The Committee met at 9:05 a.m. in the House of Assembly

CHAIR (Mercer): Order, please!

Perhaps we could get the Committee meeting started this morning. Before we do that, perhaps we could ask the members of the Committee to introduce themselves, starting with the gentleman at the far end.

MR. BARRETT: Percy Barrett, MHA for Bellevue.

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

MR. WISEMAN: Ralph Wiseman, MHA for Topsail.

MR. FRENCH: Bob French, MHA for Conception Bay South.

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

CHAIR: Bob Mercer, MHA for Humber East, Chairman of the Committee.

Just before we start, just to inform you of the way in which we have decided to proceed, we will do all discussion and debate under the first head. When the Clerk calls head 1.1.01., questions could be asked on any part of the Estimates - policy, dollars - whatever the case might be. We will not be going through it head by head. We will be doing all discussion under the first head.

The way in which we will proceed is that we will ask the minister to take up to fifteen minutes to make some introductory comments, or whatever you may wish to say during that time frame. Then we will ask the Vice-Chair, Mr. Fitzgerald, to make his introductory remarks and commence his line of questioning. Then we will alternate between members until such time as all of the questions have been asked.

With that having been said, I will ask the Clerk to call the first head.

CLERK: Subhead 1.1.01.

CHAIR: Minister, if you could make your opening comments and introduce your officials, I would appreciate it.

MR. TULK: First of all, Mr. Chairman, let me say that it is a pleasure to -

MR. BARRETT: On a point of order, Mr. Chairman.

We have not passed the minutes of the last meeting.

CHAIR: Would you like to pass them now?

MR. TULK: Yes.

On motion, minutes adopted as circulated.

CHAIR: Mr. Minister.

MR. TULK: Technicalities.

CHAIR: We were going to do it at the end but the beginning is fine.

MR. TULK: First of all let me say, Mr. Chairman, it is a pleasure to be before the Committee and I would like to take this opportunity, if I could, to introduce the officials.

On my immediate left is Mr. John Scott, who is the Deputy Minister. Seated in Judy Foote's seat, and not near as good-looking, is Mr. Sam Kean, Assistant Deputy Minister of Regional Economic Development. Next to Sam is Mr. Terry Johnstone, Director of Policy and Strategic Planning. Next to him is Mr. Bill Stirling, Assistant Deputy Minister of Small Enterprise Development; and Mr. Ken Curtis, Budget Analysis, Central Administration Division. I didn't leave out the Premier here; and Mr. Bill Mackenzie, who is Assistant Deputy Minister of Field Operations.

I am not going to take the fifteen minutes to start off with. I find it far more interesting to answer questions that people on the Committee might have.

Let me just say that the mandate of the Department of Development and Rural Renewal is to attempt to foster economic development and rural renewal in each of twenty economic zones in the Province. The mandate is pursued through services and programs delivered within two business lines, namely: the promotional regional economic development focusing on the twenty economic zones; and, secondly, fostering development and growth of small- to medium-size business enterprises throughout the Province.

Mr. Chairman, I think there are significant economic challenges that remain in the Province, especially in rural areas. It is clear, however, that over the past four years the efforts of the department and the efforts of government are seeing real results.

The economy in the Province is growing and is becoming more diversified. Employment is increasing and unemployment is falling, albeit somewhat slowly; because, as everybody knows, when you increase the employment opportunities in an economy the participation rate of people goes up. Besides that, we still do have significant areas of the Province, a number of sectors in a number of areas of the Province, that are not moving in the way that we would like. I could name five or six of them this morning if I wanted to, but I don't believe that is necessary unless members want me to.

I think it is also important for us to do away with another myth, and that is that all of the growth is confined to St. John's and the Avalon Peninsula. Statistics Canada - I ask you to note that it was Statistics Canada and not a government report - reported that 10,700 new jobs were created in Newfoundland and Labrador in 1999. That was a 5.5 per cent increase and yet, as I said to you before, our unemployment rate did not drop by that amount because of - I think it was a factor of close to a 3 per cent increase in the participation rate.

I think it is important to note that 9,400 or 88 per cent of these jobs were created outside the St. John's area. If you want to say off the Avalon Peninsula, almost two-thirds of them - again, these are Statistics Canada's figures - or 6,600 new jobs were created beyond the Avalon Peninsula itself. That it is due, in no small measure, to the efforts that have been made in the fishery, tourism and one that we do not too often highlight but we should maybe: the saw milling industry, and in particular in terms of the integrated sawmills.

I think it is clear to say that the economy is growing, that employment is growing, and that we should, in no small measure attribute that success to the work of a volunteer group in the Province called the Regional Economic Development Boards.

As you know, last fall this department conducted Jobs and Growth consultations throughout the Province. We were the primary department in that, along with five or six other departments. I think if you look at the overall budget, it reflects some of the major themes that were identified during that process. The report is not finished. We all sit in the House and we know that we released a report called an interim report on the Jobs and Growth consultation, and it is our hope that we can put out a final report. There is still some ongoing work that needs to be done but we believe we can have a new report finished by the last of May or the middle of June, a finished report on the whole economy.

The truth is that the budget reflected a lot of the things that we heard in the Jobs and Growth consultation, and I would like, if I could, to just move on to one of those and that is the Strategic Enterprise Development Fund, one of the things that occurred within our Department. As you know, over the past three years - and I am using round figures here - in 1996-1997 the budget of the department was $18 million approximately, and that included a $11 million input from a special reserve fund. For the years since that, the budget has been basically hovering around the $6 million or $7 million mark for the Strategic Enterprise Development Fund. SEDF is the favorite name that the Auditor General puts on it.

I want to say to you that we have re-profiled that $6 million to the extent that the Department of Development and Rural Renewal is no longer in the loans business. I think it is important for us to draw that distinction. What we did is we took $2 million of that $6 million and we helped increase - there is a $6 million loss of revenue by government. We took $2 million of ours, and $4 million came from, I guess, the general treasury, John?

MR. SCOTT: Yes.

MR. TULK: Which makes a total of $6 million to increase the tax-free threshold of the payroll tax from $150,000 to $400,000. Again, that was one of the things that we heard in the Jobs and Growth consultation. That will have the effect of removing some 1,300 to 1,400 small businesses from the payroll tax altogether. Of course, for those people who pay the payroll tax, even if your payroll is $1 million you do not kick in before you get up to $400,000 rather than $150,000. In actual fact, it increases the ceiling for everybody by $250,000.

We also heard that one of the things that was very necessary was a new venture capital tax credit program. We have taken $1 million of that and said: Let's use that and we will announce the details in the near future, but we do want to work it out with the community, the business community and the REDBs and so on before we announce the exact details of it. We have set aside $1 million to encourage what we believe will be $6 million of private investment into new business. We believe that that $1 million in venture capital program - and it is a tax credit, that we will give them $1 million - if it works well, then there is no reason that we should not increase the amount that we set aside for.

The other thing that we did was to set aside $2 million of that $6 million for small businesses. One of the concerns that I have always had as a member of the House and as a minister in government is that when we talk about small business in the Province we usually - we have this general notion of small businesses across Canada. Small businesses in rural Newfoundland do not bear the same definition that you would use on a small business say in Ontario or Alberta. If you look at all of the federal budgets that I have ever read, to be frank with you, most of the small businesses have revenues of somewhere about $1.5 million to $2 million. That is not what I want my department to be encouraging. Fine if we get it, but the truth is that there are small communities in the Province that need small businesses where you have two to five employees. What we have done is said: Let's take $2 million of that - and one other thing, I might add, is that oftentimes when you make a loan to those people all you do is burden them with debt and practically ensure their bankruptcy. I don't believe, either, that people should be in a business and put nothing into it.

What we have said is: Let's set aside $2 million, put a $50,000 cap on it - in other words you won't take all of your money and shove it into one big business that may fail - and it should help small businesses in rural Newfoundland that we will provide on a matching basis an equity investment. If you have $15,000, or you can get it from your aunt, uncle, wife, grandparents or some other private individual to put into a business, we will match that amount in equity; not in a loan, in equity. We will put that $15,000 so that you now have $30,000 which you should be able to use.

I think it is important that I spend a little bit of time on this and then I am going to end. When we looked at the variety of funding mechanisms that are out there, if you would recall out of the FRAM-ED program the Post-TAGS program, we put $10 million into the community business development corporations. We gave them $10 million which enables them - and they have the mandate to make loans or equity investments up to $125,000. ACOA, out of its own office here in St. John's, can make loans up to $500,000. HRDC, under the CJF program - I don't know what is going to happen to that. Who knows, because those people seem to be in somewhat of a bit of a shock. Under the CJF program you could normally get up to - I use the words up to - $20,000 per job created. That is sort of an equity investment as well.

I think one of the things that you have to keep in mind here is that the banks in Atlantic Canada in particular- true across the country, true across North America, but in particular in Atlantic Canada - the commercial banks have not been interested in making loans. What we are trying to do here is to say: Let's use the amount of money that we have in the department that we can afford to use, to enable people to use it as leverage, to give a strong equity base to their small company, and to use those funds for perhaps leveraging bank money, ACOA money, or something of that nature.

This is somewhat of a duplication of the Department of Industry, Trade and Technology: some people may have noticed that we have set aside $500,000 to help small businesses seek out new opportunities and new markets. The Department of Industry, Trade and Technology, we feel, deals basically with the larger companies that come into the Province. They are more prospecting than we are. We do, however, believe that there is room for people in rural Newfoundland, in small areas of the Province, to go out and look for business as well under the umbrella of rural renewal, rural development, so we have set aside $500,000 for that area.

To be frank with you, I was surprised at the positive play that a lot of people in the business community gave this, and I think a lot of it came from payroll tax and the attempts to set up the venture capital funds.

Those are basically the new initiatives that we have undertaken in the department as a result of the Jobs and Growth consultations. There were other measures - and I am not going to get into those; I will leave those for the various ministers - and there were other budget measures and programs put in place during the Budget Speech process to respond to some of the concerns. In the final analysis, in May and June, we will finish off our main recommendations on the report and issue a final report for people to peruse.

I want to say to you that if anybody believes that doing those consultations and putting out a final report is easy, the truth of the matter is that it is not. There were some 300 presentations made to us. We were actually surprised by the amount of interest that people had. We scheduled thirteen meetings. We ended up, I think, having twenty-three. Besides that, I think we did eleven sectoral forums in which we drew in the various partners and various industries in the Province and heard from them as well.

Putting all of that together and coming out with what represents the consensus of those groups, it takes some time and it takes time to talk to other departments in government. To be frank with you, that is one of the roles that this department, in the last couple of years, has undertaken: to be the Department of Development in its broadest sense, and if there is a problem that can be dealt with or that we can detect, let's say, in the Department of Mines and Energy - and you saw the Department of Mines and Energy keep their tax incentive for mining exploration. Well, that was as a result of that Jobs and Growth consultation. One of the things that we heard from the mining industry was: We want you to keep that program, especially in view of the fact that the flow-through tax credit that was being given by the federal government seemed to be in some danger.

We increased that, I believe; was it $500,000?

WITNESS: Three years to five years.

MR. TULK: We extended it three years to five years. That was in some measure due to what we heard during those Jobs and Growth consultations. I just use that as an example to tell you the kind of things we have been involved in.

I am going to stop there, Mr. Chairman. I am sure there are lots of questions.

CHAIR: Thank you, Mr. Minister.

Mr. Fitzgerald, and then we will go to Mr. Wiseman.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, I am not going to repeat the figures. I did not take note of them, and you hear them quite often, the number of jobs that are being created in this Province; but I can assure you that the figures that are being put forward are not reflective of what you see in a lot of places in rural Newfoundland and Labrador, and you know the areas very well. While you might be fortunate enough to represent an area - and I suppose the Valleyfield area is probably one of the most prosperous communities, maybe next to Arnold's Cove, outside of the St. John's and other urban areas in the Province - when you look at places like the Bonavista Peninsula, the Northern Peninsula and the Southern Shore, we have some major problems in this Province. I would think it is probably as bad as it has ever been since Confederation.

You go down in my district, and I am not going to go through the communities one by one. Everybody, I think, here in this room is fully aware what is happening in rural Newfoundland, and they are fully aware of what drove the economy in rural Newfoundland and Labrador. I always refer to a community by the name of Sweet Bay where there are 160 people living. Four people get up in the morning and go to work. This was a community in which, while everybody was not working twelve months of the year, they had an income twelve months of the year. The income was provided by the local fish plant and unemployment insurance for the other six months or eight months, or whatever it was that they were laid off. You go there now and there is complete devastation. I am not so sure that your figures give the true picture, because I always say, do not tell me the number of people who are unemployed, tell me the number of people who are working. Because the people that are unemployed and the figures that we get are probably gotten from the number of people that can access employment insurance.

When you look at a $35 billion account being built up in Ottawa at the end of this year - I think that is what the projection is - then there are a lot of people today that are unemployed that are not getting employment insurance. In fact, I think at one time the figure was something like 70 per cent to 75 per cent who would access EI. Today it is down to 30-something per cent of the number of people unemployed being able to access employment insurance.

You see an area like the Port Union-Catalina-Melrose area where there is just about, again, full employment, and last week they had a small project approved that hired eight people. They hired four from the town of Port Union and four from the outside, and they almost had a riot down there because of people coming and blocking the people from outside the community from going to work because those other people in the community did not have a job. That is not because they were mad at the people in Catalina or they did not like their neighbours or they had some gripe with somebody from another argument. It was all about trying to put bread and butter on the table and people trying to access a job.

I have people down there where the husband works with the FPI plant and the wife is up in Brampton, Ontario, working with some kind of an agency that she calls every morning. They tell her where to go to work for $6 or $7 an hour. It is terrible what is happening, and I do not know the answer. I am not saying you are not doing this because you have no interest in it or because it should be done. I do not know the answer either. I do not think we are going to get car manufacturing plants or any high tech industries to move into Keels, Open Hall or Red Cliff, but something has to be done. The figures that you put forward are not reflective of what is happening in rural Newfoundland today. It is heartbreaking to see it.

You spoke about the twenty economic zones. I do not know if you can give us an update of what activity those twenty economic zones have provided in the twenty areas that they serve. We went through the growing stages of rural development and then we got into a catchy name - I think the name was Community Futures - and now we are into the RED Boards. It is all a group of people that are trying to reach out and help other people and bring about some economic stimulus in the communities in the areas they serve.

Some of those rural development boards did very well. Their problem was that there was never enough money there in order for them to be effective. They had to go out selling tickets and they had to go out and have fundraisers in order to pay heat and light in the building that they had access to. I think, for the most part, the government led them to get into those situations. Rural development associations own buildings that are big enough to house government departments, and they are there with one office in them. We have expanded on them. Drive out the Trans-Canada Highway and you can see several of them along the highway. I think government, at the end of the day, was giving them something like $20,000 in order to pay a coordinator to run their affairs and to be able to create economic activity, and it could not be done. I do not want to knock volunteers - volunteers are important people and we have some good people on those boards - but I do not know if they are going to be any more effective than the rural development associations were. I think we lost a lot of knowledge, although some of the same people are involved with the economic zones.

It would be interesting to see the number of jobs or the amount of activity that those economic zones are creating. Do you have some information that you can pass back to us here this morning and give us some examples? I know the one down my way is the goat industry there, and that was brought about through the efforts of Cabot Resources Inc. While I suppose the jury is still out on it, there are eight or ten goat farmers there who are trying to do very well and they need to be taken another step further before you see any kind of a viable operation where that can be profitable. Is there any economic activity emanating from those RED Boards?

MR. TULK: If I could, Mr. Chairman, let me just reply to the member's question. The truth is that the Regional Economic Development Boards are not in the same vein as the RDAs used to be. The RDAs became very project oriented and it was very easy to see the amount of jobs that they were creating. The role of the REDB is to encourage other people and to try to put in place strategic plans so that those people fit in for their areas, so that government is aware of what their strategic plans are for the area and encourage other people and other groups to get involved in business.

For example, I was just asking the Member for Cartwright-L'Anse au Clair about what is happening with - I think the title of it was smart towns - whereby the federal government is going, I guess the correct word is choose, a smart town in the Province. The final three people in competition for that are people from the Straits, from the District of Cartwright-L'Anse au Clair, Deer Lake, and the one in Clarenville. That is primarily the role of the Regional Economic Development Boards, to encourage those people and get them on track working with the Department of Development and Rural Renewal to see that employment is brought about in the area. That is what makes it so difficult for those people, and that is what makes you wonder - a member like yourself and you are perfectly entitled to them; you should ask those questions - about whether the Regional Economic Development Boards are being successful.

I have specifically said to them - and this was part of their mandate when they were created, it is not only me saying it - that: I don't want you people to be involved in the running of projects, not to be involved in the running of businesses, not to have buildings standing around on the side of the road. Encourage other groups and private enterprise and try to set up the kind of environment so that private enterprise and other groups and other individuals carry on that kind of work. If you see that it is necessary to put forward ideas, as they have done in the smart towns' case - one of them in the next week - only one of them, and that is the sad part about it, I wish all three of them could - will be successful. It could be either Clarenville, Deer Lake or the Straits area.

That is more the role of the Regional Economic Development Board rather than to say: How many jobs did you create last year? It is to set the type of environment and to see that government is kept in contact, the bureaucracy and ourselves as politicians, with what is necessary in terms of infrastructure and what is necessary in terms of environment so that private enterprise - that is the reason that we have redesigned our SEDF program, to try to make it easier for small businesses and the Regional Economic Development Boards to encourage small businesses to become involved in the community.

It is very difficult to say: Yes, the Regional Economic Development Boards created that job, that job and that job. Rather, the Regional Economic Development Board might have encouraged a group of former fishermen in your area to become involved in a cooperative to get into the goat's milk and cheese industry, whereas you couldn't point your finger and say: They created that job. The Regional Economic Development Board there played a major role in helping those people set up and encouraging them to get in. You can't look at Regional Economic Development Boards in that light. Again, the RDAs did a great job for the time that they were in, but they became, as you and I know, project oriented, a lot of them - most of them actually - and it was probably because of the result of funding by governments of the day. They became more involved in, shall we say, make-work job creation projects and as a result of that probably lost their focus.

One of the things that I want the REDBs to do, and that is their mandate, is to, for example, see that people become aware of the type of programs that we have and to play a coordination role with the community business development corporations. I recognize, to be frank with you, that there are areas of this Province - and there is one area of my district that is not that prosperous as well, the north end of my district - but you are right when you say that the rest of the district is doing very well. There are areas of the Province, some of them larger than others - the Bonavista Peninsula is one of them, part of the Northern Peninsula - not all of the Northern Peninsula - that are suffering. The Port au Port Peninsula has some real problems. The area that we call the Irish Loop has some tremendous problems. We hope that we can provide some incentives and help people in that region establish small-scale business, and that is the reason that we have re-profiled the department the way that we have.

MR. FITZGERALD: You have gone out, minister, and heard from people. You have given them a chance to come forward, make their suggestions and tell you what they see as something that can be realistically done. Your former Administration, under Mr. Wells, did exactly the same thing. What can I tell the people on the Bonavista Peninsula today? What can I tell them that your department is going to be able to do in order to alleviate the employment insurance problem that we have? What can the people representing the Irish Loop tell their people? Are there any plans at all to help those people, or it is a situation where they are expected to go out and compete for the crumbs from somebody's table in order to survive and get their eight weeks' work or their six weeks' work and then go to the department of social services?

MR. TULK: Let me just say to you, quite categorically, that there is not going to be a government sponsored total make-work program to just try to get people on employment insurance. As know, under the job creation program in Municipal Affairs we try to help as many people as we can, but our budget would not even be big enough, if we used it all, to give everybody full employment in the Province.

We think we have put in place - part of this program - an incentive and we will certainly take a look at other incentives in the upcoming weeks and months ahead to see if we can encourage people to locate in certain areas of the Province, whether it be tax incentives or whatever. The door is not yet closed on whether one tax applies right across this Province or not. We will not become involved in businesses ourselves. Again, you made a comment in your original remarks about the number of people working in the Province: Don't talk to me about unemployment. I don't. There is no point in talking about the number of people unemployed because, as you say, the unemployment figures in rural Newfoundland today are probably close to 60 per cent or 65 per cent because there are an awful lot of people on EI. Within the next month, praise God, a lot of that will drop significantly as people get back into the fishing industry and into seasonal employment. We believe there are various things we can do to encourage people to locate in certain areas. We will carry on that with a special emphasis, I might say, this summer, in this department, laid on those particular regions of the Province. Because there are regions that are doing well.

If you look at the amount of money, for example, that my department has spent in districts in the Province, then I think you will find that the minister's district is down to about number thirty-two or thirty-three in terms of where we rate the amount of expenditure, because the employment is very good there.

MR. FITZGERALD: Some to the people are doing very good there, yes.

MR. TULK: Absolutely.

You just cannot sit down and say: Here is the Communist martial plan or a Socialist martial plan for either the Bonavista Peninsula or other areas of the Province. What you can do is sit down and say: We will try to provide the right environment for small-scale businesses and for the tourism industry to take over. In many cases, it is a long-drawn process.

If anybody is silly enough to believe that you are going to take what happened to us in 1992 and reverse that, even in a decade, in certain areas of the Province - the Bonavista Peninsula was entirely dependent and was one of better fishing areas in Newfoundland and Labrador. As you know, while there is a fairly good crab industry on the Bonavista Peninsula today, and while there is some work being carried on by Bill Barry in the Mifflin Plant and so on, and while there is hopefully a shrimp industry being established on the Bonavista Peninsula, those things are not nearly as labour intensive as was the groundfish industry. So it becomes extremely difficult to recover in areas where there was such a large dependency on both the inshore and offshore. In Port Union was an offshore plant. Yes, it is in Port Union, Catalina, that area. It was an offshore plant, and it was going full-scale, full tilt, 1,200 people working there.

MR. FITZGERALD: Twelve hundred people worked there. Today there are 120 people working there, fifteen weeks of the year.

MR. TULK: If you are going to cut that out, which we had no control of cutting out - it had to be done; I think we will all agree with that - then it is going to be very difficult, and it is difficult, to turn that economy around in that area, and it will take a great deal of time to do it.

MR. FITZGERALD: Minister, we keep talking about the new economy. One of the things we refer to when we talk about the new economy is to get away from jobs that are seasonal, or create - a lot of people use the EI program in order to top them up and take part in that particular industry. In talking about the new economy, we always talk about tourism being one of the vehicles that drives the new economy.

Tourism in Newfoundland and Labrador, as you know, is probably more seasonal than the fishery ever was. However, having said that, it is still important and it is probably one of the things on the Bonavista Peninsula, and again on the Northern Peninsula and some of the other areas that offer some opportunities to projects that you are well aware of, that they have identified, and I think the zonal boards have identified as well and seem to be very frustrated in that there is not funding coming forward for it. I attended their annual meeting, and I think they were more frustrated than the people who attended it looking for the information, because they were not sure the money was going to be disbursed, when it was going to be disbursed, who had priority, and how it was going to all wash out.

Two of the things that have been identified are the continuation and the completion of the Matthew Legacy building there. The other one that I feel offers a lot of opportunity as well and probably would be the gem in the whole tourism industry on the Bonavista Peninsula is the Coaker Premises in Port Union - a story to be told there like you would not believe. While we always give them enough money to keep a few people interested, and to maintain a building there, if you would, where they can put up an office, there is never enough money brought forward in order to do anything realistic there to continue helping it along. With the Matthew Legacy, that is not true. We spent a fair amount of money there, but now it has come to the point where there has to be money there to finish it.

Are those two projects being considered under the fisheries diversification plan? If it is, when can we see some money brought forward to have it realized?

MR. TULK: The last part of your question I am not going to answer - when? - because, as you know, both ourselves and ACOA are involved in making that decision. Let me just say to you that we spent close to $4 million on the Matthew Legacy. As you know, I met with - I forget the gentleman's name -

MR. FITZGERALD: Cal Ryder.

MR. TULK: - Cal Ryder, some two or three weeks ago. The Matthew Legacy is now in the process and hopefully will, as far as we are concerned, receive the approval of all of the partners in the FRAM-ED group.

In terms of the Coaker Premises, a substantial amount of money is required to do that. I think what they have applied for up to this point is to put together a master plan. That, too, is being looked at. Whether it gets approval or not is another question.

Let me just say this to you, that of the $81 million that was allocated under FRAM-ED, $41 million of that is already allocated. We put, as you know, $10 million into the Fisheries Diversification Program administered by the Department of Fisheries and Aquaculture and ACOA. We just recently set aside another $10 million for the Community Business Development Corporations, CBDCs, so that is $20 million that is out. The truth of the matter is that the REDBs, in putting forward their priorities last year, put forward enough that if we were to fund at all, you would need to take that $81 million and multiply it tenfold and probably come out with something like $800 million; and that is good, from their point of view. It leads to frustration as well, but it is good in that you have those people who are on top of what is happening in their region.

I say to the REDBs and I say to you that all of their priorities will not receive the funds under the FRAM-ED program that they thought were there because, in actual fact, if you did - the FRAM-ED program would have had to have been something like $800 million to $1 billion in terms of infrastructure. We are doing the best we can with what we have, and my hope is that the Matthew Legacy will receive a favorable reply and finish that job that was there. I believe it will.

MR. FITZGERALD: I will just ask one more question, Mr. Chairman, and then we will move on.

MR. TULK: I said I believe; I didn't say for certain.

MR. FITZGERALD: Well, I hope it will because it is a work in progress now and if we are going to commit $4 million, for God's sake, let's finish this and be able to realize the benefits from it that it was designed to do in the beginning.

MR. TULK: Get you re-elected, too.

MR. FITZGERALD: It might get me re-elected. You never know.

MR. TULK: I wouldn't want you to be out of here (inaudible).

MR. FITZGERALD: You are right, out of a job.

MR. TULK: The color would be gone.

MR. FITZGERALD: It is needed.

I could be on the - no, I don't even qualify for unemployment insurance.

MR. TULK: Don't you?

MR. FITZGERALD: No.

Mr. Chairman, I will just ask one more question and then I will move on and correct the minister when the minister refers to Deer Lake and Clarenville as being the two towns that have been identified as being two of the three smart towns. It is the areas, I say to the minister. It is not Clarenville, it is not Deer Lake; it is the whole area there. I know that I, as a representative outside of Clarenville, supported what they were doing and gave them a letter of support, and I know other people did from the whole area, because the whole area stands to benefit from the dollars that will be put forward when this final selection is made.

MR. TULK: Yes.

Let me just say thank you for agreeing with us, because we believe that you are going to develop this economy on a regional basis as opposed to town by town; and it is the Straits area, it is the Humber Valley area. I use it because that is the one that is mostly - and I would not want you to lose a vote by saying that you supported something in Clarenville, so it is the whole peninsula area.

MR. FITZGERALD: Well, I have always been the person who has said that if there is one town - and I will say it here again this morning - in this Province that has benefited from the moratorium, it has been Clarenville. If there is one town that has benefited from the closure of the ground fishery and benefited from the economy taking a nose dive in rural areas, it is places like Clarenville; because you have gotten all those people from outside of those areas with so much time on their hands, they go into those service centers to spend their money and to do their shopping.

Minister, on page 97, under 3.1.07., Canada/Newfoundland Agreement on Economic Development And Fisheries Adjustment -

MR. TULK: What was that number again?

MR. FITZGERALD: Under 3.1.07, come down to 10., Grant and Subsidies. There was a budget of $18,670,000 in 1999. There was $1,760,000 spent, and there is $6,100,000 brought forward this year. If $18 million was budgeted for and there was only $1,760,000 spent, and this year we are only going to be up to less than $8 million, there is still another $10 million there somewhere. If all of the things that are true that I just told you, about the number of people unemployed and the number of people affected in those areas affected by the ground fishery, why are we so slow in putting this funding forward?

MR. TULK: It is not as drastic as the figures indicate, because here is what really happened. Initially, when the FRAM-ED program was put in place it was believed that we - and by we, I mean the Province - would administer and initially fund - I think that is important, initially fund - projects and then collect the federal portion and feed into out budgetary process.

In actual fact, the reverse has happened. ACOA is funding the projects and we are feeding in our 20 per cent, if you understand what I mean. We were supposed to have the initial outlay of cash. If the project, for example, cost $5 million we would put out the $5 million - and that is what the figure $18,670,000 reflects - that we would initially put out the $5 million, let's say, for a project and then collect back our 80 per cent from ACOA. Instead of that, what finally ended up - and this is, as you know, when the budget was done last year - ACOA puts out the money and they collect the 20 per cent from us, so that expenditure is not as high.

The other thing is that, as you know and everybody else knows, there was a delay last year in signing the agreements and getting the funding off of the ground. The key thing, the big thing to keep in mind, is the way that the projects are being funded, who is doing the initial outlay of cash, which was the number that led to that big figure of $18 million.

In other words, we would lay out 100 per cent, collect 80 per cent. In actual fact, what has happened is ACOA is laying out the 100 per cent and collecting 20 per cent from us. That is the difference. This year, some $53 million will be spent in TAGS money. Instead of us laying out the $53 million and collecting 80 per cent back from the federal, they will lay out the $53 million and collect the 20 per cent from us.

MR. FITZGERALD: If you look down under Amount to be Voted, 01., under the same heading, you see there is $14,936,000 that was budgeted for. That is federal money. I have a real problem that we do not spend federal money. I don't think we should be so free with our own, but I think we should grab every bit of federal money that we can get.

MR. TULK: No, it is not that it is not being spent. The money is being spent.

When the budget was done last year, as I said to you, we were to do the outlay and the federal government was to put the cash in to us. What is happening is the federal government is doing the outlay and we are putting our 20 per cent into theirs. So the $14 million is a figure that is on the books, but in actual fact it is necessary to put it there to balance the books so that you reflect the change in the way the program is administered.

MR. FITZGERALD: So we do not show any being spent in 1999, but we are showing $437,400, a small amount compared to the principle amount that was budgeted for again for this year.

MR. TULK: That is simply because the outlay by us will not be there; therefore, we will not get any revenue from the federal government coming back in, if you want, to replenish our coffers.

MR. FITZGERALD: So are we spending this money?

MR. TULK: We are not spending it. We are spending $6 million, but we did not spend $18 million; because the old way the program was funded, or the mechanism by which the program was funded, was reversed. We initially thought, and it was initially thought by both groups of people, that we, as I said to you, would lay out 100 per cent of the cash. Am I correct?

WITNESS: Yes.

MR. TULK: We would lay out 100 per cent of the cash and then recover it from the federal government. In actual fact, when the mechanism to do the program was put in place, the federal government is laying out the cash - the 100 per cent - and recovering 20 per cent from us. Am I correct?

WITNESS: Yes.

MR. FITZGERALD: It is confusing to me.

MR. TULK: Yes, it was confusing to me too because I kicked the hell out of those fellows until it was explained to me.

MR. FITZGERALD: Where would the $6 million have been spent under that particular heading?

MR. TULK: Well, in 2000-2001 that will be our share of the program, our 20 per cent.

MR. FITZGERALD: Have the programs that have already been funded, like the money that you spent for the celebration on New Year's Eve and for the Viking celebrations, is that -

MR. TULK: Yes, and like we are going to spend on the Matthew Legacy in Bonavista, I hope.

MR. FITZGERALD: Yes. So this is where this money came from?

MR. TULK: Yes.

MR. FITZGERALD: It seems to be an awful lot of money there not spent with the great need in this Province today -

MR. TULK: It was spent, but the method of spending it was different. We did not outlay the cash and then collect from the federal government. They outlaid the cash and are collecting from us.

MR. FITZGERALD: Pass, Mr. Chairman.

CHAIR: Thank you, Mr. Fitzgerald.

We will move on to Ralph Wiseman and then we will come back to Mr. French.

MR. RALPH WISEMAN: (Inaudible), Mr. Chairman.

CHAIR: I guess you are on, Robert. From Robert we will go on to Yvonne.

MR. FRENCH: Thank you, Mr. Chairman.

It never ceases to amaze me, minister, as I go to these Estimates, the amounts of monies that we vote in Transportation and Communications. The same applies here, and I probably have several questions as they relate to Transportation and Communications.

In the Minister's Office, 1.1.01.03, we budgeted $60,000, we spent $91,900, and this year we have gone back to $60,000. What would that money have been spent for? Why we were over budget by $31,900, and why this year did we go back $31,900?

MR. TULK: I will be completely up front with you. I do an awful lot of travelling in this Province. I think in the last year I have taken one trip outside the country. I have gone to Ottawa on a couple of occasions. I do an awful lot of travel in this Province as the minister. The truth of the matter is that that cost increase - if you want to go to Goose Bay now, you had better be ready to lay out $1,200 for a ticket, in travel alone. So I do do an awful lot of travel in the Province, and the budget is up.

Let me also say to you that the other reason that we keep - as a government, to be frank with you - our ministerial figures as they are is not to leave the door wide open to go wherever we want. If you tell a minister he has $60,000 then he has to go through another test if he wants to get it increased, to go to Treasury Board and justify it. If you put in $90,000 some people might be back looking for another $30,000, and then you would be up to $120,000. We try somewhat to keep a lid on it both ways. Let me say to you that I find you can leave this Province today and go to Germany and probably get back home with an airline ticket that is a lot cheaper than if you go to Goose Bay. I do do an awful lot of travel in the Province. This year I did a fair amount of travel under the Jobs and Growth strategy as well, but I do a lot of travel in the Province.

I think last year the Member for Lewisporte was here and he was telling me that he thinks it is great because at least the ministers are getting around the Province, but I do do a lot of travel in the Province. I have to account for that in my travel.

MR. FRENCH: Would there be any other department's expenses added in there?

MR. TULK: Any other departments?

MR. FRENCH: Yes.

MR. TULK: I don't think so. No.

MR. FRENCH: So all of this $91,900 would have been spent in Development and Rural Renewal and none of it would have been outside your department?

MR. TULK: No.

MR. FRENCH: Okay.

In 1.1.01.06, Purchased Services, we budgeted $10,000 and went up to $30,000. What kind of services would we be purchasing? This year we have gone back to $10,000.

MR. TULK: Again, the reason is to keep it as it is and to put you through the test of going to Treasury Board to increase it. The truth of the matter is, again, that I do meet with a lot of groups and then, as a department, we pick up a lot of the tabs for groups in the Province that we meet with. I would not be at all surprised to see it up to $20,000 or $25,000 again next year. I don't think it will be as high as it was this year because I don't believe that you will have the same number of groups with the Jobs and Growth, say. You put out the budget as it is and then say: If you want to increase this, then you have to go back to Treasury Board and justify what you are doing in front of Treasury Board.

MR. FRENCH: What type of groups would we be talking about here?

MR. TULK: It could be Regional Economic Development Boards, it could be business groups, it could be any kind of community group that is interested in pursuing our objectives.

MR. FRENCH: Further down the page, under Executive Support, 1.2.01.03, Transportation and Communications, we budgeted $86,000 but we only spent $72,500, and this year we are gone back up to $76,500.

MR. TULK: I kicked the heck of them because I told them they were not getting out around the Province enough.

MR. FRENCH: 1.2.01.06, Purchased Services again. We budgeted $13,400 but we spent $49,500, and this year we are gone back to $17,600. Why?

MR. TULK: Again, it is an attempt to stay within budget and to force us to go to Treasury Board. We did increase the advertising promotion and other public relations costs last year to advertise this Province. I think a lot of that would have been the - what do you call it?

WITNESS: (Inaudible) "We're Doing It Right Here."

MR. TULK: Yes, the "We're Doing It Right Here" campaign, which I think is important, and which, by the way, I have response back from people around the Province saying: It is one of the best things that your department is doing. We don't put our name on it because -

MR. FRENCH: What agency spends this money for us?

MR. TULK: Is that -

WITNESS: (Inaudible).

MR. TULK: Bristol.

MR. FRENCH: On page 92, 1.2.02.03, Policy and Strategic Planning, Transportation and Communications, we budgeted $130,200, we only spent $126,200, and this year we are gone down to $30,200. Why would that be?

MR. TULK: Again, if you want to look at that whole Policy and Strategic Planning area, I think that is primarily due again to the Jobs and Growth. All of the things that you see in here are primarily due to the Jobs and Growth strategy that we have undertaken. The numbers come down in your estimates, again to keep a lid on.

MR. FRENCH: Is all this money being spent internally, in the department?

MR. TULK: Internally?

MR. FRENCH: Yes, is it all being spent by the Department of Development and Rural Renewal?

WITNESS: (Inaudible).

MR. TULK: In some of those cases, as we went around the Province with the Jobs and Growth consultation, obviously one of the groups of people that had to travel with us and be accommodated was the Cabinet Secretariat. So we covered the Cabinet Secretariat in some cases. Did we cover any other ministers in any other department?

WITNESS: No.

MR. TULK: No, we covered the Cabinet Secretariat, Bob, their work on the Jobs and Growth strategy.

MR. FRENCH: As well under the same heading, again we look at .06, Purchased Services. We budgeted $68,800, we spent $222,500, and this year we are gone down further. We are gone down to $18,800. Why would that be and who would receive funding there?

MR. TULK: Pardon me?

MR. FRENCH: Where would that funding have been spent?

MR. TULK: That is expenditures for room rentals, printing, advertising in relation to Jobs and Growth, and of course it was greater than originally estimated due to the number of consultations that we had and the time that we spent and so on. We don't foresee that expenditure as being there this year because the consultations have been done.

MR. FRENCH: On page 93 it says Business and Economic Development Services. Information Technology is up over $300,000. Where would this money have been spent, and why?

MR. TULK: Which one is that, Bob?

MR. FRENCH: It is Information Technology. We budgeted $290,200 -

MR. TULK: Would you give me the heading?

MR. FRENCH: Yes, 2.1.01.12.

MR. TULK: 2.1.01.12. Again, $290,200 to $378,800 is a difference of, what, eighty-eight thousand dollars. That is for the replacement of computers, printers and software. John, you correct me if I'm wrong here, but I think it has something to do with a program - if you look at the Auditor General's report in her audit of May 1999, one of the things that she criticized the department for was its monitoring of what is going on. Now we set about in late 1997 to put a new monitoring process in place, and that project kicked in, really, in about November 1999. If you are now in Baie Verte, for example, and you want to know something about a project that is happening in Harbour Breton, you can now push your computer and up come all the facts. We have improved our monitoring process. Of course, as you know, computers, printers and software, you get it today and it is outdated tomorrow. That increase is due to that expenditure.

MR. FRENCH: Again, under the same heading, 2.1.01.06, Purchased Services, we budgeted $664,000, we spent in excess of $1 million, and this year we have gone back to $666,200. Where would that money have been spent, and on whom?

MR. TULK: Last year, as you know, as I told you before, we repositioned. I guess you have seen the new ads, "We're Doing It Right Here," where we switched gears. Not only that, but if you recall, last fall we carried out that national advertising campaign on the "We're Doing It Right Here" program, so that would be in that area as advertised in the Province and what we are doing in trying to attract business.

MR. FRENCH: Who would the government agent have been in this promotion?

MR. TULK: Bristol. They are our agent of record for that program.

MR. FRENCH: Again, there was less than $13,000 in change, but Transportation and Communications -

MR. TULK: Where?

MR. FRENCH: In the same heading, 2.1.01.03. We are going to spend $447,900. Again, on whom and why?

MR. TULK: Those are our field offices. I wish we spent more there, to be frank with you, so that we would get more people out around more areas of the Province and into some areas. Sometimes it is a job to get them to go. I would think that would be practically a natural increase, Bob.

MR. FRENCH: Down in the next heading, right in under that, 2.1.02.03, Industrial Research Assistance program (NRC), Transportation and Communications again, we budgeted $73,400, we spent $86,200, and this year we have gone to $92,000.

MR. TULK: That is a program by the way, the Industrial Research Assistance Program, that we carried on with the NRC. What percentage of that do they pay for, Bill?

MR. STIRLING: They pay 95 per cent.

MR. TULK: They pay 95 per cent of the program. What it basically does is - this is one that I don't know where - I would like to spend a minute on it if I could, Bob. Because I am not sure that Committee members are aware that this service can be provided. It provides some technical expertise for small- and medium-size businesses in improving their overall confidence and competitiveness. It is done in conjunction with the National Research Council of Canada. How many people are there around the Province, four?

WITNESS: Four.

MR. TULK: Four people around the Province are available to do that. We are attempting to place more emphasis on the - I hate to use this term but I will use it - outreach services. That increase would come from that. Again, to be honest with you, I hope it is up more next year because it means they are out doing more work around the Province.

MR. FRENCH: Again, 2.1.02.05, Professional Services, it was $315,000 last year. This year we are going to spend $320,000. Am I safe in assuming that will be with Bristol as well?

MR. TULK: No. That is contract salaries?

WITNESS: Yes.

MR. TULK: That is Purchased Services, that is contract salaries. Those four people are on contract so that is for contract services. You have the Bristol goods, I think.

WITNESS: (Inaudible).

MR. TULK: No, there is no advertising.

MR. FRENCH: On page 94, under 3.1.01.03, Regional Economic Development Services, Transportation and Communications, this year it is $55,000. Last year we only spent $38,200. What area would we spend this in?

MR. TULK: That is basically caused by the fact that last year there was a director's position that was vacant. What was the director? I know the name, but what is the title?

WITNESS: Director of Regional Economic Development.

MR. TULK: The Director of Regional Economic Development's position in the department was vacant. If you notice, the amount spent dropped from $55,000 to $38,200. I would hope that we will refill that position, and then the travel will be up to where it was before, $55,000.

MR. FRENCH: In 3.1.01.10, Grants and Subsidies, we budgeted $121,500, we spent $463,000, and this year we are going to spend another $460,000. Who would these Grants and Subsidies have been paid to?

MR. TULK: Various communities and businesses and so on around the Province. If you recall, I said to you that we have put in place a Community Economic Development Program. Last year we transferred funding from the Strategic Enterprise Development Fund to increase funding for the Community Economic Development Program and that amount will be there again this year. Because we think it is very worthwhile, where small amounts of money are needed for community infrastructure. We help communities do it. We do not do it, we help them do it.

MR. FRENCH: On page 95, 3.1.03.10, Grants and Subsidies, we budgeted $4,500,000, we spent $3,990,500, and this year we are gone back up to $4,061,400.

MR. TULK: If you notice the heading it is Comprehensive Economic Development Agreement (CEDA). That is funding that is moved to the Department of IT&T because they administer that program to cover projects delivered by them, notably the strategic opportunities program. Obviously, they did not spend as much last year as we had anticipated in that area, but we would hope that they get back up to $4,000,000. That is a federal-provincial agreement that they administer again.

MR. FRENCH: On page 96, 3.1.05.03, Inuit Agreement, Transportation and Communications, we budgeted $140,600. We only spent $49,000, and this year we have gone up to $135,800.

MR. TULK: Again, if you notice the heading it is called Inuit Agreement. We help administer and deliver certain programs under the Canada-Newfoundland Inuit Communities of Labrador Contribution Agreement. Again, the travel requirements for the agreement administered were less than anticipated. We do not expect that to be the case this year.

MR. FRENCH: Under .10, Grants and Subsidies, would this be grants we would have made to the Inuit nation?

MR. TULK: I will ask the one of the officials to confirm whether what I say is right or wrong, but I think basically what we are doing is administering funds that come from the federal department. You will notice if you go down farther in that vote, Mr. French, that the same amount, Revenue - Federal, is $3,800,100, so that is basically a flow through from the feds to us under the Inuit Agreement.

MR. FRENCH: We just administer the program on behalf of the feds.

MR. TULK: Yes.

MR. FRENCH: On page 97, under 3.1.07.03, Canada-Newfoundland Agreement on Economic Development and Fisheries Adjustment, Transportation and Communications, we spent $3,500, and we are gone to $69,000 this year. Why the increase?

MR. TULK: This is the FRAM-ED program, so obviously as you get into, shall we say, the guts of the program and you get right into the middle of it, it is going to cost more to administer and more to put out than it did last year when the program was just getting off of the ground.

MR. FRENCH: I think my colleague might have asked the question, although I was not really clear on the answer. In 3.1.07.10, Grants and Subsidies, there is $18,670,000, and this year we are only going to spend $6,100,000, which, to me, creates a false impression. We are saying that we budgeted $18,670,000, we only spent $1,760,000, and this year we are going to spend $6,100,000. To me, it looks like there is federal money that was not spent.

MR. TULK: No.

MR. FRENCH: That is the way it looks here. Isn't there a better way to report this?

MR. TULK: Let me try to make this as simple as I can. You are the federal government, I am the Province. Now, mind you, we were late, as you know, getting that program off of the ground, which accounted for some of that, but here is what really happened. When we start to negotiate - and just before we are just about finished - I am the Province. I am going to spend the money, you are going to pay me afterwards. In actual fact, what happened in the final agreement was: You spent the money and I paid you. My share was only 20 per cent as the Province and yours was 80 per cent.

When we made this budget last year of $18 million, you noticed that we said that the revenue from the federal government was going to be $14 million, if you go back to the estimates of last year. So they would have been paying us. In actual fact, they spent the money and we, the Province, did not get the funds, so it is just a change in administration. The other thing is that the $6,100,000 this year will represent our 20 per cent plus - again, like all the figures up and down that column - there will increased activity, increased spending as you move into that year.

MR. FRENCH: Do we have any input, minister, in where this funding is to be spent?

MR. TULK: Yes.

MR. FRENCH: Or is it all a federal thing and do they make all the decisions?

MR. TULK: No, we have input. Sometimes we agree, sometimes we do not, but there is a senior management team which is made up of the Deputy Minister of Development and Rural Renewal, the Deputy Minister of Intergovernmental Affairs, and - what is Paul's title?

WITNESS: Vice-president of ACOA.

MR. TULK: Vice-president of ACOA for Newfoundland, Paul Mills. There is also another management group. What do you call yourselves, Sam?

MR. KEAN: It is an implementation committee.

MR. TULK: An implementation committee made up of Sam Kean, Ken Powell from ACOA, and they make recommendations to the senior management group, so we do have input. Not as much maybe as we would like, sometimes, but we do have input.

MR. FRENCH: My last question, Mr. Chairman, is on page 98. Under 3.1.09.10, Canada-Newfoundland Agreement on Economic Development and Fisheries Adjustment, Grants and Subsidies, we budgeted $9,330,000, we spent $200,000, and this year we are going to spend $3,194,000. What is the reason that we budged $9,330,000 and only spent $200,000, and why is it now going up to $3,194,000?

MR. TULK: Again, it is due to the same thing as I told you before. There is a total change in the way the program is going to be administered. It is the FRAM-ED program, and this one reflects again the fact that the federal government will be spending the money and we will be reimbursing them for our 20 per cent as opposed to us spending the money and they reimbursing us for 80 per cent.

MR. FRENCH: Thank you, Mr. Chairman.

CHAIR: Thank you, Mr. French.

Yvonne, and then we will go to Percy Barrett.

MS JONES: Thank you, Mr. Chairman.

I actually have a couple of comments I would like to make, minister, if it is okay.

MR. TULK: Sure.

MS JONES: In discussions about rural communities in the Province, I think that it is also noteworthy to look at the progress that we have made on some accounts in rural communities around Newfoundland and Labrador. As the Member for Bonavista South points out, there are certainly areas in the Province that still need a great deal of work and certainly a great deal of support in terms of trying to accomplish the same ends.

I want to talk a little bit about my own district and about the tip of the Northern Peninsula in the St. Anthony area, because I think there are two specific regions. I say regions because I really do believe that rebuilding communities has to be done on a regional basis, as a regional community, and that in doing so I think all communities learn to capitalize from it.

These are two specific regions in the Province which unlike no other rural areas of Newfoundland and Labrador have gone through some dramatic changes in the past eight years. I think that a lot of their success certainly can be attributed to a number of factors. One is through the regional economical development process. A second is through an environment that government was able to create for those areas in terms of allowing them to be conducive to other opportunities of economic development. Also, I think, it is because there has been specific or particular attention or measures put in place in order to aid these regions. I really do believe that there is no one policy that can help the whole Province. Quite often when governments make exemptions to policies or certainly allow flexibility in certain areas to help communities achieve growth we are quite often criticized for our actions.

I want to speak on two accounts, one which come up at a forum earlier about government's transactions of the Nain Banker. The Nain Banker was not a gift to the people of Labrador but it was really -

MR. TULK: Poor old John should not take all the blame for it, either. I should take some of it.

MS JONES: I know, and your department was involved as well.

MR. TULK: I am proud of it.

MS JONES: It was sold to the people in that area and because of that they have achieved extreme economic growth in their region. We saw a number of new jobs created. We saw sales climb. We saw people being able to diversify within the industry. I think we have to allow for those types of changes. Although sometimes they are criticized and not always welcomed in all arenas, we have to realize that provisions have to be made. Maybe they have to be made for areas like yours, Roger, and other areas of the Province as well.

The only other thing I am going to say on that is that I think government's role in all of this is encouraging communities to be self-reliant, encouraging them to develop a good attitude about their future and where it is they can go. People should not always look to government to solve the actual economic crisis in their communities, but to help them, aid them and assist them. I think, through your department, Minister, we are doing that. Through the REDBs, you have provided good staff in a lot of these regions. You have provided business development officers and offices around this Province. I know the ones in my area are very well-utilized.

Just through the fact that you go around this Province, through things like Jobs and Growth - a lot of people will say: Oh, here comes another government agency that is going to sit in a room, listen to what we say, go away and do nothing.

Well, I sat through a lot of those Jobs and Growth hearings. When you read the Budget, it really does reflect what the people in this Province were saying during those hearings. People out there in communities, whether they are in Port Union or Cartwright or Griquet or wherever, they do have ideas about how they want to sustain their regions and about how they can best develop them. Unless we go to them, and unless we listen to them, and unless we provide the resources in the field to aid and assist them, I do not know if they will be achieved. People in those regions have a responsibility as well. It is not always government, and I think that is noteworthy.

The only other comment that I want to make is that I feel that you, as minister, and certainly your department, have been very much accountable and have acted very responsibly in looking at rural communities in this Province. I think you did an admirable job thus far and there is still a lot of work to be done, as members have pointed out here this morning. I do not think we can just look at where we have to go; we also have to learn from where we have come. Over the last eight years we have certainly made tremendous strides in renewing the rural economy in this Province. I think there is a lot to be learned from that and it can be applied to the other communities out there that are still looking and still need those types of support.

Those would be the only comments that I want to make this morning, Mr. Chairman, and I thank you for the opportunity.

MR. TULK: Mr. Chairman, I wonder if I could just say a couple of words in relation to what Yvonne said. Yvonne, on behalf of the people in the department, I want to thank you for your kind words.

Let me just say to you that I became minister of this department on July 7, 1997. I had a little vacation, thanks to a certain gentleman. One of the first places that I visited was the Straits area. I have to say to you that, when I left it, I said: That has to be the most cantankerous bunch. They were practically hostile. It was only my charming personality that kept me alive, and kept me going.

The truth of the matter is, that group of people - it is not that they are not likeable people. They are. The truth of the matter is that the Straits found itself in the same kind of situation, Roger, that you see on the Bonavista Peninsula where employment is down, the economy is shot, and they were just recovering from the groundfish industry like the rest of us.

I was back there, I think, four times this year. I have to say to you and to the members of this Committee, it is one of the areas in this Province that increases your faith in what can happen in rural Newfoundland. It is an area that is certainly not as far ahead as they want to be economically and socially, but it has had tremendous improvement. I suppose, Yvonne, that is due in no small part to their member. The truth of the matter is, the attitude and the positive thinking and the movement has changed dramatically, and the economics of the area has changed dramatically - and they have done it themselves - to the point now where it is a pleasure as the minister to go back there. For example, I don't want to advertise here for anybody, but we should all have a chance to stay in the hotel in L'Anse au Clair. The accommodations are superb. The tourism industry is up. It is superb, and it is the result of that kind of infrastructure and a result of that kind of attitude.

The other thing, in regards to the kind of consultations that you do as a government, is this. I almost believe that it should be mandatory for every Cabinet minister to spend a month or two months touring the Province in the summer so that they become, if nothing else - if you never did anything else with the Jobs and Growth consultation, the truth is that you had to sit, and you didn't open your gob except to ask a question. You had to sit and listen to what the people of the Province were saying, and that in itself is worth the effort, if nothing else ever came of it, just so that you keep people who are in government cued in to what is happening in the Province.

The Straits area has done well. I cannot wish them the best of luck in getting the smart town because if I do I will get Mr. Fitzgerald all upset with me over there, and Rick Woodford will be eating me, so we will just let that one play out how it plays.

MR. FITZGERALD: It is a done deal where it is going.

MR. TULK: You know for sure, do you? I don't know.

CHAIR: Mr. Barrett.

MR. BARRETT: Thank you very much.

I will be an hour or so.

MR. TULK: Percy, you have to get out and beat Roger in the by-election. Don't -

WITNESS: (Inaudible) stay over on this side, Percy, or what?

MR. BARRETT: I want to stay on this side, yes.

I just have a couple of comments to make. I think Roger alluded to it. The Discovery Smart Group was a group that got together, and it is a group that is actually from Chapel Arm to Bonavista. It is not just the Clarenville area. It was a perfect example of the whole region coming together, and I think that is a tribute to the RED Board because I think -

MR. TULK: Also a tribute to the people themselves.

MR. BARRETT: - because they were the ones that brought them together.

I want to make a comment about the RED Boards because we hear some criticism of the boards. We hear some negativism about the rural development associations. In my district, both organizations work hand in hand. As a matter of fact, the -

MR. TULK: Both have a role, too.

MR. BARRETT: Yes, and both of them have developed a role for themselves. The Trinity-Placentia Development Association and the Isthmus Development Association are still alive, still well and still fulfilling a great role, and have provided great leadership in terms of working on major infrastructure for the region. The RED Board has its facilitators, and one of the people that they just recently hired was the onshore gas and oil specialist, which is encouraging to me. We see now in the Arnold's Cove-Come By Chance area actually a spinoff from Bull Arm. There are industries, small businesses, being developed in that area as a sort of a spinoff. We saw for three or four years that most of that stuff went to Donovans's Industrial Park, or Paradise, but there now seems to be, in terms of geography, in terms of the efficiency, more and more, I get interest from businesses who want to set up next to Bull Arm. I think we will get more and more of that as Bull Arm becomes a permanent site for fabrication as opposed to a construction site. I think the business community is looking at Bull Arm as being there for a long time and they will provide small businesses that will supplement the Bull Arm site itself. We have a major fabrication facility right on the Come By Chance road there now, and at peak they are hiring thirty-five to forty people, which is very encouraging.

The other thing is this. I think that whole area there is a perfect example of our traditional industries. We have ninety-five professional fishermen in Southern Harbour. One of the largest fishing communities in Newfoundland is in Southern Harbour, and of course in Arnold's Cove you have the National Sea Products plant which employs 430 people from -

MR. TULK: There is only one better in the Province right?

MR. BARRETT: What?

MR. TULK: There is only one better than Arnold's Cove in the Province.

MR. BARRETT: Only one better.

That employs people from Southport in the great District of Trinity North right up to Swift Current, and all these communities around there. It is a tremendous industry. I think it is a perfect example of a person who had a vision and had faith in rural Newfoundland. When the cod fishery collapsed, and Arnold's Cove was an offshore plant and everybody said the community is ruined, Bruce Wareham said: Oh no, there is a future in this plant. He went off and got the raw material and when there wasn't a codfish caught in Newfoundland that plant was operating forty-eight weeks out of fifty-two weeks. As a matter of fact, it was only closed down to give the employees their holidays and it closed down -

MR. TULK: Also to do repairs, do maintenance.

MR. BARRETT: - two weeks in the summer and it closed down two weeks at Christmas time to give the employees some time off. It was a perfect example in that area there of the new industries in terms of the offshore oil and the traditional industries. It is a very vibrant area.

I guess the other comment I have is that I guess if there is economic activity in the area it means that there is a lot of spinoff. I don't know whether the department has assisted a lot of small businesses in my area, not necessarily in financial terms. In a lot of cases it is providing expertise. I think that is a great role that the Department of Development and Rural Renewal -

MR. TULK: I think it is where we have to go.

MR. BARRETT: Yes. A lot of people have the expertise. I know of a person, for example, who was making crafts from birch, and the field people with the Department of Development and Rural Renewal really helped him in terms of developing his business plans and going after the funding agencies. He will be up in running and employing four or five people pretty soon.

The other comment I have to make, because I was heavily involved in it when I was involved in adult education, is in the area of crafts. I visited a lot of craft shows in the last two or three years and I am really impressed with what is happening. We don't hear very much about what is happening in the craft industry.

MR. TULK: We are at $25 million now to the Newfoundland economy.

MR. BARRETT: Yes. Look at the quality of the products that are being developed. I agree with the minister in terms of - that is one of the areas that you talked about, the $500,000 - looking at new markets. I think that is one of the areas I am sure that the department will look at because those products need to be marketed in other areas outside of Newfoundland. We are not just talking about tourists that are coming in. The tourist industry as it develops, of course, will expand the craft area in this Province, but I think we also need to take these crafts people and get them out there. We just sent some people from the Rural Development Association, believe it or not, to the craft show in Halifax to look at new markets and that sort of stuff. I want to compliment the minister. I think it is very important that these grassroots people, these rural development people, get out there and sell the craft industry.

I remember years ago starting the first training program for the mat makers in Placentia West. I was the person that started the course that taught these people how to make mats because we had one person who had the expertise and it was being lost. We put on courses at the time and trained the people, the Placentia West mat makers. We have a lot of natural resources when it comes to the craft industry in this Province, we have a lot of expertise, and I think the department is doing a fantastic job in terms of promoting it, and I would like for you to keep up the work on that.

The other thing that really disturbs me - because I attended quite a few of the sessions of the Jobs and Growth - is the attitude. Last fall I heard a lot of negative things and I think it centred around most of the baloney that comes off the open line programs, but this attitude that there is something wrong with a business person making a profit. I mean, we heard it on the Gisborne Lake. My God, it was the golden handshake. It was like if a person was out there and he had some money to invest in this Province there was something corrupt about it. There were people on the open line program who said: I cannot prove it but I know there is a deal being struck, there is a golden handshake here somewhere. People get off on this emotional kick that it was okay to -

MR. TULK: That wouldn't be anybody from the Opposition now, would it?

MR. BARRETT: What?

MR. FITZGERALD: I have a point of order, Mr. Chairman.

The Member for Bellevue sounds more like Peter Fenwick every time I hear him talk.

CHAIR: There is no point of order, but point well taken.

MR. BARRETT: We talk about governments going into rural Newfoundland, providing money to employ people. As the minister said, there is not enough money in the treasury to put everybody in Newfoundland and Labrador to work. It is not possible, but one thing we can do is if that small crafts person there gets a market and what have you will employ another four or five people. That is where the future of rural Newfoundland is, in providing those small businesses with an opportunity to expand and to develop. We are not going to get the mega-industries. We are not going to get the Bull Arms and all that sort of stuff. That is -

MR. TULK: If (inaudible) they are gravy.

MR. BARRETT: If they do they are gravy. They will spin off some of these other things. We have to get away from this attitude that the business community is out there and it is a sin and it is corrupt to make profits. We have to go out and promote these people in Newfoundland and Labrador. We have to get more young people involved in businesses and the brains in this Province involved in businesses. I think the department is doing a great role, not in terms of money, but in terms of providing advice and assistance to people out there in rural Newfoundland.

Because the first thing that happens when a person wants to form a business is they call the MHA wondering what they can do. To me, I just call the people at the Clarenville office and say: You are going to get a call from so-and-so, will you sit down with them? They will sit down with them and lead them through the process. If there are some grants through HRD and all that sort of stuff, these people are the experts. I do not give them advice because that sort of thing changes every day.

So I have no problem in supporting and voting for the Estimates in this department because I think they are doing a great job.

MR. TULK: Thanks, Percy, for the salary.

CHAIR: Thank you, Percy.

Roger, do you have any other questions you might want to ask?

MR. FITZGERALD: Yes, I just have a few questions and a few comments, I suppose, minister. I will go back to some of the comments that were made by two of the speakers previous.

The Member for Cartwright-L'Anse au Clair is right. There is nothing wrong with going out and having a committee of Cabinet or a committee of government or a committee of the House and listening to people, because for the most part people know the problems in their own towns and in their own areas. If there is a resolution to them they know that as well. Sometimes I do not know how often we can expect people to come and tell their story. It has been done, and it continues to be done. I don't know how more often we can go back and say: Tell me what needs to be done. Tell me what we can do to solve this. While they come and tell their story, when it washes out, we don't see a lot of results from the next time that they are expected to tell their story.

I don't have the answer, as I stated. While we talk about private enterprise, how it has to drive the rural economy, and government are not the people to go out there and create economic activity, that should be left to private enterprise, I don't know what private enterprise or I don't know who is going to go down into some of those small communities and solve their problems. I think government has to play some part if we are going to sustain the communities. Whether it is going and providing them with funding at the end of the day, to top them up for EI, I don't think that is such a bad idea. Other people might say that is a waste of money; you shouldn't top people up for unemployment insurance. I will argue with that until the cows come home, and say that if going to Toronto is not an option for the man down in your district or mine who is fifty-five or sixty years old, doesn't have an income, doesn't have an education, and you tell him that he should go now and bar up his house and move up to Toronto where there are some construction jobs, it is not an option. Whatever we can do to sustain those communities has to be done, and I see nothing wrong with doing that.

The other thing, Mr. Chairman - I spoke to you, Minister, about this a couple of days ago - is that while we have those programs in place and we have Enterprise Newfoundland and Labrador and we have the Business Development Centre and those other arms of government out in the communities, I think it is about time that we fine-tune some of those. If I have a business idea, I think it should almost be like one-stop shopping, I should be able to go and here is the place to go, not have to go here and they send me here and somebody else sends me somewhere else.

I think, for the most part, some of the people out there lead people along. I think people would like to know the medicine, and they like to be fed it without having it watered down. There is no point in me coming and sitting down and talking to somebody out in ENL in Clarenville and asking them if they are going to fund a convenience store down in Musgravetown or down in Tickle Cove for me when you know it is not going to happen. Far too often people are told to go back, do up the business plan, put your plan together, get some help with it, come back and I will take it to the committee. There is no need of doing that. We are building up people's hopes. They should be told, when they come, that this is not something we fund. You are going into competition with somebody else. The garages, the service garages and the convenience stores are not part of the process. It is not happening and it should happen.

The one place, I think, where your government missed the boat was when we took part in the early retirement of fishery workers. I still believe, I am a strong believer, that we should have reduced that to the age of fifty years old. We could have gotten thirty cent dollars. We could have gotten our younger people involved in the opportunities that exist now in the fishery, and we could have had some of our older people with an income where they could live with some kind of dignity and sustain the communities where they live.

Those are the only comments that I have to make, Minister. If you want to respond to them, you certainly can. I will stop by not heaping a bit of praise - I won't go as far as Percy and Yvonne went. I will just say to you that I thank you for allowing your services to be made available to the people from my district who have come in. You have met with them in a reasonable period of time and given them whatever time they need in order to (inaudible) their concerns and, I suppose, to echo their thoughts as to what they would like to see happen as well.

MR. TULK: Strike that last comment off the record. I would not want them to (inaudible). Thank you, Roger.

MR. FITZGERALD: I have said that to you before.

MR. TULK: Thank you. I am only kidding.

Let me just try to address some of the issues. I have no problem with EI top-up either. I wish we didn't have to do it for anybody, but when it is necessary I have no problem with it. As a matter of fact, I am one of the advocates of it. I don't want it to turn into a full-scale job creation program because I think, in many ways, some of the job creation programs that we did stifled private initiative, but I have absolutely no problem with an EI top-up if a person needs three weeks, four weeks, five weeks or whatever. It is part of the problem-solving process that we have to go through for the long term if we are going to get over this groundfish shutdown that was in many parts of Newfoundland, and it will linger for years.

In terms of the consultations, I share your view that if you do not react to what people say, you will only carry this so far. That is the reason why I thought it was important this year that we respond through the Throne Speech and the budgetary process in the way that we did.

I can say to you that, of the people I talked to who did make presentations to us, many of them - all of them, as far as I know, but I guess there are some who are not - were pleased with the consultation process.

Let me just say this to you: I have a great deal of faith in the people of Newfoundland and Labrador. I think that if you keep responding to them, even though you do not do everything they want you to do, and nobody will ever be able to do that - and that is good - it is good that people put forward things that you cannot respond to sometimes because of fiscal restraint or whatever. I think as long as you make a genuine attempt to respond to what they have said, they will keep coming back. I have a great deal of faith in their resilience.

Let me also say to you that when I talk about private enterprise, as a minister, I am not talking about private enterprise that is large-scale business. My definition of private enterprise in rural Newfoundland is the Bruce Davis'. I was in Wesleyville last week, on Saturday, at the Wesleyville Marine Service Centre. I had heard that they were remodeling a boat as a yacht for a fellow down in the U.S., and that Davis Shipping Ltd. in Wesleyville was doing it.

What I did not realize is the enormity of the project that they were undertaking; that they had bought one of the stern trawlers - they advertised - and this guy from the U.S. asked them to turn it into a yacht for him. There have been eighteen people working since some time in January and they are there until July. There will be an expenditure of American money in that area of $2.5 million. When it is finished, I can tell you that the accommodations on it and the workmanship in it will be tremendous.

That is the type of thing that I am talking about as private enterprise. I said to Bruce Davis - he owned the boat himself and sold it to this fellow down in the U.S. and is now remodeling it for him. I said: Why couldn't you buy boats around the world and do this refurbishing for people down in the Eastern Seaboard of the U.S.? He said: Yes, I could. I need somebody to just find markets for them.

That is where, I believe, this department comes in, in that we help him find that marketplace and, if he needs some work done with a business plan, we do that for him. I can guarantee you that he will take care of two boats a year, which means eighteen jobs year-round. The people who get the product will have a cheap product but they will have a good product, because they do not have to rebuild the hull of a boat. It does not necessarily have to be that, either, but that is my definition when I talk about private enterprise in rural Newfoundland.

Building up people's hopes - I do, in many cases, have a personal problem, and it is something that we have to deal with as a department, as to how you define what is competitive. For example, I do not believe that it was fair for us last year - I will use an example from my own district; not this department, but another group of people - to tell the young fellow who wanted to access some funds for setting up a cabinet-making industry in Wesleyville, which is about an hour-and-a-half drive away from Gander, that he would be in competition with somebody in Gander. I think that was taking it a little too far. In that particular case he succeeded on his own, which is probably an advantage to him in that he does not owe government any money.

I think that whole idea of competitiveness - sure, if people walk into our offices and say: I want to set up a convenience store, only in rare and exceptional cases, if there is nothing in the community or something like that, we might consider helping them; but if there is something in the community, people should look up in his or her face right away and say: Look, we are not in the business. We are not going to use government funds to compete with somebody who is already established in the community. It should be done.

We should have reduced the retirement age to age fifty. I am on record, and I was the person who chaired the TAGS effort in the Province and pushed it for government. We are on record as saying we would have reduced it to age fifty, and would have put our share up. Unfortunately, the federal government did not see that as happening and it did not happen. There are a large number of people -

MR. FITZGERALD: It was the reverse, Minister, in the former Administration, where the federal government wanted to do it and the provincial government would not do it, if you recall.

MR. TULK: I was up in the gallery.

MR. FITZGERALD: You were back in the gallery.

MR. TULK: This government - and I can only be responsible for this government - I think, was on record as saying that we want it reduced too, to age fifty, and we did.

Thank you.

CHAIR: Thank you, Mr. Minister.

Roger?

MR. FITZGERALD: Thank you.

CHAIR: Anyone else with any further questions?

The legal beagle, Ralph.

MR. RALPH WISEMAN: Thank you very much, Mr. Chairman.

I always knew you had a lot of respect for me. It is nice for you to put it on the record, actually.

Mr. Chairman, I want to congratulate the minister and the staff of the department for the superb job they are doing. I am saying that from the experience I have had in directing people in my district to the department. I must say that they are very efficient and always up front about what can or cannot be funded. I know it is a very difficult department when we talk about Development and Rural Renewal.

The renewal of rural Newfoundland has always been a challenge. I recall when the cod fishery collapsed in 1992. I was executive assistant to the Minister of Environment who traveled across the country and talked about the devastating effect that it would have here in the Province. I must say, all the provinces in Canada were very supportive in terms of what they offered and what they wanted to do to help Newfoundland.

I also recall, back in 1985 we had an unemployment rate of 24 per cent. Those communities did not disappear from 1985 to 1992, and they have not disappeared from 1992 to 2000. I believe there is a great spirit in Newfoundland; and I believe, Minister, that you led the challenge or the charge in going out and listening to what people had to say in the Province. I believe that it has been a very productive process and the budget is reflecting what we have heard. No longer is government talking to the people but the people are talking to government and government is listening. I believe that if we continue on that path there will be a tremendous improvement in the rural areas of the Province. It is not going to be easy, but with all the collection of ideas and initiatives that are under way I think we have a great future.

Thank you very much, Mr. Chairman.

CHAIR: Thank you, Mr. Wiseman.

Would you like to respond to that, Mr. Minister?

MR. TULK: I agree that if we are going to keep making strides in the Province then we have to keep talking to our people, keep listening to them, and try, as far as possible, fiscally and otherwise, to listen to what they have to say and put their ideas into practice. It won't always be easy. It won't always get done either.

CHAIR: Thank you kindly.

If there are no further questions, we will call for a motion to approve the heads.

On motion, subheads 1.1.01. through 4.2.03., carried.

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

CHAIR: Just before we adjourn, just to inform Committee members, it would seem that the Minister of Mines and Energy and the Minister of Tourism, Culture and Recreation have switched, and tomorrow we will be doing the Estimates of the Department of Tourism, Culture and Recreation. Tomorrow we will be doing that during the time that the House is in session, so the Vice-Chair and I will meet to decide when we start and will inform everyone appropriately.

Is that okay with you, Roger?

MR. TULK: Could I ask, as Government House Leader, to ensure that you meet somewhere where we can get you in three or four minutes?

CHAIR: We will meet in the Committee room. That should not be a problem, to be able to reach us within a minute or two.

MR. FITZGERALD: If we are not there, we will be eating at My Brother's Place (inaudible)

CHAIR: That being said -

WITNESS: Mr. Chairman, we are doing -

CHAIR: Tourism, Culture and Recreation tomorrow. Tentatively it is scheduled for 7:00 p.m. but if the Vice-Chair and I feel that we can do that at a somewhat earlier time we will try and do it for that time, so we will be in touch with each of the members to ensure that.

MR. TULK: (Inaudible).

CHAIR: Thank you, Mr. Minister, and your officials, although I notice that all of your officials were rather quiet. You did the right thing. The minister had everything to say.

Take care.

The Committee adjourned.