Pursuant to Standing Order 87, Ralph Wiseman, MHA, Topsail, substitutes for Rick Woodford, MHA, Humber Valley.

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

CHAIR (Canning): Order, please!

Welcome, ladies and gentlemen, to the final meeting for the Department of Development and Rural Renewal for the Resource Estimates Committee. Before we begin, I would like, with the department and the minister, a motion to accept the minutes of the previous meeting.

On motion, minutes adopted as circulated.

Good evening, Minister. You might want to take a couple of minutes to introduce yourself and your officials, but perhaps the Committee members would want to introduce themselves to your officials.

MR. WISEMAN: Ralph Wiseman, District of Topsail.

MR. BARRETT: Percy Barrett, District of Bellevue.

MS THISTLE: Anna Thistle, District of Grand Falls - Buchans.

MR. FITZGERALD: Roger Fitzgerald, District of Bonavista South.

CHAIR: Perry Canning, District of Labrador West.

Minister, it is all yours.

MR. TULK: Thank you, Mr. Chairman.

Let me first of all say, it is a pleasure to be here and to introduce the officials. To my immediate left is John Scott, Deputy Minister; the Assistant Deputy Minister of Field Operations is next to him, William MacKenzie; this gentleman here with all the hair is Sam Kean, he is the Assistant Deputy Minister of Regional Economic Development; the good looking young fellow there is the Assistant Deputy Minister of Small Enterprise Development, Bruce Saunders; and the fellow who tries to keep us all straight is from down on the Southern Shore, Ken Curtis, Budget Officer with the Central Administration Division. (Inaudible).

I think we just passed out - and I would like to run through those, if I could, as an opening statement, and maybe give us a kicking off point for questions and answers that you might want to put forward. I do not know how those things run now. One time -

CHAIR: Minister, you can just go through your statement. The only advice I would give you is that when your officials speak, for the purpose of Hansard, that they identify themselves.

MR. TULK: Sure.

CHAIR: So the folks at Hansard will have an easier time identifying who is speaking. Go ahead.

MR. TULK: First of all, I would like to cover the mandate of the department. The Department of Development and Rural Renewal was created in March of 1996 by the present Administration with a mandate to foster economic growth and job creation throughout the Province, especially in rural areas.

I might say, if I could, Mr. Chairman, just as a aside here, that the Department of Development and Rural Renewal has somehow come to be regarded by most people in the Province, in government, and I suspect in the Legislature, as just the Department of Rural Renewal. In actual fact, it is the Department of Development and Rural Renewal. I have forbidden anybody in my department to say `D₂R₂' any more because it is like a pesticide; it does not say what the department is all about.

Our mandate is pursued through programs and services delivered within two business lines: a) promoting regional economic development, focusing on the twenty economic zones that have been established; and (b) fostering the development of small and medium-sized business enterprises throughout the Province. We deliver these business lines through Field Operations, and that consists of five regional offices which hopefully provide regional coordination and support to client services delivered by staff in each of the twenty economic zones.

I might also say that, wherever possible, we are co-locating with other government and community-based development agencies to provide single-window business service delivery. I might say that some of you have experienced some difficulty with that as people have moved from some rented premises to some other rented premises because, as MHAs, you ultimately get the question put in front of you: Well, why are they moving out of my situation, or out of my building and into another building? In many case that is because we would like to put, as much as we can, all of the services in one place.

The objective in our 1998-1999 budget process has been to preserve and strengthen these core lines of business as a means of stimulating new employment opportunities and economic growth, especially in rural areas, in partnership with the twenty REDBs as well as the private sector.

Over $30 million is committed in this budget towards government's economic growth agenda as expressed through the Department of Development and Rural Renewal. In addition to our own budgetary resources, an additional $10 million will be invested throughout the Province to support strategic economic priorities through the federal government and SRDA, the Strategic Regional Diversification Agreement.

The department fully achieved its targeted program review savings in the 1997-1998 fiscal period, and will not have any staff reductions or program cuts in 1998-1999. There are some fluctuations in our budget this year over last year, and these are accounted for by an anticipated drop in federal-provincial cost-shared agreements, and I note the expiry of the Comprehensive Labrador Development Agreement and the SRDA Agreement, or the Strategic Regional Diversification Agreement, as well as a drop in provincial revenue - collections. That, of course, has to do with a drop in the overall economic well-being of the past number of years, especially in the fishery. There are a number of cases, to be frank with you, where in the last two or three years the department has decided to take an equity position in companies as opposed to increasing the loans. The amount invested is lower, in many cases, and therefore the collections which bring in those revenues are down as well.

I would like, if I could, to take this opportunity to briefly highlight for the Committee some of the more significant achievements of the department since its establishment approximately two years ago.

The work of the Department of Development and Rural Renewal, in partnership with the twenty Regional Economic Development Boards, represents a fundamental shift in the way this Administration is tackling the economic challenges confronting our Province. Previous efforts tended to be centrally driven and were imposed by government itself. They did not always, as all of us know, produce the desired results.

This government is interested in approaches that will result in permanent long-term solutions to our problems, solutions that also involve the active involvement of its citizens, not solutions that are band-aid in nature.

I am pleased to tell you that, in this regard, eighteen of the twenty Regional Economic Development Boards have now submitted their strategic economic plans to the federal and provincial governments. The Cabinet Committee on Rural Revitalization has met with seventeen of them in their own zones to review the plans and jointly identify the five top priority initiatives to advance the economic agenda in each region. That does not mean we will not look at other parts of strategic economic plans, but we ask those people so as to provide a focus. We asked if they would give us their top five priority initiatives, and I am pleased to say that eighteen of them have done that.

We have also partnered with the federal government to support tangible economic opportunities throughout the Province over the past two years by investing $22.4 million in eighty-seven community economic development initiatives through the Canada-Newfoundland Strategic Regional Diversification Agreement, otherwise known as SRDA.

We have invested $34.4 million in 112 economic initiatives under the Transitional Jobs Fund, TJF, which levered an additional $103.7 million from other sources and will create over 2,800 new jobs. An additional $3.8 million has been approved for the coming year under the Canada-Newfoundland Comprehensive Labrador Agreement for thirty-three economic initiatives, which will lever another $5.3 million from other sources.

Our Strategic Enterprise Development Fund has supported 341 projects at a cost of $14 million, which has levered an additional $45 million from other sources to create and maintain over 2,000 jobs.

Government has committed $100 million under the federal-provincial Economic Renewal Agreement, a large portion of which will directly benefit rural Newfoundland and Labrador. Twenty million is being directed toward new aquacultural opportunities and $22 million to expand and diversify the tourism industry.

A new Canada-Newfoundland Comprehensive Economic Development Agreement will bring $50 million in new economic development money into the Province over the next five years.

The federal-provincial Labour Market Development Agreement will bring $386 million in support of active employment programs into the Province over the next three years, and will be invested in keeping with the recent economic development priorities established in the economic zones. We are presently negotiating an extension to this agreement for an additional two years.

Through initiatives such as the Newfoundland and Labrador Film Development Corporation, and the trade initiative with St. Pierre and Miquelon, we are aggressively pursuing new economic and employment opportunities in new emerging sectors of our economy. We will introduce a Telefilm Tax Credit Program this year to further stimulate the film and video industry in this Province. I might say to you that further along I hope we can get into a discussion of this industry, because it seems to me there is a great deal of potential there.

We are leading research and strategic business development initiatives, in partnership with industry associations and entrepreneurs, community organizations and other government departments and agencies, in small-scale manufacturing, dimension stone... I might drop a note here and say that in the dimension stone industry we have now engaged a consultant. We asked for proposals some four months ago and we now have a consultant, the name of which I do not know. There is a consultant engaged in putting together a strategy for us, a development strategy for the dimension stone industry in this Province. My initial understanding is that there is a great deal of potential in terms of employment, and employment maybe for some of the kinds of skills that our people have in this Province. From what I hear, it is basically on a small-scale quarry with numerous quarries, and in that way creating quite a few jobs.

The peat industry, agrifoods secondary processing - there is a great potential there - commercial craft development and entrepreneurship development, which will contribute to business development this year.

In summary, I feel we have made significant progress in advancing small business and regional economical development initiatives, as well as creating the infrastructure and environment for sustained economic growth.

The economic indicators reveal that our efforts are starting to yield real dividends. April represented the ninth consecutive month of year-over-year employment gains in Newfoundland and Labrador. The number of people employed has increased 5.3 per cent over the past twelve months. Nine thousand three hundred new jobs have been created across all sectors of the economy. This represents the strongest growth in employment we have see in the nineties thus far. Alberta was the only Province to report stronger year-over-year employment gains in April on a percentage basis than Newfoundland and Labrador. This increased employment accounted for a two point decline in the unemployment rate in the first four months of 1998. It is significant to point out as well that these employment gains are not confined to one region of the Province but are evident across the Province.

We, of course - you would be blind not to say otherwise - continue to face significant challenges, particularly in rural Newfoundland and Labrador; however, it is clear that we have turned the corner. The building blocks are now solidly in place. With continued progress based on our economic development efforts in large-scale resource industries, small enterprise development and regional development, we are well positioned to maximize our opportunities. We are moving aggressively to advance the economic growth agenda, and we look forward to the continued achievements in the year ahead.

Thank you.

CHAIR: Thank you, Minister.

Mr. Fitzgerald, would you like to begin with an opening comment and a line of questions?

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, I listened as you read out your statement there and this figure of 9,300 jobs, I think, was echoed by the Premier here in the House some time ago as well. Are you talking about 9,300 new jobs or are you talking about 9,300 jobs this time of the year over this time last year? Are you talking about jobs created due to those make-work projects that the Minister of Municipal and Provincial Affairs put forward, ordinary seasonal jobs that would kick in at this time when people would go back to work?

I do not mean to be negative, but I cannot see where we have created 9,300 jobs. Just prior to that you talked about 2,800 and another 2,000 jobs, and on page 4 you talked about 4,800 jobs there in two paragraphs: 2,800 jobs, and another 2,000 jobs just a little bit further down in the next paragraph. Are those accurate figures or are they seasonal jobs that would ordinarily kick in at this time, rather than new jobs?

MR. TULK: I think if you look at the figures, and I can supply you... Actually, you can get them yourself out of - I think it is the Cabinet Secretariat that delivers them to us.

WITNESS: Statistics Canada.

MR. TULK: Statistics Canada. If you look at the year-over-year growth... I never compare, to be frank with you, one month as compared to last month. This morning, for example, I went through - I think it was the April figures that came across my desk this morning. I have them here in this booklet, I guess. The truth of the matter is that if you look over April, 1998: In Newfoundland, the number of people employed in April, 1998, was 186 or 185.3 thousand. If you go to April, 1997 - so it is over twelve months. If the jobs kicked in this April, they should have kicked in last April if they were not new jobs.

You see, there is a difference. I am going to say 185,000 because the figures are blurred here - 185.3 thousand - this year in April there were 185.3 thousand. Last year - in April, 1997 - there were 176,000 jobs. That indicates, depending on whether there were 185,000 or 186,000 - well, say 185,000; the figures I just used - that indicates 9.3 or 9,300 more jobs this April than last April. There must have been a significant improvement in economic growth and employment this April as compared to last April. So if they kicked in this April.

MR. FITZGERALD: Then they should not be showing up as new jobs this April.

MR. TULK: No, no, that is what I am saying. They are showing up as new jobs this April because there are that many more people employed this April. There were 176,000 jobs last year; there are 185.3 thousand this year. That indicates there are 9,300 more people working this April than last April.

MR. FITZGERALD: Still, our unemployment rate reflects where we have only gone down approximately a percentage of 1 per cent.

MR. TULK: No. If you look at the change in our employment rate for Newfoundland as a whole, April 1997 to April 1998, you will see that we are down minus 1.9 per cent, almost 2 per cent. Those are Statistics Canada figures; they are not mine. The change from March to April of this year was 0.3, so there is a significant change in the overall employment rate from last April to this April. It is down almost two percentage points.

Now I am not going around bragging about that, to be frank with you, but the point is that it is a significant improvement. The only thing I can say to you is, that significant improvement has gone on for the past nine months and I would hope that it continues that way.

When you say, alright, if you look at the figures we have passed out to you here on the -

WITNESS: (Inaudible).

MR. TULK: Pardon me?

WITNESS: There are 160 new jobs (inaudible).

MR. TULK: Yes, we did that rather quickly last August and September, to be frank with you, under TJF.

If the GDP goes up for this year we are predicted to lead all of Canada this year in terms of GDP; there can be no doubt about that. If you want to come back to the figures that I gave you on page 4, the truth of the matter is that some of those figures are over the life of those agreements. When you put those in, we are talking about what we have created, I think, as a result since the agreements were signed. Those are not yearly figures. Those are a result of those programs, what has been created. The point I want to make to you is that the 9,300 more jobs in the economy this April than last April are not necessarily going to match, because that is a longer period of time under the agreements.

MR. FITZGERALD: I am kind of confused here because I am wondering what figures they are using. I am wondering if they are looking at the Hibernia platform and saying there are x number of new jobs created there, but not taking into account that five times as many jobs disappeared when the Hibernia platform was completed. It is the same thing -

MR. TULK: There is another labour force sheet which will indicate to you just where the jobs are in the economy each year. Again, that one is available from Statistics Canada (inaudible). Let me just say to you that the greatest increase, if I recall correctly, was in the manufacturing sector. Some of that obviously is tied to Hibernia and some more of it is tied to other aspects of the economy, but the greatest overall increase - I think I am correct when I say this - in terms of jobs in the Province, and in terms of GDP in the Province, was in the manufacturing sector.

WITNESS: (Inaudible).

MR. TULK: They break down the Island of Newfoundland into four areas: the Avalon Peninsula, the Burin Peninsula and the South Coast, the West Coast and the Northern Peninsula, Labrador, Central Newfoundland and the Northeast Coast.

If you look at the Avalon Peninsula, you will see that the rate for the Avalon Peninsula went down from 17.7 to 16.3 in terms of -

MR. FITZGERALD: The unemployment rate.

MR. TULK: Unemployment.

If you look at the Burin Peninsula and the South Coast - and this is in large part attributable to Marystown - it went down from 27.5 in April 1997, down to 15.9, so there has been a substantial decrease. In actual fact, everywhere in the Province there has been a decrease with the exception of the West Coast, the Northern Peninsula and Labrador, and there has been an increase of 2 per cent there. In Central Newfoundland -

MR. FITZGERALD: An increase of 2 per cent unemployment or employment?

MR. TULK: Unemployment, in one part of the Province. If you look at Central Newfoundland and the Northeast Coast, the change has been 0.9 per cent to the good. In other words, it has gone down from 25.6 to 22.7.

MR. FITZGERALD: I find that hard to relate to because I know what is happening in my district and pretty well mostly along the Northeast Coast. I tell you, the number of calls that I get from people looking for work certainly has not decreased. The one thing positive that has happened there, and I am sure those figures reflect it, is the seal processing plant that has opened up in the Catalina area. Other than that in my district, and I know the Terra Nova district as well, and the bordering districts, they have not seen any big increase in employment growth.

MR. TULK: Let me say to you that, as the Minister responsible for development and I guess in some sense for what happens with employment in the Province, I note that there are two areas in this Province - when I have been looking at the TAGS program - that have, I think, greater problems in terms of employment than any other parts of the Province. I refer to Trepassey, the Southern Shore area, and the Bonavista Peninsula in particular. I think you can attribute that to the fact that those two areas - Catalina, Port Union, whichever one the plant was in - and Trepassey, were largely dependent on the offshore fishery. Was the plant in Port Union or Catalina? The two of them are there right together.

MR. FITZGERALD: Port Union.

MR. TULK: The plant there was put together by some company - I think it was Fishery Products International - purely as a deep-sea plant. In actual fact, I suppose, if you had to lay the blame on somebody for fishing the Hamilton Banks, you would probably say it was the people who fished out of Port Union and Catalina, although I am not into that; I like to blame it on somebody else instead.

If you look at Trepassey, the plant in Trepassey which employed a large number of people, and the community in this Province that I guess has suffered more as a result of the decline in the offshore cod stocks and the groundfish stocks in general, it is Trepassey. You keep hearing about Trepassey being cut down, I think it is from 1,300 people down to about 800 people. So I have no doubt that in your district, to be frank with you, you would probably get far more calls than I would; because let me just say to you that in Bonavista North, which stretches from Trinity to Gander Bay, if you look at the Lumsden to Trinity area, employment is not that bad. If you look at the northern part of the district it is terrible, and that is primarily due to the fact that there is a fish plant in Valleyfield that employs some 1,200 people and was founded on the inshore as opposed to the offshore.

What happened in Trepassey, when you tear down a plant and send it out, Trepassey has just destroyed any capacity it had for harvesting anyway. We would hope that in your area, with the investment by Fishery Products International in the shrimp industry, and with the investment by Barry's in the sealing industry, that there would be some regained employment, but certainly not to the extent that it was and certainly not stretching twelve months of the year. Well, it was close to twelve months when the offshore fishery - you worked there - was in full swing.

I think the next hardest area hit is the Northern Peninsula, and I would hope that with the opening of the shrimp plant in St. Anthony, when that comes to fruition, there will be some 400 or 500 jobs created there - at least provide the means to do that. I think you would experience substantially more calls in that regard from people looking for work than I would. My fish plant is now in operation.

MR. FITZGERALD: Yes.

Minister, you talked about the twenty economic zones that make up the Province and Labrador. I don't know what you are hearing about those things, but I have attended a couple of meetings in my area and it seems to me that people still need to be convinced. They have seen the rural development associations, and then they saw another new catchy name called `Community Futures', and they saw very little employment happen. They saw somebody put in place who was given a pot of money to look after a fax machine and a telephone, and for the most part went out and looked to volunteers to provide the expertise, to provide economic activity. It seems like they are looking at the economic zones as not much different.

The two meetings I have attended, like I said, people still need to be convinced that this is going to work and it is going to function differently than the other two groups that were put in place prior to now. I don't know how much money was put forward, or how those development associations or economic zones are going to be able to function if we are going to allow them to operate in the same way as the two former groups. I fail to see how they are going to be successful. For the most part it is the same people, the same names, the same faces, that have been involved down through the years.

I suppose my question to you is: If those groups identify some potential in the area for economic activity, will your department supply the expertise and the money that is going to be needed to do the marketing and to do what needs to be done in order to pursue that particular venture to get it up and running?

MR. TULK: Let me just address the first part of your question first, the mistrust and suspicion that you point to, that you believe exists out there on behalf of the population in regards to a lot of those REDBs, and which you say you somehow mirror yourself. I know there has been a great deal of upheaval in regard to the rural development boards in the Province, the rural development associations as they were called. There was also a feeling among them some five or six years ago that they were the administrators of make-work programs and that is where it ended. I think now you have a situation where there are still some people in the Province who believe that the old rural development associations should still exist.

In regard to the administration - and I guess some of them would eat me alive if they heard me say this so you might want to report it to them, Roger - I do not think there is a scarcity of money in regards to administration that is going to put them under.

What we have basically done is to say to them: Alright, you put forward your strategic economic plans and we will then sign a performance contract with you and we will negotiate a budget with you, which I think we have done with eighteen - seventeen or eighteen?

WITNESS: Eighteen.

MR. TULK: Eighteen. We have negotiated a budget with eighteen of them. Under CEDA, under the new program that we just signed with the federal government, there has been five-year funding provided for them, to the tune of how much a year, Sam?

MR. KEAN: (Inaudible) $4.5 million.

MR. TULK: That is $4.5 million a year?

MR. KEAN: Roughly about that.

MR. TULK: Roughly about $4.5 million a year for those twenty Regional Economic Development Boards to operate.

We have gone out, as I have said to you, sat down and had discussions with them on the five top economic priorities they want us to develop. The Cabinet Committee on Rural Revitalization has had one meeting to date to go over those ninety, instead of 100 - we aimed for 100 and we got ninety initiatives. We have had one meeting to start and we have now `sectorialized' those to put them into various categories, and are going back to those people and saying: Alright, here is how we think we can help you find the funding.

Let me just say this to you: While this may seem untrue to some people, if you look at the amount of funds that are available, that we have listed off here that are available under the various programs, it seems to me that there is a little money at least to help those people get their projects off the ground.

I would be a fool if I sat here and said that the REDBs are going to solve all of the economic problems in Newfoundland and Labrador. It is not going to happen. Let me say to you that in the case of your own, in the case of the Discovery Board which is yours, I believe - it covers your district and I think part of the Member for Bellevue's district - you have a very good advocacy group who are very focused, who know where they want to go, who know what they want encouraged to be done, and I believe they will have great progress. I would hope, to be frank with you, after the discussions we have had with them, that in this particular case they become very good facilitators of Information Technology in this Province. I believe they will. I can tell you now that they are advocating to turn your vocational school into a certain type of vocational school, into a certain type of excellence.

It is not going to happen overnight. Anybody who sits at a table and tells you there are miracles about to happen in terms of rural Newfoundland is a fool. That is not the case. I say that to you in all seriousness and in all truthfulness, because if you look at what is happening in Canada and North America generally, there is a movement away from rural Canada. There is a movement away from rural North America. There is a movement towards urban North America. I am not saying that I encourage it; I am not going to.

In Newfoundland, I think it has been exasperated by the fact that we have seen the shutdown of the fishery. Let me say one other thing to you. You went through this; you must have. You are not as old as I am, maybe, but - I grew up in Ladle Cove.

MR. FITZGERALD: Not even close.

MR. TULK: No, okay. You just look older than you are.

I grew up in Ladle Cove where there were some 200 people. The truth of the manner is, I was encouraged by everybody - and everybody else in the community as well - to get an education, to get a good job. My mother used to say to me night after night: Learn your books so you can get a good job.

A good job meant what? It did not mean: Beaton, will you stay home and try to diversify the fishing industry or the lumber industry? It meant, in my particular case, either teach or preach. That was not much of a choice for me, but that was the kind of thing, to get a job in a school somewhere. So our education system has been geared in the past, and I would hope we are getting away from that.

I remember saying to some of my students in Carmanville, when I was principal and I used to take them back and forth to school to play volleyball, I had a young fellow who was very good at volleyball, and who is a very good friend of mine now, who said to me, "I want to drop out of school." I said, "Why are you going to drop out of school?" He said, "I want to go fishing." I said, "Can't you finish school and then go fishing?" He said, "You are not supposed to do that."

The point I want to make is that I think our education system, the years that I grew up in, and I think the years that my family grew up in, to be frank with you - I have two daughters in Ontario. One is a Clinical Pharmacist and the other an Electrical Engineer. I tell you, she is not going to live in Ladle Cove. Neither one of those is going to live in Ladle Cove.

As a result of that kind of movement, and as a result of what has happened in the fishing industry with the shutdown of the groundfish industry, with the destruction of the North Atlantic ecosystem, as I keep saying, it has been exasperated; the problem has become particularly acute. Ladle Cove is not going to survive unless something happens to it drastically within the next two or three years, because there are only three families there now under the age of forty.

MR. FITZGERALD: Like a lot of other communities, Minister, but we grew up, I think, in an environment where it was not bred into us to go out and create any economic opportunities yourself.

MR. TULK: Absolutely.

MR. FITZGERALD: You probably grew up in an environment like I did, where you were expected to grow up and go out to work for somebody else. That has not changed, I do not think, a whole lot in rural Newfoundland and Labrador.

MR. TULK: If I could just carry that a little further, let me say to you that one the programs we have in the department - and I think there is something on the go somewhere tomorrow or the next day about it - is called GMO, Getting the Message Out. It is a program whereby we use students, I think primarily university students, to go around this Province to discuss with the high school students and other people how they can perhaps stay in the communities they are in and, as you say, create some work as opposed to what I was told, to get a good job.

I might say that is one of the best government programs I have seen in a long, long time. I do not say this because I created it, because it was there when I got there. It is one of the better programs and we are looking forward to expanding that with the hope that we teach our people - because, you see, the one thing that we have now that we did not have fifteen or twenty years ago is the information highway.

You can carry on research as well now in Fogo or Ladle Cove or Bonavista. If you want to talk about marine research, you can carry that on now as well in either one of those three places I just mentioned as you can at Nagles Hill or Memorial University. We have to get to that place where we look outward as opposed to inward. We have to push the kind of lifestyles that is in rural Newfoundland, because many of our educated young people believe they have to move into a city.

MR. FITZGERALD: Sometimes I think we should look at ourselves and look at our own government to provide some of those initiatives, Minister. I think of many things that can happen in rural Newfoundland concerning government that we seem to be reluctant to make the move.

Maybe we could talk about the Motor Registration Division that made the giant move from St. John's to Mount Pearl. The Motor Registration Division can operate just as well out of Bonavista as it can out of Mount Pearl, but if government themselves are not willing to have the initiative to make that commitment and show that they believe in rural Newfoundland, then sometimes other people, private enterprise, are reluctant as well. Maybe we should start looking at some of those things because you do not need today, as you said, and I am only repeating your comments, to drive to a business, or to be there and do your business over the counter. That do not need to happen any more. Maybe those are some of the things we can look at that might mean the survival of a town or a whole area.

MR. TULK: Let me say that the discussion has not been intense at this point in government along the lines that you are suggesting. It has not been as intense as I suspect it is going to be in the next few months about where services are located and where they can be located. That will cause some problems in the sense that, if you remember, I remember that some time ago I believe the former Leader of the Opposition, Ms Verge - maybe it was during the tenure of Len Simms, when he was in Treasury Board, but it was certainly under a Progressive Conservative government - decided to move the forestry centre. I think they got some encouragement from the federal member of the day, who happens to be sitting in this chair now during regular hours - not now, but during regular hours - to move the forestry department, or a large part of the forestry department, to Corner Brook, where, I suppose, you could say either Corner Brook or Grand Falls was then the centre of the universe when it comes to forestry operations in the Province.

The pressure that came about, as I recall, sitting on the Opposition side of the House at that point in time, came from the employees of the Department of Forestry who obviously did not want to have to pick up and move house and family to Corner Brook. It came about not to the extent I think most people would have liked it to come about, but it did come about to some extent, with the result that you now have... I remember when I was the Minister of Forestry; I think I had eight employees in St. John's in forestry. The rest of them were in Corner Brook.

MR. FITZGERALD: Where they should be.

MR. TULK: There is no doubt that you can move some of those things today, and particularly today, from being centrally located to be decentralized. Just take your time now, John, you are not going to live (inaudible).

MR. FITZGERALD: (Inaudible) provide the same level of service.

MR. TULK: One of the things we have to start using - the Minister of Finance used it very, very well this spring - we should increase, and I think you will see an increase by governments in the use of that technology, and that is the use of Information Technology, the use of the information highway, to consult, to send messages, to have meetings and so on. Like I said, I think the Minister of Finance used it very well this year. Everything I heard from people who participated in those budgetary discussions, consultations, with Paul Dicks this year was very complimentary, and I have no doubt you will see an increase in that kind of thing over the next few years. I would hope, to be frank with you, that you see a movement, on a reasonable basis, to other parts of this Province of some government services. I think that is going to be a policy of government.

MR. FITZGERALD: There is no reason why it cannot work.

Minister, moving on, page 93, Client Support Services, 2.1.01, Business and Economic Development Services, Transportation and Communications.

MR. TULK: 2.1.01?

MR. FITZGERALD: Yes, 2.1.01.03, Transportation and Communications. You budgeted for $391,900 and the revision went to $472,000. What is the difference of the $80,000-plus there? Why?

MR. TULK: Well, to be frank with you, I think there was a serious under-budgeting. I think we previously under-budgeted for the Labrador regional office, and as a result of the costs - and they are tremendous, as the Member for Torngat can tell you; they are tremendous in Labrador when it comes to travel - for the Labrador regional office people there was a serious under-budgeting that took place in 1997-1998 and that is the larger part, by far, of that increase.

MR. FITZGERALD: Grants and Subsidies, the same heading, under 10, $135,000 in the budget, $135,000 under the revision, and this year reduced by $100,000. What is being done away with there?

MR. TULK: Some years ago, under federal-provincial agreements, there were two incubator malls built, one in Port aux Basques and one in Pasadena. We have now taken the step - because we do not believe they ever paid off under, shall we say, government administration - we have now passed over the Pasadena one to the Town of Pasadena. The Port aux Basques one is in the process of being passed over either to the Town of Port aux Basques or a group which I do not want to name at this point because it would be unfair to them because they have not yet accepted the offer.

We had to support those. Those are operating on support that we had to put in place for those incubator malls, as well as an operating grant to the Combined Councils of Labrador. That is the $35,000 you see remaining, the operating grant that is given to the Combined Councils of Labrador.

MR. FITZGERALD: Information Technology is the same heading, 2.1.02. There was $40,500 budgeted, a revision of $12,000 to $12,500.

MR. TULK: Where is that?

MR. FITZGERALD: 2.1.02.

MR. TULK: 2.1.02. What is the item?

MR. FITZGERALD: Item number 12.

MR. TULK: Item number 12. There was $40,500 budgeted and $12,500 spent. John, can you answer that?

MR. SCOTT: The primary explanation for that is that the Industrial Outreach Program is a National Research Council administered program and we deliver it through our offices. Last year there was a major investment in new Information Technology above normal rates. It was less than what was budgeted by the federal government through this cost-shared agreement. That investment is now concluded, and the Information Technology support you see for 1998-1999 is normal maintenance activity. There is a little bit of a bubble over the last year, albeit less than what was originally budgeted.

MR. TULK: Mr. Fitzgerald, if you go up to 2.1.01.12, Information Technology, again you will see that we had an increase there of some $97 million; $97,000, I am sorry.

MR. FITZGERALD: Yes, $97,000.

MR. TULK: That comes about as a result of the fact that we purchased new computers for the zonal offices and we replaced the computers for our regional offices. That is back down to $147,200 this year, which is substantially lower.

MR. FITZGERALD: There has been a large amount of money spent in every budget on Information Technology. Somebody must have done well with selling computers, computer software, and everything else this past year in government. There is a tremendous amount of money from each department under Information Technology. One time it was all hidden under Transportation and Communications. Now it seems there is another heading where it is a good place to put (inaudible).

MR. TULK: A more open government.

MR. FITZGERALD: Under 3.1.01.10, Grants and Subsidies, $121,500 was budgeted and it was reduced to $65,000. This year it is up to the same as was budgeted last year. What grants were done away with last year, grants or subsidies that were not provided? Almost half of it, or more than half (inaudible).

MR. TULK: Let me just say that is block funding so that the Province can participate as a full partner with the federal government on IAS or IAC Committees - IAS Committees, I think they are called, or Industrial Adjustment Services - and it covers approximately 10 per cent of the cost of the committees. The level of activity - of course, the level of the 10 per cent therefore varies from year to year. While you budget $121,500, it may not all be spent; but, depending on the level of activity, it could be spent. It is one of those things that goes up or down; it may or may not, depending on the necessity for industrial adjustment that goes on.

MR. FITZGERALD: Under 3.1.02.01, Minister, there was $611,000 budgeted in 1997-1998 and $460,000 spent on salaries. How many people were laid off there? How many people lost their job?

MR. TULK: How many people what?

MR. FITZGERALD: Or was it a program? Was that a program that has been done away with, or was it people laid off?

MR. TULK: Well, I can tell you what they are. If you take the whole head, the Strategic Regional Diversification Agreement, SRDA, as I said to you earlier in my statement, this agreement is winding down and is being replaced by the CEDA, Canada-Newfoundland Comprehensive Economic Development Agreement, and 1998 is the final year to enter into commitments under this agreement. All expenditures must be concluded by March 31, 2001. Reduced expenditures here, by the way, result from a number of the REDBs not being established, and the operation as originally scheduled.

I guess what I am saying to you is that they were slower - as is usually the case with governments anyway - being established than was originally the case. The amount is down, but I can tell you that I think you will see that picked up under the CEDA Agreement next year because those things are now off the ground and operating well.

That really does not have to do with salaries - I do not think, John - within the government department itself, direct salaries within the government. It would be indirect salaries that would come about as a result of agreements with the REDBs.

MR. FITZGERALD: That would probably be the same explanation for the headings all the way down, because there is a vast difference in each heading.

MR. TULK: The same explanation applies right through.

MR. FITZGERALD: Minister, what would have happened there to the federal revenue, where there is $4,900,000 budgeted? I would assume that was money that you thought would be available federally, and you actually received $3,214,100.

MR. TULK: I believe if you take what was budgeted for 1997-1998 federal revenues - no, that is wrong. I was going to say that if you combine that with the estimates for 1998-1999 I think it would come up with to the $4.9 million but that is not the case. John, do you have an explanation for that?

MR. SCOTT: No, essentially, the federal revenues will flow directly in proportion to the gross amount of expenditure.

MR. TULK: That we spend.

MR. SCOTT: That we spend. So if you saw the budget in 1997-1998, it was budgeted $7 million -

MR. TULK: That is right.

MR. SCOTT: - and $4.9 million of revenue.

MR. TULK: They pay 70 per cent of it, Roger.

MR. SCOTT: Seventy per cent. The actual expenditure was $4.6 million rounded in 1997-1998; therefore, federal revenues are down because of 70/30 cost-sharing.

MR. FITZGERALD: They would give you 70 per cent of what you spent?

MR. SCOTT: Correct.

MR. FITZGERALD: Seventy-thirty.

MR. TULK: That will obviously carry over.

MR. FITZGERALD: Let us move on to the following page, 3.1.06, Economic Renewal Agreement - Planning. Here again, under Revenue - Federal, $560,000 was budgeted and we actually received $382,500.

MR. TULK: Well, I think if you look at both expenditures and revenues you will find they are down for two reasons. I think a number of the projects that were originally designed to go under the ERA where undertaken directly by ACOA. There was also a delay in completing a number of those projects; therefore, the change in the payout would be different. The only difference is that the amount of revenue that you get from the federal government here is 80 per cent of your expenditure as opposed to 70 per cent under the SRDA, and the Province pays the 20 per cent. I believe that works out to be - yes, 80 per cent of $700,000 would be $560,000. In actual fact, the revised figure is $508,300 and 80 per cent of that would be $382,000.

You get that variance, and you will get it year after year. The truth is that your expenditures never occur as you time-line them during the initial part of the year what you expect, because you usually carry over. It is the same explanation there as applied to the SRDA, isn't it? I think I am right.

WITNESS: Yes.

MR. FITZGERALD: Is this amount of money available to you? Is this an amount of money that the federal government makes available for this particular agreement, that we do not spend that amount of money?

MR. TULK: No, we will spend that amount of money. As a matter of fact, we might very well take some of the projects -

WITNESS: (Inaudible).

MR. TULK: I think what you get here is $2 million over five years that you can spend. We might very well, to save some of our agreement money, to be frank with you, to perhaps lever some more cash here, we could very well take some of the money that we had initially intended to spend during the year and use it to lever ACOA funding or indeed to lever TJF funding.

MR. FITZGERALD: What you are saying is that it is not limited only to that particular agreement.

MR. TULK: No, you can sometimes use money from one agreement to lever funding from another one. Take, for example, the TJF funding which is basically a grant that gives to the proponent of a project up to $20,000 per job created. That is in the form of a grant. John, you are going to have to stop me if I am wrong, but obviously some person might decide to take that $20,000 per job - which, if you have twenty jobs it could be $400,000 - and use it more or less as their equity investments and lever some more money out of ACOA. All of those things you use, if a project is sound.

I have said to my people, and I guess the people before me have said but certainly it is a policy of ours, that if we do due diligence on a program and we believe it to be sound, we will use the funding mechanisms that we have to our best advantage to get that project off the ground. Do I make myself muddily clear?

MR. FITZGERALD: Maybe I am not clear on it because every time I see this money there I say: Ghee, this is money that we have had access to and did not use.

MR. TULK: Oh, we use it.

MR. FITZGERALD: That is what is going through my mind, and I turn over to 3.1.07 and see another -

MR. TULK: Let me just say to you that at the end of the program - every program, as far as I know, that has ever come into existence in this Province - the money was spent, or committed to programs. Right now under the SRDA I think most of our funds, if we carried through on them - not most of our funds, all of our funds, with the exception of about $600,000 under that agreement - are committed. Now, you are not going to rush the project. If the project needs some refining you are not going to rush the project and endanger it in failing if you have to carry it forward from one year to the next. Let me say to you that everything under the SRDA, everything under the Economic Renewal Agreement, is committed.

MR. FITZGERALD: So this money does not disappear after this budget year?

MR. TULK: No, no, you get it. It is just that you do not pay out and you do not receive payment until it is done. We might commit, for example, to the Cabot Corporation down in Bonavista South if they put forward a proposal, which I think they did. We might commit to them a certain amount of funds that might not be in this year's budget or might not get spent in this year's budget but it is committed and you know where it is going. I can assure you, if somebody could find some more for me I would love to have it because I love spending it, especially if it is for the right stuff.

MR. FITZGERALD: So the federal budget must work a lot differently than our own provincial budget works.

MR. TULK: Indeed it does.

MR. FITZGERALD: Because if we make commitments, if we commit funding, and it is not spent in that fiscal year it automatically disappears.

MR. TULK: Yes and no.

MR. FITZGERALD: It has to be shown again in the following budget or it is not there.

MR. TULK: It could be carried forward.

MR. FITZGERALD: But it has to be shown again.

MR. TULK: Yes.

MR. FITZGERALD: The total amount.

MR. TULK: Yes, and I can tell you that the federal government has this thing that they call booking whereby they book funds for maybe three years down the road and it shows up in their outfit. I guess it is somewhat akin to our contingency fund; somewhat akin to it but not exactly. They book off funds for things they know are going to happen down the road and they say, well, we want to book the funds in this year's budget. That booking then becomes a budgetary item for them.

WITNESS: Roads for Rail Agreement.

MR. TULK: Roads for Rail Agreement is a prime example, yes. The funds are booked but not necessarily shown.

MR. FITZGERALD: I will pass for now and let somebody else ask some questions.

CHAIR: Thank you, Mr. Fitzgerald.

Ms Thistle.

MS THISTLE: I think tonight I will pass, too. Thank you, Mr. Chairman.

CHAIR: Thank you.

Mr. Barrett.

MR. BARRETT: I will just make one comment. A lot of the jobs that is the minister is talking about were created in my district but I will pass on any questions.

CHAIR: Thank you, Mr. Barrett.

Mr. Wiseman.

MR. WISEMAN: I am interested, Mr. Minister, in the 1996 Statistics Canada Report. You started off with - the hon. Member for Bonavista South had some concerns with the 9,300 jobs. You have the stats in front of you; can you tell us what the job difference was, beginning in 1996?

MR. TULK: No, I cannot say that I have those stats in front of me. I have received them for the past year, but for 1996 -

MR. WISEMAN: They should be there.

MR. TULK: Oh, I have them all. I keep a file. I kept a file even when I was in Opposition - no, when I was in the back bench in 1993 onward. I used to get them then and keep them, but I do not have them in front of me. Let me just say this to you: There has been, particularly in the last year, an upswing in economic activity that is no doubt tied to Hibernia, is no doubt tied to the oil industry; but also, if you look at the consumer confidence (inaudible) that you see around, there has been a fairly big increase, I say to the Member for Topsail and other members of the Committee, in spite of all the doom and gloom that we experience from day to day; and there are pockets of it, particularly among people who are the TAGS recipients. The tremendous upheaval that those people have experienced is significant, and there is not much optimism in the life those people are living.

I have detected, to be frank with you, I think it is fair to say, that among other groups in society that are not engaged in occupations that are more of a semi-skilled or unskilled level, there has been a growth of optimism in the manufacturing sector. There has been a growth of optimism and the stats to show it month over month, and I follow them every month. Month over month in the past two years there is an optimism in consumer confidence in every year with the exception of one. I am at a loss to explain why this is, because it has always been a notion of economics and people who know anything about economic growth in a country, that as housing starts go, so goes the economy.

I think there is a very good reason for that, because we have had a large out-migration. In particular, as you go across Atlantic Canada the housing starts are down. Yet, in this Province, all of the other economic indicators, the manufacturing indicators, the iron ore shipments, the paper shipments, the sale of cars and so on, just about every one of them is up, with the exception of the housing starts.

WITNESS: Retail sales is up (inaudible).

MR. TULK: Retail sales is up. That, I suppose, has to do with the fact that shops are open on Sunday.

WITNESS: No, it has nothing to do with it.

MR. TULK: I am only kidding.

MR. WISEMAN: I might say, though, that all of the business people I talk to - and I have quite a few people out there in the St. John's area who I am acquainted with - I make it a point of asking them how their business is doing, and all I get are positive responses; they are doing absolutely -

MR. TULK: Absolutely.

MR. WISEMAN: Sometimes I wonder if we are living in a bubble, in the sense that we do not know what is happening in the real world.

MR. TULK: Let me just say to you that in compiling our budgetary figures this year - and I do not think I am revealing any Cabinet secrets here - and I am taking a look at the budget as a whole, in this department, in any case, I think we have taken conservative figures -

WITNESS: Liberal.

MR. TULK: I mean conservative in the small `c' sense. We have taken a conservative figure in what we believe will be the GDP growth for the coming year.

We had figures last February that came from some of the banks. I believe one figure indicated 11.9 per cent growth rate or something, that this Province was going to experience this year. I think the budgetary figure we are using is something like 4.6, in that order.

In certain industries in the Province, in certain sectors of the Province, there is an optimism. I think, to be frank with you, if we can get a post-TAGS program of any stature at all, this year we will have significant growth that will see a significant growth in employment figures. I am hoping; it is only a hope. I do not read crystal balls, and in many cases economics is crystal balls. The trend is there, it has been there for four or five months, and you just keep all of your fingers and toes crossed that our people are going to find that the employment figures are going to keep climbing over the coming months.

Another industry that is going to add - well, it may not add employment to the extent that the groundfish industry - another industry that is going to add significantly to the GDP growth and the exploit market of fish is going to be the shrimp industry, if it turns out the way we think it will turn out. The Minister of Fisheries announced, was it 23,000 more tons - something like that - of shrimp allocated this year for -

WITNESS: Double what it was last year.

MR. TULK: Yes, double what it was last year.

While, for example, that will see an increase in the export market value of fish, the landed valued of our fish, it may not create the number of jobs that you would get if you had that kind of export value that we used to have in the groundfish industry.

One of the things it will do, basically, is lengthen the season for some of our fishing crews which, God knows, we need. In the good old days in the inshore fishery, basically what you had was glut and poverty. You had six to eight weeks of top employment and then it tapered off and there was nothing until the next year, or you got your unemployment insurance.

What I think you are going to see with the shrimp and crab industry combination - and you are going to see the people engaged in one are going to be engaged in the other - is a lengthening of the season for the fishing crews. You are probably going to see a lengthening of the season for the processors, although I would hope that our processors use some good old `Newfie' ingenuity here and maybe employ a few more people than they would if they were in Ontario or something - or so they say up there; I do not believe them, in the meantime.

What you will see is an extension of the season as opposed to the numbers being employed in that industry. That promises to give us - but it is more money in the economy; it is more money that will be spent. Therefore, as a result of it, there should be an increase in consumer spending, there should be an increase in purchases, new trucks, new pick-ups, and so on and so forth. That essentially should help the rural economy, and we hope that it will.

MR. WISEMAN: I had hoped, Minister, that your answer would be shorter, but I guess you have so much to say that it is almost impossible to shorten it up.

MR. TULK: I am from Bonavista North, remember.

MR. WISEMAN: I have no more questions.

CHAIR: Thank you, Mr. Wiseman.

Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, it irritates me a little bit, although I do not blame the investors and I do not blame the towns because the more vibrant those communities are in trying to attract industry and trying to attract investors, I commend them for it.

When I see government coming out a few days ago and announcing that this fellow, Mr. Lee, was looking at relocating to Newfoundland with 1,000 new jobs, and you see a place like Clarenville with enough investors to be able to put together a plan whereby they could come and put up a building and give the investor ten years of free rent, or a ten-year rent-free facility, I often wonder if we are going to fall into that kind of a scenario and allow people to come here and give them EDGE status, and all of the other things that we reward people with by relocating here in this Province, to move to a particular area because that expertise or that money is there.

How do places like Port Union and Catalina and Ladle Cove and Lumsden ever compete with that? Is it going to be a situation, if we allow that to happen, where those places will die by the very fact of the decisions that we make as a government?

MR. TULK: Let me address two points that I think need to be addressed if I am going to answer your question. I remember first when I got into this job last summer, sitting down in Cabinet and hearing a person from Ireland... I do not know whether you are familiar with the Irish model or not, but I would advise any member of the House and any member involved in the development of this Province - and I am not always a fan of Dr. House at Memorial University - to take a look at the summary that he put in The Evening Telegram of the Irish model.

I want to say to you, I forget the name of the gentleman but I think he was the Chairman of the IDA. What is his name?

WITNESS: (Inaudible).

MR. TULK: Kieran somebody. Is it McGowan? Mr. Kieran McGowan, I believe his name was. When he started talking about how they get jobs in Ireland, the Premier put the question to him: But you are buying jobs. He looked back at him and said: Yes, but if I do not then somebody else will.

I think what he was saying is that if you hope to get jobs (inaudible) somewhere, you are going to have to compete with everybody else. New Brunswick, in this country, has been famous for it. Sometimes you succeed, and sometimes you do not succeed as well as you would like.

The other thing is, I think the development in this Province, to be frank with you, is going to take place - and that is the reason we have those boards - by region. Let me say to you that in the case of my own district, and yours is a little bit different because you have a Bonavista region and you have got a Clarenville region in your area, your peninsula - the discovery zone is different. I guess it also has Arnold's Cove, so they have three areas to contend with.

In my own case, for example, in zone 14, if I could create, as the Minister of Development and Rural Renewal, some 300 or 400 jobs in the Town of Gander, I would not be at all adverse to doing that. I think I would be helping Ladle Cove; I think I would be helping Carmanville; I think I would be helping Gander Bay; I believe I would be helping Dover, which happens to be in the District of Terra Nova; I believe I would be helping Gambo; I believe I would be helping Glovertown; and I would go so far as to venture to say Eastport, down the Eastport Peninsula.

If you created those 300 or 400 jobs in Gander on a regional basis, the people from Eastport or Ladle Cove or Carmanville would drive to Gander to work, as they have done over the years. My father, and I think your father, as a matter of fact, never spent very much time - I do not think your father spent very much time - in Musgravetown, to be frank with you. He spent a great deal of time, from what I hear, in the lumber woods. My father did the same thing. Now we have the added convenience of having transportation back and forth.

If we created 300 jobs in Gander, I think the people of Carmanville, which is forty miles away, would drive to work in the morning and go back and live the lifestyle that we want to keep in this Province, that we hold dear in this Province. I think they would be very well content to do that.

I am not overly concerned about the fact that you create jobs in Clarenville, for example, for the people in Musgravetown. Do you understand what I am saying?

MR. FITZGERALD: I am not saying it is going to be a negative thing, but I am not so sure that I agree with the perception that your former leader put forward, where he always talked about the five or six economic centres across the Island.

MR. TULK: That is not my concept.

MR. FITZGERALD: I do not think that should be allowed to happen.

MR. TULK: I think the regional development approach is what you have to do.

By the way, let me say something else to you. Given the information highway, and given the Information Technology, small- scale manufacturing can occur almost anywhere. I think that is a concept that - I do not know if it is a concept, but it is an idea that we have to get used to. For example, Point Leamington; the guy in Point Leamington is making his gloves for all of North America. He can make them as well in Point Leamington as he can make them in Grand Falls or he could make them in Gander. The person in Indian Bay, Indian Bay Frozen Foods, can make pie fillings and put together a product as well in Indian Bay as he can in St. John's. Through the Internet, the world markets are at their fingertips.

I think you are going to see, and we see in the department some - not enough, but some - ideas flowing from people where that is the case. I am not going to talk about any particular project that is on the board because that would be unfair to the people who are putting it forward, but I can tell you that there are a number of proposals coming forward to us from people who are saying: Look, it is not because I live in Charleston that I cannot manufacture some small part, a very specialized part, for a certain part of the recreation industry in flying, in small planes, home-built planes and that kind of stuff. It depends on where you have a number of things: the labour force, not necessarily a cheap labour force. It depends on where you can get the best breaks in your taxes.

As Kieran McGowan would say - I am not sure he would say this, but that is exactly what he did say: It depends on how much you are willing to pay for a job. How much are you willing to pay for a job? and there is competition.

One of the things that the Irish do, for example, is they have those independent organizations - not unlike the old ENL - that are given a block of money that flows from the EU. It is not like our equalization payments, where you can make a buck and then grab back eighty cents. A block of money flows from the EU to Ireland, and that is farmed out to the IDA - the Irish Development Authority - in this particular case, and they have complete control of that money. As a matter of fact, governments have attempted to stop some of the projects that they have recommended and they have been told where to go by the IDA.

So I think we are going to see the establishment of those kinds of semi-independent groups that are going to say: Alright, you can do something here as well as you can anywhere else. It is going to depend on: Can you access the market? You can access the market as well on the Funk Islands, if you have electricity, as you can if you live in the Goulds, where I live. The world is wide open for us but it has to be small scale. You have to have the labour market, you have to have the expertise, and you have to be willing to compete with other countries, other provinces and towns, to get the jobs. It is that simple, and you have to do it in a very practical, very targeted and very focused sense.

MR. FITZGERALD: Minister, just a couple of more questions on the budget here, on 3.1.07.06, Purchased Services.

MR. TULK: 3.1 -

MR. FITZGERALD: Under 3.1.07, Purchased Services, $718,500 was budgeted and the revision was for $253,500 this year. So that was cut down to just about one-third. Next year it takes a jump up to $1,015,000. What is that money to be spend on?

MR. TULK: Well, as I understand it, the Purchased Services funding covers the completion of schools - this is under the Labrador Agreement, you will notice.

MR. FITZGERALD: Yes.

MR. TULK: We are allowed to do schools in Labrador under that, given the terms of that agreement. It covers the completion of schools in Rigolet and Hopedale, and the completion of the Labrador Interpretation Centre. The expenditures and revenues are down again for two reasons: the 1996-1997 carryovers were less than expected, and the delays in completing the Labrador Interpretation Centre.

MR. FITZGERALD: So we would not be funding schools here on the Island under an agreement such as that?

MR. TULK: No, this is the Labrador Comprehensive Agreement. Under that, they are allowed to do -

MR. FITZGERALD: You are allowed to do schools?

MR. TULK: Yes, that is an infrastructure agreement.

MR. FITZGERALD: Here again under 01, under 3.1.07, we are seeing another large amount of money left there under the federal revenue portion of that particular heading.

MR. TULK: Just as a float because there has been a delay primarily in completely the Labrador Interpretation Centre.

MR. FITZGERALD: Portfolio Management, 4.1.01.

MR. TULK: 4.1.01?

MR. FITZGERALD: Yes, under Grants and Subsidies, number 10, $1,073,000 was budgeted and $73,000 spent, $1 million left.

MR. TULK: I think what you are seeing there... This is the Strategic Enterprise Development Fund, and this is one of the things that the gurus here are very good at, but primarily, as explained to me, a reduction in interest rates resulted in a decrease in the loan subsidy payments that were made. John, you are better at this than I am - you fellows are - so would you give the member the explanation?

MR. SCOTT: Sure. The money in Grants and Subsidies is for interest subsidy on historic fishing loans. Up until the past three or four years, fishing loans administered through chartered banks and guaranteed by the Province were subsidized at the rate of three points below prime; prime being the time at which the loans were originally advanced.

When interest rates fluctuate over time, certain interest subsidies kick in. Interest rates (inaudible) historic low, and were lower than budgeted over a multi-year period. Therefore, the historical drawdown on that program, which was about $1 million in the last year, was considerably lower than that; in fact, almost zero because of the original interest rates over the years have come down.

You see, in terms of the 1998-1999 estimates, the number rising again because interest rates have come up again a bit, and in terms of the budget forecast will come up a bit further. To give you a sense of the impact, one point in interest rate translates into almost $300,000 in this program; so it is very sensitive, the interest rate - a sudden shock or a sudden drop that was not forecast a year and a half before the budget was prepared can result in fairly significant fluctuations over time.

Historically, we were budgeting around $1 million - almost $1.1 million - so that accounts for that. There has been no reduction in programs, no reduction in services offered; it is just the interest rate policy in this program.

MR. FITZGERALD: Did we pass that on to the fishermen who are paying their loans sincerely?

MR. SCOTT: That would have been passed along in the sense that interest accrues -

MR. TULK: It is added on to the account. Interest accrues on the account.

MR. SCOTT: Right, interest would accrue on the account.

MR. FITZGERALD: They would have been given the credit as well to reflect the interest rate charge.

MR. SCOTT: Over the balance of the period, yes.

MR. FITZGERALD: Moving on now to 4.2.02, the last appropriation, I think, for that department; Minister, what is the total amount of federal money that is being brought forward for the Newfoundland and Labrador Film Development Corporation? It shows $380,000; $200,000 spent; $370,000 budgeted. Do you have any idea if it is over this two-year period?

MR. TULK: Where are you now?

MR. FITZGERALD: On 4.2.02.

MR. TULK: Yes.

MR. FITZGERALD: The Newfoundland and Labrador Film Development Corporation.

MR. TULK: Let me just say to you in a general sense - and I will ask the officials to get into the detail of it - I am glad you asked that question because I will tell you something: I think the Newfoundland and Labrador Film Development Corporation and the possibilities in this industry are tremendous for this Province.

Let me say that in 1996-1997 - and the Member for Topsail might be interested in this because there is a lot of stuff happening around this area in terms of the Newfoundland and Labrador Film Development Corporation - there was no film development corporation; there was some $3.5 million worth of activity. I think it is interesting to note that in 1997-1998 there were some twenty-two productions undertaken in the Province with a total production cost of $9,790,000, almost $10 million. That is up $6.5 million.

I want to point out something here that not a lot of people realize. That is that the film industry is a very labour intensive industry and can create a number of jobs. As I have said to you, in 1997-1998 there were twenty-two productions undertaken in the Province with a total production cost of almost $10 million. We made some equity investments of $1,028,000 in seven productions, and they received $3 million - three times as much - from other sources. So far in 1998-1999 we have made an equity investment of $640,476 in four productions, and there have been equity investments from other sources of over $6 million.

We also have currently under review some eight applications by the department which are seeking a total equity of investment from the department of some $2,200,000, and there will be some $13 million that will be from other sources.

There is approximately - on the books and approved for this year - some $20 million of film production in the Province as compared to just $3.5 million in 1996-1997. For that we are going to be required to put in an equity investment of about $3 million. I tell you, it is amazing.

Every member of the House - I should have made a Ministerial Statement on it and have you praise me up, Roger. If you were only to got down to the sets - and I think they are finished shooting; I believe they are -

WITNESS: They are still going.

MR. TULK: They are still going, Devine Ryans - and see the amount of work, the amount of manual work, building sets...

WITNESS: (Inaudible).

MR. TULK: What?

WITNESS: (Inaudible).

MR. TULK: That could very well be.

I tell you, in 1997 the film corporation undertook a successful scouting visit by senior official of TriStar Pictures for the upcoming movie Shipping News, and that resulted in a second scouting visit by TriStar for the upcoming movie Endurance. The Shipping News, John tells me, will bring some $15 million to the Province, all on the West Coast of the Province. Of course, that is where the Shipping News is set.

I think we have had some visits from some people from Disney. As a matter of fact, I was supposed to take them down and show them Greenspond. Hopefully, I can get them to go down there.

One of the problems we face, Roger, if I could say this to you, in areas like yours and mine and in other rural areas in the Province, is not that we do not have the background and the settings for it; there is a problem, they tell me, with finding hotel accommodations close to the sets. I do not know, but at some point maybe we should start using some of our people to have... I do not know how this would work. It is just a fantasy that I had one day, I suppose, when I should have been asleep, of having people - no not that kind of fantasy, but a fantasy that I have had that maybe we could use some of our private homes for people to stay in, like we used to do with boarding houses. I do not know how well that would work.

One of the problems they tell me they would have with using, for example, Greenspond, which is very historic and has a great history, would be the fact that even in Gander - if they were to do a major production, and Gander would be too far away, but - they would have some difficulty finding the types of accommodations they would need.

I believe that the Newfoundland Hotel - was it the Newfoundland Hotel, for Devine Ryans? There was a large segment of those rooms booked for that production. There is tremendous potential there, and one of the things we have committee ourselves to - I believe we committed ourselves in the Budget Speech - was to put in place a tax credit. I know myself and the Minister for Finance or somebody - the Minister of Finance, I guess - will be introducing a bill before the spring gets by to do exactly that so we can attract the film industry in far greater numbers to the Province.

You may even become an actress, Elizabeth; you have been acting all of your life in here.

MR. FITZGERALD: It goes on to say that these expenditures are cost-shared by the federal government. What is the breakdown percentage wise?

MR. SCOTT: In 1997-1998 they were 80/20 because they were sourced under the Economic Renewal Agreement. In 1998-1999 -

MR. FITZGERALD: Eighty per cent federal?

MR. SCOTT: Eighty per cent federal. In 1998-1999, part of it is 80/20 and part of it is 70/30; so, say it breaks down to seventy-five.

MR. FITZGERALD: It is a negotiated thing on an annual basis?

MR. TULK: It depends on the agreement.

MR. SCOTT: Yes, the Economic Renewal Agreement is funding of the $500,000; $200,000 for international marketing. The Comprehensive Economic Development Agreement, which is 70/30, funds the operating support for the corporation itself. It is a bit of a split in terms of how the two agreements deal with it. That is a federal machination not a provincial machination.

MR. FITZGERALD: Minister, is there anything new on the slate mine? Is there anything new to report on that, or is that still where it was the last time that the (inaudible).

MR. TULK: You are talking about the slate power?

MR. FITZGERALD: Yes.

MR. TULK: Is there anything new? I would prefer, to be frank with you, if you would ask me that question privately.

MR. FITZGERALD: Okay.

MR. TULK: Because it concerns your district and it concerns a specific individual.

MR. FITZGERALD: Petlee Fisheries in Charleston, has that particular company approached your department for funding?

MR. TULK: Not to my knowledge. I have not heard of it. They may have approached the regional office, but I am not aware of it. We can check.

MR. FITZGERALD: Those are the only questions I have, Minister. The name of your department is Development and Rural Renewal, and rural areas in this Province certainly need economic diversification and an economic stimulus. I do not know what is coming down through TAGS, or if there is going to be a work component put in there. Hopefully, if there is funding put in there for economic diversification, it will be spent wisely, it will be done through your department, and the people most affected will, I suppose, derive the benefit from it.

There is a lot of need out there, especially for fisheries infrastructure. We have reached a point in rural Newfoundland and Labrador where we have had a five or six year moratorium on our fishery and the whole fisheries infrastructure is falling down around our ears. I don't know what would happen if the fishery were to start tomorrow.

In my district a lot of the wharves, a lot of the slipways, a lot of the sheds, have all disappeared. They have not been kept up and it is a shame, because I believe there is still a future in rural Newfoundland and Labrador, and the fishery is still going to provide the economic stimulus that will allow those communities to survive. Hopefully, maybe you will look at doing this kind of work and directing money in that particular direction if and when such funding becomes available to your department.

Thank you.

MR. TULK: I will just conclude, Mr. Chairman, on the remarks he made. I have tremendous faith in rural Newfoundland as well. I think it will be a different rural Newfoundland. I think the fishery will be somewhat different even when it comes back. I do not know, at this point in time, what the TAGS program is going to entail, and I say that to you honestly and above board. I don't think anybody outside the federal Cabinet knows exactly what is going on at this point in time. I would hope there is a significant economic diversification package, and I would hope that it is tailored - as I have said many times in this House - to the communities and to the people who have been affected by the downturn in the fishing industry.

CHAIR: Thank you, Minister.

I just have one short question that I would like to ask. I was thinking about it earlier when you were talking about a lot of these small manufacturing type of businesses that might crop up around the Province. I was wondering if we have a program to help individuals acquire patent protection if they design some small product that might be manufactured locally? I know that is an expensive proposition, and it is not one that many people understand very well; but, if we design something, that might fit some need somewhere that you are certainly going to have to look toward.

MR. TULK: Would we help people with the protection of patents?

MR. SCOTT: Generally, we will support financially what it takes to get a small business off the ground. If somebody needs some support financially to establish a patent, with the backing of a strong business plan, that can be considered. A stand-alone patent type of registration program we do not have, but certainly our small business programs could be availed of in their entirety to support that type of need. There is no reason to preclude it, but on a stand-alone basis we do not have a program called a patent registration program.

CHAIR: As a matter of fact, a small brochure just outlining patent protection, how to acquire it, even that in and of itself would be beneficial.

I appreciate the comments, Minister, from you and your staff, and I appreciate all the participation between the members. This is the last Estimates Committee for this particular Budget. I really do appreciate all the efforts of all the members, the genuine dialogue that has occurred, and the sound review that has occurred.

MR. TULK: Mr. Chairman, if I could just drop one piece of information for the Member for Topsail. He asked me what the growth rate was on the Avalon Peninsula, I think. The Avalon Peninsula region has the largest employment gain with 5,400 new jobs, of which 3,600 went to the St. John's metropolitan area; so Topsail must have benefited from the 5 per cent, 5.3 per cent recorded.

WITNESS: (Inaudible) definition of Avalon Peninsula. How far (inaudible)?

MR. TULK: It is the Avalon Peninsula metropolitan area we are talking about. I do not know where that goes.

WITNESS: (Inaudible).

MR. TULK: It would not include your district.

MR. WISEMAN: On the film industry, you had -

WITNESS: (Inaudible).

CHAIR: Order, please!

MR. WISEMAN: You had mentioned the Member for Topsail may be interested in your conversation with the Member for Bonavista South. The Member from Topsail is always interested in development in his district. I was wondering if the Minister had anything in mind for the development of the film industry in the District of Topsail.

MR. TULK: The film industry? Did you say the film industry?

MR. WISEMAN: Yes.

MR. TULK: I am sure, Mr. Chairman, if the Member for Topsail were to go down to the Film Development Corporation and find out the tremendous advantages that I know he believes, and all of us believe, Topsail has, I would not be at all surprised if some scene or groups of scenes were not set in Topsail; and it might even come to pass that the Member for Topsail would be a leading star.

MR. WISEMAN: We could do better, Minister, if we had Manuels River completed.

WITNESS: I understand, Minister, that since they talked about a sequel to Grease, he has bought white shoes.

MR. TULK: Who?

CHAIR: Could I have a motion to accept the heads for the Department of Development and Rural Renewal from 1.1.01 through 4.2.02 inclusive?

On motion, subheads 1.1.01 through 4.2.02, carried.

On motion, Department of Development and Rural Renewal, total heads, carried.

CHAIR: Minister, thank you very much for attending.

MR. TULK: Thank you, Mr. Chairman.

CHAIR: I appreciate all of your comments.

On motion, the Committee adjourned.