there a required protection necessary under legislation by the government?

MR. SKINNER: There are, as you are aware I am sure, existing electrical systems in place and they have varying charges. This power is being brought to meet the needs of the Island in terms of the expected increase in demand and the surplus can be used for Labrador industrial benefits or for moving down, as we said, in selling in the spot market. There is no intention to have the residents of Labrador pay for this power, if that is what your question is.

MS JONES: Yes, and I am wondering what protection is there for them. If Nalcor decides they want to file a rate increase or they want to file an application to have them fall under that particular grid rate, is there any protection for them? For example, when they did the interconnection between Labrador West and Goose Bay people did not realize it but as soon as the connection was done, obviously, all the rates were brought in line which is normally what happens on a grid system. I guess what I am saying is that is there a protection there so that this does not happen with residents in Lake Melville and in Labrador West right now?

MR. SKINNER: The cost of producing and delivering that power are going to be borne by the people who are the recipients of that. That is not the residents of Labrador in this particular case, so there would be no change or no impact to them.

MS JONES: Nor is it the residents of Bay d'Espoir and they are going to pay the price. If you want to look at it under that formula, you are looking at probably about 70 per cent of the people in the Province who do not require Muskrat Falls power, they are already on clean energy, they are already getting their power from Cat Arm or Bay d'Espoir or whatever, they are getting power there now so they are going to have to pay the price for Muskrat Falls power.

MR. SKINNER: Those users of that power are all going to need the power. The demand is a demand that is recognized and is being needed by the residents of the Island portion of the Province, so they would be the ones who would pay for that.

MS JONES: The fact that today there are people on the Island portion of the Province who are receiving clean, green, cheaper power, like Bay d'Espoir, is irrelevant. If Muskrat Falls comes down, the line comes down; their rates are going to increase just like the people who need it on the Avalon Peninsula.

MR. SKINNER: Well, again, the increasing demand is identified as being an Island-increasing demand, so the recipients of that power, which would be all the people on the Island, would be the ones who would pay the cost of it.

MS JONES: I guess the thing is, we are not seeing where the demand for power exists outside of those that are dependent on Holyrood right now. We are not seeing that demand across the Province, and I am wondering where that demand for energy is in Central Newfoundland or Western Newfoundland right now.

MR. SKINNER: The system that is supplying the electricity to the people of the Province is the same system. So, it is all of the people on that system who are going to be experiencing - if we do not meet the demand - challenges with the supply. So, by increasing the supply, meeting the demand, all of the people on that system will pay for it.

MS JONES: Under Nalcor, it is my understanding that the executives of Nalcor obviously are paid under a different system than the rest of government, in terms of what they make and so on. Can you tell me how they are paid, how that system works? Are they on a set salary? How are their salaries determined, and do they receive any kind of bonuses and so on at the executive level within Nalcor?

MR. SKINNER: The executive of Nalcor do receive an annual salary. For some of them, I would imagine, there would be car allowances, or car expenses, and that kind of stuff, as with any normal executive compensation package, and there would be a bonus structure as well.

MS JONES: Can you give us the information on how the bonus system works in Nalcor for its executive employees?

MR. SKINNER: I certainly do not have that information with me tonight, but I can provide the salary information too.

MS JONES: Yes, we would like to get what the salaries are of their executive team, and what other compensations they receive, as well as what their bonuses are.

Can you also tell us how much Nalcor Energy itself has spent so far on the Muskrat Falls project?

MR. SKINNER: We do have that. I have two numbers floating in my head. I just want to get clarification as to what it is, so we will give you that in a minute.

MS JONES: Maybe you could give us what government has spent as well – I am sure you have that there – to date on the project.

MR. SKINNER: Do you want previous governments, too, or just the current one?

MS JONES: It does not matter.

OFFICIAL: (Inaudible).

MR. SKINNER: That's okay; take your time.

MS JONES: Pardon?

MR. SKINNER: I am just saying to take his time. He is looking; I just said take your time.

MS JONES: If you want, I could just continue when he is looking, if you don't mind.

MR. SKINNER: Okay.

MS JONES: Okay.

In terms of the negotiations with Emera Energy around this deal, when did you guys first enter into the negotiations with Emera around this?

MR. SKINNER: The answer to the question, Ms Jones, is, it would have been in 2009.

MS JONES: Okay.

Lorraine, did you want to ask any questions?

MS MICHAEL: I already have asked all my questions.

CHAIR: For clarity, Ms Michael, did you –

MS MICHAEL: Well, I can ask a question on an earlier topic. There was one set that I was not going to ask, but while Ms Jones takes a quick break I can do that.

CHAIR: Yes, sure. We can oblige you.

MS MICHAEL: Just give me one second until I go through my notes. There may not be new information, but I will ask questions about this because I did have it down. It has to do with the power plants in Central Newfoundland, and what the status is right now. I remember asking this question probably a year ago with regard to: Is that power in any way offsetting Holyrood?

Then, I would also like to know about the reservoirs in Bay d'Espoir. Are they still storing water? How has the addition of this power changed the dynamic for the department financially, if it has?

MR. SKINNER: Okay.

MS MICHAEL: Maybe I should not have thrown all those three things at one time.

MR. SKINNER: The power from Bay d'Espoir is being put into the Island system. There is water being stored. That is accumulating as a value that at some point, depending on the disposition of the power facility, will have a value that will have to be determined in a future date; because the Province currently, in the expropriation, owns the facility but it is being managed and operated by Nalcor. So, at some point, I would imagine, we would have Nalcor own and manage that on our behalf. There would be value to the water that would have been stored, and at some point that value would have to be realized.

MS MICHAEL: Okay.

So, in the negotiations that are still ongoing this is going to be an issue, is that it? Is that what you mean?

MR. SKINNER: Do you mean the negotiations with Fortis?

MS MICHAEL: Yes.

MR. SKINNER: No, that –

MS MICHAEL: Where does the value – I am tired now, too. When you talk about the value of the water that is being stored, what is the implication of that? I mean, there is no more negotiation going on with Abitibi, right? That is over with?

MR. SKINNER: No, no, maybe I did not explain it well enough. Maybe it is because it is late in the day, Ms Michael, but I will attempt it again.

MS MICHAEL: Okay.

MR. SKINNER: There is water being stored, as I indicated, and there is value attached to that.

MS MICHAEL: That is right.

MR. SKINNER: Currently, as I indicated, the Province is the owner of that resource. Nalcor is managing and operating that facility on our behalf. At some point in the future we anticipate transferring that asset to Nalcor. There will be value associated with the transfer of that asset, and there are currently costs that are being incurred by Nalcor in terms of the operation and maintenance of that system for us. There will have to be an accounting done of that. At some point somebody will have more value than the other party, I guess, or it will even out or whatever, but we need it to account for the value of that stored water. We need to recognize that there had to be some values accrue for that, so that is accruing.

MS MICHAEL: That is good.

So, what you are telling me, if I get it clear, then, that it is not just an assumption, that it just gets passed over to Nalcor, because there is balancing that has to be done, and it could be that there is value to the Province that has to come to the Province.

MR. SKINNER: Correct.

MS MICHAEL: Okay.

MR. SKINNER: That is the point I was trying to make, and did not do it very well the first time.

MS MICHAEL: Right.

I was just trying to figure out where the negotiation was going on. It was not clear to me. Okay, that makes sense.

If there is going to be a financial benefit to the Province, through the department, I guess, then it would be at that point; not now, but in the transfer.

MR. SKINNER: In the transfer of it, correct, in the future. At some point in the future that value will be determined, one way or the other; I am not making an assumption on either end at this point –

MS MICHAEL: No, no.

MR. SKINNER: - but, one way or the other there would be a value that would be recognized, and owed or paid to one of the parties, I guess.

MS MICHAEL: In the meantime, with regard to those power plants themselves, that power is going into the grid.

MR. SKINNER: Correct.

MS MICHAEL: Okay. That is clear, then.

I did not understand this other part before, actually. That is very interesting around the transfer, and the role of the value of the stored water. That is the first time I have ever heard that said, actually, to us, so that is a very interesting piece of information.

I think that was the last question that I did have on the paper that I was going to forego, if I did not need to ask it, but I am really glad I asked it because that is important information.

Thank you.

MR. SKINNER: I am glad I got it out eventually.

CHAIR: Thank you, Ms Michael and Minister.

We will go back to Ms Jones for some further questions.

MS JONES: Okay. Thank you.

I was just asking about when you entered into negotiations with Emera; you are saying around 2009. Did the Government of Nova Scotia have any role in the negotiations of this deal at all?

MR. SKINNER: I will ask Mr. Bown, because I was not there at the time. I will ask Mr. Bown, just for clarity. I think I know the answer, but I want to be sure. The answer would have been no, but I will ask Mr. Bown.

MR. BOWN: I will confirm that it was no. The discussion was between the two utilities.

MS JONES: Okay.

Was Fortis ever offered an opportunity to participate in this project, or just Emera Energy?

MR. BOWN: Emera brought specific value to the project, which included their existing transmission assets in Atlantic Canada and also in the Northeast US. So, while Fortis has distribution and generation assets here on the Island, other than PEI, they would not have any other infrastructure, or any value-add to provide to the project. So, as was described to you in the technical briefing, it was the assets that Emera has that enables the transmission of electricity through Nova Scotia, New Brunswick, and then into Maine, that actually provides significant value.

MS JONES: So Fortis was not offered an opportunity, is that what you are telling me?

MR. BOWN: I would not be able to say they were not offered an opportunity. I would not have knowledge of whether they were offered.

MS JONES: Emera Energy is being given an opportunity to invest in transmission capacity within Newfoundland and Labrador, inside of our Province. I am just wondering why they were given that opportunity, and I am wondering if it was offered to others like Fortis, which is a Newfoundland-based company.

MR. SKINNER: The answer to that question, Ms Jones, would be that, again, Emera had other strategic assets that were important to the Province, in terms of transmission lines and access, and agreements to be able to bring power to other jurisdictions, that we felt would be beneficial to the Province. It was that reason that we wanted that access, so the project, as a total project, was one. It was not done in pieces or in parts where we looked at just offering, for instance, transmission on the Island; it was we had a bigger vision than that, in terms of what we were doing here, and that met our vision more so than what Fortis brought to the table.

MS JONES: In terms of the total energy use of power on the Island, do you have any statistics of where our power consumption went between 2005 and 2009? Our information is telling us that it actually fell by 18 per cent in the Province during that period of time. There has not been really anything that has changed in terms of the demand for power since that time, and I am just wondering if you have any figures or information that you can provide to us, that speaks to a different set of numbers.

MR. SKINNER: In terms of the closure of the mills, we certainly would have seen a drop in demand at that time. I am sure we would be able to provide to you some historical information that would show power consumption or demand on the system. To answer your question, my guess would be yes, we would certainly be able to provide that to you.

MS JONES: I have a note made of it. You have to provide a lot of information to us. I am not sure when we will get it, but hopefully it will not be too long.

MR. SKINNER: Just by way of clarity, my experience in the past is that when this session finishes, within a day or so I will forward to you a letter and indicate what I understand we have agreed to provide tonight, and ask you to concur with that. When I say you, I mean both of you – both parties – and, assuming you concur with that, we will follow up and provide that information.

If there is anything we have omitted - because we are keeping notes on this side as well - please let us know and we will do our best to provide it. We will keep a record of everything that has been asked for here this evening, and we will do our best to endeavour to give it to you.

MS JONES: Can you tell me how much it would cost to upgrade the transmission on the Isthmus? Do you guys have any figures on that?

MR. SKINNER: To upgrade the transmission?

MS JONES: Capacity; to do the upgrade on the transmission capacity on the Isthmus on the Avalon Peninsula.

MR. SKINNER: We will provide it.

MS JONES: Okay. I am sure you have it somewhere.

MR. SKINNER: Yes, we just do not have it here tonight. Maybe what I should have done was asked you to forward some questions in advance of tonight.

MS JONES: Yes, and we could have done that as well. That might be a good idea, actually.

Right now, we understand that Nalcor and government are not open to considering any applications around the development of wind farms on the Island. Why is that? Why is there a moratorium on that?

MR. SKINNER: There was a call for expressions, I guess, would be the term I would use. There was a call for expressions, and we have – pardon me?

OFFICIAL: Expressions of Interest.

MR. SKINNER: Yes, there was Expressions of Interest. We have a demonstration project and we will evaluate that. We, right now, are focusing on the hydro generation, and we will look at wind as another source once we finish the review of the demonstration project.

MS JONES: There was a guy, a proponent, who was obviously very upset with the fact that his application was not being considered. I think it was actually refused for a wind farm in Argentia, I believe it was?

MR. SKINNER: I am told yes. I am told that is accurate, yes.

MS JONES: So, right now, then, government is not open to considering any new applications at all from any proponents surrounding wind development in the Province, wind energy?

MR. SKINNER: Again, given that we are doing a demonstration project and we will do a review, we are looking at the potential for wind development, but at this point in time it is not something we are doing, no.

MS JONES: Okay.

In terms of Muskrat Falls power, government has already established the base rate for residential users on the Island could be about 14.3 cents per kilowatt hour. What will be the effect on industrial users on the Island?

MR. SKINNER: Ms Jones, the answer to that would be that we are still doing some analysis on that number, so we do not have a number just yet, but we are working on that number.

MS JONES: If there is not enough demand on the Island to take up the two terawatts of power annually from Muskrat Falls and, therefore, we are only consuming one terawatt as opposed to two, will that affect the base price to consumers at all?

MR. SKINNER: Just for clarity, Ms Jones, I want to make sure I understood it. The question is: If we use less power than what we anticipated we are going to use, will the base price change based upon that? That is basically your query?

MS JONES: Yes.

MR. SKINNER: Okay.

The response I would give to that is that the cost of the power, the cost of the generation of the power will be borne by the customer base that uses it. So, there is going to be a cost associated with generating that power and you will pay, as a consumer, for how much you consume. Whatever I use, I pay for, but the base rate will be tied up in the creation of the capital assets that cause the generation of that power.

MS JONES: So, basically, if Muskrat Falls is developed, whether people on the Island use 20 per cent of that power or 40 per cent or 60 per cent of it, the price will not change?

MR. SKINNER: Basically, yes.

MS JONES: They will still pay the same price.

MR. SKINNER: If I could just go back, you asked a question fifteen minutes or so ago about the costs expended thus far on the Lower Churchill-Muskrat Falls Project.

MS JONES: Yes.

MR. SKINNER: We have some numbers now. We have been able to calculate some numbers up to the end of 2010.

MS JONES: Okay.

MR. SKINNER: I have three components and then I will give a total. Pre-2003, there was $118.66 million spent.

MS JONES: I am sorry. Could you repeat that, please?

MR. SKINNER: Yes. Pre-2003, $118.66 million; post-2003, $157 million; and interest on the total would be $79 million. That grand total is $350.1 million.

MS JONES: The amount spent pre-2003, how far back does that go?

MR. SKINNER: How far back does the pre-2003 number go?

MS JONES: Yes. What period does it cover - from 1970?

OFFICIAL: Actually, it would include all costs incurred on the project to date.

MS JONES: So it would be right from –

OFFICIAL: Mid-seventies.

MS JONES: - mid-seventies to 2003. About thirty years.

I think I was asking you about the take up of power, was I? Was that where I ended off? Sorry.

MR. SKINNER: Yes.

MS JONES: If we, for example, only use 20 per cent of the power on the Island portion of the Province in terms of what Muskrat Falls produces, does that affect the economics of the project at all? It does not because the base rate does not change, right? So it does not. The economics are based on the base rate, the consumers, right?

MR. SKINNER: For clarity, when you say the economics, what do you mean by the economics?

MS JONES: The overall viability of the project.

MR. SKINNER: The business case for the project is based upon 14.3 cents, yes.

MS JONES: Okay.

My communications director is making a point to me. He is saying that if it is based on 40 per cent of the power being consumed on the Island and only 20 per cent is consumed, therefore that affects the rate of return for Nalcor.

MR. SKINNER: Absolutely. The business case is done based upon 40 per cent of the power being consumed, correct.

MS JONES: Yes. So I guess our question is: If for some reason there is only 20 per cent – and I am just using 20 per cent as a figure – consumed, how does that affect the economics of the project, the business case around it?

MR. SKINNER: If that were to be the case, then obviously the business case for the project would change. The work that we have done indicates there will be 40 per cent of that power consumed, so we have done our business case based upon those numbers. The analysis we have done indicates there will be 40 per cent of that power consumed by the residents and, therefore, we then have done the projections based upon that.

MS JONES: If your numbers are off - and I am not suggesting they will be, but if they are - what does that mean? What are the implications? How do we make up the shortfall, and will it affect consumers or ratepayers in the Province?

MR. SKINNER: Again, we have done the analysis, and we have looked at the demand projections. We have looked at what we think the demand on that power will be, so we have done our business case based on that. If the demand usage changes then it would obviously change the business case for the project, but we are confident that it is going to be 40 per cent usage and we have projected it based on that.

MS JONES: Okay.

Can you outline for me, Minister, what alternatives Nalcor looked at before choosing Muskrat Falls as the preferred option to replace Holyrood and to meet what you feel are increasing demands in electricity in the Province?

MR. SKINNER: In terms of the options that were looked at, there was an option to do an isolated Island system, small developments. That was deemed to be not the least-cost alternative. There was an option looking at a link, extending the Maritime Link, and buying power from the Atlantic Provinces through a Maritime Link. There was an option that looked at transmission access across the Straits as an isolated system. There was then an evaluation that was put in place, a matrix that was used to evaluate the options that were presented, and we looked at what we felt was the least-cost supply of power to meet the needs of the consumer, that was a secure power. We came upon Muskrat Falls as being the one that was the least cost, most secure power for us.

MS JONES: I am assuming that one of those evaluations would have included Island Pond, and Round Pond, and Portland Creek, and those areas as well.

MR. SKINNER: Yes.

MS JONES: Can we get a copy of the evaluations of those projects, the cost and stuff associated with them?

MR. SKINNER: That information, Ms Jones, has not been released. We have provided it in technical briefings, but we have not released it at this point.

MS JONES: Will you release it? I guess my question is, are you prepared to release it and provide us with the information?

MR. SKINNER: That would not be a decision that I would make on my own. So I would have to, I guess, say to you that I would take that under advisement, but I am not prepared to give you a definitive answer to that tonight.

MS JONES: Okay.

Thank you, and we will await your response.

When Nalcor was talking about the Gull Island project they basically outlined guidelines around Gull Island, saying that they must have guaranteed power sales for all of the power in advance of any approval for the development. I am just wondering why that was not a precedent for Muskrat Falls.

MR. SKINNER: I have to apologize; the first part of your question I did not hear, so I think I might have missed something there. If I could just ask you to repeat it; I apologize for that.

MS JONES: It was my understanding that Nalcor, when they were outlining the Gull Island project guidelines, indicated that they would have to have guaranteed power sales in place for that project before they would actually move forward with it. I am asking why that was not the precedent for Muskrat Falls.

MR. SKINNER: The answer to that is, given the cost of doing Gull Island, the magnitude of it, or the enormity of it, we needed to have some surety of power sales to be able to finance that project.

MS JONES: What is the costing around Gull Island? What is the big estimated figure around it?

MR. SKINNER: In terms of dollar value, you mean?

MS JONES: Yes, development of Gull Island. What are we looking at? We are looking at $6.2 billion for Muskrat Falls, based on the Maritime Link, but what would we be looking at for Gull Island, based on a Maritime Link or a direct transmission through Quebec?

MR. SKINNER: I am going to give you a guesstimate, just to try and give you some quantum, I guess, of what we are talking about. It would be about $9 billion.

MS JONES: Is that using the Maritime Link, as well, or is that using transmission through Quebec?

MR. SKINNER: Through Quebec.

MS JONES: Through Quebec.

In terms of the Maritime Link, it is our understanding that the Province has the option to buy that back after thirty-five years, or it automatically comes back. Can you clarify that for me?

MR. SKINNER: It basically comes back after thirty-five years.

MS JONES: Okay.

Have you guys done any costing around what it is going to cost at that time to do the maintenance on the line or to replace it, if necessary, or to rehabilitate it, or whatever needs to be done? What is the life of the line, and what are we looking at in terms of cost after thirty-five years?

MR. SKINNER: The short answer to that is that there will be required and regular maintenance that will be done on that line. It will be a line that would be maintained over the life of the thirty-five years until it comes back, so we do not anticipate that it would have to be replaced. There will just be regular operational type maintenance that would need to be done on it.

OFFICIAL: (Inaudible).

MR. SKINNER: That is the other key point. Thank you for reminding me. The other point is that it is estimated to have a life of fifty years as a transmission asset. That is why I say it would just be ongoing operational maintenance we would anticipate having to do on it.

MS JONES: Okay.

Is there any power price with Emera outside of the one terawatt block that was identified in the term sheet? Any access power that they buy, was there any predetermined price that was set with them?

MR. SKINNER: No.

MS JONES: Okay.

I have a couple of questions on section 92(a), only because this has been raised in the public. I guess, first of all, I would ask what work has been done by government, or Nalcor, to explore this particular option.

MR. SKINNER: From my perspective - and I will look to officials to add to what I will say to you - there has been numerous legal research, legal studies, legal opinions, that have been done on this - and by a number of governments as well, I understand. Specifically in terms of our recent time, vis-à-vis Nalcor, has there been anything done?

OFFICIAL: (Inaudible).

MR. SKINNER: There is ongoing work that has been done relative to reviewing some of the old legal opinions, as well as just sort of a fresh look at it. That is where it is right now.

MS JONES: Okay.

Do you guys have any idea what the cost would be if we were to pursue this option? How much work has been done around looking at that in terms of how long it would take, what the cost would be and so on?

MR. SKINNER: No, it is a court based system. One of the pieces of documentation that I looked at said it could take years, but it did not quantify that. Whether that was two years or twenty years, it did not quantify. It also indicated that the potential damages could be billions. It is very loose in terms of trying to nail it down. I could not give you anything too specific. I guess depending on the lawyer you spoke to you would probably get a different answer.

MS JONES: I guess we are raising it because Mr. Hearn seems pretty adamant that it should be an option that the Province should explore and it is in the best interest of people to do that. He claims the terms of that particular agreement has made it much more beneficial for us to look at that as an option. I guess it is not a direction that you guys are going to go in, is it, at all?

MR. SKINNER: With all due respect to Mr. Hearn, who I have never met but I have spoken to and he certainly has some very strong opinions on it which I appreciate, he is willing to talk about and share with people, but his is one legal voice, one legal opinion. He, in fact, himself has been a part of some legal research that would maybe argue the opposite. There are other lawyers who would give different opinions. So, it is that weighing of the balance that is being done by us. I would not say to you it is something we would not pursue, I will say to you it is something we have revisited from time to time but we have not, at this point, made a decision that it is something we should pursue.

MS JONES: Okay.

In terms of the recall power that we have on the Upper Churchill, I know we are recalling all of that power every year, how much of it was sold last year and where are we selling that power now?

MR. SKINNER: Yes, I have some general number, but go ahead.

MR. BOWN: The amount, obviously, that we sell is dependent on the time of year. Obviously, in the winter the drawdown on the recall block within Labrador is significant so there is not very much to sell in the winter, and in the summer there is more. The majority of that –

MS JONES: What do you sell, 150 or 130 megawatts –

MR. BOWN: Yes, about 150, on average, throughout the whole year; obviously much less in the winter, and a little bit more in the summer depending on the day. The majority of that power is being sold into New Brunswick, about 90 per cent, 95 per cent of it.

MS JONES: We are selling it to Emera Energy, are we?

MR. BOWN: No, we are selling it into New Brunswick through Nalcor.

MS JONES: Through Nalcor?

MR. BOWN: Yes.

MS JONES: Originally, we were selling under the agreements that were done going back probably ten, fifteen years ago I suppose now. In the late 1990s, was it? Then it was renewed several times. I know Premier Williams renewed the agreement, I think, under two or three different occasions in the time he was there, and weren't we originally selling all of that power into Quebec transmission?

MR. BOWN: Yes, we were. We were selling it at the border to Hydro-Quebec.

MS JONES: It was under the last agreement that we changed, was it, and we just sold to New Brunswick?

MR. BOWN: When the last agreement expired, we chose to market it ourselves to whoever was prepared to pay the best price for it.

MS JONES: Okay.

New Brunswick is buying it directly from Nalcor?

MR. BOWN: Yes.

MS JONES: So that is their energy company that is purchasing it, is it?

MR. BOWN: New Brunswick Power.

MS JONES: New Brunswick Power.

What are we getting for that power today? What is the value of that contract? How much are we profiting on an annual basis?

MR. BOWN: I could not give you the exact figure, but we are getting a New York price plus a premium. So, they are paying a premium against the New York price.

MS JONES: How much would that be per kilowatt hour? Because I do not know what the New York price is.

MR. BOWN: Again, it depends on the day. It could be anywhere from as low as probably in the mid four cents to as high as whatever the market merits at that time. Again, the prices in New York now are increasing. The past year, there was a slump both in the economy so prices were down, but actually prices are increasing over this year.

MS JONES: Can you give me a range at all of what would be the high-end rate here?

MR. BOWN: No, I do not have the specific data from the marketing group at Nalcor with the highest that they would have had that sold for.

MS JONES: Can you provide for me then what the annual profit on the sale of that power has been, say, for the last ten years for example?

MR. BOWN: Ten years -

MS JONES: I know it has been climbing every year, but I would just like to get an analysis of what it has been over the course of the last ten years.

MR. SKINNER: Just for clarity, Ms Jones, do you mean the value of the power sale over the past ten years? Is that what you are asking for?

MS JONES: What we are earning as a Province, what our take home is on that sale.

MR. SKINNER: Okay.

MS JONES: I know that the amount of power that we sell has changed, I realize that, but I would just like to get what the take home is.

CHAIR: As Chair, I would like to remind Ms Jones that while you engage in conversation back and forth with some of the officials, the question is really directed to the minister and any request for information would have to be approved by the minister as well.

MR. SKINNER: We are fine with that.

MS JONES: Yes, I am sure he would interject if there was a problem.

CHAIR: No, I was just interjecting because you were asking the official for specific information.

MS JONES: I do apologize, Mr. Chairman, and I will direct my questions to the minister.

My next question is with regard to the status of the appeal to the Quebec Régie decision. Can you give me an update on where that is and if it is headed to the Quebec Supreme Court any time soon or what is happening with it?

MR. SKINNER: The short answer to that is yes, we are going to continue to pursue it. We believe that we have a valid case. We believe that our case that we put forward was not given due consideration by the Régie and we need to go to the Quebec Supreme Court and wherever from there if we need to.

MS JONES: Yes.

This is just a probable question: Obviously, if Nalcor were to lose this appeal, and we certainly hope they will not but if they were, is there further recourse for us then? Is that the end of it or do we have other options?

MR. SKINNER: There are other options. We could go to the Supreme Court of Canada, obviously, if the Quebec courts ruled against us. That would be an option that we would determine whether or not we wanted to go that route. What would be involved in that? At every stage of this we have to stop and reassess and review and so on. I do not want to leave you with the impression that we are just blindly going forward. The anticipation - we feel very strongly about our case, so I would expect we will go there. There are also international agreements, for lack of a better word – I am looking for the word to use here. FERC, the Federal Energy Regulatory Commission in the United States, because Quebec sells power into the United States, there are certain rules, certain standards, certain open access obligations that the FERC expects participants in their system to use. So that would be another option as well that we would look at pursuing and are having discussions about.

MS JONES: Can you provide to us what we would have spent, say, so far on legal fees in this particular case in trying to make our original claim, and then our appeal with the Régie and, of course, now our next appeal that we will make to the Supreme Court?

MR. SKINNER: I just wanted to confirm what I thought, but I did have it confirmed. It is a cost of Nalcor. It is not a cost, per se, of us. Nalcor would be pursuing that. So, they would be the ones that would be incurring the cost on that.

MS JONES: Yes, would we be able to get that information? Are you able to provide it to us?

MR. SKINNER: I will consider that. I cannot say a definite yes to you because I am not sure, from a legal perspective, if there are any legal sensitivities around that, but I will look into that.

MS JONES: Yes.

Back some time ago when Ed Martin was doing an interview with The Telegram, he said that they had retained some American counsel on this particular file. I am just wondering if that is still the case. Is there some American legal firm that is working on this case for Nalcor, and what the status of that is?

MR. SKINNER: The answer to your question is yes; they have engaged American legal representation, relative to what I just mentioned a minute ago, in terms of FERC and so we had to go and get some expertise in that area, yes.

MS JONES: Okay.

I think that is about all of my questions.

CHAIR: Any other members have any questions for the minister?

MR. SKINNER: Mr. Chair, again, just by way of, if I could, from my end for concluding, we have been keeping a tally of things that have been asked for. Give us a day or two to sort of read our scratches here tonight and make sure we have everything. We will provide that to both the Leader of the NDP and the Leader of the Liberal Party. We will seek your concurrence on what our list is and if we have missed anything, please let us know. Once we get your concurrence that yes, this is what, we will we endeavour to start to put all that together and get it over to you.

I do want to thank all members, including yourself, Mr. Chair, and the Table Officers for your patience with us tonight and for your consideration. Thank you for the spirit in which we engaged tonight.

MS JONES: Thank you, Mr. Chairman.

I certainly would like to thank the minister and all of his officials. I know it has been a long day for everyone and this is a huge department, so it takes quite some time to get through it. I certainly appreciate the information that has been provided to us and the agreement to provide us with things that you do not necessarily have at your fingertips, and we understand that.

I would like to thank my colleagues on the Committee and my staff as well for their participation this evening.

CHAIR: Shall 1.1.01 carry?

CLERK: 1.1.01 to 5.1.06 inclusive.

CHAIR: 1.1.01 to 5.1.06.

Shall it carry?

SOME HON. MEMBERS: Aye.

On motion, subheads 1.1.01 through 5.1.06 carried.

CLERK: The total.

CHAIR: Shall the total carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, Department of Natural Resources, total heads, carried.

CHAIR: Shall I report the Estimates of the Department of Natural Resources carried without amendment?

All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

Carried.

On motion, Estimates of the Department of Natural Resources carried without amendment.

CHAIR: Before I ask for a motion to adjourn, I would also like to thank the minister and his officials and all members of the Committee for your participation tonight and to advise you all that the next meeting of the Resource Committee is on Monday, May 9, commencing at 6:00 p.m. at which time we will be hearing Estimates from the Department of Tourism, Culture and Recreation.

On that, I would invite a motion to adjourn.

MR. GRANTER: We would like to adjourn, Mr. Chair.

CHAIR: Moved by Mr. Vaughn Granter.

MR. DINN: Seconded, Mr. Chair.

CHAIR: Seconded by Mr. John Dinn.

This meeting is now adjourned.

Thank you.

On motion, the Committee adjourned.