Pursuant to Standing Order 68, Christopher Mitchelmore, MHA for The Straits – White Bay North, substitutes for Lorraine Michael, MHA for Signal Hill – Quidi Vidi.

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

CHAIR (Brazil): We are ready to start the Resource Committee's meeting to review Fisheries and Aquaculture. Before I do that, there are two pieces of housekeeping that we need to do. One is to acknowledge that Mr. Mitchelmore will be replacing Ms Michael for today's meeting, and that has been approved by the Clerk's Office.

Also, we selected a Vice-Chair at the last meeting, but the person who was chosen as Vice-Chair was just a fill-in, as part of the process, so we have to go back now and select a Vice-Chair who is a permanent member.

Do I have a nominee for Vice-Chair?

MR. CROSS: I nominate Mr. Bennett.

CHAIR: Mr. Bennett.

Are there any other nominees for Vice-Chair?

This is a third call for nominees for Vice-Chair.

If no other, Jim Bennett is Vice-Chair of the Resource Committee.

MR. CROSS: He is a permanent member.

CHAIR: He is a permanent member, so you will stay as the permanent –

MS PERRY: Do you need a seconder?

CHAIR: No, not necessarily for that, not for Vice-Chair.

I want to thank everybody for coming as we review the Estimates. First what I will do is start off by asking the Committee if they can introduce themselves, then we will go to the minister and get the minister to ask his staff to introduce themselves.

As part of the process, I just want to explain – Mr. Minister has been through it, but some of his staff may not have been. If you are asked to respond to a question, could you please state your name also because it is being recorded in Hansard? You will see your light come on and then you know it is being recorded appropriately.

Okay, I ask the Committee to introduce themselves.

MR. RUSSELL: Keith Russell, the Member for Lake Melville.

MS PERRY: Tracey Perry, the Member for Fortune Bay – Cape La Hune.

MR. CROSS: Eli Cross, Bonavista North.

MR. BENNETT: Jim Bennett, MHA for St. Barbe.

CHAIR: Also, any staff, if you want to.

MS PLOUGHMAN: Kim Ploughman, Researcher, Official Opposition.

MR. MITCHELMORE: Christopher Mitchelmore, MHA for The Straits – White Bay North.

MR. MORGAN: Ivan Morgan, Researcher, NDP Caucus.

CHAIR: Mr. Minister.

MR. KING: Good morning.

Darin King, Minister of Fisheries and Aquaculture, and Member for the District of Grand Bank.

MR. O'RIELLY: Alastair O'Rielly, Deputy Minister, Department of Fisheries and Aquaculture.

MR. WARREN: Good morning.

Mike Warren, ADM, Policy and Planning.

MR. ROBINSON: Shawn Robinson, ADM, Fisheries.

MR. MEANEY: Brian Meaney, ADM, Aquaculture.

MR. POWER: Bradley Power, Director of Communications.

CHAIR: Thank you.

I will just outline the process a little bit because we have some new members sitting on the Resource Committee. The process will be: I will give the minister fifteen minutes to do an interlude as to his Estimates, if he needs that much. Then we will go back and there is ten minutes each, as a response from each of the Opposition parties. Then we will get into the questioning of things. I would like to stick to the headings as much as possible.

I will be giving fifteen minutes sort of start-up time. If there is a minute or two or three needed to complete a certain heading for that individual, I do ask that you notify me so we can move it on. I do like to go back and forth so it keeps the momentum going and it eliminates the monotony of the same discussions going forward.

The plan is to conclude by 12:00 o'clock. If need be and we have to adjourn and reconvene, we will do that. If we need extra time to go, we will assess that and see if it is workable at the time.

Mr. Minister, I turn it over to you now.

MR. KING: Good morning to my colleagues –

CHAIR: Sorry.

I need to call the first heading, please.

CLERK (Ms Murphy): Subhead 1.1.01.

CHAIR: Mr. Minister.

MR. KING: Thank you.

Good morning to both my colleagues opposite and members of the Committee. It is a great opportunity to be here this morning and share a few thoughts and answer your questions.

Certainly, fisheries continues to be a significant priority for our government, as you have all heard me say many times in this House and in public. We are certainly going through very challenging and interesting times in the industry, to say the least. As we are all aware the recent announcement of plant closures, with potentially more forthcoming, has created challenges that we have to try to address with respect to displaced plant workers. Some of whom will have the opportunity to retrain; others, unfortunately, may not be able to take that route.

We are certainly going to focus and be there to support, as best we can, as we go through a transitioning industry, if you will, from what we would have been used to and enjoyed perhaps fifteen or twenty years ago where there were a significant number of plants operating in the Province and a significant number of people employed in fish processing.

There are many great opportunities in the Province for the fishery as well, as we go through a transition. We are seeing great opportunities in the crab and shrimp market, in particular. Notwithstanding one particular part of the Province, so far this year the crab season has gone extremely well. There are great opportunities for those who want to stay in the industry and make a living.

We are focused on making strategic investments from this department. We will continue to advocate and support the sealing industry as a vital part of the industry for the Province of Newfoundland and Labrador. We recognize not only the historical relevance of sealing, but also the importance it has in the lives of the harvesters, their families, and the communities in which they reside.

We will continue at every opportunity we can to advocate for a stronger seal hunt; one that has a greater role and a greater presence in the industry, and one where we are able to harvest more of the quota and access more markets and increase the opportunities for those who are in the industry.

We will also continue to support industry, as we transition, through our FTNOP: Fisheries Technology and New Opportunities Program. There have been a significant number of very, very positive projects that we have supported in the industry in the past number of years; projects that have provided an opportunity to research and to explore ideas, and opportunities to make changes in the industry and in processing plants, in particular, that result in better product, a higher quality of seafood product in the end. As a result, all of you would recognize, the higher the quality of the seafood product, the greater the return there is for the Province as a whole and for those involved in the industry.

We are in a very interesting place because of geography. From the time we land product in Newfoundland and Labrador, we are at a very strategic disadvantage in many respects because of transportation. While some wish not to acknowledge that, when we talk pricing and the variables that affect pricing, the reality is that seafood landed on the South Coast, in my district for example, is a good forty-eight hours behind that landed in Nova Scotia when you factor in the time it leaves the wharf, trucked across the Province, line up for the ferry, get across the gulf on the ferry and into the market.

We are told by everyone in the industry, who is involved in pricing product, that it affects the bottom price that we can get for the product when there are two products side by side, one of which is two days older than the other.

There are a number of challenges we have geographically. Therefore, to understate what I said a few moments ago, it is important in this industry that we strive to have as high a quality of seafood product as we possibly can coming out of the Province. It is also important that we continue to work towards marketing our product as closely as we can under one umbrella as a Newfoundland seafood product. That is why we are working towards implementation of the MOU recommendations on developing a marketing council for the Province. That will come following the introduction of one or more marketing consortiums.

We are working on proposals now, very active proposals that we hope in the not-too-distant future to be able to make an announcement about, that will see partners in the industry come together for the first time ever to look at marketing seafood product under one umbrella. There are tremendous opportunities there.

The process we have accepted as outlined and endorsed by the industry for the marketing aspect of the MOU is that we would bring all of our partners together across the Province, which we have done several times in the last several months, to seek their input on how to move forward. We have done that. We have listened.

We are moving towards developing a consortium. From that we would develop a provincial seafood marketing council. It will be, for this year and beyond, a significant priority for the Department of Fisheries and Aquaculture to move that initiative forward. We believe that is one of the most significant initiatives we can pursue that will help enrich what we can bring back from the seafood industry for Newfoundland and Labrador.

Mr. Chair, I am not going to use my full time speaking. I am certain my colleagues opposite will have lots of questions. I will have an opportunity to provide remarks in answers to some of those questions.

I will conclude there, and thank everyone for being here.

CHAIR: Thank you, Mr. Minister.

Mr. Bennett.

MR. BENNETT: What we call now the seafood industry, which I suppose traditionally we have always called the fishery, is in my view the most important industry in our Province. That may seem like an overstatement based on oil revenues, forestry, mining and other areas. However, the reason I think the seafood industry is the most important industry is because it has the potential to benefit the greatest number of people in the Province who are geographically diverse and who will have limited opportunities to participate in the economy unless they move.

It is an excellent resource and an industry for what some would call social engineering. There has been criticism of that, but in fact if we agree seafood is a common property resource, then why shouldn't the people – and not just the people of Newfoundland and Labrador, but the people of Canada – be the ones who benefit most from that common property resource?

The earth now has 7 billion people and food is going to be a challenge in the coming years, as will other inputs, but food is something that people simply cannot go without. We are positioned in the North Atlantic in a huge fishing ground and we have an opportunity to access the wealth from the sea for the most people. Traditionally, the people have not benefited the most, at least in my view, because they have been concentrated in too few hands. Historically, that has been the case, and maybe of necessity due to lack of refrigeration. I am speaking of the old fishery days. Today, there is a greater opportunity for more people to participate than there would have been previously.

One of the challenges I see that we are dealing with in the fishery is a mindset, and the mindset is in a lot of people that the fishery is over. It is on its last legs and it is not doing well. Part of the problem that has caused that, is we have had so much resource, we had such an abundant resource that we have only ever needed to catch it and sell it, and cure it for a period of time. We could then export it to various parts of the world. Coming into Confederation this was a phenomenal seafood exporter. When we merged with Canada seafood became less important. Nevertheless, DFO tells us that seafood is Canada's greatest food export. Not beef, not wheat, but seafood. We have a phenomenal opportunity.

A lot of our entrepreneurs and a lot of what I will call our business community in this Province are tied up in the fishing industry, and more in the catching. If you look at somebody who would go and borrow $500,000 or a million or more dollars and invest in a vessel and fight with the climate and buyers, unions, geography, and run an enterprise and then the climate permits only part of a year, some people would call that person crazy. Maybe they would be right, but I would call that person an entrepreneur. If this were a culture where we had manufacturing or other similar opportunities and a person taking that much capital and invested it in some sort of a manufacturing facility, and ran that plant for seven days a week, had one, two or even three shifts, the amount of wealth that would generate would be phenomenal.

Our entrepreneurs have been on the water. Consequently, other entrepreneurial opportunities have not been developed. I think they can be developed today in the seafood industry, in not just primary, but secondary, tertiary processing so that we can extract every dollar of value from every pound of seafood that comes ashore for our people to maximize our benefit. I believe we need a plan and a focus which says that. When we have demonstrated we can do that, more people will be interested in entering the fishery and more younger people. It is not just an age issue.

When I hear of the aging plant worker, then I look at the demography of the Province. The average age is around forty-two or forty-three. Somewhere in the order of 100,000 people are under twenty and around 50,000 are over sixty-five. The average age of a worker is probably fifty or so. If a plant worker is five or six years older than that, then I think we can embrace that in the next five or ten years because these people are committed and they have the skills. We probably have a five or ten-year window at best to restore and recover the fishery for us and for our communities. To me, that is my principal focus in the fishery.

I am pleased to be here and have an opportunity to review the plans with the minister, the financial side of the package for the coming year.

Thank you.

CHAIR: Thank you, Mr. Bennett.

Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Chair.

I could speak for quite a while on the fishery but I will not do so. In my own opinion, I do think there are models for change, certainly when it comes to partnerships and co-operatives. Hopefully, the government, as they move forward, will adapt some of these models and we will see that in the budget.

I would like to get into some of the line items actually, if I could. Under 1.1.01 the Minister's Office there, when it comes to Salaries, we see the revised amount was $250,000, there was $85,600 not spent. Could you explain that?

MR. KING: Sure.

The Fisheries department used to have a Parliamentary Secretary position which no longer exists, and there was a vacancy in the office for a period of time.

MR. MITCHELMORE: Okay.

There were no other staff changes?

MR. KING: No.

MR. MITCHELMORE: Okay.

Under Executive Support, line 1.2.01, Transportation and Communications, we see that $38,300 was not spent. What allocated for these cost savings?

MR. KING: Predominantly it would be related to less international travel than we normally would have done. Mr. Chair, for the benefit of all members, you are going to find in a number of my explanations throughout here as a result of it being an election year there are a number of expenditures than we might normally have incurred as a result of that. This one here in particular would have resulted from less international travel.

We budget for a certain amount of what we call planned and expected travel. We also budget for other travel that may arise depending on what circumstances prevail. In this particular case, we did not use the full amount.

MR. MITCHELMORE: Could you explain which actual international events were attended or could you provide a list to us as to what happened last year?

MR. KING: Pardon?

MR. MITCHELMORE: Could you provide a list of the international events attended by your staff?

MR. KING: Yes, sure.

MR. MITCHELMORE: Under Administrative Support, line 1.2.02, under line item 05, Professional Services, there was no money allocated in the budget there but $291,300 was actually under the revised amount. Can the minister explain what these professional services were for?

MR. KING: Sure.

This section deals predominantly with infrastructure – wharves in particular. The entire budget typically gets dropped in section 1.2.02.07, Property, Furnishings and Equipment. As the money is expended, it is moved to the appropriate category.

In this particular category, $291,300 was moved. That would have had to do with engineering design and consulting fees with respect to aquaculture wharves, as well as work on the former Transport Canada wharves that we had responsibility for.

MR. MITCHELMORE: Okay.

Under Purchased Services as well, under the same line item, we certainly see that it has gone from $716,300 under the budgeted amount, quite the increase, to $1,388,100. That is a bit of a variance there. Could you explain?

MR. KING: Sure.

It was money transferred again from the same category, Property, Furnishings and Equipment. It was spent on the wharves in Hermitage and Pool's Cove, engineering and design work for a wharf in Milltown, design work for a wharf in Harbour Breton, and upgrades to the St. Alban's wharf.

MR. MITCHELMORE: This is primarily for aquaculture?

MR. KING: All of these that I just mentioned are.

MR. MITCHELMORE: Okay.

Under Property, Furnishings and Equipment there is a big variance in this year's estimate from what was actually budgeted in 2011-2012, $9.5 million, and only $715,800 was actually spent. What is anticipated for the coming year?

MR. KING: The anticipated amount is the estimate, $6.22 million.

MR. MITCHELMORE: Yes, but what is going to actually be spent? Where is the allocation for property? Because there was $9.6 million allocated last year, what work did not actually get done?

MR. KING: All the work that we budgeted for was done. The $6.2 million is for new projects.

MR. MITCHELMORE: The $9.6 million that was budgeted, only $715,000 was actually spent.

MR. KING: No, that is not correct. I just explained that to you in the two previous subheads.

MR. MITCHELMORE: Okay.

MR. KING: The $9.5 million, Property, Furnishings and Equipment, was a total amount. Some of that money was moved around in Purchased Services and Professional Services in previous categories.

The $6.2 million, the same thing will happen. It will be moved into different categories as the money is expended. That money is allocated for the tender for the Harbour Breton wharf that was just announced probably a week or so ago, there is an amount of money there as well for an extension to the Pool's Cove wharf, and there is further money for design work on the Milltown wharf.

MR. MITCHELMORE: With all these expenditures into aquaculture, in the Budget statement it had listed that of the $20 million-something that the Province has allocated there has been over $400 million in private investment. Can you explain some of this private investment as to how we are getting such great return?

MR. KING: Sure.

If you look at the companies that are operating on the South Coast in Pool's Cove, the ones that were in Belleoram, Milltown, and St. Alban's, we are investing money there not only in wharves, we are investing money through our Capital Equity Program. In most cases, what we put in is a small percentage of the total project worth.

If we invest, for example, in a fish plant in Hermitage, our investment is very small compared to what the company brings to the table to complete the project. Our Capital Equity Program is leveraging further money from the private sector, which in turn creates not only the capital investment, it then creates the employment that occurs as a result of that investment. It has been acknowledged by Department of Finance officials that this particular program is actually probably the most effective program in government for the dollar for dollar that we are able to leverage as a result of our investment in the industry.

MR. MITCHELMORE: Is the salaries and the workforce calculated into that $400 million –

MR. KING: Absolutely. Every dollar that results from our investment is calculated in. So if there is nothing happening in Hermitage today – and I will just pick Hermitage, and what I said is not the case – if we invest $2 million and the company invests $18 million to build a plant and they create 150 jobs and salaries at $30,000 a piece, all of that in any economic model for any government will be factored in when you calculate the benefits of the investment.

MR. MITCHELMORE: It is jobs created, maintained, annualized year after year.

MR. KING: Spin-off benefits, that is correct.

MR. MITCHELMORE: With that program is the Equity Program partnered with other government departments such as IBRD to secure other investments from these companies?

MR. KING: Not normally. Normally our Equity Program is direct between us and the proponents.

MR. MITCHELMORE: Okay.

Under section 1.3.01, Planning and Administration, line 05, Professional Services, last year's budget had $100,000; $80,000 was the revised amount. This year – I am wondering as to what this was spent for and why there is no estimate for anything in the coming year? You do not anticipate using professional services under this policy department?

MR. KING: This particular category, the $100,000 that we budgeted was a one-time amount that we put in there from the previous year, a number of initiatives that we wanted to pursue, and obviously we did not spend $20,000 of that which is less than anticipated costs that we would have had for consulting fees.

MR. MITCHELMORE: Can you explain what those initiatives were for?

MR. KING: I do not have a list here, but we can provide it. If you want it we can provide it, but we are talking $1,000 and $2,000 projects, $3,000 projects. Is that the kind of detail you would like?

MR. MITCHELMORE: I am just wondering what the variety was because if they are $1,000 and $2,000 it is quite different than if it is just one project for $80,000 and one (inaudible) –

MR. KING: Any of those, Mr. Mitchelmore, any of the professional services typically deal with the engagement of consultants and fees associated with that. That could be anything from seeking advice on issues to writing reports on topics of interest. There is a whole range in our department. If you would like it, we can provide it, but it is a fair amount of operational information. It is up to you.

MR. MITCHELMORE: Okay.

The Purchased Services also under this amount, under last year's budget there was $145,000. Only $50,000 was purchased. Was there something not done under this line item?

MR. KING: Purchased Services in all particular categories relate to the same things. It deals with office equipment repairs, photocopier repairs, lease of copiers, and conference rooms if we have meetings off-site. We support those kinds of things. It is hard to judge from year to year.

We have an annualized amount in that particular category. You are going to see this over and over. There are times when we exceed the budget; there are times when we come in under. It depends on what activities are occurring. In the year, for example, when we did the MOU it is likely you would find a lot of those budgets were exceeded because we had more activity. There are other times when it is decreased.

The $145,000 is an annualized amount we used. We often move money between categories. There is no particular reason why we did not expend that. It is just that the money was not required for those activities beyond what we spent.

MR. MITCHELMORE: Okay.

Under Sustainable Fisheries Resources and Oceans Policy, line 1.3.02.10 Grants and Subsidies, the budget had allocated $4.1 million and $4.25 million was expended. Can either this be explained or can we have a list of what the grants and subsidies were for?

MR. KING: That budget was for fisheries research and science activities. The $150,000 above the budgeted amount was re-profiled and transferred in from another budget head.

MR. MITCHELMORE: Okay.

With this year, you are anticipating to spend double that? Is this additional research as well?

MR. KING: The extra amount budgeted this year; the two significant amounts would be $3.75 million for the Centre for Fisheries Ecosystems Research, CFER, and a little over $1 million toward the Lobster Sustainability program that we announced.

MR. MITCHELMORE: Okay.

MR. KING: A partnership with the federal government and the FFAW.

MR. MITCHELMORE: Back to my question: Can I have a list of the $4.25 million under the Grants and Subsidies from your department?

MR. KING: Sure.

MR. MITCHELMORE: Thanks.

Under Fishing Industry Renewal Strategy, there are a number of things here –

MR. KING: May I ask which line item, please?

MR. MITCHELMORE: Line 1.4.01, which is 05 for the Professional Services. I am just wondering why there was budgeted $30,000 and there is no amount under the revision. Was there something that was not done that is being carried forward this year?

MR. KING: There was an allocation there, we had hoped to do an evaluation of our FTNOP, Fisheries, Technology and New Opportunities Program, and we did not do it. The money lapsed and we re-budgeted for this year. We hope to get the project done this year.

MR. MITCHELMORE: Is that a re-evaluation then to look at additional funding potentially for the FTNOP?

MR. KING: There is always an opportunity to look for new funding but predominantly it is to look at whether the program is succeeding and achieving the objectives we set out to achieve or not.

MR. MITCHELMORE: Under Purchased Services as well, there was $17,000 budgeted, $4,500 that was spent. The same type of question, what was actually purchased?

MR. KING: Again, my answer is very similar to the question you asked in the previous head. This section would have to do with the rental of meeting spaces, those kinds of things. We did not do our evaluation of FTNOP. As a result of that, some of the costs that would have been associated with that would be down.

MR. MITCHELMORE: Grants and Subsidies, under this heading of 1.4.01.10, had $875,000 listed and only $258,000 spent. What type of things fall under these grants and subsidies?

MR. KING: Can you repeat the last part? I am sorry about that.

MR. MITCHELMORE: The $258,000 under the revised amount of line item 1.4.01.10 Grants and Subsidies, it was budgeted at $875,000 and $258,000 was spent. What was it spent on?

MR. KING: That has to do with our plant closure program, wage subsidies and supports.

MR. MITCHELMORE: Okay.

Only $258,000, this is for the worker adjustment program, the fisheries program?

MR. KING: Yes.

MR. MITCHELMORE: Okay.

You are anticipating this amount will grow quite significantly in the coming year that there will be a number of displaced workers with $2.375 million under this line item in the budget?

MR. KING: We are aware today that there are two plants closed in Port Union and Marystown. So we budget accordingly.

MR. MITCHELMORE: Are there any other items that would fall under that amount or is that specifically for wage adjustment programs?

MR. KING: Worker adjustment, employment supports, anything related to a plant closure.

MR. MITCHELMORE: Okay.

CHAIR: Thank you, Mr. Mitchelmore.

We are going to go to Mr. Bennett now.

MR. BENNETT: Minister, I am probably more interested in the broad strokes of where you see the department going, not to say that all the nuts and bolts and the dollars and cents are not really important because they are. You have said we are growing the fishing industry undaunted by challenges, and that is a good thing because there are some challenges. What do you see as the greatest challenge?

MR. KING: One of the greatest challenges we face is the mindset of people who believe that the industry we had thirty years ago is the industry we have today, in my view. The fishing industry has changed significantly. We are no longer in an era where we can have fish plants in every port, I believe, and sustain workforces of 150 and 200.

I think of the days, when I was growing up in Fortune we had 380 workers, in Grand Bank we had 300, in Marystown there was 1,200, in Burin there was 350. The industry has changed significantly, not the least of which of course is impacted by the declining cod stocks and the moratorium, which, as you would know, the cod fish in those days was a significant input into the industry.

A significant challenge from a political perspective is helping people understand that the industry has changed, and that the days we lived in twenty-five and thirty years ago are no more. Having said that, from an operational perspective – I highlighted a few moments ago, one of the significant challenges we have to acknowledge is our geography and the role we play in a global seafood marketplace.

The fact is that while the fishing industry – and I agree with your comments by the way, that it is one of, if not the most important industry in Newfoundland and Labrador, no question, but in the world stage we are a very, very small player. As a result of that, we do not have the same kinds of leverages and controls that we might think we have.

We have to ensure that we are in a market where our product is of the highest quality and that we are keeping our product competitive in the price market in particular, because if we cannot market our product and sell our product then the industry is of no value to us. That is a significant challenge, but transitioning from the mindset of the past to focusing on the opportunities for the future I think is a huge challenge.

We are moving through an area where we are experiencing some of that. The Marystown fish plant and the changes in Port Union are significant shifts in the Province because they are two, I think, of the largest plants that we have ever had in terms of workforce. That is a challenge for us.

We have all heard the public debate around the possibility of further exemptions for fish processing companies in Newfoundland and Labrador. There are some very strong views that we not provide any of those exports at all. As a matter of fact, the very strong view is to leave the fish in the water. We are currently doing that.

The question is where is the giveaway? Is the giveaway when you try and export to adapt and take advantage of a market that exists, and therefore a certain amount of processing in our Province and onshore jobs, and using money from exports to supplement that, or do you do what we are doing today? As a result of that decision, today we have plants closed. There is no work happening in Fortune, there is none in Marystown, and there is none in Port Union. I do not believe that is the answer. I believe we have to find a solution that maximizes all of the species for Newfoundland and Labrador. That is going to require some people's shift in thinking.

The other challenge as a result of some of the comments that I have made, I believe, is people coming to a realization in the industry in general. That while it might be an idealistic view that we can catch and process, then secondary process and value add to all the products that come out of the water here – and I would like to see that happen – you have to factor in one significant issue. What is going to be the cost to the consumer if we do that? I do not think there is any question that we can take yellowtail fish and process it here, secondary process it here and do a good job with it. We could build cars in this Province too, but can we compete with the GM auto plant out of Ontario?

It is not about whether we can do it here. It is about whether we can market the product when it is done. I believe that some in the Province, some of our strongest opponents – and I do not mean political opponents, I mean public airwaves opponents. I do not necessarily believe that they are fully focused on the big picture. I think they are stuck in a mindset that we will do nothing but bring the industry down versus help the industry thrive.

If we cannot grow the fishing industry so that the people who participate, whether you are a plant worker, or a harvester, or a processor, if we cannot grow the industry so that these people make money, make good livings and provide for their families, and are happy doing what they are doing, then the industry will not survive. I do not believe the conditions we have seen in the last five years are necessarily conducive to making that industry work. I think we have to move forward and we have to seek out new opportunities.

MR. BENNETT: Minister, on that note, actually on two of those notes, I accept that we cannot afford the labour cost to process everything. It is simply a rule of economics. I accept that. However, if we also accept that seafood is a common property resource and if we export unprocessed, it seems to mean the people who own the product are getting nothing from it. We hear the no-more-giveaways mantra, which also makes sense both politically and economically.

Why should the person on the street who has just as much entitlement to an equity position in that fish – whether it is yellowtail, shrimp, or whatever it is, you or me or all of us together. Do you see a time when, in the case of unprocessed exports, the Province will put into place a royalty regime?

If there is no royalty regime of some kind then the incentive will always be there for the catcher or the exporter to maximize profits by shipping to, let's say, a lower labour regime like China with little to nothing for the people except a few catching jobs or a few handling jobs. Do you see a time when your department might entertain putting into place a royalty for anything that must be exported, and then those funds reinvested back into the industry?

MR. KING: I am not sure, to be frank with you, if you will ever see that. One of the challenges is that we do not have the authority to do that, first of all. The fishery, unlike the oil and the forestry, the quotas belongs to the federal government. Forestry is a given because it is on land. In the oil industry there are boundaries and definitions that give the Province rights to the oil. The fishery is not like that. The quotas are allocated by the federal government and they have the ultimate authority to do that.

I have explored that, Mr. Bennett, to be honest with you. I have explored that and many other options. The conclusion we are provided with by any number of experts in the field is that the Province does not have a right to impose a royalty regime on a resource that does not belong to the Province. The allocations, if you just picked yellowtail as an example, since I mentioned it, those companies who have a quota of yellowtail in the Province received that quota from the federal government.

The only authority we have, jurisdictionally in the Province, is once the product is landed in Newfoundland and Labrador on land, we impose minimum processing requirements. If the product is not landed here, we have no authority or right to impose a royalty regime. If your question is, do I agree with you? Yes. If your question is, will I pursue it? Yes.

The first question you asked, do I ever see it happening? I do not know. Because I am advised by those who assess the constitution and assess everything else, that unless the federal government agrees there is no way we can ever do it and legally make it happen. That is about as honest as I can be.

MR. BENNETT: Yes. I can see how a catcher, a big harvester who is also a processor would be motivated to land in another provincial jurisdiction where there was no royalty and we charge a royalty. We would only hurt ourselves by doing that. It is not like a tree, it is on land. It is not like minerals.

Last April 25, Prime Minister Harper, in response to the Premier, made certain – I will not say commitments, because on reading the letter closely he expressed what he considered to be the view of the Conservative Party of Canada, which is now the government. He says it is the view that may not be seen necessarily as an election promise, but he said things like: We share your view that provinces must be given a formal role in the management of the fisheries. He says a re-elected Conservative government would move forward with legislation in the next Parliament to give the provinces a formal role in the management of the fisheries.

As you know, I have written to you and asked you about the possibility that at least the five eastern provinces and the federal government could or should get together on marketing. Can you tell me if you think there is a possibility here in what looks like Prime Minister Harper's commitment that provinces will have a formal role, that the provinces of Canada could have a sub-constitutional agreement with the federal government that we could basically put into place some sort of a mechanism whereby we could charge royalties or at least to level the playing field?

It seems like the commitment is there. The feds, in spite of all the things we like to discredit DFO for, they do have an active interest in the fishery for sure. Do you see any possibilities there?

MR. KING: I think a possibility exists. I think it is going to take a fair degree of talking and discussion. I have had discussions with the federal minister on any number of issues like that, that are on the peripheral of what you are advocating for.

I am hopeful that maybe, through the process of policy review that we are looking at now, there might come some opportunities to do something like that. It is very difficult to say because, as I said, we are trying to read into the commitments of the Prime Minister's letter and my discussions. I certainly did not see anything concrete. I do think there may be opportunities. I think that is a fair point.

One of the challenges we face around the other Atlantic Provinces in coming together – the marketing is not a bad idea, there is no question about that. One of the challenges with the other Atlantic Provinces though, for us, is that they would like to dig into more than marketing. They would like to have more access to, what we call our historical resource, Newfoundland and Labrador. It has always been a contentious issue. At meetings not long ago it got raised.

They believe the resources we have access to in Newfoundland and Labrador ought to be shared around more equitably than they are. In other words, we ought not to have control like we do of the quotas that we currently do, and Nova Scotia harvesters, for example, ought to be able to access more of that quota. There has been a big lobby for the federal minister and the government to remove some of the quotas that are currently allocated to Newfoundland companies and move it to other non-Newfoundland and Labrador companies.

There is always a balance when we engage in discussions about sharing and partnership with the Atlantic Provinces and the fishing industry. If we open door A on this side, we might have to be prepared to open door B on the other side.

CHAIR: Okay, Mr. Bennett. I would like to go back to Mr. Mitchelmore there.

Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Chair.

I would like to ask the minister, in the past his department has not supported the allocation decisions of the Northern shrimp based solely on the last in, first out and has made representation to the federal Minister of Fisheries. The strategic plan notes that the feds will review the policy based on this approach and the position taken by his department. What is the position taken by the department?

MR. KING: The most recent position that we have taken is that we do not support last in, first out.

MR. MITCHELMORE: Okay.

The department worked throughout the planning period for reductions in tariffs and non-trade barriers communicating its position with the federal government. Efforts were continued to keeping the EU autonomous tariff rate quota of 20,000 tons with no tariff on the cooked, peeled shrimp. How much of that is actually exported to Europe from this Province?

MR. KING: Alastair is going to provide an answer there.

Just let me say there is a bit of a grey area there. That is why I am chatting with him, because some of what you ask crosses over into the trade talks and IBRD. I am just being very cautious that I am not the spokesperson for that.

MR. MITCHELMORE: Okay.

MR. O'RIELLY: Mr. Mitchelmore, I think the question you are asking is about the ATRQ. The ATRQ, of course, is an autonomous tariff reduced quota is what it stands for. The amount that is in ATRQ for shrimp, which is really important to us, is 20,000 tons.

For the last number of years that full quota has been used, and has been used primarily by Canadian firms, and primarily by Newfoundland-based firms. This is the last year for that ATRQ. So there is some question about what is going to happen with it in the future.

That is really wrapped into the minister's comment about IBRD's involvement now as the Province's representative in the Canada-EU trade negotiations which are ongoing. The question about what we will have for the future kind of rests with how those negotiations are going. I hope that answers your question.

MR. MITCHELMORE: Okay.

The same ATRQ had 10,000 tons, with no tariff for flatfish as well, which included the yellowtail. I am just wondering, if that ATRQ included – was that a processed or an unprocessed form when it was shipped?

MR. O'RIELLY: Yes, thank you.

Most of the ATRQs require an opportunity for further processing within the EU. It is not really duty free. You can have duty-free access at zero but you still have to have further processing. In the case of yellowtail or flatfish, or in the case of shrimp, in order to achieve that reduced tariff you have to have the processing done within Europe, which really dramatically diminishes the benefit.

MR. MITCHELMORE: Right.

MR. O'RIELLY: The activity is captured over there. Plus, because of that, we ship everything in bulk then. You do not have the opportunity for branding and for doing more effective marketing under that circumstance.

MR. MITCHELMORE: Thank you for that.

On March 17, 2011, the provincial government announced it would take a more active role in the Canadian European Union negotiations towards the Comprehensive Economic and Trade Agreement, CETA, which the minister had alluded to. What is the role that your department has played to date?

MR. KING: Our department is a secondary player in that file. That is being led by Minister Hutchings, Innovation, Business and Rural Development.

MR. MITCHELMORE: Okay.

Have you had any discussion, any letters, anything that has been written, a position that you have taken from the fishery? Obviously, these CETA negotiations will have an impact to the fishery here in the Province.

MR. KING: You need to direct that question to Minister Hutchings. We do not break down the position of the Province into various departments. He is the lead minister for that.

MR. MITCHELMORE: Okay, I will ask Mr. Hutchings on future CETA questions.

With respect to the World Trade action through CCFAM, deputy ministers' committee on seals, I am just wondering where this currently stands with the argument on the ban? Has there been any movement on that? Could you just provide an update?

MR. O'RIELLY: That action is ongoing. We think we are probably about halfway through the process. At the moment there is an issue of selection of the review panel that will look at the case. It is a rather painstakingly slow process, but we have been, of course, advocating the federal government continuing to intensify their efforts, which they have. We are at least another year away from an outcome, but we are optimistic. We are actively involved with the federal government through the committee as to the various procedures and status of that action.

MR. MITCHELMORE: Okay, thank you.

The seafood processing policy renewal framework stresses there are going to be more rigorous policies related to the issuance of new licences, retention of existing licences, more restrictive transfer policy, more stringent policy on cancellation, and clearer policy on the limited circumstances under which the Province will consider intervening when a plant closes.

Can you outline what kind of budget and staff is being provided to make sure these measures are put into play? Can we have an outline as to how this is actually being worked into the department and how it is being enforced?

MR. KING: Are you referring to a report from the industry or are you asking me a question about our own licensing division? I am not clear where you are coming from in the preamble.

MR. MITCHELMORE: Yes, that is what I am asking about, your licensing division and the restrictions you are putting into play to basically make sure that the policies are being abided by, by processors, specifically, in the Province.

MR. KING: There is a line item in here that outlines everything you have asked for. The licensing division is highlighted, the amount of allocation that we put forward. The salaries and support are all highlighted here.

Mike, do you know which line? Just have a look and see if you can find it. Bear with me, Mr. Chair, that is here in the Estimates, the information you are asking for.

CHAIR: Sure.

MR. KING: Line 2.2.02, Licensing and Quality Assurance is the division.

MR. MITCHELMORE: Right. My question would be then, what is the clear policy when a plant closes? Because it says there would be circumstances under which the Province will consider intervening when a plant closes.

Is this just eluding to the taskforce or work, fisheries adjustment program or are there other measures the department has when a plant closes that it would take? I guess this would fall more under enforcement.

MR. KING: You are asking for how we will react when a plant – I am not sure, you are talking around a little bit. You are asking how we will respond when a plant closes, is that your question?

MR. MITCHELMORE: I am asking: What type of measures does your department have to intervene if a plant closes?

MR. KING: For workers, I assume?

MR. MITCHELMORE: Not specifically, no, but you can certainly explain what would happen for workers as well.

MR. KING: If a fish plant closes, we have a fish plant worker adjustment program. Through that program we provide one opportunity for project work, one round for each worker where we provide wages, hours of work and weeks of work that would get them to qualify for Employment Insurance in the federal system and thereby get a years employment.

We also have off-shoot range of supports there, including wage subsidies that we will provide to try and entice other employers to hire on displaced workers. We will provide retraining funding through the Department of Advanced Education and Skills for those who opt to get out of the industry and move forward in a different direction. We will provide supports through the Department of Innovation, Business and Rural Development to support the community in its adjustment measures and seek out opportunities for economic development.

There are other things that can occur. Typically what happens, there is a ministerial committee that is formed, made up of six or eight or so of myself and colleagues. We typically engage with the local communities affected, a community or communities affected. In addition to the things we have talked about, it is very likely the community will come with ideas and suggestions that we will try and assist them with.

It is not all carved in a neat little package where you can say open the box and here it is. Every community is different. What we would do in Marystown may be very different than Port Union or than what we did in Fortune when it closed five or six-or-so years ago. Those are the broad strokes of what we offer.

MR. MITCHELMORE: What I would like to get at is what type of – under the Compliance and Enforcement piece, do you have auditors or do you have people who go in and assess the plants and assess the quality for maintenance to make sure that they are living up to certain standards?

MR. KING: That is not part of the adjustment program?

MR. MITCHELMORE: No, this would be under Compliance and Enforcement, 2.2.03. Does your department have enforcement or an audit that you would go into the processing facilities to make sure that they are up to standard for various aspects of –?

MR. KING: Yes, we do.

MR. MITCHELMORE: How many staff members do you have?

MR. O'RIELLY: There are thirty-three inspection positions. That includes supervisors. I am not exactly sure of the number of auditors. Four?

OFFICIAL: Three.

MR. O'RIELLY: Three auditing staff.

MR. MITCHELMORE: Okay.

How often is a plant assessed for maintenance and repairs and cited with different concerns?

MR. KING: Just to be clear, you are crossing boundaries here. Our role is not to monitor maintenance and repair of private facilities. Our role is on the fish side, to making sure that the standards we expect in the Province are applied. It is not the role of government to go out and monitor whether they are doing proper maintenance and repair of buildings. Ours is on the fish side.

On the safety side, there would be another division in government that will be responsible for Occupational Health and Safety. That is not our role either.

MR. MITCHELMORE: Okay.

The recent closure of labs here in the capital city where seafood has been tested in the past, will that have an impact on seafood, the quality assurance that has taken place here in Newfoundland and Labrador?

MR. KING: Any closure of a lab will have an impact on the business we do, but if your question is: Is it going to allow for reduced quality or inferior quality? No, we will continue to carry out our work and ensure that the things we need to do get done.

MR. MITCHELMORE: Okay.

A seafood marketing council is something you have talked about, and has been noted in the past that there will be $3 million promised. Then under the MOU, they were saying that the work would continue in 2011-2012 fiscal year.

We are in 2012-2013 fiscal year, and I would like to ask the minister to outline the role of a marketing council, when we can anticipate that it would be set-up. What is the vision for this versus using a generic provincial marketing campaign? Because you talk about needing to get all the players together and that has not been successful in the past.

MR. KING: The role of the marketing council would be to provide some broad, high-level direction in the Province, first of all, on how we can better collaborate and co-operate coming out of the Province. Also, there will be an opportunity for the council to dig into other world markets and seek out opportunities where we might be able to move our product.

The piece that everyone has to be mindful of is the Department of Fisheries and Aquaculture is a support and enforcement entity for the industry. We do not run the industry. The industry is made up of many private businesses, no different than if you look at the Department of Natural Resources, or Mines and Energy if you would.

Government does not tell Hebron or Chevron, or any of those companies what to do. They are external entities and businesses to government. Departments will provide regulations and supports, and things like that. We are no different.

My point is on the marketing initiative you have to be mindful that we cannot impose a marketing consortium in the Province. We have no authority or ability to do that. What we are attempting to do from the MOU process is to offer our support by co-ordinating efforts and providing some financial resources to move the initiative forward. If and until the industry decides they want our support and they want to buy in, we cannot force them to buy in.

To your question specifically, I cannot give you a date on when all of this will be concluded. We are working very hard. We have had any number of meetings – in the short time that I have been the minister of this department – with industry stakeholders to try and convince them of the merits of combined marketing efforts for the Province, and the value of a consortium where we do not have thirty or forty different entities trying to market crab, albeit in very small quantities. If we can bring it all together under one umbrella and we have one entity marketing crab for the Province, it gives us a better opportunity to control the flow of crab into the marketplace. It gives us a better opportunity thereby to leverage a higher price, which in turn results in benefits to the harvesters as well as the processors.

We cannot mandate that. They have to be agreeable to participating in that process. It is very difficult to give you a timeline. We would have hoped to have had that up and running quicker than now, but we have not been successful in convincing the industry partners and participants of the benefits of it.

As we speak today, though, we are working through what I think is going to be a very positive initiative. We have some significant partners who have come to the table now and indicated an interest in working with us on marketing. I believe that if we can move this particular initiative forward, and I say if because until we get it working there is always a chance it will not, but if we get this one to succeed I believe you are going to see many other players in the Province want to be a part of this. Because I think they are going to see the benefits of coming in with the larger group and having the power of the bulk of the product, if you will, going into the marketplace, allowing us to negotiate better prices for our product.

MR. MITCHELMORE: I certainly thank you for sharing –

CHAIR: Excuse me, Mr. Mitchelmore, I want to move back to Mr. Bennett now.

MR. MITCHELMORE: Sure.

MR. BENNETT: I have to say that I am encouraged by the last part of your answer to the last question, because I agree with you pretty much across the board in that respect. If I do not agree with you in some part of it, I do not know what it is yet. I understand fully you cannot mandate this, you can encourage and support and maybe even coerce or whatever, but the participants need to know or need to believe that it is a good deal and it works for them. If that is what you are doing, then that will be a great thing. I accept that they are very diverse because they compete with each other.

Let's say over the next five years – I think your department says there is between 100 and 115 or so plants right now in the Province.

MR. KING: Yes.

MR. BENNETT: I accept with your earlier commentary that the day of the big plant is done. If we could drag together enough product to make Marystown fly, halleluiah! That might be all the yellowtail, it might be all the American plaice, it might be all the groundfish we could find, and show that it could work.

I understand that there is a huge building there and overhead considerations. A distributed plant force in the smaller plants would seem to be the best solution for the small communities, and even some of the medium-sized communities. If we had the big plants, we would not have the workforce today anyway.

Where would you get 1,000 people in Trepassey to go work in a fish plant, or any of the others that have closed? They are just not there – thirty or forty maybe, or twenty-five maybe.

How many plants do you see being in existence and operating in the Province in five years? Have you thought of it?

MR. KING: That is a tough question to answer, to be honest with you. I could guesstimate, and I hesitate doing that for fear that you will use it against me at another time. I think realistically, if you are using the figure of 100, we are likely going to see 20 per cent of those phase out over a period of time.

From where I sit on the plants, Mr. Bennett, number one, and I think you acknowledged this as well, the days of the big plants are gone. There is a whole host of reasons, including overhead, lack of material, cost, and that sort of thing. Those days are probably gone and we are seeing that in our public debate today vis-à-vis Marystown and Port Union.

There are also going to be challenges in some parts of the Province, and one of your colleagues is going through the circumstance now, where the amount of product available in a particular area is such that it is just not feasible for a company to go in there. There are going to be some other plants like that will close.

I do believe there are still going to be opportunities for good, strong seasonal plants in communities. I can think of any number of examples of that where they are doing great work with crab and/or shrimp, and they work for a defined period of time, but they have a good workforce who is dedicated to the plant, committed to the lifestyle, and happy with how things are going. Those kinds of plants are going to survive.

The model I believe is ideal is the multi-species plant where you are doing a variety of product over different fishing seasons. Eventually I would like to see fifty-two weeks a year. That might be a bit of a stretch, but certainly plants that can operate for thirty-five to forty weeks a year. I will give you a couple of examples, and certainly I know you are very interested in this. I invite you to at some point in time to visit some of these.

St. Lawrence in my district is not operating for thirty-five weeks, but they have been very creative. It is a crab plant predominantly. Several years ago we diversified into whelk and a few mussels. Last year we put a canary operation in there. A canary operation in itself –

MR. BENNETT: Kippers?

MR. KING: It is not kippers.

MR. BENNETT: It could be.

MR. KING: It is actually salt fish.

MR. BENNETT: I am getting a price on the cans of between one and two cents per million. I will table that one day.

MR. KING: Yes, do that, please.

The cannery, in itself, as they tell me at least, there is no business there for them to run a canning plant in St. Lawrence, but the cannery operation they are doing has provided ten or a dozen jobs for eight or ten weeks a year. When you factor in the jobs and the weeks, what they have actually done is taken their workforce and they probably got another four weeks for every worker in the plant to extend beyond what they are doing. My point being, it is the diversification through multi-species.

The other one that I mentioned yesterday, when I was having a bit of fun with you in the House on the kippers, but in all seriousness is Allen's Fishery. I do not know if they would want me to say it because sometimes they want to stay below the radar, but it is worth you visiting in the Bay of Islands. As I recollect, they purchase lobster but they are doing pelagics, they are doing crab, they are doing mussels and some value-added product there. It is an amazing piece of work.

MR. BENNETT: I know Richard. They are really good seafood entrepreneurs.

MR. KING: Yes, they are indeed.

What is amazing about it, for anybody who is really interested, I think there is a model there. You are not going to see it everywhere, but I think there are opportunities to take what they are doing and look at doing it in other parts of the Province. Because any one of the species they do in and of itself is not going to produce a year's work, but by adding one on top of the other what they are doing is extending the weeks the plant is open and the opportunities for employment.

I think if we can strive to get more opportunities to do that that is where the opportunity to entice more people would be. I think you would agree with this that if you are going to entice young people into the fishery, they are not looking for ten weeks a year any more at $10 an hour. You will get, I think, some to come in if you provide a half decent wage and assure them that there is going to be at least close to a degree of year-long employment, whether that is thirty, thirty-two or thirty-five weeks, I do not know, I cannot really define it. I do not think you are going to get them for ten weeks a year any more. I really do not think that is going to happen. So the plants in communities where that is all they are offering, I think that is where you are going to see a struggle to survive in the long term.

MR. BENNETT: I have noticed in the Canadian seafood industry, for want of a better term, that Canada imports a lot of seafood. We export a lot, but we also import a lot, and it seems like the imports of Canadian seafood have kept on going up over the last ten or fifteen years. I am wondering if your department has made inquiries or looked to doing some marketing within Canada.

MR. KING: I will just ask Alastair to make a comment on the import piece in particular.

MR. O'RIELLY: Some of the products are quite diverse and they are not available here or produced in Canada. Warm water shrimp for instance is a huge seller. Most people do not know when they are buying shrimp that they are actually buying shrimp that is produced in freshwater, mostly in Asia. That is a huge item in Canada.

The ones that are shown on the rings and so on, they are convenient to eat but they are not North American produced. They have some advantages that the consumer likes. Price is a significant factor, and size, in the case of shrimp. There are other finished products as well, a lot of canned product that comes out of Asia, a low-cost product.

MR. BENNETT: A lot of the small, canned product comes from Europe and it is expensive. People are buying it in Ontario.

MR. O'RIELLY: Yes, of course, and there are caviars and things that are also somewhat unique to Europe, and also hitting some of the ethnic markets or niche markets.

MR. BENNETT: Mackerel and smoked mussels and all these.

MR. O'RIELLY: The question, the market opportunity, as you know most of Newfoundland's production is export markets. These markets tend to offer better opportunities, better price positions than to the best of Canadian markets.

Canada, as is North America as a whole, is a very modest consumer, low consumer of seafood. Per capita consumption is hovering around fifteen or sixteen pounds, around seven kilos. It has been that way for decades, which is a fraction of what is consumed in Europe. Maybe about one-third of the consumption level in Europe and 10 per cent of what is consumed in Japan. We are not seafood eaters in Canada and North America, so the markets tend not to be attracted by our producers.

MR. BENNETT: Have we looked to following the expatriate Newfoundlanders? I always marvel when I read a newspaper story and it says such and such a person, a former Newfoundlander. I do not think you can get to be a former Newfoundland without dying. It does not matter where you go, you take it with you – or Labradorian, and we are two distinct crowds in one.

You can be a former Ontarian, Albertan or whatever; you cannot be a former Newfoundlander and Labradorian because it is part of us. There would seem to be marketing opportunities in places like Fort McMurray where they would recognize our product and walk in and say well I am going to have some capelin, or I am going to have some whatever. Are we pursuing those markets? Are local entrepreneurs doing that?

MR. O'RIELLY: There are a number of companies that are actually supplying some of those products to places like Fort McMurray, but it is very small-scale stuff, of course, because it is relatively small volumes and speciality items. There are several smaller producers who are doing that. We have fourteen or fifteen companies that are licensed to sell at the retail level in the Province as well. So that is another way in which the product is being sold locally in the Newfoundland and Labrador market. I guess some of the smaller processing firms do target these kinds of niche markets such as you are referring to.

MR. BENNETT: Minister, the Harper government committed to working with all provinces including Newfoundland and Labrador – and I mentioned this earlier, this is during the last election in May. What specifically have they done over the past year in working with you to advance our fishery?

MR. KING: It is probably better to ask Mr. Harper that. I am kidding.

MR. BENNETT: Someone may, but it might not be me. Someone may ask him that in Ottawa if he is no coming through on a promise to this Province.

MR. KING: We have had positive engagement from the federal government thus far, notwithstanding the search and rescue issue. I am going to park that one and I am assuming, for the moment, that is not what you are referring to –

MR. BENNETT: I am interested in the fish and seafood.

MR. KING: We have had positive discussions with the federal minister, in my tenure. I came in, in November I guess, so there was six or eight months ahead of me when the federal government was sworn in. We have had positive discussions on any range of issues, including the whole modernization process that is currently underway and the impacts that that could have on Newfoundland and Labrador. Both positive and negative depending on which piece of the policy you focus on.

We have been very clear in expressing our views on some pieces of that, that we obviously strongly support, and we have been clear in the Legislature on that, but the minister has been, in my view, very receptive to our commentary and our views around the fishery for the future and where we would like to see it go. It certainly has been very supportive of trying to assist us in any number of initiatives that we are focused on. The sealing, in particular, is one that we have been engaged, through the federal minister and the Prime Minister, with the country, in advocating to try to get the markets open and certainly been very respectful of our position and, I believe, very forceful in defending Newfoundland and Labrador in that discussion.

Do you want to jump in and add a little, maybe?

MR. O'RIELLY: We have been working closely with the federal government on the aquaculture file as well, especially on regulatory matters. There have been a number of initiatives related to aquatic health, to veterinarian services, and so on where there has been good co-operation and collaboration with DFO.

As the minister noted earlier on the trade file as well, we are playing the supportive role as he described in our department. DFO are also involved at that level as well. There is a good collaborative effort on that. At a working level it is still a good relationship and we are finding there is an open engagement.

The challenges we always seem to face is: Is there enough money to do the kinds of things we would like to do? There are lots of issues we could cite that we wish we would have had more federal expenditures on any element of what we are doing.

MR. BENNETT: Is there anything right now on the table? You do not have to say what it is because it might be sensitive discussions or whatever. Is there actually a timetable that we are moving forward on some issues with and that you expect to get resolved in sixty days, ninety days, or before the end of the year? Are things happening or are they just drifting?

MR. KING: The short answer is yes. There are a number of significant files. They are not all sensitive. The sealing one is one I have talked to you about before. That is obviously one we are working on from a variety of perspectives, not just the challenge to the trade into Europe. There are a couple of other pieces we are working on as well and we are hopeful we will see some success in that. There are a couple of other files we are working on and hopeful we will see some success over the next few months, maybe.

MR. BENNETT: Do you see on the marketing side merit to us marketing not as a Newfoundland and Labrador label but under a Canadian label for all Canadian seafood? I do not care if they put a Mountie on it, a beaver, or a maple leaf. Canada is bigger and it would give us better volumes that we would be able to market under with the assurance of the Canadian Food Inspection Agency. Canada has a great international reputation.

Do you see a role there or a potential for us there?

MR. KING: Alastair is going to offer you some commentary first.

MR. O'RIELLY: You make an interesting observation. There is a lot of discussion around the industry as to the Canadian brand and whether or not Canada has a better image and is better known in the international marketplace because we are, of course, selling to the world, as I mentioned earlier. It is easier to seek an identity as the Canadian brand than by each province.

What has been happening over the last few years is that there has been a co-ordinated or collaborative effort in the marketing initiatives that we carry out, for instance, at major trade shows. Usually, that involves activity between federal departments which include DFO and also Agriculture and Agri-Food Canada which has a marketing budget, so they participate as well. They co-ordinate with the various provinces and so when we participate at a trade show, such as the one in Boston or the one that was held last week in Brussels, all parties are there together in the same areas and then, of course, co-operating is a joint effort.

The issue, I think, down the road, in terms of whether or not the industry will embrace collaborative marketing efforts, I think that remains to be seen. As the minister mentioned in terms of market council and other initiatives, we are hoping to do more on the Newfoundland side.

I know that in the Maritimes they have really been struggling with trying to bring together a collaborative marketing effort on lobster, for instance, but there are provincial jurisdictions, different industry groups, and they have had great difficulty trying to put that into some sort of a consistent and significant marketing effort.

I think it just illustrates the type of challenges that exist across the provinces in terms of species and in jurisdictions, and in terms of market interests in terms of need of opportunity to bring this together. I think it remains to be seen, but we are hopeful that we are going to be able to launch forward with the market council and over time that will sort of demonstrate and spearhead efforts to do more marketing and bring other parties to the table depending on our success. That is the hope and aspersions, anyway.

CHAIR: Mr. Bennett, I am going to suggest we take a thirteen-minute break for people to stretch their legs and go to the washroom. Everybody is good with that?

Okay, we will reconvene at 10:40 a.m.

CHAIR: Welcome back.

We will to go Mr. Mitchelmore to start again.

MR. MITCHELMORE: Thank you, Mr. Chair.

There has certainly been a lot of worry about the federal government abandoning the Fleet Separation Policy and I know the minister has made a statement on that here in the House of Assembly. I am just wondering if there has been any further correspondence, an update with the federal government on where things are, and if he can tell us what the federal government is planning, if he has had any discussion.

MR. KING: I cannot tell you what they are planning, that would be looking into a crystal ball. The information I have, Mr. Mitchelmore, is the federal government, as a result of their consultations, will produce a document, what we heard, or some kind of a title therein similar to that, and they are going to share that back with us and look for further feedback on what they heard before they make any decisions.

We have had any number of meetings and representation with them. We have not really gotten into the nuts and bolts of a number of the items because, in my view, there are lots of things that could change, that can make this industry better.

I make that statement based on significant amount of discussion and consultation I have had with the FFAW and independent members of the FFAW over the last three months. There is no question that many harvesters feel overregulated and ‘policied' to death. They feel it limits their ability to have a successful enterprise or to build upon a successful enterprise that will improve their incomes for them and their crew members.

There are certainly a lot of things we can look at trying to change and adjust to make life better. We have not gotten into a lot of those specifics. We did have discussion around the fleet separation owner-operator. As I have said – well, I have certainly said it to this Legislature, but I am not sure if I said to you directly, maybe Mr. Bennett – we have been very clear around that policy, that our position stands, that we support it, and that we think it is important to Newfoundland and Labrador.

What we have said to the minister, though, is: I am prepared to look at some changes to any number of policies if I see there is a benefit for people in the Province. When I say if I see, obviously I mean through consultation with harvesters and those who would be affected. If there are changes we can make to improve the industry we are prepared to support them. From a process perspective, I am given assurances by the minister, in the company of my deputy for sure, that there is not going to be any action taken until that document comes back to us and we have a chance to have further input.

MR. MITCHELMORE: China has no import-export tax for fish that is being shipped there for reprocessing, whether it is a whole fish or a head un-gutted. These are certainly protectionist measures by this country.

Is there anything being done by this department pressing the federal government on these types of trade barriers to see if Canada would be looking at implementing different changes to its trade policy with China?

MR. KING: As in asking the federal government to advocate that China impose tariffs?

MR. MITCHELMORE: I am just asking if your department is looking at this measure by China, a very serious matter that is causing a lot of raw material basically to be processed elsewhere.

MR. KING: Our department looks at all of those countries, the ones that have tariffs and that do not have tariffs, very seriously. It is a fair stretch to think – I am not suggesting you do – that the Department of Fisheries and Aquaculture in Newfoundland can change the tariff agreement that China has on imports and exports. I have not had any discussions on that.

Alastair, are you aware of any international discussions?

MR. O'RIELLY: There are lots of discussions about Canada engaging in future trade arrangements, especially in Asia. There are recent discussions about a Pacific initiative that there have been some comments on, which would obviously be the vehicle or the mechanism within which you would begin to raise those issues. On that particular one, I do not recall there is anything because it is difficult to find a way to attack that issue.

Effectively China is not charging any tariffs on raw material that they can further process which is sort of common practice. Exactly as we mentioned earlier with shrimp with the EU, that is exactly what they are doing. They are saying we will give you a tariff break if we can process the product. It really necessitates some sort of a bilateral negotiation or trade agreement. Maybe this Pacific initiative might be the forum for doing that.

MR. MITCHELMORE: Okay.

I want to get back to the Seafood Marketing Council that is proposed. I would just like to ask: Are there funds allocated in this year's budget earmarked to the set-up? If the minister could look at explaining what the structure would be like. I may have missed the line item specifically.

MR. KING: Yes, there are funds allocated, we are just looking for the line item in the Estimates for you.

The section for the Estimates is 2.2.01.10, Grants and Subsidies. There is a budget amount there of $4.1 million.

MR. MITCHELMORE: Would all of that be allocated for the Seafood Market Council or just some of the amount?

MR. KING: Mr. Chair, $3.4 million of that is allocated towards not only the council but the marketing initiatives that we have announced as part of the MOU, so there are the sales consortia as well.

MR. MITCHELMORE: Okay.

Other departments, like the Department of Tourism has a provincial tourism strategy, provincial ads that have been very award winning. The fishery has been a mainstay and has been the industry of Newfoundland and Labrador since the beginning of time basically.

Why isn't the government, your department, looking at a provincial strategy that is very generic and brand seafood, the way of life and our living, and really promote how important the industry is to the Province, not necessarily looking at individualized products that companies have in addition to this type of council?

MR. KING: Are you referring to promoting the fishing industry or are you talking about promoting the product?

MR. MITCHELMORE: The overall fishing industry. It may include some parts of the product. It may include some of the restaurants, the dining, the different product that would be there but promoting Newfoundlanders and Labradorians dealing in the industry, and also with various parts of seafood product but not necessarily specific branded items that a seafood marketing consortia would deal with.

It may be a way to promote the lifestyle of how important the fishery is to us and encourage a greater uptake of fish being ate throughout the Province, through people who are coming inside and not only people who live here as well.

MR. KING: That is certainly an item that could be considered as part of the marketing council's role. Our marketing efforts typically are based on industry advice.

To date, the industry has not identified promoting fishing and the fishing industry in Newfoundland and Labrador as a priority. What they have identified to us as priority is to invest in promoting Newfoundland and Labrador seafood product in markets where they are actually purchasing the product to try and enhance our opportunity to sell product. Our efforts are on the marketing side.

Provincially, I guess what we have done, we have marketing items that we distribute to promote fishery but the bulk of our budget has been into trade shows and significant events. Like the Boston Seafood Show, the seafood show in China, Brussels, and things like that, where we have an opportunity to tap into a very huge market that might be interested in buying our product.

It has not been identified by the industry. As I said, most of our advice we take from the industry as to where the strategic priorities are. The notion of expending money on television ads and provincial campaign has not been identified as a priority. The priority they have identified to us is targeting markets where there is actually an opportunity to sell our product.

MR. MITCHELMORE: Okay.

Thank you, Minister.

Under 2.2.03 Compliance and Enforcement, 06 Purchased Services, last year's budget was $15,000 and it was revised to $12,000 but this year's estimates are for $45,000, triple last year's budget. That is a big increase. What is planned under Purchased Services for Compliance and Enforcement?

MR. KING: We intend to invest in new inspection equipment for crab monitoring.

MR. MITCHELMORE: Okay. That is certainly an important investment with the concern of crab asthma and things like that.

I would like to ask about the licensing that has been provided to processors. I understand there is a two-year limit where a company has to do a minimum amount of processing. There are incidences where this has not happened, where people have gone more than the two-year period.

I am wondering if the compliance department, if there are regular audits to ensure there is actually processing happening at facilities and not at other facilities and being shipped. I just ask what the process is there.

MR. KING: We have inspectors in the field who do regular inspections of processing facilities and monitor the product that is processed there on an annualized basis. All of the license holders in the Province, their list of production or lack of is assessed.

Ultimately, it is the decision of the minister to cancel a licence. It is all tracked, and at the end of day if a licence gets flagged as being inactive for two years it is cancelled. That is our policy; subject, obviously, to appeal. If there are extraordinary circumstances, and sometimes there are, then the minister of the day may very well not cancel the licence.

The short answer is all of that is tracked. The amount of processing is monitored and logged. The decision to cancel or renew licences is based purely on the facts of the case.

MR. MITCHELMORE: Have you cancelled licences in the coming year?

MR. KING: Yes.

MR. MITCHELMORE: Is it possible to be provided a list of cancelled licences?

MR. KING: Yes, sure. I do not have it here but I can provide them. There are four or five, I think, we cancelled this year.

MR. MITCHELMORE: Okay.

I would like to ask about the mussel strategy from the annual report in 2010-2011. There has not been anything written since 2008. I am just wondering is there anywhere in these Estimates an allocation to really brand and grow an actual mussel strategy? Will we see a mussel strategy from your department on the aquaculture piece?

MR. MEANEY: We have a number of initiatives working with the mussel industry. There are a number of challenges, as the minister alluded to, not the least of which is the distance from market for Newfoundland into the Boston states which is the primary market. Our product is two days older when it hits those markets and that puts us at a market disadvantage.

We have funding under our aquaculture sustainability and development program to assist mussel producers and processers to be innovative in technology and being able to put the absolute best mussel into the marketplace as quickly as possible. In addition, we work with the other branches of the department, particularly in Marketing, to ensure we get the optimum market for mussels, optimum price, look at new products, including value-added, frozen mussels, mussels in vacuum packs, and mussels in modified atmospheric packaging.

There have been quite a number of initiatives that have been underway with the mussel sector to help them move that forward.

MR. MITCHELMORE: Okay. Thank you for that.

I did want to ask under, I think it falls under the Aquaculture Development and Management section, 3.1.01. Under Salaries there, there was over $1 million budgeted and $875,900 was the revised amount. Was there a position there that was not filled in that situation, or two positions?

MR. KING: Two positions, a marine finfish aquaculturist and a financial analyst.

MR. MITCHELMORE: Okay.

You do have on staff, then, a bio-security auditor? As well, are the two veterinarians and the laboratory technicians still on staff there?

MR. KING: Yes.

MR. MITCHELMORE: Okay, great.

Certainly, bio-security is a big concern that we see in aquaculture for sure.

MR. KING: I think you would find upon investigation that Newfoundland and Labrador is probably doing more for bio-security than most other jurisdictions.

MR. MITCHELMORE: Right.

In the current situation, Cooke Aquaculture in Nova Scotia are undergoing what could end up being very catastrophic when there are viruses and things like that there. This type of investment for bio-security in doing the auditing and making sure it is safe, because there is a lot of investment obviously here in the Province in aquaculture, so protecting that is certainly important. It is nice to see that those investments are being made.

MR. KING: It is not lost on people that the investment we have made in the aquatic health facility in St. Alban's is a big part of that. To emphasize and to illustrate our commitment to bio-security and fish health is why we put that facility there and why we stock it with very high-quality people.

Although, I have to admit, I think there is lots of co-operation in the industry. Certainly, I think it is fair to say the standards we have and the expectations we have around fish health are as high as or higher than anywhere else. We share your view on that. We want to grow the industry but we want to grow it right. We do not want to make mistakes that are going to be potentially catastrophic.

MR. MITCHELMORE: Great.

CHAIR: Mr. Mitchelmore, I am going to move back to Mr. Bennett.

MR. MITCHELMORE: Thank you.

CHAIR: Mr. Bennett.

MR. BENNETT: Minister, in the cancellation of processing licences, I understand if it is two years of non-use it is cancelled. Sometimes, as I am sure you would appreciate, there might be good reasons why no processing takes place.

Do you think at some point you might consider, if someone does not process for a year that they would be allowed on a year-by-year basis to explain why they did not do any this year? Instead of all of a sudden they have let it lapse and now they have a big problem to get it back.

Moose-hunting licences have the same system whereby you can get in the draw but not get in the draw. I did it last year. There was an election coming up. You fill out your cheque and say: Put me in but I do not want a licence. You basically have excluded yourself.

As you know, there is a small processor looking to get back a pelagic licence that we have spoken about very briefly. The issue may have been shortage of product or it was not worthwhile to do it. It was seen to be fairer to the processor and maybe to the department if at the end of any given year they file a report and say: This is why we did not process. Then you would have the option to say, well, you have a pass for that year; instead of letting it go for a couple of years and then coming back and saying you are lapsed and now you have to apply and maybe appeal to get it back. Would that be a better system?

MR. KING: I had not thought about the change to the system. We have applied a fair degree of latitude in accepting explanations from processers for non-processing and extending licences beyond the two-year period. Our policy, which is widely known in the industry, is two years of inactivity.

I can only speak since I have been here, but in most cases that I have dealt with, if there is a year of inactivity they tend to make representation and say: For the record, here is why we did not do anything and here is the case. The ones that I have been engaged in cancelling are typically just let go by the processors and the community.

MR. BENNETT: Okay.

MR. KING: In most cases, where there is some sense that they want to maintain it or there is an opportunity, they have made representation upfront. We will do our best to support the processors and the communities.

Our interest in the policy is removing licences that are just not being used or are sitting dormant and of no value or use to anyone. Likewise, in terms of new licences, obviously not wanting to put new licences in to glut the system and go back to some of what we had years ago with too many plants, too many licences, and nobody is really making ends meet.

MR. BENNETT: I agree with that, actually.

MR. KING: For a simple answer to your question: Yes, we certainly would work with people and give consideration to the reasons presented.

MR. BENNETT: The $3.4 million more or less that is to be allocated or set aside, or budgeted for the new seafood marketing council, is this imminent? Is this something you are going to cut a ribbon on tomorrow or the next day and you do not want us all to know yet, or is it something you are just working on and it is going to be sometime in the summer?

This sounds like really good news. As the minister, presumably you will announce it. How close is it?

MR. KING: No, it is not imminent.

MR. BENNETT: That is too bad.

MR. KING: I am not trying to scoop you or anything. It is not imminent but the consortia idea I talked to you about, that is moving forward. I cannot say whether it is going to operate this year. Perhaps not, but hopefully in the not-too-distant future we may be in a position to be able to talk publicly about what that is going to look like down the road.

There is a process you have to go through. Now that we have engaged companies and we are working with them, obviously we are talking about a business arrangement. I am sure you can appreciate; there are all kinds of pieces on their end that they have to work through to get this to work.

At the same time, it would certainly be my objective that the marketing council is going to come together over the next – maybe this is unrealistic, I do not know because I have not consulted – four to six months, for sure. I want to get the council in place, and get it active and moving.

MR. BENNETT: In the broad strokes or broad picture, as minister, how do you see that? You must have an idea of what you would like to deliver for that kind of money, 10 per cent of your last year's budget. It could be money very well spent.

What are your thoughts on what that is going to get us? Is it going to be a Cadillac or a Ford, or a pick-up truck?

MR. KING: The vision we are striving toward is that marketing council is going to give significant leadership to the industry with support from us on opening up new marketing opportunities worldwide to increase the value we get back for our seafood product. That is the ultimate goal in all of this, to get the maximum value back for the Province. I see that the marketing council will play a significant role in that.

We do not though, to be honest with you, have a defined plan as to exactly what that will look like and how it will operate. Again, the plan was, as per the MOU, that we would work with the industry along a process timeline and they would provide input from an expertise perspective on what that ought to look like. We have not really defined what the council has to look like.

In the broader strokes, Mr. Bennett, by engaging industry experts as part of that council there is a significant role, I believe, in changing the face of the seafood industry when it comes to marketing outside the Province and tapping into new markets, and partnering with other organizations.

MR. BENNETT: What sorts of input or role will very small plants play, very small operators? I have a concern that we have a handful of very large operators and they really dominate the industry in the Province. Then there are maybe eighty or 100 small ones.

In this council, do you see the small plants, like the people who are represented by SPNL and others, having a membership role or a lobby role, or a participant role?

There are eight of these plants in my district and two of them are owned by what I will call big players. They are both shrimp. Others are owned by much smaller players. One or two are not even very active.

MR. KING: On the marketing council side, it would be our view that we would engage all industry stakeholders, large and small. It is not just the large companies, if you want to use that term. It would obviously factor in the small operations like you are describing as well. They would have a voice at the table.

Probably the more significant piece that would be of interest to you on that issue would be the marketing consortium. That is probably where I see a significant benefit for the small plants.

The challenge we have at this point is getting our first group up and running. Our first marketing consortium, a group of plants and processors up and running to demonstrate to others what you can achieve by coming together. I am sure – I have met with lots of them, as I am sure you have – that there is some fear and trepidation amongst some of the smaller players about what this all means and whether they get swallowed up in the process.

From my perspective, I see the opposite happening. I see tremendous benefit for a small operator. If you have a consortium of ten fairly significant players in the crab industry – and this is all hypothetical, but I will just try to illustrate to you – and let's say they have 50 per cent of the crab in the Province, they are coming together under one consortium to market that crab product outside of Newfoundland and Labrador; if you are a very small player in the industry and you can throw your product in with them, then you are going to actually access the benefits that will come from having 50 per cent or 52 per cent of the product from Newfoundland, which allows the consortium to negotiate a higher price back for the product because they have a higher volume to work with and they can control the flow of the product into the markets outside of Newfoundland and Labrador.

I actually see that there is going to be tremendous benefit for the smaller operators to be a part of a consortium by getting greater value for their product. What happens today, typically, is a lot of these smaller operators are living – and I say this loosely – some from hand to mouth, so to speak. If somebody comes in and makes them an offer of $2 a pound and they sell it, if tomorrow the guy comes and says I can only give you a $1.80 they have to sell it then too, because they have to move the product.

The idea of the consortium is that the product will be banked and it can be released into the market as the consortium dictates. If the price goes down, they can slow down the release of the product into the market. If the price goes up, they can speed it up. That is very simplified terms now, but my point being, no matter how small you are if you become a part of that consortium, you are able to leverage the same price for your product as the larger members are.

MR. BENNETT: How would you see quality control being handled in a consortium like that, CFIA standard or somebody else?

MR. KING: It would not change from what we currently do. Do you want to add anything specific to that?

MR. BENNETT: It might be a bad batch going with everybody else's and then you have a big problem.

MR. O'RIELLY: Yes, the quality issue – there is a regulatory issue and that is the one referring to in the Canadian Food Inspection Agency and it is also quality standards that the Province applies in our inspection programs.

The real opportunity with the concept the minister is talking about, and your question on quality, would go to whether or not these sales consortia, as they are established, what product specs and standards are they going to adhere to. There are two elements of that which are important. One is the level that you are going to target in terms of your product specifications, and then, perhaps even more important as to the specification, is the consistency with which you deliver that.

The expectation is that if these sales consortia proceed as envisaged, they will establish those standards. In all likelihood they will be considerably higher than the basic CFIA standard, which is really make sure that the food is safe to eat, that is all. It will be something higher than that, but, most importantly, it will help ensure a very consistent quality to the marketplace. Hence, a better reputation, a better price point and so on.

MR. BENNETT: Is this foreseen with a single label? Is this like the ASMI or the Norwegian model? Is this like a singular label for all of them?

MR. KING: The vision that we shared through the MOU process is that if we could achieve one label for the Province it would be ideal, but I think it was recognized that there may be challenges around getting everyone to agree at the same time to come together. We are working on the notion that there may be multiple consortiums in the Province.

MR. BENNETT: For the species or something of that nature.

MR. KING: Yes, typically you would work on a group that are selling lobster, or crab, or shrimp, or something like that. Lobster and crab has been the focus, as recommended by the MOU, so at this point in time those are the two species that we are focused on. All of those who market under one consortium would have one label. If you have, using my hypothetical example, ten companies with 40 per cent of the crab for the Province or whatever magical number, then those ten companies will market under one label their product.

MR. BENNETT: Okay.

MR. KING: Crab and shrimp, sorry. Did I say lobster? Crab and shrimp are the two that we are focused on.

MR. BENNETT: That makes better sense. Lobster is a fish all by itself.

The document or the follow-up information that Mr. Mitchelmore is requesting, do I need to ask for that separately or will it automatically come to me? Whatever you give him, are you going to give to me?

MR. KING: Oh, yes.

MR. BENNETT: Okay.

Earlier you indicated, with some of the equity funding, or investment capital funding - or I am not certain what it was; I do not think it was equity – that you are not actually dependent upon or partnered with IBRD, which I see as a good thing because it reserves more autonomy in DFA.

Even that being the case, would there be cases where an individual who wants to put forth an undertaking, that they want to fund for whatever, would DFA fund a proponent at the same time as IBRD would, albeit for other things, one might be for inventory, the other one might be for equipment? Could that happen? Or, if DFA was involved, then IBRD would not be, or vice versa?

MR. KING: It is possible – I just conversed with Alastair there. Typically there would be a conversation between departments though, government –

MR. BENNETT: Mr. O'Rielly knows who I am asking about.

MR. KING: Okay, I do not.

MR. BENNETT: You probably do not, but he definitely knows.

MR. KING: Typically there is sharing of information across departments. It depends on the nature of the project. To be clear the Capital Equity Program I am talking about is aquaculture.

MR. BENNETT: Yes, okay.

MR. KING: It is a fund that we introduced a couple of years ago to support the aquaculture industry. It is a zero-based budget, which Mr. Mitchelmore asked about a while ago why the difference last year and this year and so on.

We make a case in the Budget process for certain specific projects. I think this year it was $6.1 million, next year it could be $2 million or it could be $200 million. Project proponents come to us through that program, and then the department will do an assessment and determine what we think are good projects. We will then make representation as part of the Budget process.

It is not a case that we have I will say $5 million every year to allocate, it is zero based and we make the case through the Budget process. It is targeted to aquaculture development.

MR. BENNETT: Is there any pool of funds or the possibility for anything but aquaculture?

MR. KING: The only other program of any significance that we have that might focus on what you are talking about, if I could read into you a little bit, would be our Fisheries Technology and New Opportunities Program; FTNOP we call it. There was some slippage in that one this year because again that one is all industry driven. We have a budget, we accept applications, and we do assessments. There is a whole range of things that can be considered there within specific criteria. Included in that could be capital equipment and things like that for processing facilities.

MR. BENNETT: Okay.

I would like to ask you a little bit about the cod recovery or if it is a recovery or non-recovery. The reading that I have done indicates that it is now the most important species by value in both Iceland and Norway is cod. They have hit around a 20 per cent threshold or thereabouts. They had a bad time of it back, more or less, when we did.

Mr. King, have you reviewed any of the Icelandic or Norwegian scientific literature to learn about their recovery to see what we could be doing? I know it is a DFO issue primarily.

MR. O'RIELLY: We are aware, of course, of the status of the stocks in Iceland and Norway and looked at what their success has been, which is absolutely phenomenal in the case of Norway. The cod quota this year is just north of 700,000 metric tons. Understanding how that stock has recovered so well is pretty elusive. I do not think they fully understand it either, but we are aware of what science says and the health of the stock, and the recruitment processes and so on.

A lot of that work and what is happening elsewhere will certainly input into the CFER initiative, which is the Centre for Fisheries Ecosystems Research at Memorial University, which the department funds. Scientists there – which, of course, you may know – are headed up by Dr. George Rose. He and his team will be looking very carefully at what happens in other jurisdictions and what the models are.

The whole purpose of the CFER initiative is to look at new and innovative ways of addressing science and of finding new scientific methodologies and approaches to stock assessment and to resource assessment overall.

MR. BENNETT: Is DFO actively doing anything in cod research? Not you guys, but DFO, to see where we are?

They may not have all been dragging, although that is the popular wisdom, is that we have caught them all. I have read other reports that say it may have had as much to do with water temperatures. There may have been ecological issues as well that we have not been paying attention to.

MR. O'RIELLY: The science that DFO is doing is very consistent with what they have done over decades really in terms of the annual survey that is carried out, the stock assessment survey. That is the main tool they use. There are a bunch of others in terms of looking at areas of habitat and recruitment, juvenile production and so on.

DFO really does not have any greater insight to what has happened with the resource. There is a question of ecological effects, temperature, regime shifts, and changes and so on. All of these are theorized but I do not think anyone has been able to pull this together and show in any definitive way what the effects have been of levels of fishing effort, predator-prey relationships, especially as it relates to seals and environmental shifts.

Certainly, we are seeing in the last couple of years significant changes in temperature regimes, in the north in particular, that seem to be more conducive to cod recovery. So there is some hope on that side. It is a mixed bag though because what tends to be good for groundfish, and particularly cod, tends not to be good for crab and shrimp.

CHAIR: Thank you, Mr. Bennett.

I would like to move to Mr. Mitchelmore.

I would like to suggest too, I am going to go back and forth one more time to each, fifteen minutes. Then we will have eight to nine minutes to conclude and do our motions to adopt the Estimates, if that is fine.

MR. BENNETT: What time limit today? I anticipated making more progress on the items that I have. That is not to say that this is a bad thing because it has been very informative across the board. If we had another morning available that would be really helpful.

CHAIR: That will have to be the call of the committee to decide on what is normally the protocol. It is up to the committee to decide. Okay, as we go through it we will see how far we can get. We can review that.

Would the minister and his officials be available?

MR. KING: It would be difficult to get another morning, I would think. If Mr. Bennett's interest is pursuing similar discussion –

CHAIR: Can that be done at a private meeting?

MR. KING: Yes, no difficulty with that. It appears you are not as focused on line by line as you are bigger issues. We can certainly do that, find some time for that if is appealing. Finding a morning is challenging for me because of my other duties in Cabinet and committees and so on.

CHAIR: Plus, all the officials too, getting everybody together.

MR. KING: Yes.

CHAIR: Mr. Bennett, would that suffice? We can arrange something.

MR. BENNETT: Line item matters are important to this year and this Budget debate and so on. To me, the big picture of where we are in the fishery and the opportunity to interact, share ideas and find out where we have similarities more so than dissimilarities is much more valuable than trying to figure out how much is budgeted for this and how much was spent for that. This sort of interaction takes more time.

CHAIR: Mr. Mitchelmore, if I could just ask for your input into –

MR. MITCHELMORE: Thank you.

I will focus in on the line items here of –

CHAIR: Yes, but I would like to ask also your view on that. I do not think it is available here in the agenda to be able to, down the road, convene another meeting of the committee.

MR. MITCHELMORE: I will certainly try and get through –

CHAIR: If there is additional information that the minister's staff might be able to work out a sidebar down the road, would that be convenient?

MR. MITCHELMORE: I would be okay to meet again. I will certainly try and get through my line items if possible within the time. Pending further discussion as to how everyone wants to go, I would continue to have further fishery discussions on the broader issues.

Right now, is it okay for me to go into my line items?

CHAIR: Go right to the line items, please.

MR. MITCHELMORE: Thank you, Mr. Chair.

Line 2.2.01 Seafood Marketing and Support Services, 10 Grants and Subsidies; you had already explained, but I just want to ask for a list of the $200,000 of what was actually spent on the marketing initiatives last year, if that could be provided.

MR. KING: Okay.

MR. MITCHELMORE: Is that okay?

MR. KING: Yes.

MR. MITCHELMORE: I go back to – it is under Compliance and Enforcement, 2.2.01. I just want to ask, what is the frequency of department audits for fish buyers and processors? Is there a clear set up, a structure of funds allocated to do the audits on a regular basis? Is it a yearly audit?

This is for the safety and what we had talked about earlier. Is there a specific time frame for your department to audit these facilities?

MR. KING: Line 2.2.01, is it?

MR. MITCHELMORE: Line 2.2.03 Compliance and Enforcement.

MR. KING: Line 03?

MR. MITCHELMORE: Oh, sorry about that.

MR. KING: Line 03?

MR. MITCHELMORE: Yes, it is 03 Compliance and Enforcement. I would imagine it would fall under the Salaries and probably Purchased Services if so.

MR. KING: Shawn is going to speak to that for you.

MR. MITCHELMORE: Okay, great.

MR. ROBINSON: The audits of facilities are scheduled on a regular basis. We have three auditors, as was mentioned earlier, and they look at the processing operations. They have a schedule worked out where they do them on a rotating basis.

At the same time, if there is – we talked earlier about production information that companies would provide. If production information comes into us that the department wants to take a closer look at, the auditors can also be deployed to look at specific production information that the company provides.

MR. MITCHELMORE: There is currently no set up for an auditor to go into a facility on a regular basis. There are processors and buyers across the Province that may not have been physically met with and their facilities.

MR. ROBINSON: No, sorry if I was unclear.

We do have a regular schedule of auditing. We look at all the processors in the Province and we do them on a regular basis. As I said, we have three auditors, they are scheduled. We look at how many processing operations we have, and they are done on an annual basis or a semi-annual basis.

MR. MITCHELMORE: Okay.

I would like to move on to 2.2.04 Fisheries Innovation and Development. I think this may have been answered by the minister.

MR. ROBINSON: Excuse me. Sorry, if I could just jump in?

MR. MITCHELMORE: Sure.

MR. ROBINSON: Perhaps it would be an idea to define the inspection process versus the auditing process. We have a number of inspectors, as was said earlier, over thirty that everyday are in processing operations and are looking at how companies are doing their work, what they are processing, the quality, et cetera.

Separate from that, we have an auditing team that looks at the annualized production of a company. They will go in and look at, what did they do over the year period? As I said, they do that on a regular basis. Plus, they have the ability to go in and do some kind of investigative auditing if we see an issue.

MR. MITCHELMORE: I may not have been clear in my questioning. I was focusing mainly on the auditing piece and I thank you for that clarification.

The Fisheries Innovation and Development, 2.2.04, Grants and Subsidies, I guess the decline then – we see the budget and the revised amount is a drop. Is that to confirm that there was less funding used under the Fisheries Technology and New Opportunities Program?

OFFICIAL: Yes.

MR. MITCHELMORE: Okay.

Can we have a list as well of that? They are printed on-line but not for the past year. They are not there for 2011. They are there for 2010.

MR. KING: You want a list of just the companies and the amount?

MR. MITCHELMORE: Yes.

MR. KING: No problem.

MR. MITCHELMORE: Under the Aquaculture Development and Management, 3.1.01, I would just like some clarification. What is being used for these Professional Services? Are these consultants that are being hired, under 05, Professional Services? That is the $232,800.

MR. KING: Line 05?

MR. MITCHELMORE: Line 05, under Aquaculture Development and Management, $232,800. Is that to hire a consultant? That is the Estimates for this year.

MR. KING: The budget head for that one is for hiring consultants. It is for using contractors and using labs as we require them, external to our own facilities. It also relates to special projects that we may be engaged in with respect to data collection and analysis in the aquaculture industry, any work we need to do around infrastructure development or industry development issues. It could include, at some points in time, site cleanup, water sample analysis or other scientific consultations on technical issues.

MR. MITCHELMORE: Okay.

In that same section under the Grants and Subsidies there, there was budgeted $1.5 million and it was revised to $330,000. Was something not done in this case, under the Grants and Subsidies? What program did the allocation have that did not get utilized?

MR. KING: Yes, there was $1.25 million that we had initially budgeted for a project to construct a meal plant and the proponent has since not followed through with it.

MR. MITCHELMORE: Is that the cod demonstration plant – no, that is a separate issue.

MR. KING: Separate.

MR. MITCHELMORE: Under the Aquaculture Capital Equity Investment 3.1.02.08, Loans, Advances and Investments under your equity fund, previously you had looked at investing $8 million and this year it is only $6.5 million in the equity fund. Is this an indication or is there any reasoning behind why you would allocate less money for an industry that is getting so much private equity back?

MR. KING: This is the one I referenced for Mr. Bennett a few moments ago. This is the one that is a zero-based budget.

MR. MITCHELMORE: Okay.

MR. KING: We make a case through the Budget process annually. It is all based on applications that we receive from the industry.

MR. MITCHELMORE: It is possible that it could be increased more than $6.5 million?

MR. KING: Well, the $6.5 million is the only allocation we have for this year. It is based on the applications that we have in the system for this year. Unfortunately at this point, I cannot share with you what they are because we are working through a process.

MR. MITCHELMORE: Okay.

MR. KING: We budget a notional amount based on two things: based on applications we have that we feel are solid; but also there is also a notional amount there for consideration of new applications that may come in which may give us the opportunity to fund over a couple of year period. The $6.5 million this year as I said a few moments ago, next year it could be down to $1.5 million or it could be up to $10.5 million.

MR. MITCHELMORE: Okay.

MR. KING: It is based on specific projects that we have for consideration right now.

MR. MITCHELMORE: Right. Those are the applications put in advance. Okay, I understand that now. Thank you.

MR. KING: Yes.

MR. MITCHELMORE: Last year there was $150,000 allocated in the budget to remove old fish structures and different buildings. Is that still – because I have not seen it in the budget or these Estimates, I may have missed it. Is this program still available or has it lapsed? It is for cleanup and different things, small amounts I believe of $3,000 were allocated.

MR. KING: There is no amount in the budget for this year. That was not an ongoing line item.

MR. MITCHELMORE: Okay.

MR. KING: It is an amount that we allocated –and it is DFA facilities and structures; it is not others.

MR. MITCHELMORE: Okay.

MR. KING: It is our own properties. We had targeted a number of properties that we felt we needed to do work with. That amount was in last year's budget specifically for those that have been targeted.

MR. MITCHELMORE: Right.

There has been quite an increase in natural disasters such as storm surges and things like that. That has had an impact on fishers and their sheds and outer buildings and things like that that has been damaged. Some of them have chosen not to rebuild. Would there be some consideration for a partial funded program to remove old structures under Department of Fisheries and Aquaculture?

MR. KING: I have not given any consideration to it. A primary consideration for any government, whether it is us or someone else would be that if you looked at enacting that kind of a program, the minute you take on responsibility for cleanup you take on responsibility for liability of the property. It is not a road that we have travelled, and I do not foresee us doing it at this point in time.

MR. MITCHELMORE: Right. I am aware of that.

What investments are being made into the safety and the professionalization for harvesters? There were some funds allocated previously, and I did not see it this year in the Budget for the certification board.

MR. KING: Mike, do you want to speak to it?

MR. WARREN: We are continuing with our safety initiative that was identified in the Fishing Industry Renewal Strategy. We were working with the Workplace Health, Safety and Compensation Commission, and so we are making some progress that we hope will build to make some announcement soon.

MR. MITCHELMORE: That is great to hear that.

One other thing I wanted to get back to was the certification of fish species. There have been several initiatives undertaken by the department where there has been great certification. Are there any initiatives being undertaken to do further certification of fish species in the upcoming year?

MR. O'RIELLY: Yes, there are some discussions amongst members, various processors in particular who are interested in pursuing this. Mostly Marine Stewardship Council certification but there is other initiatives as well. We are doing some work with the aquaculture sector as well for this purpose, particularly in mussels. So we are receptive to that, and we are finding that it is a way to add value and differentiated product for the Province.

MR. MITCHELMORE: Would the Fisheries Technologies and New Opportunities Program have funds allocated as an incentive or partially fund either harvesters or processors to use more energy efficient technologies, whether it would be equipment, motors, or with their facilities? Does that fall under the program?

MR. KING: Yes, it would. Under the program, there is no particular amount of money allocated for specific types of projects; it is a global pot. We work with those in the industry who have ideas that might fit the criteria – that certainly would fit the criteria.

MR. MITCHELMORE: Okay, that is great.

Is there any movement, because there is a lot of biomass from fish plants and things like that, such as things like shrimp shells that are just being dumped and not being utilized, which could be an energy source or could be used for other things. Is this being pursued through outside investment, or should I direct this maybe to the Department of Innovation, Business and Rural Development as an initiative? Is this something that your department is exploring?

MR. O'RIELLY: There are a number of initiatives that the department has supported, but other departments, such as IBRD, or federal departments and so on have also considered. We have done a fair bit of work in that area with the Marine Institute over time and there are a couple of significant projects that have been undertaken or are in place within the Province right now to more fully utilize waste by-products from seafood production.

MR. MITCHELMORE: Okay, that is great.

I guess I alluded to – I would like to just ask what the status of the cod demonstration plant is. I may have missed that; the $1 million provincial investment in Cooke Aquaculture. It was supposed to be completed operations for September 2012. Is that moving forward?

MR. MEANEY: We entered into the process with Cooke to evaluate cod aquaculture. Over the course of the last three years we have come collectively to the position that the economics of growing cod in cages or in tanks simply does not meet the market prices. So, the bottom line is that we have cut the program short by a year, and that has resulted in lessened cost to us and to the company as well.

It is in its very last stages. The first fish will be going to harvest and evaluation for measurements and weights and that sort of information over the next six to twelve months, but the project is essentially wound down. The science and information will be retained, and if market prices improve it may be able to be looked at in the future.

Currently throughout the world – Norway, in particular, was spending huge amounts of money, time, and energy. There were over forty companies involved in cod farming. There is one company left in operation right now, and it is in pretty rough shape. So, the economics were simply not there to allow cod aquaculture to continue in the marketplace.

MR. MITCHELMORE: Okay, thank you.

After attending the Home from the Sea Campaign, it announced that it had raised $1.6 million at the seal of approval dinner there, and that the Province agreed to invest $1 for every $2 raised so that it could erect the $2.5 million sealers' memorial and interpretation centre at Elliston. I am just wondering if this investment of the $800,000-plus, would that be coming from the Department of Fisheries and Aquaculture's budget. I did not see it under the Grants and Subsidies – I am just wondering.

MR. KING: No, it is not in our budget.

MR. MITCHELMORE: Okay, thank you on that.

I would be willing to put it over to Mr. Bennett now.

CHAIR: Okay, thank you, Mr. Mitchelmore.

Mr. Bennett, I will give you the last fifteen minutes, and hopefully we can conclude.

MR. BENNETT: Minister King, I would like to flesh out the lobster rationalization plan a little bit. Can you tell me how much has the Province paid out to date for the lobster rationalization plan?

MR. KING: Mike has the amount there.

MR. WARREN: What we have done is it started in 2011-2012 and to date we have paid out $3.5 million. That was mainly our contribution towards the voluntary trap reduction program aspect of it.

MR. BENNETT: Is that part of the licence buy out?

MR. WARREN: It is part of the full package of the Newfoundland and Labrador Lobster Conservation and Sustainability Plan. There are three elements. The first element was the voluntary trap reduction; the second one was the Lobster Enterprise Retirement Program, called LERP, which was the main budget of the plan; and then there is also a conservation element, which is included as well. So, it was those three elements.

MR. BENNETT: What did the $3.5 million pay for?

MR. WARREN: That was our contribution towards the reduction in traps.

MR. BENNETT: When they gave up so many traps each?

MR. WARREN: Yes, exactly.

MR. BENNETT: Okay.

Is that done now? Is that fully funded and finished, that part of it?

MR. WARREN: Yes, the trap reduction element is completed.

MR. BENNETT: Okay.

What about the other one, LERP?

MR. WARREN: We have had two rounds and to date there have been in the order of 300 to 350 bids per round. I cannot say they are all different bids. They could be the same person, obviously, rebidding. We have had thirty-nine bids that have been accepted. I believe there were two bidders who rejected the offer. There will be another round at the end of the lobster-fishing season. Probably in July it will be announced.

MR. BENNETT: With the funding for this, did the Province fund it up front with a lump sum or is it pay as you go? How is that working?

MR. WARREN: It is pay as you go. We have completed the first part, the first element, the voluntary trap reduction, and then we contribute based on the expenditures that are made on the formula of 30 per cent from the Province, 30 per cent from the federal government, and 40 per cent from the industry. That would be for LERP.

MR. BENNETT: I am talking about what is being reported, $18 million; $9 million for the Province and $9 million for the feds.

MR. WARREN: The total value of the program is $30 million when you consider $9.1 million for the Province, $9.1 million for the federal government, and the remainder from the industry. That includes the three elements.

MR. BENNETT: When you say from the industry, who is that exactly?

MR. WARREN: That is harvesters because they contribute the money they received from the voluntary lobster trap reduction program to the pool, to the buy out.

MR. BENNETT: There is $30 million to work out for buying out enterprises?

MR. WARREN: No, that is the total of the program. For the lobster buyback component of it, lobster enterprise buyback, it is $17.1 million.

MR. BENNETT: Okay.

How much has the Province paid for the LERP right now?

MR. WARREN: Paid out for that – $44,000. That is what we paid out for the licence buyback. That is just the amount that we have, I guess, contributed to the program. We do not have the details from the union. The FFAW are organizing and delivering the program. Once the final payouts have been made, we will then make our contribution.

MR. KING: Just to be clear, on direct correlation between what we have paid and what they have paid, they pay out when they buy the licence back; then they come and bill us for the money and we pay them. Our portion of paying is subject to receiving a bill from the FFAW saying that they have now bought X number of licences from harvesters.

MR. BENNETT: What you have paid so far, is that for the first round, the first eight?

MR. KING: It may not be the full first round. It represents the bills we have received. The issue here is we are not engaged in that program; we simply are paying the bills. The program is being administered 100 per cent by the FFAW.

As long as they follow the terms and conditions around the financial commitment that we have made, we have absolutely no engagement whatsoever in the program. It is all done independent of us and independent of the federal government. They run the bids, they review the bids, and they determine which ones they accept. If they accept, for the sake of an argument, $100,000 worth of buyouts, they will bill us for our portion that we committed towards the $100,000 and we pay them.

MR. BENNETT: Have you set up some sort of a written agreement with them or contract?

MR. KING: A contract.

MR. BENNETT: How much of the money that the Province has committed – does a certain amount of that go to administration? Presumably, they do not do it for nothing.

MR. KING: About $560,000.

MR. BENNETT: That is a fee to administer the program.

MR. KING: Yes.

MR. BENNETT: Is it dependent on how many rounds it takes or how long it takes?

MR. KING: That is to administer the full program – the LERP component.

MR. BENNETT: Okay.

There is another round coming some time in the next few months. Will there be successive rounds after that?

MR. KING: At this point in time we have committed to March, 2014. March, 2014 is when this is scheduled to end. I guess the loose answer is there could be any number of rounds.

MR. WARREN: It depends on the numbers of the bids, the successful bids and the budget that remains. It may go to six rounds, is what we predict.

MR. BENNETT: It may be six rounds?

MR. WARREN: It could be.

MR. KING: Theoretically, they may get enough bids to take the entire amount the next round. If they do, well then the program is over. So it depends.

MR. BENNETT: How is the price that – I was going to say you are willing to pay but maybe you are not – someone is willing to pay for the buyouts, how is that price determined? Because it is a reverse auction and the fish is put in there. I will sell my enterprise for whatever. How is that number arrived at?

MR. WARREN: What we do is we announce the round and a fish harvester makes their own decision on what they see as the value of the licence to them and how much they are prepared to sell it for, looking at all of their situation, their financial situation. We want to use the money to remove as much capacity as we possibly can so that those who remain have a potential for greater incomes.

MR. BENNETT: Okay.

There must be an amount that is determined, otherwise either everybody would sell their enterprise or nobody would sell their enterprise. Who picks that number?

MR. KING: Those kinds of details are established by the group or the committee on behalf of the FFAW who is administering the program.

As I understand, there is a committee, Mike?

MR. WARREN: Yes.

MR. KING: Yes, there is a committee established.

What Mr. Bennett is asking is, if I am reading into you a little bit –

MR. BENNETT: There is a lot of confusion out there.

MR. KING: - who determines if it is $60,000 or $160,000 as the price, so to speak. Is that kind of what you –?

MR. BENNETT: Yes.

MR. KING: It is a committee of the FFAW harvesters, I assume.

MR. WARREN: Well, it is the partners.

MR. KING: It is the partners.

MR. WARREN: Yes. It is all (inaudible).

MR. KING: Okay. Just explain it to the committee, maybe it might be helpful.

MR. WARREN: There is an executive committee that is made up of the three partners that are funding the program. What happens is as the bids come in – a highly confidential process. The program manager evaluates the bids, complies all the bids, all based on number. We do not know any names, and then looks at the range of bids and then makes a presentation to the executive committee. Then we accept his suggestions or recommendations, or not, and we go from there.

MR. BENNETT: Okay.

Because we have had two rounds so far and this resulted in thirty-nine enterprises being retired, and around 300 or more people are bidding. Is there any idea of how many of these enterprises you want to take out?

MR. WARREN: There was some analysis done at the beginning of the program by DFO based on the value of lobster pots and the value to the harvester and his contribution to their income. We have an idea of the value, and we use that in determining sort of what bids may be selected. There are three partners involved here. So it is by consensus or majority vote at the end by the executive group.

MR. BENNETT: One person from each of the three, DFO, DFA and FFAW sit on the committee?

MR. WARREN: That is correct.

MR. BENNETT: Are they permanent members?

MR. WARREN: Yes, unless there is a change in position. I was on it and I moved into another position. My replacement filled the position for us.

MR. BENNETT: You are not the DFA person?

MR. WARREN: Pardon?

MR. BENNETT: You are not the DFA person?

MR. WARREN: Not now.

MR. BENNETT: Who is now?

MR. WARREN: That is the ADM of Marketing and Development.

MR. BENNETT: Okay. Who is that? One of you guys?

MR. WARREN: No, it is Gerry Donovan. He is off on medical leave.

MR. BENNETT: Okay.

MR. KING: (Inaudible) with us and is off for a little while. He is actually new to the department. He was with us a short period of time and had – I can share with you confidentially later, but a pretty serious bout with illness.

MR. BENNETT: Yes, I do not need to know the personal details.

MR. KING: Yes, but anyway it is Gerry Donovan. Gerry came from the industry and joined us.

MR. BENNETT: It seems like there is an awful lot of frustration among the people with lobster licences of how this is working or not working. Mostly it is around price, because nobody really knows where to go. If only $44,000 from the – and that is from the first eight licences?

MR. KING: No. The $44,000 is based on the bill we received. That may be for one or two, or three, I do not know. They may not have billed us for all of the first round yet. We pay based on the bills we receive. It is not necessary that they wait until they have all of the first round paid before they bill us. They may bill us for one or two, or whatever the case might be.

MR. BENNETT: Is it possible, at the end of the program, there will be money leftover and people did not get bought out?

MR. KING: A possibility, but I do not see it happening personally because it is reverse auction. So, we will creep our way up. The intent of the program was to relieve stress on the system and help harvesters exit. I do not personally see that happening, Mr. Bennett.

MR. BENNETT: Okay.

How is the price established? Is it by landings or whatever species they have? Because it is more than just lobster, it is the whole enterprise.

MR. KING: When the purchase is made, it does not factor in other licences that the harvester may have. It is purely on the value of the lobster licence itself.

MR. BENNETT: Then that harvester, that fisher has to give up the groundfish licence, the whole shebang. That person is out of the industry.

MR. KING: Yes.

MR. BENNETT: The Englee plant, Mr. Mitchelmore asked questions about this. Can you tell me who the owner is of the Englee plant?

MR. O'RIELLY: It is still the company Daley Brothers, I think. It was either their company or a subsidiary of that company. Those companies went into receivership a few years ago but they are still the owners of the facility. That facility was not picked up out of receivers and resold. It is still held by that company, but that company is bankrupt.

MR. BENNETT: Do you know who the directors of the company might be?

MR. O'RIELLY: I cannot say for sure, no.

MR. BENNETT: Does the company owe DFA any money? Do you know if they owe the Province any money?

Whoever owns the Englee plant, we seem to have a real logjam there. I understand an order was made to remove it and so on, but it seems like an order made against an insolvent or bankrupt company. The order does not seem to be worth very much. Unless it can chase directors or –

MR. KING: From our perspective, it is not a fish issue. It is either Municipal Affairs or Government Services. You really need to talk to them about the order that was issued. Our department is not engaged in those kinds of activities, as I said a few moments ago.

We are involved in the processing of fish side of things and supporting the industry, not in plant cleanups and occupational health orders and things like that. I think Service Newfoundland is the one that is actually taking the lead on that.

MR. BENNETT: Okay.

Back in 2007 I understand there was a two-year pilot project for shipping bulk herring. Is that still happening?

MR. KING: As of now, it is still happening.

MR. BENNETT: So they are still shipping bulk herring right now?

MR. KING: Yes, bulk herring for bait.

MR. BENNETT: Who are the shippers? Who is shipping out bulk herring?

MR. O'RIELLY: Are you looking for the names of the companies?

MR. BENNETT: Yes.

MR. O'RIELLY: A number of them participate, we would have to –

MR. KING: We would have to check our lists because there are a variety of processors who participate in any given time.

MR. BENNETT: Can you provide the list and the quantities that are being shipped out?

MR. KING: The list, we can; the quantities, we cannot. That would be proprietary information. We can certainly provide you a list.

MR. BENNETT: A list of who is shipping out unprocessed –

MR. KING: Yes.

MR. BENNETT: Is anybody processing herring in the Province?

MR. KING: Yes, Bill Barry in Corner Brook, I will call it, is processing.

MR. O'RIELLY: There is a large number. I mean, I do not know what it is exactly; there are sixty or seventy plants that are authorized to process herring, mackerel, and capelin. Those are all pelagic species that are all under one licensed rubric. Most of those are active in doing some volumes, some small volume; the minister mentioned one of the larger ones, of course, is the Barry Group. There are a number of them doing it. Even some of the ones that are processing take advantage of that two- or three-week window in the spring to ship product into the bait market in Nova Scotia which is based on the lobster industry.

MR. BENNETT: What level of processing is taking place?

MR. O'RIELLY: On bait product?

MR. BENNETT: On the herring. Is it primary, secondary, tertiary?

MR. O'RIELLY: Most pelagic species, it is a frozen whole product in many cases. Some companies do some more than that, in terms of either butterfly product or product that is produced ready for secondary processing, but a lot of the pelagic product is frozen whole and shipped in that form.

MR. BENNETT: Simply being frozen, that qualifies as processing?

MR. O'RIELLY: Yes.

MR. KING: Just to add to that, Bill Barry is doing herring fillets. He has tapped into a market – has a partnership with Vita Seafood. We actually had a meeting with them while we were at the Boston Seafood Show and he is doing herring fillets and herring chunks. Some of it is being done in vinegar and being shipped and there is further work being done through Vita Seafood. A very long-standing partnership, more than 100 years, I believe.

MR. BENNETT: Where is Vita?

MR. KING: The head office is in Chicago.

MR. BENNETT: Is this secondary processing they are doing?

MR. KING: Yes.

MR. BENNETT: Tertiary, like the jars or butterfly fillets frozen.

MR. KING: Yes, the jars – there are a variety of things you could probably ask Bill about and he can give you more detail. We saw a couple of products there. Just to give you a specific example, they are using the chunks of herring with tomato and some other ingredients to make herring bruschetta. It is very tasty, by the way.

MR. BENNETT: Okay.

Do you know what quantities?

MR. KING: No.

MR. BENNETT: Is anybody other than the Barry Group doing this level of processing?

MR. O'RIELLY: I would have to check to answer that question. Most of it is done in whole frozen form but I think there are other companies that are doing something beyond that as well. For most pelagic products that we produce that is the primary form is frozen whole.

MR. BENNETT: Do you know where it goes then when it is frozen whole?

MR. O'RIELLY: Depending on the product, in the case of herring, a lot of it goes into Eastern Europe. Russia is another significant market, Taiwan, and China.

MR. BENNETT: Is it possible for you to provide a list or summary of how much is primary processing and how much is secondary, what percentage?

MR. O'RIELLY: I am not sure how much data and where we would draw the line on that. There might also be issues of confidentiality in terms of product forms, but certainly we will get some profile information on that.

MR. BENNETT: You would not necessarily need to apply the amounts to the companies because we have – how many herring seiners in the Province, twenty, twenty-one?

MR. O'RIELLY: Seiners?

MR. BENNETT: Yes (inaudible) –

MR. O'RIELLY: No, there is much more than that. There are hundreds for sure.

MR. BENNETT: Seiners, I think, is a smaller list.

MR. O'RIELLY: Sorry?

MR. BENNETT: It is a relatively smaller list because –

MR. O'RIELLY: No, there are only a handful of large seiners. There are five or six actually on the West Cost. The number of sixty-five footers, a lot of those are seining as well. So there are hundreds of those.

MR. BENNETT: This is the product that we are talking about. Most of this product has been frozen whole and shipped out.

MR. O'RIELLY: Yes.

MR. BENNETT: Okay.

What I am interested in is what percentage of it is being just frozen and shipped out, and what quantity of it is getting further processing, secondary or tertiary. There might be opportunities there for smaller processors to do additional value-added processing. It is a complaint among some small processors that you cannot get product to do it further.

I do not know if that means they cannot get product to freeze and send out or if they cannot get product to do something else with, but it is a complaint. Along the lines of the minister's earlier observations that multi-species plants would be a good thing, which I agree, some of these might be doing turbot. Then a little later on they might have been able to do four or five, or six or eight weeks of herring or mackerel. This would provide an additional revenue stream for them. I am interested in trying to assess the possibilities.

MR. KING: Yes, and I appreciate your line of questioning and your line of thinking. Government is not adverse to that at all. As I have said before on many occasions, the fishery is business driven. We are not in the process of running the business. We are in the process of trying to facilitate and support a positive fishery.

If there are business persons out there who feel that they would like to take a stab at further processing herring, to follow one example you have used or others, we will never stand in the way of that. That door is open today for anybody to decide I am going to do further refining or secondary processing of herring. If there are programs that we have that can support that like our fisheries technology program then we will certainly do that.

We do not see the role of government as going out and doing that. We are not in the fishery business. We support the businesses and we do the licensing, the monitoring and the quality assurance and control. We do not run fish plants and we do not run secondary facilities; we support the businesses that want to do that.

MR. BENNETT: I understand –

CHAIR: Excuse me, Mr. Bennett, as we are almost to the end of our allotted time and we need to decide if we are going to move forward, people have schedules I know that they have to get to, I want to throw out what the minister has thrown out that he has the offer there that if you want to sit down privately with him and some of his officials to go through some of the other budget lines that were emphasized here, he would be willing to do that.

Right now looking at the schedule and the House opening and particular members who are on other Committees, it does not seem to be a time frame to reconvene. I do not know if members of the Committee are comfortable in calling and voting on the budget lines here now.

MR. BENNETT: (Inaudible) at all, not even for one hour?

CHAIR: It does not appear right here to work with everybody's schedules, particularly the minister and his staff, and ours; I know three of us are on other Committees.

MR. BENNETT: Yes, because another Committee did it. Education did it; they got additional time. I wouldn't mind if it were one evening, or a Friday

CHAIR: The only thing I can suggest, we can convene and it will be at the call of the Chair to review to see if it is possible.

I will note though, at the end of it under the criteria or the policy, at the end of the fifteen-day debate on the Budget it is an automatic that we come back and accept the Budget lines if we have not reconvened. So, unless you want to reconvene or, again, take the offer that the minister and his staff have offered?

MR. BENNETT: I would like to reconvene. It would not need to be for a three-hour session, but even if we could reconvene for an hour at some point in the course of the Budget debate.

MR. RUSSELL: Mr. Chair, I have no interest in reconvening. I think we have been presented with the line items in the Estimates and that the minister and his staff have done an excellent job of answering questions as per the line items.

Even Mr. Mitchelmore asked questions that had direct relation to the Estimates. I have no interest in a philosophical debate on items that have little or nothing to do with the actual line items in the Estimates. Mr. Bennett should have chosen his line of questioning as per the line items as opposed to issues that are not directly related to them.

MR. KING: For the record, Mr. Chair, I have a company waiting in my office for noon. So unless you need me for this debate, your committee can continue.

CHAIR: No, this is now at the committee level for debate.

MR. MITCHELMORE: Mr. Chair, (inaudible) to the offer as proposed by the minister and his staff. I have had the opportunity to ask my line items on the Budget Estimates. I would be happy to get into the additional information with the minister and his staff. They have given their time here today. I do not see where we would need to reconvene on those items.

CHAIR: Thank you, Mr. Mitchelmore.

Can I ask leave for Mr. Bennett to agree to the same?

MR. MITCHELMORE: (Inaudible) confirmation, Mr. Chair, anything that is provided to Mr. Bennett also be provided to myself from the department?

MR. KING: That is standard.

CHAIR: Will do. We will make sure.

MR. BENNETT: I do not feel I was provided enough time to pursue this as comprehensively as I would like to. Clearly, it is the hands of the committee, but I am asking for another hour some time in the course of the debate.

MR. KING: For the record, Mr. Chair, since we are recording, I have been forthcoming on every question asked to me of the Estimates provided here.

We need to note that the last twenty minutes of discussion, while worthwhile, have not been on the Estimates. They have been on philosophical issues around the future of the fishery. I am quite prepared to discuss that at any point in time, certainly.

CHAIR: Our member from Lake Melville wanted to make a motion to say that we will not reconvene. Mr. Clerk, can we then ask to adopt the Estimates?

We will vote on the motion first.

I make the motion that we not reconvene.

MR. RUSSELL: I move that we not reconvene, Mr. Chair.

CHAIR: A seconder for that?

MS PERRY: Yes.

CHAIR: Seconded by the MHA for Fortune Bay – Cape La Hune.

You heard the motion.

All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

MR. BENNETT: Nay.

CHAIR: Record it, one nay.

Now we will vote on the headings.

I will ask the Clerk to read the headings, please.

CLERK: Subhead 1.1.01.

CHAIR: All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

On motion, subhead 1.1.01 carried.

CLERK: Subheads 1.2.01 to 5.1.01 inclusive.

CHAIR: All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

MR. BENNETT: Nay.

CHAIR: One nay.

On motion, subheads 1.2.01 through 5.1.01 carried.

CLERK: The total, $49,680,200.

CHAIR: All those in favour, ‘aye'.

SOME HON. MEMBERS: Aye.

CHAIR: All those against, ‘nay'.

MR. BENNETT: Nay.

CHAIR: The motion is carried.

On motion, Department of Fisheries and Aquaculture, total heads, carried.

On motion, Estimates of the Department of Fisheries and Aquaculture, carried.

CHAIR: The Estimates for the Department of Fisheries and Aquaculture have been passed.

I want to thank everybody, the minister and his staff and the committee members, for your due diligence and your time.

Thank you.

On motion, Committee adjourned.