The Committee met at 9:00 a.m.

CHAIR (Mr. Harding): Order, please!

(Inaudible) fifteen minutes as well. Following that, then we will give each member of the Committee an opportunity to speak and ask questions, and they will have ten minutes each. I would like to ask the Committee members to try to be as brief as possible, direct the questions to the minister and then she will respond.

At this point in time I would like to have the Committee members introduce themselves by name and district. Charlene?

MS JOHNSON: Charlene Johnson, Trinity-Bay de Verde.

MR. RIDGLEY: Bob Ridgley, St. John's North.

MR. HUNTER: Ray Hunter, Windsor-Springdale district.

MS FOOTE: Judy Foote, Grand Bank.

MR. REID: Gerry Reid, Twillingate & Fogo.

CHAIR: Thank you.

We also have Eddie Joyce, who is also a member of the Committee, but I assume he will probably be along a little bit later. I would also like to introduce this morning our Table Officer, Elizabeth Murphy.

Now I would like to have the minister of the department introduce her officials that she has there with her this morning.

MS DUNDERDALE: Thank you, Mr. Chairman, and good morning.

I would like to introduce to my immediate left, Dr. Doug House, who is my Deputy Minister. To Doug's left, we have Mr. Ken Curtis, who is the Manager of Financial Operations - Central administration division. To my far right, at the back, is Lynn Evans. Lynn is my Director of Communications. Immediately behind me is Donna Kelland, one of my Assistant Deputy Ministers, and Phil McCarthy, Assistant Deputy Minister.

CHAIR: Thank you, Kathy.

I would just like to remind the members, especially the government officials, that when you speak if you would state your name. This is being recorded by Hansard, so it would make it more convenient for the Clerk to do the recordings.

Having said that, now I would ask the Clerk to call the first subhead.

CLERK: 1.1.01

CHAIR: 1.1.01 of the Department of Innovation, Trade and Rural Development.

Now I would like to ask the minister to proceed with her - she can have up to fifteen minutes.

MS DUNDERDALE: Thank you, again, Mr. Chairman.

It is my pleasure to be here this morning before the Committee.

Let me start by saying in our first mandate government intends to formulate and implement smart policies and programs to promote medium and small business development.

There are many organizations and agencies in this Province who are committed to building local and regional economies. I have already begun a province-wide consultation with stakeholders throughout the Province to build partnerships, identify common priorities and strategies and focus our mutual resources. Together, we can harness the innovation of our people, create sustainable industries, attract new investment and capture new markets, thereby creating employment.

The Department of Innovation, Trade and Rural Development is being allocated $30.5 million in 2004-2005, to allow it to implement its plans for economic growth and job creation for the Province.

Medium and small businesses in Newfoundland and Labrador face competitive problems associated with their size and relative isolation. To help small business to achieve economies of scale in purchasing supplies and sourcing large contracts, the department intends to assist small businesses operating in the same or related activities to raise their competitiveness by grouping together into business networks. This will allow them to access sources of supply and to pursue large market opportunities in the Province and abroad.

The department is in the process of establishing a branch of innovation, research and advanced technologies to focus on high growth opportunities in information technology, marine technologies, biotechnology, environmental technologies and defense and aerospace. Through this new branch, the department will work with the private and public sector partners to develop an innovation strategy for Newfoundland and Labrador. A special budgetary allocation of $200,000 has been earmarked for this purpose.

To help provide the infrastructure to make business competitive in rural Newfoundland and Labrador, $1.2 million is provided in the Budget to assist community and regional groups to leverage funding for broadband expansion in support of local, social and economic development. The department will be implementing some of the concepts previously identified by the department but which have not been acted upon. This includes working with Aliant to establish a Near Shore IT Development Initiative to attract new IT work to the Province. The first meeting of this task force occurred on May 10, 2004. We will be formally launching this initiative in the next few weeks.

In partnership with Memorial University, we have finalized the criteria for an industrial research and innovation fund which is designed to encourage research in clusters of excellence, such as: marine technology, pharmaceutical research, biotechnology, and the oil and gas industry.

In an effort to continue building partnerships between business, labour and government, the department will continue to fund the strategic partnership initiative with $300,000 in operational funding in 2004-2005. An additional $100,000 will be provided to the initiative to continue their research on the competitiveness of the provincial economy.

The newly established Rural Secretariat, supported by Budget 2004 allocation of $1.7 million, will be the focal point for government work with local and regional partners to build strong and dynamic rural communities and regions. The Secretariat will promote the well-being of rural Newfoundland and Labrador through a comprehensive approach aimed at integrating economic, social and cultural aspects of rural and regional development.

The department will continue to contribute to the core operational funding of the Province's twenty Regional Economical Development Boards in an amount of just over $1 million. Despite the federal governments withdrawal from various federal and provincial agreements, we will nevertheless continue to fund important initiatives, such as: the Ambassador program and the Canada/ Newfoundland and Labrador Business Service Network. We have also committed $3 million towards the Province's portion of these projects that will be completed in this fiscal year under the now discontinued CEDA program.

The department is continuing its direct investment in the development of the Province's small and medium sized businesses through the continued funding of the Seed Capital Equity and Business Market Development Grant programs. These programs will be funded at the same level as was budgeted in 2003-2004.

The significant resources being allocated to the Department of Innovation, Trade and Rural Development reflect government's strong commitment to an action-oriented economic development agenda.

Thank you, Mr. Chairman.

CHAIR: Thank you, Kathy.

The critic now or the Vice-Chair.

MS FOOTE: Thank you, Mr. Chairman.

Good morning.

I guess the first obvious question that comes to mind is the relationship, or the distinction between the new Department of Business and the Department of Innovation, Trade and Rural Development. If I could ask - if you could just give me some idea of the relationship there between the two and what the distinction is?

MS DUNDERDALE: The Department of Business and the Department of Innovation, Trade and Rural Development obviously will work very closely together. The main thrust at this stage in the game as we develop the new Department of Business is - the focus of that department will be on business attraction and investment attraction. That will be the main drive behind that department.

Our department will continue to do sector development. We will continue with our trade missions. We will have a particular focus on innovation and developing those technologies for business development throughout the Province. Our department will have a specific focus on rural Newfoundland and Labrador.

MS FOOTE: I noticed in the Budget that there is a million dollar allocation for the Department of Business but there are no breakdowns in terms of what it will be for. So, I am just wondering, as I look through your headings here in your department, whether or not you will be undertaking some of the work for the Department of Business through the employees within the Department of Innovation, Trade and Rural Development?

MS DUNDERDALE: We have already undertaken while that department is being developed. For example, we have just undertaken with the federal government - you would be familiar with the Canada/Newfoundland and Labrador Comprehensive Economic Development Agreement. There was a sum of money, $850,000, in that fund last year, of which $75,000 was used to do some work around business attraction. That was due to fall off of the table on March 31 of this year. We have been able to convince the federal government to roll over that money for one other year. Now we are using that money for the development and implementation of a detailed strategic plan to design and develop a new marketing campaign for promotion of the Province abroad and to design and develop specific sectoral campaigns for the strategic sectors being pursued, an in-depth research into perspective target markets for foreign direct investment and research protocol model for identifying specific companies which will be approached to consider expansion into our Province. So while the Department of Business is in the formation stage, we are already undertaking a number of initiatives in our department that would support their work when they get fully established.

MS FOOTE: Are there any other areas of overlap there at this point in time?

MS DUNDERDALE: We see that, potentially, the red tape reduction would move to the Department of Business once that is established and be refrained within that department.

MS FOOTE: Is that the only thing that would come out of your department?

MS DUNDERDALE: At this point in time, yes. They already have advertised now for their chief information officer. The chief information officer will look specifically at the IT needs of government, the IT business within government, and ensure that those business opportunities that are there are maximized to the benefit of businesses in Newfoundland and Labrador. Obviously, with our innovation strategy and our chief innovation officer, we will work very closely between those two divisions.

MS FOOTE: You mentioned pursuing opportunities for different sectors of growth. Can you just elaborate on what sectors? I know what they were when I was there. I am just wondering if there has been any change, if you have added or deleted?

MS DUNDERDALE: Well, that is the whole purpose of the study, because this is a study to identify companies who are looking to expand in target markets that we have identified around the world that we see we would have a lot in common with and then looking to our own Province to see how we can meet those needs. What the drivers are for those companies, how can we meet those needs, then how can we sell ourselves to them, if they are interested in expanding, to consider us.

As you know, I am sure there are over 2,000 readily, identifiable investment and business attraction agencies in the world out there campaigning for business throughout the world. So, when you go to do that kind of work you have to be very, very well prepared and have your research completed. If you get ten minutes of an executive's time you need to be well prepared going in there so that you can sell this Province and what it is we have to offer. This research piece will support us in doing that, in identifying the companies that are looking to expand where we feel that we have what it is they are looking for, understanding everything we need to know about those companies so that when we go in our promotion, we can answer all of their questions and really portray the Province as a place for good investment.

MS FOOTE: I guess my question was more along the lines of whether or not you have identified sectors for growth, in terms of whether it is agriculture or forestry, just looking at what we have to offer as a Province and developing and building on those?

MS DUNDERDALE: Yes, as I referred to in my opening remarks, the advanced technologies, marine technologies. We see that we have huge opportunities here in marine technologies. There is great opportunity in aquaculture. Environmental technology is being advanced; tourism, cultural industries. Already a number of those -

MS FOOTE: So, you are going to continue to look at those and build on those?

MS DUNDERDALE: Yes, build on what has already been done.

MS FOOTE: A question, you mentioned the REDBs and your continuing support of the REDBs. With the Rural Secretariat, I do not quite understand yet. So you might want to elaborate on that because I really have not seen or heard, in terms of what that is supposed to do or how it is structured. Do you want to elaborate on that a little bit for us?

MS DUNDERDALE: Sure.

This government believes that social and economic development are interdependent and that they must occur at the same time; like in development and implementation. I certainly feel that there has been tremendous, good work done under the Strategic Social Plan in terms of putting the social lens on the needs of the people of Newfoundland and Labrador. The touchstones of inclusion and capacity building and partnership are certainly ones that we embrace.

It is my understanding, in certainly some of my conversations with members of the Strategic Social Planning committees, that they were certainly aware and have evolved to a place that they were trying to bring the regional economic piece onto the board. They were realizing that they needed that economic voice at their table too, because you cannot have healthy communities unless you have good social development and good economic development. One is completely reliant on the other. So we have to always take a comprehensive view.

In view of that, from that whole concept of the interdependence of social and economic development comes the whole concept of the Rural Secretariat. What we will do is build on the work of the SSP. We will include the economic pieces to those steering committees. Out of representation from the SSP committees, as well as several at-large organizations that have an expertise in regional and community economic and social development, will be formed a board, a rural secretariat working group. The idea is to influence government to have access to government in policy development and program development and to have influence right across government at the implementation stages of policy. So that committee can reflect the rural realities and needs throughout the Province and effect policy as it is formed and effect programming as it is developed. So they would have a real voice across government.

We have already begun to - given the touchstone principles that are guiding us through this of partnership and inclusion and so on. I have already met with the chairs of the SSP. We are now moving into the planning stages, that we hope to move forward within the next couple of weeks, to start a series of provincial forums where we bring the SSP together, as well as other stakeholders in the community, and talk about how we actually do this work; what this will look like. We have the broad strokes and the principles of what needs to happen in the Rural Secretariat. Then we need to sit down in partnership and develop exactly how that is going to happen.

MS FOOTE: If I am hearing you right, it is essentially the SSP being expanded on in terms of bringing in an economic focus. What role is there and what role will there be for the REDBs in that? At the end of the day, do you see disbanding the REDBs and just going with the Rural Secretariat?

MS DUNDERDALE: No, and one will not necessarily interfere with the other. I understand, for example, on the West Coast REDBs are already starting to become members of the SSP. They may very well be on the steering committees. So, while they have a general piece that they would do in the discussion of economic and social policy and in forming that whole piece and to say, for example, if you need this - an example that I use to demonstrate some of what I mean is - you are familiar with what is happening in Marystown now where we have great economic development and there are wonderful things happening there in the shipbuilding industry. In the planning for that development in Marystown we did not progress it as much as we ought to have done, to say: here are the economic implications for what is going to happen in the region but we did not deal with the social implications of what was going to happen. As a result, we have a housing crisis, for example.

What the Rural Secretariat will do is take a comprehensive view in a region of those kinds of initiatives and advise government what is necessary to have a healthy climate for economic development and social development, and that the two go together. That you cannot look at one in isolation, you must look at both together. When you look at economic development in Voisey's Bay or the Marystown Shipyard where you are going to have a big influx of people, for example, is one example, and what you need to support that and ensure that you maintain a healthy community. That it is just not one aspect of the community that is thriving and putting burdens on another piece of the community that we have not supported and will get in trouble.

So it is that kind of vision and high-level advice that the Rural Secretariat will provide to government. The REDBs will participate in that but they will also have their own specific role, as they do now, as a facilitator of economic development in the region, specifically. You know, that singular focus that they now have, that will continue also.

MS FOOTE: Will there be a separate SSP -

MS DUNDERDALE: No.

MS FOOTE: - or will the Rural Secretariat, in fact, replace the SSP? Is there any new funding allocated or is it -

MS DUNDERDALE: Not at this time, because we are in a transitional year. Community counts, for example, is well established and implemented and the extra funding that was required there is no longer required. So we see clearly that the $1.7 million will do what we need to do this year, given it is a transitional year. We expect that we will be looking for a greater budget allocation in the next budget to support that work.

MS FOOTE: Are there going to be new people hired with respect to the Rural Secretariat? Do you see that as -

MS DUNDERDALE: We will maintain the staffing allocations that are now presently within the Strategic Social Plan.

MS FOOTE: You mentioned the Near Shore Initiative. Of course that was something we were very excited about, the fact that the private sector came onboard. I just want you to elaborate on where you are with that. I know you mentioned that you are going to be rolling it out or -

MS DUNDERDALE: Yes, we have now been able to reach an agreement with Aliant. The negotiations have come to a stage that we are all able to agree and move forward. We had the first meeting on May 10. I can refer to my deputy who attended the meeting.

DR. HOUSE: We had a meeting earlier this week of the initial steering committee. I think that it is an exciting initiative. I think the great thing about it is that we have Aliant and x-wave together involved in this, but also we have the Newfoundland and Labrador Alliance of Technical Industries as also a partner sitting on the steering committee. In fact, we had our meeting in their offices. So, there is agreement around the table that we should proceed on this. A consultant is in the process of being hired to start working on developing a plan for how we should proceed and an implementation plan. There will be a formal signing of the agreement in the next little while. As you know, Aliant are in a strike situation right now, so probably that needs to get resolved before the formal signing is done, but the initiative is underway. I guess that is the important thing.

MS FOOTE: NATI has always had concerns, of course, in terms of any IT initiative. They are comfortable at this point?

DR. HOUSE: The great thing about it is, when I went in and talked to the current Chair of NATI he was probably the one around the table who was most excited to see this thing getting underway. The fact that they have really bought into it, I think, is a bit of a breakthrough.

MS FOOTE: I guess the proof will be in the pudding at the end of the day, whether or not they are dissatisfied.

DR. HOUSE: Absolutely.

MS FOOTE: The other program within the department that - and Donna would know this - has always been a matter of concern is the Provincial Nominee Program. I would like an update on where we are with that. I know it was an ongoing issue with the federal government. I would like to know where you are with that.

MS DUNDERDALE: We have just received 400 new units, so we are at the point now where we are doing something diligent with the Department of Justice, to make sure that our forms are correct and that we have everything in order. We will be making an announcement on those and the availability of those, we hope, by the end of the month.

The original 300 are still moving through the system, they are not all complete. There was a difference of opinion between the provincial government and the federal government in terms of the rules and regulations around the PNP under the old program. They have been somewhat stringent with us in the new one and some of that is attributed to some of the fallout from the old program. At this point, we are just letting them progress through the system and letting them be dealt with by immigration officials in Ottawa. We are just letting them follow through in due course.

MS FOOTE: What restrictions are being placed on the 400?

MS KELLAND: We have developed a new nomination plan in co-operation with the federal government, so we will continue to offer placements for skilled workers depending, of course, on a guaranteed offer of employment from a local employer and them not being able to source a local person or a Canadian national for the job. We have continued with our entrepreneur class, which will require an individual who wants to either establish a new business in the Province or purchase an existing business, to make a minimum deposit in terms of a minimum equity investment. We will require them to make a personal visit to the Province prior to nomination. There are just some additional safeguards, if you like, to make sure that they are bonafide entrepreneurs.

We are also looking at a process whereby one or two or three partners can participate in a single business provided that they are active participants in the business and have an active role as either a director or senior manager.

MS FOOTE: What were you able to get in terms of a percentage of the nominees being allocated for the entrepreneurial category?

MS KELLAND: We have reached an agreement that there will be no fixed percentage, that we will take it as the market demands, which was, as you would be aware, our preference. We were successful in having them allow us to be open, provided, of course, it was consistent with federal regulations.

MS FOOTE: Will this allow you now to move with associations like the dairy farmers, for instance, who were so interested in availing of this particular program?

MS KELLAND: We are continuing those discussions with them. Once we have the criteria firmly in place - and again, as the minister mentioned, we are making sure, through Justice, that we have all our things done properly - we will continue and have a look then at what they are proposing to see if it is consistent with our nomination plan.

MS FOOTE: Okay.

CHAIR: Excuse me! We have gone beyond our fifteen minutes now.

MS FOOTE: Oh, really?

CHAIR: Yes. You will have plenty of time after anyway.

MS FOOTE: Absolutely. Thank you.

CHAIR: I would just like to move to the government members now, if I could. Before I do, I would like to welcome another member of the committee, Eddie Joyce, the Member for Bay of Islands.

If one of the government member representatives now would like to ask a question or so of the minister, you have up to ten minutes. No questions? We will carry on and go back to the Opposition members.

MS FOOTE: Thank you. That was quick.

CHAIR: That was quick.

MS FOOTE: The whole Broadband initiative, I think it is a great initiative for this Province. We are talking to the tune of $15 million. Is that still what we are talking about here, with $5 million from the feds and $5 from the Province and Aliant? Aliant is the private sector that is at the table?

MS DUNDERDALE: The Broadband initiative that is referred to in the budget is the projects that have been approved under BRAND. This $1.1 million will average out just about $16 million. It is the five groups that were approved under BRAND, the first round of BRAND, who have not been able to find the community portion or their portion of what they needed to leverage out that money. Rather than see that money slide off the table, we have responded to say that we are going to work with them. Some of them will need the whole piece of their share of the funding, others will need incremental amounts of that. We are hopeful, also, that we may be able to have something left over, because there are four more projects that have been approved under round two.

MS FOOTE: I am talking about the other initiative, the one with the federal and the provincial partnership.

DR. HOUSE: We are talking about two different initiatives here, so we need to clarify. One is the Broadband initiative specifically with respect to education, which is a three way cost-shared.

MS FOOTE: Hopefully, it will not be just education. I would expect that business would be able to -

DR. HOUSE: Hopefully we can build on that, but it is basically geared toward the education sector, and the government is continuing to commit $5 million to that initiative.

The second initiative that the minister referred to is what is called the BRAND initiative and it is basically to help community-based approaches to expanding Broadband capacity in rural regions. What we have found is that a number of the communities that were getting federal funding under that program were having difficulty coming up with the additional amount that they were required to come up with themselves, and so the government has allocated $1.2 million in addition to the $5 million to support those BRAND initiatives. I hope that clarifies it.

MS FOOTE: Is the $5 million that was allocated for the Broadband initiative now being used for the BRAND initiative? Is that what you are telling me?

MS DUNDERDALE: No, the $5 million has been identified. The first $5 million in Broadband is still there in its entirety specifically for the program, and then there is an additional $1.2 million for the BRAND. What we are also doing is working very closely with those two initiatives to see that we maximize benefits by coming together with that $15 million plus the other total of between $16 million and $17 million that will be leveraged to see how we can really coordinate our activities and maximize even more benefits by doing them together where we can.

MS FOOTE: Has there been $15 million identified, though? I know the Province had $5 million, the feds had $5 million, and we were looking to the private sector for another $5 million. Has that been realized?

MS DUNDERDALE: It does not fall under our department so I cannot speak to that specifically. I know that our $5 million is there, but the Department of Education is taking the lead.

MS FOOTE: We are working very closely on it because, obviously, it is such an important initiative that one would hope that at the end of the day not only the education sector would benefit but business as well and certainly some of the tourist initiatives.

MS DUNDERDALE: Absolutely. All kinds of community groups would also benefit from that.

DR HOUSE: The point that you raise, I think, is really important. Just for your information, we are starting now to begin to work cooperatively with Industry Canada, ACOA, the university, Aliant, and other user groups to try to get a provincial kind of a strategy towards where we should be going next in terms of Broadband, to ensure that this important infrastructure is available as widely as possible in the Province.

MS FOOTE: I guess I would like to ask some questions in terms of the budget cuts. Obviously, when you look at where they have been taking place it has been very much in rural Newfoundland and Labrador. When I look at twenty HRE offices closing, I think we all have to realize that while they may have been offices from a social perspective, at the end of the day there are employees who do make a contribution, they earn a living and they contribute to the bottom line of these communities. When you are looking at the needs of communities throughout Newfoundland and Labrador, particularly in rural Newfoundland and Labrador, and you talk about the SSP and you talk about your Rural Secretariat, how do you gel what is happening in terms of these layoffs in these communities that are so vulnerable because there is so little happening in some communities, if they do not have something going on in the fishery. Try as hard as we might it is very hard to attract anyone to invest in a place like Grey River or a place like Point May or a place like Lawn. They look to have these services available, but also for them it is a contributing factor to the bottom line of those communities too, to have those offices there.

How are you taking that into account in terms of your strategic social planning and your Rural Secretariat? How does that play when you look at how you are going to work with those communities?

MS DUNDERDALE: It is certainly my understanding that the number - just HRL&E, for example, the job loss there will be actually minimal because even though the offices are closing they are being absorbed into the regional offices and other offices throughout the Province. We have a dilemma that we have to deal with in terms of our fiscal situation. It is extremely important that we get our fiscal house in order, and that means there is some rationalization that has to go on, and there are efficiencies that have to be found. It is extremely difficult to attract investment to a Province where people might not feel that there investment is secure given the financial situation that the Province finds itself in.

In terms of economic development -

MS FOOTE: You and I could have that debate until the cows come home but we will not go there.

MS DUNDERDALE: Yes, but from our perspective it is extremely important to have our fiscal house in order, because that is the first step to good solid economic development.

You have to be very mindful - and I appreciate what you are saying about how any kind of a job loss or relocation impacts, especially in rural Newfoundland, and that you have to pay particular attention to that. There is a real sensitivity around that in government and as we approach this work. I guess the job in our department is to grow the economy and create a climate where jobs can be created to absorb any kind of fallout from government so that government does not - government is a provider of services rather than an employer or an employer of last resort. I mean, the employment mandate is very strong too. I appreciate that this is a place where people come to work in this Province, but it should not be our primary source of employment anywhere in the Province, particularly in rural Newfoundland; that the only job that is available to you is to work with government. The challenge to us is to grow the economy, you know, to do things in aquaculture and tourism and cultural industries and with our industrial milk quota now that is just become available and so on, so that there is employment in the private sector for people, so that when people graduate from our universities and our colleges there is work for them other than government work.

MS FOOTE: I guess my question was more along the lines of: What role does the SSP play in terms of working with those communities that are going to feel the impact of these losses?

MS DUNDERDALE: In terms of the SSP, we are still very much in transition. The SSP is carrying on at this point the traditional work that it did, for example, under your administration. That has not changed. The planners are there, they are still working with that. We are on the front end of a transition from their work as SSP into the Rural Secretariat. When that formation is complete that Rural Secretariat will be able to reflect on the questions that you have raised and look at them very specifically in terms of their own regions and advise government and influence government in terms of policy and programs.

MS FOOTE: I guess one of the issues for me - as I said, you and I can debate in terms of the financial situation of the Province and what we were able to accomplish in the fifteen years we were there in terms of growing the economy. I feel quite comfortable and confident in what we were able to accomplish, and obviously you have other views.

At the end of the day, I think if you - I really am concerned with what I see happening in our Province in terms of rural Newfoundland and Labrador, where we seem to be going back to the whole idea of centralization, with things continuing to be offered as long as you are along the Trans-Canada Highway and losing sight of the geography of Newfoundland and Labrador and the fact that we have 10,000 miles of coastline. We have been trying to survive under very difficult circumstances and I think doing very well given those circumstances, not to say that there could not be improvements because there can always be improvements and I welcome any that you can make. But, I guess I really am concerned of the way this is going and the fallout that might come into play for our rural communities. I think we all know that Newfoundland and Labrador is what it is because of our rural communities. You can find a St. John's anywhere in the country or in the world. You can find a Corner Brook anywhere in the country or in the world, but when you come to Trinity or you come to Grand Bank or you come to wherever that is off the beaten track, then it is a different kettle of fish as it were, and you really need to have a different approach and a different focus when dealing with it.

I guess one of the other questions when we were talking about cuts, I am wondering if there is any idea of bringing back into the fold the group that we put down in Marystown? Are they going to remain down there or - from the department?

MS DUNDERDALE: Yes, there is no -

MS FOOTE: Portfolio management.

MS DUNDERDALE: No, that is not where we are. Let me say, first off, that I agree with your comments on the fabric of who we are as Newfoundlanders and Labradorians and without rural Newfoundland, to me, we would lose our soul. I am passionate about rural Newfoundland. I am thoroughly committed to Newfoundland and Labrador and would certainly not be engaged in any kind of a dismantlement, but there are new realities that we have to deal with in this Province. First of all, given our fiscal situation. Second of all, given the demographics that we now have at work in this Province and what they bode for the future, which is extremely concerning.

In the concept - again, this goes back to the Rural Secretariat. Perhaps this will capture for you exactly what it is that we talk about when we talk about the kind of thinking that we are engaged in in this department now. For example, on the Burin Peninsula - I will use that because it is a place we are both very familiar with. The Rural Secretariat, or the steering committee from down there, what we would ask of them and of the people of the Burin Peninsula - for example, a significant part of rural Newfoundland - is to come together and say: Here we are 30,000 people on the Burin Peninsula, what is it that we need on the Burin Peninsula to sustain ourselves, to create healthy, viable communities? What do we need in health care? What do we need in education? What do we need in terms of the economy, whether that is the fishery, shipbuilding, peat harvesting, aquaculture or whatever? Coming together and using their best knowledge and experience of the Peninsula and a full and thorough understanding of their needs and what it is they need to live good, healthy lives, and how, in fact, they can expand their 30,000 upwards and onwards and then come back to advise government on what it is we need to do to work with them to create a climate, economically and socially, that this kind of growth and sustainability can take place. That is the path we are on.

MS FOOTE: You see, that sounds to me exactly what the REDBs were doing. Now, some better than others, obviously, because if you look at the twenty boards you can look at the accomplishments of some, and some of them did much better than others, but when you consider the stakeholders on the REDBs, they were from all sectors of society, social and economic. What you are describing for me, in terms of the Rural Secretariat, is precisely what the REDBs were meant to do.

MS DUNDERDALE: But their focus was economic development and they were arm's-length from government. So, in terms of the effect they would have on the internal policy and program development of government was minimal. What we are trying to do with the Rural Secretariat is bring that right into government and have it influenced right out across government so that the Rural Secretariat is there, it is real, and there is a real relationship between decision making and the Rural Secretariat and a partnering that is going on there. So government gets influenced. A REDB has little or no influence on what is happening in education, health or recreation. It is a much, more comprehensive approach than you would have seen in the REDB. The REDB is still very specific to economic development and fostering that.

MS FOOTE: I guess I would be concerned if it became just another level of bureaucracy in terms of the REDBs, the SSP, the Rural Secretariat. Getting our act together would be even more difficult?

MS DUNDERDALE: But that is why we are on the front end of this consultation process. I am in meetings with REDBs and with the SSP. We will bring all of these groups together. All of those stakeholders will come together over the next six to eight months. We will have these discussions and from those discussions the best practices that they have and the best knowledge that they have, then we will craft how all of us will work together.

We have a lot of resources on the ground. There is an awful lot of duplication of effort going on in terms of economic development, for example. I mean municipalities now have Economic Development Officers. We have five regions with Economic Development Officers. The REDBs had Economic Development Officers. ACOA has Economic Development Officers. We are down by the head with Economic Development Officers and yet we have very limited resources. We need to find a way that we can all come together, work together and make sure that we are making the best use of the limited resources that we all have and to find a mechanism which allows us to have a coordinated approach to economic social development in the Province.

MS FOOTE: I want to move on to Venture Capital because, obviously, that has been an issue in our Province, I guess, since we have been a Province and before.

Where are we with the Venture Capital Equity Program?

MS DUNDERDALE: Well, as you know, under your Administration you put out a call for proposals. We had four responses. We have met with one proponent and have scheduled meetings with the other three. Hopefully, something solid will come out of that. That is also going to be something that the Department of Business is going to be very focused on, identifying Venture Capital funds for use in the Province and also identifying other forms of capital. Investment, as you know, is a tremendous challenge for us here in the Province.

MS FOOTE: Were you successful in attracting anyone from a labour sponsor?

MR. McCARTHY: Two of the responses we got to the RFP were from labour sponsored venture capital groups. We are in the process now of - going to be meeting them over the next period of time to explore their proposal in detail.

MS FOOTE: What is happening now in terms of the young entrepreneur who is having difficulty accessing capital? I think of some young people and I think we always try to encourage young people, in particular, not to go to work for someone else but to, in fact, start their own business if at all possible and try to encourage more and more post-secondary - and even children in high schools to think that way. Are there any additional monies made available in your budget or is that going to be a part of business, or is there an overlap there in terms of - where do they go?

MS DUNDERDALE: There is no specific funding made available at this point in time for them. They would still fall within the general programming of the department. It is certainly, again, part of the comprehensive view that one would expect from the Rural Secretariat so that we address all of that; identifying specific groups that have challenges in terms of accessing capital. As you know, in the GMO we speak specifically to young people about business opportunities and so on in the Province, and to support that and expand it.

MS FOOTE: What if someone came to you today? What advice, what direction, or what help would you be able to provide?

MS DUNDERDALE: Well, in terms of all of the things that were there under your Administration are still there. We have the small seed capital program business investment and the advice from all of our regional offices and economic development officers. All of that is still there and available to them.

MS FOOTE: Okay.

I know that there were some layoffs in your department. Are they reflected in this budget, in the Estimates?

MS DUNDERDALE: Yes, we had two contractual positions lost. The contracts came to an end and they were not renewed. We do not have our EDGE facilitators anymore and that resulted in one layoff.

MS FOOTE: What is happening with EDGE then?

MS DUNDERDALE: The EDGE applications now are being handled by our Economic Development Officers and that is working very, very well.

MS FOOTE: I know that the Premier has talked about the Irish model and how that is something which appeals to him. I guess that appeals to all of us who have not been in a position to want to make things happen, both from an education perspective and from an economic perspective. I would assume that relationship is still there and you are cultivating that?

MS DUNDERDALE: Yes, we are. In fact, the Premier and I will be travelling to Ireland in early July to meet with the Taoiseach to reaffirm our partnership and renew our MOU with them.

MS FOOTE: Again, I go back to the differentiation between Business and Innovation, Trade and Rural Development. So both of you are going to that?

MS DUNDERDALE: Yes.

MS FOOTE: Okay.

MS DUNDERDALE: These departments will work very closely together.

MS FOOTE: I know that - of course it was always an issue, the fact that the feds left the table with respect to Community Economic Development agreements. That was a serious blow for the Province. I know that we have allocated money to carry out, and you mentioned the Ambassador Program. Is it the intention then to continue with those programs?

MS DUNDERDALE: Yes. You will see a reduction in the Budget from the $5 million that was there last year. It is down to $2.2 million. What we have done is allocate out to the Department of Tourism, Culture and Recreation the portion that was there. That $2.2 million now more clearly reflects what it is that our department is doing. So, we are continuing the Ambassador Program, the GMO and so on.

MS FOOTE: Okay.

Are you reviewing the Ambassador Program? Because I think that was something which was being suggested when I was there, that those who were more directly involved were suggesting we should probably look at a different model for it.

MS DUNDERDALE: All our programs are now under renewal, so we will be looking at all of them. We are in the process of looking at all of them, seeing which of them are really effective and others that are not, and so on. What do we need to do to support them more fully, or do we need to let some go and add others and so on? That is a process that, again, we are on the front-end of and working through. These should be complete by the end of the year.

MS FOOTE: Did you say it will be another six months or so before everything is in place with respect to the Rural Secretariat?

MS DUNDERDALE: Our first consultation we are planning for early June. So we need to move around the Province with that. We are hopeful that we may be able to do one in Clarenville next month. Then we need to move about the Province over the summer. In the fall we should be able to bring all of that together.

MS FOOTE: Okay. That is fine for me for now.

CHAIR: Do you want to take a break?

Any of the government committee members have any questions for the minister? No questions?

MR. REID: I have one.

CHAIR: We will go to the Opposition members.

Mr. Reid.

MR. REID: Thank you, Mr. Chair.

I only have one general question, I guess. It pertains to the made right here campaign. It is my understanding you have cancelled that.

MS DUNDERDALE: Excuse me, I did not hear you.

MR. REID: Your made right here campaign. That is gone?

MS DUNDERDALE: "We're doing It. Right Here."

MR. REID: "We're doing it. Right Here." It is gone?

MS DUNDERDALE: Yes, it is.

MR. REID: That is unfortunate. I know that two entrepreneurs in my district - a young teacher got into building kayaks and did quite well as a result of the free advertising that he got on that. Another one was Cottle's Island Lumber that we also used in that ad for a number of years. It has done well by him as well. It is very unfortunate that you had to take that program out of your department.

MS DUNDERDALE: I agree. I wish we could have kept it there, but the fiscal restraint did not allow that to happen.

MR. REID: You do not have an easy job to revitalize rural economies especially when your government is starting to do that, by cutting jobs in rural Newfoundland in the public service. I know, representing a very rural district, that it is going to be very difficult to replace the jobs that your government just eliminated in the last few weeks and are continuing to eliminate in the coming months. For example, I just lost the HRE office on Fogo Island and there is no way that the individuals who were displaced yesterday are going to be able to commute because of the ferry schedules and things like that, not to mention that ferry rates have gone up. It is going to be very difficult. Just when the economy of that district started to pick up in recent years with the opening of a new fish plant in Twillingate and a new shrimp plant on Fogo Island, it is going to be very difficult to continue that growth when your government is cutting services in that area.

That is just a comment. If you want, you can comment on it, if not, I will just move on to the Estimates.

MS DUNDERDALE: I think we have enormous potential right throughout rural Newfoundland and Labrador. That is the challenge to us, to grow the economy in the private sector so there are employment opportunities for people right throughout the Province. I think there is enormous opportunity and enormous capacity to be able to do that.

MR. REID: I wish I could agree totally with you. I certainly hope you are right. Again, I think my colleague mentioned it while I was out - I was listening to her in the office there. She talked about: It appears that your development of rural economies is going to be along the Trans Canada Highway. That certainly appears to be the move in my district with the school boards and the hospital boards and the other services that are provided by government. They are moving out of my district, they are going somewhere. That is a rural area, so it appears that they are going to end up in Gander and Grand Falls.

Since I have been the MHA for nine years, I have tried, and have been relatively successful, in preventing that from happening in my district. Unfortunately now that I am sitting in Opposition, that is going to start all over again. I have grave concerns as to what is going to happen to public services in my district, and I think that other rural members, even on your side, are going to have similar problems. I noticed that our Chair yesterday lost two social services offices in his district, and who knows what is to come in the health care. I fear for the two hospitals. Well, I do not have the fear for Fogo Island Hospital anymore, they have already announced they are eliminating ten beds out of that building before it is even opened. I fear what is going to happen in Twillingate and New World Island.

Our Chair here today must have a fear of what is going to happen in Brookfield hospital, because for years, I know, the board in Gander was trying to swallow up all of these to keep the hospital alive in Gander. Now, with one major board in Central Newfoundland, we are going to have to fight off not only Gander, I say, but Grand Falls as well. I fear for our districts in the Central Region.

As I said to your colleague last night, we are going to take you through, heading by heading, in your budget estimates. We would like to know what is happening there. The reason we are doing it is not because of you or your officials, I happen to know a lot of your officials and have a great deal of respect for them, but your colleague, the Minister of Finance, made some statements in here and for awhile he used to make different statements outside of the House of Assembly, and now he is making statements in the House and contradicting himself later on. We need to go through word for word here in the Budget to actually determine whether or not he was being correct in his statements and not you. We will approach it that way, if you do not mind?

MS DUNDERDALE: Sure.

MR. REID: We can start with heading 1.2.01, Executive Support. It looks like you have laid some people off there. You have dropped from $1.2 million to $877,000.

MS DUNDERDALE: Under Salaries? We have dropped -

MR. REID: Three hundred and thirty-two thousand.

MS DUNDERDALE: This is a net reduction due to several factors. First, there are fewer executive and secretarial positions as a result of departmental restructuring. Second, funding is allocated for a new position of Chief Innovation Officer. Third, a Temporary Departmental Coordinator was hired in this area in 2003-2004 and this position is being maintained for 2004-2005. Fourth, a Special Projects Coordinator has been reassigned from elsewhere in the department to this activity, to work on the Red Tape Reduction Task Force.

MR. REID: I am sorry.

MS DUNDERDALE: That is Salaries, 01, under Executive support?

MR. REID: Yes.

MS DUNDERDALE: For 2004-2005?

MR. REID: Okay. Which positions have gone since the revised Budget? That is what I am asking. The revised Budget for 2003-2004 was $1.2 million, today it is $877,000, so obviously there were bodies there that are not there today.

MS DUNDERDALE: The difference there is due mainly to severance and unused leave payments to former executives. As well, a temporary Departmental Coordinator was hired during the year. That would explain that discrepancy between the budgeted and the revised.

MR. REID: It is not completely clear to me. You are saying the reason it was revised is because of that severance?

MS DUNDERDALE: Yes.

MR. REID: That means that some people have left?

MS DUNDERDALE: Yes, we have had an Assistant Deputy Minister and a director, two executive positions.

MR. REID: Which Assistant Deputy Minister was that, by the way?

MS DUNDERDALE: Larry Guinchard.

MR. REID: Okay.

Down in Transportation - which director? I am sorry.

MS DUNDERDALE: Bill Sterling and Ted Lomond. Ted Lomond was a contract position.

MR. REID: Even though you have reduced the number of employees there, it looks like, how come your Transportation and Communications has increased by $31,000 over the revised budget last year?

MS DUNDERDALE: The budget is increased there to more closely reflect historic costs of transportation in this area. The funds have been reallocated to that from Purchased Services.

MR. REID: Yes, but you would assume Transportation and Communications would go down if you eliminated three positions, but obviously it did not.

DR. HOUSE: The people who were eliminated, as it happened, did not travel very much so it did not have that much effect. What we are doing is going to bring it up to what the historical pattern is. There has been some inflation in the transportation costs, of course, over the years. The reason that the amount was a little bit less in the revised budget last year is that, with the election and so on, some of the trade visits did not take place that were expected. It went down a little bit from the original budget in 2003-2004, but we are trying to be realistic and put in the amount of money that we really think we are going to need in 2004-2005.

MR. REID: What type of things do you buy in 06 there, for Purchased Services?

MR. HOUSE: Sorry?

MR. REID: In 06, Purchased Services, $32,900. What types of things do you purchase there? What types of services do you purchase under that heading?

MR. CURTIS: That covers things like photocopier rentals for the minister's office and meeting costs, where the minister hosts meetings of various officials from across Canada, and entertainment costs incurred by the minister.

MR. REID: Well, the minister has under Purchased Services, $25,000, under her own budget.

MR. CURTIS: Sorry, I misunderstood your question.

This is for the executive area, where it covers again similar types of things, entertainment costs incurred by the executive when they go off to trade missions or host meetings for people having trade missions and trade shows and the like. It covers the rental of equipment and some minor advertising and things of that nature.

MR. REID: I know there was an election called halfway through the year, but you budgeted last year $43,000 and you only spent $7,000. This year you are gone back up to $32,900.

MS DUNDERDALE: There were a couple of trade missions cancelled also which accounts for that lower number.

MR. REID: 1.2.02, Administrative Support, Salaries, $135,000 in the revised budget last year and none this year.

MS DUNDERDALE: This is due to the requirement to provide temporary assistance in the Information Technology area and the general operations area.

MR. REID: Under Salaries, there is somebody gone there. Obviously there was a position eliminated, there is no money there.

MS DUNDERDALE: We had not budgeted for summer students in 2004-2005. Any summer students now that are going to be hired will be funded through vacancy management.

MR. REID: Are you going to hire any?

MS DUNDERDALE: Yes.

MR. REID: So, originally budgeted last year was $46,000 for summer students?

MS DUNDERDALE: Yes.

MR. REID: Obviously there were a lot more than that hired. I went to $133,000, and this year you are not budgeting any.

MS DUNDERDALE: No, the plan is to hire summer students through vacancy management.

MR. REID: Where is that, though? You say vacancy management, or vacancies in your management?

MS DUNDERDALE: Yes, vacancies that we have in the department that will not be filled over the summer on a permanent basis. We will hire students when we use that funding.

MR. REID: So you have budgeted for these vacant positions, as if they were filled?

MS DUNDERDALE: Yes.

MR. REID: There is no money within that division for Salaries, under Administrative Support.

MR. CURTIS: Basically, what the minister is saying is correct. In order to fund summer students this year, what the department is going to do is use any savings that will be realized as a result of people leaving during the year, the normal turnover in staff. If someone accepts a position somewhere else, in another department, or leaves the department and their position is held vacant for a few months or weeks or whatever, any savings realized as a result of that, some of those savings, will be used to fund students to whatever level, I guess, the department decides.

MR. REID: So, you are assuming and you have budgeted for positions?

MR. CURTIS: At the start of a year we do not know who is going to leave the department or who is going to move on to other positions, so we budget for the positions for the full year. There are always people moving in and out, so there are always delays in filling those positions and that results in some savings throughout the department.

MS DUNDERDALE: (Inaudible) a number of positions that people are moving on to other employment elsewhere and so on are vacant but will be filled. There are savings while we go through the process of advertising and screening new applicants and so on. The savings that we realize there we will use to pay our summer students.

MR. REID: It is a strange way of budgeting. You budget for a position and now you are saying that you are not going to fill the position so that you can hire summer students. That could cost as much if you go by the revised budget last year of $133,000.

MS DUNDERDALE: Well, we will not be hiring the number of students that were hired last year.

MR. CURTIS: I think the minister mentioned, all of that $133,000 was not spent on summer students. Some of it was used to hire some temporary assistants in the Information Technology division and in the general operations area to do some work in the department's registry. Those were temporary, one-time positions that will not be filled this year. It was up to $130,000, and only about $50,000 of it was spent on students.

MR. REID: Do you have any non-paid student positions, work-term students?

MS DUNDERDALE: Not right now.

MR. REID: Employee Benefits, what falls under that heading?

MR. CURTIS: Basically, that covers registration fees, like conferences and seminars. If anybody goes off and does a course it covers their registration fee. If somebody does, for example, a WordPerfect course or something like that. If departmental staff are injured at work and there are related workers' compensation costs, it also covers those costs. The salary of people is covered through government, but if they have any medical costs or transportation costs in order to attain medical services (inaudible).

MR. REID: No, transportation is already covered down there. What I find strange under this heading is this, you do not have any salary dollars. That is what it says right here. There are no salary dollars for anyone in that position or positions under Administration Support. Right now there is not a dollar budgeted for this year. Yet, you are saying you are going to hire summer students and put them in there. You are saying you are going to have the positions there this year even though it is not mentioned in your budget. Am I correct?

MS DUNDERDALE: You are referring to students again?

MR. REID: I am referring to whoever fills the positions where it says: Salaries, zero dollars. So, you are saying that you are going to hire some student positions until you - it just does not make sense to me that you have Employee Benefits of $18,700 and you have no employees. You have Transportation and Communications for these non-employees to the tune of $62,900 and you have Supplies for them for $24,000, and Professional Services for these employees for $25,000 and Purchased Services for these non-employees for $36,000. That seems to me that $424,000 is being spent on no employees there.

MR. CURTIS: I can understand your confusion on it. What this subhead captures is a lot of general administrative activities for the department. For instance, Transportation and Communications, the majority of that money is used to cover the department's postage costs in their entirety. So the entire postage cost for the department is charged to this subhead.

Employee Benefits, a large chunk of it relates to workers' compensation costs that are incurred by staff throughout the department who may be injured at work. A lot of these expenditures are budgeted in blocks because at the start of the year we do not know the individual breakdown of it.

MR. REID: Hold on now.

MR. CURTIS: This is common throughout government departments. There is an Administrative Support subhead where the costs that are spread throughout the department are budgeted, such as postage and workers' compensation.

The Information Technology amounts, which are the bulk of this subhead, covers projects that will be undertaken throughout the department (inaudible) system that will be used by all of the staff in the department.

MR. REID: Yes, but if you look under every other heading - like Policy and Strategic Planning in the next category there - you have all of these: employee benefits, transportation and communications, supplies and professional services. Under every one of your divisions here you have these figures. So how can you say that this spreads over the entire department when under each of the individual headings you have figures already in for these?

MR. CURTIS: The basic answer to that is, if you look at say just - to use your example of Policy and Planning, the Transportation and Communications there covers the travel costs and the phone costs of that division which are readily identifiable to that division.

MR. REID: Yes, I understand that.

MR. CURTIS: The Transportation and Communications cost under this Administrative Support covers things that are not readily assigned to each division, like postage and some other (inaudible).

MR. REID: For whom though, people in Policy and Planning?

MR. CURTIS: The postage cost of the entire department is located in Confederation Building. It is the postage cost for everybody located in Confederation Building, which will include several divisions. It does not include the regional offices because their costs are also readily identifiable.

MR. REID: Yes, but you have Transportation and Communications under Policy and Planning for $46,700 and you have Employee Benefits for $4,300 for Policy and Strategic Planning but yet you have them all up in this Administrative Support as well. Do you understand what I mean?

MR. CURTIS: I understand what you are saying. Maybe I am not doing a great job of explaining it.

MR. REID: No, you are not. I am sorry.

Maybe we are arguing about nothing, but to me you are funding it twice.

MR. CURTIS: Let me approach it from a different angle. In areas like workers' compensation costs, at the start of the year we do not really know who may be injured at work and what their associated costs are going to be, so we try and budget a block under this subhead to cover off any potential costs that may come up. At the start of the year we do not know if somebody is going to be injured in Policy and Planning or in the Regional Economic Development Services area or in the Executive, so we put a block in Administrative Support to try and cover those things off.

The same thing with postage. We do not really know at the start of the year how much postage costs are going to be, but with postage the government system - through Works, Services - is not very good at tracking the postage costs by division, so we budget a block in one area to cover it off.

MR. REID: Why didn't you, for example, take those employees involved with the Policy and Strategic Planning division and put down employee benefits - why didn't you inflate the figure for employee benefits under that heading in case you had a workmen's compensation claim, rather than putting it all up here in one?

MR. CURTIS: That gets a bit difficult because, as I said, we do not know which divisions are going to have costs. So it would be sort of a stab in the dark.

We know, historically, that the department spends $20,000 a year on workmen's compensation costs but we have no real idea where that should be allocated. As I said, this is a common practice in all departments, that block funding is put in Administrative Support subheads to cover these things off that are difficult to identify up front.

MR. REID: What you are saying is there is $424,900 under Administrative Support, with the exception maybe of Information Technology, because I do not think they are listed under the other subheadings. So you have a couple of hundred thousand dollars parked there for the department for unforeseen circumstances. Am I correct?

MR. CURTIS: No, I would not say it is parked there to cover unforeseen circumstances. It is budgeted there because these are areas where it is difficult to break out the cost by various subheads.

MS FOOTE: That was not a negative. That was just a (inaudible).

MR. REID: It might be standard practice for the non-economist, or whatever you want to call your financial people over there. When you see zero salaries under a heading and you have $424,000 worth of expenses, you would expect someone to ask you a question on it. Right?

MS DUNDERDALE: Yes.

MR. REID: Whereas if I were doing the books on this and I was realizing that I might have problems with some sickness in Policy and Planning, then under Employee Benefits I would have put - instead of $4,300 I would have put $10,000, rather than sticking it up and parking it. What I mean by parking, is sticking it up in here in a division where there are no employees.

CHAIR: Excuse me now.

Would it be the wish of the Committee to take a short break or not? How much longer do you think you might be?

MS FOOTE: It could be all day.

MR. REID: So, all of those - is Professional Services under that heading the same thing? Transportation and Communications?

MR. CURTIS: Yes, generally these subheads and these budgets are similar types of things. They are block money where we do not know how to allocate it properly at the start of the year because we do not know where the expenses are going to be incurred throughout the department.

MR. REID: Slush fund.

AN HON. MEMBER: (Inaudible).

MR. REID: Well, it depends on what you mean by a slush fund. It just means that there is a couple of hundred thousand dollars that you can dip into if you have to send someone off to a conference that you did not budget for in the other divisions. Would that be the same for Purchased Services?

MR. CURTIS: With Purchased Services, what that covers are the photocopiers that are staying in Confederation Building which are used by everybody. It is hard to figure out which division to charge what percentage of the usage because everybody uses it. So, it is common usage. Again, it one of these things that is shared across multiple divisions. It is hard to allocate it to a specific division, because if you have three photocopiers that are used throughout the year by everybody in the department it is hard to figure out who used this much paper and who did these many copies. It is easier just to budget it all in the one place.

MR. REID: Yes, but under each of the other headings you have Purchased Services for that.

MR. CURTIS: The (inaudible) in the other divisions cover other things that are considered Purchased Services, like advertising and printing; things that you can easily say that this much of it relates to this division, whereas with a photocopier, as I mentioned, it is hard to tell who used how much of it.

MR. REID: Alright, I will let you out of that one. Let's go on to 1.2.03. Who did you hire under Salaries there?

MS DUNDERDALE: We have made provision for another trade analyst and it also provides for step increases. We only have one trade analyst in our department at the moment and we live in fear that something might happen to him because all the knowledge rests with him.

MR. REID: Step increase for? There is an increase of $100,000 so that -

MS DUNDERDALE: It is a fill-in position and a step increase. It is the sum total of that cost.

MR. REID: (Inaudible) step increases?

MS DUNDERDALE: Yes, step increases.

MR. REID: The step increase, is that for the individual you have hired or someone else?

MS DUNDERDALE: No, for everybody.

MR. REID: For everybody in that division?

MR. CURTIS: (Inaudible).

MR. REID: Okay, yes.

I guess the Purchased Services (inaudible). What is that about, do you know?

MS DUNDERDALE: Ken, do you want to speak -

MR. CURTIS: Purchased Services? I am sorry, what was the question about Purchased Services?

MR. REID: What do you spend $11,000 on in Purchased Services in that division?

MR. CURTIS: Basically, this covers printing costs, the rental of meeting rooms, the rental of equipment, the purchase of data from Statistics Canada. Just general purchase services that might come up during the year, advertising and things of that nature.

MR. REID: Obviously, you only spent $2,000 there last year, right? I guess there were another few shows cancelled, was there? It increased from $2,000 to $11,000.

MR. CURTIS: What tends to happen, you will notice, in a lot of these areas as you go through the budget there are ups and downs from year to year. These costs tend to vary from year to year depending on what is happening. Last year in this activity, they did not have a requirement for certain Purchased Services, and there was also, towards the end of the year, some curtailment of expenditures. What the budget figure tries to reflect for 2004-2005 is sort of the average historical cost in these areas. Even though it was down last fiscal year, the average cost has been around this amount, so the budget has been maintained at that level.

MR. REID: Thank you.

Under the next heading, Administrative Support, there was $20,000 spent on Property, Furnishings and Equipment.

MS DUNDERDALE: Which one?

MR. REID: 1.2.04, Administrative Support

MS DUNDERDALE: Property, furnishings and equipment? Beginning in 2004-2005, the Province decided to budget for the purchase of tangible capital assets under a separate subhead within each department, and in order to qualify as a tangible capital asset the purchase must be greater than $15,000. Basically, what that does is give us greater accountability for our assets. When we buy things we know what they are and where they are.

MR. REID: Again you have, under Minister's Office, Property, Furnishings and Equipment for $7,500. Under Executive Support you have $1,000 in there for Property, Furnishings and Equipment. Under Administrative Support, which is suppose to cover the whole department - am I right? At least all of the other headings are supposed to cover the whole department, where you do not really know who uses it. You have another $19,000 in property and furnishings, and now you have $20,000 right there.

MR. CURTIS: This particular subhead here is, as the minister indicated, starting in 2004-2005 the Province - and this is being initiated through the Comptroller General's Office - in order to more properly record and reflect what are called capital assets, which are fairly large assets with a value of $15,000 or greater, has decided to set up a separate subhead in the estimates to reflect how much is spent on those assets. The amounts under Furnishings and Equipment, say under the Minister's Office and Administrative Support, are meant to cover the purchase of smaller items of furniture and equipment, items that have a purchase price of less than $15,000. If the department went out and bought, say, a chair for the Minister's Office, or a desk, it would be budgeted under the Minister's Office, Furnishings and Equipment, but if they went out and bought a car or a four-wheel drive vehicle for one of its regional offices, which would be considered a capital asset, those assets are being reflected under this subhead.

MR. REID: All right. Do you want to take some questions from somebody else?

CHAIR: I just want to switch to the government members, to see if they have any questions for the minister.

RAY HUNTER: When the members are relating to specific headings and subheadings, if you would give the number of the heading, so we would know how to follow it. It gets a bit confusing when you are all over the place and you are trying to flick back pages to find the subheadings.

AN HON. MEMBER: (Inaudible).

RAY HUNTER: No, you just skipped it now. I am trying to find it. Maybe the titles, subheadings and the number.

MR. RIDGLEY: Just on the Property and Furnishings, Mr. Curtis, again. The ones under each department for lesser amounts than $15,000, would they be ticketed and tracked as assets?

KEN CURTIS: Yes, they are. Every asset that is purchased by government is assigned an asset number and recorded in government's inventory. What this new activity is trying to do is reflect those with a larger purchase price, and they would be reflected more clearly in government's financial statements and government's financial records. In 2005, there will a separate line showing how much government spent on what it considered capital assets. Now, a lot of those smaller assets are just picked up in the miscellaneous category as miscellaneous essentials by government.

MR. RIDGLEY: So, are they ticketed and tracked, the smaller ones, say something for $1,000?

MR. CURTIS: Yes, all of government's purchases are tracked and put into government's inventory system. Just in terms of the financial statements and government's financial records, the Comptroller General's Office starting, I guess, this year now, is going to reflect all of its bigger ticket items as a separate line in the financial statements. Whatever the total ends up being across government in capital assets, and the rest, the smaller assets, will be picked up as sort of a miscellaneous category.

MR. RIDGLEY: So, the smaller ones, $1,000 or $2,000 would be under a bulk category of -

MR. CURTIS: That is under the other categories of Furniture and Equipment.

MR. RIDGLEY: And then the bigger ones would be Furnishings and Equipment?

MR. CURTIS: They would be reflected in the financial statements as capital assets of the Province.

MR. RIDGLEY: Capital assets. Everything is tracked?

MR. CURTIS: Basically, the capital assets tend to have a longer use for life, whereas the smaller items are used for life. There is no depreciation of them because they do not last all that long. These assets will be set up with depreciation schedules and things like that, so they can be properly amortized in government's financial statement.

MR. RIDGLEY: Something like $1,000 would not be amortized?

MR. CURTIS: No, because of its insignificant, and its use for life is usually fairly short.

CHAIR: Does any other government committee member have a question? No. Okay, we will move back to the Opposition Committee members.

MR. REID: Trade and Investment on page 128, heading 2.1.01.01, Salaries, it has gone up, obviously. Have you hired someone there?

MS DUNDERDALE: We have not hired anyone, but the anticipated vacancies in this area are going to be lower than was reflected in the 2003-2004 budget.

MR. REID: Tell me that again, please.

MS DUNDERDALE: First of all, perhaps I should explain the revised budget for 2003-2004. That number was higher than was budgeted due to the retention of a temporary position and the payment of severance and annual leave entitlements to the estate of a deceased employee. That is why the revised budget went up. The estimates for 2004-2005 are higher because the number of anticipated vacancies is going to be less than was reflected in the 2003-2004 budget.

MS FOOTE: That means you have positions on paper that were not filled that are going to be filled?

MS DUNDERDALE: Yes.

MR. REID: That are going to be filled?.

MS DUNDERDALE: Are.

MS FOOTE: What position is that, Donna?

MS KELLAND: We have some industrial development officers there in both the trade and investment that we had carried vacancies for last year as well as anticipating a vacancy management factor. We were able to retain a valuable employee who was due to be laid off because we were running out of funds in another area. We kept her on by using that sort of vacancy management factor within the overall budget.

MR. REID: Under Purchased Services, 06, same heading, it has dropped by $446,000.

MS DUNDERDALE: That is due to the elimination of the "We're doing it. Right here." campaign.

MR. REID: Terrible!

What other Purchased Services are in there besides that one, though? Obviously you left some there for $609,000.

MS DUNDERDALE: There are also reduced expenditures on export development-related advertising.

MR. REID: So, that is what the $609,000 is for, the export advertising? Under 06, Purchased Services,. you are leaving $609,000 there. What are we purchasing under that, Donna?

MS KELLAND: That is the investment and trade promotion advertising budget and that runs us a little over $400,000 annually - I think it is $475,000 this year - as well as Purchased Services in support of our trade shows and exhibitions. That would include items when we are on the road in terms of paying for meeting rooms, paying for exhibition space and that type of thing, for a number of exhibitions during the year.

MS FOOTE: Professional Services here, that would be the engaging of consultants?

MS KELLAND: That would be engaging consultants for two purposes. One would be to do matchmaking for business companies during trade missions. The other part there is for a Provincial Nominee Program where we would normally hire a consultant to do background checks on applicants, things like financial social funds and those types of things. We did not use a lot of that in the last fiscal year because of the reduction in the number of applicants but we anticipate now, with the new units, that we will need to have that arrangement as well.

MR. REID: Investment Prospecting, 2.1.02, Grants and Subsidies, 10, you budgeted $447,000 last year, you only used $96,000, and it is back to around the same this year, $446,000. What types of grants and subsidies are these and why did they drop so much last year?

MS DUNDERDALE: They dropped last year because Network Newfoundland and Labrador did not require its entire operating budget last year, and the Near Shore Development IT initiative, that we talked about earlier, was delayed getting started and that had been budgeted for.

Donna, do you want to speak to that?

MS KELLAND: We budget, annually, $250,000 for Network Newfoundland and Labrador. Of that, $53,000 is a salary component, as you will see, and the balance would be for their operating costs. In the previous fiscal year, they had drawn down more money than they required and we had a balance overrun, so we did not have to pay them as much in the last fiscal year. Is that clear? Then, with Near Shore, as the minister said, we have another $250,000.

MR. REID: Strategic Industries Development, 3.1.01.01, the increase in Salaries from $588,500 budgeted in 2004 to $694,800.

MS KELLAND: This is due to the fact that there will be fewer vacancies in this area in 2003-2004, and an additional position has been retained to assist with research and analysis for the Strategic Partnership Initiative.

MS FOOTE: Can I ask, because you are talking about additional positions: How many additional positions have you hired in your department? Do you have a number?

MS KELLAND: What we have done here is - there is not a position being created for the strategic partnership, it is a secondment from another department. We then absorb the salary component. So it is an individual who has been assigned to us on a temporary basis and we would then budget for their salary.

MS FOOTE: How many new employees are there throughout the department? Do you have a handle on that?

DR. HOUSE: There are a number of positions that are not so much new positions as they are positions that have not been filled for a few years that we are hoping that we will be able to fill in the department and which have been budgeted for. At the moment, we are talking probably about ten or twelve positions of that type.

MR. REID: How many positions did your department decrease by? You mentioned three earlier?

DR. HOUSE: Well, there were three that were sort of contractual type positions, and then there were the three executive level positions that you mentioned. So, not that many really, although there are a number of other positions that are vacant that are not being filled. That is the way we were able to handle a lot of the pressure on our budget for this year. The reason that you keep them on the books, you know, is that you are hoping that, as the financial conditions of the Province improve, you will be able to fill some of those positions. As you know, there is still an official hiring freeze, which means that even when we do want to fill positions we still have to submit them and get Treasury Board approval for filling those positions.

MR. REID: You say that as the financial position of the Province improves you will be able to fill these positions, but you have budgeted for some of these positions, haven't you?

DR. HOUSE: We have budgeted for some of the positions to be filled.

MR. REID: It sounds like six are gone. How many are coming in do you figure this year? Did you say eleven or something?

MS DUNDERDALE: The Assistant Deputy Minister can answer that.

DR. HOUSE: We are hoping ten or eleven people might come in, but we cannot be sure.

MR. REID: For a net of four or five.

DR. HOUSE: Something like that.

MS FOOTE: If you have budgeted for them, then it has nothing to do with the fiscal position of the Province because, obviously, you have allocated the money for it, the money is there.

DR. HOUSE: Yes, but I am saying there are additional ones that are still kept vacant for that reason.

MR. REID: They are not in the budget?

DR. HOUSE: No.

MS FOOTE: I just have a question. As I looked through your Estimates, it would appear that in terms of what was budgeted for 2003-2004, in a lot of cases there were fewer dollars spent. Still, when I look at your Estimates for 2004-2005, you have gone back to or greater than the original budget for 2003-2004. I guess my question is: At a time when you are being asked to tighten your belt and find some fat in the system, were you asked to cut by a percentage to your department, by 5 per cent or 10 per cent, when going through the budget exercise?

MS DUNDERDALE: When we first came to government we went to a 10 per cent reduction.

MS FOOTE: Across the board?

MS DUNDERDALE: We looked across the department and we really curtailed spending in departments until we had an idea of where we were and how we were going to move forward.

MS FOOTE: That was prior to the Budget, was it?

MS DUNDERDALE: Yes, prior to the Budget. What you see reflected in the revised budget of 2003-2004 reflects that curtailing of those months that we were in government. Plus, there were a number of trade missions, a number of initiatives that were not - given the down time out of election and transition into government and so on, all of that is reflected in that 2003-2004 revised figure. Now that the department is back up to full speed again and we are moving forward we anticipate that we will need the traditional amount to do that work.

MS FOOTE: It is interesting, though, when I look at Strategic Industries Development, heading 3.1.01, Grants and Subsidies, the budget for 2003-2004, $435,500, revised, $220,000 for any number of reasons that you have already explained, but then we go back and the estimate for 2004-2005 is $336,100. At a time when so much emphasis is being put on growing the economy, do you want to elaborate on that, like why you would not have seen fit to- when I look at some others where I have seen the budgets go up, because of what their deputy said, inflation, why would that not have been the case for Grants and Subsidies in this very important heading?

MS DUNDERDALE: It is up substantially from the revised budget in 2003-2004.

MS FOOTE: Yes, but we have already indicated any number of reasons why those numbers were down in any other area.

MS DUNDERDALE: Yes.

MS FOOTE: But for this particular area.

MS DUNDERDALE: Why it is up?

MS FOOTE: No, why it would not have been higher, in fact.

MS KELLAND: This area is generally related to the Jobs and Growth Investment Fund which was, as you know, a special initiative fund that the previous administration had put in place to assist with special initiatives or projects to kick-start areas of the economy. As time went on that money was reallocated to special initiatives within the department that government wanted to proceed with on an ongoing basis. The Red Tape Reduction Initiative was an example of that. The business attraction, investment attraction piece, was also another example.

The Red Tape Reduction did not proceed in 2003-04, so there were some savings there which you will see largely is the difference. That has been restored for 2004-05. The business attraction funding was moved to another area, which is more consistent with the requirement. There was some amount of unallocated money under that fund which was offered up as part of program reduction.

MR. REID: Business Development, page 130, heading 3.2.01, Salaries: Like Judy said, for most of your budget you are trying to stay in line with what was budgeted from last year and not the revised. In this case your budget for last year was $499,000 for salaries and it down to $392,000 this year.

MS DUNDERDALE: That is due to the fact that a position in this division will be funded through federal-provincial agreement for 2004-2005, and there is also an anticipated vacancy.

MR. REID: Under Grants and Subsidies, what were those grants and subsidies for, because you look like you have lost $400,000 even out of the revised?

MS DUNDERDALE: That is due to the elimination of the Community Economic Development Program.

MR. REID: What did we fund under that?

MS DUNDERDALE: Pardon?

MR. REID: What did you fund under that?

MS DUNDERDALE: The Community Economic Development fund was not a fund that was advertised, generally, and my understanding is, because the fund was pretty much depleted when I got there, it was used to fund community-based initiatives around economic development.

MR. REID: I wish I had known about it.

MS DUNDERDALE: Your colleagues did.

MR. REID: I do not think I got any money out of it, Phil, did I?

MS DUNDERDALE: Yes, your district had a few things out of it.

MR. REID: Did we?

MS DUNDERDALE: Yes.

MR. REID: Under the Comprehensive Economic Development heading 3.2.02, Salaries have gone up from $627,000 revised to $789,000, but it was budgeted last year for $332,000.

MS DUNDERDALE: In the revised, 2003-2004, the increase reflects the allocation of approved funding for CEDA and the post-CEDA fund in order to cover project related salary costs during the year. That is why it increased in 2003-2004. Based on the experience in 2003-2004, we get the revised figure and the fact that some of the salaries that previously flowed through the Canada/Newfoundland and Labrador Labour Market Development Agreement, the LMDA, will be charged to this activity in 2004-2005, and salary expenditures will increase in 2004-2005 in comparison with the previous year.

MR. REID: The Professional Services have dropped from $500,000 under that same heading. What types of professional services did we have under that and why are we not required to have so many this year?

MS DUNDERDALE: They increased under the revised budget due to the fact that a greater portion of the post-CEDA block allocation was spent on professional services. More was spent than was anticipated. When the 2003-2004 budget figures were prepared -

MR. REID: Yes, but what type of professional services are we talking about?

MR. MCCARTHY: Some of the Professional Services would be some projects that were done under the Comprehensive Economic Development Agreement.

MR. REID: Would that be engineering fees and things like that?

MR. MCCARTHY: Yes, engineering consultants, economic consultants and things like that, based on projects.

MR. REID: All right. Under Grants and Subsidies, we have gone down from $9 million to $7 million to $3 million.

MR. McCARTHY: That is a reflection that the Comprehensive Economic Development Agreement is winding down.

MR. REID: You are budgeting $3 million, though.

MR. McCARTHY: Yes, there are some projects that will carry into this year just for final payout.

MR. REID: That is not new money then?

MR. McCARTHY: No, it is not new money.

MR. REID: It is all committed.

MR. McCARTHY: Yes.

MR. REID: Too bad. I thought I might have a go at that.

Under the Canada/Newfoundland Agreement, I guess the reason there is no money in that is that we have none. There is none there, is there? On page 131, Business Development (Cont'd).

MR. HOUSE: Subhead 3.2.03?

MR. REID: Yes.

DR. HOUSE: That is over.

MR. REID: That is the money that we had in that post-TAGS agreement?

DR. HOUSE: Yes. That is gone.

MR. REID: Under Comprehensive Economic Development, Professional Services, this is another one of these this gentleman might want to answer for me again. It looks like there is a program or a division or something here with no employees and yet we have Professional Services and Purchased Services and all of that. What is going on there?

DR. HOUSE: (Inaudible) better off to answer that one.

That is a project under the Comprehensive Economic Development Agreement. That is actually the wharf in Charlottetown. There are professional fees that have to be incurred and then the work will be done. That is actually under the CEDA agreement.

MR. REID: Basically, it is all done outside?

DR. HOUSE: Yes.

MR. REID: Charlottetown, is it?

DR. HOUSE: Yes.

MR. REID: On page 132, Business Incentives, there is a Salaries decrease there from what was budgeted to what was revised down to $546,000.

MS DUNDERDALE: There were a number of vacant positions in that division 2004-2005. The budget reflects that.

MR. REID: Under Grants and Subsidies, you dropped by $5 million there. What types of things did we do to Grants and Subsidies in there?

MS DUNDERDALE: We are talking about wage rebates for call centers. The requirements for call centre wage rebates will be down in 2004-2005 because of Help Desk Now in Grand Falls and HMC in Gander, because they have reached the end of their wage rebate contracts.

MR. REID: We were subsidizing those two call centres to the tune of $4 million to $5 million?

MS DUNDERDALE: Yes.

MR. REID: Any word on whether or not they may get new contracts in Grand Falls or Gander?

MS DUNDERDALE: We are working very closely with the town and with the EXCITE Centre. We have to be careful, we certainly do not want to do anything to undermine the company that is presently there, Mr. Fred Riek, we certainly do not want to do anything to undermine his efforts, but we have offered the full support and services of our department as well as Network Newfoundland and Labrador to move in and support and help them find new customers.

MR. REID: Do you foresee this happening in other areas of the Province? Is there any indication that these companies are not getting the contracts that they previously had, or is this just an incident in Grand Falls that is sort of separate from all of the rest of the call centres?

MS DUNDERDALE: I think Grand Falls is set. All of the other call centres are doing very well right throughout the Province. Grand Falls seems to be the anomaly. It was set up in a different kind of way, from the beginning.

MR. REID: They do not compete with each for the same contracts, do they?

MS DUNDERDALE: Not that I-

MS KELLAND: No, generally not. We are careful too, when we do look attracting individual call centres, that they are not direct competitors. That is why we encourage them to go to different communities, as well.

We are almost to the end here. Let's go down to the next one. You have gone back to your loans, under the Strategic Industries Development Fund, you have gone back to what was originally budgeted last year, and down $1 million from what was actually spent.

MS DUNDERDALE: Yes. These funds were reallocated from savings elsewhere in the department to cover strategic business investments like Hurley Slate, Bloomfield Lumber and Griffith's Guitar.

MR. REID: Hurley Slate, is that out in the Clarenville area? Is that up and running now?

WITNESS: They are in the process of getting back up and running, yes.

MR. REID: Under Salaries in 4.1.01, it looks like you lost a position there. Is that correct? Or you had some positions there last year that you did not -

MS DUNDERDALE: The reduction in the 2004-2005 Estimates reflects anticipated vacancies throughout the department in 2004-2005. The department plans to manage vacancies in order to achieve salary savings in various areas of the department. The same thing, the slight decrease you saw in the Revised Budget 2003-2004 was also due to vacant positions during the year.

MR. REID: I am somewhat confused, because your Deputy said a few minutes ago that you were anticipating hiring more people but under most of those headings we have talked about it looks like you are actually losing people.

MS DUNDERDALE: There have been a fair number of vacancies held in the department for a number of years. Some of those we are still maintaining, some of those we are trying to fill.

MR. REID: Page 134, 5.1.01.05, Professional Services has gone from $7,000 to $157,000.

MS DUNDERDALE: There is an additional funding of $200,000 there that we announced in our budget for the development of an innovation strategy in the Province.

MR. REID: That is going to be -

MS DUNDERDALE: Done.

MR. REID: Outside?

MS DUNDERDALE: No, it is the new Assistant Deputy Minister of Advanced Technologies who will come into our department. He will lead that development of that innovation strategy, or she.

MR. REID: Yes, but why would you call it Professional Services?

MS DUNDERDALE: Because some of the pieces of that may need to be contracted out.

MR. REID: Yes, because if you are coming into the department it would be under the salary heading, wouldn't it?

DR. HOUSE: I did not get the question.

MR. REID: Your minister said under Professional Services it is talking about an employee coming into your department.

DR. HOUSE: No. What we are saying is that the ADM for Advanced Technologies will also act as the leader for developing this innovation strategy but a lot of the work will be done by professionals that we would hire, and we would do this in partnership with federal agencies as well. The Professional Services there would be the pieces of work that is contracted out, but the leadership would come from the ADM.

MR. REID: I am finished.

That is it for me, Mr. Chairman.

CHAIR: Ms Foote.

MS FOOTE: I would like to get back to some general questions and ask about the xwave contract and if that is continuing to work?

MS DUNDERDALE: Yes, xwave, they are in compliance with their industrial benefits agreement, with the exception of about thirty jobs internally. Otherwise, they are meeting all of their requirements.

MS FOOTE: Were they not supposed to have already been compliant at this point in time?

MS DUNDERDALE: There is still a question of compliance around the internal job creation.

DR. HOUSE: What has happened, as you are aware, under the xwave agreement, is that basically the downturn and the restructuring that has been required in the IT sector since the renewed agreement was signed has made it extremely difficult for xwave to be able to meet its employment targets under that agreement. We are now in discussion with xwave about how to deal with that. The most straightforward way to deal with it is simply they would have to pay a penalty. So they can still be in compliance, in a sense, by paying the penalty.

What we are trying to do is to try to think if there are other more constructive ways in which they would partner with the government to - it is not settled yet, but possibly develop a little investment fund for the IT sector that they would contribute to in a partnership role with government to sort of compensate for the fact that they have not been able to create the number of jobs that they were hoping to create. It is still in negotiations. We are not quite sure exactly how that will turn out but we have to recognize that there is a real problem there. We cannot expect them to create jobs just to have people sitting on benches with nothing to do. The simplest thing would be to say just pay the penalty. That would get a little bit of revenue for government but it would not do much for developing the IT sector. So we are trying to look for more constructive solutions to that.

MS FOOTE: I guess what the local IT sector would tell you is that, get out of the contract. Are you still hearing that from NATI?

DR. HOUSE: Yes, we have discussed that with NATI and NATI are not really saying we should finish off the contract with xwave right now. They are part of this process of consultation or trying to mutually come up with some kind of an approach to things that would be to everybody's benefit. That is what we are working on right now.

MS FOOTE: I cannot recall, is it a year left in that contract?

DR. HOUSE: No, it is more than a year. I am not sure exactly, offhand.

MS DUNDERDALE: Three years.

MS FOOTE: Left?

MS DUNDERDALE: I think so. I am not absolutely sure. I would have to check it but that is my recall right now, 2007.

MS FOOTE: Okay.

I am also curious about bonding composites in Gander and where that is.

MS DUNDERDALE: They are in full compliance and things are going extremely well there.

MS FOOTE: They have some new contracts?

MS DUNDERDALE: Yes. My understanding is that things are working very well there indeed, and they have met all their commitments to government.

MS FOOTE: Again, that is certainly a growth industry for us. It is good that one is working out.

Do you know something that the minister does not know?

WITNESS: No, nothing.

MS FOOTE: I guess I cannot let this opportunity go without addressing Dr. House, if I am allowed to do that, Mr. Chair, because it reflects on what I think is wrong with the approach that I think the government is taking and my fear for rural Newfoundland. I just want to get it on the record and I guess get a response to it. That is your comments with respect to the dependency of Newfoundlanders and Labradorians on EI and job creation monies and sick leave, and the fact that we feel we have an entitlement to those particular benefits. I would be very concerned if anyone thought that Newfoundlanders and Labradorians want to be on EI or want job creation monies or think that sick leave is anything other than what they use when they are sick. I am really concerned for rural Newfoundland and Labrador under that kind of cloud, if that is the leadership that is going to come out of the Department of Innovation, Trade and Rural Development. By leadership, I think we all know that deputies play an important role with the minister of a department.

I would just like your response. I do not know if it is true, but I heard that you have been told not to say that anymore but, at the end of the day, I would be very concerned if that was being repeated.

DR. HOUSE: I will address your last comment first. No, I have not been told not to say anything. I think I have been very well treated so far by the minister and the government in terms of what I can and cannot say.

I guess my answer to what you are saying is that I believe all Newfoundlanders, in all regions of the Province, in rural parts of the Province as well as other parts of the Province, are wanting to create viable private sector businesses, enterprises and meaningful jobs for people in all parts of the Province. So the emphasis, in terms of our approach to rural development, has got to be - as the minister mentioned earlier - to help people get mobilized within the regions to identify the ways in which that can be achieved and to work out with government what way government can best contribute to that process. So the emphasis is on active programs to provide long-term, meaningful, private sector or co-operative sector, or even, in some cases, public sector employment for people. That is where the focus has to be. That is the message that I will be supporting the minister in as we travel around the Province and do these consultations and try to develop these approaches to development.

MS FOOTE: Yes, and that is good. I mean that is the same message that every minister who has ever been in the department would carry, I think. I believe that we have a lot to offer and, I think, particularly in rural Newfoundland and Labrador. I do not think your message is any different than what we have all been preaching who has ever had the opportunity to lead that particular department, or its predecessor. I guess I would just be concerned if there was some kind of feeling or belief that Newfoundlanders and Labradorians think otherwise. You know, think that they do not need to work or they work long enough to get EI or they only want job creation money. I guess it was those comments that really threw me for a loop because my understanding of where you have always come from is certainly to grow the economy if given the opportunity to do so.

DR. HOUSE: For sure. The whole emphasis, as far as I am concerned, is how do we provide the opportunities for people who are dependent on those kinds of ways, through no fault of their own, to move into more meaningful long-term employment?

MS FOOTE: I think that is the key: through no fault of their own. As long as we recognize that and keep it in mind when we are out there looking at what is happening in rural Newfoundland and Labrador, that we all want it to survive because it is, in fact, the soul of our Province.

Thank you.

CHAIR: Thank you, Ms Foote.

Before we call for the vote on the subheads, are there any further questions from any member of the Committee? Mr. Joyce.

MR. JOYCE: I will just be a few minutes. I am going to (inaudible) but we have a briefing from the Executive Council on funding that is in for the Bay of Islands for each individual district through the freedom of information. I think under the Community Economic Development fund there was funding put in last year for a wharf in upper marina in Summerside. I am sure Phil is familiar with it. It was told that the funding is still there in place waiting for ACOA to come onside. Phil, is that funding still there and how much? I think it said $30,000 when I got the information from -

MR. McCARTHY: Summerside marina?

MR. JOYCE: Yes.

MR. McCARTHY: Twenty thousand dollars.

MR. JOYCE: And it is still there waiting for the -

MR. McCARTHY: Yes, that was part of what was carried over.

MR. JOYCE: I will not go through each question but I will ask the minister if she will take it upon herself, in the next week or so - because I do not want to waste everybody's time here.

You mentioned that there are ten to twelve new people being hired. Would the minister take it upon himself to just forward me a copy of what the positions are and who has been hired? That is one.

DR. HOUSE: Just to clarify, let me say there are no positions that have been hired so far. These are positions that we have budgeted for and we will be proposing, through the Treasury Board process, that these positions be filled. We are hoping that they get filled, obviously, but we do not know whether they will or not. We can certainly provide you with a list of what they are.

MR. JOYCE: The second thing is, if you can provide me with a list, if there are any new positions being hired in Corner Brook or if there are any layoffs in the office in Corner Brook.

The third thing that I would ask - then again, it is no good to go through it here because it will take too much time. In each subhead there is Professional Services. If you could give me a breakdown of who has been hired so far and what funds are for each different subhead ,instead of having to go through it. If you could give me a breakdown, if there are any Professional Services already hired or which ones have already been awarded.

The last thing I will ask for is: Subhead 3.2.04, on page 131, the Professional Services and the Purchased Services. Professional Services is $100,000, which I am sure are engineering fees or whatever. It is subhead 3.2.04, page 131. I will just ask for a breakdown of what those services are.

MR. McCARTHY: That is all related to the wharf in Charlottetown that is done under the Canada/Newfoundland and Labrador Comprehensive Economic Development Agreement.

MR. JOYCE: Yes. If you could just give me a little one paragraph thing on that.

MR. McCARTHY: No problem at all.

CHAIR: Thank you.

Mr. Reid.

MR. REID: A final couple of questions to Dr. House. In response to a question that my colleague asked him, he talked about getting people mobile within a region.

DR. HOUSE: Sorry, I did not say mobile, I said mobilized. It is different thing.

MR. REID: Okay, mobilized. In these regions that you are talking about, do you look at it as having centres in these regions that people could become mobile towards?

DR. HOUSE: No, what we are saying is we want to meet and work with people in the regions themselves to determine what approach they think is best for their region as they look to the future in terms of their development. Whether or not they feel that there should be anymore concentration of services in certain communities or others or whatever is something that will be determined in the process. We are not going in with an agenda in terms of whether we should be centralizing people in certain communities or whatever, no.

MR. REID: It has been my experience that when you are talking regions - and this has been going on for quite some time. It goes back to what I have been talking about, moving services from my district into the larger urban areas in my region, Central Newfoundland. To go back again to what I said, with the consolidation of the school boards and the health boards in Central Newfoundland, I see services in that whole Central region going towards either Gander or Grand Falls and away from the more rural areas of that region. As a result, you are going to see people move from the more rural areas into those larger urban areas. Do you see that happening and is that a good thing or a bad thing in your estimation?

DR. HOUSE: My own personal estimation is that it is not a good thing to have people moving out of rural parts of the Province. Some of the issues that you are talking about here are beyond the mandate of our department and certainly of me, as a Deputy Minister. Our approach is going to be - and you will see in terms of our own department, we have not concentrated the services that we are offering in any urban areas, in larger towns, or whatever. It is our philosophy, if you will, that we want to develop all parts of our Province. Now it is true, and you will find this internationally, that the jurisdictions in the world that have the healthiest world development, at the moment, are areas in which there are also healthy urban or larger town kind of development within the same region. This is why it makes sense to look at it from the point of view of regional approach to development as opposed to just urban or just rural or whatever. We need to look at, you know, the Great Northern Peninsula as a whole and work with the people on that Peninsula to determine, with them, how they see the future development in that region of the Province occurring.

CHAIR: No further questioning from the Committee members? Okay. I will ask the Clerk now for the subheads.

MR. RIDGLEY: Mr. Chairman, a comment on something that was mentioned earlier in terms of the budget for 2003-2004 and the revised figures for 2003-2004. The reference was made that, in many cases, the Estimates went back to the original budget and, in fact, of the eighteen subheads that are there, which we will be voting on now in a minute, in seventeen of the eighteen subheads the Estimates were less than the original budgeted figures for 2003-2004, and in twelve of the eighteen cases, the Estimates are less than the revised budgeted figures for 2003-2004. I am not sure that it is a correction of anything, but I would not want the impression left that the Estimates here have gone back to the original budgeted figures and equaled or was greater than them. In fact, in seventeen of the eighteen cases the Estimates are less than the original budgeted figures.

CHAIR: Thank you, Mr. Ridgley, for that observation.

No further questioning?

I ask the Clerk to call the subheads.

CLERK: Subheads 1.1.01 to 5.1.02 inclusive.

CHAIR: Shall subheads 1.1.01 to 5.1.02 carry?

AN HON. MEMBER: Carried.

CHAIR: Carried.

On motion, subheads 1.1.01 through 5.1.02 carried.

CHAIR: Shall total heads carry?

AN HON. MEMBER: Carried.

CHAIR: Carried.

On motion, total heads carried.

CHAIR: Shall the Estimates for the Department of Innovation, Trade and Rural Development carry with no amendments?

AN HON. MEMBER: Carried.

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

CHAIR: At this point in time, I would like to thank the minister and her officials for coming here this morning. They are very well prepared, I must say, and did a commendable job.

MS DUNDERDALE: Thank you.

CHAIR: I would also like to thank the members of the Committee for their - what I saw last night and continued again this morning - no shortage of questions.

MR. REID: Very informative, though.

CHAIR: It was really good, I must say. I will comment further after another four meetings.

I would also like to thank the staff of the House of Assembly for being here this morning. One reminder, that this evening at 7:00 p.m. we are meeting again to discuss, debate, the Estimates for the Department of Environment and Conservation.

I ask for a motion to adjourn.

AN HON. MEMBER: So moved.

WITNESS: Try to get us out of here before 12:00.

CHAIR: Okay, that is a promise.

On motion, the Committee meeting now stands adjourned.