The Committee met at 5:30 p.m. in the Executive Dining Room, West Block.

CHAIR (Mr. Harding): Order, please!

I guess we are ready to begin. First of all, I would like to welcome you as we debate the Estimates for the Department of Natural Resources.

We will follow the same procedure as we have done with other meetings, that after the Clerk calls the first subhead the minister will have up to fifteen minutes to introduce her officials and to give an overview of her department's estimates for the coming year. After that, the critic or the Leader - in this case now the Leader of the Opposition - will have up to fifteen minutes. Then, we will alternate with the other members on the Committee if they want, up to ten minutes each.

I would also like to remind the officials with the department that if you are asked to speak by the minister, to respond to a question or whatever, if you would identify yourself each time so that Hansard can record the proceedings.

The first thing we will do is adopt the minutes of the previous meeting. I will ask for a motion now for adoption of these minutes.

MR. BAKER: So do.

CHAIR: Moved by Mr. Baker, seconded by Mr. Verge that the minutes of the previous meeting, the Department of Business, the minutes as circulated be adopted.

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, minutes adopted as circulated.

CHAIR: I will ask, first of all, the Committee members to identify themselves and the district for which they represent.

MR. BAKER: Jim Baker, Labrador West.

MR. HUNTER: Ray Hunter, Grand Falls-Windsor-Green Bay South.

MR. DALLEY: Derrick Dalley, The Isles of Notre Dame.

MR. VERGE: Wade Verge, Lewisporte.

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

CHAIR: And the other people in attendance, could you identify yourselves?

MS CAMPBELL: Lori Ann Campbell, researcher.

MR. LONO: Simon Lono, researcher with the Opposition Office.

CHAIR: Thank you very much.

I will ask the Clerk now to call the first subhead.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01.

Shall that subhead carry?

I will ask the minister now to introduce her officials.

MS DUNDERDALE: Thank you, Mr. Chair.

I am going to begin by having my staff introduce themselves and give their positions. I will start on my right and have the Energy and Mines Branch introduce themselves first.

MR. KIELEY: Chris Kieley, Deputy Minister of Natural Resources, Mines and Energy.

MR. WARDLE: Dick Wardle, ADM, Mines.

MR. TOBIN: Pierre Tobin, Associate Deputy Minister of Energy.

MR. BOWN: Charles Bown, Assistant Deputy Minister of Energy Policy.

MS DUNDERDALE: Now from my Forestry and Agrifoods Agency, beginning with the CEO.

MR. MOORES: Len Moores, CEO, Forestry and Agrifoods Agency.

MR. DEERING: Keith Deering, Assistant Deputy Minister, Forestry Services Branch.

MR. WHALEN: Jeff Whalen, ADM, Agrifoods.

MS DUNDERDALE: With me also, I have my Communications Director, Tracy Barron.

MR. IVIMEY: Philip Ivimey, Director of Finance and General Operations.

MS DUNDERDALE: Thank you very much, Mr. Chair, and thank you to everyone for being here to discuss our Budget Estimates.

I will begin by providing you with an overview of the Budget items as they relate to the Department of Natural Resources and the investments we are making in these resource industries over the coming year.

Each of the four sectors under my department are in different stages of evolution and that is why it is so important to be strategic with our programs in support of these sectors.

We are all aware of the downturn in the forest and pulp and paper industry and the impact that this has had on forest industry workers and related businesses in this Province. We are addressing the challenges faced by this sector by providing major new funding to restructure the industry.

We have a total Budget this year of $49.3 million, an increase of about $10 million from last year.

We have initiatives to assist the forest industry to diversify and compete in the new global economy. This is in addition to the year over year support we provide to the industry to maintain essential supports, such as silviculture programming and forest access roads.

I will not get into the specific details of the $14 million I have already announced for initiatives to be undertaken this year, that I announced two weeks ago, because this has all been in the public domain, but I will say that of the $14 million, $4 million is being transferred from the Community Development Trust, which is a federal government program.

Continuing investments reflected in this year's Budget include an increase of $1 million for silviculture activities for the third year in a row, bringing the total annual budget to $10.4 million. We have also maintained the Resource Roads budget at $4.2 million and we are spending $350,000 to renovate the forestry office in Roddickton.

Given the success of our enforcement efforts in protecting our woodland caribou herds this winter, we are also continuing our dedicated funding of $69,300 for increased helicopter patrols of the Quebec-Labrador border.

While the forest industry is in a period of transition, the agriculture and agrifoods industry in this Province is growing steadily every year. Our initiatives in this industry reflect the growth opportunities that have been identified in this sector.

Investments in the development of new crops, improved soil conditions, land availability and research and development are assisting farmers in overcoming the unique challenges involved in working in this industry in this Province. In the area of new crops, the rapidly developing cranberry industry is getting $2.95 million this year to provide for new plant propagation, site development and specialized equipment.

We are also providing the Agrifoods Development branch with $1 million for research and development activities focusing on the development of new and improved crops, such as livestock production systems.

The new $5.4 million Aleutian Disease Management Program will help mink farmers to manage the disease through animal replacement, carcass disposal, disinfection and bio-security enhancement assistance. This funding program has been very well received by the industry.

Our $10 million Farm Loans Guarantee Program will help farmers to access capital from financial institutions to grow their operations and become more competitive. It can be used for land development to assist new entrance to the industry and to develop the perennial crop sectors.

We are also investing $2.3 million in the Land Development program again this year.

We also have significant funding this year for new positions for the branch, as well as for positions and services that were previously funded under the federal-provincial cost-shared agriculture policy framework. Basically, we are spending $618,000 to enable a larger portion of APF funding to be directly available to farmers.

In recognition of the growth of the sector, we are spending another $556,000 to support human resource staffing to ensure the effective management of new and expanded programs.

We are also continuing the $4 million investment in the Agriculture and Agrifoods Development Fund to assist in the development, diversification and expansion of large scale agricultural projects. This is the program that assisted in the development of new egg grading facilities, the expansion by Brookfield into a premium ice cream line and the establishment of a cheese processing facility at Central Dairies.

Some of the smaller budgetary items include $130,000 to construct a new garage at the provincial agriculture building to store veterinary emergency vehicles and another $292,000 to upgrade the fleet of vehicles used by the Agrifoods Development Branch staff.

We have also earmarked $2.6 million for our 40 per cent share of the Growing Forward Continuity Agreement. This is the transition agreement between APF and the new five-year cost-shared agreement between the Province and the federal government.

In the Mines Branch we are focusing on increasing the Province's mineral sector competitiveness through improving our knowledge of the mineral resource base and improving service delivery. We have had an average of one new mine a year for the last four years and we have seen record breaking levels of mineral exploration and shipments. To maintain this growth we are providing $1 million this year for new geological mapping of which $800,000 is going to projects in Labrador.

We are continuing our record level funding of $2.5 million for the third consecutive year for the Mineral Incentive Program, and through the Office of the Chief Information Officer we will be spending $500,000 over two years to develop and launch a new on-line system to speed up the approval of mineral exploration plants. We believe these initiatives are helping the Province to successfully compete for global mineral investment. In fact, exploration expenditures in 2007 reached an all-time high of $138 million.

Funding for Energy Branch reflects our long-term vision for the Province's energy resources as outlined in our Energy Plan. The $12 million allocated in last year's Budget for the implementation of the Energy Plan has been carried over and will be spent this year instead. This is a result of the timing of the Energy Plan release followed by the general election. The time remaining did not permit the money to be spent in the fiscal year ending March 31,2008, so we are simply carrying it over. Instead of $35 million over the three-year period starting from 2007-2008 to 2009-2010 we will spend the money over the three-year period extending to 2010-2011.

In addition to the $12 million carried over from last year we have an additional $1 million for the Petroleum Exploration Enhancement Program bringing the total to be spent implementing the energy plan this year to $13 million.

Initiatives that are being funded this year include energy efficiency programs, the collection of geoscience information and planning for major projects on the horizon.

Our investment this year of $215 million in the Province's Energy Corporation was already announced. This covers the 2008 financing requirements for Hebron, White Rose and the Lower Churchill project. We are also providing Newfoundland and Labrador Hydro with a $100 million equity investment. Hydro is not a strong and viable company from a balance sheet point of view. We compared it to other utilities across the country, and this pay down of debt puts the company in a stronger financial position. This is consistent with our plan to have the company less dependent on the provincial government for its financial requirements.

We are also spending a significant amount of money this year to prepare the Bull Arm Site for the major resource projects on the horizon.

In addition to the $1.2 million annual operating grant to the corporation we are investing another $2.75 million on maintenance, upgrades and establishment of a new management structure and essential expertise. The new staff will include several senior engineering and technical professionals to advice and manage the facilities as these major projects come on-stream, and they will be in addition to the current basic caretaker staff. This is a transition period for the site as we prepare for its optimal use during construction of these projects, and we want to ensure that we have the best structure and people possible. I cannot get into a whole lot more detail at this point, but I will provide additional information as we move forward with positioning the site for the future.

In terms of other investments we are spending $500,000 for professional services to expedite royalty audits. This ensures the Province is getting the appropriate benefit from our resource projects. We are also tripling the size of the CNLOPB core storage facility by partnering 50-50 with the federal government. Our share for this year is $400,000.

We are also contributing $4.5 million to Hydro's Ramea Wind Hydrogen Power Generation Demonstration project. The objective of this project is to combine new renewable energy with conventional power to supply Ramea and other remote locations in the Province. If successful this could be an option down the road for our isolated diesel communities.

These are some of the highlights of our department's budget this year. We are really pleased with the investment we are able to make in these resource sectors and we are here to answer any specific questions you might have on any of these issues.

Thank you, Mr. Chair.

CHAIR: Thank you, very much, Minister Dunderdale.

Ms Jones.

MS JONES: Thank you, Mr. Chairman.

I certainly thank the minister for her opening comments.

I would like to say, Minister, if my questions are somewhat repetitive to your presentation I do apologize because it is oftentimes hard to match what you are saying with the actual Estimates, while you are going through it. If you could be somewhat tolerant that that will happen I would appreciate it.

MS DUNDERDALE: No problem. I am happy to provide you with whatever information you require.

MS JONES: Okay.

I am going to start with the Estimates under heading 1.2.01. That would be the executive support staff within your department. Last year the salaries were vastly overspent in that particular department versus what was actually budgeted for. I am wondering if you could provide me with an explanation as to what the reasoning for that was.

MS DUNDERDALE: The variance was due to salary continuum pay, severance and vacation pay for former deputy ministers in the amount of $270,000, severance and vacation pay for retired ADM of Royalties and Benefits, $125,000, and as well, salary expenditure for a commercial advisor which is $100,000.

MS JONES: What is a commercial advisor? What would their job be?

MS DUNDERDALE: It is in terms of our negotiations around Hebron and White Rose.

MS JONES: That was a salary position, not a contract, was it?

OFFICIAL: A salary position under a contract, yes.

MS JONES: The people who took their leave last year, what positions in your department would that have been, for severance and -

MS DUNDERDALE: The Deputy, Bruce Saunders, and the ADM, –

OFFICIAL: The ADM of Royalties and Benefits, Brian Condon.

MS DUNDERDALE: - Brian Condon, both retired.

MS JONES: I guess that would explain why the Employee Benefits, although they were projected at very low numbers - I wonder why the Employee Benefits are projected so low under that estimate when there is a high salary. Usually they fall within line. Is that budgeted for somewhere else? For example, in your own office where you would be spending about $280,000, there is $1,700 budgeted for benefits, but in this department where you are spending nearly $1.7 million there is only $3,700 budgeted. I am just wondering where that line item would come from to pay that.

MS DUNDERDALE: My note tells me that in terms of that heading most of that Employee Benefits include registration fees for seminars and conferences, ministers' conferences, oil and gas symposium and so on. That is what that heading covers off. So in terms of where some of the meetings – more meetings were attended and some of the meetings were further away, for example, in BC, than we anticipated. You do not always know where your FPTs are going to be. That is the heading where we pay our registration fees and support employees to attend those conferences.

MS JONES: Under Transportation and Communications you overspent by nearly $100,000. I was wondering what that was for; something that you did not budget for in particular.

MS DUNDERDALE: Well, a number of things; Hebron negotiations for one thing, because they take place outside the Province as well as within the Province. There were several ministers' conferences, a ministers' conference in B.C. as well as a symposium in Halifax. As you know, my Forestry and Agrifoods Agency is located in Corner Brook which requires a lot of travel by my senior executive, especially in terms of the things that we have had to deal with in the last year, so that is the (inaudible). Every time they come it is a costly exercise, because face-to-face meetings are required and as a result of having the agency situated out there, there are more travel costs associated with that as well.

MS JONES: You did not maintain the revised expenditure though, it is down again this year. It went up to $326,000 as you say because of Hebron meetings outside the Province and Forestry people on the West Coast coming back and forth, but there is no revision for it this year.

MS DUNDERDALE: No, and we are going to try and live within our budget this year.

MS JONES: Under Purchased Services, under the same heading, again another situation where the budget increased under revisions by $10,000: can you tell me what additional services were purchased that were not budgeted for?

MS DUNDERDALE: Well, my note tells me that we had an increased requirement for purchased services such as printing, advertising, promotion, facility room rentals, paper shredding services, photocopier rentals and other miscellaneous purchased services.

MS JONES: Was that related to any particular file or aspect of your department?

MS DUNDERDALE: Not that I am aware of. I think it was generally across the department.

MS JONES: The Property, Furnishings and Equipment, what does that include? Can you explain what –

MS DUNDERDALE: The bulk of that is for a new photocopier for the executive office and we had some furnishings and equipment. We had a couple of new boardrooms in the building, so that was furniture and equipment for those.

MS JONES: We will move on to the next heading, 1.2.02, Administrative Support.

This concerns financial and operational activities of the Department of Natural Resources and Fisheries and Aquaculture. Can you explain why it would include Fisheries and Aquaculture? Is there one financial expenditure under administration for those two departments?

MR. KIELEY: Yes, the one financial operations group services both the Department of Natural Resources and the Fisheries and Aquaculture Department.

MS JONES: Okay.

Therefore, the cost is all incurred within your department, is it? It would not appear in the Fisheries and Aquaculture expenditures, would it?

MR. KIELEY: No, it is voted within this particular piece but the services are provided to the two departments.

MS JONES: All right.

Maybe you could explain to me why you under spent, actually, by $200,000 in Salaries last year.

MS DUNDERDALE: Vacant positions.

MS JONES: Vacancies?

MS DUNDERDALE: Yes.

MS JONES: Were they in your department or in Fisheries and Aquaculture?

MS DUNDERDALE: You will have to speak it, I think.

MR. KIELEY: They would be in the financial and operations group that service both departments, so within that financial operations group that is headed by –

MS JONES: They had vacancies.

MR. KIELEY: They would have vacancies, yes.

MS JONES: Okay, but they are hoping to recruit some people by the looks of it. They have their estimates back up.

MR. KIELEY: Yes, they are. They are going through the process now in terms of trying to recruit. Last year, they just had some turnover which resulted in the salary savings.

MS JONES: Okay.

In that group, what kind of purchased services would they have? They spent $33,000. What kind of things do they go outside for?

MR. IVIMEY: The same types of expenditures fall under that, the same thing as executive support: rental of photocopier equipment, if there were rentals of facilities or rooms for holding meetings, paper shredding services, or any rental or general purchased services of that nature.

MS JONES: Okay, thank you.

CHAIR: I would like to remind the officials to identify yourself each time that you speak.

MS JONES: Also, under Administrative Support, 1.2.03., last year there was $109,500 spent in Professional Services. It was not budgeted for. I am wondering what the service was that you required under that heading.

MS DUNDERDALE: The revised variances are due to engineering design expenditures related to the construction and renovation for our buildings in Winterland and Pynn's Brook for forestry.

MS JONES: The Purchased Services, that was revised as well, not budgeted for but incurred.

MS DUNDERDALE: Again, the same thing.

MS JONES: Okay.

Property, Furnishings and Equipment, you did budget for $2.8 million and you spent almost $1.8 million. Can you tell me what you did with that money, and why it did not meet your projected expenditure last year?

MS DUNDERDALE: Because the buildings in Winterland and Pynn's Brook, that was for equipping those buildings and those buildings were not finished.

MS JONES: Okay.

The full amount that you have budgeted this year, is that all for that one project, the $4.5 million?

MS DUNDERDALE: No, we have Forestry and Agrifoods vehicles included in that amount, the Pynn's Brook building construction-renovation, the Roddickton building construction, the Lewisporte building construction and the Winterland building construction, the Animal Health vehicle garage, vehicles for agriculture, the Production and Marketing and Land Resource Stewardship Division, the silviculture seed extraction building construction, and that is all included in that $4,529,000.

MS JONES: Okay.

The work that you are doing in Roddickton and Lewisporte, that would be new work this year, is it renovation work, or…?

MS DUNDERDALE: It is new building –

MS JONES: New buildings?

MS DUNDERDALE: In Roddickton and Lewisporte -

MS JONES: Okay.

MS DUNDERDALE: - and Winterland, three new buildings.

MS JONES: Okay.

The one in Pynn's Brook is a renovation, is it, or expansion or something?

MS DUNDERDALE: It is a new building.

MS JONES: Oh, a new building, too.

MS DUNDERDALE: Yes, they all need to be replaced. The animal health vehicle garage is also a new building. We need to be able to secure the emergency vehicles so that the veterinarians - they have drugs and so on in them, and they are left in the open, so we need to be able to secure them.

MS JONES: Where is that base, that building?

MR. WHALEN: Brookfield Road, St. John's.

MS JONES: Okay, St. John's.

While you are giving out new buildings, Minister, I think I might put a plug in for my own district.

Actually, it was only a couple of weeks ago that I was in to Port Hope Simpson and I think they are telling me that they are going to have to house somewhere between twelve and fifteen employees in that building over the summer, which, as you know, I do not know the exact dimensions, but it cannot be any more than twenty by thirty if it is actually that big. I don't know; Keith may know this better than I do. Certainly, in just having a general discussion in terms of some new staff that were being hired up there, and some jobs that are posted, it is a legitimate concern because there are confined spaces for them to do their work, and right now I think not only are they doing most of the conservation and protection work in the district but they are also providing a great deal of the fire safety work over the summer as well.

I do not know where it is on your radar right now, but maybe you might want to give some consideration to that. I am sure I am probably one of the last to be bringing this to your attention, I am sure your officials have done so long before now, but I do not know if it is something that you have considered or not.

MS DUNDERDALE: It is in the mix.

MS JONES: Over the summer, though, will there be some provisions made for additional space for the workers there, or will they all be expected to work out of this two-office building, because I think that is what it is, two offices?

MR. DEERING: Most of the staff working out of that particular office, as you are probably aware, spend most of their time in the field. Unfortunately - and they have done a great job over the years in trying to accommodate themselves in that small space - at this point, our plan for this summer is for them to utilize the existing space, including the garage outside, the best way they can.

Our sense is that most of that staff are going to be spending a vast majority of their time in the field this summer.

MS JONES: You don't see it as a concern right now, do you?

MR. DEERING: It was raised to us, I guess, by some of the stakeholders in Port Hope Simpson over the last several weeks, actually. It is the first time, I guess, that it has been put on our radar as a concern for the staff themselves, but suffice it to say, given that it is a concern that now has been raised by the stakeholders, we will quite likely put it on our priority list for future planning.

MS JONES: Thank you.

I will go to section 2.1.01., which is Administration and Program Planning. It has a fair chunk of your budget, Minister.

MS DUNDERDALE: Yes.

MS JONES: I will start with the Salaries, I guess. You spent less than you budgeted last year. I am wondering if that was because of vacancies that were not filled, or some other reason.

MS DUNDERDALE: Yes, vacancies.

MS JONES: What positions were vacant?

MR. DEERING: We had ten new positions approved in last year's budget and, as a result of various delays in getting those positions filled, specifically the Director of the Ecosystems Sustainability Division and our Industry Analyst with our Forest Engineering and Industry Services Sections - we had delays in getting those positions filled.

MS JONES: This year the budget was increased for that department by nearly $285,000. Is that more new positions that are being created?

MR. MOORES: That additional funding is - when we had the ten positions Keith just mentioned, that is partial funding because they gave us some time to staff up, so we have 100 per cent funding this year for those ten new positions and two new positions this year.

MS JONES: Okay.

So, if you were to hire the ten positions that were allocated last year, it would cost this amount of money in addition to what you already have.

MR. MOORES: Plus two new positions this year.

MS JONES: Okay.

What are the two new ones this year?

MR. MOORES: The new one is a provincial fire training officer and a resource analyst.

MS JONES: The Director of Ecosystems Management that you talked about, that was not filled, where is that position going to be placed?

MR. DEERING: That is the Director of Ecosystems Sustainability, and that is at our headquarters in Corner Brook.

MS JONES: Okay.

The ten new positions from last year, what were they? Were they conservation management positions or were they something else?

MR. DEERING: In my memory, we had about four conservation officers that were staffed. I cannot recall -

MS JONES: Take your time. I am not putting you on the spot; I am just wondering.

MR. DEERING: Again, we had two industry analyst positions, which we had a delay in getting those filled. The Director of Ecosystems Sustainability was another one. We had a regional planner in Gander and a senior planner in headquarters as well.

MS JONES: Okay, thank you.

Also under the same headings, 02., Employee Benefits did increase.

MS DUNDERDALE: Higher than anticipated workplace health and safety compensation expenditures.

MS JONES: Okay.

You have to meet the regulations, hey?

MS DUNDERDALE: That is it.

MS JONES: Your budget for Transportation and Communications was under spent. Was there something in particular that you budgeted for, that did not happen?

MS DUNDERDALE: They vary. That is for the forest ecosystem management operations, and they vary from year to year, so it is hard to really pin down the exact amount you are going to use.

MS JONES: Okay.

Under Professional Services there was actually quite an increase, probably by $450,000 more spent than was budgeted. What would that be attributed to?

MS DUNDERDALE: Well, the biggest chunk of it is for the forest sector strategy study. As you recall, we did the study in Labrador and we just have the draft report now for the forest sector study on the Island part of the Province.

As well, we just had, in the last month, a pilot forest fair in Corner Brook, which is something we want to expand right across the Province but we piloted the project there. We are finding that the level of understanding around the forest industry in the Province, and the importance of it to the Province, is really dismal in the general population so we really need to address that and heighten awareness around this sector, so that is an important piece of work that we are doing.

As well, we had Crime Stoppers' payments for poachers, and other miscellaneous consulting and professional service expenditures. Also in that heading are some expenditures related to the comprehensive research program for sustainable forest management, and expenditures for Metis agreements in the Labrador Innu Association charged to professional services in error. We have some funding available to us to engage both of those organizations in our forestry planning and it was charged out to that heading rather than the appropriate heading, and we will come across that shortly, no doubt.

MS JONES: That was the Metis and the Innu, you say?

MS DUNDERDALE: The Labrador Innu Association.

MS JONES: That was for them to participate –

MS DUNDERDALE: We contract them to work with us in our forest management planning, in our forest management plans.

MS JONES: Okay.

The forest sector strategy study, what is that? Can you tell me what that is?

MS DUNDERDALE: Well, as I said in my opening remarks, the forestry sector is under tremendous pressure. We have had our troubles with the pulp and paper industry, as you know, which -

MS JONES: Is this the Halifax Global?

MS DUNDERDALE: Yes.

MS JONES: Okay. I did not realize that is what it was called.

MS DUNDERDALE: That is what it is, yes.

We completed the one in Labrador and we have had an RFP on that piece, but decisions have not been taken yet with regard to the awarding of the RFP because we are trying to see what is happening in terms of land use in Labrador, particularly as it relates to land claims and so on, and we have the draft - I think we have the draft report on the Island study.

OFFICIAL: Yes.

MS JONES: The RFP in Labrador, that was for a specific project, was it not?

MS DUNDERDALE: It came out of the recommendation out of the forest study for Labrador.

MS JONES: And that was, gosh, well over a year ago now was it, that RFP?

MS DUNDERDALE: Yes, we had requests for proposals - it was over last winter?

OFFICIAL: Yes.

MS DUNDERDALE: Yes.

MS JONES: Okay, and will there be a decision on that any time in the near future, or –

MS DUNDERDALE: There are issues for us while we are undergoing land claims, in terms of where we have the right to assign wood for harvesting. So that is complicating - given the fact that there are active discussions going on with regard to land claims, it is complicating the decision making to some degree.

MS JONES: What claims would you be referring to?

MS DUNDERDALE: The Innu land claim. The quantum of land that is going to be determined for settlement for the Innu, we need to know where their lands are going to be. We cannot assign rights to somebody that is probably going to be within their land claims area and so on. So in determining where the Crown will ultimately have rights to the wood is something that we need to determine before we give permits.

MS JONES: Yes. How long will that be?

MS DUNDERDALE: I do not know. I am not involved in negotiations on land claims – and even if I was, I am not sure I could give you the answer.

MS JONES: Yes, I know about the reserved status piece, but I am not sure how that – I did not think there was land ownership agreements. I guess there are land access or resource sector agreements or something, are there?

MS DUNDERDALE: Absolutely, and there are precedents set when you give permits and all of these kinds of things. So, we need to be prudent in how we do this. Even though these things are renewed on an annual basis, once you give them, they are kind of hard to get back; even though they are given on an annual basis.

MS JONES: Now, the Forest Sector Strategic Study for the Island, that is completed, isn't it?

MS DUNDERDALE: We have a draft, but we do not have the final report.

MS JONES: Okay. How long have you had that?

MS DUNDERDALE: How long have we had the draft report?

MR. DEERING: The latest draft - which is not the final at this point. We still have to have a final meeting with the consultant to outline some last changes before the penultimate draft, but we have had this current draft about three weeks at this point.

MS JONES: Did you have this prior to the decisions around Roddickton?

MS DUNDERDALE: What decisions around Roddickton?

MS JONES: The pelleting plant.

MS DUNDERDALE: We have not made a decision with regard to the pelleting plant in Roddickton.

MS JONES: I could have sworn I read that on the front page of The Northern Pen.

MS DUNDERDALE: Yes, I am not sure what happened there. I think the paper may have gotten out ahead of itself. We have several proposals well advanced within the system for pellet plant development within the Province and if there is going to be a pellet plant on the Northern Peninsula, or even on the West Coast, it is very likely going to be in Roddickton, but we are certainly not in a position at this point in time to make the announcement, which was on the front page of The Independent this week, I think, or last week.

MS JONES: Actually, they called me last week for a comment but I declined because I did not have the information.

MS DUNDERDALE: Yes, I think -

MS JONES: I guess there was a reason I did not have the information.

MS DUNDERDALE: - enthusiasm got ahead of people, but there is a great opportunity for pellet development here in the Province and, as I say, we have several proposals in the system and they are well progressed.

MS JONES: That is from the Island as well as Labrador?

MS DUNDERDALE: The pellet production piece, the only piece involving pellet comes out of the Happy Valley-Goose Bay piece that we talked about in the RFP beforehand. We are not in a position yet to determine whether or not a pellet operation would be successful outside of Happy Valley-Goose Bay in terms of that proposal.

MS JONES: Okay. Well, that certainly helps me understand this a little bit more. When would you expect to have a final report from Halifax Global on this?

MR. DEERING: I suspect, pending our final analysis on the consultants concurrence with our views on the issues, I suspect we would probably have a final report within thirty days of that meeting.

MS JONES: The other question I have is around purchased services. You under spent $1.3 million less than you budgeted. I am just wondering what was budgeted for that you did not purchase at the end of the day, if you could give me an explanation?

MS DUNDERDALE: Under Operations and Implementation?

MS JONES: No, the same heading, 2.1.01., Administration and Program Planning.

MS DUNDERDALE: Okay.

Estimates were down due to allocation of $10,000 to grants for Canadian Council of Forest Ministers for a study on the forest tree species adaptation and their vulnerability to climate change. We had a revised variance due to additional funding.

No that can't be -

MS JONES: No, under the Purchased Services.

OFFICIAL: Purchased Services, the inventory program.

MS DUNDERDALE: My note says that we had additional funding in 2007-2008 for enhanced inventory program but it was not fully expended, and funding for the Comprehensive Research Program for Sustainable Forest Management was not fully expended. All related expenditures incurred for the research program were charged to Professional Services rather than to Purchased Services.

MS JONES: So that was looking at wood inventories and stuff like that?

MR MOORES: Yes, of the inventory work, really what happened is that the inventory program did not accomplish all its spending because they did not get all the aerial photographs done for District 19 in the Goose Bay area, Southern Goose Bay. That was because of weather. Weather conditions did not permit the flying to get the aerial photographs completed last year.

MS JONES: Were there any other areas that were being photographed for inventory besides Area 19?

MR. MOORES: In the Province?

MS JONES: Yes.

MR. MOORES: Yes, there are areas on the Island. I am pretty sure they are in the Eastern Region, Districts 4 and 5, in around Gander.

MS JONES: Okay. Were they any others in Labrador?

MR. MOORES: Not that I am aware of. No, we were focusing on the Goose Bay area.

MS JONES: Okay.

What is the Comprehensive Research Program, just out of curiosity?

MR. DEERING: That was a new program that the branch had undertaken last year and would have been led by our director of ecosystems sustainability, which is partly the reason why this money did not get fully expended last year, because of the delay in staffing that position.

This year we had undertaken research for erioderma pedicellatum on the Avalon Peninsula, which is a rare endangered lichen, which is sort of -

MS DUNDERDALE: That has forestry shut down on the Avalon Peninsula.

MR. DEERING: Yes. Again, our director of ecosystems sustainability position will be staffed fairly soon, and that particular Budget will be fully expended on various other research projects outside of erioderma this year.

MS JONES: How long has the industry been shut down on the Avalon Peninsula because of that?

MS DUNDERDALE: Well, in terms of when these endangered flora are found, there is considerable work then required by our department to have mitigation plans in place that are acceptable to the Department of Environment and Conservation to allow us to go in there and harvest.

In terms of the Avalon and the erioderma lichen, as well as several other lichen now that have been discovered here, we just have not been able to work out a mitigation plan that makes going in there to harvest wood a sensible financial investment for harvesters in terms of how they have to keep certain distances from trees, and you have to wind in and out, because they are all over the place. They are sporadic and they are not found anywhere else in the world.

We have a very strong lobby here in terms of (inaudible) and outside the Province, that put considerable effort into ensuring that these lichen are protected. These protected species can provide real challenges for us from time to time.

MS JONES: I would think so, when you have a case like that.

Was there much commercial activity in that?

MS DUNDERDALE: Not a great deal.

MS JONES: No?

MS DUNDERDALE: But in terms of certainly one operator, we have spent enormous amounts of time this last year trying to find a way for that company to proceed. Unfortunately, we really have not been able to do it, to develop a mitigation plan that is acceptable for the protection of the

lichen and which would make financial sense for him to continue to invest in that business.

Of course, there are challenges that we have right across the Province in terms of flora and fauna, and view plains and watersheds. They are real challenges for us in the resource sector in how we deal with all of that and protect the environment, protect all of those other values, but at the same time, it lasts for the development of our resources. It is a big challenge and we spend a lot of time on it in the department.

MS JONES: This year you are going to spend $3.2 million again to do something, is that inventory projects and so on as well?

MR. MOORES: Yes, we will carry over to next year. We have to complete our photography because our next stage in doing interpretation and the mapping will be - we have to meet that requirement. We will finish off the photography for District 19, weather pending, obviously.

MS JONES: Once that work is done, does that give you - I guess it is for planning purposes in terms of determining what allocations can be utilized and stuff, is it?

MR. MOORES: That is correct.

MS JONES: Okay. How long does that usually take? I have no idea, so I ask you that.

MS DUNDERDALE: It is rotating. We constantly have to be upgrading our inventory. So, you move about the Province. You rotate the different areas that you are studying at different times. So, rotation is -

MR. MOORES: We are at a ten-year cycle now, but in any particular district from the time an aerial photography is flown until you have your maps that people could use, it is about eighteen months to two years, that timeframe.

MS JONES: Okay. For example, you used Area 19 in terms of when you gave me a response. If you would finish that work this summer it would probably be next year before we would see new inventory numbers on that area. Is that basically how it would work?

MR. MOORES: We would have a new inventory in terms of a new harvest level. We have a schedule on when we do our new harvest levels, and I think it is another couple of years before we start that process again, but by the end of next year I would hope that we would have a new inventory, an updated inventory, of the resource in Labrador.

MS DUNDERDALE: What it does, actually, is always ensure that we are on top of what it is we have in terms of resource, and we determine our schedules then as to how we are going to harvest that, what we are going to harvest where.

MS JONES: Yes.

Are areas twenty and twenty-one done, do you know, or…?

MR. DEERING: We had a contract in 2007 for new photography for District 21. The specific area was between Port Hope Simpson and south to – well south of Mary's Harbour, actually. So we had photography flown in 2007 and a contract this past winter to have the photographs interpreted and we hope to have a new inventory and new mapping for that particular area this summer.

MS JONES: Okay.

What about area twenty?

MR. DEERING: We have not flown any new area in District 20 in the late years. We do have it on our priority list to fly for this summer.

MS JONES: Okay.

Under the Property, Furnishings and Equipment, you spent $87,000 last year. What did you purchase or buy? I am still under 2.101.

MS DUNDERDALE: The $87,600; additional expenditures were required for property, furnishings and equipment for the forest ecosystem management operations. That is an amount, again, that varies from year to year depending on what is going on in that program.

MS JONES: This year you more than doubled the budget for it. I am just wondering what you are going to use that for.

MR. MOORES: That money allocation, Property, Furnishings and Equipment, I know an inventory crew last year purchased new data loggers for entering their data. Instead of putting it on paper sheets, they enter it actually into small, hand-held computers, and when they come back to the office they can just download the information directly into a computer system. We have GPS units purchased as well from last year.

MS JONES: The Grants and Subsidies, last year you spent $2.5 million. What would that have been used for?

MS DUNDERDALE: Access road money for the pulp and paper companies. That was assistance to the companies, which we have been trying to do. There are also expenditures there related to the Metis agreement and the Labrador Innu Association which was charged to professional services in error. That is what I referred to earlier.

MS JONES: Okay.

Can you give me the breakdown of the road money that was spent, you said, for the pulp and paper companies? How much would have been spent on Abitibi-used roads, and Krueger-used roads?

MS DUNDERDALE: We can provide all of that to you. That is no problem.

MS JONES: Okay.

MS DUNDERDALE: Actually, I can give you a full breakdown of the assistance that we have provided to the two companies for the last year. Including their power purchase agreements we have provided about $40 million assistance to the two pulp and paper industries in 2006-2007.

MS JONES: I guess we will see that as we go along in the energy estimates, will we?

MS DUNDERDALE: No, because that is part of it here, but we can provide to you the whole breakdown of that, how much money and where, and what program it was paid out, because it was in silviculture, roads access, any number of headings where we – you know, we did not give them direct money. We worked within the programs. So it is about $12 million each. Then, they both have power purchase agreements, which puts at least another $8 million or more into their pockets as well.

MS JONES: Okay.

I would appreciate getting a breakdown of that.

MS DUNDERDALE: Yes, no problem, you can have that.

MS JONES: This year you are going to budget $14.6 million, a lot of money, under Grants and Subsidies.

MS DUNDERDALE: Yes.

MS JONES: I am just wondering if you could give me an explanation now of how that breaks out.

MS DUNDERDALE: That is the $14 million program that I announced two weeks ago in advance of the Budget, and there are a number of initiatives under that program. There is money in there for a pilot program that we are cost-sharing with Corner Brook Pulp and Paper to take fibre from the Northern Peninsula to use it in a pilot project as an energy source through a company in Deer Lake and to the mill in Corner Brook through Eastwood Lumber.

When Corner Brook Pulp and Paper shut down number four machine, the most significant impact of that was felt on the Northern Peninsula, and the people who were directly affected were harvesters, as well as some truckers and so on, and we have been working very hard to find constructive ways to lessen the impact or deal with the impact of the closure of the machine on that area. In working with Corner Brook Pulp and Paper, this has certainly provided a solution that is very effective and it is real in terms of this is something that will be very helpful to Corner Brook Pulp and Paper and also provides a market for harvesters on the Northern Peninsula. That is part of the program.

MS JONES: How much money would you be putting into this?

MS DUNDERDALE: That is cost shared. I think we are putting in about $1 million each.

MS JONES: Meaning you and the company?

MS DUNDERDALE: And the company, Corner Brook Pulp and Paper, is putting in $1 million.

There is also a significant piece of money there to work with integrated sawmillers in the Province to do mill diagnostics, to go in and have a look at their operations and make sure that they are as lean and as efficient as they need to be, or ought to be, and that they have the appropriate infrastructure to develop new materials for the market; because another piece of this program is, for a number of years, government and other agencies or organizations have been doing market studies in Canada and around the world around wood supply or wood products, and we have had lots of information come back over the years about markets in Nunavut, markets in Greenland, Iceland, and markets in Ireland, Iceland, and now England; however, there has not really been any concentrated or focused effort on translating that market information into something tangible that can be used by people involved in the industry.

So a big part of this program is updating all of that market information and putting together a secretariat that will work with the industry to be able to work with the integrated sawmillers in the development of the new projects but also in terms of the marketing; that they will work with them, to go to those markets, to understand those markets, to ensure that they are export ready and work with them until they are able to come home with a contract in their hand. They need that kind of sustained support, to provide that kind of sustained support, to make sure that their operations have the capacity to do what needs to get done in terms of what the market requires, so they understand what the market requires, that they have the ability to produce what the market requires, and then somebody to work with them in terms of securing contracts from those markets. That is another sustained piece.

In terms of pellet production, we do not have the fibre capacity in this Province to penetrate a worldwide market while we have two pulp and paper companies operating in the Province. We just do not have enough fibre to be able to penetrate, for example, the wood pellet market in Europe, which is the most vibrant market and the most demanding market at the moment.

The economies of scale just are not there, but we do have enough fibre in this Province to sustain a domestic market, so we have been doing some pieces of work on that. As I said, we have two proposals at least in our system in terms of pellet plants, development of a pellet plant, and those things are being advanced and they are looking very, very positive. The second piece of it is that we are going to work under our Energy Plan to develop that, to help develop that domestic market within the Province. So, for example, we are offering a 25 per cent subsidy on the purchase of wood pellet stoves which, in the face of rising costs of oil heat and in electricity in cases where we are still using Holyrood, that this will provide considerable savings.

A conversion to wood pellet will provide considerable savings to homeowners here in the Province. Our information tells us that you can recover your cost of the wood pellet stove and whatever is required to install it within three to four years of installation, if not before. Then you have a much reduced cost from then on.

We are working on both fronts. Environmentally, that also works for us because we have a number of sawmillers operating in the Province and we do not have a use for their waste product, and that will now go into pellet production.

It is green on a number of fronts, so it fits well under our Energy Plan. It is a renewable resource, so it also fits there. The plan addresses all of those elements. The $14 million addresses all of – and we have not developed a criterion around all of that yet, and so on, and we are in the process of doing it, but I must say it has been very well received by the industry.

MS JONES: Okay.

On the secretariat for the marketing piece, how far along are you with that? When will we see something on that?

MS DUNDERDALE: We brought this proposal forward in budget, and it was approved in budget, and we will now start our implementation process. We have just started, since we got our approvals.

MS JONES: Okay, so that will be it (inaudible).

MS DUNDERDALE: (Inaudible) out over the next year.

MS JONES: In terms of the rebate program on the purchases of pellet stoves and stuff, when will that come into effect?

MS DUNDERDALE: Charles?

That is under our Energy Plan.

MR. BOWN: That is a program that we are currently developing the terms for, right now.

MS JONES: Okay.

MS DUNDERDALE: We are going to try and move ahead with this as quickly as we can so people can start to access the program.

MS JONES: Okay.

Just one last question under that heading and it has to do with the revenue that you collected from the federal government.

You projected that you were going to get –

MS DUNDERDALE: Four million dollars. It is a $14 million program; $10 million is coming from the Province, and $4 million is coming from the Community Trust program, and that is a program that the federal government announced last year in response – generally it was driven by the pressure that was on the pulp and paper industry through the country, although the federal government applied it to manufacturing industries across the board, so it is not specific to. So we have an allocation, the Province has an allocation, of $23 million over three years out of that program. So we are allocating, of the money that is available to us –

MS JONES: This year.

MS DUNDERDALE: I think it is $12 million, is it?

OFFICIAL: Eight million.

MS DUNDERDALE: Eight million this year, we are allocating $4 million of that to this program.

MS JONES: Okay.

The other $4 million will be in the energy estimates?

MS DUNDERDALE: We have not allocated the other four as yet, because you have to apply. There are criteria set down, but we know that in terms of what we are proposing underneath this program –

MS JONES: You will get this amount.

MS DUNDERDALE: - we can access at least $4 million for this program. There are criteria set down by the federal government that we have to apply under, so it is not money we can just take and allocate.

MS JONES: Just out of curiosity: Last year you budgeted for $130,000 from the federal government that you did not get. What was that supposed to be for? Under Federal Revenue, 2.1.01.

MS DUNDERDALE: I will be able to tell you in one second now. The revised variance is due to a one-time revenue payment for a federal-provincial inventory project from 2006-2007 that was left in the budget in error in 2007-2008, and the revenue was removed in 2008-2009.

MS JONES: Okay.

MS DUNDERDALE: I just wanted to also say to you, on the forestry program, before we move on, because I know this would be of particular interest to you: in terms of that program, too, we are also looking at infrastructure to help the industry. I cannot get into the detail of it but we are looking at infrastructure that can help the industry grow in Southern Labrador.

MS JONES: Well, it is certainly desperately needed. It might be the catalyst you need to get some things moving.

MS DUNDERDALE: Yes.

MS JONES: Under 2.1.02 – we will move on now to this section of the Forest Management estimates – just a quick question on the salaries, because it did increase this year by $176,000. Is that a new position that is being created?

MS DUNDERDALE: Yes, they were positions approved in 2008, so it was additional salary funding. That is why the salary went up $66,000, and we did not get 100 per cent funding in 2008-2009 because of staffing delays.

MS JONES: I am sorry. I did not understand what you just said.

MS DUNDERDALE: Alright, so – yes.

MR. MOORES: These are some of the additional positions we received last year in the field. Again, the budget allocation for last year was nine months of atonement position to give you time to do the staffing requirement. This year's budget is a bit more because it gives the full twelve month funding for the position.

MS JONES: Oh, okay.

MR. MOORES: We also have additional dollars for this year for, I guess, what we are calling a stand-by duty officer system. Our conservation officers work all times of the day, seven days a week, so they have been now equipped with access to satellite phones and will have someone on standby twenty-four hours a day. When they go out in the field at two in the morning or at three in the morning or whenever it is, they report in that they are gone somewhere, wherever they are going to do their work. So, now we can track them. They have to report back when they get back. It is a safety measure

MS DUNDERDALE: It is a safety measure for our conservation officers who often work alone when they are out after hours. You know, there is nobody back in an office to know if they have come back on their scheduled time and so on, so for their safety we need to be able to know where they are and check in on them on a regular basis to make sure they are safe.

MS JONES: That makes sense.

Under the same heading, Transportation and Communications, you budgeted over $1 million last year but you only spent $845,000.

MS DUNDERDALE: All for the same reasons. Everything just about under that heading.

MS JONES: You had savings there of $188,000.

MS DUNDERDALE: Under Transportation?

MS JONES: And Communications, 2.1.02.03. Last year you spent $188,000 less than you budgeted.

MS DUNDERDALE: Yes, for the same reason, in terms of the staffing fees, nine months instead of twelve. Everything under that heading is affected by the fact that we have gone from nine months to twelve.

MR. MOORES: In that whole area, I think the deviations are – the whole budget is usually operational and internal transfers so in the one that you are referring to in Transportation and Communications, there are some internal transfers in terms of funding which was removed for snowmobiles and ATVs and was transferred somewhere else, into Administration and Program Planning. That is why it was reduced. We just moved the funding somewhere else to pay for our ATVs and snow machines.

MS JONES: But you increased the budget back to the –

MR. MOORES: The original amount for this year.

MS JONES: Yes.

MR. MOORES: Yes, that is correct.

MS JONES: Are you buying snowmobiles under that heading this year or using it for something else?

MR. MOORES: It would be for something else. No, we would not be buying snowmobiles out of that money this year. In terms of that subhead, if we did, if we required additional money for snow machines, we would move it into the appropriate subhead, Property and Furnishings.

MS JONES: Okay, so you are projecting to spend more in transportation this year?

MR. MOORES: Yes.

MS JONES: Increased staff. Under Supplies you spent $1.2 million, a little over that. What would you have used that for? It was $360,000 over what you originally budgeted. It is the same heading, 2.1.02

MR. MOORES: That is office supplies related to day-to-day office equipment, cartridges and fax machines and photocopiers and the purchasing of steel culverts and material and aggregate for road grading. In this particular unit they required some additional funding and that is why you see that number up. It is back for the proposed estimate for this year, to be back to the original amount as that amount fluctuates from year to year.

MS JONES: Every year you are spending $5,300 in professional services. What service is that for?

MR. MOORES: That is specific services, funds required for forensic scientific services to examine blood, hair and meat samples for identification, and DNA for court purposes.

MS JONES: Under Purchased Services, last year you overspent by $340,000. Could you tell me, first of all, what you would have purchased under that heading and what the increase was that you did not budget for?

MR. MOORES: Under that subhead we covered our vehicle repairs, maintenance to our equipment, vehicle and machinery rentals, maintenance of our photocopier equipment and also contracting out services for snow clearing our access roads.

MS JONES: What came up last year that cost you an extra $340,000?

MR. MOORES: That would be snow clearing. We had a good, snowy year.

MS JONES: Expecting milder temperatures this year?

MR. MOORES: Climate change.

MS JONES: You are taking care of it another way. Under the Property, Furnishings and Equipment, it was down last year over what you would have projected, but anything –

MS DUNDERDALE: He is taking the snowmobiles and the ATVs out of there -

MS JONES: That is where that went, is it?

MS DUNDERDALE: - and putting them in the more appropriate –

MS JONES: That takes care of that.

We will move on to 2.1.03. The budget for Salaries under this heading obviously was overspent by almost $500,000. I am just wondering if there were any particular positions created there or what that money was used for?

MS DUNDERDALE: Seasonal employees were kept on longer to complete projects to the year end.

MS JONES: That would have been employees that were relative to the silviculture program directly?

MS DUNDERDALE: Yes.

MS JONES: This year your budget numbers are down, so they will not be kept on this year or is there another change within that heading?

MS DUNDERDALE: I will let Len speak to it, because we have a number of initiatives around silviculture.

MR. MOORES: Last year, I guess, due to weather in the fall we had to extend some of our programs to get our work done, so as a result there was an additional cost. We are estimating this year that the weather will co-operate more and we will do it within budget.

MS DUNDERDALE: We are optimists in this department.

MS JONES: I would say. That is $1 million less so far you are going to need if the weather co-operates.

Transportation and Communications, again, was up as well in the revised numbers. It was up about $65,000.

MR. MOORES: That is Transportation and Communications on helicopter contract time, courier charges, freight charges and basic communication costs, as well as fixed-wing aircraft for doing some of our work.

MS JONES: You budgeted lower this year. You went back to your –

MR. MOORES: We are staying with the original amount of the budget which is $136,000. Hopefully we will stay within that. We should be able to. That is our plan.

MS JONES: Why was your budget for Supplies overspent by $400,000 last year?

MR. MOORES: Supplies relates to a whole gamut of issues, probably the main one being machinery - probably the major one of them would be oil and gas. All our oil and gas for our field operations come under there. For our helicopter time, we pay for the fuel for choppers and that has gone up dramatically in the past year. We probably had some additional costs there. We also purchased day-to-day field equipment for our operations. Our field equipment operations have larger programs and we have additional charges there.

MS JONES: You went back to your original budget this year and I do not think the price of oil and gas went down.

MR. MOORES: No, and that is something that is happening. When we did our budget estimates that was a while back. Hopefully, we will just see and if we need to, it could end up, as you say, possibly being higher.

MS JONES: The $6.8 million that you are going to spend in that department on Purchased Services, what would you be purchasing there, what services?

MS DUNDERDALE: (Inaudible) silviculture.

MR. MOORES: Primarily, it is our silviculture agreements for the forest industry for about $3.6 million. That is our component to that. Plus, our own planting and (inaudible) contracts make up that amount to Purchased Services in the department.

MS DUNDERDALE: Plus there is funding in there too for the construction of our seed extraction building.

MS JONES: Okay.

MS DUNDERDALE: It is all related to silviculture.

MS JONES: Last year you were down by $1.6 million. Was there any particular part of the program you did not do, any silviculture work that you did not get done?

MR. MOORES: Again, because of bad weather in the fall, some our thinning projects and planting projects were not completed. We will pick them up again this year.

MS JONES: Right in under that you only budgeted $1,500 for Property, Furnishing and Equipment but you spent $310,000. Can you account for that for me, please?

MR. MOORES: One hundred thousand dollars of that again was for snow machines and ATVs and some design work for the seed extraction plant that we are building this year.

MS JONES: Can you tell me some of the work you are doing in silviculture this year around the Province, what locations and so on?

MR. MOORES: I guess our planting program is pretty well Province-wide. There is planting in the Clarenville area, right across Central Newfoundland and Western Newfoundland, the Corner Brook area and up the Northern Peninsula.

There is planting planned in the Goose Bay area for sure, I think, and the same thing with our thinner. Thinning is probably more focused in Western Newfoundland and Central Newfoundland; Central Newfoundland being Gander, the Grand Falls area.

For road construction, we probably have about 100 kilometres of new construction planned and about forty kilometres of reconstruction road planning.

MS JONES: Okay. Well, we will get into that now in just a second, but before I do, you collected $10,000 last year in provincial revenue under that part of the budget. What would people have paid the department for there? Was there a fee there, or –

MR. MOORES: Tree seedlings; the sale of tree seedlings.

MS JONES: Well, sales were good, $1,000 to $10,000.

Okay. Under the roads section – actually, I was going to get you to just outline for me what some of the roadwork was that you are going to be doing in the Province this year. You said you were going to look at 100 kilometres of construction. Can you tell me what areas of the Province that will be done in and how much will be done in those areas?

MR. MOORES: I can tell the areas, how much - we would have to get back to you on the specifics of the amount in each area. Usually in the Clarenville area there is road construction done, in Lewisporte, Gambo area, and up in the Roddickton area is another major area. As you know, on the South Coast - there is usually some road construction as well done in Labrador, in the Goose Bay area. The specific amounts, we can get that; the actual length of road we can get to you.

MS JONES: Okay, I would appreciate that. Actually, that is my only question under that one. It is pretty standard there, isn't it?

Under the Insect Control Program, my only question is with regard to the fact that your revised budget is down by $143,000. I am just wondering if that was a vacant position or some other reason. I see the numbers went up again this year to the original budgeted amount.

That would be 2.2.01., under Insect Control, the salary portion.

MR. MOORES: Our anticipated costs were less. I think the program was a bit smaller last year than what we had planned, so we had some savings in terms of helicopter time and personnel time.

MS JONES: Okay. Again, the Transportation and Communications budget was down by –

MS DUNDERDALE: All down for the same reason.

MR. MOORES: Yes, the same reason.

MS JONES: The same reason, okay. You did not require any professional services at all last year? You had budgeted for some. Was it anything in particular or just an amount that you put in the budget in case you need it?

MR. MOORES: It was not required last year. Usually professional services deal with some of our contracts and sometimes we do our licence - getting a licence are required to do some specific research projects. Our licence last year, obviously, did not require us to do very specific research projects that we would be assigned because we have an allocated amount there that they assigned (inaudible) specific work to be done when we receive our licence, that we have funding to contract that work out.

MS JONES: Okay. The revenue was down to what you had projected.

MS DUNDERDALE: We sprayed more on Crown lands than we did on company lands.

MS JONES: Oh, okay.

Under Fire Suppression and Communications, 2.2.02.; again, the salaries were down here by $140,000. Was there someone off or a position vacant?

MR. DEERING: We had a lower than average year, over all the Province last year, for fires and, in particular, in the Western region; and overtime expenditures and all that were down.

MS JONES: Okay, all right.

The Purchased Services budget there was over spent by $121,000, nearly $122,000. What was purchased under that heading?

MR. MOORES: Under Purchased Services there was maintenance on our seven radio towers and some building repairs to some of our patrol offices and garages, and servicing to our hose drying system.

MS JONES: Okay. Also under that section there is a Grants and Subsidies head. You had budgeted $30,400 but you did not spend any of it. This year you budgeted again. What would be a grant or a subsidy under that particular heading?

MR. MOORES: This is a grant they usually give to the Canadian Interagency Forest Fire Centre that coordinates the sharing of forest fire equipment across the country. What we are seeing is the grant was incorrectly charged to a different activity. The grant was actually paid but it is the grant we have with the rest of the provinces in sharing fire equipment.

MS JONES: Okay, and you paid out of that section this year?

MR. MOORES: Yes, that is correct.

MS JONES: Okay. Under provincial revenue, you did not budget to collect any but you collected $216,000. What would that have been for?

MS DUNDERDALE: From National Defence for the recovery of forest fire expenditures.

MS JONES: Okay. It is not something you can really budget for, for this year, is it?

MS DUNDERDALE: No.

MS JONES: In the section 3.3.01. the Land Resource Stewardship - Administration portion of that. The salaries increased by $353,000 in that division. I am wondering if you can tell me how many positions were created and what those positions would have been.

MS DUNDERDALE: Part of the estimates are up due to overtime, but we have also had a situation for the last twenty-odd years, ending in 2003, where a number of positions have been charged off to APF, the federal-provincial program, when, in fact, they were the responsibility of the provincial government. We are trying to address that problem, as I talked about in my opening remarks, where we get those people back more appropriately in the estimates of the department, thereby bringing up more money to go into the hands of farmers.

MS JONES: That might have been, basically, a transfer of positions more so than new positions being created?

MS DUNDERDALE: Yes, there are a lot of positions being charged off to APF.

MS JONES: Okay.

The budget for Purchased Services here, what would you be purchasing there? What kind of services would that be?

MR. WHALEN: It would be repairs, rentals and maintenance of vehicles, laboratory equipment, inshore repairs and maintenance, soil land use maps, reports and printing, cartographic equipment, map files and air photo files.

MS JONES: Okay.

Under section 3.1.03., Land Development; under Purchased Services there, what would you be purchasing under that heading?

MS DUNDERDALE: Farm access roads, under Purchased Services, and -

MS JONES: Private access roads, did you say?

MS DUNDERDALE: No, farm access roads.

MS JONES: Oh, farm access roads. Okay.

MS DUNDERDALE: There is also land acquisition in the ADA in St. John's. They are lower because under that heading we do our land consolidation program, and because we have had a review of the agricultural zone in St. John's ongoing over the last year, there have been fewer purchases while that review is ongoing.

MS JONES: Is that finished now?

MS DUNDERDALE: Pretty much. We should have the final report within the next month or so.

MS JONES: Okay. Again, under Property, Furnishings and Equipment you are budgeting $1.8 million this year. What will that be used for?

MS DUNDERDALE: That is land consolidation. That is purchasing land. We are trying very hard to maintain, as you know, agricultural land we have in the Province. People sometimes make offers of private land to us because they cannot do residential development, they are not able to farm any more and so on, so they will come, as you know, and make a proposal to government. So, we have a fund where we can purchase that land and put it in the provincial land bank. We can lease out then to farmers who want to work that piece of property.

MS JONES: You do not sell that land do you? It is all done on lease agreements, is it?

MS DUNDERDALE: Yes. We do not grant land or sell land anymore; everything is done on lease now.

MS JONES: Okay. Normally, what would a lease be? Is it like, fifty year or 100 year leases or something?

MS DUNDERDALE: Fifty years.

MS JONES: Okay.

MS DUNDERDALE: People forget sometimes. People ask us if they can will their lease.

MS JONES: Yes. Is there provision for that though, all the same?

MS DUNDERDALE: No.

MS JONES: No, there isn't, but there are renewal clauses, I guess, are there?

MS DUNDERDALE: Yes.

MS JONES: First options on renewals and things like that.

MS DUNDERDALE: That is right, and if the family is going to continue to work a farm. All of those things are taken into consideration, but you cannot pass it on in your will.

MS JONES: No.

We are going to move now to the Production and Market Development aspect of the Agrifoods. Again, on the Salaries piece, there was an increase of $137,000.

MS DUNDERDALE: Yes, it is that whole APF piece now that you will find - as we go through the Agrifoods piece, you will find those salaries are off because there are about eleven positions that we are transferring this year, and some overtime included in that as well.

We do a lot of agricultural fairs in the summer and fall and so on, and a lot of that work takes place in the evenings and weekends.

MS JONES: Yes, Okay. I will keep note of that as I go through the Agrifoods headings.

Under the same section 07., Property, Furnishings and Equipment, this year you have budgeted almost $727,000, which is $724,000 or something more than last year. Can you tell me what you are going to use that money for? What it will be used for?

MS DUNDERDALE: A good piece of the additional funding is related to the Cranberry Development Program, and that is a big initiative we have. As you know, we addressed our cranberry strategy last year. That is a piece of R & D that has gone on in the Province that we are really proud of. We have great potential here for cranberry development and we have a lot of the big players, not only in the country, internationally, who are taking a great deal of interest in what is happening in cranberry development here in the Province, but we have a very solid strategy and a vision for how we want that to happen, which is cultivation of our own vines. We are not interested in people bringing in their vines from outside of the Province, so we will propagate the vines here in the Province; plus, we will do some peat development to get ready for cranberry production here in the Province.

MS JONES: How many farms now are into cranberry production in the Province?

MS DUNDERDALE: Four on the West Coast and down on the Burin Peninsula. Deadman's Bay is one; that is ours in Deadman's Bay.

MR. WHALEN: One in Stephenville, one in Stephenville Crossing, Deadman's Bay and Terra Nova.

MS DUNDERDALE: One in Frenchman's Cove.

MR. WHALEN: The one in Deadman's Bay is a research site.

MS JONES: Okay.

The money that was budgeted this year, is that also to contribute to new operations or to sustain the ones that are there?

MS DUNDERDALE: This is in terms of propagation of our vine, which is very specific to this Province: disease resistant, has a very high yield, higher than most places, other places in the country and so on, so it is very particular, very hardy and very strong. When people come here to involve themselves in it, when people get involved in cranberry production here, we want them to use vines, so we are going to propagate the vines, self-propagate the vines. We need money to do that.

As well, we need to start to prepare some of the bogs for development, for people, new entrants, to come in then and use, so we will have a good piece of the development done, because that has to undergo environmental assessment, all of those kinds of things, so we will start to get tracks of land ready for development here in the Province.

MS JONES: You said the one in Devon is ours. What do you mean by that?

MS DUNDERDALE: We have our experimental farm. We do quite a bit of work.

MS JONES: So, it is owned by the Province?

MS DUNDERDALE: Yes, and it is all associated with the research and development we are doing, and our success here, and there is other work that we are doing in Wooddale around different plants. Jeff can speak more fully to it, but in terms of blueberries and partridgeberries and sea buckthorn and so on, we are really buoyed by the success of the cranberry because people thought that was not something that we could do here. Not only can we do it, we can do it better than most places in North America. It shows where R&D really works for us, so we have upped our budget with regard to that.

MS JONES: Under the Grants and Subsidies section, what would the $7.9 million be used for? It is obviously new money. Is that relative to the cranberry project?

MS DUNDERDALE: It is additional funding for the School Milk Program - another $50,000 for them - there is $5.4 million for the Aleutian Disease Management Program for the mink producers, and further funding for the Cranberry Development Program, $2.3 million.

MS JONES: Can you tell me how the Aleutian Disease investment is going to work, what that money is going to be used for?

MS DUNDERDALE: It would be a $150,000 grant to successful applicants to be used, first of all, for biosecurity, if they have had Aleutian, to clean up their site, equipment and so on, to build fences to stop mink from getting out as well as stop other mink from getting in – wild mink from getting in - and replacement of diseased stock.

Again (inaudible).

MS JONES: Is there a cap on the replacement of stock?

MS DUNDERDALE: No, $150,000.

MS JONES: Oh, it is everything?

MS DUNDERDALE: Yes.

MS JONES: Okay.

Is that a cost-shared grant?

MS DUNDERDALE: No.

MS JONES: Was any of the money in that alignment for anything else, other than that?

MS DUNDERDALE: The $5.4 million for the mink program, are you saying, under that heading?

MS JONES: Yes, but under that heading were there some kind of provincial guidelines or provincial program for monitoring or anything of this disease going to be put in place?

MS DUNDERDALE: We will continue to provide blood testing and also money for an Aleutian Disease specialist, really.

Everywhere where mink are farmed in the world they have Aleutian Disease, and the disease is managed. We do not have an expertise within the existing farmers or here in the Province with regard to Aleutian Disease, so part of the funding of this $5.4 million is to provide that expertise to the industry.

MS JONES: Okay, so that is a new position?

MS DUNDERDALE: Because it has to be managed. It has to be managed, now that it is here.

MS JONES: Yes.

MS DUNDERDALE: Some of our wild mink now are testing, and we really do not know where the Aleutian Disease came from. We really do not know, and there are all kinds of theories about that.

In terms of the first strain that affected the farmers that we are most familiar with is a disease that is not known anywhere else in the world, so it is not anywhere else unless it mutated. One suspects that it probably was not brought here, and it would be very hard to – it would be impossible to bring it here legally, certainly, because in terms of the mink have to be tested before they come here and they have to be in quarantine before they come here. They have to be tested before they come here, and when they come here they have to go in quarantine again and have to be tested before they are released. So it certainly was not brought in legally. Now, whether it came in on equipment or whether it already existed here we are not able to determine.

There were mink operations here on the Island part of the Province fifty years ago, and there is certainly anecdotal information to say that Aleutian Disease probably affected those farms and a lot of those mink got out and about.

So, while we claimed to have an Aleutian Disease-free Province, that claim may not have been entirely correct, but we cannot prove it one way or the other. We do know now, though, that Aleutian Disease is in the wild population.

MS JONES: Obviously, an issue for me here is how this disease can get into the Province, for one thing, if it is tested and quarantined and tested, and all of this stuff.

Maybe my first question should be: Was there a review process taken by your department after this disease was discovered in the Province to ensure that all of these processes were followed and that all of the compliances were being met?

MS DUNDERDALE: Absolutely.

MS JONES: It was.

MS DUNDERDALE: Yes.

MS JONES: I guess more of a district issue for me, as you would know, is the fact that there was a transfer of stock from Island farms to Labrador farms, and this was new-based operations. We certainly have no reason to suspect that they would have contracted that disease once they were in Labrador, so they had to have contracted it before that.

I am just wondering if there are any new provisions or guidelines that are now going to be put in place to ensure the internal transfer of stock within the Province.

MS DUNDERDALE: We are working very closely with the fur industry on that. In terms of the final transfers in terms of the general animal industry here in the Province, the industry had been quite clear in terms that they did not want those kinds of regulations.

We had regulations in terms of the bringing in of stock into the Province, and making sure that they were disease free, but in terms of how farmers did transactions, and do transactions, not only with mink but in terms of cattle, pigs, chicken, none of those are regulated on terms of they are farm-to-farm business, and never have been, and are not, and the industry did not want us involved at that level.

MS JONES: Okay.

MS DUNDERDALE: So, it really is a buyer-beware industry in terms of how they want the industry to be regulated.

We have been fully engaged with the fur committee, and working with them on regular basis on this piece now. A decision has not been taken yet in terms of whether or not we will regulate that activity, but we are working very closely with them in determining how we ought to do this business in a better way, and to provide those kinds of safeguards; or, if they absolutely wish, as an industry, to continue in that kind of a way, then it certainly is buyer beware. You have to be very careful what you are doing.

There was certainly no reason for anybody in the Province to suspect, at that time, that Aleutian Disease was here, because we had stringent testing in terms of bringing in of the mink. None of the wild mink - although it was not a large sample – that had been tested up to that point showed any Aleutian disease. We had tested some of them. Now, we did not test a whole great big lot, but we had tested some and there was no sign. So, we were making the claim that we were an Aleutian Disease-free Province without a large sampling, but on the information we had.

MS JONES: Right now the disease is in the Province, and we know what the impact of that is.

MS DUNDERDALE: Yes.

MS JONES: Is there more support from the fur breeders to look at some kinds of policies or testing policies around the transfer of stock than there was in the past? I am just going in my sense of it, from discussions I have had with them. I kind of sensed that there was some receptiveness to doing something along those lines, and maybe I misinterpreted that.

MR. WHALEN: Industry would prefer, in our meetings with industry, to self-regulate. Like I say, in the event that does not work, then we would have to look at, for instance, our legislation to see what we could put in place to make sure that the spread of Aleutian Disease is taken care of, but industry, themselves, would prefer to basically self-regulate.

MS JONES: So they are still not asking that there be a regulated process around this?

MS DUNDERDALE: No.

MS JONES: Okay.

MS DUNDERDALE: No, and we have been fully engaged with them. We meet with them and Dr. Whitney meets with them on a regular basis, so we are taking a lot of information and have a lot of discussion with the fur industry around this issue.

MS JONES: How many farms were impacted by this disease this year?

MS DUNDERDALE: Nineteen? Ten of nineteen.

OFFICIAL: Ten of twenty-seven.

MS DUNDERDALE: Ten of twenty-seven.

MS JONES: Okay.

What is the revenue that you collect there? I know you only collected $25,000 last year, but this year you are looking at collecting $454,700. Is that some new fee or something…?

MS DUNDERDALE: That is our cranberries, the sale of our cranberry vines to producers.

MS JONES: Okay.

I am going to move to the agrifoods business development. Before I do, Mr. Chairman, if you would not mind, could I be excused for five minutes? Is that a problem, Minister?

MS DUNDERDALE: No, not at all.

MS JONES: Okay, thank you.

CHAIR: I was about to ask for that anyway.

MS DUNDERDALE: So we are going to have a five-minute break; that is good.

CHAIR: We will take a five minute break now.

CHAIR (Mr. Harding): Okay. I think we can reconvene. There has been word that there is some food ordered or something for our next break. So we will see when that comes and take it from there.

I do not know if any of the other Committee members have a question or not.

We will carry on then, Ms Jones.

OFFICIAL: The only question I had, Mr. Chair, was (inaudible).

CHAIR: Yes, you can go ahead now.

MS JONES: Under the Agricultural Business Development - Administration, the administration portion, I guess, 3.3.01.; again, the salary piece, would that have to do with the agriculture framework program? Is that more positions being transferred over, or are we into a different section right now for that?

MS DUNDERDALE: (Inaudible) salaries?

MS JONES: Yes, only because there was an increase, minister, of $211,000 or something.

MS DUNDERDALE: They are to cover salary shortfalls and overtime; overtime associated with our agricultural fairs instead of our agricultural affairs.

MS JONES: Okay. Also under that section, under Professional Services you spent $27,000 last year that you did not necessarily budget for. What would that have been used for?

MS DUNDERDALE: They are consultation sessions we did with Growing Forward, the federal-provincial program. We are negotiating a new agreement and there were consultation pieces associated with that.

MS JONES: Under Purchased Services again, you did overspend just a little, but what was the $105,000 used for? What was purchased with that?

MR. WHALEN: Purchased Services covered off vehicle repairs, maintenance, as well as printing services and expenses associated with meetings, training and seminars.

MS JONES: Okay. Also, Allowances and Assistance, you have been budgeting $20,000 a year, what is that for? What are the allowances being given for, or what kind of assistance would you be purchasing with it?

MR. WHALEN: That covers off areas such as allowance assistance for the delivery of various producer seminars.

MS JONES: I am sorry, delivery of -

MR. WHALEN: Producer seminars.

MS DUNDERDALE: Producer seminars.

MS JONES: Okay.

MR. WHALEN: It includes travel and exchange for farmers as well.

MS JONES: That would be in the Province, I guess, those seminars, would they?

MR. WHALEN: That is correct.

MS JONES: Okay.

The grants and subsidies that you give out there, what is that used for? Who gets those grants or subsidies?

MR. WHALEN: Several organizations. It goes to support the provincial farm organizations, the Provincial 4-H Council, the Federation of Agriculture.

It covers off, as well, agricultural fairs and exhibitions; as well as other support for agricultural organizations and undertakings, as well as the Fruit and Vegetable Storage Program.

MS JONES: Okay. What revenue do you collect there? What source of revenue is that? You collected $36,800 last year. You are projecting to collect a lot less this year.

MS DUNDERDALE: That comes from the agrifoods and the agriculture and flower show. Last year it was held in Corner Brook - or is being held in Corner Brook in 2008, where it was held in Mount Pearl this year. So there was greater revenue from Mount Pearl, obviously, because of population base. It would be less in Corner Brook for the same reason.

MS JONES: So, that is what people would pay to have a booth there or something like that, or a sponsorship or something, is it?

MS DUNDERDALE: Yes.

MS JONES: Under 3.3.02, the revenue received from the federal government was a little bit less. I guess I am just wondering what revenue that is anyway. What do you receive from them?

MS DUNDERDALE: Sixty per cent of the administration. The federal government reimburses the Province for 60 per cent of the administration and government premium costs of the production and livestock insurance program.

MS JONES: I guess you are projecting that that is going to go up this year, the cost of the insurance? Is that due to premiums or is it due to more animals? I am not sure.

MR. WHALEN: It is basically due to more participation by the producers, more producers being involved in the program.

MS DUNDERDALE: Purchasing more animals.

MS JONES: 3.3.03, under the Grants and Subsidies, what kind of grants and subsidies would you give out there? Who gets this money, for example? This is obviously the partnership with the federal government, is it, the agriculture –

MR. WHALEN: That is the provincial Agrifoods Assistance Program. It is a provincial government program. It deals with, basically, various projects throughout the Province. It covers off areas like land, construction facilities and equipment purchases. It covers off land issues with regard to the community pastures and fencing projects. In 2007-2008 we had 265 applications, 173 completed projects, which expended $1.8 million of the $2 million dollars.

MS DUNDERDALE: That is our program. That is not a cost-shared program.

MS JONES: How come you were projecting to get almost $900,000 out of the federal government but you did not get it?

MS DUNDERDALE: The savings from that line is – number 05, right?

OFFICIAL: 02.

MS DUNDERDALE: 02 is savings from the Greencover Canada and the National Water Supply Expansion Program. Both of those were 100 per cent (inaudible) funded.

MS JONES: The $10,000 that you are expecting to get this year from the federal government, what is that for?

MS DUNDERDALE: That is down due to the removal of revenue associated with Greencover Canada, the same programs. We have to do an audit of the Greencover program, which is again 100 per cent funded by the federal government. The $10,000 there is to do the audit to that program.

MS JONES: Okay.

Under 3.3.04, Grants and Subsidies, you did budget a lot of money under that section last year, $6.8 million. There was $4.6 million of it that was not spent. I guess I am just wondering what you did spend the $2 million on and why you projected to spend such an amount. Obviously it was overestimated?

MS DUNDERDALE: Not so much overestimated in terms of there is a long process in terms of the application because there are a number of other agencies involved, and part of the due diligence for funding under this program includes environmental assessments. Municipalities have to be involved, and so it takes a fair amount of time to move the application forward from beginning to end. We are reviewing that whole application process and trying to speed things up, but it is hard to hurry an environmental assessment where it is required.

MS JONES: Do you have many applications under the program?

MS DUNDERDALE: Before we get there, for example, new mink farms is a good example of what would come under funding for this. It certainly would explain, this year, some of the unspent funding. We experienced with a couple of our farms last year some serious issues around odour and flies and complaints from nearby residents. As you know, this is a new industry getting started in the Province. It holds great potential here in the Province, especially in Labrador, as you know, particularly in your area, and it was extremely important to us that we get these issues dealt with and we get these problems under control and dealt with in an effective way. So, we put a moratorium on new mink development until we try to work through some of these issues.

We have done that now, so there are a number of applications going forward. We had a lot of them on hold, particularly mink farm development, until we resolved some of those issues that really could set the industry back if there was a great human cry out of certain areas of the Province about the establishment of mink farms.

MS JONES: What other things would fit under this? I am just trying to think – well, the feed kitchens, I guess. Would that fit under this program to support the fur industry?

MS DUNDERDALE: Yes.

MS JONES: What about things like - I do not know - berry production and peat moss production? I am just trying to get a better understanding of what is an eligible –

MR. WHALEN: The fund was established to encourage development, diversification and expansion of large scale agriculture projects, whether it be feed kitchens that are established or mink production that is established. So, large scale investments of projects that are ongoing, businesses already set-up and running, for instance. The two that we funded so far are Central Dairies with a cheese plant, as well as Newfoundland Eggs to help with their grading station.

MS JONES: To help their what? I am sorry I did not get it.

MR. WHALEN: Their egg grading station.

MS JONES: Okay.

Just getting back to my original question now. Are there many applications under that program? I know there is a long process, as the minister said, but I am wondering what the intentional take-up might be.

MS DUNDERDALE: It is very good actually.

MR. WHALEN: We have six large projects right now that are ongoing.

MS JONES: That is in the application process, is it?

MS DUNDERDALE: Applications being progressed through the system now.

MS JONES: Your Budget Estimates that you voted for this year, would that be adequate amounts of money, for example, if you were to look at six of these projects?

MR. WHALEN: That is correct.

MS JONES: So, there is still room for more take-up in the program even if you were to do all of those?

MR. WHALEN: Yes.

MS JONES: How are those programs promoted? Are they done through Industry Trade, or are they done directly through your program, your department? How does that work?

MR. WHALEN: They are done through the department but as well they are also on the website, the provincial website, and as well, like I say, through various agricultural staff throughout the Province.

MS DUNDERDALE: We do a lot of promotion around this program because it is an opportunity to do value-added here in the Province. We have our own specialty cheeses now being developed right here in the Province, we have premium ice cream and we have upgraded our grading facilities for eggs. There are a lot of good things happening around this program and developing some new jobs, but certainly around, for example, the ice cream and the cheeses. It saves farmers a tremendous amount of money because the industrial milk quota can be used here in the Province and they do not have to ship their milk out of the Province for secondary process. The industrial milk now is being used within the Province instead of being exported out for yogurt or cheese or ice cream on the mainland because we were not able to do value-added here in the Province.

MS JONES: I am just assuming now, based on the fact that you told me there were two projects funded, that between the two of those they would have received the $2.2 million dollars last year?

MR. WHALEN: That is correct.

MS JONES: What is the cost-shared breakdown with the private sector on this initiative?

MR. WHALEN: It varies depending – we prefer to have more industry involvement. The higher the percentage of industry put in, the more favourable the application looks, so we prefer to have a higher input from industry. It certainly would not be less.

MS DUNDERDALE: It is more than we put in, but it varies.

MS JONES: Okay.

MS DUNDERDALE: They certainly bring more to the table than we do in terms of investment.

MS JONES: Under the Agricultural Policy Framework Agreement - how many years was this agreement, by the way? I forget again. I think I asked you that last year, too.

MR. WHALEN: Five years.

MS DUNDERDALE: Five years, and we are in the process of negotiating the next five years. Actually, we are in transitional funding now because we have not completed the agreement.

MS JONES: The five years is expired now?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We have great challenges with our federal government around this piece, because in terms of scale this Province is pretty much in a league of its own. The only ones who come anywhere close to us at all would be the Northwest Territories, and so we always have to look for some kind of an exception to get our funding up, so that we can grow this industry. There is not always a great understanding of that by our federal partners. It tends to be quite a struggle for us, in terms of our FPT meetings are always a bit of a challenge.

MS JONES: Now, I understood that a lot of the salaried positions that would have normally been paid out of this heading, you said they are now being incurred by the Province under different headings.

MS DUNDERDALE: Well, we are doing a transition for any number of years. We understand in terms of cutbacks, times were tight and so on. A lot of salaries were shifted over to APF that really ought not have been there. We are gradually trying to take them back where they appropriately need to be.

MS JONES: Yes, but I understand from your earlier comments that there are something like eleven positions –

MS DUNDERDALE: Eleven positions.

MS JONES: – that would be transferred back, but the salary estimates are maintained at last year's budgeted amounts. Are there going to be new positions hired here?

MS DUNDERDALE: Jeff? I don't think so. There are no new salary positions?

MR. WHALEN: No, there are no new positions underneath this heading, Policy Framework.

MS JONES: Now I am a little bit confused, because while I went through all these headings were there were salary differentials, the explanation given to me was the transfer of positions from the Agricultural Policy Framework.

MS DUNDERDALE: And that has been true up to this heading.

MS JONES: But it is not reflected here.

MS DUNDERDALE: No, in this program, and it would not be for all programs. As an explanation for a lot of the variances that you would see in salaries, that is where the variances come from. There is no variance in this program, because we are not adding anybody in this program.

MS JONES: No, but you are moving people out, are you not?

MS DUNDERDALE: No, not in this program.

MS JONES: You are not?

MS DUNDERDALE: No.

MS JONES: Well I really misunderstood, because I thought this was the program that positions were being funded under.

MS DUNDERDALE: In terms of all the information you have received up to this point, that has been correct. This is the first program where we are not shifting people out.

MS JONES: Okay, so all the levels will be maintained here. There was some differential in salary last year, however.

MS DUNDERDALE: Yes.

MS JONES: Not a lot, though; probably only about $30,000 or $40,000.

MS DUNDERDALE: That is associated with the Green Cover Canada and the national water supply expansion programs as well.

MS JONES: Under the Purchased Services here, you overspent $220,000. What would you have purchased that you did not budget for here?

MS DUNDERDALE: Are we into the agricultural -

MS JONES: Policy Framework, yes, 3.3.05, under Purchased Services. There was $220,000 spent over and above what was originally budgeted. I am just wondering what that would have been for, what services?

MR. WHALEN: Purchased Services underneath the APF covers off contracting of services for approved project activities, such as the agriculture awareness advertising, development and production of program materials, printing, applications, brochures, vehicle repairs and maintenance, equipment rentals, meeting facilities for industry consultations. That fluctuates from year to year.

MS JONES: Who do you use to do your public relations work there, the brochures and the printing and those things that you talked about, advertising design? What company would you contract to for that work?

MR. WHALEN: We did contract out for a company to do some of the media and television ads we had. I cannot recall who the company was, but there was a RFP that went out for that.

MS JONES: You just told me you spent $520,000 in that work this year. Did it all go to one company? Was it one contract to one company? Was it a number of contracts?

MR. WHALEN: It would have been one main contract but all the money would not have gone to that one contract. There would have been several things in-house.

MS JONES: Can you find out what company it was, that you contracted out to?

MS DUNDERDALE: Yes, we can. We did a request for proposals. You probably would have seen the ads on television all last year.

MS JONES: Yes, I did see the ads, but I am asking who the company was that did it.

MS DUNDERDALE: Yes, and we will get you that information.

MS JONES: Yes, okay.

MR. WHALEN: I think it was Dory, Dory Advertising.

MS DUNDERDALE: Dory Advertising.

MS JONES: Dory Advertising.

MS DUNDERDALE: Yes.

MS JONES: Okay. Also under that same section there was an increase in the amount of Professional Services that you purchased by $55,000. What were the extra services that you needed?

MR. WHALEN: That would have covered off things like the fees for program audits and evaluation of the program.

MS JONES: It was just higher fees, or was it an audit that you did not anticipate having to have done that you had to get done after?

MR. WHALEN: We do several audits per year. It depends on the federal requirement, whether we do one, two, or three audits. Sometimes we have to do extra audits, internal and federal audits.

MS JONES: Okay. The extra cost of $55,000, would that have been for an audit that you were not anticipating having to do?

MS DUNDERDALE: We did not anticipate we would have to do. We do not know if we are going to have to do one, or three, or four. So, again, it is hard to budget.

MS JONES: To budget for it, okay.

Under Grants and Subsidies, under this heading; obviously, you spent $600,000 less than you had budgeted for. I am just wondering what those grants and subsidies would be? Who would be eligible for them and what they would be eligible to be spent at?

MR. WHALEN: Grants and Subsidies underneath this program basically would be farmers and agricultural organizations for various activities that would be covered underneath the science and innovation, renewal, environment, food safety and food quality programs, and all those activities would be approved by an implementation committee.

It would also include the provincial share of the national business risk management programs, such as NISA and CASE, which is program driven risk management for producers. So it covers off a whole aspect, or gamut of anything that a producer basically would apply for.

MS JONES: This year the grants were down $610,000 under that program. Is that because there is not a big take up or demand was not there? What would have contributed to that?

MR. WHALEN: Several, I guess, issues would arise. It has to do with, basically, poor weather conditions, land not being - in the case of land development, if a producer applied for funding for land development - this year we had a really early winter. It started in November, when the snow started - he would not get his project finished. There would be funds coming back in, so it would not be spent. Areas of - well, that is one case. There are other cases where producers, at the end of the year, could not get their share of the 50 per cent to cover off the project, so they would just drop the project.

MS JONES: Okay. This agreement is administered through a committee or a board or something, is it?

MR. WHALEN: It is through a committee.

MS JONES: Okay. Is that kind of like arm's-length from the provincial government or - how does that work?

MR. WHALEN: The committee is an implementation committee which is made up of a federal representative, a provincial representative - government person - and industry.

MS JONES: Okay. The industry representation, is that appointed by the provincial government, federal government, elected - I don't know - how are they decided?

MR. WHALEN: It is basically accepted by both provincial and federal governments, the representatives would be, and they take their feedback from an industry advisory committee, which is made up of producers, mostly producers, with one provincial and one federal representative. So, there are two committees.

MS JONES: Okay. What are the terms for those individuals who sit on the board? Are they there for a couple of years, five years, the life of the agreement, or -

MR. WHALEN: Currently, the individuals that sat on the board were for the term of the APF. So they all expired as of March 31 this year.

MS JONES: Okay. Where are their offices located? Where are their staff based to?

MR. WHALEN: Staff for?

MS JONES: For this program, the salaries that are paid out. There is $1.7 million paid out to staffing here. Where would those people be based?

MR. WHALEN: They would be all based out of headquarters in Corner Brook.

MS JONES: In Corner Brook?

MR. WHALEN: Yes.

MS JONES: Okay. So this program is really run out of Corner Brook and they are in the same office.

MS DUNDERDALE: That is administered and managed, and the application process is dealt with by the committees and all the work is done by staff in the department.

MS JONES: So, really this committee decides who gets this grant money and who does not get it, and you guys just sign off on it, do you? There is a sign-off process I am sure, somewhere, by someone.

MR. WHALEN: Yes, that is correct. It goes through the implementation committee first, who signs off on the project. Depending on how much that project was valued at, it may then bump up to a management committee level, which is one federal and one provincial person to look at the overall project.

MS JONES: The people who get grants under this program, is that published? The people who receive monies here, is that published information like it is, for example, in Industry Trade or ACOA programs, things like that?

MR. WHALEN: I do not think it is published but it is available to the public, because all these funds - it is one of the requirements, federally and provincially, is to have all these projects available to the general public.

MS JONES: Yes. How would they get it, though? How would the public find out? If there was $20 million spent in the last five years, how would they be able to determine who received that money? Of course, there was that much for sure.

MS DUNDERDALE: They would have to make a request to the department for that information. We certainly would not have any issue with making that information available in a more public way, at all.

MS JONES: Yes, okay.

Just out of curiosity, the industry people who sit on that board, are they eligible to receive grants for their businesses?

MR. WHALEN: Are we talking about the industry advisory committee who gives advice to the implementation committee?

MS DUNDERDALE: The implementation committee, the people who make the decisions.

MS JONES: Yes, the one that has -

MR. WHALEN: The industry advisory rep who sits on that board, if an application came forward and there was a conflict of interest he would have to step out of the room.

MS JONES: There are only two, I think you said, is there?

MR. WHALEN: There are three individuals, a provincial staff, federal staff and one industry rep.

MS JONES: One industry rep. So if there is any proposal that directly impacts that individual's business, then the decision is made by the provincial and the federal government representative?

MS DUNDERDALE: Yes.

MS JONES: Okay. Who is the industry rep?

MR. WHALEN: Up to March 31 it was the president of the federation, which is Merv Wiseman.

MS JONES: Is he still there then, or has he now been removed, or -

MR. WHALEN: As of March 31, all these board members were basically removed because their term was up.

MS JONES: No new board has yet been appointed?

MR. WHALEN: That is correct.

MS JONES: Okay. Now, would you be the provincial representative on this board?

MR. WHALEN: No, I am not.

MS JONES: Can you tell me who it is?

MR. WHALEN: It is the director of our business, Cindy MacDonald.

MS JONES: I am sorry; I did not get the name.

MR. WHALEN: Cynthia MacDonald.

MS JONES: Okay, and who is the federal representative?

MR. WHALEN: Brian Goldsworthy.

MS JONES: Brian, did you say?

MR. WHALEN: Brian Goldsworthy.

MS JONES: Where is he based to?

MR. WHALEN: St. John's.

MS JONES: In what department or branch of the federal government?

MR. WHALEN: Agriculture and Agri-food Canada.

MS JONES: Okay.

Under section 3.4.01, Grants and Subsidies: What kind of grants and subsidies are these that are provided?

MS DUNDERDALE: SPCA.

MS JONES: Okay. All of them, is it minister, goes to the SPCA?

MS DUNDERDALE: Yes, $50,000 to the St. John's SPCA. We actually thought last year there would be a greater disbursement. We allocated that to the St. John's SPCA for use right across the Province. However, we found that most of it was done in St. John's, and they do accept animals from all over the Province.

This year, we increased the funding to - not to St. John's SPCA but to provide funding, $5,000 funding to all the other SPCAs (inaudible) there are six of them, obviously.

MS JONES: That is a good gesture.

MS DUNDERDALE: Yes, they do good work.

MS JONES: Again, the salaries were down in this department last year. I am wondering if there were some vacancies or if there was another reason that it got -

MS DUNDERDALE: No, not on this one either. We had a variance due to late recruitment and vacancies in the division.

MS JONES: What positions would that be? Were there some new positions created?

MR. WHALEN: It would have been existing positions, veterinary services as well as the manager of animal health as well.

MS DUNDERDALE: We had a new vet position open last year that we were trying to fill. We were late filling that position.

MS JONES: Okay.

MS DUNDERDALE: It takes two weeks for somebody to leave working for government; it takes six months to get somebody back.

MS JONES: I hear it takes about twelve to get a nurse, so I would say you are doing good.

I just wanted to look at the Professional Services under this heading as well. You budgeted $31,200 and you spent a little more than that. What kind of professional services would you be contracting there?

MS DUNDERDALE: It is all around the Aleutian Disease, additional funding for the blood testing and so on for the mink industry.

MS JONES: Okay.

Of course, the amount you budgeted this year will be used for the same thing, will it?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We are absorbing all of that cost in support of the industry.

MS JONES: In the Purchased Services, what would the extra $55,000 or $56,000 have been for under Purchased Services?

MS DUNDERDALE: Again, some of that is associated with the Aleutian Disease testing, as well as increased expenditures for vehicle repairs and rentals.

MS JONES: Okay.

The purchases of property, furnishings and equipment, this year you are budgeting $100,000 more than you spent last year.

MS DUNDERDALE: Yes.

MS JONES: I am just wondering what equipment or furnishings that would be for.

MS DUNDERDALE: It is general equipment, but as part of that there is an X-ray machine and an ultrasound machine and so on; that is all associated with our veterinarians.

MS JONES: Okay.

How many veterinarians do you have in the Province?

MR. WHALEN: Seven.

MS JONES: Where are they all based?

MR. WHALEN: They are based throughout the Province, in our regional offices.

MS JONES: Can you tell me where they are, like what offices they are in?

MR. WHALEN: You are looking at Brookfield Road, St. John's, Carbonear, Clarenville, Pynn's Brook, and that is it.

MS JONES: Okay, so some offices have more than one.

MS DUNDERDALE: That is determined by the volume of the work and where the heaviest concentration, for example, of the dairy industry would be, or chickens or whatever.

MS JONES: Okay.

All right, we are almost through the Agrifoods. Wade will soon be able to come back.

Now, the Research and Development here obviously, according to this, would be a new project, a new initiative, that you are taking on.

MS DUNDERDALE: (Inaudible) crops, livestock. The cranberry development came out of that, what we are doing with blueberries, partridgeberries, sea buckthorn, but it is also livestock management and best practices and so on. So, it is basically everything that we can do to support the growth of the industry and support best practices within the industry.

MS JONES: I do not see any staff or salaries attached to it, so I guess it will just be a program that will be encouraged by existing staff and so on.

MS DUNDERDALE: In a place like Wooddale, for example, that is already staffed. So, it is money to support the programs and research projects and so on that they are doing.

MS JONES: Okay.

These things would have been done in the past, then; they are probably just broken out under a specific heading right now, is it?

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: We are trying to put more resources there because we really need to - there are all kinds of things happening in R&D, for example, in terms of we were able to encourage the growth of corn in the Province because of R&D and the new greenhouse covering almost that you could put over corn that really speeds up its growth and protects it from cold weather. People thought that we never could grow that crop here in the Province, and we are having enormous success with that now because of the R&D that was done.

Everything that we have done shows us that an investment in this area is a really good investment for the Province and for the industry, so we keep expanding the program because it is very important; it pays great dividends for us.

MS JONES: Okay.

I just have a couple of general questions before we move on to that.

MS DUNDERDALE: Then we could have a break, because the pizza is here.

MS JONES: Okay.

MS DUNDERDALE: We can finish up this before we go to Mines, and we can have maybe a ten minute break?

MS JONES: Okay.

Well, I just have a couple left under Forestry and Agrifoods.

MS DUNDERDALE: That is fine.

I am suggesting, Mr. Chair, that we finish up this heading, and before we move into Mines we have a ten minute break.

CHAIR: Yes.

MS JONES: Perfect.

With the Abitibi operations in Grand Falls, what is happening there now? I mean, there were some layoffs in management. They were looking at where there might be some adjustments made in the unionized workers side of it. Can you give me an update on where that is now, and what has been happening?

MS DUNDERDALE: I spoke to Abitibi last week and they have just about finished - thought not completely, but they have just about finished - their Phase 2 review, and what they were able to tell me in terms of that, they certainly believe now that they have the right mix of assets to go forward as a company so there will be no closure of the mill in Grand Falls, which is a very good story.

They are continuing their internal review in terms of the operations of the mill, so from where they were in terms of their position last week there are not going to be any layoffs at this time, but I would not certainly take that as any promise that there will not be layoffs in the future.

We are in a position where we pretty much have to wait and see what their internal review results in. We are status quo for the moment and everyone can breathe around the piece that they are going to maintain the mill in Grand Falls, but whether or not there are going to be further layoffs – there is certainly an expectation that there would be. I have to be quite honest with that. They have not told me that there is going to be, but they are taking a very strong look at their operations there, so there very well may be layoffs coming out of their own internal review.

MS JONES: The internal review, I guess, is the aspect where they are looking at they have to achieve a certain amount of savings, is it not?

MS DUNDERDALE: In my understanding it is not so much savings; they have to trim their losses, stop their losses.

MS JONES: It has to be a more efficient operation.

MS DUNDERDALE: They think they can run a more efficient operation than they are doing at the moment, so they are looking to see how that can happen.

MS JONES: Did they give you any time frame around when the internal review might be completed?

MS DUNDERDALE: No.

MS JONES: Okay.

It will be in this current year, I would imagine.

MS DUNDERDALE: In the second quarter, I would imagine.

MS JONES: Okay.

What about the number four paper machine at the Kruger mill in Corner Brook? Is there any intention of reopening that machine, or reactivating?

MS DUNDERDALE: Not under the present circumstances there isn't. There is an excess capacity worldwide for paper production. Paper prices have risen as a result of the takeout of capacity, and that is good news for the industry; however, they are not terribly hopeful of maintaining that in the long run, that there has to be more capacity to come out of the industry.

In terms of my meetings with Corner Brook Pulp and Paper and Kruger, and Mr. Kruger in particular, he is certainly committed to that operation in Corner Brook Pulp and Paper and to the Province, and if there comes an opportunity for him to restart number four then I do not think he is going to need a great deal of encouragement to do it, but there are certainly no plans for that at the moment, given the state of the industry.

MS JONES: One of the issues that seem to keep coming up is with regard to the fact of not buying as much fibre on the Northern Peninsula, and I know you talked about the other agreement for wood fuel and so on. I guess right now it is our understanding that they are importing wood from other provinces in Atlantic Canada.

MS DUNDERDALE: When they closed down number four machine, they stopped taking offshore wood. That was the first place they went to protect workers here in this Province and maintain the workforce here in the Province.

For example, there has been some discussion around the nineteen harvesters that may not be rehired this season, and they are particularly attributing it to the fact that number four was shut down, and the explanation from the company is saying that is not so. When we closed down number four, the very first thing that we did was stop purchasing offshore wood - but it certainly had an impact on the Northern Peninsula. The pilot program that we are doing now has addressed that piece.

In terms of the nineteen workers, nineteen is the worst-case scenario in terms of rehires over the summer. There is a number, but it is hard to fix the number at this point in time, what it might be. Whether it is going to be five or four or nineteen, they cannot say because it depends on vacation time.

What they are trying to do is respond to their more senior workers who are saying that they are not getting enough work harvesting for Corner Brook Pulp and Paper, so what they are trying to do is extend out their season and increase their income so they have better retention of that workforce.

So, it is not as a result of number four closing down. The company is saying it is a piece of realignment they have done to work on retention, which is an issue for them.

MS JONES: Under this pilot project, how much fibre will be purchased, say, from the Northern Peninsula, or used in that process?

MR. MOORES: Approximately 40,000 cubic metres.

MS JONES: What percentage of the supply is that, that would normally be allocated and harvested on an annual basis?

MR. MOORES: On the Northern Peninsula?

MS JONES: Yes.

MR. MOORES: Maybe around 30 per cent or 35 per cent.

MS JONES: We were under the understanding that they were still purchasing wood offshore under a contract that they had with Prince Edward Island that had not expired yet. I don't know when it does expire, or maybe it has already expired, but –

MR. MOORES: We can check on that for you. We are not aware of it. We are aware that the only wood we thought they were going to bring in offshore was Southern Labrador this year.

MS JONES: Did he say when it expired?

MS CAMPBELL: (Inaudible) next year.

MS JONES: This was a month ago. I was not sure of the time frame; I had to check with Lori Ann.

MR. MOORES: We will check on it.

MS JONES: They had indicated to us then that they had a signed contract and they would continue to bring it in until the contract ran out. They did not tell us if they would not renew the contract, and I guess that would be a point of interest for me.

The other point of interest is that the only other wood contract they had outside of their immediate region, then, was the one in my district, in Port Hope Simpson, which I think expires – this is the last summer under that contract, or the last season, I should say, so coming into the end of this calendar year they would have to look at whether they are going to continue to purchase there or not.

I guess because you, Minister, and your department, will be the lead, I am sure, in any negotiations with the company on this, it is pretty important in that area that this contract be renewed.

I do not know what the cost of providing wood out of there is going to be in comparison to the Northern Peninsula or on the West Coast of the Island in the direct area, but they have indicated to us already that they know there is enough wood supply in the western region freed up that they will not necessarily need to be purchasing out of that area.

We have already had one sawmill closed down, when Abitibi closed up in Stephenville, and there were twenty-seven people employed by that operator. Today, I think, with the exception of three, every one of them have moved out of the Province and are working in western Canada and their families as well. It has been a very difficult period for this community of only 500 people. The only other operation that remains is there solely for the purpose of having a market for the by-product, and if they lose this agreement with Kruger I can honestly tell you that it will have a devastating impact there. We could probably see the eroding of the commercial activity that was ongoing. Keith would know very well what I am speaking about because I know he has been there and met with these operators on a number of occasions. I will continue to push on my end, of course, but they have told us already that there will not be the same need as it was back three, four years ago when the agreement was put in place. I am very fearful of that.

I just ask that, when you are discussing with them opportunities to be purchasing wood on the Northern Peninsula and on the West Coast that you be very mindful of what the implications could be if this agreement is not renewed.

That would be the end of my questions on that section, you will be happy to know.

CHAIR: We will take a short break now, fifteen or twenty minutes or so.

CHAIR: I think we are about ready to begin again. It is quarter to nine now, we will take our next break at eleven o'clock.

Ms Jones, you may begin again.

MS JONES: I can assure you, Mr. Chairman, I will not be here till eleven o'clock.

Under Section 4.1.01, Purchased Services: what services would you be purchasing there? It was way under, so I am a little bit curious as to why that would have been.

MR. WARDLE: Purchased Services normally includes: costs associated with program delivery such as vehicle and equipment rental and maintenance; sample analysis - that would be for geochemical analysis for a range of elements; thin section preparation; geochronology - that is the dating of rocks; microprobe services; costs associated with publication of maps and reports emanating from the field program; and storage space rented for the geological survey, and that is storage space for samples and for field equipment.

MS JONES: Where is that stored, here in St. John's?

MR. WARDLE: Some of it is stored in Labrador, in Goose Bay, and some of it is stored here in St. John's.

MS JONES: Under Professional Services you spent $24,000 last year. What service was it you had to contract for?

MS DUNDERDALE: That was translation services in support of a promotional effort at the 2007 China Mining Conference.

MS JONES: You attended that conference?

MS DUNDERDALE: I did not attend but representatives from the department did.

MS JONES: Good. Also in that section, under the Salaries component, last year you basically spent nearly $400,000 less than you had budgeted for. I am wondering why that was.

MS DUNDERDALE: Again, due to late recruitment and vacancies in the division. This is a very competitive industry, so some real challenges, sometimes, around recruitment.

MS JONES: What positions would you have been recruiting for?

MS DUNDERDALE: Dick?

MR. WARDLE: Field Geologists for the most part. We had three permanent field positions that were vacant, plus we had another four temporary positions we were seeking to fill.

MS JONES: Have you filled any of those since then?

MR. WARDLE: Yes, we filled the three permanent positions, but late in the year and into the early part of this year, after quite a few campaigns.

MS JONES: What was the $10,000 for under Grants and Subsidies?

MR. WARDLE: That was for a conference that is co-sponsored with the Geological Survey of Ireland. It is called the North Atlantic Mineral Symposium. It is a biannual event. Normally each department puts a certain amount of money into it, and our contribution was $10,000 for 2007.

MS JONES: That is not an annual event I take it.

MR. WARDLE: That is not an annual – it is a biannual event.

MS JONES: Also, under Property, Furnishings and Equipment you spent $250,000 last year. Most of it you did not budget for. Was that for anything specific, any kind of specific purchase?

MS DUNDERDALE: Yes. That was for a microscope, a battery powered spectrometer and additional snow machines and some other related equipment.

MS JONES: Under the Mineral Lands section, the Transportation and Communications portion of this was much higher than was budgeted. Why would that be?

MS DUNDERDALE: Increased expenditures associated with increased travel for the core storage and inspections, especially in Labrador. We have had quite a bit of activity in Labrador, as I stated in my opening remarks, last year particularly. As well, we have increased banking fees associated with our online claim staking system, MIRIAD. We are just trying to really do everything that we can to support the further development of the industry here in the Province. For example, our MIRIAD system means now that you can file a claim from anywhere in the country, through the internet. That is a new system, recently introduced, for which we have received an award, I might add; a great piece of work by the Mines Division.

MR. WARDLE: Yes, a lot of the increased costs in Mineral Lands are associated with the fact that we had a record year for exploration in the Province this year and record levels of exploration expenditure. That increased the requirements for inspection services in connection with exploration sites and the fees associated with the claim staking system, as the minister just said, and for collecting core that the companies have left behind in the field. We bring this in to our core libraries.

MS DUNDERDALE: That is extremely important in terms of – the companies leave it in the field and that information is lost, so we collect the stores, bring it into our storage system and it is available then to other interested parties to have a look at in terms of their interest in mineral development in that area of the Province.

MS JONES: That is all, I guess, inputted into some kind of database system, something for tracking, is it?

MS DUNDERDALE: Yes it is, and we have applied for and received funding in this year's Budget to be able to get that information on-line as well, so people can access it from across the country. Right now you can get your claim but you have to come to Newfoundland and Labrador to look at the geoscience. We are trying also to get on the leading edge of technology in providing that information and facilitating information dispersement to people who are interested.

MS JONES: You talked about this past year being a record level of exploration in the Province. What is a record level? Where is the industry in terms of claims being staked, work being done and so on?

MR. WARDLE: The level of expenditure, which is the main metric for judging this, is $138 million.

MS JONES: What was the amount, again?

MS DUNDERDALE: $138 million dollars.

MR. WARDLE: $138 million dollars.

MS DUNDERDALE: In exploration.

MR. WARDLE: That has been going up consistently since 2003. We have had something like, I think, a 300 per cent increase about that time.

MS JONES: Where is most of the exploration work being done now?

MR. WARDLE: In terms of expenditure, most of it is in Labrador, where it has been associated with base metal and uranium exploration.

MS JONES: Why is there so much uranium exploration going on in Labrador? I am aware that it is. I met several exploration companies last year when I travelled around Labrador that were doing that work. Is there a high demand for that now in the world market? Has the price shot up? Is it because of so many bans on uranium mining elsewhere in the world? What is the contributing factor?

MR. WARDLE: A combination of things. A number of nuclear power plants are starting to run out of fuel. The supplies of military fuel, which have kept some of them going for the past two or three decades, are winding down. That would be military fuel that came from decommissioning of warheads, particularly in the USSR.

With the Green Agenda, the Kyoto Accord, et cetera, there has been an increased emphasis on so-called green power or power that does not involve hydrocarbons, burning hydrocarbons, so nuclear power has gone through somewhat of a renaissance because of that.

The combination of those two factors has produced projected growth in the number of nuclear power stations the world is going to need and, of course, that drives the need for fuel which drives the price. So, since 2003 the price of uranium has gone from about $11 a pound up to, it was over $120 or $130 a pound earlier this year. It has fallen back to around $100 since then. It is that surge in price that really drives the exploration industry.

MS JONES: Where in the country is uranium mining going on now?

MS DUNDERDALE: Saskatchewan.

MS JONES: Are there any other provinces?

MS DUNDERDALE: (Inaudible).

MS JONES: Just Saskatchewan.

I guess I will move on to the Mineral Development section or Mineral Management section. I am getting so tired I forget where I was; 4.1.03., Mineral Development.

MS DUNDERDALE: Where are we?

MS JONES: Subhead 4.1.03.

MS DUNDERDALE: Subhead 4.l.03.?

MS JONES: Yes.

I will start with the numbers here first, and that is first of all Salaries. It was down quite a bit from what was projected, and I am just wondering why that was.

MS DUNDERDALE: Late recruitment and vacancies, again.

MS JONES: What positions, again, would that have been?

MR. WARDLE: Chiefly mining engineers, mineral development engineers.

MS JONES: How many vacancies would you be looking at?

MR. WARDLE: We are short three mining engineers at the moment. Plus, we have a vacancy for a mineral analyst, a Geologist III and, I think, a clerk-typist.

MS JONES: I guess it is difficult competing with the private sector, is it, to recruit those positions in the Province?

MS DUNDERDALE: Well, commodity prices are so high and there is so much activity going on, and there is a limited pool because it is an ebb and flow industry, and because there is such a high demand, and because we have such expertise within the department as well, this department is noted throughout the country. I have to say, when I go to PDAC, for example, which is the largest mining conference in the country, the feedback I get in terms of the service that is provided by the Mines Branch is amazing. They have a solid reputation right throughout the whole country and, in fact, company after company maintains that Newfoundland and Labrador is the best place in the country to do this kind of business, that the Mining Branch are well informed, there is a great level of expertise, and they are helpful and responsive. We get accolades almost on a daily basis in terms of the work that is done in that division of the department.

MS JONES: So I guess you are hoping to be able to recruit those four positions this year.

MS DUNDERDALE: Yes.

MR. WARDLE: Yes, we are, we are continuously trying to find these positions. It is not just a problem of compensation, though, it is the fact that the recession in the industry over the past decade or so resulted in the closure of a number of mining schools so the academia simply is not turning out enough mining engineers to meet the demand. That, coupled with demand from the private sector, makes it difficult to get these people.

OFFICIAL: This is an issue as well - you will see it in the energy sector - with the demand associated with geologists and engineers within that sector as well. It is a priority issue for us in this particular year. The companies are seeing it; the department is seeing it. We have implemented some initiatives to try to improve upon that situation; we have gotten a specific analyst dedicated to looking at some of the issues with respect to the recruitment and retention of staff. We have made it a priority issue at the executive level in terms of understanding what the issues are, and what things we can do to be able to recruit and retain staff in terms of professional development and those types of things.

We have been talking to some degree with the university to try to see how we can make sure that the university has the programs and policies in place to try to train more individuals to fill these positions for the industry generally and for us specifically, so we are working on programs with them, as well, to try to improve the situation.

It is a problem that the industry has. It is a problem that we are specifically grappling with as well, so you will see that throughout this whole budget process from the Mines and Energy perspective that we consistently are under our salary budget because we are having a tough time retaining the staff because the industry is taking them because, as the minister indicated, we have very good staff. It is a problem that we are trying to deal with, but it is a problem that the whole industry is grappling with.

MS JONES: I remember actually doing the Estimates last year in this department, this section of the department, and also the year before, and that is why I have been asking what positions are vacant; because, going back through my notes a few days ago, that was one of the things I noticed: that there was a problem, and that was recruiting engineers, geologists and some other individuals.

It is nice to see that you are putting some incentive program in place in terms of designating a recruitment officer, but do you actually think that is going to enhance your opportunities any great deal in terms of recruiting professionals at that particular level right now with such demands in the industry?

MS DUNDERDALE: This is a problem that is just not peculiar to us or particular to us. I had a conversation with the Energy Minister of Qatar this summer, while he was here, and he was telling me how activity in Fort McMurray is impacting operations in Qatar. So there is a crunch worldwide, given the price of commodities, given the activity that is going on in all of those sectors, and the shortage, given the fact that we are coming out of a period where there was not a great deal of activity, that every organization is finding itself within that crunch.

We gain ground, we get people and we get up, and we are finding it really challenging to maintain. We fill positions and then people go out the door and then we have to start again. Plus, it is a long process in terms of, in two weeks we can turn around - a process here that allows us to hire, but it only takes two weeks for people to walk out the door.

It is a challenging piece of work for us, but at the same time I have to say that in terms of the work that gets generated out of the department it really speaks to the professional and dedicated people that we have there, because the work gets done, and the volume of work that has come particularly out of Mines and Energy in the last year has been staggering. So it really speaks to the people we have there as well.

MS JONES: Okay.

In terms of the Purchased Services under this department there was $3.4 million allocated and you spent less than $200,000. What would the allocation have been for? Why was it not used?

MS DUNDERDALE: In terms of 05. and 06., both of those have to do with the Baie Verte and Rambler Mine rehabilitation. There was a delay in awarding the contract. Because we award the tender, and the tenders that came back were outside the scope of the work that needed to be done, we had to pull it back and go back and re-tender and that caused a delay. All of that now has been rolled over into this next fiscal year and that work is now proceeding.

MS JONES: That was the cleanup work on the old mine site?

MS DUNDERDALE: Yes.

MS JONES: There was a part of that mine there was supposed to be reactivated by another private sector company.

MS DUNDERDALE: Yes, and that is not affected by the rehab work, that area.

MS JONES: Okay.

MS DUNDERDALE: There are four different sections to the Baie Verte and Rambler property. The section where they are doing the restart is not in the area that we are doing the rehab.

MS JONES: Okay.

I am thinking back because it is well over a year ago since I have read the report or the environmental assessment piece that was done. It was no small piece of work, if I remember correctly. It was very detailed.

In terms of the mine cleanup piece that government is looking at now, the amounts that you have budgeted for this year, nearly $6.156 million, will that complete the cleanup work that is required or is that only a portion of the cost?

MS DUNDERDALE: What it does is complete the work that has been outlined as a result of the studies that have been done. In that piece of work there is money for even more work to be done in terms of study, in terms of what the next steps are. I mean, that is a huge problem, a big mess that has to be cleaned out there, that will take tens upon tens upon tens of millions of dollars to clean up.

The first item for us was to ensure that surrounding communities were secured and that the site also was secured, that nobody could wander on that site and hurt themselves and so on. That is the first pieces of work that have been completed as well as other studies now to see what the next steps are.

MS JONES: The company that had proposed to government to reactivate one portion of this mine operation - one of the four portions - what was the name of that company again? I forget.

MR. WARDLE: Rambler Metals & Mining; it is a UK-based company.

MS JONES: Have they made any progress on that at all?

MR. WARDLE: Yes, they have. They have dewatered the old Ming Mine; that is the mine that we are talking about. Most of their prior exploration was being done from surface but once you get below that a kilometre surface drilling gets very expensive. So, they received environmental approval to pump the mine out and now they are down underground drilling to depths below a kilometre. They have produced an initial study which outlines a resource that may at some point in the future be minable. They are getting some very good grades of copper and gold down there, so it is looking very promising.

MS JONES: How many people do they have on site doing that work out there? How many people do they have on site? I am just trying to get a determination of the scale of the work.

MR. WARDLE: I think they had about forty people during the dewatering phase. I am not sure how many they have out there at the moment.

MS JONES: Okay.

Under Grants and Subsidies under that section as well, what kind of grants and subsidies would be given out under this line item, and who would be eligible to get them?

MR WARDLE: Grants and Subsidies is entirely contained in our Mineral Incentive Program; that is a series of incentives that are given to the exploration industry. The major part of that is what is called the Junior Exploration Company Assistance Program, so $2 million of that would go towards assisting junior exploration companies. They would receive matching grants up to $100,000 on the Island, $150,000 in Labrador, and they would have to match that with their own funding. Generally, I think the rule of thumb is for every dollar that we put into this we get $3 back from industry in the way of contributions.

The other components of the Mineral Incentive Program will be prospector assistance. We give $5,000 grants to prospectors to grubstake them essentially. We also have a Natural Stone Assessment program which is worth, I think, about - it is a nominal amount, but about $250,000. That is for people to assess potential dimension stone projects like granite, that sort of thing.

MS JONES: Do you get many applications under that program?

MR WARDLE: Yes, we are always oversubscribed by year-end, particularly in the junior exploration company part of this. It is a very popular program. Most provinces do this; it is a fairly standard thing across Canada, to find these incentives.

MS JONES: Okay.

MS DUNDERDALE: Great leverage for investment, as that kind of leverage, three to one, is very, very good for the Province.

MS JONES: Right.

The revenue you collected last year, what was that from? There was $95,500.

MS DUNDERDALE: It is recovery of costs from rehabilitating the Colliers barite mine, and that was received from financial assurance.

MS JONES: From what mine was that?

MS DUNDERDALE: The Colliers Point barite mine.

MS JONES: I am not familiar with that.

MR. WARDLE: It is on the Isthmus as you – I think on the west side, as you cross the Isthmus.

MS JONES: Why would they again have to pay to this money (inaudible)?

MS DUNDERDALE: Because you cannot operate a mine – we will never have another Baie Verte and Rambler. Now, when you operate a mine in this Province, you have to have a rehabilitation plan on your application to operate, and you have to provide assurances to do the rehabilitation once the mine is depleted.

MS JONES: Okay, so that is a requirement of the mining companies.

MS DUNDERDALE: It is a requirement now.

MS JONES: Okay.

MS DUNDERDALE: There will never be a repeat of that within the Province.

MS JONES: I guess there was only one mine, then, last year, if this was the amount that –

MS DUNDERDALE: Yes.

MS JONES: So mines like Duck Pond, for example, would have the same kind of –

MS DUNDERDALE: They have to have a rehab plan before they are allowed to take a spoonful of ore out.

MS JONES: We heard that before.

Just a couple of questions, general questions, on the mining side before we move on.

The Voisey's Bay smelter-refinery piece for the Argentia site –

MS DUNDERDALE: Hydromet.

MS JONES: The hydromet, yes. Can you give me an update on what is happening with that?

MS DUNDERDALE: Things are going very well in terms of the technology. In terms of where they are, all indications are that hydromet will be the way that they process the ore, so they are progressing with the work.

They did an environmental assessment and it was found deficient by the Department of Environment and Conservation so they have been sent back to redo that piece of work and that is in progress.

There is going to be a requirement to have some regulatory changes with regard to the tailings pond – federal regulations with regard to tailings pond - for their tailings in Sandy Pond, and they are progressing in that piece of work with the federal government and will get to sanction date in November. We will see where things are in terms of all of those pieces then.

We have regular contact with them. We went down to Brazil in the fall and viewed their operations there in terms of what CVRD is doing, to get a better idea of who this company is and how they do their work. Since then, I had some concerns after the environmental assessment; so, while I was in PDAC I took the opportunity again to meet with the Canadian vice-president of CVRD and again ascertain where they were or what they were doing, and my concerns about the environmental assessment piece and so on.

We maintain regular contact with them. In June we will get a reading about where they are in terms of being able to sanction the project in November, so we will review progress at that point, but so far….

MS JONES: I know they have to go through the environmental process and all that stuff, I can certainly understand that, and have been following it, actually, in terms of what is happening there, but what were the time frames again in which they were looking at having a full smelter operation ongoing, or hydromet processing plant ongoing?

MS DUNDERDALE: Their sanction date is November 15, 2008, and hydromet 2011.

MR. WARDLE: December 31, 2011 would be the construction completion date.

MS JONES: Okay.

In terms of the royalties out of Voisey's Bay, how much money did government take out of that project on royalties and mineral taxes last year?

MS DUNDERDALE: Do you recall the number off the top of your head?

MR. WARDLE: It is a finance issue. It is in the Estimates but, it is -

MS DUNDERDALE: I cannot recall right off the top of my head.

MS JONES: I just thought you might know.

MR. WARDLE: No, I can't remember offhand.

MS JONES: I know the amount in terms of all of the mining developments, but I don't know how many mines pay in, in royalty. I know they all pay mineral tax, but I don't know how many pay the royalty. The breakout is not there, so I was unable to determine the actual amounts.

MS DUNDERDALE: I can't tell you off the top of my head.

MR. WARDLE: The bulk of the revenue would be from the iron ore operations and Voisey's Bay. Duck Pond was a small contributor this year, and the other operations, the industrial mineral operations, will be very small contributors to that, so it is pretty well iron ore, nickel and copper.

MS JONES: Yes.

In Duck Pond, they are into their underground mining piece now, aren't they?

MS DUNDERDALE: Yes.

MS JONES: And, they have their smelter operation going, or processing facility? I remember they were building it the last time I was there, which was back last spring I think it was.

MS DUNDERDALE: It is operational.

MS JONES: It is.

MR. WARDLE: Not a smelter, no. It is a mill.

MS JONES: It is a milling operation.

MS DUNDERDALE: Yes.

MS JONES: Okay.

MS DUNDERDALE: My first foray underground.

MS JONES: My second. I didn't like either.

In the Duck Pond Mine operation now, the full operation, how many people are working there?

MR. WARDLE: Just under 200.

MS JONES: Okay.

Are their production levels pretty stable or are they on a gradual incline over a period of time? I know that they are just getting started and so on, but –

MR. WARDLE: No, they are up to full production, and that production will stay pretty constant until they get close to closure and then it obviously will wind down.

MS JONES: Okay.

MR. WARDLE: The mill is designed for a certain capacity, so they have to feed the mill to keep it going. That is why mining is generally done at a fairly constant rate.

MS JONES: What is the lifespan of that mine operation?

MR. WARDLE: A maximum at the moment of eight years, unless they find additional reserves and then it could be extended longer.

MS JONES: Yes.

MR. WARDLE: Well, it is seven years now because it has been in operation for a year.

MS JONES: There was an issue going back a few years ago in Western Labrador with the pelletization of iron ore. Government, at the time, looked at feasibility projects for production and the company wanted enhancements for things to occur in this Province as opposed to in Quebec. At that time, they agreed that they would re-utilize, or reopen a pelleting operation across the border and it never happened. I am wondering what their long-term plan is now for pelletization.

MS DUNDERDALE: I met with them this morning.

MS JONES: Well, the timing is good.

MS DUNDERDALE: Which one are you talking about? KeMag, LabMag?

MS JONES: That is the new mines. I am talking about the IOC.

MS DUNDERDALE: Iron Ore Company, okay. No (inaudible) KeMag, LabMag.

MS JONES: I will get to that one in a minute.

MS DUNDERDALE: I met with the Iron Ore Company in January, yes.

MS JONES: Did someone want to answer that question?

MR. WARDLE: As part of the current expansion plans, IOC has not indicated any intention to reactivate its dormant or mothballed pellet plant in Sept-Iles. I think that is what you are referring to.

MS JONES: Yes.

I asked because I knew that nothing had happened on that front but I also have heard some rumblings locally in the western region that there might be some consideration now being given to looking at that issue again, and I was just wondering if you guys had any conversations with them, were aware of anything, if they are looking at any change of plans, or any plans at all at this stage, because nothing has happened.

MR. WARDLE: We have been told that the focus at the moment is very much on concentrate. The price differential between concentrate and pellets was narrowing considerably until just recently. We are monitoring that situation, though, obviously. It is a potential concern, but as of now the company is showing no signs of moving to reactivate that plant.

MS JONES: Also, with the operation in Wabush, there was some talk about transfers, sale of assets and so on, going back a few years ago. Where does that stand now? Is the company that is there, there for the long haul? Is there a new deal?

MS DUNDERDALE: Well, there is legal work happening between the two companies is certainly our understanding. I met with Cleveland-Cliffs a month ago, or six weeks – within the last two months in any case. Their stated intention to us is that they intend to stay in Wabush, that they intend to operate that mine, that they are pleased with the manganese reduction testing that they have had going on there, and that they are going to continue investment in that piece.

There is certainly concern on the ground with the union, certainly in Wabush, with what the plans are with regard to Wabush. It certainly has been an unsettling year for them in terms of what was happening to that operation, and where they were going, with it being sold, being on the market, and then they thought they had a buyer and that cancelled, and then back and so on.

I stay in regular contact with Cleveland-Cliffs. We are watching very carefully what they doing up there. There have been a number of safety concerns and this department, along with Government Services, has been monitoring that very carefully. We met with Jim Skinner from the union the week before last, or within the last two weeks, and certainly heard his concerns and shared with him what we knew, so we will just have to monitor it as we go along.

In terms of the company, they are saying all the right things. We are just going to stay close to it and see where this goes.

MS JONES: Now we will get back to the Quebec KeMag and LabMag project.

MS DUNDERDALE: They are still a junior exploration company that has not finished their bankable feasibility study. They are working diligently on their part to do whatever they can to attract investment and have an exploitation plan for both those projects.

MS JONES: How far apart are those projects anyway?

MS DUNDERDALE: They are the same ore body, is my understanding. Part of it is in Quebec and part of it is in Labrador. Do I have that right, Dick?

MR. WARDLE: Yes, there are three. There are two types of deposits up there. The KeMag and LabMag deposits are what is called taconite, that is a separate belt, and then there are the two direct shipping ore projects, one of them by New Millennium and the other one by Labrador Iron Mines. They are the old deposits that IOC used to mine in the Schefferville area. When they closed in 1982 they left behind a considerable amount of reserves in that area, so these projects would propose to exploit those remaining reserves.

MS DUNDERDALE: We are listening to them, and what they have to say, but we bring the same philosophy to those discussions as we do with all other resource development: How do we maximize benefits to the people of the Province, and particularly to the people of Labrador, in the development of this resource? That is the bar that they have to rise to and the questions that they have to answer when they are making any kind of proposals around development.

MS JONES: What company is that?

MS DUNDERDALE: Is it New Millennium?

MR. WARDLE: New Millennium Capital Corp., and the other proponent is Labrador Iron Mines Limited.

MS JONES: Labrador who?

MR. WARDLE: Iron Mines. They are both junior mining companies.

MS JONES: Okay.

I think that concludes my questions on the Mining section. Thank you for your answers, for sure.

I am just starting into the Energy section there. I will skip over the Salaries. I am assuming that again it is short-staffed and so on.

MS DUNDERDALE: It is the same reason, yes.

MS JONES: Professional Services were budgeted much higher than was actually utilized. What were you –

MS DUNDERDALE: They were Energy Plan initiatives that we were not able to initiate because of the lateness of the announcement as well as the general election.

MS JONES: Okay.

What particular initiatives would that have been? What particular pieces of the Energy Plan?

MS DUNDERDALE: Charles?

MR. BOWN: Those particular pieces were not identified. The budget estimate was done prior to the completion of the Energy Plan, so an allotment was made for those activities that could have been rolled out following the Energy Plan.

MS JONES: Okay.

This year you are budgeting about $273,000. What will you spend that on?

MR. BOWN: Those are not Energy Plan activities. Those are Energy Policy studies that will take place, and they will be largely focused on activities such as electricity industry review and also a regulatory review for the onshore oil and gas land tenure system.

MS JONES: Okay.

Under Purchased Services, again, you were down but I am just wondering what you would have purchased with that money and what you are budgeting for this year.

MR. BOWN: Sorry, I didn't say my name the last time, Charles Bown.

Those funds in 2007-2008 were used for equipment rentals. We used those funds for printing the Energy Plan, and it also includes the Province's contribution to the Council of Atlantic Premiers.

MS JONES: Okay.

What are the grants and subsidies that you provide under that section?

MR. BOWN: Those are payments for memberships in two organizations that we currently belong to; that would be the Oil and Gas Compact Commission and the Energy Council.

MS JONES: Okay.

Just out of curiosity, before I move on, what positions are vacant under that section?

MR. BOWN: We are currently recruiting middle management positions in the Energy Policy section as they relate to regulatory development, regulatory compliance, energy efficiency, alternative energy, and planning and co-ordination.

MS JONES: So you have four vacancies or more?

MR. BOWN: Five.

MS JONES: You have reduced your budget, though, this year over what you budgeted last year. Is there a position that you have taken out, or something?

MR. BOWN: We have just completed a restructuring in the Energy Policy branch, and that has seen a couple of positions moved to another division.

MS JONES: Okay.

What division would that be under?

MR. BOWN: If I remember correctly, that is the Royalties and Benefits Division.

MS JONES: Okay.

In Petroleum Development, I am assuming the Salaries piece is vacancies again, is it?

MS DUNDERDALE: Yes.

MS JONES: What positions would they be? What skill sets are…?

MR. KIELEY: They would be mainly geophysicists, geologists, and petroleum engineers.

MS JONES: You must have probably at least four vacancies there, or –

MR. KIELEY: Four or five, yes.

MS JONES: Under Professional Services there, what would you be purchasing? What services?

MR. KIELEY: Mainly technical type services in terms of geological services, assessing geological information. We utilize that to prepare packages when we have land sales, so we would get a package put together on a particular area that we are trying to promote for our land sale, and utilize that to promote that to potential exploration companies.

MS JONES: Okay.

What were the land sales this year?

MS DUNDERDALE: We have four parcels of lands up for sale off Labrador, and it is the first land sale we have had off Labrador since the 1970s so we are very excited about that.

MS JONES: That is in the gas reserves, the areas you are talking about?

MR. KIELEY: They have been gas prone, yes.

MS DUNDERDALE: They have been gas prone; they have been looking for oil but found gas.

MS JONES: Yes.

MS DUNDERDALE: It is in that area.

MR. KIELEY: Yes.

MS DUNDERDALE: We had a land sale off the West Coast as well.

MR. KIELEY: We had a land sale off the West Coast, right? I think we had one in the Jeanne d'Arc as well last year.

OFFICIAL: That is correct, yes.

MS DUNDERDALE: Yes, one on the West Coast; one in the Jeanne d'Arc.

MR. KIELEY: One in the Jeanne d'Arc last year and we have one coming up in August off the Coast of Labrador.

MS DUNDERDALE: Off the Coast.

MR. KIELEY: That was delayed because they are going to have to complete a strategic environmental assessment to help facilitate the land sale process there in Labrador, because it has been a while since they have had a land sale off Labrador.

MS JONES: Okay, so there are four parcels all together that are up for sale this year: one in the Jeanne d'Arc –

MS DUNDERDALE: No, no, four of them are off Labrador.

MS JONES: Oh, there are four off Labrador.

MS DUNDERDALE: Yes.

MR. KIELEY: Those other ones we referred to happened last year.

MS DUNDERDALE: Last year – one off the West Coast and one in the Jeanne d'Arc.

MS JONES: Okay.

Do you have any companies that have expressed interest in those land sales?

MS DUNDERDALE: Well, land sales are driven by interest from companies. Because there has been quite a bit of seismic activity going on off Labrador, independent of companies and so on, that generally indicates an interest. Companies don't go out and spend money on doing seismic work if they don't feel they have a potential customer for that work. Then, lands are nominated to be put up for sale.

Given the fact that all of those things have taken place, it certainly indicates a healthy interest in that area of the Province again, and we are really pleased about that.

MS JONES: What companies have expressed an interest?

MS DUNDERDALE: Do we have that information?

MR. KIELEY: No, the process that is normally followed is that they would provide – there would be certain companies that would express an interest to the board. The board actually runs the actual land sale. So the specific companies, at this point in time, are not publicly out there, but in terms of the activity –

MS DUNDERDALE: When the bids take place, that is when companies are identified.

MR. KIELEY: You will know what the successful bidder is; but, obviously, from even our own experience in terms of providing information about the area, there has been quite a bit of interest in various companies looking for information on the area to assess and potentially prepare a bid in the upcoming August land sale.

MS JONES: Okay.

Again, under Purchased Services, what would you be purchasing?

MR. KIELEY: Do you want to take that part?

OFFICIAL: Sure, it would be trade shows, (inaudible) rentals, that sort of thing, for geological type shows, such as summer NAPE, winter NAPE, which is North American Prospecting Exhibition.

MS JONES: Okay.

Under the C-NLOPB, the Grants and Subsidies have increased this year.

MS DUNDERDALE: Yes.

MS JONES: Any particular reason?

MS DUNDERDALE: Yes, there is a $500,000 increase to the board's base budget - $500,000; expansion of the Core Storage and Research Centre, because they have run out of space, $400,000; and additional funding related to their data repository system, $125,000. All of that is our share, cost-shared with the federal government.

MS JONES: I don't know if this is a fair question, Minister, and if it is not I certainly will not be offended if you do not answer it, but there has been some interest expressed by the Auditor General to do an audit on this particular board in the Province. I am wondering if they have approached you or government generally in terms of having that audit conducted. I know there was some concern in terms of whether the federal Auditor General, Sheila Fraser, would co-audit this particular committee, and I think the response from her at the time was that it was not a priority on her list.

MS DUNDERDALE: We stated quite clearly, when the issue was raised, that we had no problem with the Auditor General going in. The board's position is that it has to be a joint audit, and has indicated that to the Auditor General and to us and to government.

MS JONES: Okay.

MS DUNDERDALE: To both levels of government.

MS JONES: Actually, the only conversation I had with the Auditor General on this was a very brief one. I am just wondering if there is any protocol whereby consent would be given at the request of your government to the federal government to allow for just the Auditor General of Newfoundland and Labrador to conduct that audit.

MS DUNDERDALE: We have made it quite clear that we have no objection to an audit being done on the C-NLOPB. It is the federal government who is resisting and saying it is not a priority for them. Until we have federal government agreement, the board accepting - you know, the board has to accept that (inaudible). We do not control the board. We only have a half interest in the board, a 50 per cent interest, in determining what goes on there, so we cannot dictate to the board. We cannot dictate to the board, but we do not have an issue with it.

MS JONES: Okay.

Under Royalties and Benefits, the salary portion again was down.

MS DUNDERDALE: The same issue.

MS JONES: I am just wondering what the vacancies were.

MR. TOBIN: That would be, in the past year, a number of auditors, but those positions have since been filled for the most part. There would also have been a couple of development officers and a couple of economists. We are almost fully staffed, particularly in the royalty audit section. We are down one person out of upwards to a dozen, I guess; we are doing really well there.

MS JONES: Okay, good. I hope you have success in keeping them.

Also under that section again, Professional Services, you did go over budget about $250,000 last year. What kind of professional services would you -

MS DUNDERDALE: Our audits.

MS JONES: That would have been the audits?

MS DUNDERDALE: Our audits. We are way behind in our audits. They have not been brought up to date since the projects began, so we are struggling not only to do our own years but to do the years before that. Audits of our three projects: Hibernia –

OFFICIAL: Royalty.

MS DUNDERDALE: - royalty audits, the royalty, Terra Nova and White Rose.

MS JONES: Okay, so they are audits that are required under legislation, I am assuming.

MS DUNDERDALE: And, can mean millions of dollars to us in terms of –

MS JONES: Whether the rate of money is being collected -

MS DUNDERDALE: - ensuring it is being charged out under right headings and so on. So it is critical that we get them up to date, and there has not been a full, you know, in terms of - we are just now getting to a place where the initial years of those operations have their audits up to date, years behind –

MS JONES: So you are talking about White Rose, Terra Nova –

MS DUNDERDALE: Hibernia.

MS JONES: - and Hibernia.

When would the last audits have been done on some of these?

MS DUNDERDALE: They weren't done.

MS JONES: They were never done?

MR. KIELEY: For those three projects, and with the increased activity, every year we are doing audits but, because of the turnover in staff, because of the resources that were assigned to that particular piece in previous years, the audits were behind; so, this past year and the year before we have made a particular effort to get those audits up to date and we have used outside assistance through auditing firms to help us do some of those audits. So, we have a combination now of outside accounting firms helping us get the audits up to date and we have our own staff working on the audits as well. We are working on a number of different audits now with all our projects at this point.

MS DUNDERDALE: But the audits were –

MR. KIELEY: Behind.

MS DUNDERDALE: Behind, big time.

MS JONES: So where are you now? You have been at this for two years, you said?

MR. KIELEY: We have been at this for a number of years, but the last two years we have made a concerted effort to bring them up to date, so we are making progress over the last year in terms of knocking off years; because, with Hibernia, Hibernia would have been first production in 1997 so we have had that many years to audit Terra Nova. You would have started production in 2001, so you have to go back and audit all these years.

MS DUNDERDALE: We have had to come from audits from 1997 up to this year, so it is taking us some time to bring that work up to date because we were so far behind.

MS JONES: Where are you with it now? Where are you, like, with Hibernia? Have you finished it?

MR. KIELEY: Hibernia will be up to a certain date, I think it is around 2000, in the early 2000s, so we are making progress but we still have a lot of work to do to get them totally up to date.

MS DUNDERDALE: And you are given a time frame in which to bring them up to date so benefits are not at risk, but we have to get them up to date. If we allow –

MS JONES: I guess that is where I am going. I would like to know the dates to which you are now, and I would like to know – this a legislated piece, you are saying? I was not aware of this before; that is why I am asking about it now. Is there a legislative requirement here to have done this?

MS DUNDERDALE: There is a time frame in which you have to have audits completed for a certain year.

MS JONES: Okay.

So, say we are looking at 1997 under Hibernia and we are doing that audit twelve years out, or eleven years out –

MR. KIELEY: Those audits are done. Those audits are done, so we are up –

MS JONES: That is why it is important for you to tell me the dates so I can understand where we are, because my next question is going to be around any discrepancies that have been found and how they are calculated and how we collect it. So, can you tell me where you are with Hibernia, with Terra Nova, and with White Rose on those audits now?

MR. KIELEY: With Hibernia we would be up to the 2001 time frame, and I could be corrected. I believe it is up to the 2001 time frame, so we would have done audits for those particular years, issued what is called a redetermination in terms of determining how the royalty should be recalculated, and going through the process to get to a certain point as to how you would reconcile the difference that we may have with the companies.

We can go through those processes on Hibernia. Terra Nova, we are going through a process of getting the whole capital phase audit up to date, so that is the next step that we are going to be doing. White Rose, we are just about to begin those particular audits; we are planning for those audits this year.

We are within the timelines prescribed by legislation (inaudible) the Hibernia royalty contract, but we are behind and we are putting extra effort into this whole piece to get caught up. When I say behind, we have not lost any ability to audit these. What we are saying is that we would like to get them up to a closer time frame.

MS DUNDERDALE: Because the work had not been done on Hibernia that is where our concentration had to be, so our time frame did not run out on us.

MS JONES: What is the time frame?

MR. KIELEY: Six years.

MS JONES: Six years on each one.

MR. KIELEY: Yes, six years and you have another year to go through a process, but it is six years in terms of the audit period. We have been keeping within the time frames established. We would just like to have them more current.

MS JONES: On Terra Nova, you said you are looking at the audit on the capital piece now, so you are talking about the investment in the project, are you?

MR. KIELEY: Yes, the capital phase of the project prior to production starting. We are looking at that particular phase of the project in terms of the capital cost of the project, and doing an audit process with respect to that.

MS JONES: Okay.

Were there discrepancies in the work that you have done so far, for example, with Hibernia, which would be the only one, I guess, so far.

MS DUNDERDALE: You will always find discrepancies, and there are issues for debate and settlement and so on, but there has been nothing earth-shattering that we have come across to this point.

MR. KIELEY: No, and there are processes in place within the agreements and the legislation to resolve disputes, and we would go through those processes to try to determine the interpretations that we would have versus what the company would have. We have gone through some of those issues and come to conclusions on some and not to conclusions on others, but there are processes that you would go through to reach those conclusions.

It is like you would do in a tax system, the same type of process that you would go through in terms of identifying doing an audit, seeing whether or not there are disagreements with respect to the costs that would have been deducted, and coming through a process to determine what should be deducted and what should not. We would go through various processes to get to that point.

MS JONES: So all of the money that was there would have been spent to do those audit processes.

Under Purchased Services, what would you have used that for? What service did you purchase?

MR. TOBIN: Trade shows once again for the Offshore Technology Conference in Houston, Offshore Europe, so it would be rental of space and equipment, for the most part, for those types of industry trade shows.

MS JONES: Okay.

MR. KIELEY: Just to answer your question on Professional Services, not all of it is used for audit. We would use some of it as well for doing analysis of various issues. For example, I think our strategic advisor on energy would come under that budget.

MR. TOBIN: That is correct.

MR. KIELEY: So it is not all for audit processes. It is mainly for the audit process; plus, we have a strategic advisor that provides us with analysis and advice on specific energy issues, so that would come under that budget as well.

MS JONES: The strategic advisor: Is this a rotational contract or is it the one person all the time?

MR. KIELEY: It is Wood Mackenzie. They are an internationally recognized firm based out of the UK which we use for expertise in specific issues.

MS JONES: Okay.

Under Grants and Subsidies, do you want to explain to me what falls under that? You budgeted $4 million. What are you going to use that for?

MS DUNDERDALE: The estimates are due to the additional funding for the Bull Arm Site Corporation. We are doing upgrades and renovations. We are preparing to get that site ready for the major developments we have in the offing.

Also under that heading is the department's membership in the Centre for Marine Compressed Natural Gas, about $25,000.

MR. TOBIN: The base budget there is the core funding for the Bull Arm Site Corporation. I guess in the $1.235 million is your snow clearing, insurance, heat and light, security, those kinds of basic costs for the Bull Arm Site. The incremental piece is what the minister referred to.

MS JONES: This expansion at the Bull Arm Site, you probably told me the total cost - I can't remember now - or maybe you didn't.

MR. TOBIN: It is $2.75 million.

MS DUNDERDALE: On top of their base budget.

MS JONES: What project are you getting ready for there?

MS DUNDERDALE: Hebron.

MS JONES: The Hebron project.

MS DUNDERDALE: The Hebron project. If the refinery goes ahead, there certainly - I mean, we have the LNG terminal being proposed for that area. We have the second refinery being proposed for that area. We know in terms of the benefits agreements we have negotiated under Hebron, that there is going to be a GBS built in Bull Arm. We have the Lower Churchill Project in the offing. So, all of these things, we have to make sure that site is operational, ready to receive that work.

MR. TOBIN: Also, Minister, the Long Harbour facility and the White Rose expansion work would be there.

MS DUNDERDALE: And the hydromet and the White Rose expansion. So there is quite a great deal of interest in Bull Arm. Any one of those projects, when they come to fruition, will fill up every piece of capacity we have in this Province, so that is a yard that we are responsible for and we have to make sure that it is up and everything is in place and that it is in tip-top shape for activity.

MS JONES: The refinery piece, the discussions around that, can you give me an update on that, where it is, if anything is progressing at this stage?

MS DUNDERDALE: Well, it has passed its environmental assessment. In terms of investment, our understanding is that they are having some difficulty at the moment in terms of their investment given the situation in the U.S.

MS JONES: I heard the media around it, of course, but -

MS DUNDERDALE: I don't have any more immediate information than that, other than there is difficulty now around the financing and they are scrambling to get other investors in the project. If there is any way that we, as a government, can be helpful in that we are certainly going to try in terms of promotion of the project and so on because it would be a very good one for the Province.

MS JONES: What were the timelines around that refinery project, the development piece?

MR. TOBIN: I guess initially they were talking about a start in, I think it was early 2009. That might have been shifted out a little bit, so it is in the 2009 to 2011 or 2012 type of timeline.

MS JONES: Okay.

On the Hebron project, what is the status of the negotiations there now? I think the last timelines we heard from government was that we would see something by June.

MS DUNDERDALE: Well, we are hoping to do something by June. It is certainly not anything I can give you a definitive timeline on. I can tell you that negotiations are ongoing as we speak. They are very intense. Both sides are happy with the process, and both sides committed to getting this done as quickly as we can and as reasonably possible, and both of us, both parties, have set targets. Their target is June. Now, whether or not we will be able to bring it home in June, that is not something I can unequivocally say here tonight but that is the target and everything is looking good towards that target.

MS JONES: So you are still hoping that you could foreseeably see some information being released on an MOU early in the summer?

MS DUNDERDALE: If we can reach the final agreement in June, and then in terms of the restrictions we have under confidentiality agreements with the parties is going to determine what we are going to be able to release, but as much information as we can release we will certainly be releasing. We are really proud of this deal and what we have been able to accomplish, and it is only in our best interests to release as much information as we can, but there is proprietary information there, there is fierce competition in this industry, and the company has real concerns around that.

MS JONES: Because we have not seen a lot of information on this at all. In fact, we have seen very, very little, just broad, general statements and some, I guess, discussion around what some of the security levels may be. On the 4.9 per cent equity position in Hebron, in the case of a spill or some kind of catastrophe that could happen in that industry around that project, who would be insuring the risk and the responsibility for it?

MS DUNDERDALE: There are underwriters that companies have for risk, so we would participate, the same as ExxonMobil or Chevron or Husky, all the other partners. All the same responsibilities, all the same rights, all the same liabilities that are associated with that project, we will own 4.9 per cent of all of it.

MS JONES: You talked earlier, when we were dealing with Bull Arm, about some of the GBS work being done there for the Hebron project. I guess I am just wondering: What other work are you looking at now that would be done as part of that project in the Province?

MR. KIELEY: Well, the GBS, certainly, would be there with respect to Bull Arm, but other pieces of work or some of the topsides work, some of which was identified previously, we are going through a negotiation process now with respect to exactly what work would be going within the Province. Some of that work could happen in Bull Arm; some of that work could happen in other yards within the Province. It would be mainly some of the topsides work that would go along with the GBS.

MS DUNDERDALE: As well as the engineering.

MR. KIELEY: And the engineering and all that type of stuff with respect to the project.

MS DUNDERDALE: Every piece of work that can be done in this Province is going to be done in this Province.

MS JONES: Actually, I am glad you mentioned the engineering piece to it. What front-end engineering and design work will be done here and how much of it will have to be outsourced outside the Province?

MS DUNDERDALE: Where there is a capacity to do the work in the Province the work will be done in the Province.

MS JONES: So there is no breakdown on that at this stage, is there?

MS DUNDERDALE: No.

MS JONES: We are getting very near the end, you will be happy to know. I am hoping I get there before I fall asleep.

Just on the royalty piece again, or the equity stake piece - like, for example, the gas piece in Labrador - is there a royalty regime or an equity regime built around those developments as well?

MS DUNDERDALE: All the principles are laid out in the Energy Plan.

MS JONES: Okay, so the same principles would apply?

MS DUNDERDALE: Yes. So, where it makes sense for us to do it, we will be looking for 10 per cent equity in development projects. We say where it makes sense for us to do it because if we think there is high risk associated with a project or it does not make economical sense to us, we are not going to expose the people of the Province to that. Where it all makes sense then we will be looking for a 10 per cent equity ownership.

In terms of the natural gas royalty regime, certainly the structure of that is laid out in the Energy Plan, although it is not completed at this point because we are still doing broad consultations with the industry.

As stated also quite clearly in the Energy Plan, a pioneer project in this Province which would kick-start the gas development side of the industry is something that we would consider some exceptions to, that might be given special consideration in order to get the industry up and running.

MS JONES: Okay.

I just have a couple of questions on the Energy section and then I will be concluding.

The $1 million here, I guess that is – the $100 million, where is that? That is built into the Finance Estimates, is it?

MS DUNDERDALE: No. The $100 million for Hydro?

MS JONES: Yes.

MS DUNDERDALE: No, that is in our Estimates here.

MS JONES: Okay, so that would be the one under –

MS DUNDERDALE: Energy Initiatives, 5.1.06.

MS JONES: Yes.

MS DUNDERDALE: The $319,500,000?

MS JONES: Yes.

MS DUNDERDALE: That is $215 million for our equity in Hebron, our equity in White Rose Extension, as well as some funding for Lower Churchill Project development, as well as the $100 million for Hydro.

Is our capex in there?

MR. KIELEY: Ramea, yes.

MS DUNDERDALE: And our capex is in there also for White Rose?

MR. KIELEY: White Rose, yes.

MS DUNDERDALE: For White Rose, and also we have $4 million in there for the Ramea Wind-Hydrogen-Diesel – four-and-a-half.

MS JONES: Okay.

Because, when the Premier was questioned in the House of Assembly on this expenditure, he quoted that the equity in Hebron was going to cost $110 million, and $44 million for the equity in White Rose; and, of course, that made up for $154 million of that expenditure. I am referring to the $215 million.

The other $60 million is where I am wondering where it was transferred.

MS DUNDERDALE: There is $110 million for equity on Hebron.

MS JONES: Hebron.

MS DUNDERDALE: There is $30 million or less for White Rose, because we are still working around delineation of the reserve – of the reservoir in White Rose.

MS JONES: Okay.

MS DUNDERDALE: So $30 million will be the maximum, but it could end up being less than that depending on the size of the reservoir.

MS JONES: Okay.

The other $70 million is where I was wondering where that money is going.

MS DUNDERDALE: It is capex for our – we have now the White Rose Extension taking place so we have to provide our 5 per cent of the capital expenditure of the development of the White Rose Expansion, and there is $4.5 million in there for the Ramea project, and money for the Lower Churchill as well.

MS JONES: What is the breakout for the Lower Churchill?

MS DUNDERDALE: About $20 million.

MS JONES: What is that going to be used for?

MR. KIELEY: Just as equity investment in terms of the project work being done to advance the Lower Churchill Project to the project sanction stage.

MS DUNDERDALE: Environmental assessment, consultation, engineering, technical, financial information.

MS JONES: Hydro doesn't pay for that? The Province is paying for that?

MR. KIELEY: Well, this is an equity investment that the Province is making in Hydro.

MS DUNDERDALE: In Hydro. All this money is going to Hydro. Hydro doesn't have those kinds of –

MS JONES: It is just that it wasn't coined as an equity investment when it was announced in the Budget. There was $100 million that was for equity, but –

MS DUNDERDALE: There is $100 million going to the regulated utility to improve their debt-to-equity ratio. The utility, when compared to other Canadian utilities, is in a very poor financial position and struggles - because its rate of return is set by the PUB and set by legislation - struggles to maintain its operations because money has been bled out of the company for years and years and years.

The debt-to-equity is very high, and any time they get any kind of unexpected event it really impacts in a very negative way on the utility, so we are trying to put the utility in a better financial position and make sure that it is secured in terms of its operations for the people of the Province.

In terms of the Energy Corp., of which Newfoundland and Labrador Hydro will be a subsidiary, this is our equity investment in them in terms of the purchase, because they will hold and manage our equity investments in Hebron and in White Rose, and they will also lead the development and hold the development of the Lower Churchill.

That is why we need - all the monies that are going to be used in terms of that piece of work will be invested in the Energy Corp.

MS JONES: Okay, the capex project that you are talking about for the White Rose Expansion, how much is that costing? What is the investment breakout for that?

MS DUNDERDALE: About $79 million will be our share. That is for our equity and our capex.

MS JONES: Okay.

MS DUNDERDALE: As soon as White Rose Extension starts to produce oil and sell oil, the very first proceeds from those sales then feed back to the companies, the shareholders, including the Province of Newfoundland and Labrador, and those expenses are the first money that is repaid to the Province.

So, while we might expend $40 million or $50 million in capex in terms of developing the project, before anybody takes five cents home, profit, all of that money is repaid to the shareholders.

MS JONES: Including the company investments as well.

MS DUNDERDALE: Absolutely. Until everybody is repaid -

MS JONES: It would be much higher than government's, obviously.

MS DUNDERDALE: Pardon?

MS JONES: It is paid to all the investors, as I understand it, right?

MS DUNDERDALE: Absolutely, because their investment would be much larger, but in terms - they are always the first monies recovered.

MS JONES: You were talking about the $100 million that is being investment in Hydro to elevate its debt-to-equity ratio or to put it in a better standing. You talked about being one of the poorest in the country in terms of that ratio. Is it the poorest? Where does it rank in terms of the other corporations?

MS DUNDERDALE: It is not far off the bottom of the pile, and we can show you the research that we have done. We would be happy to share it with you.

MS JONES: I would like to have a copy of that, if you could have it sent over.

MS DUNDERDALE: Yes, we are happy to provide it to you.

MS JONES: I guess the other piece is with regard to Hydro itself. They did earn a profit last year.

MS DUNDERDALE: They do, and it is a regulated profit, but when you compare it, for example, to Newfoundland Power, it is much less than Newfoundland Power. Because they are limited in terms of what they can earn, if they have any extraordinary event that they have not budgeted for, it completely eats up that profit.

So, if something goes wrong in Seal Cove, if they have some winter event and so on, the company is constrained in a way, for example, that Newfoundland Power is not, and it makes for a difficult operation of that company within the promise to be in a healthy place, especially when, for so many years, dividends were taken from the company rather than reinvested in the company.

MS JONES: What has been happening with the Lower Churchill Project? Where are you guys with that in terms of the routing that was being looked at, the environmental work that was ongoing?

MS DUNDERDALE: It is all progressing. There is a very thorough process in place, being led through the Energy Corp. It is a gated decision process that has timelines associated with it, and so on. The applications for access through Quebec and New Brunswick are all filed. We are in the cue, and we are progressing with that piece of work. The technical work is going; the financial piece is going. We have done a substantial piece of work on the routing, whether the subsea route is feasible physically, and is it feasible financial, and there has been a resounding yes to both of those questions.

We are talking to potential customers within Labrador, people who are interested in industrial development in Labrador, which is very important to us, and we are talking to potential customers in Canada and in the U.S. and there is enormous interest in the development of that project on all fronts.

MS JONES: So you are still hoping to meet the targeted time frames that you have outlined?

MS DUNDERDALE: Yes, we are working very hard to stay on for sanction in 2009.

MS JONES: The report that was done on the routing, and I think you called it the viability of bringing it across the Straits, underwater cable and so on, is that document a public document? Has it been released?

MS DUNDERDALE: I can't tell you off the top of my head because I don't know, but I will find out.

MS JONES: That would be inside of Hydro, would it?

MS DUNDERDALE: Yes.

MS JONES: Okay.

Just a question on the Holyrood plant, because a study that was done a couple of years ago looked at the environmental aspects of that plant and I think it was one of the highest polluters in the country at that time. I am wondering if there is anything changed. I know you changed the grade of fuel that you are burning there, but I am wondering if there has been any consideration given to installing some of the scrubbers and filterization pieces.

MS DUNDERDALE: Yes, and we announced that in last year's Budget. We have not only reduced the sulphur fuel but we have also taken on two wind projects that have given us between fifty and fifty-four megawatts of power that now will not have to be produced by Seal Cove.

The decision that we undertook in our Budget last year was - while we are hoping to replace the power that we use at Seal Cove with the Lower Churchill power, there is a possibility that might not happen. So, in conjunction, as we progress work on the Lower Churchill, we are also progressing work on installing scrubbers in Seal Cove.

In 2009 one of those is going to fall off the table, and that well may cost us a million dollars or so, but it is important enough to us that we are progressing the work at the same time; so, if everything goes fine with the Lower Churchill and we get sanction, the other place can fall off the table, but if we don't sanction the Lower Churchill we have not lost any time in the installation of the scrubbers in Seal Cove.

MS JONES: The scrubbers, you are installing one now, you said? You are in the process of doing one or all three?

MS DUNDERDALE: No, what we are doing is, there is a big piece of technical work that has to go on. You just cannot decide that you are going to do a – the earliest we could get scrubbers in there, if we ordered them and did everything today, is 2012. It is not just a simple: We are going to go out there and put scrubbers on.

What I am saying is: we are doing that piece of technical work and engineering work at the same time as we are doing the Lower Churchill so we do not end up, if we don't get the Lower Churchill, having to start from scratch, that we have not lost any time. We are covering off all contingencies because we want Holyrood cleaned up as quickly as possible. So, if we can't do it in the Lower Churchill, we haven't lost any time by waiting on sanction time.

MS JONES: The fifty-four megawatts of wind power that you are talking about, when will that be added to the grid? When does that come on stream?

OFFICIAL: We are in the process now; I am thinking 2008-2009.

MS DUNDERDALE: Propellers are en route to St. Lawrence as we speak.

MR. BOWN: That should be in service in 2009, late 2009.

MS JONES: Those are all the questions that I have.

I want to thank you, Minister, and I thank your officials for giving good detailed answers but also for your patience and your time.

I apologize for taking the length of time that we have taken, but it is a big department and it does cover a lot of very important industry sectors in the Province, so I think the time was certainly well spent.

I also thank you, Mr. Chairman, and my colleagues on the Committee for their patience and endurance this evening.

CHAIR: Thank you very much.

Any further questions from the Committee?

I will ask the Clerk now to call the subheads.

CLERK: Subhead 1.1.01.

CHAIR: Shall 1.1.01. carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 1.1.01. carried.

CLERK: Subheads 1.2.01. to 5.1.06. inclusive.

CHAIR: Shall subheads 1.2.01. to 5.1.06. inclusive carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subheads 1.2.01. through 5.1.06. carried.

CLERK: Department total $452,434,900.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, Department of Natural Resources, total heads carried.

CHAIR: Shall I report the Estimates of the Department of Natural Resources for the fiscal year 2008-2009 carried without amendment?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, Estimates of the Department of Natural Resources Estimates carried without amendment.

CHAIR: I would like to take the opportunity to thank the minister and her officials, the members of the Committee, and also the House of Assembly staff.

For the benefit of the Committee, our next meeting will be on Thursday afternoon, over in the House of Assembly, and we will be doing the Estimates of the Department of Environment and Conservation.

Now I will ask for a motion to adjourn.

MR. VERGE: So moved.

CHAIR: Moved by Mr. Verge, this meeting is adjourned.

This meeting stands adjourned.

On motion, meeting adjourned.