Pursuant to Standing Order 68, Kevin Pollard, MHA for Baie Verte-Springdale, substitutes for Wade Verge, MHA for Lewisporte; and Kevin Parsons, MHA for Cape St. Francis, substitutes for Derrick Dalley, MHA for The Isles of Notre Dame.

The Committee met at 6:15 p.m. in the House of Assembly.

CHAIR (Harding): Okay, we are ready to begin.

I would like to welcome you all to this evening's meeting as we debate the Estimates for the Women's Policy Office in the Office of Executive Council, as well as the Department of Natural Resources.

First of all, I will ask the members of the Committee to introduce themselves by name and district.

MR. BAKER: Jim Baker, MHA for Labrador West.

MR. POLLARD: Kevin Pollard, MHA for Baie Verte-Springdale.

MR. KEVIN PARSONS: Kevin Parsons, MHA for Cape St. Francis.

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

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

MS MICHAEL: Lorraine Michael, MHA for Signal Hill-Quidi Vidi.

CHAIR: Okay. For the record as well, if the observers would like to give us their names.

MR. LONO: Simon Lono, Official Opposition Office.

MR. MORGAN: Ivan Morgan, NDP Office.

MS CAMPBELL: Lori Ann Campbell, Official Opposition Office.

CHAIR: Thank you very much.

After the Clerk calls the first subhead – and we will be dealing with the Women's Policy Office first – the minister may introduce her officials and have up to fifteen minutes if required to give an overview of her department, her office estimates for the year. After that, the first speaker then will have up to fifteen minutes as well and then we will alternate after that if needed.

I will call on Minister Dunderdale now to –

First, we will ask for the first subhead.

CLERK: Subhead 2.7.01.

CHAIR: 2.7.01. Shall that carry?

I recognize the minister.

MS DUNDERDALE: Thank you, Mr. Chair.

I thank you and my colleagues for being here this evening to discuss the budget Estimates for the Women's Policy Office.

I would like to introduce Heather MacLellan, Assistant Deputy Minister for the Women's Policy Office who is accompanying me this evening, as well as Linda Vaughan, who is Director of Finance for Executive Council. I will leave my introductions there until we get to the Department of Natural Resources and I will introduce the rest of my colleagues.

CHAIR: That is fine, yes.

MS DUNDERDALE: I want to provide an overview of the budget for the portfolio as well as the focus of our activities to advance the status of women in the Province.

The total budget for the office and its activities is $4.5 million, an increase of 165 per cent since 2003-2004. Part of this funding goes to the Provincial Advisory Council and the Status of Women for the role it has in advancing the status of women and advising government on policy matters and issues related to women.

Since 2003, we have increased the budget for the Advisory Council by more than 71 per cent. This year alone, we have provided the organization with an increase of approximately $20,000 so its staff can receive the salary increases provided to public servants. To ensure women's issues are being dealt with at the community level, we also provide grant funding to many women's organizations through the budget that is allotted to the Women's Policy Office. We provide $2 million to the eight Status of Women Councils located throughout the Province. This year, all eight councils are receiving an increase of 5 per cent to their operating budgets for a total of $110,000 each. This is a total investment of $880,000.

We also fund an annual meeting with the councils and the Women's Policy Office to ensure that current issues are brought forward and information is shared among these groups. This year, we are also pleased to provide the Multicultural Women's Organization of Newfoundland and Labrador with an annual grant funding of $100,000. This voluntary non-profit organization has been serving immigrant and multicultural women since 1982. This organization is looking to having a wider provincial presence as the immigrant population continues to increase. Providing this annual funding is consistent with the Province's immigration strategy and multicultural policy. We feel that this organization is an important vehicle in helping to promote the Province's goals for women's equality in the areas of violence against women, women's economic equality and women's leadership.

Since 2005, this government has made it a priority to fund Aboriginal organizations to directly deal with violence prevention. We provide $200,000 annually in grant funding for violence prevention activities in Aboriginal communities. To date, up to thirty grants have been provided for a total expenditure of more than $475,000 since 2006.

This year, we are also supporting the Rigolet Partnership Against Family Violence with $60,000 in funding to help them prepare for a new women's safe house in that community. We also spend $60,000 annually for the Aboriginal Women's Conference to enable women from different Aboriginal communities and groups to come together to discuss issues of importance related to the status of women in their cultures and communities.

In addition to providing grants to women's groups and community organizations, about $2 million of the budget for the Women's Policy Office goes towards supporting its role of providing Cabinet departments and Cabinet with policy advice as well as to lead programs to advance the status of women. The Women's Policy Office is also the liaison between government and women's organizations throughout the Province.

An important program the office leads is our six year Violence Prevention Initiative. Over the past year we have provided funding of $720,000 for our ten regional coordinating committees. This amount includes an additional $20,000 for the Labrador committee to help offset costs associated with travel.

Approximately twenty-one violence awareness and action training sessions were conducted around the Province with 230 frontline service and community workers being trained. Six train-the-trainer sessions were also held with an additional fifty-nine participants. Eleven of these sessions were held in Labrador, six in Happy Valley-Goose Bay, two in Sheshatshiu, one in Labrador West, one in Forteau and one in Makkovik. In this current fiscal year we are planning to undertake violence awareness and action training in Nain, Hopedale, Cartwright and Black Tickle during the month of May.

Funding is also being provided in Budget 2009 to follow up on a study on the employment needs of women who are victims of violence. Information gathered through this study will be introduced this year in the employment support programs of the Department of Human Resources, Labour and Employment.

I also want to recognize at this time the work of the Women's Policy Office in the new Family Violence Treatment Court introduced by the Department of Justice. Through this office we also provide annual funding to the Newfoundland and Labrador Sexual Assault Crisis and Prevention Centre $100,000, and the Transition House Association of Newfoundland and Labrador $75,000.

I am pleased with the work being done by the Women's Policy Office and value what we receive from our investments in this area.

With that, then, I am prepared to take your questions.

CHAIR: Thank you, Minister Dunderdale.

Ms Jones.

MS JONES: Thank you, Mr. Chairman, and thank you, minister, for your update on the activities in the Women's Policy Office.

We just have a few questions. Starting first of all with the salary Estimates under section 2.7.01. Last year you were down on the amount of salary that you had estimated you would spend. This year I see an increase again. I am just wondering, were there some positions last year in that office that were not filled, and are you increasing positions this year?

MS DUNDERDALE: The revision there reflects the savings of approximately $159,600 which was primarily due to the delayed recruitment of the VPI older adult training position and the WPO research position. The Estimates reflects the increase of $64,000. That can be attributed to a $32,000, 4-4 per cent salary increase adjustment, and $32,000 for the extra pay period we are going to have this year.

MS JONES: Okay. Also under Professional Services you did not spend a lot of money last year, $25,000. You are budgeting $80,000 this year. Is there something specific that you are going to do this year? Is it a new project?

MS DUNDERDALE: Is that Purchased Services or Professional Services?

MS JONES: Sorry, I am on the wrong line. I have the Rural Secretariat and the Women's Policy Office, both of them in front of me. You spent a lot more than that, actually.

Under Professional Services last year you spent nearly $300,000. I am just wondering what you would have spent that on.

MS MacLELLAN. There were nineteen professional services projects last year. Sixteen of them were associated with our Violence Prevention Initiative. For instance, we worked with a professor from Memorial University and we looked at the best practices with respect to recognizing, preventing and intervening in violence against older adults. That is a baseline documentation for us as we work with the regional health boards around the Province to look at developing training programs for their officials.

We also work with the Newfoundland and Labrador Stats Agency to design our pre-test surveys and our surveys to evaluate our campaigns, our social marketing campaign. We had other professional services to do with our violence prevention conference we held this year on violence against women, including a contract for Brian Vallee to come in and speak. So, those kinds of professional services.

MS JONES: Last year the RCMP were releasing statistics around the rate of family violence in the Province. I think at that time they said there was 1,115 cases that had been reported. I am just wondering if you guys have any numbers for the current year in terms of what would have been statistics reported for family violence in the Province?

MS DUNDERDALE: We do not have the numbers for this year yet but we will get them.

MS JONES: Okay. Also, when they made that statement last year they also said in the statement that one of the common denominators in the family violence cases that they were discussing was alcoholism. I know recently there was an announcement with regard to family violence court and the enhancement of that program. I am just wondering if you guys were consulted on that as the Women's Policy Office and if you have made any recommendations that there also be some kind of addiction services attached to sentencing or cases that are being dealt with through that family violence court?

MS DUNDERDALE: We have been very engaged in that piece of work. There is a variety of services that the aggressor - I mean they have to agree to participate in programs in order to be in that court, to participate in that court. While we have not made specific recommendations around addictions counselling, that is certainly, in terms of how the whole program works, would certainly be one of the services that they would have to avail of if it is recommended from the assessment team.

MS JONES: Okay. With regard to the sexual assault centre in St. John's, I know that it is the only centre now in the Province. I think they have had funding since 1999. I am just wondering if you guys are looking at – I know that you have done, as you said on the last line item, a lot of consultation and input around violence and violence prevention in the Province. I am just wondering if you are looking at expanding the women's crisis shelter, the programs that they offer? Because I know from discussions I have had with them that they are certainly in a position to look at that and they want to look at how they can expand their services. I think the last report I looked at with regard to statistics is that the national average of violence right now is up by 25 per cent against women in the country. So I do not know if that was part of your plan through the consultation or not.

MS DUNDERDALE: Well, we have certainly increased funding to the sexual assault crisis centre and the year before last we made an increase of about $25,000 to their annual budget to deal with just some of those issues. In this year's budget we are expanding our shelters. There is funding in this budget for a new shelter to be established out in Carbonear. That also is under the auspices of Iris Kirby House. That will also provide an opportunity for Iris Kirby to expand its program and develop its programs further for some of their clients who have greater needs and require more intervention and more support and need the services longer.

We are also working in Labrador, in Rigolet. We are putting $60,000 in, in capital, to get a safe house ready there. We have also contacted the Nunatsiavut government and we will work with the Nunatsiavut government to appeal to the federal government to include Inuit communities in anti-violence funding, and funding for shelters and so on. They do not participate here in the Province for Inuit communities.

MS JONES: How much funding does each individual shelter receive now in the Province? Is it the same amount everywhere?

MS DUNDERDALE: We will have to get a list from Health because the program is administered through the Department of Health. It is approximately $300,000 per shelter, but it varies, depending on how much demand and capacity each of them have.

MS JONES: There was a report completed this past winter by Cara Transition House. It was done after they had volunteers that were observing several cases in the court. I do not know what it was, like forty or fifty different cases in the court system and how justice and the judicial system were dealing with each of these individual cases. All of them were around domestic violence. I think they reported a number of incidences around improper conduct they felt by judges and by other people in the court system. I am not sure if you were involved in that from the Women's Policy Office perspective but I am sure you have had a chance to review the report. I am just wondering, is there any action that is being taken through the Women's Policy Office to deal with some of these issues and those concerns?

MS DUNDERDALE: The issues identified in that report, if I recall correctly, were relatively minor in terms of the attitude that there was some reference to a judge smirking, and there was another reference to some dismissive behaviour the women felt of the victims in the courtroom in the telling or the hearing of the story and so on. I know that the judiciary had a copy of the report and the people there charged with the responsibility around those issues dealt with it and dealt with it in a public way. We certainly had a discussion of it in the WPO, and I have had a discussion with the justice minister with regard to the issues that were raised there.

MS JONES: I guess there is no other action that is going to be taken in terms of any kind of an education process within the judicial system. After all, this is domestic violence cases and if women did not feel strongly about what was happening in the courts they would not have sat through fifty cases and documented all the information and to write a report.

I am just wondering if sometimes it may seem minor but you have to look at the vulnerability of people who are using the system and requiring the services. I just think that some kind of an education program around how you deal with this within the system, what is appropriate, what is not appropriate. Even though you are talking to professional people, I do not think it makes a difference sometimes. Everybody can learn something different.

MS DUNDERDALE: Certainly, we are guided by the women from Cara House who did that report. Cara House, as you well know, has a long history of dealing with legal issues around – and the courts and judicial systems and how they deal particularly with women who are victims of violence. In fact, have done outstanding work, and I have referenced Nellie Nippard and the whole federal justice parole cases as an example of that. We have Elaine Condon who was instrumental in that work, as a matter of fact, now works with the Provincial Advisory Council on the Status of Women.

So we are very aware, and women who do this work in the community are aware and we are all constrained in terms of the opportunities we have to educate and sensitize the judiciary. It is a complicated process but it is one that we are always aware of and where we can find opportunities to educate and raise awareness and consciousness we do it because it is extremely important but it is not an easy thing to do.

Heather just tells me that we just had a call from legal aid who have asked us to train all of their workers, 120 of them, this year under the violence prevention.

MS JONES: Good. Maybe we will get to the judges next.

MS DUNDERDALE: Start at the bottom and work our way up.

MS JONES: Yes.

Recently, I think it was in the Budget, they announced that there would be a psychologist and an addictions counsellor now being placed at Her Majesty's Penitentiary in St. John's. I am just wondering if the services of those individuals are going to be available to the women's penitentiary in Clarenville as well, because over the last few years we were always getting some complaints about the lack of services there, especially I guess as it relates to psychology and addiction services.

MS DUNDERDALE: Yes, and I am aware of the issues that have been ongoing in Clarenville for some time. Now I will have to get the answer to that. I do not have that answer for you this evening.

MS JONES: Okay. Maybe I will get my colleague to ask it in Justice. I do not know, maybe it would be under Justice would it?

MS DUNDERDALE: Yes, it would.

MS JONES: One other question, around the midwifery legislation –

MS DUNDERDALE: Yes.

MS JONES: You knew that was coming didn't you?

We have raised it many times in the House of Assembly and I know that your office have had lots of discussion with the Midwifery Association in Newfoundland and Labrador. I think everyone is anticipating that there is going to be legislation, or at least they are hoping there will be. I do not know if you can give us an update on where that is; what input you have had from the Women's Policy Office into it. I am sure you realize the value in it.

MS DUNDERDALE: The Women's Policy Office has had its input, and this minister has had her input long before she came to the Women's Policy Office. It is an issue that I am very familiar with. All I can say at this point is, we will see where it all takes us. It is something that I am very familiar with. I have met with the Midwifery Association of Newfoundland and Labrador. My own daughter was in receipt of midwifery services during her pregnancies.

MS JONES: So it is still on government's radar?

MS DUNDERDALE: Absolutely, it is.

MS JONES: You are still planning on bringing the legislation forward and so on?

MS DUNDERDALE: Yes.

MS JONES: It is just a waiting game as to when it is going to happen, is it?

MS DUNDERDALE: We will see.

MS JONES: Also, I do not know if you would know the answer to this. I am thinking maybe it would be better put to the Justice Minister as well. The construction of the new detention centre in Goose Bay for women, this was an issue that was very high profile in the media after a case where a woman was incarcerated in a male penitentiary. I guess what we are wondering is: What is the plan to be able to move forward with the centre and what are the timeframes when we are going to start seeing it in place and the program being offered?

MS DUNDERDALE: That question is better put to the minister. I will say to you that the WPO is very intimately involved in that project.

MS JONES: Maybe you can tell me, then, if it is going to be a separate detention centre or if it will be part of the penitentiary system that exists in Goose Bay right now or if it will be part of the health care system.

MS DUNDERDALE: That question is better addressed to the Minister of Justice, but in terms of the issues that have been raised in Goose Bay, the treatment of women in the detention centre and where we need to go with that, the WPO is engaged and giving advice and recommendations. They are being sought and being given.

MS JONES: Okay.

I am going to defer to my colleagues now. I guess she has some questions.

CHAIR: Ms Michael.

MS MICHAEL: Thank you very much, Mr. Chair.

I am going to come back to the Budget Estimates themselves first and ask a few questions of clarification; or not clarification, information in most cases.

With regard to Salaries - I will not repeat anything. It is anything that I wanted to ask that did not get asked – the total Salaries is $913,600, but of that $367,400 is for temporary and other positions. Could we just have a breakdown of what are temporary and other positions within the WPO?

MS MacLELLAN: The temporary positions: we have a research and policy position that is associated with the violence prevention initiative; we also have a training officer policy position who leads the violence awareness action training program; we have another temporary training position which leads the violence prevention for older adults, which we are doing in partnership with Health and Community Services; and I believe our fourth one is actually a director who is in a temporary position at the moment.

MS MICHAEL: Thank you.

So they are very related to the specific short-term programs?

MS MacLELLAN: Yes.

MS MICHAEL: Thank you.

Under Transportation and Communications, the revised was about $60,500 short of what had been budgeted. I am assuming that that must be related to the fact that the recruitment of the position for the elder abuse programming was delayed. Is that the reason for that being under spent by $60,500?

MS DUNDERDALE: Yes, very small of that. In the main it is due to training and conventions' travel being down as a result of vacancies, the travel costs to conferences being lower than we anticipated.

MS MICHAEL: Okay, great.

It is a big budget item at $341,000. I guess there are a lot of transportation costs with regard to the various programs and the training that is going on around the Province.

MS DUNDERDALE: Yes. We move about 192 people to come to various meetings and conferences.

MS MICHAEL: Thank you.

Under 06, Purchased Services, could we have a breakdown of what would be the services that would be Purchased Services?

MS DUNDERDALE: In terms of our notes here we had nineteen professional service expenditures – is that the one?

MS MICHAEL: No, the next one, 06.

MS DUNDERDALE: Sorry.

Advertising in the amount of $75,000, approximately; shredding; room rentals for meetings, $17,388; work station reviews, $1,100; photo copier charges, $1,800 - these are estimates now - NLOWE conference sponsorship, $2,000; moving expenses, $225; tickets for the women's network dinner, $240; and training, $458. That is all under the administration, under Violence Prevention Initiative again. It is advertising. Violence Prevention Initiative: our advertising is $246,873.82; work station reviews, room rentals again, substantial, $22,000; translations, $3,250; production of DVDs, $2,500; equipment rentals, $6,175; printing, $5,306; and Aboriginal women's issues, room rentals, $18,135. That is associated with the conference. The Inuit tribal dance performance was $300. All of those, approximately, totalled $446,880.

MS MICHAEL: Thank you very much. A very detailed accounting. You do not always get it as detailed as that. Thanks.

Under the Grants and Subsidies, because it is up by $122,000, am I correct in assuming that the $100,000 to the Multicultural Women's Organization would account for the big jump there?

MS DUNDERDALE: Yes, and the increase for the women's centres.

MS MICHAEL: Yes, which is just $5,000 each. That would give you $122,000.

Those are all the line items that I have. There are a couple of general questions that I would like to address. Well, they are not general, they are specific, but they are more policy related.

One has to do with the Supportive Living Community Partnership Program, where HRLE is the lead department I realize, and I know it is not under your budget, but is WPO a partner in the Supportive Living Community Partnership Program?

MS MacLELLAN: We are certainly involved at the deputy minister's level. I was invited to attend the first meeting they had with community partners where they came in to present their needs of those projects that are going to be considered, so I feel we have a very good working relationship with that team.

MS MICHAEL: Are you permitted to say whether or not the St. John's Women's Centre is involved as a partner group in this discussion at this moment? I am thinking about Marguerite's Place. I know they were quite concerned whether or not Marguerite's Place would fit under this program.

MS DUNDERDALE: They have been in to present.

MS MICHAEL: They do fit in?

MS DUNDERDALE: Well, they have in to present their proposal. I could not speak to whether or not they are part of the partnership in a formal way but we do know that they have been in to present.

MS MICHAEL: Right.

MS DUNDERDALE: Yes, and they are getting very serious consideration.

MS MICHAEL: They are getting serious consideration.

Does the Women's Policy Office have to stay unbiased and unprejudiced in that or can you advocate for them at the table?

MS DUNDERDALE: The committee does its work. The women involved in Marguerite's Place have certainly made me very familiar. I have met with them, discussed the project, and we talk about it from time to time. I see these women on a regular basis. Part of what we are doing too is trying to get a very good picture of what we are doing around social housing in the Province, because we have put an awful lot of money in it. Through different organizations, as well as through Newfoundland and Labrador Housing, we are trying to capture for ourselves a comprehensive picture of what we are doing in that area, so we have a better understanding of the investments we are making now and where we need to go next with it in ensuring that we have a good balance and have a really clear picture of what it is we are doing.

MS MICHAEL: Minister, when you were outlining, in the beginning, some of the work of the Women's Policy Office you did make reference to actually a fair bit of time spent in consultation with departments within government. I guess I would like to know: Are there any areas which are of specific or special concern to the Women's Policy Office that you really do make an exerted effort to get out there and try to share your analysis with different departments?

MS DUNDERDALE: In terms of government, the internal workings?

MS MICHAEL: Yes.

MS DUNDERDALE: Certainly, as Cabinet papers are prepared they come to the WPO for our analysis, recommendations, commentary, and so on. That is a significant way in which you influence what is going on in other departments. As Heather says, she works with deputies and ADMs at that level on a regular basis. It is certainly a lens that I have on all of the time. As you know, you do not get to take them off. That happens at the Cabinet table on a regular basis and it happens at the caucus table. There is a real sensitivity in our government around these issues. We have made, I feel, considerable advancement on all of them. We have progressed a number of the principles that guide this work, and we create awareness amongst my colleagues as well as within the public service. There still remains a considerable amount of work to be done and we understand that. Government really is a microcosm of the larger community, so you know the same challenges we have in the wider community we have in this community as well, but you know we are making progress.

MS MICHAEL: I am just wondering how proactive can the Women's Policy Office be. For example, you see an issue that is going on, it is being discussed in the House of Assembly and it does concern women, but nobody is coming to you and asking you about it, no department, but this department should really be thinking about this particular issue. Can you be proactive in doing that kind of thing?

MS DUNDERDALE: Everyday.

MS MICHAEL: Okay, great.

MS DUNDERDALE: Everybody knows us. We are in everybody's business.

MS MICHAEL: Those are all my questions, Mr. Chair.

CHAIR: Thank you, Ms Michael.

Ms Jones, do you have any further questions?

MS JONES: (Inaudible) was a review of the Human Rights Code being done in the Province. I am just wondering if the Women's Policy Office made a submission to that in terms of some possible changes that would affect women.

MS DUNDERDALE: We will review it when it comes to Cabinet, and make our recommendations there. Where it was done external to government, the Provincial Advisory Council on the Status of Women made a presentation.

MS JONES: Okay.

I just had another question and that was regarding the victim services. You mentioned earlier about legal aid and so on, but in a report that the Province put out last year they were saying that there were nearly 3,500 cases of referrals to victim services and that there was a wait list, and there still is a wait list, as we know, for people to receive services. I am just wondering if you guys have the breakdown on what percentage of those cases would have been women?

MS DUNDERDALE: We do not have it but we can get it.

MS JONES: Okay.

CHAIR: Any further questions from the committee?

I ask the Clerk to call the subheads.

CLERK: Subhead 2.7.01.

CHAIR: Subhead 2.7.01. Shall that carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 2.7.01. carried.

CLERK: 2.7.02.

CHAIR: Subhead 2.7.02. Shall that one carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 2.7.02. carried.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, total carried.

CHAIR: Shall I report the Estimates for the Women's Policy Office carried without amendment?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, Estimates of the Women's Policy Office carried without amendment.

CHAIR: Before we move into the Department of Natural Resources Estimates, you have a copy of the minutes of our meeting that was held on April 2, the Department of Fisheries and Aquaculture. I would like to have a motion now to adopt these minutes as circulated.

Moved by Mr. Baker, seconded by Mr. Parsons, that the minutes of the Department of Fisheries and Aquaculture be adopted as circulated.

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, minutes of the Department of Fisheries and Aquaculture adopted as circulated.

CHAIR: Okay, we will begin now with the Estimates for the Department of Natural Resources. One thing I want to mention as well is that this is being recorded by Hansard, so if any of the officials have to answer a question, if you could identify yourself before you speak.

Minister Dunderdale.

MS DUNDERDALE: Thank you again, Mr. Chair.

I am going to begin this piece by introducing all of the people I have left remaining with me here and there will be some seat changes as we move from Forestry and Agrifoods Agency into Mines and Energy.

To my immediate left is Len Moores, who is the CEO of the Forestry and Agrifoods Agency. Then we have Cindy MacDonald, who is the Director of Agriculture Business Development, and at the end of the row is Keith Deering, our ADM for Forestry. We also have with us this evening Robert Thompson, who is my Deputy Minister of Natural Resources; Dick Wardle, ADM of Mines; Charles Bown, ADM of Energy Policy; Pierre Tobin, Associate Deputy Minister of Energy; Phil Ivimey, Director of Financial Operations, and Tracey Barron, who is the Director of Communications for the department.

CHAIR: Thank you, Minister.

Before we begin, I guess I should ask the Clerk to call the first subhead.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01. Shall that carry?

Minister Dunderdale.

MS DUNDERDALE: Thank you, Mr. Chair.

I will start by giving a general overview of our main Budget items across the four branches.

Starting with the forestry sector, you are all aware of the drastic change in the global marker for forest products and the impact that that has had on the industry in this Province. Most of these impacts are being felt by individuals and businesses in the Central and Western regions of the Province. We are continuing to work with the industry to identify diversification opportunities and initiatives that will ensure the continued sustainability of the industry.

On Friday past, I announced $500,000 to continue the Residential Wood Pellet Rebate Program for 2009. The whole idea behind this rebate program is to create a local market for wood pellets to assist our sawmill industry in utilizing their residues and improving their financial bottom line. The rebate program is being funded this year through our Forest Industry Diversification Program originally announced last year. This is a multi-year program which had an initial investment of $14 million last year to assist the industry to identify new markets and develop new value-added products.

We have hired a marketing consultant to assist in developing a diversification and marketing strategy for the sawmill sector, and our officials are working closely with sawmillers to develop business plans and achieve efficiencies. We felt that that was the first step.

The diversification program will provide sawmill operators with capital to acquire new infrastructure, technology and equipment to support innovation and modernization of the industry. The fund will lead to product development and the product and market diversification necessary to lessen dependency on the North American commodity lumber market. We are currently working with the integrated sawmillers on a variety of proposals under that fund.

Also, this year we are continuing to invest in infrastructure through the Resource Roads Program. We are spending an additional $1.6 million for construction upgrades, new roads and bridge building on former Abitibi limits. This is important infrastructure spending and the majority of this funding will be directed to the Central region for potential industry opportunities and growth. The funding is on top of our regular $4.2 million Capital Roads Program.

We are also spending $10.9 million this year on our silviculture activities, which is a $200,000 increase over last year.

In agriculture, we are continuing to take a strategic approach to the development of the industry by investing in areas that will help grow this sector. These areas include land development, availability of farmland, research and development, and support for local farmers. Our provincial programming allows for further expansion and diversification of primary and secondary sectors and deals with challenges facing the agri-businesses in the Province.

In Budget 2009, we are spending $31.7 million on the agriculture and agrifoods industry. You will notice this is a $6 million decrease compared with last year's budget. That is, essentially, as a result of funding that was allocated last year and not spent in a number of program areas. Remember, the overall budget last year was increased by $11.2 million. We did not carryover certain monies from last year based on anticipated uptake for particular programs. We are being strategic with our funding and not tying up money in those areas where funding is not being utilized.

A significant investment for us is our share of the new federal-provincial Growing Forward agreement, valued at nearly $30 million over a five-year period. Of that amount, we are spending $6.5 million in federal and provincial monies this year on initiatives that support innovation and competitiveness, enabling farm businesses to better manage risk and enhance environmental stewardship and food safety.

We are maintaining our $2 million Provincial Agrifoods Assistant Program and the $4 million Agriculture and Agrifoods Development Fund geared towards large scale agriculture expansions. Both programs strive to improve and grow the economic viability of the agriculture industry and enhance the Province's competitiveness capacities.

We are investing $2 million this year into the Cranberry Industry Development Program to provide assistance to applicants involved in the development of cranberry sites throughout the Province. We are also spending an additional $300,000 on the Agricultural Land Consolidation Program, for a total budget this year of $3 million. This funding will provide for construction of agricultural roads, the acquisition of farmland which is then sold as Crown leases to local farmers.

Under mines; our mining industry is experiencing a downturn as a result of the global recession and the past six months have not been kind to us. This has had the most impact in Labrador West where cutbacks at Wabush Mines, cancellation of the IOCC expansion, and IOCC's potential summer shutdown have had a severe effect. This has had an impact on employment, especially in Labrador West. However, this is expected to be partially offset by the construction of the Vale Inco Hydromet facility.

In response to this current crisis we feel it is important for us to continue our support of the mining sector and keep people working and exploring, as well as to promote our mineral potential. Funding for this year focuses on mineral exploration and investment attraction and we are spending an additional $620,000 in this year's Budget on exploration, attraction and mineral promotion. We are making a record investment of $3 million in the provincial Mineral Incentive Program, an increase of $500,000 over last year. This program provides financial assistance to our junior mining companies and we will also be restructuring the program this year to respond to current industry needs.

The Province's mineral promotions plan will also include a continued emphasis on Labrador to attract interest and potential investment consistent with our commitment to address the economic and social needs of the people of Labrador as outlined in our Northern Strategic Plan. The increased funding of $120,000 will enable us to implement a promotions plan targeted around attracting investment and increasing awareness around opportunities in the Province's mining industry.

We have also committed $200,000 to the identification, evaluation and rehabilitation of the Province's former mine and exploration sites. This funding will be used to further investigate abandoned mine sites throughout the Province to determine levels of contamination and potential remediation work, including the former mine sites at Buchans and Whalesback in Notre Dame Bay. We are also continuing our investment in the three-year work plan for the rehabilitation of the Baie Verte and Rambler Mine sites.

Budget 2009 includes a carryover of $4.3 million from last year, in addition to the just over $3 million allocated for this year. This will complete the current phase of this project.

Last, but not least, is the energy branch. This year's funding priorities reflects our approach to long-term strategic planning and provides clear direction for the development of our resources as laid out in the Energy Plan.

Budget 2009 provides $228 million to Nalcor Energy to assist with its financing requirements related to the corporations anticipated investments in Hebron, the White Rose extension, the Lower Churchill development, and other potential acquisitions. This investment reflects our recent role as equity partners in the development of our energy resources and provides us with a competitive advantage in the international energy market as we pursue attractive energy developments.

Budget 2009 also provides $7.76 million to continue the implementation of key initiatives outlined in the Energy Plan in the areas of geoscience, energy efficiency and conservation, and energy innovation. This year's amount reflects our decision to add a year to the implementation schedule of the Energy Plan. We believe this is a much more realistic approach to completing these major initiatives. The original $35 million commitment to these initiatives remains. This approach acknowledges the existing Human Resource issues within Nalcor Energy and the energy branch as a result of the many major projects currently underway in the energy sector.

I am also very pleased with our investment this year of $1.55 million for the EnerGuide for Houses Program to assist homeowners with energy audits and making their homes more energy efficient. Participation in the EnerGuide for Houses Program will allow homeowners in the Province to become more energy efficient, reduce cost, encourage energy conservation practices and decrease greenhouse gas emissions. It also complements retrofits assistance available to homeowners under the federal retrofit program.

These are just a few highlights of this year's investments under my department. My staff and I are happy to answer any questions you may have.

CHAIR: Thank you, Minister.

Ms Jones.

MS JONES: Thank you, Minister, for the update and I thank your officials being available this evening.

I am just going to start with a couple of questions from the Estimates under section 1.1.01, which would be your office, Minister, in particular. Under Salaries it says that you are budgeting $329,300. I know it is a little more than last year. I am assuming it is the wage increase. It is also telling me that one of the positions in your office is a temporary or other employee being paid at $47,400.

I am just wondering if you could clarify that for me and tell me what position it is?

MS DUNDERDALE: In the Minister's Office, $329,300 is in our Estimates and the increase is because of the extra pay period and the wage increase.

MR. IVIMEY: I do not have that information right now, what temporary position that is. I believe it currently could just be funding not allocated at this time, just not allocated to permanent salaries. We can check into that and I can let you know that information.

MS JONES: Well, it would be allocated because the Estimates last year shows me that it was spent, so it is being spent somewhere. Right now I currently have a list of permanent employees which includes, of course, the minister, the parliamentary secretary salary, the executive assistant, the secretary to the minister, and the departmental secretary to the minister, but there is a position that shows temporary being paid at $47,400.

MS DUNDERDALE: We will have to check it for you.

MS JONES: Okay.

The other question would be around Purchased Services. This year there is $36,600 being allocated and I am wondering if you can tell me what you are planning to use that money for.

MS DUNDERDALE: Purchased Services: we have budgeted $36,600

MR. IVIMEY: (Inaudible) used for the repairs of office equipment, advertising expenditures, as well as the purchase of periodicals, newspapers and official entertainment for the Minister's Office.

MS JONES: It is just that it is $26,000 more than you spent last year, so I am wondering if you are targeting anything specific. Are you just going to buy a lot more newspapers this year?

MS DUNDERDALE: We have been using it on the things that it is there for and we will have to see whether or not we do. I expect the Minister of Finance's sharp eye will be on it as well and if I do not spend it this year I will not be getting it next year.

MS JONES: Okay.

Under Executive Support, again under Salaries, last year you did overspend what you had estimated. You estimated $1.8 million, and you spent $2.4 million, a little more. I am just wondering what the additional salaries were for.

MS DUNDERDALE: The variance was due to severance and vacation pay owed to a former deputy minister as well as a critical temporary and contractual position on commercial advisory and policy positions to work on some of our future resource developments.

MS JONES: The Estimates are telling me that there was $26,000 in temporary employees, so that is what it would have been?

MS DUNDERDALE: Yes.

MS JONES: Okay.

Last year as well you spent $30,000 more in Supplies than you had budgeted for under Executive Support and I am wondering if it was something in particular. It would be a lot of pens and paper, but it might have been something specific.

MS DUNDERDALE: Well, my note tells me that it was due to increased requirement for office supplies associated with increased staffing levels in the executive office. We have been robbing Peter to pay Paul because we have not had any incremental raises over the last number of years. I guess last year was where the rubber hit the road and we needed to do a formal budget allocation.

MS JONES: Okay.

It still seems like an awful lot although the number of employees did increase. Your budget did go from $11,800 up to over $40,000 in supplies, so it has actually more than tripled.

Under Purchased Services you had budgeted $11,700, you spent $26,500. Again, you doubled your expenditure and I am just wondering what that was for.

MS DUNDERDALE: For printing, advertising, promotions, facility of room rentals, paper shredding services, photocopier rentals, and other miscellaneous purchased services.

There has been tremendous activity in the office over the last year, as you can imagine. We have been dealing with a number of major projects and negotiations, so there has been quite a bit of activity in the office.

MS JONES: But you are not budgeting an increase for this year?

MS DUNDERDALE: No.

MS JONES: Under section 1.2.02, which would be the Administrative Support financial operations for the Departments of Natural Resources and Fisheries and Aquaculture, I am just wondering if someone can explain to me what the crossover is in Administrative Support.

MR. IVIMEY: The amounts voted there are for the financial operation and the general operation divisions that would be shared services between the Department of Natural Resources and Fisheries and Aquaculture. Our Financial Operations Division as well as our General Operations Division provide support to both departments, and the amount is voted in our Department of Natural Resources.

MS JONES: Okay.

Again this year you spent $300,000 less in Salaries than you had budgeted. Can you tell me if there were some vacancies in that section and what the vacancies were?

MR. IVIMEY: Yes, there were several vacancies there in that section this year. There was a manager, an organizational budget analyst, an audit officer, and an accounting clerk position that were vacant throughout the year on different occasions.

MS JONES: The increase in the line item this year is to cover, I am assuming, the 8 per cent wage increase and the extra pay period, is it?

MR. IVIMEY: Yes.

MS JONES: Under Purchased Services you budgeted $22,600 and you spent $63,500. Can you tell me what the purchases were?

MR. IVIMEY: The purchases that were provided there underneath Purchased Services for the year would have been printing, advertising and promotion, facility and room rentals, as well as photocopier leases and expenses for photocopies.

MS JONES: What kind of advertising would that have been? What kind of ads would it have been?

MR. IVIMEY: Job advertising in various media papers.

MS JONES: Okay.

Were there any specific projects undertaken under this heading?

MR. IVIMEY: No specific projects, where it is the general operations and the financial operations of the whole division. Any print or media ads that would go in the paper involving calls for public tender or request for proposals would also be incurred underneath this subhead.

MS JONES: Under the next section, section 1.2.03, purchase and construction and alteration of tangible assets, you spent $35,000 last year on Professional Services. Obviously it was something that you did not anticipate because you did not budget for it in the year. Can you tell me what that was spent on?

MR. IVIMEY: The Revised variance there is due to consulting, design and engineering expenditures that related to infrastructure projects. All of the infrastructure funding was originally budgeted in Property, Furnishings and Equipment and it was reallocated to Professional Services as needed during the year.

MS JONES: Okay.

What specific project was that?

MR. IVIMEY: There were several infrastructure projects that were budgeted underneath the subhead for the year. There was construction of an animal health vehicle garage, buildings in Winterland and Lewisporte, as well as renovations and construction of a Pynn's Brook veterinarian office. Those Professional Services expenditures would have related to those infrastructure projects.

MS JONES: What about the Purchased Services? Again, you did not Budget it but you actually spent it, so it was not anticipated.

MR. IVIMEY: The Purchased Services would also be along the same lines, various consulting and designing expenditures that were not anticipated and all the funding was budgeted within the Property, Furnishings and Equipment vote, and therefore reallocated as needed.

MS JONES: The $2,994,000 that you spend, can you tell me what that was spent on specifically?

MR. IVIMEY: That was spent on the projects that I just outlined there earlier. There was the Pynn's Brook vet office, an animal health vehicle garage, and construction of new forestry buildings in Winterland and Lewisporte.

MS JONES: Okay.

The Budget that you had anticipated, the $3.7 million, you did not spend all of that. Is there something that did not get done?

MS DUNDERDALE: That was because the bid came in I do not know how many hundreds of pre cent over and above what was – we had, I think, a twenty by thirty building extension and the bid came in at over $400,000.

MS JONES: Have you re-tendered it for this year?

MS DUNDERDALE: Not at this point in time. We are looking at that. We had the same issue in Port Hope Simpson and it is a very serious problem for us and one we have to get our heads wrapped around as to how we manage. The bids are coming in. They are so far out of alignment it is incredible. You know, it is a difficult issue for us and we have to find a way to manage it, but a twenty by thirty extension in Roddickton, $400,000, and a similar experience in Port Hope Simpson - nobody would ever be able to build a house there if an extension costs that much.

MS JONES: So you have not decided if you are going to proceed with it or what you are going to do at this stage?

MS DUNDERDALE: No. We are grappling with how we deal with this serious issue. We need to have this infrastructure but we have to make sure that we are not throwing money away, that the investments we are making are good investments and we are paying fair market value for what it is we are getting. We do not believe that we are getting fair market value when a twenty by thirty extension, very basic, a room, nothing complicated, is going to cost us over $400,000.

MS JONES: Well one thing is for certain, that the economic situation has changed. If tenders were out early you might see a difference in price bidding this year as opposed to last year.

MS DUNDERDALE: We will see.

MS JONES: The $1.6 million that you are going spend this year, what has that been targeted for?

MR. IVIMEY: The funding that is targeted for 2009-2010 is for the replacement and upgrading of forestry and agrifood's vehicles.

MS JONES: How many new vehicles are you buying?

MR. IVIMEY: The exact number of vehicles I am not too sure about at this time.

MS JONES: What kind of vehicles are they, like trucks or something?

MR. IVIMEY: Yes.

MS DUNDERDALE: What we need to do our regular work for our conservation officers and road inspections and so on.

MS JONES: Okay.

I guess we can get into the Forest Management part of it now. Before I move on, I did not know if Lorraine had questions on those two sections or not.

MS MICHAEL: No questions, Mr. Chair. All the questions that I have noted you asked, so I am all right.

MS JONES: Under Administration and Program Planning, 2.1.01.; under this particular section again last year you underspent about $500,000 in Salaries. I am just wondering what the vacancies were in the department?

MS DUNDERDALE: Some of them were late recruitments and others were vacancies.

MR. MOORES: They were primarily late recruitment, just going through the process of vacancies and then recruiting them again, and the time change, the difference between those times.

MS JONES: Okay. Also in that section of the department this year you are going to spend $582,500 on temporary and other employees, a fairly large chunk of your salary budget. Can you tell me what those positions are for?

MR. MOORES: Seasonal, we have a large seasonal program on in forestry from fire suppression to silviculture to roadwork to harvesting trials. So it is a large part of the program. Tree nursery has seasonal employees as well.

MS JONES: Okay. Now I see the silviculture temporary employees are nearly $2 million, but I guess I am just wondering, in the planning section, what the positions would actually be, in the Administration and Program Planning section?

MOORES: Yes.

MS JONES: Silviculture is under a different line in my book, so are a couple of the other ones you just said. So I guess I want a breakdown of what the $500,000 is for what employees?

MR. MOORES: Yes, I can get you the actual. The general would be for forest conservation officers who are doing the various types of work that I was just referring to in terms of field for the different components of our program under Administration and Program Planning.

MS JONES: Are these workers that are on recall normally hired back every season?

MR. MOORES: Primarily, they are all on recall, yes.

MS JONES: Okay. This year, of course, you have increased your budget. I do not know if there are any new positions been added or if this is just the necessary amount you need to cover off increases and the extra pay period.

MR. MOORES: It is just for covering off the increases. There are no new positions been added.

MS JONES: Okay.

Under Employee Benefits, last year you budgeted $60,800, you paid out $280,000. Were there some positions made redundant, some packages issued? Why would the Employee Benefits have increased so much?

MR. MOORES: Under Employee Benefits, we pay for our work health, safety and compensation expenditures there. We had three bills related to the year before, 2007-2008, that was actually paid for in 2008-2009 Budget.

MS JONES: Okay. That is not something that would occur on a regular basis, is it? When do you have to pay that and why do you have to pay it? You have to explain to me because I have no idea. You obviously do not have to pay it this year because you are not budgeting it again.

MR. MOORES: Well, I guess we are hoping to pay it all in (inaudible).

MS JONES: Okay, so it is –

MS DUNDERDALE: (Inaudible) three months billing of the former year got caught in last year's budget. We have to pay it, workplace health and safety compensation, we have to pay it annually.

MS JONES: Yes, but is it $220,000?

MR. IVIMEY: Those bills were paid late in 2008-2009 due to there was a vacancy in the Human Resources Division there and there were some bills that related to the end of the year. Primarily, I think it was January, February and March that were not processed, unfortunately, until the following fiscal year. So no, that is not something that would normally occur under general, normal circumstances.

MS JONES: Okay, because I am looking back through the Estimates here for 2007-2008 and during that year it tells me that you paid $31,000 more in benefits that year as well. So that would have been 2007-2008. What I am talking about now is 2008-2009, the year after. You have already overpaid $31,000 in the previous year, but you are telling me you did not pay, so it got carried over into 2008-2009. Either I am missing something or I am totally confused all together. The estimates for your department on that line item are not balancing out with your statement, your comments.

MR. IVIMEY: The over-expenditures in the year before would have primarily been attributable to higher additional costs of the Workers' Compensation bills that were not anticipated. There would not have been any bills related to prior years during that year.

MS JONES: Okay. So you are saying it would have been related to increases in the benefit rate. Well, you did not budget for that either, right?

MR. IVIMEY: Yes, correct.

MS JONES: So really, if that was the case you should have budgeted $90,000 last year as opposed to $60,000. Next year you are still budgeting the same amount. All of this is due to Workers' Comp. So your department has paid out $220,000 in additional revenue last year due to that issue but you do not anticipate paying any money this year.

Under Professional Services, you budgeted $74,000 and you spent $1.5 million – actually, more than $1.5 million. We would like to have a break down of what that money was spent on.

MS DUNDERDALE: Well, a significant piece of it is legal expenditures incurred related to Abitibi. They were transferred from justice to us.

As well, under that heading we have the mill diagnostic and marketing expenditures related to initiatives under the Forestry Industry Diversification Program. That money was budgeted under grants, but then transferred to this heading. Also included in that is additional photo interpretation and forest mapping professional services contracts that they entered into during the year.

MS JONES: Okay. This year you are budgeting a lot less, of course, $404,000. It is still more than your estimates from last year but a lot less than what you actually spent. Can you tell me what that will be used for? Was it anything in particular?

MR. MOORES: For professional services this coming year. That will continue to be for some aerial photography purchasing, some site imagery purchasing, and some wood harvesting modeling as we start to prepare for our next wood supply analysis.

MS JONES: Okay.

There is another issue I am going to raise with regard to the Estimates for this department. I have been picking it up as I have been going along. There is one example here I want to point out. There are lots of them, actually, in the department where the estimate numbers for 2008-2009 that would have been in last year's book, that should have showed up as the budgeted amount are different.

For example, Professional Services here is one of those lines. I want to point it out because I think someone needs to get an explanation for it. Last year when we did the Estimates for your department, under this line, Professional Services, you had said that you had indicated there would be $22,000 budgeted for Professional Services. This year, under 2008-2009 budgeted line it should have read $22,000, not $74,000.

MS DUNDERDALE: Yes.

MS JONES: That has happened with a lot of lines in this department, but not only in your department. I picked it up in Health too, when I was doing the Health Estimates. I am not sure what the reasoning is for it.

MR. IVIMEY: The reasoning behind those number variances would be various budget restatements that are done from year to year. There were several restatements that have been done within the department from year to year. That detailed list I do not have with me right now but some of the restatements would have been in the admin and program planning subhead that you speak of.

MS JONES: Yes.

MR. IVIMEY: One of them I guess I could speak to right now would be probably under the Grants and Subsidies, where last year, I think, according to the budget, it would have been approximately about $14 million and in this years it only shows $3 million. That is due to the restatement in that there was a new activity set up which is 2.1.05. Forest Industry Diversification, which is on page 151 of the Estimates. On that page you can see that there is a 2008-2009 budget there of $11 million. This activity was not in the Estimates for 2008-2009. So it was a new activity set up. That money was restated under the budget underneath there.

So there are various reasons like that during the year we would do budget restatements. That is a list that I can provide you of restatements that are done from budget year to budget year so you can reconcile those figures.

MS JONES: Yes, because it is really confusing.

The other thing – I do not know why the Department of Finance would do their accounting that way because even if it were budgeted and you guys moved it into another heading or another department, it was still budgeted. That is why we have a revised column, to revise the difference. Then it is up to us to ask the questions, I guess, and you to give us the answer as to why it changed. It becomes very confusing when we go back and compare it to previous years and all of the numbers are different.

MR. IVIMEY: It is a common practice. It has been done as long as I know that I have been a Director of Finance and it is done through all government departments. It is usually done when there are funds moved around like that in order to provide a comparable year-to-year figure in that – or what the money was actually budgeted for.

In the instance that I speak of, in say the Forestry Industry Diversification subhead 2.1.05., if we did not do that restatement, the 2008-2009 budget there would be zero, when, in fact, that would not be correct because there was money budgeted for Forest Industry Diversification last year, but at that time we did not have this activity set up. So it is more correct, and correct accounting to put it in the activity where it belongs so you can see the comparable figures of where, if the activity was set up, where it should have been budgeted, and if there were expenditures, those expenditures would also be restated to show up there as well. Therefore, you can get two comparable years from 2008-2009 as if the activity existed in 2008-2009 and we spent there, and then you could see underneath, for next year, what we would budget as well.

MS JONES: Oh, yes. It makes perfect sense when you explain it, but it is really confusing when you are going through it and you are trying to make all the numbers come together. It is almost impossible to do.

MS DUNDERDALE: We can certainly give you a listing of it. We had the same discussion. This is not a new practice. This has been done forever as far as -

MS JONES: Yes, this is the first year I have really picked it up, all the same, probably because we have so much money in the budget this year. So we have been all interested in doing the comparisons.

MS MICHAEL: Could I just ask a following question in regard to that?

CHAIR: Ms Michael.

MS JONES: Yeah, sure, go ahead.

MS MICHAEL: Thank you.

I think what would help is if we had a definition of what the revised figure represents, is that a moment in time is a moment in which revisions are done, apart from the description of what then happens with the reassignment. Is that what the revised column is, it is one moment in time. Yes, I think that is what –

MS DUNDERDALE: If you introduce new programs and then when you go in the next year, you have to restate your budget when you start to allocate it out. It is an accounting practice that has been used in budgets - my understanding is - for a very long time, but we can certainly give you a list. If you want the restatements, we can do that that is not a problem.

MS JONES: Well, it would be helpful for us in terms of making everything come together for us because right now there are a lot of differences in the numbers and different columns, and without that, we have to go look for it everywhere else and that makes it kind of difficult as well because we have not been able to find it in some cases.

Were you finished there, Lorraine?

MS MICHAEL: Yes, I just wanted to (inaudible).

MS JONES: Oh, okay.

Under Purchased Services, last year you budgeted $3,253,000 and you spent $1.7 million. Do you want to tell me what the difference is, why you did not spend what you had budgeted? Was there something that did not get done you had hoped to do?

MS DUNDERDALE: Yes, there were delays, for example, in obtaining our aerial photography of forest sites, which, in turn, delayed the calling of tenders for additional interpretation contracts during the year.

MS JONES: Is that going to go ahead this year, Minister?

MR. MOORES: Yes.

MS JONES: The $2.8 million that you are going to spend this year on purchased services, what would that include outside of the aerial photography work that you need to finish?

MR. MOORES: That will include our vehicle rentals, our advertising that we do throughout the year for forestry promotion, storage space that we have, and doing our seed collection in the fall.

MS JONES: Of course the Grants and Subsidies you have already touched on with the transfer of money. That was obviously one of the ones we picked up on, the $14 million, and then the revised figure of $3,639,000. We will get to the $11 million portion of that when we get into the other section, but of the $3.6 million that was budgeted for Grants and Subsidies there was only $1.7 million spent.

Two things: One, could we have a breakdown of what you spent the money on; and secondly, what were you to spend money on that did not occur?

MR. MOORES: We did a project with the Canadian Council of Forestry Ministers. We are a corporate member of the Canadian Institute of Forestry. We spent money for the junior forest wardens. We provided a grant to the Newfoundland Forest Protection Association, and we provided a grant to the Newfoundland Lumber Producers Association. Those are our main grants.

MS JONES: How come you did not have a full take-up on the program; nobody looking for money?

MR. MOORES: Some of that grant money was actually transferred. As Philip said, some of the money that we had for the Forest Diversification Fund, for the marketing and the rebate program, was transferred to somewhere else. It was not a specific grant, so the money gets moved.

MS JONES: Okay.

According to this we are still showing that you have $ 1 million dollars in grant money that you did not spend last year. He told us that the amount budgeted that had changed from 2008 was moved to heading 2.1.05, which still leaves you with the amount that is there, the $3.6 million.

MR. MOORES: That is right.

MS JONES: You only spent $1.7 million. I guess we want to know why you did not spend the rest of the grant money. Was no one looking for it? Did you have it earmarked for something that you did not do after?

MR. MOORES: I will try again. When we started, as Philip said, the $14 million was in Grants and Subsidies. You will see in another area of the Budget there is $11 million there, but we took some of the money there for the mill diagnostics work, for the marketing fund, and for the rebate money. That was transferred out of Grants and up into Purchased Services.

MS JONES: Oh, okay. Now I got you, but it still does not make sense to me. I've got you but it does not make sense to me because you did not spend all of your budget in Purchased Services either. You only spent half of it or a little more than half.

MR. MOORES: Professional Services.

MS JONES: Okay, you transferred, then, to Professional Services.

MR. MOORES: Professional Services.

MS JONES: Now I think we might have it right.

The $1.6 million that you have allocated for Grants, what do you intend to use that for this year; the same groups that you gave grants to last year?

MR. MOORES: Yes, that is correct.

MS JONES: So they are usually standard groups that you would give to on an annual basis?

MR. MOORES: Yes.

MS JONES: Oh, okay.

Lorraine, do you want me to do the next one and you start with Culture or do you want to go ahead?

MS MICHAEL: Sure.

CHAIR: Ms Michael.

MS MICHAEL: Thank you.

Before moving on to the next section - you may have said this. I remember hearing of at least one federal–provincial partnership that the minister referred to, but under Revenue, what is that Revenue? Is that just a one-time program and you did not get all the money that you anticipated getting from the federal government? This is under 2.1.01, in Federal Revenue.

MS DUNDERDALE: That is our community trust money, and that has been now budgeted under Forest Industry Diversification.

MS MICHAEL: What did you say that time, Minister?

MS DUNDERDALE: The community trust money is the federal government funding and it was put there for the manufacturing sector.

MS MICHAEL: Right. And that funding has ended?

MS DUNDERDALE: No. We have a pot of $24 million that was made available under that program. There was $4 million of it that was assigned over the life of the forestry restructuring and diversification program and so that much of it has been allocated and moved to another sector, moved to another heading, the Forest Industry Diversification Program.

MS MICHAEL: Thank you. I just did not hear you the first time.

We can move on to 2.1.02, Operations and Implementation. Here, of course, we are getting into district forestry and wildlife offices. Some of these questions always seem repetitive, I know, but we do have to ask.

Under Salaries there was a slight over expenditure, almost $100,000 in the revised figure, and the new figure for the estimate for this year is up over $1 million. Could we have an explanation? Are there new positions happening here or what is it that is going on?

MS DUNDERDALE: The variance from the budget to the revised was due to higher than anticipated overtime and some other earning expenditures associated with the regional forestry operations. The increase in the budget this year is due to the 4 per cent raise that we had to budget for this year as well as the extra pay period.

MS MICHAEL: Thank you.

Under Transportation and Communications, 03, you under spent last year, but it looks like you still anticipate over $1 million. You have kept the same line. What was the under expenditure, just less travel than planned?

MS DUNDERDALE: Less travel and we anticipate more travel in the upcoming year because we are doing more training. We have required training for our conservation officers and employees and that is scheduled for the upcoming year.

MS MICHAEL: Thank you.

Under Supplies, I have no idea what supplies means here so you will have to fill me in on that, but there was an over expenditure of $539,700.

MS DUNDERDALE: The cost of fuel for our trucks and all of our vehicles, as well as additional costs of outfitting new and replacement vehicles purchased during the year, with tires, winches, light bars, racks and other things like that that we need for our operations.

MS MICHAEL: The over expenditure, one of the big reasons was the increase in the cost of fuel?

MS DUNDERDALE: Yes.

MS MICHAEL: Okay.

Under Purchased Services, again there is an over expenditure of $323,500. It looks like that was a one time thing, but what was that?

MS DUNDERDALE: Higher expenditures associated with vehicle repairs and maintenance. Some of our fleet is getting old which is why we are going to replace some of them this year.

MS MICHAEL: Right.

Property, Furnishings and Equipment: Do some of the new vehicles come in under that?

MS DUNDERDALE: Yes.

MS MICHAEL: Yes.

MS DUNDERDALE: As well as some furnishings and equipment we need for program delivery.

MS MICHAEL: Thank you.

I always find these curious so I always ask: What is the Provincial Revenue, $3,500? What would make that?

MR. IVIMEY: That Provincial Revenue would not be anything specific. It is just unallocated, just general miscellaneous revenue that might come in through the year in terms of, we might get a reimbursement from a vender or supplier for a product that we purchased or something like that. It is not budgeted per se.

MS MICHAEL: Thank you.

The next section then, 2.1.03, Silviculture Development: Again, looking at Salaries, there was an under expenditure for $126,000, but the estimate for this year is $212,700 over what was budgeted last year. Are there any new positions involved there or is all of that –

MS DUNDERDALE: The variance is due, in terms of the Revised Budget for 2008-2009, we had less than anticipated salary costs with the silviculturists and that varies from year to year depending on the scope of the program. The increase in Salaries again is to do with the 4 per cent and the twenty-seven pay periods.

MS MICHAEL: Right. Of course, the nature of the silviculture would be such that it would explain the high amount of temporary and other employees because that would be the summer program.

MS DUNDERDALE: Absolutely. It is a seasonal job.

MS MICHAEL: Thank you very much.

Supplies, 04: Again there was a major over expenditure there of $307,000. Was that something unanticipated?

MS DUNDERDALE: The revised variance was due to an internal reallocation of funds within the silviculture program. Allocation of the silviculture budget is done early in the fiscal year, and at that time a number of projects had been certified to proceed. Some are on hold and some are under analysis. Some of the projects proceed while others do not, and new projects are added during the year when tendered projects come in at under our estimated costs. Therefore we reallocate funds under that heading to Purchased Services where the public tender contracts for silviculture projects are budgeted, to transportation and communication and supplies to allow for the department to proceed with the silviculture work. We try to manage the funds within that, depending on the scope of work that needs to get done.

MS MICHAEL: Thank you.

Under Purchased Services, 06, you were slightly under budget, $272,500.

MS DUNDERDALE: For all of the same reasons.

MS MICHAEL: The same reasons, okay. That is all from that.

Would the Provincial Revenue have the same explanation here? It is a bit more this time, it is $9,200.

MR. IVIMEY: The Provincial Revenue budgeted underneath the silviculture development is for the sale of tree seedlings. The higher amount there this year is just due to a slightly larger amount of tree seedlings sold during the year.

MS MICHAEL: Thank you.

Moving down, then, into Capital, the Resource Roads Construction: The major one for me would be 06, Purchased Services. There was a variance from the budget to the revised, a variance downward, but the budget for this year, the estimate, is $1.6 million more than last year.

MS DUNDERDALE: Abitibi.

MS MICHAEL: Oh, okay.

MS DUNDERDALE: That is for construction and maintenance of roads on their former limits.

MS MICHAEL: Okay.

We will do one more, 2.1.05., the Forest Industry Diversification. The Loans, Advances and Investments, can you tell us a bit about that, Minister, because it looks like you had $11 million budgeted but that money was not used at all?

MR. DEERING: The amount of money that was budgeted last year under the Forest Industry Diversification Fund was allocated to the projects that the minister described in her opening remarks, projects that we were going to fund to promote the diversification and competitiveness of the integrated sawmill sector. It was a new program for us this year and it took us some time to get the program established. We had to set up a committee and set up guidelines and criteria to evaluate proposals, and as well, give the proponents opportunities to develop business plans to get projects in to us for evaluation. It is a three year program. We do have some business plans on the table now for which the committee has evaluated and are soon ready to move forward on projects.

MS MICHAEL: So I assume the $11 million was just carried over with $2.5 million added to it.

MR. DEERING: Correct.

MS MICHAEL: Right, and this program is the one that is cost-shared with the federal, obviously, because you have the federal component there.

MS DUNDERDALE: Only in the Community Trust Program provides part of the funding for this program.

MS MICHAEL: Okay, this is the Community Trust part.

MS DUNDERDALE: This is the $14 million, three-year program.

MS MICHAEL: Right.

MS DUNDERDALE: The first year of the three-year program, but because it is a new program there is an awful lot of work that is required once you get approval through the budget process to go ahead. So a whole process, an application process and a regulatory process has to be set up. When a program is announced it takes some time to get it up and running and for people to understand what is required of them, to prepare their applications, to get them in, to get them considered. So we are not surprised that we did not have a big uptake in the first year. That is fairly normal when you are introducing something new but we are happy with – we have significant challenges that I am sure we will talk about before the night is done in terms of the forestry sector, but in terms of some of the things that we are trying to do here, we have a number of applications, as Keith has said, before us and well progressed. So we will soon be able to start to approve some of the projects that have been submitted.

MS MICHAEL: Okay. I do not know, do you want to – yes, I thought so.

MS JONES: I have questions on that program as well. Now, all the money that is in that program is for loans or investment projects. There is nothing in that for grants at all is there? Is there a cap on what you can receive?

MR. DEERING: The funding criteria require a minimum of 20 per cent investment by the proponent. Of course, we have to distribute our fund as best as we can across the Province and amongst the operators that we still have remaining in the Province.

MS JONES: What kind of projects would fit the criteria? What is it you are looking for in particular?

MR. DEERING: Prior to the commencement of the program itself we had set up a set of criteria and guidelines for the operators to structure their business plans around. We had required that each of the proponents undertake a technical diagnostic of their integrated operations, and we had contracted Forintek out of Quebec to do that for us. As well, the proponents were required to undertake a financial diagnostic, for which we had to engage the Department of Innovation, Trade and Rural Development to do that work for us.

Some of the projects that we anticipate funding are mill upgrades that came as a result of the technical diagnostics, which would include components to improve energy efficiency, components to improve mill productivity, increase lumber yields, and things of that nature, as well as projects that would be brand new, including bio-energy development. In this particular case, wood pellet plant to displace fibre that normally would have been shipped and processed as pulpwood in the past. So we are looking to diversify the products that we are producing, or had been producing up to this point, to make the industry more competitive.

MS JONES: Are you getting many applications?

MR. DEERING: Well up to this point, as I said, we had limited the program in the first year to the integrated sawmill operators. We had approximately eleven integrated sawmill operators as early as four years ago. We currently have four integrated sawmills that are continuing to operate in this Province. At this point we are inviting proposals and business plans from those operators. As I said earlier on, the anticipated length of this program is up to three years and if funding still exists after the projects that these people have undertaken have been completed, then we will expand the program into some of the larger non-integrated mills.

MS JONES: That is all I had.

MS MICHAEL: (Inaudible) 2.2.01. which is Insect Control, "Appropriations provide for the Province's insect and disease surveys as well as control programs which are cost shared with the Province's pulp and paper companies…" Unfortunately, I think now we are saying company. There will be only one company now involved in this, "depending on insect location and timber ownership."

The first one, 03.Transportation and Communications, the revision from the budget was $318,400. Was that a one-time expense or was it unexpected expense?

MR. DEERING: (Inaudible) budget year, it was an unanticipated expense because of the significant outbreak of hemlock looper that we had in Labrador.

MS MICHAEL: Oh, right.

MR. DEERING: We undertook a significant program in Labrador this past year and we do expect to continue with a looper spray program in Labrador again this year.

MS MICHAEL: Okay. You have gone back to the budget for last year, the same estimate. You think you will not need any more than that?

MR. DEERING: It will be a prioritization exercise for us for this year and we anticipate if we do undertake an expanded program in Labrador there will be a reduced program on the Island portion of the Province.

MS MICHAEL: Okay, thank you.

Under Professional Services, you budgeted last year and did not spend anything and you are budgeting again this year. Is it normal to keep so much in a line like Professional Services, or was there a reason you did not spend anything last year?

MS DUNDERDALE: (Inaudible) the variance. We did not spend anything because we did not contract outside consults for various insect control related studies but we do expect to do that this year.

MS MICHAEL: Okay.

MS DUNDERDALE: In terms of that heading, there are some programs that we share with the pulp and paper company now, we did share with the pulp and paper companies, but we also do an insect control program that is entirely within the purview of the department.

MS MICHAEL: Right.

MS DUNDERDALE: Like in Labrador, for example.

MS MICHAEL: Okay, thank you.

Under Purchased Services, there was not a big overspending, about $50,000. Again, was that a one-time expense?

MS DUNDERDALE: Again, that was to do with the outbreak we had of the hemlock looper in Labrador.

MS MICHAEL: Okay. All of those were related.

Do you want to start asking, Yvonne?

MS JONES: Actually, on the last section you said that there were eleven integrated sawmills now there are only four. Can you give us the list of sawmills and the seven that have closed down? If you do not have it right now you can send it to us.

MR. DEERING: I will send it to you.

MS JONES: We would like to get it a bit earlier because information we asked for last year, we only got a couple of weeks ago from last year's Estimates. So it was kind of outdated for us at that stage.

MS DUNDERDALE: (Inaudible) everything that we asked for in Estimates when you were in government, we did not get any. So at least we have moved it up.

MS JONES: Oh, did you?

MS DUNDERDALE: We have speeded it up somewhat.

MS JONES: I guess it was an improvement. Anyway, it was a real great one.

If we could get the list it would be helpful for us because I am not even sure what mills it was. I know that there recently we did get a call from a mill operator who was, at the time, looking for money from the department. I think they were looking for some kind of funding to offset the cost of their operations, emergency assistance or something like that. They did come to us and they had about forty employees, and we did find out after that they did close up and go out of business.

MS DUNDERDALE: Yes, and I am familiar with that company.

We were aware of those situations when we developed our forestry restructuring and diversification program. It is one of the reasons that we brought in mill diagnostics, because we wanted to work with the industry and we wanted to make significant investment in the industry and we were going forward in the budget to make the request under this program. We also wanted to ensure that because the program that we have brought forward is a multidimensional one, it talks about the business we are doing in this Province with pulpwood, but also what we are doing with sawlogs and the need to encourage and support secondary processing and to develop markets outside of the United States.

One of the critical pieces of that was to help companies make sure that they were in the best possible position in their businesses to go forward and be successful with the support of the programs, such as the ones that we were introducing. We said to them quite clearly at the time, we are not interested in paying your light bill. We need to go in and have a look at your business overall to see that you have the right equipment that you need to do your business, that you have a sound business plan and we are going to make monies available to you. If you are in a good place and you have a reasonable chance of success, we can provide money so that you can get the equipment you require to further your business, to assist you to have a lean and efficient operation and to help you do good, sound business planning. We will also work with you in identifying markets and working with you, not only in identifying the markets, but co-operating with you and supporting you until you can actually realize contracts and get ready for export development.

So we looked at all of those initiatives. When the program was announced it was very well received by the industry, but we have significant challenges in the forestry industry here as we do across the country and across the world. The situation has become exacerbated by the fact that AbitibiBowater has closed down. Unless there is a market for pulpwood, we have a serious issue about what we do about sawlogs. That is an issue that has not been resolved.

Hopefully, in our call for Expression of Interest we will have – we are hoping that in that process we will be able to identify a company that can come forward with some kind of plan for the use of pulpwood in the Province because without it we have significant challenges for the industry, and particularly in Central Newfoundland and Labrador.

MS JONES: Under Bill 65, when we passed that in the House of Assembly, I guess at the time we did not anticipate the kind of fallout that we are getting now. We are getting a lot of feedback right now, and I guess a lot of it is coming from the operators that had allocations and did not have equipment. I thought under the legislation there was a provision whereby people could appeal for an exemption, I guess, to the minister or to the department or whatever. I am just wondering if there were any appeals for exemptions and if any were granted under that legislation in the last little while?

MS DUNDERDALE: The whole purpose of Bill 65 was to take the middle person out of the industry here in the Province. You are well aware - even though permits were only issued annually, once the first one was issued it was extraordinarily difficult not to continue to issue it.

Over the years we had a number of people who did not harvest wood, who were not associated anymore with the forestry industry at all, holding permits, getting them for a few dollars year over year and selling them to people, businesses that were involved in the industry, adding significantly to their costs and really affecting in a negative way their ability to succeed. In fact, we had a number of people who went out of business because they did not have access to the fibre supply here in the Province, while the people who did have the fibre supply were retired or working in Fort McMurray or so on.

That kind of a practice in the fishery was called slipper skipper and we use the same term in terms of the forestry piece. We needed to take those people out of the industry and to make the industry more competitive and give the people who were legitimately involved in working in that area and hiring people and running businesses in that area a reasonable chance of success and a reasonable chance to assess to the natural resources.

It is essentially the same thing we said to Abitibi: If you are not going to be here and operate here then you are not going to get access to the fibre here. That is what we were saying to the other people: If you did not have the ability to harvest or to manufacture or have a sawmill that uses the lumber coming from a permit, then we were not going to issue you the permit anymore.

Now, there have been a number of circumstances where people - in terms of the integrated sawmillers, there was at least one of them, that I am sure you are familiar with because I think you have referred to it at least once or twice, who because of the circumstances in terms of his ability to provide pulpwood to Abitibi was certainly impaired. The markets really impacted him negatively and he found himself in a position where he really could not operate his business anymore. He closed his operation down, even though he did participate in the mill diagnostics and so on, because he is hopeful that he may come back into the industry. He found himself out West earning a living for himself and his family and that was fair enough.

He appealed to the ministry and what we did was, we gave a timeline that, if you come back to Newfoundland and you are going to restart your business and you are going to be legitimately involved in this industry, then your wood supply will be here for you, but you are not going to have the wood supply while you are in Alberta. We are going to use it for the businesses who are here and operational during that time. But I make a commitment to you, that if you come back within two years then your wood supply is going to be available to you. We would not see your operation closed down that way.

There are a number of other people who have applied to me to say that they would like to appeal on the grounds that they had illnesses and so on, and we are taking all of that into consideration. We are not in the business of putting people who legitimately earned a living and were legitimately involved in this business out of the business. What we are trying to do is stop the practice of added costs and expenses to people who are legitimately involved in the industry by people who have no more than a financial industry, are not active in the industry themselves other than in that particular way.

MS JONES: So there is really only one exemption then that has been given, is that what you are telling me?

MS DUNDERDALE: I do not know. We have not given any exemptions. We have held the supply for that case and we have asked for some additional information from the other two cases, I think it is, but we have not issued the permit. I need a doctor's certificate and so on or a note from the doctor to confirm the facts.

MR. MOORES: For that sawmiller, in particular, we have not issued the permit, but if he can get his sawmill up and running we would be prepared to issue it.

MS DUNDERDALE: That is right. As I said, even though the mill was not operational, which was one of the requirements of the program to avail of the mill diagnostics, we did the mill diagnostics with him anyway. Any proposal that he made to us for funding would be given very serious consideration.

We have been around the business a long time and we know the people who are legitimately involved in this and we are certainly aware of the challenges that they have had to deal with over the last number of years. It certainly was not the intention of Bill 65 to put more onerous responsibilities on them or challenges to them. Those are not the people we were trying to deal with. We are trying to accommodate them as best we can, while staying true to the intent of the bill.

MS JONES: On the Abitibi lands, I understand that government had to issue new permits to those who wanted to cut firewood. Did that ever get done or is there some reason why it has not been done?

MS DUNDERDALE: No. What we did was we worked very hard at keeping people (inaudible) so we would not have a big disruption in everything else that went on. Our permits run until December, and what we did was said: Those same permits will serve you now, so everyone who has permits can keep them and you apply in the normal run of business.

MS JONES: So there is not going to be any issue there where there is some dispute with the lands between government and the company and so on? That will not interfere with this in any way?

MS DUNDERDALE: No.

MS JONES: Before we move on, I just had a couple of more questions with regard to the forestry piece of it. You have recently called for an Expression of Interest in Central Newfoundland on the timber resources that were there and I understand that there were several criteria that people had to meet and so on, and you can certainly give us an update on that if you want.

There was some concern expressed to us, because what we were told was that under section 13(4) of the act government had to deal with a comprehensive consultation process before they could tender this land or issue any new licenses. We have been getting some calls from people saying that they were not aware or they are not aware that there was any kind of consultation held. I do not know if there is going to be one or if there is one scheduled. What is happening with that?

MS DUNDERDALE: Part of the issue is going to be, we need to know what the proposals are for the land. It is hard to have a consultation when you do not have any proposals before you. Yes, we will certainly do the consultation. Basically we had a significant interest in the lands out there. Significant people wanted a piece of the land for different reasons; access to the fibre. We need to do this in a comprehensive way.

As I said earlier, we still have significant challenges in the forestry industry, and given the fact that there is not now a market for pulpwood in Central makes for significant challenges for us in the whole sector. We need to advertise far and wide so that we have a variety of interest. We hope, in that fibre, to make a proposal under the Expression of Interest.

We need to find a purpose for the pulpwood because if we do not find a purpose for the pulpwood we are very restricted in terms of what we can do with the saw logs. That is a very important consideration as we move forward. We just cannot go in and cut thousands of cords of pulpwood and lay it to one side to rot while we take out the saw logs. We have a significant challenge before us and we felt that the most comprehensive way to address that was to give everybody fair access to the fibre and also to ensure that we did significant work around attracting larger interests that might have a purpose for the pulpwood to that area of the Province.

MS JONES: The reason that we ask is because our interpretation of it under that section of the act is that the consultation was to occur before there was a tender of any other practice or usage of the land. I will go back and check the act again –

MS DUNDERDALE: But we are not issuing a tender. We have asked for Expressions of Interest. We are not issuing tenders.

MS JONES: Well, you are still going to use the land, so call it whatever you like.

MS DUNDERDALE: Yes, but we have time. When we get the Expressions of Interest and we are able to understand what the interest is in the use of that fibre, and what is before us, then we can do the consultation process, making that information available to people in the Province who want to engage in that consultation, so it is informed and people know what the possibilities are or are not. There is a big difference between doing an Expression of Interest and actually awarding access to fibre.

MR. MOORES: Maybe I can clarify. Under that section, our understanding is, if you are going to award or enter into a new timber licence with someone, there is a requirement for public consultation.

We have done the Expression of Interest to see what interests are out there to use the resource, because there are some companies who may not want a timber licence. They might just want to keep the resource and have access to it through the Crown, and to be prepared to go out and purchase wood from Crown operators.

We are waiting to see what the interest is from the Expression of Interest, and see what kind of security they want for the fibre resource. Hypothetically, if at the end of the day there is someone who wants a secure fibre resource for a possible facility, there will have to be public consultations as per the act, if government decides that they might want to enter into a timber licence with a particular operator.

MS JONES: From our perspective, we have not raised a number of these issues in the House, but I am going to raise them tonight. A lot of it is coming from environmentalists and outfitters. I will be honest with you. There have been a number of complaints regarding any number of districts across the Province, and I will get into two or three examples shortly. They have to deal with the concerns that they are expressing around the forest management plans, and the fact that they feel, and they legitimately feel - the most recent group that we have had discussions with is the Atlantic Salmon Federation. Recently the outfitters' associations just met on the West Coast over the weekend. We have been getting concerns, I guess, from them that they have withdrawn even, in some cases, from the processes, because they feel that their concerns are not being taken seriously and their issues are not being addressed appropriately. I would just like to give you the opportunity to explain what the involvement of these groups has been.

One of the most recent ones was with regard to Districts 14 and 15 on the West Coast. There was a very strong feeling that the Minister of Environment had rubber-stamped that entire allocation or management plan. I believe it was a five-year management plan. I am trying to recall now. They certainly felt that there was not a lot of consideration taken for the environmental aspects and the concerns that they had raised. They felt like they did not have an opportunity to raise their concerns appropriately.

When this is being done, is there specific consideration being given to the ecological perspectives and environmental perspectives that people are having and is there appropriate open consultation, like in this case for example in District 14 and 15?

MS DUNDERDALE: Absolutely!

If I recall correctly, the federation did not make a presentation. We did the whole consultation process and they did not bother to come and make a presentation. It is one of the challenges that we have to face in the department all the time. Having access now to the Abitibi fibre underlines it even more in lots of ways. There are many, many people in this Province who do not think we should cut another log. They see forestry as a twilight industry, an industry of the past. The Prime Minister, in fact, has made the same statements. Under whatever circumstance you go to cut down timber, you will have protesters.

We have had offers to buy up the Abitibi limits so that people cannot cut wood on it. The forest should only be used for outfitters or it should only be used for view scapes and tourism, any number of proposals that come before us.

To say that the Department of Natural Resources or the Department of Environment and Conservation does not take these issues seriously, I will tell you that we have forestry practically shut down on the Avalon Peninsula because of eriderma lichen, and significant numbers of people put out of work as a result of that. There was one company with over forty people who were put out of work because they do not have access here and that is without knowing very much about the lichen. When the lichen was first discovered, we designated an area on the Avalon, Halls Gullies, to protect the thalli. We did not allow any forestry activities to take place there at all. All the lichen died, but it certainly did not have anything to do with forestry and we do not have any information on why they died. Nevertheless, we have spent hundreds and hundreds of hours working with the industry and working with the Department of Environment and Conservation to try and resolve these significant issues. None of us want to be responsible for harming the environment. I certainly do not want to be responsible in any kind of a way for destroying a species that only exists here in Newfoundland and Labrador.

I can give you example after example of significant measures that we have taken that have been detrimental to the industry to protect what is considered to be endangered flora and fauna. In terms of the fauna piece, what we have done in terms of the pine marten in Western Newfoundland has caused pulp and paper companies millions and millions of dollars. We have moved people away from viewscapes, we have moved them away from watersheds. Every time you drive one of these companies back further into the country, we add millions of dollars onto their bottom line in an industry that is significantly challenged and has been for some time, and hundreds and hundreds, if not thousands of people, in this Province rely on them for their livelihood.

It is always a question of finding the balance. For me, I do not believe that forestry is a twilight industry. I think we are going through a rough patch, there is no doubt about that, and we have to be innovative and we have to be smarter about how we are doing things. We have to stop being so insular and look at the world and the markets in the world and how we might be able to access them. We always have to be sustainable and we have to be very careful of what we are doing in the environment. All of these things are taken into consideration. To suggest that we do not take them into consideration, I mean, we can provide you example after example where we do.

These whole planning processes, not only that we do as a department, but, for example, that companies do, provide the opportunity for whoever is interested to engage. People have now decided to assign a motive to the people who do not participate. It is because they are frustrated and not happy with the process. There is no evidence to support that. They could be completely satisfied with the process.

I know that we take very seriously any suggestion or recommendation. I can give you examples in terms of our planning on the Northern Peninsula, where communities made representation to it and significant adjustments were made to our harvesting plan as a result. It happens all of the time, on a daily basis. For somebody to complain about the consultation process and be writing letters to the minister with concerns and so on, and they did not participate in the consultation, it is hard for me to give much creditability to that criticism.

MS JONES: After all of that, maybe you can tell me what the consultation process was for Districts 14 and 15, because we are being told that during the planning process, before this went to an environmental assessment, there was no public consultation or at least these individuals were not engaged in it. We have had letters and phone calls from people in that area.

MR. DEERING: The plans for Districts 14 and 15 are the second or third iteration, I believe, of forest management plans for those particular districts. We have been undertaking strategic and operational plans for the last fifteen years or so and we have had a vast range of people involved in the process in that time.

Typically, the way our process starts out is we write a twenty-year strategic plan for the department, we undertake a public consultation exercise that is advertised in every medium that we can throughout the districts that are involved, we send public notices to community councils, and we ensure that regulatory agencies including the Department of Fisheries and Oceans, the federal Department of Environment, the Canadian Wildlife Service, any stakeholder that we know has an interest in our planning process in various other districts, we send them specific invitations in addition to the outreach that we do through the public at large. Anybody who has an interest in being involved in the process, we make sure they have amply opportunity to do so.

I would add that our plans are written and based on the best available science. We engage the expertise of wildlife biologists and habitat biologists from DFO who provide us with the guidelines and recommendations for forestry operations as it relates to fish habitat and wildlife habitat, and those things are implemented.

As the minister has already pointed out, our land-based net down starts with an alienation of areas that are of special interest to people and to animals and things like that. After we do our net down process whatever is left over is what our available wood supply is. Again, we write plans, the pulp and paper company writes plans, and all told we have a significant number of plans that we write on an annual basis.

MS JONES: You mentioned the Great Northern Peninsula and that is another area where we have been getting complaints, actually, from Districts 17 and 18, I think it is. What they have been telling us is that under the environmental assessment process all forestry activity is supposed to be suspended in a certain area until the natural area systems study or whatever is completed. They are telling us that the activity was not suspended for the two-year period, and that in one section called The Tickles - and I know nothing about the area up there so I am just going on the local input that I have been given - that there is still cutting ongoing in that area and forest activity. They have expressed concerns to us because they are saying this was part of the process, this was part of the undertaking, and this was what was agreed to but it is not being followed. I do not know if you can clarify what is going on there for us or not.

MR. DEERING: My understanding of the circumstance in The Tickles in particular - The Tickles area is on the periphery of one of the areas in the natural area systems plan, but we did agree through the Minister of Environment's release of the plan that we would suspend harvesting activities in The Tickles area. To my knowledge there are no commercial harvesting activities taking place in that particular area. There was a road constructed to the area in the year previous, but at this point we have not allocated any commercial operators to that particular plot until the consultation process for this particular area is completed, as per the Minister of Environment's direction.

MS JONES: So you are telling me that there is no cutting going on there now? Because I am just checking with my staff to see when the last call was that we received on this issue, and it was a little over a month ago.

MR. DEERING: In the area that was under question, and again as per the Department of Environment's release, we have not allocated any commercial operators to that particular area. Again, we have constructed a road. The road was constructed prior to the release of the plan –

MS JONES: Yes, we are aware of that.

MR. DEERING: - but we have not allocated operators to harvest wood from that piece of road.

MS JONES: When we passed the sustainability act in the House of Assembly, I thought that act would really be there to help resolve issues like that, to bring all the partners together and to ensure that there wasn't a problem. In the act I thought there was also a section in which there was a conflict resolution committee that was going to be established to actually do this. I do not know if that committee was ever established. I think the act was passed in 2007.

MS DUNDERDALE: In terms of some of the contacts that I have had, I do not know that there is a conflict resolution process available to us that is going to reconcile some of the difficulties we have and the polarized positions. There are people in this Province who do not feel that we should be cutting, period. Now I do not know how you reconcile that.

MS JONES: Well, that is not the issue that we are raising. In fact, the people who I have talked to have no problem with development within the woods industry. They have concerns that their voices may not be heard, their issues may not be addressed appropriately, and it is only appropriate that the department answer for that.

MS DUNDERDALE: Issues are heard, but again it is a question of balance. It depends on the arguments that are being put forward. For example, on the Avalon Peninsula the environmentalists who have made the issues around the Erioderma lichen, their issue has been the one that people have agreed to. They have made an argument strong enough, that at this point we have suspended woods operations on the Avalon. In other areas sometimes it is the harvesters who will win the argument at the end of the day, because, again, it has to be balanced about; what values are we trying to protect. That is extremely important in terms of the environment and conservation side, but there are also values on the economic side and on the forestry side that we have to balance that out with, and whether we can have a pulp and paper industry operating in Corner Brook, for example, if we are going to limit everywhere they can cut and we are going to escalate their costs of accessing fibre to such a degree that the industry has to shut down. That truly is a serious consideration.

There is always a question of balance and that is what I have to work at with my colleague in the Department of Environment and Conservation. If somebody says to me, Corner Brook Pulp and Paper should not be able to cut on the side of a hill so people can see it from the highway, that is all fine and dandy. We have had that circumstance and I have said to Corner Brook Pulp and Paper: Move back. You have to move out of the view plain. The minute I did that I added a million dollars to their operations for that year. Now, how many millions of dollars do I add before I have a company saying, I cannot operate here any more, and I have 1,500 people or 2,000 people out of work in Western Newfoundland? That is the balance.

MS JONES: But that is all part of the planning process.

MS DUNDERDALE: It is part of the planning process, but I cannot protect everything and the Minister of Environment and Conservation cannot protect everything, so we have to find the balance and it is a difficult thing to do.

MS JONES: My next question is on District 2, and that is the five-year forestry operating plan. When you released that plan – and I have to quote here – you said: The annual operating plan that was submitted to government must describe how issues raised by the public and government agencies in this environmental assessment review will be addressed. You asked that they submit an annual progress report to the department outlining the outcomes of these measures and how they followed up on that.

Were these reports ever received, are they being received, and are the issues being addressed from an environmental perspective that were raised during the assessment?

MR. DEERING: The release and the provisions that you just described came from the Minister of Environment?

MS JONES: Yes. The proponent was your department. The Minister of Environment set the conditions.

MR. DEERING: Correct, and these would have been conditions that the Minister of Environment provided to us. In our annual operating plan process for which we have to write a AOP, an annual operating plan, for every single forest management district in the Province that has commercial activities, this is where these provisions and operations are described, and these are submitted to the Department of Environment on an annual basis.

MS JONES: How are they made available to the public? Do you know?

MR. DEERING: Most of our districts have websites where the stakeholders can access information related to the forest management planning process, and a lot of the districts have posted these annual operating plans on those district planning websites.

MS JONES: Okay.

I just have one other question under the forestry section and it comes out of the comments in the Auditor General's report. It was regarding conservation officers and their seizure practices with regard to property, how they managed it, tracked it, protected it, whatever they did. I guess the question would be: how did government fix this problem? Do you now have a database in place for the administration of seized properties? Is it all accounted for or not?

The other issue was to deal with the moose meat that was being donated to charitable events and so on. There were some issues raised around that and how that was tracked – was it moose meat?

OFFICIAL: It was any kind of game (inaudible) people donated that to charities.

MS JONES: Yes, any kind of game. Wherever the seized meat would go and how that was tracked.

MS DUNDERDALE: We do not do that any more.

MS JONES: Oh, okay.

MS DUNDERDALE: We have stopped that practice.

MR. MOORES: (Inaudible) inventory of items that we have seized, but we are also currently in the process of acquiring a tracking and inventory system from Environment Canada called NEMESIS. This particular system will allow us to maintain a digital database of all seizures, all violations and everything related to our enforcement activities that could be accessed and quarried in a number of different ways. We are just in the process of acquiring this system now from the federal government, and we hope to have it operational before the end of this summer.

MS JONES: Okay. So you have money budgeted for that in –

MR. MOORES: Actually, the federal government has agreed - I think, I hope - to provide this particular system to us free of charge.

MS JONES: Oh, good.

MS DUNDERDALE: Things are not near as bad as you think.

MS JONES: You have a great relationship with the feds.

MS DUNDERDALE: That's right.

MS JONES: That is all the questions I have on the forestry piece.

Did you want to go, Lorraine, and move into the land section – land resources, is it or something?

MS MICHAEL: Agrifoods Development, Land Resource Stewardship, 3.1.01. I will go into line-by-line stuff again.

Once again under Salaries; an under-expenditure in the revision by almost $200,000, then up to $1,727,000 in the estimate for this year, so just an explanation of the Salaries there.

MS DUNDERDALE: All right, of course it includes the 4 per cent salary increases and the twenty-seventh pay period, but it is also additional funding to convert positions currently charged to the federal cost-shared growing formula agreement to the provincial program.

Just an explanation of that; prior to 2003, it was a common practice when there were cutbacks within government and we needed to lay off people, apparently people under the agriculture program were not laid off but transferred to the federal-provincial program. What that really meant was that money that was intended to farmers was going to pay for people who had formerly been employed by the department, the provincial department. By the time we came along and did an investigation, because we started to look, comb through the program in our program review and discovered what had been going on there. We have started a three-year plan to get those people back over on the provincial payroll where they rightly belong and ensure that money that is intended for programming for farmers goes to farmers. So that is the rest of that allocation.

MS MICHAEL: That sounds confusing to me. The program with the money for farmers, what was that program about?

MS DUNDERDALE: It was the federal-provincial program. The new program is called the Growing Forward program and it is almost $30 million we are spending this year. It is a variety of programs under that for funding for farmers for different things.

Prior to 2003, a significant number of employees who normally would be found on the provincial government payroll, in times of cutbacks were transferred over to that program, and we are in the process of transferring them all back.

MS MICHAEL: So the money was going into their salaries instead of going directly to the farmers for operations?

MS DUNDERDALE: Yes, what was legitimately a provincial government responsibility was being charged out under the federal-provincial program.

MS MICHAEL: Okay. Will this end it?

MS DUNDERDALE: Pardon?

MS MICHAEL: Will it end this year?

MS DUNDERDALE: Will this end it or next year?

OFFICIAL: Next year.

MS DUNDERDALE: Next year will end it. We had a three-year program. So this is year two.

MS MICHAEL: Okay, thank you.

The strange things that happened.

Under Employee Benefits, it used to be just $200, obviously it is going up. Why? What is happening there? I know it is a small amount of money but -

MS DUNDERDALE: Fees for seminars and conferences and training events during the year.

MS MICHAEL: Yes, still not much for that.

MS DUNDERDALE: No.

MS MICHAEL: Okay. The rest is pretty straightforward actually. I do not really have a lot of questions there.

Under the revenue, the provincial revenue, what is the source of that revenue?

MS DUNDERDALE: We do soil and plant analysis, and fees are realized from those services.

MS MICHAEL: Oh, right. Yes, okay. Thank you.

You had a big drop. I guess it was not a demand, so it did not happen.

The next one is the Limestone Sales. All of this is pretty straightforward. In Supplies you had a major under-expenditure. Was that a sign of what was happening in the industry?

MS DUNDERDALE: Oh, not at all. It was the issue we had last year with the limestone supplier, when it went down in Corner Brook, and it took some while to get up and reorganized and so on.

MS MICHAEL: Oh, right. I remember hearing about that, yes, right.

MS JONES: Can I just ask one question on that?

MS MICHAEL: Yes, sure.

MS JONES: Mr. Chair, I just have a question on it.

CHAIR: Ms Jones.

MS JONES: On the limestone program, what is your plans for this year? How are you accessing the limestone?

MS DUNDERDALE: We are accessing limestone here in the Province.

MS MacDONALD: Yes, we are getting our limestone from a quarry in Cormack. The supplier that was there before, they were closed down for about a two-month period and a new company has now taken over. So they are now supplying limestone to the Province.

MS JONES: Okay. So you only brought in the limestone in that interim period last summer. I believe it was one load or something, was it? A few loads or something?

MS DUNDERDALE: (Inaudible) new company to establish itself.

MS JONES: Okay, thank you.

MS MICHAEL: I would assume, then, that revenue line was affected by the same issue?

MS DUNDERDALE: Yes.

MS MICHAEL: Okay.

Under Land Development, 3.1.03., "Appropriations provide for the construction of agricultural roads and for the acquisition of farmland which is then sold as Crown land leases to farmers..."

Actually, except for 07., you are pretty well on target, but under Property, Furnishings and Equipment there was a major under-expenditure.

MS DUNDERDALE: Yes, and that under-expenditure came in our land acquisition program.

MS MICHAEL: Okay.

MS DUNDERDALE: And that can be a really complicated process. It can be a drawn out process when somebody is, we are trying to buy farmland back, in terms of establishing ownership and getting the proper documents and so on, and then negotiating the price of the land and so on. So sometimes you can complete it in a short time, other times these agreements take a lengthy time to negotiate.

MS MICHAEL: Minister, could you give us an idea of how well this is going? Are there farmers who are looking for more land, and is there a growth in this area?

MS DUNDERDALE: Absolutely. Farmers are looking for new land all the time. Our dairy farmers now have identified this as the number one issue for them in terms of, especially forage lands for them and their farms. We now have some of the largest dairy farms in the country right here on the Island part of the Province of Newfoundland. Forage lands for that industry are extremely important.

We have very little arable land here in the Province, so it is extremely important to us that we hang on to every piece that we can get our hands on. So this is a very important program for us and for farmers.

MS MICHAEL: Okay. We will move on then.

Maybe one more question in that area. Which area in the Province is probably where the greatest action is happening? I can make a guess at this but I might be wrong.

MS DUNDERDALE: Do you know where we are doing those acquisitions?

MS MacDONALD: We have 1,200 developed Province-wide. (Inaudible) land is being purchased from individuals, mostly on the East Coast and there are also some acquisitions that are under negotiation on the West Coast as well.

MS MICHAEL: Okay. Thank you.

3.2.01. Production and Market Development – Administration; under Property, Furnishings and Equipment you had quite a bit of money budgeted last year. What were you expecting?

MS DUNDERDALE: We had less than anticipated equipment expenditures because of delays in the cranberry development program.

MS MICHAEL: And you are not expecting that to happen this year either from the looks of it.

MS DUNDERDALE: No. Again, the cranberry development program was a new program last year so we were a little slow getting it up and going. Again, because of the development of the regulations, the applications, advertising and so on. So we expect a much better uptake on that program this year.

MS MICHAEL: Could you tell us a little bit more about the program and where the program exists, but why such a move in the area of cranberries, for example?

MS DUNDERDALE: Well, it is the result of an R&D program that government undertook that was extremely successful. Cranberries can be grown on bogs and we have millions of acres of bogs here in the Province. We have found that we grow berries very well, as good as or better than anywhere else in the country. We have been able to cultivate a particular vine that gives us a very high yield and a sweet berry. We have interest from farmers in entering into this part of the industry.

We have also had significant interest from companies that use strawberries, such as Ocean Spray, and they are very active here in the Province. There is a great deal of potential here for farmers and a new crop to be grown here in the Province and an opportunity to grow businesses. So it is one we are very excited about and we have made significant monies available again this year to get the bogs, to work with farmers, significant grants available to farmers to prepare bogs for cranberry development here in the Province.

MS MICHAEL: And how labour intensive is it, or is there a lot of mechanization?

MS MacDONALD: There is a lot of labour to develop a cranberry bog. Obviously, you have to profile the land, you have to put in the berms and put in water sources for flooding the fields but once the site is developed for cranberries it is mechanized because you are really only harvesting once out of the year.

MS MICHAEL: Right. So it is not a high labour operation in terms of employment?

MS DUNDERDALE: Only in the preparation of the bog.

MS MICHAEL: Only in the preparation, that is what I mean.

MS DUNDERDALE: Meanwhile, it takes $30,000 an acre to prepare bog.

MS MICHAEL: But once it is prepared –

MS DUNDERDALE: Once it is prepared, but it has – we have high yield of really good berries and we have pretty strong indication that we have good markets for the berries.

MS MICHAEL: Okay.

Under Grants and Subsidies, I notice that you had quite a bit estimated last year but only a small amount went out. Was that a lack of interest, lack of application?

MS DUNDERDALE: No, that was the cranberry development program and the Aleutian disease program. These were both new programs and it is not unusual when you announce a program in the budget and you still have to do your whole application process. You have to get your whole regulatory and the criteria established and so on. With both of these – and you are not quite sure in terms – you are going on estimates on what you think the take up of the program is going to be when you first introduce a new program. The take-up, because of those reasons, was less than anticipated in both those programs. That was part of the $6 million that I referred to in my opening remarks that we did not do the carry-over, because we are not sure at this point in time if farmers are going to be ready to draw down that money. We think what we have in the budget now is reasonable. Where money is tight in terms of this year, in terms of our budgeting, we did not want money just sitting there that we were not using up that could be better used in health or education or so on. We think we have the right amount of money there now, and if we need more money in the next fiscal year, then we will certainly go looking for that in the next budget process.

MS MICHAEL: In the expenditure that did happen, approximately $818,000 - that may have been revised again - how many operations does that represent?

MS KELLAND: The $818,000 under Grants actually represents about $560,000 out of the Aleutian Disease Management Program. I think there are about eight mink farms that receive funding under that program. We did not get any applications under the Cranberry Industry Development Program because they require you to do business plans and that, but we do expect applicants this year. The remainder of that $818,000 was $250,000 for the School Milk Program in the Province.

MS MICHAEL: Okay.

It is interesting that the School Milk Program comes under this area. Could I have an explanation of the rationale? Is that seen as a marketing activity?

MS DUNDERDALE: No, it is a very successful program and we are delighted with the success of it. In fact, we expanded the program into Labrador last year. It is just where it fits in the budgetary process. I guess because the dairy farmers are there, the milk program is there as well.

MS MICHAEL: Right.

Under the Provincial Revenue you anticipated much more than came in and you are still anticipating the higher amount again.

MS DUNDERDALE: That is for the sale of our cranberry plants and vines. We have cultivated a very disease resistant vine that is very particular to this Province. So if you are going to grow cranberries in Newfoundland you have to get the vines from us.

MS MICHAEL: Where was the research done with regard to -

MS DUNDERDALE: Here in the Province.

MS MICHAEL: Where in particular, at the experimental farm?

MS KELLAND: Actually, we have done research on cranberry farms across the Province. There are about four sites. As well, the department operates a research facility at Deadman's Bay. We have been testing different varieties of cranberries there for the last five, six, seven years.

MS MICHAEL: Good. Thank you.

Do you want to take over, Yvonne?

MS JONES: Did you guys have an application or something from Ocean Spray cranberry? I thought I heard something about that in the news or the mayor of Grand Falls or somebody out talking about it.

MS DUNDERDALE: They would not have a contract with us. They would have a contract with the farmers. We have had Ocean Spray in and we know that they are still active in the Province and they have a significant interest in cranberry production here in the Province. I have met with them.

MS JONES: Are you anticipating a proposal from them?

MS DUNDERDALE: The proposal would not be with us because they are not going to grow the cranberries. Our own local farmers would grow the cranberries and they would have some kind of business association with Ocean Spray, either as a partner or to buy the berries from them.

MS JONES: Okay.

MS DUNDERDALE: We have not received a proposal to that effect at this point in time.

MS JONES: Under the Grants and Subsidies program, how does that work? Is there is cap on the amount of a grant you can get or is it a percentage of what you are investing? How does that work?

MS DUNDERDALE: In the cranberry program?

MS JONES: Yes.

MS MacDONALD: Under the cranberry program producers are eligible for up to $15,000 per acre for the establishment of a cranberry site. They are eligible for ten acres a year, so that is $150,000 per applicant. That is as a grant.

MS JONES: Okay.

So that is about half the cost of an acre or something, is it?

MS DUNDERDALE: Am I right in $30,000 or is it $15,000?

OFFICIAL: (Inaudible).

MS JONES: I could not hear you, I am sorry.

MS DUNDERDALE: To develop an acre of cranberry bog it costs $30,000 and we are providing, as a grant, $15,000 of that.

MS JONES: Okay.

Under the Marketing Board, the Salaries there were over what was budgeted last year. Were there some new positions or some reason for that?

MS DUNDERDALE: Again, it is severance, vacation pay and overtime payout with the retirement of a former manager.

MS JONES: Okay.

The Professional Services, what did you spend that money on?

MS DUNDERDALE: Cindy, can you speak to that?

MS MacDONALD: Professional Services is the per diem expenses for the board members for the Farm Industry Review Board.

MS JONES: The only question I have under 3.3.01 is under Grants and Subsidies. I am just wondering what the $140,000 is used for?

MS DUNDERDALE: I am sorry! If you could just-

MS JONES: The next section 3.3.01, Agricultural Business Development Administration.

MS DUNDERDALE: 3.3.01. The question is with regard to grants and subsidies?

MS JONES: Yes.

MS DUNDERDALE: And what we use the $140,000 for?

MS MacDONALD: The $140,000 includes $75,000 to the Newfoundland and Labrador Federation of Agriculture, $50,000 to the provincial 4H council, and there is about $15,000 in miscellaneous grants there that we would provide to, say, the young farmers in Newfoundland and Labrador through other agriculture groups in the Province, like when they are doing AGMs.

MS JONES: These are pretty standard every year, are they? We do not switch them out for new applicants?

MS MacDONALD: Yes, the $75,000 to the Newfoundland and Labrador Federation of Agriculture and the $50,000 to the 4H council is a set amount that they get each year.

MS JONES: Under section 3.3.02, the Grants and Subsidies under that section, you budgeted $125,000 last year and again this year. What would you normally give that for?

MS MacDONALD: The Grants and Subsidies is the premium cost for the Production Insurance Program. We have a Crop Insurance Program in the Province where producers can ensure the vegetables against national perils like frost, the draught and excessive moisture. Governments pay 60 per cent of producers' premium costs. That $60,000 is government's share of the premium cost and it gets paid to the Newfoundland and Labrador Crop Insurance Agency.

MS JONES: What would the remainder be, because you are budgeting it again this year although you did not spend it last year?

MS MacDONALD: It was down in 2008-2009 because we had less potato acreage ensured last year but we anticipate that we would have our acreage up again for 2009-2010.

MS JONES: Under 3.3.03, Agriculture Initiatives, Grants and Subsidies again: what is that used for?

MS MacDONALD: Two million is for our Provincial Agrifoods Assistance Program and that is a grant program that is provided to producers for things, primarily for land development. It is also there for new technology or for secondary processing or for innovation. And $250,000 of that amount is for the Fruit and Vegetable Storage Assistance Program in which producers can avail of $250,000 per year for the construction and enhancement of vegetable storages.

MS JONES: Okay.

Under the next section, 3.3.04, Grants and Subsidies again, you budgeted $7.8 million. I do not know if you have already touched on this, if I missed it, and if I did I apologize. You only spent $1.5 million. I am just wondering if that money was transferred out somewhere else or if it is under a different heading.

MS MacDONALD: No, the money was not spent elsewhere. Normally, we commit $4 million a year to the Agriculture and Agrifoods Development Fund. It is for large scale projects within the agriculture sector, normally projects that exceed $1 million. We had worked on quite a few projects last year, but some of the projects did not proceed or were moved into 2009-2010. Of the $1.5 million that was spent, it was for some development of some mink operations as well as a feed kitchen for the fur industry.

MS JONES: What were you intending to spend the other $6 million on that you did not spend it on? Was there anything in particular or were you waiting for applications?

MS DUNDERDALE: These are really big projects, over $1 million. It is a program that is designed for those big projects that we can get. For example, secondary processing is what we have done with Brookfield and Central Dairies in terms of premium ice cream and the making of cheese here in the Province. This also has gone into an egg grading facility. These are very, very large projects that require significant funding that does not fit under our other programs.

MS JONES: So, there just weren't applicants. Has that been an issue?

MS DUNDERDALE: Again, because the projects are so big. Sometimes we were able to move two or three along rather quickly, but because they are large they tend to complicated sometimes. The whole application analysis and the whole process gets slowed.

MS JONES: What is the cost-shared ratio under that program?

MS MacDONALD: Under the development fund we can provide up to 50 per cent of the cost. Some of the projects we have done, like with the dairies, we have contributed 20 to 30 per cent of the cost. It depends upon the project.

MS JONES: The $4 million that you have budgeted this year, do you have applications that you are reviewing for that?

MS MacDONALD: Yes we do, actually. We are working with a couple of proponents, including the dairy farmers, some more of the mink farms, and some of the processors in the Province as well. We have applications and we have been working with them over the winter.

MS JONES: Did you ask questions on this one already, the Growing Forward? You did not do that, did you? Do you want to start there?

MS MICHAEL: In the same area, 3.3.04, what does the $225,000 last year under Provincial Revenue speak to? What was that?

MS DUNDERDALE: That is from dividends in the government's preferred shares in Country Ribbon Chicken.

MS MICHAEL: You do not know what you are going to get each year, so you just put in what you get? Do you get dividends every year?

MS DUNDERDALE: Obviously not, because it is not there.

MS MICHAEL: No, it is not.

MR. IVIMEY: No, the dividends are not budgeted on a yearly basis. It is basically set on Country Ribbon's dividend policy in terms of they may or may not declare the dividend schedule for that given year. We cannot budget it. We are not too sure when they will or will not pay.

MS MICHAEL: That was the only one I had from that section.

I will start the next one and then if Yvonne has a question she can jump in. It is the last part of the agricultural. Under Salaries, there was quite an under expenditure. The revision is down by $908,000 and then the estimate for this year is down even more. What is happening there?

MS DUNDERDALE: Revised variance due to late recruitment and vacancies, as well as lower than anticipated salary expenditures.

MS MICHAEL: It looks like this year the estimate has dropped by $1.1 million from last year's estimate.

MS DUNDERDALE: Some of that has to do with the new Growing Forward program and the transfer of some of our staff, and we expect that we are going to have lower administrative costs with the new program.

MS MICHAEL: Minister, could you give us some information on this program because this was new to me when I read this?

MS DUNDERDALE: The Growing Forward program?

MS MICHAEL: Yes, the Growing Forward.

MS DUNDERDALE: I will get Cindy to take you through. I am not sure how long we have had federal-provincial programs; some for quite some time. We just concluded the four-year program last year and we spent nearly a year negotiating the new Growing Forward program. I have to tell you, it was one of the most frustrating experiences of my life trying to – because we started off the program and did negotiate the new program and were assured by the federal government that all provinces would have the same amount of money in the new program going forward as they had in the old program. Well then when they released the numbers that they were going to allocate to each province for the new program, Newfoundland and Labrador had a reduction; the only province in the country to have a reduction where everybody else had an increase. So the first six month battle was around that piece, and we had our funding restored. We certainly had some issues then with how they were going to deal with the funds that they had put back into the program, and that took the next six months to resolve that piece.

So it has been an extremely difficult process in trying to get the federal government to understand, as well as our colleagues across the country. There are various levels of understanding of this issue. Certainly, our colleagues in the Yukon and the Northwest Territories understand it better than anybody else because they find themselves in a very similar position.

This is a very small industry compared to the industry in the rest of the provinces. The value is about $500 million here in Newfoundland and Labrador. It is a significant industry, a rural industry and has great value for us and something that we want to grow, not only because of the economic return to farmers here in the Province, but it has become a whole issue now around food safety and so on. We all want to know where our food is coming from and what it has been treated with and so on. We need to be able to sustain ourselves in cases of emergency for a certain length of time and there are significant challenges around that. With an industry as big as it is in British Columbia, for example, they would only be able to sustain themselves on food grown in that Province for a little longer than ten days. So given the scale, you can see the challenges that we have here.

Trying to get the federal government to understand that treating people – and this is the concept that you would be very familiar and comfortable with – means to treat people fairly does not mean they all get treated the same. Equality does not have much to do with treating everybody the same, understanding that an industry, as small as it is in Newfoundland and Labrador, has a great deal of difficulty accessing federal programs that are designed for the bulk of the people who need them.

There are huge industries in Manitoba, Alberta, Ontario, B.C. and Quebec and so on. So when you are as small as we are it is hard to access some of those programs, but there is a whole suite of programs. It is funded 60-40 and it covers – I will get Cindy to give you a rundown. It is everything from insurance on crops, from providing farmers with money if crops fail, where they are able to shelter some of their earnings from a good year. It is providing support for them in hard times and so on.

I will get Cindy to give you a rundown. There are a number of programs in that Growing Forward agreement.

MS MacDONALD: We have six separate programs under Growing Forward proposed over the next four years. We have a land development program where producers can avail of funding for land clearing. We have an innovation program, where farmers can avail of funding for new technology, for mechanization on farms, for new crops. We have a new farm investment program as well which will provide funding to attract new people into the industry and start new farms. We have funding there for sustainability programs for environmental stewardship programs on farms and to enhance on-farm food safety on farms. We also have a program there for mitigating agricultural risks, which will provide funding for farmers who want to do things like irrigation on farms to mitigate effects due to weather.

MS DUNDERDALE: (Inaudible) in every other province in the country the federal government provides more funding to farmers than does the provincial government, and the exception to that is in Newfoundland and Labrador. The provincial government provides more funding to farmers in this Province than does the federal government.

MS MICHAEL: As you know, I do not have to tell you, I think there is a growing voice in the Province with regard to not just food safety and quality but also increasing the food that we produce here on the Island for our people, and it is connected to food safety and quality as well.

I think there are many people for whom there is a lot of frustration with regard to the fact that we produce so little for ourselves, especially when it comes to the crops that we know grow really well here. Not everybody is able, like some of us, to go around and find the food that is grown here. I make a point of doing it but I am in a position where I can do that. The average consumer out there cannot.

So I guess I am wondering: Where is the department in looking at trying to get involved with people in that and increase the potential and the actual production of our own food? It is discouraging to look at the bottom line and to see that the expenditure into the agricultural business development is going down. It is going down $4 million between last year's budget and this year's budget. So, it is a real concern.

MS DUNDERDALE: Everything we do is to support farmers here in the Province and to encourage new farmers to work with the Newfoundland and Labrador Federation of Agriculture. As I said, we are the only province in the country that puts more money into agriculture than does the federal government. We had an increase last year of over $11 million in our budget to farmers.

Even the former President of the Newfoundland and Labrador Federation of Agriculture has not always been a fan and is certainly not shy about stating his views of the department and what we are and not doing. He said at an event that I attended with him last summer, farming conference that was held here in St. John's, that we had the money we needed for the time being and the size of the industry and so on. We need to continue to work - succession is a real area of concern for us. We work at identifying those challenges. We are working with the industry.

As I said, dairy farmers came to us this year and said our number one issue was land consolidation. Where do we get access to forage? We have had to do one-off programs. We have two hog farmers here in the Province. One of them was in real difficulty last year because of the high price of feed and we were able to - we have to think outside the box a lot of times in trying to provide support in those kinds of circumstances and we were able to. We have challenges because the industry is small.

In terms of animals, a great deal of our feed comes from outside the Province which makes it very expensive. The whole issue around ethanol has driven grain prices very high. These all have an effect here in the Province and we can only work together with the industry bringing sufficient funds forward and to do the very best we can to grow it here under difficult circumstances. The fact that we have so little arable land does not help us either.

MS MICHAEL: Right. We have to try to save what we have.

MS DUNDERDALE: Yes, and we have significant challenges in Labrador as well.

MS MICHAEL: Yes.

MS DUNDERDALE: We had issues there with agricultural land. We have been able to resolve them and make land available to farmers there. They are interested in starting like, for example, dairy farms in Labrador but some of the challenges are beyond their scope and ours at the moment but we continue to work together because it is important to grow the industry in that part of the Province as well.

MS MICHAEL: Yvonne, do you want to take over?

MS JONES: I just have two other questions on that section. One is the expenditure for peatland development and their drainage program. Where is that to?

MS DUNDERDALE: That was the program under the Growing Forward program. It is no longer funded. It was funded under the APF agreement, the former federal-provincial program. It is no longer funded under the Growing Forward program and we consulted with farmers in –we did a review of the program. We did not find it particularly efficient or effective. We have talked to farmers about the program and they much prefer that the money be given to them directly and they do their own work. So that is what we have done.

MS JONES: Okay. Did that affect what was happening at Holyrood? Was there any people –

MS DUNDERDALE: That is Holyrood.

MS JONES: Okay. So they were laid off, were they?

MS DUNDERDALE: Yes.

MS JONES: It is being shut down. Okay.

The only other question –

MS DUNDERDALE: We have not laid anybody off. There was no job loss in that. We just closed that office down and stopped that particular function. We have been able to absorb the staff into – they are still working for us, so we have not laid anybody off. It is just that work is not being done and that office is being closed and farmers are doing the work themselves, getting the money to do the work themselves.

MS JONES: Okay.

MS DUNDERDALE: So we did not lay anybody off.

MS JONES: Where is the equipment? Was there some equipment or something associated with that? What did you do with the equipment?

MS MacDONALD: (Inaudible) there has not been a decision made as to what we are going to do with that equipment yet.

MS JONES: Okay. The only other question I have is one that I raised in the House of Assembly last spring and it has to do with the Chicken Marketing Board. I asked at that time if there was a forensic audit being done on the board with regard to spending and expenditures. I am just wondering what the status of that is.

MS DUNDERDALE: Do we have the final report?

MR. MOORES: There is an internal audit completed by the Comptroller General's office that we received last week. So we are in the process of reviewing that audit right now.

MS JONES: Okay.

MS DUNDERDALE: (Inaudible) probably get it in the next little while.

MS JONES: So I guess you do not want to tell me what the findings are.

MS DUNDERDALE: Well, I do not know what the findings are yet, so I am going to find out before you find out.

MS JONES: You better read that report quick.

MS DUNDERDALE: We tried to get an external audit done but auditors were not prepared to come in and audit somebody else's audit work when there was no evidence of any kind of wrongdoing or so on. We wanted the audit done because we do not want any questions hanging around or speculation about what went on there, so we went to the Comptroller General and asked that they do an audit. I was not even aware that it came in. That came over the Easter break. So I will have a look at that within the next week or so.

MS JONES: Okay. That is all the questions I have on that section. I do not know if the minister wants a break before we go to the next section.

MS DUNDERDALE: Yes, have a break, that would be great.

MS JONES: I know you have not had an opportunity to leave the room.

MS DUNDERDALE: Yes, ten minutes.

CHAIR: A ten minute break? Okay.

CHAIR: We are ready to proceed again.

I guess we are over now to the Mineral Resource Management section.

Ms Jones, are you going to being?

MS JONES: I guess so.

I guess we will start under the Mineral Resource Management, that is the next section, 4.1.01 dealing with the Geological Survey. I noticed that this year you are budgeting more money for Salaries in the department. Are there any extra positions there or is that just natural increases the need to occur this year?

MS DUNDERDALE: That $4,102,500 is again the salary increases and the twenty-seven pay periods. As well, of that amount there is $476,200 transferred from general operating within the activity for temporary seasonal student employees for 2009-2010.

MS JONES: Okay.

Last year you did not Budget for Professional Services in that department, but you ended up spending $15,000 in that section. Can you tell me what that was for?

MS DUNDERDALE: It was for translation services in support of a promotional effort at the 2008 China Mining Conference.

MS JONES: In China?

MS DUNDERDALE: In China. There is lots of outward investment coming out of China.

MS JONES: Good. Perfect!

Under Purchased Services you budgeted $787,000. You did overspend in that section by $150,000 or something. Can you tell me what that expenditure was; not just the overspending but all of it?

MS DUNDERDALE: The increased expenditure was associated with a major airborne geophysical survey contract.

In terms of the other, can you give a list of the other services we provide?

MR. WARDLE: In Purchased Services that was by far the biggest item, but normally things like analytical contracts would be a big part of that, analysis of rocks like sediment samples, and the geophysical survey was a big part of that this year.

MS JONES: Okay.

Is most of that survey work done now, or are you continuing with that?

MR. WARDLE: Yes.

MS JONES: So the money that you have allocated this year, will that go to finish it?

MR. WARDLE: No, that is finished now.

MS JONES: Oh, it is finished now. Okay.

The money you have budgeted this year, what will that be used for?

MR. WARDLE: There is an additional $120,000 worth of funding in there that was announced in the budget for promotions. That would be in addition to the normal Purchased Services. That is our promotional marketing plan.

MS DUNDERDALE: Even though we are undergoing a global meltdown in terms of mining, we have increased our budget around our promotional activity, as well as some of our grants as you will see as we move forward. We feel it is extremely important to keep up this activity during this time so that we are well positioned when the economy turns itself around.

MS JONES: Okay.

Under the Grants and Subsidies, under that heading, what would you normally give out a grant and subsidy for? I see that you are increasing it this year. Who would normally apply and get a grant under that section?

MR. WARDLE: Normally the grants (inaudible). Here it was a memorial scholarship to a geologist with another provincial survey who was killed in a helicopter accident.

This year, though, in 2009-2010, the money is going towards the North Atlantic Minerals Conference, which is a conference we organize jointly with the Irish Geological Survey. We normally give a small amount of funding as seed funding for that meeting. This year, that is in Fredericton, New Brunswick.

MS JONES: Okay.

Moving on to section 4.1.02 under Mineral Lands, a question on Professional Services: You budgeted $7,000 and you spent $47,000, what was that money spent on?

MS DUNDERDALE: That associated with per diem costs related to the Mineral Rights Adjudication Board hearings.

MS JONES: What is that board? What do they do? Are they a regular board or were they set up for a purpose?

MR. WARDLE: The Mineral Rights Adjudication Board was set up as a requirement under the Mineral Act, and it serves to hear grievances over mineral licences, mineral claims, mineral leases, essentially disputes between individual parties or between parties and the government.

MS JONES: Does that happen every year?

MR. WARDLE: No, it is a very infrequent occasion. This particular instance is to hear the Vinland grievance, which is a grievance filed by Vinland Resources against the Claims Recorder's Office.

MS JONES: Has that been clued up now?

MR. WARDLE: No. It will probably be resolved or the final ruling will be made in July of this year.

MS JONES: How many people are on this Mineral Rights Adjudication Board?

MR. WARDLE: It is a three-member board.

MS JONES: Are they appointed by the department?

MR. WARDLE: No, the board is appointed by Cabinet.

MS JONES: How are they paid?

MR. WARDLE: They are paid a daily stipend or per diem, plus expenses; expenses according to government standards.

MS JONES: Can you tell me who sat on that board? Who was appointed to it?

MR. WARDLE: Ernie Boone is the chair of the board. Roland Strickland and Stephen Burt are two permanent members, who have not been able to participate in this hearing due to the pressure of work, so they are being replaced on a temporary basis by Dr. Hugh Miller and Samir El-Gohary.

MS JONES: Also under that section, Purchased Services, you budgeted $55,600 and you spent $75,100. Can you tell me what you purchased and also why you have estimated that the budget should be an extra $30,000 more this year?

MS DUNDERDALE: The variance is due to increased banking fees associated with the online claim staking system, the MARIAD System that we have introduced.

The estimates are up due to an internal reallocation of funds from activity 5.1.01, Energy Policy, to meet operational requirements of the Mineral Lands Division, $100,000, and an increase of $50,000 in each of Supplies and Purchased Services.

MS JONES: Under section 4.1.03, Mineral Development, in your Salaries last year you under spent. Were there some vacancies or some reason for that?

MS DUNDERDALE: Vacancies in the division, primarily mineral development engineers. We certainly do have recruitment issues - we did last year - associated with filling positions through the mines branch due to the competitive nature of the industry. We have a great mining division that it lauded from one end of this country to the other by mining companies. They are always interested in headhunting personnel from the department, and like every other division it takes two to three weeks for somebody to leave their job, and it can six, seven or eight months to replace them.

MS JONES: Under Professional Services you budgeted $274,000 and you spent $883,100. Can you tell me what that money was spent on?

MS DUNDERDALE: Those variances are related to the Baie Verte Rambler Mine rehab project.

MS JONES: All of them, is it?

MS DUNDERDALE: Yes.

MS JONES: The $1,127,900 that you are going to spend this year, what it that directed towards?

MS DUNDERDALE: That is a carry-over of unspent funds related again to the Baie Verte Rambler rehabilitation project.

MS JONES: Will that go to that project?

MS DUNDERDALE: Yes. Purchased Services again, in the next line, are all related again to that project. What we have done is - some analysis showed us that if we carry forward the money from last year and use it with this year's allocation that we could get significantly more work done, and that is what we have done. So that is approximately $6 million that will be spent on that project this year.

MS JONES: You obviously did not get done, nothing near what you wanted to do last year, according to your budget estimates?

MS DUNDERDALE: We took a conscious decision not to do it last year because we could get better return on that money by doing it all at the same time. So we carried it forward to this year. There will be $6 million worth of work, and we will get much more work done for that amount of money this year than if we had spent our allocation last year, and then spent our allocation this year.

MS JONES: Will this conclude that particular project now?

MS DUNDERDALE: No. What it will do is complete the surface work. We do not have a cost yet associated with full rehabilitation of that mine but it will be very, very significant.

What this does is take care of the surface issues, to make sure that we know now that there is no asbestos flowing back into the town. It is demolition of buildings, taking down of buildings, fencing off areas that might be dangerous and so on. It is trying to make the whole surface of those sites safe.

Significant other work needs to be done on the amount of rehab that needs to be done there, but it is very significant. The amounts of money that are going to be required to do it are extremely significant.

MS JONES: All of that was outlined in the study that you had done, wasn't it? The study covered everything for the rehab project?

MS DUNDERDALE: No. It did not cover the whole cost of rehab at the site, did it?

MR. WARDLE: We covered the cost necessary to remove the immediate health and safety hazards. Such as the buildings that the minister mentioned, capping shafts, fencing open pits and that sort of thing, but the actual remediation of environmental damage, no, that would have to be a totally separate project.

MS JONES: Okay, because I remember when that study was released, it was fairly comprehensive.

MS DUNDERDALE: No, it was a fairly comprehensive study to address the issues that Richard just identified, and we have spent just about eleven –

MR. WARDLE: $10.9 million.

MS DUNDERDALE: Yes, nearly $11 million in three years to address – he identified the major health and safety issues that have been identified by the consultant on that site.

MS JONES: What about the environmental issues? Will you look at what needs to be addressed around that?

MS DUNDERDALE: We have addressed those issues, the immediate health and safety issues that are there and the environmental issues around the asbestos. We have done air quality tests and so on. So we are satisfied that all our immediate concerns and the surface concerns are dealt with. In terms of full remediation of that site, we estimate the cost to be significant but we have not had a detailed piece of work done around that as yet.

CHAIR: Ms Michael.

MS MICHAEL: Yes, I would just like to get a bit more information from the minister. I think it was last week or maybe ten days ago, we had a phone call in the office from Baie Verte, people wanting to know what was happening because they saw action on the mine site. We did do some phone calling. We were told there was nothing happening on the mine site but people saw people on site.

MS DUNDERDALE: Well, that is not quite right. There is something happening on the mine site.

In terms of this project, we have talked extensively, and I have had meetings with the town council in Baie Verte. I go out there annually to the mining conference that they hold there. In all of my speeches there I have talked extensively about the rehabilitation efforts and what it is that we are trying to do. Staff is out there on a regular basis and engaged on a regular basis. As much as we can inform people about what is happening they know.

In one of the buildings there was sawmill equipment. A company in that area, Wolverine, is removing that equipment for use on the Baie Verte Peninsula in sawmilling. That is the activity that people saw out there. It does not have anything to do with us. Our work will not begin until the end of May, early June.

MS MICHAEL: The people who are removing the stuff are removing it with your permission?

MS DUNDERDALE: With the permission of INTRD, who have an interest in the product.

MS MICHAEL: Okay, thank you.

MS JONES: (Inaudible) Grants and Subsidy program, what do you use that money for?

MS DUNDERDALE: That money is used for the mineral incentive program.

OFFICIAL: (Inaudible) incentive program and that analogy is entirely for that program. That is a series of grants given to prospectors and to junior exploration companies.

MS DUNDERDALE: (Inaudible) junior mining companies, and has a really good leverage ratio; is it three to one?

OFFICIAL: One to three.

MS DUNDERDALE: Oh, yes, one to three. So, for every $1 we give to the junior mining companies they are able to leverage out another $3. It is a very good program.

Again, as I said earlier, part of the effort, we do not feel that this is the time to be cutting back on programs and that is why we have increased, so that we continue exploration activity here in the Province and try and help the industry position itself to take advantage of markets when they return.

MS JONES: Just a couple of questions on some of the mining development in the Province, if you can give me an update on what is going on at Long Harbour now, with that project, the Vale Inco project.

MS DUNDERDALE: Everything is going along fine. In the renegotiation of the agreement and the amendment to the agreement we were able to negotiate with Vale Inco a number of waypoints in the project that we can go in and do inspections and ensure that the project is on time.

This year, work will begin on preparation of the site and some of the earthworks there. We will not see steel go up this year, but the work on the site will commence later this summer.

MS JONES: What about the Voisey's site itself? Have you received any additional information as to if they will still proceed with the shutdown over the summer, or if they have deferred that at this stage?

MS DUNDERDALE: No, they are still going to proceed. I haven't any information any different than that. They are going to proceed with their shutdown.

MS JONES: I guess a similar question for IOC; they have delayed their capital expenditure project and expansion. Has there been any indication that may be back on the radar, or is everything still at a standstill at this stage?

MS DUNDERDALE: No. In fact, that shutdown may be extended; it depends on the markets.

There is a very small group of companies in the world who buy this product and, even though the company has legal and binding agreements with them, they are careful in terms of the pressure they exert on these companies to honour those agreements given that these will be their customers when the market rebounds.

Iron ore is down by 50 per cent, so they still have significant challenges. There is no sign, as of yet, of the industry rebounding. Right now they are hoping that they will only have to shut down for a certain period of time, but they are already sounding precautionary warnings that the shutdown may have to be extended depending on what is happening in the markets.

MS JONES: What about Wabush Mines? I know they have laid off a number of workers - thirty or forty workers. Have any of those been recalled to their jobs, or are there indications that there are more layoffs coming within that company?

MS DUNDERDALE: I am not aware that anybody has been recalled, and there are no indications that there are going to be further layoffs at this point in time.

MS JONES: Okay.

Did you have any more questions, Lorraine, on the mining (inaudible)?

MS MICHAEL: Yes, just a couple.

How badly has the mining exploration been affected by the downturn? In 2008 it was a bumper year.

MS DUNDERDALE: Well, there are two issues at work in terms of the exploration piece. We had a bumper year last year in terms of activity, and the bulk of that was around uranium. Without a doubt, the moratorium by the Nunatsiavut government had a significant impact on that, so we were seeing a significant slowdown before the markets deteriorated to the point they did, and certainly that has not helped the situation.

MS MICHAEL: Right.

Just coming to Vale Inco again for a minute, and their temporary layoffs, hasn't the federal government said that they were going to challenge this - or was it the Ontario government? Because the agreement around the companies coming together, the takeover by Vale into Vale Inco, there was an agreement that there would not be layoffs for a period of three years, I think it is, and I do not think the agreement said whether it was temporary or permanent. What is happening with that?

MS DUNDERDALE: That was in Sudbury.

MS MICHAEL: Pardon?

MS DUNDERDALE: Sudbury, Ontario.

MS MICHAEL: Yes, that is right.

MS DUNDERDALE: I cannot tell you any more how that progressed beyond that. There were not any such agreements in place here in Newfoundland and Labrador with Voisey's Bay.

MS MICHAEL: Okay, so it just had to do with their operations in Sudbury. I was not clear on that.

MS DUNDERDALE: And, I understand, the amount of money that the government had put into the company in commitments that they had received in return.

MS MICHAEL: Okay, so it doesn't affect us.

That was all I had on that.

OFFICIAL: (Inaudible).

MS MICHAEL: You want me to go ahead? Okay. Thank you.

That means we are moving into energy, the energy policy.

I think what I am going to do, just for a change, just to wake us all up a little bit, instead of doing the line by line, I have a couple of significant questions and maybe I will ask those first. I am tired of asking about salaries and stuff.

One of the concerns, Minister, is the whole issue of the audit for the C-NLOPB. I think we all know what has happened there. Has anything been done about that? Are the discussions going on? Is the Province concerned about this? Because I do not think it is acceptable that the C-NLOPB is not audited. If it has to be a joint audit, why can't that be put together?

MS DUNDERDALE: There is an audit underway at the moment.

MS MICHAEL: Yes.

MS DUNDERDALE: It had to be done with the permission of both the federal and provincial governments, but it is my understanding that the Chair and CEO did not have any issue at all with an audit being done, and an audit is being conducted as we speak.

MS MICHAEL: Who made that happen?

MR. TOBIN: The Auditor General's office is currently into the board now doing that audit, doing a comprehensive audit at the C-NLOPB.

MS MICHAEL: The Auditor General?

MR. TOBIN: The Auditor General, that is correct.

MS MICHAEL: Our Auditor General is doing it?

MR. TOBIN: That is correct.

MS MICHAEL: It is interesting how –

MS DUNDERDALE: Because we share the board with the federal government we certainly do not have any issue at all with the board being audited, but the federal government would have to agree to it as well.

MS MICHAEL: Right; and they have agreed?

MS DUNDERDALE: Obviously, because the Chair has invited the Auditor General down to do the auditing and it is happening as we speak.

MS MICHAEL: Okay, so the issue looks like it is resolved then.

MS DUNDERDALE: Yes.

MS MICHAEL: We hear about the bad news; we do not hear when the good news happens.

MR. TOBIN: The Auditor General's staff has had initial meetings with the staff of Natural Resources in developing an audit plan for the board as well.

MS MICHAEL: Okay, very good. That is good to hear.

Last year there was a discussion around the royalty audits. I think the quote from you last year, Minister, was to say that the audits were behind big time.

MS DUNDERDALE: None of the audits have been completed since 1995.

MS MICHAEL: Have there been any this year?

MS DUNDERDALE: We have a plan and we have significant investment in ensuring that those audits are completed, and completed within the timeframe that we are given to have them completed. We have a plan in place that would see all of the audits completed to the end of 2007 by 2010.

MS MICHAEL: By 2010.

MS DUNDERDALE: Besides the department being engaged, we have two outside firms assisting us with those audits.

MS MICHAEL: I do not speculate myself and I am not asking you to speculate, but are there any guesstimates at all around how much money the Province, at the moment, might be out?

MS DUNDERDALE: I do not have an estimate.

MR. TOBIN: I do not think, Ms Michael, that at the end of the day the Province will be out money. There will be predeterminations done, and anything that is picked up in audit there will be adjustments made to correct those.

MS MICHAEL: What would those adjustments be like?

MR. TOBIN: I do not have a number but the adjustments could be around things such as transportation costs.

MS MICHAEL: Okay.

MS DUNDERDALE: What we need to ensure in these audits is that the charges, the amounts that they have put in for certain deductions, are correct, such as transportation costs. We verify that everything they have claimed is correct. If it is found out, at the end of the audit, that they owe us more money then they have to remit that money, so we do not lose any money.

MS MICHAEL: No, no. I know we do not lose money. I meant out, that has to be repaid. I did not mean that we would lose it.

MS DUNDERDALE: We do not have an estimate at this point in time.

MS MICHAEL: Okay.

When you say 2010, do you mean by the end of 2010?

MS DUNDERDALE: Yes, by the end. We got pushed off our schedule a little bit last year because we had so much activity in the department in terms of the Hebron piece and so on, because you do have limited resources in terms of the various work you are doing. We had our plate pretty full last year, but we are still within our timeline of 2010.

MS MICHAEL: Great!

Do you want to ask some questions?

MS JONES: It does not matter (inaudible).

MS MICHAEL: I do have some specifics so I will do these. I will probably have more to say afterwards but we will come back to the budget lines.

Under 5.1.01, the Salaries, the revision was down by $325,900 and we are going back up to $1,410,300. Were these positions that were vacant? What was going on here?

MS DUNDERDALE: These are recruitment issues and vacancies we have in the department, again the same as in the Mines branch; a very competitive environment, hard to recruit positions.

MS MICHAEL: Those two industries are difficult industries to have to be up against. I realize that.

You have a lot of under spending in this section. As a matter of fact every single line item was under spent.

MS DUNDERDALE: Most of that is due to hiring and vacancies.

MS MICHAEL: Right.

Under Professional Services, the under spending there is by $105,000 and going up to $373,000, so going up $100,000 in this year's estimate from last year's estimate. What caused that to happen and what are the Professional Services in this area?

MS DUNDERDALE: Professional Services?

MS MICHAEL: Yes.

MS DUNDERDALE: The revised variance is due to less than anticipated expenditures related to professional consulting services with respect to energy policy.

MS MICHAEL: Okay.

MS DUNDERDALE: Our estimates are up due to the additional funding we require because we are hosting the Council of Energy and Mines Ministers' Council Conference in St. John's this summer.

MS MICHAEL: In the Purchased Services, again it was under spent, not by much, by $54,000, but the estimate is up significantly. Why is that estimate up?

MS DUNDERDALE: Estimates again are up to the additional funding to host the Council of Energy and Mines Ministers.

We have $100,000 we want to transfer to activity 4.1.02, Mineral Lands, to meet operational requirements for the 2009-2010 fiscal year, and a transfer of $12,700 to the Public Service Commission related to job advertising expenditures for 2009-2010.

MS MICHAEL: Thank you.

What would be the Grants and Subsidies in this section?

MR. TOBIN: That would be largely due to the Energy Council that the Province is a member of. That would take, by far, the lion's share of that grant.

MS MICHAEL: That is the International Energy Council.

MR. TOBIN: It is an international organization. That is correct.

MS MICHAEL: Thank you.

Under Revenue, there is revenue anticipated of $350,000 this year, provincial revenue. What is that?

MS DUNDERDALE: That is conference fees and corporate sponsorships associated with CEM.

MS MICHAEL: The meeting of the council. Very good.

The next section, 5.1.02, Petroleum Development, appropriations for the collaborative development and implementation of policy in support of petroleum development, again in the Salaries, I presume recruitment might be an issue here as well?

MS DUNDERDALE: The same issue.

MS MICHAEL: The same issue, okay. I am not going to beat a dead horse to death.

What would the Professional Services – here, again, we have a variance between the budget and the revision; not a lot, $65,000.

MS DUNDERDALE: The variance is due to the fact that we had less than anticipated professional services and consulting expenditures, as a majority of the marketing and promotion design work was completed internally within the division. Our increase in the budget is a variance due to $5,000 being transferred from Professional Services to Grants to provide grant sponsorships to industry, education events, and activities related to careers within the petroleum field.

MS MICHAEL: I notice the grant of $5,000, and it is not a lot of money. You did not have money in that category before.

MR. TOBIN: This will accommodate small requests we get from time to time. Just to make it clean, from a budgeting perspective, we did put a small amount in there. If we get a request from somewhere, like perhaps the geology department at MUN, to sponsor a student for something or other, we would have a small amount to be able to do that.

MS MICHAEL: Okay. So it is related more to the educational institution?

MR. TOBIN: Very much so, yes.

MS MICHAEL: Okay.

The petroleum board underspent quite a bit in the – well, that is the Grants and Subsidies. They get the money given to them. What would cause the underspending in the grant and subsidy to the board?

MS DUNDERDALE: Lower than anticipated expenditures related to the data management repository system.

MS MICHAEL: Can you say that again. The first part was not on the mic.

MS DUNDERDALE: It is due to the lower than anticipated expenditures related to the data management repository system, and the core storage research centre, due to delays in the projects. The unexpended funding has been carried, but we approved those in the budget last year.

MS MICHAEL: So it is just carried over, the difference. Great.

What constitutes the provincial revenue here?

MS DUNDERDALE: The revised variance is due to additional revenue associated with the data management repository system. Again, expenditures were 75 per cent recoverable from the industry. We do not budget for it because we do not know what the recovery rate is going to be.

MS MICHAEL: Right.

Royalties and Benefits: this is the administration of the agreements and the legislation. Again, your salaries are under spent here. Would you also have problems with recruitment in this area too?

MS DUNDERDALE: Absolutely.

MS MICHAEL: In every area?

MS DUNDERDALE: Yes.

MS MICHAEL: It has to be frustrating.

The Professional Services was under spent by $187,000.

MS DUNDERDALE: That is related to the royalty audits. You know, we have limited capacity for the number of projects that can be completed by a limited number of available qualified consultants.

MS MICHAEL: Okay.

So you keep your line the same hoping that you can get people to do the work, right?

MS DUNDERDALE: That we can get more work done, yes.

MS MICHAEL: It is important if you are going to keep on schedule.

MS DUNDERDALE: That is why we are pushing it.

MS MICHAEL: Are you able to get all of that done by people here in the Province or do you have to go outside the Province for that?

MS DUNDERDALE: Both companies are operational here in the Province.

MR. TOBIN: We use two main consultants, Grant Thornton, of course, who are here, and Navigant who would be, I guess, headquartered in Toronto but there are people who operate out of here.

MS MICHAEL: Right.

Under Purchased Services, would expenditures there also be relating to the royalty audits?

MS DUNDERDALE: No, those are purchases related to booth rental and exhibition space for the various oil and gas shows that we do.

MS MICHAEL: Right.

Coming down to the Grants and Subsidies, what exactly is the nature of Grants and Subsidies in this section?

MS DUNDERDALE: The variance is due to less than anticipated grant expenditures related to the Bull Arm Site Corporation, as the staff complement expenditures proposed during the initial assessment of transfer of the ownership to Nalcor were not required. Estimates are down for the new year due to a reduction of funding for the Bull Arm Site Corporation related to the transfer to Nalcor Energy and the anticipated internal revenue generation at the site. There are a number of projects that will be done there this year.

MS MICHAEL: This year?

MS DUNDERDALE: Yes.

They generate income for Bull Arm and that money we are using to ready the site, particularly for Hebron. So it has not required the same kind of investment from the provincial government.

MS MICHAEL: Have any of those projects started yet?

MR. TOBIN: Currently, North Eastern Constructors Limited are at Bull Arm doing work for the North Amethyst, White Rose extension, some subsea work that is a substantial piece of work that has been going on for the past several months.

MS MICHAEL: Okay.

Minister, I am just wondering: If things work out well and you get the royalty audits done by the end of 2010, what can you put in place to ensure that the audits do not fall so far behind after that?

MS DUNDERDALE: I certainly hope that we are able to address our staffing requirements so we are able to stay on top. That is the big issue for us, given that there was such a backlog of work that needed to be done when we came to government. You know, some work had been done on the audits through the years but as I said none of them are complete up to this point. You know, it is really important. We are going to stay within the timeframe. We are sure we are going to hit all of those targets and we will not lose any money because we have not completed the audit in the timeframe that we were given to do it. It is important that we stay more current than we were and are at the moment.

MS MICHAEL: So the main reason for the backlog was not inadequate staffing?

MS DUNDERDALE: It is certainly part of the problem.

MS MICHAEL: Right, but not all of it.

MS DUNDERDALE: No. These are complicated pieces of work as well, that we need verification, we need documents from the companies, and so on. Sometimes that can be a time consuming exercise and so on. It is a complicated piece of work.

MS MICHAEL: Thank you.

Section 5.1.05. Energy Initiatives, "Appropriations provide for the implementation of initiatives related to the Provincial Energy Plan including energy efficiency, conservation and innovation initiatives." Money was set aside, but nothing happening. Tell us a bit about this year and what –

MS DUNDERDALE: The revised variances were due to delays in implementation of energy planned initiatives primarily due to the slower than anticipated implementation of the offshore geoscience initiatives outlined in the plan, as well as early geoscience gap analysis performed by the C-NLOPB at no cost to the department.

MS MICHAEL: Where are things at this moment? What part of the plan had you hoped to be dealing with last year that you did not deal with, and that I would hope you would start dealing with this year?

MR. TOBIN: Much of the dropped balance in the past fiscal year was due to the fact that the geoscience activities in particular – and those activities make up perhaps 75 per cent of the budget for the Energy Plan for last year - we have good but limited capacity within the energy branch, and a number of those initiatives are also being co-ordinated with Nalcor, who also have good but limited geoscience capability. A number of those same people were dedicated to other major projects, be it Hebron negotiations or what have you, so we had limited capacity to complete all of that work. We recognize that capacity limitation and have added another year onto the Energy Plan implementation allowing, perhaps, a more realistic and smoother cash flow for those initiatives.

There were several others, but that is the primary explanation.

MS MICHAEL: That is the primary.

MR. TOBIN: Yes.

MS MICHAEL: Okay.

Under Grants and Subsidies, $11 million was budgeted and only $4.1 million was spent. What is the intent of the grants and subsidies in this area?

MS DUNDERDALE: It all falls within that same explanation. All of those issues are related to the geoscience.

MS MICHAEL: Where does the Grants and Subsidies money go? To whom does it go?

MR. TOBIN: Much of it flows through our department to Nalcor who, in actual fact, will be charged with either undertaking or purchasing the geoscience data that is the subject of much of this activity.

MS MICHAEL: Right.

MR. TOBIN: That would flow from our department to Nalcor Energy in the form of a grant.

MS MICHAEL: Okay.

There are a number of places, then, where money flows through to Nalcor.

MS DUNDERDALE: Yes.

MR. TOBIN: Indeed.

MS MICHAEL: Okay, Yvonne, do you want to…?

CHAIR: Ms Jones.

MS JONES: Thank you.

I have a couple of questions or, I guess, a few questions.

First of all, the Upper Churchill facilities, there was a fire in November, I think, on that site. Can you tell me what the impact was on the operations, if any of the turbines were affected, and if they are now in operation?

MR. BOWN: It is my understanding that two of the units were off line for a period of time. I am aware that one of those units is now back on line and it is expected that the next unit will be back on line within a short period of months.

MS JONES: Okay.

What was the cost of the repairs there, or was it all covered on the insurance (inaudible)?

MR. BOWN: I am not sure of that amount.

MS JONES: Okay.

Was there any cost to us in terms of the revenue lost or in the downtime or anything like that? Was there any impact in that way?

MR. BOWN: Presumably, with two units down at that time, there was a shortfall in revenue at CF(L)Co. That will be reported in the CF(L)Co financial statements this year.

MS JONES: You do not know what it is right now, do you?

MR. BOWN: Those statements have not been published yet.

MS JONES: So you do know; you are just not going to tell me.

Do you know when the other turbine will get up and running, or do you have any idea?

MR. BOWN: No, I am not sure. I understand it is only a matter of a couple of more months before it will be back up and running.

MS JONES: Okay.

Some questions around the hydro assets that were operated by AbitibiBowater. When you guys assumed operations through Nalcor Corporation, what was the level of the capacity of energy that was being produced there? What is the number of megawatts?

MS DUNDERDALE: I will have to check these figures. My understanding is the capacity was somewhere around 100 or 112 megawatts. That is not necessarily what gets produced all the time. Probably around 90 megawatts is the constant flow of power there. The incremental amount into the grid, I think it might be 54 megawatts. I will have to check those numbers for you.

All of the power, with the exception of the amount that was used in the mill operations, flowed into the grid anyway.

MS JONES: There was a return for that wasn't there?

MS DUNDERDALE: There are power purchase agreements in place with Abitibi, NL and Fortis.

MS JONES: Where are these purchase power agreements now? Where does that leave them? That power that was going into the grid, is there any money coming out for that? If there is, where is it going?

MS DUNDERDALE: The power purchase agreements were suspended or cancelled when we expropriated the property. We made a commitment at the time, when we expropriated the property, that we would keep the partners NL and Fortis whole and restore their equity to them. That has not happened to date. That is in the process of happening. That process is ongoing, and when that transaction is completed there will have to be a calculation of the power that they own, that has been generated and coming to the grid, that they will have to be paid for. So they will not incur a loss as a result of the expropriation. The terms that were negotiated in the PPA with NL and Fortis will be honoured at the end of the day.

MS JONES: Okay.

Why can't they be paid now? Is there a reason? Is there no formula -

MS DUNDERDALE: Because we are moving through this whole evaluation of the asset, negotiation with Abitibi, setting a value to the assets and so on. That is a bit of a complicated process.

We are moving through it. We talk regularly to NL and Fortis. They understand what it is that we are doing here, and we are hopeful that we will be able to conclude this process sooner rather than later.

Once that is properly done, once we have dealt with Abitibi and dealt with NL and Fortis, then we will honour the PPAs that they had in place, and reinstate them for those partners.

MS JONES: Right now, then, Nalcor is not having to pay out any money to anyone in terms of –

MS DUNDERDALE: But the obligation is there.

MS JONES: Is there to do so. Okay.

MR. BOWN: Nalcor operates those assets under licence from government, so they have normal operating costs and capital improvement costs associated with those assets as well.

MS JONES: There is no legislative requirement here in order for those purchase agreements to be put in place, is there?

MS DUNDERDALE: No. The PPAs are negotiated between the companies and Nalcor, or Newfoundland and Labrador Hydro, so they will be put back in place again once all of these transactions are completed, and these discussions are finished with Abitibi and equity is restored.

MS JONES: Will there be options to negotiate new pricing arrangements with these companies like NL and Fortis?

MS DUNDERDALE: No. We were quite clear when we took over the assets and we spoke to both of these partners, with Abitibi at the time, and we told them that we would keep them whole. The same conditions that they had previous to the expropriation would be put back in place once we got through the whole process.

MS JONES: What are the current estimated revenues, I guess, from these assets, if you were to annualize them? What is it?

MS DUNDERDALE: I could not tell you at this point in time because it depends –

MS JONES: I heard quotes in the media of $40 million, $80 million.

MS DUNDERDALE: I could not tell you.

MS JONES: I do not know what is correct and what is not.

MS DUNDERDALE: No, and I could not tell you at this point. You are asking me the value of the assets?

MS JONES: No, the revenues.

MS DUNDERDALE: I would not be able to tell you at this point in time.

MS JONES: The annual revenues.

MS DUNDERDALE: I could not tell you, because it depends on where your customers are, the need for the power, and what we are going to use the power for. Right now, the power is going into the grid. It is not being used anywhere, really.

Because Seal Cove is at its lowest operational level, the minimum level that it can operate on - and that is laid down by the PUB - what we are doing is storing water in Bay d'Espoir, so there is more water in the reservoir, so we are basically storing the electricity in Bay d'Espoir.

MS JONES: What do you mean, the minimum requirement at Holyrood according to the PUB? They have to operate at a certain capacity or what?

MS DUNDERDALE: Yes.

MS JONES: Even if there is a cleaner source of energy?

MS DUNDERDALE: There is a minimum capacity that Holyrood has to operate.

MS JONES: I did not know this before. It seems kind of strange. Why would they establish a minimum capacity requirement, even?

MR. BOWN: That was an order issued by the Public Utilities Board to ensure that the units at Holyrood are run at the most efficient level. As you reduce capacity on such a large diesel generator you are burning more fuel per unit on energy generated, so they have established a minimum level for each of the units.

MS JONES: Okay, so it has all to do with cost?

MR. BOWN: Yes, absolutely.

MS JONES: If you reduce it too much, the cost goes up (inaudible).

MR. BOWN: That follows the principles of the EPCA to ensure that the ratepayers get the best price for electricity.

MS MICHAEL: So, because of that, you are saying that the power that is going into the grid from Exploits cannot be used to reduce the amount of oil that is being burned in Seal Cove. Is that what you are telling us?

MS DUNDERDALE: (Inaudible) of oil.

MS MICHAEL: Pardon?

MS DUNDERDALE: It is not being used to reduce the amount of oil that is being used in Seal Cove.

MS MICHAEL: That is what I am saying.

MS DUNDERDALE: Because we are required to operate Seal Cove at a minimum level, and it is operating at that minimum level now.

MS MICHAEL: So, you are just storing the energy in Bay d'Espoir?

MS DUNDERDALE: We are not losing energy; we are storing it.

MS MICHAEL: No, we are storing it.

MS DUNDERDALE: There will come a time when we will use that energy.

MS MICHAEL: Okay.

MS DUNDERDALE: We may be able to keep Holyrood at that minimum level for a length of time. We have not determined a use for the power yet.

MS MICHAEL: What is the minimum level? Do you know?

MR. BOWN: I do not recall that number here tonight.

MS MICHAEL: Okay, thank you.

MS JONES: In June 2008 the federal government announced that they were going to put a regional energy office in Newfoundland and Labrador. Actually, I think at the time they were going to establish it in the fall of that year.

Now, I do not know if they did or not; I have no idea. That is why I am asking the question.

MS DUNDERDALE: They have not.

MS JONES: They have not?

MS DUNDERDALE: They have not.

MS JONES: Okay. Do you know anything about it?

MS DUNDERDALE: No.

MS JONES: If it was ever talked about since, or –

MR. THOMPSON: There is some talk. It seems like it is a slow rolling start to this office, and we have been told still that it will be established. We have been told that ACOA and NRCan continue to both play a role. I think, in fact, there has been some recent advertising for one position.

OFFICIAL: For geosciences.

MR. THOMPSON: For a geoscience position.

It is a very slow build up process, and we think there will be some relationship between that office and the new Atlantic Canada Energy Gateway concept that the federal government announced last month. These are just emerging details; there is nothing firm.

MS JONES: So you do not see any overlap in terms of what this office will do, with what you guys do as a provincial office, or anything like that?

MS DUNDERDALE: If there are opportunities there for cooperation, if it allows us to do our work better, we are certainly open to that. I have met with the Minister of Natural Resources federally twice and they are very interested in developments here in the Province, energy wise, both in oil and gas, and certainly very interested in what is happening with the Lower Churchill. If they open an office here and there is opportunity it is certainly something that we are going to take advantage of.

MS JONES: In February of 2008, you guys announced a partnership with the Corner Brook Board of Trade, and I think at the time you put some money out there to look at business opportunities in the oil and gas industry, exploration, development, and all these kinds of things, on the West Coast of the Island. Was that ever completed and has it ever been released to the public?

MR. TOBIN: A consultant was retained and I guess that study is being co-managed by the Corner Brook Board of Trade and our department. We have had a draft of the report. Both the Corner Brook partners and ourselves had some additional work that we required and it is gone back to the consultant to do that additional work. We are hoping to have a final draft within the next couple of weeks.

MS JONES: I have to write this down because I may not remember it all.

You also provided $500,000 to work towards the development of natural gas royalty regulations, and I know that in the energy plan there was a draft of what those royalty regulations would look like, but when are we going to see the actual regulations, I guess, for a natural gas royalty regime in the Province?

MS DUNDERDALE: They have not been completed yet. Work is ongoing. We have made it quite clear to the industry that we are, for a pioneer project, prepared to consider conditions outside or we are prepared to consider a special circumstance for a pioneer project in gas development here in the Province. There is some interest in that and the talks are progressing.

Of course, we are very excited by our land sales off Labrador this year. This is the first interest we have had in that area and the first land sale since the 1970's. As you would know, it is primarily gas that we have found off Labrador, very little oil, but over four trillion cubic feet of gas.

The fact that we saw some interest up there, because we saw a fair bit of seismic activity going on, the work that had been specifically contracted by companies was speculative work. These companies have their ear pretty close to the ground, and they were there doing that kind of work. That meant somebody was interested, and they surely were.

When the lands were nominated for sale - and a very good price we got for the land - that bodes very well for gas development here in the Province, although it will be primarily exploratory work that will happen in Labrador on these particular parcels of land.

MS JONES: Back to the royalty regime again: You said that it is in progress. Is there any expected date of release, and are you looking at this as a royalty regime that will be done on a project by project basis, or will it be a standard royalty that will be across the board?

MR. TOBIN: The intent is to have a generic royalty regime, a natural gas royalty regime. The minister did mention, of course, that there is provision in the energy plan for a pioneer project, which presumably would be or could be more favourable than that generic regime for a first project.

In terms of the timeframe, development of the natural gas royalty regime is in our energy plan implementation plan. We are hoping within the next year or so to complete that, but it is very much a function of a capacity piece within the department. The same key people who are involved in commercial negotiations on things like, once again, Hebron or Hibernia South, are very much the people that we require to do the work on this piece. So, it will depend.

MS JONES: I think this might be my last question.

On the Hibernia South project: I am just wondering if you can give me a little update on the status of the project and what the timeline is now for the development of it?

MS DUNDERDALE: I cannot give you the timelines, because these things are always fluid.

As you know, the development plan application for development of Hibernia South was turned down because we felt that we needed significantly more information than had been provided in the application. The companies undertook to get that information. It has certainly been proven through that whole process that our concerns were very legitimate. I think the companies have acknowledged that, that we had identified significant challenges to the pieces of work that they were proposing to do. They have worked hard to overcome those challenges and they have engaged in discussions with us. Things are going very well in that area. We are very pleased with the progress we have made, and I expect that relatively soon there will be another application before the C-NLOPB.

MS JONES: For the Hibernia South project, what royalty regime are you using, the old regime or are you negotiating a new one?

MS DUNDERDALE: Those matters are under discussion.

MS JONES: Okay, so there is no decision yet, or no announcement anyway.

CHAIR: Any further questions from the Committee?

Perhaps the Clerk can call the subhead.

MS JONES: Mr. Chairman, if I could, I just want to thank the minister and her officials for their time this evening and their answers. I really appreciate it.

MS MICHAEL: I would like to do the same.

MS DUNDERDALE: You are very welcome.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01: Does that 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 inclusive carried.

CHAIR: Shall the totals 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 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 thank the minister and her officials as well, as well as the members of the Committee, the House of Assembly staff, and our observers.

Our next meeting will be tomorrow morning at 9:00 o'clock. We will debate the Estimates for the Department of Innovation, Trade and Rural Development, Newfoundland and Labrador Research and Development Council, and the Rural Secretariat.

I will ask for a motion to adjourn.

Moved by Mr. Pollard this meeting is now adjourned.

On motion, committee adjourned