The Committee met at 9:40 a.m.

MR. CHAIRMAN: Order, please!

I would like to welcome you to the Estimates Committee for the Department of Fisheries. At this time I would like to extend a welcome to the Minister and his officials.

Before we begin, I would like to introduce the Members of the Committee: Mr. Woodford, the member for Humber Valley who is the Vice-Chair of the Committee; Mr. Langdon, the Member for Fortune -Hermitage; Mr. Hewlett, the Member for Green Bay; and Mr. Noel, the Member for Pleasantville. We have two guests this morning, Mr. Dumaresque, the Member for Eagle River, and Mr. Matthews, the Member for Grand Bank.

Our format, just for our own purposes, is pretty simple. We will begin with an opening statement from the Minister. We have, over the past while, allowed ten minutes for each side to ask questions and to expedite matters. By leave from all the Committee Members in the last hour we have tended to stay a little more with the Members of the Opposition and allow them to go from ten to twenty minutes to clear up some matters and hopefully deal with the issues that may be at hand. As opposed to having to delay the Minister for yet another meeting, hopefully we can clear up those matters today. Again I make note that that is by leave, and if we do not have consensus of our Committee for that we will stay with the normal ten- minute time slot.

I would like to point out to all of the advisors who are here with the Minister this morning that all questions being asked of the department are to the Minister, and all questions will come back through the Minister. By that I mean the Minister can certainly ask any of his officials to deal with a matter that he wishes them to speak for, but just a reminder to the Committee Members that the questions are to the Minister, and by leave from him his officials may give the answer if he so wishes.

I would also like to remind all people here this morning who will be either asking questions or answering them for the sake of Hansard I would like for you to identify yourselves. It will not be necessary, I think, for the Minister, I think his voice will be more than recognized, and for most of the Members, I think it would be the same situation. But particularly the officials, should you be answering, please identify yourselves before you deal with any question that may be posed to you.

With that we will begin. I will turn to the Vice-Chair, and if he wishes to open we will do that, if not we will relinquish to one of the other Members.

MR. WOODFORD: Mr. Chairman, are we going to give the Minister an opportunity to give an opening statement?

MR. CHAIRMAN: I am sorry, I apologize. Mr. Minister.

MR. CARTER: I want to introduce the officials from the Department of Fisheries here this morning. To my far right is Assistant Deputy Minister, Harold Murphy; Assistant Deputy Minister, Leslie Dean; Mr. Brian Bursey, Chairman of the Fisheries Loan Board; Mr. David Vardy, Deputy Minister of Fisheries; Garland Mouland, Administrative Officer; and Mr. Frank Pinhorn, Director of Processing. That pretty well takes care of the officials.

I have a short statement which I will read into the record, if you wish.

I am pleased today to present to this Committee the Budget Estimates of the Department of Fisheries for the fiscal year 1991-92. While we are in a period of restraint I feel that the level of total expenditures from my department in 1991 and 1992 continues to demonstrate the commitment of this Government to our most important resource sector.

Gross expenditures in 1991-92 are projected at $40,778,100, and related revenues both current and capital will total $15,316,900 consisting of $6,500,900 through Federal-Provincial cost-shared programmes, and $5,500,000 through Fisheries Loan Board repayments and $3,316,000 from other provincial revenue, and that expenditure in the years 1991-1992, both capital and current will amount to an estimated $25,461,200. My department will in total, spend $23.8 million on current account and $17 million on capital account in this fiscal year. I would like to take a moment to place the fishing industry in perspective.

The fishing industry is the largest goods producing employer in Newfoundland and Labrador, producing approximately 18 per cent of gross domestic product in the goods producing sector in 1989. It provided employment for approximately 30,000 people, who depend directly on the fishing industry for employment for all or part of the year, including 17,000 plant workers at peak and approximately 13,000 full-time fishermen.

Ground fish landings on average make up 68 per cent of total sea fish landings, and cod is the most important of the ground fish species. The total landings of cod decreased from 296,000 tons in 1988 to 236,000 tons in 1990, a decrease of some 60,000 tons or 20 per cent.

The value of these landings decreased from $136 million to $130 million, a decrease of $6 million, or 4 per cent. Increases in the final selling price of cod products have helped maintain the relative incomes of fishermen; in the three year period, 1988 to 1990, the total sea fish landings in Newfoundland and Labrador decreased from 534,000 tons to 475,000 tons, a decrease of 59,000 metric tons.

The 60,000 ton decrease in total landings is due entirely to reduction in ground fish allocations. The value of commercial sea fish landings decreased by $18 million over the same period to an estimated level of $258 million in 1990. This data is summarized in Appendix 1, which is attached.

In the context of offshore-inshore landings, ground fish landings by the offshore sector decreased from 208,000 tons to 138,000 tons, a decrease of 70,000 tons. Ground fish landings by the inshore sector increased from 175,000 tons to 186,000 tons, an increase of 10,000 tons over the 1988 to 1990 period.

Each 1,000 ton reduction in ground fish landings by the offshore sector equates with the loss of 23 person years of employment. Quota reductions have therefore resulted in the loss of 1,600 person years of employment in the offshore industry, while Federal-Provincial adjustment programmes have been put in place, the economic loss and financial hardship is particularly acute to those most directly affected.

The level of reduction represents an economic loss to the industry and to the Province of $124 million. The present difficulty stems from the fact that certain key ground fish stocks, adjacent to this Province and historically fished by Newfoundland and Labrador fishermen, are no longer able to sustain catch rates any where near those achieved in the past.

The cornerstone of the Newfoundland fishery is the 2J, 3KL or northern cod stock. The importance of this stock to Newfoundland and Labrador, Mr. Chairman, lies in the fact that in 1990 it provided approximately 74 per cent of total cod landings. In addition 60 per cent of all registered fishermen and registered fishing vessels, 63 per cent of our population and 61 per cent of our communities, are located adjacent to the northern cod resource.

Similarly, the ability of the western Newfoundland gulf cod stocks to provide an adequate level of income to industry participants has greatly diminished since 1988. We have estimated, Mr. Chairman, the potential growth in major ground fish stocks which could be available to the Newfoundland and Labrador industry by the year 2000, using CAFSAC and other scientific data, we believe an additional 70,000 tons of traditional groundfish could be available annually to the industry by the end of the current decade. Such an increase would create an additional 1,200 person years of annual sustainable employment in the processing sector. If this potential is to be realized there must be fundamental changes in fisheries management.

The first involves a cessation of foreign overfishing outside the Canadian economic zone, particularly on the Nose and Tail of the Grand Banks. In 1990 the European community took 97,000 tons of groundfish against a NAFO quota of 15,377 tons. Catches of this magnitude defy all principles of conservation and negate the benefits to Canadian fishermen of stock rebuilding.

Secondly, there must be a reaffirmation by the Federal Government of the fundamental and long established principles of resource allocation. Criteria for the 1991 Groundfish Development Programme are totally inconsistent with the priorities assigned this programme in 1990 and ignore completely the requirements of communities in which plants have either closed or require additional (Inaudible). Some 87 per cent of groundfish in this programme comes from stocks in the Newfoundland region upon which Newfoundland inshore and offshore sectors have had a traditional dependence.

The Province will continue in 1991 to seek a greater voice in fisheries' management. The economic development of this Province is so closely tied to the fishing industry that Provincial participation in fisheries' management is critical. In 1990 my Department began the process of developing a fisheries' policy framework for the coming decade. I am pleased to report that the White Paper is nearing completion.

I am also pleased to indicate that despite budgetary constraints nine new positions will be filled in my Department. Two of these positions will provide for the creation of a Labrador division, which will include a number of existing staff having specific responsibility for that area of the Province. We will strengthen our biological capability with the addition of a senior resource biologist. Remaining positions will be filled in the areas of aquaculture, resource utilization, product development and marketing. I wish to emphasize that all four of these areas have met with outstanding success in 1990.

The success of the industry depends in large measure on it's ability to compete on two fronts: price and quality. Our groundfish products must compete with the much cheaper and abundant Alaskan pollack and fish exports of developing countries. I look forward to working with the new Minister of Fisheries and Oceans, Mr. Crosbie, with the objective of resolving many of the issues which prevent the full realization of the benefits from a dynamic fishing industry.

Specific Budget activity: The above framework briefly highlights the significance of the industry, the effect of reduced resource availability, and areas in which measures of success have been achieved as the 1991 season unfolds. Some $12.4 million of expenditures are allocated under the heading of Facility Services. Of this total $5.4 million will provide for the ongoing administration, operation and maintenance of all shore based infrastructure. These include: twenty-five marine service centres; fish processing facilities; regional ice making facilities; community stages; baited trawl units; and related facilities. In total the Department has an inventory of 300 fishery related facilities.

Specific reference should be made to the Marine Service Centre Programme which can be considered one of the most successful industry support initiatives administered by my Department. There are presently twenty-five marine service centres in operation, four of which were completed in the last fiscal year. Additional lifting capabilities have been added at Fortune, Fermeuse, Hodge's Cove and Makkovik. The capability at Port Saunders has been increased from seventy to 200 hundred tonnes, the largest such capacity lift in Canada. These extra capacity lifts are strategically located to service the fleet of larger inshore fishing vessels, approximately 1400 vessels use the facilities annually. I intend to pursue our policy of divestiture very aggressively in 1991 - 1992 with the objective of moving facilities with commercial potential into the private sector. Under my department's divestiture programme some twelve fish handling facilities have been sold to the private sector. We continue to retain ownership of forty-three such facilities. Leases entered into in 1991 - 1992 will be for a one-year period only.

The Department administers 215 structures used directly by fishermen as community stages, gear sheds, slipways, and baited trawl holding facilities. Fishermen directly use and coordinate their use of these facilities while my Department retains responsibility for maintenance and repair.

The heading also includes an expenditure of $1.1 million for the operation of processing plants at Nain and Davis Inlet, and a contribution towards the operating loss of the Makkovik Fish Plant operated by the Torngat Co-operative. These three facilities employ 200 processing workers in season, the principal source of onshore employment in Northern Labrador. The new processing plant in Nain opened in 1990 - 1991 at a capital cost of $2.5 million. The Makkovik Plant is also being modernized under the ERDA Agreement at a cost of $4.7 million and will open this coming season.

The 1991 - 1992 Estimates for my Department project expenditures under ERDA, which is the Inshore Fisheries Development Agreement of $9.2 million. This will be the fourth year of the five-year development agreement. My Department proposes to spend $4.6 million capital on fisheries infrastructure under the ERDA Agreement of which $2.5 million will accrue as revenue representing the federal contribution. These initiatives are listed in Appendix II which is attached. My Department also proposes to spend $1.4 million on infrastructure under its regular capital programmes which will include various projects under its Marine Service Centre and Fishermen Facilities programmes. Also, included will be funding for special assistance grants on access roads.

The capital programme includes funding for upgrading and construction of new fisheries access roads and the provision of small top-up grants for materials to assist fisheries related capital projects. The Department will spend $600,000 under the Labrador Development Agreement for the design and construction of ice-making facilities, off-loading facilities, containerization and palletisation facilities, water systems and plant upgrading in areas from Cape Charles to Smokey.

The second major operational branch of my Department is Industry Support Services. This Branch will spend $9.6 million in 1991 - 1992 which is an increase of approximately $0.6 million over the previous year. Under the harvesting sector of this Branch activities include aquaculture, resource assessment, experimental fishing, experimental fishing gear, vessel design and operation and initiatives associated with ongoing fleet development. Funding in the amount of $1.6 million is provided towards the provision of technical and financial assistance to aquaculture development in the Province.

Expenditures will be made towards research, development and the provision of technical and financial support to all areas of aquaculture. In addition to promoting the development of a viable aquaculture industry, Newfoundland's Aquaculture Legislation serves as a model for other Canadian provinces. Expenditures of $1.4 million will be made under the harvesting component related to resource assessment, fishing vessel design and developments, which includes quality enhancement initiatives related to harvesting, on board handling and storage, cost of operational effectiveness of fishing vessels and demonstrations in use of various types of fishing gear.

Gross expenditures of $3 million will be spent by the processing sector of this branch. Activities are directed towards improving processing technology, expanding upon our in-plant quality control procedures and providing technical support and assistance directed towards the development of secondary and value added fish products. It is my intention to introduce before the House an updated Fish Inspection Act at the earliest opportunity. Expenditures in the area of marketing will total $1.3 million in 1991-92. While gains have been made with respect to product identification, we still require a more cohesive approach to the established marketplace and an increased presence in new and developing markets.

The Policy Planning Services Branch will have estimated expenditures in 1991-92 of $3.8 million. This branch provides ongoing policy and programme planning within the context of Government's broad development objectives for the fisheries sector. The Planning Services Division is also responsible for the co-ordination of all projects and programmes associated with the Inshore Fisheries Development Agreement. Some $9.2 million will be spent under this programme in 1991-92. The department will also co-ordinate the implementation of the Coastal Labrador Development Agreement. This Federal-Provincial agreement, signed in July of 1989, calls for expenditures of $7 million over the 1990-94 period. The fisheries component of the agreement will (1) provide infrastructure where necessary in coastal Labrador; (2) fund initiatives in the harvesting and processing sectors promoting diversification and improved incomes from fishing and fish processing activity; and (3) training to upgrade skills of fishermen and plant workers. Some $1.8 million has been allocated in the 1991-92 fiscal year under this cost-shared agreement.

The field services division operates seven major field regions, and maintains a number of field offices throughout the Province. The division in most instances provides first line contact with fishermen and fishermen representatives. The Fisheries Loan Board is projecting an expenditure in 1991-92 of $13.3 million in support of the Province's inshore fleet. The expenditures will be directed toward interest subsidy payments under the Bank Loan Guarantee Programme, loans under the board's Direct Loan Fund, and assistance under all three bounty programmes.

Mr. Chairman, in conclusion, the fishing industry faces severe resource constraints over the foreseeable future, and performance will be impaired by quota and catch reductions. In the interim, a course must be charted which minimizes the impact of quota reductions, and achieves our objectives with respect to resource management which will result in the rebuilding of a strong and resilient industry.

My department will continue to develop policies and programmes through which these objectives can be achieved for the overall benefit of our provincial economy and the fishing industry at large. I welcome any questions which you may have on my department's 1991-92 estimates. Thank you very much.

MR. CHAIRMAN: Thank you very much, Mr. Minister.

Mr. Hewlett.

MR. HEWLETT: Mr. Chairman, I would like sort of a general re-action from the Minister: I have a major FPI plant at Triton, in my district, and a little while ago the former Minister of Fisheries, Mr. Valcourt, announced what you might refer to I suppose as a more gradual phase down of northern cod quotas, so in one regard the 300 workers at the Triton plant, sort of breathe a collective sigh of relief and I did, as their Member.

But at the same time, Mr. Bartlett, who is the Vice-President of NIFA, from my district, sort of took exception to my breathing a sigh of relief with 300 other workers; does the Minister have a feel, with the new Minister coming on, that there will be relatively modest quota reductions as outlined over a three year period by Mr. Valcourt, is that still on and can the workers at Triton continue to breathe a sigh of relief, so to speak?

MR. CARTER: I cannot speak for the Minister of Fisheries and Oceans, but I can only surmise that on the basis of what the Minister said last year when that management plan was announced by his predecessor; I do not anticipate any changes frankly in the TACs that were announced last year by the previous Minister, and I think that amounts to about a 5,000 ton reduction over the next three years.

My Assistant Deputy reminds me that there may very well be new scientific evidence come to light that would change that, but certainly from the Province's point of view, we do not anticipate that there will be any increase in the TACs next year, and in fact, as we see it, we expect there will be a continuation of the previous Minister's policy in that regard.

MR. HEWLETT: I have heard some commentary on the fact that relatively new scientific data would tend to indicate that maybe more gradual phasedown of the quota under Mr. Valcourt might not be in keeping with the latest scientific findings, which of course, breathes a degree of 'I told you so' into the inshore sector and causes a degree of deep concern in an area where you have a large plant depending on offshore northern cod. Have you had any indications that the three year programme as announced by Mr. Valcourt, might have to be amended downward, based on new scientific data?

MR. CARTER: No, we are not aware of any new scientific advice that would alter things to any great extent, so I guess in answer to your question, we cannot, at the present time, foresee any circumstance or set of circumstances that might alter things. We are not aware of any new advice that would have that effect.

MR. HEWLETT: One more question, Mr. Chairman, and this is relatively specific. You mentioned you have monies in your budget, capital monies for fishery facilities. I have an inshore fishing community that depends entirely on the inshore fishery, that is Beachside. They have a community stage that is used basically as a buying station by Connors Brothers.

The stage is, I guess, on its last legs quite literally, because the legs are rotting out from under it. I know they have written the Department before looking for some sort of assistance, maybe in concert with top up money or whatever, with some sort of Federal programme. Is there anything in the works for the Beachside community stage? Because it is virtually on the verge of collapse, so to speak. Is there anything in your Department this year? That is a specific question, I know.

MR. CARTER: First of all that stage does not belong to the Province, as I understand, that is Federally owned I expect, is it?

MR. HEWLETT: Well, the Province did build an access road out to it because it sort of needed a fifty-foot causeway. It was built off the beach.

MR. CARTER: Yes. I am not able now at this particular point in time to make a commitment. That is a specific project you had in mind there, but certainly my advice is to have the fishermen's committee make representation to the Department. If there is anything that we can do within the guidelines under which we operate then we will certainly consider it. But I cannot at this time give any firm undertaking that we will do what needs to be done there.

MR. HEWLETT: Okay. So obviously it is not one that has been on the tip of your tongue for the last few weeks or whatever. Okay, that is fair enough. That is it for me right now, Mr. Chairman, I would hand off to someone else.

MR. CHAIRMAN: Thank you, Mr. Hewlett.

Mr. Langdon.

MR. LANGDON: The Minister was saying earlier that there is to be some fundamental changes in fish management. Last year, if I have the totals correct, you were saying that it was probably 97,000 metric tons of fish taken on the Nose and Tail of the Grand Banks whereas the quota was 15,000. What hope do we have in the foreseeable future to be able to tell Spain and Portugal that basically: we do not want you to do this. I know the Federal Government is doing it in a diplomatic way but there comes a point when there is nothing else there. Eventually it is taking bread off the table. What is the latest that the Federal Government has been able to do to try to change this around in conjunction with your own Department?

MR. CARTER: I can tell you at the outset I guess, Mr. Langdon, that the Province is certainly not satisfied with the progress that has been made to date in remedying that problem. It is a very serious problem. Probably one of the most serious problems facing the eastern Canadian-Newfoundland fishing industry today. We are not at all happy with what has transpired to date.

Now, we recognize too that it is not a simple matter to correct. We have an advisory council, a fifteen or sixteen man council, that was appointed first when I became Minister to act in an advisory capacity to the Department of Fisheries and to the Minister. They have been addressing that problem now for quite some time. In fact they have had several meetings on it, and they have put together a report and a set of recommendations to me, and to the Department, on how we should maybe go about prodding or at least trying to generate more activity from the Federal Government. You must bear in mind that the Province does not have any authority on its own to take any direct action dealing with that problem. It is a Federal responsibility to manage that resource and to do what needs to be done to bring some order out there.

But that is a matter that has been under active consideration by my Department and my advisory council. At our last meeting it was decided that we should give Mr. Crosbie a chance to see what he could do. It would not be fair now for us to start making demands on what should or should not be done. We want to give him a chance. We believe that maybe with a new Minister, and a man who obviously has a better understanding of the problem and maybe a better feeling for it, hopefully he will achieve more success than any of his predecessors. So we are going to see what Mr. Crosbie can do. We will assist him in any way possible to that end.

Of course I suppose if nothing happens over a period then we will have to look at what other options are available. But I guess to make a short answer to your question, we are looking to the new Minister now to maybe take a more aggressive approach and hopefully achieve more success than his predecessor. We want to help him do that and we will do all we can to that end.

MR. LANGDON: No doubt the people who fished the Nose and Tail of the Grand Banks have probably devastated the fish there, but probably as well we have not been vigilant enough in protecting the stock that is fished by our own people.

It is my understanding, and I have talked to a number of people in the area, people who fish on deep-sea trawlers, that there are times when the fish net is pulled up when as much as 50%, 60% or 70% of what is caught is discarded and just thrown back into the ocean. These people tell us that this is probably a bigger hindrance to the growth of the resource than even the actions of the foreign people themselves.

We live in a technological age and with all the advantages that are possible through technology certainly we should be able to devise some plan not to waste that particular resource. Maybe a boat quota where they would be able to bring it in for fish meal or anything, but to just leave it on the ocean adrift, in my opinion, is not the best way to look after the resource. So, what are we doing in a sense to addressed that?

MR. CARTER: Well, we don't like the idea of seeing fish dumped either and we understand there is a lot of it being dumped. What we have been saying is that you want almost a total observer coverage, even on the 65 foot vessels and under, to see what is going on. We have heard of cases where a lot of small fish is being dumped because it is not worth their while to bring it in and it takes away from their quota, their allocation, and for that reason, I suppose, probably it would be more beneficial for them to dump it than to bring it in. That is wrong. Unless and until we find or develop the necessary technology whereby we can prevent or avoid catching small fish, then it seems to me that we should be utilizing it, because there is a market, by the way, for undersized fish. It is not the sort of thing you would want to encourage the harvesting of, but when it is being harvested and unavoidably harvested, then I think we have a responsibility to ensure that it is put to good use. That can only be done if there is full observer coverage on the vessels.

The problem, of course, I guess in the main, is with the otter trawlers. It seems to me that the Federal Government is going to have to give some thought to putting observers on all those vessels. Then and only then will we be sure that at least the fish will be used. That will not correct the problem of mesh size. Mesh sizes are under review in 1992 and hopefully there will be something done to change the mesh sizes whereby this small fish will not be caught. I suppose, that is the ultimate solution to the problem, avoid catching. Again, I guess that is going to be time consuming and costly but something has to be done and all the reports that we get including the Aidan Maloney Report for example indicates that - in Aidan's report I think he mentions something about gear size, didn't he, and new technology and new gear sizes are necessary to ensure that small fish is not caught. Certainly, we should not allow people to deliberately set out to catch small fish. There are cases I am told where in some areas they use liners in their nets, it will have the effect, of course, of trapping small fish but naturally that should not be allowed under any circumstance.

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: Could you speak a bit about the tariff situation and the international markets? To what extent is the Newfoundland industry being hurt by tariffs these days? I gather it is improving with the United States, but I presume it is still a large factor. Is it as much of a factor with other countries?

MR. CARTER: The big problem with tariffs, of course, at the present time is Europe, the European community. Tariffs are high.

MR. NOEL: They are high enough to essentially put the market off limits for our -

MR. CARTER: Yes, pretty well. Now in the U.S., of course, under the Free Trade Agreement, the tariffs are reducing, decreasing. In fact I believe they are now down to six per cent from ten per cent, and over the next two or three years will continue to decline until they are wiped out altogether.

We were in Boston to the Boston Sea Food Show a month or so ago and we visited the FPI plant in Danvers, Massachusetts, where they put out a pretty wide range of finished product. Using fish, by the way, that is shipped into Danvers in a raw state from Newfoundland and processed up there. It sort of makes one wonder sometimes if it is necessary, when you see 300 people gainfully employed earning good wages processing fish that is caught in Mr. Matthew's district and others, being carted off to Boston for processing.

Of course, the problem was tariffs, but that is correcting itself now and it seems to me that over the next few years there will be very little justification for allowing that to happen or for encouraging that to happen. In fact there are products being marketed now by FPI, finished products, that are in fact processed in the plant in Burin. They pay the tariff, whatever it is, six or something per cent, and they can get it into the U.S. and compete. I guess that must be the aim of FPI, eventually as the tariffs decrease to do more of their secondary processing in their vastly underutilized plant in Burin, and that plant in Burin, I am told, is operating at less than fifty per cent capacity. So there is a lot of opportunity there for expansion and to get into several new products.

MR. NOEL: But tariffs are not too bad a problem when it comes to exporting to the United States today, and the situation is going to get better. Are there other trade obstacles to exporting to the United States aside from tariffs?

MR. CARTER: I am not aware of there being any other impediments to shipping finished product into the U.S. Lobster, of course, is a different situation, as you know, because of the size restriction. The Americans have now placed a certain minimum size restriction on lobsters going into the U.S. market, and that is having an affect of about twenty per cent on our harvested lobsters. Approximately twenty per cent of Canadian harvested lobsters now will not qualify to get into the U.S. market, and other markets have to be found for that twenty per cent. Lobster is posing a problem for that reason. As far as the other products, I am not aware of there being any impediments that would keep Newfoundland products out of the U.S. today.

In Burin, by the way, they have managed to get around the tariff problem in some areas where they produce a product for the microwave trade, I suppose, where it is embellished with a few little things whereby it would qualify as not being a finished product - uncooked. Fish with little embellishments on it would not qualify as a finished product, but I think the prospects are good as the Free Trade Agreement continues to trigger a place that will, I believe, increase our activity in that respect over the next few years.

MR. NOEL: So it is fair to say that the Free Trade arrangement appears to have been positive for our fishing industry -

MR. CARTER: Yes, I would think. Yes.

MR. NOEL: - without reservation, pretty well.

MR. CARTER: Like I said, the tariffs have gone from ten down to six per cent already.

It is not all gravy by the way. There is a lot of competition in the United States marketplace. For example the Alaskan pollack is a fish that is somewhat similar to our traditional groundfish, the cod, and that is making some inroads now into the American marketplace. Currently it is being produced at a much lower price than cod and that is causing some problem. But all-in-all the market appears to be good, it is a very strong market. Last year it was good and there is every indication that it will continue to be strong.

MR. NOEL: Does our manufacturing industry appear to be pretty competitive? You know, as we eliminate the artificial barriers to trade the competition is going to become more of a factor. Do we look well prepared to compete with other sources for business in the United States? Are there any indications there are problems in the efficiency of our manufacturing industry that need to be dealt with?

MR. CARTER: Yes. I think it is fair to say the more efficient fish companies in Newfoundland are competitive. We have FPI, of course, and we have a number of smaller companies, Janes and Sons in Hants Harbour, Quinlan's and Beothuck Fisheries, these are all solid companies with a good track record, and given a chance I think most of them can hold their own anywhere.

I think in Newfoundland there is a mind-set that we have to deal with, in that I sort of get the impression, and this does not apply to all companies, but a lot of them have found themselves a pretty comfortable niche. I am not sure the will is there to branch out and become more adventurous in terms of secondary processing. But that is changing. They can get their fish and put it up in blocks, they can ship it into the United States marketplace in a raw state and make a good dollar on it. So, I guess the question they ask themselves is: why should we take on additional problems and expense if there is no need of it? But that is changing because there is hardly a day passes when we do not hear of a company now that is expressing some interest in secondary processing. I think in time the message will be through to them that there is a dollar to be made there and a lot of possibilities exist.

MR. NOEL: There is not much basis for optimism about gaining improved access to the European market, is there? No force is developing there or no pressure is developing there that may be to our advantage?

MR. CARTER: In the short-term there does not appear to be too many prospects for any improvement in that situation.

MR. NOEL: What about the Asian markets and things like that? Are tariffs a problem there, or markets outside of the United States and Europe, potential markets? Is there much potential?

MR. CARTER: Tariffs are not as big a problem in Asia as they are in Europe, for example. But you are dealing with a different clientele, I guess, in Asia. For example, Newfoundland has now over the past few years developed a pretty lucrative caplin fishery where 30,000 metric tonnes of female caplin end up in the Japanese marketplace.

MR. NOEL: Is that a tariff-free market?

MR. CARTER: Yes, that is tariff-free.

There is a smaller market for caplin in Taiwan, a 3,000, 4,000, or 5,000 metric tonne allocation but we are told that is developing and hopefully at some point in time it will be a broader market.

There are all kinds of things happening today, especially in Southeast Asia. Hardly a week passes when we do not have representation from some major companies in those countries looking for opportunities to invest money in the fishery. No later than last week I had dinner with a group that has a very serious interest in fish meal for example. They are endeavouring to buy or set up new fish meal plants here in the Province.

Getting back to the Japanese market: it is interesting to note by the way that unlike Newfoundland Japan does not have an unemployment problem. In fact, there is a labour shortage in Japan, and the processing of the 30,000 metric tons of caplin that we ship in to Japan yearly is extremely labour intensive. If you can visualize, every single caplin in that 30,000 tons - and that I suppose is in the hundreds of millions of caplin - having to be treated, handled and skiverred up on a rack individually and processed that way.

We are trying to encourage people in the private sector now to look into the possibility of processing that caplin in this Province. Now I am not here this morning going to tell you that that is going to happen tomorrow morning. But I can only tell you that there are some possibilities there. In fact there is one company, Greens, I think, out in Winterton that is now engaged in the processing of caplin the way the Japanese process it. I think they are catering more to the local market or the market in Canada, the Japanese community in Canada, although I do believe some of that is being shipped into Japan, isn't it?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Pardon? On a trial basis.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. There is another company that is also looking at the possibility of curing that caplin here. Now if we can ever achieve that - and given the fact that in Japan the jobs that it creates does not mean a thing to the Japanese because they have full employment.

MR. NOEL: But practically everything that goes there now is unprocessed.

MR. CARTER: Everything that goes there is unprocessed, it is frozen female caplin. There is a very simple procedure followed in the curing of those caplin that can be done in Newfoundland, no trouble at all.

MR. NOEL: Now what is the obstacle to it? How come that has not been done to some extent?

MR. CHAIRMAN: The last question, Mr. Noel.

MR. CARTER: Obstacle? I am not too familiar with the ins and outs of the Japanese market but I think you will find in the Japanese marketplace there are a couple of middle people, middlemen, importers in the supermarkets and that sort of thing. I do not know what problems it would create in the marketplace in that regard, but from what I have been told there are no insurmountable problems there. If we can ever achieve that objective then the number of jobs that it would generate is just mind-boggling almost.

AN HON. MEMBER: (Inaudible).

MR. CARTER: My Deputy reminds me that a lower Canadian dollar would be very helpful. The dollar of course is now relatively high. So a reduction in the value of the dollar would be a big plus for us.

MR. CHAIRMAN: Thank you, Mr. Minister, thank you Mr. Noel.

Mr. Matthews, by leave of the Committee. Or are you an official Member this morning?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Okay. Then I understand by leave from your colleagues they will relinquish their time to you. Carry on.

MR. MATTHEWS: Thank you very much. Just a few questions. Just following on the secondary processing avenue as taken up by the Member for Pleasantville. I guess it would be fair to say that in the secondary processing form as it is done at Burin, that we really cannot look forward to any other facilities in the Province doing the same type of secondary processing, I suppose, over the next number of years, anyway. Would that be a fair statement, looking at Burin probably being utilized now at about 40 per cent? Would that be fair? Because there has been so much talk over the years about secondary processing of this form and higher value products. From my own observation it would seem that until Burin gets up to 90 per cent or 95 per cent, if that is possible, that we will not see another facility such as that in the Province. Would that be a fair observation or would I be wrong?

MR. CARTER: I think that is probably a fair assessment of it, but there are opportunities, of course, in cold packing products.

MR. MATTHEWS: Oh yes.

MR. CARTER: You know, we have a lot of that going on, but that does not require any big infrastructure or big facility. But certainly, I suppose from FPI's point of view, who are the owners of the Burin plant, I guess their ultimate aim would be to fully utilize their Burin facility before they would start looking elsewhere for secondary processing, but there are a number of smaller things happening.

I had the privilege of having lunch out to P. Janes and Sons in Hant's Harbour last fall, and Ed served up samples of the products that he is putting out, and I was absolutely flabbergasted. I did not realize that there were so many products being put out by that relatively small local firm, and I mean good products as well. So there is a lot of that going on in the Province, and I expect as time goes on, as it becomes harder maybe to make it on the shipping of raw fish by virtue of a reduction in quotas, as a means to survive, I think a lot of our companies will have to seek out ways of getting more involved in secondary processing underutilized fish as a means of surviving.

MR. MATTHEWS: Is it realistic in your opinion, or that of your officials, that Burin will reach ninety-plus per cent production of secondary processed fish in the form that they are doing it, as you referred to it, the microwave -

MR. CARTER: Yes, within a certain time frame I can see Burin at some point in time becoming fully utilized, and again the U.S. tariffs will have a major role to play in that because we saw products being served us in Danvers, Massachusetts that were done in the Massachusetts plant. You know there is no reason at all why they could not be done in the Burin plant. The only reason, of course, is that six or eight per cent tariff, but from a technical point of view they are doing nothing in Danvers that they cannot do in Burin.

MR. MATTHEWS: In your presentation - I am sorry, are you finished?

MR. CARTER: Burin is as technologically advanced if not more so than the plant in Danvers.

MR. MATTHEWS: In the presentation you made, did I hear you correctly when you said that there were, I think, landings of 534,000 tons? Is that correct? I tried to follow your figures as you went through your presentation - perhaps it was between 1988-90 that you made reference to 534,000 tons?

MR. CARTER: Yes the landed value in 1988 was 533,729 tons. In 1990 it was 474,659 tons.

MR. MATTHEWS: I am wondering, would you be able to give us a rough breakdown by species of those landings?

MR. CARTER: Yes. For example, in 1988 we had 296,340 tons of cod fish. In 1990 we had 236,350 tons. The total pelagics for those years, 1988, 117,520 tons, and in 1990 there were 107,643 tons. Shellfish: the total landings in shell fish for those two years, 1988 we had roughly 33,000 tons and in 1990 we had 10,000 tons more, 43,000 tons. Most of the big reduction, of course, was in cod.

MR. MATTHEWS: Yes. What was the difference in the pelagics in 1988 and 1990?

MR. CARTER: Pelagics were 117,520 in 1988 and roughly 10,000 tons less in 1990, 107,520 tons.

MR. MATTHEWS: Why would that be? I mean it would seem that with the reduction in the groundfish allocation and landings and so on that you would expect an increase. Now the shellfish has gone up by some 10,000, but in the pelagics, what would be the explanation for that being 10,000 tons less?

MR. CARTER: Less caplin. Most of that is accounted for by caplin landings. There were less caplin landings in 1990 than in 1988.

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: There is a 70,000 metric ton drop in the offshore landings as well and a 10,000 ton increase in the inshore landings in those periods.

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: It is interesting to note by the way gentlemen that in 1990 we had one of the best cod trap fisheries on the northeast coast in many years. It was a huge success.

MR. MATTHEWS: In 1990.

MR. CARTER: 1990, yes, last year. We had a glut situation for example in St. John's and Flat Rock and fish were caught in 1990 in bays where there has been no fish caught for years, parts of Trinity Bay.

MR. MATTHEWS: Well last year if I recall what you said in your presentation as well it was 186,000 tons inshore caught. Was that right? You say there was an increase of 10,000 tons. You made an reference to 175,000, gone up to 186,000.

MR. CARTER: As you know there were some drastic reductions on landings on the west coast of the Province and of course in Labrador last year.

MR. MATTHEWS: But overall it seems -

MR. CARTER: It compensated - yes.

MR. MATTHEWS: - overall we came, what? - closest to catching the inshore allowance than we have for years.

MR. CARTER: We took the full inshore allowance, yes.

MR. MATTHEWS: Yes. So it is kind of hard to tie it into what my colleague from Green Bay was saying about his situation and the inshore versus offshore and the concerns. That kind of makes you wonder out loud that for the first year in a number of years they caught, I think it was 185,000 tons or 186,000 tons. When you talk about scientific evidence and data that you referred to, and there may be some adjustment with a total allowable catch dependent upon additional scientific evidence and so on, you know that sort of - it is positive. Why would you think that last year that much would be caught? What would be the explanation for that? Looking at the stocks being on a decline, if there is more offshore than you would think there would be less coming inshore which is the usual argument that is put forward. Why would that amount be up that high?

MR. CARTER: I do not know. It appears that last year there was a very healthy migration of fish from the offshore to the inshore. I guess that is not much of an answer I know but not being a scientist I cannot come up with much better at the present time. That was the main reason I am told for the increase in the inshore landings last year. You might remember in the summer of 1989 we had a glut situation in Labrador. I recall visiting Black Tickle, in July month I guess, the Premier and I went down there and there were fish going everywhere. Vessels lined up waiting to unload. Last year the fishery in Black Tickle was a dismal failure. So it is a job to predict where it is going to happen. The offshore people did not catch their quota for example in 2J.

MR. MATTHEWS: Too small? Was that the reason for that?

AN HON. MEMBER: Couldn't find them.

MR. MATTHEWS: We are talking about the different stocks around us and so on, the southwest part -

MR. CARTER: Pardon?

MR. MATTHEWS: In discussion about the state of the cod stocks and so on as referenced by the Leader of the Opposition - whether it was last week or a couple of weeks ago about that - the stock that seems to be in the greatest difficulty is the gulf fishery, or the north and southwest coast fishery. It seems - and you met with Mr. Crosbie yesterday, as we did yesterday morning, and we had a chance to discuss that situation with him and it would seem there are going to have to be some very serious drastic decisions made pertaining to that particular fishery. Have you given any particular advice to the Federal Government on that? There are those that advocate a complete shutdown. I suppose again as was said in the House last week or two weeks ago, we are the masters of our own destiny when it comes to that fishery, we cannot blame that on Spain and Portugal as we can with the Nose and Tail of the Grand Banks as referenced by the Member for Fortune - Hermitage. Whatever damage is done there we, we being Newfoundlanders and Labradorians or Canadians or the Federal or the Provincial Government, have caused the damage. I was just wondering: have you made any specific recommendations to the Federal Minister or the Federal Government pertaining to that gulf stock, what action should be taken there? Should it be a complete shutdown, or what?

MR. CARTER: There has not been a meeting, I suppose, between the Federal Minister and ourselves in the last two years where problems in the gulf area have not come up for considerable discussions. I agree with you there are some very serious problems. For example, the fixed gear effort dropped from 50,000 metric tonnes down to a 5,000 metric tonne harvest. I think it is obvious that in the Gulf area there is going to have to be a reduction in the TAC if we are going to give the stocks a chance to rebuild. It will require almost, I think, 100 per cent observer coverage, because we have heard stories of liners being used and other things being done that certainly have a detrimental affect on the stocks and their chances of rebuilding, and a complete review of the whole fishery over there. I suppose, eventually by attrition or otherwise a reduction in effort. It might well be that if there is going to be a reduction in effort there will have to be a suitable compensation package put together to offset earnings lost as a result of that reduction. I am talking here, I guess, mainly about the otter trawl fleet, the fixed gear fishermen are not causing the problem, it is the larger boats that come down the coast and fish. I think there are about 108 altogether. It is difficult to tell a man who has $1 million invested in a boat that he is not going to be allowed to fish there, but there is going to have to be some kind of a compensation package, I guess. I suppose attrition will take care of some of it. Certainly, we cannot allow that fishery to expand while the stocks are like they are.

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

Mr. Dumaresque.

MR. DUMARESQUE: My thanks to the Committee for allowing me leave to ask a couple of questions.

Mr. Minister, I guess as we all know the resource problem in the northern cod is a critical one. In the quest for new fish, I wonder has the Province been able to establish its position on the Canada - France boundary dispute? That particular dispute is due to be arbitrated at the end of the year or early in 1992. As everyone knows there are some 31,000 tonnes of fish on that table for redistribution, and more particularly from my point of view, there are some 11,000 tons of cod and turbot in 2GH and 2J+3KL. In our quest to get, in our case 7,000 tonnes of fish, whether it be cod or turbot, I wonder is the Province going to be stating a position on how that fish is to be reallocated after the arbitration decision is made. Indeed, it is my interpretation that the result of that arbitration will be only a boundary settlement not a fish allocation segment to the decision, is that correct?

MR. CARTER: Given the fact, Danny, that that matter is now subject to arbitration, I am not sure that I should, quite frankly, have too much to say about it. I guess it is almost like having something before the courts, it is not wise to comment on it. We all recognize the problem of course and the need to do something about it, but I would not care to comment too widely on it for that reason, that it is now a subject of arbitration.

MR. DUMARESQUE: Okay.

On the basic principles then, you alluded to the fact in your opening statement that by the end of the decade you expect to have some 70,000 tonnes of new fish available. Has the Province established the principles upon which this new fish should be allocated?

MR. CARTER: Well, I guess the principles that are well established and we have been espousing almost on a regular basis, those of adjacency, community dependency, economic efficiency and quality, of course.

MR. DUMARESQUE: Okay, a final question, you also alluded to it earlier. Is the total allowable catch of northern cod caught each year? If not, has there been any options looked at, as it is under the development plan of the Groundfish Management Plan, where they have review dates put in place so that if in fact the TAC is not caught it can be reallocated? So, the first question is: Is the TAC of northern cod caught each year? If not, what happens to that fish, does it just die on the paper?

MR. CARTER: Not a quota, but the inshore allowance this year as you know is 190,000 tonnes. In 1990 the entire inshore allowance was taken but other years it was not taken, but we are certainly not going to suggest that any of that inshore allowance left in the water be transferred to the offshore because the fact that it is not taken speaks for itself. It means that the fish is just not there to be had. It would not make any sense as far as we are concerned to encourage that any left in the water be reallocated to the offshore sector.

MR. DUMARESQUE: I was thinking more particularly of the reverse, the offshore, if these allocations are not caught does anything happen to them? - because under the development plan of the under-utilized species, they have review dates in place that if the allocations that are made to the different companies are not caught by a certain time then they can be reallocated to the next in line sort of thing.

MR. CARTER: Well, the offshore allocation is always taken by the way, the offshore quota.

MR. DUMARESQUE: That was my question. Last year I think the 2J quota for some of the offshore companies, I am not sure if it was taken, but that was basically what I was wondering about.

One final question on the salmon management plan. I know last year for the first time it was brought in under a quota system for most parts of the Province and in Labrador except for the northern area and it certainly did not meet with much approval, in Labrador in particular, and now we are on the brink of seeing the new plan again this year. I wonder has the Province made any representations to the Federal Government on that plan?

MR. CARTER: Yes. In fact no later than yesterday we had a discussion with the Minister on the salmon management plan. Again I cannot speak for the Minister - that is his prerogative, he has to make a statement on that - but it seems to me that we are not going to have time this year to make any drastic changes in the salmon management plan, certainly not along the lines that is being talked about now in some circles. Namely that there be a reduction in the commercial salmon fishery in most areas, or indeed the abolition almost of the commercial fishery probably in all but in Labrador.

I think the Minister agrees that the time is just not available now to make any such changes, so I expect what he will be doing is maintaining the status quo this year, allowing things to continue this year as in previous years, with a view to taking what time we have between now and next year to work out with the various groups some kind of a management plan. The position we have taken on the salmon is that if a moratorium on the commercial harvest is deemed to be necessary then there must be an appropriate compensation package put together for the fishermen affected. Every i must be dotted before there is anything agreed to because you are dealing with lives and the livelihood of a lot of people. Salmon makes a big contribution to the earned income of a lot of Newfoundland fishermen, more in your area and in White Bay than probably in some other areas, but certainly it is not something that can be taken lightly. We would want to be sure that all of the groups - the union and the fishermen and everybody else - had an opportunity to have some input into any such plan. Only then would we support the abolition of the commercial fishery, only after we are satisfied that everybody else is satisfied.

MR. DUMARESQUE: Thank you.

MR. CARTER: Stocks have to be rebuilt, there is no doubt about that, and I guess it will take some drastic measures in order for us to do that.

MR. CHAIRMAN: Thank you, Mr. Minister, thank you Mr. Dumaresque. I think now we will take a short break and we will come back at five minutes after the hour, and we will pick it up and go on from there.

Recess

MR. CHAIRMAN: Order, please!

I would like to welcome the Committee back in session. Before going to our Vice-Chair for his questions I would like to ask a Member of the Committee if they would move the minutes of the Resource Estimates Committee of May 2 1991, which was the Department of Development.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. Foreign overfishing has been mentioned here again this morning. It is always a contentious issue, Mr. Minister. You mentioned the fact that you have an advisory committee set up to advise the Federal Government on what measures they should take with regard to foreign overfishing. There is always criticism of foreign overfishing and how it should be handled. How would you as a Minister and your Administration - what are some of the conditions or solutions that you recommend for dealing with this problem?

MR. CARTER: I want to make a correction in the preamble to your question, Mr. Chairman, in that the advisory council to which I referred earlier is a council that is put in place to advise the Province, the Provincial Minister of Fisheries. That council does not have any direct connection with the Federal Department of Fisheries and Oceans. They meet on a regular basis, and there are matters referred to that council. I should point out, by the way, that members of that council represent pretty well all the sectors of the fishing community. We have men like Vic Young, for example, Bruce Chapman, Gus Etchegary, and we have several really successful fishermen, inshore fishermen. We have trawlermen on it, Richard Cashin is a member of that council, and people from the university and from the fisheries college. I find it to be a very worthwhile endeavour to have the cream of the fishing industry in Newfoundland at our disposal. We referred the matter of overfishing to them a couple of months ago and asked the council to give us some consideration. They struck a sub-committee of their group and they met with us and the Premier on a couple of occasions and discussed the whole problem. But the question you are asking, I presume, is what would we do about it

MR. WOODFORD: Yes, what is your position with regards to foreign overfishing?

MR. CARTER: I guess the easy way out would be to say that we would unilaterally declare jurisdiction over the entire slopes and edge of the continental shelf. That would be the easy way to address that question, but we are told from everybody who is in the know that that would not work. It would be difficult to enforce that kind of an action. We have been saying all along that probably the most effective - short of doing that, and there are reasons why that cannot be done, obviously. I am not alone here so I cannot go into too many details, but the best legal advice we get is to the effect that it would be difficult to get the kind of consensus that is necessary amongst the coastal states of the world to make that kind of an action stick.

What we have been saying all along is that the Prime Minister himself should become more involved in the process. We recognize that the Federal Government has done a lot. They have had delegations go to Europe and they have had public relations campaigns, and a year and a half ago or so they appointed a special ambassador, Mr. Allan Beasley, who is now retired, by the way, and they have had all kinds of special initiatives undertaken by the Federal Government including our Minister, Mr. Crosbie, but none of it appears to have worked because the problem is getting worse and not better. We have been saying that maybe the time has come for the Prime Minister himself to get more involved and to intercede with his counterparts around the world and try to get some sanity out there. It seems to us that if the Prime Minister were to do that and to talk to the heads of state in the other countries and the U.S., of course, and Great Britain and West Germany and others, that that might have the desired result.

Focusing attention on the problem, the advisory council, I cannot this morning go into all the details of their recommendations, I do not have them here in front of me, but they had a sizeable list of recommendations as to what, in their view should be done to focus attention on the problem first of all, and then hopefully get the desired results. There is no easy solution to it, but certainly we are not satisfied with what has happened to date.

MR. WOODFORD: So you are saying there is no easy solution to it and everybody seems to agree with that, but at the same time you are saying that the Prime Minister should get involved. Is there any other consensus by other countries involved? Am I missing something in saying that there is almost an impossibility to come to some unilateral decision?

MR. CARTER: I think the tactic that has been used by the Federal Government is to work through the diplomatic channel that is open to us and to try to bring about the resolution to the problem that way. But there is a United Nations meeting, and it has been called for that purpose, a conference sometime this summer where that problem will be addressed, and maybe that is where Canada will have an opportunity to make a strong plea to the member nations to take some action to head off what is happening out there. But Canada so far, has chosen to go the diplomatic way, and like I said, they did appoint a special ambassador two years ago, but all that seems to have been for nothing.

Now there have been talks of economic sanctions, for example, and there are upsides and downsides to going that route as well because where does that end? If you start imposing sanctions on them it will be tit for tat, and there are no guarantees that that will work. But it certainly appears that all the action that has been taken to date, like the closing of the port et cetera, has not worked either, so there are going to have to be some new initiatives taken, and I think the Prime Minister is going to have to step in there and deal with his counterparts and try to get something done.

MR. WOODFORD: Last year P. Janes and Sons made an offer to try to get that (inaudible) machine that was on Bell Island. I forget the name of the company there on Bell Island that had it at that time under lease from your department.

AN HON. MEMBER: Pinnacle Seafoods.

MR. WOODFORD: Yes, Pinnacle Seafoods. That eventually went to a company in Port de Grave. They have, if I am not mistaken, a quota of approximately 600 tons of herring, and yet P. Janes and Sons, with the quota for the White Bay area something like 5,000 tons with 4,700 tons left in the water. Why was the decision made at that time for that to go to Port de Grave for the filleting of herring, or was it put there for something else?

MR. CARTER: Yes, that is the machine that was brought in in conjunction with the operator of the small plant on Bell Island. He had the machine over there for I guess a year and it did not work out. We repossessed the machine, we took possession of it. Then we called proposals for it and I am told that the proposals were not that good, were they? We did not get a good proposal anyway to buy the machine. The machine I think is worth over $200,000 -

MR. WOODFORD: Two hundred and twenty-five thousand dollars.

MR. CARTER: Two hundred and twenty-five thousand dollars. The offers that we got were ridiculously low and we could not justify selling it even to the highest bidder. Then we decided to lease it out on a short term basis to Alec Moore's company in Port de Grave. That lease has expired. I think it ran up to December, Harold, wasn't it, last December? It was a very short term. What is the status of that machine now? Is that -?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. We are now in the process of calling for proposals again, working with the company. There has been nothing done on it yet. There has been no response yet. Has it been advertised?

AN HON. MEMBER: Yes.

MR. CARTER: Yes, we have advertised it and there will be a decision soon I guess as to what we will do with it. I visited the plant by the way you are talking about in Jackson's Arm last year.

I was hopeful at the time, and I said as much to the operator there, that something could be worked out but the offers that we got for the plant were so low that we could not possibly justify selling it at those prices.

MR. WOODFORD: I can understand you not justifying a sale but my question was: how could you justify putting it in an area where there was only a quota of 600 tons versus a quota for 5,000, and to deal specifically with herring? And the second part of my question is: that machine has been used for filleting of small cod, undersized cod. Is there any truth to that?

MR. CARTER: Our initial objective is to sell the machine. We do not want to be the owners of fish filleting machines, we want to sell it, get a decent price for it and be done with it. We did not want to enter into any long term lease with anybody. In fact the shorter the lease the better because while the thing was under lease then that would preclude us from selling it. Therein was the reason for entering into a short lease with the company in Port de Grave. It was only a short lease, a three month lease I think. That lease has expired and now it is being offered again.

MR. WOODFORD: Is it up for proposals again now, for sale?

MR. CARTER: Yes. You should tell your people in Jackson's Arm as we will if we -

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, alright, I have to make a correction. The lease expired with Moore Fish at the end of December. Then we called for proposals again to sell the machine. The proposals that came in were not satisfactory so we extended the lease with the fish company in Port de Grave for an additional three months. So I presume that will expire on the last of March or thereabouts. The end of August. Alright. So the lease will expire at the end of August. Then we will have to start the process again of trying to find a buyer for it, or maybe by that time we will have decided to go for a longer term lease. Certainly we wanted to sell the machine first.

MR. WOODFORD: I am wondering if at that time, Mr. Minister, you could take into consideration the problems encountered in White Bay now. The crab plant closed there last year and now we have Sop's Arm fishery gone in Sop's Arm, and it does not look like there are going to be any buyers there. FBDB put it up on auction Thursday; nobody went even a cent over 244.5, their opening bid, and it looks like the whole sector down there now is pretty well gone except for the other plant in Jackson's Arm, so I would like for you and your officials to take that into consideration. I cannot speak for P. Janes and Son's, but if they make a proposal again, look at the whole White Bay sector because it is very vital.

MR. CARTER: I can only tell you that there is a lot of interest shown in that machine. A lot of companies expressed an interest in it, but none of them were willing to pay even close to the price that we would have to get to justify its sale. We will take that into consideration when the time comes.

MR. WOODFORD: I do not know if it is too early or not, but what about the prices for caplin this year? Is there anything new established in that particular -

MR. CARTER: The negotiations, of course, for the price of caplin have not started yet, that is usually an eleventh hour type effort as you know. So we are not sure. I cannot say with any certainty what the price will be, but we are lead to believe that the price this year will be maybe close to what it was last year. That is the fairest statement, I guess. We have no reason to believe that it will be much less than last year. The quantity might be down a few tons. Last year I believe it was thirty-something thousand. This year it may be down to 25,000, we are not sure yet. These negotiations will be starting soon. I guess they are ongoing now. In Japan now, as a matter of fact, there is a delegation of people from the private sector starting the process, and you know, it usually ends up one minute before midnight before there is an agreement.

MR. WOODFORD: Yes, that is the usual process. I heard that there was a delegation in Japan looking into that right now, and I just wondered if you had anything new on it and was this a turn for the better trying to get something in place before the eleventh hour?

MR. CARTER: One of our Assistant Deputy Ministers is in Japan with the delegation and he is coming back on Friday. He will be giving us a thorough briefing then on the market outlook and the situation, so at that time maybe I will be able to have more information on it.

MR. WOODFORD: You mentioned the fact that the quantity will be down this year to possibly 25,000 tons.

MR. CARTER: That is not a certainty; we think it might. On the basis of the information we have, it seems to indicate that maybe the volume will be slightly less than last year.

MR. WOODFORD: What about the Norwegians coming back into it this year.

MR. CARTER: Yes.

MR. WOODFORD: Will it have any affect on -

MR. CARTER: They are getting into it, but their caplin, I understand, is smaller isn't it?

AN HON. MEMBER: Yes.

MR. CARTER: It is not as attractive for the Japanese market. They do not have the quantities that the Japanese are looking for. They will be a factor, no doubt, and we cannot ignore them. But it appears that Canadian caplin are the size the Japanese like, and we have dealt with them successfully now for the past number of years, but the Norwegian caplin cannot be ignored either. We just cannot sit back and rest on our oars.

MR. WOODFORD: You mentioned earlier that all the processing of the 30,000 tons last year was done in Japan.

MR. CARTER: Thirty in Japan, and five in Taiwan.

MR. WOODFORD: And five in Taiwan. The fact that there is a small Newfoundland company now looking at the same thing and possibly doing the same thing as the Japanese do. Why is it, I wonder, we are so labour intensive? You know, why is it taking so long for someone in this Province to do it, or do the Japanese want that? Do they want to process here? That is the question.

MR. CARTER: Well, there does not appear to be too many obstacles. Like I said earlier, they do not need the labour in Japan. There are probably arrangements in Japan between the importers and the super markets and others that might very well be affected if, in fact, the product goes in in a finished state. I guess that would probably cut out some of the middle people there, and I guess that has to be a consideration from where they sit. But you ask why has it not been done to date?

MR. WOODFORD: Yes.

MR. CARTER: I do not know. I guess it is part of the mind set that we have allowed ourselves to get into, the comfortable pew syndrome where quick money, a guy now can - I had a processor in my office last week and he said, 'look, we will get so many tons of caplin, we will get them in and get them out and we will make ourselves a good dollar, but why in the hell should we worry about final processing, the cost and the risk that will involve and everything else? I expect that is probably a reason. Of course in terms of the finished product there will be a tariff barrier as well. There are no tariffs on the raw material going in. But when the finished product goes in that will trigger a tariff. Now I do not know how much it is. Does anybody here know if it is prohibitive or -?

MR. WOODFORD: That is what I was wondering. There must be some reason for it and maybe that is the reason.

MR. CARTER: Fifteen to twenty per cent. But I have had discussions with some of the processors who have told me that will not be a big impediment, they can get around that. They will have to pay the tariff but they can probably pay it and still make a dollar.

MR. WOODFORD: Because I mean that is (Inaudible).

MR. CARTER: I do not want to convey the impression that all this is going to happen tomorrow, that tomorrow Newfoundland will become the caplin production capital of the world. That is not going to happen overnight. But I am saying there is potential there and we are now exploring that potential and talking to the various people in the industry, encouraging them to get involved in it. I think given time that we can start doing it that way. If we do then it will be a Klondike for Newfoundland because it is probably the most labour intensive industry that Newfoundland will see.

MR. CHAIRMAN: Thank you, Mr. Woodford.

MR. CARTER: I was shown a video tape two weeks ago made in a Japanese factory where this is being done and there is nothing at all being done there that we cannot do over here, nothing at all. It is a pretty simple operation.

MR. HEWLETT: Excuse me for the interruption. Do they take the eggs out of the caplin?

MR. CARTER: No, no.

MR. HEWLETT: They don't.

MR. CARTER: But what I did see, Alvin was a factory, you could see nothing but people dressed in white and hairnets on. Everybody going to it, piles of caplin, each caplin individually taken and skiverred on a rack. It is highly labour intensive. It is not backbreaking labour either, it is something that the ladies can do as well, you know.

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

Just a reminder that now that we are into our - well I guess we consider that final hour, the Government Members in this particular Committee have by leave allowed the Opposition Members, instead of going the ten minutes, to try to ensure that we can clue up for the day, pretty well a twenty minute run or a little better than ten minutes if required so that we can get the dialogue back and forth. I just want to point out that it is by leave and if one of the Government Members decided they want to pick up and carry on then as long as each of the participants realize that that is the format that we are under.

I would also like to point out at this time before we go on to the next individual that we are really here to discuss the estimates. Although we always allow pretty freewheeling discussion I just want to remind all of us that somewhere between now and 12:30 p.m. we would like to deal with the actual estimates themselves and the numbers from 1.1.01 right on through. So I just remind all of us of that, that we may want to get to that this morning as well.

By leave we will go to Mr. Matthews. The only reason I say "by leave" of course, is none of the other Members wish to speak at this point in time and you are more than welcome to participate, and so by leave we will go back to Mr. Matthews.

MR. MATTHEWS: Thank you very much, Mr. Chairman. I appreciate the leave given by Members of the Committee. Just a few things flowing out of the Minister's presentation that I did not get a chance to cover in my initial questioning and remarks. I believe you mentioned that there were twelve plants divested - will you be able to inform us where these plants are located? How much Government received from the sale of those plants? And the monies received for the sale of those plants, would that money be shown anywhere in the estimates?

MR. CARTER: Do you have a list there, Harold? Okay. There is a plant in Trout River that was sold I presume to J.W. Hiscock and Sons. Do you want the sale price and all that, Bill?

MR. MATTHEWS: Sure, yes, please.

MR. CARTER: The selling price for that plant was $50,400. Rocky Harbour plant, sold to Harbour Seafoods Limited, in October of 19(Inaudible) for $18,500. The plant in Witless Bay sold to Shamut Fisheries Limited - and that is a plant by the way that they bought; you know the plant I am sure - they bought it for the grand sum of one dollar. That is all it is worth, because they took it down right from the footings and rebuilt the plant. So it had no value.

Cook's Harbour, sold to Fisheries Products International in 1990 for $68,000. The St. Bride's plant was sold to Supreme Seafoods Limited, January of this year, for $28,000. Sandy Cove sold to White's Fisheries Limited -

AN HON. MEMBER: Who? White?

MR. CARTER: White's Fisheries, $54,500. That was sold by the receiver, I think. Wasn't there a receiver appointed on that one?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Musgrave Harbour, Beothuck Fisheries bought that for $100,000 in January 1991. We just concluded the sale of the barge in Smokey, Labrador 1, to Canship Limited for $33,000. We have just sold the small feeder plant in Bridgeport to Conpac Seafood Limited for $50,000. We have sold the plants in Black Tickle and Williams Harbour to H.B. Dawe Limited as a package deal for $151,000. That was a tender call. Woody Point, there is a plant there we sold to 3 T's Company, whoever they are, in April of 1991 for $40,000.

MR. MATTHEWS: How much?

MR. CARTER: Forty thousand dollars. That is it. That is part of our programme of divesting ourselves of these properties.

MR. MATTHEWS: Twillingate, is that sold now?

MR. CARTER: That was last year.

MR. MATTHEWS: Was that sold last year?

MR. CARTER: No, we did not sell it, the Newfoundland and Labrador Development Corporation sold that to Conpac Seafoods. That plant did not belong to the Province.

MR. MATTHEWS: Right. Would you know offhand what it was sold for, Mr. Minister?

MR. CARTER: Four hundred thousand seems to ring a bell but do not hold me to that. I can find out and let you know. But again, tenders were called, that plant was advertised for the required time and the Conpac people were the only - about $450,000.

MR. MATTHEWS: In your recommendation this year to the Atlantic Groundfish - AGAC, I suppose we would call it - I believe you went and recommended a total allowable catch of I think it was - if my memory serves me correctly - between 170,000 and 185,000? I believe, if my memory serves me correctly, that you recommended a total allowable -

MR. CARTER: One hundred and seventy to 185,000, I think.

MR. MATTHEWS: As well, at the same time - and of course we know what the TAC was set at and that it will decrease over the next three years - the Province was calling for a reinstatement of the Scandinavian long-liner allocation and the resource short-plant programme. At the time, and shortly thereafter, I wondered both privately and publicly, based upon your recommendation for the total allowable catch, where do you foresee being able to access fish to reinstate the Scandinavian long-liner allocation and the resource short-plant programme when in essence you are recommending a total allowable catch lower than what we saw the Federal Government set.

MR. CARTER: That is a good question.

There are a number of non-Newfoundland user groups given access to allocations, that in our view have no entitlement to them. We saw a case the other day where a company known as the Osprey Company chartered the Polar Storm, because their vessel sank, and went out and harvested 610 tonnes of groundfish, brought it into Harbour Grace with a view to repackaging it and then transhipping it to a foreign country for processing. We interceded and let it be know that we were not prepared to allow them to issue a permit for the fish to leave the Province. Shortly thereafter they came back and told us that being so then they would undertake to have the fish processed in a Canadian plant, in fact they named the plant, I think it was some place up in New Brunswick, a co-op plant. Under the reciprocal arrangement that we have with the other provinces we could not legitimately, I guess, withhold a permit to allow them to do that because it is often the case where fish landed in some other Canadian province is trucked or brought into this Province for processing, so that is sort of a reciprocal arrangement that we have.

Anyway, we found out after the fact that that company lied to us. They took the fish in trucks to North Sydney somewhere, Mulgrave, and immediately put it aboard a ship and took it to Greenland for processing. I wrote the Minister in Ottawa and objected to what had happened and suggested maybe Canada should follow suit with Newfoundland and bring in laws that would prohibit the shipment of raw fish out of Canada, such a law as we have in Newfoundland.

Now, the Minister, Mr. Valcourt, came back with all kinds of excuses and he tried to rationalize what happened. But there are a number of companies that have access to fish that in our view have no legitimate right to it. In fact last year there were something like 40 million pounds of northern cod taken out of the waters adjacent to our shores and taken back to Nova Scotia. If you look through the management plan of the Federal Government it is not difficult to identify several other companies that have, in some cases rather small allocations granted, but allocations of fish. Our position is that surely the resource short-plant programme and the Scandinavian long-liner programme have a greater right to that fish than some of these companies. That is the source from which we would have seen the fish come to accommodate the two programmes that were abolished.

Using the principles of adjacency, which Canada at least gives lip service to, and community dependency, there is every reason why we should have had that fish as opposed to these non-Newfoundland companies who, at least in our view, have no right to it.

We were not looking for large tonnages. In fact, very modest tonnages would have kept both programmes alive, but now both of them are gone.

MR. MATTHEWS: In your presentation as well, Mr. Minister, you made reference to Marine Service Centres. Looking through the Estimates, I see there is a decrease there. Last year in the revised budget there was -

MR. CHAIRMAN: Mr. Matthews, I wonder, out of courtesy for other people who are trying to keep up with you, could you identify the page and the item number so that it would be easier for people to follow.

MR. MATTHEWS: Sure, Mr. Chairman. Page 112, sub-head 2.2.03 under Marine Service Centres. There was $833,000 voted there last year and $519,000 this year. Is that because some of the centres have been completed or what would the reason be for that because I believe in your presentation you said there were twenty-five Marine Service Centres existing in the Province at present?

MR. CARTER: No, these were major improvements undertaken to a number of service centres the Province funded on its own, and that accounts for that. It is a one shot deal; a one shot arrangement.

MR. MATTHEWS: As well we see, looking at the Fisheries Loan Board, I took notes which goes back to the last page in the department there, page 120. Looking at the Fisheries Loan Board, I believe overall you are down $5 million - yes, it is $10,759,000 revised last year to $7,783,700 this year. My own thoughts on it were that in this time of difficulty and so on, that the budget for the Department of Fisheries and certain sub-heads would have been increased. In analyzing the budget and the estimates you see that there is about $3 million left there, but in overall departmental budget there is $5 million, but $3 million less to the loan board. How can you account for that? Could some of your officials explain why that is? Is it that people are getting out, that there are less fishermen looking for loans or what would be the reason?

MR. CARTER: Well certainly there is a smaller demand, given the state of the industry, especially on the west coast. It is ludicrous to consider increasing, for example, the fleet on the west coast of the Province where you have already over capacity, and so the demand on the board is down. Interest rates have dropped, as you know, in the past few months, thereby reducing the amount of subsidy that we will need to pay in cases where we are paying that subsidy on interest. For example, on direct bank loans the Province subsidizes the interest as three percentage points below the prime rate, and in the case of direct loans there would be a smaller interest payment as well because of the reduction in interest rates.

The main factor is the reduction in the demand of larger vessels. I guess in these circumstances that is the way it should be. It does not make sense now with the stocks declining to encourage fishermen to get too far in debt building vessels for which there is no fish. Plus the fact there has been a substantial influx of new boats into the fishery during the past three years.

MR. MATTHEWS: Is the loan board able to provide assistance to all fishermen, I mean legitimate, good applicants, not fishermen who are in arrears or have problems. With that amount of funding this year -

MR. CARTER: A couple of things have happened. We have changed our policy slightly in terms of the direct bank loan. Previously loans in excess of $50,000 were directed to the banks, loans that were subsequently guaranteed by the Province of course, that meant that the Province did not have to have that money on hand to fund that loan.

We are proposing that there be a slight change in that approach, a change that might very well - in fact, we know we will see a reduction in the amount of money that we will need to fund the number of applications that come in; so there are a number of little things that we are doing over the next few months to accommodate what we had to do, but I should tell you that 80 per cent of the people who apply for loans are approved and that is not a bad -

MR. MATTHEWS: People who apply?

MR. CARTER: 80 per cent.

MR. MATTHEWS: So 15 per cent fall into the bad risk category or -

MR. CARTER: I do not know what the ratio is. Maybe Brian would know that, but 80 per cent are approved while the others are poor risk or just do not measure up.

MR. MATTHEWS: But anyone who is legitimate and a good risk can get funded, is that what you are saying?

MR. CARTER: Yes, and will continue to get funded.

MR. MATTHEWS: Oh yes, but I just wondered with the reduction in the amount from last year if we were going to see people with good applications that would not be funded.

You mentioned the change, Mr. Minister, has that change been made public or is that something -

MR. CARTER: No, not yet, it is not final; it has not finally gone through the system.

MR. MATTHEWS: When do you expect that to happen?

MR. CARTER: Oh, I would think, soon. I would expect within days or a week or so anyway. I might note too, by the way, that in the reduction in both our capital and current account expenditures this year, a major part of that is accounted for by virtue of the fact that capital projects under the NIFTA agreement have now been completed and thereby -

We are in the fourth year of the agreement and that accounts for the very substantial reduction in our capital account-current account estimates.

MR. MATTHEWS: You mentioned as well in your presentation about the top-up money or grants, small grants or special assistance and a lot of that went for fishermen's committees around the Province; a lot of times to top up federal funding and so on. What has happened to that amount of funding, was there a decrease in that too as well, this year?

I know in my own case, and I am sure other Members find that, that bit of top-up money which committees can access from the Province sometimes, makes a difference in getting enough materials to be able to properly carry out funding access to the Federal Government and so on, but what is the difference in that particular - I understand that there is a decrease in that amount of money as well?

MR. CARTER: We are budgeting this year the same amount we budgeted for last year.

MR. MATTHEWS: How much is it?

MR. CARTER: $200,000.

MR. MATTHEWS: Community projects, is that the one?

MR. CARTER: Community projects, yes. Last year we budgeted for $200,000, this year we are budgeting for $200,000.

MR. MATTHEWS: Yes, but it was revised upwards last year because you spent $440,000?

MR. CARTER: We did that; we had to provide $240,000 to the Port aux Basques plant to get it in operation, working with the community futures people I think, and the Town of Port aux Basques and others; so we provided some infrastructure for them, $240,000, to be exact, but again, that was a one shot deal, but to answer your question, the budget this year for that small programme, is the same as it was last year and I suppose the previous years.

MR. MATTHEWS: Just one final question, Mr. Chairman. Look at the same page and your construction of fishing facilities where there is again a decrease of $3.3 million. What would be the reason for that? Subhead 2.2.09 at the bottom. The total construction of fishing facilities is down $3 million overall.

MR. CARTER: That is the ERDA Federal-Provincial cost shared agreement. Marine service centres would account for that reduction.

MR. MATTHEWS: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Matthews and thank you Mr. Minister.

Mr. Noel.

MR. NOEL: It seems to me there is a lot more activity down in St. John's harbour with the off-loading of fish these days. You see these people who have these lift operations and that sort of thing. I wonder what the Department thinks about that and if there is anything that can be done to improve how things are done there, or if it is regarded as operating properly - just your views generally?

MR. CARTER: You will be interested in knowing, Mr. Chairman, that the Member now represents in part, I suppose, what has become the biggest inshore fishing port probably in Canada, certainly in Newfoundland.

MR. NOEL: I wish I did represent it.

MR. CARTER: Well, you have a part of it I presume.

The Gut would be your -

MR. NOEL: That is St. John's East.

MR. CARTER: There is a lot of activity down there and it is sort of encouraging to see it. There are a lot of plans being made, mostly by the private sector working with the public sector in providing off-loading. For example, no later than last week I met with a gentleman who is very much involved in the off-loading activity in the Harbour. He has some thoughts about providing boxing, for example, the boxing of fish in plastic boxes. I cannot give you too many details on that yet because it is a private initiative and it is far from concluded, but there is a lot of good stuff happening. It is becoming a major tourist attraction.

MR. NOEL: It is very interesting, and when you go down there it is good to see all the activity.

MR. CARTER: Absolutely.

MR. NOEL: Sometimes it seem to get a bit crowded.

MR. CARTER: Then, of course, we have the boat basin on the other side of the harbour now. The Federal Government is putting a boat basin over there and I am told there is some increased activity on the Southside of the Harbour now. In fact the chap who came in to see me last week complained that there is not enough space on the Southside of the harbour to accommodate what they are trying to do and he is encouraging boats to land their fish on the other side. There are a lot of good things happening. There is a lot of emphasis being put on quality and a lot of emphasis is being put on the boxing of fish. For instance the Scandinavian type long liners that we have, have probably the best technology in Canada for boats of their size. In their case they use gill nets and the fish are boxed, iced and gutted and not touched by human hands after it goes into the boxes. It is taken directly to the plant and left in the box until it is ready to be put on the processing line. That is the coming thing now for off-loading fish, for handling it. Most big long liners now are designed with a view to accommodating this kind of boxing because it does require a certain configuration in the hole of the vessel to be able to maximize its capacity, so there are a lot of good things happening there.

MR. CHAIRMAN: Thank you. Mr. Minister, are we ready for the question?

MR. WINSOR: Mr. Chairman.

MR. CHAIRMAN: Mr. Winsor.

MR. WINSOR: With respect to marine service centres, has the Province ever commissioned a study to look at where they are needed? I am sure Mr. Murphy is quite familiar with the situation in Musgrave Harbour, perhaps one of the busiest fishing towns on the northeast coast. I realize that there is a bit of a problem in that the Federal Government has to put in place another finger pier so that it can accommodate a travel lift, but there is certainly a great concern in that community over the need for a travel lift there. Has there been any kind of a study done to look at where the need is greatest now for marine service centres?

MR. CARTER: Yes. We just completed now a very comprehensive study done by Coastal Consultants, I think they call themselves, and it is a good study. They looked at the harbour and areas to which you referred - Musgrave Harbour, I guess you are talking about.

Don't forget there are three major facilities in pretty close proximity to Musgrave Harbour. Namely, Wesleyville, Fogo and Triton. And Twillingate of course, Durrells. It would be difficult right now to justify putting in another centre. In fact this report recommends that we not build any more marine service centres at this point in time. Sort of consolidate and maybe improve the ones that we have, identify those that can be looked upon as a regional facility, and by putting in bigger lifts and that sort of thing. But I have talked to the people in Musgrave Harbour two or three times and I have told them that I do not see any opportunity in the foreseeable future that there will be a service centre out in Musgrave. But that is not to say that at some point in time down the road they will not get one. But certainly right now it would be difficult to justify. Given the fact too, by the way, that this programme is over and done with now, isn't it? In terms of the ERDA programme the funds have all been exhausted and -

MR. WINSOR: So if the Federal Government was to put in the next finger pier that is needed then they still would not be able to avail of a travel lift?

MR. CARTER: Not under this agreement, no. Now I do not know how big a hardship is imposed on the people in Musgrave Harbour -

MR. WINSOR: If you check the marine service centres that are in the area - the ones at Fogo and Wesleyville, which are the two nearest ones - then there is no way possible that they could accommodate the number of boats that are in Musgrave Harbour, and they revert to using the old-fashioned slipways and wait till high tides and a front-end loader type thing.

MR. CARTER: We are going to be expanding the service centre for example in Wesleyville, we are going to be spending $1 million on that. La Scie, that would not be a factor, I suppose, would it?

MR. WINSOR: That is too far away.

MR. CARTER: But the marine service centre in Durrell last year had a bigger lift installed.

MR. WINSOR: But I am talking about the actual space say, for winter storage. Aren't most of these existing places practically maximized to the fullest?

MR. CARTER: I guess to be frank with you, Mr. Member, is that from where we sit and on the basis of the report that we just received there are other places in the Province that are probably in a much greater need of such a facility than Musgrave Harbour. I say that with great respect. There are a lot of places that do not have access to these facilities as do the people of Musgrave Harbour. It would be difficult right now to commit ourselves to putting one there until the other needs are met.

MR. WINSOR: The second one is - someone has referred to caplin already. Last year the Province gave some consideration to imposing some regulations with respect to the trucking of caplin, distance, that type of thing. Are there any plans in place this year to restrict the amount of trucking involved in the caplin industry?

MR. CARTER: No, I do not think so. I am not aware of there being any. I know last year there was some talk about restricting them. There was some talk of restricting the distances that we would allow caplin to be trucked. But I think now with the equipment that they have - tanks and all that - it is not difficult to move caplin, and the quality does not seem to suffer. So, I guess, the short answer to your question is that we do not have any such plans at this point in time.

MR. WINSOR: I understand in Notre Dame Bay this year, Notre Dame Bay meaning from Cape Freels all the way down past Green Bay I think, there is some consideration to splitting the Bay into three zones for fixed gear. Has you Department had any input to it, made any recommendations in view of what had happened last year with the southern part of the Bay unable to fish for caplin until the northern section was open?

MR. CARTER: We are not aware of any final decision being taken on that yet. We know there have been requests from a number of places to do that, but we are not aware of there being any final decision yet being made on it.

MR. WINSOR: It is my understanding from talking to the federal people that next week on the 13th, whenever the 13th is, they are going to be meeting and they have pretty well split the Bay into three distinct zones for fixed gear and allocated quotas to each section, are you not aware of that?

MR. CARTER: No, that is the meeting of the Caplin Advisory Committee. Our Department is represented on that committee and that is one of the things that will be discussed and maybe dealt with at that meeting next week, it is called the Caplin Advisory Committee. It is a committee that is chaired, I presume, and initiated by the Federal Department of Fisheries and Oceans on which we have a representative. So that will be the subject of some discussion next week.

MR. WINSOR: The final question I have is with respect to guaranteed loans, I know the Province has now extended the one to the Fogo Island Co-op for a number of months, what exactly is the Province's position on guaranteed loans to fish plant now?

MR. CARTER: I guess I can sum it up Sam in a couple of words, more discipline. We are trying to get more discipline now into the processing sector and maybe to some extent stop propping up companies that appear to be going nowhere. We have had that done in the past, of course, only to find out at the end of the day that the companies have gone under and Government has been left holding the bag with a loan guarantee on its hands. So any legitimate request from a legitimate company that appears to have some hopes of survival, their application is given very sympathetic consideration. But if it is a hopeless situation, and I guess I can liken it to my own District when Oceana were the operators of the Twillingate Fish Plant and when they came to us for help, through no fault of their own that company showed absolutely no prospect of survival or potential to survive, the end result being that we had to say no to them. We have done that before in other cases and in most cases as it turned out it was a good decision.

It is not fair to the other companies. We have had complaints from the Fred Woodman's of the world and others that they are not playing on a level playing field and if we start propping up companies it is not fair to them. So, we will be very selective.

MR. CHAIRMAN: Thank you, Mr. Minister and Mr. Winsor.

My colleague, Mr. Woodford.

MR. WOODFORD: Do you have another one Mr. Matthews?

MR. MATTHEWS: Yes, just a short one.

MR. WOODFORD: Okay.

MR. MATTHEWS: Mr. Minister, through you to Mr. Murphy. I had a discussion with Mr. Murphy some time ago about the operation of the Fortune Marine Service Centre, that time you were trying to tie together some arrangement, I believe, with the Harbour Authority down there, has that materialized?

MR. CARTER: Yes, that is done.

MR. MATTHEWS: It is done.

MR. CARTER: We are in the process now of finalizing the deal with the new Harbour Authority to manage the plants, I do not know how much longer it will take to finish off the deal, the deal should be completed by the last of the month.

MR. MATTHEWS: So the question then is, the revenue from the users of the facility will go to the Harbour Authority, is that what will happen, and the expenses paid?

MR. CARTER: Yes.

MR. MATTHEWS: So is the centre then expected to be self-sustaining? Is that the objective, or will there be assistance from Governments too?

MR. CARTER: The hope is that they will be self-sustaining, but if there are any shortfalls then I think the deal is that we will have to look at coming up with the necessary funds to offset any shortfall. But we are hoping that by doing it this way, these service centres can become self-sufficient, and I should add, by the way, that the rates they are going to be charging will be consistent with the rates that are being charged now. That is correct, so there will not be any great increase in rates.

MR. MATTHEWS: Thank you. Another question that perhaps one of your officials can help with: last year there was some scallop processing that took place in Fortune, by permit, a permit to process scallops. FPI had, I think, leased part of the building and then another group went in there. I understand that will not be going ahead this year. I am wondering if you could explain why the change or what the department's rationale would be for not re-issuing the permit in Fortune? Would you or one of your officials know?

MR. CARTER: For scallops?

MR. MATTHEWS: Yes. There are some small forty-five footers that were fishing scallop last year bringing it in to Fortune for processing. I was told last week that that permit will not be re-issued for this season. Is that correct?

MR. CARTER: Well you are aware of what is pending in Grand Bank.

MR. MATTHEWS: Oh yes, of course.

MR. CARTER: I am sure we both hope that that is going to materialize, and I guess there is just not enough scallop out there to accommodate everybody who might want to go after them. If we start issuing licences to some of the smaller operators then that will certainly diminish the chances of the Clearwater operation getting in.

MR. MATTHEWS: Well basically what was happening here is like you said, three or four small boats, forty-five footers or so, have been scallop fishing for the last couple of years and were landing at Fortune. I do not think they will still be permitted to fish regardless of what happens with the Clearwater proposal in Grand Bank. I just found out this weekend that the Fortune operation will not exist this year. They said that the department would not re-issue or allow the permit, and I was just wondering what the reason for it is because that would not influence the Clearwater proposal in Grand Bank whatsoever because there are only three or four small boats that are going to fish anyway. I was just wondering what the reason is for that.

MR. CARTER: You say these boats were operating under a licence from FPI was it - the processing.

MR. MATTHEWS: The company was processing, is that what you are saying? They were selling the product to FPI, I know that.

MR. CARTER: They were operating - Bungy wasn't it?

MR. MATTHEWS: No, Parsons.

MR. CARTER: Yes, they were doing it under the auspices of FPI, using their licence, and the way the situation is shaping up now I do not think it would be too wise to allow that sort of an operation to continue, given the interest that has been shown in scallop and Clearwater's involvement up there. And there is a chap Fen Bungy as well working in Grand Bank.

MR. MATTHEWS: Grand Bank, yes.

MR. CARTER: What has happened to his operation?

MR. MATTHEWS: He hopes to go again this year.

MR. CARTER: To continue.

MR. MATTHEWS: He hopes to continue this year. Another local issue that I believe I have mentioned to the Minister before that I sort of gather has been brought to your attention particularly by the council of St. Lawrence, about Fishery Products International and their activities along that section of the Burin Peninsula. They are operating the Lord's Cove plant this year and seem to be very aggressive in pursuing inshore fish. I wonder what your reaction is to that? Because it is going to have it seems - while it is going to be very good for Lord's Cove, which pleases me, there could be some fallout as a consequence for places like St. Lawrence. I am wondering what is your reaction to that, or how are you going to handle that situation? Because I understand the representation has been made from the council and so on.

MR. CARTER: You know what has happened in Lawn, of course.

MR. MATTHEWS: Yes.

MR. CARTER: The plant in Lawn is now being leased to P. Janes and Sons. Ideally, probably, that plant should have gone to the company that is operating the St. Lawrence plant. But for reasons that I will not go into here that arrangement could not materialize. We have been given an assurance from FPI that some of the charges that have been made by the council in St. Lawrence and others, are just not true. Now in Red Harbour a situation evolved where FPI was asked by the fishermen of Red Harbour to buy their fish. Again for some reason of which I am not aware, they were not prepared to continue selling their fish to their former buyer. The FPI company was actually asked to come in to buy their fish. That is the only place that I am told that that kind of a situation will go ahead this year. That was the basis of our talks with (Inaudible).

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, well we understand that FPI for example will be looking at other sites to set up buying stations. Now they are in the business of buying fish but not just on the Burin Peninsula either. It is a difficult thing to handle, because how do you tell a fisherman he is not allowed to sell his fish to a Newfoundland company? Especially if that company may be paying a little more for the fish or giving a better service?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Pardon?

AN HON. MEMBER: (Inaudible).

MR. CARTER: It is good for the fisherman so how do we put a -

MR. MATTHEWS: I can appreciate that, Mr. Minister.

MR. CARTER: It is not very desirable. I can see the plant in Twillingate district for example suffering if FPI - or indeed any company - goes down there and starts paying a better price for the fish. But you cannot stop it. That is the way the system works.

MR. MATTHEWS: Yes, I know. It is just that the history of the whole situation down there where up to a few short years ago it seemed the inshore fish was more of a nuisance to the Lake group and Fishery Products International. Now that the squeeze is on for resource it is a little bit... "ironic" is the word to use. But it is just concern from I guess the communities and the plant workers in some of those communities that if - like in the St. Lawrence situation for sure - if they lose any resource then I do not know if the operation there will have any future. That is the reason why I asked the question. I thank you for your answers. Thank you, Mr. Chairman and Members of the Committee.

MR. CARTER: I should mention too, Bill, that the lease on the Lord's Cove property went to FPI because nobody else expressed an interest in it. Ideally I suppose maybe that plant should have gone to the operator of the plant in St. Lawrence as well. But we can not dictate it, we can only -

MR. MATTHEWS: Oh certainly. I appreciate that. Thank you.

MR. CHAIRMAN: Thank you Mr. Minister, thank you Mr. Matthews.

Mr. Woodford, are we ready for the question?

MR. WOODFORD: No, Mr. Chairman, not yet. Just a couple of short questions anyway. Mr. Minister, as you know it was in 1988 the marine centre was started at Jackson's Arm. Every since that there has been no funding allocated for it. Could you give me the real reason why there was no funding allocated for that over the last three years?

MR. CARTER: I remember that there was a start made on it and I believe $500,000 was -

MR. WOODFORD: No, there was only $160,000 -

MR. CARTER: - allocated. No, I mean it was allocated and then it was taken out of the budget, I think. Some groundwork was done.

MR. WOODFORD: Yes.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. There was a hold put on the construction of any other centres other than the ones that the Federal Government had an involvement in. The one that you are talking about now would not have been a Federal-Provincial project, it would have been purely a Provincial initiative. For that reason - and there have been others too, I suspect - where there has been a hold put on them for that reason.

MR. WOODFORD: My understanding is that in the 1989-1990 budget, there were two or three other marine centres started around the Province; I will have to go back and take a look at it but I thought I had some names (inaudible).

MR. CARTER: Well, there were, there was one started in Fermeuse-

MR. WOODFORD: No, it was strictly provincial money.

MR. CARTER: I beg your pardon? No, no, there is no such -

MR. WOODFORD: None started in the last three years, is that what you are saying?

MR. CARTER: No.

MR. WOODFORD: Marine Service Centres, unless it was Federal-Provincial.

MR. CARTER: One was started in Fermeuse and Hodges Cove and where else, Fortune, was it? Makkovic; these were all federally funded.

MR. WOODFORD: Okay. What about the report, Coastal Consultants report? Did they bring in any other areas, did they recommend anything?

MR. CARTER: No, they are not recommending any more new construction of marine service centres, not for the time being any how. We are suggestion we consolidate and identify centres that could be looked upon as regional centres; that is the basis of their recommendation.

MR. WOODFORD: In the White Bay area, they have to travel such long distances; in fact some have to come here and the rest have to go to Englee, in order to get a place to do up their boats even if -

MR. CARTER: The size of the lift is not sufficient?

MR. WOODFORD: There is no lift; even if they had a lift - I do not know if the Minister or the Department would entertain something like that because there are lifts around apparently.

MR. CARTER: How many boats are there in the bottom of White Bay?

MR. WOODFORD: I do not know exactly how many are there, but I know they travel long distances to get some service.

MR. CARTER: I understand there is only a very small number of boats there; it is hardly enough to warrant a $3 million or $4 million service centre.

MR. WOODFORD: Well, I do not want to get into any debate over it, but we certainly were not looking at a $3 million or $4 million service centre; I mean, my understanding was $600,000 or $700,000 over a three or four year period and it would have been done.

MR. CARTER: It is a costly proposition you know; you have to build a wharf which costs a lot of money and then you have the lift itself, and I am told these lifts cost over $200,000 -

AN HON. MEMBER: $600,000.

MR. CARTER: -$600,000 just for the lift itself, a small one; you get into a bigger lift and you are over a million dollars, the 200 ton lift that we are putting up in Port de Choix cost over a million dollars.

MR. WOODFORD: My understanding was that there were some lifts around; as for instance, Port de Choix was one of the places mentioned that there was a fifty ton lift which could have been obtained at a cheaper price.

MR. CARTER: I do not know what has happened to that lift; I know the one in Twillingate was sold. Most of these smaller lifts have been sold when they come out, sold or put in somewhere else.

MR. WOODFORD: So in other words it is dead; that is the bottom line is it, that that particular project is dead?

MR. CARTER: The bottom line, Mr. Chairman, for the present I would say does not look good, but that is not to say that at some point in time, down the road, when circumstances change and money becomes available, we will take a new look at that area and maybe consider putting a lift there.

MR. WOODFORD: There was one figure there on page 116 of your Estimates, 3.1.08, Inshore Fishery Support, what is that figure for this year? There was nothing there last year and now $1,100,000, is that a Federal -

MR. CARTER: Yes. That was a special programme, you might recall, made available to the inshore fishermen on the southwest coast, interest free loans, fixed gear fishermen, and that was a programme that was approved by the previous Administration. We implemented part of that programme and these loans - that was a $3 million programme, and payment, even thought they are interest free loans, by virtue of the bad fishery up there for the past couple of years, we have had to defer payment of those loans and I would expect we will have to continue for a while to defer their repayment. We have not done anything extraordinary to collect them because the people just do not have the means to repay that loan at the present time.

That $1.1 million that you see there is based on the assumption that maybe a good fishery will see some of those loans repaid. But up until now there has been no repayment of those loans.

Bearing in mind that the surveys conducted by our Department indicate that the small boat fixed-gear fisherman in that area last year for example earned less than $5,000 of their income from the fishery, and that speaks for itself. It would be awfully difficult to collect any of that money under those circumstances.

MR. CHAIRMAN: Are we ready for the question?

On motion, subheads 1.1.01 through to 1.1.04, carried.

On motion, Department of Fisheries, total head, carried.

MR. CHAIRMAN: I would like to thank the Minister and his officials for their appearance before the Committee this morning and also for the frank and open way that the questions asked were handled.

I thank the Committee also. It was a pleasure to have the Fisheries critic with us this morning as well as some other MHAs who are obviously concerned and interested with respect to the Department of Fisheries and how the fisheries affect their own Districts.

Mr. Woodford.

MR. WOODFORD: I was wondering if the Minister could get me a copy of his opening statement this morning, please?

MR. CHAIRMAN: Under normal circumstances each Committee member would receive a copy of the opening statement, so if they are available. They are available now? Good.

MR. CARTER: I would like to thank the Committee for the very civilized manner in which they received us this morning. I appreciate that very much. I can tell them now that if they need any additional information on any matter pertaining to our Department, I will be happy to provide it to them. A telephone call or a visit to the office, and my officials will be more than happy to cooperate with them and facilitate them, so I want them to know that.

MR. CHAIRMAN: Thank you, Mr. Minister.

I would like to thank the media for their kind attention this morning, as well Miss Elizabeth Murphy, our Clerk, and as well the Pages.

The meeting now stands adjourned.