Pursuant to Standing Order 68, Kevin Pollard, MHA for Baie Verte-Springdale, replaces Ray Hunter, MHA for Grand Falls-Windsor-Green Bay South.

The Committee met at 9:00 a.m. in the House of Assembly.

CHAIR (Harding): We are ready to begin this morning's session. I would like to welcome you all as we debate the Estimates for the Department of Innovation, Trade and Rural Development, the Newfoundland and Labrador Research and Development Council, and the Rural Secretariat.

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

MR. LODER: Terry Loder, MHA for Bay of Islands.

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

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

MR. VERGE: Wade Verge, MHA for Lewisporte.

MR. KELVIN PARSONS: Kelvin Parsons, MHA for Burgeo & LaPoile.

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

CHAIR: The observers, also if you would identify yourselves, please.

MR. LONO: Simon Lono, Official Opposition Office.

MR. MORGAN: Ivan Morgan, NDP caucus.

CHAIR: Okay.

We have three to do this morning, so we will begin with the two shorter ones. That will be the Rural Secretariat, which is on page 20 [technical difficulties] the Research and Development Council, which is on page 22, and then we will go into Innovation, Trade and Rural Development.

First of all, I would like to ask the minister to introduce his officials that he has with him this morning.

MR. SKINNER: Thank you, Mr. Chair.

As you indicated, we will start will the Rural Secretariat, but before we get to that I will just ask my colleagues here to introduce themselves down along the line.

I am Shawn Skinner, the Minister of Innovation, Trade and Rural Development and the Member for St. John's Centre.

MR. MEADE: Brent Meade, Deputy Minister, Innovation, Trade and Rural Development.

MR. HOGAN: Dennis Hogan, ADM for Innovation and Technology, Innovation, Trade and Rural Development.

MS HEARN: Judith Hearn, ADM for Trade and Export Development, Innovation, Trade and Rural Development.

MR. CRANE: Gerald Crane, Director of Research and Analysis, Rural Secretariat.

MS SNOW: Doreen Snow, Manager of Partnership Administration, Rural Secretariat.

MS VAUGHAN: Linda Vaughan, Director of Financial and General Operations, Executive Council.

MS MALONE: Rita Malone, Assistant Deputy Minister for Regional Economic Development.

MR. McCARTHY: Phil McCarthy, ADM, Business Development Strategic Industries, Innovation, Trade and Rural Development.

MR. GILBERT: Bruce Gilbert, Assistant Deputy Minister, Rural Secretariat.

MR. JANES: Glenn Janes, CEO, Newfoundland and Labrador Research and Development Council.

MR. BARFOOT: Scott Barfoot, Director of Communications, Innovation, Trade and Rural Development.

MS HOOPER: Diane Hooper, Executive Director, Ireland Business Partnerships, Innovation, Trade and Rural Development.

MR. JONES: Scott Jones, Director of Financial Operations, Innovation, Trade and Rural Development.

MR. FORRISTALL: Paul Forristall, Manager of Financial Operations, Innovation, Trade and Rural Development.

CHAIR: Before the minister begins, I would like to ask the Clerk now to call the subhead.

CLERK: 2.6.01.

CHAIR: 2.6.01, that is the Rural Secretariat.

Minister Skinner.

MR. SKINNER: Thank you, Mr. Chair.

I do not have any opening remarks for the Rural Secretariat, or the NLRDC, in terms of formal remarks. I will have some when we get to the department.

I would like to just say that from a Rural Secretariat perspective, myself and Bruce Gilbert - who is directly behind me here, just behind me - over the last number of months that I have been in the position of minister, have been working very hard to engage with our Rural Secretariat and our rural councils.

As you are aware, I have been in the position about five months. Bruce has been there, I believe, since about last July or August and has done a fair amount of touring around the Province, meeting with all of the volunteers that we have on our groups. I think as we get into some of the questions, some of the activities that we have been engaged in and some of the things we are hoping to do will come out in our discussion.

So I will leave it at that for now, and throw it to the members opposite to see if they have any particular questions.

CHAIR: Okay, thank you, sir.

Mr. Parsons.

MR. KELVIN PARSONS: Thank you, Mr. Chair.

Good morning, folks. There cannot be too many left over in the West Block. Quite a crew.

On the Rural Secretariat; first of all, minister, I just wonder what your thoughts are. This is the first time we have ever done Estimates together on this issue. I am just wondering what your thoughts are as to why Rural Secretariat is under Executive Council as opposed to being directly under your department. What is the logic for that, in your view?

MR. SKINNER: In terms of the logic for why it is put under Executive Council versus this department, I do not have the particular knowledge as to why that was done.

I can indicate to you that from an operational perspective, it is a seamless exercise, really. Myself and the assistant deputy minister are communicating on a fairly regular basis, and we spend a fair bit of time together on various projects. In terms of why it was initially structured like that, I am really not sure the logic behind it.

I will look to my assistant deputy to see if he might have anything to say to that. From my perspective, it was a structure that I inherited, and basically, just started to work with it as opposed to really questioning why it was with Executive Council.

I will ask Mr. Gilbert if he might have some more that he can add to it.

MR. GILBERT: Thank you, minister.

I, as well, was not there in the early days of the formation of the Rural Secretariat but one notion that I have heard repeatedly since I have been in this position is that the Rural Secretariat is trying to position itself as an entity focused on sustainability and when that is used in the context of the Rural Secretariat people generally mean economic development, cultural development, social development, environmental stewardship, et cetera.

So it is an integrated secretariat that I suspect may have precipitated the decision not to place it within INTRD, which to many people has a strong economic focus. In fact, the Rural Secretariat has tried for the past three years to explain to the population that we are not just about economic development.

MR. SKINNER: One of the things I would suggest, and again this would be my own sort of feelings on this, is that one of the, I guess attributes of having something in Executive Council from my perspective would be that it allows, in this case, the Secretariat to be seen to be more cross departmental, more cross government in terms of its activities and involvements. The Rural Secretariat certainly does engage with a number of different departments across government and having it positioned in an Executive Council I believe gives it the perception and the reality of being able to move seamlessly across governments when it needs to as opposed to being perhaps seen to be in a silo of one particular department.

MR. KELVIN PARSONS: What can we look to or what can you point out to us to show that there has been any justification for the existence of the Rural Secretariat?

MR. SKINNER: In terms of the justification for a Rural Secretariat there are, I think, many things that we can speak to. One of the things that we have been focusing on - when I say we, myself and Mr. Gilbert in terms of some of our recent activities, because as I indicated, we are both fairly new to the department. We have done a fair bit of work with our rural councils, our regional councils in terms of capacity building with them, in terms of providing them with some of the resources necessary to be able to identify economic and or social development opportunities within their councils. We have engaged with them on a number of government public policy issues. We have utilized their expertise and their local knowledge when we have been formulating government policy and have had the opportunity and the benefit of their experience into that public policy.

Again, if I could, I will refer to Mr. Gilbert if he wants to elaborate on some of those things but from my level, Mr. Parsons, those would be some of the things I would identify for you.

MR. GILBERT: The primary product, I guess you could – to use a word here of the Rural Secretariat councils. The expectation of product was documents, advice documents. Thoughtful people meeting regularly to discuss complex issues that affect their region in a safe environment with enough time and enough supports and enough expertise brought to the table so they can make intelligent, informed comments to government about the particular issue on the table at the time.

In my time here, in the last nine months or so, there have been twenty-three documents submitted into government. This is a bit of a watershed for the Rural Secretariat because it appeared that before - in the early couple of years, there was an issue within councils about whether they were ready to submit advice. They felt that they needed to be more up to speed with what is going on within government. They need to study the issues that were important to them thoroughly, and these documents are beginning to flow. Now these documents are sent in to the senior official's world for them to consider among other sources of data. What they reflect are a citizen's voice, an informed, deliberative citizen's voice which is considered to be different than just opinion.

MR. KELVIN PARSONS: Just to go back here a little bit, flashback, and I have asked this several years. The original Blue Book of this Administration talked about a - words we see repeatedly - comprehensive, strategic, sustainable, rural plan.

Now other than a few pieces of advice, and I take it you are talking partly here about the reports that they file and I read those, particularly the one from Robin Davis who is on the Rural Secretariat for Western. What has the Rural Secretariat offered this Province that Chambers of Commerce and Boards of Trade, for example, and municipalities do not? What, again, can you point to other than the few submitted pieces of advice, which I am sure you could get at any time that you want to ask any chamber or any council to justify their existence? To use words like, and all these spin words, we use them for capacity building. We use them for advice documents. Surely, there must be something more substitutive that you can point to so that taxpayers of this Province can say we are getting some bang for our buck in having this creature. That is all I am asking.

Is there something you could be more definitive about, because I keep asking this question for the last six years? I have never seen a plan. We had the big meetings out in Port Blandford a few years ago and we thought it was the be-all and end-all and rural Newfoundland was on its way to great heights economically. What have we seen to justify its existence again?

MR. SKINNER: In terms of activities at the Rural Secretariat or things that it has been involved with, there have been a number of forums in various areas of the Province that the rural councils have been able to convene and focus on economic and or social development activities in their areas. They have been held, as I said, in many areas of the Province.

In terms of what do they bring as opposed to what a Chamber of Commerce or a Regional Economic Development Board can bring? First of all, they come being more of a cross-section of the region than would one particular group, like a Chamber of Commerce or a Regional Economic Development Board. They are coming with a broader perspective and a broader lens on what they are looking at.

We have seen a number of documents that have been produced that have come forward to us. We have an opportunity with the Rural Secretariat to view government policy and propose government regulations with a specific eye to how it affects rural Newfoundland and Labrador. It allows us to work, as I said, with other departments to be able to provide the kind of perspective, I guess, that needs to be applied from a rural theme or rural policy.

The activities that we are engaged in are allowing us to, in my opinion, focus on the particular nine rural council areas that we have and allow them to work with government to try and develop the economic and or social policies that they want to see implemented in their areas. Some of those are moving along more quickly than others. Some of those, because of the membership that they have, are able to move more quickly. We see that it is something that we need to be doing with them, and we have been doing with them, and I believe it is something that can allow government to more effectively have sustainable rural regions because of the input of the people who are living there and who are impacted by the decisions of government.

MR. KELVIN PARSONS: Minister, these twenty-three documents that have been referenced, are these the reports that they have filed annually? If there are other documents, are they public documents? Can we have copies of those just so that we can see what twenty-three areas of advice government has received advice on from these rural councils?

MR. SKINNER: The twenty-three documents are above and beyond the annual reports. They would be documents that have been received from various regions, and they do not all submit the same ones. Obviously, it is up to them to decide what they want to submit on, but we have received documents on our youth retention and attraction strategy, on regional governance, on transportation issues, education issues, poverty reduction. There have been a bunch like that, and that would be what the twenty-three documents would be, and they would have come, I would assume, from all of the nine rural councils.

MR. KELVIN PARSONS: I would assume they are public. We can get a copy of those?

MR. SKINNER: I do not think there is going to be any issue with that from my perspective. I mean, they are documents that these individuals have submitted. I guess from my perspective, I will just confirm that, but I do not have any particular issue with it. I am not sure if any of them were sent in and said, this is only to be used by government or something. I do not know if they have put any parameters on them themselves, but I will look into that.

MR. KELVIN PARSONS: Yes. Normally in the committees, Mr. Chair, too, the secretary records any undertakings of documentation so that we can get a list at the end of the sessions.

CHAIR: Yes. Clerk, take note of that.

MR. KELVIN PARSONS: I do not have any questions, further questions on the Rural Secretariat. I do not know if any other member of the committee has anything. Ms Michael is not here, I would not want to – I know she does have some questions. She had to step out for a moment. I could go on to the Research and Development Council one if you wanted and come back to her.

MR. SKINNER: Sure, if you want to do that.

CHAIR: Yes, okay, we will do that.

MR. KELVIN PARSONS: Okay.

Minister, on page 22, again Executive Council. Any logic, in your understanding, as to why Research and Development Council, like the Rural Secretariat, is under Executive Council and not directly under your department for you who are responsible for it? The rationale, please.

MR. SKINNER: Again, I guess I will be a little bit repetitive here, Mr. Parsons. I think the thought would have been that it would be important to have the council having the ability and being perceived to be cross government, cross departmental, engaging with a number of different departments. It has been my experience, in the brief time that I have been here, that if something is positioned within Executive Council it is seen to be more broad in terms of the areas and the departments that it can interact with, and it is seen to be a cross-governmental council as opposed to being attached specifically to one department, like INTRD.

MR. KELVIN PARSONS: I noticed in last year's Budget 2008-2009, from Budget to Revised there was $10 million budgeted and you actually spend the $10 million. I am wondering if we could get a comprehensive list of how that $10 million was spent last year.

MR. SKINNER: The $10 million would have been - I am assuming that would have been under the Grants and Subsidies?

MR. KELVIN PARSONS: Yes.

MR. SKINNER: Yes, which would have actually been the IRIF – I forget what IRIF stands for, Industrial Regional Investment Fund?

OFFICIAL: Industrial Research Innovation Fund.

MR. SKINNER: Industrial Research Innovation Fund. Just, I guess for clarification, that amount of money is actually, as I understand it, appropriated from the Department of Education. It is their budget but they gave it to INTRD to manage, and INTRD managed it and this year the decision was made that the research council would actually take over that functioning.

I will ask Mr. Janes to give you a little bit more descriptive analysis of that, but those are the threads as to where that money comes from and how it was expended.

MR. JANES: The $10 million you see reflected here is a government accounting mechanism. These funds were not in use by the council this past year. They represent a fund that has been in existence for a number of years that supports academic research, or institutional research. For the past number of years those monies have been voted in Education and administered by INTRD.

As of April 1 this year, given the existence of the council and our mandate, it was seen that the management of these funds fell most appropriately under our remit. So what you see here is a restatement of what was spent last year, again, voted in Education and administered by INTRD. It is on a go forward basis, so this fiscal year that we will be administering those funds.

MR. KELVIN PARSONS: Just so we are all on the same page then, because I am not the critic for Education. I am the critic for ITRD, which includes Research and Development, so I would not have been aware of this before today. Because it was voted into Education, managed by ITRD, and reported upon in the Estimates under Executive Council, you see that might be somewhat confusing to a lay person.

Again, my question is, can you provide me with the details of where that $10 million was spent last year?

MR. SKINNER: I am not able to, obviously, provide that to you right now, in terms of providing a list –

MR. KELVIN PARSONS: No, no, I mean an undertaking to get it from somewhere. I would presume Education would have a list somewhere, that is all.

MR. SKINNER: Yes, the –

MR. KELVIN PARSONS: A lot of these things I will ask today, I realize full well that you may not have them instantaneous, but most people just give an undertaking they will provide them and it comes along later.

MR. SKINNER: Sure. The undertaking, yes, I will give that to you, Mr. Parsons.

The only caveat I will have to check into is whether or not any of those funded amounts that were given out may involve any intellectual property that may need to be – and I do not know if there is, I am just throwing that out there.

MR. KELVIN PARSONS: No, and normally that has not been the case. The funding is very public; it is public taxpayers' dollars. Now, what it is used for might lead to intellectual properties, we understand, but normally any money that is expended, that is the purpose of Estimates, is to justify who it went to and explain –

MR. SKINNER: Yes, and we will provide that.

MR. KELVIN PARSONS: That leads me, of course, to this year's budget of $24.6 million. Now I take it, are we on a different process this year? It is not voted through Education this year. It is going to be voted specifically through Executive Council, ITRD? Explain what is different now than last year.

MR. SKINNER: In terms of what is different, the monies this year that you referenced, the $24 million, there is $10 million that is the old IRIF fund, I will call it. There has been an extra $8.5 million that has been provided for new funding, new programs. Then there is $6.6 million for –

MR. JANES: Operations and set up.

MR. SKINNER: Oh, operational, yes, sorry.

The $6.6 million was for the operations and set up of the office. In terms of providing new details on those three amounts, if you would like some, I will ask Mr. Janes just to give you some breakdown on those three specific categories.

MR. KELVIN PARSONS: Yes, please.

CHAIR: Mr. Janes.

MR. JANES: Yes, he is correct in that the IRIF fund is now encompassed within that $24 million. So that will be $10 million; there is $8.5 million in new programming.

I mentioned earlier that the IRIF fund was intended for support of research and development within institutions. So, predominately in this Province, academic institutions. It is the remit of the council to work with the entire Province to improve its R&D performance. So some of the funds that you will allocate for the new programming will be targeting, working with business and improving their R&D performance. This will be the first move in that direction. So that is where you see the allocation for some of the new monies.

The third expenditure that the minister alluded to, the operational setup of the organization, the entity itself, as you are probably aware of from the previous sitting of the House, there was legislation passed to set up and enable this entity as a Crown corporation. The monies that you see in operational terms are for the actual physical set up of the Crown corporation and staffing of the entity itself.

MR. KELVIN PARSONS: Could you give me a bit of a more breakdown? It seems $6.6 million in set up. What is involved there? It seems fairly substantial.

MR. JANES: The main items that are in the breakdown are salaries. Well, first I should probably point out for you, for the current Estimates, what you are seeing now 2009-2010, is only Interim Supply for several months until the actual legislation is proclaimed, at which point the balance of the funds will be transferred to a Crown corporation.

MR. KELVIN PARSONS: You have $200,000 up in 01. for Salaries. So you are saying now there is another salary setup component?

MR. JANES: Yes.

MR. KELVIN PARSONS: That is why we need explanation, because this thing is not clear, not jumping off the paper at me as to what $6.6 million to set up what appears to be a, albeit important, fairly small council as opposed to some other entities in government.

MR. JANES: Okay. So, moving forward, in the upcoming year the Salaries will be approximately $2 million.

MR. KELVIN PARSONS: How many people will that involve?

MR. JANES: Nineteen to twenty, plus five temporary. The Employee Benefits, given that there is a Crown corporation, is zero, as those numbers or associated type numbers actually would now fall under Professional Services for the Crown corporation. Transportation and Communications will be approximately $500,000; Supplies are approximately $100,000; Professional Services will be $1.4 million; Purchased Services, $1.3 million; and Property, Furnishings and Equipment, $1.2 million.

I have rounded, but I think those numbers will give you close to the vicinity of $6.6 million.

MR. KELVIN PARSONS: Okay.

Just to take that a little bit further, the nineteen to twenty people you anticipate having on staff, what kind of skill sets would we be talking here?

MR. JANES: The skills will be, obviously - the existing employees who are contractual employees now are ones who it was necessary to facilitate to set up the operations and the administration of the entity itself. They will obviously carry over. We need those supporting functions.

As we go forward, we will be looking for technical expertise in areas that are relevant to the spaces we will be working. We will also be looking for staff that would be, if you will, officers who would administer the funds that are dispersed to the communities and client base that we serve.

MR. KELVIN PARSONS: Again, could you be a bit more specific? Even the Premier's office, which has twenty-two people up there, does a fairly important job too. They have twenty-one people. They spend half a million dollars less than what you are talking about. They spend $1.6 million, and you are saying you are going to spend $2 million for this office.

I am just wondering what kind of skill sets they would have. Are they technical people who would demand high salaries of $200,000 to $300,000 a year? Could you give me some detail on that?

MR. JANES: They are technical people, that is the nature of the business, with highly specialized skills. In the areas that we operate, we will have to be able to attract and retain those talents to be able to service our clients and to be able to conduct the business of the organization.

MR. KELVIN PARSONS: If you have these highly paid, highly skilled people as permanent employees, which is going to cost you to the tune of $2 million, what is the $1.4 million for in Purchased Services, and certainly the $1.3 million for Professional Services that you have there, in addition to that?

MR. JANES: Your point is well taken. There are some experts that we will want to retain, and it makes sense to retain, as permanent employees, because they will be core ongoing functions. As you try to cater or service specialist needs in other areas, it probably makes more sense to be able to retain that expertise for a shorter duration of time, as opposed to retaining them permanently. That would be the notion or the approach and why you see some of the numbers in Professional Services.

MR. KELVIN PARSONS: We did not have the expertise anywhere else in ITRD to help out and operate the Research and Development Council?

MR. JANES: Not for these particular positions, no. We would be looking at people with PhDs, specialist knowledge in the areas that are in, or industry expertise for years in a particular segment or area. So it is fairly specialist knowledge.

MR. KELVIN PARSONS: Now when you budget your $8.5 for your business R&D as opposed to your academic institutional R&D, what kind of process do you go through to estimate that I am going to need $8.5 versus $2.3? It is the start of the year, you have not even gotten your staff in place, you are going to be growing, and yet at the same time you are hiring, setting up, getting the physical premises, and you are going to spend $8.5 million. What kind of thought process gives you that number? What do you crunch to come up with that number at the end of the day or is it just an absolute guess?

MR. JANES: It is not an absolute guess but it is an approximation. We do identify some areas in business that we think can be helped and supported and the way to build the budget around that, then, would be to identify the areas that we think we need to support, allocate some funds for that, and then try to move forward.

MR. KELVIN PARSONS: What kind of interaction will there be between the Research and Development Council and the other research and development - I use that phrase very broadly - sectors, arms, and divisions of other government department? We have a vast research sector over in Finance, and I know they might not be all interrelated, but explain to us so we have an understanding of why your Research and Development Council is going to operate on a different level than any capacity that we currently have in the government. Because virtually every department I am aware of has some kind of research piece to it.

MR. JANES: For us, we have three clients as an entity to be set up outside. We will have government, business, and academia, and we have to occupy somewhat of a neutral ground to be able to cater to and serve all those clients. For government itself, we will be looking and supporting their initiatives with coordination, facilitation, and offering some depth and technical expertise in areas that might not currently be available. For the existing complement of skills that are there, we will be providing a facilitating role, a coordinating role, to make sure that that information is used to its best purposes.

MR. KELVIN PARSONS: How does a person know - maybe you are not the right person to answer this, I do not know. Maybe the minister or someone else is the best to answer. How does Joe Public who has an idea ever know where to go? You have your Research and Development Council that has a bunch of grants and subsidies money, or will, you have strategic enterprise development which has a bunch of money, and we have a totally separate department called Business that has a bunch of money. How does anybody ever know where to go shopping? We talk about sustainability and integration and all of this stuff, but it seems to be that there are little pots of money all over the place and a fellow just has to go in and start opening up cupboards and say: Okay, where do I fit or where can I make myself fit?

Am I off the wall here with this, because that is the impression you get the more Estimates I do with different departments. It is just the matter of where do I find the pot.

MR. SKINNER: You are correct, Mr. Parsons, in terms of the fact that we have a variety of pots, as you refer to them, or places where one can go to access funding.

There has been a fairly extensive consultation process done by Mr. Janes in terms of reviewing, talking specifically to the NLRDC, reviewing what has happened in other provinces and in other countries where research and development has been deemed to be not only important and significant but critical to the development of enterprises and business opportunities and economic development in other jurisdictions. We have looked at what we have done here in our Province relative to some of those other jurisdictions that we have evaluated and we felt that we have been lacking, and the area that we have been lacking in is what Mr. Janes has been speaking to you about. We will give you more detail on it, I am sure, as we go through this.

In terms of the other departments and the funding that we have: Just to speak specifically for a second to the Department of Business. The Department of Business, generally speaking, is responsible for inward investment. We, as a Department of INTRD, would be more responsible for more indigenous companies and for working with those that we already have here and established, and trying to grow those or expand those and diversify those.

One of the challenges that I as a minister and my senior executive team have been working on is making sure that we are well aware, within our department, of the various funds that we have so that if someone happens to go to the wrong area, if I could use that term, we are able direct them and hand them off. As apposed to saying, sorry, we are the wrong people, we would like to be able to hand them off to the people we know are the ones who can help them. We are trying to facilitate that for them. As we work more with our academic community and our business community in particular, we are finding that we need to break out more of what we do to try and target the areas we want to be involved in.

It is not just a matter of having one fund that everybody comes to, but we have identified areas that we fell are strategic and important for the Province, we have created funds for those areas, and we have created the supporting infrastructure to be able to promote, administer, deliver and continue to support those sectors and areas that we feel are important.

MR. KELVIN PARSONS: I do not mean to get into Industry, Trade but since you used the comparison I will deal with it here rather than later, if that is okay.

That is what is confusing. Again, you use the analogy or the explanation that business looks to attract business from outside of the Province. I was told that in Estimates by two successive business ministers. ITRD does business within the Province. I asked Minister Oram: What have you invested in this year, tell us the good news? He said: Well, we put this money into Harbour Grace and the boot factory. I said: Just a minute now, I thought that was an ITRD thing, putting money into that. That is a local business, so I would think that that is an ITRD investment. No, no, no, he said, we attracted Kodiak here. I said: Now, just a minute. Did you attract Kodak here by putting an investment in Harbour Grace and therefore you are justifying that as a business development department investment in attracting a business, or is it a case that ITRD is putting money to keep the company that is there here? Now, that is how I saw it and that is how the company certainly reported it; that we had a choice, we were going to leave Newfoundland or we were going to stay here. We stayed here because the Province came up with the money.

No problem with the investment, it is just that how it is done is confusing because you have two different ministers saying different things. That to me is spin at its best, when the Minister of Business tries to suggest that he attracted a business. I do believe the boot factory was there for years. I do believe the Province put money into it which they should have and we support it, but why is another wing of government saying, no, no we attracted them here? Nothing could be further from the truth. He did not attract anybody here, he just made an investment to keep somebody here and expand what was there. That is not an attraction. That was more of a retention investment than anything.

How does the public deal with this, because the public sees this too and asks the same questions? How do we explain having so many different departments? Why wouldn't business be part of you if we are going to operate that way?

MR. SKINNER: I do not have an answer for you on that, Mr. Parsons. I will explain to you the structure of how I view ITRD's focus, what I understand to be the Department of Business's focus, and beyond that I do not believe that I can really give you any more that.

MR. KELVIN PARSONS: I am not being factious here. I am being sincere when I say it is confusing. I will give you an example. When I was in ITRD myself a few years back, I went over to England because there was an aeronautics show taking place in some place outside of London, and the big thing was we were attracting business. Now, all of a sudden, the Minister of Business goes over to do that and I am saying: What has changed other than the creation of another department and another person going over to do it? We are still spending the Province's money. It seems to be we have duplicated what your department has been doing for years with this business department.

MR. SKINNER: We work with the Department of Business on some files, there is no doubt that, but there are files that we do not work with them on. Some of that, I think, is going to be natural anyway.

MR. KELVIN PARSONS: Minister, would it be fair to say that you do not work on them now because somebody (inaudible) it off and called it another department. You always did work on them. That work happened. That work got done. It is just that somebody decided to slice a portion off of ITRD, call it the Department of Business, give it resources and staffing and said: This is what your mandate is. Even though that was done you are still doing the same job, both of you.

Is there any difference?

MR. SKINNER: I think there is, yes. I think there is a big difference. We are concentrating our efforts and focusing ourselves on companies that are currently here in the Province and we are trying to, as I said, build and expand upon their economic base. We are not outside trying to attract business into the Province. There is another minister and another department that is responsible for that. There is a difference.

MR. KELVIN PARSONS: Thank you, Minister.

I have no further questions at this point.

CHAIR: Ms Michael.

MS MICHAEL: I am sorry that I had to step out but I think I have caught up with the discussion. I will not add to the questions that have been asked except to – and this may have been explained, Minister. If it has been I am sorry, but I would like to ask the question. I want to get a handle on what the council is now becoming. I understand it is becoming a Crown Corporation and obviously we are going to have legislation put in front of us and some answers may come out then.

When it becomes a Crown Corporation it then stands on its own. It is not going to be under a ministry or under the Executive Council. Is that correct? Would that be right?

MR. SKINNER: From a reporting perspective, it is my understanding that they will report back to government through the Executive Council. In terms of standing on its own, I guess generally speaking, I would say to you, yes, that is an accurate statement depending on the specifics of what you are talking about.

MS MICHAEL: Okay.

Then, the difference for me is that if the council were not a Crown Corporation it would always be here with the ministry whether it was you or whomever it would be to be part of the Estimates, et cetera. As a Crown corporation such as Nalcor, for example, that is not the case. It will be a whole different relationship with it, because of its being a Crown corporation.

This may have been explained, but I would like to know the reasoning of why the council was made a Crown corporation.

MR. SKINNER: I will ask Mr. Janes to just elaborate on that for you.

MR. JANES: The council is being set up as a Crown corporation after we looked extensively at other areas and other jurisdictions both within Canada and some other flourishing research councils such as the Alberta Research Council and Saskatchewan Research Council, both of which, in the Canadian context, are Crown corporations.

We have also looked internationally, in Scandinavia particularly, and the U.K. In the U.K. the issue would be they set them up as a trust, which is the closest thing to a Crown corporation.

There are some specific needs of an entity such as a research council that necessitate a degree of arm's-length operation. One is that it has to be seen credibly as being a neutral, independent body from which advice is sought from its client base. As I mentioned earlier, client base would be government, academia and industry.

Two, it deals in areas of intellectual property ideas and in particular in business case, but also equally in the areas of intellectual property there is commercially-sensitive information that has to be developed.

So, in simple terms, you are investing a lot of money to try to take something several steps ahead. Unless you can hold that information closely, and guard it, the investment you made will quickly evaporate; because someone will simply ask and say: Well, all that wonderful research you are doing, can we please have it for free? We are just going to put in a request.

There are some needs there to get out, to be able to protect that information, to be able to operate in that environment, so there are some flexibilities that are needed for this type of entity that necessitate it being set up as a Crown corporation.

MS MICHAEL: I do not have a problem with this being set up as a Crown corporation. Actually, for the reasons that you have stated, I think it is necessary, because one of the issues with research – I do not think any of us are naive enough to not know this fact: that even research in universities is suspect these days, because of the corporate sector - that is one sector, for example, having influence on research – fears that the corporate sector, when it puts money into it, could have an influence on the research that happens.

I think all research, whether it is in university, outside of university, whatever, has to be completely on its own, independent, and not influenced by policy of other bodies, like policy of government or policy of business or whatever.

Having the triple client base might help with that, but what do you see – if I may ask a question of Mr. Janes – what do you see needing to be put in place, because we are going to have legislation that we are going to have to look at with regard to this, to make sure that the council is completely independent and is not being guided either by government policy or business or academia? If you have thought that one through, I do not know.

MR. JANES: For us to operate, a board will be appointed. We will be accountable to that board, so that will be the degree of autonomy that is provided in the relationship, given that government is our supporter in the initial instance, to provide us with the funds to set up. That would be sort of the key piece.

The other thing is that we have within the Crown corporation openness and transparency in terms of our reporting and our structure, that will enable us to disclose how we are behaving and functioning so it will be obvious.

MS MICHAEL: Okay.

Thank you, Mr. Chair. I will leave other questions that I might have around what was just said to when we get to discuss this in legislation, because I think it will be really important to make sure that we have a board that allows for that independence, but that is a whole separate issue and I will not pursue it any further here unless the minister wants to say something to it.

CHAIR: Do you have any questions on the Rural Secretariat?

MS MICHAEL: Just let me go back and see. I didn't have anything in-depth noted, except I did want to hear from Mr. Gilbert, if that were possible - he may have said it already and, if so, I can get the information - what the goals for the coming year are with regard to the Rural Secretariat.

MR. GILBERT: Thank you, Ms Michael.

Our hope, our plan, for this coming year is to strengthen the councils. The councils are always in transition; people leave and people are added. We want to help them with their ability to deal with complex topics affecting their region, so we have in this budget a small pot of money that is to be used for council capacity building. We want to help them to do a type of research, not to be confused with the scholarship that we have just been talking about, a type of community-based research sometimes referred to participatory action research. We want our staff to work with our councils, to work with them to focus on their urgent priority and to get them to engage citizens in their region in a dialogue – this would be a type of qualitative research – to sort out what they believe the people of the region believe about particular issues. That is all, because the documents or the advice that the councils want to give to senior officials needs to be informed and not just the opinions of the twelve or fifteen people around the table.

So, this coming year we are going to have a strengthened emphasis on citizen engagement approaches. We are going to do regional forums. We have done a few – I think ten or eleven - last fiscal. We are going to do more dialogue sessions with stakeholder groups, citizens throughout the region, and we are going to frame this as a type of data gathering so that every document that comes in to government, it will be clearly visible to the reader that this is how these views were collected.

That is very important for us, because even the councils themselves were hesitant about putting in advice documents to government because they felt that they did not necessarily represent the people of the region. They were a small group of appointees. They want to expand their dialogue so that when a document hits the desk in here it is back-stopped by considerable discussion and thinking.

I should say that one of the ways we are going to facilitate that is to work with departments – the word silos was used – to try and bring officials from departments to the councils, to the regions, to help them garner the information and deliberate effectively over the problems they are trying to sort out, so that when a document or some advice comes into government it is not just citizens' advice; it is citizens having conferred with officials thoughtfully. So the advice, from a layperson's point of view, is already somewhat reality tested because people from both sectors, or all sectors – if you want to consider government a sector for a moment – government, business, industry, academia and citizens, have all conferred on this document. So the document is thoughtful and usable by the people who are reading it.

A key task for us in the Secretariat office is to do effective follow-up on these documents. I will give you one example. A document comes in from the Codroy Valley area about the importance of agriculture and how education, educating young people about the potential of agriculture as a future industry, by its very nature, deals with the Department of Education and Natural Resources. That document comes into the minister's office, and the Secretariat follows up on that document to try and bring those players together inside here and then to find a way to bring those players together with the players who wrote the document in the first place, to try and figure out the best way to advance the good ideas that are contained in the document.

So, in a way, the Rural Secretariat is somewhere between civil society and the government bureaucracy. We have a foot in both camps. People in government often look at the Secretariat and do not know what it is doing, and it could be said that the citizens see the same thing, but the fact is, it is because the nature of the beast is that it is in between, and this, in the literature, is widely known as a very critical step for governments or bureaucracies that want to actually engage people. It is actually walking the talk.

It is also very important to recognize that the Rural Secretariat is not just the councils. The councils are the appointed boards. The Rural Secretariat itself - the provincial office, I guess you could call it - is an entity as well, so a major part of our staff's workload is about supporting the councils but that is not the only thing they do.

The other thing they do, if you want to imagine a do-list approach, is to work within the bureaucracy, inside government, to try and offer our services to any department or departments that might have something they want to explore with rural or regional groups, citizens or what have you. So we are trying to be helpful to the government side, to more effectively get ideas and insights from citizens and with citizens to get their ideas in government. It is not the only thing that needs to be done, but it certainly is a legitimate function. It is ambitious, and it remains to be seen certainly how far it can go. It is an evolution. It has changed a lot over three years; there has been a lot of learning.

I think the focus this year on community-based research or participatory research is a new emphasis for the Secretariat, the fact that we are going to do regional dialogue, participatory engagement-type exercises.

None of this will, of course, create development in the regions, but that is not the role of the Rural Secretariat. That is the role of other departments, and our job is to try and support them and to try and create a healthy dialogue. The alternative, of course, is to have typical consultation processes. They will continue, as well, but our emphasis is different. It is not consultation; it is attempting to truly engage.

The Secretariat is working with other players from around the country, other provincial governments, to try and figure out what is the best way to train senior officials in citizen engagement so that we can all, collectively, move beyond what a lot of people are frustrated with – commonly referred to as tired consultative processes.

So we are a bit on the edge trying to do things differently. I guess it is probably fair to say that our staff are very much community development workers, and anybody who has ever worked in community development, including Barack Obama, knows that if you are looking for hard and fast deliverables from community development workers, then you may as well shut it all down at any given time; because community development workers, by their very nature, are working in the cracks and gaps between departments and stakeholders, trying to advance things.

We write it up; it is in our reports. We do have deliverables. It may not be the deliverables that some people expect, but then I think it is also safe to say that one of the issues with the Rural Secretariat is that there are a variety of divergent expectations and views about it is and what it should be doing. I will just put it there.

It is stay the course with a difference, if I might sum this up. There are so many things we can do to engage citizens out there, and stakeholder groups. Of course, they are also tired of consultative efforts so we have to be very careful.

This is why it is important to work with the departments in here to offer ourselves up as a type of support service for departments that want to engage people. Work with us; we will help you do a good job, a creative job, and that is where we are heading.

MS MICHAEL: Thank you.

If I were not in the position I am in, maybe I would apply for a job with the Rural Secretariat, having the background that I have.

MR. GILBERT: And we would have you.

MS MICHAEL: Thank you.

I am glad to hear you say what you have said. I do look forward to reading your report for the past year.

The capacity building of the councils, I think, is major. You said there is a small amount of money. About how much money is actually going to go towards the capacity building itself? Because – and this is not to be critical; it is just to state a fact – I think that the councils are quite a variety of people and, before I came into the position I am in, I did deal with some of the councils.

Even when it came to things as simple – what I considered simple – as diversification, the need to reflect the community gender balance, even things that are concepts I take for granted, were not concepts that were taken for granted by people on some of the councils.

I was connected with some of the nominees because they came from the organization that I was the executive director of, so I do have a fair knowledge. I am really glad to see the capacity building, but you said a small amount.

MR. GIBLERT: One hundred thousand, notionally ten councils, nine regional councils, one provincial council; $8,000 to $10,000 per council to do what, to do a dialogue event to have at least one. I expect next year that I will be able to say that there are nine or ten community-based research projects ongoing in the Province and these are projects led by the councils. These are community identified gaps in knowledge about certain issues that would help them make their case to government about why x, y or z needs to happen. That there would be at least some creative, interactive dialogue effort, perhaps high profile in each of the regions. So there would be nine of those. It is not much money. It is a little bit of money.

This was a tough budget, as we all know, but I also learned from my past experience that too much money is also a problem. I think it is the right amount of money for this year and we will see how it goes. Because of course, as you know, these are not entities. These are informal appointed boards. They are not NGOs. They have no staff. They have no capacity. In fact, they are supposed to meet up to two to four times per year. Just imagine a lot of money in there – well, they do not even have a bank account but just imagine if they did have a lot of money, they would not have the capacity or the ability to actually spend it, or spend it wisely.

So I think it is finding the right balance between no budget line for any activities of the councils to a budget line. I am very pleased that we managed to hang on to that money in our budget request and I think the councils see it as a vote of confidence for their voices.

MS MICHAEL: Thank you, Mr. Chair.

I will just make one final comment, and I do not require an answer but just to say because of having been a person involved in community development in the 1980s in the Province when we had all kinds of resources to help communities, I would love to see the Rural Secretariat come back next year looking for twice as many staff because they have been so successful with the goal that has been stated. So, I wish them luck.

Thank you.

CHAIR: Thank you, Ms. Michael.

Mr. Parsons, any further questions on that?

MR. KELVIN PARSONS: No.

CHAIR: Any other questions from the Committee?

I will ask the Clerk now to call the subheads for the Rural Secretariat.

CLERK: Subhead 2.6.01.

CHAIR: Shall 2.6.01. carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 2.6.01. carried.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

All those against, 'nay'.

Carried.

On motion, Department of Rural Secretariat, total heads, carried.

CHAIR: Shall I report the Estimates for the Rural Secretariat carried without amendment?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, the Estimates for the Rural Secretariat carried without amendment.

CHAIR: We will go over now to the Research and Development Council.

Any further questions on that one?

No further questions.

I will ask the Clerk now to call the subhead for that one.

CLERK: Research and Development Council, 2.9.01.

CHAIR: Subhead 2.9.01. Shall that carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subhead 2.9.01. carried.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, Research and Development Council, total heads, carried.

CHAIR: Shall I report the Estimates for the Research and Development Council carried without amendment?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, the Estimates for the Research and Development Council carried without amendment.

CHAIR: Now we will move on to the Department of Innovation, Trade and Rural Development.

We will begin by having the minister - he may take up to fifteen minutes to give an overview of his Estimates for the year. Following that, the first speaker will have up to fifteen minutes and then we can alternate whoever wants to ask questions thereafter.

Minister Skinner.

MR. SKINNER: Thank you, Mr. Chair.

I will not use all of my fifteen minutes, I will say that to you. I do want to thank you for the opportunity to have a few remarks.

As I indicated earlier, I have been in the department since about November 1. From my perspective, it has been a very exciting department for me to be involved with and very rewarding in terms of some of the activities thus far. I came from Human Resources, Labour and Employment, which I saw very much as a social development department. I have now moved to an area which is very much economic development and has significant impact on the Province's economic development plan.

I will speak to, I guess, the various divisions and staff that we have. One of the things, in my short time in provincial politics, that I have come to realize is that we have some very capable and competent staff who direct the political machine, and support the political machine in terms of carrying out the policies and the visions that the elected officials like us have.

While I have a number of my staff here with me, I do want to publicly recognize their abilities and capabilities, and how much time and effort and support they put into what they do, support they give to me and I believe they are very much a significant part of the success that this Province will have, regardless of politically who is sitting in the minister's chair. These people are very capable and competent and they are reflective of what I have seen in other parts of the civil service, and I just want to recognize that.

From a departmental perspective as well, I do want to recognize that we, as a department, are certainly motivated by trying to ensure that we have success in all regions of the Province. There is a lot of activity that happens in the Avalon Peninsula area simply because I believe the population base, a lot of the organizations and headquarters and facilities that we work with are located in the Avalon area, but we do tremendous work outside of the Avalon area and we are motivated to try to do more of that. We see the Province as being the area that we need to be out into and we have a number of offices throughout the Province, a number of staff throughout the Province, and a lot of our funding that we push out through the various programs that we have gets pushed out into rural areas of the Province.

There are a number of different funds. I will not go through all of them. I will not specifically mention any of them. I am sure they will come out in our discussions. To go to my earlier point, we have a number of different funds because we have a number of different areas. Some of them are small enterprise, some of them are commercial developments, some of them are innovation related and so on, but I think it is also important that members recognize, and the public recognize, that this department is not just about money. We also have support programs where we do not actually give money out but we support businesses; we give advice. They are non-financial types of programs, and those non-financial programs I believe are very, very valuable as well to the economic development of this Province.

So that is just a very high-level overview of some of the activities of the Province and I will throw it to the members opposite and we will do our best to try and answer any questions that they may have regarding the work that the Department of Innovation, Trade and Rural Development undertakes.

CHAIR: Thank you, Minister Skinner.

The proceedings are being recorded by Hansard. So if an official is asked to speak, in order for them to turn the right microphone on, if you would identify yourself before answering a question or whatever.

Mr. Parsons.

MR. KELVIN PARSONS: Thank you.

First of all, minister, there is of course a Departmental Salary book that accompanies the Budget Estimates. I notice on page 101 it indicates that there are 170 permanent positions within ITRD. How many of those are currently vacant?

MR. SKINNER: How many would be vacant?

The information I have in front of me, Mr. Parsons, indicates that we have 170 permanent positions, fifty-three temporary positions, one contractual, two that are secondments, and fifty that are vacant.

MR. KELVIN PARSONS: Fifty of the 170 are vacant, or fifty counting temps?

MR. SKINNER: No, no. Fifty of the total would be vacant.

MR. KELVIN PARSONS: So how many of the permanent positions are vacant?

MR. SKINNER: I would have to try and calculate that for you. I do not have that information.

MR. KELVIN PARSONS: Yes. We know fifty-three are temporary anyway.

MR. SKINNER: Yes.

MR. KELVIN PARSONS: Anyway, maybe someone can give me that figure later on.

MR. SKINNER: I do not know. Yes, we will try and get it for you.

MR. KELVIN PARSONS: Just a few line by line things that I had, referring now to the Estimates themselves.

First of all, on page 137, 2.1.01. Export and Investment Promotion, Grants and Subsidies, number 10 item.

MR. SKINNER: Yes.

MR. KELVIN PARSONS: I notice last year you had $1.1 million budgeted and you spent $645,300. Any particular reason why it was down by pretty well half?

MR. SKINNER: The explanation on that, Mr. Parsons, has to do with lower than anticipated costs in our NAFTA challenge with the federal government that was brought by ExxonMobil, regarding the required R&D expenditures that ExxonMobil were supposed to undertake pursuant to the Atlantic Accord. We had budgeted for that particular category $500,000 and we had only spent $20,000 last year, so there was a difference there of almost half a million dollars.

MR. KELVIN PARSONS: Excuse me. Am I under the wrong category here? I am looking under the Grants and Subsidies.

MR. SKINNER: 2.1.01.10?

MR. KELVIN PARSONS: Yes. Explain to me how we got a NAFTA challenge under Grants and Subsidies. I would have thought that was Professional Services, if you had legal counsel involved.

MR. SKINNER: I will ask the deputy minister if he will give you some description on that.

MR. MEADE: My understanding is, is that we have entered into this with the federal government. We have an MOU with the federal government on defending the challenge and I guess it was in the wisdom of finance that we would budget under grants and subsidies.

It must be, hon. member, the way that we are paying it out to carry out the defence. That is the only thing I can suggest. We can go back and check why it would not be under professional services but I think what it is, and I do not know if Judith has a particular on that, but again, we have an MOU with the federal government on the defence of the ExxonMobil challenge and we have procured a legal team for both parties on that defence. Obviously, the way we have decided to share that expense is by allocating under grants and subsidies.

MR. KELVIN PARSONS: Okay. Can we get a breakdown of what the other grants and subsidies were there? We know what you did not spend. You are telling me you did not spend that $500,000 because it did not transpire. That explains why the number is down but of the $645,000 you did spend?

MR. MEADE: Yes. Do you want an overview of the types of things it is spent on now or would you just -

MR. KELVIN PARSONS: Well, the details actually.

MR MEADE: Yes, we can supply the details.

MR. KELVIN PARSONS: The names of who you gave grants to and so on under that particular heading.

The next one would be page 138, heading 3.1.01. Business Analysis, down by $1.4 million roughly. Reason?

MR. SKINNER: The main reason for that, Mr. Parsons, is that monies that were budgeted were budgeted based upon anticipated employment levels in the call centre industry in the Province.

As you may be aware, we do provide some rebates, subsidies relevant to employment levels. The call centres were down in terms of their employment levels in the past year. Therefore, because of their lower than anticipated employment levels, there were lower than anticipated rebates back to them.

MR. KELVIN PARSONS: Were the call centre employment rates down because of slowed business volumes or did they actually close? Did any call centres close in the Province last year?

MR. SKINNER: To my knowledge, there was one that closed. I will defer to one of my ADMs to maybe provide a bit more detail, but there was one that closed. I visited a number of them myself, to have some discussions with them, and they have had some lower than anticipated volumes relative to some of the contracts that they have been working on. I am only aware of one that has closed, but I will just defer to see if there were others.

MR. McCARTHY: The one the minister is referring to is the one that ICT closed in Carbonear and that was a year ago, or a couple of years. I am not quite sure of the time frame now; I cannot remember offhand. That is the only one.

The reason why the numbers are down is because the volumes in some of the contracts they have are lower than they thought because of today's economy.

MR. KELVIN PARSONS: I take it that is the reason you put it back to $3.2 million; you do not anticipate that slowdown.

MR. McCARTHY: If they believe they are going to get back up, yes.

MR. KELVIN PARSONS: You are thinking that the economic tsunami we are currently involved in is going to be over in this fiscal year, then.

MR. McCARTHY: In our conversations with the companies, they believe that they are going to get their numbers back up.

MR. KELVIN PARSONS: I love an optimist.

The next heading, the same page, under 3.1.02.10., it is not a significant number there in terms of the overall budgeting, but you had budgeted for Grants and Subsidies – oh, by the way, before I forget, can we get the breakdown on the Grants and Subsidies on the one I just asked you before that?

MR. SKINNER: Subhead 3.1.01.10?

MR. KELVIN PARSONS: That is correct.

MR. SKINNER: Yes, okay.

MR. KELVIN PARSONS: Also, on to this one now, $50,900 was budgeted and only $16,000 spent.

MR. SKINNER: Before I get Mr. McCarthy to answer that, if I could, if you would allow me the opportunity just to go back to the previous one when you asked about the amount and it going back up; we budgeted back up to $3.2 million. I would like to share with you, and I think it is important that I share with you, in my visits that I have been doing to the call centres – and I have gone to a number of them just to see how they are making out - one of the reasons for our optimism as a government, and their optimism as a business, is some of the feedback they have been receiving from their customers relative to the service being provided by the employees in Newfoundland and Labrador. They consistently get rated higher than some of the other locations that call centres have people because of – the best way I can explain this – the level of interaction on the phone and the attention to detail that our people working in call centres seem to provide relative to some other places.

When someone picks up a phone and calls, they – being the call centre industry – recognize the difference, when they do their surveys for customer satisfaction, if that phone is picked up not in Newfoundland and Labrador versus if that phone is picked up in Newfoundland and Labrador. Because of that they are trying to locate more of their contracts here and attract more of their business here, because their customers are telling them that they are hearing there is a difference when the phone is answered here.

MR. KELVIN PARSONS: Is your department involved in the call centre in St. Anthony, with the help line?

MR. SKINNER: I will ask Mr. McCarthy to answer your original question – I am sorry to digress a bit – in terms of the second 3.1.02.10, and I will also ask him to answer that question as well.

MR. McCARTHY: The answer to your second question is no, we are not involved in that one.

The answer to your first question: that is the old fisheries industry subsidy program. There are still fourteen accounts left around with that, where the interest rate is subsidized, and that is winding down over time.

MR. KELVIN PARSONS: On page 140, heading 3.1.05, last year we had budgeted $3 million and spent $3 million. First of all, I am wondering if we could get a list of those expenditures.

Secondly, in that same heading, why have we reduced it to $1 million this year, as opposed to $3 million?

MR. SKINNER: I will do my best, and I may again refer to staff to give you the details, but this is the Small and Medium Enterprise Fund that we have. The fund, as I understand it, is a revolving fund over a number of years – and I will get staff to explain that to you – but the fund is in a better than anticipated financial position. Therefore we did not need to put as much money into it, or we felt we did not need to put as much money into it, in the coming year because there was enough money there, where it was a revolving fund.

Phil, would you, or Rita – who would be the best one?

MR. McCARTHY: I can (inaudible).

MR. SKINNER: Okay, I will get Phil to answer or maybe elaborate a bit more on that.

MR. McCARTHY: Of the $3 million, $2 million was for the SME Fund and the $1 million was for the BMD, the Business Market Development Program. That is the $1 million that is showing there in 2009-2010.

As the minister said, the SME is a revolving fund. Revenues that come back in, we keep and we put out. We have looked at it, and right now we have $13 million available for investment in SMEs this year.

MR. KELVIN PARSONS: How much?

MR. McCARTHY: Thirteen million.

MR. KELVIN PARSONS: Where is that showing on the books?

MR. McCARTHY: That is actually with the Business Investment Corporation, which is a Crown corporation. It does not show up here; it shows up in Public Accounts.

MR. KELVIN PARSONS: How does one access what they use the money for? It shows up in Public Accounts, but is there a listing? Politicians do not get a chance to question the Comptroller General, in what he does. How do we find out? Your department is responsible for it. How can we get the details on what the Business Investment Corporation has used the $13 million for, and what they are invested in?

MR. McCARTHY: You are looking for a list of approvals under the SME Fund? Is that what you are asking for?

MR. KELVIN PARSONS: Yes, it is all publicly generated funding, whether it is under your shop or whatever, but I would assume that board is appointed by somebody and there is accountability to the Public Accounts, but we do not have an avenue to question the Business Investment Corporation. They do not come before Estimates Committees, so we would not be able to access that information otherwise. I do not think their reports that they file would show that level of detail either, so if we could get that it would be important as well.

Next, on page 142, heading 4.3.01, last year $9.6 million budgeted and $4.7 million spent. I have two questions: Why the substantial reduction and, secondly, can we get a list of what you spent it on? It is almost 50 per cent.

MR. SKINNER: In terms of getting the list, yes, we will provide that undertaking. In terms of the reduction from the $9.6 million to the $4.7 million, there were a number of projects that were delayed in terms of start-up that funding was approved for. There were a number of projects that got approved late in the year and just did not draw down the number of funds that were needed.

MR. KELVIN PARSONS: I notice you jumped this year's from $9.6 million up to $16.8 million. Is that a makeup of the ones that you are saying did not get off the ground last year? You just used the same figure, $9.6 million, plus what you did not use last year, and you boosted it, or is there…?

MR. McCARTHY: It is basically carry-over.

MR. SKINNER: Carry-over.

MR. KELVIN PARSONS: Carry-over.

MR. McCARTHY: A carry-over amount.

MR. SKINNER: Yes, that is correct.

MR. KELVIN PARSONS: Next year we will get the details on what that was spent on.

MR. SKINNER: Well, I can tell you in terms of the carry-over, I do not mind sharing with you, there is $2.5 million there under Shorefast - we made an announcement on Shorefast - and there is $2 million for a wharf project that we will be doing as well. That is $4.5 million of it right there in those two projects.

MR. KELVIN PARSONS: What is the Shorefast one?

MR. SKINNER: Shorefast was the Fogo Island project that ourselves and ACOA partnered with Ms Zita Cobb in terms of some of the activities that she is doing in the Fogo Island area in terms of a significant economic development project out there that she has underway.

MR. KELVIN PARSONS: On page 143, heading 5.1.02.08. Loans, Advances and Investments, again, why the reduction from $5.3 million to $2.3 million, and can we get a list of those?

MR. SKINNER: In terms of the list, yes, we will provide that undertaking. In terms of the reduction, it is very similar to the previous answer in terms of some late start-ups and approvals of projects occurring later in the budget year and people getting their projects going. As well, there were fewer applications than anticipated, less take-up and fewer approvals in that area as well.

MR. KELVIN PARSONS: Is that the one where they include the trade shows and stuff like that? Where would that fall?

MR. SKINNER: I will refer that question to Dennis Hogan, and ask Dennis if he can provide some response to you on that.

MR. HOGAN: This category is basically referencing the commercialization program. As the minister indicated, we did see lower than anticipate uptake on the program this year and that is, we believe, due to a number of different factors, including the state the companies are in when they make application. As well, other funding providers had seen a reduction in their funds in the last fiscal year, including NRC-IRAP, the Industrial Research Assistance Program, where their budget was used up essentially in the first quarter of the year. We believe that had an impact on our own uptake on our program as well, because we are often jointly funding projects, but that would not include the trade missions you mentioned.

MR. KELVIN PARSONS: Where would I find the trade mission stuff? Where, specifically, would I look to see that?

MR. SKINNER: I will ask the deputy.

MR. MEADE: You would find trade missions, or any activity related to that, under 2.1.01, Export and Investment Promotion, page 137.

CHAIR: Mr. Parsons.

MR. KELVIN PARSONS: That would be the Grants and Subsidies under that one?

MR. MEADE: It would be there, yes.

MR. KELVIN PARSONS: Okay.

Thank you.

MS MICHAEL: I would like to come back to a couple of the ones that Mr. Parsons dealt with, because I have further questions to make sure I understand.

If we could go back to 3.1.05, I understand the evolving fund and I understand where the money ends up, but it seems to me that the money under Strategic Enterprise Development is for one purpose and the money, the $13 million that now finds itself in the Business Investment Corporation is also investment money but would not necessarily have the same goal as this money.

I am not sure why the money under 3.1.05 has decreased to the $1 million. There must still be companies out there who meet the criteria under the Strategic Enterprise Development for investment. There seem to me to be two different pots of money, so if I could have a better explanation of the rationale that was given.

MR. McCARTHY: The money that is showing there in the Strategic Enterprise Development fund is actually moved from there to the Business Investment Corporation. There are not two programs or two funds like that. The money all goes to the Business Investment Corporation fund. The money is used for the SME Fund and for the Business and Market Development Program.

MS MICHAEL: Then why is money kept here?

MR. McCARTHY: This is money that government is passing from Treasury to a Crown corporation, so this is how it has to be accounted for.

MS MICHAEL: I see.

Okay. Then, what happens next year, for example, in 2010-2011? Will you keep –

MR. McCARTHY: In 2010-2011 we will have to look the demand in our program, the revenue, the whole scenario, and look at where the BIC is. During the normal budget process we will go back into the budget progress and say we think we need this, or request this, or whatever the situation is at that point in time.

MS MICHAEL: Okay.

Basically, this money gets passed on. It is exactly that, the money goes to the investment.

MR. McCARTHY: Yes.

MS MICHAEL: Okay. That was not clear. Thank you.

If we could move ahead to 4.3.01.; this money goes into "…initiatives and projects throughout the Province with emphasis on projects that leverage funding from other sources." The example used by the minister, Shorefast. I presume the fact that the recipient also had leverage money from ACOA was part of this.

What is expected back when a group like Shorefast receives $2.5 million? What does government expect back from them in terms of accountability for the use of that money or is it just a grant that is just given and that is it?

MR. SKINNER: I will explain what I understand, Ms Michael, and then I will ask staff if they can add any more to try and give you a more detailed answer.

There would obviously be an agreement signed with the organization, in this case Shorefast, that would specify the commitments that each party would be making financially. Obviously, there is some money that Shorefast is committing to. There would be a timetable relating to that investment and when that investment would be expected to be made, when the investment from government would be expected to be paid out. There may be some guarantees of certain employment levels. The money from government may be motivated by employment levels being reached, numbers of persons being hired, those kinds of things.

From my experience, in the few that I have reviewed, it has to do with ensuring that the individual who says they are going to come to the table with a certain amount of equity has that, and we have that documented. If they indicate certain employment levels and if we believe those employment levels are a significant part of our decision to invest, that those employments levels are also guaranteed, for lack of a better word, within that agreement.

I do not know if there is anything else that I may have missed that anybody might want to add to that. I will ask my deputy.

MR. MEADE: All of our programs, Ms Michael, have contribution agreements with them. It would lay out terms and conditions of that contribution. So the terms and conditions may change depending on the program, the type of project we are working with. Some of them would have basic things around reporting; financial reporting, progress reporting, things like that. They may have indicators, as the minister has also laid out there, in terms of certain levels of employment or whatever that may be there, but the department has a very thorough, and I think in terms of accountability, a very strong terms and conditions and agreement approach with our proponents to ensure that the money is used as proposed and carried out.

MS MICHAEL: In those agreements, is there any stated liability if it turned out that the applicant did not come up with the results that you were expecting, if the tangibles were not there, if you have a timeline and they are not performing, is there any liability on their part for this money?

MS MALONE: There are a number of conditions with respect to that particular deal. It is a broader deal than just of infrastructure to create direct employment. Ms Cobb has committed to a social entrepreneurship model, which includes a development fund for the community for businesses and community development organizations to grow and expand. So there are progress payments based on certain performance. Not only the performance of the anchor product, which is the Artist in Residence and the resort itself, but in other components of development that is already underway.

MS MICHAEL: Okay, thank you.

I need to go back to the beginning and see if I had questions that were in the first sections that had not been covered.

Just to make one point, and I am sure the Chair knows this, but any of the things that Mr. Parsons asked with regard to the Grants and Subsidies, I would like those same lists, of course, and I had it noted every time for myself as well.

CHAIR: Sure.

MS MICHAEL: I just want to make sure that we have covered everything that I wanted to cover.

2.1.01., this is the Export and Investment Promotion. I do not think Mr. Parsons requested the breakdown for subsection 10. in 2.1.01. but I would like to have that broken down as well, please.

MR. SKINNER: Yes, we will do that.

MS MICHAEL: Thank you.

3.1.03. Canada/Newfoundland and Labrador Business Service Network. "Appropriations provide for the Provincial contribution to the Canada/Newfoundland and Labrador Business Service Network throughout the Province."

I am just wondering, I am sure you do, do you have it in the report form yet, data with regard to how many individuals and businesses have made contact with the department over the year? How many people are coming through the doors? How do you evaluate how effective this is in helping individuals and businesses?

MR. SKINNER: I will ask the ADM if he will provide you with some of that. I have some general comments, but rather than do that I will just see if Phil can give you the details on it.

MS MICHAEL: Sure.

MR. McCARTHY: The Canada/Newfoundland and Labrador Business Service Centre is shared between us and ACOA and is jointly funded by the two of us. I do not have them here but I can give you numbers on the number of people that come in by walk-ins, e-mails or Web sites. We have all those numbers.

The centre on the federal side just went through a review process in order to get their funding put in place again for another three or four or five years in terms of how they do it. So I can get you all of those numbers.

MS MICHAEL: Thank you very much. I appreciate that.

5.1.01. Advanced Technologies and Industrial Research. Again, I do not remember hearing Mr. Parsons ask but here as well, the Grants and Subsidies section 10., could I have a breakdown of that as well?

Under Professional Services in that section; in last year's Budget you had $2.5 million budgeted but revised down to $906,500 and going back up to almost $2 million this year. What happened last year the Professional Services were down and what do the Professional Services cover in this?

MR. SKINNER: In terms of a general explanation, Ms Michael, and I will defer to Mr. Hogan to give you the detail that you have requested, but generally those funds relate to the ocean technology strategy which was delayed, which did not get out when it was anticipated to get out. Therefore, there was less draw down on some of the things that we anticipated as a department to be doing last year, but I will ask Mr. Hogan if he can give you more detail.

MR. HOGAN: Yes, the minister is correct. The primary reason that number was reduced is we had originally anticipated launching the strategy in last fiscal year, but due to a number of reasons the strategy itself was delayed. The primary reason has to do with aligning our own strategy and intentions with that of industry. The industry itself had undertaken a similar exercise related to strategic foresight and planning for the next five to ten-year period and we wanted to ensure that our work and strategy aligned very well with theirs. That has been done, and we were integrated into the industries process.

MS MICHAEL: Okay. Then the money was carried over was it, I presume? The money that was unspent got carried over?

MR. HOGAN: Yes.

MS MICHAEL: Okay.

The last question then, the next section 5.1.02.; once again budgeted $5.3 million, spend $2.3 million. How does this work? Is there any pro-action on the part of the department or is it just people come with applications?

MR. SKINNER: Again, in terms of the amounts, this again is things not starting up as quickly as was anticipated, therefore the monies were not required by the individuals in the timelines that we initially expected they would be.

My understanding is that this is all application driven. Is that correct?

MR. HOGAN: We use a combination of promotion of the programs within the department throughout our network of regional and field offices, along with corporate office here in St. John's. We also get applications that do come in. They are solicited, not only by our own efforts, but companies as they become aware of the program will make application.

As I mentioned previously, the uptake was lower than anticipated due to other issues related to funding availability. As well, we had a number of clients who ended up withdrawing their own applications due to their own business reasons or the fiscal situation of the company, they decided not to go ahead with their projects and that amount totally about $2 million, roughly.

MS MICHAEL: Why is this year's estimate so much lower? It is $2 million lower now than last year's estimate.

MR. HOGAN: There is a combination of factors. One, when we initially launched the innovation strategy in 2006 we had notionally allocated $5 million per year over the four years of the strategy, however we did some re-profiling of those funds. So this is the last year now of the innovation strategy as it was originally envisioned. We are working currently on renewal of that strategy for the next several years. The amount would be lower due to that, along with looking at the update on the programs as well. We do that on a regular basis and monitoring.

MS MICHAEL: Did you see, over the three years, the uptake improve each year or did it stay sort of the same?

MR. HOGAN: It has been relatively steady. The first year, of course, was a start-up year so it did take a bit longer. Notwithstanding the delays we have experienced in this year, I would say it does remain relatively constant. Now that the program has been up and running for close to three years, not quite three years, there is a lot more awareness about the program itself and we believe that demand will continue as we have analyzed.

MS MICHAEL: In those three years did you, yourselves, see the need to be out there a bit more in pushing the program or did you stay static in your program?

MR. HOGAN: No, we definitely recognize that it is very important to be out promoting the programs, as we do with all of our suite of programming. When a program is new or still relatively new, of course, we have to make a bit of a more concentrated effort to do that. We have also embarked on a review of our promotion of the programs and whether they are meeting needs and so on as part of our ongoing evaluation of the effectiveness of the programs.

MS MICHAEL: Right.

MR. HOGAN: So there might be some further enhancements made into next year and the year beyond.

MS MICHAEL: Okay, thank you.

That is all my questions, Mr. Chair.

CHAIR: Thank you, Ms Michael.

Mr. Parsons, do you have any further questions?

MR. KELVIN PARSONS: Just a couple. An easy one for you, minister: What is, in your view, the single, greatest initiative this government considers it has undertaken to boost rural growth?

MR. SKINNER: Rural growth?

MR. KELVIN PARSONS: The single, biggest initiative your department has undertaken.

MR. SKINNER: In terms of what I believe is going to be the single, biggest initiative which will help us with rural growth, we are currently working on a regional pilot project that we will be implementing on the Northern Peninsula relative to the Rural Secretariat. I believe the work we are doing in the Rural Secretariat to connect government and decision-makers and policy-makers with the needs that people identify in their own local areas, to engage them in that process, is going to make for more effective policies of government to allow people to be able to increase the level of economic activity and the diversity of economic activity in their regions.

So I think the work we are doing in the Rural Secretariat will now start with the regional co-ordination pilot that we will be doing, because we are engaging with the people in the regions to ensure that the policies and the legislation and the programs and the initiatives that we are bringing in as government are in tune with what they themselves see as being important to their particular areas.

MR. KELVIN PARSONS: Have any companies in rural Newfoundland been turned down for funding, in the past five years, because they were in competition or would have been in competition with someone else?

MR. SKINNER: I will have to ask the staff to help me with that, because I do not go back five years, myself.

Rita, would you be able to provide some background there?

MS MALONE: We look at competition in a very detailed manner: competition at the local market, the regional market, and if they are involved in export markets.

Competition leads to reduction in market share for existing enterprises, as well as could overall affect the viability – for example, the repayment - of that particular financial ask.

So, yes, competition does play as one of the issues of consideration in an overall credit decision.

MR. KELVIN PARSONS: So, the answer was yes. Do you have a list of what businesses were turned down for competition reasons?

MS MALONE: Yes, we do.

MR. KELVIN PARSONS: Can we get a copy of that list as well?

MS MALONE: Yes.

MR. KELVIN PARSONS: Thank you.

I will be all over the place on these, Minister, by the way.

MR. SKINNER: Mr. Parsons, just for clarification on your question on the list: You, in your question, referenced a five year period. Do you want that list for the past five years?

MR. KELVIN PARSONS: Yes, please.

MR. SKINNER: Okay.

MR. KELVIN PARSONS: Back in 2006-2007 the details were released on the task force for the Bay St. George area when the mill closed in Stephenville. Could you give me some sort of update as to: Does the task force still exist? What is the situation there now? What have we seen since the closure of that mill? Just an overview.

MR. SKINNER: It is my understanding that the task force is still engaged. I, myself, am not directly involved with it. I believe it was under another minister at the time. The individuals who are involved in that task force, the community individuals, still have some initiatives that they are pursuing in the Bay St. George-Stephenville area. That work is still ongoing and they are still working, as I understand it, with government - some, I believe, through this department - in terms of some of the opportunities that they are exploring.

MR. KELVIN PARSONS: Can you tell me what jobs specifically have been created in the Bay St. George area as a result of government involvement since the closure of the mill? Government, or the task force that it created, or anybody that it worked with out there, could you give me a list of exactly what initiatives were undertaken and what jobs resulted from it?

MR. SKINNER: I would be able to access that information; I certainly would not be able to provide that to you at this time. Again, as I indicated, I was not involved -

MR. KELVIN PARSONS: Oh, no.

MR. SKINNER: - but I am sure we can get that.

MR. KELVIN PARSONS: Sure.

Now to one of my favourite topics, the fibre optic deal.

MS MICHAEL: I was going to ask about that. I must have missed my note on that.

MR. KELVIN PARSONS: I asked you a couple of questions in the House of Assembly recently. We did not have time, of course, in the House to get into much substantive answering or questioning really. What is the situation right now? Where are we with this fibre deal?

MR. SKINNER: In the questions that you asked in the House, you referenced a timeline of about a year or so ago. Generally speaking, you were accurate with those. The tender did go out, I believe it was last spring. I was not in this position at the time, but there was a tender gone out. There were a number of proponents who responded to that. The complexity of the information and the propensity of the information, the amount of information that was put forward in terms of trying to evaluate those proposals was very, very large. I have seen some of the files and looked at some of the information, and there is a lot of information there that had to be gone through, so there were a team of people within government, provincially, federally, and I believe some industry people may have been involved with that, too. Is that –

MR. KELVIN PARSONS: Nobody who is currently here, I don't think, was involved in the original deal.

MR. SKINNER: In terms of staff, I know there were provincial and federal people who did a review. Was there anyone outside?

MR. HOGAN: (Inaudible) Crown corporations and other entities, but not directly private sector in the evaluation.

MR. SKINNER: So there were a number of people who went through an evaluation process of all of the responses that came in, and there was a fairly extensive review, a lot of things that had to be looked at, and questions that had to be answered. We are now pretty well near the end of that process, and ready to come forward with a recommendation as to how we should proceed with that.

MR. KELVIN PARSONS: Just so we have a clear understanding of what we are talking about when we talk about the fibre optic deal, originally it was going to be a government contribution to an industry project. For example, in my understanding there were several people. Persona was one. Was it Rogers or MTS out of Manitoba who were going to do the project? And government put in, I do believe $15 million was the deal. That is the same deal we are talking about here that government is doing?

MR. SKINNER: The comments that I just made were relative to the tender that was issued last spring, which would be distinct from what was referenced by you just then.

MR. KELVIN PARSONS: Okay.

That is what I would like you to clarify, because we do know that the $15 million has been based on the last number of budgets.

MR. SKINNER: Yes.

MR. KELVIN PARSONS: That is already gone -

MR. SKINNER: Correct.

MR. KELVIN PARSONS: – based upon the deal that you had with the private industry.

How does what the government is now doing tie in with that contract, fibre optics, and what was the anticipated cost of this project – the new one we are talking about now – when you went to tender with it over a year ago?

MR. SKINNER: Okay.

MR. KELVIN PARSONS: Just flesh that out for me, if you would.

MR. SKINNER: Well, I am going to ask Mr. Hogan if he will provide you some information on that, and if there is anything that I can add to it then I will certainly do my best.

MR. HOGAN: Just to put the issue into context, they are two separate projects, two separate initiatives, although they are connected and related.

Initially, the trans-gulf fibre optic initiative was a proposal that came forward from industry proponents wanting to build a second carrier-redundant fibre optic link to mainland Canada. The provincial government, after all of its analysis was completed, did decide to make that investment. The network was built and, in return for government's investment of $15 million, government was provided with fibre optic lines in that network.

So, the Government Broadband Initiative, which is the second initiative, is using that infrastructure but it is a separate initiative. It is really a consolidation of all of government's operational requirement and network needs as it relates to telecommunications and data communications. What it will do is use the infrastructure that was purchased, depending on the model that is selected in the RFP that the minister referenced, and we will be working with the successful proponent of that RFP to develop this model. The intention is to bring advanced high-speed Internet communications and broadband services to approximately 219 government facilities around the Province. Those facilities would, in the new model, be able to have much greater access to broadband infrastructure than currently is the situation. They will be able to do a lot more with that.

That is the primary objective of the Government Broadband Initiative; however, there is an economic development component. That was also one of the primary reasons why we have developed this initiative, and that is to work with the provider, or the winning proponent, rather, to do what is called overbuild. That would be, once the provider is into these communities that either currently now may be serviced, underserved, or not served at all, the economic case for offering both commercial and residential services in those regions rises dramatically because of the infrastructure that government is placing there for government needs. That is essentially the scope of the project.

MR. KELVIN PARSONS: Okay, that is where I wanted to go. You put it in the context like I wanted.

What 200 government agencies are you anticipating would be connected?

MR. HOGAN: In these facilities there are approximately 219 communities that have a government presence, so that would be a combination - I think it is approaching about 1,000 government offices, libraries, health care facilities, educational institutions. If it is a government facility, it will have access to this network.

MR. KELVIN PARSONS: In 219 communities.

MR. HOGAN: In 219 communities, that is correct.

MR. KELVIN PARSONS: Okay.

MR. HOGAN: They will benefit from having this infrastructure and, in turn, it will improve the economic and business case for the carriers to provide services in those areas.

MR. KELVIN PARSONS: Okay.

How many fibre strands did we ultimately end up with?

MR. HOGAN: I believe there were twelve different strands as part of the network in various locations.

MR. KELVIN PARSONS: How does that number, of twelve strands of the fibre optic strands, relate to the capacity to look after 219 communities?

MR. HOGAN: The analysis we conducted revealed that we will have more than enough capacity to light up all of those facilities, and many more in addition to that.

As far as we understand it, from the experts that are reviewing this, we will not have any issue with capacity on the backbone network, which is the network that we invested in originally as a government.

MR. KELVIN PARSONS: I guess the reason we went for a Request for Proposals, or…?

MR. HOGAN: Yes, correct.

MR. KELVIN PARSONS: – on the broadband, something we did not do on the fibre itself, when you went for the Request for Proposals for the Broadband Initiative, you must have had some idea in mind as to – I know part of the process, of course, is to get a fixed price, to get a firm price, but what did government anticipate the ballpark to be of the Broadband Initiative when you first started it?

Obviously, you go to an RFP to firm up what you believe; but it is like me, if I went to buy a Volkswagen. I have so much money in my pocket, and I am going with the intent of getting that Volkswagen, but all of a sudden if I go and buy a Cadillac I realize I do not have enough money.

I am just wondering, how much money did you have in your pocket when you went first for the broadband?

MR. HOGAN: I can say that, notionally, when we were initially sketching out the project itself, and doing the initial analysis, we did a review of all government expenditures for departments and agencies, what their current spending was each year on telecommunications services. That number, again, was approximated to be roughly $20 million per year. That is covering all existing contracts. This was done in 2005.

The intention we have is to use approximately that benchmark of about $20 million a year over a ten to fifteen year period, and want to use, roughly speaking, a similar level of investment for the new network.

Now, I should qualify things by saying that we have not yet determined and have the final proponent. A lot of the more specific costs will be determined when we enter into negotiations with that proponent, once that proponent is selected; but, roughly speaking, as you mentioned, $20 million a year over ten years. If it is extended out to fifteen, of course, it would go up.

MR. KELVIN PARSONS: So you are anticipating that we are going to spend $200 million.

MR. HOGAN: That is a rough estimate at this point. It could be more.

MR. KELVIN PARSONS: At $20 million a year for ten years it would be $200 million. That is what you anticipate it is going to cost this government to get this broadband up and running?

MR. HOGAN: It may be more than that, but that was the original benchmark that we used. We looked at current costs and, for a similar type of investment, what could we do with this new broadband network? It will likely be higher than that, given inflation and other costs, but that was the benchmark we started with.

MR. KELVIN PARSONS: So, where does the analysis piece fit? Where are we going to be technologically ten, fifteen years out? We are four years out now from the time we put our $15 million into the project to build a rump. We have the line built, we are four years out, and we are nowhere near starting the project. Another question is: how long is it going to take? Once you award the contract, how long is it going to take to connect the 219 communities to do the project? What is your timelines on doing the project?

MR. HOGAN: There is no question that it is a significant project, that it encompasses all of government and many government entities, as we have discussed. The negotiations for the contract will likely take between six and eight months.

MR. KELVIN PARSONS: Further than what they have now?

MR. HOGAN: Pardon?

MR. KELVIN PARSONS: Beyond now.

MR. HOGAN: Yes, beyond now. Once we receive direction to enter into those negotiations. Beyond that, it may take up to about eighteen months to two years to get the first instalment going, and over a period of four to five years we expect to see the full roll out. There will be different communities that are being worked on concurrently. So they are not all going to be done in a row.

MR. KELVIN PARSONS: So before the project, based on your timelines you just gave me, were 2009 before the contract is done.

MR. HOGAN: Yes.

MR. KELVIN PARSONS: We are eighteen to twenty-four, which takes us to 2011 before we are ready to hook, and then we are going to take another four to five years before everybody gets on.

MR. HOGAN: The substantial amount of the population will be on long before then, but you are correct.

MR. KELVIN PARSONS: The bottom line is we are still paying out that $20 million a year in the meantime. Of course, as they come on I would think we are going to save some of that $20 million but for right now we are looking at 2014 or 2015 before we can say that the fibre optic project, as was envisionaged four years ago, is actually doing in the Province what it was intended to do.

My question then becomes, that is when we were supposedly now going to see some return on our $15 million investment that we made back three or four years ago. Where is the analysis piece around, where is the technology going to be by the time 2015 comes around? Is the rump that we invested in 2005 going to be any good in 2015, or will there be something new and we are saying: my God, we have just gone through ten years of putting in the line, doing all the broadband piece, doing all the RFPs and we are finding ourselves in 2015 - I mean, anyone who has been familiar, look where we have come in the last ten years technologically. Don't you think it will be antiquated?

MR. HOGAN: It is a fair point to raise, and as part of the analysis that we conducted, we did solicit expertise on this. The key infrastructure required for such networks, and these are networks that will be in use for decades to come, is the fibre optic infrastructure itself.

The lion's share of technological innovations relates to the equipment that would be on the various nodes or the various end points where the terminals are for hook up. Within the broadband industry there are refresh rates on equipment. So generally speaking, every five to seven years a lot of this equipment has to be taken out, upgraded and that is where the primary technological innovations will reside on the equipment. The infrastructure itself will be in place for many decades. There will be perhaps a forty to fifty year life on that infrastructure, even beyond, and that is what has been indicated to government through our analysis.

MR. KELVIN PARSONS: What analysis has been done? This is one case, I guess, where it is great to see that Industry, Trade and Rural Development, certainly the industry and the rural development piece is in the same shop here. What kind of thought process has been put around the thought that these 219 communities are not going to be there in 2015, not only the technology issue but what is the status of the communities themselves or the services that you currently have in those 219? Because I have personally witnessed and shut down in my own district two communities since I started in this game, which was not a long time.

With our declining populations and so on, birth rates and everything else, issues that we have, older population dying off, who put all of that in the mix and came up with the suggestion that this was a good project? Now don't get me wrong, I know technologically I would like to be in Burnt Island and get my high-speed Internet too, but we do not get it. I will be very thankful if we ever did get it. I am just saying this practical consideration that we are looking at spending a minimum of $200 million more over the next seven years with the expectation that the needs are going to be the same in the communities and that the technology is going to be adequate. Who came up with these figures and these theories? Don't you think that is serious questions here around that?

MR. HOGAN: We certainly did take into account the growth rates in rural Newfoundland and Labrador. I guess, really, one of the intentions of this investment is to help spur greater economic development opportunity in these communities, understanding that there will be some – like you mentioned – that are dying off, but at the same time we think there are tremendous opportunities for business growth, business investment.

There will be a greater range of social services provided through this infrastructure. So really, the intention is to help diversify the economy and get an impact to all regions of the Province. We are ensuring that we are making wise investments in that not all communities will receive this, particularly communities that do not have the capacity or the population to be serviced but we also anticipate that about 93 per cent or 94 per cent of the population will be able to avail of these services once it is complete.

MR. KELVIN PARSONS: What population we have, of course, because right now the stats - we are sort of stabilized and maybe even have a 1,000 to the plus in the last year, according to our economics branch of finance, population wise. All of that virtually is on the Northeast Avalon.

Seriously, if you look in rural Newfoundland, I went to my first graduation in a community called Burgeo and we had seventy-two grads. I am going to one Friday night and there is going to be twelve. That is since 1999. So, when we talk growth we have to be realistic. There are no young people in rural communities, none. I represent a fair number of them and there is no growth in what makes you grow, the younger people. Not in rural Newfoundland, and the older people are dying off. I am just saying, when we take that reality, we are going to go out and spend $200 million in 219 communities. Is that realistic?

MR. SKINNER: We obviously think it is. Your glass is half empty, my glass is half full.

MR. KELVIN PARSONS: No, I think I am a realist too.

MR. SKINNER: Time will tell on that.

MR. KELVIN PARSONS: The Auditor General last year, we had quite a few questions about certain issues that the Auditor General raised vis-à-vis, things that were not being done in the department from a point of view of follow up on loans and stuff. There were two or three. Minister Taylor and I had quite the discussion. I kept asking about the names of certain companies that have received monies from the department and the minister kept telling me no, no, no I cannot tell you the names because of whatever, confidentiality. Meanwhile, the Comptroller General is out with a list of names and who got what monies. I am saying, what is the problem? The Auditor General identified numbers and put a letter on a company. The Comptroller General went out and identified the same exact dollar amounts and put the names on the companies and the minister would not tell me who the companies were. I am saying, what is the shell game here? If you lend money to people, public money, why would you not tell somebody that you lent the money?

Anyway, the Auditor General's report dealt with those companies and the fact that they have gotten monies. In some cases he talked about due diligence not having been done on the file, he talked about follow up not having been done on the file. It was quite an extensive report in the Auditor General's report last year. The information I was given last year by the staff and the minister was that it is a growing process. We have to go back and clean up some of this stuff and make sure that we run a tidier ship. So I am just wondering if you can give me an update now on where we stand vis-à-vis these criticisms that the AG had back then now that we are another year out?

MR. SKINNER: Yes. I will just say by way of overview, I guess, that there were three items that I recall we replied to this year to the Auditor General. In terms of your comments re: the previous year, I will direct that maybe to Mr. McCarthy, if I could, and ask if he might be able to elaborate because he would have more knowledge of that than I would.

MR. McCARTHY: A couple of things we are after doing in terms of the follow-up to the Auditor General's report is, one of his main criticisms was that all the documentation and stuff like that was not on file. Some of it was his interpretation of our manual versus our interpretation. We have met with staff and we have stressed the importance of having all of the documentation. Further than that, we are in the process and getting close to the end of putting in an internal audit process to follow up on some of this stuff.

MR. KELVIN PARSONS: Minister, the Community Development Trust Fund, I believe that is the federal piece, where is that to in the government accounting process, which department?

The reason I ask you the question, is when I went through Estimates for Tourism, Culture and Recreation I asked the minister, there was one little pot of money off to one side for $7 million for stadiums. I said, well that seems a bit strange. Wouldn't that be over in Municipal Affairs which usually gives all the money for doing stadiums? He said yes, but the reason was that the feds apparently had taken this money and just carved it off and put it over in Tourism, Culture and Recreation because they had not had the guidelines worked out around this. So that is just where they parked it.

Where is the monies parked for this fund? I realize too, some of it you have already indicated publicly is going to be put into Central Newfoundland as a result of what happened there. Where do we look to see that?

MR. SKINNER: Yes. My understanding is all of that money initiates in Finance, and then we as departments, if we have projects, we have it transferred, I guess, through the Department of Finance, but it is my understanding it is through Finance.

MR. KELVIN PARSONS: Okay. Was the total $23 million, my understanding?

OFFICIAL: Yes.

MR. KELVIN PARSONS: I am all over the place here because I am just trying to follow up some different issues.

I notice the estimates information is all online but the departmental salary details are not online. Is there any particular reason for that?

MR. SKINNER: I would have to undertake to try and find the answer. I mean, no reason that I –

MR. KELVIN PARSONS: I just pass that on to somebody because nowadays where we all work with computers and laptops it makes it a lot more convenient if you have both of it online.

MR. SKINNER: For sure, yes.

MR. KELVIN PARSONS: It might be a suggestion that someone could make, since it is all publicly available anyway.

MR. SKINNER: We will follow up on that for you, yes.

MR. KELVIN PARSONS: Thank you.

That is it for me. I have not been too hard on you, I am sure.

MR. SKINNER: No. Thank you.

CHAIR: Ms Michael, do you have any further questions?

MS MICHAEL: No, I am fine. Thank you.

CHAIR: Do anyone else on the Committee have any questions?

MR. SKINNER: Mr. Chair, if I could just -

CHAIR: Okay.

MR. SKINNER: I just wanted to first of all, thank the members opposite for their questions. The things that we have undertaken to provide we will get that to you as soon as we can compile it, and we will make sure that it goes to both individuals.

I would also like to thank my staff for being here today and for the support and for the clarification they have been able to provide on some of the issues.

Thanks to all of you.

CHAIR: Thank you, Minister Skinner.

I will ask the Clerk now to call –

MS MICHAEL: (Inaudible).

CHAIR: Ms Michael.

MS MICHAEL: I would like to thank the minister and his staff.

Thank you.

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

CLERK: 1.1.01. to 5.1.04.

CHAIR: Shall 1.1.01. to 5.1.04. inclusive carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, subheads 1.1.01. through 5.1.04. inclusive carried.

CHAIR: Shall the total carry?

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

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

CHAIR: Shall I report the Estimates of the Department of Innovation, Trade and Rural Development 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 Innovation, Trade and Rural Development carried without amendment.

CHAIR: We have the minutes of the meeting that was held last night. So I will ask for a motion now to adopt these minutes as circulated.

MR. LODER: (Inaudible).

CHAIR: Moved by Mr. Loder, seconded by Mr. Pollard that the minutes of the meeting for the Department of Natural Resources and the Women's Policy Office be adopted as circulated.

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

I would like to thank Minister Skinner and his officials, the members of the House of Assembly staff, the Committee, and observers.

Before we adjourn, our next meeting will be on Monday, May 4, 6:00 p.m. here in the House of Assembly. We will be doing the Estimates for the Department of Environment and Conservation.

I will ask for a motion to adjourn.

MR. VERGE: Mr. Chair, before you clue up here, just a point of clarification.

Mr. Loder moved that the minutes be adopted but he was not a part of the Committee last night. Is that out of order, or would that present a problem?

My understanding is that somebody who was at the original meeting had to move that the minutes be adopted. I just brought it up. I do not know if it would present a problem or not.

CHAIR: Okay. I guess we can change that. That is a technicality that someone move -

Moved by Mr. Baker.

Seconded?

MR. POLLARD: Seconded.

CHAIR: Seconded by Mr. Pollard that the minutes of last night's meeting be adopted as circulated.

All those in favour, 'aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, 'nay'.

Carried.

On motion, minutes adopted as circulated.

CHAIR: A motion to adjourn.

This meeting is now adjourned.

On motion, Committee adjourned.