Pursuant to Standing Order 87, Danny Dumaresque, M.H.A. (Eagle River) substitutes for Bud Hulan, M.H.A. (St. George's).

The Committee met at 7:00 p.m. in the House of Assembly.

MR. CHAIRMAN (Penney): Order, please!

I welcome you to the fourth meeting of the Resource Estimates Committee. Tonight we will be reviewing the estimates of the Department of Fisheries. I welcome Minister Carter and his officials.

First I will introduce the members of the Committee. My name is Melvin Penney, I'm the Member for Lewisporte and the Chairman of the Resource Committee. To my immediate left is Mr. Rick Woodford, the Member for Humber Valley, who is the vice-chairman of the Committee. Seated at the members' seats to my left are: Mr. Beaton Tulk, the Member for Fogo: Mr. Ed Byrne, the Member for Kilbride: Mr. Paul Shelley, the Member for Baie Verte - White Bay: and Mr. Don Whelan, the Member for Harbour Main. I would like to recognize as well Mr. Bill Matthews, the Member for Grand Bank, who is welcome to sit in and participate in everything other than voting procedures and the moving of a motion, in accordance with the Standing Orders of the House of Assembly.

For those of you who are not familiar with the procedures, the Estimates Committee is an extension of the House of Assembly. The role of the Chairman is basically the role of the Speaker of the House, to maintain decorum and order. The one big difference is that the atmosphere is considerably relaxed. We are not restricted to the dress code that we have to adhere to in the House of Assembly. You are at liberty to remove your jackets. We are not restricted to referring to hon. members by the name of the districts that they represent. The members may be referred to by their name. If you wish, you may bring into the Chamber a cup of coffee or tea and our Page will be happy to accommodate you in that request.

The procedure that we have been following at this Committee for as long as I've been the Chairman of it - I believe this is the third year - is that we will accord to the minister twenty minutes to make an opening statement, and then we will accord to the vice-chairman twenty minutes to make a statement as well. Then we will go into questions from members for ten minutes' duration each. What we have asked is that members not take the ten minutes to make a speech and request that the minister reply, but that he use the ten minutes to ask questions and the minister respond and it be back and forth, similar to what we do in question period in the House of Assembly.

I would remind members of the Committee that they are permitted to question only the minister. If the minister decides to have his officials reply to the questions that is his right, but they can answer on fact. They can not reply in any way with reference to policy of the department.

The other thing I would mention to you is this is being recorded by Hansard. Where Hansard is familiar with the voices of all hon. members in this Chamber and are not familiar with the voices of the officials, I would ask that as you speak you first would identify yourself by name, and that secondly you lean into the microphones to speak, because they are designed to accommodate a member speaking from a standing position. Of course, you will be speaking tonight from a sitting position. I ask you to identify yourself first and then lean into the microphone.

Having said that, Mr. Minister, if you would be so kind as to introduce your officials. Once you have done that, proceed immediately into your opening statement.

MR. CARTER: Thank you very much, Mr. Chairman. On my far right is Assistant Deputy Minister Harold Murphy. Next to him, Assistant Deputy Minister Reg Kingsley; Deputy Minister David Vardy, Assistant Deputy Minister and Chairman of the Fisheries Loan Board, Mr. Leslie Dean.

To Chairman, and members of the Committee - may I start my statement?

MR. CHAIRMAN: Yes, Mr. Minister.

MR. CARTER: I am pleased today to present to this Committee the budget estimates of the Department of Fisheries for the fiscal year 1994-1995. Despite the fiscal realities facing the Province in 1994, I feel that the level of total expenditures for my department in 1994-'95 continues to demonstrate the commitment of this government to our most important resource sector. Gross expenditures in 1994-'95 are projected at $25 million. Revenues, both current and capital, will total $7.6 million, consisting of $1.2 million through the fisheries component of the federal-provincial comprehensive Labrador development agreement, $3.5 million through Fisheries Loan Board repayments, and $2.9 million from other provincial sources.

My department will, in total, spend $18.4 million on current account, and $6.6 million on capital account in this fiscal year. Our previous year's estimates called for expenditures of $22.8 million on current account and $7.6 million on capital account. As indicated above, my department will spend $25 million in 1994-'95, a reduction of $5.4 million from the previous year. The principal decreases include $4.1 million related to the expiry of the Atlantic Salmon licence buy back program, $2.6 million related to interest subsidy requirements in the Fisheries Loan Board, and $1 million based on reduced direct loan requirements in the Fisheries Loan Board.

The principal increases in budgeted estimates include approximately $1.9 million to continue turbot fishery development off Northern Labrador, $300 million to provide for a fisheries research chair at Memorial University, and $1 million for the Province's share of the co-operation agreement for salmon enhancement and conservation.

I wish to take this opportunity to touch briefly on recent events in the Newfoundland and Labrador fishery, and the Province's perspective on the fishery of the future. The fishery is fundamental to the economy and way of life in this Province. Economic activity generated by the fishing industry provides incomes to individuals. It provides vessel payments and commercial spending by fishermen and plant workers.

Despite the considerable challenges which have faced and will continue to face the industry, principally due to the decline of critically important groundfish stocks, the industry in 1993 still achieved landings valued at approximately $175 million, and produced fish products for the market value in the order of $400 million.

While these figures represent a major reduction in the peak landed value of $287 million, a market value of $800 million in 1988, it nevertheless indicates that the fishery is still a major contributor to the Newfoundland and Labrador economy.

My department believes that we are now experiencing the trough in terms of the economic contribution of the fishery, and that based on the continuation of more conservative management practices as the federal government, the fishery will start rebuilding over the next decade. The Province and the federal government agree that the fishery can no longer be expected to sustain all those who have come to rely on it, often due to lack of alternatives, if fishermen and plant workers in the future are to become more self-reliant and achieve reasonable levels of earned income; however, in the interim there will be an enormous need to support individuals who have been affected by the industry turndown as they strive to maintain their place in the fishery or move on to other opportunities.

The federal government has been working co-operatively with the Province over the past several months to develop specific support and adjustment programs under The Atlantic Groundfish Strategy, TAGS. In the recently tabled federal budget, this strategy has been allocated $1.9 billion over five years. In the coming weeks the Province will be considering how best to compliment federal programs to ensure that all affected individuals are treated fairly and with respect as they consider their future options, and to attempt to provide realistic alternatives for those who are displaced.

I would like now to briefly discuss the 1994-95 estimates as they relate to the four branches of my department. The regional services branch has allocated $9.2 million in support of the maintenance and utilization of over 200 fisheries facilities, the capital works program, the operation of the Northern Labrador plants, and the administration of the regional services division in Labrador.

The operation of twenty-five marine service centres throughout the Province remains a major activity in this branch, and those within the program in recent years include leasing the centres to private operators and community based organizations. At the present time five marine service centres located in Fermeuse, Port de Grave, Bonne Bay, Cartwright, and Bonavista are under commercial operation, and the centre in Fortune is run by the local harbour authority.

The results of this type of operation are proving satisfactory to the local communities, fishermen, and the department in terms of the services provided and cost effectiveness. We will continue where feasible to make such facilities available to private operators, and to develop and provide marine service centres to fisheries and other marine industries.

In 1993-94 the centres conducted approximately 2400 vessel haul out and launches, 240 emergency or service lifts, and accommodated winter storage of 800 vessels. In consideration of the moratorium on various groundfish fisheries we intend to continue assistance to fishermen for vessel haul out, storage, and landing at the centres. In 1993-94 600 vessel owners received assistance for a total value of $750,000.

Since 1990 my department has implemented a fishplant divesture program which resulted in the sale of twenty-five plants, seven of which were de-licensed and transferred to community based operations for use outside the processing sector. One other floating facility was also de-licensed and sold to a private company for other purposes. Currently the Province has ownership of twenty-three plants. Eight of these plants are presently vacant and inoperative, fourteen are under various lease purchase and operating agreements with private companies. In addition the plant in Nain has been operated directly by government for a number of years and efforts are now underway to acquire a private operator for the plant in 1994 and the future.

The department is continuing with a capital works program which mainly involves upgrading or replacing distant facilities. A budget of $1 million will fund various projects at marine service centres, fishermen's community stages, and slipways. An important development in 1993-94 has been a direct contribution by community groups and a private operator to these projects in the form of labour and financial input.

The department plans to further such partnership arrangements in the future which includes a policy for the transfer of ownership of fisheries public facilities to community based groups such as fishermen's committees as may be feasible. A previous policy required that the department owned facilities before any significant repair or upgrading assistance was provided.

Under our current policy the communities are provided the opportunity to own and control these facilities and the provincial government can continue to provide maintenance, upgrading, and other forms of development support as may be appropriate. In 1993-'94, a total of eleven facilities were transferred to local fishermen's committees and area development associations. Other communities and their organizations are interested in this approach and we will continue with this direction in the future. It provides for greater opportunities for involvement and control within the community. Each year the capital program provides grants to approximately eighty community-sponsored projects mainly for the purchase of material to maintain community-owned fisheries facilities.

The department also administers the fisheries component of the Federal/Provincial Comprehensive Labrador Development Agreement signed in July of 1989, which calls for expenditures of $7 million over the 1990-1996 period. In 1994-'95, approximately $1.56 million will be appropriated to current and capital accounts under this agreement; the fisheries and aquaculture development branch is the second major operational branch in my department. The branch is composed of four divisions: Harvesting Operations, Processing Operations, Marketing Services and Technical Services. The branch will spend $5.7 million in 1994-'95 consisting of $3.4 million on current account and $2.3 million on capital account.

The branch administers Newfoundland's aquaculture legislation which provides the legal framework for the development of the industry. Major emphasis in the current year will focus on increasing and strengthening salmonoid production worth approximately $1.2 million last year in Bay d'Espoir; increasing mussel production and stimulating the farming of scallops. Extensive field activities are undertaken to provide extension services as well as inspections of licensed sites.

Primary focus of harvesting initiatives will be to broaden the resource base through the development of less traditional species such as skate, urchin and scallop, to promote access by the inshore fleet to fleet to shrimp on the Northeast Coast, and to demonstrate improved handling and storage for pelagic species. Capital expenditure of approximately $2.3 million is provided with respect to financing and insurance costs and four middle-distance vessels built at Marystown during the 1987-'90 period. The department is currently involved in a process to divest itself of these vessels. The branch will provide financial and technical support to industry to promote value added processing and the utilization of underutilized species especially seal and other fishery by-products.

There is also a strong focus towards technological innovations to enable Newfoundland and Labrador processors to operate on a competitive basis. The funding also provides for the administration of the Fish Inspection Act. The branch will provide marketing support for industry, primarily in order to market underutilized resources and value added and aquaculture products and to explore new marketing opportunities. It will continue to provide market research and intelligence and will also continue to provide corps funding in the newly established Newfoundland Seafood Market Council.

The Fisheries and Aquaculture Development Branch have been allocated $500,000 to fund the new corporation agreement for fishing industry development. Guidelines for a program implementation have yet to be established pending the formation of the federal/provincial management committee which will be responsible for the administration of the agreement. However, the thrust of the agreement is to diversify the resource and product base of the industry through the development of underutilized resources, the utilization of by-products and value added processing activities.

Technical support to the Fisheries Loan Board is provided through the technical services division of the branch which also co-ordinates the administration and the rebuilding of the repair bounty program. Applications to the Fisheries Loan Board for loan assistance are technically assessed by this division which also conducts inspections on vessel constructions and repairs undertaken by fishermen with financing from the Fisheries Loan Board.

The policy planning branch will have estimated expenditures in 1994-1995 of $3.1 million. This branch provides ongoing policy and program planning within the context of government's broad fisheries management and fisheries development objectives. During the coming year the branch will continue to focus significant attention on resource difficulties facing the industry, stock rebuilding, and fisheries revitalization. In particular the branch will be finalizing a new fisheries policy white paper which is being developed based on the Changing Tides public meetings and industry consultation. The branch is also responsible for field services activities, coordinating the activities of six regional field offices. In addition, the branch undertakes the fisheries science and resource analysis activities of the department, including representation on the federal government's fisheries research conservation council.

The branch also manages the Province's role in the day-to-day operation and administration of the cooperation agreement for salmon enhancement and conservation, a five-year cost-shared agreement valued at $20.57 million which will expire on March 31 1997. The Province's expenditure during 1994-1995 will be $1.2 million. The policy planning branch will also undertake program development and coordinate the administration of the cooperation agreement for fishing industry development. Under this $8.57 million five-year cost-shared agreement which was signed in late 1993-1994 the Province will spend $550,000 during 1994-1995.

The Fisheries Loan Board is projecting gross expenditures in 1994-1995 of $5.2 million in support of the Province's inshore fleet. Expenditures will be directed toward interest subsidy payments for the existing loan guarantee program portfolio, loans under the Board's direct loan program, and assistance under its rebuilding and repairing bounty program.

My department's response to the 1992 northern cod moratorium and the subsequent Province-wide closure of the cod fishery consisted of interest forgiveness programs for both direct loans and loan guarantee program clients, and a loan write-off program for retiring fishermen. In 1992-1993 the interest forgiveness program and early retirement program provided assistance to 900 clients of the Board at a cost of approximately $6 million. The 1994-1995 projected expenditure consists of a further $1.3 million for 1994 interest forgiveness assistance for loan guarantee program clients.

The Board's direct loan and loan guarantee program portfolios consist of 5,700 loans with a total value of approximately $110 million. The Fisheries Loan Board will continue to collect loan repayments from direct loan program clients who have the ability to repay. The Board will also continue to work closely with chartered banks concerning the loan guarantee program loans in order to minimize claims under the government's loan guarantee. In response to the recently announced federal programs under the Atlantic Groundfish Strategy known as TAGS it is anticipated that a significant number of the Board's direct loan and loan guarantee program clients will be retiring from the fishing industry. My officials will be considering the options to address the outstanding loans of these fishermen.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Minister. The Chair would like to first recognize the Member for Eagle River, Mr. Danny Dumaresque, who is here tonight replacing Dr. Bud Hulan, the Member for St. George's.

SOME HON. MEMBERS: (Inaudible).

MR. CHAIRMAN: In case members didn't recognize him, it is the hon. member right behind you and to your left.

I would also like to welcome the media here tonight. We have representatives from CBC and from The Evening Telegram. It is nice to see that the media is here with us for our proceedings.

Before I turn it over to Mr. Woodford, I would ask for a motion to adopt the minutes as circulated. That is the minutes of the last estimates committee meeting of April 27 dealing with the estimates of the Department of Mines and Energy.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

Mr. Minister, in the release that Mr. Tobin made the other day in consultation with the Province and so on. Under the eligibility criteria there for fish plant workers and fishers, it says it is based on substantial historical dependence on the groundfish industry. Could the minister clarify for me what both levels of government consider substantial?

MR. CARTER: I do not have a copy of the minister's release here.

MR. WOODFORD: What is the meaning of substantial?

MR. CARTER: I am assuming that means people with a substantial attachment to the -

MR. WOODFORD: Yes.

MR. CARTER: - processing sector and fishermen of course. I expect the details of that will have to be worked out later along with a lot of other details on the ministers announced program but obviously it applies to people with a substantial attachment to the fishery, both in the harvesting and processing sectors.

MR. WOODFORD: Yes, that is why I asked the question because if the minister has any reason to believe that - because under the old NCARP program, as the minister knows, in order for fishermen or plant workers, especially plant workers to be eligible, the plant had to have a 10 per cent through-put -

MR. CARTER: Yes.

MR. WOODFORD: - of fish, of groundfish.

MR. CARTER: Yes, Northern Cod.

MR. WOODFORD: Northern Cod, yes. That is what struck my eye when I read the statement and so on - when it said: substantial historical attachment to the fishery where they are not saying a 10 per cent through-put, they are not saying 20 per cent, they are not saying 30 per cent and that worries me and concerns me, and I hear that it is 25 per cent. I think it was said in the House, what is it, 3,000 - that would eliminate some 2,500 to 3,000 people off it then but there are a lot of plants around that will not make the 25 per cent. So I mean it is obvious from that particular statement that - and as the minister just stated, it is not clarified for him yet let alone have other -

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: Yes, that's right. Yes, if there is anything over, if there are plants over 25 per cent but -

MR. CHAIRMAN: Order, please!

MR. CARTER: I am assuming from the minister's statement that people who are currently covered under the old program, we will call it, will also be covered under the new program until the details are worked out.

MR. WOODFORD: Until December.

MR. CARTER: Yes, and people with a substantial attachment of course to the fishery will be covered and those who have somewhat less attachment to it, then they are going to have problems obviously.

MR. WOODFORD: So it is obvious that a lot of those people will be off it as of the end of December because everybody on it now will get it to the end of December.

MR. CARTER: It is estimated 3,000 people will be removed from the program on December 31. These are people with a minimal attachment to the fishery. After that, my understanding of it is that there will be nobody, except for those people who will be taken out initially, the estimated 3,000, after that everybody else in the program will get a minimum of two years' coverage, and in the case of core fishermen, people qualifying, and then plant workers, the core people, they will be in for a five-year period. There will be nobody getting less than two years.

MR. WOODFORD: Nobody getting less than two -

MR. CARTER: Except the initial drop-outs on December 31.

MR. WOODFORD: Those are the people who won't meet the 25 per cent requirement.

MR. CARTER: Yes.

MR. WOODFORD: Under the wage subsidy program whereby employers will be given an incentive, more or less be subsidized, if they hire a plant worker or fisherman or whatever, does the minister see any problems with that? Because I can foresee some real serious problems with it.

For instance, our unemployment rate now will be 19 per cent to 20 per cent. Take for instance that the NCARP people today are not included in that unemployment rate, and our unemployment is 19 per cent, 20 per cent. Can you imagine if 6,000 or 7,000 people all of a sudden, or in some of the figures they mention, some 10,000 people who come off that program in the next couple of years, and they for instance - 50 per cent of them - went into work with employers and so on. Because it is obvious if any employer is going to hire four or five people and they are going to pay them $2,000 a month for instance, and someone is going to give them a subsidy of $1,200 or $1,500, well, it is only natural, human nature being what it is, they are going to hire the individual who is going to subsidize them. Wouldn't this be a real concern for the Province?

MR. CARTER: The Province shares your concern very much so, Mr. Chairman. We have so indicated to the federal government. We have some concerns as well with respect to that, some serious concerns.

MR. WOODFORD: Yes, but I mean, very serious. They could really pop the unemployment rate. Because it is obvious that if you take those people -

MR. CARTER: That is right.

MR. WOODFORD: - someone else is left out.

MR. CARTER: Yes, we see problems there too and hopefully they will be addressed by the federal authorities and remedied, corrected.

MR. WOODFORD: The minister mentioned in his statement - I was following what you were reading but I hadn't had the one in front of me - about de-licensing some plants and so on. I think the figure of seven was mentioned. One floating. Does the minister consider a plant that is an inactive plant? Would you consider that now a license that is, we will say, invalid and so on? Because it is not transferrable.

MR. CARTER: A plant on which there is a license that has been inactive two years prior to the moratorium date will automatically, unless there are extenuating circumstances to the contrary, be retrieved by the government.

MR. WOODFORD: Okay. The licence will be -

MR. CARTER: In that regard, since 1990 we have retrieved a number of licenses.

AN HON. MEMBER: Government plants.

MR. CARTER: These are government plants here, by the way, and if you want me to I can just go through this for you again.

MR. WOODFORD: Yes, okay.

MR. CARTER: Since 1990 my department has implemented a fish plant divestiture program which resulted in the sale of twenty-five plants, seven of which were de-licensed and transferred to community-based operations for use outside of the processing sector. One floating facility was also de-licensed - that was the old Labrador barge I think, and sold to a private company. The Province still has ownership of twenty-three plants and eight of these plants are presently vacant and inoperative. Fourteen are under various lease-purchase arrangements and operating agreements with private companies. There have been a number of plants decommissioned since this moratorium started.

MR. WOODFORD: The reason I asked you that, as you know, the old Sop's Arm plant in (inaudible) -

MR. CARTER: Sop's Arm is one of them, I think. Sop's Arm is one of the plants that is being decommissioned, isn't it?

MR. WOODFORD: (Inaudible).

MR. CARTER: Hasn't it?

MR. WOODFORD: No, I don't think they are among the seven. This was my question.

MR. CARTER: I can give the Committee, if you wish, the names of the seven. These are plants from which the licenses have been withdrawn, Newtown, Smokey, The barge, a plant in Campbellton, St. Julien's, Blue Cove, and Piccadilly. These are government owned plants, government owned facilities that have been decommissioned.

MR. WOODFORD: So plants such as the Sop's Arm fisheries plant are not considered taken back or anything like that? It is not transferable, it is frozen, and it cannot be transferred.

MR. CARTER: That plant has been de-licensed, the Sop's Arm plant.

MR. WOODFORD: Okay. That is the question.

MR. CARTER: That is gone because it was inoperative for more than two years.

MR. WOODFORD: That is right. An individual has just bought that, as you know, through FBDB.

MR. CARTER: Somebody from the West Coast, Allans I think, 3T or something.

MR. WOODFORD: As the minister knows, in my area, White Bay South, we always had a fair amount of groundfish going through the Old Sop's Arm plant and that is the reason why the plant was open for years, because of groundfish really. The Jackson's Arm plant relied primarily on pelagic and so on, and they had a very successful fishery over the years in crab, caplin, mackerel, herring, and so on. They have some real good markets for herring, for instance. They had some last year and have some better ones this year, good markets for mackerel and so on, but last year we had some complaints, and I was just talking to management the other day -

MR. CARTER: That is the Janes plant, is it?

MR. WOODFORD: Yes, in Jackson's Arm, about how small the herring were, the size and so on. They are out there now getting ready for this year and the same thing I would think is going to happen to the mackerel fishery because it seems right now there are more people going into that than were ever at it before. We had an example of that last year with the crab. Does the minister have any concerns there? I am sure he has been approached by some of the plant owners with regards to this particular problem?

MR. CARTER: That is second year class herring getting into the fishery and that accounts for the smallness of them. You mentioned small herring.

MR. WOODFORD: That is right but they do not consider it second year, they are talking about consistency. It is a concern they have right now, and they have some nice markets for herring. P. Janes has some lovely markets for herring and some real good markets for mackerel as well.

The crab fishery is another concern because, as you know, I think there were 150 pots or supplementary licenses?

MR. CARTER: Yes, there has been some realignment of the number of pots.

MR. WOODFORD: Last year there was a good crab fishery and they got some good prices. This year the price is agreed on for the crab fishery. They have some real concerns in that area and that is a plant primarily depending on, like I said, mostly pelagics and so on, and if management has a concern and some of the fishermen there have a concern then I say there must be concern by the department. Whether it is a grave one or not I do not know.

MR. CARTER: Is Janes operating there now?

MR. WOODFORD: He has just gone back in again now for the summer, but they are putting in a new (inaudible) machine there now for the mackerel and so on as well.

MR. CARTER: Is he doing his crab there now? Will he be doing crab there this year?

MR. WOODFORD: They ship most of it out to Hant's Harbour. They take it in through there. It is a small operation and they ship most of it out to Hant's Harbour.

Mr. Chairman, I have one other question and then I will pass it along to the other fellows. Have fishermen lost their boats and so on to the banks, or has the loan board foreclosed on them so far since the moratorium was announced?

MR. CARTER: There have been some in the normal course of events. I cannot provide you with the number but if you wish I can get the number for you.

MR. WOODFORD: The banks there for awhile were getting a little -

MR. CARTER: The banks have taken some actions, I understand, not a big number. Considering the number of loans that are out, the size of the loans and the problems, that whole portfolio is in a reasonably healthy condition. There are some loans where the payments of principle interest are in arrears but by and large I think it is fair to say that most of the loans in that bank loan guarantee program are in reasonably good shape, the majority of them.

The reason of course is obvious, most of the boat owners have multiple licensing, especially crab, and for that reason they are able to maintain their loans. There have been no recent repossessions under the bank loan guarantee program. The department is working with the banks. In fact the Premier and I met with the bankers association some time ago, had a long chat with them, pointed out some of the problems and they appeared to be somewhat sympathetic but things are not, given what is happening in the industry, it is not as bad as it is pictured to be probably in some quarters. My deputy here reminds me that I should not give the impression that everything is hunky-dory, it is not. There are some loans that have serious problems and Bill has one up in his own district, a chap came in to see me a few days ago. He has been in, yes and there are people who have problems but the vast majority of them do not have a problem.

MR. WOODFORD: This is another example of the pressure being put on the other part of the industry though because like you said, those people have multiple licenses and so on, especially those who have a majority of their income from the groundfish operation. Now we are gone into other species.

MR. CARTER: I get the impression that the clients, the bank loan guarantee clients, are acting in a very responsible way with the banks and are building up a reasonably good rapport with the banks. Now there are some who are not and that is unfortunate because sometimes a bit of honey attracts a lot more bees than vinegar. If a person plays the game, keeps returning phone calls and cooperates with the banks, sometimes that can pay off but it is a big problem, no doubt about that.

MR. WOODFORD: Thank you, Mr. Chairman.

MR. CHAIRMAN: Okay, Mr. Woodford. Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

Mr. Minister, I just have a few questions. From what you are saying and I guess generally what is happening in Labrador but the first thing I was interested in is the middle distance vessels. Exactly, how many are there now? Are there still four or how many are there? You mentioned in your note that you were going to divest of them and I was wondering what - I know there was a public call but is there now going to be another and would the department be open to a proposal from a cooperative or some other group who might want to access on the utilized species using one of those, either on an ownership basis or on a leased basis?

MR. CARTER: These vessels are costing the Province a lot of money and their initial cost of course far exceeded what the true cost was when they were built, $22 million for four boats, $22 million for four vessels. I submit to you, that had there been competitive bidding without the need for a subsidiary, as was the case in Marystown, those boats would have probably cost a little more than half that much. So the end result being that we have four very costly boats on our hands. Now I should tell you that the Province's first ambition is to sell all of them because the way the fishery is now and with the prospects of the ground-fishery, the cod fishery coming back soon being very dismal, it is going to be difficult for those boats to maintain themselves. When they started out some years ago they did have a middle-distance boat quota, and that quota kept shrinking until eventually it disappeared. Those boats have not made any money since.

AN HON. MEMBER: (Inaudible)?

MR. CARTER: I'm not sure, but again, given their cost, and the cost of servicing the money - you see, both of them are financed under some kind of a special arrangement with ROYNAT Leasing and Pitney Bowes. They put up the money to buy those vessels. Our first aim is to sell them. I can tell you that, without going into any details, the sale of two of them is now being negotiated and looks reasonably promising. I don't want to go into any details on that because the deal is by no means closed yet and I don't want to say anything that might upset the apple cart.

The other two are up for sale. We would much prefer to sell them than to lease them. Because we found that in leasing them we can't possibly generate enough revenue from the lease to pay the cost of keeping them in the water when it comes to insurance, maintenance, annual refits and so on. It is not a money making game. In fact, it is a money losing game. Last year we had those vessels leased and I don't know to what extent it contributed to their general upkeep, but I know that there was still a very sizeable amount of money spent by government by way of a subsidy on the operational cost, upkeep.

I guess, Danny, to answer your question, we would prefer to sell them. They are getting older and with the prospects of the groundfishery not coming back until three or four or five years' time it is not worth our while to keep them. I tell you now, my Assistant Deputy, Les, reminds me we are not going to give them away. In fact, we've had several offers -

MR. DUMARESQUE: Not like FPI.

MR. CARTER: - from far away countries and nearby countries. They've not even come close to compensating government for what they cost. In fact, it is pretty well impossible to get that anyway.

MR. DUMARESQUE: You touched on one point there that I would just like to pursue a bit. I've heard it sometime before. I know you weren't there as a minister - we weren't here even as the government - when the original contract was put in place to build these vessels. You say they were leased from Pitney Bowes or something. Do we own these vessels or is it at the end of the day still Pitney Bowes that owns these vessels?

MR. CARTER: These are operated through two different companies, I think, is it?

AN HON. MEMBER: Four (inaudible).

MR. CARTER: Four different companies. NEWCO. I, NEWCO. II, NEWCO. III and NEWCO. IV. These companies arranged financing from Pitney Bowes - they own two. NEWCO. I and II, I believe, probably got their financing from Pitney Bowes, and NEWCO. III and IV from ROYNAT, the Royal Bank. The government, by the way, has guaranteed the loans. Even though the loans are in the name of the NEWCO. I, II, III and IV companies the Newfoundland government is on the guarantee. There would be a considerable payout - for example, if we were to sell those boats tonight, we will have to liquidate the outstanding balance on each of them, and that is considerable.

MR. DUMARESQUE: But if we were to keep them and continue making the payments, how long would it be before we would own them? Or is there -

MR. CARTER: I don't know what the amortization period is. It must be twenty years.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Twelve years, another twelve years, at about $2 million a year.

MR. DUMARESQUE: A sizeable investment. I wanted to touch on -

MR. CARTER: I will just tell you, Danny, that we have advertised extensively, internationally, nationally and locally to try to attract buyers. We get all kinds of offers, some of which you wouldn't even bother to give a second thought to, you know. Weird offers, some of them. In fact almost every day - not every day, but certainly on a frequent basis - we get offers from people who want to lease them and bring them to the Azores or to Russia or to Argentina and Lord knows where else; but they are good vessels and it is unfortunate that it turned out this way.

MR. DUMARESQUE: Okay. On the Labrador fishery, as you know, we have had some good successes with the crab resource securing Cartwright and Mary's Harbour like they have not been secured in some twenty years, for the last two years in Cartwright and I think the last three in Mary's Harbour, and we also have an operation, at least in the section stage in St. Louis, and we would hope that the company there will be able to get that facility that is owned by the federal government right now, and to be able to put more investment in it; they have put $400,000 in it so far, but we would hope they would get access to that building and invest more money to create even more jobs in that community.

Last year, we lost some 40 per cent of the supplementary crab quota through boats coming from other parts of the Island, and we are concerned about that obviously, because the quota is only to the level where it can sustain these three operations and if that happens, everybody loses. There is very little crab there, in relative terms, towards the overall quotas and if that quota continues to be taken over by outside vessels, there is no doubt that we will have these plants operate for less than ten or twelve weeks now, and it is going to be very difficult to get even twelve weeks out of them even if we use every last crab that is there.

I know for the first time ever, you put a directive in place last year and supported by the union, and I think even requested by the union, because of the fact that we do not have any highways in that area of Labrador and we cannot possibly truck in resource from somewhere else, and it is the same thing for the turbot, so I am just wondering if you could indicate whether you have been able to keep that directive or regulation or whatever the terminology used in that respect, and if you have been able to get any co-operation from the federal government and be able to make sure that that small resource is kept there for the benefit of the people on the coast of Labrador and that we do -

MR. CARTER: Danny, the Province last year, did everything within our power as you know, to keep the crab in Labrador. We could not order the boats where they landed because boats are licensed by the federal government as you know. We could not do anything while the crab was on the water in a vessel, but we did issue a directive as you know, ordering that once the crab is landed in Labrador that it must remain in Labrador and be processed in a Labrador plant. Now that caused quite a stir as you know, because a lot of the Island plant owners, in fact I believe one particular company had a vessel under charter, it was either on the way to Labrador as a collector or a boat ready to go to Labrador and that caused that company - it is supposed to have lost quite a lot of money because of our actions there but we did hold it on and kept that directive in place.

We are in the process now of consulting with the industry again; we will be making a decision on that very shortly because we have to, of course, for obvious reasons. We have a similar problem with the turbot. Last year as you know, we had quite a kerfuffle in Nain for example, when the ships landed turbot, the fishermen in Nain and the fish plant owners refused to allow it to leave Nain, so again, we issued a directive that any fish landed in Labrador would have to remain in Labrador for processing.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Unless there was a surplus. Any turbot surplus to the needs of the Labrador plants, then had to be released and allowed to go wherever the owner wanted to take it, but again, that caused quite a stir last year. We had Newfoundland owned vessels, one the John Cabot for example, fished up there and it raised quite a stir in the news media charging that we were interfering and preventing him from getting top price for his turbot. Again, that policy is under review. We are trying to find ways of facilitating the problem that Labrador is having, yet without being too restrictive on the Island plant owners and fishermen, but we will have to find a way to certainly do all we can to make sure that crab landed in Labrador, and turbot, stays there. Again, we are working that out, talking to the industry and the union, and within a very short number of days we should have a firm policy on that, but it's a real problem. I think you understand the implications of doing it.

MR. DUMARESQUE: Oh yes.

MR. CHAIRMAN: Mr. Dumaresque, your time is up. We will get back to you later. Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairman. Thank you, Minister. I think it is the first committee that I have come to that there has been a prepared statement. It adds, I think, to the value of the discussion and the credibility of discussion; however, I would like to refer to a comment you made last week in the Globe and Mail - that is where I first read it - dealing with compensation for fish processors in the Province. The comment, I think - and correct me if I am wrong, and if I am please elaborate on what you actually said, but - it dealt with the fact that the Province has no intention of either pushing the federal government, or the Province itself, of looking at compensation for million dollar fish processors who have made big money from the fishery already. Would that be a correct summation of what was indicated there?

MR. CARTER: Even though it's in the Globe and Mail, I think that's reasonably correct.

MR. E. BYRNE: Fair enough.

Minister, surely there are processors out there who have not relied on either provincial loan guarantees or the federal government in any way, shape or form, who do not fall in that category of million dollar processors, who have been as tragically hit by the cod moratorium today as any fish plant worker or fisherman or fisher woman. Have any representations been made to you or your officials dealing with compensation by the fish processors? If so, can you update myself on what your response has been to that group so far?

MR. CARTER: I guess a better way you could have put it is, does a day pass in our lives when there isn't representation made for compensation in one form or another?

The position the Province has taken is that the Province does not support the proposition that we should be using taxpayers dollars to prop up, or bail out, or buy out - call it what you want - fish plants, most of which, by the way, are idle, some of which were put there with a lot of government money in the first place. You must remember that -

MR. E. BYRNE: I am not referring to the ones who were put there with government money, and neither am I referring to prop up or buy out. What I am referring to are private sector initiatives, people in the private sector who have gone out on a limb themselves, invested their own monies in building up plants and trying to secure licences and in keeping people working in rural Newfoundland, who have not had the ear of the Province, or not even been given the time of day in terms of what will happen to them. Some of these people will be left holding the bag more significantly than any fish plant worker or fisherman, and that's the processor that I am talking about. I am not referring to those who have been propped up with government money or loan guarantees. I am talking about the individuals who have gone out on a limb themselves privately and invested heavily through their own financing and through the banks, that will find themselves in a dreadful situation, and are in a dreadful situation right now.

MR. CARTER: Most representations that come to us, Mr. Byrne, come through FANL, and FANL has come up with a rather unique idea as to how to address the problem. Some time ago they proposed setting up an organization called the Phoenix organization, 'rising from the ashes,' phoenix. They were led to believe by the former Minister of Fisheries and Oceans, and I think he did it with tongue in cheek, that if the Province would participate in a program that the federal government would. They were looking for an amount of $50 million. That is what they were estimating it would cost.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. Crosbie led them to believe that he would probably be interested in entertaining a request for 70 per cent of that amount, $35 million, providing the Province would come up with the balance, the other $15 million. Phoenix Organization, or FANL, came to us and said: Guarantee a loan for us at the bank for $15 million. We will increase our licensing fees over the years, the proceeds from which we will use to liquidate the bank loan. We will then go out and identify plants that in our view have no future, and on a willing buyer-willing seller basis we will try and down size the fishery.

The Province didn't go along with that for a number of reasons. One, of course, we found out - in fact, we knew all along - that the federal government was not serious. While John Crosbie would be here, like I said, tongue in cheek, telling FANL what he would be willing to do, his senior officials were telling my senior officials in Ottawa or St. John's that it wasn't on. I think that John was playing a bit of politics, to be quite frank, knowing full well that the Province would not be prepared to go along with that kind of an arrangement, and I guess tried to put us on the spot.

Let's not lose sight of the fact, by the way, that the dilemma in which these small fish plants find themselves is precisely the same dilemma that fishing vessel owners find themselves, and fishermen. Namely, a problem caused in the main by the federal government. The fact that they have accepted responsibility for 25,000, 26,000 fishermen in terms of compensation, that speaks for itself, that they have acknowledged responsibility. A case could be made for them to assist plant owners because they have just as much responsibility to assist a plant owner in my view as they would to assist a vessel owner.

You might say that the Province licensed plants, but I've never known of a fish plant which is on the Grand Banks and catch fish. We licence plants. Plants are licensed by the Province on the basis of projections made by the federal government. In the 1970s for example when the 200-mile limit was imposed the federal government then, with a great deal of fanfare and flurry, said that within a very short number of years we would have fish coming out of our ears. Newfoundland in those days had to face up to certain things. Because under the Law of the Sea, as you probably know, if the coastal state doesn't use the fish it can lose it. Which is, any fish surplus to your own needs you must lose it to a foreign country.

Newfoundland geared up for this great onslaught of fish that was about to fall on us in the harvesting and processing sectors only to find out at the end of the day that the scientists were wrong, that we didn't have this great new rebuilt fishery. The end result being of course that we ended up with far too many fish plants and far too many vessels. If there is a surplus of capacity in the processing sector it is not because the Province issued licenses. It is because the federal government built up the hopes and aspirations of the people who in turn - and encouraged by the Province, very much so.

Now we find that we have far too many plants.

MR. E. BYRNE: Minister, the Free Trade Agreement, trends under the Free Trade Agreement demonstrate that a shift towards value added products could increase the value of exports into the United States and thus create the level of earnings for those people involved in primary resource industries, such as the fishery. Do you or your department have any long term projections or plans in terms of increasing the level of value added products in the fishing industry? If so, where are we headed with that and what are we doing to develop those markets in the United States?

MR. CARTER: That is a good question. There are a lot of things happening and as you know under the Free Trade Agreement the tariffs on imported fish into the US is dropping.

MR. E. BYRNE: Yes, and will continue to drop.

MR. CARTER: It is down to about 6 per cent. It was up, I believe, to twenty at one time.

MR. E. BYRNE: Yes, a little higher.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Some, yes, it is gradually dropping. There are markets in the US for a finished product but some of the big markets for value added, would be in Asia. For example, caplin, Newfoundland exports female caplin anywhere from twelve to fifteen - one year I think about 25,000 metric tons of female caplin, in frozen block form, were exported to Japan, for which by the way, the fish plants received a good price. In fact, that is what kept the industry alive I suppose for the past couple of years.

There are people in the Province now who are contemplating getting involved in the secondary processing of caplin, known as shishomo in Japan. It appears that there is a shortage of labour in Japan, certainly the type of labourer who would spend all day picking up caplin one at a time and skew them along on some kind of a piece of wire. So it is not the most attractive job and apparently they are finding it difficult to attract the kind of people to it. So some companies are looking at the prospect of doing that here in Newfoundland. In fact there is one company in my own district, Breakwater Fisheries are doing it and I can tell you now that if we can get that moving - that is a labour intensive industry. If you can visualize a mound of 20,000 tons of caplin, bigger than this building, each having to be picked up individually by hand and moved by hand about three times; taken up, put on a piece of wire, put up, taken off the wire, put in a little box in a certain way. You know it is very, very labour intensive and that is one area where there are some great possibilities, I believe, for labour intensive secondary processing. There are other things too of course happening in Asia.

The seal industry right now is - this year we have seen a rebirth of the seal fishery and my friend from Baie Verte is the beneficiary of this new reborn seal fishery. Cosmos Ho or Dr. Ho, one of the joint partners in that deal, has 12,000 seal carcasses going into Korea, vacuum packed. That is the first time ever I suppose that that quantity left the country for human consumption.

MR. E. BYRNE: Into Korea?

MR. CARTER: Into Korea.

They found markets for oil. This year they are going to be refining the oil here in Newfoundland, in a raw state, shipping it to China where it is going to be given the final refinement and then put in capsules and sent out into the marketplace. Those capsules will contain some very important medicinal properties. (Inaudible) I think it is called, that is good for people with cholesterol.

MR. CHAIRMAN: Order, please!

I recognize that the minister could go on and on and on -

MR. CARTER: Oh, I did not realize, I'm sorry.

MR. CHAIRMAN: - answering that question. No, the hon. members time is up, we will get back to you though. Mr. Tulk.

MR. TULK: Thank you, Mr. Chairman. I don't know why you are interrupting the minister, he was getting into some very good things with what can happen in the sealing industry and there are a great many other things that can be done.

I want to pursue something with the minister, purely from an information point of view. First of all let me start off by congratulating his deputy minister for starting to bring this to the floor at least for discussion and that is - the best way I can put it - the breeding and the possible seeding of the area called 2J-3KL with fish. I think it is something that we have to explore because I'm afraid - I happen to believe, unless we have a Barents Sea phenomena happening and the fish have moved and may come back, that that stock has probably reached the place where it is not going to rejuvenate on its own. I happen to believe that. If it is not moved somewhere and will come back again, perhaps when water temperatures change or whatever caused the codfish to leave and come, whatever that is, I believe that species is extinct.

Perhaps the minister would like for his Deputy Minister to speak on this, because it is a technical question. I read the article in today's Telegram, Mr. Minister, but what are the known possibilities, and how much scientific research and development is still needed, how much scientific research is done? Do we have the scientific knowledge in this Province that is required to carry on what I consider in my mind might be a very massive undertaking, if we were to carry on such a project?

I'm just asking for the minister to give us - and if he wants to, to go to the Deputy Minister, but I think he has some thoughts about this - to give us some idea as to what is involved there, and where the Province hopes to head on this whole issue of breeding fish, breeding of cod. Mr. Chairman, that is my first question. If I've got time I will ask some others later.

MR. CARTER: I'm going to need to ask my Deputy Minister to -

MR. TULK: It is a technical question.

MR. CARTER: - (inaudible) detail but I can - let me clarify something that Mr. Byrne asked with respect to the Province's position on buy-out.

MR. TULK: Buy-out.

MR. CARTER: Buy-out of plants.

MR. TULK: You may not have to.

MR. CARTER: There is nothing written in stone, I suppose. While the Province has maintained that position now since Day 1 that we would not participate in a buy-out program I don't want to give the impression tonight that the door is closed.

MR. TULK: No.

MR. CARTER: Again, I don't want to give the impression -

MR. TULK: That the door is open.

MR. CARTER: - that the door is open.

MR. TULK: Yes.

MR. CARTER: But I'm only telling you that there are very intensive discussions going on now with all of the stakeholders in the fishery, and the federal government and the Province, and we are going to be looking at all areas of activity within the fishery and responsibility. Like I said, while the door might not be completely closed that matter is being discussed. I don't know what will come of it. I doubt very much if there would be any drastic change in our position.

Getting back to what Beaton said, yes, I believe there are a lot of very interesting possibilities in cod aquaculture under a number of headings. Under catch and release enhancement, for example; under a program of depositing the fertilized spawn in the areas where it must be deposited. There are only certain places you can deposit it. You can't just take a bucket of spawn and -

MR. TULK: Throw it overboard.

MR. CARTER: - throw it - right - over the wharf because nothing will come of it. You must find the baskets, I think they call it. It has great possibilities. I think the sooner we get on with it - I think Mother Nature needs a hand right now, because the spawning biomass is so low that if we don't help Mother Nature it might be very well be that we might not see fish come back. I hope I'm wrong.

MR. TULK: I do too.

MR. CARTER: I would like for David to elaborate on that if you don't mind.

MR. VARDY: Mr. Chairman. The spawning biomass for northern cod is presently 1 per cent of what it was thirty years ago. It is down to 15,000 to 20,000 tons. That is the spawning fish which are seven years of age and older. Most of that fish is in the southern part of the zone. There is very little fish left in 2J or 3K. As a result of that we as a department took some initiatives earlier this year and brought together a group of scientists in this community to look at what the options were, and you have to realize that we have, in Newfoundland, a large corps of scientists, marine scientists. We have 20 per cent of the expertise in fisheries science in Canada, and we brought together these people and looked at what could be done, recognizing that back in the 1890's Adolph Nielsen started out a major program in 1889 of hatchery development that went on for close to seven years, and they actually bred one billion eggs and deposited those -

AN HON. MEMBER: (Inaudible).

MR. VARDY: One billion eggs over a period of six years, and those eggs were deposited in the area around Dildo. It was very difficult to determine the impact of that at the time, but all of this was brought about because the failure in the fisheries took place at that time and a fisheries commission was appointed, and the fisheries commission brought in Mr. Nielsen and they started this hatchery. Now what they did at that time was to have a hatchery which was put together for the purpose of breeding small fish - these were fry, cod fry - and these were released into the wild, so we looked at in that context of revisiting that in order to enhance what nature has done.

The scientists felt that rather than releasing the fry that it might be preferable to release the fish at the larval stage, basically the fertilized eggs with the yokes attached, just after the eggs were basically fertilized, so that was one approach identified by scientists that we would like to proceed with on a pilot project basis.

The other approach which scientists felt was more prospective was the idea of actually holding cod in captivity and feeding them with caplin for a period of six to eight months and then releasing them into the wild. One of the things that has been learned is that the fecundity, the fertility, of these fish has been greatly increased when they are kept in the net pens, to the point where their fecundity is increased by 100 to 150 per cent, so that opens up the prospect of a major program of catching and feeding and release which could do a lot of good to enhance our wild stocks, and we have reached the point now where we have been talking with scientists and with the federal government about pilot projects.

We have had some meetings with the fishermen's union. The fishermen's union are very nervous - the fishermen themselves rather, I should say, are very nervous about any kind of experimentation. They have a lot of concern about science. They feel that science has really not served them well, and they are very nervous about giving the green light to any kind of an enterprise of this sort, but we are at the stage now where we really need to do some pilot projects if we are going to develop the fundamental science that needs to be developed if we are going to move forward on this front.

One of the biggest difficulties with regard to the egg production facility is the selection of the best time in which to put the fish out into the wild, and also the selection of the best location, because these fish won't breed anywhere. The eggs will not incubate in just any location. They have to be in the right - what the scientists call - basket, and that basically involves a mass of water, a large basket of water, that is usually warmer than the surrounding water mass, and also these tend to occur in what they call gyres, and these gyres are spirals of water which suck up the nutrients from the bottom and then enrich the water mass so you have a warmer, more nutrient enriched area. So what we have to do is find where they are, how you can identify where those gyres are located, so we can actually put the fish, put the eggs, into those locations. So that is the kind of research that is needed.

Hatchery technology per se is fairly well developed. We were doing that back in the 1890's, so there is room for work to be done. We are at the stage now where we have costed out a pilot project which would cost about $5 million to $6 million to do and that is relatively modest when you consider the possible benefits of avoiding the total collapse and extinction of that species, but we are at the stage as well where it is extremely important for fishermen to be involved and to participate in the project and to be a part of it, and we are at the stage now where the fishermen are really just getting to understand and to learn what this is all about, so as I said, there is a concern about science, because to a certain extent, science is now in disrepute.

People feel that science has failed them, therefore there is a lot of scepticism about doing any of these projects. The real risk of doing pilot projects is probably very small, but people tend to think that the introduction of diseases could actually bring about an even worse situation but the reality is that the downside is really not that great. The biggest risk of all is the risk of the total collapse of the stock and obviously that is what we want to avoid.

MR. TULK: Mr. Chairman, could I just ask one more question? I don't know what time it is, but it is on this issue and I don't mean this in a partisan sense in any way.

I maintain that the federal government is responsible, the central government, never mind the federal government because that is Liberal or PC or whatever, but that the central government is responsible for what has happened; it was their management schemes that caused it and as Walter said just now, if you do not harvest it you cannot process it, so don't try to lay the blame here in terms of processing licenses, because in the final analysis the people will tell you how much fish you can catch, we will tell you where you are going to process fish or not, so I maintain that it is their problem.

Has anybody sat down and said: alright, if we were to carry on the kind of scientific projects that we need to carry on over the next two years to prove whether this is a viable option on this kind of work, it is a viable option to replenish that stock, has there been any thought put into this and any numbers put on paper as to what the cost would be and perhaps what we should be saying to the federal government on what it is going to cost you to replace this stock. Has there been anything done with that?

MR.VARDY: Mr. Chairman, Minister Carter has written to Minister Tobin and asked for the federal government to become fully involved in this project and Mr. Tobin has indicated that he would like to appoint the Newfoundland Director General as the co-chairman of a steering committee, to work with me to further develop this whole project and I should say as well, that there are scientists in the federal government who have done some work on this and it is the work that they have done which has been very helpful, and in addition to the work done by people who are at our university, which enabled us to get to this point now where we do in fact have a budget for a pilot project and the budget for the hatchery component is in the order of $3 million and the component for the grow-out release is also in the same order of $3 million. You are looking at a total of $6 million to do the pilot projects over the next three to four years.

MR. TULK: The next three to four years?

MR. VARDY: The next three to four years but that does not include - that does not cover the kind of - if the pilot project were to be successful than a large scale effort would then be needed in order to carry this out on a scale sufficiently large enough to have an impact on the wild stocks. Then what you would probably do would be to may be mount a number of hatchery projects, probably converting fish plants around the Province into hatcheries and that could be in the tens of millions of dollars but we have not cost that out as to what a full scale operation would be because I don't think you can cost it out until you have reached the point at which you have done the pilot project.

MR. CHAIRMAN: Your time is up. Mr. Matthews.

MR. W. MATTHEWS: Thank you very much, Mr. Chairman.

I would just like to refer the minister to page 3 of his statement, just to begin. I have a number of questions I would like to ask and I realize that I'm under a time constraint here and I don't want to abuse my privileges. The minister on page 3 referenced that the federal government has been working cooperatively with the Province in the past several months and so on with reference to the Atlantic Groundfish Strategy, TAGS. Then he goes on to say: in the coming weeks the Province will be considering how best to compliment federal programs to ensure that all affected individuals are treated fairly and with respect - to consider future options. What do you mean there by complimenting the federal programs? Are you looking at - in what ways - I mean financial, borrow, planning - what do you mean specifically by that?

MR. CARTER: One of the advantages in this program as opposed to the previous program, and without being unkind to our old and dear departed friend John Crosbie, is that there appears to be a greater willingness on the part of the new minister to consult. Now I suppose in fairness he has probably had more time in that NCARP-I was sort of sprung on us. The roof sort of fell in -

AN HON. MEMBER: (Inaudible) sprung.

MR. CARTER: Not sprung, did I say sprung? God help me.

MR. W. MATTHEWS: Stop cursing, stop cursing.

MR. CARTER: This has been a long day.

No, NCARP, it sort of was dropped on us and consequently there was not much time to do anything. Fortunately NCARP-II or TAGS, as it is called, there has been a bit more time and the minister is prepared to undertake a long period of consultation if it is necessary. We are going to be working with the federal government looking at all the programs. For example, Fisheries Loan Board interest write-offs, that is one of the things that we are talking about. The program that we have now was initiated by the Province for two years, the first two years of the initial moratorium, the Northern Cod moratorium but obviously now we have a five year moratorium. Therefore, we are going to be looking at how we can help.

MR. W. MATTHEWS: So are you saying that - I am not trying to put words in your mouth - are you trying to say that you are looking at things like the Loan Board to try and help with harvesting reduction? Is that what I'm reading into what you are saying? That you will compliment the federal effort to reduce the harvesting capacity by up to 50 per cent, is that what you are saying basically?

MR. CARTER: Let me give you an example. In the TAGS program there is a component to do with early retirement. Vessel license buy-backs for example, we are going to have to take a look at that and see to what extent the Province can assist in that respect. For example, if a fisherman decides to take retirement and is left owing money to the Fisheries Loan Board he is not likely to accept retirement if it means the proceeds from his retirement federal government funding has to be used to pay off a Fisheries Loan Board loan. That is not going to encourage many fishermen to take early retirement, is it?

MR. W. MATTHEWS: True.

MR. CARTER: I don't know what we are going to do yet, quite frankly. The policy has not been firmed up. But we are looking at that, and I expect the feds will look to us for some kind of assistance in that respect, okay? I would expect that. I'm not saying tonight we are going to -

MR. W. MATTHEWS: No.

MR. CARTER: I will do what I can, that's -

MR. W. MATTHEWS: I thank the minister for that answer.

MR. CARTER: My Deputy Minister informs me we are already involved in an early retirement program, by the way.

MR. W. MATTHEWS: Oh yes.

MR. CARTER: Age fifty-five. It is costing the Province $30 million. In fact, the northern cod moratorium cost the Province probably - well, $50 million altogether. Fifty million dollars provincial funding has been used to facilitate some of the problems in the fishery.

MR. W. MATTHEWS: I thank the minister for that compliment. I just wondered in what ways that was being considered or what ways the Province could, and that makes sense, I say to the minister.

With the proposed fishing industry renewal boards and again with the mandate that they have been given by Mr. Tobin of a minimum reduction of 50 per cent, you were talking about harvesting licences just a minute ago. We now have people with processing license whose plants no doubt will be coming out of the system. Are you going to facilitate plant closures by cancellation of processing licenses? Is that the way the Province envisages being involved in that effort, or how do you see that going about?

MR. CARTER: A moment ago I qualified something I said when I said to Mr. Byrne about - I probably conveyed the impression that the Province - it is written in stone where we sit in terms of a buy-out. I did qualify it later by saying that things might happen, where the door might be slightly ajar, where there might be some possibility of provincial involvement. Very slight.

In the Cashin task force report Mr. Cashin recommends that there be a fisheries renewal board established but with a very short lifespan. A board that would be only concerned with decommissioning plants or buying back plants. The Province is not prepared to take part in that kind of a board and for a very good reason. We believe that the board's mandate should be broadened and that more emphasis be put on renewal as opposed to down sizing. I don't know what is going to come of it yet. You raised it in the House today, I think, Bill, or yesterday, and indicated that -

MR. W. MATTHEWS: Two or three occasions now (inaudible).

MR. CARTER: - the federal minister sort of made up his mind on it. I have no reason to believe that. The Premier has talked to the minister and he has written the minister. I have more reason to believe that the federal minister will see things our way than I have to believe that he will not see things our way.

We've been after joint management now for four years, five years, and we've had all kinds of problems with it. We view this renewal board as maybe a foot in the door in terms of joint management, providing they will expand the mandate as the Province has asked them to. In that renewal board the federal government will be required, from where we sit, to vest in that board certain rights pursuant to some well defined public policy objectives. For example, on licensing in the harvesting sector. We will do likewise in the processing sector. The government will define the public policy that will be followed, the objectives. The board will be there at arm's length to carry it out. So there can be no charges of political collusion or anything else, as is often the case. Until this government took office, of course.

I don't know what will happen but that board will play a very major part in the fishery of the future, if and when it is in place. We've been talking about it now for quite some time and I'm hoping the federal government - because it is essential almost that both governments play a part in that board, because otherwise the way it is now the left hand never knows what the right hand is doing. You have one branch of government 2,000 miles away responsible for vessel licensing and quotas, and you have another government here in the Province responsible for processing, so really the two should go together so there can be a more co-operative approach to it, and I suspect that is why we are in some of the trouble we are in now where there has been too little consultation and dialogue between two governments.

MR. W. MATTHEWS: I appreciate the minister's optimism as to what the Province might get from Mr. Tobin. I think the issue of joint management, from listening to Mr. Tobin the other night, is over. I don't think you are going to make any progress whatsoever. Whether you are going to expand the mandate of the fishing industry renewal boards is still up for question, obviously. We won't know that yet. If Mr. Tobin expands the mandate then obviously the Province will participate, but the Premier said if he doesn't he won't participate.

Mr. Tobin has really given the renewal board a twelve-month time frame to get its work done, from what I read into what he said and what is written. If the Province doesn't participate in the fishing industry renewal boards to reduce processing capacity by 50 per cent, would the Province then keep the same time frame? Would you hopefully have your decisions made about what plants stay in the system and come out, say within about twelve months? Because whether or not you go with the industry renewal board or not there has to be some co-ordination between the harvesting reduction and the processing reduction. How do you see that unfolding? Would you then have a time frame of about twelve months, so your time frame is about the same as Mr. Tobin's with the harvesting reduction?

MR. CARTER: I should point out, by the way, that a renewal board need not necessarily be an instrument of joint management. Joint planning, I guess, is probably a better way of putting it, certainly as a start. The Province will then look at other options. If the federal government should turn thumbs down on what we are suggesting, the Province is not going to give up on it. We have to look at other options.

As to the other part of your question, whether or not within twelve months we will have decided what plants will remain open, I don't think so. As I have said to you before, that is a lot easier said than done.

MR. W. MATTHEWS: So are you saying that it is unrealistic for Mr. Tobin to put that time frame, or include it in the mandate of the industry renewal board?

MR. CARTER: I don't want to say it is unrealistic. I am only saying that the Province doesn't look at that board as one that will self destruct at any time. We want that board to be a permanent arrangement.

MR. W. MATTHEWS: We can understand that.

MR. CARTER: Maybe Mr. Tobin thinks he can do it in twelve months.

MR. W. MATTHEWS: So you are saying that if you don't participate in the fishing industry renewal boards there is no way you will have a decision in twelve months, if you have to do it alone.

MR. CARTER: I doubt very much if we are going to be able to provide you or anybody else with a list of plants that are going to be closed. The fact of the matter is that every plant in Newfoundland that depends on groundfish for its survival is closed - every single one of them -

MR. W. MATTHEWS: While you decide what won't reopen.

MR. CARTER: And will remain closed, more than likely, for the next five years or longer, if they are depending solely on groundfish.

MR. W. MATTHEWS: Let me ask you this, then: How do you propose maintaining whatever percentage or numbers of processing plants for a five or ten year period? How do you decide which ones - if you are going to mothball you will mothball them - which ones will you keep ready to reopen in case our stocks regenerate? How will you do that?

MR. CARTER: Look, it's as difficult now to project what fish will be in the water in the year 2000 as it is to predict what the annual rainfall will be in the year 2000. It is virtually impossible. Our people make projections as to what might happen, based on the best scientific information they have, but these are only projections, so I am sure you understand, Bill, just how serious it is, and how complex, and how difficult it is -

MR. W. MATTHEWS: I do.

MR. CARTER: How difficult it is to get a handle on precisely what is going to happen in the year 2000.

We had the moratorium in 1991 for two years, and it was said then by Mr. Crosbie that come hell or high water the Northern Cod fishery would reopen in May of 1994. We all know what happened; 1994 came and the groundfishery is still not open. In fact, according to the scientists the biomass is decreasing rather than increasing as one would expect. So it is a very, very inexact science and we are seeing it every day.

You mentioned about closures. It is not a question of what plants are going to close. Every single plant today in Newfoundland that depends on the fishery is closed.

MR. W. MATTHEWS: Pretty much, not all of them.

MR. CARTER: It is a case of what plants we are going to reopen or will be able to reopen, and if a person is in a community where there is a plant depending on Northern cod and it is closed - we are getting it almost every day: why don't you tell us what you are going to do with our plant?

MR. W. MATTHEWS: Yes, it is a big concern.

MR. CARTER: If a person living in a community where there is a Northern cod plant, if that person is going to sit around for the next five or six or seven or eight years and wait for a plant that might never reopen, we have no guarantee what plant may never reopen really, unless we know what stocks are coming back, what can we do about it?

MR. W. MATTHEWS: I realize it is very complex, Minister, but all I am saying is, if you decide which plants are going to reopen or, none of them are going to reopen, in essence you are deciding that the others will not reopen. That is my point. You mentioned that -

MR. CARTER: I should point out too that most of the decisions as to what plants will reopen will be made by the operators at the time, and again will be determined largely by the extent to which the stock rebuilds.

MR. W. MATTHEWS: What affect, if we look at Fishery Products International, still trying a plant reduction -

AN HON. MEMBER: Fishery Products International is right.

MR. W. MATTHEWS: Yes, Fishery Products International for sure, more than ever but, are they going to be left - and based on what you just said I guess, you sort of pre-empted my next question. I mean, they will totally decide, which they have done all along, what plants but they have always consulted with government, what plants remain open, which to close; I mean Fortune is operating now doing a bit of Russian cod and so on.

If the goal or objective is realistic to get the processing capacity down to about 50 per cent, which must have come from somewhere, I am sure Brian Tobin did not make it up, and obviously you have agreed that there has been considerable consultation by your statement tonight between the Province and the federal government on all of this stuff. Would five or six of their plants equal a lot of processing capacity?

I think we all realize that some of those big plants have one hell of a lot of capacity, more than has been utilized I guess, in the last number of years but they can put a lot of fish through those plants at Marystown, Fortune and at Catalina whatever is open and so on, so how do you see that factoring into the capacity reduction, because, I suppose if you took all of FPI plants and they could reopen them, they would probably equate to 50 per cent of the processing capacity in the Province, which will mean that the rest then, if that goal were made, would be closed, or if you wiped out all of FPI, the large plants would say: they are not going to open anymore, then you probably could, if the stocks rebuild, keep most of the smaller plants open, because 50 per cent of capacity reduction, as I said a number of times, does not mean that of 200 plants, there will be 100 staying opened, so it depends on what way it falls out. So what are you feelings on that, because if Fishery Products International were successful enough to access right now, enough Russian cod, which is not part of the problem because they are not utilizing our own stocks which are depleted, but you know, they can operate what they want, so how does that get into the equation? How do you see that playing out?

MR. CARTER: First of all I should tell you that 17 per cent of their capacity has been taken -

MR. W. MATTHEWS: How much?

MR. CARTER: Seventeen per cent, so far.

MR. W. MATTHEWS: Seventeen per cent?

MR. CARTER: Seventeen.

MR. W. MATTHEWS: Of FPI's capacity?

MR. CARTER: No, that is the industry capacity.

MR. W. MATTHEWS: Yes, as what?

MR. CARTER: I don't know. FPI is probably the major share of that. FPI would account for the major part of that 17 per cent.

MR. W. MATTHEWS: Of the production, you mean?

MR. CARTER: Of the production.

MR. W. MATTHEWS: To date?

MR. CARTER: Yes. There will be other public policy issues that will play a role in determining for example, what plants will remain open. The need for regional balance for example; we certainly do not want to end up at the end of the day with all of the processing plants on the Avalon Peninsula or on the Burin Peninsula, or on the Bonavista Peninsula so there is going to have to be well-defined public policy objectives that is going to determine to some extent, by whatever means, precisely how the fishery can be structured based on a regional balance as opposed to having them concentrated all in the one area.

MR. W. MATTHEWS: May I just make a comment, because obviously, Minister, from what you are telling me now and what has transpired here in this House over the last number of months, really, is that you have changed your position on that because for a number of months, you consistently said that the market forces would decide. So I sort of sense from you now - and by the way, I compliment you if you have changed because I think that is the way it should be. I have advocated that any number of times publicly and here, that I am pleased to see that because I think there has to be a regional presence and a regional -

MR. CARTER: In what way have we changed our position, would you mind telling me?

MR. W. MATTHEWS: Sorry?

MR. CARTER: In what way have we changed our position?

MR. W. MATTHEWS: Well because if you let the market forces decide, the market forces are not going to consider a regional balance or a regional presence, that is my point.

MR. CARTER: No, we have always, Bill, we have -

MR. DUMARESQUE: (Inaudible).

MR. W. MATTHEWS: Who didn't say it? You might not have said it. I don't know what you said but I questioned the minister and I can get Hansard for you time after time after time and the minister has said publicly - I am not here to get in a spat with the minister Danny - I mean I compliment the minister because there is a definite change to what has been said publicly and in this House by the minister and the Premier from what the minister said tonight and I'm glad of that. I am not here to have a spat with the minister. I compliment him, I compliment the minister.

MR. CHAIRMAN: Order, please!

MR. CARTER: There is going to have to be some allowance for regional balance you know.

MR. W. MATTHEWS: I agree and I commend you for that.

MR. CHAIRMAN: Order, please!

Before the minister replies I must remind Mr. Matthews that the Chair has been very lenient in giving him -

MR. W. MATTHEWS: And I appreciate that.

MR. CHAIRMAN: - additional time beyond his allocation in recognition of the fact that he had to go and the reason he gave me privately as to why he had to go - the Chair has been very flexible.

Mr. Minister.

MR. CARTER: I want to make it clear, Mr. Chairman, especially Bill's point that we have never - we have always said that regional balance must be a factor and I just gave an example of why it should be. Do you want to end up with all the processing capacity concentrated on the Avalon Peninsula or on the Burin Peninsula? So as much as we would like to see the market forces call all the shots it might well be that there would have to be some regulatory intervention by way of public policy to ensure that there is a regional balance. Do you agree?

MR. W. MATTHEWS: I agree with that. I have to tell you that perhaps something happened to my hearing and other things but it is the first time that I heard you say it, minister - not saying you have not said it before.

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: Yes, well I can only tell you.

MR. CARTER: Regional balance is very important.

MR. W. MATTHEWS: Oh my God, my substitute has just arrived. Thank you, Mr. Minister. Thank you very much by the way, Mr. Chairman, to you and the committee for your leniency and your understanding.

MR. CHAIRMAN: Mr. Whelan.

MR. WHELAN: Mr. Minister, I was reading here that since 1990 there have been seven plants, which were formerly government owned plants, that have been de-licensed. Are any privately owned plants being de-licensed now on the Avalon Peninsula? If there are, which plants are they?

MR. CARTER: Publicly owned plants?

MR. WHELAN: No, privately owned.

MR. CARTER: Privately owned plants on the Avalon Peninsula? I cannot give you a complete list tonight, Don, but I can get it for you. For example, two of the real big ones, St. John's and Trepassey, these two plants are out of the system, out to stay.

MR. WHELAN: No these were closed and they have been de-licensed but they have been de-licensed for a number of years now, haven't they?

MR. CARTER: They were de-licensed in 1990.

MR. WHELAN: But I'm talking about this year.

MR. CARTER: Yes, there have been a number of smaller plants too that, by virtue of the two year idleness, have fallen under that as well.

MR. WHELAN: When you say two year idleness, two years idle with regard to not being open and not being in production?

MR. CARTER: No, any plant that has been idle for a two year period or longer, prior to the Northern Cod Moratorium, unless there are extenuating circumstances that plant would automatically lose its license. We have enforced that rigidly and in so doing, we have removed quite a few plants from the system. Now mind you some of them were small plants.

AN HON. MEMBER: (Inaudible).

MR. CARTER: That is part of the 17 per cent that I mentioned a moment ago.

MR. WHELAN: Just to get it straight, the plant must have been shut down altogether for two years?

MR. CARTER: Yes, no fish put through it.

MR. WHELAN: You don't have a number as to how many that is this past six months?

MR. CARTER: Altogether about twenty-six. Twenty-six altogether, is it?

AN HON. MEMBER: We don't have the numbers.

MR. CARTER: I don't have the numbers. I will get the numbers for you.

MR. WHELAN: Have there been any plants closed that have been in production this past two years?

MR. CARTER: Any closed, what?

MR. WHELAN: That have been producing over the past number of years.

MR. CARTER: No, I don't know of any plants that closed -

MR. WHELAN: I will be a little bit more specific. I just received notice today that the plant in Harbour Main received a notification that they will not be relicensed this year.

MR. CARTER: We had hundreds of licences out there for all species, herring, mackerel, shell fish, you name it. All of those that were inactive for a two-year period, we notified the owners that they would be cancelled. Again, I will list the words `extenuating circumstances'. Two weeks ago there were probably 100 letters that went out to a number of fish plants, in some cases two or three to the one plant, cancelling dormant licences.

AN HON. MEMBER: (Inaudible) individual species.

MR. CARTER: Individual species, for example herring and mackerel. There are an awful lot of licences out for herring and mackerel in plants that never put through a herring or a mackerel. So we are trying to clean up the act. We are trying to rationalize the fishery, find out where we are, and get clear of some of the licences that aren't being used.

MR. WHELAN: Okay, so I am given to understand that the plant in Harbour Main hasn't been de-licensed. It is just that fact that if they haven't been processing a particular species, the licence for that species has been cancelled. Is that what I understand from that?

MR. CARTER: That is Gorman's, is it?

MR. WHELAN: Yes.

MR. CARTER: If there is a species that they haven't processed in two years, then that licence will be withdrawn.

MR. WHELAN: Another question, with regard to the importation -

MR. CARTER: We haven't decommissioned the plant. The plant is still a plant, but that particular licence has been retrieved.

MR. WHELAN: When you say `that particular licence' -

MR. CARTER: Whatever it was, it might have been -

MR. WHELAN: The species that he hasn't been processing for a period of two years.

MR. CARTER: Yes.

MR. WHELAN: Okay. There are certain companies in the Province that have been importing cod and processing it and sending it on to markets. How extensive an operation is that here in the Province?

MR. CARTER: Oh, it's becoming more extensive. As we talk tonight there is a plant in Arnold's Cove, for example. I would suggest probably it is operating tonight. This year we are expecting there would be probably as much as 12,000 or 15,000 tons of Barents Sea cod coming into the Province for processing. There are a number of companies doing it, and they are doing it reasonably successfully. Fishery Products International in Fortune, I believe Bill Barry did some in Port aux Basques. I think there has been some done in the plant in Triton. In Bay Bulls the O'Brien's are doing quite a lot of it. Derek Green is doing it in Winterton.

AN HON. MEMBER: Arnold's Cove.

MR. CARTER: I visited the plant in Arnold's Cove and I got a real eye opener there, I must say, because I had visions of this fish coming in all the way from Russia not being of very good quality, but my officials and I went to Arnold's Cove a few months ago and went through the plant, and I can tell you now that what I saw coming off that assembly line, individually frozen, was as good as anything I have ever seen. That night the owner of the plant, Bruce Wareham, invited us to supper and his wife served us that cod. I am telling you, I have never tasted codfish any better.

AN HON. MEMBER: (Inaudible).

MR. CARTER: I have never tasted fish any better. It was delicious; so there is potential there. Nova Scotians are doing it quite extensively, probably as much or more than we are, and Newfoundland entrepreneurs are looking at it, without subsidy by the way. There are no subsidies being paid. In fact, to their credit, they have suggested to us that we shouldn't be talking subsidies because once you do that you know what happens. So those who are at it are doing it on their own, making a dollar at it, and doing a darn good job. The fish will be a credit to Newfoundland in the marketplace. That was one of our concerns, by the way, that fish going into the marketplace with a Newfoundland label on it in our view should be as good or better than anything else going in there.

MR. WOODFORD: (Inaudible)?

MR. CARTER: Yes. It is a good product and it has a lot of potential. Do you realize the total allowable catch this year in the Barents Sea is 700,000 metric tons?

AN HON. MEMBER: (Inaudible).

MR. CARTER: It went down to zero at one time.

MR. WHELAN: I understand that they've been without cod over there for so long that they've lost the taste for it and the market for cod is not as great as it used to be, and the price obviously is down so they're getting - from what I understand they're getting it for a good price. I wonder if this probably may not be the salvation to some of the problems that we're having with plant closures and that type of thing. Maybe some of them could possibly be salvaged through the importation of cod as opposed to the actual harvesting of it here in the Province. What are your views on that?

MR. CARTER: The key to it, by the way, my Deputy Minister reminds me, is efficiency. In Arnold's Cove they've come up with something that is quite unique in Newfoundland. They've introduced a new system there. It is widely used in Japan. Self-directed work teams. It is working extremely well. It has kept the cost down to the point where it is economically viable to process that fish.

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. It is a good system and I expect more Newfoundland companies are going to have to take a look at it if they want to survive. I don't know if you fellows realize it or not but do any of you know just to what extent the Newfoundland fishery contributes to the world consumption of fish? How much of it do you think is caught in Newfoundland? Far less now than a half of 1 per cent. Even in the best of times it was only half of 1 per cent of the total consumption of fish. Some of us thought that fish, we were the originators of it, it all started here, we invented it. But less than half of 1 per cent of the total world production comes out of Newfoundland. I went to the Balkan seafood show a few weeks ago. When you go up there you realize just how insignificant we are as a fish producing country. In fact, I don't think I saw any cod there at all from any country. Some of the species that you see are unheard of here. I'm not taking away from the importance of the Newfoundland fishery but certainly in the overall global picture the world is going on notwithstanding the moratorium.

MR. WHELAN: The cod that they are bringing in up in Arnold's Cove, is that already processed or (inaudible)?

MR. CARTER: No. Gutted, head on.

MR. WHELAN: Okay. There was something else that I wanted to mention with regard to the fishery fleet. Most of it has been out of the water now for two years. There will be another five-year moratorium that will be seven years. I'm sure many of the boats were at least ten years old when they were taken out of the water. Even if they are able to be used when they go back it will only be a year or two before they will have to be replaced. Has there been any thought put into the replacement of a lot of these vessels?

MR. CARTER: What we've done, Don, we are now putting more emphasis on providing funding for fishermen to upgrade their boats. For example, fibre-glassing. We have a program now where we can assist them to fibreglass their boats. By doing that of course you are extending the life almost indefinitely. I don't think anybody knows really just how long fibreglass is good for. We are encouraging that now for fishermen to upgrade their boats and to fibreglass them.

Most of the vessels, by the way, even though we have a groundfish moratorium, the vast majority of the vessels are still active in one capacity or another. Lump roe, caplin, crab, any number of things.

For example there is a whole new scallop fishery developing on the Grand Banks and showing a lot of promise. We have issued a number of temporary developmental licenses to six or seven companies to facilitate that fishery and it is showing a lot of promise and a lot of the boats, of course, are going to be used in that fishery. The price is good and the scallops are good.

MR. SHELLEY: What boats are they using for that fishery? There was a big boat up in Grand Bank a few years ago.

MR. CARTER: Fifty-five or sixty-five foot long-liners.

MR. WHELAN: With regard to aquaculture, what potential does that have on this coast and the north east coast? What areas would be prime areas for aquaculture? What potential is there for aquaculture?

MR. CARTER: The world consumption of food is now 100,000.000 tons and they are projecting that by the year 2000 it will be probably 150,000,000 tons, in that order, and it is being projected by the experts that the vast majority of that increase will be coming from aquaculture. China, for example, a country of 1.2 billion people, 20 per cent of their fish consumption comes from fish farms.

Aquaculture in my view is one of the real bright stars on the horizon. It is the sort of thing where you have to crawl before you can walk. You have to take it easy. You cannot rush it. We saw a few years ago where in the Bay d'Espoir area - I do not know if it was a case of rushing it or what happened, but the end result was they lost their entire stock at considerable cost, and darn near wiped themselves out in the process.

Aquaculture is something that has to build slowly and if you try to rush it too fast you are inclined to make mistakes and they can be costly, but certainly in Newfoundland there is a great potential. Char, for example, steel head trout, salmon, mussels, scallop, all of these are being very actively pursued now. On the North East Coast mussels are becoming big. We have sixty-eight mussel licensees out there that have the potential of producing 5000 tons of mussels. From what I am told the market is good. In fact in certain areas the demand almost exceeds the supply, does it now?

AN HON. MEMBER: In certain areas.

MR. CARTER: There are a lot of good things happening but we are getting bogged down with some of the more negative things, as is always the case, of course, but there are some good things happening out there, especially in aquaculture.

MR. CHAIRMAN: Mr. Whelan, your time is up and we have to go to another member of the committee. We will get back to you if you wish.

Mr. Shelley.

AN HON. MEMBER: Are we going to take a break?

MR. CHAIRMAN: It was not my intention because unless other members have a lot of questions I anticipate we will be out of here soon. If it is the wish of the committee to take a break we will certainly do so.

Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

While we are on this subject because it is one of the questions I have further down, but first I want to refer to one page in the estimates, Page 113, just for clarification more than anything. I think I know but I just want to ask anyway. On Page 113, 4.3.02 Atlantic Salmon Management Agreement.

MR. CARTER: Page 114?

MR. SHELLEY: Page 113, Section 4.3.02, Atlantic Salmon Management Agreement. That is the Canada/Newfoundland Atlantic Salmon Management Agreement, right? The Budget for last year was $5,854,700. What was the reason for the decrease?

MR. CARTER: Because of the two year program.

MR. SHELLEY: That is where it dropped off there, right?

MR. CARTER: The two year program, yes.

MR. SHELLEY: I was not sure. Now, right across on the next page, Page 112, the reason for the increase in Salmonid Enhancement?

MR. CARTER: That is a new agreement, a separate agreement, by the way.

MR. SHELLEY: (Inaudible).

MR. CARTER: One by the way is a buy-out and the other one is an enhancement.

MR. SHELLEY: It is 70/30 cost shared, is it?

MR. CARTER: The one on page 112 is salmon enhancement you see.

MR. SHELLEY: Anyway, I just wanted it clarified, that's all. With the aquaculture as you have just finished speaking a little bit about, what areas of the Province now is most concentration with aquaculture as it relates to cod planning? I think there is some in my area and off the Northeast Coast but where is the biggest concentration, is it on the Northeast Coast?

MR. CARTER: Trinity Bay appears to be one of the prime spots for it and I guess there is no coincidence that the father of aquaculture in Newfoundland, Nielsen, one hundred years ago, chose Trinity Bay, Dildo as his site -

AN HON. MEMBER: (Inaudible).

MR. CARTER: It was from Trinity Bay and he tells me that there is nothing unusual about that, aquaculture is the sort of thing that can happen anywhere; in my own district for example, without any prompting from me, there has been a lot of activity in aquaculture, and certainly, if we are going to get involved in it in enhancement, then I can see a lot of activity in most of the bays including Placentia Bay.

MR. SHELLEY: Yes, and in my district actually there are some sites. I would just as soon jump around here a little bit now and try to get in the questions, it seems like we run out of time all the time. This one is more specific but I thought that I should ask you to get it out of the way now, and it is local and that is the crab plant in Fleur de Lys. I have not spoken to you about it since but I think I should bring it up, I was asked to ask that -

MR. CARTER: You have seals you are doing there.

MR. SHELLEY: Yes, and I am going to continue with the seals which is a positive thing as you said and I am glad for that but, Minister, I would just remind you that last year we met with a contingent of people who came in from Fleur de Lys, and I know that there were lots of intricacies about this particular situation and of course, at that time we said that we could not go into detail about it and I don't expect to go into it now, but we did tell these people, or you and the Premier did tell those people at that time, that we would investigate it in detail and see exactly what happened in Fleur de Lys in that isolated situation, because it certainly got complicated for a little while there and of course, this spring, I probably will ask it in the House again I can tell you now. But as you said at the time when we met, you would get to the bottom of exactly what happened at the crab plant in Fleur de Lys, and at this point, we have not received any report or any response back so, I wonder if you want to respond to it now or would -

MR. CARTER: There has been a lot of investigation going on with respect to the crab plant in Englee, we have not just ignored it. You came to us and your people whenever it was last two years ago and we wanted to get to the bottom of it because it would take all night to go into all the gory details of what happened, but certainly, the investigations that we have conducted certainly did not show any wrongdoing or anything on the part of any of our officials. It was a matter that was started by the previous government as you know, when, two days before this government took office on May 3, 1989, two days before that happened, the then minister and deputy minister transferred or issued licenses (inaudible) -

MR. SHELLEY: Issued new licenses, yes.

MR. CARTER: Pardon?

MR. SHELLEY: Issued new license.

MR. CARTER: - issued a new license. First they were going to transfer the one from Fleur de Lys but then they decided to issue a new license; they issued along with it, four other licenses two days before we took office.

MR. SHELLEY: Two days?

MR. CARTER: Three days before we took office -

MR. SHELLEY: I have no problem with it.

MR. CARTER: - after the election, three days or two days before we were sworn in, it came to light that there were issued four licenses. One to St. Lawrence that was never activated; one to Old Perlican, one to Indian Bay -

AN HON. MEMBER: - and one to... (inaudible)? Where was the other one?

MR. SHELLEY: Gander?

MR. CARTER: What?

SOME HON. MEMBERS: (Inaudible).

MR. SHELLEY: But minister -

MR. CARTER: Grand Falls, Buchans.

MR. SHELLEY: I -

MR. CARTER: It was unfortunate, Paul, very unfortunate -

MR. SHELLEY: Yes.

MR. CARTER: - and a lot of people were hurt.

MR. SHELLEY: Minister, I say to you in all sincerity, I didn't bring it up to get into the detail.

MR. CARTER: No, I know.

MR. SHELLEY: I investigated quite a bit and to be honest with you, and to be quite frank, I don't really give a damn whose problem it was in the previous or whatever. The bottom line is that the people in Fleur de Lys are the ones who suffered out of it, as far as I'm concerned. I still think it was handled wrong, not just by your government and previous, or whatever mistakes were made in the past. To watch those trucks roll those crab out of there last summer after Fleur de Lys being the haven of productivity down there the year before, it was just something that would just turn you. The simple bottom line is, I wanted to get to the bottom of the story. Right or wrong, whether Fleur de Lys ever gets one or not, I would still like to get to the bottom line of exactly what happened here and what injustice if any was done.

MR. CARTER: I guess what you are saying now, more than anything else, points out the need for an independent, arm's length board like (inaudible).

MR. SHELLEY: Sure, and I agree with that too.

MR. CARTER: When that board is appointed then that matter, I presume, along with a lot of other applications, will be referred to the board, and again, based on well defined public policy objectives, it will deal with it. That is the only way around it. Twillingate, my own district -

MR. SHELLEY: I know, I realize that.

MR. CARTER: - (inaudible) licence.

MR. SHELLEY: I knew that too, yes.

MR. CARTER: La Scie had a crab licence.

MR. SHELLEY: Yes. They lost theirs for I think a straight reason.

MR. CARTER: For being inactive.

MR. SHELLEY: They didn't use it. Two years. That is fine. Fleur de Lys was a little bit different.

MR. CARTER: Yes, and the process was followed to the letter by the way there, I might tell you.

MR. SHELLEY: Yes I know, and I know it well. That is why I don't even bring that up. But the Fleur de Lys one -

MR. CARTER: Twillingate wants a licence. I can't give them one. Every time I go to Twillingate they remind me about the fact that they had a licence.

MR. SHELLEY: Yes, I know, and we talked about that. I have no problem with that. I have no problem with Fleur de Lys not getting one as long as it was handled properly.

MR. CARTER: Quite frankly, I would welcome the opportunity to pass that one, it is not a matter of -

MR. SHELLEY: Yes.

MR. CARTER: - reneging on my responsibilities, but I tell you, it is awfully difficult to administer licensing policy in this Province where there is so much interference, and some of it political interference.

MR. SHELLEY: Yes. I can appreciate that. It happened in this case, obviously.

MR. CARTER: Every single community that has crab landed on the wharf wants a crab plant.

MR. SHELLEY: The bottom line is I would like to get to the bottom line and find out what happened, and whoever is at fault, and if at the end of the day Fleur de Lys still doesn't deserve a licence or should have never had one or whatever, well that is fine. It is just too open now. It hasn't been settled, as far as I'm concerned.

To change sides again now, because I know there is only a couple of minutes left. The deal with seal, seal licences. Especially now, I guess, in my district as you know they are pretty active out there now. Just to keep this simplistic, I guess, and I know it is in the jurisdiction of the federal government, but right now when fishermen catch seals in their nets - can fishermen apply to have a seal licence for domestic, for personal, use, for killing seals now? Is that right?

MR. CARTER: First of all, seal licences are issued by the federal government.

MR. SHELLEY: Yes, I know that.

MR. CARTER: I'm under the understanding any fisherman who has a groundfish licence automatically qualifies for a sealing licence.

MR. SHELLEY: Okay, I thought so.

MR. CARTER: We've had to tighten up on the buyers' licences, and for obvious reasons. If there is one thing we don't want it is everybody out there and his brother buying seals just for the organ, for example.

MR. SHELLEY: I will just ask the minister's opinion on this then, realizing it is federal jurisdiction. What about a person who does not have a fishing licence just to buy a domestic licence, shall we say, to kill one or two, a bag limit of two seals for personal use? We've got them coming up in the bay and going into the salmon river after seals. Of course the story is all over the Island, as everywhere. I just don't see why any person who wants a seal - not that I'm not saying every Newfoundlander is going to go out and want to take a seal anyway - but anybody who wants a seal, and it is in the bay, and if they can't go out and take one or two seals for personal consumption, I really don't see the logic or common sense in that whatsoever.

I think it's something that should be brought to the federal minister.

MR. CARTER: Well, it has been brought to the federal minister, and Beaton you were there. We were given to understand that any Newfoundlander is allowed to get a licence to kill up to five seals.

MR. TULK: For personal use.

MR. CARTER: For personal use.

MR. SHELLEY: Is that out now?

MR. CARTER: I don't know.

MR. SHELLEY: Not as far as I know. As far as I know, you have to have a fishing licence right now.

MR. CARTER: We were told that.

MR. SHELLEY: Well, Minister, if that is correct -

MR. CHAIRMAN: What the minister has referred to, I believe hon. members will recall that that was stated at our caucus meeting just as the minister said it. By the time that got down on paper to the fisheries offices it said that right would be accorded to retired fishermen only.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: That's the way it has been (inaudible).

MR. SHELLEY: I don't think anybody here would disagree with that.

MR. CARTER: Just imagine the benefit. Say if there were 50,000 Newfoundlanders out there who applied for a licence and got five seals each, that is 250,000 animals taken out of -

MR. SHELLEY: That would be great. So I am sure everybody concurs with the idea, so -

AN HON. MEMBER: (Inaudible).

MR. SHELLEY: So where is it now?

MR. CARTER: I think we are going to have to -

MR. SHELLEY: Well I would ask the minister to, if he would, follow up on that. It is something that if you could come out and tell Newfoundlanders that they can go and take those five seals you would be supplying the seals for the man who likes to eat it, for one thing, and for his family in hard times as it is. At the same time you would be taking the bloody seals out of the water, where the less the better.

MR. CARTER: That's right.

MR. SHELLEY: So it only makes common sense to everybody, so I would ask the minister if he would pursue that with the federal minister.

MR. CARTER: We will pursue it.

MR. SHELLEY: As a matter of fact I will, and everybody else I guess, lobby and write and do whatever they can, to hopefully use some common sense and deal with that matter.

MR. CHAIRMAN: Mr. Shelley, your time is up. We will get back to you in a moment, if you wish.

MR. SHELLEY: Thank you very much.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: I have a lot of questions here, but I won't get into them all because we are getting near to the time when - to tell you the truth, I am sick of being here.

Mr. Chairman, I would just like to ask the minister to outline for us the nature of the expenditure on salmon enhancement. There was some question from somebody about the way that money was being spent - I read it somewhere - the way money was being allocated or something, not suggesting anything crooked was going on, or illegal was going on, but there was some question as to whether most of the money was ending up putting in physical facilities that would enhance salmon spawning or whatever. Was that really the case, and has that been cleared up?

The other thing is: Is there enough money now allocated to take care of all of the physical things that need to be done for salmon enhancement to be at an acceptable level, or are we going to need more money after four or five years?

MR. CARTER: I will let Les handle that.

MR. TULK: That is all I am going to ask, Mr. Chairman.

MR. DEAN: Mr. Tulk, the five year salmon enhancement agreement is managed on a co-chair basis by the federal government and the provincial government, and the Department of Fisheries for the Province is the lead agency, and the Department of Fisheries and Oceans is the lead agency for the federal government. I represent the Province as the co-chair for the agreement, and Eric Dunne represents the federal government for the co-chair, which is the normal process that is followed in implementing all of these cost-shared agreements.

I think the issue that you are referring to, your initial concern was about the way in which the funding was allocated. I think you may be referring to a statement by Mr. Tom Humphries last fall who indicated that most of the money, or 20 per cent or 40 per cent of the money, went towards administration.

MR. TULK: Yes.

MR. DEAN: That is not the case. Approximately 8 per cent of the agreement funding is for administration. What he was mixing up was the pure administration funding associated with the agreement with the program elements of the agreement that are delivered by either the Province or the federal government, so that is the issue there.

In terms of whether or not there is adequate funding, in fact the committee met this morning to discuss this year's expenditure profile, and it is quite clear that the level of applications this year relevant to the cash flow that is available, far exceeds the cash flow availability, which was the case last year as well. That is more so with one or two elements of the agreement. For example, salmon, the enhancement component, because there are five separate components associated with the agreement; one is enforcement, habitant improvement, enhancement but generally for some components of the agreement the demand exceeds the amount of money that is available. Next year because of the cash flow structure associated with the agreement - this is the third year - in the final two years of the agreement that is when most of the money will be available.

MR. TULK: Will it be adequate then?

MR. DEAN: I doubt very much if it will take care of all of the demand. It was a $20.2 million agreement.

MR. WOODFORD: (Inaudible).

MR. DEAN: I just forget the exact amount that we expended last year but our share of the agreement is 30 per cent. I think in terms of the cash flow, we averaged our total commitments over five years almost on an even basis.

MR. CHAIRMAN: Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairman.

Just a couple of other questions, minister. In terms of the revoking of licenses which processors have not used for a two year period, I got a call today from a processor I never met before, I just happened to take the call and he said that he received a letter from the Provincial Department of Fisheries indicating that his license to process squid had been revoked because he had not processed in two years. He said to me, it is kind of impossible to process squid when there was none around for the last two years. How could he utilize or use his license to process squid when there was none around to process? He raised it to me and not having a great knowledge of the department, certainly I felt that probably tonight would be a legitimate time to answer the question or pose the question to see what - if that is the case with squid, are there also other licenses being revoked for other species as well where there have not been an available supply to be processed over the last two years? Mr. Whelan was referring to a similar situation, I don't know if it is exactly the same, where a license had been revoked. So I pose that question to you, why would the department revoke a license for a processor where he has not been able to process that species for the last two years?

MR. CARTER: There is no problem, if and when the need arises - the last big squid fishery in Newfoundland was back in 1979 - '78 was it? - and there has not been -

MR. E. BYRNE: Much of one since.

MR. CARTER: - a real good fishery since. If and when the squid come back, as is the case with herring, mackerel or whatever - you know we are not in the business of closing people down. They can apply and tell us what they want to do, then we will reissue that license. We will reissue a license to them if and when the need arises. We are following certain procedures. We are not going to leave them on the books indefinitely. I mean we have licenses now coming out of our ears in there, most of which are dormant and we want to get clear of them. That is not to say that if that person decides to get back into the squid fishery or herring fishery later on, that he will be denied a license. That will not be the case.

MR. E. BYRNE: Could the possibility exist, with the license gone now, that he would have to reapply and the possibility exists that he would not be granted the application, is that correct?

MR. CARTER: He has to reapply anyway. A license is only issued for one year anyhow and if he has a license he has to keep reapplying for it. The license just does not automatically be sent out, they have to be reapplied for. So you just have to reapply when your time comes. You can understand the need to clean up the act, I'm sure.

MR. E. BYRNE: Oh, no question. I don't have a lot of knowledge in fisheries administration. I worked at one time with the Inshore Fishermens' Union for a little over a year and got to see the inside of an industry that was pretty interesting and into some 400 communities in the Province here in that year. I can understand the need to clean up the act, no question about it.

I will ask another question dealing with the value-added exports that I was asking earlier. You referred to one of the bright spots which is so labour-intensive is that dealing with the caplin industry. There are some people in the Province today, and I'm sure they've written you - people from my district, certainly in the Petty Harbour - Maddox Cove area, people on the Southern Shore - who believe that we are overfishing the caplin stock and are very fearful that we are putting the stock in jeopardy in the same fashion that we've put the groundfish stock or codfish in jeopardy. Could you extrapolate or indicate what your department's feelings are, what your feelings are, what the government's feelings are on that issue?

MR. CARTER: We have always supported scientific advice. We have never yet asked the feds to increase, at least not to my knowledge, a quota or TAC. If they indicate a need to decrease, reduce the quota, we support them. We are not scientists, we don't have any scientific capability within our department, so we have to rely - and of course, that is their responsibility anyhow - on the federal scientists because that is their role. If they come in and say: The caplin stocks are showing signs of weakening and TACs should be reduced in half, we will support them. We always have done that.

We have to rely on them because we have no way of refuting what they are telling us. We've heard the same stories. Last year we heard the same stories about the caplin being small, the stocks being in slack shape. Fortunately the season was re-opened, and we had a reasonably good harvest last year. I don't know what the prognosis is for this year. I'm told that it is about the same this year. We will have to wait and see. I can tell you now, Mr. Byrne, that if the scientists come to us and say: Will you support us, we have to reduce the TAC, we won't raise our voice against it, we will go along with them. That is the best we can do.

MR. E. BYRNE: I understand, and your answer still does not alleviate the concern that I personally have. Your Deputy Minister talked earlier about the fact that the practitioners in the fishing industry have very little faith in science and scientists because of what their, I guess, projections of what the biomass was, how off base they were. People in the field there now are saying that the caplin stock is in jeopardy and that it has been declining for some time. For the last five to seven years for sure they've seen that stock, in terms of the size of the caplin, decline, and they attribute it to the concentrated effort offshore and caplin not being able to spawn.

The issue still remains that if we have to rely on scientists right now surely there must be some other way to seriously look at, from a public policy point of view, the conservation of the caplin industry.

MR. CARTER: There is no offshore caplin -

MR. E. BYRNE: Especially in view of the fact that it is a bright spot.

MR. CARTER: There was no offshore caplin harvest last year. Caplin, as far as I know, at least I always thought, that the caplin TAC was market driven. Wasn't there a time when the biological quota far exceeded what the market quota was? Isn't that so?

There is a lot of concern on the part of fishermen, and rightly so, that maybe we are overfishing the caplin. Because years ago - correct me if I'm wrong - there was a biological quota of 170,000 or 180,000 metric tons and there was a market driven quota of less than 100,000 tons. They opted to go for the lower, the market driven quota. What is set now? Is it a biological quota now? It is still a market driven quota.

MR. E. BYRNE: Still a market driven quota, yes.

MR. CARTER: It is certainly well within the biological quota.

MR. E. BYRNE: Okay.

MR. CARTER: But you are right, they have to be very cautious.

MR. E. BYRNE: I raise it for the point of fact that it is an industry that could provide in the near future many jobs for people in this Province.

MR. CARTER: More importantly -

MR. E. BYRNE: It would be sad to see at some point in the near future another opportunity lost.

MR. CARTER: Yes, but more importantly, caplin is a very important part of the chain.

MR. E. BYRNE: No question about that.

MR. CARTER: It is a food fish and -

MR. E. BYRNE: I'm not even thinking otherwise, a very important part of it, an integral part of it.

MR. CARTER: We have to be careful. I appreciate what you are saying.

MR. E. BYRNE: Another question. I will try not to be too long, Mr. Chairman. Just a quick question on the industry renewal boards. My colleague Mr. Matthews, and fisheries critic, alluded that there seems to be some confusion over the provincial government view on what that board will do and the federal government's stand on what that board will do. Notwithstanding all of that, who would sit on that board, or on those boards?

MR. CARTER: I don't know. I would expect if the Province was going to be involved then naturally we will have some input in the selection of the members. I can't tell you, but they will be people I presume who will be far removed from government and those without any vested interest whatever in the fishery.

MR. E. BYRNE: Where are we going to find them?

AN HON. MEMBER: (Inaudible) hard to find those.

MR. CARTER: You are going to hard-pressed to find seven or eight people in Newfoundland who don't have some kind of political biases. They will be people without any vested interest -

MR. TULK: Let's hope they aren't people who got us into this bloody mess.

MR. CARTER: - in government, and certainly no government members would be on that board. Fellows like - I don't know if you know Aidan Maloney or not. I'm not saying Aidan would be there, but his type.

MR. E. BYRNE: By reputation.

MR. CARTER: A fellow whose record is above reproach. He has no connection with the fishery, no connection with any political party. I would think that men like him, retired, semi-retired, would be good candidates.

MR. E. BYRNE: Leslie Harris maybe.

MR. CARTER: I should give you an interesting statistic here. In Iceland for example, the catching of caplin in Iceland, it is over 700,000 metric tons, all of which goes into fish meal.

MR. E. BYRNE: Goes into fish meal.

MR. CARTER: - goes into fish meal. That seems to be an awful waste. I don't know how they can get away with it, but it is happening. Seven hundred thousand tons. We took 46,000 tons last year, by the way, so compare their TAC with ours.

MR. E. BYRNE: With the industry renewal boards, somebody like an Aidan Maloney, would we see somebody like a former president of Memorial University, like a Leslie Harris, on it?

MR. CARTER: Might very well (inaudible).

MR. E. BYRNE: Would we possibly see representatives from FANL sit on it?

MR. CARTER: No.

MR. E. BYRNE: People from -

MR. CARTER: FANL would be too close to the industry. We need people at arm's length.

MR. E. BYRNE: On the other end, from the FFAW, from the union's point of view, would they be considered too close to the industry on the other hand?

MR. CARTER: They might well be. Probably would be too close. I don't think it would be too difficult to find seven or eight Newfoundlanders or Canadians, I don't think, Newfoundlanders that would meet those criteria.

MR. E. BYRNE: On the issue of aquaculture, what long-term plans does the Province have to invest heavily in aquaculture? That is assuming of course that the Province has plans to invest heavily over a period of time in a graduated sort of scale more and more each year. It is something that more than any other place in Canada and one of probably mostly unique just the Province geographically-wise is naturally suited, I believe, for aquaculture. It is something that we have fallen down on tremendously as a province. Some people alluded to it earlier and talked about it, but are there more definite concrete plans by the department, long-range plans, that would see this Province become more involved in aquaculture? I will leave it at that.

MR. CARTER: There is an agreement by the way that is about to be signed, isn't it? It has been signed. Canada-Newfoundland cooperation agreement, strategic regional diversification, for $38 million. A lot of this we hope will go in aquaculture through the private sector.

MR. E. BYRNE: I hope so.

MR. CARTER: But I can only tell you that aquaculture is not the sort of thing you can throw money at.

MR. E. BYRNE: No, I know that.

MR. CARTER: Nor should you. Because it is a little cottage type industry that has to grow gradually.

MR. E. BYRNE: That is why I said that each year - are there projections that there would be gradual increases -

MR. CARTER: Last summer my deputy and I visited a number of sites around the island, one in particular was in Pool's Cove, Fortune Bay. The Caines', they have a scallop farm up there and in my view - she has a masters degree and he has a master mariners degree, two very fine people and in my view they are doing everything right. They are walking before they start to run. They are both ready now to go into production and I predict that they will make a lot of money in time but for the past two years they have been living like misers. She has had to go substitute teaching, he has had to do a few things, take a boat somewhere just to get a few dollars.

MR. E. BYRNE: I think that will be a success story. I think you are right.

MR. CARTER: Yes, it will be successful because they are doing it right and there was not a bucketful of money thrown at them. Most of the money they have used came from their own sources.

AN HON. MEMBER: (Inaudible).

MR. CARTER: You can speak to that, Rick, yes.

MR. CHAIRMAN: If you wish we will get back to you Mr. Byrne.

Mr. Dumaresque.

MR. DUMARESQUE: No, I just had a comment to make and suggest to the minister something he might just do and add to what he did yesterday concerning the shrimp fishery off Labrador. As most members might know by now, from what I have talked about, there is a $75 million industry off the coast of Labrador and we get very little from it. Right now the scientific information is that this stock can withstand - because it is healthy and that is largely due to the lack of cod, one of the main predators - because the stock is healthy they are saying that there could be a rise in the TAC by some 3,300 tons.

I guess, as the minister might know, we are pursuing - and supported quite well - and we are very pleased with the support we are getting from the provincial Department of Fisheries in Goose Bay to look at an inshore shrimp fishery on the coast of Labrador. I know there is a lobby by others to get a new entrant into that shrimp fishery, to get a new quota in an effort for others because it is a lucrative thing offshore. There is also the lobby by the seventeen existing licensed holders to have that potential quota reallocated from within and we see this as a positive possible route for a couple of plants on the coast of Labrador or even St. Anthony on the Northern Peninsula to get involved in the processing of that great resource.

I would hope that the provincial government will be able to support the plan that this shrimp not be allocated to the existing holders and neither should it be allocated to anybody new but that, for at least a year, we be given a chance in Labrador, in conjunction with some people maybe on the northern Peninsula or elsewhere in Newfoundland, to use some exploratory fishing and have the data to substantiate whether harvesting by inshore vessels is possible and therefore have a couple of plants processing that shrimp. If we were given that year, if we can prove it by that time, then we would certainly support having the license issued.

MR. CARTER: Yes, we will have to be cautious, Danny, in talking in terms of increasing a quota. Maybe realigning some existing quotas but on my desk tonight there is a letter to the federal minister for my signature tomorrow morning asking him, pleading with him, to allow inshore vessels to harvest that shrimp in Labrador. Now that letter is ready to go.

MR. DUMARESQUE: Obviously I wasn't expecting you to act that quickly, Mr. Minister, but now that you have I would certainly -

MR. WOODFORD: (Inaudible).

MR. DUMARESQUE: - bearing in mind what you said, I appreciate that very much and I'm sure that the people of that area will certainly appreciate that as well.

MR. CHAIRMAN: Mr. Whelan.

MR. DUMARESQUE: Another 200 copies (inaudible).

MR. CARTER: One day turnaround for government members and a day and a half for Opposition members.

SOME HON. MEMBERS: (Inaudible).

MR. DUMARESQUE: That's fair enough.

MR. CARTER: No, I'm serious, Danny, there is a letter - and I can show it to you tomorrow - ready for me to sign, drafted by my Deputy Minister or Assistant Deputy Minister.

MR. CHAIRMAN: Mr. Whelan.

MR. WHELAN: Mr. Chairman, thank you. Mr. Minister, there was some reference made earlier to fishermen from outside or from away, probably from the Island portion of the Province, fishing in the northern parts of Labrador. There was mention made of fish that were landed in a port in northern Labrador, and there are very few up there. There is quite a distance between these ports, so if you are fishing off Nain you are almost compelled to go into Nain. If you are fishing off Hopedale or Makkovik you are almost - it makes sense to go into a particular port.

You mentioned that if they go in and land fish there it has to be processed there. When you say that it is landed there what exactly do you mean? Do you go in and tie up to the dock and land it, or do you have to put it on the wharf, or can you - if you transfer it from one boat to another does that mean it is landed in that port?

MR. CARTER: You are talking about John Cabot of course.

MR. WHELAN: I'm talking about anybody, sir.

MR. CARTER: The policy that we had in place last year in fact stated that if you land your turbot in Labrador you would have to leave it in Labrador unless there was a surplus. Then you would be allowed to take it elsewhere. If it remained in the boat I don't know.

AN HON. MEMBER: (Inaudible).

MR. CARTER: No, we have no authority over the fish while it is at sea or in the boat, but once it gets on the wharf then it falls within the ambit of the jurisdiction of the Province.

MR. WHELAN: What you are saying is that it has to be landed on the wharf?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes. Last summer you might recall, Don, the federal government required that any transshipping of turbot had to be done in a designated harbour. I presume where they had inspections and facilities. You couldn't just land your turbot anywhere. It had to be landed in a designated harbour. Once it was landed of course under our directive -

MR. WHELAN: I'm sorry, and I don't want to get too technical, but when you say "landed" does it mean that it has to go on the wharf? If you go in and drop anchor in a harbour and there is another boat comes in and ties up alongside, does that mean that the fish is landed?

MR. CARTER: There is some question as to at what point it is in provincial jurisdiction. Did we ever get a ruling from Justice on that?

AN HON. MEMBER: (Inaudible).

MR. CARTER: If it is within the laws of the lands, Les tells me here, then it is the provincial responsibility. It is still somewhat hazy.

MR. WHELAN: It is little hazy to me too. I'm really not getting a clear picture as to what the law and the regulations are. I'm given to understand that if you are fishing off northern Labrador and you take the fish directly in the boat that you catch it in and go to some point on the Island, or the other alternative is that you take into the port - obviously it would be nearest to the fishing ground that you are fishing - and you have to land it there and you have to sell it there. There is no other alternative. Is that...?

MR. CARTER: If it is transshipped from one boat to another then it is deemed to have been landed and therefore would become the responsibility of the Province. I know we got a long legal opinion last year from Justice on it, and -

AN HON. MEMBER: (Inaudible).

MR. CARTER: Within the jaws of the land.

MR. WHELAN: If you are outside of a harbour you can transship it and it is not considered to be landed. Is that right?

MR. CARTER: Within provincial jurisdiction. How many miles is that off? Three, isn't it?

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: DFO last year would not allow vessels to trans-ship at sea. They had to go into a harbour to trans-ship and that forced them in the jaws of the Province. I don't know if it was done for the same purpose that we were doing it or not but it has had that effect. It had the same effect but it was not being done for the same reason that we did it. We did that last year for what we thought were all the right reasons, in that you had plants up in places like Nain, Makkovik, with no other source of employment -

MR. WHELAN: There are a lot of places like that. In the meantime, with regard to the pricing, actually in effect what you have done is you have given these communities practically a monopoly on the fish processing. Any fish that is caught adjacent to their community, you have given them a monopoly up to and including the amount of fish that they can handle. What about the setting of prices up there? Do they have to follow any particular regulation with regard to prices? For example, if you are up there and you are fishing, you go in and one day the price is fifty or sixty cents a pound and all of a sudden they have this monopoly, then they can bring the price down to forty cents a pound and you are compelled to go in and sell it to them?

MR. CARTER: No, we cannot control prices but I should -

MR. WHELAN: No, what I am saying is you cannot control the prices but you can control the situation whereby the prices can be manipulated and nothing can be done about it by the plant operators.

MR. CARTER: Don, there are a number of principles that you have to recognize. One, in the absence of that kind of a directive the communities affected would become barren, namely Nain and Makkovik.

MR. WHELAN: Barren?

MR. CARTER: Yes, the plants would almost cease to exist.

MR. WHELAN: Those plants existed up there before this regulation was introduced, wasn't it? I believe Wilf Bartlett used to keep Makkovik going alone.

MR. CARTER: Yes, but the put-through in those plants is so insignificant. I mean it doesn't take very much fish to keep those plants operating.

MR. WHELAN: These regulations were only introduced last year I understand. Is that right?

MR. CARTER: Nain of course previously was a salmon and char operation. That collapsed and now their only hope is turbot. The laws of adjacency must play some part there too. That fish has been caught in waters adjacent to their coast up there. What we did - maybe it has not been - it is not 100 per cent correct in what we did but I don't know of any other way of tackling that problem quite frankly. I've talked to Danny, I've talked to people up there -

MR. WHELAN: Yes, I can understand what Danny's position is -

MR. CARTER: No, and Danny was not one of the driving forces on this. All to his credit, he wasn't a driving force but we did it because we thought it to be the right thing to do.

We had the same problem with crab. If you leave things alone, the people of Labrador would not see a crab or a turbot landed in any of their plants.

MR. WHELAN: I cannot see how you can base your argument on that because these plants have been operating long before this regulation came in and there are enough boats fishing crab and whatever on the Labrador to keep their plants going. I think most of the boats that are fishing up there now are Labrador boats anyway. So they are just bringing their catch back and forth to home. I know there were a lot of Port de Grave boats up there at one time but most of these boats are gone now.

MR. CARTER: That is Southern Labrador, isn't it?

MR. WHELAN: That is the Southern Labrador, yes but you can base your same argument - I think you mentioned -

MR. CARTER: But it seems to me you know, given the economic circumstances in that area and the fact that you got a couple of plants there that do not need very much fish to keep them happy -

MR. WHELAN: Well that's okay, that's -

MR. DUMARESQUE: Less than 10 per cent of what's taken out there.

MR. CARTER: Yes, less than 10 per cent. Surely God they are entitled.

MR. WHELAN: That's okay but in the meantime if they are given this right, if they are given this particular favouritism, shouldn't there be some stipulation to say that you have to pay a competitive price?

MR. CARTER: It's not favouritism, by the way, Don. I think it is an act of humanity almost.

MR. WHELAN: That's a matter of opinion, I suppose.

MR. CARTER: If you don't provide some kind of protection for the people of Labrador, especially in these times when the ground fishery is closed down, the cod fishery. There is so much competition now for that turbot that were it not for that directive of ours I doubt very much if there would have been a pound of that landed in Labrador.

MR. WHELAN: I think there was quite a bit of it being landed in Labrador until the price dropped.

MR. CARTER: No, I think the price they paid last year is competitive, given the fact that if the John Cabots of the world had to bring theirs from where they were up to the Northern Peninsula or Twillingate, given the time it takes, and the expense -

MR. WHELAN: They would not have had to do that if they had been allowed to use -

MR. CARTER: Collector.

MR. WHELAN: Collector boats.

MR. CHAIRMAN: Thank you, Mr. Whelan.

MR. CARTER: This reminds me, by the way, and I forgot, that the reduction in price took place, you said, in Makkovik, wasn't it? Makkovik is run by Labrador Shrimp, isn't it?

AN HON. MEMBER: Torngats.

MR. CARTER: Torngats. So it certainly didn't have anything to do with the Nain plants, but it is something we are looking at.

MR. WHELAN: I may have been misinformed, but I was given the understanding that the price dropped by about twenty cents per pound after this regulation was introduced.

MR. CARTER: Not in Nain, is it?

MR. WHELAN: Okay, well I stand corrected.

MR. CARTER: Nain is a government plant. We follow a price there very closely. We don't want to pay a price for fish there that is - we have to be competitive, I suppose, with Makkovik. We have to keep that in mind. Anyway, it's a thorny problem, one we are going to have to keep looking at.

MR. WHELAN: Thank you.

MR. CHAIRMAN: Does any other member of the committee have a question, or do we call the subheads?

On motion, subheads 1.1.01 through to 5.1.04 carried.

On motion, Department of Fisheries, total heads carried.

MR. CHAIRMAN: Before I call for a motion to adjourn I would like to give the minister an opportunity, if he wishes, to make a closing comment. Before he does that, I would like to thank the minister and his officials, the members of the committee, Elizabeth, our Page, Mr. Oates, and all those people who have been so patient with us here tonight and have been so co-operative with the Chair.

Mr. Minister.

MR. CARTER: I, too, want to express my thanks to my staff for coming here tonight, and the House staff, and I want to especially thank the members of the committee opposite. I think tonight you have acted in a very responsible way, as you always do, asked the right questions, good questions, and I only hope that we were able to provide you with some of the answers. If there is anything else you want to know about our estimates or the operation of our department, I extend to all of you an invitation to come to the Department of Fisheries any time you can and want to, and I will make whatever staff you need to be made available to enlighten you on certain things as to what is going on. In fact, I would like for you to do that. I would welcome the opportunity to have any of you visit the department at some point in time and sit down with our staff and see firsthand what we are trying to do.

Right now we are in a pretty serious problem in this Province, and life in our department right now, from the minister down, is not a very happy one. There are all kinds of problems. On a daily basis we are confronting crisis. It has been the story of our life now for the past five years. You are going from one crisis to another.

Tonight I want to pay tribute to my staff. I would say, without fear of contradiction, there isn't a staff in the entire public service that puts in more hours or works harder than the people in the Department of Fisheries. I am telling you that. You can't drive by our office any morning after 7:30 and not see some - not all, but some - of our senior staff in working. I am quite proud of that, and proud of them, and I think notwithstanding all the criticism sometimes that bureaucrats get, and public servants, I think in my case, in my department, I have nothing but admiration for them. They are doing a good job, under extremely difficult circumstances. It is not easy, every single day of your life, to have to be telling people in La Scie, or in Fogo, or in some other place, that you can't accommodate them, that you can't give them that licence that means so much to them, and that is going on every day. It is almost a nightmare.

Notwithstanding, I still think the fishery is going to come through. I have faith in it, and I believe that eventually the fishing industry will once again play a very dominant role in the economy of Newfoundland. In fact, if it doesn't then it is difficult to see what we are going to do in this Province, or where we are going to go, or if in fact we will have a Province.

I think we should work together, keep a stiff upper lip, the old British people say, and let's see what happens. Thanks very much, fellows, you have been good.

MR. CHAIRMAN: The next committee meeting will be the Department of Forestry and Agriculture on Monday, p.m.

On motion, the Committee adjourned.