April 23, 1997                                                           RESOURCE ESTIMATES COMMITTEE


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

CHAIR (Mr. P. Canning): Welcome to the first Resource Committee meeting of this particular budget process. We have tonight the Minister responsible for Industry, Trade and Technology, the hon. Charles Furey and his staff. We have the members of the House forming the Committee. Maybe we will just go through the members, starting with the Member for Humber Valley. Can you identify yourselves for the record?

MR. WOODFORD: Rick Woodford, MHA, Humber Valley.

MS THISTLE: Anna Thistle, MHA, Grand Falls - Buchans.

MR. OLDFORD: Doug Oldford, Trinity North.

MR. E. BYRNE: Ed Byrne, Kilbride.

MR. FITZGERALD: Roger Fitzgerald, Bonavista South.

CHAIR: Thank you very much. Minister, perhaps you can introduce your staff and have a short opening statement.

MR. FUREY: Thank you, Mr. Chairman.

I am Chuck Furey, Minister of Industry, Trade and Technology. On my immediate right is Max Ruelokke, the Deputy Minister of this department. To his right is Keith Healey, the Assistant Deputy Minister, who has just taken up those new duties in the last couple of weeks. On my left is Rick Hayward, Director of Financial and General Operations. He covers three departments since we amalgamated administrative responsibilities. He covers off Tourism, Culture and Recreation; Industry, Trade and Technology; and Environment and Labour.

Mr. Chairman, I do not have a short statement. I think we should just go right to questions. Our estimates are fairly straightforward. If there are questions, I would be happy to entertain them.

CHAIR: Thank you, Minister. Well, that is what we will do. We will go straight to questions. Perhaps Mr. Byrne might want to open up, or Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

On page 143, Minister, it shows Salaries there under 1.2.01, Executive Support, $646,900 down to $436,800. Is this a situation where positions were eliminated to reduce salaries by $210,000, 32 per cent? If it was, which positions were eliminated, and could you indicate the salary levels of those positions?

MR. FUREY: What page are you on there, Mr. Fitzgerald?

MR. FITZGERALD: Page 143.

MR. FUREY: Can I just open by saying that the department is under program review and that is part of the general overall reductions. Our department took a 30 per cent reduction. It is all about - as the Premier and the Minister of Finance have said over and over - making choices, and we moved to protect the health care budget and other budgets. So every department was asked to look and to cut as close as possible. With respect to my own department, in that particular subhead, you are looking at the removal two ADMs. There used to be three ADMs in my department, an ADM for economic analysis, an ADM for trade and development and an ADM for technology development. We decided to remove that layer of management and go with basically five directors. We wanted more flexibility, more accountability and quick decision-making.

MR. FITZGERALD: So you are saying there were three positions eliminated there under the one heading.

MR. FUREY: Yes, and there is now one ADM. And when I say that is eliminated, it is all the support staff that goes with it.

MR. FITZGERALD: Okay. You do not feel that, in any way, the reduction of staff will have any impact upon the department's ability to plan or establish or evaluate policy objectives for the department?

MR. FUREY: No, we basically said: we are going to reinvent the department. We decided that we would look at the basic core responsibilities and focus on them more. The areas that we chose to focus on are marketing, technology development, investment prospecting, trade and exports and industrial benefits, particularly as it relates to petroleum industry and the mining industry. But the other thing we decided to do was to start building teams across the divisions. Instead of just categorizing people and pigeon-holing them into various categories, we said: we are going to take down those walls and start building teams across the division; that is how we have mandated the restructured department and we think it is going to work very, very well. It will be more accountable, more flexible, and we are going to count more on the private sector to do an awful lot more. Where we reduced the public sector by thirty per cent, we are going to ask the private sector to start paying for things like trade shows, cost recovery and exhibits and those kinds of things.

MR. FITZGERALD: Under 1.1.01, the first heading, Minister's Office, there is another reduction there from $188,300 to $169,900, a reduction of $19,000. That is probably not a salary. What is that reduction? Is it a reduction in the minister's salary or it is a -

MR. FUREY: It is tax time, I wish. Basically, I think, that reflects a reduction in overtime costs. In other words, there are a lot of people working in my office for whom one time there was a fair budget there for overtime and those kinds of things. A lot of it now has moved off to time in lieu, rather than a cash payment.

MR. FITZGERALD: On page on 144, Policy and Strategic Planning, 1.2.02. Here, again, we have a difference in salaries from $107,600 to $196,000. Why have salaries increased here by $88,400?

MR. FUREY: I am just going to ask the deputy to refer to that because he is - we are getting right down into the divisions and he will speak to it.

CHAIR: If I could, as you speak, just identify yourself for the record.

MR. RUELOKKE: The budget for salaries for the Policy and Strategic Planning Division of 1996-1997, was $145,000. There was a director, an officer and a secretary associated with that. There was a vacancy during part of the year - one of the people was transferred out to another division, so that resulted in a savings in that division. We added another person as a part of the reorganization following program review, so we have really added one person from 1996-1997 to 1997-1998 and the budget estimate reflects those positions being filled for the entire year.

MR. FITZGERALD: So that is at a salary of approximately $51,000?

MR. RUELOKKE: That is correct.

MR. FITZGERALD: Coming on down to Grants and Subsidies, you notice a reduction of $20,000 in the 1996-1997 budget and the estimates is for $9,000 this year. Which Grants and Subsidies have been eliminated here in this particular heading?

MR. FUREY: Which one was eliminated, you are asking?

MR. FITZGERALD: Yes.

MR. FUREY: As you know, when the internal trade agreements were under way, each of the provinces contributed a portion to those negotiations. They have since concluded all eighteen chapters with the exception of two, the chapter dealing with the so-called MASH or MUSH sector, on which we are getting very close to signing off. The other one was the energy chapter and it is one that Newfoundland had quite an interest in with respect to wheeling rights across Quebec territory. So, you will see that that budget has declined, Mr. Fitzgerald, because basically that agreement is completed.

MR. FITZGERALD: Just going to Salaries again, on page 145 at the heading 2.1.01, Business Services: How many positions were lost to reduce the salaries here by $90,700?

MR. FUREY: As I told you, there were twenty-six positions and some temporary adding up to about thirty positions in total. I can dig through the background detail and give you the specifics on those, but the overall department had a decline of about thirty-one positions, of which twenty-six were full-time, the rest part-time. So, each of these subheadings as you go through will reflect that.

MR. FITZGERALD: Coming on down the line to item 10, Grants and Subsidies: in 1996-1997, we see the Grants and Subsidies at $450,000; I think it was about $550,000 and it was revised to $450,000, this year it is $1,250,000. What new grants and subsidies are implemented here?

MR. FUREY: Basically, that has two components, the first one is the agency of record that we have hired, Bristol Communications which has helped us with our advertising campaign. Perhaps you have seen it, the `Think Again Campaign' in the Globe and Mail, which was designed to cast a better image of the Province from the outside looking in. That takes up a fair portion of that, but we also had to budget a fixed amount which we knew would be fluid and flexible for the EDGE Program. The EDGE Program, as you know, contemplated $2,000 per job, so the balance of that would be taking up in terms of the EDGE Program, we expect, a bigger pay-out this year. Under the EDGE legislation, each job created we would guarantee a $2,000 grant -

MR. FITZGERALD: Per job.

MR. FUREY: That is right - which is the equivalent of what we would have collected in personal income tax, which we rolled back to the company in the first year to allow them to use it as a grant to get people up on the learning curve in these industries.

MR. FITZGERALD: So this is tied in with the EDGE program?

MR. FUREY: That is exactly right, yes.

MR. FITZGERALD: Under the amount to be voted next, coming on down to Revenue - Provincial, it shows $45,000 there in the 1997-1998 Budget. What would be the source of that revenue, Minister?

MR. FUREY: This would, I think, reflect the trade shows and what industry, I guess, would pay towards those trade shows. Prior to last year, whenever we had these trade shows the Province would always pick up the costs for manning the booths, setting up the exhibitions, dealing with the literature, those kinds of things. We never ever had a fee that we charged back against industry for these. Last year we started a small fee. This year it will increase. What we are saying is we want to recover some of those costs. We will still pick up about 80 per cent of each of the trade shows and their costs. That is not the cost, now, for business men or women going out to export their products. This is the cost of the Province setting up their exhibitions, putting their literature in place, and staffing these booths. They will make a small contribution towards that.

MR. FITZGERALD: I have had a real problem with some of the thinking, I suppose, behind the EDGE program. It is always the situation where I felt we did not treat our own people as fairly as we treated other people, or new people moving in, whereby somebody would be encouraged to start a new business and create a new job, when many of our own businessmen here in this Province were doing exactly that but got no recognition from government whatsoever. Have you had any thoughts about changing that and recognizing all new job creations by letting them either take part in the EDGE program, or at least providing them with a subsidy of $2,000 for the jobs they create?

MR. FUREY: Yes. Two points on that. The first one is that 45 per cent of the companies that are approved under EDGE are local Newfoundland companies. So they are companies in which businessmen have come up with new ideas and set up new companies, or companies that currently exist that are expanding. So, clearly, nearly half of them are from here.

The second point is that we decided that under this Budget review, after the pay-outs are completed this year, there will be no more $2,000 per job grants from the Province. We have asked them to look at the EDGE program and reinvent it. One of the areas we are looking at is the so-called jobs training fund which is mostly funded by the Federal Government, as you know. Now, that is available to all companies anyway.

Basically, what is left on the table for companies that are setting up under EDGE are relief of the payroll tax for a ten-year period, relief of corporate income tax for a ten-year period, Crown lands which we would make available for a dollar, an EDGE facilitator to guide and navigate them through permits and any obstacles in the bureaucracy. Because as you know, with the Harmonized Sales Tax, with the GST merging with the PST, there is a tax input credit that goes to all businesses anyway. So it is a level playing field in that sense in terms of taxation, and we have removed the $2,000 job grant, and that is available to any company under the JTF.

We are working hard to try to reinvent that program. It has been fairly successful. We have about fifty-seven companies. There is projected to be over $250 million invested over the next two years. It will create upwards of 3,000 jobs. There is an element of success to it. But we have to refocus on it and rethink it because of the Harmonized Sales Tax and the removal of the $2,000 grant per job.

MR. FITZGERALD: It would be nice to see our own local people being encouraged to hire more people and to receive some benefits, at least, on an equal footing with other people who move in here and create new jobs.

Minister, you have done a lot of travelling and spent a lot of money. Are you happy with the amount of success you have had? Can you tell us how many jobs you feel you have attracted to this Province, or how many industries you have attracted to this Province, since you have been in the portfolio? It is a pretty broad question, but -

MR. FUREY: Yes, it is a pretty broad question, a very difficult one. I remember, when I sat over there from 1985-1989, asking the same questions of my predecessor, Mr. Barrett, incidentally, whose travel budgets were double mine, whose entertainment budgets were triple mine, etc., but that is not the issue.

MR. FITZGERALD: I do not think anybody here would argue about your travel budgets or question you on your pettiness or anything like that. That is not the intent.

MR. FUREY: No, and I do not mean it that way. I just mean that it is very costly to go out and travel the world. It is extremely difficult, you are competing in an international environment, you are competing with all of the states in the United States of America that have various programs that are out competing, you are competing against all of the other provinces - it is very difficult.

We have had some success stories. You know some of them because we have given EDGE status - the antimony mine in Central Newfoundland, the Baie Verte gold mine. I met with some people - Mr. Shelley probably told you about this: we are pretty close to a deal on this tannery which will create another 100 jobs on the Baie Verte Peninsula.

There are a number of call centres we have been chasing, one which is very significant and we are very close to winning it. I cannot say a whole lot more about it, but we have been short-listed on a list of nine and we are down to two, and it is fairly substantial.

We have attracted a number of IT companies here, Abbacom Logic, for example, which is in the business of tracking devised for marine animals that exports right out of here now. Abbacom Logic, which has hired fifty graduates out of our University, is a company that is involved in the enhancement of memory boards.

There is a silica group that Mr. Canning has been working very diligently on, called Globe International, that is taking samples out of Labrador. I believe it is a $100 million project we are talking about, that we have met with, and those samples are now being tested in the United States. There is another company that I met with three weeks ago and I visited with, that is looking at a lime project on the Port au Port Peninsula, which would provide sixty jobs - I am confident that that will come true - of which thirty-five per cent of their requirements will go into Voisey's Bay and the other sixty-five per cent will go into the New England States. I just met with a major sports sweater manufacturing facility that is look to set up in Argentia, 140 jobs. I met with the shareholders for two days in Toronto the other day, and that looks very promising.

So, there is a whole range of companies; I can get into a long litany of companies that I have met with that are very promising, but I can equally sit here and tell you of thousands that I met, where we were unsuccessful.

MR. FITZGERALD: Minister, what will I tell someone from my district who worked in, I suppose, the flagship plant of the FPI operations, that once employed 1200 people, and now has had the windows boarded up for the past five years, with very little hope of ever getting back to go to work in that particular area in the fishery? The whole area is devastated. People are leaving there by the dozens and that is not any stretch of numbers. Has there been anything or do you know of anything -

MR. FUREY: You are referring to Port Union?

MR. FITZGERALD: I am referring to Port Union -

MR. FUREY: It is funny that you should refer to Port Union, because in my Toronto meetings on this sweater manufacturing facility, I contacted Mr. Young and asked for the details and space requirements and stuff for that plant, because this company wanted to look at an alternate site, as well.

This is a very exciting company. It has some terrific investors, they have good contracts in hand, mostly going into the New York garment industry and I have recommended Argentia and the Port Union area.

But it is very difficult, you are quite right. There are a lot of abandon fish plants, there is a lot of property lying around that could be picked up very cheaply. It is not easy to direct investments in there. I get this question all the time on the North West Coast. My own riding runs from Rocky Harbour in the South all the way to Flowers Cove in the North and it is a necklace of forty-eight communities, all depending on the fishery. Many of the plants are abandoned, a lot of them will be closed, and I am constantly asked about it. So, it is not peculiar to your area, although I am sensitive to your area, and it is an area that came to mind when I spoke with this company. I highly recommended it to them. That is basically what I have to do as a salesman, because that is my job, to try to sell. It is to pass on this information.

I understand Mr. Young has had a number of faxes from the company since, but I think there is some good news coming down the pipe for you, as well, with the announcement today of this $100 million shrimp industry. It looks very promising for the Bonavista plant which has been idle and boarded up. It will create a significant number of jobs in your area, and that is good news.

MR. FITZGERALD: Minister, there is a group in that particular area known as Cabot Resources which has been operating through funding through HRD. The sad part about it is, if we put those people in those positions, we give them office space, and we give them some money to operate a telephone and a fax machine, and that is it, you know from your travels and from the experiences you have had that it is very hard to attract people to your area - new industry, or to solve your problems - by sitting in a small office down in Port Union or Catalina. We have to think much bigger than that, and allow those people room to travel, and go and search out companies and prospective investors to come and look at what we have to offer, and possibly provide our people with some work. That is something that I would like for you to take under consideration. I know it has probably been brought to your attention before, but I can assure you that as long as we continue to expect those people to be able to solve our problems with such a limited amount of funding, it will never happen, as hard as they might try.

MR. FUREY: One of the things I would comment on, with respect to your comments, Mr. Fitzgerald - and I am not sure what your economic zone is because I have been out of the rural picture for awhile now, but in my own area, which is Zone 7, they just completed a terrific strategic economic plan where they travelled the coast, met with the communities, highlighted the areas of forestry, aquaculture, secondary processing in the fishery, tourism, and a number of other areas, and that strategic plan has a series of action items. I am meeting with them, in fact, tomorrow night on this issue, and they are seeking federal/provincial dollars to go out and market themselves, now that they have a good plan in place, and they have some very good ideas about it. They are taking local products, by the way, to trade shows for the first time ever.

There is a fellow in Port au Choix who has developed a product called a Komatik. It turns into a sled for carrying wood, a boat, a tent, a camper. It is just a phenomenal piece of equipment, and he is meeting the likes of L.L. Bean, and those kinds of people, but he is getting out there and marketing it. We have given him a few dollars to go to some of these trade shows, and I know Mr. Byrne has had some of his constituents - and he might want to talk about this after - use the MAPD program to go out and take products and show them off around the world and open up new markets, because if we open up new markets we can start selling these kinds of things.

You are quite right. It is not just government; it is not Chuck Furey; it is not the Department of Industry. It is all of us, particularly the people who live in the communities and who know the strengths best. But the issue, Mr. Fitzgerald, is to catalogue them, identify them, put them on paper, and get out and market them. I quite agree with you.

MR. FITZGERALD: I will pass, Mr. Chairman.

Thank you, Mr. Chairman.

CHAIR: Mr. Byrne.

MR. E. BYRNE: Good evening, Minister. Gentlemen, how are you?

I was noticing in some of the responses to questions by my colleague here, you talked about reorganizing and reinventing the Department of Industry, Trade and Technology to focus in on fundamentals, I think is the word that you used, and one of them was industrial benefits specifically relating to mining and oil and gas, I believe you said.

MR. FUREY: Yes.

MR. E. BYRNE: Could you elaborate on that a little bit for me?

MR. FUREY: The predecessor of the Department of Industry, Trade and Technology used to be called the Department of Development, and there was a division in there known as the Offshore Benefits Division at that time - we have now changed it to Industrial Benefits to widen its mandate - but at that time it's job, Mr. Byrne, was to go out with our local companies to seek out trade shows that were meaningful so that our companies could be in a position to engage in joint ventures and strategic alliances, because we knew we could not do it all alone on the oil front.

As a consequence of that, and as a consequence of these trade shows and some of the developments that have come from the department, we have seen over 150 new joint ventures and strategic alliances over the last ten years. Now a great deal of credit for that does not go to me or to my department per se. It goes, I think, to the former government that had a vision of creating that. I give Mr. Peckford and his group full marks in that regard, because they recognized early that we could not send company x out with zero experience in the petro-chemical or the petroleum industry. We had no experience, so we had to go out and find people who had experience, join with them and build bridges back into the economy so that we could transfer the technology across those bridges back into our companies. As a result, you will see from the Hibernia project, literally 46 per cent of all the expenditures, which was close to $3 billion spent here, was spent in local companies winning contracts on their own merit.

We thought that was important in that it was a success story for Hibernia. We have widened it now for Terra Nova. We have just catalogued a whole range of opportunities for some of our local companies. NOIA, as you know, sprung up out of that, the Newfoundland Offshore Industries Association, which is a collection of those companies that have been successful. We have widened it now further to Voisey's Bay, and the department is now in the midst - and that particular division known as the Industrial Benefits Division is in the midst - of cataloguing a whole range of opportunities from the time the people go in to extract the ore until it is taken out, until it is refined and smelted and has a final product. We are looking at downstream industries beyond that as well, but the studies under way now will be fairly comprehensive and we will hold a series of seminars across the Province so businesses can see what the opportunities are, but I think it has been very successful. Mac, you have been involved in this as a director and as an ADM and now as DM; I think you would probably agree with that.

MR. RUELOKKE: Yes, I would, Minister.

MR. FUREY: Does that sort of touch on what you were asking, Mr. Byrne?

MR. E. BYRNE: Yes, it begins to touch on it.

Again, it may be somewhat ignorant on my part but forgive me if it is; what role, outside of that, does your department play with the ongoing offshore oil and gas industry, because it is still a very young industry in the Province which really has not emerged upon the scene at all. And outside of the Hibernia project, which is an agreement that is essentially, in terms of the construction phase of the GBS, complete, for all intents and purposes, in terms of procuring and assuring significant benefits, industrial and otherwise to the Province, what role does your department play in that?

MR. FUREY: We were not just involved in the construction side of getting companies up-and-ready.

MR. E. BYRNE: Oh, I understand that. You are involved in much more than that. I am honing in on specifics.

MR. FUREY: I should mention this. The department also, about a year-and-a-half ago, released a catalogue of opportunities for the production side. Production, as you know, starts in December and I think it will be roughly 150,000 barrels a day and will go for about twenty years. We catalogued a whole range of opportunities, because over the life of that project, which some people say is eighteen years and some people say is twenty years, personally I believe it is going to be far greater than that, and I think the volumes are going to prove out to be far larger, but that is a personal point of view, not a government point of view, there is a whole catalogue of opportunities during production. We think there will be about $8 billion spent over that twenty-year period. We wanted to position our companies not just to chase construction jobs and servicing of the construction, but to chase the servicing of the production, and you are seeing that we will service. Look at Harvey's Offshore, for example, the supply base, right on your own neck of the woods down there in St. John's. You will see that literally millions of dollars is being spent down there to service these offshore rigs. Boats will come and go. Supplies will have to go on; the helicopter contract, which led to a major capital expansion at the airport, ferrying working to and from the rig 300 kilometres southwest of St. John's.

Mr. Byrne, there are a whole range of opportunities that my department, with this very small division, who are a very talented group of men and women I have to tell you, are ferreting out and making, facilitating, these opportunities with companies. That is the role. Our role, really, is to identify and to facilitate and help the companies go chase and capture these contracts.

MR. E. BYRNE: I wonder if the Clerk could move back a bit because I can hardly see the minister. I am sorry about that.

If that is your role, what is the department doing now in terms of identifying, facilitating, enhancing, local companies to take advantage of the Terra Nova project, in terms of every aspect of it? Because there is a legitimate concern, I think, that has been raised in a number of areas in terms of: What are the significant industrial benefits, major contracts, that we have seen lost in the past with respect to Hibernia, in terms of the Cow Head facility, and other things like that, that a great deal of the work may go out.

In the agreement between the Province on the one hand and Petro Canada on the other hand, it says e bidders with facilities in the Province that can complete or do work, the agreement only allows or only stipulates that Petro-Canada, maybe I can read it just to a little bit clearer, Minister, I will read it. `Where Newfoundland and Labrador fabrication assembly and outfitting capabilities exist and are qualified by project proponents to be capable of undertaking the project activity, the project proponents will request potential bidders in the Province to bid the work using Newfoundland and Labrador local and addition to bidding other locations'. So, there is no guarantee that we have the facilities between the Province on the one hand and Petro-Canada developer on the other hand, that where fabrication opportunities exist, all that is in the agreement is that it guarantees that local companies will be allowed to bid.

So, what is the Department of Industry, Trade and Technology doing to facilitate and to ensure that that fabrication work actually starts here and not to be built or constructed, as is the case, and I am sure the deputy minister who has been involved in this industry is as aware as anybody in the Province, to ensure that that is not build in Europe or in the United Kingdom where some are suggesting that it is going to be built now?

MR. FUREY: Well, you know how that agreement was structured and it is different than the Hibernia agreement.

MR. E. BYRNE: I know, I understand that.

MR. FUREY: The Hibernia agreement, the way it was structured was, we set about to capture the industrial benefits and to squeeze on the industrial benefits as much as we could. Now, there was a price tag for that, $2 billion in loan guarantees from Ottawa, which I feel confident will be paid back, since significant tax concessions by the Province and a whole range of other issues. So, the trade-off was, we will ensure industrial benefits on the one hand and we will trade-off royalties on the other.

MR. E. BYRNE: But we did not get entirely the industrial benefits that we thought we were going to get from that project either, but we did well. I am not saying, but we did not - some of the larger thing in terms of - but anyway that is not the issue now.

MR. FUREY: I think you are thinking about Marystown and some others, but again Mr. Byrne, that is - you are at the whim of the market place in that regard because our bid with respect to Marystown on the MOF, if that is what you are talking about, the Mechanical Outfitting Project, which is why we built -

MR. E. BYRNE: That is an example, that is not the question I am asking in terms -

MR. FUREY: I know what you are asking. In terms of Terra Nova, the thinking was to take more on royalties, less on industrial benefits as a framework agreement. Our royalties structure is much better, as you are aware, with respect to Terra Nova, but even with Terra Nova we will get about $1.5 million person hours of work on Terra Nova and there is another million out there that we have to chase.

Now, I think a significant milestone was reached the other day in that the buildings trades council have come to a very good agreement with the so called Grand Banks Alliance, which just changed their name to the Terra Nova Alliance. Having that agreement in place, with the state of the art facility at Bull Arm, puts us in an extremely competitive position. I am not worried that we are not going to get work, in fact, I feel very confident.

I also feel confident that some of the topsides modules will be fabricated at Marystown. We have had a very good success story at Marystown, it has been a turn around like nobody ever dreamed of in the last fourteen months. You have been following those stories that the unions have come to the table, the management has come to the table, we have reopened agreements, we have restructures packages, we have made ourselves that most competitive, I think, shipyard and repair facility east of Montreal including Quebec, and that is why we are winning contracts in the Gulf of Mexico, with AMFELS and others, an $8 million contract, a $400,000 extension, another $4 million two weeks ago, $6 million beyond that. We are now primed to win the tug contract on the Transhipment terminal. We are one of the two bidders being considered and I feel confident that we will win it.

So, we have made ourselves competitive, Mr. Byrne, and that is the best that we can do to create a competitive environment because the actual agreement calls for a full and fair opportunity.

Now, with respect to the monohull, we cannot build that in the Province anyway, if they go for a new build. That will be build in Japan or Korea or one of the British shipyards, but the hull itself will come in and the real work and the integrate work and the man hours and the construction and the experience and the technology transfer is in building all of those topsides that go onto that monohull.

MR. E. BYRNE: That is the question then. So, in terms of what is the department doing, or government, or through you as minister -

MR. FUREY: Right.

MR. E. BYRNE: - to ensure -

MR. FUREY: I (inaudible) -

MR. E. BYRNE: - that where that fabrication sort of opportunity and ability exists industrially in the Province... Because there is no guarantees within the project for the reasons you are outlined, that you have a chosen a route to take it more on the royalty regime as opposed to on the industrial benefits side. To ensure that we are competitive, because the agreement talks about being globally competitive as a province, what are we doing to ensure that we have the edge, so to speak, to ensure that whatever contracts we can bid on that we in fact do, and win?

MR. FUREY: Right. My answer to you was you have seen the first of its kind labour agreement in all of North America that was announced last week that I think puts us in a very competitive position. Bull Arm, as you know, the site itself reverts to the Province within the first 3 million barrels of oil, which is probably sometime mid next year. We will make that site available. It is ours. It reverts to us for one dollar. There are no capital intensive costs that have to be absorbed by anybody. There is a fantastic labour agreement regime put in place that is far less onerous than the Hibernia one.

I think the answer to your question simply is that we make ourselves competitive. We have done everything in our power to do that. At Marystown I feel confident, I feel very confident, that we are going to win significant chunks of work on Terra Nova because we are competitive. We can bid and we can win and we can make money. Bull Arm is the same thing.

With respect to spin-offs for other companies, smaller and mid-size companies, we are nurturing them as well. We have met with a great many companies over the past year pointing out the smaller subcontracts they can chase. We continue to go to these trade shows. There is an important one in a week or so which I will be speaking at, an international conference in Houston. I think we have fifty companies going to that, Max? Fifty companies going to that. I will be meeting with the Terra Nova alliance while I'm down there as well and continuing to pressure them that: Look, we want as much benefit to go to Newfoundland, and holding them tight to the best efforts agreement.

We all know in law that best efforts means very little when you appear before judges. But really and truly Mr. Byrne, if companies are going to operate here - and Petro Canada is a significant shareholder in Hibernia, and the operator of Terra Nova, and it has other fields out there that it is exploring and that it is a partner in, it has to live with us as well. The next agreement we are going to be carefully monitoring and watching it.

The broad brush answer to your question is to make ourselves competitive. Create a competitive environment where we can bid, win and make money. No good to bid and win and lose money. Because the Province owns those sites.

MR. E. BYRNE: Fair enough. I guess I will rephrase it. Do you think government has put enough emphasis on ongoing research and development in terms of dedicating an office or individuals or a certain thrust of government that would maintain, operate, so to speak, or look at ongoing opportunities within the oil and gas industry? Because it is an industry that you know moves extremely fast. It changes daily, weekly, monthly.

Is the Province doing enough in that regard to continually monitor that to ensure that advantages that are happening around the world, in terms of what we have to offer as an emerging player in that industry, are we doing enough to take advantage of that? Or - and I'm not trying to be flippant either, it is an important question - are opportunities passing us by that we don't even know of yet? Or that have passed us by because we haven't singled out that specific thrust in that industry?

MR. FUREY: No, you make a good point. You are never going to capture it all -

MR. E. BYRNE: No.

MR. FUREY: - but you are quite right. That is the importance that I place on these trade shows. In fact, in Houston next week - it is called the Offshore Technology Conference, the OTC. All the new and modern technologies that come into play, or have come into play, or will come into play in the next year or so, will be assembled and presented at the show.

MR. E. BYRNE: I'm aware of the Conference, I've seen the (inaudible).

MR. FUREY: Yes. They filled the entire Astrodome. That is why it is important for our companies to go down and see what kinds of new technologies are being - for example, in sub-sea technology. It is changing all the time, like flexible pipes and a whole range of other things. Horizontal drilling was a new technology. The ROVs, which David Squires and the diving department - he got involved with SubSea out of New Orleans, which transported new technology, new equipment, and new know-how into the Province.

Not only did he, Mr. Byrne, import it into the Province, but he became so good at it that he exported it back to where he came from, and had something like twelve of our divers there for a year in the Gulf of Mexico. Was it twelve or fourteen of our divers, Max? So we are watching for it all the time, and our department is watching for it all the time, and that is the importance of these trade shows and exhibits.

MR. E. BYRNE: In terms of getting out there.

MR. FUREY: Yes, getting out there, to see it, touch it, feel it, and examine it, and do joint ventures wherever you can. Because a lot of times our companies are small and they are undercapitalized. That is why we put in place -

MR. E. BYRNE: Agreed. That is why I asked the question in terms on one hand in getting out there, but having the information as current as it may be to provide those companies - you say fifty are going to the one in Houston - with the most up-to-date latest information in terms of giving them the tools, the equipment, necessary to not only survive, but thrive in that environment. (Inaudible) are we doing that enough?

MR. FUREY: Yes. One of the points I was going to make is that a lot of these companies are undercapitalized, and that is why we set aside under the Offshore Development Fund a so-called offshore technology transfer fund. Companies can access that on a grantable basis so long as the technology is brought here, stays here, and creates jobs. Many companies have accessed that. Max pointed out to me that it was our department and that small division that created a paper on floating production systems three years ago, pointing out the new technologies not only to our own companies, but to Terra Nova and to the consortium.

So yes, they are staying ahead of the game, and we have some very bright minds over there and good people in Fred Murrin and Valerie Hillier and Colin Dyer and these people who are engineers and technicians and who have been around this game a long time. But are there some that pass by us and blow past us? No question, there are. But these companies are in the business of making money. I know you have talked to many of them, and they have done very well coming out of these trade shows because they have joined and made strategic alliances with the right partners.

MR. E. BYRNE: Is your department still involved, directly or indirectly, in terms of the ongoing privatization initiatives of government?

MR. FUREY: No.

MR. E. BYRNE: I don't think you play the same role as a department as you used to. I could be wrong, but...

MR. FUREY: No, you are quite right. We used to do the privatizations because under the old former Department of Development there were a lot of Crowns that sat with me. For example, Newfoundland Hardwoods was reporting to me. We privatized that very successfully. Newfoundland and Labrador Stores reported to me; we privatized those stores as well, very successfully. There were other things that were reported to me as well. Marystown, for example. I hope to privatize that. The picture has turned around, it is looking very bright and positive, and we are getting some very interesting nibbles.

That is why privatization was focused on my department. As we started to feed these Crowns back out into the private sector, there was nothing really left except in an advisory capacity, and we were very much advisors in the privatization of Newfoundland and Labrador Computer Services Limited. The file has now been moved to Finance, because as you will notice in the Estimates the so-called project and analysis division, which was my -

MR. E. BYRNE: (Inaudible).

MR. FUREY: - has all shifted to Finance with their economists, so you have a bigger group which looks at the larger picture, not just project by project.

MR. E. BYRNE: More of a general question. Compared to last year's budget, I guess on page 141 in the Program Funding Summary, gross expenditures I think will increase by about $7 million, $8 million, up to $36,846,200, from $28,888,600 the year before, an increase of about 25 per cent, 26 per cent, 27 per cent, whatever.

MR. FUREY: They reflect the federal-provincial agreements (inaudible).

MR. E. BYRNE: Yes. Again, why such an increase? I'm not complaining about it, by the way.

MR. FUREY: No.

MR. E. BYRNE: Why such an increase, and where has that increase in revenue been directed to reflect, I guess, the new direction the department is taking?

MR. FUREY: There are two issues there, Mr. Byrne. The increase is reflective of a federal-provincial agreement that we signed, the so-called Economic Renewal Agreement, which carved out $30 million for my department, which is used for information technology and as you know, we did a major study. I highly recommend it to you, on information technology called: Operation Online. The Operation Online had a series -

MR. E. BYRNE: You sent it to me.

MR. FUREY: That is right, you probably read it, - series of recommendations, well they needed some money to give life to those recommendations and Operation Online is proceeding straight ahead going gang busters, they are doing a good job.

MR. E. BYRNE: So, basically the increase was as a result of that.

MR. FUREY: That is part one. Part two, we also had to float in there some cash flow for a new agreement we are about to sign with the Government of Canada. It is basically a $50 million economic agreement. You remember the old ERDA's, they were call Economic Regional Development Agreement? This will supplant that and it will be cost -shared seventy - thirty between ACOA and the Government of Newfoundland and Labrador and about $35 million of that will sit in my department for the very things, Mr. Fitzgerald just talked about, getting out there and marketing, getting out there and getting our products exported, market and product development, business initiative, those kinds of things. I can give you the details, if you are interested. That is why the substantial increases.

MR. E. BYRNE: In the 1996-97 estimates, section 2.1.02, I believe it is page 163, if I am not mistaken, I will just double check that myself, 161.

MR. FUREY: 2.1.02, page 145.

MR. E. BYRNE: Page 145, sorry, contained appropriations for the Strategic Supplier Development Fund, right on the same -

MR. FUREY: Oh, you are on the year before are you?

MR. E. BYRNE: Year before, yes, `96-97. Let me get it here now.

MR. FUREY: Does anybody have the year before?

MR. E. BYRNE: Yes, 2.1.02, in the year before `96-97, contained appropriations for the Strategic Supplier Development Fund, approximately $350,000 and it appears, in terms of this years estimates, that that heading is not contained whatsoever. Have these appropriations been eliminated altogether or are they included in a different heading? If they are contained under a different heading, which ones?

MR. FUREY: On the old one, are you on page 165?

MR. E. BYRNE: Page 163, 2.1.02, in the last years 1996-97 estimates.

MR. FUREY: That was a separate division.

MR. E. BYRNE: Is that gone altogether?

MR. FUREY: Yes, it has been rolled into Industrial Benefits and what we did there was reverse trade shows and those kinds of things, to get suppliers in the Province, to get in the doors of Light & Power, Abitibi Corporation, Iron Ore Company of Canada those kinds of things, to see what they were buying around the world, that we could supply at competitive rates.

MR. E. BYRNE: So, it was a redirection of funding?

MR. FUREY: Yes, it has been a cut, but we have moved it over under Industrial Benefits because we see supplier development as an Industrial Benefit program.

MR. E. BYRNE: Fair enough. That is all I have for now.

CHAIR: Ms Thistle.

MS THISTLE: Thank you, Mr. Chairman.

Mr. Minister, I note that one bright spot in our economy for sure is in the manufacturing sector and I believe that it is the forth year in a row that we have seen significant growth in that sector and I think we are now up to about $1.6 billion in exports.

Coming from my district, I can see that and I can confirm it. You mentioned the Antinmony Mine close to my district, in fact I see the direct and indirect benefits from that mine in my district and I too recognize the importance of the export business now that is in Buchans and the contract that was landed by Steel Corp. with the Bowing contract. We are now making use of a skilled labour workforce in Buchans and if things are happening in a remote location like Buchans, we are going into high tech and it confirms what your department is doing.

I would like for you to tell me, what is your forecast for this coming year, in the way of exports from our Province and do you expect a growth similar to what we experienced in the pervious four years or do you see us taking off in leaps and bounds?

MR. FUREY: I think your question is very timely. If you look at the record of the manufacturing sector you will see growth over the last eight years - significant growth.

One of the things we have been very lucky about, Ms. Thistle, this year, is that a Newfoundlander has actually sat as President of the National Manufacturers' Association, which is now called the Manufacturing and Export Association or Alliance of Canada, Lorne James, and he has been a terrific salesman right across the country, and he has fed back a lot of investment opportunities to us. But you are quite right when you point out Steel Corp, who exported to Ireland and other parts of the world and are now joined in with a giant, Boeing, but just up the street from you is High Point Industries. High Point Industries called my department a couple of weeks ago because there was a significant oil spill off the coast of Uruguay that I visited on a South America mission that I led, and because we had contacts down there we joined that company to them and they just won a significant contract down there to help that clean-up using the peat, oclansorb I think they call it, but here in St. John's let me tell you about another success story.

Brookfield Ice Cream, everybody thinks of it as great ice cream that is produced for the domestic market. Ten years ago, 100 per cent of their production was sold domestically. Today, 32 per cent of it is exported. Did you know that the ice cream at the SkyDome at the Blue Jays games comes off LeMarchant Road? And they sell it at a premium price. So we are exporting.

Let me tell you something else. They are just about to enter a joint venture with a group in Iceland. Can you believe that? Do you know that they sent three tractor trailer loads from Newfoundland, using the back-haul rates, and made a significant profit, to British Columbia last year? So we cannot think of the world as a large world out there that is distant and hard to get to. It is not any more. It is a shrunken globe. There are very good economies of scale. There are good reasons to export. People are crying out for quality products, and they are prepared to pay premium prices, and we do that.

Harbour Grace is another success story. They did a contract with the U.S. Navy to build these insular boots for the Navy Seals, they are called, and they are exporting into Europe with the Wild Sider, a very good success story.

The mattress factory in Carbonear, Restwell, it is fantastic what they are doing. So, yes, there are all kinds of success stories. Genesis Organic, that also deals in peat, which uses it for growing flowers in gardens, just landed a contract with Loblaws and they are going out as a President's Choice product this year right across Canada in all of the supermarkets. So there are a lot of success stories and they are primarily focused around manufacturing, and I see tremendous growth ahead of us.

MS THISTLE: Mr. Minister, it sounds very exciting and we have confirmed that from all parts of the Province. The only criticism I would have is the fact that we are not getting our message out enough. The young people in our schools today are not hearing it often enough. What does your department have in the way of getting our message out?

MR. FUREY: My department is more responsible for getting the message out outside of the Province to the rest of the world, but I can tell you, and I am happy to tell you, that the Minister of Development and Rural Renewal is about to launch a program, and she has consulted with our department on getting the message out on success stories around the Province, which you will start to see being profiled on television and in the newspapers and the school systems in the next month or so, I think.

MS THISTLE: Good news.

MR. FUREY: Very good stories that people ought to hear about. The problem is that the media have become so jaded and cynical, particularly the public media, but we cannot criticize because we have a self interest and a vested interest from their perspective. But you talk about privatization; I know what I would privatize if I were in charge of it.

MS THISTLE: Thank you.

CHAIR: Mr. Woodford.

MR. WOODFORD: Minister, I would just like to make a comment on your earlier comments with regard to Brookfield. You talk about spin-off, and you mentioned the fact that you are sending the product now into Iceland. I remember some years ago that Iceland - you used to always refer to it, in fact sent many an agricultural delegation off to Iceland because they were one of the countries with very little agricultural production, but yet they were self-sufficient in dairy products. They were one of the countries self-sufficient in dairy products - although they had very little agricultural base, land - and nobody could understand why. There is a bit of irony in it now, when you see a company right here in this Province, selling its product into Iceland and the product that they use, the resource and the ingredients coming from - you talk about spin-off - coming from the agricultural industry in this Province; because most of Brookfield's producers are right here on the East Coast of the Province and the more markets that those people get, whether it is Brookfield or Central Dairies or whoever, that, in turn, increases production, goes right on back to the land, to the farmer in this Province and the agriculture in this Province with regard to making sure that that product is there. Now, granted, they are tied in with other places outside the Province, I realize that, but they do take everything produced in this Province first, which is a plus.

Under 2.1.04, page 146, Atlantic Investment Fund: When that was first announced I was a bit sceptical of it because of the fact that it was tied in with chartered banks, and I think there was some reason, I should have some scepticism there dealing with the history of chartered banks in this country when dealing with small business. How successful has that been or has there been any activity at all there yet under that venture capital fund?

MR. FUREY: It has just really gotten under way; they named a new president about six months ago. All the provinces and ACOA and the banks have signed off on the agreements. The board is in place now. Newfoundland has two representatives on that board, a lady by the name of Barbara Fong, who is a businesswoman, and a businessman by the name of Danny Williams, who are two excellent people. We wanted somebody involved in technology and Mr. Williams met that mark. That fund is a $30 million revolving fund, $10 million from the banks, $10 million from ACOA, $10 million split pro rata amongst the four provinces.

It really has not addressed many applications yet, Max, unless I am unaware of them. They were here a couple of weeks ago to look at a number of companies that were getting ready to submit business plans from our Province, but we are guaranteed a base rate of our $2.8 million over the life of it. So, we are guaranteed a return for the Province on our money, but the challenge for us is to put forward business propositions where we can leverage out some of that bank money and some of that ACOA money. But they are going to be tough because they are using basic bank principals, there are no giveaways or no freebies and they are very careful of risk, but they looking primarily at the high-tech sector.

MR. WOODFORD: I forget the name of it, I think it is called the Government Administration Venture Fund, the so-called Hong Kong Fund: There has been some talk of that lately and it seems to be fairly exciting. I believe the last news reports I saw showed that there was approximately $14 million raised and you are trying to raise $35 million this year. What is the status of that particular fund now as of today?

MR. FUREY: We just had a report from our agents in Hong Kong, the Hong Kong-Shanghai Bank and they have been operating throughout South East Asia, mostly in Korea, Hong Kong and Taiwan. To date, we have about $16 million committed, and they are very encouraged. The Federal Government has just extended the deadline that you can use to fill up that fund - it was July 1, so there was a lot of pressure on us, but they moved it forward to January 1, 1998.

We feel confident, Mr. Woodford, that we will fill that up and we will use it for public private infrastructure. What that allows us, of course, is $35 million interest free for five years.

MR. WOODFORD: What is the minimum they put in? Is it $250,000 or $500,000?

MR. FUREY: Two hundred and fifty thousand dollars per investor.

MR. WOODFORD: And they get their money back -

MR. FUREY: They get their money back in five years at a 2 per cent rate and we cannot explicitly guarantee it, but putting the seal of the Province behind it implicitly guarantees it and that helps sell the fund. Because we were wandering into a market that had a pretty black eye from the private sector, I do not mind saying. There were a lot of charlatans and shysters out there creaming off high percentages off these funds, then investing them in terrible projects. But the government has said: Here is what we are going to do; it is going to be (inaudible) infrastructure. We are going to involve the private sector, but we, the banks, and the government, will have sign-off on all of the project.

MR. WOODFORD: You mentioned in an answer to -

MR. FUREY: Incidentally, I should say to you that we are going to launch a couple of more of those, too. That is good cheap money for a long period of time that we do not have to worry about. We carve out 30 per cent of it, put it in escrow, and reinvest it in the economy to grow it so that we can start paying it back after five years.

MR. WOODFORD: You mentioned earlier, in an answer to Mr. Fitzgerald, or maybe it was Mr. Byrne, regarding the EDGE program, about the $2,000 per employee subsidy under the EDGE program, and you also mentioned what I refer to as the transitional jobs fund - there might be another name on it, jobs transitional fund or whatever - administered under HRD, I believe.

MR. FUREY: Yes.

MR. WOODFORD: By the way, I think that transitional jobs fund is an excellent fund. I know a lot of experiences in my area in which businesses have taken advantage of it, and been very successful so far. Can a businessperson access that particular fund in conjunction with the EDGE program?

MR. FUREY: Yes.

MR. WOODFORD: Can there be a crossover there?

MR. FUREY: Yes. The problem is that we are going to back out of our $2,000-per-job grants. We are backing out because we know that there is a pool of capital over the next four years of $45 million, mostly paid for by the Federal Government. There is no limitation on the jobs transition fund. It can go up to $10,000, $20,000, if it is a real job, a meaningful job -

AN HON. MEMBER: Higher.

MR. FUREY: Yes.

- whereas we are restricted under this legislation to $2,000. Two thousand dollars at 100 per cent provincial dollars does not look so good up against an unlimited amount per job where the majority of it comes from the Federal Government. So we are going to use that program to supplement the EDGE. In fact, we have a number of proposals on the table before us now where the jobs transition fund, with the EDGE, are going to make this sustainable and put us in a competitive position. Some of them are call centres, for example. We have some exciting proposals on the table that I hope we can talk more about in a little while.

MR. WOODFORD: Yes, I am sure, because I have seen a couple of exciting proposals in my area. In fact, there is one about to go now. My understanding is that there is an application in under the EDGE program, and there was some question with regard to the involvement of this transitional job fund. I can see now where there should not be any problems there. Because this was approved, absolutely no problem, through ACOA, through HRD, through all - in fact, hardly any questions asked. It is mainly for export, so -

MR. FUREY: Yes, no problem.

MR. WOODFORD: In fact, I have a call in today to your department on that, to someone over there. You mentioned earlier - someone referred to, or maybe it was you - about the Marystown Shipyard and the success story, the turnaround in that one. Looking at some figures here under 3.3.03 with regards to Grants and Subsidies, in the Budget in 1997 there was $5 million, but the revised one is at $3.5 million. I notice now in this year, 1997-1998, there is $3,750,000. Would that be the last of the subsidies, or only what is required for this year?

MR. FUREY: That sits there as a subsidy, but if you look at the last year's Budget you will see that the subsidy was $5 million. That $5 million is reflective of the interest on the debt, the cumulative debt throughout the years on the Yard. The reduction you are seeing this year down to $3.75 million is reflective of the great free-fall in interest rates.

MR. WOODFORD: Yes. So that $5 million -

MR FUREY: See, we -

MR. WOODFORD: What is reflected? Is the reflection 1997-1998, or the reflection in what was said, is that why that was revised in 1997?

MR. FUREY: Yes.

MR. WOODFORD: Just that interest rate gave you that much flexibility.

MR. FUREY: Yes. You see, that is a debt we are carrying, which is a fixed debt, but the interest rate is floating. So if it was $5 million because the interest rate on average over that year was reflected in that bottom line; but as the interest rates went into free fall, those were the savings.

MR. WOODFORD: Substantial. I will pass to some other member.

CHAIR: Thank you, Mr. Woodford.

Is there a member who would wish to raise another issue?

Mr. Fitzgerald.

MR. FITZGERALD: Thank you.

I have just a few more questions. Page 146, Minister, 2.1.03.05, Professional Services, reduced by $180,000. Tell me what has been done away with there.

MR. FUREY: As part of the cuts, we reduced our consulting services with respect to - we had a number of consultants whom we used around the world for prospecting and feeding us back investment opportunities. We basically decided to terminate those contracts and not carry them forward.

MR. FITZGERALD: But then you go over on page 147, 3.1.02, Special Initiatives - Offshore Fund, and you see another reduction there of $300,000 to $130,000. It is exactly the same thing, I guess, is it?

MR. FUREY: Yes.

MR. FITZGERALD: How about the Grants and Subsidies above that, from $300,000 to $1,144,000? What new grants and subsidies are included there?

MR. FUREY: Where is it you are looking?

MR. FITZGERALD: 3.1.01.10. Three hundred thousand dollars in 1996-1997; 1997-1998, $1,144,000.

MR. FUREY: I am going to ask the Deputy Minister, if you do not mind, to respond to that because he sits on the Technology Transfer Opportunities fund board. I think it is a carry-over, is it not?

MR. RUELOKKE: That is a training fund that local companies can avail of to train their employees to take advantage of new opportunities. What we saw happening in 1996-1997 was really a tail-off of training related to the Hibernia project. The $1,144,000 for 1997-1998 reflects a continued tail-off of that. There are about four or five projects that are ongoing and will be finished up in the very near future. We anticipate that there will be some considerable take-up as a result of opportunities from Terra Nova for different technologies which will require different training. That is why we anticipate and forecast that increase for 1997-1998 in that particular heading.

MR. FITZGERALD: You are talking about upgrading in trades, or new training?

MR. RUELOKKE: It is an application-driven process, so as a company identifies a new opportunity for itself - let us just take an example. In terms of the assembly, installation and integration of sub-sea wellheads, there has been none of that done in the Province in the past. We have not had to. But all the thirty-two wells that will be used to produce the Terra Nova field will be produced sub-sea. There may well be a company or companies that want to train employees in the advanced hydraulics and electronics required to perform that kind of work. So we are anticipating that sort of demand.

MR. FITZGERALD: There has been a tremendous reduction in grants and subsidies right through the whole Industry, Trade and Technology budget there. You do not see that having any effect whatsoever on development and (inaudible) people?

MR. FUREY: When we looked at it we knew we were going to take a 30 per cent hit over the next three years. One of the areas where we took the hit was on the provincial dollar, but we are looking for federal-provincial agreements to take up that slack. For example, the Market and Product Development Program, which was very successful, a $350,000 program, is wiped out. But I know that there is a new Economic Regional Development Agreement coming, and we have carved out a portion of that - I think close to $1 million, Max - so that we can use that to help companies get out and market their products. In other words, it is the same program, but it is not 100 per cent provincial, it is only 30 per cent provincial, yet with more money. So while you see -

MR. FITZGERALD: (Inaudible) 70 per cent (inaudible).

MR. FUREY: Yes. While you see a reduction in grants and subsidies on the one hand, it is on the provincial side, but we are hoping to recover it under federal-provincial agreements which will cost us less.

MR. FITZGERALD: So, in all likelihood, they will not disappear, it is just that our funding part of it (inaudible).

MR. FUREY: That is right.

MR. FITZGERALD: Minister, have you had a chance to look at the proposal of this TACKE wind power company that is looking at producing power in - well, they have looked at three sites, two in my district and one out in Grates Cove. I think they have made a proposal to Hydro, and Hydro said: Come back with one site. They are looking at producing fifteen kilowatts of power -

MR. FUREY: Fifteen megawatts.

MR. FITZGERALD: Fifteen megawatts, I am sorry, of power from each station, for forty-five megawatts. What are your thoughts or your department's thoughts on this particular project?

MR. FUREY: I think it is very interesting technology. In fact, we had a company - he says that these wind turbines should be put right here in the House.

MR. FITZGERALD: I mentioned that the day they did the proposal, but they said they do not think (inaudible).

MR. FUREY: Mr. Fitzgerald, I should tell you - you asked earlier about success stories. The Heiley Henderson group in Hong Kong, that I met two years ago, are in the business of constructing these wind towers. We had them here a year ago and, in fact, Metal World, I think - was it, Max? - built the prototype for the new development right here in St. John's. They built two or three and there is a great opportunity for more. But, to your question, I am not sure. I do not know enough about that kind of technology. We do know that there is certainty in hydro technology because we have a history of proving it, and there are a number of hydro projects that are being put forward, one in my own district, the Torrent River project. There is another one on the West Coast. There are some on the South Coast. There are thermal-generated projects that are being put forward. The issue for that is, is it environmentally acceptable?

On the wind power, the question for me becomes not can you generate forty-five megawatts; you can, but can you do it consistently and is it reliable? Those are the issues, I guess, that have to be addressed by the professionals, because you cannot have forty-five megawatts pouring into the grid for a smelter or refinery or whatever for two weeks and then all of a sudden there is no wind for three days.

MR. FITZGERALD: No, it would have to be tied in with other more reliable sources; there is no doubt about that. It is a very interesting -

MR. FUREY: It is very interesting. I do not have the competence to speak technically, but those are the questions that would give rise to that technology.

MR. FITZGERALD: Very interesting.

MR. FUREY: I am not sure there would be many jobs associated with it.

MR. FITZGERALD: There are not, no. I watched your proposal and it was very interesting. It is not new technology. It is very common in places like Texas, Switzerland, Sweden, and those places.

MR. FUREY: This is in your district they would be set up, is it?

MR. FITZGERALD: They were looking at three sites. Two of them were in my district.

MR. FUREY: You want to be known as the new Don Quixote, do you?

MR. FITZGERALD: Well, it would be nice to bring some people down here to even look at something different.

Minister, just to end on a note, and I guess it will go back to what I had said earlier about allowing people an opportunity to go and look for industry, or look for other potential possibilities to be moved into your district, or moved anywhere in rural Newfoundland and Labrador to provide employment opportunities. Ms Thistle spoke about what happened in Buchans, and that is a prime example. You get fellows like Shawn Power and Ivan - do you know his last name?

AN HON. MEMBER: (Inaudible).

MR. FITZGERALD: Anyway, I have seen him, and those fellows would be an asset to your department, to go out and talk with people. I have listened to them both and they can tell the story of what they did in their particular town, and how they went and took the problem on themselves. They got tired of coming and knocking on government's doors and looking for hand-outs. As a result, like you said, there are some success stories here. It is certainly very encouraging, and I think they could teach a lot of us some lessons, but they were given some money as well. They were allowed to have a budget whereby they could travel and look for things, and get out of Buchans to try to bring back some possibilities.

The last and final question, Minister, a couple of months ago you did some advertising and put your name on some commodity. I am wondering if it was a success. How well did it sell?

MR. E. BYRNE: What was the increase in the market?

MR. FUREY: You know what that was - they asked me for a letter of -

MR. FITZGERALD: I asked everybody over here and nobody could remember.

MR. FUREY: They asked me for a letter of endorsement because they wanted to sell this iceberg ice overseas. I gave them the letter and it ended up on the package, that is what happened. I do not know what the success rate was, but I can certainly find out for you.

MR. FITZGERALD: Thank you.

CHAIR: Are there any other question?

I will ask the Clerk to call the subheads.

On motion, subheads 1.1.01 through 3.4.02, carried.

On motion, Department of Industry, Trade and Technology, total heads, carried.

CHAIR: Can I ask a motion to adjourn?

Thank you very much for attending.

On motion, Committee adjourned.