June 1, 1993                                                                   RESOURCE ESTIMATES COMMITTEE


The Committee met at 9:00 a.m. in the House of Assembly.

MR. CHAIRMAN (Dumaresque): Order, please!

First of all, since I am a replacement for the Chair, Mr. Penny from Lewisporte, for proper procedure we need a motion to confirm my position here today according to the Clerk, so if I could get a motion to that effect.

MR. SHELLEY: I so move.

Pursuant to Standing Order 87, Mr. Danny Dumaresque, M.H.A. (Eagle River) substitutes for Mr. Melvin Penney, M.H.A. (Lewisporte).

MR. CHAIRMAN: Thank you very much.

First of all, I would like to welcome the minister and his staff to the Estimates Committee of the Department of Fisheries this morning, and I would like to start off by introducing the members of the estimates Committee. On my immediate right is the Vice-Chair, Mr. Woodford, the MHA for Humber Valley; Dr. Hulan, the Member for St. George's; Mr. Tulk, the Member for Fogo; Mr. Whelan, the Member for Harbour Main and to my right, Mr. Matthews, the Fisheries critic and the Member for Grand Bank and Mr. Shelly, the Member for Baie Verte - White Bay.

The procedure we will follow this morning is fairly routine. We will start off by asking the minister to make a statement, for which he has fifteen minutes but I am sure if it is a little shorter or longer, the Committee would understand. Following his statement, the Vice-Chair has fifteen minutes to question and then we would throw it open to all members of the Committee and probably go from one side to the other, if that is the wish of the Committee. It is a relaxed atmosphere and I intend to try and make sure we get all the questions required and I am sure we will also get all the answers; so without further ado, I would like to call on the Minister of Fisheries for his opening statement.

MR. CARTER: Thank you, Mr. Chairman and members of the Committee. I am pleased today to present to this Committee the budget estimates for the Department of Fisheries, for the fiscal year 1993-1994. While we are in a period of restraint I feel that the level of total expenditures for my department in 1993 and 1994 continues to demonstrate the commitment of this government to our most important resource sector.

Gross expenditures in '93 and '94 are projected at $30.4 million. Revenues, both current and capital will total $8 million, consisting of $3 million to the federal/provincial cost-shared programs; $3.7 million to Fisheries Loan Board repayments and $1.3 million from other provincial sources. My department will, in total, spend $22.8 million on current account and $7.6 million on capital account in this fiscal year. Our previous year's estimates called for expenditures of $29.2 million on current account and $14.3 million dollars on capital account.

As indicated above, my department will spend $13.2 million less in 1993-94 than in the previous year; some $6.7 million dollars of that amount follows from the expiry of the 1992-93 Canada-Newfoundland Inshore Fisheries Development Agreement and, an anticipated reduction in expenditure under the Canada- Newfoundland Corporation Agreement on salmon enhancement and conservation.

Capital funding under fisheries loans and assistance decreased by $4.5 million as a result of a reduced requirement for loan and bounty funding due to a general downturn in the availability of ground fish.

I wish to take this opportunity to touch briefly on the document: Changing Tides, a consultative document on the fishery of the future, and recent announcements by the Government of Canada which will fundamentally alter the management and allocation of the fishery resources. The fishery is fundamental to the economy and the way of life in this Province. Economic activity generated by the fishing industry provides incomes to individuals; it provides vessel payments and commercial spending by fishermen and plant workers. Throughout the past ten to fifteen years, there has been considerable adjustments or change if you wish, in the species of fish harvested, the manner in which fish are handled and processed and the variety of fish products offered for sale on international markets. The common thread throughout has been the skilful adjustment of the fishing community to the opportunities available to it.

The closure of the northern cod fishery on July 2, 1992, while an event of enormous proportions and ramifications represented the culmination of things gone wrong with respect to the management of that resource. The consequences of the moratorium are being addressed through northern cod adjustment recovery program and similar programs. The factors which led to its imposition, and adjustments which must be made to ensure such an event never happens again, must be understood and acted upon.

Two truths can be stated with certainty, these are, one; only rebuilt fish stocks will provide security for the long term and, two; the fishery of the future will not mirror the fishery of the past. Changing tides and a consultive document on the fishery of the future encompasses thirty-nine proposals for a policy framework. The principal objective of this policy framework is to build a viable fishery that is regionally balanced, one that is stable and competitive in the absence of government subsidies, and one in which highly skilled plant workers and fishermen can earn an adequate income without dependence on income maintenance payments.

Achieving this objective will require that rebuilding and conservation of the resource be pursued as a priority goal in the short term and that rebuilt stocks be managed on a sustainable yield basis in order to provide greater assurances of industry and community stability. Changing Tides proposes change in the stewardship of our fish resource. It calls for increased decision making by those who participate in the industry. Joint fisheries management, synonymous with effective management, is the only method by which the aspirations of those in areas of harvesting and processing can receive full and fair hearing in a process which has as its first requirement the application of sound fisheries management principles. Effective resource management is the key to building a sustainable fishery. Public meetings have been scheduled to obtain the views of as many people as possible on the documents thirty-nine proposals for a policy framework.

On May 10, the federal Minister of Fisheries and Oceans introduced Bill C-129 in the Parliament of Canada. That bill, Mr. Chairman, calls for the establishment of an Atlantic Fisheries Board which has as its primary function the allocation of fish resources throughout Atlantic Canada. This approach to managing the fishery is unacceptable and I thank all members of this Committee for their support in passing the resolution calling upon Mr. Crosbie and the Government of Canada to withdraw Bill C-129 immediately.

The regional services branch has allocated $7.9 million in support of the development, maintenance and utilization of fisheries infrastructure. These include; marine service centres, fishermen's community stages, fish processing and handling facilities, fisheries access roads and the operation of the Northern Labrador fish plants. Funding is also provided for the administration costs for the regional services division in Labrador. A relatively major activity in the branch is the administration of twenty-five marine service centres throughout the Province. In the past the operations were exclusive to government, however, in recent years we have embarked upon an initiative to involve private sector and community groups. The initial results are positive and in conjunction with the fishermen's groups in respective areas, we intend to further pursue this in the future. In addition we have been successful in controlling operational costs which are reflected in very few increases in fees to fishermen who utilize these centres.

In 1992-93 the centres provided approximately 1200 vessel haul-out and launches, 250 emergency or service lifts and accommodated a winter storage of over 700 vessels.

In 1992-1993 we introduced a marine service centre assistance program in consideration of the fisheries crisis. This was a Province-wide program whereby eligible fishermen were provided with haul-out, storage and launching assistance. A total of 650 vessel owners received assistance and it is planned to extend this program into the 1993-1994 fiscal year.

My department is continuing efforts to divest government owned fish plants. Presently a total of ten remain leased as compared to over thirty active government owned facilities in 1990. An exception to this activity are the plants in Northern Labrador where the department continues to operate the Nain plant and the Torngat Co-operative receives a subsidy to operate the Makkovik plant. Our development goals in that regard are to transfer the Nain operation to a community based company and to reduce the subsidy payment. Except for the northern plants we remain committed to the private ownership of all plants within the fishing industry.

The department is continuing with a capital works program. A budget of $1.6 million will fund various projects, including upgrading of existing marine service centres, community stages, slipways, and refrigerated facilities. Our capital budget also includes support to community groups, which in 1992-1993 provided assistance to over eighty community sponsored projects. Mr. Chairman, this is a significant ongoing increase in community input into fisheries infrastructure. My department intends to foster and assist this community involvement.

The department will also continue to coordinate the fisheries component of the Coastal Labrador Development Agreement. This federal-provincial agreement, signed in July of 1989, calls for expenditures of $7 million over the 1990-1994 period. In 1993-1994 approximately $1.9 million will be spent on current and capital account under the Coastal Labrador Development Agreement.

Fisheries and Aquaculture Development branch is the second major operational branch of my department. The branch is composed of three divisions, harvesting operations, processing operations and marketing services. The branch will spend $5.6 million in 1993-1994 consisting of $3.3 million on current account and $2.3 on capital account. The harvesting division is responsible for the development activities related to aquaculture and resource development. In addition, the division administers Newfoundland aquaculture legislation, which provides the legal framework for the industry. Extensive field activities are undertaken to provide annual inspections of licensed sites as required under the act. The major emphasis in the current year will focus on: increasing and strengthening the salmonoid production worth approximately $1 million last year in Bay d'Espoir; increase mussel production; and stimulate the farming of scallops. The primary focus of harvesting initiatives will be to broaden the resource base through development of less traditional species, principally skate, urchin and scallop.

Capital expenditure of $2,276,000 is provided in respect of financing and insurance cost of four middle distance vessels built at Marystown in the 1987-1990 period.

The processing operations division will provide a contribution of $325,000 to the Ramea fish plant to provide for the processing of foreign fish caught, as the Ramea plant is ineligible for assistance under the Northern Cod Adjustment and Recovery Program. Other program funding will be spent on other facets of the processing industry, including seal meats and by-products.

I will clue up in about two or three minutes, Mr. Chairman.

The Marketing Services division will provide marketing support for industry, primarily in order to market underutilized resources, value-added, and aquaculture products, and to explore new marketing opportunities. The division will continue to provide market research and intelligence and would also provide core funding for the newly-established Newfoundland Seafood Market Council.

An additional $500,000 has been allocated to the Fisheries and Aquaculture Development branch in anticipation of a new ERDA agreement being signed. Guidelines are currently being developed through discussions with appropriate federal agencies. The Strategic Economic Plan also provides for initial block funding of $575,000 in support of fisheries initiatives, primarily related to development opportunities, details of which are presently being finalized.

The Policy Planning branch of my department will have estimated expenditures in 1993-1994 of $5.9 million. This branch provides ongoing policy and program planning within the context of government's broad fisheries management and fisheries development objectives. During the coming year the branch will continue to focus significant attention on resource difficulties facing the industry, on stock rebuilding, and fisheries revitalization.

In particular, the branch will be developing a new fisheries policy framework which would evolve as a result of the Changing Tide public meetings, and will also be undertaking further initiatives aimed at achieving joint management of the Newfoundland and Labrador fishery.

The branch is also responsible for field services activities, co-ordinating the activities of six regional field offices. In addition, the branch undertakes the fisheries science and resource analysis activities of the department. The branch will deliver the Province's share of the Atlantic Salmon Agreement, amounting to $11.7 million over two years, of which $4.1 million of that amount will be spent in the 1993-1994 estimates, the second and final year of the agreement.

The Canada-Newfoundland Inshore Fisheries Development Agreement is also co-ordinated by the policy planning branch. Some $1 million will be spent under this program in 1993-1994. The Fisheries Loan Board is projecting expenditures in 1993-1994 of $9.3 million in support of the Province's inshore fleet. Expenditures will be directed towards interest subsidy payments under the Bank Loan Guarantee program, loans under the Board's direct loan fund, and assistance under its bounty programs.

My department's response to the Northern cod moratorium included interest forgiveness programs for both direct loans and loan guarantee program clients of the Board. Loan guarantee program clients are anticipated to receive approximately $3 million interest forgiveness assistance for 1992. Interest charges and the same assistance is provided to loan guarantee program clients in 1993. The Board's direct loan clients are expected to receive approximately $600,000 interest forgiveness assistance in each of the 1992-1993 years.

Mr. Chairman, the fishing industry is experiencing difficulties of unprecedented proportions. Clearly, these difficulties will require greater integration of federal and provincial policies if we are to emerge with a stronger fishery in the future. Resource considerations are the underlying reason for the present crisis in the industry, and the overriding priority for recovery of the industry must be the rebuilding of key groundfish stocks.

I welcome any questions you may have on my department's 1993-1994 estimates. Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Minister. First of all, while some of the members know your staff, maybe you could introduce them for the new members of the Committee.

MR. CARTER: On my far right is Mr. Harold Murphy, Assistant Deputy Minister; Mr. David Vardy, Deputy Minister; Mr. Les Dean, Assistant Deputy Minister; Mr. Gordon Kane, Managing Director of the Fisheries Loan Board; and Mr. Reg. Kingsley, Assistant Deputy Minister, as well.

MR. CHAIRMAN: At this point, I would like to go to the Vice-Chair, Mr. Woodford. He has fifteen minutes or he may refer them, for his time, to the fisheries critic - it is up to him.

For members' information and for the purposes of Hansard, whoever is speaking, would you please identify yourself so we can make sure that is recorded properly.

Mr. Woodford.

MR. WOODFORD: I will yield to Mr. Matthews, Mr. Chairman.

MR. TULK: Mr. Chairman, I would like clarification on a point of order.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: Is the Member for Grand Bank signed on as a member of this Committee?

MR. CHAIRMAN: He is not a voting member of the Committee, but he certainly is -

MR. TULK: Well, I would just like to go on record as saying that while - and I have seen this happen in a couple of committees - while I have no objection at all to deferring to the member, the voting members of this Committee should have the right to speak in advance of the people who are not voting members and there is a mechanism for people who get put in as voting members to replace somebody else. I would like that to go on the record.

MR. CHAIRMAN: Yes, the member is quite right.

MR. TULK: Because this can become too informal; if they want to, people could be just walking in and out and throwing attacks at ministers, and all the rest can get up and leave. I have seen it happen before and I don't want it to happen to the Committees again, but in this case, I agree.

MR. CHAIRMAN: Okay.

MR. WOODFORD: To that point, Mr. Chairman, on the other hand, I can speak for fifteen minutes, so it doesn't matter, I am still an Opposition member and there is no difference. Regardless of who is speaking, the time is still there, you are not going to lose that, so I just want to make it quite clear that I have fifteen minutes to speak, whether I yield or not. I will make sure of that.

MR. TULK: With respect to the rules of the Legislature, you cannot just walk in and say I am going to defer to this one or that one

and cut out voting members of the Committee.

MR. CHAIRMAN: No. Mr. Tulk, it is not the intention of the Chair, I am sure, nor the Committee, to exclude voting members of the Committee, and certainly, if some member wanted to persist and ask the questions now, then certainly, they have the right, under parliamentary procedure, to do that. We thought, it being the nature of the committees thus far, that if the Vice-Chair, who is a member of the Opposition, wanted to provide an opportunity to his fisheries critic, then that would have to have leave of the Committee, I guess.

MR. TULK: Mr. Chairman, that is the point I want to make - speaking by leave only.

MR. CHAIRMAN: Very well.

MR. W. MATTHEWS: Mr. Chairman, I would like to have some clarification on the format. I have some time to just question the minister - is that what I understand?

MR. CHAIRMAN: Well, you have fifteen minutes to respond to the minister.

MR. W. MATTHEWS: To use as I see fit?

MR. CHAIRMAN: I guess you may make a speech or you can ask questions, as you see fit.

MR. W. MATTHEWS: I think I will just pursue, with your permission and that of the committee, a few questions for the minister, realizing that perhaps the general underlying concern in the Province for the state of the fish stocks, of course, has brought on a couple of things, one of them being the NCARP, or the moratorium package, as it is referred to.

I would say, the time when that moratorium will be lifted is anyone's guess; from all evidence or from all signals, it certainly won't be within the next twelve months. I am just wondering if the minister or his officials have received any indication from the federal Department of Fisheries as to whether there has been any improvement whatsoever in fish stocks. I know there is no way they can guess when the moratorium may be lifted; personally, I think we are talking years, but I am just wondering, has there been any information exchange or flow from DFO to your department, Mr. Minister, indicating whether there has been any improvement whatsoever in fish stocks?

MR. CARTER: I am not aware of any. I don't know if my officials are - if so, they can speak up, but I am not aware of any information coming from DFO to that effect. I understand there are a lot of tests going on, and surveys, but I am not aware of any good news coming from the department to the effect that the stocks are rebuilding to any significant degree.

MR. W. MATTHEWS: I am just wondering - what do you hope to accomplish from the public meetings that you are starting tonight? What is your aim? I know that we all have concerns about the Atlantic agency that is proposed by Mr. Crosbie and there has been significant concern expressed about the processing sector, the number of plants, processing capability or capacity in the Province. Really, what are you hoping to accomplish from your series of public meetings?

MR. CARTER: Well, the Green Paper, or discussion paper, Changing Tides, is the result of a lot of effort from officials of the Department of Fisheries, and in it we have outlined thirty-nine options - proposals for the fisheries of the future. Any such document, given the fact that the fisheries of the future will have a major input on the future of Newfoundland, certainly rural Newfoundland and, in fact, all of Newfoundland directly and indirectly, then we believe that the stakeholders and the people out there in rural areas must have an opportunity to have input into the final decision having to do with the fisheries of the future. Tonight, we are having our first meeting in Bonavista, a public meeting, which all who want to may attend, and we will be soliciting their views on the proposal, on the Green Paper. I think it is a necessary function. I think that the people who have probably the most to lose by what is going to be happening over the next few years, mainly the stakeholders, themselves, should have the opportunity to have some input, hear what we have to say, question us as to what our thoughts are on the fisheries of the future and explain some of the options that we have outlined in the paper. So, I think it is going to be a very useful exercise and, in fact, I am looking forward to it very much.

MR. W. MATTHEWS: Do you have a time frame in mind where, say, you would conclude this process?

MR. CARTER: Well, if the House of Assembly were not open we could probably establish a series of meetings and almost name the day when the final meeting will be held. As you know, I suppose, like most members, my first responsibilities are to the Legislature; while it is sitting, as a minister, I have to be there. So, we are going to try to work the meetings in, in a way where it won't interfere, to any great extent, with my ability to attend House sessions.

For example, this afternoon I am hoping to attend Question Period and then leave immediately for Bonavista. Tomorrow we will be in Marystown, so tomorrow I will be out of the House and back on Thursday. Next week we will be planning two or three more meetings, hopefully meetings where I can be in the House until Question Period, then leave and go to the meeting following it. So it is difficult for that reason, Mr. Chairman, to put a time frame on the meetings but I am hoping that within a month or maybe less we will have had our twelve or fourteen meetings around the Province and then resulting from the meetings there will be a White Paper developed in which we will outline the Province's official policy on the fishery of the future evolving from the Green Paper and the discussions resulting therefrom.

MR. W. MATTHEWS: Do you really expect, at the end of this process, that you are going to be able to zero in on the number of fish plants that will be open in the Province or that have some potential in the Province? Is that part of it or how do you see that coming out of the maze?

MR. CARTER: No, I don't think that is going to be possible and for a very simple reason. If we had the information that we would need to make that kind of an assessment, yes, then it wouldn't be too difficult; but, at this point in time, going back to your first question, we haven't, and I don't suppose anybody, short of the Man above, has any idea as to what is going to happen in terms of the fishing industry in this Province, here in Atlantic Canada, over the next number of years. For that reason, it is extremely difficult for us, as a department, or for anybody, the federal or provincial department, to be able to accurately project what is going to happen in this Province, say, five years from now. We can make certain assumptions based on the very best information available but, as we all know, I am sure, these are guesstimates probably more than anything else. And we have no choice in the matter because right now we don't have any indication whatsoever as to when the moratorium will be lifted. We have no idea what the total allowable catch will be once it is lifted. We all know that officially it is supposed to cease, I believe in June, 1994. The federal Minister of Fisheries and Oceans has repeatedly stated, almost without qualification, that there will be a fishery in 1994.

Well, as the hon. member said, Mr. Chairman, I have serious reservations whether that is going to be possible. If there is one thing we don't want in this Province, in Atlantic Canada, in the fishing industry, it is a premature re-opening of the fishery, because we are dealing with a very delicate situation here. If we, for whatever reason, whether it be economic, social or political, re-open the fishery before it is ready to be re-opened, then I am afraid the result could be catastrophic. It could have far-reaching implications on the ability of the fish stock to rebuild itself and for the industry to get back to becoming a viable industry. I am hoping, I guess, that doesn't happen.

MR. W. MATTHEWS: Thank you. Mr. Minister, I would like to pursue something I tried to pursue yesterday in the House of Assembly but, of course, with Question Period and the Speaker, you don't get enough time to pursue it.

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: Pardon?

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: I was asking about a plan for the processing sector, which has been talked about for the last number of months. I guess the concern I have about it is that processing is a provincial responsibility. When a decision has to be made whether or not to continue with compensation benefits, moratorium benefits, in another year or so, if there is not a plan forwarded to the Federal Government on the processing end of it all, my concern is for the fish plant workers. That is what I was trying to get at yesterday. and as I said, I didn't have enough time to develop it and so on.

I was just wondering: Do you or your officials have any concerns that when a decision has to be made whether to continue with further assistance - we all hope a decision to continue with it will be made - that there may be some implications here for fish plant workers who work in the processing sector? Perhaps I am being a little too concerned - but I don't think we can be - or suspicious. I am just wondering perhaps if this continuous call over the last while for a plan on the processing sector might not be a signal that unless something is done, or a plan submitted to the Federal Government, there may be some serious implications for fish plant workers who are now being funded under that program, since processing is a provincial responsibility. That is what I was trying to get at yesterday. I am just wondering if you or your officials have thought about that, or if you are concerned about it.

MR. CARTER: Yes, Mr. Chairman, we have thought about it and we are concerned about it. There is one thing we should not lose sight of. I know that sometimes we all are inclined to say things for one reason or another; but there is one very important point that we shouldn't miss here this morning, or ever in this Province, as long as this moratorium lasts, that is, that the responsibility for what happened rests with the Federal Government.

Now, I have been criticized in the past and accused of maybe trying to pass off responsibility to the federal - but that's a fact. There isn't anybody around this table or, indeed, in Newfoundland, who understands both jurisdictions, who can deny the fact that almost every single problem that we are experiencing today in this Province in terms of the fishing industry, certainly in terms of the Northern cod moratorium, were caused by virtue, by and large, of mismanagement on the part of Federal Governments - plural, `governments'- not just the Mulroney Government, but previous governments. I am not suggesting that all of these problems started with John Crosbie or Brian Mulroney, they go back a long period, a good number of years. That is one very important point we should not lose sight of, and therefore, we should not, knowingly or otherwise, give the federal politicians and bureaucrats an opportunity to get off the hook, as it were. They have that responsibility and, in fact, they have recognized it; to their credit, they have recognized their responsibility and NCARP and the billion dollars that will flow therefrom, is self-evident; it is an indication of the fact that they have recognized their responsibility, and I think we are treading on pretty thin ice, when we attempt to try, for whatever reason, to divert responsibility from where it really belongs on to the Provincial Government, for a number of reasons.

First of all, more importantly, it is their responsibility. Mismanagement, poor management, call it what you want, on the part of Federal Governments of the past - they have ignored our warnings, they have ignored our requests - I can recall ever since 1989, we have repeatedly, consistently objected to the TACs they were setting; we are on public record as saying that, that taxes are too high, that we are living dangerously, they have ignored by and large the Harris panel recommendation to that effect and others and now we are paying a price for it. And I think we have to unite in this Province and make sure that those responsible, accept their responsibility and continue to accept their responsibility and come to the rescue.

Now, you talk about the processing sector. Yes, the Province does license plants, but I have never known of a fish plant to go out on the Grand Bank and overfish or catch fish. We licensed plants on the basis of the total allowable catches that were established by the Federal Government. Unfortunately, the advice they got, or the way they interpreted their advice, has caused a lot of problems. Consequently, we now have too much processing capacity in the Province and this goes back a number of years, to the time when federal scientists were projecting allowable catches that were totally unrealistic, as we found out later. I remember back in the 1970s, when they were projecting, once the 200-mile limit was in place, an operation where we would have a total allowable catch of 300,000 or 400,000 metric tons.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes, and the Province, of course, a province like Newfoundland where, the economy is so dependent on the fishery, did what the government of the day thought was the right thing to do and geared up for this new fishery that was promised, only to find out, years later that, somewhere, somebody made a few bad calculations and the total allowable catch did not materialize as envisaged. The result is now that we have too much capacity and we have to find ways and means of reducing the plant capacity in the Province. I suppose in Newfoundland today, our plants are operating at what, less than 20 per cent?

AN HON. MEMBER: 17 per cent.

MR. CARTER: Seventeen per cent. Can you imagine any business, whether it is a service station, a fish plant or a supermarket, operating at 17 per cent of its actual operating capability? You know, it is just unbelievable. And is it any wonder that the fishing industry is struggling and bordering on bankruptcy three parts of its time? So we have to find ways of decreasing the plant capacity, but that has to be done in a certain way, too. I don't think the Province has the right, nor does any group have the right to assume the role of God, to put the finger on certain communities. What criteria would you use, for example? Who is to say that the plant in community A shall remain open and the plant in community B shall close, and decisions of that nature - having the effect of more than likely determining the future of a region or a community of the Province.

The Province is not going to take on that role, nor should we. Yesterday we met with FANL and we had quite a lengthy discussion on this whole question of how we should approach downsizing within the processing sector. There are talks ongoing with FANL. Some of their proposals have not been acceptable to the Province, but eventually it will settle back and work itself out. It is going to be a long-drawn-out process. It is not one that you can rush. If we start rushing and coming up with grandiose schemes as to how we are going to do this and that, it is a recipe for disaster, I think. We have to take it in a rational way and see what happens. I know I have taken longer than I should have to answer that question, Mr. Chairman.

AN HON. MEMBER: Crazy.

MR. CARTER: Pardon?

AN HON. MEMBER: Crazy.

MR. CARTER: Yes, I am sure it is.

AN HON. MEMBER: You will educate the Member for Grand Bank.

MR. CARTER: The Member for Grand Bank has done his homework.

AN HON. MEMBER: Has he?

MR. CARTER: Yes.

MR. W. MATTHEWS: Am I out of time? I don't want to abuse my leave.

MR. CHAIRMAN: Yes, the Clerk said you had more time, so we will go under her direction.

Now we would like to refer to -

MR. W. MATTHEWS: Could I have leave just to -

MR. CHAIRMAN: Okay.

MR. W. MATTHEWS: I just want to say to the minister, I follow very closely what he is saying and, for the most part, it makes a lot of sense, but I guess - I mean, most of the plants are closed now. It is not a matter of - they are closed. Perhaps a better way of asking the question is: How do you see - hopefully the stocks will regenerate in a few years. Is there not going to be some plan needed then to decide what plants are reactivated, how they come on stream? Otherwise, we are going to be in this mess for years, if a percentage of the regenerated stocks are spread throughout all those plants in the Province. Do you know what I am saying? If the plants are operating now, as the deputy minister said, at 17 per cent, and as the stocks regenerate and more fish come ashore you bring them all up to say, 25 per cent, that is still not going to make them viable.

How do you deal with that situation? Say, in five years, if the stocks have regenerated, the total allowable catch is increased somewhat, more fish come to our ports, how do you plan, as a Provincial Government in charge of the processing sector, to deal with that situation so that at least the plants that come on stream have a chance of being viable and maintain some degree of employment in those communities? How do you deal with that?

MR. CARTER: Well, let's take a look, Mr. Chairman, at some of the factors that have led to the problem we are now encountering with respect to, namely, overcapacity: Government-guaranteed loans propping up plants that were inefficient, not productive, plants that probably should never have existed in the first place.

Natural forces, we believe, will eventually dictate. The government will be withdrawing, in most cases - I am not suggesting that never again will the Province undertake to guarantee a loan for a fish company, but I can tell you one thing, that the days when any fish plant owner can walk into the minister's office and get a loan guarantee are over, that is history. That will never happen again to the extent that it has in the past - propping up inefficient operations, plants that do not have access to adequate raw material, undercapitalized. Again, we have found ourselves in a position where a lot of the plants that we have around the Province - and by the way, I should remind the member that not all of the fish processing plants are closed. There are still a lot of plants in operation and doing extremely well, they are alive and well. Granted, they are not processing any Northern cod, but I guess, like the old saying, necessity is the mother of invention.

What is happening, probably one of the good things that is going to come out of this crisis, is the fact that we Newfoundlanders, in order to survive, which is a strong force, of course, are now finding ways of making better use of what we have, becoming more involved in secondary processing.

I attended a dinner last night that we hosted for a group of Japanese people, magazine writers and chefs, very well known in their own country, in that field. We had with us also, half a dozen or four or five Newfoundland fish processors. We were encouraged to hear some of the things that were being said there and how plants are getting involved in secondary processing in the production of shishamo, that is, the female caplin that has caught on in Japan, which represents an export market of probably anywhere from $50 million to $70 million for this Province.

So, a lot of things are happening. It is not all bad news out there, a lot of good things are happening. Secondary processing, underutilized species development, for example, is another important thing. Newfoundlanders are finding ways and means of coping, and the strong will survive.

I have to call the Premier's office immediately, I wonder could I be excused for about two minutes, Mr. Chairman? I don't know if you want to ask, Mr. Vardy or -

MR. CHAIRMAN: We will take a break now and come back and start off with the Member for Fogo, probably, if you are ready. Do you want to start off when we come back?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Okay, we will come back and start off with the Member for St. George's.

 

Recess

 

MR. CHAIRMAN: I will call the meeting back to order. At this point I would like to give another member ten minutes or so to follow up, and continue, whoever is ready.

Mr. Tulk.

MR. TULK: Mr. Chairman, I would like for the Minister of Fisheries to comment on two points. One of them is the middle distance fleet. I understand he inherited that thing. I would like for him to comment on what the status of those boats is now, five or six of them. I think they cost the Province well over $20 million, was it, some years ago?

AN HON. MEMBER: (Inaudible).

MR. TULK: Yes, approximately $20 million some years ago. I would like for him to comment on it. As I said, I know he inherited it; it was the brainchild of a former minister. He was warned, in no uncertain terms, against it, but he went ahead with it, and it cost the Province $20 million. I wonder is that going to be a profitable venture and just where are those boats right now?

MR. CARTER: Well, it has turned out that the whole venture, as you call it, is not at all profitable. In fact, it is quite the opposite. The four vessels that we now own - we have one leased, and the amount we are able to get by way of lease payment doesn't even come close to servicing what it costs, servicing the loan - the mortgage.

MR. TULK: Servicing the debt.

MR. CARTER: It makes no contribution whatever to the servicing of the debt on the vessel.

MR. TULK: Could we get some figures on it? Because it is definitely new to me.

MR. CARTER: I think we have figures here somewhere. These vessels - it is very unfortunate because they are probably the best technology that is available right now in the fishing industry and because the quotas were eliminated, back a few years ago - it is costing the Province every year, in terms of lease payments and insurance, $2,276,000.

MR. TULK: That is the net cost?

MR. CARTER: That is the net cost of the vessels, yes, servicing the loans and the insurance.

MR. TULK: From whom are we leasing the boats?

MR. CARTER: These vessels were built by the government, leased through an arrangement with two companies; the Pitney Bowes Company and RoyNat which is an offshoot of the Royal Bank. The boats are obviously overpriced, they cost far more than they should have cost, the result being that even if we were to sell those boats now, the payout on the mortgage would be far in excess of what we can hope to get for the vessels.

MR. TULK: Can we sell them?

MR. CARTER: We can sell them, yes, at a much lower price, I suppose, but given the fact that there is so much money owed on the boats, by virtue of their excessive cost, we can't afford to sell them at a loss, really. We are trying our best to find ways of utilizing the vessels to the point where they will come at least close to paying their way. To date, that has not been possible. In fact, as I said, it is quite the opposite.

Eventually, we will have to sell them, I expect. We have tried to deploy them in certain other fisheries but it doesn't seem to work out. We have had some enquiries from certain countries which have shown some interest in leasing the vessels, but again, the arrangements that are being offered are not substantial, certainly not adequate to make it worth our while.

I guess, to answer Mr. Tulk's question, Mr. Chairman, the whole middle distance vessel program is not working out at all. In fact, it is imposing a severe burden on the Province, not because there is anything wrong with the vessels, or with the people manning the vessels, but the fact of the matter is, there is no resource there. If we had - you might recall years ago, before the moratorium, there was a middle distance quota and that enabled the vessels to be viable. With that quota now removed, the vessels are just not viable. I personally cannot see us getting a quota for those vessels in the foreseeable future. If the fishery is re-opened, when the moratorium comes off, and a very limited total allowable catch is established, I question very much whether we will be able to succeed in getting a quota for those vessels, certainly at the outset.

MR. TULK: Mr. Chairman, just one more question. The minister, I think, will remember this. Some years ago, the then Minister of Fisheries, Mr. Rideout, and the future premier, were pushing the concept, and it was our thought, I believe, that where those people were going to fish, those 110s or 100-foot boats, whatever they were, could very well be fished by 65-foot boats, maybe 85-foot, at the top. It is debatable whether there ever should have been a boat built and a quota for it. And he is right, when the quotas come back, if they do come back, then I suspect they will go to the 65-foot to 85-foot boats to fish the same areas that the 110s were fishing. I don't believe those boats are ever economically viable - that is just a personal opinion of mine, and I believe the minister might share that view. As I said, he is stuck with it at this point and has to do something about it. The truth of the matter is, that venture is costing the Province an arm and a leg, $2 million that could very well be put into some other sector of the industry and do very well.

Let me ask him one other question - a question, I think, that is of concern to all of us. I don't know whether he can answer it or not. I don't know if anybody can answer it. The real question that bothers all of us is: How bad is that 2J-3KL Northern cod stock? I know certain little projections are given to us, but what is the feeling of people around his department and around the federal department? Just how bad is that stock?

MR. CARTER: The only advice we have to rely on, of course - we don't have any scientific capability within the Province in terms of being able to do an accurate assessment of the condition of the stock. The advice we are getting, the information we are getting from the people who do have that expertise, is that the stocks are in very serious trouble.

MR. TULK: Are they getting worse now, even at this point?

MR. CARTER: I don't know if they are getting worse, but they are not showing any signs of improvement, Correct me if I am wrong, fellows, this is what I am hearing and I suspect you are hearing the same thing. They do not appear to be improving - they are going the other way, we have heard.

MR. TULK: Still going the other way, aren't they?

MR. CARTER: Yes, for whatever reason - nobody seems to know why.

MR. WHELAN: What is that assumption based on?

MR. CHAIRMAN: Would the member please identify himself.

MR. WHELAN: Don Whelan, Harbour Main.

MR. CARTER: Maybe Mr. Vardy would like to interject.

MR. VARDY: I would just like to comment with regard to the Northern cod stock. The scientists have indicated that you need to have a spawning biomass of seven-years-of-age and older fish of 1.2 million metric tons, for a healthy stock. The spawning biomass has been steadily declining over the years, from the 1970s and the 1980s, and now it is estimated to be in the order of 70,000 metric tons.

MR. TULK: As compared to 1 million -

MR. VARDY: As compared with 1.2 million, which is needed.

MR. TULK: Oh, for heavens sake!

MR. VARDY: Now, the actual stock back in 1962 was a little over 2 million tons for the spawning biomass; we are now down to 70,000 tons, so it will virtually disappear. The spawners, large fish in that stock, have virtually disappeared and that estimate of 70,000 metric tons came out in June of last year. There was a conference several months ago, where a number of fishery scientists from around the world were brought together by DFO, to review the cause of what has happened out there and there were a number of conjectures and hypotheses put forward. One of them is the question of cold water, but some people believe that the major problem is environmental conditions. A great many icebergs are carving from Greenland in the Labrador current, and cold water arising from the greenhouse effect is bringing those icebergs down, cooling off the water.

MR. TULK: What is happening as a result of that, Mr. Vardy? I am just trying to get information.

MR. VARDY: That is cooling off the water and creating a problem in terms of survival. A lot of fish, apparently, are dying as a result of that. And the environment in terms of the larvae, I mean, the water is so cold, it is very difficult for the larvae to grow and that means that recoupment in the fishery is a real problem for the future. But the really big problem out there now with the spawning biomass is that the large fish have been taken or they have died; they are not out there, and we are down to the very precarious level of 70,000 tons, which is unprecedented. We do not have on record, any time in our history, when the spawning biomass for Northern cod was down to that level.

MR. TULK: Mr. Chairman, I am going to make two points or ask a question, I am not sure at this point, but it is a concern, because I believe, to be quite frank, and there are a number of fishermen around this Province who believe - and, Mr. Minister, you would know one of them, Tony Noble, who put the proposition to me about three weeks ago, that really, this fish has not been caught, it just disappeared into some other part of the ocean. Now, whether there is any sense in that or not, I don't know. Don't shake your head, Les, I have heard scientists talk about it.

AN HON. MEMBER: (Inaudible).

MR. TULK: It is thought that really, this fish, the Northern cod stock, has not been caught, that it has probably disappeared into some other part of the ocean. That is the belief he has. Now, I don't know whether there is anything to that or not, but as I was saying, I would not shake my head at anything, because I can remember being told in 1986, by scientists and all the rest of them, that there was lots of fish out there, that there always would be, and that there would be, I believe, 350,000 metric tons of Northern cod, this year, for them to catch, which is not the case.

My question is for the minister, and if he wants to he can defer to his officials: Are we talking about a stock that is basically extinct and are we still fishing that spawning ground? I mean, if we are looking at a 70,000 metric tons spawning biomass, as opposed to 1.3 million, it seems to me, there is nothing left, is what you are saying.

MR. CARTER: David.

MR. VARDY: Clearly, 70,000 is an estimate.

MR. TULK: Yes, so is 1.3.

MR. VARDY: Well, so is 1.3, but I would be a lot more comfortable with 1.3. There have been some Northern cod tagged in the Bering Sea; that doesn't suggest there has been a widespread migration of fish from the Bering Sea, but based on that, some people have inferred that the fish have dispersed all over the world, which is highly unlikely.

MR. TULK: I think it is highly unlikely, too.

MR. VARDY: I think it is highly unlikely. The fact of the matter is, survey vessels have covered an incredibly wide area and they have just not been able to find those fish. Now, in terms of the question about whether we are still fishing for Northern cod, the answer is no. We are not fishing for Northern cod, we are not fishing spawning concentrations, but there is still an effort out there.

MR. TULK: That is what I mean. I am sorry about that, I didn't mean we, as Canadians.

MR. VARDY: No, but there are over 100 vessels fishing; some of them are reputed to be fishing species other than Northern cod, but we really don't know what they are fishing. There are 100 boats fishing today as we speak, with 4,000 fishermen on those boats. They have landed a lot of fish so far this year, much of it being turbot, but there is no question that a lot of cod is being taken, as well. The members of NAFO have agreed not to take Northern cod and to accept the Northern cod moratorium. However, several months ago, there were Spanish vessels fishing Northern cod and we understand that the EC surveillance vessels moved in and stopped them, but in the meantime, they did take a substantial amount of Northern cod before they were stopped. Apart from NAFO, there are a number of countries, non-NAFO members, who are still fishing for Northern cod.

MR. TULK: Out on the banks?

MR. VARDY: No, they are fishing further south on the Nose. They are fishing mostly on the Nose. They can't fish on the Hamilton Bank now because that is inside the 200-mile limit and they are not allowed in there. I think, one thing we have been able to do is, we have been able to keep vessels from coming in over the line, by and large. The big problem we have is what is going on outside the 200-mile limit. There is still a major effort going on right now, as we speak, and that could lead to the extinction of the Northern cod.

MR. CHAIRMAN: Thank you, Mr. Vardy. I would like to refer now to the Member for Baie Verte - White Bay.

MR. SHELLEY: Thank you, Mr. Chairman. I have a few questions and a few comments, I guess, in general; some are specific and some are more general.

I would like to start off with one on the interest payments to the Loan Board. All, or most of these, I guess, are directly related to the Loan Board. Are there any considerations - I really don't know, that is why I am asking - to loans outside the Loan Board, especially the smaller ones? During the election and since then I have had a lot of calls on this type of thing, of people who are receiving the NCARP with small loans they have had with, for example, a plant. A fisherman had a $5,000 loan with a plant. Are any considerations being given to those people for interest forgiveness on those types of loans?

MR. CARTER: I guess, the answer to your question, Mr. Chairman, is no. First of all, we have no idea how many of those loans are out there. We asked the Fishermen's Union, quite some time ago, to document the number of loans and the circumstances. We, as a department, have no way of knowing how many such loans are out there and the circumstances surrounding the loans. It would be extremely difficult for us to take on that job, I'm afraid.

We are now providing interest subsidies and write-offs for direct loans, loans that are made directly by the Fisheries Loan Board, and for those loans that are guaranteed through the bank, under the bank guarantee program. But, in answer to your question, no, we are not contemplating taking any kind of action to assist people who have loans outside of the Fisheries Loan Board.

MR. SHELLEY: Okay, that will help me answer a lot of questions, because I didn't know it and I was being asked by - I guess there are many people who don't know that.

I will just comment now, as quickly as I can. The Committee you are talking about starts meeting in Bonavista tonight. I just want to say, I hope that one of the terms of reference, I guess, or guidelines of the Committee or whoever decides which plants are going to stay open and which are going to close - one of the criteria should, I think, say where in the Province these plants are to be located, how they are to be spread out.

I wouldn't like to see fourteen plants - the geographical question - open in one area and one in another. I think that should be one of the considerations or guidelines or terms of reference - I don't know how you want to put it - when this Committee starts deciding. Because sooner or later they are going to have to start deciding which plants open up.

Also, I am concerned, well, in my district, anyway, about the plants that haven't been upgraded in years, that have old equipment and things like that in them, that that won't be a deterrent to that plant being decided - I know it is going to come down to dealing in a business sense with the company saying: We are going to shut down this plant down here because the equipment is outdated. But I also hope that won't be the final judgement, because a plant hasn't been upgraded over the years, that that will only be a small factor when we finally decide which plants will stay open.

I wonder if you have any comment with respect to plants that are not upgraded now, that that won't be a major factor in deciding which plants stay open.

MR. CARTER: It seems to me, in recent years there has been a lot of activity on the part of existing plants to upgrade themselves, and to upgrade to the point where they can facilitate production of other species. For example, in the crab industry, there has been a lot of activity in recent months with plants gearing up for meeting the market demands for a different product, for example.

Again you are talking about something that is strictly within the ambit of the private sector. You talk about whether we have a plan or not. The question is not whether the department has a plan. The Green Paper that we are now about to take around the Province for consultation gives a number of options for a plan for the fisheries of the future. So, it is not a question of whether the government has a plan, the question, of course, is: Should the government be put in a position of deciding on which plants and which communities will perish and which should live? I don't believe, quite frankly, that is our role. I think natural forces, in the long run, will dictate which plants survive and which plants go under. Again, in the absence of any definitive knowledge on the extent to which the stock is rebuilding and where it will be four or five years from now, it is extremely difficult for anybody, including government, to be able to make a determination as to which plants are going to survive under these circumstances - it is virtually impossible, quite frankly.

MR. SHELLEY: Yes. Well, I guess my point in all of it is that I am hoping it doesn't lie solely with the private sector, that they decide which plants stay open because of their equipment in certain places, how they upgrade it or the convenience of the private sector or the business people to decide which plants for convenience sake, to stay in one area, as opposed to another. I think there has to be a combination there of the government and the private sector so that they come to an agreement on - you know, there have to be guidelines from you and also guidelines from them as far as the business goes.

MR. CARTER: Well, I can only repeat what I said a moment ago, that it seems to me, if we are going to have the kind of fishery we want, that is not almost totally dependent on government assistance in one form or another, and fishermen who are able to survive without government assistance, then we are going to have to let the private sector make some decisions, I think. If government tries to impose itself on the private sector, we know what happens and we are now seeing the results of it, frankly.

MR. SHELLEY: Well, I agree with that but I certainly don't want to see - I think rural Newfoundland would be at a disadvantage if they were to take the majority of control of that. I mean, if some guy who owns seven or eight plants, decides to put them all in one area where it is convenient to him, instead of consideration being given to a smaller plant in another area - that is just the point I want to make, there has to be some control there. I know that the private sector, in running a business, has to be controlled by their own business. I agree with you in the natural way it will go but there have to be some guidelines so that it is not just the private sector making these decisions. I just hope that our government is in control of what is happening, that is all, that it is not just totally left to the private sector.

Anyway, that was just a comment, more or less; really, I just want to - I guess it will be the last one, basically just an update on aquaculture, where it is going and what the plans are, in the near future, for aquaculture. What is the potential? Really, I guess, I am looking for the good news on that because I have heard quite a bit about it and I just want an update on it, basically.

MR. CARTER: I can ask Mr. Kingsley to comment on that if you don't mind, Mr. Chairman.

MR. CHAIRMAN: That is fine. Mr. Kingsley.

MR. KINGSLEY: Well, the most immediate prospects for success in the aquaculture industry would be related to mussels and the Atlantic salmon, steelhead trout and, to some extent, scallops, as the minister mentioned in his preamble. In the meantime, there is variety of research initiatives being undertaken with other species of fish like Arctic chard, wolffish, halibut and so on.

The most recent statistics that we have, indicate that in 1992 we produced 1,250 pounds of mussels and approximately 100 pounds of salmon and steelhead trout. All of the growers now are in an expansion mode. We are providing some assistance to stimulate the production of mussels and the growers in Bay d'Espoir are now on an expansion track that will see them produce about 1,000 tons of product over the next three or four years. In Bay d'Espoir, we feel, realistically, there is room for production of about 10,000 tons of product, being about the level of production now in New Brunswick, which provides a $100 million industry. So, we are very optimistic about the outlook for aquaculture in general, and the most immediate prospects, as I mentioned, are with mussels, some monads and scallops.

MR. SHELLEY: How much money, provincially, is being put into aquaculture, this year, anyway? I didn't read anything in the report there.

MR. KINGSLEY: Well, the Budget indicates, I think the figure was, in provincial funds, about $250,000. In the meantime, we have just come off a cost-shared program with the Federal Government, the NIFDA program, which put about $5 million in research initiatives in the industry over the last five years, and we are in the process of preparing a proposal for another cost-shared agreement with the Federal Government. There may not be any cash flow in that program this year but we would expect that something would be put in place to cover another five-year planning period.

In addition to the provincial funds, which I have just mentioned, there is also some provision under the Strategic Economic Plan for support to the aquaculture industry. We would expect something in the order of another $150,000 - $200,000 to be available from that source this year.

MR. SHELLEY: I am very interested in that particular part of it and I know some people who are involved in it. I would like to get a written update on projects that are ongoing now and also those that have been proposed for this coming year, if I could, somewhere along the way.

MR. KINGSLEY: Yes, Mr. Chairman, we would have that. I don't have it with me at the moment but we certainly will be able to follow up and provide a listing, as requested.

MR. SHELLEY: Okay, thank you very much.

MR. CHAIRMAN: We will now go to the Member for St. George's, Mr. Hulan.

DR. HULAN: I want to make a comment first, since some of my colleagues are continuously being blamed for making an error in estimating the cod stocks. I can't but in a humorous way think about the fact that years ago, we were trained to use a slide rule and not a calculator. You know what happens to a calculator when the batteries start to go - if you don't notice it, it gives you erroneous results. So, I hope that isn't the simple explanation. I am sure it is not.

I was certainly glad to hear you, Mr. Minister, comment on the fact that as far as inefficient operations are concerned that the inefficient will go by the wayside. I think you are going in the right direction there; certainly, that has been recommended to the agri-food industry of this Province, as well. I commend you on that stance.

I am very concerned about the biomass, which I am hearing Mr Vardy tell us is in such a serious condition today - 70,000 metric tons, I guess it was, and that leads me into my real question, Mr. Minister. I am indeed pleased to see such attention being given to aquaculture. As you heard the other day in the House, in my maiden address, I spent some time on aquaculture. The question I have is: Cod larvae, for instance, the survival rate in the wild, from larvae to adult is around 5 - 8 per cent, somewhere in that region. What plans are there for your department to use the science of aquaculture to improve the survival of cod larvae? Are there plans there? That is number one.

Number two, I have a real problem, when I read the information in the aquaculture area, with the reduction in dollars going into aquaculture - the reduction in dollars compared to other years - and I draw your attention to the one area where it was identified for research; it was virtually decimated. Yes, here we are: "Appropriations provide for the management, research and development of aquaculture in the Province" - item 3.1.04 on page 114, and the reduction is sizable from $190,000, that was the revised budget for 1992-1993, to $133,000. "Grants and Subsidies" - wiped out altogether. I don't know what Grants and Subsidies mean but, there was $100,000 in there, wiped out completely, there is zero in there now.

I really want to draw the Committee's attention to this because, to me, aquaculture can do so much for the problems we have in the fish industry, and although I see great attention to aquaculture, I am concerned about the reduction in the dollars. If I go up above in the other area in the same category, Fisheries and Aquaculture Development, I see a reduction from $575,000 in 3.1.03, to $256,000. Maybe I am reading it incorrectly. I am reading it as sizable numbers of dollars being removed from aquaculture commitment.

MR. CARTER: With respect to the first question, Mr. Chairman, "Grants and Subsidies" under subhead 3.1.04, as I mentioned in my opening remarks,there is some block funding provided to the Strategic Economic group and also, as I mentioned as well, in my opening remarks, the NIFDA agreement has now terminated and that is why there is no amount under that heading. We are anticipating funding will be provided under the block funding arrangement provided to the Strategic Economic planning group. Reg, do you have any further comment you want to make on that?

MR. KINGSLEY: Yes, well, as the minister indicated, we are anticipating that there will be additional funding available under the Strategic Economic Plan. I mentioned earlier the figure of $175,000 to - well, $150,000 to $200,000, which, if you look at both 3.1.04 which I think was the first question related to the budget, the expenditure this year is $156,000 under 3.1.04, so if, in addition to that, we have funding of $175,000, in fact, then, the provincial funding - strictly provincial funding - in 1993-1994 would be in excess of the revised budgets for 1992-1993.

Aquaculture - ERDA, 3.1.05 - there has been a reduction there because the agreement has expired; there is $60,000 provided there as a wrap-up to that five-year agreement, but as I indicated, as well, we are in the process of developing a proposal and we are hopeful that we will have another cost-shared agreement put in place, albeit that there may not be any cash flow in the present fiscal year under any revised or new cost-shared agreements.

DR. HULAN: Mr. Minister, say, the agreement that Mr. Kingsley is speaking about comes through, what proportion of that agreement will actually, in dollars, be put into research? Because that is where it is going to pay off - it is going to be through research. I can go back to the agri-food industry across North America and the areas of the industry that are surviving extremely well in Canada and the United States are the areas where they put significant dollars into good research. How much would be actually into basic and applied research?

MR. KINGSLEY: Mr. Chairman, well, we agree that the emphasis should be on research, that has always been our philosophy, I guess, in the Department of Fisheries. Most of the funding we get from year to year is for pilot scale work and in support of research at the University and other places. Now, the terms and conditions of any revised agreement would have to be the subject of negotiations with the federal agencies. So, it would be impossible to answer that question definitively at this point in time until we get those details finalized, but I believe it is fair to say that there is an interest by both the Federal and Provincial Governments in supporting research initiatives that will lead to development of the industry.

DR. HULAN: Okay, you have basically answered my question. You people are manning the ship, so to speak, and I am hearing you say that you are interested in making sure that a sizeable component will be in the area of research?

MR. KINGSLEY: Yes.

DR. HULAN: I am satisfied with that.

MR. CARTER: Mr. Chairman, I wonder if Mr. Vardy may address Dr. Hulan's comments on cod farming?

MR. VARDY: I would like to just respond a little, at greater length, to Dr. Hulan's comments. In the Province's Strategic Economic Plan, of course, aquaculture is identified as one of fifteen major growth opportunities and we realize it has considerable potential. Mr. Kingsley has already made reference to mussels and salmon and we believe that Bay d'Espoir has tremendous opportunity. Somebody recently said that the aquaculture growth potential in Bay d'Espoir is greater than the Bay of Fundy and the Bay of Fundy is already producing $100 million worth of farmed fish.

The question that was raised with me was with regard to the raising of cod. As you know, back in 1896, Adolph Nielsen in Dildo started a hatchery which lasted for several years. Unfortunately, that particular project died, and we are now looking at similar types of cod enhancement. We had a study done by a number of professors at Memorial University in the Ocean Science Centre and they have recommended that we start a pilot project. We are putting together a team now to see whether we can get a pilot project started which would involve, essentially, enhancement of some of the bay stocks, possibly Trinity Bay. We are looking at building on some of the work that is being done there by Dr. Wroblewski. He was in the Chair of Fisheries Oceanography at Memorial. We are very keen on exploring that opportunity in terms of hatcheries, because virtually every other species is enhanced. Particularly, when an environmental problem occurs, it seems logical that one should respond by some kind of an enhancement action, so we are giving a lot of attention to that. The other general comment I would make is that the aquaculture industry is, of course, very much a new industry. It is an infant industry and it requires a lot of nurture. And everywhere else in the world where aquaculture has become successful, it has received funding, particularly in terms of research. That is true in New Brunswick, in British Columbia, in Chile and Norway, and I think it is true here. We certainly want to put a lot of emphasis on research with regard to aquaculture.

The University has a big role to play. One of the things we have been doing over the last few years has been to fund work being done at the Ocean Science Centre on scallop. When we get a new agreement we are hoping to be able to continue that work, to continue the core funding to the Ocean Science Centre. Because we have a scallop industry here that is growing, that has a lot of potential, and we think that the next step now is a hatchery. The University has given us a lot of help so far in developing the genetic strains of scallop that are most likely to succeed in Newfoundland and we want to continue that work.

I think, Mr. Chairman, the point is, we certainly feel that research is a key component of the aquaculture industry, and, indeed, without it, the industry could never succeed. Thank you.

MR. CHAIRMAN: Thank you.

DR. HULAN: Thank you, Mr. Chairman. I really should have had him in sometimes to defend the University, you know, because that was fantastic. I should get that on tape. Thank you very much.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. Mr. Minister, some months ago, and I believe the time is either up now or very close to being up, you introduced a freeze on further processing licenses, or the transfer of processing licenses in the Province. Is that about to change or are you going to extend it? What are your plans?

MR. CARTER: Yes, we did announce it, and we are going to continue the freeze until the discussion is completed on our discussion paper, and then we will see where we are going from there. In answer to your question, the freeze that was in place has been extended.

MR. WOODFORD: Have there been any new licenses issued or transferred since that particular freeze came on?

MR. CARTER: For groundfish or for -

MR. WOODFORD: For anything - groundfish or any other species.

MR. CARTER: No new licenses have been issued. I am not aware of any groundfish licenses having been transferred. Reg, that is your division. Are you aware of any?

MR. KINGSLEY: No, Minister, I am not aware of any new licenses. There may have been some retail processing licenses which had been conditionally approved before the freeze was announced and, of course, "conditionally approved" would have meant that the licence basically was approved but the individual would have had to put a facility in place and have it inspected and registered and so on. There may have been one, two or three of those that were issued after the announcement of the freeze.

There have been no transfers, to my knowledge or to my recollection. There were two facilities on the West Coast in which there was a consolidation of facilities at St. George's and Stephenville. One or two of the miscellaneous licenses that were held at Stephenville have now been consolidated with the operation in St. George's. That was in the context of a general reduction in capacity. The groundfish licenses of both facilities disappeared and so on. Only in that context have there been any licenses transferred, to my knowledge.

MR. WOODFORD: So, no new licenses have been issued and none transferred, is that right?

MR. KINGSLEY: That is correct.

MR. WOODFORD: Sop's Arm Fisheries: There was a request in for the transfer of a processing license from Sop's Arm Fisheries to a company. I am not at liberty to name the company. The minister knows the company I am talking about, and his officials also know. My understanding, from talking to the minister a couple of times on it, and from other officials, is that if there was a case to be made they would review the process, and, if at all possible, especially when you are talking about underutilized species, maybe there might be some accommodation for something like that.

This particular company had a request in for the transfer of that particular license, mainly to deal with underutilized species and to do some groundfish, because they wanted to ship it or transport it down there and have the groundfish go through that plant, as well, along with the pelagic that they are used to doing. Is there any particular explanation why that wasn't followed up on or there was no firm decision made on it?

MR. CARTER: That is a case where they wanted an extension of an existing license, isn't it? (Inaudible).

MR. WOODFORD: Yes, just to transfer that license to them.

MR. CARTER: Transfer that license from one plant to another.

MR. WOODFORD: No, Sop's Arm Fisheries had the license. It is issued in the name of Sop's Arm Fisheries, or Jake Mullins.

MR. CARTER: That was an inactive license.

MR. WOODFORD: Yes.

MR. CARTER: That license has not been operational now for quite some time.

MR. WOODFORD: Yes, in 1989.

MR. CARTER: We do have a policy, of course, that once a license is inactive for a given period, two years, unless there are extenuating circumstances, then the licence is automatically cancelled. I suspect that is what happened in that case. The Sop's Arm - I presume that was a redundant licence, it was inactive for a period of two years at least?

MR. KINGSLEY: Yes, Minister, that is correct. It is one of the licenses that is caught up in the freeze that you raised earlier.

MR. WOODFORD: Yes. Well, that is what I'm talking about, in the freeze. But you would think, or I would think, I mean, when I looked at it first, I realized that the freeze was on. I realized that there should be no exceptions with regard to a transfer or a new license. When I looked at their proposal and we are always talking about - you and your officials, and we all are as a whole - talking about trying to do different things, especially when it comes to underutilized species, they were talking about skate, gray sole, flounder and so on there, and I couldn't understand why some accommodation wasn't made for that.

MR. KINGSLEY: Actually, I'm unaware of any proposal from the applicants for the use of underutilized species at Sop's Arm. The question, I guess, that was put to us was as to whether or not the groundfish license was available, and the response, of course, was that the groundfish license has been frozen.

MR. WOODFORD: This proposal was faxed in. I had a copy of it on the day and I spoke to the minister on the same day that it came in. He was going to talk to his officials at that time. This company has been talking to the department - to whom, I don't know. There must be some breakdown, because this particular company is well-established and they were dealing with underutilized species. It wasn't taking away from anybody else, it was something new, and they wanted to go in there and do it.

I would ask the minister if he would probably talk to his officials and have them look at that. Because there is no government money involved, absolutely none, it is a lease from - FBDB owns the plant now. They were going to lease the plant from FBDB, and there was absolutely no government funding asked to go into it. I would appreciate very much if your department would take another look at that and see if it is at all possible to try to have something done, to rejuvenate that particular plant.

MR. CARTER: This was for underutilized -

MR. WOODFORD: Yes. They are all mentioned. They are all in the proposal that was sent in. If the proposal is not there now, I can certainly accommodate the minister and his officials in providing the same copy of that proposal, but you got a copy the same day that I got one.

MR. CARTER: Well, the policy of the department, rather than reinstate an inactive license for example, is to direct that activity to an existing plant and that is already in operation. Now, that is not the case here; Sop's Arm has been closed up - it was Jake Mullins' plant, wasn't it?

MR. WOODFORD: Yes.

MR. CARTER: It has been closed for quite some time, as you know.

MR. WOODFORD: Since 1989.

MR. CARTER: Yes, 1989, so it is beyond the two-year period when, if a plant is inactive for two years, or a license, then the license automatically is cancelled and rather than renew a license to reactivate that plant, it would make a lot more sense to direct that activity to an existing plant - it might help that plant, for example, to survive - rather than start an entirely new entity.

MR. WOODFORD: We are always talking about the viability of plants and the viability of the fishery and so on, but in this case, the question is, that other plants may not be viable; i.e. transportation, maintenance, renovations. This plant is ready - you can pretty well walk into it, and he can operate on a lease basis with FBDB. So the viability of the plant, a particular license and a particular area should be taken into consideration. I mean, if the plant is viable, for instance, in Sop's Arm and not viable, for instance, in Bonne Bay, why give the license to Bonne Bay? that is my question.

MR. CARTER: Well, you know, going back to the reason why it was closed in the first place, that was because it wasn't viable. I assume, if there were any opportunity or any potential there at all, Mullins would have recognized it and would have kept the plant operating.

MR. WOODFORD: Well, I don't know if that holds water, Mr. Minister, because I can understand if I were talking strictly about groundfish; that is mainly what went through there, groundfish and pelagics, caplin and so on, but no underutilized species went through the plant in Sop's Arm, and we are talking about something new; and I can understand what you are saying, you are right, you are dead on about what happened in 1989, but when we are talking about this particular proposal, I think it is like night and day.

MR. CARTER: What species are you talking about?

MR. WOODFORD: Grey sole, skate, flounder - it was all on the proposal, and you know the company. I will mention it to you after, I can't say it publicly, because I don't think the company would want that, but you do have the proposal.

MR. CARTER: You were talking about grey sole; grey sole is not deemed to be an underutilized species.

MR. WOODFORD: But they wanted to make sure that it went through that plant - it was not going through.

AN HON. MEMBER: Flounder is not.

MR. CARTER: No, flounder is certainly not.

MR. WOODFORD: No, flounder is not, but the skate and the other - well, I had a copy of it there and we went down through it. You thought there might be some chance for it to go through at that time. I spoke to you in the House of Assembly about it.

MR. CARTER: I don't know what I said at the time but, certainly, I don't think I conveyed the impression that it was almost an automatic approval.

MR. WOODFORD: No, no, but you would have a look at it.

MR. CARTER: I probably said it would have to be referred to the Committee and let them have a look at it, which is what would normally happen in a case like this.

MR. WOODFORD: Yes. What rate of collection does the Fisheries Loan Board have?

MR. CARTER: Maybe Mr. Kane will answer that question.

MR. WOODFORD: What percentage?

MR. KANE: It depends on what period you are talking about. Are you talking about the present?

MR. WOODFORD: Historically, the last two or three years, the last three years.

MR. KANE: The last two years, the -

MR. WOODFORD: As compared - for instance, before the moratorium, what was the rate of collection as compared to now?

MR. KANE: You would have to look at the historical activity of collections at the board. The board started in 1949 and it was not until 1986-1987 that it started to have a proactive collection activity. It has been a bit of a catch-up situation that involves writing off of accounts that are not repayable, as well as collecting accounts to demonstrate that they can repay. There is obviously a considerable allowance for doubtful accounts built up because of the past inactivity of collections. So we are obviously not collecting the amounts that are due each year, but we are making headway on the use of proactive avenues such as, just counselling accounts or trying to rehabilitate accounts. Where that can't be done we have to seek a remedy to resolve the account either through repossession, legal action or write-off, depending on whether they have the ability or inability but it is done. It is very important to realize that you can't look at them all together, they are done on an individual basis. The incomes of each are looked at in assessing whether the fishermen have the ability to pay and if they don't, then there can be a partial settlement of the account. If it is deemed that they have the ability to address the whole account, they are expected to do so, but if there is inability to repay, then there is also an avenue to go through Treasury Board to seek write-off of the account.

MR. WOODFORD: What would be the total write-off value this year? Do you have that figure?

MR. KANE: What is the write-off?

MR. WOODFORD: You do it each year. I assume you do so many write-offs each year.

MR. KANE: Yes we do. We have just come up with a - in 1992 we were developing write-off guidelines that were acceptable to Treasury Board and there was approximately $3.5 million identified for write-off. The guidelines have just been put in place over the past three or four months and we are now funnelling those through Treasury Board for their authorization. So, in the past two years, you could say that there has been approximately $3.5 million that the Fisheries Loan Board executive board has approved. The approval of Treasury Board is now being obtained but there was a slight delay because of the - internal audit got involved in actually endorsing guidelines that we had prepared.

MR. WOODFORD: So, it is about a $3.5 million write-off for this year, if it goes through.

MR. KANE: There is going to be - well, as soon as Treasury Board -we just received $1 million of that $3.5 million approved to write off. There is another $2.5 million that will be going through in the next two months.

MR. CHAIRMAN: There is at least one member of the Committee who hasn't had a chance to ask anything yet. Would you want to do that Mr. Whelan?

MR. WHELAN: Yes, I was wondering was there any research done into the possibility of pressure being put on the boatbuilding industry after the moratorium was lifted.

MR. CARTER: In what way?

MR. WHELAN: For example, a lot of the boats that have been hauled up may have been marginal as far as seaworthiness is concerned and a few years out of the water may be enough to do the trick on them. Apart from that, if there is a new fishery, maybe different types of boats may be needed. As a result, there may be, as I said, a strain put on the boatbuilding industry with the possibility of a lot of fishermen going outside the Province to buy their boats.

MR. CARTER: As you might know, Mr. Chairman, under the NCARP program there is a provision for maintenance, a maintenance allowance, provided you meet certain criteria. I presume that is to enable fishermen to help defray the cost of mothballing their vessels and keeping them in good shape. In our department, we are putting more emphasis, in the Loan Board now, on the upgrading of existing vessels rather than the building of new vessels, which it wouldn't make sense at this point in time to encourage by way of bounties or subsidies or whatever - the building of new boats.

So, we are putting more emphasis on upgrading existing vessels, for example, fiberglassing. We are providing assistance in cases where certain criteria are met. Old boats are being fiberglassed, which will have the effect of extending their life span almost - nobody seems to know yet how long.

MR. WHELAN: Whether they are upgraded or fiberglassed or rebuilt, it would affect the boatbuilding industry. Most likely they would bring them to a shipyard to do it.

MR. CARTER: Yes, and there is no doubt about it, it is no secret, the boatbuilding industry is going through some pretty rough times because of the moratorium and the absence of new vessels being built. A lot of the upgrading work will be done on marine service centre lots by the owners themselves, or they will probably employ people to work with them - certainly, they won't go to a shipyard.

A lot of activity is now starting to build up in terms of fiberglassing with a great many private sector people getting involved. In fact, in some cases, where it has been possible, we have facilitated the establishment of fiberglassing operations right on our marine service centre lots. There is a lot of activity going on in rural Newfoundland now - people upgrading boats, improving them.

MR. WHELAN: The wooden boatbuilding industry in Newfoundland is a traditional and an historic industry. Where do you see it going? Has it disappeared altogether? Is there any future for it?

MR. CARTER: I don't think it will disappear but a lot of changes are taking place in the boatbuilding industry. There is a lot of emphasis now on fiberglass and steel vessels. The shipyard in Glovertown is, I think, concentrating almost entirely on the building of steel vessels. They are still operating I think, aren't they - Davis Yard in Glovertown?

AN HON. MEMBER: Yes, Mr. Chairman. Very few fishermen now are requesting wooden vessels of any size. I mean, generally boats thirty-five feet and up are either fiberglass or steel. In fact, I think there is in the Province now probably only one wooden yard that has any activity. While those skills are still there, the fact is that most fishermen now are looking for alternate materials for their boats.

MR. WHELAN: What is the status of the boatbuilding yards today? Are there any boats on chocks today? Are there any boats under construction?

AN HON. MEMBER: At the Loan Board there are very few. Obviously, the boatbuilding yards have very little activity on the go right now. That there is anything different in these times would just be false thinking.

AN HON. MEMBER: I don't believe there was a new vessel approved by the board in the last twelve months. I stand to be corrected on that. But if so, there would be no more than one or two. I couldn't say what was actually at the yards at the moment. The only steel yard that maintained any level of activity was at Glovertown. I really couldn't say if they have anything out there at the moment, but, quite frankly, I doubt they have. There are no boats being built - that is the reality.

MR. WHELAN: The new fishery, apparently, will have quite a few less fishermen than the fishery presently has, or did have, before the moratorium. How drastic a cut will there be in the number of fishermen?

MR. CARTER: Again, that is an imponderable, I suppose. That, to some extent, will depend on the extent to which the fish stocks rebuild. At this point in time we all know there are too many fishermen, I suppose, chasing - as the old saying goes, chasing too few fish. Again, the survival rate will depend, to a large extent, on the extent to which the stocks rebuild.

In our Green Paper, my deputy just reminded me, we have made certain projections based on the best advice we can get, and it does, in fact, project a very substantial reduction in the number of fishermen in the Province over the next few years.

MR. WHELAN: Will that be brought about by a process of buying out licenses?

MR. CARTER: The Federal Government, as you know, have a number of initiatives under way - seeking early retirement of fishermen, buying out licenses. We have the PWAP - is that what they call it? - PWAP, Plant Worker Adjustment Program, that now provides pensions, under certain circumstances, for fishermen fifty-five years of age and older. I don't know precisely how many fishermen are taking advantage of that program. Are you aware, David?

MR. VARDY: Somewhere between 600 and 700 up to now.

MR. CARTER: Yes, not very many.

MR. TULK: Take advantage of what?

MR. VARDY: Of the early retirement.

MR. TULK: Six or seven hundred?

MR. VARDY: About 600 or 700 fishermen. There are potentially 1,000 who could, but there hasn't been a full take up as yet.

MR. CARTER: No. Then, of course, there is the license buy-back, and attrition would naturally remove some people from the fishery.

MR. WHELAN: Thank you.

MR. CHAIRMAN: Mr. Tulk, you wanted to ask some questions?

MR. TULK: Yes, Mr. Chairman, if I could come back to that question of the stocks. Again, because I realize it is detailed, the minister might want a few minutes to finish his answer. To come back to that question of the stocks: It is obvious that there is a moratorium on and that there is very little effort in catching 2J-3KL or the Northern cod stock, as it was coined by a former Premier. The question is: Just how much pressure is that putting on other stocks, such as flounder, turbot, and any other species that you might think of? and what kind of pressure? Just what kind of shape are those stocks in, as well?

While it is all very well for us to talk about a new fishery, we must, at some point, have a product to process and a product to catch and so on. Just what is happening? Again, I realize it is out of your domain. It is not something that you control. You have very little to say about who catches what and what harvesting licenses are issued and so on. But it has to be a concern for you, it has to be a concern for all of us, just what is happening to those other stocks.

I hear, for example, that the turbot stock is getting used up, that the next crisis will be in some of those other stocks, that we will have nothing left unless we can cut back the effort by offshore boats, by foreign boats, and so on. Just where are we going? Are we taking everything out of the ocean? I mean, we know we have the technology, or we think we have the technology to catch every last fish out there. Are we, in fact, doing it? What has happened to our caplin stocks? Are we fishing caplin when, indeed, perhaps we shouldn't? I mean, I hear talk again this year of `maybe there will be, maybe there won't be, a caplin fishery.' What is happening with that? Are we tearing the heck out of that? Just what is happening? Are we fishing ourselves into extinction here?

I realize, again, as I said, Mr. Minister, it is not a question for you but it a concern of mine. Because, if there is no fishery in this Province, somebody will be looking for - if we keep doing what we are doing, as I see it, places like the communities that I represent, as a member of the House, in ten to fifteen years will have no reason to exist. I am just wondering what is happening to those other stocks.

MR. CARTER: I am going to ask Mr. Dean to elaborate, but I will say that you are right, there has been a lot of stock, a lot of (inaudible).

MR. TULK: You represent the same kind of place.

MR. CARTER: Yes, of course. There was a time when the Twillingate plant, for example, operated on the basis of turbot. Today, there isn't enough turbot landed in Twillingate to make a good meal for a family.

MR. TULK: Catsup brewis.

MR. CARTER: That's right. But there is a lot of pressure, especially on turbot. Even the federal people will admit that there are some problems. On caplin, too, of course, we all know there is some pressure, but again from the Province's point of view, we can only rely on the advice of the scientists. We will be guided by them. We have consistently said, if the scientists say the stocks are such that they can stand a fishery, then fine, we will go along with that, but if there is any suspicion that it can't, then do what needs to be done.

MR. TULK: Let me take, for example, this spring - and if I could, just to add to it before Mr. Dean starts. You will recall, a number of fishermen this year were in contact with somebody in the department, I don't who it was, about a number of fishing boats, sixty-five footers, tied up at the waterfront again this year trying to get into 3O to fish turbot.

AN HON. MEMBER: What is 3O? (Inaudible).

MR. TULK: No, 3O, in this particular case, to fish turbot. They got out there eventually, and the initial reports that I am getting back is that even though there was supposed to be all kinds out there - if there was any fish left, that is where it was supposed to be, out there in 3N and 3O. They got nothing; basically, they got very little fish, and the question remains: Are we not fishing ourselves right out of extinction? This is a question that somebody has to answer and I know you have no authority to do it, but, Mr. Dean?

MR. DEAN: The hon. member is correct in his observation that, in fact, with the moratorium, there appears to be a significant increase in effort towards the other species that are commercially attractive. For example, in the case of lump roe, there has been a dramatic escalation in the level of effort and the number of nets deployed in that fishery this year. But, in the wake of the moratorium, one species that certain vessels directed effort towards, was turbot and, of course, turbot is not a new fishery. In the long line of fishery in this Province, in the 1960s and 1970s and in the early 1980s, it expanded, not on the basis of the cod fishery as much as the turbot fishery. But essentially, the inshore turbot grounds have become barren wastelands.

MR. TULK: Another stock gone.

MR. DEAN: And turbot is a species that moves from inshore waters to deeper waters, so if you are going to search out the last surviving spawning concentrations of turbot in deep water, whether the foreigners do it or the Canadian fleets do it, either the middle distance or otherwise, don't expect any recovery of inshore stocks or concentrations, if that fishing pressure takes place.

MR. TULK: But we did that last year, did we not?

MR. DEAN: Well, it was done to some degree, and I think the concern that was expressed last year, Mr. Chairman, was that there appeared to be excessive effort in terms of numbers of nets deployed, a significant number of nets lost, and one could conclude, probably, that there needs to be more discipline in how that deep water fishery is conducted if, in fact, it should be conducted. So the general conclusion that you can draw is, in fact, that the turbot resource is probably headed in much the same direction as some of the other species, whether it is Gulf cod, or 3Ps cod, or Northern cod.

The level of effort, of course, will depend on the circumstances of each individual fisherman in certain areas. For example, in the case of the deep water turbot fishery, there wasn't a large number of vessels involved, probably in the order of fifteen or twenty, some of them from Fogo Island, for example, and some from the Avalon, but I guess, in terms of when times get desperate, fishermen will try to compensate for a reduction in one species by increasing effort towards others.

Now, in the case of the caplin fishery, I think it is fair to say that the camp is divided in this Province as to whether or not there should be a caplin fishery. If one were to read the minutes, for example, of the management committee meeting held about a month ago, certainly, based on consensus, and on the basis of the scientific evidence that was produced, you would have concluded that most of the participants were opposed to any fishery. But, given the nature of the scientific evidence that was produced, in fact, there was no solid argument against a permanent closure of the caplin fishery.

It was in that context that the management plan announced yesterday did provide for a harvest somewhere in the order of, I think, 47,000 tons, which is down from about 59,000 or 60,000 tons last year. But, certainly, there is a lot of concern about the caplin stocks, as well. Again, a lot of the uncertainty relates to the nature of the scientific advice that we are getting, very, very inconclusive scientific advice, much the same type of advice now being received on caplin that was received on Northern cod three or four years ago. I think we should learn from that, if anything.

MR. TULK: Mr. Chairman, could I just pursue one more question with the gentleman? It is along the same line.

The crab fishery: There is a great deal of effort being expended, along my coast, anyway, compared to what there was in the crab fishery. Again, I am only asking you for information that has obviously been filtered to you from the Federal Government. But there is a great deal of effort being put into the crab fishery. Is that another one?

MR. DEAN: Mr. Chairman, in the case of the crab fishery, of course, there are three controls on the fishery - number one is the number of fishermen that are licensed; number two, the number of crab pots that fishermen can deploy in any given area; and thirdly, but more significantly, of course, is the total allowable catch, itself. So, whether there are 15,000 fishermen fishing or 5,000 fishermen fishing, the fishery closes once the quota is reached.

MR. TULK: But is the quota too high?

MR. DEAN: So, there is a quota. Now, the question as to whether or not the quota is at a reasonable level is another question, because clearly, the crab resource has shown significant fluctuations over the last ten years. In other words, the level of catch, for example, the quota this year, is significantly lower than it was, let's say, in the early 1980s, for example. There is some evidence throughout Atlantic Canada, by the way, in the wake of the depletion of the groundfish resources, that, in fact, there is an increase in certain other species on which groundfish would normally feed. We are seeing it, for example, in the case of shrimp in the Gulf and, to some degree, as well, crab in the Gulf. Now, the evidence would suggest a wide distribution of crab in Newfoundland waters all the way up to Labrador. Of course, as the Chairman is aware, a new fishery is being developed in that area, but I don't have the same degree of concern, given the present quota levels, over the depletion of the crab resource, as I do over, let's say, 4RS, 3Pn cod or 3Ps cod or 2J+3KL cod, caplin or turbot.

MR. TULK: Well, caplin, I have some concern over.

MR. CHAIRMAN: Okay. Mr. Woodford has a couple of questions and then we will go back to Mr. Hulan.

MR. WOODFORD: Mr. Minister, there have been some reports and estimates, especially - the latest one I saw is from the Atlantic Provinces Economic Council. They have made some estimates in which they foresee closure of half of the approximately 170 plants in the Province. Could you comment on that? Is that realistic? or would you not want to comment on it?

MR. CARTER: I don't know if you would want to start crystal ball-gazing. I don't know on what they base that. I have heard the same reports, of course, but I am not sure it is based on any concrete information that they have. As I said at the outset, obviously, there is going to be a reduction in the number of plants, probably a large number of plants, over the next few years. It is obvious. We are learning the hard way, I guess, that you can't successfully operate a fish plant any more than you can any other kind of a business enterprise, operating at 17, 18 or 20 per cent of the operating capacity of that entity, and it has caused all kinds of problems. So, there will have to be, in the fishery of the future, fewer plants, fewer fishermen, and no doubt there will be more secondary processing, value-added, taking place in the various plants. New species will be developed and markets will be found for new product - we are already seeing it, by the way, in caplin.

There was mention made earlier about a reception last night for some Japanese people visiting the Province and about shishamo, which is a labour-intensive industry, or a product that generates a lot of employment in Japan, in fact, probably in the thousands.

There are companies now, in Newfoundland, getting into that production. In fact, one of the people, last night, said: Maybe the time will come when most of the caplin that we export to Japan will be exported in finished form, rather than in frozen block form. There lies a lot of potential. That's labour-intensive. I have seen video tapes of factories in Japan, for example, that are producing shishamo - am I pronouncing it correctly? - female caplin. It is a sea of faces there and mounds of caplin. If you can visualize 20,000 or 25,000 tons of caplin, each having to be handled individually two or three times. In my own district, last year, for example, I believe 500 tons of caplin were processed into Shishamo. It provided a lot of employment. I predict that within a very short span of time, a lot of the market needs, the Japanese market for shishamo, will be filled by Newfoundlanders and processed here in Newfoundland. It is one of the bright spots.

Now, again, we are talking about caplin and, as Mr. Dean pointed out, there are some very serious questions being raised about the caplin stocks. That is the reason why, I guess, it is all the more important that we allow nothing to happen now, certainly to things over which we have control - which is very limited, I know, in terms of setting the TAC. In fact, we have no control over that. It would be a catastrophe if anything happened to the caplin stocks now that we are on the verge of a breakthrough with respect to the secondary processing of them.

MR. WOODFORD: You mentioned earlier about the Sop's Arm plant which you referred to, I think, as an inactive license, or an inactive -

MR. CARTER: That plant closed in 1989. Jake Mullins was the operator. They folded in 1989 and, as a result, once a license is inactive for two years or longer, unless extenuating circumstances dictate otherwise - for example, if a company made a substantial investment in a plant over the past four or five years, then there would be some questions raised as to if, in fact, we should cancel the license.

Certainly, in the case of Sop's Arm there were no such extenuating circumstances. The license was withdrawn and that is where it stands now. We would be very hesitant to renew that license and to reactivate that plant in the present circumstance. If there are underutilized fish that can be processed, then it seems to me that it would make all kinds of sense to direct that to an existing plant that is struggling to survive, that is already operating, of which we have many cases.

Maybe Mr. Kingsley would speak, if you don't mind, Mr. Chairman, and if Rick doesn't mind, to the number of inactive plants that we have in the Province, and licenses. Do you want to take that?

MR. WOODFORD: One more question before he comments: Has this always been a policy of the Provincial Department of Fisheries, or is this something new within the last while?

MR. CARTER: It is not new, and again, it hasn't been a long-standing policy of the department. The cancellation of redundant licenses is a policy that was adopted, what? a year, two years ago? When does that policy date back to?

MR. CHAIRMAN: Mr. Kingsley.

MR. KINGSLEY: Mr. Chairman, the policy, I guess, has been on the books for several years. There have been licenses cancelled over the years. For example, there was a crab license cancelled seven or eight years ago. In 1990, I believe it was, we reviewed all of the inactive licenses that were on our books and we called them all into question. We cleaned up many of the inactive licenses then, in 1990, but there were many, as the minister mentioned, who had invested. If they could demonstrate to the department that they had made an investment in the facility on the strength of the license, then we reconsidered it, and many of them were reissued.

In general terms, it has been the policy for several years that at least the license is called into question after a period of inactivity. In October, there was a public announcement by the minister that all of the inactive licenses we then had would be frozen and that we would no longer consider the transfer of licenses. Because usually a transfer involved the activation of an inactive license. There were seventeen or eighteen licenses captured in that freeze. Sop's Arm was one of them.

MR. WOODFORD: Did the actual release say "inactive"? I have my doubts as to whether that release said "inactive licenses." Anyway, that can be checked. What I see here, then, if that is a policy of the Department of Fisheries, that all inactive licenses be cancelled, withdrawn, you are doing indirectly what you don't have to do directly by closing any plants in the Province.

MR. CARTER: No, but surely, Mr. Chairman, if I can interject, if a plant is closed, for whatever reason - and usually there is a good reason for it, the main reason, of course, being lack of raw material, or maybe lack of the necessary working capital to keep it going, surely then we can't just leave those licenses there and at any given time in the future allow those plants to become active again - to reactivate those plants. That, it seems to me, would defeat the whole purpose of what we are trying to do.

MR. WOODFORD: But what I am saying is true, though. If there are 170 plants there now, you don't have to go out and say, we will pick here, pick there, because if they are closed now they are just going to be done. If their license is withdrawn the plant is closed automatically.

MR. CARTER: Yes, but the government didn't close the plant in the first place, the plant closed for a variety of reasons, maybe -

MR. WOODFORD: No, no, I didn't say the government -

MR. CARTER: - plus the fact, a license to process fish is not a right of anybody, it is a privilege that is granted on behalf of the people of the Province by the government, and with that license and that privilege, go certain responsibilities. Surely, if a person has a license given to him on behalf of the people, he has an obligation to use it or lose it. He can't hope to sit on it forever.

MR. WOODFORD: That's right.

MR. CARTER: And that is what we are doing. In cases where a plant has been dormant, inactive, for a couple of years, or longer, and unless there are special circumstances, then that license becomes history, it is cancelled. That is the only way we can do it.

MR. WOODFORD: Would the announcement of the moratorium be classified as a special circumstance by the department? Because, if not, those plants are going to be the same as the Sop's Arm plant - it is only a matter of time. If the moratorium stays on for another couple of years, which is, I guess, very probable now, all those plants are going to be in the same situation as the Sop's Arm plant - that's the point I'm getting at.

MR. CARTER: In cases where plants are forced to close by virtue of the moratorium, that would constitute special circumstances. But let me tell you, Mr. Chairman, the Sop's Arm operation was run by certainly one of the most capable plant operators in the Province, a man by the name of Jake Mullins, who had years and years of experience working with - I believe at one time, going back to Bonavista Cold Storage, and with other major companies. And I am satisfied that if Mullins couldn't make a go of the Sop's Arm plant, I tell you now, it's - he didn't walk away from that plant because he wanted to. He walked away from it because obviously, for a variety of reasons, it wasn't a viable operation. That being the case, then how can we justify allowing the license to stay there? Like Mr. Kingsley said, (inaudible).

MR. WOODFORD: Well, I won't comment on that.

MR. CARTER: Pardon?

MR. WOODFORD: I won't comment on that particular part of it. Has the minister or his department had any calls or concerns with regard to ice conditions so far this year anywhere in the Province?

MR. CARTER: No, I haven't. Unless my staff - I haven't had any.

MR. WOODFORD: I have had some calls. I know it isn't your responsibility or anything, but where the UI finished in May and some of the fishermen are on NCARP, they can automatically take that, but the people finished with their UI have nothing. And Jackson's Arm, Sop's Arm and Hampden are blocked in now with ice.

MR. CARTER: I must confess, Mr. Chairman, this is probably the first year in the past number of years that I haven't received a whole slew of calls on that subject, but to date I have not received any calls.

MR. WOODFORD: It seems that is the only area that is blocked right in, all White Bay, and they can't put out their lump nets, nothing, so I am just wondering if -

MR. CHAIRMAN: The Labrador Straits, for the last few days, has been blocked in and probably (inaudible).

MR. CARTER: I expect a lot of the people are on NCARP payments and the ice doesn't bother them.

MR. WOODFORD: No, well, that is the problem, when you have some who are not, and that is what I am running into, especially in the Jackson's Arm area where the plant has been taken off the list.

MR. CARTER: They might be directing their calls where they should, I guess, to the federal people.

MR. WOODFORD: Yes, I realize that, but I am just wondering if the department has had this problem with any other areas of the Province. Has anybody else had the problem?

MR. CHAIRMAN: Dr. Hulan.

DR. HULAN: Mr. Minister, (inaudible), Mr. Dean's. I would like to go back to the question on the caplin stocks. It scares me when I hear that we could be going the same way as the Northern cod as far as caplin is concerned, and I am sure everyone around the tables here feel the same way. I am amused at the fact that science, by sheer nature, is for precision, it is precise, and we know that a gross error was made with regard to the Northern cod stocks. How is this being treated by the international scientific authority on the ocean and the seas - the comment being made now that the caplin stocks are not in jeopardy, and yet there is the feeling that they are? What is the response internationally on that?

MR. DEAN: The management of caplin stocks, of course, within Canadian waters is undertaken by Canadian scientists, so there are no international scientists involved in that context.

DR. HULAN: Well, that worries me even more. I would have thought there would be dialogue between scientists in Norway and the Canadians.

MR. DEAN: But that is a different issue, Mr. Chairman. You are correct, there is ongoing dialogue between Canadian, Icelandic and Norwegian scientists. In fact, when we were in Iceland the year before last, we met an individual who had spent close to a year working with Fisheries and Oceans here in St. John's, so there is a lot of information exchange and interaction between the scientists from Canada, Norway and Iceland.

It is not a case of saying that the caplin are going the way of the Northern cod, I wouldn't be as definitive as that. The point I was trying to make is that there is a lot of uncertainty in terms of the scientific advice as to what is the actual state, let say, of the 2J+3K caplin stock, you know, the 3O, whatever the case might be - that is the point I was trying to make.

MR. CHAIRMAN: Mr. Tulk, you have another question?

MR. TULK: Mr. Chairman, I have another question - again, I guess, a detailed one - for Mr. Kane, with respect to his collection efforts and the establishment of ability to pay. The question is: Do you have a set of guidelines or regulations that you use when you try to establish ability to pay and, if so, what are they? Given the freeze that is now on groundfish licences, and the moratorium and so on that are on the go - and that is the biggest mess that ever you saw in your life, this freeze on groundfish licences by DFO, federal Department of Fisheries. I don't know what is their criterion; we tried to establish it in the past couple of weeks, but we are not able to do it. Are there any cases where you are saying to fishermen: Alright, given the fact we know that you are on the NCARP program, that you have a boat which maybe you launched in 1991, the Fisheries Loan Board gave you the money for it, and obviously, your income has now been substantially cut in terms of your operation - are there any cases where you are saying to them: alright, we will also freeze your payments? In other words, we won't force you to make payment over the next little while because we realize you don't have it. In the meantime, if the fishery makes a comeback, you will be allowed to keep that boat and start using it when the fish moratorium is lifted. Do you understand the question? My point is made rather clumsily.

MR. KANE: I understand - there are three questions there, basically.

MR. TULK: There are probably several.

MR. KANE: Yes. First of all, the established guidelines -

MR. TULK: I know I should be going through the minister, but I am sure he doesn't mind.

MR. KANE: (Inaudible). Mr. Chairman, first of all, the established guidelines for collections. Again, they are done on an individual basis.

MR. TULK: Pardon me?

MR. KANE: They are based on an individual review of each borrower's circumstances. Somebody could be receiving NCARP but his total income, which would include NCARP, would be assessed to determine whether the person has the ability to pay. If he does, he could be receiving NCARP as part of his total income and he would be expected to make some partial payments towards his debt.

Depending on his attitude towards his debt - that is a factor that comes into play. If a person, for example, on the positive side, just received a loan in 1991, and made reasonable payments in 1991, and then the Northern cod moratorium came into place, there are a number of things to help him. There is an interest forgiveness program. Secondly, based on a review of his income during the moratorium, the Board can be flexible with regard to principal payments. There is an ability to defer principal payments, or a portion of the principal payment, and get partial payment of the principal.

On the other side, if a person has a loan since 1983, or 1985 or 1986, he hasn't made any payments, it is in arrears and then he is using the excuse of the Northern cod moratorium for not making further payments, obviously, the executive board would look at him in a different light.

Again, it is an individual review. There are circumstances where fishermen are receiving the minimum under NCARP, since they have other family income. They could be, during the moratorium period, working at fishing crab.

MR. TULK: The wife could be a teacher?

MR. KANE: That is the next thing I was going to say - or a nurse. It could be a family income that would give the borrower the ability to partially or fully pay. So, again, it's an individual assessment, looking at his intent to repay in the past and his ability to pay now. The Board has a number of ways to help, as I mentioned. There is a principal deferment - the principal portion of his loan can be deferred. But the main thing is intent. The Board is very flexible. The last thing we want to do is build up a big inventory of repossessed boats.

MR. TULK: It is hard to say what you're going to do, isn't it?

MR. KANE: It is important that the borrower demonstrate the intent to pay. There may be a $5,000 a year payment on the loan, but if that person can set up monthly payments of $100 or $150 during the moratorium period to defray expenses, all of a sudden, at the end of - hopefully the end of the moratorium, he will have less responsibilities to the Board. It is important that borrowers demonstrate an intent based on their ability to pay.

MR. TULK: Could you just answer yes or no. Do you have a set of written guidelines for this, or is it just on an individual basis? Mr. Minister.

MR KANE: It -

MR. TULK: Well, go ahead. He is busy, and I realize that. This is the last question I have.

MR. KANE: There are a number of things. We have guidelines for the write-off of accounts. There is a poverty income level.

MR. TULK: If I could, very quickly, because the minister, I understand, has to leave. Do you have a set amount that you say a family has to have to live on? Over and above that, then, you should be able to pay something on this loan.

MR. KANE: That is the poverty income level. That is true.

MR. TULK: The poverty income level is what you are using.

MR. KANE: Yes.

MR. TULK: Okay.

MR. KANE: As a guideline.

MR. TULK: Okay. I have no further questions.

MR. CHAIRMAN: Thank you.

Our final question is from Mr. Woodford.

MR. WOODFORD: On 3.2.02, to the Minister or one of his officials, under Operations, page 116 of the Estimates - 3.2.02.10 Grants and Subsidies, there was $333,000 budgeted last year but $813,000 was spent and now it is back to $425,000 for this year. Why would there be a big variation there of almost $500,000?

MR. CARTER: Last year, $510,000 transferred from the Atlantic Salmon Management agreement was used to subsidize the sealing industry. There were subsidies provided to the sealing industry - a one shot deal.

MR. WOODFORD: That is why this is revised.

MR. CARTER: This year that subsidy does not exist. So, that accounts for the drastic change in the reduction in the Grants and Subsidies.

MR. WOODFORD: In 3.3.03, under Market Development - ERDA, I would take it that the bottom line on that - the Total: Marketing is $520,000 for this year - that is because the agreement has expired, has it, the inshore NIFDA?

MR. CARTER: I am sorry, I didn't get that.

MR. WOODFORD: Page 118 - 3.3.03.

MR. CARTER: Yes, okay. The termination of the NIFDA, that is what caused it there, as well.

MR. WOODFORD: Yes. Do you foresee an agreement in the near future?

MR. CARTER: We are hoping. The Province has done its homework, I guess, pending federal approval. Yes, we are hoping for another agreement. That is one of our top priorities, by the way.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Well, NIFTA covers a whole wide range of things, as you know.

MR. WOODFORD: That is okay for me, Mr. Chairman. The minister has a meeting at 12:00 noon, so if you wish, we can move the adoption of the Estimates from 1.1.01 to 5.1.04 inclusive.

On motion, subheads 1.1.01 through 5.1.04, carried.

MR. CHAIRMAN: Thank you very much.

Mr. Minister.

MR. CARTER: I want to say thank you to the Committee members for facilitating another meeting that I have on and I appreciate very much the fact that they were able to accommodate me. Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Minister, and I thank the officials and the members of the Committee.

The Committee adjourned.