Pursuant to Standing Order 87, William Ramsay, M.H.A., Burgeo & LaPoile substitutes for Robert Mercer, M.H.A., Humber East; and Anthony Sparrow, M.H.A., Placentia & St. Mary's substitutes for Anna Thistle, M.H.A., Grand Falls - Buchans.

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

CHAIR (Mr. Canning): Order, please!

Welcome, Minister. Before we begin, we will just say that the way we have decided to go is to give fifteen minutes opening statement to you and fifteen minutes of rebuttal by Mr. Shelley, then questions and answers are ten minutes each.

Before we do that, though, we should deal with the Minutes of the last Resource Committee meeting of May 28. I think the Minutes have been circulated.

On motion, Minutes adopted as circulated.

CHAIR: Minister, perhaps first, you would like to start by introducing your delegation and then we will take a few minutes to introduce the members of the Committee.

MR. FUREY: Thank you, Mr. Chairman.

On my right is Mr. Sid Blundon, the Assistant Deputy Minister of Industry and Trade and the Acting Deputy for the next week or two.

On my left is David Butler, the Director of Finance and Administration.

CHAIR: Thank you.

Rick, do you want to start and just introduce yourselves?

MR. WOODFORD: Rick Woodford, MHA for Humber Valley.

MR. SPARROW: Anthony Sparrow, MHA for Placentia and St. Mary's.

MR. RAMSAY: Bill Ramsay, MHA for Burgeo and LaPoile.

MR. SHELLEY: Paul Shelley, MHA for Baie Verte.

MR. FITZGERALD: Roger Fitzgerald, MHA for Bonavista South.

MR. WALSH: Jim Walsh, MHA for Conception Bay East and Bell Island, here as a guest and the White Knight, in case the minister needs the help, but I doubt if he will.

CHAIR: I am Perry Canning, MHA for Labrador West.

Well, Minister we will get on with it - the floor is yours.

MR. FUREY: Thank you, Mr. Chairman.

I don't have an opening statement except to say that the budget has been tabled for a number of weeks now; my particular budget has $28 million. You take the related revenue off it and you are down to $20 million, it is less than 1 per cent of the entire Budget for the Province which is $3.4 billion, and I am open for questions.

CHAIR: I should say that as each of your delegates speak, he should identify himself for Hansard purposes.

Mr. Shelley.

MR. SHELLEY: Thank you very much, Mr. Chairman.

CHAIR: One second now, we should call the first heading as the Clerk -

CLERK (Ms Murphy): 1.1.01

CHAIR: 1.1.01, okay, fine.

MR. SHELLEY: Thank you very much, Mr. Chairman.

I say to the minister, first of all, as I have said to every other minister who was up the last week or so, that I am on call and may have to leave at any moment; I don't feel like saying that anymore because it hasn't happened, but who knows? A week-and-a-half has passed now. Anyway, I have a few questions.

Just looking through the estimates again - I glanced over them a couple of days ago and most things have dropped in the minister's department anyway. Of course, there has been a big changeover with the things that have left your department, not a big changeover but things have changed in your department. I will start with a couple of things. First of all, I would like to mention the EDGE legislation and, of course, the concept of EDGE and so on. I have been on record as saying it anyway, that it is a good thing, the concept of EDGE and anything we can do to attract and let people know in big industries outside of not only Newfoundland but outside of Canada, that we are open for business and that we are business-friendly and so on.

Of course, the comment is always made, and I think I have said to the minister before, that that is great for those companies who invest that amount of money but, more attractions I think, in line with the smaller business. I think the minister heard those criticisms before, not just the government but Newfoundland in general, that our small businesses of two and three people in a business as small as that, but smaller than an investment of $500,000 is it, for the EDGE criteria as a minimum?

MR. FUREY: Three hundred thousand dollars.

MR. SHELLEY: Three hundred thousand dollars, but you know, the incentive is good for business outside the Province and outside the country to invest. But, of course, our own small business, especially pertaining to young entrepreneurs - and I have talked about this before. But regarding capital and expertise, certainly, very young people who have small, simple ideas find that they get locked up behind brick walls and bureaucracy and they soon get turned off. So we need to put things in place for those people. I know the minister and other members here get the young person, a student fresh out of college or whatever, who wants to work for himself and start a business on his own, and he gets turned off very quickly. So, I mean, the incentives for these people still have to be looked at; I know there are things being experimented with now, but other avenues for them to look to also.

The EDGE legislation again, as it pertains to mining, I know the people in my area have taken advantage, shall we say, of the EDGE legislation, and others have not. When it comes to mining, maybe I will start with a question on that in general I guess and ask the minister just to comment on when it comes to mining and the size of the mine, and one mine getting EDGE status. Could you just make some comments on that to start.

MR. FUREY: Mr. Chairman, I want to apologize for my dress here tonight. I caught a flight from the Great Northern Peninsula and because of the fog and weather in St. John's it was difficult and we were late arriving so I didn't have time to properly dress. Secondly, I would like to congratulate the member and I am not sure if this is his first time being a father, but I had that experience two years ago at the tender age of forty-one. It was quite an experience.

The EDGE legislation. It is a good piece of legislation. It is a piece of legislation that has had unanimous support from the House when it was tabled. We left the thresholds of $300,000 and ten jobs at those levels because that is what we discovered in consultation around the Province and amongst business men and women, that these would be reasonable thresholds. But we also put an adjective in there, quite consciously. We put the adjective `potential' which sits just before `$300,000' and `potential' sits just before `ten jobs'. So what we are saying to people is, you may not create the ten jobs immediately and you may not have the $300,000 of capital investment immediately, but you must show that you have the potential to do it. And it is on that basis that each is judged on its own merit.

With respect to the legislation, it is just a little over a year old. There are thirty-three companies registered in the Province to date. Thirty-seven municipalities have signed on in mirror or in corresponding legislation. Of those thirty-three companies there are 300 brand new full-time jobs, real jobs created so far, but there is the potential to bring it up to 1,000 within the next four to six months. We think we will achieve that potential of the 1,000 new jobs.

The investment so far is around $67.8 million, is what comes to mind, and that may be up slightly. But here is what is interesting about that investment: 85 per cent of the $67.5 million is from the private sector. I think that is a remarkable achievement because most of the time you get them drawing on the ACOAs and the FDBDs and the ENLs and those kinds of things and they marry it to private sector capital which they formulate at around 20 per cent or 30 per cent usually.

In this case the EDGE legislation foregoing the taxes and giving the companies a break in the early formative years of the company has allowed them to put up front cash in to the tune of 85 per cent of that total investment. And, I think, that is pretty remarkable.

With respect to minerals and mining, we struggled with that one, and I have to tell you, we are struggling with tourism as well. Where do you say yes and where do you say no? Of course, the competitive clause section 31-4 of the Act is invoked automatically where there is competition that causes somebody to lose jobs or lose investment by virtue of a tax concession by the government. So the board independently reviewing each EDGE application on its own merit, has to look and ensure that clause is not breached, the competition clause. They have been diligent and very careful about that. We have had one series of complaints, and I am happy to tell you about that at some point in the future, if you would like to talk about it. It was a judgment call.

But with respect to the mines and the minerals, we were happy to announce one in your district just recently which will create about ninety jobs, I think, over the life of it, and trigger about $16 million in private capital investment. The company that came to us said, `Look, we really need EDGE. And why do we need EDGE? Because we are going to the capital markets to try to borrow this money to flow it through, to kick-start this particular project.' EDGE is not there for every mine, and EDGE is not there for every mineral development or every mining company. Each one was looked at on its own merit. The business case was studied. We looked at the foregone revenues by way of tax concessions that the government would provide. We look at the economic impacts. We looked at where it was, what the unemployment rates were, the social impacts. We looked at the job creation, we looked at the private sector investment, and we looked at the volumes in the mine.

Now, if tomorrow or the next day they discovered at Nugget Pond that there were large or huge volumes of gold beyond their wildest dreams, like the nickel pouring off Voisey's Bay, and we all of a sudden said: This is different, well naturally, we would have to call the companies back and say: Look, we gave you EDGE under these parameters and under these circumstances. And they know that. We signed those contracts fully with our eyes open.

Roycefield Resources was another one, the antimony mine at Bishop's Falls. We don't think that would be started for another five or six years. Should we deprive 120 Newfoundlanders and Labradorians to take an income, to get jobs in Central Newfoundland? You see, what is happening with that market, antimony is a soft white substance and it is used as a fire retardant. The largest volumes of that particular mineral are found in central China. China has just slapped an import tax of 26 per cent on all antimony because they want to hold those reserves to themselves to create economic development within their own borders. When that surtax and tariff went on and those walls went up, the rest of the world looked around to see where they could find antimony, and they found a very large deposit near Bishop's Falls. What they needed from us is, again, to go to the capital markets to raise, I think, Sid, the amount was about -

MR. BLUNDON: Twenty point five million.

MR. FUREY: Twenty and-a-half million dollars of private sector money that will flow through there. But again, it is a limited mine. It is rich, it is concentrated, the volumes are there for about a ten-year period. We think the tax trade-off was worthwhile to create those jobs, get that investment. Plus on the construction side, you are going to see temporary jobs, and lots of them, building the necessary infrastructure around these mines. So it is on a case-by-case basis. If the economics change or the volumes change in each mineral deposit, or something extraordinary happens that was outside the parameters of the agreements that we have struck, then obviously, we will sit back down at the table.

MR. SHELLEY: That's it for mining. Thank you.

Still on EDGE, I know there is another group - I can't even remember the name of it exactly now, but the sealing industry that is near Fleur de Lys is interested in the same type of thing. They have applied for EDGE. I don't know what the status of that is or where it is or how soon they could expect an answer on that. Because it is very important not just - well, for the sealing industry as a whole, because I think that could be the pilot project that could expose us (inaudible).

MR. FUREY: Yes, I agree. I don't have an exact - my recollection is that the EDGE board met last week. They have approved six new companies. Those will go to Cabinet I presume next Thursday. But there is a list of about seventeen in the line that are being looked at and studied now, and the board will examine them.

MR. SHELLEY: Six were approved at the last meeting? Could I find out through the minister who they were, who were approved?

MR. FUREY: I would like to tell my Cabinet colleagues first.

MR. SHELLEY: Oh yes, but I -

MR. FUREY: And get - because -

MR. SHELLEY: I know the line, but those six that were put up for proposal (inaudible) come through the Cabinet, of course.

MR. FUREY: Yes, and I don't think the sealing one was on it. I don't recall one on sealing.

MR. SHELLEY: I just wanted to know if they were in that area.

MR. FUREY: I will certainly take a note of it, if you would like, and let you know.

MR. SHELLEY: When is the next EDGE committee?

MR. FUREY: It meets as applications come in and the board is required to meet. I think they are going to have a series of meetings in the next few weeks because there are about seventeen applications, as I understand it, that are in the line-up now for examination. We will approve about six, I guess.

WITNESS: There are five on the next Cabinet -

MR. FUREY: Five on the next Cabinet meeting. I don't think the seal tannery is there. Seal tannery, is that what you said?

MR. SHELLEY: Seal - yes. Natsiq, I think they are.

MR. FUREY: Oh yes, I remember that company. Yes, they are - N-A-T-S-I-Q or -

MR. SHELLEY: Something like that.

MR. FUREY: Yes, it is a really funny name.

MR. SHELLEY: They have changed it a couple of times.

MR. FUREY: Yes, I saw that company. They are on the list somewhere in the -

MR. SHELLEY: On the long list, but they are not on the most recent one, are they?

MR. FUREY: Not in the most recent one, no.

MR. SHELLEY: Okay. A couple of other questions, then. First of all, with the Atlantic Investment Fund, 2.1.04, on page 164, there is almost $1 million in Atlantic Investment. That is venture capital. How is this money going to be accessed?

MR. FUREY: This venture capital fund comes about because the four premiers a year-and-a-half ago beat up on the banks and said: You aren't doing enough in Atlantic Canada. The banks said: You make a proposal to us, and we would be quite prepared to look at venture capital by way of equity in the companies. This is a $30 million fund that on a pro ratio basis each province puts up its share. Newfoundland's share is $2.4 million. That $956,000 that sits in that subhead is our first flow of that share. It is flowed over a three-year period. That is our first upfront cost.

The way it works is that the partners are the Government of Canada, the four Atlantic Provinces, and the six major banks. Each partner puts $10 million into a pot. The $10 million breakout for the four Atlantic Provinces is where you will get the number $2.4 million from Newfoundland, and that $956,000 sits in the subhead as our first flow in it.

How it will work is we have structured a board of directors and appointed them. Ms Barbara Fong, who is president of Instrumar, and is very much involved in high technology, which is a sector this government has targeted, she will sit on the board from Newfoundland; and somebody you would probably be familiar with, Mr. Danny Williams, has been appointed as well. You would be familiar with him for other reasons, I'm sure. We thought that he brings a great deal of intelligence and a lot of knowledge about fibre optics and coaxial cable and high technology and satellite technology. He is very well versed in that. We wanted him or somebody in that kind of business who is doing those kinds of deals to sit at the table as well.

The way it works is if a businessman or woman has a good business case and requires some equity, and there have been members who have provided me - some of them are sitting here tonight - with applications to put into this fund, the way it would work, I say to the hon. member, is that the application would flow in. The board members, two from the Atlantic Provinces each - two from P.E.I., two from New Brunswick, two from Nova Scotia, two from Newfoundland - two from the banks and two from the Government of Canada sit in judgement of these applications and look at the business case based on banking principles. We are guaranteed as a province as a minimum to flow back into Newfoundland our $2.4 million, as is P.E.I. and its pro rated shared, as is New Brunswick, as is Nova Scotia.

MR. SHELLEY: That was my next question, yes.

MR. FUREY: No, that is a guarantee, that is a minimum guarantee. The challenge for Newfoundland companies is to use our $2.4 million to leverage off the Government of Canada's $10 million and the $10 million from the banks. That is the challenge for us. I think we are going to do okay. There are some fabulous applications coming forward. The board will meet, I think quarterly, Sid, isn't it, and sit in judgement of those applications. But we are guaranteed to at least get back the principal amount that we have put in the pot, which is $2.4 million.

MR. SHELLEY: What is the Province doing to encourage these Newfoundland-based firms to access?

MR. FUREY: I'm speaking to many chambers and boards. I spoke last night in Port au Choix to the newly-formed Chamber of Commerce, and I spoke about that fund and the business immigration fund. Because if you add $30 million to the $35 million for the business immigration fund, this fall some time there is $65 million worth of floating venture capital out there that any company can take advantage of. But I can't beat people over the head or twist their arms or shove them before the board. I can only say: This is available, establish your case, do it on banking principles and proper business principles, and we will certainly stand in there for you as the Newfoundland Government through our board members.

MR. SHELLEY: That is one of the avenues you are using, of course, speaking engagements and so on.

MR. FUREY: I would expect all members should be promoting this, too.

MR. SHELLEY: Sure.

MR. FUREY: I will have a promotional package which should be developed in the next week or two, I would say.

MR. SHELLEY: I was going to ask if there was anything in print.

MR. FUREY: Yes, there will be. There isn't right now, but there should be very shortly.

MR. SHELLEY: With Research and Development - Offshore Fund, this has increased quite a bit. Provincial funding jumps from $90,000 to $300,000 - this is on page 166 - and the federal funding has jumped from $210,000 to $900,000. Can you just elaborate on what the actual funding is for there?

MR. FUREY: I'm sorry, which subhead are you in now?

MR. SHELLEY: Page 166. I just made notes on it.

MR. FUREY: Page 165, you mean? Technology Transfer Opportunities - Offshore Fund?

MR. SHELLEY: It is the Research and Development - Offshore Fund.

WITNESS: 3.1.05.

MR. FUREY: I'm sorry, okay. What is it you are asking me?

MR. SHELLEY: It is quite a jump, of course, the Research and Development - Offshore Fund, from $90,000 to $300,000, and then federally it is from $210,000 to $900,000.

MR. FUREY: This research and development block fund comes out of the $300 million offshore fund that was put in place back when Premier Peckford negotiated with Prime Minister Mulroney the Atlantic Accord, which triggered the Hibernia development. A portion of that was set aside for research and development. It is there for companies that can access it. We flow the money as it is required.

There are applications in the system from companies that I just mentioned, like Instrumar, C-Core, and some of the institutes around the Province that want to take advantage of it. Usually with the private sector it is 50-50. It is from that fund, for example, that Instrumar developed its high technology clean ice wing detection system which is computerized technology that will be in most airplanes around the world. They can change the aviation laws, in fact, a Newfoundland technology. C-Core comes out of that, Oceans Limited, Instrumar and other companies. So what it is, is actually cash flowing money that is 75 per cent federal, as I recall, and 25 per cent provincial, and we flow it as is required and it is in an account when we require it and use it.

MR. SHELLEY: I will just ask one more and then I will pass it on to somebody else. I think I have used fifteen minutes; I have not kept track of the time. On page 170, I always ask this question because there has never been any information on it in the last few meetings we have had - of course, it is the Economic Renewal Agreement.

MR. FUREY: Yes.

MR. SHELLEY: There is that much money. I would like a little bit more, not detailed, but some specifics on it.

MR. FUREY: Yes, that whole piece there, and perhaps rather than get into a long of discussion, what I should do is send you a package on the ONLINE Task Force, ONLINE is an acronym for Opportunities in Newfoundland and Labrador In The New Economy. If you spell out ONLINE that is what you spell it out to be. That was a board that was struck and mandated given 180 days to look at how can we best achieve growth in the high tech and information technology sector. We struck a board that was made up of public senior civil servants and many people from the private sector. David, as I recall there are about fourteen people on that board?

MR. BUTLER: Yes.

MR. FUREY: People from the hospital side who are involved in information technologies. People from, well you pick it, Newfoundland Telephone, Cable, we had a whole range of people. What they did was put in place, after a great deal of consultation, a Strategic Economic Plan that develops a pathway for growth for the information technology sector. You know, that by the turn of the century, four short years away, the information technology sector will be worth three trillion dollars. If we didn't have our home work done and we didn't have a foundation and a pathway and a strategic plan that outlines specific action items, we could hardly get a crumb. What this tries to achieve is a slither of the three trillion, one slither would have one awfully good economic impact on this Province.

But it is broken out in a whole range of areas, I will l say to the member, human resources development, hardware technology upgrade, software development, a whole range of issues. But what is interesting is the community came together in a public private partner agreement and in public private partner co-operation and they developed a plan. They spelled it out. They have specific action items. They have specific targets. By the way, it is about $17 million that we will spend over four years in this sector and will trigger $5 for every one public dollar.

MR. SHELLEY: Well, since we got on to ONLINE, on page 167, since we are discussing it now, Salaries increased - 3.1.06 - but the Professional Services decreased - quite substantially, too. Could you tell me -

MR. FUREY: Say that again.

MR. SHELLEY: Was there a person hired there?

MR. FUREY: Say again. Which one is it?

MR. SHELLEY: 3.1.06 - Operation ONLINE. Salaries increased.

MR. FUREY: Salaries decreased. They went from $315,000 in the budgeted 1995-96 down to $87,000. And we are estimating -

MR. SHELLEY: No, Salaries increased.

MR. FUREY: Yes, but if you look at what we budgeted in 1995-96, we budgeted $315,000. We spent $87,000. We are projecting or estimating $125,000 this year for an overall global decrease from $315,000 to $125,000. Do you follow me?

MR. SHELLEY: Go back again, in 3.1.06.

MR. FUREY: Yes, I am with you.

MR. SHELLEY: Operation ONLINE - 01 - Salaries - in the estimates for 1996-1997 it increased from what was spent last year from $87,000 to $125,000.

MR. FUREY: Right.

MR. SHELLEY: Answer that along with in Professional Services, it decreased from $206,400 to $25,000.

MR. FUREY: I will be happy to.

The Budget was $315,000 for a secretariat which was a public- private partnership. We didn't spend all of that on the secretariat, we didn't need to spend it; we spent $87,000. Now we are moving into the implementation of this and we are going to require extra people to help us implement it in a public-private partnership.

When you look at Professional Services and you saw $206,400, we budgeted $25,000 but it jumped $206,400; we hired what we consider some of the world's best people in the IT sector to help us craft the strategy, so we had to pay for that. So it was a contracted position and the company just slips my mind right now but it will come to me in a second.

MR. SHELLEY: So the $315,000 that was budgeted in Salaries was for the secretariat and you didn't use it, you only used $87,000.

MR. FUREY: That's right.

MR. SHELLEY: But now, you are going to need an extra - one person?

MR. FUREY: I am not sure. There are two from the private sector and two from the public sector (inaudible).

MR. SHELLEY: $38,000, isn't it?

MR. FUREY: Two from the private sector which is paid for by the private sector.

WITNESS: (Inaudible).

MR. FUREY: Which one?

WITNESS: (Inaudible).

MR. FUREY: NewTel Enterprises, Frank Davis, who is a Senior Vice-President has been seconded into the on-line secretariat. He will be paid for by the private sector. Now, we have to meet our agreement, which is 50-50, so we have to staff up some people there, too. But I will say to the member, this is about implementation now. We have the report, we have used all of the best minds in the Province that we could assemble who are involved in information technology. We reached outside in Purchased Services, they did, contracted a group who are experts in the IT sector, who came to Newfoundland, held public hearings all around the Province, as I recall, and helped marshall the forces of this plan together into Operation On-line, so you will see that the Purchased Services have decreased substantially. But we are going to take this plan now and try to implement it and that is why you are seeing a slight increase in the actual expenditure over last year, but in the global budget, a significant decrease.

MR. SHELLEY: Okay. I am going to yield to somebody else who may have some questions (inaudible).

CHAIR: Thank you, Mr. Shelley. Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

Under your Atlantic Investment Fund, Minister, what exactly is meant by strategic sectors? What would be the criteria there?

The money will flow to projects and strategic sectors.

MR. FUREY: Yes. The idea was that it would be available and open to all companies excepting retail operations and real estate. So, in other words, if somebody is going to try to put in a project to sell socks, we are not interested in funding your cash flow or your line of credit to sell socks. Nor are we interested, Mr. Woodford, in somebody just purchasing land and using our money and flipping it and making money. When I say real estate, if somebody has a development project that is part and parcel, that it requires real estate - I think, Mr. Walsh you and I talked about some of this the other day, that would be very acceptable. But the two areas that we caution are: real estate in the pure sense of real estate and retail, in terms of just providing cash flow for companies. We are not interested in that.

Strategically, this Province would like to see the investment fund flow in three areas; it can flow in many other areas but we are quite interested and intrigued by high technology, information technology which is what Mr. Shelley and I just talked about. We are quite intrigued and excited about tourism projects and there are many out there that can fit this, and thirdly, aquaculture. We are behind the eight-ball in aquaculture but we should be moving at the speed of light to regain lost ground.

MR. WOODFORD: If a firm came under this, would there be any restrictions if they had access to other funding, I mean other government programs, or would that be ruled out completely?

MR. FUREY: No. Anything and everything will be accepted by this board and looked at. If somebody, for example, wants to come in here and build small computer-enhanced memory requirement boards for computers and they have say, a million dollars and they can leverage half-a-million from ENL and half-a-million from FBDB, but they aren't quite there and they require further equity investments, they can marry those two in their application of business case and send it forward.

MR. WOODFORD: I know it is early in the mandate of this particular fund, but is there any indication that there would be sort of a preference from any one province that would give someone sort of an in, other than they would in another province? I know that is a question that -

MR. FUREY: No, it is a good question. I tell you, look, we are always paranoid about the other Atlantic Provinces, and with good reasons. When you see some of the decisions that were made in the past by governments of all political stripes - I mean, putting the fisheries headquarters for Western Newfoundland in Moncton? Give me a break, you know. Putting the headquarters of Marine Atlantic in New Brunswick. It is just the heights of stupidity, and there is no other word for it. Yes, there is a certain paranoia there, but we have two very bright minds at the table in the forms of Danny Williams and Barbara Fong, who I believe is a chartered accountant.

WITNESS: (Inaudible).

MR. FUREY: But she has an accountancy background, too, her brother told me the other day. She is very good, very sharp.

MR. SHELLEY: Barbara Frum or Deborah Frum?

MR. FUREY: Barbara Fong, F-O-N-G - not Frum.

We are going to be diligent at the table. But this is why there is a clause in the agreement that captures our investment. Our investment must come home, $2.4 million. The trick for us is to use the $2.4 million and to get out with good solid business cases and business applications to leverage off the other $10 million from the banks and the other $10 million from the Federal Government.

MR. WOODFORD: Under 3.2.02, page 168, the Strategic Investment and Industrial Development fund. As explained there, it is self-explanatory, for "new business development and/or modernization of existing firms in strategic industries...." The strategic industries referenced there, would they be much the same as what they were in the Atlantic Investment Fund, or would there be others involved there?

MR. FUREY: Would you mind just repeating the last part of that?

MR. WOODFORD: Under that fund, I said it is self-explanatory, for "development and/or modernization of existing firms in strategic industries...." I just mentioned the strategic sectors that were involved in the Atlantic Investment Fund. Would there be any difference in this or would they be a little bit more involved?

MR. FUREY: No, it is very similar. What this was, as you will recall, was a five-year agreement that Mr. Crosbie and I signed five years ago. In fact, the last part of the cash flow will go out through this budget. There is about $500,000 left, and you are the co-chair with the federal people, and they just approved the last $500,000. This went right across a whole range of companies. Manufacturers were big winners here. It went right across every sector, just about. I can table a list of every company and the kinds of grants that were made. Some of them are outstanding and some of them have done terrific work.

But no, when we said Strategic Industrial Investment and Development agreement, strategic to Newfoundland, what is strategic to Newfoundland. We used the Strategic Economic Plan in many ways to guide us on how to spend that money.

MR. WOODFORD: That is okay, Mr. Chairman, for now. Go to someone else. Just one second, Mr. Chairman. I just wanted to mention something to the minister. Did he hear anything as of late - I just heard a rumour the other day, and I don't know, it might be public knowledge, but I haven't seen anything on it - about Air Canada moving their reservation system to Moncton, Fredericton, or somewhere like that? Because I heard a little sketch that there was a possibility that some of it might come to Newfoundland. Did you ever hear anything about that?

MR. FUREY: I've heard something about it and I've tried to talk to my colleague, the Minister of Works, Services and Transportation, but as you probably know, she is Winnipeg in her capacity as the Minister responsible for the Status of Women. There is a note on my desk to speak to her about it. I've heard sketches and some talk about that as well, yes.

MR. WOODFORD: Because there are quite a few jobs involved. In fact, I think if they moved Halifax, I think Moncton, and one other, then there would be some 500 jobs involved.

MR. FUREY: Yes.

MR. WOODFORD: I just heard a little rumour -

MR. FUREY: In terms of the reservation systems and stuff.

MR. WOODFORD: Yes, the reservation system.

MR. FUREY: That folds into the whole call centre concept. You would probably be aware that Newfoundland has another public-private partnership called Network Newfoundland -

MR. WOODFORD: Yes.

MR. FUREY: - where we put up fifty cents and they put up fifty cents, to the tune of $500,000 per year, and we are, using that strategy, chasing some call centres. In fact, I will be opening a new call centre next week, the first in the Province, which is at Newtel, which has 100 jobs, and it is a first-class state-of-the-art facility here. We are also chasing about twenty-two prospects that we have identified, and we have narrowed down four that are involving the Premier and myself, and I have had a number of dinner engagements with a number of American companies right here in St. John's. And I think we are going to pull off a few of these. And as we get them going -

MR. WOODFORD: That is a benefit, something like this.

MR. FUREY: Absolutely. But we have to prove ourselves. We have to show that (a) we have the technology, and there is no doubt that we do; (b) that we have the skills to pull this off and: (c) we have to get some live ones in here and operating and point to them.

MR. WOODFORD: Thank you, Mr. Chairman.

CHAIR: Thank you, Mr. Woodford.

Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, just looking through the Estimates here on Industry, Trade and Technology - Transportation and Communications - I think your department is probably one of the very few that transportation and communications is cut down less than half in a lot of those headings from what it used to be or what it was last year, quite a difference. Are you the only one travelling in the department these days?

MR. FUREY: I think in the overall Ministerial Offices there was about a 20 per cent or 21 per cent cut. They were sensitive to the Minister of Industry, Trade and Technology because the very nature of the job actually causes you to be out there selling the Province and seeking investment. I think if you look you will see it was budgeted at $111,000 last year, we spent $106,000. This is considerably lower than in the past, I might add. In the past, I can think of say, ten years ago, my predecessor spending easily $180,000 a year, but these are 1996 dollars and I am limited to $90,000.

But I would argue you should triple my budget, that you should never see me in the House. And my critic should be the loneliest person like the Magtag salesman, just sitting there asking: Where is Furey?

MR. FITZGERALD: I agree with what you are saying.

AN HON. MEMBER: (Inaudible).

MR. FUREY: Quite seriously, that is my job. It is not Chuck Furey's job, it is the Minister of Industry whoever happens to have the honour and privilege of occupying that position. So would you then agree tonight to tell the Cabinet to double my budget?

MR. FITZGERALD: I am not arguing against that because I know what you are saying is true. I don't think that anybody should stand and knock somebody for being out trying to sell Newfoundland and Labrador and create some economic activity here when you see what is happening in most of the areas of our Province. But it just seems strange that a lot of the transportation and communications is quite a bit lower.

MR. FUREY: Than a lot of other departments, you mean?

MR. FITZGERALD: No, even in the particular headings here from what was revised last year to what is in the estimates this year. In some cases there is a great saving there. Marketing is a big one which is still up there, but look at the there under 3.1.01 for instance, it went from $124,800 to $35,900. And there are many more of them there.

MR. FUREY: Right throughout the department, you mean?

MR. FITZGERALD: That reflects, yes.

MR. FUREY: Well, the whole department, I should say to you, Mr. Fitzgerald, was caught up in the broad brush cuts where everybody took big hits, in Communication, in Supplies, in Transportation and Purchased Services, every department took those. You will see that ripple right through every department. I guess what I was trying to say is we tried to protect the travel budgets even though we were relegated to the back of the bus, and some would argue that is not smart either. But, I mean, that is for another place to argue. But we tried to protect the transportation budgets because we have to move on a minute's notice sometimes in this department. I had to send a senior officer to Toronto this morning, because we got a really good lead on a very good company, and we think we have a real crack at it. So sometimes we have to react on a minute's notice.

I would predict to you that that $90,000 - I hope I am wrong, but I would predict to you here tonight for next year's estimates you will be saying you went over your budget and I will say: Yes, and I told you that last year.

MR. FITZGERALD: Sure. There is nothing wrong with that.

Minister, did you ever hear or did you ever find out what ever happened to that big investor who was here a couple of years ago from - the mysterious lad from the United States who made seventeen trips here to invest in almost owning the Bonavista Peninsula? Did you ever find out what he was all about or what he was up to?

MR. FUREY: You know, we do due diligence and we do checks and intelligence checks and sometimes we deal with police forces around the world and other agencies. I tell you, we couldn't find anything on this particular person. You are quite right, he swept in and out of town. He talked a great story. He had connections to the President of the United States, and on and on. You recall some of the things he said to you and me. He was going to make a massive expenditure, take over Farm Products, create a chicken industry to supply half of Europe, and on it went - converting fish plants. He just fizzled into the night. Thankfully, neither the government nor any of the taxpayers put any money on the table for anything that he did.

MR. FITZGERALD: I think he left a few bills behind in some of the consulting offices around town and that sort of thing.

MR. FUREY: He may well have, Mr. Fitzgerald, but I wouldn't know that. I'm just saying -

MR. FITZGERALD: He certainly talked a good talk.

MR. FUREY: He certainly asked us to cover some things for him in terms of transportation and feasibilities, and we consistently said no. Consistently said no. But if he left some bills behind, that is unfortunate, and I feel -

MR. SHELLEY: Something like Christina.

MR. FUREY: Yes. But no, I haven't heard from him since. Have you talked to him at all?

MR. FITZGERALD: No. One of the lawyers actually called me and asked me if I would try to contact him because he was trying to get hold of him. Naturally, because of the confidentiality between him and his client, he wasn't going to discuss - but it wasn't hard to read between the lines why he was trying to get hold of him. But I tell you, he had some big ideas, and he knew the industry, what he was talking about. I don't say that because I knew it, but I went so far as to talk to people in the industry and direct some questions so that I could talk intelligently to him and find out what it was, and to see if I could find out if he was for real or not. And he knew the answers.

MR. FUREY: I tell you, you are quite right, and we did the same thing. We had some people quietly sit in on meetings who were just introduced by their name but who knew that industry inside-out and they sat there and listened to him, and they said: This man knows what he is talking about. He knows chickens, he knows the markets, he knows the integrated and vertical industry inside-out. On that basis you couldn't argue with him. His lawyers were quite excited, he was quite excited.

I tell you one thing that I did, and it sort of - this was early in the game and it sent some fire alarms off in my head. He said to Mr. Baker and me one day: Look, I would really like to take you down to - where was it he was quoting from, the plant -

MR. FITZGERALD: I was supposed to go, too. The private jet was supposed to pick me up at the airport.

MR. FUREY: That is the story I was going to tell you. What was the name of it? Was it in Arkansas?

MR. FITZGERALD: Somewhere (inaudible).

MR. FUREY: Somewhere where they are up to their necks in chickens, anyway.

MR. FITZGERALD: Yes, I can't remember where it was.

MR. FUREY: So anyway, he called -

MR. FITZGERALD: He was shipping out of West Virginia. That was the port from which he was shipping his product over to the Eastern Seaboard.

MR. FUREY: That is right. Anyway, I decided to call his bluff. I said: Well, we would be happy to come down and look at this facility with you. I said: In fact, I will bring the Minister of Finance who is quite interested in the privatization of Farm Products and we will both go. He was supposed to have a corporate jet. He insisted that we not go commercial. He insisted that we land at some air force base belonging to the government, he would make all the arrangements and the corporate jet would pick us up and blah blah blah. I said: Okay, give me the time and date. He gave me the time and date. And I think six hours before we were supposed to go it all got cancelled mysteriously. Then I said to myself - this is early in the game - I said: The guy doesn't want me to fly commercial. I think his reasoning was he didn't want to tip off -

MR. FITZGERALD: His competitors.

MR. FUREY: - the poultry producers of America, his competitors. Because they would run to the market, et cetera. He was talking about converting National Sea to a slaughterhouse for beef for Europe. I guess he was ahead of his time on the mad cow disease over there. But I've gone way off track. Your question was: Have I heard from him since? No, I haven't.

MR. FITZGERALD: I figured there was something happening when he told me that he had bought all the newsprint in New York City and he had just come from out in Carbonear then. He had bought M. A. Powell and that was where he was going to bring it in all in there and (inaudible) get into packaging material. I said: Gee, there is something not right here. Anyway, it was an interesting story. I put on about ten pounds sitting in the backs of restaurants in some dim lit area, always with his back to the wall and no lights on, listening to him.

MR. FUREY: Yes, but you know, he was quite a talker, this guy, quite a mover.

MR. FITZGERALD: He was a fellow about six foot eight or seven feet tall, 365 pounds, and not an ounce of fat on him. Isn't that right?

MR. FUREY: Yes.

MR. FITZGERALD: So when he pointed a finger at you and told you to be quiet, you were quiet.

MR. FUREY: That's right.

MR. FITZGERALD: Minister, getting back to why we are here. A few days or a week ago there was great concern when the Newfoundland Dockyard wasn't allowed to bid on work by the Coast Guard, the Henry Larson. There is some indication as well that there will be work done on the Sir Humphrey Gilbert and, I think, the frigate Iroquois. Is the dockyard going to be able to compete and bid on this work or is this going to be a situation again where -

MR. FUREY: You know, my public statements on that. I think it is outrageous and I continue to hold that position. I should tell you, I finally tracked down the Minister for Transportation for Canada yesterday at 11:30, and we talked at length on the telephone about the two problems, one being the withdrawal of the bid of the Larson and the other about future bids. I contended and I still contend that if you are going to have on one track serious negotiations about an employee takeover, and do it in good faith, you have to, on the other track, sustain life in the place and keep the place operating as a going concern, otherwise the transfer into a locked facility and to try to re-start it and chase markets and keep the thing functioning would be just totally detrimental to keeping life there and keeping a future there.

Yes, we had a very serious chat, and I said to him that it is my belief on behalf of the Province that they should take the handcuffs off, and allow the Yard to function and prepare bids and stay in the marketplace so long as this goes forward. His argument back to me was - there were two arguments he put back, first, that it was to close in December 1995. The then Minister of Fisheries, the current Premier now asked for a reprieve and a period of time to set and train negotiations with the workers to see if there was a possibility for an employee takeover. So Anderson, who happened to have been Doug Young at that time, gave a three-month extension to take it to April. There was not enough progress - or not enough information is the best way to categorize it - for either the facilitator, Mr. Baker, or for the management, or for union to see the big picture and to see whether or not there was a prospect here for takeover. So the then Minister of Transportation, the current one, gave an additional three-month extension, which would carry it to the end of June.

So his point was twofold: `Number one, I have given two extensions and I don't see anything serious put on the table that shows me that there is an earnest willingness to talk seriously about a take-over.'

`Number two,' he said, `I am not prepared to let the dockyard drag on, drag on, drag on. There has to be a drop dead date, otherwise, we will stop talking and we might as well close it, because that is our original decision. And he said, my drop dead date is June 30, and I stick to that.'

He said, `So, in that context, we cannot allow bidding for long-range vessel repair or construction.' I understand that point of view and I acknowledge it. We are struggling ourselves with the provincial shipyard at Marystown. I understand where he is coming from. But I said to him: `It is very difficult for morale, for the management for the workforce for your facilitator, for everybody involved, to carry on serious negotiations if in fact you have handcuffed the place. This was yesterday, and I suggested to him that he should give very serious consideration to allowing the Yard to continue to bid. He said, that he would get back to me within twenty-four hours. I just stepped off a plane. My other Assistant Deputy, Mr. Spracklin, has been dealing with this issue and I am sure he will brief me in the morning. So I do not know what his response back was. If I were a betting person, and there was a time that I was, but I am not anymore, I would say that he is not going to take the handcuffs off. That is the tone of the conversation basically that we had. But I will not prejudge that until I see the report.

MR. FITZGERALD: Is Winston Baker's work finished now as it relates to the negotiations?

MR. FUREY: No, a steering committee has just completed the parameters and outlines of a business case for takeover, on which Mr. Baker now has to report back to Ottawa. That is where Baker is essentially now in the process. I have to tell you, he has done a good job. So have the unions. But I guess where Ottawa is coming from, Mr. Fitzgerald, is, they want to know: Are you serious, employees, about taking this over? And if you are, tell us and we will find a way to try to get down to the nuts and bolts in negotiations and get this deal done. That is where Anderson, I detected, was coming from.

MR. FITZGERALD: Minister, on page 171: 4.1.01, Marystown Shipyard Subsidy. Speaking of Marystown, there was $3,300,000 budgeted last year, $3,720,000 spent. This year there is $5 million there. Is that an indication of government's plan (inaudible) -

MR. FUREY: What page are you on, I'm sorry?

MR. FITZGERALD: Page 171.

MR. FUREY: Are you on the actual estimate pages? Yes.

MR. FITZGERALD: Yes. Page 171, 4.1.01, Commercial Crown Corporation Operations.

MR. FUREY: I don't have a page 171 but I will address it anyway. They gave me just a xerox.

MR. FITZGERALD: There is $5 million there.

MR. FUREY: I will address it, that is fine.

MR. FITZGERALD: Is that an indication of government's commitment to continue funding Marystown this year?

MR. FUREY: No, it isn't. What that reflects is, the accumulated debt to date is around sixty-two point something million dollars. That additional dollar value reflects the overruns and increased line on the operating credit, and we have to pay - the way it works is the Yard as an arm's length corporation has a line of credit. Government has to sanction it because the taxpayers pay for it, but that sits on their balance sheet. What sits on our balance sheet is the cost of the interest on that debt, and that debt has risen substantially, and therefore, the interest payments correspondingly have increased substantially.

There is nothing in the budget, no new money in the budget, to cover any increased line to have this Yard function for another year. That will depend upon the discussions that are occurring with management, the unions, the board and the committee of ministers put in place by Cabinet. I tell you, it is a difficult task because it requires radical surgery, radical restructuring, radical changes of attitude, and radical co-operation by everybody to make this thing work. This is its last chance ever, if Cabinet approves the money, and it will only approve it based upon the plan that is coming forward from the management in consultation with the unions and the board. We haven't made that decision yet.

MR. FITZGERALD: When you talk of Marystown Shipyard you also talk of the Cow Head facility. It goes hand in hand.

MR. FUREY: Yes, it is all wrapped into one.

MR. FITZGERALD: Minister, what is the future of that yard, number one. I guess number two is: When do you see government stop providing funding to it?

MR. FUREY: The business case that is being presented to government now talks about a one-time additional infusion of $5 million. That is what government has to make its decision on. The business case that has been presented by the board of directors who are business men and women who function in the real world with real bottom lines in real businesses, we gave them a two-year mandate to take it to a break-even at the earliest opportunity. The business case that they put forward talks about a bid on a vessel we have in now which is a DND vessel, which is about a $45 million boat. We don't know if we have won that. We will know that in a week or so. The business case talks about work spilling off Terra Nova into the Yard. The business case talks about finding other work around the world.

The real balance and question for the government is: Do we write another cheque for $5 million on top of the debt that has already accumulated, to give life to this business case, because these real business men and women say this can work if you do a, b, c, d, e, f, g, h, i, j, k, which I can't spell out for you right now because Cabinet hasn't approved it. Look, I really do believe that it has a future, but when I use the word radical, that adjective, I mean it in the strongest possible sense. It can only work if there is a radical change of attitude, a radical restructuring of the way things were done and will be done in the future, and a radical series of co-operation by everybody who believes there is an opportunity to do this. Because the only way it is really going to work is if it is privatized. Governments are hopeless at conducting business. They have no business in business.

MR. FITZGERALD: Minister, Come by Chance - since they have solved their labour problems out there, you haven't heard a squeak from them. They seem to be operating, the fire is going, the smoke is coming out of the stacks. They appear to be doing okay.

MR. FUREY: Yes.

MR. FITZGERALD: Is there any possibility of some of the things that were talked about in the beginning happening out there. I think of the petrochemical plants and I think of an expansion on the refinery. It seems to be doing very well.

MR. FUREY: It is doing very well. I should tell you that they have attracted some other interest from the Far East that are looking at it. That is about all I can you right now. The company may be in a position to say more about that soon. But I think the real trick, and this is why the government - and I was delighted that your party took the same position. The real trick about creating a downstream industry is to use the wealth that will come off our offshore. And you can only use that wealth if you can bring it ashore. The original thinking was that would be transported either by a third tanker right into the market place, Portland, perhaps, in the New England area, or that it would be placed in storage containers, and it looked, in all likelihood, that that would go to Nova Scotia in the original go-around. The government and the people of the Province took a strong exception to that. And, I think, it was the right thing to do, because if we ever surrendered that resource to another territory, that would be where all future frontier oil would gather. And it is at that gathering place, the importance of the transhipment is not so much the construction jobs, they are important. It is not so much the $150 million of investment. That is important. The real magic in it is getting it ashore, hopefully close to our refinery, and I tell you, the spinoff possibilities are enormous. We are already looking at one, a major, a major investor from Taiwan - am I supposed to be saying this?

AN HON. MEMBER: (Inaudible).

MR. FUREY: Okay.

- is looking at a dewaxing plant, because as the oil comes up from the Grand Banks, you know, it is hot beyond belief, but it is also covered in a film of wax, and to transport that oil, you have to heat these ships, otherwise it congeals almost like that funny disease that clogs your arteries. The point is, we already have people looking now at setting up a dewaxing plant, which would never be possible if you did not have the transhipment site. So if you can get that oil ashore, dewax and clean it, start refining it, you have all of a sudden created a major industry around your refinery where investment will then start looking at downstream industries, plastics and other things.

MR. FITZGERALD: Yes, with the wharf or the jetty that they have there, it would make sense if you are going to use that type of facility for off-loading rather than -

MR. FUREY: Absolutely.

MR. FITZGERALD: I know you don't have to come and land at a wharf today you can do it anywhere.

MR. FUREY: Absolutely. And Bunker crude, as you know, is -

MR. FITZGERALD: But it would save a lot of money, plus you are right in the grounds of the refinery.

MR. FUREY: And Bunker crude is coming now from the Middle East - Nigeria.

MR. FITZGERALD: All you need is a tank farm.

MR. FUREY: That is what a transhipment terminal is. But it attracts investment because it has the resource captive, and that is why you need to do that.

MR. FITZGERALD: I just have another couple of questions, and then that will be it for me for tonight. Minister, in your travels and in your efforts to create economic activity and to have businesses located here - is there anybody interested in any of our vacant fish plants around the Island? Is there anybody out who is around looking or something to create a little bit of hope?

MR. FUREY: Yes, there are. But there is no one company or group of companies that is a panacea for these empty plants. There are on an individual basis. You saw what happened in Piccadilly, the plastics manufacturer went in there and it burned and everybody is rebuilding it, and that is going to be okay. That was an abandoned fish plant. Down in your own district, you know, that there are companies looking at, I think, it is the Charleston plant? The UFCW group, would that be Charleston?

MR. FITZGERALD: No, it is the -

MR. FUREY: Mifflin.

MR. FITZGERALD: It is the Charleston plant where this fellow, David Lee -

MR. FUREY: No, no. I want to talk to you about that some other time, not at these estimates. What I am talking about is the fellow who - you remember the group that had the jam operation.

MR. FITZGERALD: Okay. Yes.

MR. FUREY: And they are going to market it -

MR. FITZGERALD: They are going to market it down in Mifflin's plant in Catalina.

MR. FUREY: Well, they are set to come to us to talk about EDGE. They are going to create lots of jobs. They are going to fill up that plant. They are also going to create jobs out in the fields. You know, we link them with Loblaws, the Weston Food Chain. They are going to take their products into their supermarkets. The union is going to invest its money into it, the UFCW funding. I think that is a really good project. You have been on top of that, too.

MR. FITZGERALD: Yes, the only thing about that one is, now that the Federal Government is kind of reneging or is a little bit slow in financing the other phase in getting the grounds ready and having the actual site work done, they are asking people for (inaudible) -

MR. FUREY: Well, you and I are going to have to start kicking their ass up there in Ottawa, that's all, because we don't have the luxury -

MR. FITZGERALD: People (inaudible) calls and it seems to be very frustrating because I am always getting this answer: `Another week, another week', but a lot of the people who have gone through phase one are now about to go somewhere else to try to find employment because they feel that it is just another story (inaudible).

MR. FUREY: Yes, just another bureaucratic nightmare, and I think that is one of the biggest problems in this country. We have a swamp of regulations that we need to drain as citizens to allow businesses to conduct business in their country. It is shocking what has grown up over the years and the nightmare and strangulation that is happening is unparalleled anywhere that I have seen; but look, that one is a good one and that's a fish plant. I have another company looking at the Great Northern Peninsula; there is an invention up there that is going to - look, I just saw it today and I couldn't believe it. It is called a Komatik Utility Trailer, the guy has actually invented a two-person boat that converts to a sleigh, a trailer, a camper.

MR. FITZGERALD: Perfect for Newfoundland weather.

MR. FUREY: Yes, but not just Newfoundland; in a lot of those European countries they want this because of their small cars, small roads et cetera. It is unbelievable, the opportunity there. He wants to manufacture this in a fish plant. We are going to turn him on and take him down to meet the President of L. L. Bean and some of these major industrial and business catalogues in the U.S. There is a great opportunity there. But there is no one person, Mr. Fitzgerald, who has come up to me and said: Have I got an answer to all your fish plants.

MR. FITZGERALD: No, but even if we can get one.

MR. FUREY: Yes, if we can pick them off one at a time, which is the strategy we are trying to use.

MR. WOODFORD: (Inaudible).

MR. FUREY: Yes, that's right.

MR. FITZGERALD: Minister, Bull Arm: What is going to happen when the ground base, the gravity structure pulls out to bay?

MR. FUREY: Bull Arm will revert to the Crown.

MR. OSBORNE: Newfoundland or Canadian?

MR. FUREY: The Government of Newfoundland. It will revert to us. We have put up, as you know, one-third of the cost for Bull Arm and the private sector has put up the balance. It is basically a $400 million facility which will revert to us once the gravity-based system and the top sides are mated, are actually at the site, 300 kilometres southwest of St. John's and are actually pumping oil, and I think they have to pump 3 million barrels.

The trigger clause is 3 million barrels. When 3 million barrels are actually produced, it legally reverts to the Crown for one dollar, but we have put in place, Mr. Fitzgerald the Bull Arm site divestiture corporation, because a lot of these assets, whether they are vehicles or pieces of equipment, as they become redundant they depreciate at an incredible speed, so we put in place with the agreement of the oil companies, Chevron, Mobil and Petro-Canada and Murphy Oil, a divestiture team so that as vehicles and other things become available, we can divest of them quickly and will roll back the profits into the Bull Arm site corporation to use in our marketing worldwide, and I think that is a smart thing to do.

We are out there marketing; we are looking at opportunities with Terra Nova and there is a number of other ones I am not at liberty to talk about because if I start talking about them, you know what the media does with them; they jump all over the companies, beat the living crap out of them and drive them out of Newfoundland, particularly the public media.

WITNESS: (Inaudible).

MR. FUREY: Yes, I know all about it and I can't mention it.

MR. FITZGERALD: Okay, that's it, Minister.

WITNESS: (Inaudible).

MR. FUREY: But it is true; it is true.

MR. WOODFORD: (Inaudible) we would be a `have' province (inaudible).

WITNESS: It would certainly be the thing to tip the balance.

CHAIR: Are you finished, Mr. Fitzgerald? Mr. Sparrow? Mr. Osborne?

MR. OSBORNE: Thank you.

The hon. minister lives in my district; he is -

MR. FUREY: He is my member, you guys, so be nice to him.

MR. OSBORNE: He and the Premier have both picked a district where they know the member can get something done for them.

Just a couple of questions. I guess, the first question: What role does the ITT department have in the Voisey's Bay mining development?

MR. FUREY: That's a good question. You know, we have a section in our department called Industrial Benefits. It really came about because we set up in the previous government - Premier Peckford and the previous government had the foresight to set up what was called an Offshore Industrial Benefits Division focused just on the offshore. We have since then widened the mandate to look at industrial benefits and economic impacts of projects on the Province. Our role will be to start - and we are just about getting there now - to prepare to fund a major, major study on Voisey's Bay, not just the economic impacts, but what are the industrial benefits and downstream industries that we should be chasing and maximizing. Because we have put the companies on notice, we have, I have, the members from Labrador have, certainly that every benefit should come to the Province. We would be delighted if the benefits went to Labrador but we have to wait for the economic models and a whole range of other issues, impacts that have to be looked at to see whether in fact they could go to Labrador first. I think that was debated yesterday and approved. But that is our role.

Our role is to look at, as we did with Hibernia, what are the industrial benefits? What are the opportunities that will fall out of that? What kinds of companies can we start getting excited in the Province about it? How can we build joint ventures worldwide to transfer technology in so that we can be the best in the world at that? Voisey's Bay is essentially a comprehensive major study of all the industrial benefits and economic impacts on the Province and that's our role.

MR. OSBORNE: Now, again with the Terra Nova, what is the ITT department doing to prepare for Terra Nova and subsequent offshore development?

MR. FUREY: Exactly the same thing. We have produced for Hibernia, for example, a catalogue of production opportunities. I would ask you to get your hands on it. It is a good catalogue in terms of Hibernia. It's not just the jobs that are going to happen with Hibernia as we construct the GBS. It is true that 46 per cent of the expenditures of $5 billion occurred here and it is true that 5,500 Newfoundlanders and Labradorians got jobs here, but there are also benefits beyond the construction. We have twenty-two years of pumping oil at a speed of 125,000 barrels per day for the next twenty-two years, which will spin out, in services and requirements, $11 billion. Eleven billions of dollars will come into this economy through services, through tug boats, food and all the services required out there and the jobs.

Terra Nova is the same thing, we have structured it - Terra Nova is a little different in this way, that it is mostly - well, it is all private sector driven. There are no requirements - unlike Hibernia, which was the first and frontier industry, there are no requirements for the Government of Canada to put direct cash in. There are no requirements for the Government of Newfoundland and Labrador to put cash in. So we really cannot nail them down on industrial benefits essentially because of that and secondly, because the mode of production is completely different from the first one. This will obviously be floating production technology. Now, by virtue of it being off our coast, a lot of benefits will accrue because of geography and because of our learning experience off Hibernia, but we have to be prepared to look at the industrial benefits and we are. That's our job as well, in that regard.

MR. OSBORNE: Thank you. The Newfoundland Dockyard - there was some media coverage a week to ten days ago maybe about the synchrolift. The synchrolift has been paid off for quite some time. The Newfoundland Government was not informed of this and as a result, had continued to pay the interest payments. Where are we now with that?

MR. FUREY: Well, I think the Minister of Finance spoke to that issue, because he is the one who has intervened in court to ensure that Newfoundland's position is protected. I don't think there is any doubt in legal terms that we have provided that loan and that loan was fully expected to be repaid. We have not made much of a fuss on it other than to protect our legitimate and legal position before the courts and I think that's a correct action on the Minister of Finance's part. But we don't see that loan as something that we want to just chase and put back in our treasury. We want to look at it in terms of how we can be helpful for the future of the Yard.

I've been on the record a number of times as saying that this government is quite prepared to look at that, and any other creative ways, particularly if there is an employee takeover. We want to give it every possible rightful chance to chase the market and do very well for itself. In that context we would look at that as well. But the legality, this was a legal move by the Minister of Finance on the advice of Justice to step in and protect our position.

MR. OSBORNE: Other than this, does Marine Atlantic owe us any money?

MR. FUREY: No.

MR. OSBORNE: There is a division within ITT to collect funds from, I guess, Crown corporations. Last year we were supposed to have collected $250,000, I think, from Newfoundland Hardwoods.

MR. FUREY: Oh yes, through privatization.

MR. OSBORNE: Yes. That money was not collected. I was just wondering why it was not collected.

MR. FUREY: It was not collected?

WITNESS: (Inaudible).

MR. OSBORNE: Yes. Crown Agency - Recoveries.

MR. FUREY: Sorry, what are you reading from, Mr. Osborne?

MR. OSBORNE: Just some notes. Page -

WITNESS: Page 171.

MR. OSBORNE: Yes, page 171 -

MR. FUREY: Of the estimates?

MR. OSBORNE: - 4.1.02.

MR. FUREY: I don't have (inaudible). They gave me every page but 171. What does it say, David?

WITNESS: (Inaudible).

MR. FUREY: Oh, yes, of course. What that is - that sat there when the government owned the Crown, it would return a dividend to us each year of $250,000. But we have since privatized Newfoundland Hardwoods by breaking it in two. The asphalt side has been sold off to a group in New Brunswick, I think. Irving's, yes. The treated timber pole project was sold off to a company in Quebec. One has been given EDGE status because it has increased its jobs and investment to treated timber. The Irving one is on its own.

That normal dividend came in by way of a cheque to Consolidated Revenue as a dividend pouring off the profits that came from Hardwoods. Since we have sold it there are no dividends because we took the capital cash of about $7 million? Yes, total buy-out of $7 million. That's what that is.

WITNESS: (Inaudible).

MR. FUREY: Yes.

MR. OSBORNE: I guess that would lead to another insignificant question. You say they produce treated poles, I guess for -

MR. FUREY: Treated timber.

MR. OSBORNE: Treated timber.

MR. FUREY: Poles, timber, they have a whole range of products.

MR. OSBORNE: For Newfoundland Hydro and that type of -

MR. FUREY: Yes.

MR. OSBORNE: Are they being produced now in the Province, those poles, or are we buying those from outside?

MR. FUREY: They could well be buying them from outside but they were being produced at a very heavy subsidized rate when the Crown owned it. We have since sold it to Wood Preservation Inc. of Quebec. They have converted the part-time jobs to full-time jobs. They have made, I think, a significant investment, over $1 million in it.

WITNESS: They are going to be doing that over the next number of months.

MR. FUREY: The next number of months. They are going to be producing treated timber, treated poles, treated wood, and they are going to be exporting it. Are they producing it this minute, today? I don't know but I can check on that for you.

MR. OSBORNE: No, that is fair enough. NAFTA: Is the minister aware of any problems with NAFTA as regards Newfoundland and Labrador, or companies in Newfoundland and Labrador?

MR. FUREY: No, I'm not aware of any problems.

MR. OSBORNE: Okay.

MR. FUREY: We are a big exporter. We export 75 per cent of that which we produce: Fish, timber, minerals, ore. It is mostly crossing the border now with heavily reduced tariffs under the NAFTA protection.

MR. OSBORNE: I've received some information from your department on, I guess, a co-development with NewTel on the information highway and new technologies with regard to that. I think Memorial University is somewhat involved in that as well. What role does this new technology play in the one-stop shopping centres the government is setting up?

MR. FUREY: I don't think any of the government service centres are on line yet. The thinking is to bring them on line so that people can actually conduct business right from their homes, computer to computer. When the government services centres were conceived and put in place it was a consolidation of various government departments and making permitting and applications and stuff put under one roof and decentralized.

I think the thinking is to get them on line over time when we can afford it. We couldn't do it because the technology just wasn't there. The fibre-optics and the redundant system have only been in place completed since this month, I think?

WITNESS: (Inaudible).

MR. FUREY: Yes. The one-line system was completed last year but you have to have a redundant backup system so that you are dealing in real time, and that was only completed this year, so the fibre optics and the fibre-optic penetration is right across the Province. I think Nesbitt Burns or Wood Gundy or one of them came out with a report recently saying Newfoundland has the highest penetration of fibre optics per capita anywhere in the country.

MR. OSBORNE: I have read that. Actually, we have the highest quality fibre optics in North America, apparently.

MR. FUREY: Yes. The fibre optic, the fibre itself is really a tunnel through which light goes and using binary numbers, it is modulation of light which creates information which is received and then translated.

MR. OSBORNE: Okay, when are these one-stop shopping centres projected to be set up?

MR. FUREY: They are set up, but when will they be brought on-line and heavily computerized and personalized like that? When we get the money. Remember, government has to spend to do that but we are in a period of difficulty and restraint so - I would love to do it; it would be a priority, but it is just a -

MR. OSBORNE: What type of employment figures do you think that would generate?

MR. FUREY: Well, I don't know that it would generate any employment per se directly in the public service; it certainly would be helpful to businesses because they are cutting down on time, travel, phone bills and a whole bunch of other stuff if they can go to their terminal, connect in and get a business permit and, boom, it is done.

MR. OSBORNE: So in that regard, do you think it would create a decline in employment?

MR. FUREY: No, I don't think so. I think it would be more helpful to business because it makes it more efficient, therefore it allows more profit which allows it more room to re-invest and grow.

MR. OSBORNE: Just a couple of other questions.

The Argentia Base: How are things progressing on the Argentia Base as far as bringing - and I guess, Mr. Sparrow is here so - I wasn't expecting him tonight; however, I am surprised you didn't ask the question.

MR. SPARROW: No, I (inaudible).

MR. FUREY: Maybe we should let Mr. Sparrow address this.

CHAIR: He does have a question, if you want to yield.

MR. SPARROW: Well, at any rate, I am delighted to be here tonight, I am replacing Anna Thistle, she had some other commitments and fortunately for me, I sit next to her in the House and when I heard she was unavailable I was delighted to attend, but mostly, I wanted to pick up on anything that the department had been doing.

I think, hon. colleagues in the Opposition should make a recommendation to boost this Budget because, in all the decline in the Province's economy, this is the one department that is meeting people internationally and bringing to this Province - and I personally think we should be putting a few more dollars in there and maybe, our friends will use their influence and do that; but I do have a few questions. I didn't want to be too parochial and talk about the Argentia area myself, but I do have a question for the minister; something I have heard quite a few times -

MR. OSBORNE: I will allow him leave.

MR. SPARROW: Okay. I am still -

MR. FUREY: He was hoping you would talk about Argentia, that is why he passed the mike to you, to tell us all the good stories.

MR. SPARROW: Oh, okay, to answer your question? You want me to answer the question for the minister?

MR. OSBORNE: Yes.

MR. SPARROW: Okay. Well now, the minister has had -

WITNESS: (Inaudible).

MR. SPARROW: I will save my question for later. What is happening in Argentia? Before my time, Empress Mushrooms had started down there and are doing quite well; they are into production and you know, everyone here has tasted -

WITNESS: (Inaudible).

MR. SPARROW: - the fruits of their labour. Yes. Super, but they are magic mushrooms, they are going to transform Argentia. From a dead-end base, they will revitalize it and bring it to life. Down there now, the minister has brought in a couple of firms from overseas who are very interested in export markets and hopefully - I haven't the authority to probably mention who they are or whatever but it has great promise there.

Also down there, there is a cannery about to open in the next month or two, and that is started by a local entrepreneur, the same as Mr. Hickey from Whitbourne. This guy is a good friend of mine. His name is Dan Meade, and has a partner, Terry Bishop. These two guys leave no stone unturned to get some business moving down there and will have probably twenty employees, I guess, when they go into production.

Another big advantage with having these businesses down there, particularly with Empress Mushrooms, they have had a class in the Trades College all winter teaching people, twenty-five students, what there is to know about growing and cultivating mushrooms and compost, et cetera, and providing a nutrient for the mushrooms because they apparently use up quite a lot. So it must be a pretty healthy food. But, at any rate, those are two of the businesses down there. Argentia Freezers moved in there seven or eight years ago and they are now the largest private sector employer in my district. They employ ninety people at this point. They bring in ships from all over, Norway - the Scandinavian countries. There is also, let me see...What else is down there? That's three. Oh, my, I don't want to forget anybody. EIMSKIP is there, and they bring and trade to Europe and the United States and they are also a great vehicle for anybody else who wants to trade because they are always advertising for anybody who wants to participate in sending finished goods from Newfoundland and finished goods to be imported to Newfoundland from the States or Montreal. So it is a pretty good open shipping lane. And Marine Atlantic is there. I am not really happy with Marine Atlantic. They have a great state-of-the-art facility, and they are only using it for a short period of time. So I hope they will use that a little better, promote the place a little better.

There is an awful lot of real estate down there. The minister will have his hands full and his deputies will have their hands full trying to get people in for those places. They have sold off all of the assets that the United States had there, as the minister mentioned, assets that deteriorate quickly - vehicles, equipment. They have sold every asset there with the exception of a couple of buildings, but it makes it a lot less (inaudible), supervise and take possession of, and they have received $1,020,000, I think, from the net sale of assets which is presently held in a fund to help any businesses which may come in there.

The Argentia Management Authority was set up when the base closed down. They are doing a very good job as well, co-operating with the minister's department, trying to bring in industry. They have a $5 million development fund which I think is advanced in increments of $1 million per year, give or take a few dollars. I don't know the state of that but I am sure they have some of that spent.

But overall, they have, it just started yesterday or the day before, an effort out to let the world know what is happening with Argentia, vis-à-vis, the Voisey's Bay smelter or whatever. But that will all come clear in the next little while.

So I have nothing else to say.

CHAIR: It is abundantly clear to this Chair that the Member has a great handle on that particular part of his riding.

Mr. Osborne.

MR. OSBORNE: Just a couple more questions and I will let you off the hook for tonight.

MR. FUREY: Did you like that answer that I just gave?

MR. OSBORNE: The Special Initiatives - Offshore Fund: there is some extra funding in that fund this year. I am just wondering what that extra funding is for?

MR. FUREY: Which subhead are you under?

MR. OSBORNE: I am sorry, it is page 166. I have all the notes here. Okay, it is the Special Initiatives - Offshore Fund, 3.1.04.

MR. FUREY: Okay. Yes. That is a fund that is 75/25 again. We have set aside funding there for a number of initiatives. One of them is C-Core, the Centre for Cold Ocean Research and Engineering here in St. John's. Another that comes to mind is that we have set aside some money for marketing the Bull Arm site, which we talked about earlier. It is one thing to have a good catalogue of inventory and a super video and marketing materials, but you have to get out on the world stage and chase opportunities. There is money in there for that. Ultimate East Data Communication, there is some money in there. That money is for some research work on communication satellite technology that they are doing. Oceans Engineering, the Centre of Excellence Program, the Centres of Excellence that are here in St. John's, we have some money in there for marketing as well.

MR. OSBORNE: Okay. I notice that the funding from the Province has increased and from Ottawa has decreased under that section. Would you know why Ottawa has given less to this particular heading?

MR. FUREY: I don't see what you are saying. If you look at that heading, Special Initiatives, you will see Professional Services $300,000, Grants and Subsidies $1.3 million for a total of $1.6 million. Correct?

MR. OSBORNE: No, under 3.1.04 -

MR. FUREY: Yes, the amount to be voted total is $1.6 million. Ottawa is putting in $1.25 million.

MR. OSBORNE: Yes, but last year they put in $1.387 million.

MR. FUREY: It is slightly less, cash flow is all it is. It is just a cash flow, slightly less because of the demands on the fund. Sometimes the demands are higher, sometimes lower. It is still an absolute pot that can't be touched. It just flows at different levels.

MR. OSBORNE: Okay. Page 169, Industrial Infrastructure - Offshore Fund?

MR. FUREY: Yes, I am with you.

MR. OSBORNE: Okay, $75,000 in provincial money and $225,000 in federal money was budgeted last year but was not spent. Why was that not spent?

MR. FUREY: This is out at the Hibernia site, as I recall, `... detailed engineering is the supports at major Hibernia construction sites in the Province...'. There was a certain block of fund that was set aside for that. There was no take-up on it this year. It wasn't put there to be spent. It was put there to be spent if required.

MR. OSBORNE: Okay, so it just was not required.

MR. FUREY: It was not required.

MR. OSBORNE: Okay, and this year there is only $12,500 in provincial money and $37,500 in federal money. What is that budgeted for this year?

MR. FUREY: The same thing, if required.

MR. OSBORNE: If required, okay. That's all of my questions, thank you.

MR. FUREY: It is there on an `as needed' basis.

MR. OSBORNE: Okay.

CHAIR: Thank you, Mr. Osborne.

Mr. Ramsay.

MR. RAMSAY: Just one thing, I note with regret the closing of incubator mall facilities in Port aux Basques and Pasadena over this past year - Port aux Basques, anyway, Pasadena I am not to sure. It is just one that I wanted to note on the record. I know that there is a divesture of it planned and there has been some interest expressed. Just maybe if you could comment on that and secondly, something else that I want to get into afterwards just quickly.

MR. FUREY: My only comment is, when I was the minister it was open for the seven years I was there. I am not the minister responsible for that anymore. How is that for a cop-out?

No, look, the reality is that the incubator malls meant well, the concept was pretty good, the capital dollars were put in, there was no interest, no debt. They attracted, for the most part, fly-by-nighters. If you want to know the truth about it, they attracted, for the most part, fly-by-nighters. People who went in there and took refuge under that roof for free rent, came in with ACOA grants and every other grant in their arse-pocket and when the money ran out they ran out the back door. Now, that's the truth of the matter about the incubator malls. What we have to do and the challenge for us is to divest of them to the private sector, to real people in the real world with real risk capital who have some good ideas that can perhaps make it. Now that's the truth. I can't sit here and tell you there has been any smashing sterling success stories that keep rolling out of the incubator malls because I can't think of one. Is that about right, Mr. Woodford? You would have more knowledge about that.

MR. WOODFORD: Yes.

MR. RAMSAY: Just in some of the overall focus of the department, as you mentioned in the area of telecommunications. I know there have been some very strong expressions of interest from companies over the past year or so with EDGE being brought in, some projects that you have been working on that are very well thought out and, of course, I am not sure of any that you can really mention because some of these companies apply - things don't go well or their corporate plans change and they don't proceed. But I just wonder, you did mention the idea of the possibility of 1,000 jobs. I think that is probably holding back a little bit, based on some of the interesting and very viable large corporations that are interested in using Newfoundland and the double fibre-optic network with the redundant back-up and so on. The overall effort that is being made between yourselves in partnership with NISL and the telephone company itself in this area, do you feel fully confident that it will reap benefits soon? Do you think that we will be able to - I know you've said this, but I think that it is important to emphasize, because I think our future is in the private sector. I'm wondering how confident you feel at us being able to stand up and say: Yes, we have managed to stimulate the private sector to create these jobs that we have had to cut out of the public sector.

MR. FUREY: Yes. Just to clarify a point that I talked about in terms of the 1,000 jobs. There are thirty-three companies that have the potential to create 1,000 or more jobs based on the EDGE status they are given. How many have they created to date? For various reasons - and I'm not talking about construction jobs or repair jobs or renovations of buildings -

MR. RAMSAY: The long term.

MR. FUREY: - I'm talking about direct company jobs. There are 300 men and women working in full-time jobs in EDGE companies today. There will be 1,000, I predict, by the end of six months. Mr. Ramsay, that is outside of the other companies that are lining up, that are talking to us. Let me tell you something interesting. Some of the EDGE companies have brought other investors to the table, and I'm thinking of - maybe I shouldn't say that because the deal is a ways off. But it is significant.

You mentioned high technology. Look at AbbaCom Logic, investors from the United States and Vancouver, British Columbia. They came to Newfoundland because geography - you know McLuhan's phrase, the world is a global village now. With the technology that we have it has shrunk. It doesn't matter where you live because we can go to satellite technology. A trillion dollars a day changes hands at the speed of light. A trillion dollars a day, through banking machines and other things, changes hands every single waking day.

We aren't limited or hamstrung by geography as we were in the past because in the past we were trying to move bulky products. The products in the new third wave era are products of the mind, they are knowledge-based, they are things we think about and information we gather that we can fire off at the speed of light through digitized technology and satellite technology.

AbbaCom Logic came here, these two investors. They set up downtown on Blackmarsh Road. They are building enhanced memory capability for computer boards. They came here under EDGE. Their minimum required capital investment was $300,000. They are over $1 million now. Their minimum jobs were ten. They have hired thirty-one young people out of the University. Their first year of sales will be $50 million into the U.S. and by August they will be at sixty employees, and hope to double by next year. They have given us a fabulous lead on another major corporation. EDGE did that.

MR. RAMSAY: Excellent.

MR. FUREY: Let me just speak about Newfoundland Information Solutions for a second. That is a spin-off of the old NLCS, the computer technology company which we privatized, and everybody in the House at the time agreed it was a good idea. They have more than met their commitments to spin out sub-contracts to the small IT sector in the Province. They have more than met their commitments on the job side. I'm sad to tell you that the president told me they have thirty-four jobs they can't even fill within the country because people aren't trained for them. They have to look outside the country. Something like twenty of our workers over there are in California retraining at Anderson's Consulting firm in California.

So they have met all their targets. Not only that, they are now being recognized as the largest information technology company east of Montreal. They are producing fabulous new products. Have you see the CD-ROMS and technology they are producing for the Department of Tourism, Culture and Recreation? Outstanding stuff. They are developing new ideas over there in their laboratories and their research and development, some of which they have told me about, but for obvious reasons I can't speak about. Look, it is just really exciting what is happening over there. They have expanded the building, they are growing at leaps and bounds, exporting the knowledge that Newfoundlanders are taking from the universities and technical schools who are going to work for them. They are exporting our brain power around the country and around the world.

You can only tip your hat to that. That is a dynamic company. Keep an eye on it. It is going to grow at an incredible pace.

MR. RAMSAY: Mr. Minister, one final, little comment, and I guess it points towards public investment in industrial infrastructure. Over the years we have had projects such as Marystown Shipyard, the Labrador Linerboard Mill in Stephenville and many others that have reaped benefits to us, regardless of their somewhat jaded history as far as further public investment in them is concerned.

It would be interesting to know - and I know this is probably not available, but maybe, even a comment on it by you - the amount of money that has come back to the taxpayers from people being employed both at the Marystown Shipyard, through the eventual success of the Labrador Linerboard and Come By Chance, all of these things now which are employing people regardless of the fact that we have put a huge amount of capital investment in there, the tax dollars that have come back into the tax coffers for the people of the Province, must certainly equate with and possibly far exceed the original public investments, even in Marystown, so I think if we talk about $65 million public investment of capital in Marystown, there has probably been in excess of $65 million worth of personal income tax, retail sales tax flowed back into the Province throughout that period of time and likewise with the others. So I think that by investing our money in infrastructure like that, eventually we do reap some rewards of going beyond and being a net economic benefit to the people of the Province.

MR. FUREY: Yes.

MR. RAMSAY: Any comment on that, because -

MR. FUREY: Yes. My comment would simply be this, that historically, governments have gone where the private sector wouldn't dare to go, if I could use a Star Trek analogy, and they go out and they do that. They build the infrastructure, they create the opportunities, they service a demand where people won't normally go; but as it becomes acceptable, government's real role is to back out then, and to allow the private sector to step in.

Your comment about government money going into public corporations like Marystown Shipyard is a valid one. There is no doubt that there is a boomerang effect back to the Treasury. The issue is not in putting money into Marystown or Crown corporations, the issue is putting it in there efficiently, and driving it as though it were a business so that it operates using business principles, so that you are not wasting taxpayers' money and that is where the mind-set starts taking over whether it is Linerboard or Marystown; ask the government, the government has an unending Treasury. Well, those days are long gone - over, so it either runs on business principles or it closes.

MR. RAMSAY: I agree. We all know we want to get out of these businesses but the thing is, maybe the bad story of it costing us a lot, maybe it ends up being awash after it is all over anyway, if you look at the amount that has been returned, back to the Treasury out of the -

MR. FUREY: Well, I wish that was true but I don't think that is true because, if that were true, let us open up the Treasury and put shipyards in every part of the Province.

MR. RAMSAY: I know. We would be spending everywhere. That's all I have.

CHAIR: Thank you, Mr. Ramsay.

MR. FUREY: The logic and the premise is inescapable. It is like saying that because man is a biped, fifty men are a centipede. Did you have a question?

MR. SPARROW: Yes, Sir.

I have heard about it over the past ten or twelve years that there was a possibility of a free trade zone somewhere in Newfoundland but it has never materialized -

MR. FUREY: Argentia.

MR. SPARROW: Well, I didn't want to mention Argentia again - but it has never materialized. They sort of spring up all over the United States in quite a few locations but we can't seem to get one on the East Coast of Canada; is it a federal problem?

MR. FUREY: Yes, it very much is. The foreign trade zone concept is something that we brought to the table eight years ago and it's a foreign trade zone is how they are commonly known around the world. Canada is perhaps the only G-7 country that does not have a foreign trade zone. There are something in the order of 300 worldwide. I think Russia is another one that doesn't - The former Soviet Union, now whether these broken out countries that have fallen out of the former U.S.S.R. have them now I don't know, but as a country they didn't.

They are fabulous for economic development because what you can do is draw in companies to this sort of bonded warehouse zone where products can be brought in, mixed, matched, added to, value-added, they don't attract taxes and tariffs of any kind; when they are exported back out to the end users is when they attract taxes. That is the beauty of a foreign trade zone.

I've put forward the proposal that the whole of the Province should be treated as a foreign trade zone. The Government of Canada's position, of course, was: We can't do for one province that which we aren't prepared to do for everybody else. Because we are all in this equally. Nobody has special status, nobody is distinct, nobody has special rights above everybody else.

In fact, if you look at some of these foreign trade zones and why they came about, they came about just after the Depression in the U.S. Roosevelt came out with his so-called plan for reviving the economy and New Jersey was one of the first ones to set up. They attracted components of products from around the world and they stored them without attracting taxes, which created jobs. Within the boundaries of that foreign trade zone they assembled, put together, value-added, and didn't attract taxes. It is only when they left those zones that they attracted taxes. In Mexico, along the Texas-Mexico border you will find what are called maquiladoras. In these maquiladoras they have absolutely total tax-free status, but they go a step further. They couldn't care less about the environment or anything else. Whatever you want to do in there, get at it and create jobs. Now, there is something wrong with that.

We made the proposition as a province to the country to create a foreign trade zone in Newfoundland. They said: We can't give it to the whole Province, because if we do that we have to do it for this one, that one and the other one. We said: Well, look at zones within the Province. In particular, we told them to look at Gander, because of our international airport reputation which we could build on, and look at Argentia and Stephenville. Three areas: Shipping lanes, shipping lines and airports.

We gave them a formula that would say: You can give this to everybody in the country so you aren't treating anybody differently. You use basically four or five economic indicators to measure against the national average: unemployment, GDP, growth rate, population, those kinds of things. Put those in a column and measure it against the national average, and anybody who falls below 60 per cent, you can have a foreign trade zone as an economic development tool. We think we could have attracted a lot of industry into those zones where it is totally tax-free, federal, provincial, all of that stuff.

They wouldn't buy into it. They would not give to Newfoundland that economic development tool. They started to tell us: It is playing with the tax act, Revenue Canada would have to amend their laws, et cetera. Utter nonsense and garbage and bureaucratic tripe, to be honest about it. If they wanted to help us, don't give us equalization and transfers, give us the tools to build our economy, and here is a fabulous tool.

MR. SPARROW: Well, Mr. Minister, I am -

MR. FUREY: But they said no, successive governments of all political stripes.

MR. SPARROW: I was reading just last week that in Tijuana, Mexico, which is right next to the U.S. border, that I believe it was Lucky Goldstar, but I stand to be corrected, one of the Korean conglomerates, their investment in the last eighteen months was $800 million.

MR. FUREY: Yes, I saw that.

MR. SPARROW: It is quite a sizeable investment, if we could ever pick up something like that.

MR. FUREY: But if you could invest $800 million in a zone that wouldn't attract any taxes whatsoever until your product was moving out into the economy, you would really think about investing there, wouldn't you?

MR. SPARROW: Thank you, sir.

CHAIR: Thank you, Mr. Sparrow. (Inaudible) -

MR. FUREY: May I make one last point on that? We are still pursuing that. It is still very much at the top of our agenda but it is an uphill battle - and it is an uphill battle because the governments of Canada successively have said: We can't give to one part of the nation that which we do not give to another, even though they give special status on immigration policy to Quebec.

CHAIR: Mr. Shelley.

MR. SHELLEY: I have just a couple of other questions. I suggest we forego the break as we did last night so that we can finish a bit early. I'm sure the minister and his officials won't mind that -

MR. FUREY: I'm available all night.

MR. SHELLEY: - and save the best questions for the House. First of all, on behalf of my former colleague, Nick Careen, I still would like a comment on the American base in Argentia and what you see in the near future anyway, and what some alternatives might be down there. I think it is fair to ask that.

MR. FUREY: I don't know if you were here when Mr. Sparrow commented on it, but he listed a whole series of projects. I think there is still the Argentia economic development fund. I know that you have done a prospectus on the assets out there and there is quite a fabulous piece of literature that has been done by - I forget the company's name now, but it will come to me in a second.

We have been steering companies through EDGE into there. He mentioned Empress. Empress is a small mushroom company. You have tried their products. They are first rate. They have twenty-five or twenty-eight employees now. They are growing by leaps and bounds, pardon the pun. They are exporting to the Maritimes and I think they just have a fabulous opportunity. EIMSKIP comes through there, you have the cold storage freezers out there. I think one of the biggest drawbacks, Mr. Shelley, with respect to Argentia is the environmental clean-up. That Is one of the things that we really have to work on and we are in negotiations with the Government of Canada and the United States now.

MR. WOODFORD: (Inaudible).

MR. SHELLEY: Pardon? Yes, I will now in a second.

MR. SPARROW: Excuse me, could I just add something to what you just said?

MR. FUREY: Yes, please do.

MR. SPARROW: Environment Canada did an assessment and basically gave Argentia a pretty good bill of health. The Federal Government also committed to - if a company wanted to move in on any section of the naval base, the north side or the south side, which was the most recently vacated place, that if a particular area was picked up, for example, if a company needed a parcel of land, an area of ten acres, that the Federal Government, rather than see that project shelved, would go in there, and even if negotiations with the U.S. Government are not completed, they will unilaterally clean up - call tenders, I assume, and foot the bill for a clean-up on that site so that that business is not precluded from entering the naval base and contributing to the Province's economy. So the Federal Government will clean it up, even though the environmental problem has not been resolved between Canada and the United States. There is no impediment to a company moving in there.

MR. FUREY: They will provide indemnification to any business.

MR. SPARROW: Yes.

CHAIR: Thank you, Mr. Sparrow.

MR. SHELLEY: This is just a matter of curiosity, on page 166, the Science and Technology Advisory Council, it is down to $30,000 now but there are mergers talked about with ACE and Stack and the different groups; then you have the advisory council on the economy; then you have RTEE, Round Table on Environment and so on. These groups, where are they going with these? How beneficial are they?

MR. FUREY: Do you remember in the Budget the minister referred to twenty boards and agencies being consolidated?

MR. SHELLEY: Yes.

MR. FUREY: We folded up the ERC, we will be folding up the Science and Technology Advisory Council and we will be folding up the Round Table on the Environment and the Economy. What we have decided to do is put one very strong group together, the Advisory Council on the Economy and Technology. We will draw from those boards the best and brightest who are willing to serve on a volunteer basis and they will advise the Premier. So we are rolling all of them into one. We will seek advice from people, who to a point - we are going to be very sensitive to those people who sat on the Round Table on the Environment and the Economy and those people who sat on the Science and Technology Advisory Council; but they will all report to the Premier now. It will be one council and it will be basically driven off advising us on the economy.

MR. SHELLEY: That's one thing that I agree with, what you are going to do with that because there is so much of that going on and you really wonder what all of these groups are doing all the time.

Page 168, one last question, on Strategic Investment and Industrial Development. Now, Salaries, of course, I have to ask that, from $109,000 down to $28,000. You mentioned that earlier?

MR. FUREY: Yes, I mentioned it earlier. This agreement is concluding. It is a five-year agreement. So what you are seeing here in these numbers is basically a cash flow of commitments from last year. The balance that actually sits in the agreement now of the $45 million is just under $500,000 and the board met this morning and committed to that $500,000.

MR. SHELLEY: Okay, so my question is - and this is because I heard you mention it earlier - did you lay off people and rehire them for the last year to clue up?

MR. FUREY: No, these people were the administrative side of the agreement.

MR. SHELLEY: Yes, so what I am asking you - it went down, obviously, it went down to $28,000, that is in salaries and then it jumped up again to $109,000. So were the people laid off and rehired to clue up what was going on with the agreement and so on? It's just a bit peculiar.

MR. FUREY: I am going to ask the chairman of the agreement just to report on that because he has the details.

MR. SHELLEY: I just don't get the gist of it.

MR. BLUNDON: What we have here with the other SIID agreement, the double `i' SIID -

WITNESS: `Sid's agreement.'

MR. BLUNDON: `Sid's agreement,' yes. You will note that, as the minister said, most of this has to do with cash flow. In the past we have always had a notional amount that allowed us to look after the total administration of this particular agreement. What has really happened in the past is that the Province has used its internal resources to administer its part of the agreement. As you can see in the revised for 1995-1996, the only amount that you see here in terms of salaries is a couple of students and stuff that we had helping the administrators. In the 1996-1997 budget, again it is just a notional amount. I would be very surprised if next year you didn't see a revised similar to 1995-1996.

MR. SHELLEY: Like I said, at the beginning in my opening remarks, Minister - I'm about to clue up here - although your overall budget went up $1.3 million, as Roger mentioned earlier, there was a lot of salaries and transportation was down in some other heads. Overall, it was an increase of $1.3 million.

The last question, then, to clue up with the EDGE again. There are five that just went through the committee, seventeen more lined up. There is no particular schedule -

MR. FUREY: When I say there are seventeen, there may be thirty in the hopper but there are seventeen being assessed now, yes.

MR. SHELLEY: But there is no particular schedule. You don't meet every second week. It just depends on the numbers that you have.

MR. FUREY: What happens is an application comes in. They ask for a facilitator most of the time. They present a business case which we have to analyze, we have to go through all that. Once those analyses are done, Mr. Shelley, they are stacked up, and when you have four or five ready to go they call the board together.

MR. SHELLEY: There is nothing confidential about finding who has plans in there. So any time you want to get an update or see where it is, basically - I mean, this group called me, and I don't have a lot to do with them (inaudible) -

MR. FUREY: No, and I tell you, I made a note. The assistant acting deputy here tonight made a note of that and I will find out where it is in the system for you. Natsiq, is it?

MR. SHELLEY: Yes, it is something like that. It changed twice.

MR. FUREY: You made a note of that, (inaudible)? I will check on it for you, don't worry about that.

MR. SHELLEY: Okay. Those are all the questions we have.

MR. FUREY: Do you know where they are from?

MR. SHELLEY: That is a question in itself. I think there is a combination of people involved with that company, including the Métis, from what I understand, somebody from Ontario, and I think somebody in France has some investments in it, too.

MR. FUREY: Okay, I got you. I will check on it for you.

CHAIR: Thank you, Mr. Shelley. Are there any further questions?

Thank you very much. I would just like to clue up here now. I should say, from what I've heard about the EDGE legislation, Minister, is the facilitator is one of the biggest benefits that companies see flowing from that particular legislation. I would like to -

MR. FUREY: May I make a point on that?

CHAIR: Sure.

MR. FUREY: That is singly the most common comment we get back from companies: Thanks for the tax breaks, but thank God for the facilitator. Now, that speaks volumes, not just about how good these people are at doing their jobs, but it speaks volumes that we have to hire a facilitator in government to take people through government. You have to shake your head. There is something wrong. The system is arsed-up, upside down, when you have to hire a facilitator -

AN HON. MEMBER: (Inaudible).

MR. FUREY: No, but when you think about it now, seriously, when you think about it.

- if you have real money to invest and you have to hire somebody in government to navigate government.

MR. FITZGERALD: Minister, I've always said that in order to start a business here in Newfoundland, the first thing you have to do is to be unemployed in order to have the time to be able to go through the bureaucracy.

CHAIR: When I made that comment I didn't want to stimulate another debate here tonight.

MR. FUREY: Somebody else made a similar comment to me about the bureaucracy, how to start a small business in Newfoundland? Start a big one and wait.

CHAIR: Minister, I want to say for all who are present and all who will read the record that this is an exceptional department. It accounts for about .9 per cent of the total expenditure of the whole of the government, but it is very important. It has skilled stewardship. This is the department that looks at the information highway, the information technology, new opportunities, new investment. Your job, Minister, seems to be sell, sell, sell, developing relationships, partnerships between our people and our resources, leveraging and getting private sector investment and providing new jobs and new opportunity with technology and building, I think, a much better and brighter society. So we all appreciate the work that you and your department does.

I would now call upon the Clerk to call the headings.

MADAM CLERK: Inclusively?

CHAIR: Inclusively.

MADAM CLERK: 1.1.01 through 4.2.02.

On motion, headings 1.1.0l through 4.2.02 inclusive, carried.

On motion, Department of Industry, Trade and Technology, total Head, carried.

On motion, the Committee adjourned.